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
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 02472
(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, 1998 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, 1998, 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, 1998 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, 1999 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-8. 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-8.
3. Exhibits
Exhibit
No. Description
3.0 Articles of Organization and By-Laws
3.1 Restated Articles of Organization filed *
April 16, 1986 (filed as Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
3.1(a) Amendment to the Restated Articles of *
Organization filed June 19, 1987 (filed
as Exhibit 3.1(a) to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1997).
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 the Company's
Quarterly Report on Form 10-Q for the
quarterly period ending June 30, 1996).
3.1(d) Amendment to Restated Articles of *
Organization filed May 8, 1998
(filed as Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the
quarterly period ending March 31, 1998).
IV-1
/3
3.2 By-Laws, as amended through November 14, 1997 *
(filed as Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 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
the Company's Current Report on Form 8-K
dated August 27, 1997).
4.2 Form of Common Stock Certificate (filed as *
Exhibit 4.2 to the Company's Annual Report
on Form 10-K for the year ended
December 31, 1997).
10.0 Material Contracts
10.1 1979 Stock Option Plan, as amended through *
February 22, 1996 (filed as Exhibit 10.1 to
the Company'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 the Company's Annual Report on
Form 10-K for the year ended December 31, 1996).
10.3 Amended and Restated Credit Agreement between *
the Company and the First National Bank of Boston
dated as of December 31, 1992 (filed as
Exhibit 10.3 to the Company's Annual Report
for the year ended December 31, 1997).
10.3(1)Amendment Agreement No. 1, dated as of *
December 31, 1995, to Amended and Restated
Credit Agreement between the Company and The
First National Bank of Boston (filed as Exhibit
10.3(1) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995).
10.3(2)Amendment Agreement No. 2, dated as of
December 31, 1998, to Amended and Restated
Credit Agreement between the Company and
BankBoston N.A.
10.4 Operating Agreement dated as of September 27, *
1989 between the Company and Aqua Cool
Enterprises, Inc. (filed as Exhibit 10.4 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1997).
IV-2
/4
10.5 Term Lease Master Agreement dated as of *
September 27, 1989 between the Company and
Aqua Cool Enterprises, Inc. (filed as
Exhibit 10.5 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
10.6 Option Agreement dated as of September 27, 1989 *
among the Company, Aqua Cool Enterprises, Inc.
and the other parties named therein (filed as
Exhibit 10.6 to the Company'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 the Company's Annual Report on Form 10-K dated
March 30, 1995).
10.8 1997 Stock Incentive Plan (filed as Exhibit 10.12 *
to the Company'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
(filed as Exhibit 10.9 to the Company's Annual
Report on Form 10-K dated December 31, 1997).
10.10 Form of Employee Retention Agreement dated *
February 24, 1998 between the Company and
certain officers of the Company and its
subsidiaries (filed as Exhibit 10.10 to the
Company's Annual Report on Form 10-K dated
December 31, 1997).
10.11 1998 Non-Employee Directors Fee Plan (filed *
as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period
ending September 30, 1998).
13.0(a) Annual Report to Stockholders of the Company for the
year ended December 31, 1998 (constituting the following
sections: Management's Discussion and Analysis of Results of
Operations and Financial Condition; Report of Independent
Accountants; Consolidated Statements of Operations;
Consolidated Balance Sheets; Consolidated Statements of
Cash Flow; Consolidated Statements of Stockholders' Equity;
Notes to Consolidated Financial Statements; Selected
Financial Data; Board of Directors; Corporate Officers;
Principal U.S. Offices, Affiliates & Subsidiaries;
Corporate Headquarters; Principal Overseas Offices,
Affiliates & Subsidiaries; Investor Information; Transfer
Agent & Registrar; and Auditors).
(b) Annual Report of the Ionics Section 401(k) Stock Savings
Plan on Form 11-K for the year ended December 31, 1998.
IV-3
/5
21.0 Subsidiaries of the Registrant.
23.0 Consents
23.1 Consent of PricewaterhouseCoopers LLP
to incorporation by reference of that firm's
report dated February 19, 1999, which is
included on page 21 of the Registrant's
Annual Report to Stockholders
for the year ended December 31, 1998.
24.0 Power of Attorney.
27.0 Financial Data Schedule. **
________________________________
* incorporated herein by reference
** for electronic purposes only
IV-4
/6
EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description Page
3.0 Articles of Organization and By-Laws
3.1 Restated Articles of Organization filed *
April 16, 1986 (filed as Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
3.1(a) Amendment to the Restated Articles of *
Organization filed June 19, 1987 (filed
as Exhibit 3.1(a) to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1997).
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 the Company's
Quarterly Report on Form 10-Q for the quarterly
period ending June 30, 1996).
3.1(d) Amendment to Restated Articles of *
Organization filed May 8, 1998
(filed as Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the
quarterly period ending March 31, 1998).
3.2 By-Laws, as amended through November 14, 1997 *
(filed as Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 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
the Company's Current Report on Form 8-K
dated August 27, 1997).
/7
4.2 Form of Common Stock Certificate (filed as *
Exhibit 4.2 to the Company's Annual Report
on Form 10-K for the year ended
December 31, 1997).
10.0 Material Contracts
10.1 1979 Stock Option Plan, as amended through *
February 22, 1996 (filed as Exhibit 10.1 to
the Company'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 the Company's Annual Report on
Form 10-K for the year ended December 31, 1996).
10.3 Amended and Restated Credit Agreement between *
the Company and the First National Bank of Boston
dated as of December 31, 1992 (filed as
Exhibit 10.3 to the Company's Annual Report
for the year ended December 31, 1997).
10.3(1) Amendment Agreement No. 1, dated as of *
December 31, 1995, to Amended and Restated
Credit Agreement between the Company and The
First National Bank of Boston (filed as Exhibit
10.3(1) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995).
10.3(2) Amendment Agreement No. 2, dated as of 35
December 31, 1998, to Amended and Restated
Credit Agreement between the Company and
BankBoston N.A.
10.4 Operating Agreement dated as of September 27, *
1989 between the Company and Aqua Cool
Enterprises, Inc. (filed as Exhibit 10.4 to
the Company's Annual Report on Form 10-K for
the year ended December 31, 1997).
10.5 Term Lease Master Agreement dated as of *
September 27, 1989 between the Company and
Aqua Cool Enterprises, Inc. (filed as
Exhibit 10.5 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
10.6 Option Agreement dated as of September 27, 1989 *
among the Company, Aqua Cool Enterprises, Inc.
and the other parties named therein (filed as
Exhibit 10.6 to the Company's registration
statement on Form S-2, No. 33-38290,
effective January 24, 1991).
/8
10.7 1994 Restricted Stock Plan (filed as Exhibit 10.12 *
to the Company's Annual Report on Form 10-K dated
March 30, 1995).
10.8 1997 Stock Incentive Plan (filed as Exhibit 10.12 *
to the Company'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
(filed as Exhibit 10.9 to the Company's Annual
Report on Form 10-K dated December 31, 1997).
10.10 Form of Employee Retention Agreement dated *
February 24, 1998 between the Company and
certain officers of the Company and its
subsidiaries (filed as Exhibit 10.10 to the
Company's Annual Report on Form 10-K dated
December 31, 1997).
10.11 1998 Non-Employee Directors Fee Plan (filed *
as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period
ending September 30, 1998).
13.0(a) Annual Report to Stockholders of the Company for the 40
year ended December 31, 1998 (constituting the following
sections: Management's Discussion and Analysis of Results
of Operations and Financial Condition; Report of Independent
Accountants; Consolidated Statements of Operations;
Consolidated Balance Sheets; Consolidated Statements of
Cash Flow; Consolidated Statements of Stockholders' Equity;
Notes to Consolidated Financial Statements; Selected
Financial Data; Board of Directors; Corporate Officers;
Principal U.S. Offices, Affiliates & Subsidiaries;
Corporate Headquarters; Principal Overseas Offices,
Affiliates & Subsidiaries; Investor Information; Transfer
Agent & Registrar, and Auditors).
(b) Annual Report of the Ionics Section 401(k) Stock Savings
Plan on Form 11-K for the year ended December 31, 1998. 75
21.0 Subsidiaries of the Registrant. 76
23.0 Consents
23.1 Consent of PricewaterhouseCoopers LLP 77
to incorporation by reference of that firm's
report dated February 19, 1999, which is
included on page 21 of the Registrant's
Annual Report to Stockholders
for the year ended December 31, 1998.
24.0 Power of Attorney. 78
27.0 Financial Data Schedule. **
________________________________
* incorporated herein by reference
** for electronic purposes only
/9
Exhibit No. 13(b) to Annual Report on Form 10-K
of Ionics, Incorporated for the year ended December 31, 1998
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
For the fiscal year ended December 31, 1998
OR
[ ] Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934
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 02472-2882
/10
IONICS SECTION 401(k) STOCK SAVINGS PLAN
INDEX OF FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
For the years ended December 31, 1998 and 1997
________
Page(s)
Independent Auditors Report 2
Financial Statements:
Statements of Net Assets Available for Plan Benefits
at December 31, 1998 and 1997 3-4
Statements of Changes in Net Assets Available for
Plan Benefits for the years ended December 31,
1998 and 1997 5-6
Notes to Financial Statements 7-11
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes, at
December 31, 1998 12
Schedule of Reportable Transactions
for the year ended December 31, 1998 13
Schedule of Nonexempt Transactions
for the year ended December 31, 1998 14
/11
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, 1998 and 1997, 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 audits provide 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, 1998 and 1997 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, reportable transactions and nonexempt
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 14, 1999
/12
-2-
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1998
PARTICIPANT - DIRECTED FUNDS
IONICS, INC. INDEXED MULTI- INDEXED JANUS BT PARTIC-
COMMON PURITAN CONTRAFUND BOND ASSET EQUITY WORLDWIDE PYRAMID IPANT CASH/
STOCK FUND FUND FUND FUND FUND FUND FUND GIC FUND LOANS OTHER TOTAL
ASSETS:
INVESTMENTS @ MARKET
(SEE NOTES 2,3 & 7)
IONICS, INCORPORATED
COMMON STOCK: 362,638
SHARES @ $29.9375
PER SHARE $10,856,475
$10,856,475
PURITAN FUND:
112,008.059 SHARES @
$20.07 PER SHARE $2,248,001
2,248,001
CONTRAFUND FUND:
79,138.441 SHARES @
$56.79 PER SHARE $4,494,272
4,494,272
INDEXED BOND FUND:
31,702.851 SHARES @
$10.93 PER SHARE $346,512
346,512
MULTI-ASSET FUND:
68,193.101 SHARES @
$15.36 PER SHARE $1,047,446
1,047,446
INDEXED EQUITY FUND:
10,428.763 SHARES @
$33.39 PER SHARE $348,217
348,217
JANUS WORLDWIDE FUND:
11,714.329 SHARES @
$47.36 PER SHARE $554,791
554,791
BT PYRAMID GIC FUND $1,165,028
1,165,028
CASH & CASH EQUIVALENTS 202,839
202,839
AMOUNTS RECEIVABLE:
FROM SPONSOR 60,046
60,046
FROM PLAN PARTICIPANTS 232,343
232,343
LOANS RECEIVABLE FROM
PLAN PARTICIPANTS 792,691
792,691
TOTAL ASSETS $11,059,314 $2,248,001 $4,494,272 $346,512 $1,047,446 $348,217 $554,791 $1,165,028 $792,691 $292,389
$22,348,661
LIABILITIES -0- -0- -0- -0- -0- -0- -0- -0- -0- -0-
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $11,059,314 $2,248,001 $4,494,272 $346,512 $1,047,446 $348,217 $554,791 $1,165,028 $792,691 $292,389
$22,348,661
=========== ========== ========== ======== ========== ======== ======== ========== ======== ========
===========
The accompanying notes are an integral part of these financial statements.
-3-
/13
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 IPANT CASH/
STOCK FUND FUND FUND FUND FUND FUND FUND GIC FUND LOANS OTHER 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 SPONSER 54,277 54,277
FROM PLAN PARTICIPANTS 209,476 209,476
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 $682,144 $263,783 $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 $682,144 $263,783 $21,188,808
=========== ========== ========== ======== ======== ======== ======== ======== ======== ======== ===========
The accompanying notes are an integral part of these financial statements.
-4-
/14
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
PARTICIPANT - DIRECTED FUNDS
IONICS, INC. INDEXED MULTI- INDEXED JANUS BT
COMMON PURITAN CONTRAFUND BOND ASSET EQUITY WORLDWIDE PYRAMID
STOCK FUND FUND FUND FUND FUND FUND FUND GIC FUND SUB-TOTAL
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
BEGINNING OF YEAR $12,987,729 $1,903,802 $3,441,509 $151,279 $ 490,991 $ 65,041 $237,322 $ 965,208 $20,242,881
NET INVESTMENT INCOME,
PRINCIPALLY INTEREST
AND DIVIDENDS 5,609 231,338 331,178 20,502 154,945 14,538 2,132 55,803 816,045
NET APPRECIATION(DEPREC-
IATION)IN THE FAIR VALUE
OF INVESTMENTS (3,135,925) 87,485 734,112 (2,727) (34,794) 50,472 86,030 (2,215,347)
CONTRIBUTIONS:
PARTICIPANTS
EMPLOYER
ACQUISITIONS
LOAN ADVANCES
LOAN REPAYMENTS
TRANSFERS 1,649,130 25,376 (12,527) 177,458 436,304 218,166 229,307 144,017 2,867,231
DISTRIBUTIONS TO
PARTICIPANTS (447,229) (447,229)
NET INCREASE(DECREASE) (1,928,415) 344,199 1,052,763 195,233 556,455 283,176 317,469 199,820 1,020,700
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
END OF YEAR $11,059,314 $2,248,001 $4,494,272 $346,512 $1,047,446 $348,217 $554,791 $1,165,028 $21,263,581
=========== ========== ========== ======== ========== ======== ======== ========== ===========
The accompanying notes are an integral part of these financial statements.
-5-
/15
Page 1 of 2
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
PARTICIPANT - DIRECTED FUNDS
SUB-TOTAL PARTICIPANT CASH/
Page 1 LOANS OTHER TOTAL
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
BEGINNING OF YEAR $20,242,8$ $ 682,144 $ 263,783 $21,188,808
NET INVESTMENT INCOME,
PRINCIPALLY INTEREST
AND DIVIDENDS 816,045 74,167 408 890,620
NET APPRECIATION(DEPREC-
IATION)IN THE FAIR VALUE
OF INVESTMENTS (2,215,347) (2,215,347)
CONTRIBUTIONS:
PARTICIPANTS 3,743,207 3,743,207
EMPLOYER 778,688 778,688
ACQUISITIONS 6,463 126,857 133,320
LOAN ADVANCES 425,845 (425,845) - 0 -
LOAN PAYMENTS (366,140) 366,140 - 0 -
TRANSFERS 2,867,231 (2,867,231) - 0 -
DISTRIBUTIONS TO
PARTICIPANTS (447,229) ( 29,788) (1,693,618) (2,170,635)
NET INCREASE(DECREASE) 1,020,700 110,547 28,606 1,159,853
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
END OF YEAR $21,263,581 792,691 $ 292,389 $22,348,661
=========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements.
/16
Page 2 of 2
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
PARTICIPANT - DIRECTED FUNDS
IONICS, INC. ASSET INDEXED MULTI- INDEXED JANUS BT
COMMON PURITAN MANAGER CONTRAFUND BOND ASSET EQUITY WORLDWIDE PYRAMID
STOCK FUND FUND FUND FUND FUND FUND FUND FUND GIC FUND SUB-TOTAL
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.
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Page 1 of 2
IONICS SECTION 401(K) STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
<CATION>
PARTICIPANT - DIRECTED FUNDS
SUB-TOTAL PARTICIPANT CASH/
PAGE 1 LOANS OTHER TOTAL
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
BEGINNING OF YEAR $20,211,125 $ 644,327 $ 733,125 $21,588,577
NET INVESTMENT INCOME,
PRINCIPALLY INTEREST
AND DIVIDENDS 627,751 57,270 13,184 698,205
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 (505,099) 441,256 (63,843)
TRANSFERS 2,225,497 (2,225,497) 0
WITHDRAWALS BY AND
DISTRIBUTIONS TO
PARTICIPANTS (430,678) 485,646 (2,265,278) (2,210,310)
NET INCREASE(DECREASE) 31,756 37,817 (469,342) (399,769)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS -
END OF YEAR $20,242,881 $ 682,144 $ 263,783 $21,188,808
=========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements.
/18
Page 2 of 2
IONICS SECTION 401(K) STOCK STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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. 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 and domestic subsidiaries (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.
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/19
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.
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/20
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, 1998 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, 1998.
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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, 1998 and
1997, respectively:
Market Value Cost
1998 1997 1998 1997
Investments At Fair Value
As Determined By Quoted
Market Price
Ionics, Incorporated
Common Stock $10,856,475 $12,829,166 $ 9,964,585 $ 8,627,726
Fidelity Investments:
Puritan 2,248,001 1,903,802 1,952,133 1,651,163
Contrafund 4,494,272 3,441,509 3,365,420 2,897,030
Mainstay Institutional:
Indexed Bond 346,512 151,279 353,422 160,749
Multi-Asset 1,047,446 490,991 1,113,981 521,808
Indexed Equity 348,217 65,041 301,639 65,042
Money Market 202,839 158,593 202,839 158,593
Janus Worldwide Fund: 554,791 237,322 484,674 250,472
BT Pyramid GIC Fund: 1,165,028 965,208 1,165,028 965,208
Other Investments
Participant Loans 792,691 682,144 792,691 682,144
$22,056,272 $20,925,055 $19,696,412 $15,979,935
Note 4: INCOME TAX STATUS
The Internal Revenue Service has determined and informed the
Company by a letter dated September 12, 1995 that the Plan is
qualified and the trust established under the Plan is tax-exempt,
under the appropriate sections of the Code.
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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, 1998 and 1997
to Form 5500:
1998 1997
Net assets available for benefits
per the financial statements $22,348,661 $21,188,808
Amounts allocated to withdrawing
participants (171,046) (99,676)
Net assets available for benefits
per the form 5500 $22,177,615 $21,089,132
The following is a reconciliation of benefits paid to
participants per the financial statements for the year ended
December 31, 1998 to Form 5500:
Distributions to participants per the
financial statements: $ 2,170,635
Add: Amounts allocated to withdrawing
participants at December 31, 1998 171,046
Less: Amounts allocated to withdrawing
participants at December 31, 1997 ( 99,676)
Benefits paid to participants per Form 5500 $ 2,242,005
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.
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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, 1998
Face Amount,
Shares or Current
Description of Investment Rate Cost Value
Ionics, Incorporated
Common Stock 362,638 $ 9,964,585 $10,856,475
Fidelity Investments:
Puritan Fund 112,008 1,952,133 2,248,001
Contrafund 79,138 3,365,420 4,494,272
MainStay Institutional:
Indexed Bond 31,703 353,422 346,512
Multi-Asset Fund 68,193 1,113,981 1,047,446
Indexed Equity Fund 10,429 301,639 348,217
Money Market 202,839 202,839
Janus Worldwide Fund 11,714 484,674 554,791
BT Pyramid GIC Fund 1,165,028 1,165,028
Participant Loans
(Rate of Interest 7.43% to 10.50%) -0- 792,691
Total Funds Invested $18,903,721 $22,056,272
The accompanying notes are an integral part of these supplemental schedules.
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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, 1998
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:
Company Stock
59,710 shares of
Ionics, Inc.
Common Stock $2,017,841
Sale:
Company Stock
9,830 shares of
Ionics, Inc.
Common Stock $ 403,109 $ 264,023 $ 403,109 $ 139,086
The accompanying notes are an integral part of these supplemental schedules.
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ATTACHMENT TO FORM 5500
EIN: 04-2068530
PN: 003 SCHEDULE III
IONICS SECTION 401(K) STOCK SAVINGS PLAN
ITEM 27f - SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(a) (b) (c) (d) (e) (h) (i) (j)
Identity Current
of Party Relationship Description of Purchase Selling Cost of Value Net Gain
Involved to Plan Transaction Price Price Asset of Asset (Loss)
Ionics, Employer Late payment of $ 2,925 $ 2,925 $ 2,925 $ 2,925 $ -0-
Inc. contributions
to the Plan
Note: The total amount due for the nonexempt transaction was
paid on January 20, 1999.
The accompanying notes are an integral part of these supplemental schedules.
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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, 1999 By /s/John P. Bergeron
John P. Bergeron
Administrator and Vice President
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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 14, 1999 on our audits of the financial
statements of the Ionics Section 401(k) Stock Savings Plan
as of December 31, 1998 and 1997, 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,
1998.
/s/BELANGER & COMPANY P.C.
CERTIFIED PUBLIC ACCOUNTANTS
Chelmsford, Massachusetts
June 21, 1999
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