##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended: September 30, 2007
 Commission File Number: 0-11688
 AMERICAN ECOLOGY CORPORATION
  Delaware
    
    95-3889638(State of Incorporation)
    
    (I.R.S. Employer Identification Number)Lakepointe Centre I, 
300 E. Mallard, Suite 300Boise, Idaho
    
    83706(Address of Principal Executive Offices)
    
    (Zip Code)
  (Registrants Telephone Number, Including Area Code)
  þ o
  o þ o
  o þ




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##### 



AMERICAN ECOLOGY CORPORATION
 TABLE OF CONTENTS
 PART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Consolidated Balance Sheets as of September 30, 2007 and December 31, 2006
    
    
    1Consolidated Statements of Operations for the three and nine months ended September 30, 2007 and 2006
    
    
    2Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006
    
    
    3Notes to Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4.
    
    Controls and Procedures
    
    
    18PART II.
    
    OTHER INFORMATIONCautionary Statement
    
    
    19Item 1.
    
    Legal Proceedings
    
    
    19Item 1A.
    
    Risk Factors
    
    
    19Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3.
    
    Defaults Upon Senior Securities
    
    
    19Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    20Item 5.
    
    Other Information
    
    
    20Item 6.
    
    Exhibits
    
    
    20SIGNATURE
    
    
    21Exhibit 31.1Exhibit 31.2Exhibit 32




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 AMERICAN ECOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
 September 30,2007
    
    
    December 31,(unaudited)
    
    
    2006AssetsCurrent Assets:Cash and cash equivalents
    
    $
    9,095
    
    
    $
    3,775Short-term investments
    
    
    2,190
    
    
    
    6,120Receivables, net
    
    
    28,600
    
    
    
    27,692Prepaid expenses and other current assets
    
    
    4,287
    
    
    
    2,639Income tax receivable
    
    
    
    
    
    
    650Deferred income taxes
    
    
    1,139
    
    
    
    2,166Total current assets
    
    
    45,311
    
    
    
    43,042Property and equipment, net
    
    
    61,877
    
    
    
    55,460Restricted cash
    
    
    4,841
    
    
    
    4,691Deferred income taxes
    
    
    460
    
    
    
    848Total assets
    
    $
    112,489
    
    
    $
    104,041Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable
    
    $
    4,252
    
    
    $
    6,866Deferred revenue
    
    
    4,324
    
    
    
    3,612Accrued liabilities
    
    
    7,670
    
    
    
    3,544Accrued salaries and benefits
    
    
    2,045
    
    
    
    1,943Customer advances
    
    
    338
    
    
    
    1,866Income tax payable
    
    
    1
    
    
    
    Current portion of closure and post-closure obligations
    
    
    2,017
    
    
    
    656Current portion of long-term debt
    
    
    6
    
    
    
    6Total current liabilities
    
    
    20,653
    
    
    
    18,493Long-term closure and post-closure obligations
    
    
    11,176
    
    
    
    12,160Long-term debt
    
    
    19
    
    
    
    24Other long-term liabilities
    
    
    
    
    
    
    9Total liabilities
    
    
    31,848
    
    
    
    30,686Contingencies and commitmentsStockholders EquityCommon stock $0.01 par value, 50,000 authorized; 18,231 and
18,174 shares issued and outstanding, respectively
    
    
    182
    
    
    
    182Additional paid-in capital
    
    
    58,483
    
    
    
    57,532Retained earnings
    
    
    21,976
    
    
    
    15,641Total stockholders equity
    
    
    80,641
    
    
    
    73,355Total liabilities and stockholders equity
    
    $
    112,489
    
    
    $
    104,041
   1




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##### Table of Contents



AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    39,427
    
    
    $
    27,464
    
    
    $
    119,658
    
    
    $
    78,910Transportation costs
    
    
    18,935
    
    
    
    12,683
    
    
    
    55,866
    
    
    
    29,199Other direct operating costs
    
    
    10,224
    
    
    
    7,874
    
    
    
    30,357
    
    
    
    22,569Gross profit
    
    
    10,268
    
    
    
    6,907
    
    
    
    33,435
    
    
    
    27,142Selling, general and administrative expenses
    
    
    3,636
    
    
    
    2,902
    
    
    
    10,709
    
    
    
    9,446Business interruption insurance claim
    
    
    
    
    
    
    (704
    )
    
    
    
    
    
    
    (704
    )Operating income
    
    
    6,632
    
    
    
    4,709
    
    
    
    22,726
    
    
    
    18,400Other income (expense):Interest income
    
    
    189
    
    
    
    215
    
    
    
    550
    
    
    
    608Interest expense
    
    
    
    
    
    
    (6
    )
    
    
    (2
    )
    
    
    (8
    )Other
    
    
    10
    
    
    
    
    
    
    
    62
    
    
    
    458Total other income
    
    
    199
    
    
    
    209
    
    
    
    610
    
    
    
    1,058Income before income taxes
    
    
    6,831
    
    
    
    4,918
    
    
    
    23,336
    
    
    
    19,458Income tax
    
    
    2,313
    
    
    
    1,925
    
    
    
    8,799
    
    
    
    7,359Net income
    
    $
    4,518
    
    
    $
    2,993
    
    
    $
    14,537
    
    
    $
    12,099Earnings per share:Basic
    
    $
    0.25
    
    
    $
    0.17
    
    
    $
    0.80
    
    
    $
    0.67Dilutive
    
    $
    0.25
    
    
    $
    0.16
    
    
    $
    0.80
    
    
    $
    0.66Shares used in earnings per share calculation:Basic
    
    
    18,220
    
    
    
    18,129
    
    
    
    18,215
    
    
    
    18,046Dilutive
    
    
    18,257
    
    
    
    18,237
    
    
    
    18,255
    
    
    
    18,215Dividends paid per share
    
    $
    0.15
    
    
    $
    0.15
    
    
    $
    0.45
    
    
    $
    0.45
   2




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AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Nine Months Ended September 30,2007
    
    
    2006Cash Flows From Operating Activities:Net income
    
    $
    14,537
    
    
    $
    12,099Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation, amortization and accretion
    
    
    7,039
    
    
    
    5,796Deferred income taxes
    
    
    1,415
    
    
    
    5,579Stock-based compensation expense
    
    
    420
    
    
    
    243Accretion of interest income
    
    
    (140
    )
    
    
    (299
    )Net gain on sale of property and equipment
    
    
    (58
    )
    
    
    (166
    )Changes in assets and liabilities:Receivables
    
    
    (908
    )
    
    
    (5,204
    )Income tax receivable
    
    
    650
    
    
    
    808Insurance receivable
    
    
    
    
    
    
    157Other assets
    
    
    (1,648
    )
    
    
    133Accounts payable and accrued liabilities
    
    
    542
    
    
    
    (2,120
    )Deferred revenue
    
    
    712
    
    
    
    1,804Accrued salaries and benefits
    
    
    102
    
    
    
    (1,023
    )Income tax payable
    
    
    1
    
    
    
    Closure and post-closure obligations
    
    
    (416
    )
    
    
    (947
    )Net cash provided by operating activities
    
    
    22,248
    
    
    
    16,860Cash Flows From Investing Activities:Purchases of short-term investments
    
    
    (22,700
    )
    
    
    (24,393
    )Purchases of property and equipment
    
    
    (13,264
    )
    
    
    (15,731
    )Restricted cash
    
    
    (150
    )
    
    
    (4,617
    )Maturities of short-term investments
    
    
    26,770
    
    
    
    38,909Proceeds from sale of property and equipment
    
    
    92
    
    
    
    174Net cash used in investing activities
    
    
    (9,252
    )
    
    
    (5,658
    )Cash Flows From Financing Activities:Dividends paid
    
    
    (8,202
    )
    
    
    (8,096
    )Proceeds from stock option exercises
    
    
    328
    
    
    
    1,778Tax benefit of common stock options
    
    
    203
    
    
    
    551Other
    
    
    (5
    )
    
    
    (1
    )Net cash used in financing activities
    
    
    (7,676
    )
    
    
    (5,768
    )Increase in cash and cash equivalents
    
    
    5,320
    
    
    
    5,434Cash and cash equivalents at beginning of period
    
    
    3,775
    
    
    
    3,641Cash and cash equivalents at end of period
    
    $
    9,095
    
    
    $
    9,075Supplemental DisclosuresIncome taxes paid
    
    $
    6,523
    
    
    $
    404Interest paid
    
    
    2
    
    
    
    8Non-cash investing and financing activities:Capital expenditures in accounts payable
    
    
    342
    
    
    
    2,613Acquisition of equipment with capital leases
    
    
    
    
    
    
    34
   3




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AMERICAN ECOLOGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 1  GENERAL
 Basis of Presentation
   Use of Estimates
 NOTE 2  EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 EITF 06-3. How Taxes
Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income
Statement (That Is, Gross versus Net Presentation)
 FIN 48. Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109 Accounting for Income Taxes
  4




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SFAS 157. Fair Value Measurements
 FSP EITF 00-19-2. Accounting
for Registration Payment Arrangements Accounting for Contingencies
 SFAS 159. The Fair Value Option for Financial
Assets and Financial Liabilities
 NOTE 3   CONCENTRATION AND CREDIT RISK
 Major Customers
 Three Months Ended
    
    
    Three Months EndedCustomer
    
    September 30, 2007
    
    
    September 30, 2006Honeywell International, Inc.
    
    
    45
    %
    
    
    52
    %
 Nine Months Ended
    
    
    Nine Months EndedCustomer
    
    September 30, 2007
    
    
    September 30, 2006Honeywell International, Inc.
    
    
    40
    %
    
    
    34
    %U.S. Army Corps of Engineers
    
    
    7
    %
    
    
    11
    %
  5




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% of TradeAccounts ReceivableCustomer
    
    as of September 30, 2007Honeywell International, Inc.
    
    
    48
    %
 Credit Risk Concentration
  NOTE 4 SHORT-TERM INVESTMENTS
  September 30,
    
    
    December 31,(in thousands)
    
    2007
    
    
    2006Fixed maturity securitiesCommercial paper
    
    $
    993
    
    
    $
    4,122Federal Home Loan
    
    
    1,197
    
    
    
    1,998Total
    
    $
    2,190
    
    
    $
    6,120
 NOTE 5   RECEIVABLES
  September 30,
    
    
    December 31,(in thousands)
    
    2007
    
    
    2006Trade
    
    $
    27,120
    
    
    $
    27,536Unbilled revenue
    
    
    1,138
    
    
    
    237Other
    
    
    446
    
    
    
    2928,704
    
    
    
    27,802Allowance for doubtful accounts
    
    
    (104
    )
    
    
    (110
    )$
    28,600
    
    
    $
    27,692
 NOTE 6 PROPERTY AND EQUIPMENT
 September 30,
    
    
    December 31,(in thousands)
    
    2007
    
    
    2006Cell development costs
    
    $
    28,366
    
    
    $
    28,366Land and improvements
    
    
    8,880
    
    
    
    8,816Buildings and improvements
    
    
    26,142
    
    
    
    18,264Railcars
    
    
    17,375
    
    
    
    17,375Vehicles and other equipment
    
    
    19,952
    
    
    
    17,479Construction in progress
    
    
    7,477
    
    
    
    5,590108,192
    
    
    
    95,890Accumulated depreciation and amortization
    
    
    (46,315
    )
    
    
    (40,430
    )$
    61,877
    
    
    $
    55,460
  6




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NOTE 7   LINE OF CREDIT
  NOTE 8  CLOSURE AND POST-CLOSURE OBLIGATIONS
 Accounting for Contingencies Accounting for Asset Retirement Obligations
  Three Months Ended
    
    
    Nine Months Ended(in thousands)
    
    September 30, 2007
    
    
    September 30, 2007Beginning obligation
    
    $
    13,071
    
    
    $
    12,816Accretion expense
    
    
    264
    
    
    
    793Payments
    
    
    (184
    )
    
    
    (517
    )Adjustments
    
    
    42
    
    
    
    101Ending obligation
    
    $
    13,193
    
    
    $
    13,193Less current portion
    
    
    (2,017
    )
    
    
    (2,017
    )Long-term portion
    
    $
    11,176
    
    
    $
    11,176
 NOTE 9   INCOME TAXES
 .
   7




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NOTE 10   COMMITMENTS AND CONTINGENCIES
  NOTE 11  COMPUTATION OF EARNINGS PER SHARE
 Three Months Ended September 30,2007
    
    
    2006(in thousands, except per share data)
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNet income
    
    $
    4,518
    
    
    $
    4,518
    
    
    $
    2,993
    
    
    $
    2,993Weighted average common
shares outstanding
    
    
    18,220
    
    
    
    18,220
    
    
    
    18,129
    
    
    
    18,129Dilutive effect of stock options and
restricted stock
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    108Weighted average
shares outstanding
    
    
    
    
    
    
    18,257
    
    
    
    
    
    
    
    18,237Earnings per share
    
    $
    0.25
    
    
    $
    0.25
    
    
    $
    0.17
    
    
    $
    0.16Anti-dilutive shares
excluded from calculation
    
    
    
    
    
    
    155
    
    
    
    
    
    
    
    151
 Nine Months Ended September 30,2007
    
    
    2006(in thousands, except per share data)
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNet income
    
    $
    14,537
    
    
    $
    14,537
    
    
    $
    12,099
    
    
    $
    12,099Weighted average common
shares outstanding
    
    
    18,215
    
    
    
    18,215
    
    
    
    18,046
    
    
    
    18,046Dilutive effect of stock options and
restricted stock
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    169Weighted average
shares outstanding
    
    
    
    
    
    
    18,255
    
    
    
    
    
    
    
    18,215Earnings per share
    
    $
    0.80
    
    
    $
    0.80
    
    
    $
    0.67
    
    
    $
    0.66Anti-dilutive shares
excluded from calculation
    
    
    
    
    
    
    157
    
    
    
    
    
    
    
    151
  8




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NOTE 12  OPERATING SEGMENTS
    Non-Operating
    
    
    OperatingDisposal
    
    
    Disposal(in thousands)
    
    Facilities
    
    
    Facilities
    
    
    Corporate
    
    
    TotalThree months ended September 30, 2007Revenue
    
    $
    39,420
    
    
    $
    7
    
    
    $
    
    
    
    $
    39,427Transportation costs
    
    
    18,935
    
    
    
    
    
    
    
    
    
    
    
    18,935Other direct operating costs
    
    
    10,101
    
    
    
    123
    
    
    
    
    
    
    
    10,224Gross profit
    
    
    10,384
    
    
    
    (116
    )
    
    
    
    
    
    
    10,268Selling, general
& administration
    
    
    1,288
    
    
    
    
    
    
    
    2,348
    
    
    
    3,636Business interruption claim
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    9,096
    
    
    
    (116
    )
    
    
    (2,348
    )
    
    
    6,632Interest income, net
    
    
    5
    
    
    
    
    
    
    
    184
    
    
    
    189Other income
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Income (loss) before tax
    
    
    9,111
    
    
    
    (116
    )
    
    
    (2,164
    )
    
    
    6,831Tax expense
    
    
    
    
    
    
    
    
    
    
    2,313
    
    
    
    2,313Net income (loss)
    
    $
    9,111
    
    
    $
    (116
    )
    
    $
    (4,477
    )
    
    $
    4,518Depreciation, amortization & accretion
    
    $
    2,271
    
    
    $
    77
    
    
    $
    10
    
    
    $
    2,358Capital expenditures
    
    $
    4,689
    
    
    $
    
    
    
    $
    24
    
    
    $
    4,713Total assets
    
    $
    91,020
    
    
    $
    60
    
    
    $
    21,409
    
    
    $
    112,489
 Non-Operating
    
    
    OperatingDisposal
    
    
    Disposal(in thousands)
    
    Facilities
    
    
    Facilities
    
    
    Corporate
    
    
    TotalThree months ended September 30, 2006Revenue
    
    $
    27,458
    
    
    $
    6
    
    
    $
    
    
    
    $
    27,464Transportation costs
    
    
    12,683
    
    
    
    
    
    
    
    
    
    
    
    12,683Other direct operating costs
    
    
    7,781
    
    
    
    93
    
    
    
    
    
    
    
    7,874Gross profit
    
    
    6,994
    
    
    
    (87
    )
    
    
    
    
    
    
    6,907Selling, general
& administration
    
    
    1,353
    
    
    
    
    
    
    
    1,549
    
    
    
    2,902Business interruption claim
    
    
    (704
    )
    
    
    
    
    
    
    
    
    
    
    (704
    )Operating income (loss)
    
    
    6,345
    
    
    
    (87
    )
    
    
    (1,549
    )
    
    
    4,709Interest income, net
    
    
    7
    
    
    
    
    
    
    
    202
    
    
    
    209Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) before tax
    
    
    6,352
    
    
    
    (87
    )
    
    
    (1,347
    )
    
    
    4,918Tax expense
    
    
    
    
    
    
    
    
    
    
    1,925
    
    
    
    1,925Net income (loss)
    
    $
    6,352
    
    
    $
    (87
    )
    
    $
    (3,272
    )
    
    $
    2,993Depreciation, amortization & accretion
    
    $
    1,852
    
    
    $
    89
    
    
    $
    8
    
    
    $
    1,949Capital expenditures
    
    $
    4,623
    
    
    $
    6
    
    
    $
    22
    
    
    $
    4,651Total assets
    
    $
    74,833
    
    
    $
    86
    
    
    $
    22,219
    
    
    $
    97,138
  9




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Non-Operating
    
    
    OperatingDisposal
    
    
    Disposal(in thousands)
    
    Facilities
    
    
    Facilities
    
    
    Corporate
    
    
    TotalNine Months Ended September 30, 2007Revenue
    
    $
    119,641
    
    
    $
    17
    
    
    $
    
    
    
    $
    119,658Transportation costs
    
    
    55,866
    
    
    
    
    
    
    
    
    
    
    
    55,866Other direct operating costs
    
    
    30,017
    
    
    
    340
    
    
    
    
    
    
    
    30,357Gross profit
    
    
    33,758
    
    
    
    (323
    )
    
    
    
    
    
    
    33,435Selling, general
& administration
    
    
    3,875
    
    
    
    
    
    
    
    6,834
    
    
    
    10,709Business interruption claim
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    29,883
    
    
    
    (323
    )
    
    
    (6,834
    )
    
    
    22,726Interest income, net
    
    
    12
    
    
    
    
    
    
    
    536
    
    
    
    548Gain on litigation settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other income (expense)
    
    
    (4
    )
    
    
    66
    
    
    
    
    
    
    
    62Income (loss) before tax
    
    
    29,891
    
    
    
    (257
    )
    
    
    (6,298
    )
    
    
    23,336Tax expense
    
    
    3
    
    
    
    
    
    
    
    8,796
    
    
    
    8,799Net income (loss)
    
    $
    29,888
    
    
    $
    (257
    )
    
    $
    (15,094
    )
    
    $
    14,537Depreciation, amortization & accretion
    
    $
    6,780
    
    
    $
    232
    
    
    $
    27
    
    
    $
    7,039Capital expenditures
    
    $
    13,232
    
    
    $
    5
    
    
    $
    27
    
    
    $
    13,264Total assets
    
    $
    91,020
    
    
    $
    60
    
    
    $
    21,409
    
    
    $
    112,489
 Non-Operating
    
    
    OperatingDisposal
    
    
    Disposal(in thousands)
    
    Facilities
    
    
    Facilities
    
    
    Corporate
    
    
    TotalNine Months Ended September 30, 2006Revenue
    
    $
    78,894
    
    
    $
    16
    
    
    $
    
    
    
    $
    78,910Transportation costs
    
    
    29,199
    
    
    
    
    
    
    
    
    
    
    
    29,199Other direct operating costs
    
    
    22,292
    
    
    
    277
    
    
    
    
    
    
    
    22,569Gross profit
    
    
    27,403
    
    
    
    (261
    )
    
    
    
    
    
    
    27,142Selling, general
& administration
    
    
    3,966
    
    
    
    1
    
    
    
    5,479
    
    
    
    9,446Business interruption claim
    
    
    (704
    )
    
    
    
    
    
    
    
    
    
    
    (704
    )Operating income (loss)
    
    
    24,141
    
    
    
    (262
    )
    
    
    (5,479
    )
    
    
    18,400Interest income, net
    
    
    22
    
    
    
    
    
    
    
    578
    
    
    
    600Other income (expense)
    
    
    (14
    )
    
    
    173
    
    
    
    299
    
    
    
    458Income (loss) before tax
    
    
    24,149
    
    
    
    (89
    )
    
    
    (4,602
    )
    
    
    19,458Tax expense
    
    
    
    
    
    
    
    
    
    
    7,359
    
    
    
    7,359Net income (loss)
    
    $
    24,149
    
    
    $
    (89
    )
    
    $
    (11,961
    )
    
    $
    12,099Depreciation, amortization & accretion
    
    $
    5,506
    
    
    $
    270
    
    
    $
    20
    
    
    $
    5,796Capital expenditures
    
    $
    15,596
    
    
    $
    59
    
    
    $
    76
    
    
    $
    15,731Total assets
    
    $
    74,833
    
    
    $
    86
    
    
    $
    22,219
    
    
    $
    97,138
 NOTE 13 SUBSEQUENT EVENT
   10




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##### Table of Contents



AMERICAN ECOLOGY CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
     11




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##### Table of Contents



Results of Operations
  (in thousands, except per
    
    Three Months Ended September 30,
    
    
    Nine Months Ended September 30,share amounts)
    
    2007
    
    
    %
    
    
    2006
    
    
    %
    
    
    2007
    
    
    %
    
    
    2006
    
    
    %Revenue
    
    $
    39,427
    
    
    
    100.0
    %
    
    $
    27,464
    
    
    
    100.0
    %
    
    $
    119,658
    
    
    
    100.0
    %
    
    $
    78,910
    
    
    
    100.0
    %Transportation costs
    
    
    18,935
    
    
    
    48.0
    %
    
    
    12,683
    
    
    
    46.2
    %
    
    
    55,866
    
    
    
    46.7
    %
    
    
    29,199
    
    
    
    37.0
    %Other direct operating costs
    
    
    10,224
    
    
    
    26.0
    %
    
    
    7,874
    
    
    
    28.7
    %
    
    
    30,357
    
    
    
    25.4
    %
    
    
    22,569
    
    
    
    28.6
    %Gross profit
    
    
    10,268
    
    
    
    26.0
    %
    
    
    6,907
    
    
    
    25.1
    %
    
    
    33,435
    
    
    
    27.9
    %
    
    
    27,142
    
    
    
    34.4
    %Selling, general and
administrative expenses
    
    
    3,636
    
    
    
    9.2
    %
    
    
    2,902
    
    
    
    10.6
    %
    
    
    10,709
    
    
    
    8.8
    %
    
    
    9,446
    
    
    
    12.0
    %Business interruption
insurance claim
    
    
    
    
    
    
    0.0
    %
    
    
    (704
    )
    
    
    -2.6
    %
    
    
    
    
    
    
    0.0
    %
    
    
    (704
    )
    
    
    -0.9
    %Operating income
    
    
    6,632
    
    
    
    16.8
    %
    
    
    4,709
    
    
    
    17.1
    %
    
    
    22,726
    
    
    
    19.1
    %
    
    
    18,400
    
    
    
    23.3
    %Other income (expense):Interest income
    
    
    189
    
    
    
    0.5
    %
    
    
    215
    
    
    
    0.8
    %
    
    
    550
    
    
    
    0.4
    %
    
    
    608
    
    
    
    0.8
    %Interest expense
    
    
    
    
    
    
    0.0
    %
    
    
    (6
    )
    
    
    0.0
    %
    
    
    (2
    )
    
    
    0.0
    %
    
    
    (8
    )
    
    
    0.0
    %Other
    
    
    10
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    62
    
    
    
    0.0
    %
    
    
    458
    
    
    
    0.6
    %Total other income
    
    
    199
    
    
    
    0.5
    %
    
    
    209
    
    
    
    0.8
    %
    
    
    610
    
    
    
    0.4
    %
    
    
    1,058
    
    
    
    1.4
    %Income before income taxes
    
    
    6,831
    
    
    
    17.3
    %
    
    
    4,918
    
    
    
    17.9
    %
    
    
    23,336
    
    
    
    19.5
    %
    
    
    19,458
    
    
    
    24.7
    %Income tax
    
    
    2,313
    
    
    
    5.8
    %
    
    
    1,925
    
    
    
    7.0
    %
    
    
    8,799
    
    
    
    7.4
    %
    
    
    7,359
    
    
    
    9.4
    %Net income
    
    $
    4,518
    
    
    
    11.5
    %
    
    $
    2,993
    
    
    
    10.9
    %
    
    $
    14,537
    
    
    
    12.1
    %
    
    $
    12,099
    
    
    
    15.3
    %Earnings per share:Basic
    
    $
    0.25
    
    
    
    
    
    
    $
    0.17
    
    
    
    
    
    
    $
    0.80
    
    
    
    
    
    
    $
    0.67Dilutive
    
    $
    0.25
    
    
    
    
    
    
    $
    0.16
    
    
    
    
    
    
    $
    0.80
    
    
    
    
    
    
    $
    0.66Shares used in earnings
per share calculation:Basic
    
    
    18,220
    
    
    
    
    
    
    
    18,129
    
    
    
    
    
    
    
    18,215
    
    
    
    
    
    
    
    18,046Dilutive
    
    
    18,257
    
    
    
    
    
    
    
    18,237
    
    
    
    
    
    
    
    18,255
    
    
    
    
    
    
    
    18,215Dividends paid per share
    
    $
    0.15
    
    
    
    
    
    
    $
    0.15
    
    
    
    
    
    
    $
    0.45
    
    
    
    
    
    
    $
    0.45
 Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006
 Revenue
   12




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##### Table of Contents



Treatment and Disposal Revenue GrowthThree months ended September 30, 2007 vs.Three months ended September 30, 2006Federal cleanup
    
    
    290
    %Refinery
    
    
    109
    %Rate regulated
    
    
    81
    %Private cleanup
    
    
    69
    %Steel
    
    
    2
    %Broker
    
    
    -4
    %Other industry
    
    
    -22
    %
         13




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##### Table of Contents



Gross Profit.
 Selling, General and Administrative (SG&A).
 2006 Business Interruption Insurance Claim Settlement.
 Interest income.
 Other expense/income.
 Income tax expense.
  Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006
 Revenue
  14




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##### Table of Contents



Treatment and Disposal Revenue GrowthNine months ended September 30, 2007 vs.Nine months ended September 30, 2006Private cleanup
    
    
    133
    %Refinery
    
    
    63
    %Federal cleanup
    
    
    43
    %Rate regulated
    
    
    19
    %Steel
    
    
    14
    %Broker
    
    
    13
    %Other industry
    
    
    -41
    %
       15




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##### Table of Contents



Gross Profit.
  SG&A.
 Interest income.
 Other expense / income.
 Nine Months Ended September 30,(in thousands)
    
    2007
    
    
    2006Net gain on sale of property and equipment
    
    $
    58
    
    
    $
    166Reimbursement of legal expenses
    
    
    
    
    
    
    299Other
    
    
    4
    
    
    
    (7
    )$
    62
    
    
    $
    458
 Income tax expense.
 Critical Accounting Policies
   16




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##### Table of Contents



Liquidity and Capital Resources
    Operating Activities
  Investing Activities
  Financing Activities
  17




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##### Table of Contents



Contractual Obligations and Guarantees
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
    18




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Cautionary Statement for Purposes of Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995  This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the
federal securities laws. Statements that are not historical facts, including statements about the
Companys beliefs and expectations, are forward-looking statements. Forward-looking statements
include statements preceded by, followed by or that include the words may, could, would,
should, believe, expect, anticipate, plan, estimate, target, project, intend and
similar expressions. These statements include, among others, statements regarding our financial and
operating results, strategic objectives and means to achieve those objectives, the amount and
timing of capital expenditures, the amount and timing of interest expense, the likelihood of our
success in expanding our business, financing plans, budgets, working capital needs and sources of
liquidity.
 Forward-looking statements are only predictions and are not guarantees of performance. These
statements are based on managements beliefs and assumptions, which in turn are based on currently
available information. Important assumptions include, among others, those regarding demand for
Company services, expansion of service offerings geographically or through new service lines, the
timing and cost of planned capital expenditures, competitive conditions and general economic
conditions. These assumptions could prove inaccurate. Forward-looking statements also involve known
and unknown risks and uncertainties, which could cause actual results to differ materially from
those contained in any forward-looking statement. Many of these factors are beyond our ability to
control or predict. Such factors include, but are not limited to, changes in key personnel,
compliance with and changes in applicable laws and regulations, exposure to litigation, access to
insurance and financial assurances, emergence of new technologies, potential loss of major
contracts, access to cost effective transportation services, our ability to meet contractual
commitments, impact of general economic trends on our business, and competition.
 Except as required by applicable law, including the securities laws of the United States and the
rules and regulations of the SEC, we are under no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise. You
should not place undue reliance on our forward-looking statements. Although we believe that the
expectations reflected in forward-looking statements are reasonable, we cannot guarantee future
results or performance. Before you invest in our common stock, you should be aware that the
occurrence of the events described in the Risk Factors section in Section 1A of Part II Other
Information in this Form 10-Q and filed in our Annual Report on Form 10-K could harm our business,
prospects, operating results, and financial condition. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee future results or
performance.
 Investors should also be aware that while we do, from time to time, communicate with securities
analysts, it is against our policy to disclose to them any material non-public information or other
confidential commercial information. Accordingly, stockholders should not assume that we agree with
any statement or report issued by any analyst irrespective of the content of the statement or
report. Furthermore, we have a policy against issuing or confirming financial forecasts or
projections issued by others. Thus, to the extent that reports issued by securities analysts
contain any projections, forecasts or opinions, such reports are not the responsibility of American
Ecology Corporation.
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
   19




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1
    
    Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
  20




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##### Table of Contents



SIGNATURE
  American Ecology Corporation(Registrant)Date: October 26, 2007
    
    /s/ Jeffrey R. FeelerJeffrey R. FeelerVice President and
Chief Financial Officer
  21




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description31.1
    
    Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
  22