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: September 30, 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 November 2, 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 Ended September 30, 1998 and 1997 (Unaudited) 3
Condensed Consolidated Balance Sheets
September 30, 1998 and June 30, 1998 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Three Months Ended September 30, 1998 and 1997 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
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
September 30,
------------------------------------
1998 1997
----------- ----------
<S> <C> <C>
Sales $6,047,942 $9,148,285
---------- ----------
Costs and Expenses:
Cost of sales 5,050,451 6,370,077
Selling, general and administrative 1,039,826 1,328,540
---------- ----------
Total Costs and Expenses 6,090,277 7,698,617
---------- ----------
Earnings (Loss) from Operations (42,335) 1,449,668
Investment Income 24,740 18,454
Interest Expense (12,705) (33,883)
Other Income 55,605 62,627
---------- ----------
Earnings Before Income Taxes
and Non-owned Interests 25,305 1,496,866
Non-owned Interests in Pretax Loss
of Midsouth Partners 61,623 157,146
---------- ----------
Earnings Before Income Taxes 86,928 1,654,012
Provision for Income Taxes 34,000 645,000
---------- ----------
Net Earnings $ 52,928 $1,009,012
=========== ==========
Basic Earnings Per Share $ 0.01 $ 0.23
=========== ==========
Diluted Earnings Per Share $ 0.01 $ 0.23
=========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30,
1998 1998
------------ ------------
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 1,381,541 $ 2,148,511
Accounts receivable - net of allowance
for doubtful accounts of $0 6,182,492 5,180,022
Inventories - raw materials 1,372,576 1,381,861
Prepaid and refundable income taxes 664,007 671,565
Prepaid expenses 341,502 401,659
----------- ----------
Total Current Assets 9,942,118 9,783,618
Property, Plant and Equipment - at cost less accumulated
depreciation of $14,554,899 and $14,105,020 11,022,755 11,108,691
Cash Surrender Value of SERP Life Insurance 80,299 0
Other Assets 58,000 60,000
----------- ----------
Total Assets $21,103,172 $20,952,309
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Partner loans to Midsouth Partners $ 250,000 $ 250,000
Accounts payable 1,076,702 1,120,910
Accrued compensation and related expenses 1,470,008 1,398,806
Income taxes payable 37,196 27,196
Current portion of capital lease obligations 36,390 34,621
----------- -----------
Total Current Liabilities 2,870,296 2,831,533
Deferred Income Taxes 1,019,000 915,000
Long-Term Capital Lease Obligations 95,052 104,829
Accrued SERP Liability 26,572 0
----------- -----------
Total Liabilities 4,010,920 3,851,362
----------- -----------
Non-owned Interests in Consolidated Subsidiary 1,637,437 1,699,060
----------- -----------
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 12,456,614 12,403,686
----------- -----------
16,644,428 16,591,500
Less cost of 327,897 shares of common stock in treasury 1,189,613 1,189,613
----------- -----------
Total Stockholders' Equity 15,454,815 15,401,887
----------- -----------
Total Liabilities and Stockholders' Equity $21,103,172 $20,952,309
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
----------------------------------
1998 1997
------------- -------------
Cash Flows from Operating Activities:
<S> <C> <C>
Net earnings $ 52,928 $1,009,012
Adjustments for noncash items included in net earnings:
Depreciation and amortization 485,971 507,476
Deferred income taxes 104,000 (35,000)
Non-owned interests in loss of consolidated subsidiary (61,623) (157,146)
Accrued SERP liability 26,572 0
Changes in assets and liabilities:
Receivables (1,002,470) (3,481,577)
Inventories 9,285 (240,231)
Other current assets 67,715 24,111
Payables and accruals 36,994 1,789,442
----------- -----------
Net cash used in operating activities (280,628) (583,913)
----------- -----------
Cash Flows from Investing Activities:
Capital expenditures, net (398,035) (472,358)
Increase in cash surrender value of SERP life insurance (80,299) 0
----------- -----------
Net cash used in investing activities (478,334) (472,358)
----------- -----------
Cash Flows from Financing Activities:
Dividends paid 0 (261,412)
Proceeds from bank line of credit advances 0 1,800,000
Repayment of line of credit advances to bank 0 (1,200,000)
Proceeds from line of credit advances from CERBCO, Inc. 0 600,000
Principal payments under capital lease obligations (8,008) (6,616)
----------- -----------
Net cash provided by (used in) financing activities (8,008) 931,972
----------- -----------
Net decrease in cash and cash equivalents (766,970) (124,299)
Cash and cash equivalents at beginning of period 2,148,511 2,071,852
----------- -----------
Cash and cash equivalents at end of period $ 1,381,541 $ 1,947,553
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid $ 12,705 $ 32,466
Income taxes paid (refunded) $ (87,598) $ 15,230
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 September 30, 1998, the
Condensed Consolidated Statements of Operations for the three months ended
September 30, 1998 and 1997, and the Condensed Consolidated Statements of Cash
Flows for the three months ended September 30, 1998 and 1997 have been prepared
by the Company without audit. The Condensed Consolidated Balance Sheet as of
June 30, 1998 (unaudited) has been derived from the Company's June 30, 1998
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 September 30,
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, 1998 audited financial statements.
The results of operations for the period ended September 30, 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. Computation of Net Earnings Per Share
Basic earnings per share was computed by dividing net earnings 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 per share for
the three months ended September 30, 1998 and 1997.
Diluted earnings per share was computed by dividing net earnings 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 and 4,359,817 were used in computing diluted earnings per share for
the three months ended September 30, 1998 and 1997, respectively.
4. Segment Reporting Information
During the year ended June 30, 1998, the Company adopted the disclosure
requirements of Statement of Financial Accounting Standards No. 131, Disclosures
about Segments of an Enterprise and Related Information ("SFAS No. 131"). In
accordance with the provisions of SFAS No. 131, the Company has determined that
its operating activities consist of two reportable operating segments, (i)
Insituform East, Incorporated and its wholly-owned subsidiary corporations
(collectively, "East") and, (ii) its majority-controlled subsidiary partnership,
Midsouth Partners. Although both reportable operating segments are primarily
engaged in the business of rehabilitating underground sewers and other conduits
using the Insituform process, rehabilitation services are generally provided to
customers in separate licensed geographic territories. Financial Information
about the Company's reportable operating segments is as follows:
<PAGE>
<TABLE>
<CAPTION>
Financial Information about
Reportable Operating Segments
Three Months Ended
September 30,
-------------------------------------------
1998 1997
-------------------------------------------
SALES TO UNAFFILIATED CUSTOMERS:
Insituform East, Incorporated and
wholly-owned subsidiaries
<S> <C> <C>
(collectively, "East") $ 4,170,767 $ 7,751,523
Midsouth Partners 1,877,175 1,396,762
------------ ------------
Total Sales to Unaffiliated Companies $ 6,047,942 $ 9,148,285
============ ============
RECONCILIATION OF SALES BY SEGMENT
Total Sales
East $ 4,228,820 $ 7,786,762
Midsouth Partners 1,877,175 1,410,799
Less: Intersegment Sales
East to Midsouth Partners (58,053) (35,239)
Midsouth Partners to East (0) (14,037)
------------ ------------
Total Sales to Unaffiliated Customers $ 6,047,942 $ 9,148,285
============ ============
RECONCILIATION OF EARNINGS (LOSS)
BEFORE INCOME TAXES, CREDIT
(PROVISION) FOR INCOME TAXES AND
NET EARNINGS (LOSS) BY SEGMENT
East
Earnings (Loss) Before Income Taxes $ 132,476 $ 1,770,163
Credit (Provision) for Income Taxes (52,000) (690,000)
------------ -----------
Net Earnings (Loss) $ 80,476 $ 1,080,163
============ ===========
Midsouth Partners
Earnings (Loss) Before Income Taxes $ (45,548) $ (116,151)
Credit (Provision) for Income Taxes 18,000 45,000
------------ -----------
Net Earnings (Loss) $ (27,548) $ (71,151)
============ ===========
Consolidated Total
Earnings Before Income Taxes $ 86,928 $ 1,654,012
Provision for Income Taxes (34,000) (645,000)
------------ -----------
Net Earnings $ 52,928 $ 1,009,012
============ ===========
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview and Outlook
The Company reported consolidated net earnings of $52,928 ($0.01 per share)
on sales of $6.0 million for the first quarter of fiscal 1999 ended September
30, 1998. The Company recognized record net earnings of $1,009,012 ($0.23 per
share) on record sales of $9.1 million for the first quarter of fiscal 1998
ended September 30, 1997. The Company attributed its modestly positive first
quarter fiscal 1999 results to a favorable mix, despite deficient volume, of
work available to the Company's East operating segment (consisting of the
Company's Landover, Maryland based operations and its wholly-owned
subsidiaries). The Company attributed its historic first quarter fiscal 1998
earnings to an exceptional volume of sales revenue recognized during the period
from the installation phase of a nearly year long $4.7 million project performed
for the owners of the Perry Nuclear Power Plant in Perry, Ohio and installed
between mid-September and early October, 1997 by the Company's East operating
segment. The Company experienced contributory losses from its Midsouth Partners
operating segment during the first quarter of fiscal 1999 and 1998.
With respect to forward-looking information, and while there can be no
assurances regarding the Company's future operating performance, based on the
volume and mix of the Company's present and expected workable backlog of
customer orders, the Company presently anticipates that a combination of
additional sales at normal margins and increased production levels will be
required to sustain positive operating results through the remainder of fiscal
1999.
The Company's total backlog value of all uncompleted and multi-year
contract awards was approximately $23.2 million at September 30, 1998 as
compared to $24.9 million at September 30, 1997. The twelve-month backlog at
September 30, 1998 was approximately $9.8 million as compared to $11.3 million
at September 30, 1997. The total backlog value of all uncompleted and multi-year
contracts at September 30, 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.
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 limited
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" to "best value" evaluations when
buying sophisticated processes and technologies. In the face of mounting
technical failures from awards based upon lowest price, municipalities also are
expected over time to reevaluate simple low bid award criteria - in favor of
"best value" award criteria - when procuring trenchless technology for the
rehabilitation of older pipelines.
Results of Operations
Three Months Ended September 30, 1998 Compared with Three Months Ended September
30, 1997
The Company recognized consolidated net earnings of $52,928 ($0.01 per
share) on sales of $6.0 million for the first quarter of fiscal 1999 ended
September 30, 1998 as compared to consolidated net earnings of $1,009,012 ($0.23
per share) on sales of $9.1 million for the first quarter of fiscal 1998 ended
September 30, 1997. The Company's modestly positive first quarter fiscal 1999
results were due primarily to a favorable mix, despite deficient volume, of work
available to the Company's East operating segment. The Company's record first
quarter fiscal 1998 operating results were primarily a result of a significant
contribution to both sales and earnings from the $4.7 million project performed
by the Company's East operating segment at the Perry Nuclear Power Plant in
Perry, Ohio. The Company experienced contributory losses from its
majority-controlled Midsouth Partners operating segment during the first quarter
of fiscal 1999 and 1998.
Sales decreased $3.1 million (34%) from $9.1 million for the three
months ended September 30, 1997 to $6.0 million for the three months ended
September 30, 1998. Comparable period sales for East decreased 46% primarily as
a result of significant revenues from the Perry Nuclear project recognized in
the first quarter of fiscal 1998. Comparable period sales for Midsouth Partners
increased 34% primarily as a result of increased production capacity. As a
result, Midsouth Partners sales as a percentage of total consolidated sales
increased from 15% for the first quarter of fiscal 1998 to 31% for the first
quarter of fiscal 1999.
Cost of sales decreased 21% in the first quarter of fiscal 1999 as
compared to the first quarter of fiscal 1998. As a result, gross profit as a
percentage of sales decreased from 30% of sales for the first quarter of fiscal
1998 to 16% of sales for the first quarter of fiscal 1999. The decrease in gross
profit as a percentage of sales is due primarily to absorption of semi-fixed
costs over lower sales volume during the first quarter of fiscal 1999 and, to a
lesser extent, to increased Midsouth Partners sales at margins lower than
margins recognized from East sales.
Selling, general and administrative expenses decreased $288,714 (22%)
for the first quarter of fiscal 1999 as compared to the first quarter of fiscal
1998, primarily as a result of reduced costs to support decreased production
activities.
Financial Condition
During the three months ended September 30, 1998, the Company used
$280,628 in cash in operating activities, due primarily to a $1.0 million
increase in Accounts Receivable that more than offset the impact of $486,000 in
Depreciation and Amortization expense included in net earnings that did not
require the outlay of cash. The increase in Accounts Receivable is due primarily
to a $940,000 increase in sales from the three months ended June 30, 1998 to the
three months ended September 30, 1998.
During the first three months of fiscal 1999, the Company expended
$398,035 for equipment purchases and other capital improvements. Although the
Company experienced a $767,000 decrease in cash during the first quarter of
fiscal 1999, the Company's financial liquidity remained strong with working
capital of $7.1 million and a current ratio of 3.46 at September 30, 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.
<PAGE>
Year 2000 Issues
The inability of present computerized systems to process dates beyond
December 31, 1999 and the potential impact on businesses and governments in the
future are generally referred to as "Year 2000 Issues."
The Company has implemented plans to address Year 2000 issues. Primary
areas of focus include the Company's information technology systems, the
Company's non-information technology systems, the Year 2000 readiness of the
Company's vendors and suppliers and the Year 2000 readiness of the Company's
major customers. Because the Company's primary products and services neither
include nor rely upon computerized components, the Company believes that there
are no additional contingencies associated with actual or implied warranties
related to its products and services resulting from Year 2000 issues.
With respect to the Company's information technology systems, the
Company's primary accounting and information processing system is Year 2000
compliant and will recognize years 2000 through 2029 in the proper century. The
Company's preliminary assessment of supporting information systems is that these
systems either are Year 2000 compliant, can be modified to become Year 2000
compliant, or should not have a significant impact on either the primary
accounting and information system or the Company's operating activities should
non-compliant systems not be properly modified.
With respect to the Company's non-information technology systems, the
Company is still in the preliminary assessment stage. The Company is dependent
on information from vendors and suppliers in assessing and evaluating these
systems. As potential Year 2000 issues are identified, implementation plans are
developed and executed. The Company has completed corrective action for its
office telephone system and initiated corrective action for its headquarters
facility security system, two systems that were identified as not being Year
2000 compliant.
With respect to the Company's suppliers and customers, the Company has
initiated preliminary correspondence with selected critical suppliers and
customers. Responses received to date indicate that responding suppliers and
customers either are currently Year 2000 compliant or expect to be Year 2000
compliant by December 31, 1999. Prior to December 31, 1998, the Company plans to
seek to obtain responses from suppliers and customers who have not as yet
responded to inquiries and develop a plan to monitor and assess Year 2000
readiness from respondents not as yet Year 2000 compliant.
The Company currently estimates that the cost of implementing its Year
2000 Plan will not exceed $200,000. This preliminary estimate is based on
presently available information and will be updated as the Company continues its
assessment and proceeds with implementation. Specifically, this estimate would
change if, after receipt of information from key suppliers or customers, a
formal contingency plan required development and implementation. The Company has
incurred $12,000 in implementation costs through September 30, 1998.
There can be no assurances that the Company's Year 2000 Plan will be
successful. The Company is dependent on vendors to identify and correct Year
2000 issues related to the Company's utilities and equipment using computerized
components. In addition, if key vendors fail to provide the Company with
materials critical to its operations, or with sufficient electrical power or
other utilities, or if transportation of the Company's personnel and equipment
is seriously impeded; then any such failure or impedance could have a material
adverse effect on the operational performance and financial condition of the
Company.
In addition, if major municipal, industrial or Federal government
customers are seriously affected, directly or indirectly, by Year 2000 issues
such that pipeline rehabilitation programs are delayed or abandoned, this too
could have a material adverse effect on the operational performance and
financial condition of the Company.
The Company has not yet established a contingency plan, but intends to
formulate one prior to June 30, 1999, based primarily on potential actions that
would be required if key vendors or customers are unable to address and resolve
Year 2000 Issues that would directly or indirectly impact the Company's ability
to conduct normal business operations in the year 2000 and beyond.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported, on June 30, 1998, Inliner U.S.A. and CAT
Contracting, Inc. (collectively, "Plaintiffs") filed an antitrust suit against
Insituform Technologies, Inc. ("ITI"), Insituform East, Inc. and Insituform Gulf
South, 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), Insituform Gulf South, Inc. and the
Company of Sections 1 and 2 of the Sherman Act, Section 2 of the Clayton Act, as
amended by the Robinson-Patman Act, Section 43(a) of the Lanham Act, business
disparagement, tortious interference with contracts and prospective business
relationships, and unfair competition. 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. Plaintiffs'
allegations were consistent with the allegations contained in the Third Amended
Complaint of earlier litigation initiated October 23, 1996 and dismissed without
prejudice on June 18, 1998.
The Company believes it has strong defenses to, and is vigorously
contesting, the suit. On August 17, 1998, the Company filed its answer denying
plaintiffs' claims and a motion to dismiss this action. 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.
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 November 12, 1998 /s/ Robert W. Erikson
----------------- ----------------------
Robert W. Erikson
President
Date November 12, 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 SEPTEMBER 30, 1998, AND THE COMPANY'S UNAUDITED
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 1,381,541
<SECURITIES> 0
<RECEIVABLES> 6,182,492
<ALLOWANCES> 0
<INVENTORY> 1,372,576
<CURRENT-ASSETS> 9,942,118
<PP&E> 25,577,654
<DEPRECIATION> 14,554,899
<TOTAL-ASSETS> 21,103,172
<CURRENT-LIABILITIES> 2,870,296
<BONDS> 0
<COMMON> 187,390
0
0
<OTHER-SE> 15,267,425
<TOTAL-LIABILITY-AND-EQUITY> 21,103,172
<SALES> 6,047,942
<TOTAL-REVENUES> 6,047,942
<CGS> 5,050,451
<TOTAL-COSTS> 5,050,451
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,705
<INCOME-PRETAX> 86,928
<INCOME-TAX> 34,000
<INCOME-CONTINUING> 52,928
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,928
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
