----

----

| UNITED      STATES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| SECURITIES AND EXCHANGE      COMMISSION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| WASHINGTON, D.C.      20549                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| FORM  10-Q                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| (Mark      One)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| þ                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | QUARTERLY REPORT PURSUANT TO      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | For      the quarterly period ended     June 30,      2008 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | or  |
| ¨                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | TRANSITION REPORT PURSUANT TO      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | For      the transition period      from  ______________   to   _______________________ |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| Commission      File Number: 0-10786                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Insituform      Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (Exact      name of registrant as specified in its charter)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| Delaware                                                                        13-3032158                                                                                                                                                  |
| (State      or other jurisdiction of incorporation or      organization)                                                  (I.R.S.      Employer Identification No.)                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| 17988 Edison Avenue,      Chesterfield,      Missouri                                                                                  63005-1195                                                                       |
| (Address of principal executive      offices)                                                                                            (Zip Code)                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| (636)      530-8000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (Registrant’s      telephone number, including area code)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| Indicate      by check mark whether the registrant (1) has filed all reports required to      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934      during the preceding 12 months (or for such shorter period that the      registrant was required to file such reports), and (2) has been subject to      such filing requirements for the past 90 days. Yes  þ No ¨                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer, or a non-accelerated filer. See definition of      “accelerated filer and large accelerated filer” in Rule 12b-2 of the      Exchange Act.                                                                                                                                                                                                                                                                                                                                                  |
| Large      accelerated ¨                                              Accelerated      þ                                        Non-accelerated      ¨ |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| Indicate      by checkmark whether the registrant is a shell company (as defined in Rule      12b-2 of the Exchange Act).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Yes      ¨ No þ                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| There      were 27,940,919 shares of common stock, $.01 par value per share,      outstanding at July 24, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |

----

----

| INDEX                                    |
|-----------------------------------------------|
|                                          |   |
|                                          | Page |
| PART I—FINANCIAL      INFORMATION  |   |
|                                          | Item      1. | Financial      Statements: |   |
|                                          |   |   |   |   |
|                                          |   | Consolidated      Statements of Operations for the Three and Six Months Ended June      30, 2008 and 2007 | 3 |
|                                          |   |   |   |   |
|                                          |   | Consolidated      Balance Sheets as of June 30, 2008 and December 31,    2007 | 4 |
|                                          |   |   |   |   |
|                                          |   | Consolidated      Statements of Cash Flows for the Six Months Ended June 30, 2008      and 2007 | 5 |
|                                          |   |   |   |   |
|                                          |   | Notes      to Consolidated Financial Statements | 6 |
|                                          |   |   |   |   |
|                                          | Item      2. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations |                       17 |
|                                          |   |   |   |   |
|                                          | Item      3. | Quantitative      and Qualitative Disclosures About Market Risk |                       26 |
|                                          |   |   |   |   |
|                                          | Item      4. | Controls      and Procedures |                       27 |
|                                          |   |   |   |   |
| PART II—OTHER      INFORMATION          |   |
|                                          |   |   |   |   |
|                                          | Item      1. | Legal      Proceedings |                       28 |
|                                          |   |   |   |   |
|                                          | Item      1A. | Risk      Factors |                       28 |
|                                          |   |   |   |   |
|                                          | Item      4. | Submission      of Matters to a Vote of Security Holders |                       28 |
|                                          |   |   |   |
|                                          | Item      5. | Other      Information |                       29 |
|                                          |   |   |   |
|                                          | Item      6. | Exhibits |                       29 |
|                                          |   |   |   |   |
| SIGNATURE                                     |                       30 |
|                                          |   |   |   |   |
| INDEX TO      EXHIBITS                        |                       31 |

----

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                                        | For      the Three Months Ended June 30,                                                                                                         |               | For      the Six Months Ended June 30,                                                                                 |
|-------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------------------------------------------------------------------------------------------------------------------|
|                                                                                                        | 2008                                                                                                                         |               | 2007                                                                                               |   | 2008     |   | 2007     |
|                                                                                                        |                                                                                                                                             |               |                                                                                                                   |   |   |   |   |
| Revenues                                                                                                    | $     135,585                                                                                                      |               |          $     124,968                                                         |   |          $  261,512  |   | $   239,950  |
| Cost      of revenues                                                                                       |        104,455                                                                                           |               |  96,919                                                                                                      |   |         203,496  |   |           191,518  |
| Gross      profit                                                                                           |          31,130                                                                                |               |  28,049                                                                                                      |   |           58,016  |   |             48,432  |
| Operating      expenses                                                                                     |          24,914                                                                                |          |  24,021                                                                                                      |   |           48,546  |   |             48,206  |
| Operating      income                                                                                       |            6,216                                                                     |               |         4,028                                                                                           |   |             9,470  |   |                  226  |
| Other      income (expense):                                                                                |                                                                                                                                             |               |                                                                                                                   |   |   |   |   |
| Interest      income                                                                                        |               739                                                     |               |            710                                                                                |   |                  1,587  |   |               1,659  |
| Interest      expense                                                                                       |            (1,158)                                                                        |               |                    (1,315)                            |   |                  (2,385) |   |               (2,808) |
| Other                                                                                                       |               237                                                     |               |            (134)                                                                              |   |                  1,005  |   |                  568  |
| Total      other income (expense)                                                                           |               (182)                                                        |               |                            (739)            |   |                            207  |   |                        (581) |
| Income      (loss) before taxes on income                                                                   |            6,034                                                                     |               |                     3,289                        |   |                    9,677  |   |                        (355) |
| Taxes      on income                                                                                        |            1,732                                                                     |          |                        759             |   |                         2,806  |   |                           49  |
| Income      (loss) before minority interests and equity in         losses of affiliated companies |            4,302                                                                     |               |                      2,530                  |   |                         6,871  |   |                    (404) |
| Minority      interests                                                                                     |               (177)                                                        |               |                         (84) |   |                           (333) |   |                        (132) |
| Equity      in losses of affiliated companies                                                               |               (211)                                                        |               |                              (14)      |   |                           (594) |   |                   (320) |
| Income      (loss) from continuing operations                                                               |           3,914                                                                           |               |                     2,432                        |   |                         5,944  |   |                        (856) |
| Gain      (loss) from discontinued operations, net of tax                                                   |                    (516)                                                        |               |                        764        |   |                           (603) |   |              (11,223) |
| Net      income (loss)                                                                                      |                 $         3,398                   |               |     $               3,196                             |   |            $            5,341  |   |         $        (12,079) |
|                                                                                                        |                                                                                                                                             |               |                                                                                                                   |   |   |   |   |
| Earnings      (loss) per share:                                                                             |                                                                                                                                             |               |                                                                                                                   |   |   |   |   |
| Basic:                                                                                                      |                                                                                                                                             |               |                                                                                                                   |   |   |   |   |
| Income      (loss) from continuing operations                                                               |                 $           0.14        |               |          $           0.09                        |   |                 $              0.21  |   |         $       (0.03) |
| Gain      (loss) from discontinued operations                                                               |                   (0.02)                                                             |               |                       0.03             |   |                     (0.02) |   |                       (0.41) |
| Net      income (loss)                                                                                      |            $                0.12   |               |     $                0.12                   |   |            $              0.19  |   |         $            (0.44) |
| Diluted:                                                                                                    |                                                                                                                                             |               |                                                                                                                   |   |   |   |   |
| Income      (loss) from continuing operations                                                               |            $           0.14   |               |     $                0.09                   |   |                 $              0.21  |   |         $            (0.03) |
| Gain      (loss) from discontinued operations                                                               |                             (0.02) |               |                       0.03             |   |                     (0.02) |   |                  (0.41) |
| Net      income (loss)                                                                                      |            $           0.12   |               |     $                0.12                        |   |            $         0.19  |   |         $            (0.44) |

----

CONSOLIDATED BALANCE SHEETS

|                                                                                                                                 |             June 30,                2008 |          December 31,                 2007 |
|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|
| Assets                                                                                                                               |                                                                                                                     |                                                                                                             |
|  Current      assets                                                                                                            |                                                                                                                     |                                                                                                             |
|      Cash      and cash equivalents                                                                         |  $      93,212                                                                        | $        78,961                                                          |
|      Restricted      cash                                                                                   |            2,629                                                  |                  2,487                                    |
|  Receivables,      net                                                                                                          |          92,794                                                             |                85,774                                               |
|  Retainage                                                                                                                      |          23,315                                                             |                23,444                                               |
|  Costs      and estimated earnings in excess of billings                                                                        |          37,802                                                             |                40,590                                               |
|  Inventories                                                                                                                    |          17,639                                                             |                17,789                                               |
|  Prepaid      expenses and other assets                                                                                         |          27,577                                                             |                28,975                                               |
|  Current      assets of discontinued operations                                                                                 |          19,383                                                             |                31,269                                               |
|  Total      current assets                                                                                                      |        314,351                                                                        |              309,289                                                          |
|  Property, plant and      equipment, less accumulated depreciation                                                              |          71,940                                                             |                73,368                                               |
|  Other      assets                                                                                                              |                                                                                                                     |                                                                                                             |
|  Goodwill                                                                                                                       |        122,475                                                                        |              122,560                                                          |
|  Other      assets                                                                                                              |          27,475                                                             |                26,532                                               |
|  Total      other assets                                                                                                        |        149,950                                                                        |              149,092                                                          |
|  Non-current      assets of discontinued operations                                                                             |            8,081                                                  |                  9,391                                    |
|                                                                                                                                 |                                                                                                                     |                                                                                                             |
| Total      Assets                                                                                                                    |  $    544,322                                                                                   | $           541,140                                                                     |
|                                                                                                                                 |                                                                                                                     |                                                                                                             |
| Liabilities and      Stockholders’ Equity                                                                                      |                                                                                                                     |                                                                                                             |
|  Current      liabilities                                                                                                       |                                                                                                                     |                                                                                                             |
|  Current      maturities of long-term debt and line of credit                                                                   |  $           513                                             | $          1,097                                               |
|  Accounts      payable and accrued expenses                                                                                     |          93,909                                                             |                87,935                                               |
|  Billings      in excess of costs and estimated earnings                                                                        |            7,746                                                  |                  8,602                                    |
|  Current      liabilities of discontinued operations                                                                            |            5,961                                                  |                14,830                                               |
|  Total      current liabilities                                                                                                 |        108,129                                                                        |              112,464                                                          |
|  Long-term debt,      less current maturities                                                                                   |          65,000                                                             |                65,000                                               |
|  Other      liabilities                                                                                                         |            5,333                                                  |                  7,465                                    |
|  Non-current      liabilities of discontinued operations                                                                        |            1,048                                                  |                     953                    |
|  Total      liabilities                                                                                                         |        179,510                                                                        |              185,882                                                          |
|  Minority      interests                                                                                                        |            3,201                                                  |                  2,717                                    |
|                                                                                                                                 |                                                                                                                     |                                                                                                             |
|  Stockholders’      equity                                                                                                |                                                                                                                     |                                                                                                             |
|  Preferred      stock, undesignated, $.10 par – shares authorized 2,000,000; none      outstanding                        |                  –            |                      –          |
|  Common      stock, $.01 par – shares authorized 60,000,000; shares issued and      outstanding 27,942,137 and 27,470,623 |               279                                  |                     275                    |
|  Additional      paid-in capital                                                                                                |        107,184                                                                        |              104,332                                                          |
|  Retained      earnings                                                                                                         |        244,318                                                                        |              238,976                                                          |
|  Accumulated      other comprehensive income                                                                                    |            9,830                                                  |                  8,958                                    |
|  Total      stockholders’ equity                                                                                          |        361,611                                                                        |              352,541                                                          |
|                                                                                                                                 |                                                                                                                     |                                                                                                             |
| Total      Liabilities and Stockholders’ Equity                                                                                |  $    544,322                                                                                   | $           541,140                                                                     |

----

CONSOLIDATED STATEMENTS OF CASHFLOWS

|                                                                                                | For      the Six MonthsEnded      June 30,                                                                          |
|-----------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|
|                                                                                                |                   2008                                  |                 2007 |
|                                                                                                |                                                                                                                |   |
| Cash flows from      operating activities:                                                          |                                                                                                                |   |
| Net      income (loss)                                                                              | $         5,341                                                        | $     (12,079) |
| Loss      from discontinued operations                                                              |                   (603)                                      |             (11,223) |
| Income      (loss) from continuing operations                                                       |                 5,944                                             |             (856) |
| Adjustments      to reconcile to net cash provided by operating activities:                         |                                                                                                                |   |
| Depreciation      and amortization                                                                  |                 8,263                                             |                7,789 |
| Gain      on sale of fixed assets                                                                   |                   (732)                                 |                  (857) |
| Equity-based      compensation expense                                                              |                 2,789                                             |                3,207 |
| Deferred      income taxes                                                                          |                 2,130                                             |               (4,940) |
| Other                                                                                               |                (3,596)                                                 |               (4,240) |
| Changes      in operating assets and liabilities:                                                   |                                                                                                                |   |
| Restricted      cash                                                                                |                   (138)                                 |               (1,174) |
| Receivables      net, retainage and costs and estimated earnings in excess of      billings         |                (4,435)                                                 |                7,884 |
| Inventories                                                                                         |                    321                             |               (1,428) |
| Prepaid      expenses and other assets                                                              |                    872                             |                  (555) |
| Accounts      payable and accrued expenses                                                          |                 3,891                                             |             (10,791) |
| Net      cash provided by (used in) operating activities of continuing      operations              |               15,309                                                        |               (5,961) |
| Net      cash provided by (used in) operating activities of discontinued      operations            |                (1,340)                                                 |                1,421 |
| Net      cash provided by (used in) operating activities                                            |               13,969                                                        |               (4,540) |
|                                                                                                |                                                                                                                |   |
| Cash flows from      investing activities:                                                          |                                                                                                                |   |
| Capital      expenditures                                                                           |                (6,872)                                                 |               (8,795) |
| Proceeds      from sale of fixed assets                                                             |                 1,304                                             |           1,287 |
| Net      cash used in investing activities of continuing operations                                 |                (5,568)                                                 |               (7,508) |
| Net      cash provided by (used in) investing activities of discontinued      operations            |                 1,338                                             |               (1,423) |
| Net      cash used in investing activities                                                          |                (4,230)                                                 |               (8,931) |
|                                                                                                |                                                                                                                |   |
| Cash flows from      financing activities:                                                          |                                                                                                                |   |
| Proceeds      from issuance of common stock                                                         |                    256                             |           1,080 |
| Additional      tax benefit from stock option exercises recorded in additional paid-in      capital |                       –       |                   129 |
| Proceeds      from notes payable                                                                    |                    700                             |                   685 |
| Principal      payments on notes payable                                                            |           (1,284)                                                 |               (1,212) |
| Principal      payments on long-term debt                                                           |                        – |             (15,768) |
| Net      cash used in financing activities                                                          |                   (328)                                 |        (15,086) |
| Effect      of exchange rate changes on cash                                                        |                 4,840                                             |                6,000 |
| Net      increase (decrease) in cash and cash equivalents for the      period                       |               14,251                                                        |             (22,557) |
| Cash      and cash equivalents, beginning of period                                                 |               78,961                                                        |         96,393 |
| Cash      and cash equivalents, end of period                                                       | $       93,212                                                                   | $      73,836 |

----

NOTES TO CONSOLIDATED FINANCIALSTATEMENTS

----

|                                                                                                        | Three      Months Ended                                             |   | Six      Months Ended                                         |
|-------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|--------|---------------------------------------------------------------|
|                                                                                                        | June      30,                                                       |   | June      30,                                                 |
|                                                                                                        | 2008                                                                |   | 2007                                                          |   | 2008 |   | 2007 |
| Weighted      average number of common shares used for basic EPS                                            |      27,572,992                            |   |          27,281,051                            |   |     27,521,807 |   |         27,267,789 |
| Effect      of dilutive stock options and restricted stock                                                  |           753,448 |   |               269,335 |   |          600,402 |   |                        – |
| Weighted      average number of common shares and dilutive potential      common stock used in dilutive EPS |      28,326,439                            |   |          27,550,386                            |   |     28,122,209 |   |         27,269,789 |

|                                                   | Three      Months Ended June 30,                                                                   | Six      Month Ended June 30, |
|--------------------------------------------------------|----------------------------------------------------------------------------------------------------|-------------------------------|
|                                                   | 2008                                                                                               |                          | 2007 |   | 2008 |   | 2007 |
| Revenues                                               |     $   1,963                                                   |                          | $  19,740 |   |          $  7,571 |   |   $        35,706 |
| Gross      profit (loss)                               |                 (699)                            |                          |            1,845 |   |          (734) |   |          2,032 |
| Operating      expenses                                |                  549                             |                          |               619 |   |            584 |   |             18,504 |
| Closure      charges (reversals) of tunneling business |                      – |                          |                  – |   |               (477) |   |        16,843 |
| Operating      income (loss)                           |              (1,248)                                            |                          |            1,226 |   |            (1,318) |   |            (16,472) |
| Income      (loss) before tax benefits                 |                 (813)                            |                          |            1,273 |   |          (946) |   |       (16,386) |
| Taxes      on income (tax benefits)                    |                 (297)                            |                          |               509 |   |          (343) |   |              (5,163) |
| Net      income (loss)                                 |                 (516)                            |                          |               764 |   |          (603) |   |       (11,223) |

----

|                                                              | June      30,  2008                                                                             | December      31, 2007                                                                              |
|-------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
|                                                              |                                                                                                      |                                                                                                |
| Receivables,      net                                             |          $        3,934                            |          $       9,001                                 |
| Retainage                                                         |               7,501                 |                   9,122                 |
| Costs      and estimated earnings in excess of billings           |               6,883                 |                   9,063                      |
| Prepaid      expenses and other current assets                    |                    1,065                 |                   4,083                      |
| Property,      plant and equipment, less accumulated depreciation |                    3,695                 |                   4,297                 |
| Other      assets                                                 |                    2,733                 |                   2,957                 |
| Total      assets                                                 |          $      25,811                                       |          $     38,523                                       |
|                                                              |                                                                                                      |                                                                                                |
| Accounts      payable and accrued expenses                        |          $        4,156                            |          $       9,925                            |
| Billings      in excess of costs and estimated earnings           |                       152 |                   2,768                 |
| Other      liabilities                                            |                    1,048                 |                      953 |
| Total      liabilities                                            |          $        5,356                            |     $     13,646                                       |

|                        | As      of June 30, 2008                             |                                                                     | As      of December 31, 2007                                                                                                  |
|-----------------------------|------------------------------------------------------|--------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------|
|                        | Weighted      Average      Useful      Lives (Years) |  Gross      Carrying Amount                                    |   AccumulatedAmortization                                                                                           |  Net      CarryingAmount |   |  Gross      CarryingAmount |   AccumulatedAmortization |  Net      CarryingAmount |
|                        |                                                 |                                                                     |                                                                                                                          |   |   |   |   |   |
| License      agreements     | 23                                                   |            $     3,840 | $      (2,003)                                                                                  | $     1,837 |   | $      3,894 | $        (1,976) | $      1,918 |
| Customer      relationships | 15                                                   |             1,797                          |                     (571) |             1,226 |   |         1,797 |                   (512) |              1,285 |
| Patents      and trademarks | 16                                                   |           19,615                                          |                     (13,774)                            |             5,841 |   |            17,942 |              (13,613) |              4,329 |
| Total                       |                                                 |            $   25,252            |          $    (16,348)                                       | $     8,904 |   | $    23,633 | $      (16,101) | $      7,532 |

|                                     | 2008                                                                                    | 2007                                                                              |
|------------------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|
| Aggregate      amortization expense:     |                                                                                    |                                                                              |
| For      the three months ended June 30: |           $         73 |           $        47 |
| For      the six months ended June 30:   |                    136      |                   117      |
|                                     |                                                                                    |                                                                              |
| Estimated      amortization expense:     |                                                                                    |                                                                              |
| For year ending December 31,      2008   |                    566 |                                                                              |
| For year ending December 31,      2009   |                    860 |                                                                              |
| For year ending December 31,      2010   |                    804 |                                                                              |
| For year ending December 31,      2011   |                    748 |                                                                              |
| For year ending December 31,      2012   |                    705 |                                                                              |

----

----

|                                |  Stock      Awards               | WeightedAverageAward      DateFair      Value |
|-------------------------------------|---------------------------------------|-----------------------------------------------|
| Outstanding      at January 1, 2008 | 102,089      | $   19.31                      |
| Awarded                             | 442,553      |           13.56           |
| Shares      distributed             | (28,266)               |           14.97           |
| Forfeited                           | (12,621)               |           15.92           |
| Outstanding      at June 30, 2008   | 503,755      |  $  14.58                      |

|                                |  DeferredStockUnits                        | WeightedAverageAward      DateFair      Value |
|-------------------------------------|-------------------------------------------------|-----------------------------------------------|
| Outstanding      at January 1, 2008 | 155,098                                         | $    18.51                |
| Awarded                             |            51,364(1)   |            15.61     |
| Shares      distributed             |        (27,382)                            |            20.69     |
| Forfeited                           |            (23,816)(1) |            14.01     |
| Outstanding      at June 30, 2008   | 155,264                                         | $    17.85                |

|   | (1) | Mr.      Woods was awarded 26,236 deferred stock units on March 3, 2008 as      compensation for his service as Interim Chief Executive Officer for the      period from February 13, 2008 through August 12, 2008. Pursuant to the      terms of the award agreement, however, on April 14, 2008, the amount of      deferred stock units was adjusted downward to 8,745 deferred stock units      to reflect his actual period ofservice. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                |  Shares                                  | WeightedAverageExercisePrice              |
|-------------------------------------|-----------------------------------------------|-------------------------------------------|
| Outstanding      at January 1, 2008 | 909,987                                       | $    21.27            |
| Granted                             | 424,021                                       |            13.42 |
| Exercised                           |        (14,200)                          |            14.17 |
| Forfeited                           |        (62,595)                          |            22.21 |
| Expired                             |        (30,371)                          |            21.24 |
| Outstanding      at June 30, 2008   |            1,226,842 | $    18.59            |
| Exercisable      at June 30, 2008   | 681,224                                       | $    21.50            |

| Range      ofExercise      Price                      | NumberOutstanding                                                           | WeightedAverageExercisePrice                                                   | AggregateIntrinsicValue                                                                                                                                       | WeightedAverageRemainingContractualTerm      (Yrs) |
|-------------------------------------------------------|-----------------------------------------------------------------------------|--------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------|
| $10.00      - $15.00                                  | 578,280                                                                     |          $       13.61       | $   933,963                                                                                                                                    |  5.6                                          |
|    15.01      -   20.00 | 254,930                                                                     |                   17.90 |                               – |  4.5                                          |
|    20.01      -   25.00 | 162,800                                                                     |                   23.93 |                   –                                                                         |  3.6                                          |
|    25.01      -   30.00 | 230,832                                                                     |                   28.07 |                   –                                                                         |  3.4                                          |
| Total      Outstanding                                |                 1,226,842 |          $      18.59             | $   933,963                                                                                                                                    |  4.7                                          |

| Range      ofExercise      Price                | NumberOutstanding                                                                           | WeightedAverageExercisePrice                                | AggregateIntrinsicValue                                                                     | WeightedAverageRemainingContractualTerm      (Yrs) |
|-------------------------------------------------|---------------------------------------------------------------------------------------------|-------------------------------------------------------------|---------------------------------------------------------------------------------------------|----------------------------------------------------|
| $10.00      - $15.00                            | 155,558                                                                                     | $       14.08            | $   179,329                                                                  | 2.8                                                |
|   15.01      -   20.00 | 182,876                                                                                     |               17.97      |                    – | 4.3                                                |
|   20.01      -   25.00 | 160,800                                                                                     |               23.91 |                    – | 3.6                                                |
|   25.01      -   30.00 | 199,815                                                                                     |               28.42 |                    – | 3.1                                                |
| Total      Exercisable                          |                    699,049 | $       21.46            | $   179,329                                                                  | 3.5                                                |

----

|                       | For      the Six Months Ended June 30, |
|----------------------------|----------------------------------------|
|                       | 2008                                   |   | 2007 |
|                       |  Range                            | WeightedAverage |   |  Range | WeightedAverage |
| Volatility                 | 37.3%      – 41.9%               | 40.6% |   | 45.0%      – 46.4% |      45.0% |
| Expected      term (years) | 4.5                                    | 4.5 |   | 4.5-4.8 |        4.5 |
| Dividend      yield        | 0.0%                                   | 0.0% |   | 0.0% |        0.0% |
| Risk-free      rate        | 4.0%                                   | 4.0% |   | 4.4%-4.6% |        4.4% |

----

----

|                                                | DocumentedRemediationCosts                                                                        | Interest                                                                                          |   Total                                                      |
|-----------------------------------------------------|---------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|
|                                                | (in      thousands)                                                                               |
| Claim      recorded June 30, 2005                   | $         5,872                                      | $          275                                  | $       6,147                       |
| Adjustment      based on subsequent developments(1) |                   183                 |                     – |                  183 |
|  Interest      recorded(2)                     |                     – |               1,450                                       |               1,450            |
| Claim      receivable balance, June 30, 2008        | $        6,055                                            | $       1,725                                                  | $      7,780                             |

|  | (1)   | During      the second quarter of 2006, the claim was adjusted up by $0.5 million, as      a result of documented remediation costs. During the second      quarter of 2007, the claim was adjusted down by $0.3 million, as a result      of subsequent developments in the matter. Interest was      adjusted accordingly.         |
|--|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | During      the second quarter of 2008, the Company recorded interest income of $0.1      million for post-judgment interest. During the first six months of 2008,      the Company recorded interest income of $0.2 million ($0.1 million in      post-judgment interest and $0.1 million in pre-judgment interest). In the      three and six months ended June 30, 2007, the Company recorded $0.1      million in a reversal of interest income and $0.1 million in pre-judgment      interest income, respectively. In total, the Company has recorded $1.6      million in pre-judgment interest and $0.1 million in post-judgment      interest. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                 |     |                              | Weighted                                                                                |     |
|----------------------|----------|-----------------------------------|-----------------------------------------------------------------------------------------|----------|
|                 |     |                              | Average                                                                                 |     |
|                 |     |                              | Remaining                                                                               | Average  |
|                 |     | Notional                          | Maturity                                                                                | Exchange |
|                 | Position | Amount                            | in      Months                                                                          | Rate     |
| Canadian      Dollar | Sell     | $      11,000,000                 |                    6.2 | 1.015    |
| Euro                 | Sell     | €      11,000,000           | 6.2                                                                                     | 1.536    |
| Pound      Sterling  | Sell     | £   5,000,000 | 6.2                                                                                     | 1.964    |

|                                             |          Derivatives, net                                                  |
|--------------------------------------------------|-------------------------------------------------------------------------------------------|
| Beginning      balance, January 1, 2008          | $              (55) |
| Loss      included in other comprehensive income |                    (152) |
| Ending      balance, June 30, 2008               | $            (207)            |

----

|                          | Three      Months EndedJune      30,                        | Six      Months EndedJune      30, |
|-------------------------------|-------------------------------------------------------------|------------------------------------|
|                          | 2008                                                        |                               | 2007 |   | 2008 |   | 2007 |
|                          |                                                        |                               |   |   |   |   |   |
| Revenues:                     |                                                        |                               |   |   |   |   |   |
|   Rehabilitation    | $   117,843                                  |                               | $   114,280 |   | $     227,918 |   | $  217,601 |
|   Tite      Liner   |        17,742            |                               |        10,688 |   |          33,594 |   |       22,349 |
| Total      revenues           | $   135,585                                  |                               | $   124,968 |   | $     261,512 |   | $  239,950 |
|                          |                                                        |                               |   |   |   |   |   |
| Gross      profit:            |                                                        |                               |   |   |   |   |   |
|   Rehabilitation    | $     26,077                       |                               | $     23,536 |   | $       47,729 |   | $    38,953 |
|   Tite      Liner   |          5,053 |                               |          4,513 |   |          10,287 |   |         9,479 |
| Total      gross profit       | $     31,130                       |                               | $     28,049 |   | $       58,016 |   | $    48,432 |
|                          |                                                        |                               |   |   |   |   |   |
| Operating      income (loss): |                                                        |                               |   |   |   |   |   |
|   Rehabilitation    | $       2,944            |                               | $       1,299 |   | $         2,815 |   | $     (5,796) |
|   Tite      Liner   |          3,272 |                               |               2,730 |   |            6,656 |   |         6,022 |
| Total      operating income   | $       6,216            |                               | $       4,029 |   | $         9,471 |   | $         226 |

|                           | Three      Months Ended June      30,            |   | Six      Months EndedJune      30,                                           |
|--------------------------------|-------------------------------------------------------|--------|------------------------------------------------------------------------------|
|                           | 2008                                                  |   | 2007                                                                         |   | 2008 |   | 20007 |
|                           |                                                  |   |                                                                         |   |   |   |   |
| Revenues:                      |                                                  |   |                                                                         |   |   |   |   |
|   United      States | $    83,313                       |   | $            84,786                            |   | $   161,948 |   |  $   157,700 |
|   Canada             |       13,703            |   | 13,158                                                                       |   |        25,908 |   |         32,090 |
|   Europe             |       27,452            |   | 23,559                                                                       |   |        53,994 |   |         44,007 |
|   Other      foreign |       11,116            |   | 3,465                                                                        |   |        19,663 |   |           6,154 |
| Total      revenues            | $  135,585                                  |   | $          124,968                                       |   | $   261,512 |   |  $   239,950 |
|                           |                                                  |   |                                                                         |   |   |   |   |
| Gross      profit:             |                                                  |   |                                                                         |   |   |   |   |
|   United      States | $    18,470                       |   | $            17,097                            |   | $     34,453 |   |  $     29,005 |
|   Canada             |         4,947 |   | 4,604                                                                        |   |          8,869 |   |           8,121 |
|   Europe             |         5,385 |   | 5,282                                                                        |   |        10,169 |   |           8,965 |
|   Other      foreign |         2,328 |   | 1,067                                                                        |   |          4,525 |   |           2,341 |
| Total      gross profit        | $    31,130                       |   | $            28,049                            |   | $     58,016 |   |  $     48,432 |
|                           |                                                  |   |                                                                         |   |   |   |   |
| Operating      income (loss):  |                                                  |   |                                                                         |   |   |   |   |
|   United      States | $      2,308            |   | $                 561 |   | $       3,559 |   |  $           (4,035) |
|   Canada             |         3,203 |   | 2,744                                                                        |   |          5,392 |   |           4,267 |
|   Europe             |  (750)                                           |   | 88                                                                           |   | (2,321) |   | (1,634) |
|   Other      foreign |         1,455 |   | 636                                                                          |   |          2,840 |   |           1,628 |
| Total      operating income    | $      6,216            |   | $              4,029                 |   | $       9,471 |   |  $          226 |

----

Item 2. Management’s Discussion and Analysis ofFinancial Condition and Results of Operations

----

|                                                   | Three      Months Ended June 30,                                                               |                                                                                                                                |   |
|--------------------------------------------------------|------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                   | 2008                                                                                           | 2007                                                                                                                                |   | Increase      (Decrease) |
|                                                   |                                                                                           |                                                                                                                                |   |   |   |
| Consolidated                                           |                                                                                           |                                                                                                                                |   |   |   |
|   Revenues                                   | $   135,585                                                      | $   124,968                                                                                      |   |  $  10,617         |           8.5% |
|   Gross      profit                          |        31,130                                |        28,049                                                                |   | 3,081         | 11.0     |
|   Gross      margin                          |              23.0%            |                    22.4%                                                |   | 0.6%(1)   |   |
|   Operating      expenses                    |        24,914                                |        24,021                                                                |   | 893         |  3.7     |
|   Operating      income                      |          6,216                     |          4,028                                                     |   |              2,188         | 54.3     |
|   Operating      margin                      |                4.6% |                           3.2%                                |   | 1.4%(1)   |            |
|   Net      income from continuing operations |          3,914                     |          2,432                                                     |   | 1,482         | 60.9     |
|                                                   |                                                                                           |                                                                                                                                |   |   |   |
| Rehabilitation                                         |                                                                                           |                                                                                                                                |   |   |   |
|   Revenues                                   |      117,843                                           |      114,280                                                                           |   | 3,563         |  3.1     |
|   Gross      profit                          |        26,077                                |        23,536                                                                |   |  2,541         | 10.8     |
|   Gross      margin                          |              22.1%            |                    20.6%                                           |   |  1.5%(1)   |           |
|   Operating      expenses                    |        23,133                                |        22,238                                                                |   |  895               |  4.0     |
|   Operating      income                      |          2,944                     |          1,298                                                     |   |   1,646               |               126.8     |
|   Operating      margin                      |                2.5% |                      1.1%                                     |   | 1.4%(1)   |   |
|                                                   |                                                                                           |                                                                                                                                |   |   |   |
| Tite      Liner                                        |                                                                                           |                                                                                                                                |   |   |   |
|   Revenues                                   |        17,742                                |                     10,688                |   | 7,054         | 66.0     |
|   Gross      profit                          |          5,053                     |                       4,513     |   | 540         | 12.0     |
|   Gross      margin                          |              28.5%            |                    42.2%                                           |   | (13.7)%(1) |   |
|   Operating      expenses                    |          1,781                     |                       1,783     |   | (2)        |  (0.1)   |
|   Operating      income                      |          3,272                     |                       2,730     |   |   542         | 19.9     |
|   Operating      margin                      |                   18.4%            |                    25.5%                                           |   | (7.1)%(1) |   |

----

|                                                          | Six      Months Ended June 30,                                                                                   |                                                                                                             |   |
|---------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|--------|
|                                                          | 2008                                                                                                             | 2007                                                                                                             |   | Increase      (Decrease) |
|                                                          |                                                                                                             |                                                                                                             |   |   |   |
| Consolidated                                                  |                                                                                                             |                                                                                                             |   |   |   |
|   Revenues                                          | $     261,512                                                                           | $    239,950                                                                                 |   | $     21,562 |            9.0% |
|   Gross      profit                                 |          58,016                                                     |         48,432                                                           |   |               9,584 | 19.8 |
|   Gross      margin                                 |                      22.2%            |                      20.2%            |   |                                2.0%(1) |   |
|   Operating      expenses                           |          48,546                                                     |         48,206                                                           |   |                   340 |   0.7 |
|   Operating      income                             |            9,470                                          |              226                                |   |          9,244 |            4090.3 |
|   Operating      margin                             |                        3.6% |                        0.1% |   |                                3.5%(1) |   |
|   Net      income (loss) from continuing operations |                 5,944                                          |             (856)                                    |   |                6,800 |              794.4 |
|                                                          |                                                                                                             |                                                                                                             |   |   |   |
| Rehabilitation                                                |                                                                                                             |                                                                                                             |   |   |   |
|   Revenues                                          |        227,918                                                                |       217,601                                                                      |   |              10,317 |   4.7 |
|   Gross      profit                                 |          47,729                                                     |         38,953                                                           |   |                8,776 | 22.5 |
|   Gross      margin                                 |                      20.9%            |                      17.9%            |   |                           3.0%(1) |   |
|   Operating      expenses                           |          44,915                                                     |         44,749                                                           |   |                   166 |        0.4 |
|   Operating      income (loss)                      |            2,814                                          |                (5,796)                                              |   |                8,610 |              148.6 |
|   Operating      margin                             |                        1.2% |                      -2.7%            |   |                           3.9%(1) |   |
|                                                          |                                                                                                             |                                                                                                             |   |   |   |
| Tite      Liner                                               |                                                                                                             |                                                                                                             |   |   |   |
|   Revenues                                          |          33,594                                                     |         22,349                                                           |   |              11,245 | 50.3 |
|   Gross      profit                                 |          10,287                                                     |           9,479                                                |   |                   808 |        8.5 |
|   Gross      margin                                 |                      30.6%            |                      42.4%            |   |                           (11.8)%(1) |   |
|   Operating      expenses                           |            3,631                                          |           3,457                                                |   |                   174 |        5.0 |
|   Operating      income                             |            6,656                                          |           6,022                                                |   |                   634 | 10.5 |
|   Operating      margin                             |                      19.8%            |                      26.9%            |   |                           (7.1)%(1) |   |

----

----

----

----

| Backlog                                                                                                                                                                                          | June      30,2008                                                                                                                    | March      31,2008                                                                                               | December      31,2007                                                  | September      30,2007                                                 | June      30,2007                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------|------------------------------------------------------------------------|
|                              (in      millions) |
| Rehabilitation                                                                                                                                                                                   | $          265.1            |             $       253.4                       | $       232.8                       | $       208.3                       | $       193.1                       |
| Tite      Liner                                                                                                                                                                                  | 24.7                                                                          |                        32.2 |                 26.2 |                 16.3 |                 12.5 |
| Total                                                                                                                                                                                            | $               289.8            |        $       285.6                       | $       259.0                       | $       224.6                       | $       205.6                       |

|                           | June      30,2008                                                       | December      31,2007                                                   |
|--------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|
|                           | (in      thousands)                                                     |
| Cash      and cash equivalents | $       93,212                       | $       78,961                       |
| Restricted      cash           |                 2,629 |                 2,487 |

----

----

| Payments      Due by Period             |
|-----------------------------------------|
| Cash      Obligations(1)(2)(3)(4)       |    Total    |    2008   |         2009   |    2010   |         2011    |         2012   | Thereafter |
| Long-term      debt                     | $    65,000           |  $            - |  $           - |  $          -           |  $         -          | $         -          | $    65,000 |
| Interest      on long-term debt         |       21,254           |              2,125 |               4,251 | 4,251           | 4,251          | 4,251          |         2,125 |
| Operating      leases                   |      22,297           |              4,662 |               6,849 | 4,213           | 2,731          | 1,787          |         2,055 |
| Total      contractual cash obligations | $  108,551           |  $     6,787 |  $         11,100 |  $   8,464           | $        6,982          | $  6,038          | $    69,180 |

| (1) | Cash      obligations are not discounted. See Notes 6 and 9 to the consolidated      financial statements contained in this report regarding our long-term debt      and credit facility and commitments and contingencies,      respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Resin      supply contracts are excluded from this table. See “Commodity Risk” under      Part I, Item 3 of this report for further  discussion. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | As      of June 30, 2008, we had no outstanding borrowings on our $35.0 million      credit facility. The available balance was $19.6 million and the      commitment fee was 0.175%. The remaining $15.4 million was used for      non-interest bearing letters of credit, $14.5 million of which was      collateral for insurance and $0.9 million of which was collateral for work      performance. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Liabilities      related to Interpretation No. 48, Accounting for Uncertainty in      Income Taxes, an Interpretation of FASB Statement No. 109, have not      been included in the table above because we are uncertain as to if or when      such amounts may be settled. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

Item 4. Controls and Procedures

----

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 4. Submission of Matters to a Vote of SecurityHolders

|   | 1. | The      following seven directors were elected, each to serve a one-year term or      until his or her successor has been elected and qualified. The      vote was as follows: |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                         | For                   | Withheld                                                                       |
|------------------------------|-----------------------|--------------------------------------------------------------------------------|
| J.      Joseph Burgess       | 11,056,537            | 98,631                       |
| Stephen      P. Cortinovis   | 11,056,977            |   98,191           |
| Stephanie      A. Cuskley    | 11,057,593            | 97,575                       |
| John      P. Dubinsky        |   8,049,982 | 114,040                      |
| Juanita      H. Hinshaw      | 11,056,670            | 98,498                       |
| Nickolas      W. Vande Steeg | 10,595,799            | 64,461                       |
| Alfred      L. Woods         |   8,057,870 | 106,152                      |

| Name                       | For             | Withheld                                                              |
|----------------------------|-----------------|-----------------------------------------------------------------------|
| Sheldon      Weinig        |  8,030,673 | 133,349             |
| Alfonse      D’Amato |  3,436,642 | 4,232,472           |
| Disque      D. Deane Jr.   |  6,148,333 | 1,520,781           |
| Matthew      J. Diserio    |  7,361,584 | 3,298,676           |
| Richard      Onses         |  4,027,556 | 3,641,558           |

| 2. | The      appointment of PricewaterhouseCoopers LLP as independent auditors for the      fiscal year ending  December 31, 2008 was      ratified.  The      vote was as follows: |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For        | Against | Abstain |
|------------|---------|---------|
| 18,698,976 | 102,983 | 22,322  |

| 3. | A      proposed amendment to the Company’s Amended and Restated By-Laws to fix      the number of directors at six was not approved. The      vote was as follows: |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For       | Against    | Abstain |
|-----------|------------|---------|
| 6,630,376 | 12,177,726 | 16,180  |

----

Item 5.  Other Information

Item 6. Exhibits 

----

SIGNATURE

----

INDEX TO EXHIBITS

|        3.3 | Amended      and Restated By-Laws of the Company, as amended through July 23, 2008,      filed herewith. |
|-----------------|----------------------------------------------------------------------------------------------------------|

| 31.1 | Certification      of J. Joseph Burgess pursuant to Section 302 of the Sarbanes-Oxley Act of      2002, filed herewith. |
|------|-------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification      of David A. Martin pursuant to Section 302 of the Sarbanes-Oxley Act of      2002, filed herewith. |
|------|-----------------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification      of J. Joseph Burgess pursuant to 18 U.S.C. Section 1350, as adopted      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed      herewith. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification      of David A. Martin pursuant to 18 U.S.C. Section 1350, as adopted pursuant      to Section 906 of the Sarbanes-Oxley Act of 2002, filed      herewith. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|