0000052466-95-000013.txt : 19950810 0000052466-95-000013.hdr.sgml : 19950810 ACCESSION NUMBER: 0000052466-95-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950809 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IONICS INC CENTRAL INDEX KEY: 0000052466 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 042068530 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07211 FILM NUMBER: 95560060 BUSINESS ADDRESS: STREET 1: 65 GROVE ST CITY: WATERTOWN STATE: MA ZIP: 02172 BUSINESS PHONE: 6179262500 10-Q 1 10-Q 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 June 30, 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 June 30, 1995 Common Stock, Par Value $1 14,049,271 Shares /1 IONICS, INCORPORATED FORM 10-Q FOR QUARTER ENDED JUNE 30, 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 10 Exhibit Index 11 Exhibit 11 - Computation of Earnings Per Share 12 Exhibit 27 - Financial Data Schedule (for electronic purposes only) - 1 - /2 PART I - FINANCIAL INFORMATION IONICS, INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 Net revenue: Membranes and related equipment $29,204 $25,800 $ 58,060 $ 54,334 Water, food and chemical supply 14,816 13,061 30,569 25,959 Consumer products 12,522 10,967 24,786 22,570 56,542 49,828 113,415 102,863 Costs and expenses: Cost of membranes and related equipment 21,113 19,283 42,668 41,545 Cost of water, food and chemical supply 9,912 8,755 20,344 17,270 Cost of consumer products 6,719 5,901 13,413 12,462 Research and development 855 857 1,666 1,660 Selling, general and administrative 11,332 10,211 22,839 20,461 49,931 45,007 100,930 93,398 Income from operations 6,611 4,821 12,485 9,465 Interest income 267 296 504 529 Equity income 104 151 247 269 Income before income taxes 6,982 5,268 13,236 10,263 Provision for income taxes 2,364 1,686 4,490 3,284 Net income $ 4,618 $ 3,582 $ 8,746 $ 6,979 Earnings per share $ .32 $ .25 $ .61 $ .49 Shares used in earnings per share calculations 14,476 14,130 14,453 14,134 The accompanying notes are an integral part of these financial statements. -2- /3
IONICS, INCORPORATED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except par value)
June 30, December 31, 1995 1994 ASSETS Current assets: Cash and cash equivalents $ 6,275 $ 14,966 Short-term investments 7,485 5,617 Notes receivable, current 3,080 3,126 Accounts receivable 55,455 61,675 Receivables from affiliated companies 1,333 2,170 Inventories: Raw materials 11,752 11,088 Work in process 5,200 5,964 Finished goods 2,276 2,353 19,228 19,405 Other current assets 7,228 6,518 Total current assets 100,084 113,477 Notes receivable, long-term 5,470 5,246 Investments in affiliated companies 5,334 5,419 Property, plant and equipment: Land 2,559 2,584 Buildings 25,105 23,621 Machinery and equipment 173,935 148,881 Other, including furniture, fixtures and vehicles 24,031 22,122 225,630 197,208 Less accumulated depreciation (82,353) (73,115) 143,277 124,093 Other assets 28,502 28,929 Total assets $282,667 $277,164 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long-term debt $ 2,547 $ 370 Accounts payable 22,053 30,317 Customer deposits 4,445 4,959 Accrued commissions 1,693 1,852 Accrued expenses 15,521 15,407 Taxes on income 1,861 1,972 Total current liabilities 48,120 54,877 Long-term debt and notes payable 84 99 Deferred income taxes 4,202 2,928 Other liabilities 734 650 Stockholders' equity: Common stock, par value $1, 30,000,000 authorized shares; issued: 14,049,271 in 1995 and 13,989,896 in 1994 14,049 13,990 Additional paid-in capital 126,755 125,529 Retained earnings 92,773 84,027 Cumulative translation adjustments (3,528) (4,936) Unearned compensation (522) - Total stockholders' equity 229,527 218,610 Total liabilities and stockholders' equity $282,667 $277,164 The accompanying notes are an integral part of these financial statements.
-3- / 4 IONICS, INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in thousands)
Six Months Ended June 30, 1995 1994 Operating activities: Net income $ 8,746 $ 6,979 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,931 9,073 Provision for losses on accounts and notes receivable 377 238 Changes in assets and liabilities: Notes receivable (82) (68) Accounts receivable 6,786 4,736 Inventories 122 (1,884) Other current assets (562) (1,706) Investments in affiliates 85 (43) Accounts payable and accrued expenses (8,937) 4,696 Income taxes 1,281 1,446 Other (88) 115 Net cash provided by operating activities 17,659 23,582 Investing activities: Additions to property, plant and equipment (27,445) (15,422) Purchase of investments (3,000) - Sale of investments 1,203 1,327 Payment for Resources Conservation Company acquisition -__ (11,000) Net cash used by investing activities (29,242) (25,095) Financing activities: Principal payments on current debt (12,165) (320) Proceeds from issuance of current debt 14,322 10 Principal payments on long-term debt - (247) Proceeds from stock option plans 763 300 Net cash provided by financing activities 2,920 (257) Effect of exchange rate changes on cash (28) 328 Net change in cash and cash equivalents (8,691) (1,442) Cash and cash equivalents at beginning of period 14,966 21,534 Cash and cash equivalents at end of period $ 6,275 $ 20,092 The accompanying notes are an integral part of these financial statements.
-4- 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 June 30, 1995 and December 31, 1994, the consolidated results of its operations for the three and six months ended June 30, 1995 and 1994 and the consolidated cash flows for the six months then ended. 2. The consolidated results of operations of the Company for the three and six months ended June 30, 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- /6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Comparison of the Three and Six Months Ended June 30, 1995 with the Three and Six Months Ended June 30, 1994 Revenues for the second quarter of 1995 increased 13.5% to $56.5 million from $49.8 million in 1994. Revenues for the six-month period increased 10.3% to $113.4 million from $102.9 million in the comparable period in 1994. Revenues were higher in all three business segments for both the three and six-month periods. The largest increase in revenues for the second quarter was in the Membranes and Related Equipment segment, while the largest increase in revenues in the six-month period was in the Water, Food and Chemical Supply segment. Revenues from the Membranes and Related Equipment segment grew in both the second quarter and the six-month period with increased sales of spare parts and traditional capital equipment. In addition, during the six-month period this segment experienced continuing strength in the sale of ultrapure water systems, particularly to the semiconductor industry, and higher revenues from zero liquid discharge systems. Revenues from the Water, Food and Chemical Supply segment increased in both periods due to continuing growth in the Company's own and operate and service businesses. Consumer Products revenues increased in both the second quarter and the six-month period with higher revenues from bottled water and home water products. During the six-month period, these increases were partially offset by softness, experienced during the first quarter of 1995, in sales of certain other consumer products, particularly windshield wash. Cost of sales as a percentage of revenues for the second quarter was 66.8% in 1995 and 68.1% in 1994. For the six-month period, cost of sales as a percentage of revenues was 67.4% in 1995 and 69.3% in 1994. The most significant improvement occurred during both periods in the Membranes and Related Equipment segment due to a more favorable mix between capital equipment and spare parts revenues and to a decrease in manufacturing overhead costs as a percentage of revenues resulting from increased sales of capital equipment. Improvement during both periods in cost of sales as a percentage of revenues in the Consumer Products segment resulted from an overall improvement in product mix. Cost of sales as a percentage of revenues remained substantially consistent during both periods in the Water, Food and Chemical Supply segment. -6- /7 Operating expenses as a percentage of revenues decreased during the second quarter to 21.6% in 1995 from 22.2% in 1994 due to higher absorption of relatively fixed operating expenses by increased sales volume. For the six-month period, operating expenses as a percentage of revenues of 21.6% in 1995 remained substantially consistent with 1994. Interest income decreased during both the second quarter and the six- month period as lower average cash and invested balances were partially offset by higher average interest rates. Financial Condition Working capital decreased by $6.6 million during the first six months of 1995 while the current ratio remained consistent at 2.1 as of both June 30, 1995 and December 31, 1994. Cash provided from net income, depreciation and collection of accounts receivable totaled $25.5 million during the first six months of 1995 while the primary uses of cash were for additions to property, plant and equipment and for payment of accounts payable. Significant capital expenditures were incurred to support growth in the bottled water operations, bleach operations, trailers and other "own and operate" facilities. At June 30, 1995, the Company had $13.8 million in cash and short-term investments, a decrease of $6.8 million from December 31, 1994. The Company believes that its cash and short-term investments, cash from operations, lines of credit and foreign exchange facilities are adequate to meet its currently anticipated needs. -7- /8 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of Stockholders was held on May 4, 1995. (b) William L. Brown, Robert B. Luick, John J. Shields and Allen S. Wyett were each re-elected as a Class III Director for a three- year term. Continuing as Class II Directors until the 1997 Annual Meeting are Arnaud de Vitry d'Avaucourt, Kachig Kachadurian, William E. Katz and Mark S. Wrighton. Continuing as Class I Directors until the 1996 Annual Meeting are Lawrence E. Fouraker, Samuel A. Goldblith, Arthur L. Goldstein, and Carl S. Sloane. The tabulation of votes for all nominees is as follows: Votes for: 10,990,372 Votes withheld: 61,535 (c) The other matters submitted for stockholder approval were: (i) Approval of the Corporation's 1994 Restricted Stock Plan. Votes for: 9,751,892 Votes against: 1,168,855 Abstentions and broker non-votes: 131,162 (ii) the selection of Coopers & Lybrand as the Company's auditors for 1995: Votes for: 10,920,266 Votes against: 45,340 Abstentions and broker non-votes: 36,303 -8- /9 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 11- Computation of Net Earnings Per Share (included on Page 12 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 June 30, 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. -9- /10 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: August 9, 1995 By: /s/Arthur L. Goldstein Arthur L. Goldstein Chairman and Chief Executive Officer (duly authorized officer) Date: August 9, 1995 By: /s/Robert J. Halliday Robert J. Halliday Vice President of Finance (chief financial officer) -10- /11 EXHIBIT INDEX Exhibit Page 11. Computation of Earnings Per Share 13 27. Financial Data Schedule (for electronic purposes only) -11- /12 EX-11 2 EXHIBIT 11 IONICS, INCORPORATED COMPUTATION OF EARNINGS PER SHARE (Amounts in thousands, except earnings per share)
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 Net income $ 4,618 $ 3,582 $ 8,746 $ 6,979 Earnings per common and common equivalent share: Weighted average number of shares outstanding 14,034 13,906 14,019 13,900 Incremental shares for stock options under treasury stock method 442 224 434 234 Weighted average number of common and common equivalent shares outstanding 14,476 14,130 14,453 14,134 Earnings per common and common equivalent share $ .32 $ .25 $ .61 $ .49 Earnings per common and common equivalent share - assuming full dilution: Weighted average number of shares outstanding 14,034 13,906 14,019 13,900 Incremental shares for stock options under treasury stock method 593 224 528 244 Weighted average number of common and common equivalent shares outstanding - assuming full dilution 14,627 14,130 14,547 14,144 Earnings per common and common equivalent share - assuming full dilution $ .32 $ .25B $ .60A $ .49B A Dilution is less than 3% so the primary basis was used for per share calculations. B Reflects rounding due to January 1995 2-for-1 stock split.
-12- /13 EX-27 3
5 1,000 6-MOS DEC-31-1995 JUN-30-1995 6,275 7,485 60,605 (2,070) 19,228 100,084 225,630 (82,353) 282,667 48,120 0 14,049 0 0 215,478 282,667 113,415 113,415 76,425 76,425 0 377 0 12,989 4,490 8,746 0 0 0 8,746 .61 .60