<PAGE>   1
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                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                            -----------------------

                                   FORM 10-Q
(Mark One)
 [X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 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 1-7427

                                DIGICON INC.
           (Exact name of registrant as specified in its charter)

                                      
            DELAWARE                                              76-0343152
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

3701 KIRBY DRIVE, SUITE #112, HOUSTON, TEXAS                         77098
   Address of principal executive offices)                         (Zip Code)

                                (713) 526-5611
             (Registrant's telephone number, including area code)

                                  NO CHANGES
             (Former name, former address and former fiscal year,
                        if changed since last report)

         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
                                                    -----    -----

     APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
                          THE PRECEDING FIVE YEARS:

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.      Yes    X   No
                                -----    -----

                    APPLICABLE ONLY TO CORPORATE ISSUERS:
         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

          CLASS                                    OUTSTANDING AT MARCH 14, 1996
Common Stock, $.01 par value                                    11,123,422

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                        DIGICON INC. AND SUBSIDIARIES

                                    INDEX

<TABLE>
<CAPTION>
                                                                               Page
                                                                              Number
                                                                              ------
<S>          <C>                                                                <C>
                                                                              
PART  I.     Financial Information                                            
                                                                              
             Item 1.  Financial Statements                                    
                                                                              
             Consolidated Balance Sheets -                                    
               January 31, 1996 and July 31, 1995                                1
                                                                              
             Consolidated Statements of Operations -                          
               For the Three and Six Months Ended January 31, 1996 and 1995      3
                                                                              
             Consolidated Statements of Cash Flows -                          
               For the Six Months Ended January 31, 1996 and 1995                4
                                                                              
             Notes to Consolidated Financial Statements                          7
                                                                              
             Item 2.  Management's Discussion and Analysis                    
                        of Financial Condition and Results of Operations        10
                                                                              
                                                                              
PART  II.    Other Information                                                
                                                                              
             Item 1.  Legal Proceedings                                         15
                                                                              
             Item 4.  Submission of Matters to a Vote of Security Holders       15
                                                                              
             Item 5.  Other                                                     16
                                                                              
             Item 6.  Exhibits and Reports on Form 8-K                          16
</TABLE>


<PAGE>   3
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                        PART I.  FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

                        DIGICON INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                (Unaudited)
                                                                                January 31,         July 31,
                                                                                   1996               1995
                                                                                -----------       ------------
 ASSETS                                                                           (In thousands of dollars)
 <S>                                                                            <C>               <C>
 Current assets:
    Cash                                                                        $     3,907       $      4,209
    Restricted cash investments                                                         332                670
    Accounts and notes receivable (net of allowance for
        doubtful accounts:  January, $595; July, $703)                               42,130             40,662
    Materials and supplies inventory (net of reserves:
        January, $66; July, $66)                                                      1,388              1,335
    Prepayments and other                                                             5,714              6,619
                                                                                -----------       ------------

           Total current assets                                                      53,471             53,495

 Property and equipment:
     Seismic equipment                                                               57,855             53,615
     Data processing equipment                                                       23,737             26,703
     Leasehold improvements and other                                                30,694             29,394
                                                                                -----------       ------------

           Total                                                                    112,286            109,712
           Less accumulated depreciation                                             63,390             60,874
                                                                                -----------       ------------

           Property and equipment - net                                              48,896             48,838

 Proprietary seismic data                                                            24,859             28,444

 Goodwill (net of accumulated amortization:
     January, $1,379; July, $1,168)                                                   2,866              3,077

 Other assets                                                                         1,304              1,216
                                                                                -----------       ------------
               Total                                                            $   131,396       $    135,070
                                                                                ===========       ============
</TABLE>
____________

See Notes to Consolidated Financial Statements.





                                      1
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<TABLE>
<CAPTION>
                                                                                (Unaudited)
                                                                                January 31,          July 31,
                                                                                    1996               1995
                                                                                -----------        ------------
 LIABILITIES AND STOCKHOLDERS' EQUITY                                              (In thousands of dollars)
 <S>                                                                            <C>                <C>
 Current liabilities:
   Current maturities of long-term debt                                         $     9,479        $     10,915
   Accounts payable - trade                                                          15,112              18,875
   Accrued interest                                                                     422                 409
   Other accrued liabilities                                                         12,767              14,869
   Income taxes payable                                                               1,411               1,097
                                                                                -----------        ------------

           Total current liabilities                                                 39,191              46,165

 Non-current liabilities:
   Long-term debt-less current maturities                                            22,510              25,243
   Deferred credits                                                                   3,669               3,675
   Other non-current liabilities                                                      1,343               1,105
                                                                                -----------        ------------

           Total non-current liabilities                                             27,522              30,023

 Stockholders' equity:
   Common stock, $.01 par value; authorized:
      20,000,000 shares; issued: 11,123,422 shares and
      11,134,939 shares at January and July, respectively                               111                 111

   Additional paid-in capital                                                        71,095              71,895

   Accumulated deficit from August 1, 1991                                           (6,523)             (8,352)

   Less: Treasury stock, at cost; 858,497 shares                                                         (4,772)
                                                                                -----------        ------------

            Total stockholders' equity                                               64,683              58,882
                                                                                -----------        ------------

                   Total                                                        $   131,396        $    135,070
                                                                                ===========        ============
</TABLE>

____________

See Notes to Consolidated Financial Statements.





                                      2
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                         DIGICON INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                   UNAUDITED
                    (In thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                       Three Months Ended                 Six Months Ended
                                                           January 31,                       January 31,
                                                   --------------------------        --------------------------
                                                      1996             1995            1996              1995
                                                   ---------        ---------        ---------        ---------
 <S>                                               <C>              <C>              <C>              <C>
 Revenues                                          $  40,068        $  30,266        $  78,246        $  62,266

 Costs and expenses:
     Operating expenses                               33,247           22,701           63,680           47,709
     Depreciation and amortization                     3,899            3,453            7,522            6,846
     Selling, general and administrative               1,276            1,058            2,527            2,164
     Interest                                          1,343            1,331            2,625            2,501
     Equity in loss of 50% or less-
      owned companies and joint ventures                   5              279                5              640
     Other                                               (48)             298               63              (74)
                                                   ---------        ---------        ---------        ---------

           Total costs and expenses                   39,722           29,120           76,422           59,786
                                                   ---------        ---------        ---------        ---------

 Income before provision for
    (benefit from) income taxes                          346            1,146            1,824            2,480

 Provision for (benefit from)
    income taxes                                        (731)             317               (5)           1,044
                                                   ---------        ---------        ---------        ---------

 Net income                                        $   1,077        $     829        $   1,829        $   1,436
                                                   =========        =========        =========        =========

 Per share of common stock:

 Income per share of common stock                  $     .10        $     .07        $     .17        $     .13
                                                   =========        =========        =========        =========

 Weighted average shares (includes
    common stock only)                                11,123           11,135           10,848           11,046
                                                   =========        =========        =========        =========

 Cash dividends                                         None             None             None             None
                                                   =========        =========        =========        =========
</TABLE>

____________

See Notes to Consolidated Financial Statements.





                                       3
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                        DIGICON INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  UNAUDITED

<TABLE>
<CAPTION>
                                                                                  Six Months Ended January 31,
                                                                                  ----------------------------
                                                                                      1996             1995
                                                                                  ------------     -----------
                                                                                    (In thousands of dollars)
 <S>                                                                                <C>              <C>
 Operating activities:
   Net income                                                                       $  1,829         $  1,436
   Non-cash items included in net income:
      Depreciation and amortization                                                    7,522            6,846
      Amortization of deferred gain on sale/leaseback                                    (90)            (496)
      (Gain) loss on disposition of property and equipment                                52              (87)
      Equity in loss of 50% or less-owned
         companies and joint ventures                                                      5              640
      Write-down of proprietary seismic data to market                                   198              198
      Restructuring accrual                                                                              (537)
      Amortization of warrants issued with short-term
         related party loans                                                                               27
   Change in operating assets/liabilities:
      Accounts and notes receivable                                                   (1,468)          (2,678)
      Accounts and notes receivable from FSU joint venture                                                 59
      Materials and supplies inventory                                                   (53)              93
      Prepayments and other                                                              905           (2,296)
      Proprietary seismic data                                                         3,387           (6,540)
      Other                                                                             (118)             207
      Accounts payable - trade                                                        (3,584)          (5,403)
      Accrued interest                                                                    13              131
      Other accrued liabilities                                                       (2,012)           2,787
      Income taxes payable                                                               314              193
      Deferred credits                                                                    (6)            (415)
      Other non-current liabilities                                                      238               83
                                                                                    --------         --------
           Total cash provided (used) by operating activities                          7,132           (5,752)

 Financing activities:
   Borrowings of short-term related party debt                                                             30
   Payments of short-term related party debt                                                           (1,052)
   Payments of long-term debt                                                         (4,889)          (2,505)
   Net borrowings (payments) under credit agreements                                  (2,068)           2,534
   Net proceeds from sale of common stock                                                                 (39)
   Net proceeds from sale of treasury stock                                            3,972
                                                                                    --------         --------
           Total cash used by financing activities                                    (2,985)          (1,032)
</TABLE>

____________

See Notes to Consolidated Financial Statements.





                                      4
<PAGE>   7
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                        DIGICON INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (CONTINUED) UNAUDITED


<TABLE>
<CAPTION>
                                                                                  Six Months Ended January 31,
                                                                                  ----------------------------
                                                                                     1996             1995
                                                                                  -----------      -----------
                                                                                    (In thousands of dollars)
 <S>                                                                               <C>              <C>
 Investing activities:
   Purchase of property and equipment                                              $  (5,185)       $  (1,757)
   Sale of property and equipment                                                        370            1,095
   (Increase) decrease in restricted cash investments                                    338             (432)
   Increase in investment in FSU joint ventures                                                          (807)
   Sale to Syntron, Inc.:
     Inventories and technologies                                                                       1,630
     Property and equipment                                                                             1,370
                                                                                   ---------        ---------

       Total cash provided (used) by investing activities                             (4,477)           1,099

 Currency loss on foreign cash                                                            28               39
                                                                                   ---------        ---------

 Change in cash and cash equivalents                                                    (302)          (5,646)

 Beginning cash and cash equivalents balance                                           4,209            8,365
                                                                                   ---------        ---------

 Ending cash and cash equivalents balance                                          $   3,907        $   2,719
                                                                                   =========        =========
</TABLE>

____________

See Notes to Consolidated Financial Statements.





                                      5
<PAGE>   8
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                        DIGICON INC. AND SUBSIDIARIES
              SUPPLEMENTARY SCHEDULES TO CONSOLIDATED STATEMENTS
                           OF CASH FLOWS UNAUDITED

<TABLE>
<CAPTION>
                                                                                  Six Months Ended January 31,
                                                                                  ----------------------------
                                                                                     1996             1995
                                                                                  ----------       -----------
                                                                                   (In thousands of dollars)
 <S>                                                                               <C>             <C>
 Schedule of non-cash investing and financing activities:

 Increase (decrease) in property and equipment for:
   Equipment purchase obligations                                                  $   2,788       $      843
   Accounts payable - trade                                                             (179)             257

 Increase (decrease) in investment in FSU joint venture for:
   Common stock                                                                                         2,309
   Accounts and note receivable from FSU joint venture                                                   (409)
   Other accrued liabilities                                                                              841
   Long-term debt                                                                                         245

 Sale of inventories, property and equipment, and technologies
     to Syntron, Inc. resulting in an increase (decrease) in:
   Accounts and notes receivable - deferred credits                                                     3,255
   Materials and supplies inventory                                                                    (2,034)
   Other assets - deferred credits receivable                                                             857
   Accounts payable - trade                                                                               957
   Other accrued liabilities - deferred gain                                                            1,011
   Other non-current liabilities - deferred gain                                                          110

 Supplemental disclosures of cash flow information:

 Cash paid during the six months ended for:
    Interest -
      Revolving credit agreements                                                      1,036              930
      Secured term loan                                                                  242              312
      Equipment purchase obligations                                                     901              560
      Other                                                                              443              534
    Income taxes                                                                         436              826
</TABLE>





                                      6
<PAGE>   9
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                         DIGICON INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   UNAUDITED



1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         OPINION OF MANAGEMENT

         In the opinion of Management, the accompanying unaudited consolidated
         financial statements contain all adjustments necessary to present
         fairly the financial position of Digicon Inc. and subsidiaries at
         January 31, 1996, and the results of its operations and its cash flows
         for the three and six months ended January 31, 1996 and 1995.  The
         results of operations for any interim period are not necessarily
         indicative of the results to be expected for a full year, as such
         results could be affected by changes in demand for geophysical services
         and products, which is directly related to the level of oil and gas
         exploration and development activity.  Governmental actions, foreign
         currency exchange rate fluctuations, seasonal factors, weather
         conditions and equipment problems also could impact future operating
         results.

         EARNINGS PER SHARE

         Weighted average shares and earnings per share for all periods
         presented have been restated to reflect the effect of a one for three
         reverse stock split consummated on January 17, 1995.  Primary earnings
         per share is computed based on the weighted average number of shares of
         common stock plus common stock equivalents.  Shares issuable upon the
         conversion of stock options and warrants, which are common stock
         equivalents, were disregarded since the treasury stock method of
         calculation produced no incremental shares or resulted in dilution of  
         less than 3%.

         Fully diluted earnings per share is not presented since common stock
         equivalents referenced above had no dilutive effect.





                                       7
<PAGE>   10
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2.    LONG-TERM DEBT

      The Company's long-term debt is as follows:
<TABLE>
<CAPTION>
                                                                      January 31,        July 31,
                                                                         1996              1995
                                                                      -----------       ---------
                                                                     (In thousands of dollars)
      <S>                                                              <C>              <C>
      Revolving credit agreement due April 1997, at prime plus    
         3% ( 11.50% at January 31, 1996)                              $  12,937        $ 14,123
      Secured term loan due June 1997, at 10.75%                           4,500           4,500
      Secured Indonesian Rupiah revolving credit agreement        
         due September 1995, at 19%                                                          894
      Equipment purchase obligations maturing through             
         February 1999, at an average rate of 11.11%              
         at January 31, 1996                                              14,552          16,641
                                                                       ---------        --------
                                                                  
                Total                                                     31,989          36,158
                                                                  
      Less current maturities                                              9,479          10,915
                                                                       ---------        --------
                                                                  
                Due after one year                                     $  22,510        $ 25,243
                                                                       =========        ========
</TABLE>


      The revolving credit agreement is with a finance company and provides a
      revolving credit facility of up to $17,000,000 (increased from
      $15,000,000 in April 1995) through April 11, 1997.  Advances under the
      agreement are limited by a borrowing formula and are collateralized by a
      majority of the assets of the Company.  The agreement limits, among other
      things, the Company's right, without consent of the lender, to take
      certain actions, including creating indebtedness, prohibits paying
      dividends and requires the Company to maintain certain financial ratios.
      The agreement also provides for the deposit of collections of certain of
      the Company's accounts receivable into cash collateral accounts and for
      the repayment of outstanding advances and monthly interest with such
      proceeds.  Amounts applied against outstanding advances are available for
      reborrowing upon presentation of evidence of adequate borrowing base
      coverage.  At January 31, 1996, approximately $3,500,000 was available
      for borrowing under this agreement.

      The secured term loan is due June 30, 1997, with interest at 10.75%
      payable quarterly.  A principal payment of $1,500,000 is due June 30,
      1996, and the remaining unpaid principal is due June 30, 1997.  The loan
      agreement limits, but does not prohibit, the Company's ability to pay
      dividends and to incur indebtedness for borrowed money and requires the
      Company to maintain certain financial ratios.  In April 1994, in
      conjunction with the execution of the revolving credit agreement, the
      lender was granted a security interest in a majority of the Company's
      equipment.  In connection with the loan, the Company issued common stock
      purchase warrants to the lender.





                                      8
<PAGE>   11
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      The secured Indonesian Rupiah revolving credit facility in the amount of
      two billion Rupiahs was the obligation of P.T. Digicon Mega Pratama, a
      consolidated subsidiary of the Company, and provided working capital and
      certain bank guarantees for its Indonesian operations.  The facility was
      repaid September 1995.

      The Company's equipment purchase obligations represent installment loans
      and capitalized lease obligations primarily related to computing and
      seismic equipment.

3.    SALE OF TREASURY STOCK

      In September 1995, the Company sold its 858,497 shares of treasury stock
      to a group of institutional investors at a price of $4.6875 per share for
      total cash proceeds of $4,024,204.

4.    OTHER COSTS AND EXPENSES

      Other costs and expenses consist of the following:

<TABLE>
<CAPTION>
                                             Three Months Ended       Six Months Ended
                                                 January 31,             January 31,
                                             ------------------      -------------------
                                              1996        1995        1996        1995
                                             -------     ------      ------      -------
                                                     (In thousands of dollars)
      <S>                                    <C>         <C>         <C>         <C>
      Net foreign currency exchange
         loss                                $    57     $   84      $   55      $    91
      Net (gain) loss on disposition of                                            
         property and equipment                  (85)       262          52          (87)
      Interest income                            (20)       (48)        (44)         (85)
      Other                                                                            7
                                             -------     ------      ------      -------
                                                                                   
                Total                        $   (48)    $  298      $   63      $   (74)
                                             =======     ======      ======      =======
</TABLE>

5.    COMMON STOCK AND WARRANTS

      In January 1996, the Company cancelled 11,517 shares of common stock and
      22,473 warrants previously held by an escrow agent for issuance in
      conjunction with the cancellation in 1991 of a previous issue of common
      and preferred stock and certain other liabilities.





                                      9
<PAGE>   12
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ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Three Months Ended January 31, 1996 compared with Three Months Ended January
31, 1995

Revenues.  For the three month period ended January 31, 1996, total revenues
increased 32% from $30.3 million to $40.1 million.  Land revenues decreased 23%
from $9.1 million to $7.0 million, primarily due to downtime during a domestic
crew's conversion to an Input/Output System Two - Remote Seismic Recorder
system and permitting delays for another crew.  These decreases were partially
offset by a domestic crew operating on higher revenue producing 3D and
transition zone surveys and the addition of a South American crew.  Marine
revenues increased 60% from $7.6 million to $12.2 million, primarily due to the
addition of a new vessel and the reassignment of two vessels to contract work.
This increase was partially offset by a decline in revenues from the Company's
other vessels due to weather delays and lower prices in the Far East.  Data
processing revenues increased 8% from $8.7 million to $9.3 million, due to
improved contract terms at the Assen, Holland center, increased capacity at the
Houston and Singapore centers and the improved Far East market.  These
increases were partially offset by the closing of the Company's Bogota,
Colombia and Oklahoma City centers and depressed European data processing
prices.  Proprietary seismic data revenues increased 139% from $4.8 million to
$11.5 million, resulting from an expansion of the Company's data library.  This
expansion has been in response to modifications in oil and gas companies'
spending strategies.

Operating Expenses.  Cost of services for the period increased 46% from $22.7
million to $33.2 million, and, as a percentage of total revenues, cost of
services increased from 75% to 83%.  The increase as a percentage of total
revenues resulted from a weakness in marine acquisition margins, lower
profitability on the mix of proprietary data sales and $929,000 in Argentina
social security taxes retroactively applied to compensation of employees
converted from a temporary to permanent classification.

Depreciation and Amortization.  Depreciation and amortization expense increased
13% from $3.5 million to $3.9 million, due to equipment purchases for South
American land crews, two of the Company's vessels and the Houston, Singapore
and London data processing centers.

Selling, General and Administrative.  Selling, general and administrative
expenses increased 21% from $1.1 million to $1.3 million, resulting primarily
from additional costs incurred in implementing a new administrative data
processing system.

Interest.  Interest expense increased from $1,331,000 to $1,343,000.  Although
total debt and overall borrowing costs increased during the current quarter,
the prior year quarter included interest related to the deferral of payments on
certain trade accounts payable balances.

Equity in Loss.  The FSU joint ventures were sold in June 1995, therefore
equity losses declined from $279,000 to $5,000.

Other.  Other expenses (income) decreased from an expense of $298,000 to income
of $48,000 resulting primarily from losses on damaged cables in the prior
year's quarter.





                                       10
<PAGE>   13
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Income Taxes.  Provision for (benefit from) income taxes decreased from an
expense of $317,000 to a benefit of $731,000.  The benefit relates primarily to
taxable losses in South America generated by deductions for the Argentina
social security taxes and compensation previously discussed.  The prior year's
provision related primarily to taxable income in Malaysia.

Six Months Ended January 31, 1996 compared with Six Months Ended January 31,
1995

Revenues.  For the six month period ended January 31, 1996, total revenues
increased 26% from $62.3 million to $78.2 million.  Land revenues increased 14%
from $18.5 million to $21.1 million, primarily from two of the Company's North
American crews operating on higher revenue producing 3D and transition zone
surveys and increased rates and production on Argentina land surveys.  These
increases were partially offset by downtime during a domestic crew's conversion
to an Input/Output System Two - RSR system and permitting delays for another
crew.  Marine revenues increased 15% from $18.5 million to $21.3 million,
primarily resulting from the addition of a new vessel and the reassignment of
two vessels to contract work.  This increase was partially offset by a decline
in revenues from the Company's other vessels due to weather delays, lower
prices in the Far East and the start-up of the new vessel which is working in
tandem with two other vessels.  Data processing revenues increased 7% from
$17.5 million to $18.7 million, due to improved contract terms at the Assen,
Holland center, increased capacity at the Houston and Singapore centers and the
improved Far East market.  These increases were partially offset by the closing
of the Company's Bogota, Colombia and Oklahoma City centers and depressed
European data processing prices.  Proprietary seismic data revenues increased
128% from $7.5 million to $17.1 million, resulting from an expansion of the
Company's library.  This expansion has been in response to modifications in oil
and gas companies' spending strategies.

Operating Expenses.  Cost of services for the period increased 33% from $47.7
million to $63.7 million, and, as a percentage of total revenues, cost of
services increased from 77% to 81%.  The increase as a percentage of total
revenues resulted from a weakness in marine acquisition margins, lower
profitability on the mix of proprietary data sales and $929,000 in Argentina
social security taxes retroactively applied to compensation of employees
converted from a temporary to permanent employment classification.

Depreciation and Amortization.  Depreciation and amortization expense increased
10% from $6.8 million to $7.5 million, due to equipment purchases for South
American land crews, two of the Company's vessels and the Houston, Singapore
and London data processing centers.

Selling, General and Administrative.  Selling, general and administrative
expenses increased 17% from $2.2 million to $2.5 million, resulting primarily
from additional costs incurred in implementing a new administrative data
processing system.

Interest.  Interest expense increased 5%, from $2.5 million to $2.6 million,
resulting from additional financing for equipment purchases and an increase in
overall borrowing costs.





                                       11
<PAGE>   14
--------------------------------------------------------------------------------

Equity in Loss.  The FSU joint ventures were sold in June 1995, therefore
equity losses declined from $640,000 to $5,000.

Other.  Other expenses (income) increased from income of $74,000 to an expense
of $63,000.  The current year includes losses on damaged cables and the prior
year includes a gain on the sale of a seismic vessel partially offset by losses
on damaged cables.

Income Taxes.  Provision for (benefit from) income taxes decreased from an
expense of $1.0 million to a benefit of $5,000.  In the current year, provision
for income taxes from taxable income in Malaysia was offset by an $876,000 tax
benefit resulting from taxable losses in South America generated by deductions
for the Argentina social security taxes and compensation previously discussed.
Provision for income taxes in the prior year related primarily to taxable
income in Malaysia and South America and a tax assessment in Jakarta.





                                       12
<PAGE>   15
--------------------------------------------------------------------------------

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company's internal sources of liquidity are cash balances ($3.9 million at
January 31, 1996) and cash flow from operations ($7.1 million for the six
months ended January 31, 1996).  External sources include proceeds from the
sale of common stock, the unutilized portion of the working capital facility
described below (approximately $7.5 million at March 14, 1996), equipment
financing and trade credit.  To provide additional working capital, the Company
maintains a $17.0 million revolving credit facility with a commercial finance
company which provides for borrowings of up to 80% of the majority of the
Company's domestic and foreign receivables at an interest rate of 3% over a
prime rate, secured by most of the Company's world-wide assets.  On February
16, 1996, the Company filed a registration statement relating to a public
offering of up to 4,055,000 shares of common stock.  As of the date of this
Form 10-Q report, the registration statement has not yet become effective.  See
Part II. Other Information, Item 5.  Other.

At January 31, 1996, the Company's backlog of commitments for services totaled
$82.5 million of which 34% relates to land acquisition, 37% relates to marine
acquisition and 29% relates to data processing.  The Company expects to
complete 76% of these commitments during fiscal 1996.

The Company requires significant amounts of working capital to support its
operations and to fund its capital spending and research and development
programs.  The Company's foreign operations, which accounted for 54% of fiscal
1995 revenues and 56% of revenues in the first half of fiscal 1996, require
greater amounts of working capital than similar domestic activities, as the
average collection period for foreign receivables is generally longer than for
comparable domestic accounts.  In addition, the Company has increased its
participation in non-exclusive data surveys and has significantly expanded its
library of proprietary data.  Because of the lead time between survey execution
and sale, non-exclusive surveys generally require greater amounts of working
capital than contract work.  During the past six months, this problem was
exacerbated as, for budgeting purposes, several clients deferred payments on
data library purchases totaling in excess of $5.0 million until January and
February 1996, at which time substantially all of such receivables were
collected.  Depending on the timing of future sales of the data and the
collection of the proceeds from such sales, the Company's liquidity will
continue to be affected; however, the Company believes that these non-exclusive
surveys have good long-term sales, earnings and cash flow potential.

In recent years, the Company has updated and increased its data processing
capabilities, invested significant capital to outfit a new seismic vessel and
has, more recently, allocated significant resources to its land and transition
zone activities.  Since July 31, 1992, the Company has committed  approximately
$77.6 million for new capital equipment and invested approximately $13.2
million in its research and development efforts.

During fiscal 1996, the Company expects to spend approximately $13.7 million
for capital expenditures and $2.7 million for research and development
activities.  In addition, $6.2 million of equipment was purchased by a
commercial finance company and leased to the Company under an operating lease
entered into in December 1995.  The majority of capital spending in 1996 will
be to upgrade and expand the Company's land and marine data acquisition
capabilities.





                                       13
<PAGE>   16
--------------------------------------------------------------------------------

The utilization of net operating loss carryforwards ("NOLs") is subject to
certain limitations.  Additionally, when such NOLs are utilized, the benefit
will be recognized as an addition to paid-in capital and will not be reflected
in the consolidated statements of operations.

The Company believes that it possesses sufficient liquidity to continue
operations on a satisfactory basis.  If additional working capital were to
become necessary as a result of deterioration in demand for or pricing of the
Company's services, and if additional financing were not available, the
Company's operating results and financial condition could be adversely
affected.





                                       14
<PAGE>   17
--------------------------------------------------------------------------------

                          PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings

As of March 14, 1996, the Company was not a party to, nor was its property the
subject of, any material pending legal proceedings, as defined by relevant
rules and regulations of the Securities and Exchange Commission.

Item 4.  Submission of Matters to a Vote of Security Holders

The Company's annual meeting of stockholders was held on December 19, 1995.
Common stockholders of record on October 31, 1995 were entitled to vote.  The
following matters were voted on by the Company's stockholders at the meeting:

1.       Each of the eight directors nominated for the board of directors was
         elected by the stockholders as follows:
<TABLE>
<CAPTION>
                                                  FOR                 WITHHOLD
                                                ---------             --------
         <S>                                    <C>                    <C>
         George F. Baker                        6,598,055              398,511
         James B. Clement                       6,598,055              398,445
         Clayton P. Cormier                     6,598,055              407,345
         Steven J. Gilbert                      6,598,055              407,611
         Stephen J. Ludlow                      6,598,022              399,078
         Edward R. Prince                       6,582,823              424,000
         Douglas B. Thompson                    6,598,022              399,244
         Jack C. Threet                         6,598,055              408,768
</TABLE>

2.       The stockholders approved an amendment to the 1992 Employee
         Nonqualified Stock Option Plan whereby 1) the number of shares which
         may be issued or covered by options pursuant to the Plan was increased
         by 500,000 shares from 658,333 shares to 1,158,333 shares and 2) the
         exercisability of all outstanding options may be accelerated in the
         event of a change in control of the Company (as defined).

         Stockholders holding 6,427,306 shares voted to affirm the matter;
         542,338 negative votes were cast and 26,756 votes abstained.





                                       15
<PAGE>   18
--------------------------------------------------------------------------------

Item 5.  Other

The Company is engaged in highly preliminary, exploratory discussions with a
smaller oilfield service company, which if successful, would result in a
substantial increase in the revenues of a combined enterprise.  There is no
assurance that any transaction will result from these discussions; however,
until such time as discussions are concluded, the Company is deferring its
previously announced common stock offering.

Item 6.  Exhibits and Reports on Form 8-K

a)     Exhibits filed with this report:

   10-A)        First and Second Amendments dated April 11, 1994 and August 31,
                1994, respectively, to the Warrant Agreement dated June 29,
                1992, between Digicon Inc. and Hanseatic Corporation, as Agent.

   10-B)        Warrant dated January 30, 1995, certifying Soros Capital L.P.
                as the holder of 43,200 warrants to purchase shares of Digicon
                Inc. Common Stock.

   10-C)        Warrant dated January 30, 1995, certifying Jupiter Management
                Co., Inc. as the holder of 42,000 warrants to purchase shares
                of Digicon Inc. Common Stock.

   10-D)        Warrant dated January 30, 1995, certifying CCF Jupiter L.P. as
                the holder of 34,800 warrants to purchase shares of Digicon
                Inc. Common Stock.

     11)        Computation of income per common and common equivalent share
                for the three and six months ended January 31, 1996 and 1995.

b)     Reports on Form 8-K

       1)       There were no reports filed on Form 8-K during the quarter
                ended January 31, 1996.





                                       16
<PAGE>   19
--------------------------------------------------------------------------------

                                  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.



                                        
                                                       DIGICON INC.
                                     -------------------------------------------
                                                       (Registrant)
                                        
                                        
                                        
                                        
                                        
 Date:     March 14, 1996            By:         \s\ Stephen J. Ludlow
         ------------------          -------------------------------------------
                                                    Stephen J. Ludlow
                                         (President and Chief Executive Officer)
                                        
                                        
                                        
 Date:     March 14, 1996                         \s\ Richard W. McNairy
         ------------------          -------------------------------------------
                                                    Richard W. McNairy
                                              (Principal Financial Officer)
                                           
                                           



                                      17
<PAGE>   20
                                  EXHIBIT  INDEX



   10-A)        First and Second Amendments dated April 11, 1994 and August 31,
                1994, respectively, to the Warrant Agreement dated June 29,
                1992, between Digicon Inc. and Hanseatic Corporation, as Agent.

   10-B)        Warrant dated January 30, 1995, certifying Soros Capital L.P.
                as the holder of 43,200 warrants to purchase shares of Digicon
                Inc. Common Stock.

   10-C)        Warrant dated January 30, 1995, certifying Jupiter Management
                Co., Inc. as the holder of 42,000 warrants to purchase shares
                of Digicon Inc. Common Stock.

   10-D)        Warrant dated January 30, 1995, certifying CCF Jupiter L.P. as
                the holder of 34,800 warrants to purchase shares of Digicon
                Inc. Common Stock.

     11)        Computation of income per common and common equivalent share
                for the three and six months ended January 31, 1996 and 1995.

     27)        Financial Data Schedule