-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IFr80xDAeSzh1gHXSuJSSATL95/apXxmBAeBl/kq11YU7qA9a1CPmvZBd4mEyqVF ZhgyUrG0dPR4cpCTQ34awA== 0000950134-03-011829.txt : 20030814 0000950134-03-011829.hdr.sgml : 20030814 20030814144754 ACCESSION NUMBER: 0000950134-03-011829 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSITUFORM TECHNOLOGIES INC CENTRAL INDEX KEY: 0000353020 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 133032158 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10786 FILM NUMBER: 03846566 BUSINESS ADDRESS: STREET 1: 702 SPIRIT 40 PARK DRIVE CITY: CHESTERFIELD STATE: MO ZIP: 63005 BUSINESS PHONE: 6365308000 MAIL ADDRESS: STREET 1: 702 SPIRIT 40 PARK DRIVE CITY: CHESTERFIELD STATE: MO ZIP: 63005 FORMER COMPANY: FORMER CONFORMED NAME: INSITUFORM OF NORTH AMERICA INC/TN/ DATE OF NAME CHANGE: 19930617 FORMER COMPANY: FORMER CONFORMED NAME: INSITUFORM OF NORTH AMERICA INC DATE OF NAME CHANGE: 19921217 10-Q 1 c78627e10vq.txt FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended June 30, 2003 -------------------------------------------------- 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 (I.R.S. Employer Identification No.) incorporation or organization) 702 Spirit 40 Park Drive, Chesterfield, Missouri 63005 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (636) 530-8000 - -------------------------------------------------------------------------------- (Registrant's telephone number including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at August 8, 2003 ------------------------------------ ----------------------------- Class A Common Stock, $.01 par value 26,448,086 Shares INDEX
Page No. -------- Part I Financial Information: Item 1. Financial Statements (unaudited): Consolidated Statements of Income............................... 3 Consolidated Balance Sheets..................................... 4 Consolidated Statements of Cash Flows........................... 5 Notes to Consolidated Financial Statements...................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................. 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk...... 18 Item 4. Controls and Procedures......................................... 18 Part II Other Information: Item 1. Legal Proceedings............................................... 19 Item 4. Submission of Matters to a Vote of Security Holders............. 19 Item 6. Exhibits and Reports on Form 8-K................................ 19 Signatures.............................................................................. 21
2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, -------------- -------------- 2003 2002 2003 2002 ---- ---- ---- ---- REVENUES $ 124,778 $ 118,488 $ 248,126 $ 229,663 COST OF REVENUES 95,511 87,491 190,590 169,777 --------- --------- --------- --------- GROSS PROFIT 29,267 30,997 57,536 59,886 SELLING, GENERAL AND ADMINISTRATIVE 18,982 16,741 36,065 34,396 --------- --------- --------- --------- OPERATING INCOME 10,285 14,256 21,471 25,490 OTHER (EXPENSE) INCOME: Interest expense (2,175) (1,643) (3,372) (3,831) Other (189) 333 242 783 --------- --------- --------- --------- TOTAL OTHER EXPENSE (2,364) (1,310) (3,130) (3,048) --------- --------- --------- --------- INCOME BEFORE TAXES ON INCOME 7,921 12,946 18,341 22,442 TAXES ON INCOME 3,089 4,899 7,153 8,595 --------- --------- --------- --------- INCOME BEFORE MINORITY INTERESTS, EQUITY IN EARNINGS AND DISCONTINUED OPERATIONS 4,832 8,047 11,188 13,847 MINORITY INTERESTS (30) (37) (60) (68) EQUITY IN EARNINGS OF AFFILIATED COMPANIES 75 228 100 381 --------- --------- --------- --------- INCOME FROM CONTINUING OPERATIONS 4,877 8,238 11,228 14,160 LOSS FROM DISCONTINUED OPERATIONS (292) (927) (16) (2,529) --------- --------- --------- --------- NET INCOME $ 4,585 $ 7,311 $ 11,212 $ 11,631 ========= ========= ========= ========= EARNINGS PER SHARE OF COMMON STOCK AND COMMON STOCK EQUIVALENTS: Basic: Income from continuing operations $ 0.18 $ 0.31 $ 0.42 $ 0.53 Discontinued operations (0.01) (0.03) (0.00) (0.09) Net income 0.17 0.28 0.42 0.44 Diluted: Income from continuing operations $ 0.18 $ 0.31 $ 0.42 $ 0.53 Discontinued operations (0.01) (0.03) (0.00) (0.09) Net income 0.17 0.27 0.42 0.43
See accompanying notes to consolidated financial statements. 3 INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 30, 2003 DECEMBER 31, 2002 ------------- ----------------- ASSETS CURRENT ASSETS Cash and cash equivalents, including restricted cash of $3,313 and $3,985, respectively $ 117,552 $ 75,386 Receivables, net 87,258 82,962 Retainage 25,468 23,726 Costs and estimated earnings in excess of billings 23,952 36,680 Inventories 12,481 12,402 Prepaid expenses and other assets 12,891 13,586 Assets related to discontinued operations 4,054 7,909 --------- --------- TOTAL CURRENT ASSETS 283,656 252,651 --------- --------- PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation 69,142 71,579 --------- --------- OTHER ASSETS Goodwill 131,188 131,032 Other assets 17,528 17,751 --------- --------- TOTAL OTHER ASSETS 148,716 148,783 --------- --------- TOTAL ASSETS $ 501,514 $ 473,013 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt and line of credit $ 18,192 $ 49,360 Accounts payable and accrued expenses 68,413 69,776 Billings in excess of costs and estimated earnings 8,690 5,992 Liabilities related to discontinued operations 1,148 3,293 --------- --------- TOTAL CURRENT LIABILITIES 96,443 128,421 --------- --------- LONG-TERM DEBT, less current maturities 116,078 67,014 OTHER LIABILITIES 3,327 3,530 --------- --------- TOTAL LIABILITIES 215,848 198,965 --------- --------- MINORITY INTERESTS 1,521 1,430 --------- --------- COMMITMENTS AND CONTINGENCIES (NOTE 10) STOCKHOLDERS' EQUITY Preferred stock, undesignated, $.10 par - shares authorized 1,400,000; none outstanding -- -- Series A Junior Participating Preferred stock, $.10 par - shares authorized 600,000; none outstanding -- -- Common stock, $.01 par - shares authorized 60,000,000; shares outstanding 26,447,024 and 26,558,165 288 288 Unearned restricted stock compensation (961) -- Additional paid-in capital 133,965 132,820 Retained earnings 206,016 194,803 Treasury stock - 2,347,164 and 2,218,273 shares (51,416) (49,745) Accumulated other comprehensive loss (3,747) (5,548) --------- --------- TOTAL STOCKHOLDERS' EQUITY 284,145 272,618 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 501,514 $ 473,013 ========= =========
See accompanying notes to consolidated financial statements. 4 INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
FOR THE SIX MONTHS ENDED JUNE 30, -------------- 2003 2002 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME $ 11,212 $ 11,631 Loss from discontinued operations 16 2,529 --------- -------- INCOME FROM CONTINUING OPERATIONS 11,228 14,160 --------- -------- ADJUSTMENTS TO RECONCILE TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation 7,247 7,197 Amortization 653 721 Deferred income taxes (20) 42 Other 1,510 (1,349) CHANGES IN OPERATING ASSETS AND LIABILITIES, NET OF PURCHASED BUSINESSES: Receivables, including costs and estimated earnings in excess of billings 6,690 (6,098) Inventories (63) 1,121 Prepaid expenses and other assets 341 (2,470) Accounts payable and accrued expenses 1,574 3,240 --------- -------- NET CASH PROVIDED BY CONTINUING OPERATIONS 29,160 16,564 NET CASH PROVIDED (USED) BY DISCONTINUED OPERATIONS (1,299) 1,800 --------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 27,861 18,364 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (5,734) (11,561) Proceeds from sale of fixed assets 349 2,520 Purchase of business, net of cash acquired (300) (8,484) Cash from sale of business -- 1,515 Other investing activities 1,089 (501) --------- -------- NET CASH USED IN INVESTING ACTIVITIES (4,596) (16,511) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 185 1,257 Purchases of treasury stock (1,417) (4,357) Principal payments on long-term debt (19,271) (17,870) Issuance of long-term debt 65,000 -- Increase (decrease) in line of credit (25,778) 7,929 Deferred financing charges (692) -- --------- -------- NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 18,027 (13,041) --------- -------- Effect of exchange rate changes on cash 874 833 --------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FOR THE PERIOD 42,166 (10,355) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 75,386 74,649 --------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 117,552 $ 64,294 ========= ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: CASH PAID FOR: Interest $ 3,450 $ 4,074 Income taxes 5,329 5,786 NONCASH INVESTING AND FINANCING ACTIVITIES: Note receivable on sale of business $ -- $ 2,000 Liabilities established in connection with business acquisition -- 1,690 Amounts due to the Company settled in business acquisitions -- 2,300 Note payable recovered in settlement 5,350 -- Accrued interest recovered in settlement 557 -- Treasury stock recovered in settlement 254 --
See accompanying notes to consolidated financial statements. 5 INSITUFORM TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 2003 1. GENERAL In the opinion of the Company's management, the accompanying consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company's unaudited consolidated balance sheets as of June 30, 2003 and December 31, 2002 and the unaudited consolidated statements of income and cash flows for the three and six months ended June 30, 2003 and 2002. The financial statements have been prepared in accordance with the requirements of Form 10-Q and consequently do not include all the disclosures normally made in an Annual Report on Form 10-K. Accordingly, the consolidated financial statements included herein should be reviewed in conjunction with the financial statements and the footnotes thereto included in the Company's 2002 Annual Report on Form 10-K. The results of operations for the three and six months ended June 30, 2003 and 2002 are not necessarily indicative of the results to be expected for the full year. 2. STOCK-BASED COMPENSATION At June 30, 2003, the Company had two plans under which equity incentives may be granted. On May 29, 2003, shareholders approved an increase in the number of shares available under the 2001 Employee Equity Incentive Plan from 1,000,000 to 2,000,000. The Company applies the recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations in accounting for those plans. No compensation expense from stock options was reflected in the net income for the quarters ended June 30, 2003 and 2002, respectively, as all options granted during these and subsequent time periods had an exercise price equal to the market value of the underlying common stock on the date of the grant. Compensation expense related to restricted stock grants was $33 thousand for the three and six months ended June 30, 2003. There were no shares of restricted stock granted in 2002. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based Compensation," to stock-based compensation (in thousands, except share data):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2003 2002 2003 2002 ---- ---- ---- ---- Net income - as reported $ 4,585 $ 7,311 $ 11,212 $ 11,631 Deduct: Total stock-based compensation expense determined under fair value method for all awards, net of related tax effects (980) (1,361) (2,449) (3,576) ---------- ---------- ---------- ---------- Pro forma net income $ 3,605 $ 5,950 $ 8,763 $ 8,055 ========== ========== ========== ========== Basic earnings per share: As reported $ 0.17 $ 0.28 $ 0.42 $ 0.44 Pro forma 0.14 0.22 0.33 0.30 Diluted earnings per share: As reported 0.17 0.27 0.42 0.43 Pro forma 0.14 0.22 0.33 0.30
For SFAS No. 123 disclosure purposes, the weighted average fair value of stock options is required to be based on a theoretical option-pricing model such as the Black-Scholes method. In actuality, because the Company's employee stock options are not traded on an exchange and are subject to vesting periods, the disclosed fair value represents only an approximation of option value based solely on historical performance. Beginning in 2000, the Company decided to increase the alignment of key employee goals and shareholder objectives by increasing the relative value of variable compensation. On May 27, 2003, the Company granted 57,300 shares of restricted stock to executives and key employees. The grant of restricted stock to executives is contingent on meeting performance goals over a one-year period, and all restricted stock is generally subject to a three-year service term before vesting. The grant date fair value of these shares was 6 $0.9 million. The value of the restricted stock grant was added to additional paid-in capital at the grant date and an equal amount was established in unearned restricted stock compensation. All shares subject to performance restrictions are revalued at each reporting date to reflect the then current market price of the Company's stock. Revaluations are treated as a change in accounting estimate and accounted for prospectively with an appropriate increase or decrease to additional paid-in capital, unearned restricted stock compensation and a current period adjustment in compensation expense. All restricted shares are expensed as compensation through the service restriction term. On July 22, 2003, Anthony W. (Tony) Hooper resigned as Chairman of the Board and Chief Executive Officer. Consequently, Mr. Hooper forfeited 21,900 shares of restricted stock. 3. BUSINESS ACQUISITIONS Effective May 1, 2002, the Company acquired the business and certain assets and liabilities of Elmore Pipe Jacking, Inc. ("Elmore") for approximately $12.5 million. Elmore was a regional provider of trenchless tunneling, microtunneling, segmented lining and pipe jacking services in the western United States. The purchase price included $8.5 million in cash, settlement of $2.3 million of debt owed by Elmore to the Company, and the assumption of an additional $1.7 million of liabilities, of which $0.2 million was interest-bearing and the remainder, including covenants not to compete, owed to the former owners of the Elmore assets. The purchase price was allocated to assets acquired and liabilities assumed based on their respective fair values at the date of acquisition and resulted in goodwill of $8.9 million. The Company's results reflect the operation of Elmore's former assets from the date of acquisition. The Elmore acquisition added $2.7 million of revenues and $2.6 million of operating loss in the tunneling segment for the second quarter of 2003, with the resulting revenues and operating loss for the first six months of 2003 equaling $6.9 million and $5.1 million, respectively. Pro forma information relative to the quarter and six months ended June 30, 2002 is immaterial and has not been presented relative to the Elmore acquisition. On June 19, 2003, the Company announced that it had reached an agreement to acquire the rehabilitation business of Insituform East, Inc., the Company's final remaining unaffiliated domestic licensee of the Insituform(R) cured-in-place pipe process (the "Insituform CIPP Process"), at an estimated purchase price of $5.5 million. The transaction is expected to close in the third quarter. 4. DISCONTINUED OPERATIONS In 2001, the Company made the decision to sell certain operations acquired in the Kinsel acquisition. Accordingly, the Company classified as discontinued the wastewater treatment plant, commercial construction and highway operations acquired as part of the Kinsel acquisition. These operations were not consistent with the Company's operating strategy of providing differentiated trenchless rehabilitation and tunneling services. The Company completed the sale of the wastewater treatment plant operations effective January 1, 2002. The Company received $1.5 million in cash and a $2.0 million note for a total sale price of $3.5 million, resulting in a slight loss on the sale. During the third quarter of 2002, the Company sold the heavy highway construction business for $2.6 million in cash and $1.5 million in notes, resulting in a pre-tax gain of $1.5 million, or $0.9 million after-tax. The Company completed the sale of certain assets and contracts of the Kinsel highway maintenance business during the fourth quarter of 2002 for certain assumed liabilities, $1.4 million in cash and a $1.5 million subordinated note, with no material gain or loss for the sale. Pursuant to the terms of the sale agreements described above, the Company retained responsibility for some uncompleted jobs, which has resulted in the absorption of additional trailing costs. The Company substantially completed these jobs in the second quarter of 2003. This completes the disposition of all material assets classified as discontinued pursuant to the acquisition of Kinsel. The Company negotiated settlements, without litigation, during the first quarter of 2003 between the Company and the former Kinsel owners, and the Company and the purchasers of the wastewater treatment plant operations acquired from Kinsel. The Company made various claims against the former shareholders of Kinsel, arising out of the February 2001 acquisition of Kinsel and Tracks. Those claims were settled in March 2003 without litigation. Under the terms of the settlement, 18,891 shares of Company common stock and all of the promissory notes, totaling $5,350,000 in principal (together with all accrued and unpaid interest), issued to former Kinsel shareholders in connection with the acquisition, were returned to the Company from the claim collateral escrow account established at the time of the acquisition. The remaining 56,672 shares of Company common stock held in the escrow account were distributed to the former Kinsel shareholders. The settlement of the escrow account primarily related to matters associated with Kinsel operations that have been sold and presented as discontinued operations. In January 2003, the Company received notice of multiple claims, totaling more than $3.5 million, from the buyer of the former Kinsel wastewater treatment division. The claims arose out of the January 2002 sale of the Kinsel wastewater treatment division and alleged the valuation of the assets sold was overstated. These settlements resulted in a $0.6 million after- 7 tax non-operating gain in the results of continuing operations and a net after-tax $0.7 million gain in discontinued operations for the quarter ended March 31, 2003. As of June 30, 2003 and December 31, 2002, assets related to discontinued operations totaled $4.1 million and $7.9 million, respectively, and included $0.2 million and $0.7 million of unbilled receivables, respectively. Assets related to discontinued operations also included $0.7 million in retainage receivables, $0.3 million of trade receivables, $2.4 million of prepaid and other assets, and $0.4 million of fixed assets at June 30, 2003. Liabilities related to discontinued operations totaled $1.1 million and $3.3 million at June 30, 2003 and December 31, 2002, respectively. The results of operations for the discontinued operations were as follows (in thousands):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2003 2002 2003 2002 ---- ---- ---- ---- REVENUES: Wastewater treatment plant $ -- $ -- $ -- $ -- Commercial construction and highway operations 753 8,248 2,151 16,870 INCOME (LOSS) FROM DISCONTINUED OPERATIONS: Wastewater treatment plant, net of tax expense (benefit) of $(104), $0, $(866), and $(348), respectively (163) -- (1,355) (642) Commercial construction and highway operations, net of tax expense (benefit) of $(83), $(659), $856, and $(563), respectively (129) (927) 1,339 (1,887)
5. RESTRUCTURING In the third quarter of 2002, the Company recorded a pre-tax restructuring charge of $2.5 million ($1.5 million after-tax), $1.3 million of which was severance costs associated with the elimination of 75 salaried positions, primarily related to administrative and other overhead functions. An additional $1.2 million involved related decisions for information technology asset write-downs, lease cancellations, and disposal of certain identifiable fixed assets primarily at the corporate level. As of June 30, 2003, the remaining liability on this restructuring was $0.2 million related entirely to future severance costs that are expected to be substantially settled in 2003. In the fourth quarter of 2001, the Company recorded a pre-tax restructuring charge of $4.1 million ($2.5 million after-tax), $0.9 million of which was severance costs associated with the elimination of 112 company-wide positions specifically identified as of December 31, 2001. An additional $3.2 million of the charge related to asset write-downs, lease cancellations and other costs associated with the closure of eight facilities in the United States and the disposal of the associated assets. As of June 30, 2003, the remaining liability was $0.3 million, $0.1 million of which was for retirement of equipment, and $0.2 million of which related to facilities closure costs, both of which are expected to be substantially settled in 2003. 8 The following table illustrates each of the restructuring reserve components and the related balances at June 30, 2003 (in thousands):
BALANCE AT 2002 CHARGED DURING CHARGED DURING BALANCE AT DECEMBER 31, 2001 RESERVE 2002 FIRST HALF OF 2003 JUNE 30, 2003 ----------------- ------- ---- ------------------ ------------- 2001 RESERVE CASH NON-CASH CASH NON-CASH ------------------------ -------------------- Severance $ 844 $ (844) $ -- $ -- $ -- $ -- Equipment 616 (122) (237) (104) (57) 96 Facility 1,702 (1,171) (302) (12) -- 217 ------ ------- ------- ------ ----- ----- ----- Total $3,162 $(2,137) $ (539) $(116) $ (57) $ 313 ====== ======= ======= ====== ===== ===== ===== 2002 RESERVE Severance $ -- $ 1,258 $ (465) $ -- $(559) $ -- $ 234 Equipment -- 1,200 (852) -- -- (348) -- ------ ------- ------- ------ ----- ----- ----- Total $ -- $ 2,458 $(1,317) $ -- $(559) $(348) $ 234 ====== ======= ======= ====== ===== ===== =====
6. COMPREHENSIVE INCOME For the quarters ended June 30, 2003 and 2002, comprehensive income was $7.3 million and $7.2 million, respectively, with comprehensive income of $13.0 million and $11.8 million for the six months ended June 30, 2003 and 2002, respectively. The Company's adjustment to net income to calculate comprehensive income consists solely of cumulative foreign currency translation adjustments of $2.7 million and $(0.1) million for the quarters ended June 30, 2003 and 2002, respectively, and $1.8 million and $0.2 million for the six months ended June 30, 2003 and 2002, respectively. 7. SHARE INFORMATION Earnings per share have been calculated using the following share information:
THREE MONTHS ENDED JUNE 30, 2003 2002 ---- ---- Weighted average number of common shares used for basic EPS 26,444,923 26,543,025 Effect of dilutive stock options and restricted stock 102,815 275,858 ---------- ---------- Weighted average number of common shares and dilutive potential common stock used in dilutive EPS 26,547,738 26,818,883 ========== ==========
SIX MONTHS ENDED JUNE 30, 2003 2002 ---- ---- Weighted average number of common shares used for basic EPS 26,487,028 26,548,236 Effect of dilutive stock options and restricted stock 86,665 281,797 ---------- ---------- Weighted average number of common shares and dilutive potential common stock used in dilutive EPS 26,573,693 26,830,033 ========== ==========
8. SEGMENT REPORTING The Company has principally three operating segments: rehabilitation, tunneling, and TiteLiner(R), the Company's corrosion and abrasion segment ("TiteLiner"). The segments were determined based upon the types of products sold by each segment and each is regularly reviewed and evaluated separately. The following disaggregated financial results have been prepared using a management approach, which is consistent with the basis and manner with which management internally disaggregates financial information for the purpose of assisting in making internal operating decisions. The Company evaluates performance based on stand-alone operating income. 9 Financial information by segment is as follows (in thousands):
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2003 2002 2003 2002 ---- ---- ---- ---- REVENUES Rehabilitation $ 93,883 $ 93,351 $186,250 $184,793 Tunneling 26,385 22,249 51,970 37,425 TiteLiner 4,510 2,888 9,906 7,445 -------- --------- -------- -------- TOTAL REVENUES $124,778 $ 118,488 $248,126 $229,663 ======== ========= ======== ======== GROSS PROFIT Rehabilitation $ 25,004 $ 26,080 $ 48,472 $ 50,386 Tunneling 2,773 4,224 5,934 7,275 TiteLiner 1,490 693 3,130 2,225 -------- --------- -------- -------- TOTAL GROSS PROFIT $ 29,267 $ 30,997 $ 57,536 $ 59,886 ======== ========= ======== ======== OPERATING INCOME Rehabilitation $ 8,589 $ 11,904 $ 17,403 $ 20,530 Tunneling 976 2,497 2,417 4,363 TiteLiner 720 (145) 1,651 597 -------- --------- -------- -------- TOTAL OPERATING INCOME $ 10,285 $ 14,256 $ 21,471 $ 25,490 ======== ========= ======== ========
9. ACQUIRED INTANGIBLE ASSETS AND GOODWILL In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets," which requires that an intangible asset that is acquired shall be initially recognized and measured based on its fair value. This statement also provides that certain intangible assets deemed to have an indefinite useful life, such as goodwill, should not be amortized, but shall be tested for impairment annually, or more frequently if circumstances indicate potential impairment, through a comparison of fair value to its carrying amount. SFAS 142 is effective for fiscal periods beginning after December 15, 2001. The Company adopted SFAS 142 on January 1, 2002, at which time amortization of goodwill ceased and a transitional impairment test was performed. The annual impairment test for goodwill was performed in the fourth quarter of 2002. Management retained an independent party to perform a valuation of the Company's reporting units as of these dates and determined that no impairment of goodwill existed. The Company's 2003 annual impairment test of goodwill will be performed in the fourth quarter of 2003. Intangible assets were as follows (in thousands):
AS OF JUNE 30, 2003 GROSS CARRYING ACCUMULATED AMOUNT AMORTIZATION ------ ------------ Amortized intangible assets: Patents $13,943 $(12,090) License agreements 3,263 (1,989) Non-compete agreements 4,628 (2,332) ------- -------- Total $21,834 $(16,411) ======= ======== Aggregate amortization expense: For quarter ended June 30, 2003 $ 334 For six months ended June 30, 2003 653 Estimated amortization expense: For year ending December 31, 2003 $ 1,166 For year ending December 31, 2004 1,072 For year ending December 31, 2005 730 For year ending December 31, 2006 725 For year ending December 31, 2007 332
Effective June 1, 2003, the Company completed the acquisition of the business of Sewer Services Ltd., a United Kingdom based contractor specializing in the rehabilitation of man-entry pipes and culverts. The acquisition, with a purchase price of $0.4 million, resulted in an increase of $143 thousand in goodwill. Pro forma information relative to this acquisition was not considered material. 10 10. COMMITMENTS AND CONTINGENCIES Litigation The Company is involved in certain litigation incidental to the conduct of its business. The Company does not believe that the outcome of any such litigation will have a material adverse effect on the Company's financial position, results of operations and liquidity. During the third quarter of 2002, a Company crew had an accident on a cured-in-place pipe project in Des Moines, Iowa. Two workers died and five workers were injured in the accident. The financial statements include the estimated amounts of liabilities that are likely to be incurred from these and various other pending litigation and claims. Guarantees The Company has entered into several contractual joint ventures to develop joint bids on contracts for its installation businesses, and for tunneling operations. In these cases, the Company could be required to complete the partner's portion of the contract if the partner is unable to complete its portion. The Company is at risk for any amounts for which the Company itself could not complete the work and for which a third party contractor could not be located to complete the work for the amount awarded in the contract. The Company has not experienced material adverse results from such arrangements and foresees no future material adverse impact on financial position, results of operations or cash flows. As a result, the Company has not recorded a liability on the balance sheet associated with this risk. The Company has many contracts that require the Company to indemnify the other party against loss from claims of patent or trademark infringement. The Company also indemnifies its bonding agents against losses from third party claims of subcontractors. The Company has not experienced material losses under these provisions and foresees no future material adverse impact on financial position, results of operations or cash flows. 11. FINANCINGS Credit Facility Effective March 27, 2003, the Company entered into a new three-year bank revolving credit facility to replace its expiring bank credit facility. This new facility provides the Company with borrowing capacity of up to $75 million. The quarterly commitment fee ranges from 0.2% to 0.3% per annum on the unborrowed balance depending on the leverage ratio determined as of the last day of the Company's preceding fiscal quarter. At the Company's option, the interest rates will be either (i) the LIBOR plus an additional percentage that varies from 0.75% to 1.5% depending on the leverage ratio or (ii) the higher of (a) the prime rate or (b) the federal funds rate plus 0.50%. As of June 30, 2003, there was no borrowing on the credit facility and therefore there is no applicable interest rate as rates are determined on the borrowing date. The available balance was $68.7 million and the commitment fee was 0.20%. The remaining $6.3 million was used for non-interest bearing letters of credit, the majority of which was collateral for insurance. The Company generally uses the credit facility for short-term borrowings and discloses amounts outstanding as a current liability. Senior Notes On April 24, 2003, the Company placed $65 million of Senior Notes, Series 2003-A, due April 24, 2013 and bearing interest, payable semi-annually in April and October of each year, at a rate of 5.29% per annum, with certain institutional investors through a private offering. The principal amount is due in a single payment on April 24, 2013. The Senior Notes, Series 2003-A, may be prepaid at the Company's option, in whole or in part, at any time, together with a make-whole premium. Upon specified change in control events each holder has the right to require the Company to purchase its Senior Notes, Series 2003-A, without any premium thereon. At June 30, 2003, the Company was in compliance with all debt covenants. 12. NEW ACCOUNTING PRONOUNCEMENTS In June 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 146 ("SFAS 146"), "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 requires an entity to recognize, and measure at fair value, a liability for costs associated with an exit or disposal activity in the period in which the liability is incurred. SFAS 146 supercedes Emerging Issues Task Force Issue ("EITF") No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an 11 Activity (Including Certain Costs Incurred in a Restructuring)." SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The Company has adopted the provisions of SFAS 146 effective January 1, 2003. There was no exit or disposal activity initiated during the first six months of 2003. In November 2002, FASB issued FASB Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," which elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued along with expanded disclosures of warranty reserves. It also requires that a guarantor recognize a liability for the fair value of the obligation undertaken in issuing the guarantee at the inception of the guarantee. This interpretation incorporates the guidance in FIN 34, "Disclosure of Indirect Guarantees of Indebtedness of Others," which is being superseded. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor's fiscal year-end and the disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. Adoption of FIN 45 did not have a material impact on the consolidated financial statements. See Note 10 to the Consolidated Financial Statements regarding commitments and contingencies. In December 2002, FASB issued Statement of Financial Accounting Standards No. 148 ("SFAS 148"), "Accounting for Stock-Based Compensation - Transition and Disclosure." SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation," and allows two alternative methods of transition for a voluntary change to the more preferable fair value based method of accounting for stock-based employee compensation. These methods avoid the ramp-up effect arising from prospective application of the fair value based method. The Statement also amends Accounting Principles Board Opinion No. 28 ("APB 28"), "Interim Financial Reporting," and requires disclosure of comparable information for all companies regardless of whether, when, or how an entity adopts the fair value based method of accounting and requires the inclusion of the disclosure in financial reports for interim periods. SFAS 148 is effective for interim and year-end financial statements for fiscal years ending after December 15, 2002. As previously disclosed, the Company will continue to account for stock compensation pursuant to APB 25. However, it has adopted the disclosure provisions of SFAS 148 and continues to evaluate its options. In January 2003, FASB issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities," which addresses the reporting and consolidation of variable interest entities as they relate to a business enterprise. This interpretation incorporates and supercedes the guidance set forth in Accounting Research Bulletin No. 51 ("ARB 51"), "Consolidated Financial Statements." It requires the consolidation of variable interests into the financial statements of a business enterprise if that enterprise holds a controlling financial interest via other means than the traditional voting majority. The requirements of FIN 46 are effective immediately for variable interest entities created after January 31, 2003 and thereafter, or the first reporting period after June 15, 2003 for variable interest entities for which an enterprise holds a variable interest that it acquired prior to February 1, 2003. The Company is evaluating FIN 46 relative to its equity investments and lease agreements, among other things. 13. SUBSEQUENT EVENT Effective July 22, 2003, Anthony W. (Tony) Hooper resigned as Chairman of the Board and Chief Executive Officer. Effective on that same date, the Company's board of directors named Thomas S. Rooney, Jr. as Chief Executive Officer. Mr. Rooney retained the responsibilities of his previous position and was elected as a new member to the board of directors. The Company expects to record associated severance costs of approximately $1.2 million during the third quarter of 2003. See Note 2 regarding forfeiture of restricted stock. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of certain significant factors that have affected the Company's financial condition and results of operations during the periods included in the accompanying consolidated financial statements. See the discussion of the Company's critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2002; there have been no changes to these policies during the quarter and six months ended June 30, 2003. RESULTS OF OPERATIONS - Three and Six Months Ended June 30, 2003 and 2002 The following table highlights the results for each of the segments and periods presented (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, 2003 JUNE 30, 2003 REVENUES GROSS PROFIT OPERATING INCOME REVENUES GROSS PROFIT OPERATING INCOME -------- ------------ ---------------- -------- ------------ ---------------- Rehabilitation $ 93,883 $25,004 $ 8,589 $186,250 $48,472 $17,403 Tunneling 26,385 2,773 976 51,970 5,934 2,417 TiteLiner 4,510 1,490 720 9,906 3,130 1,651 -------- ------- -------- -------- ------- ------- Total $124,778 $29,267 $ 10,285 $248,126 $57,536 $21,471 ======== ======= ======== ======== ======= =======
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, 2002 JUNE 30, 2002 REVENUES GROSS PROFIT OPERATING INCOME REVENUES GROSS PROFIT OPERATING INCOME -------- ------------ ---------------- -------- ------------ ---------------- Rehabilitation $ 93,351 $26,080 $ 11,904 $184,793 $50,386 $20,530 Tunneling 22,249 4,224 2,497 37,425 7,275 4,363 TiteLiner 2,888 693 (145) 7,445 2,225 597 -------- ------- -------- -------- ------- ------- Total $118,488 $30,997 $ 14,256 $229,663 $59,886 $25,490 ======== ======= ======== ======== ======= =======
Consolidated revenues from continuing operations were $124.8 million in the second quarter of 2003, an increase of 5.3% from $118.5 million in the second quarter of 2002. Second quarter 2003 tunneling revenues increased $4.1 million, or 18.6%, to $26.4 million, and TiteLiner revenues increased $1.6 million, or 56.2%, to $4.5 million compared to the second quarter of 2002. Tunneling revenues increased despite a decrease in revenue contribution from the Elmore division during the second quarter of 2003 compared to the same quarter of 2002. High productivity on large tunneling jobs in Dallas, Chicago, and St. Louis primarily accounted for the revenues increase in the segment. Rehabilitation revenues increased only slightly compared to the second quarter of 2002 to $93.9 million for the second quarter of 2003 as strong performances in some domestic rehabilitation units were more than offset by weak performances in two areas of the United States. Rehabilitation revenues increased in total on the strength of growth in the European unit. For the first half of 2003, consolidated revenues from continuing operations were up 8.0% to $248.1 million from $229.7 million in the first six months of 2002. Growth in rehabilitation revenues came primarily from increases in the Kinsel unit and in European operations. The tunneling and TiteLiner segments, up 38.9% and 33.0%, respectively, were primarily responsible for the first half increase in 2003 compared to 2002. Approximately two-thirds of the increase in tunneling revenues in the first six months of 2003 compared to the first six months of 2002 was due to the addition of Elmore operations, which contributed a full six months of revenue in 2003 compared to two months in 2002. Cost of revenues increased 9.2% in the second quarter of 2003 to $95.5 million from $87.5 million in the second quarter of 2002, outpacing revenue growth for the quarter. Higher than expected casualty, workers compensation and healthcare claims in the second quarter of 2003 impacted cost of revenues in all segments compared to the second quarter of 2002, and inventory and equipment write-offs associated with obsolete small diameter installation methods increased the cost of revenues in rehabilitation during the second quarter of 2003 relative to the second quarter of 2002. Poor performance on specific identifiable projects and in some regions in domestic rehabilitation operations during the quarter resulted in crew downtime and excessive costs. Additional unanticipated costs were incurred in the second quarter of 2003 on some of the contracts acquired with Elmore, a division of tunneling. The Company has not yet been able to finalize settlement of its related customer claims and change orders or its claim against the sellers of the Elmore business that would have offset some of the unanticipated costs. The Company is not able to predict when its claims relating to these contracts will be settled, nor the amount it may recover. The original Elmore contracts have been completed. Consolidated cost of revenues for the six months ended June 30, 2003 was $190.6 million, an increase of 12.3% compared to $169.8 million for the first half of 2002. Most of the increase in cost of revenues during the first six months of 2003 compared to 2002 occurred in 13 tunneling. The sources of tunneling cost of revenues increases were in almost equal parts due to growth in the Affholder division and previously mentioned excess costs on contracts acquired from Elmore. The remaining cost of revenues increase primarily resulted from costs due to poor crew utilization at one of the locations in the Company's Kinsel operation included in the rehabilitation segment. Gross profit from continuing operations was $29.3 million in the second quarter of 2003, a 5.6% decrease from gross profit of $31.0 million in the second quarter of 2002. Based on the increase in cost of revenues described above, gross margin decreased to 23.5% in the second quarter of 2003 from 26.2% in the second quarter of 2002. As tunneling grows in its contribution to the consolidated results, its historical lower margins also continue to lower the consolidated margins. For the first six months of 2003, gross profit was down 3.9% to $57.5 million from $59.9 million in the first half of 2002. Projects associated with the Elmore acquisition were completed in the second quarter of 2003 at low or negative margins, which reduced tunneling gross margin; consequently, tunneling margins are expected to improve for the remainder of 2003. Higher casualty, workers compensation and healthcare claims for all segments, the write-off of obsolete equipment and regional domestic rehabilitation issues as well as unexpectedly high costs to complete projects acquired from Elmore accounted for decreased gross margins for both the three and six months ended June 30, 2003 compared to the same periods of 2002. TiteLiner gross margin increases over the same time periods were generally the result of revenue growth resulting from renewed cyclical demand for the segment's products. Selling, general and administrative costs were 13.4% higher in the second quarter of 2003 at $19.0 million compared to $16.7 million in the second quarter of 2002. This increase was primarily due to approximately $1.0 million in additional casualty, workers compensation and healthcare costs to reflect increased casualty losses and healthcare costs, as well as an increase in bad debt expense. Nearly all of the increases were associated with the rehabilitation segment, which experienced a 15.8% increase in overhead expenses in the second quarter of 2003 compared to 2002. For the six months ended June 30, 2003, selling, general and administrative expenses were $36.1 million, a 4.9% increase compared to $34.4 million in the first six months of 2002. An additional four months of Elmore operations in 2003 compared to 2002 caused year-to-date operating expenses in the Elmore segment to be up $0.8 million in the first six months of 2003 compared to the first six months of 2002. For the second quarter of 2003, consolidated operating income from continuing operations was $10.3 million, a 27.8% decrease from operating income from continuing operations of $14.3 million in the second quarter of 2002. The previously mentioned unanticipated excess costs in the Elmore operation were a significant reason for the shortfall, as the tunneling segment dropped 60.9% to $1.0 million from $2.5 million in the second quarter of 2002. In addition, project execution and a decrease in the amount of work available on Kinsel contracts decreased operating income from $2.4 million in the second quarter of 2002 to a $0.1 million operating loss attributable to Kinsel in the second quarter of 2003. Performance problems in some domestic rehabilitation units, including Kinsel, combined with the increase in casualty, workers compensation and healthcare claims, write-offs of obsolete small diameter equipment and inventory, and bad debt expense drove operating income down 27.8% in the rehabilitation segment in the second quarter of 2003 compared to the second quarter of 2002. The TiteLiner segment turned a $0.1 million operating loss in the second quarter of 2002 into a $0.7 million operating income gain in the second quarter of 2003. The turnaround in TiteLiner is predominantly due to United States' operations returning to normal financial health in 2003 after suffering abnormally low operating results in 2002, especially in the first half of the year. For the first six months of 2003, operating income from continuing operations was $21.5 million, a 15.8% decrease from operating income from continuing operations of $25.5 million in the second quarter of 2002. During the first six months of 2003, tunneling and rehabilitation fell short of 2002 operating income by 44.6% and 15.2%, respectively. TiteLiner's operating income was up $1.1 million, or 176.5%, during the first six months of 2003 compared to 2002. Interest expense in the second quarter of 2003 was $2.2 million, up 32.4% compared to second quarter 2002 interest expense of $1.6 million. Although interest rates have declined in the second quarter of 2003 compared to 2002, the Company financed an additional $65 million in Senior Notes in April 2003, resulting in an overall increase in interest expense. Interest expense for the first six months of 2003 was $3.4 million, down 12.0% from $3.8 million in the first six months of 2002, a reflection of the lower interest rates on the Company's line of credit in the first six months of 2003 and a lower balance in the second quarter of 2003. The Company incurred $0.2 million in other expenses, down from $0.3 million in other income in the second quarter of 2002. For the first six months of 2003, other income was down 69.1% to $0.2 million from $0.8 million in the first half of 2002. Much of this decrease is due to reduced interest income earned on cash balances as a result of declining interest rates. The effective tax rate for the first six months of 2003 was 39.0% compared to 38.3% for the first six months of 2002. Income from continuing operations was $4.9 million for the second quarter of 2003, or $0.18 per diluted share, down 40.8% from $8.2 million in income from continuing operations for the second quarter of 2002, or $0.31 per diluted share, due to the factors described previously. Discontinued operations lost $0.3 million in the second quarter of 2003, an improvement from the $0.9 million loss in the second quarter of 2002. Resulting net income was $4.6 million for the 14 second quarter of 2003, or $0.17 per diluted share, down 37.3% from $7.3 million in net income for the second quarter of 2002. For the six months ended June 30, 2003, income from continuing operations was down 20.7% to $11.2 million, or $0.42 per diluted share, from $14.2 million in the first six months of 2002, or $0.53 per diluted share. The loss from discontinued operations during the first six months of 2003 was substantially zero, while the loss from discontinued operations in the first six months of 2002 was $2.5 million, or $0.09 per diluted share. Net income was $11.2 million, or $0.42 per diluted share, down 3.6% from $11.6 million in the first six months of 2002, or $0.43 per diluted share. Based on current economic conditions, uncertainty still remains about the levels of municipal spending for the remainder of 2003 and fiscal 2004. Orders during the second quarter of 2003 were relatively strong, particularly in the domestic CIPP business where orders exceeded revenues by 26.9%. However, the distribution of backlog is not even. One of the domestic CIPP units, Kinsel, and the Elmore division of Affholder face sub-optimal backlog levels. At June 30, 2003, the Company eliminated all remaining Jacksonville Electric Authority term contract backlog due to changes in planned releases from the customer. These units will continue to confront the challenges posed by their backlog positions for the balance of the year. BACKLOG In addition to the Company's decision not to give specific earnings guidance for the third and fourth quarters of 2003, the Company has decided to discontinue voluntary disclosure of backlog balances for the remainder of the year. See preceding paragraph for narrative commentary on the Company's backlog situation. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents at June 30, 2003 totaled $117.6 million, an increase of $42.2 million from the December 31, 2002 balance of $75.4 million. Continuing operations contributed $29.2 million in operating cash flow during the first six months of 2003, with working capital changes comprising $8.5 million of this amount. This is a 76.0% increase compared to operating cash flow from continuing operations of $16.6 million in the first six months of 2002. Operating cash flow benefited from accelerated collections during the second quarter, specifically in the tunneling segment where production on large projects began generating strong cash flow. These receivables had been classified as costs in excess of billings in recent prior quarters. Discontinued operations used $1.3 million of cash in the first six months of 2003 compared to a contribution of $1.8 million in the first six months of 2002. The Company decreased spending on investing activities by 72.2% in the first half of 2003 to $4.6 million from $16.5 million in the first six months of 2002. Decreased capital asset acquisitions and the purchase of Elmore in the second quarter of 2002 were the primary reasons for the difference. The Company spent $5.7 million on capital assets during the first half of 2003 compared to $11.6 million in the first half of 2002, a 50.4% decline in spending. However, due to the planned expansion of the Company's manufacturing facility in Batesville, Mississippi, the Company expects an increase in capital expenditures for the second half of the year, resulting in total capital expenditures for the year ending December 31, 2003 that are consistent with recent years. The Company spent $0.3 million in purchasing certain identifiable assets from Sewer Services, Ltd. in the first half of 2003 while it paid $8.5 million for Elmore last year. The Company received $18.0 million in cash from financing activities in the first six months of 2003, up significantly from the use of $13.0 million in the first half of 2002. The primary cause of the increase in cash from financing activities was $65 million provided by the Company's new Senior Notes issued during the second quarter of 2003. Additionally, the Company paid down its long-term debt by $19.3 million and paid $25.8 million towards the line of credit in the six months ended June 30, 2003. The Company did not purchase shares of its own stock in the second quarter of 2003 due to overlapping blackout periods. During the second quarter of 2002, the Company purchased 100,000 shares of its stock. During the first six months of 2003, the Company has purchased 110,000 shares of its own stock for $1.4 million compared to 200,000 repurchased shares in the first six months of 2002 for $4.4 million. On a cumulative basis, the Company has spent $74.0 million to repurchase 3,919,615 shares through June 30, 2003 since the inception of the stock repurchase program originally authorized in 1998. In April 2003, the Company indefinitely extended its repurchase program, which was due to expire in June 2003. Repurchased shares are held as treasury stock until reissued. Trade receivables and retainage totaled $112.7 million at June 30, 2003, up 5.7% from December 31, 2002 trade receivables and retainage of $106.7 million. The increase is primarily a result of the movement of unbilled receivables to trade receivables in the tunneling segment based on production cycle. Based on the percentage of completion method of revenue recognition, typically, work is started on large jobs and substantial costs are incurred with no revenue recognized, as was the case on three large tunneling jobs in Dallas, Chicago, and St. Louis in late 2002. As production continues, these revenues are generated and the receivable is moved into trade receivables. The tunneling segment has also seen accelerated collection of much of these receivables as well. This is evident in the fact that costs and estimated earnings in 15 excess of billings in the tunneling segment decreased 68.1% from December 31, 2002 to $6.9 million at June 30, 2003. On a consolidated basis, costs and estimated earnings in excess of billings were down 34.7% to $24.0 million at June 30, 2003 from $36.7 million at December 31, 2002. Effective March 27, 2003, the Company entered into a new three-year bank revolving credit facility (the "Credit Agreement") to replace its expiring bank credit facility. This new facility provides the Company with borrowing capacity of up to $75 million. The quarterly commitment fee ranges from 0.2% to 0.3% per annum on the unborrowed balance depending on the leverage ratio determined as of the last day of the Company's preceding fiscal quarter. At the Company's option, the interest rates will be either (i) the LIBOR plus an additional percentage that varies from 0.75% to 1.5% depending on the leverage ratio or (ii) the higher of (a) the prime rate or (b) the federal funds rate plus 0.50%. The Company paid $40 million in principal towards the line of credit facility during the second quarter of 2003. At June 30, 2003, the Company had unused committed bank credit facilities under the Credit Agreement totaling $68.7 million and the commitment fee was 0.20%. The remaining $6.3 million was utilized for non-interest bearing letters of credit, the majority of which was collateral for insurance. As of June 30, 2003, there was no borrowing on the credit facility and therefore there is no applicable interest rate as rates are determined on the borrowing date. Under the Credit Agreement, the Company has certain debt covenant provisions that require, among other things, a minimum fixed charge coverage ratio of 1.1 and a maximum leverage ratio of 2.25. The fixed charge coverage ratio was 1.34 at June 30, 2003 and 1.45 at March 31, 2003. The leverage ratio was 2.02 and 1.03 at June 30 and March 31, 2003, respectively. If the Company's net income from continuing operations drops below $25 million for a twelve-month period, the Company will be at risk of violating one, or both, of these covenant restrictions. At June 30, 2003, the Company was in compliance with all debt covenants under the Credit Agreement. The Company's Senior Notes, Series A, due February 14, 2007, bear interest, payable semi-annually in August and February of each year, at the rate per annum of 7.88%. Each year, from February 2004 to February 2007, inclusive, the Company will be required to make principal payments of $15.7 million, together with an equivalent payment at maturity. On June 30, 2003, the principal amount of Senior Notes, Series A, outstanding was $62.9 million. On April 24, 2003, the Company placed an additional $65 million of Senior Notes, Series 2003-A, with certain institutional investors through a private offering, bringing the total Series A and Series 2003-A Senior Notes outstanding to $127.9 million at that date. The Senior Notes, Series 2003-A, are due April 24, 2013 and bear interest, payable semi-annually in April and October of each year, at a rate of 5.29% per annum. The principal amount is due in a single payment on April 24, 2013. The Senior Notes, Series 2003-A, may be prepaid at the Company's option, in whole or in part, at any time, together with a make-whole premium. Upon specified change in control events, each holder has the right to require the Company to purchase its Senior Notes, Series 2003-A, without any premium thereon. The proceeds of the Senior Notes, Series 2003-A, were used to pay off the balance on the line of credit and to provide future liquidity. The note purchase agreements pursuant to which the Senior Notes, Series A and Series 2003-A, were issued, and the Credit Agreement, obligate the Company to comply with certain financial ratios and restrictive covenants that, among other things, place limitations on operations and sales of assets by the Company or its subsidiaries, limit the ability of the Company to incur further secured indebtedness and liens and of subsidiaries to incur indebtedness, and, in the event of default, limit the ability of the Company to pay cash dividends or make other distributions to the holders of its capital stock or to redeem such stock. At June 30, 2003, the Company was in compliance with all debt covenants under the note purchase agreements. The Company believes it has adequate resources and liquidity to fund future cash requirements for working capital, capital expenditures and debt repayments with cash generated from operations, existing cash balances, additional short- and long-term borrowing and the sale of assets. On May 27, 2003, the Company granted 57,300 shares of restricted stock to executives and key employees. The grant of restricted stock to executives is contingent on meeting performance goals over a one-year period, and all restricted stock is generally subject to a three-year service term before vesting. The grant date fair value of these shares was $0.9 million. The value of the restricted stock grant was added to additional paid-in capital at the grant date, and an equal amount was established in unearned restricted stock compensation. All restricted shares are expensed as compensation through the service restriction term. On July 22, 2003, Anthony W. (Tony) Hooper resigned as Chairman of the Board and Chief Executive Officer. Consequently, Mr. Hooper forfeited 21,900 shares of restricted stock. DISCLOSURE OF FINANCIAL OBLIGATIONS AND COMMERCIAL COMMITMENTS The Company has entered into various financial obligations and commitments in the course of its ongoing operations and financing strategies. Financial obligations are considered to represent known future cash payments that the Company is 16 required to make under existing contractual arrangements, such as debt and lease agreements. These obligations may result from both general financing activities as well as from commercial arrangements that are directly supported by related revenue-producing activities. Commercial commitments represent contingent obligations of the Company, which become payable only if certain pre-defined events were to occur, such as funding financial guarantees. See Note 14 to the Consolidated Financial Statements included in the Company's 2002 Annual Report on Form 10-K for additional disclosure of financial obligations and commercial commitments. The following table provides a summary of the Company's financial obligations and commercial commitments as of June 30, 2003 (in thousands). This table includes cash obligations related to principal outstanding under existing debt arrangements and operating leases.
PAYMENTS DUE BY PERIOD REMAINING Cash Obligations* TOTAL 2003 2004 2005 2006 2007 THEREAFTER - ----------------- ----- ---- ---- ---- ---- ---- ---------- Long-term debt** $134,270 $2,477 $16,994 $16,730 $16,582 $16,454 $65,033 Line of credit facility*** -- -- -- -- -- -- -- Operating leases 38,589 6,513 9,877 6,587 4,578 3,963 7,071 -------- ------ ------- ------- ------- ------- ------- Total contractual cash obligations $172,859 $8,990 $26,871 $23,317 $21,160 $20,417 $72,104 ======== ====== ======= ======= ======= ======= =======
*Cash obligations herein are not discounted and do not include related interest. See Notes 10 and 11 to the Consolidated Financial Statements regarding commitments and contingencies and debt issued, respectively. **On April 24, 2003, the Company placed an additional $65 million of Senior Notes, Series 2003-A, with principal due in a single payment on April 24, 2013. See Note 11 to the Consolidated Financial Statements for additional discussion regarding the Senior Notes. ***Effective March 27, 2003, the Company entered into a new three-year bank revolving credit facility to replace its expiring bank credit facility. The Company uses the credit facility for short-term borrowing and discloses amounts outstanding as a current liability. See Note 11 to the Consolidated Financial Statements for additional discussion regarding the credit facility. NEW ACCOUNTING PRONOUNCEMENTS See Note 12 to the Consolidated Financial Statements for discussion of new accounting pronouncements and their impact on the Company. MARKET RISK The Company is exposed to the effect of interest rate changes and foreign currency fluctuations. Due to the immateriality of potential impacts from changes in these rates, the Company does not use derivative contracts to manage these risks. INTEREST RATE RISK The fair value of the Company's cash and short-term investment portfolio at June 30, 2003 approximated carrying value. Given the short-term nature of these instruments, market risk, as measured by the change in fair value resulting from a hypothetical 10% change in interest rates, is not material. The Company's objectives in managing exposure to interest rate changes are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, the Company maintains fixed rate debt as a percentage of its net debt in a percentage range set by policy. The impact to earnings and cash flows from a hypothetical 10% decrease in the Company's debt specific borrowing rates at June 30, 2003 was not material. FOREIGN EXCHANGE RISK The Company operates subsidiaries, and is associated with licensees and affiliates operating solely in countries outside of the United States, and in currencies other than the U.S. dollar. Consequently, these operations are inherently exposed to risks associated with fluctuation in the value of the local currencies of these countries compared to the U.S. dollar. The effect of a hypothetical adverse change of 10% in exchange rates (a strengthening of the U.S. dollar) was immaterial and would be largely offset by cash activity. 17 OFF-BALANCE SHEET ARRANGEMENTS The Company uses various structures for the financing of operating equipment, including borrowing, operating and capital leases, and sale-leaseback arrangements. All debt, including the discounted value of future minimum lease payments under capital lease arrangements, is presented in the balance sheet. The Company also has exposure under performance guarantees by contractual joint ventures and indemnification of its bonding agent and licensees. However, the Company has never experienced any material adverse effects to financial position, results of operations or cash flows relative to these arrangements. The Company has no other off-balance sheet financing arrangements or commitments. MANAGEMENT CHANGES Effective April 1, 2003, Thomas S. Rooney, Jr. was named President and Chief Operating Officer, reporting to Anthony W. (Tony) Hooper, who remained Chairman of the Board and Chief Executive Officer. Effective July 22, 2003, Anthony W. (Tony) Hooper resigned as Chairman of the Board and Chief Executive Officer. Effective on that same date, the Company's board of directors named Thomas S. Rooney, Jr. as Chief Executive Officer. Mr. Rooney retained the responsibilities of his previous position and was elected as a new member to the board of directors. The Company expects to record associated severance costs of approximately $1.2 million during the third quarter of 2003. Also effective July 22, 2003, Alfred L. Woods, an independent member of the Company's board of directors, was elected non-executive Chairman of the Board. Mr. Woods has been an independent member of Insituform's board since 1997. He has served as chair of the Corporate Governance & Nominating Committee and as a member of the Compensation Committee. He is president of Woods Group, a management consulting company based in Williamsburg, Virginia. Effective July 31, 2003, Carroll W. Slusher resigned his position as the Company's Vice President - North America. FORWARD-LOOKING INFORMATION This quarterly report contains various forward-looking statements that are based on information currently available to management and on management's beliefs and assumptions. When used in this document, the words "anticipate," "estimate," "believes," "plans," 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 risks and uncertainties. The Company's actual results may vary materially from those anticipated, estimated or projected due to a number of factors, such as the competitive environment for the Company's products and services, the geographical distribution and mix of the Company's work, the timely award or cancellation of projects, political circumstances impeding the progress of work, and other factors set forth in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume a duty to update forward-looking statements. Please use caution and do not place reliance on forward-looking statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For information concerning this item, see "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Market Risk," which information is incorporated herein by reference. ITEM 4. CONTROLS AND PROCEDURES The Company's Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the Company's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15(d)-14(c)). Based on that evaluation, these officers have concluded that as of June 30, 2003, the Company's disclosure controls and procedures were adequate and designed to provide reasonable assurance that material information relating to the Company and the Company's consolidated subsidiaries would be made known to them by others within those entities. There were no changes in the Company's internal controls over financial reporting that occurred during the Company's fiscal quarter ended June 30, 2003 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 18 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There have been no material changes since the filing of the Company's Form 10-Q for the period ended March 31, 2003. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's Annual Meeting of Stockholders held on May 29, 2003, stockholders elected the following persons as directors of the Company:
WITHHOLD FOR AUTHORITY --- --------- Robert W. Affholder 25,429,555 124,040 Paul A. Biddelman 25,404,948 148,647 Stephen P. Cortinovis 25,430,538 123,057 John P. Dubinsky 25,406,038 147,557 Juanita H. Hinshaw 25,405,828 147,767 Anthony W. Hooper 25,357,423 196,172 Thomas N. Kalishman 25,430,029 123,566 Sheldon Weinig 25,404,198 149,397 Alfred L. Woods 25,430,076 123,519
In addition, at the Company's Annual Meeting of Stockholders, stockholders voted in favor of the following proposals:
WITHHOLD FOR AUTHORITY ABSTAIN --- --------- ------- Approve and adopt amendment to and 24,525,441 614,257 413,897 restatement of the 2001 Non-Employee Director Equity Incentive Plan (1) Approve and adopt amendment to and 20,379,744 4,771,737 402,114 restatement of the 2001 Employee Equity Incentive Plan (2)
(1) The amendment and restatement of the 2001 Non-Employee Director Equity Incentive Plan expanded the terms of the plan to permit the award of stock units to non-employee directors. (2) The amendment and restatement of the 2001 Employee Equity Incentive Plan increased the number of shares available for issuance under the plan from 1,000,000 to 2,000,000. There were no broker non-votes at this year's Annual Meeting of Stockholders. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The exhibits filed as part of this Quarterly Report on Form 10-Q are listed on the annexed Index to Exhibits. (b) On April 25, 2003, the Company filed a Current Report on Form 8-K, under Item 9 and pursuant to Item 12, to provide the Company's earnings release, dated April 24, 2003, announcing its financial results for the fiscal quarter ended March 31, 2003. The Company also filed a Current Report on Form 8-K on May 1, 2003, under Item 9 and pursuant to Item 12, to provide a transcript of its April 25, 2003 conference call held to announce and discuss its financial results for the fiscal quarter ended March 31, 2003. On June 19, 2003, the Company filed a Current Report on Form 8-K, under Item 9, to provide the Company's press release, dated June 19, 2003, announcing an agreement to acquire the rehabilitation business of Insituform East, Inc. On July 14, 2003, the Company filed a Current Report on Form 8-K, under Item 9 and pursuant to Item 12, to provide the Company's press release, dated July 9, 2003, announcing that it lowered its guidance for the second quarter of 2003, and to provide a transcript of the Company's July 10, 2003 conference call held to announce and discuss that it lowered its guidance for the second quarter of 2003. On July 24, 2003, the Company filed a Current Report on Form 8-K, under Item 5, regarding the issuance of the Company's press release, dated July 22, 2003, concerning the election of Thomas S. Rooney, Jr., President and Chief Operating Officer, as Chief Executive Officer and a member of the board of directors, 19 and the election of Alfred L. Woods, an independent member of the Company's board of directors, as Non-executive Chairman of the Board. The Company also filed a Current Report on Form 8-K on July 30, 2003, under Item 12, to provide the Company's press release, dated July 24, 2003, announcing its financial results for the fiscal quarter ended June 30, 2003, and to provide a transcript of the Company's July 25, 2003 conference call held to announce and discuss its financial results for the fiscal quarter ended June 30, 2003. 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INSITUFORM TECHNOLOGIES, INC. August 14, 2003 /s/ Joseph A. White ------------------------------------------ Joseph A. White Vice President - Chief Financial Officer Principal Financial and Accounting Officer 21 INDEX TO EXHIBITS 3.1 Amended and Restated By-Laws of the Company, as amended through July 22, 2003. 10.1 Executive Separation Agreement and Release effective as of July 22, 2003 by and between the Company and Anthony W. Hooper. (1) 10.2 Employee Separation Agreement and Release effective as of July 1, 2003 by and between the Company and Carroll W. Slusher. (1) 31.1 Certification of Thomas S. Rooney, Jr. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Joseph A. White pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 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. 32.2 Certification of Joseph A. White pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. - ---------------------------------- (1) Management contract or compensatory plan or arrangement. 22 EX-3.1 3 c78627exv3w1.txt AMENDED AND RESTATED BY-LAWS EXHIBIT 3.1 AMENDED AND RESTATED BY-LAWS OF INSITUFORM TECHNOLOGIES, INC. (as amended through July 22, 2003) ARTICLE I - OFFICES The principal offices of the Corporation in the State of Delaware shall be located in the City of Dover, County of Kent. The Corporation may have such other offices, either within or without the State of incorporation as the Board of Directors may designate or as the business of the Corporation may from time to time require. ARTICLE II - STOCKHOLDERS 1. ANNUAL MEETING. The annual meeting of the stockholders shall be held at such time and upon such date in each year as the Board of Directors may determine, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday such meeting shall be held on the next succeeding business day. 2. SPECIAL MEETINGS. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by either the Chairman of the Board, the Chief Executive Officer or by the Board, and shall be called by the Chief Executive Officer at the request of the holders of not less than fifty percent of all the outstanding shares of the Corporation entitled to vote at the meeting. 3. PLACE OF MEETING. The Board may designate any place, either within or outside the State unless otherwise prescribed by statute, as the place of meeting for any annual meeting or for any special meeting called by the Board. A waiver of notice signed by all stockholders entitled to vote at a meeting may designate any place, either within or outside the state unless otherwise prescribed by statute, as the place for holding such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the Corporation. 4. NOTICE OF MEETING. Written or printed notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of either the Chairman of the Board, the Chief Executive Officer, the Secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon pre-paid. 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty days and, in case of a meeting of stockholders, not less than ten days prior to the date on which the particular action requiring such determination of stockholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, or stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board declaring such dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof. 6. VOTING LISTS. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make, at least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten days prior to such meeting, shall be kept on file at the principal office of the Corporation and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to who are the stockholders entitled to examine such list or transfer books or to vote at the meeting of stockholders. 7. QUORUM. At any meeting of stockholders a majority of the outstanding shares of the Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If less than said number of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. 8. PROXIES. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. 9. VOTING. Each stockholder entitled to vote in accordance with the terms and provisions of the Certificate of Incorporation and these By-laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholders. Upon the demand of any stockholder, the vote for directors and upon any question before the meeting shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of this State. 10. ORDER OF BUSINESS. The order of business at all meetings of the stockholders, shall be as follows: 1. Roll call. 2. Proof of notice of meeting or waiver of notice. 3. Reading of minutes of preceding meeting. 4. Reports of Officer. 5. Reports of Committees. 6. Election of Directors. 7. Unfinished Business. 8. New Business. 11. BUSINESS AT MEETINGS. No business shall be transacted at an annual meeting of stockholders other than business that is (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (iii) otherwise properly brought before the annual meeting by a stockholder who (x) is a stockholder of record on the record date for the determination of stockholders entitled to vote at such annual meeting and on the date of the giving of the notice provided for in this Section 11 and (y) complies with the procedures set forth in this Section 11 and any other applicable requirements. No business shall be conducted at a special meeting of stockholders other than business that is specified in the Corporation's notice of meeting (or any supplement thereto). In addition, only persons who are nominated in accordance with the procedures set forth in this Section 11 (and any other applicable requirements) shall be eligible for election as directors of the Corporation. If business is not properly brought before any meeting of stockholders in accordance with the procedures set forth in this Section 11, or if a nomination at any meeting was not made in accordance with the requirements of this Section 11, the Chairman of the Board shall declare to the meeting that the business was not properly brought before the meeting, and such business shall not be transacted, or the nomination was defective, and such defective nomination shall be disregarded. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting: (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof), subject to the requirements of these By-laws, or (ii) by any stockholder who (x) is a stockholder of record on the record date for the determination of stockholders entitled to vote at such annual meeting and on the date of the giving of the notice provided for in this Section 11 and (y) has complied with the procedures set forth in this Section 11. For a stockholder to be entitled to properly bring business before an annual meeting of stockholders, a proper Stockholder's Notice (as defined below) must have been received by the Secretary of the Corporation at the principal executive offices of the Corporation, and for any nomination of a person or persons for election to the Board of Directors by a stockholder (a "Stockholder Nomination") to be made at any annual meeting of stockholders, written notice thereof meeting the requirements set forth below must have been received by the Secretary of the Corporation at the principal executive offices of the Corporation, in each case not less than 90 days nor more than 120 days prior to the first anniversary of the date of the preceding year's annual meeting of stockholders; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days compared to the preceding year's annual meeting, notice by the stockholder to be timely must be so received not later than the close of business on the later of (i) the ninetieth (90th) day prior to such annual meeting or (ii) the tenth (10th) day following the day on which public disclosure (as defined below) of the date of the annual meeting is first made. For a Stockholder Nomination to be made at any special meeting of stockholders as aforesaid, written notice thereof meeting the requirements set forth below must have been received by the Secretary of the Corporation at the principal executive offices of the Corporation, in each case not later than the close of business on the later of (i) the ninetieth (90th) day prior to such special meeting or (ii) the tenth (10th) day following the day on which public disclosure of the date of the special meeting is made. A Stockholder's Notice shall mean a written notice to the Secretary of the Corporation which sets forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting (including the form of the proposal) and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by such stockholder, indicating the name and address of any beneficial owner of such shares, (iv) a description of all arrangements or understandings between such stockholder (and any person acting on behalf of the stockholder) and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business, and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. Any notice of a Stockholder Nomination must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as then in effect (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. For purposes of this Section 11, "public disclosure" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. ARTICLE III - BOARD OF DIRECTORS 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed by its Board of Directors. The directors shall in all cases act as a board, and they may adopt such rules and regulations for the conduct of their meetings and the management of the Corporation, as they may deem proper, not inconsistent with these By-laws and the laws of this State. 2. NUMBER OF DIRECTORS, TENURE AND QUALIFICATIONS. The Board of Directors at the date of these By-laws shall consist of nine (9) directors; provided, such number of directors may be increased or decreased from time to time exclusively pursuant to a resolution adopted by a majority of all directors then serving. 3. REGULAR MEETINGS. The Board may provide, by resolution, the time and place for the holding of regular meetings without other notice than such resolution. 4. SPECIAL MEETINGS. Special meetings of the Board may be called by or at the request of the Chairman of the Board, the Chief Executive Officer, the President or any two directors. The person or persons authorized to call special meetings of the Board may fix the place either within or outside the State, for holding any special meeting of the Board called by such person or persons. 5. NOTICE. Notice of any special meeting shall be given at least 24 hours previously thereto by written notice delivered personally, or by telegram or telecopy or mailed to each director at such director's residence or business address (or as otherwise requested by a director). If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. 6. QUORUM. At any meeting of the Board a majority shall constitute a quorum for the transaction of business, but if less than said number is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. 7. MANNER OF ACTING. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. 8. NEWLY-CREATED DIRECTORSHIPS AND VACANCIES. Any vacancy on the Board of Directors and any newly-created directorship resulting from an increase in the number of directors may be filled by the Board in accordance with the Corporation's Certificate of Incorporation. 9. REMOVAL OF DIRECTORS. Any or all of the directors may be removed only for cause by vote of the stockholders. 10. RESIGNATION. A director may resign at any time by giving written notice to the Board, the Chairman of the Board, the Chief Executive Officer or the Secretary of the Corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Board or such officer, and the acceptance of the resignation shall not be necessary to make it effective. 11. COMPENSATION. The Board of Directors shall have the authority to fix the compensation of directors. Nothing herein shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed compensation for attending committee meetings. 12. PRESUMPTION OF ASSENT. A director of the Corporation who is present at a meeting of the Board at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless such director's dissent shall be entered in the minutes of the meeting or unless such director shall file such director's written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. 13. COMMITTEES AND CHAIRMAN OF THE BOARD. The Board, by resolution, may designate from among its members an executive committee and other committees, each consisting of one or more directors. Each such committee shall serve at the pleasure of the Board. The Board, by resolution, may designate from among its members a Chairman of the Board and a Vice Chairman of the Board. The Chairman of the Board and the Vice Chairman of the Board positions shall not be officer positions and shall not have operating, executive or independent oversight authority or responsibility. All oversight authority and responsibility is vested in the Board and its designated committees, and executive and operating authority and responsibility is vested in the officers as prescribed from time to time by the Board or these By-laws. The Chairman of the Board shall preside, when present, at all meetings of the Board of Directors and at all meetings of the stockholders and will perform such other duties as may be prescribed from time to time by the Board or these By-laws. The Chairman of the Board shall be an ex officio member of all Board committees. In the absence, death or inability or refusal to act of the Chairman of the Board, the Vice Chairman of the Board shall perform the duties of the Chairman of the Board and, when so acting, shall have all the duties of and be subject to all the restrictions on the Chairman of the Board. The Vice Chairman of the Board shall perform such other duties as may be prescribed from time to time by the Board or these By-laws. Notwithstanding any other provisions of these By-laws, the Vice Chairman of the Board, acting in any capacity, shall not have the power to call any special meeting of the Stockholders. 14. NOTICE AND APPROVAL OF CERTAIN ACTIONS Notwithstanding any other provision of these By-laws: (a) in the event that any director proposes to bring before any regular or special meeting of the Board of Directors any proposal relating to any amendment of the Corporation's Certificate of Incorporation or these By-laws, or any change in the structure, composition (other than such director's resignation) or governance of the Board of Directors (any such action being referred to herein as a "Special Action"), such director must provide written notice thereof (including a reasonably detailed description of such proposal) to each member of the Board of Directors at least seven days prior to the date of the Board meeting at which the Special Action is to be proposed; and (b) the taking of any Special Action by the Board of Directors must be approved by a majority of all directors then serving. ARTICLE IV - OFFICERS 1. NUMBER. The officers of the Corporation shall be a Chief Executive Officer, a President, one or more Vice Presidents and a Secretary, each of whom shall be elected by the Board. The Chief Executive Officer may also hold the position of President. Vice Presidents may be given distinctive designations such as Executive Vice President, Group Vice President, Senior Vice President or any similar designation. The Board may elect or appoint such other officers (including a Treasurer), assistant officers and agents as it may deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as may be determined from time to time by the Board. In connection with the election of any officer of the Corporation, the Board may determine that such officer, in addition to the title of the office to which such officer is elected, shall have a further title as the Board may designate, such as Chief Operating Officer, Chief Financial Officer or General Counsel, and the Board may prescribe powers to be exercised and duties to be performed by any such officer to whom any such additional title of office is given in addition to those powers and duties provided for by these By-laws for such office. In addition, the Chief Executive Officer and/or the President may from time to time appoint such officers of operating divisions, and such contracting and attesting officers, of the Corporation as the Chief Executive Officer and/or President may deem proper, who shall have such authority, subject to the control of the Board, as the Chief Executive Officer and/or President may from time to time prescribe. 2. ELECTION AND TERM OF OFFICE. The officers of the Corporation to be elected by the Board shall be elected annually at the first meeting of the Board held after each annual meeting of the stockholders. Each officer elected by the Board shall hold office until such officer's successor shall have been duly elected and shall have qualified or, if earlier, until such officer's death or until such officer shall resign or shall have been removed in the manner hereinafter provided. Each officer of the Corporation appointed by the Chief Executive Officer and/or President shall hold office for such period as the Chief Executive Officer and/or President may from time to time prescribe or, if earlier, until such officer's death or until such officer shall resign or shall have been removed in the manner hereinafter provided. 3. REMOVAL. Any officer elected or appointed by the Board, or any officer appointed by the Chief Executive Officer and/or President, may be removed by the Board whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract, if any, of the person so removed. Any officer appointed by the Chief Executive Officer and/or President may be removed by the Chief Executive Officer and/or President whenever in the Chief Executive Officer's and/or President's judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract, if any, of the person so removed. 4. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or otherwise of an officer elected or appointed by the Board may be filled by the Board for the unexpired portion of the term. A vacancy in any office because of death, resignation, removal, disqualification or otherwise of any officer appointed by the Chief Executive Officer and/or President may be filled by the Chief Executive Officer and/or President for the unexpired portion of the term. 4A. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be responsible for the general and active management of the business and affairs of the Corporation, subject only to the control of the Board. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors are carried into effect and shall be responsible to the Board of Directors for the Corporation's strategic development and operational results and for the conduct of the Corporation's business and affairs in accordance with policies approved by the Board of Directors. The Chief Executive Officer shall have full authority in respect to the signing and execution of deeds, bonds, mortgages, contracts and other instruments of the Corporation; and, in general, to exercise all the powers and authority usually appertaining to the chief executive officer of a Corporation. In the absence, death or inability or refusal to act of the Chairman of the Board and the Vice Chairman of the Board, the Chief Executive Officer (i) shall preside at all meetings of stockholders and (ii) if a member of the Board, shall preside at all meetings of the Board and otherwise perform all of the duties of the Chairman of the Board. The Chief Executive Officer shall perform such other duties as the Board may prescribe. 5. PRESIDENT. The President shall be an executive officer of the Corporation. The President shall have equal authority with the Chief Executive Officer to sign and execute deeds, bonds, mortgages, contracts and other instruments of the Corporation. The President shall have all powers and shall perform all duties incident to the office of President, and shall have the general authority to cause the employment or appointment of such employees and agents of the Corporation as the proper conduct of operations may require, and to fix their compensation, subject to the provisions of these By-laws; to remove or suspend any employee or agent who shall have been employed or appointed under the President's authority or under authority of an officer subordinate to the President. The President shall perform such other duties as from time to time may be assigned to him by the Chief Executive Officer. In the absence, death or inability or refusal to act of the Chief Executive Officer, the President shall exercise all the powers and discharge all of the duties of the Chief Executive Officer. The President shall perform such other duties as the Board may prescribe. 6. VICE PRESIDENT. In the absence, death or inability or refusal to act of the President, one of the Vice Presidents designated by the Board or the Chief Executive Officer shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents shall perform such other duties as from time to time may be assigned to them by the Board, the Chief Executive Officer or the President. If the Board gives any Vice President a distinctive designation, such as Executive Vice President, or an additional titled, the Board may also establish the reporting responsibility of such Vice President directly to the Chief Executive Officer. 7. SECRETARY. The Secretary shall keep the minutes of the stockholders' and of the Board's meetings in one or more books provided for that purpose, see that all notices are duly given in accordance with the provisions of these By-laws or, as required, be custodian of the corporate records and of the seal of the Corporation and keep a register of the post office address of each stockholder which shall be furnished to the Secretary by such stockholder, have general charge of the stock transfer books of the Corporation and in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to the Secretary by the Board or the Chief Executive Officer. 8. TREASURER. If elected by the Board, the Treasurer shall have charge and custody of and be responsible for all funds and securities of the Corporation; receive and give receipts for monies due and payable to the Corporation from any source, whatsoever, and deposit all such monies in the name of Corporation in such banks, trust companies or other depositories as shall be selected in accordance with these By-laws and in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to the Treasurer by the Board or the Chief Executive Officer. If required by the Board, the Treasurer shall give a bond for the faithful discharge of the Treasurer's duties in such sum and with such surety or sureties as the Board shall determine. 9. SALARIES. The salaries of those officers elected or appointed by the Board shall be fixed from time to time by the Board, and no officer shall be prevented from receiving such salary by reason of the fact that such officer is also a director of the Corporation. ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS 1. CONTRACTS. The Board may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. The Chief Executive Officer and/or the President may authorize any contracting officer appointed by the Chief Executive Officer and/or the President pursuant to Section 1 of Article IV to enter into any contract in the ordinary course of business of the Corporation, or execute and deliver any instrument in connection therewith, in the name and on behalf of the Corporation. 2. LOANS. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board. Such authority may be general or confined to specific instances. 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board. 4. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board may select. ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER 1. CERTIFICATES FOR SHARES. Certificates representing shares of the Corporation shall be in such form as shall be determined by the Board. Such certificates shall be signed by the Chief Executive Officer or the President, as authorized by the Board and the Secretary, or such other officers authorized by law and by the Board. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the stockholders, the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board may prescribe. 2. TRANSFERS OF SHARES. (a) Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate; every such transfer shall be entered on the transfer book of the Corporation which shall be kept at its principal office. (b) The Corporation shall be entitled to treat the holder of record of any share as the holder in fact thereof, and, accordingly, shall not be bound to recognized any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, except as expressly provided by the laws of this State. ARTICLE VII - FISCAL YEAR The fiscal year of the Corporation shall begin on the first day of January in each year. ARTICLE VIII - DIVIDENDS The Board may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law. ARTICLE IX - SEAL The Board shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the Corporation, the state of incorporation, year of incorporation and the words, "Corporate Seal". ARTICLE X - WAIVER OF NOTICE Unless otherwise provided by law, whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of these By-laws or under the provisions of the Certificate of Incorporation, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE XI - AMENDMENTS Except as otherwise provided by law, the Board of Directors may adopt, alter, amend or repeal the By-laws of the Corporation, provided, however, that the stockholders, representing a majority of all the shares issued and outstanding at any annual stockholders' meeting or at any special stockholders' meeting, may repeal, alter or amend By-laws adopted by the Board of Directors and may adopt new By-laws; provided, further, however, that the size of the Board of Directors, as set forth in Section 2 of Article III, may only be amended by a vote of at least 80% of the members of the Board of Directors or by a vote of the stockholders, representing a majority of all of the shares issued and outstanding, at any annual stockholders' meeting or at any special stockholders' meeting. EX-10.1 4 c78627exv10w1.txt EXECUTIVE SEPARATION AGREEMENT AND RELEASE-HOOPER EXHIBIT 10.1 EXECUTIVE SEPARATION AGREEMENT AND RELEASE THIS EXECUTIVE SEPARATION AGREEMENT AND RELEASE (the "AGREEMENT") is made and entered into effective as of July 22, 2003 (the "EFFECTIVE DATE") by and between INSITUFORM TECHNOLOGIES, INC., a Delaware corporation ("EMPLOYER"), and Anthony W. Hooper ("EXECUTIVE"). PRELIMINARY STATEMENT A. Executive's employment with Employer terminated as of the Effective Date. B. Without any admission as to fault, liability or wrongdoing, and in order to provide for a smooth transition in leadership of Employer and to avoid the time, distractions and resource expenditures potentially associated with an involuntary departure, Employer and Executive desire to resolve all matters relating to or arising out of Executive's employment by Employer and Executive's termination of employment with Employer on the terms described below. C. Executive is being provided a period of twenty-one (21) days from the date that he receives this Agreement (the "ACCEPTANCE DATE") (which will be August 11, 2003 because Executive is being provided this Agreement on July 21, 2003), to consider the meaning and effect of this Agreement prior to finally accepting this Agreement. Executive has been (and hereby is) advised in writing to consult with an attorney prior to finally accepting this Agreement. NOW, THEREFORE, in consideration of the mutual agreements and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. RESIGNATION AS EXECUTIVE OFFICER AND DIRECTOR; EMPLOYMENT TERMINATION. Executive voluntarily resigns all of his executive officer positions and offices with Employer and any of its subsidiaries and plans as of the Effective Date. Executive also resigns, as of the Effective Date, his position as a director of Employer and as a director (or similar position) of any of its subsidiaries or affiliates. These resignations are effected by means of a separate resignation letter in the form attached to this Agreement as Exhibit A, signed and delivered by Executive and accepted by the Board of Directors. The employment of Executive by Employer, in any capacity whatsoever, ceases as of the Effective Date, except under terms and conditions as specifically approved by the Board of Directors and set forth in a separate letter between Executive and Employer. Executive's status as an executive officer and director of Employer, and the accompanying obligations imposed upon executive officers and directors of public companies by applicable law, regulation, contract and internal company policy also cease as of the Effective Date. Any and all right or authority of Executive to act as an agent of Employer, in any manner whatsoever, terminates on the Effective Date. Employer will pay Executive as soon as practicable after the Effective Date for all accrued but unpaid compensation due Executive as well as any accrued but unused vacation time, which is agreed to be 4 weeks, as of the Effective Date. 2. REVOCATION OF ACCEPTANCE. Executive has the right to consult with an attorney or attorneys of his choice concerning this Agreement and has been advised in writing of his right to do so. Executive has until the Acceptance Date to accept this Agreement unless Employer elects to rescind the Agreement before such acceptance. Executive may accept this Agreement by delivering this Agreement, executed by Executive as required, to the Corporate Secretary of Employer (or the Corporate Secretary's designee) within such twenty-one day (21) period after delivery of this Agreement to Executive. Executive also has a period of seven (7) days from the date Executive delivers a signed copy of this Agreement to Employer to revoke his acceptance of this Agreement. For Executive to revoke his acceptance of this Agreement, he must notify the Board of Directors, through written notice delivered to the Corporate Secretary prior to the close of business on the seventh day after delivery of the signed Agreement, of his 1 Executive Initials: /s/ --------- decision to revoke his acceptance. If Executive does not accept this Agreement prior to the Acceptance Date or revokes his acceptance prior to the close of business on the seventh day after delivering a signed copy of the Agreement to Employer, the payments described in this Agreement and the benefits agreed upon will not be paid or provided and this Agreement shall be null, void and of no force or effect with respect to either Executive or Employer. In the event of a failure by Executive to timely accept this Agreement or upon a timely revocation of acceptance of this Agreement, the resignation of Executive from his positions as an executive officer and director of Employer and its subsidiaries and affiliates as contemplated in Section 1 will not be revoked and will remain in full force and effect, but Executive will be entitled to receive solely those payments and benefits due to him under that certain employment letter dated July 15, 1998 by and between Executive and Employer (the "Employment Letter") for a termination of employment without cause. If Executive delivers a signed copy of this Agreement to Employer and does not timely revoke his acceptance of this Agreement, the terms and conditions of this Agreement will control with respect to the matters contained herein. 3. SEPARATION PAYMENTS AND BENEFITS. In consideration for the resignation of Executive from all executive officer positions and directorships with Employer and its subsidiaries and the other representations, warranties, covenants and agreements made by Executive and contained in this Agreement, Employer shall pay the following amounts and provide the following benefits (the "SEPARATION PAYMENTS AND BENEFITS") under the terms and conditions stated in this Agreement: (a) REGULAR CASH SEVERANCE PAYMENTS. Employer agrees to pay Executive an aggregate sum of One Million Fifty-Eight Thousand Seven Hundred Thirteen Dollars and No/100 Cents ($1,058,713.00) in cash in thirty-six (36) consecutive installments (the "REGULAR CASH SEVERANCE PAYMENTS") of Twenty-Nine Thousand Three Hundred Eighty-Nine Dollars and 25/100 Cents ($29,389.25). The Regular Cash Severance Payments will be payable on the regularly scheduled pay date under Employer's normal payroll practices starting with the first regular payday after all conditions to effectiveness of this Agreement are satisfied and the seven-day revocation period expires without Executive revoking his acceptance of this Agreement. (b) CONTINUATION OF HEALTH, DENTAL, LIFE AND DISABILITY BENEFITS AND AUTOMOBILE ALLOWANCE. Employer agrees to continue to provide Executive with health, dental, life and disability benefits equivalent to Executive's current benefits for Executive and his eligible family members (the "WELFARE BENEFITS") and a car allowance in the amount of Nine Hundred Eighty-Five Dollars and No/100 Cents ($985.00) (the "CAR ALLOWANCE"), for either a period of eighteen (18) months after the Effective Date or upon Executive's full-time employment with another employer and qualification as an employee for coverage under another group health insurance plan, whichever occurs first. During such continuation period, Employer shall be responsible to pay the same portion of the Welfare Benefits as Employer had been responsible to pay prior to the Effective Date. If Executive chooses to continue his health and medical benefits under COBRA after Employer is no longer required to pay for such benefits in accordance with this subsection, Executive will be responsible for the payment of such benefits for the remainder of the period required under COBRA. Unless otherwise modified in a separate letter on continued employment of Executive by Employer, Executive agrees that the qualifying event for electing to continue Executive's health and medical benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") is the date on which Executive no longer holds any position with Employer or any of its subsidiaries. Executive shall not be entitled to continue his participation in any other benefits generally available to employees of Employer, including any 401(k) plan, cash incentive or bonus plans, stock-based incentive plans or the like. The Effective Date shall be the trigger date for any 401(k) plan or deferred compensation rollovers or distributions. (c) EXERCISABILITY OF STOCK OPTIONS; UNVESTED STOCK AWARDS FORFEITED. Any vested options that Executive holds unexercised on the Effective Date will remain exercisable until July 22, 2004, but any options or other stock awards that are unvested on the Effective Date will be cancelled and forfeited 1 Executive Initials: /s/ --------- by Executive to Employer. Executive acknowledges and agrees that he will remain subject to Employer's insider trading policy, which includes compliance with all blackout periods. (d) REPAYMENT TERMS ON PERSONAL LOAN. That certain loan (the "PERSONAL LOAN") from Employer to Executive in the original principal amount of Two Hundred Thousand Dollars and No/00 Cents ($200,000.00) shall be due and payable by Executive to Employer in eleven (11) monthly installments of One Thousand Seventy-Three Dollars and 64/00 Cents ($1,073.64) (with such amount determined on the basis of a thirty-year amortization of the full principal amount assuming regular monthly payments and 5% per annum interest rate (prime rate plus 1%) and a final balloon payment of One Hundred Ninety-Eight Thousand One Hundred Twenty-Two Dollars and 96/00 Cents ($198,122.96), the balance of the principal plus accrued but unpaid interest on the first anniversary of the Effective Date. The first eleven (11) monthly payments due from Executive under the Personal Loan will be directly offset from the Special Cash Severance Payments (as such term is defined in Section 3(e)). All required payments under the Personal Loan, unless otherwise paid by Executive on a timely basis, can be directly offset from any of the Cash Severance Payments (as that term is defined in Section 3(e)). Executive irrevocably authorizes Employer to make all such offsets from these payments due from Employer to Executive. (e) SPECIAL CASH SEVERANCE PAYMENTS. In consideration for Executives continued performance of all of his covenants, agreements and obligations under this Agreement, Employer shall pay Executive an additional cash payment (the "SPECIAL CASH SEVERANCE PAYMENT" and, collectively with the Regular Cash Severance Payment, the "CASH SEVERANCE PAYMENTS") equal to Seventy Five Thousand Dollars and No/00 Cents ($75,000.00), payable in cash in 12 consecutive monthly installments of Six Thousand Two Hundred Fifty Dollars and No/00 Cents ($6,250.00). The first eleven (11) of the Special Cash Severance Payments will be directly offset by the monthly payments of One Thousand Seventy-Three Dollars and 64/00 Cents ($1,073.64), for a net monthly payment to Executive of Five Thousand One Hundred Seventy-Six Dollars and 36/00 Cents ($5,176.36). (f) GENERAL. All Separation Payments and Benefits shall be paid or provided subject to any applicable federal, state and local income tax or other appropriate withholding requirements as well as the right of Employer to directly offset any amounts owed by Executive to Employer, including the Personal Loan as set forth in Section 3(d). Further, the Separation Payments and Benefits represent all of the compensation (including vacation and severance pay) to which Executive is, or may be, entitled by virtue of Executive's employment and separation from employment with Employer. This Section 3, however, shall have no force or effect if Executive revokes Executive's acceptance of this Agreement pursuant to Section 3 hereof. 4. EXECUTIVE AGREEMENTS, REPRESENTATIONS AND RELEASES. (a) PRIOR AGREEMENTS REGARDING SEVERANCE OR SEPARATION BENEFITS SUPERSEDED. In consideration for all of the Severance Payments and Benefits to be paid or received by Executive under this Agreement and subject to Section 2, Executive agrees that any other agreement with respect to severance or separation payments between Executive and Employer, including the Employment Letter, is terminated as of the Effective Date of this Agreement and is superseded in its entirety by the terms of this Agreement in all respects. Executive will have no further rights, and Employer will have no further obligations, under the Employment Letter or any other such agreement (b) REPRESENTATIONS. Executive represents and warrants to Employer that (i) Executive (A) has not filed any suit, action, claim, allegation or other proceeding at law or in equity, before any court, governmental agency, arbitration panel or other forum of any nature (an "ACTION") with respect to the matters released below or (B) will not prosecute, and will immediately dismiss with prejudice, any pending Action with respect to the matters released below; (ii) Executive has not assigned to any other person or entity any right(s) or claim(s) Executive may have against Employer; (iii) in deciding to execute this 2 Executive Initials: /s/ --------- Agreement (A) no fact, evidence, event or transaction currently unknown to Executive, but which may hereinafter become known to Executive, shall affect in any way or any manner the final or unconditional nature of this Agreement; (B) Executive's execution of this Agreement is a knowing and voluntary act on Executive's part and was not provided in connection with any exit incentive or other employment termination program offered to any group or class of employees; (C) Executive has read and fully understands the terms of this Agreement, including the final and binding nature and effect of Executive's waiver of rights by execution of this Agreement and was advised in writing to consult with an attorney before signing the Agreement at the time Executive first received this Agreement; (D) Executive has been provided with a reasonable and adequate period of time (and at least twenty-one (21) days) to consider this Agreement and consult with his attorneys and advisors concerning this Agreement and has consulted with legal counsel as to the meaning of this Agreement and relied solely upon the judgment of Executive's legal counsel in determining to finally accept this Agreement; and (E) Executive has not been promised anything or provided any consideration for entering into this Agreement that is not specified in this Agreement. In addition, Executive hereby represents and warrants that, to the best of his knowledge, Executive has disclosed to Employer, either on or prior to the Effective Date, any material violation of federal, state, foreign or local criminal law or regulation that is applicable to Employer, any threatened or pending federal, state, foreign or local governmental criminal investigation against Employer and any practice or policy of Employer that may be unlawful under applicable federal, state, foreign or local criminal law. (c) WAIVER AND RELEASE. Executive hereby releases, gives up and waives any and all rights or claims for liability Executive may now or in the future have against Employer, and its shareholders, directors, officers, employees, agents, affiliates, subsidiaries and predecessors in interest, together with their respective shareholders, directors, officers, employees, insurers and agents (collectively, "RELEASED PARTIES") in connection with, relating to or arising out of Executive's employment with Employer (or any Released Parties) or out of the termination of Executive's employment with Employer (or any Released Parties) or any promise, agreement, act, conduct or decision of any of the Released Parties. Further, EXECUTIVE HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY, RELEASES, REMISES, ACQUITS AND FOREVER DISCHARGES RELEASED PARTIES of and from any and all manner of claims, actions, charges, complaints, causes of action, suits, judgments, demands, injuries, damages and agreements whatsoever, whether in law or in equity, whether based on contract, statute, tort or strict liability, any alleged rights or claims arising under the National Labor Relations Act; Title VII of the Civil Rights Act of 1964, as amended; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Employee Retirement Income Security Act of 1974, as amended (except for claims under Employer's 401(k) Profit Sharing Plan); the Immigration Reform Control Act; the Americans with Disabilities Act of 1990, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Rehabilitation Act of 1973, as amended; the Fair Labor Standards Act of 1938; the Occupational Safety and Health Act; the Family and Medical Leave Act; the Missouri Human Rights Act; Missouri's Workers' Compensation Law; the Missouri Service Letter Statute; other alleged age discrimination or other employment discrimination, breach of express or implied contract, breach of the covenant of good faith and fair dealing, wrongful discharge, or any other alleged violation of federal, state, or local statutory or common law, whether or not now known or contemplated, which now exist or may hereafter arise from any matter, fact, circumstance, happening or thing whatsoever occurring or failing to occur in connection with, relating to or arising out of Executive's employment with Employer (or any Released Parties) or out of the termination of Executive's employment with Employer (or any Released Parties). This is not, however, a release of any claims arising after this date or any right to vested benefits due Executive under Employer's 401(k) plan or group health or dental insurance plans based plans based upon service to and ending as of the Effective Date. Except with respect to obligations under this Agreement, under the Personal Loan or matters which the Employer would not be able to indemnify Executive, Employer hereby releases, gives up and waives any and all rights or claims for liability Employer may now or in the future have against Executive in connection with, relating to or arising out of Executive's employment with Employer. Further, except as excluded above, EMPLOYER HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY, RELEASES, REMISES, ACQUITS 3 Executive Initials: /s/ ______ AND FOREVER DISCHARGES EXECUTIVE of and from any and all manner of claims, actions, charges, complaints, causes of action, suits, judgments, demands, injuries, damages and agreements whatsoever, whether in law or in equity, whether based on contract, statute, tort or strict liability, whether or not now known or contemplated, which now exist or may hereafter arise from any matter, fact, circumstance, happening or thing whatsoever occurring or failing to occur in connection with, relating to or arising out of Executive's employment with Employer. (d) NATURE OF RELEASE. It is expressly understood and agreed that this Agreement is intended to cover and does cover not only all known losses and damages but any future losses and damages not now known or anticipated but which may later develop or be discovered, including the effects and consequences thereof. It is further expressly understood and agreed that as against Executive this Agreement may be pleaded as a counterclaim to or as a defense in bar or abatement of any action taken by or on behalf of Executive. Executive agrees that neither this Agreement nor performance hereunder constitutes or should be construed as an admission by Employer or any of the Released Parties of any violation of any Employer policy, federal, state, foreign or local law, regulation, common law, or any breach of any contract or any other wrongdoing of any type, all of which are expressly denied. 5. COVENANT NOT TO SUE; INDEMNIFICATION. Executive agrees not to enter into any suit, action or other proceeding at law or in equity (including administrative actions), or to prosecute further any existing suit or action that might presently exist, or to make any claim or demand of any kind or nature against any Released Party, in any such case asserting any claim released by Executive by Section 4 of this Agreement, other than an action against Employer to enforce Executive's rights set forth in this Agreement. If Executive enters into any such suit, action or other proceeding in violation of this Section 5, Executive shall (i) indemnify, defend and hold the Released Parties harmless from and against any and all liabilities, obligations, losses, damages, penalties, claims, action, suits, costs, expenses and disbursements (including attorneys' fees and expenses and court costs whether or not litigation is commenced and, if litigation is commenced, during all trial and appellate phases of such litigation) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against any Released Party in any way relating to, arising out of, connected with or resulting from such actions, including any of the matters released hereunder and (ii) immediately return the Separation Payments and Benefits (or the value thereof). Employer shall indemnify Executive to the full extent permitted by any applicable insurance or by Section 145 of the Delaware General Corporation Law, as amended from time to time, in connection with any action, suit or proceeding arising by reason of any acts taken or omissions to act occurring while Executive was an officer and director of Employer or any of its subsidiaries. 6. CONFIDENTIALITY; NONSOLICITATION AND NONCOMPETITION. (a) CONFIDENTIALITY. Executive acknowledges the competitive nature of the Employer's business and agrees and reaffirms that any information acquired by Executive regarding the Employer's business, its finances, costs, pricing, contracts, customers, prospects, plans, products, manufacturing methods, technology, personnel, directors and officers (whether or not such information is marked confidential) shall be considered the Employer's confidential information. In furtherance and not limitation of any prior agreements regarding confidentiality, Executive agrees not to disclose to anyone (other than Employer), or use for Executive's benefit or the benefit of any other person (other than Employer), any marketing documents or information, financial statements, reports, salary information, product cost or price information, technical information, financial information, manufacturing methods, technology, any information relating to customers, production, prospects, bids, proposals or sales or any other information acquired by Executive regarding Employer or its business, directors, officers, and employees (whether or not such information is marked confidential). Furthermore, Executive agrees to immediately return to Employer all Employer property and any 4 Executive Initials: /s/ ______ information (including any copies thereof) which Executive has received, prepared or helped to prepare during the course of Executive's employment with Employer. (b) NONSOLICITATION. In consideration of the Separation Payments and Benefits, and in furtherance and not limitation of any prior agreement between Executive and Employer with respect to nonsolicitation matters, Executive acknowledges and agrees that, from the Effective Date through July 22, 2004, Executive will not, directly or indirectly recruit any employee, sales representative, consultant or other personnel of Employer or any of its subsidiaries or affiliates (other than secretarial, custodial and clerical employees) to work for another company or business; nor will Executive assist anyone else in recruiting or hiring any such employee to work for another company or business or discuss with any such person his or her leaving the employ of the Employer to engage in a business activity in competition with Employer or any of its subsidiaries or affiliates. Executive acknowledges and agrees that, from the Effective Date through July 22, 2004, Executive will not directly or indirectly (i) solicit or encourage any person firm, corporation or other business entity to cease doing business, or reduce the level of business that could be done, with Employer or any of its subsidiaries or affiliates, or discuss doing so with any such person, firm, corporation or entity; or (ii) take away or procure for the benefit of any competitor of Employer or any of its subsidiaries or affiliates, any business of the type provided by or competitive with a product or service offered by Employer or any of its subsidiaries or affiliates. (c) NONCOMPETE PERIOD. In consideration of the Separation Payments and Benefits, and in furtherance and not limitation of any prior agreement between Executive and Employer with respect to noncompete matters, Executive agrees that from the Effective Date through July 22, 2004, Executive will not act as a consultant, advisor, independent contractor, officer, manager, employee, principal, agent, director or trustee, or provide any services or advice to, of any corporation, partnership, limited liability company, association or other entity, or directly or indirectly own more than one percent (1%) of the outstanding equity of any such entity which is engaged in the business of rehabilitating, lining, relining, coating, constructing or reconstructing pipelines, sewers, conduits or passageways anywhere in the world; or otherwise engage in such business. Executive specifically agrees and acknowledges that Employer does business and will continue to seek and do business in the United States and internationally so the foregoing geographic scope is reasonable in light of current and presently anticipated operations of the Employer. (d) EQUITABLE RELIEF. Executive acknowledges and agrees that (i) any breach of this Agreement by Executive, including any breach of the terms of this Section 6, will cause Employer irreparable injury and damage, (ii) the provisions of this Agreement are necessarily of a special, unique and extraordinary nature and (iii) if Executive breaches any such provisions, Employer shall be entitled, in addition to any other remedies and damages Employer could recover as a result of any such breach, to obtain equitable relief, including restraining orders or injunctions, both temporary and permanent, in order to prevent future violation thereof by Executive or any person with whom Executive may be affiliated. Executive hereby waives the claim or defense that Employer has an adequate remedy at law and Executive shall not claim that an adequate remedy at law exists. Further, Executive waives any requirement for Employer to post a bond in connection with any action relating to this Agreement. (e) SURVIVAL. The provisions of this Section 6 shall survive any termination of this Agreement. 7. NONDISCLOSURE; NO DISPARAGING REMARKS; NO RE-APPLICATION. Executive agrees that the terms of this Agreement will not be discussed by Executive with, or otherwise disclosed by Executive to, any person other than Executive's attorney, including any present or former employee of Employer, its shareholders, affiliates, subsidiaries or predecessors in interest. Executive agrees that Executive will not disparage Employer. Executive agrees that a breach by Executive of the first or second sentence of this Section will cause harm and damage to Employer that is impossible, or very difficult, to estimate accurately as of the date of this Agreement. Accordingly, Executive agrees to pay to Employer, as liquidated damages 5 Executive Initials: /s/ _______ (and not as a penalty), an amount equal to the Special Cash Severance Payments for any (and each) such breach. Executive further agrees, and hereby waives any right to challenge, that such liquidated damages amount (i) is a reasonable forecast of the probable damages resulting from such a breach, (ii) will provide just compensation for such a breach, and (iii) is not unreasonable or disproportionate to the amount of harm anticipated as the result of such breach. Executive agrees not to re-apply for any employment position with Employer without expressly and conspicuously listing this Agreement on any application for such re-employment. Further, Executive agrees that Employer shall not be required to give any consideration to such re-application. Employer agrees that Employer will not disparage Executive. For purposes of the foregoing, only statements made by Employer's directors, executive officers and human resource directors will be attributed to Employer. Employer agrees that a breach by Employer of the first or second sentence of this Section will cause harm and damage to Executive that is impossible, or very difficult, to estimate accurately as of the date of this Agreement. Accordingly, Employer agrees to pay to Executive, as liquidated damages (and not as a penalty), an amount equal to the Special Cash Severance Payments for any (and each) such breach. Employer further agrees, and hereby waives any right to challenge, that such liquidated damages amount (i) is a reasonable forecast of the probable damages resulting from such a breach, (ii) will provide just compensation for such a breach, and (iii) is not unreasonable or disproportionate to the amount of harm anticipated as the result of such breach. 8. GENERAL PROVISIONS. (a) ENTIRE AGREEMENT. This Agreement incorporates by this reference the Preliminary Statement hereto. Each party represents and warrants that any facts relating to such party that are contained in the Preliminary Statement are true. This Agreement and any agreement, instrument or document to be executed in connection herewith (as referenced herein) contain the parties' entire understanding and agreement with respect to the subject matter hereof (the termination of Executive's employment and directorship with Employer, the Severance Payments and Benefits and the release of any potential related claims). Any discussions, agreements, promises, representations, warranties or statements between the parties or their representatives (whether or not conflicting or inconsistent) that are not expressly contained or incorporated herein shall be null and void and are merged into this Agreement, except that any confidentiality agreement, noncompete agreement, invention assignment, stock option agreement or other agreement between Employer and Executive, expressly covering a party's rights after termination of employment, shall remain in full force and effect, in accordance with its terms, after the execution of this Agreement, except to the extent specified in this Agreement. In case of any conflict between Executive's rights under any such agreement and this Agreement, the terms of this Agreement will control. (b) MODIFICATION, AMENDMENT AND WAIVER. Neither this Agreement, nor any part hereof, may be modified or amended orally, by trade usage or by course of conduct or dealing, but only by and pursuant to an instrument in writing duly executed and delivered by the party sought to be charged therewith. No covenant or condition of this Agreement can be waived, except by the written consent of the party entitled to receive the benefit thereof. Forbearance or indulgence by a party in any regard whatsoever shall not constitute a waiver of a covenant or condition to be performed by the other party to which the same may apply, and, until complete performance by such other party of such covenant or condition, the party entitled to receive the benefit thereof shall be entitled to invoke any remedy available to it under this Agreement, at law, in equity, by statute or otherwise, despite such forbearance or indulgence. (c) SUCCESSORS, ASSIGNS AND THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns. Except as expressly provided herein, neither this Agreement nor any rights hereunder may be assigned or transferred, and no duties may be delegated, by any party hereto without the prior written consent 6 Executive Initials: /s/ _______ of the other party hereto. Each affiliate of Employer (and their predecessors, successors and assigns) shall be a third party beneficiary of this Agreement, as if such affiliate was the "Employer" hereunder. (d) CONSTRUCTION. This Agreement shall not be construed more strictly against one party than against another party merely by virtue of the fact that this Agreement may have been physically prepared by such party, or such party's counsel, it being agreed that all parties, and their respective counsel, have mutually participated in the negotiation and preparation of this Agreement. Unless the context of this Agreement clearly requires otherwise: (i) references to the plural include the singular and vice versa; (ii) references to any person include such person's successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; (iii) references to one gender include all genders; (iv) "including" is not limiting; (v) "or" has the inclusive meaning represented by the phrase "and/or"; (vi) the words "hereof", "herein", "hereby", "hereunder" and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (vii) article, section, subsection, clause, exhibit and schedule references are to this Agreement unless otherwise specified; (viii) reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof; and (ix) general or specific references to any law means such law as amended, modified, codified or re-enacted, in whole or in part, and in effect from time to time. (e) GOVERNING LAW. All questions with respect to the formation and construction of this Agreement, and the rights and obligations of the parties hereto, shall be governed by and determined in accordance with the laws of the State of Missouri, which are applicable to agreements entered into and performed entirely within such State, without giving effect to the choice or conflicts of law provisions thereof. (f) ATTORNEYS' FEES. In any suit or proceeding arising in connection with this Agreement, the prevailing party shall have the right to receive an award of the reasonable attorneys' fees and disbursements actually incurred by it in connection therewith. Each reference to attorneys' fees or attorneys' fees and disbursements in this Agreement shall include attorneys' and paralegal fees, and costs and disbursements, whether or not suit is brought (and, if suit is brought, during all trial and appellate phases of litigation). (g) SEVERABILITY. If any Section (or part thereof) of this Agreement is found by a court of competent jurisdiction to be contrary to, prohibited by or invalid under any applicable law, such court may modify such Section (or part thereof) so, as modified, such Section (or part thereof) will be enforceable and will to the maximum extent possible comply with the apparent intent of the parties in drafting such Section (or part thereof). If no such modification is possible, such Section (or part thereof) shall be deemed omitted, without invalidating the remaining provisions hereof. No such modification or omission of a Section (or part thereof) shall in any way affect or impair such Section (or part thereof) in any other jurisdiction. If, in the sole judgement of Employer, a Section (or part thereof) of this Agreement is so modified or omitted in a manner which eliminates a substantial part of the benefit intended to be received by Employer hereunder, then Employer may rescind this Agreement and Executive shall immediately return to Employer any consideration paid hereunder. (h) CAPTIONS. The captions, headings and titles of the various Sections of this Agreement are for convenience of reference only, and shall not be deemed or construed to limit or expand the substantive provisions of such Sections. (i) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which together shall constitute a single agreement. A facsimile signature is as good as an original [signature page next] 7 Executive Initials: /s/ _______ IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date. EXECUTIVE: EMPLOYER: INSITUFORM TECHNOLOGIES, INC., /s/ Anthony W. Hooper - ------------------------------------ By: /s/ Stephen P. Cortinovis Print Name: Anthony W. Hooper ------------------------------- SSN: Name: Stephen P. Cortinovis Address: Title: Chairman of the Compensation Committee of Board of Directors 8 Executive Initials: _________ EXHIBIT A FORM OF RESIGNATION LETTER July 22, 2003 Board of Directors Insituform Technologies, Inc. 702 Spirit 40 Park Drive Chesterfield, Missouri 63005 Attention: Corporate Secretary Gentlemen: Effective immediately, I hereby resign as Chairman of the Board, Chief Executive Officer and director of Insituform Technologies, Inc. (the "Company"). I also resign, effective immediately, from all other offices and directorships (or similar positions) of the Company's subsidiaries and affiliates. In addition, I am terminating my employment with the Company and its subsidiaries and affiliates effective immediately. except to the extent that the Board of Directors and I agree to a continuing employment relationship with the Company in a separate letter. I understand and specifically agree that if I choose to revoke my acceptance of that certain Executive Separation Agreement and Release (the "Separation Agreement") pursuant to the terms of Section 2 of that agreement, my resignation from my offices and directorships and the termination of my employment with the Company, its subsidiaries and affiliates will not be revoked and will remain in full force and effect. In the event of such a revocation of the Separation Agreement pursuant to the Section 2 thereof, the Company agrees to treat my termination of employment as a termination of employment by Employer without cause for all purposes, including determining the severance benefits payable to me under my employment letter dated July 15, 1998. Very truly yours, Anthony W. Hooper APPROVED AND ACCEPTED: - ---------------------------------- Stephen P. Cortinovis Chairman, Compensation Committee 9 Executive Initials: _________ EX-10.2 5 c78627exv10w2.txt EMPLOYEE SEPARATION AGREEMENT AND RELEASE-SLUSHER EXHIBIT 10.2 EMPLOYEE SEPARATION AGREEMENT AND RELEASE THIS EMPLOYEE SEPARATION AGREEMENT AND RELEASE (the "AGREEMENT") is made and entered into effective as of the date set forth on the signature page hereto (the "EFFECTIVE DATE") by and between INSITUFORM TECHNOLOGIES, INC., a Delaware corporation, or one of its subsidiaries as shown on the signature page hereto ("EMPLOYER"), and the individual listed on the signature page hereto ("EMPLOYEE"). PRELIMINARY STATEMENT A. Employee's employment with Employer terminated as of the date shown on the signature page hereto ("EMPLOYMENT TERMINATION DATE"). B. Employer and Employee desire to resolve all matters relating to or arising out of Employee's employment by Employer and Employee's subsequent termination. C. Employee has been (or is being) provided at least twenty-one (21) days from the offer date set forth on the signature page hereto (the "OFFER DATE") to consider the meaning and effect of this Agreement prior to accepting this Agreement (the "ACCEPTANCE DATE"). Employee has been (or hereby is) advised in writing to consult with an attorney prior to executing this Agreement. NOW, THEREFORE, in consideration of the mutual agreements and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. EMPLOYMENT TERMINATION; ACCEPTANCE. The employment of Employee by Employer, in any capacity whatsoever, ceased (or will cease) as of the Employment Termination Date. Any and all right or authority of Employee to act as an agent of Employer, in any manner whatsoever, terminated (or will terminate) on that date. If Employee does not return a signed copy of this Agreement to Employer by the Acceptance Date (which is 30 days after the date this Agreement was given to Employee), then this Agreement shall be null, void and of no force or effect. 2. SEPARATION PAYMENTS. (a) PAYMENTS. As consideration for this Agreement, Employer agrees to pay Employee the amounts set forth on the signature page hereto as shown on the signature page hereto (the "SEPARATION PAYMENTS"). (b) GENERAL. All Separation Payments shall be made subject to any applicable federal, state and local income tax or other appropriate withholding requirements. Further, the Separation Payments represent all of the compensation (including vacation and severance pay) to which Employee is, or may be, entitled by virtue of Employee's employment and separation from employment with Employer. This Section 2, however, shall have no force or effect if Employee revokes Employee's acceptance of this Agreement pursuant to Section 9 hereof. 3. EMPLOYEE REPRESENTATIONS AND RELEASE. (a) REPRESENTATIONS. Employee represents and warrants to Employer that (i) Employee (A) has not filed any suit, action, claim, allegation or other proceeding at law or in equity, before any court, governmental agency, arbitration panel or other forum of any nature (an "ACTION") with respect to the matters released below or (B) will not prosecute, and will immediately dismiss with prejudice, any pending Action with respect to the matters released below; (ii) Employee has not assigned to any other person or 1 Employee Initials: /s/ ______ entity any right(s) or claim(s) Employee may have against Employer; (iii) in deciding to execute this Agreement (A) no fact, evidence, event or transaction currently unknown to Employee, but which may hereinafter become known to Employee, shall affect in any way or any manner the final or unconditional nature of this Agreement; (B) Employee's execution of this Agreement is a knowing and voluntary act on Employee's part; (C) Employee has read and fully understands the terms of this Agreement, including the final and binding nature and effect of Employee's waiver of rights by execution of this Agreement; and (D) Employee has been provided with time to consult with legal counsel as to the meaning of this Agreement, and Employee has relied solely upon the judgment of Employee's legal counsel in determining to execute this Agreement. (b) WAIVER AND RELEASE. Employee hereby waives any and all rights or claims for liability Employee may now or in the future have against Employer, and its shareholders, directors, officers, employees, agents, affiliates, subsidiaries and predecessors in interest, together with their respective shareholders, directors, officers, employees and agents (collectively, "RELEASED PARTIES") in connection with, relating to or arising out of Employee's employment with Employer (or any Released Parties) or out of the termination of Employee's employment with Employer (or any Released Parties). Further, EMPLOYEE HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY, RELEASES, REMISES, ACQUITS AND FOREVER DISCHARGES RELEASED PARTIES of and from any and all manner of claims, actions, charges, complaints, causes of action, suits, judgments, demands, injuries, damages and agreements (including any specifically listed on the signature page hereto) whatsoever, whether in law or in equity, whether based on contract, statute, tort or strict liability, any alleged rights or claims arising under the National Labor Relations Act; Title VII of the Civil Rights Act of 1964, as amended; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Employee Retirement Income Security Act of 1974, as amended (except for claims under Employer's 401(k) Profit Sharing Plan); the Immigration Reform Control Act; the Americans with Disabilities Act of 1990, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Rehabilitation Act of 1973, as amended; the Fair Labor Standards Act of 1938; the Occupational Safety and Health Act; the Family and Medical Leave Act; other alleged age discrimination or other employment discrimination (including any specifically listed on the signature page hereto), breach of express or implied contract, breach of the covenant of good faith and fair dealing, wrongful discharge, or any other alleged violation of federal, state, or local statutory or common law, whether or not now known or contemplated, which now exist or may hereafter arise from any matter, fact, circumstance, happening or thing whatsoever occurring or failing to occur in connection with, relating to or arising out of Employee's employment with Employer (or any Released Parties) or out of the termination of Employee's employment with Employer (or any Released Parties). (c) NATURE OF RELEASE. It is expressly understood and agreed that this Agreement is intended to cover and does cover not only all known losses and damages but any future losses and damages not now known or anticipated but which may later develop or be discovered, including the effects and consequences thereof. It is further expressly understood and agreed that as against Employee this Agreement may be pleaded as a counterclaim to or as a defense in bar or abatement of any action taken by or on behalf of Employee. Employee agrees that neither this Agreement nor performance hereunder constitutes an admission by Employer of any violation of any Employer policy, federal, state or local law, regulation, common law, or any breach of any contract or any other wrongdoing of any type. 4. COVENANT NOT TO SUE; INDEMNIFICATION. Employee agrees not to enter into any suit, action or other proceeding at law or in equity (including administrative actions), or to prosecute further any existing suit or action that might presently exist, or to make any claim or demand of any kind or nature against any Released Party, in any such case asserting any claim released by Employee by Section 3 of this Agreement, other than an action against Employer to enforce Employee's rights contained herein. If Employee enters into any such suit, action or other proceeding in violation of this Section 4, Employee shall (i) indemnify, defend and hold the Released Parties harmless from and against any and all liabilities, obligations, losses, damages, penalties, claims, action, suits, costs, expenses and disbursements (including attorneys' fees and 1 Employee Initials: /s/ _______ expenses and court costs whether or not litigation is commenced and, if litigation is commenced, during all trial and appellate phases of such litigation) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against any Released Party in any way relating to, arising out of, connected with or resulting from such actions, including any of the matters released hereunder and (ii) immediately return the Separation Payments. Employer shall indemnify Employee to the full extent permitted by Section 145 of the Delaware General Corporation Law, as amended, from time to time. 5. CONFIDENTIALITY; NONSOLICITATION AND NONCOMPETITION. (a) CONFIDENTIALITY. Employee acknowledges the competitive nature of the Employer's business and reaffirms Employee's prior written covenant that any information acquired by Employee regarding the Employer's business, its directors, officers and employees (whether or not such information is marked confidential) shall be considered the Employer's confidential information. In furtherance and not limitation of those prior agreements, Employee agrees not to disclose to anyone (other than Employer), or use for Employee's benefit or the benefit of any other person (other than Employer), any marketing documents or information, financial statements, reports, salary information, product cost or price information, technical information, any information relating to production or sales or any other information acquired by Employee regarding Employer's business, its directors, officers, and employees (whether or not such information is marked confidential). Furthermore, Employee agrees to immediately return to Employer all Employer property and any information (including any copies thereof) which Employee has received, prepared or helped to prepare during the course of Employee's employment with Employer. (b) NONSOLICITATION. In consideration of the Separation Payments, and in furtherance and not limitation of any prior agreement between Employee and Employer with respect to nonsolicitation matters, Employee acknowledges and agrees that, during the period listed on the signature page hereto, Employee will not, in any manner or at any time, solicit or encourage any person, firm, corporation or other business entity to cease doing business with Employer or solicit or encourage any employee(s) of Employer to cease being an employee of Employer. (c) NONCOMPETE PERIOD. In consideration of the Separation Payments, and in furtherance and not limitation of any prior agreement between Employee and Employer with respect to noncompete matters, Employee agrees that during the period listed on the signature page hereto, Employee will not engage in or enter the employ of, or have any interest in, directly or indirectly, any other person, firm, corporation or other entity engaged in any business activities competitive with any business carried on by Employer. Although Employer's interests are international in scope, the geographic area for purposes of this restriction shall be the continental United States. (d) EQUITABLE RELIEF. Employee acknowledges and agrees that (i) any breach of this Agreement by Employee, including any breach of the terms of this Section 5, will cause Employer irreparable injury and damage, (ii) the provisions of this Agreement are necessarily of a special, unique and extraordinary nature and (iii) if Employee breaches any such provisions, Employer shall be entitled, in addition to any other remedies and damages Employer could recover as a result of any such breach, to obtain equitable relief, including restraining orders or injunctions, both temporary and permanent, in order to prevent future violation thereof by Employee or any person with whom Employee may be affiliated. Employee hereby waives the claim or defense that Employer has an adequate remedy at law and Employee shall not claim that an adequate remedy at law exists. Further, Employee waives any requirement for Employer to post a bond in connection with any action relating to this Agreement. (e) SURVIVAL. The provisions of this Section 5 shall survive any termination of this Agreement. 2 Employee Initials: /s/ ------------- 6. NONDISCLOSURE; NO DISPARAGING REMARKS; NO RE-APPLICATION. Employee agrees that the terms of this Agreement will not be discussed by Employee with, or otherwise disclosed by Employee to, any person other than Employee's attorney, including any present or former employee of Employer, its shareholders, affiliates, subsidiaries or predecessors in interest. Employee agrees that Employee will not disparage Employer or portray Employer in a negative light. Employee agrees that a breach by Employee of the first or second sentence of this Section will cause harm and damage to Employer that is impossible, or very difficult, to estimate accurately as of the date of this Agreement. Accordingly, Employee agrees to pay to Employer, as liquidated damages (and not as a penalty), an amount equal to the Separation Payments for any (and each) such breach. Employee further agrees, and hereby waives any right to challenge, that such liquidated damages amount (i) is a reasonable forecast of the probable damages resulting from such a breach, (ii) will provide just compensation for such a breach, and (iii) is not unreasonable or disproportionate to the amount of harm anticipated as the result of such breach. Employee agrees not to re-apply for any employment position with Employer without expressly and conspicuously listing this Agreement on any application for such re-employment. Further, Employee agrees that Employer shall not be required to give any consideration to such re-application. 7. GENERAL PROVISIONS. (a) ENTIRE AGREEMENT. This Agreement incorporates by this reference the Preliminary Statement hereto. Each party represents and warrants that any facts relating to such party that are contained in the Preliminary Statement are true. This Agreement and any agreement, instrument or document to be executed in connection herewith (as referenced herein) contain the parties' entire understanding and agreement with respect to the subject matter hereof (the termination of Employee's employment with Employer and the release of any potential related claims). Any discussions, agreements, promises, representations, warranties or statements between the parties or their representatives (whether or not conflicting or inconsistent) that are not expressly contained or incorporated herein shall be null and void and are merged into this Agreement, except that any confidentiality agreement, noncompete agreement, invention assignment, stock option agreement or other agreement between Employer and Employee, expressly covering a party's rights after termination of employment, shall remain in full force and effect, in accordance with its terms, after the execution of this Agreement, including those specifically listed on the signature page hereto. (b) MODIFICATION, AMENDMENT AND WAIVER. Neither this Agreement, nor any part hereof, may be modified or amended orally, by trade usage or by course of conduct or dealing, but only by and pursuant to an instrument in writing duly executed and delivered by the party sought to be charged therewith. No covenant or condition of this Agreement can be waived, except by the written consent of the party entitled to receive the benefit thereof. Forbearance or indulgence by a party in any regard whatsoever shall not constitute a waiver of a covenant or condition to be performed by the other party to which the same may apply, and, until complete performance by such other party of such covenant or condition, the party entitled to receive the benefit thereof shall be entitled to invoke any remedy available to it under this Agreement, at law, in equity, by statute or otherwise, despite such forbearance or indulgence. (c) SUCCESSORS, ASSIGNS AND THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns. Except as expressly provided herein, neither this Agreement nor any rights hereunder may be assigned or transferred, and no duties may be delegated, by any party hereto without the prior written consent of all other parties hereto. Each affiliate of Employer (and their predecessors, successors and assigns) shall be a third party beneficiary of this Agreement, as if such affiliate was the "Employer" hereunder. (d) CONSTRUCTION. This Agreement shall not be construed more strictly against one party than against another party merely by virtue of the fact that this Agreement may have been physically 3 Employee Initials: /s/ ------------ prepared by such party, or such party's counsel, it being agreed that all parties, and their respective counsel, have mutually participated in the negotiation and preparation of this Agreement. Unless the context of this Agreement clearly requires otherwise: (i) references to the plural include the singular and vice versa; (ii) references to any person include such person's successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; (iii) references to one gender include all genders; (iv) "including" is not limiting; (v) "or" has the inclusive meaning represented by the phrase "and/or"; (vi) the words "hereof", "herein", "hereby", "hereunder" and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (vii) article, section, subsection, clause, exhibit and schedule references are to this Agreement unless otherwise specified; (viii) reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof; and (ix) general or specific references to any law means such law as amended, modified, codified or re-enacted, in whole or in part, and in effect from time to time. (e) GOVERNING LAW. All questions with respect to the formation and construction of this Agreement, and the rights and obligations of the parties hereto, shall be governed by and determined in accordance with the laws of the State identified on the signature page hereto, which are applicable to agreements entered into and performed entirely within such State, without giving effect to the choice or conflicts of law provisions thereof. (f) SEVERABILITY. If any Section (or part thereof) of this Agreement is found by a court of competent jurisdiction to be contrary to, prohibited by or invalid under any applicable law, such court may modify such Section (or part thereof) so, as modified, such Section (or part thereof) will be enforceable and will to the maximum extent possible comply with the apparent intent of the parties in drafting such Section (or part thereof). If no such modification is possible, such Section (or part thereof) shall be deemed omitted, without invalidating the remaining provisions hereof. No such modification or omission of a Section (or part thereof) shall in any way affect or impair such Section (or part thereof) in any other jurisdiction. If, in the sole judgement of Employer, a Section (or part thereof) of this Agreement is so modified or omitted in a manner which eliminates a substantial part of the benefit intended to be received by Employer hereunder, then Employer may rescind this Agreement and Employee shall immediately return to Employer any consideration paid hereunder. (g) CAPTIONS. The captions, headings and titles of the various Sections of this Agreement are for convenience of reference only, and shall not be deemed or construed to limit or expand the substantive provisions of such Sections. (h) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which together shall constitute a single agreement. [signature page next] 4 Employee Initials: /s/ ------------ 8. REVIEW BY EMPLOYEE. Employee acknowledges that this Agreement has been reviewed in detail with Employee, that its language and intended effect have been explained, and that Employee has reviewed this Agreement with an attorney of Employee's choice. Employee also acknowledges that Employee has voluntarily entered into this Agreement of Employee's own free will based only upon the terms and conditions set out herein. 9. EMPLOYEE'S RIGHT TO REVOKE. Employee may revoke this Agreement for a period of seven (7) days after execution by Employee, and this Agreement shall not become effective or enforceable until such period has expired. IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date. EMPLOYEE: EMPLOYER: INSITUFORM TECHNOLOGIES, INC., /s/ Carroll W. Slusher - ---------------------------------------- Print Name: Carroll W. Slusher By: /s/ Anthony W. Hooper SSN: ###-##-#### ----------------------------- Address: 336 Woodmere Drive Name: Anthony W. Hooper St. Charles, MO 63303 Title: Chairman and CEO
- --------------------------------------------------------------------------------------------------------------- State Governing Law: Missouri Specifically Release State Statutes: Missouri Human Rights Act, Mo. Rev. Stat. Section 213.010 et seq., Missouri's Workers' Compensation Law, Mo. Rev. Stat. Section 287.010 et seq., and the Missouri Service Letter Statute, Mo. Rev. Stat. Section 290.140 - --------------------------------------------------------------------------------------------------------------- Specifically Surviving Agreements: Confidentiality, Work Product and Non-Competition Agreement signed 4/18/02; Confidentiality Agreement signed 1/14/01; Confidentiality Agreement dated March 31, 1999; Nondisclosure and Non-Competition Agreement signed March 4, 1997; Employee Confidentiality Agreement signed March 4, 1997; Policy with Respect to Standards of Business Conduct and Conflicts of Interest signed March 4, 1997. - --------------------------------------------------------------------------------------------------------------- Nonsolicitation Period: Through July 31, 2005 Noncompete Period: Through July 31, 2005 - --------------------------------------------------------------------------------------------------------------- Employment Termination Date: July 31, 2003 Employee agrees to resign from any officer positions held in the Company or in any of its affiliate no later than July 31, 2003. Last day of regular pay July 31, 2003 Offer Date: May 22, 2003 Acceptance Date: June 22, 2003 Effective Date: July 1, 2003 - --------------------------------------------------------------------------------------------------------------- Separation Payment(s): $190,200 Lump sum payment to be made on or about July 31, 2003 - --------------------------------------------------------------------------------------------------------------- Vacation Pay: Employer agrees to pay Employee any earned but unused vacation as of Employee's Termination Date.
5 Employee Initials: /s/ ------------
Vehicle Employer agrees to pay Employee a lump sum amount that is equal the nine month's of vehicle allowance payments. Payment will be made on or about July 31, 2003. Outplacement Counseling: Outplacement counseling services will be provided at a national firm of Employee's choice. Services to continue through April 30, 2004, or until employment is secured, whichever comes first. Other: Employer will provide funds to pay Employee's COBRA medical/dental (family coverage) through January 31, 2004. This coverage is considered part of the 18 month COBRA coverage availability. Should Employee not be employed by January 31, 2004, funds to pay Employee's COBRA medical/dental (family coverage) will be provided through December 31, 2004, or until Employee begins work, whichever comes first. This coverage is considered part of the 18 month COBRA coverage availability. Employer has the right to periodically inquire of Employee his employment status, and Employee agrees to provide complete information concerning such status.
6 Employee Initials: /s/ ------------ EX-31.1 6 c78627exv31w1.txt CERTIFICATION OF THOMAS S. ROONEY, JR. Exhibit 31.1 CERTIFICATIONS I, Thomas S. Rooney, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Insituform Technologies, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 14, 2003 /s/ Thomas S. Rooney, Jr. ------------------------------------- Thomas S. Rooney, Jr. President and Chief Executive Officer 23 EX-31.2 7 c78627exv31w2.txt CERTIFICATION OF JOSEPH A. WHITE Exhibit 31.2 I, Joseph A. White, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Insituform Technologies, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 14, 2003 /s/ Joseph A. White ------------------------------------------ Joseph A. White Vice President and Chief Financial Officer 24 EX-32.1 8 c78627exv32w1.txt CERTIFICATION OF THOMAS S. ROONEY, JR. Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report of Insituform Technologies, Inc. (the "COMPANY") on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "FORM 10-Q"), I, Thomas S. Rooney, Jr., President and Chief Executive Officer of the Company, hereby certify, as of the date hereof, that: (1) the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 14, 2003 /s/ Thomas S. Rooney, Jr. ------------------------------------- Thomas S. Rooney, Jr. President and Chief Executive Officer 25 EX-32.2 9 c78627exv32w2.txt CERTIFICATION OF JOSEPH A. WHITE Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report of Insituform Technologies, Inc. (the "COMPANY") on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "FORM 10-Q"), I, Joseph A. White, Vice President and Chief Financial Officer of the Company, hereby certify, as of the date hereof, that: (1) the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: August 14, 2003 /s/ Joseph A. White ------------------------------------------ Joseph A. White Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----