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, 2004
                              -------------------------------------------------

                                       or

(   )             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              0-15661

                        AMCOL INTERNATIONAL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               Delaware                                   36-0724340
   --------------------------------                 ---------------------
   (State or other jurisdiction of                    (IRS Employer
    incorporation or organization)                   Identification No.)

    1500 West Shure Drive, Suite 500, Arlington Heights, Illinois 60004-7803
--------------------------------------------------------------------------------
               (Address of principal executive offices)            (Zip Code)

                                 (847) 394-8730
--------------------------------------------------------------------------------
              (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 ___

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12(b)-2 of the Exchange Act).

Yes_x_               No ___

      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 21, 2004
------------------------------                      ----------------------------
(Common stock, $.01 par value)                           29,269,176 Shares

<PAGE>

                         AMCOL INTERNATIONAL CORPORATION

                                      INDEX

                                                                        Page No.
                                                                        --------
Part I - Financial Information

 Item 1   Financial Statements
          Condensed Consolidated Balance Sheets -
          June 30, 2004 and December 31, 2003                                 1

          Condensed Consolidated Statements of Operations -
          three and six months ended June 30, 2004 and 2003                   2

          Condensed Consolidated Statements of Comprehensive Income -
          three and six months ended June 30, 2004 and 2003                   2

          Condensed Consolidated Statements of Cash Flows -
          three and six months ended June 30, 2004 and 2003                   3

          Notes to Condensed Consolidated Financial Statements                4

 Item 2   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                                 9

 Item 3   Quantitative and Qualitative Disclosures About Market Risk         18

 Item 4   Controls and Procedures                                            18

Part II - Other Information

 Item 2e  Company Repurchases of Company Stock                               19

 Item 6   Exhibits and Reports on Form 8-K                                   19

<PAGE>

                AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

--------------------------------------------------------------------------------
                                       ASSETS          June 30,     December 31,
                                                          2004          2003
                                                       (unaudited)        *
--------------------------------------------------------------------------------
Current assets:

   Cash                                                    $ 15,993     $ 13,525
   Accounts receivable, net                                  86,642       60,997
   Inventories                                               51,966       46,182
   Prepaid expenses                                           9,267        5,858
   Current deferred tax assets                                5,229        3,289
   Income taxes receivable                                     --          8,445
                                                           --------     --------
       Total current assets                                 169,097      138,296
                                                           --------     --------

Investment in and advances to joint ventures                 13,432       13,068
                                                           --------     --------

Property, plant, equipment, and
   mineral rights and reserves:

   Land and mineral rights                                   10,460       10,275
   Depreciable assets                                       234,345      226,221
                                                           --------     --------
                                                            244,805      236,496
   Less: accumulated depreciation                           157,459      149,500
                                                           --------     --------
                                                             87,346       86,996
                                                           --------     --------
Other assets:

   Goodwill                                                  16,339        5,633
   Intangible assets, net                                     1,421        1,345
   Other assets                                               9,294        8,649
   Deferred tax assets                                        4,721        4,790
                                                           --------     --------
                                                             31,775       20,417
                                                           --------     --------
                                                           $301,650     $258,777
                                                           ========     ========

                        LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
                                                        June 30,    December 31,
                                                         2004          2003
                                                      (unaudited)        *
--------------------------------------------------------------------------------
Current liabilities:

   Notes payable                                           $    125     $    844
   Accounts payable                                          25,287       20,365
   Income tax payable                                         3,355         --
   Accrued liabilities                                       29,306       25,162
                                                           --------     --------
      Total current liabilities                              58,073       46,371
                                                           --------     --------

Long-term debt                                               31,331        9,006
                                                           --------     --------

Minority interests in subsidiaries                              117          116
Other liabilities                                            19,787       18,386
                                                           --------     --------
                                                             19,904       18,502
                                                           --------     --------
Stockholders' equity:

   Common stock                                                 320          320
   Additional paid in capital                                68,403       67,513
   Retained earnings                                        134,359      125,627
   Accumulated other comprehensive income                     7,759        8,372
                                                           --------     --------
                                                            210,841      201,832
Less:

   Treasury stock                                            18,499       16,934
                                                           --------     --------
                                                            192,342      184,898
                                                           --------     --------
                                                           $301,650     $258,777
                                                           ========     ========
*Condensed from audited financial statements

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


                                       1
<PAGE>

                AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
               (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                      Six Months Ended               Three Months Ended
                                                          June 30,                       June 30,
                                                 -----------------------------------------------------------
                                                    2004            2003           2004             2003
------------------------------------------------------------------------------------------------------------
<S>                                            <C>             <C>             <C>             <C>
Net sales                                      $    218,995    $    172,720    $    117,028    $     93,253
Cost of sales                                       165,511         130,900          88,080          70,057
                                               ------------    ------------    ------------    ------------
   Gross profit                                      53,484          41,820          28,948          23,196
General, selling and administrative expenses         35,143          29,223          17,847          14,929
                                               ------------    ------------    ------------    ------------
   Operating profit                                  18,341          12,597          11,101           8,267
                                               ------------    ------------    ------------    ------------
Other income (expense):

   Interest expense, net                               (390)           (202)           (311)           (122)
   Other, net                                            82             162              39             130
                                               ------------    ------------    ------------    ------------
                                                       (308)            (40)           (272)              8
                                               ------------    ------------    ------------    ------------
Income before income taxes and equity                18,033          12,557          10,829           8,275
   in income of joint ventures
Income tax expense                                    5,679           4,269           3,410           2,814
                                               ------------    ------------    ------------    ------------
   Income before equity in income of                 12,354           8,288           7,419           5,461
      joint ventures
Income from joint ventures                              469             349             321             246
                                               ------------    ------------    ------------    ------------
Net income                                     $     12,823    $      8,637    $      7,740    $      5,707
                                               ============    ============    ============    ============

Weighted average common shares outstanding       29,091,621      28,051,675      29,090,587      28,108,456
                                               ============    ============    ============    ============
Weighted average common and common
    equivalent shares outstanding                30,859,545      29,745,805      30,835,691      29,896,941
                                               ============    ============    ============    ============
Basic earnings per share                       $       0.44    $       0.30    $       0.27    $       0.20
                                               ============    ============    ============    ============
Diluted earnings per share                     $       0.42    $       0.29    $       0.25    $       0.19
                                               ============    ============    ============    ============
Dividends declared per share                   $       0.14    $       0.07    $       0.07    $       0.04
                                               ============    ============    ============    ============
</TABLE>

            CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (Unaudited)
                                 (In thousands)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                    Six Months Ended                Three Months Ended
                                                         June 30,                         June 30,
                                               ----------------------------    ----------------------------
                                                   2004            2003            2004             2003
                                               ----------------------------    ----------------------------
<S>                                            <C>             <C>             <C>             <C>
Net income                                     $     12,823    $      8,637    $      7,740    $      5,707
Other comprehensive income (loss):
   Reclassification of prior service cost              (410)             --            (410)             --
   Foreign currency translation adjustment             (204)          2,286          (1,545)          3,832
                                               ------------    ------------    ------------    ------------
Comprehensive income                           $     12,209    $     10,923    $      5,785    $      9,539
                                               ============    ============    ============    ============
</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


                                       2
<PAGE>

                AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)

--------------------------------------------------------------------------------
                                                            Six Months Ended
                                                                June 30,
                                                         -----------------------
                                                           2004         2003
-------------------------------------------------------------------------------
Cash flow from operating activities:

Net income                                                $ 12,823    $  8,637
Adjustments to reconcile from net
   income to net cash
   used in operating activities:
     Depreciation, depletion, and amortization               9,398       8,756
     Changes in assets and liabilities, net of
       effects of acquisitions:
        Increase in current assets                         (20,568)    (17,221)
        Decrease (increase) in noncurrent assets            (1,511)         35
        Increase in current liabilities                      8,371       1,353
        Increase in noncurrent liabilities                   1,135         240
        Other                                                1,515        (153)
                                                          --------    --------
        Net cash provided by operating activities           11,163       1,647
                                                          --------    --------
Cash flow from investing activities:

   Acquisition of land, mineral rights,
     and depreciable assets                                 (7,446)     (6,323)
   Acquisitions, net of cash acquired                      (13,335)       --
   Other                                                     1,629        (978)
                                                          --------    --------
        Net cash used in investing activities              (19,152)     (7,301)
                                                          --------    --------
Cash flow from financing activities:

   Net change in outstanding debt                           17,651       4,043
   Proceeds from sales of treasury stock                       746       1,085
   Purchases of treasury stock                              (2,879)     (1,593)
   Dividends paid                                           (4,091)     (1,965)
                                                          --------    --------
        Net cash provided by financing activities           11,427       1,570
                                                          --------    --------
Effect of foreign currency rate changes on cash               (970)      1,597
                                                          --------    --------
Net (increase) in cash and cash equivalents                  2,468      (2,487)
                                                          --------    --------
Cash and cash equivalents at beginning of period            13,525      15,597
                                                          --------    --------
Cash and cash equivalents at end of period                $ 15,993    $ 13,110
                                                          ========    ========
Supplemental disclosures of cash flow information:
Cash paid for:
   Interest                                               $    186    $    252
                                                          ========    ========
   Income taxes                                           $  3,022    $  2,180
                                                          ========    ========

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


                                       3
<PAGE>

                AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
               (In thousands, except share and per share amounts)

Note 1: 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,
2003, is unaudited.  The condensed consolidated balance sheet as of December 31,
2003  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, 2003. The  information  furnished  herein  includes all adjustments
that are, in the opinion of  management,  necessary for a fair  statement of the
results of operations and cash flows for the interim periods ended June 30, 2004
and 2003, and the financial position of the Company as of June 30, 2004, and all
such adjustments are of a normal recurring  nature.  Management  recommends that
the  accompanying  condensed  consolidated  financial  information  be  read  in
conjunction  with  the  consolidated  financial  statements  and  related  notes
included in the Company's 2003 Annual Report on Form 10-K, which accompanies the
2003 Corporate Report.

      The  results  of  operations  for  interim  periods  are  not  necessarily
indicative of the results to be expected for the full years.

      In June 2001,  the  Financial  Accounting  Standards  Board (FASB)  issued
Statement of Financial  Accounting  Standards  (SFAS) No. 143,  "Accounting  for
Asset Retirement Obligations" ("SFAS 143"), which addresses financial accounting
and reporting for legal  obligations  associated with the retirement of tangible
long-lived assets and the related asset retirement costs. SFAS 143 requires that
the fair value of a liability for an asset  retirement  obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made. The fair value of the liability is added to the carrying  amount of the
associated  asset and this additional  carrying  amount is depreciated  over the
life of the asset. Subsequent to the initial measurement of the asset retirement
obligation,  the obligation is adjusted at the end of each period to reflect the
passage of time and changes in the estimated  future cash flows  underlying  the
obligation.  The  Company  adopted  SFAS No.  143 as of  January  1,  2003,  and
determined that no material  adjustments were required to the amounts previously
recorded.  At June 30, 2004, the Company's recorded  reclamation  obligation was
$5,142.  During the quarter ended June 30, 2004,  the  obligation was reduced by
$240 due to  payments  made in relation to normal  mining  activities  offset by
accretion and recognition of additional obligations resulting from normal mining
activities.

Note 2: INVENTORIES

      Inventories at June 30, 2004 have been valued using the same methods as at
December 31, 2003. The  composition of inventories at June 30, 2004 and December
31, 2003 was as follows:

--------------------------------------------------------------------------------
                                                      June 30,    December 31,
                                                        2004         2003
--------------------------------------------------------------------------------
Advance mining                                        $ 2,383      $ 2,605
Crude stockpile inventories                            15,313       14,410
In-process inventories                                 18,726       14,190
Other raw material, container,
   and supplies inventories                            15,544       14,977
                                                      -------      -------
                                                      $51,966      $46,182
                                                      =======      =======


                                       4
<PAGE>

                AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
               (In thousands, except share and per share amounts)
                                   (Continued)

Note 3:  EARNINGS PER SHARE

      Basic  earnings  per share were  computed  by  dividing  net income by the
weighted average number of common shares outstanding during each period. Diluted
earnings per share were computed by dividing net income by the weighted  average
common shares  outstanding  after  consideration of the dilutive effect of stock
options outstanding during each period. For the quarter ended June 30, 2004, the
exercise price of 294,650 outstanding stock options was above the average market
price, and therefore these options were excluded from the computation of diluted
earnings per share.  For the six months ended June 30, 2004,  the exercise price
of all the  outstanding  stock  options was below the average  market  price and
therefore the impact of these options was included in the computation of diluted
earnings per share.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                      Six Months Ended        Three Months Ended
                                                         June 30,                    June 30,
                                                   -------------------------------------------------
                                                      2004         2003         2004         2003
----------------------------------------------------------------------------------------------------
<S>                                                <C>          <C>          <C>          <C>
Weighted average of common shares outstanding       29,091,621   28,051,675   29,090,587   28,108,456
Dilutive impact of stock options                    1,767,924    1,694,130    1,745,104    1,788,485
Weighted average of common and common equivalent
  shares for the period                            30,859,545   29,745,805   30,835,691   29,896,941
                                                   ==========   ==========   ==========   ==========
Common shares outstanding                          29,203,355   28,262,630   29,203,355   28,262,630
                                                   ==========   ==========   ==========   ==========
</TABLE>

Note 4:  BUSINESS SEGMENT INFORMATION

      The  Company  operates  in  two  major  industry  segments:  minerals  and
environmental. The Company also operates a transportation business. The minerals
segment  mines,  processes  and  distributes  clays and  products  with  similar
applications  to various  industrial  and consumer  markets.  The  environmental
segment processes and distributes  clays and products with similar  applications
for use as a moisture barrier in commercial construction, landfill liners and in
a variety of other industrial and commercial  applications.  The  transportation
segment includes a long-haul trucking business and a freight brokerage business,
which provide services to both the Company's plants and outside customers.

      The Company identifies segments based on management responsibility and the
nature of the business activities of each component of the Company. Intersegment
sales are insignificant, other than intersegment shipping, which is disclosed in
the following table. The Company measures segment performance based on operating
profit.  Operating  profit is defined  as 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 interest or income taxes.

      Segment  assets are those assets used in the Company's  operations in that
segment. Corporate assets include cash and cash equivalents, corporate leasehold
improvements,   the  nanocomposite  plant  investment  and  other  miscellaneous
equipment.


                                       5
<PAGE>

                AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
               (In thousands, except share and per share amounts)
                                   (Continued)

      The  following  summaries  set  forth  certain  financial  information  by
business  segment for the six and three  months ended June 30, 2004 and 2003 and
as of June 30, 2004 and December 31, 2003.

-------------------------------------------------------------------------------
                                Six Months Ended     Three Months Ended
                                     June 30,              June 30,
                           -----------------------------------------------------
                                2004          2003        2004        2003
--------------------------------------------------------------------------------
Business Segment:
Revenues:

  Minerals                   $ 130,472    $ 103,719    $  66,417    $  53,542
  Environmental                 76,517       57,402       44,750       33,913
  Transportation                19,390       18,187       10,058        9,390
  Intersegment shipping         (7,384)      (6,588)      (4,197)      (3,592)
                             ---------    ---------    ---------    ---------
     Total                   $ 218,995    $ 172,720    $ 117,028    $  93,253
                             =========    =========    =========    =========

Operating profit (loss):

  Minerals                   $  15,673    $  10,799    $   8,238    $   5,882
  Environmental                  9,231        7,704        6,152        5,321
  Transportation                   837          775          451          399
  Corporate                     (7,400)      (6,681)      (3,740)      (3,335)
                             ---------    ---------    ---------    ---------
     Total                   $  18,341    $  12,597    $  11,101    $   8,267
                             =========    =========    =========    =========

                            June 30,      Dec. 31,
                              2004         2003
                        --------------------------
Assets:

   Minerals                 $155,067     $144,973
   Environmental             119,563       82,453
   Transportation              2,243        1,891
   Corporate                  24,777       29,460
                            --------     --------
      Total                 $301,650     $258,777
                            ========     ========


      At June 30, 2004 and December 31, 2003,  goodwill for the minerals segment
was $5,024 and $5,394;  and for the environmental  segment was $11,315 and $239.
The purchase  price  allocation of  acquisitions  made within the past 12 months
have not been finalized as management is in the process of determining  the fair
values of the assets acquired and liabilities assumed.

Note 5:  STOCK OPTION PLANS

      Prior to 2003,  the  Company  accounted  for its fixed plan stock  options
under the recognition and measurement  provisions of Accounting Principles Board
Opinion  No.  25,  Accounting  for  Stock  Issued  to  Employees,   and  related
Interpretations.  No stock-based employee compensation cost was reflected in net
income prior to 2003,  as all options  granted under those plans had an exercise
price equal to the market  value of the  underlying  common stock on the date of
grant. Effective January 1, 2003, the Company adopted the fair value recognition
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, and elected
to apply those provisions prospectively, in accordance with SFAS No.


                                       6
<PAGE>

                AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
               (In thousands, except share and per share amounts)
                                   (Continued)

148,  Accounting  for  Stock-Based  Compensation-amendment  to SFAS 123,  to all
employee  awards  granted,  modified,  or settled after January 1, 2003.  Awards
under the Company's plans vest over three years. Therefore,  the cost related to
stock-based  employee  compensation  included in the determination of net income
for 2003 and 2004 is less than that which would have been recognized if the fair
value based method had been  applied to all awards since the original  effective
date of Statement No. 123. Results for prior years have not been restated.

      The following table  illustrates the effect on net income and earnings per
share if the fair value based  method had been  applied to all  outstanding  and
unvested awards in each period.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                Six Months Ended     Three Months Ended March 31,
                                                    June 30,                  June 30,
                                            ----------------------------------------------------
                                               2004           2003         2004         2003
------------------------------------------------------------------------------------------------
<S>                                         <C>           <C>           <C>           <C>
Net income, as reported                     $   12,823    $    8,637    $    7,740    $    5,707
Add: Stock-based employee compensation
       expense included in reported net
       income, net of related tax effects          635           132           303            66
Deduct:  Total stock-based employee
         compensation expense determined
         under fair value based method
         for all awards, net of related
         tax effects                              (784)         (414)         (378)         (207)
                                            ----------    ----------    ----------    ----------
Pro forma net income                        $   12,674    $    8,355    $    7,665    $    5,566
                                            ==========    ==========    ==========    ==========

Earnings per share:

Basic - as reported                         $     0.44    $     0.30    $     0.27    $     0.20
Basic - pro forma                           $     0.44    $     0.30    $     0.26    $     0.20

Diluted - as reported                       $     0.42    $     0.29    $     0.25    $     0.19
Diluted - pro forma                         $     0.41    $     0.28    $     0.25    $     0.19
</TABLE>


Note 6: COMPONENTS OF PENSION AND OTHER RETIREMENT BENEFIT COST

--------------------------------------------------------------------------------
                                                 Six Months      Three Months
                                                    Ended           Ended
                                                   June 30,        June 30,
                                               ---------------------------------
                                                2004     2003    2004      2003
--------------------------------------------------------------------------------
Service cost                                   $ 724    $ 664    $ 362    $ 332
Interest cost                                    914      876      457      438
Expected return on plan assets                  (968)    (788)    (484)    (394)
Amortization of transition
   (asset) obligation                            (68)     (68)     (34)     (34)
Amortization of prior service cost                14       14        7        7
Amortization of net (gain) loss                 --         34     --         17
                                               -----    -----    -----    -----
Net periodic benefit cost                      $ 616    $ 732    $ 308    $ 366
                                               =====    =====    =====    =====


                                       7
<PAGE>

                AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
               (In thousands, except share and per share amounts)
                                   (Continued)

Employer Contributions

      The Company previously  disclosed in its financial statements for the year
ended  December  31,  2003,  that it  expected to  contribute  $1 million to its
pension plan in 2004. As of June 30, 2004, that full contribution has been made.

Note 7: ACQUISITIONS

      The Company  acquired  all of the  outstanding  stock in two  individually
insignificant  acquisitions during the period ended June 30, 2004. Net cash paid
and  notes   payable   assumed  were  $13,335.   Goodwill  was  $11,307.   These
acquisitions,  individually  and in  aggregate,  did not  materially  affect the
Company's operating results or financial position in the periods presented.  The
purchase price  allocations of acquisitions  made within the past 12 months have
not been  finalized  as  management  is in the process of  determining  the fair
values of the acquired assets and liabilities assumed.


                                       8
<PAGE>

            Item 2: AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND 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.

Three months ended June 30, 2004 vs. June 30, 2003:

Results of operations (in millions):

Net sales:                           2004             2003            % Change
                                     ----             ----            --------
                                    $ 117.0          $ 93.3              25%

      Net  sales  from  businesses  acquired  since the  third  quarter  of 2003
accounted  for 37% of the growth  over the prior year  period,  while  favorable
foreign  currency  changes  accounted for 11% of the increase in net sales.  The
remainder  of the increase was due to organic  growth.  On an operating  segment
basis,   minerals  accounted  for  54%  of  the  increase  in  net  sales  while
environmental contributed 46% of the growth.

Gross profit:                         2004             2003           % Change
                                      ----             ----           --------
                                    $ 28.9           $ 23.2              25%
                  Margin              24.7%            24.9%            N/A

      Gross profit improved over the second quarter of 2003 in conjunction  with
the  increase in net sales.  Gross  margin  declined  by 20 basis  points due to
relatively  lower gross profit earned from  businesses  acquired since the third
quarter of 2003 that were reported in the environmental segment this period.

General, selling &
administration expenses              2004             2003            % Change
                                     ----             ----            --------
                                    $ 17.8           $ 14.9              20%

      Higher  compensation  and benefit costs  accounted for the majority of the
increase over the 2003 second quarter.  We had higher employment levels compared
with  the  prior  year  due  to  acquired  businesses  and  staffing  increases.
Stock-based  compensation  costs accounted for $0.4 million of the increase over
the prior year period.  Research and  development  expenses were $1.4 million in
the second quarter of 2004 compared with $1.2 million in last year's period.

Operating profit:                    2004             2003            % Change
                                     ----             ----            --------
                                   $ 11.1            $  8.3              34%
                  Margin              9.5%              8.9%            N/A

      Acquisitions and favorable  foreign currency  exchange rates accounted for
30% and 11%,  respectively,  of the increase in  operating  profit over the 2003
second quarter.  Operating profit improved with the increase in gross profit and
net sales.  The 60 basis point  improvement in operating  margin reflected lower
growth in operating  expenses compared to gross profit gains over the prior year
period.


                                       9
<PAGE>

Interest expense, net               2004              2003             % Change
                                    ----              ----             --------
                                   $  0.3            $  0.1              200%

      Interest  expense  in the  current  year  period  increased  due to higher
average  long-term  debt  compared  with the prior year period.  The increase in
long-term debt was attributed to acquisitions  completed in the first quarter of
2004 and an increase in working  capital  funding  over the course of the second
quarter of this year.

Income taxes:                       2004               2003           % Change
                                    ----               ----           --------
                                   $  3.4            $  2.8              21%
         Effective tax rate          31.5%             34.0%            N/A

      Income  tax  expense  increased  due  to  higher  earnings  before  taxes.
Businesses  with  lower  statutory  income  tax  rates   represented  a  greater
proportion  of pre-tax  earnings in the current  year period  compared  with the
second quarter of 2003.

Net income:                          2004              2003            % Change
                                     ----              ----            --------
                                   $  7.7            $  5.7              35%
                  Margin              6.6%              6.1%            N/A

      Net income improved in conjunction  with the increase in operating  profit
and the lower effective income tax rate in the 2004 quarter.

Diluted earnings per share:          2004              2003            % Change
                                     ----              ----            --------
                                    $ 0.25           $ 0.19               32%

      Earnings from acquired  businesses,  favorable  foreign currency  exchange
rates and a lower  effective  income tax rate each accounted for $0.01 per share
of the increase over the second  quarter of 2003.  Weighted  average  common and
common  equivalent  shares  outstanding  increased by 3% over the 2003  quarter,
which negatively impacted earnings per share by $0.01 in the 2004 period.  Stock
option  exercises  by  employees  throughout  2004  resulted in higher  weighted
average shares  outstanding  during the second quarter of the current  reporting
period.  Organic sales and operating  profit  growth  contributed  the remaining
$0.04 per share of the increase over the second quarter of 2003.

         Segment analysis:

      Following is a review of operating  results for each of our four reporting
segments:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
         Minerals                                 Three Months Ended June 30,
                             -----------------------------------------------------------
                                     2004                2003             2004 vs. 2003
----------------------------------------------------------------------------------------
                                                (Dollars in Thousands)
----------------------------------------------------------------------------------------
<S>                          <C>          <C>     <C>          <C>      <C>        <C>
Product sales                $60,325      90.8%   $47,842      89.4%
Shipping revenue               6,092       9.2%     5,700      10.6%
                             -------   -------    -------   -------
Net sales                     66,417     100.0%    53,542     100.0%    12,875      24.0%
                             -------   -------    -------   -------
Cost of sales - product       46,838      70.5%    37,345      69.7%
Cost of sales - shipping       6,092       9.2%     5,700      10.6%
                             -------   -------    -------   -------
Cost of sales                 52,930      79.7%    43,045      80.4%
                             -------   -------    -------   -------
   Gross profit               13,487      20.3%    10,497      19.6%     2,990      28.5%
General, selling and
   administrative expenses     5,249       7.9%     4,615       8.6%       634      13.7%
                             -------    -------   -------    -------   -------
Operating profit               8,238      12.4%     5,882      11.0%     2,356      40.1%
</TABLE>


                                       10
<PAGE>

      Acquired   businesses  and  favorable   foreign  currency  exchange  rates
accounted for 13% and 11%,  respectively,  of the increase in net sales. Organic
sales growth was primarily attributed to the metalcasting and specialty minerals
businesses.  Domestic  metalcasting  sales were  positively  impacted  by higher
demand from rail car  producers as well as automotive  component  manufacturers.
The metalcasting  markets in the  Asia/Pacific  region also continued to benefit
from strong  demand  from  automotive  and  transportation  equipment  component
manufacturers.  Specialty  minerals  experienced  higher  demand from  detergent
producers  while the health and beauty  business  continued to grow its customer
base.

      Gross profit rose in conjunction with the increase in sales.  Gross margin
improved by 70 basis points over the prior year due to higher  production volume
and pricing in the metalcasting and specialty minerals business units.

      General,  selling and administrative  expenses increased  primarily due to
higher  compensation and benefit costs.  Higher foreign currency  exchange rates
also contributed to the increase over the prior year quarter.

      Operating  profit  improved  over the  second  quarter  of 2003 due to the
increase in sales and gross  profit.  Operating  margin  increased  by 140 basis
points due to the  expansion  in gross  margin and a lower rate of  increase  in
general, selling and administrative expenses.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
        Environmental                       Three Months Ended June 30,
                           ------------------------------------------------------------
                                 2004                 2003            2004 vs. 2003
---------------------------------------------------------------------------------------
                                        (Dollars in Thousands)
---------------------------------------------------------------------------------------
<S>                        <C>          <C>     <C>          <C>      <C>        <C>
Product sales              $41,406      92.5%   $31,270      92.2%
Shipping revenue             3,344       7.5%     2,643       7.8%
                           -------   -------    -------   -------
Net sales                   44,750     100.0%    33,913     100.0%    10,837      32.0%
                           -------   -------    -------   -------
Cost of sales - product     27,057      60.5%    19,596      57.8%
Cost of sales - shipping     3,344       7.5%     2,643       7.8%
                           -------   -------    -------   -------
Cost of sales               30,401      67.9%    22,239      65.6%
                           -------   -------    -------   -------
   Gross profit             14,349      32.1%    11,674      34.4%     2,675      22.9%
General, selling and
   administrative expenses   8,197      18.3%     6,353      18.7%     1,844      29.0%
                           -------    -------   -------    -------   -------
   Operating profit          6,152      13.7%     5,321      15.7%       831      15.6%
</TABLE>

      65% of the increase in net sales was  attributed  to  businesses  acquired
since the third quarter of 2003. Favorable currency exchange rates accounted for
another 12% of the increase.  Lining  technologies  represented 49% of net sales
for the period,  while building materials and water treatment  comprised 26% and
25% of net sales, respectively.

      Gross profit grew in conjunction with the increase in net sales,  however,
gross  margin  declined  by 230 basis  points  from the second  quarter of 2003.
Acquired   businesses  earned  relatively  lower  gross  margins  than  existing
businesses.  Gross margins earned from existing  businesses  were  comparable to
second quarter of 2003.

      General,  selling and administrative  expenses increased  primarily due to
higher personnel levels and associated benefit costs. The personnel increase was
primarily  associated  with  acquisitions


                                       11
<PAGE>

completed  since the third quarter of 2003.  Higher  foreign  currency  exchange
rates also contributed to the increase over 2003.

      Operating  profit grew due to the  increase in net sales and gross  profit
over the prior year period. Operating margins declined by 200 basis points. This
was caused by the decline in gross margin described above.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
      Transportation                          Three Months Ended June 30,
                          -------------------------------------------------------------
                                 2004                 2003            2004 vs. 2003
---------------------------------------------------------------------------------------
                                          (Dollars in Thousands)
---------------------------------------------------------------------------------------
<S>                       <C>         <C>      <C>         <C>      <C>           <C>
Net sales                 $10,058     100.0%   $ 9,390     100.0%   $   668       7.1%
Cost of sales               8,946      88.9%     8,365      89.1%
                          -------   -------    -------   -------
   Gross profit             1,112      11.1%     1,025      10.9%        87       8.5%
General, selling and
   administrative expenses    661       6.6%       626       6.7%        35       5.6%
                          -------    -------   -------    -------   -------
Operating profit              451       4.5%       399       4.2%        52      13.0%
</TABLE>

      Net sales  improved  due to higher  traffic  levels.  Higher  intersegment
revenues accounted for the majority of the increase.  Gross profit improved over
the second quarter of 2003 by 20 basis points  primarily due to higher  pricing.
General,  selling and administrative  expenses increased due to higher personnel
levels.
-------------------------------------------------------------------------
          Corporate                     Three Months Ended June 30,
                              -------------------------------------------
                               2004       2003         2004 vs. 2003
-------------------------------------------------------------------------
                                      (Dollars in Thousands)
-------------------------------------------------------------------------
Intersegment shipping sales   $(4,197)   $(3,592)
Intersegment shipping costs    (4,197)    (3,592)
                              -------    -------
   Gross profit                  --         --
Corporate general, selling
   and administrative expenses  2,848      2,415        433       17.9%

Nanocomposite business
   development expenses           892        920        (28)     -3.0%
                              -------    -------    -------
Operating loss                 (3,740)    (3,335)      (405)      12.1%

      Intersegment  shipping revenues and costs are related to billings from the
transportation  segment to the domestic minerals and environmental  segments for
services. These services are invoiced to the minerals and environmental segments
at  arms-length  rates and those costs are  subsequently  charged to  customers.
Intersegment  sales and costs  reported  above reflect the  elimination of these
transactions.

      Corporate   expenses   increased   primarily  due  to  higher  stock-based
compensation costs recorded in the current year.  Corporate personnel levels and
base compensation costs were comparable to the prior year period.

      Nanocomposite  operating  expenses declined from the first quarter of 2003
due to an increase in revenues  and lower  spending on  activities  that are now
funded by our alliance  partners.  The business  has  alliance  agreements  with
Mitsubishi  Gas  Chemical  Company  and  Poly  One  Corporation  that  focus  on
developing certain markets for nanocomposites.


                                       12
<PAGE>

Six months ended June 30, 2004 vs. 2003

Results of operations (in millions):

Net sales:                           2004            2003            % Change
                                     ----            ----            --------
                                    $ 219.0         $172.7               27%

      Net  sales  from  businesses  acquired  since the  third  quarter  of 2003
accounted  for 30% of the growth  over the prior year  period,  while  favorable
foreign currency  changes  accounted for 14% of the increase in net sales. On an
operating segment basis, minerals accounted for 58% of the increase in net sales
while environmental contributed 41% of the growth. The remaining increase in net
sales was contributed by the transportation segment.

Gross profit:                         2004             2003            % Change
                                      ----             ----            --------
                                    $ 53.5           $ 41.8                28%
                  Margin              24.4%            24.2%              N/A

      Gross profit improved over the first half of 2003 in conjunction  with the
increase  in net  sales.  An  increase  in the  minerals  segment  gross  margin
contributed to the 20 basis point improvement in consolidated results.

General, selling &
administration expenses              2004             2003            % Change
                                     ----             ----            --------
                                    $ 35.1           $ 29.2              20%

      Higher  compensation  and benefit costs  accounted for the majority of the
increase over the 2003 second  quarter.  We had higher  personnel  levels in the
first  half  of  2004  due to  acquisitions  and an  increase  in  research  and
development staff.  Stock-based compensation costs accounted for $0.7 million of
the increase over the prior year period.  Research and development expenses were
$2.8 million in the first half of 2004 compared with $2.6 million in last year's
period.

Operating profit:                    2004             2003             % Change
                                     ----             ----             --------
                                    $ 18.3           $ 12.6              45%
                  Margin               8.4%             7.3%            N/A

      Acquisitions and favorable  foreign currency  exchange rates accounted for
23% and 13%, respectively, of the increase in operating profit over the 2003 six
month period.  Operating  profit  improved with the increase in gross profit and
net sales.  The  operating  margin  improved  by 110 basis  points over the 2003
period  due to higher  growth in gross  profit in  comparison  to the  growth in
operating expenses.

Interest expense, net                 2004            2003             % Change
                                      ----            ----             --------
                                    $  0.4           $  0.2              100%

      Interest  expense  in the  current  year  period  increased  due to higher
average  long-term  debt  compared  with the prior year period.  The increase in
long-term debt was attributed to acquisitions


                                       13
<PAGE>

completed  in the first  quarter  of 2004 and an  increase  in  working  capital
funding over the course of the second quarter of this year.

Income taxes:                         2004            2003             % Change
                                      ----            ----             --------
                                     $  5.7          $  4.3                33%
         Effective tax rate            31.5%           34.0%              N/A

      Income  tax  expense  increased  due  to  higher  earnings  before  taxes.
Businesses  with  lower  statutory  income  tax  rates   represented  a  greater
proportion of pre-tax earnings in the current year period compared with the 2003
six month period.

Net income:                           2004             2003            % Change
                                      ----             ----            --------
                                    $ 12.8           $  8.6                49%
                  Margin               5.9%             5.0%              N/A

      Net income improved in conjunction  with the increase in operating  profit
and the lower effective income tax rate in the 2004 six month period.

Diluted earnings per share:           2004             2003            % Change
                                      ----             ----            --------
                                    $ 0.42           $ 0.29               45%

      Earnings from acquired  businesses,  favorable  foreign currency  exchange
rates and a lower effective income tax rate accounted of $0.03,  $0.02 and $0.01
per  share,  respectively,  of the  increase  over the 2003  six  month  period.
Weighted average common and common  equivalent shares  outstanding  increased by
3.7% over the 2003 six month  period,  which  negatively  impacted  earnings per
share  by  $0.01  in the  2004  period.  Stock  option  exercises  by  employees
throughout 2004 resulted in higher weighted  average shares  outstanding  during
the second quarter of the current reporting period.  Organic sales and operating
profit growth contributed the remaining $0.08 per share of the increase over the
2003 six month period.

         Segment analysis:

      Following is a review of operating  results for each of our four reporting
segments:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
          Minerals                                    Six Months Ended June 30,
                           -----------------------------------------------------------------
                                    2004                    2003            2004 vs. 2003
--------------------------------------------------------------------------------------------
                                                    (Dollars in Thousands)
--------------------------------------------------------------------------------------------
<S>                        <C>            <C>     <C>            <C>      <C>           <C>
Product sales              $119,442       91.5%   $ 93,903       90.5%
Shipping revenue             11,030        8.5%      9,816        9.5%
                           --------   --------    --------   --------
Net sales                   130,472      100.0%    103,719      100.0%     26,753       25.8%
                           --------   --------    --------   --------
Cost of sales - product      93,352       71.5%     73,956       71.3%
Cost of sales - shipping     11,030        8.5%      9,816        9.5%
                           --------   --------    --------   --------
Cost of sales               104,382       80.0%     83,772       80.8%
                           --------   --------    --------   --------
   Gross profit              26,090       20.0%     19,947       19.2%      6,143       30.8%
General, selling and
   administrative expenses   10,417        8.0%      9,148        8.8%      1,269       13.9%
                           --------    --------   --------    --------   --------
Operating profit             15,673       12.0%     10,799       10.4%      4,874       45.1%
</TABLE>


      Acquired   businesses  and  favorable   foreign  currency  exchange  rates
accounted for 10% and 13%,  respectively,  of the increase in net sales over the
2003 six  month  period.  Metalcasting,  pet  products  and


                                       14
<PAGE>

specialty minerals represented 45%, 19% and 36%, respectively,  of net sales for
the 2004 six month period.  Organic sales growth was primarily attributed to the
metalcasting and specialty minerals businesses. Domestic metalcasting sales were
positively  impacted  by  higher  demand  from  rail  car  producers  as well as
automotive component manufacturers. The metalcasting markets in the Asia/Pacific
region  also  continued  to benefit  from  strong  demand  from  automotive  and
transportation equipment component manufacturers. Specialty minerals experienced
higher  demand from  detergent  producers  while the health and beauty  business
continued to grow its sales volume.

      Gross profit rose in conjunction with the increase in sales.  Gross margin
improved by 80 basis points over the prior year period due to higher  production
volume and pricing in the metalcasting and specialty minerals business units.

      General,  selling and administrative  expenses increased  primarily due to
higher  compensation and benefit costs.  Higher foreign currency  exchange rates
also contributed to the increase over the prior year six-month period.

      Operating  profit  improved  over the first six  months of 2004 due to the
increase in sales and gross  profit.  Operating  margin  increased  by 160 basis
points due to the  expansion  in gross  margin and a lower rate of  increase  in
general, selling and administrative expenses.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
     Environmental                               Six Months Ended June 30,
                          ------------------------------------------------------------
                                   2004               2003            2004 vs. 2003
--------------------------------------------------------------------------------------
                                            (Dollars in Thousands)
--------------------------------------------------------------------------------------
<S>                        <C>          <C>     <C>          <C>     <C>         <C>
Product sales              $71,473      93.4%   $53,223      92.7%
Shipping revenue             5,044       6.6%     4,179       7.3%
                           -------   -------    -------   -------
Net sales                   76,517     100.0%    57,402     100.0%    19,115      33.3%
                           -------   -------    -------   -------
Cost of sales - product     46,228      60.4%    33,353      58.1%
Cost of sales - shipping     5,044       6.6%     4,179       7.3%
                           -------   -------    -------   -------
Cost of sales               51,272      67.0%    37,532      65.4%
                           -------   -------    -------   -------
   Gross profit             25,245      33.0%    19,870      34.6%     5,375      27.1%
General, selling and
   administrative expenses  16,014      20.9%    12,166      21.2%     3,848      31.6%
                           -------    -------   -------    -------   -------
Operating profit             9,231      12.1%     7,704      13.4%     1,527      19.8%
</TABLE>


      59% of the increase in net sales was  attributed  to  businesses  acquired
since the third quarter of 2003. Favorable currency exchange rates accounted for
another 16% of the increase.  Lining  technologies  represented 49% of net sales
for the period,  while building materials and water treatment  comprised 26% and
25% of net sales, respectively.

      Gross profit grew in conjunction with the increase in net sales,  however,
gross margin  declined by 160 basis points in comparison with the 2003 six month
period.  Acquired businesses earned relatively lower gross margins than existing
businesses. Gross margins earned from existing businesses were comparable to the
2003 six month period.

      General,  selling and administrative  expenses increased  primarily due to
higher personnel levels and associated benefit costs. The personnel increase was
primarily  attributed  to acquired  businesses  since the third quarter of 2003.
Higher foreign  currency  exchange  rates also  contributed to the increase over
2003.


                                       15
<PAGE>

      Operating  profit grew due to the  increase in net sales and gross  profit
over the prior year period.  Operating margin declined by 120 basis points. This
was caused by the decline in gross margin described above.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
       Transportation                          Six Months Ended June 30,
                          ------------------------------------------------------------
                                  2004               2003            2004 vs. 2003
--------------------------------------------------------------------------------------
                                            (Dollars in Thousands)
--------------------------------------------------------------------------------------
<S>                       <C>         <C>      <C>         <C>      <C>           <C>
Net sales                 $19,390     100.0%   $18,187     100.0%   $ 1,203       6.6%
Cost of sales              17,241      88.9%    16,184      89.0%
                          -------   -------    -------   -------
   Gross profit             2,149      11.1%     2,003      11.0%       146       7.3%
General, selling and
   administrative expenses  1,312       6.8%     1,228       6.8%        84       6.8%
                          -------    -------   -------    -------   -------
Operating profit              837       4.3%       775       4.3%        62       8.0%
</TABLE>

      Net sales  improved  due to higher  traffic  levels.  Higher  intersegment
revenues accounted for the majority of the increase.  Gross profit improved over
the 2003 six month period by 10 basis points  primarily  due to higher  pricing.
General,  selling and administrative  expenses increased due to higher personnel
levels.

--------------------------------------------------------------------------------
        Corporate                               Six Months Ended June 30,
                          ------------------------------------------------------
                                  2004          2003            2004 vs. 2003
--------------------------------------------------------------------------------
                                            (Dollars in Thousands)
--------------------------------------------------------------------------------
Intersegment shipping sales   $(7,384)       $(6,588)
Intersegment shipping costs    (7,384)        (6,588)
                              -------        -------
   Gross profit                   --              --
Corporate general, selling
   and administrative expenses  5,594          4,733           861       18.2%

Nanocomposite business
   development expenses         1,806          1,948           (142)     -7.3%
                              -------        -------        -------
Operating loss                 (7,400)        (6,681)          (719)      10.8%

      Intersegment  shipping revenues and costs are related to billings from the
transportation  segment to the domestic minerals and environmental  segments for
services. These services are invoiced to the minerals and environmental segments
at  arms-length  rates and those costs are  subsequently  charged to  customers.
Intersegment  sales and costs  reported  above reflect the  elimination of these
transactions.

      Corporate   expenses   increased   primarily  due  to  higher  stock-based
compensation  costs  recorded in the current  year period.  Corporate  personnel
levels and base compensation costs were comparable to the prior year period.

      Nanocomposite  operating  expenses declined from the 2003 six month period
due to an increase in revenues  and lower  spending on  activities  that are now
funded by our alliance  partners.  The business  has  alliance  agreements  with
Mitsubishi  Gas  Chemical  Company  and  Poly  One  Corporation  that  focus  on
developing certain markets for nanocomposites.


                                       16
<PAGE>

Liquidity and capital resources (in millions):

--------------------------------------------------------------------------------
                 Cash Flows                                  Six Months Ended
                                                                 June 30,
                                                           ---------------------
                                                           2004          2003
--------------------------------------------------------------------------------
Net cash provided by operating activities                  $11.2        $ 1.6
Net cash used in investing activities                      $(19.2)      $(7.3)
Net cash provided by financing activities                  $11.4        $ 1.6

      Cash flows provided by operating  activities improved over the 2003 period
as a  result  of  higher  net  income,  which  increased  by $4.2  million.  The
improvement  was also aided by lower  growth in working  capital in the  current
year period  compared with the 2003 six month period.  Historically,  cash flows
provided by operations  have increased over the course of the fiscal year and we
anticipate this pattern to continue in 2004.

      Cash  flows  used  in  investing  activities  increased  primarily  due to
acquisitions  completed in the first  quarter of 2004. We acquired the shares of
Lafayette  Well  Testing,  Inc. on January 7, 2004,  and  Linteco  Geotechnische
Systeme GmbH on March 5, 2004. Capital  expenditures totaled $7.4 million in the
first half of 2004  compared  with $6.3  million in the prior  year  period.  We
anticipate  capital  expenditures  to increase over the remainder of 2004 due to
investments in capacity expansion and productivity projects. Our estimate of the
total 2004 capital expenditures is in the range of $20 million to $22 million.

      Cash flows provided by financing  activities increased due to debt funding
for  acquisitions  completed  in the first half of 2004.  We used our  revolving
credit  facility  to finance the  acquisitions.  Additionally,  we assumed  $4.1
million of funded debt as part of the consideration for the Linteco acquisition.
Dividends  paid in the first half of 2004  increased  to $4.1  million from $2.0
million in the prior year  period.  We paid  dividends of $0.14 per share in the
first  half of 2004  compared  with  $0.07  per  share  in the 2003  period.  We
purchased 183,400 shares of our common stock on the open market during the first
half of 2004 for a total value of $2.9 million, or an average price per share of
$15.70.  All of the shares  repurchased during the first half of 2004 were based
on a board  authorization made on May 16, 2002. The 2002  authorization  expired
during the  second  quarter of 2004.  On May 13th 2004,  the board of  directors
authorized  funds to repurchase  up to an  additional  $10 million of our common
stock on the open market.  We consider  that such a use of our cash will enhance
shareholder value. The entire $10 million remains available to repurchase common
stock as of June 30, 2004. We purchased  $1.6 million of our common stock in the
open market during the first six months of 2003.

--------------------------------------------------------------------------------
        Financial Position                                 Six Months Ended
                                                   -----------------------------
                                                     June 30,     December 31,
                                                   -----------------------------
                                                       2004           2003
--------------------------------------------------------------------------------
Working capital                                      $  111.0       $  91.9
Intangible assets                                    $   17.8       $   7.0
Total assets                                         $  301.7       $ 258.8

Long-term debt                                       $   31.3       $   9.0
Other long-term obligations                          $   19.9       $  18.5
Stockholder's equity                                 $  192.3       $ 184.9

      Working  capital  at June 30,  2004  increased  from  December  31,  2003,
primarily  due to  acquisitions  completed  in the first half of 2004 and strong
sales  reported in the period.  The current  ratio at June 30, 2004 and December
31, 2003 was 2.9-to-1 and 3.0-to-1, respectively.


                                       17
<PAGE>

      Intangible   assets   primarily   represent   goodwill   associated   with
acquisitions.  The amount  increased  from  December 31, 2003 as a result of the
purchase price allocation for acquisitions  closed in the first quarter of 2004.
The purchase  price  allocations  may be subject to change since certain  assets
acquired and liabilities assumed with the acquisitions  require further analysis
to determine their fair values. Consequently, intangible asset values may change
as well.

      Long-term  debt  increased  to 14.0% of total  capitalization  at June 30,
2004,  compared with 5.1% at December 31, 2003.  The increase in debt levels was
principally attributed to funding of acquisitions completed in the first quarter
of 2004. We have a $100 million  revolving  credit facility with a consortium of
U.S. banks that mature on October 31, 2006. At June 30, 2004, we had $83 million
of borrowing capacity  remaining under the credit facility.  The credit facility
stipulates that we must comply with a number of financial  covenants.  We are in
compliance with those covenants at June 30, 2004.

      Other long-term  obligations  primarily represent  liabilities  associated
with our qualified and supplemental retirement plans and deferred income taxes.

      We believe  future  cash flows from  operations  combined  with  borrowing
capacity  from our  revolving  credit  facility will be adequate to fund capital
expenditures and other investments approved by the board of directors.

      Since the mid 1980's,  the Company and/or its subsidiaries have been named
as one of a number of defendants in product  liability  lawsuits relating to the
minor free-silica  content within the Company's  bentonite  products used in the
metalcasting  industry. The plaintiffs in these lawsuits are primarily employees
of the  Company's  foundry  customers.  To date,  the Company  has not  incurred
significant  costs in  defending  these  matters.  The  Company  believes it has
adequate  insurance  coverage  and does not believe the  litigation  will have a
material adverse impact on the financial condition,  liquidity or results of the
operation of the Company.

Item 3: Quantitative and Qualitative Disclosure About Market Risk

      There have been no material  changes in the  Company's  market risk during
the three and six months ended June 30, 2004. See disclosures as of December 31,
2003 in the Company's Annual Report on Form 10-K, Item 7A.

Item 4: Controls and Procedures

      As of the end of the period  covered by this  report,  an  evaluation  was
performed  under the  supervision  and with the  participation  of the Company's
management,  including  the Chief  Executive  Officer  and the  Chief  Financial
Officer,  of  the  effectiveness  of  the  Company's   disclosure  controls  and
procedures.  Based on that  evaluation,  the Chief  Executive  Officer and Chief
Financial  Officer have  concluded  that the Company's  disclosure  controls and
procedures are effective to ensure that information  required to be disclosed by
the Company in reports that it files or submits  under the  Securities  Exchange
Act of 1934 is recorded,  processed,  summarized  and  reported  within the time
periods specified in Securities and Exchange Commission rules.

      Our management,  including our Chief Executive Officer and Chief Financial
Officer,  has  evaluated  any changes in our internal  controls  over  financial
reporting that occurred during the quarterly period covered by this report,  and
has concluded that there was no change that occurred during the quarterly period
covered by this report that has materially affected,  or is reasonably likely to
materially affect, our internal controls over financial reporting.


                                       18
<PAGE>

                           PART II - OTHER INFORMATION

Item 2e: Company Repurchases of Company Stock

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                           Total Number of                                   Maximum Value of
                                         Shares Repurchased             Average           Shares that May Yet Be
                                        as Part of the Stock            Price Paid        Repurchased Under the
                                          Repurchase Program            Per Share                Program
----------------------------------------------------------------------------------------------------------------
<S>                                               <C>                 <C>                     <C>
January 1, 2004 - January 31, 2004
   Shares repurchased                                --               $      --               $ 3,704,133
February 1, 2004 - February 29, 2004
   Shares repurchased                                --               $      --               $ 3,704,133
March 1, 2004 - March 31, 2004
  Shares repurchased                               12,400             $     15.83             $ 3,507,839
April 1, 2004 - April 30, 2004
  Shares repurchased                                 --               $      --               $ 3,507,839
May 1, 2004 - May 31, 2004
  Shares repurchased                              171,000             $     15.69             $   825,448
  Expiration of unused authorization                                                          $      --
  New repurchase authorization                                                                $10,000,000
June 1, 2004 - June 30, 2004
  Shares repurchased                                 --               $      --               $10,000,000
                                              -----------             -----------             -----------
   Total                                          183,400             $     15.70             $10,000,000
                                              ===========             ===========             ===========
</TABLE>

*On May 13, 2004,  the Board of Directors  authorized a program to repurchase up
to $10  million of the  Company's  outstanding  stock which will expire June 30,
2006.  The  repurchase  program  authorized  on May 16, 2002 expired  during the
second quarter ended June 30, 2004.

Item 6: Exhibits and Reports on Form 8-K

      (a)   See Index to Exhibits immediately following the signature page.

      (b)   A current report on Form 8-K was filed on April 19, 2004, furnishing
            a press release  disclosing the Company's  operating results for the
            first quarter ended March 31, 2004.


                                       19
<PAGE>

                                   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:     August 6, 2004                /s/ Lawrence E. Washow
                                        -------------------------------------
                                        Lawrence E. Washow
                                        President and Chief Executive Officer

Date:     August 6, 2004                /s/ Gary L. Castagna
                                        --------------------------------------
                                        Gary L. Castagna
                                        Senior Vice President and Chief
                                        Financial Officer and Principal
                                        Accounting Officer


                                       20
<PAGE>

                                INDEX TO EXHIBITS

Exhibit
Number
------
3.1   Restated Certificate of Incorporation of the Company (5), as amended (10),
      as amended (16)
3.2   Bylaws  of the  Company  (10) 4  Article  Four of the  Company's  Restated
      Certificate of Incorporation (5), as amended (16)
10.3  Lease  Agreement for office space dated  September  29, 1986,  between the
      Company and American National Bank and Trust Company of Chicago; (1) First
      Amendment dated June 2, 1994 (8); Second Amendment dated June 2, 1997 (13)
10.4  AMCOL International  Corporation 1987 Non-Qualified Stock Option Plan (2);
      as amended (6)
10.9  AMCOL International  Corporation Dividend  Reinvestment and Stock Purchase
      Plan (4); as amended (6)
10.10 AMCOL  International  Corporation 1993 Stock Plan, as amended and restated
      (10)
10.15 AMCOL  International  Corporation  1998 Long-Term  Incentive Plan (15), as
      amended  (21)  10.26  Employment  Agreement  dated  March 15,  2002 by and
      between Registrant and Gary D. Morrison (22)*
10.27 Employment  Agreement  dated March 15, 2002 by and between  Registrant and
      Peter M. Maul (22)*
10.28 Employment  Agreement  dated March 15, 2002 by and between  Registrant and
      Gary Castagna (22)*
10.29 Employment  Agreement  dated March 15, 2002 by and between  Registrant and
      Ryan F. McKendrick (22)*
10.30 Employment  Agreement  dated March 15, 2002 by and between  Registrant and
      Lawrence E. Washow (22)*
10.31 Credit Agreement by and among AMCOL  International  Corporation and Harris
      Trust and Savings Bank, individually and as agent, Wells Fargo Bank, N.A.,
      Bank of America N.A. and the Northern Trust Company dated October 31, 2003
      (23)
21    AMCOL International Corporation Subsidiary Listing
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
------------------
(1)   Exhibit is  incorporated  by reference to the  Registrant's  Form 10 filed
      with the Securities and Exchange Commission on July 27, 1987.
(2)   Exhibit is incorporated by reference to the  Registrant's  Form 10-K filed
      with the  Securities  and Exchange  Commission for the year ended December
      31, 1988.
(4)   Exhibit is incorporated by reference to the  Registrant's  Form 10-K filed
      with the  Securities  and Exchange  Commission for the year ended December
      31, 1992.
(5)   Exhibit is  incorporated by reference to the  Registrant's  Form S-3 filed
      with the Securities and Exchange Commission on September 15, 1993.
(6)   Exhibit is incorporated by reference to the  Registrant's  Form 10-K filed
      with the  Securities  and Exchange  Commission for the year ended December
      31, 1993.
(8)   Exhibit is incorporated by reference to the  Registrant's  Form 10-K filed
      with the  Securities  and Exchange  Commission for the year ended December
      31, 1994.
(10)  Exhibit is incorporated by reference to the  Registrant's  Form 10-K filed
      with the  Securities  and Exchange  Commission for the year ended December
      31, 1995.
(13)  Exhibit is incorporated by reference to the  Registrant's  Form 10-Q filed
      with the Securities and Exchange Commission for the quarter ended June 30,
      1997.
(15)  Exhibit is  incorporated by reference to the  Registrant's  Form S-8 (File
      333-56017)  filed with the Securities  and Exchange  Commission on June 4,
      1998.
(16)  Exhibit is incorporated by reference to the  Registrant's  Form 10-Q filed
      with the Securities and Exchange Commission for the quarter ended June 30,
      1998.
(21)  Exhibit is  incorporated by reference to the  Registrant's  Form S-8 (File
      333-68664) filed with the Securities and Exchange Commission on August 30,
      2001.
(22)  Exhibit is incorporated by reference to the  Registrant's  Form 10-Q filed
      with the  Securities  and Exchange  Commission for the quarter ended March
      31, 2002.
(23)  Exhibit is incorporated by reference to the  Registrant's  Form 10-Q filed
      with  the  Securities  and  Exchange  Commission  for  the  quarter  ended
      September 30, 2003.
(24)  Exhibit is incorporated by reference to the  Registrant's  Form 10-Q filed
      with the  Securities  and Exchange  Commission for the quarter ended March
      31, 2004.

*Management compensatory plan or arrangement