UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 10, 2004
IONICS, INCORPORATED
(Exact name of registrant as specified in its charter)
Massachusetts 1-7211 04-2068530
(State of incorporation) (Commission File No.) (IRS Employer Identification No.)
65 Grove Street, Watertown, MA 02472 (617) 926-2500
(Address of principal executive offices) (Zip Code) (Registrant's telephone number,
including area code)
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Item 7. Financial Statements and Exhibits
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Exhibit Number Description
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99 Press Release dated May 10, 2004, reporting the
financial results of Ionics, Incorporated for the
quarter ended March 31, 2004.
Item. 12. Results of Operations and Financial Condition
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On May 10, 2004, Ionics, Incorporated issued a press release
reporting its financial results for the quarter ended March 31, 2004.
A copy of the Press Release is attached hereto as Exhibit 99 and is
hereby incorporated by reference.
SIGNATURES
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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 duly authorized.
IONICS, INCORPORATED
May 10, 2004 By: /s/Stephen Korn
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Name: Stephen Korn
Title: Vice President and General Counsel
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EXHIBIT INDEX
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Number Description Page Number
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99 Press release dated May 10, 2004, reporting 4
the financial results of Ionics, Incorporated
for the quarter ended March 31, 2004.
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EXHIBIT 99
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IONICS REPORTS RESULTS FOR THE FIRST QUARTER OF 2004
Watertown, MA, May 10, 2004 . . . Ionics, Incorporated (NYSE-ION) today reported
results for the three-month period ended March 31, 2004. First quarter revenues
were $107.4 million compared to $82.6 million for the first quarter of 2003. The
net loss of $4.0 million, or ($0.19) per share, in Q1 2004 compared to net
income of $0.6 million, or $0.03 per share, for Q1 2003. For continuing
operations, the loss per share of ($0.06) in Q1 2004 compares to earnings per
share of $0.05 in Q1 2003. Excluding amortization of intangibles, loss per share
for continuing operations of ($0.03) compares to earnings per share of $0.06 in
the first quarter of 2003.
The results for the first quarter include a $3.3 million charge related to
Carmel Desalination Limited (CDL), an Israeli project company in which Ionics
holds a 33 1/3% ownership interest. Other items included in the results were
$0.6 million of restructuring charges and $0.6 million in systems development
charges.
Also included are the consolidated results of the Ecolochem Group (acquired on
February 13, 2004), and Desalcott (Desalination Company of Trinidad and Tobago
Ltd.), the Company's 40% owned joint venture in Trinidad. Desalcott's results
were included in the consolidated results of the Company in accordance with the
provisions of FIN46. Ecolochem revenues from February 14 through the end of the
quarter were $11.9 million, and Desalcott revenues for the full quarter were
$6.9 million.
The CDL charge was taken as a result of the Israel Water Desalination Agency's
("WDA") notification of its intent to terminate the concession agreement with
CDL. As a result, the Company recorded a charge including all assets and
liabilities related to this project. The majority of the charge ($2.5 million)
relates to the Company's pro rata portion of CDL's performance bond, upon which
the WDA has made a demand. Commenting on the dispute between CDL and the WDA,
Douglas Brown, Ionics' CEO stated, "In our view, the failure of the CDL project
was due to the failure of the Israeli government to fulfill its obligations.
Among other things, the water project included a power plant which the WDA
approved with our original contract award. Subsequently, the government declined
the permit for the power plant, thereby substantially damaging the project's
economics. Therefore, CDL has made a claim against the government, which, if
successful, would allow Ionics to recover the charge we have taken this quarter.
Ionics and our Israeli partners in CDL intend to vigorously pursue the recovery
of these funds." The dispute between CDL and the WDA has been submitted to
binding arbitration in Israel, with final resolution anticipated in the third
quarter of 2004.
Backlog at the end of the first quarter was $464.1 million and included the
backlog of Ecolochem of $52.5 million, and the net backlog of Desalcott of $93.7
million.
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Ionics will host a conference call tomorrow, Tuesday, May 11, 2004 at 10:30AM,
EDT to discuss its first quarter financial results. This conference call will be
accessible on the Company's home page, at
http://www.shareholder.com/ion/medialist.cfm. Recorded replays of the financial
results conference call will be available on the web site for a one-week period
beginning later that day.
About Ionics, Inc.
Ionics is a global leader in water purification and wastewater treatment. The
Company has over 50 years of experience in the design, installation, operation
and maintenance of water and wastewater treatment systems and is a leading
provider of emergency and long-term water treatment services. More
membrane-based desalination systems have been designed and built by Ionics than
any other supplier worldwide. Ionics is also a leader in supplying
zero-liquid-discharge systems, in providing ultrapure water systems for the
power and microelectronics industries, and in the measurement and analysis of
water impurities. The Company also supplies Point-of-Use and Point-of-Entry
water treatment systems for commercial and residential applications. For more
information, visit www.ionics.com.
Safe-harbor statement under the Private Securities Litigation Reform Act of
1995: Forward-looking statements in this news release involve risk and
uncertainty. The statements contained in this release which are not historical
facts are forward-looking statements. These forward-looking statements are based
on management's current views and assumptions and are neither promises nor
guarantees but are subject to risks, uncertainties and other factors that could
cause actual results to differ materially from management's current expectations
as described in such forward-looking statements, including overall economic and
business conditions; competitive factors, such as acceptance of new products,
pricing pressures and competition from competitors larger than the Company;
risks of nonpayment of accounts receivable, including those from affiliated
companies; risks associated with foreign operations; technological and product
development risks; availability of manufacturing capacity; risks associated with
the Company's restructuring program announced in September 2003; risks
associated with the integration of Ecolochem's operations with those of the
Company; and other factors described in the Company's filings with the
Securities and Exchange Commission, including its annual report on Form 10-K for
the year ended December 31, 2003. You should not place undue reliance on the
forward-looking statements in this press release, and the Company disavows any
obligation to update or supplement those statements in the event of any changes
in the facts, circumstances, or expectations that underlie those statements.
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IONICS REPORTS FIRST QUARTER RESULTS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Three months ended
March 31,
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2004 2003
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Revenues:
Equipment Sales $ 33,430 $ 29,552
Operations 52,406 27,682
Consumer Water 5,721 5,200
Instruments 8,751 8,379
Affiliated companies 7,115 11,777
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107,423 82,590
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Costs and expenses:
Cost of sales of Equipment Sales 27,873 22,642
Cost of sales of Operations 34,548 19,133
Cost of sales of Consumer Water 2,405 2,238
Cost of sales of Instruments 4,006 3,589
Cost of sales to affiliated companies 6,110 10,217
Research and development 1,531 1,777
Selling, general and administrative 29,023 21,674
Restructuring charges 564 -
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106,060 81,270
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Income from continuing operations 1,363 1,320
Interest (expense) income, net (3,322) 556
Equity income (loss) 490 (101)
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(Loss) income from continuing operations before
income tax and minority interest expense (1,469) 1,775
Income tax benefit (expense) 470 (624)
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(Loss) income from continuing operations before
minority interest expense (999) 1,151
Minority interest expense 253 198
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(Loss) income from continuing operations (1,252) 953
Loss on discontinued operations, net of tax (2,699) (377)
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Net (loss) income $ (3,951) $ 576
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Basic (loss) earnings per share from continuing operations $ (0.06) $ 0.05
Basic loss per share from discontinued operations (0.13) (0.02)
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Basic net (loss) earnings per share $ (0.19) $ 0.03
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Diluted (loss) earnings per share from continuing operations $ (0.06) $ 0.05
Diluted loss per share from discontinued operations (0.13) (0.02)
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Diluted net (loss) earnings per share $ (0.19) $ 0.03
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Shares used in basic (loss) earnings per share calculations 20,322 17,555
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Shares used in diluted (loss) earnings per share calculations 20,322 17,562
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Backlog $464,062 $348,488
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Other Data:
Three months ended
March 31,
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2004 2003
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Reconciliation of net (loss) income from continuing operations
to EBITA from continuing operations:
(Loss) income from continuing operations $ (1,252) $ 953
Add back:
Amortization of intangibles, net of tax 725 51
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EBITA (loss) income from continuing operations $ (527) $ 1,004
============ ==========
Diluted (loss) income per share from continuing operations $ (0.06) $ 0.05
Add back:
Amortization of intangibles, net of tax 0.04 0.00
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EBITA diluted (loss) income per share
from continuing operations $ (0.03) $ 0.06
============ ==========
Management believes that the diluted (loss) earnings per share from continuing
operations excluding the amortization of intangibles is a key performance
indicator, because the amortization charge is non cash and relates essentially
to the Ecolochem transaction.
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IONICS REPORTS FIRST QUARTER RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
March 31, December 31,
2004 2003
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Current assets:
Cash and cash equivalents $ 68,002 $ 133,815
Restricted cash 18,730 -
Short-term investments 679 -
Notes receivable, current 7,810 6,365
Accounts receivable, net 106,071 87,415
Receivables from affiliated companies 13,787 22,140
Inventories 30,294 24,716
Assets from discontinued operations 2,976 7,466
Other current assets 50,915 33,901
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Total current assets 299,264 315,818
Receivables from affiliated companies, long-term 10,046 20,915
Notes receivable, long-term, net 28,700 28,408
Investments in affiliated companies 11,042 14,362
Property, plant and equipment, net 399,411 171,785
Goodwill 183,435 7,695
Intangible assets, net 79,830 6,378
Other assets 31,010 26,616
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Total assets $ 1,042,738 $ 591,977
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Current liabilities:
Notes payable and current portion of long-term debt $ 9,129 $ 6,276
Accounts payable 36,429 28,279
Billings in advance from affiliated companies - 3,629
Liabilities from discontinued operations 239 396
Other current liabilities 88,968 79,512
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Total current liabilities 134,765 118,092
Long-term debt and notes payable 290,108 8,889
Deferred income taxes 34,360 30,979
Minority interest 14,926 1,426
Accumulated losses in investments in affiliated companies 6,079 5,068
Other liabilities 11,413 11,358
Stockholders' equity 551,087 416,165
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Total liabilities and stockholders' equity $ 1,042,738 $ 591,977
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# # # # #
For more information, contact:
John F. Curtis Daniel M. Kuzmak
Vice President, Strategy and Operations, Treasurer Vice President, Chief Financial Officer
Ionics, Incorporated Ionics, Incorporated
Tel: (617) 673-4403 Tel: (617) 673-4350
jcurtis@ionics.com dkuzmak@ionics.com