-----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, Pl1ZT38KLIe3C/Q+Y+tsCC51N12fgkBPY1BgSFZRTZsapbljjt0xnC4a/6qOzTAV +uEd8UvbNSzFYytg5SrGug== 0000891092-04-003954.txt : 20040809 0000891092-04-003954.hdr.sgml : 20040809 20040809081453 ACCESSION NUMBER: 0000891092-04-003954 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040809 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: 1934 Act SEC FILE NUMBER: 001-14447 FILM NUMBER: 04959467 BUSINESS ADDRESS: STREET 1: 1500 W SHURE DR CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60004-7803 BUSINESS PHONE: 8473948730 MAIL ADDRESS: STREET 1: 1500 W SHURE DR CITY: ARLINGTON HEIGHTS STATE: IL ZIP: 60004-7803 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN COLLOID CO DATE OF NAME CHANGE: 19920703 10-Q 1 e18765_10q.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-Q (Mark One) ( x ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2004 ------------------------------------------------- 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 (IRS Employer incorporation or organization) 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12(b)-2 of the Exchange Act). 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 21, 2004 - ------------------------------ ---------------------------- (Common stock, $.01 par value) 29,269,176 Shares AMCOL INTERNATIONAL CORPORATION INDEX Page No. -------- Part I - Financial Information Item 1 Financial Statements Condensed Consolidated Balance Sheets - June 30, 2004 and December 31, 2003 1 Condensed Consolidated Statements of Operations - three and six months ended June 30, 2004 and 2003 2 Condensed Consolidated Statements of Comprehensive Income - three and six months ended June 30, 2004 and 2003 2 Condensed Consolidated Statements of Cash Flows - three and six months ended June 30, 2004 and 2003 3 Notes to Condensed Consolidated Financial Statements 4 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3 Quantitative and Qualitative Disclosures About Market Risk 18 Item 4 Controls and Procedures 18 Part II - Other Information Item 2e Company Repurchases of Company Stock 19 Item 6 Exhibits and Reports on Form 8-K 19 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) - -------------------------------------------------------------------------------- ASSETS June 30, December 31, 2004 2003 (unaudited) * - -------------------------------------------------------------------------------- Current assets: Cash $ 15,993 $ 13,525 Accounts receivable, net 86,642 60,997 Inventories 51,966 46,182 Prepaid expenses 9,267 5,858 Current deferred tax assets 5,229 3,289 Income taxes receivable -- 8,445 -------- -------- Total current assets 169,097 138,296 -------- -------- Investment in and advances to joint ventures 13,432 13,068 -------- -------- Property, plant, equipment, and mineral rights and reserves: Land and mineral rights 10,460 10,275 Depreciable assets 234,345 226,221 -------- -------- 244,805 236,496 Less: accumulated depreciation 157,459 149,500 -------- -------- 87,346 86,996 -------- -------- Other assets: Goodwill 16,339 5,633 Intangible assets, net 1,421 1,345 Other assets 9,294 8,649 Deferred tax assets 4,721 4,790 -------- -------- 31,775 20,417 -------- -------- $301,650 $258,777 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------- June 30, December 31, 2004 2003 (unaudited) * - -------------------------------------------------------------------------------- Current liabilities: Notes payable $ 125 $ 844 Accounts payable 25,287 20,365 Income tax payable 3,355 -- Accrued liabilities 29,306 25,162 -------- -------- Total current liabilities 58,073 46,371 -------- -------- Long-term debt 31,331 9,006 -------- -------- Minority interests in subsidiaries 117 116 Other liabilities 19,787 18,386 -------- -------- 19,904 18,502 -------- -------- Stockholders' equity: Common stock 320 320 Additional paid in capital 68,403 67,513 Retained earnings 134,359 125,627 Accumulated other comprehensive income 7,759 8,372 -------- -------- 210,841 201,832 Less: Treasury stock 18,499 16,934 -------- -------- 192,342 184,898 -------- -------- $301,650 $258,777 ======== ======== *Condensed from audited financial statements The accompanying notes are an integral part of these condensed consolidated financial statements. 1 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share amounts)
- ------------------------------------------------------------------------------------------------------------ Six Months Ended Three Months Ended June 30, June 30, ----------------------------------------------------------- 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------ Net sales $ 218,995 $ 172,720 $ 117,028 $ 93,253 Cost of sales 165,511 130,900 88,080 70,057 ------------ ------------ ------------ ------------ Gross profit 53,484 41,820 28,948 23,196 General, selling and administrative expenses 35,143 29,223 17,847 14,929 ------------ ------------ ------------ ------------ Operating profit 18,341 12,597 11,101 8,267 ------------ ------------ ------------ ------------ Other income (expense): Interest expense, net (390) (202) (311) (122) Other, net 82 162 39 130 ------------ ------------ ------------ ------------ (308) (40) (272) 8 ------------ ------------ ------------ ------------ Income before income taxes and equity 18,033 12,557 10,829 8,275 in income of joint ventures Income tax expense 5,679 4,269 3,410 2,814 ------------ ------------ ------------ ------------ Income before equity in income of 12,354 8,288 7,419 5,461 joint ventures Income from joint ventures 469 349 321 246 ------------ ------------ ------------ ------------ Net income $ 12,823 $ 8,637 $ 7,740 $ 5,707 ============ ============ ============ ============ Weighted average common shares outstanding 29,091,621 28,051,675 29,090,587 28,108,456 ============ ============ ============ ============ Weighted average common and common equivalent shares outstanding 30,859,545 29,745,805 30,835,691 29,896,941 ============ ============ ============ ============ Basic earnings per share $ 0.44 $ 0.30 $ 0.27 $ 0.20 ============ ============ ============ ============ Diluted earnings per share $ 0.42 $ 0.29 $ 0.25 $ 0.19 ============ ============ ============ ============ Dividends declared per share $ 0.14 $ 0.07 $ 0.07 $ 0.04 ============ ============ ============ ============
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In thousands)
- ----------------------------------------------------------------------------------------------------------- Six Months Ended Three Months Ended June 30, June 30, ---------------------------- ---------------------------- 2004 2003 2004 2003 ---------------------------- ---------------------------- Net income $ 12,823 $ 8,637 $ 7,740 $ 5,707 Other comprehensive income (loss): Reclassification of prior service cost (410) -- (410) -- Foreign currency translation adjustment (204) 2,286 (1,545) 3,832 ------------ ------------ ------------ ------------ Comprehensive income $ 12,209 $ 10,923 $ 5,785 $ 9,539 ============ ============ ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) - -------------------------------------------------------------------------------- Six Months Ended June 30, ----------------------- 2004 2003 - ------------------------------------------------------------------------------- Cash flow from operating activities: Net income $ 12,823 $ 8,637 Adjustments to reconcile from net income to net cash used in operating activities: Depreciation, depletion, and amortization 9,398 8,756 Changes in assets and liabilities, net of effects of acquisitions: Increase in current assets (20,568) (17,221) Decrease (increase) in noncurrent assets (1,511) 35 Increase in current liabilities 8,371 1,353 Increase in noncurrent liabilities 1,135 240 Other 1,515 (153) -------- -------- Net cash provided by operating activities 11,163 1,647 -------- -------- Cash flow from investing activities: Acquisition of land, mineral rights, and depreciable assets (7,446) (6,323) Acquisitions, net of cash acquired (13,335) -- Other 1,629 (978) -------- -------- Net cash used in investing activities (19,152) (7,301) -------- -------- Cash flow from financing activities: Net change in outstanding debt 17,651 4,043 Proceeds from sales of treasury stock 746 1,085 Purchases of treasury stock (2,879) (1,593) Dividends paid (4,091) (1,965) -------- -------- Net cash provided by financing activities 11,427 1,570 -------- -------- Effect of foreign currency rate changes on cash (970) 1,597 -------- -------- Net (increase) in cash and cash equivalents 2,468 (2,487) -------- -------- Cash and cash equivalents at beginning of period 13,525 15,597 -------- -------- Cash and cash equivalents at end of period $ 15,993 $ 13,110 ======== ======== Supplemental disclosures of cash flow information: Cash paid for: Interest $ 186 $ 252 ======== ======== Income taxes $ 3,022 $ 2,180 ======== ======== The accompanying notes are an integral part of these condensed consolidated financial statements. 3 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (In thousands, except share and per share amounts) Note 1: 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, 2003, is unaudited. The condensed consolidated balance sheet as of December 31, 2003 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, 2003. The information furnished herein includes all adjustments that are, in the opinion of management, necessary for a fair statement of the results of operations and cash flows for the interim periods ended June 30, 2004 and 2003, and the financial position of the Company as of June 30, 2004, and all such adjustments are of a normal recurring nature. Management recommends that the accompanying condensed consolidated financial information be read in conjunction with the consolidated financial statements and related notes included in the Company's 2003 Annual Report on Form 10-K, which accompanies the 2003 Corporate Report. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full years. In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"), which addresses financial accounting and reporting for legal obligations associated with the retirement of tangible long-lived assets and the related asset retirement costs. SFAS 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The Company adopted SFAS No. 143 as of January 1, 2003, and determined that no material adjustments were required to the amounts previously recorded. At June 30, 2004, the Company's recorded reclamation obligation was $5,142. During the quarter ended June 30, 2004, the obligation was reduced by $240 due to payments made in relation to normal mining activities offset by accretion and recognition of additional obligations resulting from normal mining activities. Note 2: INVENTORIES Inventories at June 30, 2004 have been valued using the same methods as at December 31, 2003. The composition of inventories at June 30, 2004 and December 31, 2003 was as follows: - -------------------------------------------------------------------------------- June 30, December 31, 2004 2003 - -------------------------------------------------------------------------------- Advance mining $ 2,383 $ 2,605 Crude stockpile inventories 15,313 14,410 In-process inventories 18,726 14,190 Other raw material, container, and supplies inventories 15,544 14,977 ------- ------- $51,966 $46,182 ======= ======= 4 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (In thousands, except share and per share amounts) (Continued) Note 3: EARNINGS PER SHARE Basic earnings per share were computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted earnings per share were computed by dividing net income by the weighted average common shares outstanding after consideration of the dilutive effect of stock options outstanding during each period. For the quarter ended June 30, 2004, the exercise price of 294,650 outstanding stock options was above the average market price, and therefore these options were excluded from the computation of diluted earnings per share. For the six months ended June 30, 2004, the exercise price of all the outstanding stock options was below the average market price and therefore the impact of these options was included in the computation of diluted earnings per share.
- ---------------------------------------------------------------------------------------------------- Six Months Ended Three Months Ended June 30, June 30, ------------------------------------------------- 2004 2003 2004 2003 - ---------------------------------------------------------------------------------------------------- Weighted average of common shares outstanding 29,091,621 28,051,675 29,090,587 28,108,456 Dilutive impact of stock options 1,767,924 1,694,130 1,745,104 1,788,485 Weighted average of common and common equivalent shares for the period 30,859,545 29,745,805 30,835,691 29,896,941 ========== ========== ========== ========== Common shares outstanding 29,203,355 28,262,630 29,203,355 28,262,630 ========== ========== ========== ==========
Note 4: BUSINESS SEGMENT INFORMATION The Company operates in two major industry segments: minerals and environmental. The Company also operates a transportation business. 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 transportation segment includes a long-haul trucking business and a freight brokerage business, which provide services to both the Company's plants and outside customers. The Company identifies segments based on management responsibility and the nature of the business activities of each component of the Company. Intersegment sales are insignificant, other than intersegment shipping, which is disclosed in the following table. The Company measures segment performance based on operating profit. Operating profit is defined as sales less cost of sales and general, selling and administrative expenses related to a segment's operations. The costs deducted to arrive at operating profit do not include interest or income taxes. Segment assets are those assets used in the Company's operations in that segment. Corporate assets include cash and cash equivalents, corporate leasehold improvements, the nanocomposite plant investment and other miscellaneous equipment. 5 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (In thousands, except share and per share amounts) (Continued) The following summaries set forth certain financial information by business segment for the six and three months ended June 30, 2004 and 2003 and as of June 30, 2004 and December 31, 2003. - ------------------------------------------------------------------------------- Six Months Ended Three Months Ended June 30, June 30, ----------------------------------------------------- 2004 2003 2004 2003 - -------------------------------------------------------------------------------- Business Segment: Revenues: Minerals $ 130,472 $ 103,719 $ 66,417 $ 53,542 Environmental 76,517 57,402 44,750 33,913 Transportation 19,390 18,187 10,058 9,390 Intersegment shipping (7,384) (6,588) (4,197) (3,592) --------- --------- --------- --------- Total $ 218,995 $ 172,720 $ 117,028 $ 93,253 ========= ========= ========= ========= Operating profit (loss): Minerals $ 15,673 $ 10,799 $ 8,238 $ 5,882 Environmental 9,231 7,704 6,152 5,321 Transportation 837 775 451 399 Corporate (7,400) (6,681) (3,740) (3,335) --------- --------- --------- --------- Total $ 18,341 $ 12,597 $ 11,101 $ 8,267 ========= ========= ========= ========= June 30, Dec. 31, 2004 2003 -------------------------- Assets: Minerals $155,067 $144,973 Environmental 119,563 82,453 Transportation 2,243 1,891 Corporate 24,777 29,460 -------- -------- Total $301,650 $258,777 ======== ======== At June 30, 2004 and December 31, 2003, goodwill for the minerals segment was $5,024 and $5,394; and for the environmental segment was $11,315 and $239. The purchase price allocation of acquisitions made within the past 12 months have not been finalized as management is in the process of determining the fair values of the assets acquired and liabilities assumed. Note 5: STOCK OPTION PLANS Prior to 2003, the Company accounted for its fixed plan stock options under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost was reflected in net income prior to 2003, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Effective January 1, 2003, the Company adopted the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, and elected to apply those provisions prospectively, in accordance with SFAS No. 6 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (In thousands, except share and per share amounts) (Continued) 148, Accounting for Stock-Based Compensation-amendment to SFAS 123, to all employee awards granted, modified, or settled after January 1, 2003. Awards under the Company's plans vest over three years. Therefore, the cost related to stock-based employee compensation included in the determination of net income for 2003 and 2004 is less than that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of Statement No. 123. Results for prior years have not been restated. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period.
- ------------------------------------------------------------------------------------------------ Six Months Ended Three Months Ended March 31, June 30, June 30, ---------------------------------------------------- 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------ Net income, as reported $ 12,823 $ 8,637 $ 7,740 $ 5,707 Add: Stock-based employee compensation expense included in reported net income, net of related tax effects 635 132 303 66 Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects (784) (414) (378) (207) ---------- ---------- ---------- ---------- Pro forma net income $ 12,674 $ 8,355 $ 7,665 $ 5,566 ========== ========== ========== ========== Earnings per share: Basic - as reported $ 0.44 $ 0.30 $ 0.27 $ 0.20 Basic - pro forma $ 0.44 $ 0.30 $ 0.26 $ 0.20 Diluted - as reported $ 0.42 $ 0.29 $ 0.25 $ 0.19 Diluted - pro forma $ 0.41 $ 0.28 $ 0.25 $ 0.19
Note 6: COMPONENTS OF PENSION AND OTHER RETIREMENT BENEFIT COST - -------------------------------------------------------------------------------- Six Months Three Months Ended Ended June 30, June 30, --------------------------------- 2004 2003 2004 2003 - -------------------------------------------------------------------------------- Service cost $ 724 $ 664 $ 362 $ 332 Interest cost 914 876 457 438 Expected return on plan assets (968) (788) (484) (394) Amortization of transition (asset) obligation (68) (68) (34) (34) Amortization of prior service cost 14 14 7 7 Amortization of net (gain) loss -- 34 -- 17 ----- ----- ----- ----- Net periodic benefit cost $ 616 $ 732 $ 308 $ 366 ===== ===== ===== ===== 7 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (In thousands, except share and per share amounts) (Continued) Employer Contributions The Company previously disclosed in its financial statements for the year ended December 31, 2003, that it expected to contribute $1 million to its pension plan in 2004. As of June 30, 2004, that full contribution has been made. Note 7: ACQUISITIONS The Company acquired all of the outstanding stock in two individually insignificant acquisitions during the period ended June 30, 2004. Net cash paid and notes payable assumed were $13,335. Goodwill was $11,307. These acquisitions, individually and in aggregate, did not materially affect the Company's operating results or financial position in the periods presented. The purchase price allocations of acquisitions made within the past 12 months have not been finalized as management is in the process of determining the fair values of the acquired assets and liabilities assumed. 8 Item 2: AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Following is a discussion and analysis that describes certain factors that have affected, and may continue to affect, our financial position and operating results. This discussion should be read with the accompanying condensed consolidated financial statements. Three months ended June 30, 2004 vs. June 30, 2003: Results of operations (in millions): Net sales: 2004 2003 % Change ---- ---- -------- $ 117.0 $ 93.3 25% Net sales from businesses acquired since the third quarter of 2003 accounted for 37% of the growth over the prior year period, while favorable foreign currency changes accounted for 11% of the increase in net sales. The remainder of the increase was due to organic growth. On an operating segment basis, minerals accounted for 54% of the increase in net sales while environmental contributed 46% of the growth. Gross profit: 2004 2003 % Change ---- ---- -------- $ 28.9 $ 23.2 25% Margin 24.7% 24.9% N/A Gross profit improved over the second quarter of 2003 in conjunction with the increase in net sales. Gross margin declined by 20 basis points due to relatively lower gross profit earned from businesses acquired since the third quarter of 2003 that were reported in the environmental segment this period. General, selling & administration expenses 2004 2003 % Change ---- ---- -------- $ 17.8 $ 14.9 20% Higher compensation and benefit costs accounted for the majority of the increase over the 2003 second quarter. We had higher employment levels compared with the prior year due to acquired businesses and staffing increases. Stock-based compensation costs accounted for $0.4 million of the increase over the prior year period. Research and development expenses were $1.4 million in the second quarter of 2004 compared with $1.2 million in last year's period. Operating profit: 2004 2003 % Change ---- ---- -------- $ 11.1 $ 8.3 34% Margin 9.5% 8.9% N/A Acquisitions and favorable foreign currency exchange rates accounted for 30% and 11%, respectively, of the increase in operating profit over the 2003 second quarter. Operating profit improved with the increase in gross profit and net sales. The 60 basis point improvement in operating margin reflected lower growth in operating expenses compared to gross profit gains over the prior year period. 9 Interest expense, net 2004 2003 % Change ---- ---- -------- $ 0.3 $ 0.1 200% Interest expense in the current year period increased due to higher average long-term debt compared with the prior year period. The increase in long-term debt was attributed to acquisitions completed in the first quarter of 2004 and an increase in working capital funding over the course of the second quarter of this year. Income taxes: 2004 2003 % Change ---- ---- -------- $ 3.4 $ 2.8 21% Effective tax rate 31.5% 34.0% N/A Income tax expense increased due to higher earnings before taxes. Businesses with lower statutory income tax rates represented a greater proportion of pre-tax earnings in the current year period compared with the second quarter of 2003. Net income: 2004 2003 % Change ---- ---- -------- $ 7.7 $ 5.7 35% Margin 6.6% 6.1% N/A Net income improved in conjunction with the increase in operating profit and the lower effective income tax rate in the 2004 quarter. Diluted earnings per share: 2004 2003 % Change ---- ---- -------- $ 0.25 $ 0.19 32% Earnings from acquired businesses, favorable foreign currency exchange rates and a lower effective income tax rate each accounted for $0.01 per share of the increase over the second quarter of 2003. Weighted average common and common equivalent shares outstanding increased by 3% over the 2003 quarter, which negatively impacted earnings per share by $0.01 in the 2004 period. Stock option exercises by employees throughout 2004 resulted in higher weighted average shares outstanding during the second quarter of the current reporting period. Organic sales and operating profit growth contributed the remaining $0.04 per share of the increase over the second quarter of 2003. Segment analysis: Following is a review of operating results for each of our four reporting segments:
- ---------------------------------------------------------------------------------------- Minerals Three Months Ended June 30, ----------------------------------------------------------- 2004 2003 2004 vs. 2003 - ---------------------------------------------------------------------------------------- (Dollars in Thousands) - ---------------------------------------------------------------------------------------- Product sales $60,325 90.8% $47,842 89.4% Shipping revenue 6,092 9.2% 5,700 10.6% ------- ------- ------- ------- Net sales 66,417 100.0% 53,542 100.0% 12,875 24.0% ------- ------- ------- ------- Cost of sales - product 46,838 70.5% 37,345 69.7% Cost of sales - shipping 6,092 9.2% 5,700 10.6% ------- ------- ------- ------- Cost of sales 52,930 79.7% 43,045 80.4% ------- ------- ------- ------- Gross profit 13,487 20.3% 10,497 19.6% 2,990 28.5% General, selling and administrative expenses 5,249 7.9% 4,615 8.6% 634 13.7% ------- ------- ------- ------- ------- Operating profit 8,238 12.4% 5,882 11.0% 2,356 40.1%
10 Acquired businesses and favorable foreign currency exchange rates accounted for 13% and 11%, respectively, of the increase in net sales. Organic sales growth was primarily attributed to the metalcasting and specialty minerals businesses. Domestic metalcasting sales were positively impacted by higher demand from rail car producers as well as automotive component manufacturers. The metalcasting markets in the Asia/Pacific region also continued to benefit from strong demand from automotive and transportation equipment component manufacturers. Specialty minerals experienced higher demand from detergent producers while the health and beauty business continued to grow its customer base. Gross profit rose in conjunction with the increase in sales. Gross margin improved by 70 basis points over the prior year due to higher production volume and pricing in the metalcasting and specialty minerals business units. General, selling and administrative expenses increased primarily due to higher compensation and benefit costs. Higher foreign currency exchange rates also contributed to the increase over the prior year quarter. Operating profit improved over the second quarter of 2003 due to the increase in sales and gross profit. Operating margin increased by 140 basis points due to the expansion in gross margin and a lower rate of increase in general, selling and administrative expenses.
- --------------------------------------------------------------------------------------- Environmental Three Months Ended June 30, ------------------------------------------------------------ 2004 2003 2004 vs. 2003 - --------------------------------------------------------------------------------------- (Dollars in Thousands) - --------------------------------------------------------------------------------------- Product sales $41,406 92.5% $31,270 92.2% Shipping revenue 3,344 7.5% 2,643 7.8% ------- ------- ------- ------- Net sales 44,750 100.0% 33,913 100.0% 10,837 32.0% ------- ------- ------- ------- Cost of sales - product 27,057 60.5% 19,596 57.8% Cost of sales - shipping 3,344 7.5% 2,643 7.8% ------- ------- ------- ------- Cost of sales 30,401 67.9% 22,239 65.6% ------- ------- ------- ------- Gross profit 14,349 32.1% 11,674 34.4% 2,675 22.9% General, selling and administrative expenses 8,197 18.3% 6,353 18.7% 1,844 29.0% ------- ------- ------- ------- ------- Operating profit 6,152 13.7% 5,321 15.7% 831 15.6%
65% of the increase in net sales was attributed to businesses acquired since the third quarter of 2003. Favorable currency exchange rates accounted for another 12% of the increase. Lining technologies represented 49% of net sales for the period, while building materials and water treatment comprised 26% and 25% of net sales, respectively. Gross profit grew in conjunction with the increase in net sales, however, gross margin declined by 230 basis points from the second quarter of 2003. Acquired businesses earned relatively lower gross margins than existing businesses. Gross margins earned from existing businesses were comparable to second quarter of 2003. General, selling and administrative expenses increased primarily due to higher personnel levels and associated benefit costs. The personnel increase was primarily associated with acquisitions 11 completed since the third quarter of 2003. Higher foreign currency exchange rates also contributed to the increase over 2003. Operating profit grew due to the increase in net sales and gross profit over the prior year period. Operating margins declined by 200 basis points. This was caused by the decline in gross margin described above.
- --------------------------------------------------------------------------------------- Transportation Three Months Ended June 30, ------------------------------------------------------------- 2004 2003 2004 vs. 2003 - --------------------------------------------------------------------------------------- (Dollars in Thousands) - --------------------------------------------------------------------------------------- Net sales $10,058 100.0% $ 9,390 100.0% $ 668 7.1% Cost of sales 8,946 88.9% 8,365 89.1% ------- ------- ------- ------- Gross profit 1,112 11.1% 1,025 10.9% 87 8.5% General, selling and administrative expenses 661 6.6% 626 6.7% 35 5.6% ------- ------- ------- ------- ------- Operating profit 451 4.5% 399 4.2% 52 13.0%
Net sales improved due to higher traffic levels. Higher intersegment revenues accounted for the majority of the increase. Gross profit improved over the second quarter of 2003 by 20 basis points primarily due to higher pricing. General, selling and administrative expenses increased due to higher personnel levels. - ------------------------------------------------------------------------- Corporate Three Months Ended June 30, ------------------------------------------- 2004 2003 2004 vs. 2003 - ------------------------------------------------------------------------- (Dollars in Thousands) - ------------------------------------------------------------------------- Intersegment shipping sales $(4,197) $(3,592) Intersegment shipping costs (4,197) (3,592) ------- ------- Gross profit -- -- Corporate general, selling and administrative expenses 2,848 2,415 433 17.9% Nanocomposite business development expenses 892 920 (28) -3.0% ------- ------- ------- Operating loss (3,740) (3,335) (405) 12.1% Intersegment shipping revenues and costs are related to billings from the transportation segment to the domestic minerals and environmental segments for services. These services are invoiced to the minerals and environmental segments at arms-length rates and those costs are subsequently charged to customers. Intersegment sales and costs reported above reflect the elimination of these transactions. Corporate expenses increased primarily due to higher stock-based compensation costs recorded in the current year. Corporate personnel levels and base compensation costs were comparable to the prior year period. Nanocomposite operating expenses declined from the first quarter of 2003 due to an increase in revenues and lower spending on activities that are now funded by our alliance partners. The business has alliance agreements with Mitsubishi Gas Chemical Company and Poly One Corporation that focus on developing certain markets for nanocomposites. 12 Six months ended June 30, 2004 vs. 2003 Results of operations (in millions): Net sales: 2004 2003 % Change ---- ---- -------- $ 219.0 $172.7 27% Net sales from businesses acquired since the third quarter of 2003 accounted for 30% of the growth over the prior year period, while favorable foreign currency changes accounted for 14% of the increase in net sales. On an operating segment basis, minerals accounted for 58% of the increase in net sales while environmental contributed 41% of the growth. The remaining increase in net sales was contributed by the transportation segment. Gross profit: 2004 2003 % Change ---- ---- -------- $ 53.5 $ 41.8 28% Margin 24.4% 24.2% N/A Gross profit improved over the first half of 2003 in conjunction with the increase in net sales. An increase in the minerals segment gross margin contributed to the 20 basis point improvement in consolidated results. General, selling & administration expenses 2004 2003 % Change ---- ---- -------- $ 35.1 $ 29.2 20% Higher compensation and benefit costs accounted for the majority of the increase over the 2003 second quarter. We had higher personnel levels in the first half of 2004 due to acquisitions and an increase in research and development staff. Stock-based compensation costs accounted for $0.7 million of the increase over the prior year period. Research and development expenses were $2.8 million in the first half of 2004 compared with $2.6 million in last year's period. Operating profit: 2004 2003 % Change ---- ---- -------- $ 18.3 $ 12.6 45% Margin 8.4% 7.3% N/A Acquisitions and favorable foreign currency exchange rates accounted for 23% and 13%, respectively, of the increase in operating profit over the 2003 six month period. Operating profit improved with the increase in gross profit and net sales. The operating margin improved by 110 basis points over the 2003 period due to higher growth in gross profit in comparison to the growth in operating expenses. Interest expense, net 2004 2003 % Change ---- ---- -------- $ 0.4 $ 0.2 100% Interest expense in the current year period increased due to higher average long-term debt compared with the prior year period. The increase in long-term debt was attributed to acquisitions 13 completed in the first quarter of 2004 and an increase in working capital funding over the course of the second quarter of this year. Income taxes: 2004 2003 % Change ---- ---- -------- $ 5.7 $ 4.3 33% Effective tax rate 31.5% 34.0% N/A Income tax expense increased due to higher earnings before taxes. Businesses with lower statutory income tax rates represented a greater proportion of pre-tax earnings in the current year period compared with the 2003 six month period. Net income: 2004 2003 % Change ---- ---- -------- $ 12.8 $ 8.6 49% Margin 5.9% 5.0% N/A Net income improved in conjunction with the increase in operating profit and the lower effective income tax rate in the 2004 six month period. Diluted earnings per share: 2004 2003 % Change ---- ---- -------- $ 0.42 $ 0.29 45% Earnings from acquired businesses, favorable foreign currency exchange rates and a lower effective income tax rate accounted of $0.03, $0.02 and $0.01 per share, respectively, of the increase over the 2003 six month period. Weighted average common and common equivalent shares outstanding increased by 3.7% over the 2003 six month period, which negatively impacted earnings per share by $0.01 in the 2004 period. Stock option exercises by employees throughout 2004 resulted in higher weighted average shares outstanding during the second quarter of the current reporting period. Organic sales and operating profit growth contributed the remaining $0.08 per share of the increase over the 2003 six month period. Segment analysis: Following is a review of operating results for each of our four reporting segments:
- -------------------------------------------------------------------------------------------- Minerals Six Months Ended June 30, ----------------------------------------------------------------- 2004 2003 2004 vs. 2003 - -------------------------------------------------------------------------------------------- (Dollars in Thousands) - -------------------------------------------------------------------------------------------- Product sales $119,442 91.5% $ 93,903 90.5% Shipping revenue 11,030 8.5% 9,816 9.5% -------- -------- -------- -------- Net sales 130,472 100.0% 103,719 100.0% 26,753 25.8% -------- -------- -------- -------- Cost of sales - product 93,352 71.5% 73,956 71.3% Cost of sales - shipping 11,030 8.5% 9,816 9.5% -------- -------- -------- -------- Cost of sales 104,382 80.0% 83,772 80.8% -------- -------- -------- -------- Gross profit 26,090 20.0% 19,947 19.2% 6,143 30.8% General, selling and administrative expenses 10,417 8.0% 9,148 8.8% 1,269 13.9% -------- -------- -------- -------- -------- Operating profit 15,673 12.0% 10,799 10.4% 4,874 45.1%
Acquired businesses and favorable foreign currency exchange rates accounted for 10% and 13%, respectively, of the increase in net sales over the 2003 six month period. Metalcasting, pet products and 14 specialty minerals represented 45%, 19% and 36%, respectively, of net sales for the 2004 six month period. Organic sales growth was primarily attributed to the metalcasting and specialty minerals businesses. Domestic metalcasting sales were positively impacted by higher demand from rail car producers as well as automotive component manufacturers. The metalcasting markets in the Asia/Pacific region also continued to benefit from strong demand from automotive and transportation equipment component manufacturers. Specialty minerals experienced higher demand from detergent producers while the health and beauty business continued to grow its sales volume. Gross profit rose in conjunction with the increase in sales. Gross margin improved by 80 basis points over the prior year period due to higher production volume and pricing in the metalcasting and specialty minerals business units. General, selling and administrative expenses increased primarily due to higher compensation and benefit costs. Higher foreign currency exchange rates also contributed to the increase over the prior year six-month period. Operating profit improved over the first six months of 2004 due to the increase in sales and gross profit. Operating margin increased by 160 basis points due to the expansion in gross margin and a lower rate of increase in general, selling and administrative expenses.
- -------------------------------------------------------------------------------------- Environmental Six Months Ended June 30, ------------------------------------------------------------ 2004 2003 2004 vs. 2003 - -------------------------------------------------------------------------------------- (Dollars in Thousands) - -------------------------------------------------------------------------------------- Product sales $71,473 93.4% $53,223 92.7% Shipping revenue 5,044 6.6% 4,179 7.3% ------- ------- ------- ------- Net sales 76,517 100.0% 57,402 100.0% 19,115 33.3% ------- ------- ------- ------- Cost of sales - product 46,228 60.4% 33,353 58.1% Cost of sales - shipping 5,044 6.6% 4,179 7.3% ------- ------- ------- ------- Cost of sales 51,272 67.0% 37,532 65.4% ------- ------- ------- ------- Gross profit 25,245 33.0% 19,870 34.6% 5,375 27.1% General, selling and administrative expenses 16,014 20.9% 12,166 21.2% 3,848 31.6% ------- ------- ------- ------- ------- Operating profit 9,231 12.1% 7,704 13.4% 1,527 19.8%
59% of the increase in net sales was attributed to businesses acquired since the third quarter of 2003. Favorable currency exchange rates accounted for another 16% of the increase. Lining technologies represented 49% of net sales for the period, while building materials and water treatment comprised 26% and 25% of net sales, respectively. Gross profit grew in conjunction with the increase in net sales, however, gross margin declined by 160 basis points in comparison with the 2003 six month period. Acquired businesses earned relatively lower gross margins than existing businesses. Gross margins earned from existing businesses were comparable to the 2003 six month period. General, selling and administrative expenses increased primarily due to higher personnel levels and associated benefit costs. The personnel increase was primarily attributed to acquired businesses since the third quarter of 2003. Higher foreign currency exchange rates also contributed to the increase over 2003. 15 Operating profit grew due to the increase in net sales and gross profit over the prior year period. Operating margin declined by 120 basis points. This was caused by the decline in gross margin described above.
- -------------------------------------------------------------------------------------- Transportation Six Months Ended June 30, ------------------------------------------------------------ 2004 2003 2004 vs. 2003 - -------------------------------------------------------------------------------------- (Dollars in Thousands) - -------------------------------------------------------------------------------------- Net sales $19,390 100.0% $18,187 100.0% $ 1,203 6.6% Cost of sales 17,241 88.9% 16,184 89.0% ------- ------- ------- ------- Gross profit 2,149 11.1% 2,003 11.0% 146 7.3% General, selling and administrative expenses 1,312 6.8% 1,228 6.8% 84 6.8% ------- ------- ------- ------- ------- Operating profit 837 4.3% 775 4.3% 62 8.0%
Net sales improved due to higher traffic levels. Higher intersegment revenues accounted for the majority of the increase. Gross profit improved over the 2003 six month period by 10 basis points primarily due to higher pricing. General, selling and administrative expenses increased due to higher personnel levels. - -------------------------------------------------------------------------------- Corporate Six Months Ended June 30, ------------------------------------------------------ 2004 2003 2004 vs. 2003 - -------------------------------------------------------------------------------- (Dollars in Thousands) - -------------------------------------------------------------------------------- Intersegment shipping sales $(7,384) $(6,588) Intersegment shipping costs (7,384) (6,588) ------- ------- Gross profit -- -- Corporate general, selling and administrative expenses 5,594 4,733 861 18.2% Nanocomposite business development expenses 1,806 1,948 (142) -7.3% ------- ------- ------- Operating loss (7,400) (6,681) (719) 10.8% Intersegment shipping revenues and costs are related to billings from the transportation segment to the domestic minerals and environmental segments for services. These services are invoiced to the minerals and environmental segments at arms-length rates and those costs are subsequently charged to customers. Intersegment sales and costs reported above reflect the elimination of these transactions. Corporate expenses increased primarily due to higher stock-based compensation costs recorded in the current year period. Corporate personnel levels and base compensation costs were comparable to the prior year period. Nanocomposite operating expenses declined from the 2003 six month period due to an increase in revenues and lower spending on activities that are now funded by our alliance partners. The business has alliance agreements with Mitsubishi Gas Chemical Company and Poly One Corporation that focus on developing certain markets for nanocomposites. 16 Liquidity and capital resources (in millions): - -------------------------------------------------------------------------------- Cash Flows Six Months Ended June 30, --------------------- 2004 2003 - -------------------------------------------------------------------------------- Net cash provided by operating activities $11.2 $ 1.6 Net cash used in investing activities $(19.2) $(7.3) Net cash provided by financing activities $11.4 $ 1.6 Cash flows provided by operating activities improved over the 2003 period as a result of higher net income, which increased by $4.2 million. The improvement was also aided by lower growth in working capital in the current year period compared with the 2003 six month period. Historically, cash flows provided by operations have increased over the course of the fiscal year and we anticipate this pattern to continue in 2004. Cash flows used in investing activities increased primarily due to acquisitions completed in the first quarter of 2004. We acquired the shares of Lafayette Well Testing, Inc. on January 7, 2004, and Linteco Geotechnische Systeme GmbH on March 5, 2004. Capital expenditures totaled $7.4 million in the first half of 2004 compared with $6.3 million in the prior year period. We anticipate capital expenditures to increase over the remainder of 2004 due to investments in capacity expansion and productivity projects. Our estimate of the total 2004 capital expenditures is in the range of $20 million to $22 million. Cash flows provided by financing activities increased due to debt funding for acquisitions completed in the first half of 2004. We used our revolving credit facility to finance the acquisitions. Additionally, we assumed $4.1 million of funded debt as part of the consideration for the Linteco acquisition. Dividends paid in the first half of 2004 increased to $4.1 million from $2.0 million in the prior year period. We paid dividends of $0.14 per share in the first half of 2004 compared with $0.07 per share in the 2003 period. We purchased 183,400 shares of our common stock on the open market during the first half of 2004 for a total value of $2.9 million, or an average price per share of $15.70. All of the shares repurchased during the first half of 2004 were based on a board authorization made on May 16, 2002. The 2002 authorization expired during the second quarter of 2004. On May 13th 2004, the board of directors authorized funds to repurchase up to an additional $10 million of our common stock on the open market. We consider that such a use of our cash will enhance shareholder value. The entire $10 million remains available to repurchase common stock as of June 30, 2004. We purchased $1.6 million of our common stock in the open market during the first six months of 2003. - -------------------------------------------------------------------------------- Financial Position Six Months Ended ----------------------------- June 30, December 31, ----------------------------- 2004 2003 - -------------------------------------------------------------------------------- Working capital $ 111.0 $ 91.9 Intangible assets $ 17.8 $ 7.0 Total assets $ 301.7 $ 258.8 Long-term debt $ 31.3 $ 9.0 Other long-term obligations $ 19.9 $ 18.5 Stockholder's equity $ 192.3 $ 184.9 Working capital at June 30, 2004 increased from December 31, 2003, primarily due to acquisitions completed in the first half of 2004 and strong sales reported in the period. The current ratio at June 30, 2004 and December 31, 2003 was 2.9-to-1 and 3.0-to-1, respectively. 17 Intangible assets primarily represent goodwill associated with acquisitions. The amount increased from December 31, 2003 as a result of the purchase price allocation for acquisitions closed in the first quarter of 2004. The purchase price allocations may be subject to change since certain assets acquired and liabilities assumed with the acquisitions require further analysis to determine their fair values. Consequently, intangible asset values may change as well. Long-term debt increased to 14.0% of total capitalization at June 30, 2004, compared with 5.1% at December 31, 2003. The increase in debt levels was principally attributed to funding of acquisitions completed in the first quarter of 2004. We have a $100 million revolving credit facility with a consortium of U.S. banks that mature on October 31, 2006. At June 30, 2004, we had $83 million of borrowing capacity remaining under the credit facility. The credit facility stipulates that we must comply with a number of financial covenants. We are in compliance with those covenants at June 30, 2004. Other long-term obligations primarily represent liabilities associated with our qualified and supplemental retirement plans and deferred income taxes. We believe future cash flows from operations combined with borrowing capacity from our revolving credit facility will be adequate to fund capital expenditures and other investments approved by the board of directors. Since the mid 1980's, the Company and/or its subsidiaries have been named as one of a number of defendants in product liability lawsuits relating to the minor free-silica content within the Company's bentonite products used in the metalcasting industry. The plaintiffs in these lawsuits are primarily employees of the Company's foundry customers. To date, the Company has not incurred significant costs in defending these matters. The Company believes it has adequate insurance coverage and does not believe the litigation will have a material adverse impact on the financial condition, liquidity or results of the operation of the Company. Item 3: Quantitative and Qualitative Disclosure About Market Risk There have been no material changes in the Company's market risk during the three and six months ended June 30, 2004. See disclosures as of December 31, 2003 in the Company's Annual Report on Form 10-K, Item 7A. Item 4: Controls and Procedures As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules. Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated any changes in our internal controls over financial reporting that occurred during the quarterly period covered by this report, and has concluded that there was no change that occurred during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. 18 PART II - OTHER INFORMATION Item 2e: Company Repurchases of Company Stock
- ---------------------------------------------------------------------------------------------------------------- Total Number of Maximum Value of Shares Repurchased Average Shares that May Yet Be as Part of the Stock Price Paid Repurchased Under the Repurchase Program Per Share Program - ---------------------------------------------------------------------------------------------------------------- January 1, 2004 - January 31, 2004 Shares repurchased -- $ -- $ 3,704,133 February 1, 2004 - February 29, 2004 Shares repurchased -- $ -- $ 3,704,133 March 1, 2004 - March 31, 2004 Shares repurchased 12,400 $ 15.83 $ 3,507,839 April 1, 2004 - April 30, 2004 Shares repurchased -- $ -- $ 3,507,839 May 1, 2004 - May 31, 2004 Shares repurchased 171,000 $ 15.69 $ 825,448 Expiration of unused authorization $ -- New repurchase authorization $10,000,000 June 1, 2004 - June 30, 2004 Shares repurchased -- $ -- $10,000,000 ----------- ----------- ----------- Total 183,400 $ 15.70 $10,000,000 =========== =========== ===========
*On May 13, 2004, the Board of Directors authorized a program to repurchase up to $10 million of the Company's outstanding stock which will expire June 30, 2006. The repurchase program authorized on May 16, 2002 expired during the second quarter ended June 30, 2004. Item 6: Exhibits and Reports on Form 8-K (a) See Index to Exhibits immediately following the signature page. (b) A current report on Form 8-K was filed on April 19, 2004, furnishing a press release disclosing the Company's operating results for the first quarter ended March 31, 2004. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMCOL INTERNATIONAL CORPORATION Date: August 6, 2004 /s/ Lawrence E. Washow ------------------------------------- Lawrence E. Washow President and Chief Executive Officer Date: August 6, 2004 /s/ Gary L. Castagna -------------------------------------- Gary L. Castagna Senior Vice President and Chief Financial Officer and Principal Accounting Officer 20 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) 10.3 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) 10.9 AMCOL International Corporation Dividend Reinvestment and Stock Purchase Plan (4); as amended (6) 10.10 AMCOL International Corporation 1993 Stock Plan, as amended and restated (10) 10.15 AMCOL International Corporation 1998 Long-Term Incentive Plan (15), as amended (21) 10.26 Employment Agreement dated March 15, 2002 by and between Registrant and Gary D. Morrison (22)* 10.27 Employment Agreement dated March 15, 2002 by and between Registrant and Peter M. Maul (22)* 10.28 Employment Agreement dated March 15, 2002 by and between Registrant and Gary Castagna (22)* 10.29 Employment Agreement dated March 15, 2002 by and between Registrant and Ryan F. McKendrick (22)* 10.30 Employment Agreement dated March 15, 2002 by and between Registrant and Lawrence E. Washow (22)* 10.31 Credit Agreement by and among AMCOL International Corporation and Harris Trust and Savings Bank, individually and as agent, Wells Fargo Bank, N.A., Bank of America N.A. and the Northern Trust Company dated October 31, 2003 (23) 21 AMCOL International Corporation Subsidiary Listing 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 - ------------------ (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. (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. (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. (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. (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. (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. (21) Exhibit is incorporated by reference to the Registrant's Form S-8 (File 333-68664) filed with the Securities and Exchange Commission on August 30, 2001. (22) 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, 2002. (23) 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, 2003. (24) 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, 2004. *Management compensatory plan or arrangement EX-31.1 2 e18765ex31_1.txt CERTIFICATION Exhibit 31.1 AMCOL INTERNATIONAL CORPORATION CERTIFICATION Pursuant to Rule 13a - 14(a) / 15d-14(a) I, Lawrence E. Washow, certify that: 1. I have reviewed this quarterly report on Form 10-Q of AMCOL International Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 6, 2004 /s/ Lawrence E. Washow -------------------------------------- Lawrence E. Washow President and Chief Executive Officer EX-31.2 3 e18765ex31_2.txt CERTIFICATION Exhibit 31.2 AMCOL INTERNATIONAL CORPORATION CERTIFICATION Pursuant to Rule 13a - 14(a) / 15d-14(a) I, Gary L. Castagna, certify that: 1. I have reviewed this quarterly report on Form 10-Q of AMCOL International Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 6, 2004 /s/ Gary L. Castagna ---------------------------------- Gary L. Castagna Senior Vice President, Chief Financial Officer and Principal Accounting Officer EX-32 4 e18765ex32.txt CERTIFICATION OF PERIODIC FINANCIAL REPORT Exhibit 32 Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350 Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of AMCOL International Corporation (the "Company") certifies that the quarterly report on Form 10-Q of the Company for the six months ended June 30, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: August 6, 2004 -------------------------------------- Lawrence E. Washow Chief Executive Officer Date: August 6, 2004 -------------------------------------- Gary L. Castagna Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----