-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QIJ1OYFaR08KKdc2r7dNCNEDcv5HZUm7QJnv+0vyQVK7rKGwILc/lTdcKnHjoS7C 3XwiHR9dQFmGYvnz72AWFQ== 0000052466-98-000007.txt : 19980624 0000052466-98-000007.hdr.sgml : 19980624 ACCESSION NUMBER: 0000052466-98-000007 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980623 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: 11-K SEC ACT: SEC FILE NUMBER: 001-07211 FILM NUMBER: 98652603 BUSINESS ADDRESS: STREET 1: 65 GROVE ST CITY: WATERTOWN STATE: MA ZIP: 02172 BUSINESS PHONE: 6179262500 11-K 1 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 IONICS SECTION 401(K) STOCK SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS DECEMBER 31, 1997
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 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.
-3- /12 IONICS SECTION 401(K) STOCK SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS DECEMBER 31, 1996
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 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.
-4- /13 IONICS SECTION 401(K) STOCK SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS DECEMBER 31, 1997
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 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
/14 IONICS SECTION 401(K) STOCK SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS DECEMBER 31, 1997
TOTAL PARTICIPANT- DIRECTED CASH/ PARTICIPANT FUNDS OTHER LOANS TOTAL 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
/15 IONICS SECTION 401(K) STOCK SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1996
PARTICIPANT - DIRECTED FUNDS IONICS, INC. ASSET BT COMMON PURITAN MANAGER CONTRAFUND PYRAMID PARTICIPANT CASH/ STOCK FUND FUND FUND FUND GIC FUND LOANS OTHER TOTAL 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.
-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:
Market Value Cost 1997 1996 1997 1996 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
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:
1997 1996 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
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 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
Face Amount, Shares or Current Description of Investment Rate Cost Value 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
The accompanying notes are an integral part of these supplemental schedules. -12- /22 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
Current Value Of Asset On Purchase Selling Cost of Transaction Net Gain Description of Asset Price Price Asset Date (Loss) 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.
-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 EX-23 2 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 -15- /25 -----END PRIVACY-ENHANCED MESSAGE-----