##### Table of Contents



United States
Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-K
 (Mark One)
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Fiscal Year Ended January 31, 2008
 o
    
    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: 0-20578
 Layne Christensen Company
  Delaware
    
    48-0920712(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)1900 Shawnee Mission Parkway,
Mission Woods, Kansas 66205(Address of principal executive
offices) (Zip Code)
   
 
 o þ
 o þ
 þ o
 o
  Large accelerated filer
o
    
    Accelerated filer
þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
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TABLE OF CONTENTS  PART IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. Properties and EquipmentItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersItem 4A. Executive Officers of the RegistrantPART IIItem 5. Market for Registrants Common Equity and Related Stockholder MattersItem 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresPART IIIItem 10. Directors and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and ManagementItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accounting Fees and ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesSignaturesEX-10(2.6)EX-10(24)EX-10(27)EX-10(33)EX-21(1)EX-23(1)EX-23(2)EX-31(1)EX-31(2)EX-32(1)EX-32(2)    Table of Contents  
 PART I
 
 Item 1. Business
 General
  www.laynechristensen.com
 Market Overview
  Water Infrastructure
     Mineral Exploration
    2




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Energy
  Business Strategy
 Our growth strategy
  Expand our turnkey service capabilities and geographic platform and focus on industrial end-markets
for water and wastewater treatment facilities
    Continue to take advantage of robust market conditions in mineral exploration
  3




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Develop existing unconventional natural gas opportunities and expand presence in the upstream
energy market
  Services
and Products
 Overview of the Companys Drilling Techniques
  
    
    Conventional and reverse circulation rotary drilling is used primarily in water well
applications for drilling large diameter wells and employs air or drilling fluid circulation
for removal of cuttings and borehole stabilization.
 
    
    Dual tube drilling, an innovation advanced by the Company primarily for mineral exploration
and environmental drilling, conveys the drill cuttings to the surface inside the drill pipe.
This drilling method is critical in mineral exploration drilling and environmental sampling
because it provides immediate representative samples and because the drill cuttings do not
contact the surrounding formation thus avoiding contamination of the borehole while providing
reliable, uncontaminated samples. Because this method involves circulation of the drilling
fluid inside the casing, it is highly suitable for penetration of underground voids or faults
where traditional drilling methods would result in the loss of circulation of the drilling
fluid, thereby preventing further penetration.
 
    
    Diamond core drilling is used in mineral exploration drilling to core solid rock, thereby
providing geologists and engineers with solid rock samples for evaluation.
 
    
    Cable tool drilling, which requires no drilling fluid, is used primarily in water well
drilling for larger diameter wells. While slower than other drilling methods, it is well
suited for penetrating boulders, cobble and rock.
 
    
    Auger drilling is used principally in environmental drilling applications for efficient
completion of relatively small diameter, shallow borings or monitoring wells. Auger rigs are
equipped with a variety of auger sizes and soil sampling equipment.
 Water Infrastructure
   Water Systems
  Well and Pump Rehabilitation
  4




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Water and Wastewater Treatment and Plant Construction
 Sewer Rehabilitation 
 Environmental Assessment Drilling
 Mineral Exploration
    Energy
    5




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Operations
    Customers and Contracts
      Backlog
  6




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Competition
     Regulation
   Applicable Legislation
  Employees
  7




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Legal Proceedings
  
 Item 1A. Risk Factors
 Investing in our common stock involves a high degree of risk. You should carefully consider the
risks described below with all of the other information contained or incorporated by reference in
this annual report before deciding to invest in our common stock. If any of the following risks
actually occur, they may materially harm our business and our financial condition and results of
operations. In this event, the market price of our common stock could decline, and you could lose
part or all of your investment.
 Risks Relating To Our Business And Industry
 A decline in municipal spending on water treatment and wastewater infrastructure could reduce our
revenue.
  A reduction in demand for our mineral exploration and development services could reduce our
revenue.
  
    
    global and domestic economic considerations;
 
    
    the economic feasibility of mineral exploration and production;
 
    
    the discovery rate of new mineral reserves;
 
    
    national and international political conditions; and
 
    
    the ability of mining companies to access or generate sufficient funds to finance capital
expenditures for their activities.
  Because our businesses are seasonal, our results can fluctuate significantly which could make it
difficult to evaluate our business and could cause instability in the market price of our common
stock.
  
    
    the timing of the award and completion of contracts;
 
    
    the recording of related revenue; and
 
    
    unanticipated additional costs incurred on projects.
  8




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Our use of the percentage-of-completion method of accounting could result in a reduction or
reversal of previously recorded results.
  We may experience cost overruns on our fixed-price contracts, which could reduce our profitability.
  We have indebtedness and other contractual commitments that could limit our operating flexibility,
and in turn, hinder our ability to make payments on the obligations, lessen our ability to make
capital expenditures and/or increase the cost of obtaining additional financing.
  
    
    our ability to obtain any necessary financing in the future for working capital, capital
expenditures, debt service requirements or other purposes may be limited or financing may be
unavailable;
 
    
    a portion of our cash flow must be dedicated to the payment of principal and interest on
our indebtedness and other obligations and will not be available for use in our business;
 
    
    our level of indebtedness could limit our flexibility in planning for, or reacting to,
changes in our business and the markets in which we operate; and
 
    
    a high degree of indebtedness and other liabilities could make us more vulnerable to
changes in general economic conditions and/or a downturn in our business, thereby making it
more difficult for us to satisfy our obligations.
  A significant portion of our earnings is generated from our operations, and those of our
affiliates, in foreign countries, and political and economic risks in those countries could reduce
or eliminate the earnings we derive from those operations.
  
    
    political, social and economic instability;
 
    
    war and civil disturbances;
 
    
    the taking of property nationalization or expropriation without fair compensation;
 
    
    changes in government policies and regulations;
 
    
    tariffs, taxes and other trade barriers;
 
    
    exchange controls and limitations on remittance of dividends or other payments to us by our
foreign subsidiaries and affiliates; and
 
    
    devaluations and fluctuations in currency exchange rates.
   Reductions in the market price of gold could significantly reduce our profit.
 9




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
    
    the strength of the U.S. economy and the economies of other industrialized and developing
nations;
 
    
    global or regional political or economic crises;
 
    
    the relative strength of the U.S. dollar and other currencies;
 
    
    expectations with respect to the rate of inflation;
 
    
    interest rates;
 
    
    sales of gold by central banks and other holders;
 
    
    demand for jewelry containing gold; and
 
    
    speculation.
  Reductions in natural gas prices could reduce our revenue and profit and curtail our future growth.
    Our derivative financial instruments may not fully protect us from changes in natural gas prices.
  The development of unconventional natural gas properties is capital intensive and involves
assumptions and speculation that may result in a total loss of investment.
  If we are unable to find, develop and acquire additional unconventional natural gas reserves that
will be commercially viable for production, our reserves and revenue from our energy division would
decline.
  10




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Our estimated proved reserves are based on many assumptions that may prove to be inaccurate. Any
material inaccuracies in these reserve estimates or underlying assumptions could materially reduce
the quantities and present value of our reserves.
  
    
    a constant level of future natural gas prices;
 
    
    geological conditions;
 
    
    production levels;
 
    
    capital expenditures;
 
    
    operating and development costs;
 
    
    the effects of regulation; and
 
    
    availability of funds.
    
    
    the actual prices we receive for natural gas;
 
    
    our actual operating costs in producing natural gas;
 
    
    the amount and timing of actual production
 
    
    the amount and timing of our capital expenditures;
 
    
    supply of and demand for natural gas; and
 
    
    changes in governmental regulations or taxation.
  If we are unable to obtain bonding at acceptable rates, our operating costs could increase.
  Fluctuations in the prices of raw materials could increase our operating costs.
  11




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The dollar amount of our backlog, as stated at any given time, is not necessarily indicative of our
future earnings.
  Our failure to meet the schedule or performance requirements of our contracts could harm our
reputation, reduce our client base and curtail our future operations.
  If we cannot obtain third-party subcontractors at reasonable rates, or if their performance is
unsatisfactory, our profit could be reduced.
  Professional liability, product liability, warranty and other claims against us could reduce our
revenue.
  If our joint venture partners default on their performance obligations, we could be required to
complete their work under our joint venture arrangements, which could reduce our profit or result
in losses.
  Our business is subject to numerous operating hazards, logistical limitations and force majeure
events that could significantly reduce our liquidity, suspend our operations and reduce our revenue
and future business.
   12




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If we are unable to retain skilled workers, or if a work stoppage occurs as a result of disputes
relating to collective bargaining agreements, our ability to operate our business could be limited
and our revenue could be reduced.
   If we are not able to demonstrate our technical competence, competitive pricing and reliable
performance to potential customers we will lose business to competitors, which would reduce our
profit.
  The cost of complying with complex governmental regulations applicable to our business, sanctions
resulting from non-compliance or reduced demand resulting from increased regulations could increase
our operating costs and reduce our profit.
     Our activities are subject to environmental regulation that could increase our operating costs or
suspend our ability to operate our business.
  13




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If our health insurance, liability insurance or workers compensation insurance is insufficient to
cover losses resulting from claims or hazard, if we are unable to cover our deductible obligations
or if we are unable to obtain insurance at reasonable rates, our operating costs could increase and
our profit could decline.
  Our actual results could differ if the estimates and assumptions that we use to prepare our
financial statements are inaccurate.
  
    
    contract costs and profit and application of percentage-of-completion accounting and
revenue recognition of contract claims;
 
    
    recoverability of inventory and application of lower of cost or market accounting;
 
    
    provisions for uncollectible receivables and customer claims and recoveries of costs from
subcontractors, vendors and others;
 
    
    provisions for income taxes and related valuation allowances;
 
    
    recoverability of goodwill;
 
    
    recoverability of other intangibles and related estimated lives;
 
    
    valuation of assets acquired and liabilities assumed in connection with business
combinations;
 
    
    accruals for estimated liabilities; including litigation and insurance reserves; and
 
    
    calculation of estimated gas reserves.
  The cost of defending litigation or successful claims against us could reduce our profit or
significantly limit our liquidity and impair our operations.
  If we must write off a significant amount of intangible assets or long-lived assets, our earnings
will be reduced.
  Difficulties integrating our acquisitions could lower our profit.
  14




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If we are unable to protect our intellectual property adequately, the value of our patents and
trademarks and our ability to operate our business could be harmed.
   RISKS RELATED TO OUR COMMON STOCK
 The market price of our common stock could be lowered by future sales of our common stock.
    Provisions in our organizational documents and Delaware law could prevent or frustrate attempts by
stockholders to replace our current management or effect a change of control of our company.
    Because we are a relatively small company, we are disproportionately negatively impacted by changes
in federal securities laws and regulations, which are likely to increase our costs and require
additional management resources.
  15




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We are restricted from paying dividends.
  Our share price could be volatile and could decline, resulting in a substantial or complete loss of
your investment. Because the trading of our common stock is characterized by low trading volume, it
could be difficult for you to sell the shares of our common stock that you may hold.
  
    
    our operating performance and the performance of other similar companies;
    
    actual or anticipated differences in our operating results;
    
    changes in our revenue or earnings estimates or recommendations by securities analysts;
    
    publication of research reports about us or our industry by securities analysts;
    
    additions and departures of key personnel;
    
    strategic decisions by us or our competitors, such as acquisitions, divestments, spin-offs,
joint ventures, strategic investments or changes in business strategy;
    
    the passage of legislation or other regulatory developments that adversely affect us or our
industry;
    
    speculation in the press or investment community;
    
    actions by institutional stockholders;
    
    changes in accounting principles;
    
    terrorist acts; and
    
    general market conditions, including factors unrelated to our performance.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties and Equipment
    Natural Gas Reserves
  2008
    
    2007Proved developed (MMcf)
    
    
    22,794
    
    
    
    25,010Proved undeveloped (MMcf)
    
    
    27,258
    
    
    
    32,068Total proved reserves (MMcf)
    
    
    50,052
    
    
    
    57,078Standardized measure of discounted
cash flow (in thousands)
    
    $
    86,484
    
    
    $
    89,012
 16




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Productive Wells, Production and Acreage
  Fiscal Years Ended January 31,
    
    2008
    
    2007
    
    2006Revenues
    
    $
    6.45
    
    
    $
    5.95
    
    
    $
    8.52Lease operating expenses
    
    
    1.71
    
    
    
    1.46
    
    
    
    1.94Transportation costs
    
    
    2.06
    
    
    
    1.88
    
    
    
    2.57Production and property taxes
    
    
    0.18
    
    
    
    0.16
    
    
    
    0.24
  Gross
    
    NetAcres
    
    Acres2009
    
    
    29,220
    
    
    
    29,2202010
    
    
    24,497
    
    
    
    24,4972011
    
    
    35,046
    
    
    
    35,0462012
    
    
    18,985
    
    
    
    18,9852013
    
    
    63,096
    
    
    
    63,096Thereafter
    
    
    212
    
    
    
    212
  AcresFiscal Years Ended January 31,
    
    2008
    
    2007Gross developed
    
    
    66,044
    
    
    
    63,973Net developed
    
    
    65,836
    
    
    
    50,159Gross undeveloped
    
    
    192,473
    
    
    
    161,301Net undeveloped
    
    
    192,473
    
    
    
    161,301
 Drilling Activity
  Fiscal Years Ended January 31,
    
    2008
    
    2007
    
    2006Gross
    
    Net
    
    Gross
    
    Net
    
    Gross
    
    NetExploratory wells:Capable of production
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dry
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Development wells:Capable of production
    
    
    92
    
    
    
    104
    
    
    
    148
    
    
    
    147
    
    
    
    111
    
    
    
    111Dry
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Wells abandoned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquired wells
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    13
    
    
    
    4
    
    
    
    40Net increase in capable wells
    
    
    92
    
    
    
    104
    
    
    
    162
    
    
    
    160
    
    
    
    115
    
    
    
    151
  17




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Delivery Commitments
  
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 4A. Executive Officers of the Registrant
   Name
    
    Age
    
    PositionAndrew B. Schmitt
    
    
    59
    
    
    President, Chief Executive Officer and DirectorJeffrey J. Reynolds
    
    
    41
    
    
    Executive Vice President and DirectorGregory F. Aluce
    
    
    52
    
    
    Senior Vice President and
Division President  Water ResourcesEric R. Despain
    
    
    59
    
    
    Senior Vice President and
Division President  Mineral ExplorationSteven F. Crooke
    
    
    51
    
    
    Senior Vice President, Secretary and
General CounselJerry W. Fanska
    
    
    59
    
    
    Senior Vice President-Finance and Treasurer
        18




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PART II
 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters
  Fiscal Year 2008
    
    High
    
    LowFirst Quarter
    
    $
    41.81
    
    
    $
    30.21Second Quarter
    
    
    46.17
    
    
    
    36.36Third Quarter
    
    
    59.19
    
    
    
    38.09Fourth Quarter
    
    
    58.49
    
    
    
    33.83
 Fiscal Year 2007
    
    High
    
    LowFirst Quarter
    
    $
    33.93
    
    
    $
    25.60Second Quarter
    
    
    32.04
    
    
    
    25.12Third Quarter
    
    
    33.68
    
    
    
    26.57Fourth Quarter
    
    
    36.46
    
    
    
    28.67
   19




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Item 6. Selected Financial Data
   Fiscal Years Ended January 31,
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004Income Statement Data (in thousands, except per share data):Revenues
    
    $
    868,274
    
    
    $
    722,768
    
    
    $
    463,015
    
    
    $
    343,462
    
    
    $
    272,053Cost of revenues (exclusive of depreciation, depletion and amortization
shown below)
    
    
    638,003
    
    
    
    536,373
    
    
    
    344,628
    
    
    
    250,244
    
    
    
    196,462Selling, general and administrative expense
    
    
    119,937
    
    
    
    102,603
    
    
    
    69,979
    
    
    
    60,214
    
    
    
    53,920Depreciation, depletion and amorization
    
    
    43,620
    
    
    
    32,853
    
    
    
    20,024
    
    
    
    14,441
    
    
    
    11,877Other income (expense):Equity in earnings of affiliates
    
    
    8,076
    
    
    
    4,452
    
    
    
    4,345
    
    
    
    2,637
    
    
    
    1,398Interest
    
    
    (8,730
    )
    
    
    (9,781
    )
    
    
    (5,773
    )
    
    
    (3,221
    )
    
    
    (2,604
    )Debt extinguishment costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,320
    )Other, net
    
    
    1,229
    
    
    
    2,557
    
    
    
    900
    
    
    
    1,220
    
    
    
    358Income from continuing operations before income taxes
and minority interest
    
    
    67,289
    
    
    
    48,167
    
    
    
    27,856
    
    
    
    19,199
    
    
    
    6,626Income tax expense
    
    
    30,178
    
    
    
    21,915
    
    
    
    13,121
    
    
    
    9,215
    
    
    
    4,265Minority interest
    
    
    145
    
    
    
    
    
    
    
    (50
    )
    
    
    (17
    )
    
    
    Net income from continuing operations before discontinued operations
    
    
    37,256
    
    
    
    26,252
    
    
    
    14,685
    
    
    
    9,967
    
    
    
    2,361Gain (loss) from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    (213
    )
    
    
    (1,456
    )Gain (loss) on sale of discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,746Net income
    
    $
    37,256
    
    
    $
    26,252
    
    
    $
    14,681
    
    
    $
    9,754
    
    
    $
    2,651Basic income per share:Net income from continuing operations before discontinued
operations
    
    $
    2.23
    
    
    $
    1.71
    
    
    $
    1.08
    
    
    $
    0.79
    
    
    $
    0.20Income (loss) from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )
    
    
    0.02Net income per share
    
    $
    2.23
    
    
    $
    1.71
    
    
    $
    1.08
    
    
    $
    0.78
    
    
    $
    0.22Diluted income per share:Net income from continuing operations before discontinued
operations
    
    $
    2.20
    
    
    $
    1.68
    
    
    $
    1.05
    
    
    $
    0.77
    
    
    $
    0.19Income (loss) from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.02
    )
    
    
    0.02Net income per share
    
    $
    2.20
    
    
    $
    1.68
    
    
    $
    1.05
    
    
    $
    0.75
    
    
    $
    0.21Balance Sheet Data (in thousands):Working capital, including current maturities of debt
    
    $
    127,696
    
    
    $
    66,989
    
    
    $
    69,996
    
    
    $
    54,455
    
    
    $
    52,406Total assets
    
    
    696,955
    
    
    
    547,164
    
    
    
    449,335
    
    
    
    245,380
    
    
    
    217,327Total long term debt, excluding current maturities
    
    
    46,667
    
    
    
    151,600
    
    
    
    128,900
    
    
    
    60,000
    
    
    
    42,000Total stockholders equity
    
    
    423,372
    
    
    
    205,034
    
    
    
    171,626
    
    
    
    104,697
    
    
    
    93,685
 20




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Cautionary Language Regarding Forward-Looking Statements
  Management Overview of Reportable Operating Segments
  Water Infrastructure
    Mineral Exploration Division
    21




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Energy Division
    Other
   Fiscal Years Ended January 31,
    
    Period-to-Period Change2008
    
    20072008
    
    2007
    
    2006
    
    vs. 2007
    
    vs. 2006Revenues:Water infrastructure
    
    
    73.7
    %
    
    
    73.6
    %
    
    
    69.3
    %
    
    
    20.2
    %
    
    
    65.7
    %Mineral exploration
    
    
    20.5
    
    
    
    20.6
    
    
    
    26.8
    
    
    
    19.9
    
    
    
    19.9Energy
    
    
    4.6
    
    
    
    3.7
    
    
    
    2.7
    
    
    
    46.8
    
    
    
    116.0Other
    
    
    1.2
    
    
    
    2.1
    
    
    
    1.2
    
    
    
    (29.6
    )
    
    
    181.6Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    20.1
    
    
    
    56.1Cost of revenues (exclusive of depreciation, depletion and amortization
shown below)
    
    
    73.5
    
    
    
    74.2
    
    
    
    74.4
    
    
    
    18.9
    
    
    
    55.6Selling, general and administrative expense
    
    
    13.8
    
    
    
    14.2
    
    
    
    15.1
    
    
    
    16.9
    
    
    
    46.6Depreciation, depletion and amortization
    
    
    5.0
    
    
    
    4.5
    
    
    
    4.3
    
    
    
    32.8
    
    
    
    64.1Other income (expense):Equity in earnings of affiliates
    
    
    0.9
    
    
    
    0.6
    
    
    
    0.9
    
    
    
    81.4
    
    
    
    2.5Interest
    
    
    (1.0
    )
    
    
    (1.4
    )
    
    
    (1.3
    )
    
    
    (10.7
    )
    
    
    69.4Other, net
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.2
    
    
    
    (51.9
    )
    
    
    184.1Income from continuing operations before income taxes and
minority interest
    
    
    7.8
    
    
    
    6.6
    
    
    
    6.0
    
    
    
    39.7
    
    
    
    72.9Income tax expense
    
    
    3.5
    
    
    
    3.0
    
    
    
    2.8
    
    
    
    37.7
    
    
    
    67.0Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income from continuing operations
    
    
    4.3
    
    
    
    3.6
    
    
    
    3.2
    
    
    
    41.9
    
    
    
    78.8Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    
    *
    
    

    
    *Net income
    
    
    4.3
    %
    
    
    3.6
    %
    
    
    3.2
    %
    
    
    41.9
    %
    
    
    78.8
    %
   22




---



##### Table of Contents



(in thousands)Fiscal Years Ended January 31,
    
    2008
    
    2007
    
    2006RevenuesWater infrastructure
    
    $
    639,584
    
    
    $
    531,916
    
    
    $
    320,996Mineral exploration
    
    
    178,482
    
    
    
    148,911
    
    
    
    124,206Energy
    
    
    39,749
    
    
    
    27,081
    
    
    
    12,536Other
    
    
    10,459
    
    
    
    14,860
    
    
    
    5,277Total revenues
    
    $
    868,274
    
    
    $
    722,768
    
    
    $
    463,015Equity in earnings of affiliatesWater infrastructure
    
    $
    
    
    
    $
    
    
    
    $
    839Mineral exploration
    
    
    8,076
    
    
    
    4,452
    
    
    
    3,506Total equity in earnings of affiliates
    
    $
    8,076
    
    
    $
    4,452
    
    
    $
    4,345Income (loss) from continuing operations before income taxes and minority interestWater infrastructure
    
    $
    42,995
    
    
    $
    35,000
    
    
    $
    28,255Mineral exploration
    
    
    37,452
    
    
    
    26,557
    
    
    
    13,947Energy
    
    
    13,075
    
    
    
    10,680
    
    
    
    2,891Other
    
    
    3,696
    
    
    
    4,094
    
    
    
    1,307Unallocated corporate expenses
    
    
    (21,199
    )
    
    
    (18,383
    )
    
    
    (12,771
    )Interest
    
    
    (8,730
    )
    
    
    (9,781
    )
    
    
    (5,773
    )Total income from continuing operations before income taxes and minority interest
    
    $
    67,289
    
    
    $
    48,167
    
    
    $
    27,856
 23




---



##### Table of Contents



Comparison of Fiscal 2008 to Fiscal 2007
        Water Infrastructure Division
 (in thousands)Fiscal Years Ended January 31,
    
    2008
    
    2007Revenues
    
    $
    639,584
    
    
    $
    531,916Income before income taxes and
minority interest
    
    
    42,995
    
    
    
    35,000
   
 Mineral Exploration Division
 (in thousands)Fiscal Years Ended January 31,
    
    2008
    
    2007Revenues
    
    $
    178,482
    
    
    $
    148,911Income before income taxes and
minority interest
    
    
    37,452
    
    
    
    26,557
   Energy Division
 (in thousands)Fiscal Years Ended January 31,
    
    2008
    
    2007Revenues
    
    $
    39,749
    
    
    $
    27,081Income before income taxes and
minority interest
    
    
    13,075
    
    
    
    10,680
   Other
 (in thousands)Fiscal Years Ended January 31,
    
    2008
    
    2007Revenues
    
    $
    10,459
    
    
    $
    14,860Income before income taxes and
minority interest
    
    
    3,696
    
    
    
    4,094
  24




---



##### Table of Contents



Unallocated Corporate Expenses
  Comparison of Fiscal 2007 to Fiscal 2006
        Water Infrastructure Division
 (in thousands)Fiscal Years Ended January 31,
    
    2007
    
    2006Revenues
    
    $
    531,916
    
    
    $
    320,996Income from continuing operations
before income taxes and minority interest
    
    
    35,000
    
    
    
    28,255
   
 Mineral Exploration Division
 (in thousands)Fiscal Years Ended January 31,
    
    2007
    
    2006Revenues
    
    $
    148,911
    
    
    $
    124,206Income from continuing operations
before income taxes and minority interest
    
    
    26,557
    
    
    
    13,947
   25




---



##### Table of Contents



Energy
 (in thousands)Fiscal Years Ended January 31,
    
    2007
    
    2006Revenues
    
    $
    27,081
    
    
    $
    12,536Income from continuing operations
before income taxes and minority interest
    
    
    10,680
    
    
    
    2,891
   Other
 (in thousands)Fiscal Years Ended January 31,
    
    2007
    
    2006Revenues
    
    $
    14,860
    
    
    $
    5,277Income from continuing operations
before income taxes and minority interest
    
    
    4,094
    
    
    
    1,307
  Unallocated Corporate Expenses
  Fluctuation in Quarterly Results
  Inflation
  Liquidity and Capital Resources
     26




---



##### Table of Contents



Operating Activities
  Investing Activities
     Financing Activities
    27




---



##### Table of Contents



Contractual Obligations and Commercial Commitments
  (in thousands)
    
    Payments/Expiration by PeriodLess than
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    1 year
    

    1-3 years
    
    4-5 years
    
    5 yearsContractual Obligations and Other Commercial CommitmentsCredit Agreement principal payments
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Senior Notes principal payments
    
    
    60,000
    
    
    
    13,333
    
    
    
    40,000
    
    
    
    6,667
    
    
    
    Interest payments
    
    
    10,011
    
    
    
    3,500
    
    
    
    5,791
    
    
    
    720Operating leases
    
    
    28,387
    
    
    
    10,543
    
    
    
    15,067
    
    
    
    2,777
    
    
    
    Mineral interest obligations
    
    
    613
    
    
    
    109
    
    
    
    345
    
    
    
    146
    
    
    
    13Income tax
uncertainties
    
    
    1,200
    
    
    
    1,200
    
    
    
    
    
    
    
    
    
    
    
    Total cash contractual obligations
    
    
    100,211
    
    
    
    28,685
    
    
    
    61,203
    
    
    
    10,310
    
    
    
    13Standby letters of credit
    
    
    12,716
    
    
    
    12,716
    
    
    
    
    
    
    
    
    
    
    
    Asset retirement obligations
    
    
    1,043
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,043Total contractual obligations and
commercial commitments
    
    $
    113,970
    
    
    $
    41,401
    
    
    $
    61,203
    
    
    $
    10,310
    
    
    $
    1,056
    Critical Accounting Policies and Estimates
   Revenue Recognition
     Oil and Gas Properties and Mineral Interests
 28




---



##### Table of Contents



Reserve Estimates
 Goodwill and Other Intangibles
    Other Long-lived Assets
 Accrued Insurance Expense
 29




---



##### Table of Contents



Income Taxes
 Litigation and Other Contingencies
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
        30




---



##### Table of Contents



Item 8.
Financial Statements and Supplementary Data
 Index to Consolidated Financial Statements and Financial Statement Schedules
 Layne
Christensen Company and Subsidiaries
 PageStatement of Management Responsibility
    
    
    32Report of Independent Registered Public Accounting Firm
    
    
    33Financial Statements:Consolidated Balance Sheets as of January 31, 2008 and 2007
    
    
    34Consolidated Statements of Income for the Years Ended January 31, 2008, 2007 and 2006
    
    
    35Consolidated Statements of Stockholders Equity for the Years Ended January 31, 2008, 2007 and 2006
    
    
    36Consolidated Statements of Cash Flows for the Years Ended January 31, 2008, 2007 and 2006
    
    
    37Notes to Consolidated Financial Statements
    
    
    38Supplemental Information on Oil and Gas Producing Activities
    
    
    58Financial Statement Schedule II Valuation and Qualifying Accounts
    
    
    60
  31




---



##### Table of Contents



Statement of Management Responsibility
    /s/A. B. Schmitt
    
    /s/Jerry W. FanskaAndrew B. Schmitt
    
    Jerry W. FanskaPresident and
    
    Senior Vice President andChief Executive Officer
    
    Chief Financial Officer
 32




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Accounting for
Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109 Share-Based Payments Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  an
amendment of FASB Statements No. 87, 88, 106 and 132(R)
 Internal ControlIntegrated Framework
 /s/Deloitte & Touche LLP
 
 33




---



##### Table of Contents



Consolidated Balance Sheets
 (in thousands)ASSETSJanuary 31,
    
    2008
    
    2007Current assets:Cash and cash equivalents
    
    $
    73,068
    
    
    $
    13,007Customer receivables, less allowance of $7,571 and $7,020, respectively
    
    
    125,091
    
    
    
    109,615Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    60,796
    
    
    
    51,210Inventories
    
    
    21,020
    
    
    
    18,456Deferred income taxes
    
    
    18,711
    
    
    
    16,551Income taxes receivable
    
    
    866
    
    
    
    521Restricted cash  current
    
    
    500
    
    
    
    8,270Other
    
    
    5,288
    
    
    
    5,578Total current assets
    
    
    305,340
    
    
    
    223,208Property and equipment:Land
    
    
    8,643
    
    
    
    8,180Buildings
    
    
    21,868
    
    
    
    21,457Machinery and equipment
    
    
    299,642
    
    
    
    263,049Gas transportation facilities and equipment
    
    
    30,266
    
    
    
    24,939Oil and gas properties
    
    
    76,844
    
    
    
    58,458Mineral interests in oil and gas properties
    
    
    18,165
    
    
    
    12,515455,428
    
    
    
    388,598Less  accumulated depreciation and depletion
    
    
    (208,061
    )
    
    
    (174,081
    )Net property and equipment
    
    
    247,367
    
    
    
    214,517Other assets:Investment in affiliates
    
    
    29,835
    
    
    
    24,280Goodwill
    
    
    85,706
    
    
    
    65,184Other intangible assets, net
    
    
    20,930
    
    
    
    16,017Restricted cash  long term
    
    
    505
    
    
    
    Other
    
    
    7,272
    
    
    
    3,958Total other assets
    
    
    144,248
    
    
    
    109,439$
    696,955
    
    
    $
    547,164LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    67,777
    
    
    $
    52,156Current maturities of long term debt
    
    
    13,333
    
    
    
    Accrued compensation
    
    
    36,763
    
    
    
    29,616Cash purchase price adjustments
    
    
    
    
    
    
    240Accrued insurance expense
    
    
    8,158
    
    
    
    7,303Other accrued expenses
    
    
    15,222
    
    
    
    14,222Acquisition escrow obligation  current
    
    
    550
    
    
    
    9,395Income taxes payable
    
    
    4,200
    
    
    
    9,045Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    31,641
    
    
    
    34,242Total current liabilities
    
    
    177,644
    
    
    
    156,219Noncurrent and deferred liabilities:Long-term debt
    
    
    46,667
    
    
    
    151,600Accrued insurance expense
    
    
    9,736
    
    
    
    8,160Deferred income taxes
    
    
    28,329
    
    
    
    23,302Acquisition escrow obligation  long term
    
    
    505
    
    
    
    Minority interest
    
    
    398
    
    
    
    Other
    
    
    10,304
    
    
    
    2,849Total noncurrent and deferred liabilities
    
    
    95,939
    
    
    
    185,911ContingenciesStockholders equity:Common stock, par value $.01 per share, 30,000,000 shares authorized,
19,160,716 and 15,517,724 shares issued and outstanding, respectively
    
    
    192
    
    
    
    155Capital in excess of par value
    
    
    328,301
    
    
    
    149,187Retained earnings
    
    
    101,866
    
    
    
    64,145Accumulated other comprehensive loss
    
    
    (6,987
    )
    
    
    (8,453
    )Total stockholders equity
    
    
    423,372
    
    
    
    205,034$
    696,955
    
    
    $
    547,164
  34




---



##### Table of Contents



Consolidated Statements of Income
 (in thousands, except per share data)Years Ended January 31,
    
    2008
    
    2007
    
    2006Revenues
    
    $
    868,274
    
    
    $
    722,768
    
    
    $
    463,015Cost of revenues (exclusive of depreciation, depletion and amortization shown below)
    
    
    638,003
    
    
    
    536,373
    
    
    
    344,628Selling, general and administrative expense
    
    
    119,937
    
    
    
    102,603
    
    
    
    69,979Depreciation, depletion and amortization
    
    
    43,620
    
    
    
    32,853
    
    
    
    20,024Other income (expense):Equity in earnings of affiliates
    
    
    8,076
    
    
    
    4,452
    
    
    
    4,345Interest
    
    
    (8,730
    )
    
    
    (9,781
    )
    
    
    (5,773
    )Other, net
    
    
    1,229
    
    
    
    2,557
    
    
    
    900Income from continuing operations before income taxes and minority interest
    
    
    67,289
    
    
    
    48,167
    
    
    
    27,856Income tax expense
    
    
    30,178
    
    
    
    21,915
    
    
    
    13,121Minority interest
    
    
    145
    
    
    
    
    
    
    
    (50
    )Net income from continuing operations before discontinued operations
    
    
    37,256
    
    
    
    26,252
    
    
    
    14,685Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    (4
    )Net income
    
    $
    37,256
    
    
    $
    26,252
    
    
    $
    14,681Basic income per share:Net income from continuing operations
    
    $
    2.23
    
    
    $
    1.71
    
    
    $
    1.08Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    Net income per share
    
    $
    2.23
    
    
    $
    1.71
    
    
    $
    1.08Diluted income per share:Net income from continuing operations
    
    $
    2.20
    
    
    $
    1.68
    
    
    $
    1.05Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    Net income per share
    
    $
    2.20
    
    
    $
    1.68
    
    
    $
    1.05Weighted average shares outstanding  basic
    
    
    16,670
    
    
    
    15,320
    
    
    
    13,550Dilutive stock options
    
    
    268
    
    
    
    311
    
    
    
    477Weighted average shares outstanding  diluted
    
    
    16,938
    
    
    
    15,631
    
    
    
    14,027
  35




---



##### Table of Contents



Consolidated Statements of Stockholders Equity
 AccumulatedCapital In
    
    
    
    
    
    OtherCommon Stock
    
    Excess of
    
    Retained
    
    Comprehensive
    
    Unearned(in thousands, except share data)
    
    Shares
    
    Amount
    
    Par Value
    
    Earnings
    
    Income (Loss)
    
    Compensation
    
    TotalBalance, January 31, 2005
    
    
    12,618,641
    
    
    $
    126
    
    
    $
    90,707
    
    
    $
    23,212
    
    
    $
    (9,067
    )
    
    $
    (281
    )
    
    $
    104,697Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,681
    
    
    
    
    
    
    
    
    
    
    
    14,681Other comprehensive income:Change in unrecognized pension liability,
net of income tax benefit of $1,198
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,902
    
    
    
    
    
    
    
    1,902Foreign currency translation adjustments,
net of income tax expense of $155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (277
    )
    
    
    
    
    
    
    (277
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,306Cancellation of unvested shares
    
    
    (5,734
    )
    
    
    
    
    
    
    (87
    )
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    (20
    )Amortization of unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170
    
    
    
    170Issuance of stock upon acquisition
of business
    
    
    2,222,216
    
    
    
    22
    
    
    
    45,031
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,053Issuance of stock upon exercise of options
    
    
    398,349
    
    
    
    4
    
    
    
    3,320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,324Income tax benefit on exercise of options
    
    
    
    
    
    
    
    
    
    
    2,096
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,096Balance, January 31, 2006
    
    
    15,233,472
    
    
    
    152
    
    
    
    141,067
    
    
    
    37,893
    
    
    
    (7,442
    )
    
    
    (44
    )
    
    
    171,626Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,252
    
    
    
    
    
    
    
    
    
    
    
    26,252Other comprehensive income:Foreign currency translation adjustments,
net of income tax expense of $35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    291
    
    
    
    
    
    
    
    291Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,543Issuance of unvested shares
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reclassification of unearned compensation
related to the adoption of SFAS 123R
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    Adjustment to initially apply SFAS 158,
net of income tax benefit of $819
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,302
    )
    
    
    
    
    
    
    (1,302
    )Issuance of stock upon acquisition
of business
    
    
    45,563
    
    
    
    1
    
    
    
    1,262
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,263Issuance of stock upon exercise of options
    
    
    237,689
    
    
    
    2
    
    
    
    3,008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,010Income tax benefit on exercise of options
    
    
    
    
    
    
    
    
    
    
    1,654
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,654Share-based compensation
    
    
    
    
    
    
    
    
    
    
    2,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,240Balance, January 31, 2007
    
    
    15,517,724
    
    
    
    155
    
    
    
    149,187
    
    
    
    64,145
    
    
    
    (8,453
    )
    
    
    
    
    
    
    205,034Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,256
    
    
    
    
    
    
    
    
    
    
    
    37,256Other comprehensive income:Foreign currency translation adjustments,
net of income tax expense of $424
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    760
    
    
    
    
    
    
    
    760Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,016Issuance of unvested shares
    
    
    73,863
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cumulative effect of adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    465
    
    
    
    
    
    
    
    
    
    
    
    465Change in
unrecognized pension liability,
net of income tax expense of $445
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    706
    
    
    
    
    
    
    
    706Proceeds from public offering, net
    
    
    3,105,000
    
    
    
    31
    
    
    
    159,848
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    159,879Issuance of stock upon acquisition of business
    
    
    249,023
    
    
    
    3
    
    
    
    10,979
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,982Issuance of stock upon exercise of options
    
    
    215,106
    
    
    
    2
    
    
    
    2,902
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,904Income tax benefit on exercise of options
    
    
    
    
    
    
    
    
    
    
    2,360
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,360Share-based compensation
    
    
    
    
    
    
    
    
    
    
    3,026
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,026Balance, January 31, 2008
    
    
    19,160,716
    
    
    $
    192
    
    
    $
    328,301
    
    
    $
    101,866
    
    
    $
    (6,987
    )
    
    $
    
    
    
    $
    423,372
  36




---



##### Table of Contents



Consolidated Statements of Cash Flows
 (in thousands)Years Ended January 31,
    
    2008
    
    2007
    
    2006Cash flow from operating activities:Net income
    
    $
    37,256
    
    
    $
    26,252
    
    
    $
    14,681Adjustments to reconcile net income to cash from operations:Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    4Depreciation, depletion and amortization
    
    
    43,620
    
    
    
    32,853
    
    
    
    20,024Deferred income taxes
    
    
    2,364
    
    
    
    (2,985
    )
    
    
    6,540Equity in earnings of affiliates
    
    
    (8,076
    )
    
    
    (4,452
    )
    
    
    (4,345
    )Dividends received from affiliates
    
    
    2,521
    
    
    
    1,502
    
    
    
    1,693Minority interest
    
    
    (145
    )
    
    
    
    
    
    
    50(Gain) loss on disposal of property and equipment
    
    
    (671
    )
    
    
    (994
    )
    
    
    295Gain on sale of domestic affiliate
    
    
    
    
    
    
    
    
    
    
    (1,289
    )Gain on sale of mineral concession
    
    
    
    
    
    
    (920
    )
    
    
    Share-based compensation
    
    
    3,026
    
    
    
    2,240
    
    
    
    Share-based compensation excess tax benefits
    
    
    (2,313
    )
    
    
    (1,382
    )
    
    
    Changes in current assets and liabilities, (exclusive of effects of acquisitions and disposals):Increase in customer receivables
    
    
    (9,616
    )
    
    
    (7,691
    )
    
    
    (3,139
    )Increase in costs and estimated earnings in excess of
billings on uncompleted contracts
    
    
    (9,205
    )
    
    
    (10,044
    )
    
    
    (432
    )(Increase) decrease in inventories
    
    
    (1,788
    )
    
    
    462
    
    
    
    3,682(Increase) decrease in other current assets
    
    
    602
    
    
    
    598
    
    
    
    (866
    )Increase in accounts payable and accrued expenses
    
    
    27,512
    
    
    
    27,522
    
    
    
    1,594Increase (decrease) in billings in excess of costs and estimated
earnings on uncompleted contracts
    
    
    (2,648
    )
    
    
    12,312
    
    
    
    3,534Other, net
    
    
    (2,276
    )
    
    
    (597
    )
    
    
    (1,185
    )Cash from continuing operations
    
    
    80,163
    
    
    
    74,676
    
    
    
    40,841Cash from discontinued operations
    
    
    
    
    
    
    
    
    
    
    28Cash from operating activities
    
    
    80,163
    
    
    
    74,676
    
    
    
    40,869Cash flow used in investing activities:Additions to property and equipment
    
    
    (44,177
    )
    
    
    (36,150
    )
    
    
    (24,427
    )Additions to gas transportation facilities and equipment
    
    
    (5,327
    )
    
    
    (12,413
    )
    
    
    (5,125
    )Additions to oil and gas properties
    
    
    (18,216
    )
    
    
    (23,075
    )
    
    
    (11,084
    )Additions to mineral interests in oil and gas properties
    
    
    (5,650
    )
    
    
    (3,174
    )
    
    
    (2,281
    )Payment of cash purchase price adjustment on prior year acquisition
    
    
    (2,270
    )
    
    
    (6,120
    )
    
    
    Proceeds from disposal of property and equipment
    
    
    3,333
    
    
    
    4,646
    
    
    
    892Proceeds from sale of domestic affiliate
    
    
    
    
    
    
    
    
    
    
    2,355Proceeds from sale of mineral concession
    
    
    
    
    
    
    920
    
    
    
    Acquisition of businesses, net of cash acquired
    
    
    (20,470
    )
    
    
    (31,305
    )
    
    
    (61,542
    )Acquisition of gas transportation facilities and equipment
    
    
    
    
    
    
    
    
    
    
    (1,445
    )Acquisition of oil and gas properties and mineral interests
    
    
    
    
    
    
    (1,988
    )
    
    
    (4,704
    )Deposit of cash into restricted accounts
    
    
    (2,075
    )
    
    
    (4,473
    )
    
    
    Release of cash from restricted accounts
    
    
    9,627
    
    
    
    5,597
    
    
    
    Distribution of restricted cash for prior year acquisition
    
    
    (9,627
    )
    
    
    
    
    
    
    Return of capital from (investment in) affiliates
    
    
    
    
    
    
    411
    
    
    
    (69
    )Cash used in investing activities
    
    
    (94,852
    )
    
    
    (107,124
    )
    
    
    (107,430
    )Cash flow from financing activities:Borrowings under revolving credit facilities
    
    
    483,800
    
    
    
    425,925
    
    
    
    335,155Repayments under revolving credit facilities
    
    
    (575,400
    )
    
    
    (403,225
    )
    
    
    (266,255
    )Debt issuance costs
    
    
    
    
    
    
    
    
    
    
    (605
    )Payments on promissory note
    
    
    
    
    
    
    
    
    
    
    (1,080
    )Proceeds from public offering of common stock, net of issuance costs
    
    
    159,879
    
    
    
    
    
    
    
    Issuances of common stock
    
    
    2,904
    
    
    
    3,010
    
    
    
    3,324Excess tax benefit on exercise of share-based instruments
    
    
    2,313
    
    
    
    1,382
    
    
    
    Contribution by minority interest
    
    
    543
    
    
    
    
    
    
    
    Cash from financing activities
    
    
    74,039
    
    
    
    27,092
    
    
    
    70,539Effects of exchange rate changes on cash
    
    
    711
    
    
    
    380
    
    
    
    (403
    )Net increase (decrease) in cash and cash equivalents
    
    
    60,061
    
    
    
    (4,976
    )
    
    
    3,575Cash and cash equivalents at beginning of year
    
    
    13,007
    
    
    
    17,983
    
    
    
    14,408Cash and cash equivalents at end of year
    
    $
    73,068
    
    
    $
    13,007
    
    
    $
    17,983
  37




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##### Table of Contents



Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
 Description of Business
 Fiscal Year
 Investment in Affiliated Companies
 Principles of Consolidation
 Use of Estimates in Preparing Financial Statements
 Foreign Currency Transactions and Translation
   Revenue Recognition
     Inventories
 Property and Equipment and Related Depreciation
 YearsBuildings
    
    
    1535Machinery and equipment
    
    
    310Gas transportation facilities and equipment
    
    
    15
 38




---



##### Table of Contents



Oil and Gas Properties and Mineral Interests
  Reserve Estimates
 Goodwill and Intangibles
    Other Long-Lived Assets
 Restricted Cash
 39




---



##### Table of Contents



Accrued Insurance Expense
 Fair Value of Financial Instruments
 Litigation and Other Contingencies
 Derivatives
 Consolidated Statements of Cash Flows
  (in thousands)
    
    2008
    
    2007
    
    2006Income taxes
    
    $
    20,704
    
    
    $
    15,489
    
    
    $
    7,399Interest
    
    
    8,721
    
    
    
    9,564
    
    
    
    5,547
 Supplemental Non-cash Transactions
    Income Taxes
 Earnings Per Share
 40




---



##### Table of Contents



Share-Based Compensation
 Transition Election Related
to Accounting for Tax Effects of Share-Based Payment Awards
   (in thousands, except per share amounts)
    
    2006Net income, as reported
    
    $
    14,681Deduct:Total stock-based employee
compensation determined under
fair value based method for all
awards, net of income taxes of
$428
    
    
    (681
    )Pro forma net income
    
    $
    14,000Net income per share:Basic  as reported
    
    $
    1.08Basic  pro forma
    
    $
    1.03Diluted  as reported
    
    $
    1.05Diluted  proforma
    
    $
    1.00
 Unearned Compensation
 Other Comprehensive Loss
 AccumulatedCumulative
    
    Unrecognized
    
    OtherTranslation
    
    Pension
    
    Comprehensive(in thousands)
    
    Adjustment
    
    Liability
    
    LossBalance, January 31, 2006
    
    $
    (7,442
    )
    
    $
    
    
    
    $
    (7,442
    )Period change
    
    
    291
    
    
    
    (1,302
    )
    
    
    (1,011
    )Balance, January 31, 2007
    
    $
    (7,151
    )
    
    $
    (1,302
    )
    
    $
    (8,453
    )Period change
    
    
    760
    
    
    
    706
    
    
    
    1,466Balance, January 31, 2008
    
    $
    (6,391
    )
    
    $
    (596
    )
    
    $
    (6,987
    )
 41




---



##### Table of Contents



(2) Acquisitions
    (in thousands)Working capital
    
    $
    3,983Property and equipment
    
    
    3,127Total purchase price
    
    $
    7,110
  (in thousands, except per share data)
    
    2008
    
    2007Revenues
    
    $
    890,755
    
    
    $
    758,310Net income
    
    
    38,052
    
    
    
    28,250Basic earnings per share
    
    $
    2.28
    
    
    $
    1.84Diluted earnings per share
    
    $
    2.25
    
    
    $
    1.81
     (in thousands)Working capital
    
    $
    64Property and equipment
    
    
    115Goodwill
    
    
    7,270Tradenames
    
    
    2,962Patents
    
    
    2,543Other intangible assets
    
    
    551Deferred income taxes
    
    
    81Total purchase price
    
    $
    13,586
 Applicability of FASB Statement
No. 2 to Business Combinations Accounted for by the Purchase
Method.
  (in thousands, except per share data)
    
    2008
    
    
    2007Revenues
    
    $
    872,427
    
    
    $
    726,575Net income
    
    
    36,307
    
    
    
    25,211Basic earnings per share
    
    $
    2.18
    
    
    $
    1.65Diluted earnings per share
    
    $
    2.14
    
    
    $
    1.61
   42




---



##### Table of Contents



(in thousands)Working capital
    
    $
    11,723Property and equipment
    
    
    13,602Goodwill (non tax deductible)
    
    
    3,891Other intangible assets
    
    
    143Other long-term assets
    
    
    69Deferred income taxes
    
    
    (1,766
    )Total purchase price
    
    $
    27,662
  (in thousands, except per share data)
    
    2007
    
    2006Revenues
    
    $
    760,752
    
    
    $
    506,776Net income
    
    
    25,199
    
    
    
    14,303Basic earnings per share
    
    $
    1.64
    
    
    $
    1.06Diluted earnings per share
    
    $
    1.61
    
    
    $
    1.02
       (in thousands)Working capital
    
    $
    1,016Property and equipment
    
    
    1,580Goodwill (non tax deductible)
    
    
    3,436Deferred income taxes
    
    
    (590
    )Total purchase price
    
    $
    5,442
     43




---



##### Table of Contents



(in thousands)Working capital
    
    $
    20,998Property and equipment
    
    
    40,508Goodwill
    
    
    49,832Tradenames
    
    
    16,000Other intangible assets
    
    
    586Deferred income taxes
    
    
    (15,568
    )Total purchase price
    
    $
    112,356
   (in thousands, except per share data)
    
    2006Revenues
    
    $
    600,781Net income
from continuing operations
    
    
    17,945Net income
    
    
    17,941Basic earnings per share
from continuing operations
    
    $
    1.19Diluted earnings per share
from continuing operations
    
    $
    1.16Basic earnings per share
    
    $
    1.19Diluted earnings per share
    
    $
    1.16
    (in thousands)Mineral interest in oil and gas properties
    
    $
    2,479Oil and gas properties
    
    
    2,428Gas transportation facilities and equipment
    
    
    987Minority interest
    
    
    512Total purchase price
    
    $
    6,406
  (in thousands)Working capital
    
    $
    (10
    )Property and equipment
    
    
    84Other intangible assets
    
    
    379Total purchase price
    
    $
    453
 (3) Investments in Affiliates
  PercentageOwnedChristensen Chile, S.A. (Chile)
    
    
    50.00
    %Christensen Commercial, S.A. (Chile)
    
    
    50.00Geotec Boyles Bros., S.A. (Chile)
    
    
    50.00Boyles Bros. Diamantina, S.A. (Peru)
    
    
    29.49Christensen Commercial, S.A. (Peru)
    
    
    35.38Geotec, S.A. (Peru)
    
    
    35.38Boytec, S.A. (Panama)
    
    
    50.00Plantel Industrial S.A. (Chile)
    
    
    50.00Boytec Sondajes de Mexico, S.A. de C.V. (Mexico)
    
    
    50.00Geoductos Chile, S.A. (Chile)
    
    
    50.00Mining Drilling Fluids (Panama)
    
    
    25.00Diamantina Christensen Trading (Panama)
    
    
    42.69Boyles Bros. do Brasil Ltd. (Brazil)
    
    
    40.00Boytec, S.A. (Columbia)
    
    
    50.00
 44




---



##### Table of Contents



(in thousands)
    
    2008
    
    2007
    
    2006Current assets
    
    $
    78,165
    
    
    $
    42,584
    
    
    $
    36,937Noncurrent assets
    
    
    42,682
    
    
    
    29,696
    
    
    
    28,866Current liabilities
    
    
    48,496
    
    
    
    19,857
    
    
    
    17,178Noncurrent liabilities
    
    
    9,373
    
    
    
    4,755
    
    
    
    5,211Revenues
    
    
    202,649
    
    
    
    130,090
    
    
    
    103,735Gross profit
    
    
    36,234
    
    
    
    23,274
    
    
    
    18,003Operating income
    
    
    24,074
    
    
    
    14,319
    
    
    
    10,828Net income
    
    
    18,762
    
    
    
    10,862
    
    
    
    9,452
  (in thousands)
    
    2008
    
    2007
    
    2006Accounts Receivable
    
    $
    
    
    
    $
    
    
    
    $
    Revenues
    
    
    17
    
    
    
    3
    
    
    
    302
   (4) Discontinued Operations
  45




---



##### Table of Contents



(5) Goodwill and Other Intangible Assets
  2008
    
    2007Gross
    
    
    
    
    
    GrossCarrying
    
    Accumulated
    
    Carrying
    
    Accumulated(in thousands)
    
    Amount
    
    Amortization
    
    Amount
    
    AmortizationGoodwill
    
    $
    85,706
    
    
    $
    
    
    
    $
    65,184
    
    
    $
    Amortizable intangible assets:Tradenames
    
    $
    18,962
    
    
    $
    (1,464
    )
    
    $
    16,000
    
    
    $
    (818
    )Customer-related
    
    
    332
    
    
    
    (340
    )
    
    
    332
    
    
    
    (134
    )Patents
    
    
    2,902
    
    
    
    (307
    )
    
    
    359
    
    
    
    (160
    )Non-competition agreements
    
    
    379
    
    
    
    (273
    )
    
    
    379
    
    
    
    (227
    )Other
    
    
    1,292
    
    
    
    (553
    )
    
    
    762
    
    
    
    (476
    )Total amortizable intangible assets
    
    $
    23,867
    
    
    $
    (2,937
    )
    
    $
    17,832
    
    
    $
    (1,815
    )
  (in thousands)2009
    
    $
    1,1812010
    
    
    1,0952011
    
    
    1,0572012
    
    
    1,0282013
    
    
    1,020
   WaterEnergy
    
    Infrastructure
    
    TotalBalance, February 1, 2006
    
    $
    950
    
    
    $
    56,907
    
    
    $
    57,857Additions
    
    
    
    
    
    
    7,327
    
    
    
    7,327Balance, January 31, 2007
    
    
    950
    
    
    
    64,234
    
    
    
    65,184Additions
    
    
    
    
    
    
    20,522
    
    
    
    20,522Balance, January 31, 2008
    
    $
    950
    
    
    $
    84,756
    
    
    $
    85,706
 46




---



##### Table of Contents



(6) Other Income (Expense)
  (in thousands)
    
    2008
    
    2007
    
    2006Gain (loss) from disposal of
property and equipment
    
    $
    671
    
    
    $
    994
    
    
    $
    (295
    )Gain on sale of domestic affiliate
    
    
    
    
    
    
    
    
    
    
    1,289Gain on sale of mineral concession
    
    
    
    
    
    
    920
    
    
    
    Interest income
    
    
    953
    
    
    
    187
    
    
    
    133Exchange gain (loss)
    
    
    (430
    )
    
    
    95
    
    
    
    (290
    )Miscellaneous, net
    
    
    35
    
    
    
    361
    
    
    
    63Total
    
    $
    1,229
    
    
    $
    2,557
    
    
    $
    900
  (7) Costs and Estimated Earnings on Uncompleted Contracts:
 (in thousands)
    
    2008
    
    2007Costs incurred on uncompleted contracts
    
    $
    586,459
    
    
    $
    711,922Estimated earnings
    
    
    147,796
    
    
    
    155,520734,255
    
    
    
    867,442Less: Billings to date
    
    
    705,100
    
    
    
    850,474Total
    
    $
    29,155
    
    
    $
    16,968Included in accompanying balance sheets
under the following captions:Costs and estimated earnings in excess
of billings on uncompleted
contracts
    
    $
    60,796
    
    
    $
    51,210Billings in excess of costs and estimated
earnings on uncompleted contracts
    
    
    (31,641
    )
    
    
    (34,242
    )Total
    
    $
    29,155
    
    
    $
    16,968
  (8) Income Taxes
  (in thousands)
    
    2008
    
    2007
    
    2006Domestic
    
    $
    46,649
    
    
    $
    31,928
    
    
    $
    21,039Foreign
    
    
    20,640
    
    
    
    16,239
    
    
    
    6,817Total
    
    $
    67,289
    
    
    $
    48,167
    
    
    $
    27,856
  (in thousands)
    
    2008
    
    2007
    
    2006Currently due:U.S. federal
    
    $
    17,226
    
    
    $
    13,150
    
    
    $
    3,536State and local
    
    
    3,125
    
    
    
    2,541
    
    
    
    462Foreign
    
    
    7,099
    
    
    
    8,615
    
    
    
    3,78527,450
    
    
    
    24,306
    
    
    
    7,783Deferred:U.S. federal
    
    
    1,632
    
    
    
    (941
    )
    
    
    4,100State and local
    
    
    288
    
    
    
    (649
    )
    
    
    372Foreign
    
    
    808
    
    
    
    (801
    )
    
    
    8662,728
    
    
    
    (2,391
    )
    
    
    5,338Total
    
    $
    30,178
    
    
    $
    21,915
    
    
    $
    13,121
 47




---



##### Table of Contents



(in thousands)
    
    2008
    
    2007Assets
    
    Liabilities
    
    Total
    
    Assets
    
    Liabilities
    
    TotalContract income
    
    $
    4,545
    
    
    $
    
    
    
    $
    4,545
    
    
    $
    4,372
    
    
    $
    
    
    
    $
    4,372Inventories
    
    
    2,125
    
    
    
    (271
    )
    
    
    1,854
    
    
    
    1,956
    
    
    
    (164
    )
    
    
    1,792Accrued insurance
    
    
    2,809
    
    
    
    
    
    
    
    2,809
    
    
    
    2,600
    
    
    
    
    
    
    
    2,600Other accrued liabilities
    
    
    2,234
    
    
    
    
    
    
    
    2,234
    
    
    
    2,382
    
    
    
    
    
    
    
    2,382Prepaid expenses
    
    
    
    
    
    
    (684
    )
    
    
    (684
    )
    
    
    
    
    
    
    (619
    )
    
    
    (619
    )Bad debts
    
    
    2,866
    
    
    
    
    
    
    
    2,866
    
    
    
    2,521
    
    
    
    
    
    
    
    2,521Employee compensation
    
    
    4,905
    
    
    
    
    
    
    
    4,905
    
    
    
    3,361
    
    
    
    
    
    
    
    3,361Other
    
    
    481
    
    
    
    (299
    )
    
    
    182
    
    
    
    481
    
    
    
    (339
    )
    
    
    142Total current
    
    
    19,965
    
    
    
    (1,254
    )
    
    
    18,711
    
    
    
    17,673
    
    
    
    (1,122
    )
    
    
    16,551Cumulative translation adjustment
    
    
    4,665
    
    
    
    
    
    
    
    4,665
    
    
    
    5,088
    
    
    
    
    
    
    
    5,088Buildings, machinery and equipment
    
    
    440
    
    
    
    (16,251
    )
    
    
    (15,811
    )
    
    
    126
    
    
    
    (16,554
    )
    
    
    (16,428
    )Gas transportation facilities and equipment
    
    
    
    
    
    
    (3,799
    )
    
    
    (3,799
    )
    
    
    
    
    
    
    (2,270
    )
    
    
    (2,270
    )Mineral interests and oil and gas properties
    
    
    
    
    
    
    (14,702
    )
    
    
    (14,702
    )
    
    
    
    
    
    
    (11,779
    )
    
    
    (11,779
    )Intangible assets
    
    
    744
    
    
    
    (5,788
    )
    
    
    (5,044
    )
    
    
    747
    
    
    
    (6,072
    )
    
    
    (5,325
    )Tax deductible goodwill
    
    
    2,831
    
    
    
    
    
    
    
    2,831
    
    
    
    3,448
    
    
    
    
    
    
    
    3,448Accrued insurance
    
    
    3,988
    
    
    
    
    
    
    
    3,988
    
    
    
    3,384
    
    
    
    
    
    
    
    3,384Pension
    
    
    781
    
    
    
    (689
    )
    
    
    92
    
    
    
    673
    
    
    
    (331
    )
    
    
    342Stock-based compensation
    
    
    1,352
    
    
    
    
    
    
    
    1,352
    
    
    
    633
    
    
    
    
    
    
    
    633Unremitted foreign earnings
    
    
    
    
    
    
    (3,036
    )
    
    
    (3,036
    )
    
    
    
    
    
    
    (1,587
    )
    
    
    (1,587
    )Other
    
    
    1,230
    
    
    
    (95
    )
    
    
    1,135
    
    
    
    1,430
    
    
    
    (238
    )
    
    
    1,192Total noncurrent
    
    
    16,031
    
    
    
    (44,360
    )
    
    
    (28,329
    )
    
    
    15,529
    
    
    
    (38,831
    )
    
    
    (23,302
    )Total
    
    $
    35,996
    
    
    $
    (45,614
    )
    
    $
    (9,618
    )
    
    $
    33,202
    
    
    $
    (39,953
    )
    
    $
    (6,751
    )
 48




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##### Table of Contents



2008
    
    2007
    
    2006Effective
    
    
    
    
    
    Effective
    
    
    
    
    
    Effective(in thousands)
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    RateIncome tax at statutory rate
    
    $
    23,551
    
    
    
    35.0
    %
    
    $
    16,858
    
    
    
    35.0
    %
    
    $
    9,750
    
    
    
    35.0
    %State income tax, net
    
    
    2,219
    
    
    
    3.3
    
    
    
    1,230
    
    
    
    2.6
    
    
    
    542
    
    
    
    1.9Difference in tax expense resulting from:Nondeductible expenses
    
    
    1,041
    
    
    
    1.5
    
    
    
    842
    
    
    
    1.8
    
    
    
    593
    
    
    
    2.1Taxes on foreign affiliates
    
    
    (1,370
    )
    
    
    (2.0
    )
    
    
    (774
    )
    
    
    (1.6
    )
    
    
    (422
    )
    
    
    (1.5
    )Taxes on foreign operations
    
    
    5,033
    
    
    
    7.5
    
    
    
    3,461
    
    
    
    7.2
    
    
    
    2,641
    
    
    
    9.5Other, net
    
    
    (296
    )
    
    
    (0.5
    )
    
    
    298
    
    
    
    0.5
    
    
    
    17
    
    
    
    0.1$
    30,178
    
    
    
    44.8
    %
    
    $
    21,915
    
    
    
    45.5
    %
    
    $
    13,121
    
    
    
    47.1
    %
    (in thousands)Balance, February 1, 2007
    
    $
    6,152Additions based on tax
positions related
to current year
    
    
    3,248Additions for tax positions of
prior years
    
    
    772Impact of changes in exchange
rate
    
    
    79Settlements with tax
authorities
    
    
    (162
    )Reductions for tax positions
of prior years
    
    
    (2,995
    )Reductions due to the lapse of
statute of
limitations
    
    
    (452
    )Balance, January 31, 2008
    
    $
    6,642
     49




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##### Table of Contents



(9) Operating
Leases and Other Obligations
  (in thousands)2009
    
    $
    10,5432010
    
    
    6,2572011
    
    
    4,8702012
    
    
    3,9402013
    
    
    2,777Thereafter
    
    
    
   (10) Employee Benefit Plans
  SFAS 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans  An
Amendment of FASB Statements 87, 88, 106 and 132(R)
   Pension PlanPrior to
    
    
    
    
    
    PostAdoption
    
    
    
    
    
    Adoptionof SFAS
    
    
    
    
    
    of SFAS158
    
    Adjustments
    
    158Other non-current assets
    
    $
    2,979
    
    
    $
    (2,121
    )
    
    $
    858Accumulated other
comprehensive loss before taxes
    
    $
    
    
    
    $
    (2,121
    )
    
    $
    (2,121
    )Deferred tax liabilities
    
    $
    
    
    
    
    819
    
    
    
    819Accumulated other
comprehensive loss
    
    $
    
    
    
    $
    (1,302
    )
    
    $
    (1,302
    )
  (in thousands)
    
    2008
    
    2007Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    8,191
    
    
    $
    7,967Service cost
    
    
    
    
    
    
    Interest cost
    
    
    450
    
    
    
    452Actuarial gain (loss)
    
    
    (902
    )
    
    
    164Benefits paid
    
    
    (413
    )
    
    
    (392
    )Benefit obligation at end of year
    
    
    7,326
    
    
    
    8,191Change in plan assets:Fair value of plan assets at beginning of year
    
    
    9,049
    
    
    
    8,108Actual return on plan assets
    
    
    473
    
    
    
    833Employer contribution
    
    
    
    
    
    
    500Benefits paid
    
    
    (413
    )
    
    
    (392
    )Fair value of plan assets at end of year
    
    
    9,109
    
    
    
    9,049Funded status
    
    
    1,783
    
    
    
    858Contributions between measurement
date and year-end
    
    
    
    
    
    
    Net amount recognized as other
non-current assets
    
    $
    1,783
    
    
    $
    858
 50




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##### Table of Contents



(in thousands)
    
    2008
    
    2007
    
    2006Service cost and expenses
    
    $
    96
    
    
    $
    86
    
    
    $
    74Interest cost
    
    
    450
    
    
    
    452
    
    
    
    436Expected return on assets
    
    
    (536
    )
    
    
    (529
    )
    
    
    (484
    )Net amortization
    
    
    215
    
    
    
    271
    
    
    
    278Net periodic pension cost
    
    $
    225
    
    
    $
    280
    
    
    $
    304
   2008
    
    2007
    
    2006Discount rate
    
    
    6.49
    %
    
    
    5.90
    %
    
    
    5.67
    %Expected long-term return
on plan assets
    
    
    7.0
    %
    
    
    7.0
    %
    
    
    7.0
    %Rate of compensation increase
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AHealth care cost trend
on covered charges
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AMarket-related value of assets
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AExpected return on assets
    
    Smoothed value
    
    Smoothed value
    
    Smoothed value
   As of December 31,2007
    
    2006Equity securities
    
    
    60
    %
    
    
    63
    %Debt securities
    
    
    13
    
    
    
    35Cash and cash equivalents
    
    
    27
    
    
    
    2Total
    
    
    100
    %
    
    
    100
    %
  Normal
    
    PolicyWeighting
    
    RangeEquity securities
    
    
    60
    %
    
    
    40-70
    %Debt securities
    
    
    35
    
    
    
    20-60Cash and cash equivalents
    
    
    5
    
    
    
    0-15
   
    
    Equity Securities- Allowable equity securities include common stocks listed on any U.S.
stock exchange or over-the-counter common stocks, preferred and convertible securities. The
equity holdings of any single issuer should aggregate to no more than 10% of the total market
value of the plan.
    
    International Securities- Allowable international securities include common stocks,
preferred stocks, warrants, convertible securities, as well as government and corporate debt
securities.
    
    Mutual Funds- Mutual funds may be utilized for investments in fixed income, equity and
international securities
to enhance diversification and performance.
    
    Fixed Income Securities- Allowable fixed income securities include U.S. Treasury
securities, U.S. Agency securities and corporate bonds. All fixed income securities shall be
rated A or better at the time of purchase. No fixed income security shall continue to be
held if its rating falls below BBB. The securities of any single issuer, with the exception
of U.S. Treasuries and Agencies, should aggregate to
no more than 10% of the total market value of the Plan.
The fixed income segment of the portfolio will generally have an intermediate average maturity
(five to 10 years)
and a maximum permitted maturity for an individual issue
of 15 years.
    51




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##### Table of Contents



(in thousands)2009
    
    $
    4242010
    
    
    4362011
    
    
    4512012
    
    
    4672013
    
    
    4772014-2018
    
    
    2,467
  (in thousands)
    
    2008
    
    2007
    
    2006Service cost
    
    $
    176
    
    
    $
    100
    
    
    $
    120Interest cost
    
    
    103
    
    
    
    88
    
    
    
    75Net periodic pension cost
    
    $
    279
    
    
    $
    188
    
    
    $
    195
    (11) Indebtedness
      (in thousands)
    
    2008
    
    2007Long-term debt:Credit Agreement
    
    $
    
    
    
    $
    91,600Senior Notes
    
    
    60,000
    
    
    
    60,000Total debt
    
    
    60,000
    
    
    
    151,600Less current maturities
    
    
    (13,333
    )
    
    
    Total long-term debt
    
    $
    46,667
    
    
    $
    151,600
 52




---



##### Table of Contents



(in thousands)2009
    
    $
    13,3332010
    
    
    20,0002011
    
    
    20,0002012
    
    
    6,667Thereafter
    
    
    
 (12) Derivatives
    (13) Stock and Stock Option Plans
     Weighted
    
    AggregateAverage
    
    IntrinsicNumber of
    
    Grant Date
    
    Value (inShares
    
    Fair Value
    
    thousands)Nonvested stock at
January 31, 2005
    
    
    24,576
    
    
    $
    15.26Granted
    
    
    
    
    
    
    Vested
    
    
    (10,244
    )
    
    
    15.26Canceled
    
    
    (5,734
    )
    
    
    15.26Nonvested stock at
January 31, 2006
    
    
    8,598
    
    
    
    15.26Granted
    
    
    1,000
    
    
    
    29.70Vested
    
    
    (8,598
    )
    
    
    15.26Nonvested stock at
January 31, 2007
    
    
    1,000
    
    
    $
    29.70Granted
    
    
    73,863
    
    
    
    42.76Vested
    
    
    (1,000
    )
    
    
    29.70Nonvested stock at
January 31, 2008
    
    
    73,863
    
    
    $
    42.76
    
    
    $
    3,159
  RemainingContractualGrant
    
    Options
    
    Options
    
    Exercise
    
    TermDate
    
    Outstanding
    
    Exercisable
    
    Price
    
    (Months)4/98
    
    
    736
    
    
    
    736
    
    
    $
    10.290
    
    
    
    34/99
    
    
    9,773
    
    
    
    9,773
    
    
    
    4.125
    
    
    
    154/99
    
    
    24,875
    
    
    
    24,875
    
    
    
    5.250
    
    
    
    152/00
    
    
    3,500
    
    
    
    3,500
    
    
    
    5.500
    
    
    
    254/00
    
    
    14,794
    
    
    
    14,794
    
    
    
    3.495
    
    
    
    276/04
    
    
    25,000
    
    
    
    25,000
    
    
    
    16.600
    
    
    
    776/04
    
    
    159,791
    
    
    
    101,041
    
    
    
    16.650
    
    
    
    776/05
    
    
    12,000
    
    
    
    12,000
    
    
    
    17.540
    
    
    
    899/05
    
    
    201,250
    
    
    
    76,250
    
    
    
    23.050
    
    
    
    921/06
    
    
    210,231
    
    
    
    95,116
    
    
    
    27.870
    
    
    
    966/06
    
    
    12,000
    
    
    
    12,000
    
    
    
    29.290
    
    
    
    1016/06
    
    
    70,000
    
    
    
    17,500
    
    
    
    29.290
    
    
    
    1016/07
    
    
    70,000
    
    
    
    
    
    
    
    42.260
    
    
    
    1137/07
    
    
    33,000
    
    
    
    
    
    
    
    42.760
    
    
    
    1149/07
    
    
    3,000
    
    
    
    
    
    
    
    55.480
    
    
    
    116849,950
    
    
    
    392,585
  53




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##### Table of Contents



Shares Under OptionWeightedWeighted
    
    Average
    
    AggregateAverage
    
    Remaining
    
    IntrinsicNumber of
    
    Exercise
    
    Contractual Term
    
    Value (inShares
    
    Price
    
    (years)
    
    thousands)Stock Option Activity Summary:Outstanding at
February 1, 2005
    
    
    1,038,836
    
    
    
    10.800Exercisable at
January 31, 2005
    
    
    745,653
    
    
    
    8.761Granted
    
    
    476,231
    
    
    
    24.993Exercised
    
    
    (398,349
    )
    
    
    8.345
    
    
    
    
    
    
    
    5,534Canceled
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Outstanding at
January 31, 2006
    
    
    1,116,718
    
    
    
    17.728Exercisable at
January 31, 2006
    
    
    455,640
    
    
    
    10.603Granted
    
    
    87,000
    
    
    
    29.318Exercised
    
    
    (237,689
    )
    
    
    12.656
    
    
    
    
    
    
    
    4,422Canceled
    
    
    
    
    
    
    Forfeited
    
    
    (2,500
    )
    
    
    16.650
    
    
    
    
    
    
    
    30Expired
    
    
    
    
    
    
    Outstanding at
January 31, 2007
    
    
    963,529
    
    
    $
    20.028Exercisable at
January 31, 2007
    
    
    413,356
    
    
    $
    15.202Granted
    
    
    106,000
    
    
    
    42.790Exercised
    
    
    (215,106
    )
    
    
    13.632
    
    
    
    
    
    
    
    6,890Canceled
    
    
    
    
    
    
    Forfeited
    
    
    (3,750
    )
    
    
    16.650
    
    
    
    
    
    
    
    151Expired
    
    
    (723
    )
    
    
    11.400
    
    
    
    
    
    
    
    19Outstanding at
January 31, 2008
    
    
    849,950
    
    
    $
    24.541
    
    
    
    7.36
    
    
    $
    13,955Exercisable at
January 31, 2008
    
    
    392,585
    
    
    $
    19.944
    
    
    
    6.56
    
    
    $
    8,250
 (14) Contingencies
   (15) Segments and Foreign Operations
  54




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##### Table of Contents



Water Infrastructure
  Mineral Exploration Division
  Energy Division
  Other
  55




---



##### Table of Contents



(in thousands)As of and for the Year Ended January 31,
    
    2008
    
    2007
    
    2006RevenuesWater infrastructure
    
    $
    639,584
    
    
    $
    531,916
    
    
    $
    320,996Mineral exploration
    
    
    178,482
    
    
    
    148,911
    
    
    
    124,206Energy
    
    
    39,749
    
    
    
    27,081
    
    
    
    12,536Other
    
    
    10,459
    
    
    
    14,860
    
    
    
    5,277Total revenues
    
    $
    868,274
    
    
    $
    722,768
    
    
    $
    463,015Equity in earnings of affiliatesWater infrastructure
    
    $
    
    
    
    $
    
    
    
    $
    839Mineral exploration
    
    
    8,076
    
    
    
    4,452
    
    
    
    3,506Total equity in earnings of affiliates
    
    $
    8,076
    
    
    $
    4,452
    
    
    $
    4,345Income from continuing operations before income taxes and minority interestsWater infrastructure
    
    $
    42,995
    
    
    $
    35,000
    
    
    $
    28,255Mineral exploration
    
    
    37,452
    
    
    
    26,557
    
    
    
    13,947Energy
    
    
    13,075
    
    
    
    10,680
    
    
    
    2,891Other
    
    
    3,696
    
    
    
    4,094
    
    
    
    1,307Unallocated corporate expenses
    
    
    (21,199
    )
    
    
    (18,383
    )
    
    
    (12,771
    )Interest
    
    
    (8,730
    )
    
    
    (9,781
    )
    
    
    (5,773
    )Total income from continuing operations before income taxes and minority interests
    
    $
    67,289
    
    
    $
    48,167
    
    
    $
    27,856Investment in affiliatesWater infrastructure
    
    $
    
    
    
    $
    
    
    
    $
    411Mineral exploration
    
    
    29,835
    
    
    
    24,280
    
    
    
    21,330Total investment in affiliates
    
    $
    29,835
    
    
    $
    24,280
    
    
    $
    21,741Total assetsWater infrastructure
    
    $
    388,491
    
    
    $
    321,406
    
    
    $
    297,928Mineral exploration
    
    
    110,064
    
    
    
    89,826
    
    
    
    85,110Energy
    
    
    112,363
    
    
    
    91,552
    
    
    
    55,080Other
    
    
    2,449
    
    
    
    4,112
    
    
    
    1,546Corporate
    
    
    83,588
    
    
    
    40,268
    
    
    
    9,671Total assets
    
    $
    696,955
    
    
    $
    547,164
    
    
    $
    449,335Capital expendituresWater infrastructure
    
    $
    22,029
    
    
    $
    23,777
    
    
    $
    10,640Mineral exploration
    
    
    18,451
    
    
    
    11,607
    
    
    
    13,525Energy
    
    
    30,345
    
    
    
    40,737
    
    
    
    24,639Other
    
    
    1,037
    
    
    
    483
    
    
    
    69Corporate
    
    
    1,508
    
    
    
    196
    
    
    
    193Total capital expenditures
    
    $
    73,370
    
    
    $
    76,800
    
    
    $
    49,066Depreciation, depletion and amortizationWater infrastructure
    
    $
    21,978
    
    
    $
    17,691
    
    
    $
    10,604Mineral exploration
    
    
    10,523
    
    
    
    8,260
    
    
    
    6,306Energy
    
    
    10,704
    
    
    
    6,531
    
    
    
    2,703Other
    
    
    237
    
    
    
    229
    
    
    
    273Corporate
    
    
    178
    
    
    
    142
    
    
    
    138Total depreciation, depletion and amortization
    
    $
    43,620
    
    
    $
    32,853
    
    
    $
    20,024
 56




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##### Table of Contents



(in thousands)As of and for the Year Ended January 31,
    
    2008
    
    2007
    
    2006Geographic information:RevenuesUnited States
    
    $
    712,098
    
    
    $
    595,959
    
    
    $
    356,899Australia/Africa
    
    
    89,739
    
    
    
    78,640
    
    
    
    71,594Mexico
    
    
    42,242
    
    
    
    32,749
    
    
    
    22,345Other foreign
    
    
    24,195
    
    
    
    15,420
    
    
    
    12,177Total revenues
    
    $
    868,274
    
    
    $
    722,768
    
    
    $
    463,015Property and equipment, netUnited States
    
    $
    218,047
    
    
    $
    191,797
    
    
    $
    137,162Africa/Australia
    
    
    19,530
    
    
    
    16,655
    
    
    
    17,486Mexico
    
    
    8,555
    
    
    
    5,279
    
    
    
    3,104Other foreign
    
    
    1,235
    
    
    
    786
    
    
    
    373Total property and equipment, net
    
    $
    247,367
    
    
    $
    214,517
    
    
    $
    158,125
 (16) New Accounting Pronouncements
        57




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(17) Quarterly Results (Unaudited)
  (in thousands of dollars, except per share data)2008:
    
    First
    
    Second
    
    Third
    
    FourthRevenues
    
    $
    201,615
    
    
    $
    217,844
    
    
    $
    225,226
    
    
    $
    223,589Net income
    
    
    8,153
    
    
    
    9,568
    
    
    
    9,929
    
    
    
    9,606Basic net income per share
    
    
    0.53
    
    
    
    0.61
    
    
    
    0.60
    
    
    
    0.50Diluted net income per share
    
    
    0.52
    
    
    
    0.60
    
    
    
    0.59
    
    
    
    0.50
 2007:
    
    First
    
    Second
    
    Third
    
    FourthRevenues
    
    $
    156,717
    
    
    $
    187,146
    
    
    $
    185,824
    
    
    $
    193,081Net income
    
    
    4,642
    
    
    
    7,192
    
    
    
    7,762
    
    
    
    6,656Basic net income per share
    
    
    0.30
    
    
    
    0.47
    
    
    
    0.51
    
    
    
    0.43Diluted net income per share
    
    
    0.30
    
    
    
    0.47
    
    
    
    0.50
    
    
    
    0.42
 Supplemental Information on Oil and Gas
Producing Activities (Unaudited)
  Capitalized Costs Related to Oil and Gas Producing
Activities
  (in thousands)
    
    2008
    
    2007
    
    2006Oil and gas properties
    
    $
    76,844
    
    
    $
    58,458
    
    
    $
    34,308Mineral interest in oil
and gas properties
    
    
    18,165
    
    
    
    12,515
    
    
    
    8,43095,009
    
    
    
    70,973
    
    
    
    42,738Accumulated depletion
    
    
    (16,353
    )
    
    
    (7,848
    )
    
    
    (2,931
    )Total
    
    $
    78,656
    
    
    $
    63,125
    
    
    $
    39,807
   (in thousands)
    
    2008
    
    2007
    
    2006Gas transportation facilities
and equipment
    
    $
    30,266
    
    
    $
    24,939
    
    
    $
    12,526Accumulated depreciation
    
    
    (4,355
    )
    
    
    (2,353
    )
    
    
    (883
    )Total
    
    $
    25,911
    
    
    $
    22,586
    
    
    $
    11,643
  Cost Incurred in Oil and Gas Producing Activities
  (in thousands)
    
    2008
    
    2007
    
    2006Acquisition
Proved
    
    $
    5,647
    
    
    $
    4,249
    
    
    $
    4,751Unproved
    
    
    
    
    
    
    
    
    
    
    Exploration
    
    
    1,501
    
    
    
    25
    
    
    
    64Development
    
    
    16,718
    
    
    
    23,719
    
    
    
    13,45423,866
    
    
    
    27,993
    
    
    
    18,269Asset retirement costs
    
    
    170
    
    
    
    243
    
    
    
    224Total
    
    $
    24,036
    
    
    $
    28,236
    
    
    $
    18,493
  58




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##### Table of Contents



Results of Operations for Oil and Gas Producing Activities
  (in thousands, except per Mcf)
    
    2008
    
    2007
    
    2006Revenues
    
    $
    20,861
    
    
    $
    14,014
    
    
    $
    8,554Operating costs:Production taxes
    
    
    872
    
    
    
    552
    
    
    
    345Lease operating expenses
    
    
    8,242
    
    
    
    5,051
    
    
    
    2,753Depreciation and depletion
    
    
    8,504
    
    
    
    4,917
    
    
    
    2,021Asset retirement accretion expense
    
    
    60
    
    
    
    43
    
    
    
    27Income tax expense
    
    
    1,196
    
    
    
    1,286
    
    
    
    1,271Total operating costs
    
    
    18,874
    
    
    
    11,849
    
    
    
    6,417Results of operations
    
    $
    1,987
    
    
    $
    2,165
    
    
    $
    2,137Depletion per Mcf
    
    $
    1.80
    
    
    $
    1.46
    
    
    $
    1.44
 Proved Oil and Gas Reserve Quantities
     (MMcf):
    
    2008
    
    2007Balance, beginning of year
    
    
    57,078
    
    
    
    45,120Revisions of previous estimates
    
    
    (5,697
    )
    
    
    (5,627
    )Extensions,
discoveries and other additions
    
    
    3,617
    
    
    
    19,019Production
    
    
    (4,732
    )
    
    
    (3,250
    )Purchases of reserves in place
    
    
    
    
    
    
    1,816Balance, end of year
    
    
    50,266
    
    
    
    57,078Proved Developed Reserves
    
    
    22,794
    
    
    
    25,010
 Standardized Measure Of Discounted Future Net Cash Flows Relating To Proved Oil And Gas Reserve
Quantities
   (in thousands)
    
    2008
    
    2007Future cash inflows
    
    $
    376,955
    
    
    $
    393,153Future production costs
    
    
    (148,069
    )
    
    
    (144,511
    )Future development costs
    
    
    (44,077
    )
    
    
    (49,073
    )Future income taxes
    
    
    (52,961
    )
    
    
    (59,098
    )Future net cash flows
    
    
    131,848
    
    
    
    140,47110% discount to reflect timing of cash flows
    
    
    (45,364
    )
    
    
    (51,459
    )Standardized measure of discounted cash flows
    
    $
    86,484
    
    
    $
    89,012
  (in thousands)
    
    2008
    
    2007Balance, beginning of year
    
    $
    89,012
    
    
    $
    79,611Sales of gas produced, net of production costs
    
    
    (17,454
    )
    
    
    (11,687
    )Net changes in prices and production costs
    
    
    25,005
    
    
    
    (16,568
    )Extensions and discoveries, less related costs
    
    
    8,189
    
    
    
    37,431Revisions of quantity estimates
    
    
    (20,265
    )
    
    
    (14,420
    )Purchases of reserves in place
    
    
    
    
    
    
    3,729Change in future development
    
    
    (19,352
    )
    
    
    (34,038
    )Accretion of discount
    
    
    11,762
    
    
    
    12,998Net change in income taxes
    
    
    (15,531
    )
    
    
    3,075Development costs incurred
    
    
    25,118
    
    
    
    28,881Asset retirement obligation and other
    
    
    
    
    
    
    Net change
    
    
    (2,528
    )
    
    
    9,401Balance, end of year
    
    $
    86,484
    
    
    $
    89,012
 59




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##### Table of Contents



Schedule II: Valuation and Qualifying Accounts
 AdditionsBalance at
    
    Charges to
    
    Charges to
    
    
    
    
    
    BalanceBeginning
    
    Costs and
    
    Other
    
    
    
    
    
    at End(in thousands)
    
    of Period
    
    Expenses
    
    Accounts
    
    Deductions
    
    of PeriodAllowance for customer receivables:Fiscal year ended January 31, 2006
    
    $
    4,106
    
    
    $
    1,496
    
    
    $
    709
    
    
    $
    (738
    )
    
    $
    5,573Fiscal year ended January 31, 2007
    
    
    5,573
    
    
    
    1,700
    
    
    
    666
    
    
    
    (919
    )
    
    
    7,020Fiscal year ended January 31, 2008
    
    
    7,020
    
    
    
    1,205
    
    
    
    336
    
    
    
    (990
    )
    
    
    7,571
 60




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures.
 Managements Report on Internal Control over Financial
Reporting.
   Changes in Internal Control over Financial Reporting.
 61




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal
Control  Integrated Framework
    Internal
Control  Integrated Framework
  /s/ Deloitte & Touche LLPKansas City, MissouriApril 15, 2008
 62




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##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management
  
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accounting Fees and Services
  63




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules.
  1.
    
    Financial Statements:
  2.
    
    Financial Statement Schedules:
  3.
    
    Exhibits:
  ExhibitNumber
    
    Description4(1)
    
    Corrected Certificate of Restated Certificate of Incorporation of the Registrant (filed as
Exhibit 3(1) with the Registrants Registration Statement on Form S-1 which was filed on
September 20, 2007 (File No.333-146184), and incorporated herein by this reference)4(2)
    
    Certificate of Designations of Series A Junior Participating Preferred Stock of Layne
Christensen Company (filed with the Registrants Annual Report on Form 10-K for the fiscal
year ended January 31, 2007 as Exhibit 4(2) and incorporated herein by this reference)4(3)
    
    Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.1(b) to the Registrants
Form 8-K filed September 17, 2007 and incorporated herein by this reference)4(4)
    
    Registration Rights Agreement, dated September 28, 2005, by and among the Company and the
holders of Company common stock listed on the signature pages thereto (incorporated by
reference to Exhibit 4.1 to the Companys Quarterly Report on Form 10-Q filed September 10,
2007)4(5)
    
    Specimen Common Stock Certificate (filed with Amendment No. 3 to the Registrants
Registration Statement on Form S-1 (File No. 33-48432) as Exhibit 4(1) and incorporated herein
by reference)4(6)
    
    Amended and Restated Loan Agreement, dated as of September 28, 2005, by and among Layne
Christensen Company, LaSalle Bank National Association, as Administrative Agent and as Lender,
and the other Lenders listed therein (filed as Exhibit 4.1 to the Companys Form 8-K, dated
September 28, 2005, and incorporated herein by this reference)4(7)
    
    Amendment No. 1 to Amended and Restated Loan Agreement, dated June 16, 2006, by and among
Layne Christensen Company and LaSalle Bank National Association (LaSalle) as Administrative
Agent, and LaSalle and the other Lenders a party thereto (filed as Exhibit 10(1) to the
Companys Form 10-Q for the quarter ended July 31, 2006 and incorporated herein by this
reference).4(8)
    
    Amendment No. 2 to the Amended and Restated Loan Agreement, dated as of November 20, 2006, by
and among Layne Christensen Company and LaSalle, as Administrative Agent, and LaSalle and the
other Lenders a party thereto (filed as Exhibit 4(1) to the Companys Form 8-K, dated November
20, 2006, and incorporated herein by this reference).4(9)
    
    Amendment No. 3 to Amended and Restated Loan Agreement, dated October 15, 2007, by and among
the Company, LaSalle Bank National Association, as Administrative Agent and Lender, and the
other Lenders listed therein (filed as Exhibit 10(1) to the Companys Form 10-Q for the
quarter ended October 31, 2007, and incorporated herein by this reference)4(10)
    
    Master Shelf Agreement, dated as of July 31, 2003, by and among Layne Christensen Company,
Prudential Investment Management, Inc., The Prudential Insurance Company of America, Pruco
Life Insurance Company, Security Life of Denver Insurance Company and such other Purchasers of
the Notes as may be named in the Master Shelf Agreement from time to time (filed with the
Registrants 10-Q for the quarter ended July 31, 2003 (File No. 0-20578) as Exhibit 4(5) and
incorporated herein by reference)
 64




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##### Table of Contents



Item 15. Exhibits and Financial Statement Schedules.
 4(11)
    
    Letter Amendment No. 1 to Master Shelf Agreement, dated as of May 15, 2004, by and among
Layne Christensen Company, Prudential Investment Management, Inc., The Prudential Insurance
Company of America, Pruco Life Insurance Company, Security Life of Denver Insurance Company
and such other Purchasers of the Notes as may be named in the Master Shelf Agreement from time
to time (filed as Exhibit 4(6) to the Companys Form 10-K for the fiscal year ended January
31, 2006, and incorporated herein by this reference)4(12)
    
    Letter Amendment No. 2 to Master Shelf Agreement, dated as of September 28, 2005, by and
among Layne Christensen Company, Prudential Investment Management, Inc., The Prudential
Insurance Company of America, Pruco Life Insurance Company, Security Life of Denver Insurance
Company and such other Purchasers of the Notes as may be named in the Master Shelf Agreement
from time to time (filed as Exhibit 4.2 to the Companys Form 8-K, dated September 28, 2005,
and incorporated herein by this reference)4(13)
    
    Letter Amendment No. 3 to Master Shelf Agreement, dated as of June 16, 2006, by and among
Layne Christensen Company, Prudential Investment Management, Inc., The Prudential Insurance
Company of America, Pruco Life Insurance Company, Security Life of Denver Insurance Company
and such other Purchasers of the Notes as may be named in the Master Shelf Agreement from time
to time (filed as Exhibit 10(2) to the Companys Form 10-Q for the quarter ended July 31, 2006
and incorporated herein by this reference)4(14)
    
    Letter Amendment No. 4 to Master Shelf Agreement, dated as of November 20, 2006, by and
among Layne Christensen Company, Prudential Investment Management, Inc., The Prudential
Insurance Company of America, Pruco Life Insurance Company, Security Life of Denver Insurance
Company and such other Purchasers of the Notes as may be named in the Master Shelf Agreement
from time to time (filed as Exhibit 4(2) to the Companys Form 8-K, dated November 20, 2006,
and incorporated herein by this reference)4(15)
    
    Letter Amendment No. 5 to Master Shelf Agreement, dated as of October 15, 2007, by and among
Layne Christensen Company, Prudential Investment Management, Inc., The Prudential Insurance
Company of America, Pruco Life Insurance Company, Security Life of Denver Insurance Company
and such other Purchasers of the Notes as may be named in the Master Shelf Agreement from time
to time (filed as Exhibit 10(2) to the Companys Form 10-Q for the quarter ended October 31,
2007 and incorporated herein by this reference)10(1)
    
    Tax Liability Indemnification Agreement between the Registrant and The Marley Company (filed
with Amendment No. 3 to the Registrants Registration Statement (File No. 33-48432) as Exhibit
10(2) and incorporated herein by reference)10(2)
    
    Lease Agreement between the Registrant and Parkway Partners, L.L.C. dated December 21, 1994
(filed with the Registrants Annual Report on Form 10-K for the fiscal year ended January 31,
1995 (File No. 0-20578) as Exhibit 10(2) and incorporated herein by reference)10(2.1)
    
    First Modification & Ratification of Lease, dated as of February 26, 1996, between Parkway
Partners, L.L.C. and the Registrant (filed with the Registrants Annual Report on Form 10-K
for the fiscal year ended January 31, 1996 (File No. 0-20578), as Exhibit 10(2.1) and
incorporated herein by this reference)10(2.2)
    
    Second Modification and Ratification of Lease Agreement between Parkway Partners, L.L.C.
and Layne Christensen Company dated April 28, 1997 (filed with the Registrants Annual Report
on Form 10-K for the fiscal year ended January 31, 1999 (File No. 0-20578), as Exhibit 10(2.2)
and incorporated herein by this reference)10(2.3)
    
    Third Modification and Extension Agreement between Parkway Partners, L.L.C. and Layne
Christensen Company dated November 3, 1998 (filed with the Companys 10-Q for the quarter
ended October 31, 1998 (File No. 0-20578) as Exhibit 10(1) and incorporated herein by
reference)10(2.4)
    
    Fourth Modification and Extension Agreement between Parkway Partners, L.L.C. and Layne
Christensen Company executed May 17, 2000, effective as of December 29, 1998 (filed with the
Companys 10-Q for the quarter ended July 31, 2000 (File No. 0-20578) as Exhibit 10.1 and
incorporated herein by reference)10(2.5)
    
    Fifth Modification and extension Agreement between Parkway Partners, L.L.C. and Layne
Christensen Company dated March 1, 2003 (filed as Exhibit 10(2.5) to the Registrants Annual
Report on Form 10-K for the fiscal year ended January 31, 2003 (File No. 0-20578) and
incorporated herein by this reference)10(2.6)
    
    Sixth Modification Agreement, dated February 29, 2008, between 1900 Associates L.L.C. and the Company**10(3)
    
    Form of Stock Option Agreement between the Company and management of the Company (filed with Amendment No. 3 to the
Registrants Registration Statement (File No. 33-48432) as Exhibit 10(7) and incorporated herein by reference)
 65




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##### Table of Contents



Item 15. Exhibits and Financial Statement Schedules.
 10(4)
    
    Insurance Liability Indemnity Agreement between the Company and The Marley Company (filed
with Amendment No. 3 to the Registrants Registration Statement (File No. 33-48432) as Exhibit
10(10) and incorporated herein by reference)10(5)
    
    Agreement between The Marley Company and the Company relating to tradename (filed with the
Registrants Registration Statement (File No.33-48432) as Exhibit 10(10) and incorporated
herein by reference)**10(6)
    
    Form of Subscription Agreement for management of the Company
(filed with Amendment No. 3 to the Registrants Registration
Statement (File No. 33-48432) as Exhibit 10(16) and incorporated
herein by reference)**10(7)
    
    Form of Subscription Agreement between the Company and Robert J.
Dineen (filed with Amendment No. 3 to the Registrants
Registration Statement (File No. 33-48432) as Exhibit 10(17) and
incorporated herein by reference)**10(8)
    
    Letter Agreement between Andrew B. Schmitt and the Company dated
October 12, 1993 (filed with the Companys Annual Report on Form
10-K for the fiscal year ended January 31, 1995 (File No. 0-20578)
as Exhibit 10(13) and incorporated herein by reference)**10(9)
    
    Form of Incentive Stock Option Agreement between the Company and
Management of the Company (filed with the Companys Annual Report
on Form 10-K for the fiscal year ended January 31, 1996 (File No.
0-20578), as Exhibit 10(15) and incorporated herein by this
reference)10(10)
    
    Registration Rights Agreement, dated as of November 30, 1995, between the Company and Marley
Holdings, L.P. (filed with the Companys Annual Report on Form 10-K for the fiscal year ended
January 31, 1996 (File No. 0-20578), as Exhibit 10(17) and incorporated herein by this
reference)**10(11)
    
    Form of Incentive Stock Option Agreement between the Company and
Management of the Company effective February 1, 1998 (filed with
the Companys Form 10-Q for the quarter ended April 30, 1998
(File No. 0-20578) as Exhibit 10(1) and incorporated herein by
reference)**10(12)
    
    Form of Incentive Stock Option Agreement between the Company and
Management of the Company effective April 20, 1999 (filed with
the Companys Form 10-Q for the quarter ended April 30, 1999
(File No. 0-20578) as Exhibit 10(2) and incorporated herein by
reference)**10(13)
    
    Form of Non Qualified Stock Option Agreement between the Company
and Management of the Company effective as of April 20, 1999
(filed with the Companys Form 10-Q for the quarter ended April
30, 1999 (File No. 0-20578) as Exhibit 10(3) and incorporated
herein by reference)**10(14)
    
    Layne Christensen Company District Incentive Compensation Plan
(revised effective February 1, 2000) (filed as Exhibit 10(17) to
the Registrants Annual Report on Form 10-K for the fiscal year
ended January 31, 2003 (File No. 0-20578) and incorporated herein
by this reference)**10(15)
    
    Layne Christensen Company Executive Incentive Compensation Plan (as amended and restated,
effective February 1, 2008) (filed as Exhibit 10.1 to the Registrants Current Report on Form
8-K filed February 11, 2008 and incorporated herein by this reference)**10(16)
    
    Layne Christensen Company Corporate Staff Incentive Compensation Plan (revised effective
October 10, 2003) (filed as Exhibit 10(18) to the Registrants Annual Report on Form 10-K for
the fiscal year ended January 31, 2004 (File No. 0-20578) and incorporated herein by this
reference)10(17)
    
    Standstill Agreement, dated March 26, 2004, by and among Layne Christensen Company,
Wynnefield Partners Small Cap Value, L.P., Wynnefield Small Cap Value Offshore Fund, Ltd.,
Wynnefield Partners Small Cap Value L.P.I., Channel Partnership II, L.P., Wynnefield Capital
Management, LLC, Wynnefield Capital, Inc., Wynnefield Capital, Inc. Profit Sharings Money
Purchase Plan, Nelson Obus and Joshua Landes (filed as Exhibit 10(19) to the Registrants
Annual Report on Form 10-K for the fiscal year ended January 31, 2004 (File No. 0-20578) and
incorporated herein by this reference)**10(18)
    
    Layne Christensen Company 2006 Equity Incentive Plan, as amended
(filed as Exhibit 10.1 to the Companys Form 8-K, filed June 14,
2006, and incorporated herein by this reference)**10(19)
    
    Form of Incentive Stock Option Agreement between the Company and
management of the Company for use with the 2006 Equity Incentive
Plan (filed as Exhibit 4(e) to the Companys Form S-8 (File No.
333-135683), filed July 10, 2006, and incorporated herein by this
reference)
 66




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##### Table of Contents



Item 15. Exhibits and Financial Statement Schedules.
 **10(20)
    
    Form of Nonqualified Stock Option Agreement between the Company
and management of the Company for use with the 2006 Equity
Incentive Plan (filed as Exhibit 4(f) to the Companys Form S-8
(File No. 333-135683), filed July 10, 2006, and incorporated
herein by this reference)**10(21)
    
    Form of Nonqualified Stock Option Agreement between the Company
and non-employee directors of the Company for use with the 2006
Equity Incentive Plan (filed as Exhibit 4(g) to the Companys
Form S-8 (File No. 333-135683), filed July 10, 2006, and
incorporated herein by this reference)**10(22)
    
    Form of Restricted Stock Award Agreement between the Company and
management of the Company for use with the 2006 Equity Incentive
Plan (filed as Exhibit 10(7) to the Companys Form 10-Q for the
quarter ended July 31, 2006 and incorporated herein by this
reference)**10(23)
    
    Form of Restricted Stock Award Agreement for Management and
Non-Employee Directors under the Companys 2006 Equity Incentive
Plan (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed September 17, 2007)**10(24)
    
    Layne Christensen Company Water Infrastructure Division Incentive
Compensation Plan (as amended and restated, effective February 1,
2008)**10(25)
    
    Layne Energy, Inc. 2007 Stock Option Plan (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on Form
8-K filed June 13, 2007)**10(26)
    
    Form of Nonqualified Stock Option Agreement under the Layne
Energy, Inc. 2007 Stock Option Plan (incorporated by reference to
Exhibit 10.2 to the Companys Current Report on Form 8-K filed
June 13, 2007)**10(27)
    
    Layne Christensen Company Mineral Exploration Division
Incentive Compensation Plan (as amended and restated effective
February 1, 2008)**10(28)
    
    Severance Agreement, dated March 13, 2008, by and between
Andrew B. Schmitt and Layne Christensen Company (incorporated by
reference to Exhibit 10(1) to the Companys Current Report on
Form 8-K filed March 19, 2008)**10(29)
    
    Severance Agreement, dated March 13, 2008, by and between
Gregory F. Aluce and Layne Christensen Company (incorporated by
reference to Exhibit 10(2) to the Companys Current Report on
Form 8-K filed March 19, 2008)**10(30)
    
    Severance Agreement, dated March 13, 2008, by and between Steven
F. Crooke and Layne Christensen Company (incorporated by
reference to Exhibit 10(3) to the Companys Current Report on
Form 8-K filed March 19, 2008)**10(31)
    
    Severance Agreement, dated march 13, 2008, by and between Jerry
W. Fanska and Layne Christensen Company (incorporated by
reference to Exhibit 10(4) to the Companys Current Report on
Form 8-K filed March 19, 2008)**10(32)
    
    Severance Agreement, dated march 13, 2008, by and between Jeffrey
J. Reynolds and Layne Christensen Company (incorporated by
reference to Exhibit 10(5) to the Companys Current Report on
Form 8-K filed March 19, 2008)**10(33)
    
    Summary of 2008 Salaries of Named Executive Officers10(34)
    
    Agreement and Plan of Merger, dated August 30, 2005, among Layne Christensen Company, Layne
Merger Sub 1, Inc., Reynolds, Inc. and the Stockholders of Reynolds, Inc. listed on the
signature pages thereto (filed as Exhibit 10.2 to the Companys Form 8-K, dated September 28,
2005, and incorporated herein by this reference)10(35)
    
    Amendment to Agreement and Plan of Merger, dated July 30, 2007, by and among the Company and
Jeffrey Reynolds, individually and as Agent of the Stockholders listed on the signature pages
thereto (incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form 8-K
filed August 3, 2007)**10(36)
    
    Layne Christensen Company Key Management Deferred Compensation Plan, effective as of
January 1, 2006 (filed as Exhibit 10.1 to the Companys Form 8-K, dated January 20, 2006, and
incorporated herein by this reference)**10(37)
    
    Reynolds Division of Layne Christensen Company Cash Bonus Plan, dated September 28, 2005
(filed as Exhibit 10.1 to the Companys Form 8-K, dated September 28, 2005, and incorporated
herein by this reference)10(38)
    
    Settlement Agreement, dated March 31, 2006, by and among Layne Christensen Company, Steel
Partners II, L.P., Steel Partners, L.L.C. and Warren G. Lichtenstein (filed as Exhibit 10.1 to
the Companys Form 8-K, dated April 5, 2006, and incorporated herein by this reference)21(1)-
    
    List of Subsidiaries23(1)-
    
    Consent of Deloitte & Touche LLP
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##### Table of Contents



Item 15. Exhibits and Financial Statement Schedules.
 23(2)-
    
    Consent of Cawley, Gillespie & Associates, Inc.31(1)-
    
    Section 302 Certification of Principal Executive Officer of the Company31(2)-
    
    Section 302 Certification of Principal Financial Officer of the Company32(1)-
    
    Section 906 Certification of Principal Executive Officer of the Company32(2)-
    
    Section 906 Certification of Principal Financial Officer of the Company
      68




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##### Table of Contents



Signatures
  Layne Christensen CompanyBy
    
    /s/ A. B. SchmittAndrew B. SchmittPresident and Chief Executive Officer:Dated April 14, 2008
  Signature and Title
    
    Date/s/ A. B. Schmitt
    
    April 14, 2008Andrew B. SchmittPresident, Chief Executive Officerand Director (Principal Executive Officer)/s/ Jerry W. Fanska
    
    April 14, 2008Jerry W. FanskaSenior Vice President-Finance and Treasurer(Principal Financial and Accounting Officer)/s/ Jeff Reynolds
    
    April 14, 2008Jeffrey J. ReynoldsDirector/s/ Donald K. Miller
    
    April 14, 2008Donald K. MillerDirector/s/ David A. B. Brown
    
    April 14, 2008David A. B. BrownDirector/s/ J. Samuel Butler
    
    April 14, 2008J. Samuel ButlerDirector/s/ Anthony B. Helfet
    
    April 14, 2008Anthony B. HelfetDirector/s/  Nelson Obus
    
    April 14, 2008Nelson ObusDirector
 69