<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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 1-7211
IONICS, INCORPORATED
(exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2068530
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
65 Grove Street, Watertown, Massachusetts 02172
(Address of principal executive offices)
(Zip Code)
(617) 926-2500
(Registrant's telephone number, including area code)
NONE
(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
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 31, 1995
Common Stock, Par Value $1 14,015,899 Shares
/1
<PAGE>
IONICS, INCORPORATED
FORM 10-Q FOR
QUARTER ENDED MARCH 31, 1995
INDEX
Page No.
Part I - Financial Information
Consolidated Statements of Operations 2
Consolidated Balance Sheets 3
Consolidated Statements of Cash Flows 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of Results
of Operations and Financial Condition 6
Part II - Other Information 8
Signatures 9
Exhibit Index 10
Exhibit 11 - Computation of Earnings Per Share 11
Exhibit 27 - Financial Data Schedule 12
(for electronic
purposes only)
- 1 -
/2
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
IONICS, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except earnings per share)
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Net revenue:
Membranes and related equipment $28,856 $28,534
Water, food and chemical supply 15,753 12,898
Consumer products 12,264 11,603
56,873 53,035
Costs and expenses:
Cost of membranes and related equipment 21,555 22,262
Cost of water, food and chemical supply 10,432 8,515
Cost of consumer products 6,694 6,561
Research and development 811 803
Selling, general and administrative 11,507 10,250
50,999 48,391
Income from operations 5,874 4,644
Interest income 237 233
Equity income 143 118
Income before income taxes 6,254 4,995
Provision for income taxes 2,126 1,598
Net income $ 4,128 $ 3,397
Earnings per share $ .29 $ .24
Shares used in earnings per
share calculations 14,429 14,140
The accompanying notes are an integral part of these financial statements.
-2-
/3
</TABLE>
<PAGE>
IONICS, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,473 $ 14,966
Short-term investments 4,959 5,617
Notes receivable, current 2,994 3,126
Accounts receivable 52,255 61,675
Receivables from affiliated companies 1,688 2,170
Inventories:
Raw materials 11,001 11,088
Work in process 5,778 5,964
Finished goods 2,599 2,353
19,378 19,405
Other current assets 6,490 6,518
Total current assets 99,237 113,477
Notes receivable, long-term 5,327 5,246
Investments in affiliated companies 5,549 5,419
Property, plant and equipment:
Land 2,587 2,584
Buildings 24,806 23,621
Machinery and equipment 160,081 148,881
Other, including furniture, fixtures and vehicles 22,797 22,122
210,271 197,208
Less accumulated depreciation (77,727) (73,115)
132,544 124,093
Other assets 31,780 28,929
Total assets $274,437 $277,164
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion
of long-term debt $ 239 $ 370
Accounts payable 22,014 30,317
Customer deposits 4,138 4,959
Accrued commissions 1,650 1,852
Accrued expenses 15,440 15,407
Taxes on income 2,004 1,972
Total current liabilities 45,485 54,877
Long-term debt and notes payable 91 99
Deferred income taxes 4,135 2,928
Other liabilities 596 650
Stockholders' equity:
Common stock, par value $1, 30,000,000 authorized shares;
issued: 14,015,899 in 1995 and 13,989,896 in 1994 14,016 13,990
Additional paid-in capital 125,962 125,529
Retained earnings 88,155 84,027
Cumulative translation adjustments (4,003) (4,936)
Total stockholders' equity 224,130 218,610
Total liabilities and stockholders' equity $274,437 $277,164
The accompanying notes are an integral part of these financial statements.
-3-
/4
</TABLE>
<PAGE>
<TABLE>
IONICS, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Operating activities:
Net income $ 4,128 $ 3,397
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,955 4,258
Provision for losses on accounts and notes receivable 322 149
Changes in assets and liabilities:
Notes receivable 24 (87)
Accounts receivable 9,567 1,860
Inventories 18 (1,248)
Other current assets 77 (1,576)
Investments in affiliates (130) (111)
Accounts payable and accrued expenses (9,290) (284)
Income taxes 1,609 1,199
Other (6) (9)
Net cash provided by operating activities 11,274 7,548
Investing activities:
Additions to property, plant and equipment (12,667) (6,592)
Sale of short-term investments 672 6,226
Purchase of long-term investments (3,000) -
Payment for Ionics RCC acquisition - (11,000)
Net cash used by investing activities (14,995) (11,366)
Financing activities:
Principal payments on current debt (152) (302)
Proceeds from issuance of current debt - 179
Proceeds from stock option plans 459 118
Net cash provided (used) by financing activities 307 (5)
Effect of exchange rate changes on cash (79) 168
Net change in cash and cash equivalents (3,493) (3,655)
Cash and cash equivalents at beginning of period 14,966 21,534
Cash and cash equivalents at end of period $ 11,473 $ 17,879
The accompanying notes are an integral part of these financial statements.
-4- /5
</TABLE>
<PAGE>
IONICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying consolidated
financial statements contain all adjustments (consisting of
only normal, recurring accruals) necessary to present fairly
the consolidated financial position of the Company as of March
31, 1995 and December 31, 1994, the consolidated results of
its operations for the three months ended March 31, 1995 and
1994 and the consolidated cash flows for the three months then
ended.
2. The consolidated results of operations of the Company for the
three months ended March 31, 1995 and 1994 are not necessarily
indicative of the results of operations to be expected for the
full year.
3. Reference is made to the Notes to Consolidated Financial
Statements appearing in the Company's 1994 Annual Report as
filed on Form 10-K with the Securities and Exchange
Commission. There have been no significant changes in the
information reported in those Notes, other than from the
normal business activities of the Company, and there have been
no changes which would, in the opinion of Management, have a
materially adverse effect upon the Company.
4. Certain prior year amounts have been reclassified to conform
to the current year presentation with no impact on net income.
5. At the Annual Meeting on May 4, 1995, the stockholders
approved the 1994 Restricted Stock Plan (the "1994 Plan").
The purpose of the 1994 Plan is to increase stock ownership
among officers and other key employees of the Company.
-5-
/6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Comparison of the Three Months Ended March 31, 1995 with the Three
Months Ended March 31, 1994
Revenues for the first quarter of 1995 increased 7.2% to $56.9 million
from $53.0 million in 1994. The largest growth was in the Water, Food
and Chemical Supply segment due to continuing improvement in the
Company's own and operate and service businesses.
Consumer Product revenues increased as higher revenues from bottled
water and home water products more than offset seasonal softness in
certain other consumer products, particularly windshield wash.
Bottled water revenues increased at existing locations as well as
through the opening of a new distribution facility in Charlotte, North
Carolina. Home water product sales increased through expansion of the
independent dealer base as well as through increased sales by the
existing distribution network.
Revenues from the Membranes and Related Equipment segment reflected
increased spare parts sales, continuing strength in the sale of
ultrapure water systems, particularly to the semiconductor industry,
and revenues from zero liquid discharge systems which offset lower
sales of traditional capital equipment.
Cost of sales as a percentage of revenues was 68.0% in 1995 and 70.4%
in 1994. Decreases in cost of sales as a percentage of revenues
occurred in both the Membranes and Related Equipment and Consumer
Products segments while the percentage for the Water, Food and
Chemical Supply segment was unchanged. The improvement in the
Membranes and Related Equipment segment resulted from a more favorable
mix between capital equipment and spare parts revenues and among
individual capital equipment jobs. The improvement in the Consumer
Products segment also resulted from an overall improvement in product
mix.
Operating expenses as a percentage of revenues were 21.7% in the first
quarter of 1995, up from 20.8% in the first quarter of 1994. This
increase was due to higher selling and other related expenses
primarily associated with a different mix of sales between equipment
and consumer products. Sales of equipment contributed to the increase
as a percentage of revenues due to a different mix between products
and distribution channels. Within Consumer Products, the increase
reflected increased start-up costs of new locations.
Interest income increased slightly, despite lower average cash and
investment balances, due to an increase in average interest rates.
-6-
/7
<PAGE>
Financial Condition
Working capital decreased $4.8 million during the first three months
of 1995, while the Company's current ratio increased to 2.2 at March
31, 1995 from 2.1 at December 31, 1994. Cash provided from net
income, depreciation and a reduction in accounts receivable totaled
$18.7 million in the first three months of 1995 while the primary uses
of cash were for payment of accounts payable, additions to property,
plant and equipment and the purchase of long-term investments.
Significant capital expenditures were made for bleach manufacturing
operations, bottled water operations, trailers and other "own and
operate" facilities.
At March 31, 1995, the Company had $19.4 million in cash and
investments (including $3.0 million of U.S. government securities
included in other assets), a decrease of $1.2 million from December
31, 1994. The Company believes that its cash and investments, cash
from operations, lines of credit and foreign exchange facilities are
adequate to meet its currently anticipated needs.
-7-
/8
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11- Computation of Earnings Per Share (included on Page
11 of this report).
(b) Reports on Form 8-K
No reports on Form 8-K were filed with the Securities and
Exchange Commission during the quarter ended March 31, 1995.
All other items reportable under Part II have been omitted as
inapplicable or because the answer is negative, or because the
information was previously reported to the Securities and
Exchange Commission.
-8-
/9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
IONICS, INCORPORATED
Date: May 12, 1995 By: /s/Arthur L. Goldstein
Arthur L. Goldstein
Chairman and Chief Executive Officer
(duly authorized officer)
Date: May 12, 1995 By: /s/Robert J. Halliday
Robert J. Halliday
Vice President, Finance and
Accounting (chief financial officer)
-9-
/10
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Page
<S> <C> <C>
11 Computation of Earnings Per Share 12
27 Financial Data Schedule 13
(for electronic
purposes only)
-10-
/11
</TABLE>
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 11
IONICS, INCORPORATED
COMPUTATION OF EARNINGS PER SHARE
(Amounts in thousands, except earnings per share)
<CAPTION>
Three Months Ended
March 31,
1995 1994
<S> <C> <C>
Net income $ 4,128 $ 3,397
Earnings per common and common
equivalent share:
Weighted average number of shares
outstanding 14,004 13,894
Incremental shares for stock options
under treasury stock method 425 246
Weighted average number of common and
common equivalent shares outstanding 14,429 14,140
Earnings per common and common
equivalent share $ .29 $ .24
Earnings per common and common equivalent
share - assuming full dilution:
Weighted average number of shares
outstanding 14,004 13,894
Incremental shares for stock options
under treasury stock method 464 262
Weighted average number of common and
common equivalent shares outstanding -
assuming full dilution 14,468 14,156
Earnings per common and common
equivalent share - assuming
full dilution $ .29 $ .24
-11-
/12
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 11,473
<SECURITIES> 4,959
<RECEIVABLES> 57,263
<ALLOWANCES> (2,014)
<INVENTORY> 19,378
<CURRENT-ASSETS> 99,237
<PP&E> 210,271
<DEPRECIATION> (77,727)
<TOTAL-ASSETS> 274,437
<CURRENT-LIABILITIES> 45,485
<BONDS> 0
<COMMON> 14,016
0
0
<OTHER-SE> 210,114
<TOTAL-LIABILITY-AND-EQUITY> 274,437
<SALES> 56,873
<TOTAL-REVENUES> 56,873
<CGS> 38,681
<TOTAL-COSTS> 38,681
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 322
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,111
<INCOME-TAX> 2,126
<INCOME-CONTINUING> 4,128
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,128
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
<PAGE>
</TABLE>
