Insituform
Technologies, Inc.
|
Delaware
|
13-3032158
|
|||
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|||
702
Spirit 40 Park Drive
|
||||
Chesterfield,
Missouri
|
63005
|
|||
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code:
|
636-530-8000
|
||
Securities
registered pursuant to Section 12(b) of the Act:
|
None
|
||
Securities
registered pursuant to Section 12(g) of the Act:
|
|||
Title
of each class
|
Name
of each exchange on which reported
|
||
|
Class
A Common Shares, $.01 par value
|
The
Nasdaq Global Select Market
|
|
|
Preferred
Stock Purchase Rights
|
The
Nasdaq Global Select Market
|
Document
|
Part
- Form 10-K
|
Registrant’s
Proxy Statement
|
Part
III
|
for
the 2007 Annual Meeting of
|
|
Stockholders
|
3
|
|
3
|
|
11
|
|
14
|
|
14
|
|
15
|
|
15
|
|
15
|
|
17
|
|
17
|
|
20
|
|
21
|
|
39
|
|
41
|
|
41
|
|
74
|
|
74
|
|
74
|
|
75
|
|
75
|
|
75
|
|
75
|
|
75
|
|
75
|
|
75
|
|
75
|
|
77
|
Item
1.
|
Business
|
December
31,
|
||||||||||
Backlog
|
2006
|
2005
|
2004
|
|||||||
(In
millions)
|
||||||||||
Rehabilitation
|
$
|
201.7
|
$
|
213.3
|
$
|
190.4
|
||||
Tunneling
|
75.7
|
66.3
|
129.3
|
|||||||
Tite
Liner®
|
12.8
|
20.2
|
8.6
|
|||||||
Total
|
$
|
290.2
|
$
|
299.8
|
$
|
328.3
|
Item
1A.
|
Item
1B.
|
Item
2.
|
Properties
|
Item
3.
|
Legal
Proceedings
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
Item
4A.
|
Executive
Officers of the
Registrant
|
Name
|
Age
at
February
1, 2007
|
Position
with the Company
|
||
Thomas
S. Rooney, Jr.
|
47
|
President
and Chief Executive Officer
|
||
Thomas
E. Vossman
|
44
|
Senior
Vice President and Chief Operating Officer
|
||
David
F. Morris
|
45
|
Vice
President, General Counsel and Secretary
|
||
David
A. Martin
|
39
|
Vice
President and Controller
|
Period
|
High
|
Low
|
|||||
2006
|
|||||||
First
Quarter
|
$
|
27.87
|
$
|
18.51
|
|||
Second
Quarter
|
29.67
|
20.89
|
|||||
Third
Quarter
|
25.53
|
18.56
|
|||||
Fourth
Quarter
|
27.70
|
22.04
|
|||||
2005
|
|||||||
First
Quarter
|
$
|
22.98
|
$
|
13.24
|
|||
Second
Quarter
|
17.50
|
13.86
|
|||||
Third
Quarter
|
21.17
|
15.86
|
|||||
Fourth
Quarter
|
20.99
|
14.90
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights(1)
(a)
|
Weighted-average
exercise price of outstanding options, warrants and
rights
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
|||||||
Equity
compensation plans approved by security holders
|
1,392,199
|
$
|
19.85
|
2,193,500
|
||||||
Equity
compensation plans not approved by security holders
|
-
|
n/a
|
-
|
|||||||
Total
|
1,392,199
|
$
|
19.85
|
2,193,500
|
(1)
|
The
number of securities to be issued upon exercise of outstanding options,
warrants and rights includes 1,298,392 stock options and 93,807 deferred
stock units outstanding at December 31,
2006.
|
·
|
INEI
Corporation, f/k/a Insituform East,
Incorporated
|
·
|
Michael
Baker Corporation
|
·
|
Granite
Construction, Inc.
|
·
|
Fluor
Corporation
|
·
|
Jacobs
Engineering Group, Inc.
|
·
|
Foster
Wheeler Corporation
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||||
Insituform
Technologies, Inc.
|
$
|
100.00
|
$
|
66.65
|
$
|
64.50
|
$
|
88.62
|
$
|
75.72
|
$
|
101.09
|
|||||||
S&P
500 Index
|
$
|
100.00
|
$
|
77.90
|
$
|
100.25
|
$
|
111.15
|
$
|
116.61
|
$
|
135.03
|
|||||||
Composite
Peer Group Index
|
$
|
100.00
|
$
|
81.86
|
$
|
115.21
|
$
|
139.89
|
$
|
198.70
|
$
|
229.03
|
Item
6.
|
Selected
Financial Data
|
Year
Ended December 31,
|
||||||||||||||||
2006(1)
|
2005
|
2004
|
2003(2)
|
2002(2,3,4)
|
||||||||||||
(In
thousands, except per share amounts)(Unaudited)
|
||||||||||||||||
INCOME
STATEMENT DATA:
|
||||||||||||||||
Revenues
|
$
|
596,715
|
$
|
595,282
|
$
|
542,598
|
$
|
487,272
|
$
|
480,358
|
||||||
Operating
income
|
31,459
|
23,743
|
8,178
|
21,591
|
50,183
|
|||||||||||
Income
from continuing operations
|
24,678
|
13,160
|
597
|
4,628
|
28,560
|
|||||||||||
Loss
from discontinued operations
|
-
|
-
|
-
|
(1,103
|
)
|
(5,869
|
)
|
|||||||||
Net
income
|
24,678
|
13,160
|
597
|
3,525
|
22,691
|
|||||||||||
Basic
earnings per share:
|
||||||||||||||||
Income
from continuing operations
|
0.91
|
0.49
|
0.02
|
0.17
|
1.08
|
|||||||||||
Loss
from discontinued operations
|
-
|
-
|
-
|
(0.04
|
)
|
(0.22
|
)
|
|||||||||
Net
income
|
0.91
|
0.49
|
0.02
|
0.13
|
0.86
|
|||||||||||
Dilutive
earnings per share:
|
||||||||||||||||
Income
from continuing operations
|
0.90
|
0.49
|
0.02
|
0.17
|
1.07
|
|||||||||||
Loss
from discontinued operations
|
-
|
-
|
-
|
(0.04
|
)
|
(0.22
|
)
|
|||||||||
Net
income
|
0.90
|
0.49
|
0.02
|
0.13
|
0.85
|
|||||||||||
BALANCE
SHEET DATA:
|
||||||||||||||||
Unrestricted
cash and cash equivalents
|
$
|
96,393
|
$
|
77,069
|
$
|
93,246
|
$
|
93,865
|
$
|
71,401
|
||||||
Working
capital, net of unrestricted cash
|
77,466
|
70,114
|
61,637
|
73,535
|
52,829
|
|||||||||||
Current
assets
|
310,364
|
274,024
|
273,201
|
277,273
|
252,651
|
|||||||||||
Property,
plant and equipment
|
90,453
|
95,657
|
90,846
|
75,667
|
71,579
|
|||||||||||
Total
assets
|
550,069
|
518,328
|
513,154
|
508,360
|
473,013
|
|||||||||||
Current
maturities of long-term debt and line of credit
|
16,814
|
18,264
|
15,778
|
16,938
|
49,360
|
|||||||||||
Long-term
debt, less current maturities
|
65,046
|
80,768
|
96,505
|
114,323
|
67,014
|
|||||||||||
Total
liabilities
|
209,277
|
213,106
|
221,671
|
227,726
|
198,965
|
|||||||||||
Total
stockholders’ equity
|
338,611
|
303,496
|
289,836
|
279,169
|
272,618
|
(1)
|
Effective
January 1, 2006, we adopted SFAS 123(R), “Share Based Payment” which
requires recording expense for stock option and other equity compensation
awards. We recorded $2.9 million in incremental expense for stock
options
in 2006.
|
(2)
|
We
have completed various acquisitions that have been accounted for
under the
purchase method of accounting, including Elmore Pipe Jacking, Inc.
in
2002, Sewer Services, Ltd. in 2003, Video Injection (remaining interest)
in 2003, Insituform East in 2003, and Ka-Te Insituform (remaining
interest) in 2003.
|
(3)
|
Results
include a pre-tax intangible asset impairment and restructuring charges
of
$3.5 million and $2.5 million, respectively.
|
(4)
|
Effective
January 1, 2002, we adopted SFAS 142, “Goodwill and Other Intangible
Assets,” and ceased amortizing
goodwill.
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Years
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(Dollars
in thousands)
|
||||||||||
Revenues
|
$
|
596,715
|
$
|
595,282
|
$
|
542,598
|
||||
Gross
profit
|
127,954
|
116,841
|
99,499
|
|||||||
Gross
profit margin
|
21.4
|
%
|
19.6
|
%
|
18.3
|
%
|
||||
Operating
expenses
|
96,495
|
93,098
|
91,321
|
|||||||
Operating
income
|
31,459
|
23,743
|
8,178
|
|||||||
Operating
income percentage
|
5.3
|
%
|
4.0
|
%
|
1.5
|
%
|
·
|
Interest
income of $1.3 million in the quarter due to improved treasury practices,
higher interest rates and higher cash
balances.
|
·
|
Other
income of $4.3 million, primarily from gains on sales of property
and
equipment, of which,
|
·
|
A
tax rate of 30.1% for the quarter to bring the 2006 effective tax
rate to
31.8%.
|
Year
Ended
December
31, 2006 vs. 2005
|
||||
Increase
(Decrease)
|
||||
Legal
& accounting professional fees
|
$
|
3,125
|
||
Stock
option expense
|
2,870
|
|||
Other
equity compensation expense
|
547
|
|||
Incentive
compensation expense
|
247
|
|
||
Other,
including business unit operating expenses
|
(3,392
|
)
|
||
Total
|
$
|
3,397
|
·
|
sales
of tunneling property and equipment resulted in gains of $2.5
million;
|
·
|
sales
of other property resulted in gains of $3.7
million;
|
·
|
interest
income increased by $1.8 million due to improved cash management
practices, higher interest rates and a $0.4 million increase
in pre-judgment interest on a claim receivable;
and
|
·
|
interest
expense was $1.6 million lower due to our annual debt amortization
payment.
|
Backlog
|
December
31,
2006
|
September
30,
2006
|
June
30,
2006
|
March
31,
2006
|
December
31,
2005
|
|||||||||||
(in
millions)
|
||||||||||||||||
Rehabilitation
|
$
|
201.7
|
$
|
201.2
|
$
|
186.8
|
$
|
216.2
|
$
|
213.3
|
||||||
Tunneling
|
75.7
|
80.7
|
70.1
|
50.2
|
66.3
|
|||||||||||
Tite
Liner®
|
12.8
|
13.2
|
15.6
|
20.1
|
20.2
|
|||||||||||
Total
|
$
|
290.2
|
$
|
295.1
|
$
|
272.5
|
$
|
286.5
|
$
|
299.8
|
Years
Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
|||||||
(Dollars
in thousands)
|
||||||||||
Revenues
|
$
|
481,220
|
$
|
445,072
|
$
|
409,408
|
||||
Gross
profit
|
113,623
|
109,585
|
94,305
|
|||||||
Gross
profit margin
|
23.6
|
%
|
24.6
|
%
|
23.0
|
%
|
||||
Operating
expenses
|
81,874
|
75,275
|
77,173
|
|||||||
Operating
income
|
31,749
|
34,310
|
17,132
|
|||||||
Operating
income percentage
|
6.6
|
%
|
7.7
|
%
|
4.2
|
%
|
Rehabilitation
Revenues by Quarter
|
|||||||||||||
2006
|
2005
|
$
Increase
|
%
Increase
|
||||||||||
(dollars
in thousands)
|
|||||||||||||
1st
quarter
|
$
|
111,658
|
$
|
105,228
|
$
|
6,430
|
6.1
|
%
|
|||||
2nd
quarter
|
125,218
|
123,231
|
1,987
|
1.6
|
%
|
||||||||
3rd
quarter
|
118,269
|
107,821
|
10,448
|
9.7
|
%
|
||||||||
4th
quarter
|
126,075
|
108,792
|
17,283
|
15.9
|
%
|
||||||||
Total
|
$
|
481,220
|
$
|
445,072
|
$
|
36,148
|
8.1
|
%
|
Years
Ended
December
31,
|
|||||||
2006
|
2005
|
||||||
Gross
profit, excluding insurance claims
|
$
|
113,097
|
$
|
106,138
|
|||
Gross
profit margin, excluding insurance claims
|
23.5
|
%
|
23.8
|
%
|
|||
Effect
of insurance claims recognition
|
526
|
3,447
|
|||||
Gross
profit, as reported
|
$
|
113,623
|
$
|
109,585
|
|||
Gross
profit margin, as reported
|
23.6
|
%
|
24.6
|
%
|
Years
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(Dollars
in thousands)
|
||||||||||
Revenues
|
$
|
69,296
|
$
|
111,687
|
$
|
108,729
|
||||
Gross
loss
|
(1,048
|
)
|
(4,184
|
)
|
(3,128
|
)
|
||||
Gross
profit margin
|
-1.5
|
%
|
-3.7
|
%
|
-2.9
|
%
|
||||
Operating
expenses
|
8,338
|
12,723
|
10,080
|
|||||||
Operating
loss
|
(9,386
|
)
|
(16,907
|
)
|
(13,208
|
)
|
||||
Operating
income percentage
|
-13.5
|
%
|
-15.1
|
%
|
-12.1
|
%
|
Years
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(Dollars
in thousands)
|
||||||||||
Revenues
|
$
|
46,199
|
$
|
38,523
|
$
|
24,461
|
||||
Gross
profit
|
15,379
|
11,440
|
8,322
|
|||||||
Gross
profit margin
|
33.3
|
%
|
29.7
|
%
|
34.0
|
%
|
||||
Operating
expenses
|
6,283
|
5,100
|
4,068
|
|||||||
Operating
income
|
9,096
|
6,340
|
4,254
|
|||||||
Operating
income percentage
|
19.7
|
%
|
16.5
|
%
|
17.4
|
%
|
Years
Ended
December
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Interest
expense
|
$
|
6,834
|
$
|
8,465
|
$
|
9,305
|
||||
Increase
(decrease) from prior year
|
(1,631
|
)
|
(840
|
)
|
1,070
|
Years
Ended
December
31,
|
|||||||
2006
vs. 2005
|
2005
vs. 2004
|
||||||
Debt
principal amortization
|
$
|
(1,476
|
)
|
$
|
(1,238
|
)
|
|
Increased
rates due to debt amendments
|
93
|
487
|
|||||
Deferred
fee write-offs due to debt amendments
|
-
|
(226
|
)
|
||||
Euro
note interest (Note repaid in 2004)
|
-
|
(114
|
)
|
||||
Interest
on short-term borrowings and other
|
(248
|
)
|
251
|
||||
Total
|
$
|
(1,631
|
)
|
$
|
(840
|
)
|
·
|
significant
underperformance of a segment or division relative to expected, historical
or projected future operating
results;
|
·
|
significant
negative industry or economic trends;
and
|
·
|
significant
changes in the strategy for a segment or
division.
|
·
|
significant
underperformance in a region relative to expected historical or projected
future operating results;
|
·
|
significant
changes in the use of the assets of a region or the strategy for
the
region;
|
·
|
significant
negative industry or economic trends;
|
·
|
significant
decline in our stock price for a sustained period; and
|
·
|
market
capitalization significantly less than net book
value.
|
December
31,
|
|||||||
2006
|
2005
|
||||||
(In
thousands)
|
|||||||
Cash
and equivalents
|
$
|
96,393
|
$
|
77,069
|
|||
Restricted
cash - in escrow
|
934
|
5,588
|
Payments
Due by Period
|
||||||||||||||||||||||
Cash
Obligations(1,3)
|
Total
|
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
|||||||||||||||
Long-term
debt
|
$
|
81,860
|
$
|
16,814
|
$
|
13
|
$
|
13
|
$
|
13
|
$
|
7
|
$
|
65,000
|
||||||||
Interest
on long-term debt
|
28,488
|
5,107
|
4,251
|
4,251
|
4,251
|
4,251
|
6,377
|
|||||||||||||||
Line
of credit facility(2)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Operating
leases
|
37,490
|
13,636
|
11,346
|
7,062
|
2,639
|
1,215
|
1,592
|
|||||||||||||||
Total
contractual cash obligations
|
$
|
147,838
|
$
|
35,557
|
$
|
15,610
|
$
|
11,326
|
$
|
6,903
|
$
|
5,473
|
$
|
72,969
|
(1)
|
Cash
obligations herein are not discounted. See Notes 5 and 11 to the
consolidated financial statements contained in this report regarding
long-term debt and commitments and contingencies,
respectively.
|
(2)
|
As
of December 31, 2006, there was no borrowing balance on the credit
facility and therefore there is no applicable interest rate as the
rates
are determined on the borrowing date. The available balance was $19.5
million, and the commitment fee was 0.20%. The remaining $15.5 million
was
used for non-interest bearing letters of credit, of which $14.5 million
was collateral for insurance and $1.0 million for work performance.
We
generally use the credit facility for short-term borrowings and disclose
amounts outstanding as a current liability.
|
(3)
|
A
resin supply contract with one of our vendors is excluded from this
table.
See “Market Risk - Commodity Risk” under this Item 7 for further
discussion.
|
Item 7A. |
Quantitative
and Qualitative Disclosures about Market
Risk
|
Financial
Statements and Supplementary Data
|
42
|
|
43
|
|
45
|
|
46
|
|
47
|
|
48
|
|
49
|
/s/
Thomas S. Rooney, Jr.
|
|
Thomas
S. Rooney, Jr.
President
and Chief Executive Officer
|
/s/
David A. Martin
|
|
David
A. Martin
Vice
President and Controller
|
2006
|
2005
|
2004
|
||||||||
Revenues
|
$
|
596,715
|
$
|
595,282
|
$
|
542,598
|
||||
Cost
of revenues
|
468,761
|
478,441
|
443,099
|
|||||||
Gross
profit
|
127,954
|
116,841
|
99,499
|
|||||||
Operating
expenses
|
95,200
|
91,603
|
89,385
|
|||||||
Amortization
expense
|
1,295
|
1,495
|
1,936
|
|||||||
Operating
income
|
31,459
|
23,743
|
8,178
|
|||||||
Other
income (expense)
|
||||||||||
Interest
expense
|
(6,834
|
)
|
(8,465
|
)
|
(9,305
|
)
|
||||
Interest
income
|
3,889
|
2,081
|
1,397
|
|||||||
Other
|
6,256
|
(698
|
)
|
(185
|
)
|
|||||
Total
other income (expense)
|
3,311
|
(7,082
|
)
|
(8,093
|
)
|
|||||
Income
before taxes on income
|
34,770
|
16,661
|
85
|
|||||||
Taxes
(benefits) on income
|
11,057
|
4,188
|
(835
|
)
|
||||||
Income
before minority interests, equity in earnings
|
23,713
|
12,473
|
920
|
|||||||
Minority
interests
|
(316
|
)
|
(166
|
)
|
(107
|
)
|
||||
Equity
in earnings (losses) of affiliated companies
|
1,281
|
853
|
(216
|
)
|
||||||
Net
income
|
$
|
24,678
|
$
|
13,160
|
$
|
597
|
||||
Earnings
per share of common stock and common stock
equivalents:
|
||||||||||
Basic
|
$
|
0.91
|
$
|
0.49
|
$
|
0.02
|
||||
Diluted
|
0.90
|
0.49
|
0.02
|
Assets
|
2006
|
2005
|
|||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
96,393
|
$
|
77,069
|
|||
Restricted
cash
|
934
|
5,588
|
|||||
Receivables,
net
|
90,678
|
85,896
|
|||||
Retainage
|
37,193
|
33,138
|
|||||
Costs
and estimated earnings in excess of billings
|
41,512
|
32,503
|
|||||
Inventories
|
17,665
|
15,536
|
|||||
Prepaid
expenses and other assets
|
25,989
|
24,294
|
|||||
Total
current assets
|
310,364
|
274,024
|
|||||
Property,
plant and equipment,
less accumulated depreciation
|
90,453
|
95,657
|
|||||
Other
assets
|
|||||||
Goodwill
|
131,540
|
131,544
|
|||||
Other
assets
|
17,712
|
17,103
|
|||||
Total
other assets
|
149,252
|
148,647
|
|||||
Total
Assets
|
$
|
550,069
|
$
|
518,328
|
|||
Liabilities
and Stockholders’ Equity
|
|||||||
Current
liabilities
|
|||||||
Current
maturities of long-term debt and line of credit
|
$
|
16,814
|
$
|
18,264
|
|||
Accounts
payable and accrued expenses
|
107,320
|
94,560
|
|||||
Billings
in excess of costs and estimated earnings
|
12,371
|
14,017
|
|||||
Total
current liabilities
|
136,505
|
126,841
|
|||||
Long-term
debt,
less current maturities
|
65,046
|
80,768
|
|||||
Other
liabilities
|
7,726
|
5,497
|
|||||
Total
liabilities
|
209,277
|
213,106
|
|||||
Minority
interests
|
2,181
|
1,726
|
|||||
Commitments
and contingencies (Note 11)
|
-
|
-
|
|||||
Stockholders’
equity
|
|||||||
Preferred
stock, undesignated, $.10 par - shares authorized 2,000,000; none
outstanding
|
-
|
-
|
|||||
Common
stock, $.01 par - shares authorized 60,000,000; shares issued 29,597,044
and 29,294,849; shares outstanding 27,239,580 and
26,937,385
|
296
|
293
|
|||||
Additional
paid-in capital
|
149,802
|
139,372
|
|||||
Retained
earnings
|
236,763
|
212,085
|
|||||
Treasury
stock, at cost - 2,357,464 shares
|
(51,596
|
)
|
(51,596
|
)
|
|||
Accumulated
other comprehensive income
|
3,346
|
3,342
|
|||||
Total
stockholders’ equity
|
338,611
|
303,496
|
|||||
Total
Liabilities and Stockholders’ Equity
|
$
|
550,069
|
$
|
518,328
|
Accumulated
|
|||||||||||||||||||||||||
Additional
|
Other
|
Total
|
|||||||||||||||||||||||
Common
Stock
|
Paid-In
|
Retained
|
Treasury
|
Comprehensive
|
Stockholders’
|
Comprehensive
|
|||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Stock
|
Income
(Loss)
|
Equity
|
Income
|
||||||||||||||||||
BALANCE,
December 31, 2003
|
28,844,069
|
$
|
288
|
$
|
133,382
|
$
|
198,328
|
$
|
(51,596
|
)
|
$
|
(1,233
|
)
|
$
|
279,169
|
||||||||||
Net
income
|
-
|
-
|
-
|
597
|
-
|
-
|
597
|
$
|
597
|
||||||||||||||||
Issuance
of common stock upon exercise of options, including income tax
benefit of $382
|
284,750
|
3
|
3,959
|
-
|
-
|
-
|
3,962
|
-
|
|||||||||||||||||
Restricted
stock issued (See Note 7)
|
65,000
|
1
|
(1
|
)
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||
Amortization
and forfeitures of restricted stock
|
(19,800
|
)
|
(0
|
)
|
128
|
-
|
-
|
-
|
128
|
-
|
|||||||||||||||
Common
stock repurchased
|
-
|
-
|
-
|
-
|
(1,851
|
)
|
-
|
(1,851
|
)
|
-
|
|||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
5,980
|
5,980
|
5,980
|
|||||||||||||||||
Total
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
6,577
|
||||||||||||||||
BALANCE,
December 31, 2004
|
29,174,019
|
$
|
292
|
$
|
137,468
|
$
|
198,925
|
$
|
(51,596
|
)
|
$
|
4,747
|
$
|
289,836
|
|||||||||||
Net
income
|
-
|
-
|
-
|
13,160
|
-
|
-
|
13,160
|
$
|
13,160
|
||||||||||||||||
Issuance
of common stock upon exercise of options, including income tax
benefit of $163
|
107,613
|
1
|
1,606
|
-
|
-
|
-
|
1,607
|
-
|
|||||||||||||||||
Restricted
stock issued (See Note 7)
|
55,000
|
1
|
(1
|
)
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||
Amortization
and forfeitures of restricted stock
|
(41,783
|
)
|
(0
|
)
|
299
|
-
|
-
|
-
|
298
|
-
|
|||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
(1,405
|
)
|
(1,405
|
)
|
(1,405
|
)
|
||||||||||||||
Total
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
11,755
|
||||||||||||||||
BALANCE,
December 31, 2005
|
29,294,849
|
$
|
293
|
$
|
139,372
|
$
|
212,085
|
$
|
(51,596
|
)
|
$
|
3,342
|
$
|
303,496
|
|||||||||||
Net
income
|
-
|
-
|
-
|
24,678
|
-
|
-
|
24,678
|
$
|
24,678
|
||||||||||||||||
Issuance
of common stock upon exercise or redemption of equity compensation
instruments, including tax benefit of $772
|
243,370
|
2
|
4,892
|
-
|
-
|
-
|
4,894
|
-
|
|||||||||||||||||
Distribution
of shares pursuant to Deferred Stock Unit awards
|
9,525
|
0
|
50
|
-
|
-
|
-
|
50
|
-
|
|||||||||||||||||
Reclassification
of deferred stock units in accordance with SFAS 123(R)
|
-
|
-
|
1,235
|
-
|
-
|
-
|
1,235
|
-
|
|||||||||||||||||
Restricted
stock issued (See Note 7)
|
50,800
|
1
|
(1
|
)
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||
Amortization
and forfeitures of restricted stock
|
(1,500
|
)
|
(0
|
)
|
-
|
-
|
-
|
-
|
(0
|
)
|
-
|
||||||||||||||
Equity
based compensation expense
|
-
|
-
|
4,254
|
-
|
-
|
-
|
4,254
|
-
|
|||||||||||||||||
Foreign
currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
4
|
4
|
4
|
|||||||||||||||||
Total
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
24,682
|
||||||||||||||||
BALANCE,
December 31, 2006
|
29,597,044
|
$
|
296
|
$
|
149,802
|
$
|
236,763
|
$
|
(51,596
|
)
|
$
|
3,346
|
$
|
338,611
|
2006
|
2005
|
2004
|
||||||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
24,678
|
$
|
13,160
|
$
|
597
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||
Depreciation
|
20,258
|
19,744
|
17,502
|
|||||||
Amortization
|
1,295
|
1,495
|
1,936
|
|||||||
(Gain)/loss
on sale of assets/investment
|
(6,195
|
)
|
1,813
|
610
|
||||||
Equity-based
compensation expense
|
4,254
|
837
|
640
|
|||||||
Write-off
of debt issuance costs
|
-
|
-
|
226
|
|||||||
Change
in restricted cash related to operating activities
|
4,653
|
(3,883
|
)
|
(181
|
)
|
|||||
Other
|
(1,577
|
)
|
(556
|
)
|
4,282
|
|||||
Deferred
income taxes
|
2,175
|
2,352
|
1,481
|
|||||||
Tax
benefits related to stock option exercises
|
(772
|
)
|
-
|
-
|
||||||
Changes
in operating assets and liabilities (Note 10)
|
(9,027
|
)
|
(11,404
|
)
|
15,464
|
|||||
Net
cash provided by operating activities
|
39,742
|
23,558
|
42,557
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Capital
expenditures
|
(20,635
|
)
|
(27,081
|
)
|
(35,195
|
)
|
||||
Proceeds
from sale of fixed assets
|
12,079
|
1,296
|
1,904
|
|||||||
Liquidation
of life insurance cash surrender value
|
1,423
|
-
|
-
|
|||||||
Other
investing activities
|
-
|
(557
|
)
|
(844
|
)
|
|||||
Net
cash used in investing activities
|
(7,133
|
)
|
(26,342
|
)
|
(34,135
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Proceeds
from issuance of common stock
|
4,122
|
1,243
|
3,580
|
|||||||
Additional
tax benefit from stock option exercises recorded in additional paid-in
capital
|
772
|
-
|
-
|
|||||||
Proceeds
from notes payable
|
2,662
|
6,179
|
-
|
|||||||
Principal
payments on notes payable
|
(4,101
|
)
|
(3,650
|
)
|
-
|
|||||
Principal
payments on long-term debt and lines of credit, net
|
(15,735
|
)
|
(15,779
|
)
|
(18,978
|
)
|
||||
Changes
in restricted cash related to financing activities
|
-
|
-
|
4,602
|
|||||||
Deferred
financing costs paid
|
(106
|
)
|
(260
|
)
|
(633
|
)
|
||||
Net
cash used in financing activities
|
(12,386
|
)
|
(12,267
|
)
|
(11,429
|
)
|
||||
Effect
of exchange rate changes on cash
|
(899
|
)
|
(1,126
|
)
|
2,388
|
|||||
Net
increase (decrease) in cash and cash equivalents for the
period
|
19,324
|
(16,177
|
)
|
(619
|
)
|
|||||
Cash
and cash equivalents, beginning of year
|
77,069
|
93,246
|
93,865
|
|||||||
Cash
and cash equivalents, end of year
|
$
|
96,393
|
$
|
77,069
|
$
|
93,246
|
||||
Supplemental
disclosures of cash flow information:
|
||||||||||
Cash
paid for:
|
||||||||||
Interest
|
$
|
6,402
|
$
|
7,759
|
$
|
8,501
|
||||
Income
taxes (refunded) paid, net
|
7,637
|
(5,218
|
)
|
(5,117
|
)
|
|||||
Noncash
investing and financing activities:
|
||||||||||
Noncompete
liability recovered in settlement
|
$
|
-
|
$
|
-
|
$
|
919
|
1.
|
DESCRIPTION
OF BUSINESS:
|
2.
|
SUMMARY
OF ACCOUNTING POLICIES:
|
2006
|
2005
|
2004
|
||||||||
Weighted
average number of common shares used for basic EPS
|
27,043,651
|
26,782,818
|
26,649,030
|
|||||||
Effect
of dilutive stock options, stock appreciation rights, restricted
stock and
deferred stock units (Note 7)
|
460,617
|
168,766
|
161,450
|
|||||||
Weighted
average number of common shares and dilutive potential common stock
used
in diluted EPS
|
27,504,268
|
26,951,584
|
26,810,480
|
·
|
significant
underperformance in a region relative to expected historical or projected
future operating results;
|
·
|
significant
changes in the use of the assets of a region or the strategy for
the
region;
|
·
|
significant
negative industry or economic trends;
|
·
|
significant
decline in the Company’s stock price for a sustained period; and
|
·
|
market
capitalization is significantly less than net book
value.
|
·
|
significant
underperformance of a segment or division relative to expected, historical
or projected future operating
results;
|
·
|
significant
negative industry or economic trends;
and
|
·
|
significant
changes in the strategy for a segment or
division.
|
3.
|
SUPPLEMENTAL
BALANCE SHEET INFORMATION (in
thousands):
|
2006
|
2005
|
2004
|
||||||||
Balance,
at beginning of year
|
$
|
3,433
|
$
|
4,077
|
$
|
3,008
|
||||
Charged
to (reversed from) expense
|
(483
|
)
|
654
|
1,143
|
||||||
Write-offs
and adjustments
|
(313
|
)
|
(1,298
|
)
|
(74
|
)
|
||||
Balance,
at end of year
|
$
|
2,637
|
$
|
3,433
|
$
|
4,077
|
2006
|
2005
|
||||||
Costs
incurred on uncompleted contracts
|
$
|
446,119
|
$
|
529,105
|
|||
Estimated
earnings to date
|
77,426
|
70,331
|
|||||
Subtotal
|
523,545
|
599,436
|
|||||
Less
- Billings to date
|
(494,404
|
)
|
(580,950
|
)
|
|||
Total
|
$
|
29,141
|
$
|
18,486
|
|||
Included
in the accompanying balance sheets:
|
|||||||
Costs
and estimated earnings in excess of billings
|
$
|
41,512
|
$
|
32,503
|
|||
Billings
in excess of costs and estimated earnings
|
(12,371
|
)
|
(14,017
|
)
|
|||
Total
|
$
|
29,141
|
$
|
18,486
|
2006
|
2005
|
||||||
Raw
materials and supplies
|
$
|
3,072
|
$
|
1,839
|
|||
Work-in-process
|
3,897
|
3,947
|
|||||
Finished
products
|
2,210
|
1,618
|
|||||
Construction
materials
|
8,486
|
8,132
|
|||||
Total
|
$
|
17,665
|
$
|
15,536
|
Estimated
Useful Lives (Years)
|
2006
|
2005
|
||||||||
Land
and land improvements
|
$
|
8,171
|
$
|
10,107
|
||||||
Buildings
and improvements
|
5
- 40
|
27,284
|
28,446
|
|||||||
Machinery
and equipment
|
4
- 10
|
114,152
|
114,670
|
|||||||
Furniture
and fixtures
|
3
- 10
|
8,425
|
7,159
|
|||||||
Autos
and trucks
|
3
- 10
|
40,462
|
40,937
|
|||||||
Construction
in progress
|
9,757
|
3,825
|
||||||||
Subtotal
|
208,251
|
205,144
|
||||||||
Less
- Accumulated depreciation
|
(117,798
|
)
|
(109,487
|
)
|
||||||
Total
|
$
|
90,453
|
$
|
95,657
|
2006
|
2005
|
||||||
Investment
in affiliates
|
$
|
8,258
|
$
|
7,083
|
|||
License
agreements
|
2,081
|
2,250
|
|||||
Customer
relationships
|
1,406
|
1,526
|
|||||
Patents
and trademarks
|
2,765
|
1,462
|
|||||
Non-compete
agreements
|
196
|
839
|
|||||
Other
|
3,006
|
3,943
|
|||||
Total
|
$
|
17,712
|
$
|
17,103
|
2006
|
2005
|
||||||
Accounts
payable - trade
|
$
|
63,707
|
$
|
55,154
|
|||
Estimated
casualty and healthcare liabilities
|
21,313
|
20,325
|
|||||
Job
costs
|
15,364
|
10,314
|
|||||
Compensation
and bonus
|
5,375
|
6,126
|
|||||
Interest
|
1,314
|
1,838
|
|||||
Job
loss reserves
|
197
|
533
|
|||||
Warranty
|
50
|
270
|
|||||
Total
|
$
|
107,320
|
$
|
94,560
|
2006
|
2005
|
||||||
Casualty
insurance
|
$
|
19,508
|
$
|
18,219
|
|||
Healthcare
benefits
|
1,805
|
2,106
|
|||||
Total
|
$
|
21,313
|
$
|
20,325
|
4.
|
ACQUIRED
INTANGIBLE ASSETS AND GOODWILL:
|
Rehabilitation
|
Tunneling
|
Total
|
||||||||
Balance
as of December 31, 2005
|
$
|
122,624
|
$
|
8,920
|
$
|
131,544
|
||||
Foreign
currency adjustment
|
(4
|
)
|
-
|
(4
|
)
|
|||||
Balance
as of December 31, 2006
|
$
|
122,620
|
$
|
8,920
|
$
|
131,540
|
As
of December 31, 2006
|
||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
||||||||
Amortized
intangible assets:
|
||||||||||
License
agreements
|
$
|
3,894
|
$
|
(1,813
|
)
|
$
|
2,081
|
|||
Customer
relationships
|
1,797
|
(391
|
)
|
1,406
|
||||||
Patents
and trademarks
|
16,048
|
(13,283
|
)
|
2,765
|
||||||
Non-compete
agreements
|
3,252
|
(3,056
|
)
|
196
|
||||||
Total
|
$
|
24,991
|
$
|
(18,543
|
)
|
$
|
6,448
|
As
of December 31, 2005
|
||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
||||||||
Amortized
intangible assets:
|
||||||||||
License
agreements
|
$
|
3,894
|
$
|
(1,644
|
)
|
$
|
2,250
|
|||
Customer
relationships
|
1,797
|
(271
|
)
|
1,526
|
||||||
Patents
and trademarks
|
14,500
|
(13,038
|
)
|
1,462
|
||||||
Non-compete
agreements
|
3,239
|
(2,400
|
)
|
839
|
||||||
Total
|
$
|
23,430
|
$
|
(17,353
|
)
|
$
|
6,077
|
For
the year ended December 31:
|
2006
|
|
2005
|
||||
Aggregate
amortization expense:
|
$
|
1,295
|
$
|
1,495
|
|||
Estimated
amortization expense:
|
|||||||
For
year ending December 31, 2007
|
$
|
1,166
|
|||||
For
year ending December 31, 2008
|
758
|
||||||
For
year ending December 31, 2009
|
291
|
||||||
For
year ending December 31, 2010
|
291
|
||||||
For
year ending December 31, 2011
|
291
|
5.
|
LONG-TERM
DEBT AND LINE OF CREDIT
FACILITY:
|
2006
|
2005
|
||||||
8.88%
Senior Notes, Series A, payable in $15,715 annual installments
beginning
February 2001 through 2007, with interest payable
semiannually
|
$
|
15,710
|
$
|
31,425
|
|||
6.54%
Senior Notes, Series 2003-A, due April 24, 2013
|
65,000
|
65,000
|
|||||
Other
notes with interest rates from 5.0% to 10.5%
|
1,150
|
2,607
|
|||||
Subtotal
|
81,860
|
99,032
|
|||||
Less
- Current maturities and notes payable
|
(16,814
|
)
|
(18,264
|
)
|
|||
Total
|
$
|
65,046
|
$
|
80,768
|
Year
|
Amount
|
|||
2007
|
$
|
16,814
|
||
2008
|
13
|
|||
2009
|
13
|
|||
2010
|
13
|
|||
2011
|
7
|
|||
Thereafter
|
65,000
|
|||
Total
|
$
|
81,860
|
6.
|
STOCKHOLDERS’
EQUITY
|
7.
|
EQUITY
BASED COMPENSATION
|
2006
|
2005
|
||||||||||||
Range
|
Weighted
Average
|
Range
|
Weighted
Average
|
||||||||||
Volatility
|
41.7%
- 45.6
|
%
|
41.9
|
%
|
44.0
|
%
|
44.0
|
%
|
|||||
Expected
term (years)
|
4.5
- 4.8
|
4.8
|
5.6
|
5.6
|
|||||||||
Dividend
yield
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
|||||
Risk-free
rate
|
4.3%
- 5.0
|
%
|
4.3
|
%
|
4.0
|
%
|
4.0
|
%
|
|||||
Turnover
|
2.3%
- 2.9
|
%
|
2.3
|
%
|
3.3
|
%
|
3.3
|
%
|
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
(Yrs)
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding
at December 31, 2005
|
1,381,476
|
$
|
19.53
|
||||||||||
Granted
|
330,500
|
19.74
|
|||||||||||
Exercised
|
(243,370
|
)
|
16.88
|
||||||||||
Forfeited/Expired
|
(170,214
|
)
|
21.46
|
||||||||||
Outstanding
at December 31, 2006
|
1,298,392
|
$
|
19.85
|
4.8
|
$
|
8,476,463
|
|||||||
Exercisable
at December 31, 2006
|
901,667
|
$
|
20.60
|
4.4
|
$
|
5,396,866
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||||
Range
of
Exercise
Price
|
Number
Outstanding
|
Weighted
Average
Remaining
Contractual
Term
(Yrs)
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
|||||||||||||||
$4.00
to $10.00
|
29,400
|
0.9
|
$
|
8.75
|
$
|
503,034
|
29,400
|
$
|
8.75
|
$
|
503,034
|
|||||||||||
$10.01
to $20.00
|
751,846
|
5.1
|
16.49
|
7,045,843
|
391,996
|
15.38
|
4,107,136
|
|||||||||||||||
$20.00
and above
|
517,146
|
4.6
|
25.37
|
927,586
|
480,271
|
25.59
|
786,696
|
|||||||||||||||
Total
Outstanding
|
1,298,392
|
4.8
|
$
|
19.84
|
$
|
8,476,463
|
901,667
|
$
|
20.60
|
$
|
5,396,866
|
For
the Years Ended December 31,
|
|||||||||||||||||||
2006
|
2005
|
2004
|
|||||||||||||||||
Shares
|
Weighted
Average
Grant
Date
Fair
Value
|
Shares
|
Weighted
Average
Grant
Date
Fair
Value
|
Shares
|
Weighted
Average
Grant
Date
Fair
Value
|
||||||||||||||
Outstanding,
beginning of period
|
83,900
|
$
|
16.64
|
73,600
|
$
|
15.53
|
28,400
|
$
|
15.72
|
||||||||||
Granted
|
50,800
|
19.41
|
55,000
|
14.65
|
65,000
|
17.97
|
|||||||||||||
Vested
|
(1,700
|
)
|
15.72
|
(2,917
|
)
|
15.61
|
—
|
—
|
|||||||||||
Forfeited
|
(1,500
|
)
|
15.50
|
(41,783
|
)
|
15.97
|
(19,800
|
)
|
15.72
|
||||||||||
Outstanding,
end of period
|
131,500
|
$
|
17.73
|
83,900
|
$
|
16.64
|
73,600
|
$
|
15.53
|
For
the Years Ended
December
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Restricted
stock expense
|
$
|
796
|
$
|
485
|
$
|
242
|
||||
Forfeitures
|
(15
|
)
|
(187
|
)
|
(114
|
)
|
||||
Restricted
stock expense, net
|
781
|
298
|
128
|
|||||||
Tax
benefit
|
(304
|
)
|
(104
|
)
|
(44
|
)
|
||||
Net
expense
|
$
|
477
|
$
|
194
|
$
|
84
|
For
the Years Ended December 31,
|
|||||||||||||||||||
2006
|
2005
|
2004
|
|||||||||||||||||
Deferred
Stock
Units
|
Weighted
Average
Grant
Date
Fair
Value
|
Deferred
Stock
Units
|
Weighted
Average
Grant
Date
Fair
Value
|
Deferred
Stock
Units
|
Weighted
Average
Grant
Date
Fair
Value
|
||||||||||||||
Outstanding,
beginning of period
|
78,432
|
$
|
16.39
|
58,800
|
$
|
16.11
|
27,500
|
$
|
15.75
|
||||||||||
Granted
|
24,900
|
24.20
|
32,282
|
16.69
|
31,300
|
16.42
|
|||||||||||||
Shares
distributed
|
(9,525
|
)
|
15.75
|
(12,650
|
)
|
15.85
|
—
|
—
|
|||||||||||
Outstanding,
end of period
|
93,807
|
$
|
18.53
|
78,432
|
$
|
16.39
|
58,800
|
$
|
16.11
|
For
the Years Ended
December
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Deferred
stock units expense
|
$
|
603
|
$
|
539
|
$
|
512
|
||||
Tax
benefit
|
(234
|
)
|
(189
|
)
|
(180
|
)
|
||||
Net
expense
|
$
|
369
|
$
|
350
|
$
|
332
|
For
the Years Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Net
income, as reported
|
$
|
13,160
|
$
|
597
|
|||
Add:
Total equity-based compensation expense included in net income,
net of
related tax benefits
|
544
|
416
|
|||||
Deduct:
Total equity-based compensation expense determined under fair value
method
for all awards, Net of related tax effects
|
(2,307
|
)
|
(2,093
|
)
|
|||
Pro
forma net income
|
$
|
11,397
|
$
|
(1,080
|
)
|
||
Basic
earnings per share as reported:
|
$
|
0.49
|
$
|
0.02
|
|||
Basic
earnings per share pro forma:
|
0.43
|
(0.04
|
)
|
||||
Diluted
earnings per share as reported:
|
$
|
0.49
|
$
|
0.02
|
|||
Diluted
earnings per share pro forma:
|
0.42
|
(0.04
|
)
|
8.
|
OTHER
INCOME (EXPENSE):
|
2006
|
2005
|
2004
|
||||||||
Gain
(loss) on sale/disposal of assets
|
$
|
6,195
|
$
|
(1,813
|
)
|
$
|
(610
|
)
|
||
Other
|
61
|
1,115
|
425
|
|||||||
Total
|
$
|
6,256
|
$
|
(698
|
)
|
$
|
(185
|
)
|
9.
|
TAXES
ON INCOME:
|
2006
|
2005
|
2004
|
||||||||
Domestic
|
$
|
11,623
|
$
|
1,066
|
$
|
(8,310
|
)
|
|||
Foreign
|
23,147
|
15,595
|
8,395
|
|||||||
Total
|
$
|
34,770
|
$
|
16,661
|
$
|
85
|
2006
|
2005
|
2004
|
||||||||
Current:
|
||||||||||
Federal
|
$
|
985
|
$
|
(3,187
|
)
|
$
|
(6,778
|
)
|
||
Foreign
|
7,323
|
4,531
|
4,274
|
|||||||
State
|
574
|
492
|
188
|
|||||||
Subtotal
|
8,882
|
1,836
|
(2,316
|
)
|
||||||
Deferred:
|
||||||||||
Federal
|
1,169
|
2,662
|
2,735
|
|||||||
Foreign
|
364
|
217
|
(713
|
)
|
||||||
State
|
642
|
(527
|
)
|
(541
|
)
|
|||||
Subtotal
|
2,175
|
2,352
|
1,481
|
|||||||
Total
tax provision
|
$
|
11,057
|
$
|
4,188
|
$
|
(835
|
)
|
2006
|
2005
|
2004
|
||||||||
Income
taxes at U.S. federal statutory tax rate
|
$
|
12,170
|
$
|
5,832
|
$
|
30
|
||||
Increase
(decrease) in taxes resulting from:
|
||||||||||
State
income taxes, net of federal income tax benefit
|
791
|
(23
|
)
|
(229
|
)
|
|||||
Amortization
of intangibles
|
(711
|
)
|
(715
|
)
|
(616
|
)
|
||||
Foreign
tax matters
|
(1,787
|
)
|
(581
|
)
|
(126
|
)
|
||||
Valuation
allowance on net operating loss carryforwards (NOL)
|
648
|
(204
|
)
|
100
|
||||||
Non-deductible
meals and entertainment
|
203
|
200
|
668
|
|||||||
Other
matters
|
(257
|
)
|
(321
|
)
|
(662
|
)
|
||||
Total
tax provision
|
$
|
11,057
|
$
|
4,188
|
$
|
(835
|
)
|
|||
Effective
tax rate
|
31.8
|
%
|
25.1
|
%
|
(982.4
|
)%
|
2006
|
2005
|
||||||
Deferred
income tax assets:
|
|||||||
Foreign
tax credit carryforwards
|
$
|
491
|
$
|
605
|
|||
Net
operating loss carryforwards
|
7,105
|
6,467
|
|||||
Accrued
expenses
|
8,831
|
9,437
|
|||||
Other
|
2,171
|
2,485
|
|||||
Total
gross deferred income tax assets
|
18,598
|
18,994
|
|||||
Less
valuation allowance
|
(4,571
|
)
|
(4,524
|
)
|
|||
Net
deferred income tax assets
|
14,027
|
14,470
|
|||||
Deferred
income tax liabilities:
|
|||||||
Property,
plant and equipment
|
(8,335
|
)
|
(7,696
|
)
|
|||
Other
|
(6,380
|
)
|
(5,394
|
)
|
|||
Total
deferred income tax liabilities
|
(14,715
|
)
|
(13,090
|
)
|
|||
Net
deferred income tax (liabilities)/assets
|
$
|
(688
|
)
|
$
|
1,380
|
2006
|
2005
|
||||||
Current
deferred income tax assets, net
|
$
|
2,805
|
$
|
3,454
|
|||
Noncurrent
deferred income tax liabilities, net
|
(3,493
|
)
|
(2,074
|
)
|
|||
Net
deferred income tax (liabilities)/assets
|
$
|
(688
|
)
|
$
|
1,380
|
10.
|
CHANGES
IN OPERATING ASSETS:
|
2006
|
2005
|
2004
|
||||||||
Receivables,
net, retainage and costs and estimated earnings in excess of
billings
|
$
|
(14,657
|
)
|
$
|
(15,213
|
)
|
$
|
4,460
|
||
Inventories
|
(1,741
|
)
|
(2,500
|
)
|
(404
|
)
|
||||
Prepaid
expenses and other assets
|
(2,096
|
)
|
(6,693
|
)
|
2,818
|
|||||
Accounts
payable and accrued expenses
|
9,467
|
13,002
|
8,590
|
|||||||
Total
|
$
|
(9,027
|
)
|
$
|
(11,404
|
)
|
$
|
15,464
|
11.
|
COMMITMENTS
AND CONTINGENCIES:
|
Year
|
Minimum
Lease
Payments
|
|||
2007
|
$
|
13,636
|
||
2008
|
11,346
|
|||
2009
|
7,062
|
|||
2010
|
2,639
|
|||
2011
|
1,215
|
|||
Thereafter
|
1,592
|
|||
Total
|
$
|
37,490
|
Documented
Remediation
Costs
|
Pre-judgment
Interest
|
Total
|
||||||||
(in
thousands)
|
||||||||||
Claim
recorded June 30, 2005
|
$
|
5,872
|
$
|
275
|
$
|
6,147
|
||||
Interest
recorded July through December 31, 2005
|
-
|
165
|
165
|
|||||||
Additional
documented remediation costs recorded in the second quarter of
2006
|
526
|
-
|
526
|
|||||||
Interest
recorded in 2006
|
-
|
811
|
811
|
|||||||
Claim
receivable balance, December 31, 2006
|
$
|
6,398
|
$
|
1,251
|
$
|
7,649
|
12.
|
SEGMENT
AND GEOGRAPHIC INFORMATION:
|
2006
|
2005
|
2004
|
||||||||
Revenues:
|
||||||||||
Rehabilitation
|
$
|
481,220
|
$
|
445,072
|
$
|
409,408
|
||||
Tunneling
|
69,296
|
111,687
|
108,729
|
|||||||
Tite
Liner®
|
46,199
|
38,523
|
24,461
|
|||||||
Total
revenues
|
$
|
596,715
|
$
|
595,282
|
$
|
542,598
|
||||
Operating
income (loss):
|
||||||||||
Rehabilitation
|
$
|
31,749
|
$
|
34,310
|
$
|
17,132
|
||||
Tunneling
|
(9,386
|
)
|
(16,907
|
)
|
(13,208
|
)
|
||||
Tite
Liner®
|
9,096
|
6,340
|
4,254
|
|||||||
Total
operating income
|
$
|
31,459
|
$
|
23,743
|
$
|
8,178
|
||||
Total
assets:
|
||||||||||
Rehabilitation
|
$
|
370,582
|
$
|
345,893
|
$
|
301,006
|
||||
Tunneling
|
53,660
|
63,253
|
73,822
|
|||||||
Tite
Liner®
|
20,810
|
15,255
|
9,349
|
|||||||
Corporate
|
105,017
|
93,927
|
124,644
|
|||||||
Total
assets
|
$
|
550,069
|
$
|
518,328
|
$
|
508,821
|
Capital
expenditures:
|
||||||||||
Rehabilitation
|
$
|
12,601
|
$
|
19,571
|
$
|
22,002
|
||||
Tunneling
|
885
|
2,434
|
8,549
|
|||||||
Tite
Liner®
|
870
|
527
|
1,322
|
|||||||
Corporate
|
6,279
|
4,549
|
3,322
|
|||||||
Total
capital expenditures
|
$
|
20,635
|
$
|
27,081
|
$
|
35,195
|
||||
Depreciation
and amortization:
|
||||||||||
Rehabilitation
|
$
|
13,838
|
$
|
13,266
|
$
|
12,278
|
||||
Tunneling
|
4,933
|
4,867
|
4,099
|
|||||||
Tite
Liner®
|
594
|
818
|
797
|
|||||||
Corporate
|
2,188
|
2,288
|
2,264
|
|||||||
Total
depreciation and amortization
|
$
|
21,553
|
$
|
21,239
|
$
|
19,438
|
2006
|
2005
|
2004
|
||||||||
Revenues:
|
||||||||||
United
States
|
$
|
448,350
|
$
|
462,541
|
$
|
439,618
|
||||
Canada
|
44,101
|
31,169
|
25,595
|
|||||||
Europe
|
90,259
|
89,716
|
75,914
|
|||||||
Other
foreign
|
14,005
|
11,856
|
1,471
|
|||||||
Total
revenues
|
$
|
596,715
|
$
|
595,282
|
$
|
542,598
|
||||
Operating
income (loss):
|
||||||||||
United
States
|
$
|
10,328
|
$
|
8,289
|
$
|
946
|
||||
Canada
|
9,484
|
5,296
|
4,005
|
|||||||
Europe
|
8,945
|
8,734
|
3,271
|
|||||||
Other
foreign
|
2,702
|
1,424
|
(44
|
)
|
||||||
Total
operating income
|
$
|
31,459
|
$
|
23,743
|
$
|
8,178
|
||||
Long-lived
assets:
|
||||||||||
United
States
|
$
|
84,695
|
$
|
91,692
|
$
|
88,442
|
||||
Canada
|
2,222
|
2,292
|
2,066
|
|||||||
Europe
|
20,163
|
17,993
|
17,230
|
|||||||
Other
foreign
|
1,085
|
783
|
675
|
|||||||
Total
long-lived assets
|
$
|
108,165
|
$
|
112,760
|
$
|
108,413
|
13.
|
SUBSEQUENT
EVENTS:
|
14.
|
SELECTED
QUARTERLY FINANCIAL DATA
(UNAUDITED):
|
First
|
Second
|
Third
|
Fourth
|
||||||||||
Year
ended December 31, 2006
|
|||||||||||||
Revenues
|
$
|
143,564
|
$
|
154,201
|
$
|
144,076
|
$
|
154,874
|
|||||
Gross
profit
|
28,665
|
34,061
|
31,640
|
33,588
|
|||||||||
Operating
income
|
5,778
|
8,185
|
7,347
|
10,149
|
|||||||||
Net
income
|
3,034
|
5,514
|
5,695
|
10,435
|
|||||||||
Basic
earnings per share:
|
0.11
|
0.20
|
0.21
|
0.39
|
|||||||||
Diluted
earnings per share:
|
0.11
|
0.20
|
0.21
|
0.38
|
|||||||||
Year
ended December 31, 2005:
|
|||||||||||||
Revenues
|
$
|
136,277
|
$
|
157,841
|
$
|
155,213
|
$
|
145,951
|
|||||
Gross
profit
|
26,099
|
28,223
|
32,850
|
29,669
|
|||||||||
Operating
income
|
2,641
|
5,484
|
9,459
|
6,159
|
|||||||||
Net
income
|
400
|
2,735
|
5,760
|
4,265
|
|||||||||
Basic
earnings per share:
|
0.01
|
0.10
|
0.21
|
0.16
|
|||||||||
Diluted
earnings per share:
|
0.01
|
0.10
|
0.21
|
0.16
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
|
Item
9A.
|
Controls
and Procedures
|
Item
9B.
|
Other
Information
|
Not
applicable.
|
Item
10.
|
Directors,
Executive Officers and Corporate
Governance
|
Item
11.
|
Executive
Compensation
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director Independence
|
Item
14.
|
Principal
Accountant Fees and
Services
|
Item
15.
|
Exhibits
and Financial Statement Schedules
|
Dated:
|
February
22, 2007
|
INSITUFORM
TECHNOLOGIES, INC.
|
||
By:
|
/s/
Thomas S. Rooney, Jr.
|
|||
Thomas
S. Rooney, Jr.
|
||||
President
and Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/
Thomas S. Rooney, Jr.
|
Principal
Executive Officer and
|
February
22, 2007
|
||
Thomas
S. Rooney, Jr.
|
Director
|
|||
/s/
David A. Martin
|
Principal
Financial and
|
February
22, 2007
|
||
David
A. Martin
|
Accounting
Officer
|
|||
/s/
Alfred L. Woods
|
Director
|
February
22, 2007
|
||
Alfred
L. Woods
|
||||
/s/
Stephen P. Cortinovis
|
Director
|
February
22, 2007
|
||
Stephen
P. Cortinovis
|
||||
/s/
Stephanie A. Cuskley
|
Director
|
February
22, 2007
|
||
Stephanie
A. Cuskley
|
/s/
John P. Dubinsky
|
Director
|
February
22, 2007
|
||
John
P. Dubinsky
|
||||
/s/
Juanita H. Hinshaw
|
Director
|
February
22, 2007
|
||
Juanita
H. Hinshaw
|
||||
/s/
Alfred T. McNeill
|
Director
|
February
22, 2007
|
||
Alfred
T. McNeill
|
||||
/s/
Sheldon Weinig
|
Director
|
February
22, 2007
|
||
Sheldon
Weinig
|
3.1
|
Restated
Certificate of Incorporation of the Company, as amended through
April 27,
2005 (incorporated by reference to Appendix A to the definitive
proxy
statement on Schedule 14A filed on March 24, 2005 in connection
with the
2005 annual meeting of stockholders), and Certificate of Designation,
Preferences and Rights of Series A Junior Participating Preferred
Stock
(incorporated by reference to Exhibit 3.1 to the annual report
on Form
10-K for the year ended December 31,
2001).
|
3.2
|
Amended
and Restated By-Laws of the Company, as amended through July 25,
2006
(incorporated by reference to Exhibit 3.1 to the current report
on Form
8-K dated and filed July 27, 2006).
|
4
|
Rights
Agreement dated as of February 26, 2002 between Insituform Technologies,
Inc. and American Stock Transfer & Trust Company (incorporated by
reference to Exhibit 1 to the Registration Statement on Form 8-A
dated
March 8, 2002).
|
10.1
|
Second
Amended and Restated Credit Agreement (the “Credit Agreement”) dated as of
February 17, 2006 between the Company and Bank of America, N.A.,
as
Administrative Agent and Letter of Credit Issuing Lender (incorporated
by
reference to Exhibit 10.1 to the current report on Form 8-K dated
and
filed February 21, 2006).
|
10.2
|
Note
Purchase Agreement (the “Note Purchase Agreement”) dated as of April 24,
2003 among the Company and each of the lenders listed therein
(incorporated by reference to Exhibit 10.1 to the quarterly report
on Form
10-Q for the quarter ended March 31, 2003), as further amended
by First
Amendment dated as of March 12, 2004 (incorporated by reference
to Exhibit
10.3 to the annual report on Form 10-K for the year ended December
31,
2003), as further amended by Second Amendment dated as of March
16, 2005
(incorporated by reference to Exhibit 10.3 to the annual report
on Form
10-K for the year ended December 31,
2004).
|
10.3
|
Master
Guaranty dated as of February 17, 2006 by those subsidiaries of
the
Company named therein (incorporated by reference to Exhibit 10.2
to the
current report on Form 8-K dated and filed February 21,
2006).
|
10.4
|
Amended
and Restated Intercreditor Agreement dated as of April 24, 2003
among Bank
of America, N.A. and the Noteholders (incorporated by reference
to Exhibit
10.2 to the quarterly report on Form 10-Q for the quarter ended
March 31,
2003).
|
10.5
|
Employment
Letter dated March 7, 2003 between the Company and Thomas S. Rooney,
Jr.
(incorporated by reference to Exhibit 10.3 to the quarterly report
on Form
10-Q for the quarter ended March 31, 2003), as amended by Amendment
dated
March 1, 2004 (incorporated by reference to Exhibit 10.6 to the
annual
report on Form 10-K for the year ended December 31, 2003).
(3)
|
10.6
|
Employment
letter dated May 2, 2005 between the Company and Thomas E. Vossman
(incorporated by reference to Exhibit 10.1 to the current report
on Form
8-K dated and filed May 4, 2005).
(3)
|
10.7
|
Resin
Purchase Agreement dated as of March 29, 2005 by and between the
Company
and AOC, LLC (incorporated by reference to Exhibit 10.1 to the
current
report on Form 8-K dated and filed April 4, 2005), as amended by
First
Amendment to Resin Purchase Agreement entered into as of August
17, 2005
and effective as of July 15, 2005 (incorporated by reference to
Exhibit
10.1 to the current report on Form 8-K dated and filed August 19,
2005).
|
10.8
|
2007
Management Annual Incentive Plan (incorporated by reference to
Exhibit
10.1 to the current report on Form 8-K dated and filed January
17, 2007).
(3)
|
10.9
|
1992
Employee Stock Option Plan of the Company (incorporated by reference
to
Exhibit 10.11 to the annual report on Form 10-K for the year ended
December 31, 1999). (3)
|
10.10
|
1992
Director Stock Option Plan of the Company (incorporated by reference
to
Exhibit 10.12 to the annual report on Form 10-K for the year ended
December 31, 1999). (3)
|
10.11
|
Amended
and Restated 2001 Employee Equity Incentive Plan of the Company
(incorporated by reference to Appendix C to the definitive proxy
statement
on Schedule 14A filed on April 16, 2003 in connection with the
2003 annual
meeting of stockholders). (3)
|
10.12
|
Amended
and Restated 2001 Non-Employee Director Equity Incentive Plan of
the
Company (incorporated by reference to Appendix B to the definitive
proxy
statement on Schedule 14A filed on April 16, 2003 in connection
with the
2003 annual meeting of stockholders).
(3)
|
10.13
|
2006
Employee Equity Incentive Plan of the Company (incorporated by
reference
to Appendix C to the definitive proxy statement on Schedule 14A
filed on
March 10, 2006 in connection with the 2006 annual meeting of
stockholders), as amended on April 14, 2006 (incorporated by reference
to
Exhibit 10.1 to the Current Report on Form 8-K, dated and filed
on April
14, 2006). (3)
|
10.14
|
2006
Non-Employee Director Equity Incentive Plan of the Company (incorporated
by reference to Appendix B to the definitive proxy statement on
Schedule
14A filed on March 10, 2006 in connection with the 2006 annual
meeting of
stockholders). (3)
|
10.15
|
2006
Executive Performance Plan of the Company (incorporated by reference
to
Appendix D to the definitive proxy statement on Schedule 14A filed
on
March 10, 2006 in connection with the 2006 annual meeting of
stockholders). (3)
|
|
10.16
|
Stock
Purchase Program of the Company (incorporated by reference to Exhibit
99.1
to the Registration Statement on Form S-8 dated and filed on May
18,
2006). (3)
|
10.17
|
Senior
Management Voluntary Deferred Compensation Plan of the Company
(incorporated by reference to Exhibit 10.19 to the annual report
on Form
10-K for the year ended December 31, 1998), as amended by First
Amendment
thereto dated as of October 25, 2000 (incorporated by reference
to Exhibit
10.15 to the annual report on Form 10-K for the year ended December
31,
2000), as further amended by Second Amendment to Senior Management
Voluntary Deferred Compensation Plan dated as of December 21, 2005
(incorporated by reference to Exhibit 10.19 to the annual report
on Form
10-K for the year ended December 31, 2005), as further amended by
Third Amendment to Senior Management Voluntary Deferred Compensation
Plan
dated as of January 5, 2006 (incorporated by reference to Exhibit
10.5 to
the current report on Form 8-K dated and filed January 11, 2006).
(3)
|
10.18
|
Form
of Directors’ Indemnification Agreement (incorporated by reference to
Exhibit 10.3 to the quarterly report on Form 10-Q for the quarter
ended
June 30, 2002). (3)
|
21
|
Subsidiaries
of the Company, filed herewith.
|
23
|
Consent
of PricewaterhouseCoopers LLP, filed
herewith.
|
24
|
Power
of Attorney (set forth on signature
page).
|
31.1
|
Certification
of Thomas S. Rooney, Jr. pursuant to Section 302 of the Sarbanes-Oxley
Act
of 2002, filed herewith.
|
31.2
|
Certification
of David A. Martin pursuant to Section 302 of the Sarbanes-Oxley
Act of
2002, filed herewith.
|
32.1
|
Certification
of Thomas S. Rooney, Jr. pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
32.2
|
Certification
of David A. Martin pursuant to 18 U.S.C. Section 1350, as adopted
pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.
|
(1)
|
The
Company’s current, quarterly and annual reports are filed with the
Securities and Exchange Commission under file no.
0-10786.
|
(2)
|
Pursuant
to Reg. Section 229.601, does not include certain instruments with
respect
to long-term debt of the Company and its consolidated subsidiaries
not
exceeding 10% of the total assets of the Company and its subsidiaries
on a
consolidated basis. The Company undertakes to furnish to the Securities
and Exchange Commission, upon request, a copy of all long-term
debt
instruments not filed herewith.
|
(3)
|
Management
contract or compensatory plan or
arrangement.
|