FORM 10-K/A
AMENDMENT TO FORM 10-K ANNUAL REPORT
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 1
[ 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, 1997
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)
/1
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 as set forth
in the pages attached hereto:
1. Item 14(a) 3. of Part IV of said report on Form 10-K is amended
to list Form 11-K, Annual Report of the Ionics Section 401(k) Stock
Savings Plan for the year ended December 31, 1997, as Exhibit 13(b)
thereto. The Annual Report of the Ionics Section 401(k) Stock Savings
Plan on Form 11-K for the year ended December 31, 1997 is hereby filed
pursuant to rule 15d-21 and General Instruction F to Form 10-K as an
Exhibit to said Annual Report on Form 10-K.
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed on
its behalf by the undersigned, thereunto duly authorized.
IONICS, INCORPORATED
(Registrant)
Date: June 23, 1998 By /s/Stephen Korn
----------------- ----------------------------------
Stephen Korn
Vice President and
General Counsel
/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
No. Description
3.0 Articles of Organization and By-Laws
3.1 Restated Articles of Organization filed
April 16, 1986.
3.1(a) Amendment to the Restated Articles of
Organization filed June 13, 1987.
3.1(b) Amendment to Restated Articles of *
Organization filed May 13, 1988
(filed as Exhibit 3.1(b) to
Registration Statement No. 33-38290 on
Form S-2 effective January 24, 1991).
3.1(c) Amendment to Restated Articles of *
Organization filed May 8, 1992
(filed as Exhibit 3.1 to Form 10-Q
for quarterly period ending
June 30, 1996).
3.2 By-Laws, as amended through
November 14, 1997.
4.0 Instruments defining the rights of security holders,
including indentures
IV-1
/3
4.1 Renewed Rights Agreement, dated as of *
August 19, 1997 between Registrant and
BankBoston N.A. (filed as Exhibit 1 to
Registrant's Current Report on Form 8-K
dated August 27, 1997).
4.2 Form of Common Stock Certificate
10. Material Contracts
10.1 1979 Stock Option Plan, as amended through *
February 22, 1996 (filed as Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
10.2 1986 Stock Option Plan for Non-Employee Directors, *
as amended through February 19, 1997 (filed as
Exhibit 10.2 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996).
10.3 Amended and Restated Credit Agreement between
Registrant and the First National Bank of Boston
dated as of December 31, 1992.
10.3(1) Amendment Agreement No. 1, dated as of
December 31, 1995, to Amended and Restated
Credit Agreement between Registrant and The
First National Bank of Boston (filed as Exhibit
10.3(1) to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
10.4 Operating Agreement dated as of September 27,
1989 between Registrant and Aqua Cool
Enterprises, Inc.
10.5 Term Lease Master Agreement dated as of
September 27, 1989 between Registrant and
Aqua Cool Enterprises, Inc.
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 1994 Restricted Stock Plan (filed as Exhibit 10.12 *
to Registrant's Annual Report on Form 10-K dated
March 30, 1995).
IV-2
/4
10.8 1997 Stock Incentive Plan (filed as Exhibit 10.12 *
to Registrant's Annual Report on Form 10-K dated
December 31, 1996).
10.9 Ionics, Incorporated Supplemental Executive
Retirement Plan effective as of January 1, 1996.
10.10 Form of Employee Retention Agreement dated
February 24, 1998 between the Registrant and
each of its executive officers and certain other
officers of Registrant and its subsidiaries.
13. (a) Annual Report to Stockholders of the Registrant for
the year ended December 31, 1997 (only pages 17
through 36 and the inside back cover constitute an
exhibit to this report).
(b) Annual Report of the Ionics 401(k) Stock Savings Plan on
Form 11-K for the year ended December 31, 1997.
21. Subsidiaries of the Registrant.
23. Consents
23.1 Consent of Coopers & Lybrand L.L.P. to
incorporation by reference of that firm's
report dated February 17, 1998, which is
included on page 19 of the Registrant's Annual
Report to Stockholders for the year ended
December 31, 1997.
24. Power of Attorney.
27. Financial Data Schedule. **
27.1 Financial Data Schedule - Restated **
27.2 Financial Data Schedule - Restated **
27.3 Financial Data Schedule - Restated **
27.4 Financial Data Schedule - Restated **
27.5 Financial Data Schedule - Restated **
27.6 Financial Data Schedule - Restated **
27.7 Financial Data Schedule - Restated **
27.8 Financial Data Schedule - Restated **
________________________________
* incorporated herein by reference
** for electronic purposes only
IV-3
/5
EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description Page
3.0 Articles of Organization and By-Laws
3.1 Restated Articles of Organization filed 32
April 16, 1986.
3.1(a) Amendment to the Restated Articles of 39
Organization filed June 13, 1987.
3.1(b) Amendment to Restated Articles of *
Organization filed May 13, 1988
(filed as Exhibit 3.1(b) to
Registration Statement No. 33-38290 on
Form S-2 effective January 24, 1991).
3.1(c) Amendment to Restated Articles of *
Organization filed May 8, 1992
(filed as Exhibit 3.1 to Form 10-Q
for quarterly period ending
June 30, 1996).
3.2 By-Laws, as amended through 42
November 14, 1997.
4.0 Instruments defining the rights of security holders,
including indentures
4.1 Renewed Rights Agreement, dated as of *
August 19, 1997 between Registrant and
BankBoston N.A. (filed as Exhibit 1 to
Registrant's Current Report on Form 8-K
dated August 27, 1997).
4.2 Form of Common Stock Certificate 61
10. Material Contracts
10.1 1979 Stock Option Plan, as amended through *
February 22, 1996 (filed as Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
IV-4
/6
10.2 1986 Stock Option Plan for Non-Employee Directors, *
as amended through February 19, 1997 (filed as
Exhibit 10.2 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996).
10.3 Amended and Restated Credit Agreement between 64
Registrant and the First National Bank of Boston
dated as of December 31, 1992.
10.3(1) Amendment Agreement No. 1, dated as of *
December 31, 1995, to Amended and Restated
Credit Agreement between Registrant and The
First National Bank of Boston (filed as Exhibit
10.3(1) to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
10.4 Operating Agreement dated as of September 27, 118
1989 between Registrant and Aqua Cool
Enterprises, Inc.
10.5 Term Lease Master Agreement dated as of 140
September 27, 1989 between Registrant and
Aqua Cool Enterprises, Inc.
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 1994 Restricted Stock Plan (filed as Exhibit 10.12 *
to Registrant's Annual Report on Form 10-K dated
March 30, 1995).
10.8 1997 Stock Incentive Plan (filed as Exhibit 10.12 *
to Registrant's Annual Report on Form 10-K dated
December 31, 1996).
10.9 Ionics, Incorporated Supplemental Executive 155
Retirement Plan effective as of January 1, 1996.
10.10 Form of Employee Retention Agreement dated 165
February 24, 1998 between the Registrant and
each of its executive officers and certain other
officers of Registrant and its subsidiaries.
IV-5
/7
13. (a) Annual Report to Stockholders of the Registrant for 177
the year ended December 31, 1997 (only pages 17
through 36 and the inside back cover constitute an
exhibit to this report).
(b) Annual Report of the Ionics 401(k) Stock Savings Plan on 213
Form 11-K for the year ended December 31, 1997.
21. Subsidiaries of the Registrant. 229
23. Consents
23.1 Consent of Coopers & Lybrand L.L.P. to 230
incorporation by reference of that firm's
report dated February 17, 1998, which is
included on page 19 of the Registrant's Annual
Report to Stockholders for the year ended
December 31, 1997.
24. Power of Attorney. 231
27. Financial Data Schedule. **
27.1 Financial Data Schedule - Restated **
27.2 Financial Data Schedule - Restated **
27.3 Financial Data Schedule - Restated **
27.4 Financial Data Schedule - Restated **
27.5 Financial Data Schedule - Restated **
27.6 Financial Data Schedule - Restated **
27.7 Financial Data Schedule - Restated **
27.8 Financial Data Schedule - Restated **
________________________________
* incorporated herein by reference
** for electronic purposes only
IV-6
/8
Exhibit No. 13(b) to Annual Report on Form 10-K
of Ionics, Incorporated for the year ended December 31, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] Annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1997
OR
[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from _________ to _________
Commission file number 1-7211
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Ionics Section 401(k) Stock Savings Plan
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
IONICS, INCORPORATED
65 Grove Street
Watertown, Massachusetts 02172
/9
IONICS SECTION 401(k) STOCK SAVINGS PLAN
INDEX OF FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
For the years ended December 31, 1997 and 1996
________
Page(s)
Independent Auditors Report 2
Financial Statements:
Statements of Net Assets Available for Plan Benefits
at December 31, 1997 and 1996 3-4
Statements of Changes in Net Assets Available for
Plan Benefits for the years ended December 31,
1997 and 1996 5-6
Notes to Financial Statements 7-11
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes, at
December 31, 1997 12
Schedule of Reportable Transactions
for the year ended December 31, 1997 13
/10
INDEPENDENT AUDITOR'S REPORT
Administrators
Ionics Section 401(k) Stock Savings Plan
Watertown, Massachusetts
We have audited the accompanying statements of net assets available
for plan benefits of the Ionics Section 401(k) Stock Savings Plan (the
Plan) as of December 31, 1997 and 1996, and the related statement of
changes in net assets available for plan benefits for the years then ended.
These financial statements and the schedules referred to below are the
responsibility of the plan administrator. Our responsibility is to express
an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan
benefits of the Plan as of December 31, 1997 and 1996 and the changes in
its net assets available for plan benefits for the years then ended, in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and reportable transactions are
presented for purposes of complying with the Department of Labor Rules and
Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 and are not a required part of the basic
financial statements. Such schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, are fairly stated, in all material respects, in relation to
the basic financial statements taken as a whole.
/s/BELANGER & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
Chelmsford, Massachusetts
June 19, 1998
-2-
/11<TABLE>
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
<CAPTION>
PARTICIPANT - DIRECTED FUNDS
IONICS, INC. INDEXED MULTI- INDEXED JANUS BT PARTIC-
COMMON PURITAN CONTRAFUND BOND ASSET EQUITY WORLDWIDE PYRAMID CASH/ IPANT
STOCK FUND FUND FUND FUND FUND FUND FUND GIC FUND OTHER LOANS TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
INVESTMENTS @ MARKET
(SEE NOTES 2,3 & 7)
IONICS, INCORPORATED
COMMON STOCK: 327,902
SHARES @ $39.125
PER SHARE $12,829,166 $12,829,166
PURITAN FUND:
98,235.430 SHARES @
$19.38 PER SHARE $1,903,802 1,903,802
CONTRAFUND FUND:
73,804.616 SHARES @
$46.63 PER SHARE $3,441,509 3,441,509
INDEXED BOND FUND:
14,085.539 SHARES @
$10.74 PER SHARE $151,279 151,279
MULTI-ASSET FUND:
33,107.937 SHARES @
$14.83 PER SHARE $490,991 490,991
INDEXED EQUITY FUND:
2,404.482 SHARES @
$27.05 PER SHARE $65,041 65,041
JANUS WORLDWIDE FUND:
6,281.68 SHARES @
$37.78 PER SHARE $237,322 237,322
BT PYRAMID GIC FUND $965,208 965,208
CASH & CASH EQUIVALENTS 158,563 $ 30 158,593
AMOUNTS RECEIVABLE FROM
IONICS, INCORPORATED
AND PLAN PARTICIPANTS 263,753 263,753
LOANS RECEIVABLE FROM
PLAN PARTICIPANTS 682,144 682,144
TOTAL ASSETS $12,987,729 $1,903,802 $3,441,509 $151,279 $490,991 $ 65,041 $237,322 $965,208 $263,783 $682,144 $21,188,808
LIABILITIES -0- -0- -0- -0- -0- -0- -0- -0- -0- -0- -0-
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $12,987,729 $1,903,802 $3,441,509 $151,279 $490,991 $ 65,041 $237,322 $965,208 $263,783 $682,144 $21,188,808
=========== ========== ========== ======== ======== ======== ======== ======== ======== ======== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-3-
/12
<TABLE>
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996
<CAPTION>
PARTICIPANT - DIRECTED FUNDS
IONICS, INC. ASSET BT PARTIC-
COMMON PURITAN MANAGER CONTRAFUND PYRAMID IPANT CASH/
STOCK FUND FUND FUND FUND GIC FUND LOANS OTHER TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
INVESTMENTS AT MARKET
(SEE NOTES 2,3 & 7)
IONICS, INCORPORATED
COMMON STOCK:
310,613 SHARES @
$48.00 PER SHARE $14,909,424 $14,909,424
FIDELITY INVESTMENTS:
PURITAN FUND:
89,866.814 SHARES
@ $17.24 PER SHARE $1,549,304 1,549,304
ASSET MANAGER FUND:
22,679.732 SHARES
@ $16.47 PER SHARE $373,535 373,535
CONTRAFUND FUND:
59,558.237 SHARES
@ $42.15 PER SHARE $2,510,380 2,510,380
BT PYRAMID GIC FUND $868,421 868,421
CASH AND CASH EQUIVALENTS 61 $537,187 537,248
AMOUNTS RECEIVABLE FROM
IONICS, INCORPORATED
AND PLAN PARTICIPANTS 195,938 195,938
LOANS RECEIVABLE FROM
PLAN PARTICIPANTS $644,327 644,327
TOTAL ASSETS $14,909,485 $1,549,304 $373,535 $2,510,380 $868,421 $644,327 $733,125 $21,588,577
LIABILITIES -0- -0- -0- -0- -0- -0- -0- -0-
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $14,909,485 $1,549,304 $373,535 $2,510,380 $868,421 $644,327 $733,125 $21,588,577
The accompanying notes are an integral part of these financial statements.
</TABLE>
-4-
/13
<TABLE>
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
<CAPTION>
PARTICIPANT - DIRECTED FUNDS TOTAL
IONICS, INC. ASSET INDEXED MULTI- INDEXED JANUS BT PARTICIPANT-
COMMON PURITAN MANAGER CONTRAFUND BOND ASSET EQUITY WORLDWIDE PYRAMID DIRECTED
STOCK FUND FUND FUND FUND FUND FUND FUND FUND GIC FUND FUNDS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
BEGINNING OF YEAR $14,909,485 $1,549,304 $373,535 $2,510,380 $ -0- $ -0- $ -0- $ -0- $868,421 $20,211,125
NET INVESTMENT INCOME,
PRINCIPALLY INTEREST
AND DIVIDENDS 4,530 152,513 6,618 327,767 9,607 55,298 1,895 16,036 53,487 627,751
NET APPRECIATION(DEPREC-
IATION)IN THE FAIR VALUE
OF INVESTMENTS (2,880,259) 187,359 45,574 310,606 (8,003) (30,496) (91) (15,504) (2,390,814)
CONTRIBUTIONS:
PARTICIPANTS
EMPLOYER
ACQUISITIONS
LOAN PAYMENTS
TRANSFERS 1,383,234 14,626 (425,727) 292,756 149,675 466,189 63,237 236,790 44,717 2,225,497
WITHDRAWALS BY AND
DISTRIBUTIONS TO
PARTICIPANTS (429,261) (1,417) (430,678)
NET INCREASE(DECREASE) (1,921,756) 354,498 (373,535) 931,129 151,279 490,991 65,041 237,322 96,787 31,756
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
END OF YEAR $12,987,729 $1,903,802 $0 $3,441,509 $151,279 $490,991 $65,041 $237,322 $965,208 $20,242,881
=========== ========== ========= ========== ======== ======== ======= ======== ======== ===========
The accompanying notes are an integral part of these financial statements.
-5-
Page 1 of 2
</TABLE>
/14
<TABLE>
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
<CAPTION>
TOTAL
PARTICIPANT-
DIRECTED CASH/ PARTICIPANT
FUNDS OTHER LOANS TOTAL
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
BEGINNING OF YEAR $20,211,125 $ 733,125 $ 644,327 $21,588,577
NET INVESTMENT INCOME,
PRINCIPALLY INTEREST
AND DIVIDENDS 627,751 13,184 57,270 698,205
NET APPRECIATION(DEPREC-
IATION)IN THE FAIR VALUE
OF INVESTMENTS (2,390,814) 2,390,814
CONTRIBUTIONS:
PARTICIPANTS 2,617,995 2,617,995
EMPLOYER 750,045 750,045
ACQUISITIONS 198,953 198,953
LOAN PAYMENTS 441,256 (505,099) (63,843)
TRANSFERS 2,225,497 (2,225,497) 0
WITHDRAWALS BY AND
DISTRIBUTIONS TO
PARTICIPANTS (430,678) (2,265,278) 485,646 (2,210,310)
NET INCREASE(DECREASE) 31,756 (469,342) 37,817 (399,769)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
END OF YEAR $20,242,881 $ 263,783 $ 682,144 $21,188,808
=========== =========== ========== ===========
The accompanying notes are an integral part of these financial statements.
Page 2 of 2
</TABLE>
/15
<TABLE>
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
PARTICIPANT - DIRECTED FUNDS
IONICS, INC. ASSET BT
COMMON PURITAN MANAGER CONTRAFUND PYRAMID PARTICIPANT CASH/
STOCK FUND FUND FUND FUND GIC FUND LOANS OTHER TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN
BENEFITS - BEGINNING
OF YEAR $ 12,892,198 $ 1,061,403 $ 273,102 $1,158,415 $ 750,252 $ 387,065 $ 259,125 $16,781,560
NET INVESTMENT INCOME,
PRINCIPALLY
INTEREST
AND DIVIDENDS 1,007 160,277 28,669 166,481 46,127 43,179 12,164 457,904
NET APPRECIATION
(DEPRECIATION)
IN THE FAIR VALUE OF
INVESTMENTS 1,195,185 32,320 13,512 221,456 1,462,473
CONTRIBUTIONS:
PARTICIPANTS 2,171,648 2,171,648
EMPLOYER 605,473 605,473
ACQUISITIONS 55,591 1,171,972 1,227,563
LOAN PAYMENTS (256,903) 58,613 (198,290)
TRANSFERS 955,807 295,304 58,252 964,028 74,370 (2,347,761) -0-
WITHDRAWALS BY AND
DISTRIBUTIONS TO
PARTICIPANTS (134,712) (2,328) 415,395 (1,198,109) (919,754)
NET INCREASE(DECREASE) 2,017,287 487,901 100,433 1,351,965 118,169 257,262 474,000 4,807,017
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
END OF YEAR $14,909,485 $1,549,304 $ 373,535 $2,510,380 $ 868,421 $ 644,327 $ 733,125 $21,588,577
The accompanying notes are an integral part of these financial statements.
</TABLE>
-6-
/16
IONICS SECTION 401(K) STOCK STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 1: THE PLAN AND ITS PROVISIONS
The Ionics Section 401(k) Stock Savings Plan (the "Plan") became effective
January 1, 1986. Effective May 1, 1994, the Plan was amended to provide a
broader range of investment selections for Plan participants and the
opportunity to change investment elections on a quarterly basis. Other
amendments to the Plan were also adopted, including provisions to permit
participants to borrow from their accounts. In addition, the Plan trustee
was changed from the Bank of Boston to the PNC Bank, New England. On
August 25, 1997, the Plan was amended to increase the number of investment
options, reduce the period for changing contribution rates from quarterly
to monthly, and institute daily account valuation. In addition, the
trustee was changed from PNC Bank to New York Life Trust Company.
Participants should refer to the Summary Plan Description for a more
complete description of the Plan's provisions.
General
The Plan is a defined contribution plan qualified under Section
401(k) of the U.S. Internal Revenue Code covering all permanent employees
of Ionics, Incorporated (the "Company") working at least 20 hours per week
who have completed one year of service. The Plan was established to
provide benefits to participants upon retirement, termination of
employment, death, permanent and total disability, or demonstration of
financial hardship. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974.
Investment Options
The following investment options are available to participants:
Ionics, Incorporated Common Stock Fund - This fund invests directed
contributions solely in common stock of the Company.
Fidelity Puritan Fund - This mutual fund maintains a broadly based
conservatively managed diversified investment portfolio which is primarily
income oriented with a secondary emphasis on growth. Its portfolio
consists principally of high yielding common and preferred stocks and
corporate bonds.
Fidelity Contrafund - This mutual fund invests primarily in common
stocks and securities convertible into common stocks, and has capital
appreciation as its investment objective.
Fidelity Asset Manager Fund - This mutual fund maintains an
investment portfolio of stocks, bonds and short-term investments of U.S.
and foreign issuers, and has a primary objective of high total return with
reduced risk over the long term. This fund was replaced with the MainStay
Institutional Multi-Asset Fund effective August 25, 1997.
-7-
/17
MainStay Institutional Indexed Bond Fund - This income mutual fund
invests in investment grade corporate and U.S. Government bonds, mortgage-
backed securities and asset-backed securities. The fund measures itself
by the Salomon Brothers Broad Investment Grade Bond Index.
MainStay Institutional Multi-Asset Fund - This fund is an asset
allocation mutual fund which varies the amount invested in each class of
assets, based on anticipated risks and returns associated with each class.
The fund invests in domestic and foreign common stocks, fixed income
securities and money market instruments. Its objective is to maximize
total return.
MainStay Institutional Indexed Equity Fund - This fund is a growth
and income mutual fund. The fund seeks to correspond with the Standard &
Poor's Composite Index of 500 Stocks.
Janus Worldwide Fund - This fund seeks long-term growth with
preservation of capital. It invests mainly in common stocks of domestic
and foreign issuers. It will normally invest in issuers from at least
five different countries, including the United States. Foreign investing
may be subject to greater risks than domestic investing.
BT Pyramid GIC Fund - This fund, administered by The Bankers Trust
Company, invests primarily in Guaranteed Investment Contracts and Bank
Investment Contracts and Bankers Trust Commingled short-term investment
funds, and has as its objectives safety of principal, stability, superior
yields and a predictable annual return. The fund sets an estimated range
of return on an annual basis, but because results can be affected by
economic or market conditions, it does not guarantee the rate.
All cash transactions, including contributions, fund purchases, fund
liquidations, loans, distributions, etc. were made through a conduit
account, which is an interest bearing cash account with the PNC Bank, New
England. On August 25, 1997 this account was changed to the MainStay
Institutional Money Market Fund.
Participant Contributions
Employees who meet certain length of service requirements may elect to
become participants in the Plan and contribute, on a pre-tax basis, from 1%
to 12% of their compensation as defined by the Plan. The annual amounts so
contributed by employees are subject to certain federal income tax
limitations. Contributions made by employees to the Plan may be used to
purchase either common stock of the Company or may be directed to be
invested in any of the available investment funds.
Participant Accounts
Each participant's account is credited with the participant's
contribution and an allocation of Plan earnings. Allocations are based on
total investment earnings and average participant investment balances, as
defined.
-8-
/18
Company Contribution
The terms and conditions of the Plan provide for the Company to
contribute 50% of the first 6% an employee elects to invest in common stock
of the Company (subject to certain limitations). The maximum annual amount
that the Company may contribute on behalf of employees is currently
$900,000, and that limit is set by the Board of Directors of the Company.
Matching Company contributions under the Plan are invested solely in common
stock of the Company. Non-vested Company contributions may, subject to
certain restrictions, be forfeited upon withdrawal of the employee from the
Plan and be used as a credit to reduce future Company contributions.
Vesting
All participant contributions are 100% vested when made. Company
matching contributions are vested in increasing percentages based on the
years of service of the individual employee, from 33 1/3% after two years
to 100% after four years.
Plan Expenses
The Plan provides that all expenses of the Plan and its administration
shall be paid by the Company.
Withdrawals
A participant can make a hardship withdrawal of his or her own
contributions, subject to Internal Revenue Service restrictions. A
participant may withdraw the entire vested amount due to his or her own
contributions after attaining age 59 1/2.
Loans
A participant can borrow money from his or her vested account subject
to certain rules including a minimum amount of $1,000 and a maximum amount
not to exceed the lesser of 50% of the participant's total vested account
balance or $50,000.
Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented on the accrual
basis of accounting.
Valuation of Investments
Investment of the Plan in Ionics, Incorporated common stock is stated
at market, market being the last sale price on December 31, 1997 of Ionics,
Incorporated common stock as reported on the New York Stock Exchange.
Investments in the Plan of the Fidelity Funds, the Mainstay Institutional
Funds and the BT Pyramid GIC Fund are stated at the Net Asset Value of the
funds reported as of December 31, 1997.
-9-
/19
The Plan presents in the statement of changes in net assets available
for plan benefits the net appreciation (depreciation) in the fair value of
its investments which consist of realized gains or losses and the
unrealized appreciation (depreciation) of these investments.
Payment of Benefits
Benefits are recorded when paid.
Note 3: INVESTMENTS
The following is a summary of investments at December 31, 1997 and
1996, respectively:
<TABLE>
<CAPTION>
Market Value Cost
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Investments At Fair Value
As Determined By Quoted
Market Price
Ionics, Incorporated
Common Stock $12,829,166 $14,909,424 $ 8,627,726 $ 6,744,813
Fidelity funds:
Puritan 1,903,802 1,549,304 1,651,163 1,453,418
Asset Manager - 373,535 - 346,486
Contrafund 3,441,509 2,510,380 2,897,030 2,165,766
Mainstay Institutional
funds:
Indexed Bond 151,279 - 160,749 -
Multi-Asset 490,991 - 521,808 -
Indexed Equity 65,041 - 65,042 -
Janus Worldwide Fund: 237,322 - 250,472 -
BT Pyramid GIC Fund: 965,208 868,421 965,208 868,421
Other Investments
Participant Loans 682,144 644,327 682,144 644,327
$20,766,462 $20,855,391 $15,821,342 $12,223,231
</TABLE>
Note 4: INCOME TAX STATUS
The Internal Revenue Service has determined and informed the
Company by a letter dated September 12, 1996 that the Plan is
qualified and the trust established under the Plan is tax-exempt,
under the appropriate sections of the Code.
-10-
/20
Note 5: PLAN TERMINATION
Although it has not expressed any intent to do so, the Company
has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA.
In the event of Plan termination, participants will become 100
percent vested in their accounts.
Note 6: RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for
benefits per the financial statements at December 31, 1997 and 1996
to Form 5500:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Net assets available for benefits
per the financial statements $21,188,808 $21,588,577
Amounts allocated to withdrawing
participants (99,676) (316,115)
Net assets available for benefits
per the form 5500 $21,089,132 $21,272,462
</TABLE>
The following is a reconciliation of benefits paid to
participants per the financial statements for the year ended
December 31, 1997 to Form 5500:
Distributions to participants per the
financial statements:
Benefits paid $ 2,210,310
Defaulted loans recorded as distributions 63,843
Add: Amounts allocated to withdrawing
participants at December 31, 1997 99,676
Less: Amounts allocated to withdrawing
participants at December 31, 1996 (316,115)
Benefits paid to participants per Form 5500 $ 2,057,714
Amounts allocated to withdrawing participants are recorded on
the Form 5500 for benefit claims that have been processed and
approved for payment prior to December 31 but not yet paid as of
that date.
-11-
/21
<TABLE>
ATTACHMENT TO FORM 5500
EIN: 04-2068530
PN: 003
SCHEDULE I
IONICS SECTION 401(K) STOCK SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<CAPTION>
Face Amount,
Shares or Current
Description of Investment Rate Cost Value
<S> <C> <C> <C>
Cash and Cash Equivalents $ 158,593 $ 158,593
Ionics, Incorporated
Common Stock 327,902 8,627,726 12,829,166
Fidelity Investments:
Puritan Fund 98,235 1,651,163 1,903,802
Contrafund 73,805 2,897,030 3,441,509
MainStay Institutional:
Indexed Bond 14,086 160,749 151,279
Multi-Asset Fund 33,108 521,808 490,991
Indexed Equity Fund 2,404 65,042 65,041
Janus Worldwide Fund 6,282 250,472 237,322
BT Pyramid GIC Fund 965,208 965,208
Participant Loans
(Rate of Interest 9.75% to 10.0%) -0- 682,144
Total Funds Invested $15,297,791 $20,925,055
</TABLE>
The accompanying notes are an integral part of these supplemental schedules.
-12-
/22
<TABLE>
ATTACHMENT TO FORM 5500 SCHEDULE II
EIN: 04-2068530
PN: 003
IONICS SECTION 401(K) STOCK SAVINGS PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
Current Value
Of Asset On
Purchase Selling Cost of Transaction Net Gain
Description of Asset Price Price Asset Date (Loss)
<S> <C> <C> <C> <C> <C>
INDIVIDUAL TRANSACTIONS
None
SERIES OF TRANSACTIONS
Purchase:
Fidelity Investments
25,997 shares of
Contrafund $1,190,583
Company Stock
64,823 shares of
Ionics, Inc.
Common Stock 2,879,330
Sale:
Fidelity Investments
11,751 shares of
Contrafund $ 570,060 $459,319 $ 570,060 $110,741
Company Stock
36,224 shares of
Ionics, Inc.
Common Stock 1,650,103 855,758 1,650,103 794,345
The accompanying notes are an integral part of these supplemental schedules.
</TABLE>
-13-
/23
SIGNATURES
Ionics Section 401(k) Stock Savings Plan. Pursuant to the requirements
of the Securities Exchange Act of 1934, the trustees (or other persons
who administer the employee benefit plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly
authorized.
IONICS SECTION 401(K) STOCK
STOCK SAVINGS PLAN
Date: June 23, 1998 By /s/John P. Bergeron
----------------- ------------------------------------
John P. Bergeron
Administrator and Treasurer
-14-
/24
EXHIBIT 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statement of the Ionics Section 401(k) Stock
Savings Plan on Form S-8 (Registration No. 33-2092) of our
report dated June 19, 1998 on our audits of the financial
statements of the Ionics Section 401(k) Stock Savings Plan
as of December 31, 1997 and 1996, which report is included
in this Annual Report on Form 11-K of the Plan which is
being filed as Exhibit 13(b) to the Annual Report on Form
10-K of Ionics, Incorporated for the year ended December 31,
1997.
/s/BELANGER & COMPANY P.C.
CERTIFIED PUBLIC ACCOUNTANTS
Chelmsford, Massachusetts
June 23, 1998
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