Amcol International 10-Q 2010 Q2 Quarterly report

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:	Financial Statements
	Condensed Consolidated Balance Sheets – June 30, 2010 and December 31, 2009	4
	Condensed Consolidated Statements of Operations – three and six months ended June 30, 2010 and 2009	6
	Condensed Consolidated Statements of Comprehensive Income – three and six months ended June 30, 2010 and 2009	7
	Condensed Consolidated Statements of Changes in Equity – three and six months ended June 30, 2010 and 2009	8
	Condensed Consolidated Statements of Cash Flows – six months ended June 30, 2010 and 2009	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4:	Controls and Procedures	36
Part II - Other Information
Item 4:	Submission of Matters to a Vote of Security Holders	37
Item 6:	Exhibits	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 segmen t 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 a re 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

Item 2: 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 guar antees 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 r elated 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 use d 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 wi th 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 com parable 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 h ave 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 t he 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.

Item 3: 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.

Item 4: 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	--

Item 6: 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)
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+
* 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