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,
2009


Or


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





For the
transition period from ______________________ to _______________________
______________





Commission
file number 0-15661





AMCOL INTERNATIONAL CORPORATION





(Exact
name of registrant as specified in its charter)





Delaware
                  
                  36-0724340(State or other jurisdiction of incorporation or organization)
                  
                  (IRS Employer Identification No.)2870 Forbs Avenue, Hoffman Estates, IL
                  
                  60192(Address
      of principal executive offices)
                  
                  (Zip
      Code)





(847) 851-1500





(Registrant’s
telephone number, including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.    Yes xNo  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).   Yes
 ̈No  ̈





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


Large
      accelerated filer   ̈
            Accelerated
      filer  x
            Non-accelerated
      filer   ̈Smaller
      reporting company   ̈





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





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


Class
                
                Outstanding at August 3,
    2009(Common
      stock, $.01 par value)
                
                30,610,718
      Shares










AMCOL INTERNATIONAL
CORPORATION





INDEX





Page No.Part I - Financial
    InformationItem
      1:
                                                Financial
      StatementsCondensed
      Consolidated Balance Sheets –June
      30, 2009 and December 31, 2008
                                                3Condensed
      Consolidated Statements of Operations –three
      and six months ended June 30, 2009 and 2008
                                                5Condensed
      Consolidated Statements of Comprehensive Income –three
      and six months ended June 30, 2009 and 2008
                                                6Condensed
      Consolidated Statements of Changes in Equity –six
      months ended June 30, 2009 and 2008
                                                7Condensed
      Consolidated Statements of Cash Flows –six
      months ended June 30, 2009 and 2008
                                                8Notes
      to Condensed Consolidated Financial Statements
                                                9Item
      2:
                                                Management’s
      Discussion and Analysis of FinancialCondition
      and Results of Operations
                                                19Item
      3:
                                                Quantitative
      and Qualitative Disclosures About Market Risk
                                                36Item
      4:
                                                Controls
      and Procedures
                                                36Part II - Other
      InformationItem
      1A:
                                                Risk
      Factors
                                                37Item
      4:
                                                Submission
      of Matters to a Vote of Security Holders
                                                40Item
      6:
                                                Exhibits
                                                40


2


AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands)





Item
1:  Financial Statements





June 30,
                                
                                
                                December 31,ASSETS
                                
                                2009
                                
                                
                                2008(unaudited)
                                
                                
                                *Current
      assets:Cash
      and cash equivalents
                                
                                $
                                21,357
                                
                                
                                $
                                19,441Accounts
      receivable, net
                                
                                
                                155,196
                                
                                
                                
                                197,611Inventories
                                
                                
                                104,776
                                
                                
                                
                                125,066Prepaid
      expenses
                                
                                
                                13,969
                                
                                
                                
                                12,812Deferred
      income taxes
                                
                                
                                4,723
                                
                                
                                
                                5,358Income
      tax receivable
                                
                                
                                4,008
                                
                                
                                
                                3,490Other
                                
                                
                                161
                                
                                
                                
                                7,409Total
      current assets
                                
                                
                                304,190
                                
                                
                                
                                371,187Investment
      in and advances to affiliates and joint ventures
                                
                                
                                28,043
                                
                                
                                
                                30,025Property,
      plant, equipment, and mineral rights and reserves:Land
      and mineral rights
                                
                                
                                53,628
                                
                                
                                
                                17,186Depreciable
      assets
                                
                                
                                399,099
                                
                                
                                
                                380,555452,727
                                
                                
                                
                                397,741Less:
      accumulated depreciation and depletion
                                
                                
                                222,606
                                
                                
                                
                                206,398230,121
                                
                                
                                
                                191,343Other
      assets:Goodwill
                                
                                
                                71,035
                                
                                
                                
                                68,482Intangible
      assets, net
                                
                                
                                50,352
                                
                                
                                
                                53,974Deferred
      income taxes
                                
                                
                                15,136
                                
                                
                                
                                15,867Other
      assets
                                
                                
                                22,575
                                
                                
                                
                                13,702159,098
                                
                                
                                
                                152,025$
                                721,452
                                
                                
                                $
                                744,580





Continued...


3


AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands)





June 30,
                                                    
                                                    
                                                    December 31,LIABILITIES AND SHAREHOLDERS' EQUITY
                                                    
                                                    2009
                                                    
                                                    
                                                    2008(unaudited)
                                                    
                                                    
                                                    *Current
      liabilities:Accounts
      payable
                                                    
                                                    $
                                                    43,837
                                                    
                                                    
                                                    $
                                                    45,297Accrued
      liabilities
                                                    
                                                    
                                                    52,257
                                                    
                                                    
                                                    
                                                    63,197Total
      current liabilities
                                                    
                                                    
                                                    96,094
                                                    
                                                    
                                                    
                                                    108,494Long-term
      debt
                                                    
                                                    
                                                    230,056
                                                    
                                                    
                                                    
                                                    256,821Pension
      liabilities
                                                    
                                                    
                                                    24,263
                                                    
                                                    
                                                    
                                                    22,939Other
      liabilities
                                                    
                                                    
                                                    41,120
                                                    
                                                    
                                                    
                                                    27,97165,383
                                                    
                                                    
                                                    
                                                    50,910Equity:Common
      stock
                                                    
                                                    
                                                    320
                                                    
                                                    
                                                    
                                                    320Additional
      paid in capital
                                                    
                                                    
                                                    82,586
                                                    
                                                    
                                                    
                                                    86,350Retained
      earnings
                                                    
                                                    
                                                    261,712
                                                    
                                                    
                                                    
                                                    262,453Accumulated
      other comprehensive income (loss)
                                                    
                                                    
                                                    540
                                                    
                                                    
                                                    
                                                    (4,721
                                                    )345,158
                                                    
                                                    
                                                    
                                                    344,402Treasury
      stock
                                                    
                                                    
                                                    (16,330
                                                    )
                                                    
                                                    
                                                    (18,196
                                                    )Total
      AMCOL shareholders' equity
                                                    
                                                    
                                                    328,828
                                                    
                                                    
                                                    
                                                    326,206Noncontrolling
      interest
                                                    
                                                    
                                                    1,091
                                                    
                                                    
                                                    
                                                    2,149Total
      equity
                                                    
                                                    
                                                    329,919
                                                    
                                                    
                                                    
                                                    328,355$
                                                    721,452
                                                    
                                                    
                                                    $
                                                    744,580





*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 EndedJune
      30,
                                    
                                    
                                    June
      30,2009
                                    
                                    
                                    2008
                                    
                                    
                                    2009
                                    
                                    
                                    2008Net
      sales
                                    
                                    $
                                    335,619
                                    
                                    
                                    $
                                    425,256
                                    
                                    
                                    $
                                    171,200
                                    
                                    
                                    $
                                    233,847Cost
      of sales
                                    
                                    
                                    245,251
                                    
                                    
                                    
                                    316,246
                                    
                                    
                                    
                                    124,052
                                    
                                    
                                    
                                    171,187Gross
      profit
                                    
                                    
                                    90,368
                                    
                                    
                                    
                                    109,010
                                    
                                    
                                    
                                    47,148
                                    
                                    
                                    
                                    62,660General,
      selling and administrative expenses
                                    
                                    
                                    66,421
                                    
                                    
                                    
                                    72,847
                                    
                                    
                                    
                                    33,368
                                    
                                    
                                    
                                    39,209Operating
      profit
                                    
                                    
                                    23,947
                                    
                                    
                                    
                                    36,163
                                    
                                    
                                    
                                    13,780
                                    
                                    
                                    
                                    23,451Other
      income (expense):Interest
      expense, net
                                    
                                    
                                    (6,566
                                    )
                                    
                                    
                                    (5,238
                                    )
                                    
                                    
                                    (3,159
                                    )
                                    
                                    
                                    (2,837
                                    )Other,
      net
                                    
                                    
                                    (2,714
                                    )
                                    
                                    
                                    595
                                    
                                    
                                    
                                    (1,502
                                    )
                                    
                                    
                                    830(9,280
                                    )
                                    
                                    
                                    (4,643
                                    )
                                    
                                    
                                    (4,661
                                    )
                                    
                                    
                                    (2,007
                                    )Income
      before income taxes and income (loss) fromaffiliates
      and joint ventures
                                    
                                    
                                    14,667
                                    
                                    
                                    
                                    31,520
                                    
                                    
                                    
                                    9,119
                                    
                                    
                                    
                                    21,444Income
      tax expense
                                    
                                    
                                    3,117
                                    
                                    
                                    
                                    8,383
                                    
                                    
                                    
                                    1,546
                                    
                                    
                                    
                                    5,666Income
      before income (loss) from affiliates andjoint
      ventures
                                    
                                    
                                    11,550
                                    
                                    
                                    
                                    23,137
                                    
                                    
                                    
                                    7,573
                                    
                                    
                                    
                                    15,778Income
      (loss) from affiliates and joint ventures
                                    
                                    
                                    (1,642
                                    )
                                    
                                    
                                    625
                                    
                                    
                                    
                                    (1,634
                                    )
                                    
                                    
                                    (670
                                    )Net
      income
                                    
                                    
                                    9,908
                                    
                                    
                                    
                                    23,762
                                    
                                    
                                    
                                    5,939
                                    
                                    
                                    
                                    15,108Net
      income (loss) attributable to noncontrolling interests
                                    
                                    
                                    (365
                                    )
                                    
                                    
                                    307
                                    
                                    
                                    
                                    (158
                                    )
                                    
                                    
                                    274Net
      income (loss) attributable to AMCOL shareholders
                                    
                                    $
                                    10,273
                                    
                                    
                                    $
                                    23,455
                                    
                                    
                                    $
                                    6,097
                                    
                                    
                                    $
                                    14,834Weighted
      average common shares outstanding
                                    
                                    
                                    30,719
                                    
                                    
                                    
                                    30,336
                                    
                                    
                                    
                                    30,744
                                    
                                    
                                    
                                    30,413Weighted
      average common and common equivalent shares outstanding
                                    
                                    
                                    30,928
                                    
                                    
                                    
                                    30,938
                                    
                                    
                                    
                                    30,984
                                    
                                    
                                    
                                    30,993Basic
      earnings per share attributable to AMCOL shareholders
                                    
                                    $
                                    0.33
                                    
                                    
                                    $
                                    0.77
                                    
                                    
                                    $
                                    0.20
                                    
                                    
                                    $
                                    0.49Diluted
      earnings per share attributable to AMCOL shareholders
                                    
                                    $
                                    0.33
                                    
                                    
                                    $
                                    0.76
                                    
                                    
                                    $
                                    0.20
                                    
                                    
                                    $
                                    0.48Dividends
      declared per share
                                    
                                    $
                                    0.36
                                    
                                    
                                    $
                                    0.32
                                    
                                    
                                    $
                                    0.18
                                    
                                    
                                    $
                                    0.16





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)





Total
                        
                        
                        AMCOL Shareholders
                        
                        
                        Noncontrolling InterestThree Months Ended
                        
                        
                        Three Months Ended
                        
                        
                        Three Months EndedJune 30,
                        
                        
                        June 30,
                        
                        
                        June 30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Net
      income (loss)
                        
                        $
                        5,939
                        
                        
                        $
                        15,108
                        
                        
                        $
                        6,097
                        
                        
                        $
                        14,834
                        
                        
                        $
                        (158
                        )
                        
                        $
                        274Other
      comprehensive income (loss):Foreign
      currency translation adjustment
                        
                        
                        13,471
                        
                        
                        
                        1,379
                        
                        
                        
                        13,131
                        
                        
                        
                        1,435
                        
                        
                        
                        340
                        
                        
                        
                        (56
                        )Unrealized
      gain (loss) on interest rate swap agreement
                        
                        
                        1,151
                        
                        
                        
                        2,109
                        
                        
                        
                        1,151
                        
                        
                        
                        2,109
                        
                        
                        
                        -
                        
                        
                        
                        -Other
                        
                        
                        (206
                        )
                        
                        
                        (663
                        )
                        
                        
                        (206
                        )
                        
                        
                        (663
                        )
                        
                        
                        -
                        
                        
                        
                        -Comprehensive
      income (loss)
                        
                        $
                        20,355
                        
                        
                        $
                        17,933
                        
                        
                        $
                        20,173
                        
                        
                        $
                        17,715
                        
                        
                        $
                        182
                        
                        
                        $
                        218





Total
                        
                        
                        AMCOL Shareholders
                        
                        
                        Noncontrolling InterestSix Months Ended
                        
                        
                        Six Months Ended
                        
                        
                        Six Months EndedJune 30,
                        
                        
                        June 30,
                        
                        
                        June 30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Net
      income (loss)
                        
                        $
                        9,908
                        
                        
                        $
                        23,762
                        
                        
                        $
                        10,273
                        
                        
                        $
                        23,455
                        
                        
                        $
                        (365
                        )
                        
                        $
                        307Other
      comprehensive income (loss):Foreign
      currency translation adjustment
                        
                        
                        4,505
                        
                        
                        
                        6,618
                        
                        
                        
                        4,208
                        
                        
                        
                        6,674
                        
                        
                        
                        297
                        
                        
                        
                        (56
                        )Unrealized
      gain (loss) on interest rate swap agreement
                        
                        
                        1,319
                        
                        
                        
                        (3
                        )
                        
                        
                        1,319
                        
                        
                        
                        (3
                        )
                        
                        
                        -
                        
                        
                        
                        -Other
                        
                        
                        (266
                        )
                        
                        
                        (70
                        )
                        
                        
                        (266
                        )
                        
                        
                        (70
                        )
                        
                        
                        -
                        
                        
                        
                        -Comprehensive
      income (loss)
                        
                        $
                        15,466
                        
                        
                        $
                        30,307
                        
                        
                        $
                        15,534
                        
                        
                        $
                        30,056
                        
                        
                        $
                        (68
                        )
                        
                        $
                        251





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


6




AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


(Unaudited)


(In
thousands)





AMCOL ShareholdersTotal
                                              Equity
                                            
                                            
                                            Retained
                                              Earnings
                                            
                                            
                                            Accumulated
                                              Other
                                              Comprehensive
                                              Income (Loss)
                                            
                                            
                                            Common
                                              Stock
                                            
                                            
                                            Treasury
                                              Stock
                                            
                                            
                                            Paid-in
                                              Capital
                                            
                                            
                                            Noncontrolling
                                              InterestBalance
      at December 31, 2007
                                            
                                            $
                                            352,650
                                            
                                            
                                            $
                                            258,164
                                            
                                            
                                            $
                                            33,248
                                            
                                            
                                            $
                                            320
                                            
                                            
                                            $
                                            (21,008
                                            )
                                            
                                            $
                                            81,599
                                            
                                            
                                            $
                                            327Net
      income
                                            
                                            
                                            23,762
                                            
                                            
                                            
                                            23,455
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            307Dividends
                                            
                                            
                                            (9,671
                                            )
                                            
                                            
                                            (9,671
                                            )Purchase
      of treasury shares
                                            
                                            
                                            (2,062
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (2,062
                                            )Issuance
      of treasury shares pursuant to options and acquisition
                                            
                                            
                                            4,920
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            4,216
                                            
                                            
                                            
                                            704Tax
      benefit from employee stock plans
                                            
                                            
                                            946
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            946Vesting
      of common stock in connection with employee stock plans
                                            
                                            
                                            1,542
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            1,542Comprehensive
      income (loss)
                                            
                                            
                                            6,545
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            6,601
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (56
                                            )Investments
      made
                                            
                                            
                                            2,447
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,447Other
                                            
                                            
                                            183
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            183Balance
      at June 30, 2008
                                            
                                            
                                            381,262
                                            
                                            
                                            
                                            271,948
                                            
                                            
                                            
                                            39,849
                                            
                                            
                                            
                                            320
                                            
                                            
                                            
                                            (18,854
                                            )
                                            
                                            
                                            84,791
                                            
                                            
                                            
                                            3,208Balance
      at December 31, 2008
                                            
                                            $
                                            328,355
                                            
                                            
                                            $
                                            262,453
                                            
                                            
                                            $
                                            (4,721
                                            )
                                            
                                            $
                                            320
                                            
                                            
                                            $
                                            (18,196
                                            )
                                            
                                            $
                                            86,350
                                            
                                            
                                            $
                                            2,149Net
      income (loss)
                                            
                                            
                                            9,908
                                            
                                            
                                            
                                            10,273
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (365
                                            )Dividends
                                            
                                            
                                            (11,014
                                            )
                                            
                                            
                                            (11,014
                                            )Purchase
      of treasury shares
                                            
                                            
                                            (175
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (175
                                            )Issuance
      of treasury shares pursuant to options and acquisition
                                            
                                            
                                            778
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,041
                                            
                                            
                                            
                                            (1,263
                                            )Tax
      benefit from employee stock plans
                                            
                                            
                                            783
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            783Vesting
      of common stock in connection with employee stock plans
                                            
                                            
                                            1,430
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            1,430Purchase
      of noncontrolling interest shares
                                            
                                            
                                            (5,704
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (4,714
                                            )
                                            
                                            
                                            (990
                                            )Comprehensive
      income (loss)
                                            
                                            
                                            5,558
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            5,261
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            297Balance
      at June 30, 2009
                                            
                                            
                                            329,919
                                            
                                            
                                            
                                            261,712
                                            
                                            
                                            
                                            540
                                            
                                            
                                            
                                            320
                                            
                                            
                                            
                                            (16,330
                                            )
                                            
                                            
                                            82,586
                                            
                                            
                                            
                                            1,091





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


7


AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)


(In
thousands)





Six
      Months EndedJune 30,2009
                          
                          
                          2008Cash
      flow from operating activities:Net
      income
                          
                          $
                          9,908
                          
                          
                          $
                          23,762Adjustments
      to reconcile from net income to net cashprovided
      by (used in) operating activities:Depreciation,
      depletion, and amortization
                          
                          
                          17,875
                          
                          
                          
                          15,747Other
      non-cash charges
                          
                          
                          3,630
                          
                          
                          
                          (488
                          )Changes
      in assets and liabilities, net of effects of acquisitions:Decrease
      (increase) in current assets
                          
                          
                          45,157
                          
                          
                          
                          (53,864
                          )Decrease
      (increase) in noncurrent assets
                          
                          
                          (4,665
                          )
                          
                          
                          (650
                          )Increase
      (decrease) in current liabilities
                          
                          
                          (8,004
                          )
                          
                          
                          12,065Increase  (decrease)
      in noncurrent liabilities
                          
                          
                          1,639
                          
                          
                          
                          1,416Net
      cash provided by (used in) operating activities
                          
                          
                          65,540
                          
                          
                          
                          (2,012
                          )Cash
      flow from investing activities:Capital
      expenditures
                          
                          
                          (32,446
                          )
                          
                          
                          (23,313
                          )Capital
      expenditures - corporate building
                          
                          
                          (6,400
                          )
                          
                          
                          (6,273
                          )Proceeds
      fron sale of depreciable assets - corporate building
                          
                          
                          6,400
                          
                          
                          
                          -Acquisitions,
      net of cash
                          
                          
                          (522
                          )
                          
                          
                          (42,257
                          )Investments
      in and advances to affiliates and joint ventures
                          
                          
                          (889
                          )
                          
                          
                          (9,715
                          )Receipts
      from (advances to) Chrome Corp
                          
                          
                          6,000
                          
                          
                          
                          (6,000
                          )Other
                          
                          
                          1,874
                          
                          
                          
                          (1,198
                          )Net
      cash used in investing activities
                          
                          
                          (25,983
                          )
                          
                          
                          (88,756
                          )Cash
      flow from financing activities:Net
      change in outstanding debt
                          
                          
                          (28,792
                          )
                          
                          
                          84,820Net
      change in outstanding debt - corporate building
                          
                          
                          -
                          
                          
                          
                          11,081Proceeds
      from sales of treasury stock
                          
                          
                          768
                          
                          
                          
                          1,272Purchases
      of treasury stock
                          
                          
                          (165
                          )
                          
                          
                          (2,062
                          )Dividends
                          
                          
                          (11,014
                          )
                          
                          
                          (9,671
                          )Excess
      tax benefits from stock-based compensation
                          
                          
                          686
                          
                          
                          
                          913Net
      cash provided by (used in) financing activities
                          
                          
                          (38,517
                          )
                          
                          
                          86,353Effect
      of foreign currency rate changes on cash
                          
                          
                          876
                          
                          
                          
                          1,115Net
      increase (decrease) in cash and cash equivalents
                          
                          
                          1,916
                          
                          
                          
                          (3,300
                          )Cash
      and cash equivalents at beginning of period
                          
                          
                          19,441
                          
                          
                          
                          25,282Cash
      and cash equivalents at end of period
                          
                          $
                          21,357
                          
                          
                          $
                          21,982





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


8





Note
1:       SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES





Company
Operations





We, AMCOL International Corporation
(the Company), operate 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, coil tubing 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 EndedJune
      30,2009
                    
                    
                    2008Minerals
                    
                    
                    46
                    %
                    
                    
                    49
                    %Environmental
                    
                    
                    30
                    %
                    
                    
                    32
                    %Oilfield
      services
                    
                    
                    19
                    %
                    
                    
                    15
                    %Transportation
                    
                    
                    7
                    %
                    
                    
                    7
                    %Intersegment
      shipping
                    
                    
                    -2
                    %
                    
                    
                    -3
                    %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, 2008, is unaudited.  The
condensed consolidated balance sheet as of December 31, 2008 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,
2008.  The information furnished herein includes all adjustments that
are, in our opinion, necessary for a fair presentation of our results of
operations and cash flows for the interim periods ended June 30,  2009
and 2008, and our financial position as of June 30, 2009, 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, 2008.





Certain items in the prior year’s
condensed consolidated financial statements contained herein and notes thereto
have been reclassified to conform to the condensed consolidated financial
statement presentation for the three and six months ended June 30, 2009. These
reclassifications did not have a material impact on our financial
statements.


9


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





The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year for a variety of reasons, including the seasonality of our
environmental segment, which varies due to the seasonal nature of the
construction industry, and our oilfield services segment, which varies due to
seasonality of weather in its various markets.





As appropriate, we have evaluated
subsequent events that have occurred through August 10, 2009, the date of
issuance for these condensed consolidated financial statements as well as the
filing date of this Form 10-Q.





Recently
Adopted Accounting Standards





In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51,” (“SFAS
160”).  A noncontrolling interest, sometimes called a minority
interest, is the portion of equity in a subsidiary not directly or indirectly
attributable to a parent company.  SFAS 160 establishes standards of
reporting for noncontrolling interests as well as deconsolidation of a
subsidiary.  SFAS 160 clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
clearly identified and reported within equity in the consolidated statement of
financial position, albeit separate from the parent company’s
equity.  It also requires consolidated net income to be reported at
amounts that include the amounts attributable to both the parent and
noncontrolling interests rather than reporting the noncontrolling interest as a
deduction in arriving at net income.  The adoption of SFAS 160 on
January 1, 2009 did not have a material impact on our financial statements. The
presentation and disclosure requirements of this standard were applied
retrospectively.





In
February 2008, the FASB issued FASB Staff Position (“FSP”) FAS157-2, “Effective Date of FASB Statement No.
157,”(“FSP FAS157-2”),which delayed our effective date of SFAS No. 157, “Fair Value Measurements,”(“SFAS 157”) to January 1, 2009, for nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually).
The adoption of FSP FAS 157-2 on January 1, 2009 did not have a material impact
on our financial statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities an amendment of FASB Statement No. 133,”
(“SFAS 161”).This standard requires enhanced disclosures about an entity’s derivative
and hedging activities and is intended to improve the transparency of financial
reporting. Entities are required to provide enhanced disclosures about (a) how
and why an entity uses derivative instruments, (b) how derivative instruments
and related hedged items are accounted for under FASB Statement No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” and its related interpretations, and
(c) how derivative instruments and related hedged items affect an entity’s
financial position, financial performance, and cash flows. The adoption of this
standard on January 1, 2009 did not have a material impact on our financial
statements. See Note 7 for additional disclosures required by this
standard.


10


In April
2009, FASB issued FSP No. 141(R)-1, “Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies,” (“FSP FAS 141(R)-1”). This FSP amends and clarifies the
provisions of SFAS No. 141(R), “Business Combinations,”
(“SFAS No. 141 (R)”) for initial recognition and measurement, subsequent
measurement, accounting, and disclosure of assets and liabilities arising from
contingencies in a business combination. This FSP requires pre-acquisition
contingencies assumed in a business combination to be recognized at acquisition
date fair value. If the fair value cannot be determined during the measurement
period, and if the information available before the end of the measurement
period indicates that it is probable that an asset existed or a liability
incurred at the acquisition date and such amount can reasonably be estimated,
then the provisions of SFAS No. 5, “Accounting for
Contingencies,” and FASB Interpretation No. 14, “Reasonable Estimation of the Amount
of a Loss,” shall be applied. Contingent consideration arrangements
assumed in a business combination shall still be measured subsequently per the
provisions of SFAS No. 141(R). We adopted FSP FAS 141(R)-1 on January 1, 2009.
This standard did not have a material impact on our financial
statements.





In April
2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value
of Financial Instruments,” (“FSP FAS 107-1 and APB 28-1”). This FSP
amends SFAS No. 107, “Disclosures about Fair Value of
Financial Instruments,”to require disclosures about fair value of
financial instruments for interim reporting periods as well as in annual
financial statements. This FSP also amends Accounting Principles Board Opinion
No. 28, “Interim Financial
Reporting,”to require those disclosures in summarized financial
information at interim periods. This standard did not have a material impact on
our financial statements when we adopted it on June 30, 2009.





In May
2009, the FASB issued SFAS No. 165, “Subsequent Events,”(“SFAS 165”). This
standard establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued. Although introducing new terminology, the standard is based on the
same principles that currently exist with US GAAP.  It does, however,
require disclosure of the date through which we have evaluated subsequent
events.  This standard did not have a material impact on our financial
statements when we adopted it on June 30, 2009.





Recently
Issued Accounting Standards (Not Yet Adopted)





Accounting
pronouncements approved by various standard setting and governmental authorities
that have not yet become effective with respect to our condensed consolidated
financial statements are detailed as follows, together with our assessment of
the potential impact they may have on our condensed consolidated financial
statements:





In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation
No. 46(R),”(“SFAS
167”).  This standard amends consolidation guidance applicable to
variable interest entities (“VIEs”) and requires additional disclosures
concerning an enterprise’s continual involvement with VIEs.  We are
currently evaluating the effect this standard will have on our financial
statements when we adopt it on January 1, 2010.


11


In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards
CodificationTMand the Hierarchy of Generally
Accepted Accounting Principles—a replacement of FASB Statement No.
162,”(“SFAS 168”).
Once in effect, TheFASB Accounting
Standards CodificationTM(Codification) will
become the source of US GAAP recognized by the FASB to be applied by all
non-governmental entities. Codification will supersede all existing non-SEC
accounting and reporting standards. All other non-grandfathered, non-SEC
accounting literature not included in the Codification will become
non-authoritative. We do not
believe this standard will have a material impact on our financial statements
when we adopt it on September 30, 2009.




Note
2:               EARNINGS
PER SHARE




The table below provides further share
information used in computing our earnings per share for the periods presented
herein.  Basic earnings per share was computed by dividing net income
attributable to AMCOL shareholders by the weighted average number of common
shares outstanding during each period.  Diluted earnings per share was
computed by dividing net income attributable to AMCOL shareholders by the
weighted average common shares outstanding after consideration of the dilutive
effect of stock based compensation outstanding during each period.





Six
      Months Ended
                
                
                Three
      Months EndedJune 30,
                
                
                June 30,2009
                
                
                2008
                
                
                2009
                
                
                2008Weighted
      average number of common shares outstanding
                
                
                30,719,389
                
                
                
                30,336,315
                
                
                
                30,744,447
                
                
                
                30,412,832Dilutive
      impact of stock based compensation
                
                
                208,579
                
                
                
                602,087
                
                
                
                239,696
                
                
                
                580,598Weighted
      average number of common and common equivalent shares outstanding for the
      period
                
                
                30,927,968
                
                
                
                30,938,402
                
                
                
                30,984,143
                
                
                
                30,993,430Number
      of common shares outstanding at the end of the period
                
                
                30,602,966
                
                
                
                30,380,915
                
                
                
                30,602,966
                
                
                
                30,380,915Weighted
      average number of anti-dilutive shares excluded from the computation of
      diluted earnings per share
                
                
                1,606,728
                
                
                
                640,207
                
                
                
                1,143,072
                
                
                
                18,333





Note
3:               ADDITIONAL
BALANCE SHEET INFORMATION





Our inventories at June 30, 2009 and
December 31, 2008 are comprised of the following components:





June
      30,
                
                
                December
      31,2009
                
                
                2008Crude
      stockpile inventories
                
                $
                31,844
                
                
                $
                40,056In-process
      and finished goods inventories
                
                
                45,152
                
                
                
                51,653Other
      raw material, container, and supplies inventories
                
                
                27,780
                
                
                
                33,357$
                104,776
                
                
                $
                125,066




12


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 EndedJune 30,2009
                      
                      
                      2008Balance
      at beginning of period
                      
                      $
                      5,649
                      
                      
                      $
                      5,699Settlement
      of obligations
                      
                      
                      (669
                      )
                      
                      
                      (625
                      )Liabilities
      incurred and accretion expense
                      
                      
                      862
                      
                      
                      
                      1,579Acquisition
      of mining claims
                      
                      
                      474
                      
                      
                      
                      -Foreign
      Currency
                      
                      
                      136
                      
                      
                      
                      -Balance
      at end of period
                      
                      $
                      6,452
                      
                      
                      $
                      6,653





Note
4:               BUSINESS
SEGMENT INFORMATION





As previously mentioned, we operate in
five segments.  We measure segment performance based on operating
profit, which is defined as net sales less cost of sales and general, selling
and administrative expenses related to a segment’s operations.  The
costs deducted to arrive at operating profit do not include several items, such
as net interest expense or income taxes.  Segment assets are those
assets used in the operations of that segment.  Corporate assets
include cash and cash equivalents, corporate leasehold improvements, and other
miscellaneous equipment.


13


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





Six
      Months Ended
                
                
                Three
      Months EndedJune 30,
                
                
                June 30,2009
                
                
                2008
                
                
                2009
                
                
                2008Net
      sales:Minerals
                
                $
                155,636
                
                
                $
                206,347
                
                
                $
                75,479
                
                
                $
                107,003Environmental
                
                
                99,603
                
                
                
                136,260
                
                
                
                55,370
                
                
                
                78,041Oilfield
      services
                
                
                64,031
                
                
                
                61,798
                
                
                
                32,133
                
                
                
                37,655Transportation
                
                
                22,849
                
                
                
                31,233
                
                
                
                11,558
                
                
                
                16,883Intersegment
      shipping
                
                
                (6,500
                )
                
                
                (10,382
                )
                
                
                (3,340
                )
                
                
                (5,735
                )Total
                
                $
                335,619
                
                
                $
                425,256
                
                
                $
                171,200
                
                
                $
                233,847Operating
      profit (loss):Minerals
                
                $
                13,391
                
                
                $
                16,207
                
                
                $
                5,783
                
                
                $
                8,520Environmental
                
                
                10,848
                
                
                
                18,226
                
                
                
                7,154
                
                
                
                12,255Oilfield
      services
                
                
                9,367
                
                
                
                12,697
                
                
                
                4,450
                
                
                
                8,748Transportation
                
                
                990
                
                
                
                1,613
                
                
                
                509
                
                
                
                833Corporate
                
                
                (10,649
                )
                
                
                (12,580
                )
                
                
                (4,116
                )
                
                
                (6,905
                )Total
                
                $
                23,947
                
                
                $
                36,163
                
                
                $
                13,780
                
                
                $
                23,451





As of Jun. 30,
                    2009
                  
                  
                  As of Dec. 31,
                    2008Assets:Minerals
                  
                  $
                  345,970
                  
                  
                  $
                  341,111Environmental
                  
                  
                  159,430
                  
                  
                  
                  177,898Oilfield
      services
                  
                  
                  159,152
                  
                  
                  
                  160,691Transportation
                  
                  
                  3,549
                  
                  
                  
                  4,761Corporate
                  
                  
                  53,351
                  
                  
                  
                  60,119Total
                  
                  $
                  721,452
                  
                  
                  $
                  744,580




14





Six
      Months Ended
                
                
                Three
      Months EndedJune 30,
                
                
                June 30,2009
                
                
                2008
                
                
                2009
                
                
                2008Depreciation,
      depletion and amortization:Minerals
                
                $
                8,113
                
                
                $
                7,667
                
                
                $
                4,000
                
                
                $
                3,993Environmental
                
                
                3,003
                
                
                
                3,180
                
                
                
                1,519
                
                
                
                1,605Oilfield
      services
                
                
                5,887
                
                
                
                4,023
                
                
                
                2,937
                
                
                
                2,249Transportation
                
                
                21
                
                
                
                16
                
                
                
                10
                
                
                
                7Corporate
                
                
                851
                
                
                
                861
                
                
                
                451
                
                
                
                458Total
                
                $
                17,875
                
                
                $
                15,747
                
                
                $
                8,917
                
                
                $
                8,312Capital
      expenditures:Minerals
                
                $
                23,647
                
                
                $
                11,911
                
                
                $
                3,832
                
                
                $
                4,224Environmental
                
                
                1,095
                
                
                
                2,311
                
                
                
                559
                
                
                
                1,453Oilfield
      services
                
                
                6,465
                
                
                
                6,209
                
                
                
                4,000
                
                
                
                2,925Transportation
                
                
                -
                
                
                
                17
                
                
                
                -
                
                
                
                5Corporate
                
                
                7,639
                
                
                
                9,138
                
                
                
                458
                
                
                
                5,216Total
                
                $
                38,846
                
                
                $
                29,586
                
                
                $
                8,849
                
                
                $
                13,823Research
      and development expense:Minerals
                
                $
                2,698
                
                
                $
                2,573
                
                
                $
                1,363
                
                
                $
                1,297Environmental
                
                
                1,073
                
                
                
                1,130
                
                
                
                546
                
                
                
                486Oilfield
      services
                
                
                335
                
                
                
                256
                
                
                
                168
                
                
                
                137Corporate
                
                
                127
                
                
                
                576
                
                
                
                41
                
                
                
                428Total
                
                $
                4,233
                
                
                $
                4,535
                
                
                $
                2,118
                
                
                $
                2,348





Note
5:               EMPLOYEE
BENEFIT PLANS





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





Six
      Months Ended
                      
                      
                      Three
      Months EndedJune 30,
                      
                      
                      June 30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008Service
      cost
                      
                      $
                      824
                      
                      
                      $
                      835
                      
                      
                      $
                      412
                      
                      
                      $
                      417Interest
      cost
                      
                      
                      1,303
                      
                      
                      
                      1,187
                      
                      
                      
                      652
                      
                      
                      
                      594Expected
      return on plan assets
                      
                      
                      (1,073
                      )
                      
                      
                      (1,561
                      )
                      
                      
                      (519
                      )
                      
                      
                      (780
                      )Amortization
      of acturial (gain) / loss
                      
                      
                      213
                      
                      
                      
                      (32
                      )
                      
                      
                      106
                      
                      
                      
                      (16
                      )Amortization
      of prior service cost
                      
                      
                      31
                      
                      
                      
                      34
                      
                      
                      
                      15
                      
                      
                      
                      17Net
      periodic benefit cost
                      
                      $
                      1,298
                      
                      
                      $
                      463
                      
                      
                      $
                      666
                      
                      
                      $
                      232




As
previously disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2008, we expect to contribute up to $1,000 to our pension plan in
2009.





Note
6:               INCOME
TAXES





Our effective tax rate for the six
months ended June 30, 2009 and 2008 was 21.3% and 26.8%, respectively. For both
periods, the rate differs from the U.S. federal statutory rate of 35.0% largely
due to depletion deductions and differences in local tax rates on the income
from our foreign subsidiaries.


15


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 or
the statute of limitations is closed for our U.S. federal income tax returns for
all years through 2004. The IRS has recently begun auditing the 2005, 2006 and
2007 tax years.





Note
7:               DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITES





As a
multinational corporation with operations throughout the world, we are subject
to certain market risks, including those related to foreign currency, interest
rates and government actions. We use a variety of practices to manage these
market risks, including, when considered appropriate, derivative financial
instruments. We use derivative financial instruments only for risk management
and not for trading or speculative purposes.





The
following table sets forth the fair values of our derivative
instruments:





Balance
      Sheet
                        
                        Fair Value as ofLiability Derivatives
                        
                        Location
                        
                        June 30, 2009
                        
                        
                        December 31, 2008Derivatives
      designated as hedging instruments under Statement 133:Interest
      rate swap
                        
                        Other
      liabilities
                        
                        $
                        3,642
                        
                        
                        $
                        5,997Derivatives
      not designated as hedging instruments under Statement 133:Foreign
      currency exchange contracts
                        
                        Accounts
      payable
                        
                        $
                        512
                        
                        
                        
                        N/A





SFAS No.
157, “Fair Value Measurements”(“SFAS 157”),
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date. We use several inputs in the valuation technique used to
calculate the fair value of each derivative instrument. The fair value hierarchy
under SFAS 157 prioritizes these inputs in the following three broad
levels:





Level 1 –
Valuation is based on quoted prices (unadjusted) in active markets for identical
assets or liabilities we have the ability to access at the measurement
date.





Level 2 –
Valuation is based on quoted prices for similar assets or liabilities in active
markets, quoted prices for identical or similar assets or liabilities in markets
that are not active and model based valuations for which all significant inputs
are observable in the market.





Level 3 –
Valuation is based on model based techniques that use unobservable inputs for
the asset or liability. These inputs reflect our own assumption about the
assumption market participants would use in pricing the asset or
liability.





The
interest rate swap and foreign currency exchange contracts are valued using
discounted cash flows. The key inputs include foreign exchange rate, forward
points and interest rate which are readily observable at commonly quoted
intervals for the term of the contract and the valuation does not involve
significant management judgment.


16


The
following table illustrates how the fair value of our derivative instruments is
dependent upon different levels of input assumptions for our derivatives
outstanding as of June 30, 2009:





Fair
      Value Measurements UsingBalance
      at
                    
                    
                    Quoted
      Prices in
                      Active
      Markets
                      for
      Identical
                      Assets
                    
                    
                    Significant
      Other
                      Observable
                      Inputs
                    
                    
                    Significant
                      Unobservable
                      InputsDescription
                    
                    6/30/2009
                    
                    
                    (Level 1)
                    
                    
                    (Level 2)
                    
                    
                    (Level 3)Interest
      rate swap
                    
                    $
                    3,642
                    
                    
                    
                    N/A
                    
                    
                    $
                    3,642
                    
                    
                    
                    N/AForeign
      currency exchange contracts
                    
                    
                    512
                    
                    
                    
                    N/A
                    
                    
                    
                    512
                    
                    
                    
                    N/A$
                    4,154
                    
                    
                    
                    
                    
                    
                    $
                    4,154





The
following table illustrates how the fair value of our derivative instruments is
dependent upon different levels of input assumptions for our derivatives
outstanding as of December 31, 2008:





Fair
      Value Measurements UsingBalance
      at
                    
                    
                    Quoted
      Prices in
                      Active
      Markets
                      for
      Identical
                      Assets
                    
                    
                    Significant
      Other
                      Observable
                      Inputs
                    
                    
                    Significant
                      Unobservable
                      InputsDescription
                    
                    12/31/2008
                    
                    
                    (Level 1)
                    
                    
                    (Level 2)
                    
                    
                    (Level 3)Interest
      rate swap
                    
                    $
                    5,997
                    
                    
                    
                    N/A
                    
                    
                    $
                    5,997
                    
                    
                    
                    N/A





Cash
flow hedges




Amount
      of Gain or (Loss)
                                                                                  Recognized
      in OCI on
                                                                                  Derivatives
                                                                                
                                                                                
                                                                                Amount
      of Gain or (Loss)
                                                                                  Recognized
      in OCI on
                                                                                  Derivatives(Effective
      Portion)
                                                                                
                                                                                
                                                                                (Effective
      Portion)Derivatives
      in Statement 133 Cash Flow Hedging
    Relationships
                                                                                
                                                                                Six
      Months Ended June 30,
                                                                                
                                                                                
                                                                                Three
      Months Ended June 30,2009
                                                                                
                                                                                
                                                                                2008
                                                                                
                                                                                
                                                                                2009
                                                                                
                                                                                
                                                                                2008Interest
      rate swap
                                                                                
                                                                                $
                                                                                1,319
                                                                                
                                                                                
                                                                                $
                                                                                (3
                                                                                )
                                                                                
                                                                                $
                                                                                1,151
                                                                                
                                                                                
                                                                                $
                                                                                2,109





We use
interest rate swaps to manage floating interest rate risk on debt securities.
Interest rate differentials are paid or received on these arrangements over the
life of the agreements. At the end of June 30, 2009 and 2008, we had an interest
rate swap outstanding which effectively hedges the variable interest rate of our
senior notes to a fixed rate of 5.6% per annum.


17


Other


We are exposed to potential gains or
losses from foreign currency fluctuations affecting net investments and earnings
denominated in foreign currencies. Our primary exposures are to fluctuations in
exchange rates between the U.S. dollar and the Euro, British pound and Polish
zloty.  We also have significant exposure to fluctuations in exchange
rates between the British pound and the Euro as well as between the Polish zloty
and the Euro. We have entered into a series of foreign exchange forward
contracts to mitigate the risk of currency fluctuations on these exposures. We
also entered into a series of foreign exchange collars to mitigate the risk of
currency fluctuations on our February 2009 purchase of a chrome mine in South
Africa, the purchase price of which was paid in Australian dollars.





We have not designated these contracts
for hedge accounting treatment and therefore, changes in fair value of these
contracts are recorded in earnings as follows:





Location
      of Gain
                              or
      (Loss)
                            
                            Amount
      of Gain or (Loss)
                              Recognized
      in Income on
                              Derivatives
                            
                            
                            Amount
      of Gain or
                              (Loss)
      Recognized in
                              Income
      on DerivativesDerivatives
      Not Designated as HedgingInstruments
      UnderStatement
      133
                            
                            Recognized
      inIncome
      on
                            
                            Six
      Months Ended June
                              30,
                            
                            
                            Three
      Months Ended
                              June
      30,Derivatives
                            
                            2009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008Foreign
      currency exchange contracts
                            
                            Other,
      net
                            
                            $
                            (4,792
                            )
                            
                            $
                            1,964
                            
                            
                            $
                            (3,910
                            )
                            
                            $
                            1,673





Note
8:               CONTINGENCIES





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


18


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





Forward-Looking
Statements





From time to time, certain statements
we make, including statements in this Management's Discussion and Analysis of
Financial Condition and Results of Operations section, constitute
"forward-looking statements" made in reliance upon the safe harbor contained in
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements
include statements relating to our Company or our operations that are preceded
by terms such as "expects," "believes," "anticipates," "intends" and similar
expressions, and statements relating to anticipated growth and levels of capital
expenditures. Such forward-looking statements are not 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; oil and gas prices and conditions in those 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, waste fluid treatment, rental tools, coil
tubing and well testing data services for the oil and gas
industries.  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 our mineral based 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, Mexico, Russia and
Azerbaijan.  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 two of the core components of our
longevity and future prospects.


19


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 segment’s customer base is
primarily comprised of oil and gas service or exploration
companies.





A significant portion of our products
have been used in the same applications for decades and have experienced minimal
technological obsolescence.  A majority of our business is performed
under short-term agreements; therefore, terms of sale, such as pricing and
volume, can change within our fiscal year.





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





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





·
            Organic
      growth:  The central component of our growth strategy is
      expansion of our product lines and market presence.  We have a
      history of commitment to research and development 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
      and Eastern European regions 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 ensure 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, as appropriate, when we believe those businesses
      are fairly valued and fit with our overall growth
      strategy.  However, the existing global economic will make it
      more challenging for us to do this than it has in recent
      years.


20


A number of risks will challenge us in
meeting these long-term objectives, and there can be no assurance that we will
achieve success in implementing any one or more of them.  We describe
certain risks throughout this report as well as under “Item 1A. Risk Factors”
and “Item 7A. Quantitative and Qualitative Disclosure About Market Risk” within
our Annual Report on Form 10-K for the year ended December 31,
2008.  In general, the significance of these risks has not materially
changed over the past year except as they are affected by the global economic
and credit crisis occurring in the United States and throughout many of the
economies in which we operate. The ongoing credit crisis is characterized by
increased volatility, and lack of available capital for short and long term
financing. The credit crisis may increase the risks outlined in our latest
Annual Report on Form 10-K, especially in the areas of our reliance on key
industries (which could be more adversely affected due to the credit crisis),
volatility of our stock price, and increased exchange rate sensitivity. In
addition, the credit crisis may affect our ability to obtain additional
financing to fund acquisitions or other activities on terms substantially
similar to our current debt facilities should that need arise in the future. Any
of these factors could adversely affect our business opportunities and
results.





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, please read our Annual Report
on Form 10-K for the year ended December 31, 2008.


21


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.





Three
months ended June 30, 2009 vs. June 30, 2008





Consolidated
Review





The
following table compares our operating results for the quarters ended June 30,
2009 and June 30, 2008:





Three
      Months Ended June 30,Consolidated
                                                                            
                                                                            2009
                                                                            
                                                                            
                                                                            2008
                                                                            
                                                                            
                                                                            2009
      vs. 2008(Dollars
      in Thousands, Except Per Share Amounts)Net
      sales
                                                                            
                                                                            $
                                                                            171,200
                                                                            
                                                                            
                                                                            $
                                                                            233,847
                                                                            
                                                                            
                                                                            
                                                                            -26.8
                                                                            %Cost
      of sales
                                                                            
                                                                            
                                                                            124,052
                                                                            
                                                                            
                                                                            
                                                                            171,187Gross
      profit
                                                                            
                                                                            
                                                                            47,148
                                                                            
                                                                            
                                                                            
                                                                            62,660
                                                                            
                                                                            
                                                                            
                                                                            -24.8
                                                                            %margin
      %
                                                                            
                                                                            
                                                                            27.5
                                                                            %
                                                                            
                                                                            
                                                                            26.8
                                                                            %General,
      selling andadministrative expenses
                                                                            
                                                                            
                                                                            33,368
                                                                            
                                                                            
                                                                            
                                                                            39,209
                                                                            
                                                                            
                                                                            
                                                                            -14.9
                                                                            %Operating
      profit
                                                                            
                                                                            
                                                                            13,780
                                                                            
                                                                            
                                                                            
                                                                            23,451
                                                                            
                                                                            
                                                                            
                                                                            -41.2
                                                                            %margin
      %
                                                                            
                                                                            
                                                                            8.0
                                                                            %
                                                                            
                                                                            
                                                                            10.0
                                                                            %Other
      income (expense):Interest
      expense, net
                                                                            
                                                                            
                                                                            (3,159
                                                                            )
                                                                            
                                                                            
                                                                            (2,837
                                                                            )
                                                                            
                                                                            
                                                                            11.4
                                                                            %Other,
      net
                                                                            
                                                                            
                                                                            (1,502
                                                                            )
                                                                            
                                                                            
                                                                            830
                                                                            
                                                                            
                                                                            
                                                                            -281.0
                                                                            %(4,661
                                                                            )
                                                                            
                                                                            
                                                                            (2,007
                                                                            )Income
      before income taxes and income (loss) from affiliates and joint
      ventures
                                                                            
                                                                            
                                                                            9,119
                                                                            
                                                                            
                                                                            
                                                                            21,444Income
      tax expense
                                                                            
                                                                            
                                                                            1,546
                                                                            
                                                                            
                                                                            
                                                                            5,666
                                                                            
                                                                            
                                                                            
                                                                            -72.7
                                                                            %effective
      tax rate
                                                                            
                                                                            
                                                                            17.0
                                                                            %
                                                                            
                                                                            
                                                                            26.4
                                                                            %Income
      before income (loss) from affiliates and joint ventures
                                                                            
                                                                            
                                                                            7,573
                                                                            
                                                                            
                                                                            
                                                                            15,778Income
      (loss) from affiliates and joint ventures
                                                                            
                                                                            
                                                                            (1,634
                                                                            )
                                                                            
                                                                            
                                                                            (670
                                                                            )
                                                                            
                                                                            
                                                                            143.9
                                                                            %Net
      income
                                                                            
                                                                            
                                                                            5,939
                                                                            
                                                                            
                                                                            
                                                                            15,108Net
      income (loss) attributable to noncontrolling interests
                                                                            
                                                                            
                                                                            (158
                                                                            )
                                                                            
                                                                            
                                                                            274
                                                                            
                                                                            
                                                                            
                                                                            -157.7
                                                                            %Net
      income (loss) attributable to AMCOL shareholders
                                                                            
                                                                            $
                                                                            6,097
                                                                            
                                                                            
                                                                            $
                                                                            14,834
                                                                            
                                                                            
                                                                            
                                                                            -58.9
                                                                            %Basic
      earnings per share attributable to AMCOL shareholders
                                                                            
                                                                            $
                                                                            0.20
                                                                            
                                                                            
                                                                            $
                                                                            0.49Diluted
      earnings per share attributable to AMCOL shareholders
                                                                            
                                                                            $
                                                                            0.20
                                                                            
                                                                            
                                                                            $
                                                                            0.48





We
measure sales fluctuations by the relevant components: organic, acquisitions,
and foreign currency exchange. Fluctuation due to foreign currency exchange is
measured as the change in revenues resulting from differences in currency
exchange rates between periods. Fluctuation due to acquisitions is measured as
the changes in revenues resulting from businesses within the first year (twelve
consecutive months) we own them. Any remaining fluctuation is due to organic
components. The table details the consolidated sales fluctuations by components
over the prior year’s comparable period:


22





Organic
                            
                            
                            Acquisitions
                            
                            
                            Foreign
                              Exchange
                            
                            
                            TotalMinerals
                            
                            
                            -11.5
                            %
                            
                            
                            0.0
                            %
                            
                            
                            -2.0
                            %
                            
                            
                            -13.5
                            %Environmental
                            
                            
                            -5.8
                            %
                            
                            
                            0.3
                            %
                            
                            
                            -4.2
                            %
                            
                            
                            -9.7
                            %Oilfield
      services
                            
                            
                            -3.9
                            %
                            
                            
                            1.7
                            %
                            
                            
                            -0.2
                            %
                            
                            
                            -2.4
                            %Transportation
      & intersegment shipping
                            
                            
                            -1.3
                            %
                            
                            
                            0.0
                            %
                            
                            
                            0.0
                            %
                            
                            
                            -1.3
                            %Total
                            
                            
                            -22.5
                            %
                            
                            
                            2.0
                            %
                            
                            
                            -6.4
                            %
                            
                            
                            -26.9
                            %%
      of change
                            
                            
                            83.7
                            %
                            
                            
                            -7.5
                            %
                            
                            
                            23.8
                            %
                            
                            
                            100.0
                            %





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





Americas
                                  
                                  
                                  EMEA
                                  
                                  
                                  Asia
      Pacific
                                  
                                  
                                  TotalMinerals
                                  
                                  
                                  26.3
                                  %
                                  
                                  
                                  10.1
                                  %
                                  
                                  
                                  7.7
                                  %
                                  
                                  
                                  44.1
                                  %Environmental
                                  
                                  
                                  15.7
                                  %
                                  
                                  
                                  14.3
                                  %
                                  
                                  
                                  2.3
                                  %
                                  
                                  
                                  32.3
                                  %Oilfield
      services
                                  
                                  
                                  16.9
                                  %
                                  
                                  
                                  0.8
                                  %
                                  
                                  
                                  1.1
                                  %
                                  
                                  
                                  18.8
                                  %Transportation
                                  
                                  
                                  4.8
                                  %
                                  
                                  
                                  0.0
                                  %
                                  
                                  
                                  0.0
                                  %
                                  
                                  
                                  4.8
                                  %Total
      - current year's period
                                  
                                  
                                  63.7
                                  %
                                  
                                  
                                  25.2
                                  %
                                  
                                  
                                  11.1
                                  %
                                  
                                  
                                  100.0
                                  %Total
      from prior year's comparable period
                                  
                                  
                                  67.1
                                  %
                                  
                                  
                                  23.3
                                  %
                                  
                                  
                                  9.6
                                  %
                                  
                                  
                                  100.0
                                  %





Net
sales:





The decrease in net sales is driven by
an overall decrease in our organic revenues predominantly within our minerals
and environmental services segments.





Gross
profit:





Overall
gross profit decreased due to the decrease in net sales mentioned
above.  However, gross margin increased due primarily to price
increases in our minerals segment implemented in 2008 which were not in full
effect during the prior year’s quarter.





General,
selling & administrative expenses (GS&A):





GS&A expenses decreased 14.9%, with
all of our segments reducing expenses as compared to last year’s
quarter.  The decreases were greatest in our environmental and
corporate segments.  Favorable exchange rate movements helped drive
the decrease in the environmental segment, especially from fluctuations in
European currencies.  Efforts to reduce costs within our corporate
departments combined with favorable gains on benefit plan assets helped decrease
operating expenses in that segment.


23


Operating
profit:





Operating profit decreased due to the
decrease in gross profit as mentioned earlier.  On a segment basis,
our environmental and oilfield services segments experienced the largest
decreases as these businesses are more heavily impacted by the current economic
environment, the impact of which is heightened as these businesses move into
their busiest time of the season.  Operating profit margin decreased
across all segments as the reductions in GS&A expenses were not large enough
to offset the impact of decreased gross profits.





Interest
expense, net:





Net interest expense increased due to
increased average debt levels - we began 2009 with debt levels significantly
greater than those that existed at the beginning of 2008 due to increased
capital spending, an acquisition, and increased working capital levels generated
in 2008. The majority of our long-term debt has a variable rate of interest
which is primarily influenced by changes in LIBOR.





Other
income (expense):





Other expense includes foreign currency
transaction gains and losses for third party and intercompany related activity
as well as gains and losses on foreign currency derivatives.  Other
expenses increased in 2009 largely due to losses on foreign currency
transactions and derivatives to manage the risk of these foreign currency
fluctuations.





Income
tax expense:





Our
effective tax rate decreased in 2009 to 17.0% compared with 26.4% in the prior
year’s period because a greater proportion of our income is being derived by our
foreign subsidiaries, whose tax rates are lower than the 35% US federal income
tax rate.





Income
(loss) from affiliates & joint ventures:





Our joint ventures experienced a loss
during the quarter largely due to the fact that they are geographically less
diversified businesses.  For example, the majority of our Russian
investee’s sales are generated within Russia, leading to losses as the Russian
economy experiences significant decreases in the markets for its
products.  In addition, losses from our investment in Belgium
increased as that business begins to establish operating activities after
recently completing a production processing facility.





Diluted
earnings per
share:





Diluted EPS decreased commensurate with
the decrease in net income as opposed to a change in the weighted average shares
outstanding, which remained relatively constant.


24


Segment
analysis:





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





Minerals
Segment




Three
      Months Ended June 30,Minerals
                                                        
                                                        2009
                                                        
                                                        2008
                                                        
                                                        2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                                                        
                                                        $
                                                        75,479
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        107,003
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        (31,524
                                                        )
                                                        
                                                        
                                                        -29.5
                                                        %Cost
      of sales
                                                        
                                                        
                                                        60,567
                                                        
                                                        
                                                        
                                                        80.2
                                                        %
                                                        
                                                        
                                                        88,659
                                                        
                                                        
                                                        
                                                        82.9
                                                        %Gross
      profit
                                                        
                                                        
                                                        14,912
                                                        
                                                        
                                                        
                                                        19.8
                                                        %
                                                        
                                                        
                                                        18,344
                                                        
                                                        
                                                        
                                                        17.1
                                                        %
                                                        
                                                        
                                                        (3,432
                                                        )
                                                        
                                                        
                                                        -18.7
                                                        %General,
      selling andadministrative
      expenses
                                                        
                                                        
                                                        9,129
                                                        
                                                        
                                                        
                                                        12.1
                                                        %
                                                        
                                                        
                                                        9,824
                                                        
                                                        
                                                        
                                                        9.2
                                                        %
                                                        
                                                        
                                                        (695
                                                        )
                                                        
                                                        
                                                        -7.1
                                                        %Operating
      profit
                                                        
                                                        
                                                        5,783
                                                        
                                                        
                                                        
                                                        7.7
                                                        %
                                                        
                                                        
                                                        8,520
                                                        
                                                        
                                                        
                                                        7.9
                                                        %
                                                        
                                                        
                                                        (2,737
                                                        )
                                                        
                                                        
                                                        -32.1
                                                        %







Three
      Months Ended June 30,Minerals
      Product Line Sales
                                                  
                                                  2009
                                                  
                                                  
                                                  2008
                                                  
                                                  
                                                  %
      change(Dollars
      in Thousands)Metalcasting
                                                  
                                                  $
                                                  30,954
                                                  
                                                  
                                                  $
                                                  44,709
                                                  
                                                  
                                                  
                                                  -30.8
                                                  %Specialty
      materials
                                                  
                                                  
                                                  22,007
                                                  
                                                  
                                                  
                                                  27,328
                                                  
                                                  
                                                  
                                                  -19.5
                                                  %Pet
      products
                                                  
                                                  
                                                  15,355
                                                  
                                                  
                                                  
                                                  19,179
                                                  
                                                  
                                                  
                                                  -19.9
                                                  %Basic
      minerals
                                                  
                                                  
                                                  6,090
                                                  
                                                  
                                                  
                                                  13,317
                                                  
                                                  
                                                  
                                                  -54.3
                                                  %Other
      product lines
                                                  
                                                  
                                                  1,073
                                                  
                                                  
                                                  
                                                  2,470
                                                  
                                                  
                                                  
                                                  *Total
                                                  
                                                  
                                                  75,479
                                                  
                                                  
                                                  
                                                  107,003


.





Decreased
sales volumes accounted for the decrease in revenues over the prior year
quarter, primarily in metalcasting and drilling products (part of basic
minerals) due to the global recession.  The segment also experienced
decreased revenues due to adverse movements in foreign currency exchange rates,
primarily the British pound and Turkish Lira to the US dollar.  The
effect of a full period of selling price increases that were instituted in the
prior year but were not in effect in the prior year’s quarter worked to slightly
ameliorate these decreases.  The increased selling prices, however,
were the primary driver behind the increase in gross margins.





GS&A
expenses decreased marginally due principally to favorable foreign exchange rate
movements, again primarily in European currencies.  However, they did
not decrease proportionally to revenues, leading to a slight decrease in
operating profit margin.


25





Environmental
Segment




Three
      Months Ended June 30,Environmental
                                                          
                                                          2009
                                                          
                                                          2008
                                                          
                                                          2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                                                          
                                                          $
                                                          55,370
                                                          
                                                          
                                                          
                                                          100.0
                                                          %
                                                          
                                                          $
                                                          78,041
                                                          
                                                          
                                                          
                                                          100.0
                                                          %
                                                          
                                                          $
                                                          (22,671
                                                          )
                                                          
                                                          
                                                          -29.1
                                                          %Cost
      of sales
                                                          
                                                          
                                                          35,843
                                                          
                                                          
                                                          
                                                          64.7
                                                          %
                                                          
                                                          
                                                          51,165
                                                          
                                                          
                                                          
                                                          65.6
                                                          %Gross
      profit
                                                          
                                                          
                                                          19,527
                                                          
                                                          
                                                          
                                                          35.3
                                                          %
                                                          
                                                          
                                                          26,876
                                                          
                                                          
                                                          
                                                          34.4
                                                          %
                                                          
                                                          
                                                          (7,349
                                                          )
                                                          
                                                          
                                                          -27.3
                                                          %General,
      selling andadministrative
      expenses
                                                          
                                                          
                                                          12,373
                                                          
                                                          
                                                          
                                                          22.3
                                                          %
                                                          
                                                          
                                                          14,621
                                                          
                                                          
                                                          
                                                          18.7
                                                          %
                                                          
                                                          
                                                          (2,248
                                                          )
                                                          
                                                          
                                                          -15.4
                                                          %Operating
      profit
                                                          
                                                          
                                                          7,154
                                                          
                                                          
                                                          
                                                          13.0
                                                          %
                                                          
                                                          
                                                          12,255
                                                          
                                                          
                                                          
                                                          15.7
                                                          %
                                                          
                                                          
                                                          (5,101
                                                          )
                                                          
                                                          
                                                          -41.6
                                                          %




Three
      Months Ended June 30,Environmental
      Product Line Sales
                                              
                                              2009
                                              
                                              2008
                                              
                                              
                                              %
      change(Dollars
      in Thousands)Lining
      technologies
                                              
                                              $
                                              34,670
                                              
                                              
                                              $
                                              48,452
                                              
                                              
                                              
                                              -28.4
                                              %Building
      materials
                                              
                                              
                                              15,099
                                              
                                              
                                              
                                              22,858
                                              
                                              
                                              
                                              -33.9
                                              %Other
      product lines
                                              
                                              
                                              5,601
                                              
                                              
                                              
                                              6,731
                                              
                                              
                                              
                                              *Total
                                              
                                              
                                              55,370
                                              
                                              
                                              
                                              78,041


* Not
meaningful.




Revenues
in the environmental segment decreased due to adverse movements in foreign
currency exchange rates, primarily the British pound and Polish zloty to the US
dollar, and organic decreases across all product lines due to the recession and
credit crisis.  Gross margins improved due to decreased raw material
costs, such as resin and lower freight costs.





More than
75% of the decrease in GS&A expenses is attributable to foreign currency
exchange rate fluctuations which, while they reduce the value of foreign
denominated revenues, also reduce foreign denominated
expenses.  Operating profit margin decreased due to the combination of
the above reasons.





Oilfield
Services Segment





Three
      Months Ended June 30,Oilfield
      Services
                                                          
                                                          2009
                                                          
                                                          2008
                                                          
                                                          
                                                          2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                                                          
                                                          $
                                                          32,133
                                                          
                                                          
                                                          
                                                          100.0
                                                          %
                                                          
                                                          $
                                                          37,655
                                                          
                                                          
                                                          
                                                          100.0
                                                          %
                                                          
                                                          $
                                                          (5,522
                                                          )
                                                          
                                                          
                                                          -14.7
                                                          %Cost
      of sales
                                                          
                                                          
                                                          20,770
                                                          
                                                          
                                                          
                                                          64.6
                                                          %
                                                          
                                                          
                                                          21,904
                                                          
                                                          
                                                          
                                                          58.2
                                                          %Gross
      profit
                                                          
                                                          
                                                          11,363
                                                          
                                                          
                                                          
                                                          35.4
                                                          %
                                                          
                                                          
                                                          15,751
                                                          
                                                          
                                                          
                                                          41.8
                                                          %
                                                          
                                                          
                                                          (4,388
                                                          )
                                                          
                                                          
                                                          -27.9
                                                          %General,
      selling andadministrative
      expenses
                                                          
                                                          
                                                          6,913
                                                          
                                                          
                                                          
                                                          21.5
                                                          %
                                                          
                                                          
                                                          7,003
                                                          
                                                          
                                                          
                                                          18.6
                                                          %
                                                          
                                                          
                                                          (90
                                                          )
                                                          
                                                          
                                                          -1.3
                                                          %Operating
      profit
                                                          
                                                          
                                                          4,450
                                                          
                                                          
                                                          
                                                          13.9
                                                          %
                                                          
                                                          
                                                          8,748
                                                          
                                                          
                                                          
                                                          23.2
                                                          %
                                                          
                                                          
                                                          (4,298
                                                          )
                                                          
                                                          
                                                          -49.1
                                                          %





Several
of our oilfield services segment service offerings experienced fluctuations in
revenues as compared to the prior year’s period.  Although foreign
markets were down overall, our foreign operations benefited from new revenues in
Brazil that were not present in the prior year’s period as our activities were
not operational in the prior year period.  Domestically, our on-shore
operations suffered more than our offshore operations, especially our Nitrogen
services which experienced the largest decrease in revenues.


26


Certain
of our businesses are experiencing significant selling price competition,
especially our coil tubing and nitrogen businesses, due to reductions in demand
and the entrance of competitors who used to primarily serve the offshore market
but have focused more on the on-shore market given depressed activities
offshore.  All these factors led to significant decreases in gross
margins, combined with the fact that the prior year’s gross margins were very
good as certain of our businesses, such as our European business, experienced
record profits in last year’s quarter.





Operating
profits decreased due to the decreased gross profits mentioned above without
commensurate decreases in GS&A expenses.  Operating margin
decreased as the profitability of our coil tubing business was lower than other
parts of the business, thereby decreasing the overall
profitability.  Our coil tubing business has experienced significant
competitive pressures as customers reduce their use of these services given the
drop in oil and natural gas prices.





Transportation
Segment





Three
      Months Ended June 30,Transportation
                                                            
                                                            2009
                                                            
                                                            
                                                            2008
                                                            
                                                            
                                                            2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                                                            
                                                            $
                                                            11,558
                                                            
                                                            
                                                            
                                                            100.0
                                                            %
                                                            
                                                            $
                                                            16,883
                                                            
                                                            
                                                            
                                                            100.0
                                                            %
                                                            
                                                            $
                                                            (5,325
                                                            )
                                                            
                                                            
                                                            -31.5
                                                            %Cost
      of sales
                                                            
                                                            
                                                            10,212
                                                            
                                                            
                                                            
                                                            88.4
                                                            %
                                                            
                                                            
                                                            15,194
                                                            
                                                            
                                                            
                                                            90.0
                                                            %Gross
      profit
                                                            
                                                            
                                                            1,346
                                                            
                                                            
                                                            
                                                            11.6
                                                            %
                                                            
                                                            
                                                            1,689
                                                            
                                                            
                                                            
                                                            10.0
                                                            %
                                                            
                                                            
                                                            (343
                                                            )
                                                            
                                                            
                                                            -20.3
                                                            %General,
      selling andadministrative
      expenses
                                                            
                                                            
                                                            837
                                                            
                                                            
                                                            
                                                            7.2
                                                            %
                                                            
                                                            
                                                            856
                                                            
                                                            
                                                            
                                                            5.1
                                                            %
                                                            
                                                            
                                                            (19
                                                            )
                                                            
                                                            
                                                            -2.2
                                                            %Operating
      profit
                                                            
                                                            
                                                            509
                                                            
                                                            
                                                            
                                                            4.4
                                                            %
                                                            
                                                            
                                                            833
                                                            
                                                            
                                                            
                                                            4.9
                                                            %
                                                            
                                                            
                                                            (324
                                                            )
                                                            
                                                            
                                                            -38.9
                                                            %





Traffic
levels decreased as compared to the prior year period due to the recession in
the United States.  In addition, prices for gasoline have decreased,
leading to decreased fuel surcharges.  Both of these factors
contributed to the decrease in this segment’s performance.





Corporate
Segment





Three
      Months Ended June 30,Corporate
                                                
                                                2009
                                                
                                                
                                                2008
                                                
                                                
                                                2009
      vs. 2008(Dollars
      in Thousands)Intersegment
      shipping sales
                                                
                                                $
                                                (3,340
                                                )
                                                
                                                $
                                                (5,735
                                                )
                                                
                                                
                                                2,395Intersegment
      shipping costs
                                                
                                                
                                                (3,340
                                                )
                                                
                                                
                                                (5,735
                                                )Gross
      profit
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -General,
      selling andadministrative
      expenses
                                                
                                                
                                                4,116
                                                
                                                
                                                
                                                6,905
                                                
                                                
                                                
                                                (2,789
                                                )
                                                
                                                -40.4
                                                %Operating
      loss
                                                
                                                
                                                4,116
                                                
                                                
                                                
                                                6,905
                                                
                                                
                                                
                                                (2,789
                                                )
                                                
                                                
                                                -40.4
                                                %





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


27


Corporate GS&A expenses decreased
in many areas due to reduced consulting, IT and personnel related
costs.





Six
months ended June 30, 2009 vs. June 30, 2008





Consolidated
Review





The
following table compares our operating results for the period ended June 30,
2009 and June 30, 2008:





Six
      Months Ended June 30,Consolidated
                                                            
                                                            2009
                                                            
                                                            
                                                            2008
                                                            
                                                            
                                                            2009
      vs. 2008(Dollars
      in Thousands, Except Per Share Amounts)Net
      sales
                                                            
                                                            $
                                                            335,619
                                                            
                                                            
                                                            $
                                                            425,256
                                                            
                                                            
                                                            
                                                            -21.1
                                                            %Cost
      of sales
                                                            
                                                            
                                                            245,251
                                                            
                                                            
                                                            
                                                            316,246Gross
      profit
                                                            
                                                            
                                                            90,368
                                                            
                                                            
                                                            
                                                            109,010
                                                            
                                                            
                                                            
                                                            -17.1
                                                            %margin
      %
                                                            
                                                            
                                                            26.9
                                                            %
                                                            
                                                            
                                                            25.6
                                                            %General,
      selling andadministrative
      expenses
                                                            
                                                            
                                                            66,421
                                                            
                                                            
                                                            
                                                            72,847
                                                            
                                                            
                                                            
                                                            -8.8
                                                            %Operating
      profit
                                                            
                                                            
                                                            23,947
                                                            
                                                            
                                                            
                                                            36,163
                                                            
                                                            
                                                            
                                                            -33.8
                                                            %margin
      %
                                                            
                                                            
                                                            7.1
                                                            %
                                                            
                                                            
                                                            8.5
                                                            %Other
      income (expense):Interest
      expense, net
                                                            
                                                            
                                                            (6,566
                                                            )
                                                            
                                                            
                                                            (5,238
                                                            )
                                                            
                                                            
                                                            25.4
                                                            %Other,
      net
                                                            
                                                            
                                                            (2,714
                                                            )
                                                            
                                                            
                                                            595
                                                            
                                                            
                                                            
                                                            -556.1
                                                            %(9,280
                                                            )
                                                            
                                                            
                                                            (4,643
                                                            )Income
      before income taxes and income (loss) from affiliates and joint
      ventures
                                                            
                                                            
                                                            14,667
                                                            
                                                            
                                                            
                                                            31,520Income
      tax expense
                                                            
                                                            
                                                            3,117
                                                            
                                                            
                                                            
                                                            8,383
                                                            
                                                            
                                                            
                                                            -62.8
                                                            %effective
      tax rate
                                                            
                                                            
                                                            21.3
                                                            %
                                                            
                                                            
                                                            26.6
                                                            %Income
      before income (loss) from affiliates and joint ventures
                                                            
                                                            
                                                            11,550
                                                            
                                                            
                                                            
                                                            23,137Income
      (loss) from affiliates and joint ventures
                                                            
                                                            
                                                            (1,642
                                                            )
                                                            
                                                            
                                                            625
                                                            
                                                            
                                                            
                                                            -362.7
                                                            %Net
      income
                                                            
                                                            
                                                            9,908
                                                            
                                                            
                                                            
                                                            23,762Net
      income (loss) attributable to noncontrolling interests
                                                            
                                                            
                                                            (365
                                                            )
                                                            
                                                            
                                                            307
                                                            
                                                            
                                                            
                                                            -218.9
                                                            %Net
      income (loss) attributable to AMCOL shareholders
                                                            
                                                            $
                                                            10,273
                                                            
                                                            
                                                            $
                                                            23,455
                                                            
                                                            
                                                            
                                                            -56.2
                                                            %Basic
      earnings per share attributable to AMCOL shareholders
                                                            
                                                            $
                                                            0.33
                                                            
                                                            
                                                            $
                                                            0.77Diluted
      earnings per share attributable to AMCOL shareholders
                                                            
                                                            $
                                                            0.33
                                                            
                                                            
                                                            $
                                                            0.76


28


We
measure sales fluctuations by the relevant components: organic, acquisitions,
and foreign currency exchange.  The following table details the
consolidated sales fluctuations by components over the prior year’s comparable
period:





Organic
                              
                              
                              Acquisitions
                              
                              
                              Foreign
                                Exchange
                              
                              
                              TotalMinerals
                              
                              
                              -9.2
                              %
                              
                              
                              0.0
                              %
                              
                              
                              -2.7
                              %
                              
                              
                              -11.9
                              %Environmental
                              
                              
                              -4.6
                              %
                              
                              
                              0.2
                              %
                              
                              
                              -4.2
                              %
                              
                              
                              -8.6
                              %Oilfield
      services
                              
                              
                              -1.2
                              %
                              
                              
                              1.8
                              %
                              
                              
                              -0.1
                              %
                              
                              
                              0.5
                              %Transportation
      & intersegment shipping
                              
                              
                              -1.1
                              %
                              
                              
                              0.0
                              %
                              
                              
                              0.0
                              %
                              
                              
                              -1.1
                              %Total
                              
                              
                              -16.1
                              %
                              
                              
                              2.0
                              %
                              
                              
                              -7.0
                              %
                              
                              
                              -21.1
                              %%
      of change
                              
                              
                              76.4
                              %
                              
                              
                              -9.4
                              %
                              
                              
                              33.0
                              %
                              
                              
                              100.0
                              %





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





Americas
                                      
                                      
                                      EMEA
                                      
                                      
                                      Asia
      Pacific
                                      
                                      
                                      TotalMinerals
                                      
                                      
                                      29.9
                                      %
                                      
                                      
                                      9.4
                                      %
                                      
                                      
                                      7.1
                                      %
                                      
                                      
                                      46.4
                                      %Environmental
                                      
                                      
                                      14.7
                                      %
                                      
                                      
                                      12.7
                                      %
                                      
                                      
                                      2.3
                                      %
                                      
                                      
                                      29.7
                                      %Oilfield
      services
                                      
                                      
                                      17.5
                                      %
                                      
                                      
                                      0.6
                                      %
                                      
                                      
                                      1.0
                                      %
                                      
                                      
                                      19.1
                                      %Transportation
                                      
                                      
                                      4.8
                                      %
                                      
                                      
                                      0.0
                                      %
                                      
                                      
                                      0.0
                                      %
                                      
                                      
                                      4.8
                                      %Total
      - current year's period
                                      
                                      
                                      66.9
                                      %
                                      
                                      
                                      22.7
                                      %
                                      
                                      
                                      10.4
                                      %
                                      
                                      
                                      100.0
                                      %Total
      from prior year's comparable period
                                      
                                      
                                      67.6
                                      %
                                      
                                      
                                      22.9
                                      %
                                      
                                      
                                      9.5
                                      %
                                      
                                      
                                      100.0
                                      %





Net
sales:





The decrease in net sales predominantly
stems from the decrease in volumes in our domestic minerals business and our
environmental segment. Revenues from our oilfield services and transportation
segments also decreased.





Gross
profit:





Overall
gross profit decreased due to the decrease in net sales mentioned
above.  However, gross margin increased due primarily to price
increases in our minerals segment implemented in 2008 which were not in full
effect during the prior year’s comparable period.





General,
selling & administrative expenses (GS&A):





GS&A expenses experienced an 8.8%
decrease primarily due to favorable exchange rate movements in our environmental
segment combined with decreases in our minerals and corporate
segments.


29


Operating
profit:
 
 Operating profit decreased due to the
decrease in gross profit as mentioned earlier.  Excluding our
corporate segment, every segment experienced deteriorating operating profits as
we will outline later herein.  However, our minerals segment
experienced increased operating profit margins due to the aforementioned selling
price increases.
 
 Interest
expense, net:
 
 Net interest expense increased due to
increased average debt levels - we began 2009 with debt levels significantly
greater than those that existed at the beginning of 2008 due to increased
capital spending, an acquisition, and increased working capital levels generated
in 2008. The majority of our long-term debt has a variable rate of interest
which is primarily influenced by changes in LIBOR.
 
 Other
income (expense):
 
 Other expense includes foreign currency
transaction gains and losses for third party and intercompany related activity
as well as gains and losses on foreign currency derivatives.  Other
expense increased in 2009 largely due to losses on derivative and foreign
exchange transaction losses.  We are undertaking several measures to
ameliorate these losses.
 
 Income
tax expense:
 
 Our
effective tax rate is lower in 2009 than in 2008 due to a greater proportion of
income being derived in our foreign operations, which typically have income tax
rates which are lower than the statutory 35% in the USA.
 
 Income
(loss) from affiliates & joint ventures:
 
 Our joint ventures experienced a loss
during the period largely due to the fact that they are geographically less
diversified businesses.  For example, the majority of our Russian
investee’s sales are generated within Russia, leading to losses as the Russian
economy experiences significant decreases in the markets for its
products.  In addition, losses from our investment in Belgium
increased as that business begins to establish operating activities after
recently completing a production processing facility.
 
 Diluted
earnings per
share:
 
 Diluted EPS decreased commensurate with
the decrease in net income as previously outlined.
  30
  Segment
analysis:
 
 Following is a review of operating
results for each of our five reporting segments:
 
 Minerals
Segment
  Six
      Months Ended June 30,Minerals
                            
                            2009
                            
                            
                            2008
                            
                            
                            2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                            
                            $
                            155,636
                            
                            
                            
                            100.0
                            %
                            
                            $
                            206,347
                            
                            
                            
                            100.0
                            %
                            
                            $
                            (50,711
                            )
                            
                            
                            -24.6
                            %Cost
      of sales
                            
                            
                            124,542
                            
                            
                            
                            80.0
                            %
                            
                            
                            171,326
                            
                            
                            
                            83.0
                            %Gross
      profit
                            
                            
                            31,094
                            
                            
                            
                            20.0
                            %
                            
                            
                            35,021
                            
                            
                            
                            17.0
                            %
                            
                            
                            (3,927
                            )
                            
                            
                            -11.2
                            %General,
      selling and administrative expenses
                            
                            
                            17,703
                            
                            
                            
                            11.4
                            %
                            
                            
                            18,814
                            
                            
                            
                            9.1
                            %
                            
                            
                            (1,111
                            )
                            
                            
                            -5.9
                            %Operating
      profit
                            
                            
                            13,391
                            
                            
                            
                            8.6
                            %
                            
                            
                            16,207
                            
                            
                            
                            7.9
                            %
                            
                            
                            (2,816
                            )
                            
                            
                            -17.4
                            %
 
 Six
      Months Ended June 30,Minerals
      Product Line Sales
                                        
                                        2009
                                        
                                        
                                        2008
                                        
                                        
                                        %
      change(Dollars
      in Thousands)Metalcasting
                                        
                                        $
                                        62,495
                                        
                                        
                                        $
                                        85,387
                                        
                                        
                                        
                                        -26.8
                                        %Specialty
      materials
                                        
                                        
                                        44,669
                                        
                                        
                                        
                                        52,991
                                        
                                        
                                        
                                        -15.7
                                        %Pet
      products
                                        
                                        
                                        32,770
                                        
                                        
                                        
                                        38,702
                                        
                                        
                                        
                                        -15.3
                                        %Basic
      minerals
                                        
                                        
                                        13,940
                                        
                                        
                                        
                                        25,358
                                        
                                        
                                        
                                        -45.0
                                        %Other
      product lines
                                        
                                        
                                        1,762
                                        
                                        
                                        
                                        3,909
                                        
                                        
                                        
                                        *Total
                                        
                                        
                                        155,636
                                        
                                        
                                        
                                        206,347
 
 * Not
meaningful.
 
 Decreased
sales volumes accounted for the reduction in revenues over the prior year
period, primarily in metalcasting and drilling products (part of basic minerals)
due to the global recession.  The segment also experienced decreased
revenues due to adverse movements in foreign currency exchange rates, primarily
the British pound and Turkish Lira to the US dollar, which were more than offset
by the effect of a full period of selling price increases that were instituted
in the prior year but were not in effect in the prior year’s
period.  The increased selling prices also accounted for the increase
in gross profit margins.
 
 GS&A
expenses decreased due to foreign exchange rate movements and decreases in
employee related expenses.  This decrease, along with the increase in
gross profit margin, contributed to the increase in operating profit
margins.
  31
  Environmental
Segment
 
 Six Months Ended June 30,Environmental
                        
                        2009
                        
                        
                        2008
                        
                        
                        2009 vs. 2008(Dollars in Thousands)Net
      sales
                        
                        $
                        99,603
                        
                        
                        
                        100.0
                        %
                        
                        $
                        136,260
                        
                        
                        
                        100.0
                        %
                        
                        $
                        (36,657
                        )
                        
                        
                        -26.9
                        %Cost
      of sales
                        
                        
                        65,977
                        
                        
                        
                        66.2
                        %
                        
                        
                        89,963
                        
                        
                        
                        66.0
                        %Gross
      profit
                        
                        
                        33,626
                        
                        
                        
                        33.8
                        %
                        
                        
                        46,297
                        
                        
                        
                        34.0
                        %
                        
                        
                        (12,671
                        )
                        
                        
                        -27.4
                        %General,
      selling and administrative expenses
                        
                        
                        22,778
                        
                        
                        
                        22.9
                        %
                        
                        
                        28,071
                        
                        
                        
                        20.6
                        %
                        
                        
                        (5,293
                        )
                        
                        
                        -18.9
                        %Operating
      profit
                        
                        
                        10,848
                        
                        
                        
                        10.9
                        %
                        
                        
                        18,226
                        
                        
                        
                        13.4
                        %
                        
                        
                        (7,378
                        )
                        
                        
                        -40.5
                        %
  Six Months Ended June 30,Environmental
      Product Line Sales
                              
                              2009
                              
                              
                              2008
                              
                              
                              % change(Dollars in Thousands)Lining
      technologies
                              
                              $
                              61,423
                              
                              
                              $
                              80,947
                              
                              
                              
                              -24.1
                              %Building
      materials
                              
                              
                              27,477
                              
                              
                              
                              42,853
                              
                              
                              
                              -35.9
                              %Other
      product lines
                              
                              
                              10,703
                              
                              
                              
                              12,460
                              
                              
                              
                              *Total
                              
                              
                              99,603
                              
                              
                              
                              136,260
 
 * Not
meaningful.
 
 Revenues
in the environmental segment decreased due, almost equally, to two
factors:  exchange rates and reduced activity in our domestic markets
due to the recession and credit crisis.  Adverse movements in foreign
currency exchange rates, primarily the British pound and Polish zloty to the US
dollar, drove the decrease due to exchange rates.  Organic decreases
across all product lines, but most notably our lining technologies and
contracting services divisions, accounted for the decrease due to recessionary
and credit crisis factors.  These decreases also led to the decrease
in gross profits as gross margins were relatively constant.
 
 GS&A
expenses decreased in part due to the currency movements as mentioned above and
due to decreased employee incentives and third party commissions stemming from
decreased sales levels.  Operating profit margin decreased due to the
decrease in sales without a corresponding decrease in GS&A
expenses.
  32
  Oilfield
Services Segment
 
 Six Months Ended June 30,Oilfield
      Services
                      
                      2009
                      
                      
                      2008
                      
                      
                      2009 vs. 2008(Dollars in Thousands)Net
      sales
                      
                      $
                      64,031
                      
                      
                      
                      100.0
                      %
                      
                      $
                      61,798
                      
                      
                      
                      100.0
                      %
                      
                      $
                      2,233
                      
                      
                      
                      3.6
                      %Cost
      of sales
                      
                      
                      41,063
                      
                      
                      
                      64.1
                      %
                      
                      
                      37,345
                      
                      
                      
                      60.4
                      %Gross
      profit
                      
                      
                      22,968
                      
                      
                      
                      35.9
                      %
                      
                      
                      24,453
                      
                      
                      
                      39.6
                      %
                      
                      
                      (1,485
                      )
                      
                      
                      -6.1
                      %General,
      selling and administrative expenses
                      
                      
                      13,601
                      
                      
                      
                      21.2
                      %
                      
                      
                      11,756
                      
                      
                      
                      19.0
                      %
                      
                      
                      1,845
                      
                      
                      
                      15.7
                      %Operating
      profit
                      
                      
                      9,367
                      
                      
                      
                      14.7
                      %
                      
                      
                      12,697
                      
                      
                      
                      20.6
                      %
                      
                      
                      (3,330
                      )
                      
                      
                      -26.2
                      %
 
 Strong
increased demand for offshore, deep water filtration services and revenues from
our May 2008 acquisition of our coil tubing business are the primary drivers of
the increased sales over the prior year period.  However, these sales
levels are being achieved at reduced selling prices given increased competition
for services as oil and gas companies curtail their investments and maintenance
activities given the decline in the price of oil.  The increased
competition has thus led to reduced gross profits and gross
margins.
 
 GS&A
expenses increased primarily due to the acquisition of our coil tubing
business.  Operating profits decreased due to the decreased gross
profits mentioned above, and the decreased operating margins follow the decrease
in gross margins.  Additive to that, however, is our coil tubing
business which has experienced significant competitive pressures as customers
reduce their use of these services given the drop in oil prices.
 
 Transportation
Segment
 
 Six
      Months Ended June 30,Transportation
                          
                          2009
                          
                          
                          2008
                          
                          
                          2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                          
                          $
                          22,849
                          
                          
                          
                          100.0
                          %
                          
                          $
                          31,233
                          
                          
                          
                          100.0
                          %
                          
                          $
                          (8,384
                          )
                          
                          
                          -26.8
                          %Cost
      of sales
                          
                          
                          20,169
                          
                          
                          
                          88.3
                          %
                          
                          
                          27,994
                          
                          
                          
                          89.6
                          %Gross
      profit
                          
                          
                          2,680
                          
                          
                          
                          11.7
                          %
                          
                          
                          3,239
                          
                          
                          
                          10.4
                          %
                          
                          
                          (559
                          )
                          
                          
                          -17.3
                          %General,
      selling and administrative expenses
                          
                          
                          1,690
                          
                          
                          
                          7.4
                          %
                          
                          
                          1,626
                          
                          
                          
                          5.2
                          %
                          
                          
                          64
                          
                          
                          
                          3.9
                          %Operating
      profit
                          
                          
                          990
                          
                          
                          
                          4.3
                          %
                          
                          
                          1,613
                          
                          
                          
                          5.2
                          %
                          
                          
                          (623
                          )
                          
                          
                          -38.6
                          %
 
 Traffic
levels decreased as compared to the prior year period due to the recession in
the United States.  In addition, prices for gasoline have decreased,
leading to decreased fuel surcharges.  Both of these factors
contributed to the decrease in this segment’s performance.
 
  33
  Corporate
Segment
 
 Six
      Months Ended June 30,Corporate
                          
                          2009
                          
                          
                          2008
                          
                          
                          2009
      vs. 2008(Dollars
      in Thousands)Intersegment
      shipping sales
                          
                          $
                          (6,500
                          )
                          
                          $
                          (10,382
                          )
                          
                          
                          3,882Intersegment
      shipping costs
                          
                          
                          (6,500
                          )
                          
                          
                          (10,382
                          )Gross
      profit
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -General,
      selling and administrative expenses
                          
                          
                          10,649
                          
                          
                          
                          12,580
                          
                          
                          
                          (1,931
                          )
                          
                          
                          -15.3
                          %Operating
      loss
                          
                          
                          10,649
                          
                          
                          
                          12,580
                          
                          
                          
                          (1,931
                          )
                          
                          
                          -15.3
                          %
 
 Intersegment
shipping revenues and costs are related to billings from our transportation
segment to its domestic minerals and environmental segment sister companies for
services.  These services are invoiced at arms-length rates and those
costs are subsequently charged to customers.  Intersegment sales and
costs reported above reflect the elimination of these transactions.
 
 Corporate GS&A expenses decreased
due to reduced employee and employee related expenses, including benefits, as
well as a decrease in professional and consulting expenses.
 
 Liquidity and Capital
Resources
 
 Cash flows from operations, an ability
to issue new debt instruments, and borrowings from our revolving credit facility
have been our sources of funds to provide working capital, make capital
expenditures, acquire businesses, repurchase common stock, and pay dividends to
shareholders.  We believe cash flows from operations and borrowings
from an unused and committed credit facility will be adequate to support our
current business needs for the foreseeable future.  Given the current
economic climate and credit crisis, it is unlikely that we would pursue a
substantial acquisition in 2009.  However, we may need additional debt
or equity facilities in order to pursue acquisitions, when and if these
opportunities become available, and we may or may not be able to obtain such
facilities on terms substantially similar to our current facilities as discussed
in Item 1A – Risk Factors in our Form 10-K for 2008. See our additional comments
in the Overview section of Part 1, Item 2 of this report. Following is a
discussion and analysis of our cash flow activities as presented in the
Condensed Consolidated Statement of Cash Flows presented within Part 1, Item 1
of this report.
 
 Six
      Months EndedCash
      Flows
                        
                        June
      30,($
      in millions)
                        
                        2009
                        
                        
                        2008Net
      cash provided by operating activities
                        
                        $
                        65.5
                        
                        
                        $
                        (2.0
                        )Net
      cash used in investing activities
                        
                        $
                        (26.0
                        )
                        
                        $
                        (88.8
                        )Net
      cash provided by (used in) financing activities
                        
                        $
                        (38.5
                        )
                        
                        $
                        86.4
 
 Cash
flows from operating activities increased substantially as compared to the prior
year period due to decreased working capital levels, which we were able to
reduce through decreased business activity resulting from the current economic
environment and better inventory management.  Historically, cash flows
from operations have increased over the course of the year and we anticipate
this pattern will continue for the remainder of this year.
  34
  Cash
flows used in investing activities decreased in the current year period as the
prior year period includes the acquisition of our coil tubing business and our
investment in a Russian bentonite company.  In 2009, we purchased a
chrome sand mine in South Africa from Chrome Corporation for $15.1 million
(included within capital expenditures).  Investing activities in 2009
include the repayment of the $6 million loan from Chrome Corporation made in
2008.
 
 Cash flows from financing activities
decreased as we paid off debt whereas in the previous year we incurred more
debt.  We were able to pay down debt due to reduced working capital
requirements and reduced investing activities.  Year-to-date dividends
increased in 2009 to $0.36 per share from $0.32 per share in the prior year
period.
 
 As atFinancial
      Position
                          
                          June 30,
                          
                          
                          December 31,($
      in millions)
                          
                          2009
                          
                          
                          2008Working
      capital
                          
                          $
                          208.1
                          
                          
                          $
                          262.7Goodwill
      & intangible assets
                          
                          $
                          121.4
                          
                          
                          $
                          122.5Total
      assets
                          
                          $
                          721.5
                          
                          
                          $
                          744.6Long-term
      debt
                          
                          $
                          230.1
                          
                          
                          $
                          256.8Other
      long-term obligations
                          
                          $
                          65.4
                          
                          
                          $
                          50.9Total
      equity
                          
                          $
                          329.9
                          
                          
                          $
                          328.4
 
 Working
capital at June 30, 2009 decreased over the amount at December 31, 2008 due to
decreases in accounts receivable and inventories partly commensurate with the
decreased sales levels but also due to increased efforts to minimize these
assets.  Given the seasonality of our environmental segment and the
project nature of some of our services provided in the oilfield services
segment, working capital levels typically increase in the second and third
quarters of the year.  However, this trend may or may not continue in
the current economic environment.
 
 Long-term debt relative to total
capitalization reduced slightly to 41.1% at June 30, 2009 versus 43.9% at
December 31, 2008.  We have approximately $87.0 million of borrowing
capacity available from our revolving credit facility at June 30,
2009.  We are in compliance with financial covenants related to the
revolving credit facility as of the period covered by this report.
 
 Since the mid 1980’s, we have been
named as one of a number of defendants in product liability lawsuits relating to
the minor free-silica content within our bentonite products used in the
metalcasting industry.  The plaintiffs in these lawsuits are primarily
employees of our former and current customers.  To date, we have not
incurred significant costs in defending these matters.  We believe we
have adequate insurance coverage and do not believe the litigation will have a
material adverse impact on our financial position, liquidity or results of
operations.
 
 Contractual Obligations and
Off-Balance Sheet Arrangements
 
 Item 7 of our Annual Report on Form
10-K for the year ended December 31, 2008 discloses our contractual obligations
and off-balance sheet arrangements.  Other than the decrease in our
long-term bank debt as disclosed in our condensed consolidated financial
statements herein there were no material changes in our contractual obligations
and off-balance sheet arrangements.
  35
  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, 2008 other than those discussed in Part 1, Item 2 of
this report.
 
 Item
4:             Controls
and Procedures
 
 Evaluation of Disclosure
Controls and Procedures
 
 Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the
end of the period covered by this report. Based on that evaluation, they
concluded that, as of the end of such period, our disclosure controls and
procedures were effective in recording, processing, summarizing, and reporting,
on a timely basis, information we are required to disclose in the reports we
file or submit under the Exchange Act.
 
 Changes in Internal Control
Over Financial Reporting
 
 The Securities and Exchange Commission,
as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules
requiring public companies to include in their annual reports on Form 10-K an
assessment by management of the effectiveness of our internal controls over
financial reporting.  As described in our Annual Report on Form 10-K
filed for the year ended December 31, 2008, we identified a material weakness in
internal control over financial reporting relative to incorporating the results
of our equity investees in our financial statements pursuant to the equity
method of accounting. In particular, our design of internal controls did not
address the proper accounting for the value of derivative instruments held by
one of our equity investees, Ashapura Minechem Limited. As a result of the
foregoing, we began implementing changes in our internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) promulgated
under the Securities Exchange Act of 1934) during the fiscal quarter ended March
31, 2009 that materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.
 
 Specifically,
these changes include transferring the responsibility of accounting for equity
investees from our minerals segment to our corporate segment. We also enhanced
controls over financial reporting of our equity investees to assure the
consolidated financial statements are presented in accordance with U.S.
generally accepted accounting principles.
 
 We began remediating this material
weakness in the first quarter of 2009 and completed our activities in the second
quarter of 2009.  Accordingly, we have determined that the material
weakness in our internal control over financial reporting relative to our
accounting for equity investments as described in our annual report on Form 10-K
for the year ended December 31, 2008 was remediated as of June 30,
2009.
  36
  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, 2008. In addition, we also
face certain Market Risks as noted in Part 1, “Item 7A. Quantitative and
Qualitative Disclosures about Market Risk” of that Form 10-K.  The
risk factors presented below update, and should be considered in addition to,
the risk factors previously disclosed in our Annual Report on Form 10-K for the
year ended December 31, 2008.
 
 Risks
of International Expansion& Operation
 An
important part of our business strategy is to expand internationally, partly
through our intent to seek acquisitions, joint ventures and strategic alliances
globally.  Sales and earnings from our overseas operations have increased
considerably in recent years and comprose a significant portion of our financial
results; morever, our income has been more sensitive to our earnings from joint
ventures.  As we expand and operate internationally, we will be subject to
a myriad of risks, especially in less developed and higher growth
countries.  These risks relate to currency exchange rates, political and
economic environments, business and trade laws, and regulatory and compliance
issues.  All of these risks can change beyond our control and lead to
sudden, and potentially prolonged, changes in demand for our products,
difficulty in enforcing agreements, or losses in the realizability of our
assets.
  37
 Seasonality
of Our Oilfield Services and Environmental Segments
 Our oilfield services segment and
environmental segment are affected by seasonal weather patterns. A majority of
our oilfield services’ revenues are derived from the Gulf of Mexico and
surrounding states, which are susceptible to hurricanes that typically occur in
the Fall months.  In addition, it is affected by customers’ demands
for natural gas.  Natural gas is affected by weather patterns as
colder winters increase the demand for natural gas to heat homes and warmer
summers increase the demand for natural gas to fuel generators providing
electricity to run air conditioners.  Actual or threatened hurricanes
or changes in the demand for natural gas can result in volatile demand for
services provided by our oilfield services segment.
 
 Our environmental segment is affected
by weather patterns which determine the feasibility of construction
activities.  Typically, less construction activity occurs in winter
months and thus this segment’s revenues tend to be greatest in the second and
third quarters when weather patterns in our geographic markets are more
conducive to construction activities.
 
 Cyclicality
of Our Segments
 All of our segments are affected by
economic cycles.  During periods of economic slowdown, our customers
often reduce their capital expenditures and defer or cancel pending
projects.  Such developments occur even amongst customers that are not
experiencing financial difficulties.  These risks are more predominant
in our environmental and minerals segments.
 
 In our
environmental segment, the construction and infrastructure markets are heavily
dependent upon the strength of domestic and international
economies.  In our minerals segment, the metalcasting market is
dependent upon the demand for castings for automotive, farming, railcar, home
appliance and metallurgical uses.  The recent volatility in the credit
markets and the economic slowdown that was present in the beginning of 2009 has
decreased demand for our environmental and minerals segments’ products and
services due to the decreased demand in these markets.  These
decreases may or may not continue.
 
 Sensitivity
to Energy and Petroleum Related Products
 We
purchase a significant amount of raw materials which are derived from
petrochemical products.  Our production processes also consume a
significant amount of energy, primarily electricity, diesel fuel, natural gas
and coal.  We use diesel fuel to operate our mining and processing
equipment and our freight costs are heavily dependent upon fuel prices and
surcharges.
 
 These
factors combined represent a large exposure to petrochemical and energy products
which may be subject to significant price fluctuations.  While we have
been successful in attaining price increases in certain markets to offset some
of these rising costs, there can be no assurance that we will be successful in
continuing to achieve these price increases.
 
 Ability
to Complete,  Integrate & Finance Acquisitions
 Our business strategy includes pursuing
acquisitions of complementary businesses, either through our own wholly-owned
subsidiaries or investments in affiliates and joint ventures.  The success
of any future acquisitions or investments will be dependent upon our ability to
locate an attractive business at an attractive price and our ability to
successfully integrate them into our existing operations.
  38







In addition, we have typically financed
our acquisitions and investments with debt available to us under our various
credit agreements.  However, we may decide to pay all or a portion of
the purchase price of any future acquisition or investment with shares of our
common stock.  If we use our common stock in this way, the ownership
interests of our shareholders will be diluted and the price of the stock may
decrease.





Impact
of Competition


Our businesses have many competitors,
some of whom are bigger and have more resources than we do.  We also
face competition for some of our products from alternative products, and some of
the competition we face comes from competitors in lower-cost production
countries like China and India.  Many factors could change the level of
competition we face in our markets, which could result in decreased demand for
our products and services and negatively affect our financial
performance.




Credit
and Liquidity Concerns


In
addition to the cash flows from our operations, we have relied on our ability to
issue new debt instruments and borrow from our revolving credit facility to
provide for our capital needs.  These debt facilities require us to
certify certain representations and warranties and to comply with certain
covenants, including certain financial ratios.  If we are not able to
make these certifications, we may default on our debt facilities, which could
impact our liquidity and have a material adverse effect on our business,
financial position, and ability to raise debt in the future.




Even if
we continue to satisfy the applicable financial covenants, the current
volatility in the credit markets has caused a contraction in the availability
and cost of obtaining credit generally.  This contraction could
potentially reduce our sources of future liquidity.




As described more fully under the
heading “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in
our most recent Form 10-K, our debt securities are also subject to interest rate
risk, which could adversely affect the cost of our debt for those portions that
are not or are inadequately hedged.


39


Ability
to Pay Dividends


We currently declare and pay regular
cash dividends on our common stock.  Any future payment of cash
dividends will depend upon our financial condition, earnings, legal
requirements, restrictions in our debt agreements and other factors deemed
relevant by our board of directors.  Our board of directors may
decrease or discontinue payment of dividends at any time.  In
addition, we cannot assure you that the agreements governing our current and
future indebtedness will permit us to pay dividends on our common
stock.





Item
4:                 Submission of Matters to a vote of
Security Holders





(a)
            The
      Annual Meeting of Shareholders was held on May 7,
  2009.




(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:




Director
                
                For
                
                
                WithheldDaniel
      P. Casey
                
                
                21,969,576
                
                
                
                517,592Dale
      E. Stahl
                
                
                21,898,661
                
                
                
                588,506Lawrence
      E. Washow
                
                
                22,184,082
                
                
                
                303,085





Item
6:                 Exhibits




Exhibit
                      Number31.1
                    
                    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.


40


SIGNATURES




Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.




AMCOL
INTERNATIONAL CORPORATION


Date:                   
      August 10, 2009
                  /s/ Lawrence E. WashowLawrence
      E. WashowPresident
      and Chief Executive OfficerDate:                   
      August 10, 2009
                  /s/ Donald W. PearsonDonald
      W. PearsonVice
      President and Chief Financial
Officer


41


INDEX
TO EXHIBITS





31.1
              Certification
      of Chief Executive Officer Pursuant to Rule
      13a-14(a)/15d-14(a)*31.2
              Certification
      of Chief Financial Officer Pursuant to Rule
      13a-14(a)/15d-14(a)*32
              Certification
      of Periodic Financial Report Pursuant to 18 U.S.C. Section
      1350*


* Filed
herewith.




42