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, 2001
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 its charter)
Massachusetts 04-2068530
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation of 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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Common Stock, $1 par value
Name of each exchange on which registered: New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
-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, 2001 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, 2001, as Exhibit 13 thereto, and the Consent of Belanger &
Company, P.C., independent public accountants, as Exhibit 23.2 thereto. The
Annual Report of the Ionics Section 401(k) Stock Savings Plan on Form 11-K for
the year ended December 31, 2001 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 26, 2002 By /s/Stephen Korn
--------------------------
Stephen Korn
Vice President and
General Counsel
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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 Schedule
on page 30.
2. Financial Statement Schedule
See Index to Financial Statements and Financial Statement Schedule
on page 30. All other Financial Statement Schedules have been
omitted because they are either not applicable or the required
information is included in the Consolidated Financial Statements
or notes thereto.
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 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 May 2, 2000 *
(filed as Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000).
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
26, 2002.
10.3 Second Amendment and Waiver to Third
Amended and Restated Revolving Credit
Agreement dated as of March 28, 2002
between the Company and Fleet National
Bank.
10.3(1) First Amendment and Waiver to Third
Amended and Restated Revolving Credit
Agreement dated as of December 21, 2001
by and among the Company, Fleet National
Bank (as agent and lender), Bank
America, N.A., The Chase Manhattan Bank
and Mellon Bank, N.A.
10.4 Third Amended and Restated Credit *
Agreement dated as of June 29, 2001,
among the Company, Fleet National Bank
(as agent and lender), Bank of America,
N.A., The Chase Manhattan Bank and
Mellon Bank, N.A. (filed as Exhibit 4.1
to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended
June 30, 2001).
10.5 Global Amendment and Affirmation *
Agreement dated as of June 29, 2001,
among the Company, Fleet National Bank
and certain subsidiaries of the Company
(filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2001).
10.6 Second Amended and Restated Credit *
Agreement dated as of July 28, 2000,
among the Company, Fleet National Bank
and Fleet National Bank as agent (filed
as Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2000).
10.6(1) Amendment Agreement No. 1 to Second *
Amended and Restated Credit Agreement
among the Company, Fleet National Bank
and Fleet National Bank as Agent dated
March 1, 2001 (filed as Exhibit 10.3(1)
to the Company's Annual Report on Form
10-K for the year ended December 31,
2000).
10.6(2) Amendment Agreement No. 2 to Second *
Amended and Restated Credit Agreement
among the Company, Fleet National Bank
and Fleet National Bank as Agent dated
May 14, 2001 (filed as Exhibit 10.2 to
the Company's Quarterly Report on Form
10-Q for the quarterly period ended
March 31, 2001).
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 Shareholders' Agreement dated April 3, *
2001 between the Company and Mohammed
Abdulmohsin Al-Kharafi & Sons (filed as
Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly
period ended March 31, 2001).
10.12 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).
10.13 Shareholders' Agreement dated as of May *
12, 2000, by and among the Company,
Hafeez Karamath Engineering Services
Limited, and Desalination Company of
Trinidad and Tobago Ltd., as amended on
June 16, 2000 (filed as Exhibit 10.2 to
the Company's Quarterly Report on Form
10-Q for the quarterly period ended June
30, 2000).
10.14 Loan Agreement dated as of October 25, *
2000 between the Company and Hafeez
Karamath Engineering Services Limited
(filed as Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the year
ended December 31, 2000).
13.0 Annual Report of the Ionics Section 401(k) Stock
Savings Plan on Form 11-K for the year ended
December 31, 2001.
21.0 Subsidiaries of the Registrant.
23.0 Consents
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Belanger & Company, P.C.
24.0 Power of Attorney.
-------------------------------
*Incorporated herein by reference
(b) Reports on Form 8-K
A report on Form 8-K was filed by the Company on December 3, 2001,
reporting under Item 5 the issuance of a press release announcing the
Company's agreement to sell its bottled water business.
-3-
Exhibit No. 13 to Annual Report on Form 10-K of
Ionics, Incorporated for the year ended December 31, 2001
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] Annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2001
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, MA 02472-2882
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IONICS SECTION 401(k) STOCK SAVINGS PLAN
INDEX OF FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
Page
----
Independent Auditor's Report 2
Financial Statements:
Statements of Net Assets Available for Benefits
at December 31, 2001 and 2000 3
Statements of Changes in Net Assets Available for
Benefits for the year ended December 31, 2001 4
Notes to Financial Statements 5
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes at
December 31, 2001 9
Schedule of Nonexempt Transactions for the year ended
December 31, 2001 10
-5-
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 benefits
of the Ionics Section 401(k) Stock Savings Plan (the Plan) as of December 31,
2001 and 2000, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2001. These financial statements 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 benefits of the Plan as of
December 31, 2001 and 2000 and the changes in its net assets available for
benefits for the year ended December 31, 2001, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and nonexempt transactions are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audits 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.
---------------------------
BELANGER & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
Chelmsford, Massachusetts
June 5, 2002
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IONICS SECTION 401(k) STOCK SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
----------------------------------------
2001 2000
------------------ ------------------
Assets:
Investments (see Note C) $ 27,121,799 $ 25,348,894
------------------ ------------------
Receivables:
Employer contribution 49,014 54,346
Participant contributions 248,934 264,942
------------------ ------------------
Total receivables 297,948 319,288
------------------ ------------------
Total assets 27,419,747 25,668,182
Liabilities 0 0
------------------ ------------------
Net assets available for benefits $ 27,419,747 $ 25,668,182
================== ==================
See accompanying notes to the financial statements.
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IONICS SECTION 401(k) STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended
December 31, 2001
-----------------
Additions:
Additions to net assets attributed to:
Investment income:
Net depreciation in fair value
of investments (see Note C) $ (394,510)
Interest 134,591
Dividends 167,882
----------------
(92,037)
----------------
Contributions:
Participant 3,253,629
Employer 709,729
----------------
3,963,358
----------------
Total additions 3,871,321
Deductions:
Withdrawals by and distributions to participants 2,119,756
----------------
Net increase 1,751,565
Net assets available for benefits:
Beginning of year 25,668,182
----------------
End of year $27,419,747
================
See accompanying notes to the financial statements.
-8-
NOTES TO FINANCIAL STATEMENTS
A. Description of Plan
The following description of the Ionics, Incorporated and domestic
subsidiaries ("Company") 401(k) Plan (Plan) provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
1. General. The Plan is a defined contribution plan covering all permanent
employees of the Company working at least 20 hours per week who have
completed one year of service (effective March 1, 2000, the Plan was
amended to permit new employees to become eligible to participate effective
as of the first day of the month coincident with or next following the
employee's date of hire).
2. Contributions. Each year, participants may contribute up to 12 percent of
pretax annual compensation, as defined in the Plan. Participants may also
contribute amounts representing distributions from other qualified defined
benefit or defined contribution plans. Participants direct the investment
of their contributions into various investment options offered by the Plan.
The Plan currently offers Company stock and seven mutual funds as
investment options for participants. The Company contributes 50% of the
first 6 percent of base compensation that a participant contributes to the
Company stock portion of the Plan. The matching Company contribution is
invested directly in Ionics, Incorporated common stock. Contributions are
subject to certain limitations.
3. Participant Accounts. Each participant's account is credited with the
participant's contribution and allocations of (a) the Company's
contribution and (b) Plan earnings. Allocations are based on total
investment earnings and average participant investment balances, as
defined. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's vested account.
4. Vesting. Participants are vested immediately in their contributions plus
actual earnings thereon. Vesting in the Company's contribution portion of
their accounts is based on years of continuous service ranging from 33 1/3%
after two years to 100% after four years.
5. Participant Loans. Participants may borrow from their fund accounts a
minimum of $1,000, up to a maximum of $50,000 or 50 percent of their
account balance, whichever is less. The loans are secured by the balance in
the participant's account and bear interest at rates that are commensurate
with local prevailing rates as determined by the Plan administrator.
6. Payment of Benefits. On termination of service due to death, disability, or
retirement, a participant may elect to receive either a lump-sum amount
equal to the value of the participant's vested interest in his or her
account, or annual installments over the life expectancy of the Participant
(or the joint life expectancy of the Participant and spouse or
beneficiary).
7. Plan Expenses. The Plan provides that the Company shall pay all expenses of
the Plan and its administration.
-9-
B. Summary of Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
changes therein, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
Investment Valuation and Income Recognition
Investment of the Plan in Ionics, Incorporated Common Stock is stated at
the last sales price on December 31, 2001 as reported on the New York Stock
Exchange. Shares of mutual funds are valued at the Net Asset Value of
shares held by the Plan at year-end.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
C. Investments
The following presents investments that represent 5 percent or more of the
Plan's net assets.
December 31,
-----------------------------------
2001 2000
----------------- ----------------
Ionics, Incorporated common stock, 469,796
and 436,598 shares, respectively $14,107,974* $12,388,468*
Puritan Fund, 125,870 and 114,594 shares,
respectively 2,224,126 2,157,798
Contrafund Fund, 101,392 and 99,513 shares,
respectively 4,336,547 4,893,052
Janus Worldwide Fund, 31,458 and 26,252
shares, respectively 1,379,131 1,492,678
BT Pyramid GIC Fund 1,396,208 N/A
*Nonparticipant-directed
During 2001, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value by
$394,510 as follows:
Mutual funds $ (1,255,521)
Ionics, Incorporated common stock 861,011
--------------
$ (394,510)
==============
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D. Nonparticipant-Directed Investments
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows:
December 31,
-------------------------------------
2001 2000
----------------- -----------------
Common stock $ 14,107,974 $ 12,388,468
================= =================
Year Ended
12/31/01
-----------------
Contributions $ 1,583,607
Net appreciation 861,011
Benefits paid to participants (725,112)
-----------------
$ 1,719,506
=================
E. 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.
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F. 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, 2001 and 2000 to Form 5500:
2001 2000
----------------- ---------------
Net assets available for benefits per the
financial statements $27,419,747 $25,668,182
Amounts allocated to withdrawing
participants (165,207) (301,050)
----------------- ---------------
Net assets available for benefits per the
Form 5500 $27,254,540 $25,367,132
================= ===============
The following is a reconciliation of benefits paid to participants per the
financial statements for the year ended December 31, 2001 to Form 5500:
Distributions to participants per the
financial statements: $2,119,756
Add: Amounts allocated to withdrawing
participants at December 31, 2001 165,207
Less: Amounts allocated to withdrawing
participants at December 31, 2000 (301,050)
--------------
Benefits paid to participants per Form 5500 $1,983,913
==============
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 31st but not yet paid as of that date.
G. Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated September 12, 1995, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (IRC). Although the Plan has been amended since receiving the
determination letter, it is believed that the Plan is designed and is
currently being operated in compliance with the applicable requirements of
the IRC.
-12-
Attachment to Form 5500
Schedule H, Line 4 I
EIN: 04-2068530
Plan Number 003
Schedule I
IONICS SECTION 401(k) STOCK SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 2001
Face Amount Current
Description of Investment Shares or Rate Cost Value
-------------- ------------ -------------
Ionics, Incorporated
Common Stock 469,796 $ 12,941,167 $ 14,107,974
Fidelity Investments:
Puritan Fund 125,870 2,260,636 2,224,126
Contrafund 101,392 4,851,452 4,336,547
MainStay Institutional:
Indexed Bond 62,640 676,615 657,723
Asset Manager Fund 102,998 1,568,698 1,269,964
Indexed Equity Fund 23,788 758,349 626,568
Money Market 207,982 207,982
Janus Worldwide Fund 31,458 1,764,702 1,379,131
BT Pyramid GIC Fund 1,396,208 1,396,208
Participant Loans
(Rate of interest 6.25% to 11.00%) 0 915,576
------------- -------------
Total funds invested $ 26,425,809 $ 27,121,799
============= =============
See accompanying notes to the financial statements.
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Attachment to Form 5500
Schedule H, line 4 d
EIN: 04-2068530
Plan Number 003
Schedule II
IONICS SECTION 401(k) STOCK SAVINGS PLAN
SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(a) (b) (c) (d) (e) (h) (i) (j)
Identify of Relationship Description of Purchase Selling Cost of Current Value Net Gain
Party Involved to Plan Transaction Price Price Asset of Asset (Loss)
---------------------------------- ----------------- ----------- ----------- ----------- ----------------- -----------
Ionics, Inc. Employer Late payment $8,599 $8,599 $8,599 $8,599 $0
of contributions
to the Plan
Note: The total amount due for the nonexempt transaction was paid on June 4, 2001
See accompanying notes to the financial statements.
-14-
SIGNATURES
Ionics Section 401(k) Stock Savings Plan. Pursuant to the requirements of the
Securities Exchange Act of 1934, the trustee (or other persons who administer
the employee benefit plan) has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
IONICS SECTION 401(k)
STOCK SAVINGS PLAN
Date: June 25, 2002 By: /s/Daniel M. Kuzmak
-----------------------------
Daniel M. Kuzmak, Member
Plan Administrative Committee