[LOGO]  IONICS                              Worldwide Headquarters
                                            Ionics, Incorporated
                                            65 Grove Street
                                            Watertown, Massachusetts
                                            02472-2882 USA
                                            Tel:  (617) 926-2500
                                            Fax: (617) 926-3760
                                            www.ionics.com

November 13, 2001

Securities and Exchange Commission
Filing Desk - Room 1004
450 Fifth Street, N.W.
Washington, DC 20549

Re:    Ionics, Incorporated (Commission File No. 1-7211) - filing of Form 10-Q
       for quarter ended September 30, 2001, Account No. 0000052466

Ladies and Gentlemen:

I enclose via  electronic  filing  pursuant to the  Electronic  Data  Gathering,
Analysis and Retrieval  ("EDGAR") System on behalf of Ionics,  Incorporated (the
"Company"),  the Form 10-Q for the quarter  ended  September  30,  2001.  Please
acknowledge  receipt of this electronic  filing by return email to the Company's
email address: plynes@ionics.com.

A manually  signed  copy of the Form 10-Q will be kept on file at the offices of
the Company.

If you have any questions or require  further  information,  please  contact the
undersigned at 617-926-2510, ext. 450.

Very truly yours,

/s/Stephen Korn
Stephen Korn
Vice President and
General Counsel

Enc.

cc:    Arthur L. Goldstein, Chairman and Chief Executive Officer
       Daniel M. Kuzmak, Vice President, Finance and Chief Financial Officer

<PAGE>

                                    FORM 10-Q
                                  ------------

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                 ---------------

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

                         For the quarterly period ended

                               September 30, 2001

                                       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)               (I.R.S. Employer Identification Number)

    65 Grove Street
 Watertown, Massachusetts                            02472-2882
(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

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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                 At October 19, 2001 the Company had 17,467,242
                    shares of Common Stock, par value $1 per
                               share, outstanding.


<PAGE>


                              IONICS, INCORPORATED


                                      INDEX


                                                                     Page
Number

PART I          Financial Information:

                Consolidated Statements of Operations                  2

                Consolidated Balance Sheets                            3

                Consolidated Statements of Cash Flows                  4

                Notes to Consolidated Financial Statements             5

                Management's Discussion and Analysis of Results
                of Operations and Financial Condition                  9


PART II         Other Information                                     13

                Signatures                                            14





                                       1
<PAGE>
<TABLE>
<CAPTION>
                                                     PART I - FINANCIAL INFORMATION

                                                          IONICS INCORPORATED
                                                 CONSOLIDATED STATEMENTS OF OPERATIONS
                                                              (Unaudited)
                                              (Amounts in thousands, except per share amounts)

                                                                   Three months ended              Nine months ended
                                                                     September 30,                   September 30,
                                                              -----------------------------  ------------------------------

                                                                  2001            2000           2001            2000
                                                              --------------  -------------  --------------  --------------

Revenue:
<S>                                                                <C>            <C>            <C>             <C>
     Equipment Business Group                                      $ 51,182       $ 48,188       $ 154,933       $ 131,949
     Ultrapure Water Group                                           26,623         40,528          85,685          94,832
     Consumer Water Group                                            34,455         28,389          94,047          81,741
     Instrument Business Group                                        6,033          7,781          20,264          21,963
                                                              --------------  -------------  --------------  --------------

                                                                    118,293        124,886         354,929         330,485
                                                              --------------  -------------  --------------  --------------

Costs and expenses:
     Cost of sales of Equipment Business Group                       40,291         37,107         120,242          99,591
     Cost of sales of Ultrapure Water Group                          21,628         33,190          67,568          76,433
     Cost of sales of Consumer Water Group                           19,400         16,993          52,929          47,593
     Cost of sales of Instrument Business Group                       3,272          3,658           9,701           9,697
     Research and development                                         1,496          1,833           4,795           5,481
     Selling, general and administrative                             25,655         26,415          81,736          73,475
                                                              --------------  -------------  --------------  --------------

                                                                    111,742        119,196         336,971         312,270
                                                              --------------  -------------  --------------  --------------


Income from operations                                                6,551          5,690          17,958          18,215

Interest income                                                         176            265           1,147             850

Interest expense                                                     (1,221)        (1,270)         (4,273)         (3,196)

Equity income                                                           876            289           1,906           1,260
                                                              --------------  -------------  --------------  --------------


Income before income taxes and minority interest                      6,382          4,974          16,738          17,129

Provision for income taxes                                            2,170          1,690           5,691           5,824
                                                              --------------  -------------  --------------  --------------


Income before minority interest                                       4,212          3,284          11,047          11,305

Minority interest in (earnings) losses                                   (1)          (358)            328            (602)
                                                              --------------  -------------  --------------  --------------


Net income                                                          $ 4,211        $ 2,926        $ 11,375        $ 10,703
                                                              ==============  =============  ==============  ==============


Basic earnings per share                                             $ 0.24         $ 0.18          $ 0.67          $ 0.66
                                                              ==============  =============  ==============  ==============


Diluted earnings per share                                           $ 0.24         $ 0.18          $ 0.66          $ 0.65
                                                              ==============  =============  ==============  ==============


Shares used in basic earnings per share calculations                 17,449         16,234          16,983          16,220
                                                              ==============  =============  ==============  ==============


Shares used in diluted earnings per share calculations               17,626         16,519          17,132          16,451
                                                              ==============  =============  ==============  ==============
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>
<TABLE>
<CAPTION>
                                                       IONICS, INCORPORATED
                                                    CONSOLIDATED BALANCE SHEETS
                                                           (Unaudited)
                                        (Amounts in thousands, except share and par value amounts)

                                                                                  September 30,           December 31,
                                                                                      2001                   2000
                                                                                 ----------------      ----------------

Current assets:
<S>                                                                                     <C>                   <C>
      Cash and cash equivalents                                                         $ 23,025              $ 25,497
      Short-term investments                                                                 602                 1,105
      Notes receivable, current                                                            5,082                 4,741
      Accounts receivable                                                                156,146               162,711
      Receivables from affiliated companies                                                1,640                   792
      Inventories:
          Raw materials                                                                   25,685                21,061
          Work in process                                                                 10,558                 8,264
          Finished goods                                                                   7,175                 5,376
                                                                                 ----------------      ----------------

                                                                                          43,418                34,701
      Other current assets                                                                17,144                16,443
      Deferred income taxes                                                               12,749                12,749
                                                                                 ----------------      ----------------

          Total current assets                                                           259,806               258,739
Notes receivable, long-term                                                               22,945                17,502
Investments in affiliated companies                                                       24,894                18,310
Property, plant and equipment:
      Land                                                                                 8,617                 8,738
      Buildings                                                                           49,028                48,773
      Machinery and equipment                                                            323,863               312,138
      Other, including furniture, fixtures and vehicles                                   52,663                48,470
                                                                                 ----------------      ----------------

                                                                                         434,171               418,119
      Less accumulated depreciation                                                     (212,261)             (195,276)
                                                                                 ----------------      ----------------

                                                                                         221,910               222,843
Other assets                                                                              57,389                60,072
                                                                                 ----------------      ----------------

          Total assets                                                                 $ 586,944             $ 577,466
                                                                                 ================      ================


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Notes payable and current portion of long-term debt                               $ 60,995              $ 75,045
      Accounts payable                                                                    41,002                56,014
      Customer deposits                                                                    3,318                 4,883
      Accrued commissions                                                                  2,538                 2,002
      Accrued expenses                                                                    38,965                35,419
                                                                                 ----------------      ----------------

          Total current liabilities                                                      146,818               173,363

Long-term debt and notes payable                                                          10,427                10,911
Deferred income taxes                                                                     30,962                30,334
Other liabilities                                                                          6,088                 5,997
Commitments and contingencies

Stockholders' equity:
      Common stock, par value $1, authorized shares: 55,000,000;
      issued and outstanding: 17,467,242 in 2001 and
      16,369,029 in 2000                                                                  17,467                16,369
      Additional paid-in capital                                                         187,703               162,114
      Retained earnings                                                                  208,991               197,616
      Accumulated other comprehensive loss                                               (21,512)              (19,238)
                                                                                 ----------------      ----------------

          Total stockholders' equity                                                     392,649               356,861
                                                                                 ----------------      ----------------

          Total liabilities and stockholders' equity                                   $ 586,944             $ 577,466
                                                                                 ================      ================

</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>
                                                   IONICS, INCORPORATED
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                        (Unaudited)
                                                   (Dollars in thousands)




                                                                                            Nine Months Ended
                                                                                             September 30,
                                                                              -----------------------------------------

Operating activities:                                                              2001                      2000
                                                                              ---------------            --------------

      <S>                                                                           <C>                        <C>
      Net income                                                                    $ 11,375                   $10,703
      Adjustments to reconcile net income to net cash provided
      (used) by operating activities:
         Depreciation and amortization                                                26,963                    24,116
         Provision for losses on accounts and notes receivable                         2,255                     2,479
         Equity in earnings of affiliates                                             (1,906)                   (1,346)
         Compensation expense on restricted stock awards                                   -                        36
         Changes in assets and liabilities:
            Notes receivable                                                          (5,988)                   (2,049)
            Accounts receivable                                                        2,438                   (42,017)
            Inventories                                                               (9,065)                   (4,780)
            Other current assets                                                        (819)                   (3,941)
            Investments in affiliate                                                     903                     1,224
            Accounts payable and accrued expenses                                    (11,708)                    5,990
            Income taxes                                                               1,656                       298
            Other                                                                        251                       537
                                                                              ---------------            --------------

               Net cash provided (used) by operating activities                       16,355                    (8,750)
                                                                              ---------------            --------------

Investing activities:
      Additions to property, plant and equipment                                     (27,394)                  (35,822)
      Disposals of property, plant and equipment                                       1,617                     1,427
      Additional investments in affiliates                                            (5,479)                   (1,136)
      Acquisitions, net of cash acquired                                                   -                    (4,250)
      Sale (purchase) of short-term investments                                          425                      (443)
                                                                              ---------------            --------------

               Net cash used by investing activities                                 (30,831)                  (40,224)
                                                                              ---------------            --------------

Financing activities:
      Principal payments on current debt                                             (88,569)                  (61,603)
      Proceeds from borrowings of current debt                                        75,137                   112,178
      Principal payments on long-term debt                                            (1,158)                     (838)
      Proceeds from borrowings of long-term debt                                         250                     4,807
      Proceeds from issuance of common stock                                          21,814                         -
      Proceeds from stock option plans                                                 4,872                     1,769
                                                                              ---------------            --------------

               Net cash provided by financing activities                              12,346                    56,313
                                                                              ---------------            --------------

Effect of exchange rate changes on cash                                                 (342)                      (64)
                                                                              ---------------            --------------

Net change in cash and cash equivalents                                               (2,472)                    7,275
Cash and cash equivalents at beginning of period                                      25,497                    13,169
                                                                              ---------------            --------------

Cash and cash equivalents at end of period                                          $ 23,025                   $20,444
                                                                              ===============            ==============

</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>



                              IONICS, INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       Basis of Presentation

       In the opinion of the management of Ionics, Incorporated (the "Company"),
       all adjustments have been made that are necessary for a fair statement of
       the consolidated financial position of the Company, the consolidated
       results of its operations and the consolidated cash flows for each period
       presented. The consolidated results of operations for the interim periods
       are not necessarily indicative of the results of operations to be
       expected for the full year. These financial statements should be read in
       conjunction with the Company's 2000 Annual Report as filed on Form 10-K
       with the Securities and Exchange Commission. Other than noted below,
       there have been no significant changes in the information reported in
       those Notes, other than from the normal business activities of the
       Company, and there have been no changes which would, in the opinion of
       management, have a materially adverse effect upon the Company. Certain
       prior year amounts have been reclassified to conform to the current year
       presentation with no impact on net income.

2.     Earnings per share (EPS) calculations
<TABLE>
<CAPTION>

                                                     (Amounts in thousands, except per share amounts)

                                                         For the three months ended September 30,
                                   ------------------------------------------------------------------------------------------------

                                        2001                                             2000
                                   -----------------------------------------------    ---------------------------------------------

                                        Net                            Per Share          Net                          Per Share
                                       Income           Shares          Amount          Income          Shares          Amount
                                   ---------------    ------------    ------------    ------------    ------------   --------------
<S>                                       <C>              <C>             <C>            <C>              <C>              <C>
     Income available to
     common stockholders                  $ 4,211          17,449          $ 0.24         $ 2,926          16,234           $ 0.18

     Effect of dilutive
     stock options                              -             177               -               -             285                -
                                   ---------------    ------------    ------------    ------------    ------------   --------------


Diluted EPS                               $ 4,211          17,626          $ 0.24         $ 2,926          16,519           $ 0.18
                                   ===============    ============    ============    ============    ============   ==============




                                                               For the nine months ended September 30,
                                   ------------------------------------------------------------------------------------------------

                                        2001                                             2000
                                   -----------------------------------------------    ---------------------------------------------

                                        Net                            Per Share          Net                          Per Share
                                       Income           Shares          Amount          Income          Shares          Amount
                                   ---------------    ------------    ------------    ------------    ------------   --------------

Basic EPS
     Income available to
     common stockholders                 $ 11,375          16,983          $ 0.67        $ 10,703          16,220           $ 0.66

     Effect of dilutive
     stock options                              -             149           (0.01)              -             231            (0.01)
                                   ---------------    ------------    ------------    ------------    ------------   --------------


Diluted EPS                              $ 11,375          17,132          $ 0.66        $ 10,703          16,451           $ 0.65
                                   ===============    ============    ============    ============    ============   ==============
</TABLE>




       The effect of dilutive stock options excludes those stock options for
       which the impact would have been antidilutive based on the exercise price
       of the options. The number of options that were antidilutive for the
       three months ended September 30, 2001 and 2000 was 1,416,317 and 731,750,
       respectively. The number of options that were antidilutive for the nine
       months ended September 30, 2001 and 2000 was 1,448,317 and 1,600,084,
       respectively.

                                       5
<PAGE>


3.     Comprehensive Income

       The table below sets forth comprehensive income as defined by Statement
       of Financial Accounting Standard No. 130 for the three month and nine
       month periods ended September 30, 2001 and 2000, respectively.
<TABLE>
<CAPTION>

                                                               (Amounts in thousands)
                                           Three Months Ended                     Nine Months Ended
                                             September 30,                          September 30,
                                    ---------------------------------      ---------------------------------

                                        2001                2000                2001               2000
                                    --------------      -------------      ---------------     -------------

<S>                                       <C>                <C>                 <C>                <C>
Net income                                $ 4,211            $ 2,926             $ 11,375           $10,703
Other comprehensive income
     (loss), net of tax:
     Translation adjustments                2,810             (3,580)              (2,274)           (7,156)
                                    --------------      -------------      ---------------     -------------

Comprehensive income                      $ 7,021             $ (654)             $ 9,101           $ 3,547
                                    ==============      =============      ===============     =============
</TABLE>


4.     Segment Information

       The following table summarizes the Company's operations by the four
       business group segments and "Corporate" (Corporate includes the
       elimination of intersegment transfers).
<TABLE>
<CAPTION>

                                                           For the three months ended September 30, 2001
                                     ----------------------------------------------------------------------------------------

                                       Equipment      Ultrapure      Consumer        Instrument
                                       Business         Water           Water        Business
                                         Group          Group           Group         Group        Corporate       Total
                                     --------------  -------------   ------------  -------------  ------------  -------------

<S>                                       <C>            <C>            <C>             <C>               <C>      <C>
(Amounts in thousands)
Revenue - unaffiliated
     customers                            $ 51,182       $ 26,623       $ 34,455        $ 6,033           $ -      $ 118,293
Inter-segment transfers                        374            470              -            334        (1,178)             -
Gross profit                                10,891          4,995         15,055          2,761             -         33,702



                                                           For the three months ended September 30, 2000
                                     ----------------------------------------------------------------------------------------

                                       Equipment      Ultrapure       Consumer       Instrument
                                       Business         Water           Water        Business
                                         Group          Group           Group         Group        Corporate       Total
                                     --------------  -------------   ------------  -------------  ------------  -------------

(Amounts in thousands)
Revenue - unaffiliated
     customers                            $ 48,188       $ 40,528       $ 28,389        $ 7,781           $ -      $ 124,886
Inter-segment transfers                      4,815          1,021              -            444        (6,280)             -
Gross profit                                11,081          7,338         11,396          4,123             -         33,938

</TABLE>


                                       6
<PAGE>
<TABLE>
<CAPTION>

                                                           For the nine months ended September 30, 2001
                                     ----------------------------------------------------------------------------------------

                                       Equipment      Ultrapure       Consumer       Instrument
                                       Business         Water           Water        Business
                                         Group          Group           Group         Group        Corporate       Total
                                     --------------  -------------   ------------  -------------  ------------  -------------

<S>                                       <C>            <C>            <C>             <C>               <C>      <C>
(Amounts in thousands)
Revenue - unaffiliated
     customers                            $154,933       $ 85,685       $ 94,047       $ 20,264           $ -      $ 354,929
Inter-segment transfers                      2,361          2,436              -          1,332        (6,129)             -
Gross profit                                34,691         18,117         41,118         10,563             -        104,489



                                                           For the nine months ended September 30, 2000
                                     ----------------------------------------------------------------------------------------

                                       Equipment      Ultrapure       Consumer       Instrument
                                       Business         Water           Water        Business
                                         Group          Group           Group         Group        Corporate       Total
                                     --------------  -------------   ------------  -------------  ------------  -------------

(Amounts in thousands)
Revenue - unaffiliated
     customers                            $131,949       $ 94,832       $ 81,741       $ 21,963           $ -      $ 330,485
Inter-segment transfers                      6,853          2,585              -          1,816       (11,254)             -
Gross profit                                32,358         18,399         34,148         12,266             -         97,171

</TABLE>

5.     Accounting Pronouncements

       In July 2001, the Financial  Accounting  Standards Board (FASB) issued
       Statement of Financial  Accounting  Standards (SFAS) No. 141, Business
       Combinations.  SFAS No. 141 requires that all business combinations be
       accounted for under the purchase method only and that certain acquired
       intangible  assets in a business  combination  be recognized as assets
       apart from  goodwill.  Implementation  of SFAS No. 141 is required for
       fiscal years beginning after December 15, 2001.

       In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other
       Intangible Assets. SFAS No. 142 addresses financial accounting and
       reporting for intangible assets acquired individually or with a group of
       assets (but not those acquired in a business combination) at acquisition.
       This Statement also addresses financial accounting and reporting for
       goodwill and other intangible assets subsequent to their acquisition. The
       provisions of this Statement are required to be applied with fiscal years
       beginning after December 15, 2001. This Statement is required to be
       applied at the beginning of an entity's fiscal year and to be applied to
       all goodwill and other intangible assets recognized in its financial
       statements at that date. Impairment losses for goodwill and
       indefinite-lived intangible assets that arise due to the initial
       application of this Statement are to be reported as resulting from a
       change in accounting principle.

       SFAS Nos. 141 and 142 were issued recently, and consequently the Company
       has not yet determined what effect, if any, the adoption of SFAS Nos. 141
       and 142 will have on the Company's financial position or results of
       operations.

       In  August  2001,  the FASB  issued  SFAS  No.  143,  "Accounting  for
       Obligations Associated with the Retirement of Long-Lived Assets." SFAS
       No.  143  provides  the   accounting   requirements   for   retirement
       obligations  associated with tangible  long-lived assets. SFAS No. 143
       is effective for financial statements for fiscal years beginning after
       June  15,  2002.  Ionics  is  currently  assessing  but  has  not  yet
       determined  the impact of SFAS No. 143 on its  financial  position  or
       results of operations.



                                       7
<PAGE>



       In October 2001, the FASB issued SFAS No. 144, "Accounting for the
       Impairment of Disposal of Long-Lived Assets." This accounting standard,
       which is effective for fiscal years beginning after December 31, 2001,
       requires that long-lived assets that are to be disposed of by sale be
       measured at the lower of book value or fair value less cost to sell.
       Additionally, SFAS No. 144 expands the scope of discontinued operations
       to include all components of an entity with operations that can be
       distinguished from the rest of the entity and will be eliminated from the
       ongoing operations of the entity in a disposal transaction. The effect of
       adopting SFAS No. 144 on the Company's financial position and results of
       operations has not yet been determined.


                                       8
<PAGE>



          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2001 with the Three
-------------------------------------------------------------------------------
and Nine Months Ended September 30, 2000
----------------------------------------

Revenues for the third quarter of 2001 decreased 5.3% while net income increased
43.9%, compared to the results of the third quarter of 2000. Revenues for the
nine-month period of 2001 increased 7.4%, and net income increased by 6.3% from
the comparable nine-month period of 2000. Gross profit was $33.7 million in the
third quarter of 2001 compared to $33.9 million in the third quarter of 2000.
For the nine-month period of 2001, gross profit was $104.5 million compared to
$97.2 million for the nine-month period of 2000. Gross profit increased in the
third quarter and nine-month period of 2001 for the Consumer Water Group (CWG).
The Equipment Business Group's (EBG) gross profit decreased in the third quarter
of 2001 but increased for the nine-month period in 2001 from the comparable
periods in 2000. Gross profit for the Ultrapure Water Group (UWG) and the
Instrument Business Group (IBG) decreased in the third quarter and nine-month
period of 2001 from the comparable periods in 2000.

Total revenues for the third quarter of 2001 decreased 5.3% to $118.3 million
from $124.9 million in 2000. For the third quarter of 2001, revenues were higher
in EBG and CWG but lower in UWG and IBG as compared to the same period in 2000.
Revenues for the nine-month period of 2001 increased 7.4% to $354.9 million from
$330.5 million in the comparable 2000 period. Revenues were higher in both EBG
and CWG but lower in UWG and IBG in the nine-month period of 2001, compared to
the same period of 2000.

EBG revenues increased $3.0 million, or 6.2%, in the third quarter and increased
$23.0 million, or 17.4%, in the nine-month period of 2001 as compared with the
same respective periods of 2000. These increases resulted primarily from
continuing work on a desalination facility in Trinidad.

UWG revenues decreased $13.9 million, or 34.3%, in the third quarter of 2001
from the third quarter of 2000. This decrease was due primarily to lower
revenues from the Company's domestic operations specifically related to the
microelectronics industry and, to a lesser extent, lower revenues from the
Company's Far East operations. UWG revenues decreased $9.1 million, or 9.6%, in
the nine-month period of 2001 compared to the nine-month period of 2000. This
decrease was due primarily to lower revenues from the Company's Far East
operations.

The revenues of CWG increased $6.1 million, or 21.4%, in the third quarter of
2001 compared to the third quarter of 2000. Similarly, CWG revenues increased
$12.3 million, or 15.1%, in the nine-month period of 2001 compared to the
nine-month period of 2000. These increases were due to continued growth in both
the bottled water business, primarily in the United Kingdom, and home water
businesses.

IBG revenues decreased $1.7 million, or 22.5%, in the third quarter of 2001
compared to the third quarter of 2000. Revenues for the nine-month period of
2001 also decreased $1.7 million, or 7.7%, as compared to revenues for the
nine-month period of 2000. These decreases in revenue reflect lower instrument
sales particularly to the microelectronics industry.

Total cost of sales as a percentage of revenues for the third quarter was 71.5%
in 2001 and 72.8% in 2000. For the nine-month period, cost of sales as a
percentage of revenues was 70.6% in 2001 and 2000.

Cost of sales as a percentage of revenues increased for EBG and IBG for both the
third quarter and nine-month periods of 2001, as compared to the respective
periods of 2000. UWG's and CWG's cost of sales as a percentage of revenues
decreased in the third quarter and nine-month period of 2001 compared to the
third quarter and nine-month period of 2000. EBG's cost of sales percentage


                                       9
<PAGE>

increased to 78.7% and 77.6% in the third quarter and nine-month period of 2001,
respectively, as compared to 77.0% and 75.5% in the same respective periods in
2000. The increases in this percentage for EGB primarily reflect a shift in
business mix to lower margin capital equipment. IBG's cost of sales percentage
increased to 54.2% and 47.9% in the third quarter and nine-month period of 2001,
respectively, from 47.0% and 44.2% in the third quarter and nine-month period of
2000, respectively. These increases were due to lower sales volume and
unabsorbed manufacturing overhead. UWG's cost of sales as a percentage of
revenues decreased to 81.2% and 78.9% in the third quarter and nine-month period
of 2001, respectively, as compared to 81.9% and 80.6% in the same respective
periods in 2000. These decreases were due primarily to the lower volume of
revenues in 2001 as compared to 2000. Cost of sales as a percentage of revenues
for CWG decreased to 56.3% in both the third quarter and nine-month period of
2001 from 59.9% and 58.2% in the third quarter and nine-month period of 2000,
respectively. The decreases for both periods are due to increased sales volume,
particularly in the United Kingdom operations, and overall improved operations.
The nine-month period decrease also is attributable to a gain recognized on the
sale of certain bottled water assets in the second quarter of 2001.

Operating expenses, consisting of Research and Development expense and Selling,
General and Administrative expense, as a percentage of revenues increased during
the third quarter of 2001 to 23.0% from 22.6% in 2000. For the nine-month
period, operating expenses as a percentage of revenues increased to 24.4% in
2001 from 23.9% in 2000. The increase in operating expenses as a percentage of
revenues primarily reflected the decrease in UWG revenue, which generally has
lower selling costs relative to revenues than do CWG and IBG, and the higher
revenue growth in CWG, which generally has higher selling costs relative to
revenues than do EBG and UWG.

Interest income of $0.2 million for the third quarter of 2001 decreased from
$0.3 million for the third quarter of 2000. Interest income of $1.1 million for
the nine-month period of 2001 increased from $0.9 million for the nine-month
period of 2000. Interest expense of $1.2 million for the third quarter of 2001
remained relatively flat with the third quarter of 2000 interest expense of $1.3
million. Interest expense of $4.3 million in the nine-month period of 2001, as
compared to interest expense of $3.2 million in the nine-month period of 2000,
reflects higher average borrowings in the nine-month period of 2001 than in the
same period of 2000.

Equity income increased to $0.9 million for the third quarter of 2001 from $0.3
million for the third quarter of 2000. Equity income increased to $1.9 million
for the nine-month period of 2001 from $1.3 million for the nine-month period of
2000. These increases are primarily the result of higher equity income from a
Mexican investment.

The Company's effective tax rate was 34% for both the third quarter and the
nine-month period of 2001, as well as for the same respective periods in 2000.

Financial Condition

Working capital increased $27.6 million during the first nine months of 2001,
and the Company's current ratio also increased to 1.8 at September 30, 2001 from
1.5 at December 31, 2000. At September 30, 2001, the Company had $23.0 million
in cash and cash equivalents, a decrease of $2.5 million from December 31, 2000.
Notes payable and current portion of long-term debt decreased by $14.1 million,
and accounts payable decreased by $15.0 million. Accounts receivable decreased
by $6.6 million while inventory increased by $8.7 million. Notes receivable,
long-term and investments in affiliated companies increased by $5.4 million and
$6.6 million, respectively.

Cash provided by operating activities totaled $16.4 million for the nine-month
period of 2001. The primary uses of cash for investing purposes were additions
to property, plant and equipment. Significant capital expenditures were made for
"own and operate" facilities and to expand the Company's bottled water
operations. Net cash provided by financing activities, $12.3 million for the
nine-month period of 2001, was primarily from short-term borrowings and the
issuance of common stock.


                                       10
<PAGE>

During 2001, construction has been continuing on the Trinidad desalination
facility owned by Desalination Company of Trinidad and Tobago Ltd. (Desalcott),
in which the Company has a 40% equity interest. The Company has loaned $10
million to the 60% equity owner, Hafeez Karamath Engineering Services Ltd.
(HKES), as the source of HKES' equity contribution, in addition to the $10
million contributed by the Company for its 40% equity interest. Desalcott has
entered into a "bridge loan" agreement with a Trinidad bank providing $60
million in construction financing. In November 2001, the Bank has increased the
amount of the bridge loan to Desalcott from U.S. $60 million to U.S. $77.7
million, subject to certain conditions, including the Company's making a loan of
$10 million to Desalcott. Based on current estimates, the augmented bridge loan
plus the $20 million in equity provided to Desalcott, and the $10 million loan
to be made by the Company should provide sufficient funds to complete
construction of the project. In addition, Desalcott has accepted an offer to
provide long-term financing from the same bank, subject to certain conditions.
The proceeds from the long-term financing as currently proposed should be
sufficient to repay the bridge loan and the $10 million loan to be made by the
Company to Desalcott.

The Company completed a private placement of common stock to Fidelity Management
& Research Company (Fidelity), on behalf of funds and accounts managed by
Fidelity, in April 2001. 875,000 shares were sold at a price of $24.93 per
share, and the total proceeds to the Company were approximately $21.8 million.
The proceeds were used to reduce short-term borrowings. The Company filed a
registration statement with the Securities and Exchange Commission covering the
resale of these shares. The registration statement became effective on June 7,
2001.

On June 29, 2001, the Company entered into a Third Amended and Restated
Revolving Credit Agreement with Fleet National Bank (as lender and agent) and
Bank of America, N.A., the Chase Manhattan Bank, and Mellon Bank, N.A. (the
"Credit Agreement"). Under the terms of the Credit Agreement, which supercedes a
prior loan agreement with Fleet National Bank, the Company may borrow up to $90
million, subject to terms and financial covenants typical to such loan
agreements.

The Company believes that its cash and cash equivalents, cash from operations,
lines of credit and foreign exchange facilities are adequate to meet its
currently anticipated needs.

Accounting Pronouncements

In July 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting Standards (SFAS) No. 141, Business  Combinations.  SFAS
No. 141 requires  that all  business  combinations  be  accounted  for under the
purchase method only and that certain acquired  intangible  assets in a business
combination be recognized as assets apart from goodwill.  Implementation of SFAS
No. 141 is required for fiscal years beginning after December 15, 2001.

In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 addresses financial accounting and reporting for intangible
assets acquired individually or with a group of assets (but not those acquired
in a business combination) at acquisition. This Statement also addresses
financial accounting and reporting for goodwill and other intangible assets
subsequent to their acquisition. The provisions of this Statement are required
to be applied with fiscal years beginning after December 15, 2001. This
Statement is required to be applied at the beginning of an entity's fiscal year
and to be applied to all goodwill and other intangible assets recognized in its
financial statements at that date. Impairment losses for goodwill and
indefinite-lived intangible assets that arise due to the initial application of
this Statement are to be reported as resulting from a change in accounting
principle.

SFAS Nos. 141 and 142 were issued recently, and consequently the Company has not
yet determined what effect, if any, the adoption of SFAS Nos. 141 and 142 will
have on the Company's financial position or results of operations.

                                       11
<PAGE>

In August  2001,  the FASB  issued  SFAS No. 143,  "Accounting  for  Obligations
Associated with the Retirement of Long-Lived  Assets." SFAS No. 143 provides the
accounting  requirements  for retirement  obligations  associated  with tangible
long-lived assets. SFAS No. 143 is effective for financial statements for fiscal
years beginning after June 15, 2002.  Ionics is currently  assessing but has not
yet determined  the impact of SFAS No. 143 on its financial  position or results
of operations.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment of
Disposal of Long-Lived Assets." This accounting standard, which is effective for
fiscal years beginning after December 31, 2001, requires that long-lived assets
that are to be disposed of by sale be measured at the lower of book value or
fair value less cost to sell. Additionally, SFAS No. 144 expands the scope of
discontinued operations to include all components of an entity with operations
that can be distinguished from the rest of the entity and will be eliminated
from the ongoing operations of the entity in a disposal transaction. The effect
of adopting SFAS No. 144 on the Company's financial position and results of
operations has not yet been determined.

Quantitative and Qualitative Disclosures about Market Risk

Derivative Instruments and Market Risk
--------------------------------------

There has been no material change in the information reported in the Company's
2000 Annual Report as filed on Form 10-K with the Securities and Exchange
Commission with respect to these risk matters.

Forward-Looking Information

Safe Harbor Statement under Private Securities Litigation Reform Act of 1995
----------------------------------------------------------------------------

The Company's future results of operations and certain statements contained in
this report, including, without limitation, "Management's Discussion and
Analysis of Results of Operations and Financial Condition," constitute
forward-looking statements. Such statements are based on management's current
views and assumptions and involve risks, uncertainties and other factors that
could cause actual results to differ materially from management's current
expectations. Among these factors are business conditions and the general
economy; competitive factors, such as acceptance of new products and price
pressures; risk of nonpayment of accounts receivable; risks associated with
foreign operations; risks involved in litigation; regulations and laws affecting
business in each of the Company's markets; market risk factors, as described
above under "Derivative Instruments and Market Risks;" and other risks and
uncertainties described from time to time in the Company's filings with the
Securities and Exchange Commission.



                                       12
<PAGE>



                           PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

a)       Reports on Form 8-K

     No reports on Form8-K were filed with the Securities and Exchange
     Commission during the quarter ended September 30, 2001.

     All other items reportable under Part II have been omitted as inapplicable
     or because the answer is negative, or because the information was
     previously reported to the Securities and Exchange Commission.




                                       13
<PAGE>



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      IONICS, INCORPORATED



Date: November 13, 2001               By: /s/Arthur L. Goldstein
                                          ---------------------------------
                                          Arthur L. Goldstein
                                          Chairman and Chief Executive Officer
                                          (duly authorized officer)



Date: November 13, 2001               By: /s/Daniel M. Kuzmak
                                          ----------------------------------
                                          Daniel M. Kuzmak
                                          Vice President and
                                          Chief Financial Officer
                                          (principal financial officer)