##### 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: June 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 300
Boise, Idaho
    
    83706(Address of Principal Executive Offices)
    
    (Zip Code)
 (208) 331-8400(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 June 30, 2007 and December 31, 2006
    
    
    1Consolidated Statements of Operations for the three and six months ended June 30, 2007 and 2006
    
    
    2Consolidated Statements of Cash Flows for the six months ended June 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
    
    
    17Item 4.
    
    Controls and Procedures
    
    
    17PART II.
    
    OTHER INFORMATIONCautionary Statement
    
    
    17Item 1.
    
    Legal Proceedings
    
    
    18Item 1A.
    
    Risk Factors
    
    
    18Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3.
    
    Defaults Upon Senior Securities
    
    
    18Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    18Item 5.
    
    Other Information
    
    
    19Item 6.
    
    Exhibits
    
    
    19SIGNATURE
    
    
    
    
    19Exhibit 10.3Exhibit 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)
 June 30,2007
    
    
    December 31,(unaudited)
    
    
    2006AssetsCurrent Assets:Cash and cash equivalents
    
    $
    3,755
    
    
    $
    3,775Short-term investments
    
    
    4,245
    
    
    
    6,120Receivables, net
    
    
    33,035
    
    
    
    27,692Prepaid expenses and other current assets
    
    
    3,949
    
    
    
    2,639Income tax receivable
    
    
    
    
    
    
    650Deferred income taxes
    
    
    932
    
    
    
    2,166Total current assets
    
    
    45,916
    
    
    
    43,042Property and equipment, net
    
    
    59,891
    
    
    
    55,460Restricted cash
    
    
    4,791
    
    
    
    4,691Deferred income taxes
    
    
    581
    
    
    
    848Total assets
    
    $
    111,179
    
    
    $
    104,041Liabilities and Stockholders EquityCurrent Liabilities:Accounts payable
    
    $
    4,730
    
    
    $
    6,866Deferred revenue
    
    
    4,025
    
    
    
    3,612Accrued liabilities
    
    
    7,344
    
    
    
    3,544Accrued salaries and benefits
    
    
    1,975
    
    
    
    1,943Customer advances
    
    
    961
    
    
    
    1,866Income tax payable
    
    
    334
    
    
    
    Current portion of closure and post-closure obligations
    
    
    1,567
    
    
    
    656Current portion of long-term debt
    
    
    6
    
    
    
    6Total current liabilities
    
    
    20,942
    
    
    
    18,493Long-term closure and post-closure obligations
    
    
    11,504
    
    
    
    12,160Long-term debt
    
    
    21
    
    
    
    24Other long-term liabilities
    
    
    
    
    
    
    9Total liabilities
    
    
    32,467
    
    
    
    30,686Contingencies and commitmentsStockholders EquityCommon stock $0.01 par value, 50,000 authorized; 18,230 and
18,174 shares issued and outstanding, respectively
    
    
    182
    
    
    
    182Additional paid-in capital
    
    
    58,337
    
    
    
    57,532Retained earnings
    
    
    20,193
    
    
    
    15,641Total stockholders equity
    
    
    78,712
    
    
    
    73,355Total liabilities and stockholders equity
    
    $
    111,179
    
    
    $
    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
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    41,267
    
    
    $
    29,924
    
    
    $
    80,231
    
    
    $
    51,446Transportation costs
    
    
    19,760
    
    
    
    11,459
    
    
    
    36,931
    
    
    
    16,516Other direct operating costs
    
    
    9,854
    
    
    
    7,940
    
    
    
    20,133
    
    
    
    14,695Gross profit
    
    
    11,653
    
    
    
    10,525
    
    
    
    23,167
    
    
    
    20,235Selling, general and administrative expenses
    
    
    3,474
    
    
    
    3,061
    
    
    
    7,073
    
    
    
    6,544Operating income
    
    
    8,179
    
    
    
    7,464
    
    
    
    16,094
    
    
    
    13,691Other income (expense):Interest income
    
    
    150
    
    
    
    205
    
    
    
    361
    
    
    
    393Interest expense
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    (2
    )Other
    
    
    48
    
    
    
    174
    
    
    
    52
    
    
    
    458Income before income taxes
    
    
    8,376
    
    
    
    7,842
    
    
    
    16,505
    
    
    
    14,540Income tax
    
    
    3,292
    
    
    
    2,915
    
    
    
    6,486
    
    
    
    5,434Net income
    
    $
    5,084
    
    
    $
    4,927
    
    
    $
    10,019
    
    
    $
    9,106Earnings per share:Basic
    
    $
    0.28
    
    
    $
    0.27
    
    
    $
    0.55
    
    
    $
    0.51Dilutive
    
    $
    0.28
    
    
    $
    0.27
    
    
    $
    0.55
    
    
    $
    0.50Shares used in earnings per share calculation:Basic
    
    
    18,216
    
    
    
    18,116
    
    
    
    18,213
    
    
    
    17,997Dilutive
    
    
    18,254
    
    
    
    18,257
    
    
    
    18,254
    
    
    
    18,132Dividends paid per share
    
    $
    0.15
    
    
    $
    0.15
    
    
    $
    0.30
    
    
    $
    0.30
   2




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AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Six Months Ended June 30,2007
    
    
    2006Cash Flows From Operating Activities:Net income
    
    $
    10,019
    
    
    $
    9,106Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation, amortization and accretion
    
    
    4,681
    
    
    
    3,846Net gain on sale of property and equipment
    
    
    
    
    
    
    (48
    )Deferred income taxes
    
    
    1,501
    
    
    
    4,866Stock-based compensation expense
    
    
    278
    
    
    
    113Accretion of interest income
    
    
    (107
    )
    
    
    (233
    )Changes in assets and liabilities:Receivables
    
    
    (5,277
    )
    
    
    (8,272
    )Income tax receivable
    
    
    650
    
    
    
    (103
    )Other assets
    
    
    (1,310
    )
    
    
    (201
    )Deferred revenue
    
    
    413
    
    
    
    2,099Accrued salaries and benefits
    
    
    32
    
    
    
    (301
    )Accounts payable and accrued liabilities
    
    
    685
    
    
    
    (1,100
    )Income tax payable
    
    
    334
    
    
    
    Closure and post-closure obligations
    
    
    (274
    )
    
    
    (729
    )Net cash provided by operating activities
    
    
    11,577
    
    
    
    9,091Cash Flows From Investing Activities:Purchases of short-term investments
    
    
    (18,341
    )
    
    
    (20,340
    )Purchases of property and equipment
    
    
    (8,551
    )
    
    
    (10,780
    )Restricted cash
    
    
    (100
    )
    
    
    (4,538
    )Maturities of short-term investments
    
    
    20,323
    
    
    
    27,582Proceeds from sale of property and equipment
    
    
    15
    
    
    
    4Net cash used in investing activities
    
    
    (6,654
    )
    
    
    (8,072
    )Cash Flows From Financing Activities:Dividends paid
    
    
    (5,467
    )
    
    
    (5,375
    )Proceeds from stock option exercises
    
    
    326
    
    
    
    1,777Tax benefit of common stock options
    
    
    201
    
    
    
    551Other
    
    
    (3
    )
    
    
    (1
    )Net cash used in financing activities
    
    
    (4,943
    )
    
    
    (3,048
    )Decrease in cash and cash equivalents
    
    
    (20
    )
    
    
    (2,029
    )Cash and cash equivalents at beginning of period
    
    
    3,775
    
    
    
    3,641Cash and cash equivalents at end of period
    
    $
    3,755
    
    
    $
    1,612Supplemental DisclosuresIncome taxes paid
    
    $
    3,803
    
    
    $
    103Interest paid
    
    
    2
    
    
    
    2Non-cash investing and financing activities:Capital expenditures in accounts payable
    
    
    975
    
    
    
    518Acquisition of equipment with capital leases
    
    
    
    
    
    
    34
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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 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
    
    June 30, 2007
    
    
    June 30, 2006Honeywell International, Inc.
    
    
    40
    %
    
    
    37
    %Molycorp, Inc.
    
    
    12
    %
    
    
    0
    %U.S. Army Corps of Engineers
    
    
    7
    %
    
    
    12
    %
 Six Months Ended
    
    
    Six Months EndedCustomer
    
    June 30, 2007
    
    
    June 30, 2006Honeywell International, Inc.
    
    
    38
    %
    
    
    24
    %U.S. Army Corps of Engineers
    
    
    8
    %
    
    
    17
    %
  % of TradeAccounts ReceivableCustomer
    
    as of June 30, 2007Honeywell International, Inc.
    
    
    37
    %
  5




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Credit Risk Concentration
  NOTE 4 SHORT-TERM INVESTMENTS
 June 30,
    
    
    December 31,(in thousands)
    
    2007
    
    
    2006Fixed maturity securitiesCommercial paper
    
    $
    2,167
    
    
    $
    4,122Federal Home Loan
    
    
    2,078
    
    
    
    1,998Total
    
    $
    4,245
    
    
    $
    6,120
 NOTE 5 RECEIVABLES
  June 30,
    
    
    December 31,(in thousands)
    
    2007
    
    
    2006Trade
    
    $
    30,614
    
    
    $
    27,536Unbilled revenue
    
    
    2,557
    
    
    
    237Other
    
    
    67
    
    
    
    2933,238
    
    
    
    27,802Allowance for doubtful accounts
    
    
    (203
    )
    
    
    (110
    )$
    33,035
    
    
    $
    27,692
 NOTE 6 PROPERTY AND EQUIPMENT
 June 30,
    
    
    December 31,(in thousands)
    
    2007
    
    
    2006Cell development costs
    
    $
    28,366
    
    
    $
    28,366Land and improvements
    
    
    8,880
    
    
    
    8,816Buildings and improvements
    
    
    18,414
    
    
    
    18,264Railcars
    
    
    17,375
    
    
    
    17,375Vehicles and other equipment
    
    
    18,647
    
    
    
    17,479Construction in progress
    
    
    12,444
    
    
    
    5,590104,126
    
    
    
    95,890Accumulated depreciation and amortization
    
    
    (44,235
    )
    
    
    (40,430
    )$
    59,891
    
    
    $
    55,460
  NOTE 7 LINE OF CREDIT
   6




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NOTE 8  CLOSURE AND POST-CLOSURE OBLIGATIONS
 Accounting for Contingencies Accounting for Asset Retirement Obligations
  Three Months Ended
    
    
    Six Months Ended(in thousands)
    
    June 30, 2007
    
    
    June 30, 2007Beginning obligation
    
    $
    12,961
    
    
    $
    12,816Accretion expense
    
    
    265
    
    
    
    529Payments
    
    
    (186
    )
    
    
    (333
    )Adjustments
    
    
    31
    
    
    
    59Ending obligation
    
    $
    13,071
    
    
    $
    13,071Less current portion
    
    
    (1,567
    )
    
    
    (1,567
    )Long-term portion
    
    $
    11,504
    
    
    $
    11,504
 NOTE 9 INCOME TAXES
 .
   NOTE 10 COMMITMENTS AND CONTINGENCIES
   7




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NOTE 11  COMPUTATION OF EARNINGS PER SHARE
 Three Months Ended June 30,2007
    
    
    2006(in thousands, except per share data)
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNet income
    
    $
    5,084
    
    
    $
    5,084
    
    
    $
    4,927
    
    
    $
    4,927Weighted average common
shares outstanding
    
    
    18,216
    
    
    
    18,216
    
    
    
    18,116
    
    
    
    18,116Dilutive effect of stock options and
restricted stock
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    141Weighted average
shares outstanding
    
    
    
    
    
    
    18,254
    
    
    
    
    
    
    
    18,257Earnings per share
    
    $
    0.28
    
    
    $
    0.28
    
    
    $
    0.27
    
    
    $
    0.27Anti-dilutive shares
excluded from calculation
    
    
    
    
    
    
    153
    
    
    
    
    
    
    
    
 Six Months Ended June 30,2007
    
    
    2006(in thousands, except per share data)
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNet income
    
    $
    10,019
    
    
    $
    10,019
    
    
    $
    9,106
    
    
    $
    9,106Weighted average common
shares outstanding
    
    
    18,213
    
    
    
    18,213
    
    
    
    17,997
    
    
    
    17,997Dilutive effect of stock options and
restricted stock
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    135Weighted average
shares outstanding
    
    
    
    
    
    
    18,254
    
    
    
    
    
    
    
    18,132Earnings per share
    
    $
    0.55
    
    
    $
    0.55
    
    
    $
    0.51
    
    
    $
    0.50Anti-dilutive shares
excluded from calculation
    
    
    
    
    
    
    153
    
    
    
    
    
    
    
    
 NOTE 12  OPERATING SEGMENTS
    8




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Non-Operating
    
    
    OperatingDisposal
    
    
    Disposal(in thousands)
    
    Facilities
    
    
    Facilities
    
    
    Corporate
    
    
    TotalThree months ended June 30, 2007Revenue
    
    $
    41,261
    
    
    $
    6
    
    
    $
    
    
    
    $
    41,267Transportation costs
    
    
    19,760
    
    
    
    
    
    
    
    
    
    
    
    19,760Other direct operating costs
    
    
    9,744
    
    
    
    110
    
    
    
    
    
    
    
    9,854Gross profit
    
    
    11,757
    
    
    
    (104
    )
    
    
    
    
    
    
    11,653Selling, general
& administration
    
    
    1,291
    
    
    
    
    
    
    
    2,183
    
    
    
    3,474Operating income (loss)
    
    
    10,466
    
    
    
    (104
    )
    
    
    (2,183
    )
    
    
    8,179Interest income, net
    
    
    3
    
    
    
    
    
    
    
    146
    
    
    
    149Other income
    
    
    (18
    )
    
    
    66
    
    
    
    
    
    
    
    48Income (loss) before tax
    
    
    10,451
    
    
    
    (38
    )
    
    
    (2,037
    )
    
    
    8,376Tax expense
    
    
    
    
    
    
    
    
    
    
    3,292
    
    
    
    3,292Net income (loss)
    
    $
    10,451
    
    
    $
    (38
    )
    
    $
    (5,329
    )
    
    $
    5,084Depreciation, amortization & accretion
    
    $
    2,243
    
    
    $
    78
    
    
    $
    9
    
    
    $
    2,330Capital expenditures
    
    $
    4,771
    
    
    $
    2
    
    
    $
    3
    
    
    $
    4,776Total assets
    
    $
    93,363
    
    
    $
    125
    
    
    $
    17,691
    
    
    $
    111,179
 Non-Operating
    
    
    OperatingDisposal
    
    
    Disposal(in thousands)
    
    Facilities
    
    
    Facilities
    
    
    Corporate
    
    
    TotalThree months ended June 30, 2006Revenue
    
    $
    29,918
    
    
    $
    6
    
    
    $
    
    
    
    $
    29,924Transportation costs
    
    
    11,459
    
    
    
    
    
    
    
    
    
    
    
    11,459Other direct operating costs
    
    
    7,847
    
    
    
    93
    
    
    
    
    
    
    
    7,940Gross profit
    
    
    10,612
    
    
    
    (87
    )
    
    
    
    
    
    
    10,525Selling, general
& administration
    
    
    1,283
    
    
    
    1
    
    
    
    1,777
    
    
    
    3,061Operating income (loss)
    
    
    9,329
    
    
    
    (88
    )
    
    
    (1,777
    )
    
    
    7,464Interest income, net
    
    
    7
    
    
    
    
    
    
    
    197
    
    
    
    204Other income
    
    
    1
    
    
    
    173
    
    
    
    
    
    
    
    174Income (loss) before tax
    
    
    9,337
    
    
    
    85
    
    
    
    (1,580
    )
    
    
    7,842Tax expense
    
    
    
    
    
    
    
    
    
    
    2,915
    
    
    
    2,915Net income (loss)
    
    $
    9,337
    
    
    $
    85
    
    
    $
    (4,495
    )
    
    $
    4,927Depreciation, amortization & accretion
    
    $
    1,896
    
    
    $
    90
    
    
    $
    6
    
    
    $
    1,992Capital expenditures
    
    $
    2,921
    
    
    $
    4
    
    
    $
    54
    
    
    $
    2,979Total assets
    
    $
    70,904
    
    
    $
    83
    
    
    $
    25,602
    
    
    $
    96,589
  9




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##### Table of Contents



Non-Operating
    
    
    OperatingDisposal
    
    
    Disposal(in thousands)
    
    Facilities
    
    
    Facilities
    
    
    Corporate
    
    
    TotalSix Months Ended June 30, 2007Revenue
    
    $
    80,221
    
    
    $
    10
    
    
    $
    
    
    
    $
    80,231Transportation costs
    
    
    36,931
    
    
    
    
    
    
    
    
    
    
    
    36,931Other direct operating costs
    
    
    19,916
    
    
    
    217
    
    
    
    
    
    
    
    20,133Gross profit
    
    
    23,374
    
    
    
    (207
    )
    
    
    
    
    
    
    23,167Selling, general
& administration
    
    
    2,587
    
    
    
    
    
    
    
    4,486
    
    
    
    7,073Operating income (loss)
    
    
    20,787
    
    
    
    (207
    )
    
    
    (4,486
    )
    
    
    16,094Interest income, net
    
    
    7
    
    
    
    
    
    
    
    352
    
    
    
    359Gain on litigation settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other income (expense)
    
    
    (14
    )
    
    
    66
    
    
    
    
    
    
    
    52Income (loss) before tax
    
    
    20,780
    
    
    
    (141
    )
    
    
    (4,134
    )
    
    
    16,505Tax expense
    
    
    
    
    
    
    
    
    
    
    6,486
    
    
    
    6,486Net income (loss)
    
    $
    20,780
    
    
    $
    (141
    )
    
    $
    (10,620
    )
    
    $
    10,019Depreciation, amortization & accretion
    
    $
    4,509
    
    
    $
    155
    
    
    $
    17
    
    
    $
    4,681Capital expenditures
    
    $
    8,543
    
    
    $
    5
    
    
    $
    3
    
    
    $
    8,551Total assets
    
    $
    93,363
    
    
    $
    125
    
    
    $
    17,691
    
    
    $
    111,179
 Non-Operating
    
    
    OperatingDisposal
    
    
    Disposal(in thousands)
    
    Facilities
    
    
    Facilities
    
    
    Corporate
    
    
    TotalSix Months Ended June 30, 2006Revenue
    
    $
    51,436
    
    
    $
    10
    
    
    $
    
    
    
    $
    51,446Transportation costs
    
    
    16,516
    
    
    
    
    
    
    
    
    
    
    
    16,516Other direct operating costs
    
    
    14,511
    
    
    
    184
    
    
    
    
    
    
    
    14,695Gross profit
    
    
    20,409
    
    
    
    (174
    )
    
    
    
    
    
    
    20,235Selling, general
& administration
    
    
    2,613
    
    
    
    1
    
    
    
    3,930
    
    
    
    6,544Operating income (loss)
    
    
    17,796
    
    
    
    (175
    )
    
    
    (3,930
    )
    
    
    13,691Interest income, net
    
    
    17
    
    
    
    
    
    
    
    374
    
    
    
    391Other income (expense)
    
    
    (14
    )
    
    
    173
    
    
    
    299
    
    
    
    458Income (loss) before tax
    
    
    17,799
    
    
    
    (2
    )
    
    
    (3,257
    )
    
    
    14,540Tax expense
    
    
    
    
    
    
    
    
    
    
    5,434
    
    
    
    5,434Net income (loss)
    
    $
    17,799
    
    
    $
    (2
    )
    
    $
    (8,691
    )
    
    $
    9,106Depreciation, amortization & accretion
    
    $
    3,654
    
    
    $
    180
    
    
    $
    12
    
    
    $
    3,846Capital expenditures
    
    $
    10,673
    
    
    $
    53
    
    
    $
    54
    
    
    $
    10,780Total assets
    
    $
    70,904
    
    
    $
    83
    
    
    $
    25,602
    
    
    $
    96,589
 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 June 30,
    
    
    Six Months Ended June 30,share amounts)
    
    2007
    
    
    %
    
    
    2006
    
    
    %
    
    
    2007
    
    
    %
    
    
    2006
    
    
    %Revenue
    
    $
    41,267
    
    
    
    100.0
    %
    
    $
    29,924
    
    
    
    100.0
    %
    
    $
    80,231
    
    
    
    100.0
    %
    
    $
    51,446
    
    
    
    100.0
    %Transportation costs
    
    
    19,760
    
    
    
    47.9
    %
    
    
    11,459
    
    
    
    38.3
    %
    
    
    36,931
    
    
    
    46.0
    %
    
    
    16,516
    
    
    
    32.1
    %Other direct operating costs
    
    
    9,854
    
    
    
    23.9
    %
    
    
    7,940
    
    
    
    26.5
    %
    
    
    20,133
    
    
    
    25.1
    %
    
    
    14,695
    
    
    
    28.6
    %Gross profit
    
    
    11,653
    
    
    
    28.2
    %
    
    
    10,525
    
    
    
    35.2
    %
    
    
    23,167
    
    
    
    28.9
    %
    
    
    20,235
    
    
    
    39.3
    %Selling, general and
administrative expenses
    
    
    3,474
    
    
    
    8.4
    %
    
    
    3,061
    
    
    
    10.3
    %
    
    
    7,073
    
    
    
    8.7
    %
    
    
    6,544
    
    
    
    12.7
    %Operating income
    
    
    8,179
    
    
    
    19.8
    %
    
    
    7,464
    
    
    
    24.9
    %
    
    
    16,094
    
    
    
    20.2
    %
    
    
    13,691
    
    
    
    26.6
    %Other income (expense):Interest income
    
    
    150
    
    
    
    0.4
    %
    
    
    205
    
    
    
    0.7
    %
    
    
    361
    
    
    
    0.4
    %
    
    
    393
    
    
    
    0.8
    %Interest expense
    
    
    (1
    )
    
    
    0.0
    %
    
    
    (1
    )
    
    
    0.0
    %
    
    
    (2
    )
    
    
    0.0
    %
    
    
    (2
    )
    
    
    0.0
    %Other
    
    
    48
    
    
    
    0.1
    %
    
    
    174
    
    
    
    0.6
    %
    
    
    52
    
    
    
    0.0
    %
    
    
    458
    
    
    
    0.9
    %Income before income taxes
    
    
    8,376
    
    
    
    20.3
    %
    
    
    7,842
    
    
    
    26.2
    %
    
    
    16,505
    
    
    
    20.6
    %
    
    
    14,540
    
    
    
    28.3
    %Income tax
    
    
    3,292
    
    
    
    8.0
    %
    
    
    2,915
    
    
    
    9.7
    %
    
    
    6,486
    
    
    
    8.1
    %
    
    
    5,434
    
    
    
    10.6
    %Net income
    
    $
    5,084
    
    
    
    12.3
    %
    
    $
    4,927
    
    
    
    16.5
    %
    
    $
    10,019
    
    
    
    12.5
    %
    
    $
    9,106
    
    
    
    17.7
    %Earnings per share:Basic
    
    $
    0.28
    
    
    
    
    
    
    $
    0.27
    
    
    
    
    
    
    $
    0.55
    
    
    
    
    
    
    $
    0.51Dilutive
    
    $
    0.28
    
    
    
    
    
    
    $
    0.27
    
    
    
    
    
    
    $
    0.55
    
    
    
    
    
    
    $
    0.50Shares used in earnings
per share calculation:Basic
    
    
    18,216
    
    
    
    
    
    
    
    18,116
    
    
    
    
    
    
    
    18,213
    
    
    
    
    
    
    
    17,997Dilutive
    
    
    18,254
    
    
    
    
    
    
    
    18,257
    
    
    
    
    
    
    
    18,254
    
    
    
    
    
    
    
    18,132Dividends paid per share
    
    $
    0.15
    
    
    
    
    
    
    $
    0.15
    
    
    
    
    
    
    $
    0.30
    
    
    
    
    
    
    $
    0.30
 Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
 Revenue -
   12




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##### Table of Contents



.
      Gross Profit .
 Selling, General and Administrative (SG&A) .
 Interest income.
  13




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##### Table of Contents



Other income.
 Income tax expense .
  Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
 Revenue -
      14




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##### Table of Contents



Gross Profit .
  SG&A .
 Interest income.
 Other income.
 Six Months Ended June 30,(in thousands)
    
    2007
    
    
    2006Net gain on sale of property and equipment
    
    $
    48
    
    
    $
    166Reimbursement of legal expenses
    
    
    
    
    
    
    299Other
    
    
    4
    
    
    
    (7
    )$
    52
    
    
    $
    458
 Income tax expense .
 Critical Accounting Policies
    15




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##### Table of Contents



Liquidity and Capital Resources
    Operating Activities
 Investing Activities -
  Financing Activities -
  16




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##### Table of Contents



Contractual Obligations and Guarantees
  
    
    On April 26, 2007 we renewed our lease with the State of Nevada modifying a lease of
real property under which we operate our Beatty, Nevada hazardous waste facility. The
terms of the amendment provide for continuance of the lease as a year-to-year periodic
tenancy until (i) the site reaches full capacity and can no longer accept waste (estimated
at approximately 20 years); (ii) the lease is terminated by us at our option; or (iii) the
lessor terminates the lease in accordance with the violation provisions of the lease. All
other terms of the Lease, including those relating to rents and fees, remain unchanged.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
   
 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.
  17




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##### Table of Contents



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
  
 Item 4. Submission of Matters to a Vote of Security Holders
  Nominee
    
    Votes For
    
    
    Votes WithheldRoy C. Eliff
    
    
    17,334,510
    
    
    
    53,795Edward F. Heil
    
    
    16,947,464
    
    
    
    440,841Kenneth C. Leung
    
    
    16,550,538
    
    
    
    837,767John W. Poling
    
    
    17,324,456
    
    
    
    63,849Stephen A. Romano
    
    
    16,950,382
    
    
    
    437,923Richard T. Swope
    
    
    17,341,788
    
    
    
    46,517
  Corporate Governance andAudit Committee
    
    Compensation Committee
    
    Nominating CommitteeJohn W. Poling, Chairman
    
    Roy C. Eliff, Chairman
    
    Richard T. Swope, ChairmanRoy C. Eliff
    
    Richard T. Swope
    
    Edward F. HeilRichard T. Swope
    
    John W. Poling
    
    John W. Poling
 2)
    
    Ratification of the Appointment of Moss Adams LLP as Our Independent Registered Public
Accountant
 Votes For
    
    Votes Against
    
    Abstentions
    
    Broker Non-Voted17,370,726
    
    
    9,877
    
    
    
    7,701
    
    
    
  18




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##### Table of Contents



Item 5. Other Information
  
 Item 6. Exhibits
 10.3
    
    Lease Agreement between US Ecology Nevada, Inc. and the State of Nevada, amended
April 17, 200631.1
    
    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
 
 SIGNATURE
  American Ecology Corporation(Registrant)Date: August 6, 2007
    
    /s/ Jeffrey R. FeelerJeffrey R. FeelerVice President andChief Financial Officer
  19