-----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, chxwaNm8h/5Nf9IcF7vC9lDt7iOkUUUhpaSw6UjweBx/ILCsvz6LxWZGxWR2Ih+B E0fe34uYNpSsm4S/ONKMiQ== 0000052466-94-000029.txt : 19941121 0000052466-94-000029.hdr.sgml : 19941121 ACCESSION NUMBER: 0000052466-94-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NONE 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: 94559033 BUSINESS ADDRESS: STREET 1: 65 GROVE ST CITY: WATERTOWN STATE: MA ZIP: 02172 BUSINESS PHONE: 6179262500 10-Q 1 10-Q 1 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 September 30, 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 September 30, 1994 Common Stock, Par Value $1 6,980,195 Shares 1/ 2 IONICS, INCORPORATED FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 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 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/ 3 PART I - FINANCIAL INFORMATION IONICS, INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except share amounts)
Three Months Ended Nine Months Ended September 30, September 30, 1994 1993 1994 1993 Net revenue: Membranes and related equipment $29,852 $21,956 $ 84,186 $ 67,382 Water, food and chemical supply 16,617 12,588 47,461 38,226 Consumer water products 9,981 8,247 27,666 23,959 56,450 42,791 159,313 129,567 Costs and expenses: Cost of membranes and related equipment 22,746 15,756 64,291 47,743 Cost of water, food and chemical supply 11,507 8,734 32,854 26,802 Cost of consumer water products 4,851 3,987 13,236 11,717 Research and development 808 863 2,468 2,749 Selling, general and administrative 10,861 9,204 31,322 27,826 50,773 38,544 144,171 116,837 Income from operations 5,677 4,247 15,142 12,730 Interest income 278 343 807 1,418 Equity income 180 433 449 709 Income before income taxes 6,135 5,023 16,398 14,857 Provision for income taxes 1,963 1,507 5,247 4,457 Net income $ 4,172 $ 3,516 $ 11,151 $ 10,400 Earnings per share $ .59 $ .50 $ 1.58 $ 1.48 Shares used in earnings per share calculations 7,095,000 7,033,000 7,077,000 7,047,000 The accompanying notes are an integral part of these financial statements. -2- 3/
4 IONICS, INCORPORATED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in thousands, except share amounts)
September 30, December 31, 1994 1993 ASSETS Current assets: Cash and cash equivalents $ 17,498 $ 21,534 Short-term investments 668 8,603 Notes receivable, current 2,862 2,505 Accounts receivable 58,829 57,214 Receivables from affiliated companies 2,902 2,944 Inventories: Raw materials 9,345 9,541 Work in process 6,121 3,016 Finished goods 2,128 1,369 17,594 13,926 Other current assets 4,899 3,231 Total current assets 105,252 109,957 Notes receivable, long-term 5,193 4,919 Investments in affiliated companies 5,250 4,989 Property, plant and equipment: Land 2,404 1,261 Buildings 19,904 13,829 Machinery and equipment 142,399 121,792 Other, including furniture, fixtures and vehicles 21,710 18,918 186,417 155,800 Less accumulated depreciation (69,721) (55,355) 116,696 100,445 Other assets 28,738 29,252 Total assets $261,129 $249,562 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of long-term debt $ 592 $ 326 Accounts payable 21,524 12,496 Obligation for purchase of Ionics RCC - 10,974 Customer deposits 4,169 5,668 Accrued commissions 1,755 1,733 Accrued expenses 13,912 13,957 Taxes on income 2,525 928 Total current liabilities 44,477 46,082 Long-term debt and notes payable 110 109 Deferred income taxes 2,003 2,699 Other liabilities 791 591 Stockholders' equity: Common stock, par value $1, 30,000,000 authorized shares; issued: 6,980,195 in 1994 and 6,945,805 in 1993 6,980 6,946 Additional paid-in capital 124,980 124,189 Retained earnings 86,725 75,574 Cumulative translation adjustments (4,937) (6,628) Total stockholders' equity 213,748 200,081 Total liabilities and stockholders' equity $261,129 $249,562 The accompanying notes are an integral part of these financial statements. -3- 4/
5 IONICS, INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands)
Nine Months Ended September 30, 1994 1993 Operating activities: Net income $ 11,151 $ 10,400 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,512 11,280 Provision for losses on accounts and notes receivable 378 623 Changes in assets and liabilities: Notes receivable (465) 6,135 Accounts receivable (1,034) (10,214) Inventories (3,495) ( 3,788) Other current assets (1,543) 1,870 Investments in affiliates (216) (581) Accounts payable and accrued expenses 6,085 (4,358) Income taxes (113) 113 Other 288 (6,788) Net cash provided by operating activities 25,548 4,692 Investing activities: Additions to property, plant and equipment (27,926) (11,150) Sale of short-term investments 8,270 12,221 Payment for RCC acquisition (11,000) - Acquisitions, net of cash - (7,959) Net cash used by investing activities (30,656) (6,888) Financing activities: Principal payments on current debt (260) (8,755) Proceeds from issuance of current debt 162 8,116 Principal payments on long-term debt - (435) Proceeds from issuance of long-term debt - 257 Proceeds from stock option plans 825 909 Net cash provided by financing activities 727 92 Effect of exchange rate changes on cash 345 (178) Net change in cash and cash equivalents (4,036) (2,282) Cash and cash equivalents at beginning of period 21,534 13,535 Cash and cash equivalents at end of period $ 17,498 $ 11,253 The accompanying notes are an integral part of these financial statements. 5/ -4-
6 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 September 30, 1994 and December 31, 1993, the consolidated results of its operations for the three and nine months ended September 30, 1994 and 1993 and the consolidated cash flows for the nine months then ended. 2. The consolidated results of operations of the Company for the three and nine months ended September 30, 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- 6/ 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Comparison of the Three and Nine Months Ended September 30, 1994 with the Three and Nine Months Ended September 30, 1993 Revenues for the third quarter of 1994 increased 31.9% to $56.5 million from $42.8 million in 1993. Revenues for the nine-month period increased 23.0% to $159.3 million from $129.6 million in the comparable period in 1993. Revenues were higher in all three business segments for both the three and nine-month periods. The largest growth in revenues for both periods was in the Membranes and Related Equipment segment due primarily to the acquisition of Resources Conservation Company (Ionics RCC), effective December 1, 1993, and to growth in the sale of ultrapure water systems, particularly to the semiconductor industry. This growth was partially offset by lower sales of other traditional capital equipment. Revenues within the Water, Food and Chemical Supply segment increased during both periods due to strong demand for consumer products produced by the Elite Chemicals Division in New England, Australia and in the United Kingdom, where the Company's newest bleach manufacturing facility began operating in the fourth quarter of 1993. Growth was also experienced during both periods in the Ionics Ultrapure Water subsidiary in California due to the strength of service business activities, including own and operate activities and the regeneration of ion-exchange resins. The commencement in the first quarter of 1994 of a contract to provide whey processing equipment and services to Mid-America Dairymen, Inc. also produced revenue increases in both periods. Revenues within the Consumer Water Products segment also increased during both periods primarily from higher volumes of bottled water at existing locations and the addition of distribution facilities in Cincinnati and Columbus, Ohio, Raleigh-Durham, North Carolina and Birmingham, England. These volume increases have been partially supported by an increase in production capacity resulting from the replacement of the bottling facility in Maryland with one in Virginia. Revenues also increased during both periods resulting from additional home water product sales. Cost of sales as a percentage of revenues for the third quarter was 69.3% in 1994 and 66.5% in 1993. For the nine-month period, cost of sales as a percentage of revenues was 69.3% in 1994 and 66.6% in 1993. The increase in 1994 in both periods occurred primarily in the Membranes and Related Equipment segment. This increase was due to a less favorable mix between capital equipment and spare parts revenues and to an increase in manufacturing overhead costs as a percentage of -6- 7/ 8 revenues resulting from reduced sales of traditional capital equipment noted above. The increase also resulted because Ionics RCC (acquired as of December 1993) has a greater percentage of its total costs classified as cost of goods sold as compared to the rest of the Membranes and Related Equipment segment. However, Ionics RCC's increased costs of goods sold are offset by lower operating costs, as noted below. Reductions during the nine-month period in cost of sales as a percentage of revenues in the Water, Food and Chemical Supply segment and the Consumer Water Products segment partially offset the increases in the Membranes and Related Equipment segment. These improvements were attributable to lower unit costs of manufacturing due to increased volume and to continued achievement of operating efficiencies. Operating expenses as a percentage of revenues were 20.7% in the third quarter of 1994, down from 23.5% in 1993. For the nine-month period, operating expenses as a percentage of revenues decreased to 21.2% in 1994 compared to 23.6% in 1993. Both periods improved due to continued emphasis on expense controls and the absorption of relatively fixed operating expenses by increased sales volume. Furthermore, as noted above, Ionics RCC's operating expenses are lower than those of the traditional Membranes and Related Equipment segment. Interest income decreased in the third quarter and nine-month periods due to lower invested balances, resulting from payment of the RCC acquisition obligation in the first quarter of 1994, and increased capital spending during both periods. Financial Condition Working capital decreased by $3.1 million during the first nine months of 1994 and the Company's current ratio remained at 2.4 at September 30, 1994 compared to December 31, 1993. Cash provided from net income, depreciation, an increase in accounts payable and a reduction of short- term investments totaled $40.0 million in the first nine 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 manufacturing operations, trailers and other "own and operate" facilities. At September 30, 1994, the Company had $18.2 million in cash and short- term investments, a decrease of $12.0 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- 8/ 9 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 September 30, 1994. 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/ 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: November 11, 1994 By:/s/Arthur L. Goldstein Arthur L. Goldstein Chairman and Chief Executive Officer (duly authorized officer) Date: November 11, 1994 By:/s/Robert J. Halliday Robert J. Halliday Vice President, Finance and Accounting (chief financial officer) -9- 10/ 11 EXHIBIT INDEX Exhibit Page 11 Computation of Earnings Per Share 12 27 Financial Data Schedule 13 (for electronic purposes only) -10- 11/ EX-11 2 EXHIBIT 11 IONICS, INCORPORATED COMPUTATION OF EARNINGS PER SHARE (Amounts in thousands, except per share data)
Three Months Ended Nine months Ended September 30, September 30, 1994 1993_ 1994 1993 Net income $4,172 $3,516 $11,151 $10,400 Earnings per common and common equivalent share: Weighted average number of shares outstanding 6,966 6,941 6,956 6,932 Incremental shares for stock options under treasury stock method 129 92 121 115 Weighted average number of common and common equivalent shares outstanding 7,095 7,033 7,077 7,047 Earnings per common and common equivalent share $ .59 $ .50 $ 1.58 $ 1.48 Earnings per common and common equivalent share - assuming full dilution: Weighted average number of shares outstanding 6,966 6,941 6,956 6,932 Incremental shares for stock options under treasury stock method 130 107 124 120 Weighted average number of common and common equivalent shares outstanding - assuming full dilution (A) 7,096 7,048 7,080 7,052 Earnings per common and common equivalent share - assuming $ .59 $ .50 $ 1.58 $ 1.47 full dilution (A) (A) Dilution is less than 3% so the primary basis was used for per share calculations. -11- 12/
EX-27 3
5 1,000 9-MOS DEC-31-1994 SEP-30-1994 17,498 668 65,839 (1,246) 17,594 105,252 186,417 (69,721) 261,129 44,477 0 6,980 0 0 206,768 261,129 159,313 159,313 110,381 110,381 0 378 0 16,398 5,247 11,151 0 0 0 11,151 1.58 1.58
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