FORM 10-K  

              SECURITIES AND EXCHANGE COMMISSION

                     Washington, DC 20549

[ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended   December 31, 1996               

                              OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

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 of      (I.R.S. Employer 
   incorporation or organization        Identification Number)

 65 Grove Street, Watertown, Massachusetts        02172     
(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)

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]

1



State the aggregate market value of the voting stock held by
non-affiliates of the registrant.  The aggregate market value
shall be computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as
of a specified date within 60 days prior to the date of filing.
The aggregate market value of the voting stock held by non-
affiliates as of March 21, 1997 was $715,710,320 (15,559,320
shares at $46 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).


          (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.  As of March 21, 1997, 15,913,621 shares of
Common Stock, $1 par value, were issued and outstanding.

              DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 1996 Annual Report to Stockholders. Parts I, II
                                                    (for Item 201      
                                                    information)
                                                    and IV

Portions of the Definitive Proxy Statement for 
the Annual Meeting of Stockholders to be held 
on May 8, 1997.                                     Part III



























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                             PART I

Item 1.  BUSINESS

     Ionics, Incorporated ("Ionics," the "Company," or the
"Registrant") is a leading water purification company engaged
worldwide in the supply of water and of water treatment equipment
through the use of proprietary separations technologies and
systems.  Ionics' products and services are used by the Company or
its customers to desalt brackish water and seawater, to purify and
supply bottled water, to treat water in the home, to manufacture
and supply water treatment chemicals and ultrapure water, to
process food products, recycle and reclaim process water and
wastewater, and to measure levels of water-borne contaminants and
pollutants.  The Company's customers include industrial companies,
consumers, municipalities and utilities.

     The Company's business activities are divided into three
segments:  Membranes and Related Equipment; Water, Food and
Chemical Supply; and Consumer Products, which in 1996 accounted
for approximately 46%, 34% and 20% of revenues, respectively.
Approximately 36% of the Company's 1996 revenues were derived from
foreign sales or operations.  Since 1985, the Company has pursued
a strategy of expanding beyond its traditional focus of selling
desalination plants and equipment by owning and operating its own
equipment to produce and sell water, food and chemicals.  In 1996,
the Water, Food and Chemical Supply and Consumer Products business
segments accounted for 66% of the Company's earnings before
interest and taxes.  

     Currently, the Company's three business segments encompass
ten business areas or applications described by the Company as its
"Ten-Cylinder EngineSM" strategy.  The description of the
Company's business segments under this Item is further divided
into a description of these business areas.

     Over forty years ago, the Company pioneered the development
of the ion-exchange membrane and the electrodialysis process.
Since that time, the Company has expanded its separations
technology base to include a number of membrane and non-membrane-
based separations processes which the Company refers to as "The
Ionics ToolboxSM."  These separations processes include
electrodialysis reversal (EDR), reverse osmosis (RO),
ultrafiltration (UF), microfiltration (MF), electrodeionization
(EDI), electrolysis, ion exchange, carbon adsorption, and thermal
processes such as evaporation and crystallization, as well as
solvent extraction and recovery processes.  The Company believes
that it is the world's leading manufacturer of ion-exchange
membranes and of membrane-based systems for the desalination of
water.  

     The Company was incorporated in Massachusetts in 1948.  The
Company's principal executive offices are located at 65 Grove
Street, Watertown, Massachusetts 02172.


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                               I-1




Financial Information About Business Segments

     The information contained in Note 14 of Notes to Consolidated
Financial Statements contained in the Company's Annual Report to
Stockholders for the year ended December 31, 1996 is incorporated
herein by reference.

Membranes and Related Equipment

     The Company's Membranes and Related Equipment business
segment, which accounted for approximately 46% of revenues in 1996
and provides membrane-based and other advanced technology systems
to the municipal and industrial markets, is divided into four
market areas:  desalination and related water treatment equipment;
wastewater treatment equipment; instruments; and ultrapure water
equipment.

     1.    Desalination and Related Water Treatment Equipment

     Opportunities for the sale of desalination and related
water treatment equipment arise from changes in the needs of
people and municipalities, from industrial shifts and growth,
and from a need to avert environmental concerns.  With less
than 1% of the total water on the planet fresh and usable,
desalination has played an important role in creating new water
sources.

     The Company sells a wide spectrum of products and systems
to serve this market which utilize technologies including
electrodialysis reversal, ion exchange, electrodeionization,
reverse osmosis, ultrafiltration, and carbon adsorption.
Depending on the customers' needs, the Company provides
standardized versions of systems utilizing one or more of the
technologies mentioned, or can supply complete turnkey plants
that may include standardized models as well as peripheral
water treatment equipment, complete engineering services,
process and equipment design, project engineering,
commissioning, operator training and field service.

     2.    Wastewater Treatment Equipment

     The market for wastewater treatment, recycle and reuse has
shown significant growth as world demand for water of specified
quality continues to increase and as regulations limiting waste
discharges to the environment continue to mount.  The
wastewater market is increasingly driven by the concept of
Total Water ManagementSM, which involves the recognition that
the water streams which enter, leave or become part of a
process can be managed to achieve overall economic
efficiencies.  Ionics services the wastewater market with brine
concentrators and crystallizers, traditional wastewater
treatment equipment, and special electrodialysis reversal
membrane-based concentrators for recycle and reuse.



4

                               I-2



     The Company designs, engineers and constructs brine
concentrators, evaporators and crystallizers which are used to
clean, recover and recycle wastewater, particularly in zero
liquid discharge industrial uses.  Such systems may also
incorporate electrodialysis reversal membrane systems as
preconcentrators.  Ionics also holds a license for a patented
solvent extraction technology known as B.E.S.T. (Basic
Extraction Sludge Technology), which separates contaminated
sludges, sediments and soils into oil, water and solids and has
potential use for cleanup of toxic organic materials at
contaminated sites.

     Ionics also designs, engineers and constructs customized
systems for industrial wastewater customers which may include
conventional treatment systems as well as advanced separation
technologies such as electrodialysis reversal, reverse osmosis,
electrolysis and microfiltration.  Typical industrial customers
are power stations, chemical and petrochemical plants, 
metal-working and automobile factories, textile manufacturers
and a variety of other industrial applications.  The Company
also provides custom and packaged sewage treatment systems for
municipalities.

     3.    Instruments

     The Company sells instruments to measure water quality for
industrial and government customers.  In 1996, the Company
acquired Sievers Instruments, Inc. (Sievers), located in
Boulder, CO.  Sievers manufactures, among other instruments,
total organic carbon (TOC) monitors used primarily in ultrapure
water applications in the semiconductor and pharmaceutical
industries, which complement the Company's existing TOC monitor
line for process water and wastewater applications.  The
Company's instrument products, which are used both in the
laboratory and on-line, measure and detect, among other things,
total carbon, TOC, nitric oxide, chemical oxygen demand and
total oxygen demand.  The Company also sells instruments for
the measurement of dissolved metals which are sensitive to the
part-per-billion range and specific chemical analyzers for
ammonia, phosphates, nitrates and chlorine.

     4(a). Ultrapure Water Equipment

     Ultrapure water, which has been purified by a series of
processes to the degree that remaining impurities are measured
in parts per billion or trillion, is required for specialized
industrial uses.  The demand for technologically advanced
ultrapure water equipment and systems has increased as the
industries which use ultrapure water have become more
knowledgeable about their quality requirements.  Ultrapure
water needs are particularly important in the semiconductor,
pharmaceutical, petroleum and power generation industries.  The
semiconductor industry in particular has increasingly demanded
higher purity water as the circuits on silicon wafers have
become more densely packed.


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                               I-3



     The recent increasing worldwide demand for computer chips
has sparked a worldwide boom in the construction of fabrication
facilities and the associated need for ultrapure water
equipment.  The Company supplies sophisticated ultrapure water
systems to the semiconductor, electronics and power industries
which utilize a combination of electrodialysis reversal, ion-
exchange, electrodeionization, reverse osmosis and 
ultrafiltration technologies.  These systems are either
trailer-mounted or land-based and vary from standardized
modules to large multimillion dollar systems, depending on the
customer's requirements.

Water, Food and Chemical Supply

     The Water, Food and Chemical Supply business segment
accounted in 1996 for approximately 34% of the Company's
revenues.  The Company's strategy is to sell, where
appropriate, water, food products and chemicals produced by its
membrane-based equipment, rather than selling the equipment
itself.  The Water, Food and Chemical Supply business segment
can be divided into four market areas:  ultrapure water supply;
drinking water supply; chemical supply; and food processing. 

     4(b).  Ultrapure Water Supply

     In industries such as power generation, semiconductors,
pharmaceuticals and biotechnology, ultrapure water is critical
to product quality and yield.  Depending on the composition and
quantity of the impurities to be removed or treated, any one of
several membrane separations methods can be utilized to provide
ultrapure water to the customer.  Ionics has pioneered in the
application of three membrane technologies (EDR, RO and UF)
combined together in a mobile system called the "triple
membrane" trailer for use in the commercial processing of
ultrapure water.  Ionics provides ultrapure water services and
the production and sale of ultrapure water from trailer-mounted
units at customer sites.

     Ionics has also commercially implemented its new
electrodeionization (EDI) technology in the production of
ultrapure water.  EDI is a continuous, electrically driven,
membrane-based water purification process which produces
ultrapure water without the use of strong chemical regenerants,
such as sulfuric acid and caustic soda, which are commonly
required.  The Company's new TMT-II trailers utilize a
combination of EDI, RO and UF technologies and represent what
the Company believes to be the most advanced technology used in
the commercial processing of ultrapure water.

     At the end of 1996, the Company had a total capacity,
installed or under construction, of approximately 13,000
gallons per minute for the production of ultrapure water under
long-term contracts with various industries.




6

                               I-4




     In January 1996, the Company acquired Apollo Ultrapure
Water Systems, Inc., based near Los Angeles, enabling the
Company to provide additional resources to service the growing
Southern California ultrapure water market.

     One of the Company's important ultrapure water service
activities is ion exchange regeneration services, which are
provided at four U.S. locations.  The Company also provides
system sanitization and high-flow deionization services at
customer sites.

     5.    Drinking Water Supply  

     Ionics' position as a seller of purified or treated water
has evolved from its traditional role as a supplier of water
treatment equipment.  In certain situations, opportunities are
available for the Company to provide a complete service package
involving financing, construction, operation and maintenance of
water treatment facilities.

     Ionics, through its wholly owned subsidiary, Ionics
Iberica, S.A., owns and operates a 5.5 million gallon per day
capacity brackish water EDR facility and a 3.6 million gallon
per day RO seawater facility on Grand Canary Island, Spain.
Under long-term contracts, the Company is selling the desalted
water from both facilities to the local water utility for
distribution.

     The Company's wholly owned subsidiary, Ionics (Bermuda)
Ltd., owns and operates a 600,000 gallon per day EDR brackish
water desalting plant on the island of Bermuda.  This plant
supplies fresh water under a long-term contract with Watlington
Waterworks Ltd., a Bermuda corporation partially owned by
Ionics.

     Through its acquisition of Aqua Design, Inc. in January
1996, the Company owns and operates approximately 35
desalination plants on a number of Caribbean islands, which
provide drinking water to hotels, resorts and governmental
entities.
















7

                               I-5




     6.    Chemical Supply

     In the chemical supply area, the Company uses its
CloromatR electrolytic membrane-based technology to produce
sodium hypochlorite and related chlor-alkali chemicals for
industrial, commercial and other non-consumer applications.
The Company's wholly owned Australian subsidiary, Elite
Chemicals Pty. Ltd., utilizes Cloromat systems to produce
sodium hypochlorite on-site in Brisbane for the industrial,
commercial and janitorial supply of bleach products, and to
supply sodium hypochlorite to treat the City of Brisbane's
drinking water supply under a five-year contract.

     The Company's wholly owned English subsidiary, Ionics
(U.K.) Limited, engages in sales of bulk bleach produced by
Cloromat facilities in Bridgwater and Thetford, England.  These
facilities supply bleach directly to manufacturers of
cellophane and household cleaning products, respectively, and
also supply bleach in bulk form to the regional market.

     7.    Food Processing

     In 1994, the Company commenced operations under an
agreement with a major U.S. dairy cooperative overseeing whey
processing activities at two plants owned by the cooperative.
Included in the equipment being utilized by the Company at
these plants are its ElectromatR electrodialysis systems.  The
Company receives a processing fee for its services based on the
production of demineralized whey. 

     In July 1996, the Company acquired Separation Technology,
Inc. (STI), with headquarters in St. Paul, MN.  STI is a
supplier of membrane-based purification equipment and services
to the food industry.  Systems built by STI are used primarily
for the concentration, clarification or fractionation of fluid
food products or food plant effluents.  Representative uses
include the concentration of cheese whey, milk and juice, the
production of whey protein concentrates, and the clarification
of brine for reuse and recovery of spent caustic.

Consumer Products

     The Company's Consumer Products business segment accounted
for approximately 20% of the Company's revenues in 1996.  The
Company's consumer products serve the bottled water, home water
purification and consumer bleach product market areas. 

     8. Aqua CoolR Pure Bottled Water

     Ionics entered the bottled water business in 1984.  The
Company's strategy is to utilize its proprietary desalination
and purification technology to produce a brand of drinking
water, named Aqua Cool Pure Bottled Water, which can be  



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                               I-6




reproduced with uniform consistency and high quality at
numerous locations around the world.  Distribution operations
have been established to serve the areas in and around London,
Manchester, Birmingham, Bristol and Leeds, England; a number of
metropolitan areas in the eastern, southeastern and central
United States; and, through joint ventures, in Bahrain, Kuwait
and Saudi Arabia.  The Company's business focuses on the sale
of Aqua Cool in five-gallon bottles to a variety of commercial
and residential customers.

     At the end of 1996, there were a total of 27 Aqua Cool
distribution centers in the United States and overseas,
supplied with Aqua Cool by seven regional water purification
and bottling facilities, supplying a customer base of
approximately 100,000.

     9.    Home Water Purification Systems  

           Point-of-Use Devices

     The Company participates in the "point-of-use" market for
over- and under-the-sink water purifiers through the
manufacture and sale of HYgeneR, a proprietary, EPA-registered,
silver-impregnated activated carbon filtering medium, and
through the sale of reverse osmosis and activated carbon-based
filtering devices.  The Company incorporates HYgene, which is
designed to prevent bacterial build-up while providing the
capability of removing undesirable tastes and odors from the
water supply, into its own bacteriostatic water conditioners
and also sells HYgene to manufacturers of household point-of-
use water filters.

           Point-of-Entry Devices 

     Ionics' point-of-entry water products include ion exchange
water conditioners to "soften" hard water, and chemicals and
media for filtration and treatment.  The Company sells its
products, under the General Ionics and other brand names,
through both independent distributorships and wholly owned
sales and service dealerships.  

     10.   Bleach-Based Consumer Products

     The Company's Elite New England division operates a
Cloromat facility to produce and distribute bleach-based
products for the consumer market, primarily one-gallon bleach
products under private label or under the Company's own
"EliteR", "Super ValueTM" and "UltraPureTM" brands, and
methanol-based automobile windshield wash solution.  These
operations are conducted in a 129,000 square foot manufacturing
facility, located in Ludlow, Massachusetts.  A recently
purchased facility in Elkton, Maryland will serve as the Mid-
Atlantic regional manufacturing and distribution center for
bleach-based and related consumer products.


9

                               I-7




Raw Materials and Sources of Supply

     All raw materials essential to the business of the Company
can normally be obtained from more than one source.  In those
few instances where raw materials are being supplied by only
one source, the current supplier has given the Company a lead
time for cancellation, which the Company believes is sufficient
to enable it to obtain other suppliers.  In addition, the
Company maintains inventories of single source items which it
believes are adequate under the circumstances.

     The Company produces the membranes required for its
equipment and systems that use the ED, EDR, MF, UF and EDI
processes.  Membranes used for the RO process are purchased
from outside suppliers, and are normally available from
multiple sources.

Patents and Trademarks

     The Company believes that its products, know-how,
servicing network and marketing skills are more significant to
its business than trademarks or patent protection of its
technology.  Nevertheless, the Company has a policy of applying
for patents both in the United States and abroad on inventions
made in the course of its research and development work for
which a commercial use is considered likely.  The Company owns
numerous United States and foreign patents and trademarks and
has issued licenses thereunder, and currently has additional
pending patent applications.  Of the 99 outstanding U.S.
patents held by the Company, a substantial portion involves
membranes, membrane technology and related separations
processes such as electrodialysis and electrodialysis reversal,
reverse osmosis, ultrafiltration and electrodeionization.  The
Company does not believe that any of its individual patents or
groups of related patents, nor any of its trademarks, is of
sufficient importance that its termination or abandonment, or
the cancellation of licenses extending rights thereunder, would
have a material adverse effect on the Company.


Seasonality

     The activities of the Company's businesses are not of a
seasonal nature, other than certain activities of the Consumer
Products segment.  Bottled water sales and bleach products for
swimming pool use tend to increase during the summer months.
Also, sales levels for automobile windshield wash solution
increase in the winter months.








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                               I-8




Customers

     The nature of the Company's business is such that it
frequently has in progress large contracts with one or more
customers for specific projects; however, there is no one
customer whose purchases account for 10% or more of the
Company's consolidated revenues and whose loss would have a
material adverse effect on the Company and its subsidiaries
taken as a whole.

Backlog

     The Company's backlog of firm orders was $210,505,000 at
December 31, 1996 and $175,409,000 at December 31, 1995.  For
multi-year contracts, the Company includes in reported backlog
the revenues associated with the first five years of the
contract.  For multi-year contracts which are not otherwise
included in backlog, the Company includes in backlog up to one
year of revenues.  Ionics expects to fill approximately 76% of
its December 31, 1996 backlog during 1997.  The Company does
not believe that there are any seasonal aspects to these
backlog figures.

Government Contracts

     The Company does not believe that any of its sales under
U.S. Government contracts or subcontracts during 1996 are
subject to renegotiation.  The Company has not had adjustments
to its negotiated contract prices, nor are any proceedings
pending for such adjustments.


Research and Development

     Since the development of the ion exchange membrane and the
EDR process, Ionics has continued its commitment to research
and development directed toward products for use in water
purification, processing and measurement, and separations
technology.  The Company's research and development expenses
were approximately $5,108,000 in 1996, $4,180,000 in 1995, and
$3,372,000 in 1994.

Competition

     The Company experiences competition from a variety of
sources with respect to virtually all of its products, systems
and services, although the Company knows of no single entity
that competes with it across the full range of its products and
services.  Competition in the markets served by the Company is
based on a number of factors, which may include price,
technology, applications experience, know-how, availability of
financing, reputation, product warranties, reliability, service
and distribution.



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                               I-9




     With respect to the Company's Membranes and Related
Equipment business segment, there are a number of companies,
including several sizable chemical companies, that manufacture
membranes, but not equipment.  There are numerous smaller
companies, primarily fabricators, that build water treatment
and desalination equipment, but which generally do not have
their own proprietary membrane technology.  A limited number of
companies manufacture both membranes and equipment.  The
Company has numerous competitors in its conventional water
treatment, instruments and fabricated products business lines.

     In 1996, the International Desalination Association
released a report providing data regarding the manufacturers of
desalination equipment.  According to the report, which covered
land-based water desalination plants delivered or under
construction as of December 1995, with a capacity to produce
100 cubic meters (approximately 25,000 gallons) or more of
fresh water daily, Ionics ranked first in terms of the
cumulative number of such plants sold, having sold 1,414 plants
of such capacity, more than the next three manufacturers
combined.  When compared only to manufacturers of membrane-type
desalination equipment, Ionics ranked first in both number of
units sold and the total capacity of units sold.

     With respect to the Water, Food and Chemical Supply
business segment, the Company competes with regional suppliers
of ultrapure water services, and with other manufacturers of
membrane-related equipment.  In the chemical supply activity,
the Company competes with manufacturers and distributors of
sodium hypochlorite and water treatment chemicals.

     With respect to the Company's Consumer Products business
segment, there are numerous bottled water companies which
compete with the Company, including several which are much
larger than the Company.  Most of the Company's competitors in
point-of-entry and point-of-use products for the home are small
assemblers, serving local or regional markets.  However, there
are also several large companies competing nationally in these
markets.  In the case of its silver-impregnated activated
carbon product lines, the Company knows of two competitors with
which it competes on a national basis.

     The Company competes with many suppliers of bleach and
bleach-based cleaning products and automobile windshield wash
for the consumer market, a number of which are much larger than
the Company.

     The Company is unable to state with certainty its relative
market position in all aspects of its business.  Many of its
competitors have financial and other resources greater than
those of the Company.





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                              I-10




Environmental Matters

     Continued compliance by the Company and its subsidiaries
with federal, state and local provisions regulating the
discharge of materials into the environment or otherwise
relating to the protection of the environment is expected to
have no material effect upon capital expenditures, earnings or
the competitive position of the Company or any of its
subsidiaries.

     The Company is one of approximately 1,000 potentially
responsible parties (PRPs) at a Superfund site at Solvent
Recovery Services of New England in Southington, Connecticut
(the "SRS Site").  The Company's volumetric ranking in
comparison to the total volume of wastes treated at the SRS
Site is approximately 0.5%.  A non-time critical removal
action, consisting of containment, pumping, and treatment of
the most heavily contaminated non-bedrock groundwater, was
completed in 1995.  Combined assessments to date against all
PRPs for non-time critical removal actions and other work total
$9.73 million.  The Company's share of these assessments is
approximately $51,000.  The ultimate site cleanup cost is
currently not expected to exceed $59 million, of which the
Company's share would not exceed $308,000 including the amounts
already assessed against the Company.  While it is too soon to
predict the scope and cost of the final clean-up remedy that
the EPA will select, based on the Company's small volumetric
ranking and the identities of the larger PRPs, which include
many substantial companies, the Company believes that its
liability in this matter will not have a material effect on the
Company or its financial position.

During 1995, the Company acquired certain real property in
Maryland to accommodate expansion of the Elite bleach-based
consumer chemicals business.  Prior to its acquisition by the
Company, the property had been determined to have some
contamination of soil and groundwater.  In conjunction with the
purchase, the Company worked closely with the Maryland
Department of the Environment and, based upon an environmental
study completed by a third party consultant, reached a
preliminary agreement regarding treatment.  Based upon the
costs of treatment identified by the consultant, the Company
has provided a conservative accrual, recorded as part of the
cost of the property.  The Company believes that additional
liability associated with treatment of the property, if any,
will not have a material effect on the Company or its financial
condition.









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                              I-11



     The Company has never had a product liability claim
grounded in environmental liability, and believes that the
nature of its products and business makes such a claim
unlikely.

Employees

     The Company and its consolidated subsidiaries employ
approximately 1,850 full-time persons, none of whom are
represented by unions except for the employees of the Company's
Australian subsidiary and certain employees of the Company's
Spanish subsidiary.  The Company considers its relations with
its employees to be good.

Foreign Operations

     The Company's sales to customers in foreign countries
primarily involve desalination systems, water and wastewater
treatment systems, sodium hypochlorite, Cloromat systems,
related products and services related to the foregoing systems,
and bottled water.  The Company seeks to minimize financial
risks relating to its international operations.  Wherever
possible, the Company obtains letters of credit or similar
payment assurances denominated in U.S. dollars.  If U.S. dollar
payments cannot be secured, the Company, where appropriate,
enters into foreign currency hedging transactions.  The Company
also uses foreign sources for equipment parts and may borrow
funds in local (foreign) currencies to offset the asset risk of
foreign currency devaluation.  Net foreign currency transaction
gains included in income before taxes totalled $548,000 in
1996, $58,000 in 1995 and $23,000 in 1994.

     Ionics engages in certain foreign operations both directly
and through the following wholly owned subsidiaries:  Ionics
(Bermuda) Ltd.; Ionics Iberica, S.A.; Ionics (U.K.) Limited;
Ionics Italba, S.p.A.; Ionics Nederland B.V.; Global Water
Services, S.A.; Elite Chemicals Pty. Ltd.; Eau et Industrie;
Resources Conservation Co. International; Ionics (Korea) Ltd.;
and Ionics Foreign Sales Corporation Limited.  In January 1996,
Ionics acquired Aqua Design, Inc., which has a number of
subsidiaries and affiliates incorporated in various Caribbean
jurisdictions which are engaged in seawater desalination
operations.

     The Company engages in various foreign operations through
investments in affiliated companies and joint venture
relationships.  The activities include the production, sale and
distribution of bottled water through a 40% owned affiliate in
Bahrain, a 40% owned affiliate in Saudi Arabia, and a 49% owned
affiliate in Kuwait.






14

                              I-12




  In addition, the Company has a 19% ownership interest in
Watlington Waterworks Ltd. in Bermuda.  Watlington collects,
treats and distributes water throughout Bermuda for both
potable and non-potable uses.  The Company also has a 50%
ownership interest in Yuasa-Ionics Co., Ltd., Tokyo, Japan,
which among its activities serves as a distributor of certain
of the Company's products in Japan; a 49% ownership interest in
Ionics-Mega s.r.o., a limited liability company of the Czech
Republic established to pursue water treatment opportunities in
that country; and a 20% interest in Aguas Tratadas de
Cadereyta, S.A. de C.V., a company organized to provide water
treatment services in Mexico.

     Further geographical and financial information concerning
the Company's foreign operations appears in Notes 1, 5, 8, 9,
12, 13 and 14 to the Company's Consolidated Financial
Statements included as part of the Company's 1996 Annual Report
to Stockholders, which Notes are incorporated herein by
reference.

Financial Information About Foreign and 
Domestic Operations and Export Sales

     The information contained in Note 14 of Notes to
Consolidated Financial Statements contained in the Company's
Annual Report to Stockholders for the year ended December 31,
1996 is incorporated herein by reference.

Item 2.  PROPERTIES

     The Company owns or leases and occupies various
manufacturing and office facilities in the United States and
abroad.  The principal facilities owned by the Company include
two buildings in Watertown, Massachusetts, containing
approximately 250,000 square feet and housing executive
offices, laboratories and manufacturing and assembly
operations; a 234,000 square foot facility in Elkton, Maryland
which will be utilized primarily for consumer bleach and
automobile windshield wash product packaging and distribution;
a 129,000 square foot facility in Ludlow, Massachusetts which
is utilized primarily for packaging and distribution of
consumer bleach and windshield wash products; two buildings in
Bridgeville, Pennsylvania containing approximately 77,000
square feet and housing manufacturing operations for home water
treatment equipment and fabricated products; and other
facilities in the U.S. and overseas for various operations
relating to the business of the Company.

     The Company makes use primarily of leased facilities for
its Aqua Cool bottled water distribution centers at 27
locations in the U.S. and overseas.

     The Company considers the business facilities that it
utilizes to be adequate for the uses to which they are being
put.

15

                              I-13




Item 3.  LEGAL PROCEEDINGS

     The Company is involved in the normal course of its
business in various litigation matters.  Although the Company's
counsel is unable to determine at the present time whether the
Company will have any liability in any of the pending matters,
some of which are in the early stages of pre-trial discovery,
the Company believes generally that it has meritorious defenses
and that none of the pending matters will have an outcome
material to the financial condition or business of the Company.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this
report.







































16

                              I-14



                            PART II


Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND
         RELATED STOCKHOLDER MATTERS

     Reference is made to the Company's Annual Report to
Stockholders for the year ended December 31, 1996.  The
information set forth on page 32 entitled "Common Stock Price
Range" and on the inside back cover of such Annual Report is
hereby incorporated by reference.

     During 1996, the Company issued a total of 1,062,277
shares of Common Stock to the stockholders of four closely held
corporations that were acquired by the Company during the year,
and to the principal of a proprietorship, the assets of which
were acquired by a subsidiary of the Company during the year.
The details of these transactions are as follows:

                                              Agreed    1933 Act
                                     Shares    Value    Exemption
Acquisition                 Date     Issued  Per Share  Relied Upon

Aqua Design, Inc. and       1/3/96  222,977   $44.29    Section 4(2)
 related companies
 (stock)

Apollo Ultrapure Water      1/10/96 331,567   $42.00    Section 4(2)
 Systems, Inc. and
 related companies (stock)
 and real estate

Sievers Instruments, Inc.   5/31/96 447,258   $47.06    Rule 506
 (stock)

Separation Technology, Inc. 7/25/96  58,000   $42.00    Section 4(2)
 (stock)

Mark Keenan (assets)        12/6/96   2,475  $48.48     Section 4(2)

In each case, the Company's Common Stock was offered to the
stockholders of the company being acquired or to the seller of the
assets being purchased.  The Common Stock was valued in each case as
an average of the last sales prices of the Common Stock as reported
on the New York Stock Exchange over a stated number of days
preceding either the closing date or the date of the purchase
agreement.









17

                             II-1




With respect to the Sievers acquisition, the Company met all the
requirements for compliance with a Rule 506 offering.  The other
acquisitions all involved either small numbers of sophisticated
investors and/or non-U.S. residents, the shares issued were legended
and made the subject of "stop transfer" instructions, and the only
permitted sales to date have been made pursuant to resale
registration statements prepared and filed pursuant to the exercise
of certain registration rights granted to such stockholders.


Item 6.  SELECTED FINANCIAL DATA

    Reference is made to the Company's Annual Report to Stockholders
for the year ended December 31, 1996.  The information set forth on
page 32 of such Annual Report entitled "Selected Quarterly Financial
Data (UNAUDITED)" is hereby incorporated by reference.


Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
         OF OPERATIONS AND FINANCIAL CONDITION

    Reference is made to the Company's Annual Report to Stockholders
for the year ended December 31, 1996.  The information set forth on
pages 16 through 18 of such Annual Report entitled "Management's
Discussion and Analysis of Results of Operations and Financial
Condition" is hereby incorporated by reference.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Reference is made to the Company's Annual Report to Stockholders
for the year ended December 31, 1996.  The consolidated balance
sheets of the Registrant as of December 31, 1996 and 1995, the
related consolidated statements of operations, cash flows and
stockholders' equity for the years ended December 31, 1996, 1995 and
1994, and the related notes with the opinion thereon of Coopers &
Lybrand L.L.P., independent accountants, on pages 18 through 31, and
Selected Quarterly Financial Data (unaudited) on page 32, are hereby
incorporated by reference.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
        ACCOUNTING AND FINANCIAL DISCLOSURE

    This item is not applicable to the Company.











18

                             II-2



                             PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information required by Item 10 with respect to directors is
hereby incorporated by reference from the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held May 8,
1997 to be filed with the Securities and Exchange Commission on or
about March 28, 1997.
<TABLE>
    The information regarding executive officers is as follows:
<CAPTION>
                      Age as of     Positions
Name                 March 1, 1997  Presently Held
<S>                  <C>            <C>
Arthur L. Goldstein*      61        President, Chief Executive Officer
                                     and Director since 1971; Chairman
                                     of the Board since 1990
William E. Katz           72        Executive Vice President since 1983;
                                     Director since 1961
Robert J. Halliday        42        Vice President, Finance and Accounting
                                     since December 1990; Chief Financial
                                     Officer since August 1992
Stephen Korn              51        Vice President, General Counsel
                                     and Clerk since September 1989
Theodore G. Papastavros   63        Vice President since 1975 (currently
                                     Vice President, Strategic Planning)
                                     and Treasurer since February 1990
___________________
* Member of Executive Committee
</TABLE>
     There are no family relationships between any of the
officers or directors.  Officers of the Company are elected each
year at the annual meeting of Directors.

     All of the above executive officers have been employed by
the Company in various capacities for more than five years.

Item 11.  EXECUTIVE COMPENSATION

     The information required by Item 11 is hereby incorporated
by reference from the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held May 8, 1997 to be
filed with the Securities and Exchange Commission on or about
March 28, 1997.












19

                               III-1




Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT

     The information required by Item 12 is hereby incorporated
by reference from the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held May 8, 1997 to be
filed with the Securities and Exchange Commission on or about
March 28, 1997.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by Item 13 is hereby incorporated
by reference from the Company's definitive proxy statement for
the Annual Meeting of Stockholders to be held May 8, 1997 to be
filed with the Securities and Exchange Commission on or about
March 28, 1997.







































20

                               III-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-7.  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-7.
<TABLE>
     3.   Exhibits
<CAPTION>
     Exhibit                                                              
       No.    Description                                                 
<S>  <C>      <C>                                                         <C>
     3.0      Articles of Organization and By-Laws

              3.1    Restated Articles of Organization (filed               *
                     as Exhibit 3(a) to Form 10-K for year 
                     ended December 31, 1986).

              3.1(a) Amendment to the Restated Articles of                  *
                     Organization (filed as Exhibit 3(b) to 
                     Form 10-K for year ended December 31, 1987).

              3.1(b) Amendment to Restated Articles of                      *
                     Organization (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 as Exhibit 3.1 to 
                     Form 10-Q for quarterly period ending
                     June 30, 1996).

              3.2    By-Laws, as amended (filed as Exhibit 19 to            *
                     Form 10-Q for the quarter ended September 30,
                     1989).

     4.0      Instruments defining the rights of security holders,
              including indentures

              4.1    Rights Agreement, dated as of December 22, 1987,      *
                     as amended and restated as of August 15, 1989,
                     between Registrant and The First National Bank 
                     of Boston (filed as Exhibit 1 to Registrant's
                     Current Report on Form 8-K dated August 30, 1989).



21


                             IV-1




              4.2     Indenture, dated as of December 22, 1987, between    *
                      Registrant and The First National Bank of Boston,
                      relating to Rights Agreement (filed as Exhibit 2 
                      to Registrant's Current Report on Form 8-K dated
                      December 22, 1987).

              4.3     Form of Common Stock Certificate (filed as Exhibit   *
                      4.10 to Registrant's Annual Report on Form 10-K 
                      for the year ended December 31, 1990).

     10.      Material Contracts

              10.1    1979 Stock Option Plan, as amended through           *
                      February 22, 1996.                                  

              10.2    1986 Stock Option Plan for Non-Employee Directors,  33 
                      as amended through February 19, 1997.

              10.3    Amended and Restated Credit Agreement between        * 
                      Registrant and the First National Bank of Boston
                      dated as of December 31, 1992 (filed as Exhibit
                      10.3 to Registrant's Annual Report on Form 10-K
                      for the year ended December 31, 1992).

              10.3(1) Amendment Agreement No. 1, dated as of               *
                      December 31, 1996, to Amended and Restated
                      Credit Agreement between Registrant and The
                      First National Bank of Boston (filed as Exhibit
                      10.3(1) to Registrant's Annual Report on Form 10-K
                      for the year ended December 31, 1995).

              10.4    Operating Agreement dated as of September 27,        *
                      1989 between Registrant and Aqua Cool
                      Enterprises, Inc. (filed as Exhibit 10.4 to 
                      Registrant's Annual Report on Form 10-K for the
                      year ended December 31, 1989).

              10.5    Term Lease Master Agreement dated as of              *
                      September 27, 1989 between Registrant and
                      Aqua Cool Enterprises, Inc. (filed as Exhibit
                      10.5 to Registrant's Annual Report on Form 10-K
                      for the year ended December 31, 1989).

              10.6    Option Agreement dated as of September 27, 1989      *
                      among Registrant, Aqua Cool Enterprises, Inc.
                      and the other parties named therein (filed as
                      Exhibit 10.6 to Registrant's registration 
                      statement on Form S-2, No. 33-38290, 
                      effective January 24, 1991).








22


                             IV-2




              10.7    Agreement for Privatization of Water Supplies        *
                      dated as of September 18, 1990 between the 
                      Company and the City of Santa Barbara, 
                      California (filed as Exhibit 10.7 to 
                      Registrant's registration statement on Form S-2,
                      No. 33-38290, effective January 24, 1991).

              10.8    Amendment No. 1, dated as of January 3, 1992, to     *
                      Agreement for Privatization of Water Supplies 
                      dated as of September 18, 1990 between the Company
                      and the City of Santa Barbara, California (filed as
                      Exhibit 10.8 to Registrant's annual report on 
                      Form 10-K for the year ended December 31, 1991).

              10.9    Amendment No. 2, dated as of January 19, 1993,       *
                      to Agreement for Privatization of Water Supplies
                      dated as of September 18, 1990 between the Company
                      and the City of Santa Barbara, California (filed as 
                      Exhibit 10.9 to the Registrant's annual report on
                      Form 10-K for the year ended December 31, 1992).

              10.10  Amendment No. 3, dated June 28, 1994, to Agreement    * 
                     for Privatization of Water Supplies dated as of
                     September 18, 1990, between the Company and the City
                     of Santa Barbara, California (filed as Exhibit 10.1
                     to the Registrant's Form 10-Q for the period ending
                     June 30, 1994).
 
              10.11  1994 Restricted Stock Plan (filed as Exhibit 10.12    *
                     to Registrant's Annual Report on Form 10-K dated
                     March 30, 1995).

              10.12  1997 Stock Incentive Plan.                           43

     11.      Statement re: Computation of Earnings Per Share.            59

     13.      Annual Report to Stockholders of the Registrant for         60
              the year ended December 31, 1996 (only pages 16   
              through 32 and the inside back cover constitute an 
              exhibit to this report).

     21.      Subsidiaries of the Registrant.                             95

     23.      Consents

              23.1   Consent of Coopers & Lybrand L.L.P. to incorporation 96
                     by reference of that firm's report dated 
                     February 18, 1997, which is included on page 18 of 
                     the Registrant's Annual Report to Stockholders 
                     for the year ended December 31, 1996.

     24.      Power of Attorney.                                          97

     27.      Financial Data Schedule.                                     **
________________________________
     *   incorporated herein by reference
     **  for electronic purposes only
</TABLE>

23


                             IV-3





(b)  Reports on Form 8-K

     No reports on Form 8-K were filed by the Registrant during
     the last quarter of fiscal 1996.

     Undertaking

     For purposes of complying with the amendments to the rules
     governing Form S-8 effective July 13, 1990 under the
     Securities Act of 1933, the undersigned hereby undertakes as
     follows, which undertaking shall be incorporated by
     reference into Registrant's registration statements on Form
     S-8 Nos. 33-14194, 33-5814, 33-2092, 2-72936, 2-82780, 2-
     64255, 33-41598, 33-54293, 33-59051, 333-05225 and 33-54400.

     Insofar as indemnification for liabilities arising under the
     Securities Act of 1933 may be permitted to directors,
     officers and controlling persons of the registrant pursuant
     to the foregoing provisions, or otherwise, the registrant
     has been advised that in the opinion of the Securities and
     Exchange Commission such indemnification is against public
     policy as expressed in the Act and is, therefore,
     unenforceable.  In the event that a claim for
     indemnification against such liabilities (other than the
     payment by the registrant of expenses incurred or paid by a
     director, officer or controlling person of the registrant in
     the successful defense of any action, suit or proceeding) is
     asserted by such director, officer or controlling person in
     connection with the securities being registered, the
     registrant will, unless in the opinion of its counsel the
     matter has been settled by controlling precedent, submit to
     a court of appropriate jurisdiction the question whether
     such indemnification by it is against public policy as
     expressed in the Act and will be governed by the final
     adjudication of such issue.






















24


                             IV-4







                        SIGNATURES



     Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                             IONICS, INCORPORATED
                             (Registrant)



                             By/s/Arthur L. Goldstein     
                                  Arthur L. Goldstein,
                                  Chairman of the Board,
                                  President and Chief
                                  Executive Officer
          
                             Date:    March 27, 1997      



     Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in
the capacities and on the dates indicated.



Date: March 27, 1997         By/s/Arthur L. Goldstein    
                                  Arthur L. Goldstein,
                                  Chairman of the Board,
                                  President and
                                  Chief Executive Officer
                                  (principal executive
                                   officer) and Director



Date: March 27, 1997         By/s/Robert J. Halliday     
                                  Robert J. Halliday, 
                                  Vice President, Finance
                                  and Chief Financial
                                  Officer (principal
                                  financial and principal
                                  accounting officer)







25


                             IV-5











Date: March 27, 1997         By/s/Douglas R. Brown             
                                  Douglas R. Brown, Director


Date: March 27, 1997         By/s/William L. Brown             
                                  William L. Brown, Director


Date: March 27, 1997         By/s/Arnaud de Vitry d'Avaucourt  
                                  Arnaud de Vitry d'Avaucourt,
                                  Director


Date: March 27, 1997         By/s/William E. Katz              
                                  William E. Katz, Director


Date: March 27, 1997         By/s/Robert B. Luick______________
                                  Robert B. Luick, Director


Date: March 27, 1997         By/s/John J. Shields              
                                  John J. Shields, Director


Date: March 27, 1997         By/s/Carl S. Sloane               
                                  Carl S. Sloane, Director


DATE: March 27, 1997         By/s/Mark S. Wrighton             
                                  Mark S. Wrighton, Director


Date: March 27, 1997         By/s/Allen S. Wyett               
                                  Allen S. Wyett, Director
















26


                             IV-6




                     IONICS, INCORPORATED
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                                                         PAGES

Report of Independent Accountants                           18*

Financial Statements:

     Consolidated Statements of Operations for the
     Years Ended December 31, 1996, 1995 and 1994           19*

     Consolidated Balance Sheets as of
     December 31, 1996 and 1995                             20*

     Consolidated Statements of Cash Flows for the 
     Years Ended December 31, 1996, 1995 and 1994           21*

     Consolidated Statements of Stockholders' Equity for
     the Years Ended December 31, 1996, 1995 and 1994       22*

     Notes to Consolidated Financial Statements          23-31* 


Supporting Financial Statement Schedules for the years Ended
December 31, 1996, 1995 and 1994:

     Schedule II - Valuation and Qualifying Accounts     IV-8
          

Report of Independent Accountants on Financial
Statement Schedule                                       IV-9

__________________

All other schedules are omitted because the amounts are
immaterial, the schedules are not applicable, or the required
information is shown in the financial statements or the notes
thereto.

*  Page references are to the Annual Report to Stockholders of
   the Company for the year ended December 31, 1996, which pages
   are incorporated herein by reference.















27


                             IV-7



<TABLE>
                             IONICS, INCORPORATED

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                                        
<CAPTION>

                                      Additions    Additions
                         Balance at   Charged to     Due to
                           End of     Costs and     Acquired                      Balance at
Description              Prior Year    Expenses    Businesses     Deductions(A)   End of Year
<S>                      <C>          <C>          <C>            <C>             <C>
Allowance for doubtful
accounts and uncollectible
notes receivable:

     Years ended:

     December 31, 1996   $2,410,000   $1,011,000   $ 286,000      $  849,000      $2,858,000

     December 31, 1995   $2,197,000   $  579,000   $  21,000      $  387,000      $2,410,000

     December 31, 1994   $2,022,000   $  535,000   $       0      $  360,000      $2,197,000

<FN>
(A)  Deductions result primarily from the write-off of accounts.



</TABLE>




























28


                             IV-8





               REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of
Ionics, Incorporated:

     Our report on the consolidated financial statements of
Ionics, Incorporated as of December 31, 1996 and 1995 and for
each of the three years in the period ended December 31, 1996
has been incorporated by reference in this Form 10-K from page
18 of the 1996 Annual Report to Stockholders of Ionics,
Incorporated.  In connection with our audits of such financial
statements, we have also audited the related financial statement
schedule listed in the Index on page IV-7 of this Form 10-K.

     In our opinion, the financial statement schedule referred
to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.



                                       /s/COOPERS & LYBRAND L.L.P.



Boston, Massachusetts
February 18, 1997





























29


                             IV-9



<TABLE>
                           EXHIBIT INDEX
<CAPTION>
                                                                     Sequentially
     Exhibit                                                           Numbered
       No.    Description                                              Page No.   
<S>  <C>      <C>                                                         <C>
     3.0      Articles of Organization and By-Laws                         

              3.1     Restated Articles of Organization (filed             *
                      as Exhibit 3(a) to Form 10-K for year 
                      ended December 31, 1986).

              3.1(a)  Amendment to the Restated Articles of                *
                      Organization (filed as Exhibit 3(b) to 
                      Form 10-K for year ended December 31, 1987).

              3.1(b)  Amendment to Restated Articles of                    *
                      Organization (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 as Exhibit 3.1 to 
                      Form 10-Q for quarterly period ending
                      June 30, 1996).

              3.2     By-Laws, as amended (filed as Exhibit 19 to          *
                      Form 10-Q for the quarter ended September 30,
                      1989).

     4.0      Instruments defining the rights of security holders,
              including indentures

              4.1     Rights Agreement, dated as of December 22, 1987,     * 
                      as amended and restated as of August 15, 1989,
                      between Registrant and The First National Bank 
                      of Boston (filed as Exhibit 1 to Registrant's
                      current Report on Form 8-K dated August 30, 1989).

              4.2     Indenture, dated as of December 22, 1987, between    *
                      Registrant and The First National Bank of Boston,
                      relating to Rights Agreement (filed as Exhibit 2 
                      to Registrant's Current Report on Form 8-K dated
                      December 22, 1987).

              4.3     Form of Common Stock Certificate (filed as Exhibit   *
                      4.10 to Registrant's Annual Report on Form 10-K 
                      for the year ended December 31, 1990).

     10.      Material Contracts

              10.1    1979 Stock Option Plan, as amended through           *
                      February 22, 1996.

              10.2    1986 Stock Option Plan for Non-Employee Directors,  33
                      as amended through February 19, 1997.

30





              10.3    Amended and Restated Credit Agreement between        *
                      Registrant and The First National Bank of Boston
                      dated as of December 31, 1992 (filed as Exhibit
                      10.3 to Registrant's Annual Report on Form 10-K
                      for the year ended December 31, 1992).

              10.3(1) Amendment Agreement No. 1, dated as of               *
                      December 31, 1996, to Amended and Restated
                      Credit Agreement between Registrant and The
                      First National Bank of Boston (filed as Exhibit
                      10.3(1) to Registrant's Annual Report on Form 10-K
                      for the year ended December 31, 1995).

              10.4    Operating Agreement dated as of September 27,        *
                      1989 between Registrant and Aqua Cool
                      Enterprises, Inc. (filed as Exhibit 10.4 to 
                      Registrant's Annual Report on Form 10-K for the
                      year ended December 31, 1989).

              10.5    Term Lease Master Agreement dated as of              *
                      September 27, 1989 between Registrant and
                      Aqua Cool Enterprises, Inc. (filed as Exhibit
                      10.5 to Registrant's Annual Report on Form 10-K
                      for the year ended December 31, 1989).

              10.6    Option Agreement dated as of September 27, 1989      *
                      among Registrant, Aqua Cool Enterprises, Inc.
                      and the other parties named therein (filed as
                      Exhibit 10.6 to Registrant's registration 
                      statement on Form S-2, No. 33-38290, 
                      effective January 24, 1991).

              10.7    Agreement for Privatization of Water Supplies        *
                      dated as of September 18, 1990 between the 
                      Company and the City of Santa Barbara, 
                      California (filed as Exhibit 10.7 to 
                      Registrant's registration statement on Form S-2,
                      No. 33-38290, effective January 24, 1991).

              10.8    Amendment No. 1, dated as of January 3, 1992, to     *
                      Agreement for Privatization of Water Supplies 
                      dated as of September 18, 1990 between the Company
                      and the City of Santa Barbara, California (filed as
                      Exhibit 10.8 to Registrant's annual report on 
                      Form 10-K for the year ended December 31, 1991).

              10.9    Amendment No. 2, dated as of January 19, 1993,       *
                      to Agreement for Privatization of Water Supplies
                      dated as of September 18, 1990 between the Company
                      and the City of Santa Barbara, California (filed as
                      Exhibit 10.9 to the Registrant's annual report on
                      Form 10-K for the year ended December 31, 1992).






31





              10.10   Amendment No. 3, dated June 28, 1994, to Agreement   *
                      for Privatization of Water Supplies dated as of 
                      September 18, 1990 between the Company and the City
                      of Santa Barbara, California (filed as Exhibit 10.1 
                      to the Registrant's Form 10-Q for the period ended 
                      June 30, 1994).

              10.11   1994 Restricted Stock Plan (filed as Exhibit         *
                      10.12 to Registrant's Annual Report on Form 10-K 
                      dated March 30, 1995).

              10.12   1997 Stock Incentive Plan.                          43

     11.      Statement re: Computation of Earnings Per Share.            59

     13.      Annual Report to Stockholders of the Registrant for         60
              the year ended December 31, 1996 (only pages 18
              through 31 and the inside back cover constitute an 
              exhibit to this report).

     21.      Subsidiaries of the Registrant.                             95

     23.      Consents

              23.1    Consent of Coopers & Lybrand L.L.P. to              96
                      incorporation by reference of that firm's report
                      dated Februry 18, 1997, which is included on  
                      page 18 of the Registrant's Annual Report to 
                      Stockholders for the year ended December 31, 1996.

     24.      Power of Attorney.                                          97

     27.      Financial Data Schedule.                           (for electronic
                                                                  purposes only)


                               
* incorporated herein by reference
</TABLE>












32