**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**




**Washington,
      D.C. 20549**





**FORM
      10-Q**




(Mark
      One)




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





For
      the
      quarterly period ended  June 30,
      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.   Yesx   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   No




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


Class
              
              Outstanding
                  at July 31, 2007(Common
                  stock, $.01 par value)
              
              29,955,009
                  Shares







**AMCOL
        INTERNATIONAL CORPORATION**
 
 **INDEX** ****


Page
                No.Part
                I - Financial InformationItem
                1
            
            Financial
                StatementsCondensed
                Consolidated Balance Sheets - June 30, 2007 and December 31,
                2006
            
            3Condensed
                Consolidated Statements of Operations - three and six months ended
                June
                30, 2007 and 2006
            
            5Condensed
                Consolidated Statements of Comprehensive Income - three and six months
                ended June 30, 2007 and 2006
            
            6Condensed
                Consolidated Statements of Cash Flows - six months ended June 30,
                2007 and
                2006
            
            7Notes
                to Condensed Consolidated Financial Statements
            
            8Item
                2
            
            *Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations*
            
            15Item
                3
            
            *Quantitative
                and Qualitative Disclosures About Market Risk*
            
            31Item
                4
            
            *Controls
                and Procedures*
            
            31Part
                II - Other InformationItem
                1A
            
            *Risk
                Factors*
            
            32Item
                2
            
            *Unregistered
                Sales of Equity Securities and Use of Proceeds*
            
            32Item
                4
            
            *Submission
                of Matters to a Vote of Security Holders*
            
            32Item
                6
            
            *Exhibits*
            
            33




2


**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(In
      thousands)**




Item
      1.
      Financial Statements


**June
                  30,**
              
              **December
                  31,****2007**
              
              **2006****(unaudited)**
              
              *******ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              25,172
              
              $
              17,805Accounts
                  receivable, net
              
              
              152,909
              
              
              133,432Inventories
              
              
              90,541
              
              
              84,612Prepaid
                  expenses
              
              
              12,648
              
              
              10,142Deferred
                  income taxes
              
              
              4,793
              
              
              4,648Other
              
              
              2,006
              
              
              1,045Total
                  current assets
              
              
              288,069
              
              
              251,684Investment
                  in and advances to affiliates and joint ventures
              
              
              39,416
              
              
              31,049Property,
                  plant, equipment, and mineral rights and reserves:Land
                  and mineral rights
              
              
              17,170
              
              
              17,428Depreciable
                  assets
              
              
              323,650
              
              
              305,013340,820
              
              
              322,441Less:
                  accumulated depreciation
              
              
              185,521
              
              
              181,669155,299
              
              
              140,772Other
                  assets:Goodwill
              
              
              51,993
              
              
              40,341Intangible
                  assets, net
              
              
              43,181
              
              
              25,611Deferred
                  income taxes
              
              
              8,748
              
              
              6,643Other
                  assets
              
              
              17,969
              
              
              15,124121,891
              
              
              87,719$
              604,675
              
              $
              511,224


Continued...


3


**AMCOL
      INTERNATIONAL CORPORATION AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(In
      thousands)**




**June
                30,**
            
            **December
                31,****2007**
            
            **2006****(unaudited)**
            
            *******LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Accounts
                payable
            
            $
            40,514
            
            $
            26,107Accrued
                income taxes
            
            
            1,896
            
            
            4,844Accrued
                liabilities
            
            
            44,496
            
            
            47,432Total
                current liabilities
            
            
            86,906
            
            
            78,383Long-term
                debt
            
            
            168,237
            
            
            112,448Minority
                interests in subsidiaries
            
            
            276
            
            
            276Pension
                liabilities
            
            
            13,056
            
            
            13,209Other
                liabilities
            
            
            21,486
            
            
            12,09034,818
            
            
            25,575Stockholders’
                equity:Common
                stock
            
            
            320
            
            
            320Additional
                paid in capital
            
            
            78,521
            
            
            76,686Retained
                earnings
            
            
            236,853
            
            
            219,690Accumulated
                other comprehensive income
            
            
            21,365
            
            
            16,658337,059
            
            
            313,354Less:Treasury
                stock
            
            
            22,345
            
            
            18,536314,714
            
            
            294,818$
            604,675
            
            $
            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 OPERATIONS**


**(Unaudited)**


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


**Six
                    Months Ended**
                
                **Three
                    Months Ended****June
                    30,**
                
                **June
                    30,****2007**
                
                **2006**
                
                **2007**
                
                **2006**Net
                    sales
                
                $
                346,182
                
                $
                295,465
                
                $
                182,454
                
                $
                152,701Cost
                    of sales
                
                
                252,892
                
                
                220,041
                
                
                132,663
                
                
                113,006Gross
                    profit
                
                
                93,290
                
                
                75,424
                
                
                49,791
                
                
                39,695General,
                    selling and administrative expenses
                
                
                59,459
                
                
                48,549
                
                
                30,654
                
                
                24,867Operating
                    profit
                
                
                33,831
                
                
                26,875
                
                
                19,137
                
                
                14,828Other
                    income (expense):Interest
                    expense, net
                
                
                (4,097
                )
                
                (1,095
                )
                
                (2,155
                )
                
                (618
                )Other,
                    net
                
                
                (170
                )
                
                532
                
                
                (3
                )
                
                320(4,267
                )
                
                (563
                )
                
                (2,158
                )
                
                (298
                )Income
                    before income taxes and income fromaffiliates
                    and joint ventures
                
                
                29,564
                
                
                26,312
                
                
                16,979
                
                
                14,530Income
                    tax expense
                
                
                7,501
                
                
                7,268
                
                
                4,190
                
                
                3,860Income
                    before income from affiliates andjoint
                    ventures
                
                
                22,063
                
                
                19,044
                
                
                12,789
                
                
                10,670Income
                    from affiliates and joint ventures
                
                
                4,032
                
                
                2,586
                
                
                2,466
                
                
                1,249Income
                    from continuing operations
                
                
                26,095
                
                
                21,630
                
                
                15,255
                
                
                11,919**Discontinued
                    operations:**Loss
                    on disposal
                
                
                (286
                )
                
                -
                
                
                (286
                )
                
                -Net
                    income
                
                $
                25,809
                
                $
                21,630
                
                $
                14,969
                
                $
                11,919Weighted
                    average common shares outstanding
                
                
                30,154
                
                
                29,880
                
                
                30,155
                
                
                29,971Weighted
                    average common and common equivalent shares outstanding
                
                
                30,951
                
                
                31,011
                
                
                30,879
                
                
                30,937Basic
                    earnings per share:Continuing
                    operations
                
                $
                0.87
                
                $
                0.72
                
                $
                0.51
                
                $
                0.40Discontinued
                    operations - Gain (Loss) on disposal
                
                
                (0.01
                )
                
                -
                
                
                (0.01
                )
                
                -Basic
                    earnings per share
                
                $
                0.86
                
                $
                0.72
                
                $
                0.50
                
                $
                0.40Diluted
                    earnings per share:Continuing
                    operations
                
                $
                0.84
                
                $
                0.70
                
                $
                0.49
                
                $
                0.39Discontinued
                    operations - Gain (Loss) on disposal
                
                
                (0.01
                )
                
                -
                
                
                (0.01
                )
                
                -Diluted
                    earnings per share
                
                $
                0.83
                
                $
                0.70
                
                $
                0.48
                
                $
                0.39Dividends
                    declared per share
                
                $
                0.28
                
                $
                0.23
                
                $
                0.14
                
                $
                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)**
 **Six
                    Months Ended**
                
                **Three
                    Months Ended****June
                    30,**
                
                **June
                    30,****2007**
                
                **2006**
                
                **2007**
                
                **2006**Net
                    income
                
                $
                25,809
                
                $
                21,630
                
                $
                14,969
                
                $
                11,919Other
                    comprehensive income (loss):Foreign
                    currency translation adjustment
                
                
                4,567
                
                
                4,214
                
                
                3,162
                
                
                3,283Other
                
                
                140
                
                
                -
                
                
                55
                
                
                -Comprehensive
                    income
                
                $
                30,516
                
                $
                25,844
                
                $
                18,186
                
                $
                15,202
  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)**


**Six
                  Months Ended****June
                  30,****2007**
              
              **2006**Cash
                  flow from operating activities:Net
                  income
              
              $
              25,809
              
              $
              21,630Adjustments
                  to reconcile from net income to net cashprovided
                  by (used in) operating activities:Depreciation,
                  depletion, and amortization
              
              
              13,805
              
              
              10,089Changes
                  in assets and liabilities, net of effects of acquisitions:Decrease
                  (increase) in current assets
              
              
              (22,625
              )
              
              (22,563
              )Decrease
                  (increase) in noncurrent assets
              
              
              (1,582
              )
              
              (1,895
              )Increase
                  (decrease) in current liabilities
              
              
              7,289
              
              
              (1,663
              )Increase
                  (decrease) in noncurrent liabilities
              
              
              7,783
              
              
              1,024Other
              
              
              (4,893
              )
              
              (917
              )Net
                  cash provided by (used in) operating activities
              
              
              25,586
              
              
              5,705Cash
                  flow from investing activities:Capital
                  expenditures
              
              
              (21,906
              )
              
              (20,525
              )Acquisitions,
                  net of cash
              
              
              (38,393
              )
              
              (1,270
              )Investments
                  in and advances to affiliates and joint ventures
              
              
              (4,191
              )
              
              (877
              )Investments
                  in restricted cash
              
              
              (816
              )
              
              -Other
              
              
              2,425
              
              
              1,096Net
                  cash used in investing activities
              
              
              (62,881
              )
              
              (21,576
              )Cash
                  flow from financing activities:Net
                  change in outstanding debt
              
              
              55,564
              
              
              15,168Proceeds
                  from sales of treasury stock
              
              
              1,283
              
              
              2,380Purchases
                  of treasury stock
              
              
              (6,115
              )
              
              (3,290
              )Dividends
              
              
              (8,393
              )
              
              (6,893
              )Excess
                  tax benefits from stock-based compensation
              
              
              927
              
              
              1,931Net
                  cash provided by (used in) financing activities
              
              
              43,266
              
              
              9,296Effect
                  of foreign currency rate changes on cash
              
              
              1,396
              
              
              4,321Net
                  increase (decrease) in cash and cash equivalents
              
              
              7,367
              
              
              (2,254
              )Cash
                  and cash equivalents at beginning of period
              
              
              17,805
              
              
              15,997Cash
                  and cash equivalents at end of period
              
              $
              25,172
              
              $
              13,743


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:


**Six
                  Months Ended**
              
              **Three
                  Months Ended****June
                  30,**
              
              **June
                  30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Minerals
              
              
              50
              %
              
              54
              %
              
              47
              %
              
              51
              %Environmental
              
              
              33
              %
              
              31
              %
              
              36
              %
              
              35
              %Oilfield
                  services
              
              
              13
              %
              
              10
              %
              
              13
              %
              
              9
              %Transportation
              
              
              7
              %
              
              9
              %
              
              7
              %
              
              8
              %Intersegment
                  shipping
              
              
              -3
              %
              
              -4
              %
              
              -3
              %
              
              -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 June 30, 2007 and 2006,
      and the financial position of the Company as of June 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.





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.


8
  **AMCOL
        INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 **(In
        thousands, except share and per share amounts)**




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 Interpretation 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 upon its release 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.


**Six
                  Months Ended**
              
              **Three
                  Months Ended****June
                  30,**
              
              **June
                  30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Weighted
                  average number of common shares outstanding
              
              
              30,154,043
              
              
              29,879,651
              
              
              30,155,216
              
              
              29,971,338Dilutive
                  impact of stock options
              
              
              796,962
              
              
              1,131,238
              
              
              723,851
              
              
              965,578Weighted
                  average number of common and common equivalentshares
                  for the period
              
              
              30,951,005
              
              
              31,010,889
              
              
              30,879,067
              
              
              30,936,916Number
                  of common shares outstanding at the end of the period
              
              
              29,937,103
              
              
              29,990,445
              
              
              29,937,103
              
              
              29,990,445Weighted
                  average number of anti-dilutive shares excluded from theomputation
                  of diluted earnings per share
              
              
              268,875
              
              
              208,036
              
              
              657,309
              
              
              290,950


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**





Inventories
      at June 30, 2007 have been valued using the same methods as at December 31,
      2006. Our inventories are comprised of the following components:


**June
                  30,**
              
              **December
                  31,****2007**
              
              **2006**Crude
                  stockpile inventories
              
              $
              21,043
              
              $
              26,390In-process
                  inventories
              
              
              40,167
              
              
              32,640Other
                  raw material, container, and supplies inventories
              
              
              29,331
              
              
              25,582$
              90,541
              
              $
              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:


**Six
                  Months Ended**
              
              **Three
                  Months Ended****June
                  30,**
              
              **June
                  30,****2007**
              
              **2007**Balance
                  at beginning of period
              
              $
              5,715
              
              $
              5,942Settlement
                  of obligations
              
              
              (852
              )
              
              (453
              )Liabilities
                  incurred and accretion expense
              
              
              1,310
              
              
              684Balance
                  at end of period
              
              $
              6,173
              
              $
              6,173


A
      reconciliation of the activity within our accrued warranty obligation is as
      follows:


**Six
                  Months Ended**
              
              **Three
                  Months Ended****June
                  30,**
              
              **June
                  30,****2007**
              
              **2007**Balance
                  at beginning of period
              
              $
              911
              
              $
              865Charged
                  to costs and expenses
              
              
              429
              
              
              316Net
                  settlements
              
              
              (306
              )
              
              (146
              )Foreign
                  currency translation
              
              
              12
              
              
              11Balance
                  at end of period
              
              $
              1,046
              
              $
              1,046


**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:


**Six
                  Months Ended**
              
              **Three
                  Months Ended****June
                  30,**
              
              **June
                  30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Net
                  sales:Minerals
              
              $
              171,526
              
              $
              158,189
              
              $
              85,713
              
              $
              78,118Environmental
              
              
              113,806
              
              
              92,876
              
              
              65,108
              
              
              52,718Oilfield
                  services
              
              
              44,994
              
              
              29,113
              
              
              23,030
              
              
              14,141Transportation
              
              
              24,273
              
              
              25,319
              
              
              13,380
              
              
              12,848Intersegment
                  shipping
              
              
              (8,417
              )
              
              (10,032
              )
              $
              (4,777
              )
              
              (5,124
              )Total
              
              $
              346,182
              
              $
              295,465
              
              $
              182,454
              
              $
              152,701Operating
                  profit (loss):Minerals
              
              $
              17,571
              
              $
              16,588
              
              $
              8,314
              
              $
              8,700Environmental
              
              
              16,178
              
              
              12,426
              
              
              9,935
              
              
              7,640Oilfield
                  services
              
              
              8,090
              
              
              4,967
              
              
              4,924
              
              
              2,022Transportation
              
              
              1,272
              
              
              1,415
              
              
              732
              
              
              732Corporate
              
              
              (9,280
              )
              
              (8,521
              )
              
              (4,768
              )
              
              (4,266
              )Total
              
              $
              33,831
              
              $
              26,875
              
              $
              19,137
              
              $
              14,828**As
                  of June 30, 2007**
              
              
              **As
                  of Dec. 31, 2006**Assets:Minerals
              
              $
              291,594
              
              $
              245,417Environmental
              
              
              180,285
              
              
              145,884Oilfield
                  services
              
              
              90,360
              
              
              84,917Transportation
              
              
              4,093
              
              
              3,722Corporate
              
              
              38,343
              
              
              31,284Total
              
              $
              604,675
              
              $
              511,224


11
  **AMCOL
            INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 **(In
            thousands, except share and per share
            amounts)**





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





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


**Six
                  Months Ended**
              
              **Three
                  Months Ended****June
                  30,**
              
              **June
                  30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Service
                  cost
              
              $
              830
              
              $
              869
              
              
              415
              
              
              434Interest
                  cost
              
              
              1,104
              
              
              994
              
              
              552
              
              
              497Expected
                  return on plan assets
              
              
              (1,347
              )
              
              (1,260
              )
              
              (673
              )
              
              (630
              )Amortization
                  of prior service cost
              
              
              33
              
              
              15
              
              
              16
              
              
              8Net
                  periodic benefit cost
              
              $
              620
              
              $
              618
              
              
              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.





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





Our
      effective tax rate from continuing operations for the six months ended June
      30,
      2007 was 25.37%, 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 25.37% includes an
      increase to income tax expense of $373 largely due to changes in estimates
      related to provision to return differences. Excluding the $373, the effective
      tax rate would have been 24.11%.




Our
      effective tax rate from continuing operations for the six months ended June
      30,
      2006 was 27.6%, which varies from the U.S. Federal statutory rate of 35% for
      the
      same depletion and foreign tax rates mentioned above. Additionally, the 27.6%
      includes an increase to income tax expense of $282 largely due to changes in
      estimates related to provision to return differences. Excluding the $282, the
      effective tax rate would have been 26.6%.





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 2002.





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.


12
  **AMCOL
            INTERNATIONAL CORPORATION AND SUBSIDIARIES**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 **(In
            thousands, except share and per share
            amounts)**


At
      January 1, 2007, our worldwide liability for uncertain tax positions was $4,846.
      Unrecognized tax benefits of $2,778 would affect our effective tax rate if
      recognized. There were no significant changes in components of the liability
      in
      the six months ending June 30, 2007.





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





Approximately
      $1,575 of unrecognized tax benefits relate to items that are affected by
      expiring statute of limitations within the next 12 months. Of this amount,
      $754
      could have an impact on our effective tax rate.





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





We
      made
      payments of $1,531 in the three months ended March 31, 2007 to former owners
      of
      businesses we acquired pursuant to contingent payment arrangements associated
      with those acquisitions; no such payments were made in the second quarter of
      2007. These payments had the effect of increasing the amount of goodwill by
      $313
      and decreasing accrued liabilities by $1,218.





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 $6,376 of goodwill and $8,570 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
      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 $8,027 for the business and recognized $4,176 of goodwill and
      $6,000 of intangible assets for this acquisition as of June 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 and detergents and desiccants. Turkey is the leading producer of white
      bentonites for specialized applications. We paid approximately $11,039 for
      the
      business and recognized $818 and $5,000 of goodwill and intangible assets,
      respectively, as of June 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.


13
  **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.


14


**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, building materials and
      water treatment. Our Oilfield services segment provides both onshore and
      offshore water treatment filtration, pipeline separation, rental tools and
      well
      testing data services for the oil and gas industry. Our Transportation segment
      provides trucking services for our domestic businesses as well as third parties.
      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.





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.





15


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.


16


**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 June 30, 2007 vs. June 30, 2006***





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


**Net
                  sales:**
              
              **2007**
              
              **2006**
              
              **%
                  Change**$
              182.5
              
              $
              152.7
              
              
              19
              %


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


**Foreign
                  Exchange****Base
                    Business**
              
              **Acquisitions**
              
              **June
                  30,**
              
              **Total**Minerals
              
              
              -0.1
              %
              
              4.0
              %
              
              1.1
              %
              
              5.0
              %Environmental
              
              
              4.5
              %
              
              2.1
              %
              
              1.5
              %
              
              8.1
              %Oilfield
                  services
              
              
              1.6
              %
              
              4.1
              %
              
              0.1
              %
              
              5.8
              %Transportation
              
              
              0.5
              %
              
              0
              %
              
              0.0
              %
              
              0.5
              %Total
              
              
              6.5
              %
              
              10.2
              %
              
              2.7
              %
              
              19.4
              %%
                  of growth
              
              
              33.7
              %
              
              52.6
              %
              
              13.7
              %
              
              100.0
              %
  17


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;
      and Asia Pacific) and the comparable total from the prior year’s
      period:


**Asia
                  Pacific****Americas**
              
              **EMEA**
              
              **June
                  30,**
              
              **Total**Minerals
              
              
              34.6
              %
              
              6.7
              %
              
              5.7
              %
              
              47.0
              %Environmental
              
              
              20.0
              %
              
              13.8
              %
              
              1.9
              %
              
              35.7
              %Oilfield
                  services
              
              
              11.0
              %
              
              1.6
              %
              
              0.0
              %
              
              12.6
              %Transportation
              
              
              4.7
              %
              
              0.0
              %
              
              0.0
              %
              
              4.7
              %Total
                  - current year's quarter
              
              
              70.3
              %
              
              22.1
              %
              
              7.6
              %
              
              100.0
              %Total
                  from prior year's comparable quarter
              
              
              67.8
              %
              
              24.7
              %
              
              7.5
              %
              
              100.0
              %
 The
          increase in Americas-based sales was entirely due to acquisitions.
  **Gross
                    profit:**
                
                2007
                
                2006
                
                %
                    Change$
                49.8
                
                $
                39.7
                
                
                25
                %Margin
                
                
                27.3
                %
                
                26.0
                %
                
                N/A
  Increased
          sales were responsible for the increase in gross profit in the period.
          Gross
          margin improved by 130 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$
                30.7
                
                $
                24.9
                
                
                23
                %
 
 In
          aggregate, operating expenses associated with acquired businesses accounted
          for
          approximately $3.0 million of the increase in operating expenses over the
          prior-year quarter. Higher personnel levels and professional fee expense
          represented the largest portion of the remaining increase.
  **Operating
                    profit:**
                
                2007
                
                2006
                
                %
                    Change$
                19.1
                
                $
                14.8
                
                
                29
                %Margin
                
                
                10.5
                %
                
                9.7
                %
                
                N/A
 
 Operating
          profit increased with the higher gross profit reported in the 2007 period.
          The
          80 basis point increase in operating margin reflected greater contribution
          by
          the Environmental and Oilfield services segments which have the highest
          operating margins.
  **Interest
                    expense, net:**
                
                2007
                
                2006
                
                %
                    Change$
                2.2
                
                $
                0.6
                
                
                267
                %
 
 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.
 
 **Other
                    income / (expense):**
                
                2007
                
                2006
                
                %
                    Change$
                0.0
                
                $
                0.3
                
                
                100
                %
 
 18
 In
          the
          prior reporting period, we recognized 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**$
                4.2
                
                $
                3.9
                
                
                8
                %Effective
                    tax rate
                
                
                24.7
                %
                
                26.6
                %
                
                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 decline in the tax rate reflects updated estimates
          of
          taxable income distribution between our domestic and overseas businesses.
 
 **Income
                    from affiliates &
                    joint ventures:**
                
                2007
                
                2006
                
                %
                    Change$
                2.5
                
                $
                1.2
                
                
                108
                %
 
 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$
                15.0
                
                $
                11.9
                
                
                26
                %Margin
                
                
                8.2
                %
                
                7.8
                %
                
                N/A
 
 Current-period
          net income improved due to higher operating profit and a lower effective
          tax
          rate. The loss from discontinued operations in the current-year reporting
          period
          was caused by the sale of a business based in the U.K. that was part of
          our
          Minerals segment.
 
 **Diluted
                    earnings per share:**
                
                2007
                
                2006
                
                %
                    Change$
                0.48
                
                $
                0.39
                
                
                23
                %
 
 Earnings
          per share improved commensurate with greater net income. The sale of the
          U.K.
          business mentioned above resulted in a $0.01 per share decrease in the
          current-year period. Weighted average common and common equivalent shares
          outstanding remained relatively constant at 30.9 million compared with
          the 2006
          period.
 
 19
 **Segment
          analysis:**
 
 Following
          is a review of operating results for each of our five reporting
          segments:
 **Three
                      Months Ended June 30,****Minerals**
                  
                  **2007**
                  
                  **2006**
                  
                  **2007
                      vs. 2006**(Dollars
                      in Thousands)Net
                      sales
                  
                  $
                  85,713
                  
                  
                  100.0
                  %
                  $
                  78,118
                  
                  
                  100.0
                  %
                  $
                  7,595
                  
                  
                  9.7
                  %Cost
                      of sales
                  
                  
                  69,381
                  
                  
                  80.9
                  %
                  
                  62,470
                  
                  
                  80.0
                  %Gross
                      profit
                  
                  
                  16,332
                  
                  
                  19.1
                  %
                  
                  15,648
                  
                  
                  20.0
                  %
                  
                  684
                  
                  
                  4.4
                  %General,
                      selling andadministrative
                      expenses
                  
                  
                  8,018
                  
                  
                  9.4
                  %
                  
                  6,948
                  
                  
                  8.9
                  %
                  
                  1,070
                  
                  
                  15.4
                  %Operating
                      profit
                  
                  
                  8,314
                  
                  
                  9.7
                  %
                  
                  8,700
                  
                  
                  11.1
                  %
                  
                  (386
                  )
                  
                  -4.4
                  %
  Base
            business sales, on a constant currency basis, declined by 0.3 percent
            from the
            prior-year period. Lower sales volume in the domestic metalcasting market
            accounted for reduced base business revenue offsetting higher sales in
            the
            Asia-Pacific metalcasting, specialty minerals and pet products areas.
            An
            acquisition and favorable exchange rates grew sales by 7.8 percent and
            2.2
            percent increase in sales 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 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
                  
                  $
                  63,064
                  
                  $
                  58,269
                  
                  
                  8.2
                  %EMEA
                  
                  
                  12,172
                  
                  
                  11,462
                  
                  
                  6.2
                  %Asia
                      Pacific
                  
                  
                  10,477
                  
                  
                  8,387
                  
                  
                  24.9
                  %Total
                      segment
                  
                  $
                  85,713
                  
                  $
                  78,118
                  
                  
                  39.3
                  %
 Gross
          profit margin declined by 90 basis points principally due to higher
          manufacturing costs in the current-year period. Additionally, sales from
          the
          pass-through of higher freight costs negatively impacted gross margin since
          we
          realize minimal profit. Both the U.S. and Asia-Pacific manufacturing operations
          experienced higher costs in the current-year period. Within Asia-Pacific,
          start-up costs at new operations in China and Australia caused the increase.
 
 Approximately
          $0.6 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
          G, S
& A.
 
 Operating
          margin declined by 140 basis points from the 2006 period in conjunction
          with the
          lower gross margin and increase in G, S & 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.
 
 20


**Three
                      Months Ended June 30,****Environmental**
                  
                  **2007**
                  
                  **2006**
                  
                  **2007
                      vs. 2006**(Dollars
                      in Thousands)Net
                      sales
                  
                  $
                  65,108
                  
                  
                  100.0
                  %
                  $
                  52,718
                  
                  
                  100.0
                  %
                  $
                  12,390
                  
                  
                  23.5
                  %Cost
                      of sales
                  
                  
                  42,521
                  
                  
                  65.3
                  %
                  
                  34,752
                  
                  
                  65.9
                  %Gross
                      profit
                  
                  
                  22,587
                  
                  
                  34.7
                  %
                  
                  17,966
                  
                  
                  34.1
                  %
                  
                  4,621
                  
                  
                  25.7
                  %General,
                      selling andadministrative
                      expenses
                  
                  
                  12,652
                  
                  
                  19.4
                  %
                  
                  10,326
                  
                  
                  19.6
                  %
                  
                  2,326
                  
                  
                  22.5
                  %Operating
                      profit
                  
                  
                  9,935
                  
                  
                  15.3
                  %
                  
                  7,640
                  
                  
                  14.5
                  %
                  
                  2,295
                  
                  
                  30.0
                  %


Base
      business sales, on a constant currency basis, increased by 13.1 percent over
      the
      prior-year period. Improved shipments of lining technology and building material
      products in the U.S. and European markets 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 by 6.1 percent and 4.3 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
              
              $
              36,568
              
              $
              26,748
              
              
              36.7
              %EMEA
              
              
              25,141
              
              
              22,832
              
              
              10.1
              %Asia
                  Pacific
              
              
              3,399
              
              
              3,138
              
              
              8.3
              %Total
                  segment
              
              $
              65,108
              
              $
              52,718
              
              
              55.1
              %


Gross
      profit improved in conjunction with sales. The 60 basis point improvement in
      gross margin was due to product mix and lower manufacturing costs in the U.S.
      operations.





Approximately
      $1.0 million of the increase in general, selling and administrative expenses
      was
      due to an acquired business. Base business G, S & 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 80 basis points due to the expanded gross margin and a lower
      relative increase in G, S & A expenses in the current-year
      quarter.





21





**Three
                  Months Ended June 30,****Oilfield
                  Services**
              
              **2007**
              
              **2006**
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Net
                  sales
              
              $
              23,030
              
              
              100.0
              %
              $
              14,141
              
              
              100.0
              %
              $
              8,889
              
              
              62.9
              %Cost
                  of sales
              
              
              13,660
              
              
              59.3
              %
              
              9,572
              
              
              67.7
              %Gross
                  profit
              
              
              9,370
              
              
              40.7
              %
              
              4,569
              
              
              32.3
              %
              
              4,801
              
              
              105.1
              %General,
                  selling andadministrative
                  expenses
              
              
              4,446
              
              
              19.3
              %
              
              2,547
              
              
              18.0
              %
              
              1,899
              
              
              74.6
              %Operating
                  profit
              
              
              4,924
              
              
              21.4
              %
              
              2,022
              
              
              14.3
              %
              
              2,902
              
              
              143.5
              %




Base
      business sales, on a constant currency basis, increased by 17.3 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 by 44.3 percent and
      1.3
      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
              
              $
              20,092
              
              $
              10,783
              
              
              86.3
              %EMEA
              
              
              2,938
              
              
              3,358
              
              
              -12.5
              %Asia
                  Pacific
              
              
              -
              
              
              -
              
              
              N/ATotal
                  segment
              
              $
              23,030
              
              $
              14,141
              
              
              73.8
              %





Gross
      margin improved by 840 basis points primarily due to product/service mix. The
      two acquired businesses also both generate higher margins than our base
      businesses.





Approximately
      $1.4 million of the increase in general, selling and administrative expenses
      was
      due to acquired businesses. Base business G, S & A increased due to higher
      personnel costs. Operating margin improved 710 basis points due to the higher
      relative increase in gross profit than G, S &A over the prior-year
      period.


**Three
                  Months Ended June 30,****Transportation**
              
              
              **2007**
              
              
              **2006**
              
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Net
                  sales
              
              $
              13,380
              
              
              100.0
              %
              $
              12,848
              
              
              100.0
              %
              $
              532
              
              
              4.1
              %Cost
                  of sales
              
              
              11,878
              
              
              88.8
              %
              
              11,336
              
              
              88.2
              %Gross
                  profit
              
              
              1,502
              
              
              11.2
              %
              
              1,512
              
              
              11.8
              %
              
              (10
              )
              
              -0.7
              %General,
                  selling andadministrative
                  expenses
              
              
              770
              
              
              5.8
              %
              
              780
              
              
              6.1
              %
              
              (10
              )
              
              -1.3
              %Operating
                  profit
              
              
              732
              
              
              5.4
              %
              
              732
              
              
              5.7
              %
              
              -
              
              
              0.0
              %


Traffic
      levels and revenue mix improved over the prior-year period. Transportation
      services for the Environmental segment primarily led increase. Gross profit
      and
      margins were negatively impacted by the higher net fuel surcharge costs. G,
      S
& A spending declined over the 2006 quarter in several
      categories.




22




**Three
                  Months Ended June 30,****Corporate**
              
              
              **2007**
              
              
              **2006**
              
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Intersegment
                  shipping sales
              
              $
              (4,777
              )
              $
              (5,124
              )Intersegment
                  shipping costs
              
              
              (4,777
              )
              
              (5,124
              )Gross
                  profit
              
              
              -
              
              
              -Corporate
                  general, sellingand
                  administrative expenses
              
              
              4,768
              
              
              4,266
              
              
              502
              
              
              11.8
              %Operating
                  loss
              
              
              4,768
              
              
              4,266
              
              
              502
              
              
              11.8
              %




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





Corporate
      G, S & A increased primarily due to higher personnel and professional
      service expenses.





***Six
      months ended June 30, 2007 vs. June 30, 2006***





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


**Net
                  sales:**
              
              
              **2007**
              
              
              **2006**
              
              
              **%
                  Change**$
              346.2
              
              $
              295.5
              
              
              17
              %


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


**Foreign****Base
                  Business**
              
              **Acquisitions**
              
              **Exchange**
              
              **Total**Minerals
              
              
              -0.2
              %
              
              3.5
              %
              
              1.2
              %
              
              4.5
              %Environmental
              
              
              3.9
              %
              
              1.7
              %
              
              1.5
              %
              
              7.1
              %Oilfield
                  services
              
              
              0.9
              %
              
              4.3
              %
              
              0.2
              %
              
              5.4
              %Transportation
              
              
              0.1
              %
              
              0
              %
              
              0.0
              %
              
              0.1
              %Total
              
              
              4.7
              %
              
              9.5
              %
              
              2.9
              %
              
              17.1
              %%
                  of growth
              
              
              28.1
              %
              
              55.0
              %
              
              16.9
              %
              
              100.0
              %




23


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;
      and
      Asia Pacific) and the comparable total from the prior year’s
      period:


**Americas**
              
              **EMEA**
              
              **Asia
                  Pacific**
              
              **Total**Minerals
              
              
              36.5
              %
              
              7.1
              %
              
              5.9
              %
              
              49.5
              %Environmental
              
              
              17.1
              %
              
              13.7
              %
              
              2.1
              %
              
              32.9
              %Oilfield
                  services
              
              
              11.2
              %
              
              1.8
              %
              
              0.0
              %
              
              13.0
              %Transportation
              
              
              4.6
              %
              
              0.0
              %
              
              0.0
              %
              
              4.6
              %Total
                  - current year's period
              
              
              69.4
              %
              
              22.6
              %
              
              8.0
              %
              
              100.0
              %Total
                  from prior year's comparable period
              
              
              69.4
              %
              
              23.0
              %
              
              7.6
              %
              
              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$
              93.3
              
              $
              75.4
              
              
              24
              %Margin
              
              
              27.0
              %
              
              25.5
              %
              
              N/A


Increased
      sales were responsible for the increase in gross profit in the period. Gross
      margin improved by 150 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$
              59.4
              
              $
              48.6
              
              
              22
              %





In
      aggregate, operating expenses associated with acquired businesses accounted
      for
      approximately $5.4 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$
              33.8
              
              $
              26.9
              
              
              26
              %Margin
              
              
              9.8
              %
              
              9.1
              %
              
              N/A




Operating
      profit increased with the higher gross profit reported in the 2007 period.
      The
      70 basis point increase in operating margin reflected greater contribution
      by
      the Environmental and Oilfield services segments which have the highest
      operating margins.


**Interest
                  expense, net:**
              
              
              2007
              
              
              2006
              
              
              %
                  Change$
              4.1
              
              $
              1.1
              
              
              273
              %





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.


**Other
                  income / (expense):**
              
              2007
              
              2006
              
              %
                  Change$
              (0.2
              )
              $
              0.5
              
              
              140
              %




24




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$
              7.5
              
              $
              7.3
              
              
              3
              %Effective
                  tax rate
              
              
              25.4
              %
              
              27.6
              %
              
              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 additional expense 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.


**Income
                  from affiliates &
                  joint ventures:**
              
              2007
              
              2006
              
              %
                  Change$
              4.0
              
              $
              2.6
              
              
              54
              %


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$
              25.8
              
              $
              21.6
              
              
              19
              %Margin
              
              
              7.4
              %
              
              7.3
              %
              
              N/A




Current-period
      net income improved due to higher operating profit and a lower effective tax
      rate. The loss from discontinued operations in the current-year reporting period
      was caused by the sale of a business based in the U.K. that was part of our
      Minerals segment.


**Diluted
                  earnings per share:**
              
              2007
              
              2006
              
              %
                  Change$
              0.83
              
              $
              0.70
              
              
              19
              %





Earnings
      per share improved commensurate with greater net income. The sale of the U.K.
      business mentioned above resulted in a $0.01 per share decrease in the
      current-year period. Weighted average common and common equivalent shares
      outstanding for the 2007 period were 30.9 million compared with 31.0 million
      for
      the 2006 period, or a decrease of 0.2 percent.





**Segment
      analysis:**





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


**Six
                  Months Ended June 30,****Minerals**
              
              **2007**
              
              **2006**
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Net
                  sales
              
              $
              171,526
              
              
              100.0
              %
              $
              158,189
              
              
              100.0
              %
              $
              13,337
              
              
              8.4
              %Cost
                  of sales
              
              
              138,395
              
              
              80.7
              %
              
              127,649
              
              
              80.7
              %Gross
                  profit
              
              
              33,131
              
              
              19.3
              %
              
              30,540
              
              
              19.3
              %
              
              2,591
              
              
              8.5
              %General,
                  selling andadministrative
                  expenses
              
              
              15,560
              
              
              9.1
              %
              
              13,952
              
              
              8.8
              %
              
              1,608
              
              
              11.5
              %Operating
                  profit
              
              
              17,571
              
              
              10.2
              %
              
              16,588
              
              
              10.5
              %
              
              983
              
              
              5.9
              %





25


Base
      business sales, on a constant currency basis, declined by 0.4 percent from
      the
      prior-year period. Lower sales volume in the domestic metalcasting market
      accounted for reduced base business revenue offsetting higher sales in the
      Asia-Pacific metalcasting, specialty minerals and pet products areas. An
      acquisition and favorable exchange rates grew sales 6.5 percent and 2.3 percent,
      respectively, over the prior-year quarter. 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
              
              $
              126,524
              
              $
              118,278
              
              
              7.0
              %EMEA
              
              
              24,643
              
              
              22,942
              
              
              7.4
              %Asia
                  Pacific
              
              
              20,359
              
              
              16,969
              
              
              20.0
              %Total
                  segment
              
              $
              171,526
              
              $
              158,189
              
              
              34.4
              %




Gross
      profit margin remained the same for both reporting periods despite the increase
      in sales. Higher sales from the pass-through of freight costs negatively
      impacted gross margin in the current-year period since we realize minimal
      profit. Both the U.S. and Asia-Pacific manufacturing operations experienced
      higher costs in the current-year period. Within Asia-Pacific, start-up costs
      at
      new operations in China and Australia caused the increase.





Approximately
      $0.9 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 G, S
      & A.





Operating
      margin declined by 30 basis points from the 2006 period in conjunction with
      the
      unchanged gross margin and increase in G, S & 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.





26




**Six
                    Months Ended June 30,****Environmental**
                
                **2007**
                
                **2006**
                
                **2007
                    vs. 2006**(Dollars
                    in Thousands)Net
                    sales
                
                $
                113,806
                
                
                100.0
                %
                $
                92,876
                
                
                100.0
                %
                $
                20,930
                
                
                22.5
                %Cost
                    of sales
                
                
                73,684
                
                
                64.7
                %
                
                60,631
                
                
                65.3
                %Gross
                    profit
                
                
                40,122
                
                
                35.3
                %
                
                32,245
                
                
                34.7
                %
                
                7,877
                
                
                24.4
                %General,
                    selling andadministrative
                    expenses
                
                
                23,944
                
                
                21.0
                %
                
                19,819
                
                
                21.3
                %
                
                4,125
                
                
                20.8
                %Operating
                    profit
                
                
                16,178
                
                
                14.3
                %
                
                12,426
                
                
                13.4
                %
                
                3,752
                
                
                30.2
                %




Base
      business sales, on a constant currency basis, increased by 12.3 percent over
      the
      prior-year period. Improved shipments of lining technology and building material
      products in the U.S. and European markets 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
      accounted grew sales 5.4 percent and 4.8 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
              
              $
              59,130
              
              $
              48,420
              
              
              22.1
              %EMEA
              
              
              47,541
              
              
              39,079
              
              
              21.7
              %Asia
                  Pacific
              
              
              7,135
              
              
              5,377
              
              
              32.7
              %Total
                  segment
              
              $
              113,806
              
              $
              92,876
              
              
              76.5
              %


Gross
      profit improved in conjunction with sales. The 60 basis point improvement in
      gross margin was due to product mix and lower manufacturing costs in the U.S.
      operations.





Approximately
      $1.7 million of the increase in general, selling and administrative expenses
      was
      due to an acquired business. Base business G, S & 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 90
      basis points due to the expanded gross margin and a lower relative increase
      in
      G, S & A expenses in the current-year quarter.


**Six
                  Months Ended June 30,****Oilfield
                  Services**
              
              **2007**
              
              **2006**
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Net
                  sales
              
              $
              44,994
              
              
              100.0
              %
              $
              29,113
              
              
              100.0
              %
              $
              15,881
              
              
              54.5
              %Cost
                  of sales
              
              
              27,737
              
              
              61.6
              %
              
              19,468
              
              
              66.9
              %Gross
                  profit
              
              
              17,257
              
              
              38.4
              %
              
              9,645
              
              
              33.1
              %
              
              7,612
              
              
              78.9
              %General,
                  selling andadministrative
                  expenses
              
              
              9,167
              
              
              20.4
              %
              
              4,678
              
              
              16.1
              %
              
              4,489
              
              
              96.0
              %Operating
                  profit
              
              
              8,090
              
              
              18.0
              %
              
              4,967
              
              
              17.0
              %
              
              3,123
              
              
              62.9
              %




27





Base
      businesses sales, on a constant currency basis, increased by 9.5 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 43.3 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
              
              $
              38,600
              
              $
              23,163
              
              
              66.6
              %EMEA
              
              
              6,394
              
              
              5,950
              
              
              7.5
              %Asia
                  Pacific
              
              
              -
              
              
              -
              
              
              N/ATotal
                  segment
              
              $
              44,994
              
              $
              29,113
              
              
              74.1
              %





Gross
      margin improved by 530 basis points primarily due to product/service mix. The
      two acquired businesses also both generate higher margins than our base
      businesses.





Approximately
      $2.9 million of the increase in general, selling and administrative expenses
      was
      due to acquired businesses. Base business G, S & A increased due to higher
      personnel costs. Operating margin improved 100 basis points due to the higher
      relative increase in gross profit than G, S &A over the prior-year
      period.


**Six
                  Months Ended June 30,****Transportation**
              
              **2007**
              
              **2006**
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Net
                  sales
              
              $
              24,273
              
              
              100.0
              %
              $
              25,319
              
              
              100.0
              %
              $
              (1,046
              )
              
              -4.1
              %Cost
                  of sales
              
              
              21,493
              
              
              88.5
              %
              
              22,325
              
              
              88.2
              %Gross
                  profit
              
              
              2,780
              
              
              11.5
              %
              
              2,994
              
              
              11.8
              %
              
              (214
              )
              
              -7.1
              %General,
                  selling andadministrative
                  expenses
              
              
              1,508
              
              
              6.2
              %
              
              1,579
              
              
              6.2
              %
              
              (71
              )
              
              -4.5
              %Operating
                  profit
              
              
              1,272
              
              
              5.3
              %
              
              1,415
              
              
              5.6
              %
              
              (143
              )
              
              -10.1
              %




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. G, S & A
      spending declined over the 2006 period in several categories.




28




**Six
                  Months Ended****June
                  30,****Corporate**
              
              **2007**
              
              **2006**
              
              **2007
                  vs. 2006**(Dollars
                  in Thousands)Intersegment
                  shipping sales
              
              $
              (8,417
              )
              $
              (10,032
              )Intersegment
                  shipping costs
              
              
              (8,417
              )
              
              (10,032
              )Gross
                  profit
              
              
              -
              
              
              -Corporate
                  general, sellingand
                  administrative expenses
              
              
              9,280
              
              
              8,521
              
              
              759
              
              
              8.9
              %Operating
                  loss
              
              
              9,280
              
              
              8,521
              
              
              759
              
              
              8.9
              %


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
      G, S & 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.


**Cash
                  Flows ($ in million)****June
                  30,****2007**
              
              **2006**Net
                  cash provided by (used in) operating activities
              
              $
              25.6
              
              $
              5.7Net
                  cash provided by (used in) investing activities
              
              $
              (62.9
              )
              $
              (21.6
              )Net
                  cash provided by (used in) financing activities
              
              $
              43.3
              
              $
              9.3


Cash
      flows from operating activities improved largely due to higher current-year
      net
      income, non-cash charges such as depreciation and amortization, and less of
      an
      increase in working capital needs. 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.





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 $21.9
      million for the 2007 period compared with $20.5 million in the prior-year
      period. 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 a new investment in Antwerp,
      Belgium. The 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.




29





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.





Dividends
      declared increased to $0.28 per share from $0.23 per share in the prior- year
      period, consequently increasing the financing needs this year. We spent $6.1
      million on the repurchase of Company stock on the open market through June
      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 10, 2006;
      the
      authorization will expire on November 10, 2008.


**Financial
                  Position**
              
              **As
                  at****($
                  in millions)**
              
              **June
                  30,**
              
              **December
                  31,****2007**
              
              **2006**Working
                  capital
              
              $
              201.2
              
              $
              173.3Goodwill
                  & intangible assets
              
              $
              95.2
              
              $
              66.0Total
                  assets
              
              $
              604.7
              
              $
              511.2Long-term
                  debt
              
              $
              168.2
              
              $
              112.4Other
                  long-term obligations
              
              $
              34.8
              
              $
              25.6Stockholder's
                  equity
              
              $
              314.7
              
              $
              294.8





Working
      capital at June 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 3.3-to-1 and 3.2-to-1 at June 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 35% at
      June 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 $64 million of borrowing capacity available from our revolving
      credit facility. We are in compliance with financial covenants related to the
      revolving credit facility as of June 30, 2007.





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.




30





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.





**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.




31





**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**





In
      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.


**2007**
              
              **Total
                      Number of Shares Repurchased as Part of the Stock Repurchase
                      Program**
              
              **Average
                    Price Paid Per Share**
              
              **Maximum
                        Value of Shares that May Yet Be Repurchased Under the
                        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
              
              
              -
              
              $
              -
              
              $
              8,915,000Total
              
              
              250,000
              
              $
              24.34
              
              $
              8,915,000


**Item
      2:**  **Submission
      of Matters to a Vote of Security Holders**





(a)
            The
                Annual Meeting of Shareholders was held on May 10,
                2007.




(b)
            See
                Item 4(c) below.




(c)
            At
                the Annual Meeting of Shareholders, the shareholders voted on the
                election
                of three directors, each to serve a three year term. The voting results
                were as follows:




In
      the
      election of directors, each nominee was elected by a vote of shareholders as
      follows to serve for three years or until successors are elected and
      qualified:


Director
              
              For
              
              AgainstArthur
                  Brown
              
              
              26,212,751.89
              
              
              760,118.91Jay
                  D. Proops
              
              
              26,624,047.89
              
              
              348,822.91Paul
                  C. Weaver
              
              
              26,694,875.29
              
              
              277,995.51




32




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





**Exhibit**


**Number**





10.1
            
            Note
                Purchase Agreement dated as of April 2, 2007 by and between AMCOL
                International Corporation and Metropolitan Life Insurance Company
                (incorporated by reference to Exhibit 10.1 to the Company’s Report on Form
                8-K filed April 5, 2007).10.2
            
            Subsidiary
                Guaranty Agreement dated April 2, 2007 (incorporated by reference
                to
                Exhibit 10.2 to the Company’s Report on Form 8-K filed April 5,
                2007).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.





33




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:
              August
              9, 2007
            
            /s/ Lawrence
              E. WashowLawrence
                E. Washow
              President
                and Chief Executive Officer Date:August
              9, 2007
            
            /s/ Gary
              L.
              CastagnaGary
                L. Castagna
              Senior
                Vice President and Chief Financial Officer
              and
                Principal Accounting Officer




34




10.1
            
            Note
                Purchase Agreement dated as of April 2, 2007 by and between AMCOL
                International Corporation and Metropolitan Life Insurance Company
                (incorporated by reference to Exhibit 10.1 to the Company’s Report on Form
                8-K filed April 5, 2007).10.2
            
            Subsidiary
                Guaranty Agreement dated April 2, 2007 (incorporated by reference
                to
                Exhibit 10.2 to the Company’s Report on Form 8-K filed April 5,
                2007).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.





35