UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 10-Q

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

                   For the quarterly period ended: June 30, 2000

                                       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 or other jurisdiction of             (IRS Employer Identification Number)
 incorporation)                              or organization)

           65 Grove Street
       Watertown, Massachusetts                        02472
(Address of principal executive offices)             (Zip Code)

       Registrant's telephone number, including area code: (617) 926-2500

             Former name, former address and former fiscal year,
             if changed since last report: None

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 June 30, 2000 the Company had 16,220,390 shares of Common Stock, par value $1
per share, outstanding.



                                       1
<PAGE>


                            IONICS, INCORPORATED
                                  FORM 10-Q
                        FOR QUARTER ENDED JUNE 30, 2000


                                    INDEX


                                                                    Page Number

Part I        Financial Information

              Consolidated Statements of Operations                      3

              Consolidated Balance Sheets                                4

              Consolidated Statements of Cash Flows                      5

              Notes to Consolidated Financial Statements                 6

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


Part II       Other Information                                         13

              Signatures                                                14

              Exhibit Index                                             15

              Exhibit 27 - Financial Data Schedule      (for electronic purposes
                                                         only)



                                       2
<PAGE>

<TABLE>
<CAPTION>
                 PART I - FINANCIAL INFORMATION

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

                                                                     Three months ended              Six months ended
                                                                          June 30,                       June 30,
                                                                 ---------------------------    ----------------------------

                                                                    2000           1999            2000            1999
                                                                 ------------   ------------    -----------     ------------
<S>                                                                 <C>            <C>            <C>              <C>
Revenue:
     Equipment Business Group                                       $ 42,405       $ 30,740       $ 83,761         $ 65,179
     Ultrapure Water Group                                            26,558         23,292         54,304           47,825
     Consumer Water Group                                             26,933         23,672         53,352           45,531
     Instrument Business Group                                         6,908          6,864         14,182           13,449
                                                                 ------------   ------------    -----------     ------------

                                                                     102,804         84,568        205,599          171,984
                                                                 ------------   ------------    -----------     ------------

Costs and expenses:
     Cost of sales of Equipment Business Group                        31,079         21,736         62,484           46,451
     Cost of sales of Ultrapure Water Group                           21,378         17,448         43,243           35,686
     Cost of sales of Consumer Water Group                            14,899         12,851         30,600           25,134
     Cost of sales of Instrument Business Group                        2,761          2,864          6,039            5,880
     Research and development                                          1,827          1,771          3,648            3,639
     Selling, general and administrative                              24,086         20,616         47,060           40,725
                                                                 ------------   ------------    -----------     ------------

                                                                      96,030         77,286        193,074          157,515
                                                                 ------------   ------------    -----------     ------------


Income from operations                                                 6,774          7,282         12,525           14,469

Interest income                                                          318            404            585              512

Interest expense                                                      (1,202)          (205)        (1,926)            (335)

Equity income                                                            639            216            971              379
                                                                 ------------   ------------    -----------     ------------


Income before income taxes and minority interest                       6,529          7,697         12,155           15,025

Provision for income taxes                                             2,221          2,479          4,134            4,861
                                                                 ------------   ------------    -----------     ------------

Income before minority interest                                        4,308          5,218          8,021           10,164

Minority interest expense                                                 93            114            244              388
                                                                 ------------   ------------    -----------     ------------


Net income                                                           $ 4,215        $ 5,104        $ 7,777          $ 9,776
                                                                 ============   ============    ===========     ============


Basic earnings per share                                              $ 0.26         $ 0.32         $ 0.48           $ 0.61
                                                                 ============   ============    ===========     ============


Diluted earnings per share                                            $ 0.26         $ 0.31         $ 0.47           $ 0.60
                                                                 ============   ============    ===========     ============


Shares used in basic earnings per share calculations                  16,216         16,133         16,213           16,130
                                                                 ============   ============    ===========     ============


Shares used in diluted earnings per share calculations                16,429         16,374         16,417           16,238
                                                                 ============   ============    ===========     ============


The accompanying notes are an integral part of these financial statements.
</TABLE>


                                       3
<PAGE>

<TABLE>
<CAPTION>

                   IONICS, INCORPORATED
               CONSOLIDATED BALANCE SHEETS
                       (Unaudited)
   (Amounts in thousands, except share and par value amounts)

                                                                                June 30,            December 31,
                                                                                  2000                  1999
                                                                             ----------------      ---------------
<S>                                                                                 <C>                  <C>
ASSETS
------
Current assets:
      Cash and cash equivalents                                                     $ 19,344             $ 13,169
      Short-term investments                                                             376                  195
      Notes receivable, current                                                        4,525                5,374
      Accounts receivable                                                            138,464              120,407
      Receivables from affiliated companies                                              102                1,231
      Inventories:
          Raw materials                                                               20,725               20,216
          Work in process                                                             13,096                8,913
          Finished goods                                                               5,643                4,751
                                                                             ----------------      ---------------
                                                                                      39,464               33,880
      Other current assets                                                            13,487               14,816
      Deferred income taxes                                                            4,730                4,730
                                                                             ----------------      ---------------

          Total current assets                                                       220,492              193,802

Notes receivable, long-term                                                           10,847               10,027
Investments in affiliated companies                                                    9,363               10,752
Property, plant and equipment:
      Land                                                                             8,499                8,352
      Buildings                                                                       46,583               44,858
      Machinery and equipment                                                        309,291              299,303
      Other, including furniture, fixtures and vehicles                               52,107               49,119
                                                                             ----------------      ---------------

                                                                                     416,480              401,632
      Less accumulated depreciation                                                 (182,527)            (174,382)
                                                                             ----------------      ---------------

                                                                                     233,953              227,250
Other assets                                                                          62,591               59,075
                                                                             ----------------      ---------------

          Total assets                                                             $ 537,246            $ 500,906
                                                                             ================      ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
      Notes payable and current portion of long-term debt                          $  54,309            $  25,514
      Accounts payable                                                                39,351               41,867
      Customer deposits                                                                3,780                2,671
      Accrued commissions                                                              1,589                2,362
      Accrued expenses                                                                30,067               27,061
      Taxes on income                                                                    826                    -
                                                                             ----------------      ---------------

          Total current liabilities                                                  129,922               99,475

Long-term debt and notes payable                                                      11,956                8,351
Deferred income taxes                                                                 24,261               26,803
Other liabilities                                                                      4,567                4,425
Stockholders' equity:
      Common stock, par value $1, authorized
      shares: 55,000,000; issued: 16,220,390 in 2000 and 16,201,483 in 1999           16,220               16,201
      Additional paid-in capital                                                     159,720              159,288
      Retained earnings                                                              207,081              199,304
      Accumulated other comprehensive income                                         (16,481)             (12,905)
      Unearned compensation                                                                -                  (36)
                                                                             ----------------      ---------------

          Total stockholders' equity                                                 366,540              361,852
                                                                             ----------------      ---------------
          Total liabilities and stockholders' equity                               $ 537,246            $ 500,906
                                                                             ================      ===============

The accompanying notes are an integral part of these financial statements.
</TABLE>


                                       4
<PAGE>



<TABLE>
<CAPTION>

                      IONICS, INCORPORATED
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Unaudited)
                      (Amounts in thousands)


                                                                                         Six Months Ended
                                                                                             June 30,
                                                                              --------------------------------------

Operating activities:                                                             2000                     1999
                                                                              -------------             ------------
      <S>                                                                          <C>                      <C>

      Net income                                                                   $ 7,777                  $ 9,776
      Adjustments to reconcile net income to net cash (used)
      provided by operating activities:
         Depreciation and amortization                                              14,925                   14,107
         Provision for losses on accounts and notes receivable                       1,261                      193
         Compensation expense on restricted stock awards                                36                       54
         Changes in assets and liabilities:
            Notes receivable                                                          (700)                    (450)
            Accounts receivable                                                    (19,971)                   2,101
            Inventories                                                             (5,942)                  (1,572)
            Other current assets                                                     1,162                      121
            Investments in affiliates                                                1,135                   (1,580)
            Accounts payable and accrued expenses                                      (53)                  (8,170)
            Income taxes                                                               302                    1,792
            Other                                                                   (1,275)                  (2,175)
                                                                              -------------             ------------

               Net cash (used) provided by operating activities                     (1,343)                  14,197
                                                                              -------------             ------------

Investing activities:
      Additions to property, plant and equipment                                   (21,218)                 (22,143)
      Disposals of property, plant and equipment                                       888                      936
      Acquisitions, net of cash acquired                                            (4,250)                  (8,394)
      (Purchase) sale of short-term investments                                       (158)                     167
                                                                              -------------             ------------

               Net cash used by investing activities                               (24,738)                 (29,434)
                                                                              -------------             ------------

Financing activities:
      Principal payments on current debt                                           (37,660)                  (6,715)
      Proceeds from borrowings of current debt                                      65,756                   13,096
      Principal payments on long-term debt                                            (492)                    (672)
      Proceeds from borrowings of long-term debt                                     3,946                      355
      Proceeds from stock option plans                                                 454                      402
                                                                              -------------             ------------

               Net cash provided by financing activities                            32,004                    6,466
                                                                              -------------             ------------

Effect of exchange rate changes on cash                                                252                     (812)
                                                                              -------------             ------------

Net change in cash and cash equivalents                                              6,175                   (9,583)
Cash and cash equivalents at beginning of period                                    13,169                   28,770
                                                                              -------------             ------------

Cash and cash equivalents at end of period                                        $ 19,344                 $ 19,187
                                                                              =============             ============



The accompanying notes are an integral part of these financial statements.
</TABLE>


                                       5
<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 to present fairly 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  1999 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.

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

                                                           (Amounts in thousands, except per share amounts)

                                                                For the three months ended June 30,
                                   ---------------------------------------------------------------------------------------------
                                                        2000                                            1999
                                   --------------------------------------------    ---------------------------------------------

                                       Net                          Per Share          Net                          Per Share
                                     Income          Shares          Amount          Income          Shares          Amount
                                   ------------    ------------    ------------    ------------    ------------   --------------
<S>                                    <C>              <C>             <C>            <C>              <C>              <C>
Basic EPS
     Income available to
     common stockholders               $ 4,215          16,216          $ 0.26         $ 5,104          16,133           $ 0.32

     Effect of dilutive
     stock options                           -             213               -               -             241            (0.01)
                                   ------------    ------------    ------------    ------------    ------------   --------------


Diluted EPS                            $ 4,215          16,429          $ 0.26         $ 5,104          16,374           $ 0.31
                                   ============    ============    ============    ============    ============   ==============




                                                                  For the six months ended June 30,
                                   ---------------------------------------------------------------------------------------------
                                                         2000                                            1999
                                   --------------------------------------------    ---------------------------------------------

                                       Net                          Per Share          Net                          Per Share
                                     Income          Shares          Amount          Income          Shares          Amount
                                   ------------    ------------    ------------    ------------    ------------   --------------
Basic EPS
     Income available to
     common stockholders               $ 7,777          16,213          $ 0.48         $ 9,776          16,130           $ 0.61

     Effect of dilutive
     stock options                           -             204           (0.01)              -             108            (0.01)
                                   ------------    ------------    ------------    ------------    ------------   --------------

Diluted EPS                            $ 7,777          16,417          $ 0.47         $ 9,776          16,238           $ 0.60
                                   ============    ============    ============    ============    ============   ==============
</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 at the three
       months  ended  June  30,  2000  and  1999  was   1,715,684  and  725,750,
       respectively.  The number of options  that were  antidilutive  at the six
       months  ended  June  30,  2000  and  1999  were  1,665,084  and  725,750,
       respectively.



                                       6
<PAGE>


3.       Comprehensive Income

       The Company has adopted the  Statement of Financial  Accounting  Standard
       ("SFAS") No. 130,  "Reporting  Comprehensive  Income," which  establishes
       standards for the reporting and display of  comprehensive  income and its
       components.  The table below sets forth "comprehensive income" as defined
       by SFAS No. 130 for the three month and six month  periods ended June 30,
       2000 and 1999.
<TABLE>
<CAPTION>

                                                           (Amounts in thousands)
                                          Three Months Ended                   Six Months Ended
                                               June 30,                             June 30,
                                    -------------------------------      ------------------------------

                                        2000              1999               2000             1999
                                    -------------      ------------      -------------    -------------
<S>                                      <C>               <C>                <C>              <C>

Net income                               $ 4,215           $ 5,104            $ 7,777          $ 9,776
Other comprehensive income,
     net of tax:
     Translation adjustments              (1,166)           (1,405)            (3,576)          (4,355)
                                    -------------      ------------      -------------    -------------

Comprehensive income                     $ 3,049           $ 3,699            $ 4,201          $ 5,421
                                    =============      ============      =============    =============
</TABLE>


4.     In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of
       an Enterprise and Related  Information."  At the end of 1998, the Company
       changed  from three  reportable  segments  to four  reportable  "business
       group" segments  corresponding  to a "business group" structure which was
       put  into  place in the  latter  part of 1998.  As of June 30,  2000,  no
       changes have been made to the basis of segmentation or the measurement of
       profit or loss from that which was reported in the Company's  1999 Annual
       Report as filed on Form 10-K with the Securities and Exchange Commission,
       and there were no material changes to total assets by segment.

       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 June 30, 2000
                                     -------------------------------------------------------------------------------------
                                      Equipment      Ultrapure     Consumer      Instrument
                                       Business        Water         Water        Business
                                        Group          Group         Group         Group        Corporate       Total
                                     -------------  ------------  ------------  -------------   -----------  -------------
<S>                                      <C>           <C>           <C>             <C>                        <C>
(Amounts in thousands)
Revenue - unaffiliated
     customers                           $ 42,405      $ 26,558      $ 26,933        $ 6,908      $      -      $ 102,804
Inter-segment transfers                       456         1,339             -            986        (2,781)             -
Gross profit                               11,326         5,180        12,034          4,147             -         32,687



                                                                For the three months ended June 30, 1999
                                     -------------------------------------------------------------------------------------
                                      Equipment      Ultrapure     Consumer      Instrument
                                       Business        Water         Water        Business
                                        Group          Group         Group         Group        Corporate       Total
                                     -------------  ------------  ------------  -------------   -----------  -------------

(Amounts in thousands)
Revenue - unaffiliated
     customers                           $ 30,740      $ 23,292      $ 23,672        $ 6,864       $     -       $ 84,568
Inter-segment transfers                       546             -             -            383          (929)             -
Gross profit                                9,004         5,844        10,821          4,000             -         29,669



                                                                  For the six months ended June 30, 2000
                                     -------------------------------------------------------------------------------------
                                      Equipment      Ultrapure     Consumer      Instrument
                                       Business        Water         Water        Business
                                        Group          Group         Group         Group        Corporate       Total
                                     -------------  ------------  ------------  -------------   -----------  -------------

(Amounts in thousands)
Revenue - unaffiliated
     customers                           $ 83,761      $ 54,304      $ 53,352       $ 14,182       $     -      $ 205,599
Inter-segment transfers                     2,038         1,564             -          1,372        (4,974)             -
Gross profit                               21,277        11,061        22,752          8,143             -         63,233



                                                                  For the six months ended June 30, 1999
                                     -------------------------------------------------------------------------------------
                                      Equipment      Ultrapure     Consumer      Instrument
                                       Business        Water         Water        Business
                                        Group          Group         Group         Group        Corporate       Total
                                     -------------  ------------  ------------  -------------   -----------  -------------

(Amounts in thousands)
Revenue - unaffiliated
     customers                           $ 65,179      $ 47,825      $ 45,531       $ 13,449       $     -      $ 171,984
Inter-segment transfers                       865           197             -            577        (1,639)             -
Gross profit                               18,728        12,139        20,397          7,569             -         58,833
</TABLE>



                                       7
<PAGE>


5.     Accounting Pronouncements

       In March 2000,  the Financial  Accounting  Standards  Board (FASB) issued
       FASB Interpretation No. 44, Accounting for Certain Transactions involving
       Stock Compensation, an interpretation of APB Opinion No. 25 (FIN No. 44).
       This   interpretation,   which  is  generally  effective  July  1,  2000,
       clarifies,  among  other  issues,  the  definition  of  employee  for the
       purposes of applying the  provisions  of APB Opinion No. 25, the criteria
       for determining  whether a plan qualifies as a noncompensatory  plan, and
       the  accounting  consequence of various  modifications  to the terms of a
       previously fixed stock option or award. The adoption of FIN No. 44 is not
       expected to have a material effect on the Company's financial position or
       results of operations.

       In June 1999, the FASB issued Statement of Financial Accounting Standards
       No.   137,   Accounting   for   Derivative    Instruments   and   Hedging
       Activities-Deferral  of the  Effective  Date of FASB  Statement  No. 133,
       (SFAS  137).  SFAS  137  amends  SFAS  133,   Accounting  for  Derivative
       Instruments and Hedging  Activities,  which was issued in June 1998. SFAS
       137 defers the effective  date of SFAS 133 to all fiscal years  beginning
       after June 15, 2000. SFAS 133 requires that all derivatives be recognized
       as either assets or liabilities  at estimated  fair value.  In June 2000,
       the FASB issued  Statement of  Financial  Accounting  Standards  No. 138,
       Accounting  for  Certain  Derivative   Instruments  and  Certain  Hedging
       Activities,  which is an  amendment  of SFAS  No.  133.  This  accounting
       standard  amended the accounting and reporting  standards of SFAS No. 133
       for certain derivative  instruments and hedging activities.  The adoption
       of SFAS No. 133, as amended, is not expected to have a material effect on
       the Company's financial position or results of operations.

       In December 1999, the  Securities  and Exchange  Commission  (SEC) issued
       Staff  Accounting  Bulletin  No. 101,  Revenue  Recognition  in Financial
       Statements  (SAB 101),  which among  other  guidance,  clarifies  certain
       conditions to be met in order to recognize revenue. In June 2000, the SEC
       issued   Staff   Accounting   Bulletin   No.   101B  which   delayed  the
       implementation  of SAB 101  until the  fourth  quarter  of  fiscal  years
       beginning after December 15, 1999. The  implementation  of SAB 101 is not
       expected to have a material effect on the Company's financial position or
       results or operations.



                                       8
<PAGE>




                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2000 with the Three and
Six Months Ended June 30, 1999


Revenues  for the  second  quarter  of 2000  increased  21.6%  while net  income
decreased  by 17.4%,  compared  to the  results of the  second  quarter of 1999.
Similarly, revenues for the first six-month period of 2000 increased 19.5% while
net income  decreased  by 20.4% from the  comparable  six-month  period in 1999.
Gross profit was $32.7  million in the second  quarter of 2000 compared to $29.7
million in the second quarter of 1999. For the first  six-month  period of 2000,
gross profit was $63.2 million compared to $58.8 million for the first six-month
period of 1999. Gross profit increased in the second quarter and first six-month
period for the Equipment  Business  Group (EBG),  Consumer Water Group (CWG) and
Instrument  Business Group (IBG). The Ultrapure Water Group's (UWG) gross profit
decreased  in the second  quarter  and first  six-month  period of 2000 from the
comparable  periods  in 1999.  This  decrease  was  primarily  due to  continued
competitive   pricing   pressures  in  several  markets,   particularly  in  the
microelectronic industry.

Total revenues for the second quarter of 2000 increased  21.6% to $102.8 million
from $84.6  million in 1999.  Revenues  for the first  six-month  period of 2000
increased  19.5% to $205.6 million from $172.0  million in the  comparable  1999
period. Revenues during 2000 were higher in the second quarter and the six-month
period, compared to the respective periods in 1999, in all four business groups.

EBG revenues  increased  37.9% in the second quarter and increased  28.5% in the
first six-month period of 2000, as compared with the same respective  periods of
1999.  These  increases  came primarily  from higher  capital  equipment  sales,
particularly for zero liquid discharge equipment, the commencement of operations
at water  supply  plants in  Barbados  and  Curacao,  and  continuing  work on a
contract  to  manufacture  storage  systems to manage the  containment  of spent
nuclear fuels.

The  revenues of UWG  increased  by $3.3 million and $6.5 million for the second
quarter and six-month periods of 2000, respectively,  compared to the respective
second quarter and six-month periods of 1999. These increases were due primarily
to higher sales to the microelectronics and power industries.

Revenues of CWG  increased  13.8% in the second  quarter of 2000 compared to the
second  quarter  of 1999.  CWG's  revenues  also  increased  17.2% in the  first
six-month  period of 2000 compared to the first six-month  period of 1999. These
increases  were due to growth in both  bottled  water and home  water  products,
particularly the foreign operations of both businesses.

IBG revenues  increased by approximately 1.0% and 5.5% in the second quarter and
first six months of 2000, respectively, as compared to the same periods in 1999.
These  increases  resulted  primarily  from sales of total organic  carbon (TOC)
instruments due to new European pharmaceutical regulations.

Cost of sales as a percentage  of revenues  for the second  quarter was 68.2% in
2000 and 64.9% in 1999. For the six-month period,  cost of sales as a percentage
of revenue was 69.2% in 2000 and 65.8% in 1999.



                                       9
<PAGE>


Cost of sales as a  percentage  of revenues  increased  for EBG, UWG and CWG for
both the second  quarter  and  six-month  periods of 2000,  as  compared  to the
respective  periods in 1999.  IBG's cost of sales as a  percentage  of  revenues
decreased  in the second  quarter and first half of 2000  compared to the second
quarter  and  first  half of 1999.  The  increases  in this  percentage  for EBG
primarily  reflected a shift in the mix of contracts  to lower margin  equipment
business. UWG's increases in cost of sales as percentage of revenues reflect the
continued competitive environment in the microelectronics industry for ultrapure
water  capital  equipment in the first two quarters of 2000.  Cost of sales as a
percentage of revenue  increased for CWG in the second quarter and first half of
2000,  as compared to the second  quarter and first half of 1999,  due to higher
distribution  expenses,  particularly  increases in fuel and labor costs.  These
increases  were  partially  offset by  decreases in cost of sales for IBG in the
second quarter and first six months of 2000,  compared to the second quarter and
first six months of 1999.  These  decreases  were the result of a more favorable
mix of sales.

Operating  expenses  as a  percentage  of revenues  decreased  during the second
quarter to 25.2% in 2000 from 26.5% in 1999. For the six-month period, operating
expenses as a  percentage  of revenues  decreased to 24.7% in 2000 from 25.8% in
1999. The decreases in operating  expenses as a percentage of revenues primarily
reflected  higher  revenue  growth in EBG and UWG  which  generally  have  lower
selling costs relative to revenues than do the other business groups.

Interest  income  of $0.3  million  for the  second  quarter  of 2000  decreased
slightly  from interest  income of $0.4 million for the second  quarter of 1999.
Interest  income of $0.6  million  for the  first  half of 2000  increased  from
interest income of $0.5 million for the first half of 1999.  Interest expense of
$1.2  million and $1.9  million  for the second  quarter and first half of 2000,
respectively,  increased  from $0.2  million  and $0.3  million  for the  second
quarter and first half of 1999, respectively.  The increases in interest expense
in 2000 were due to higher average borrowings by the Company.

Financial Condition

Working capital decreased $3.8 million during the first six months of 2000 while
the  Company's  current  ratio  decreased  to 1.7 at June 30,  2000  from 2.0 at
December 31, 1999.  At June 30, 2000,  the Company had $19.3 million in cash and
cash  equivalents,  an increase of $6.2  million from  December 31, 1999.  Notes
payable and the current  portion of long-term  debt  increased by $28.8 million,
and accounts receivable increased by $18.0 million.

Cash used by operating  activities  totaled  $1.3  million  during the first six
months  of 2000.  The  primary  uses of cash  for  investing  purposes  were for
additions to property,  plant and  equipment and for  acquisitions.  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  was  $32.0  million  for the  first  half of 2000  primarily  due to
short-term and long-term borrowings.

At June 30, 2000, the Company had incurred  approximately  $3.2 million in costs
relating  primarily to providing  assistance  to a project  company in obtaining
financing  for,  and project  management  and design  work on, a major  seawater
desalination  project in Trinidad  announced  in  September,  1999.  The project
company has obtained a source of bridge  financing  for the project,  subject to
the fulfillment of certain conditions,  and anticipates that it will soon obtain
funds from such source. Should funds not be obtained,  the costs incurred by the
company  would be  expensed.  The  Company  anticipates  that funds will  become
available to the project  company in the third quarter of 2000.  The Company may
incur additional expenditures related to this project prior to such time.

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.



                                       10
<PAGE>


Accounting Pronouncements

In March 2000,  the  Financial  Accounting  Standards  Board (FASB)  issued FASB
Interpretation  No. 44,  Accounting  for Certain  Transactions  involving  Stock
Compensation,  an  interpretation  of APB  Opinion  No.  25 (FIN No.  44).  This
interpretation,  which is generally  effective  July 1, 2000,  clarifies,  among
other  issues,  the  definition  of employee  for the  purposes of applying  the
provisions  of APB Opinion No. 25, the criteria for  determining  whether a plan
qualifies as a noncompensatory  plan, and the accounting  consequence of various
modifications  to the terms of a  previously  fixed stock  option or award.  The
adoption  of FIN  No.  44 is not  expected  to  have a  material  effect  on the
Company's financial position or results of operations.

In June 1999, the FASB issued  Statement of Financial  Accounting  Standards No.
137, Accounting for Derivative  Instruments and Hedging  Activities-Deferral  of
the Effective Date of FASB  Statement No. 133, (SFAS 137).  SFAS 137 amends SFAS
133,  Accounting for Derivative  Instruments and Hedging  Activities,  which was
issued in June  1998.  SFAS 137  defers  the  effective  date of SFAS 133 to all
fiscal  years  beginning  after  June  15,  2000.  SFAS  133  requires  that all
derivatives  be  recognized as either assets or  liabilities  at estimated  fair
value. In June 2000, the FASB issued Statement of Financial Accounting Standards
No. 138,  Accounting  for Certain  Derivative  Instruments  and Certain  Hedging
Activities,  which is an amendment  of SFAS No. 133.  This  accounting  standard
amended  the  accounting  and  reporting  standards  of SFAS No. 133 for certain
derivative instruments and hedging activities.  The adoption of SFAS No. 133, as
amended,  is not expected to have a material  effect on the Company's  financial
position or results of operations.

In December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting  Bulletin No. 101, Revenue  Recognition in Financial  Statements (SAB
101),  which among other  guidance,  clarifies  certain  conditions to be met in
order to  recognize  revenue.  In June  2000,  the SEC issued  Staff  Accounting
Bulletin No. 101B which delayed the  implementation  of SAB 101 until the fourth
quarter of fiscal years beginning after December 15, 1999. The implementation of
SAB 101 is not  expected to have a material  effect on the  Company's  financial
position or results or operations.

Year 2000 (Y2K) Disclosure

The Company  undertook a program in years 1998 and 1999 to assure the ability of
its  information  and  manufacturing  systems to properly  recognize and process
date-sensitive  information  beginning on January 1, 2000. To date,  the Company
has  completed  the  transition  from  calendar  1999 to 2000  with no  reported
significant  impact to  operations.  The  Company  will  continue to monitor Y2K
related  matters at suppliers and customers,  as well as the Company's  systems,
facilities  and  products,  to  ensure  that  latent  defects  do  not  manifest
themselves over the next several months.

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
1999  Annual  Report  as filed on Form  10-K with the  Securities  and  Exchange
Commission with respect to these risk matters.



                                       11
<PAGE>


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 of latent Y2K defects;  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 Risk;"
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 1. Legal Proceedings
-------------------------

The  investigation  conducted by the  Attorney  General of the  Commonwealth  of
Massachusetts into certain former operations of a division of the Company during
portions  of the years  1991  through  1995,  first  reported  in the  Company's
quarterly report on Form 10-Q for the quarter ended September 30, 1998, has been
settled.  Pursuant to the settlement  agreement  entered in civil proceedings on
August 2, 2000, in which the Company did not admit to any liability, the Company
will pay a civil penalty of $425,000 to the  Commonwealth  of  Massachusetts  to
settle claims of violations of certain  industrial waste discharge  regulations,
and  will in  addition  make a  contribution  of  $110,000  to fund a  watershed
protection plan for the Connecticut River basin.

Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------

a) The Annual Meeting of the Stockholders was held on May 2, 2000.

Arnaud de Vitry  d'Avaucourt,  William  E.  Katz,  Daniel I. C. Wang and Mark S.
Wrighton were reelected as Class II Directors for a three-year term.  Continuing
as Class I  Directors  until the 2002  Annual  Meeting  are  Douglas  R.  Brown,
Kathleen F.  Feldstein,  Arthur L.  Goldstein and Carl S. Sloane.  Continuing as
Class III Directors until the 2001 Annual Meeting are William L. Brown,  John J.
Shields and Allen S. Wyett. Each of the Class II Directors received at least the
following votes "for" election and no more than the following votes withheld:

                Votes for:                          12,860,448
                Votes withheld:                        116,790

b) The other matter  submitted for stockholder  approval was ratification of the
selection of  PricewaterhouseCoopers  LLP as the Company  auditors for 2000. The
following votes were cast:

                Votes for:                          12,902,884
                Votes against:                          50,987
                Abstentions:                            23,367

Item 5. Other Information
-------------------------

On May 23, 2000,  the Board of Directors  expanded the total number of Class III
director  positions to five, and elected  Stephen L. Brown and William K. Reilly
as Class III Directors. As such, they will serve until the 2001 Annual Meeting.

Item 6. Exhibits and Reports on Form 8-K
----------------------------------------

Exhibit 10 - Material Contracts

10.1   Second  Amended and  Restated  Credit  Agreement  dated as of July 28,
       2000, among the Company, Fleet National Bank and Fleet National Bank as
       agent.

10.2   Shareholders'  Agreement  dated as of May 12,  2000,  among the  Company,
       Hafeez Karamath  Engineering Services Limited and Desalination Company of
       Trinidad and Tobago Limited, as amended on June 16, 2000.



                                       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:  August 14, 2000                  By:  /s/Arthur L. Goldstein
       ---------------                  ---------------------------------------
                                          Arthur L. Goldstein
                                          Chairman and Chief Executive Officer
                                          (duly authorized officer)



Date:  August 14, 2000                  By:  /s/Robert J. Halliday
       ---------------                  --------------------------------------
                                          Robert J. Halliday
                                          Executive Vice President
                                          Chief Operating Officer and
                                          Chief Financial Officer
                                          (principal financial officer)




                                       14
<PAGE>



                                  EXHIBIT INDEX

                                                              Sequentially
                                                                Numbered
Exhibit                                                           Page
-------                                                      ---------------

10.1   Second Amended and Restated  Revolving  Credit              16
       Agreement dated as of July 28, 2000,  among the
       Company,  Fleet  National Bank and Fleet National
       Bank as agent.

10.2   Shareholders'  Agreement  dated as of May 12, 2000,        109
       among the Company,  Hafeez  Karamath  Engineering
       Services  Limited and Desalination  Company  of
       Trinidad  and  Tobago  Limited, as amended on June
       16, 2000.

27.0   Financial Data Schedule                                (for electronic
                                                                purposes only)


                                       15
<PAGE>