-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JfD4ESauILssbZRdzzH1ubGJJpHAhgv5qly/8Lkff8AQIezWFStPnU+bR7EtXkcP g2DiXXCAArccp3kNxolmRA== 0000052466-94-000007.txt : 19940519 0000052466-94-000007.hdr.sgml : 19940519 ACCESSION NUMBER: 0000052466-94-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IONICS INC CENTRAL INDEX KEY: 0000052466 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94528181 BUSINESS ADDRESS: STREET 1: 65 GROVE ST CITY: WATERTOWN STATE: MA ZIP: 02172 BUSINESS PHONE: 6179262500 10-Q 1 10Q 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, 1994 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, 1994 Common Stock, Par Value $1 6,949,556 Shares IONICS, INCORPORATED FORM 10-Q FOR QUARTER ENDED MARCH 31, 1994 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 Operation and Financial Condition 6 Part II - Other Information 8 Signatures 9 Exhibit Index 10 Exhibit 11 - Computation of Earnings Per Share 11 -1- PART I - FINANCIAL INFORMATION IONICS, INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Dollars in thousands, except per share amounts)
Three Months Ended March 31, 1994 1993__ Net revenue: Membranes and related equipment $28,534 $ 20,979 Water, food and chemical supply 16,054 13,143 Consumer water products 8,447 7,036 53,035 41,158 Costs and expenses: Cost of membranes and related equipment 22,262 14,426 Cost of water, food and chemical supply 11,101 9,336 Cost of consumer water products 3,975 3,485 Research and development 803 904 Selling, general and administrative 10,250 8,891 48,391 37,042 Income from operations 4,644 4,116 Interest income 233 554 Equity income 118 136 Income before income taxes 4,995 4,806 Provision for income taxes 1,598 1,442 Net income $ 3,397 $ 3,364 Earnings per share $ .48 $ .48 Shares used in earnings per share calculations 7,070,000 7,067,000 The accompanying notes are an integral part of these financial statements.
-2- IONICS, INCORPORATED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
March 31, December 31, 1994 1993 ASSETS Current assets: Cash and cash equivalents $ 17,879 $ 21,534 Short-term investments 2,503 8,603 Notes receivable, current 2,581 2,505 Accounts receivable 55,007 57,214 Receivables from affiliated companies 3,509 2,944 Inventories: Raw materials 9,209 9,541 Work in process 4,463 3,016 Finished goods 1,550 1,369 15,222 13,926 Other current assets 4,844 3,231 Total current assets 101,545 109,957 Notes receivable, long-term 5,002 4,919 Investments in affiliated companies 5,131 4,989 Property, plant and equipment: Land 1,802 1,261 Buildings 14,930 13,829 Machinery and equipment 127,772 121,792 Other, including furniture, fixtures and vehicles 19,272 18,918 163,776 155,800 Less accumulated depreciation (59,773) (55,355) 104,003 100,445 Other assets 29,169 29,252 Total assets $244,850 $249,562 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long-term debt $ 270 $ 326 Accounts payable 14,046 12,496 Obligation for purchase of Ionics RCC - 10,974 Customer deposits 6,937 5,668 Accrued commissions 1,650 1,733 Accrued expenses 11,230 13,957 Taxes on income 1,394 928 Total current liabilities 35,527 46,082 Long-term debt and notes payable 109 109 Deferred income taxes 4,010 2,699 Other liabilities 648 591 Stockholders' equity: Common stock, par value $1, 30,000,000 authorized shares; issued: 6,949,556 in 1994 and 6,945,805 in 1993 6,950 6,946 Additional paid-in capital 124,304 124,189 Retained earnings 78,971 75,574 Cumulative translation adjustments (5,669) (6,628) Total stockholders' equity 204,556 200,081 Total liabilities and stockholders' equity $244,850 $249,562 The accompanying notes are an integral part of these financial statements.
-3- IONICS, INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS ($000's Omitted) (Unaudited)
Three Months Ended March 31, 1994 1993 Operating activities: Net income $ 3,397 $ 3,364 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,258 3,652 Provision for losses on accounts and notes receivable 149 235 Changes in assets and liabilities: Notes receivable (87) (644) Accounts receivable 1,860 (6,298) Inventories (1,248) (1,550) Other current assets (1,576) 205 Investments in affiliates (111) (149) Accounts payable and accrued expenses (284) 1,073 Income taxes 1,199 967 Other (9) 257 Net cash provided by operating activities 7,548 1,112 Investing activities: Additions to property, plant and equipment (6,592) (3,602) Sale (purchase) of short-term investments 6,226 (842) Payment for Ionics RCC acquisition (11,000) - Net cash used by investing activities (11,366) (4,444) Financing activities: Principal payments on current debt (302) (412) Proceeds from issuance of current debt 179 57 Principal payments on long-term debt - (60) Proceeds from issuance of long-term debt - 69 Proceeds from stock option plans 118 805 Net cash (used)provided by financing activities (5) 459 Effect of exchange rate changes on cash 168 (137) Net change in cash and cash equivalents (3,655) (3,010) Cash and cash equivalents at beginning of period 21,534 13,535 Cash and cash equivalents at end of period $ 17,879 $ 10,525 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 March 31, 1994 and December 31, 1993, the consolidated results of its operations for the three months ended March 31, 1994 and 1993 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, 1994 and 1993 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 1993 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. -5- MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Comparison of the Three Months Ended March 31, 1994 with the Three Months Ended March 31, 1993 Revenues for the first quarter of 1994 increased 28.9% to $53.0 million from $41.2 million in 1993. Revenues were higher in all three business segments. The largest growth was in the Membranes and Related Equipment segment where the growth was due primarily to the acquisition of Resources Conservation Company (Ionics RCC), effective December 1, 1993. The Water, Food and Chemical Supply segment revenues increased due primarily to strong demand for consumer products produced by the Elite Chemicals division, particularly in New England. Higher Elite Chemicals revenues were also experienced in Australia and in the United Kingdom, where the Company's newest bleach manufacturing facility began operating in the fourth quarter of 1993. Revenues also increased with the commencement in the first quarter of 1994 of a contract to provide whey processing equipment and services to Mid-America Dairymen, Inc. in the midwestern United States. The Consumer Water Products segment revenues increased due to a higher volume of bottled water and related products sales and increased sales of home water conditioners. Cost of sales as a percentage of revenues was 70.4% in 1994 and 66.2% in 1993. The increase in 1994 occurred in the Membranes and Related Equipment segment. This increase was due to a less favorable mix between capital equipment and spare parts revenues and the continuing weakness in this segment's membrane-based capital equipment business resulting from slow bookings throughout most of 1993. The acquisition of Ionics RCC, which had gross margins (and operating expenses) below those for the traditional Membranes and Related Equipment segment, also contributed to the 1994 increase. The increase in cost of sales as a percentage of revenues for the Membranes and Related Equipment segment was partially offset by improvements in both the Water, Food and Chemical Supply segment and the Consumer Water Products segment as increased volume and operating efficiencies in the Elite Chemicals and Aqua Cool businesses reduced the unit costs of manufacturing. Operating expenses as a percentage of revenues were 20.8% in the first quarter of 1994, down from 23.8% in the first quarter of 1993. As noted above, Ionics RCC's operating expenses as a percentage of revenues were lower than those of the traditional Membranes and Related Equipment segment. Furthermore, the improvement reflected the absorption of relatively fixed operating expenses by increased sales volume and continued emphasis on expense controls. Interest income decreased in the first quarter of 1994 due to lower invested balances, resulting from payment for the Ionics RCC acquisition, debt repayment of Aqua Cool Enterprises, Inc. in the second quarter of 1993 and capital spending. -6- Financial Condition Working capital increased by $2.1 million during the first three months of 1994 and the Company's current ratio increased to 2.9 at March 31, 1994 from 2.4 at December 31, 1993. Cash provided from net income, depreciation and a reduction in short-term investments totaled $13.9 million in the first three months of 1994 while the primary uses of cash were for the payment of the Ionics RCC acquisition obligation and capital expenditures. Significant capital expenditures were made for bottled water operations, bleach operations, trailers and other "own and operate" facilities. At March 31, 1994 the Company had $20.4 million in cash and short- term investments, a decrease of $9.8 million from December 31, 1993. 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- 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 The Company filed a report on Form 8-K dated February 7, 1994, reporting under Item 5 the completion of the acquisition of certain assets of Resources Conservation Company. No financial statements were required or filed. 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- 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 13, 1994 By: /s/Arthur L. Goldstein Arthur L. Goldstein Chairman and Chief Executive Officer (duly authorized officer) Date: May 13, 1994 By: /s/Robert J. Halliday Robert J. Halliday Vice President, Finance and Accounting (chief financial officer) -9- EXHIBIT INDEX Exhibit Page 11 Computation of Earnings Per Share 11 - - -10- EX-11 2 EXHIBIT 11 EXHIBIT 11 IONICS, INCORPORATED COMPUTATION OF EARNINGS PER SHARE (Amounts in thousands except per share data)
Three Months Ended March 31, 1994 1993 Net income $3,397 $3,364 Earnings per common and common equivalent share: Weighted average number of shares outstanding 6,947 6,918 Incremental shares for stock options under treasury stock method 123 149 Weighted average number of common and common equivalent shares outstanding 7,070 7,067 Earnings per common and common equivalent share $ .48 $ .48 Earnings per common and common equivalent share - assuming full dilution: Weighted average number of shares outstanding 6,947 6,918 Incremental shares for stock options under treasury stock method 131 149 Weighted average number of common and common equivalent shares outstanding - assuming full dilution 7,078 7,067 Earnings per common and common equivalent share - assuming full dilution $ .48 $ .48
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