UNITED STATES SECURITIES AND EXCHANGE
COMMISSION


Washington,
D.C.  20549


FORM
10-Q


(Mark
One)


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




For the
quarterly period ended March
31,
2009


or


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




For the
transition period from to;





Commission
file number 0-15661&
#160;





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.YesxNo ̈





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 April 30,
    2009(Common
      stock, $.01 par value)
                
                30,591,488
      Shares









AMCOL INTERNATIONAL
CORPORATION
 
 INDEX


Page No.Part I - Financial
    InformationItem
      1:
                                      Financial
      StatementsCondensed
      Consolidated Balance Sheets –March
      31, 2009 and December 31, 2008
                                      3Condensed
      Consolidated Statements of Operations –three
      months ended March 31, 2009 and 2008
                                      5Condensed
      Consolidated Statements of Comprehensive Income –three
      months ended March 31, 2009 and 2008
                                      6Condensed
      Consolidated Statements of Changes in Equity –three
      months ended March 31, 2009 and 2008
                                      7Condensed
      Consolidated Statements of Cash Flows –three
      months ended March 31, 2009 and 2008
                                      8Notes
      to Condensed Consolidated Financial Statements
                                      9Item
      2:
                                      Management’s
      Discussion and Analysis of FinancialCondition
      and Results of Operations
                                      18Item
      3:
                                      Quantitative
      and Qualitative Disclosures About Market Risk
                                      28Item
      4:
                                      Controls
      and Procedures
                                      29Part II - Other InformationItem
      1A:
                                      Risk
      Factors
                                      30Item
      6:
                                      Exhibits
                                      30




2




AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands)





Item
1:  Financial Statements


March
      31,
                                                            
                                                            
                                                            December
      31,2009
                                                            
                                                            
                                                            2008ASSETS
                                                            
                                                            (unaudited)
                                                            
                                                            
                                                            *Current
      assets:Cash
      and cash equivalents
                                                            
                                                            $
                                                            32,561
                                                            
                                                            
                                                            $
                                                            19,441Accounts
      receivable, net
                                                            
                                                            
                                                            157,432
                                                            
                                                            
                                                            
                                                            197,611Inventories
                                                            
                                                            
                                                            115,699
                                                            
                                                            
                                                            
                                                            125,066Prepaid
      expenses
                                                            
                                                            
                                                            12,160
                                                            
                                                            
                                                            
                                                            12,812Deferred
      income taxes
                                                            
                                                            
                                                            5,294
                                                            
                                                            
                                                            
                                                            5,358Income
      tax receivable
                                                            
                                                            
                                                            3,760
                                                            
                                                            
                                                            
                                                            3,490Other
                                                            
                                                            
                                                            163
                                                            
                                                            
                                                            
                                                            7,409Total
      current assets
                                                            
                                                            
                                                            327,069
                                                            
                                                            
                                                            
                                                            371,187Investment
      in and advances to affiliates and joint ventures
                                                            
                                                            
                                                            28,904
                                                            
                                                            
                                                            
                                                            30,025Property,
      plant, equipment, and mineral rights and reserves:Land
      and mineral rights
                                                            
                                                            
                                                            46,073
                                                            
                                                            
                                                            
                                                            17,186Depreciable
      assets
                                                            
                                                            
                                                            384,686
                                                            
                                                            
                                                            
                                                            380,555430,759
                                                            
                                                            
                                                            
                                                            397,741Less:
      accumulated depreciation and depletion
                                                            
                                                            
                                                            210,462
                                                            
                                                            
                                                            
                                                            206,398220,297
                                                            
                                                            
                                                            
                                                            191,343Other
      assets:Goodwill
                                                            
                                                            
                                                            69,097
                                                            
                                                            
                                                            
                                                            68,482Intangible
      assets, net
                                                            
                                                            
                                                            51,782
                                                            
                                                            
                                                            
                                                            53,974Deferred
      income taxes
                                                            
                                                            
                                                            14,793
                                                            
                                                            
                                                            
                                                            15,867Other
      assets
                                                            
                                                            
                                                            13,042
                                                            
                                                            
                                                            
                                                            13,702148,714
                                                            
                                                            
                                                            
                                                            152,025$
                                                            724,984
                                                            
                                                            
                                                            $
                                                            744,580
 
 Continued...
  3
  AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (In
thousands)
 
 March
      31,
                                                                  
                                                                  
                                                                  December
      31,2009
                                                                  
                                                                  
                                                                  2008LIABILITIES
      AND SHAREHOLDERS' EQUITY
                                                                  
                                                                  (unaudited)
                                                                  
                                                                  
                                                                  *Current
      liabilities:Accounts
      payable
                                                                  
                                                                  $
                                                                  37,502
                                                                  
                                                                  
                                                                  $
                                                                  45,297Accrued
      liabilities
                                                                  
                                                                  
                                                                  50,505
                                                                  
                                                                  
                                                                  
                                                                  63,197Total
      current liabilities
                                                                  
                                                                  
                                                                  88,007
                                                                  
                                                                  
                                                                  
                                                                  108,494Long-term
      debt
                                                                  
                                                                  
                                                                  252,972
                                                                  
                                                                  
                                                                  
                                                                  256,821Pension
      liabilities
                                                                  
                                                                  
                                                                  23,589
                                                                  
                                                                  
                                                                  
                                                                  22,939Other
      liabilities
                                                                  
                                                                  
                                                                  40,847
                                                                  
                                                                  
                                                                  
                                                                  27,97164,436
                                                                  
                                                                  
                                                                  
                                                                  50,910Equity:Common
      stock
                                                                  
                                                                  
                                                                  320
                                                                  
                                                                  
                                                                  
                                                                  320Additional
      paid in capital
                                                                  
                                                                  
                                                                  86,225
                                                                  
                                                                  
                                                                  
                                                                  86,350Retained
      earnings
                                                                  
                                                                  
                                                                  261,124
                                                                  
                                                                  
                                                                  
                                                                  262,453Accumulated
      other comprehensive income
                                                                  
                                                                  
                                                                  (13,536
                                                                  )
                                                                  
                                                                  
                                                                  (4,721
                                                                  )334,133
                                                                  
                                                                  
                                                                  
                                                                  344,402Treasury
      stock
                                                                  
                                                                  
                                                                  (16,463
                                                                  )
                                                                  
                                                                  
                                                                  (18,196
                                                                  )Total
      AMCOL shareholders' equity
                                                                  
                                                                  
                                                                  317,670
                                                                  
                                                                  
                                                                  
                                                                  326,206Noncontrolling
      interest
                                                                  
                                                                  
                                                                  1,899
                                                                  
                                                                  
                                                                  
                                                                  2,149Total
      equity
                                                                  
                                                                  
                                                                  319,569
                                                                  
                                                                  
                                                                  
                                                                  328,355$
                                                                  724,984
                                                                  
                                                                  
                                                                  $
                                                                  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)
 
 Three
      Months EndedMarch
      31,2009
                                                  
                                                  
                                                  2008Net
      sales
                                                  
                                                  $
                                                  164,419
                                                  
                                                  
                                                  $
                                                  191,409Cost
      of sales
                                                  
                                                  
                                                  121,199
                                                  
                                                  
                                                  
                                                  145,059Gross
      profit
                                                  
                                                  
                                                  43,220
                                                  
                                                  
                                                  
                                                  46,350General,
      selling and administrative expenses
                                                  
                                                  
                                                  33,053
                                                  
                                                  
                                                  
                                                  33,638Operating
      profit
                                                  
                                                  
                                                  10,167
                                                  
                                                  
                                                  
                                                  12,712Other
      income (expense):Interest
      expense, net
                                                  
                                                  
                                                  (3,407
                                                  )
                                                  
                                                  
                                                  (2,401
                                                  )Other,
      net
                                                  
                                                  
                                                  (1,212
                                                  )
                                                  
                                                  
                                                  (235
                                                  )(4,619
                                                  )
                                                  
                                                  
                                                  (2,636
                                                  )Income
      before income taxes and income (loss) from affiliates and joint
      ventures
                                                  
                                                  
                                                  5,548
                                                  
                                                  
                                                  
                                                  10,076Income
      tax expense
                                                  
                                                  
                                                  1,571
                                                  
                                                  
                                                  
                                                  2,717Income
      before income (loss) from affiliates and joint ventures
                                                  
                                                  
                                                  3,977
                                                  
                                                  
                                                  
                                                  7,359Income
      (loss) from affiliates and joint ventures
                                                  
                                                  
                                                  (8
                                                  )
                                                  
                                                  
                                                  1,295Net
      income
                                                  
                                                  
                                                  3,969
                                                  
                                                  
                                                  
                                                  8,654Net
      income (loss) attributable to noncontrolling interests
                                                  
                                                  
                                                  (207
                                                  )
                                                  
                                                  
                                                  33Net
      income (loss) attributable to AMCOL shareholders
                                                  
                                                  $
                                                  4,176
                                                  
                                                  
                                                  $
                                                  8,621Weighted
      average common shares outstanding
                                                  
                                                  
                                                  30,694
                                                  
                                                  
                                                  
                                                  30,260Weighted
      average common and common equivalent shares outstanding
                                                  
                                                  
                                                  30,909
                                                  
                                                  
                                                  
                                                  30,889Basic
      earnings per share attributable to AMCOL shareholders
                                                  
                                                  $
                                                  0.14
                                                  
                                                  
                                                  $
                                                  0.28Diluted
      earnings per share attributable to AMCOL shareholders
                                                  
                                                  $
                                                  0.14
                                                  
                                                  
                                                  $
                                                  0.28Dividends
      declared per share
                                                  
                                                  $
                                                  0.18
                                                  
                                                  
                                                  $
                                                  0.16
 
 The
accompanying notes are an integral part of these condensed consolidated
financial statements.
  5
  AMCOL
INTERNATIONAL CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (Unaudited)
 (In
thousands)
 
 Total
                                    
                                    
                                    AMCOL
      Shareholders
                                    
                                    
                                    Noncontrolling
                                      InterestThree
      Months Ended
                                    
                                    
                                    Three
      Months Ended
                                    
                                    
                                    Three
      Months EndedMarch
      31,
                                    
                                    
                                    March
      31,
                                    
                                    
                                    March
      31,2009
                                    
                                    
                                    2008
                                    
                                    
                                    2009
                                    
                                    
                                    2008
                                    
                                    
                                    2009
                                    
                                    
                                    2008Net
      income (loss)
                                    
                                    $
                                    3,969
                                    
                                    
                                    $
                                    8,654
                                    
                                    
                                    $
                                    4,176
                                    
                                    
                                    $
                                    8,621
                                    
                                    
                                    $
                                    (207
                                    )
                                    
                                    $
                                    33Other
      comprehensive income (loss):Foreign
      currency translation adjustment
                                    
                                    
                                    (8,966
                                    )
                                    
                                    
                                    5,239
                                    
                                    
                                    
                                    (8,923
                                    )
                                    
                                    
                                    5,239
                                    
                                    
                                    
                                    (43
                                    )
                                    
                                    
                                    -Unrealized
      gain (loss) on interest rate swap agreement
                                    
                                    
                                    168
                                    
                                    
                                    
                                    (2,112
                                    )
                                    
                                    
                                    168
                                    
                                    
                                    
                                    (2,112
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Other
                                    
                                    
                                    (60
                                    )
                                    
                                    
                                    593
                                    
                                    
                                    
                                    (60
                                    )
                                    
                                    
                                    593
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Comprehensive
      income (loss)
                                    
                                    $
                                    (4,889
                                    )
                                    
                                    $
                                    12,374
                                    
                                    
                                    $
                                    (4,639
                                    )
                                    
                                    $
                                    12,341
                                    
                                    
                                    $
                                    (250
                                    )
                                    
                                    $
                                    33
 
 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
                                          
                                          
                                          8,654
                                          
                                          
                                          
                                          8,621
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          33Cash
      dividends
                                          
                                          
                                          (4,816
                                          )
                                          
                                          
                                          (4,816
                                          )Purchase
      of treasury stock
                                          
                                          
                                          (2,062
                                          )
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (2,062
                                          )Sales
      of treasury shares pursuant to options
                                          
                                          
                                          753
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          1,633
                                          
                                          
                                          
                                          (880
                                          )Tax
      benefit from employee stock plans
                                          
                                          
                                          690
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          690Vesting
      of common stock in connection with employee stock plans
                                          
                                          
                                          751
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          751Comprehensive
      income (loss)
                                          
                                          
                                          3,720
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          3,720Other
                                          
                                          
                                          183
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          183Balance
      at March 31, 2008
                                          
                                          
                                          360,523
                                          
                                          
                                          
                                          261,969
                                          
                                          
                                          
                                          36,968
                                          
                                          
                                          
                                          320
                                          
                                          
                                          
                                          (21,437
                                          )
                                          
                                          
                                          82,160
                                          
                                          
                                          
                                          543Balance
      at December 31, 2008
                                          
                                          $
                                          328,355
                                          
                                          
                                          $
                                          262,453
                                          
                                          
                                          $
                                          (4,721
                                          )
                                          
                                          $
                                          320
                                          
                                          
                                          $
                                          (18,196
                                          )
                                          
                                          $
                                          86,350
                                          
                                          
                                          $
                                          2,149Net
      income (loss)
                                          
                                          
                                          3,969
                                          
                                          
                                          
                                          4,176
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (207
                                          )Cash
      dividends
                                          
                                          
                                          (5,505
                                          )
                                          
                                          
                                          (5,505
                                          )Purchase
      of treasury stock
                                          
                                          
                                          (175
                                          )
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (175
                                          )Sales
      of treasury shares pursuant to options
                                          
                                          
                                          753
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          1,908
                                          
                                          
                                          
                                          (1,155
                                          )Tax
      benefit from employee stock plans
                                          
                                          
                                          315
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          315Vesting of common
      stock in connection with
      employee stock plans
                                          
                                          
                                          715
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          715Comprehensive
      income (loss)
                                          
                                          
                                          (8,858
                                          )
                                          
                                          
                                          
                                          
                                          
                                          
                                          (8,815
                                          )
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (43
                                          )Balance
      at March 31, 2009
                                          
                                          
                                          319,569
                                          
                                          
                                          
                                          261,124
                                          
                                          
                                          
                                          (13,536
                                          )
                                          
                                          
                                          320
                                          
                                          
                                          
                                          (16,463
                                          )
                                          
                                          
                                          86,225
                                          
                                          
                                          
                                          1,899
 
 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)
 
 Three
      Months EndedMarch
      31,2009
                                            
                                            
                                            2008Cash
      flow from operating activities:Net
      income
                                            
                                            $
                                            3,969
                                            
                                            
                                            $
                                            8,654Adjustments
      to reconcile from net income to net cash provided by (used in) operating
      activities:Depreciation,
      depletion, and amortization
                                            
                                            
                                            8,958
                                            
                                            
                                            
                                            7,435Other
      non-cash charges
                                            
                                            
                                            2,349
                                            
                                            
                                            
                                            (103
                                            )Changes
      in assets and liabilities, net of effects of acquisitions:Decrease
      (increase) in current assets
                                            
                                            
                                            38,898
                                            
                                            
                                            
                                            (5,671
                                            )Decrease
      (increase) in noncurrent assets
                                            
                                            
                                            446
                                            
                                            
                                            
                                            (301
                                            )Increase
      (decrease) in current liabilities
                                            
                                            
                                            (14,677
                                            )
                                            
                                            
                                            (5,624
                                            )Increase  (decrease)
      in noncurrent liabilities
                                            
                                            
                                            710
                                            
                                            
                                            
                                            (112
                                            )Net
      cash provided by (used in) operating activities
                                            
                                            
                                            40,653
                                            
                                            
                                            
                                            4,278Cash
      flow from investing activities:Capital
      expenditures
                                            
                                            
                                            (23,597
                                            )
                                            
                                            
                                            (12,932
                                            )Capital
      expenditures - corporate building
                                            
                                            
                                            (6,400
                                            )
                                            
                                            
                                            (2,831
                                            )Proceeds
      fron sale of depreciable assets - corporate building
                                            
                                            
                                            6,400
                                            
                                            
                                            
                                            -Acquisitions,
      net of cash
                                            
                                            
                                            (70
                                            )
                                            
                                            
                                            (1,148
                                            )Investments
      in and advances to affiliates and joint ventures
                                            
                                            
                                            (575
                                            )
                                            
                                            
                                            (2,107
                                            )Receipts
      from (advances to) Chrome Corp
                                            
                                            
                                            6,000
                                            
                                            
                                            
                                            (6,000
                                            )Other
                                            
                                            
                                            549
                                            
                                            
                                            
                                            33Net
      cash used in investing activities
                                            
                                            
                                            (17,693
                                            )
                                            
                                            
                                            (24,985
                                            )Cash
      flow from financing activities:Net
      change in outstanding debt
                                            
                                            
                                            (3,227
                                            )
                                            
                                            
                                            23,404Net
      change in outstanding debt - corporate building
                                            
                                            
                                            -
                                            
                                            
                                            
                                            9,463Proceeds
      from sales of treasury stock
                                            
                                            
                                            743
                                            
                                            
                                            
                                            753Purchases
      of treasury stock
                                            
                                            
                                            (165
                                            )
                                            
                                            
                                            (2,062
                                            )Dividends
                                            
                                            
                                            (5,505
                                            )
                                            
                                            
                                            (4,816
                                            )Excess
      tax benefits from stock-based compensation
                                            
                                            
                                            612
                                            
                                            
                                            
                                            669Net
      cash provided by (used in) financing activities
                                            
                                            
                                            (7,542
                                            )
                                            
                                            
                                            27,411Effect
      of foreign currency rate changes on cash
                                            
                                            
                                            (2,298
                                            )
                                            
                                            
                                            1,177Net
      increase (decrease) in cash and cash equivalents
                                            
                                            
                                            13,120
                                            
                                            
                                            
                                            7,881Cash
      and cash equivalents at beginning of period
                                            
                                            
                                            19,441
                                            
                                            
                                            
                                            25,282Cash
      and cash equivalents at end of period
                                            
                                            $
                                            32,561
                                            
                                            
                                            $
                                            33,163
 
 The
accompanying notes are an integral part of these condensed consolidated
financial statements.
  8
  Note
      1:
              SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
 
 Company
Operations
 
 We, AMCOL International Corporation
(the Company), operate in five segments:  minerals, environmental,
oilfield services, transportation and corporate.  The minerals segment
mines, processes and distributes clays and products with similar applications to
various industrial and consumer markets.  The environmental segment
processes and distributes clays and products with similar applications for use
as a moisture barrier in commercial construction, landfill liners and in a
variety of other industrial and commercial applications.  The oilfield
services segment provides onshore and offshore water treatment filtration,
pipeline separation, waste fluid treatment, rental tools, coil tubing and well
testing data services for the oil and gas industry.  The
transportation segment includes a long-haul trucking business and a freight
brokerage business, which provide services to our other segments as well as
third-party customers.  Intersegment sales are insignificant, other
than intersegment shipping, which is eliminated in the corporate segment. The
composition of our revenues by segment is as follows:
 
 Three
      Months EndedMarch
      31,2009
                            
                            
                            2008Minerals
                            
                            
                            49
                            %
                            
                            
                            52
                            %Environmental
                            
                            
                            27
                            %
                            
                            
                            30
                            %Oilfield
      services
                            
                            
                            19
                            %
                            
                            
                            13
                            %Transportation
                            
                            
                            7
                            %
                            
                            
                            7
                            %Intersegment
      shipping
                            
                            
                            -2
                            %
                            
                            
                            -2
                            %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 March
31,  2009 and 2008, and our financial position as of March 31, 2009,
and all such adjustments are of a normal recurring nature.  The
accompanying condensed consolidated financial information should be read in
conjunction with the consolidated financial statements and related notes
included in our Annual Report on Form 10-K for the year ended December 31,
2008.
 
 Certain items in the prior year’s
condensed consolidated financial statements contained herein and notes thereto
have been reclassified to conform with the condensed consolidated financial
statement presentation for the three months ended March 31, 2009. These
reclassifications did not have a material impact on our financial
statements.
  9
  The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America 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.
 
 New
Accounting Standards
 
 In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51,” (“SFAS
160”).  A noncontrolling interest, sometimes called a minority
interest, is the portion of equity in a subsidiary not directly or indirectly
attributable to a parent company.  SFAS 160 establishes standards of
reporting for noncontrolling interests as well as deconsolidation of a
subsidiary.  SFAS 160 clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
clearly identified and reported within equity in the consolidated statement of
financial position, albeit separate from the parent company’s
equity.  It also requires consolidated net income to be reported at
amounts that include the amounts attributable to both the parent and
noncontrolling interests rather than reporting the noncontrolling interest as a
deduction in arriving at net income.  The adoption of SFAS 160 on
January 1, 2009 did not have a material impact on our financial statements. The
presentation and disclosure requirements of this standard were applied
retrospectively.
 
 In
February 2008, the FASB issued FASB Staff Position (“FSP”) FAS157-2, “Effective Date of FASB Statement No.
157,”(“FSP FAS157-2”),which delayed our effective date of SFAS No. 157, “Fair Value Measurements,”(“SFAS 157”) to January 1, 2009, for nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least annually).
The adoption of FSP FAS 157-2 on January 1, 2009 did not have a material impact
on our financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities an amendment of FASB Statement No. 133,”
(“SFAS 161”).This standard requires enhanced disclosures about an entity’s derivative
and hedging activities and is intended to improve the transparency of financial
reporting. Entities are required to provide enhanced disclosures about (a) how
and why an entity uses derivative instruments, (b) how derivative instruments
and related hedged items are accounted for under FASB Statement No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” and its related interpretations, and
(c) how derivative instruments and related hedged items affect an entity’s
financial position, financial performance, and cash flows. The adoption of this
Standard on January 1, 2009 did not have a material impact on our financial
statements. See Note 7 for additional disclosures required by this
standard.
  10
  In April
2009, FASB issued FSP No. 141(R)-1, “Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies,” (“FSP FAS 141(R)-1”). This FSP amends and clarifies the
provisions of Statement of Financial Accounting Standards (“SFAS”) No. 141(R),
“Business
Combinations,” (“SFAS No. 141 (R)”) for initial recognition and
measurement, subsequent measurement and accounting, and disclosure of assets and
liabilities arising from contingencies in a business combination. This FSP
requires contingent assets acquired and liabilities assumed in a business
combination to be recognized at acquisition date fair value during the
measurement period. If the fair value cannot be determined during the
measurement period, and if the information available before the end of the
measurement period indicates that it is probable that an asset existed or a
liability incurred at the acquisition date and such amount can reasonably be
estimated, then the provisions of SFAS No. 5, “Accounting for
Contingencies,” and FASB Interpretation No. 14, “Reasonable Estimation of the Amount
of a Loss,” shall be applied. Contingent consideration arrangements
assumed in a business combination shall still be measured subsequently per the
provisions of SFAS No. 141(R). FSP FAS 141(R)-1 has been effective for us since
January 1, 2009. The effect of this standard on our financial statements will
depend on the nature and terms of acquisitions completed after 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,” (“FSP FAS 107-1 and APB 28-1”). This FSP
amends SFAS No. 107, “Disclosures about Fair Value of
Financial Instruments,”to require disclosures about fair value of
financial instruments for interim reporting periods as well as in annual
financial statements. This FSP also amends Accounting Principles Board Opinion
No. 28, “Interim Financial
Reporting,”to require those disclosures in summarized financial
information at interim periods. We do not believe this standard will have a
material impact on our financial statements when we adopt it on June 30,
2009.
  Note
      2:
              EARNINGS
      PER SHARE
  The table below provides further share
information used in computing our earnings per share for the periods presented
herein.  Basic earnings per share was computed by dividing net income
attributable to AMCOL shareholders by the weighted average number of common
shares outstanding during each period.  Diluted earnings per share was
computed by dividing net income attributable to AMCOL shareholders by the
weighted average common shares outstanding after consideration of the dilutive
effect of stock based compensation outstanding during each period.
 
 Three
      Months EndedMarch
      31,2009
                                
                                
                                2008Weighted
      average number of common shares outstanding
                                
                                
                                30,694,053
                                
                                
                                
                                30,259,799Dilutive
      impact of stock based compensation
                                
                                
                                215,126
                                
                                
                                
                                629,113Weighted
      average number of common and common equivalent shares outstanding for the
      period
                                
                                
                                30,909,179
                                
                                
                                
                                30,888,912Number
      of common shares outstanding at the end of the period
                                
                                
                                30,591,488
                                
                                
                                
                                30,156,968Weighted
      average number of anti-dilutive shares excluded from the computation of
      diluted earnings per share
                                
                                
                                1,530,997
                                
                                
                                
                                553,334
  11
  Note
      3:
              ADDITIONAL
      BALANCE SHEET INFORMATION
 
 Our inventories at March 31, 2009 and
December 31, 2008 are comprised of the following components:
 
 March
      31,
                                              
                                              
                                              December
      31,2009
                                              
                                              
                                              2008Crude
      stockpile inventories
                                              
                                              $
                                              39,496
                                              
                                              
                                              $
                                              40,056In-process
      and finished goods inventories
                                              
                                              
                                              43,833
                                              
                                              
                                              
                                              51,653Other
      raw material, container, and supplies inventories
                                              
                                              
                                              32,370
                                              
                                              
                                              
                                              33,357$
                                              115,699
                                              
                                              
                                              $
                                              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:
 
 Three
      Months EndedMarch
      31,2009
                              
                              
                              2008Balance
      at beginning of period
                              
                              $
                              5,649
                              
                              
                              $
                              5,699Settlement
      of obligations
                              
                              
                              (590
                              )
                              
                              
                              (384
                              )Liabilities
      incurred and accretion expense
                              
                              
                              1,073
                              
                              
                              
                              532Balance
      at end of period
                              
                              $
                              6,132
                              
                              
                              $
                              5,847
 
 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.
  12
  The following summaries set forth
certain financial information by business segment:
 
 Three
      Months EndedMarch
      31,2009
                                
                                
                                2008Net
      sales:Minerals
                                
                                $
                                80,157
                                
                                
                                $
                                99,344Environmental
                                
                                
                                44,233
                                
                                
                                
                                58,219Oilfield
      services
                                
                                
                                31,898
                                
                                
                                
                                24,143Transportation
                                
                                
                                11,291
                                
                                
                                
                                14,350Intersegment
      shipping
                                
                                
                                (3,160
                                )
                                
                                
                                (4,647
                                )Total
                                
                                $
                                164,419
                                
                                
                                $
                                191,409Operating
      profit (loss):Minerals
                                
                                $
                                7,608
                                
                                
                                $
                                7,687Environmental
                                
                                
                                3,694
                                
                                
                                
                                5,971Oilfield
      services
                                
                                
                                4,917
                                
                                
                                
                                3,949Transportation
                                
                                
                                481
                                
                                
                                
                                780Corporate
                                
                                
                                (6,533
                                )
                                
                                
                                (5,675
                                )Total
                                
                                $
                                10,167
                                
                                
                                $
                                12,712
 
 As
      of Mar. 31, 2009
                        
                        
                        As
      of Dec. 31, 2008Assets:Minerals
                        
                        $
                        352,786
                        
                        
                        $
                        341,111Environmental
                        
                        
                        149,910
                        
                        
                        
                        177,898Oilfield
      services
                        
                        
                        163,626
                        
                        
                        
                        160,691Transportation
                        
                        
                        4,277
                        
                        
                        
                        4,761Corporate
                        
                        
                        54,385
                        
                        
                        
                        60,119Total
                        
                        $
                        724,984
                        
                        
                        $
                        744,580
  13
  Three
      Months EndedMarch
      31,2009
                                  
                                  
                                  2008Depreciation,
      depletion and amortization:Minerals
                                  
                                  $
                                  4,113
                                  
                                  
                                  $
                                  3,674Environmental
                                  
                                  
                                  1,484
                                  
                                  
                                  
                                  1,575Oilfield
      services
                                  
                                  
                                  2,950
                                  
                                  
                                  
                                  1,774Transportation
                                  
                                  
                                  11
                                  
                                  
                                  
                                  9Corporate
                                  
                                  
                                  400
                                  
                                  
                                  
                                  403Total
                                  
                                  $
                                  8,958
                                  
                                  
                                  $
                                  7,435Capital
      expenditures:Minerals
                                  
                                  $
                                  19,815
                                  
                                  
                                  $
                                  7,687Environmental
                                  
                                  
                                  536
                                  
                                  
                                  
                                  858Oilfield
      services
                                  
                                  
                                  2,465
                                  
                                  
                                  
                                  3,284Transportation
                                  
                                  
                                  -
                                  
                                  
                                  
                                  12Corporate
                                  
                                  
                                  7,181
                                  
                                  
                                  
                                  3,922Total
                                  
                                  $
                                  29,997
                                  
                                  
                                  $
                                  15,763Research
      and development expense:Minerals
                                  
                                  $
                                  1,335
                                  
                                  
                                  $
                                  1,276Environmental
                                  
                                  
                                  527
                                  
                                  
                                  
                                  644Oilfield
      services
                                  
                                  
                                  167
                                  
                                  
                                  
                                  119Corporate
                                  
                                  
                                  86
                                  
                                  
                                  
                                  148Total
                                  
                                  $
                                  2,115
                                  
                                  
                                  $
                                  2,187
 
 Note
      5:
              EMPLOYEE
      BENEFIT PLANS
 
 Our net periodic benefit cost for our
defined benefit pension plan was as follows:
 
 Three
      Months EndedMarch
      31,2009
                              
                              
                              2008Service
      cost
                              
                              $
                              412
                              
                              
                              $
                              418Interest
      cost
                              
                              
                              651
                              
                              
                              
                              593Expected
      return on plan assets
                              
                              
                              (554
                              )
                              
                              
                              (781
                              )Amortization
      of acturial (gain) / loss
                              
                              
                              107
                              
                              
                              
                              (16
                              )Amortization
      of prior service cost
                              
                              
                              16
                              
                              
                              
                              17Net
      periodic benefit cost
                              
                              $
                              632
                              
                              
                              $
                              231
 
 As
previously disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2008, we expect to contribute up to $1,000 to our pension plan in
2009.
  Note
      6:
              INCOME
      TAXES
 
 Our effective tax rate for the three
months ended March 31, 2009 and 2008 was 28.3% and 27.0%, 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.
  14
  In the normal course of business, we
are subject to examination by taxing authorities throughout the
world.  With few exceptions, we are no longer subject to U.S. federal,
state, local, or non-US income tax examinations by tax authorities for years
prior to 2001.  The Internal Revenue Service (“IRS”) has examined or
the statute of limitations is closed for our U.S. federal income tax returns for
all years through 2004. The IRS has recently begun auditing the 2005, 2006 and
2007 tax years.
  Note
      7:
              DERIVATIVE
      INSTRUMENTS AND HEDGING ACTIVITES
 
 As a
multinational corporation with operations throughout the world, we are subject
to certain market risks, including those related to foreign currency, interest
rates and government actions. We use a variety of practices to manage these
market risks, including, when considered appropriate, derivative financial
instruments. We use derivative financial instruments only for risk management
and not for trading or speculative purposes.
 
 The
following table sets forth the fair values of our derivative
instruments:
 
 Balance
      Sheet
                  
                  Fair
      Value as ofLiability
      Derivatives
                  
                  Location
                  
                  March
      31, 2009
                  
                  
                  December
      31, 2008Derivatives
      designated as hedging instruments under Statement 133:Interest
      rate swap
                  
                  Other
      liabilities
                  
                  $
                  5,606
                  
                  
                  $
                  5,997Derivatives
      not designated as hedging instruments under Statement 133:Foreign
      currency exchange contracts
                  
                  Accrued
      liabilities
                  
                  $
                  238
                  
                  
                  
                  N/A
  SFAS No.
157, “Fair Value Measurements”(“SFAS 157”),
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date. We use several inputs in the valuation technique used to
calculate the fair value of each derivative instrument. The fair value hierarchy
under SFAS 157 prioritizes these inputs in the following three broad
levels:
 
 Level 1 –
Valuation is based on quoted prices (unadjusted) in active markets for identical
assets or liabilities we have the ability to access at the measurement
date.
 
 Level 2 –
Valuation is based on quoted prices for similar assets or liabilities in active
markets, quoted prices for identical or similar assets or liabilities in markets
that are not active and model based valuations for which all significant inputs
are observable in the market.
 
 Level 3 –
Valuation is based on model based techniques that use unobservable inputs for
the asset or liability. These inputs reflect our own assumption about the
assumption market participants would use in pricing the asset or
liability.
  15
  The
interest rate swap and foreign currency exchange contracts are valued using
discounted cash flows. The key inputs include foreign exchange rate, forward
points and interest rate which are readily observable at commonly quoted
intervals for the term of the contract and the valuation does not involve
significant management judgment.
 
 The
following table illustrates how the fair value of our derivative instruments is
dependent upon different levels of input assumptions for our derivatives
outstanding as of March 31, 2009:
 
 Fair
      Value Measurements UsingQuoted
      Prices in
                                        Active
      Markets
                                        for
      Identical
                                        Assets
                                      
                                      
                                      Significant
      Other
                                        Observable
                                        Inputs
                                      
                                      
                                      Significant
                                        Unobservable
                                        InputsBalance
      atDescription
                                      
                                      3/31/2009
                                      
                                      
                                      (Level
      1)
                                      
                                      
                                      (Level
      2)
                                      
                                      
                                      (Level
      3)Interest
      rate swap
                                      
                                      $
                                      5,606
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      $
                                      5,606
                                      
                                      
                                      
                                      N/AForeign
      currency exchange contracts
                                      
                                      
                                      238
                                      
                                      
                                      
                                      N/A
                                      
                                      
                                      
                                      238
                                      
                                      
                                      
                                      N/A$
                                      5,844
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      5,844
  The
following table illustrates how the fair value of our derivative instruments is
dependent upon different levels of input assumptions for our derivatives
outstanding as of December 31, 2008:
 
 Fair
      Value Measurements UsingQuoted
      Prices in
                                                Active
      Markets
                                                for
      Identical
                                                Assets
                                              
                                              
                                              Significant
      Other
                                                Observable
                                                Inputs
                                              
                                              
                                              Significant
                                                Unobservable
                                                InputsBalance
      atDescription
                                              
                                              12/31/2008
                                              
                                              (Level
      1)
                                              
                                              
                                              (Level
      2)
                                              
                                              
                                              (Level
      3)Interest
      rate swap
                                              
                                              $
                                              5,997
                                              
                                              
                                              N/A
                                              
                                              
                                              $
                                              5,997
                                              
                                              
                                              
                                              N/A
 
 Cash
flow hedges
 
 Amount
      of Gain or (Loss)
                                                                Recognized
      in OCI on
                                                                Derivatives(Effective
      Portion)Three
      Months Ended March 31,Derivatives
      in Statement 133 Cash Flow Hedging Relationships
                                                              
                                                              2009
                                                              
                                                              
                                                              2008Interest
      rate swap
                                                              
                                                              $
                                                              168
                                                              
                                                              $
                                                              (2,112
                                                              )
  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 March 31, 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
  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 DerivativesRecognized
      in
                                                  Income
      on
                                                
                                                
                                                Three Months Ended
                                                  March 31,Derivatives Not Designated as Hedging Instruments
      Under Statement 133
                                                
                                                Derivatives
                                                
                                                
                                                2009
                                                
                                                2008Foreign
      currency exchange contracts
                                                
                                                Other,
      net
                                                
                                                $
                                                (882)
                                                
                                                $
                                                291
 
 Note
      8:
              CONTINGENCIES
 
 We are party to a number of lawsuits
arising in the normal course of business.  We do not believe that any
pending litigation will have a material adverse effect on our consolidated
financial statements.
  17
  Item
2:  Management’s Discussion and Analysis of Financial Condition and
Results of Operations
 
 Forward-Looking
Statements
 
 From time to time, certain statements
we make, including statements in this Management's Discussion and Analysis of
Financial Condition and Results of Operations section, constitute
"forward-looking statements" made in reliance upon the safe harbor contained in
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include statements relating to our Company or our
operations that are preceded by terms such as "expects," "believes,"
"anticipates," "intends" and similar expressions, and statements relating to
anticipated growth and levels of capital expenditures. Such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties. Our actual results, performance or achievements could differ
materially from the results, performance or achievements expressed in, or
implied by, these forward-looking statements as a result of various factors,
including without limitation the following: actual performance in our various
markets; conditions in the metalcasting and construction industries; oil and gas
prices and conditions in those industries; operating costs; competition;
currency exchange rates and devaluations; delays in development, production and
marketing of new products; integration of acquired businesses; and other factors
set forth from time to time in our reports filed with the Securities and
Exchange Commission.  We undertake no duty to update any forward
looking statements to actual results or changes in our
expectations.
 
 Overview
 
 We are a global, specialty minerals
company and earn our revenues and profits from a diverse group of industrial and
consumer product lines.  Our principal operations are located in North
America, Europe and the Asia-Pacific region.
 
 We
operate in five segments:  minerals, environmental, oilfield services,
transportation and corporate.  Our minerals segment operates in three
principal markets:  metalcasting, pet products and specialty
minerals.  The environmental segment’s principal markets include
lining technologies, building materials and water treatment.  Our
oilfield services segment provides both onshore and offshore water treatment
filtration, pipeline separation, waste fluid treatment, rental tools, coil
tubing and well testing data services for the oil and gas
industries.  Our transportation segment provides trucking services for
our domestic businesses as well as third parties.  Intersegment
shipping revenues are eliminated in our corporate segment.
 
 The principal mineral that we utilize
to generate our mineral based revenues is bentonite.  We own or lease
bentonite reserves in the United States, China, Turkey and
Australia.  Additionally, through our affiliates and joint ventures,
we have access to bentonite reserves in Egypt, India, Mexico, Russia and
Azerbaijan.  Bentonite deposits have varying physical properties which
require us to identify which markets our reserves can serve.  We
believe that our understanding of bentonite properties, mining methods,
processing and application to markets are the core components of our longevity
and future prospects.
  18
  Our customers are engaged in various
end-markets and geographies.  Customers in the minerals segment range
from foundries that produce castings for automotive, industrial, and
transportation equipment, including heavy-duty trucks and railroad cars, to
producers of consumer goods, including cat box filler, cosmetics and
detergents.  The customers for our environmental segment’s lining
technologies and building materials products are predominantly engineering
contractors.  The oilfield services segment’s customer base is
primarily comprised of oil and gas service or exploration
companies.
 
 A significant portion of our products
have been used in the same applications for decades and have experienced minimal
technological obsolescence.  A majority of our business is performed
under short-term agreements; therefore, terms of sale, such as pricing and
volume, can change within our fiscal year.
 
 The majority of our revenues are
generated in North America; our fastest growing markets are in the Asia-Pacific
and Eastern European regions, which have continued to outpace the United States
in economic growth in recent years.  Consequently, the state of the US
and international economies impacts our revenues.
 
 Sustainable, long-term profit growth is
our primary objective.  We employ a number of strategic initiatives to
achieve this goal:
 
 ·
              Organic
      growth:  The central component of our growth strategy is
      expansion of our product lines and market presence.  We have a
      history of commitment to research and development and using this resource
      to bring innovative products to market.  We believe this
      approach to growth offers the best probability of achieving our long-term
      goals at the lowest risk.
 
 ·
              Globalization:  We
      have expanded our manufacturing and marketing organizations into European
      and Asia-Pacific regions over the last 40 years.  This operating
      experience enables us to expand further into emerging
      markets.  We see significant opportunities in the Asia-Pacific
      and Eastern European regions for expanding our revenues and earnings over
      the long-term as a number of markets we serve, such as metalcasting and
      lining technologies, are expected to grow.  We expect to take
      advantage of these growth areas either through our wholly-owned
      subsidiaries or investments in affiliates and joint
    ventures.
 
 ·
              Mineral
      development:  Bentonite is a component in a majority of the
      products we produce.  Since it is a natural material, we must
      continually expand our reserve base to maintain a long-term
      business.  Our goal is to add new reserves to replace the
      bentonite mined each year.  Furthermore, we need to assure new
      reserves meet the physical property requirements for our diverse product
      lines and are economical to mine.  Our organization is committed
      to developing its global reserve base to meet these
      requirements.
 
 ·
              Acquisitions:  We
      continually seek opportunities to add complementary businesses to our
      portfolio of products, as appropriate, when we believe those businesses
      are fairly valued and fit with our overall growth
      strategy.  However, the global economic and credit crisis that
      existed in the beginning of 2009 will make it more challenging for us to
      do this than it has in recent years.  Over the last several
      years, we have acquired a number of
businesses.
  19
  A number of risks will challenge us in
meeting these long-term objectives, and there can be no assurance that we will
achieve success in implementing any one or more of them.  We describe
certain risks under “Item 1A. Risk Factors” and “Item 7A. Quantitative and
Qualitative Disclosure About Market Risk” within our Annual Report on Form 10-K
for the year ended December 31, 2008.  In general, the significance of
these risks has not materially changed over the past year except as they are
affected by the recent credit crisis occurring in the United States and
throughout many of the economies in which we operate. The ongoing credit crisis
is characterized by increased volatility, and lack of available capital for
short and long term financing. The credit crisis may increase the risks outlined
in our latest Annual Report on Form 10-K, especially in the areas of our
reliance on key industries (which could be more adversely affected due to the
credit crisis), volatility of our stock price, and increased exchange rate
sensitivity. In addition, the credit crisis may affect our ability to obtain
additional financing to fund acquisitions or other activities on terms
substantially similar to our current debt facilities should that need arise in
the future. Any of these factors could adversely affect our business
opportunities and results.
 
 Critical Accounting Policies
and Estimates
 
 The discussion and analysis of our
financial condition and results of operations are based upon our condensed
consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States.  We evaluate the
accounting policies and estimates used to prepare the financial statements on an
ongoing basis.  We consider the accounting policies used in preparing
our financial statements to be critical accounting policies when they are both
important to the portrayal of our financial condition and results of operations,
and require us to make estimates, complex judgments, and assumptions, including
with respect to events which are inherently uncertain.  As a result,
actual results could differ from these estimates.  For more
information on our critical accounting policies, please read our Annual Report
on Form 10-K for the year ended December 31, 2008.
 
 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.
  20
  Three
months ended March 31, 2009 vs. March 31, 2008
 
 Consolidated
Review
 
 The
following table compares our operating results for the quarters ended March 31,
2009 and March 31, 2008:
 
 Three
      Months Ended March 31,Consolidated
                                                          
                                                          2009
                                                          
                                                          
                                                          2008
                                                          
                                                          
                                                          2009
      vs. 2008(Dollars
      in Thousands, Except Per Share Amounts)Net
      sales
                                                          
                                                          $
                                                          164,419
                                                          
                                                          
                                                          $
                                                          191,409
                                                          
                                                          
                                                          
                                                          -14.1
                                                          %Cost
      of sales
                                                          
                                                          
                                                          121,199
                                                          
                                                          
                                                          
                                                          145,059Gross
      profit
                                                          
                                                          
                                                          43,220
                                                          
                                                          
                                                          
                                                          46,350
                                                          
                                                          
                                                          
                                                          -6.8
                                                          %margin
      %
                                                          
                                                          
                                                          26.3
                                                          %
                                                          
                                                          
                                                          24.2
                                                          %General,
      selling and administrative expenses
                                                          
                                                          
                                                          33,053
                                                          
                                                          
                                                          
                                                          33,638
                                                          
                                                          
                                                          
                                                          -1.7
                                                          %Operating
      profit
                                                          
                                                          
                                                          10,167
                                                          
                                                          
                                                          
                                                          12,712
                                                          
                                                          
                                                          
                                                          -20.0
                                                          %margin
      %
                                                          
                                                          
                                                          6.2
                                                          %
                                                          
                                                          
                                                          6.6
                                                          %Other
      income (expense):Interest
      expense, net
                                                          
                                                          
                                                          (3,407
                                                          )
                                                          
                                                          
                                                          (2,401
                                                          )
                                                          
                                                          
                                                          41.9
                                                          %Other,
      net
                                                          
                                                          
                                                          (1,212
                                                          )
                                                          
                                                          
                                                          (235
                                                          )
                                                          
                                                          
                                                          415.7
                                                          %(4,619
                                                          )
                                                          
                                                          
                                                          (2,636
                                                          )Income
      before income taxes and income (loss) from affiliates and joint
      ventures
                                                          
                                                          
                                                          5,548
                                                          
                                                          
                                                          
                                                          10,076Income
      tax expense
                                                          
                                                          
                                                          1,571
                                                          
                                                          
                                                          
                                                          2,717
                                                          
                                                          
                                                          
                                                          -42.2
                                                          %effective
      tax rate
                                                          
                                                          
                                                          28.3
                                                          %
                                                          
                                                          
                                                          27.0
                                                          %Income
      before income (loss) from affiliates and joint ventures
                                                          
                                                          
                                                          3,977
                                                          
                                                          
                                                          
                                                          7,359Income
      (loss) from affiliates and joint ventures
                                                          
                                                          
                                                          (8
                                                          )
                                                          
                                                          
                                                          1,295
                                                          
                                                          
                                                          
                                                          -100.6
                                                          %Net
      income
                                                          
                                                          
                                                          3,969
                                                          
                                                          
                                                          
                                                          8,654Net
      income (loss) attributable to noncontrolling interests
                                                          
                                                          
                                                          (207
                                                          )
                                                          
                                                          
                                                          33
                                                          
                                                          
                                                          
                                                          -727.3
                                                          %Net
      income (loss) attributable to AMCOL shareholders
                                                          
                                                          $
                                                          4,176
                                                          
                                                          
                                                          $
                                                          8,621
                                                          
                                                          
                                                          
                                                          -51.6
                                                          %Basic
      earnings per share attributable to AMCOL shareholders
                                                          
                                                          $
                                                          0.14
                                                          
                                                          
                                                          $
                                                          0.28Diluted
      earnings per share attributable to AMCOL shareholders
                                                          
                                                          $
                                                          0.14
                                                          
                                                          
                                                          $
                                                          0.28
 
 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
component. The table details the consolidated sales fluctuations by components
over the prior year’s comparable period:
  21
  Organic
                          
                          
                          Acquisitions
                          
                          
                          Foreign
                            Exchange
                          
                          
                          TotalMinerals
                          
                          
                          -6.6
                          %
                          
                          
                          0.0
                          %
                          
                          
                          -3.5
                          %
                          
                          
                          -10.1
                          %Environmental
                          
                          
                          -3.1
                          %
                          
                          
                          0.0
                          %
                          
                          
                          -4.2
                          %
                          
                          
                          -7.3
                          %Oilfield
      services
                          
                          
                          2.2
                          %
                          
                          
                          2.0
                          %
                          
                          
                          -0.1
                          %
                          
                          
                          4.1
                          %Transportation
      & intersegment shipping
                          
                          
                          -0.8
                          %
                          
                          
                          0.0
                          %
                          
                          
                          0.0
                          %
                          
                          
                          -0.8
                          %Total
                          
                          
                          -8.3
                          %
                          
                          
                          2.0
                          %
                          
                          
                          -7.8
                          %
                          
                          
                          -14.1
                          %%
      of change
                          
                          
                          59.4
                          %
                          
                          
                          -13.9
                          %
                          
                          
                          54.5
                          %
                          
                          
                          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
                                
                                
                                33.6
                                %
                                
                                
                                8.7
                                %
                                
                                
                                6.6
                                %
                                
                                
                                48.9
                                %Environmental
                                
                                
                                13.7
                                %
                                
                                
                                11.0
                                %
                                
                                
                                2.2
                                %
                                
                                
                                26.9
                                %Oilfield
      services
                                
                                
                                18.1
                                %
                                
                                
                                0.3
                                %
                                
                                
                                0.9
                                %
                                
                                
                                19.3
                                %Transportation
                                
                                
                                4.9
                                %
                                
                                
                                0.0
                                %
                                
                                
                                0.0
                                %
                                
                                
                                4.9
                                %Total
      - current year's period
                                
                                
                                70.3
                                %
                                
                                
                                20.0
                                %
                                
                                
                                9.7
                                %
                                
                                
                                100.0
                                %Total
      from prior year's comparable period
                                
                                
                                68.0
                                %
                                
                                
                                22.5
                                %
                                
                                
                                9.5
                                %
                                
                                
                                100.0
                                %
 
 Net
sales:
 
 The decrease in net sales is driven
almost equally between an overall decrease in our organic revenues as well as
adverse currency movements on sales in our overseas businesses.  Our
oilfield services segment revenues increased, however, over the comparable prior
year’s quarter due to the acquisition in May 2008 of our coil tubing
business.
 
 Gross
profit:
 
 Overall
gross profit decreased due to the decrease in net sales mentioned
above.  However, gross margin increased due to price increases in our
minerals segment implemented in 2008 which were not in full effect during the
prior year’s quarter.
 
 General,
selling & administrative expenses (GS&A):
 
 GS&A expenses decreased slightly
with large increases in our oilfield services and corporate segments offset by a
large decrease in our environmental segment.  The increases are
largely due to the acquisition of our coil tubing business in May 2008,
commissions resulting from increased sales in our oilfield services segment, and
increased professional fees in our corporate segment associated with restating
our quarterly results for the second and third quarter of 2008 for items
associated with our Indian investment in Ashapura Minechem Limited (“Ashapura”).
The decrease is primarily due to fluctuations in foreign currency exchange rates
and lower personnel related cost in our environmental segment.
  22
  Operating
profit:
 
 Operating profit decreased due to the
decrease in gross profit as mentioned earlier.  On a segment basis,
our environmental segment experienced the largest decrease while our oilfield
services segment experienced an increase in operating
profits.  Operating profit margin decreased across all segments except
our minerals segment.
 
 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 derivatives associated with
our purchase of a chrome mine in South Africa, the purchase price for which was
denominated in Australian Dollars (AUD).
 
 Income
tax expense:
 
 Our
effective tax rate increased in 2009 to 28.3% compared with 27.0% in the prior
year’s period.  This difference equates to an approximate $70 thousand
difference in income taxes, which is insignificant.  Our effective tax
rate in both reporting periods continues to differ from the U.S. federal
statutory 35.0% rate largely due to depletion deductions and differences in
local tax rates on the income of our foreign subsidiaries which are generally
lower than the U.S. rates.
 
 Income
(loss) from affiliates & joint ventures:
 
 As reported in our Form 10-K for 2008,
income from our investment in Ashapura has historically comprised the majority
of income from affiliates and joint-ventures.  As also reported
therein, we have written off our investment in this entity as of December 31,
2008, and have suspended recognition of further losses on this investment in
accordance with the equity method of accounting.  As such, the lack of
income from Ashapura in 2009 caused the decrease as compared to the 2008
period.
 
 Net income (loss) attributable to
AMCOL shareholders:
 
 The
decrease in net income from the prior year period results largely from the
decrease in operating profit, increased expenses for interest and derivative
losses, and the lack of income from Ashapura.
 
 Diluted
earnings per
share:
 
 Diluted EPS decreased commensurate with
the decrease in net income as previously outlined.
  23
  Segment
analysis:
 
 Following is a review of operating
results for each of our five reporting segments:
 
 Minerals
Segment
 
 Three
      Months Ended March 31,Minerals
                                      
                                      2009
                                      
                                      
                                      2008
                                      
                                      
                                      2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                                      
                                      $
                                      80,157
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      99,344
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      (19,187
                                      )
                                      
                                      
                                      -19.3
                                      %Cost
      of sales
                                      
                                      
                                      63,975
                                      
                                      
                                      
                                      79.8
                                      %
                                      
                                      
                                      82,667
                                      
                                      
                                      
                                      83.2
                                      %Gross
      profit
                                      
                                      
                                      16,182
                                      
                                      
                                      
                                      20.2
                                      %
                                      
                                      
                                      16,677
                                      
                                      
                                      
                                      16.8
                                      %
                                      
                                      
                                      (495
                                      )
                                      
                                      
                                      -3.0
                                      %General,
      selling andadministrative expenses
                                      
                                      
                                      8,574
                                      
                                      
                                      
                                      10.7
                                      %
                                      
                                      
                                      8,990
                                      
                                      
                                      
                                      9.0
                                      %
                                      
                                      
                                      (416
                                      )
                                      
                                      
                                      -4.6
                                      %Operating
      profit
                                      
                                      
                                      7,608
                                      
                                      
                                      
                                      9.5
                                      %
                                      
                                      
                                      7,687
                                      
                                      
                                      
                                      7.8
                                      %
                                      
                                      
                                      (79
                                      )
                                      
                                      
                                      -1.0
                                      %
 
 Three
      Months Ended March 31,Minerals
      Product Line Sales
                                    
                                    2009
                                    
                                    
                                    2008
                                    
                                    
                                    %
      change(Dollars
      in Thousands)Metalcasting
                                    
                                    $
                                    31,541
                                    
                                    
                                    $
                                    40,678
                                    
                                    
                                    
                                    -22.5
                                    %Specialty
      materials
                                    
                                    
                                    22,662
                                    
                                    
                                    
                                    25,663
                                    
                                    
                                    
                                    -11.7
                                    %Pet
      products
                                    
                                    
                                    17,415
                                    
                                    
                                    
                                    19,523
                                    
                                    
                                    
                                    -10.8
                                    %Basic
      minerals
                                    
                                    
                                    7,850
                                    
                                    
                                    
                                    12,041
                                    
                                    
                                    
                                    -34.8
                                    %Other
      product lines
                                    
                                    
                                    689
                                    
                                    
                                    
                                    1,439
                                    
                                    
                                    
                                    *Total
                                    
                                    
                                    80,157
                                    
                                    
                                    
                                    99,344
 
 * 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, which was almost
entirely offset by the effect of a full period of selling price increases that
were instituted in the prior year but were not in effect in the prior year’s
quarter.  The increased selling prices also accounted for the increase
in gross profit margins.
 
 GS&A
expenses decreased marginally due to foreign exchange rate movements and
decreases in employee related expenses due to greater cost
controls.  This decrease, along with the increase in gross profit
margin, contributed to the increase in operating profit margins.
  24
  Environmental
Segment
 
 Three
      Months Ended March 31,Environmental
                                      
                                      2009
                                      
                                      
                                      2008
                                      
                                      
                                      2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                                      
                                      $
                                      44,233
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      58,219
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      (13,986
                                      )
                                      
                                      
                                      -24.0
                                      %Cost
      of sales
                                      
                                      
                                      30,134
                                      
                                      
                                      
                                      68.1
                                      %
                                      
                                      
                                      38,798
                                      
                                      
                                      
                                      66.6
                                      %Gross
      profit
                                      
                                      
                                      14,099
                                      
                                      
                                      
                                      31.9
                                      %
                                      
                                      
                                      19,421
                                      
                                      
                                      
                                      33.4
                                      %
                                      
                                      
                                      (5,322
                                      )
                                      
                                      
                                      -27.4
                                      %General,
      selling andadministrative expenses
                                      
                                      
                                      10,405
                                      
                                      
                                      
                                      23.5
                                      %
                                      
                                      
                                      13,450
                                      
                                      
                                      
                                      23.1
                                      %
                                      
                                      
                                      (3,045
                                      )
                                      
                                      
                                      -22.6
                                      %Operating
      profit
                                      
                                      
                                      3,694
                                      
                                      
                                      
                                      8.4
                                      %
                                      
                                      
                                      5,971
                                      
                                      
                                      
                                      10.3
                                      %
                                      
                                      
                                      (2,277
                                      )
                                      
                                      
                                      -38.1
                                      %
 
 Three
      Months Ended March 31,Environmental
      Product Line Sales
                                    
                                    2009
                                    
                                    
                                    2008
                                    
                                    
                                    %
      change(Dollars
      in Thousands)Lining
      technologies
                                    
                                    $
                                    26,753
                                    
                                    
                                    $
                                    32,495
                                    
                                    
                                    
                                    -17.7
                                    %Building
      materials
                                    
                                    
                                    12,378
                                    
                                    
                                    
                                    19,995
                                    
                                    
                                    
                                    -38.1
                                    %Other
      product lines
                                    
                                    
                                    5,102
                                    
                                    
                                    
                                    5,729
                                    
                                    
                                    
                                    *Total
                                    
                                    
                                    44,233
                                    
                                    
                                    
                                    58,219
 
 * Not
meaningful.
 
 Revenues
in the environmental segment decreased due to adverse movements in foreign
currency exchange rates, primarily the British pound and Polish zloty to the US
dollar, and organic decreases across all product lines due to the recession and
credit crisis.  These decreases also led to the decrease in gross
profit margins.
 
 GS&A
expenses decreased in part due to the currency movements as mentioned above as
well as due to decreased employee incentives and third party commissions
stemming from decreased sales levels.  Operating profit margin
decreased due to the decrease in sales and gross profit margin.
 
 Oilfield
Services Segment
 
 Three
      Months Ended March 31,Oilfield
      Services
                                    
                                    2009
                                    
                                    
                                    2008
                                    
                                    
                                    2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                                    
                                    $
                                    31,898
                                    
                                    
                                    
                                    100.0
                                    %
                                    
                                    $
                                    24,143
                                    
                                    
                                    
                                    100.0
                                    %
                                    
                                    $
                                    7,755
                                    
                                    
                                    
                                    32.1
                                    %Cost
      of sales
                                    
                                    
                                    20,293
                                    
                                    
                                    
                                    63.6
                                    %
                                    
                                    
                                    15,441
                                    
                                    
                                    
                                    64.0
                                    %Gross
      profit
                                    
                                    
                                    11,605
                                    
                                    
                                    
                                    36.4
                                    %
                                    
                                    
                                    8,702
                                    
                                    
                                    
                                    36.0
                                    %
                                    
                                    
                                    2,903
                                    
                                    
                                    
                                    33.4
                                    %General,
      selling andadministrative expenses
                                    
                                    
                                    6,688
                                    
                                    
                                    
                                    21.0
                                    %
                                    
                                    
                                    4,753
                                    
                                    
                                    
                                    19.7
                                    %
                                    
                                    
                                    1,935
                                    
                                    
                                    
                                    40.7
                                    %Operating
      profit
                                    
                                    
                                    4,917
                                    
                                    
                                    
                                    15.4
                                    %
                                    
                                    
                                    3,949
                                    
                                    
                                    
                                    16.3
                                    %
                                    
                                    
                                    968
                                    
                                    
                                    
                                    24.5
                                    %
 
 Strong
increased demand for offshore, deep water filtration services was the primary
driver of the increased sales over the prior year quarter.  Sales
levels were also helped by the inclusion of our coil tubing business, which we
acquired in May 2008 and thus is not present in the prior year quarterly
results.
  25
  GS&A
expenses increased due to the acquisition of our coil tubing business and
increases in employee related expenses due to greater sales
levels.  Operating profits increased due to the increased gross
profits mentioned above.  Operating margin, however, decreased as the
profitability of our coil tubing business was lower than other parts of the
business, thereby decreasing the overall profitability.  Our coil
tubing business has experienced significant competitive pressures as customers
reduce their use of these services given the drop in oil prices.
 
 Transportation
Segment
 
 Three
      Months Ended March 31,Transportation
                                      
                                      2009
                                      
                                      
                                      2008
                                      
                                      
                                      2009
      vs. 2008(Dollars
      in Thousands)Net
      sales
                                      
                                      $
                                      11,291
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      14,350
                                      
                                      
                                      
                                      100.0
                                      %
                                      
                                      $
                                      (3,059
                                      )
                                      
                                      
                                      -21.3
                                      %Cost
      of sales
                                      
                                      
                                      9,957
                                      
                                      
                                      
                                      88.2
                                      %
                                      
                                      
                                      12,800
                                      
                                      
                                      
                                      89.2
                                      %Gross
      profit
                                      
                                      
                                      1,334
                                      
                                      
                                      
                                      11.8
                                      %
                                      
                                      
                                      1,550
                                      
                                      
                                      
                                      10.8
                                      %
                                      
                                      
                                      (216
                                      )
                                      
                                      
                                      -13.9
                                      %General,
      selling andadministrative expenses
                                      
                                      
                                      853
                                      
                                      
                                      
                                      7.6
                                      %
                                      
                                      
                                      770
                                      
                                      
                                      
                                      5.4
                                      %
                                      
                                      
                                      83
                                      
                                      
                                      
                                      10.8
                                      %Operating
      profit
                                      
                                      
                                      481
                                      
                                      
                                      
                                      4.2
                                      %
                                      
                                      
                                      780
                                      
                                      
                                      
                                      5.4
                                      %
                                      
                                      
                                      (299
                                      )
                                      
                                      
                                      -38.3
                                      %
 
 Traffic
levels decreased as compared to the prior year period due to the recession in
the United States.  In addition, prices for gasoline have decreased,
leading to decreased fuel surcharges.  Both of these factors
contributed to the decrease in this segment’s performance.
 
 Corporate
Segment
 
 Three
      Months Ended March 31,Corporate
                                      
                                      2009
                                      
                                      
                                      2008
                                      
                                      
                                      2009
      vs. 2008(Dollars
      in Thousands)Intersegment
      shipping sales
                                      
                                      $
                                      (3,160
                                      )
                                      
                                      $
                                      (4,647
                                      )
                                      
                                      
                                      1,487Intersegment
      shipping costs
                                      
                                      
                                      (3,160
                                      )
                                      
                                      
                                      (4,647
                                      )Gross
      profit
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -General,
      sellingand administrative expenses
                                      
                                      
                                      6,533
                                      
                                      
                                      
                                      5,675
                                      
                                      
                                      
                                      858
                                      
                                      
                                      
                                      15.1
                                      %Operating
      loss
                                      
                                      
                                      6,533
                                      
                                      
                                      
                                      5,675
                                      
                                      
                                      
                                      858
                                      
                                      
                                      
                                      15.1
                                      %
 
 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 increased
due to both non-recurring professional fees incurred to restate our second and
third quarter results for 2008 (related to our investment in Ashapura as
previously discussed) and greater employee and employee benefit related
expenses.
  26
  Liquidity and Capital
Resources
 
 Cash flows from operations, an ability
to issue new debt instruments, and borrowings from our revolving credit facility
have been our sources of funds to provide working capital, make capital
expenditures, acquire businesses, repurchase common stock, and pay dividends to
shareholders.  We believe cash flows from operations and borrowings
from an unused and committed credit facility will be adequate to support our
current business needs for the foreseeable future.  Given the current
economic climate and credit crisis, it is unlikely that we would pursue a
substantial acquisition in 2009.  However, we may need additional debt
or equity facilities in order to pursue acquisitions, when and if these
opportunities become available, and we may or may not be able to obtain such
facilities on terms substantially similar to our current facilities as discussed
in Item 1A – Risk Factors in our Form 10-K for 2008. See our additional comments
in the Overview section of Part 1, Item 2 of this report. Following is a
discussion and analysis of our cash flow activities as presented in the
Condensed Consolidated Statement of Cash Flows presented within Part 1, Item 1
of this report.
 
 Three
      Months EndedCash
      Flows
                                                
                                                March
      31,($
      in millions)
                                                
                                                2009
                                                
                                                
                                                2008Net
      cash provided by operating activities
                                                
                                                $
                                                40.7
                                                
                                                
                                                $
                                                4.3Net
      cash used in investing activities
                                                
                                                $
                                                (17.7
                                                )
                                                
                                                $
                                                (25.0
                                                )Net
      cash provided by (used in) financing activities
                                                
                                                $
                                                (7.5
                                                )
                                                
                                                $
                                                27.4
 
 Cash
flows from operating activities increased substantially as compared to the prior
year period due to decreased working capital levels, which we were able to
reduce through concerted efforts and decreased business activity resulting from
the current recession.  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 due to
the purchase of a chrome mine in South Africa for $15.1 million (included within
capital expenditures).  Investing activities include the repayment of
a $6 million loan from the seller, Chrome Corporation that we made in the prior
year period.
 
 Cash flows from financing activities
decreased as we paid off debt whereas in the previous year we incurred more
debt.  Year-to-date dividends increased in 2009 to $0.18 per share
from $0.16 per share in the prior year period.
  27
  As
      atFinancial
      Position
                                                                                  
                                                                                  March
      31,
                                                                                  
                                                                                  
                                                                                  December
      31,($
      in millions)
                                                                                  
                                                                                  2009
                                                                                  
                                                                                  
                                                                                  2008Working
      capital
                                                                                  
                                                                                  $
                                                                                  239.1
                                                                                  
                                                                                  
                                                                                  $
                                                                                  262.7Goodwill
      & intangible assets
                                                                                  
                                                                                  $
                                                                                  120.9
                                                                                  
                                                                                  
                                                                                  $
                                                                                  122.5Total
      assets
                                                                                  
                                                                                  $
                                                                                  725.0
                                                                                  
                                                                                  
                                                                                  $
                                                                                  744.6Long-term
      debt
                                                                                  
                                                                                  $
                                                                                  253.0
                                                                                  
                                                                                  
                                                                                  $
                                                                                  256.8Other
      long-term obligations
                                                                                  
                                                                                  $
                                                                                  64.4
                                                                                  
                                                                                  
                                                                                  $
                                                                                  50.9Total
      equity
                                                                                  
                                                                                  $
                                                                                  319.6
                                                                                  
                                                                                  
                                                                                  $
                                                                                  328.4
 
 Working
capital at March 31, 2009 decreased over the amount at December 31, 2008 due to
decreases in accounts receivable and inventories partly commensurate with the
decreased sales levels but also due to increased efforts to better manage
working capital.  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.  Our current ratio was 3.7-to-1 and 3.4-to-1 at
March 31, 2009, and December 31, 2008, respectively.
 
 Long-term debt decreased due to our
ability to repay debt using cash generated from operating activities as opposed
to investing that cash in greater working capital levels and investing
activities.  Long-term debt relative to total capitalization remained
fairly constant at 44.2% at March 31, 2009 versus 43.9% at December 31,
2008.  We have approximately $61.0 million of borrowing capacity
available from our revolving credit facility at March 31, 2009.  We
are in compliance with financial covenants related to the revolving credit
facility as of the period covered by this report.
 
 Since the mid 1980’s, we have been
named as one of a number of defendants in product liability lawsuits relating to
the minor free-silica content within our bentonite products used in the
metalcasting industry.  The plaintiffs in these lawsuits are primarily
employees of our former and current customers.  To date, we have not
incurred significant costs in defending these matters.  We believe we
have adequate insurance coverage and do not believe the litigation will have a
material adverse impact on our financial position, liquidity or results of
operations.
  Contractual Obligations and
Off-Balance Sheet Arrangements (in millions)
 
 Item 7 of our Annual Report on Form
10-K for the year ended December 31, 2008 discloses our contractual obligations
and off-balance sheet arrangements.  Other than the decrease in our
long-term bank debt as disclosed in our condensed consolidated financial
statements herein there were no material changes in our contractual obligations
and off-balance sheet arrangements.
  Item
      3:
              Quantitative
      and Qualitative Disclosures About Market
Risk
 
 There were no material changes in our
market risk from the disclosures made in our Annual Report on Form 10-K for the
year ended December 31, 2008 other than those discussed in Part 1, Item 2 of
this report.
  28
  Item
      4:
              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 March 31, 2009. Based on that evaluation, they have
concluded that, as a result of the material weakness in our internal control
over financial reporting discussed below and the fact that our remedial efforts
have not been completed as of March 31, 2009, our disclosure controls and
procedures were not effective as of March 31, 2009 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.
Notwithstanding the foregoing, we believe that the financial statements included
within this report fairly present, in all material respects, our financial
position and results of operations in conformity with generally accepted
accounting principles in the United States, for the periods
presented.
 
 The Securities and Exchange Commission,
as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules
requiring public companies to include in their annual reports on Form 10-K an
assessment by management of the effectiveness of our internal controls over
financial reporting.  As described in our annual report on Form 10-K
filed for the year ended December 31, 2008, we identified a material weakness in
internal control over financial reporting relative to incorporating the results
of our equity investees in our financial statements pursuant to the equity
method of accounting. In particular, our design of internal controls did not
address the proper accounting for the value of derivative instruments held by
one of our equity investees, Ashapura Minechem Limited. As a result of the
foregoing, we began implementing changes in our internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) promulgated
under the Securities Exchange Act of 1934) during the fiscal quarter ended March
31, 2009 that materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.
 
 Specifically,
these changes include transferring the responsibility of accounting for equity
investees from our minerals segment to our corporate segment. We are also
enhancing controls over financial reporting of our equity investees to assure
the consolidated financial statements are presented in accordance with U.S.
generally accepted accounting principles.
 
 Although remedial efforts were
initiated in the first quarter of 2009, the implementation of such changes had
not been completed as of March 31, 2009.  Accordingly, we have
determined that the material weakness in our internal control over financial
reporting relative to our accounting for equity investments as described in the
annual report on Form 10-K filed by the Company for the year ended December 31,
2008 still existed as of March 31, 2009.
  29
  PART
II - OTHER INFORMATION
 
 Item
      1A:
              Risk
      Factors
 
 Information regarding risk factors
appears in Part 1, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for
the year ended December 31, 2008.  Except as discussed previously in
our Management’s Discussion and Analysis section of this report, there have been
no material changes from the risk factors disclosed therein.
 
 Item 6:
              Exhibits
 
 Exhibit
                        Number3.2
                      
                      AMCOL
      International Corporation Amended and Restated By-Laws, as amended and
      restated February 10, 2009 (1)10.1
                      
                      Form
      of Indemnification Agreement between the Company and its directors and
      executive officers (1)10.2
                      
                      Employment
      Agreement dated February 2, 2009 between AMCOL International Corporation
      and Lawrence E. Washow (2)10.3
                      
                      Employment
      Agreement dated February 2, 2009 between AMCOL International Corporation
      and Gary L. Castagna (2)10.4
                      
                      Employment
      Agreement dated February 2, 2009 between AMCOL International Corporation
      and Ryan F. McKendrick (2)10.5
                      
                      Employment
      Agreement dated February 2, 2009 between AMCOL International Corporation
      and Donald W. Pearson (2)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 February 13,
  2009.
 (2)
              Exhibit
      is incorporated by reference to the Company’s Form 8-K filed with the
      Securities and Exchange Commission on February 5,
  2009.
  30
  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:
                  May
      8, 2009
                  
                  /s/ Lawrence E. WashowLawrence
      E. WashowPresident
      and Chief Executive OfficerDate:
                  May
      8, 2009
                  
                  /s/ Donald W. PearsonDonald
      W. PearsonVice
      President and Chief Financial
Officer
  31
  INDEX
TO EXHIBITS
 
 3.2
                
                AMCOL
      International Corporation Amended and Restated By-Laws, as amended and
      restated February 10, 2009 (1)10.1
                
                Form
      of Indemnification Agreement between the Company and its directors and
      executive officers (1)10.2
                
                Employment
      Agreement dated February 2, 2009 between AMCOL International Corporation
      and Lawrence E. Washow (2)10.3
                
                Employment
      Agreement dated February 2, 2009 between AMCOL International Corporation
      and Gary L. Castagna (2)10.4
                
                Employment
      Agreement dated February 2, 2009 between AMCOL International Corporation
      and Ryan F. McKendrick (2)10.5
                
                Employment
      Agreement dated February 2, 2009 between AMCOL International Corporation
      and Donald W. Pearson (2)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 February 13,
  2009.
 (2)
              Exhibit
      is incorporated by reference to the Company’s Form 8-K filed with the
      Securities and Exchange Commission on February 5,
  2009.
  32