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: September 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 incorporation    (IRS Employer Identification
or organization)                                 Number)

           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 September  30, 2000 the
Company  had  16,286,083  shares  of  Common  Stock,  par  value  $1 per  share,
outstanding.


<PAGE>
                             IONICS, INCORPORATED
                                   FORM 10-Q
                       FOR QUARTER ENDED SEPTEMBER 30, 2000




                                     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

              Exhibit Index                                           15

              Exhibit 27 - Financial Data Schedule                    16
                                                       (for electronic purposes
                                                        only)


<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,
                                                                 ---------------------------    ----------------------------

                                                                    2000           1999            2000            1999
                                                                 ------------   ------------    -----------     ------------

Revenue:
<S>                                                                 <C>            <C>            <C>              <C>
     Equipment Business Group                                       $ 48,188       $ 31,810       $131,949         $ 96,989
     Ultrapure Water Group                                            40,528         21,144         94,832           68,969
     Consumer Water Group                                             28,389         26,668         81,741           72,199
     Instrument Business Group                                         7,781          7,049         21,963           20,498
                                                                 ------------   ------------    -----------     ------------

                                                                     124,886         86,671        330,485          258,655
                                                                 ------------   ------------    -----------     ------------

Costs and expenses:
     Cost of sales of Equipment Business Group                        37,107         22,767         99,591           69,218
     Cost of sales of Ultrapure Water Group                           33,190         16,174         76,433           51,860
     Cost of sales of Consumer Water Group                            16,993         14,237         47,593           39,371
     Cost of sales of Instrument Business Group                        3,658          2,781          9,697            8,661
     Research and development                                          1,833          1,623          5,481            5,262
     Selling, general and administrative                              26,415         21,134         73,475           61,859
                                                                 ------------   ------------    -----------     ------------

                                                                     119,196         78,716        312,270          236,231
                                                                 ------------   ------------    -----------     ------------


Income from operations                                                 5,690          7,955         18,215           22,424

Interest income                                                          265             92            850              604

Interest expense                                                      (1,270)          (111)        (3,196)            (446)

Equity income                                                            289            180          1,260              559
                                                                 ------------   ------------    -----------     ------------


Income before income taxes and minority interest                       4,974          8,116         17,129           23,141

Provision for income taxes                                             1,690          2,653          5,824            7,514
                                                                 ------------   ------------    -----------     ------------


Income before minority interest                                        3,284          5,463         11,305           15,627

Minority interest expense                                                358             94            602              482
                                                                 ------------   ------------    -----------     ------------


Net income                                                           $ 2,926        $ 5,369       $ 10,703         $ 15,145
                                                                 ============   ============    ===========     ============


Basic earnings per share                                              $ 0.18         $ 0.33         $ 0.66           $ 0.94
                                                                 ============   ============    ===========     ============


Diluted earnings per share                                            $ 0.18         $ 0.33         $ 0.65           $ 0.93
                                                                 ============   ============    ===========     ============


Shares used in basic earnings per share calculations                  16,234         16,144         16,220           16,135
                                                                 ============   ============    ===========     ============


Shares used in diluted earnings per share calculations                16,519         16,373         16,451           16,283
                                                                 ============   ============    ===========     ============

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

<PAGE>
<TABLE>
<CAPTION>


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

                                                                              September 30,         December 31,
                                                                                  2000                  1999
                                                                             ----------------      ---------------

ASSETS
Current assets:
<S>                                                                                 <C>                  <C>
      Cash and cash equivalents                                                     $ 20,444             $ 13,169
      Short-term investments                                                             377                  195
      Notes receivable, current                                                        4,723                5,374
      Accounts receivable                                                            156,732              120,407
      Receivables from affiliated companies                                              510                1,231
      Inventories:
          Raw materials                                                               21,509               20,216
          Work in process                                                             11,248                8,913
          Finished goods                                                               5,265                4,751
                                                                             ----------------      ---------------

                                                                                      38,022               33,880
      Other current assets                                                            18,371               14,816
      Deferred income taxes                                                            4,730                4,730
                                                                             ----------------      ---------------

          Total current assets                                                       243,909              193,802

Notes receivable, long-term                                                           11,217               10,027
Investments in affiliated companies                                                   10,249               10,752
Property, plant and equipment:
      Land                                                                             8,398                8,352
      Buildings                                                                       47,101               44,858
      Machinery and equipment                                                        317,341              299,303
      Other, including furniture, fixtures and vehicles                               53,648               49,119
                                                                             ----------------      ---------------

                                                                                     426,488              401,632
      Less accumulated depreciation                                                 (188,703)            (174,382)
                                                                             ----------------      ---------------

                                                                                     237,785              227,250
Other assets                                                                          60,104               59,075
                                                                             ----------------      ---------------

          Total assets                                                             $ 563,264            $ 500,906
                                                                             ================      ===============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Notes payable and current portion of long-term debt                           $ 76,992             $ 25,514
      Accounts payable                                                                42,008               41,867
      Customer deposits                                                                6,938                2,671
      Accrued commissions                                                              1,834                2,362
      Accrued expenses                                                                28,745               27,061
      Taxes on income                                                                  1,012                    -
                                                                             ----------------      ---------------

          Total current liabilities                                                  157,529               99,475

Long-term debt and notes payable                                                      11,494                8,351
Deferred income taxes                                                                 22,106               26,803
Other liabilities                                                                      4,931                4,425
Stockholders' equity:
      Common stock, par value $1, authorized
      shares: 55,000,000; issued: 16,286,083 in 2000 and 16,201,483 in 1999           16,286               16,201
      Additional paid-in capital                                                     160,972              159,288
      Retained earnings                                                              210,007              199,304
      Accumulated other comprehensive income                                         (20,061)             (12,905)
      Unearned compensation                                                                -                  (36)
                                                                             ----------------      ---------------

          Total stockholders' equity                                                 367,204              361,852
                                                                             ----------------      ---------------

          Total liabilities and stockholders' equity                               $ 563,264            $ 500,906
                                                                             ================      ===============

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

<PAGE>
<TABLE>
<CAPTION>


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


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

Operating activities:                                                             2000                      1999
                                                                              -------------             -------------

<S>                                                                               <C>                       <C>
      Net income                                                                  $ 10,703                  $ 15,145
      Adjustments to reconcile net income to net cash (used)
      provided by operating activities:
         Depreciation and amortization                                              24,116                    21,491
         Provision for losses on accounts and notes receivable                       2,479                       457
         Compensation expense on restricted stock awards                                36                        81
         Changes in assets and liabilities:
            Notes receivable                                                        (2,049)                   (1,020)
            Accounts receivable                                                    (42,017)                   (9,568)
            Inventories                                                             (4,780)                   (1,303)
            Other current assets                                                    (3,941)                      628
            Investments in affiliates                                                  (43)                   (3,464)
            Accounts payable and accrued expenses                                    5,990                   (10,035)
            Income taxes                                                               298                     2,989
            Other                                                                     (678)                     (877)
                                                                              -------------             -------------

               Net cash (used) provided by operating activities                     (9,886)                   14,524
                                                                              -------------             -------------

Investing activities:
      Additions to property, plant and equipment                                   (35,822)                  (38,029)
      Disposals of property, plant and equipment                                     1,427                     1,371
      Acquisitions, net of cash acquired                                            (4,250)                   (8,394)
      (Purchase) sale of short-term investments                                       (443)                      112
                                                                              -------------             -------------

               Net cash used by investing activities                               (39,088)                  (44,940)
                                                                              -------------             -------------

Financing activities:
      Principal payments on current debt                                           (61,603)                   (7,475)
      Proceeds from borrowings of current debt                                     112,178                    20,886
      Principal payments on long-term debt                                            (838)                     (738)
      Proceeds from borrowings of long-term debt                                     4,807                       416
      Proceeds from stock option plans                                               1,769                       923
                                                                              -------------             -------------

               Net cash provided by financing activities                            56,313                    14,012
                                                                              -------------             -------------

Effect of exchange rate changes on cash                                                (64)                     (666)
                                                                              -------------             -------------

Net change in cash and cash equivalents                                              7,275                   (17,070)
Cash and cash equivalents at beginning of period                                    13,169                    28,770
                                                                              -------------             -------------

Cash and cash equivalents at end of period                                        $ 20,444                  $ 11,700
                                                                              =============             =============

The accompanying notes are an integral part of these financial statements.
</TABLE>
<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 as
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 September 30,
                                   ---------------------------------------------------------------------------------------------

                                                      2000                                            1999
                                   --------------------------------------------    ---------------------------------------------

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

Basic EPS
<S>                                    <C>              <C>             <C>            <C>              <C>              <C>
     Income available to
     common stockholders               $ 2,926          16,234          $ 0.18         $ 5,369          16,144           $ 0.33

     Effect of dilutive
     stock options                           -             285               -               -             229                -
                                   ------------    ------------    ------------    ------------    ------------   --------------


Diluted EPS                            $ 2,926          16,519          $ 0.18         $ 5,369          16,373           $ 0.33
                                   ============    ============    ============    ============    ============   ==============




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

                                                      2000                                            1999
                                   --------------------------------------------    ---------------------------------------------

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

Basic EPS
     Income available to
     common stockholders              $ 10,703          16,220          $ 0.66        $ 15,145          16,135           $ 0.94

     Effect of dilutive
     stock options                           -             231           (0.01)              -             148            (0.01)
                                   ------------    ------------    ------------    ------------    ------------   --------------

Diluted EPS                           $ 10,703          16,451          $ 0.65        $ 15,145          16,283           $ 0.93
                                   ============    ============    ============    ============    ============   ==============
</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 September
30, 2000 and 1999 were 731,750 and 725,750,  respectively. The number of options
that were antidilutive at the nine months ended September 30, 2000 and 1999 were
1,600,084 and 725,750, respectively.

<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
and nine-month periods ended September 30, 2000 and 1999.

<TABLE>
<CAPTION>
                                                          (Amounts in thousands)
                                          Three Months Ended                    Nine Months Ended
                                             September 30,                         September 30,
                                    -------------------------------       -------------------------------

                                        2000              1999                2000              1999
                                    -------------      ------------       -------------     -------------

<S>                                      <C>               <C>                 <C>               <C>
Net income                               $ 2,926           $ 5,369             $10,703           $15,145
Other comprehensive income,
     net of tax:
     Translation adjustments              (3,580)            1,674              (7,156)           (2,681)
                                    -------------      ------------       -------------     -------------

Comprehensive income                      $ (654)          $ 7,043             $ 3,547           $12,464
                                    =============      ============       =============     =============

</TABLE>

4.       Segment Disclosures

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 September 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).

<PAGE>
<TABLE>
<CAPTION>

                                          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)
<S>                                       <C>           <C>           <C>            <C>               <C>       <C>
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



                                          For the three months ended September 30, 1999
                                     -------------------------------------------------------------------------------------

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

(Amounts in thousands)
Revenue - unaffiliated
     customers                            $31,810       $21,144       $26,668        $ 7,049       $     -        $86,671
Inter-segment transfers                       803           204             -            570        (1,577)             -
Gross profit                                9,043         4,970        12,431          4,268             -         30,712



                                          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



                                          For the nine months ended September 30, 1999
                                     -------------------------------------------------------------------------------------

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

(Amounts in thousands)
Revenue - unaffiliated
     customers                            $96,989       $68,969       $72,199       $ 20,498       $     -       $258,655
Inter-segment transfers                     1,668           401             -          1,147        (3,216)             -
Gross profit                               27,771        17,109        32,828         11,837             -         89,545
</TABLE>

<PAGE>

5.       Accounting Pronouncements

In June 1999, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting  Standard  (SFAS) No. 137,  "Accounting  for Derivative
Instruments  and  Hedging  Activities-Deferral  of the  Effective  Date  of FASB
Statement No. 133." SFAS No. 137 amends SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which was issued in June 1998. SFAS No. 137
defers the effective  date of SFAS No. 133 to all fiscal years  beginning  after
June 15, 2000.  SFAS No. 133 requires  that all  derivatives  be  recognized  as
either assets or  liabilities  at estimated  fair value.  In June 2000, the FASB
issued SFAS 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 September  2000, the FASB issued SFAS No. 140,  "Accounting for Transfers and
Servicing of Financial Assets and  Extinguishments of Liabilities." SFAS No. 140
replaces  SFAS No. 125,  "Accounting  for  Transfers  and Servicing of Financial
Assets and  Extinguishments  of  Liabilities."  It  revises  the  standards  for
accounting  for  securitizations  and other  transfers of  financial  assets and
collateral and requires  certain  disclosures,  but it carries over most of SFAS
No. 125's provisions  without  reconsideration.  This Statement is effective for
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring   after  March  31,  2001  and  is  effective  for   recognition   and
reclassification  of collateral and for disclosures  relating to  securitization
transactions  and  collateral  for fiscal years ending after  December 15, 2000.
Disclosures about  securitization  and collateral  accepted need not be reported
for  periods  ending  on or  before  December  15,  2000,  for  which  financial
statements are presented for comparative purposes.  The adoption of SFAS No. 140
is not expected to have a material effect on the Company's financial position or
results of operations.

In March 2000,  the 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 was 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 December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements"
which among other guidance,  clarifies certain  conditions to be met in order to
recognize  revenue.  In June 2000, the SEC issued SAB 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 of operations.

<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, 2000 with the Three
-------------------------------------------------------------------------------
and Nine Months Ended September 30, 1999
----------------------------------------

Revenues for the third quarter of 2000  increased  44.1% to $124.9 million while
net income decreased 45.5% or $2.4 million, compared to the results of the third
quarter of 1999. Similarly, revenues for the nine-month period of 2000 increased
27.8% to $330.5  million while net income  decreased  $4.4 million or 29.3% from
the comparable  nine-month period in 1999. Gross profit was $33.9 million in the
third  quarter of 2000  compared to $30.7  million in the third quarter of 1999.
For the nine-month  period of 2000, gross profit was $97.2 million,  compared to
$89.5 million for the nine-month  period of 1999.  Gross profit increased in the
third quarter and nine-month  period for the Equipment  Business Group (EBG) and
Ultrapure  Water Group  (UWG).  The  Consumer  Water Group (CWG) and  Instrument
Business  Group  (IBG) had lower  gross  profit  in the  third  quarter  of 2000
compared  to the third  quarter of 1999,  although  both  Groups'  gross  profit
increased for the nine-month period of 2000 compared to the nine-month period of
1999.

Revenues  during 2000 were higher in all four  business  groups during the third
quarter  compared  to the  respective  period in 1999.  For the 2000  nine-month
period,  revenues were higher in all four business groups than in the comparable
1999 period.

Revenues of EBG  increased  51.5% or $16.4  million in the third quarter of 2000
compared to the third quarter of 1999.  EBG's revenues also  increased  36.0% or
$35.0 million in the 2000  nine-month  period from the 1999  nine-month  period.
These  increases  were  primarily  due  to  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.

UWG revenues  increased by $19.4  million,  or 91.7%,  in the third  quarter and
increased $25.9 million, or 37.5%, in the nine-month period of 2000, as compared
with the  respective  periods of 1999.  These  increases  were  primarily due to
higher sales to the microelectronics and power industries.

CWG revenues  increased by $1.7 million,  or 6.5%,  for the third quarter and by
$9.5  million,  or 13.2%,  for the nine month  period of 2000,  compared  to the
respective  third  quarter  and nine month  periods  of 1999.  The  increase  in
revenues  for the third  quarter  was due to growth  in both the  bottled  water
business,  particularly  in foreign  operations,  and the home  water  business,
primarily from independent  dealers.  For the nine-month period,  revenue growth
also was  attributable  to  growth  in both the  bottled  water  and home  water
businesses, particularly the foreign operations of both businesses.

IBG revenues  increased by 10.4%,  or $0.7 million,  in the third quarter and by
7.1%, or $1.5 million, in the nine-month period of 2000, as compared to the same
periods in 1999. These increases resulted primarily from increased sales volume,
predominantly to the microelectronics industry.
<PAGE>

For the Company, cost of sales as a percentage of revenues for the third quarter
was 72.8% in 2000 and 64.6% in 1999. For the nine-month period, cost of sales as
a percentage of revenues was 70.6% in 2000 and 65.4% in 1999.

Cost of sales as a percentage of revenues increased for all four business groups
for both the third quarter and the nine-month period of 2000, as compared to the
respective periods in 1999. The increases in this percentage for EBG reflected a
shift in the mix of business to lower margin  capital  equipment.  Additionally,
the  Company  incurred  losses in the third  quarter of 2000 on two  projects in
Australia and Malaysia.  These losses impacted EBG and UWG cost of sales amounts
for the third quarter and year-to-date  period of 2000. The increases in cost of
sales as a percentage of revenues for UWG also reflect the continued competitive
environment  in  the  microelectronics  industry  for  ultrapure  water  capital
equipment.  CWG's increases in cost of sales as a percentage of revenues reflect
an increase  in  distribution  expenses,  particularly  fuel and driver  (labor)
costs.  IBG had  increased  cost of  sales as a  percentage  of  revenue  due to
increased raw material costs.

Operating  expenses  as a  percentage  of  revenues  decreased  during the third
quarter  to  22.6%  in 2000  from  26.3% in  1999.  For the  nine-month  period,
operating  expenses as a percentage of revenues  decreased to 23.9% in 2000 from
26.0% 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.
However,  total spending  increased for the third quarter and for the nine-month
period  of  2000  primarily  due to  increased  legal  expenses  related  to the
Company's defense in a patent  infringement  lawsuit (which is expected to go to
trial in the fourth quarter of 2000) and to increased bad debt expense.

Interest  income of $0.3 million for the third  quarter of 2000  increased  from
$0.1 million for the third quarter in 1999.  Interest income of $0.9 million for
the  nine-month  period  of  2000  also  increased  from  $0.6  million  for the
nine-month period of 1999. Interest expense of $1.3 million and $3.2 million for
the third quarter and nine-month  period of 2000,  respectively,  increased from
$0.1 million and $0.4  million for the third  quarter and  nine-month  period of
1999, respectively. The increases in interest expense in 2000 reflect the higher
average borrowings of the Company in 2000.

Financial Condition
-------------------

Working  capital  decreased  $7.9  million  during the first nine months of 2000
while the Company's  current  ratio  decreased to 1.5 at September 30, 2000 from
2.0 at December 31, 1999. At September  30, 2000,  the Company had $20.4 million
in cash and cash  equivalents,  an increase of $7.3  million  from  December 31,
1999. Notes payable and the current portion of long-term debt increased by $51.5
million, and accounts receivable increased by $36.3 million.

Cash used by operating  activities totaled $9.9 million for the first nine-month
period  of 2000.  The  primary  uses of cash  for  investing  purposes  included
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 $56.3 million for the nine-month  period of 2000,  primarily from
short-term and long-term borrowings.
<PAGE>

At September 30, 2000,  the Company had incurred  approximately  $6.3 million in
costs related to a major seawater desalination project in Trinidad announced in
September 1999. Bridge financing  arrangements for the project were completed in
October 2000, and  consequently,  these costs will be treated as project charges
in the fourth quarter of 2000.

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 June 1999, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting  Standard  (SFAS) No. 137,  "Accounting  for Derivative
Instruments  and  Hedging  Activities-Deferral  of the  Effective  Date  of FASB
Statement No. 133." SFAS No. 137 amends SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which was issued in June 1998. SFAS No. 137
defers the effective  date of SFAS No. 133 to all fiscal years  beginning  after
June 15, 2000.  SFAS No. 133 requires  that all  derivatives  be  recognized  as
either assets or  liabilities  at estimated  fair value.  In June 2000, the FASB
issued SFAS 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 September  2000, the FASB issued SFAS No. 140,  "Accounting for Transfers and
Servicing of Financial Assets and  Extinguishments of Liabilities." SFAS No. 140
replaces  SFAS No. 125,  "Accounting  for  Transfers  and Servicing of Financial
Assets and  Extinguishments  of  Liabilities."  It  revises  the  standards  for
accounting  for  securitizations  and other  transfers of  financial  assets and
collateral and requires  certain  disclosures,  but it carries over most of SFAS
No. 125's provisions  without  reconsideration.  This Statement is effective for
transfers and servicing of financial assets and  extinguishments  of liabilities
occurring   after  March  31,  2001  and  is  effective  for   recognition   and
reclassification  of collateral and for disclosures  relating to  securitization
transactions  and  collateral  for fiscal years ending after  December 15, 2000.
Disclosures about  securitization  and collateral  accepted need not be reported
for  periods  ending  on or  before  December  15,  2000,  for  which  financial
statements are presented for comparative purposes.  The adoption of SFAS No. 140
is not expected to have a material effect on the Company's financial position or
results of operations.

In March 2000,  the 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 was 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 December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements"
which among other guidance,  clarifies certain  conditions to be met in order to
recognize  revenue.  In June 2000, the SEC issued SAB 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 of operations.
<PAGE>

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 continues 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.

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 from time to time in the Company's filings with
the Securities and Exchange Commission.


<PAGE>


                           PART II - OTHER INFORMATION

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

On October 26, 2000, the Company  announced that bridge  financing  arrangements
had  been  completed  for the  construction  of a 28.8  million  gallon  per day
desalination plant in Trinidad.

The plant will be owned by  Desalination  Company of  Trinidad  and Tobago  Ltd.
("Desalcott"),  a project  company  established  under the laws of Trinidad  and
Tobago. The Company has acquired a 40% equity interest in Desalcott, and a local
contracting firm, Hafeez Karamath Engineering Services Ltd. ("HKES") holds a 60%
equity interest in Desalcott. Desalcott has entered into a loan agreement with a
Trinidad  bank  providing  up to U.S.  $60  million in  construction  financing.
Desalcott has also received several proposals for long-term debt financing.

The Company,  through a local subsidiary,  has also entered into an engineering,
procurement and construction (EPC) agreement with Desalcott, under which it will
be  responsible  for  the  desalination  process  portion  of  the  desalination
facility,  and will subcontract  construction and civil work responsibilities to
local contractors.

The Company will include anticipated  revenues from this project in its bookings
for the fourth quarter of 2000 in accordance with its booking policies. Costs of
approximately  $6.3 million  previously  incurred by the Company related to the
project will be treated as project charges in the fourth quarter of 2000.

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

(a)    Reports on Form 8-K

       No  reports  on Form 8-K were  filed  with the  Securities  and  Exchange
       Commission during the quarter ended September 30, 2000.

       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.

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



Date:  November 14, 2000             By:  /s/Anthony DiPaola
       -----------------                  ------------------
                                          Anthony DiPaola
                                          Vice President and
                                          Corporate Controller
                                          (principal accounting officer)



<PAGE>


                                  EXHIBIT INDEX





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

27.0     Financial Data Schedule                         16
                                              (for electronic purposes only)