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:  March 31, 2009
            Commission
      File Number:  0-11688





AMERICAN
      ECOLOGY CORPORATION(Exact
      Name of Registrant as Specified in Its Charter)





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)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”) during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.





Yes xNo o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).




Yes  o  
No o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer  o
            Accelerated
      filer  xNon-accelerated
      filer  o(Do not check if smaller reporting company)
            Smaller
      Reporting Company  o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).





Yes oNo x





The
number of shares of the registrant’s common stock, $0.01 par value, outstanding
as of April 28, 2009 was 18,304,314.








AMERICAN
ECOLOGY CORPORATION




TABLE
OF CONTENTS





PART
      I.
            
            FINANCIAL
      INFORMATIONItem
      1.
            
            Financial
      Statements (Unaudited)Consolidated
      Balance Sheets as of March 31, 2009 and December 31, 2008
            
            1Consolidated
      Statements of Operations for the three months endedMarch
      31, 2009 and 2008
            
            2Consolidated
      Statements of Cash Flows for the three months ended March 31, 2009 and
      2008
            
            3Notes
      to Consolidated Financial Statements
            
            4Item
      2.
            
            Management’s Discussion and
      Analysis of Financial Condition and Results of
      Operations
            
            10Item
      3.
            
            Quantitative and Qualitative
      Disclosures About Market Risk
            
            16Item
      4.
            
            Controls and
      Procedures
            
            16PART
      II.
            
            OTHER
      INFORMATIONCautionary
      Statement
            
            17Item
      1.
            
            Legal
      Proceedings
            
            17Item
      1A.
            
            Risk
      Factors
            
            17Item
      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
            
            18Item
      6.
            
            Exhibits
            
            18SIGNATURE
            
            19








PART
I. FINANCIAL INFORMATION





Item
1.  Financial Statements


AMERICAN
ECOLOGY CORPORATION


CONSOLIDATED
BALANCE SHEETS


(in
thousands, except per share data)


(unaudited)








March
      31, 2009
              
              
              December
      31, 2008AssetsCurrent
      Assets:Cash
      and cash equivalents
              
              $
              24,121
              
              
              $
              18,473Receivables,
      net
              
              
              25,524
              
              
              
              30,737Prepaid
      expenses and other current assets
              
              
              2,160
              
              
              
              2,281Income
      tax receivable
              
              
              382
              
              
              
              2,834Deferred
      income taxes
              
              
              923
              
              
              
              684Total
      current assets
              
              
              53,110
              
              
              
              55,009Property
      and equipment, net
              
              
              67,878
              
              
              
              67,987Restricted
      cash
              
              
              4,724
              
              
              
              4,716Total
      assets
              
              $
              125,712
              
              
              $
              127,712Liabilities
      and Stockholders’ EquityCurrent
      Liabilities:Accounts
      payable
              
              $
              3,721
              
              
              $
              5,400Deferred
      revenue
              
              
              5,134
              
              
              
              4,657Accrued
      liabilities
              
              
              3,587
              
              
              
              4,398Accrued
      salaries and benefits
              
              
              1,693
              
              
              
              2,895Current
      portion of closure and post-closure obligations
              
              
              1,003
              
              
              
              490Current
      portion of capital lease obligations
              
              
              11
              
              
              
              10Total
      current liabilities
              
              
              15,149
              
              
              
              17,850Long-term
      closure and post-closure obligations
              
              
              13,603
              
              
              
              13,972Long-term
      capital lease obligations
              
              
              18
              
              
              
              21Deferred
      income taxes
              
              
              4,406
              
              
              
              3,927Total
      liabilities
              
              
              33,176
              
              
              
              35,770Contingencies
      and commitmentsStockholders’
      EquityCommon
      stock $0.01 par value, 50,000 authorized; 18,304 and18,304 shares
      issued, respectively
              
              
              183
              
              
              
              183Additional
      paid-in capital
              
              
              61,022
              
              
              
              60,803Retained
      earnings
              
              
              33,921
              
              
              
              33,544Common
      stock held in treasury, at cost, 155 and 155, respectively
              
              
              (2,590
              )
              
              
              (2,588
              )Total
      stockholders’ equity
              
              
              92,536
              
              
              
              91,942Total
      liabilities and stockholders’ equity
              
              $
              125,712
              
              
              $
              127,712




See Notes
to Consolidated Financial Statements.




1


AMERICAN
ECOLOGY CORPORATION


CONSOLIDATED
STATEMENTS OF OPERATIONS


(in
thousands, except per share data)


(unaudited)








Three
      Months Ended March 31,2009
              
              
              2008Revenue
              
              $
              34,965
              
              
              $
              46,219Transportation
      costs
              
              
              14,174
              
              
              
              22,058Other
      direct operating costs
              
              
              11,245
              
              
              
              10,717Gross
      profit
              
              
              9,546
              
              
              
              13,444Selling,
      general and administrative expenses
              
              
              3,573
              
              
              
              3,919Operating
      income
              
              
              5,973
              
              
              
              9,525Other
      income (expense):Interest
      income
              
              
              48
              
              
              
              63Interest
      expense
              
              
              (1
              )
              
              
              (1
              )Other
              
              
              33
              
              
              
              65Total
      other income
              
              
              80
              
              
              
              127Income
      before income taxes
              
              
              6,053
              
              
              
              9,652Income
      taxes
              
              
              2,409
              
              
              
              3,784Net
      income
              
              $
              3,644
              
              
              $
              5,868Earnings
      per share:Basic
              
              $
              0.20
              
              
              $
              0.32Dilutive
              
              $
              0.20
              
              
              $
              0.32Shares
      used in earnings per share calculation:Basic
              
              
              18,143
              
              
              
              18,229Dilutive
              
              
              18,176
              
              
              
              18,277Dividends
      paid per share
              
              $
              0.18
              
              
              $
              0.15




See Notes
to Consolidated Financial Statements.





2


AMERICAN
ECOLOGY CORPORATION


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(in
thousands)


(unaudited)





Three
      Months Ended March 31,2009
              
              
              2008Cash
      Flows From Operating Activities:Net
      income
              
              $
              3,644
              
              
              $
              5,868Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation,
      amortization and accretion
              
              
              2,286
              
              
              
              2,838Deferred
      income taxes
              
              
              240
              
              
              
              (90
              )Stock-based
      compensation expense
              
              
              218
              
              
              
              201Net
      gain on sale of property and equipment
              
              
              (34
              )
              
              
              (2
              )Accretion
      of interest income
              
              
              -
              
              
              
              (14
              )Changes
      in assets and liabilities:Receivables
              
              
              5,213
              
              
              
              (8,576
              )Income
      tax receivable
              
              
              2,452
              
              
              
              994Other
      assets
              
              
              121
              
              
              
              (5
              )Accounts
      payable and accrued liabilities
              
              
              (1,722
              )
              
              
              (1,026
              )Deferred
      revenue
              
              
              477
              
              
              
              (277
              )Accrued
      salaries and benefits
              
              
              (1,202
              )
              
              
              (914
              )Income
      tax payable
              
              
              -
              
              
              
              2,874Closure
      and post-closure obligations
              
              
              (148
              )
              
              
              (164
              )Net
      cash provided by operating activities
              
              
              11,545
              
              
              
              1,707Cash
      Flows From Investing Activities:Purchases
      of property and equipment
              
              
              (2,661
              )
              
              
              (3,464
              )Proceeds
      from sale of property and equipment
              
              
              42
              
              
              
              9Restricted
      cash
              
              
              (8
              )
              
              
              63Purchases
      of short-term investments
              
              
              -
              
              
              
              (992
              )Maturities
      of short-term investments
              
              
              -
              
              
              
              2,216Net
      cash used in investing activities
              
              
              (2,627
              )
              
              
              (2,168
              )Cash
      Flows From Financing Activities:Dividends
      paid
              
              
              (3,267
              )
              
              
              (2,737
              )Common
      stock repurchases
              
              
              (2
              )
              
              
              -Other
              
              
              (1
              )
              
              
              (3
              )Proceeds
      from stock option exercises
              
              
              -
              
              
              
              1Tax
      benefit of common stock options
              
              
              -
              
              
              
              2Net
      cash used in financing activities
              
              
              (3,270
              )
              
              
              (2,737
              )Increase
      (decrease) in cash and cash equivalents
              
              
              5,648
              
              
              
              (3,198
              )Cash
      and cash equivalents at beginning of period
              
              
              18,473
              
              
              
              12,563Cash
      and cash equivalents at end of period
              
              $
              24,121
              
              
              $
              9,365Supplemental
      DisclosuresIncome
      taxes paid, net of receipts
              
              $
              (399
              )
              
              $
              4Interest
      paid
              
              
              1
              
              
              
              1Non-cash
      investing and financing activities:Capital
      expenditures in accounts payable
              
              
              128
              
              
              
              474Acquisition
      of equipment with capital leases
              
              
              -
              
              
              
              6





See Notes
to Consolidated Financial Statements.





3





AMERICAN
ECOLOGY CORPORATION


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(unaudited)





NOTE
1 – GENERAL





Basis of
Presentation


The
accompanying unaudited consolidated financial statements include the results of
operations, financial position and cash flows of American Ecology Corporation
and its wholly-owned subsidiaries (collectively, “AEC” or “the Company”). All
material intercompany balances have been eliminated.




In the
opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments necessary to present fairly, in all material
respects, the results of the Company for the periods presented. These
consolidated financial statements have been prepared by the Company pursuant to
the rules and regulations of the Securities and Exchange Commission (“SEC”).
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been omitted pursuant to the rules and regulations of
the SEC. These consolidated financial statements should be read in conjunction
with the consolidated financial statements and accompanying notes included in
the Company’s 2008 Annual Report on Form 10-K filed with the SEC on February 25,
2009. The results of operations for the three months ended March 31, 2009 are
not necessarily indicative of results to be expected for the entire fiscal
year.




The
Company’s Consolidated Balance Sheet as of December 31, 2008 has been derived
from the Company’s audited Consolidated Balance Sheet as of that
date.





Use of
Estimates


The
preparation of the Company’s consolidated financial statements, in conformity
with accounting principles generally accepted in the United States, requires
management to make estimates and assumptions. Some of these estimates require
difficult, subjective or complex judgments about matters that are inherently
uncertain. As a result, actual results could differ from these estimates, in
some cases materially. These estimates and assumptions affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenue and expenses during the reporting
period.





NOTE
2 – EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS




SFAS 157. In September 2006,
the Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standard (“SFAS”) 157, Fair Value Measurements
(“SFAS 157”), which defines fair value, establishes a framework for measuring
fair value under generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS 157 applies to other existing
accounting pronouncements that require or permit fair value measurements, the
FASB having previously concluded in those accounting pronouncements that fair
value is the relevant measurement attribute. While SFAS 157 does not require any
new fair value measurements, its application may change the current practice for
fair value measurements. SFAS 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. In February 2008, the FASB issued FSP FAS 157-2, Effective Date of FASB Statement No.
157, which delayed the effective date of SFAS 157 for nonfinancial
assets and liabilities to fiscal years beginning after November 15, 2008. The
adoption of SFAS 157 for nonfinancial assets and liabilities in the first
quarter of 2009 had no significant impact on our consolidated financial
statements.




SFAS 141 R.  In
December 2007, the FASB issued SFAS 141(revised 2007), Business Combinations (“SFAS
141 R”), which establishes principles and requirements for how an acquirer
recognizes and measures the identifiable assets acquired, the liabilities
assumed and any non-controlling interest in the acquiree in a business
combination. SFAS 141 R requires that assets and liabilities, including
contingencies, be recorded at the fair value determined on the acquisition date
with changes thereafter reflected in results of operations, as opposed to
goodwill. Additionally, SFAS 141 R modifies the treatment of restructuring costs
associated with a business combination and requires acquisition costs to be
expensed as incurred. The statement also provides guidance on disclosures
related to the nature and financial impact of the business combination. SFAS 141
R is effective for transactions closing after December 15, 2008 and for fiscal
years beginning after December 15, 2008. SFAS 141 R will be adopted for
business combinations, if any, entered into by the Company after December 31,
2008. The impact of this new standard will be dependent on the nature of
acquisitions completed after adoption of SFAS 141 R. Any impact will be
evaluated as part of the economic evaluation of such a business
combination.






4




SFAS 160.  In
December 2007, the FASB issued SFAS 160, Non-controlling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51 (“SFAS
160”). This statement establishes accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. This statement is effective prospectively, except for certain
retrospective disclosure requirements, for fiscal years beginning after
December 15, 2008. This statement was effective for the Company at the
beginning of the first quarter of 2009 and had no impact on our consolidated
financial statements as we have no non-controlling interests in any subsidiaries
and have had no subsidiary deconsolidation.




SFAS 161.  In March
2008, the FASB issued SFAS 161, Disclosures About Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133 (“SFAS 161”).  SFAS 161 expands quarterly disclosure
requirements in SFAS 133 about an entity’s derivative instruments and hedging
activities.  SFAS 161 is effective for fiscal years beginning after
November 15, 2008.  This statement was effective for the Company at
the beginning of the first quarter of 2009 and had no impact on our consolidated
financial statements as we currently do not have any derivative instruments or
hedging activities.




SFAS 162.In May
2008, the FASB issued SFAS 162, The Hierarchy of Generally Accepted
Accounting Principles (“SFAS 162”).  SFAS 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of non-governmental
entities that are presented in conformity with generally accepted accounting
principles in the United States.  This statement is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting
Principles.  Although the Company will continue to evaluate the
application of SFAS 162, we do not currently believe that the adoption of SFAS
162 will have a material impact on our consolidated financial
statements.




FSP EITF
03-6-1.In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities(“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting and, therefore, need to be included in computing earnings per share
under the two-class method described in SFAS No. 128, Earnings Per Share. FSP EITF
03-6-1 requires companies to treat unvested share-based payment awards that have
non-forfeitable rights to dividend or dividend equivalents as a separate class
of securities in calculating earnings per share. FSP EITF 03-6-1 was effective
for the Company beginning January 1, 2009. The adoption of FSP EITF 03-6-1
did not have a material impact on our consolidated financial
statements.




NOTE 3–CONCENTRATION AND CREDIT
RISK





Major
Customers. The Company has a long-term contract with Honeywell
International, Inc. (“Honeywell”) for transportation, treatment and disposal of
hazardous waste from a clean-up site in New Jersey.  Work on this site
is presently estimated to be completed in the third quarter of 2009. Revenue
under this bundled service contract represented 44% and 38% of our total revenue
for the three months ended March 31, 2009 and 2008, respectively. No other
customer represented more than 10% of total revenue for the three months ended
March 31, 2009 and 2008, respectively. Receivables from Honeywell represented
49% of our total trade receivables at March 31, 2009 and 43% of total trade
receivables at December 31, 2008.  No other customer’s receivable
balances exceeded 10% of our total trade receivables at March 31, 2009 or
December 31, 2008.





Credit
Risk Concentration. We maintain most of our cash with Wells Fargo Bank.
Substantially all balances are uninsured and are not used as collateral for
other obligations. Concentrations of credit risk on accounts receivable are
believed to be limited due to the number, diversification and character of the
obligors and our credit evaluation process, except for receivables from
Honeywell for which significant credit risk exists.  We believe that
credit risk on Honeywell receivables is partially mitigated by federal court
orders requiring that Honeywell perform activities covered by our contract.
Typically, we have not required customers to provide collateral for such
obligations.








5




NOTE 4–CASH AND CASH
EQUIVALENTS




Cash and
cash equivalents include funds held in managed money market funds with Wells
Fargo & Company and Fidelity Investments.  The fair value of these
money market funds, using level 1 inputs, was $16.6 million at March 31,
2009.





NOTE
5 - RECEIVABLES


Receivables
were as follows:


March
      31,
                      
                      
                      December
      31,(in
      thousands)
                      
                      2009
                      
                      
                      2008Trade
                      
                      $
                      23,405
                      
                      
                      $
                      27,324Unbilled
      revenue
                      
                      
                      2,156
                      
                      
                      
                      3,536Other
                      
                      
                      165
                      
                      
                      
                      22625,726
                      
                      
                      
                      31,086Allowance
      for doubtful accounts
                      
                      
                      (202
                      )
                      
                      
                      (349
                      )$
                      25,524
                      
                      
                      $
                      30,737




NOTE 6–PROPERTY AND
EQUIPMENT




March
      31,
                          
                          
                          December
      31,(in
      thousands)
                          
                          2009
                          
                          
                          2008Cell
      development costs
                          
                          $
                          45,377
                          
                          
                          $
                          42,432Land
      and improvements
                          
                          
                          9,158
                          
                          
                          
                          9,158Buildings
      and improvements
                          
                          
                          29,742
                          
                          
                          
                          29,721Railcars
                          
                          
                          17,375
                          
                          
                          
                          17,375Vehicles
      and other equipment
                          
                          
                          22,722
                          
                          
                          
                          22,065Construction
      in progress
                          
                          
                          2,659
                          
                          
                          
                          4,473127,033
                          
                          
                          
                          125,224Accumulated
      depreciation and amortization
                          
                          
                          (59,155
                          )
                          
                          
                          (57,237
                          )$
                          67,878
                          
                          
                          $
                          67,987





Depreciation
expense for the three months ended March 31, 2009 and 2008 was $2.0 million and
$2.5 million, respectively.





NOTE
7 – RESTRICTED CASH





Restricted
cash balances of $4.7 million at both March 31, 2009 and December 31, 2008
are held in third-party managed trust accounts as collateral for our financial
assurance policies for closure and post-closure obligations.  These
restricted cash balances are maintained by third-party trustees and are invested
in money market accounts.





NOTE 8–LINE OF CREDIT





We have a
$15.0 million unsecured revolving line of credit (the “Revolving Credit
Agreement”) with Wells Fargo Bank, National Association (“Wells
Fargo”).  This Revolving Credit Agreement expires on June 15,
2010.  Monthly interest-only payments are paid based on a pricing grid
under which the interest rate decreases or increases based on our ratio of
funded debt to earnings before interest, taxes, depreciation and amortization.
We can elect to borrow utilizing the offshore London Inter-Bank Offering Rate
(“LIBOR”) plus an applicable spread or the prime rate. The Revolving Credit
Agreement contains quarterly financial covenants including a maximum leverage
ratio, a maximum funded debt ratio and a minimum required tangible net
worth.  Pursuant to our Revolving Credit Agreement, we may only
declare quarterly or annual dividends if on the date of declaration, no event of
default has occurred, or no other event or condition has occurred that would
constitute an event of default after giving effect to the payment of the
dividend. At March 31, 2009, we were in compliance with all of the financial
covenants in the Revolving Credit Agreement.








6





At March
31, 2009 and December 31, 2008, we had no amounts outstanding on the revolving
line of credit. At March 31, 2009 and December 31, 2008, the availability under
the line of credit was $11.0 million.  An additional $4.0 million of
the line of credit has been issued in the form of a standby letter of credit
that provides collateral for closure and post-closure financial
assurance.





NOTE
9 – CLOSURE AND POST-CLOSURE OBLIGATIONS





Closure
and post-closure obligations are recorded when environmental assessments and/or
remedial efforts are probable and the costs can be reasonably estimated
consistent with SFAS 5, Accounting for Contingencies
and with the liability calculated in accordance with SFAS 143, Accounting for Asset Retirement
Obligations. We perform periodic reviews of both non-operating and
operating facilities and revise accruals for estimated post-closure, remediation
and other costs when necessary. Our recorded liabilities are based on best
estimates of future costs and are updated periodically to reflect existing
environmental conditions, current technology, laws and regulations, permit
conditions, inflation and other factors.





Changes
to reported closure and post-closure obligations were as follows:




(in
      thousands)
                          
                          Three
      Months Ended
                            March
      31, 2009Beginning
      obligation
                          
                          $
                          14,462Accretion
      expense
                          
                          
                          292Payments
                          
                          
                          (148
                          )Adjustments
                          
                          
                          -Ending
      obligation
                          
                          
                          14,606Less
      current portion
                          
                          
                          (1,003
                          )Long-term
      portion
                          
                          $
                          13,603








NOTE 10–INCOME TAXES





As of
March 31, 2009 and December 31, 2008, we had no significant unrecognized tax
benefits. We recognize interest assessed by taxing authorities as a component of
interest expense. We recognize any penalties assessed by taxing authorities as a
component of selling, general and administrative expenses.Interest and penalties for
the three months ended March 31, 2009 and 2008 were not material.





Our
effective tax rate for the first quarter 2009 was 39.8% compared to 39.2% in the
first quarter of 2008. This increase is primarily due to lower pre-tax earnings
in the current year increasing the impact non-tax-deductible expenses have on
the effective tax rate.





We file
U.S. federal income tax returns with the Internal Revenue Service (“IRS”) as
well as income tax returns in various states. We may be subject to examination
by the IRS for tax years 2005 through 2008. Additionally, we may be subject to
examinations by various state taxing jurisdictions for tax years 2004 through
2008. We are not currently under examination by the IRS or any state taxing
jurisdictions.





NOTE 11–COMMITMENTS AND
CONTINGENCIES





In the
ordinary course of conducting business, we are periodically involved in judicial
and administrative proceedings involving federal, state or local governmental
authorities. Actions may also be brought by individuals or groups in connection
with permit modifications or proposed new facilities, alleged violations of
existing permits, or alleged damages suffered from exposure to hazardous
substances purportedly released from our operating sites or non-operating sites,
as well as other litigation. We maintain insurance intended to cover property
and damage claims asserted as a result of our operation. Periodically,
management reviews and may establish reserves for legal and administrative
matters, or fees expected to be incurred in connection therewith. As of March
31, 2009, we did not have any ongoing, pending or threatened legal action that
management believes would have a material adverse effect on our financial
position, results of operations or cash flows.






7




NOTE
12 – COMPUTATION OF EARNINGS PER SHARE





(in
      thousands, except per share data)
                        
                        Three
      Months Ended March 31,2009
                        
                        
                        2008Basic
                        
                        
                        Diluted
                        
                        
                        Basic
                        
                        
                        DilutedNet
      income
                        
                        $
                        3,644
                        
                        
                        $
                        3,644
                        
                        
                        $
                        5,868
                        
                        
                        $
                        5,868Weighted
      average commonshares outstanding
                        
                        
                        18,143
                        
                        
                        
                        18,143
                        
                        
                        
                        18,229
                        
                        
                        
                        18,229Dilutive
      effect of stock options andrestricted stock
                        
                        
                        
                        
                        
                        
                        33
                        
                        
                        
                        
                        
                        
                        
                        48Weighted
      averageshares outstanding
                        
                        
                        
                        
                        
                        
                        18,176
                        
                        
                        
                        
                        
                        
                        
                        18,277Earnings
      per share
                        
                        $
                        0.20
                        
                        
                        $
                        0.20
                        
                        
                        $
                        0.32
                        
                        
                        $
                        0.32Anti-dilutive
      sharesexcluded from calculation
                        
                        
                        
                        
                        
                        
                        264
                        
                        
                        
                        
                        
                        
                        
                        144





NOTE
13 – OPERATING SEGMENTS





We
operate within two segments, Operating Disposal Facilities and Non-Operating
Disposal Facilities. The Operating Disposal Facilities segment represents
facilities currently accepting waste. The Non-Operating Disposal Facilities
segment represents facilities that are no longer accepting waste.





Income
taxes are assigned to Corporate. All other items are included in the segment of
origin. Intercompany transactions have been eliminated from the segment
information and are not significant between segments.





Summarized
financial information concerning our reportable segments is shown in the
following tables:





(in
      thousands)
                                
                                Operating
      Disposal Facilities
                                
                                
                                Non-Operating
      Disposal Facilities
                                
                                
                                Corporate
                                
                                
                                TotalThree months ended
      March 31, 2009Revenue
                                
                                $
                                34,961
                                
                                
                                $
                                4
                                
                                
                                $
                                -
                                
                                
                                $
                                34,965Transportation
      costs
                                
                                
                                14,174
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                14,174Other
      direct operating costs
                                
                                
                                11,189
                                
                                
                                
                                56
                                
                                
                                
                                -
                                
                                
                                
                                11,245Gross
      profit
                                
                                
                                9,598
                                
                                
                                
                                (52
                                )
                                
                                
                                -
                                
                                
                                
                                9,546Selling,
      general& administration
                                
                                
                                1,108
                                
                                
                                
                                -
                                
                                
                                
                                2,465
                                
                                
                                
                                3,573Operating
      income (loss)
                                
                                
                                8,490
                                
                                
                                
                                (52
                                )
                                
                                
                                (2,465
                                )
                                
                                
                                5,973Interest,
      net
                                
                                
                                (1
                                )
                                
                                
                                -
                                
                                
                                
                                48
                                
                                
                                
                                47Other
      income
                                
                                
                                33
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                33Income
      (loss) before income taxes
                                
                                
                                8,522
                                
                                
                                
                                (52
                                )
                                
                                
                                (2,417
                                )
                                
                                
                                6,053Income
      taxes
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,409
                                
                                
                                
                                2,409Net
      income (loss)
                                
                                $
                                8,522
                                
                                
                                $
                                (52
                                )
                                
                                $
                                (4,826
                                )
                                
                                $
                                3,644Depreciation,
      amortization & accretion
                                
                                $
                                2,221
                                
                                
                                $
                                54
                                
                                
                                $
                                11
                                
                                
                                $
                                2,286Capital
      expenditures
                                
                                $
                                2,656
                                
                                
                                $
                                -
                                
                                
                                $
                                5
                                
                                
                                $
                                2,661Total
      assets
                                
                                $
                                94,243
                                
                                
                                $
                                57
                                
                                
                                $
                                31,412
                                
                                
                                $
                                125,712






8





(in
      thousands)
                              
                              Operating
      Disposal Facilities
                              
                              
                              Non-Operating
      Disposal Facilities
                              
                              
                              Corporate
                              
                              
                              TotalThree months ended
      March 31, 2008Revenue
                              
                              $
                              46,215
                              
                              
                              $
                              4
                              
                              
                              $
                              -
                              
                              
                              $
                              46,219Transportation
      costs
                              
                              
                              22,058
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              22,058Other
      direct operating costs
                              
                              
                              10,645
                              
                              
                              
                              72
                              
                              
                              
                              -
                              
                              
                              
                              10,717Gross
      profit
                              
                              
                              13,512
                              
                              
                              
                              (68
                              )
                              
                              
                              -
                              
                              
                              
                              13,444Selling,
      general& administration
                              
                              
                              1,322
                              
                              
                              
                              -
                              
                              
                              
                              2,597
                              
                              
                              
                              3,919Operating
      income (loss)
                              
                              
                              12,190
                              
                              
                              
                              (68
                              )
                              
                              
                              (2,597
                              )
                              
                              
                              9,525Interest,
      net
                              
                              
                              (1
                              )
                              
                              
                              -
                              
                              
                              
                              63
                              
                              
                              
                              62Other
      income
                              
                              
                              65
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              65Income
      (loss) before income taxes
                              
                              
                              12,254
                              
                              
                              
                              (68
                              )
                              
                              
                              (2,534
                              )
                              
                              
                              9,652Income
      taxes
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              3,784
                              
                              
                              
                              3,784Net
      income (loss)
                              
                              $
                              12,254
                              
                              
                              $
                              (68
                              )
                              
                              $
                              (6,318
                              )
                              
                              $
                              5,868Depreciation,
      amortization & accretion
                              
                              $
                              2,755
                              
                              
                              $
                              72
                              
                              
                              $
                              11
                              
                              
                              $
                              2,838Capital
      expenditures
                              
                              $
                              3,419
                              
                              
                              $
                              9
                              
                              
                              $
                              36
                              
                              
                              $
                              3,464Total
      assets
                              
                              $
                              103,400
                              
                              
                              $
                              60
                              
                              
                              $
                              17,958
                              
                              
                              $
                              121,418





NOTE 14–SUBSEQUENT EVENT





On April
1, 2009, we declared a quarterly dividend of $0.18 per common share to
stockholders of record on April 17, 2009. The dividend was paid using cash on
hand on April 24, 2009 in an aggregate amount of $3.3 million.








9





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





American
Ecology Corporation, through its subsidiaries, is a hazardous, Polychlorinated
biphenyl (“PCB”), non-hazardous and radioactive waste services company providing
treatment, disposal and transportation services to commercial and government
entities including oil refineries, chemical production facilities,
manufacturers, electric utilities, steel mills, biotechnology companies, waste
broker aggregators and medical and academic institutions.  The
majority of the waste received at our facilities is produced in the United
States.  We generate revenue from fees charged to treat and dispose of
waste at our four fixed disposal facilities located near Grand View, Idaho;
Richland, Washington; Beatty, Nevada; and Robstown, Texas. We also arrange
transportation of waste to our facilities, which has contributed significant
revenue in recent years. We or our predecessor companies have been in the waste
business since 1952.





Our
customers may be divided into categories to better evaluate period-to-period
changes in our treatment and disposal revenue based on service mix and type of
business (recurring “Base” or “Event” clean-up).  Each of these
categories is described in the table below, along with information on the
percentage of total treatment and disposal revenues for each category for the
three months ended March 31, 2009 and 2008.




Customer
      Category
              
              Description
              
              %
      of Treatment and Disposal Revenue (1)
      for the Three Months ended
      March 31, 2009
              
              %
      of Treatment and Disposal Revenue (1)
      for the Three Months ended
      March 31, 2008Broker
              
              Companies
      that collect and aggregate waste from their direct customers, comprised of
      both base and event clean-up business.
              
              33%
              
              28%Private
      Clean-up
              
              Private
      sector clean-up project waste, typically event business.
              
              21%
              
              27%Government
              
              Federal
      and State government clean-up project waste, comprised of both base
      business and event clean-up business.
              
              14%
              
              19%Refinery
              
              Petroleum
      refinery customers, comprised of both base and event clean-up
      business.
              
              13%
              
              4%Other
      industry
              
              Electric
      utilities, chemical manufacturers and other industrial customers not
      included in other categories, comprised of both recurring base business
      and event clean-up business.
              
              11%
              
              13%Rate
      regulated
              
              Northwest
      and Rocky Mountain Compact customers paying rate-regulated disposal fees
      set by the State of Washington, predominantly base
    business.
              
              7%
              
              6%Steel
              
              Steel
      mill customers, comprised of both base and event clean-up
      business.
              
              1%
              
              3%
  (1)
      Excludes all transportation service revenue




A
significant portion of our disposal revenue is attributable to discrete Event
Business projects which vary widely in size, duration and unit pricing.
Approximately 48% and 52% of our treatment and disposal revenue was derived from
Event Business projects for the three months ended March 31, 2009 and 2008,
respectively. The one-time nature of Event Business, diverse spectrum of waste
types received and widely varying unit pricing necessarily creates variability
in revenue and earnings. This variability may be influenced by funding
availability, changes in laws and regulations, government enforcement actions,
public controversy, litigation, weather, real estate redevelopment project
timing, government appropriation cycles and other factors. The types and amounts
of waste received from Base Business also vary from
quarter-to-quarter.  As a result of this variability, we can
experience significant quarter-to-quarter and year-to-year differences in
revenue, gross profit, gross margin, operating income and net income. Also,
while many large projects are pursued months or years in advance of work
performance, both large and small clean-up project opportunities routinely arise
with little prior notice. This uncertainty, which is inherent to the hazardous
and radioactive waste disposal business, is factored into our projections and
externally communicated business outlook statements. Our projections combine
historical experience with identified sales pipeline opportunities and new or
expanded service line projections.  Management believes that the
significant adverse economic conditions emerging in late 2008 and continuing in
2009 exacerbate the uncertainty inherent to projecting future
results.








10





Depending
on project-specific customer needs and competitive economics, transportation
services may be offered at or near our cost to help secure new business. For
waste transported by rail from the east coast (e.g.  Honeywell Jersey
City project) and other locations distant from our Grand View, Idaho facility,
transportation-related revenue can account for as much as three-fourths (75%) of
total project revenue. While bundling transportation and disposal services
reduces overall gross profit as a percentage of total revenue (“gross margin”),
this value-added service has allowed us to win multiple projects that management
believes we could not otherwise have competed for successfully.  Our
investment in a Company-owned railcar fleet to supplement rail cars obtained
under operating leases has reduced transportation expenses incurred when we
relied solely on operating leases and short-term rentals.





The
increased waste volumes resulting from projects won through this bundling
strategy have taken advantage of our operating leverage and increased
profitability.  While waste treatment and other variable costs are
project-specific, the contribution to profitability from the individual projects
performed generally increases as overall disposal volumes
increase.  Management believes that maximizing operating income and
earnings per share is a higher priority than maintaining or increasing gross
margin.  We plan to continue aggressively bidding bundled
transportation and disposal services based on this income growth
strategy.





We serve
oil refineries, chemical production plants, steel mills, waste
broker-aggregators serving small manufacturers and other customers that are, or
may be, affected by adverse economic conditions and a tight credit environment.
Such conditions may cause our customers to curtail operations resulting in lower
waste production and/or delayed spending on off-site waste shipments,
maintenance, waste clean-up projects and other work.  Factors that can
impact general economic conditions and the level of spending by our customers
include, but are not limited to, consumer and industrial spending, increases in
fuel and energy costs, conditions in the real estate and mortgage markets, labor
and healthcare costs, access to credit, consumer confidence and other economic
factors affecting spending behavior.  Market forces may also induce
customers to reduce or cease operations, declare bankruptcy, liquidate or
relocate to other countries, any of which could adversely affect our
business.  To the extent our business is either government funded or
driven by government regulations or enforcement actions, we believe it is less
susceptible to general economic conditions.  However, spending by
government agencies may also be reduced due to declining tax revenues resulting
from a weak economy.





Adverse
economic trends arising in the second half of 2008 and continuing in 2009 have
resulted in a decrease in near-term demand for our services from industrial
production and manufacturing activities.  These conditions also
adversely impact spending on market-driven real estate “brownfield”
redevelopment projects and other discretionary industry clean-up
projects.  We have tightened our credit standards in response to these
trends, which may also impact our business.  Demand for our services
may benefit from greater emphasis on enforcement by the new federal
administration as well as increased federal funding for environmental
remediation, including funds specifically appropriated for remediation by the
recently enacted American Recovery and Reinvestment Act of
2009.







11





Results
of Operations




The
following table summarizes our results of operations for the three months ended
March 31, 2009 and 2008 in dollars and as a percentage of total
revenue.




(in thousands,
      except per share
      amounts)
              
              Three
      Months Ended March 31,2009
              
              
              %
              
              
              2008
              
              
              %Revenue
              
              $
              34,965
              
              
              
              100.0%
              
              
              $
              46,219
              
              
              
              100.0%Transportation
      costs
              
              
              14,174
              
              
              
              40.5%
              
              
              
              22,058
              
              
              
              47.7%Other
      direct operating costs
              
              
              11,245
              
              
              
              32.2%
              
              
              
              10,717
              
              
              
              23.2%Gross
      profit
              
              
              9,546
              
              
              
              27.3%
              
              
              
              13,444
              
              
              
              29.1%Selling,
      general andadministrative expenses
              
              
              3,573
              
              
              
              10.2%
              
              
              
              3,919
              
              
              
              8.5%Operating
      income
              
              
              5,973
              
              
              
              17.1%
              
              
              
              9,525
              
              
              
              20.6%Other
      income (expense):Interest
      income
              
              
              48
              
              
              
              0.1%
              
              
              
              63
              
              
              
              0.1%Interest
      expense
              
              
              (1
              )
              
              
              
              
              
              
              (1
              )Other
              
              
              33
              
              
              
              0.1%
              
              
              
              65
              
              
              
              0.2%Total
      other income
              
              
              80
              
              
              
              0.2%
              
              
              
              127
              
              
              
              0.3%Income
      before income taxes
              
              
              6,053
              
              
              
              17.3%
              
              
              
              9,652
              
              
              
              20.9%Income
      taxes
              
              
              2,409
              
              
              
              6.9%
              
              
              
              3,784
              
              
              
              8.2%Net
      income
              
              $
              3,644
              
              
              
              10.4%
              
              
              $
              5,868
              
              
              
              12.7%Earnings
      per share:Basic
              
              $
              0.20
              
              
              
              
              
              
              $
              0.32Dilutive
              
              $
              0.20
              
              
              
              
              
              
              $
              0.32Shares
      used in earningsper share calculation:Basic
              
              
              18,143
              
              
              
              
              
              
              
              18,229Dilutive
              
              
              18,176
              
              
              
              
              
              
              
              18,277Dividends
      paid per share
              
              $
              0.18
              
              
              
              
              
              
              $
              0.15







Three
Months Ended March 31, 2009 Compared to Three Months Ended March 31,
2008





Revenue -
Revenue decreased 24% to $35.0 million for the first quarter of 2009, down from
$46.2 million for the first quarter of 2008. This reflects lower treatment and
disposal revenue as well as lower transportation revenue in the first quarter of
2009 compared to the first quarter of 2008, which we believe was significantly
influenced by adverse economic conditions. In the first quarter of 2009, we
disposed of 213,000 tons of waste, down 38% from the 343,000 tons disposed in
the first quarter of 2008.  This volume decline was partially offset
by a 42% increase in average selling price for treatment and disposal services
(excluding transportation) in the first quarter of 2009 over the same quarter
last year.  This increase in average selling price primarily reflects
pricing for the thermal desorption and recycling service introduced at our
Robstown, TX facility in the second half of 2008.





During
the first quarter of 2009, treatment and disposal revenue from recurring Base
Business was 5% lower than the first quarter of 2008 and comprised 52% of
non-transportation revenue.  This compared to 48% of
non-transportation Base Business revenue in the first quarter of 2008. This
decrease primarily reflects Base Business declines in our broker and steel
customer categories.  Event Business revenue in the first quarter of
2009 decreased 19% over the same quarter in 2008 and comprised 48% of
non-transportation revenue during the quarter.  This compared to 52%
of non-transportation Event Business in the first quarter of 2008.  As
discussed further below, this reflects decreased treatment and disposal revenue
from both private and government clean-up projects.








12





The
following table summarizes our first quarter 2009 revenue growth (both Base and
Event Business) by customer type as compared with the first quarter of
2008.




Treatment
      and Disposal Revenue Growth
                  Three
      Months Ended March 31, 2009 vs. Three Months Ended March 31,
      2008Refinery
                
                158%Rate
      regulated
                
                11%Broker
                
                3%Other
      industry
                
                -28%Private
                
                -31%Government
                
                -36%Steel
                
                -65%







Treatment
and disposal revenue from our refinery customers increased 158% in the first
quarter of 2009 compared to the same quarter in 2008. This increase is primarily
due to the introduction of thermal desorption recycling services at our
Robstown, Texas facility in the second half of 2008.





Rate-regulated
business at our Richland, Washington low-level radioactive waste facility
increased 11% in the first quarter of 2009 compared to the first quarter of
2008. Our Richland facility operates under a State-approved revenue
requirement.  This increase reflects the timing of revenue recognition
for the rate-regulated portion of the business.





Our
broker business increased 3% in the first quarter of 2009 compared to the same
quarter in 2008.  This reflects growth in waste brokered to us for
thermal desorption and recycling services at our Robstown, Texas facility in the
first quarter of 2009, partially offset by decreased business for other brokered
wastes.  We believe that the decrease in business for other brokered
waste reflects reduced industrial production in the United States.





Our other
industry revenue decreased 28% in the first quarter of 2009 compared to the
first quarter of 2008. This decrease was due primarily to a large clean-up
project for an electric utility customer which, was shipped to our Grand View,
Idaho site in the first quarter of 2008 and was not replaced in the first
quarter of 2009.





Treatment
and disposal revenue from private clean-up customers decreased approximately 31%
in the first quarter of 2009 as compared to the same period last year. This
decline reflects decreased shipments from the Molycorp, Honeywell Jersey City
and other smaller projects in the first quarter of 2009 compared to the same
period in 2008.  We believe that fewer new clean-up opportunities were
identified and more previously identified projects were delayed in the first
quarter of 2009 than the same quarter last year as a result of the adverse
economic conditions which emerged in the second half of 2008 and continued in
2009. The Honeywell Jersey City project contributed 44% of total revenue
(including transportation) in the first quarter of 2009 and 38% of total revenue
(including transportation) in the first quarter of 2008, or $15.4 million and
$17.3 million, respectively.  Shipments under our bundled
transportation and disposal contract with Chevron/Molycorp which is near
completion contributed 4% of total revenue (including transportation) in the
first quarter of 2009, or $1.5 million, compared to 8% of total revenue
(including transportation) or $3.5 million in the first quarter of
2008.





Government
clean-up business revenue decreased 36% in the first quarter of 2009 compared to
the first quarter of 2008. This decline reflects a decrease in Event Business
under our contract with the U.S. Army Corps of Engineers (“USACE”), which
contributed $2.2 million or 6% of total revenue in the first quarter of 2009,
compared to $3.8 million or 8% of total revenue in the first quarter of 2008.
This quarterly decrease reflects completion of a major project phase at one site
in the first quarter of 2008, partially offset by shipments from two other
projects sites in the first quarter of 2009.  This variability is
consistent with project-specific timing at the multiple USACE clean-up sites we
serve.  Each such site typically is remediated over multiple years in
discretely funded project phases.  These phases vary by amount of
waste received and duration.  No USACE projects served by the Company
were cancelled or awarded to competitors during the quarter.  We
believe timing of USACE work in the first quarter of 2009 was also affected by
delayed enactment of full-year funding for the fiscal year 2009 federal
budget.








13





Treatment
and disposal revenue from our steel mill customers decreased 65% in the first
quarter of 2009 compared to the first quarter of 2008. This reflects business
lost to zinc recyclers offering a cost-effective alternative to land disposal as
well as reduced steel production levels in the first quarter of 2009 at mills
served by the Company.





Gross
Profit. Gross profit for the first quarter of 2009 decreased by 29% to
$9.5 million, down from $13.4 million in the first quarter of 2008. This
decrease primarily reflects lower volumes of waste disposed in the first quarter
of 2009 compared to the same period in 2008.





Gross
margin was 27% in the first quarter of 2009, down from 29% in the first quarter
of 2008.  This decrease reflects lower treatment and disposal waste
volumes partially offset by a decrease in transportation revenue. Disposal gross
margins (excluding transportation revenue and costs) were 46% in the first
quarter of 2009 as compared to 55% in the first quarter of 2008. This decrease reflects
reduced operating leverage caused by lower waste volumes and a greater
percentage of waste requiring treatment (and therefore higher costs) prior to
disposal.





Selling, General
and Administrative (“SG&A”). As a percentage of total
revenue, SG&A expenses for the first quarter of 2009 and 2008 were 10% and
9%, respectively.  SG&A expenses decreased 9% to $3.6 million,
down from $3.9 million for the first quarter of 2008. The decline in SG&A
expense was due primarily to lower incentive compensation and business
development costs, partially offset by higher professional service
fees.





Interest
income.During the first
quarter of 2009, we earned $48,000 of interest income, down from $63,000 in the
first quarter of 2008. This decrease reflects a lower average rate of interest
earned on investments.





Other
expense/income.Other
expense/income includes business activities not included in current year
ordinary and usual revenue and expenses. In the first quarter of 2009, we
recognized $33,000 in other income.  This primarily reflects royalty
income from a previously sold municipal waste landfill in Texas, partially
offset by foreign currency transaction losses.  Other income in the
first quarter of 2008 was $65,000, primarily from the Texas royalty
income.





Income tax
expense. Our effective tax rate for the first quarter 2009 was 39.8%
compared to 39.2% in the first quarter of 2008. This increase is primarily due
to lower pre-tax earnings in the current year increasing the impact
non-tax-deductible expenses have on the effective tax rate.





At March
31, 2009 and December 31, 2008, we had no unrecognized tax benefits. We
recognize interest assessed by taxing authorities as interest expense. We
recognize any penalties assessed by taxing authorities as SG&A expense.Interest and penalties for
the three months ended March 31, 2009 and 2008 were not material.





Critical
Accounting Policies





Financial
statement preparation requires management to make estimates and judgments that
affect reported assets, liabilities, revenue and expenses and disclosure of
contingent assets and liabilities. The accompanying consolidated financial
statements are prepared using the same critical accounting policies discussed in
our Annual Report on Form 10-K for the fiscal year ended December 31,
2008.





Liquidity and Capital
Resources





Our
principal source of cash is from operations. The $24.1 million in cash at March
31, 2009 was comprised of cash and cash equivalents immediately available for
operations.





We have a
$15.0 million unsecured revolving line of credit (the “Revolving Credit
Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”) expiring
on June 15, 2010. This unsecured line-of-credit is available to supplement daily
working capital if needed. Monthly interest-only payments are required on
outstanding debt levels based on a pricing grid, under which the interest rate
decreases or increases based on our ratio of funded debt to earnings before
interest, taxes, depreciation and amortization. We can elect to borrow monies
utilizing LIBOR plus an applicable spread or the prime rate. The Revolving
Credit Agreement contains quarterly financial covenants, including a maximum
leverage ratio, a maximum funded debt ratio and a minimum required tangible net
worth. Pursuant to our Revolving Credit Agreement, we may only declare quarterly
or annual dividends if on the date of declaration, no event of default has
occurred, or no other event or condition has occurred that would constitute an
event of default after giving effect to the payment of the dividend. At March
31, 2009 we were in compliance with all financial covenants in the Revolving
Credit Agreement. We have a standby letter of credit to support our closure and
post-closure obligation of $4.0 million that expires in September 2009. At March
31, 2009, we had a borrowing capacity of $11.0 million after deducting the
outstanding letter of credit, with no borrowings outstanding.








14





On
October 28, 2008, our Board of Directors authorized management to repurchase up
to 600,000 shares, or approximately 3%, of our outstanding common stock. On
December 11, 2008, the program was extended until February 28, 2009. On February
23, 2009, the program was extended through December 31, 2009 unless extended,
canceled or modified by our Board of Directors. This authorization does not
obligate the Company to acquire any particular amount of common stock and is to
be executed at management’s discretion within Board-established stock price
limits. Through March 31, 2009, the Company had purchased 155,315 shares under
the plan at an average price of $16.68 per share using cash on
hand.  We anticipate that any future repurchases would be funded with
cash on hand.





We
believe that cash on hand and cash flow from operations will be sufficient to
meet our operating cash needs, including future dividends as may be approved by
our Board of Directors and potential expenditures for the Board-approved stock
repurchase plan, if any, during the next 12 months.





Operating
Activities - For the three months ended March 31, 2009, net cash provided
by operating activities was $11.5 million. This reflects net income of $3.6
million, decreases in receivables of $5.2 million, a $2.5 million decrease in
income tax receivable and depreciation, amortization and accretion of $2.3
million.  Partially offsetting these sources of cash were decreases in
accounts payable and accrued liabilities of $1.7 million and decreases in
accrued salaries and benefits of $1.2 million.  Impacts on net income
are due to the factors discussed above under Results of Operations. The decrease
in receivables is primarily attributable to a decline in revenue in the first
quarter of 2009 as compared with the same quarter in 2008. Days sales
outstanding was 64 days as of March 31, 2009, compared to 66 days at December
31, 2008 and 74 days at March 31, 2008. The decrease in income tax receivable
reflects application of prior year over-payments to current year tax liabilities
generated during the quarter as well as tax refunds received in the first
quarter of 2009. The decrease in accounts payable and accrued liabilities is
primarily attributable to lower waste disposal volumes in the first quarter of
2009.  The decrease in accrued salaries and benefits reflects
incentive compensation earned for 2008 performance and paid in the first quarter
of 2009.





For the
three months ended March 31, 2008, net cash provided by operating activities was
$1.7 million.  This reflects net income of $5.9 million, an increase
in income tax payable of $2.9 million and depreciation, amortization and
accretion of $2.8 million.  Partially offsetting these sources of cash
were increases in receivables of $8.6 million and decreases in accounts payable
and accrued liabilities of $1.0 million.





Investing
Activities- For
the three months ended March 31, 2009, net cash used in investing activities was
$2.6 million. Significant transactions affecting cash used in investing
activities during the first three months of 2009 include capital expenditures of
$2.6 million.  Significant capital projects included equipment
purchases at all four operating disposal facilities as well as construction of
additional disposal capacity at our Robstown, Texas site.





For the
three months ended March 31, 2008, net cash used in investing activities was
$2.2 million, including capital expenditures of $3.5
million.  Partially offsetting cash outflows for capital expenditures
were net maturities of short-term investments totaling $1.2
million.





Financing
Activities- For
the three months ended March 31, 2009 and 2008, net cash used in financing
activities was $3.3 million and $2.7 million, respectively. This primarily
reflects payment of dividends partially offset by proceeds from stock option
exercises and tax benefits associated with those exercises.





Contractual
Obligations and Guarantees





For
information on contractual obligations and guarantees, see our Annual Report on
Form 10-K for the fiscal year ended December 31, 2008 filed on February 25,
2009. There were no material changes in the amounts of our contractual
obligations and guarantees during the three months ended March 31,
2009.








15


Item
3.  Quantitative and Qualitative Disclosures About Market
Risk





We do not
maintain equities, commodities, derivatives or any other instruments for trading
or any other purposes.





We have
minimal interest rate risk on investments or other assets. At March 31, 2009,
approximately $24.1 million was held in cash and cash equivalents primarily
invested in money market accounts. Interest earned on these investments is
approximately 1% per year.





We are
exposed to market risks primarily from changes in interest rates. We do not
engage in financial transactions for trading or speculative
purposes.





Item
4.  Controls and Procedures





Management
of the Company, including the Chief Executive Officer and the Chief Financial
Officer of the Company, have evaluated the effectiveness of the Company’s
disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934) as of March 31, 2009. Based on this evaluation,
our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures, including the accumulation and communication
of disclosures to the Company’s Chief Executive Officer and Chief Financial
Officer as appropriate to allow timely decisions regarding required disclosure,
are effective to provide reasonable assurance that information required to be
disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified by the rules and forms of the SEC.





There
were no changes in our internal control over financial reporting that occurred
during the most recently completed fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.








16





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, repurchases of its stock under approved stock repurchase
plans, 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 or expanded 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, a loss of a
major customer, compliance with and changes to applicable laws and regulations,
access to cost effective transportation services, access to insurance and other
financial assurances, loss of key personnel, lawsuits, labor disputes, adverse
economic conditions including a tightened credit market, government funding or
competitive pressures, incidents or adverse weather conditions that could limit
or suspend specific operations, implementation of new technologies production
rates for the  thermal desorption service at our Texas and Nevada
facilities, market conditions and pricing for recycled materials, our ability to
perform under required contracts, our ability to permit and contract for timely
construction of new or expanded disposal cells, our willingness or ability to
pay dividends, our willingness or ability to repurchase our own common stock
under approved stock repurchase plans, and our ability to integrate any
potential acquisitions.





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  our 2008 Annual Report on Form 10-K filed with
the SEC on February 25, 2009 could harm our business, prospects, operating
results, and financial condition.





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





We are
not currently a party to any material pending legal proceedings and are not
aware of any claims that could have a materially adverse effect on our financial
position, results of operations or cash flows.





Item
1A.  Risk Factors.





There
have been no material changes in our risk factors from those disclosed in Item
1A of Part I of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2008.








17





Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds





The
following table sets forth the Company’s purchases of American Ecology common
stock made during the three months ended March 31, 2009:





Period
      (1)
              
              Total
      Number of Shares Purchased
              
              
              Average
      Price Paid per Share
              
              
              Total
      Number of Shares Purchased as Part of Publicly Announced
      Program
              
              
              Maximum
      Number of Shares That May Yet Be Purchased Under the Program (2)January
      1, 2009  to January 31, 2009
              
              
              -
              
              
              $
              -
              
              
              
              155,175
              
              
              
              444,825February
      1, 2009 to February 28, 2009
              
              
              140
              
              
              $
              16.02
              
              
              
              155,315
              
              
              
              444,685March
      1, 2009 to March 31, 2009
              
              
              -
              
              
              $
              -
              
              
              
              155,315
              
              
              
              444,685Total
              
              
              140
              
              
              $
              16.02
              
              
              
              155,315
              
              
              
              444,685





(1)
            The
      reported periods conform to our fiscal calendar.  The first
      quarter of fiscal 2009 began on January 1, 2009 and ended on March 31,
      2009.


(2)
            On
      October 28, 2008, our Board of Directors authorized a program to
      repurchase up to 600,000 shares of the Company’s outstanding common stock
      through December 31, 2008.  On December 11, 2008, the program
      was extended from December 31, 2008 to February 28, 2009. On February 23,
      2009, the program was extended from February 28, 2009 to December 31,
      2009. Stock repurchases under the program may be made in the open market
      or through privately negotiated transactions at times and in such amounts
      as the Company deems to be
appropriate.





Item
3.  Defaults Upon Senior Securities





None.





Item
4.  Submission of Matters to a Vote of Security Holders





None.





Item
5.  Other Information





None.





Item
6.  Exhibits





10.56
            *Management
      Incentive Plan Effective January 1, 200931.1
            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*
      Identifies management contracts or compensatory plans or arrangements
      required to be filed as an exhibit
hereto.








18





SIGNATURE





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.











American
      Ecology Corporation(Registrant)Date:  April
      30, 2009
            /s/
      Jeffrey R. FeelerJeffrey
      R. Feeler
              Vice
      President and
              Chief
      Financial Officer









19