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 THESECURITIES
      EXCHANGE ACT OF
1934





For the
quarterly period ended September 30,
2009


Or


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


For the
transition period from 
to


Commission
file number 1-14447





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 x       
No  ̈





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 November 3,
    2009(Common
      stock, $.01 par value)
            
            30,668,570
      Shares











AMCOL INTERNATIONAL
CORPORATION





INDEX





Page No.Part
      I - Financial InformationItem
      1:
                            Financial
      StatementsCondensed
      Consolidated Balance Sheets –
                              September
      30, 2009 and December 31, 2008
                            3Condensed
      Consolidated Statements of Operations –three
      and nine months ended September 30, 2009 and 2008
                            5Condensed
      Consolidated Statements of Comprehensive Income –three
      and nine months ended September 30, 2009 and 2008
                            6Condensed
      Consolidated Statements of Changes in Equity –
                              nine
      months ended September 30, 2009 and 2008
                            7Condensed
      Consolidated Statements of Cash Flows –
                              nine
      months ended September 30, 2009 and 2008
                            8Notes
      to Condensed Consolidated Financial Statements
                            9Item
      2:
                            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                            20Item
      3:
                            Quantitative
      and Qualitative Disclosures About Market Risk
                            37Item 4:
                            Controls
      and Procedures
                            37Part
      II - Other InformationItem
      6:
                            Exhibits
                            37





2





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands)





Item
1:  Financial Statements





September
      30,
                                  
                                  
                                  December
      31,2009
                                  
                                  
                                  2008ASSETS
                                  
                                  (unaudited)
                                  
                                  
                                  *Current
      assets:Cash
      and cash equivalents
                                  
                                  $
                                  19,367
                                  
                                  
                                  $
                                  19,441Accounts
      receivable, net
                                  
                                  
                                  165,477
                                  
                                  
                                  
                                  197,611Inventories
                                  
                                  
                                  103,966
                                  
                                  
                                  
                                  125,066Prepaid
      expenses
                                  
                                  
                                  14,190
                                  
                                  
                                  
                                  12,812Deferred
      income taxes
                                  
                                  
                                  3,043
                                  
                                  
                                  
                                  5,358Income
      tax receivable
                                  
                                  
                                  6,791
                                  
                                  
                                  
                                  3,490Other
                                  
                                  
                                  232
                                  
                                  
                                  
                                  7,409Total
      current assets
                                  
                                  
                                  313,066
                                  
                                  
                                  
                                  371,187Investment
      in and advances to affiliates and joint ventures
                                  
                                  
                                  30,292
                                  
                                  
                                  
                                  30,025Property,
      plant, equipment, and mineral rights and reserves:Land
      and mineral rights
                                  
                                  
                                  56,356
                                  
                                  
                                  
                                  17,186Depreciable
      assets
                                  
                                  
                                  405,217
                                  
                                  
                                  
                                  380,555461,573
                                  
                                  
                                  
                                  397,741Less:
      accumulated depreciation and depletion
                                  
                                  
                                  229,387
                                  
                                  
                                  
                                  206,398232,186
                                  
                                  
                                  
                                  191,343Other
      assets:Goodwill
                                  
                                  
                                  71,537
                                  
                                  
                                  
                                  68,482Intangible
      assets, net
                                  
                                  
                                  48,681
                                  
                                  
                                  
                                  53,974Deferred
      income taxes
                                  
                                  
                                  14,361
                                  
                                  
                                  
                                  15,867Other
      assets
                                  
                                  
                                  24,449
                                  
                                  
                                  
                                  13,702159,028
                                  
                                  
                                  
                                  152,025$
                                  734,572
                                  
                                  
                                  $
                                  744,580





Continued...





3





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands)





September
      30,
                                                            
                                                            
                                                            December
      31,2009
                                                            
                                                            
                                                            2008LIABILITIES AND SHAREHOLDERS'
      EQUITY
                                                            
                                                            (unaudited)
                                                            
                                                            
                                                            *Current
      liabilities:Accounts
      payable
                                                            
                                                            $
                                                            47,116
                                                            
                                                            
                                                            $
                                                            45,297Accrued
      liabilities
                                                            
                                                            
                                                            53,080
                                                            
                                                            
                                                            
                                                            63,197Total
      current liabilities
                                                            
                                                            
                                                            100,196
                                                            
                                                            
                                                            
                                                            108,494Long-term
      debt
                                                            
                                                            
                                                            217,064
                                                            
                                                            
                                                            
                                                            256,821Pension
      liabilities
                                                            
                                                            
                                                            24,920
                                                            
                                                            
                                                            
                                                            22,939Other
      liabilities
                                                            
                                                            
                                                            44,650
                                                            
                                                            
                                                            
                                                            27,97169,570
                                                            
                                                            
                                                            
                                                            50,910Equity:Common
      stock
                                                            
                                                            
                                                            320
                                                            
                                                            
                                                            
                                                            320Additional
      paid in capital
                                                            
                                                            
                                                            83,284
                                                            
                                                            
                                                            
                                                            86,350Retained
      earnings
                                                            
                                                            
                                                            269,500
                                                            
                                                            
                                                            
                                                            262,453Accumulated
      other comprehensive income (loss)
                                                            
                                                            
                                                            8,749
                                                            
                                                            
                                                            
                                                            (4,721
                                                            )361,853
                                                            
                                                            
                                                            
                                                            344,402Treasury
      stock
                                                            
                                                            
                                                            (15,952
                                                            )
                                                            
                                                            
                                                            (18,196
                                                            )Total
      AMCOL shareholders' equity
                                                            
                                                            
                                                            345,901
                                                            
                                                            
                                                            
                                                            326,206Noncontrolling
      interest
                                                            
                                                            
                                                            1,841
                                                            
                                                            
                                                            
                                                            2,149Total
      equity
                                                            
                                                            
                                                            347,742
                                                            
                                                            
                                                            
                                                            328,355$
                                                            734,572
                                                            
                                                            
                                                            $
                                                            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)





Nine
      Months Ended
                      
                      
                      Three
      Months EndedSeptember 30,
                      
                      
                      September 30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008Net
      sales
                      
                      $
                      526,539
                      
                      
                      $
                      678,304
                      
                      
                      $
                      190,920
                      
                      
                      $
                      253,048Cost
      of sales
                      
                      
                      382,320
                      
                      
                      
                      505,727
                      
                      
                      
                      137,069
                      
                      
                      
                      189,481Gross
      profit
                      
                      
                      144,219
                      
                      
                      
                      172,577
                      
                      
                      
                      53,851
                      
                      
                      
                      63,567General,
      selling and administrative expenses
                      
                      
                      101,047
                      
                      
                      
                      109,061
                      
                      
                      
                      34,626
                      
                      
                      
                      36,214Operating
      profit
                      
                      
                      43,172
                      
                      
                      
                      63,516
                      
                      
                      
                      19,225
                      
                      
                      
                      27,353Other
      income (expense):Interest
      expense, net
                      
                      
                      (9,399
                      )
                      
                      
                      (8,642
                      )
                      
                      
                      (2,833
                      )
                      
                      
                      (3,404
                      )Other,
      net
                      
                      
                      (2,595
                      )
                      
                      
                      (1,533
                      )
                      
                      
                      119
                      
                      
                      
                      (2,128
                      )(11,994
                      )
                      
                      
                      (10,175
                      )
                      
                      
                      (2,714
                      )
                      
                      
                      (5,532
                      )Income
      before income taxes and income (loss) from affiliates and joint
      ventures
                      
                      
                      31,178
                      
                      
                      
                      53,341
                      
                      
                      
                      16,511
                      
                      
                      
                      21,821Income
      tax expense
                      
                      
                      6,388
                      
                      
                      
                      13,950
                      
                      
                      
                      3,271
                      
                      
                      
                      5,567Income
      before income (loss) from affiliates and joint ventures
                      
                      
                      24,790
                      
                      
                      
                      39,391
                      
                      
                      
                      13,240
                      
                      
                      
                      16,254Income
      (loss) from affiliates and joint ventures
                      
                      
                      (921
                      )
                      
                      
                      (14,072
                      )
                      
                      
                      721
                      
                      
                      
                      (14,697
                      )Net
      income
                      
                      
                      23,869
                      
                      
                      
                      25,319
                      
                      
                      
                      13,961
                      
                      
                      
                      1,557Net
      income (loss) attributable to noncontrolling interests
                      
                      
                      296
                      
                      
                      
                      (58
                      )
                      
                      
                      661
                      
                      
                      
                      (365
                      )Net
      income (loss) attributable to AMCOL shareholders
                      
                      $
                      23,573
                      
                      
                      $
                      25,377
                      
                      
                      $
                      13,300
                      
                      
                      $
                      1,922Weighted
      average common shares outstanding
                      
                      
                      30,735
                      
                      
                      
                      30,405
                      
                      
                      
                      30,766
                      
                      
                      
                      30,540Weighted
      average common and common equivalent shares outstanding
                      
                      
                      30,973
                      
                      
                      
                      30,993
                      
                      
                      
                      31,061
                      
                      
                      
                      31,129Basic
      earnings per share attributable to AMCOL shareholders
                      
                      $
                      0.77
                      
                      
                      $
                      0.83
                      
                      
                      $
                      0.43
                      
                      
                      $
                      0.06Diluted
      earnings per share attributable to AMCOL shareholders
                      
                      $
                      0.76
                      
                      
                      $
                      0.82
                      
                      
                      $
                      0.43
                      
                      
                      $
                      0.06Dividends
      declared per share
                      
                      $
                      0.54
                      
                      
                      $
                      0.50
                      
                      
                      $
                      0.18
                      
                      
                      $
                      0.18








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 EndedSeptember
      30,
                            
                            
                            September
      30,
                            
                            
                            September
      30,2009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008Net
      income (loss)
                            
                            $
                            13,961
                            
                            
                            $
                            1,557
                            
                            
                            $
                            13,300
                            
                            
                            $
                            1,922
                            
                            
                            $
                            661
                            
                            
                            $
                            (365
                            )Other
      comprehensive income (loss):Foreign
      currency translation adjustment
                            
                            
                            8,270
                            
                            
                            
                            (12,644
                            )
                            
                            
                            8,181
                            
                            
                            
                            (12,456
                            )
                            
                            
                            89
                            
                            
                            
                            (188
                            )Unrealized
      gain (loss) on interest rate swap agreement
                            
                            
                            (344
                            )
                            
                            
                            (275
                            )
                            
                            
                            (344
                            )
                            
                            
                            (275
                            )
                            
                            
                            -
                            
                            
                            
                            -Other
                            
                            
                            372
                            
                            
                            
                            57
                            
                            
                            
                            372
                            
                            
                            
                            57
                            
                            
                            
                            -
                            
                            
                            
                            -Comprehensive
      income (loss)
                            
                            $
                            22,259
                            
                            
                            $
                            (11,305
                            )
                            
                            $
                            21,509
                            
                            
                            $
                            (10,752
                            )
                            
                            $
                            750
                            
                            
                            $
                            (553
                            )





Total
                            
                            
                            AMCOL
      Shareholders
                            
                            
                            Noncontrolling
                              InterestNine
      Months Ended
                            
                            
                            Nine
      Months Ended
                            
                            
                            Nine
      Months EndedSeptember
      30,
                            
                            
                            September
      30,
                            
                            
                            September
      30,2009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008Net
      income (loss)
                            
                            $
                            23,869
                            
                            
                            $
                            25,319
                            
                            
                            $
                            23,573
                            
                            
                            $
                            25,377
                            
                            
                            $
                            296
                            
                            
                            $
                            (58
                            )Other
      comprehensive income (loss):Foreign
      currency translation adjustment
                            
                            
                            12,775
                            
                            
                            
                            (6,026
                            )
                            
                            
                            12,389
                            
                            
                            
                            (5,782
                            )
                            
                            
                            386
                            
                            
                            
                            (244
                            )Unrealized
      gain (loss) on interest rate swap agreement
                            
                            
                            975
                            
                            
                            
                            (278
                            )
                            
                            
                            975
                            
                            
                            
                            (278
                            )
                            
                            
                            -
                            
                            
                            
                            -Other
                            
                            
                            106
                            
                            
                            
                            (13
                            )
                            
                            
                            106
                            
                            
                            
                            (13
                            )
                            
                            
                            -
                            
                            
                            
                            -Comprehensive
      income (loss)
                            
                            $
                            37,725
                            
                            
                            $
                            19,002
                            
                            
                            $
                            37,043
                            
                            
                            $
                            19,304
                            
                            
                            $
                            682
                            
                            
                            $
                            (302
                            )





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 (loss)
                                            
                                            
                                            25,319
                                            
                                            
                                            
                                            25,377
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (58
                                            )Dividends
                                            
                                            
                                            (15,143
                                            )
                                            
                                            
                                            (15,143
                                            )Purchase
      of treasury shares
                                            
                                            
                                            (2,062
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (2,062
                                            )Issuance
      of treasury shares pursuant to options and acquisition
                                            
                                            
                                            5,198
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            4,595
                                            
                                            
                                            
                                            603Tax
      benefit from employee stock plans
                                            
                                            
                                            1,122
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            1,122Vesting
      of common stock in connection with employee stock plans
                                            
                                            
                                            2,348
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,348Comprehensive
      income (loss)
                                            
                                            
                                            (6,317
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            (6,073
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (244
                                            )Investments
      made by non-controlling interests
                                            
                                            
                                            2,447
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,447Other
                                            
                                            
                                            183
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            183Balance
      at September 30, 2008
                                            
                                            
                                            365,745
                                            
                                            
                                            
                                            268,398
                                            
                                            
                                            
                                            27,175
                                            
                                            
                                            
                                            320
                                            
                                            
                                            
                                            (18,475
                                            )
                                            
                                            
                                            85,672
                                            
                                            
                                            
                                            2,655Balance
      at December 31, 2008
                                            
                                            $
                                            328,355
                                            
                                            
                                            $
                                            262,453
                                            
                                            
                                            $
                                            (4,721
                                            )
                                            
                                            $
                                            320
                                            
                                            
                                            $
                                            (18,196
                                            )
                                            
                                            $
                                            86,350
                                            
                                            
                                            $
                                            2,149Net
      income (loss)
                                            
                                            
                                            23,869
                                            
                                            
                                            
                                            23,573
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            296Dividends
                                            
                                            
                                            (16,526
                                            )
                                            
                                            
                                            (16,526
                                            )Purchase
      of treasury shares
                                            
                                            
                                            (304
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (304
                                            )Issuance
      of treasury shares pursuant to options
                                            
                                            
                                            1,342
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,548
                                            
                                            
                                            
                                            (1,206
                                            )Tax
      benefit from employee stock plans
                                            
                                            
                                            551
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            551Vesting
      of common stock in connection with employee stock plans
                                            
                                            
                                            2,127
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,127Purchase
      of noncontrolling interest shares
                                            
                                            
                                            (5,528
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (4,538
                                            )
                                            
                                            
                                            (990
                                            )Comprehensive
      income (loss)
                                            
                                            
                                            13,856
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            13,470
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            386Balance
      at September 30, 2009
                                            
                                            
                                            347,742
                                            
                                            
                                            
                                            269,500
                                            
                                            
                                            
                                            8,749
                                            
                                            
                                            
                                            320
                                            
                                            
                                            
                                            (15,952
                                            )
                                            
                                            
                                            83,284
                                            
                                            
                                            
                                            1,841





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)





Nine
      Months EndedSeptember 30,2009
                              
                              
                              2008Cash
      flow from operating activities:Net
      income
                              
                              $
                              23,869
                              
                              
                              $
                              25,319Adjustments
      to reconcile from net income to net cashprovided
      by (used in) operating activities:Depreciation,
      depletion, and amortization
                              
                              
                              26,781
                              
                              
                              
                              24,872Undistributed
      (earnings) losses from affiliates and joint ventures
                              
                              
                              1,412
                              
                              
                              
                              14,866Other
      non-cash charges
                              
                              
                              7,611
                              
                              
                              
                              2,409Changes
      in assets and liabilities, net of effects of acquisitions:Decrease
      (increase) in current assets
                              
                              
                              35,096
                              
                              
                              
                              (86,237
                              )Decrease
      (increase) in noncurrent assets
                              
                              
                              (1,257
                              )
                              
                              
                              (848
                              )Increase
      (decrease) in current liabilities
                              
                              
                              (7,480
                              )
                              
                              
                              20,116Increase  (decrease)
      in noncurrent liabilities
                              
                              
                              4,586
                              
                              
                              
                              788Net
      cash provided by (used in) operating activities
                              
                              
                              90,618
                              
                              
                              
                              1,285Cash
      flow from investing activities:Capital
      expenditures
                              
                              
                              (39,637
                              )
                              
                              
                              (29,686
                              )Capital
      expenditures - corporate building
                              
                              
                              (9,651
                              )
                              
                              
                              (14,273
                              )Proceeds
      from sale of depreciable assets - corporate building
                              
                              
                              9,651
                              
                              
                              
                              -Acquisitions,
      net of cash
                              
                              
                              (522
                              )
                              
                              
                              (42,549
                              )Investments
      in and advances to affiliates and joint ventures
                              
                              
                              (2,647
                              )
                              
                              
                              (10,993
                              )Receipts
      from (advances to) Chrome Corp
                              
                              
                              6,000
                              
                              
                              
                              (6,000
                              )Other
                              
                              
                              2,906
                              
                              
                              
                              (849
                              )Net
      cash provided by (used in) investing activities
                              
                              
                              (33,900
                              )
                              
                              
                              (104,350
                              )Cash
      flow from financing activities:Net
      change in outstanding debt
                              
                              
                              (42,467
                              )
                              
                              
                              105,495Net
      change in outstanding debt - corporate building
                              
                              
                              -
                              
                              
                              
                              20,692Proceeds
      from sales of treasury stock
                              
                              
                              1,005
                              
                              
                              
                              1,550Purchases
      of treasury stock
                              
                              
                              (165
                              )
                              
                              
                              (2,062
                              )Dividends
                              
                              
                              (16,526
                              )
                              
                              
                              (15,143
                              )Excess
      tax benefits from stock-based compensation
                              
                              
                              464
                              
                              
                              
                              1,087Net
      cash provided by (used in) financing activities
                              
                              
                              (57,689
                              )
                              
                              
                              111,619Effect
      of foreign currency rate changes on cash
                              
                              
                              897
                              
                              
                              
                              (190
                              )Net
      increase (decrease) in cash and cash equivalents
                              
                              
                              (74
                              )
                              
                              
                              8,364Cash
      and cash equivalents at beginning of period
                              
                              
                              19,441
                              
                              
                              
                              25,282Cash
      and cash equivalents at end of period
                              
                              $
                              19,367
                              
                              
                              $
                              33,646





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





8





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(In
thousands)





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:





Nine
      Months EndedSeptember 30,2009
                      
                      
                      2008Minerals
                      
                      
                      46
                      %
                      
                      
                      48
                      %Environmental
                      
                      
                      31
                      %
                      
                      
                      33
                      %Oilfield
      services
                      
                      
                      18
                      %
                      
                      
                      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 September
30,  2009 and 2008, and our financial position as of September 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, as amended, 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 nine months ended September 30, 2009.
These reclassifications did not have a material impact on our financial
statements.





9





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(In
thousands)





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 November 9, 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,”
(Accounting Standards Codification (“ASC”) Topic 810-10-65).  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.  This guidance establishes standards of reporting for
noncontrolling interests as well as deconsolidation of a
subsidiary.  It 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 this standard 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,”(ASC Topic 820-10),which delayed our effective
date of SFAS No. 157, “Fair
Value Measurements,”(ASC Topic 820) 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 this standard on January 1, 2009 did not have a material impact
on our financial statements.





10





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(In
thousands)





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133,”
(ASC Topic 815-10-65).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 ASC Topic 815, 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.





In April
2009, the FASB issued FSP No. 141(R)-1, “Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies,” (ASC Topic 805-20). This standard amends the accounting
treatment for assets and liabilities arising from contingencies in a business
combination. It 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,” (ASC Topic 405) shall be applied. This standard did not have
a material impact on our financial statements when we adopted it on January 1,
2009.





In April
2009, the FASB issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value
of Financial Instruments,” (ASC Topic 825-10-65). This standard requires
disclosures about fair value of financial instruments 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,”(ASC Topic 855). 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. It requires 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.





In June
2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-01,
“Generally Accepted Accounting Principles” (ASC Topic 105) which establishes
theFASB
Accounting Standards CodificationTM(“Codification” or
“ASC”) as the source of authoritative accounting principles recognized by the
FASB to be applied by all non-governmental entities in the preparation of
financial statements in conformity with US GAAP. Rules and interpretive
releases of the Securities and Exchange Commission (“SEC”) under authority of
federal securities laws are also sources of authoritative US GAAP for SEC
registrants. Following the Codification, the FASB will issue ASUs instead of new
standards in the form of Statements, FASB Staff Positions, or Emerging Issues
Task Force Abstracts. The ASUs will serve only to update the Codification,
provide background information about the guidance, and provide the bases for
conclusions on the change(s) in Codification. The adoption of this ASU did not
have a material impact on our financial statements when we adopted it on
September 30, 2009.





11





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(In
thousands)





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),”(ASC Topic
810-10).  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.




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.





Nine
      Months Ended
                      
                      
                      Three
      Months EndedSeptember 30,
                      
                      
                      September 30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008Weighted
      average number of common shares outstanding
                      
                      
                      30,734,996
                      
                      
                      
                      30,404,745
                      
                      
                      
                      30,765,700
                      
                      
                      
                      30,540,122Dilutive
      impact of stock based compensation
                      
                      
                      238,091
                      
                      
                      
                      588,567
                      
                      
                      
                      295,740
                      
                      
                      
                      589,167Weighted
      average number of common and common equivalent shares outstanding for the
      period
                      
                      
                      30,973,087
                      
                      
                      
                      30,993,312
                      
                      
                      
                      31,061,440
                      
                      
                      
                      31,129,289Number
      of common shares outstanding at the end of the period
                      
                      
                      30,637,887
                      
                      
                      
                      30,413,787
                      
                      
                      
                      30,637,887
                      
                      
                      
                      30,413,787Weighted
      average number of anti-dilutive shares excluded from the computation of
      diluted earnings per share
                      
                      
                      1,442,016
                      
                      
                      
                      307,958
                      
                      
                      
                      936,612
                      
                      
                      
                      -





12





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(In
thousands)





Note
      3:
            ADDITIONAL
      BALANCE SHEET INFORMATION





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





September
      30,
                    
                    
                    December
      31,2009
                    
                    
                    2008Crude
      stockpile inventories
                    
                    $
                    33,416
                    
                    
                    $
                    40,056In-process
      and finished goods inventories
                    
                    
                    44,132
                    
                    
                    
                    51,653Other
      raw material, container, and supplies inventories
                    
                    
                    26,418
                    
                    
                    
                    33,357$
                    103,966
                    
                    
                    $
                    125,066





We mine
various minerals using a surface mining process that requires the removal of
overburden.  Under various governmental regulations, we are obligated
to restore the land comprising each mining site to its original condition at the
completion of mining activity.  The obligation is adjusted to reflect
the passage of time and changes in estimated future cash outflows.  A
reconciliation of the activity within our reclamation obligation is as
follows:





Nine
      Months EndedSeptember 30,2009
                        
                        
                        2008Balance
      at beginning of period
                        
                        $
                        5,649
                        
                        
                        $
                        5,699Settlement
      of obligations
                        
                        
                        (930
                        )
                        
                        
                        (1,191
                        )Liabilities
      incurred and accretion expense
                        
                        
                        1,342
                        
                        
                        
                        1,799Acquisition
      of mining claims
                        
                        
                        474
                        
                        
                        
                        -Foreign
      Currency
                        
                        
                        174
                        
                        
                        
                        -Balance
      at end of period
                        
                        $
                        6,709
                        
                        
                        $
                        6,307





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




AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 (In
thousands)





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





Nine
      Months Ended
                      
                      
                      Three
      Months EndedSeptember 30,
                      
                      
                      September 30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008Net
      sales:Minerals
                      
                      $
                      244,657
                      
                      
                      $
                      323,228
                      
                      
                      $
                      89,021
                      
                      
                      $
                      116,881Environmental
                      
                      
                      164,096
                      
                      
                      
                      222,393
                      
                      
                      
                      64,493
                      
                      
                      
                      86,133Oilfield
      services
                      
                      
                      93,140
                      
                      
                      
                      100,177
                      
                      
                      
                      29,109
                      
                      
                      
                      38,379Transportation
                      
                      
                      35,336
                      
                      
                      
                      49,216
                      
                      
                      
                      12,487
                      
                      
                      
                      17,983Intersegment
      shipping
                      
                      
                      (10,690
                      )
                      
                      
                      (16,710
                      )
                      
                      
                      (4,190
                      )
                      
                      
                      (6,328
                      )Total
                      
                      $
                      526,539
                      
                      
                      $
                      678,304
                      
                      
                      $
                      190,920
                      
                      
                      $
                      253,048Operating
      profit (loss):Minerals
                      
                      $
                      23,863
                      
                      
                      $
                      27,317
                      
                      
                      $
                      10,472
                      
                      
                      $
                      11,110Environmental
                      
                      
                      21,603
                      
                      
                      
                      32,945
                      
                      
                      
                      10,755
                      
                      
                      
                      14,719Oilfield
      services
                      
                      
                      12,463
                      
                      
                      
                      18,891
                      
                      
                      
                      3,096
                      
                      
                      
                      6,194Transportation
                      
                      
                      1,683
                      
                      
                      
                      2,571
                      
                      
                      
                      693
                      
                      
                      
                      958Corporate
                      
                      
                      (16,440
                      )
                      
                      
                      (18,208
                      )
                      
                      
                      (5,791
                      )
                      
                      
                      (5,628
                      )Total
                      
                      $
                      43,172
                      
                      
                      $
                      63,516
                      
                      
                      $
                      19,225
                      
                      
                      $
                      27,353





As of Sep. 30,
                                                                        2009
                                                                      
                                                                      
                                                                      As of Dec. 31,
                                                                        2008Assets:Minerals
                                                                      
                                                                      $
                                                                      355,288
                                                                      
                                                                      
                                                                      $
                                                                      341,111Environmental
                                                                      
                                                                      
                                                                      169,870
                                                                      
                                                                      
                                                                      
                                                                      177,898Oilfield
      services
                                                                      
                                                                      
                                                                      149,882
                                                                      
                                                                      
                                                                      
                                                                      160,691Transportation
                                                                      
                                                                      
                                                                      3,668
                                                                      
                                                                      
                                                                      
                                                                      4,761Corporate
                                                                      
                                                                      
                                                                      55,864
                                                                      
                                                                      
                                                                      
                                                                      60,119Total
                                                                      
                                                                      $
                                                                      734,572
                                                                      
                                                                      
                                                                      $
                                                                      744,580





14





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(In
thousands)





Nine
      Months Ended
                          
                          
                          Three
      Months EndedSeptember 30,
                          
                          
                          September 30,2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008Depreciation,
      depletion and amortization:Minerals
                          
                          $
                          12,030
                          
                          
                          $
                          11,564
                          
                          
                          $
                          3,917
                          
                          
                          $
                          3,897Environmental
                          
                          
                          4,607
                          
                          
                          
                          4,857
                          
                          
                          
                          1,604
                          
                          
                          
                          1,677Oilfield
      services
                          
                          
                          8,815
                          
                          
                          
                          7,286
                          
                          
                          
                          2,928
                          
                          
                          
                          3,263Transportation
                          
                          
                          30
                          
                          
                          
                          25
                          
                          
                          
                          9
                          
                          
                          
                          9Corporate
                          
                          
                          1,299
                          
                          
                          
                          1,140
                          
                          
                          
                          448
                          
                          
                          
                          279Total
                          
                          $
                          26,781
                          
                          
                          $
                          24,872
                          
                          
                          $
                          8,906
                          
                          
                          $
                          9,125Capital
      expenditures:Minerals
                          
                          $
                          27,473
                          
                          
                          $
                          15,743
                          
                          
                          $
                          3,826
                          
                          
                          $
                          3,832Environmental
                          
                          
                          1,684
                          
                          
                          
                          3,318
                          
                          
                          
                          589
                          
                          
                          
                          1,007Oilfield
      services
                          
                          
                          8,924
                          
                          
                          
                          7,593
                          
                          
                          
                          2,459
                          
                          
                          
                          1,384Transportation
                          
                          
                          27
                          
                          
                          
                          48
                          
                          
                          
                          27
                          
                          
                          
                          31Corporate
                          
                          
                          11,180
                          
                          
                          
                          17,257
                          
                          
                          
                          3,541
                          
                          
                          
                          8,119Total
                          
                          $
                          49,288
                          
                          
                          $
                          43,959
                          
                          
                          $
                          10,442
                          
                          
                          $
                          14,373Research
      and development expense:Minerals
                          
                          $
                          3,976
                          
                          
                          $
                          3,732
                          
                          
                          $
                          1,278
                          
                          
                          $
                          1,159Environmental
                          
                          
                          1,716
                          
                          
                          
                          1,652
                          
                          
                          
                          643
                          
                          
                          
                          522Oilfield
      services
                          
                          
                          503
                          
                          
                          
                          401
                          
                          
                          
                          168
                          
                          
                          
                          145Corporate
                          
                          
                          155
                          
                          
                          
                          645
                          
                          
                          
                          28
                          
                          
                          
                          69Total
                          
                          $
                          6,350
                          
                          
                          $
                          6,430
                          
                          
                          $
                          2,117
                          
                          
                          $
                          1,895





Note
      5:
            EMPLOYEE
      BENEFIT PLANS





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





Nine
      Months Ended
                              
                              
                              Three
      Months EndedSeptember 30,
                              
                              
                              September 30, September 30,2009
                              
                              
                              2008
                              
                              
                              2009
                              
                              
                              2008Service
      cost
                              
                              $
                              1,235
                              
                              
                              $
                              1,253
                              
                              
                              $
                              411
                              
                              
                              $
                              418Interest
      cost
                              
                              
                              1,954
                              
                              
                              
                              1,780
                              
                              
                              
                              651
                              
                              
                              
                              593Expected
      return on plan assets
                              
                              
                              (1,609
                              )
                              
                              
                              (2,342
                              )
                              
                              
                              (536
                              )
                              
                              
                              (781
                              )Amortization
      of acturial (gain) / loss
                              
                              
                              320
                              
                              
                              
                              -
                              
                              
                              
                              107
                              
                              
                              
                              32Amortization
      of prior service cost
                              
                              
                              47
                              
                              
                              
                              3
                              
                              
                              
                              16
                              
                              
                              
                              (31
                              )Net
      periodic benefit cost
                              
                              $
                              1,947
                              
                              
                              $
                              694
                              
                              
                              $
                              649
                              
                              
                              $
                              231





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





15





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(In
thousands)





Note
      6:
            INCOME
      TAXES





Our effective tax rate for the nine
months ended September 30, 2009 and 2008 was 20.5% and 26.2%, 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.





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 is currently auditing our tax returns for 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. 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
                              
                              September 30,
      2009
                              
                              
                              December 31,
      2008Derivatives
      designated as hedging instruments:Interest
      rate swap
                              
                              Other liabilities
                              
                              $
                              4,331
                              
                              
                              $
                              5,997





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)Nine
      Months Ended September 30,
                            
                            
                            Three
      Months Ended September 30,Derivatives in Cash Flow
      Hedging Relationships
                            
                            2009
                            
                            
                            2008
                            
                            
                            2009
                            
                            
                            2008Interest
      rate swap
                            
                            $
                            975
                            
                            
                            $
                            (278
                            )
                            
                            $
                            (344
                            )
                            
                            $
                            (275
                            )





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 September 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.





16





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(In
thousands)





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
      onDerivativesRecognized in
                                  Income
      on
                                
                                Nine
      Months Ended
                                  September
      30,
                                
                                
                                Three
      Months Ended
                                  September
      30,Derivatives
      Not Designated as Hedging Instruments
                                
                                Derivatives
                                
                                2009
                                
                                
                                2008
                                
                                
                                2009
                                
                                
                                2008Foreign
      exchange derivative instruments
                                
                                Other,
      net
                                
                                $
                                (4,709
                                )
                                
                                $
                                1,464
                                
                                
                                $
                                83
                                
                                
                                $
                                (500
                                )





We do not have any foreign exchange
derivative instruments outstanding as of September 30, 2009.





Note
      8:
            FAIR
      VALUE MEASUREMENTS





SFAS No.
157, “Fair Value
Measurements” (ASC Topic 820), 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 No. 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.





17




AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 (In
thousands)


The
following tables show the basis used to measure fair value on a recurring
basis:





Fair Value Measurements
    UsingBalance
      at
                
                
                Quoted
      Prices in
                  Active
      Markets
                  for
      Identical
                  Assets
                
                
                Significant
      Other
                  Observable
                  Inputs
                
                
                Significant
                  Unobservable
                  InputsDescription
                
                September 30, 2009
                
                
                (Level 1)
                
                
                (Level 2)
                
                
                (Level 3)Interest
      rate swap liability
                
                $
                4,331
                
                
                
                N/A
                
                
                $
                4,331
                
                
                
                N/A





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





The
interest rate swap is valued using discounted cash flows. The key input used is
the LIBOR swap rate, which is observable at commonly quoted intervals for the
full term of the swap.





We did
not have any significant assets or liabilities measured at fair value on a
nonrecurring basis as of September 30, 2009.





Note
      9:
            ASSET
      IMPAIRMENT CHARGE





For the three and nine months ended
September 30, 2009, our minerals segment recorded a non-cash impairment charge
of $1,980 to write down certain fixed assets to their estimated fair values
based on a third party appraisal (Level 2 inputs). The impairment charge is
related to the closing of a plant within our minerals segment due to reduced
demand. This $1,980 impairment charge is recorded within the cost of sales
within our Condensed Consolidated Statements of Operations.In
addition, we increased our inventory reserve by $293 (also recorded within the
cost of sales) to record the excess of cost over net realizable value of the
inventory located at this plant, bringing the total one-time expense associated
with this write-off to $2,273.





18





AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


(In
thousands)





Note
      10:
            DEBT





Our
revolving credit agreement is subject to certain financial covenants and ratios.
On September 18, 2009, we amended our revolving credit agreement to change the
definition of senior leverage ratio to exclude contingent obligations in respect
of our performance letters of credit for purposes of determining whether an
event of default has occurred; all other substantive terms and conditions
remained the same.





Note
      11:
            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.





19





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 its application to markets are two of the core components of our
longevity and future prospects.





20





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 litter 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 EMEA 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 economy will make it
      more challenging for us to do this than it has in recent
      years.





21





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, as amended, for the year ended December 31,
2008.  In general, the significance of these risks has not materially
changed since our Quarterly Report on From 10-Q for the period ended June, 30,
2009, 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, as
amended, and our Quarterly Report on From 10-Q for the period ended June 30,
2009, 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, as amended, for the year ended December 31, 2008.





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.





The
following paragraphs discuss the three and nine month results ending September
30, 2009 with the comparable results in the prior year.  However, on a
sequential quarter basis, the three months ending September 30, 2009 include a
few highlights as compared to the three months ending June 30,
2009.  In particular, our minerals segment experienced an increase in
both sales and margins.  This is due in part to increased activity in
our metalcasting business resulting from both the government’s “cash for
clunkers” program as well as model year change-overs in automobile production,
both of which increased foundry activity.  Our minerals business is
also improving in both Asia and Europe, which has a significant consumer
products related business.  Also, our environmental segment has more
construction project activity, but customers are still cautious about starting
new projects.





22







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





Consolidated
Review





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





Three Months Ended September
      30,Consolidated
                                
                                2009
                                
                                
                                2008
                                
                                
                                2009 vs. 2008(Dollars
      in Thousands, Except Per Share Amounts)Net
      sales
                                
                                $
                                190,920
                                
                                
                                $
                                253,048
                                
                                
                                
                                -24.6
                                %Cost
      of sales
                                
                                
                                137,069
                                
                                
                                
                                189,481Gross
      profit
                                
                                
                                53,851
                                
                                
                                
                                63,567
                                
                                
                                
                                -15.3
                                %margin
      %
                                
                                
                                28.2
                                %
                                
                                
                                25.1
                                %General,
      selling andadministrative
      expenses
                                
                                
                                34,626
                                
                                
                                
                                36,214
                                
                                
                                
                                -4.4
                                %Operating
      profit
                                
                                
                                19,225
                                
                                
                                
                                27,353
                                
                                
                                
                                -29.7
                                %margin
      %
                                
                                
                                10.1
                                %
                                
                                
                                10.8
                                %Other
      income (expense):Interest
      expense, net
                                
                                
                                (2,833
                                )
                                
                                
                                (3,404
                                )
                                
                                
                                -16.8
                                %Other,
      net
                                
                                
                                119
                                
                                
                                
                                (2,128
                                )
                                
                                
                                -105.6
                                %(2,714
                                )
                                
                                
                                (5,532
                                )Income
      before income taxes and income (loss) from affiliates and joint
      ventures
                                
                                
                                16,511
                                
                                
                                
                                21,821Income
      tax expense
                                
                                
                                3,271
                                
                                
                                
                                5,567
                                
                                
                                
                                -41.2
                                %effective
      tax rate
                                
                                
                                19.8
                                %
                                
                                
                                25.5
                                %Income
      before income (loss) from affiliates and joint ventures
                                
                                
                                13,240
                                
                                
                                
                                16,254Income
      (loss) from affiliates and joint ventures
                                
                                
                                721
                                
                                
                                
                                (14,697
                                )
                                
                                
                                -104.9
                                %Net
      income
                                
                                
                                13,961
                                
                                
                                
                                1,557Net
      income (loss) attributable to noncontrolling interests
                                
                                
                                661
                                
                                
                                
                                (365
                                )
                                
                                
                                -281.1
                                %Net
      income (loss) attributable to AMCOL shareholders
                                
                                $
                                13,300
                                
                                
                                $
                                1,922
                                
                                
                                
                                592.0
                                %Basic
      earnings per share attributable to AMCOL shareholders
                                
                                $
                                0.43
                                
                                
                                $
                                0.06Diluted
      earnings per share attributable to AMCOL shareholders
                                
                                $
                                0.43
                                
                                
                                $
                                0.06





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 following table details the consolidated sales fluctuations by
components over the prior year’s comparable period:




23




Organic
                    
                    
                    Acquisitions
                    
                    
                    Foreign
                      Exchange
                    
                    
                    TotalMinerals
                    
                    
                    -9.2
                    %
                    
                    
                    0.0
                    %
                    
                    
                    -1.8
                    %
                    
                    
                    -11.0
                    %Environmental
                    
                    
                    -5.6
                    %
                    
                    
                    0.2
                    %
                    
                    
                    -3.2
                    %
                    
                    
                    -8.6
                    %Oilfield
      services
                    
                    
                    -3.2
                    %
                    
                    
                    0.0
                    %
                    
                    
                    -0.5
                    %
                    
                    
                    -3.7
                    %Transportation
      & intersegment shipping
                    
                    
                    -1.3
                    %
                    
                    
                    0.0
                    %
                    
                    
                    0.0
                    %
                    
                    
                    -1.3
                    %Total
                    
                    
                    -19.3
                    %
                    
                    
                    0.2
                    %
                    
                    
                    -5.5
                    %
                    
                    
                    -24.6
                    %%
      of change
                    
                    
                    78.2
                    %
                    
                    
                    -0.9
                    %
                    
                    
                    22.7
                    %
                    
                    
                    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
                      
                      
                      29.0
                      %
                      
                      
                      9.7
                      %
                      
                      
                      8.0
                      %
                      
                      
                      46.7
                      %Environmental
                      
                      
                      17.0
                      %
                      
                      
                      15.0
                      %
                      
                      
                      1.8
                      %
                      
                      
                      33.8
                      %Oilfield
      services
                      
                      
                      13.7
                      %
                      
                      
                      0.4
                      %
                      
                      
                      1.1
                      %
                      
                      
                      15.2
                      %Transportation
                      
                      
                      4.3
                      %
                      
                      
                      0.0
                      %
                      
                      
                      0.0
                      %
                      
                      
                      4.3
                      %Total
      - current year's period
                      
                      
                      64.0
                      %
                      
                      
                      25.1
                      %
                      
                      
                      10.9
                      %
                      
                      
                      100.0
                      %Total
      from prior year's comparable period
                      
                      
                      66.9
                      %
                      
                      
                      23.4
                      %
                      
                      
                      9.7
                      %
                      
                      
                      100.0
                      %





Net
sales:





The decrease in net sales is driven by
decreased revenues in all segments, mostly occurring from organic operations
within our minerals and environmental segments.  Please see the
segment discussion for further details.





Gross
profit:





Overall
gross profit decreased due to the decrease in net sales mentioned above, with
the decrease in our environmental segment having the largest
impact.  Expenses associated with a $2.3 million write off of certain
U.S. metal casting operations within our Minerals segment also contributed to
the decrease in gross profits.  However, gross margin increased
substantially due to price increases in our minerals segment, which were
implemented in 2008 and thus not in full effect during the prior year’s quarter,
and reduced raw material costs in our environmental segment.





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





GS&A expenses decreased due to
decreased costs in our environmental segment as other segment GS&A costs
remained relatively constant.  Please see the segment discussion for
further details.





Operating
profit:





Operating profit decreased due to the
decrease in gross profit mentioned earlier, partially offset by the
improvement in GS&A expenses in our environmental
segment.  Operating profit margin decreased across all segments except
the minerals segment.  Please see the segment discussions for further
details.




24




Interest
expense, net:





Net interest expense decreased due to
decreased average debt levels.  In the 2008 comparable period, we
increased debt levels due to increased spending on acquisitions, capital
expenditures and investments in working capital.  In 2009, we have
limited our expenditures, decreased working capital, and have not made any
business acquisitions.  Thus, we have significantly reduced our
quarterly average debt levels in 2009 as compared to 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.  This
line item includes income in 2009 whereas the prior year’s quarter included
expenses.  The improvement results primarily from our entrance into
markets where our activities were not significant in the prior year, most
notably Brazil and South Africa.  With these countries’ currencies,
the exchange rate to the US dollar moved in our favor.





Income
tax expense:





Our
effective tax rate decreased in 2009 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 affiliates and joint ventures
generated income during the 2009 third quarter whereas they experienced a loss
in the previous year’s quarter.  In the prior year, the expenses
resulted from our investment in Ashapura Minechem Limited, a publicly traded
Indian company (“Ashapura”), in which we hold a 21% interest accounted for using
the equity method of accounting.  Ashapura suffered significant
foreign currency derivative expenses as a result of the derivative contracts it
entered into to hedge foreign currency exposure on its receivables and payables,
primarily related to the conversion of currencies between the US dollar and the
Indian Rupee.  US GAAP required that we record the fair value of these
derivative contracts in our balance sheet as of the end of each reporting period
and record the changes in such fair values in our statement of
operations.  Ashapura’s losses resulted in a significant non-cash
charge against our income from affiliates and joint ventures.  In the
current year, the income was primarily generated from our other Indian
investment, Ashapura Volclay.




Diluted
earnings per
share:





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




25




Segment
analysis:





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





Minerals
Segment





Three Months Ended September
      30,Minerals
                              
                              2009
                              
                              
                              2008
                              
                              
                              2009 vs. 2008(Dollars
      in Thousands)Net
      sales
                              
                              $
                              89,021
                              
                              
                              
                              100.0
                              %
                              
                              $
                              116,881
                              
                              
                              
                              100.0
                              %
                              
                              $
                              (27,860
                              )
                              
                              
                              -23.8
                              %Cost
      of sales
                              
                              
                              69,232
                              
                              
                              
                              77.8
                              %
                              
                              
                              96,206
                              
                              
                              
                              82.3
                              %Gross
      profit
                              
                              
                              19,789
                              
                              
                              
                              22.2
                              %
                              
                              
                              20,675
                              
                              
                              
                              17.7
                              %
                              
                              
                              (886
                              )
                              
                              
                              -4.3
                              %General,
      selling andadministrative
      expenses
                              
                              
                              9,317
                              
                              
                              
                              10.5
                              %
                              
                              
                              9,565
                              
                              
                              
                              8.2
                              %
                              
                              
                              (248
                              )
                              
                              
                              -2.6
                              %Operating
      profit
                              
                              
                              10,472
                              
                              
                              
                              11.7
                              %
                              
                              
                              11,110
                              
                              
                              
                              9.5
                              %
                              
                              
                              (638
                              )
                              
                              
                              -5.7
                              %





Three Months Ended September
      30,Minerals
      Product Line Sales
                      
                      2009
                      
                      
                      2008
                      
                      
                      % change(Dollars
      in Thousands)Metalcasting
                      
                      $
                      38,097
                      
                      
                      $
                      46,392
                      
                      
                      
                      -17.9
                      %Specialty
      materials
                      
                      
                      26,661
                      
                      
                      
                      29,033
                      
                      
                      
                      -8.2
                      %Pet
      products
                      
                      
                      16,959
                      
                      
                      
                      19,559
                      
                      
                      
                      -13.3
                      %Basic
      minerals
                      
                      
                      6,348
                      
                      
                      
                      19,471
                      
                      
                      
                      -67.4
                      %Other
      product lines
                      
                      
                      956
                      
                      
                      
                      2,426
                      
                      
                      
                      *Total
                      
                      
                      89,021
                      
                      
                      
                      116,881*
      Not meaningful.





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 full 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.  Our gross profits suffered due to the decreased sales in
addition to a $2.3 million write off of certain assets within our U.S. metal
casting operations.





GS&A
expenses decreased marginally due to favorable foreign exchange rate movements,
again primarily in European currencies.  Operating margins increased
due to the significant increase in gross profit margin mentioned
previously.




26




Environmental
Segment




Three Months Ended September
      30,Environmental
                                                          
                                                          2009
                                                          
                                                          
                                                          2008
                                                          
                                                          
                                                          2009 vs. 2008(Dollars
      in Thousands)Net
      sales
                                                          
                                                          $
                                                          64,493
                                                          
                                                          
                                                          
                                                          100.0
                                                          %
                                                          
                                                          $
                                                          86,133
                                                          
                                                          
                                                          
                                                          100.0
                                                          %
                                                          
                                                          $
                                                          (21,640
                                                          )
                                                          
                                                          
                                                          -25.1
                                                          %Cost
      of sales
                                                          
                                                          
                                                          41,603
                                                          
                                                          
                                                          
                                                          64.5
                                                          %
                                                          
                                                          
                                                          57,731
                                                          
                                                          
                                                          
                                                          67.0
                                                          %Gross
      profit
                                                          
                                                          
                                                          22,890
                                                          
                                                          
                                                          
                                                          35.5
                                                          %
                                                          
                                                          
                                                          28,402
                                                          
                                                          
                                                          
                                                          33.0
                                                          %
                                                          
                                                          
                                                          (5,512
                                                          )
                                                          
                                                          
                                                          -19.4
                                                          %General,
      selling andadministrative
      expenses
                                                          
                                                          
                                                          12,135
                                                          
                                                          
                                                          
                                                          18.8
                                                          %
                                                          
                                                          
                                                          13,683
                                                          
                                                          
                                                          
                                                          15.9
                                                          %
                                                          
                                                          
                                                          (1,548
                                                          )
                                                          
                                                          
                                                          -11.3
                                                          %Operating
      profit
                                                          
                                                          
                                                          10,755
                                                          
                                                          
                                                          
                                                          16.7
                                                          %
                                                          
                                                          
                                                          14,719
                                                          
                                                          
                                                          
                                                          17.1
                                                          %
                                                          
                                                          
                                                          (3,964
                                                          )
                                                          
                                                          
                                                          -26.9
                                                          %





Three Months Ended September
      30,Environmental Product Line
      Sales
                                      
                                      2009
                                      
                                      
                                      2008
                                      
                                      
                                      % change(Dollars
      in Thousands)Lining
      technologies
                                      
                                      $
                                      44,727
                                      
                                      
                                      $
                                      57,320
                                      
                                      
                                      
                                      -22.0
                                      %Building
      materials
                                      
                                      
                                      14,227
                                      
                                      
                                      
                                      22,237
                                      
                                      
                                      
                                      -36.0
                                      %Other
      product lines
                                      
                                      
                                      5,539
                                      
                                      
                                      
                                      6,576
                                      
                                      
                                      
                                      *Total
                                      
                                      
                                      64,493
                                      
                                      
                                      
                                      86,133*
      Not meaningful.





Revenues
in the environmental segment decreased due to decreased demand as a result of
the depressed construction activity in the U.S. and fewer large projects within
our U.S. contracting services business.  Also fueling the decrease
were adverse movements in foreign currency exchange rates, primarily the British
pound and Polish zloty to the US dollar.  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 September
      30,Oilfield Services
                                                      
                                                      2009
                                                      
                                                      
                                                      2008
                                                      
                                                      
                                                      2009 vs. 2008(Dollars
      in Thousands)Net
      sales
                                                      
                                                      $
                                                      29,109
                                                      
                                                      
                                                      
                                                      100.0
                                                      %
                                                      
                                                      $
                                                      38,379
                                                      
                                                      
                                                      
                                                      100.0
                                                      %
                                                      
                                                      $
                                                      (9,270
                                                      )
                                                      
                                                      
                                                      -24.2
                                                      %Cost
      of sales
                                                      
                                                      
                                                      19,491
                                                      
                                                      
                                                      
                                                      67.0
                                                      %
                                                      
                                                      
                                                      25,785
                                                      
                                                      
                                                      
                                                      67.2
                                                      %Gross
      profit
                                                      
                                                      
                                                      9,618
                                                      
                                                      
                                                      
                                                      33.0
                                                      %
                                                      
                                                      
                                                      12,594
                                                      
                                                      
                                                      
                                                      32.8
                                                      %
                                                      
                                                      
                                                      (2,976
                                                      )
                                                      
                                                      
                                                      -23.6
                                                      %General,
      selling andadministrative
      expenses
                                                      
                                                      
                                                      6,522
                                                      
                                                      
                                                      
                                                      22.4
                                                      %
                                                      
                                                      
                                                      6,400
                                                      
                                                      
                                                      
                                                      16.7
                                                      %
                                                      
                                                      
                                                      122
                                                      
                                                      
                                                      
                                                      1.9
                                                      %Operating
      profit
                                                      
                                                      
                                                      3,096
                                                      
                                                      
                                                      
                                                      10.6
                                                      %
                                                      
                                                      
                                                      6,194
                                                      
                                                      
                                                      
                                                      16.1
                                                      %
                                                      
                                                      
                                                      (3,098
                                                      )
                                                      
                                                      
                                                      -50.0
                                                      %




Several
of our oilfield services segment service offerings experienced fluctuations in
revenues as compared to the prior year’s period.  Domestically, our
nitrogen and coil tubing operations experienced large revenues decreases from
the prior period as lower demand for oil and natural gas has led to reduced
production activities, decreasing demand for the services we
offer.  Although foreign markets were down overall, our 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; we also
experienced growth in our Malaysian operations.




27




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
profit, especially considering that the prior year period’s gross profit was
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.





Transportation
Segment





Three Months Ended September
      30,Transportation
                                                          
                                                          2009
                                                          
                                                          
                                                          2008
                                                          
                                                          
                                                          2009 vs. 2008(Dollars
      in Thousands)Net
      sales
                                                          
                                                          $
                                                          12,487
                                                          
                                                          
                                                          
                                                          100.0
                                                          %
                                                          
                                                          $
                                                          17,983
                                                          
                                                          
                                                          
                                                          100.0
                                                          %
                                                          
                                                          $
                                                          (5,496
                                                          )
                                                          
                                                          
                                                          -30.6
                                                          %Cost
      of sales
                                                          
                                                          
                                                          10,933
                                                          
                                                          
                                                          
                                                          87.6
                                                          %
                                                          
                                                          
                                                          16,087
                                                          
                                                          
                                                          
                                                          89.5
                                                          %Gross
      profit
                                                          
                                                          
                                                          1,554
                                                          
                                                          
                                                          
                                                          12.4
                                                          %
                                                          
                                                          
                                                          1,896
                                                          
                                                          
                                                          
                                                          10.5
                                                          %
                                                          
                                                          
                                                          (342
                                                          )
                                                          
                                                          
                                                          -18.0
                                                          %General,
      selling andadministrative
      expenses
                                                          
                                                          
                                                          861
                                                          
                                                          
                                                          
                                                          6.9
                                                          %
                                                          
                                                          
                                                          938
                                                          
                                                          
                                                          
                                                          5.2
                                                          %
                                                          
                                                          
                                                          (77
                                                          )
                                                          
                                                          
                                                          -8.2
                                                          %Operating
      profit
                                                          
                                                          
                                                          693
                                                          
                                                          
                                                          
                                                          5.5
                                                          %
                                                          
                                                          
                                                          958
                                                          
                                                          
                                                          
                                                          5.3
                                                          %
                                                          
                                                          
                                                          (265
                                                          )
                                                          
                                                          
                                                          -27.7
                                                          %




Traffic
levels decreased as compared to the prior year period due to the recession in
the United States.  In addition, prices for diesel fuel 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 September
      30,Corporate
                                    
                                    2009
                                    
                                    
                                    2008
                                    
                                    
                                    2009 vs. 2008(Dollars
      in Thousands)Intersegment
      shipping sales
                                    
                                    $
                                    (4,190
                                    )
                                    
                                    $
                                    (6,328
                                    )
                                    
                                    
                                    2,138Intersegment
      shipping costs
                                    
                                    
                                    (4,190
                                    )
                                    
                                    
                                    (6,328
                                    )Gross
      profit
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -General,
      sellingand
      administrative expenses
                                    
                                    
                                    5,791
                                    
                                    
                                    
                                    5,628
                                    
                                    
                                    
                                    163
                                    
                                    
                                    
                                    2.9
                                    %Operating
      loss
                                    
                                    
                                    5,791
                                    
                                    
                                    
                                    5,628
                                    
                                    
                                    
                                    163
                                    
                                    
                                    
                                    2.9
                                    %




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.




28




Corporate GS&A expenses remained
relatively constant from the prior year’s comparable period.





Nine
months ended September 30, 2009 vs. September 30, 2008





Consolidated
Review





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





Nine Months Ended September 30,Consolidated
                            
                            2009
                            
                            
                            2008
                            
                            
                            2009 vs. 2008(Dollars
      in Thousands, Except Per Share Amounts)Net
      sales
                            
                            $
                            526,539
                            
                            
                            $
                            678,304
                            
                            
                            
                            -22.4
                            %Cost
      of sales
                            
                            
                            382,320
                            
                            
                            
                            505,727Gross
      profit
                            
                            
                            144,219
                            
                            
                            
                            172,577
                            
                            
                            
                            -16.4
                            %margin
      %
                            
                            
                            27.4
                            %
                            
                            
                            25.4
                            %General,
      selling andadministrative
      expenses
                            
                            
                            101,047
                            
                            
                            
                            109,061
                            
                            
                            
                            -7.3
                            %Operating
      profit
                            
                            
                            43,172
                            
                            
                            
                            63,516
                            
                            
                            
                            -32.0
                            %margin
      %
                            
                            
                            8.2
                            %
                            
                            
                            9.4
                            %Other
      income (expense):Interest
      expense, net
                            
                            
                            (9,399
                            )
                            
                            
                            (8,642
                            )
                            
                            
                            8.8
                            %Other,
      net
                            
                            
                            (2,595
                            )
                            
                            
                            (1,533
                            )
                            
                            
                            69.3
                            %(11,994
                            )
                            
                            
                            (10,175
                            )Income
      before income taxes and income (loss) from affiliates and joint
      ventures
                            
                            
                            31,178
                            
                            
                            
                            53,341Income
      tax expense
                            
                            
                            6,388
                            
                            
                            
                            13,950
                            
                            
                            
                            -54.2
                            %effective
      tax rate
                            
                            
                            20.5
                            %
                            
                            
                            26.2
                            %Income
      before income (loss) from affiliates and joint ventures
                            
                            
                            24,790
                            
                            
                            
                            39,391Income
      (loss) from affiliates and joint ventures
                            
                            
                            (921
                            )
                            
                            
                            (14,072
                            )
                            
                            
                            -93.5
                            %Net
      income
                            
                            
                            23,869
                            
                            
                            
                            25,319Net
      income (loss) attributable to noncontrolling interests
                            
                            
                            296
                            
                            
                            
                            (58
                            )
                            
                            
                            -610.3
                            %Net
      income (loss) attributable to AMCOL shareholders
                            
                            $
                            23,573
                            
                            
                            $
                            25,377
                            
                            
                            
                            -7.1
                            %Basic
      earnings per share attributable to AMCOL shareholders
                            
                            $
                            0.77
                            
                            
                            $
                            0.83Diluted
      earnings per share attributable to AMCOL shareholders
                            
                            $
                            0.76
                            
                            
                            $
                            0.82




29




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
                      %
                      
                      
                      -2.4
                      %
                      
                      
                      -11.6
                      %Environmental
                      
                      
                      -5.0
                      %
                      
                      
                      0.2
                      %
                      
                      
                      -3.8
                      %
                      
                      
                      -8.6
                      %Oilfield
      services
                      
                      
                      -1.8
                      %
                      
                      
                      1.1
                      %
                      
                      
                      -0.3
                      %
                      
                      
                      -1.0
                      %Transportation
      & intersegment shipping
                      
                      
                      -1.2
                      %
                      
                      
                      0.0
                      %
                      
                      
                      0.0
                      %
                      
                      
                      -1.2
                      %Total
                      
                      
                      -17.2
                      %
                      
                      
                      1.3
                      %
                      
                      
                      -6.5
                      %
                      
                      
                      -22.4
                      %%
      of change
                      
                      
                      77.1
                      %
                      
                      
                      -5.9
                      %
                      
                      
                      28.8
                      %
                      
                      
                      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
                    
                    
                    29.6
                    %
                    
                    
                    9.5
                    %
                    
                    
                    7.4
                    %
                    
                    
                    46.5
                    %Environmental
                    
                    
                    15.6
                    %
                    
                    
                    13.5
                    %
                    
                    
                    2.1
                    %
                    
                    
                    31.2
                    %Oilfield
      services
                    
                    
                    16.1
                    %
                    
                    
                    0.5
                    %
                    
                    
                    1.1
                    %
                    
                    
                    17.7
                    %Transportation
                    
                    
                    4.6
                    %
                    
                    
                    0.0
                    %
                    
                    
                    0.0
                    %
                    
                    
                    4.6
                    %Total
      - current year's period
                    
                    
                    65.9
                    %
                    
                    
                    23.5
                    %
                    
                    
                    10.6
                    %
                    
                    
                    100.0
                    %Total
      from prior year's comparable period
                    
                    
                    67.3
                    %
                    
                    
                    23.1
                    %
                    
                    
                    9.6
                    %
                    
                    
                    100.0
                    %





Net
sales:





All segments experienced a decrease in
sales as compared to the prior year period.  This can largely be
attributed to the global recession.  Please see the segment
discussions for greater explanation on a per segment basis.





Gross
profit:





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





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





GS&A expenses decreased overall,
largely due to a $6.8 million decrease in our environmental segment’s
cost.  See the discussion of this segment’s results outlined later
herein.





Operating
profit:





Operating profit decreased due to the
decrease in gross profit mentioned earlier.  Excluding our corporate
segment, every segment experienced deteriorating operating profits as we will
outline later herein.  Our minerals segment, however, experienced
increased operating profit margins due to the aforementioned selling price
increases.




30




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 foreign currency derivatives
and foreign exchange transaction 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 lower than the statutory 35% in the USA.





Income
(loss) from affiliates & joint ventures:





Our affiliates and joint ventures
losses in the first three quarters of 2009 are less than the prior year’s
comparable period, as the prior period contained significant losses from our
Ashapura investment, described above.  In 2009, the losses are due to
our joint-ventures being less geographically and operationally diverse than
AMCOL in addition to the decrease in worldwide economic activity and the
start-up nature of our Belgian joint-venture.




Diluted
earnings per
share:





Diluted EPS decreased commensurate with
the decrease in net income as opposed to a change in the weighted average number
of shares outstanding.




31




Segment
analysis:





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





Minerals
Segment





Nine Months Ended September
    30,Minerals
                                                    
                                                    2009
                                                    
                                                    
                                                    2008
                                                    
                                                    
                                                    2009 vs. 2008(Dollars
      in Thousands)Net
      sales
                                                    
                                                    $
                                                    244,657
                                                    
                                                    
                                                    
                                                    100.0
                                                    %
                                                    
                                                    $
                                                    323,228
                                                    
                                                    
                                                    
                                                    100.0
                                                    %
                                                    
                                                    $
                                                    (78,571
                                                    )
                                                    
                                                    
                                                    -24.3
                                                    %Cost
      of sales
                                                    
                                                    
                                                    193,774
                                                    
                                                    
                                                    
                                                    79.2
                                                    %
                                                    
                                                    
                                                    267,532
                                                    
                                                    
                                                    
                                                    82.8
                                                    %Gross
      profit
                                                    
                                                    
                                                    50,883
                                                    
                                                    
                                                    
                                                    20.8
                                                    %
                                                    
                                                    
                                                    55,696
                                                    
                                                    
                                                    
                                                    17.2
                                                    %
                                                    
                                                    
                                                    (4,813
                                                    )
                                                    
                                                    
                                                    -8.6
                                                    %General,
      selling andadministrative
      expenses
                                                    
                                                    
                                                    27,020
                                                    
                                                    
                                                    
                                                    11.0
                                                    %
                                                    
                                                    
                                                    28,379
                                                    
                                                    
                                                    
                                                    8.8
                                                    %
                                                    
                                                    
                                                    (1,359
                                                    )
                                                    
                                                    
                                                    -4.8
                                                    %Operating
      profit
                                                    
                                                    
                                                    23,863
                                                    
                                                    
                                                    
                                                    9.8
                                                    %
                                                    
                                                    
                                                    27,317
                                                    
                                                    
                                                    
                                                    8.4
                                                    %
                                                    
                                                    
                                                    (3,454
                                                    )
                                                    
                                                    
                                                    -12.6
                                                    %








Nine Months Ended September
    30,Minerals Product Line Sales
                                      
                                      2009
                                      
                                      
                                      2008
                                      
                                      
                                      % change(Dollars
      in Thousands)Metalcasting
                                      
                                      $
                                      100,592
                                      
                                      
                                      $
                                      134,118
                                      
                                      
                                      
                                      -25.0
                                      %Specialty
      materials
                                      
                                      
                                      71,330
                                      
                                      
                                      
                                      77,239
                                      
                                      
                                      
                                      -7.7
                                      %Pet
      products
                                      
                                      
                                      49,729
                                      
                                      
                                      
                                      58,261
                                      
                                      
                                      
                                      -14.6
                                      %Basic
      minerals
                                      
                                      
                                      20,288
                                      
                                      
                                      
                                      47,275
                                      
                                      
                                      
                                      -57.1
                                      %Other
      product lines
                                      
                                      
                                      2,718
                                      
                                      
                                      
                                      6,335
                                      
                                      
                                      
                                      *Total
                                      
                                      
                                      244,657
                                      
                                      
                                      
                                      323,228*
      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.  Revenues also decreased due to adverse
movements in foreign currency exchange rates (primarily the British pound and
Turkish Lira to the US dollar), and less pass through freight revenues from
customers who are procuring freight on their own now.  Revenues
increased, however, due to the full period effect of price increases instituted
in 2008, leading to increased gross profit margins.





GS&A
expenses decreased due to foreign exchange rate movements and lesser increases
in other miscellaneous expenses.  This overall decrease, along with
the increase in gross profit margin, contributed to the increase in operating
profit margins.





32




Environmental
Segment


Nine Months Ended September
    30,Environmental
                                            
                                            2009
                                            
                                            
                                            2008
                                            
                                            
                                            2009 vs. 2008(Dollars
      in Thousands)Net
      sales
                                            
                                            $
                                            164,096
                                            
                                            
                                            
                                            100.0
                                            %
                                            
                                            $
                                            222,393
                                            
                                            
                                            
                                            100.0
                                            %
                                            
                                            $
                                            (58,297
                                            )
                                            
                                            
                                            -26.2
                                            %Cost
      of sales
                                            
                                            
                                            107,580
                                            
                                            
                                            
                                            65.6
                                            %
                                            
                                            
                                            147,694
                                            
                                            
                                            
                                            66.4
                                            %Gross
      profit
                                            
                                            
                                            56,516
                                            
                                            
                                            
                                            34.4
                                            %
                                            
                                            
                                            74,699
                                            
                                            
                                            
                                            33.6
                                            %
                                            
                                            
                                            (18,183
                                            )
                                            
                                            
                                            -24.3
                                            %General,
      selling andadministrative
      expenses
                                            
                                            
                                            34,913
                                            
                                            
                                            
                                            21.3
                                            %
                                            
                                            
                                            41,754
                                            
                                            
                                            
                                            18.8
                                            %
                                            
                                            
                                            (6,841
                                            )
                                            
                                            
                                            -16.4
                                            %Operating
      profit
                                            
                                            
                                            21,603
                                            
                                            
                                            
                                            13.1
                                            %
                                            
                                            
                                            32,945
                                            
                                            
                                            
                                            14.8
                                            %
                                            
                                            
                                            (11,342
                                            )
                                            
                                            
                                            -34.4
                                            %




Nine Months Ended September
    30,Environmental Product Line
      Sales
                                        
                                        2009
                                        
                                        
                                        2008
                                        
                                        
                                        % change(Dollars
      in Thousands)Lining
      technologies
                                        
                                        $
                                        106,150
                                        
                                        
                                        $
                                        138,267
                                        
                                        
                                        
                                        -23.2
                                        %Building
      materials
                                        
                                        
                                        41,704
                                        
                                        
                                        
                                        65,090
                                        
                                        
                                        
                                        -35.9
                                        %Other
      product lines
                                        
                                        
                                        16,242
                                        
                                        
                                        
                                        19,036
                                        
                                        
                                        
                                        *Total
                                        
                                        
                                        164,096
                                        
                                        
                                        
                                        222,393*
      Not meaningful.





Revenues
in the environmental segment decreased due to unfavorable exchange rate
movements 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 (which includes contracting
services) and building materials 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 mostly due to the currency movements as mentioned above but
also 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.





Oilfield
Services Segment





Nine Months Ended September
    30,Oilfield Services
                                            
                                            2009
                                            
                                            
                                            2008
                                            
                                            
                                            2009 vs. 2008(Dollars
      in Thousands)Net
      sales
                                            
                                            $
                                            93,140
                                            
                                            
                                            
                                            100.0
                                            %
                                            
                                            $
                                            100,177
                                            
                                            
                                            
                                            100.0
                                            %
                                            
                                            $
                                            (7,037
                                            )
                                            
                                            
                                            -7.0
                                            %Cost
      of sales
                                            
                                            
                                            60,554
                                            
                                            
                                            
                                            65.0
                                            %
                                            
                                            
                                            63,130
                                            
                                            
                                            
                                            63.0
                                            %Gross
      profit
                                            
                                            
                                            32,586
                                            
                                            
                                            
                                            35.0
                                            %
                                            
                                            
                                            37,047
                                            
                                            
                                            
                                            37.0
                                            %
                                            
                                            
                                            (4,461
                                            )
                                            
                                            
                                            -12.0
                                            %General,
      selling andadministrative
      expenses
                                            
                                            
                                            20,123
                                            
                                            
                                            
                                            21.6
                                            %
                                            
                                            
                                            18,156
                                            
                                            
                                            
                                            18.1
                                            %
                                            
                                            
                                            1,967
                                            
                                            
                                            
                                            10.8
                                            %Operating
      profit
                                            
                                            
                                            12,463
                                            
                                            
                                            
                                            13.4
                                            %
                                            
                                            
                                            18,891
                                            
                                            
                                            
                                            18.9
                                            %
                                            
                                            
                                            (6,428
                                            )
                                            
                                            
                                            -34.0
                                            %




33




Demand
for offshore, deep water filtration services and pipeline services was strong in
the first quarter of the year. However, uncertainty in the demand for oil and
the U.S. recession has reduced oil and gas production in the second and third
quarters. This has accordingly increased competition for several of our
services, leading to an overall decrease in revenues in the year-to-date
period. The
increased competition has also led to reduced gross profits and gross
margins.





GS&A
expenses increased primarily due to the acquisition of our coil tubing business
in May 2008 and the full period effect of our Brazil operations which we started
in 2008.  Operating profits decreased due to the increased GS&A
expenses as well as the decreased gross profits mentioned above.  Both
factors also contributed to the decrease in operating margins.





Transportation
Segment





Nine
      Months Ended September 30,Transportation
                                                  
                                                  2009
                                                  
                                                  
                                                  2008
                                                  
                                                  
                                                  2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                                                  
                                                  $
                                                  35,336
                                                  
                                                  
                                                  
                                                  100.0
                                                  %
                                                  
                                                  $
                                                  49,216
                                                  
                                                  
                                                  
                                                  100.0
                                                  %
                                                  
                                                  $
                                                  (13,880
                                                  )
                                                  
                                                  
                                                  -28.2
                                                  %Cost
      of sales
                                                  
                                                  
                                                  31,102
                                                  
                                                  
                                                  
                                                  88.0
                                                  %
                                                  
                                                  
                                                  44,081
                                                  
                                                  
                                                  
                                                  89.6
                                                  %Gross
      profit
                                                  
                                                  
                                                  4,234
                                                  
                                                  
                                                  
                                                  12.0
                                                  %
                                                  
                                                  
                                                  5,135
                                                  
                                                  
                                                  
                                                  10.4
                                                  %
                                                  
                                                  
                                                  (901
                                                  )
                                                  
                                                  
                                                  -17.5
                                                  %General,
      selling andadministrative
      expenses
                                                  
                                                  
                                                  2,551
                                                  
                                                  
                                                  
                                                  7.2
                                                  %
                                                  
                                                  
                                                  2,564
                                                  
                                                  
                                                  
                                                  5.2
                                                  %
                                                  
                                                  
                                                  (13
                                                  )
                                                  
                                                  
                                                  -0.5
                                                  %Operating
      profit
                                                  
                                                  
                                                  1,683
                                                  
                                                  
                                                  
                                                  4.8
                                                  %
                                                  
                                                  
                                                  2,571
                                                  
                                                  
                                                  
                                                  5.2
                                                  %
                                                  
                                                  
                                                  (888
                                                  )
                                                  
                                                  
                                                  -34.5
                                                  %





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





Nine Months Ended September
    30,Corporate
                                              
                                              2009
                                              
                                              
                                              2008
                                              
                                              
                                              2009 vs. 2008(Dollars
      in Thousands)Intersegment
      shipping sales
                                              
                                              $
                                              (10,690
                                              )
                                              
                                              $
                                              (16,710
                                              )
                                              
                                              
                                              6,020Intersegment
      shipping costs
                                              
                                              
                                              (10,690
                                              )
                                              
                                              
                                              (16,710
                                              )Gross
      profit
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -General,
      sellingand
      administrative expenses
                                              
                                              
                                              16,440
                                              
                                              
                                              
                                              18,208
                                              
                                              
                                              
                                              (1,768
                                              )
                                              
                                              
                                              -9.7
                                              %Operating
      loss
                                              
                                              
                                              16,440
                                              
                                              
                                              
                                              18,208
                                              
                                              
                                              
                                              (1,768
                                              )
                                              
                                              
                                              -9.7
                                              %




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 expenses associated with certain benefit plans.




34




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, as amended, for 2008, and in Item 1A
– Risk factors in our Quarterly Report on From 10-Q for the period ended June
30, 2009. 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.




Nine
      Months EndedCash Flows
                          
                          September 30,($ in millions)
                          
                          2009
                          
                          
                          2008Net
      cash provided by operating activities
                          
                          $
                          90.6
                          
                          
                          $
                          1.3Net
      cash used in investing activities
                          
                          $
                          (33.9
                          )
                          
                          $
                          (104.4
                          )Net
      cash provided by (used in) financing activities
                          
                          $
                          (57.7
                          )
                          
                          $
                          111.6




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 better inventory management and decreased business activity
resulting from the current economic environment.  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.





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 $0.54 per share from $0.50 per share in the prior year
period.




35




As atFinancial Position
                                  
                                  September
      30,
                                  
                                  
                                  December
      31,($ in millions)
                                  
                                  2009
                                  
                                  
                                  2008Working
      capital
                                  
                                  $
                                  212.9
                                  
                                  
                                  $
                                  262.7Goodwill
      & intangible assets
                                  
                                  $
                                  120.2
                                  
                                  
                                  $
                                  122.5Total
      assets
                                  
                                  $
                                  734.6
                                  
                                  
                                  $
                                  744.6Long-term
      debt
                                  
                                  $
                                  217.1
                                  
                                  
                                  $
                                  256.8Other
      long-term obligations
                                  
                                  $
                                  69.6
                                  
                                  
                                  $
                                  50.9Total
      equity
                                  
                                  $
                                  347.7
                                  
                                  
                                  $
                                  328.4





Working
capital at September 30, 2009 decreased from 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 reduce our levels of
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 to 38.4% at September 30, 2009 versus 43.9% at December
31, 2008.  During 2009, we have focused on strengthening our balance
sheet, including reducing our investments in working capital. We have also
limited our capital expenditures to maintenance activities with minimal
expansion projects given the worldwide economic situation. These activities,
combined with a decrease in overall sales and business levels, have allowed us
to decrease our long-term debt substantially in 2009. We have approximately
$106.6 million of borrowing capacity available from our revolving credit
facility at September 30, 2009.  We are in compliance with financial
covenants on all of our debt agreements 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, as amended, 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.





36




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, as
amended, 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





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




PART
II - OTHER INFORMATION





Item 6:
            Exhibits




Exhibit
                Number10.1
              Fourth
      Amendment to Credit Agreement dated as of September 18, 2009 among AMCOL
      International Corporation and certain of its wholly-owned subsidiaries and
      Harris N.A. and certain other lenders (1)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.




(1)
Exhibit is incorporated by reference to the Company’s Form 8-K filed with the
Securities and Exchange Commission on September 23, 2009.




37




SIGNATURES


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





AMCOL
      INTERNATIONAL CORPORATIONDate:
                November
      9, 2009
                
                /s/ Lawrence E. WashowLawrence
      E. WashowPresident
      and Chief Executive OfficerDate:
                November
      9, 2009
                
                /s/ Donald W. PearsonDonald
      W. PearsonVice
      President and Chief Financial
Officer




38




INDEX
TO EXHIBITS


10.1
            Fourth
      Amendment to Credit Agreement dated as of September 18, 2009 among AMCOL
      International Corporation and certain of its wholly-owned subsidiaries and
      Harris N.A. and certain other lenders (1)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.





(1)
Exhibit is incorporated by reference to the Company’s Form 8-K filed with the
Securities and Exchange Commission on September 23, 2009.




39