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: December 31, 1997
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 February 3, 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 Six Months Ended December 31, 1997
and 1996 (Unaudited) 3
Condensed Consolidated Balance Sheets
December 31, 1997 and June 30, 1997 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Six Months Ended December 31, 1997 and 1996 (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 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
<TABLE>
<CAPTION>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
---------------------------- -----------------------------
1997 1996 1997 1996
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $5,487,623 $6,637,618 $14,635,908 $11,958,388
---------- ---------- ----------- -----------
Costs and Expenses:
Cost of sales 5,373,820 4,923,149 11,743,897 9,633,836
Selling, general and administrative 1,141,133 1,336,533 2,469,673 2,538,974
---------- ---------- ----------- -----------
Total Costs and Expenses 6,514,953 6,259,682 14,213,570 12,172,810
---------- ---------- ----------- -----------
Earnings (Loss) from Operations (1,027,330) 377,936 422,338 (214,422)
Investment Income 26,278 37,169 44,732 83,710
Interest Expense (20,836) (8,118) (54,719) (14,411)
Other Income 41,952 29,191 104,579 78,095
----------- ---------- ----------- -----------
Earnings (Loss) Before Income Taxes
and Non-owned interests (979,936) 436,178 516,930 (67,028)
Non-owned Interests in Pretax Loss
(Earnings) of MIDSOUTH Partners 250,950 (91,939) 408,096 (76,596)
---------- ---------- ----------- -----------
Earnings (Loss) Before Income Taxes (728,986) 344,239 925,026 (143,624)
Provision (Credit) for Income Taxes (285,000) 134,000 360,000 (57,000)
----------- ---------- ----------- -----------
Net Earnings (Loss) $ (443,986) $ 210,239 $ 565,026 $ (86,624)
========== ========== =========== ===========
Basic Earnings (Loss) Per Share $ (0.10) $ 0.05 $ 0.13 $ (0.02)
========== ========== =========== ===========
Diluted Earnings (Loss) Per Share $ (0.10) $ 0.05 $ 0.13 $ (0.02)
========== ========== =========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, June 30,
1997 1997
------------ --------
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 1,229,579 $ 2,071,852
Accounts receivable - net of allowance
for doubtful accounts of $0 6,717,841 6,682,127
Inventories - raw materials 1,439,301 1,538,017
Prepaid and refundable income taxes 839,890 765,580
Prepaid expenses 411,937 251,572
----------- -----------
Total Current Assets 10,638,548 11,309,148
Property, Plant and Equipment - at cost less accumulated
depreciation of $14,043,702 and $13,165,282 11,638,469 11,670,061
Other Assets 63,000 86,000
----------- -----------
Total Assets $22,340,017 $23,065,209
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to CERBCO, Inc. $ 400,000 $ 0
Accounts payable 915,642 1,486,841
Accrued compensation and related expenses 1,455,039 1,876,988
Income taxes payable 19,724 14,724
Dividends payable 0 261,412
Current portion of capital lease obligations 31,425 28,508
---------- -----------
Total Current Liabilities 2,821,830 3,668,473
Deferred Income Taxes 1,055,000 1,074,000
Long-Term Capital Lease Obligations 123,001 139,480
---------- -----------
Total Liabilities 3,999,831 4,881,953
---------- -----------
Non-owned Interests in Consolidated Subsidiary 2,041,366 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 13,300,619 12,735,593
---------- ----------
17,488,433 16,923,407
Less cost of 327,897 shares of common stock in treasury 1,189,613 1,189,613
---------- ----------
Total Stockholders' Equity 16,298,820 15,733,794
---------- ----------
Total Liabilities and Stockholders' Equity $22,340,017 $23,065,209
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31,
1997 1996
------------ -----------
Cash Flows from Operating Activities:
<S> <C> <C>
Net earnings (loss) $ 565,026 $ (86,624)
Adjustments for noncash items included in net earnings (loss):
Depreciation and amortization 1,079,937 873,092
Deferred income taxes (19,000) 214,000
Non-owned interests in earnings (loss) of consolidated subsidiary (408,096) 76,596
Changes in assets and liabilities:
Receivables (35,714) 246,562
Inventories 98,716 (234,988)
Other current assets (234,675) (497,230)
Payables and accruals (988,148) 791,767
----------- ----------
Net cash provided by operating activities 58,046 1,383,175
----------- ----------
Cash Flows from Investing Activities:
Capital expenditures, net (1,025,345) (1,573,430)
----------- ----------
Net cash used in investing activities (1,025,345) (1,573,430)
----------- ----------
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. (2,200,000) 0
Principal payments under capital lease obligations (13,562) (22,735)
----------- ----------
Net cash provided by (used in) financing activities 125,026 (284,147)
----------- ----------
Net decrease in cash and cash equivalents (842,273) (474,402)
Cash and cash equivalents at beginning of period 2,071,852 4,183,084
----------- ----------
Cash and cash equivalents at end of period $ 1,229,579 $3,708,682
=========== ==========
Supplemental disclosure of cash flow information:
Interest paid $ 54,719 $ 14,411
Income taxes paid $ 448,310 $ 388,816
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 December 31, 1997, the
Condensed Consolidated Statements of Operations for the three months and six
months ended December 31, 1997 and 1996, and the Condensed Consolidated
Statements of Cash Flows for the six months ended December 31, 1997 and 1996
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 December 31, 1997 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 December 31, 1997 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. Notes Payable to 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 4,360,950 and 4,356,862 were used in computing diluted
earnings (loss) per share for the three months ended December 31, 1997 and 1996,
respectively; 4,360,384 and 4,356,862 shares were used in computing diluted
earnings (loss) per share for the six months ended December 31, 1997 and 1996,
respectively.
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. Subsequent Event - 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.
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 -$443,986 (-$0.10 per
share) on sales of $5.5 million for the second quarter of fiscal 1998 ended
December 31, 1997, reducing consolidated net earnings over the first six months
of fiscal 1998 to $565,026 ($0.13 per share) on sales of $14.6 million. In the
previous year, the Company recognized net earnings of $210,239 ($0.05 per share)
on sales of $6.6 million for the second quarter and a net loss of -$86,624
(-$0.02 per share) on sales of $12.0 million for the first six months. The
Company attributed its unfavorable current second quarter results to a 17%
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. Positive comparable period
six 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 in the six months ended December 31, 1997.
The first quarter superior results were representative of the
significant leveraging effect to positive earnings of increases in period sales
at normal margins while, conversely, the second quarter's loss is 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, and
in both immediately workable and in twelve-month backlog share captured by East,
are likely to produce negative results in the third quarter of fiscal 1998. This
trend could continue through the remainder of the fiscal year, and perhaps
longer, although analysis of longer term data indicates that the fiscal 1998 to
date large 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. 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 $25.1 million at December 31, 1997 as compared
to $23.0 million at December 31, 1996. The twelve-month backlog at December 31,
1997 was approximately $10.8 million as compared to $21.8 million at December
31, 1996. The total backlog value of all uncompleted and multi-year contracts at
December 31, 1997 and 1996 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 have been 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 December 31, 1997 Compared with Three Months Ended December
31, 1996
The Company recognized a consolidated net loss of -$443,986 ($-0.10 per
share) on sales of $5.5 million for the second quarter of fiscal 1998 ended
December 31, 1997, as compared to net earnings of $210,239 ($0.05 per share) on
sales of $6.6 million for the second quarter of fiscal 1997 ended December 31,
1996. The Company attributed its unfavorable second quarter results to a 17%
decrease in comparable period sales and reduced margins on work performed by
MIDSOUTH Partners during the quarter.
Sales decreased $1.1 million (17%) from $6.6 million for the three months
ended December 31, 1996 to $5.5 million for the three months ended December 31,
1997. Comparable period sales for East decreased 22%. Comparable period sales
for MIDSOUTH Partners decreased 3%.
Cost of sales increased 9% in the second quarter of fiscal 1998 as compared
to the second quarter of fiscal 1997. As a result, gross profit as a percentage
of sales decreased from 26% of sales for the second quarter of fiscal 1997 to 2%
of sales for the second quarter 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 and, to a lesser extent, absorption of semi-fixed costs over
reduced sales during the second quarter of fiscal 1998. Reduced margins on work
performed by MIDSOUTH Partners were due principally to discounted sales and
performance inefficiencies on certain projects.
Selling, general and administrative expenses decreased $195,400 (15%) for
the second quarter of fiscal 1998 as compared to the second quarter of fiscal
1997, primarily as a result of decreased costs to support decreased production
activities during the three months ended December 31, 1997 and decreased
comparable period legal expenses. Additional legal costs were incurred during
the second quarter of fiscal 1997 in connection with the Inliner U.S.A. / CAT
Contracting antitrust lawsuit.
Six Months Ended December 31, 1997 Compared with Six Months Ended December 31,
1996
The Company recognized consolidated net earnings of $565,026 ($0.13 per
share) from sales of $14.6 million for the first six months of fiscal 1998 ended
December 31, 1997 as compared to a net loss of -$86,624 (-$0.02 per share) from
sales of $12.0 million for the first six months of fiscal 1997 ended December
31, 1996. The Company attributed its positive comparable period six month
results primarily to the execution of the installation phase of the $4.7 million
Perry Nuclear Power Plant project during the six months ended December 31, 1997.
Sales increased $2.6 million (22%) from $12.0 million for the six months
ended December 31, 1996 to $14.6 million for the six months ended December 31,
1997. Comparable period sales for East increased 33%. Comparable period sales
for MIDSOUTH Partners decreased 7%.
Cost of sales increased 22% for the first six months of fiscal 1998 as
compared to the first six months of fiscal 1997. As a result, gross profit as a
percentage of sales increased from 19% of sales for the first six months of
fiscal 1997 to 20% of sales for the first six months of fiscal 1998. The modest
increase in gross profit as a percentage of sales is due primarily to absorption
of semi-fixed costs over increased sales more than offsetting reduced margins on
work performed by MIDSOUTH Partners during the first six months of fiscal 1998.
Selling, general and administrative expenses decreased $69,301 (3%) during
the first six months of fiscal 1998 as compared to the first six months of
fiscal 1997, primarily as a result of lower costs to support reduced production
activities during the three months ended December 31, 1997.
Financial Condition
During the six months ended December 31, 1997, $58,046 in cash was provided
by the Company's operating activities, due in part to Net Earnings of $565,026
plus $1,079,937 in depreciation and amortization expenses included in operating
results that did not require the outlay of cash more than offsetting a $988,148
decrease in Payables and Accruals. During the first six months of fiscal 1998,
the Company received and repaid $1.8 million in bank line of credit advances,
received $2.6 million in line of credit advances from CERBCO, Inc and repaid
$2.2 million of these advances to CERBCO, Inc. These line of credit borrowings
were required to finance increases in Accounts Receivable balances during the
period resulting primarily from increased period sales and, to a lesser extent,
collection delays on several completed projects.
During the first six months of fiscal 1998, the Company expended $1,025,345
for equipment purchases and other capital improvements and paid $261,412 in
dividends to shareholders. Although the Company experienced a $0.8 million
decrease in cash during the first six months of fiscal 1998, the Company's
financial liquidity remained strong with working capital of $7.8 million and a
current ratio of 3.8 at December 31, 1997.
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 have twenty days
from receipt of the Court's January 30, 1998 order to file a third amended
complaint which complies with the Court's previous order or face dismissal of
the case outright for failure to prosecute its alleged claims. If Plaintiffs
file a third amended complaint, Defendants have been granted leave to submit
additional motions to dismiss.
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.
Item 4. Submission of Matters to a Vote of Security Holders
On December 12, 1997, an annual meeting of stockholders was held to allow
the Company's Common Stockholders and Class B Common Stockholders to vote for
the uncontested reelection of the Company's directors. The number of votes cast
for and against the election of Directors were as follows:
<TABLE>
<CAPTION>
Common Stockholders
-------------------
FOR AGAINST
--- -------
Election of Directors
Common Directors:
<S> <C> <C>
Calvin G. Franklin 3,639,807 129,465
Thomas J. Schaefer 3,655,302 113,970
Class B Common Stockholders
---------------------------
FOR AGAINST
--- -------
Class B Common Directors
George Wm. Erikson 296,141 0
Robert W. Erikson 296,141 0
Webb C. Hayes, IV 296,141 0
Paul C. Kincheloe, Jr. 296,141 0
Jack Massar 296,141 0
</TABLE>
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 February 13, 1998 /s/ Robert W. Erikson
----------------- ----------------------
Robert W. Erikson
President
Date February 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 DECEMBER 31, 1997, AND THE COMPANY'S UNAUDITED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 1,229,579
<SECURITIES> 0
<RECEIVABLES> 6,717,841
<ALLOWANCES> 0
<INVENTORY> 1,439,301
<CURRENT-ASSETS> 10,638,548
<PP&E> 25,682,171
<DEPRECIATION> 14,043,702
<TOTAL-ASSETS> 22,340,017
<CURRENT-LIABILITIES> 2,821,830
<BONDS> 0
<COMMON> 187,390
0
0
<OTHER-SE> 16,111,430
<TOTAL-LIABILITY-AND-EQUITY> 22,340,017
<SALES> 14,635,908
<TOTAL-REVENUES> 14,635,908
<CGS> 11,743,897
<TOTAL-COSTS> 11,743,897
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,719
<INCOME-PRETAX> 925,026
<INCOME-TAX> 360,000
<INCOME-CONTINUING> 565,026
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 565,026
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
