March 14, 2006
VIA EDGAR
- ---------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0306
Attention: Ms. April Sifford, Branch Chief
Re: AMCOL International Corporation
Form 10-K for the Fiscal Year Ended December 31, 2004
Filed March 31, 2005
Form 10-K/A for the Fiscal Year Ended December 31, 2004
Filed April 29, 2005
Form 10-Q for the Fiscal Quarter Ended June 30, 2005
Filed August 1, 2005 (collectively, the "Filings")
File No. 001-14447
Ladies and Gentlemen:
This letter sets forth the response of AMCOL International Corporation
(the "Company") to the Commission's comment letter dated February 23, 2006. We
reviewed this response letter with our independent auditors and outside legal
counsel.
For your convenience, we have set forth below each of the Staff's
numbered comments, followed by our response.
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
- -----------------------------------------------------
Note (4) Business Segment and Geographic Area Information, Page F-12
- --------------------------------------------------------------------
1. We note your response to comment two from our letter dated December 29,
2005, and note your discussion of long-term economic performance on an
operating subsidiary level to support aggregation of such subsidiary
level information. However, your response did not address the
similarity of long-term economic performance on a product line basis
and all the aggregation criteria of paragraph 17 of SFAS 131. Please
tell us if your product lines meet the definition of operating segments
in paragraph 10 of SFAS 131. If so, explain in more detail how you
applied the aggregation criteria, including your operating segments'
long-term economic performance as discussed in paragraph 17 of SFAS
131, to your identified operating segments within the minerals and
environmental reportable segments. For example, compare and contrast
the gross margins between the metalcasting, pet products and specialty
minerals operating segments. In your response, please tell us what
consideration you have given to paragraph 15 of SFAS 131 in identifying
your operating segments, if applicable.
RESPONSE:
- ---------
We do not believe our product lines meet the definition of an operating segment
under paragraph 10 of SFAS 131. The chief operating decision maker does not
regularly review the operating results of the product lines or make resource
allocation decisions based on product line results because discrete financial
information, such as balance sheets or operating income, is not available at the
product line level. Thus, we do not believe our product lines meet the
definition of reportable segments. We will revise our MD&A to no longer refer to
our metalcasting, pet products, specialty minerals, lining technologies,
building materials and water treatment activities as "business units" but rather
as markets served or product lines to more accurately depict the nature of these
activities.
Note (8) Income Taxes, page F-16
- --------------------------------
2. We note your response to comment five from our letter dated December
29, 2005. Related to your response to comment 5(iv), please tell us the
quarter(s) in which the professional fees to prepare amended tax
returns were incurred.
RESPONSE:
- ---------
In Q3 2005, we recorded $1,205,000 of professional fees associated with amended
federal income tax returns, which were also filed in Q3 2005. These fees are
contingent upon our receipt of tax refunds. In Q3 2005, when we determined it
was probable that we would obtain a refund, we determined it was probable that
we would be obligated to pay the contingent fees. Therefore, the fees were
recorded in the third quarter of 2005 as this is the time period in which the
obligation was incurred.
Note (10) Acquisitions, page F-19
- ---------------------------------
3. We note from your response to comment four from our letter dated
December 29, 2005, that you lost the majority of Linteco's Austrian
customers. Please tell us how you considered the guidance in SFAS 142
in determining whether the goodwill you recorded was impaired.
RESPONSE:
- ---------
When Linteco was purchased, it had two offices: one in Austria and one in Spain.
Under paragraph 35 of SFAS 142, the goodwill upon acquisition was allocated to
the reporting unit, which corresponds to the Linteco business as a whole rather
than individual offices. We then closed, not sold, the Austrian office and lost
the majority of customers in that region, which was the smaller of the two
geographic regions. However, the goodwill still remained allocated to the
reporting unit, which was then only comprised of the Spanish operations since
the Austrian office did not meet the definition of a business due to its
closure, precluding the allocation of goodwill to it under paragraph 39 of SFAS
142. In fact, acquiring these Spanish operations was the goal of the
acquisition, and the Spanish operations were sufficient after the closure of the
Austrian office to support the amount of goodwill recorded upon acquisition.
FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 2005
- ----------------------------------------------------
Note (1) Summary of Significant Accounting Policies, page 8
- -----------------------------------------------------------
Reclassifications, page 9
- -------------------------
4. We note your response to comments seven from our letter dated December
29, 2005. In future filings, please disclose within your financial
statements where you classify product liabilities and warranty expense
and provide the disclosures set forth by paragraph 14 of FIN 45.
RESPONSE:
- ---------
We will provide such disclosures in our future filings, beginning with our Form
10-K for 2005.
* * * *
On behalf of the Company, I hereby acknowledge that (i) the Company is
responsible for the adequacy and accuracy of the disclosure in the Filings; (ii)
staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking action with respect to the Filings; and
(iii) the Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of
the United States.
If you have any questions regarding these matters or require any
additional information, please contact me at 847-506-6171.
Very truly yours,
/s/ Gary Castagna
Gary L. Castagna
Chief Financial Officer