FORM 11-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

þ		ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

o		TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

A.		Full title of the plan and the address of the plan, if different from that of the issuer named below:

B.		Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

 

LAYNE CHRISTENSEN COMPANY
CAPITAL ACCUMULATION PLAN

Financial Statements as of December 31, 2005 and 2004 and for the
Years Then Ended, Supplemental Schedule as of December 31, 2005,
and Report of Independent Registered Public Accounting Firm

LAYNE CHRISTENSEN COMPANY

CAPITAL ACCUMULATION PLAN

TABLE OF CONTENTS

		PAGES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 2005 AND 2004, AND FOR THE YEARS THEN ENDED:
Statements of Net Assets Available for Benefits			2
Statements of Changes in Net Assets Available for Benefits			3
Notes to Financial Statements			4-8
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2005
Form 5500, Schedule H, Part IV, Line 4i — Schedule of Assets (Held at End of Year)			9-11

Note:		All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosures under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Administrative Committee of
Layne Christensen Company Capital Accumulation Plan:

We have audited the accompanying statements of net assets available for benefits of the Layne Christensen Company Capital Accumulation Plan (the “Plan”) as of December 31, 2005 and 2004, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2005 and 2004, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule listed in the Table of Contents is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the basic 2005 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
June 26, 2006
Kansas City, Missouri

LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN

		2005				2004
ASSETS:
INVESTMENTS, at fair value:
Common/collective trust funds		$	15,729,502			$	14,320,369
Mutual funds			49,084,935				34,456,750
Layne Christensen Company stock account			3,640,311				2,917,961
Participant loans			1,796,161				1,275,444
Total investments, at fair value			70,250,909				52,970,524
RECEIVABLES:
Employee contributions			120,323				102,802
Employer contributions			56,225				49,166
Transfer from Reynolds, Inc. 401(k) Plan			35,860				—
Accrued income			22,740				14,294
Total receivables			235,148				166,262
CASH			51,851				26,552
Total assets			70,537,908				53,163,338
LIABILITIES:
Accrued expenses			20,419				30,698
Payable for securities purchased			45,810				—
Total liabilities			66,229				30,698
NET ASSETS AVAILABLE FOR BENEFITS		$	70,471,679			$	53,132,640

See Notes to Financial Statements.

LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN

		2005				2004
ADDITIONS:
Investment income:
Interest and dividend income		$	2,265,971			$	1,763,908
Net appreciation in fair value of investments			2,827,538				3,384,092
Net investment income			5,093,509				5,148,000
Contributions:
Participant			4,550,606				3,438,518
Employer			1,721,084				1,513,057
Total contributions			6,271,690				4,951,575
TOTAL ADDITIONS			11,365,199				10,099,575
DEDUCTIONS:
Withdrawals and terminations			3,873,867				6,261,071
Administrative expenses			36,406				41,382
TOTAL DEDUCTIONS			3,910,273				6,302,453
NET ADDITIONS			7,454,926				3,797,122
NET ASSETS AVAILABLE FOR BENEFITS AT BEGINNING OF YEAR			53,132,640				42,022,885
TRANSFER FROM OTHER PLANS			9,884,113				7,312,633
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR		$	70,471,679			$	53,132,640

See Notes to Financial Statements.

LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN

(1)		DESCRIPTION OF PLAN
		The following brief description of the Layne Christensen Company Capital Accumulation Plan (the “Plan”) is provided for general information purposes only. Participants should refer to the Plan document for more complete information.

	(a)		General — The Plan is a defined contribution plan and is administered by Layne Christensen Company and an Administrative Committee comprised of individuals appointed by the Layne Christensen Company Board of Directors. Merrill Lynch Trust Company (“Merrill Lynch”) serves as the Plan’s trustee. The Plan is subject to the provisions set forth in the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended.
	(b)		Eligibility — Salaried and certain hourly employees of Layne Christensen Company and its subsidiaries (the “Company”) become eligible for membership in the Plan after completion of three months of service.
	(c)		Contributions — Employee contributions are voluntary. Employees may make a basic (pre-tax) contribution of at least 1% up to limitations imposed by the Internal Revenue Service (“IRS”). After-tax contributions are not permitted after November 30, 1986. Effective January 2002, employees age 50 or older who make the maximum allowable pre-tax contribution to the Plan, are entitled to make an additional “catch-up contribution” in accordance with the Plan documents.
			Participants are eligible for a matching contribution immediately upon electing to make a basic contribution. Each plan year the Company may make a matching contribution as follows: 1) 100 percent of the participant’s basic contributions to the extent that such basic contributions do not exceed 3 percent of the participant’s compensation; and 2) 50 percent of the participant’s basic contributions to the extent that such basic contributions exceed 3 percent but do not exceed 5 percent of the participant’s compensation. Additionally, employees as of the end of the Plan year who have completed at least two years of service at that time are eligible to receive an allocation of the Company profit sharing contribution. This discretionary contribution is determined annually by the Board of Directors of the Company and is based on a stated percentage, if any, of participants’ eligible compensation.
	(d)		Investment Options — The Plan has sixteen types of investment funds available through Merrill Lynch including a company stock account, a common/collective trust fund and fourteen mutual funds. An additional thirteen funds transferred in on December 31, 2005 as a result of the Reynolds, Inc. 401(k) Retirement Plan merging into the Plan (see Note 1(h)). These funds are not investment options for the Plan. These assets will be liquidated in 2006 and invested in one of the sixteen investments offered

			by the Plan as directed by the Participants. Of the sixteen types of investment funds available on an ongoing basis, nine are considered “core” investment options while the remaining seven represent an expanded group of funds available to participants who wish to invest beyond the core offerings.
			Participants may allocate their elected deferral percentage to any or all of the funds in 1% increments. Participants may change their allocation between funds any time during the year. Company contributions are allocated to the funds in proportion with the participants’ elected deferral percentage at the time of contribution.
	(e)		Participant Accounts and Vesting — Investment income is allocated on a daily basis among the Plan members who are participants of the Plan. The income allocation is made in proportion to the amount each participant’s account bears to the aggregate amount of all such accounts. After January 1, 2000, participant contributions, Company matching contributions, Company profit sharing contributions and earnings thereon are fully vested at all times and are not subject to forfeiture for any reason. Upon distribution, forfeitures from employer contributions made prior to January 1, 2000 become available to the Company and are fully applied toward employer contributions. At December 31, 2005 and 2004, forfeited non-vested accounts totaled $82 and $78, respectively. No forfeitures were utilized during 2005. In 2004, employer contributions were reduced by $910 from forfeited non-vested accounts.
	(f)		Loans to Participants — Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000, not to exceed 50% of their vested employee deferral account balance. Loan transactions are treated as a transfer between the investment funds and the loan fund. Loan terms for repayment shall be no less than one year and no greater than five years, unless the loan qualifies as a home loan, for which repayment terms may be up to 15 years. Loans are secured by assignment of 50% of the vested amount of the participant’s account and bear interest at a rate equal to the prime rate. Principal and interest are paid ratably through payroll deductions.
			Participants eligible for a withdrawal as a result of financial hardship may request that all or a portion of their supplemental (after-tax) and basic (pre-tax) account be distributed. IRS regulations define severe financial hardship as a condition caused by the need for funds required for the purchase of or eviction from a family’s principal residence, college education for employees’ dependent children, self or spouse, or for major uninsured family medical expenses. The Administrative Committee must approve any such hardship withdrawals. The loan provision must be exhausted prior to applying for a hardship withdrawal.
	(g)		Payment of Benefits — Upon termination of employment or retirement, the participant or, in the case of death, the surviving spouse, can elect to receive the participant’s account balance in a single lump sum or in installments. Account balances which do not exceed $5,000 may be paid in a single lump sum upon termination. Participants with an account balance of greater than $5,000 can elect to indefinitely maintain their account balance within the Plan.

	(h)		Transfer in from Reynolds, Inc. 401(k) Retirement Plan — Effective December 31, 2005, the assets of the Reynolds, Inc. 401(k) Retirement Plan (“Reynolds Plan”) were merged into the Plan. As a result of this merger, Reynolds Plan assets totaling $9,884,113 were transferred into the Plan.
	(i)		Transfer in from Layne Christensen Company Hourly 401(k) Retirement Savings Plan — Effective January 1, 2004, the assets of the Layne Christensen Company Hourly 401(k) Retirement Savings Plan (“Hourly Plan”) were merged into the Plan. As a result of this merger, Hourly Plan assets totaling $7,312,633 were transferred into the Plan.

(2)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	(a)		Basis of Accounting — The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
	(b)		Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from these estimates.
			The Plan utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.
	(c)		Valuation of Investments — The Plan’s investments are stated at fair value. The common/collective trust funds are stated at estimated fair value which have been determined based on the unit values of the funds. Unit values are determined by the institution sponsoring such fund by dividing the fund’s net assets by its units outstanding at the valuation dates. The mutual funds are valued at quoted market values which represent the net asset values of shares held by the Plan at year end. The Plan’s investment in the Layne Christensen Company Stock Account is valued at quoted market prices as determined by closing sales prices reported on the last business day of the year. Participant loans are valued at outstanding principal balances due which approximate fair value. Investment transactions are recorded on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
			Management fees and operating expenses charged to the Plan for investments in the mutual funds are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments.

	(d)		Administrative Expenses — Most administrative costs (e.g., investment transaction fees, trustee fees, record keeping fees, and audit fees) are paid by the Plan. Other costs are paid by the Company.
	(e)		Payment of Benefits — Benefit payments to participants are recorded upon distribution. At December 31, 2005 and 2004, amounts allocated to accounts of persons who have elected to withdraw from the Plan but have not yet been paid were $15,899 and $26,197, respectively.

(3)		INVESTMENTS
		The Plan’s investments that represented 5% or more of the Plan’s net assets available for benefits as of December 31, 2005 and 2004, are as follows:

		2005				2004
Merrill Lynch Retirement Preservation Trust		$	15,326,746			$	14,320,369
PIMCO Total Return Fund			4,283,134				3,542,962
Davis New York Venture Fund			9,337,428				8,167,066
Merrill Lynch Basic Value Fund			9,140,907				8,824,024
Merrill Lynch Balanced Capital Fund			5,224,593				4,938,491
Layne Christensen Company Stock Account			3,640,311				2,917,961

During 2005 and 2004, the Plan’s investments (including investments bought, sold, and held during the year) appreciated as follows:

		Year Ended				Year Ended
		December 31, 2005				December 31, 2004
Investments at fair value as determined by quoted market price:
Common stock		$	1,117,872			$	1,053,357
Mutual funds			1,709,666				2,330,735
Net change in fair value		$	2,827,538			$	3,384,092

(4)		PLAN TERMINATION
		Although it has not expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time or to terminate the Plan subject to the provisions set forth in ERISA.
(5)		TAX STATUS
		The IRS has determined and informed the Company by a letter dated September 26, 2002, that the Plan is qualified and the trust established under the Plan is tax-exempt, under the appropriate sections of the Internal Revenue Code (the “Code”). The Plan has been amended since receiving the determination letter; however, the Company and plan administrator believe that the Plan is designed and is currently being operated in compliance with the

		applicable requirements of the Code. Therefore, the plan administrator believes that the Plan is qualified and the related trust is tax-exempt.
(6)		RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
		The following is a reconciliation of the net assets available for benefits per the financial statements at December 31, 2005 and 2004 to Form 5500:

		2005				2004
Net assets available for benefits per the financial statements		$	70,471,679			$	53,132,640
Amounts allocated to withdrawing participants			(15,899	)			(26,197	)
Net assets available for benefits per the Form 5500		$	70,455,780			$	53,106,443

The following is a reconciliation of benefits paid to participants per the financial statements for the years ended December 31, 2005 and 2004, to Form 5500:

		2005				2004
Benefits paid to participants per the financial statements		$	3,873,867			$	6,261,071
Add: Amounts allocated to withdrawing participants at end of year			15,899				26,197
Less: Amounts allocated to withdrawing participants at beginning of year			(26,197	)			—
Benefits paid to participants per Form 5500		$	3,863,569			$	6,287,268

(7)		RELATED-PARTY TRANSACTIONS
		Certain Plan investments are shares of mutual funds and units in a common collective trust fund managed by Merrill Lynch. Merrill Lynch is the trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. Fees paid by the Plan for investment management services were included as a reduction of the return earned on each fund.
		The Layne Christensen Company Stock Account includes transactions that also qualify as party-in-interest transactions. At December 31, 2005 and 2004, the Plan held 143,150 and 160,769 shares, respectively, of common stock of Layne Christensen Company, the sponsoring employer, with a cost basis of $1,630,050 and $1,671,449, respectively. There was no dividend income recorded by the Plan during the years ended December 31, 2005 and 2004.

LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN

(a)

(b)

(c)

(d)

(e)

Description of Investment including maturity

Identity of Issuer, Borrower,

date, rate of interest, collateral, par or

Lessor or Similar Party

maturity value

Cost

Current Value

*

Layne Christensen

Layne Christensen Company Stock Account

*

*

$

3,640,311

Common Stock (143,150 shares)

*

Merrill Lynch

Merrill Lynch Retirement Preservation Trust

*

*

15,326,746

Common/Collective Trust (15,326,746 units)

Managers

Managers International Equity Fund

*

*

2,536,194

Mutual Fund (47,176 shares)

Franklin

Franklin Small-Mid Capital Growth Fund

*

*

1,204,293

Mutual Fund (31,927 shares)

John Hancock

John Hancock Health Sciences Fund

*

*

513,316

Mutual Fund (11,331 shares)

*

Merrill Lynch

Merrill Lynch Basic Value Fund

*

*

9,140,907

Mutual Fund (295,631 shares)

*

Merrill Lynch

Merrill Lynch Balanced Capital Fund

*

*

5,224,593

Mutual Fund (204,325 shares)

*

Merrill Lynch

Merrill Lynch Bond Fund High Income Portfolio

*

*

262,487

Mutual Fund (52,393 shares)

*

Merrill Lynch

Merrill Lynch Pacific Fund

*

*

1,029,160

Mutual Fund (41,972 shares)

PIMCO

PIMCO Total Return Fund

*

*

4,283,134

Mutual Fund (407,918 shares)

*

Merrill Lynch

Merrill Lynch S&P 500 Index Trust

*

*

1,078,328

Mutual Fund (70,525 shares)

Van Kampen

Van Kampen Emerging Growth Fund

*

*

2,195,347

Mutual Fund (52,722 shares)

Seligman

Seligman Communications and Information Fund

*

*

993,087

Mutual Fund (36,390 shares)

Blackrock Global Rescs Prtf

Blackrock Global Resources Portfolio

*

*

1,874,047

Mutual Fund (28,300 shares)

LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN

(a)

(b)

(c)

(d)

(e)

Description of Investment including maturity

Identity of Issuer, Borrower,

date, rate of interest, collateral, par or

Lessor or Similar Party

maturity value

Cost

Current Value

Pioneer

Pioneer Europe Fund

*

*

181,257

Mutual Fund (5,622 shares)

Davis New York

Davis New York Venture Fund

*

*

9,337,428

Mutual Fund (277,075 shares)

Aim

Aim Dynamics Inv Class

*

*

181,593

Mutual Fund (9,972 shares)

Allegiant

Allegiant Multi-Factor Small Cap

*

*

556,288

Mutual fund (28,988 shares)

Allegiant

Allegiant S&P 500 Index Fund Class I

*

*

1,152,426

Mutual Fund (107,502 shares)

Franklin

Franklin Small-Mid Cap Growth

*

*

371,952

Mutual Fund (9,861 shares)

Janus

Janus Twenty Fund

*

*

720,122

Mutual Fund (14,720 shares)

Janus

Janus Fund Incorporated

*

*

325,164

Mutual Fund (12,737 shares)

Putnam

George Putnam Fund of Boston Class M

*

*

1,105,802

Mutual Fund (62,299 shares)

Putnam

Putnam International Equity Fund Class M

*

*

558,454

Mutual Fund (21,671 shares)

Putnam

Putnam New Opportunities Fund

*

*

1,217,486

Mutual Fund (28,419 shares)

Wells Fargo

Wells Fargo FDS TR, ADV OPP

*

*

595,242

Mutual Fund (13,266 shares)

Allegiant

Allegiant Money Market Fund Class I

*

*

1,860,996

Mutual Fund (1,860,996 shares)

Income Advantage

Income Advantage Funds

*

*

402,757

Common/Collective Trust (402,757 units)

LAYNE CHRISTENSEN COMPANY CAPITAL ACCUMULATION PLAN

(a)

(b)

(c)

(d)

(e)

Description of Investment including maturity

Identity of Issuer, Borrower,

date, rate of interest, collateral, par or

Lessor or Similar Party

maturity value

Cost

Current Value

Putnam

Putnam Income Fund Inc. Class M

*

*

585,831

Mutual Fund (87,568 shares)

Plan Participants

Participant Promissory Notes

1,796,161

Interest rates ranging from 4% to 9.5%; maturity dates

through September 2020.

TOTAL INVESTMENTS

$

70,250,909

SIGNATURES

     The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

				LAYNE CHRISTENSEN COMPANY
				CAPITAL ACCUMULATION PLAN
DATE: June 28, 2006				By Layne Christensen Company
		By		/s/ Jerry W. Fanska   Jerry W. Fanska
				Sr. Vice President Finance — Treasurer

EXHIBIT INDEX

Exhibit
Number		Description of Documents		Page
24		Consent of Independent Registered Public Accounting Firm			14