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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period ended ___________________________________________
Commission File Number 1-7211
Ionics, Incorporated
(Exact name of registrant as specified in it charter)
Massachusetts 04-2068530
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
65 Grove Street, Watertown, Massachusetts 02172
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-926-2500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $1 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
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State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
The aggregate market value of the voting stock held by non-affiliates as of
March 18, 1994 was $320,445,029 (6,658,598 shares at $48 1/8 per share)
(includes shares owned by a trust for the indirect benefit of a non-employee
director, and by a trust for the indirect benefit of a spouse of a non-employee
director).
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. As of March 18,
1994, 6,949,406 shares of Common Stock, $1 par value, were issued and
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of 1993 Annual Report to Stockholders Parts I, II and IV
Portions of Definitive Proxy Statement for
the Annual Meeting of Stockholders to be held
on May 5, 1994 Part III
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PART I
Item 1. BUSINESS
Ionics, Incorporated ("Ionics," the "Company," or the "Registrant") is
a leading water purification company engaged worldwide in the supply of
water and of water treatment equipment through the use of proprietary
separations technologies and systems. Ionics' products and services are
used by the Company or its customers to desalt brackish water and seawater,
to purify and supply bottled water, to treat water in the home, to
manufacture and supply water treatment chemicals and ultrapure water, to
recycle and reclaim process water and wastewater, and to measure levels of
water-borne contaminants and pollutants. The Company's customers include
industrial companies, consumers, municipalities and utilities.
The Company's business activities are divided into three segments:
membranes and related equipment, water and chemical supply, and consumer
water products, which in 1993 accounted for approximately 53%, 29% and 18%
of revenues, respectively. Since 1985, the Company has pursued a strategy
of expanding beyond its traditional focus of selling desalination plants
and equipment by owning and operating its own equipment to produce and sell
water and chemicals. Approximately 45% of the Company's 1993 revenues were
derived from foreign sales or operations.
Over forty years ago, the Company pioneered the development of the
ion-exchange membrane and the electrodialysis process. Since that time,
the Company has expanded its separations technology base to include the
electrodialysis reversal (EDR), reverse osmosis (RO), ultrafiltration (UF)
and microfiltration (MF) membrane processes, as well as related processes
such as electrodeionization (EDI), ion exchange and carbon adsorption.
With its acquisition of the business of Resources Conservation Company
(RCC) at the end of 1993, the Company's separations technology base now
includes thermal processes such as evaporation and crystallization. The
Company believes that it is the world's leading manufacturer of ion-
exchange membranes and of membrane-based systems for the desalination of
water.
The Company was incorporated in Massachusetts in 1948. The Company's
principal executive offices are located at 65 Grove Street, Watertown,
Massachusetts 02172.
Financial Information About Business Segments
The information contained in Note 14 of Notes to Consolidated
Financial Statements contained in the Company's Annual Report to
Stockholders for the year ended December 31, 1993 is incorporated herein by
reference.
Membranes and Related Equipment
The Company's membranes and related equipment business segment, which
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accounted for approximately 53% of revenues in 1993, currently encompasses
the following products: electrodialysis reversal systems; reverse osmosis
systems; microfiltration systems; non-membrane water and wastewater
treatment equipment; other separations technology products; instruments for
monitoring and on-line detection of pollution levels; fabricated products;
and brine concentrators, evaporators and crystallizers utilizing thermal
separations processes.
EDR Systems
The Company's AquamiteR desalination systems utilize Ionics' EDR
process to treat brackish water and produce potable water for commercial,
municipal, and a variety of industrial purposes.
The Company has built and installed approximately 2,000 systems and
plants utilizing its ED and EDR technology. Today, the Company sells,
under the Aquamite name, a number of standardized versions of EDR
equipment, which are designed for ease of installation and low maintenance
and have production capacities ranging from 500 gallons to 1.5 million
gallons per day. Multiple unit configurations are used for systems of
larger capacities.
Customers for water purification systems increasingly have requested
the Company to supply complete turnkey plants. For such customers, Ionics
provides basic Aquamite equipment, peripheral water treatment equipment,
complete engineering services, process and equipment design, project
engineering, commissioning, operator training and field service.
RO Systems
The Company manufactures seawater desalination plants as well as
systems for the production of ultrapure water which utilize RO membrane
technology. The Company owns and operates seawater desalination plants in
Grand Canary, Spain, Santa Barbara, California, and at the Diablo Canyon
Power Plant in California. See "Water and Chemical Supply."
MF Systems
Utilizing the Company's proprietary Aqua-PoreR microfiltration
membranes, the Company's EnviromatR Integrated Membrane Filtration System
removes toxic contaminants such as lead, nickel and other materials from
industrial wastewaters and enables manufacturers to meet stringent
regulations for effluent compliance.
Non-Membrane Water and Wastewater Treatment Equipment
Through its wholly owned Italian subsidiary, Ionics Italba, S.p.A.,
Ionics designs, engineers and constructs customized systems for wastewater
and municipal water treatment. These include ion-exchange systems which
provide purified water for power stations, chemical and petrochemical
plants, metalworking and automobile factories, textile manufacture and a
variety of other industrial applications. Other systems neutralize and
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filter industrial wastewater, separate suspended solids and, in some cases,
recover chemicals. Ionics Italba also provides custom municipal and
packaged sewage treatment systems. Ionics Italba generally subcontracts
the construction activities associated with its projects.
Through its Resources Conservation Company (RCC) business unit, Ionics
designs, engineers and constructs brine concentrators, evaporators and
crystallizers which are used to clean, recover and recycle wastewater,
particularly in zero liquid discharge industrial uses. RCC also developed,
and holds an exclusive license for, a patented solvent extraction
technology known as B.E.S.T. (Basic Extractive Sludge Technology), which
separates contaminated sludges, sediments and soils into oil, water and
solids, and has potential use for the cleanup of toxic organic materials at
Superfund Sites.
Other Separations Technology Products
Using its separations technology, Ionics manufactures, markets or
supplies products which are used in the recovery and recycling of selected
components from process streams, the manufacture of commodity and specialty
compounds and the purification of valuable fluids. The Company's
ElectromatR system is used in the demineralization of cheese whey to
produce a major component utilized extensively in infant formula products.
A similar Ionics system is used to deacidify fruit juices for a
manufacturer of canned fruit products. The Company's food product revenues
have been derived from three sources: the design and construction of the
system, the manufacture and sale of replacement membranes used in the
system, and in certain applications a royalty (based on Ionics' U.S.
patents) on the throughput of product.
At the end of 1993, the Company obtained an additional source of food
produce revenues by entering into an agreement with a major U.S. dairy
cooperative to oversee whey processing activities at plants owned by the
cooperative, for which the Company will receive a processing fee based on
the production of demineralized whey.
Other Ionics process systems include the ChemomatR system to generate
organic acids and to recover, recycle, remove and separate metals and other
components from industrial wastewaters, and the CloromatR system for the
production of sodium hypochlorite and related chlor-alkali chemicals.
Instruments for Monitoring and On-Line Detection of Pollution Levels
The Company designs, manufactures and sells equipment to measure the
quality of treated or untreated water. Its products, which are used by
industrial and governmental customers to measure organic and toxic
contaminants in water and chemical process streams, include process and
laboratory instruments to measure total carbon, total organic carbon,
chemical oxygen demand and total oxygen demand. The Company recently
expanded the monitoring capabilities of its instruments with the
introduction of analyzers to measure concentrations at the parts per
billion level of dissolved metals such as copper, lead, iron, mercury, and
arsenic and specific chemical analyzers for ammonia, phosphates, nitrates,
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and chlorine. The process systems provide real-time measurement of the
level of contaminants in active waste streams. Another product, the
DigichemR, sold principally to the printed circuit board, pulp and paper,
and chemical and petrochemical industries, functions as a "robot chemist"
capable of performing automatically "wet chemistry" analyses traditionally
done manually.
Fabricated Products
At its Bridgeville, Pennsylvania facility, the Company fabricates
specially designed products for defense-related and industrial
applications. The Company's experience and expertise in design, welding,
machining and assembly to meet exceptionally fine tolerances have been
utilized to fabricate products ranging from intricate small parts to very
large 35-ton assemblies.
Water and Chemical Supply
The water and chemical supply business segment accounted in 1993 for
approximately 29% of the Company's revenues. The Company's strategy is to
sell, where appropriate, water and chemicals produced by its membrane-based
equipment, rather than selling the equipment itself. The water and
chemical supply business segment can be divided into three categories:
sale of desalted water for municipal and industrial use; sale of ultrapure
water for electronics and other industries; and sale of bleach and related
chemicals.
Sale of Desalted Water for Municipal and Industrial Use
Ionics' position in water supply as a seller of purified or treated
water has evolved from its traditional role as a supplier of water
treatment equipment. In certain situations, opportunities are available
for the Company to provide a complete service package involving financing,
construction, operation and maintenance of water treatment facilities.
Ionics, through its wholly owned subsidiary, Ionics Iberica, S.A.,
owns and operates a 5.5 million gallon per day capacity brackish water EDR
facility and a 2.0 million gallon per day RO seawater facility on Grand
Canary Island, Spain. Under long-term contracts, the Company is selling
the desalted water from both facilities to the local water utility for
distribution.
The Company's wholly owned subsidiary, Ionics (Bermuda) Ltd., operates
a 600,000 gallon per day EDR brackish water desalting plant on the island
of Bermuda. This plant supplies fresh water under a long-term contract
with Watlington Waterworks Ltd., a Bermuda corporation partially owned by
Ionics.
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The Company financed and constructed, and owns and operates, an RO
desalination facility in Santa Barbara, California. The facility began
operation in March 1992, has the capacity to produce 7,500 acre-feet per
year (approximately 6.7 million gallons per day) of desalinated water, and
is expandable to 10,000 acre-feet per year. Under the terms of the
Company's contract with the City, the City can either purchase water from
the Company or, under conditions in which the City deems it unnecessary to
purchase water, pay the Company a "stand-by fee" during the contract's
five-year term and, if the City elects to continue, a five-year extension
term. The City has placed the facility on "stand-by" status because of the
alleviation of the area's drought. At the end of the initial five-year
term, the City will have the right to renew the contract for another five-
year term, purchase the facility from the Company, or direct the Company to
remove the facility (most of which is housed in trailers) from its site.
In the event the City purchases the facility, the City must reimburse the
Company for all costs not previously recovered from operations, plus a
factor to cover general and administrative expenses and profit.
Sale of Ultrapure Water for Electronics and Other Industries
In industries from biotechnology and chemical processing to
pharmaceuticals and semiconductors, ultrapure water (water in which the
impurities have been reduced to concentrations of less than several parts
per billion) is critical to product quality and yield. In the electric
power industry, ultrapure boiler feedwater minimizes corrosion,
inefficiency and downtime in steam boilers and turbines. Depending on the
composition and quantity of the impurities to be removed or treated, any
one of several membrane separations methods can be utilized to provide
ultrapure water to the customer. Ionics has pioneered in the application
of three membrane technologies (EDR, RO and UF) combined together in a
mobile system called the "triple membrane" trailer, which the Company
believes to be the most advanced technology used in the commercial
processing of ultrapure water. Ionics provides ultrapure water services
through the sale of ultrapure water in 6,000 gallon tank trucks and the
production and sale of ultrapure water from trailer-mounted units at the
customer sites.
In 1992, Ionics announced the commercial implementation of its new
electrodeionization (EDI) technology in the production of ultrapure water.
EDI is a continuous, electrically driven, membrane-based water purification
process which produces ultrapure water without the use of the strong
chemical regenerants, such as sulfuric acid and caustic soda, which are
commonly required. In 1993, trailers utilizing EDI technology were in
service at sites in Florida, Arkansas and Mississippi.
In March 1992, the Company began a ten-year, $20 million contract to
provide process water and ultrapure boiler feedwater to Pacific Gas and
Electric's Diablo Canyon Power Plant on the central coast of California.
In 1993, ten-year ultrapure water contracts were obtained from Florida
Power and Light for its Turkey Point fossil fuel power plant near Florida
City, and for the Seabrook Nuclear Station in Seabrook, New Hampshire.
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The Company serves the ultrapure water market from its headquarters
facilities in Watertown, Massachusetts, through the Ionics Pure Solutions
Division in Phoenix, Arizona, and through the following subsidiaries:
Ionics Ultrapure Water Corporation, Campbell, California; Ionics (U.K.)
Limited, London, England; Ionics Italba, S.p.A., Milan, Italy; and Eau et
Industrie, Paris, France.
Sale of Bleach and Related Chemicals
In the chemical supply area, the Company uses its CloromatR technology
to produce sodium hypochlorite (household bleach) and related chlor-alkali
chemicals in a membrane-based process that principally relies on water and
salt as raw materials. The Company's wholly owned Australian subsidiary,
Elite Chemicals Pty. Ltd., utilizes Cloromat systems to produce sodium
hypochlorite on-site in Brisbane, for sale to the bulk market.
In 1993, the Company's wholly owned English subsidiary, Ionics (U.K.)
Limited, commenced bulk bleach sales at a new Cloromat facility in
Bridgwater, England. A large portion of the facility's output is being
sold to Courtaulds Films (Holdings) Limited for use in cellophane
manufacture, and the balance is being sold to the regional market.
In the United States, the Company's Elite Chemicals New England
division operates a Cloromat facility in Springfield, Massachusetts which
produces and distributes bleach-based products for the consumer market,
primarily one-gallon bleach products under private label or under the
Company's own "Elite" brand. In September 1993, the Company contracted to
purchase a larger manufacturing facility, located in Ludlow, Massachusetts.
The Company intends to pursue a strategy of utilizing Cloromat equipment
and technology at Company-owned facilities to produce high quality bleach
and other chlor-alkali products at selected regional sites in the United
States and overseas.
Consumer Water Products
Ionics' consumer water products business segment accounted for
approximately 18% of the Company's revenues in 1993. The Company's
consumer water products include bottled water, over and under-the-sink
point-of-use devices, and point-of-entry systems for treating the entire
home water supply.
Aqua CoolR Pure Bottled Water
Ionics entered the bottled water business in 1984. The Company's
strategy is to utilize its proprietary desalination and purification
technology to create a brand of drinking water, named Aqua Cool Pure
Bottled Water, which can be reproduced with uniform consistency and high
quality at numerous locations around the world. Distribution operations
have been established to serve the areas in and around London and
Manchester, England; Boston, Washington and Baltimore in the United States;
and, through joint ventures, in Bahrain, Kuwait and Saudi Arabia. The
Company's business focuses on the sale of Aqua Cool in five-gallon bottles
to a variety of customers including banks, office buildings, commercial
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establishments, hospitals and private homes. The Company also manufactures
coolers in a wide variety of colors which offer options for hot, cold and
room temperature water.
In 1989, the Company entered into agreements with Aqua Cool
Enterprises, Inc. (ACE), a newly formed, independently owned corporation,
which established ACE as a marketer and distributor of Aqua Cool in 10
eastern states and the District of Columbia, and provided for Ionics'
supply to ACE of products, management services and operational support. In
May 1993, the Company loaned $8.25 million to ACE which was used by ACE to
redeem debt and preferred stock of ACE held by Westinghouse Credit
Corporation. In June 1993, the Company's loan was converted into preferred
stock, and as a result of these transactions, the Company now consolidates
the operating results of ACE.
ACE operates eight distribution centers in Massachusetts, Connecticut,
New York, New Jersey, Pennsylvania and Virginia, which augment the
Company's distribution network. At the end of 1993, there were a total of
17 Aqua Cool distribution centers in the United States and overseas,
supplied with Aqua Cool by five regional water purification and bottling
facilities which are owned and operated by the Company. Construction was
being completed of a new, larger bottling facility located outside
Washington, D.C., and plans were being prepared to construct a third U.S.
bottling facility in northern New Jersey. In January 1994, the Company
announced plans to begin distribution of Aqua Cool in the Cincinnati, Ohio
area.
Aqua Cool's focus has been in particular to obtain large commercial or
governmental supply contracts for five-gallon delivery, such as the
estimated $2 million, two-year contract awarded in 1993 by the City of New
York Department of General Services.
Point-of-Use Devices
The Company participates in the "point-of-use" market for over and
under-the-sink water purifiers through the manufacture and sale of HYgeneR,
a proprietary, EPA-registered, silver-impregnated activated carbon
filtering media, and through the sale of reverse osmosis and activated
carbon-based filtering devices. The Company incorporates HYgene, which is
designed to prevent bacterial build-up while providing the capability of
removing undesirable tastes and odors from the water supply, into its own
bacteriostatic water conditioners and also sells HYgene to manufacturers of
household point-of-use water filters. In 1993, a substantial decline in
HYgene sales to other manufacturers continued as a result of lack of
business from the largest of the Company's HYgene customers.
Point-of-Entry Systems
Ionics' point-of-entry water products include ion-exchange water
conditioners to "soften" hard water, and chemicals and media for filtration
and treatment. The Company sells its products, under the General Ionics
brand, through both independent distributorships and wholly owned sales and
service dealerships. For water conditioners sold by the latter, the
Company provides customer financing.
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Raw Materials and Sources of Supply
All raw materials essential to the business of the Company can
normally be obtained from more than one source. In those few instances
where raw materials are being supplied by only one source, the current
supplier has given the Company a lead time for cancellation, which the
Company believes is sufficient to enable it to obtain other suppliers. In
addition, the Company maintains inventories of single source items which it
believes are adequate under the circumstances.
The Company produces the membranes required for its equipment and
systems that use the ED, EDR, MF, and EDI processes. Membranes used for
the RO and UF processes are purchased from outside suppliers, and are
normally available from multiple sources.
Patents and Trademarks
The Company believes that its products, know-how, servicing network
and marketing skills are more significant to its business than trademark or
patent protection of its technology. Nevertheless, the Company has a
policy of applying for patents both in the United States and abroad on
inventions made in the course of its research and development work for
which a commercial use is considered likely. The Company owns numerous
United States and foreign patents and trademarks and has issued licenses
thereunder, and currently has additional pending patent applications. Of
the 107 active U.S. patents held by the Company, a substantial portion
involves membranes, membrane technology and related separations processes
such as electrodialysis and electrodialysis reversal, reverse osmosis,
ultrafiltration and electrodeionization. The Company believes that none of
its individual patents or groups of related patents, nor any of its
trademarks, is of sufficient importance for its termination or abandonment,
or cancellation of licenses extending rights thereunder, to have a material
adverse effect on the Company.
Seasonality
The activities of the Company's businesses are not of a seasonal
nature, except that bottled water sales and bleach products for swimming
pool use tend to increase during the summer months. Also, the Company's
Elite Chemicals New England Facility produces windshield wash solution, for
which sales levels increase in the winter months.
Customers
The nature of the Company's business is such that it frequently has in
progress large contracts with one or more customers for specific projects;
however, there is no one customer whose purchases account for 10% or more
of the Company's consolidated revenues and whose loss would have a material
adverse effect on the Company and its subsidiaries taken as a whole.
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Backlog
The Company's backlog of firm orders was $129,271,000 at December 31,
1993 and $125,506,000 at December 31, 1992. In the case of multi-year
contracts entered into through June 30, 1991, the Company initially
included in reported backlog only the revenues expected from the first four
years of the contract. For multi-year contracts entered into after that
date, the Company has initially included in reported backlog the revenues
associated with the first five years of the contract. Also, the Company
now includes in backlog up to one year of revenues relating to multi-year
contracts which are not otherwise included in backlog. Ionics expects to
fill approximately 75% of its December 31, 1993 backlog during 1994. The
Company does not believe that there are any seasonal aspects to these
backlog figures.
Government Contracts
The Company does not believe that any of its sales under U.S.
Government contracts or subcontracts during 1993 are subject to
renegotiation. The Company has not had adjustments to its negotiated
contract prices, nor are any proceedings pending for such adjustments.
Research and Development
Since the development of the ion exchange membrane and the EDR
process, Ionics has continued its commitment to research and development
directed toward products for use in water purification, processing and
measurement, and separations technology. The Company's research and
development expenses were approximately $3,678,000 in 1993, $3,084,000 in
1992, and $2,886,000 in 1991.
Competition
The Company experiences competition from a variety of sources with
respect to virtually all of its products, systems and services, although
the Company knows of no single entity that competes with it across the full
range of its products and services. Competition in the markets served by
the Company is based on a number of factors, which may include price,
technology, applications experience, know-how, availability of financing,
reputation, product warranties, reliability, service and distribution.
With respect to the Company's membrane and related equipment business
segment, there are a number of companies, including several sizable
chemical companies, that manufacture membranes, but not equipment. There
are numerous smaller companies, primarily fabricators, that build water
treatment and desalination equipment, but which generally do not have their
own proprietary membrane technology. A limited number of companies
manufacture both membranes and equipment. The Company has numerous
competitors in its conventional water treatment, instruments and fabricated
products business lines.
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In 1992, the International Desalination Association released a report
providing data regarding the manufacturers of desalination equipment.
According to the report, which covered land-based water desalination plants
delivered or under construction as of December 1991, with a capacity to
produce 100 cubic meters (approximately 25,000 gallons) or more of fresh
water daily, Ionics ranked first in terms of the cumulative number of such
plants sold, having sold 1,127 plants of such capacity, more than the next
three manufacturers combined. When compared only to manufacturers of
membrane-type desalination equipment, Ionics ranked first in both number of
units sold and the total capacity of units sold.
With respect to the water and chemical supply business segment, the
Company competes with regional suppliers of ultrapure water services, and
with other manufacturers of membrane-related equipment. In the chemical
supply activity, the Company competes with manufacturers and distributors
of bleach and water treatment chemicals.
With respect to the Company's consumer water products business
segment, there are numerous bottled water companies which compete with the
Company, including several which are much larger than the Company. Most of
the Company's competitors in point-of-entry and point-of-use products for
the home are small assemblers, serving local or regional markets. However,
there are also several large companies competing nationally in these
markets. In the case of its silver-impregnated activated carbon product
lines, the Company knows of two competitors with which it competes on a
national basis.
The Company is unable to state with certainty its relative market
position in all aspects of its business. Many of its competitors have
financial and other resources greater than those of the Company.
Environmental Matters
Continued compliance by the Company or by its subsidiaries with
federal, state and local provisions regulating the discharge of materials
into the environment or otherwise relating to the protection of the
environment is expected to have no material effect upon capital
expenditures, earnings or the competitive position of the Company or any of
its subsidiaries.
The Company is one of more than 200 potentially responsible parties
(PRPs) in connection with the Silresim Superfund Site in Lowell,
Massachusetts. Under the Comprehensive Environmental Response Compensation
and Liability Act (CERCLA or Superfund), the U.S. Environmental Protection
Agency (EPA) has the authority to undertake remedial action at a Superfund
site and hold responsible parties liable, on a joint and several basis and
without regard to fault or negligence for costs incurred. Under the terms
of a 1992 Settlement Agreement among the PRPs, EPA and the Commonwealth of
Massachusetts, Ionics paid $381,000 as a settlement amount to the site
settlement trust fund, representing the Company's approximately 1%
volumetric contribution of wastes to the site. This fund will be used by
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the EPA to clean up the Silresim Site. The amount paid by Ionics had been
fully reserved at December 31, 1991, and the payment had no material
adverse impact on the Company. Because the pollution problems at the site
have been extensively studied and because the funds collected from the
settling PRPs by the site settlement trust fund substantially exceeds the
EPA's own estimate of remediation costs, the Company believes that it is
highly unlikely that it will incur any further monetary obligations with
respect to this site, other than site access costs that will be incurred by
the EPA in connection with its remediation activities. The Company's share
of these site access costs is expected to be $30,000 to $40,000 over the
next several years.
The Company was notified in June 1992 that it is a PRP at another
Superfund site, Solvent Recovery Service of New England, in Southington,
Connecticut (the "SRS Site"). The EPA has not yet completed its remedial
investigation or issued a record of decision specifying estimated clean-up
costs, and therefore it is too early to determine what the Company's
liability might be with respect to the SRS Site. However, based upon the
very large number of PRPs identified with respect to the SRS Site (over
1,000), the Company's small volumetric ranking in comparison to the total
volume of wastes brought to the SRS Site (just under 0.5%), and the
identities of the larger generators, which include many substantial
companies, the Company believes that its liability in this matter will not
have a material effect on the Company or its financial results. The
Company's intention is to participate in the settlement agreement finally
structured for the Site, so long as such agreement is fair to the parties.
The Company has never had a product liability claim grounded in
environmental liability, and believes that the nature of its products and
business makes such a claim unlikely.
Employees
The Company and its consolidated subsidiaries employ approximately
1,300 full-time persons, none of whom are represented by unions except for
the employees of the Company's Australian subsidiary and certain employees
of the Company's Spanish subsidiary. The Company considers its relations
with its employees to be good.
Foreign Operations
The Company's sales to customers in foreign countries primarily
involve desalination systems, water and wastewater treatment systems and
related products and services. The Company seeks to minimize financial
risks relating to its international operations. Wherever possible, the
Company obtains letters of credit or similar payment assurances denominated
in dollars. If dollar payments cannot be secured, the Company, where
appropriate, enters into foreign currency hedging transactions. The
Company also uses foreign sources for equipment parts and may borrow funds
in local (foreign) currency to offset the asset risk of foreign currency
devaluation. Net foreign currency transaction gains included in income
before taxes totalled $157,000 in 1993, $587,000 in 1992, and $180,000 in
1991.
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Ionics engages in certain foreign operations both directly and through
the following wholly owned subsidiaries: Ionics (Bermuda) Ltd.; Ionics
Iberica, S.A.; Ionics (U.K.) Limited; Ionics Italba, S.p.A.; Ionics
Nederland N.V.; Global Water Services, S.A.; Elite Chemicals Pty. Ltd.; Eau
et Industrie; Resources Conservation Co. International; and Ionics Foreign
Sales Corporation Limited.
The Company engages in various foreign operations through investments
in affiliated companies and joint venture relationships. The activities
include the production, sale and distribution of bottled water through a
40% owned affiliate in Bahrain, a 40% owned affiliate in Saudi Arabia and a
49% owned affiliate in Kuwait.
In addition, the Company has a 23% ownership interest in Watlington
Waterworks Ltd. in Bermuda. Watlington collects, treats and distributes
water throughout Bermuda for both potable and non-potable uses. The
Company also has a 50% ownership interest in Yuasa-Ionics Co., Ltd., Tokyo,
Japan, which among its other activities serves as a distributor of certain
of the Company's products in Japan.
Further geographical and financial information concerning the
Company's foreign operations appears in Notes 1, 5, 8, 12, and 14 to the
Company's Consolidated Financial Statements included as part of the
Company's 1993 Annual Report to the Stockholders, which Notes are
incorporated herein by reference.
Financial Information About Foreign and
Domestic Operations and Export Sales
The information contained in Note 14 of Notes to Consolidated
Financial Statements contained in the Company's Annual Report to
Stockholders for the year ended December 31, 1993 is incorporated herein by
reference.
Item 2. PROPERTIES
The Company owns or leases and occupies various manufacturing and
office facilities in the United States and abroad. The principal
facilities owned by the Company include two buildings in Watertown,
Massachusetts housing the executive offices, laboratories and manufacturing
and assembly operations; and facilities in Bridgeville, Pennsylvania;
Phoenix, Arizona; Lorton, Virginia; Elkridge, Maryland; and Milan, Italy,
for various operations relating to the design and manufacture of water
purification and treatment equipment or water-related services.
The two buildings in Watertown, Massachusetts which are owned by the
Company and together contain approximately 250,000 square feet, are the
subject of a mortgage securing the Company's guaranty with respect to
industrial revenue bond financing of such facilities. The industrial
revenue bond indebtedness will be discharged in 1994.
/14
I-12
The other major facility owned by the Company is its Bridgeville,
Pennsylvania facility, consisting of two buildings containing approximately
77,000 square feet and housing manufacturing operations for home water
conditioners and stainless steel fabrication.
The Company considers the business facilities that it utilizes to be
adequate for the uses to which they are being put.
Item 3. LEGAL PROCEEDINGS
The Company is from time to time involved in litigation in the normal
course of its business. At the present, the Company believes that there is
no pending or threatened litigation the result of which would have a
material adverse effect on the Company's earnings or financial position.
See "BUSINESS - Environmental Matters."
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
/15
I-13
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Reference is made to the Company's Annual Report to Stockholders for
the year ended December 31, 1993. The information set forth on page 32
entitled "Common Stock Price Range" and the inside back cover of such
Annual Report is hereby incorporated by reference.
Item 6. SELECTED FINANCIAL DATA
Reference is made to the Company's Annual Report to Stockholders for
the year ended December 31, 1993. The information set forth on page 32 of
such Annual Report entitled "Selected Quarterly Financial Data (unaudited)"
is hereby incorporated by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Company's Annual Report to Stockholders for
the year ended December 31, 1993. The information set forth on pages 17
through 19 of such Annual Report entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" is hereby
incorporated by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Company's Annual Report to Stockholders for
the year ended December 31, 1993. The consolidated balance sheets of the
Registrant as of December 31, 1993 and 1992, the related consolidated
statements of operations, cash flows and stockholders' equity for the years
ended December 31, 1993, 1992 and 1991, and the related notes with the
opinion thereon of Coopers & Lybrand, independent accountants, on pages 20
through 31, and Selected Quarterly Financial Data (unaudited) on page 32,
are hereby incorporated by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
This item is not applicable to the Company.
/16
II-1
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 with respect to Directors is
hereby incorporated by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held May 5, 1994 to
be filed with the Securities and Exchange Commission on or about March 30,
1994.
The information regarding executive and other officers is as follows:
Age as of Positions
Name March 1, 1994 Presently Held
Executive Officers:
Arthur L. Goldstein* 58 President, Chief Executive Officer
and Director since 1971; Chairman
of the Board since 1990
Kachig Kachadurian 44 Senior Vice President since 1991 and
Vice President since 1983, Director
since 1986
William E. Katz 69 Executive Vice President since
1983 and Director since 1961
Robert J. Halliday 39 Vice President, Finance and Accounting
since December 1990; Chief Financial
Officer since August 1992.
Stephen Korn 48 Vice President, General Counsel
and Clerk since September 1989
Theodore G. Papastavros 60 Vice President since 1975 and
Treasurer since February 1990
Other Officers:
Alan M. Crosby 41 Vice President, Corporate Quality
Programs and Watertown Operations
since 1991
Edward P. Geishecker 58 Vice President, United States and Canada
Sales and Marketing, Water Systems
Division since 1991
William B. Iaconelli 60 Vice President, Separations Technology
since 1983
Patrick K. Lam 54 Vice President, Project Management and
International Subsidiaries since 1991
Joseph M. Loftis 52 Vice President, Fabricated Products
since 1986 and General Manager,
Bridgeville
Leon Mir 55 Vice President, Research and Development
since September 1992
Ark W. Pang 44 Vice President, International Sales and
Marketing, Water Systems Division
since 1991
Walter J. Polens 72 Vice President, Household Water
Conditioning since 1968
___________________
* Member of Executive Committee
There are no family relationships between any of the officers or
directors. Officers of the Registrant are elected each year at the annual
meeting of Directors.
/17
III-1
All of the above executive officers have been employed by the Registrant in
various capacities for more than five years, except for Messrs. Halliday and
Korn. Prior to joining the Company in December 1990, Mr. Halliday served from
April 1987 to December 1990 as Corporate Controller of Alliant Computer Systems
Corporation, a manufacturer of mini-supercomputers, and between September 1984
and April 1987 as Assistant Controller and Controller of Symbolics, Inc., a
developer and manufacturer of symbolic processing computers. Prior to joining
the Company in 1989, Mr. Korn served as Vice President/General Counsel and
Secretary of Symbolics, Inc. from July 1986 to August 1989. Prior to joining
Symbolics, Mr. Korn had been a member of the Boston law firm of Widett, Slater
and Goldman, P.C. for more than five years.
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 is hereby incorporated by reference
from the Company's definitive proxy statement for the Annual Meeting of
Stockholders to be held May 5, 1994 to be filed with the Securities and
Exchange Commission on or about March 30, 1994.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information required by Item 12 is hereby incorporated by reference
from the Company's definitive proxy statement for the Annual Meeting of
Stockholders to be held May 5, 1994 to be filed with the Securities and
Exchange Commission on or about March 30, 1994.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is hereby incorporated by reference
from the Company's definitive proxy statement for the Annual Meeting of
Stockholders to be held May 5, 1994 to be filed with the Securities and
Exchange Commission on or about March 30, 1994.
/18
III-2
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) 1. Financial Statements
See Index to Financial Statements and Financial Statement
Schedules on page IV-7. The Financial Statement Schedules are
filed as part of this Annual Report on Form 10-K.
2. Financial Statement Schedules
See Index to Financial Statements and Financial Statement
Schedules on page IV-7.
3. Exhibits
Exhibit Page
No. Description No.
3.0 Articles of Organization and By-Laws
3.1 Restated Articles of Organization (filed *
as Exhibit 3(a) to Form 10-K for year
ended December 31, 1986).
3.1(a) Amendment to the Restated Articles of *
Organization (filed as Exhibit 3(b) to
Form 10-K for year ended December 31, 1987).
3.1(b) Amendment to Restated Articles of *
Organization (filed as Exhibit 3.1(b) to
Registration Statement No. 33-38290 on
Form S-2 effective January 24, 1991).
3.2 By-Laws, as amended (filed as Exhibit 19 to *
Form 10-Q for the quarter ended September 30,
1989).
4.0 Instruments defining the rights of security holders,
including indentures
4.1 Industrial Revenue Bond issued by the Town **
of Watertown, Massachusetts in the amount of
$3,000,000 guaranteed by Registrant, and
related documents.
4.2 Agreement for a loan payable by a consolidated **
subsidiary to a bank in Australia in the principal
amount of 725,000 Australian dollars guaranteed
by Registrant, and related documents.
/19
IV-1
4.3 Rights Agreement, dated as of December 22, 1987, *
as amended and restated as of August 15, 1989,
between Registrant and The First National Bank
of Boston (filed as Exhibit 1 to Registrant's
Current Report on Form 8-K dated August 30, 1989).
4.4 Indenture, dated as of December 22, 1987, between *
Registrant and The First National Bank of Boston,
relating to Rights Agreement (filed as Exhibit 2
to Registrant's Current Report on Form 8-K dated
December 22, 1987).
4.5 Form of Common Stock Certificate (filed as Exhibit *
4.10 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1990).
10. Material Contracts
10.1 1979 Stock Option Plan, as amended through
February 17, 1994.
10.2 1986 Stock Option Plan for Non-Employee Directors, *
as amended though February 18, 1992 (filed as
Exhibit 10.2 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991).
10.3 Amended and Restated Credit Agreement between *
Registrant and The First National Bank of Boston
dated as of December 31, 1992 (filed on Exhibit
10.3 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992).
10.4 Operating Agreement dated as of September 27, *
1989 between Registrant and Aqua Cool Enter-
prises, Inc. (filed as Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1989).
10.5 Term Lease Master Agreement dated as of *
September 27, 1989 between Registrant and
Aqua Cool Enterprises, Inc. (filed as Exhibit
10.5 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1989).
10.6 Option Agreement dated as of September 27, 1989 *
among Registrant, Aqua Cool Enterprises, Inc.
and the other parties named therein (filed as
Exhibit 10.6 to Registrant's registration
statement on Form S-2, No. 33-38290,
effective January 24, 1991).
10.7 Agreement for Privatization of Water Supplies *
dated as of September 18, 1990 between the
Company and the City of Santa Barbara,
California (filed as Exhibit 10.7 to
Registrant's registration statement on Form S-2,
No. 33-38290, effective January 24, 1991).
/20
IV-2
10.8 Amendment No. 1, dated as of January 3, 1992, to *
Agreement for Privatization of Water Supplies
dated as of September 18, 1990 between the Company
and the City of Santa Barbara, California (filed as
Exhibit 10.8 to Registrant's annual report on
Form 10-K for the year ended December 31, 1991).
10.9 Amendment No. 2, dated as of January 19, 1993, *
to Agreement for Privatization of Water Supplies
dated as of September 18, 1990 between the Company
and the City of Santa Barbara, California (filed as
Exhibit 10.9 to the Registrant's annual report on
Form 10-K for the year ended December 31, 1992).
10.10 Asset Purchase Agreement Among the Company, *
Resources Conservation Company, Resources
Conservation Co. International and Halliburton
NUS Corporation dated December 30, 1993 (filed as
Exhibit 2 to Registrant's current report on
Form 8-K dated February 7, 1994 and filed
electronically on the same date).
11. Statement re Computation of Earnings Per Share.
13. Annual Report to Stockholders of the Registrant for
the year ended December 31, 1993 (only pages 17
through 32 and the inside back cover constitute an
exhibit to this report).
22. Subsidiaries of the Registrant.
24. Consents
24.1 Consent of Coopers & Lybrand to incorporation
by reference of that firm's report dated
February 22, 1994, which is included on page 31 of
the Registrant's Annual Report to Stockholders
for the year ended December 31, 1993.
25. Power of Attorney.
________________________________
* incorporated herein by reference
** copies of which will be filed by Registrant with
the Securities and Exchange Commission upon its
request
/21
IV-3
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
last quarter of fiscal 1993.
Undertaking
For purposes of complying with the amendments to the rules governing
Form S-8 effective July 13, 1990 under the Securities Act of 1933, the
undersigned hereby undertakes as follows, which undertaking shall be
incorporated by reference into registrant's registration statements on
Form S-8 Nos. 33-14194, 33-5814, 33-2092, 2-72936, 2-82780, 2-64255,
33-41598, and 33-54400.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
/22
IV-4
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
IONICS, INCORPORATED
(Registrant)
By/s/ Arthur L. Goldstein
Arthur L. Goldstein, Chairman
of the Board, President and
Chief Executive Officer
Date: March 28, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: March 28, 1994 By/s/ Arthur L. Goldstein
Arthur L. Goldstein, Chairman
of the Board, President and
Chief Executive Officer
(principal executive officer)
and Director
Date: March 28, 1994 By/s/ Robert J. Halliday
Robert J. Halliday, Vice President,
Finance and Accounting and Chief
Financial Officer (principal
financial and accounting officer)
/23
IV-5
Date: March 28, 1994 By/s/ William L. Brown
William L. Brown, Director
Date: March 28, 1994 By Arnaud de Vitry d'Avaucourt
Arnaud de Vitry d'Avaucourt,
Director
Date: March 28, 1994 By/s/ Lawrence E. Fouraker
Lawrence E. Fouraker, Director
Date: March 28, 1994 By/s/ Samuel A. Goldblith
Samuel A. Goldblith, Director
Date: March 28, 1994 By/s/ Kachig Kachadurian
Kachig Kachadurian, Director
Date: March 28, 1994 By/s/ William E. Katz
William E. Katz, Director
Date: By/s/
Robert B. Luick, Director
Date: By/s/
John J. Shields, Director
DATE: March 28, 1994 By/s/ Mark S. Wrighton
Mark S. Wrighton, Director
Date: March 28, 1994 By/s/ Allen S. Wyett
Allen S. Wyett, Director
By/s/
Stephen Korn
Attorney-in-fact
/24
IV-6
IONICS, INCORPORATED
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
PAGES
Report of Independent Accountants 31*
Financial Statements:
Consolidated Statements of Operations for the Years Ended
December 31, 1993, 1992 and 1991 20*
Consolidated Balance Sheets as of December 31,
1993 and 1992 21*
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1993, 1992 and 1991 22*
Consolidated Statements of Stockholders' Equity for
the Years Ended December 31, 1993, 1992 and 1991 23*
Notes to Consolidated Financial Statements 24-31*
Supporting Financial Statement Schedules for the years Ended December 31,
1993, 1992 and 1991:
Schedule I - Marketable Securities and Other Short-Term
Investments IV-8
Schedule II - Amounts Receivable from Related Parties
and Underwriters, Promoters and Employees other than
Related Parties IV-9
Schedule V - Property, Plant and Equipment IV-10
Schedule VI - Accumulated Depreciation, Depletion
and Amortization of Property, Plant and Equipment IV-11
Schedule VIII - Valuation and Qualifying Accounts IV-12
Schedule IX - Short-Term Borrowings IV-13
Report of Independent Accountants on Financial Statement
Schedules IV-14
__________________
All other schedules are omitted because the amounts are immaterial, the
schedules are not applicable or the required information is shown in the
financial statements or the notes thereto.
* Page references are to the Annual Report to Stockholders of the Company
for the year ended December 31, 1993, which pages are incorporated herein
by reference.
/25
IV-7
IONICS, INCORPORATED
SCHEDULE I - MARKETABLE SECURITIES AND OTHER SHORT-TERM INVESTMENTS
Amount at
Market Value Which
Issue is
Name of Issuer and Principal Amount of Cost of Each of Each Issue
Carried on
Title of Each Issue Short-Term Investment Issue @ 12/31/93 Balance
Sheet
U.S. Government:
Treasury Notes $2,000,000 $2,000,000 $2,002,500
$2,000,000
Treasury Bills 3,935,742 3,935,742 3,982,940
3,935,742
Foreign Government
Securities held by
Subsidiaries (A) 2,667,859 2,827,031 2,753,761
2,667,859
$8,603,601 $8,762,773 $8,739,201
$8,603,601
(A) Foreign currencies are translated at the exchange rates in effect at the
time of the purchase
in determining the cost of each issue. Foreign currencies carried on the
Balance Sheet are
translated at the rates in effect at December 31, 1993.
/26
IV-8
IONICS, INCORPORATED
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
Balance at Deductions Balance at
End of Period
Beginning Amounts Amounts
Name of Debtor of Period Additions Collected Written Off Current
Non-current
Year ended
December 31, 1993:
Arthur L. Goldstein $ 85,940(1) $ - $ 85,940 $ - $ -
$ -
Arthur L. Goldstein $ 55,620(2) $ - $ 55,620 $ - $ -
$ -
Year ended
December 31, 1992:
Arthur L. Goldstein $ 93,323(1) $ - $ 7,383 $ - $7,759
$ 78,181
Arthur L. Goldstein $ 60,237(2) $ - $ 4,617 $ - $4,853
$ 50,767
Year ended
December 31, 1991:
Arthur L. Goldstein $100,345(1) $ - $ 7,022 $ - $7,382
$ 85,941
Arthur L. Goldstein $ 64,629(2) $ - $ 4,392 $ - $4,617
$ 55,620
(1)(2) The debt was evidenced by two notes which were secured by the pledge of
Ionics,
Incorporated common stock. The obligations were being repaid in monthly
principal and
interest installments of $990 and $627, respectively, and were originally
scheduled to
mature in January and April 1988, respectively. On February 26, 1987,
the Compensation
Committee of the Board of Directors authorized a six-year extension of
the maturity
date of the notes. The interest rate was 5%. During December 1993, both
notes were
repaid, including outstanding principal and interest.
/27
IV-9
IONICS, INCORPORATED
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
Balance at
Other
Beginning Additions
Changes Balance at
Classification of Year (at Cost)(A) Retirements
Add(Deduct)(B) End of Year
Year ended December 31, 1993:
Land $ 1,278,496 $ 305,713 $ 70,000
$ (253,685) $ 1,260,524
Buildings 13,752,453 858,111 746,124
(35,635) 13,828,805
Machinery and equipment 110,382,066 21,025,897 3,792,602
(5,822,658) 121,792,703
Other 13,348,083 7,883,123 1,594,201
(718,947) 18,918,058
$138,761,098 $30,072,844 $6,202,927
$(6,830,925) $155,800,090
Year ended December 31, 1992:
Land $ 917,373 $ 352,329 $ -
$ 8,794 $ 1,278,496
Buildings 13,250,946 1,751,592 577,349
(672,736) 13,752,453
Machinery and equipment 97,948,099 22,236,885 2,716,347
(7,086,571) 110,382,066
Other 12,074,621 2,353,627 474,546
(605,619) 13,348,083
$124,191,039 $26,694,433 $3,768,242
$(8,356,132) $138,761,098
Year ended December 31, 1991:
Land $ 852,337 $ 71,341 $ -
$ (6,305) $ 917,373
Buildings 13,116,653 605,175 412,697
(58,185) 13,250,946
Machinery and equipment 68,139,382 33,399,814 1,949,033
(1,642,064) 97,948,099
Other 9,944,812 2,601,705 1,576,251
1,104,355 12,074,621
$ 92,053,184 $36,678,035 $3,937,981
$ (602,199) $124,191,039
(A) Additions include opening balances of newly consolidated companies of
$11,508,734 and $435,649 in 1993 and 1992, respectively.
(B) Other changes include net currency translation losses of $6,830,925,
$8,356,132
and $602,199 for the years 1993, 1992 and 1991, respectively. Also
included in
other changes are transfers between classifications.
/28
IV-10
IONICS, INCORPORATED
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Additions
Balance at Charged to
Other
Beginning Costs and
Changes Balance at
Classification of Year Expenses_ Retirements
Add(Deduct)(A) End of Year
Year ended December 31, 1993:
Buildings $ 5,164,921 $ 613,386 $ 221,289
$ (102,762) $ 5,454,256
Machinery and equipment 28,636,884 12,639,660 2,182,638
177,618 39,271,524
Other 7,157,859 2,012,486 254,953
1,713,948 10,629,340
$40,959,664 $15,265,532 $2,658,880
$ 1,788,804 $55,355,120
Year ended December 31, 1992:
Buildings $ 4,774,547 $ 615,242 $ 112,059
$ (112,809) $ 5,164,921
Machinery and equipment 22,067,678 10,001,000 1,653,459
(1,778,335) 28,636,884
Other 6,028,357 1,677,018 416,773
(130,743) 7,157,859
$32,870,582 $12,293,260 $2,182,291
$(2,021,887) $40,959,664
Year ended December 31, 1991:
Buildings $ 4,254,157 $ 610,172 $ 87,859
$ (1,923) $ 4,774,547
Machinery and equipment 18,670,744 5,960,823 1,552,097
(1,011,792) 22,067,678
Other 3,881,638 1,598,377 498,331
1,046,673 6,028,357
$26,806,539 $ 8,169,372 $2,138,287
$ 32,958 $32,870,582
(A) Other changes include opening balances of newly consolidated companies of
$3,891,723 and $294,607 in 1993 and 1992, respectively. Other changes
also include net foreign exchange (losses) and gains of $(2,102,919),
$(2,316,494) and $32,958 for the years 1993, 1992 and 1991, respectively.
Also included in other changes are transfers between classifications.
/29
IV-11
IONICS, INCORPORATED
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Additions Additions
Balance at Charged to Due to
Beginning Costs and Acquired
Balance at
Description of Year Expenses Businesses(A) Deductions(B)
End of Year
Allowance for doubtful
accounts and notes
receivable:
Years ended:
December 31, 1993 $2,694,200 $390,489 $(124,000) $ 938,621
$2,022,068
December 31, 1992 $2,510,588 $944,203 $ 190,200 $ 950,791
$2,694,200
December 31, 1991 $1,752,260 $923,029 -None- $ 164,701
$2,510,588
(A) 1993 amount includes reductions of $413,000 resulting from the
consolidation of ACE.
(B) Deductions result primarily from the write-off of accounts.
/30
IV-12
IONICS, INCORPORATED
SCHEDULE IX - SHORT-TERM BORROWINGS
Weighted
Weighted
Average Maximum Average
Average
Interest Amount Amount
Interest
Balance Rate at Outstanding Outstanding
Rate
Category of Aggregate at End of End of During the During the
During the
Short-Term Borrowings Period Period (A) Period Period (B)
Period (C)
Notes payable to banks:
Years ended:
December 31, 1993 $ 153,000 10.32% $ 7,395,000 $ 1,429,000
7.18%
December 31, 1992 $ 434,000 11.86% $ 3,174,000 $ 1,290,000
13.26%
December 31, 1991 $ 692,000 15.13% $25,345,000 $ 4,079,000
13.76%
(A) The base interest rate charged on notes, exclusive of commitment fee.
(B) The average amount outstanding during the period was computed on a weighted
average monthly amount.
(C) The weighted average interest rate during the period was computed by
dividing the
actual interest expense by the average monthly loan balance outstanding.
/31
IV-13
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Ionics, Incorporated:
Our report on the consolidated financial statements of Ionics,
Incorporated as of December 31, 1993 and 1992 and for each of the three years
in the period ended December 31, 1993 has been incorporated by reference in
this Form 10-K from page 31 of the 1993 Annual Report to Stockholders of
Ionics, Incorporated. In connection with our audits of such financial
statements, we have also audited the related financial statement schedules
listed in the Index on page IV-7 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND
Boston, Massachusetts
February 22, 1994
/32
IV-14
EXHIBIT INDEX
Sequentially
Exhibit
Numbered
No. Description Page
No.
3.0 Articles of Organization and By-Laws
3.1 Restated Articles of Organization (filed *
as Exhibit 3(a) to Form 10-K for year
ended December 31, 1986).
3.1(a) Amendment to the Restated Articles of *
Organization (filed as Exhibit 3(b) to
Form 10-K for year ended December 31, 1987).
3.1(b) Amendment to Restated Articles of *
Organization (filed as Exhibit 3.1(b) to
Registration Statement No. 33-38290 on
Form S-2 effective January 24, 1991).
3.2 By-Laws, as amended (filed as Exhibit 19 to *
Form 10-Q for the quarter ended September 30,
1989).
4.0 Instruments defining the rights of security holders,
including indentures
4.3 Rights Agreement, dated as of December 22, 1987, *
as amended and restated as of August 15, 1989,
between Registrant and The First National Bank
of Boston (filed as Exhibit 1 to Registrant's
current Report on Form 8-K dated August 30, 1989).
4.4 Indenture, dated as of December 22, 1987, between *
Registrant and The First National Bank of Boston,
relating to Rights Agreement (filed as Exhibit 2
to Registrant's Current Report on Form 8-K dated
December 22, 1987).
4.5 Form of Common Stock Certificate (filed as Exhibit *
4.10 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1990).
10. Material Contracts
10.1 1979 Stock Option Plan, as amended 36
through February 17, 1994.
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10.2 1986 Stock Option Plan for Non-Employee Directors, *
as amended though February 18, 1992 (filed as
Exhibit 10.2 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991).
10.3 Amended and Restated Credit Agreement between *
Registrant and The First National Bank of Boston
dated as of December 31, 1993.
10.4 Operating Agreement dated as of September 27, *
1989 between Registrant and Aqua Cool Enter-
prises, Inc. (filed as Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1989).
10.5 Term Lease Master Agreement dated as of *
September 27, 1989 between Registrant and
Aqua Cool Enterprises, Inc. (filed as Exhibit
10.5 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1989).
10.6 Option Agreement dated as of September 27, 1989 *
among Registrant, Aqua Cool Enterprises, Inc.
and the other parties named therein (filed as
Exhibit 10.6 to Registrant's registration
statement on Form S-2, No. 33-38290,
effective January 24, 1991).
10.7 Agreement for Privatization of Water Supplies *
dated as of September 18, 1990 between the
Company and the City of Santa Barbara,
California (filed as Exhibit 10.7 to
Registrant's registration statement on Form S-2,
No. 33-38290, effective January 24, 1991).
10.8 Amendment No. 1, dated as of January 3, 1992, to *
Agreement for Privatization of Water Supplies
dated as of September 18, 1990 between the Company
and the City of Santa Barbara, California (filed as
Exhibit 10.8 to Registrant's annual report on
Form 10-K for the year ended December 31, 1991).
10.9 Amendment No. 2, dated as of January 19, 1993, *
to Agreement for Privatization of Water Supplies
dated as of September 18, 1990 between the Company
and the City of Santa Barbara, California (filed as
Exhibit 10.9 to the Registrant's annual report on
Form 10-K for the year ended December 31, 1992).
10.10 Asset Purchase Agreement among the Company, *
Resources Conservation Company, Resources
Conservation Co. International and Halliburton
NUS Corporation dated December 30, 1993 (filed
as Exhibit 2 to Registrant's current report on
Form 8-K dated February 7, 1994 and filed
electronically on the same date).
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11. Statement re Computation of Earnings Per Share. 47
13. Annual Report to Stockholders of the Registrant for 48
the year ended December 31, 1993 (only pages 17
through 32 and the inside back cover constitute an
exhibit to this report).
22. Subsidiaries of the Registrant. 81
24.1 Consent of Coopers & Lybrand to incorporation 82
by reference of that firm's report dated
February 22, 1994, which is included on page 31 of
the Registrant's Annual Report to Stockholders
for the year ended December 31, 1993.
25. Power of Attorney. 83
* incorporated herein by reference
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