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): November 9, 2004
IONICS, INCORPORATED
(Exact name of registrant as specified in its charter)
Massachusetts 1-7211 04-2068530
(State of incorporation) (Commission File Number) (IRS Employer Identification
Number)
65 Grove Street, Watertown, MA 02472
(Address of principal executive offices) (Zip Code)
617-926-2500
(Registrant's telephone number,
including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On November 9, 2004, Ionics, Incorporated issued a press release reporting its
financial results for the quarter ended September 30, 2004. A copy of the press
release is attached hereto as Exhibit 99 and is hereby incorporated by
reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No. Description
----------- -----------
99 Press Release dated November 9, 2004 reporting the
financial results of Ionics, Incorporated for the
quarter ended September 30, 2004.
SIGNATURE
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 hereunto duly authorized.
Date: November 9, 2004 IONICS, INCORPORATED
(Registrant)
By: /s/Stephen Korn
-------------------
Stephen Korn
Vice President and General Counsel
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
99 Press Release dated November 9, 2004, reporting
the financial results of Ionics, Incorporated for
the quarter ended September 30, 2004.
IONICS REPORTS RESULTS FOR THE THIRD QUARTER AND NINE MONTHS OF 2004
Watertown, MA, November 9, 2004...Ionics, Incorporated (NYSE-ION) today filed
its quarterly report on Form 10-Q, reporting results for the three and nine
month periods ended September 30, 2004. Third quarter revenues were $118.1
million, compared to $87.7 million for the third quarter of 2003. Net income of
$0.9 million, or $0.04 per share, in Q3 2004 compared to a net loss of ($22.0)
million, or ($1.24) per share, for Q3 2003. The earnings per share from
continuing operations were $0.06 in Q3 2004, compared to a loss per share of
($0.99) in Q3 2003. Excluding amortization of intangibles, net of statutory tax
rate of 38%, the results of continuing operations were $0.13, compared to a loss
per share of ($0.99) in the third quarter of 2003.
Revenues for the first nine months of 2004 were $349.6 million, compared to
$251.5 million for the first nine months of 2003. The net loss was ($5.4)
million, or ($0.25) per share, for the first nine months of 2004, compared to a
net loss of ($26.4) million, or ($1.50) per share, for the first nine months of
2003. The loss per share from continuing operations was ($0.07) for the first
nine months of 2004, compared to a loss per share of ($1.06) per share for the
first nine months of 2003. Earnings per share from continuing operations,
excluding amortization of intangibles, net of statutory tax rate of 38%, was
$0.11, compared to a loss per share of ($1.05) in the first nine months of 2003.
Income from continuing operations before income taxes and minority interest
expense for the third quarter and for the first nine months of 2004 was $3.3
million and $5.1 million, respectively. This compares to a loss from continuing
operations before income taxes and minority interest expense for the third
quarter and first nine months of 2003 of ($25.8) million and ($27.0) million,
respectively. Items impacting the results for the third quarter of 2004 include
third party expenses of $0.6 million for systems development and $1.1 million
for Sarbanes-Oxley Section 404 preparedness charges. Also during the quarter,
manufacturing at one of the Company's facilities in Pennsylvania was temporarily
halted as a result of flooding associated with Hurricane Ivan. This resulted in
delays of certain projects, which adversely impacted the results for the quarter
by approximately $0.5 million on a pretax basis. The Company expects to recover
this income through subsequent completion of the projects, as well as through
its business interruption insurance.
Also included in the Company's financial results 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 provisions of FIN46. Ecolochem revenues for the
quarter and the first nine months were $22.3 million and $58.5 million,
respectively. Desalcott revenues for the quarter and for the first nine months
were $7.4 million and $21.8 million, respectively.
Commenting on the results for the quarter, CEO Doug Brown said, "I am pleased
with the Company's financial results which demonstrate the impact of the
numerous restructuring initiatives launched over the past year. We are
continuing to implement programs designed to further increase the Company's
profitability." For further information about the Company's third quarter and
first nine months 2004 financial results, please refer to the Company's
quarterly report on Form 10-Q.
Ionics will host a conference call on Thursday, November 11, 2004 at 10:00AM,
EST to discuss its third-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.
- more -
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 and its quarterly report on Form 10-Q for the
quarter ended September 30, 2004. 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.
-more-
IONICS REPORTS THIRD QUARTER RESULTS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
-------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues:
Equipment Sales $ 32,843 $ 36,799 $ 104,264 $ 99,637
Operations 62,865 28,179 177,541 82,450
Consumer Water 4,465 3,708 12,455 9,217
Instruments 9,614 7,880 28,065 24,308
Affiliated companies 8,346 11,119 27,262 35,870
--------- --------- --------- ---------
118,133 87,685 349,587 251,482
--------- --------- --------- ---------
Costs and expenses:
Cost of sales of Equipment Sales 26,561 36,002 84,867 85,317
Cost of sales of Operations 40,235 19,998 113,588 58,227
Cost of sales of Consumer Water 1,604 2,806 5,081 5,219
Cost of sales of Instruments 4,391 3,558 12,374 11,019
Cost of sales to affiliated companies 7,411 9,575 24,014 30,958
Research and development 1,504 1,784 4,607 5,515
Selling, general and administrative 29,166 22,473 87,895 63,225
Impairment of long-lived assets - 2,499 - 2,499
Restructuring charges, net - 2,470 1,188 2,470
Impairment of goodwill - 12,731 - 12,731
--------- --------- --------- ---------
110,872 113,896 333,614 277,180
--------- --------- --------- ---------
Income (loss) from continuing operations 7,261 (26,211) 15,973 (25,698)
Interest (expense) income, net (5,174) 406 (13,410) 1,453
Equity income (loss) 1,210 43 2,501 (2,800)
--------- --------- --------- ---------
Income (loss) from continuing operations before
gain on sale of Aqua Cool, inocme taxes
and minority interest expense 3,297 (25,762) 5,064 (27,045)
Gain on sale of Aqua Cool - 457 - 457
Income tax (expense) benefit (1,652) 7,981 (5,879) 8,542
--------- --------- --------- ---------
Income (loss) from continuing operations before
minority interest expense 1,645 (17,324) (815) (18,046)
Minority interest expense 282 249 766 635
--------- --------- --------- ---------
Income (loss) from continuing operations 1,363 (17,573) (1,581) (18,681)
Loss from discontinued operations, net of tax (473) (4,459) (3,807) (7,699)
--------- --------- --------- ---------
Net income (loss) $ 890 $ (22,032) $ (5,388) $ (26,380)
========= ========= ========= =========
Basic income (loss) per share from continuing operations $ 0.06 $ (0.99) $ (0.07) $ (1.06)
Basic loss per share from discontinued operations (0.02) (0.25) (0.17) (0.44)
--------- --------- --------- ---------
Basic net income (loss) per share $ 0.04 $ (1.24) $ (0.25) $ (1.50)
========= ========= ========= =========
Diluted income (loss) per share from continuing operations $ 0.06 $ (0.99) $ (0.07) $ (1.06)
Diluted loss per share from discontinued operations (0.02) (0.25) (0.17) (0.44)
--------- --------- --------- ---------
Diluted net income (loss) per share $ 0.04 $ (1.24) $ (0.25) $ (1.50)
========= ========= ========= =========
Shares used in basic income (loss) per share calculations 22,637 17,699 21,849 17,607
========= ========= ========= =========
Shares used in diluted income (loss) per share calculations 22,891 17,699 21,849 17,607
========= ========= ========= =========
Backlog 409,425 332,666
========= =========
-more-
Other Data:
Three months ended Nine months ended
September 30, September 30,
-------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Reconciliation of income (loss) from continuing operations
to net income (loss) from continuing operations adjusted
for amortization of intangibles, net of tax:
Income (loss) from continuing operations $ 1,363 $ (17,573) $ (1,581) $ (18,681)
Add back:
Amortization of intangibles, net of tax 1,521 128 3,889 264
--------- --------- --------- ---------
Net income (loss) from continuing operations adjusted
for amortization of intangibles, net of tax $ 2,884 $ (17,445) $ 2,308 $ (18,417)
========= ========= ========= =========
Diluted income (loss) per share from continuing operations $ 0.06 $ (0.99) $ (0.07) $ (1.06)
Add back:
Amortization of intangibles, net of tax 0.07 0.01 0.18 0.02
--------- --------- --------- ---------
Diluted income (loss) per share from continuing operations
adjusted for amortization of intangibles, net of tax $ 0.13 $ (0.99) $ 0.11 $ (1.05)
========= ========= ========= =========
-more-
IONICS REPORTS THIRD QUARTER RESULTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
September 30, December 31,
2004 2003
------------ -----------
Current assets:
Cash and cash equivalents $ 59,439 $ 133,815
Short-term investments 1,504 -
Notes receivable, current 5,912 6,365
Accounts receivable, net 128,228 87,415
Receivables from affiliated companies 23,342 22,140
Inventories 29,197 24,595
Assets from discontinued operations 796 7,959
Other current assets 40,089 33,781
------------ -----------
Total current assets 288,507 316,070
Restricted cash 12,400 -
Receivables from affiliated companies, long-term 11,919 20,915
Notes receivable, long-term, net 37,641 28,408
Investments in affiliated companies 10,164 14,362
Property, plant and equipment, net 392,649 171,533
Goodwill 185,578 7,695
Intangible assets, net 74,787 6,378
Other assets 31,172 26,616
------------ -----------
Total assets $ 1,044,817 $ 591,977
============ ===========
Current liabilities:
Notes payable and current portion of long-term debt $ 8,738 $ 6,276
Accounts payable 37,121 28,279
Billings in advance from affiliated companies - 3,629
Liabilities from discontinued operations - 396
Other current liabilities 104,276 79,512
------------ -----------
Total current liabilities 150,135 118,092
Long-term debt and notes payable 277,763 8,889
Deferred income taxes 33,677 30,979
Minority interest 15,084 1,426
Accumulated losses in investments in affiliated companies 3,279 5,068
Other liabilities 10,374 11,358
Stockholders' equity 554,505 416,165
------------ -----------
Total liabilities and stockholders' equity $ 1,044,817 $ 591,977
============ ===========
For more information, contact:
John F. Curtis Daniel M. Kuzmak
Vice President, Strategy and Operations, Treasurer Vice President and Chief Financial Officer
Ionics, Incorporated Ionics, Incorporated
Tel: (617) 673-4403 Tel: (617) 673-4350
jcurtis@ionics.com dkuzmak@ionics.com