UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 02549
FORM 10-K/A
Amendment No. 1 to Form 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 1-7211
IONICS, INCORPORATED
(Exact name of registrant as specified in its charter)
Massachusetts 04-2068530
(State of incorporation) (IRS Employer Identification Number)
65 Grove Street 02472-2882
Watertown, Massachusetts (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (617)926-2500
Securities registered pursuant to Section 12(b)
of the Act: Common Stock, $1.00 par value
Name of each exchange on which registered: New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes X No ___
The aggregate market value of the Common Stock of the registrant held by
non-affiliates as of June 28, 2002 was $415,244,560 (17,123,487 shares at $24.25
per share) (includes shares owned by a trust for the indirect benefit of a
non-employee director, and by a trust for the indirect benefit of a spouse of a
non-employee director).
As of March 21, 2003, 17,555,046 shares of Common Stock, $1.00 par value, were
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant intends to file a definitive proxy statement pursuant to
Regulation 14A within 120 days of the end of the fiscal year ended December 31,
2002. Portions of such proxy statement are incorporated by reference into Item 5
and Part III of this Annual Report on Form 10-K.
EXPLANATORY NOTE
Ionics, Incorporated (the Company) is filing this Amendment No. 1 to Form 10-K
to amend its Annual Report on Form 10-K for the year ended December 31, 2002 to
correct an inadvertent typographical error in Item 14, "Controls and
Procedures."
The Company hereby amends the following item:
1. Item 14 of Part III is amended so that the first three words of the
last paragraph of Item 14 shall read, "In March 2003". A copy of the
corrected and amended Item 14 follows:
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ITEM 14. CONTROLS AND PROCEDURES
As part of the Company's continuing efforts to ensure that information required
to be disclosed by the Company in its Securities and Exchange Commission filings
is appropriately accumulated and disseminated to allow timely decisions
regarding required disclosure, the Company has been taking various actions to
strengthen its system of internal controls and disclosure controls and
procedures. Such actions were also taken to enhance the processes by which the
Company manages its various divisions and subsidiaries, because managing a large
number of relatively small, locally managed businesses around the world presents
significant challenges.
Prior to the evaluation of the Company's disclosure controls and procedures made
in connection with the filing of its Quarterly Report on Form 10-Q for the
periods ended September 30, 2002, the Company made changes in its internal
controls and took other actions designed to enhance the Company's internal
controls, which consisted of the following:
o the hiring of new personnel including, two new segment controllers in April
and July of 2002, three new divisional controllers in May and September of
2002, a corporate director of accounting in July 2002, and a new
consolidation accountant in September 2002, to enhance the quality of its
accounting capabilities;
o the replacement of the senior operating executive at the Company's French
subsidiary and the reassignment of much of the operational responsibility
for that subsidiary to the Company's Italian subsidiary;
o the implementation of a new financial consolidation software package (which
became operational in September 2002);
o the implementation of a centralized bid and proposal review and approval
process at the beginning of 2002;
o the expansion of the internal audit function through the use of outside
resources beginning in March 2002;
o the formalization of certain accounting and information technology policies
and procedures at various times throughout the year;
o the hiring of a Director of Project Management in October 2002 to oversee
project-related procedures and to train project managers at locations to
enable them to better comply with Company goals, policies and procedures;
and
o the institution of procedures requiring written quarterly certifications
and representations from the head of each business group and the local
controller of each business location.
Since that evaluation in November 2002, the Company has made additional changes
in its internal controls and taken other actions designed to enhance the
Company's internal controls, which consisted of the following:
o the formation of a disclosure committee to oversee the effectiveness of the
Company's disclosure controls and procedures;
o in furtherance of the centralized bid and proposal review and approval
process, the establishment of formal, systematic procedures for reviewing
all major commercial projects being undertaken by the Company, including
monthly participation by senior management;
o the finalization of a project database to facilitate the tracking and
analysis of project performance throughout the Company in December 2002;
o the hiring of a senior financial manager into a newly created position as
European Controller in December 2002, who is responsible for providing
financial oversight and control for the Equipment Business Group's European
operations; and
o the conduct of a conference, and other educational activities, for the
Company's segment and divisional controllers and corporate accounting
staff, which included programs regarding, among other topics, inter-company
transactions, key policies under U.S. generally accepted accounting
principles (e.g., SAB 101, SOP 81-1), the Sarbanes-Oxley Act of 2002,
internal controls, U.S. regulation of international transactions, and key
responsibilities of the local controllers.
In connection with the audit of its financial statements for 2002, the Company
was advised by its independent auditor that certain of its internal controls had
deficiencies and material control weaknesses. Consequently, and with the goal of
further improving the quality and timeliness of the information available to
management, the Company is continuing to implement measures designed to address
those deficiencies and weaknesses as follows:
o to evaluate and strengthen its financial and accounting staff and their
knowledge and understanding of key policies under U.S. generally accepted
accounting principles and of their responsibilities;
o to improve monitoring controls to assure the prevention or detection of
material accounting errors on a timely basis;
o to reduce the time necessary to collect and report financial and operating
data by improving the timing and accuracy of forecasting and emphasizing
more frequent reviews of the Company's balance sheets and reconciliation of
intercompany balances;
o to continue to update its accounting policies and procedures.
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In March 2003, the Company carried out an evaluation, under the supervision and
with the participation of the Company's management, including the Company's
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
Company's "disclosure controls and procedures." The SEC defines "disclosure
controls and procedures" as a company's controls and other procedures that are
designed to ensure that information required to be disclosed by the company in
the reports it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms. Based on their evaluation of the Company's
disclosure controls and procedures, the Company's Chief Executive Officer
(principal executive officer) and Chief Financial Officer (principal financial
officer) concluded that the Company's disclosure controls and procedures were
substantially effective for these purposes as of the date of the evaluation.
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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: April 1, 2003 By: /s/ Stephen Korn
----------------
Stephen Korn
Vice President and
General Counsel
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CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Arthur L. Goldstein, certify that:
1. I have reviewed this Amendment No. 1 to annual report on Form 10-K of
Ionics, Incorporated;
2. Based on my knowledge, this Amendment No. 1 to annual report does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Amendment No. 1 to annual report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods in
this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls, and
6. The registrant's other certifying officer and I have indicated in this
Amendment No. 1 to annual report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
/s/Arthur L. Goldstein
----------------------
Arthur L. Goldstein
Chairman and
Chief Executive Officer
April 1, 2003
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CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Daniel M. Kuzmak, certify that:
1. I have reviewed this Amendment No. 1 to annual report on Form 10-K of
Ionics, Incorporated;
2. Based on my knowledge, this Amendment No. 1 to annual report does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Amendment No. 1 to annual report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods in
this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls, and
6. The registrant's other certifying officer and I have indicated in this
Amendment No. 1 to annual report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
/s/ Daniel M. Kuzmak
--------------------
Daniel M. Kuzmak
Vice President, Finance and
Chief Financial Officer
April 1, 2003
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