UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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: March 31, 1998
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: 0-10800
INSITUFORM EAST, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 52-0905854
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3421 Pennsy Drive 20785
Landover, Maryland (Zip Code)
(Address of principal executive offices)
Registrant's telephone and fax numbers, including area code:
(301) 386-4100 (tel)
(301) 386-2444 (fax)
(301) 773-4560 (24-hour public information Fax Vault System)
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
- -
As of May 1, 1998, the following number of shares of each of the issuer's
classes of common stock were outstanding:
Common Stock 4,059,266
Class B Common Stock 297,596
---------
Total 4,356,862
<PAGE>
TABLE OF CONTENTS
Page Reference
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Consolidated Statements of Operations
Three Months and Nine Months Ended March 31, 1998
and 1997 (Unaudited) 3
Condensed Consolidated Balance Sheets
March 31, 1998 and June 30, 1997 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Nine Months Ended March 31, 1998 and 1997 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements 6
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------------------------------------------------
1998 1997 1998 1997
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 4,147,345 $6,271,529 $18,783,253 $18,229,917
----------- ---------- ----------- -----------
Costs and Expenses:
Cost of sales 4,510,966 5,813,443 16,254,863 15,447,279
Selling, general and administrative 1,025,537 1,293,307 3,495,210 3,832,281
----------- ---------- ----------- -----------
Total Costs and Expenses 5,536,503 7,106,750 19,750,073 19,279,560
----------- ---------- ----------- -----------
Earnings (Loss) from Operations (1,389,158) (835,221) (966,820) (1,049,643)
Investment Income 14,724 33,734 59,456 117,444
Interest Expense (10,534) (9,389) (65,253) (23,800)
Other Income 26,916 26,174 131,495 104,269
----------- ---------- ---------- -----------
Earnings (Loss) Before Income Taxes
and Non-owned interests (1,358,052) (784,702) (841,122) (851,730)
Non-owned Interests in Pretax Loss
(Earnings) of MIDSOUTH Partners 242,176 (36,479) 650,272 (113,075)
----------- ---------- ---------- -----------
Earnings (Loss) Before Income Taxes (1,115,876) (821,181) (190,850) (964,805)
Provision (Credit) for Income Taxes (434,000) (321,000) (74,000) (378,000)
----------- ---------- ---------- -----------
Net Earnings (Loss) $ (681,876) $ (500,181) $ (116,850) $ (586,805)
=========== ========== ========== ===========
Basic Earnings (Loss) Per Share $ (0.16) $ (0.11) $ (0.03) $ (0.13)
=========== ========== ========== ===========
Diluted Earnings (Loss) Per Share $ (0.16) $ (0.11) $ (0.03) $ (0.13)
=========== ========== ========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
March 31, June 30,
1998 1997
------------- ------------
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 795,375 $ 2,071,852
Accounts receivable - net of allowance
for doubtful accounts of $0 5,705,161 6,682,127
Inventories - raw materials 1,423,351 1,538,017
Prepaid and refundable income taxes 1,227,791 765,580
Prepaid expenses 409,894 251,572
------------- ------------
Total Current Assets 9,561,572 11,309,148
Property, Plant and Equipment - at cost less accumulated
depreciation of $14,029,558 and $13,165,282 11,194,830 11,670,061
Other Assets 61,000 86,000
------------- ------------
Total Assets $ 20,817,402 $ 23,065,209
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,035,327 $ 1,486,841
Accrued compensation and related expenses 1,194,082 1,876,988
Income taxes payable 15,724 14,724
Dividends payable 0 261,412
Current portion of capital lease obligations 32,997 28,508
------------ ------------
Total Current Liabilities 2,278,130 3,668,473
Deferred Income Taxes 1,009,000 1,074,000
Long-Term Capital Lease Obligations 114,138 139,480
------------ ------------
Total Liabilities 3,401,268 4,881,953
------------ ------------
Non-owned Interests in Consolidated Subsidiary 1,799,190 2,449,462
------------ ------------
Commitments and Contingencies
Stockholders' Equity:
Common stock - $.04 par value; 10,000,000 shares authorized;
4,387,163 shares issued; 4,059,266 shares outstanding 175,486 175,486
Class B Common stock - $.04 par value; 800,000 shares
authorized; 297,596 shares issued and outstanding 11,904 11,904
Additional paid-in capital 4,000,424 4,000,424
Retained earnings 12,618,743 12,735,593
------------ ------------
16,806,557 16,923,407
Less cost of 327,897 shares of common stock in treasury 1,189,613 1,189,613
------------ ------------
Total Stockholders' Equity 15,616,944 15,733,794
------------ ------------
Total Liabilities and Stockholders' Equity $ 20,817,402 $ 23,065,209
============ ============
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
March 31,
----------------------------------
1998 1997
-------------- --------------
Cash Flows from Operating Activities:
<S> <C> <C>
Net earnings (loss) $ (116,850) $ (586,805)
Adjustments for noncash items included in net earnings (loss):
Depreciation and amortization 1,602,142 1,319,669
Deferred income taxes (65,000) 225,000
Non-owned interests in earnings (loss) of consolidated subsidiary (650,272) 113,075
Changes in assets and liabilities:
Receivables 976,966 (83,259)
Inventories 114,666 (680,456)
Other current assets (620,533) (807,710)
Payables and accruals (1,133,420) 1,118,532
------------- -------------
Net cash provided by operating activities 107,699 618,046
------------- -------------
Cash Flows from Investing Activities:
Capital expenditures, net (1,101,911) (2,087,126)
Cash distribution from MIDSOUTH Partners to
non-owned interests 0 (101,200)
------------- -------------
Net cash used in investing activities (1,101,911) (2,188,326)
------------- -------------
Cash Flows from Financing Activities:
Dividends paid (261,412) (261,412)
Proceeds from bank line of credit advances 1,800,000 0
Repayment of line of credit advances to bank (1,800,000) 0
Proceeds from line of credit advances from CERBCO, Inc. 2,600,000 0
Repayment of line of credit advances to CERBCO, Inc. (2,600,000) 0
Principal payments under capital lease obligations (20,853) (33,144)
------------- -------------
Net cash used in financing activities (282,265) (294,556)
------------- -------------
Net decrease in cash and cash equivalents (1,276,477) (1,864,836)
Cash and cash equivalents at beginning of period 2,071,852 4,183,084
------------- -------------
Cash and cash equivalents at end of period $ 795,375 $ 2,318,248
============= =============
Supplemental disclosure of cash flow information:
Interest paid $ 65,253 $ 23,800
Income taxes paid $ 452,211 $ 404,642
Supplemental schedule of noncash investing and financing activities:
Capital equipment acquired under capital lease obligations $ 0 $ 58,543
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
INSITUFORM EAST, INCORPORATED
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Condensed Consolidated Financial Statements
The Condensed Consolidated Balance Sheet as of March 31, 1998, the
Condensed Consolidated Statements of Operations for the three months and nine
months ended March 31, 1998 and 1997, and the Condensed Consolidated Statements
of Cash Flows for the nine months ended March 31, 1998 and 1997 have been
prepared by the Company without audit. The Condensed Consolidated Balance Sheet
as of June 30, 1997 (unaudited) has been derived from the Company's June 30,
1997 audited financial statements. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at March 31, 1998
and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's June 30, 1997 audited financial statements.
The results of operations for the periods ended March 31, 1998 are not
necessarily indicative of full year operating results.
2. Principles of Consolidation
The condensed consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries, Insituform Ohio, Inc., Insitu, Inc.,
TRY TEK Machine Works, Inc., and Insituform of Pennsylvania, Inc. (collectively,
"East") and the accounts of MIDSOUTH Partners, the Company's majority-controlled
subsidiary Partnership. All significant intercompany accounts and transactions
have been eliminated.
3. Line of Credit Facility with CERBCO, Inc.
The Company has established a $3,000,000 Line of Credit facility with
CERBCO, Inc., a parent holding company with a controlling interest in Insituform
East, Incorporated. Loans against this facility are unsecured, due on demand,
with interest payable monthly at the commercial bank prime lending rate.
4. Computation of Net Earnings (Loss) Per Share
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings Per
Share" was issued February 1997 by the Financial Accounting Standards Board.
SFAS No. 128 is effective for periods ending after December 15, 1997. SFAS No.
128 requires the Company to compute and present basic and diluted earnings per
share for all periods for which Statements of Operations are presented.
Basic earnings (loss) per share was computed by dividing net earnings
(loss) by the weighted average number of common shares outstanding during the
period. Weighted average shares of 4,356,862 were used in computing basic
earnings (loss) per share for all periods presented herein.
Diluted earnings (loss) per share was computed by dividing net earnings
(loss) by the weighted average number of common shares outstanding during the
period including common stock equivalents from dilutive stock options. Weighted
average shares of 4,356,862 were used in computing diluted earnings (loss) per
share for all periods presented herein.
<PAGE>
5. Insitutube(R) Supply Agreements
On December 29, 1997, East entered into a supply agreement with Insituform
Technologies, Inc. ("ITI") whereby East committed to purchase 90% of its
Insitutube requirements from ITI for an initial five year period from January 1,
1998 to December 31, 2002. The agreement will automatically extend for one year
periods unless notice of termination is provided by either party six months
prior to the end of any such annual period. The MIDSOUTH Partners continuing
Insitutube supply agreement, effective since May 1, 1987, presently extends
through April 30, 1999.
6. Ohio Branch Facility Closing
On January 16, 1998, the Company determined to consolidate the operations
of its Cincinnati, Ohio branch facility into its Landover, Maryland headquarters
under an orderly plan to transfer the functions, personnel and equipment to
Landover by March 31, 1998. The consolidation of East operating activities at
its Landover, Maryland headquarters facility is an economic measure taken by the
Company to more effectively utilize its resources throughout its licensed
territories and is not intended to result in any significant reduction in
personnel or installation capabilities. This transfer of functions, personnel
and equipment was substantially completed by March 31, 1998.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview and Outlook
The Company reported a consolidated net loss of -$681,876 (-$0.16 per
share) on sales of $4.1 million for the third quarter of fiscal 1998 ended March
31, 1998, cumulating over the first nine months of fiscal 1998 to a net loss of
- -$116,850 (-$0.03 per share) on sales of $18.8 million. In the previous year,
the Company had a net loss of -$500,181 (-$0.11 per share) on sales of $6.3
million for the third quarter and a net loss of -$586,805 (-$0.13 per share) on
sales of $18.2 million for the first nine months. The Company attributed its
unfavorable current third quarter results to a 34% decrease in comparable period
sales, despite normal margins, experienced principally by the Company and its
wholly-owned subsidiaries (collectively, "East") and to significantly reduced
margins on work performed by MIDSOUTH Partners during the quarter, despite
reasonably normal sales volume levels experienced by such majority-controlled
subsidiary. Improved comparable period nine month results are primarily due to
significant period revenues recognized in connection with the execution of the
installation phase of the year-long $4.7 million Perry Nuclear Power Plant
project, substantially completed during the first quarter of fiscal 1998.
While the Company's superior first quarter results were representative of
the significant leveraging effect to positive earnings of increases in period
sales at normal margins, losses incurred in the second and third quarters are
conversely representative of the result of depressed sales volume despite normal
margin levels. With respect to forward-looking information, and while there can
be no assurances regarding future operating performance, the Company currently
believes that present overall decreases in total marketplace orders in East's
territory are likely to produce negative results in the fourth quarter of fiscal
1998 and perhaps into fiscal 1999. Although this trend could continue further
into fiscal 1999, analysis of longer term data indicates that the fiscal 1998
decline in total East marketplace orders is a factor that tends to average out
over running three-year periods. Indeed, total marketplace orders in fiscal 1997
were abnormally high. Thus, while selective cost saving actions have been taken
during this period of reduced sales, in anticipation of a reversal of this trend
during fiscal 1999, the Company has not undertaken drastic cost reduction
measures that would either reduce future productive capacity, erode operations
support capabilities or impair the Company's ability to execute the complex
requirements of specialized work such as the Perry Nuclear project. In addition,
while the Company remains unable to predict the likelihood or timing of further
favorable, non-core, specialized work such as the large Perry Nuclear project,
building upon both the Company's success and its preeminent capability in this
area will continue as a strong focus in future business development.
The Company's total backlog value of all uncompleted and multi-year
contract awards was approximately $26.2 million at March 31, 1998 as compared to
$19.3 million at March 31, 1997. The twelve-month backlog at March 31, 1998 was
approximately $11.5 million as compared to $17.9 million at March 31, 1997. The
total backlog value of all uncompleted and multi-year contracts at March 31,
1998 and 1997 includes work not estimated to be released and installed within
twelve months, as well as potential work included in term contract awards which
may or may not be fully ordered by contract expiration. While potentially
helpful as a possible trend indicator, backlog figures at specific dates are not
necessarily indicative of sales and earnings for future periods due to the
irregular timing and receipt of major project awards including large,
multi-year, menu-priced contracts with estimated but uncertain order quantities
further subject to the specifics of individual work releases.
<PAGE>
The principal factor affecting the Company's future performance remains the
volatility of earnings as a function of sales volume at normal margins.
Accordingly, because a substantial portion of the Company's costs are semi-fixed
in nature, earnings can, at times, be severely reduced or eliminated during
periods of either depressed sales at normal margins or material increases in
discounted sales, even where total revenues may experience an apparent buoyancy
or growth from the addition of discounted sales undertaken from time to time for
strategic reasons. Conversely, at normal margins, increases in period sales
typically leverage positive earnings significantly.
The Company believes the trenchless pipeline reconstruction marketplace is
continuing to expand, thereby enticing, however, the entry of ever more
imitations and substitute products hoping that cheap price alone may permit them
to succeed in a market otherwise dominated by Insituform. In those markets where
the lowest priced product may be deemed technically "good enough," Insituform is
at a disadvantage. Market share participation strategically undertaken by the
Company in this segment from time to time to preserve competitive presence,
typically at levels materially below normal margins, will necessarily dilute the
Company's overall margin performance. Conversely, in "best value" and quality
based markets, Insituform remains at a distinct advantage. While both the
Federal Government and industry routinely use best value and quality-weighted
contract award criteria in more sophisticated procurements, municipalities and
local governments are often politically reluctant to modernize from simply
"low-bid" buying to "best value" buying when evaluating sophisticated processes
and technologies. In the face of mounting technical failures from awards based
upon lowest price, municipalities are also expected over time to increasingly
shift from low bid to quality-driven award criteria when procuring trenchless
technology to rehabilitate older pipelines.
Results of Operations
Three Months Ended March 31, 1998 Compared with Three Months Ended
March 31, 1997
The Company recognized a consolidated net loss of -$681,876 (-$0.16 per
share) on sales of $4.15 million for the third quarter of fiscal 1998 ended
March 31, 1998, as compared to a net loss of -$500,181 (-$0.11 per share) on
sales of $6.27 million for the third quarter of fiscal 1997 ended March 31,
1997. The Company attributed its unfavorable third quarter results primarily to
a 34% decrease in comparable period sales during the quarter.
Sales decreased $2.12 million (34%) from $6.27 million for the three months
ended March 31, 1997 to $4.15 million for the three months ended March 31, 1998.
Comparable period sales for East decreased 46%. Comparable period sales for
MIDSOUTH Partners decreased 2%.
<PAGE>
Cost of sales decreased 22% in the third quarter of fiscal 1998 as compared
to the third quarter of fiscal 1997. As a result, gross profit (loss) as a
percentage of sales decreased from a gross profit of 7% of sales for the third
quarter of fiscal 1997 to a gross profit (loss) of -9% of sales for the third
quarter of fiscal 1998. The decrease in gross profit as a percentage of sales is
due primarily to absorption of semi-fixed costs over significantly reduced sales
during the third quarter of fiscal 1998. To a lesser extent, improved comparable
period margins for East work were offset by reduced margins for work performed
by MIDSOUTH Partners. Improved East margins were due primarily to sales mix as
third quarter fiscal 1997 work performed by East included increased low margin
subcontracted services and increased discounted sales. Reduced margins on work
performed by MIDSOUTH Partners were due primarily to both discounted sales and
performance inefficiencies.
Selling, general and administrative expenses decreased $267,770 (21%) for
the third quarter of fiscal 1998 as compared to the third quarter of fiscal
1997, primarily as a result of decreased costs to support decreased production
activities during the three months ended March 31, 1998.
Nine Months Ended March 31, 1998 Compared with Nine Months Ended March 31, 1997
The Company recognized a consolidated net loss of -$116,850 (-$0.03 per
share) from sales of $18.8 million for the first nine months of fiscal 1998
ended March 31, 1998 as compared to a net loss of -$586,805 (-$0.13 per share)
from sales of $18.2 million for the first nine months of fiscal 1997 ended March
31, 1997. The Company attributed its favorable comparable period nine month
results primarily to the execution of the installation phase of the $4.7 million
Perry Nuclear Power Plant project, substantially completed during the first
quarter of fiscal 1998.
Sales increased $0.6 million (3%) from $18.2 million for the nine months
ended March 31, 1997 to $18.8 million for the nine months ended March 31, 1998.
Comparable period sales for East increased 6%. Comparable period sales for
MIDSOUTH Partners decreased 3%.
Cost of sales increased 5% for the first nine months of fiscal 1998 as
compared to the first nine months of fiscal 1997. As a result, gross profit as a
percentage of sales decreased from 15% of sales for the first nine months of
fiscal 1997 to 13% of sales for the first nine months of fiscal 1998. The
decrease in gross profit as a percentage of sales is due primarily to reduced
margins on work performed by MIDSOUTH Partners during the first nine months of
fiscal 1998 more than offsetting improved margins recognized by East. Improved
East margins are primarily due to completion of the Perry Nuclear project.
Reduced margins for MIDSOUH Partners are due primarily to both discounted sales
and performance inefficiencies.
Selling, general and administrative expenses decreased $337,071 (9%) during
the first nine months of fiscal 1998 as compared to the first nine months of
fiscal 1997, primarily as a result of reduced legal expenses and lower costs to
support reduced production activities during second and third quarters of fiscal
1998. Additional legal costs were incurred during fiscal 1997 in connection with
the Inliner U.S.A. / CAT Contracting Antitrust lawsuit.
Financial Condition
During the nine months ended March 31, 1998, $107,699 in cash was provided
by the Company's operating activities, due in part to cash provided from a
$976,966 decrease in Accounts Receivable plus $1,602,142 in depreciation and
amortization expenses included in operating results that did not require the
outlay of cash more than offsetting cash used to fund a $620,533 increase in
Other Current Assets and a $1,133,420 decrease in Payables and Accruals. During
the first nine months of fiscal 1998, the Company received and repaid $1.8
million in bank line of credit advances and received and repaid $2.6 million in
line of credit advances from CERBCO, Inc. These line of credit borrowings were
required to finance increases in Accounts Receivable balances resulting
primarily from increased first quarter fiscal 1998 sales and, to a lesser
extent, collection delays on several completed projects during the first six
months of the fiscal year.
<PAGE>
During the first nine months of fiscal 1998, the Company expended
$1,101,911 for equipment purchases and other capital improvements and paid
$261,412 in dividends to shareholders. Although the Company experienced a $1.3
million decrease in cash during the first nine months of fiscal 1998, the
Company's financial liquidity remained strong with working capital of $7.3
million and a current ratio of 4.2 at March 31, 1998.
The Company anticipates that expanding production capabilities and
improving operational performance in the future will require additional capital
expenditures. Management believes that cash flow from future operations,
existing working capital, the remaining commitments available from the Company's
lines of credit and the unencumbered real and personal property owned by the
Company provide adequate resources to finance cash requirements for future
capital expenditures.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported, on October 23, 1996, Inliner U.S.A. and CAT
Contracting, Inc. (collectively, "Plaintiffs") filed an antitrust suit against
Insituform Technologies, Inc. ("ITI") and Insituform East, Inc. (collectively,
"Defendants") in United States District Court for the Southern District of
Texas, Houston Division, alleging violations by ITI (including all of its
subsidiary licensees) and the Company of Sections 1 and 2 of the Sherman Act,
Section 43(a) of the Lanham Act, Section 15 (a) and (b) of the Texas Business
and Commercial Code, tortious interference with contracts and business
disparagement. Plaintiffs are seeking from the Defendants an unspecified amount
of compensatory damages, treble damages and attorneys' fees, as well as punitive
damages of $50 million.
The Company believes it has strong defenses to, and is vigorously
contesting, the suit. The Company filed two motions to dismiss the action during
the fiscal year ended June 30, 1997. In an extensive memorandum and order of
August 25, 1997, the Court granted a partial dismissal of Plaintiffs' claims and
ordered Plaintiffs to replead remaining potential claims. The Plaintiffs filed a
motion for leave to file a Second Amended Complaint on September 29, 1997. The
Defendants each filed responses to the Plaintiffs' motion. On January 30, 1998,
the Court by order denied Plaintiffs' motion to file a second amended complaint
because the proposed amended complaint failed to comply in a number of material
respects with the Court's August 25, 1997 order. Plaintiffs were granted twenty
days from receipt of the Court's January 30, 1998 order to file a third amended
complaint which complied with the Court's previous order or face dismissal of
the case outright for failure to prosecute its alleged claims.
On February 24, 1998, the Plaintiffs filed a motion for leave to file a
Third Amended Complaint. The Company filed an opposition to the Plaintiffs'
motion asserting that the proposed Third Amended Complaint failed to comply with
the Court's August 25, 1997 and January 30, 1998 orders. The Court has not yet
taken action with respect to this motion.
Although the ultimate outcome and consequences of the suit cannot be
ascertained at this time and the results of legal proceedings cannot be
predicted with certainty, it is the opinion of the management of the Company
that the suit is meritless and will not have a material adverse effect on the
financial condition or the results of operations of the Company.
The Company is a party to other claims arising out of the ordinary course
of business. While it is not possible at this time to establish the ultimate
amount of liability, if any, associated with pending claims, management of the
Company is of the opinion that the aggregate amount of any such liability will
not have a material adverse effect on the financial position of the Company.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
None.
<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.
INSITUFORM EAST, INCORPORATED
(Registrant)
Date May 13, 1998 /s/ Robert W. Erikson
------------ ----------------------
Robert W. Erikson
President
Date May 13, 1998 /s/ Raymond T. Verrey
------------ ----------------------
Raymond T. Verrey
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED BALANCE SHEET AS OF MARCH 31, 1998, AND THE COMPANY'S
UNAUDITED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 795,375
<SECURITIES> 0
<RECEIVABLES> 5,705,161
<ALLOWANCES> 0
<INVENTORY> 1,423,351
<CURRENT-ASSETS> 9,561,572
<PP&E> 25,224,388
<DEPRECIATION> 14,029,558
<TOTAL-ASSETS> 20,817,402
<CURRENT-LIABILITIES> 2,278,130
<BONDS> 0
<COMMON> 187,390
0
0
<OTHER-SE> 15,429,554
<TOTAL-LIABILITY-AND-EQUITY> 20,817,402
<SALES> 18,783,253
<TOTAL-REVENUES> 18,783,253
<CGS> 16,254,863
<TOTAL-COSTS> 16,254,863
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,253
<INCOME-PRETAX> (190,850)
<INCOME-TAX> (74,000)
<INCOME-CONTINUING> (116,850)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (116,850)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
