8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report

(Date of earliest event reported): April 24, 2008

INSITUFORM TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-10786	13-3032158
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

17988 Edison Avenue, Chesterfield, Missouri	63005
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number,

including area code:                            (636) 530-8000                                           

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[   ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[   ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[   ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.                      Results of Operations and Financial Condition.

The Company issued an earnings release on April  24, 2008, to announce its financial results for the quarter ended March 31, 2008.  A copy of the April 24, 2008 earnings release is furnished herewith as Exhibit 99.1.  On April 25, 2008 the Company held a conference call in connection with its April 24, 2008 earnings release.  A transcript of the conference call is furnished herewith as Exhibit 99.2.

The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01.	Financial Statements and Exhibits.
	(d)	The following exhibits are filed as part of this report:

Exhibit Number	Description
99.1	Earnings Release of Insituform Technologies, Inc., dated April 24, 2008, filed herewith.
99.2	Transcript of Insituform Technologies, Inc.’s April 25, 2008 conference call, filed herewith.

*           *           *

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 hereunto duly authorized.

INSITUFORM TECHNOLOGIES, INC.

By:     /s/ David F. Morris

David F. Morris

Senior Vice President, General Counsel

and Chief Administrative Officer

Date:  April 29, 2008

INDEX TO EXHIBITS

These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

Exhibit	Description
99.1	Earnings Release of Insituform Technologies, Inc., dated April 24, 2008.
99.2	Transcript of Insituform Technologies, Inc.’s April 25, 2008 conference call.

EX-99.1

Exhibit 99.1

Insituform Technologies, Inc. Reports Significantly Improved First Quarter 2008 Results

Chesterfield, MO – April 24, 2008 – Insituform Technologies, Inc. (Nasdaq Global Select Market: INSU) today reported first quarter income from continuing operations of $2.0 million, or $0.07 per diluted share.  This compares to a loss of $3.3 million, or $0.12 per diluted share, in the first quarter of 2007.

First quarter net income was $1.9 million, or $0.07 per diluted share, after accounting for discontinued operations.  This compares to a net loss of $15.3 million, or $0.56 per diluted share, for the first quarter of 2007.  In the first quarter of 2007, the Company announced the closure of its tunneling business and recorded a pre-tax charge of $16.8 million, or $11.8 million after-tax, an impact of $0.43 per diluted share.

These results are inclusive of approximately $500,000 in expenses recorded during the quarter in connection with a proxy contest initiated by a dissident stockholder group.

“As we discussed in our last quarterly announcement, we expect 2008 to be significantly better than 2007, and our results for the first quarter are just that.  These results are indicative of the progress that we have been making on our strategic initiatives in terms of growth, project execution and cost management.  We ended the quarter with improved contract backlog in each of our business segments and geographies.  I am particularly encouraged by the 9 percent improvement in contract backlog from year end 2007 at our North American sewer rehabilitation business.  Our Tite Liner® business had a phenomenal first quarter and ended with record contract backlog once again.  We continue to build momentum and I am convinced that we are well-positioned to deliver to our stockholders in 2008 and beyond,” said Alfred L. Woods, Chairman.

“As we announced earlier this month, our Board of Directors recently completed its review of our Company’s strategic options and determined that the best way to enhance value for our stockholders was to execute our Company’s business plan and proceed with the hiring of a new Chief Executive Officer.  In the first quarter, our execution of the plan produced significant improvement in revenues, operating income and net earnings over the first quarter of 2007.  After the quarter closed, we also announced the hiring of our new President and CEO, Joe Burgess, and I am personally excited and pleased to turn the CEO’s office over to Joe.  He is an experienced and capable business leader with a strong background in the water and wastewater services industries.  We are confident of our Company’s future success under his leadership,” said Alfred L. Woods, Chairman.

Consolidated revenues in the first quarter were $125.9 million, a 9.5 percent increase over the first quarter of 2007.  Revenue growth came primarily from the European operations where backlog was strong and European currencies were at historic highs against the U.S. dollar during the quarter. The Tite Liner® business experienced significant revenue growth as it continued to expand internationally and benefited from strong performance in various regions, most notably South America.

Consolidated gross profit for the first quarter of 2008 increased $6.5 million, or 31.9 percent, from the same period in 2007. Gross profit was primarily impacted by the increase in revenues and margins in the rehabilitation business.  Gross profit improved in the European contracting operations by more than 20 percent due to revenue growth.  The U.S. sewer rehabilitation business increased its gross profit performance by 36 percent as a result of improved project execution and improved backlog margins from one year ago.  The business also benefited from decreased fixed crew costs, both labor and equipment.

Consolidated operating expenses in the first quarter of 2008 decreased by $0.6 million, or 2.3 percent, to $23.6 million from $24.2 million in the same period in 2007, primarily due to decreases in corporate overhead and field support expenses in rehabilitation resulting from ongoing realignment efforts.  Corporate overhead in the first quarter declined $0.9 million, or 8 percent, year-over-year, despite $0.5 million of expense related to an ongoing proxy contest with a dissident stockholder group.  Operating expenses increased by $0.9 million in our European, Insituform Blue® and other international operations as a result of continuing investment for future growth.  Foreign currency exchange rates also contributed to the increase in operating expenses.

Consolidated operating income in the first quarter of 2008 was $3.3 million, representing an increase of $7.1 million from the first quarter of 2007.  Net income including loss from discontinued operations in the first quarter of 2008 of $1.9 million represented an increase of $17.2 million over the first quarter of 2007.

First quarter 2008 revenues in the rehabilitation segment improved $6.8 million, or 6.5 percent, year-over-year.  Gross profit in the segment improved $6.2 million, or 40.4 percent, year-over-year.  Most of the gross profit increase resulted from improvement in the United States and Europe, but there were modest profit improvements experienced in other international markets.

Revenues in the Tite Liner® business improved $4.2 million, or 35.9 percent, year-over-year due primarily to projects completed in South America.  The U.S and Canadian regions also experienced modest growth.  Gross profit for Tite Liner® improved slightly, while the margin was lower than the first quarter of 2007.  First quarter 2007 gross profit in Tite Liner® was favorably impacted by approximately $1.3 million related to project closeout gains.  Gross profit improvement in the first quarter of 2008 offset partially by slightly increased operating expenses resulted in an increase in Tite Liner® operating income of $0.1 million, or 2.8 percent, as compared to the first quarter of 2007.

Total contract backlog of $285.6 million at March 31, 2008 was significantly higher than total contract backlog of $259.0 million at December 31, 2007 and $201.7 million at March 31, 2007.

Total backlog in the rehabilitation segment at March 31, 2008 was $253.4 million.  This represented an increase of $20.6 million, or 8.9 percent, over the backlog for the segment at December 31, 2007, and an increase of $66.2 million, or 35.4 percent, as compared to backlog at March 31, 2007.  These increases were due primarily to backlog increases in the United States, Europe and Insituform Blue®.  In addition, approximately $35 million of the backlog in the rehabilitation segment at March 31, 2008 and December 31, 2007 came from the recently awarded projects in our newly formed joint venture in India.  This work will commence late in the second quarter of 2008.

Tite Liner® contract backlog at March 31, 2008 reached another all-time high at $32.2 million, an increase of $6.0 million, or 22.9%, compared to the previous record level of backlog of $26.2 million at December 31, 2007.  Compared to March 31, 2007, Tite Liner® backlog at March 31, 2008 increased $17.7 million, or 121.9% percent, from $14.5 million.

“We saw improvement in our sales performance in the U.S. sewer rehabilitation market during the quarter as our project acquisition rate improved while pricing remained stable.  This trend is very encouraging” Woods said.  “We are seeing very favorable trends in our international business, as well.  During the quarter ended March 31, 2008 we completed our first project in India and it came in higher than our bid gross margin.  We will begin our major projects in India late in the second quarter, and we have major projects underway in both Australia and Hong Kong, as well.  We had another quarter of nice revenue growth in Europe, although earnings growth in Europe did not keep pace with revenue growth as a result of expenses associated with the ongoing realignment of our European management for continued growth and expense reduction.”

“We continue to invest in the growth of our Tite Liner® and Insituform Blue® businesses.  With record backlog and the continued strong oil and mining markets, we anticipate continued strong growth for Tite Liner® in 2008.  We recently announced a high profile I Blue® project to rehabilitate 10,000 feet of 48-inch water line under Madison Avenue in New York.  This $4.25 million project will be a significant step forward in our ongoing effort to prove the I Blue® technology in the marketplace,” Woods said.

On March 31, 2008, the Company received a final judgment in the amount of $7.7 million against its former excess insurance carrier.  As previously reported, the Company had recorded an insurance claim receivable in the amount of the judgment in prior reporting periods in accordance with the Company’s revenue and claims recognition policies.  The judgment included all the actual damages the Company had sought to recover against the excess carrier as well as approximately $1.6 million in prejudgment interest.  In 2004, the Company filed a lawsuit in U.S. District Court in Boston after the excess insurance carrier failed to acknowledge coverage under its policy’s contractor’s rework endorsement and to indemnify the Company for its loss in excess of the primary policy for work the Company was required to remediate with respect a CIPP process installation project performed in 2003 in Boston.  The Company expects the excess insurance carrier to appeal the judgment. On February 15, 2008, the Company received the cash proceeds ($4.5 million) from the settlement of the CAT Contracting patent infringement litigation. The settlement amount was recorded in the fourth quarter of 2007.

Unrestricted cash increased to $88.8 million at December 31, 2007 from $79.0 million at December 31, 2007 due to stronger cash collections on receivables and the collection of $4.5 million from the CAT Contracting patent infringement litigation settlement.

Insituform Technologies, Inc. is a leading worldwide provider of proprietary technologies and services for rehabilitating sewer, water and other underground piping systems without digging and disruption. More information about the Company can be found on its Internet site at www.insituform.com.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements.  The Company makes forward-looking statements in this news release that represent the Company’s beliefs or expectations about future events or financial performance.  These forward-looking statements are based on information currently available to the Company and on management’s beliefs, assumptions, estimates or projections and are not guarantees of future events or results.  When used in this document, the words “anticipate,” “estimate,” “believe,” “plan,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on March 10, 2008.  In light of these risks, uncertainties and assumptions, the forward-looking events may not occur.  In addition, our actual results may vary materially from those anticipated, estimated, suggested or projected.  Except as required by law, we do not assume a duty to update forward-looking statement, whether as a result of new information, future events or otherwise.  Investors should, however, review additional disclosures made by the Company from time to time in its periodic filings with the Securities and Exchange Commission.  Please use caution and do not place reliance on forward-looking statements.  All forward-looking statements made by the Company in this news release are qualified by these cautionary statements.

Insituform®, the Insituform® logo, Insituform Blue® and Tite Liner® and Clean water for the world® are the registered trademarks of Insituform Technologies, Inc. and its affiliates.

CONTACT:	Insituform Technologies, Inc.
	David A. Martin, Vice President and Chief Financial Officer
	(636) 530-8000

INSITUFORM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share amounts)

	For the Three Months Ended March 31,
	2008	2007
Revenues	$      125,927	$      114,982
Cost of revenues	99,041	94,599
Gross profit	26,886	20,383
Operating expenses	23,631	24,185
Operating income (loss)	3,255	(3,802)
Other income (expense):
Interest expense	(1,227)	(1,493)
Interest income	848	949
Other	767	702
Total other income	388	158
Income before taxes on income (tax benefits)	3,643	(3,644)
Taxes on income (tax benefits)	1,074	(710)
Income before minority interests and equity in losses of affiliated companies	2,569	(2,934)
Minority interests	(156)	(48)
Equity in losses of affiliated companies	(383)	(306)
Income (loss) from continuing operations	2,030	(3,288)
Loss from discontinued operations, net of tax	(87)	(11,988)
Net income (loss)	$           1,943	$       (15,276)
Earnings (loss) per share:
Basic:
Income (loss) from continuing operations	$            0.07	$         (0.12)
Loss from discontinued operations	(0.00)	(0.44)
Net income (loss)	$            0.07	$         (0.56)
Diluted:
Income from continuing operations	$            0.07	$         (0.12)
Loss from discontinued operations	(0.00)	(0.44)
Net income (loss)	$            0.07	$         (0.56)
Weighted average number of shares:
Basic	27,470,623	27,254,380
Diluted	27,933,969	27,254,380

INSITUFORM TECHNOLOGIES, INC.

SEGMENT DATA

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended March 31,
	2008	2007
Revenues:
Rehabilitation	$      110,075	$      103,321
Tite Liner	15,852	11,661
Total revenues	$      125,927	$      114,982
Gross profit:
Rehabilitation	$        21,652	$        15,417
Tite Liner	5,234	4,966
Total gross profit	$        26,886	$        20,383
Operating income (loss):
Rehabilitation	$           (130)	$         (7,095)
Tite Liner	3,385	3,293
Total operating income (loss)	$         3,255	$         (3,802)

INSITUFORM TECHNOLOGIES, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

(In thousands)

	March 31, 2008	December 31, 2007
Assets
Current assets
Cash and cash equivalents	$       88,783	$        78,961
Restricted cash	2,781	2,487
Receivables, net	90,638	85,774
Retainage	22,425	23,444
Costs and estimated earnings in excess of billings	37,639	40,590
Inventories	17,849	17,789
Prepaid expenses and other assets	28,991	28,975
Current assets of discontinued operations	23,130	31,269
Total current assets	312,236	309,289
Property, plant and equipment, less accumulated depreciation	72,813	73,368
Other assets
Goodwill	122,566	122,560
Other assets	26,284	26,532
Total other assets	148,850	149,092
Non-current assets of discontinued operations	9,287	9,391
Total Assets	$     543,186	$       541,140
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt and line of credit	$            365	$           1,097
Accounts payable and accrued expenses	91,630	87,935
Billings in excess of costs and estimated earnings	9,813	8,602
Current liabilities of discontinued operations	8,918	14,830
Total current liabilities	110,726	112,464
Long-term debt, less current maturities	65,000	65,000
Other liabilities	6,483	7,465
Non-current liabilities of discontinued operations	1,048	953
Total liabilities	183,257	185,882
Minority interests	2,895	2,717
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 and outstanding 27,470,623	275	275
Additional paid-in capital	105,223	104,332
Retained earnings	240,919	238,976
Accumulated other comprehensive income	10,617	8,958
Total stockholders’ equity	357,034	352,541
Total Liabilities and Stockholders’ Equity	$     543,186	$      541,140

INSITUFORM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	For the Three Months Ended March 31,
	2008	2007
Cash flows from operating activities:
Net income (loss)	$       1,943	$        (15,276)
Loss from discontinued operations	(87)	(11,988)
Income (loss) from continuing operations	2,030	(3,288)
Adjustments to reconcile to net cash provided by (used in) operating activities:
Depreciation and amortization	3,968	4,152
Gain on sale of fixed assets	(1,118)	(471)
Equity-based compensation expense	901	1,664
Deferred income taxes	(2,021)	(2,280)
Other	(300)	(282)
Changes in operating assets and liabilities:
Restricted cash	(294)	(354)
Receivables net, retainage and costs and estimated earnings in excess of billings	2,228	7,224
Inventories	1	(391)
Prepaid expenses and other assets	(1,496)	710
Accounts payable and accrued expenses	4,281	(10,358)
Net cash provided by (used in) operating activities of continuing operations	8,180	(3,674)
Net cash provided by operating activities of discontinued operations	3	244
Net cash provided by (used in) operating activities	8,183	(3,430)
Cash flows from investing activities:
Capital expenditures	(3,151)	(4,199)
Proceeds from sale of fixed assets	644	78
Net cash used in investing activities of continuing operations	(2,507)	(4,121)
Net cash used in investing activities of discontinued operations	(5)	(246)
Net cash used in investing activities	(2,512)	(4,367)
Cash flows from financing activities:
Proceeds from issuance of common stock	–	637
Additional tax benefit from stock option exercises recorded in additional paid-in capital	–	45
Principal payments on notes payable	(732)	(727)
Principal payments on long-term debt	–	(15,713)
Proceeds from lines of credit	–	5,000
Net cash used in financing activities	(732)	(10,758)
Effect of exchange rate changes on cash	4,883	1,838
Net increase (decrease) in cash and cash equivalents for the period	9,822	(16,717)
Cash and cash equivalents, beginning of year	78,961	96,393
Cash and cash equivalents, end of period	$       88,783	$        79,676

EX-99.2

EXHIBIT 99.2

INSITUFORM TECHNOLOGIES

April 25, 2008

8:30 a.m. CT

Operator:	Good day and welcome everyone to this Insituform Technologies first quarter 2008 conference call.  Any financial or statistical information presented during this call, including any non-GAAP measures, the most directly comparable GAAP measures, and reconciliation to GAAP results will be available on our Web site at Insituform.com.
	During this conference call, we will make forward-looking statements, which are inherent to and subject to risks and uncertainties.  Our results could differ materially from those currently anticipated due to a number of factors described in the SEC filings and throughout this conference call.  We do not assume the duty to update forward-looking statements.  Please use caution, and do not rely on such statements.
	I will now turn the call over to Mr. Al Woods, Chairman of the Board, and Mr. Joe Burgess, President and CEO.  Please go ahead.
Al Woods:	Good morning and thank you for joining us for Insituform's conference call on our first quarter 2008 results.  I am Al Woods, Chairman of the Board, and former Interim CEO of Insituform Technologies, Inc.
	Joining me on today's call are our new CEO, President and board member, Joe Burgess; Tom Vossman, Senior Vice President and Chief Operating Officer; David Martin, Vice President and Chief Financial Officer; and David Morris, Senior Vice President, General Counsel and Chief Administrative Officer.  Joe will have remarks following my opening comments, and then we will address your questions.
	We are pleased to report significant improvement in profitability this quarter compared to last year.  We made great progress on our strategic initiatives.  As you may recall from previous quarterly calls, we are measuring our progress against several goals.  These include restoring growth and earnings stability to our North American CIPP business unit, geographic and product diversification, and cost reduction.
	With regard to the North American CIPP business, during the first quarter, we dramatically improved our profitability despite relatively flat revenue.  This profitability improvement resulted primarily from continued optimization of crew resources, improved project execution and a greater than eight percent reduction of direct administrative support costs.
	As we look to the future, what is really exciting is that backlog in North America improved by 8.9 percent since year end 2007, and by 14.4 percent year-over-year.  Margins in backlog remained stable during the first quarter.
	In Europe, our revenue grew 30 percent, and gross profit improved 20 percent year-over-year.  During the quarter, we continued work on the realignment of our European management, and we expect further improvement in profitability as this process is completed.  Looking to the future, our backlog in Europe is up 10 percent since year-end 2007, and is up 17 percent year-over-year.
	We also have good progress to report with regard to diversification of our business, both geographic and product diversification.  We successfully completed our first small project in India.  We are encouraged because this project's profitability exceeded our expectations.  Late in the second quarter, we will commence work on our major projects in India.  We now have significant projects under way in Hong Kong and Australia.
	While Insituform Blue®’s revenue contribution is not yet material, we continue to work on and bid projects that validate our I Blue® technologies.
	I Blue® won a major project during the quarter, a $4.25 million agreement to rehabilitate 10,000 feet of 48-inch water main under Madison Avenue in New York.  This kind of high profile project should not only generate good margins, but will also allow us to demonstrate and showcase our I Blue® technologies.
	We will soon begin work on another major I Blue® project, our $7.7 million agreement to rehabilitate approximately 19 miles of water main under the famous Nathan Road in Hong Kong.  This project will be performed by our 50-50 joint venture in Hong Kong.
	Our Tite Liner® business had an outstanding quarter, and we continue to expect double-digit revenue growth for Tite Liner® in 2008.  Revenues for Tite Liner® were more than 35 percent greater than one year ago, and operating income was up 5.4 percent.  Please remember that in the first quarter of 2007, we benefited from approximately $1.3 million in favorable project closeouts.
	Tite Liner® revenue benefited from significant projects in South America, and we also enjoyed solid revenue growth in all geographic segments.  At the end of the first quarter, Tite Liner backlog reached a record level of $32.2 million, an improvement of more than 22 percent over year-end 2007, and 120 percent over the first quarter of 2007.
	Now let me address the progress we are making with our cost reduction focus, which is on target.  Overall, we achieved more than a two percent reduction in operating expenses as we grew revenues by 9.5 percent.  We continued to invest in the areas of Insituform Blue®, International and Tite Liner®, which is consistent with our diversification strategy.  We reduced corporate operating expenses by more than $900,000 as compared to last year, despite the fact that we incurred approximately $500,000 in costs related to the ongoing proxy contest.
	I highlighted earlier the very encouraging cost reductions we achieved in North American Rehab.  Operating expenses in Europe were slightly higher due primarily to some one-time costs associated with our efforts to integrate and grow this business unit.
	Before we open the line for questions, I am delighted to introduce Joe Burgess for a few remarks.  As we previously announced, Joe joins our company from Veolia Water North America, where he most recently served as President and CEO.  Joe brings to Insituform more than 20 years of experience and success in water, wastewater, energy and petrochemical industries, and has significant experience in strategic planning, operations management and customer service.
	He has demonstrated his talent for working with many of the same municipal, federal and industrial customers, upon whom we rely for success.  I know I speak for our entire board, and our over 1,600 employees located around the globe when I say that we are extremely happy to welcome Joe Burgess to Insituform.  Joe, welcome aboard.
Joe Burgess:	Thank you, Al, for that kind introduction, and good morning to everyone.  I am very excited to be taking on the CEO role at Insituform.  This company is a market leader with a great story, and I believe we're on the cusp of some important developments in the company's history, and for the industry as a whole.
	First of all, let me tell you a little bit more about why I found Insituform attractive.  Having spent 20 years in the water, energy and petrochemical industries, the last 10 managing companies in the water and wastewater operating services industry, I'm very familiar with the enormous need that municipalities and industries have for cost effective solutions to the growing problems of infrastructure decay.
	In the water and wastewater markets, while demand remains suppressed domestically by economic conditions, Insituform has positioned itself as the leading platform company focused on underground asset refurbishment.  I also had great respect for Insituform's people at every level, including our hard-working and talented workforce, strong management team and Board of Directors that really understands this company.  I believe there is significant value to be realized in this company, and I am very enthusiastic about the long-term prospects.
	One of the first things that I needed to do when I met with the board regarding this opportunity was to gain a better understanding of the board's strategic vision for Insituform, and the market opportunities that lie ahead.  It quickly became clear from my discussions with Al Woods and the other directors that the board is laser focused on improving financial and operational performance, and delivering enhanced value to our stockholders.  I share these priorities.
	So let me share with you what our primary focus will be during the next 12 to 18 months.  We will continue to exploit opportunities in the U.S. sewer and water rehabilitation markets.  I think a good example of this is that Insituform is expanding its customer base currently by refocusing its sales force to work with suburban collar communities located around many of our traditional urban clients.  These communities represent an exciting growth opportunity for Insituform.
	We will diversify Insituform's business, both by exploiting high-growth opportunities and by expanding in international markets where demand is burgeoning and competition is more limited.  An excellent example of this market profile is the emerging market in India.  Our current contracts in Delhi are the first awarded projects of an improved – of an improved investment program of over $1 billion in that region.  Insituform and its local partners are well positioned to grow this market rapidly.
	We will seek out products and services to compliment our existing businesses, and that can be acquired or licensed for marketing through our global distribution network.  Our recent I Blue® awards in New York City and Hong Kong represent a major breakthrough for this exciting product line.  Demonstrating the cost effective, non-invasive implementation of these projects in major urban centers will accelerate the acceptance and growth of the product line.
	And we will continue to rationalize overhead and improve our margins.  We simply can't just grow our way out of sub-optimal overhead percentages.  I'll be working closely with the management team here and abroad to optimize the overhead structure of the company.
	I will also be working closely with the board and the management team to identify additional ways to profitably grow the company, and improve its operational and financial performance.  I share with the board and the rest of the management team a confidence that together we can deliver sustainable and profitable growth and enhanced value to our stockholders.
	For 2008, I've reviewed the business plan, and the estimates of the analysts that follow the company.  The consensus estimate is 54 cents this year, and I believe that we will comfortably outperform that estimate.
	Insituform is known for its technological innovation and operational excellence, and I am confident that we have the right plan in place and the right people to execute it.  Over the coming weeks and months, I'll be spending a great deal of time visiting Insituform's customers and employees around the world.  I also look forward to meeting many of you who are on the phone today, and sharing with you my enthusiasm and plans for this great company.
	With that, I'd like to turn the call back over to you, Al.
Al Woods:	Thank you, Joe.  As most of you know, our board recently completed a review of strategic options with the assistance of our outside financial adviser, Merrill Lynch.  We thoroughly considered the company's strategic options in the current environment in order to determine the best way to enhance value for our stockholders.
	We have spoken with many stockholders, and considered many factors in our analysis, including our business prospects, capital structure and the industry landscape in which we're operating today.  We also considered the opportunities available to us, which are quite significant given, among other things, the aging of the U.S. infrastructure, as well as the challenges of the current environment.  Merrill Lynch reviewed our current business plan, and a number of alternative scenarios, and considered a variety of potential financial and strategic alternatives.
	We concluded from this review that the best path forward was to pursue our strategic plan and hire Joe Burgess as our permanent CEO.  I've talked to you before about our strategic plan, which includes expanding in domestic and international markets, continuing to improve our margins, and diversification and expansion of our portfolio of products and services.  You have just met Joe Burgess, a seasoned executive in whom we have great confidence.  I speak on behalf of our Board when I say we are excited about the future of this company.
	I know some of you may have questions about the proxy contest initiative by one of our stockholders.  The purpose of today's call is to discuss our first quarter results, and our plans and strategies going forward.  We will not therefore address the issue of the proxy contest today.
	Earlier this week, we mailed our proxy materials to stockholders, and I refer you to those materials for further information.  We do look forward to speaking with our stockholders about the upcoming election of directors at an appropriate and future time.
	With that, I would like to open the call to your questions.  Operator?
Operator:	Yes, sir.  Anyone wishing to ask a question can signal by pressing the star key followed by the digit one on your telephone keypad.  Do keep in mind that if you have been using your speakerphone, make sure the mute function has been released to allow the signal to reach the equipment.  Once again for questions, star one.  We will pause for just a moment to assemble the roster.
	And our first question will come from Debra Coy, Janney Montgomery.
Debra Coy:	Yes, good morning all.  Welcome, Joe, happy to have you.
Joe Burgess:	Thank you.
Debra Coy:	My question has to do with, as it has been for some time, related to the quarter profitability.  I think that you would have already comfortably beat consensus estimates, if we hadn't had SG&A costs as high as they were in the quarter.  And you've outlined some of the reasons for that.  But I'm wondering how we should think about that going forward in terms of, and not to talk about the proxy fight, per say, but half a million dollars on that seems like a lot.  And also just the sequential rise in SG&A, significantly higher than I would have expected.  How should we think about the cost structure going forward?
David Martin:	Yes.  Debra, this is David Martin.  I'll take that question.  As you know, the fourth quarter – if you're comparing back to the fourth quarter SG&A, it was about $20 million.
Debra Coy:	Yes.
David Martin:	That expense was abnormally low due to a number . . .
Debra Coy:	Right.
David Martin:	. . . of issues that we had in reversals of incentive compensation, as well as stock option cancellations.
Debra Coy:	Right.
David Martin:	So if you normalize for that, and then add on the costs associated with the proxy contest, among other things, you get back in the range of around the $22 to $23 million.
Debra Coy:	And is that the range we should think about going forward?
David Martin:	Well what I would expect is that, you know, you will continue to have ongoing proxy costs for this next quarter, obviously, until we get through May.  But then after that, you'll start seeing SG&A going down.
Debra Coy:	OK.  And you also mentioned the – in the press release about almost a million dollars related to your I Blue and other international expansion.  Obviously International and I Blue expansion continue.  Are we largely through the European restructuring costs?
David Martin:	Yes, we had some one-time costs associated with the restructuring, particularly region in Europe this quarter.  That – those costs are principally over at this point.  Will we have additional costs associated with realignment and things such as that?  Yes.  And they'll be clearly identified when we – when we have them.
	But as far as normalizing for everything else, and the expectation is that we will reduce expenses as a result of some of these one-time things that we have to do.
Debra Coy:	OK.  Final question on that is you also mentioned in the press release.  How significant was foreign exchange as a – as an impact on both the top line and the operating line?
David Martin:	I'd say that the top line, it was approximately $3 million, at the operating line, it was – it was fairly minimal.
Debra Coy:	OK.  And then my last bigger question, and I'll get back in line, is we have seen some improvement on gross margins over the course of the year overall, though it's been bouncing around on the rehab side.  As we start some of this new work that you mentioned, India, the small project came in a little better, does it sound like – I think what Tom Vossman has told us is that operating margins in rehab and North America are hanging around the 20 percent range on the gross line.  How will the new Manhattan project look on the I Blue® project?  And how will India look in terms of comparing to this approximately 20 percent range where we are in rehab gross margin?
Joe Burgess:	Debra, this is Joe Burgess.  I've reviewed the bids for both of those works, and they're both – they're both higher than the margins that we see in the rehab market now.
Debra Coy:	Well that's encouraging.  So would we – can we expect as backlog has grown that we can see a little bit of improvement in gross margin over the course of the year in rehab?
Joe Burgess:	Yes, that's our expectation, yes.  Tom?
Tom Vossman:	Yes.
Debra Coy:	OK, great, thanks.
Operator:	And if you find your question has been answered, you may remove yourself from the queue by pressing the pound key.  Now moving to the next question, Arnie Ursaner with CJS Securities.
Arnie Ursaner:	Hi, good morning.  First question I have is can you give a sense for the number of crews you currently have versus let's say Q4 or the year ago?  And give us a feel for utilization, please.
Tom Vossman:	Yes, Arnie, this is Tom.  We're excited that we have installed about nine percent more footage on 17 percent fewer crews year-over-year.
Arnie Ursaner:	All right.
Tom Vossman:	And we're holding constant with the crews that we ended 2007 with.
Arnie Ursaner:	OK and that number, please.
Tom Vossman:	I'd like not to give out the number, Arnie, if that's all right.
Arnie Ursaner:	OK.  As a follow-up to Debra's question regarding currency.  Given that you indicated you had very strong revenue growth from Europe, and you benefited from currency, were your revenues even up domestically, or were they down year-over-year?
Tom Vossman:	The revenues in the United States with – in rehab particularly were fairly flat.
Arnie Ursaner:	OK.
Tom Vossman:	But margins were up significantly.
Arnie Ursaner:	OK.  Very kind of minor technical question.  On the India contract, you mentioned that you – it came in higher than your bid gross margin.  Normally, given your percentage of completion, when you complete a contract well above margin, you get a one-time benefit.  Can you quantify how – what that impact was in the quarter on margin?
Tom Vossman:	Which – are you talking about the Indian project?
Arnie Ursaner:	Yes.
Joe Burgess:	Small project.
Tom Vossman:	It was a very small project, Arnie, so it wasn't significant in terms of the overall improvement to profitability.
Arnie Ursaner:	OK.
Tom Vossman:	You know, the project was – started and completed in the quarter as well.
Arnie Ursaner:	OK.  I guess my final question for Joe, is you mentioned in your prepared remarks that you're – you will comfortably outperform the 54-cent consensus estimates.  Can you comment a little more about the underlying factors you see?  Is it revenue, margin, G&A, where do you see the significant – the comfortable out performance coming from?
Joe Burgess:	Well we see a – we see a strengthening in the pipeline both in NAR and in our international market – in our international marketplaces, particularly in Europe.  I've had a chance to look at the major projects that we're getting ready to start in Delhi in India, and those projects are very attractive for us both in terms of their near-term margin contribution, and the long-term prospects because of their placement in a much larger spend profile in that marketplace.
	And I'm also confident that the current management team is focused on some of the operating expense cost reductions that we'll – we were questioned about earlier.
Arnie Ursaner:	OK, thank you.
Joe Burgess:	You're welcome.
Operator:	Now moving on to the next question, John Quealy with Canaccord Adams.
Chip Moore:	Thanks.  This is actually Chip Moore on behalf of John.  I guess first, Joe, given that there have been several CEOs over the past call it three or four years, what do you see as the main challenges from a company perspective, how do you intend to grow the organization?  And I guess what's unique about your approach?
Joe Burgess:	Well I guess first of all, I don't really know that there's been a number of CEOs, there was a CEO here for a number of years, and then – and then Al took the reins during this transition period.  And I think underneath that, there's been – there's been a management team that's been certainly knowledgeable about the markets, and has done some good work, both creating some new product lines and targeting some geographic diversity for the core CIPP business, as well as the other products.
	I think the key challenge – I mean this is – this is a business that is still heavily dependent on its North American rehab business.  So there's obviously some ongoing challenges to make sure the company can deliver improved earnings and profits in times like this where rehab spend is flat, as well as better times when pent up demand will come through, and that market will grow.
	And we also have to find ways to both work with our existing accounts, and as I described in my remarks, work with – work with accounts around our traditional urban accounts that allow us to create new business within the North American market.
	That against the context of I think rationalizing the cost structure, so again so that we can deliver shareholder value under whatever circumstance that market deals us.
	I think the second major challenge is there are some exciting new products and new geographies that the strategic plan has identified, and the company is pursuing.  The challenge there is always to pick the right ones, and obviously sprint at the ones that can have the – that can make the major impact for our company and our – and our stockholders, and discard the ones that won't.  And I'm working with the management team now to make sure that we are – we are focused on making those right decisions.
Chip Moore:	Great.  And just getting back to spending real quick.  How should we be thinking about R&D for some of the newer technologies, such as global water, how fast do you think that'll ramp up?
Joe Burgess:	I think I Blue® is ready to ramp up now, I mean that product – that project, and the project in New York City that was described in our prepared remarks is obviously a project of critical importance for the company.  And I would add to that that the project that we're doing on Nathan Road in Hong Kong is of equal significance.  So when you – when you have a new product that is being installed in a significant way under Nathan Road and in Madison Avenue, it's arrived.
Chip Moore:	Great.  And just kind of last one for me on the – on the guidance, the 54 cents.  What should we be thinking going forward, what's your approach, is that something you plan on updating every quarter?
Joe Burgess:	I think that – well for right now, we've said what we've said, all right, we feel like – we feel like it's appropriate to communicate that the consensus – the consensus analysis that's on the street is comfortably achievable, and we're going to do what we can in the future to continue to communicate about what we think our prospects are.
Chip Moore:	OK, thanks.  And welcome aboard.
Joe Burgess:	Thank you.
Operator:	And Dan Leben with Robert W. Baird will have the next question.  Go ahead, sir.
Dan Leben:	Thanks, good morning.  Previously you talked about on the strategic initiative you've been working on, one of the things you'd mentioned was potential acquisitions.  Could you just update us there, is that still something that's on the radar screen, or if you've stepped away from that?
Joe Burgess:	This is Joe.  I don't think that we've stepped away from it, I think it's something that our technology folks and our Board continuously review when we have opportunities.  Of course, those will be focused, as you might imagine, mainly on gaps within our technology profile, either here in the U.S., or as a response to a need in particular geographies.  I think the short answer is if we see something that we think is strategic, and adds to our advantages in a particular marketplace, we'll discuss it with our Board, and pursue it.
Dan Leben:	OK, great.  And could you talk a little bit about what you're seeing in terms of the backlog in projects that are out for bid in terms of large diameter versus small diameter projects, particularly in the North American market?
Joe Burgess:	I'm going to turn that over to Tom Vossman.
Tom Vossman:	Yes, Dan, Tom Vossman.  We're – we continue to see a slight increase from previous years in small diameter.  Maybe somewhere in the two to three percent range, a higher small diameter percent of market than we've seen in the past.
Dan Leben:	OK, great.  And then just finally, when you're looking out, you know, through the rest of the year, what are you seeing in terms of pricing trends, you know, with the market basically flattening out now, are things stabilizing?  Obviously the margins were much better in the first quarter year-over-year.  Is this something that is stable now and has a chance to improve?  Or are there still risks out there with the slowing economy and so forth?
Tom Vossman:	Yes, as I've stated before, Dan, generally speaking, we're seeing a flat market, that's consistent through first quarter.  We have seen stable margins; we are trying to influence that certainly through our bidding strategies, and some of our sales strategies, and moving toward negotiated work, which is a very favorable trend through the first quarter.  So the outlook, assuming that stays constant, which at least in our pipeline, our view of the pipeline, we think it's going to be constant.  I do not see any deterioration in our current margin level.
Dan Leben:	OK, great.  Thanks, guys.
Operator:	And our final question will come from Jeff Beach, Stifel Nicolaus.
Jeff Beach:	Yes, good morning.  I have a couple of questions.  First, could you tell me what the stock option expense was in the first quarter?
Joe Burgess:	David?
David Martin:	Stock option expense for the first quarter was approximately $800,000.
Jeff Beach:	OK.  And then I know it's been pluses and minuses that swung around, that management incentive, or maybe broadly manager incentive has swung with the ups and downs of the business.  I don't know if you'd care to quantify last year's incentive, and – or just describe, but I'm interested to know how management incentive might change this year over last year, if you meet your budget that you have set up.
David Martin:	I don't believe we're going to talk about exactly what that number is, Jeff, I just – but obviously it's going to be higher this year, because we're going to achieve our plan.  But as far as numbers, I'm not – we're not going to talk about that.
Jeff Beach:	All right.  Thanks.
Operator:	And that will conclude our question-and-answer session for today.  I will turn the call back over to your hosts for closing remarks.
Al Woods:	Well I'd like to thank everyone for joining our call today.  And, Joe, I'd like to turn this over to you for a closing remark.
Joe Burgess:	OK, thanks, Al.  I just would like to thank everyone on the call, and as I said earlier, I look forward to meeting you in the future, along with – along with many of Insituform's customers.  And I'll just reiterate what I said about the prospects for this business, I think it's a – I think it's a tremendous platform, and a leading platform really globally for exploiting opportunities in underground asset refurbishment.  And I think the – both the near- term and the long-term prospects are going to be very, very exciting for this business.  And I thank you for joining us this morning.
Operator:	And with that, that will conclude your conference call for today, thank you for your participation, everyone have a wonderful day.

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