United States
Securities and Exchange Commission
 Washington, D.C. 20549
 Form 10-K
  þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Fiscal Year Ended January 31, 2009
 or
 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: 001-34195
 Layne Christensen Company
  Delaware(State or other jurisdiction 
of incorporation or organization)
    
    48-0920712(I.R.S. Employer
Identification No.)
 
   Title of each class
    
    Name of each exchange on which registeredCommon stock, $.01 par value 
Preferred Share Purchase Rights
    
    NASDAQ Global Select Market
NASDAQ Global Select Market
  o þ
 o þ
 þ o
 þ
  Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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PART I
 Item 1. Business
 General
  www.laynechristensen.com
 Market Overview
  Water Infrastructure
     Mineral Exploration
     Energy
  2




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




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##### 



ter 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.
 
    
    Sonic drilling provides continuous core samples of any overburden formation without the use
of water or drilling additives and is able to core and drill through virtually any formation
or obstruction, including bedrock. Applications include site assessments, underground storage
tank investigation, delineation of contaminants, installation of monitoring wells and recovery
wells, construction, geotech investigations, mineral and sand exploration, and discreet water
sampling.
 Water Infrastructure
   Water Systems
  Well and Pump Rehabilitation
  Water and Wastewater Treatment and Plant Construction
 4




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Sewer Rehabilitation
 Environmental Specialty Drilling
 Mineral Exploration
    Energy
     5




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Operations
    Customers and Contracts
      Backlog
  Seasonality
  Competition
  6




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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
 Demand for our services is vulnerable to economic downturns and reductions in private industry and
municipal spending. If general economic conditions continue or weaken and current constraints on
the availability of capital continue, then our revenues, profits and our financial condition may
decline.
     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
    
    our credit agreements contain various operating and financial covenants that could restrict
our ability to incur additional indebtedness and liens, make investments and acquisitions,
transfer or sell assets, and transact with affiliates.
  There may be undisclosed liabilities associated with our acquisitions.
  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 through 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.
   9




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##### 



Reductions in the market price of gold could significantly reduce our profit.
  
    
    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 further reduce our revenue and profit and curtail our future
growth.
    The current turmoil in the credit markets and poor economic conditions could negatively impact the
credit worthiness of our financial counterparties.
  
    
    non-performance of institutions with whom we negotiate gas forward pricing contracts;
    
    viability of institutions holding our cash deposits in excess
of FDIC insurance limits; and
    
    ability of institutions with whom we have lines of credit to allow access to those funds.
  Our derivative financial instruments may not fully protect us from changes in natural gas
prices.
  10




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##### 



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.
  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.
    11




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
    
    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;
    
    the 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.
  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.
  12




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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.
   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.
   13




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Our activities are subject to environmental regulation that could increase our operating costs or
suspend our ability to operate our business.
   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.
  14




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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.
  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.
  15




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We are required to assess and report on our internal controls each year. Findings of inadequate
internal controls could reduce investor confidence in the reliability of our financial information.
  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
  16




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Natural Gas Reserves
  2009
    
    2008Proved developed (MMcf)
    
    
    16,289
    
    
    
    22,794Proved undeveloped (MMcf)
    
    
    274
    
    
    
    27,258Total proved reserves (MMcf)
    
    
    16,563
    
    
    
    50,052Standardized measure of discounted
cash flow (in thousands)
    
    $
    40,176
    
    
    $
    86,484
  Productive Wells, Production and Acreage
  Fiscal Years Ended January 31,
    
    2009
    
    2008
    
    2007Revenues
    
    $
    7.30
    
    
    $
    6.45
    
    
    $
    5.95Lease operating expenses
    
    
    1.81
    
    
    
    1.71
    
    
    
    1.46Transportation costs
    
    
    2.43
    
    
    
    2.06
    
    
    
    1.88Production and property taxes
    
    
    0.20
    
    
    
    0.18
    
    
    
    0.16
  Gross
    
    NetAcres
    
    Acres2010
    
    
    18,697
    
    
    
    18,6972011
    
    
    34,047
    
    
    
    34,0472012
    
    
    20,263
    
    
    
    20,2632013
    
    
    66,986
    
    
    
    66,9862014
    
    
    31,859
    
    
    
    31,859Thereafter
    
    
    157
    
    
    
    157
  AcresFiscal Years Ended January 31,
    
    2009
    
    2008Gross developed
    
    
    102,009
    
    
    
    66,044Net developed
    
    
    101,802
    
    
    
    65,836Gross undeveloped
    
    
    172,509
    
    
    
    192,473Net undeveloped
    
    
    172,509
    
    
    
    192,473
 Drilling Activity
  Fiscal Years Ended January 31,
    
    2009
    
    2008
    
    2007Gross
    
    Net
    
    Gross
    
    Net
    
    Gross
    
    NetExploratory wells:Capable of production
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dry
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Development wells:Capable of production
    
    
    116
    
    
    
    116
    
    
    
    92
    
    
    
    104
    
    
    
    148
    
    
    
    147Dry
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Wells abandoned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquired wells
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    13Net increase in capable wells
    
    
    116
    
    
    
    116
    
    
    
    92
    
    
    
    104
    
    
    
    162
    
    
    
    160
  Delivery Commitments
  17




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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
    
    
    60
    
    
    President, Chief Executive Officer and DirectorJeffrey J. Reynolds
    
    
    42
    
    
    Executive Vice President and DirectorGregory F. Aluce
    
    
    53
    
    
    Senior Vice President and
Division President  Water ResourcesEric R. Despain
    
    
    60
    
    
    Senior Vice President and
Division President  Mineral ExplorationSteven F. Crooke
    
    
    52
    
    
    Senior Vice President, Secretary and
General CounselJerry W. Fanska
    
    
    60
    
    
    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 2009
    
    High
    
    LowFirst Quarter
    
    $
    45.83
    
    
    $
    32.08Second Quarter
    
    
    53.37
    
    
    
    38.79Third Quarter
    
    
    58.26
    
    
    
    16.54Fourth Quarter
    
    
    27.80
    
    
    
    10.36
 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
    19




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Item 6. Selected Financial Data
   Fiscal Years Ended January 31,
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Income Statement Data (in thousands, except per share data):Revenues
    
    $
    1,008,063
    
    
    $
    868,274
    
    
    $
    722,768
    
    
    $
    463,015
    
    
    $
    343,462Cost of revenues (exclusive of depreciation, depletion, amortization
and impairment shown below)
    
    
    756,083
    
    
    
    638,003
    
    
    
    536,373
    
    
    
    344,628
    
    
    
    250,244Selling, general and administrative expense
    
    
    136,687
    
    
    
    119,937
    
    
    
    102,603
    
    
    
    69,979
    
    
    
    60,214Depreciation, depletion and amortization
    
    
    52,840
    
    
    
    43,620
    
    
    
    32,853
    
    
    
    20,024
    
    
    
    14,441Impairment of oil and gas properties
    
    
    28,704
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other income (expense):Equity in earnings of affiliates
    
    
    14,089
    
    
    
    8,076
    
    
    
    4,452
    
    
    
    4,345
    
    
    
    2,637Interest
    
    
    (3,614
    )
    
    
    (8,730
    )
    
    
    (9,781
    )
    
    
    (5,773
    )
    
    
    (3,221
    )Other, net
    
    
    3,214
    
    
    
    1,229
    
    
    
    2,557
    
    
    
    900
    
    
    
    1,220Income from continuing operations before income taxes
and minority interest
    
    
    47,438
    
    
    
    67,289
    
    
    
    48,167
    
    
    
    27,856
    
    
    
    19,199Income tax expense
    
    
    21,266
    
    
    
    30,178
    
    
    
    21,915
    
    
    
    13,121
    
    
    
    9,215Minority interest
    
    
    362
    
    
    
    145
    
    
    
    
    
    
    
    (50
    )
    
    
    (17
    )Net income from continuing operations before discontinued operations
    
    
    26,534
    
    
    
    37,256
    
    
    
    26,252
    
    
    
    14,685
    
    
    
    9,967Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    (213
    )Net income
    
    $
    26,534
    
    
    $
    37,256
    
    
    $
    26,252
    
    
    $
    14,681
    
    
    $
    9,754Basic income per share:Net income from continuing operations before discontinued operations
    
    $
    1.38
    
    
    $
    2.23
    
    
    $
    1.71
    
    
    $
    1.08
    
    
    $
    0.79Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.01
    )Net income per share
    
    $
    1.38
    
    
    $
    2.23
    
    
    $
    1.71
    
    
    $
    1.08
    
    
    $
    0.78Diluted income per share:Net income from continuing operations before discontinued operations
    
    $
    1.37
    
    
    $
    2.20
    
    
    $
    1.68
    
    
    $
    1.05
    
    
    $
    0.77Loss from discontinued operations, net of income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Net income per share
    
    $
    1.37
    
    
    $
    2.20
    
    
    $
    1.68
    
    
    $
    1.05
    
    
    $
    0.75Balance Sheet Data (in thousands):Working capital, including current maturities of debt
    
    $
    128,610
    
    
    $
    127,696
    
    
    $
    66,989
    
    
    $
    69,996
    
    
    $
    54,455Total assets
    
    
    719,357
    
    
    
    696,955
    
    
    
    547,164
    
    
    
    449,335
    
    
    
    245,380Total long term debt, excluding current maturities
    
    
    26,667
    
    
    
    46,667
    
    
    
    151,600
    
    
    
    128,900
    
    
    
    60,000Total stockholders equity
    
    
    456,022
    
    
    
    423,372
    
    
    
    205,034
    
    
    
    171,626
    
    
    
    104,697
 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 Division
    Mineral Exploration Division
    21




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Energy Division
     Other
   Fiscal Years Ended January 31,
    
    Period-to-Period Change2009
    
    2008Revenues:
    
    2009
    
    2008
    
    2007
    
    vs. 2008
    
    vs. 2007Water infrastructure
    
    
    76.1
    %
    
    
    73.7
    %
    
    
    73.6
    %
    
    
    19.9
    %
    
    
    20.2
    %Mineral exploration
    
    
    18.7
    
    
    
    20.5
    
    
    
    20.6
    
    
    
    5.8
    
    
    
    19.9Energy
    
    
    4.6
    
    
    
    4.6
    
    
    
    3.7
    
    
    
    16.6
    
    
    
    46.8Other
    
    
    0.6
    
    
    
    1.2
    
    
    
    2.1
    
    
    
    (44.2
    )
    
    
    (29.6
    )Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    16.1
    %
    
    
    20.1Cost of revenues (exclusive of depreciation, depletion, amortization
and impairment shown below)
    
    
    75.0
    
    
    
    73.5
    
    
    
    74.2
    
    
    
    18.5
    
    
    
    18.9Selling, general and administrative expense
    
    
    13.6
    
    
    
    13.8
    
    
    
    14.2
    
    
    
    14.0
    
    
    
    16.9Depreciation, depletion and amortization
    
    
    5.2
    
    
    
    5.0
    
    
    
    4.5
    
    
    
    21.1
    
    
    
    32.8Impairment of oil and gas properties
    
    
    2.8
    
    
    
    
    
    
    
    
    
    
    
    *
    
    
    
    Other income (expense):Equity in earnings of affiliates
    
    
    1.4
    
    
    
    0.9
    
    
    
    0.6
    
    
    
    74.5
    
    
    
    81.4Interest
    
    
    (0.4
    )
    
    
    (1.0
    )
    
    
    (1.4
    )
    
    
    (58.6
    )
    
    
    (10.7
    )Other, net
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    *
    
    
    
    (51.9
    )Income before income taxes and minority interest
    
    
    4.7
    
    
    
    7.8
    
    
    
    6.6
    
    
    
    (29.5
    )
    
    
    39.7Income tax expense
    
    
    2.1
    
    
    
    3.5
    
    
    
    3.0
    
    
    
    (29.5
    )
    
    
    37.7Minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    *
    
    
    
    *Net income
    
    
    2.6
    %
    
    
    4.3
    %
    
    
    3.6
    %
    
    
    (28.8
    )%
    
    
    41.9
    %
 *
    
    not meaningful
 Revenues, equity in earnings of affiliates and income before income taxes and minority interest
pertaining to the Companys operating segments are presented on the next page.
Unallocated corporate expenses primarily consist of general and administrative functions performed
on a company-wide basis and benefiting all operating segments. 22




---



##### 



(in thousands)Fiscal Years Ended January 31,
    
    2009
    
    2008
    
    2007RevenuesWater infrastructure
    
    $
    766,957
    
    
    $
    639,584
    
    
    $
    531,916Mineral exploration
    
    
    188,918
    
    
    
    178,482
    
    
    
    148,911Energy
    
    
    46,352
    
    
    
    39,749
    
    
    
    27,081Other
    
    
    5,836
    
    
    
    10,459
    
    
    
    14,860Total revenues
    
    $
    1,008,063
    
    
    $
    868,274
    
    
    $
    722,768Equity in earnings of affiliatesMineral exploration
    
    $
    14,089
    
    
    $
    8,076
    
    
    $
    4,452Income (loss) before income taxes and minority interestWater infrastructure
    
    $
    48,399
    
    
    $
    42,995
    
    
    $
    35,000Mineral exploration
    
    
    39,260
    
    
    
    37,452
    
    
    
    26,557Energy
    
    
    (12,401
    )
    
    
    13,075
    
    
    
    10,680Other
    
    
    1,280
    
    
    
    3,696
    
    
    
    4,094Unallocated corporate expenses
    
    
    (25,486
    )
    
    
    (21,199
    )
    
    
    (18,383
    )Interest
    
    
    (3,614
    )
    
    
    (8,730
    )
    
    
    (9,781
    )Total income before income taxes and minority interest
    
    $
    47,438
    
    
    $
    67,289
    
    
    $
    48,167
 Comparison of Fiscal 2009 to Fiscal 2008
        Water Infrastructure Division
 (in thousands)Fiscal Years Ended January 31,
    
    2009
    
    2008Revenues
    
    $
    766,957
    
    
    $
    639,584Income before income taxes and
minority interest
    
    
    48,399
    
    
    
    42,995
    23




---



##### 



Mineral Exploration Division
 (in thousands)Fiscal Years Ended January 31,
    
    2009
    
    2008Revenues
    
    $
    188,918
    
    
    $
    178,482Income before income taxes and
minority interest
    
    
    39,260
    
    
    
    37,452
   Energy Division
 (in thousands)Fiscal Years Ended January 31,
    
    2009
    
    2008Revenues
    
    $
    46,352
    
    
    $
    39,749(Loss) income before income taxes and
minority interest
    
    
    (12,401
    )
    
    
    13,075
     Other
 (in thousands)Fiscal Years Ended January 31,
    
    2009
    
    2008Revenues
    
    $
    5,836
    
    
    $
    10,459Income before income taxes and
minority interest
    
    
    1,280
    
    
    
    3,696
  Unallocated Corporate Expenses
  Comparison of Fiscal 2008 to Fiscal 2007
     24




---



##### 



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
  Unallocated Corporate Expenses
  Fluctuation in Quarterly Results
  25




---



##### 



Inflation
  Liquidity and Capital Resources
       Actual
    
    Required
    
    Actual
    
    Required(in thousands)
    
    2009
    
    2009
    
    2008
    
    2008Minimum fixed charge
coverage ratio
    
    
    4.22
    
    
    
    1.50
    
    
    
    5.65
    
    
    
    1.50Maximum leverage ratio
    
    
    0.44
    
    
    
    3.00
    
    
    
    0.57
    
    
    
    3.25Minimum tangible net worth
    
    $
    340,280
    
    
    $
    291,237
    
    
    $
    313,571
    
    
    $
    274,647
    26




---



##### 



Operating Activities
  Investing Activities
    Financing Activities
    Contractual Obligations and Commercial Commitments
  Payments/Expiration by PeriodLess than
    
    
    
    
    
    
    
    
    
    More than(in thousands)
    
    Total
    
    1 year
    
    1-3 years
    
    4-5 years
    
    5 yearsContractual Obligations and Other Commercial CommitmentsCredit Agreement principal payments
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Senior Notes principal payments
    
    
    46,667
    
    
    
    20,000
    
    
    
    26,667
    
    
    
    
    
    
    
    Interest payments
    
    
    6,511
    
    
    
    3,500
    
    
    
    3,011
    
    
    
    
    
    
    
    Software financing obligations
    
    
    1,105
    
    
    
    482
    
    
    
    623
    
    
    
    
    
    
    
    Operating leases
    
    
    35,657
    
    
    
    12,902
    
    
    
    14,283
    
    
    
    8,472
    
    
    
    Mineral interest obligations
    
    
    656
    
    
    
    111
    
    
    
    363
    
    
    
    159
    
    
    
    23Income tax uncertainties
    
    
    174
    
    
    
    174
    
    
    
    
    
    
    
    
    
    
    
    Total cash contractual obligations
    
    
    90,770
    
    
    
    37,169
    
    
    
    44,947
    
    
    
    8,631
    
    
    
    23Standby letters of credit
    
    
    15,841
    
    
    
    15,841
    
    
    
    
    
    
    
    
    
    
    
    Asset retirement obligations
    
    
    1,305
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,305Total contractual obligations and commercial commitments
    
    $
    107,916
    
    
    $
    53,010
    
    
    $
    44,947
    
    
    $
    8,631
    
    
    $
    1,328
 27




---



##### 



Critical Accounting Policies and Estimates
   Revenue Recognition 
     Oil and Gas Properties and Mineral Interests
   28




---



##### 



Reserve Estimates
 Goodwill and Other Intangibles
    Other Long-lived Assets
 Accrued Insurance Expense
  Income Taxes
 Litigation and Other Contingencies
 29




---



##### 



New Accounting Pronouncements 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        30




---



##### 



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, 2009 and 2008
    
    
    34Consolidated Statements of Income for the Years Ended January 31, 2009, 2008 and 2007
    
    
    35Consolidated Statements of Stockholders Equity for the Years Ended January 31, 2009, 2008 and 2007
    
    
    36Consolidated Statements of Cash Flows for the Years Ended January 31, 2009, 2008 and 2007
    
    
    37Notes to Consolidated Financial Statements
    
    
    38Supplemental Information on Oil and Gas Producing Activities
    
    
    57Financial Statement Schedule II Valuation and Qualifying Accounts
    
    
    59
   31




---



##### 



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




---



##### 



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




---



##### 



Consolidated Balance Sheets
 (in thousands, except per share data)January 31,
    
    2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    67,165
    
    
    $
    73,068Customer receivables, less allowance of $7,878 and $7,571, respectively
    
    
    116,234
    
    
    
    125,091Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    63,638
    
    
    
    60,796Inventories
    
    
    31,329
    
    
    
    21,020Deferred income taxes
    
    
    16,561
    
    
    
    18,711Income taxes receivable
    
    
    6,806
    
    
    
    866Restricted deposits  current
    
    
    774
    
    
    
    500Other
    
    
    10,063
    
    
    
    5,288Total current assets
    
    
    312,570
    
    
    
    305,340Property and equipment:Land
    
    
    8,586
    
    
    
    8,643Buildings
    
    
    27,209
    
    
    
    21,868Machinery and equipment
    
    
    336,166
    
    
    
    299,642Gas transportation facilities and equipment
    
    
    39,825
    
    
    
    30,266Oil and gas properties
    
    
    92,497
    
    
    
    76,844Mineral interests in oil and gas properties
    
    
    21,248
    
    
    
    18,165525,531
    
    
    
    455,428Less  accumulated depreciation and depletion
    
    
    (278,786
    )
    
    
    (208,061
    )Net property and equipment
    
    
    246,745
    
    
    
    247,367Other assets:Investment in affiliates
    
    
    40,973
    
    
    
    29,835Goodwill
    
    
    90,029
    
    
    
    85,706Other intangible assets, net
    
    
    21,002
    
    
    
    20,930Restricted deposits  long term
    
    
    1,155
    
    
    
    505Other
    
    
    6,883
    
    
    
    7,272Total other assets
    
    
    160,042
    
    
    
    144,248$
    719,357
    
    
    $
    696,955LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    62,575
    
    
    $
    67,777Current maturities of long term debt
    
    
    20,000
    
    
    
    13,333Accrued compensation
    
    
    36,252
    
    
    
    36,763Accrued insurance expense
    
    
    9,173
    
    
    
    8,158Other accrued expenses
    
    
    17,626
    
    
    
    15,222Acquisition escrow obligation  current
    
    
    824
    
    
    
    550Income taxes payable
    
    
    3,254
    
    
    
    4,200Billings in excess of costs and estimated
earnings on uncompleted contracts
    
    
    34,256
    
    
    
    31,641Total current liabilities
    
    
    183,960
    
    
    
    177,644Noncurrent and deferred liabilities:Long-term debt
    
    
    26,667
    
    
    
    46,667Accrued insurance expense
    
    
    9,947
    
    
    
    9,736Deferred income taxes
    
    
    29,063
    
    
    
    28,329Acquisition escrow obligation  long term
    
    
    1,155
    
    
    
    505Other
    
    
    12,468
    
    
    
    10,304Total noncurrent and deferred liabilities
    
    
    79,300
    
    
    
    95,541Minority interest
    
    
    75
    
    
    
    398ContingenciesStockholders equity:Common stock, par value $.01 per share, 30,000 shares authorized,
19,383 and 19,161 shares issued and
outstanding, respectively
    
    
    194
    
    
    
    192Capital in excess of par value
    
    
    337,528
    
    
    
    328,301Retained earnings
    
    
    128,353
    
    
    
    101,866Accumulated other comprehensive loss
    
    
    (10,053
    )
    
    
    (6,987
    )Total stockholders equity
    
    
    456,022
    
    
    
    423,372$
    719,357
    
    
    $
    696,955
  34




---



##### 



Consolidated Statements of Income
 (in thousands, except per share data)Years Ended January 31,
    
    2009
    
    
    2008
    
    
    2007Revenues
    
    $
    1,008,063
    
    
    $
    868,274
    
    
    $
    722,768Cost of revenues (exclusive of depreciation, depletion, amortization and impairment shown below)
    
    
    756,083
    
    
    
    638,003
    
    
    
    536,373Selling, general and administrative expense
    
    
    136,687
    
    
    
    119,937
    
    
    
    102,603Depreciation, depletion and amortization
    
    
    52,840
    
    
    
    43,620
    
    
    
    32,853Impairment of oil and gas properties
    
    
    28,704
    
    
    
    
    
    
    
    Other income (expense):Equity in earnings of affiliates
    
    
    14,089
    
    
    
    8,076
    
    
    
    4,452Interest
    
    
    (3,614
    )
    
    
    (8,730
    )
    
    
    (9,781
    )Other, net
    
    
    3,214
    
    
    
    1,229
    
    
    
    2,557Income before income taxes and minority interest
    
    
    47,438
    
    
    
    67,289
    
    
    
    48,167Income tax expense
    
    
    21,266
    
    
    
    30,178
    
    
    
    21,915Minority interest
    
    
    362
    
    
    
    145
    
    
    
    Net income
    
    $
    26,534
    
    
    $
    37,256
    
    
    $
    26,252Basic income per share
    
    $
    1.38
    
    
    $
    2.23
    
    
    $
    1.71Diluted income per share
    
    $
    1.37
    
    
    $
    2.20
    
    
    $
    1.68Weighted average shares outstanding  basic
    
    
    19,191
    
    
    
    16,670
    
    
    
    15,320Dilutive stock options and unvested shares
    
    
    195
    
    
    
    268
    
    
    
    311Weighted average shares outstanding  diluted
    
    
    19,386
    
    
    
    16,938
    
    
    
    15,631
  35




---



##### 



Consolidated Statements of Stockholders Equity
 AccumulatedCapital In
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Excess of
    
    
    Retained
    
    
    Comprehensive(in thousands, except share data)
    
    Shares
    
    
    Amount
    
    
    Par Value
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBalance, February 1, 2006
    
    
    15,233,472
    
    
    
    152
    
    
    
    141,023
    
    
    
    37,893
    
    
    
    (7,442
    )
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    )
    
    
    423,372Comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,534
    
    
    
    
    
    
    
    26,534Other comprehensive income:Foreign currency translation adjustments,
net of income benefit of $844
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,549
    )
    
    
    (2,549
    )Change in unrealized loss on foreign
exchange contracts, net of income tax
benefit of $62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (96
    )
    
    
    (96
    )Change in unrecognized pension liability,
net of income tax benefit of $271
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (421
    )
    
    
    (421
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,468Issuance of unvested shares
    
    
    38,584
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Treasury stock purchased and subsequently
cancelled
    
    
    (5,357
    )
    
    
    
    
    
    
    (245
    )
    
    
    
    
    
    
    
    
    
    
    (245
    )Cumulative effect of adoption of SFAS 158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    (47
    )Issuance of stock upon exercise of options
    
    
    189,033
    
    
    
    2
    
    
    
    3,321
    
    
    
    
    
    
    
    
    
    
    
    3,323Income tax benefit on exercise of options
    
    
    
    
    
    
    
    
    
    
    2,067
    
    
    
    
    
    
    
    
    
    
    
    2,067Share-based compensation
    
    
    
    
    
    
    
    
    
    
    4,084
    
    
    
    
    
    
    
    
    
    
    
    4,084Balance, January 31, 2009
    
    
    19,382,976
    
    
    $
    194
    
    
    $
    337,528
    
    
    $
    128,353
    
    
    $
    (10,053
    )
    
    $
    456,022
  36




---



##### 



Consolidated Statements of Cash Flows
 (in thousands)Years Ended January 31,
    
    2009
    
    2008
    
    2007Cash flow from operating activities:Net income
    
    $
    26,534
    
    
    $
    37,256
    
    
    $
    26,252Adjustments to reconcile net income to cash from operations:Depreciation, depletion and amortization
    
    
    52,840
    
    
    
    43,620
    
    
    
    32,853Deferred income taxes
    
    
    3,166
    
    
    
    2,364
    
    
    
    (2,985
    )Equity in earnings of affiliates
    
    
    (14,089
    )
    
    
    (8,076
    )
    
    
    (4,452
    )Dividends received from affiliates
    
    
    2,951
    
    
    
    2,521
    
    
    
    1,502Minority interest
    
    
    (362
    )
    
    
    (145
    )
    
    
    Gain on disposal of property and equipment
    
    
    (30
    )
    
    
    (671
    )
    
    
    (994
    )Impairment of oil and gas properties
    
    
    28,704
    
    
    
    
    
    
    
    Gain on sale of mineral concession
    
    
    
    
    
    
    
    
    
    
    (920
    )Share-based compensation
    
    
    4,084
    
    
    
    3,026
    
    
    
    2,240Share-based compensation excess tax benefits
    
    
    (1,911
    )
    
    
    (2,313
    )
    
    
    (1,382
    )Changes in current assets and liabilities, (exclusive of effects of acquisitions and disposals):(Increase) decrease in customer receivables
    
    
    13,735
    
    
    
    (9,616
    )
    
    
    (7,691
    )Increase in costs and estimated earnings in excess of
billings on uncompleted contracts
    
    
    (1,531
    )
    
    
    (9,205
    )
    
    
    (10,044
    )(Increase) decrease in inventories
    
    
    (10,867
    )
    
    
    (1,788
    )
    
    
    462(Increase) decrease in other current assets
    
    
    (4,949
    )
    
    
    602
    
    
    
    598Increase (decrease) in accounts payable and accrued expenses
    
    
    (8,478
    )
    
    
    27,512
    
    
    
    27,522Increase (decrease) in billings in excess of costs and estimated
earnings on uncompleted contracts
    
    
    2,615
    
    
    
    (2,648
    )
    
    
    12,312Other, net
    
    
    (386
    )
    
    
    (2,276
    )
    
    
    (597
    )Cash from operating activities
    
    
    92,026
    
    
    
    80,163
    
    
    
    74,676Cash flow used in investing activities:Additions to property and equipment
    
    
    (51,416
    )
    
    
    (44,177
    )
    
    
    (36,150
    )Additions to gas transportation facilities and equipment
    
    
    (6,739
    )
    
    
    (5,327
    )
    
    
    (12,413
    )Additions to oil and gas properties
    
    
    (19,786
    )
    
    
    (18,216
    )
    
    
    (23,075
    )Additions to mineral interests in oil and gas properties
    
    
    (3,082
    )
    
    
    (5,650
    )
    
    
    (3,174
    )Payment of cash purchase price adjustment on prior year acquisitions
    
    
    (33
    )
    
    
    (2,270
    )
    
    
    (6,120
    )Proceeds from disposal of property and equipment
    
    
    1,172
    
    
    
    3,333
    
    
    
    4,646Proceeds from sale of mineral concession
    
    
    
    
    
    
    
    
    
    
    920Acquisition of businesses, net of cash acquired
    
    
    (7,070
    )
    
    
    (20,470
    )
    
    
    (31,305
    )Acquisition of oil and gas properties and mineral interests
    
    
    
    
    
    
    
    
    
    
    (1,988
    )Deposit of cash into restricted accounts
    
    
    (15,200
    )
    
    
    (2,075
    )
    
    
    (4,473
    )Release of cash from restricted accounts
    
    
    16,126
    
    
    
    9,627
    
    
    
    5,597Distribution of restricted cash for prior year acquisition
    
    
    (926
    )
    
    
    (9,627
    )
    
    
    Return of capital from affiliates
    
    
    
    
    
    
    
    
    
    
    411Cash used in investing activities
    
    
    (86,954
    )
    
    
    (94,852
    )
    
    
    (107,124
    )Cash flow from financing activities:Borrowings under revolving credit facilities
    
    
    
    
    
    
    483,800
    
    
    
    425,925Repayments under revolving credit facilities
    
    
    
    
    
    
    (575,400
    )
    
    
    (403,225
    )Repayments of long-term debt
    
    
    (13,333
    )
    
    
    
    
    
    
    Proceeds from public offering of common stock, net of issuance costs
    
    
    
    
    
    
    159,879
    
    
    
    Issuances of common stock
    
    
    3,323
    
    
    
    2,904
    
    
    
    3,010Excess tax benefit on exercise of share-based instruments
    
    
    1,911
    
    
    
    2,313
    
    
    
    1,382Purchases of treasury stock
    
    
    (245
    )
    
    
    
    
    
    
    Contribution by minority interest
    
    
    39
    
    
    
    543
    
    
    
    Cash from (used in) financing activities
    
    
    (8,305
    )
    
    
    74,039
    
    
    
    27,092Effects of exchange rate changes on cash
    
    
    (2,670
    )
    
    
    711
    
    
    
    380Net increase (decrease) in cash and cash equivalents
    
    
    (5,903
    )
    
    
    60,061
    
    
    
    (4,976
    )Cash and cash equivalents at beginning of year
    
    
    73,068
    
    
    
    13,007
    
    
    
    17,983Cash and cash equivalents at end of year
    
    $
    67,165
    
    
    $
    73,068
    
    
    $
    13,007
  37




---



##### 



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




---



##### 



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




---



##### 



Cash and Cash Equivalents
 Restricted Deposits
 Accrued Insurance Expense
 Fair Value of Financial Instruments
 Litigation and Other Contingencies
 Derivatives
 Supplemental Cash Flow Information
 (in thousands)
    
    2009
    
    2008
    
    2007Income taxes
    
    $
    18,843
    
    
    $
    20,704
    
    
    $
    15,489Interest
    
    
    3,054
    
    
    
    8,721
    
    
    
    9,564
     Income Taxes
 Earnings Per Share
 40




---



##### 



Shared-Based Compensation 
  Other Comprehensive Loss
 Unrealized
    
    AccumulatedCumulative
    
    Unrecognized
    
    Loss On
    
    OtherTranslation
    
    Pension
    
    Exchange
    
    Comprehensive(in thousands)
    
    Adjustment
    
    Liability
    
    Contracts
    
    LossBalance, January 31, 2007
    
    $
    (7,151
    )
    
    $
    (1,302
    )
    
    $
    
    
    
    $
    (8,453
    )Period change
    
    
    760
    
    
    
    706
    
    
    
    
    
    
    
    1,466Balance, January 31, 2008
    
    $
    (6,391
    )
    
    $
    (596
    )
    
    $
    
    
    
    $
    (6,987
    )Period change
    
    
    (2,549
    )
    
    
    (421
    )
    
    
    (96
    )
    
    
    (3,066
    )Balance, January 31, 2009
    
    $
    (8,940
    )
    
    $
    (1,017
    )
    
    $
    (96
    )
    
    $
    (10,053
    )
 (2) Acquisitions
 Fiscal Year 2009
  
    
    On October 24, 2008, the Company acquired 100% of the stock of Meadors Construction Co.,
Inc. (Meadors), a construction company operating primarily in Florida. The operation will be
combined with similar service lines and will serve to foster our further expansion into
Florida and the southeast.
 
    
    On August 7, 2008, the Company acquired certain assets and liabilities of Moore & Tabor, a
geotechnical construction firm operating in California.
 
    
    On May 5, 2008, the Company acquired certain assets and liabilities of Wittman Hydro
Planning Associates (WHPA), a water consulting firm specializing in hydrologic systems
modeling and analysis.
  (in thousands)
    
    Meadors
    
    Moore & Tabor
    
    WHPA
    
    TotalCash
    
    $
    4,536
    
    
    $
    1,785
    
    
    $
    2,494
    
    
    $
    8,815Expenses
    
    
    53
    
    
    
    33
    
    
    
    25
    
    
    
    111Total purchase price
    
    $
    4,589
    
    
    $
    1,818
    
    
    $
    2,519
    
    
    $
    8,926Escrow deposits
    
    $
    700
    
    
    $
    150
    
    
    $
    300
    
    
    $
    1,150
   (in thousands)
    
    Meadors
    
    Moore & Tabor
    
    WHPA
    
    TotalWorking capital
    
    $
    2,072
    
    
    $
    427
    
    
    $
    394
    
    
    $
    2,893Property and equipment
    
    
    592
    
    
    
    798
    
    
    
    40
    
    
    
    1,430Goodwill
    
    
    1,865
    
    
    
    593
    
    
    
    1,832
    
    
    
    4,290Other intangible assets
    
    
    60
    
    
    
    
    
    
    
    250
    
    
    
    310Other assets
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3Total purchase price
    
    $
    4,589
    
    
    $
    1,818
    
    
    $
    2,519
    
    
    $
    8,926
 41




---



##### 



Fiscal Year 2008
  
    
    On December 31, 2007 (the Tierdael Closing Date), the Company acquired certain assets and
liabilities of Tierdael Construction (Tierdael), a pipeline and utility construction
contractor in Denver which was combined with similar service lines.
 
    
    On November 30, 2007 (the SolmeteX Closing Date), the Company acquired certain assets and
liabilities of SolmeteX, Inc. (SolmeteX), a water and wastewater research and development
business and a supplier of wastewater filtration products to the dental market.
  (in thousands)
    
    Tierdael
    
    Solmetex
    
    TotalCash
    
    $
    6,646
    
    
    $
    13,500
    
    
    $
    20,146Assumed liabilities
    
    
    226
    
    
    
    
    
    
    
    226Expenses
    
    
    238
    
    
    
    86
    
    
    
    324Total purchase price
    
    $
    7,110
    
    
    $
    13,586
    
    
    $
    20,696Escrow deposits
    
    $
    665
    
    
    $
    1,000
    
    
    $
    1,665
    (in thousands)
    
    Tierdael
    
    Solmetex
    
    TotalWorking capital
    
    $
    3,983
    
    
    $
    64
    
    
    $
    4,047Property and equipment
    
    
    3,127
    
    
    
    115
    
    
    
    3,242Goodwill
    
    
    
    
    
    
    7,270
    
    
    
    7,270Tradenames
    
    
    
    
    
    
    2,962
    
    
    
    2,962Patents
    
    
    
    
    
    
    2,543
    
    
    
    2,543Deferred income taxes
    
    
    
    
    
    
    551
    
    
    
    551Other intangible assets
    
    
    
    
    
    
    81
    
    
    
    81Total purchase price
    
    $
    7,110
    
    
    $
    13,586
    
    
    $
    20,696
 Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase
Method.
  (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, 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




---



##### 



Fiscal Year 2007
  
    
    On November 20, 2006, the Company acquired 100% of the stock of American Water Services
Underground Infrastructure, Inc. (UIG), a wholly owned subsidiary of American Water (USA),
Inc. UIG is engaged in the business of providing trenchless pipeline rehabilitation services
for sewer and storm water systems and was combined with a similar service line acquired.
 
    
    On June 16, 2006 (the CWI Closing Date), the Company acquired 100% of the stock of
Collector Wells International, Inc. (CWI), a privately held specialty water services company
that designs and constructs water supply systems. CWI was combined with a similar service
line.
  (in thousands)
    
    UIG
    
    CWI
    
    TotalCash
    
    $
    27,524
    
    
    $
    3,150
    
    
    $
    30,674Layne common stock
    
    
    
    
    
    
    1,263
    
    
    
    1,263Expenses and adjustments
    
    
    138
    
    
    
    1,029
    
    
    
    1,167Total purchase price
    
    $
    27,662
    
    
    $
    5,442
    
    
    $
    33,104
      (in thousands)
    
    UIG
    
    CWI
    
    TotalWorking capital
    
    $
    11,723
    
    
    $
    1,016
    
    
    $
    12,739Property and equipment
    
    
    13,602
    
    
    
    1,580
    
    
    
    15,182Goodwill
    
    
    3,891
    
    
    
    3,436
    
    
    
    7,327Other intangible assets
    
    
    143
    
    
    
    
    
    
    
    143Other long-term assets
    
    
    69
    
    
    
    
    
    
    
    69Deferred income taxes
    
    
    (1,766
    )
    
    
    (590
    )
    
    
    (2,356
    )Total purchase price
    
    $
    27,662
    
    
    $
    5,442
    
    
    $
    33,104
  (in thousands)
    
    2007Revenues
    
    $
    760,752Net income
    
    
    25,199Basic earnings per share
    
    
    1.64Diluted earnings per share
    
    $
    1.61
  43




---



##### 



(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)
    
    
    50.00Centro Internacional de Formacion S.A. (Chile)
    
    
    50.00
  (in thousands)
    
    2009
    
    2008
    
    2007Current assets
    
    $
    99,533
    
    
    $
    78,165
    
    
    $
    42,584Noncurrent assets
    
    
    62,570
    
    
    
    42,682
    
    
    
    29,696Current liabilities
    
    
    59,844
    
    
    
    48,496
    
    
    
    19,857Noncurrent liabilities
    
    
    13,319
    
    
    
    9,373
    
    
    
    4,755Revenues
    
    
    301,268
    
    
    
    202,649
    
    
    
    130,090Gross profit
    
    
    58,933
    
    
    
    36,234
    
    
    
    23,274Operating income
    
    
    40,081
    
    
    
    24,074
    
    
    
    14,319Net income
    
    
    32,626
    
    
    
    18,762
    
    
    
    10,862
   (4) Impairment of Oil and Gas Properties
    (5) Goodwill and Other Intangible Assets
  2009
    
    2008Gross
    
    
    
    
    
    GrossCarrying
    
    Accumulated
    
    Carrying
    
    Accumulated(in thousands)
    
    Amount
    
    Amortization
    
    Amount
    
    AmortizationGoodwill
    
    $
    90,029
    
    
    $
    
    
    
    $
    85,706
    
    
    $
    Amortizable intangible assets:Tradenames
    
    $
    18,962
    
    
    $
    (2,275
    )
    
    $
    18,962
    
    
    $
    (1,464
    )Customer-related
    
    
    332
    
    
    
    (332
    )
    
    
    332
    
    
    
    (340
    )Patents
    
    
    3,152
    
    
    
    (569
    )
    
    
    2,902
    
    
    
    (307
    )Non-competition agreements
    
    
    439
    
    
    
    (387
    )
    
    
    379
    
    
    
    (273
    )Other
    
    
    2,590
    
    
    
    (910
    )
    
    
    1,292
    
    
    
    (553
    )Total amortizable intangible assets
    
    $
    25,475
    
    
    $
    (4,473
    )
    
    $
    23,867
    
    
    $
    (2,937
    )
 44




---



##### 



(in thousands)2010
    
    $
    1,5352011
    
    
    1,5202012
    
    
    1,1912013
    
    
    1,0372014
    
    
    1,037
   WaterEnergy
    
    Infrastructure
    
    TotalBalance, February 1, 2007
    
    $
    950
    
    
    $
    64,234
    
    
    $
    65,184Additions
    
    
    
    
    
    
    20,522
    
    
    
    20,522Balance, January 31, 2008
    
    
    950
    
    
    
    84,756
    
    
    
    85,706Additions
    
    
    
    
    
    
    4,323
    
    
    
    4,323Balance, January 31, 2009
    
    $
    950
    
    
    $
    89,079
    
    
    $
    90,029
 (6) Other Income (Expense)
  (in thousands)
    
    2009
    
    2008
    
    2007Gain from disposal of
property and equipment
    
    $
    30
    
    
    $
    671
    
    
    $
    994Settlement income
    
    
    2,173
    
    
    
    
    
    
    
    Gain on sale of mineral concession
    
    
    
    
    
    
    
    
    
    
    920Interest income
    
    
    1,065
    
    
    
    953
    
    
    
    187Exchange gain (loss)
    
    
    91
    
    
    
    (430
    )
    
    
    95Miscellaneous, net
    
    
    (145
    )
    
    
    35
    
    
    
    361Total
    
    $
    3,214
    
    
    $
    1,229
    
    
    $
    2,557
   (7) Costs and Estimated Earnings on Uncompleted Contracts
 (in thousands)
    
    2009
    
    2008Costs incurred on uncompleted contracts
    
    $
    811,011
    
    
    $
    586,459Estimated earnings
    
    
    175,308
    
    
    
    147,796986,319
    
    
    
    734,255Less: Billings to date
    
    
    956,937
    
    
    
    705,100Total
    
    $
    29,382
    
    
    $
    29,155Included in accompanying balance sheets
under the following captions:Costs and estimated earnings in excess
of billings on uncompleted contracts
    
    $
    63,638
    
    
    $
    60,796Billings in excess of costs and estimated
earnings on uncompleted contracts
    
    
    (34,256
    )
    
    
    (31,641
    )Total
    
    $
    29,382
    
    
    $
    29,155
  (8) Income Taxes
  (in thousands)
    
    2009
    
    2008
    
    2007Domestic
    
    $
    25,962
    
    
    $
    46,649
    
    
    $
    31,928Foreign
    
    
    21,476
    
    
    
    20,640
    
    
    
    16,239Total
    
    $
    47,438
    
    
    $
    67,289
    
    
    $
    48,167
  (in thousands)
    
    2009
    
    2008
    
    2007Currently due:U.S. federal
    
    $
    7,696
    
    
    $
    17,226
    
    
    $
    13,150State and local
    
    
    1,820
    
    
    
    3,125
    
    
    
    2,541Foreign
    
    
    8,433
    
    
    
    7,099
    
    
    
    8,61517,949
    
    
    
    27,450
    
    
    
    24,306Deferred:U.S. federal
    
    
    1,355
    
    
    
    1,632
    
    
    
    (941
    )State and local
    
    
    1,085
    
    
    
    288
    
    
    
    (649
    )Foreign
    
    
    877
    
    
    
    808
    
    
    
    (801
    )3,317
    
    
    
    2,728
    
    
    
    (2,391
    )Total
    
    $
    21,266
    
    
    $
    30,178
    
    
    $
    21,915
 45




---



##### 



(in thousands)
    
    2009
    
    2008Assets
    
    Liabilities
    
    Total
    
    Assets
    
    Liabilities
    
    TotalContract income
    
    $
    659
    
    
    $
    
    
    
    $
    659
    
    
    $
    4,545
    
    
    $
    
    
    
    $
    4,545Inventories
    
    
    1,912
    
    
    
    (339
    )
    
    
    1,573
    
    
    
    2,125
    
    
    
    (271
    )
    
    
    1,854Accrued insurance
    
    
    4,395
    
    
    
    
    
    
    
    4,395
    
    
    
    2,809
    
    
    
    
    
    
    
    2,809Other accrued liabilities
    
    
    1,720
    
    
    
    
    
    
    
    1,720
    
    
    
    2,234
    
    
    
    
    
    
    
    2,234Prepaid expenses
    
    
    
    
    
    
    (718
    )
    
    
    (718
    )
    
    
    
    
    
    
    (684
    )
    
    
    (684
    )Bad debts
    
    
    3,028
    
    
    
    
    
    
    
    3,028
    
    
    
    2,866
    
    
    
    
    
    
    
    2,866Employee compensation
    
    
    5,010
    
    
    
    
    
    
    
    5,010
    
    
    
    4,905
    
    
    
    
    
    
    
    4,905Other
    
    
    916
    
    
    
    (22
    )
    
    
    894
    
    
    
    481
    
    
    
    (299
    )
    
    
    182Total current
    
    
    17,640
    
    
    
    (1,079
    )
    
    
    16,561
    
    
    
    19,965
    
    
    
    (1,254
    )
    
    
    18,711Cumulative translation adjustment
    
    
    5,508
    
    
    
    
    
    
    
    5,508
    
    
    
    4,665
    
    
    
    
    
    
    
    4,665Buildings, machinery and equipment
    
    
    336
    
    
    
    (19,035
    )
    
    
    (18,699
    )
    
    
    440
    
    
    
    (16,251
    )
    
    
    (15,811
    )Gas transportation facilities and equipment
    
    
    
    
    
    
    (6,471
    )
    
    
    (6,471
    )
    
    
    
    
    
    
    (3,799
    )
    
    
    (3,799
    )Mineral interests and oil and gas properties
    
    
    
    
    
    
    (9,024
    )
    
    
    (9,024
    )
    
    
    
    
    
    
    (14,702
    )
    
    
    (14,702
    )Intangible assets
    
    
    731
    
    
    
    (5,478
    )
    
    
    (4,747
    )
    
    
    744
    
    
    
    (5,788
    )
    
    
    (5,044
    )Tax deductible goodwill
    
    
    1,069
    
    
    
    
    
    
    
    1,069
    
    
    
    2,831
    
    
    
    
    
    
    
    2,831Accrued insurance
    
    
    4,051
    
    
    
    
    
    
    
    4,051
    
    
    
    3,988
    
    
    
    
    
    
    
    3,988Pension
    
    
    936
    
    
    
    (337
    )
    
    
    599
    
    
    
    781
    
    
    
    (689
    )
    
    
    92Stock-based compensation
    
    
    2,169
    
    
    
    
    
    
    
    2,169
    
    
    
    1,352
    
    
    
    
    
    
    
    1,352Unremitted foreign earnings
    
    
    
    
    
    
    (4,878
    )
    
    
    (4,878
    )
    
    
    
    
    
    
    (3,036
    )
    
    
    (3,036
    )Other
    
    
    1,547
    
    
    
    (187
    )
    
    
    1,360
    
    
    
    1,230
    
    
    
    (95
    )
    
    
    1,135Total noncurrent
    
    
    16,347
    
    
    
    (45,410
    )
    
    
    (29,063
    )
    
    
    16,031
    
    
    
    (44,360
    )
    
    
    (28,329
    )Total
    
    $
    33,987
    
    
    $
    (46,489
    )
    
    $
    (12,502
    )
    
    $
    35,996
    
    
    $
    (45,614
    )
    
    $
    (9,618
    )
     2009
    
    2008
    
    2007Effective
    
    
    
    
    
    Effective
    
    
    
    
    
    Effective(in thousands)
    
    Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    RateIncome tax at statutory rate
    
    $
    16,603
    
    
    
    35.0
    %
    
    $
    23,551
    
    
    
    35.0
    %
    
    $
    16,858
    
    
    
    35.0
    %State income tax, net
    
    
    1,888
    
    
    
    4.0
    
    
    
    2,219
    
    
    
    3.3
    
    
    
    1,230
    
    
    
    2.6Difference in tax expense resulting from:Nondeductible expenses
    
    
    972
    
    
    
    2.0
    
    
    
    1,041
    
    
    
    1.5
    
    
    
    842
    
    
    
    1.8Taxes on foreign affiliates
    
    
    (2,873
    )
    
    
    (6.1
    )
    
    
    (1,370
    )
    
    
    (2.0
    )
    
    
    (774
    )
    
    
    (1.6
    )Taxes on foreign operations
    
    
    4,357
    
    
    
    9.2
    
    
    
    5,033
    
    
    
    7.5
    
    
    
    3,461
    
    
    
    7.2Other, net
    
    
    319
    
    
    
    0.7
    
    
    
    (296
    )
    
    
    (0.5
    )
    
    
    298
    
    
    
    0.5$
    21,266
    
    
    
    44.8
    %
    
    $
    30,178
    
    
    
    44.8
    %
    
    $
    21,915
    
    
    
    45.5
    %
   46




---



##### 



(in thousands)
    
    2009
    
    2008Balance, beginning of year
    
    $
    6,642
    
    
    $
    6,152Additions based on tax
positions related
to current year
    
    
    3,033
    
    
    
    3,248Additions for tax positions of
prior years
    
    
    353
    
    
    
    772Impact of changes in exchange
rate
    
    
    (582
    )
    
    
    79Settlements with tax
authorities
    
    
    27
    
    
    
    (162
    )Reductions for tax positions
of prior years
    
    
    (1,031
    )
    
    
    (2,995
    )Reductions due to the lapse of
statutes of limitation
    
    
    (830
    )
    
    
    (452
    )Balance, end of year
    
    $
    7,612
    
    
    $
    6,642
     (9) Operating Leases and Other Obligations
  (in thousands)2010
    
    $
    12,9022011
    
    
    8,0022012
    
    
    6,2812013
    
    
    5,0382014
    
    
    3,434Thereafter
    
    
    
   (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)
 47




---



##### 



Pension PlanPrior to
    
    
    
    
    
    PostAdoption
    
    
    
    
    
    Adoptionof SFAS
    
    
    
    
    
    of SFAS(in thousands)
    
    158
    
    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)
    
    2009
    
    2008Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    7,326
    
    
    $
    8,191Service cost
    
    
    
    
    
    
    Interest cost
    
    
    513
    
    
    
    450Actuarial gain (loss)
    
    
    (195
    )
    
    
    (902
    )Benefits paid
    
    
    (450
    )
    
    
    (413
    )Benefit obligation at end of year
    
    
    7,194
    
    
    
    7,326Change in plan assets:Fair value of plan assets at beginning
of year
    
    
    9,109
    
    
    
    9,049Actual return on plan
assets
    
    
    (553
    )
    
    
    473Benefits paid
    
    
    (450
    )
    
    
    (413
    )Fair value of plan assets at end of
year
    
    
    8,106
    
    
    
    9,109Funded status recognized as other
non-current assets
    
    $
    912
    
    
    $
    1,783
  (in thousands)
    
    2009
    
    2008
    
    2007Service cost and expenses
    
    $
    105
    
    
    $
    96
    
    
    $
    86Interest cost
    
    
    513
    
    
    
    450
    
    
    
    452Expected return on assets
    
    
    (592
    )
    
    
    (536
    )
    
    
    (529
    )Net amortization
    
    
    149
    
    
    
    215
    
    
    
    271Net periodic pension cost
    
    $
    175
    
    
    $
    225
    
    
    $
    280
   2009
    
    2008
    
    2007Discount rate
    
    
    6.92
    %
    
    
    6.49
    %
    
    
    5.90
    %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
    
    Smoothed
    
    Smoothedvalue
    
    value
    
    value
   As ofJanuary 31,
    
    December 31,2009
    
    2007Equity securities
    
    
    
    %
    
    
    60
    %Debt securities
    
    
    13
    
    
    
    13Cash and cash equivalents
    
    
    87
    
    
    
    27
  Normal
    
    PolicyWeighting
    
    RangeEquity securities
    
    
    60
    %
    
    
    40-70
    %Debt securities
    
    
    35
    
    
    
    20-60Cash and cash equivalents
    
    
    5
    
    
    
    0-15
  48




---



##### 




    
    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.
   (in thousands)2010
    
    $
    4252011
    
    
    4362012
    
    
    4472013
    
    
    4562014
    
    
    4602015-2019
    
    
    4,366
  (in thousands)
    
    2009
    
    2008
    
    2007Service cost
    
    $
    269
    
    
    $
    176
    
    
    $
    100Interest cost
    
    
    142
    
    
    
    103
    
    
    
    88Net periodic pension cost
    
    $
    411
    
    
    $
    279
    
    
    $
    188
    (11) Indebtedness
  49




---



##### 



Actual
    
    Required
    
    Actual
    
    Required(in thousands)
    
    2009
    
    2009
    
    2008
    
    2008Minimum fixed charge
coverage ratio
    
    
    4.22
    
    
    
    1.50
    
    
    
    5.65
    
    
    
    1.50Maximum leverage ratio
    
    
    0.44
    
    
    
    3.00
    
    
    
    0.57
    
    
    
    3.25Minimum tangible net worth
    
    $
    340,280
    
    
    $
    291,237
    
    
    $
    313,571
    
    
    $
    274,647
    (in thousands)
    
    2009
    
    2008Long-term debt:Credit Agreement
    
    $
    
    
    
    $
    Senior Notes
    
    
    46,667
    
    
    
    60,000Total debt
    
    
    46,667
    
    
    
    60,000Less current maturities
    
    
    (20,000
    )
    
    
    (13,333
    )Total long-term debt
    
    $
    26,667
    
    
    $
    46,667
  (in thousands)2010
    
    $
    20,0002011
    
    
    20,0002012
    
    
    6,667Thereafter
    
    
    
 50




---



##### 



(12) Derivatives
     (13) Stock and Stock Option Plans
     Weighted
    
    AggregateAverage
    
    IntrinsicNumber of
    
    Grant Date
    
    Value (inShares
    
    Fair Value
    
    thousands)Nonvested 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
    
    
    $
    42.76Granted
    
    
    38,584
    
    
    
    37.39Vested
    
    
    (22,638
    )
    
    
    42.76Nonvested stock at
January 31, 2009
    
    
    89,809
    
    
    $
    40.48
    
    
    $
    1,417
  RemainingContractualGrant
    
    Options
    
    Options
    
    Exercise
    
    TermDate
    
    Outstanding
    
    Exercisable
    
    Price
    
    (Months)4/99
    
    
    7,741
    
    
    
    7,741
    
    
    
    4.125
    
    
    
    32/00
    
    
    1,900
    
    
    
    1,900
    
    
    
    5.500
    
    
    
    134/00
    
    
    13,794
    
    
    
    13,794
    
    
    
    3.495
    
    
    
    156/04
    
    
    20,000
    
    
    
    20,000
    
    
    
    16.600
    
    
    
    656/04
    
    
    77,376
    
    
    
    77,376
    
    
    
    16.650
    
    
    
    656/05
    
    
    10,000
    
    
    
    10,000
    
    
    
    17.540
    
    
    
    779/05
    
    
    157,000
    
    
    
    94,500
    
    
    
    23.050
    
    
    
    801/06
    
    
    191,481
    
    
    
    138,922
    
    
    
    27.870
    
    
    
    846/06
    
    
    10,000
    
    
    
    10,000
    
    
    
    29.290
    
    
    
    896/06
    
    
    70,000
    
    
    
    35,000
    
    
    
    29.290
    
    
    
    896/07
    
    
    65,625
    
    
    
    13,125
    
    
    
    42.260
    
    
    
    1017/07
    
    
    33,000
    
    
    
    8,250
    
    
    
    42.760
    
    
    
    1029/07
    
    
    3,000
    
    
    
    750
    
    
    
    55.480
    
    
    
    1042/08
    
    
    74,524
    
    
    
    
    
    
    
    35.710
    
    
    
    1081/09
    
    
    6,000
    
    
    
    6,000
    
    
    
    24.010
    
    
    
    119741,441
    
    
    
    437,358
  51




---



##### 



Shares Under OptionWeightedWeighted
    
    Average
    
    AggregateAverage
    
    Remaining
    
    IntrinsicNumber of
    
    Exercise
    
    Contractual Term
    
    Value (inShares
    
    Price
    
    (years)
    
    thousands)Stock Option Activity Summary: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
    
    
    $
    24.541Exercisable at
January 31, 2008
    
    
    392,585
    
    
    $
    19.944Granted
    
    
    80,524
    
    
    
    34.838Exercised
    
    
    (189,033
    )
    
    
    17.578
    
    
    
    
    
    
    
    6,385Canceled
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    Outstanding at
January 31, 2009
    
    
    741,441
    
    
    $
    27.435
    
    
    
    6.99
    
    
    
    279Exercisable at
January 31, 2009
    
    
    437,358
    
    
    $
    23.659
    
    
    
    6.39
    
    
    
    279
 (14) Contingencies
    (15) Segments and Foreign Operations
  52




---



##### 



Water Infrastructure
  Mineral Exploration Division
  Energy Division
  Other
  53




---



##### 



(in thousands)As of and for the Year Ended January 31,
    
    2009
    
    2008
    
    2007RevenuesWater infrastructure
    
    $
    766,957
    
    
    $
    639,584
    
    
    $
    531,916Mineral exploration
    
    
    188,918
    
    
    
    178,482
    
    
    
    148,911Energy
    
    
    46,352
    
    
    
    39,749
    
    
    
    27,081Other
    
    
    5,836
    
    
    
    10,459
    
    
    
    14,860Total revenues
    
    $
    1,008,063
    
    
    $
    868,274
    
    
    $
    722,768Equity in earnings of affiliatesMineral exploration
    
    $
    14,089
    
    
    $
    8,076
    
    
    $
    4,452Income (loss) before income taxes and minority interestsWater infrastructure
    
    $
    48,399
    
    
    $
    42,995
    
    
    $
    35,000Mineral exploration
    
    
    39,260
    
    
    
    37,452
    
    
    
    26,557Energy
    
    
    (12,401
    )
    
    
    13,075
    
    
    
    10,680Other
    
    
    1,280
    
    
    
    3,696
    
    
    
    4,094Unallocated corporate expenses
    
    
    (25,486
    )
    
    
    (21,199
    )
    
    
    (18,383
    )Interest
    
    
    (3,614
    )
    
    
    (8,730
    )
    
    
    (9,781
    )Total income before income taxes and minority interests
    
    $
    47,438
    
    
    $
    67,289
    
    
    $
    48,167Investment in affiliatesMineral exploration
    
    $
    40,973
    
    
    $
    29,835
    
    
    $
    24,280Total assetsWater infrastructure
    
    $
    422,383
    
    
    $
    388,491
    
    
    $
    321,406Mineral exploration
    
    
    125,588
    
    
    
    110,064
    
    
    
    89,826Energy
    
    
    100,309
    
    
    
    112,363
    
    
    
    91,552Other
    
    
    2,482
    
    
    
    2,449
    
    
    
    4,112Corporate
    
    
    68,595
    
    
    
    83,588
    
    
    
    40,268Total assets
    
    $
    719,357
    
    
    $
    696,955
    
    
    $
    547,164Capital expendituresWater infrastructure
    
    $
    27,924
    
    
    $
    22,029
    
    
    $
    23,777Mineral exploration
    
    
    20,944
    
    
    
    18,451
    
    
    
    11,607Energy
    
    
    30,891
    
    
    
    30,345
    
    
    
    40,737Other
    
    
    237
    
    
    
    1,037
    
    
    
    483Corporate
    
    
    1,027
    
    
    
    1,508
    
    
    
    196Total capital expenditures
    
    $
    81,023
    
    
    $
    73,370
    
    
    $
    76,800Depreciation, depletion and amortizationWater infrastructure
    
    $
    23,741
    
    
    $
    21,978
    
    
    $
    17,691Mineral exploration
    
    
    13,362
    
    
    
    10,523
    
    
    
    8,260Energy
    
    
    14,644
    
    
    
    10,704
    
    
    
    6,531Other
    
    
    935
    
    
    
    237
    
    
    
    229Corporate
    
    
    158
    
    
    
    178
    
    
    
    142Total depreciation, depletion and amortization
    
    $
    52,840
    
    
    $
    43,620
    
    
    $
    32,853
 54




---



##### 



(in thousands)Fiscal Years Ended January 31,
    
    2009
    
    2008
    
    2007Geographic information:RevenuesUnited States
    
    $
    841,542
    
    
    $
    712,098
    
    
    $
    595,959Australia/Africa
    
    
    88,967
    
    
    
    89,739
    
    
    
    78,640Mexico
    
    
    37,775
    
    
    
    42,242
    
    
    
    32,749Other foreign
    
    
    39,779
    
    
    
    24,195
    
    
    
    15,420Total revenues
    
    $
    1,008,063
    
    
    $
    868,274
    
    
    $
    722,768Property and equipment, netUnited States
    
    $
    213,408
    
    
    $
    218,047
    
    
    $
    191,797Australia/Africa
    
    
    18,663
    
    
    
    19,530
    
    
    
    16,655Mexico
    
    
    9,379
    
    
    
    8,555
    
    
    
    5,279Other foreign
    
    
    5,295
    
    
    
    1,235
    
    
    
    786Total property and equipment, net
    
    $
    246,745
    
    
    $
    247,367
    
    
    $
    214,517
 (16) New Accounting Pronouncements
       55




---



##### 



(17) Quarterly Results (Unaudited)
  (in thousands, except per share data)2009
    
    First
    
    Second
    
    Third
    
    FourthRevenues
    
    $
    244,544
    
    
    $
    269,638
    
    
    $
    264,483
    
    
    $
    229,398Net income (loss)
    
    
    10,562
    
    
    
    15,096
    
    
    
    12,227
    
    
    
    (11,351
    )Basic net income (loss) per share
    
    
    0.55
    
    
    
    0.79
    
    
    
    0.64
    
    
    
    (0.59
    )Diluted net income (loss) per share
    
    
    0.55
    
    
    
    0.78
    
    
    
    0.63
    
    
    
    (0.59
    )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
  56




---



##### 



Supplemental Information on Oil and Gas Producing Activities (Unaudited)
  Capitalized Costs Related to Oil and Gas Producing Activities
  (in thousands)
    
    2009
    
    2008
    
    2007Oil and gas properties
    
    $
    92,497
    
    
    $
    76,844
    
    
    $
    58,458Mineral interest in oil
and gas properties
    
    
    21,248
    
    
    
    18,165
    
    
    
    12,515113,745
    
    
    
    95,009
    
    
    
    70,973Accumulated depletion
    
    
    (54,859
    )
    
    
    (16,353
    )
    
    
    (7,848
    )Total
    
    $
    58,886
    
    
    $
    78,656
    
    
    $
    63,125
    (in thousands)
    
    2009
    
    2008
    
    2007Gas transportation facilities
and equipment
    
    $
    39,825
    
    
    $
    30,266
    
    
    $
    24,939Accumulated depreciation
    
    
    (6,831
    )
    
    
    (4,355
    )
    
    
    (2,353
    )Total
    
    $
    32,994
    
    
    $
    25,911
    
    
    $
    22,586
  Cost Incurred in Oil and Gas Producing Activities
  (in thousands)
    
    2009
    
    2008
    
    2007AcquisitionProved
    
    $
    2,061
    
    
    $
    5,647
    
    
    $
    4,249Unproved
    
    
    
    
    
    
    
    
    
    
    Exploration
    
    
    5
    
    
    
    1,501
    
    
    
    25Development
    
    
    20,802
    
    
    
    16,718
    
    
    
    23,71922,868
    
    
    
    23,866
    
    
    
    27,993Asset retirement costs
    
    
    185
    
    
    
    170
    
    
    
    243Total
    
    $
    23,053
    
    
    $
    24,036
    
    
    $
    28,236
  Results of Operations for Oil and Gas Producing Activities
  (in thousands, except per Mcf)
    
    2009
    
    2008
    
    2007Revenues
    
    $
    24,994
    
    
    $
    20,861
    
    
    $
    14,014Operating costs:Production taxes
    
    
    1,034
    
    
    
    872
    
    
    
    552Lease operating expenses
    
    
    10,194
    
    
    
    8,242
    
    
    
    5,051Depletion
    
    
    11,816
    
    
    
    8,504
    
    
    
    4,917Asset retirement accretion expense
    
    
    76
    
    
    
    60
    
    
    
    43Impairment of oil and gas properties
    
    
    28,704
    
    
    
    
    
    
    
    Income tax expense (benefit)
    
    
    (10,666
    )
    
    
    1,196
    
    
    
    1,286Total operating costs
    
    
    41,158
    
    
    
    18,874
    
    
    
    11,849Results of operations
    
    $
    (16,164
    )
    
    $
    1,987
    
    
    $
    2,165Depletion per Mcf
    
    $
    2.30
    
    
    $
    1.80
    
    
    $
    1.46
 Proved Oil and Gas Reserve Quantities
   57




---



##### 



Proved Developed and Undeveloped Reserves(MMcf):
    
    2009
    
    2008Balance, beginning of year
    
    
    50,052
    
    
    
    57,078Revisions of previous estimates
    
    
    (33,238
    )
    
    
    (5,697
    )Extensions, discoveries and other additions
    
    
    4,881
    
    
    
    3,403Production
    
    
    (5,132
    )
    
    
    (4,732
    )Purchases of reserves in place
    
    
    
    
    
    
    Balance, end of year
    
    
    16,563
    
    
    
    50,052Proved Developed Reserves
    
    
    16,289
    
    
    
    22,794
 Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserve
Quantities
   (in thousands)
    
    2009
    
    2008Future cash inflows
    
    $
    82,261
    
    
    $
    376,955Future production costs
    
    
    (33,514
    )
    
    
    (148,069
    )Future development costs
    
    
    (467
    )
    
    
    (44,077
    )Future income taxes
    
    
    (2,196
    )
    
    
    (52,961
    )Future net cash flows
    
    
    46,084
    
    
    
    131,84810% discount to reflect timing of cash flows
    
    
    (5,908
    )
    
    
    (45,364
    )Standardized measure of discounted cash flows
    
    $
    40,176
    
    
    $
    86,484
  (in thousands)
    
    2009
    
    2008Balance, beginning of year
    
    $
    86,484
    
    
    $
    89,012Sales of gas produced, net of production costs
    
    
    (22,214
    )
    
    
    (17,454
    )Net changes in prices, net of future production
costs
    
    
    (65,507
    )
    
    
    18,399Net changes
in future development costs
    
    
    20,565
    
    
    
    (19,353
    )Extensions and discoveries, less related costs
    
    
    12,799
    
    
    
    8,189Purchases of reserves in place
    
    
    
    
    
    
    Net change
in quantity estimates
    
    
    (17,183
    )
    
    
    (17,294
    )Accretion of discount
    
    
    11,319
    
    
    
    11,762Net changes
in timing and other
    
    
    (33,398
    )
    
    
    (15,308
    )Net change in income taxes
    
    
    30,761
    
    
    
    3,413Development costs incurred
    
    
    16,550
    
    
    
    25,118Net change
    
    
    (46,308
    )
    
    
    (2,528
    )Balance, end of year
    
    $
    40,176
    
    
    $
    86,484
 58




---



##### 



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, 2007
    
    $
    5,573
    
    
    $
    1,700
    
    
    $
    666
    
    
    $
    (919
    )
    
    $
    7,020Fiscal year ended January 31, 2008
    
    
    7,020
    
    
    
    1,205
    
    
    
    336
    
    
    
    (990
    )
    
    
    7,571Fiscal year ended January 31, 2009
    
    
    7,571
    
    
    
    2,082
    
    
    
    608
    
    
    
    (2,383
    )
    
    
    7,878
 59




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##### 



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.
 60




---



##### 



Report of Independent Registered Public Accounting Firm
 
 Internal
Control  Integrated Framework
    Internal
Control  Integrated Framework
  /s/Deloitte & Touche LLP
 
 61




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##### 



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
  62




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##### 



PART IV
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    Financial Statements, Financial Statement Schedules and Exhibits:
       ExhibitNumber
    
    Description3(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)3(2)
    
    Amended and Restated Bylaws of the Registrant (as adopted October 9, 2008) (filed as Exhibit
3.2 to the Registrants Form 8-K filed October 14, 2008, and incorporated herein by this
reference)4(1)
    
    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(2)
    
    Rights Agreement, dated as of October 14, 2008, between the Registrant and National City Bank
as Rights Agent, which includes as Exhibit C, the Summary of Rights to Purchase Preferred
Shares (filed as Exhibit 4.1 to the Registrants Form 8-K filed October 14, 2008, and
incorporated herein by this reference)4(3)
    
    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(4)
    
    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(5)
    
    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(6)
    
    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(7)
    
    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(8)
    
    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)
 63




---



##### 



Item 15. Exhibits and Financial Statement Schedules
 ExhibitNumber
    
    Description4(9)
    
    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(10)
    
    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(11)
    
    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(12)
    
    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(13)
    
    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 (filed as Exhibit 10(2.6) to the Registrants Annual Report on Form 10-K for the
fiscal year ended January 31, 2008, filed April 15, 2008, and incorporated herein by this
reference)
 64




---



##### 



Item 15. Exhibits and Financial Statement Schedules
 ExhibitNumber
    
    Description**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)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 (as
amended and restated to comply with Section 409A) dated December
2, 2008**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 November 3, 2008)**10(16)
    
    Layne Christensen Company Corporate
Staff Incentive Compensation Plan (as amended, effective
February 1, 2007)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)
 65




---



##### 



Item 15. Exhibits and Financial Statement Schedules
 ExhibitNumber
    
    Description**10(20)
    
    Form of Nonqualified Stock Option Agreement between the Company
and management of the Company for use with the 2006 Equity
Incentive Plan, as amended effective January 26, 2009**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, as amended effective January 26, 2009**10(22)
    
    Form of Restricted Stock Award Agreement between the Company and
management of the Company for use with the 2006 Equity Incentive
Plan, as amended effective January 23, 2008**10(23)
    
    Form of Restricted Stock Award Agreement between the Company and
non-employee directors of the Company for use with the Companys
2006 Equity Incentive Plan, as amended effective January 26, 2009**10(24)
    
    Layne Christensen Company Water Infrastructure Division Incentive
Compensation Plan (as amended and restated, effective February 1,
2008) (incorporated by reference to Exhibit 10(24) to the
Companys Annual Report on Form 10-K for the fiscal year ended
January 31, 2008, filed April 15, 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) (incorporated by reference to Exhibit 10(27) to
the Companys Annual Report on Form 10-K for the fiscal year
ended January 31, 2008, filed April 15, 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)
    
    Severance Agreement dated July 10, 2008, by and between Eric R.
Despain and Layne Christensen Company (incorporated by reference
to Exhibit 10(1) to the Companys Current Report on Form 8-K
filed July 14, 2008)**10(34)
    
    Summary of 2009 Salaries of Named Executive Officers10(35)
    
    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(36)
    
    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(37)
    
    Layne Christensen Company Deferred
Compensation Plan for Directors (Amended and Restated, effective as
of January 1, 2009)**10(38)
    
    Amended and Restated Layne Christensen Company Key Management Deferred Compensation Plan,
effective as of January 1, 2008**10(39)
    
    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(40)
    
    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)
 66




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Item 15. Exhibits and Financial Statement Schedules
 ExhibitNumber
    
    Description10(41)
    
    Form of Indemnification Agreement for use in connection with the Rights Agreement dated
October 14, 2008 (filed as Exhibit 10.1 to the Registrants Form 8-K filed October 14, 2008,
and incorporated herein by this reference)21(1)-
    
    List of Subsidiaries23(1)-
    
    Consent of Deloitte & Touche LLP23(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
 
 **
    
    Management contracts or compensatory plans or arrangements required to be identified by Item
14(a)(3).    67




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##### 



Signatures
  Layne Christensen CompanyBy
    /s/ A. B. SchmittAndrew B. SchmittPresident and Chief Executive
Officer:
Dated March 31, 2009  Signature and Title
    
    Date/s/ A. B. Schmitt

Andrew B. Schmitt
President, Chief Executive Officer
and Director (Principal Executive Officer)
    
    March 31, 2009/s/ Jerry W. Fanska

Jerry W. Fanska
Senior Vice President-Finance and Treasurer
(Principal Financial and Accounting Officer)
    
    March 31, 2009/s/ Jeff Reynolds

Jeffrey J. Reynolds
Director
    
    March 31, 2009/s/ Donald K. Miller

Donald K. Miller
Director
    
    March 31 , 2009/s/ David A. B. Brown

David A. B. Brown
Director
    
    March 31, 2009/s/ J. Samuel Butler

J. Samuel Butler
Director
    
    March 31, 2009/s/ Anthony B. Helfet

Anthony B. Helfet
Director
    
    March 31, 2009/s/ Nelson Obus

Nelson Obus
Director
    
    March 31, 2009/s/ Rene Robichaud

Rene Robichaud
Director
    
    March 31, 2009/s/ Robert Gilmore

Robert Gilmore
Director
    
    March 31, 2009
 68