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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2002
-------------
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 (IRS Employer Identification Number)
incorporation or organization)
65 Grove Street
Watertown, Massachusetts 02472
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 926-2500
Former name, former address and former fiscal year,
if changed since last report: None
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 preceeding 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.
At June 30, 2002 the Company had 17,551,779 shares of Common Stock, par value $1
per share, outstanding.
Page 1 of 22 pages
Page -1-
IONICS, INCORPORATED
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 2002
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations
Three Months and Six Months Ended June 30, 2002 and 2001 2
Consolidated Balance Sheets
June 30, 2002 and December 31, 2001 3
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2002 and 2001 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 13
Item 3. Quantitative and Qualitative Disclosures about Market Risk 18
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
Page -2-
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
IONICS, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
-------------------------- ----------------------------
2002 2001 2002 2001
------------ ----------- ------------ ------------
Revenues:
Equipment Business Group $38,648 $46,166 $76,919 $91,147
Ultrapure Water Group 25,187 30,818 50,222 71,666
Consumer Water Group 8,676 30,247 19,167 59,592
Instrument Business Group 6,810 6,443 13,354 14,231
------------ ----------- ------------ ------------
79,321 113,674 159,662 236,636
------------ ----------- ------------ ------------
Costs and expenses:
Cost of sales of Equipment Business Group 28,557 35,826 57,191 70,826
Cost of sales of Ultrapure Water Group 18,613 24,385 37,611 55,065
Cost of sales of Consumer Water Group 4,875 15,525 11,705 33,529
Cost of sales of Instrument Business Group 2,584 2,990 5,337 6,429
Research and development 1,594 1,609 3,215 3,299
Selling, general and administrative 21,080 27,580 40,580 56,081
------------ ----------- ------------ ------------
77,303 107,915 155,639 225,229
------------ ----------- ------------ ------------
Income from operations 2,018 5,759 4,023 11,407
Interest income 868 746 1,861 971
Interest expense (376) (1,448) (936) (3,052)
Equity income 782 589 1,674 1,030
------------ ----------- ------------ ------------
Income before income taxes and minority interest 3,292 5,646 6,622 10,356
Provision for income taxes 1,119 1,920 2,251 3,521
------------ ----------- ------------ ------------
Income before minority interest 2,173 3,726 4,371 6,835
Minority interest in (earnings) losses (79) 443 (340) 329
------------ ----------- ------------ ------------
Net income $ 2,094 $ 4,169 $ 4,031 $ 7,164
============ =========== ============ ============
Basic earnings per share $ 0.12 $ 0.24 $ 0.23 $ 0.43
============ =========== ============ ============
Diluted earnings per share $ 0.12 $ 0.24 $ 0.23 $ 0.42
============ =========== ============ ============
Shares used in basic earnings per share calculations 17,547 17,100 17,528 16,746
============ =========== ============ ============
Shares used in diluted earnings per share calculations 17,707 17,183 17,742 16,886
============ =========== ============ ============
The accompanying notes are an integral part of these consolidated financial statements.
Page -3-
IONICS, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except share and par value amounts)
June 30, December 31,
2002 2001
---------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $ 139,127 $ 178,283
Short-term investments - 21
Notes receivable, current 4,547 4,892
Accounts receivable, net 111,009 118,255
Receivables from affiliated companies 24,320 17,199
Inventories:
Raw materials 19,410 20,047
Work in process 9,563 7,547
Finished goods 7,095 5,219
---------------- ----------------
36,068 32,813
Other current assets 11,549 11,031
Deferred income taxes 15,787 16,297
---------------- ----------------
Total current assets 342,407 378,791
Notes receivable, long-term 24,497 23,210
Investments in affiliated companies 22,757 23,798
Property, plant and equipment:
Land 6,382 6,288
Buildings 42,176 41,272
Machinery and equipment 261,683 243,964
Other, including furniture, fixtures and vehicles 30,587 29,938
---------------- ----------------
340,828 321,462
Less accumulated depreciation (168,240) (154,430)
---------------- ----------------
172,588 167,032
Deferred income taxes, long-term 12,643 12,643
Goodwill 19,215 19,037
Other assets 9,166 8,802
---------------- ----------------
Total assets $ 603,273 $ 633,313
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt $ 9,575 $ 14,257
Accounts payable 26,005 34,640
Customer deposits 4,814 2,159
Accrued commissions 1,688 2,011
Accrued expenses 48,188 59,524
Income taxes payable 24,756 45,735
---------------- ----------------
Total current liabilities 115,026 158,326
Long-term debt and notes payable 11,149 10,126
Deferred income taxes 37,810 34,199
Other liabilities 5,555 7,309
Stockholders' equity:
Common stock, par value $1, authorized shares: 55,000,000;
issued: 17,551,779 in 2002 and 17,477,005 in 2001 17,552 17,477
Additional paid-in capital 190,353 188,555
Retained earnings 246,348 242,317
Accumulated other comprehensive loss (20,520) (24,996)
---------------- ----------------
Total stockholders' equity 433,733 423,353
---------------- ----------------
Total liabilities and stockholders' equity $ 603,273 $ 633,313
================ ================
The accompanying notes are an integral part of these consolidated financial statements.
Page -4-
IONICS, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Six Months Ended
June 30,
-----------------------------------
Operating activities: 2002 2001
---------------- ----------------
Net income $ 4,031 $ 7,164
Adjustments to reconcile net income to net cash (used)
provided by operating activities:
Depreciation and amortization 11,240 16,167
Amortization of goodwill - 1,509
Provision for losses on accounts and notes receivable 332 2,924
Equity in earnings of affiliates (1,674) (1,030)
Changes in assets and liabilities:
Notes receivable (1,884) (4,467)
Accounts receivable 2,656 (2,337)
Inventories (2,539) (6,291)
Other current assets 329 2,876
Investments in affiliates 1,984 72
Accounts payable and accrued expenses (19,563) (12,366)
Income taxes (19,574) 1,686
Other (1,838) 506
---------------- ----------------
Net cash (used) provided by operating activities (26,500) 6,413
---------------- ----------------
Investing activities:
Additions to property, plant and equipment (14,113) (18,402)
Disposals of property, plant and equipment 546 1,185
Additional investments in affiliates - (4,487)
Acquisitions, net of cash acquired (635) -
Sale of short-term investments 184 452
---------------- ----------------
Net cash used by investing activities (14,018) (21,252)
---------------- ----------------
Financing activities:
Principal payments on current debt (53,374) (54,222)
Proceeds from borrowings of current debt 48,618 45,918
Principal payments on long-term debt (480) (847)
Proceeds from borrowings of long-term debt 1,135 227
Proceeds from issuance of common stock 60 21,814
Proceeds from issuance of stock under stock option plans 1,654 3,095
---------------- ----------------
Net cash (used) provided by financing activities (2,387) 15,985
---------------- ----------------
Effect of exchange rate changes on cash 3,749 (788)
---------------- ----------------
Net change in cash and cash equivalents (39,156) 358
Cash and cash equivalents at beginning of period 178,283 25,497
---------------- ----------------
Cash and cash equivalents at end of period $ 139,127 $ 25,855
================ ================
The accompanying notes are an integral part of these consolidated financial statements.
Page -5-
IONICS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated quarterly financial statements of Ionics, Incorporated
(the "Company") are unaudited; however, in the opinion of the management
of the Company, all adjustments have been made that are necessary for a
fair statement of the consolidated financial position of the Company, the
consolidated results of its operations and the consolidated cash flows
for each period presented. The consolidated results of operations for the
interim periods are not necessarily indicative of the results of
operations to be expected for the full year. These financial statements
should be read in conjunction with the Company's 2001 Annual Report as
filed on Form 10-K with the Securities and Exchange Commission. Certain
prior year amounts have been reclassified to conform to the current year
presentations.
2. Commitments and Contingencies
The Company is involved in the normal course of its business in various
litigation matters, some of which are in the pre-trial discovery stages.
The Company believes that none of the pending matters will have an
outcome material to its financial condition or results of operations.
In the second quarter of 2002, construction was completed on the first
four (out of five) phases of the Trinidad desalination facility owned by
Desalination Company of Trinidad and Tobago Ltd. (Desalcott), in which
the Company has a 40% equity interest, and the facility commenced water
deliveries to its customer, the Water and Sewerage Authority of Trinidad
and Tobago. The Company has loaned $10 million to the 60% equity owner,
Hafeez Karamath Engineering Services Ltd. (HKES), as the source of HKES'
equity contribution to Desalcott, in addition to the $10 million
contributed by the Company for its 40% equity interest. In 2000,
Desalcott entered into a "bridge loan" agreement with a Trinidad bank
providing $60 million in construction financing. Effective November 8,
2001, the loan agreement was amended to increase maximum borrowings to
$79.9 million. The Company has committed to lend up to $10 million to
Desalcott as an additional source of funds for project completion costs
once all bridge loan proceeds have been expended. However, the bridge
loan of $79.9 million and the $20 million equity provided to Desalcott,
together with the additional $10 million dollars to be loaned to
Desalcott by the Company, will not provide sufficient funds to pay all of
Desalcott's obligations in completing construction and commissioning of
the project prior to receipt of long-term financing. Included in these
obligations is approximately $22.3 million payable to the Company's
Trinidad subsidiary for equipment and services in connection with the
construction of the facility. The Company intends to convert $10 million
of this amount into a loan to Desalcott to satisfy the Company's loan
commitment described above. The Company anticipates that Desalcott will
pay its outstanding obligations to the Company's subsidiary partially out
of cash flow from the sale of water and from the proceeds of long-term
debt financing. However, although Desalcott has received proposals,
including a term sheet, for long-term debt financing which it anticipates
obtaining by year-end, there is no assurance that such financing will be
obtained on terms acceptable to Desalcott.
During 2001, the Company acquired a 25% equity ownership interest in a
Kuwaiti project company, Utilities Development Company W.L.L. (UDC),
which was awarded a concession agreement by an agency of the Kuwaiti
government for the construction, ownership and operation of wastewater
reuse facility in Kuwait. At March 31, 2002, the Company had deferred
Page -6-
costs of approximately $1.1 million relating primarily to preliminary
project management and initial design work on the project, and had
invested $1.5 million in the project company. During the second quarter
of 2002, UDC entered into agreements for the long-term financing of the
project, and accordingly the Company commenced recognizing revenue in
accordance with American Institute of Certified Public Accountants
Statement of Position No. 81-1, "Accounting for Performance of
Construction-Type and Certain Construction-Type Contracts."
On December 31, 2001, the Company completed the sale of its Aqua Cool
Pure Bottled Water operations in the United States, United Kingdom and
France to affiliates of Perrier-Vittel S.A., a subsidiary of Nestle S.A.
(Nestle), for approximately $220 million, of which $10 million is being
held in escrow pursuant to the terms of the divestiture agreement. The
amount of the purchase price is subject to final adjustment based on the
number of customers and working capital levels of the transferred
businesses, in each case as determined in accordance with the divestiture
agreement. The process for determining the number of customers and
working capital levels, as well as any related purchase price
adjustments, is under way. In addition, Nestle is seeking payment of
certain amounts under the indemnification provisions of the divestiture
agreement. While the ultimate amount of purchase price adjustments or
indemnification payments, if any, cannot yet be determined with
certainty, the Company currently believes that the reserves it has
established for purchase price adjustments and the escrowed amount will
be adequate in all material respects to cover the resolution of these
issues. Accordingly, no additional provision for any liability that might
result from any of these matters has been included in the accompanying
financial statements for the current year.
Page -7-
3. Earnings per share (EPS) calculations
(Amounts in thousands, except per share amounts)
For the three months ended June 30,
----------------------------------------------------------------------------------------------
2002 2001
---------------------------------------------- --------------------------------------------
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
-------------- ------------ ------------ ------------ ------------- -------------
Basic EPS
Income available to
common stockholders $ 2,094 17,547 $ 0.12 $ 4,169 17,100 $ 0.24
Effect of dilutive
stock options - 160 - - 83 -
-------------- ------------ ------------ ------------ ------------- -------------
Diluted EPS $ 2,094 17,707 $ 0.12 $ 4,169 17,183 $ 0.24
============== ============ ============ ============ ============= =============
For the six months ended June 30,
----------------------------------------------------------------------------------------------
2002 2001
---------------------------------------------- --------------------------------------------
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
-------------- ------------ ------------ ------------ ------------- -------------
Income available to
common stockholders $ 4,031 17,528 $ 0.23 $ 7,164 16,746 $ 0.43
Effect of dilutive
stock options - 214 - - 140 (0.01)
-------------- ------------ ------------ ------------ ------------- -------------
Diluted EPS $ 4,031 17,742 $ 0.23 $ 7,164 16,886 $ 0.42
============== ============ ============ ============ ============= =============
The effect of dilutive stock options excludes those stock options for
which the impact would have been antidilutive based on the exercise price
of the options. The number of options that were antidilutive for the
three-month periods ended June 30, 2002 and 2001 was 1,409,767 and
1,555,834, respectively. The number of options that were antidilutive for
the six-month periods ended June 30, 2002 and 2001 was 635,250 and
1,541,234, respectively.
4. Comprehensive Income
The Company has adopted the Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," which establishes
standards for the reporting and display of comprehensive income and its
components. The table below sets forth the "comprehensive income" as
defined by SFAS No. 130 for the three month and six month periods ended
June 30, 2002 and 2001, respectively.
Page -8-
(Amounts in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- -------------------------------
2002 2001 2002 2001
-------------- ------------- -------------- -------------
Net income $ 2,094 $ 4,169 $ 4,031 $ 7,164
Other comprehensive income,
net of tax:
Translation adjustments 7,056 (494) 4,476 (5,084)
-------------- ------------- -------------- -------------
Comprehensive income $ 9,150 $ 3,675 $ 8,507 $ 2,080
============== ============= ============== =============
5. Segment Information
The Company has four reportable "business group" segments corresponding
to a "business group" structure. In 2002, the Company instituted a
matrix-type organization. As part of the matrix organization, the
Company's trailer leasing and non-consumer bleach based chemical supply
businesses which were included in the Equipment Business Group in prior
periods now are included in the Ultrapure Water Group. Segment
information for all periods presented has been restated to reflect this
change. Additionally, the Company's Aqua Cool Pure Bottled Water
business, which had been reported as part of the operations of the
Consumer Water Group, was sold to affiliates of Nestle S.A. on December
31, 2001 and therefore does not appear in 2002 operations.
The following table summarizes the Company's operations by the four
business group segments and "Corporate." Corporate includes legal and
research and development expenses not allocated to the business groups,
certain corporate administrative and insurance costs, foreign exchange
gains and losses on corporate assets, as well as the elimination of
intersegment transfers.
Page -9-
For the three months ended June 30, 2002
-----------------------------------------------------------------------------------
Equipment Ultrapure Consumer Instrument
Business Water Water Business
Group Group Group Group Corporate Total
------------ ------------ ------------ ------------- ----------- ------------
(Amounts in thousands)
Revenue - unaffiliated
customers $38,648 $ 25,187 $ 8,676 $ 6,810 $ - $79,321
Inter-segment transfers 1,658 163 - 635 (2,456) -
Gross profit 10,091 6,574 3,801 4,226 - 24,692
Equity income (loss) 689 9 265 - (181) 782
Income (loss) before interest, tax
and minority interest 3,117 657 (1,166) 1,237 (1,045) 2,800
Interest income - - - - - 868
Interest expense - - - - - (376)
Income before income taxes
and minority interest - - - - - 3,292
For the three months ended June 30, 2001
-----------------------------------------------------------------------------------
Equipment Ultrapure Consumer Instrument
Business Water Water Business
Group Group Group Group Corporate Total
------------ ------------ ------------ ------------- ----------- ------------
(Amounts in thousands)
Revenue - unaffiliated
customers $46,166 $ 30,818 $ 30,247 $ 6,443 $ - $113,674
Inter-segment transfers 590 788 - 316 (1,694) -
Gross profit 10,340 6,433 14,722 3,453 - 34,948
Equity income (loss) 468 (4) 144 - (19) 589
Income (loss) before interest, tax
and minority interest 3,465 (781) 3,679 557 (572) 6,348
Interest income - - - - - 746
Interest expense - - - - - (1,448)
Income before income taxes
and minority interest - - - - - 5,646
Page -10-
For the six months ended June 30, 2002
-----------------------------------------------------------------------------------
Business Water Water Business
Group Group Group Group Corporate Total
------------ ------------ ------------ ------------- ----------- ------------
(Amounts in thousands)
Revenue - unaffiliated
customers $76,919 $ 50,222 $ 19,167 $ 13,354 $ - $159,662
Inter-segment transfers 3,552 311 - 1,112 (4,975) -
Gross profit 19,728 12,611 7,462 8,017 - 47,818
Equity income (loss) 1,345 7 503 - (181) 1,674
Income (loss) before interest, tax
and minority interest 5,180 (411) (2,661) 2,014 1,575 5,697
Interest income - - - - - 1,861
Interest expense - - - - - (936)
Income before income taxes
and minority interest - - - - - 6,622
Identifiable assets 296,114 136,171 68,976 28,719 50,536 580,516
Investments in affiliated
companies 17,335 - 2,870 - 2,552 22,757
Goodwill 11,209 7,062 944 - - 19,215
For the six months ended June 30, 2001
-----------------------------------------------------------------------------------
Equipment Ultrapure Consumer Instrument
Business Water Water Business
Group Group Group Group Corporate Total
------------ ------------ ------------ ------------- ----------- ------------
(Amounts in thousands)
Revenue - unaffiliated
customers $91,147 $ 71,666 $ 59,592 $ 14,231 $ - $236,636
Inter-segment transfers 1,987 1,969 - 998 (4,954) -
Gross profit 20,321 16,601 26,063 7,802 - 70,787
Equity income (loss) 839 50 246 - (105) 1,030
Income (loss) before interest, tax
and minority interest 6,366 1,022 4,994 1,708 (1,653) 12,437
Interest income - - - - - 971
Interest expense - - - - - (3,052)
Income before income taxes
and minority interest - - - - - 10,356
Goodwill 11,245 16,594 20,033 1,830 - 49,702
Identifiable assets at June 30, 2001 did not differ materially from
identifiable assets at December 31, 2001.
6. Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 143, "Accounting
for Obligations Associated with the Retirement of Long-Lived Assets."
SFAS No. 143 provides the accounting requirements for retirement
obligations associated with tangible long-lived assets. SFAS No. 143 is
effective for financial statements for fiscal years beginning after June
15, 2002. The Company has determined that SFAS No. 143 will not have a
material impact on its financial position and results of operations.
In October 2001, FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." SFAS No. 144 requires one method of
Page -11-
accounting for long-lived assets disposed of by sale. SFAS No. 144 is
effective for financial statements issued for fiscal years beginning after
December 15, 2001. The Company adopted SFAS No. 144 effective January 1,
2002. SFAS No. 144 did not have a material impact on the Company's
financial position or results of operations.
In May 2002, FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections as of April 2002." SFAS No. 145 rescinds FASB Statement No. 4,
"Reporting Gains and Losses from Extinguishment of Debt," and an amendment
of that statement. SFAS No. 145 amends FASB Statement No. 13, "Accounting
for Leases," to eliminate an inconsistency between the required accounting
for sale-leaseback transactions and the required accounting for certain
lease modifications that have economic effects that are similar to
sale-leaseback transactions. SFAS No. 145 also amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. SFAS
No. 145 is effective for financial statements for fiscal years beginning
after May 15, 2002. The Company does not believe that SFAS No. 145 will
have a material impact on the Company's financial position and results of
operations.
In July 2002, FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal
plan and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." SFAS No. 146 is to be applied prospectively to exit or
disposal activities initiated after December 31, 2002 and accordingly,
the Company can only determine prospectively the impact, if any, SFAS No.
146 would have on the Company's financial position and results of
operations.
7. Goodwill and Intangible Assets
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets." This accounting standard addresses financial
accounting and reporting for goodwill and other intangible assets and
requires that goodwill amortization be discontinued and replaced with
periodic tests of impairment. A two-step impairment test is used to first
identify potential goodwill impairment and then measure the amount of
goodwill impairment loss, if any. SFAS No. 142 is effective for fiscal
years beginning after December 15, 2001, and is required to be applied at
the beginning of the fiscal year. Impairment losses, if any, that arise
due to the initial application of this standard would be reported as a
cumulative effect of a change in accounting principle. The first step of
the goodwill impairment test, which must be completed within six months
of the effective date of this standard, identifies any potential goodwill
impairment. As of June 30, 2002, the Company completed the transitional
goodwill impairment test and determined that no adjustment to goodwill
was necessary.
In accordance with SFAS No. 142, amortization of goodwill was
discontinued as of January 1, 2002. All of the Company's intangible
assets are subject to amortization. The Company did not record any
reclassification of amounts of intangible assets into or out of the
amounts previously reported as goodwill.
Page -12-
The following tables reflect the adjustments to selected consolidated
financial information to present pro forma amounts which exclude
amortization of goodwill:
(Amounts in thousands, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
----------------------------------------------------------
2002 2001 2002 2001
------------- ------------- ------------ ------------
Revenues $ 79,321 $ 113,674 $ 159,662 $ 236,636
Income before income taxes and
minority interest $ 3,292 $ 5,646 $ 6,622 $ 10,356
Goodwill amortization - 829 - 1,509
---------------------------- ---------------------------
Adjusted income before income taxes
and minority interest $ 3,292 $ 6,475 $ 6,622 $ 11,865
============================ ===========================
Net income $ 2,094 $ 4,169 $ 4,031 $ 7,164
Goodwill amortization, net of tax - 651 - 1,185
---------------------------- ---------------------------
Adjusted net income $ 2,094 $ 4,820 $ 4,031 $ 8,349
============================ ===========================
Reported basic earnings per share $ 0.12 $ 0.24 $ 0.23 $ 0.43
Goodwill amortization, net of tax - 0.04 - 0.07
---------------------------- ---------------------------
Adjusted basic earnings per share $ 0.12 $ 0.28 $ 0.23 $ 0.50
============================ ===========================
Reported diluted earnings per share $ 0.12 $ 0.24 $ 0.23 $ 0.42
Goodwill amortization, net of tax - 0.04 - 0.07
---------------------------- ---------------------------
Adjusted diluted earnings per share $ 0.12 $ 0.28 $ 0.23 $ 0.49
============================ ===========================
(Amounts in thousands, except per share amounts)
For the years ended December 31,
----------------------------------------------------------
2001 2000 1999
------------- ------------- ------------
Revenues $ 466,732 $ 474,551 $ 358,217
(Loss) income before income taxes, minority
interest and gain on sale of business $ (16,631) $ (2,224) $ 29,731
Goodwill amortization 2,787 2,686 2,333
------------- ------------- ------------
Adjusted (loss) income before income taxes,
minority interest and gain on sale of business $ (13,844) $ 462 $ 32,064
============= ============= ============
Net income (loss) $ 44,701 $ (1,870) $ 19,361
Goodwill amortization, net of tax 2,188 2,228 1,774
------------- ------------- ------------
Adjusted net income $ 46,889 $ 358 $ 21,135
============= ============= ============
Reported basic earnings (loss) per share $ 2.61 $ (0.12) $ 1.20
Goodwill amortization, net of tax 0.13 0.14 0.11
------------- ----------------------------
Adjusted basic earnings per share $ 2.74 $ 0.02 $ 1.31
============= ============= ============
Reported diluted earnings (loss) per share $ 2.59 $ (0.12) $ 1.18
Goodwill amortization, net of tax 0.13 0.14 0.11
------------- ----------------------------
Adjusted diluted earnings per share $ 2.72 $ 0.02 $ 1.29
============= ============= ============
Page -13-
There was no change in the carrying value of goodwill during the quarter
ended June 30, 2002, other than the impact of foreign currency
translation adjustment. As a result of the foreign currency translation
adjustment, the Equipment Business Group's goodwill balance increased
$170,000 and the Ultrapure Water Group's goodwill balance increased by
$8,000 from the respective balances at December 31, 2001.
The Company's net intangible assets included in other assets in the
Consolidated Balance Sheets consist principally of patents and
trademarks. At June 30, 2002 and December 31, 2001, the net carrying
value of these intangible assets was approximately $0.6 million.
Intangible assets are amortized over a period ranging up to 20 years. All
intangible assets are amortized on a straight-line basis. Amortization
expense for intangible assets is estimated to be approximately $0.1
million for each of the next five years.
8. Acquisitions
In late June 2002, the Company's Australian subsidiary acquired the
business and assets of Rudd Brothers, an Australian wholesale and retail
distributor of chemical and cleaning products, for approximately $0.6
million. The assets acquired consist primarily of property, plant and
equipment, inventory and certain intangibles. The allocation of the
purchase price will be completed by the end of 2002. The results of
operations of Rudd Brothers have not been included in the statement of
operations since the acquisition was consummated at the end of the second
quarter of 2002. Pro forma results of operations have not been presented
as the effect of this acquisition on the financial statements was not
material.
9. Divestiture
In May 2002, the Company completed its planned divestiture of its 55%
equity interest in a Malaysian affiliate, which had previously been
treated as "held for sale" and included in "other current assets."
Included in the Company's first half results are revenues of $4.2 million
and a $0.2 million pre-tax loss resulting from Malaysian operations. For
the second quarter of 2002, revenues totaled $1.6 million and pre-tax
profit amounted to $0.4 million, including a gain of approximately $0.8
million on the sale of the Company's equity interest in the Malaysian
affiliate, which is included in "Selling, general and administrative"
expenses.
10. Subsequent Event
In mid-July 2002, the Company acquired the business and assets of the
EnChem division of Microbar Incorporated. The assets acquired consist
primarily of patents and other intellectual property, inventory and
equipment, and are used for wastewater treatment in the semiconductor
industry. The purchase price was $0.4 million plus additional contingent
payments to be made over a five-year period based on the profitability of
the acquired business. The allocation of the purchase price will be
completed by the end of 2002.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's Form 10-K Annual Report for the year ended December 31, 2001
contains Management's Discussion and Analysis of Financial Condition and Results
of Operations at and for the year ended December 31, 2001. The following
discussion and analysis describes material changes in the Company's financial
condition since December 31, 2001. The analysis of results of operations
compares the three and six month periods ended June 30, 2002 with the comparable
periods of the prior fiscal year.
Page -14-
Results of Operations
Comparison of the Three and Six Month Periods Ended June 30, 2002 with the
Three and Six Month Periods Ended June 30, 2001
- --------------------------------------------------------------------------
The Company reported consolidated revenues of $79.3 million and net income of
$2.1 million for the second quarter of 2002, compared to $113.7 million and $4.2
million, respectively, during the second quarter of 2001. Revenues and net
income during the six months ended June 30, 2002 were $159.7 million and $4.0
million, respectively, compared to revenues and net income of $236.6 million and
$7.2 million, respectively, for the six months ended June 30, 2001. Results for
2001 include the operations of the Aqua Cool Pure Bottled Water business, which
was divested on December 31, 2001.
As part of the Company's adoption of a matrix business organization effective
January 1, 2002, results associated with the Company's trailer leasing and
non-consumer bleach based chemical supply businesses are included in the
Ultrapure Water Group (UWG), rather than the Equipment Business Group (EBG)
segment where they had historically been presented. Segment information for all
periods presented has been restated to reflect these changes. Aggregate second
quarter 2002 revenues and gross margin for these businesses were $6.1 million
and $1.6 million, respectively, compared to revenues and gross margin of $5.6
million and $1.5 million, respectively, for the second quarter of 2001. For the
first half of 2002, revenues and gross margin for these businesses were $13.4
million and $3.7 million, respectively, compared to revenues and gross margin of
$12.6 million and $3.5 million, respectively, for the first half of 2001.
Total Company revenues for the second quarter of 2002 decreased 30.2% to $79.3
million from $113.7 million for the year-earlier period. Excluding the second
quarter 2001 Aqua Cool Pure Bottled Water revenues of $19.2 million, second
quarter revenues were down $15.2 million, or 16.0%, from the comparable period
of 2001. Revenues for the first six months of 2002 totaled $159.7 million,
compared to $236.6 million for the comparable six month period of 2001. Total
revenue declined $40.9 million, or 20.4%, in the first half of 2002 compared to
the same period of 2001, excluding bottled water revenues.
EBG revenues during the second quarter of 2002 of $38.6 million decreased by
$7.5 million, or 16.3%, compared to revenues of $46.2 million during the second
quarter of 2001. For the six-month period ended June 30, 2002, EBG revenues of
$76.9 million decreased $14.2 million, or 15.6%. Revenue decreases over the
year-earlier periods reflect lower revenue levels from domestic capital
equipment sales, as well as the substantial completion of the construction phase
of the Trinidad desalination project, for which the Company's Trinidad
subsidiary serves as the equipment supply contractor.
UWG revenues during the second quarter of 2002 of $25.2 million decreased by
$5.6 million, or 18.3%, compared to revenues of $30.8 million in the second
quarter of 2001. During the six-month period ended June 30, 2002, revenues of
$50.2 million decreased $21.4 million, or 29.9%, compared to revenues of $71.7
million for the six months ended June 30, 2001. In both periods ended June 30,
2002, revenue levels were affected by continued softness in the microelectronics
industry, particularly with respect to domestic capital equipment sales.
Consumer Water Group (CWG) revenues during the second quarter of 2002 of $8.7
million decreased by $21.6 million, or 71.3%, compared to revenues of $30.2
million in the second quarter of 2001. Excluding second quarter 2001 revenues of
$19.2 million associated with the bottled water business, revenues in the second
quarter of 2002 decreased by $2.4 million, or 21.5%, compared to the
year-earlier period. For the six months ended June 30, 2002, revenues of $19.2
million decreased $40.4 million, or 67.8%, compared to revenues of $59.6 million
Page -15-
for the year-earlier period. Adjusted to exclude 2001 revenues of $36.1 million
associated with the bottled water business, revenues decreased by $4.3 million,
or 18.4%. Revenues were affected by a lower demand for automobile windshield
wash solution and consumer bleach products of the Company's Elite Consumer
Products business, and by lower demand for the Company's home water treatment
equipment.
Instrument Business Group (IBG) revenues during the second quarter of 2002 of
$6.8 million for the second quarter of 2002 increased $0.4 million, or 5.7%,
compared to $6.4 million for the second quarter of 2001. For the six months
ended June 30, 2002, revenues of $13.4 million were down $0.9 million, or 6.2%,
compared to revenues of $14.2 million for the six months ended June 30, 2001.
IBG revenues have also been affected by continued softness in the
microelectronics industry, which is an important customer for the group's
instrument products.
The Company's cost of sales as a percentage of revenue for the second quarter
was 68.9% in 2002 and 69.3% in 2001, and resulting gross margin was 31.1% in the
second quarter of 2002 compared to 30.7% in the second quarter of 2001. For the
first half of 2002, cost of sales as a percentage of revenue of 70.1% was
unchanged from the first half of 2001. For the quarter and six months ended June
30, 2002, cost of sales as a percentage of revenue decreased in the EBG, UWG,
and IBG business groups and increased in the CWG segment, compared to comparable
periods in 2001.
EBG's cost of sales as a percentage of revenue decreased to 73.9% in the second
quarter and 74.4% in the first half of 2002, as compared to 77.6% and 77.7% in
the same respective periods in 2001, reflecting a change in product mix from
lower margin capital equipment revenue (including the capital equipment portion
of the Trinidad project) to more profitable service and supply business. UWG's
cost of sales as a percentage of revenue decreased to 73.9% and 74.9% for the
second quarter and first half of 2002, respectively, as compared to 79.1% and
76.8% for the second quarter and first half of 2001, respectively. The decrease
in cost of sales as a percentage of revenue is primarily attributable to reduced
losses in the Company's Malaysian and Australian subsidiaries, both of which
incurred significant charges in 2001, primarily losses on under-performing
contracts. The Company's interest in the Malaysian subsidiary was divested in
May, 2002. Cost of sales as a percentage of revenue for CWG increased to 56.2%
and 61.1% in the second quarter and first half of 2002, respectively, from 51.3%
and 56.3% in the second quarter and first half of 2001, respectively. The
increase in cost of sales as a percentage of revenue is primarily attributable
to the exclusion of the Aqua Cool Pure Bottled Water business, which was
divested on December 31, 2001, as well as a gain recognized on the sale of
certain bottled water assets in the second quarter of 2001. IBG's cost of sales
as a percentage of revenue decreased to 37.9% and 40.0% in the second quarter
and first half of 2002, respectively, as compared to 46.4% and 45.2% in the
second quarter and first half of 2001, respectively. The decrease in cost of
sales as a percentage of revenue primarily reflects a higher proportion of more
profitable after-market service revenue as compared to lower margin capital
equipment revenue.
Operating expenses ("Research and development" and "Selling, general, and
administrative") as a percentage of revenue increased during the second quarter
of 2002 to 28.6% from 25.7% in 2001. For the six month period, operating
expenses as a percentage of revenue increased to 27.4% in 2002 from 25.1% in
2001. The increases are primarily a function of lower revenue levels during 2002
compared to 2001. Factors impacting operating expenses during the quarter ended
June 30, 2002 included a gain of approximately $0.8 million resulting from the
Company's divestiture of its 55% equity interest in its Malaysian subsidiary,
offset by net foreign exchange losses and certain restructuring charges in the
CWG segment following the Company's divestiture of the bottled water business.
For the six months ended June 30, 2002, interest income increased to $1.9
million compared to $1.0 million for the first six months of 2001. The increase
in interest income reflected investment of the proceeds from the sale of the
bottled water business. Interest expense of $0.4 million and $0.9 million for
the second quarter and first half of 2002, respectively, decreased from $1.4
Page -16-
million and $3.1 million from the respective periods in 2001, reflecting a
reduction in average borrowings as a result of the pay-down of current debt,
primarily from the proceeds of the sale of the bottled water business.
For the first six months of 2002, equity income increased to $1.7 million
compared to $1.0 million in the first six months of 2001 primarily reflecting
the Company's equity earnings in its 40% ownership interest of Desalcott and in
two projects located in Mexico in which the Company has a 20% interest.
The Company's effective tax rate was 34% for all periods presented. The current
year's effective rate reflects anticipated profit before tax adjusted for items
such as non-deductible operating losses and anticipated tax planning
initiatives.
Financial Condition
Working capital increased $6.9 million during the first six months of 2002 while
the Company's current ratio of 3.0 at June 30, 2002 increased from 2.4 at
December 31, 2001.
Accounts payable and accrued expenses decreased $19.6 million during the first
half of 2002, reflecting lower revenue levels during the first six months of
2002 compared to 2001. Income taxes payable decreased $19.6 million during the
first half of 2002, primarily reflecting tax payments made on the gain from the
sale of the Company's Aqua Cool Pure Bottled Water business.
Net cash used by operating activities amounted to $26.5 million, reflecting cash
used for payments of accounts payable, accrued expenses and current income
taxes, offset by depreciation and amortization charges of $11.2 million. Net
cash used by investing activities amounted to $14.0 million during the first six
months of 2002, reflecting additions to property, plant and equipment, primarily
relating to investments made in the Company's UWG segment for a build, own and
operate facility in the power industry. Net cash used by financing activities
totaled $2.4 million during the first six months of 2002, primarily reflecting
pay-down of the Company's short-term borrowings.
In the second quarter of 2002, construction was completed on the first four (out
of five) phases of the Trinidad desalination facility owned by Desalination
Company of Trinidad and Tobago Ltd. (Desalcott), in which the Company has a 40%
equity interest, and the facility commenced water deliveries to its customer,
the Water and Sewerage Authority of Trinidad and Tobago. The Company has loaned
$10 million to the 60% equity owner, Hafeez Karamath Engineering Services Ltd.
(HKES), as the source of HKES' equity contribution to Desalcott, in addition to
the $10 million contributed by the Company for its 40% equity interest. In 2000,
Desalcott entered into a "bridge loan" agreement with a Trinidad bank providing
$60 million in construction financing. Effective November 8, 2001, the loan
agreement was amended to increase maximum borrowings to $79.9 million. The
Company has committed to lend up to $10 million to Desalcott as an additional
source of funds for project completion costs once all bridge loan proceeds have
been expended. However, the bridge loan of $79.9 million and the $20 million
equity provided to Desalcott, together with the additional $10 million dollars
to be loaned to Desalcott by the Company, will not provide sufficient funds to
pay all of Desalcott's obligations in completing construction and commissioning
of the project prior to receipt of long-term financing. Included in these
obligations is approximately $22.3 million, payable to the Company's Trinidad
subsidiary for equipment and services in connection with the construction of the
facility. The Company intends to convert $10 million of this amount into a loan
to Desalcott to satisfy the Company's loan commitment described above. The
Company anticipates that Desalcott will pay its outstanding obligations to the
Company's subsidiary partially out of cash flow from the sale of water and from
the proceeds of long-term debt financing. However, although Desalcott has
received proposals, including a term sheet, for long-term debt financing which
it anticipates obtaining by year-end, there is no assurance that such financing
will be obtained on terms acceptable to Desalcott.
Page -17-
During 2001, the Company acquired a 25% equity ownership interest in a Kuwaiti
project company, Utilities Development Company W.L.L. (UDC), which was awarded a
concession agreement by an agency of the Kuwaiti government for the
construction, ownership and operation of wastewater reuse facility in Kuwait. At
March 31, 2002, the Company had deferred costs of approximately $1.1 million
relating primarily to preliminary project management and initial design work on
the project, and had invested $1.5 million in the project company. During the
second quarter of 2002, UDC entered into agreements for the long-term financing
of the project, and accordingly the Company commenced recognizing revenue in
accordance with American Institute of Certified Public Accountants Statement of
Position No. 81-1, "Accounting for Performance of Construction-Type and Certain
Construction-Type Contracts."
On December 31, 2001, the Company completed the sale of its Aqua Cool Pure
Bottled Water operations in the United States, United Kingdom and France to
affiliates of Perrier-Vittel S.A., a subsidiary of Nestle S.A. (Nestle), for
approximately $220 million, of which $10 million is being held in escrow
pursuant to the terms of the divestiture agreement. The amount of the purchase
price is subject to final adjustment based on the number of customers and
working capital levels of the transferred businesses, in each case as determined
in accordance with the divestiture agreement. The process for determining the
number of customers and working capital levels, as well as any related purchase
price adjustments, is under way. In addition, Nestle is seeking payment of
certain amounts under the indemnification provisions of the divestiture
agreement. While the ultimate amount of purchase price adjustments or
indemnification payments, if any, cannot yet be determined with certainty, the
Company currently believes that the reserves it has established for purchase
price adjustments and the escrowed amount will be adequate in all material
respects to cover the resolution of these issues. Accordingly, no additional
provision for any liability that might result from any of these matters has been
included in the accompanying financial statements for the current year.
On March 28, 2002, the Company amended its primary domestic credit agreement to
reduce the borrowing limit to $30 million, eliminate and revise certain
financial and other covenants, extend the term of the agreement until March
2003, and make Fleet National Bank the sole lender.
The Company believes that its cash and cash equivalents, cash from operations,
lines of credit and foreign exchange facilities are adequate to meet its
currently anticipated needs for the foreseeable future.
Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard (SFAS) No. 143, "Accounting for Obligations
Associated with the Retirement of Long-Lived Assets." SFAS No. 143 provides the
accounting requirements for retirement obligations associated with tangible
long-lived assets. SFAS No. 143 is effective for financial statements for fiscal
years beginning after June 15, 2002. The Company has determined that SFAS No.
143 will not have a material impact on its financial position and results of
operations.
In October 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 requires one method of accounting
for long-lived assets disposed of by sale. SFAS No. 144 is effective for
financial statements issued for fiscal years beginning after December 15, 2001.
The Company adopted SFAS No. 144 effective January 1, 2002. SFAS No. 144 did not
have a material impact on the Company's financial position or results of
operations.
Page -18-
In May 2002, FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of
April 2002." SFAS No. 145 rescinds FASB Statement No. 4, "Reporting Gains and
Losses from Extinguishment of Debt," and an amendment of that statement. SFAS
No. 145 amends FASB Statement No. 13, "Accounting for Leases," to eliminate an
inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. SFAS No. 145 also
amends other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. SFAS No. 145 is effective for financial statements for fiscal years
beginning after May 15, 2002. The Company does not believe that SFAS No. 145
will have a material impact on the Company's financial position and results of
operations.
In July 2002, FASB issued SFAS No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities." SFAS No. 146 requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit of disposal plan and nullifies Emerging
Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring)." SFAS No. 146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002
and accordingly, the Company will prospectively determine the impact,if any,
SFAS No. 146 will have on the Company's financial position and results of
operations
Forward-Looking Information
Safe Harbor Statement under Private Securities Litigation Reform Act of 1995
- ----------------------------------------------------------------------------
The Company's future results of operations and certain statements contained in
this report, including, without limitation, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" constitute
forward-looking statements. Such statements are based on management's current
views and assumptions and involve risks, uncertainties and other factors that
could cause actual results to differ materially from management's current
expectations. Among these factors are the matters described under "Risks and
Uncertainties" contained in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of the Company's Annual
Report on Form 10-K for the year ended December 31, 2001; business conditions
and the general economy; competitive factors, such as acceptance of new products
and price pressures; risk of nonpayment of accounts receivable; risks associated
with foreign operations; risks involved in litigation; regulations and laws
affecting business in each of the Company's markets; market risk factors, as
described below under "Quantitative And Qualitative Disclosures About Market
Risk"; and other risks and uncertainties described from time to time in the
Company's filings with the Securities and Exchange Commission.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Derivative Instruments
In 2001, the Company's Italian subsidiary entered into a series of U.S.
dollar/euro options contracts with the intent of offsetting the foreign exchange
risk associated with forecasted cash flows related to an ongoing project. These
options contracts were not entered into for trading purposes. In accordance with
the restrictions set forth in SFAS No. 133, the contracts do not qualify for
hedge accounting treatment. The fair market value of the contracts were recorded
as a liability of $1.2 million in the other current liabilities section of the
Consolidated Balance Sheet at December 31, 2001. End-of-period changes in the
market value of the contracts were reflected in the selling, general and
administrative expenses in the Consolidated Statement of Operations. In
addition, the Company periodically enters into foreign exchange contracts to
Page -19-
hedge certain operational and balance sheet exposures against changes in foreign
currency exchange rates. The Company had no foreign exchange contracts
outstanding at June 30, 2002 and 2001.
Market Risk
The Company's primary market risk exposures are in the areas of interest rate
risk and foreign currency exchange rate risk. The Company's investment portfolio
of cash equivalents is subject to interest rate fluctuations, but the Company
believes this risk is not material due to the short-term nature of these
investments. At June 30, 2002, the Company had $9.6 million of short-term debt
and $11.1 million of long-term debt outstanding. The major portion of this debt
has variable interest rates and, therefore is subject to interest rate risk.
However, a hypothetical increase of 10% in these interest rates for a one-year
period would result in additional interest expense that would not be material in
the aggregate. The Company's net foreign currency exchange gain was
approximately $1.5 million for the six months ended June 30, 2002, compared to
$0.3 million for the six months ended June 30, 2001. The Company's exposure to
foreign currency exchange rate fluctuations is moderated by the fact that the
operations of its international subsidiaries are primarily conducted in their
respective local currencies. Also, in certain situations, the Company will
consider entering into forward exchange contracts to mitigate the impact of
foreign currency exchange fluctuations.
Page -20-
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
a) The Annual Meeting of the Stockholders was held on May 8, 2002. Douglas R.
Brown, Kathleen F. Feldstein, Arthur L. Goldstein and Carl S. Sloane were
reelected as Class I Directors for a three-year term. Continuing as Class
II Directors until the 2003 Annual Meeting are Arnaud de Vitry d'Avaucourt,
William E. Katz, Daniel I. C. Wang and Mark S. Wrighton. Continuing as
Class III Directors until the 2004 Annual Meeting are Stephen L. Brown,
William K. Reilly, John J. Shields and Allen S. Wyett. The numbers of votes
cast for the election of the Class I Directors were as follows:
For Withheld
--- --------
Douglas R. Brown 12,185,123 2,246,851
Kathleen F. Feldstein 12,184,070 2,247,905
Arthur L. Goldstein 12,178,072 2,253,903
Carl S. Sloane 12,183,827 2,248,148
b) The other matters submitted for stockholder approval were (i) approval of
an amendment to the Company's 1997 Stock Incentive Plan to increase the
number of shares available for issue under such Plan by 800,000 shares,
and (ii) the ratification of the selection of PricewaterhouseCoopers LLP
as the Company's auditors for 2002. The following were cast in connection
with these matters:
i) Approval of Amendment to 1997 Stock Incentive Plan
Votes for: 8,844,428
Votes against: 5,498,404
Abstentions: 89,192
ii) Ratification of the selection of PricewaterhouseCoopers LLP as
auditors for 2002.
Votes for: 14,071,166
Votes against: 318,749
Abstentions: 42,059
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
One report on Form 8-K was filed by the Company with the Securities and
Exchange Commission during the three-month period ended June 30, 2002.
This report, filed on June 24, 2002, reported under Item 5 the signing of
certain contracts in connection with a wastewater treatment project in
Kuwait.
Page -21-
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 14 , 2002 By: /s/Arthur L. Goldstein
-----------------------------------
Arthur L. Goldstein
Chairman and Chief Executive Officer
(duly authorized officer)
Date: August 14 , 2002 By: /s/Daniel M. Kuzmak
-----------------------------------------
Daniel M. Kuzmak
Vice President and Chief Financial Officer
(principal financial officer)