-----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, GzD85ef6rgdoJ0XfV8qhHE1+IBvnUQDYq6++TgW1+6UfAYEYbPNIcWbLwSlOXfyi T+2hvwbP2znvBPAq7qUgEQ== 0000950131-02-004333.txt : 20021112 0000950131-02-004333.hdr.sgml : 20021111 20021112165153 ACCESSION NUMBER: 0000950131-02-004333 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021112 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-14447 FILM NUMBER: 02817674 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/A 1 d10qa.txt AMENDMENT TO FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A (Mark One) (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002 ------------------------------------------------ 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 October 14, 2002 - -------------------------------------- ----------------------------------- (Common stock, $.01 par value) 27,799,723 Shares Explanatory Statement Because some years were inadvertently transposed on pages 1, 3, 5, 7, and 17 we are amending our original 10-Q filed on November 8, 2002. AMCOL INTERNATIONAL CORPORATION INDEX
Page No. -------- Part I - Financial Information - ------------------------------ Item 1 Financial Statements Condensed Consolidated Balance Sheets - September 30, 2002 and December 31, 2001 1 Condensed Consolidated Statements of Operations - three and nine months ended September 30, 2002 and 2001 2 Condensed Consolidated Statements of Comprehensive Income - three and nine months ended September 30, 2002 and 2001 4 Condensed Consolidated Statements of Cash Flows - nine months ended September 30, 2002 and 2001 5 Notes to Condensed Consolidated Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3 Quantitative and Qualitative Disclosures About Market Risk 19 Item 4 Controls and Procedures 19 Part II - Other Information - --------------------------- Item 6 Exhibits and Reports on Form 8-K 19
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
- ------------------------------------------------------------------------------------------------------------------------------ September 30, December 31, ASSETS 2002 2001 (unaudited) * ============================================================================================================================== Current assets: Cash $ 9,259 $ 10,320 Accounts receivable, net 60,398 43,641 Inventories 37,748 34,593 Prepaid expenses 5,701 4,419 Net current assets of discontinued operations - 798 Current deferred tax assets 3,766 4,286 Income taxes receivable - 3,120 ------------ ------------ Total current assets 116,872 101,177 ------------ ------------ Investment in and advances to joint ventures 13,702 13,219 ------------ ------------ Property, plant, equipment, and mineral rights and reserves: Land and mineral rights and reserves 9,218 9,293 Depreciable assets 197,504 181,120 ------------ ------------ 206,722 190,413 Less: accumulated depreciation 126,318 118,065 ------------ ------------ 80,404 72,348 ------------ ------------ Other assets: Goodwill 4,633 193 Intangible assets, net 481 210 Long-term prepayments and other assets 8,642 4,410 Net non-current assets of discontinued operations - 311 Deferred tax assets 4,051 4,462 ------------ ------------ 17,807 9,586 ------------ ------------ $ 228,785 $ 196,330 ============ ============ - ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------ September 30, December 31, LIABILITIES AND STOCKHOLDERS' EQUITY 2002 2001 (unaudited) * ============================================================================================================================== Current liabilities: Accounts payable $ 14,578 $ 9,239 Accrued liabilities 26,269 21,844 ------------ ------------ Total current liabilities 40,847 31,083 ------------ ------------ Long-term debt 29,053 13,245 ------------ ------------ Minority interests in subsidiaries 691 523 Other liabilities 11,865 10,752 ------------ ------------ 12,556 11,275 ------------ ------------ Stockholders' equity: Common stock 320 320 Additional paid in capital 69,362 71,905 Retained earnings 98,642 91,018 Accumulated other comprehensive income (loss) 689 (2,688) ------------ ------------ 169,013 160,555 Less: Treasury stock 22,684 19,828 ------------ ------------ 146,329 140,727 ------------ ------------ $ 228,785 $ 196,330 ============ ============ - ------------------------------------------------------------------------------------------------------------------------------
* 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)
- ------------------------------------------------------------------------------------------------------------------------------- Nine Months Ended Three Months Ended September 30, September 30, ----------------------------------------------------- 2002 2001 2002 2001 - ---------------------------------------------------------------------------------------------------------------------------- Continuing Operations Net sales $ 221,072 $ 208,167 $ 85,196 $ 74,116 Cost of sales 167,837 158,307 63,882 56,003 ---------- ----------- ----------- ----------- Gross profit 53,235 49,860 21,314 18,113 General, selling and administrative expenses 38,858 35,471 13,715 11,755 ---------- ----------- ----------- ----------- Operating profit 14,377 14,389 7,599 6,358 ---------- ----------- ----------- ----------- Other income (expense): Investment income - 2,931 - 352 Change in value of interest rate swap - (401) - (85) Interest expense, net (410) (2,065) (170) (411) Other, net (92) 131 (15) 135 ---------- ----------- ----------- ----------- (502) 596 (185) (9) ---------- ----------- ----------- ----------- Income before income taxes and equity in income of joint ventures 13,875 14,985 7,414 6,349 Income tax expense 4,997 4,974 2,672 2,112 ---------- ----------- ----------- ----------- Income before equity in income of joint ventures 8,878 10,011 4,742 4,237 Income from joint ventures 487 332 40 89 Minority interest in net loss of subsidiary 87 19 76 19 ---------- ----------- ----------- ----------- Income from continuing operations 9,452 10,362 4,858 4,345 ---------- ----------- ----------- ----------- Discontinued Operations Loss from operations (net of income taxes) - (355) - (257) ---------- ----------- ----------- ----------- Cumulative effect of change in accounting principle (net of taxes) - (182) - - ---------- ----------- ----------- ----------- Net income $ 9,452 $ 9,825 $ 4,858 $ 4,088 ========== =========== =========== =========== - ------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------- Nine Months Ended Three Months Ended September 30, September 30, ------------------------------------------------------------- 2002 2001 2002 2001 - ---------------------------------------------------------------------------------------------------------------------------- Weighted average common shares outstanding 28,230,881 28,174,822 27,866,211 28,106,401 ============= ============= ============ ============ Weighted average common and common equivalent shares outstanding 30,370,517 30,684,498 29,890,911 30,911,806 ============= ============= ============ ============ Basic earnings (loss) per share: Continuing operations $ 0.33 $ 0.37 $ 0.17 0.16 ------------- ------------- ------------ ------------ Discontinued operations - loss from operations - (0.01) - (0.01) ------------- ------------- ------------ ------------ Cumulative effect of change in accounting principle - (0.01) - - ------------- ------------- ------------ ------------ Net income $ 0.33 $ 0.35 $ 0.17 0.15 ============= ============= ============ ============ Diluted earnings (loss) per share: Continuing operations $ 0.31 $ 0.34 $ 0.16 0.14 ------------- ------------- ------------ ------------ Discontinued operations - loss from operations - (0.01) - (0.01) ------------- ------------- ------------ ------------ Cumulative effect of change in accounting principle - (0.01) - - ------------- ------------- ------------ ------------ Net income $ 0.31 $ 0.32 $ 0.16 0.13 ============= ============= ============ ============ Dividends declared per share $ 0.065 $ 0.040 $ 0.030 0.015 ============= ============= ============ ============ - ----------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In thousands)
- -------------------------------------------------------------------------------------------------------------- Nine Months Ended Three Months Ended September 30, September 30, ----------------------------------------------------------- 2002 2001 2002 2001 - -------------------------------------------------------------------------------------------------------------- Net income $ 9,452 $ 9,825 $ 4,858 $ 4,088 Other comprehensive income (loss): Foreign currency translation adjustment 447 (1,800) 3,377 847 ------- ------- ------- ------- Comprehensive income $ 9,899 $ 8,025 $ 8,235 $ 4,935 ======= ======= ======= ======= - --------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
- ------------------------------------------------------------------------------------------------------------------------- Nine Months Ended September 30, ----------------------------- 2002 2001 ========================================================================================================================= Cash flow from operating activities: Income from continuing operations $ 9,452 $ 10,362 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation, depletion, and amortization 14,292 12,426 Changes in assets and liabilities, net of effects of acquisitions: Increase in current assets (11,338) (8,379) Increase (decrease) in current liabilities 4,054 (3,415) Increase in noncurrent liabilities 1,114 6,595 Other 1,580 (4,331) -------------- ------------ Net cash provided by operating activities of continuing operations 19,154 13,258 -------------- ------------ Net cash used in discontinued operations - (5,818) -------------- ------------ Cash flow from investing activities: Tax payments related to the absorbent polymers segment sale - (128,351) Acquisition of land, mineral reserves, and depreciable assets (10,111) (8,674) Acquisitions (16,966) - Other (3,703) 46 -------------- ------------ Net cash used in investing activities (30,780) (136,979) -------------- ------------ Cash flow from financing activities: Net change in outstanding debt 15,808 (26,782) Proceeds from sales of treasury stock 1,382 1,734 Purchases of treasury stock (6,781) (6,492) Cummulative effect of change in accounting principle (net of tax) - (182) Dividends paid (1,828) (1,127) Other 168 668 -------------- ------------ Net cash provided by (used in) financing activities 8,749 (32,181) -------------- ------------ Effect of foreign currency rate changes on cash 1,816 (1,595) Net decrease in cash and cash equivalents (1,061) (163,315) -------------- ------------ Cash and cash equivalents at beginning of period 10,320 176,750 -------------- ------------ Cash and cash equivalents at end of period $ 9,259 $ 13,435 ============== ============ Supplemental disclosures of cash flow information: Cash paid for: Interest $ 469 $ 2,219 ============== ============ Income taxes $ 879 $ 134,152 ============== ============ - -------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 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, 2001, has been prepared by management and is unaudited. The condensed consolidated balance sheet as of December 31, 2001, has been derived from, but does not include all the disclosures contained in, the audited consolidated financial statements for the year ended December 31, 2001. The information furnished herein includes all adjustments which are, in the opinion of management, necessary for a fair statement of the results of the interim period, and all such adjustments are of a normal recurring nature. Management recommends the accompanying condensed consolidated financial information be read in conjunction with the consolidated financial statements and related notes included in the Company's 2001 Annual Report on Form 10-K which accompanies the 2001 Corporate Report. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Certain items in the 2001 condensed consolidated financial statements have been reclassified to conform to the presentation for 2002. Note 2: INVENTORIES Inventories at September 30, 2002 have been valued using the same methods as at December 31, 2001. The composition of inventories at September 30, 2002 and December 31, 2001, was as follows:
- ----------------------------------------------------------------------------------------- September 30, December 31, 2002 2001 - ----------------------------------------------------------------------------------------- Advance mining $ 3,024 $ 1,872 Crude stockpile inventories 8,651 11,524 In-process inventories 14,117 11,498 Other raw material, container, and supplies inventories 11,956 9,699 -------- -------- $ 37,748 $ 34,593 ======== ======== - -----------------------------------------------------------------------------------------
6 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (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.
- --------------------------------------------------------------------------------------------------------------------------- Nine Months Ended Three Months Ended September 30, September 30, ------------------------------------------------------------------- 2002 2001 2002 2001 - --------------------------------------------------------------------------------------------------------------------------- Weighted average of common shares outstanding 28,230,881 28,174,822 27,866,211 28,106,401 Dilutive impact of stock options 2,139,636 2,509,676 2,024,700 2,805,405 ------------- -------------- -------------- -------------- Weighted average of common and common equivalent shares for the period 30,370,517 30,684,498 29,890,911 30,911,806 ============= ============== ============== ============== Common shares outstanding 27,776,608 28,223,444 27,776,608 28,223,444 ============= ============== ============== ============== - ---------------------------------------------------------------------------------------------------------------------------
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. Effective January 1, 2002, the Company changed it's method of allocating information technology expenses from the corporate segment to the operating segment. 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. 7 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following summaries set forth certain financial information by business segment as of and for the three and nine months ended September 30, 2002 and 2001.
- -------------------------------------------------------------------------------------------------------------- Nine Months Ended Three Months Ended September 30, September 30, ---------------------------------------------------------------- 2002 2001 2002 2001 - --------------------------------------------------------------------------------------------------------------- Business Segment: Revenues: Minerals $ 125,330 $ 113,479 $ 46,502 $ 38,202 Environmental 79,735 78,238 33,216 30,550 Transportation 24,053 24,907 8,591 8,832 Intersegment shipping (8,046) (8,457) (3,113) (3,468) --------- --------- -------- -------- Total $ 221,072 $ 208,167 $ 85,196 $ 74,116 ========= ========= ======== ======== Operating profit (loss): Minerals $ 10,907 $ 10,860 $ 4,386 $ 3,530 Environmental 11,471 12,104 5,950 5,372 Transportation 697 1,074 242 405 Corporate (8,698) (9,649) (2,979) (2,949) --------- --------- -------- -------- Total $ 14,377 $ 14,389 $ 7,599 $ 6,358 ========= ========= ======== ======== September 30, 2002 Dec. 31, 2001 ===================================== Assets: Minerals $ 131,549 $ 106,391 Environmental 74,489 65,216 Transportation 1,685 1,282 Corporate 21,062 22,332 Discontinued operations - 1,109 --------- --------- Total $ 228,785 $ 196,330 ========= ========= - --------------------------------------------------------------------------------------------------------------
Note 5: DERIVATIVES 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. The Company uses variable rate credit facilities to finance its operations. These debt obligations expose the Company to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense also decreases. Through June 15, 2001, the Company was a party to an interest rate swap agreement with a bank in the notional amount of $15 million. The agreement gave the bank an option to extend the term. The interest rate swap agreement changed the variable rate cash flow exposure on a portion of the Company's borrowings under its committed credit facilities to fixed rate cash flows. 8 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) The agreement called for the Company to make fixed rate payments and to receive variable rate cash flows based on the notional amount. This means the Company received funds if the variable rate (LIBOR) increased above the fixed rate, and paid the other party if LIBOR decreased below the fixed rate during the term of the agreement. Interest rate differentials were paid or received on a quarterly basis. Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and for Hedging Activities, and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. The Company concluded that SFAS No. 133 required the change in value of this agreement to be recognized in its operating results in the period of change. Accordingly, the Company recognized the fair value of the swap and the option as of January 1, 2001 by recording the cumulative effect of a change in accounting principle in the amount of $182 (net of the related income tax benefit of $115) in the accompanying condensed consolidated statements of operations. The change in the fair value of the swap and option during the period through September 30, 2001 of $401 has been reflected in operating results for the period. Note 6: ACQUISITIONS On May 1, 2002, the Company acquired all of the outstanding stock of Colin Stewart Minchem, Ltd. (CSM), a specialty minerals and chemical company located in the United Kingdom, in exchange for cash. The aggregate purchase price was $15,164. CSM supplies intermediate products, industrial minerals, inorganic chemicals, and additives to customers operating in the laundry detergent, packaging, oil exploration and water treatment markets. The acquisition of CSM provides an additional platform for the Company to expand its global operations and presence. The results of CSM's operations have been included in the condensed consolidated financial statements from the acquisition date. The following tables summarize the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition and unaudited pro forma results of operations as if the acquisition of CSM had occurred on January 1, 2001. The unaudited pro forma information is not necessarily indicative of the combined results that would have occurred had the acquisition taken place at the beginning of the periods presented, nor is it necessarily indicative of future results. 9 AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) - -------------------------------------------------------------------------------- At April 30, 2002 - -------------------------------------------------------------------------------- Current assets $ 5,940 Fixed assets 10,520 Goodwill 3,779 ------------- Total assets acquired $ 20,239 ------------- Current liabilities $ 3,023 Other liabilities 2,052 ------------- Total liabilities assumed $ 5,075 ------------- ------------- Net assets acquired $ 15,164 ============= - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------- Pro Forma Pro Forma Pro Forma Nine Months Ended Nine Months Ended Three Months Ended Three Months Ended September 30, September 30, September 30, September 30, ---------------------------------------------------------------------------------------- 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------- Net sales $ 231,305 $ 231,191 $ 85,196 $ 81,791 Income from continuing operations $ 10,227 $ 12,106 $ 4,858 $ 4,926 Net income 10,227 11,569 4,858 4,669 Basic earnings per share 0.36 0.41 0.17 0.17 Diluted earnings per share 0.34 0.38 0.16 0.15 - -------------------------------------------------------------------------------------------------------------------------------
The purchase price allocation has not been finalized as management is in the process of analyzing the fair values of the acquired assets and liabilities. Note 7: DISCONTINUED OPERATIONS In 2000 the Company announced its intention to close its U.K. cat litter business. Certain assets used in the business were sold to various outside parties for cash proceeds of $720. The closure was completed in 2001. In the fourth quarter of 2001, the Company announced the sale of its U.K. metalcasting operations. The U.K. cat litter and metalcasting businesses were both components of the Company's minerals segment. The consolidated financial statements have been reclassified to report separately the net assets and operating results of the U.K. metalcasting and cat litter businesses for all periods presented. Summary operating results for 2001 were as follows:
- --------------------------------------------------------------------------------------------------------- Nine Months Ended Three Months Ended U.K. metalcasting and cat litter businesses September 30, September 30, ---------------------------------------------- 2001 2001 - --------------------------------------------------------------------------------------------------------- Net sales $ 7,330 $ 2,178 Operating loss (807) (264) Income tax benefit 346 103 Net loss (355) (257) - ---------------------------------------------------------------------------------------------------------
10 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 certain significant factors which have affected the Company's financial position and operating results during the periods included in the accompanying condensed consolidated financial statements. Three Months Ended September 30, 2002 vs. 2001 Net sales for the 2002 three month period were $85.2 million, which represented an increase of $11.1 million, or 14.9% from 2001 levels. Mineral segment revenues increased by $8.3 million and environmental segment revenues increased by $2.7 million. As previously reported, the Company acquired Colin Stewart Minchem Limited (CSM), a U.K.-based specialty minerals company, effective from May 1, 2002. Revenues from CSM accounted for 73.0% of the Company's increase in sales from the 2001 period. Gross profit increased by $3.2 million, or 17.7%, to $21.3 million in the third quarter of 2002. As reported above, increased revenues from the minerals segment resulted in $1.9 million of gross profit improvement. Increased revenues and lower unit production costs at the domestic operations of the Company's environmental segment accounted for the remaining increase in gross profit from the prior year period. Gross margin for the period was 25.0% compared to 24.4% in the previous year's quarter. General, selling and administrative expenses increased by $2.0 million for the third quarter of 2002 to $13.7 million. Additional overheads incurred at the minerals segment, principally related to the CSM acquisition, contributed approximately 51% of the increase. Approximately 43% of the increase in expenses was attributed to the environmental segment. Operating profit for the period was $7.6 million which was an increase of $1.2 million, or approximately 20%, from the third quarter of 2001. The increase followed the improvement in sales and gross profit. Investment income of $0.4 million in the third quarter of 2001 was attributed to the temporary investment of the remaining proceeds from the sale of the absorbent polymers segment in June 2000. The Company utilized these proceeds to reduce its long-term debt in September of 2001. Interest expense in the third quarter of 2002 declined by $0.2 million from the prior year quarter, or 59%, to $0.2 million due principally to lower average interest rates and borrowing levels. Income tax expense was $2.7 million in the current year quarter comparedwith $2.1 million in the prior year period. The increase was due to higher pre-tax income in the current year quarter together with an increase in the effective income tax rate to 36.0% in the current year quarter compared with 33.3% in the prior year period. Earnings from businesses located in higher tax regions accounted for the increase in the effective tax rate. Losses from discontinued operations reported in the third quarter of 2001 represent operating results, after income taxes, of the U.K. metalcasting and pet products businesses. The U.K. metalcasting 11 and pet products businesses were disposed of in the fourth quarter and first quarter of 2001, respectively. Net income for the third quarter was $4.9 million compared with $4.1 million in the prior year period, which was an increase of approximately 19%. The increase was primarily attributed to higher operating profit earned in the current year period. Diluted earnings per share for the current year quarter was $0.16 compared with $0.13 per share in the prior year period, which was an increase of approximately 23%. Lower average common and common equivalent shares outstanding as well as higher net income contributed to the increase in earnings per share. Segment Analysis
- ---------------------------------------------------------------------------------------------------------------------- Quarter Ended September 30, Minerals ----------------------------------------------------------------------- 2002 2001 2002 vs. 2001 - ---------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ---------------------------------------------------------------------------------------------------------------------- Product sales $ 42,608 91.6% $ 34,316 89.8% Shipping revenue 3,894 8.4% 3,886 10.2% -------- ------- -------- ------- Net sales 46,502 100.0% 38,202 100.0% 8,300 21.7% -------- ------- -------- ------- Cost of sales - product 33,861 72.8% 27,421 71.8% Cost of sales - shipping 3,894 8.4% 3,886 10.2% -------- ------- -------- ------- Cost of sales 37,755 81.2% 31,307 82.0% -------- ------- -------- ------- Gross profit 8,747 18.8% 6,895 18.0% 1,852 26.9% General, selling and administrative expenses 4,361 9.4% 3,365 8.8% 996 29.6% -------- ------- -------- ------- ------- Operating profit 4,386 9.4% 3,530 9.2% 856 24.2% - ----------------------------------------------------------------------------------------------------------------------
Effective from May 1, 2002, the Company acquired a U.K. specialty minerals business, Colin Stewart Minchem (CSM). The segment includes the operating results for CSM in the third quarter of 2002. A pro forma presentation of the operating results of the Company assuming the CSM acquisition had been completed on January 1, 2001 is included in Note 6 to the condensed consolidated financial statements included with this filing. Approximately 97% of the increase in sales for the third quarter of 2002 was attributed to CSM. Within the segment's other operations, higher revenue from the domestic metalcasting business was offset by declines in the pet products and oil well businesses. The increase in gross profit primarily followed the improvement in sales. Gross margin increased by 80 basis points from the prior year quarter due to improved production costs incurred in the segment's domestic operations. General, selling and administrative expenses increased primarily due to CSM and increased research and market development costs associated with the segment's health and beauty solutions business. 12
- ---------------------------------------------------------------------------------------------------------------------------- Environmental Quarter Ended September 30, ------------------------------------------------------------------ 2002 2001 2002 vs. 2001 - ---------------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ---------------------------------------------------------------------------------------------------------------------------- Product sales $ 30,637 92.2% $ 28,173 92.2% Shipping revenue 2,579 7.8% 2,377 7.8% --------- -------- --------- -------- Net sales 33,216 100.0% 30,550 100.0% 2,666 8.7% --------- -------- --------- -------- Cost of sales - product 18,951 57.1% 17,909 58.6% Cost of sales - shipping 2,579 7.7% 2,377 7.8% --------- -------- --------- -------- Cost of sales 21,530 64.8% 20,286 66.4% --------- -------- --------- -------- Gross profit 11,686 35.2% 10,264 33.6% 1,422 13.9% General, selling and administrative expenses 5,736 17.3% 4,892 16.0% 844 17.3% --------- -------- --------- -------- -------- Operating profit 5,950 17.9% 5,372 17.6% 578 10.8% - ----------------------------------------------------------------------------------------------------------------------------
Net sales increased by $2.7 million from the prior year period. Approximately 63% of the increase was attributed to export shipments of lining products. Increased lining product shipments in the domestic market and revenues generated from the European offshore business unit also contributed to the improvement in net sales from the prior year period. Gross margin improved by 160 basis points from the prior year period. Increased sales and lower unit production costs at the segment's domestic operations largely contributed to the gross profit and margin improvement. The lower unit production costs were the result of favorable raw material pricing and higher production volumes. General, selling and administrative expenses increased due to higher compensation and benefit expenses, information technology costs, marketing and promotion costs, and research and development spending.
- ---------------------------------------------------------------------------------------------------------------------------- Transportation Quarter Ended September 30, ------------------------------------------------------------------ 2002 2001 2002 vs. 2001 - ---------------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ---------------------------------------------------------------------------------------------------------------------------- Net sales $ 8,591 100.0% $ 8,832 100.0% $ (241) -2.7% Cost of sales 7,710 89.7% 7,878 89.2% --------- --------- --------- -------- Gross profit 881 10.3% 954 10.8% (73) -7.7% General, selling and administrative expenses 639 7.5% 549 6.2% 90 16.4% --------- --------- --------- -------- ------- Operating profit 242 2.8% 405 4.6% (163) -40.2% - ----------------------------------------------------------------------------------------------------------------------------
Net sales declined due to lower customer shipments. Increased general, selling and administrative expenses were associated with higher compensation and information technology costs. 13
- ------------------------------------------------------------------------------------------------------- Corporate Quarter Ended September 30, --------------------------------------------- 2002 2001 2002 vs. 2001 - ------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ------------------------------------------------------------------------------------------------------- Intersegment shipping sales $ (3,113) $ (3,468) Intersegment shipping costs (3,113) (3,468) --------- -------- Gross profit - - Corporate general, selling and administrative expenses 1,863 1,837 26 1.4% Nanocomposite business development expenses 1,116 1,112 4 0.4% --------- -------- --------- Operating loss (2,979) (2,949) (30) -1.0% - -------------------------------------------------------------------------------------------------------
Intersegment shipping sales 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 selling and administrative expenses include information technology, legal and professional, human resources, investor relations and certain officer and director costs. These expenses were relatively the same as the prior year quarter levels. Nanocomposite business development expenses are comprised of production, research and development and marketing costs. Expenses were relatively flat compared to the prior year third quarter. Nine Months Ended September 30, 2002 vs. 2001 Net sales for the nine month period ended September 30, 2002 increased by $12.9 million to $221.1 million, or 6.2%, from the prior year period. Mineral segment sales increased by $11.9 million while environmental segment revenues increased by $1.5 million. Transportation segment revenues declined by $0.9 million from the prior year period. Gross profit increased by $3.4 million, or 6.8%, for the nine month period. Gross margin was 24.1% for the nine months ended September 30, 2002 compared to 24.0% for the prior year period. The improvement in gross profit followed the increase in sales. General, selling and administrative expenses increased by $3.4 million, or 9.5%, from the prior year period. Minerals segment overheads increased by $2.0 million while environmental segment overheads increased by $2.2 million. Corporate overheads declined by $0.8 million for the nine months period. Operating profit for the nine months ended September 30, 2002 equaled the prior year period result totaling $14.4 million. Operating margin declined by 40 basis points to 6.5% for the 2002 reporting period. The decline is attributed to the large relative increase in general, selling and administrative expenses due to the CSM acquisition and higher overall costs in certain areas. Investment income of $2.9 million recorded in the nine months ended September 30, 2001 was attributed to the temporary investment of the remaining proceeds from the sale of the absorbent 14 polymers segment in June 2000. After payment of the remaining income taxes attributed to the sale of the segment, the Company utilized a portion of these proceeds to reduce its long-term debt in September of 2001. Consequently, interest expense for the nine months ended September 30, 2002 declined by $1.6 million from the prior year quarter, or 80%, to $0.4 million. In the nine month period ended September 30, 2001 the Company recorded a loss of $401 thousand due to the change in value of an interest rate swap contract. The loss was recognized under the requirements of Statement on Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and for Hedging Activities, and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. The Company also reported a loss on the cumulative effect of a change in accounting principle of $182 thousand in the first quarter of 2001 that was associated with implementation of this accounting pronouncement. The effective income tax rate for the nine months ended September 30, 2002 was 36% compared to 33% for the prior year period. The increased tax rate in the current year was attributed to a greater portion of earnings generated in regions with higher income tax rates. The loss from discontinued operations reported in the 2001 period reflects the net loss incurred, after income taxes, in the UK metalcasting and cat litter businesses. The UK metalcasting and cat litter businesses were disposed of in the fourth quarter and first quarter of 2001, respectively. Income from joint ventures was $0.5 million for the nine months ended September 30, 2002 compared with $0.3 million for the prior year period. The increase was attributed to improved earnings recorded from an investment in an Indian minerals company. The Company owns approximately 20% of the shares in this Indian minerals company. Net income was $9.5 million for the nine months ended September 30, 2002 compared to $9.8 million for the prior year period. The decline in net income was primarily attributed to a higher effective tax rate in the current year period and higher non-operating income realized in the 2001 period. Segment Analysis
- ---------------------------------------------------------------------------------------------------------------------------- Minerals Nine Months Ended September 30, ------------------------------------------------------------------ 2002 2001 2002 vs. 2001 - ---------------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ---------------------------------------------------------------------------------------------------------------------------- Product sales $ 114,409 91.3% $ 101,676 89.6% Shipping revenue 10,921 8.7% 11,803 10.4% --------- -------- --------- -------- Net sales 125,330 100.0% 113,479 100.0% 11,851 10.4% --------- -------- --------- -------- Cost of sales - product 91,666 73.1% 80,942 71.3% Cost of sales - shipping 10,921 8.8% 11,803 10.4% --------- -------- --------- -------- Cost of sales 102,587 81.9% 92,745 81.7% --------- -------- --------- -------- Gross profit 22,743 18.1% 20,734 18.3% 2,009 9.7% General, selling and administrative expenses 11,836 9.4% 9,874 8.7% 1,962 19.9% --------- -------- --------- -------- ------- Operating profit 10,907 8.7% 10,860 9.6% 47 0.4% - ----------------------------------------------------------------------------------------------------------------------------
CSM contributed sales of $12.8 million since its acquisition, which was effective from May 1, 2002. Excluding CSM, mineral segment revenues declined by $1.0 million for the nine months ended 15 September 30, 2002. The segment recorded lower sales in its oil drilling, export and pet products businesses which totaled approximately $5.0 million. Sales from the metalcasting and international business units increased by a total of approximately $4.0 million from the prior year period. Gross profit, after excluding CSM, improved by approximately $0.5 million from the prior year period despite lower sales. The improvement was driven by lower unit production costs. General, selling and administrative expenses associated with CSM were the primary cause for the $2.0 million increase in the current year. The 2002 period also experienced higher research and development and marketing costs related to the segment's health and beauty solutions business.
- --------------------------------------------------------------------------------------------------------------------- Nine Months Ended September 30, Environmental ------------------------------------------------------------------ 2002 2001 2002 vs. 2001 - --------------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - --------------------------------------------------------------------------------------------------------------------- Product sales $ 73,996 92.8% $ 72,409 92.5% Shipping revenue 5,739 7.2% 5,829 7.5% -------- ------ -------- ------ Net sales 79,735 100.0% 78,238 100.0% 1,497 1.9% -------- ------ -------- ------ Cost of sales - product 45,987 57.7% 45,944 58.7% Cost of sales - shipping 5,739 7.2% 5,829 7.5% -------- ------ -------- ------ Cost of sales 51,726 64.9% 51,773 66.2% -------- ------ -------- ------ Gross profit 28,009 35.1% 26,465 33.8% 1,544 5.8% General, selling and administrative expenses 16,538 20.7% 14,361 18.4% 2,177 15.2% -------- ------ -------- ------ ------ Operating profit 11,471 14.4% 12,104 15.4% (633) -5.2% - ---------------------------------------------------------------------------------------------------------------------
Net sales improved due to higher shipments of lining technology products to domestic and international markets. The European offshore business also increased from prior year sales. Gross profit increased commensurate with sales. Gross margin improved by 130 basis points primarily from lower unit production costs at the segment's U.S. production operations. General, selling and administrative expenses increased due to higher compensation and benefit expenses, information technology costs, marketing and promotion costs, and research and development spending.
- ---------------------------------------------------------------------------------------------------------------- Nine Months Ended September 30, Transportation -------------------------------------------------------------------- 2002 2001 2002 vs. 2001 - ---------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ---------------------------------------------------------------------------------------------------------------- Net sales $ 24,053 100.0% $ 24,907 100.0% $ (854) -3.4% Cost of sales 21,570 89.7% 22,246 89.3% -------- ------ -------- ------ Gross profit 2,483 10.3% 2,661 10.7% (178) -6.7% General, selling and administrative expenses 1,786 7.4% 1,587 6.4% 199 12.5% -------- ------ -------- ------ ------ Operating profit 697 2.9% 1,074 4.3% (377) -35.1% - ----------------------------------------------------------------------------------------------------------------
Net sales declined due to lower customer shipments. Increased general, selling and administrative expenses were associated with higher information technology and compensation costs. 16
- ----------------------------------------------------------------------------------------------------------- Nine Months Ended September 30, Corporate ---------------------------------------------------------- 2002 2001 2002 vs. 2001 - ----------------------------------------------------------------------------------------------------------- (Dollars in Thousands) - ----------------------------------------------------------------------------------------------------------- Intersegment shipping sales $ (8,046) $ (8,457) Intersegment shipping costs (8,046) (8,457) -------- -------- Gross profit - - Corporate general, selling and administrative expenses 5,342 6,123 (781) -12.8% Nanocomposite business development expenses 3,356 3,526 (170) -4.8% -------- -------- ------ Operating loss (8,698) (9,649) 951 -9.9% - -----------------------------------------------------------------------------------------------------------
Intersegment shipping sales 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. Approximately 60% of the lower corporate administrative expenses in the current year period were associated with increased allocation of these costs to the minerals, environmental and transportation segments. The remaining decrease was attributed to lower personnel and legal costs. Nanocomposite business development expenses are comprised of production, research and development and marketing costs. The decline in expenses is associated with a restructuring of the business that was implemented in the second quarter of 2001. Liquidity and Capital Resources Working capital was $76.0 million as of September 30, 2002 compared to $70.1 million at December 31, 2001. The current ratio was 2.86-to-1 as of September 30, 2002 compared to 3.26-to-1 at December 31, 2001. For the nine months ended September 30, 2002, cash flow from operating activities was $19.2 million compared to $13.3 million for the prior year period. The Company also used $5.8 million of cash for discontinued operations in the nine months ended September 30, 2001. Accounts receivable were $60.4 million at September 30, 2002 which was an increase of $16.8 million and $4.7 million from December 31, 2001 and September 30, 2001, respectively. Historically, the accounts receivable balance is highest at the end of September due to higher sales recognized in the third quarter. Days average sales outstanding in accounts receivable was 64 days at September 30, 2002, compared to 66 days at September 30, 2001. The Company invested $10.1 million in capital expenditures in the current year period compared to $8.7 million in the prior year period. A total of $17.0 million, including transaction costs, was utilized for acquisition of CSM and the net assets of FNG Industries. Note 6 of the condensed consolidated financial statements presents further information related to the CSM acquisition. During the first nine months of 2002, a total of approximately 1.2 million shares of the Company's common stock were repurchased at an aggregate value of $6.8 million under the 17 authorization granted by the Company's board of directors in February 2001 and May 2002. Approximately $5.4 million remains in the May 2002 stock repurchase authorization as of September 30, 2002. Dividends paid in the nine month period were $1.8 million. The Company received approximately $1.4 million from employees, directors and officers upon exercise of stock options granted under incentive and non-qualified plans. Outstanding debt as of September 30, 2002 was $29.1 million which was an increase of $15.8 million from December 31, 2001. Cash outlays for acquisitions accounted for a majority of the increase in long-term debt in the nine month period. Long-term debt represented 17% of total capitalization as of September 30, 2002 compared to 9% as of December 31, 2001. The Company has a revolving credit facility of $125 million with financial institutions that matures in October 2003. As of September 30, 2002 the Company had approximately $102 million in unused, committed credit lines. The credit facilities combined with funds generated from operations are expected to be adequate to fund capital expenditures and other investments approved by the board of directors at this time. New Accounting Pronouncements In July 2001, Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Intangible Assets, was issued. SFAS No. 142 applies to all goodwill and identifiable intangible assets acquired in a business combination. Under the new standard, all goodwill, including that acquired before initial application of the standard, will no longer be amortized, but must be tested for impairment at least annually. Identified intangible assets will continue to be amortized over their estimated useful lives and reviewed for impairment in accordance with SFAS No. 144. Within six months of initial application of the new standard, a transitional impairment test must be performed on all goodwill. Any impairment loss recognized as a result of the transitional impairment test is reported as a change in accounting principle. In addition to the transitional impairment test, the required annual impairment test must also be performed in the year of adoption of SFAS No. 142. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001, and must be adopted as of the beginning of a fiscal year. The Company adopted SFAS No. 142 effective January 1, 2002. The adoption of SFAS No. 142 had no impact on the financial statements. In June 2001, the FASB issued 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 is required to adopt SFAS No. 143 on January 1, 2003. Management is currently evaluating the impact of the adoption of SFAS 143 on the Company's consolidated financial statements. 18 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, and 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 the Company's various markets, utilization of the Company's plants, competition in our business segments, operating costs, 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 Note 5 "Derivatives" under Item 1. There have been no material changes in the Company's market risk during the nine months ended September 30, 2002. See disclosures as of December 31, 2001 in the Form 10-K, Item 7A. Item 4: Controls and Procedures Within the 90-day period prior to the filing of the 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. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect those controls subsequent to the date the evaluation was carried out. PART II - OTHER INFORMATION 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 were filed during the quarter ended September 30, 2002. 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: November 12, 2002 /s/ Lawrence E. Washow ------------------------ -------------------------------------------- Lawrence E. Washow President and Chief Executive Officer Date: November 12, 2002 /s/ Gary L. Castagna ------------------------ -------------------------------------------- Gary L. Castagna Senior Vice President and Chief Financial Officer and Principal Accounting Officer CERTIFICATIONS 11/01/2002 Lawrence E. Washow 11/01/2002 Gary L. Castagna 20 I, Lawrence E. Washow, certify that: I have reviewed this quarterly report on Form 10-Q of AMCOL International Corporation; Based on my knowledge, this quarterly 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 quarterly report; Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: designed such disclosure controls and procedures 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 quarterly report is being prepared; evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 1, 2002 /s/ Lawrence E. Washow --------------------- ------------------------ Lawrence E. Washow President and Chief Executive Officer 21 I, Gary L. Castagna, certify that: I have reviewed this quarterly report on Form 10-Q of AMCOL International Corporation; Based on my knowledge, this quarterly 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 quarterly report; Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: designed such disclosure controls and procedures 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 quarterly report is being prepared; evaluatedthe effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors: all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 1, 2002 /s/ Gary L. Castagna --------------------- ---------------------- Gary L. Castagna Senior Vice President, Chief Financial Officer and Principal Accounting Officer 22 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) 10.9 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) 10.11 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); First Amendment to Credit Agreement dated September 25, 1995 (9), Second Amendment to Credit Agreement dated March 28, 1996 (-), Third Amendment to Credit Agreement dated September 12, 1996 (11), Fourth Amendment to Credit Agreement dated December 15, 1998 (18) and Fifth Amendment to Credit Agreement dated May 26, 2000 (20) 10.15 AMCOL International Corporation 1998 Long-Term Incentive Plan (15), as amended (21) 10.17 Asset and Stock Purchase Agreement dated November 22, 1999 by and between the Registrant and BASF Aktiengesellschaft (19)** 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) 99.10 Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350, dated November 1, 2002 ** Portions of these exhibits have been omitted pursuant to a request for confidential treatment. ______________________ (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. 23 (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. (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. (18) 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, 1999. (19) 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, 1999. (20) 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, 2000. (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. 24 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: November 12, 2002 /s/ Lawrence E. Washow ----------------- ------------------------------------- Lawrence E. Washow President and Chief Executive Officer Date: November 12, 2002 /s/ Gary L. Castagna ----------------- ------------------------------------- Gary L. Castagna Senior Vice President and Chief Financial Officer and Principal Accounting Officer EX-99.10 3 dex9910.txt CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AMCOL INTERNATIONAL CORPORATION 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, the undersigned officer of AMCOL International Corporation (the "Company") certifies that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2002 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. Dated: November 1, 2002 /s/ Lawrence E. Washow ------------------------- Lawrence E. Washow Chief Executive Officer AMCOL INTERNATIONAL CORPORATION 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, the undersigned officer of AMCOL International Corporation (the "Company") certifies that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2002 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. Dated: November 1, 2002 /s/ Gary L. Castagna ------------------------ Gary L. Castagna Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----