FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31,June 30, 1998
---------------------------------
Commission file number #0-10786
------------------------------------------
Insituform Technologies, Inc.
- ----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3032158
- ----------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
702 Spirit 40 Park Drive, Chesterfield, Missouri 63005
- ----------------------------------------------------------------
(Address of Principal Executive Offices)
(314) 530-8000
- ----------------------------------------------------------------
(Registrant's telephone number including area code)
- ----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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.
Class Outstanding at MayAugust 1, 1998
- -------------------------- ---------------------------------
Class A, Common Stock, 26,966,45127,030,255 Shares
$0.01 par value
INDEX
-----
Part I Financial Information:
Item 1. Financial Statements:
Consolidated Balance Sheets
3
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows
6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations
10
Part II Other Information and Signatures:
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of
Security Holders
Item 6. Exhibits and Reports on Form 8-K
15
Signatures 16
Index to Exhibits 17
PART I. - FINANCIAL INFORMATION
-------------------------------
ITEM 1. - FINANCIAL STATEMENTS
-------------------------------
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
Unaudited
March 31,June 30, 1998 December 31, 1997
-------------- -----------------
ASSETS
CURRENT ASSETS
--------------
Cash and cash equivalents $50,281$63,419 $45,734
Trade receivables, less allowance
for doubtful accounts of $2,645$2,501
and $2,587, respectively 46,83444,803 58,660
Costs and estimated earnings in excess
of billings 19,30820,091 15,551
Retainage under construction contracts 14,24712,808 14,480
Refundable income taxes 1,3271,046 2,517
Inventories 11,63511,910 12,214
Deferred income taxes 5,4795,581 5,439
Prepaid expenses and other 6,0876,240 6,678
-------- --------
TOTAL CURRENT ASSETS 155,198165,898 161,273
-------- --------
PROPERTY AND EQUIPMENT, less accumulated
depreciation 56,94258,014 57,983
-------- --------
OTHER ASSETS
- ------------
Goodwill, less accumulated amortization of
$13,225$13,895 and $12,483, respectively 54,75754,072 54,133
Patents and patent applications, less
accumulated amortization of $4,649$4,805 and
$4,496, respectively 11,66311,959 11,610
Investments in licensees and affiliated
companies 5,3465,370 5,499
Non-compete agreements, less accumulated
amortization of $4,521$4,759 and $4,282,
respectively 1,5051,266 1,744
Other 5,6854,532 5,610
-------- --------
TOTAL OTHER ASSETS 78,95677,199 78,596
-------- --------
TOTAL ASSETS $291,096$301,111 $297,852
======== ========
See accompanying summary of accounting policies and notes to consolidated
financial statements.
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
Unaudited
June 30, 1998 December 31, 1997
-------------- -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
-------------------
Notes payable to banks $1,465 $1,231
Accounts payable 40,052 41,698
Income taxes payable 1,215 3,172
Current maturities of long-term debt 1,138 889
-------- --------
TOTAL CURRENT LIABILITIES 43,870 46,990
LONG-TERM DEBT, less current maturities 111,015 111,440
DEFERRED INCOME TAXES 3,247 3,258
OTHER LIABILITIES 1,076 1,017
-------- --------
TOTAL LIABILITIES 159,208 162,705
-------- --------
MINORITY INTERESTS 3,165 3,645
-------- --------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock, undesignated, $.10 par -
shares authorized 2,000,000; none
outstanding 0 0
Common stock, $.01 par - shares authorized
40,000,000; shares outstanding 27,274,144
and 27,214,718 273 272
Additional paid-in capital 68,656 68,119
Retained earnings 75,924 68,468
-------- --------
144,853 136,859
Treasury stock, 255,801 shares (3,269) (3,269)
Cumulative foreign currency translation
adjustments (2,846) (2,088)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 138,738 131,502
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $301,111 $297,852
======== ========
See accompanying summary of accounting policies and notes to consolidated
financial statements.
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except share amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
---- ---- ---- ----
Rehabilitation revenues $75,501 $75,316 $139,261 $152,398
Cost of rehabilitation 51,067 53,425 92,933 109,486
------- ------- ------- -------
Gross profit 24,434 21,891 46,328 42,912
Operating costs and expenses:
- -----------------------------
Selling, administrative and
general 13,612 14,055 27,128 29,065
Strategic marketing and product
development 1,568 1,478 2,929 3,439
Unusual items 0 3,845 0 3,845
------- ------- ------- -------
Total operating costs and expenses 15,180 19,378 30,057 36,349
------- ------- ------- -------
Operating income 9,254 2,513 16,271 6,563
Other expense:
- --------------
Interest expense (2,243) (2,271) (4,556) (4,180)
Other income 769 375 1,310 647
------- ------- ------- -------
Total other expense (1,474) (1,896) (3,246) (3,533)
------- ------- ------- -------
Income before taxes on income 7,780 617 13,025 3,030
Taxes on income 3,088 315 5,169 1,305
------- ------- ------- -------
Income before minority interests and
equity in earnings 4,692 302 7,856 1,725
Minority interests in net income (173) (259) (250) (451)
Equity in earnings of affiliated
companies (110) 171 (151) 246
------- ------- ------- -------
Income before extraordinary item 4,409 214 7,455 1,520
Extraordinary item - loss on early
retirement of debt 0 0 0 (225)
------- ------- ------- -------
Net income $4,409 $214 $7,455 $1,295
======= ======= ======= =======
Basic and diluted earnings per share:
Income before extraordinary item $0.16 $0.01 $0.27 $0.06
Extraordinary loss, net of income
tax benefits 0 0 0 (0.01)
------- ------- ------- -------
Net income $0.16 $0.01 $0.27 $0.05
======= ======= ======= =======
Weighted average common shares 26,978 26,916 26,969 26,913
======= ======= ======= =======
Weighted average common and
equivalent shares 27,256 26,940 27,170 26,939
======= ======= ======= =======
See accompanying summary of accounting policies and notes to consolidated
financial statements.
/TABLE
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETSSTATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Unaudited
March 31,For the Six Months
Ended June 30,
1998 December 31, 1997
-------------- --------------------- ----
LIABILITIES AND STOCKHOLDERS' EQUITYCash flows from operating activities:
- ------------------------------------
CURRENT LIABILITIES
-------------------
Notes payable-------------------------------------
Net income $7,455 $1,295
Adjustments to banks $817 $1,231reconcile net income to cash used by
operating activities:
Depreciation and amortization 9,299 9,283
Miscellaneous (413) (997)
Equity in earnings of affiliated companies 151 (246)
Minority interests 250 451
Deferred income taxes (142) (119)
Changes in operating assets and liabilities:
Receivables 16,292 966
Costs in excess of billings under construction (4,540) (5,290)
Inventories 286 2,303
Prepaid expenses and miscellaneous 426 1,988
Miscellaneous other assets 832 (975)
Accounts payable 34,276 41,698and accruals (444) 740
Income taxes payable 1,673 3,172
Current maturities(3,352) (73)
------- ------
Net cash provided by operations 26,100 9,326
------- ------
Cash flows from investing activities:
- -------------------------------------
Capital expenditures (7,767) (7,797)
Proceeds on disposal of long-term debt 1,383 889
-------- --------
TOTAL CURRENT LIABILITIES 38,149 46,990
LONG-TERM DEBT, less current maturities 111,764 111,440
DEFERRED INCOME TAXES 3,244 3,258
OTHER LIABILITIES 1,026 1,017
-------- --------
TOTAL LIABILITIES 154,183 162,705
-------- --------
MINORITY INTERESTS 2,996 3,645
-------- --------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock, undesignated, $.10 par -
shares authorized 2,000,000; none
outstandingproperty and equipment 569 198
Investments in licensees/affiliated companies 16 0
0
Common stock, $.01 par - shares authorized
40,000,000; shares outstanding 27,219,252Patents and 27,214,718 272 272
Additional paid-in capital 68,152 68,119
Retained earnings 71,514 68,468
-------- --------
139,938 136,859
Treasury stock, 255,801 shares (3,269) (3,269)
Cumulative foreign currency translation
adjustments (2,752) (2,088)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 133,917 131,502
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $291,096 $297,852
======== ========patent applications (688) 1,154)
------- ------
Net cash used by investing activities (7,870) (8,753)
------- ------
(continued)
See accompanying summary of accounting policies and notes to consolidated
financial statements.
/TABLE
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOMECASH FLOWS
(Unaudited)
(in thousands, except share amounts)thousands)
For the ThreeSix Months
Ended March 31,June 30,
1998 1997
---- ----
Rehabilitation revenues $63,760 $77,082
CostCash flows from financing activities:
- -------------------------------------
Proceeds from issuance of rehabilitation 41,866 56,061
-------- --------
Gross profit 21,894 21,021
Operating costs and expenses:
- -----------------------------
Selling, administrative and general 13,516 15,010
Strategic marketing and product development 1,361 1,961
-------- --------
Total operating costs and expenses 14,877 16,971
Operating income 7,017 4,050
Other expense:
- --------------
Interest expense (2,313) (1,990)
Other income 541 353
-------- --------
Total other expense (1,772) (1,637)
-------- --------
Income before taxes on income 5,245 2,413
Taxes on income 2,081 990
-------- --------
Income before minority interests and
equitycommon stock 537 141
Increase in earnings 3,164 1,423short-term borrowings 237 65
Proceeds from issuance of long-term debt 0 110,025
Repayments of long-term debt (1,286) (84,922)
Minority interests 0 (75)
------- -------
Net cash provided (used) by financing activities (512) 25,234
------- -------
Effect of exchange rates changes on cash (33) (79)
------- -------
Net increase in net income (77) (192)
Equity in earningscash and cash equivalents for
the period 17,685 25,728
------- -------
Cash and cash equivalents, beginning of affiliated companies (41) 75
-------- --------period 45,734 13,476
------- -------
Cash and cash equivalents, end of period $63,419 $39,204
======= =======
Supplemental disclosures of cash flows information:
- ---------------------------------------------------
1998 1997
---- ----
Cash paid during six months ended June 30, for:
--------------------------------------------------
Interest $4,525 $1,267
Income before extraordinary item 3,046 1,306
Extraordinary item - loss on early retirement of debt 0 (225)
-------- --------
Net income $3,046 $1,081
======== ========
Basictaxes $5,295 $491
Non-cash investing and diluted earnings per share:
Income before extraordinary item $0.11 $0.05
Extraordinary loss, net of income tax benefits 0 (0.01)
-------- --------
Net income $0.11 $0.04
======== ========
Weighted average common shares 26,959 26,911
======== ========
Weighted average common and equivalent shares 27,016 26,938
======== ========financing activities:
--------------------------------------------
Deferred consideration for business acquired
(Note 3) $1,005 $0
See accompanying summary of accounting policies and notes to consolidated
financial statements.
/TABLE
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the Three Months
Ended March 31,
1998 1997
---- ----
Cash flows from operating activities:
- -------------------------------------
Net income $3,046 $1,081
Adjustments to reconcile net income to cash used by
operating activities:
Depreciation and amortization 4,585 4,673
Miscellaneous (452) (549)
Equity in earnings of affiliated companies 41 (75)
Minority interests 77 192
Deferred income taxes (41) 130
Changes in operating assets and liabilities:
Receivables 11,977 748
Costs in excess of billings under construction (3,757) (4,332)
Inventories 586 738
Prepaid expenses and miscellaneous 571 1,300
Miscellaneous other assets (240) (763)
Accounts payable and accruals (8,445) (509)
Income taxes payable (354) (1,275)
------- ------
Net cash provided by operations 7,594 1,359
------- ------
Cash flows from investing activities:
- -------------------------------------
Capital expenditures (3,229) (4,086)
Proceeds on disposal of property and equipment 968 64
Investments in licensees/affiliated companies 0 0
Patents and patent applications (156) (342)
------- ------
Net cash used by investing activities (2,417) (4,364)
------- ------
(continued)
See accompanying summary of accounting policies and notes to consolidated
financial statements.
/TABLEINSITUFORM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1998
1. GENERAL
In the opinion of the Company, the accompanying consolidated
financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present
fairly the financial position as of June 30, 1998
(unaudited) and the unaudited results of operations and cash
flows for the six months ended June 30, 1998 and 1997. The
financial statements have been prepared in accordance with
the requirements of Form 10-Q and consequently do not
include all the disclosures normally made in an Annual
Report on Form 10-K. Accordingly, the consolidated
financial statements included herein should be reviewed in
conjunction with the financial statements and the footnotes
thereto included in the Company's 1997 Annual Report on Form
10-K.
The results of operations for the six months ended June 30,
1998 and 1997 are not necessarily indicative of the results
to be expected for the full year.
2. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board
issued SFAS No. 130, "Reporting Comprehensive Income" which
establishes for reporting and disclosure of comprehensive
income and its components. Effective January 1, 1998, the
Company adopted SFAS No. 130. For the quarters ended June
30, 1998 and 1997, comprehensive income was $4,315 and $34,
respectively. For the six months ended June 30, 1998 and
1997, comprehensive income was $6,697 and $585,
respectively. The Company's adjustment to comprehensive
income consists solely of cumulative foreign currency
translation adjustments.
3. CURRENT EVENTS
In March 1998, the Company concluded the acquisition of the
entire minority interest in its Chilean subsidiary for an
aggregate purchase price of approximately $2.1 million, $1.0
million of which was paid in connection with closing, $0.6
million of which is due at the first anniversary of closing,
and the remainder of which is due on the second anniversary
of closing.
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the Three Months
Ended March 31,
1998 1997
---- ----
Cash flows from financing activities:
- -------------------------------------
Proceeds from issuance of common stock 33 141
Increase (decrease) in short-term borrowings (403) 1,199
Proceeds from issuance of long-term debt 0 110,069
Repayments of long-term debt (295) (84,695)
Minority interests 0 (75)
-------- --------
Net cash provided (used) by financing activities (665) 26,639
-------- --------
Effect of exchange rates changes on cash 35 (139)
-------- --------
Net increase in cash and cash equivalents for
the period 4,547 23,495
-------- --------
Cash and cash equivalents, beginning of period 45,734 13,476
-------- --------
Cash and cash equivalents, end of period $50,281 $36,971
======= ========
Supplemental disclosures of cash flows information:
- ---------------------------------------------------
1998 1997
---- ----
Cash paid during three months ended March 31, for:
--------------------------------------------------
Interest $4,469 $1,236
Income taxes $2,268 $2,087
Non-cash investing and financing activities:
--------------------------------------------
Deferred consideration for business acquired
(Note 3) $1,005 $0
See accompanying summary of accounting policies and notes to consolidated
financial statements.
/TABLE
INSITUFORM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1998
1. GENERAL
In the opinion of the Company, the accompanying consolidated
financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present
fairly the financial position as of March 31, 1998
(unaudited) and the unaudited results of operations and cash
flows for the three months ended March 31, 1998 and 1997.
The financial statements have been prepared in accordance
with the requirements of Form 10-Q and consequently do not
include all the disclosures normally made in an Annual
Report on Form 10-K. Accordingly, the consolidated
financial statements included herein should be reviewed in
conjunction with the financial statements and the footnotes
thereto included in the Company's 1997 Annual Report on Form
10-K.
The results of operations for the three months ended March
31, 1998 and 1997 are not necessarily indicative of the
results to be expected for the full year.
2. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board
issued SFAS No. 130, "Reporting Comprehensive Income" which
establishes for reporting and disclosure of comprehensive
income and its components. Effective January 1, 1998, the
Company adopted SFAS No. 130. For the periods ended March
31, 1998 and 1997, comprehensive income was $2,380 and $551,
respectively. The Company's other comprehensive income
consists solely of cumulative foreign currency translation
adjustments.
3. CURRENT EVENTS
In March 1998, the Company definitively concluded the
acquisition of the entire minority interest in its Chilean
subsidiary for an aggregate purchase price of approximately
$2.1 million, $1.0 million of which was paid in connection
with closing, $0.6 million of which is due at the first
anniversary of closing, and the remainder of which is due on
the second anniversary of closing. The acquisition awaits
customary treasury approval for funds to be transferred.
4. LITIGATION
The Company is involved in certain litigation incidental to
the conduct of its business. In the Company's opinion, none
of these proceedings will have a material adverse effect on
the Company's financial position, results of operations and
liquidity. The financial statements include the estimated
amounts of liabilities that are likely to be incurred from
these and various other pending litigation and claims.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
----------------------------------------------
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
condition and results of operations during the periods included
in the accompanying consolidated financial statements.
GENERAL
- -------
The Company's rehabilitation revenues derive primarily from
direct installation and other contracting activities, generated
by the Company's subsidiaries operating in the United States,
Canada, France, the United Kingdom, Chile, Argentina and Mexico,
and include product sales to, and royalties and license fees
paid by, the Company's 35 unaffiliated Insituform licensees and
sub-licensees and its seven unaffiliated NuPipe(R) licensees.
During the three years ended December 31, 1997, 1996 and 1995,
approximately 62.5%, 69.7% and 71.2%, respectively, of the
Company's consolidated revenues related to the Insituform(R)
process.
Fluctuations in the exchange rates between the United States
dollar and the currencies of other countries in which the
Company operates or has licensees may have an impact on the
Company's consolidated results during the relevant reporting
period. The Company intends to manage any such foreign currency
exposure in the context of discrete commercial transactions and,
when appropriate, to offset such exposure in whole or in part by
entering into foreign currency forward contracts, in order to
reduce the impact of such fluctuations on results of operations.
The Company does not anticipate that the circumstances in which
such hedging activity would be appropriate will have a material
effect on the Company's liquidity.
Statements contained in and preceding management's discussion
and analysis include various forward-looking information that is
based on data currently available to management and management's
beliefs and assumptions. When used in this report, the words
"anticipate," "estimate," "believes," "plans," and similar
expressions are intended to identify forward-looking statements,
but are not the exclusive means of identifying such statements.
Such statements are subject to risks and uncertainties, and the
Company's actual results may vary materially from those
anticipated, estimated or projected due to a number of factors,
including, without limitation, the competitive environment for
the Company's products and services, the geographical
distribution and mix of the Company's work, and other factors
set forth in reports and other documents filed by the Company
with the Securities and Exchange Commission from time to time.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At March 31, 1998, the Company had $50.3 million in cash, U.S.
Treasury bills, and short-term investments, as compared to $45.7
million at December 31, 1997. Cash and cash equivalents
increased $4.6 million primarily as a result of cash generated
from operations of $7.6 million offset somewhat by capital
expenditures of $3.2 million. The Company's working capital
ratio was 4.1-to-1.0 at March 31, 1998, representing an increase
from 3.4-to-1.0 at December 31, 1997.
Operations provided cash of $7.6 million in 1997, as compared to
$1.4 million in the first quarter of 1997. The principal reason
for the favorable increase was a decrease in trade receivables
of $11.8 million, offset by a decrease in accounts payable and
accruals of $7.4 million. In addition, net income increased
182% to $3.0 million from $1.1 million in the first quarter of
1997.
Trade receivables, together with costs and estimated earnings in
excess of billings and retainage under construction contracts,
decreased 4.8% to $80.4 million from $88.7 million at December
1997. This decrease was primarily attributable to strong
collections, along with a decrease in revenue volume in the
first quarter of 1998. The collection cycle for construction
receivables is generally longer than for the Company's
manufacturing and royalty operations due to provisions for
retainage, often 5% to 15% of the contract amount, as well as
the slow internal review processes often employed by the
construction operation's municipal customers. In the United
States, retainage receivables are generally received within 60
to 90 days after the completion of a contract.
Capital expenditures were $3.2 million in the first quarter of
1998, as compared to $4.1 million in the first quarter of 1997.
Capital expenditures generally reflect replacement equipment
required by the Company's contracting divisions. In addition,
the Company anticipates expenditures of approximately $1.9
million later in 1998 in order to acquire additional tunneling
equipment. In March 1998, the Company completed construction of
its new research and development facility entailing a total cost
of construction of approximately $2.9 million, of which $0.5
million was incurred during the first quarter of 1998.
The Company has several information system improvement
initiatives underway that will require increased expenditures
during the next several years. These initiatives, which began
principally in 1997, include an improved data collection system
from our field contracting units, and continual accounting
system upgrades and modifications. The Company has assessed and
continues to assess the impact of the Year 2000 issues on its
operations. Management believes that all system modifications
necessary will be completed well before the year 2000, and
spending on modifications will not have a significant impact on
the Company's operations.
Financing activities used $0.7 million in the first quarter of
1998, as compared to cash provided of $26.6 million in cash in
the first quarterIn July 1998, the Company announced that its Board of
Directors had authorized the repurchase of up to 2,700,000
shares of the Company's class A common stock, $.01 par
value, to be made from time to time over the next five years
in open market transactions.
4. LITIGATION
The Company is involved in certain litigation incidental to
the conduct of its business. In the Company's opinion, none
of these proceedings will have a material adverse effect on
the Company's financial position, results of operations and
liquidity. The financial statements include the estimated
amounts of liabilities that are likely to be incurred from
these and various other pending litigation and claims.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
----------------------------------------------
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
condition and results of operations during the periods included
in the accompanying consolidated financial statements.
GENERAL
- -------
The Company's rehabilitation revenues derive primarily from
direct installation and other contracting activities, generated
by the Company's subsidiaries operating in the United States,
Canada, France, the United Kingdom, Chile, Argentina and Mexico,
and include product sales to, and royalties and license fees
paid by, the Company's 35 unaffiliated Insituform licensees and
sub-licensees and its seven unaffiliated NuPipe(R) licensees.
During the three years ended December 31, 1997, 1996 and 1995,
approximately 62.5%, 69.7% and 71.2%, respectively, of the
Company's consolidated revenues related to the Insituform(R)
process.
Fluctuations in the exchange rates between the United States
dollar and the currencies of other countries in which the
Company operates or has licensees may have an impact on the
Company's consolidated results during the relevant reporting
period. The Company intends to manage any such foreign currency
exposure in the context of discrete commercial transactions and,
when appropriate, to offset such exposure in whole or in part by
entering into foreign currency forward contracts, in order to
reduce the impact of such fluctuations on results of operations.
The Company does not anticipate that the circumstances in which
such hedging activity would be appropriate will have a material
effect on the Company's liquidity.
Statements contained in and preceding management's discussion
and analysis include various forward-looking information that is
based on data currently available to management and management's
beliefs and assumptions. When used in this report, the words
"anticipate," "estimate," "believes," "plans," and similar
expressions are intended to identify forward-looking statements,
but are not the exclusive means of identifying such statements.
Such statements are subject to risks and uncertainties, and the
Company's actual results may vary materially from those
anticipated, estimated or projected due to a number of factors,
including, without limitation, the competitive environment for
the Company's products and services, the geographical
distribution and mix of the Company's work, and other factors
set forth in reports and other documents filed by the Company
with the Securities and Exchange Commission from time to time.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At June 30, 1998, the Company had $63.4 million in cash, U.S.
Treasury bills, and short-term investments, as compared to $45.7
million at December 31, 1997. Cash and cash equivalents
increased $17.7 million primarily as a result of cash generated
from operations of $26.1 million offset somewhat by capital
expenditures of $7.8 million. The Company's working capital
ratio was 3.8-to-1.0 at June 30, 1998, representing an increase
from 3.4-to-1.0 at December 31, 1997.
Operations provided cash of $26.1 million in 1998, as compared
to $9.3 million in the first half of 1997. The principal reason
for the favorable increase was a decrease in trade receivables
of $16.3 million, offset by a decrease in income taxes payable
of $3.4 million. In addition, net income increased to $7.5
million from $1.3 million in the first half of 1997.
Trade receivables, together with costs and estimated earnings in
excess of billings and retainage under construction contracts,
decreased 12.4% to $77.7 million from $88.7 million at December
1997. This decrease was primarily attributable to strong
collections, along with a decrease in revenue volume in the
first half of 1998. The collection cycle for construction
receivables is generally longer than for the Company's
manufacturing and royalty operations due to provisions for
retainage, often 5% to 15% of the contract amount, as well as
the slow internal review processes often employed by the
construction subsidiaries' municipal customers. In the United
States, retainage receivables are generally received within 60
to 90 days after the completion of a contract.
Capital expenditures were $7.8 million in each of the first half
of 1998 and of 1997. Capital expenditures generally reflect
replacement equipment required by the Company's contracting
divisions. The Company anticipates expenditures of approximately
$2.5 million in connection with the installation of an
electronic data collection system in each of the Company's North
American rehabilitation operations during the course of 1998, of
which $1.1 million was spent as of June 30, 1998. In addition,
the Company anticipates expenditures of approximately $1.9
million later in 1998 in order to acquire additional tunneling
equipment. In March 1998, the Company completed construction of
its new research and development facility entailing a total cost
of construction of approximately $2.9 million, of which $0.5
million was spent in the first half of 1998.
The Company has several information system improvement
initiatives underway that will require increased expenditures
during the next several years. These initiatives, which began
principally in 1997, include the aforementioned data collection
system from our field contracting units, and continual
accounting system upgrades and modifications. The Company has
assessed and continues to assess the impact of the Year 2000
issues on its operations. Management believes that all system
modifications necessary will be completed well before the year
2000, and spending on modifications will not have a significant
impact on the Company's operations.
Financing activities used $0.5 million in the first half of
1998, as compared to cash provided of $25.2 million in the first
half of 1997. In February 1997, the Company completed the sale,
in a private transaction, of $110 million principal amount of
its 7.88% Senior Notes Series A, due February 14, 2007 (the "Senior Notes") approximately $85 million
of which was applied at closing to the refinancing of
outstanding indebtedness of the Company. In 1998, the Company
made principal payments totaling $0.3 million relating to the
Company's existing debt.
The Senior Notes bear interest, payable semi-annually in August
and February of each year, at the rate per annum of 7.88%. Each
year, from February 2001 to February 2006, inclusive, the
Company will be required to make principal payments of $15.7
million, together with an equivalent payment at maturity. The
Senior Notes may be prepaid at the Company's option, in whole or
in part, at any time, together with a make whole premium, and
upon specified change in control events each holder has the
right to require the Company to purchase its Senior Note without
any premium thereon. To the extent not utilized to refinance
indebtedness, proceeds of the sale of the Senior Notes are
available for general corporate purposes, including possible
acquisitions of products, technologies and businesses and
repurchases of Common Stock. The Company has not reached any
determination with respect to any such transaction, and there
can be no assurance that any such transaction will be
undertaken.
In August 1997, the Company entered into a credit agreement (the
"Credit Agreement"), whereby the lender will make available to
the Company, until September 1, 2000 (the "Maturity Date"), a
revolving credit line of up to $20,000,000 aggregate principal
amount for working capital and permitted acquisitions, including
$5,000,000 available for standby and commercial letters of
credit. Interest on outstanding advances accrues, at the
election of the Company, at either the lender's prime rate,
payable monthly, or its LIBOR rate, plus a margin ranging from
.5% to 1.5% depending on the maintenance of certain financial
ratios, payable at the end of selected interest periods (from
one to six months). Outstanding principal is subject to
repayment on the Maturity Date, except that advances for
permitted acquisitions must be repaid within six months after
disbursement.
The note purchase agreements pursuant to which the Senior Notes
were acquired, and the Credit Agreement, obligate the Company to
comply with certain financial ratios and restrictive covenants
that, among other things, place limitations on operations and
sales of assets by the Company or its subsidiaries, and limit
the ability of the Company to incur further secured indebtedness
and liens and of subsidiaries to incur indebtedness, and, in the
event of default, limit the ability of the Company to pay cash
dividends or make other distributions to the holders of its
capital stock or to redeem such stock. The Credit Agreement
also obligates certain of the Company's domestic subsidiaries to
guaranty the Company's obligations, as a result of which the
same subsidiaries have also delivered their guaranty with
respect to the Senior Notes.
In March 1998, the Company definitively completed the
acquisition of the entire minority interest (40%) in its Chilean
subsidiary for an aggregate purchase price of approximately $2.1
million, $1.0 million of which was paid in connection with
closing, $0.6 million of which is due at the first anniversary
of closing, and the remainder of which is due on the second
anniversary of closing. The acquisition awaits customary
treasury approval for funds to be transferred.
Management believes its current working capital will be adequate
to meet its requirements for the foreseeable future.
RESULTS OF OPERATIONS
- ---------------------
Three Months Ended March 31, 1998 Compared to Three Months Ended
March 31, 1997
Total rehabilitation revenues decreased 17.2% to $63.8 million
from $77.1 million in 1997. The primary reason for the decrease
was decreased volume from the Company's corrosion and abrasion
operations in the United States and Latin America. This
decrease was coupled with lower volume from the Company's North
American pipeline rehabilitation operations, primarily due to
the elimination of non-core projects, such as cleaning and
inspection. In addition, there was a decrease in volume from
the Company's pipeline rehabilitation operations in the United
Kingdom, as a result of lower workable backlog caused by a shift
in the release of project work into the second quarter. As a
result of the composition of the management committee of
Midsouth Partners, the Company began accounting for its
investment therein on an equity basis beginning in April 1997,
which resulted in revenue of $0.1 million in 1998, compared to
$1.9 million in first quarter 1997 during which Midsouth's
results were consolidated with the Company.
The Company's gross profit from rehabilitation increased 4.2% to
$21.9 million from $21.0 million in 1997. The overall gross
profit margin achieved in 1998 was 34.3% compared to 27.2% in
1997. This increase was primarily due to improvements made in
productivity and efficiency in the Company's pipeline
rehabilitation operations. Much of this improvement came as a
result of extensive reorganization during 1997, where management
rationalized field crews and equipment throughout the Company's
operations. In addition, in 1998, projects with more favorable
margins were undertaken, while lower margin non-core projects,
such as cleaning and inspection, were eliminated and pricing on
core pipeline rehabilitation projects improved.
Selling, administrative and general expenses decreased 10.0% to
$13.5 million from $15.0 million in 1997. This decrease was due
to cost savings gained from the reorganization of the Company's
pipeline rehabilitation operations through elimination of
positions, facilities, and realignment of responsibilities,
along with the consolidation of the Company's headquarters in
Chesterfield, Missouri. As a percentage of revenues, selling,
administrative and general expenses increased to 21.1% from
19.5% in 1997. This increase was primarily attributable to
lower revenue volume in 1998.
Strategic marketing and product development costs decreased
30.0% to $1.4 million from $2.0 million in 1997. This decrease
was primarily attributable to controlled spending in marketing
and research projects, along with decreased personnel in
engineering.
Interest expense increased 15.0% to $2.3 million from $2.0
million in 1997, due primarily to the effect of a full quarter
in 1998 of increased borrowings resulting from the senior note
financing completed in February 1997.
Taxes on income increased 110.0% to $2.1 million from $1.0
million in 1997 due principally to the increase in income before
taxes on income of $2.8 million from 1997.
In February 1997, as a result of the closing of the Company's
senior note financing, certain previous debt facilities were
retired. Costs of $0.4 million ($0.2 million after-tax
benefits) associated with these debt facilities which were
capitalized, such as commitment fees and legal costs, were
written off. This expense was classified as extraordinary in
the Company's results of operations for first quarter of 1997.
As a result of the foregoing, net income for the first quarter
of 1998 was $3.0 million, or representing a 4.7% return on
revenue, compared to $1.1 million in the first quarter of 1997,
which a 1.4% return on revenue was achieved.
PART II. - OTHER INFORMATION
----------------------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) No exhibits are filed as part of this Quarterly
Report on Form 10-Q.
(b) During the quarter ended March 31, 1998, the
Company did not file a Current Report on Form 8-K.
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.
INSITUFORM TECHNOLOGIES, INC.
May 14, 2007 (the
"Senior Notes"), approximately $85 million of which was applied
at closing to the refinancing of outstanding indebtedness of the
Company. In 1998, the Company made principal payments totaling
$1.3 million relating to the Company's existing debt.
The Senior Notes bear interest, payable semi-annually in August
and February of each year, at the rate per annum of 7.88%. Each
year, from February 2001 to February 2006, inclusive, the
Company will be required to make principal payments of $15.7
million, together with an equivalent payment at maturity. The
Senior Notes may be prepaid at the Company's option, in whole or
in part, at any time, together with a make whole premium, and
upon specified change in control events each holder has the
right to require the Company to purchase its Senior Note without
any premium thereon. To the extent not utilized to refinance
indebtedness, proceeds of the sale of the Senior Notes are
available for general corporate purposes, including possible
acquisitions of products, technologies and businesses and
repurchases of Common Stock. The Company has not reached any
determination with respect to any such transaction, and there
can be no assurance that any such transaction will be
undertaken.
In August 1997, the Company entered into a credit agreement (the
"Credit Agreement"), whereby the lender will make available to
the Company, until September 1, 2000 (the "Maturity Date"), a
revolving credit line of up to $20,000,000 aggregate principal
amount for working capital and permitted acquisitions, including
$5,000,000 available for standby and commercial letters of
credit. Interest on outstanding advances accrues, at the
election of the Company, at either the lender's prime rate,
payable monthly, or its LIBOR rate, plus a margin ranging from
.5% to 1.5% depending on the maintenance of certain financial
ratios, payable at the end of selected interest periods (from
one to six months). Outstanding principal is subject to
repayment on the Maturity Date, except that advances for
permitted acquisitions must be repaid within six months after
disbursement.
The note purchase agreements pursuant to which the Senior Notes
were acquired, and the Credit Agreement, obligate the Company to
comply with certain financial ratios and restrictive covenants
that, among other things, place limitations on operations and
sales of assets by the Company or its subsidiaries, and limit
the ability of the Company to incur further secured indebtedness
and liens and of subsidiaries to incur indebtedness, and, in the
event of default, limit the ability of the Company to pay cash
dividends or make other distributions to the holders of its
capital stock or to redeem such stock. The Credit Agreement
also obligates certain of the Company's domestic subsidiaries to
guaranty the Company's obligations, as a result of which the
same subsidiaries have also delivered their guaranty with
respect to the Senior Notes.
In March 1998, the Company completed the acquisition of the
entire minority interest (40%) in its Chilean subsidiary for an
aggregate purchase price of approximately $2.1 million, $1.0
million of which was paid in connection with closing, $0.6
million of which is due at the first anniversary of closing, and
the remainder of which is due on the second anniversary of
closing.
In July 1998, the Company announced that its Board of Directors
had authorized the repurchase of up to 2,700,000 shares of the
Company's class A common stock, $.01 par value ("Common Stock"),
to be made from time to time over the next five years in open
market transactions. The amount and timing of purchases will be
dependent upon a number of factors, including the price and
availability of the Company's shares, general market conditions
and competing alternative uses of funds, and may be discontinued
at any time. The repurchased shares will be held as treasury
stock.
Management believes its current working capital will be adequate
to meet its requirements for the foreseeable future.
RESULTS OF OPERATIONS
- ---------------------
Three and Six Months Ended June 30, 1998 and 1997
Total rehabilitation revenues for the second quarter increased
0.3% to $75.5 million from $75.3 million in 1997, while revenues
for the first half of 1998 decreased 8.6% to $139.3 million from
$152.4 million in the prior year. The primary reason for the
decrease for the first half was decreased volume from the
Company's corrosion and abrasion operations in the United States
and Latin America. This decrease was coupled with lower volume
from the Company's North American pipeline rehabilitation
operations, primarily due to the elimination of non-core
projects, such as cleaning and inspection. In addition, there
was a decrease in volume from the Company's pipeline
rehabilitation operations in the United Kingdom, as a result of
lower workable backlog during the first quarter of 1998, caused
by a shift in the release of project work into the second
quarter. As a result of the management committee composition of
Midsouth Partners, the Company began accounting for its
investment therein on an equity basis beginning in April 1997,
which resulted in revenue of $0.2 million in 1998, compared to
$2.0 million in 1997 during which Midsouth's results were
consolidated with the Company.
The Company's gross profit from rehabilitation during the second
quarter increased 11.4% to $24.4 million from $21.9 million in
the comparable period in 1997, while for the first half of 1998,
gross profit increased 7.9% to $46.3 million from $42.9 million
in 1997. The overall gross profit margin achieved in the second
quarter of 1998 was 32.4% versus 29.1% in the second quarter of
1997, while for the first half of 1998, the gross profit margin
was 33.3%, compared to 28.2% in 1997. This increase was
primarily due to improvements made in productivity and
efficiency in the Company's pipeline rehabilitation operations.
Much of this improvement came as a result of extensive
reorganization during 1997, where management rationalized field
crews and equipment throughout the organization. In addition,
in 1998, more projects with favorable margins were undertaken,
as a result of the elimination of lower margin non-core
projects, such as cleaning and inspection, along with improved
pricing on core pipeline rehabilitation projects.
For the second quarter, selling, administrative and general
expenses decreased 3.5% to $13.6 million from $14.1 million in
1997, while for the first half of 1998, selling, administrative
and general expenses decreased 6.9% to $27.1 million from $29.1
million in the first half of 1997. This decrease was due to
cost savings gained from the reorganization of the Company's
pipeline rehabilitation operations through elimination of
positions, facilities, and realignment of responsibilities,
along with the consolidation of the Company's headquarters in
Chesterfield, Missouri. As a percentage of revenues, selling,
administrative and general expenses decreased in the second
quarter to 18.0% from 18.7% in 1997, due primarily to the
foregoing reasons. For the first half of 1998, selling,
administrative and general expenses as a percentage of revenues
increased to 19.5% from 19.1%, which was primarily attributable
to lower revenue volume in 1998, offset somewhat as a result of
the foregoing reasons.
For the second quarter, strategic marketing and product
development costs increased 6.7% to $1.6 million from $1.5
million in 1997. This increase was primarily attributable to
stepped-up research and development efforts in the second
quarter of 1998. For the first half, strategic marketing and
product development costs decreased 14.7% to $2.9 million from
$3.4 million in the first half of 1997. This decrease was
primarily attributable to controlled spending in marketing,
along with decreased personnel in engineering, offset somewhat
from increased research and development costs.
During the second quarter of 1997, the Company recorded in
operating expense an unusual item of $3.2 million for employee
severance and moving employees and offices related to the
restructuring of its corporate headquarters and related
facilities, which did not recur in the current year. In
addition, the Company accrued $0.6 million (prior to any effect
of taxes) in the second quarter of 1997, with respect to
non-recurring expenses attendant to activities leading to the
settlement agreement entered into in July 1997 with a group,
including two directors of the Company, who had stated their
intention to propose a slate of individuals to run for election
to the Board of Directors of the Company in opposition to the
slate proposed by the Company.
During the second quarter, interest expense decreased 4.3% to
$2.2 million from $2.3 million in 1997, due primarily to
somewhat lower debt outstanding in 1998 resulting from scheduled
repayments of long-term debt. For the first half of 1998,
interest expense increased 9.5% to $4.6 million from $4.2
million due primarily to the effect of borrowings resulting from
the Senior Note financing completed in February 1997.
In the second quarter of 1998, taxes on income increased to $3.1
million from $0.3 million in 1997 due principally to the
increase in income before taxes on income of $7.2 million from
the second quarter of 1997. In the first half of 1998, taxes on
income increased 296.1% to $5.2 million from $1.3 million due
principally to the increase in income before taxes on income of
$10.0 million from the first half of 1997.
In February 1997, as a result of the closing of the Senior Note
financing, certain previous debt facilities were retired. Costs
of $0.4 million ($0.2 million after-tax benefits) associated
with these debt facilities which were capitalized, such as
commitment fees and legal costs, were written off. This expense
was classified as extraordinary in the Company's results of
operations for the first quarter of 1997.
As a result of the foregoing, net income for the second quarter
of 1998 was $4.4 million, representing a 5.8% return on revenue,
compared to $0.2 million in the second quarter of 1997, when
0.3% return on revenue was achieved. Net income for the first
half of 1998 was $7.5 million, or a 5.4% return on revenue,
compared to $1.3 million in the first half of 1997, when a 0.8%
return was achieved.
PART II. - OTHER INFORMATION
----------------------------
Item 1. Legal Proceedings
-----------------
Additional Texas Proceeding. In response to pleadings
filed by the Company in the previously reported suit brought
against it in the United States District Court for the Southern
District of Texas, Houston Division, captioned Inliner U.S.A.
and Cat Contracting, Inc., v. Insituform Technologies, Inc. and
Insituform East, Inc. (Civil Action No. H96-3627), the court has
dismissed, under the doctrine of res adjudicata, plaintiff's
allegation that the Company had commenced certain patent
infringement proceedings with knowledge that the subject patent
was invalid. The court also dismissed certain other claims of
plaintiffs and held that plaintiffs had failed to plead a case
with respect to the balance of its allegations. Following the
court's acceptance of plaintiffs' third amended complaint on
June 19, 1998, a joint notice of dismissal executed by all
parties was filed on June 22, 1998 and, on June 23, 1998, the
court issued its order of dismissal. Plaintiffs thereafter
filed a motion to withdraw the voluntary dismissal motion, which
the court rejected on July 3, 1998.
In the interim, on June 30, 1998 plaintiffs refiled,
as a new suit, its third amended complaint, including Insituform
Gulf South, Inc., a subsidiary of the Company, as a defendant in
addition to the original defendants (Inliner U.S.A. and CAT
Contracting, Inc., vs. Insituform Technologies, Inc., Insituform
Gulf South, Inc. and Insituform East, Inc. [Civil Action
H-98-20651] in the United States District Court for the Southern
District of Texas, Houston Division). Plaintiffs repeat their
previous allegations that defendants conspired to exercise
monopoly power under Sections 1 and 2 of the Sherman Act and/or
acted in concert to restrain trade in an unlawful manner under
Sections 1 and 2 of the Sherman Act, that defendants have
engaged in a pattern of discriminatory pricing and subsidization
specifically designed to eliminate a competitor and/or lessen
competition in violation of Section 2 of the Clayton Act, that
defendants have made false and misleading statements about the
plaintiffs and its products in violation of Section 43(a) of the
Lanham Act, and that defendants have engaged in tortious
interference with plaintiffs' business and relationships with
its licensees so as to constitute business disparagement. The
Company intends vigorously to continue to contest plaintiffs'
claims. No discovery in any of these matters has yet taken
place.
Western Slopes Utilities. On July 7, 1998 the
proceedings previously reported by the Company captioned Western
Slopes Utilities, Inc. v. Insituform Technologies, Inc. and
Insituform Netherlands B.V. [Civil Action No. 96-N-2394]) were
voluntarily dismissed, without prejudice, by the parties, after
the court dismissed plaintiff's claims that the Company's serial
vacuum impregnation patent was invalid along with plaintiff's
request for injunctive relief from patent infringement claims by
the Company.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) On June 10, 1998, the Company convened its Annual
Meeting of Stockholders (the "Annual Meeting").
(b) Not applicable because (i) proxies for the Annual
Meeting were solicited pursuant to Regulation 14A under the
Securities Exchange Act of 1934 together with the Company's
Proxy Statement dated May 4, 1998 (the "Proxy Statement"); (ii)
there was no solicitation in opposition to management's nominees
as listed in the Proxy Statement; and (iii) all of such nominees
were elected.
(c) At the Annual Meeting, the stockholders voted in
favor of a proposal to approve and adopt an amendment to the
Company's 1992 Employee Stock Option Plan to increase the number
of shares of the Company's Common Stock, issuable pursuant to
the exercise of options from 1,000,000 shares to 1,850,000
shares. The holders of 18,191,725 shares voted in favor of, the
holders of 898,786 voted against, the holders of 872,447 shares
abstained and there were 3,331,725 broker non-votes with respect
to approval and adoption of such proposal.
At the Annual Meeting, the stockholders voted in favor
of a proposal to approve and adopt an amendment to the Company's
1992 Director Stock Option Plan to increase the number of shares
of Common Stock issuable pursuant to the exercise of options
from 500,000 shares to 1,000,000 shares. The holders of
18,094,704 shares voted in favor of, the holders of 990,993
shares voted against, the holders of 877,261 shares abstained
and there were 3,331,725 broker non-votes with respect to
approval and adoption of such proposal.
At the Annual Meeting, the stockholders voted in favor
of management's nominees for election as directors of the
Company. The holders of 22,991,511 shares voted in favor of,
and holders of 303,172 shares withheld their vote for, the
election of Robert W. Affholder; the holders of 23,001,434
shares voted in favor of, and holders of 293,249 shares withheld
their vote for, the election of Paul A. Biddelman; the holders
of 23,000,929 shares voted in favor of, and holders of 293,754
shares withheld their vote for, the election of Stephen P.
Cortinovis; the holders of 22,999,209 shares voted in favor of,
and holders of 295,474 shares withheld their vote for, the
election of Anthony W. Hooper; the holders of 22,998,634 shares
voted in favor of, and holders of 296,049 shares withheld their
vote for, the election of Jerome Kalishman; the holders of
23,000,154 shares voted in favor of, and holders of 294,529
shares withheld their vote for, the election of Silas Spengler;
the holders of 23,000,307 shares voted in favor of, and holders
of 294,376 shares withheld their vote for, the election of
Sheldon Weinig; the holders of 23,001,182 shares voted in favor
of, and holders of 293,501 shares withheld their vote for, the
election of Russell B. Wight, Jr.; and the holders of 23,000,829
shares voted in favor of, and holders of 293,854 shares withheld
their vote for, the election of Alfred L. Woods.
(d) Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) The exhibits filed as part of this Quarterly
Report on Form 10-Q are listed on the annexed Index to Exhibits.
(b) During the quarter ended June 30, 1998, the
Company did not file any Current Reports on Form 8-K. The
Company has subsequently filed: (i) a Current Report on Form
8-K dated July 6, 1998, which, under "Item 5. Other Events"
thereunder, reported the authorization of the Company's stock
repurchase program relating to up to 2,700,000 shares of Common
Stock, to be made from time to time over the next five years in
open market transactions; and (ii) a Current Report on Form 8-K
dated July 15, 1998 which, under "Item 5. Other Events"
thereunder, reported the execution of an employment letter by
the Company and Anthony W. Hooper. No financial statements were
filed as part of any such report.
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.
INSITUFORM TECHNOLOGIES, INC.
August 11, 1998 By: s/William A. Martin
---------------------------------
William A. Martin
Senior Vice President and
Principal Financial and
Accounting Officer
INDEX TO EXHIBITS
------------------
3.2 - By-laws of the Company
27 - Financial Data Schedule, which is submitted
electronically to the Securities and Exchange Commission
for information only and is not filed.