**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
                  SECURITIESEXCHANGE
                    ACT OF 1934





For
      the
      quarterly period ended September
      30, 2007




or




o
              TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES
                  EXCHANGE ACT OF 1934





For
      the
      transition period
      from to




Commission
      file number 0-15661





AMCOL
      INTERNATIONAL CORPORATION





(Exact
      name of registrant as specified in its charter)





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





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




Large
      accelerated filer o    Accelerated
      filer x    Non-accelerated
      filer o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule 12b-2
      of
      the Exchange Act). Yes o No
x




Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.





Class
            
            Outstanding
                at October 26, 2007(Common
                stock, $.01 par value)
            
            30,071,314
                Shares





**AMCOL
      INTERNATIONAL CORPORATION**





**INDEX**


Page
                No.Part
                I - Financial InformationItem
                1
            *Financial
                Statements*Condensed
                Consolidated Balance Sheets –September
                30, 2007 and December 31, 2006
            3Condensed
                Consolidated Statements of Income –three
                and nine months ended September 30, 2007 and 2006
            5Condensed
                Consolidated Statements of Comprehensive Income –three
                and nine months ended September 30, 2007 and 2006
            6Condensed
                Consolidated Statements of Cash Flows –nine
                months ended September 30, 2007 and 2006
            7Notes
                to Condensed Consolidated Financial Statements
            8Item
                2
            *Management’s
                Discussion and Analysis of Financial**Condition
                and Results of Operations*
            16Item
                3
            *Quantitative
                and Qualitative Disclosures About Market Risk*
            32Item
                4
            *Controls
                and Procedures*
            32Part
                II - Other InformationItem
                1A
            *Risk
                Factors*
            33Item
                2
            *Unregistered
                Sales of Equity Securities and Use of Proceeds*
            33Item
                6
            *Exhibits*
            34


2


**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(In
      thousands)**





Item
      1.
      Financial Statements





**September 30,**
            
            **December 31,****2007**
            
            **2006****(unaudited)**
            
            *******ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            20,773
            
            $
            17,805Accounts
                receivable, net
            
            
            173,401
            
            
            133,432Inventories
            
            
            91,919
            
            
            84,612Prepaid
                expenses
            
            
            12,375
            
            
            10,142Deferred
                income taxes
            
            
            5,905
            
            
            4,648Other
            
            
            565
            
            
            1,045Total
                current assets
            
            
            304,938
            
            
            251,684Investment
                in and advances to affiliates and joint ventures
            
            
            47,010
            
            
            31,049Property,
                plant, equipment, and mineral rights and reserves:Land
                and mineral rights
            
            
            20,233
            
            
            17,428Depreciable
                assets
            
            
            336,249
            
            
            305,013356,482
            
            
            322,441Less:
                accumulated depreciation
            
            
            190,975
            
            
            181,669165,507
            
            
            140,772Other
                assets:Goodwill
            
            
            51,384
            
            
            40,341Intangible
                assets, net
            
            
            43,501
            
            
            25,611Deferred
                income taxes
            
            
            7,914
            
            
            6,643Other
                assets
            
            
            17,771
            
            
            15,124120,570
            
            
            87,719$
            638,025
            
            $
            511,224





Continued...


3


**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(In
      thousands)**





**September 30,**
            
            **December 31,****2007**
            
            **2006****(unaudited)**
            
            *******LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            45,290
            
            $
            26,107Accrued
                income taxes
            
            
            3,107
            
            
            4,844Accrued
                liabilities
            
            
            54,492
            
            
            47,432Total
                current liabilities
            
            
            102,889
            
            
            78,383Long-term
                debt
            
            
            164,241
            
            
            112,448Minority
                interests in subsidiaries
            
            
            77
            
            
            276Pension
                liabilities
            
            
            13,480
            
            
            13,209Other
                liabilities
            
            
            19,279
            
            
            12,09032,836
            
            
            25,575Stockholders’
                equity:Common
                stock
            
            
            320
            
            
            320Additional
                paid in capital
            
            
            80,310
            
            
            76,686Retained
                earnings
            
            
            252,198
            
            
            219,690Accumulated
                other comprehensive income
            
            
            26,567
            
            
            16,658359,395
            
            
            313,354Less:Treasury
                stock
            
            
            21,336
            
            
            18,536338,059
            
            
            294,818$
            638,025
            
            $
            511,224





*Condensed
      from audited financial statements.


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


4





**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF INCOME**


**(Unaudited)**


**(In
      thousands, except per share amounts)**





**Nine Months Ended**
                **September 30,**
            
            **Three Months Ended**
              **September 30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Net
                sales
            
            $
            549,780
            
            $
            455,637
            
            $
            203,598
            
            $
            160,172Cost
                of sales
            
            
            402,190
            
            
            337,995
            
            
            149,298
            
            
            117,954Gross
                profit
            
            
            147,590
            
            
            117,642
            
            
            54,300
            
            
            42,218General,
                selling and administrative expenses
            
            
            87,756
            
            
            74,359
            
            
            28,297
            
            
            25,810Operating
                profit
            
            
            59,834
            
            
            43,283
            
            
            26,003
            
            
            16,408Other
                income (expense):Interest
                expense, net
            
            
            (6,506
            )
            
            (1,835
            )
            
            (2,409
            )
            
            (740
            )Other,
                net
            
            
            (1,000
            )
            
            259
            
            
            (830
            )
            
            (273
            )(7,506
            )
            
            (1,576
            )
            
            (3,239
            )
            
            (1,013
            )Income
                before income taxes and income from affiliates and joint
                ventures
            
            
            52,328
            
            
            41,707
            
            
            22,764
            
            
            15,395Income
                tax expense
            
            
            12,205
            
            
            8,505
            
            
            4,704
            
            
            1,237Income
                before income from affiliates and joint ventures
            
            
            40,123
            
            
            33,202
            
            
            18,060
            
            
            14,158Income
                from affiliates and joint ventures
            
            
            6,118
            
            
            4,462
            
            
            2,086
            
            
            1,876Income
                from continuing operations
            
            
            46,241
            
            
            37,664
            
            
            20,146
            
            
            16,034Income
                (Loss) from discontinued operations, net of tax
            
            
            (286
            )
            
            585
            
            
            -
            
            
            585Net
                income
            
            $
            45,955
            
            $
            38,249
            
            $
            20,146
            
            $
            16,619Weighted
                average common shares outstanding
            
            
            30,146
            
            
            29,903
            
            
            30,130
            
            
            29,962Weighted
                average common and common equivalent shares outstanding
            
            
            30,934
            
            
            30,874
            
            
            30,887
            
            
            30,825Basic
                earnings per share:Continuing
                operations
            
            $
            1.53
            
            $
            1.26
            
            $
            0.67
            
            $
            0.54Discontinued
                operations
            
            
            (0.01
            )
            
            0.02
            
            
            -
            
            
            0.02Basic
                earnings per share
            
            $
            1.52
            
            $
            1.28
            
            $
            0.67
            
            $
            0.56Diluted
                earnings per share:Continuing
                operations
            
            $
            1.49
            
            $
            1.22
            
            $
            0.65
            
            $
            0.52Discontinued
                operations
            
            
            (0.01
            )
            
            0.02
            
            
            -
            
            
            0.02Diluted
                earnings per share
            
            $
            1.48
            
            $
            1.24
            
            $
            0.65
            
            $
            0.54Dividends
                declared per share
            
            $
            0.44
            
            $
            0.35
            
            $
            0.16
            
            $
            0.12





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




5




**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**


**(Unaudited)**


**(In
      thousands)**





**Nine Months Ended**
              **September 30,**
            
            **Three Months Ended**
              **September 30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Net
                income
            
            $
            45,955
            
            $
            38,249
            
            $
            20,146
            
            $
            16,619Other
                comprehensive income (loss):Foreign
                currency translation adjustment
            
            
            9,737
            
            
            5,292
            
            
            5,170
            
            
            1,078Other
            
            
            172
            
            
            -
            
            
            32
            
            
            -Comprehensive
                income
            
            $
            55,864
            
            $
            43,541
            
            $
            25,348
            
            $
            17,697





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




6




**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(Unaudited)**


**(In
      thousands)**





**Nine Months Ended**
              **September 30,****2007**
            
            **2006**Cash flow
                from operating activities:Net
                income
            
            $
            45,955
            
            $
            38,249Adjustments
                to reconcile from net income to net cash provided by (used in) operating
                activities:Depreciation,
                depletion, and amortization
            
            
            21,688
            
            
            14,606Changes
                in assets and liabilities, net of effects of acquisitions:Decrease
                (increase) in current assets
            
            
            (44,716
            )
            
            (33,693
            )Decrease
                (increase) in noncurrent assets
            
            
            (1,620
            )
            
            (2,171
            )Increase
                (decrease) in current liabilities
            
            
            23,435
            
            
            13,240Increase
                (decrease) in noncurrent liabilities
            
            
            6,382
            
            
            1,703Other
            
            
            (9,102
            )
            
            (3,064
            )Net
                cash provided by (used in) operating activities
            
            
            42,022
            
            
            28,870Cash
                flow from investing activities:Capital
                expenditures
            
            
            (37,577
            )
            
            (29,980
            )Acquisitions,
                net of cash
            
            
            (38,783
            )
            
            (11,722
            )Investments
                in and advances to affiliates and joint ventures
            
            
            (7,369
            )
            
            (5,260
            )Proceeds
                from sale of property, plant and equipment
            
            
            6,636
            
            
            1,196Investments
                in restricted cash
            
            
            (856
            )
            
            -Other
            
            
            (173
            )
            
            615Net
                cash used in investing activities
            
            
            (78,122
            )
            
            (45,151
            )Cash
                flow from financing activities:Net
                change in outstanding debt
            
            
            50,368
            
            
            22,257Proceeds
                from sales of treasury stock
            
            
            2,574
            
            
            2,517Purchases
                of treasury stock
            
            
            (6,115
            )
            
            (5,625
            )Dividends
            
            
            (13,194
            )
            
            (10,488
            )Excess
                tax benefits from stock-based compensation
            
            
            1,463
            
            
            1,931Net
                cash provided by (used in) financing activities
            
            
            35,096
            
            
            10,592Effect
                of foreign currency rate changes on cash
            
            
            3,972
            
            
            5,011Net
                increase (decrease) in cash and cash equivalents
            
            
            2,968
            
            
            (678
            )Cash
                and cash equivalents at beginning of period
            
            
            17,805
            
            
            15,997Cash
                and cash equivalents at end of period
            
            $
            20,773
            
            $
            15,319





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




7




**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**


**(In
      thousands, except share and per share amounts)**





**Note
      1:**   **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





**Company
      Operations**





AMCOL
      International Corporation (the Company) operates in five segments: Minerals,
      Environmental, Oilfield services, Transportation and Corporate. 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 Oilfield services
      segment provides onshore and offshore water treatment filtration, pipeline
      separation, waste fluid treatment, rental tools and well testing data services
      for the oil and gas industry. The Transportation segment includes a long-haul
      trucking business and a freight brokerage business, which provide services
      to
      our other segments as well as third-party customers. Intersegment sales are
      insignificant, other than intersegment shipping, which is eliminated in the
      Corporate segment. The composition of our revenues by segment is as
      follows:





**Nine Months Ended**
              **September 30,**
            
            **Three Months Ended**
              **September 30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Minerals
            
            48%
            
            52%
            
            45%
            
            49%Environmental
            
            35%
            
            33%
            
            37%
            
            37%Oilfield
                services
            
            13%
            
            9%
            
            13%
            
            9%Transportation
            
            7%
            
            8%
            
            7%
            
            8%Intersegment
                shipping
            
            -3%
            
            -2%
            
            -2%
            
            -3%**100**%****
            
            **100**%****
            
            **100**%****
            
            **100%**





Further
      discussion of segment information is included in Note 4, “Business Segment
      Information.”





**Basis
      of Presentation**





The
      financial information included herein has been prepared by management and,
      other
      than the condensed consolidated balance sheet as of December 31, 2006, is
      unaudited. The condensed consolidated balance sheet as of December 31, 2006
      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, 2006.
      The information furnished herein includes all adjustments that are, in the
      opinion of management, necessary for a fair presentation of the results of
      operations and cash flows for the interim periods ended September 30, 2007
      and
      2006, and the financial position of the Company as of September 30, 2007, and
      all such adjustments are of a normal recurring nature. The accompanying
      condensed consolidated financial information should be read in conjunction
      with
      the consolidated financial statements and related notes included in our Annual
      Report on Form 10-K for the year ended December 31, 2006.





8




**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**


**(In
      thousands, except share and per share amounts)**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities, disclosure of contingent liabilities at the date of the financial
      statements, and the reported amounts of revenues and expenses during the
      reporting period. Actual results may differ from those estimates.





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





**Reclassifications**





In
      addition to segment disclosures contained in Note 4, certain prior year amounts
      have been reclassified to conform to the current year’s
      presentation.





**New
      Accounting Standards**





In
      May
      2007, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
      Position No. FIN 48-1, *Definition
      of Settlement in FASB Interpretation No. 48* (“FSP
      FIN 48-1”). This guidance amends FASB Interpretation 48, *Accounting
      for Uncertainty in Income Taxes* ,
      to
      provide guidance on how an enterprise should determine whether a tax position
      is
      effectively settled for the purposes of recognizing previously unrecognized
      tax
      benefits. Our adoption of this guidance did not have a material effect on our
      financial statements.





**Note
      2:**  **EARNINGS
      PER SHARE**





The
      table
      below provides further share information used in computing our earnings per
      share for the periods presented herein. Basic earnings per share was computed
      by
      dividing net income by the weighted average number of common shares outstanding
      during each period.  Diluted earnings per share was 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.





**Nine
                  Months Ended**
              **September
                30,**
            
            **Three
                  Months Ended**
              **September
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Weighted
                average number of common shares outstanding
            
            
            30,145,918
            
            
            29,902,831
            
            
            30,129,934
            
            
            29,962,153Dilutive
                impact of stock options
            
            
            788,234
            
            
            971,084
            
            
            757,540
            
            
            862,675Weighted
                average number of common and common equivalent shares for the
                period
            
            
            30,934,152
            
            
            30,873,915
            
            
            30,887,474
            
            
            30,824,828Number
                of common shares outstanding at the end of the period
            
            
            30,031,014
            
            
            29,914,446
            
            
            30,031,014
            
            
            29,914,446Weighted
                average number of anti-dilutive shares excluded from the computation
                of
                diluted earnings per share
            
            
            300,730
            
            
            232,660
            
            
            375,675
            
            
            290,200





9










**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**


**(In
      thousands, except share and per share amounts)**





**Note
      3:**  **ADDITIONAL
      BALANCE SHEET INFORMATION**


Our
        inventories at September 30, 2007 and December 31, 2006 are comprised of
        the
        following components:
 
 **September 30,**
              
              **December 31,****2007**
              
              **2006**Crude
                  stockpile inventories
              
              $
              26,108
              
              $
              26,390In-process
                  inventories
              
              
              37,273
              
              
              32,640Other
                  raw material, container, and supplies inventories
              
              
              28,538
              
              
              25,582$
              91,919
              
              $
              84,612
 
 We
        mine
        various minerals using a surface mining process that requires the removal
        of
        overburden. Under various governmental regulations, we are obligated to restore
        the land comprising each mining site to its original condition at the completion
        of mining activity. The obligation is adjusted to reflect the passage of
        time
        and changes in estimated future cash outflows. A reconciliation of the activity
        within our reclamation obligation is as follows:
 
 **Nine Months Ended**
              
              **Three Months Ended****September
                  30,**
              
              **September
                  30,****2007**
              
              **2007**Balance
                  at beginning of period
              
              $
              5,715
              
              $
              6,173Settlement
                  of obligations
              
              
              (1,531
              )
              
              (679
              )Liabilities
                  incurred and accretion expense
              
              
              1,396
              
              
              86Balance
                  at end of period
              
              $
              5,580
              
              $
              5,580
 
 A
        reconciliation of the activity within our accrued warranty obligation is
        as
        follows:
 
 **Nine Months Ended**
              
              **Three Months Ended****September
                  30,**
              
              **September
                  30,****2007**
              
              **2007**Balance
                  at beginning of period
              
              $
              911
              
              $
              1,046Charged
                  to costs and expenses
              
              
              500
              
              
              71Net
                  settlements
              
              
              (413
              )
              
              (107
              )Foreign
                  currency translation
              
              
              17
              
              
              5Balance
                  at end of period
              
              $
              1,015
              
              $
              1,015
  **Note
        4:**  **BUSINESS
        SEGMENT INFORMATION**
  As
        previously mentioned, we operate in five business segments. We identify segments
        based on management responsibility and the nature of the business activities
        of
        each component of the Company. We measure segment performance based on operating
        profit, which is defined as net sales less cost of sales and general, selling
        and administrative expenses related to a segment’s operations. The costs
        deducted to arrive at operating profit do not include interest or income
        taxes.
        Segment assets are those assets used in the operations of that segment.
        Corporate assets include cash and cash equivalents, corporate leasehold
        improvements, and other miscellaneous equipment.




10




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




Effective
      beginning in the first quarter of 2007, we included our nanocomposite business
      within the Minerals segment. Those expenses were previously included within
      the
      Corporate segment. The 2006 segment results also reflect the change in
      reporting. Operating results and profit margins for both reporting periods
      were
      not materially impacted by the change.




The
      following summaries set forth certain financial information by business
      segment:




**Nine
                Months Ended**
            
            **Three
                Months Ended****September
                30,**
            
            **September
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Net
                sales:Minerals
            
            $
            262,432
            
            $
            237,463
            
            $
            90,906
            
            $
            79,274Environmental
            
            
            189,927
            
            
            151,996
            
            
            76,121
            
            
            59,120Oilfield
                services
            
            
            72,137
            
            
            43,270
            
            
            27,143
            
            
            14,157Transportation
            
            
            38,654
            
            
            38,619
            
            
            14,381
            
            
            13,300Intersegment
                shipping
            
            
            (13,370
            )
            
            (15,711
            )
            
            (4,953
            )
            
            (5,679
            )Total
            
            $
            549,780
            
            $
            455,637
            
            $
            203,598
            
            $
            160,172Operating
                profit (loss):Minerals
            
            $
            26,706
            
            $
            26,172
            
            $
            9,135
            
            $
            9,584Environmental
            
            
            31,016
            
            
            21,275
            
            
            14,838
            
            
            8,849Oilfield
                services
            
            
            13,843
            
            
            7,237
            
            
            5,753
            
            
            2,270Transportation
            
            
            2,002
            
            
            2,190
            
            
            730
            
            
            775Corporate
            
            
            (13,733
            )
            
            (13,591
            )
            
            (4,453
            )
            
            (5,070
            )Total
            
            $
            59,834
            
            $
            43,283
            
            $
            26,003
            
            $
            16,408




**As of Sept. 30,2007**
            
            **As of Dec. 31,2006**Assets:Minerals
            
            $
            306,582
            
            $
            245,417Environmental
            
            
            194,031
            
            
            145,884Oilfield
                services
            
            
            94,730
            
            
            84,917Transportation
            
            
            4,130
            
            
            3,722Corporate
            
            
            38,552
            
            
            31,284Total
            
            $
            638,025
            
            $
            511,224




11




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




**Nine
                Months Ended**
            
            **Three
                Months Ended****September
                30,**
            
            **September
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Depreciation,
                depletion and amortization:Minerals
            
            $
            11,301
            
            $
            9,013
            
            $
            4,156
            
            $
            2,736Environmental
            
            
            4,605
            
            
            3,027
            
            
            1,628
            
            
            1,032Oilfield
                services
            
            
            4,900
            
            
            1,688
            
            
            1,734
            
            
            454Transportation
            
            
            42
            
            
            58
            
            
            11
            
            
            22Corporate
            
            
            840
            
            
            820
            
            
            354
            
            
            265Total
            
            $
            21,688
            
            $
            14,606
            
            $
            7,883
            
            $
            4,509Capital
                expenditures:Minerals
            
            $
            14,960
            
            $
            19,616
            
            $
            5,818
            
            $
            7,154Environmental
            
            
            6,918
            
            
            7,265
            
            
            2,531
            
            
            1,561Oilfield
                services
            
            
            7,235
            
            
            2,560
            
            
            3,155
            
            
            579Transportation
            
            
            61
            
            
            51
            
            
            45
            
            
            30Corporate
            
            
            8,403
            
            
            488
            
            
            4,122
            
            
            131Total
            
            $
            37,577
            
            $
            29,980
            
            $
            15,671
            
            $
            9,455Research
                and development expense:Minerals
            
            $
            3,107
            
            $
            2,826
            
            $
            1,253
            
            $
            856Environmental
            
            
            1,673
            
            
            1,794
            
            
            585
            
            
            672Oilfield
                services
            
            
            133
            
            
            -
            
            
            45
            
            
            -Corporate
            
            
            758
            
            
            88
            
            
            323
            
            
            25Total
            
            $
            5,671
            
            $
            4,708
            
            $
            2,206
            
            $
            1,553





**Note
      5:**  **EMPLOYEE
      BENEFIT PLANS**





Our
      net
      periodic benefit cost for our defined benefit pension plan was as
      follows:





**Nine
                Months Ended**
            
            **Three
                Months Ended****September
                30,**
            
            **September
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**Service
                cost
            
            $
            1,245
            
            $
            1,303
            
            $
            415
            
            $
            434Interest
                cost
            
            
            1,656
            
            
            1,490
            
            
            552
            
            
            497Expected
                return on plan assets
            
            
            (2,021
            )
            
            (1,891
            )
            
            (674
            )
            
            (630
            )Amortization
                of prior service cost
            
            
            50
            
            
            23
            
            
            17
            
            
            8Net
                periodic benefit cost
            
            $
            930
            
            $
            925
            
            $
            310
            
            $
            309




We
      previously disclosed in our Annual Report on Form 10-K for the year ended
      December 31, 2006 that we expected to contribute $1,000 to our pension plan
      in
      2007. That full contribution was made in the first quarter of 2007.




12




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




**Note
      6:**  **INCOME
      TAXES**





Our
      effective tax rate from continuing operations for the nine months ended
      September 30, 2007 was 23.32%, which differs from the U.S. Federal statutory
      rate of 35% largely due to depletion deductions and differences in local tax
      rates on the income from our foreign subsidiaries. Additionally, the 23.32%
      includes a decrease to income tax expense of $590 largely due to the release
      of
      liabilities for uncertain tax positions for which the statute of limitations
      has
      expired. Excluding the $590, the effective tax rate would have been
      24.45%.




Our
      effective tax rate from continuing operations for the nine months ended
      September 30, 2006 was 20.4%, which varies from the U.S. Federal statutory
      rate
      of 35% for the same depletion and foreign tax rates mentioned above.
      Additionally, the 20.4% includes a decrease to income tax expense of $2,962
      largely due to our settling an IRS audit (benefit of $3,412) offset by a $450
      increase in tax expense primarily for other differences. Excluding the $2,962,
      the effective tax rate for the nine months ended September 30, 2006 would have
      been 27.1%.





In
      the
      normal course of business, we are subject to examination by taxing authorities
      throughout the world. With few exceptions, we are no longer subject to U.S.
      federal, state, local, or non-US income tax examinations by tax authorities
      for
      years prior to 2001. The Internal Revenue Service (“IRS”) has examined our U.S.
      federal income tax returns for all years through 2003.





Effective
      January 1, 2007, we adopted the provisions of FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes* (“FIN
      48”). Our adoption of FIN 48 resulted in a $252 decrease in retained earnings
      and increases to income taxes payable of $2,065, deferred tax assets of $1,876
      and income tax receivables of $189. In addition, we reclassified $4,379 of
      income tax liabilities from current liabilities to non-current liabilities
      as we
      do not anticipate settling these liabilities within the next twelve
      months.





At
      January 1, 2007, our worldwide liability for uncertain tax positions was $4,846.
      Unrecognized tax benefits of $2,778 at January 1, 2007 would affect our
      effective tax rate if recognized. Excluding amounts related to the expiration
      of
      statutes of limitations mentioned above, there were no significant changes
      in
      components of the liability in the nine months ending September 30,
      2007.





We
      record
      penalties and interest relating to uncertain tax positions in the income tax
      expense line item within our consolidated statement of income. At January 1,
      2007, our balance sheet includes a liability of $2,064 for the possible payment
      of interest and penalties.





During
      the nine months ended September 30, 2007, we recognized a portion of our
      previously unrecognized benefits as a result of the expiry of statutes of
      limitations in certain jurisdictions. As discussed above, the amounts recognized
      favorably impacted our effective tax rate in the period. As a result of these
      closed tax years, our worldwide liability for uncertain tax positions has
      decreased to $4,639, of which $2,551 would affect our effective tax rate if
      recognized. Furthermore, our balance sheet at September 30, 2007 includes a
      liability of $1,626 for interest and penalties.




13




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




At
      September 30, 2007, approximately $1,095 of unrecognized tax benefits relate
      to
      items that are affected by expiring statute of limitations within the next
      12
      months. Of this amount, $850 could have an impact on our effective tax rate.




**Note
      7:**  **ACQUISITIONS**





In
      the
      nine months ended September 30, 2007, we paid former owners of businesses we
      acquired pursuant to contingent payment arrangements associated with those
      acquisitions and resulted in $1,063 of additional goodwill.





In
      January 2007, our Environmental segment acquired the business assets of LBI
      Technologies, Inc., whose product, Liquid Boot ®, is a spray-applied, asphalt
      based coating used under slabs and / or backfilled walls as part of a barrier
      system to prevent the intrusion of gas or organic vapors into occupied
      structures or buildings. We paid approximately $17,762 for the business and
      recognized $7,796 of goodwill and $7,150 of intangible assets. The allocation
      of
      this purchase price has not been finalized as we are in the process of
      determining the fair values of the assets acquired and liabilities assumed.
      The
      acquisition agreement provides for contingent consideration which, if the
      consideration is recognized, would result in additional goodwill.





In
      March
      2007, our Minerals segment acquired the Microsponge ® technology and all related
      business assets, including an existing customer base and patent portfolio.
      Microsponge ® is a system of biologically inert particles that is used to
      deliver active ingredients in dermatological products such as lotions and
      ointments. We paid approximately $8,085 for the business and recognized $1,179
      of goodwill and $9,010 of intangible assets for this acquisition as of September
      30, 2007. The allocation of this purchase price has not been finalized as we
      are
      in the process of determining the fair values of the assets acquired and
      liabilities assumed. The acquisition agreement provides for contingent
      consideration which, if the consideration is recognized, would result in
      additional goodwill.





In
      June
      2007, our Minerals segment acquired all of the shares of Bensan Aktiflestirilmis
      Bentonit Sanayi ve Ticaret A.S., a Turkish bentonite company which owns or
      controls considerable bentonite reserves and serves a diverse market base,
      including bleaching earth (edible oil industry), general-purpose drilling,
      foundry, detergents and desiccants. Turkey is the leading producer of white
      bentonites for specialized applications. We paid approximately $11,656 for
      the
      business and recognized $897 and $5,000 of goodwill and intangible assets,
      respectively, as of September 30, 2007. The allocation of this purchase price
      has not been finalized as we are in the process of determining the fair values
      of the assets acquired and liabilities assumed.





14




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




**Note
      8:**  **DEBT**





On
      March
      9, 2007, we amended our revolving credit agreement to increase the borrowing
      capacity from $120,000 to $150,000 and extend the maturity to April 1, 2012;
      all
      other substantive terms and conditions remained the same.





On
      April
      2, 2007, we issued and sold $75,000 of senior notes (the “Notes”) to a qualified
      institutional buyer which are payable at maturity on April 2, 2017, subject
      to
      certain acceleration features upon default. The Notes are comprised of (a)
      $45,000 aggregate principal amount of Series 2007-A Adjustable Fixed Rate
      Guaranteed Senior Notes, Tranche 1, due April 2, 2017 (the “Tranche 1” notes)
      and (b) $30,000 aggregate principal amount of Series 2007-A Adjustable Floating
      Rate Guaranteed Senior Notes, Tranche 2 (the “Tranche 2” notes). Tranche 1 bears
      interest at 5.78%, payable semi-annually in arrears on April 2 nd and
      October 2 nd of each
      year, beginning October 2, 2007. Tranche 2 bears interest at an annual rate
      of
      0.55% plus LIBOR in effect from time to time, adjusted quarterly, and is payable
      in arrears beginning July 2, 2007.





In
      conjunction with the issuance of the Notes, we also entered into an interest
      rate swap agreement with Wells Fargo Bank, N.A. (the “Interest Rate Swap
      Agreement”) which has the effect of converting the Tranche 2 floating interest
      rate into a fixed rate of 5.6% per annum over the term of the Tranche 2 notes.





**Note
      9:**  **CONTINGENCIES**





We
      are
      party to a number of lawsuits arising in the normal course of business. We
      do
      not believe that any pending litigation will have a material adverse effect
      on
      our consolidated financial statements.




15




**Item
      2: Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





**Forward-Looking
      Statements**





From
      time
      to time, certain statements we make, including statements in this Management's
      Discussion and Analysis of Financial Condition and Results of Operations
      section, constitute "forward-looking statements" made in reliance upon the
      safe
      harbor contained in Section 21E of the Securities Exchange Act of 1934, as
      amended. Such forward-looking statements include statements relating to our
      Company or our operations that are preceded by terms such as "expects,"
      "believes," "anticipates," "intends" and similar expressions, and statements
      relating to anticipated growth and levels of capital expenditures. Such
      forward-looking statements are not guarantees of future performance and involve
      risks and uncertainties. Our actual results, performance or achievements could
      differ materially from the results, performance or achievements expressed in,
      or
      implied by, these forward-looking statements as a result of various factors,
      including without limitation the following: actual performance in our various
      markets; conditions in the metalcasting and construction industries; operating
      costs; competition; currency exchange rates and devaluations; delays in
      development, production and marketing of new products; integration of acquired
      businesses; and other factors set forth from time to time in our reports filed
      with the Securities and Exchange Commission. We undertake no duty to update
      any
      forward looking statements to actual results or changes in our
      expectations.





**Overview**





We
      are a
      global, specialty minerals company and earn our revenues and profits from a
      diverse group of industrial and consumer product lines. Our principal operations
      are located in North America, Europe and the Asia-Pacific region.





We
      operate in five segments: Minerals, Environmental, Oilfield services,
      Transportation and Corporate. Our Minerals segment operates in three principal
      markets: metalcasting, pet products and specialty minerals. The Environmental
      segment’s principal markets include lining technologies and building materials.
      Our Oilfield services segment provides both onshore and offshore water treatment
      filtration, pipeline separation, rental tools, well testing data services and
      nitrogen blanketing services. Our Transportation segment operates a national
      truckload carrier business through contracted relationships with owner-operators
      of Class 8 trucks and a leased fleet of flat-bed and dry-van trailers. It also
      operates a brokered truckload freight business. Intersegment shipping revenues
      are eliminated in our Corporate segment.





The
      principal mineral that we utilize to generate revenues is bentonite. We own
      or
      lease bentonite reserves in the United States, China, Turkey and Australia.
      Additionally, through our affiliates and joint ventures, we have access to
      bentonite reserves in Egypt, India and Mexico. Bentonite deposits have varying
      physical properties which require us to identify which markets our reserves
      can
      serve. We believe that our understanding of bentonite properties, mining
      methods, processing and application to markets are the core components of our
      longevity and future prospects.


16


Our
      customers are engaged in various end-markets and geographies. Customers in
      the
      Minerals segment range from foundries that produce castings for automotive,
      industrial, and transportation equipment, including heavy-duty trucks and
      railroad cars, to producers of consumer goods, including cat box filler,
      cosmetics and detergents. The customers for our Environmental segment’s lining
      technologies and building materials products are predominantly engineering
      contractors. The Oilfield services customer base is primarily comprised of
      oil
      service or exploration companies. A significant portion of our products have
      been used in the same applications for decades and have experienced minimal
      technological obsolescence. A majority of our business is performed under
      short-term agreements; therefore, terms of sale, such as pricing and volume,
      can
      change within our fiscal year.




The
      majority of our revenues are generated in North America; consequently, the
      state
      of the United States economy impacts our revenues. Our fastest growing markets
      are in the Asia-Pacific and Central European regions, which have continued
      to
      outpace the United States in economic growth in recent years.





Sustainable,
      long-term profit growth is our primary objective. We employ a number of
      strategic initiatives to achieve this goal:





·
            Organic
                growth: The central component of our growth strategy is expansion
                of our
                product lines and market presence. We have a history of commitment
                to
                research and development and using this resource to bring innovative
                products to market. We believe this approach to growth offers the
                best
                probability of achieving our long-term goals at the lowest
                risk.





·
            Globalization:
                We have expanded our manufacturing and marketing organizations into
                European and Asia-Pacific regions over the last 40 years. This operating
                experience enables us to expand further into emerging markets. We
                see
                significant opportunities in the Asia-Pacific region for expanding
                our
                revenues and earnings over the long-term as a number of markets we
                serve,
                such as metalcasting and lining technologies, are expected to grow.
                We
                expect to take advantage of these growth areas either through our
                wholly-owned subsidiaries or investments in affiliates and joint
                ventures.





·
            Mineral
                development: Bentonite is a component in a majority of the products
                we
                produce. Since it is a natural material, we must continually expand
                our
                reserve base to maintain a long-term business. Our goal is to add
                new
                reserves to replace the bentonite mined each year. Furthermore, we
                need to
                assure new reserves meet the physical property requirements for our
                diverse product lines and are economical to mine. Our organization
                is
                committed to developing its global reserve base to meet these
                requirements.





·
            Acquisitions:
                We continually seek opportunities to add complementary businesses
                to our
                portfolio of products. Over the last four years, we have acquired
                a number
                of businesses. A strong financial position will enable us to continue
                to
                acquire businesses which, in our assessment, are fairly valued and
                fit
                with our growth strategy.





A
      number
      of risks will challenge us in meeting these long-term objectives, and there
      can
      be no assurance that we will achieve success in implementing any one or more
      of
      them. We describe certain risks under “Item 1A. Risk Factors” and “Item 7A.
      Quantitative and Qualitative Disclosure About Market Risk” within our Annual
      Report on Form 10-K for the year ended December 31, 2006. In general, the
      significance of these risks has not materially changed over the past
      year.


17


**Critical
      Accounting Policies and Estimates**





The
      discussion and analysis of our financial condition and results of operations
      are
      based upon our condensed consolidated financial statements prepared in
      accordance with accounting principles generally accepted in the United States.
      We evaluate the accounting policies and estimates used to prepare the financial
      statements on an ongoing basis. We consider the accounting policies used in
      preparing our financial statements to be critical accounting policies when
      they
      are both important to the portrayal of our financial condition and results
      of
      operations, and require us to make estimates, complex judgments, and
      assumptions, including with respect to events which are inherently uncertain.
      As
      a result, actual results could differ from these estimates. For more information
      on our critical accounting policies, one should also read our Annual Report
      on
      Form 10-K for the year ended December 31, 2006.





**Analysis
      of Results of Operations**





Following
      is a discussion and analysis that describes certain factors that have affected,
      and may continue to affect, our financial position and operating results. This
      discussion should be read with the accompanying condensed consolidated financial
      statements. In addition, as discussed in Note 1 of the Notes to Condensed
      Consolidated Financial Statements in Item 1, we have reclassified certain prior
      year amounts to conform to the current year’s presentation. The following
      discussion and analysis of results of operations and financial condition are
      based upon such reclassified financial data.





***Three
      months ended September 30, 2007 vs. September 30,
      2006***





**Results
      of operations (in millions):**




**Net
        sales:**


2007
            
            2006
            
            %
                Change$
            203.6
            
            $
            160.2
            
            
            27
            %




The
      following table details the quarter’s consolidated sales growth components over
      the prior year’s comparable period:





****
            
            **Base
                Business**
            
            **Acquisitions**
            
            **Foreign**
              **Exchange**
            
            **Total**Minerals
            
            
            2.1
            %
            
            4.0
            %
            
            1.2
            %
            
            7.3
            %Environmental
            
            
            7.1
            %
            
            1.7
            %
            
            1.8
            %
            
            10.6
            %Oilfield
                services
            
            
            3.8
            %
            
            4.2
            %
            
            0.1
            %
            
            8.1
            %Transportation
            
            
            1.1
            %
            
            0
            %
            
            0.0
            %
            
            1.1
            %Total
            
            
            14.1
            %
            
            9.9
            %
            
            3.1
            %
            
            27.1
            %%
                of growth
            
            
            52.3
            %
            
            36.3
            %
            
            11.4
            %
            
            100.0
            %





In
      addition, the next table shows the distribution of the quarter’s sales across
      our three principal geographic regions (Americas; Europe, Middle East, and
      Africa (EMEA); and Asia Pacific) and the comparable total from the prior year’s
      period:


18





****
            
            **Americas**
            
            **EMEA**
            
            **Asia
                Pacific**
            
            **Total**Minerals
            
            
            32.2
            %
            
            7.5
            %
            
            5.0
            %
            
            44.7
            %Environmental
            
            
            19.6
            %
            
            15.9
            %
            
            1.9
            %
            
            37.4
            %Oilfield
                services
            
            
            11.3
            %
            
            2.0
            %
            
            0.0
            %
            
            13.3
            %Transportation
            
            
            4.6
            %
            
            0.0
            %
            
            0.0
            %
            
            4.6
            %Total
                - current year's quarter
            
            
            67.8
            %
            
            25.4
            %
            
            6.9
            %
            
            100.0
            %Total
                from prior year's comparable quarter
            
            
            68.8
            %
            
            23.9
            %
            
            7.3
            %
            
            100.0
            %





The
      increase in Americas-based sales (in absolute dollar value) was due to
      acquisitions and the relatively large base business growth generated by our
      Oilfield Services segment.




**Gross
        profit:**


2007
            
            2006
            
            %
                Change$
            54.3
            
            $
            42.2
            
            
            29
            %Margin
            
            
            26.7
            %
            
            26.4
            %
            
            N/A




Increased
      sales were responsible for the increase in gross profit in the period. Gross
      margin improved by 30 basis points due to favorable segment sales distribution.
      Our higher growth segments, Environmental and Oilfield services, also have
      the
      highest gross margins.




**General,
      selling &  **administrative
      expenses:****




2007
            
            2006
            
            %
                Change$
            28.3
            
            $
            25.8
            
            
            10
            %





The
      increase over the 2006 third quarter includes the benefit of a gain on the
      sale
      of vacant land, which reduced our Environmental segment’s GS&A by $2.4
      million in the current 2007 quarter. Excluding this benefit, GS&A would have
      increased by $4.9 million, or 19 percent, over the prior-year quarter. In
      aggregate, acquired businesses, including amortization of intangible assets,
      accounted for approximately $3.3 million of the increase in the 2007 third
      quarter.




**Operating
      profit:**




2007
            
            2006
            
            %
                Change$
            26.0
            
            $
            16.4
            
            
            59
            %Margin
            
            
            12.8
            %
            
            10.2
            %
            
            N/A





Sales
      and
      gross profit growth led to the improvement in operating profit over the 2006
      third quarter. The improvement in operating margin was principally due to the
      higher gross margin reported in the current period and the benefit from the
      gain
      on sale of vacant land. Excluding this benefit, operating profit would have
      grown by 44.0 percent and operating margin would have been 11.6 percent in
      the
      2007 third quarter.




**Interest
        expense, net:**


2007
            
            2006
            
            %
                Change$
            (
                2.4)
            
            $
            (
                0.7
            )
            
            243
            %





Interest
      expense in the current-year quarter increased due both to greater average
      long-term debt compared with the prior-year period and increased interest rates.
      The increase in long-term debt was attributed to increased capital expenditures,
      acquisitions and working capital funding in the current-year period. The
      majority of our long-term debt has a variable rate of interest which is
      primarily influenced by the changes in LIBOR.


19




**Other
        income / (expense):**


2007
            
            2006
            
            %
                Change$
            (
                0.8)
            
            $
            (
                0.3
            )
            
            167
            %





In
      the
      current reporting period, we recognized greater foreign exchange losses
      primarily resulting from transactions originated at our international
      subsidiaries. We do not actively hedge our exposures to foreign currencies.


**Income
        tax expense:**


2007
            
            2006
            
            %
                Change$
            4.7
            
            $
            1.2
            
            
            292
            %Effective
                tax rate
            
            
            20.7
            %
            
            8.0
            %
            
            N/A




Favorable
      adjustments to liabilities for unrecognized tax benefits reduced the effective
      tax rate in the 2007 quarter. These adjustments benefited income by
      approximately $1.0 million. Excluding these adjustments, the effective tax
      rate
      would have been 24.9 percent in this year’s quarter. Favorable tax reductions of
      approximately $3.4 million related to the settlement of an IRS audit caused
      the
      low tax rate in the 2006 quarter.




**Income
        from affiliates & joint ventures:**


2007
            
            2006
            
            %
                Change$
            2.1
            
            $
            1.9
            
            
            11
            %





Our
      India-based investments contributed the increase in income from joint ventures
      and affiliates in the current period. Those investments also accounted for
      a
      large majority of the income reported in both periods.




**Net
        income:**


2007
            
            2006
            
            %
                Change$
            20.1
            
            $
            16.6
            
            
            21
            %Margin
            
            
            9.9
            %
            
            10.4
            %
            
            N/A





Current-period
      net income improved due largely to greater operating profit.




**Diluted
        earnings per share:**


2007
            
            2006
            
            %
                Change$
            0.65
            
            $
            0.54
            
            
            20
            %





Earnings
      per share improved commensurate with greater net income. The gain from
      discontinued operations mentioned above resulted in a $0.02 per share decrease
      in the current-year period as compared to the prior-year period. Weighted
      average common and common equivalent shares outstanding remained relatively
      unchanged at 30.9 million in the current-year period compared with 30.8 million
      the 2006 period.


20


**Segment
      analysis:**





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





**Minerals**
            
            **Three
                Months Ended September 30,****2007**
            
            **2006**
            
            **2007
                vs. 2006**(Dollars
                in Thousands)Net
                sales
            
            $
            90,906
            
            
            100.0
            %
            $
            79,274
            
            
            100.0
            %
            $
            11,632
            
            
            14.7
            %Cost
                of sales
            
            
            73,610
            
            
            81.0
            %
            
            63,503
            
            
            80.1
            %Gross
                profit
            
            
            17,296
            
            
            19.0
            %
            
            15,771
            
            
            19.9
            %
            
            1,525
            
            
            9.7
            %General,
                selling and administrative expenses
            
            
            8,161
            
            
            9.0
            %
            
            6,187
            
            
            7.8
            %
            
            1,974
            
            
            31.9
            %Operating
                profit
            
            
            9,135
            
            
            10.0
            %
            
            9,584
            
            
            12.1
            %
            
            (449
            )
            
            -4.7
            %





Base
      business sales, on a constant currency basis, increased by 4.3 percent from
      the
      prior-year period primarily due to export shipments from the U.S., as well
      as
      increased shipments and pricing in pet products and greater shipments in the
      Asia-Pacific region. An acquisition and favorable exchange rates grew sales
      by
      8.0 percent and 2.4 percent over the prior-year quarter, respectively. The
      acquired business was purchased in October 2006 and is a part of our
      metalcasting product line. Favorable exchange rates provided growth due to
      strengthening of the British Pound and Asian currencies against the US dollar.





This
      table provides further details on net sales by geographical area for the
      segment:





**2007**
            
            **2006**
            
            **%
                Change**Americas
            
            $
            65,533
            
            $
            57,056
            
            
            14.9
            %EMEA
            
            
            15,174
            
            
            13,940
            
            
            8.9
            %Asia
                Pacific
            
            
            10,199
            
            
            8,278
            
            
            23.2
            %Total
                segment
            
            $
            90,906
            
            $
            79,274
            
            
            14.7
            %





The
      segment suffered a 90 basis point decline in gross margin compared with the
      2006
      quarter. Higher freight revenues, which generate minimal profit, in the
      current-year quarter caused the gross margin decline.





Acquired
      business expenses were approximately $1.0 million of the increase over the
      prior-year quarter. Base business GS&A (general, selling and administrative
      expenses) grew in the Asia Pacific region due to higher marketing expenses
      and
      start-up costs at the Tianjin, China facility.





Operating
      margin declined 210 basis points from the 2006 period in conjunction with the
      lower gross margin and increase in GS&A.





Effective
      beginning in the first quarter of 2007, we included our nanocomposite business
      within the Minerals segment. Those expenses were previously included within
      the
      Corporate segment. The 2006 segment results also reflect the change in
      reporting. Operating results and profit margins for both reporting periods
      were
      not materially impacted by the change.


21





**Three
                    Months Ended September 30,****Environmental**
                
                **2007**
                
                **2006**
                
                **2007
                    vs. 2006**(Dollars
                    in Thousands)Net
                    sales
                
                $
                76,121
                
                
                100.0
                %
                $
                59,120
                
                
                100.0
                %
                $
                17,001
                
                
                28.8
                %Cost
                    of sales
                
                
                50,839
                
                
                66.8
                %
                
                39,303
                
                
                66.5
                %Gross
                    profit
                
                
                25,282
                
                
                33.2
                %
                
                19,817
                
                
                33.5
                %
                
                5,465
                
                
                27.6
                %General,
                        selling and administrative expenses
                
                
                10,444
                
                
                13.7
                %
                
                10,968
                
                
                18.6
                %
                
                (524
                )
                
                -4.8
                %Operating
                    profit
                
                
                14,838
                
                
                19.5
                %
                
                8,849
                
                
                14.9
                %
                
                5,989
                
                
                67.7
                %


Base
      business sales, on a constant currency basis, increased by 19.3 percent over
      the
      prior-year period. Growth in contracting services (based in the U.S.) and
      greater lining technologies and building materials shipments in Europe
      contributed to the base business growth over the 2006 quarter. Acquired
      businesses and favorable foreign currencies grew sales by 4.6 percent and 4.9
      percent, respectively. Relative strengthening of the Polish Zloty, British
      Pound
      and the Asian currencies against the US dollar led to the foreign currency-based
      growth.





This
      table provides further details on net sales by geographical area for the
      segment:




**2007**
              
              **2006**
              
              **%
                  Change**Americas
              
              $
              39,987
              
              $
              33,304
              
              
              20.1
              %EMEA
              
              
              32,358
              
              
              22,367
              
              
              44.7
              %Asia
                  Pacific
              
              
              3,776
              
              
              3,449
              
              
              9.5
              %Total
                  segment
              
              $
              76,121
              
              $
              59,120
              
              
              28.8
              %




Higher
      relative contribution from contracting services caused the 30 basis point
      decline in the Environmental segment gross margin compared with the prior-year
      period.





A
      benefit
      from a gain on the sale of vacant land reduced Environmental segment GS&A by
      $2.4 million in the current-year quarter. Acquired businesses accounted for
      approximately $0.8 million of the increase over the prior-year quarter within
      the Environmental segment. Base business GS&A increased primarily due to
      higher marketing and sales expenses at the European operations.





Operating
      margin improved by 460 basis points primarily due to the benefit from the land
      sale and lower relative increase in GS&A expenses in the current-year
      quarter. Excluding the benefit from the land sale, operating margin would have
      been 16.3 percent in the 2007 quarter.


22


**Three
                  Months Ended September 30,****Oilfield
                  Services**
              
              **2007**
              
              **2006**
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Net
                  sales
              
              $
              27,143
              
              
              100.0
              %
              $
              14,157
              
              
              100.0
              %
              $
              12,986
              
              
              91.7
              %Cost
                  of sales
              
              
              16,896
              
              
              62.2
              %
              
              9,090
              
              
              64.2
              %Gross
                  profit
              
              
              10,247
              
              
              37.8
              %
              
              5,067
              
              
              35.8
              %
              
              5,180
              
              
              102.2
              %General,
                      selling and administrative expenses
              
              
              4,494
              
              
              16.6
              %
              
              2,797
              
              
              19.8
              %
              
              1,697
              
              
              60.7
              %Operating
                  profit
              
              
              5,753
              
              
              21.2
              %
              
              2,270
              
              
              16.0
              %
              
              3,483
              
              
              153.4
              %




Base
      business sales, on a constant currency basis, increased by 43.5 percent over
      the
      prior-year period. Growth was led by increased filtration and pipeline service
      levels in the Gulf of Mexico. International markets, principally in the North
      Sea and West Africa, also improved over the prior-year quarter. Acquired
      businesses and favorable foreign currencies grew sales by 47.1 percent and
      1.1
      percent, respectively. The two acquired businesses - Nitrogen Services and
      Rental Tools and Equipment -also experienced growth over their respective annual
      sales rates prior to our ownership.





This
      table provides further details on net sales by geographical area for the
      segment:


**2007**
              
              **2006**
              
              **%
                  Change**Americas
              
              $
              23,023
              
              $
              12,178
              
              
              89.1
              %EMEA
              
              
              4,120
              
              
              1,979
              
              
              108.2
              %Asia
                  Pacific
              
              
              -
              
              
              -
              
              
              N/ATotal
                  segment
              
              $
              27,143
              
              $
              14,157
              
              
              91.7
              %




Gross
      margin improved by 200 basis points primarily due to higher relative
      profitability contributed by the acquired businesses. Additionally, margins
      improved in the base business operations due to more favorable product/service
      mix.





Approximately
      $1.4 million of the increase in general, selling and administrative expenses
      was
      due to acquired businesses. Base business GS&A increased due to higher
      personnel costs. Operating margin improved 520 basis points due to the higher
      relative increase in gross profit than GS&Aover the prior-year
      period.




**Three
                  Months Ended September 30,****Transportation**
              
              **2007**
              
              **2006**
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Net
                  sales
              
              $
              14,381
              
              
              100.0
              %
              $
              13,300
              
              
              100.0
              %
              $
              1,081
              
              
              8.1
              %Cost
                  of sales
              
              
              12,906
              
              
              89.7
              %
              
              11,737
              
              
              88.2
              %Gross
                  profit
              
              
              1,475
              
              
              10.3
              %
              
              1,563
              
              
              11.8
              %
              
              (88
              )
              
              -5.6
              %General,
                      selling and administrative expenses
              
              
              745
              
              
              5.2
              %
              
              788
              
              
              5.9
              %
              
              (43
              )
              
              -5.5
              %Operating
                  profit
              
              
              730
              
              
              5.1
              %
              
              775
              
              
              5.9
              %
              
              (45
              )
              
              -5.8
              %




23




Traffic
      levels and revenue mix improved over the prior-year period. Gross profit and
      margins were negatively impacted by the higher net fuel surcharge costs.
      GS&A spending declined over the 2006 quarter in several
      categories.


**Three Months Ended September 30,****Corporate**
              
              **2007**
              
              **2006**
              
              **2007 vs. 2006**(Dollars in Thousands)Intersegment
                  shipping sales
              
              $
              (4,953
              )
              $
              (5,679
              )Intersegment
                  shipping costs
              
              
              (4,953
              )
              
              (5,679
              )Gross
                  profit
              
              
              -
              
              
              -Corporate
                  general, selling and administrative expenses
              
              
              4,453
              
              
              5,070
              
              
              (617
              )
              
              -12.2
              %Operating
                  loss
              
              
              4,453
              
              
              5,070
              
              
              (617
              )
              
              -12.2
              %




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
      GS&A increased principally due to professional service expenses incurred in
      the 2006 third quarter that related to the previously described income tax
      refunds.





***Nine
      months ended September 30, 2007 vs. September 30,
      2006***





**Results
      of operations (in millions):**


**Net
        sales:**





2007
            
            2006
            
            %
                Change$
            549.8
            
            $
            455.6
            
            
            21
            %





The
      following table details the period’s consolidated sales growth components over
      the prior year’s comparable period:




**Base
                Business**
            
            **Acquisitions**
            
            **Foreign
                Exchange**
            
            **Total**Minerals
            
            
            0.7
            %
            
            3.6
            %
            
            1.2
            %
            
            5.5
            %Environmental
            
            
            5.0
            %
            
            1.7
            %
            
            1.6
            %
            
            8.3
            %Oilfield
                services
            
            
            1.9
            %
            
            4.2
            %
            
            0.2
            %
            
            6.3
            %Transportation
            
            
            0.5
            %
            
            0
            %
            
            0.0
            %
            
            0.5
            %Total
            
            
            8.1
            %
            
            9.5
            %
            
            3.0
            %
            
            20.6
            %%
                of growth
            
            
            39.2
            %
            
            46.3
            %
            
            14.5
            %
            
            100.0
            %




In
      addition, the next table shows the distribution of the period’s sales across our
      three principal geographic regions (Americas; Europe, Middle East, and Africa
      (EMEA); and Asia Pacific) and the comparable total from the prior year’s
      period:


24




**Americas**
            
            **EMEA**
            
            **Asia
                Pacific**
            
            **Total**Minerals
            
            
            34.9
            %
            
            7.2
            %
            
            5.6
            %
            
            47.7
            %Environmental
            
            
            18.0
            %
            
            14.5
            %
            
            2.0
            %
            
            34.5
            %Oilfield
                services
            
            
            11.2
            %
            
            1.9
            %
            
            0.0
            %
            
            13.1
            %Transportation
            
            
            4.6
            %
            
            0.0
            %
            
            0.0
            %
            
            4.6
            %Total
                - current year's period
            
            
            68.8
            %
            
            23.7
            %
            
            7.5
            %
            
            100.0
            %Total
                from prior year's comparable period
            
            
            69.2
            %
            
            23.3
            %
            
            7.5
            %
            
            100.0
            %





Acquired
      businesses largely generated the sales growth in the Americas. Base business
      growth was primarily generated in the Asia-Pacific region.


**Gross
        profit:**


2007
            
            2006
            
            %
                Change$147.6
            
            $117.6
            
            26%Margin
            
            
            26.8
            %
            
            25.8
            %
            
            N/A




Increased
      sales were responsible for the increase in gross profit in the period. Gross
      margin improved by 100 basis points due to favorable segment sales distribution.
      Our higher growth segments, Environmental and Oilfield services, have the
      highest gross margins.




**General,
        selling & **administrative
        expenses:****


2007
            
            2006
            
            %
                Change$
            87.8
            
            $
            74.4
            
            
            18
            %





Current-period
      GS&A is net of a benefit from a gain on the sale of vacant land, which was
      described earlier in this report. Excluding this benefit, GS&A would have
      increased by $15.8 million, or 21.2 percent, over the prior-year period. In
      aggregate, operating expenses associated with acquired businesses accounted
      for
      approximately $8.8 million of the increase in operating expenses over the
      prior-year period. Higher personnel levels and professional fee expenses
      represented the largest portion of the remaining increase.




**Operating
        profit:**


2007
            
            2006
            
            %
                Change$
            59.8
            
            $
            43.3
            
            
            38
            %Margin
            
            
            10.9
            %
            
            9.5
            %
            
            N/A





Sales
      and
      gross profit growth, as well as the gain on the land sale described above,
      led
      to the improvement in operating profit over the 2006 period. Excluding the
      benefit from the land sale, operating profit would have grown by 32.6 percent
      and operating margin would have been 10.4 percent in the 2007
      period.




**Interest
        expense,
        net:**


2007
            
            2006
            
            %
                Change$
            6.5
            
            $
            1.8
            
            
            261
            %





Interest
      expense in the current-year period increased due both to greater average
      long-term debt compared with the prior-year period and increased interest rates.
      The increase in long-term debt was attributed to increased capital expenditures,
      acquisitions and working capital funding in the current-year period. The
      majority of our long-term debt has a variable rate of interest which is
      primarily influenced by the changes in LIBOR.





25


**Other
      income / (expense):**




2007
              
              
              2006
              
              
              %
                  Change$
              (1.0
              )
              $
              0.3
              
              
              N/A




In
      the
      current reporting period, we recognized foreign exchange losses primarily
      resulting from transactions originated at our international subsidiaries.
      Conversely, we recognized foreign exchange gains in the prior-year reporting
      period. Fluctuation between the Polish Zloty to Euro exchange rates was the
      primary contributor to the losses in the current-year period. We do not actively
      hedge our exposures to foreign currencies.





**Income
      tax expense:**




2007
            
            
            2006
            
            
            %
                Change$
            12.2
            
            $
            8.5
            
            
            44
            %Effective
                tax rate
            
            
            23.3
            %
            
            20.4
            %
            
            N/A





Our
      effective tax rate in both reporting periods continues to differ from the U.S.
      Federal statutory 35% rate due to depletion deductions and differences in local
      tax rates on the income of our foreign subsidiaries which are generally lower
      than the U.S. rates. The 2006 period included an additional benefit for
      adjustments related to previously recorded tax liabilities. The decline in
      the
      tax rate in the 2007 period also reflects updated estimates of taxable income
      distribution between our domestic and overseas businesses and adjustments of
      previously recorded tax liabilities.





**Income
      from affiliates**  **&
      joint ventures:**


2007
              
              2006
              
              %
                  Change$
              6.1
              
              $
              4.5
              
              
              36
              %




Our
      India-based investments contributed the increase in income from joint ventures
      and affiliates in the current-year period. Those investments also accounted
      for
      a large majority of the income reported in both periods.





**Net
      income:**





2007
            
            2006
            
            %
                Change$
            46.0
            
            $
            38.2
            
            
            20
            %Margin
            
            
            8.4
            %
            
            8.4
            %
            
            N/A





Current-period
      net income improved due to higher operating profit and increased contribution
      from affiliate and joint venture investments. Discontinued operations accounted
      for a loss of $0.3 million in the current-year reporting period and a gain
      of
      $0.6 million in the prior-year period. The current-period loss was caused by
      the
      sale of a business based in the U.K., which was part of our Minerals segment,
      while the gain recorded in the prior year was generated by receipt of tax
      refunds that related to a business sold in 2000.





**Diluted
      earnings per share:**





2007
              
              2006
              
              %
                  Change$
              1.48
              
              $
              1.24
              
              
              19
              %





Earnings
      per share improved commensurate with greater net income. Discontinued operations
      related to the sale of one of our U.K. businesses resulted in a $0.01 per share
      decrease in the current-year period whereas a gain recorded in the prior-year
      period accounted for $0.02 per share. Weighted average common and common
      equivalent shares outstanding were 30.9 million for both reporting periods.


26


**Segment
      analysis:**





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




**Nine
                  Months Ended September 30,****Minerals**
              
              **2007**
              
              **2006**
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Net
                  sales
              
              $
              262,432
              
              
              100.0
              %
              $
              237,463
              
              
              100.0
              %
              $
              24,969
              
              
              10.5
              %Cost
                  of sales
              
              
              212,005
              
              
              80.8
              %
              
              191,152
              
              
              80.5
              %Gross
                  profit
              
              
              50,427
              
              
              19.2
              %
              
              46,311
              
              
              19.5
              %
              
              4,116
              
              
              8.9
              %General,
                  selling and administrative expenses
              
              
              23,721
              
              
              9.0
              %
              
              20,139
              
              
              8.5
              %
              
              3,582
              
              
              17.8
              %Operating
                  profit
              
              
              26,706
              
              
              10.2
              %
              
              26,172
              
              
              11.0
              %
              
              534
              
              
              2.0
              %




Base
      business sales, on a constant currency basis, improved by 1.2 percent from
      the
      prior-year period. Pet products and specialty materials product line sales
      grew
      due to increased shipments and pricing in certain sectors. Higher shipments
      in
      the metalcasting business in the Asia-Pacific region also contributed to base
      business growth. Domestic metalcasting shipments declined due to soft
      end-markets.





An
      acquisition and favorable exchange rates grew sales 7.0 percent and 2.3 percent,
      respectively, over the prior-year period. The acquired business was purchased
      in
      October 2006 and is a part of our metalcasting product line. Favorable exchange
      rates provided the growth due to strengthening of the British Pound and Asian
      currencies against the US dollar.





This
      table provides further details on net sales by geographical area for the
      segment:





**2007**
              
              **2006**
              
              **%
                  Change**Americas
              
              $
              192,057
              
              $
              175,334
              
              
              9.5
              %EMEA
              
              
              39,817
              
              
              36,882
              
              
              8.0
              %Asia
                  Pacific
              
              
              30,558
              
              
              25,247
              
              
              21.0
              %Total
                  segment
              
              $
              262,432
              
              $
              237,463
              
              
              10.5
              %




Gross
      margin declined by 30 basis points due to a number of factors. Higher sales
      from
      the pass-through of freight costs and high start-up costs at the Tianjin, China,
      facility accounted for the negative margin impact.





Approximately
      $1.9 million of the increase in general, selling and administrative expenses
      was
      due to an acquired business. Higher operating expenses at the Asia-Pacific
      operations caused the largest portion of the increase in base business
      GS&A.


27




Operating
      margin declined by 80 basis points from the 2006 period in conjunction with
      the
      lower gross margin and increase in GS&A expenses.





Effective
      beginning in the first quarter of 2007, we included our nanocomposite business
      within the Minerals segment. Those expenses were previously included within
      the
      Corporate segment. The 2006 segment results also reflect the change in
      reporting. Operating results and profit margins for both reporting periods
      were
      not materially impacted by the change.





**Nine
                Months Ended September 30,****Environmental**
            
            **2007**
            
            **2006**
            
            **2007
                vs. 2006**(Dollars
                in Thousands)Net
                sales
            
            $
            189,927
            
            
            100.0
            %
            $
            151,996
            
            
            100.0
            %
            $
            37,931
            
            
            25.0
            %Cost
                of sales
            
            
            124,523
            
            
            65.6
            %
            
            99,934
            
            
            65.7
            %Gross
                profit
            
            
            65,404
            
            
            34.4
            %
            
            52,062
            
            
            34.3
            %
            
            13,342
            
            
            25.6
            %General,
                selling and administrative expenses
            
            
            34,388
            
            
            18.1
            %
            
            30,787
            
            
            20.3
            %
            
            3,601
            
            
            11.7
            %Operating
                profit
            
            
            31,016
            
            
            16.3
            %
            
            21,275
            
            
            14.0
            %
            
            9,741
            
            
            45.8
            %





Base
      business sales, on a constant currency basis, increased by 15.0 percent over
      the
      prior-year period. Improved shipments of lining technology and building material
      products in the Europe contributed the largest portion of the increase. The
      U.S.-based contracting services business also increased sales over the
      prior-year period. Acquired businesses and favorable foreign currencies grew
      sales 5.1 percent and 4.9 percent, respectively. Relative strengthening of
      the
      Polish Zloty, British Pound and the Asian currencies against the US dollar
      led
      to the foreign currency-based growth.





This
      table provides further details on net sales by geographical area for the
      segment:





**2007**
            
            **2006**
            
            **%
                Change**Americas
            
            $
            99,117
            
            $
            81,724
            
            
            21.3
            %EMEA
            
            
            79,899
            
            
            61,446
            
            
            30.0
            %Asia
                Pacific
            
            
            10,911
            
            
            8,826
            
            
            23.6
            %Total
                segment
            
            $
            189,927
            
            $
            151,996
            
            
            25.0
            %








Gross
      profit improved in conjunction with sales. The 10 basis point improvement in
      gross margin was due to product mix and lower manufacturing costs in the U.S.
      operations.





A
      benefit
      from a gain on the sale of vacant land reduced GS&A by $2.4 million in the
      current-year period. Acquired businesses accounted for approximately $2.5
      million of the increase over the prior-year period within the segment. Base
      business GS&A increased primarily due to higher marketing and sales expenses
      at the European operations. Stronger foreign currencies also caused the
      increase.





Operating
      margin improved by 230 basis points primarily due to the benefit from the land
      sale and lower relative increase in GS&A expenses in the current-year
      period. Excluding the benefit from the land sale, operating margin would have
      been 15.1 percent in the 2007 period.




28




**Nine
                Months Ended September 30,****Oilfield
                Services**
            
            **2007**
            
            **2006**
            
            **2007
                vs. 2006**(Dollars
                in Thousands)Net
                sales
            
            $
            72,137
            
            
            100.0
            %
            $
            43,270
            
            
            100.0
            %
            $
            28,867
            
            
            66.7
            %Cost
                of sales
            
            
            44,633
            
            
            61.9
            %
            
            28,558
            
            
            66.0
            %Gross
                profit
            
            
            27,504
            
            
            38.1
            %
            
            14,712
            
            
            34.0
            %
            
            12,792
            
            
            86.9
            %General,
                selling and administrative expenses
            
            
            13,661
            
            
            18.9
            %
            
            7,475
            
            
            17.3
            %
            
            6,186
            
            
            82.8
            %Operating
                profit
            
            
            13,843
            
            
            19.2
            %
            
            7,237
            
            
            16.7
            %
            
            6,606
            
            
            91.3
            %








Base
      businesses sales, on a constant currency basis, increased by 20.5 percent over
      the prior-year period. Growth was led by higher well testing and pipeline
      service revenues primarily generated in Texas and the Gulf of Mexico. Acquired
      businesses and favorable foreign currencies grew sales 44.5 percent and 1.7
      percent, respectively, over the prior year’s period. The two acquired businesses
      - Nitrogen Services and Rental Tools and Equipment -also experienced growth
      over
      their respective annual sales rates prior to our ownership.





This
      table provides further details on net sales by geographical area for the
      segment:





**2007**
            
            **2006**
            
            **%
                Change**Americas
            
            $
            61,623
            
            $
            35,341
            
            
            74.4
            %EMEA
            
            
            10,514
            
            
            7,929
            
            
            32.6
            %Asia
                Pacific
            
            
            -
            
            
            -
            
            
            N/ATotal
                segment
            
            $
            72,137
            
            $
            43,270
            
            
            66.7
            %





Gross
      margin improved by 410 basis points primarily due to product/service mix. The
      two acquired businesses also both generate higher margins than our base
      businesses.





Approximately
      $4.3 million of the increase in general, selling and administrative expenses
      was
      due to acquired businesses. Base business GS&A increased due to higher
      personnel costs. Operating margin improved 250 basis points due to the higher
      relative increase in gross profit than GS&A over the prior-year
      period.





**Nine
                Months Ended September 30,****Transportation**
            
            **2007**
            
            **2006**
            
            **2007
                vs. 2006**(Dollars
                in Thousands)Net
                sales
            
            $
            38,654
            
            
            100.0
            %
            $
            38,619
            
            
            100.0
            %
            $
            35
            
            
            0.1
            %Cost
                of sales
            
            
            34,399
            
            
            89.0
            %
            
            34,062
            
            
            88.2
            %Gross
                profit
            
            
            4,255
            
            
            11.0
            %
            
            4,557
            
            
            11.8
            %
            
            (302
            )
            
            -6.6
            %General,
                    selling and administrative expenses
            
            
            2,253
            
            
            5.8
            %
            
            2,367
            
            
            6.1
            %
            
            (114
            )
            
            -4.8
            %Operating
                profit
            
            
            2,002
            
            
            5.2
            %
            
            2,190
            
            
            5.7
            %
            
            (188
            )
            
            -8.6
            %




29


Overall
      traffic levels declined in the current-year period. Transportation services
      for
      the Environmental segment primarily led to the decline. Pricing was relatively
      constant compared with the prior-year period. Gross profit and margins were
      negatively impacted by revenue mix and higher net fuel costs. GS&A spending
      declined over the 2006 period in several categories.





**Nine
                Months Ended September 30,****Corporate**
            
            **2007**
            
            **2006**
            
            **2007
                vs. 2006**(Dollars
                in Thousands)Intersegment
                shipping sales
            
            $
            (13,370
            )
            $
            (15,711
            )Intersegment
                shipping costs
            
            
            (13,370
            )
            
            (15,711
            )Gross
                profit
            
            
            -
            
            
            -Corporate
                general, selling and administrative expenses
            
            
            13,733
            
            
            13,591
            
            
            142
            
            
            1.0
            %Operating
                loss
            
            
            13,733
            
            
            13,591
            
            
            142
            
            
            1.0
            %





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
      GS&A increased primarily due to higher personnel and professional service
      expenses.





**Liquidity
      and capital resources**





Cash
      flows from operations, borrowings from a revolving credit facility and proceeds
      from the exercise of stock options by employees have been our sources of funds
      to purchase property, plant and equipment; acquire businesses; repurchase common
      stock; and pay dividends to shareholders. We believe cash flows from operations
      and borrowings from an unused and committed revolving credit facility will
      be
      adequate to support our operating plans for the foreseeable future. Following
      is
      a discussion and analysis of our cash flow activities as presented in the
      Condensed Consolidated Statement of Cash Flows presented within Part 1 of this
      report.





**Nine
                Months Ended****Cash
                  Flows**
            
            **September
                30,****($
                in millions)**
            
            **2007**
            
            **2006**Net
                cash provided by (used in) operating activities
            
            $
            42.0
            
            $
            28.9Net
                cash provided by (used in) investing activities
            
            $
            (78.1
            )
            $
            (45.2
            )Net
                cash provided by (used in) financing activities
            
            $
            35.1
            
            $
            10.6





Cash
      flows from operating activities improved largely due to higher current-year
      net
      income and non-cash charges such as depreciation and amortization. Historically,
      cash flows from operations have increased over the course of the year and we
      anticipate this pattern will continue for the remainder of 2007.




30




Cash
      flows used in investing activities increased in the 2007 period primarily due
      to
      acquisitions. We acquired three businesses in the current-year period, Liquid
      Boot Technologies, included in our Environmental segment, the Microsponge®
business of Cardinal Health Care Company and a Turkish minerals company, Bensan
      A.S., both included in our Minerals segment. Capital expenditures totaled $37.6
      million for the 2007 period compared with $30.0 million in the prior-year
      period. Equipment purchases for the Oilfield Services segment and expenditures
      related to Corporate segment projects accounted for the increase. Capital
      expenditures for 2007 are estimated to be in the range of $42 million to $47
      million. Investments and advances to affiliates and joint ventures increased
      primarily due to funding for new investments in Europe and Mexico. The European
      venture, in which we own 50% of the shares, will be engaged in processing,
      marketing and selling specialty minerals to the European market. Our partner
      is
      Ashapura Minechem Limited, an industrial minerals company based in India, in
      which we own approximately 21% of the outstanding shares. Other investing
      activities are primarily represented by cash proceeds associated with the sale
      of land and depreciable assets.





Cash
      flows provided by financing activities increased in the 2007 period primarily
      due to additional debt borrowings to fund acquisitions. We filed a current
      report, on Form 8-K, in March 2007 which described principal terms of a new
      bank
      credit agreement. The agreement increased our borrowing capability to $150
      million and extended the term to April 2, 2012. Financial covenants and interest
      rate pricing remained the same as the prior agreement. We also filed a current
      report, on Form 8-K, in April 2007 describing our $75 million private debt
      placement with Metlife Insurance Company. The debt is payable in a lump-sum
      on
      April 2, 2017. The purpose of the transaction was to fix the interest cost
      of a
      portion of our debt. The proceeds from the placement were used to repay an
      equivalent amount of revolving credit notes outstanding under the bank credit
      facility mentioned above. We also entered into an interest rate swap agreement
      with Wells Fargo Bank to convert the variable interest rate on $30 million
      of
      the private placement debt into a fixed interest rate.





Year-to-date
      dividends increased to $0.44 per share from $0.35 per share in the prior-year
      period, consequently increasing the financing needs this year. We spent $6.1
      million repurchasing our stock on the open market through September 30, 2007.
      As
      of that date, we have $8.9 million of funds available to repurchase shares.
      Our
      Board of Directors authorized these funds on November 9, 2006; the authorization
      will expire on November 10, 2008.





**As
                at****Financial
                Position**
            
            **September 30,**
            
            **December 31,****($
                in millions)**
            
            **2007**
            
            **2006**Working
                capital
            
            $
            202.0
            
            $
            173.3Goodwill
                & intangible assets
            
            $
            94.9
            
            $
            66.0Total
                assets
            
            $
            638.0
            
            $
            511.2Long-term
                debt
            
            $
            164.2
            
            $
            112.4Other
                long-term obligations
            
            $
            32.8
            
            $
            25.6Stockholder's
                equity
            
            $
            338.1
            
            $
            294.8





Working
      capital at September 30, 2007, increased over the amount at December 31, 2006
      due principally to an increase in accounts receivable commensurate with the
      growth in sales. Current ratio was 3.0-to-1 and 3.2-to-1 at September 30, 2007,
      and December 31, 2006, respectively.





Long-term
      debt increased commensurate with funding of the aforementioned acquisitions,
      greater working capital requirements and funding of capital expenditures.
      Consequently, long-term debt relative to total capitalization rose to 33% at
      September 30, 2007, compared with 28% at December 31, 2006. As described above,
      we renegotiated the bank credit agreement in the first quarter of 2007. We
      have
      approximately $72 million of borrowing capacity available from our revolving
      credit facility. We are in compliance with financial covenants related to our
      debt facilities as of September 30, 2007.




31




We
      have
      evaluated the funding requirements of our defined benefit pension plan following
      passage of the Pension Reform Act of 2006. At this time, we do not anticipate
      any material funding requirement for our plan as a consequence of the
      Act.





We
      believe future cash flows from operations combined with financing capability
      from our revolving credit facility will be adequate to fund necessary investing
      activities planned in the future.





Since
      the
      mid 1980’s, we have been named as one of a number of defendants in product
      liability lawsuits relating to the minor free-silica content within our
      bentonite products used in the metalcasting industry. The plaintiffs in these
      lawsuits are primarily employees of our former and current customers. To date,
      we have not incurred significant costs in defending these matters. We believe
      we
      have adequate insurance coverage and do not believe the litigation will have
      a
      material adverse impact on our financial position, liquidity or results of
      operations.





**Contractual
      Obligations and Off-Balance Sheet Arrangements (in
      millions)**





Item
      7 of
      our Annual Report on Form 10-K for the year ended December 31, 2006 discloses
      our contractual obligations and off-balance sheet arrangements. Other than
      the
      increase in our long-term bank debt as disclosed in our Condensed Consolidated
      Financial Statements herein and the contribution to our defined benefit plan
      as
      discussed in Note 5 of the Notes to Condensed Consolidated Financial Statements
      within this Form 10-Q, there were no material changes in our contractual
      obligations and off-balance sheet arrangements.





**Item
      3:**  **Quantitative
      and Qualitative Disclosures About Market Risk**





There
      were no material changes in our market risk from the disclosures made in our
      Annual Report on Form 10-K for the year ended December 31, 2006.





**Item
      4:**  **Controls
      and Procedures**





**Evaluation
      of Disclosure Controls and Procedures**





Our
      management, with the participation of our Chief Executive Officer and Chief
      Financial Officer, has evaluated the effectiveness of our disclosure controls
      and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under
      the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the
      end of the period covered by this report. Based on that evaluation, the Chief
      Executive Officer and Chief Financial Officer concluded that, as of the end
      of
      such period, our disclosure controls and procedures were effective in recording,
      processing, summarizing, and reporting, on a timely basis, information we are
      required to disclose in the reports we file or submit under the Exchange
      Act.




32




**Changes
      in Internal Control Over Financial Reporting**





There
      were no changes in our internal control over financial reporting that occurred
      during our most recent fiscal quarter that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.





**PART
      II - OTHER INFORMATION**





**Item
      1A:**  **Risk
      Factors**





Information
      regarding risk factors appears in Part 1, “Item 1A. Risk Factors” of our Annual
      Report on Form 10-K for the year ended December 31, 2006. There have been no
      material changes from the risk factors disclosed therein.





**Item
      2:**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**





On
      November 9, 2006, the Board of Directors announced a program to repurchase
      up to
      $15 million of our outstanding stock; this authorization expires November 10,
      2008. The table below illustrates our stock repurchases in 2007 and the amount
      remaining under this program.





**Total Number of**
            
            
            
            **Maximum Value of****Shares Repurchased**
            
            **Average**
            
            **Shares that May Yet Be****as Part of the Stock**
            
            **Price Paid**
            
            **Repurchased Under the****2007**
            
            **Repurchase Program**
            
            **Per Share**
            
            **Program**Balance
                at the beginning of the year
            
            
            
            
            
            
            
            $
            15,000,000Activity
                in 2007 calendar month of:January
            
            
            -
            
            $
            -
            
            $
            15,000,000February
            
            
            -
            
            $
            -
            
            $
            15,000,000March
            
            
            -
            
            $
            -
            
            $
            15,000,000April
            
            
            -
            
            $
            -
            
            $
            15,000,000May
            
            
            250,000
            
            $
            24.34
            
            $
            8,915,000June
            
            
            -
            
            $
            -
            
            $
            8,915,000July
            
            
            -
            
            $
            -
            
            $
            8,915,000August
            
            
            -
            
            $
            -
            
            $
            8,915,000September
            
            
            -
            
            $
            -
            
            $
            8,915,000250,000
            
            $
            24.34
            
            $
            8,915,000




33




**Item
      6** :  **Exhibits**





**ExhibitNumber**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*


*
        Filed
        herewith.


34





**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 CORPORATIONDate:
            November
                7, 2007
            
            /s/
                Lawrence E. WashowLawrence
                E. WashowPresident
                and Chief Executive OfficerDate:
            November
                7, 2007
            
            /s/
                Gary L. CastagnaGary
                L. CastagnaSenior
                Vice President and Chief Financial Officerand
                Principal Accounting Officer


35




**INDEX
      TO EXHIBITS**





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*


*
        Filed
        herewith.
  36