UNITED
STATES
|
|
SECURITIES
AND EXCHANGE COMMISSION
|
|
WASHINGTON,
D.C. 20549
|
|
FORM
10-Q
|
|
(Mark
One)
|
|
þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the quarterly period ended September 30,
2007
|
|
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: 0-10786
|
|
Insituform
Technologies, Inc.
|
|
(Exact
name of registrant as specified in its charter)
|
|
Delaware 13-3032158
|
|
(State
or other jurisdiction of incorporation or
organization) (I.R.S.
Employer Identification No.)
|
|
17988
Edison Avenue,
Chesterfield,
Missouri 63005-1195
|
|
(Address
of principal executive
offices) (Zip
Code)
|
|
(636)
530-8000
|
|
(Registrant’s
telephone number, including area code)
|
|
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 þ
No ¨
|
|
Indicate
by check mark whether the registrant is a large accelerated filer,
an
accelerated filer, or a non-accelerated filer. See definition
of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the
Exchange Act.
|
|
Large
accelerated ¨ Accelerated
þ Non-accelerated
¨
|
|
Indicate
by checkmark whether the registrant is a shell company (as defined
in Rule
12b-2 of the Exchange Act).
|
|
Yes
¨
No þ
|
|
There
were 27,469,223 shares of common stock, $.01 par value per share,
outstanding at October 26, 2007.
|
|
INDEX
|
||||
Page
|
||||
PART
I—FINANCIAL INFORMATION
|
||||
Item
1.
|
Financial
Statements:
|
|||
Consolidated
Statements of Operations for the Three and Nine Months Ended September
30,
2007 and 2006
|
3
|
|||
Consolidated
Balance Sheets as of September 30, 2007 and December 31,
2006
|
4
|
|||
Consolidated
Statements of Cash Flows for the Nine Months Ended September 30,
2007 and
2006
|
5
|
|||
Notes
to Consolidated Financial Statements
|
6
|
|||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
28
|
||
Item
4.
|
Controls
and Procedures
|
29
|
||
PART
II—OTHER INFORMATION
|
||||
Item
1.
|
Legal
Proceedings
|
30
|
||
Item
1A.
|
Risk
Factors
|
30
|
||
Item
6.
|
Exhibits
|
30
|
||
SIGNATURE
|
31
|
|||
INDEX
TO EXHIBITS
|
32
|
For
the Three Months
Ended
September 30,
|
For
the Nine Months
Ended
September,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenues
|
$ |
139,098
|
$ |
144,076
|
$ |
414,754
|
$ |
441,841
|
||||||||
Cost
of revenues
|
112,766
|
112,436
|
337,958
|
347,475
|
||||||||||||
Gross
profit
|
26,332
|
31,640
|
76,796
|
94,366
|
||||||||||||
Operating
expenses
|
22,049
|
24,293
|
71,918
|
73,056
|
||||||||||||
Costs
of closure of tunneling business
|
940
|
-
|
17,783
|
-
|
||||||||||||
Operating
income (loss)
|
3,343
|
7,347
|
(12,905 | ) |
21,310
|
|||||||||||
Other
income (expense):
|
||||||||||||||||
Interest
expense
|
(1,332 | ) | (1,716 | ) | (4,140 | ) | (5,142 | ) | ||||||||
Interest
income
|
689
|
762
|
2,348
|
2,542
|
||||||||||||
Other
|
790
|
1,507
|
1,444
|
1,945
|
||||||||||||
Total
other income (expense)
|
147
|
553
|
(348 | ) | (655 | ) | ||||||||||
Income
(loss) before taxes on income (tax benefit)
|
3,490
|
7,900
|
(13,253 | ) |
20,655
|
|||||||||||
Taxes
on income (tax benefit)
|
(800 | ) |
2,402
|
(5,913 | ) |
6,802
|
||||||||||
Income
(loss) before minority interests and equity in
earnings (losses) of affiliated companies
|
4,290
|
5,498
|
(7,340 | ) |
13,853
|
|||||||||||
Minority
interests
|
(120 | ) | (117 | ) | (252 | ) | (242 | ) | ||||||||
Equity
in earnings (losses) of affiliated companies
|
312
|
314
|
(8 | ) |
632
|
|||||||||||
Net
income (loss)
|
$ |
4,482
|
$ |
5,695
|
$ | (7,600 | ) | $ |
14,243
|
|||||||
Earnings
(loss) per share:
|
||||||||||||||||
Basic
|
$ |
0.16
|
$ |
0.21
|
$ | (0.28 | ) | $ |
0.53
|
|||||||
Diluted
|
0.16
|
0.21
|
(0.28 | ) |
0.52
|
September
30,
2007
|
December
31,
2006
|
|||||||
Assets
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$ |
78,012
|
$ |
96,393
|
||||
Restricted
cash
|
2,369
|
934
|
||||||
Receivables,
net
|
90,629
|
90,678
|
||||||
Retainage
|
34,938
|
37,193
|
||||||
Costs
and estimated earnings in excess of billings
|
52,399
|
41,512
|
||||||
Inventories
|
18,582
|
17,665
|
||||||
Prepaid
expenses and other assets
|
37,151
|
25,989
|
||||||
Total
current assets
|
314,080
|
310,364
|
||||||
Property,
plant and equipment, less accumulated
depreciation
|
90,667
|
90,453
|
||||||
Other
assets
|
||||||||
Goodwill
|
122,622
|
131,540
|
||||||
Other
assets
|
22,766
|
17,712
|
||||||
Total
other assets
|
145,388
|
149,252
|
||||||
Total
Assets
|
$ |
550,135
|
$ |
550,069
|
||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Current
maturities of long-term debt and notes payable
|
$ |
6,818
|
$ |
16,814
|
||||
Accounts
payable and accrued expenses
|
111,024
|
107,320
|
||||||
Billings
in excess of costs and estimated earnings
|
11,412
|
12,371
|
||||||
Total
current liabilities
|
129,254
|
136,505
|
||||||
Long-term
debt, less current maturities
|
65,000
|
65,046
|
||||||
Other
liabilities
|
8,069
|
7,726
|
||||||
Total
liabilities
|
202,323
|
209,277
|
||||||
Minority
interests
|
2,497
|
2,181
|
||||||
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
27,397,973
and 29,597,044; shares outstanding 27,397,973 and
27,239,580
|
274
|
296
|
||||||
Additional
paid-in capital
|
103,913
|
149,802
|
||||||
Retained
earnings
|
228,834
|
236,763
|
||||||
Treasury
stock – at cost, 0 and 2,357,464 shares
|
-
|
(51,596 | ) | |||||
Accumulated
other comprehensive income
|
12,294
|
3,346
|
||||||
Total
Stockholders’ Equity
|
345,315
|
338,611
|
||||||
Total
Liabilities and Stockholders’ Equity
|
$ |
550,135
|
$ |
550,069
|
||||
For
the Nine Months
Ended
September 30,
|
||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ | (7,600 | ) | $ |
14,243
|
|||
Adjustments
to reconcile to net cash (used in) provided by operating
activities:
|
||||||||
Depreciation
|
13,321
|
14,962
|
||||||
Amortization
|
332
|
943
|
||||||
Deferred
income taxes
|
(6,928 | ) | (1,876 | ) | ||||
Equity-based
compensation expense
|
3,005
|
3,677
|
||||||
Non-cash
charges associated with closure of tunneling business
|
11,955
|
-
|
||||||
Other
|
(2,269 | ) | (1,517 | ) | ||||
Change
in restricted cash related to operating activities
|
(1,404 | ) |
298
|
|||||
Changes
in operating assets and liabilities:
|
||||||||
Receivables
net, retainage and costs and estimated earnings in excess of
billings
|
(3,504 | ) | (17,466 | ) | ||||
Inventories
|
(371 | ) | (965 | ) | ||||
Prepaid
expenses and other assets
|
(10,157 | ) | (2,683 | ) | ||||
Accounts
payable and accrued expenses
|
(2,235 | ) |
9,808
|
|||||
Net
cash (used in) provided by operating activities
|
(5,855 | ) |
19,424
|
|||||
Cash
flows from investing activities:
|
||||||||
Capital
expenditures
|
(18,997 | ) | (14,087 | ) | ||||
Proceeds
from sale of fixed assets
|
4,542
|
3,938
|
||||||
Liquidation
of life insurance cash surrender value
|
-
|
1,423
|
||||||
Net
cash used in investing activities
|
(14,455 | ) | (8,726 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from issuance of common stock
|
2,496
|
3,920
|
||||||
Additional
tax benefit from stock option exercises recorded in
additional
paid-in
capital
|
148
|
751
|
||||||
Proceeds
from notes payable
|
2,648
|
2,795
|
||||||
Principal
payments on notes payable
|
(1,921 | ) | (3,501 | ) | ||||
Proceeds
on line of credit
|
22,500
|
-
|
||||||
Payments
on line of credit
|
(17,500 | ) |
-
|
|||||
Principal
payments on long-term debt
|
(15,768 | ) | (15,732 | ) | ||||
Deferred
financing charges paid
|
-
|
(106 | ) | |||||
Net
cash used in financing activities
|
(7,397 | ) | (11,873 | ) | ||||
Effects
of exchange rate changes on cash
|
9,326
|
(769 | ) | |||||
Net
decrease in cash and cash equivalents for the
period
|
(18,381 | ) | (1,944 | ) | ||||
Cash
and cash equivalents, beginning of period
|
96,393
|
77,069
|
||||||
Cash
and cash equivalents, end of period
|
$ |
78,012
|
$ |
75,125
|
||||
1.
|
GENERAL
|
2.
|
EQUITY-BASED
COMPENSATION
|
Weighted
Average
|
||||||||
Award
Date
|
||||||||
Shares
|
Fair
Value
|
|||||||
Outstanding
at
December 31, 2006
|
131,500
|
$ |
17.73
|
|||||
Awarded
|
–
|
–
|
||||||
Vested
|
(56,924 | ) |
17.80
|
|||||
Forfeited
|
(13,776 | ) |
18.32
|
|||||
Outstanding
at
September 30, 2007
|
60,800
|
$ |
17.16
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Restricted
stock share expense
|
$ |
135
|
$ |
193
|
$ |
519
|
$ |
601
|
||||||||
Forfeitures
|
–
|
–
|
–
|
(15 | ) | |||||||||||
Restricted
stock share expense, net
|
135
|
193
|
519
|
586
|
||||||||||||
Tax
benefit
|
(53 | ) | (75 | ) | (202 | ) | (228 | ) | ||||||||
Net
expense
|
$ |
82
|
$ |
118
|
$ |
317
|
$ |
358
|
Weighted
|
||||||||
Average
|
||||||||
Restricted
|
Award
Date
|
|||||||
Stock
Units
|
Fair
Value
|
|||||||
Outstanding
at
December 31, 2006
|
–
|
$ |
–
|
|||||
Awarded
|
61,831
|
23.85
|
||||||
Shares
distributed
|
–
|
–
|
||||||
Forfeited
|
(17,404 | ) |
25.60
|
|||||
Outstanding
at
September 30, 2007
|
44,427
|
$ |
23.17
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Restricted
stock unit expense
|
$ |
88
|
$ |
–
|
$ |
305
|
$ |
–
|
||||||||
Forfeitures
|
(99 | ) |
–
|
(99 | ) |
–
|
||||||||||
Restricted
stock unit expense, net
|
(11 | ) |
–
|
206
|
–
|
|||||||||||
Tax
expense (benefit)
|
4
|
–
|
(80 | ) |
–
|
|||||||||||
Net
expense
|
$ | (7 | ) | $ |
–
|
$ |
126
|
$ |
–
|
Weighted
|
||||||||
Average
|
||||||||
Deferred
|
Award
Date
|
|||||||
Stock
Units
|
Fair
Value
|
|||||||
Outstanding
at
December 31, 2006
|
93,807
|
$ |
18.53
|
|||||
Awarded
|
61,291
|
18.48
|
||||||
Shares
distributed
|
–
|
–
|
||||||
Outstanding
at
September 30, 2007
|
155,098
|
$ |
18.51
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Deferred
stock
unit expense
|
$ |
–
|
$ |
–
|
$ |
608
|
$ |
603
|
||||||||
Tax
benefit
|
–
|
–
|
(236 | ) | (234 | ) | ||||||||||
Net
expense
|
$ |
–
|
$ |
–
|
$ |
372
|
$ |
369
|
Weighted
|
|||||||||||
Weighted
|
Average
|
||||||||||
Average
|
Remaining
|
Aggregate
|
|||||||||
Exercise
|
Contractual
|
Intrinsic
|
|||||||||
Shares
|
Price
|
Term
(Yrs)
|
Value
|
||||||||
Outstanding
at
December 31, 2006
|
1,298,392
|
$ |
19.85
|
||||||||
Granted
|
410,012
|
23.94
|
|||||||||
Exercised
|
(158,393 | ) |
14.25
|
||||||||
Forfeited/Expired
|
(295,374 | ) |
21.44
|
||||||||
Outstanding
at
September 30, 2007
|
1,254,637
|
$ |
21.49
|
4.1
|
$ 263,857
|
||||||
Exercisable
at
September 30, 2007
|
901,960
|
$ |
21.46
|
3.4
|
$ 244,659
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||||||||||||
Weighted
|
||||||||||||||||||||||||||||||
Average
|
Weighted
|
Weighted
|
||||||||||||||||||||||||||||
Remaining
|
Average
|
Aggregate
|
Average
|
Aggregate
|
||||||||||||||||||||||||||
Range
of
|
Number
|
Contractual
|
Exercise
|
Intrinsic
|
Number
|
Exercise
|
Intrinsic
|
|||||||||||||||||||||||
Exercise
Price
|
Outstanding
|
Term
(Yrs)
|
Price
|
Value
|
Exercisable
|
Price
|
Value
|
|||||||||||||||||||||||
$ |
4.00
- $10.00
|
1,400
|
0.1
|
$ |
8.75
|
$ |
9,072
|
1,400
|
$ |
8.75
|
$ |
9,072
|
||||||||||||||||||
$ |
10.01
- $20.00
|
606,140
|
3.6
|
16.50
|
254,785
|
431,372
|
16.11
|
235,587
|
||||||||||||||||||||||
$20.01
and above
|
647,097
|
4.6
|
26.19
|
–
|
469,188
|
26.42
|
–
|
|||||||||||||||||||||||
Total
Outstanding
|
1,254,637
|
4.1
|
$ |
21.49
|
$ |
263,857
|
901,960
|
$ |
21.46
|
$ |
244,659
|
For
the Nine Months Ended September 30,
|
||||||||||||||||
2007
|
2006
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Range
|
Average
|
Range
|
Average
|
|||||||||||||
Volatility
|
44.9%–46.4 | % | 45.0 | % | 41.7%–45.5 | % | 41.8 | % | ||||||||
Expected
term
(years)
|
4.5
– 4.8
|
4.6
|
4.8
|
4.8
|
||||||||||||
Dividend
yield
|
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Risk-free
rate
|
4.4%–4.6 | % | 4.4 | % | 4.3%–5.0 | % | 4.3 | % |
Weighted
|
|||
Average
|
|||
Remaining
|
Average
|
||
Notional
|
Maturity
|
Exchange
|
|
Amount
|
in
Months
|
Rate
|
|
Canadian
Dollar
|
15,000,000
|
6.0
|
1.002
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Weighted
average number of
common
shares used for basic EPS
|
27,316,092
|
27,091,398
|
27,284,067
|
27,024,019
|
||||||||||||
Effect
of dilutive stock options and
restricted
stock
|
203,506
|
332,254
|
–
|
442,564
|
||||||||||||
Weighted
average number of common
shares
and dilutive potential common
stock
used in dilutive EPS
|
27,519,598
|
27,423,652
|
27,284,067
|
27,466,583
|
Three
Months Ended
September
30,
2007 2006
|
Nine
Months Ended
September
30,
2007 2006
|
|||||||||||||||
Revenues:
|
||||||||||||||||
Rehabilitation
|
$ |
115,093
|
$ |
118,269
|
$ |
332,695
|
$ |
355,147
|
||||||||
Tunneling
|
13,458
|
16,002
|
49,163
|
49,843
|
||||||||||||
Tite
Liner
|
10,547
|
9,805
|
32,896
|
36,851
|
||||||||||||
Total
revenues
|
$ |
139,098
|
$ |
144,076
|
$ |
414,754
|
$ |
441,841
|
||||||||
Gross
profit:
|
||||||||||||||||
Rehabilitation
|
$ |
22,129
|
$ |
28,927
|
$ |
61,082
|
$ |
83,435
|
||||||||
Tunneling
|
692
|
(868 | ) |
2,724
|
(1,318 | ) | ||||||||||
Tite
Liner
|
3,511
|
3,581
|
12,990
|
12,249
|
||||||||||||
Total
gross profit
|
$ |
26,332
|
$ |
31,640
|
$ |
76,796
|
$ |
94,366
|
||||||||
Operating
income (loss):
|
||||||||||||||||
Rehabilitation
|
$ |
2,815
|
$ |
8,225
|
$ | (801 | ) | $ |
21,962
|
|||||||
Tunneling
|
(1,288 | )(1) | (2,963 | ) | (20,081 | )(1) | (8,087 | ) | ||||||||
Tite
Liner
|
1,816
|
2,085
|
7,977
|
7,435
|
||||||||||||
Total
operating income (loss)
|
$ |
3,343
|
$ |
7,347
|
$ | (12,905 | ) | $ |
21,310
|
(1)
|
Includes
$0.9 million and $17.8 million of charges associated with the closure
of
the tunneling business for the three and nine months ended September
30,
2007, respectively.
|
Three
Months Ended
September
30,
2007 2006
|
Nine
Months Ended
September
30,
2007 2006
|
|||||||||||||||
Revenues:
|
||||||||||||||||
United
States
|
$ |
97,496
|
$ |
108,738
|
$ |
299,002
|
$ |
337,953
|
||||||||
Canada
|
11,916
|
11,989
|
35,905
|
31,730
|
||||||||||||
Europe
|
25,549
|
21,206
|
69,599
|
59,978
|
||||||||||||
Other
foreign
|
4,137
|
2,143
|
10,248
|
12,180
|
||||||||||||
Total
revenues
|
$ |
139,098
|
$ |
144,076
|
$ |
414,754
|
$ |
441,841
|
||||||||
Gross
profit:
|
||||||||||||||||
United
States
|
$ |
14,813
|
$ |
20,562
|
$ |
45,850
|
$ |
64,431
|
||||||||
Canada
|
3,741
|
4,279
|
11,862
|
11,226
|
||||||||||||
Europe
|
6,478
|
6,081
|
15,549
|
15,473
|
||||||||||||
Other
foreign
|
1,300
|
718
|
3,535
|
3,236
|
||||||||||||
Total
gross profit
|
$ |
26,332
|
$ |
31,640
|
$ |
76,796
|
$ |
94,366
|
||||||||
Operating
income (loss):
|
||||||||||||||||
United
States
|
$ | (910 | )(1) | $ |
2,804
|
$ | (21,419 | )(1) | $ |
10,803
|
||||||
Canada
|
2,441
|
2,742
|
6,708
|
6,876
|
||||||||||||
Europe
|
1,330
|
1,299
|
88
|
1,524
|
||||||||||||
Other
foreign
|
482
|
502
|
1,718
|
2,107
|
||||||||||||
Total
operating income (loss)
|
$ | 3,343 | (1) | $ |
7,347
|
$ | (12,905 | )(1) | $ |
21,310
|
(1)
|
Includes
$0.9 million and $17.8 million of charges associated with the closure
of
the tunneling business for the three and nine months ended September
30,
2007, respectively.
|
As
of September 30,
2007
|
||||||||||||
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying Amount
|
||||||||||
Amortized
intangible assets:
|
||||||||||||
License
agreements
|
$ |
3,894
|
$ | (1,925 | ) | $ |
1,969
|
|||||
Customer
relationships
|
1,797
|
(481 | ) |
1,316
|
||||||||
Patents
and trademarks
|
17,383
|
(13,532 | ) |
3,851
|
||||||||
Non-compete
agreements
|
317
|
(317 | ) |
–
|
||||||||
Total
|
$ |
23,391
|
$ | (16,255 | ) | $ |
7,136
|
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
|
2007
|
2006
|
|||||||
Aggregate
amortization expense
|
||||||||
Three
months ended September 30
|
$ |
68
|
$ |
311
|
||||
Nine
months ended September 30
|
332
|
943
|
||||||
Estimated
amortization expense:
|
||||||||
For
year ending December 31, 2007
|
533
|
|||||||
For
year ending December 31, 2008
|
803
|
|||||||
For
year ending December 31, 2009
|
803
|
|||||||
For
year ending December 31, 2010
|
803
|
|||||||
For
year ending December 31, 2011
|
803
|
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
|
|||||||||
Adjustment
based on current developments(1)
|
(343 | ) |
–
|
(343 | ) | |||||||
Interest
recorded in 2006 and 2007
|
–
|
866
|
866
|
|||||||||
Claim
receivable balance, September 30, 2007
|
$ |
6,055
|
$ |
1,306
|
$ |
7,361
|
(1)
|
During
the second quarter of 2007, the claim was adjusted down by $0.3 million
as
a result of current developments in the matter. Interest was adjusted
accordingly.
|
Segment
|
Revenues
|
Gross
Profit
|
Gross
Profit
Margin
|
Operating
Expenses(1)
|
Operating
Income
(Loss)(1)
|
Operating
Income
(Loss)
Margin
|
||||||||||||||||||
Rehabilitation
|
$ |
115,093
|
$ |
22,129
|
19.2 | % | $ |
19,314
|
$ |
2,815
|
2.4 | % | ||||||||||||
Tunneling
|
13,458
|
692
|
5.1
|
1,980
|
(1,288 | ) |
-9.6
|
|||||||||||||||||
Tite
Liner
|
10,547
|
3,511
|
33.3
|
1,695
|
1,816
|
17.2
|
||||||||||||||||||
Total
|
$ |
139,098
|
$ |
26,332
|
18.9 | % | $ |
22,989
|
$ |
3,343
|
2.4 | % |
Segment
|
Revenues
|
Gross
Profit
(Loss)
|
Gross
Profit
(Loss)
Margin
|
Operating
Expenses
|
Operating
Income
(Loss)
|
Operating
Income
(Loss)
Margin
|
||||||||||||||||||
Rehabilitation
|
$ |
118,269
|
$ |
28,927
|
24.5 | % | $ |
20,702
|
$ |
8,225
|
7.0 | % | ||||||||||||
Tunneling
|
16,002
|
(868 | ) |
-5.4
|
2,095
|
(2,963 | ) |
-18.5
|
||||||||||||||||
Tite
Liner
|
9,805
|
3,581
|
36.5
|
1,496
|
2,085
|
21.3
|
||||||||||||||||||
Total
|
$ |
144,076
|
$ |
31,640
|
22.0 | % | $ |
24,293
|
$ |
7,347
|
5.1 | % |
Segment
|
Revenues
|
Gross
Profit
|
Gross
Profit
Margin
|
Operating
Expenses(1)
|
Operating
Income
(Loss)(1)
|
Operating
Income
(Loss)
Margin
|
||||||||||||||||||
Rehabilitation
|
$ |
332,695
|
$ |
61,082
|
18.4 | % | $ |
61,883
|
$ | (801 | ) | -0.2 | % | |||||||||||
Tunneling
|
49,163
|
2,724
|
5.5
|
22,805
|
(20,081 | ) |
-40.8
|
|||||||||||||||||
Tite
Liner
|
32,896
|
12,990
|
39.5
|
5,013
|
7,977
|
24.2
|
||||||||||||||||||
Total
|
$ |
414,754
|
$ |
76,796
|
18.5 | % | $ |
89,701
|
$ | (12,905 | ) | -3.1 | % |
Segment
|
Revenues
|
Gross
Profit
(Loss)
|
Gross
Profit
(Loss)
Margin
|
Operating
Expenses
|
Operating
Income
(Loss)
|
Operating
Income
(Loss)
Margin
|
||||||||||||||||||
Rehabilitation
|
$ |
355,147
|
$ |
83,435
|
23.5 | % | $ |
61,473
|
$ |
21,962
|
6.2 | % | ||||||||||||
Tunneling
|
49,843
|
(1,318 | ) |
-2.6
|
6,769
|
(8,087 | ) |
-16.2
|
||||||||||||||||
Tite
Liner
|
36,851
|
12,249
|
33.2
|
4,814
|
7,435
|
20.2
|
||||||||||||||||||
Total
|
$ |
441,841
|
$ |
94,366
|
21.4 | % | $ |
73,056
|
$ |
21,310
|
4.8 | % |
(1)
|
Consolidated
and tunneling operating expenses include $0.9 million and $17.8 million
of
charges associated with the closure of the tunneling business for
the
three and nine months ended September 30, 2007,
respectively.
|
Three
Months
Ended
September
30, 2007 vs. 2006
|
Nine
Months Ended
September
30, 2007 vs. 2006
|
|||||||||||||||
Total
Increase
(Decrease)
|
Percentage
Increase
(Decrease)
|
Total
Increase
(Decrease)
|
Percentage
Increase
(Decrease)
|
|||||||||||||
Consolidated
|
||||||||||||||||
Revenues
|
$ | (4,978 | ) | (3.5 | )% | $ | (27,087 | ) | (6.1 | )% | ||||||
Gross
profit
|
(5,308 | ) | (16.8 | ) | (17,570 | ) | (18.6 | ) | ||||||||
Operating
expenses
|
(2,244 | ) | (9.2 | ) | (1,138 | ) | (1.6 | ) | ||||||||
Costs
of closure of tunneling business
|
940
|
n/a
|
17,783
|
n/a
|
||||||||||||
Operating
income
|
(4,004 | ) | (54.4 | ) | (34,215 | ) | (160.6 | ) | ||||||||
Rehabilitation
|
||||||||||||||||
Revenues
|
(3,176 | ) | (2.7 | ) | (22,452 | ) | (6.3 | ) | ||||||||
Gross
profit
|
(6,798 | ) | (23.5 | ) | (22,353 | ) | (26.8 | ) | ||||||||
Operating
expenses
|
(1,388 | ) | (6.7 | ) |
410
|
0.7
|
||||||||||
Operating
income
|
(5,410 | ) | (65.8 | ) | (22,763 | ) | (103.6 | ) | ||||||||
Tunneling
|
||||||||||||||||
Revenues
|
(2,544 | ) | (15.9 | ) | (680 | ) | (1.4 | ) | ||||||||
Gross
profit
|
1,560
|
179.7
|
4,042
|
306.7
|
||||||||||||
Operating
expenses
|
(1,055 | ) | (50.4 | ) | (1,747 | ) | (25.8 | ) | ||||||||
Costs
of closure of tunneling business
|
940
|
n/a
|
17,783
|
n/a
|
||||||||||||
Operating
income
|
1,675
|
56.5
|
(11,994 | ) | (148.3 | ) | ||||||||||
Tite
Liner
|
||||||||||||||||
Revenues
|
742
|
7.6
|
(3,955 | ) | (10.7 | ) | ||||||||||
Gross
profit
|
(70 | ) | (2.0 | ) |
741
|
6.0
|
||||||||||
Operating
expenses
|
199
|
13.3
|
199
|
4.1
|
||||||||||||
Operating
income
|
(269 | ) | (12.9 | ) |
542
|
7.3
|
||||||||||
Interest
Expense and Taxes
|
||||||||||||||||
Interest
expense
|
(384 | ) | (22.4 | ) | (1,002 | ) | (19.5 | ) | ||||||||
Taxes
on income
|
(3,202 | ) | (133.3 | ) | (12,715 | ) | (186.9 | ) |
For
the Three Months
Ended
September 30,
|
For
the Nine Months
Ended
September 30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Operating
loss
|
$ | (1,288 | ) | $ | (2,963 | ) | $ | (20,081 | ) | $ | (8,087 | ) | ||||
Costs
of closure of tunneling business
|
940
|
–
|
17,783
|
–
|
||||||||||||
Operating
loss
excluding closure costs
|
$ | (348 | ) | $ | (2,963 | ) | $ | (2,298 | ) | $ | (8,087 | ) |
Backlog
|
September
30,
2007
|
June
30,
2007
|
March
31,
2007
|
December
31, 2006
|
September
30,
2006
|
|||||||||||||||
(in
millions)
|
||||||||||||||||||||
Rehabilitation
|
$ |
208.3
|
$ |
193.1
|
$ |
187.2
|
$ |
201.7
|
$ |
201.2
|
||||||||||
Tunneling
|
21.9
|
35.0
|
60.6
|
75.7
|
80.7
|
|||||||||||||||
Tite
Liner
|
16.3
|
12.5
|
14.5
|
12.8
|
13.2
|
|||||||||||||||
Total
|
$ |
246.5
|
$ |
240.6
|
$ |
262.3
|
$ |
290.2
|
$ |
295.1
|
September
30,
2007
|
December
31,
2006
|
|||||||
(in
thousands)
|
||||||||
Cash
and cash equivalents
|
$ |
78,012
|
$ |
96,393
|
||||
Restricted
cash
|
2,369
|
934
|
Payments
Due by Period
|
||||||||||||||||||||||||||||
Cash
Obligations(1)(2)(3)
|
Total
|
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
|||||||||||||||||||||
Long-term
debt
|
$ |
65,000
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
-
|
$ |
65,000
|
||||||||||||||
Interest
on long-term debt
|
24,443
|
1,062
|
4,251
|
4,251
|
4,251
|
4,251
|
6,377
|
|||||||||||||||||||||
Operating
leases
|
24,944
|
2,962
|
9,748
|
5,714
|
3,156
|
1,859
|
1,505
|
|||||||||||||||||||||
Total
contractual cash obligations
|
$ |
114,387
|
$ |
4,024
|
$ |
13,999
|
$ |
9,965
|
$ |
7,407
|
$ |
6,110
|
$ |
72,882
|
(1)
|
Cash
obligations are not discounted. See Notes 10 and 11 to the consolidated
financial statements contained in this report regarding commitments
and
contingencies and financings,
respectively.
|
(2)
|
Resin
supply contracts are excluded from this table. See “Commodity Risk” under
Part I, Item 3 of this report for further
discussion.
|
(3)
|
As
of September 30, 2007, we had $5.0 million of outstanding borrowings
on
the $35.0 million credit facility. The available balance was $14.5
million, and the commitment fee was 0.175%. The remaining $15.5 million
was used for non-interest bearing letters of credit, $14.5 million
of
which were collateral for insurance and $1.0 million for work
performance.
|
/s/
David A. Martin
|
David
A. Martin
Vice
President and Chief Financial Officer
(Principal
Financial Officer)
|
31.1
|
Certification
of Alfred L. Woods 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 Alfred L. Woods 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.
|