Layne Christensen (LAYN) 8-K Layne Christensen Reports Third Quarter Fiscal 2007 Earnings

Exhibit 99

News Release

Contact: Layne Christensen Company
Jerry W. Fanska
Sr. Vice President Finance
913-677-6858
www.laynechristensen.com

TUESDAY, DECEMBER 5, 2006

LAYNE CHRISTENSEN REPORTS THIRD QUARTER FISCAL 2007 EARNINGS

• Net earnings set quarterly record, revenues up 63.7% to $186 million, compared to $114 million in the prior year, and earnings per share up 61.3% to $0.50 per share, compared to $0.31 per share in the prior year.

• Revenues and operating earnings from the water and wastewater infrastructure division increased 76.0% and 29.6%, respectively, from the prior year, driven mainly by the Reynolds acquisition and continued expansion into water treatment markets.

• Mineral exploration division revenues and operating earnings up 29.2% and 130.8% from the prior year.

• Energy division revenues and operating earnings up 82.5% and 133.6% from the prior year.

• “Other” segment revenues and operating earnings of $2.7 million and $0.8 million, respectively, resulted primarily from a single non-recurring contract with an international oil exploration company.

Financial Data	Three Months						Nine Months
					%						%
(in 000’s, except per share data)	10/31/06		10/31/05		Change		10/31/06		10/31/05		Change
Segment Revenues
—Water & wastewater infrastructure	$	136,586	$	77,596		76.0	$	387,607	$	210,542		84.1
—Mineral exploration		39,749		30,764		29.2		111,615		94,433		18.2
—Energy		6,814		3,733		82.5		17,803		7,836		127.2
—Other		2,675		1,433		86.7		12,662		3,475		264.4
Total revenues	$	185,824	$	113,526		63.7	$	529,687	$	316,286		67.5
Gross profit		50,322		30,069		67.4		138,100		83,960		64.5
Net income		7,762		4,286		81.1		19,596		11,565		69.4
Dilutive EPS	$	0.50	$	0.31		61.3	$	1.27	$	0.86		47.7
Weighted average dilutive shares outstanding		15,524		13,931				15,472		13,503

“Overall, a very impressive third quarter especially since our second quarter was also very strong. Minerals and energy more than doubled prior year quarterly operating results as we continue to benefit from strong demand for gold and base metals as well as the increased gas production from Layne Energy. Looking forward to the fourth quarter we anticipate the normal year-end seasonal slowdown in both mineral exploration and infrastructure, buffered somewhat by production from our Cherokee Basin unconventional gas properties.”—

Andrew B. Schmitt, President and Chief Executive Officer

-more-

MISSION WOODS, KANSAS, Tuesday, December 5, 2006 — Layne Christensen Company (Nasdaq: LAYN), today announced net income for the third quarter ended October 31, 2006 of $7,762,000, or $0.50 per diluted share, compared to net income of $4,286,000, or $0.31 per diluted share last year.

Revenues for the three months ended October 31, 2006 increased $72,298,000, or 63.7%, to $185,824,000 while revenues for the nine months ended October 31, 2006 increased $213,401,000, or 67.5%, to $529,687,000 from the same periods last year. Revenues were up across all divisions with the main increase in the water and wastewater infrastructure division, primarily resulting from the acquisition of Reynolds, Inc. (“Reynolds”) that closed on September 28, 2005. A further discussion of results of operations by division is presented below.

Gross profit as a percentage of revenues was 27.1% and 26.1% for the three and nine months ended October 31, 2006 compared to 26.5% for the same periods last year. The increase in the gross profit percentage for the three months was primarily the result of improved margins in the mineral exploration division due to improved pricing and efficiency and the energy division due to the increased production of unconventional gas, offset by reduced margins in the water and wastewater infrastructure division arising from the change in product mix with the acquisition of Reynolds. The decrease in gross profit percentage for the nine months was primarily due to the impact of the Reynolds product mix.

Selling, general and administrative expenses were $26,724,000 and $75,324,000 for the three and nine months ended October 31, 2006, compared to $16,834,000 and $49,196,000 for the same periods last year. The increases for the three and nine months ended October 31, 2006, respectively, were primarily the result of $3,604,000 and $11,324,000 in expenses added from the Reynolds acquisition and from various other categories, including increases in compensation expense of $540,000 and $1,661,000 associated with stock options under SFAS 123R “Share-Based Payments,” additional incentive compensation expense of $2,980,000 and $5,320,000 from increased profitability and wage and benefit increases of $796,000 and $2,730,000.

Depreciation, depletion and amortization was $8,673,000 and $23,139,000 for the three and nine months ended October 31, 2006, compared to $5,094,000 and $13,122,000 for the same periods last year. The increases for the three and nine months ended October 31, 2006, respectively, were primarily the result of increased depreciation and amortization of $1,736,000 and $5,503,000 associated with the Reynolds acquisition and increased depletion expense of $846,000 and $2,033,000 resulting from the increase in production of unconventional gas from the Company’s energy operations.

Equity in earnings of affiliates was $1,388,000 and $2,892,000 for the three and nine months ended October 31, 2006, compared to $972,000 to $3,244,000, for the same periods last year. The increase for the three months reflects increased earnings of $514,000 from foreign affiliates in mineral exploration. The decrease for the nine months reflects decreased earnings of $406,000 from a non-recurring domestic joint venture in the water and wastewater infrastructure division in the prior year.

Interest expense was $2,551,000 and $7,180,000 for the three and nine months ended October 31, 2006, compared to $1,577,000 and $3,653,000 for same periods last year. The increases were primarily a result of increases in the Company’s average borrowings for the periods in conjunction with the financing of the Reynolds acquisition.

Other, net earnings were $452,000 and $1,299,000 for the three and nine months ended October 31, 2006, compared to $471,000 and $1,004,000 for the same periods last year. The amounts were primarily due to gains on sales of non-strategic assets.

Income tax expense was recorded at an effective tax rate of 45.4% and 46.5% for the three and nine months ended October 31, 2006 compared to an effective rate of 46.4% and 47.8% for the same periods last year. The improvement in the effective rates was primarily attributable to an increase in pre-tax earnings, especially in international operations. The effective rates in excess of the statutory federal rate for the periods were due primarily to the impact of nondeductible expenses and the tax treatment of certain foreign operations.

Water and Wastewater Infrastructure Division
(in thousands)

	Three months ended				Nine months ended
	October 31,				October 31,
	2006		2005		2006		2005
Revenues	$	136,586	$	77,596	$	387,607	$	210,542
Income from continuing operations before income taxes		10,015		7,725		27,423		20,415

At the beginning of the first quarter, the Company established the water and wastewater infrastructure division. The division is a combination of the Company’s legacy water businesses, its geoconstruction division and the Reynolds company.

Water and wastewater infrastructure revenues increased 76.0% to $136,586,000 and 84.1% to $387,607,000 for the three and nine months ended October 31, 2006, compared to $77,596,000 and $210,542,000 for the same periods last year. The increases in

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revenues were primarily attributable to increases of $42,106,000 and $147,371,000 from the Company’s acquisition of Reynolds and additional revenues of $5,368,000 and $13,650,000 from the Company’s continued expansion into water treatment markets for the three and nine months ended October 31, 2006.

Income from continuing operations for the water and wastewater infrastructure division increased 29.6% to $10,015,000 for the three months ended October 31, 2006, and 34.3% to $27,423,000 for the nine months ended October 31, 2006, compared to $7,725,000 and $20,415,000 for the same periods last year. The increases in income from continuing operations for the three and nine months ended October 31, 2006 were primarily attributable to increases of $1,846,000 and $7,235,000 from the Reynolds acquisition and an increase from earnings of the Company’s water treatment initiatives of $343,000 and $1,888,000, partially offset for the nine months by reduced operating earnings of $2,705,000 as a result of a slowdown in the geoconstruction operations.

Mineral Exploration Division
(in thousands)

	Three months ended				Nine months ended
	October 31,				October 31,
	2006		2005		2006		2005
Revenues	$	39,749	$	30,764	$	111,615	$	94,433
Income from continuing operations before income taxes		7,789		3,375		19,963		13,057

Mineral exploration revenues increased 29.2% to $39,749,000 and 18.2% to $111,615,000 for the three and nine months ended October 31, 2006, compared to revenues of $30,764,000 and $94,433,000 for the same periods last year. The increases for the periods were primarily attributable to continued strength in worldwide exploration activity as a result of the relatively high gold and base metal prices.

Income from continuing operations for the mineral exploration division increased 130.8% to $7,789,000 and 52.9% to $19,963,000 for the three and nine months ended October 31, 2006, compared to $3,375,000 and $13,057,000 for the same periods last year. The improved earnings in the division were primarily attributable to the impact of increased exploration activity in most of the Company’s markets. The improved earnings were partially offset by an increase in accrued incentive compensation of $516,000 and $1,199,000 for the three and nine months ended October 31, 2006, due to higher profitability in the current year.

Energy Division
(in thousands)

	Three months ended				Nine months ended
	October 31,				October 31,
	2006		2005		2006		2005
Revenues	$	6,814	$	3,733	$	17,803	$	7,836
Income from continuing operations before income taxes		2,362		1,011		6,340		1,431

Energy division revenues increased $3,081,000, or 82.5%, to $6,814,000 and $9,967,000, or 127.2%, to $17,803,000 for the three and nine months ended October 31, 2006, compared to revenues of $3,733,000 and $7,836,000 for the same periods last year. The increase in revenues was primarily attributable to increased production from the Company’s unconventional gas properties.

Income from continuing operations increased $1,351,000, or 133.6%, to $2,362,000 and $4,909,000, or 343.0%, to $6,340,000 for the three and nine months ended October 31, 2006, compared to $1,011,000 and $1,431,000 for the same periods last year. The increases in income from continuing operations were due to the increase in revenues noted above.

Other
(in thousands)

	Three months ended				Nine months ended
	October 31,				October 31,
	2006		2005		2006		2005
Revenues	$	2,675	$	1,433	$	12,662	$	3,475
Income from continuing operations before income taxes		829		230		3,550		426

The increases in revenues and income from continuing operations in both the three and nine month periods ended October 31, 2006 as compared to the prior year were primarily due to a non-recurring contract to provide equipment and supplies to an

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international oil exploration company. Revenues of $8,798,000 were recognized during the nine months ended October 31, 2006, primarily in the second quarter, as the equipment and supplies were delivered and accepted.

Unallocated Corporate Expenses

Corporate expenses not allocated to individual divisions, primarily included in selling, general and administrative expenses, were $4,230,000 and $13,448,000 for the three and nine months ended October 31, 2006, compared to $2,757,000 and $9,439,000 for the same periods last year. The increases for the three and nine months ended October 31, 2006 were primarily due to the recognition of compensation expense under SFAS No. 123R (revised December 2004), “Share Based Payments” of $540,000 and $1,661,000, increases in wage and benefit costs of $260,000 and $708,000 and increases in consulting services of $184,000 and $612,000.

Summary of Operating Segment Reconciliation Data
(in thousands)

	Three Months Ended						Nine Months Ended
	October 31,						October 31,
	2006			2005			2006			2005
Revenues
Water and wastewater infrastructure	$	136,586		$	77,596		$	387,607		$	210,542
Mineral exploration		39,749			30,764			111,615			94,433
Energy		6,814			3,733			17,803			7,836
Other		2,675			1,433			12,662			3,475
Total revenues	$	185,824		$	113,526		$	529,687		$	316,286
Equity in earnings of affiliates
Mineral exploration	$	1,388		$	874		$	2,892		$	2,838
Water and wastewater infrastructure		—			98			—			406
Total equity in earnings of affiliates	$	1,388		$	972		$	2,892		$	3,244
Income from continuing operations before income taxes and minority interest
Water and wastewater infrastructure	$	10,015		$	7,725		$	27,423		$	20,415
Mineral exploration		7,789			3,375			19,963			13,057
Energy		2,362			1,011			6,340			1,431
Other		829			230			3,550			426
Unallocated corporate expenses		(4,230	)		(2,757	)		(13,448	)		(9,439	)
Interest		(2,551	)		(1,577	)		(7,180	)		(3,653	)
Total income from continuing operations before income taxes and minority interest	$	14,214		$	8,007		$	36,648		$	22,237

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Such statements may include, but are not limited to, statements of plans and objectives, statements of future economic performance and statements of assumptions underlying such statements, and statements of management’s intentions, hopes, beliefs, expectations or predictions of the future. Forward-looking statements can often be identified by the use of forward-looking terminology, such as “should,” “will,” “will be,” “intended,” “continue,” “believe,” “may,” “hope,” “anticipate,” “goal,” “forecast,” “plan,” “estimate” and similar words or phrases. Such statements are based on current expectations and are subject to certain risks, uncertainties and assumptions, including but not limited to prevailing prices for various commodities, unanticipated slowdowns in the Company’s major markets, the risks and uncertainties normally incident to the construction industry and to the exploration for and development and production of oil and gas, the impact of competition, the effectiveness of operational changes expected to increase efficiency and productivity, worldwide economic and political conditions and foreign currency fluctuations that may affect worldwide results of operations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially and adversely from those anticipated, estimated or projected. These forward-looking statements are made as of the date of this release, and the Company assumes no obligation to update such forward-looking statements or to update the reasons why actual results could differ materially from those anticipated in such forward-looking statements.

Layne Christensen Company provides sophisticated services and related products for the water, wastewater, mineral and energy markets.

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LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
(in thousands, except share and per share data)

	Three Months						Nine Months
	Ended October 31,						Ended October 31,
	(unaudited)						(unaudited)
	2006			2005			2006			2005
Revenues	$	185,824		$	113,526		$	529,687		$	316,286
Cost of revenues (exclusive of depreciation shown below)		135,502			83,457			391,587			232,326
Gross profit		50,322			30,069			138,100			83,960
Selling, general and administrative expenses		26,724			16,834			75,324			49,196
Depreciation, depletion and amortization		8,673			5,094			23,139			13,122
Other income (expense):
Equity in earnings of affiliates		1,388			972			2,892			3,244
Interest		(2,551	)		(1,577	)		(7,180	)		(3,653	)
Other, net		452			471			1,299			1,004
Income from continuing operations before income taxes and minority interest		14,214			8,007			36,648			22,237
Income tax expense		6,452			3,716			17,052			10,618
Minority interest		—			(10	)		—			(50	)
Net income from continuing operations before discontinued operations		7,762			4,281			19,596			11,569
Loss from discontinued operations, net of income tax		—			5			—			(4	)
Net income	$	7,762		$	4,286		$	19,596		$	11,565
Basic income per share:
Net income from continuing operations	$	0.51		$	0.31		$	1.28		$	0.89
Loss from discontinued operations, net of income taxes		—			—			—			—
Income per share	$	0.51		$	0.31		$	1.28		$	0.89
Diluted income per share:
Net income from continuing operations	$	0.50		$	0.31		$	1.27		$	0.86
Loss from discontinued operations, net of income taxes		—			—			—			—
Net income per share	$	0.50		$	0.31		$	1.27		$	0.86
Weighted average shares outstanding		15,334,000			13,697,000			15,282,000			12,988,000
Dilutive stock options		190,000			234,000			190,000			515,000
		15,524,000			13,931,000			15,472,000			13,503,000

	As of
	October 31,		January 31,
	2006		2006
Balance Sheet Data:
Working capital, excluding debt	$	63,267	$	69,996
Total assets		507,590		449,335
Total debt		131,000		128,900
Total stockholders’ equity		196,308		171,626
Common shares issued and outstanding		15,390,242		15,233,472