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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934        
 
 
For the quarterly period ended
June 30, 2010
 
or 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934       
 
 
For the transition period from
 
to
   
 
Commission file number 
 
1-14447
 
 
AMCOL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
     
Delaware
 
36-0724340
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)
     
2870 Forbs Avenue, Hoffman Estates, IL
 
60192
(Address of principal executive offices)
 
(Zip Code)
 
(847) 851-1500
(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 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 x     No 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 (§232.405 of this chapter) 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 (as defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer  o
 
Accelerated filer  x
 
Non-accelerated filer  o
Smaller reporting company  o
 


 
1

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o     No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Outstanding at July 14, 2010
(Common stock, $.01 par value)
 
31,049,393 Shares

 
2

 

AMCOL INTERNATIONAL CORPORATION
 
INDEX
 
   
Page No.
Part I - Financial Information
 
     
Item 1:
 
 
 4
     
 
 6
     
 
 7
     
 
 8
     
 
 9
     
 
10
     
Item 2:
19
     
Item 3:
36
     
Item 4:
36
     
Part II - Other Information
 
     
Item 4:
37
     
Item 6:
37

 
3


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
Item 1:
Financial Statements
 
   
June 30,
   
December 31,
 
   
2010
   
2009
 
ASSETS
 
(unaudited)
    *  
Current assets:
             
Cash and cash equivalents
  $ 17,036     $ 27,669  
Accounts receivable, net
    182,134       148,260  
Inventories
    96,094       96,173  
Prepaid expenses
    15,975       12,509  
Deferred income taxes
    7,424       6,525  
Income tax receivable
    7,635       2,431  
Other
    5,463       463  
Total current assets
    331,761       294,030  
                 
Noncurrent assets:
               
Property, plant, equipment, and mineral rights and reserves:
               
Land and mineral rights
    56,041       57,898  
Depreciable assets
    429,490       414,617  
      485,531       472,515  
Less: accumulated depreciation and depletion
    244,669       236,269  
      240,862       236,246  
                 
Goodwill
    69,177       71,156  
Intangible assets, net
    45,238       47,185  
Investment in and advances to affiliates and joint ventures
    32,472       32,228  
Available-for-sale securities
    24,518       25,563  
Deferred income taxes
    1,802       2,513  
Other assets
    21,172       25,339  
Total noncurrent assets
    435,241       440,230  
    $ 767,002     $ 734,260  
 
Continued…

 
4


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
   
June 30,
   
December 31,
 
   
2010
   
2009
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
(unaudited)
    *  
Current liabilities:
             
Accounts payable
  $ 53,168     $ 40,335  
Accrued liabilities
    48,194       49,981  
Total current liabilities
    101,362       90,316  
                 
Noncurrent liabilities:
               
Long-term debt
    223,373       207,017  
Pension liabilities
    20,943       20,403  
Deferred compensation
    7,927       7,544  
Other long-term liabilities
    32,821       29,208  
Total noncurrent liabilities
    285,064       264,172  
                 
Equity:
               
Common stock
    320       320  
Additional paid in capital
    87,598       84,830  
Retained earnings
    286,328       275,200  
Accumulated other comprehensive income
    16,358       32,174  
      390,604       392,524  
Treasury stock
    (11,377 )     (14,377 )
Total AMCOL shareholders' equity
    379,227       378,147  
                 
Noncontrolling interest
    1,349       1,625  
Total equity
    380,576       379,772  
    $ 767,002     $ 734,260  
 
*Condensed from audited financial statements.
 
  The accompanying notes are an integral part of these condensed consolidated financial statements.

 
5


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
 
   
Six Months Ended
   
Three Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Net sales
  $ 395,664     $ 335,619     $ 220,713     $ 171,200  
Cost of sales
    290,342       245,251       159,938       124,052  
Gross profit
    105,322       90,368       60,775       47,148  
General, selling and administrative expenses
    70,818       66,421       37,031       33,368  
Operating profit
    34,504       23,947       23,744       13,780  
Other income (expense):
                               
Interest expense, net
    (4,550 )     (6,566 )     (2,334 )     (3,159 )
Other, net
    (117 )     (2,714 )     330       (1,502 )
      (4,667 )     (9,280 )     (2,004 )     (4,661 )
Income before income taxes and income (loss) from affiliates and joint ventures
    29,837       14,667       21,740       9,119  
Income tax expense
    7,701       3,117       5,519       1,546  
Income before income (loss) from affiliates and joint ventures
    22,136       11,550       16,221       7,573  
Income (loss) from affiliates and joint ventures
    (71 )     (1,642 )     20       (1,634 )
Net income (loss)
    22,065       9,908       16,241       5,939  
Net income (loss) attributable to noncontrolling interests
    (212 )     (365 )     92       (158 )
Net income (loss) attributable to AMCOL shareholders
  $ 22,277     $ 10,273     $ 16,149     $ 6,097  
                                 
Weighted average common shares outstanding
    31,092       30,719       31,141       30,744  
                                 
Weighted average common and common equivalent shares outstanding
    31,467       30,928       31,515       30,984  
                                 
Basic earnings per share attributable to AMCOL shareholders
  $ 0.72     $ 0.33     $ 0.52     $ 0.20  
                                 
Diluted earnings per share attributable to AMCOL shareholders
  $ 0.71     $ 0.33     $ 0.51     $ 0.20  
                                 
Dividends declared per share
  $ 0.36     $ 0.36     $ 0.18     $ 0.18  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
6


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
 
   
Total
   
AMCOL Shareholders
   
Noncontrolling Interest
 
   
Six Months Ended
   
Six Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
   
2010
   
2009
 
Net income (loss)
  $ 22,065     $ 9,908     $ 22,277     $ 10,273     $ (212 )   $ (365 )
Other comprehensive income (loss):
                                               
Foreign currency translation adjustment
    (12,902 )     4,505       (12,838 )     4,208       (64 )     297  
Unrealized gain (loss) on available-for-sale securities, net of tax
    (668 )     -       (668 )     -       -       -  
Unrealized gain (loss) on interest rate swap agreements, net of tax
    (2,374 )     1,319       (2,374 )     1,319       -       -  
Other, net of tax
    64       (266 )     64       (266 )     -       -  
                                                 
Comprehensive income (loss)
  $ 6,185     $ 15,466     $ 6,461     $ 15,534     $ (276 )   $ (68 )
 
   
Total
   
AMCOL Shareholders
   
Noncontrolling Interest
 
   
Three Months Ended
   
Three Months Ended
   
Three Months Ended
 
   
June 30,
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
   
2010
   
2009
 
Net income (loss)
  $ 16,241     $ 5,939     $ 16,149     $ 6,097     $ 92     $ (158 )
Other comprehensive income (loss):
                                               
Foreign currency translation adjustment
    (11,564 )     13,471       (11,508 )     13,131       (56 )     340  
Unrealized gain (loss) on available-for-sale securities, net of tax
    1,318       -       1,318       -       -       -  
Unrealized gain (loss) on interest rate swap agreements, net of tax
    (1,788 )     1,151       (1,788 )     1,151       -       -  
Other, net of tax
    34       (206 )     34       (206 )     -       -  
                                                 
Comprehensive income (loss)
  $ 4,241     $ 20,355     $ 4,205     $ 20,173     $ 36     $ 182  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
7


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(In thousands)
 
         
AMCOL Shareholders
       
   
Total Equity
   
Retained Earnings
   
Accumulated Other Comprehensive Income (Loss)
   
Common Stock
   
Treasury Stock
   
Paid-in Capital
   
Noncontrolling Interest
 
Balance at December 31, 2008
  $ 328,355     $ 262,453     $ (4,721 )   $ 320     $ (18,196 )   $ 86,350     $ 2,149  
Net income (loss)
    9,908       10,273                                       (365 )
Cash dividends
    (11,014 )     (11,014 )                                        
Purchase of treasury shares
    (175 )                             (175 )                
Issuance of treasury shares pursuant to employee stock compensation plans
    778                               2,041       (1,263 )        
Tax benefit from employee stock compensation plans
    783                                       783          
Vesting of common stock in connection with employee stock compensation plans
    1,430                                       1,430          
Purchase of noncontrolling interests shares
    (5,704 )                                     (4,714 )     (990 )
Comprehensive income (loss)
    5,558               5,261                               297  
                                                         
Balance at June 30, 2009
    329,919       261,712       540       320       (16,330 )     82,586       1,091  
                                                         
Balance at December 31, 2009
  $ 379,772     $ 275,200     $ 32,174     $ 320     $ (14,377 )   $ 84,830     $ 1,625  
Net income (loss)
    22,065       22,277                                       (212 )
Cash dividends
    (11,149 )     (11,149 )                                        
Issuance of treasury shares pursuant to employee stock compensation plans
    4,061                               3,000       1,061          
Tax benefit from employee stock compensation plans
    89                                       89          
Vesting of common stock in connection with employee stock compensation plans
    1,618                                       1,618          
Comprehensive income (loss)
    (15,880 )             (15,816 )                             (64 )
                                                         
Balance at June 30, 2010
    380,576       286,328       16,358       320       (11,377 )     87,598       1,349  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
8


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
   
Six Months Ended
 
   
June 30,
 
   
2010
   
2009
 
Cash flow from operating activities:
           
Net income
  $ 22,065     $ 9,908  
Adjustments to reconcile from net income to net cash provided by (used in) operating activities:
               
Depreciation, depletion, and amortization
    17,022       17,875  
Other non-cash charges
    3,655       3,630  
Changes in assets and liabilities, net of effects of acquisitions:
               
Decrease (increase) in current assets
    (49,570 )     45,157  
Decrease (increase) in noncurrent assets
    (1,832 )     (4,665 )
Increase (decrease) in current liabilities
    14,667       (8,004 )
Increase  (decrease) in noncurrent liabilities
    843       1,639  
Net cash provided by (used in) operating activities
    6,850       65,540  
Cash flow from investing activities:
               
Capital expenditures
    (25,939 )     (32,446 )
Capital expenditures - corporate building
    -       (6,400 )
Proceeds from sale of depreciable assets - corporate building
    -       6,400  
Receipts from (advances to) Chrome Corp
    -       6,000  
Investments in and advances to affiliates and joint ventures
    (1,985 )     (889 )
Other
    1,493       1,352  
Net cash used in investing activities
    (26,431 )     (25,983 )
Cash flow from financing activities:
               
Net change in outstanding debt
    17,808       (28,792 )
Proceeds from sales of treasury stock
    2,904       768  
Purchases of treasury stock
    -       (165 )
Dividends
    (11,149 )     (11,014 )
Excess tax benefits from stock-based compensation
    164       686  
Net cash provided by (used in) financing activities
    9,727       (38,517 )
Effect of foreign currency rate changes on cash
    (779 )     876  
Net increase (decrease) in cash and cash equivalents
    (10,633 )     1,916  
Cash and cash equivalents at beginning of period
    27,669       19,441  
Cash and cash equivalents at end of period
  $ 17,036     $ 21,357  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
9

 
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
 
Note 1:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Company Operations
 
We, AMCOL International Corporation (the “Company”), operate in five segments:  minerals and materials, environmental, oilfield services, transportation and corporate.  Our minerals and materials segment mines, processes and distributes minerals and products with similar applications for use in various industrial and consumer markets, including metalcasting, pet care, detergents, iron ore pelletizing, and drilling industries. Our environmental segment manufactures and distributes products and related services for use as a moisture barrier in commercial construction, landfill liners and a variety of other industrial and commercial applications. Our oilfield services segment provides both onshore and offshore water treatment filtration, pipeline separation, waste fluid treatment, nitrogen, rental tools, coil tubing and well testing data services for the oil and natural gas industry.  Our transportation segment includes both a long-haul trucking business and a freight brokerage business for our domestic subsidiaries as well as third parties. Our corporate segment includes the elimination of intersegment shipping revenues as well as certain expenses associated with research and development, management, benefits and information technology activities for our Company.  The composition of our revenues by segment is as follows:
 
   
Six Months Ended
 
   
June 30,
 
   
2010
   
2009
 
Minerals and materials
    52 %     46 %
Environmental
    26 %     30 %
Oilfield services
    18 %     19 %
Transportation
    6 %     7 %
Intersegment shipping
    -2 %     -2 %
      100 %     100 %
 
Further discussion of segment information is included in Note 4, “Business Segment Information.”
 
Basis of Presentation
 
The financial information included herein has been prepared by management, and other than the condensed consolidated balance sheet as of December 31, 2009, is unaudited.  The condensed consolidated balance sheet as of December 31, 2009 has been derived from, but does not include all of the disclosures contained in, the audited consolidated financial statements for the year ended December 31, 2009.  The information furnished herein includes all adjustments that are, in our opinion, necessary for a fair presentation of our results of operations and cash flows for the interim periods ended June 30, 2010 and 2009, and our financial position as of June 30, 2010, and all such adjustments are of a normal recurring nature.  The accompanying condensed consolidated financial information should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2009.

 
10


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
 
Certain items in the prior year’s condensed consolidated financial statements contained herein and notes thereto have been reclassified to conform to the condensed consolidated financial statement presentation for the three and six months ended June 30, 2010.  These reclassifications did not have a material impact on our financial statements.
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results may differ from those estimates.
 
The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year for a variety of reasons, including the seasonality of our environmental segment, which varies due to the seasonal nature of the construction industry, and our oilfield services segment, which varies due to seasonal weather patterns in its various markets.
 
Recently Adopted Accounting Standards
 
In June 2009, the Financial Accounting Standard Board (“FASB”) issued guidance codified in ASC Topic 810, which amends consolidation guidance applicable to variable interest entities (“VIEs”) and requires additional disclosures concerning an enterprise’s continual involvement with VIEs.  The adoption of this guidance on January 1, 2010 did not have a material impact on our financial statements.
 
In January 2010, the FASB issued guidance codified in ASC Topic 820, which requires separate disclosure and justification for transferring fair value measurements between Level 1 and Level 2.  The adoption of this guidance on January 1, 2010 relating to new disclosures for Level 1 and Level 2 fair value measurements did not have a material impact on our financial statements.
 
Note 2:
EARNINGS PER SHARE
 
The table below provides further share information used in computing our earnings per share for the periods presented herein.  Basic earnings per share was computed by dividing net income attributable to AMCOL shareholders by the weighted average number of common shares outstanding during each period.  Diluted earnings per share was computed by dividing net income attributable to AMCOL shareholders by the weighted average common shares outstanding after consideration of the dilutive effect of stock based compensation outstanding during each period.

 
11


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
 
   
Six Months Ended
   
Three Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Weighted average number of common shares outstanding
    31,091,659       30,719,389       31,141,368       30,744,447  
Dilutive impact of stock based compensation
    375,680       208,579       373,522       239,696  
Weighted average number of common and common equivalent shares outstanding for the period
    31,467,339       30,927,968       31,514,890       30,984,143  
Number of common shares outstanding at the end of the period
    31,034,171       30,602,966       31,034,171       30,602,966  
                                 
Weighted average number of anti-dilutive shares excluded from the computation of diluted earnings per share
    554,056       1,606,728       610,295       1,143,072  
 
Note 3:
ADDITIONAL BALANCE SHEET INFORMATION
 
Our inventories at June 30, 2010 and December 31, 2009 are comprised of the following components:
 
   
June 30,
   
December 31,
 
   
2010
   
2009
 
Crude stockpile inventories
  $ 26,390     $ 30,510  
In-process and finished goods inventories
    47,608       40,368  
Other raw material, container, and supplies inventories
    22,096       25,295  
    $ 96,094     $ 96,173  
 
We mine various minerals using a surface mining process that requires the removal of overburden.  Under various governmental regulations, we are obligated to restore the land comprising each mining site to its original condition at the completion of mining activity.  The obligation is adjusted to reflect the passage of time and changes in estimated future cash outflows.  A reconciliation of the activity within our reclamation obligation is as follows:
 
   
Six Months Ended
 
   
June 30,
 
   
2010
   
2009
 
Balance at beginning of period
  $ 6,584     $ 5,649  
Settlement of obligations
    (692 )     (669 )
Liabilities incurred and accretion expense
    906       862  
Acquisition of mining claims
    -       474  
Foreign currency
    (24 )     136  
                 
Balance at end of period
  $ 6,774     $ 6,452  

 
12


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
 
Note 4:
BUSINESS SEGMENT INFORMATION
 
As previously mentioned, we operate in five segments.  Our segments are fairly diverse with respect to the products and services they offer as well as the customers they serve. Accordingly, we organize our segments based on the products and industries they serve.  We measure segment performance based on operating profit, which is defined as net sales less cost of sales and general, selling and administrative expenses related to a segment’s operations.  The costs deducted to arrive at operating profit do not include several items, such as net interest expense or income taxes.  Segment assets are those assets used in the operations of that segment.  Corporate assets include cash and cash equivalents, corporate leasehold improvements, and other miscellaneous equipment.
 
The following summaries set forth certain financial information by business segment:
 
   
Six Months Ended
   
Three Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Net sales:
                       
Minerals and materials
  $ 204,085     $ 155,636     $ 106,397     $ 75,479  
Environmental
    103,334       99,603       65,159       55,370  
Oilfield services
    69,848       64,031       39,644       32,133  
Transportation
    25,703       22,849       13,583       11,558  
Intersegment shipping
    (7,306 )     (6,500 )     (4,070 )     (3,340 )
Total
  $ 395,664     $ 335,619     $ 220,713     $ 171,200  
                                 
Operating profit (loss):
                               
Minerals and materials
  $ 30,632     $ 13,391     $ 16,326     $ 5,783  
Environmental
    7,797       10,848       8,014       7,154  
Oilfield services
    5,781       9,367       4,553       4,450  
Transportation
    1,210       990       699       509  
Corporate
    (10,916 )     (10,649 )     (5,848 )     (4,116 )
Total
  $ 34,504     $ 23,947     $ 23,744     $ 13,780  
                                 
   
As of Jun. 30, 2010
   
As of Dec. 31, 2009
                 
Assets:
                               
Minerals and materials
  $ 405,602     $ 384,896                  
Environmental
    153,482       151,265                  
Oilfield services
    167,650       145,981                  
Transportation
    4,299       3,552                  
Corporate
    35,969       48,566                  
Total
  $ 767,002     $ 734,260                  

 
13


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
 
   
Six Months Ended
   
Three Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Depreciation, depletion and amortization:
                       
Minerals and materials
  $ 7,772     $ 8,113     $ 3,976     $ 4,000  
Environmental
    2,579       3,003       1,195       1,519  
Oilfield services
    5,779       5,887       2,855       2,937  
Transportation
    20       21       12       10  
Corporate
    872       851       432       451  
Total
  $ 17,022     $ 17,875     $ 8,470     $ 8,917  
                                 
Capital expenditures:
                               
Minerals and materials
  $ 19,070     $ 23,647     $ 6,069     $ 3,832  
Environmental
    955       1,095       502       559  
Oilfield services
    4,906       6,465       2,404       4,000  
Transportation
    38       -       1       -  
Corporate
    970       7,639       886       458  
Total
  $ 25,939     $ 38,846     $ 9,862     $ 8,849  
                                 
Research and development (income) expense:
                               
Minerals and materials
  $ 2,759     $ 2,698     $ 1,436     $ 1,363  
Environmental
    1,274       1,073       628       546  
Oilfield services
    322       335       163       168  
Corporate
    40       127       (41 )     41  
Total
  $ 4,395     $ 4,233     $ 2,186     $ 2,118  
 
Note 5:
EMPLOYEE BENEFIT PLANS
 
Our net periodic benefit cost for our defined benefit pension plan was as follows:
 
   
Six Months Ended
   
Three Months Ended
 
   
June 30,
   
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Service cost
  $ 700     $ 824     $ 350     $ 412  
Interest cost
    1,246       1,303       623       652  
Expected return on plan assets
    (1,308 )     (1,073 )     (654 )     (519 )
Amortization of acturial (gain) / loss
    -       213       -       106  
Amortization of prior service cost
    32       31       16       15  
Net periodic benefit cost
  $ 670     $ 1,298     $ 335     $ 666  
 
As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009, we expect to contribute up to $1,500 to our pension plan in 2010, of which $500 was contributed in the first quarter ended March 31, 2010.

 
14


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
 
Note 6:
INCOME TAXES
 
Our effective tax rate for the six months ended June 30, 2010 and 2009 was 25.8% and 21.3%, respectively. For both periods, the rate differs from the U.S. federal statutory rate of 35.0% largely due to depletion deductions and differences in local tax rates on the income from our foreign subsidiaries.
 
In the normal course of business, we are subject to examination by taxing authorities throughout the world.  With few exceptions, we are no longer subject to income tax examinations by tax authorities for years prior to 2004.  The United States Internal Revenue Service (“IRS”) has examined our federal income tax returns for all open years through 2007.
 
Note 7:
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITES
 
As a multinational corporation with operations throughout the world, we are subject to certain market risks. We use a variety of practices to manage these market risks, including, when considered appropriate, derivative financial instruments. We use derivative financial instruments only for risk management and not for trading or speculative purposes.
 
The following table sets forth the fair values of our derivative instruments and where they are recorded within our Condensed Consolidated Balance Sheet:
 
       
Fair Value as of
 
Liability Derivatives
 
Balance Sheet Location
 
June 30,
2010
   
December 31,
2009
 
Derivatives designated as hedging instruments:
               
                 
Interest rate swaps
 
Other long-term liabilities
  $ 6,811     $ 3,082  
 
Cash flow hedges
 
   
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives
(Effective Portion)
 
   
Six Months Ended
June 30,
   
Three Months Ended
June 30,
 
Derivatives in Cash Flow Hedging Relationships
 
2010
   
2009
   
2010
   
2009
 
                         
Interest rate swaps, net of tax
  $ (2,374 )   $ 1,319     $ (1,788 )   $ 1,151  

 
15


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
 
We use interest rate swaps to manage floating interest rate risk on debt securities.  Interest rate differentials are paid or received on these arrangements over the life of the agreements.  As of June 30, 2010 and 2009, we had an interest rate swap outstanding which effectively hedges the variable interest rate on $30,000 of our senior notes to a fixed rate of 5.6% per annum.  As of June 30, 2010, we also had two other interest rate swaps outstanding which effectively hedge the variable interest rate on total of $33,000 of our borrowings under our revolving credit agreement to a fixed rate of 3.3% per annum plus credit spread over the term of the borrowing.
 
Other
 
We are exposed to potential gains or losses from foreign currency fluctuations affecting net investments and earnings denominated in foreign currencies.  Our primary exposures are to fluctuations in exchange rates between the U.S. dollar and the Euro, British pound and Polish zloty.  We also have significant exposure to fluctuations in exchange rates between the British pound and the Euro as well as between the Polish zloty and the Euro.  Occasionally, we enter into foreign exchange derivative contracts to mitigate the risk of currency fluctuations on these exposures.  We may also enter into derivative instruments to mitigate the effect of fluctuations in exchange rates on future cash flows, such as we did for the February 2009 purchase of an interest in the chromite sand mine in South Africa, the purchase price of which was denominated in Australian dollars.
 
We have not designated these contracts for hedge accounting treatment and therefore, changes in fair value of these contracts are recorded in earnings as follows:
 
Derivatives Not Designated as Hedging Instruments
 
Location of Gain or (Loss) Recognized
 
Amount of Gain or (Loss) Recognized in Income on Derivatives
 
   
in Income on
 
Six Months Ended June 30,
   
Three Months Ended June 30,
 
  
 
Derivatives
 
2010
   
2009
   
2010
   
2009
 
                             
Foreign currency exchange contracts
 
Other, net
  $ (189 )   $ (4,792 )   $ (190 )   $ (3,910 )
 
We did not have any significant foreign exchange derivative instruments outstanding as of June 30, 2010 or December 31, 2009.
 
Note 8: 
FAIR VALUE MEASUREMENTS
 
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Our calculation of the fair value of derivative instruments includes several assumptions.  The fair value hierarchy prioritizes these input assumptions in the following three broad levels:

 
16


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
 
Level 1 – Valuation is based on quoted prices (unadjusted) in active markets for identical assets or liabilities we have the ability to access at the measurement date.
 
Level 2 – Valuation is based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and model based valuations for which all significant inputs are observable in the market.
 
Level 3 – Valuation is based on model based techniques that use unobservable inputs for the asset or liability. These inputs reflect our own assumption about the assumption market participants would use in pricing the asset or liability.
 
The following tables categorize our fair value instruments, measured on a recurring basis, according to the assumptions used to calculate those values:
 
         
Fair Value Measurements Using
 
Description
 
Balance at
   
Quoted Prices in Active Markets for Identical Assets
   
Significant Other Observable Inputs
   
Significant Unobservable Inputs
 
   
6/30/2010
   
(Level 1)
   
(Level 2)
   
(Level 3)
 
                         
Interest rate swaps
  $ 6,811     $ -     $ 6,811     $ -  
                                 
Available-for-sale securities
    24,518       24,518       -       -  
                                 
Deferred compensation plan assets
    7,454       -       7,454       -  
                                 
Supplementary pension plan assets
    6,065       -       6,065       -  
 
         
Fair Value Measurements Using
 
Description
 
Balance at
   
Quoted Prices in Active Markets for Identical Assets
   
Significant Other Observable Inputs
   
Significant Unobservable Inputs
 
   
12/31/2009
   
(Level 1)
   
(Level 2)
   
(Level 3)
 
                         
Interest rate swaps
  $ 3,082     $ -     $ 3,082     $ -  
                                 
Available-for-sale securities
    25,563       25,563       -       -  
                                 
Deferred compensation plan assets
    7,285       -       7,285       -  
                                 
Supplementary pension plan assets
    5,885       -       5,885       -  

 
17


AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
 
Interest rate swaps are valued using discounted cash flows.  The key input used is the LIBOR swap rate, which is observable at commonly quoted intervals for the full term of the swap.  Available-for-sale securities are valued using quoted market prices.  Deferred compensation and supplementary pension plan assets are valued using quoted prices for similar assets in active markets.
 
We did not have any significant assets or liabilities measured at fair value on a nonrecurring basis as of June 30, 2010 or December 31, 2009.
 
Note 9:
DEBT
 
On April 29, 2010, we issued and sold an aggregate of $50 million of senior notes (the "Notes") to qualified institutional buyers pursuant to a note purchase agreement (the "Note Purchase Agreement").  The Notes bear interest at a fixed annual rate of 5.46%, payable semi-annually in arrears on April 29th and October 29th of each year, beginning on October 29, 2010.  The principal amount of the Notes is due at maturity on April 29, 2020, subject to acceleration upon an event of default (also subject in certain cases to customary grace and cure periods), including nonpayment of principal, interest or make-whole amounts, breach of covenants or other agreements in the Note Purchase Agreement and certain events of bankruptcy or insolvency. Generally, if an event of a default occurs, a holder may accelerate payment of the Notes. The Notes will accelerate automatically if certain events of bankruptcy or insolvency occur.  Our obligations under the Note Purchase Agreement are guaranteed by certain of our subsidiaries pursuant to a Subsidiary Guaranty Agreement dated as of April 29, 2010 by such subsidiaries in favor of the purchasers of the Notes.
 
Note 10: 
CONTINGENCIES
 
We are party to a number of lawsuits arising in the normal course of business.  We do not believe that any pending litigation will have a material adverse effect on our consolidated financial statements.

 
18


Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Forward-Looking Statements
 
From time to time, certain statements we make, including statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations section, constitute "forward-looking statements" made in reliance upon the safe harbor contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements relating to our Company or our operations that are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions, and statements relating to anticipated growth and levels of capital expenditures. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Our actual results, performance or achievements could differ materially from the results, performance or achievements expressed in, or implied by, these forward-looking statements as a result of various factors, including without limitation the following: actual performance in our various markets; conditions in the metalcasting and construction markets; oil and gas prices and conditions in those industries; operating costs; seasonality of our environmental and oilfield services segments; competition; currency exchange rates and devaluations; delays in development, production and marketing of new products; integration of acquired businesses; and other factors set forth from time to time in our reports filed with the Securities and Exchange Commission (SEC).  We undertake no duty to update any forward looking statements to actual results or changes in our expectations.
 
Overview
 
We are a global company focused on long term profitability growth through the development and application of minerals and technology products and services to various industrial and consumer markets.  Although some of our products are based on minerals, primarily bentonite, the majority of our revenue growth has been achieved by sustaining our products’ technological advantages, developing new products and applying them in innovative ways, and bringing additional products and services to markets we already serve.  We focus our research and development activities in areas where we can either leverage our current customer relationships and mineral reserves or enhance existing or related products and services.
 
The principal mineral that we utilize to generate revenues is bentonite.  We own or lease bentonite reserves in the U.S., Australia, China and Turkey.  Additionally, through our affiliates and joint ventures, we have access to bentonite reserves in Egypt, India, Russia, Azerbaijan and Mexico.
 
Bentonite is surface mined when it is commercially feasible to have it shipped to a plant for further processing, including crushing, drying, milling, and packaging.  Bentonite deposits have varying physical properties which require us to identify which markets our reserves can serve.  Nicknamed the mineral of a thousand uses, bentonite has several unique characteristics including its ability to bind, swell, adsorb, control rheology, soften fabrics, and have its surface modified through chemical and physical reactions.  Our research and development activities, including our understanding of bentonite properties, mining methods, processing and application to markets are core components of our longevity and future prospects.

 
19


We operate in five segments:  minerals and materials, environmental, oilfield services, transportation and corporate.  Both our minerals and materials and environmental segments operate manufacturing facilities in North America, Europe, and the Asia-Pacific region.  Our minerals and materials segment also owns and operates a chrome mine in South Africa.  Our oilfield services segment principally operates in North America’s Gulf of Mexico and surrounding states and also has a growing presence in South America, Africa and Asia.  Additionally, we have a transportation segment that performs trucking services for our domestic minerals and materials and environmental businesses as well as third parties.
 
Our customers are engaged in various end-markets and geographic regions. Customers in the minerals and materials segment range from foundries that produce castings for automotive, industrial, and transportation equipment, including heavy-duty trucks and railroad cars, to producers of consumer goods, including cat litter box filler, cosmetics and detergents.  Customers in our environmental segment include construction contractors, engineering contractors and government agencies.  The oilfield services segment’s customer base is primarily comprised of oil and natural gas exploration and production (E&P) companies.  A significant portion of our products have been used in the same applications for decades and have experienced minimal technological obsolescence.  A majority of our sales are made pursuant to short-term agreements; therefore, terms of sale, such as pricing and volume, can change within our fiscal year.
 
A majority of our revenues are generated in the Americas, principally North America.  Consequently, the state of the U.S. economy, and especially the metalcasting and industrial construction industries, impacts our revenues.
 
Sustainable, long-term profit growth is our primary objective.  We employ a number of strategic initiatives to achieve this goal:
 
 
·
Organic growth:  The central component of our growth strategy is expansion of our product lines and market presence.  We have a history of commitment to research and development activities directed at bringing innovative products to market.  We believe this approach to growth offers the best probability of achieving our long-term goals at the lowest risk.
 
 
·
Globalization:  As we have done for decades, we continue to expand our manufacturing and marketing organizations into emerging geographic markets.  We see significant opportunities in the Asia-Pacific and Eastern European regions for expanding our revenues and earnings over the long-term as a number of markets we serve, such as metalcasting, contracting services, and lining technologies, are expected to grow in these areas.  We expect to take advantage of these growth areas, either through our wholly-owned subsidiaries or investments in affiliates and joint ventures.

 
20


 
·
Mineral development: Bentonite is a component in a majority of the products we supply.  Since it is a natural material, we must continually expand our reserve base to maintain a long-term business.  Our goal is to add new reserves to replace the bentonite mined each year.  Furthermore, we need to assure that new reserves meet the physical property requirements for our diverse product lines and are economical to mine.  Our organization is committed to developing its global reserve base to meet these requirements.
 
 
·
Acquisitions: We continually seek to acquire complementary businesses, as appropriate, when we believe those businesses are fairly valued and fit into our growth strategy.  However, the global economic and credit crisis that exists as we begin fiscal 2010 continues to make it more challenging for us to do this than in periods prior to the crisis.
 
A number of risks will challenge us in meeting these long-term objectives, and there can be no assurance that we will achieve success in implementing any one or more of them.  We describe certain risks throughout this report as well as under “Item 1A. Risk Factors” and “Item 7A. Quantitative and Qualitative Disclosure About Market Risk” within our Annual Report on Form 10-K for the year ended December 31, 2009.  In general, the significance of these risks has not materially changed since our Annual Report on Form 10-K for the period ended December 31, 2009.
 
Critical Accounting Policies and Estimates
 
Management’s discussion and analysis of our financial condition and results of operations describes relevant aspects of our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  We evaluate the accounting policies and estimates used to prepare the financial statements on an ongoing basis.  We consider the accounting policies used in preparing our financial statements to be critical accounting policies when they are both important to the portrayal of our financial condition and results of operations, and require us to make estimates, complex judgments, and assumptions, including with respect to events which are inherently uncertain.  As a result, actual results could differ from these estimates.  For more information on our critical accounting policies, please read our Annual Report on Form 10-K for the year ended December 31, 2009.
 
Analysis of Results of Operations
 
Following is a discussion and analysis that describes certain factors that have affected, and may continue to affect, our financial position and operating results.  This discussion should be read with the accompanying condensed consolidated financial statements.
 
The following consolidated income statement review and segment analysis discuss the results for the three and six months period ended June 30, 2010 and the comparable results in the prior year.

 
21


Three months ended June 30, 2010 vs. June 30, 2009
 
Consolidated Income Statement Review
 
The table below compares our operating results for the quarters ended June 30, 2010 and 2009.  The comments in this section discuss our results overall and are followed with a more detailed discussion of each segment’s key operating results.
 
   
Three Months Ended June 30,
 
   
2010
   
2009
   
2010 vs. 2009
 
Consolidated
 
(Dollars in Thousands, Except Per Share Amounts)
 
Net sales
  $ 220,713     $ 171,200       28.9 %
Cost of sales
    159,938       124,052          
Gross profit
    60,775       47,148       28.9 %
margin %
    27.5 %     27.5 %        
General, selling and administrative expenses
    37,031       33,368       11.0 %
Operating profit
    23,744       13,780       72.3 %
margin %
    10.8 %     8.0 %        
Other income (expense):
                       
Interest expense, net
    (2,334 )     (3,159 )     -26.1 %
Other, net
    330       (1,502 )     -122.0 %
      (2,004 )     (4,661 )        
                         
Income before income taxes and income (loss) from affiliates and joint ventures
    21,740       9,119          
Income tax expense
    5,519       1,546       257.0 %
effective tax rate
    25.4 %     17.0 %        
                         
Income before income (loss) from affiliates and joint ventures
    16,221       7,573          
Income (loss) from affiliates and joint ventures
    20       (1,634 )     -101.2 %
                         
Net income (loss)
    16,241       5,939          
                         
Net income (loss) attributable to noncontrolling interests
    92       (158 )     -158.2 %
                         
Net income (loss) attributable to AMCOL shareholders
  $ 16,149     $ 6,097       164.9 %
                         
Basic earnings per share attributable to AMCOL shareholders
  $ 0.52     $ 0.20       160.0 %
                         
Diluted earnings per share attributable to AMCOL shareholders
  $ 0.51     $ 0.20       155.0 %

 
22


We measure sales fluctuations by the relevant components: organic, acquisitions, and foreign currency exchange. Fluctuation due to foreign currency exchange is measured as the change in revenues resulting from differences in currency exchange rates between periods. Fluctuation due to acquisitions is measured as the changes in revenues resulting from businesses within the first year (twelve consecutive months) we own them. Any remaining fluctuation is due to organic components. The following table details the consolidated sales fluctuations by components over the prior year’s comparable period:
 
   
Organic
   
Acquisitions
   
Foreign Exchange
   
Total
 
Minerals and materials
    17.4 %     0.0 %     0.7 %     18.1 %
Environmental
    4.7 %     0.3 %     0.7 %     5.7 %
Oilfield services
    3.9 %     0.0 %     0.5 %     4.4 %
Transportation & intersegment shipping
    0.8 %     0.0 %     0.0 %     0.8 %
Total
    26.8 %     0.3 %     1.9 %     29.0 %
% of change
    92.6 %     0.9 %     6.5 %     100.0 %
 
The following table shows the distribution of sales across our three principal geographic regions (Americas; Europe, Middle East, and Africa (EMEA); and Asia Pacific) and the comparable total from the prior year’s period:
 
   
Americas
   
EMEA
   
Asia Pacific
   
Total
 
Minerals and materials
    30.8 %     8.0 %     9.4 %     48.2 %
Environmental
    14.3 %     12.5 %     2.7 %     29.5 %
Oilfield services
    15.3 %     0.7 %     1.9 %     17.9 %
Transportation & intersegment shipping
    4.4 %     0.0 %     0.0 %     4.4 %
                                 
Total - current year's period
    64.8 %     21.2 %     14.0 %     100.0 %
Total from prior year's comparable period
    63.7 %     25.2 %     11.1 %     100.0 %
 
Net sales:
 
Net sales increased largely due to organic growth in all segments, with minerals and materials contributing the most to the growth.  The majority of our revenues have grown from organic business growth as currency rates have not changed significantly and we have not acquired a significant business in the last twelve months.  Sales in our Asia Pacific region have increased as a percentage of total sales as the Asian minerals and materials businesses have increased revenues significantly, largely in the metalcasting markets, due to economic growth in that region.
 
Gross profit:
 
Overall gross profit increased due to the increase in sales mentioned above, and gross margins remained constant on a consolidated basis.  By segment, however, our minerals and materials segment continued to increase its gross margins whilst we experienced margin pressures in our environmental segment and cost increases in our oilfield services segment.

 
23


General, selling & administrative expenses (GS&A):
 
GS&A expenses increased overall due primarily to increases in our minerals and materials and corporate segments.
 
Operating profit:
 
Operating profit increased due to the increase in gross profit mentioned earlier, partially offset by the overall increase in GS&A expenses.  Operating profit margin improved significantly as considerable improvements in our minerals and materials segment offset declines in our environmental and oilfield services segments.
 
Interest expense, net:
 
Net interest expense decreased due to decreased average debt levels and average interest rates.  The majority of our long-term debt has a variable rate of interest which is primarily influenced by changes in LIBOR rates, which have also decreased as compared to the prior year period.  We decreased our debt levels throughout 2009 as our working capital levels decreased and as we curtailed discretionary capital expenditures in response to the economic recession occurring at that time.  Thus, we began fiscal 2010 with debt levels significantly less than those that existed in the comparable 2009 period, and these factors explain why our debt levels in 2010 are less than the comparable prior year’s period on average.  In 2010, we expect our debt levels to fluctuate with the seasonal nature of our businesses, our level of capital expenditures and the working capital needs of our businesses.
 
Other income (expense):
 
Other expense primarily represents foreign currency transaction gains and losses, which includes gains and losses on transactions as well as foreign currency derivative instruments used to manage the risks of those transaction exposures.  In the 2010 period, foreign exchange currency rates have not fluctuated to the extent that they did in the prior year.
 
Income tax expense:
 
In the second quarter of 2009, we changed our estimate of our annual expected tax expense.  This change in estimate had the effect of significantly reducing our effective tax rate in that quarter and accounts for the difference in the effective tax rates between the second quarters of 2009 and 2010.
 
Diluted earnings per share:                                                      
 
Diluted EPS increased commensurate with the increase in net income.  The change in weighted average shares outstanding did not have a material effect on diluted earnings per share.

 
24


Quarterly Review of Each Segment’s Results
 
Following is a review of operating results for each of our five reporting segments:
 
Minerals and Materials Segment
 
   
Three Months Ended June 30,
 
Minerals and Materials
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands)
 
                                     
Net sales
  $ 106,397       100.0 %   $ 75,479       100.0 %   $ 30,918       41.0 %
Cost of sales
    79,057       74.3 %     60,567       80.2 %                
Gross profit
    27,340       25.7 %     14,912       19.8 %     12,428       83.3 %
General, selling and administrative expenses
    11,014       10.4 %     9,129       12.1 %     1,885       20.6 %
Operating profit
    16,326       15.3 %     5,783       7.7 %     10,543       182.3 %
 
   
Three Months Ended June 30,
 
Minerals and Materials Product Line Sales
 
2010
   
2009
   
% change
 
   
(Dollars in Thousands)
 
Metalcasting
  $ 49,857     $ 30,954       61.1 %
Specialty materials
    27,055       22,007       22.9 %
Pet products
    14,453       15,355       -5.9 %
Basic minerals
    13,429       6,090       120.5 %
Other product lines
    1,603       1,073       *  
                         
Total
    106,397       75,479       41.0 %
                         
* Not meaningful.
                       
 
Increased volumes, primarily in our domestic and Asian operations, drove the increase in revenues over the prior year quarter.  Strong demand in our domestic metalcasting product line and the  drilling products within our basic minerals product line accounted for 61% of the total segment’s revenue growth.  The remaining growth was primarily driven by our Asian businesses (24% of the total growth) as these regional economies are experiencing strong economic growth, particularly for castings for automobiles and heavy equipment, which helped drive increases in our metalcasting sales.   These increases in volumes also accounted for the increase in gross profit and gross margins.  We have made significant improvements in our operations, especially domestically, which have allowed us to capitalize on increased volumes without commensurate increases in cost of goods sold.
 
GS&A expenses increased due to employee related and compensation expenses, a significant portion of which is related to the ramp up of our operations in South Africa.  Operating margins increased due to the significant increase in gross profit margin mentioned previously as well as due to greater operational leverage of our management and sales support structures.

 
25


Environmental Segment
 
   
Three Months Ended June 30,
 
Environmental
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands)
 
                                     
Net sales
  $ 65,159       100.0 %   $ 55,370       100.0 %   $ 9,789       17.7 %
Cost of sales
    45,037       69.1 %     35,843       64.7 %                
Gross profit
    20,122       30.9 %     19,527       35.3 %     595       3.0 %
General, selling and administrative expenses
    12,108       18.6 %     12,373       22.3 %     (265 )     -2.1 %
Operating profit
    8,014       12.3 %     7,154       13.0 %     860       12.0 %
 
   
Three Months Ended June 30,
 
Environmental Product Line Sales
 
2010
   
2009
   
% change
 
   
(Dollars in Thousands)
 
Lining technologies
  $ 35,022     $ 25,179       39.1 %
Building materials
    13,540       15,099       -10.3 %
Contracting services
    10,425       9,491       9.8 %
Drilling products
    6,172       5,601       10.2 %
Total
    65,159       55,370       17.7 %
 
Organic demand for our environmental products increased over the prior year, which was suffering from a greater recession in the commercial construction market.  They also increased due to the shipment of products which could not ship in the first quarter of 2010 because of severe, adverse weather conditions on job sites throughout our domestic and European operations.  Approximately 12.5% of the increase in net sales is due to favorable foreign currency exchange rate movements, principally by the Polish zloty versus the United States dollar.
 
Gross profits increased slightly with the increase in sales as gross margins decreased significantly.  These gross margins decreased as a greater portion of the revenues were derived in lining technology products, which generally have a lower margin than other product lines within this segment and which is also experiencing increased competition due to the recession in commercial construction activity.
 
Overall operating profits and margins followed the increase in gross profits and margins.
 
Oilfield Services Segment
 
   
Three Months Ended June 30,
 
Oilfield Services
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands)
 
                                     
Net sales
  $ 39,644       100.0 %   $ 32,133       100.0 %   $ 7,511       23.4 %
Cost of sales
    27,874       70.3 %     20,770       64.6 %                
Gross profit
    11,770       29.7 %     11,363       35.4 %     407       3.6 %
General, selling and administrative expenses
    7,217       18.2 %     6,913       21.5 %     304       4.4 %
Operating profit
    4,553       11.5 %     4,450       13.9 %     103       2.3 %

 
26


Revenue growth was split between our domestic (59%) and international operations (41%).  Our domestic growth was driven largely by our coil tubing services as we realigned our equipment into more productive geographic markets.  Our Australian operations contributed the majority of our international growth due to two large contracts with one significant customer in that market; we expect these contracts to wind down in the third quarter of 2010.
 
Gross profits did not increase in proportion to sales due to a decrease in gross profit margins. We increased our quality control activities through increased maintenance activities, and we increased our employee base due to greater utilization on equipment and changes in customer specifications.  In addition, the increased revenues occurred in less profitable service offerings.  All three factors contributed to the decrease in gross profit margins.
 
GS&A expenses remained relatively stable.  The changes in operating profits and related margin followed from the changes in gross profits and gross profit margin.
 
Transportation Segment
 
   
Three Months Ended June 30,
 
Transportation
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands)
 
                                     
Net sales
  $ 13,583       100.0 %   $ 11,558       100.0 %   $ 2,025       17.5 %
Cost of sales
    12,040       88.6 %     10,212       88.4 %                
Gross profit
    1,543       11.4 %     1,346       11.6 %     197       14.6 %
General, selling and administrative expenses
    844       6.2 %     837       7.2 %     7       0.8 %
Operating profit
    699       5.2 %     509       4.4 %     190       37.3 %
 
Although fuel surcharges comprised 53% of the revenue increase, the remaining increase is split between an increase in the number of shipments as well as increased pricing.  However, cost pressures within the logistics business have increased, leading to a decrease in profitability of the revenues.  Operating profits increased commensurate with gross profits.
 
Corporate Segment
 
   
Three Months Ended June 30,
 
Corporate
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands)
 
                         
Intersegment shipping sales
  $ (4,070 )   $ (3,340 )     (730 )      
Intersegment shipping costs
    (4,070 )     (3,340 )              
Gross profit
    -       -       -        
General, selling and administrative expenses
    5,848       4,116       1,732       42.1 %
Operating loss
    5,848       4,116       1,732       42.1 %
 
Intersegment shipping revenues and costs reflect billings for services from our transportation segment to its domestic minerals and materials and environmental segment sister companies.  These services are invoiced at arms-length rates and those costs are subsequently charged to customers.  Intersegment sales and costs reported above reflect the elimination of these transactions.

 
27


Corporate GS&A expenses increased due to increased compensation and employee benefit related expenses.
 
Six months ended June 30, 2010 vs. June 30, 2009
 
Consolidated Income Statement Review
 
The table below compares our operating results for the period ended June 30, 2010 and 2009.  The comments in this section discuss our results overall and are followed with a more detailed discussion of each segment’s key operating results.
 
   
Six Months Ended June 30,
 
Consolidated
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands, Except Per Share Amounts)
 
Net sales
  $ 395,664     $ 335,619       17.9 %
Cost of sales
    290,342       245,251          
Gross profit
    105,322       90,368       16.5 %
margin %
    26.6 %     26.9 %        
General, selling and administrative expenses
    70,818       66,421       6.6 %
Operating profit
    34,504       23,947       44.1 %
margin %
    8.7 %     7.1 %        
Other income (expense):
                       
Interest expense, net
    (4,550 )     (6,566 )     -30.7 %
Other, net
    (117 )     (2,714 )     -95.7 %
      (4,667 )     (9,280 )        
                         
Income before income taxes and income (loss) from affiliates and joint ventures
    29,837       14,667          
Income tax expense
    7,701       3,117       147.1 %
effective tax rate
    25.8 %     21.3 %        
                         
Income before income (loss) from affiliates and joint ventures
    22,136       11,550          
Income (loss) from affiliates and joint ventures
    (71 )     (1,642 )     -95.7 %
                         
Net income (loss)
    22,065       9,908          
                         
Net income (loss) attributable to noncontrolling interests
    (212 )     (365 )     -41.9 %
                         
Net income (loss) attributable to AMCOL shareholders
  $ 22,277     $ 10,273       116.8 %
                         
Basic earnings per share attributable to AMCOL shareholders
  $ 0.72     $ 0.33       118.2 %
                         
Diluted earnings per share attributable to AMCOL shareholders
  $ 0.71     $ 0.33       115.2 %

 
28


The following table details the consolidated sales fluctuations by components over the prior year’s comparable period:
 
   
Organic
   
Acquisitions
   
Foreign Exchange
   
Total
 
Minerals
    13.2 %     0.0 %     1.2 %     14.4 %
Environmental
    -0.2 %     0.2 %     1.1 %     1.1 %
Oilfield services
    1.2 %     0.0 %     0.5 %     1.7 %
Transportation & intersegment shipping
    0.6 %     0.0 %     0.0 %     0.6 %
Total
    14.8 %     0.2 %     2.8 %     17.8 %
% of growth
    83.2 %     1.1 %     15.7 %     100.0 %
 
In addition, the following table shows the distribution of sales across our three principal geographic regions and the comparable total from the prior year’s period:
 
   
Americas
   
EMEA
   
Asia Pacific
   
Total
 
Minerals and materials
    32.8 %     8.8 %     9.9 %     51.5 %
Environmental
    12.6 %     11.0 %     2.5 %     26.1 %
Oilfield services
    14.9 %     0.7 %     2.1 %     17.7 %
Transportation & intersegment shipping
    4.7 %     0.0 %     0.0 %     4.7 %
Total - current year's period
    65.0 %     20.5 %     14.5 %     100.0 %
Total from prior year's comparable period
    66.9 %     22.7 %     10.4 %     100.0 %
 
Net sales:
 
Although all segments contributed to the increase in net sales, our minerals and materials segment was overwhelmingly the largest contributor to the increase.  As with the quarterly comments expressed earlier, the majority of our revenues have grown from organic business growth as currency rates have not changed significantly and we have not acquired a significant business in the last twelve months.  Sales in our Asia Pacific region have increased as a percentage of total sales as the Asian minerals and materials businesses have increased revenues significantly, largely in the metalcasting markets, due to improved economic growth in that region.
 
Gross profit:
 
Overall gross profit increased due to the increase in sales mentioned above.  Our minerals and materials segment continued to increase its gross margins.  Although overall gross margins remained relatively constant, significant fluctuations occurred within each segment and are discussed later herein.
 
General, selling & administrative expenses (GS&A):
 
Approximately 73% of the increase in GS&A expenses occurred in our minerals and materials segment.  Employee and employee related expenses are the leading factor underpinning the increase in GS&A expenses.

 
29


Operating profit:
 
The increase in operating profit follows the increase in gross profit.  In addition, operating profit margin increased as we gained leverage in incremental sales within the minerals and materials segment being generated without the need for proportional increase in expenses to support these activities.  However, our environmental and oilfield services segments experienced significant decreases in operating profits and operating margins.
 
Interest expense, net:
 
Net interest expense decreased due to decreased average debt and interest rate levels.
 
The majority of our long-term debt has a variable rate of interest which is primarily influenced by changes in LIBOR rates, which have also decreased as compared to the prior year period.  We decreased our debt levels throughout 2009 as our working capital levels decreased and as we curtailed discretionary capital expenditures in response to the economic recession occurring at that time.  Thus, we began fiscal 2010 with debt levels significantly less than those that existed in the comparable 2009 period, and these factors explain why our debt levels in 2010 are less than the comparable prior year’s period on average.  In 2010, we expect our debt levels to fluctuate with the seasonal nature of our businesses, our level of capital expenditures and the working capital needs of our businesses.
 
Other income (expense):
 
Other expense primarily represents foreign currency transaction gains and losses, which includes gains and losses on transactions as well as foreign currency derivative instruments used to manage the risks of those transaction exposures.  In the 2010 period, foreign exchange currency rates have not fluctuated to the extent that they did in the prior year.
 
Income tax expense:
 
Income tax expense increased as a result of incremental profits.  Our effective tax rate increased due to a greater concentration of income in domestic operations, which are typically subject to greater income tax rates than our foreign subsidiaries.
 
Diluted earnings per share:                                                      
 
Diluted EPS increased commensurate with the increase in net income.  The change in weighted average shares outstanding did not have a material effect on diluted earnings per share.

 
30


Review of Each Segment’s Results
 
Following is a review of operating results for each of our five reporting segments:
 
Minerals and Materials Segment
 
   
Six Months Ended June 30,
 
Minerals and Materials
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands)
 
                                     
Net sales
  $ 204,085       100.0 %   $ 155,636       100.0 %   $ 48,449       31.1 %
Cost of sales
    152,535       74.7 %     124,542       80.0 %                
Gross profit
    51,550       25.3 %     31,094       20.0 %     20,456       65.8 %
General, selling and administrative expenses
    20,918       10.2 %     17,703       11.4 %     3,215       18.2 %
Operating profit
    30,632       15.1 %     13,391       8.6 %     17,241       128.8 %
 
   
Six Months Ended June 30,
 
Minerals and Materials Product Line Sales
 
2010
   
2009
   
% change
 
   
(Dollars in Thousands)
 
Metalcasting
  $ 94,197     $ 62,495       50.7 %
Specialty materials
    52,863       44,669       18.3 %
Pet products
    30,891       32,770       -5.7 %
Basic minerals
    22,775       13,940       63.4 %
Other product lines
    3,359       1,762       *  
                         
Total
    204,085       155,636       31.1 %
                         
* Not meaningful.
                       
 
Increased volumes, primarily in our domestic and Asian businesses, drove the increase in revenues over the prior year period.  Approximately 32% of the increase occurred in Asia Pacific and 52% within the combination of our domestic metalcasting product line and drilling products within our basic minerals product line.  Both geographic regions experienced strong demand for castings for automobiles and heavy equipment.  These increases in volumes also accounted for the increase in gross profit and gross margins.  We have made significant improvements in our operations, especially domestically, which have allowed us to capitalize on increased volumes without equal increases in cost of goods sold.
 
GS&A expenses increased due to employee related and compensation expenses, a significant portion of which is related to the ramp up of our operations in South Africa.  However, these GS&A costs did not increase commensurate with sales as we gained significant operating leverage, which led to the increase in operating profits and operating profit margins.

 
31


Environmental Segment
 
   
Six Months Ended June 30,
 
Environmental
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands)
 
                                     
Net sales
  $ 103,334       100.0 %   $ 99,603       100.0 %   $ 3,731       3.7 %
Cost of sales
    72,216       69.9 %     65,977       66.2 %                
Gross profit
    31,118       30.1 %     33,626       33.8 %     (2,508 )     -7.5 %
General, selling and administrative expenses
    23,321       22.6 %     22,778       22.9 %     543       2.4 %
Operating profit
    7,797       7.5 %     10,848       10.9 %     (3,051 )     -28.1 %
 
   
Six Months Ended June 30,
 
Environmental Product Line Sales
 
2010
   
2009
   
% change
 
   
(Dollars in Thousands)
 
Lining technologies
  $ 51,587     $ 45,284       13.9 %
Building materials
    26,041       27,477       -5.2 %
Contracting services
    14,639       16,139       -9.3 %
Drilling products
    11,067       10,703       3.4 %
                         
Total
    103,334       99,603       3.7 %
 
As compared to the 2009 period, our environmental segment experienced a decrease in organic revenues in the first quarter of 2010 followed by organic increases in the second quarter.  Thus, revenues in the segment on a year-to-date basis in 2010 have increased almost entirely due to favorable fluctuations in foreign currency exchange rates.  Gross profits have decreased due to a greater concentration of revenues in our lining technologies business, which generally have gross profit margins which are lower than our other product lines.  In addition, the lining technologies product line has experienced price competition in the commercial construction recession.
 
Overall operating profits and margins followed the decrease in gross profits and margins.
 
Oilfield Services Segment
 
   
Six Months Ended June 30,
 
Oilfield Services
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands)
 
                                     
Net sales
  $ 69,848       100.0 %   $ 64,031       100.0 %   $ 5,817       9.1 %
Cost of sales
    50,064       71.7 %     41,063       64.1 %                
Gross profit
    19,784       28.3 %     22,968       35.9 %     (3,184 )     -13.9 %
General, selling and administrative expenses
    14,003       20.0 %     13,601       21.2 %     402       3.0 %
Operating profit
    5,781       8.3 %     9,367       14.7 %     (3,586 )     -38.3 %

 
32


Although our coil tubing operations domestically enjoyed significant increases in sales, other domestic businesses experienced decreases leading to our domestic operations remaining roughly flat overall.  Thus, our international oilfield services accounted for the increase in revenues on a year-to-date basis.  Australia has generated this growth as it has benefitted from two large contracts with one significant customer; we expect these contracts to wind down in the third quarter.  Domestically, our coil tubing operations have benefitted from improved management personnel whilst filtration and pipeline businesses have lagged as 2010 revenues are comprised of smaller contract jobs rather than longer and more profitable large jobs.
 
With respect to year to date gross profits, our domestic operations account for the decrease in gross profits given roughly 80% of our business is generated in our domestic operations.  Gross profit margins decreased due to the mix of jobs and increases in employee and employee related expenses, some of which has changed due to changes in job requirements.
 
GS&A expenses remained relatively stable.  The decrease in operating profits and related margin followed from the decrease in gross profit and related margin.
 
Transportation Segment
 
 
Six Months Ended June 30,
Transportation
2010
2009
2010 vs. 2009
 
(Dollars in Thousands)
                               
Net sales
$  25,703
   
100.0%
 
$  22,849
   
100.0%
 
$     2,854
   
12.5%
 
Cost of sales
22,833
   
88.8%
 
20,169
   
88.3%
           
Gross profit
2,870
   
11.2%
 
2,680
   
11.7%
 
190
   
7.1%
 
General, selling and administrative expenses
1,660
   
6.5%
 
1,690
   
7.4%
 
(30)
   
-1.8%
 
Operating profit
1,210
   
4.7%
 
990
   
4.3%
 
220
   
22.2%
 
 
Fuel surcharges drove the increase in revenues along with price increases.  As cost pressures witin the logistics business have increased, gross profit margins have decreased slightly.  Operating profits have increased commensurate with increased gross profits; we have been effective in generating operating leverage, leading to an increase in operating profit margins.
 
Corporate Segment
 
   
Six Months Ended June 30,
 
Corporate
 
2010
   
2009
   
2010 vs. 2009
 
   
(Dollars in Thousands)
 
                         
Intersegment shipping sales
  $ (7,306 )   $ (6,500 )     (806 )      
Intersegment shipping costs
    (7,306 )     (6,500 )              
Gross profit
    -       -       -        
General, selling and administrative expenses
    10,916       10,649       267       2.5 %
Operating loss
    (10,916 )     (10,649 )     (267 )     2.5 %
 
Intersegment shipping revenues and costs reflect billings for services from our transportation segment to its domestic minerals and materials and environmental segment sister companies.  These services are invoiced at arms-length rates and those costs are subsequently charged to customers.  Intersegment sales and costs reported above reflect the elimination of these transactions.

 
33


Corporate GS&A expenses increased slightly, mostly due to greater employee and related benefit expenses.
 
Balance Sheet Review
 
In the first six months of 2010, we have increased our overall investments in working capital, especially accounts receivable in response to the growth in sales that we have generated.  We have also increased our investments in property, plant and equipment, most notably for a new chromite ore processing facility in South Africa.  We have funded these investments partly through increased cash utilization and increased debt levels, which is reflected in our balance sheet both through the significant decrease in cash levels as well as the increase in our long-term debt.
 
In addition, as noted in our Notes to Condensed Consolidated Financial Statements earlier within this Form 10-Q, we issued and sold an aggregate of $50 million of senior notes to qualified institutional buyers pursuant to a note purchase agreement dated April 29, 2010 (the "Note Purchase Agreement").  The Notes bear interest at a fixed annual rate of 5.46% and mature April 29, 2020. Please see the Notes to Condensed Consolidated Financial Statements for further information.
 
Liquidity and Capital Resources
 
Cash flows from operations, an ability to issue new debt instruments, and borrowings from our revolving credit facility have been our sources of funds used to provide working capital, make capital expenditures, acquire businesses, repurchase common stock, and pay dividends to shareholders.  We believe cash flows from operations and borrowings from our unused and committed credit facility will be adequate to support our current business needs for the foreseeable future.  Should the need arise or should we choose to, we can issue additional equity or debt instruments on a publicly traded securities exchange via a shelf registration which became effective with the SEC in January 2010.
 
We may need additional debt or equity facilities in order to pursue acquisitions, when and if these opportunities become available, and we may or may not be able to obtain such facilities on terms substantially similar to our current facilities as discussed in Item 1A – Risk Factors of our Annual Report on Form 10-K filed for 2009.  Terms of any new facilities, especially interest rates or covenants, may be significantly different from those we currently have.
 
On April 29, 2010, we issued and sold an aggregate of $50 million of senior notes (the "Notes") to a qualified institutional buyer pursuant to a note purchase agreement dated April 29, 2010 (the "Note Purchase Agreement"). Details of these Notes are described more fully in Note 9 to the Consolidated Financial Statements.

 
34


Following is a discussion and analysis of our cash flow activities as presented in the Condensed Consolidated Statement of Cash Flows presented within Part 1, Item 1 of this report.
 
   
Six Months Ended
 
Cash Flows
 
June 30,
 
($ in millions)
 
2010
   
2009
 
Net cash provided by operating activities
  $ 6.9     $ 65.5  
Net cash used in investing activities
  $ (26.4 )   $ (26.0 )
Net cash provided by (used in) financing activities
  $ 9.7     $ (38.5 )
 
Cash flows from operating activities were not as large as the prior year comparable period as the change in our working capital levels did not decrease in 2010 as they did in 2009.  As the recession got underway in 2009, our working capital levels decreased significantly and allowed us to harvest a significant amount of cash through these reductions.  In 2010, as our business levels increased, rather than decreasing as they had in the prior year period, we have generated positive cash flows from operations through the profitability of our business and other non-cash charges.  In 2010, we have also closely managed working capital levels during this period of growth; for example, inventories decreased in 2009 as business decreased, but they have remained relatively stable in 2010 as compared to the December 2009 levels despite our business experiencing significant revenue growth.  Historically, working capital levels increase in the early and middle of the year and then decrease later in the year in conjunction with the seasonality of our business; we do not see a reason why this trend would not continue.
 
Excluding our corporate building and receipts from Chrome Corp., we did not expend as much cash in investing activities in 2010 as we did in 2009.  Our capital expenditures have decreased in 2010 due to less spending on expansionary plant and production facilities, namely in South Africa and Asia.
 
Given the differences in the changes in working capital levels mentioned previously between 2009 and 2010, we required additional debt to fund our operations in 2010 as opposed to paying down debt as we did in 2009.  Year-to-date dividends were $0.36 per share in both periods.
 
   
As at
 
Financial Position
 
June 30,
   
December 31,
 
($ in millions)
 
2010
   
2009
 
Working capital
  $ 230.4     $ 203.7  
Goodwill & intangible assets
  $ 114.4     $ 118.3  
Total assets
  $ 767.0     $ 734.3  
                 
Long-term debt
  $ 223.4     $ 207.0  
Other long-term obligations
  $ -     $ -  
Total equity
  $ 380.6     $ 379.8  
 
Working capital at June 30, 2010 increased over the amount at December 31, 2009 due to increases in accounts receivable due to the increased sales levels and the reclassification of certain loan receivables which come due in January 2011.  Given the seasonality of our environmental and oilfield services segments as well as the project nature of some of our services provided in the oilfield services segment, working capital needs are typically greater in the second and third quarters of the year.

 
35


Long-term debt increased as we needed more cash to fund increased working capital levels and purchase equipment, resulting in an increase in long-term debt relative to total capitalization to 37.0% at June 30, 2010 versus 35.3% at December 31, 2009.  We have approximately $150.6 million of borrowing capacity available from our revolving credit facility at June 30, 2010.  We are in compliance with financial covenants related to the revolving credit facility as of the period covered by this report.
 
Since the mid 1980’s, we have been named as one of a number of defendants in product liability lawsuits relating to the minor free-silica content within our bentonite products used in the metalcasting industry.  The plaintiffs in these lawsuits are primarily employees of our former and current customers.  To date, we have not incurred significant costs in defending these matters.  We believe we have adequate insurance coverage and do not believe the litigation will have a material adverse impact on our financial position, liquidity or results of operations.
 
Contractual Obligations and Off-Balance Sheet Arrangements
 
Item 7 of our Annual Report on Form 10-K, for the year ended December 31, 2009 discloses our contractual obligations and off-balance sheet arrangements.  There were no material changes in our contractual obligations and off-balance sheet arrangements.
 
Quantitative and Qualitative Disclosures About Market Risk
 
There were no material changes in our market risk from the disclosures made in our Annual Report on Form 10-K for the year ended December 31, 2009 other than those discussed in Part 1, Item 2 of this report.
 
Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, they concluded that, as of the end of such period, our disclosure controls and procedures were effective in recording, processing, summarizing, and reporting, on a timely basis, information we are required to disclose in the reports we file or submit under the Exchange Act.
 
Changes in Internal Control Over Financial Reporting
 
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 
36


PART II - OTHER INFORMATION
 
Item 4:
Submission of Matters to a Vote of Security Holders
 
At the Company’s Annual Meeting of Shareholders held on May 6, 2010, shareholders voted on proposals to (i) elect three (3) directors for a three-year term or until their successors are elected and qualified; (ii) ratify the Audit Committee’s selection of Ernst & Young LLP to serve as the Company’s independent registered public accounting firm for 2010; (iii) approve the Long-Term Incentive Plan; and (iv) approve the Cash Incentive Plan. The voting results for each proposal were as follows:
 
 
1.
Election of Directors:
 
Director
 
For
 
Witheld
 
Broker Non-Votes
Arthur Brown
 
22,743,322
 
229,673
 
3,003,714
Jay D. Proops
 
22,794,353
 
178,642
 
3,003,714
Paul C. Weaver
 
22,612,921
 
360,074
 
3,003,714
 
 
2.
Ratification of the Selection of Ernst & Young LLP:
 
For
 
Against
 
Abstain
 
Broker Non-Votes
25,890,685
 
57,106
 
28,917
 
--
 
 
3.
Approval of the Long-Term Incentive Plan:
 
For
 
Against
 
Abstain
 
Broker Non-Votes
22,242,274
 
682,531
 
48,190
 
3,003,714
 
 
4.
Approval of the Cash Incentive Plan:
 
For
 
Against
 
Abstain
 
Broker Non-Votes
25,476,582
 
447,035
 
53,091
 
--
 
Exhibits
 
Exhibit Number
   
     
10.1
 
Note Purchase Agreement Dated as of April 29, 2010 (1)
10.2
 
AMCOL International Long Term Incentive Plan* (2)
10.3
 
AMCOL International 2010 Cash Incentive Plan* (2)
10.4
 
Form of Option Award Agreement* (2)
10.5
 
Form of Annual Cash Award Agreement* (2)
31.1
 
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
31.2
 
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
32
 
Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350

 
37


 
(1)
Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on April 30, 2010
 
(2)
Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 7, 2010
 
Management compensation plan or arrangement
 
 
38


SIGNATURES
 
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.
 
   
AMCOL INTERNATIONAL CORPORATION
     
Date:
July 30, 2010
  /s/ Lawrence E. Washow
   
Lawrence E. Washow
   
President and Chief Executive Officer
     
Date:
July 30, 2010
  /s/ Donald W. Pearson
   
Donald W. Pearson
   
Vice President and Chief Financial Officer

 
39


INDEX TO EXHIBITS
 
10.1
 
Note Purchase Agreement Dated As of April 29, 2010 (1)
10.2
 
AMCOL International Long Term Incentive Plan* (2)
10.3
 
AMCOL International 2010 Cash Incentive Plan* (2)
10.4
 
Form of Option Award Agreement* (2)
10.5
 
Form of Annual Cash Award Agreement* (2)
 
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)+
 
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)+
 
Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350+
* Management compensation plan or arrangement
+ Filed herewith.
 
(1) Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and   Exchange Commission on April 30, 2010
 
(2) Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 7, 2010
 
 
40