-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LMp3Iq6Sxg+kTK82uMRzNr0dy/WqnyWQW+OGzEif3+gWX5sViMM7/FlSADqkCe5j KeVg1gDukAoQ6s7ocVSrLQ== 0000813621-99-000006.txt : 19990721 0000813621-99-000006.hdr.sgml : 19990721 ACCESSION NUMBER: 0000813621-99-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990720 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMCOL INTERNATIONAL CORP CENTRAL INDEX KEY: 0000813621 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 360724340 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14447 FILM NUMBER: 99667262 BUSINESS ADDRESS: STREET 1: 1500 W SHURE DR STREET 2: ONE NORTH ARLINGTON CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60004-7803 BUSINESS PHONE: 8473948730 MAIL ADDRESS: STREET 1: 1500 W SHURE DR STREET 2: 1500 W SHURE DR SUITE 500 CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60004-7803 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN COLLOID CO DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-15661 AMCOL INTERNATIONAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 36-0724340 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
1500 West Shure Drive, Suite 500, Arlington Heights, Illinois 60004-7803 (Address of principal executive offices) (Zip Code) (847) 394-8730 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at July 16, 1999 (Common stock, $.01 par value) 26,742,529 AMCOL INTERNATIONAL CORPORATION INDEX Page No. Part I - Financial Information Item 1 Financial Statements Condensed Consolidated Balance Sheet - June 30, 1999 and December 31, 1998 1 Condensed Consolidated Statement of Operations - six months and three months ended June 30, 1999 and 1998 2 Condensed Consolidated Statement of Cash Flows - six months ended June 30, 1999 and 1998 3 Notes to Condensed Consolidated Financial Statements 4 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 5 Item 3 Quantitative and Qualitative Disclosure About Market Risk 11 Part II - Other Information Item 4 Submission of Matters to a Vote of Security Holders 12 Item 6 Exhibits and Reports on Form 8-K 12 Part I, Item 1 - FINANCIAL INFORMATION AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands) ASSETS
June 30, December 31, 1999 1998 --------------------- ------------------- Current assets: * Cash and cash equivalents $ 5,009 $ 2,758 Accounts receivable, net 106,743 100,074 Inventories 42,190 52,093 Prepaid expenses 6,273 5,444 Current deferred tax asset 3,711 3,707 Total current assets 163,926 164,076 Investment in and advances to joint ventures 9,259 4,556 Property, plant, equipment and mineral reserves 337,549 325,681 Less accumulated depreciation 166,859 154,203 170,690 171,478 Intangible assets, net 14,999 16,308 Other long-term assets, net 1,286 1,446 $ 360,160 $ 357,864 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities of debt $ 3,789 $ 17,117 Accounts payable 21,223 21,969 Accrued liabilities 37,098 34,997 Total current liabilities 62,110 74,083 Long-term debt 102,962 96,268 Deferred credits and other liabilities 15,149 14,599 Stockholders' equity: Common stock 320 320 Additional paid-in capital 76,045 76,238 Foreign currency translation adjustment (3,072) (1,756) Retained earnings 137,274 127,262 Treasury stock (30,628) (29,150) 179,939 172,914 $ 360,160 $ 357,864
*Condensed from audited financial statements. The accompanying notes are an integral part of these condensed financial statements. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In thousands, except number of shares and per share data)
Six Months Ended June 30, Three Months Ended June 30, ---------------------------------- ----------------------------------- 1999 1998 1999 1998 --------------- --------------- --------------- --------------- Net sales $ 270,829 $ 247,192 $ 141,870 $ 125,635 Cost of sales 207,434 196,572 108,828 98,550 Gross profit 63,395 50,620 33,042 27,085 General, selling and administrative expenses 38,733 31,784 19,122 16,094 Operating profit 24,662 18,836 13,920 10,991 Other income (expense): Interest expense, net (3,660) (4,001) (1,791) (1,890) Other income, net (119) (435) (110) (104) (3,779) (4,436) (1,901) (1,994) Income before income taxes and minority interests 20,883 14,400 12,019 8,997 Income taxes 7,519 5,184 4,328 3,239 Minority interests in income of joint ventures 124 - 58 - Net income $ 13,488 $ 9,216 7,749 5,758 Weighted average common shares 26,761,617 28,353,185 26,733,521 28,216,067 Weighted average common and common equivalent shares 27,070,269 28,940,594 27,141,612 28,766,742 Earnings per share Basic $ .50 $ .33 $ .29 $ .20 Diluted $ .50 $ .32 $ .29 $ .20 Dividends declared per share $ .13 $ .11 $ .07 $ .055
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (In thousands)
Six Months Ended June 30, Three Months Ended June 30, ---------------------------------- ---------------------------------- 1999 1998 1999 1998 --------------- -------------- --------------- --------------- Net income $ 13,488 $ 9,216 $ 7,749 $ 5,758 Other comprehensive income: Foreign currency translation adjustment (1,316) 246 (375) (301) Comprehensive income $ 12,172 $ 9,462 $ 7,374 $ 5,457
The accompanying notes are an integral part of these condensed financial statements. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (In thousands)
Six Months Ended June 30, ---------------------------------------------- 1999 1998 -------------------- -------------------- Cash flow from operating activities: Net income $ 13,488 $ 9,216 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization 18,356 16,220 Other 1,627 1,171 (Increase)/decrease in current assets 1,305 (11,656) Increase in current liabilities 1,355 4,935 Net cash provided by operations 36,131 19,886 Cash flow from investing activities: Acquisition of land, mineral reserves, depreciable and intangible assets (19,588) (15,336) Sale of product line and mineral reserves - 13,176 Other (2,511) (2,143) Net cash used in investing activities (22,099) (4,303) Cash flow from financing activities: Net change in outstanding debt (6,634) 575 Dividends paid (3,476) (3,123) Treasury stock transactions (1,671) (8,954) Net cash used by financing activities (11,781) (11,502) Net increase in cash and cash equivalents 2,251 4,081 Cash and cash equivalents at beginning of period 2,758 3,077 Cash and cash equivalents at end of period $ 5,009 $ 7,158 Supplemental Disclosure of Cash Flows Information Actual cash paid for: Interest $ 3,315 $ 4,110 Income taxes $ 8,973 $ 1,793
The accompanying notes are an integral part of these condensed financial statements. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (In thousands) Note 1: BASIS OF PRESENTATION The financial information included herein, other than the condensed consolidated balance sheet as of December 31, 1998, has been prepared by management without audit by independent certified public accountants who do not express an opinion thereon. The condensed consolidated balance sheet as of December 31, 1998, has been derived from and does not include all the disclosures contained in the audited consolidated financial statements for the year ended December 31, 1998. The information furnished herein includes all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position and operating results of the interim periods, and all such adjustments are of a normal recurring nature. Management recommends the accompanying consolidated financial information be read in conjunction with the consolidated financial statements and related notes included in the Company's 1998 Form 10-K, which accompanies the 1998 Corporate Report. The results of operations for the six-month period ended June 30, 1999, are not necessarily indicative of the results to be expected for the full year. Note 2: INVENTORIES Inventories at June 30, 1999 have been valued using the same methods as at December 31, 1998. The composition of inventories at June 30, 1999 and December 31, 1998, was as follows:
June 30, 1999 December 31, 1998 ----------------------- ------------------------- Crude stockpile and in-process inventories $ 28,742 $ 36,699 Other raw material, container and supplies inventories 13,448 15,394 $ 42,190 $ 52,093
Note 3: EARNINGS PER SHARE Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing the net income by the weighted average common shares outstanding after consideration of the dilutive effect of stock options outstanding at the end of each period. Note 4: DERIVATIVE FINANCIAL INSTRUMENTS AND MARKET RISKS From time to time, the Company uses financial derivatives, principally swaps, forward contracts and options in its management of foreign currency and interest rate exposures. These contracts hedge transactions and balances for periods consistent with committed exposures. As of June 30, 1999, derivatives outstanding were related to foreign currency hedging and an interest rate swap with a notional amount on $15 million of the outstanding revolving credit. Item 2 - AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of the Company's financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Six Months Ended June 30, 1999 vs. 1998 Net sales increased by $23.6 million, or 9.6%, while gross profit increased by $12.8 million, or 25.2%, and operating profit increased by $5.8 million, or 30.9%. Lower polymer raw material costs, higher utilization of polymer plant capacity and better results from the minerals segment accounted for the improvement in operating profit. Net interest expense decreased by $.3 million, or 8.5%, as a result of lower average debt levels and interest rates. Net income increased $4.3 million, or 46.4%, over the prior-year period. Earnings were $.50 per diluted share for the 1999 period, compared with $.32 per diluted share for the prior-year period on 6.5% fewer weighted average shares outstanding. A brief discussion by business segment follows:
Six Months Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Absorbent Polymers (Dollars in Thousands) $ Change % Change Net sales $ 122,931 100.0% $ 106,703 100.0% $ 16,228 15.2% Cost of sales 93,213 75.8% 85,448 80.1% Gross profit 29,718 24.2% 21,255 19.9% 8,463 39.8% General, selling and administrative expenses 8,218 6.7% 6,161 5.8% 2,057 33.4% Operating profit 21,500 17.5% 15,094 14.1% 6,406 42.4%
Revenues increased by $16.3 million, or 15.2%, over the prior year. Gross profit margins increased by 430 basis points, or 21.6%, from the prior year, primarily as a result of the lower raw material costs. Greater production volume also helped increase the gross profit margin. The increase in general, selling and administrative expenses is related to increased research and development expenditures, the staffing of the Thailand plant, higher occupancy costs and greater incentive compensation accruals.
Six Months Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Minerals (Dollars in Thousands) $ Change % Change Net sales $ 77,690 100.0% $ 83,883 100.0% $ (6,193) (7.4%) Cost of sales 60,979 78.5% 69,640 83.0% Gross profit 16,711 21.5% 14,243 17.0% 2,468 17.3% General, selling and administrative expenses 9,025 11.6% 8,502 10.1% 523 6.2% Operating profit 7,686 9.9% 5,741 6.9% 1,945 33.9%
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Sales decreased by $6.1 million, or 7.4%, from the prior-year period. Much of the sales shortfall from the prior-year period was accounted for by the absence of sales in 1999 from the U.S. fuller's earth minerals business which was sold in April, 1998. Sales to the U.S. metalcasting industry continue to show improvement over the prior year, offsetting lower sales to the oil well and iron ore pelletizing sectors. Gross profit margins improved by 450 basis points, or 26.5%. A more profitable domestic product mix accounted for the improvement. International general, selling and administrative expenses accounted for much of the change from the prior year.
Six Months Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Environmental (Dollars in Thousands) $ Change % Change Net sales $ 53,879 100.0% $ 42,241 100.0% $ 11,638 27.6% Cost of sales 38,740 71.9% 28,845 68.3% Gross profit 15,139 28.1% 13,396 31.7% 1,743 13.0% General, selling and administrative expenses 13,024 24.2% 10,520 24.9% 2,504 23.8% Operating profit 2,115 3.9% 2,876 6.8% (761) (26.5%)
Sales increased by $11.6 million, or 27.6%, with approximately 44% of the increase coming from acquisitions that were made late in the second quarter of 1998. Gross profit margins declined by 360 basis points, or 11.4%, primarily as a result of lower margins on the oil-related wastewater treatment business in non-U.S. markets, an inventory write-down in 1999, and higher sales allowances in 1999. General, selling and administrative expenses increased by $2.5 million, or 23.8%, reflecting higher international marketing costs and expanded international infrastructure.
Six Months Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Transportation (Dollars in Thousands) $ Change % Change Net sales $ 16,329 100.0% $ 14,366 100.0% $ 1,963 13.7% Cost of sales 14,502 88.8% 12,640 88.0% Gross profit 1,827 11.2% 1,726 12.0% 101 5.9% General, selling and administrative expenses 1,052 6.4% 1,000 7.0% 52 5.2% Operating profit 775 4.8% 726 5.0% 49 6.7%
Revenues increased $2.0 million, or 13.7%. Gross profit margins declined by 80 basis points, or 6.7%, as a result of lower brokerage margins. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Six Months Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Corporate (Dollars in Thousands) $ Change % Change General, selling and administrative expenses $ 7,414 $ 5,601 $ 1,813 32.4% Operating loss (7,414) (5,601) (1,813) 32.4%
Corporate costs include management information systems, human resources, investor relations and corporate communications, corporate finance and corporate governance. The start-up of the nanocomposite business is also included in the corporate costs. The $1.8 million increase in costs is primarily attributable to increased occupancy costs and higher incentive compensation accruals. Three Months Ended June 30, 1999 vs. 1998 Net sales increased by $16.2 million, or 12.9%, while gross profit increased by $6.0 million, or 22.0%, and operating profit increased by $2.9 million, or 26.6%. Net interest expense decreased by $.1 million, or 5.2%. Net income increased by $2.0 million, or 34.6%, over the prior-year quarter. Earnings were $.29 per diluted share for the 1999 quarter, compared with $.20 per diluted share for the prior-year quarter on 5.6% fewer weighted average shares outstanding. A brief discussion by business segment follows:
Quarter Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Absorbent Polymers (Dollars in Thousands) $ Change % Change Net sales $ 64,607 100.0% $ 52,047 100.0% $ 12,560 24.1% Cost of sales 48,604 75.2% 41,416 79.6% Gross profit 16,003 24.8% 10,631 20.4% 5,372 50.5% General, selling and administrative expenses 4,030 6.2% 3,071 5.9% 959 31.5% Operating profit 11,973 18.6% 7,560 14.5% 4,413 58.4%
Revenues increased by $12.6 million, or 24.1%, over the prior year. Sales volume for the 1999 quarter benefited from a spike in demand. It is anticipated that volume will fall in the next quarter before resuming a more normal pace of growth. Gross profit margins improved by 440 basis points, or 21.6% over the prior year, primarily as a result of lower raw material costs and improved capacity utilization. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Quarter Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Minerals (Dollars in Thousands) $ Change % Change Net sales $ 38,081 100.0% $ 39,495 100.0% $ (1,414) (3.6%) Cost of sales 30,026 78.9% 32,571 82.5% Gross profit 8,055 21.1% 6,924 17.5% 1,131 16.3% General, selling and administrative expenses 4,381 11.5% 4,169 10.6% 212 5.1% Operating profit 3,674 9.6% 2,755 6.9% 919 33.4%
Sales decreased by $1.4 million, or 3.6%, over the prior-year period, primarily as a result of lower sales from the acquired U.K. cat litter business. Gross profit margins improved by 360 basis points, or 20.6%, as a result of a more favorable U.S. sales mix. General, selling and administrative expenses in 1999 increased by 5.1% as a result of higher spending in overseas markets.
Quarter Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Environmental (Dollars in Thousands) $ Change % Change Net sales $ 30,697 100.0% $ 26,546 100.0% $ 4,151 15.6% Cost of sales 22,662 73.8% 17,911 67.5% Gross profit 8,035 26.2% 8,635 32.5% (600) (6.9%) General, selling and administrative expenses 6,642 21.6% 5,813 21.9% 829 14.3% Operating profit 1,393 4.6% 2,822 10.6% (1,429) (50.6%)
Sales increased by $4.2 million, or 15.6%. Approximately 25% of the sales increase came from acquisitions. Gross profit margins declined by 630 basis points, or 19.4%, primarily as a result of lower margins on the oil-related wastewater treatment business in non-U.S. markets, an inventory charge in 1999 and higher sales allowances in 1999. General, selling and administrative expenses increased by $.8 million, or 14.3%, reflecting higher international costs.
Quarter Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Transportation (Dollars in Thousands) $ Change % Change Net sales $ 8,485 100.0% $ 7,548 100.0% $ 937 12.4% Cost of sales 7,536 88.8% 6,653 88.1% Gross profit 949 11.2% 895 11.9% 54 6.0% General, selling and administrative expenses 522 6.2% 515 6.8% 7 1.4% Operating profit 427 5.0% 380 5.1% 47 12.4%
Revenues increased 12.4%, primarily as a result of increased business unrelated to the Company's other business activities. Lower gross margins reflected increased competition in the brokerage business. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Quarter Ended June 30, ------------------------------------------------------------------------------------- 1999 1998 1999 vs. 1998 ------------------------- ---------------------- --------------------------- Corporate (Dollars in Thousands) $ Change % Change General, selling and administrative expenses $ 3,547 $ 2,526 $ 1,021 40.4% Operating income (loss) (3,547) (2,526) (1,021) 40.4%
Higher occupancy costs and increased incentive compensation accruals accounted for much of the $1.0 million, or 40.4%, increase in corporate expenses. Liquidity and Capital Resources At June 30, 1999, the Company had outstanding debt of $106.8 million (including both long- and short-term debt) and cash of $5.0 million, compared with $113.3 million in debt and $2.8 million in cash at December 31, 1998. The long-term debt represented 36.4% of total capitalization at June 30, 1999, compared with 35.8% at December 31, 1998. The Company had a current ratio of 2.64-to-1 at June 30, 1999, with approximately $101.8 million in working capital, compared with 2.21-to-1 and $90.0 million, respectively, at December 31, 1998. During 1999, The Company generated $36.1 million in cash from operations, compared with $19.9 million for the previous year six-month period. The Company paid dividends of $3.5 million, acquired property, plant and equipment and intangible assets totaling $19.6 million, and repaid debt totaling $6.6 million. These expenditures, plus $1.7 million in net treasury share transactions, were funded from operations. The Company had $50.3 million in unused, committed credit lines at June 30, 1999. These credit facilities, in conjunction with funds generated from operations, are adequate to fund the capital expenditure program approved by the board of directors at this time. Year 2000 Issues In mid-1997, the Company started a Year 2000 date conversion project to address all necessary code changes, testing and implementation for all of its computer systems. Concurrently, the Company sent inquiries to its suppliers and other key third parties to assess their ability to become Year 2000 compliant in a timely manner. The internal evaluation stage is completed. The Company is still awaiting responses from some third parties. The implementation phase is in progress. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Year 2000 Issues (continued) Many of the Company's computer systems rely on purchased software for which the Company pays a maintenance fee. The maintenance fee covers the cost of system upgrades, including the update for Year 2000 issues. As of June 30, 1999, we have met our goal of completing the Year 2000 assessment, renovation and remediation of the Company's financial reporting system, network and telecommunications system and personal computer equipment. With respect to the Company's non-information technology systems, the Company has evaluated the presence of imbedded date chips in some of its plant machinery and equipment, and has completed the renovation or replacement as necessary. Costs and expenses incurred to date in addressing the Year 2000 issue have not been material, and based upon the Company's assessment and remediation efforts to date, future costs of conversion or upgrades are not expected to be material. The Company does not believe that there is a material risk to its business or financial condition related to its own systems from Year 2000 issues, but the Company has no control over the ability of its key suppliers and other key third parties to achieve Year 2000 compliance in a timely manner. For example, an interruption in the supply of power to its plants and the inability to ship the Company's products by rail are both issues that could have severe adverse consequences to the Company's ability to carry on its business at current profit levels. Should rail service become temporarily unavailable, the Company would likely ship product by truck, but at a higher cost. A prolonged interruption in the power supply to its major plants, in particular its absorbent polymer plants in Aberdeen, Mississippi, and in the United Kingdom, however, is a risk that is difficult to minimize. While the Company continues to focus on solutions for the Year 2000 issues, and expects to be Year 2000 compliant in a timely manner, a contingency plan is being developed. Such plan is intended to address the Company's response should it, or materially significant third parties, fail to achieve Year 2000 compliance in a timely manner. The contingency plan is expected to be finalized by September 30, 1999. In addition, the Company's systems disaster recovery planning is a comprehensive, ongoing process, which is updated as products are developed, tested and modified. Disaster recovery for financial and other strategic systems is provided at alternative locations serviced by third parties, or at Company-maintained facilities. AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Year 2000 Issues (continued) The Company's expectations about future costs necessary to achieve Year 2000 compliance, the impact on its operations and its ability to bring each of its systems into Year 2000 compliance are forward-looking statements subject to a number of uncertainties that could cause actual results to differ materially. Such factors include the following: (i) the Company has no control over the ability of its key suppliers and other third parties to achieve Year 2000 compliance; (ii) the nature and number of systems that require remediation may exceed the Company's expectations in terms of complexity and scope; (iii) the Company may not be able to complete all remediation and testing necessary in a timely manner; and (iv) the Company may not be successful in properly identifying all systems and programs that contain two-digit year codes. Forward-Looking Statements Certain statements made from time-to-time by the Company, including statements in the Management's Discussion and Analysis section above, 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 the Company or its operations that are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions, and statements relating to anticipated growth, levels of capital expenditures, future dividends, expansion into global markets and the development of new products. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The Company's 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, but not limited to the actual growth in AMCOL's various markets, utilization of AMCOL's plants, customer concentration in the absorbent polymers segment, competition in the absorbent polymers and minerals segments, operating costs, raw material prices, weather, currency exchange rates, currency devaluations, delays in development, production and marketing of new products, integration of acquired businesses, and other factors detailed from time-to-time in AMCOL's annual report and other reports filed with the Securities and Exchange Commission. Item 3 - Quantitative and Qualitative Disclosure About Market Risk The information required by this item is provided in Footnote 4 "Derivative Financial Instruments and Market Risks" under Item I. PART II - OTHER INFORMATION Item 4: Submission of Matters to a Vote of Security Holders (a) The Annual Stockholders Meeting of the Company was held on May 12, 1999. (b) At the Annual Stockholders Meeting, the Stockholders voted on the following uncontested matters. Each nominee for director was elected by a vote of the Stockholders; and each matter was approved by a vote of the Stockholders as follows: 1. Election of the below-named Nominees of the Board of Directors of AMCOL International Corporation: For Withheld ------------------------- ----------------------- Clarence O. Redman 23,454,867 265,452 Paul G. Shelton 23,483,073 237,246 Audrey Weaver 23,482,114 238,205 2. Ratification of Appointment of KPMG LLP as independent accountants for the Company for its 1999 fiscal year. For Against Abstain ----------------------- ----------------------- ------------------- 23,579,545 16,330 124,444 Item 6: Exhibits and Reports on Form 8-K (a) See Index to Exhibits immediately following the signature page. (b) No reports on Form 8-K have been filed during the quarter ended June 30, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMCOL INTERNATIONAL CORPORATION Date: July 20, 1999 /s/ Lawrence E. Washow Lawrence E. Washow President and Chief Operating Officer Date: July 20, 1999 /s/ Paul G. Shelton Paul G. Shelton Senior Vice President and Chief Financial Officer INDEX TO EXHIBITS
Exhibit Number 3.1 Restated Certificate of Incorporation of the Company (5), as amended (10), as amended (16) 3.2 Bylaws of the Company (10) 4 Article Four of the Company's Restated Certificate of Incorporation (5), as amended (16) 10.1 AMCOL International Corporation 1983 Incentive Stock Option Plan (1); as amended (3) 10.3 Lease Agreement for office space dated September 29, 1986, between the Company and American National Bank and Trust Company of Chicago; (1) First Amendment dated June 2, 1994 (8); Second Amendment dated June 2, 1997 (13) 10.4 AMCOL International Corporation 1987 Non-Qualified Stock Option Plan (2); as amended (6) 10.5 Change in Control Agreement dated April 1, 1997, by and between Registrant and John Hughes (12) 10.6 Change in Control Agreement dated April 1, 1997, by and between Registrant and Paul G. Shelton (12) 10.7 Change in Control Agreement dated February 16, 1998, by and between Registrant and Lawrence E. Washow (14) 10.8 Change in Control Agreement dated February 7, 1996, by and between Registrant and Roger P. Palmer (10) 10.9 Change in Control Agreement dated April 1, 1997, by and between Registrant and Peter L. Maul (12) 10.10 AMCOL International Corporation Dividend Reinvestment and Stock Purchase Plan (4); as amended (6) 10.11 AMCOL International Corporation 1993 Stock Plan, as amended and restated (10) 10.12 Credit Agreement by and among AMCOL International Corporation and Harris Trust and Savings Bank, individually and as agent, NBD Bank, LaSalle National Bank and the Northern Trust Company dated October 4, 1994, (7); as amended, First Amendment to Credit Agreement dated September 25, 1995 (9), as amended, Second Amendment to Credit Agreement dated March 28, 1996, Third Amendment to Credit Agreement dated September 12, 1996 (11) and Fourth Amendment to Credit Agreement dated December 15, 1998. 10.13 Note Agreement dated October 1, 1994, between AMCOL International Corporation and Principal Mutual Life Insurance Company, (7); as amended, First Amendment of Note Agreement dated September 30, 1996 (11); Second Amendment of Note Agreement dated December 15, 1998. 10.14 Change in Control Agreement dated August 21, 1996 by and between Registrant and Frank B. Wright, Jr. (11) 10.15 Change in Control Agreement dated February 17, 1998 by and between Registrant and Gary L. Castagna (14) 10.16 AMCOL International Corporation 1998 Long-Term Incentive Plan (15) 10.17 Change in Control Agreement dated February 4, 1999 by and between Registrant and Ryan F. McKendrick (17) 27 Financial Data Schedule
(1) Exhibit is incorporated by reference to the Registrant's Form 10 filed with the Securities and Exchange Commission on July 27, 1987. (2) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1988. (3) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1993. (4) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1992. (5) Exhibit is incorporated by reference to the Registrant's Form S-3 filed with the Securities and Exchange Commission on September 15, 1993. (6) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1993. (7) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and Exchange Commission for the quarter ended September 30, 1994. (8) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1994. (9) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and Exchange Commission for the quarter ended September 30, 1995. (10) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1995. (11) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1996. (12) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and Exchange Commission for the quarter ended March 31, 1997. (13) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and Exchange Commission for the quarter ended June 30, 1997. (14) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1997. (15) Exhibit is incorporated by reference to the Registrant's Form S-8 (File 333-56017) filed with the Securities and Exchange Commission on June 4, 1998. (16) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and Exchange Commission for the quarter ended June 30, 1998. (17) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1998.
EX-27 2 FDS
5 0000813621 AMCOL International Corporation 1,000 USD 6-MOS DEC-31-1999 JAN-1-1999 JUN-30-1999 1.00 5,009 0 110,380 4,095 42,190 163,926 337,641 166,859 360,160 62,110 0 0 0 320 0 360,160 270,829 270,829 207,434 246,167 119 0 3,660 20,883 7,519 13,488 0 0 0 13,488 .50 .50
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