UNITED STATES 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, 1998
------------------
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
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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 (760) 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
13, 1998 was 171,903,477 shares.
Total number of pages 25
--
THERE ARE 12 EXHIBITS FILED WITH THIS REPORT
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND SEPTEMBER 30, 1998
(UNAUDITED)
March 31, 1998 September 30, 1998
--------------- ------------------
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 66,917 58,028
Short-term investments 241 116
Accounts receivable, net 873,890 1,053,419
Costs and estimated earnings in excess
of billings on uncompleted contracts 217,935 223,103
Inventories 473,698 526,508
Prepaid expenses 16,471 31,988
Deferred taxes 151,107 174,279
Other current assets 51,377 51,429
---------- ---------
Total current assets 1,851,636 2,118,870
---------- ---------
Property, plant and equipment, net 960,019 1,044,339
Investment in leasehold interests, net 21,699 20,286
Costs in excess of net assets of businesses acquired, net 1,312,776 1,366,356
Other assets 319,315 284,732
---------- ---------
$4,465,445 4,834,583
========== =========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND SEPTEMBER 30, 1998 (CONTINUED)
(UNAUDITED)
March 31, 1998 September 30, 1998
--------------- ------------------
(in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 357,260 404,747
Accrued liabilities 535,329 611,600
Current portion of long-term debt 118,849 23,783
Billings in excess of costs and estimated
earnings on uncompleted contracts 90,073 81,245
Other current liabilities 45,702 96,430
---------- ---------
Total current liabilities 1,147,213 1,217,805
---------- ---------
Notes payable 574,806 450,910
Long-term debt, excluding current portion 404,416 65,783
Convertible subordinated debentures 554,000 414,000
Redeemable or remarketable securities - 900,000
Deferred taxes 82,910 64,092
Other liabilities 110,662 152,307
---------- ---------
Total liabilities 2,874,007 3,264,897
---------- ---------
Shareholders' equity:
Preferred stock, authorized 3,000 shares - -
Common stock, par value $.01. Authorized 300,000
shares; 155,825 and 170,275 shares issued and
outstanding at March 31, 1998 and September 30, 1998,
respectively 1,558 1,703
Additional paid-in capital 1,945,223 2,060,898
Currency translation adjustment (57,282) (71,304)
Accumulated deficit (298,061) (421,611)
---------- ---------
Total shareholders' equity 1,591,438 1,569,686
---------- ---------
Commitments and contingencies
$4,465,445 4,834,583
========== =========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1998
(UNAUDITED)
Three Months Six Months
Ended Ended
September 30, September 30,
---------------------- -----------------------
1997 1998 1997 1998
--------- ---------- ---------- ----------
(in thousands, except per share data)
Revenues $938,358 1,225,882 1,731,294 2,345,213
Costs of sales 698,491 861,445 1,296,064 1,649,614
-------- --------- --------- ---------
Gross profit 239,867 364,437 435,230 695,599
Selling, general and administrative expenses 176,416 244,415 330,666 467,579
Purchased in-process research and
development - - - 3,558
Merger, restructuring, acquisition and other
related charges - - - 257,920
-------- --------- --------- ---------
176,416 244,415 330,666 729,057
-------- --------- --------- ---------
Operating income (loss) 63,451 120,022 104,564 (33,458)
Other income (expense):
Interest expense (12,883) (29,533) (23,878) (55,181)
Gain on disposition of affiliate - - 31,098 -
Interest and other income, net 1,287 3,603 2,782 7,730
-------- --------- --------- ---------
(11,596) (25,930) 10,002 (47,451)
-------- --------- --------- ---------
Income (loss) before income taxes 51,855 94,092 114,566 (80,909)
Income tax expense 18,292 33,881 41,708 14,277
-------- --------- --------- ---------
Net income (loss) $ 33,563 60,211 72,858 (95,186)
======== ========= ========= =========
Net income (loss) per common share:
Basic $ 0.26 0.37 0.57 (0.59)
======== ========= ========= =========
Diluted $ 0.25 0.36 0.56 (0.59)
======== ========= ========= =========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1998
(UNAUDITED)
1997 1998
---------- ---------
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 72,858 (95,186)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Deferred income taxes (6,967) (42,036)
Provision for doubtful accounts 4,581 10,264
Depreciation 40,523 52,120
Amortization 15,565 25,877
Merger, restructuring, acquisition and other related
cash charges - 155,396
Write-off of in-process research and development
and goodwill - 40,818
Gain on disposition of investment in affiliate (31,098) -
(Gain) loss on sale or disposal of property, plant and equipment (217) 29,724
Change in operating assets and liabilities:
Increase in accounts receivable (93,464) (113,688)
Increase in costs and estimated earnings in excess
of billings on uncompleted contracts (11,062) (430)
Increase in inventories (43,079) (28,798)
Increase in other assets (18,552) (34,577)
Increase in accounts payable and accrued expenses 28,301 40,859
Increase (decrease) in billings in excess of costs and
estimated earnings on uncompleted contracts 16,683 (21,231)
Increase (decrease) in other liabilities (1,980) 1,243
--------- --------
Net cash provided by (used in) operating activities (27,908) 20,355
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for purchase of property, plant and equipment (56,136) (88,413)
Payment for purchase of acquisitions, including certain
merger and restructuring charges, net of cash acquired (111,814) (256,110)
Proceeds from disposal of equipment 6,594 6,297
Proceeds from disposition of investment in affiliate 50,897 -
Sale (purchase) of short-term investments (9,608) 125
--------- --------
Net cash used in investing activities (120,067) (338,101)
--------- --------
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1998 (CONTINUED)
(UNAUDITED)
1997 1998
-------- ---------
(in thousands)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of remarketable or
redeemable securities - 913,637
Net proceeds from issuance of common stock 2,574 -
Proceeds from exercise of common stock options 538 1,455
Redemption of convertible subordinated debentures - (81,527)
Principal payments on long-term debt (16,711) (465,308)
Net (payments) proceeds from borrowings on notes payable 63,008 (59,400)
Dividends paid (50) -
------- --------
Net cash provided by financing activities 49,359 308,857
------- --------
Net decrease in cash and cash equivalents (98,616) (8,889)
Cash and cash equivalents at March 31, 1997 and 1998 144,128 66,917
------- --------
Cash and cash equivalents at September 30, 1997 and 1998 $45,512 58,028
======= ========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $21,304 37,175
======= ========
Cash paid during the period for income taxes $31,737 16,823
======= ========
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
6
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 U.S. 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, 1998. The
results of operations for the interim periods are not necessarily indicative of
the results of the full fiscal year.
Income (Loss) per Common Share
- ------------------------------
Income (loss) per common share is computed based on the weighted average number
of shares outstanding and in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 128 "Earnings Per Share". Dilutive securities consisting
of convertible preferred stock, convertible subordinated debt and common stock
options are included in the computation of income (loss) per dilutive share when
their effect is dilutive. Accordingly, "Basic EPS" and "Diluted EPS" were
calculated as follows:
Three Months Ended Six Months Ended
September 30, September 30,
------------------ ------------------
1997 1998 1997 1998
-------- ------- ------- --------
(in thousands, except per share data)
BASIC
Net income (loss) applicable to common shares $33,563 60,211 72,858 (95,186)
======= ======= ======= =======
Weighted average common shares outstanding 130,461 164,601 128,274 161,271
======= ======= ======= =======
Basic income (loss) per common share $ 0.26 0.37 0.57 (0.59)
======= ======= ======= =======
7
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- -------------------
1997 1998 1997 1998
----- ------- ---- --------
(in thousands, except per share data)
DILUTED
Net income (loss) applicable to common shares $ 33,563 60,211 72,858 (95,186)
Add:
Effect on net income of conversion of
convertible subordinated debentures - * 3,312 - * - **
-------- ------- ------- -------
Adjusted net income (loss) applicable to
common shares $ 33,563 63,523 72,858 (95,186)
======== ======= ======= =======
Weighted average shares outstanding 130,461 164,601 128,274 161,271
Add:
Assumed conversion of subordinated
debentures - * 10,481 - * - **
Exercise of options 2,687 2,960 2,495 - **
-------- ------- ------- -------
Adjusted weighted average shares outstanding 133,148 178,042 130,769 161,271
======== ======= ======= =======
Diluted income (loss) per common share $ 0.25 0.36 0.56 (0.59)
======== ======= ======= =======
_________________
* The calculation of Diluted EPS does not assume conversion of subordinated
debentures for the three and six months ended September 30, 1997 as the
effect would be antidilutive to income per common share.
** The calculation of Diluted EPS does not assume conversion of subordinated
debentures or exercise of stock options for the six months ended
September 30, 1998 as the effect would be antidilutive to loss per share.
Under the treasury stock method, the exercise of all outstanding options
would have increased the weighted average number of shares by 3.0 million
for the six months ended September 30, 1998.
Note 2. Inventories
-----------
Inventories at March 31, 1998 and September 30, 1998 consist of the following:
March 31, 1998 September 30, 1998
-------------- ------------------
(in thousands)
Raw materials $130,501 150,847
Work-in-progress 102,198 100,301
Finished goods 240,999 275,360
-------- -------
$473,698 526,508
======== =======
8
Note 3. Debt
----
Notes Payable. As of September 30, 1998, the Company had a Senior Credit
Facility which provides credit facilities to the Company of up to $750.0
million, of which there were outstanding borrowings of $450.9 million and
outstanding letters of credit of $52.3 million. Borrowings under the Senior
Credit Facility bear interest at variable rates of up to 0.45% above certain
Eurocurrency rates or 0.15% above BankBoston's base rate. The Senior Credit
Facility expires October 2002 and is subject to customary and usual terms.
Remarketable or Redeemable Securities Issuance. On May 15, 1998, the Company
issued $500.0 million 6.375% Remarketable or Redeemable Securities due 2011
(remarketing date May 15, 2001) and $400.0 million 6.50% Remarketable or
Redeemable Securities due 2013 (remarketing date May 15, 2003) (collectively,
the "ROARS"). The net proceeds from the sale of the ROARS, including a premium
payment to the Company by Nationsbanc Montgomery Securities LLC, were $913.6
million. The net proceeds were used to repay indebtedness under the Senior
Credit Facility, indebtedness assumed in the acquisition of Memtec Limited, and
a portion of the indebtedness assumed in the acquisition of Culligan Water
Technologies, Inc. ("Culligan").
Convertible Subordinated Debt. As of September 30, 1998, the Company had
outstanding $414.0 million aggregate principal amount of 4.5% Convertible
Subordinated Debentures due December 15, 2001 (the "Debentures"). The
Debentures are convertible into common stock at any time prior to maturity,
redemption or repurchase at a conversion price of $39.50 per share.
On September 23, 1998, the Company redeemed approximately $81.5 million of the
$140.0 million aggregate principal amount of 6% Convertible Subordinated Notes
due September 15, 2005 (the "Notes"). The redemption was financed with
borrowings under the Senior Credit Facility. The remaining notes were converted
into approximately 3.2 million shares of the Company's common stock.
Note 4. Acquisition
-----------
On June 15, 1998, a wholly owned subsidiary of the Company consummated the
acquisition of Culligan in a tax-free reorganization. The Company issued 48.6
million shares of the Company's common stock for all of the outstanding common
stock of Culligan (1.875 shares of the Company's common stock for each
outstanding share and each outstanding option or other right to acquire a share
of Culligan common stock, par value $.01). In addition, the Company assumed
approximately $491.7 million of third party debt.
Culligan is a leading manufacturer and distributor of water purification and
treatment products and services for household, consumer and commercial
applications. Products and services offered by Culligan range from those
designed to solve residential water problems, such as filters for tap water and
household softeners, to equipment and services, such as ultrafiltration and
microfiltration products. Culligan also offers desalination systems and
portable deionization services ("PDS"), designed for commercial and industrial
applications. In addition, Culligan sells and licenses its dealers to sell
under the Culligan trademark five-gallon bottled water.
The acquisition has been accounted for as a pooling of interests and,
accordingly, the condensed consolidated financial statements and notes thereto
for all periods presented have been restated to include the accounts of
Culligan. Reconciliation of results of operations of the combined entities for
the three and six months ended September 30, 1997 are as follows:
9
Three Months Six Months
Ended Ended
September 30, 1997 September 30, 1997
------------------ ------------------
(in thousands)
Revenues:
Company (as previously reported) $823,593 1,517,126
Culligan 114,765 214,168
-------- ---------
Combined $938,358 1,731,294
======== =========
Net income:
Company (as previously reported) $ 24,091 36,794
Culligan 9,472 36,064
-------- ---------
Combined $ 33,563 72,858
======== =========
Income per common share:
Basic:
As previously reported $ 0.27 0.42
======== =========
As restated $ 0.26 0.57
======== =========
Diluted:
As previously reported $ 0.26 0.41
======== =========
As restated $ 0.25 0.56
======== =========
Concurrent with the merger with Culligan, the Company designed and implemented a
restructuring plan to streamline its manufacturing and production base, redesign
its distribution network, improve efficiency and enhance its competitiveness.
The restructuring plan resulted in a pre-tax charge of $257.9 million in the six
months ended September 30, 1998. Included in the charge is approximately $49.2
million of merger-related expenses incurred to consummate the Culligan
transaction, including investment banking fees, printing fees, stock transfer
fees, legal fees, accounting fees, governmental filing fees and certain other
transaction costs. Integration and other acquisition costs of approximately
$40.6 million were incurred during the six months ended September 30, 1998 to
combine the operations of Culligan and the Company and consist of travel,
training, payroll and benefit plan conversions, legal and consulting fees and
other one-time charges related to the transaction. The plan identifies certain
manufacturing facilities, distribution sites, sales and administrative offices,
retail outlets and certain related assets that became redundant upon
consummation of the Culligan transaction. As a result, and in accordance with
SFAS 121, an impairment loss was recognized and idle assets were written down to
the lower of their carrying cost or net realizable value. These assets will not
be depreciated while they are held for disposal. Assets with remaining service
lives were written down to the extent that carrying amounts exceeded future
discounted cash flows and estimated proceeds from disposal. Had the Company not
recognized the impairment losses, the resulting depreciation expense for the
period beginning with the plan's implementation and ending September 30, 1998
would not have been material to reported results. These assets have a carrying
value of approximately $58.8 million as of September 30, 1998 and are expected
to be disposed of during the Company's current fiscal year.
The restructuring plan also resulted in the reduction of the combined workforce
by 950 employees consisting of 123 management personnel, 295 administrative
personnel, 444 manufacturing personnel and 88 sales personnel. In addition, the
plan impaired certain carrying amounts of goodwill and other intangible assets
in accordance with SFAS 121, which requires that long-lived assets be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable. In determining the amount
of impairment of these assets, the Company valued the assets based on the
present value of estimated expected future cash flows using discount rates
commensurate with the risks involved. The components of the merger,
restructuring, acquisition and other related charges are as follows:
10
(in thousands)
Merger, integration and other acquisitions costs $ 89,773
Write-off of duplicative assets and lease terminations 79,982
Severance, relocation and related costs 50,649
Write-off of goodwill and other intangible assets 37,516
--------
Total merger, restructuring, acquisition and other related charges $257,920
========
Cash charges $155,396
Non-cash charges 102,524
--------
$257,920
========
Approximately $32.9 million of merger and restructuring related charges are
included in accrued liabilities at September 30, 1998. Additional costs to
complete the restructuring plan are not expected to be material.
Prior to the Company's acquisition of Culligan, Culligan acquired Protean plc,
including Protean's Analytical and Thermal Division ("A&T"). In connection with
Culligan's acquisition of A&T, the Company recorded a charge of $3.6 million in
the six months ended September 30, 1998 for purchased in-process research and
development projects that had not reached technological feasibility and that had
no alternative future use.
After an income tax benefit of $50.5 million, the charges detailed above
totaling $261.5 million reduced earnings by $211.0 million.
Note 5. Comprehensive Income
--------------------
In the current period, the Company adopted SFAS 130 "Reporting Comprehensive
Income", which establishes standards for disclosing comprehensive income in both
annual and interim financial statements. Accordingly, the Company's
comprehensive income was as follows:
Three Months Ended Six Months Ended
September 30, September 30,
-------------------- --------------------
1997 1998 1997 1998
--------- -------- -------- ---------
(in thousands, except per share data)
Net income (loss) $ 33,563 60,211 72,858 (95,186)
Foreign currency translation adjustments (11,410) (7,115) (19,588) (14,022)
-------- ------ ------- --------
Comprehensive income (loss) $ 22,153 53,096 53,270 (109,208)
======== ====== ======= ========
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
- ---------------------
Revenues. Revenues for the three months ended September 30, 1998 were $1.2
billion, an increase of $287.5 million or 30.6% from the $938.4 million for the
three months ended September 30, 1997. Revenues for the six months ended
September 30, 1998 were $2.3 billion, an increase of $0.6 billion or 35.5% from
the $1.7 billion for the six months ended September 30, 1997. These increases
were due primarily to acquisitions completed by the Company subsequent to
September 30, 1997. For the six months ended September 30, 1998, revenues from
capital equipment sales represented 47.5% of total revenues. Revenues from
services, operations, replacement parts and consumables represented 22.4% of
total revenues, while revenues from distribution represented 22.1% of total
revenues and revenues from consumer products represented 8.0% of total revenues.
Gross Profit. Gross profit as a percentage of revenue ("gross margin") was
29.7% for the three months ended September 30, 1998 compared to 25.6% in the
corresponding period in the prior year. Gross margin was 29.7% for the six
months ended September 30, 1998 compared to 25.1% in the corresponding period in
the prior year. These increases in gross margin for the three and six month
periods ended September 30, 1998 were due primarily to (i) efficiencies realized
as a result of the Company's reorganization plans implemented in the third
quarter of the prior year and the first quarter of the current year; (ii)
certain economies of scale related to the Company's significant growth including
enhanced purchasing power; (iii) favorable product mix in the current period
resulting from the Company's emphasis on selling higher margin value added
products and services in the current period; and (iv) the incurrence of certain
unreimbursed project costs during the six months ended September 30, 1997
recorded by Kinetics, which was acquired by the Company as of December 31, 1997
and accounted for as a pooling of interests.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended September 30, 1998 were
$244.4 million, an increase of $68.0 million or 38.5% from the $176.4 million
for the three months ended September 30, 1997. During this period, selling,
general and administrative expenses were 19.9% of revenues compared to 18.8% for
the comparable period in the prior year. For the six months ended September 30,
1998 selling, general and administrative expenses, before purchased in-process
research and development and merger, restructuring, acquisition and other
related charges described below ("certain charges"), increased $136.9 million to
$467.6 million as compared to $330.7 million in the comparable period in the
prior year. During this period selling, general and administrative expenses
before certain charges were 19.9% of revenues compared to 19.1% for the
comparable period in the prior year. The increase in selling, general and
administrative expenses before certain charges in the three months and six
months ended September 30, 1998 can be attributed primarily to acquisitions
completed subsequent to September 30, 1997.
Merger, Restructuring, Acquisition and Other Related Charges. Concurrent with
the merger with Culligan, the Company designed and implemented a restructuring
plan to streamline its manufacturing and production base, redesign its
distribution network, improve efficiency and enhance its competitiveness. The
restructuring plan resulted in a pre-tax charge of $257.9 million in the six
months ended September 30, 1998. Included in the charge is approximately $49.2
million of merger-related expenses incurred to consummate the Culligan
transaction, including investment banking fees, printing fees, stock transfer
fees, legal fees, accounting fees, governmental filing fees and certain other
transaction costs. Integration and other acquisition costs of approximately
$40.6 million were incurred during the six months ended September 30, 1998 to
combine the operations of Culligan and the Company, and consist of travel,
training, payroll and benefit plan conversions, legal and consulting fees and
other one-time charges related to the transaction. The plan identifies certain
manufacturing facilities, distribution sites, sales and administrative offices,
retail outlets and certain related assets that became redundant upon
consummation of the Culligan transaction. As a result, and in accordance with
SFAS 121, an impairment loss was recognized and idle assets were written down to
the lower of their carrying cost or net realizable value. These assets will not
be depreciated while they are held for disposal. Assets with remaining service
lives were written down to the extent that carrying amounts exceeded future
discounted cash flows and estimated proceeds from disposal. Had the Company not
recognized the
12
impairment losses, the resulting depreciation expense for the period beginning
with the plan's implementation and ending September 30, 1998 would not have been
material to reported results. These assets have a carrying value of
approximately $58.8 million as of September 30, 1998 and are expected to be
disposed of during the Company's current fiscal year.
The restructuring plan also resulted in the reduction of the combined workforce
by 950 employees consisting of 123 management personnel, 295 administrative
personnel, 444 manufacturing personnel and 88 sales personnel. In addition, the
plan impaired certain carrying amounts of goodwill and other intangible assets
in accordance with SFAS 121, which requires that long-lived assets be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable. In determining the amount
of impairment of these assets, the Company valued the assets based on the
present value of estimated expected future cash flows using discount rates
commensurate with the risks involved. The components of the merger,
restructuring, acquisition and other related charges are as follows:
(in thousands)
Merger, integration and other acquisitions costs $ 89,773
Write-off of duplicative assets and lease terminations 79,982
Severance, relocation and related costs 50,649
Write-off of goodwill and other intangible assets 37,516
--------
Total merger, restructuring, acquisition and other related charges $257,920
========
Cash charges $155,396
Non-cash charges 102,524
--------
$257,920
========
Approximately $32.9 million of merger and restructuring related charges are
included in accrued liabilities at September 30, 1998. Additional costs to
complete the restructuring plan are not expected to be material.
Prior to the Company's acquisition of Culligan, Culligan acquired Protean plc,
including Protean's Analytical and Thermal Division ("A&T"). In connection with
Culligan's acquisition of A&T, the Company recorded a charge of $3.6 million in
the six months ended September 30, 1998 for purchased in-process research and
development projects that had not reached technological feasibility and that had
no alternative future use.
After an income tax benefit of $50.5 million, the charges detailed above
totaling $261.5 million reduced earnings by $211.0 million for the six months
ended September 30, 1998.
Interest Expense. Interest expense increased to $29.5 million for the three
months ended September 30, 1998 from $12.9 million for the corresponding period
in the prior year. Interest expense increased to $55.2 million for the six
months ended September 30, 1998 from $23.9 million for the corresponding period
in the prior year. Interest expense for the three and six months ended September
30, 1998 consisted primarily of interest on the Company's (i) 6.0% Convertible
Subordinated Notes issued on September 18, 1995 due 2005, (which were redeemed
or converted during the current quarter as discussed below) (ii) 4.5%
Convertible Subordinated Notes issued on December 11, 1996 due 2001, (iii)
6.375% Remarketable or Redeemable Securities issued May 15, 1998 due 2011
(Remarketing Date May 15, 2001), (iv) 6.5% Remarketable or Redeemable Securities
due 2013 (Remarketing date May 15, 2003), (v) other long-term debt bearing
interest at rates ranging from 2.0% to 10.1% and (vi) borrowings under the
Company's Senior Credit Facility. At September 30, 1998, the Company had cash
and short-term investments of $58.1 million.
Income Taxes. Income tax expense for the three months ended September 30, 1998
increased to $33.9 million from $18.3 million in the corresponding period in the
prior year. The Company's effective tax rate for the current period was 36.0%
which was nominally higher than the effective tax rate of 35.3% for the second
quarter in the prior year. The Company recorded income tax expense of $14.3
million for the six months ended September 30, 1998, a decrease of $27.4 million
from income tax expense of $41.7 million in the comparable period in the prior
year. Before certain charges, income tax expense was $64.8 million or an
13
effective tax rate of 35.9% for the six months ended September 30, 1998 as
compared to 36.4% for the comparable period in the prior year.
Net Income. Net income for the three months ended September 30, 1998 was $60.2
million, an increase of $26.6 million from the $33.6 million for the three
months ended September 30, 1997. Income before certain charges for the six
months ended September 30, 1998 was $115.8 million, an increase of $42.9 million
from the $72.9 million for the six months ended September 30, 1997. Net income
in the six months ended September 30, 1997 included a one-time after tax gain of
$18.8 million or $0.15 per diluted share on Culligan's disposition of an
investment in an affiliate. After non-recurring charges, net loss in the six
months ended September 30, 1998 was $95.2 million. Net income (loss) per common
share for the three and six months ended September 30, 1997 and 1998 were as
follows:
Three Months Ended Six Months Ended
September 30, September 30,
------------------ -----------------
1997 1998 1997 1998
-------- ------- ------ --------
(in thousands, except per share data)
Basic $0.26 0.37 0.57 (0.59)
===== ==== ==== =====
Diluted $0.25 0.36 0.56 (0.59)
===== ==== ==== =====
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 Senior
Credit Facility. At September 30, 1998, the Company had working capital of
$901.1 million including cash and short-term investments of $58.1 million. On
May 15, 1998, the Company issued $500.0 million 6.375% Remarketable or
Redeemable Securities due 2011 (remarketing date May 15, 2001) and $400.0
million 6.50% Remarketable or Redeemable Securities due 2013 (remarketing date
May 15, 2003) (collectively, the "ROARS"). The net proceeds from the sale of
the ROARS, including a premium payment to the Company by Nationsbanc Montgomery
Securities LLC, were $913.6 million. The net proceeds were used to repay
indebtedness under the Senior Credit Facility, indebtedness assumed in the
acquisition of Memtec, and a portion of the indebtedness assumed in the
acquisition of Culligan. The Company's long-term debt at September 30, 1998
consisted of (i) $414.0 million of 4.5% Convertible Subordinated Notes due 2001;
(ii) $500.0 million of ROARS due 2011 (remarketing date May 15, 2001); (iii)
$400.0 million of ROARS due 2013 (remarketing date May 15, 2003); and (iv) other
long-term debt of $89.6 million bearing interest at rates ranging from 2.0% to
10.1%.
As of September 30, 1998, the Company had a Senior Credit Facility which
provides credit facilities to the Company of up to $750.0 million, of which
there were outstanding borrowings of $450.9 million and outstanding letters of
credit of $52.3 million. Borrowings under the Senior Credit Facility bear
interest at variable rates of up to 0.45% above certain Eurocurrency rates or
0.15% above BankBoston's base rate. The Senior Credit Facility expires October
2002 and is subject to customary and usual terms.
On September 23, 1998, the Company redeemed approximately $81.5 million of the
$140.0 million aggregate principal amount of 6% Convertible Subordinated Notes
due September 15, 2005 (the "Notes"). The redemption was financed with
borrowings under the Senior Credit Facility. The remaining Notes were converted
into approximately 3.2 million shares of the Company's common stock.
The Company believes its current cash position, cash flow from operations, and
available borrowings under the Company's Senior Credit Facility 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.
14
CERTAIN TRENDS AND UNCERTAINTIES
The Company and its representatives may from time to time make written or oral
forward-looking statements, including statements contained in the Company's
filings with the United States Securities and Exchange Commission and in its
reports to stockholders. In connection with the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the Company is hereby
identifying important factors that could cause actual results to differ
materially from those contained in any forward-looking statement made by or on
behalf of the Company; any such statement is qualified by reference to the
following cautionary statements.
Earnings Variation Due to Business Cycles and Seasonal Factors. Our operating
results can experience quarterly or annual variations due to business cycles,
seasonality and other factors. The market price for our common stock may
decrease if our operating results do not meet the expectations of stock market
analysts.
About 45% of our sales are of capital equipment. Sales of capital equipment are
affected by general fluctuations in the business cycles in the United States and
worldwide, instability of economic conditions (such as the current conditions in
the Asia Pacific region and Latin America) and interest rates, as well as other
factors.
In addition, operating results of some of our business segments are
significantly influenced, along with other factors such as interest rates, by
particular business cycles and seasonality, including:
BUSINESS CYCLES
AND SEASONS
SEGMENT AFFECTING RESULTS
------- -----------------
Waterworks . Real estate development
Distribution . Housing starts
. Winter months in temperate regions
. Industrial capital spending
Consumer and Commercial . Consumer spending
. Housing starts
Industrial Products and . Microelectronics
Services . Pharmaceutical
. Biotechnology
. Municipal spending
Profit Uncertainty in Fixed-Price Contracts. Contracts with fixed prices make
up a significant portion of our revenues. If our original cost estimates are
incorrect, there are delays in scheduled deliveries or we otherwise do not
progress under a fixed-price contract as we expected, the profits under that
contract could decrease, or we could lose money on that contract. When our
estimates of cost change for fixed-price contracts, we record adjustments in our
financial statements, and any future downward adjustments could be material.
15
Competition. We compete against many companies in fragmented, competitive
markets and we have fewer resources than some of those companies. Our
businesses compete within and outside the United States principally on the basis
of the following factors:
BUSINESS FACTORS
-------- -------
Water and . Product quality and specifications
Wastewater . Technology
Treatment . Reliability
. Price (can predominate among competitors in
the wastewater treatment business that have
sufficient technical qualifications,
particularly in the municipal contract bid
process)
. Customized design and technical qualifications
. Reputation
. Prompt local service
Filtration and . Price
Separation . Technical expertise
. Product quality
. Responsiveness to customer needs
. Service
. Technical support
Industrial Products . Quality
and Services . Service
. Price
Waterworks . Prompt local service capability
Distribution . Product knowledge by sales force and service
branch management
. Price
Consumer and . Price
Commercial Products . Product quality
. "Taste"
. Service
. Distribution capabilities
. Geographic presence
. Reputation
The waterworks distribution business competes against independent wholesalers,
distribution chains similar to ours and manufacturers who sell directly to
customers. The consumer products business competes with thousands of companies,
including those with national, regional or local distribution networks, as well
as retail outlets.
Competitive pressures, including those described above, and other factors could
cause us to lose market share or could result in decreases in prices, either of
which could have a material adverse effect on our financial position and results
of operations.
16
Risks Related to Acquisitions. We have made a large number of acquisitions
since 1991 and we plan to continue to pursue acquisitions. Candidates for
acquisition include businesses that allow us to:
. expand the segments of the water and wastewater treatment and water-
related industries in which we participate;
. complement our technologies, products or services;
. broaden our customer base and geographic areas served;
. expand our global distribution network; or
. use our "one-stop-shop" approach in terms of technology, distribution
or service.
If we are not correct when we assess the value, strengths, weaknesses,
liabilities and potential profitability of acquisition candidates or we are not
successful in integrating the operations of acquired companies, our results of
operation or financial position could be adversely affected and we could lose
money. In addition, if we acquire other businesses by making so-called
"hostile" tender offers, as we did with Memtec Limited, we may encounter added
risks. When we negotiate to acquire a company, that company generally makes
legally binding statements (known as "representations") to us and provides us
with access to internal documents and other data that we rely upon in deciding
whether to acquire the company and if we decide to acquire the company, on what
terms. We would not get such representations or internal information in a
"hostile" tender offer. We will continue to look for acquisition opportunities,
although we may not continue to easily find desirable acquisition candidates or
complete acquisitions.
Risks of Doing Business in Other Countries. We have acquired businesses and we
conduct business in markets outside the United States and we expect to continue
to do so. The risks associated with conducting business outside the United
States include:
. currency fluctuations;
. slower payment of invoices;
. underdeveloped legal systems;
. nationalization; and
. social, political and economic instability.
Current economic conditions in the Asia Pacific region and Latin America have
adversely affected our operations and sales there. We cannot predict the full
impact of this economic instability, but it could have a material adverse effect
on our revenues and profits.
Importance of Certain Employees. Our senior officers, particularly Richard J.
Heckmann, who is our Chief Executive Officer, are very important to the success
of our operations. We have various compensation and benefit arrangements with
our senior officers, including Mr. Heckmann, that are designed to encourage them
to continue their employment with us. However, if any of our senior officers do
not continue in their present roles, our prospects may be adversely affected.
17
Year 2000 Risks. The Year 2000 issue concerns the potential exposures related
to the automated generation of business and financial misinformation resulting
from the application of computer programs which have been written using six
digits (for example, 12/31/99), rather than eight (for example, 12/31/1999), to
define the applicable date of business transactions. Many products and systems
could experience malfunctions when attempting to process certain dates, such as
January 1, 2000 or September 9, 1999 (a date programmers sometimes used as a
default date). We are currently identifying which of our information technology
("IT") and non-IT systems will be affected by Year 2000 issues.
Most of our IT systems with Year 2000 issues have been modified to address those
issues. We have also commenced identification and assessment of our non-IT
systems, which include, among other things, components found in water and
wastewater treatment plants and process water treatment systems operated and/or
owned under contract by us and in our hazardous waste treatment facilities, as
well as components of equipment in our manufacturing facilities.
Our Year 2000 compliance program consists of three phases: identification and
assessment; remediation; and testing. For any given system, the phases occur in
sequential order, from identification and assessment of Year 2000 problems, to
remediation, and, finally, to testing our solutions.
However, as we acquire additional businesses, each IT and non-IT system of the
acquired business must be independently identified and assessed. As a result,
all three phases of our Year 2000 compliance program may occur simultaneously as
they relate to different systems. Each phase may have a varying timetable to
completion, depending upon the system and the date when a particular business
was acquired by us.
We have completed the identification and assessment of most of our IT systems,
and those systems have been modified to address Year 2000 problems. We will
continue to assess the IT systems of businesses that we have recently acquired
and that we may acquire in the future.
We are in the identification and assessment phase with respect to all non-IT
systems, which is projected to continue until September 1999 for currently-owned
businesses. With the possible exception of the remediation and testing phases
for certain of our non-IT systems, all phases of our Year 2000 compliance
program are expected to be completed by September 1999, although we can not
assure you that all phases for all businesses will be completed by that date.
In particular, we can not assure you that acquired businesses will be Year 2000
compliant, although we currently have a policy that requires an acquisition
candidate to represent that such business is Year 2000 compliant. To the extent
feasible, we also review the Year 2000 status of acquisition candidates before
we complete an acquisition.
In addition to our internal systems, we have begun to assess the level of Year
2000 problems associated with our various suppliers, customers and creditors.
To test the Year 2000 compliance status of our suppliers, we plan to submit
hypothetical orders to our suppliers dated after December 31, 1999 requesting
confirmation that the orders have been correctly processed.
Our costs to date for our Year 2000 compliance program, excluding employee
salaries, have not been material. Although we have not completed our assessment,
we do not currently believe that the future costs associated with our Year 2000
compliance program will be material.
We are currently unable to determine our most reasonably likely worst case Year
2000 scenario, as we have not identified and assessed all our systems,
particularly our non-IT systems. As we complete our identification and
assessment of internal and third-party systems, we expect to develop contingency
plans for various worst case scenarios. We expect to have such contingency
plans in place by September 1999. A failure to address Year 2000 issues
successfully could have a material adverse effect on our business, financial
condition or results of operations.
Potential Environmental Risks. Environmental laws and regulations require us to
meet certain standards and impose liability if we do not meet them.
Environmental laws and regulations and their interpretations change.
18
We must comply with any new standards and requirements, even when they require
us to clean up environmental conditions that were not illegal when the
conditions were created. We can be held responsible for failures to meet
environmental standards by businesses we acquired that happened before we
acquired them. All of these requirements can cost us money.
Environmental costs can result from cleanup obligations, civil or criminal
enforcement actions or private actions. Costs of environmental compliance and
fines or penalties for environmental violations could have a material adverse
effect on us in the future. Environmental risks that we have in our businesses
and some of the specific environmental liabilities that we know about and that
could result in significant future costs to us are discussed below.
. Cleanup Liabilities. The United States Environmental Protection Agency
has notified us that we are a potentially responsible party under the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (CERCLA) at certain sites to which we (or companies we have
acquired) have allegedly sent waste in the past. We may receive
additional notices under CERCLA or state law.
You should be aware that in 1995, Culligan, one of our subsidiaries,
bought part of Anvil Holdings, Inc. and assumed certain environmental
liabilities associated with soil and contamination at Anvil Knitwear's
Asheville Dyeing and Finishing Plant in Swannanoa, North Carolina. Since
1990, Culligan has monitored the contamination pursuant to an
Administrative Consent Order entered into with the North Carolina
Department of Environment, Health and Natural Resources related to the
closure of an underground storage tank at the site. Groundwater testing
at this plant and at two adjoining properties showed levels of a
cleaning solvent that Culligan believed to be from the plant that exceed
applicable state standards.
We have begun cleanup of the contamination and estimate that the costs
of future site cleanup will range from $1.0 million to $1.8 million. We
have sufficient financial reserves for site cleanup. We anticipate that
the potential costs of further monitoring and corrective measures to
address the groundwater problem will not have a material adverse effect
on our financial position or results of operations. However, because the
full extent of the required cleanup has not been determined, we cannot
assure you of this result.
Also, based on all of the sites we know to require cleanup, including
the Anvil site, we do not believe that our liability relating to such
sites will be material to us. However, we cannot assure you that such
sites will not have a material adverse effect on our financial position
or results of operations.
. Hazardous Waste Treatment and Recovery Facilities. We own and operate
several hazardous waste treatment and recovery facilities, which are
subject to very strict environmental laws and regulations and compliance
reviews. If we do not comply with these regulations, we could be fined
significant amounts of money or the facilities' hazardous waste permits
could be suspended or revoked.
. Liability for Wastewater Treatment Facilities and Wastewater Discharges.
By contract, we operate various wastewater collection and treatment
facilities that were developed and are owned by governmental or
industrial entities. We also operate facilities owned by us, including
service deionization centers and manufacturing facilities, that
discharge wastewater in connection with routine operations. Under
certain service contracts and applicable environmental laws we may be
held responsible as an operator of such facilities. Potential
responsibilities include paying the fines or penalties if the facilities
malfunction or discharge wastewater which fall below certain regulatory
thresholds. In some cases, such possible malfunctions or discharges
depend upon design or operational conditions over which we have limited,
if any, control.
. Underground Storage Tanks and Potential for Soil and Groundwater
Contamination. Some of our facilities contain (or in the past
contained) underground storage tanks which may have caused soil or
19
groundwater contamination. At one site formerly owned by Culligan, we
are investigating, and have taken certain actions to correct,
contamination that may have resulted from a former underground storage
tank. Based on the amount of contamination believed to have been present
when the tank was removed, and the probability that some of the
contamination may have originated from nearby properties, we believe,
although there can be no assurance, that this matter will not have a
material adverse effect on our financial position or results of
operations.
. Impact of Environmental Laws on Our Product Sales. The liabilities and
risks imposed on our customers by environmental laws may adversely
impact demand for some of our products or services or impose greater
liabilities and risks on us, which could also have an adverse effect on
our competitive and financial position.
Risks Related to Municipal Water and Wastewater Business. Sales to municipal
customers make up a significant percentage of our revenues. We encounter some
different risks with municipalities than we do with industrial customers.
Competition for selection of a municipal contractor usually requires a formal
bidding process. By requiring formal bids, municipal projects entail longer lead
times than industrial projects and force us to commit more resources. In
addition, the municipal business depends upon the availability of funding at the
local level, which may be subject to increasing pressure as local governments
are expected to bear a greater share of the cost of public services.
Technological and Regulatory Risks. Changes in technology, competitively
imposed process standards and regulatory requirements influence the demand for
many of our products and services. To grow and remain competitive, we need to
anticipate changes in technological and regulatory standards. We need to
introduce new and enhanced products on a timely basis. We may not achieve these
goals and some of our products may become obsolete.
New products often face lack of market acceptance, development delays or
operational failure. Stricter governmental regulations also may affect
acceptance of new products. The market growth potential of acquired in-process
research and development is subject to significant risks, including high
development, production and sales costs, introduction of competing technologies
and the possible lack of market acceptance of the developed products and
technologies.
Our trademarks or patents may not provide substantial protection from
competition or be of commercial benefit to us. We may not be able to enforce our
rights under trademarks or patents against third parties. Some international
jurisdictions may not protect these kinds of rights to the same extent that they
are protected under U.S. law. If a third party successfully challenges our
trademarks or patents, it may affect our competitive and financial position.
Risks Related to Water Rights and Transfers of Water. We own more than 47,000
acres of agricultural land in the southwestern United States, most of which is
located within the Imperial Irrigation District (IID) in Imperial County,
California. We lease substantially all of the 47,000 acres to agricultural
tenants.
We acquired the land with water rights, and we are seeking to acquire additional
properties with water rights, primarily in the southwestern and western United
States. In the future, we may transfer water attributable to such water rights,
particularly from the land located in the IID.
Our ability to transfer water and the profitability of any such transfers are
subject to various uncertainties, including:
. Hydrologic risks of variable water supplies;
. Conveyance risks from unavailable or inadequate transportation
facilities;
20
. Risks presented by allocations of water under existing and prospective
priorities; and
. Risks of adverse changes to or interpretations of U.S. federal, state
and local laws, regulations and policies.
The IID holds title to all of the water rights within the IID in trust for the
landowners and would control the amounts and terms of any transfers by us of
IID water. Transfer of IID water are subject to additional uncertainties,
including:
. Limitations of Colorado River water allocations (the source of all water
deliveries to IID properties) under
. international treaties;
. interstate compacts;
. U.S. federal and state laws and regulations; and
. contractual arrangements;
. Curtailment of water deliveries by the U.S. government in times of
drought;
. The approval of the U.S. Secretary of the Interior;
. The use of the Colorado River Aqueduct owned by the Metropolitan Water
District of southern California, a quasi-governmental agency; and
. Compliance with all U.S. federal and state environmental laws and
regulations.
Even if a transfer of IID water were approved, other California water districts
and users could assert claims adverse to the IID water rights, including but not
limited to claims that the IID has failed to satisfy U.S. federal law and
California constitutional requirements that IID water must be put to reasonable
and beneficial use. A finding that the IID's water use is unreasonable or
nonbeneficial could adversely impact title to the IID water rights and the
ability to transfer IID water.
The uncertainties associated with water rights could have a material adverse
effect on our future profitability.
Impact of Recently Issued Accounting Standards. In June 1997, FASB issued a new
statement titled "Disclosures about Segments of an Enterprise and Related
Information". The new statement is effective for fiscal years beginning after
December 15, 1997. The Company is currently determining required disclosure
under this new standard and will include the disclosures in its next annual
report.
In June 1998, FASB issued a new statement titled "Accounting for Derivative
Instruments and Hedging Activities. The new statement is effective for fiscal
years beginning after June 15, 1999. The Company does not believe that the
adoption of this standard will have a material impact on its consolidated
financial position or results of operations.
21
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
N/A
Item 2. CHANGES IN SECURITIES
On September 22, 1998, the Company issued to Hadwaco US, Inc.
69,333 shares (the "Shares") of its common stock, par value $.01
per share. The Shares were issued in a transaction exempt from
registration pursuant to Section 4(2) of the United States
Securities Act of 1933 as amended.
Item 3. DEFAULTS UPON SENIOR SECURITIES
N/A
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
(i) The following directors were elected to terms expiring in 2001:
Class I Directors: For Withheld
----------------- --- --------
J. Danforth Quayle 120,217,396 946,633
Arthur B. Laffer 120,309,466 844,802
Alfred E. Osborne, Jr. 120,310,343 841,859
Andrew D. Seidel 120,311,524 841,278
(ii) To approve the Company's Senior Executive Annual Incentive Plan:
For Against Abstain
----------- --------- ---------
116,240,360 3,530,872 1,260,061
(iii) To approve the Company's 1998 Stock Incentive Plan:
For Against Abstain
----------- --------- ---------
115,104,902 4,829,148 1,097,244
(iv) To approve an amendment to the Company's 1991 Director's Stock
Option Plan:
For Against Abstain
----------- --------- ---------
116,243,891 3,505,536 1,281,867
(v) Ratification of the appointment of KPMG Peat Marwick LLP as
independent accountants for the Company:
For Against Abstain
----------- --------- ---------
120,193,998 361,306 587,098
Item 5. OTHER INFORMATION
N/A
22
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
The following exhibits are filed herewith or incorporated herein by reference:
3.02 Amended and Restated Bylaws of United States Filter Corporation (filed
herewith)
4.01 Third Amendment to Amended and Restated Multicurrency Credit Agreement
and First Omnibus Agreement dated as of November 10, 1998 by and among
the Company and various lenders with BankBoston, N.A. as Managing Agent
(filed herewith)
10.01 First Amended and Restated Employment Agreement between Richard J.
Heckmann and the Company (filed herewith)
10.02 Employment Agreement between Nicholas C. Memmo and the Company (filed
herewith)
10.03 Employment Agreement between Andrew D. Seidel and the Company (filed
herewith)
10.04 Employment Agreement between Harry K. Hornish, Jr. and the Company
(filed herewith)
10.05 Employment Agreement between Calvin R. Hendrix and the Company (filed
herewith)
10.06 Employment Agreement between Kenneth I. Wellings and the Company (filed
herewith)
10.07 Employment Agreement between Kevin L. Spence and the Company (filed
herewith)
10.08 Employment Agreement between Damian C. Georgino and the Company (filed
herewith)
10.09 Employment Agreement between Michael J. Reardon and the Company (filed
herewith)
27.0 Financial Data Schedule
The Company filed three Current Reports on Forms 8-K and 8-K/A during the
quarter ended September 30, 1998, as follows:
(1) August 17, 1998, reporting certain financial information to reflect 30 days
of combined operations of the Company and Culligan Water Technologies, Inc.
(2) August 17, 1998, amendment to 8-K dated August 17, 1998, reporting certain
financial information to reflect 30 days of combined operations of the
Company and Culligan Water Technologies, Inc.
(3) September 18, 1998, amendment to 8-K dated June 15, 1998, restating certain
of the Company's financial information as a result of the Company's
acquisition of Culligan Water Technologies, Inc.
23
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 13, 1998 Kevin L. Spence
Executive Vice President, Chief
Financial Officer (Principal
Financial Officer and Duly Authorized
Officer)
24
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
3.02 Amended and Restated Bylaws of United States Filter Corporation
(filed herewith)
10.01 First Amended and Restated Employment Agreement between Richard J.
Heckmann and the Company (filed herewith)
10.02 Employment Agreement between Nicholas C. Memmo and the Company (filed
herewith)
10.03 Employment Agreement between Andrew D. Seidel and the Company (filed
herewith)
10.04 Employment Agreement between Harry K. Hornish, Jr. and the Company
(filed herewith)
10.05 Employment Agreement between Calvin R. Hendrix and the Company (filed
herewith)
10.06 Employment Agreement between Kenneth I. Wellings and the Company
(filed herewith)
10.07 Employment Agreement between Kevin L. Spence and the Company (filed
herewith)
10.08 Employment Agreement between Damian C. Georgino and the Company
(filed herewith)
10.09 Employment Agreement between Michael J. Reardon and the Company
(filed herewith)
10.10 Third Amendment to Amended and Restated Multicurrency Credit
Agreement and First Omnibus Agreement dated as of November 10,
1998 by and among the Company and various lenders with BankBoston,
N.A. as Managing Agent (filed herewith)
27.0 Financial Data Schedule
25