Form 10-K

10-K 1 d277219d10k.htm FORM 10-K Form 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)


x		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
		EXCHANGE ACT OF 1934
		For the Fiscal Year Ended December 31, 2011

		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: 1-14447

AMCOL INTERNATIONAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)


DELAWARE		36-0724340
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2870 Forbs Avenue Hoffman Estates, Illinois		60192
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (847) 851-1500

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:		Name of Exchange on which registered:
$0.01 par value Common Stock		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer x		Accelerated filer ¨		Non-accelerated filer ¨		Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of the registrant’s $.01 par value Common Stock held by non-affiliates of the registrant (based upon the per share closing price of $38.16 per share on June 30, 2011, and, for the purpose of this calculation only, the assumption that all of the registrant’s directors and executive officers are affiliates) was approximately $957.8 million.

Registrant had 31,857,733 shares of $.01 par value Common Stock outstanding as of February 6, 2012.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, are incorporated by reference into Part III hereof.

PART I

Item 1. Business

INTRODUCTION

AMCOL International Corporation was originally incorporated in South Dakota in 1924, reincorporated in Delaware in 1959, became publicly listed in 1987 on the NASDAQ, and moved to and remains listed on the New York Stock Exchange since 1998. Except as otherwise noted or indicated by context, the term “Company” refers to AMCOL International Corporation and its subsidiaries.

We are a global company focused on long term profitability growth through the development and application of minerals and technology products and services to various industrial and consumer markets. We focus our research and development activities in areas where we can either leverage our current customer relationships and mineral reserves or enhance existing or related products and services.

We operate in five segments: minerals and materials, environmental, oilfield services, transportation and corporate. Our minerals and materials segment mines, processes and distributes minerals and products for use in various industrial and consumer markets, including metalcasting, pet care, laundry care, and drilling industries. Additionally, this segment develops and manufactures synthetic materials principally for personal care applications. Our environmental segment manufactures and distributes products and related services for use as moisture and vapor barriers in commercial construction, landfills and a variety of other industrial and commercial applications. Our oilfield services segment provides both onshore and offshore water treatment filtration, well testing, pipeline separation, nitrogen, coil tubing and other services to the oil and natural gas industry. Our transportation segment includes both a long-haul trucking business and a freight brokerage business serving our domestic subsidiaries as well as third parties. Our corporate segment includes the elimination of intersegment revenues as well as certain expenses associated with research and development, management, employee benefits and information technology activities for our Company.

A significant portion of our minerals and materials and, to a lesser extent, our environmental segments utilize a mineral called bentonite in their products, and we have bentonite reserves located throughout the world. Nicknamed the mineral of a thousand uses, bentonite has several unique characteristics including its ability to bind, swell, adsorb, control rheology, soften fabrics, and have its surface modified through chemical and physical reactions. We also develop applications for other minerals, most significantly chromite; we began acquiring a chromite ore mine in South Africa in 2008 and purchased the remaining interests in this mine in 2011.

We earn revenues from the sales of finished products, provision of services, rental of equipment, and charges for shipping goods and materials to customers. Revenues derived from services are primarily generated in our environmental, oilfield services, and transportation segments, the latter being purely service based.

The following table sets forth the percentage of our revenues generated from each segment for each of our last three fiscal years:


	Percentage of Net Sales
	2011		2010		2009
Minerals and materials		51%		51%		49%
Environmental		26%		26%		29%
Oilfield services		21%		18%		17%
Transportation		6%		6%		7%
Intersegment sales		-4%		-1%		-2%

		100%		100%		100%

Net revenues, operating profit, assets, depreciation, depletion and amortization, capital expenditures and research and development expenditures attributable to each of our segments are set forth in our Notes to Consolidated Financial Statements included later herein.

MINERALS AND MATERIALS SEGMENT

This segment conducts its business through wholly-owned subsidiaries and investments in affiliates and joint ventures throughout the world. Our principal products are marketed under various internationally registered trade names, including VOLCLAY^®, PANTHER CREEK^®, PREMIUM GEL^®, ADDITROL^®, and Hevi-Sand^®.

Our principal mineral is bentonite. Commercially produced bentonite is a type of montmorillonite clay found in beds ranging in thickness from two to 50 feet beneath overburden of up to 60 feet. There are two basic types of bentonite, sodium bentonite and calcium bentonite, and each has different chemical and physical properties. Sodium bentonite is generally referred to as Western bentonite because it predominately exists in the Western United States, although sodium bentonites of lesser purity do exist outside the United States (“U.S.”). Calcium bentonite is sometimes referred to as Southern bentonite in the U.S. and as Fuller’s Earth outside the U.S. Calcium bentonites mined outside the U.S. are sometimes activated with sodium carbonate or similar compounds to produce properties similar to natural sodium bentonite.

In 2009, we purchased a chromite ore mine in South Africa. Chromite ore is located in seams within certain rock formations that can descend over 100 feet below ground. We are particularly interested in mining chromite ore that has physical properties suited for metalcasting applications.

Principal Products and Markets

Metalcasting. In the formation of sand molds for metalcastings, sand is bonded with minerals and various other additives to yield desired casting form and surface finish. Our products are sold in the foundry and casting industry to help customers reduce waste from metalcasting defects, improve the efficiency and recycling of sand blends in mold sand systems, and improve air quality by reducing volatile organic compound emissions. We employ a consultative sales process to sell custom-blended mineral and non-mineral products to strengthen sand molds for casting auto parts; farm and construction equipment; oil and gas production equipment; power generation turbine castings; and rail car components.

In the ferrous casting market, we specialize in blending bentonite of various grades by themselves or with mineral binders containing sodium bentonite, calcium bentonite, seacoal and other ingredients. We also have a line of formulated additives that introduce silicon and carbon in the melt phase of the casting process.

In the steel alloy casting market, we sell a chromite product with a particle size distribution specific to a customer’s needs. One of chromite’s better qualities is its ability to abstract heat. Thus, we market the product for use in making very large, high integrity, steel alloy castings where the chromite is better suited to withstand the high heat and pressure resulting from the significant amount of alloy poured in the casting. We market our chromite product under the trade name Hevi-Sand^®.

Specialty Materials. Our specialty materials products are sold in markets with generally lower volume applications where our material acts as a performance additive. The following are the major markets for such mineral applications:

•

Laundry. We supply high-grade, agglomerated bentonite and other mineral additives used in laundry care products. Bentonite performs as a softening agent in certain powdered-detergent formulations, and it can also act as a carrier for colorants and fragrances. Amongst other things, our laundry care products lower pollution by eliminating phosphates, reduce packaging requirements due to our agglomeration technology which results in a greater density particle, and can lower an end-user’s energy costs in cold wash applications.

•

Personal Care. We manufacture adsorbent polymers and purified grades of bentonite ingredients for sale to manufacturers of personal skin care products. The adsorbent polymers are used to deliver high-value actives in skin-care products. Microsponge^® and Poly-Pore^® are the principal trade names under which these products are sold. Bentonite-based materials act as thickening, suspension and dispersion agent emollients.

•

Paper Manufacturing. Bentonite is used to improve processing and waste control in manufacturing a broad range of printable paper surfaces.

Pet Products. We produce and market sodium bentonite-based scoopable (clumping), traditional and alternative cat litters as well as specialty pet products to grocery and drug stores, mass merchandisers, wholesale clubs and pet specialty stores throughout the U.S. Our scoopable products’ clump-forming capability traps urine, thereby reducing the waste of litter by allowing for easy removal of only the odor-producing elements from the litter box. Our products are marketed under various trade names.

Basic Minerals. We supply minerals in industrial applications where they are used as a component of the end product to the consumer. Our markets and applications include:

•

Drilling Fluid Additives. Sodium bentonite and leonardite, a form of oxidized lignite which we mine and process in North Dakota, are components of drilling fluids used in oil and gas well drilling. Bentonite imparts thickening and suspension properties, which facilitate the transport of rock cuttings to the surface during the drilling process. Drilling fluids lubricate the drilling bit and coat the underground formations to prevent hole, collapse and drill-bit seizing. Our primary trademark for this application is the trade name PREMIUM GEL^®.

•

Other Industrial. We produce bentonite and bentonite blends for the construction industry, which are used as a plasticizing agent in cement, plaster and bricks, and as an emulsifier in asphalt. We also supply grades of bentonite used for pellitizing other materials for ease of use. Examples of this application are the pelletizing of iron ore and livestock feed.

•

Ferro Alloys. A by-product of our chromite processing operations for foundry products includes a chromite ore which has physical properties suited for use in producing ferrochrome. The ore generally needs to have a chromite content in excess of 42% to meet metallurgical grade specifications. Manufacturers of stainless steel are the primary users of ferrochrome.

Sales and Distribution

In 2011, the top ten customers of the minerals and materials segment accounted for approximately 31% of this segment’s sales worldwide. Approximately 59% of our sales in this segment are generated in the Americas. Metalcasting is our largest product line in the Americas and all of our pet products sales are in this region as well. Our sales in EMEA (Europe, Middle East and Africa) represent approximately 19% of segment sales and are comprised of our laundry care, basic minerals, and chromite products. The Asia-Pacific region represents approximately 22% of segment sales with metalcasting being our largest product line.

This segment sells minerals and materials not only to third party customers but also to other segments, principally our environmental segment. Bentonite is a key material included within several products in our environmental segment, most notably the lining technology products.

A large majority of our sales and distribution is conducted by our own personnel. We have established industry-specialized sales groups staffed with technically oriented salespersons serving each of our major markets. Certain products have networks of distributors and representatives, including companies that warehouse products at strategic locations.

We believe our strong, global market position in the metalcasting industry is largely due to our technical service capabilities and our distribution network. We provide training courses and laboratory testing for customers who use our products and blends in the metalcasting process. Our technical sales personnel provide expertise not only to educate our customers on the bentonite blend properties but also to aid them in producing castings efficiently and productively.

In pet products, we are primarily a private-label producer of cat litter. These products are sold solely in the U.S. from three principal sites from which we package and distribute finished goods. Our transportation segment provides logistics services for the cat litter group, and is a key component of our capability in supplying customers on a national basis.

Serving certain specialty material markets requires considerable technical expertise. In laundry care, we not only supply cost-effective products and additives but also provide product development capabilities to adapt to our customers’ product requirements. We experience similar requirements for our personal care business, which makes use of several patents with various durations.

In drilling fluid additives, we market products, including bentonite, under our own and private-label trade names. At least two drilling fluid service competitors have captive bentonite operations while others are party to long-term bentonite supply agreements. The potential customers for our products, therefore, are generally limited to those service organizations that neither are vertically integrated nor have long-term supply arrangements with other bentonite producers.

Competition

We are one of the largest producers of bentonite products globally. There is substantial domestic and international competition, which is essentially a matter of product quality, price, logistics, service and technical support. There are several producers of sodium bentonite or sodium activated calcium bentonite throughout the world, some of which import into the U.S. market. There are also numerous major producers of calcium bentonite and various regional suppliers in the areas we serve. Some of our competitors, especially in the chromite market, are companies primarily in other lines of business with substantially greater financial resources than ours.

Seasonality

We do not consider our minerals and materials segment to be seasonal in nature.

ENVIRONMENTAL SEGMENT

Principal Products and Markets

The business is principally conducted through wholly-owned subsidiaries and joint ventures throughout the world. Many of these companies utilize our CETCO^® brand name. Our five principal markets are as follows:

Lining Technologies. We sell a variety of lining and other products to landfill, mining, and other construction markets for a variety of applications, most of which are directed to preserving or remediating environmental issues.

•

Lining Technologies. We help customers protect ground water and soil through the sale of geosynthetic clay liner products containing bentonite. We market these products under the BENTOMAT^® and CLAYMAX^® trade names principally for lining and capping landfills, mine waste disposal sites, water and wastewater lagoons, secondary containments in tank farms, and other contaminated sites. We also provide associated geosynthetic materials for these applications, including geotextiles and drainage geocomposites.

•

Remediation Technologies. In remediation technologies, we provide engineered solutions for challenging environmental site-remediation projects, usually with the goal of redeveloping contaminated industrial sites.

Such projects often involve contaminated sediment and soil capping, waste solidification and stabilization, water treatment, sludge dewatering, hazardous waste clean-up and engineered remedial barriers. Products offered include Liquid Boot^®, a liquid applied vapor barrier system; REACTIVE CORE-MAT™, an in-situ sediment capping material; ORGANOCLAY^®, which absorbs organic containments; and QUIK-SOLID^®, a super absorbent media.

Building Materials. We supply many roofing and waterproofing materials to the non-residential construction industry. This group’s products include VOLTEX^®, a waterproofing composite comprised of two polypropylene geotextiles filled with sodium bentonite; ULTRASEAL^®, an advanced membrane using a unique active polymer core; and COREFLEX^®, featuring heat-welded seams for protection of critical infrastructure. In addition to these membrane materials, we also provide roofing products and a variety of sealants and other accessories required to create a functional waterproofing system.

Contracting Services. Our contracting services group provides geo-environmental solutions for a variety of construction projects but is focused on installation of our own products in construction sites. This group is largely domiciled in Europe as, in 2011, we sold our domestic operations. This group operates in the commercial and environmental construction industries utilizing our own and third-party products.

Drilling. Our drilling products are used in environmental and geotechnical drilling applications, horizontal directional drilling, mineral exploration and foundation construction. The products are used to install monitoring wells, facilitate horizontal and water well drilling, and seal abandoned exploration drill holes. VOLCLAY GROUT™, HYDRAUL-EZ^®, BENTOGROUT^® and VOLCLAY TABLETS™ are among the trade names for products used in these applications. Ground source heat loop systems utilizing GEOTHERMAL GROUT™ represent a developing area for drilling products. We also offer a range of drilling products used in the excavation of foundations for large buildings, bridges and dams; these products include SHORE PAC^® and PREMIUM GEL^®.

Sales and Distribution

On an individual customer basis, we generated less than $5 million of sales from each of the top five customers in the environmental segment. Approximately 45% of sales are in the Americas where the U.S. is our largest geographical market for all product lines. Approximately 49% of sales are in EMEA and the remaining 6% in the Asia-Pacific region.

Sales and distribution of the lining technologies products and our contracting services are primarily performed through our own personnel and facilities. Service revenues from our contracting services are primarily generated under medium to short-term contracts. For both groups, our staff includes sales professionals and technical support engineers who analyze the suitability of our products in relation to the customer’s specific application and the conditions that products will endure or the environment in which they will operate.

The building materials products are sold through our own sales professionals as well as through an integrated distributor and dealer network. The end-users of our products are generally building sub-contractors who are responsible for installing the products. These products have with a longer term warranty in instances where we can control or monitor the installation of the final product on the job site.

Our drilling product lines are generally sold through an extensive distribution network coordinated by our regional sales managers. The end customers for these products are typically small well drilling companies and general contractors.

Our remediation technologies products are primarily sold through approved contractors who are environmental project specialists. Our sales and technical staff typically assist project designers by providing technical data to engineers and architects who specify our products in the design of building structures or remediation sites.

Competition

Our lining technologies group competes with geosynthetic clay liner manufacturers worldwide, several suppliers of alternative lining technologies, and providers of soil and environmental remediation solutions and products. The building materials product lines compete in a highly fragmented market comprised of a wide variety of alternative technologies. Competitors in our contracting services primarily include other specialty and general contractors, some of which have substantially greater resources. A number of integrated bentonite companies compete against us in the drilling products market. Competition in all product lines is based on product quality, service, price, technical support and product availability.

Seasonality

Most of the products in the environmental segment are impacted by weather and soil conditions. Many of the products cannot be applied in wet or winter weather conditions and, as such, sales and profits tend to be larger during the period from April through October. As a result, we consider the business of this segment to be seasonal.

OILFIELD SERVICES SEGMENT

Principal Services and Markets

Our oilfield services segment provides both onshore and offshore water treatment, well testing, pipeline separation, nitrogen, coil tubing and other services to the oil and natural gas industry. We sell products and services through subsidiaries located in Australia, Brazil, Malaysia, Nigeria, the United Kingdom, and the U.S., principally in the Gulf of Mexico and surrounding on-shore area. The following are the principal services we provide:

Water Treatment. We help customers protect the environment, especially marine environments, and comply with regulatory requirements by providing equipment, technologies, personnel and filtration media to help them discharge waste water generated during oil production.

Well Testing. We provide equipment and personnel to help customers control well production as well as to clean up, unload, separate, measure component flow, and dispose of fluids from oil and gas wells.

Pipeline. Our personnel utilize engineered equipment that separates, filters, cleans and allows treatment of effluents arising from pipeline testing and maintenance activities.

Nitrogen Services. Liquid nitrogen is commonly used in the pipeline, refinery, and oil and natural gas business. By providing liquid nitrogen that is then changed into nitrogen gas with our personnel and mobile equipment, we help customers perform maintenance activities in a safe environment on their production platforms, pipeline operations, and refineries. Acquired in 2008, these services are provided in jetting wells that are loaded with fluid; stimulating wells, including fracturizing and acidizing; displacing completion fluids prior to perforating; airing up cans for offshore floating installations; and pressure testing and other maintenance activities.

Coil Tubing. Acquired in 2008, our coil tubing services utilize a long, continuous length of pipe which is wound on a spool or reel. We rent the coil tubing and provide operating personnel to pump fluids through the tubing into boreholes or to assist in certain well-drilling applications. Before being pushed into a well head, the pipe is straightened, then pumped with fluid. When finished, it is finally rewound or coiled back onto the reel housed on our transport units. Our coil tubing services are typically provided in areas of nitrogen displacement, acidizing, cleanouts, and other workovers and provide a benefit over traditional well intervention methods as fluids can be pumped at any time regardless of the position and direction of travel.

Competition

Our oilfield services group competes with other oil services companies. Several of these competitors have significantly more resources than we do and consequently may be better able to compete in periods of economic downturn, especially in terms of selling prices. However, we believe we offer several competitive advantages, especially in the area of water treatment services, due to superior and innovative technologies that we have developed internally and the combination of services that we can provide.

Sales and Distribution

The top ten customers in our oilfield services segment accounted for 47% of the segment sales worldwide. However, the composition of customers within this group varies from year to year and is significantly dependent on the type of activities each customer is undertaking within the year, regulations, and overall dynamics of the oil and gas industry. Approximately 88% of sales are in the Americas. Our largest geographical market is the U.S., and more specifically the Gulf of Mexico region. Approximately 8% of sales are in the Asia-Pacific region and 4% are in EMEA.

Employees in this segment primarily sell and distribute products and services on a direct basis. Our principal customers are oil and natural gas companies who maintain substantial offshore and onshore drilling and production platforms for both oil and gas.

Seasonality

Much of the business in the oilfield services segment is impacted by weather conditions. Our business is concentrated in the Gulf of Mexico and surrounding states where our customers’ oil and gas production facilities are subject to natural disasters, such as hurricanes. Given this, our sales could be lower in the June to November months. It can also experience periods of growth after a hurricane as customers require our services to start their operations back up.

TRANSPORTATION SEGMENT

We operate a long-haul trucking business and a freight brokerage business primarily for delivery of finished products throughout the continental U.S. These services are provided to our subsidiaries as well as third-party customers. Through our transportation business, we are better able to control costs, maintain delivery schedules and assure equipment availability in the delivery of our products. In 2011, approximately 48% of the revenues of this operation involved services provided to our domestic minerals and materials and environmental segments.

MINERAL RESERVES AND MINING

Mineral Reserves

We have reserves of sodium and calcium bentonite at various locations in the U.S., including Wyoming, South Dakota, Montana and Alabama, as well as in Australia, China, and Turkey. Through our investments in affiliates and joint ventures, we also have access to bentonite deposits in Egypt, India, and Mexico. At 2011 consumption rates and product mix, we have proven, assigned reserves of commercially usable sodium bentonite for the next 31 years. We have proven, assigned reserves of commercially usable calcium bentonite for the next 12 years. While we believe that our reserve estimates are reasonable and our title and mining rights to our reserves are valid, we have not obtained any independent verification of such reserve estimates or such title or mining rights.

We own or control the properties on which reserves are located through long-term leases, royalty agreements and patented and unpatented mining claims. A majority of our bentonite reserves are owned. No single or group of mining claims or leases is significant or material to the financial condition or operations of our Company or our segments. However, our mineral rights associated with our chrome business in South Africa are significant in that they comprise 86% of the total value of our mineral rights as recorded in our Consolidated Balance Sheet at December 31, 2011.

A majority of our current bentonite mining activities in the U.S. do not occur on reserves we own. Rather, the majority of our current bentonite mining in the U.S. occurs on reserves comprised of over eighty mining lease and royalty agreements (including easement and right of way agreements) and 2,000 mining claims. The majority of these are with private parties and located in Montana, South Dakota and Wyoming. The bentonite deposits underlying these claims and leases generally lie in parcels of land varying between 20 and 40 acres.

In general, our bentonite-reserves are immediately adjacent to, or within sixty miles of, one of seven related processing plants. All of the properties on which our reserves are located are either physically accessible for the purposes of mining and hauling or the cost of obtaining physical access would not be material. Access to processing facilities from the mining areas is generally by private road, public highways, or railroads. For each leased property and mining claim, there are multiple means of access.

To retain possessory rights in unpatented mining claims in North America, a fee of $140 per year for each unpatented mining claim is required. The validity of title to unpatented mining claims is dependent upon numerous factual matters. We believe that the unpatented mining claims that we own are in compliance with all applicable federal, state and local mining laws, rules and regulations. We are not aware of any material conflicts with other parties concerning our claims. From time to time, members of Congress and members of the executive branch of the federal government have proposed amendments to existing federal mining laws. The various amendments would have had a prospective effect on mining operations on federal lands and include, among other things, the imposition of royalty fees on the mining of unpatented claims, the elimination or restructuring of the patent system and an increase in fees for the maintenance of unpatented claims. To the extent that future proposals may result in the imposition of royalty fees on unpatented lands, the mining of our unpatented claims may become uneconomic and royalty rates for privately leased lands may be affected. We cannot predict the effect any potential amendments may have or whether or when any such amendments might be adopted.

We maintain a continuous program of worldwide exploration for additional reserves and attempt to acquire reserves sufficient to replenish our consumption each year, but we cannot assure that additional reserves will continue to become available.

We oversee all of our mining operations, including our exploration activity and securing the necessary permits from appropriate government agencies.

The following table shows a summary of our mineral sales from active mining areas for the last 3 years in short tons, as well as mineral reserves by major mineral category.


	Tons Sold (000s)						Wet Tons of Reserves (000s)		Assigned Reserves (000s)		Unassigned Reserves (000s)		Conversion Factor		Mining Claims
	2011		2010		2009		Wet Tons of Reserves (000s)		Assigned Reserves (000s)		Unassigned Reserves (000s)		Conversion Factor		Owned		Unpatented **		Leased
Sodium Bentonite
Assigned
Australia		13		9		9		1,508		1,508		—		80%		—		—		1,508
Belle/Colony, WY/SD		1,125		1,121		1,012		35,709		35,709		—		77%		1,029		904		33,776
Lovell, WY		598		605		372		29,761		29,761		—		86%		15,038		12,018		2,705
TOTAL ASSIGNED		1,736		1,735		1,393		66,978		66,978		—				16,067		12,922		37,989

Unassigned
SD, WY, MT		-		-		-		60,786		-		60,786		82%		55,189		3,857		1,740
TOTAL UNASSIGNED		-		-		-		60,786		-		60,786				55,189		3,857		1,740

TOTAL SODIUM BENTONITE		1,736		1,735		1,393		127,764		66,978		60,786				71,256		16,779		39,729
										52%		48%				56%		13%		31%
Calcium Bentonite
Assigned
Chao Yang, Liaoning, China		351		261		177		1,506		1,506		-		76%		-		-		1,506
Nevada		2		2		1		35		35		-		76%		35		-		-
Sandy Ridge, AL		91		89		66		5,991		5,991		-		76%		1,707		-		4,284
Turkey		140		134		86		1,397		1,397		-		77%		-		-		1,397
Vici, OK		-		-		-		-		-		-		76%		-		-		-
TOTAL ASSIGNED		584		486		330		8,929		8,929		-				1,742		-		7,187

Unassigned
Nevada, Vici, OK		-		-		-		599		-		599		76%		-		500		99
TOTAL UNASSIGNED		-		-		-		599		-		599				-		500		99

TOTAL CALCIUM BENTONITE		584		486		330		9,528		8,929		599				1,742		500		7,286
										94%		6%				18%		5%		76%
Leonardite
Gascoyne, ND		52		52		35		809		809		-		73%		-		-		809
										100%										100%
Other
Assigned
South Africa		121		122		60		1,352		1,352		-		75%		1,352		-		-
TOTAL ASSIGNED		121		122		60		1,352		1,352		-				1,352		-		-
Unassigned
Nevada		-		-		-		2,997		-		2,997		80%				-		2,997
TOTAL UNASSIGNED		-		-		-		2,997		-		2,997				-		-		2,997

TOTAL OTHER		121		122		60		4,349		1,352		2,997				1,352		-		2,997
										31%		69%				31%		0%		69%

GRAND TOTALS		2,493		2,395		1,818		142,450		78,068		64,382				74,350		17,279		50,821
										55%		45%				52%		12%		36%

**	Quantity of reserves that would be owned if patent was granted.

Assigned reserves are reserves which could be reasonably expected to be processed in existing plants. Unassigned reserves are reserves which will require additional expenditures for processing facilities. Conversion factor is the percentage of reserves that will be available for sale after processing. Our estimates of assigned and unassigned reserves in the above table require us to make certain key assumptions. These assumptions relate to consistency of clay beds in relation to drilling samples obtained with respect to both quantity and quality of reserves contained therein; the ratio of overburden to mineral deposits; any environmental or social impact of mining the minerals; and profitability of extracting those minerals, including haul distance to processing plants, applicability of minerals to various end markets and selling prices within those markets, and our past experiences in the mineral beds, several of which we have been operating in for over 80 years. We estimate that available supplies of other materials utilized in our minerals and materials business are sufficient to meet our production requirements for the foreseeable future.

Mining and Processing

Bentonite is surface mined, generally with large earthmoving scrapers, and then loaded into trucks and off-highway-haul wagons for movement to processing plants. The mining and hauling of our clay is done by us and by independent contractors.

At the processing plants, bentonite is dried, crushed and sent through grinding mills, where it is sized to customer requirements, then chemically modified where needed and transferred to silos for automatic bagging or bulk shipment. Most of the production is shipped as processed rather than stored for inventory.

Chromite is mined from open cast pits from our property in South Africa and transported to our nearby processing facility. In our facility, the ore is further crushed, milled, washed, and separated from impurities. We are operationalizing our production facility to give it the ability to manufacture a range of precisely specified materials, such as ones with specific particle sizes, that provide value to our customer’s operations and efficiency.

CROSS SEGMENT FUNCTIONS

Product Development and Patents

We work actively with customers in each of our major markets to develop and commercialize new products and applications of existing products to solve customer problems. We maintain research centers and laboratory testing facilities in Hoffman Estates, Illinois; Birkenhead, England; and Tianjin, China. When we perceive a need for a product that will accomplish a particular goal, we work to develop the product, research its marketability and study the feasibility of its production. We also co-develop products with customers, or others, as needs arise. Our development efforts emphasize markets with which we are familiar and products for which we believe there is a viable market.

We hold a number of U.S. and international patents. We follow the practice of obtaining patents on new developments whenever feasible. However, we do not consider that any one or any combination of such patents is material to our business as a whole.

Research and Development

Our business segments share research and laboratory facilities, and technological developments are shared among our subsidiaries, subject to license agreements where appropriate. Further information on research and development activities is included in our Notes to Consolidated Financial Statements contained in Item 8 of this report.

Regulation and Environmental

We believe we are in material compliance with current, applicable mining regulations. Since reclamation of exhausted mining sites has been a regular part of our surface mining operations since 1973, maintaining compliance with current regulations has not had a material effect on mining costs. Reclamation costs are reflected in the cost of the bentonite sold.

The grinding and handling of dried clay is part of the production process, and, because these processes generate dust, our mineral processing plants are subject to applicable clean air standards (including Title V of the Clean Air Act). All of our plants are equipped with dust collection systems. We have not had, and do not presently anticipate, any significant regulatory problems in connection with our dust emission, though we expect ongoing expenditures for the maintenance of our dust collection systems and required annual fees.

Our operations are also subject to other federal, state, local and foreign laws and regulations relating to the environment and to health and safety matters. Certain of these laws and regulations provide for the imposition of substantial penalties for noncompliance. While the costs of compliance with, and penalties imposed under, these laws and regulations have historically not had a material adverse effect on us, future events, such as changes in or modified interpretations of existing laws and regulations, enforcement policies, or further investigation or evaluation of potential health hazards of certain products, may give rise to additional compliance and other costs that could have a material adverse effect on us.

FOREIGN OPERATIONS AND EXPORT SALES

Approximately 38% of our 2011 net sales were generated in countries outside the Americas. Our foreign operations have typically comprised about a third of our income from continuing operations before income taxes, income from affiliates and joint-ventures, and non-controlling interest. However, in 2009, they comprised approximately 58% of that income as the economic recession more heavily affected our domestic operations than our foreign operations. Of our tons sold from our domestic mineral deposits in 2011, approximately 28% of these shipments were made to our sister companies and third party customers located outside the United States as compared to 21% and 17% in 2009 and 2010, respectively.

To enhance our overseas market presence, we maintain mineral processing plants in the United Kingdom, China, Australia, South Korea, Poland, Thailand, South Africa and Turkey. Chartered vessels deliver large quantities of our bulk, dried U.S. sodium bentonite to the plants outside the U.S. where it is processed and mixed with other clays and distributed throughout EMEA and the Asia-Pacific region. In addition, we maintain a worldwide network of independent dealers, distributors and representatives to support sales and distribution.

We manufacture geosynthetic clay liners in the United Kingdom, Spain, Poland, China, South Korea and India. These international operations provide a cost-effective means of supplying the EMEA and Asia-Pacific markets.

Our oilfield services segment maintains offices and operations centers in Australia, Brazil, Malaysia, Nigeria and Scotland to service customers in those local markets.

Our international operations are subject to the usual risks of doing business abroad and in developing countries, such as currency fluctuations and devaluation, restrictions on the transfer of funds, and import and export duties.

The Notes to Consolidated Financial Statements included in Item 8 of this report present further details on our sales by geographic region. These Notes are incorporated by reference for sales attributed to foreign operations and export sales from the U.S.

EMPLOYEES

As of December 31, 2011, we employed 2,563 people in our global organization, 1,283 of whom were employed outside of the United States. Operating plants are adequately staffed, and no significant labor shortages are presently foreseen. Labor relations have been satisfactory.

AVAILABLE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements and other information filed by the Company at the SEC’s Public Reference Room at 100 F. Street N.E., Washington, D.C., 20549. Please call (800) SEC-0330 for further information on the Public Reference Room. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our filings are available to the public at this website, www.sec.gov.

Our principal Internet address is www.amcol.com. Our annual, quarterly and current reports, and amendments to those reports, are available free of charge on www.amcol.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Item 1A. Risk Factors

Certain statements we make from time to time, including statements in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section hereafter, constitute “forward-looking statements” made in reliance upon the safe harbor contained in Section 21 E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements relating to our Company or our operations that are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions, and statements relating to anticipated growth, acquisitions, levels of capital expenditures, future dividends, expansion into global markets and the development of new products. Such forward-looking statements speak only as of the date hereof and are not guarantees of future performance and involve risks and uncertainties. Our actual results, performance or achievements could differ materially from the results, performance or achievements expressed in, or implied by, these forward-looking statements as a result of various factors. We undertake no duty to update any forward-looking statements to conform the statements to actual results or changes in our expectations.

A number of risks will challenge us in meeting our long-term profit and strategic objectives, and there can be no assurance that we will achieve success in implementing any one or more of them. Specifically, the risks outlined below could affect the achievement of our expected results. In addition, political, economic, or credit crises occur from time to time in our geographic markets, and these crises could affect or heighten the risks outlined below, especially with regard to our reliance on key industries, the volatility of our stock price, and increased exchange rate sensitivity. The credit crisis may also affect our ability to obtain capital or finance acquisitions or other activities on terms substantially similar to our current debt facilities should that need arise in the future. Any of these factors or the risks outlined below could affect our business opportunities and results:

Reliance on Metalcasting & Construction Markets

Approximately 53% of our minerals and materials segment’s sales in 2011 were to the metalcasting market. Our environmental segment’s sales are predominantly derived from the commercial construction and infrastructure markets. All of these markets depend heavily upon the strength of the domestic and international economies. If these economies weaken, demand for our products sold to these markets may decline and our business or future financial results may be adversely affected.

Susceptibility to Oil and Natural Gas Markets

Revenues from our oilfield services segment in 2011 represent 21% of consolidated revenues and 23% of consolidated operating income. Oil and natural gas production activities are heavily influenced by the benchmark price of these commodities, which can be influenced by both economic and political events and, in turn, affect our customers’ demand for our products and services. Thus, the benchmark prices of oil and natural gas may ultimately affect the performance of this segment.

In addition, oil and natural gas exploration and production activities depend heavily on the location of these natural resources within the earth’s geology and geographic location as well as technologies available to profitably extract them. For example, the recent application of horizontal drilling technologies allow oil and natural gas production companies to extract significantly greater amounts of oil and natural gas in geological deposits located in areas where we currently do not have a significant presence. Thus, the performance of our oilfield services segment is affected by changes in technologies, locations of customers’ targeted reserves, and competition in various geographic markets.

Sensitivity to Energy and Petroleum Related Products

We purchase a significant amount of raw materials which are derived from petrochemical products. Our production processes also consume a significant amount of energy, primarily electricity, diesel fuel, natural gas and coal. We use diesel fuel to operate our mining and processing equipment and our freight costs are heavily dependent upon fuel prices and surcharges.

On a combined basis, these factors represent a large exposure to petrochemical and energy products which may be subject to significant price fluctuations. While we have been successful in attaining price increases in certain markets to offset some of these rising costs, there can be no assurance that we will be successful in continuing to achieve these price increases or protecting our margins.

Availability and Cost of Shipping

We rely on shipping bulk cargos of bentonite from the United States and China to customers, as well as our own subsidiaries, and we are sensitive to our ability to recover these shipping costs. In the last few years, bulk cargo shipping rates have been very volatile, and, to a lesser extent, the availability of bulk cargo containers has been suspect. If we can not secure our container requirements or offset additional shipping costs with price increases to customers, our profitability could be impacted.

Seasonality of Our Oilfield Services and Environmental Segments

Our oilfield services and environmental segments are affected by seasonal weather patterns. A majority of our oilfield services revenues are derived from the Gulf of Mexico and surrounding states, which are susceptible to hurricanes that typically occur in the Fall months. In addition, it is affected by customers’ demands for natural gas. Natural gas is affected by weather patterns as colder winters increase the demand for natural gas to heat homes and warmer summers increase the demand for natural gas to fuel generators providing electricity to run air conditioners. Actual or threatened hurricanes or changes in the demand for natural gas can result in volatile demand for services provided by our oilfield services segment.

Our environmental segment is affected by weather patterns which determine the feasibility of construction activities. Typically, less construction activity occurs in winter months and thus this segment’s revenues tend to be greatest in the second and third quarters when weather patterns in our geographic markets are more conducive to construction activities.

Cyclicality of Our Segments

All of our segments are affected by economic cycles. During periods of economic slowdown, our customers often reduce their capital expenditures and defer or cancel pending projects. Such developments occur even amongst customers that are not experiencing financial difficulties. These risks are more predominant in our environmental and minerals and materials segments.

In our environmental segment, the construction and infrastructure markets are heavily dependent upon the strength of domestic and international economies. In our minerals and materials segment, the metalcasting market is dependent upon the demand for castings for automobile components, farm and construction equipment, oil and gas production equipment, power generation turbine castings, and rail car components. Many of these types of equipment are sensitive to fluctuations in demand during periods of recession or tough economies, which ultimately may affect the demand for our environmental and minerals and materials segments’ products and services.

Moreover, in periods of lower economic productivity or recession, oil and natural gas prices tend to decrease, which in turn causes exploration companies to reduce their capital expenditures and production and exploration activities. This has the effect of decreasing the demand and increasing competition for the services that our oilfield services segment provides.

Risks of International Expansion & Operation

An important part of our business strategy is to expand internationally by establishing our own presence in new markets when possible or through acquisitions, joint ventures or other strategic alliances. Sales and earnings from our overseas operations have increased considerably in recent years and comprise a significant portion of our financial results, including our joint ventures. As we expand and operate internationally, we will be subject to a myriad of risks, especially in less developed countries whose economies increase at rates faster than more developed nations. These risks relate to currency exchange rates, political and economic environments, business and trade laws, and regulatory and compliance issues. These risks are beyond our control and can lead to sudden, and potentially prolonged, changes in demand for our products, difficulty in enforcing agreements, losses in the realizability of our assets, or fluctuations in our earnings due to the impact from our joint ventures.

Regulatory and Legal Matters

Our operations are subject to various federal, state, local and foreign laws and regulations relating to environmental and to health and safety matters. Substantial penalties may be imposed if we violate certain of these laws and regulations, even if the violation was inadvertent or unintentional. If these laws or regulations are changed or interpreted differently in the future, it may become more difficult or expensive for us to comply. In addition, investigations or evaluations of our products by government agencies may require us to adopt additional safety measures or precautions. If our costs to comply with such laws and regulations in the future materially increase, our business and future financial results could be materially and adversely affected. We may also be subject to adverse litigation results in addition to increased compliance costs arising from future changes in laws and regulations that may negatively impact our operations and profits. Last, certain of our customers are subject to various federal and foreign laws and regulations relating to environmental and health and safety matters, especially our oilfield customers who are subject to drilling permits, wastewater disposal and other regulations. To the extent that these laws and regulations affecting our customers change, demand for our products and services could also change and thereby affect our financial results.

Ability to Complete, Integrate & Finance Acquisitions

Our business strategy includes pursuing acquisitions of complementary businesses, through either our own wholly-owned subsidiaries or our investments in affiliates and joint ventures. The success of any future acquisitions or investments will be dependent upon our ability to locate attractive businesses at a reasonable attractive price and our ability to successfully integrate them into our existing operations.

In addition, we have typically financed our acquisitions and investments with debt available to us under our various credit facilities and our ability to issue new debt. However, we may decide to pay all or a portion of the purchase price of any future acquisition or investment with shares of our common stock. If we use our common stock in this way, the price of our stock may decrease.

Ability to Pay Dividends

We currently declare and pay regular cash dividends on our common stock. Any future payment of cash dividends will depend upon our financial condition, earnings, legal requirements, restrictions in our debt agreements and other factors deemed relevant by our board of directors. Our board of directors may decrease or discontinue payment of dividends at any time.

Impact of Competition

Our businesses have many competitors, some of whom are larger and have more resources than we do. We also face competition for some of our products from alternative products, and some of the competition we face comes from competitors in lower-cost production countries like China and India. Many factors could change the level of competition we face in our markets, which could result in decreased demand for our products and services and negatively affect our financial performance.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We operate the following principal plants, mines and other facilities, all of which are owned, except as noted below. We also have numerous other facilities which blend ADDITROL ^®, package cat litter and chromite sand, warehouse products and serve as sales offices.


LOCATION		PRINCIPAL FUNCTION
MINERALS AND MATERIALS
Colony, WY (two plants)		Mine and manufacture sodium bentonite, package cat litter
Lovell, WY ⁽¹⁾		Mine and manufacture sodium bentonite
Sandy Ridge, AL		Mine and manufacture calcium bentonite; blend ADDITROL^®
Chao Yang, Liaoning, China		Mine and manufacture calcium bentonite
Enez, Turkey		Mine and manufacture calcium bentonite
Laemchabang, Thailand		Manufacture sodium and calcium bentonite and laundry care products
Ruighoek Farm, Northwest Province, South Africa		Mine and manufacture chromite ore
Yangbuk-Myeun, Kyeung-buk, South Korea		Manufacture metalcasting products
Tianjin, China		Manufacture metalcasting and laundry care products
Winsford, Cheshire, U.K.		Manufacture bentonite, other minerals, and laundry care products
ENVIRONMENTAL
Cartersville, GA		Manufacture components for geosynthetic clay liners; manufacture Bentomat^® and Claymax^® geosynthetic clay liners; manufactures other building materials products
Lovell, WY ⁽¹⁾		Manufacture Bentomat^® and Claymax^® geosynthetic clay liners and other building materials products
Birkenhead, Merseyside, U.K. ⁽¹⁾⁽²⁾		Manufacture Bentomat^® geosynthetic clay liner; research laboratory; headquarters for CETCO (Europe) Ltd.
Segovia, Spain		Manufacture Bentomat^® geosynthetic clay liners
Suzhou, China		Center for China operations; manufactures lining and waterproofing products for China and greater Asian markets
Szczytno, Poland		Manufacture Bentomat^® and Claymax^® geosynthetic clay liners
OILFIELD SERVICES
Beckville, TX ⁽²⁾		Well testing services
Broussard, LA ⁽²⁾		Central operations and distribution
Covington, LA ⁽²⁾		Headquarters
Driscoll, TX ⁽²⁾		Coil tubing services
Harvey, LA ⁽²⁾		Nitrogen sales and service
Kenamen, Malaysia ⁽²⁾		Filtration services and sales
New Iberia, LA ⁽²⁾		Coil tubing services
Springtown, TX ⁽²⁾		Well testing services
TRANSPORTATION
Scottsbluff, NE		Transportation headquarters and terminal
CORPORATE
Hoffman Estates, IL ⁽²⁾		Corporate headquarters; Environmental headquarters; Minerals & Materials headquarters; research laboratory

⁽¹⁾	Shared facilities between minerals and materials and environmental segments.

⁽²⁾	Certain offices and facilities are leased.

We consider our plants in the Western U.S. to be of strategic importance given their production capacity, products manufactured, and proximity to our mineral reserves. All of our pet products are manufactured either in our Lovell, WY plant or one of our Colony, WY plants given their granularization capabilities and the fact that their location provides freight cost savings to key customers. Our Sandy Ridge, AL facility supplies calcium bentonite to our U.S. blending plants as an ingredient for production of ADDITROL^®. The blending plants have collective importance since they produce customized products for metalcasting customers.

Item 3. Legal Proceedings

We are party to a number of lawsuits arising in the normal course of our business. We do not believe that any pending litigation will have a material adverse effect on our consolidated financial position or results of operations.

Since the mid-1980’s, we and/or our subsidiaries have been named as one of a number of defendants in product liability lawsuits relating to the minor free-silica content of our bentonite products used in the metalcasting industry. The plaintiffs in these lawsuits are primarily employees of our foundry customers.

To date, we have not incurred significant costs in defending these matters. We believe we have adequate insurance coverage and do not believe the litigations will have a material adverse impact on our financial condition, liquidity or results of our operations.

We have neither been nor expect to be assessed any tax shelter penalties by the United States Internal Revenue Service for tax shelter transactions that either the IRS deems abusive or have significant tax avoidance penalties.

Item 4. Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this Form 10-K.

Executive Officers of Registrant


NAME	AGE		PRINCIPAL OCCUPATION FOR LAST FIVE YEARS

James W. Ashley		62	Vice President and General Counsel of the company since January 2012; prior thereto, Partner at Locke Lord LLP since 2008; prior thereto, Partner at Lord Bissell & Brook LLP.

Patrick E. Carpenter		49	Vice President of the company and President of the environmental segment since January 2012; prior thereto, Vice President of Business Development of Colloid Environmental Technologies Company from January 2010 through December 2011, and its Vice President of Construction Materials from January 2007 through December 2009.

Gary L. Castagna		50	Senior Vice President of the company and President of our minerals and materials segment since May 2008; prior thereto, Senior Vice President, Chief Financial Officer and Treasurer of the company since February 2001; prior thereto, a consultant to AMCOL since June 2000; prior thereto, Vice President of the company and President of Chemdal International Corporation (this business is a former subsidiary of AMCOL, and consisted of the absorbent polymers business that was sold to BASF AG in June 2000) since August 1997; since January 2000, Director of M~Wave Incorporated, a manufacturer and distributor of printed circuit boards.

Michael R. Johnson		53	Vice President of the company since January 2010; President of the oilfield services segment since 2003; prior thereto, Vice President of CETCO Oilfield Services since 2000.

Ryan F. McKendrick		60	Chief Executive Officer of the company since January 1, 2011; prior thereto, Chief Operating Officer of the company since January 1, 2010; prior thereto, Senior Vice President of the company and President of our environmental segment since November 1998; and President of Volclay International Corporation since 2002.

Donald W. Pearson		50	Vice President, Chief Financial Officer and Treasurer of the company since May 2008; prior thereto, Vice President Finance, UPM - Kymmene Corporation North America (a manufacturer of magazine paper), May 2006 through May 2008; Financial Controller UPM - Kymmene Corporation North America, February 2004 through May 2006; prior thereto, Senior Vice President, Business Planning, Information Resources, Inc. (an information services provider), August 2000 through February 2004.

Robert J. Trauger		49	Vice President of Colloid Environmental Technologies Company since January 2012; prior thereto, Vice President of the company and President of our environmental segment since January 2010; prior thereto, Vice President of Operations and International Development for our environmental segment since 2004. Mr. Trauger ceased being an executive officer effective January 2012.

All executive officers of the Company are elected annually by the Board of Directors for a term expiring at the annual meeting of directors following their election or when their respective successors are elected and shall have qualified.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock trades on the New York Stock Exchange under the symbol “ACO.” The following table sets forth, for the periods indicated, the high and low sale prices of the common stock, as reported by the New York Stock Exchange, and cash dividends declared per share.


		Stock Price				Cash Dividends
		High		Low		Declared Per Share
	1st Quarter		$ 36.00		$ 28.92		$ 0.18
Fiscal Year Ended December 31, 2011:	2nd Quarter		38.62		32.45		0.18
	3rd Quarter		39.85		23.37		0.18
	4th Quarter		35.09		21.60		0.18

	1st Quarter		$ 30.50		$ 23.22		$ 0.18
Fiscal Year Ended December 31, 2010:	2nd Quarter		32.60		23.45		0.18
	3rd Quarter		31.15		22.12		0.18
	4th Quarter		31.57		25.63		0.18

We have paid cash dividends every year since 1938. As of February 15, 2012, there were approximately 9,979 holders of record of the common stock, including shares held in street name.

Purchases of Equity Securities

We did not repurchase any of our outstanding common stock in 2011.

Equity Compensation Plan Information

The following table summarizes information about our equity compensation plans as of December 31, 2011. All outstanding awards relate to our common stock. Shares issued under all of the following plans may be from the Company’s treasury, newly issued or both.


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
Equity compensation plans approved by security holders	1,714,113(1)	$24.41	1,568,950(2)
Equity compensation plans not approved by security holders	N/A	N/A	N/A
Total	1,714,113(1)	$24.41	1,568,950(2)

(1) Includes stock options and stock settled appreciation rights issued and outstanding under the following AMCOL plans: 1998 Long-Term Incentive Plan; 2006 Long-Term Incentive Plan; and 2010 Long-Term Incentive Plan.

(2)	Subject to issuance pursuant to our 2010 Long-Term Incentive Plan.

Performance Graph

The graph below sets forth a comparison of cumulative total shareholder returns for the past five years for: (i) our stock as traded on the NYSE, (ii) the S&P SmallCap600 Index, and (iii) a custom peer group of publicly traded companies selected in good faith by us (the “Peer Group”). The graph assumes that $100 was invested at the close of business on December 31, 2006. All returns were calculated assuming dividend reinvestment on a quarterly basis. The returns of each company in the Peer Group have been weighted according to market capitalization. We believe the Peer Group is representative of companies whose businesses, sales sizes, market capitalization and stock trading volumes are similar to

AMCOL. The Peer Group consists of the following companies: Compass Minerals International, Inc., Dycom Industries, Inc., Lufkin Industries, Inc., Martin Marietta Materials Inc., Minerals Technologies Inc., Oil-Dri Corporation, Rockwood Holdings Inc., RPM International Inc., and Superior Energy Services Inc.


INDEX RETURNS *Years Ending*
	Base Period
Company Name / Index	12/2006		12/2007		12/2008		12/2009		12/2010		12/2011
AMCOL International Corporation		100		132.47		78.94		111.22		124.63		110.51
S&P SmallCap 600 Index		100		99.70		68.72		86.29		108.99		110.10
Peer Group		100		117.89		74.69		98.40		130.68		121.26

Item 6. Selected Financial Data

The following is selected financial data for the Company for each of the below annual periods ending December 31^st.

SUMMARY OF OPERATIONS

(In thousands, except ratios and share and per share amounts)


	2011			2010			2009			2008			2007
Operations Data
Net sales	$	942,369		$	841,037		$	691,864		$	858,763		$	720,992
Gross profit		252,875			216,926			186,270			219,847			193,153
Selling, general and administrative expenses		165,222			146,885			133,393			144,162			120,290
Operating profit		87,653			70,041			52,877			75,685			72,863
Net interest expense		(11,519	)		(9,725	)		(12,118	)		(12,152	)		(8,915	)
Net other income (expense)		311			1,147			(927	)		(4,931	)		(1,133	)
Pretax income		76,445			61,463			39,832			58,602			62,815
Income taxes		21,849			19,391			5,335			13,688			15,614
Income (loss) from affiliates and joint ventures		5,566			(11,261	)		115			(21,714	)		8,389
Income from continuing operations		60,162			30,811			34,612			23,200			55,590
Discontinued operations		(916	)		(887	)		259			1,862			1,140
Net income		59,246			29,924			34,871			25,062			56,730
Net income attributable to AMCOL shareholders		59,111			30,347			34,799			25,331			56,735
Per Share Data
Basic earnings (loss) per share attributable to AMCOL shareholders
Continuing operations		1.89			1.00			1.12			0.77			1.84
Discontinued operations		(0.03	)		(0.03	)		0.01			0.06			0.04
Net income		1.86			0.97			1.13			0.83			1.88
Diluted earnings (loss) per share attributable to AMCOL shareholders
Continuing operations		1.87			0.99			1.11			0.76			1.79
Discontinued operations		(0.03	)		(0.03	)		0.01			0.06			0.04
Net income		1.84			0.96			1.12			0.82			1.83
Dividends		0.72			0.72			0.72			0.68			0.60

Continued…

SUMMARY OF OPERATIONS

(In thousands, except ratios and share and per share amounts)


	2011		2010		2009		2008		2007
Shares Outstanding Data
End of period		31,728,969		31,032,791		30,773,908		30,437,984		30,093,828
Weighted average for the period-basic		31,708,949		31,178,813		30,764,282		30,445,882		30,164,697
Incremental impact of stock equivalents		436,824		368,778		269,432		543,751		794,724
Weighted average for the period-diluted		32,145,773		31,547,591		31,033,714		30,989,633		30,959,421
Balance Sheet Data (at end of period)
Current assets	$	412,268	$	361,564	$	294,030	$	371,187	$	304,630
Net property and equipment		262,577		260,488		236,246		191,343		176,590
Other long-term assets		167,857		177,041		203,984		182,050		170,926
Total assets		842,702		799,093		734,260		744,580		652,146
Current liabilities		118,080		112,475		90,316		108,494		102,107
Long-term debt		260,670		236,171		207,017		256,821		164,232
Other long-term liabilities		63,732		50,011		57,155		50,910		33,157
Total equity		400,220		400,436		379,772		328,355		352,650
Other Statistics for Continuing Operations
Depreciation, depletion and amortization	$	41,836	$	36,306	$	35,906	$	33,985	$	29,219
Capital expenditures		61,029		47,305		50,767		44,068		46,004
Capital expenditures-corporate building		-		-		9,651		16,672		7,050
Gross profit margin		26.8%		25.8%		26.9%		25.6%		26.8%
Operating profit margin		9.3%		8.3%		7.6%		8.8%		10.1%
Pretax profit margin		8.1%		7.3%		5.8%		6.8%		8.7%
Effective tax rate		28.6%		31.5%		13.4%		23.4%		24.9%
Net profit from continuing operations margin		6.4%		3.7%		5.0%		2.7%		7.7%
Return on average equity		14.8%		7.8%		9.8%		7.4%		17.5%

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a global company focused on long term profitability growth through the development and application of minerals and technology products and services to various industrial and consumer markets. The majority of our revenue growth has been achieved by sustaining our products’ technological advantages, developing new products and applying them in innovative ways, bringing additional products and services to markets we already serve, and overall growth in the industries we serve. We focus our research and development activities in areas where we can either leverage our current customer relationships and mineral reserves or enhance existing or related products and services.

The principal mineral that we utilize to generate revenues is bentonite. We own or lease bentonite reserves in the U.S., Australia, China and Turkey. Additionally, through our affiliates and joint ventures, we have access to bentonite reserves in Egypt, India, and Mexico. We also develop applications for other minerals, including chromite ore from our mine in South Africa.

Bentonite is surface mined when it is commercially feasible to have it shipped to a plant for further processing, including crushing, drying, milling and packaging. Bentonite deposits have varying physical properties which require us to identify which markets our reserves can serve. Nicknamed the mineral of a thousand uses, bentonite’s unique characteristics include its ability to bind, swell, adsorb, control rheology, soften fabrics, and have its surface modified through chemical and physical reactions. Our research and development activities, including our understanding of bentonite properties, mining methods, processing and application to markets are some of the core components of our longevity and future prospects.

We operate in five segments: minerals and materials, environmental, oilfield services, transportation and corporate. Both our minerals and materials and environmental segments operate manufacturing facilities in North America, Europe, and the Asia-Pacific region. Our minerals and materials segment also owns and operates a chrome mine in South Africa. Our oilfield services segment principally operates in the Gulf of Mexico and surrounding states and also has a growing presence in South America, Africa and Asia. Additionally, we have a transportation segment that provides trucking services for our domestic minerals and materials and environmental segments as well as third parties.

Our customers are engaged in various end-markets and geographic regions. Customers in the minerals and materials segment range from foundries that produce castings for automotive, industrial, and transportation equipment, including heavy-duty trucks and railroad cars, to producers of consumer goods, including cat litter, cosmetics and laundry care. Customers in our environmental segment include construction contractors, engineering contractors and government agencies. The oilfield services segment’s customer base is primarily comprised of oil and natural gas service or exploration companies.

A significant portion of our products have been used in the same applications for decades and have experienced minimal technological obsolescence. A majority of our sales are made pursuant to short-term agreements; therefore, terms of sale, such as pricing and volume, can change within our fiscal year.

A majority of our revenues are generated in the Americas, principally North America. Consequently, the state of the U.S. economy, and especially the metalcasting and commercial construction industries, impacts our revenues. Our fastest growing markets are in the Asia-Pacific and European regions, which have continued to outpace the U.S. in economic growth.

Sustainable, long-term profit growth is our primary objective. We employ a number of strategic initiatives to achieve this goal:

•

Organic growth: The central component of our growth strategy is expansion of our product lines and market presence. We have a history of commitment to research and development activities directed at bringing innovative products to market. We believe this approach to growth offers the best probability of achieving our long-term goals at the lowest risk.

•

Globalization: As we have done for decades, we continue to expand our manufacturing and marketing organizations into emerging geographic markets. We see significant opportunities in the Asia-Pacific and European regions for expanding our revenues and earnings over the long-term as a number of markets we serve, such as metalcasting and lining technologies, are expected to grow in these areas. We expect to take advantage of these growth areas, either through our wholly-owned subsidiaries or investments in affiliates and joint ventures.

•

Mineral development: Bentonite is a component in many of the products we supply. Since it is a natural material, we must continually expand our reserve base to maintain a long-term business. Our goal is to add new reserves to replace the bentonite mined each year. Furthermore, we need to assure that new reserves meet the physical property requirements for our diverse product lines and are economical to mine. Our organization is committed to developing its global reserve base to meet these requirements.

•

Acquisitions: We continually seek to acquire complementary businesses, as appropriate, when we believe those businesses are fairly valued and fit into our growth strategy.

There can be no assurance that we will achieve success in implementing any one or more of the strategic initiatives described above.

A number of risks will challenge us in meeting our long-term objectives. We describe certain of these risks, such as competition and our reliance on economically sensitive markets, under “Item 1A. Risk Factors” and “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.” We intend to manage these risks actively, but there can be no assurance of our success to do so.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations describes relevant aspects of our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to select accounting policies that are appropriate for our business, and to make certain estimates, judgments and assumptions about matters that are inherently uncertain in applying those policies. On an ongoing basis, we re-evaluate these estimates, judgments and assumptions for reasonableness because of the critical impact that these factors have on the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results may differ from these estimates.

Our financial statements are based in part upon critical accounting policies that involve complex and subjective decisions and assessments. Our senior management has discussed the development, selection and disclosure of these policies with the members of the Audit Committee of our Board of Directors. We believe our selection of accounting policies has resulted in actual results approximating the estimated amounts in each respective area. These policies are discussed below and also in Note 1 of the Notes to Consolidated Financial Statements. The discussion which follows should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

Valuation of Accounts Receivable

We provide credit to customers in the ordinary course of business and perform ongoing credit evaluations. Our customer base is diverse and includes customers located throughout the world. Payment terms in certain of the foreign countries in which we do business are longer than those that are customary in the U.S., and, as a result, may give rise to additional credit risk related to outstanding accounts receivable from these non-U.S. customers. Likewise, a change in the financial position, liquidity or prospects of any of our customers could have an impact on our ability to collect amounts due. While concentrations of credit risk related to trade receivables are somewhat limited by our large customer base, we do extend significant credit to some of our customers.

We make estimates of the amounts of our gross accounts receivable that will not be collectible, and record an allowance for doubtful accounts to reduce the carrying value of accounts receivable to the amount that is expected to be realized. The allowance for doubtful accounts is established based upon our historical bad debt experience, a review of the overall aging of the accounts, and an analysis of specific customer accounts, particularly those with past-due balances. The recorded allowance for doubtful accounts is intended to cover specific customer collection issues identified by management at the balance sheet date and to provide for potential losses from other accounts based on our historical experience. Increases in the allowance for doubtful accounts are recorded as an expense and included in general, selling and administrative expenses in the period identified. Our estimate of the required allowance for doubtful accounts is a critical accounting estimate because it is susceptible to changes in customer payment patterns, dynamics of the industries in which we operate, our judgments about the future collectibility of customer accounts, and other factors.

Inventory Valuation

Inventories are recorded at the lower of cost or net realizable value. In addition, we regularly review inventory quantities on hand and evaluate significant items to determine whether they are excess or obsolete. We record the value of estimated excess or obsolete inventory as a reduction of inventory and as an expense in cost of sales in the period it is identified. Our estimate of excess and obsolete inventory is a critical accounting estimate because it is susceptible to changes in estimates of the future demand for inventory, customer purchasing behaviors, competition, and other factors.

Our process to evaluate inventories for excess or obsolete items is comprehensive. We quantify the amount of inventory on hand that, based on projected demand, is not anticipated to be sold within the next 12 to 24 months or, based on our current product offerings, is excess or obsolete. This involves a review by sales and production management personnel to determine whether this list of potential excess or obsolete inventory is complete. Factors which impact this evaluation include, for example, whether there has been a change in the market or packaging for particular products, and whether there are components of inventory that incorporate obsolete formulations or technology. In certain businesses in which we are engaged, such as our domestic cat litter and personal care business, product and packaging changes can occur rapidly and expose us to excess and obsolete inventories.

Goodwill and Long-lived Assets

Our goodwill and intangible assets have largely arisen from business combinations or acquisitions that we have completed. We follow the guidance in Accounting Standard Codification (“ASC”) Topic 805 related to business combinations when initially recognizing the fair value of assets and liabilities acquired in a business combination. Under these guidelines, we are required to recognize the fair value of the intangible assets we acquire in a business combination. These are typically customer related assets, trademarks and trade names and non-compete agreements. We are required to make significant estimates as to the nature of these customer relationships including future profitability and longevity of the relationships. We are also required to make significant estimates regarding the probability and impact of competition from former owners or management employees of businesses we acquire. These estimates are critical as we make them from the viewpoint of a market participant; they involve forecasting future results; and they contain uncertainties regarding the customers served by the acquired business.

For property, plant and equipment and intangible assets with finite lives, we evaluate the recoverability of these assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. For goodwill and indefinite lived intangible assets, we perform our impairment assessment annually or more frequently if impairment indicators arise. This assessment is made at the reporting unit level for goodwill and at the individual asset level for indefinite lived intangible assets.

In conducting our goodwill impairment tests and in testing the recoverability of long-lived assets, we primarily use discounted cash flow models to estimate the fair value of our reporting units and long-lived assets. Critical assumptions used in conducting these tests include expectations of our business performance and financial results, useful lives of assets, and discount rates as well as comparable market data and our market capitalization.

In evaluating the recoverability of our indefinite lived intangible assets, we make several critical assumptions as to the applicable market royalty rate and discount rates as well as the future performance of the assets underpinning those intangibles.

Our estimates related to the carrying values of these assets are considered to be critical accounting estimates because they are susceptible to change from period to period based on our judgments about a variety of factors and due to the uncontrollable variability of market factors underlying them. For example, judgment is required to determine whether events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. In addition, in performing assessments of the carrying values of these assets, we must make judgments about our future business; economic, regulatory, and political conditions affecting these assets; appropriate risk-related rates for discounting estimated future cash flows; and reasonable estimates of disposal values.

Based on business conditions and market values that existed at October 1, 2011, we concluded that no impairment loss was required. However, the market value of our common stock continues to fluctuate and if, among other factors, (1) our equity value declines, (2) the fair value of our reporting units decline, (3) we don’t achieve our expected future results, or (4) the adverse impacts of economic or competitive factors are worse than anticipated, we could conclude in future periods that impairment losses are required in order to reduce the carrying value of our goodwill, other intangible assets, or other long-lived assets. Depending on the severity of the changes in the key factors underlying the respective impairment tests, such losses could be significant.

Retirement Benefits

We sponsor a qualified defined benefit pension plan for substantially all of our U.S. employees hired before January 1, 2004. We also sponsor a supplementary pension plan (“SERP”) that provides benefits in excess of qualified plan limitations for certain employees. In order to measure the expense and obligations associated with these retirement benefits, we estimate various factors used in valuing the associated assets and liabilities, such as discount rates, expected return on plan assets, rate of compensation increases, employee turnover rates, retirement rates, mortality rates and other factors. Our benefit plan committee determines the key assumptions related to the discount rate, expected investment rate of return, long term rate of compensation increases, and other assumptions based on consultation with our actuaries. The most important assumptions that affect the computations are the discount rate and the expected long-term rate of return on plan assets.

Our discount rate assumption is intended to reflect the rate at which the retirement benefits could be effectively settled based upon the assumed timing of the benefit payments. In determining the discount rate for December 31, 2011, we utilized the Aon Hewitt AA Bond Universe yield curve, which is a hypothetical double A yield curve comprised of a series of annualized individual discount rates. The discount rates are derived from hypothetical zero coupon bonds which are given equal maturities within their maturity groups. The discount rate used to determine our retirement pension benefit obligation at December 31, 2011 was 4.70% for the qualified defined benefit plan and 4.63% for our SERP. A 50 basis point decrease in this discount rate would have increased the benefit obligation at December 31, 2011 by $5.7 million and would increase our net cost expected in 2012 by 16%, or $625 thousand. Likewise at December 31, 2011, a 50 basis point increase in the discount rate would have decreased the benefit obligation by $5.1 million and would decrease our net cost expected in 2012 by 15%, or $568 thousand.

The expected long-term rate of return on defined benefit plan assets was based on our current asset allocations and their historical long-term performance, adjusted for existing market conditions. Information regarding our asset allocations is included in the Notes to Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data.” We assumed a weighted-average expected long-term rate of return on pension plan assets of 7.50% to determine our net defined benefit pension plan expense in 2011. A 50 basis point decrease in the expected return would increase the net cost expected in 2012 by approximately 6%, or $173 thousand. Likewise, a 50 basis point increase in the expected return would decrease the net cost expected in 2012 by approximately 6%, or $173 thousand.

Income Taxes

Our effective tax rate is based on the income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. Significant judgment is required in determining our effective tax rate and in evaluating our tax positions. We account for our tax positions in accordance with the guidance for accounting for uncertainty in income taxes codified in ASC Topic 740, and thus our effective tax rate includes the impact of changes to our liability for uncertain tax positions.

Our estimates of income tax items, expenses and reserves are considered to be critical accounting estimates because they are susceptible to change from period to period based on rulings by various taxing authorities, changes in tax laws, changes in projected levels of taxable income and availability of future tax planning strategies. On a quarterly basis, these estimates are more critical as they involve estimates of our taxable income expected for the remainder of the fiscal year by taxing jurisdiction.

In addition, our effective tax rate reflects the impact of certain undistributed foreign earnings for which no U.S. taxes have been provided because such earnings are planned to be reinvested indefinitely outside the U.S. Most of the amounts held outside the U.S. could be repatriated to the U.S., but would be subject to U.S. federal income taxes and foreign withholding taxes, less applicable foreign tax credits or deductions.

Valuation allowances are recorded, if necessary, to measure a deferred tax asset at the amount that will more likely than not be realized. Both positive and negative evidence are considered in forming our judgment as to whether a valuation allowance is appropriate. Changes in a valuation allowance are recorded in the period when we determine events have occurred that will impact the realizable value of the asset.

A number of years may elapse before a particular matter is audited and finally resolved. Audits of our U.S. federal income tax returns have been completed for our income tax returns relating to fiscal years of 2009 and prior. State income tax returns are audited less frequently. Unfavorable settlement of any particular issue would require use of our cash and could result in the recording of additional tax expense. Favorable resolution would be recognized as a reduction to our tax provision in the year of resolution.

Results of Operations for the Three Years Ended December 31, 2011

The discussion below references the consolidated statement of operations included in “Item 8. Financial Statements and Supplementary Data.”

Consolidated Income Statement Review

The following table compares our operating results for the past three years.


	Year Ended December 31,
Consolidated	2011		2010		2009		2011 vs. 2010		2010 vs. 2009
	(Dollars in Thousands)
Continuing Operations
Net sales	$	942,369	$	841,037	$	691,864		12.0%		21.6%
Cost of sales		689,494		624,111		505,594

Gross profit		252,875		216,926		186,270		16.6%		16.5%
margin %		26.8%		25.8%		26.9%
Selling, general and administrative expenses		165,222		146,885		133,393		12.5%		10.1%

Operating profit		87,653		70,041		52,877		25.1%		32.5%
margin %		9.3%		8.3%		7.6%
Other income (expense):
Interest expense, net		(11,519)		(9,725)		(12,118)		18.4%		-19.7%
Other, net		311		1,147		(927)		-72.9%		-223.7%

		(11,208)		(8,578)		(13,045)


Income before income taxes and income (loss) from affiliates and joint ventures		76,445		61,463		39,832
Income tax expense		21,849		19,391		5,335		12.7%		263.5%

Income before income (loss) from affiliates and joint ventures		54,596		42,072		34,497
Income (loss) from affiliates and joint ventures		5,566		(11,261)		115		-149.4%		-9892.2%

Income from continuing operations		60,162		30,811		34,612

Discontinued Operations
Income (loss) on discontinued operations		(916)		(887)		259		-		-442.5%


Net income (loss)		59,246		29,924		34,871		98.0%		-14.2%


Net income (loss) attributable to noncontrolling interests		135		(423)		72		-131.9%		-687.5%


Net income attributable to AMCOL shareholders		59,111		30,347		34,799		94.8%		-12.8%

The following analysis comments on the significant fluctuations in our results for the past three years by material category. The comments are organized in relation to our company’s overall results in general followed by a detailed discussion of these general comments as they relate to each segment individually and in detail.

Net sales

The following tables detail components of consolidated 2011 and 2010 sales changes over their respective prior years:

		000000000000		000000000000		000000000000		000000000000
2011 vs. 2010	Base Business		Acquisitions		Foreign Exchange		Total
Minerals and materials		5.8%		0.0%		0.5%		6.3%
Environmental		2.4%		0.1%		0.6%		3.1%
Oilfield services		4.3%		0.0%		0.3%		4.6%
Transportation & intersegment sales		-2.0%		0.0%		0.0%		-2.0%

Total		10.5%		0.1%		1.4%		12.0%

% of change		87.1%		0.8%		12.1%		100.0%

		000000000000		000000000000		000000000000		000000000000
2010 vs. 2009	Base Business		Acquisitions		Foreign Exchange		Total
Minerals and materials		12.5%		0.0%		1.0%		13.5%
Environmental		2.0%		0.2%		0.3%		2.5%
Oilfield services		4.6%		0.0%		0.4%		5.0%
Transportation & intersegment sales		0.6%		0.0%		0.0%		0.6%

Total		19.7%		0.2%		1.7%		21.6%

% of change		91.1%		1.0%		7.9%		100.0%

Base or organic business represents operations owned for more than one year whereas acquisitions are those owned less than one year. We did not make any significant acquisitions in the past three years. Foreign exchange isolates the impact of currency changes over the prior-year period.

The impact of the 2008 – 2009 recession is evident in our revenue fluctuations as shown in the above tables. As the global economic recovery was underway in 2010, sales increased organically across all segments but most notably in our minerals and materials segment, which significantly benefitted from increased sales of its metalcasting products, especially to those service customers supplying the automotive industry. This growth continued into 2011 with almost half of the revenue growth occurring organically in our metalcasting product line within our minerals and materials segment, some of this due to our new chromite product offering. Our oilfield services segment also contributed significantly to the 2011 growth in revenues due to growth in our coil tubing services.

The following table provides a comparison of consolidated sales by geographical region over the last three years:

		00000000000000000		00000000000000000		00000000000000000

	2011		2010		2009
Americas		62.5%		63.2%		63.8%
EMEA ^*		23.4%		22.1%		24.3%
Asia Pacific		14.1%		14.7%		11.9%

Total		100.0%		100.0%		100.0%

^* Europe, Middle East and Africa

Inter-regional sales in the table above are eliminated in Americas.

In 2010, we experienced strong growth in our Asia Pacific revenues largely led by growth of our metalcasting and laundry care products. In 2011, our EMEA revenues increased as a percentage of total revenues given the growth in our chromite related products, which are sourced from our South African operations.

Gross profit

Gross profit increased in 2011 due to the increase in sales. In 2010, our minerals and materials segment incurred $6.3 million of unusual costs associated with operational issues in our domestic personal care product line. Excluding these unusual costs, gross margin between the two years is not significantly different – 26.8% in 2011 vs 26.5% in 2010.

Gross profit increased in 2010 due to the increase in sales. The increase in gross margins in our minerals and materials segment, which suffered from the aforementioned unusual costs within our domestic personal care product line, was overshadowed by the decrease in margins in all other segments, especially our environmental segment.

Selling, general, and administrative expenses (SG&A)

In 2011, SG&A expenses increased across all segments. See each segment’s analysis and discussion of results later herein for further details. In 2010, SG&A expenses increased mostly due to increased employee compensation and related expenses. Amounts for 2010 also include $2.7 million of expenses associated with the retirement of our previous CEO.

Operating profit

In both 2011 and 2010, the increase in operating profit follows the increase in gross profit and was generated from organic growth as opposed to acquisitions or currency movements. Operating profit in 2010 includes $6.9 million of unusual expenses in our domestic personal care business, as previously discussed, as well as $2.7 million of expenses associated with the retirement of our previous chief executive officer. Excluding both of these expenses, operating profit margin in 2011 was 9.3% as compared to 9.5% in 2010. Operating profit in 2010 increased over the 2009 amount due to the operating leverage; that is, the incremental sales were generated without commensurate increases in costs.

Net interest expense

Net interest expense increased in 2011 mostly due to increased average debt levels throughout the year. As our business grew throughout the year, we increased our debt levels to fund the corresponding increases in working capital required to fuel that growth. We had $247.3 million of debt outstanding during 2011 at an average interest rate of 4.7%.

On the contrary, net interest expense decreased in 2010 due to a decrease in average debt levels. Average debt went from $237.0 million in 2009 to $221.6 million in 2010 while average interest rates decreased from 5.1% in 2009 to 4.4% in 2010.

Other, net

Other, net is primarily comprised of gains and losses on foreign currency transactions and foreign currency derivative instruments. We are particularly sensitive to currency exchange rate fluctuations between the following currency pairs: a) the Euro to the British pound (GBP) and the Polish zloty (PLN), b) the South African Rand (ZAR) to the USD and Australian dollar (AUD), c) the GBP to the Danish kroner (DKK) and the Swiss franc (SEK), and d) the USD to the Indian rupee (INR), the Thai baht (THB), and the Turkish lira (TRY). We continue to work to reduce the effect of foreign currency exposures in order to record neither a gain nor a loss on our foreign currency transactions. Where possible, we identify currency fluctuation exposures and attempt to mute their impact through the effective use of derivative instruments. Our future levels of losses or gains on foreign currency transactions and derivatives will depend on fluctuations in the currency rates we are exposed to as well as the hedging activities we undertake, if any.

The fluctuations in Other, net between each year of 2009 to 2011 reflect the effectiveness of the actions we have taken, or not taken as the case may be, to hedge our currency exposures.

Income taxes

The largest factors giving rise to the changes in our effective income tax rates between years lies in the amount of depletion deductions and income generated in domestic versus foreign jurisdictions, which have lower tax rates. A schedule reconciling the U.S. federal statutory income tax rate to our effective rate is included in Note 7 of the Notes to Consolidated Financial Statements.

Our effective income tax rate was 28.6%, 31.5%, and 13.4% in 2011, 2010, and 2009, respectively. Our effective tax rate in 2011 is less than that in 2010 due to the fact that 2010 includes expenses of $2.7 million to reserve for income tax benefits in our foreign operations which may not be realized.

As compared to 2009, income tax expense in 2010 increased due to the aforementioned $2.7 million reserve. In addition, 2009 benefitted from the fact that a greater portion of our income was generated in our foreign operations, an approximate $3.3 million benefit, and the resolution to certain audit matters. The resolution of the matters resulted in increased income taxes upon settlement (a $2.1 million increase in expense) and the elimination of a reserve for certain uncertain tax matters (a $3.0 million benefit).

Income (loss) from affiliates and joint ventures

In 2010, we recorded losses of $7.2 million and $6.9 million from our Russian and Belgian joint ventures, respectively, which accounted for the overall loss from our affiliates and joint ventures. We recorded an impairment on our investment in the Russian joint venture due to the continued poor financial performance of that entity which was not expected to recover. Our Belgian joint venture impaired its fixed assets due to its inability to generate profits and our opinion that it will not be able to do so given the fundamentals of the business and the environment in which it operates. Our investments in these ventures was reduced to zero as of December 31, 2010.

In 2011, we sold our Belgian and Russian joint ventures and recorded $1.4 million of income from these ventures in this year.

Excluding our investments in Russia and Belgium, we recorded income of $4.1 million, $2.8 million and $1.8 million from our affiliates and joint ventures in each of 2011, 2010 and 2009, respectively. Income generated from these investments increased in each of 2010 and 2011 due to improved financial performance of our Japanese joint venture and our Mexican joint venture. The Japanese venture has benefitted from the economic recovery in Japan in 2010 and increased sales of environmental segment related products after the tsunami in March 2011. Our Mexican joint venture has experienced improved performance due to its laundry care business.

Income (loss) on discontinued operations

In 2011, we sold our domestic contracting services business due to its continued poor financial performance. The amounts reflected in Income (loss) from discontinued operations relate solely to these domestic operations, and, as of December 31, 2011, our Consolidated Balance Sheet includes a $6.3 million receivable owed to us as a result of the sale of these operations.

Net income attributable to AMCOL shareholders

The increase in net income attributable to AMCOL shareholders in 2011 is due to the increased operating profit performance of our minerals and materials and oilfield services segments. See a discussion of each segment for factors affecting each of them. In 2011, the increase is not only due to the improved operating performance offset affected by the increased interest expense and benefited by the increase in income from affiliates and joint ventures.

The decrease income attributable to AMCOL shareholders in 2010 is generated from the favorable increase in operating profit being offset by increased income tax expense and losses from joint ventures and affiliates, all as previously discussed.

Earnings per share (diluted)

Our weighted average number of shares of common stock and common stock equivalent shares outstanding increased 1.9% in 2011 and 1.7% in 2010 due to exercises of stock compensation awards. The increases have reduced our diluted earnings per share by $0.03 in each of 2011 and 2010. The remaining fluctuations in our diluted earnings per share results from the changes in Net income attributable to AMCOL shareholders, as previously discussed.

Segment Reviews

The following discussions highlight the operating results for each of our five segments. Unless otherwise stated, the fluctuations in operating profit and operating profit margin reflect the changes in gross profit, gross margin, and SG&A expenses.

Minerals and Materials Segment

		000000000	000000000		000000000	000000000		000000000	000000000		000000000		000000000
	Year Ended December 31,
Minerals and Materials	2011			2010			2009			2011 vs. 2010		2010 vs. 2009
	(Dollars in Thousands)
Net sales	$	481,898	100.0%	$	429,270	100.0%	$	336,172	100.0%		12.3%		27.7%
Cost of sales		363,040	75.3%		330,297	76.9%		264,545	78.7%

Gross profit		118,858	24.7%		98,973	23.1%		71,627	21.3%		20.1%		38.2%
Selling, general and administrative expenses		49,776	10.3%		44,393	10.3%		36,838	11.0%		12.1%		20.5%

Operating profit		69,082	14.4%		54,580	12.8%		34,789	10.3%		26.6%		56.9%


Revenues Originating From - Minerals and Materials	Americas		EMEA		Asia Pacific		Total
Fiscal year:
2011		59.1%		19.3%		21.6%		100.0%
2010		61.9%		18.1%		20.0%		100.0%
2009		62.8%		20.1%		17.0%		100.0%

		000000000000		000000000000		000000000000		000000000000		000000000000
Minerals and Materials Product Line Sales	Year Ended December 31,
Minerals and Materials Product Line Sales	2011		2010		2009		2011 vs. 2010		2010 vs. 2009
	(Dollars in Thousands)
Metalcasting	$	251,486	$	204,577	$	139,849		22.9%		46.3%
Specialty materials		105,798		107,287		97,989		-1.4%		9.5%
Pet products		55,999		61,971		66,441		-9.6%		-6.7%
Basic minerals		54,615		48,886		27,901		11.7%		75.2%
Other product lines		14,000		6,549		3,992		113.8%		64.1%

Total		481,898		429,270		336,172

Overall trends

Revenues in our Asia-Pacific region continue to comprise a greater portion of our overall revenues due to growth in that region, especially China. In addition, our chromite operations in South Africa started to make a significant contribution to revenues in 2011 – they increased $20.7 million in 2011 and account for the increase in EMEA revenues as a percentage of our total revenues.

Our metalcasting revenues have continued to increase each year from 2009 as we continue to see strong demand from the automobile and heavy equipment industries. This is especially true in the USA and China, our two largest markets. In addition, this product line includes sales of our core chromite products, which generated sales of $5.7 million, $9.1 million, and $33.7 million in 2009, 2010, and 2011, respectively.

Our pet product sales have decreased in the three year period due mostly to two factors: a $2.2 million decrease in bulk sales in 2010 and a $3.6 million decrease in sales to a large, big box retailer in 2011. The bulk sales decreased due to price sensitivity from one of our customers after we increased our selling prices. In addition, one of our big box retailers underwent an internal product re-launch, which adversely affected our sales, and is also shifting its focus towards proprietary branded product rather than its private labeled product we supply.

Basic minerals includes revenues principally from our petroleum or drilling products and agriculture products. Our petroleum product revenues have increased from $15.2 million in 2009 to $29.1 million in 2011 due to increased drilling activities for oil and gas wells. Our agriculture products, primarily additives for animal feed, have increased in revenues from $4.8 million in 2009 to $11.0 million in 2011 due principally to increased demand from a European customer.

Our other product line is comprised mostly of environmental segment products sold by entities in our minerals and materials segment in geographic markets where the environmental segment does not have a presence.

2011 vs. 2010

In 2011, our minerals and materials segment continued its strong performance from 2010 for largely the same reasons. Sales increased in three of our product lines: metalcastings by $46.9 million, basic minerals by $5.7 million (due to growth in our agriculture products), and other product lines by $7.5 million (due to increased sales of environmental segment products in Turkey). We continued to raise selling prices around the world, but most significantly in the USA and Asia Pacific due to the strong demand for our metalcasting products. In addition, we increased our volumes as well, led by demand for new chromite product from our South Africa mine.

Our gross profits increased due to the increase in sales, and gross margins increased 160 basis points. However, the 2010 gross margin was depressed due to the inclusion of $6.3 million of costs included within cost of sales that we believe were unusual and resulted from operational issues in our domestic personal care business. Excluding this $6.3 million from 2010 results, the 2010 gross margin would have been 24.5%, or roughly equivalent to the 24.7% experienced in 2011. The relatively stable gross margin reflects selling price increases, as previously noted, substantially offset by increases in production costs, such as fuel, transportation rates, and other raw materials.

SG&A expenses increased in 2011 to support the growth in business. Approximately $2.8 million of the increase resulted from headcount, compensation and benefits increases, and $3.1 million of the amount resulted from increases in support functions and investments.

2010 vs. 2009

Our minerals and materials segment achieved strong performance in 2010 mostly due our metalcasting business and our businesses within the Asia Pacific region. Sales to the metalcasting market increased 46% in 2010 as demand for automobiles, heavy equipment, and related castings increased following the global economic recovery from the recession in 2008-2009. Also, our businesses in the Asia Pacific region continue to benefit from investments we’ve made in that region and our basic minerals division experienced a strong increase in sales due to increased demand for drilling fluids for oil and gas well drilling.

The increase in sales led to the increase in gross profits. Nearly all of the increase in metalcasting sales was due to increased volumes. Given our emphasis on streamlining operations over the last several years, we were able to achieve these volumes with greater production efficiencies, leading to enhanced gross margins. We did, however, have $6.3 million of costs included within cost of sales that we believe were unusual and resulted from operational issues in our domestic personal care business.

SG&A expenses increased mostly due to increased employee headcount, employee compensation, and employee benefit expenses.

Environmental Segment

		000000000	000000000		000000000	000000000		000000000	000000000		000000000		000000000
Environmental	Year Ended December 31,
Environmental	2011			2010			2009			2011 vs. 2010		2010 vs. 2009
	(Dollars in Thousands)
Net sales	$	246,385	100.0%	$	220,598	100.0%	$	203,231	100.0%		11.7%		8.5%
Cost of sales		173,032	70.2%		152,450	69.1%		132,836	65.4%

Gross profit		73,353	29.8%		68,148	30.9%		70,395	34.6%		7.6%		-3.2%
Selling, general andadministrative expenses		54,912	22.3%		48,334	21.9%		45,305	22.3%		13.6%		6.7%

Operating profit		18,441	7.5%		19,814	9.0%		25,090	12.3%		-6.9%		-21.0%


Revenues Originating From - Environmental	Americas		EMEA		Asia Pacific		Total
Fiscal year:
2011		45.0%		49.0%		6.0%		100.0%
2010		44.9%		45.9%		9.2%		100.0%
2009		44.7%		47.6%		7.7%		100.0%

		000000000000		000000000000		000000000000		000000000000		000000000000
	Year Ended December 31,
Environmental Product Line Sales	2011		2010		2009		2011 vs. 2010		2010 vs. 2009
	(Dollars in Thousands)
Lining technologies	$	103,458	$	107,974	$	101,370		-4.2%		6.5%
Building materials		76,144		57,220		54,724		33.1%		4.6%
Contracting services		35,407		31,075		25,519		13.9%		21.8%
Drilling products		31,376		24,329		21,618		29.0%		12.5%

Total		246,385		220,598		203,231

2011 vs. 2010

Approximately 20% of the growth in revenues was derived from favorable foreign currency exchange rate movements, mostly between the USD and the PLN and GBP, with the remainder coming from organic growth.

Our building materials product line generated significant increases in revenues due to the launching of new products that utilize polymer technologies as opposed to mineral technologies. Also increasing sales is the improvement made in our distribution network in our foreign markets. Our drilling product line also experienced strong revenue growth due to increased sales of value added, polymer based products and expansion into new geographic markets in Europe. The contracting services revenue included in our product line sales represents revenues earned overseas as we sold our domestic contracting services business in 2011; in the near future we intend to reduce our footprint in our Irish contracting services product line by closing the facility providing those services.

Gross profits increased due to the increase in sales. Gross profit margins, however, decreased 110 basis points due to increased production and raw material costs. In the US, we experienced increased overhead costs as volumes decreased, thereby spreading the overhead costs amongst a smaller population of products produced. In Europe, resin costs increased to levels not seen in recent years and production costs increased as a result of the need to reduce the moisture content of minerals used in production.

SG&A expenses increased $6.6 million, most of which occurred in the US and Europe. Approximately 14% of the total increase relates to fluctuations in foreign currency exchange rates between the USD and other European currencies. In Europe, we recorded $1.2 million as a bad debt expense for a contracting services customer in our Irish branch, which we intend to close in 2012. We also had $0.7 million of increased legal expenses. In the US, employee compensation increased $1.6 million due to improved performance of our building materials and drilling product lines. We also increased expenses by $0.9 million to expand our product lines, including establishing a presence in India.

2010 vs. 2009

Base business accounted for 80% of the increase in net sales. Favorable foreign currency exchange rate movements, mostly of the U.S. dollar versus the Polish zloty and the British pound, and acquisitions split the remaining growth.

Although we do not believe the construction market has fully recovered, the growth in revenues in 2010 occurred across all product lines in response to increased construction activity and a general increase in economic activity. In addition, we’ve also increased our contracting services business in Europe by installing our products on job sites, especially as they relate to government infrastructure projects.

Gross profit and gross margin decreased due to increased competition in lower margin businesses, such as lining technologies and contracting services. Our lining technologies business continues to suffer from price competition. Our contracting services revenues were concentrated in projects which were less value added to the end customer, were competitively bid, and experienced significant increases in costs.

GS&A expenses increased mostly due to increased costs associated with expanding our presence in Ireland and Poland. Operating profit and operating margin decreased due to the decrease in gross profits and increased GS&A expenses.

Oilfield Services Segment


Oilfield Services	Year Ended December 31,
Oilfield Services	2011			2010			2009			2011 vs. 2010		2010 vs. 2009
		(Dollars in Thousands)
Net sales	$	193,632	100.0%	$	154,621	100.0%	$	119,821	100.0%		25.2%		29.0%
Cost of sales		138,778	71.7%		110,681	71.6%		81,101	67.7%

Gross profit		54,854	28.3%		43,940	28.4%		38,720	32.3%		24.8%		13.5%
Selling, general and administrative expenses		34,973	18.1%		29,322	19.0%		25,967	21.7%		19.3%		12.9%

Operating profit		19,881	10.2%		14,618	9.4%		12,753	10.6%		36.0%		14.6%


Revenues Originating From - Oilfield services	Americas		EMEA		Asia Pacific		Total
Fiscal year:
2011		87.4%		4.4%		8.2%		100.0%
2010		83.8%		4.4%		11.7%		100.0%
2009		89.2%		3.3%		7.5%		100.0%

Overall trends

Our oilfield services segment is comprised of various product lines which differ in their proprietary technology, the demand for their services, and the location of where services are performed. Our most value added and greatest margin services center around our proprietary water treatment technologies. After the Deepwater Horizon oil spill (unrelated to our company) in April 2010, less oil well drilling activity has occurred in the Gulf of Mexico and thus the demand for our water treatment services has decreased. As a result of the decrease for offshore services, many oilfield service providers relocated assets to onshore activities, thereby increasing the supply and decreasing the price for those services.

However, recent technologies in horizontal drilling (a service we do not provide) have allowed oil and gas producers to increase the productivity of oil and gas wells in shale regions. Our coil tubing services provide oil and gas producers the ability to increase production of their already horizontally drilled wells through a process called hydraulic fracturing or “fracking”, whereby they create holes / fractures in the shale bed to increase the flow of oil and gas reserves to the well head. Thus, we have experienced significant growth in our coil tubing services, which provide service technologies to the well operators to aid in the fracking process. Currently, we are focused on providing coil tubing services to oil well as opposed to gas well operators.

We have typically entered our foreign markets by securing contracts and forming relationships with large exploration and production companies in a particular region, especially in Brazil and Australia. The fluctuations in revenue derived from our Asia Pacific region as a percentage of total revenues reflects the $5.5 million of revenues earned in our Australia facility from two large customer contracts that ended in 2010.

2011 vs. 2010

Approximately 62% of the increase in revenues occurred in our coil tubing services due to the growth in fracking jobs in the US shale regions, primarily in Texas and Louisiana where our services and equipment are based. The remaining growth occurred primarily in our well testing services and pipeline services. Well testing is benefitting from increased demand in the shale regions due to the growth in production there and an increase in offshore work as compared to the significant depression of activity in the Gulf of Mexico in 2010 after the Horizon spill. Pipeline services are benefitting from increased demand due to increased prices for oil.

Gross profits increased with the increase in revenues and gross margins remained fairly stable.

Approximately half of the increase in SG&A expenses is due to increased employee compensation, mostly variable components such as commissions and bonuses, due to the improved financial performance of the segment. The remaining increase is comprised of various factors (such as increased sales and use tax expenses, information technology equipment expenses, and increased selling expenses related to gaining new business from customers) that are each individually insignificant.

2010 vs. 2009

Nearly all of the growth in revenues was derived organically, and our coil tubing operations accounted for approximately half of the increase. In 2010, we restructured our coil tubing operations and management which, when combined with the resurgence in activity within our onshore domestic market, led to significant increases in revenues and profitability. The remaining increase in revenues was derived from our foreign operations, which has been an area of focus for us. For example, our Australian facility generated $5.5 million of revenue from two large contracts in that region.

Gross profit increased due to the increased revenues and increased margins generated from our coil tubing operations. Overall, however, our gross margins decreased due to decreases in our other service lines. This segment experienced a significant decrease in margins in the first quarter of 2010 resulting from a decrease in revenues in our larger service offerings, such as filtration and well testing, which contain a greater fixed cost structure. The decrease in margins from the first quarter was difficult to overcome throughout the rest of the year when compared to a full year’s activity in 2009. In addition, 2010 had a decrease in the mix of services as revenues were less concentrated in higher profit businesses, such as our pipeline and filtration services, partly due to the drilling moratorium that existed for much of 2010 after the Horizon accident. The last factor affecting the decrease in margins across other business lines was an increase in costs to service some customers in international markets.

GS&A expenses increased due to increased employee compensation and benefits as well as increased bad debt expenses.

Transportation Segment


Transportation	Year Ended December 31,
Transportation	2011			2010			2009			2011 vs. 2010		2010 vs. 2009
		(Dollars in Thousands)
Net sales	$	54,113	100.0%	$	52,225	100.0%	$	46,642	100.0%		3.6%		12.0%
Cost of sales		47,972	88.7%		46,360	88.8%		41,114	88.1%

Gross profit		6,141	11.3%		5,865	11.2%		5,528	11.9%		4.7%		6.1%
Selling, general and administrative expenses		3,900	7.2%		3,435	6.6%		3,365	7.2%		13.5%		2.1%

Operating profit		2,241	4.1%		2,430	4.6%		2,163	4.7%		-7.8%		12.3%

2011 vs. 2010

In 2011, revenues increased due to $3.1 million of increased fuel surcharges, which overshadowed the decrease in overall number of loads shipped. The number of loads shipped reflects a change in supply as opposed to a change in demand as competition for drivers has increased with the growth in jobs, mostly in the oil and gas industry due to the growth in fracking work in the North Dakota shale and surrounding region. Gross profits increased due to the increase in sales.

2010 vs. 2009

In 2010, revenues increased almost equally between increased fuel surcharges and overall increased demand for consumer product shipments. The increased concentration of revenues in fuel surcharges also contributed to the decrease in gross margins as, for the most part, we pass these costs through to customers. Operating profits increased commensurate with increased sales and gross profit levels.

Corporate Segment


	Year Ended December 31,
Corporate	2011		2010		2009		2011 vs. 2010		2010 vs. 2009
		(Dollars in Thousands)
Intersegment sales	$	(33,659)	$	(15,677)	$	(14,002)
Intersegment cost of sales		(33,328)		(15,677)		(14,002)

Gross profit		(331)		-		-
Corporate selling, general and administrative expenses		21,661		21,401		21,918		1.2%		-2.4%

Operating loss		(21,992)		(21,401)		(21,918)

Intersegment sales occur most notably for sales a) from our transportation segment to our minerals and materials and environmental segments and b) from our minerals and materials segment to our environmental and oilfield services segments. Intersegment sales and costs reported above reflect the elimination of these transactions and are related to changes in sales in each of these businesses. As evidenced by the small amount of gross profit eliminated above, these intersegment sales are not material to the individual segments or their operating profit, our measure of segment performance.

In general, our corporate SG&A costs include costs for our corporate executive team, public company stewardship expenses, and certain centralized administration costs, especially as they relate to human resource, information technology, corporate research and development, and finance functions.

2011 vs. 2010

Excluding the $2.7 million of expenses incurred in 2010 for the retirement of our former CEO, SG&A expenses increased $2.9 million. The increase relates to expenses incurred to address issues at our South African operations, increased expenses associated with overseeing strategic initiatives in our foreign operations, and increased infrastructure expenses to support our overall operations, such as new human resource management initiatives.

2010 vs. 2009

SG&A expenses in 2010 include approximately $2.7 million of costs associated with the retirement of our former CEO. Excluding these expenses, SG&A costs decreased largely due to decreased employee benefit costs.

Consolidated Balance Sheet Review

The following paragraphs under this Consolidated Balance Sheet Review heading discuss the fluctuations in and balances of certain asset, liability and equity components of our Consolidated Balance Sheet as of December 31, 2011 as compared to the amounts as of December 31, 2010.

Our total assets increased by $43.6 million in 2011 to $842.7 million. We increased our investment in non-cash working capital by $48.9 million due to increases in our inventory ($39.1 million) and accounts receivable ($12.9 million) to support our revenue growth. We also increased our investment in property, plant and equipment, mostly in our oilfield services and minerals and materials segments, to help grow and maintain those businesses. We funded these investments mainly through profits from our operations as well as additional borrowings on our revolving debt facility.

The $9.6 million decrease in our mineral rights assets reflects the decreased value, as opposed to decreased quantity, of chromite mineral rights stemming from the devaluation of the ZAR versus the USD, our reporting currency.

The $7.4 million increase in our investments and advances to joint ventures and affiliates reflects advances we made to Ashapura Volclay Limited, one of our Indian investments, to provide necessary capital for expanded production capabilities as well as the inclusion of our Mexican investment in this account after we deconsolidated it in 2011.

Our available-for-sale securities reflect the value of our equity ownership in Ashapura Minechem Limited (Ashapura), a company listed on the Bombay stock exchange, and decreased $10.4 million in value as a result of the decrease in value of that stock as quoted on the exchange.

Our pension liabilities increased $13.5 million from prior year end mainly due to unfavorable changes in the discount rate and return on asset assumptions underlying estimates used to calculate those liabilities.

Our accumulated other comprehensive income decreased $43.9 million, of which $24.6 million relates to the revaluation of the net assets of our foreign subsidiaries into our reporting currency, USD, during consolidation. The exchange rates between the USD and the functional currencies of several of our entities, including the ZAR and TRY, have fluctuated significantly, causing the majority of the decrease. In addition, the other items included in our Statement of Other Comprehensive Income, such as unrealized losses on our available-for-sale securities and pension adjustments, accounted for an additional $17.9 million of the decrease, net of tax.

Liquidity and Capital Resources

Cash flows from operations, an ability to issue new debt instruments, an ability to lease equipment, and borrowings from our revolving credit facility have historically been our sources of funds to provide working capital, make capital expenditures, acquire businesses, repurchase common stock, and pay dividends to shareholders. We believe cash flows from operations and borrowings from the unused portion of our committed credit facility will be adequate to support our business needs for the foreseeable future. Should the need arise or should we choose to, we can issue additional equity or debt instruments on a publicly traded securities exchange via a shelf registration which became effective with the SEC in January 2010.

We may need additional debt or equity facilities in order to pursue acquisitions, when and if these opportunities become available, and we may or may not be able to obtain such facilities on terms substantially similar to our current facilities as discussed in Item 1A – Risk Factors of this Form 10-K. Terms of any new facilities, especially interest rates or covenants, may be significantly different to those we currently have.

Cash flows from operating activities have varied over the last three years due to fluctuations in working capital levels, net income, and other non-cash items, such as depreciation expense and undistributed losses (earnings) from affiliates and joint-ventures. These undistributed losses (earnings) represent the non-cash income or loss that we record in our Consolidated Statement of Operations, adjusted for distributions or dividends received from our joint-ventures.

In periods of growth, such as in 2011 and 2010, our working capital levels increase a) as our receivables grow in response to increased sales and b) as we invest in incremental inventory levels to meet the growing demand for our products. However in 2009, our working capital levels decreased as the economic recession weakened demand for our products. Non-cash working capital was approximately $270.5 million and $221.8 million as of December 31, 2011 and 2010, respectively. The current ratio (current assets divided by current liabilities) was 3.5-to-1 and 3.2-to-1 as of the end of 2011 and 2010, respectively.

Our cash flows from investing activities largely depend upon our levels of capital expenditures and acquisitions of new businesses. Capital expenditure in 2011, 2010 and 2009 were $61.2 million, $47.3 million, and $60.4 million, respectively. Capital expenditure included approximately $8.2 million and $14.9 million in 2011 and 2010, respectively, of expenditures in relation to our chromite operations in South Africa after having purchased a mine there in 2009. Capital expenditure in 2009 included $23.0 million of expenditure to acquire the chromite mineral rights and begin constructing a plant there to process the chromite. Excluding the expenditures relating to our South Africa operations, the majority of our remaining capital expenditure in all three years occurred in our oilfield services segment (to increase the size of our equipment fleet) and our minerals and materials segment (mostly for maintenance capital to ensure stability as the business experiences growth).

Cash provided by financing activities is largely dependent upon our needs for external capital and uses of internally generated capital. In 2011 and 2010, we borrowed more debt (net of repayments) to fund our activities as previously mentioned. In 2009, we generated significant cash flow from operations which we used to pay down external debt (net of borrowings).

In financing activities, our dividends have fluctuated with our outstanding share levels as dividends declared remained constant at $0.72 per share in 2011, 2010 and 2009. The purchase of non-controlling interest as shown in our cash flow statement in 2010 relates to the purchase of the remaining 47% minority interest in our South Africa subsidiary from its previous owner.

As of December 31, 2011, we had net outstanding debt (net of cash and cash equivalents) of $237.0 million versus $208.9 million at the end of the prior year. Total long-term debt represented 39%, 37%, and 35% of total capitalization at December 31, 2011, 2010 and 2009, respectively. We attempt to have a majority of our debt instruments contain fixed rates of interest; we achieve this partly through the use of interest rate swap derivatives. As of December 31, 2011, 63% of our debt is fixed at an average interest rate of 5.48%; the remainder of our debt contains interest rates which vary mostly in response to changes in LIBOR.

Contractual Obligations and Off-balance Sheet Arrangements

The following schedule sets forth details of our long-term contractual obligations at December 31, 2011:


Table of Contractual Obligations (in millions)	Payments due by Period
Table of Contractual Obligations (in millions)	Total		Less than 1 Year		2-3 Years		4-5 Years		After 5 Years
Bank debt and capital lease obligations	$	261.4		0.7		1.0		-		259.7
Operating lease obligations		90.4		12.6		20.0		12.8		45.0
Interest rate swaps		9.0		-		0.5		2.3		6.2
Unconditional purchase obligation		5.2		5.2		-		-		-
Pension plan funding obligation		1.7		1.7
Capital expenditures		1.3		0.7		0.6		-		-
Other liabilities		0.5		0.5		-		-		-

Total contractual cash obligations		369.5		21.4		22.1		15.1		310.9

Amounts included within our financial statements

At December 31, 2011, long-term debt on our Consolidated Balance Sheet includes bank debt of approximately $179.1 million due under our revolving credit agreement, which was terminated and replaced by a new agreement in January 2012 that provides a borrowing commitment from various lenders of $300 million and matures in January 2017. Long-term debt also includes $125 million of debt for our senior notes, of which $75 million are payable at maturity on April 2, 2017 and $50 million are payable at maturity on April 29, 2020. Payments relating to these debt instruments are included in the Bank debt and capital lease obligations in the Table of Contractual Obligations. Further information about these debt instruments is included in our Notes to Consolidated Financial Statements.

We have recorded a liability of $9.0 million for interest rate swap derivatives which effectively hedge the variable interest rate of our senior notes and a portion of our debt under our revolving credit agreement. The amounts included in the table above will most likely differ from the amount at maturity due to future changes in the fair value of the interest rate swap, which is largely dependent upon changes in interest rates and market expectations. Further information about these interest rate swap derivatives is included in our Notes to Consolidated Financial Statements.

We have committed to contribute $1.7 million of cash to our defined benefit pension plan in 2012.

We have recorded liabilities to satisfy the land reclamation obligations discussed in our Notes to Consolidated Financial Statements. These amounts are excluded from our table of contractual obligations as we cannot estimate the timing of these payments since they are not contractually due until the expiration of individual mining permits, which are frequently renewed.

Amounts excluded from our financial statements

Operating leases relate to non-cancelable obligations for corporate facilities, transportation equipment, machinery and equipment, computer and office equipment, automobiles, and office and plant facilities. Included in the table of contractual obligations are amounts for rent due under our operating lease commitment for our corporate facility, which requires lease payments in 2012 of $2.7 million with 2% annual increases thereafter through December 2028, the end of the lease term. Additional information regarding operating leases is disclosed in our Notes to the Consolidated Financial Statements.

We occasionally enter into unconditional purchase obligations that contemplate future, irrevocable payments, typically for inventory items, under enforceable contracts which cannot be cancelled without penalty. We also have commitments with vendors for the purchase of property, plant and equipment under noncancelable purchase orders included in capital expenditures. Both commitments are presented in the table of contractual obligations but are excluded from our financial statements.

At December 31, 2011, we had outstanding standby letters of credit of $3.7 million and outstanding performance bonds of $27.7 million, neither of which are included in our table of contractual obligations. These letters of credit and bonds typically serve to guarantee performance to customers under long-term service contracts within our construction service product line and guarantee performance of our obligations related to land reclamation and worker’s compensation claims. We have recognized the estimated costs of our obligations related to land reclamation and workers’ compensation claims in our consolidated balance sheets as of December 31, 2011 and 2010.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from fluctuations in foreign currency exchange rates, interest rates, credit risk, and market risks on certain publicly traded securities. We use a variety of practices to manage these market risks, including derivative financial instruments when appropriate. Our treasury and risk management policies prohibit us from using derivative instruments for trading or speculative purposes. We also do not use leveraged derivative instruments or derivatives with complex features.

Exchange Rate Sensitivity

As we operate in over 25 countries with many international subsidiaries, we are exposed to currency fluctuations related to manufacturing and selling our products and services. This foreign currency risk is diversified and involves assets, liabilities and cash flows denominated in currencies other than the USD. Our major foreign currency exposures involve our subsidiaries in Europe, Southeast Asia, and South Africa, although all foreign subsidiaries are subject to foreign currency exchange rate risk versus the USD. Exchange rates between these currencies and the USD have fluctuated significantly in recent years and may continue to do so in the future.

We manage our foreign currency exchange risk in part through operational means, including managing same currency revenues versus same currency costs as well as same currency assets versus same currency liabilities. We also have subsidiaries with the same currency exposures which may offset each other, providing a natural hedge against one another’s currency risk. From time to time, we also use derivative instruments to reduce these foreign currency exchange rate risks. At December 31, 2011, we did not have any foreign currency derivative contracts outstanding.

Assets and liabilities of our international subsidiaries are translated to their parent company’s reporting currency at current exchange rates during consolidation; gains and losses stemming from these translations are included as a component of Other Comprehensive Income and reported within Accumulated Comprehensive Income within our consolidated balance sheet. Income and expenses of our international subsidiaries are translated at average exchange rates for the period and, when included within retained earnings in the balance sheet at current exchange rates, the differences to those average exchange rates is included within Other Comprehensive Income and reported within Accumulated Comprehensive Income. When our subsidiaries transact business in currencies other than their functional currency, those transactions are revalued in their functional currency and differences resulting from such revaluations are included within Other income, net within our Consolidated Statement of Operations.

We can calculate the effect that changes in exchange rates would have on our total assets and net income. This calculation cannot be extrapolated to actual results that might occur because changes in the relationship of exchange rates may also impact other assumptions and calculations, such as the income tax expense, which may counteract the sensitivities. Notwithstanding and holding all other variables constant, a 10% increase in the year-end exchange rates and a 10% increase in our annual average exchange rates would result in a 5% and 1% increase in our total assets and net income to AMCOL shareholders, respectively. These changes are hypothetical scenarios used to calibrate potential risk and do not represent our view of future market changes.

Interest Rate Sensitivity

The following table provides information about our financial instruments that are sensitive to changes in interest rates. The table presents principal cash flows and related weighted average interest rates by expected maturity dates for debt obligations. The table below shows each instrument’s cash flows in U.S. dollars with a notation as to the actual currency the cash flow is denominated in.


	Expected Maturity Date
	2012		2013		2014		2015		2016		Thereafter		Total
(US$ equivalent in thousands)
Short-term debt:
Fixed rate (USD)	$	542	$	-	$	-	$	-	$	-	$	-	$	542
Interest rate		4.18%		-		-		-		-		-		4.18%
Fixed rate (PLN)		142		-		-		-		-		-		142
Interest rate		4.00%		-		-		-		-		-		4.00%
Fixed rate (Euro)		54		-		-		-		-		-		54
Interest rate		4.00%		-		-		-		-		-		4.00%
Long-term debt:
Fixed rate - Senior notes (USD)		-		-		-		-		-		125,000		125,000
Average interest rate		-		-		-		-		-		5.61%		5.61%
Variable rate - Revolver (USD)		-		-		-		-		-		79,800		79,800
Average interest rate		-		-		-		-		-		2.12%		2.12%
Fixed rate - Revolver (USD)		-		-		-		-		-		33,000		33,000
Average interest rate		-		-		-		-		-		4.90%		4.90%
Variable rate - Other (USD)		-		-		-		-		-		6,564		6,564
Average interest rate		-		-		-		-		-		2.13%		2.13%
Fixed rate - Other (USD)		-		550		226		-		-		-		776
Interest rate		-		4.15%		3.77%		-		-		-		4.04%
Fixed rate (THB)		-		-		-		-		-		4,713		4,713
Interest rate		-		-		-		-		-		6.31%		6.31%
Variable rate (GBP)		-		-		-		-		-		1,855		1,855
Average interest rate		-		-		-		-		-		2.79%		2.79%
Variable rate (RMB)		-		-		-		-		-		2,361		2,361
Interest rate		-		-		-		-		-		7.35%		7.35%
Variable rate (AUD)		-		-		-		-		-		916		916
Average interest rate		-		-		-		-		-		6.28%		6.28%
Variable rate (Euro)		-		-		-		-		-		5,335		5,335
Average interest rate		-		-		-		-		-		2.84%		2.84%
Fixed rate (Euro)		-		20		-		-		-		131		151
Average interest rate		-		4.00%		-		-		-		3.75%		3.78%
Fixed rate (PLN)		-		110		53		33		3		-		199
Interest rate		-		4.00%		4.00%		4.00%		4.00%		-		4.00%

Total		738		680		279		33		3		259,675		261,408

We periodically use interest rate swaps to manage interest rate risk on debt securities. These instruments allow us to convert variable rate debt into fixed rate or fixed rate debt into variable rate. Interest rate differentials are paid or received on these arrangements over the life of the agreements. The interest rates above for our Fixed rate – Senior notes and Fixed rate – Revolver include the effect of interest rate swaps as outlined in our Notes to Consolidated Financial Statements.

Credit Risk

receivables are limited due to the large number of customers comprising our customer base. We currently believe our allowance for doubtful accounts is sufficient to cover customer credit risks. Our accounts receivable financial instruments are carried at amounts that approximate fair value.

Securities Market Risk

We own shares of Ashapura Minechem Limited (“Ashapura”), a public company traded on the Bombay Stock Exchange Limited. We record the fair value of this investment on our Consolidated Balance Sheet using the closing price of Ashapura’s shares on the exchange as of the last day of the reporting period. The value of this investment, therefore, is subject to market forces underlying the closing price per share. We record the investment as an available-for-sale security and recognize changes in its fair value in the Consolidated Statement of Comprehensive Income.

Euro & Sovereign Debt Risk

Certain countries that have adopted the Euro as their currency have experienced financial difficulty in 2011 and are in the process of stabilizing their finances through various measures, which may include such drastic measures as defaulting on their debt or adopting a different currency as their national currency. While we do not believe we have significant financial risk resulting from any of these situations, we cannot predict the disruption that would occur to the European markets in which we compete if such drastic measures were taken.

We do not have any material credit risk with sovereign governments currently facing this situation as we do not sell our products to them. We do, however, sell to customers in these countries, but we believe our risk associated with these customers is not material. In addition, one bank that loans us money pursuant to our revolving credit facility is partially owned by a foreign government, but we believe we would be able to secure other sources of funding should this bank be unable to make loans to us under the credit facility.

Item 8. Financial Statements and Supplementary Data

See the Index to Financial Statements and Exhibits and Financial Statement Schedule in Part IV of this Form 10-K. Such financial statements and schedule are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. The design of any system of controls is also based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, we conclude that our internal control over financial reporting was effective as of December 31, 2011.

Our independent registered public accounting firm has audited our internal control over financial reporting as of the end of the period covered by this report as stated in their report, which appears in Part IV of this Form 10-K.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance of the Registrant

Information regarding our directors is included in our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, and is incorporated herein by reference.

Information regarding our executive officers is included under a separate caption in Part I hereof in accordance with General Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K.

We have adopted a Code of Business Conduct and Ethics (the “Code”) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions, as well as other employees. The Code, our Corporate Governance Guidelines and the charters of our Audit Committee, Compensation Committee and Nominating and Governance Committee are publicly available on our website at www.amcol.com and are available in print, free of charge, to any shareholder upon request addressed to our Corporate Secretary at AMCOL International Corporation, 2870 Forbs Avenue, Hoffman Estates, Illinois 60192. If we make any substantive amendments to the Code or grant any waiver, including any implicit waiver, from a provision of the Code to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, we will disclose the nature of such amendment or waiver on our website or in a report on Form 8-K in accordance with applicable rules and regulations.

Item 11. Executive Compensation

Information regarding the above is included in our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information regarding security ownership of certain beneficial owners and management is included in our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information regarding relationships and related transactions, and director independence is included in our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

Information regarding principal accountant fees and services is included in our definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K, and is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedule



(a)		1. See Index to Financial Statements and Financial Statement Schedule below.
		2. See Index to Financial Statements and Financial Statement Schedule below.
		Such Financial Statements and Schedule are incorporated herein by reference.
		3. See Index to Exhibits immediately following the signature page.
(b)		See Index to Exhibits immediately following the signature page.
(c)		See Index to Financial Statements and Financial Statement Schedule below.

Item 15(a) Index to Financial Statements and Financial Statement Schedule


		Page
(1)	Financial Statements:
	Reports of Independent Registered Public Accounting Firm	49
	Consolidated Balance Sheets, December 31, 2011 and 2010	51
	Consolidated Statements of Operations, Years ended December 31, 2011, 2010 and 2009	53
	Consolidated Statements of Comprehensive Income, Years ended December 31, 2011, 2010 and 2009	54
	Consolidated Statements of Equity, Years ended December 31, 2011, 2010 and 2009	55
	Consolidated Statements of Cash Flows, Years ended December 31, 2011, 2010 and 2009	56
	Notes to Consolidated Financial Statements	57

All other schedules called for under Regulation S-X are not submitted because they are not applicable or not required, or because the required information is not material.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of AMCOL International Corporation

We have audited the accompanying consolidated balance sheets of AMCOL International Corporation and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of AMCOL International Corporation and Subsidiaries at December 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AMCOL International Corporation’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Chicago, Illinois

February 29, 2012

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of AMCOL International Corporation

We have audited AMCOL International Corporation and Subsidiaries’ internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). AMCOL International Corporation and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, AMCOL International Corporation and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2011 consolidated financial statements of AMCOL International Corporation and Subsidiaries and our report dated February 29, 2012 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Chicago, Illinois

February 29, 2012

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)


ASSETS	December 31,
	2011		2010
Current assets:
Cash and cash equivalents	$	23,698	$	27,262
Accounts receivable:
Trade		191,167		178,473
Other		15,667		15,495
Inventories		146,582		107,515
Prepaid expenses		15,715		12,581
Deferred income taxes		5,918		5,553
Income taxes receivable		6,866		8,474
Other		6,655		6,211

Total current assets		412,268		361,564

Noncurrent assets:
Property, plant, equipment, and mineral rights and reserves:
Land		13,881		11,591
Mineral rights		41,861		51,435
Depreciable assets		482,338		454,351

		538,080		517,377
Less: accumulated depreciation and depletion		275,503		256,889

		262,577		260,488

Goodwill		69,509		70,909
Intangible assets		36,610		42,590
Investment in and advances to affiliates and joint ventures		26,407		19,056
Available-for-sale securities		3,802		14,168
Deferred income taxes		7,783		7,570
Other assets		23,746		22,748

Total noncurrent assets		430,434		437,529

		842,702		799,093

Continued…

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)


LIABILITIES AND SHAREHOLDERS’ EQUITY	December 31,
LIABILITIES AND SHAREHOLDERS’ EQUITY	2011		2010
Current liabilities:
Accounts payable	$	56,451	$	53,167
Accrued income taxes		2,679		4,104
Accrued liabilities		58,950		55,204

Total current liabilities		118,080		112,475

Noncurrent liabilities:
Long-term debt		260,670		236,171
Pension liabilities		34,840		21,338
Deferred compensation		8,927		8,686
Other long-term liabilities		19,965		19,987

Total noncurrent liabilities		324,402		286,182

Equity:
Common stock, par value $.01 per share, 100,000,000 shares authorized; 32,015,771 shares issued in 2011 and 2010		320		320
Additional paid in capital		94,529		95,074
Retained earnings		319,538		283,189
Accumulated other comprehensive income (loss)		(14,968)		28,936

		399,419		407,519
Less:
Treasury stock (286,802 and 768,946 shares in 2011 and 2010, respectively)		3,426		8,945

Total AMCOL shareholders’ equity		395,993		398,574

Noncontrolling interest		4,227		1,862

Total equity		400,220		400,436

		842,702		799,093

See accompanying notes to consolidated financial statements.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except share and per share amounts)


	Year Ended December 31,
	2011		2010		2009
Continuing Operations
Net sales	$	942,369	$	841,037	$	691,864
Cost of sales		689,494		624,111		505,594

Gross profit		252,875		216,926		186,270
Selling, general and administrative expenses		165,222		146,885		133,393

Operating profit		87,653		70,041		52,877

Other income (expense):
Interest expense, net		(11,519)		(9,725)		(12,118)
Other, net		311		1,147		(927)

		(11,208)		(8,578)		(13,045)

Income before income taxes and income (loss) from affiliates and joint ventures		76,445		61,463		39,832
Income tax expense		21,849		19,391		5,335

Income before income (loss) from affiliates and joint ventures		54,596		42,072		34,497
Income (loss) from affiliates and joint ventures		5,566		(11,261)		115

Income (loss) from continuing operations		60,162		30,811		34,612
Discontinued Operations
Income (loss) on discontinued operations		(916)		(887)		259

Net income (loss)		59,246		29,924		34,871

Net income (loss) attributable to noncontrolling interests		135		(423)		72

Net income (loss) attributable to AMCOL shareholders		59,111		30,347		34,799

See accompanying notes to consolidated financial statements.

Continued…

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except share and per share amounts)


	Year Ended December 31,
	2011		2010		2009
Earnings per share attributable to AMCOL shareholders
Basic earnings (loss) per share
Continuing operations	$	1.89	$	1.00	$	1.12
Discontinued operations		(0.03)		(0.03)		0.01

Net income		1.86		0.97		1.13

Diluted earnings (loss) per share
Continuing operations	$	1.87	$	0.99	$	1.11
Discontinued operations		(0.03)		(0.03)		0.01

Net income		1.84		0.96		1.12

Amounts attributable to AMCOL shareholders
Income from continuing operations, net of tax	$	60,027	$	31,234	$	34,540
Discontinued operations, net of tax		(916)		(887)		259

Net income		59,111		30,347		34,799

Dividends declared per share		0.72		0.72		0.72

Consolidated Statements of Comprehensive Income

(In thousands)


	Year Ended December 31,
	2011		2010		2009		2011		2010		2009		2011		2010		2009
	Total						AMCOL Shareholders						Noncontrolling Interest
Net income (loss)	$	59,246	$	29,924	$	34,871	$	59,111	$	30,347	$	34,799	$	135	$	(423)	$	72
Other comprehensive income (loss) -
Pension adjustment		(13,502)		(401)		5,736		(13,502)		(401)		5,736		-		-		-
Tax benefit (expense)		4,985		160		(2,226)		4,985		160		(2,226)		-		-		-
Unrealized gain (loss) on interest rate swap agreement		(2,373)		(3,584)		2,915		(2,373)		(3,584)		2,915		-		-		-
Tax benefit (expense)		889		1,320		(1,136)		889		1,320		(1,136)		-		-		-
Unrealized gain (loss) on available-for-sale securities		(10,366)		(11,395)		24,265		(10,366)		(11,395)		24,265		-		-		-
Tax benefit (expense)		1,022		4,119		(5,141)		1,022		4,119		(5,141)		-		-		-
Foreign currency translation adjustment		(25,322)		7,203		12,876		(24,559)		6,543		12,482		(763)		660		394

Total other comprehensive income (loss)		(44,667)		(2,578)		37,289		(43,904)		(3,238)		36,895		(763)		660		394

Comprehensive income (loss)		14,579		27,346		72,160		15,207		27,109		71,694		(628)		237		466

See accompanying notes to consolidated financial statements.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Equity

(In thousands, except share and per share amounts)


	AMCOL Shareholders
	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Noncontrolling Interest		Total Equity
	Number of Shares		Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Noncontrolling Interest		Total Equity
Balance at December 31, 2008		32,015,771	$	320	$	86,350	$	262,453	$	(4,721)	$	(18,196)		2,149		328,355
Net income (loss)								34,799						72		34,871
Cash dividends ($0.72 per share)								(22,052)								(22,052)
Issuance of 335,924 treasury shares pursuant shares pursuant to stock compensation plans and acquisitions						(282)						3,819				3,537
Tax benefit from employee stock compensation plans						730										730
Vesting of common stock in connection with employee stock compensation plans						2,570										2,570
Purchase of noncontrolling interest shares						(4,538)								(990)		(5,528)
Other Comprehensive income (loss)										36,895				394		37,289

Balance at December 31, 2009		32,015,771		320		84,830		275,200		32,174		(14,377)		1,625		379,772
Net income (loss)								30,347						(423)		29,924
Cash dividends ($0.72 per share)								(22,358)								(22,358)
Issuance of 472,917 treasury shares pursuant to employee stock compensation plans						2,723						5,432				8,155
Tax benefit from employee stock compensation plans						285										285
Vesting of common stock in connection with employee stock compensation plans						4,535										4,535
Purchase of noncontrolling interest shares						2,701										2,701
Other Comprehensive income (loss)										(3,238)				660		(2,578)

Balance at December 31, 2010		32,015,771		320		95,074		283,189		28,936		(8,945)		1,862		400,436
Net income (loss)								59,111						135		59,246
Cash dividends ($0.72 per share)								(22,762)								(22,762)
Issuance of 482,144 treasury shares pursuant to employee stock compensation plans						2,569						5,519				8,088
Tax benefit from employee stock compensation plans						593										593
Vesting of common stock in connection with employee stock compensation plans						4,885										4,885
Purchase of noncontrolling interest						(5,189)								(546)		(5,735)
Sale of subsidiary shares to noncontrolling interest						(3,403)				(1,390)				4,793		0
Deconsolidation of variable interest entity														(1,254)		(1,254)
Other Comprehensive income (loss)										(42,514)				(763)		(43,277)

Balance at December 31, 2011		32,015,771	$	320	$	94,529	$	319,538	$	(14,968)	$	(3,426)	$	4,227	$	400,220

See accompanying notes to consolidated financial statements.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)


	Year Ended December 31,
	2011		2010		2009
Cash flow from operating activities:
Net income (loss)	$	59,246	$	29,924	$	34,871
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation, depletion, and amortization		41,836		36,306		35,906
Undistributed losses (earnings) from affiliates and joint ventures		(3,931)		11,754		691
Increase (decrease) in allowance for doubtful accounts		4,397		277		(139)
Decrease (increase) in deferred income taxes		7,119		3,863		3,690
Tax benefit from employee stock plans		593		285		730
(Gain) loss on sale of depreciable assets		(807)		214		(422)
Impairment charge		110		1,045		1,980
Stock compensation expense		4,885		4,535		2,570
Excess tax benefits on stock option exercises		(716)		(436)		(639)
Other		229		(85)		(768)

(Increase) decrease in current assets, net of effects of acquisitions:
Accounts receivable		(36,919)		(47,583)		38,649
Income taxes receivable		1,594		(6,226)		1,073
Inventories		(46,977)		(11,511)		26,033
Prepaid expenses		(4,107)		2,853		(40)
Other assets		(60)		0		0
Increase (decrease) in current liabilities, net of effects of acquisitions:
Accounts payable		9,205		13,220		(1,251)
Accrued liabilities and income taxes		4,235		9,398		(11,268)
(Increase) decrease in other noncurrent assets		(736)		(3,977)		(7,590)
Increase (decrease) in other noncurrent liabilities		(566)		4,244		(1,709)

Net cash provided by operating activities		38,630		48,100		122,367


Cash flow from investing activities:
Proceeds from sale of depreciable assets		1,913		841		2,988
Proceeds from sale of corporate building		-		-		9,651
Capital expenditures		(61,029)		(47,305)		(50,767)
Capital expenditures - corporate building		-		-		(9,651)
Investments in and advances to affiliates and joint ventures		(3,387)		(2,073)		(1,387)
Proceeds from sale of interests in affiliates and businesses		6,146		-		-
Acquisition of businesses, net of cash acquired		-		(400)		(650)
Receipts from (advances to) Chrome Corp		-		-		6,000
Other		1,667		847		(216)

Net cash used in investing activities		(54,690)		(48,090)		(44,032)

Cash flow from financing activities:
Proceeds from issuance of debt		1,344,967		1,228,952		540,139
Principal payments of debt		(1,319,673)		(1,201,281)		(592,486)
Purchase of noncontrolling interest		-		(11,873)		-
Proceeds from exercise of stock awards		8,308		5,346		2,500
Excess tax benefits on stock option exercises		716		436		639
Dividends		(22,762)		(22,358)		(22,052)

Net cash provided by (used in) financing activities		11,556		(778)		(71,260)

Effect of foreign currency rate changes on cash		940		361		1,153

Net increase (decrease) in cash and cash equivalents		(3,564)		(407)		8,228
Cash and cash equivalents at the beginning of the year		27,262		27,669		19,441

Cash and cash equivalents at end of the year		23,698		27,262		27,669

Supplemental disclosures of cash flow information:
Cash paid for:
Interest, net	$	9,798	$	9,223	$	12,281

Income taxes, net	$	9,610	$	18,843	$	2,506

See accompanying notes to consolidated financial statements.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

(1)

Summary of Significant Accounting Policies

Recently Adopted Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-08, codified in Accounting Standards Codification (“ASC”) Topic 350 – Intangibles – Goodwill and Other. ASU 2011-08 simplifies how entities test goodwill for impairment. It permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. This assessment can then be used to determine whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. This ASU will not have a material impact on our financial statements when we adopted it on January 1, 2012.

In June 2011, the FASB issued ASU 2011-05, codified in ASC Topic 220 – Comprehensive Income to increase the prominence of items reported in other comprehensive income (“OCI”). This ASU requires presentation of items of net income, items of OCI and total comprehensive income either in one continuous statement or two separate but consecutive statements. This ASU does not change the items which must be reported in OCI, how such items are measured or when they must be reclassified to net income. The FASB subsequently deferred the effective date of certain provisions of this ASU pertaining to the reclassification of items out of accumulated other comprehensive income, pending the issuance of further guidance on that matter. The adoption of this ASU on January 1, 2012 will not have a material impact on our financial statements.

In May 2011, the FASB issued ASU 2011-04, codified in ASC Topic 820 – Fair Value Measurements. This ASU includes amendments that clarify the intent about the application of existing fair value measurement requirements. Specifically, it requires additional disclosures for fair value measurements that are based on significant inputs. The adoption of this ASU on January 1, 2012 will not have a material impact on our financial statements.

Principles of Consolidation

The consolidated financial statements include the accounts of our domestic and foreign subsidiaries as well as variable interest entities for which we have determined that we are the primary beneficiary. We consolidate all subsidiaries in which we own more than 50% of their equity. We use the equity method of accounting to incorporate the results of our investments in companies in which we have significant influence.

Our corporate segment includes the elimination of intersegment sales as well as certain expenses associated with research and development, management, employee benefits and information technology activities for our Company. Approximately 77% of the revenue elimination in the year ended December 31, 2011 and 100% of the revenue elimination in the years ending December 31, 2010 and 2009, represent the elimination of shipping revenues between our transportation segment and its domestic sister companies.

Segments

The composition of consolidated revenues by segment is as follows:

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)


	Percentage of Net Sales
	2011		2010		2009
Minerals and materials		51%		51%		49%
Environmental		26%		26%		29%
Oilfield services		21%		18%		17%
Transportation		6%		6%		7%
Intersegment sales		-4%		-1%		-2%

		100%		100%		100%

Further descriptions of our products, principal markets and the relative significance of our segment operations are included in Note 2.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the amount of assets, liabilities, revenues and expenses reported in our financial statements as well as certain disclosures contained therein. Actual results may differ from those estimates.

Revenue Recognition

We recognize revenue from sales of products when title passes to the customer, the customer assumes the risks and rewards of ownership, and collectibility is reasonably assured; generally, this occurs when we ship product to customers. We record allowances for discounts, rebates, and estimated returns at the time of sale and report these as reductions to revenue. We generate some sales through independent, third-party representatives. We record these sales as revenue and the commission compensation paid to the representative as an expense within selling, general and administrative expenses.

We recognize revenue for freight delivery services within our transportation segment when the service is provided. We accrue amounts payable for purchased transportation, commissions and insurance when the related revenue is recognized.

Service and rental revenues are primarily generated in our environmental and oilfield services segments. We recognize these revenues in the period such services are performed and collectibility is reasonably assured.

We record revenue from long-term construction contracts, typically generated in our environmental segment, using the percentage-of-completion method. Progress is generally based upon costs incurred to date as compared to the total estimated costs to complete the work under the contract. All known or anticipated losses on contracts are provided when they become evident. Cost adjustments that are in the process of being negotiated with customers for extra work or changes in scope of work are included in revenue when collection is reasonably assured.

Translation of Foreign Currencies

Foreign entities utilize their local currency as the functional currency. We record gains and losses resulting from foreign currency transactions in net income, and we reflect the adjustments resulting from the translation of financial statements into our reporting currency during consolidation as a component of accumulated other comprehensive income within equity. The assets and liabilities of subsidiaries located outside of the United States are translated into U.S. dollars at the rates of exchange at the balance sheet dates. The statements of operations are translated using average exchange rates throughout the period.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Cash Equivalents

We classify all short-term, highly liquid investments with original maturities of three months or less as cash and cash equivalents.

Inventories

Inventories are valued at the lower of cost or market value. Cost is determined by the first-in, first-out (FIFO) method. Mineral exploration costs are expensed as incurred.

Receivables and Allowance for Doubtful Accounts

We carry our receivables at their face amount less an allowance for bad debts. We establish the allowance for bad debts based on a review of several factors, including historical collection experience, current aging status of the customer accounts, and the financial condition of our customers.

Property, Plant, Equipment, and Mineral Rights and Reserves

Property, plant, equipment, and mineral rights and reserves are carried at cost less accumulated depreciation and depletion. Depreciation is computed using the straight-line method for substantially all of the assets. Certain other assets, primarily field and stockpile related equipment and mineral rights and reserves, are depreciated on the units-of-production method.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets of acquired businesses. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. We review the carrying value of goodwill in each reporting unit for impairment annually as of October 1^st or more frequently if indications exist which may suggest the carrying value is not recoverable. This review is a two step process. The first step involves comparing the estimated fair value of each reporting unit to the carrying value of that reporting unit. If the fair value of the reporting unit exceeds the carrying value, the goodwill is not considered impaired and the second step is unnecessary. If the fair value is less than the carrying value, the second step of the test would be performed to measure the amount of impairment loss to be recorded, if any.

Other Intangible Assets

Other intangible assets with a finite useful life are amortized on the straight-line method over the expected periods to be benefited.

Impairment of Long-Lived Assets

We review the carrying values of long-lived assets, including property, plant and equipment and intangible assets with a finite useful life whenever facts and circumstances indicate that the assets may be impaired. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the future net undiscounted cash flows we expect it to generate. If we consider an asset to be impaired, we record an impairment charge equal to the amount by which the carrying value of the asset exceeds the fair value. We report an asset to be disposed of at the lower of its carrying value or fair value, less costs of disposal.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

In the case of intangible assets with indefinite lives, we review them annually for impairment. This review involves comparing the fair value of the intangible asset with its carrying amount. If its carrying amount exceeds its fair value, we recognize an impairment loss equal to that excess.

Available-for-Sale Securities

We record available-for-sale securities at their fair value using quoted market prices. We report their unrealized gains and losses, net of applicable taxes, as a component of accumulated other comprehensive income within equity. We have one equity security that we have accounted for as an available-for-sale security as of December 31, 2011 and 2010.

Income Taxes

We recognize deferred tax assets and liabilities relating to the future tax consequences of differences between the financial statement carrying value of existing assets and liabilities and their respective tax values. We measure deferred tax assets and liabilities using tax rates in effect in the years in which those temporary differences are expected to be recovered or settled. We recognize the effect that changes in tax rates have on deferred tax assets and liabilities in income in the period that the change is enacted. Valuation allowances are recorded to reduce deferred tax assets to amounts that are more likely than not to be realized. We classify interest and penalties associated with income taxes within the income tax line item of our Consolidated Statement of Operations.

Freight and Sales Taxes

We report amounts charged to customers for shipping and handling fees as revenues and we report amounts incurred for these costs within cost of sales in the consolidated statements of operations (i.e. gross presentation with revenues and cost of sales). Also, we report amounts charged to customers for sales taxes and the related costs incurred for sales tax remittances to governmental agencies within net sales in the Consolidated Statement of Operations (i.e. net presentation within revenues).

Product Liability & Warranty Expenses

We report expenses incurred for warranty and product liability costs in general, selling and administrative expenses in our Consolidated Statement of Operations. Our warranty accrual is based on known warranty issues as of the balance sheet date as well as a reserve for unidentified claims based on historical experience.

Legal Fees

We report expenses for fees, including legal costs associated with loss contingencies, when services are performed.

Land Reclamation

We mine land for various minerals using a surface-mining process that requires the removal of overburden. In many instances, we are obligated to restore the land upon completion of the mining activity. As we remove overburden, we recognize this liability for land reclamation based on the estimated fair value of the obligation. We adjust the obligation to reflect the passage of time and changes in estimated future cash outflows.

Research and Development

Research and development costs are expensed as incurred within selling, general and administrative expenses.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Earnings per Share

Basic earnings per share is computed by dividing net income attributable to AMCOL shareholders by the weighted average number of common shares outstanding. Diluted earnings per share is similarly computed, except the denominator is increased to include the dilutive effects of stock compensation awards and other share equivalents. Stock compensation awards are antidilutive and therefore excluded from our diluted earnings per share calculation when their exercise would result in a net decrease in the weighted average number of common shares outstanding. A reconciliation between the shares used to compute basic and diluted earnings per share follows:


	2011		2010		2009
Weighted average common shares outstanding for the year		31,708,949		31,178,813		30,764,282
Dilutive impact of stock equivalents		436,824		368,778		269,432

Weighted average common and common equivalent shares for the year		32,145,773		31,547,591		31,033,714

Common shares outstanding at December 31		31,728,969		31,032,791		30,773,908

Weighted average anti-dilutive shares excluded from the computation of diluted earnings per share		189,768		470,097		938,546

Stock-Based Compensation

We account for stock-based compensation using the grant date fair value, which is based on the Black-Scholes option-pricing model. We recognize compensation cost over the requisite service period, which is generally the vesting period of the award.

Derivative Instruments and Hedging Activities

From time to time, we use derivative financial instruments to manage exposures to changes in interest rates and foreign currency exchange rates. We do not use derivative instruments for trading or other speculative purposes. We recognize our derivative instruments as either assets or liabilities in the balance sheet at their fair value. Our recognition of changes in the fair value (i.e. gains and losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and the type of that relationship. Hedges designated as cash flow hedges result in the changes in fair value being recorded in accumulated other comprehensive income. Changes in the fair value of derivative financial instruments for which hedge accounting is not applied, are recorded within Other, net within our Consolidated Statement of Operations.

Reclassifications

Certain items in the prior years’ consolidated financial statements contained herein and notes thereto have been reclassified to conform with the consolidated financial statement presentation for 2011. These reclassifications did not have a material impact on our financial statements.

(2)

Segment, Geographic, and Market Information

We determine our operating segments based on the discrete financial information that is regularly evaluated by our chief operating decision maker, our President and Chief Executive Officer, in deciding how to allocate resources and in assessing performance. Intersegment sales are not material and are eliminated in the corporate segment. Our reportable measure of profit or loss for each segment is operating profit, which is defined as net sales less cost of sales and selling, general and administrative expenses related to a segment’s operations. The costs deducted to arrive at operating profit do not include several items, such as net interest expense or income taxes.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Our five segments are as follows:

•

Minerals and materials - mines, processes and distributes minerals and products for use in various industrial and consumer markets, including metalcasting, pet care, laundry care, and drilling industries;

•

Environmental - provides services relating to and processes and distributes clay-based and other products for use as a moisture barrier in commercial construction, landfill liners and in a variety of other industrial and commercial applications;

•

Oilfield services - provides a variety of services and equipment rentals for both onshore and offshore applications to customers in the oil and natural gas industry;

•

Transportation - includes a long-haul trucking business and a freight brokerage business that provides services domestically to our subsidiaries as well as third-party customers; and

•

Corporate - intersegment sales are eliminated in our corporate segment. These are most notably sales between our transportation segment and our minerals and materials and environmental segments as well as sales between our minerals and materials segment to our environmental and oilfield services segments. Corporate segment also includes expenses associated with certain research and development, management, benefits and information technology activities.

Segment assets are those assets used within each segment. Corporate assets include assets used in the operation of this segment as well as those used by or shared amongst our segments, including cash and cash equivalents, certain fixed assets, assets associated with certain employee benefit plans, and other miscellaneous assets.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The following table sets forth certain financial information as of and for the years ended December 31, 2011, 2010 and 2009:


	2011		2010		2009
Net sales:
Minerals and materials	$	481,898	$	429,270	$	336,172
Environmental		246,385		220,598		203,231
Oilfield services		193,632		154,621		119,821
Transportation		54,113		52,225		46,642
Intersegment sales		(33,659)		(15,677)		(14,002)

Total		942,369		841,037		691,864

Operating profit (loss):
Minerals and materials	$	69,082	$	54,580	$	34,789
Environmental		18,441		19,814		25,090
Oilfield services		19,881		14,618		12,753
Transportation		2,241		2,4302		2,163
Corporate		(21,992)		(21,401)		(21,918)

Total		87,653		70,041		52,877

Assets:
Minerals and materials	$	422,093	$	402,640	$	384,896
Environmental		161,373		160,053		151,265
Oilfield services		194,408		173,239		145,981
Transportation		3,912		4,071		3,552
Corporate		60,916		59,090		48,566

Total		842,702		799,093		734,260

Depreciation, depletion and amortization:
Minerals and materials	$	20,082	$	17,165	$	16,122
Environmental		5,389		5,352		6,219
Oilfield services		13,363		11,888		11,767
Transportation		76		46		38
Corporate		2,926		1,855		1,760

Total		41,836		36,306		35,906

Capital expenditures:
Minerals and materials	$	27,306	$	29,700	$	35,659
Environmental		8,343		2,557		2,325
Oilfield services		23,097		13,249		11,095
Transportation		198		92		39
Corporate		2,085		1,707		11,300

Total		61,029		47,305		60,418

Research and development expenses:
Minerals and materials	$	6,488	$	5,913	$	5,344
Environmental		2,311		2,284		2,339
Oilfield services		238		697		659
Corporate		42		337		315

Total		9,079		9,231		8,657

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The following table sets forth certain geographic financial information as of and for the three years ending December 31^st. EMEA includes the European, Middle East and African geographic regions. Geographic sales and operating profit are determined based on origin of the sale as opposed to destination of the sale. Inter-regional sales and operating profit are eliminated in Americas.

		0000000000		0000000000		0000000000
	2011		2010		2009
Sales to unaffiliated customers shipped from:
Americas	$	589,277	$	531,133	$	441,483
EMEA		220,067		185,506		168,202
Asia Pacific		133,025		124,398		82,179

Total		942,369		841,037		691,864

Operating profit from sales from:
Americas	$	57,088	$	45,818	$	27,236
EMEA		12,543		6,455		14,124
Asia Pacific		18,022		17,768		11,517

Total		87,653		70,041		52,877

Accounts receivable in:
Americas	$	111,704	$	108,324	$	76,723
EMEA		54,245		47,318		41,401
Asia Pacific		40,885		38,326		30,136

Total		206,834		193,968		148,260

Property, plant, equipment, and mineral rights and reserves in:
Americas	$	115,720	$	110,198	$	108,352
EMEA		98,067		100,680		80,693
Asia Pacific		48,790		49,610		47,201

Total		262,577		260,488		236,246

Identifiable assets in:
Americas	$	420,973	$	433,130	$	453,894
EMEA		282,163		252,065		197,897
Asia Pacific		139,566		113,898		82,469

Total		842,702		799,093		734,260

Net sales by product line for each fiscal year are as follows:

		0000000000		0000000000		0000000000
	2011		2010		2009
Metalcasting	$	251,467	$	204,577	$	139,849
Oilfield services		193,632		154,621		119,821
Specialty materials		105,788		107,287		98,097
Lining technologies		104,220		110,614		103,046
Building materials		80,686		58,860		55,823
Pet products		55,924		61,971		66,441
Basic minerals		55,088		49,199		27,901
Contracting services		35,992		31,075		25,519
Drilling products		31,385		26,285		22,727
Transportation		54,113		52,225		46,642
Intersegment shipping revenue		(25,926)		(15,677)		(14,002)

Total		942,369		841,037		691,864

We generate revenues based on sales of products, provision of services and rental equipment, and shipment of goods to customers. A breakdown of each of these revenue generating activities and their related cost of goods sold for each of the past three years ending December 31 is shown in the following table.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)


	2011		2010		2009
Net sales by source
Net sales of tangible goods	$	709,020	$	636,562	$	522,530
Services revenues		205,162		167,927		136,694
Freight revenues		28,187		36,548		32,640

Total		942,369		841,037		691,864

Cost of sales:
Cost of tangible goods sold		511,026		467,431		382,500
Cost of services rendered		156,422		125,997		95,982
Cost associated with freight revenue		22,046		30,683		27,112

Total		689,494		624,111		505,594

(3)

Balance Sheet Related Information

We are exposed to credit risk on certain assets, primarily accounts receivable. We provide credit to customers in the ordinary course of business and perform ongoing credit evaluations. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising our customer base. We believe our allowance for doubtful accounts is sufficient to cover customer credit risks. The allowance for doubtful accounts as of and the activity for the years ended December 31 was as follows:


	2011		2010		2009
Balance at the beginning of the year	$	6,034	$	5,757	$	5,896
Charged to expense (income)		3,307		2,405		2,561
Write-offs and currency translation adjustments		(2,746)		(2,128)		(2,700)

Balance at the end of the year		6,595		6,034		5,757

Inventories at December 31 consisted of:


	2011		2010
Crude stockpile inventories	$	54,637	$	35,308
In-process and finished goods inventories		65,975		47,510
Other raw material, container, and supplies inventories		25,970		24,697

		146,582		107,515

Included within Other raw material, container, and supplies inventories in the table above is our reserve for slow moving and obsolete inventory. The balance of this reserve as of and the activity for the years ended December 31 was as follows:


	2011		2010		2009
Balance at the beginning of the year	$	2,730	$	2,136	$	1,989
Charged to costs and expenses		2,126		4,001		917
Disposals and currency translation adjustments		(2,705)		(3,407)		(770)

Balance at the end of the year		2,151		2,730		2,136

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The following table presents our reclamation liability at the end of and changes during each of the years presented:

		00000000000		00000000000
	2011		2010
Balance at beginning of the year	$	7,529	$	6,584
Settlement of obligations		(4,304)		(2,185)
Liabilities incurred and accretion expense		6,454		3,020
Currency translation adjustments		(423)		110

Balance at the end of the year		9,256		7,529

Accrued liabilities at December 31 consisted of:

		000000000		000000000
	2011		2010
Bonus	$	9,752	$	8,213
Employee benefits and related costs		9,961		8,498
Dividends payable		5,698		5,612
Other		33,539		32,881

		58,950		55,204

Accumulated other comprehensive income (loss) at December 31 was comprised of the following components:

		000000000		000000000
	2011		2010
Cumulative foreign currency translation	$	346	$	24,905
Prior service cost on pension plans (net of tax benefit of $113 in 2011 and $134 in 2010)		(195)		(232)
Net actuarial loss on pension plans (net of tax benefit of $6,944 in 2011 and $1,938 in 2010)		(11,912)		(3,358)
Unrealized loss on interest rate swap agreement (net of tax benefit of $3,329 in 2011 and $2,440 in 2010)		(5,710)		(4,226)
Unrealized gain on available-for-sale securities (net of tax expense of $0 in 2011 and $1,022 in 2010)		2,503		11,847

		(14,968)		28,936

(4)

Property, Plant, Equipment and Mineral Rights and Reserves

Property, plant, equipment and mineral rights and reserves consisted of the following:


	December 31,
	2011		2010
Mineral rights and reserves	$	41,861	$	51,435
Land		13,881		11,591
Buildings and improvements		95,388		86,410
Machinery and equipment		362,043		352,768
Construction in progress		24,907		15,173

		538,080		517,377

The range of useful lives to depreciate plant and equipment is as follows:



Buildings and improvements			3-50 years
Machinery and equipment			1-25 years

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Depreciation and depletion were charged to income as follows:


	2011		2010		2009
Depreciation expense	$	34,969	$	30,039	$	28,872
Depletion expense		2,084		1,211		365

		37,053		31,250		29,237

(5)

Goodwill and Intangible Assets

The balance of goodwill by segment and the activity occurring in the past two fiscal years is as follows:


	Minerals and Materials		Environmental		Oilfield Services		Consolidated

Balance at December 31, 2009	$	18,426	$	21,762	$	30,968	$	71,156

Change in goodwill relating to:
Acquisitions		-		761		-		761
Foreign exchange translation		(225)		(783)		-		(1,008)

Total changes		(225)		(22)		-		(247)

Balance at December 31, 2010		18,201		21,740		30,968		70,909

Change in goodwill relating to:
Sale of business		-		(156)		-		(156)
Foreign exchange translation		(817)		(427)		-		(1,244)

Total changes		(817)		(583)		-		(1,400)

Balance at December 31, 2011		17,384		21,157		30,968		69,509

Intangible assets were as follows:


	December 31, 2011						December 31, 2010
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangibles subject to amortization:
Trademarks	$	1,623	$	(1,533)	$	90	$	1,690	$	(1,283)	$	407
Patents		6,890		(6,807)		83		6,824		(6,701)		123
Customer related assets		47,069		(19,678)		27,391		48,460		(16,710)		31,750
Non-compete agreements		2,153		(2,053)		100		2,195		(2,051)		144
Developed technology		4,040		(1,998)		2,042		4,040		(1,592)		2,448
Other		2,492		(1,672)		820		3,221		(1,587)		1,634

Subtotal		64,267		(33,741)		30,526		66,430		(29,924)		36,506
Intangibles not subject to amortization:
Trademarks and tradenames		6,084		-		6,084		6,084		-		6,084

Total		70,351		(33,741)		36,610		72,514		(29,924)		42,590

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Intangible assets with finite lives are being amortized primarily on a straight-line basis over their estimated useful lives. The weighted average amortization period of our intangible assets with finite lives is 11 years. We did not recognize any material impairment charge in either of the years included above with respect to intangible assets. Amortization expense on intangible assets for each of the years ended December 31, 2011, 2010, and 2009 was $4,783, $5,056, and $6,669, respectively. We estimate amortization expense of intangible assets for the future years ending December 31 will approximate the following amounts:


	Amount
2012	$	4,157
2013		3,913
2014		3,585
2015		3,414
2016		3,384

(6)

Equity Investees

Information about our investments in and advances to affiliates and joint ventures at December 31, 2011 is as follows:


	Ownership Interest
Ashapura Volclay Limited		50%
CETCO-Bentonit Uniao Technologias Ambientais Ltda.		50%
Egypt Mining & Drilling Co. and Egypt Bentonite & Derivatives Co.		31%
Egypt Nano Technologies Co.		27%
Maprid Tech Cast, S.A. de C.V.		49%
Volclay de Mexico, S.A. de C.V.		49%
Volclay Japan Co., Ltd.		50%

We account for all of the above investments under the equity method. We record the majority of our equity in the earnings of our investments in affiliates and joint ventures on a one quarter lag. None of our equity investees are publicly traded, and the difference between our investment and the underlying net equity of the investee is immaterial.

In 2011, we recorded income of $5,566 from our joint venture and affiliated entities, of which $2,104 related to the sale of Ashapura AMCOL N.V., our Belgian joint-venture which we sold in the second quarter of 2011. The remaining income was primarily generated from Ashapura Volclay Limited, Volclay Japan Co. Ltd, and Volclay de Mexico, Sa. de C.V. In the third quarter of 2011, we sold our interest in Albagle Enterprise Limited, our Cypriot joint-venture whose operations were mainly in Russia, at an immaterial loss.

In 2010, we recorded losses of $11,261 from our joint venture and affiliated entities. Of these losses $7,196 is from Albagle Enterprise Limited and $6,875 is from Ashapura AMCOL N.V. We recorded an impairment on Albagle Enterprise Limited due to its continued poor financial performance which was not expected to recover. Ashapura AMCOL N.V. impaired its fixed assets due its inability to generate profits. Our investments in these ventures had been reduced to zero as of December 31, 2010.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

In 2009, we reduced our ownership percentage in Ashapura Minechem Limited (Ashapura), a publicly traded company on the Bombay Stock Exchange Limited, and began accounting for this investment as an available-for-sale security as of December 31, 2009.

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Income Taxes

Total income tax expense (benefit) for the years ended December 31 was comprised of the following:


	2011		2010		2009
Continuing operations	$	21,849	$	19,391	$	5,335
Discontinued operations		(597)		(735)		175

		21,252		18,656		5,510

Income from continuing operations before income taxes and income (loss) from affiliates and joint ventures was comprised of the following:


	2011		2010		2009
Income from continuing operations before income taxes and income (loss) from affiliates and joint ventures:
Domestic	$	53,049	$	42,306	$	16,456
Foreign		23,396		19,157		23,376

		76,445		61,463		39,832

The components of the provision for income taxes attributable to income from continuing operations before income taxes and income (loss) from affiliates and joint ventures for the years ended December 31 consisted of:


	2011		2010		2009
Provision (benefit) for income taxes:
Federal:
Current	$	5,466	$	8,173	$	196
Deferred		6,538		911		1,145
State:
Current		2,911		2,360		421
Deferred		376		-		253
Foreign:
Current		6,818		7,316		1,851
Deferred		(260)		631		1,469

		21,849		19,391		5,335

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities as of December 31 were as follows:

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)


	2011		2010
Deferred tax assets attributable to:
Accounts receivable	$	996	$	1,248
Inventories		1,700		2,513
Employee benefit plans		25,638		19,070
Accrued liabilities		475		703
Employee incentive plans		2,654		-
Tax credit carryforwards		7,611		7,309
Available-for-sale securities		2,759		-
Other		800		2,424

Total deferred tax assets		42,633		33,267
Deferred tax liabilities attributable to:
Plant and equipment		(18,136)		(10,971)
Land and mineral reserves		(897)		(959)
Joint ventures		(1,465)		(1,524)
Intangible assets		(1,692)		-
Available-for-sale securities		-		(1,022)
Other		(1,234)		(1,822)

Total deferred tax liabilities		(23,424)		(16,298)
Valuation allowances		(6,782)		(4,540)

Net deferred tax assets		12,427		12,429

We believe it is more likely than not that the net deferred tax assets above will be realized in the normal course of business.

The following analysis reconciles the U.S. statutory federal income tax rate to the effective tax rates related to income from continuing operations before income taxes and equity income (loss) of affiliates and joint ventures:


	2011					2010					2009
	Amount			Percent of Pretax Income		Amount			Percent of Pretax Income		Amount			Percent of Pretax Income
Provision for income taxes at U.S. statutory rates	$	26,756			35.0%	$	21,512			35.0%	$	13,955			35.0%
Increase (decrease) in taxes resulting from:
Percentage depletion		(4,900	)		-6.3%		(3,870	)		-6.4%		(3,257	)		-8.2%
State taxes, net of federal benefit		2,154			2.8%		1,547			2.5%		731			1.8%
Foreign tax rates		(2,123	)		-2.8%		(1,226	)		-2.0%		(4,560	)		-11.4%
Change in reserve for tax uncertainties		(364	)		-0.5%		-			0.0%		(2,975	)		-7.5%
Audit settlement		(118	)		-0.2%		-			0.0%		2,083			5.2%
Discrete items related to foreign tax filings		1,393			1.8%		-			0.0%		-			0.0%
Foreign tax credits		(2,359	)		-3.0%		(2,178	)		-3.5%		(880	)		-2.2%
Changes to valuation allowance		(517	)		-0.7%		2,591			4.2%		28			0.1%
Tax from foreign disregarded entities		262			0.3%		1,414			2.3%		142			0.4%
Other		1,665			2.2%		(399	)		-0.6%		68			0.2%

		21,849			28.6%		19,391			31.5%		5,335			13.4%

Percentage Depletion

Depletion deductions are federal income tax deductions that arise from extracting minerals from the ground. This

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

deduction is similar to depreciation in that it allows us to recover the cost of an asset over the resources’ productive life. It is different from depreciation, however, in that depletion deductions are a permanent book to tax difference, whereas depreciation deductions are temporary in nature. Hence, depletion deductions affect the effective tax rate whereas depreciation deductions do not. We calculate depletion under the percentage depletion method based upon revenues and costs from our mining activities in the U.S.

Tax on Reinvested Earnings

We have not provided for United States federal income tax and foreign income withholding taxes on approximately $117,454 and $109,502 of undistributed earnings from international subsidiaries as of December 31, 2011 and 2010, respectively, because such earnings are intended to be reinvested indefinitely outside of the U.S. If these earnings were distributed, foreign tax credits may become available under current law to reduce or eliminate the resulting income tax liability in the United States.

Tax Holidays

We have benefitted from tax holidays in both Poland and Thailand as a result of our locating and investing in special economic zones in each country. These tax holidays resulted in reductions to our income tax expense of $51, $469 and $1,608 in 2011, 2010 and 2009, respectively, representing benefits of $0.00, $0.01 and $0.05 to diluted earnings per share in 2011, 2010 and 2009, respectively.

Our agreement with the Polish tax authorities expired in 2010. This agreement made us eligible, based on certain terms and conditions, for a tax holiday exemption for all income tax activities through 2009. We continue to pursue other opportunities in an effort to minimize income tax within the country.

Our agreement with the Thai tax authorities provides for tax holidays on several investments. The most significant tax exemption is on all income from manufacturing operations (distributed goods are still subject to taxation) related to our initial investment. These initial manufacturing activities were taxable at 50% in years 2006 through 2010. An additional tax holiday was granted in 2007 for the expansion of our Thai facility. Income generated from this expansion is granted a 100% tax holiday from corporate income tax for eight (8) years beginning in 2007 and then taxable at 50% for five (5) years starting in 2015. We attempt to modify and obtain tax concessions when possible.

Exams

In the normal course of business, we are subject to examination by tax authorities throughout the world. With few exceptions, we are no longer subject to income tax examinations by tax authorities for years prior to 2004. The United States Internal Revenue Service (“IRS”) has examined our federal income tax returns for all open years through 2009.

NOLs and Credit Carryforwards

At December 31, 2011, we have $1,793 of various income tax credits, which we expect to utilize within the ten year carryforward period. We have foreign and state net operating loss carryovers that have resulted in a deferred tax asset of $4,023 at December 31, 2011, against which we have recorded a full valuation allowance as it is more likely than not that we will not be able to utilize the loss in the carryforward period.

Unrecognized Tax Benefits

The following table summarizes the activity related to our unrecognized tax benefits:

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)


	2011		2010		2009
Balance at beginning of the year	$	464	$	359	$	5,033
Increases related to prior year tax positions		-		105		120
Increases related to current year tax positions		-		-		86
Decreases related to the expiration of statue of limitation / settlement of audits		(464)		-		(4,880)

Balance at the end of the year		-		464		359

We report penalties and interest relating to uncertain tax positions within the income tax expense line item within our consolidated statement of operations.

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Long-term Debt

Amounts of long-term debt were as follows:


	December 31,
	2011		2010
Borrowings under revolving credit agreement	$	120,906	$	88,249
Senior notes		125,000		125,000
Industrial revenue bond		-		4,800
Other notes payable		15,502		18,756

		261,408		236,805
Less: current portion		(738)		(634)

		260,670		236,171

As of December 2011, we had a revolving credit agreement that provided a committed $225,000 revolving line of credit through April 1, 2013, of which $103,888 remained available to us as at December 31, 2011. It was a multi-currency arrangement that allowed us to borrow certain foreign currencies at an adjusted LIBOR rate plus 1.00% to 2.00%, depending upon the ratio of our debt to EBITDA as defined therein. The revolving credit agreement required us to maintain certain financial covenants and ratios; we were in compliance with all of the covenants and ratios at December 31, 2011.

In January 2012, we entered into a new revolving credit agreement to replace the one mentioned above. The new credit agreement provides us with a $300,000 unsecured line of credit, which can be increased to $400,000 subject to certain customary conditions and approvals. It is a multi-currency arrangement that will allow us to borrow certain foreign currencies at an adjusted LIBOR rate plus 1.00% to 1.75%, depending upon the ratio of our debt to EBITDA as defined therein. The new credit agreement expires on January 20, 2017, and contains certain restrictive covenants, including covenants relating to the maintenance of net worth, leverage ratios and interest coverage ratios.

We had interest rate swaps outstanding which effectively hedge the variable interest rate on $33,000 of our borrowings as of December 31, 2011 and 2010, to a fixed rate of 3.3% per annum, plus credit spread. Including the effect of this interest rate swap agreement, our borrowings under the credit agreement as of December 31, 2011 carried an average interest rate of 2.95%.

A qualified institution holds $75,000 of our senior notes which mature on April 2, 2017, subject to certain acceleration features upon an event of default, should one occur. These senior notes are comprised of (a) $45,000 aggregate principal amount of Series 2007-A Adjustable Fixed Rate Guaranteed Senior Notes, Tranche 1, due April 2, 2017 (the “Tranche 1” notes) and (b) $30,000 aggregate principal amount of Series 2007-A Adjustable Floating Rate

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Guaranteed Senior Notes, Tranche 2 (the “Tranche 2” notes). Tranche 1 bears interest at 5.78%, payable semi-annually in arrears on April 2nd and October 2nd of each year. Tranche 2 bears interest at an annual rate of 0.55% plus LIBOR in effect from time to time, adjusted quarterly, and is payable quarterly in arrears.

As of December 31, 2011 and 2010, we had an interest rate swap outstanding which effectively hedges the variable interest rate of $30,000 of Tranche 2 senior notes to a fixed rate of 5.6% per annum.

On April 29, 2010, we issued and sold an additional $50,000 of senior notes to other qualified institutional buyers pursuant to a note purchase agreement (the “Note Purchase Agreement”). These senior notes bear interest at a fixed annual rate of 5.46%, payable semi-annually in arrears on April 29^th and October 29^th of each year, beginning on October 29, 2010. Our obligations under the Note Purchase Agreement mature on April 29, 2020.

Our obligations under our revolving credit agreement, the Tranche 1 and Tranche 2 notes, and the Note Purchase Agreement are guaranteed by certain of our subsidiaries.

We also have an uncommitted, short-term credit facility maturing on November 15, 2013 that allows for maximum borrowings of $15,000, of which $6,564 was outstanding as of December 31, 2011 at an interest rate of 2.13%.

Maturities of long-term debt outstanding at December 31, 2011 were as follows:


	2012		2013		2014		2015		2016		Thereafter
Borrowings under:
Revolving credit agreement	$	-	$	-	$	-	$	-	$	-	$	120,906
Senior notes		-		-		-		-		-		125,000
Other notes payable		738		680		279		33		3		13,769

		738		680		279		33		3		259,675

At December 31, 2011 and 2010, we had outstanding standby letters of credit of approximately $3,715 and $10,926, respectively, which are not included in our Consolidated Balance Sheets. These letters of credit typically serve to guarantee performance of our land reclamation and workers’ compensation obligations; we have recorded amounts owed under these obligations in our Consolidated Balance Sheets as of December 31, 2011 and 2010.

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Derivative Instruments and Hedging Activities

As a multinational corporation with operations throughout the world, we are subject to certain market risks. We use a variety of practices to manage these market risks, including, when appropriate, derivative financial instruments. We use derivative financial instruments only for risk management and not for trading or speculative purposes.

The following table sets forth the fair values of our derivative instruments and where they are recorded within our Consolidated Balance Sheet:

Fair Value as of December 31,

Liability Derivatives

Balance Sheet Location

2011

2010

Derivatives designated as hedging instruments:

Interest rate swaps

Other long-term liabilities

(9,039)

(6,666)

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Cash Flow Hedges


Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivatives, net of tax (Effective Portion)
	Year Ended December 31,
	2011		2010
Interest rate swaps	$	(1,484)	$	(2,264)

We use interest rate swaps to manage variable interest rate risk on debt securities. Interest rate differentials are paid or received on these arrangements over the life of the swap. As of December 31, 2011 and 2010, we had an interest rate swap outstanding which effectively hedges the variable interest rate on $30,000 of our senior notes to a fixed rate of 5.6% per annum. We also had other interest rate swaps outstanding which effectively hedge the variable interest rate on $33,000 of our borrowings as of December 31, 2011 and 2010, under our revolving credit agreement, to a fixed rate of 3.3% per annum, plus credit spread.

Other

We are exposed to potential gains or losses from foreign currency fluctuations affecting net investments and earnings denominated in foreign currencies. We are particularly sensitive to currency exchange rate fluctuations between the following currency pairs: a) the Euro to the British pound (GBP) and the Polish zloty (PLN), b) the South African Rand (ZAR) to the USD and Australian dollar (AUD), c) the GBP to the Danish kroner (DKK) and the Swiss franc (SEK), and d) the USD to the Indian rupee (INR), the Thai baht (THB), and the Turkish lira (TRY). Occasionally, we enter into foreign exchange derivative contracts to mitigate the risk of currency fluctuations on these exposures.

We have not designated these contracts for hedge accounting treatment and therefore, changes in fair value of these contracts are recorded in earnings as follows:

Derivatives Not Designated as Hedging Instruments

Location of
Gain or (Loss)
Recognized in

Amount of Gain or (Loss) Recognized in

Income on Derivatives

Income on

Year Ended December 31,

Derivatives

2011

2010

2009

Foreign exchange derivative instruments

Other, net

(484)

(772)

(4,932)

We did not have any significant foreign exchange derivative instruments outstanding as of December 31, 2011 or 2010.

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Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Our calculation of the fair value of derivative instruments includes several assumptions. The fair value hierarchy prioritizes these input assumptions in the following three broad levels:

Level 1 – Valuation is based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access at the measurement date.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Level 2 – Valuation is based on quoted prices for similar assets or liabilities in active market, quoted prices for identical or similar assets or liabilities in markets that are not active and model based valuations for which all significant inputs are observable in the market.

Level 3 – Valuation is based on model based techniques that use unobservable inputs for the asset or liability. These inputs reflect our own views about the assumption market participants would use in pricing the asset or liability.

The following table categorizes our fair value instruments according to the assumptions used to calculate those values at the end of each of the past two years:


			Fair Value Measurements Using
Description	Asset / (Liability) Balance at 12/31/2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate swaps	$	(9,039)	$	-	$	(9,039)	$	-
Available-for-sale securities		3,802		3,802		-		-
Deferred compensation plan assets		7,973		-		7,973		-
Supplementary pension plan assets		7,632		-		7,632		-


			Fair Value Measurements Using
Description	Asset / (Liability) Balance at 12/31/2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate swaps	$	(6,666)	$	-	$	(6,666)	$	-
Available-for-sale securities		14,168		14,168		-		-
Deferred compensation plan assets		8,358		-		8,358		-
Supplementary pension plan assets		7,676		-		7,676		-

Interest rate swaps are valued using discounted cash flows. The key input used is the LIBOR swap rate, which is observable at commonly quoted intervals for the full term of the swap. Available-for-sale securities are valued using quoted market prices. Deferred compensation and supplementary pension plan assets are valued using quoted prices for similar assets in active markets.

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Asset Impairment Charge

During the third quarter ended September 30, 2009, our minerals and materials segment recorded a non-cash impairment charge of $1,980 to write down certain fixed assets to their estimated fair values based on a third-party appraisal (Level 2 inputs). The impairment charge is related to the closing of a plant within our minerals and materials segment due to reduced demand. This impairment charge was recorded within cost of sales within our Consolidated

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Statement of Operations. In addition, we increased our inventory reserve by $293 (also recorded within the cost of sales) to record the excess of cost over net realizable value of the inventory located at this plant, bringing the total expense associated with this write-off to $2,273.

(12)

Noncontrolling Interest

In January 2011, we acquired the remaining noncontrolling interest in Volclay South Africa (Proprietary) Limited (“VSA”), which operates our chromite business, for approximately $5,600.

In February 2011, we sold 26% of our interest in Batlhako Mining Limited (“Batlhako”) to Vengawave (Proprietary) Limited, which is a Black Economic Empowerment enterprise (a “BEE”) in the Republic of South Africa. Batlhako is VSA’s subsidiary dedicated strictly to mining chrome sand and selling it to one of our other subsidiaries for further processing and sale to the end customer. South African law requires that we have a BEE as a partner in the mining operations and this transaction was consummated to comply with those regulations.

The following table sets forth the effects of these transactions on equity attributable to AMCOL’s shareholders.


	Twelve Months Ended December 31, 2011
Net income attributable to AMCOL shareholders	$	59,111
Transfers from noncontrolling interest:
Decrease in additional paid-in capital for purchase of the remaining noncontrolling interest in South Africa (Proprietary)
Limited		(5,189)
Decrease in additional paid-in capital for transfer of 26% interest in Batlhako		(3,403)

Change from net income attributable to AMCOL shareholders and transfers from noncontrolling interest	$	50,519

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Discontinued Operations

In September 2011, our environmental segment sold CETCO Contracting Services Company, which comprised our domestic contracting services business. The operations of this business for current and prior years, including the immaterial loss recorded on the sale, have been reclassified and are recorded net of income tax within Income (loss) on discontinued operations within our Consolidated Statement of Operations.

(14)

Leases

In 2008, we entered into a sale-leaseback transaction involving the construction of a new corporate facility. Under terms of the operating lease, rental payments in fiscal 2011, 2010 and 2009 approximate $2,634 , $2,583, and $2,532, respectively, and increase 2% annually thereafter through December 2028.

We have several noncancelable leases for equipment, software, and plant facilities. Total rent expense under operating lease agreements was approximately $13,188, $12,485 and $10,714 in 2011, 2010 and 2009, respectively.

The following is a schedule of future minimum lease payments for operating leases (with initial terms in excess of one year) as of December 31, 2011:

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)


	Minimum Lease Payments
	Domestic		Foreign		Total
Year ending December 31:
2012	$	10,711	$	1,836	$	12,547
2013		10,130		1,005		11,135
2014		8,043		789		8,832
2015		6,946		526		7,472
2016		5,098		268		5,366
Thereafter		44,872		167		45,039

Total		85,800		4,591		90,391

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Employee Benefit Plans

We have a defined benefit pension plan covering substantially all of our domestic employees hired before January 1, 2004. The benefits are based upon years of service and qualifying compensation. Our funding is calculated using the actuarially determined unit credit cost method. Contributions are intended to provide not only for benefits attributed to services to date, but also for those expected to be earned in the future.

In addition to the qualified plan, we sponsor a supplementary pension plan (SERP) that provides benefits in excess of qualified plan limitations for certain employees.

The following tables set forth our pension obligations and funded status at December 31:


	Pension Benefits
	Defined Benefit Pension Plan				Supplementary Pension Plan
	2011		2010		2011		2010
Change in benefit obligations:
Beginning projected benefit obligation	$	48,018	$	42,829	$	9,220	$	9,029
Service cost		1,516		1,400		196		320
Interest cost		2,607		2,493		485		533
Actuarial (gain)/loss		7,239		2,510		2,043		(516)
Benefits paid		(1,273)		(1,214)		(376)		(146)

Ending projected benefit obligation		58,107		48,018		11,568		9,220

Change in plan assets:
Beginning fair value		35,755		31,455		-		-
Actual return		(1,516)		4,014		-		-
Company contribution		1,500		1,500		376		146
Benefits paid		(1,273)		(1,214)		(376)		(146)

Ending fair value		34,466		35,755		-		-


Funded status of the plan		(23,641)		(12,263)		(11,568)		(9,220)

The liabilities associated with our SERP plan and our defined benefit pension plan (net of the defined benefit plan assets) are included within Pension liabilities in our Consolidated Balance Sheet. Included within Other Noncurrent Assets within our Consolidated Balance Sheet are invested assets for the benefit of the employees covered by the supplemental pension plan.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Pension cost in each of the following years was comprised of:


	Defined Benefit Pension Plan						Supplementary Pension Plan
	2011		2010		2009		2011		2010		2009
Service cost – benefits earned during the year	$	1,516	$	1,400	$	1,647	$	196	$	320	$	216
Interest cost on accumulated benefit obligation		2,607		2,493		2,605		485		533		450
Expected return on plan assets		(2,858)		(2,618)		(2,146)		-		-		-
Net amortization and deferral		65		64		490		88		131		74

Net periodic pension cost		1,330		1,339		2,596		769		984		740

The following table summarizes the assumptions used in determining our pension obligations at the end of each of our last two years:


	Defined Benefit Pension Plan				Supplementary Pension Plan
	2011		2010		2011		2010
Discount rate		4.70%		5.51%		4.63%		5.36%
Rate of compensation increase		4.00%		4.00%		4.00%		4.00%
Long-term rate of return on plan assets		7.50%		8.00%		N/A		N/A

The following table summarizes the assumptions used in determining our net periodic benefit cost in the years ended December 31:


	Defined Benefit Pension Plan						Supplementary Pension Plan
	2011		2010		2009		2011		2010		2009
Discount rate		5.51%		5.91%		6.25%		5.36%		5.95%		6.25%
Rate of compensation increase		4.00%		4.00%		5.75%		4.00%		4.00%		4.00%
Long-term rate of return on plan assets		8.00%		8.25%		8.25%		N/A		N/A		N/A

We expect to contribute up to $1,693 to the defined benefit pension plan in 2012. The accumulated benefit obligation (ABO) for our defined benefit pension plan was $49,301 and $40,949 at December 31, 2011 and 2010, respectively. The ABO for our supplementary pension plan was $8,537 and $7,606 at December 31, 2011 and 2010, respectively.

The estimated future benefit payments contemplated under these plans, reflecting expected future service, as appropriate, are presented in the following table:


	Defined Benefit Pension Plan		Supplementary Pension Plan

2012	$	1,687	$	379
2013		1,853		378
2014		2,113		394
2015		2,307		451
2016		2,575		448
2017 through 2021		16,457		3,598

Note 3 shows the amounts included within accumulated other comprehensive income as of December 31, 2011 and 2010 that have not yet been recognized as components of net periodic benefit cost. Of these balances at December 31, 2011, the amounts expected to be amortized in the next fiscal year are $59 and $1,153 for the unrecognized prior service cost and unrecognized net actuarial loss, respectively. Excluding the effect of income taxes, the amounts recognized within other comprehensive income and the prior service cost for 2011 and 2010, are as follows:

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)


	2011		2010
Recognized in Other Comprehensive Income:
Net actuarial loss (gain)	$	13,657	$	597
Amortization of net actuarial loss (gain)		(96)		(137)
Amortization of prior service cost (credit)		(59)		(59)

Total change in other comprehensive income		13,502		401

Defined Benefit Pension Plan

Fair values of our defined benefit pension plan assets at December 31, by asset category, are as follows:


	Fair Value Measurements as of December 31, 2011
			Quoted Prices in Active Markets for Identical Assets		Significant Observable Inputs		Significant Unobservable Inputs
	Total		Level 1		Level 2		Level 3
Short term investment funds	$	727	$	-	$	727	$	-
Equity securities:
US equity securities		11,244		-		11,244		-
International equity securities		5,959		2,028		3,931		-
AMCOL International common stock		1,880		1,880		-		-
Fixed income securities and bonds
Governmental agencies		1,011		1,011		-		-
Corporate bonds		4,981		4,981		-		-
Guaranteed investment contracts		2,473		-		2,473		-
Other investments
Real estate index funds		601		-		601		-
Commodities linked funds		1,693		1,693		-		-
Hedge funds		3,897		-		-		3,897

Total		34,466		11,593		18,976		3,897

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)


	Fair Value Measurements as of December 31, 2010
	Total		Quoted Prices in Active Markets for Identical Assets Level 1		Significant Observable Inputs Level 2		Significant Unobservable Inputs Level 3
Short term investment funds	$	612	$	-	$	612	$	-
Equity securities:
US equity securities		10,781		-		10,781		-
International equity securities		9,489		3,367		6,122		-
AMCOL International common stock		2,170		2,170		-		-
Fixed income securities and bonds
Governmental agencies		1,774		831		943		-
Corporate bonds		2,477		2,477		-		-
Guaranteed investment contracts		3,633		-		3,633		-
Other investments
Real estate index funds		656		-		656		-
Commodities linked funds		1,996		1,996		-		-
Hedge funds		2,167		-		-		2,167

Total		35,755		10,841		22,747		2,167

Assets classified as Level 1 are valued using quoted prices on the major stock exchange on which individual assets are traded. Our Level 2 assets are valued using net asset value. The net asset value is quoted on a private market that is not active; however, the unit price is based on underlying investments that are traded on an active market. Our Level 3 assets are estimated at fair value based on the most recent financial information available for the underlying securities, which are not traded on active market, and represents significant unobservable input.

The following is a reconciliation of changes in fair value measurements of plan assets using significant unobservable inputs (Level 3):



	Hedge Funds
Beginning balance at December 31, 2009		1,596
Purchases, sales, and settlements		500
Actual return on plan assets still held at reporting date		71

Ending balance at December 31, 2010		2,167

Purchases, sales, and settlements		1,815
Actual return on plan assets still held at reporting date		(85)

Ending balance at December 31, 2011		3,897

We employ a total return investment approach whereby we use a mix of equities and fixed income investments to maximize the long-term return of plan assets with a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and our corporate financial condition. The investment portfolio contains a diversified blend of equity, fixed-income investments and alternative investments. The investment objectives emphasize maximizing returns consistent with ensuring that sufficient assets are available to meet liabilities, and minimizing corporate cash contributions. Our defined benefit plan assets are managed so as to include investments that balance income and capital appreciation.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

Our defined benefit plan has a target range for different types of investments: equity securities (between 41% and 69%), fixed income securities and bonds (between 18% and 31%), alternative investments (between 5% and 23%), and cash (between 0% and 10%). This allocation takes into account factors such as the average age of employees covered by the Plan (benefit obligations) as well as overall market conditions. Interim portfolio reviews result in investment allocations being evaluated at least twice a year by the Pension Committee and rebalancing takes place as needed. Equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, and small and large capitalizations. Fixed income securities and bonds include both government and corporate investment vehicles. These include a series of laddered debt securities as well as bond funds.

Historical markets are studied and long-term historical relationships between equities and fixed-income are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term rate of return for plan assets is established via a building block approach with proper consideration of diversification and rebalancing.

Defined Contribution Plan

Employees hired on or after January 1, 2004 do not participate in our defined benefit pension plan or SERP. Instead, they participate in a defined contribution plan whereby we make a retirement contribution into the employee’s savings plan equal to 3% of their compensation. We made total contributions to this plan of $1,778, $1,248 and $1,021 in 2011, 2010 and 2009, respectively.

401(k) Savings Plan

We also have a savings plan for our U.S. personnel. In 2011, we made a contribution in an amount equal to an employee’s contributions up to a maximum of 4% of the employee’s annual earnings. We make contributions to this plan using either cash or our own common stock which we purchase in the open market. Our contributions under the savings plan were $3,422 in 2011, $2,842 in 2010 and $2,803 in 2009.

Other

We also have a deferred compensation plan and a 401(k) restoration plan for our executives.

(16)

Stock Compensation Plans

We provide compensation to certain employees using stock based awards. For purposes of calculating compensation cost, we estimate the fair value of each award on the date of grant using the Black-Scholes option-pricing model. We used the following assumptions in calculating the fair value of awards granted in each of the following years:


	2011		2010		2009
Risk-free interest rate		2.2%		2.7%		1.7%
Expected life of option in years		5.51		5.61		4
Expected dividend yield of stock		2.5%		3.2%		4.8%
Expected volatility of stock price		49.0%		50.8%		70.5%
Weighted-average per share fair value of options granted	$	11.42	$	8.62	$	5.97

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

1998 Long-Term Incentive Plan

This plan provides for the award of incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights and phantom stock. We reserved 3,900,000 shares of our common stock for issuance to our officers, directors and key employees. Different terms and conditions apply to each form of award made under the plan. Awards granted since 2003 vest ratably over a three year period and expire six years after the date of grant, except in the event of termination, retirement or death of the optionee or a change in control of the Company. Options awarded under this plan prior to 2003 generally vest 40% after two years and continue to vest at the rate of 20% per year for each year thereafter until they are fully vested. These options are exercisable as they vest and expire 10 years after the date of grant, except in the event of termination, retirement or death of the optionee or a change in control of the Company.

Changes in options outstanding are summarized as follows:


	December 31, 2011				December 31, 2010				December 31, 2009
			Weighted				Weighted				Weighted
1998 Long-Term Incentive Plan			Average				Average				Average
			Exercise				Exercise				Exercise
	Shares		Price		Shares		Price		Shares		Price
Options outstanding at January 1		413,710	$	19.88		720,791	$	18.19		1,057,519	$	15.13
Granted		-		-		-		-		-		-
Exercised		(243,659)		18.54		(306,548)		15.93		(329,728)		8.26
Forfeited		-		-		-		-		-		-
Expired		(1,000)		14.79		(533)		4.76		(7,000)		24.31

Options outstanding at December 31		169,051		21.82		413,710		19.88		720,791		18.19

Options exercisable at December 31		169,051		21.82		413,710		19.88		720,791		18.19

2006 Long-Term Incentive Plan


	December 31, 2011				December 31, 2010				December 31, 2009
			Weighted				Weighted				Weighted
2006 Long-Term Incentive Plan			Average				Average				Average
			Exercise				Exercise				Exercise
	Awards		Price		Awards		Price		Awards		Price
Awards outstanding at January 1		1,389,598	$	23.02		1,060,057	$	22.89		709,258	$	27.11
Granted		-		-		390,750		23.24		372,750		15.11
Exercised		(170,998)		24.04		(29,862)		21.62		(500)		24.25
Forfeited		(20,087)		20.48		(22,722)		19.92		(7,166)		22.89
Expired		(9,501)		23.64		(8,625)		29.62		(14,285)		29.22

Awards outstanding at December 31		1,189,012		22.91		1,389,598		23.02		1,060,057		22.89

Awards exercisable at December 31		885,003		23.67		754,622		24.86		339,365		27.99

Our AMCOL International Corporation 2006 Long-Term Incentive Plan permits a total of 1,500,000 shares of AMCOL common stock to be awarded to eligible directors and employees through the use of nonqualified stock options, incentive stock options, restricted stock or restricted stock units, and stock appreciation rights. Different terms and conditions apply to each form of award made under the plan. Awards granted prior to 2009 have a six year life from the date of grant and vest ratably over a three year period from the date of grant. Awards granted in 2009 have a ten year life from the date of grant and vest ratably over a three year period from the date of the grant. No awards could be made pursuant to this plan after May 2010 when the AMCOL International Corporation 2010 Long-Term Incentive Plan was adopted as discussed later herein.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

2010 Long-Term Incentive Plan


	December 31, 2011
			Weighted
2010 Long-Term Incentive Plan			Average
			Exercise
	Awards		Price
Awards outstanding at January 1		-	$	-
Granted		379,425		30.66
Exercised		-		-
Forfeited		(23,375)		30.66
Expired		-		-

Awards outstanding at December 31		356,050		30.66

Awards exercisable at December 31		-		-

On May 6, 2010, our shareholders approved the AMCOL International Corporation 2010 Long-Term Incentive Plan. This plan permits a total of 2,000,000 shares of AMCOL common stock to be awarded to eligible directors and employees through the use of nonqualified stock options, incentive stock options, restricted stock or restricted stock units, and stock appreciation rights. Different terms and conditions apply to each form of award under the plan. Awards granted under this plan have a ten year life from the date of grant and vest ratably over a three year period from the date of the grant. At any time, the Board of Directors may amend the plan, which automatically expires on May 7, 2020.

All Stock Compensation Plans


All Stock Compensation Plans	2011		2010		2009
Intrinsic value of awards exercised during the year	$	5,085	$	3,899	$	4,352
Fair value of awards vested during the year		2,431		3,857		2,760
Grant date fair value of awards granted during the year		4,333		3,368		2,225

The following table summarizes information about stock compensation awards outstanding and exercisable at December 31, 2011:

All Stock Compensation Plans

Weighted

Average

Number

Average

Remaining

Exercise

Intrinsic

Contractual

Awards

Price

Value

Life (Yrs.)

Awards outstanding at December 31, 2011

1,714,113

24.41

6,362

5.42

Awards exercisable at December 31, 2011

1,054,054

23.37

4,495

3.48

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

The following table summarizes information about our nonvested stock compensation awards outstanding:


All Stock Compensation Plans - Nonvested Awards	December 31, 2011				December 31, 2010				December 31, 2009
			Weighted				Weighted				Weighted
			Average				Average				Average
			Grant date				Grant date				Grant date
	Awards		Fair value		Awards		Fair value		Awards		Fair value
Nonvested awards outstanding at January 1		634,976	$	7.87		720,692	$	7.46		677,111	$	8.81
Granted		379,425		11.42		390,750		8.62		372,750		5.97
Vested		(311,630)		7.80		(453,744)		8.50		(322,003)		8.57
Forfeited		(43,462)		9.77		(22,722)		7.59		(7,166)		8.10

Nonvested awards outstanding at December 31		659,309		9.80		634,976		7.87		720,692		7.46

Restricted Stock Awards

The tables above exclude the impact of all restricted stock awards.

Restricted stock awards are subject to performance conditions established by the Compensation Committee of the Board of Directors. The cost of these awards, determined to be the fair market value of the shares at the date of the grant, is expensed ratably over the performance period.

In February 2011, we granted 75,000 shares of performance based restricted stock to our executive officers pursuant to our 2010 Long-Term Incentive Plan. These restricted stock awards have a grant date fair value of $30.66 per share, and vest ratably over a three-year period from grant date, provided that the Company, or certain reporting segments, meet certain established performance targets. One-third of these shares vested in February 2012, as the performance targets were met.

In 2009, we granted 40,000 shares of performance based restricted stock to our executive officers pursuant to our 2006 Long-Term Incentive Plan. These restricted awards have a grant date fair value of $28.42 per share, and will vest 100% in December 2012, if certain established performance targets are met.

(17)

Contingencies

We are party to a number of lawsuits arising in the normal course of business. Since the mid-1980s, we and/or our subsidiaries have been named as one of a number of defendants in product liability lawsuits relating to the minor free-silica content of our bentonite products used in the metalcasting industry. The plaintiffs in these lawsuits are primarily employees of our foundry customers. Our oilfield operations are also party to two lawsuits alleging damages caused by our coiled tubing operations in Louisiana; one lawsuit alleges damages of $28 million and the other of $9 million. We do not believe that any pending litigation will have a material adverse effect on our consolidated financial statements.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)

(18)

Quarterly Results (Unaudited)

Unaudited summarized results for each quarter of the last two years are as follows:


	2011 Quarters
	First		Second		Third		Fourth
Minerals and materials	$	116,880	$	119,851	$	123,792	$	121,375
Environmental		50,706		73,263		69,543		52,873
Oilfield services		44,744		44,837		50,175		53,876
Transportation		12,674		14,780		14,877		11,782
Intersegment sales		(7,216)		(9,855)		(10,343)		(6,245)

Net sales		217,788		242,876		248,044		233,661

Minerals and materials	$	28,461	$	26,989	$	32,475	$	30,933
Environmental		15,648		21,899		21,563		14,243
Oilfield services		12,664		11,465		15,377		15,348
Transportation		1,403		1,640		1,775		1,323
Intersegment gross profit		(464)		122		(200)		211

Gross profit		57,712		62,115		70,990		62,058

Minerals and materials	$	16,171	$	14,699	$	20,110	$	18,102
Environmental		2,296		7,916		7,637		592
Oilfield services		4,872		3,423		5,787		5,799
Transportation		465		685		770		321
Corporate		(5,221)		(4,896)		(7,251)		(4,624)

Operating profit		18,583		21,827		27,053		20,190

Income (loss) from continuing operations	$	12,324	$	13,565	$	20,490	$	13,783

Income (loss) on discontinued operations	$	(87)	$	192	$	(1,021)	$	-

Net income (loss)	$	12,237	$	13,757	$	19,469	$	13,783

Net income (loss) attributable to noncontrolling interests	$	1	$	3	$	44	$	87

Net income (loss) attributable to AMCOL shareholders	$	12,235	$	13,755	$	19,425	$	13,696

Basic earnings per share attributable to AMCOL shareholders (A)	$	0.39	$	0.43	$	0.61	$	0.43

Diluted earnings per share attributable to AMCOL shareholders (A)	$	0.38	$	0.43	$	0.60	$	0.43

(A) Earnings per share (EPS) for each quarter is computed using the weighted-average number of shares outstanding during the quarter, while EPS for the year is computed using the weighted-average number of shares outstanding during the year. Thus, the sum of the EPS for each of the four quarters may not equal the EPS for the year.

Our minerals and materials segment recorded following in the third quarter ended September 30, 2011

Reduction to cost of sales of $1,464 resulting from the recovery of certain mining costs in our chromite operations.

Income from affiliates and joint ventures of $2,104 resulting from the sale of our Belgian joint venture.

AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(In thousands, except share and per share amounts)


	2010 Quarters
	First		Second		Third		Fourth
Minerals and materials	$	97,688	$	106,397	$	110,332	$	114,853
Environmental		37,227		63,271		67,744		52,356
Oilfield services		30,204		39,644		41,204		43,569
Transportation		12,120		13,583		14,284		12,238
Intersegment sales		(3,236)		(4,070)		(4,742)		(3,629)

Net sales		174,003		218,825		228,822		219,387

Minerals and materials	$	24,210	$	27,340	$	23,949	$	23,474
Environmental		11,061		19,946		20,742		16,399
Oilfield services		8,014		11,770		11,955		12,201
Transportation		1,327		1,543		1,630		1,365

Gross profit		44,612		60,599		58,276		53,439

Minerals and materials	$	14,306	$	16,326	$	12,341	$	11,607
Environmental		191		8,148		8,701		2,774
Oilfield services		1,228		4,553		4,079		4,758
Transportation		511		699		754		466
Corporate		(5,068)		(5,848)		(3,203)		(7,282)

Operating profit		11,168		23,878		22,672		12,323

Income from continuing operations	$	6,342	$	16,380	$	17,439	$	(9,350)

Income (loss) on discontinued operations	$	(518)	$	(139)	$	(132)	$	(98)

Net income	$	5,825	$	16,240	$	17,307	$	(9,448)

Net income (loss) attributable to noncontrolling interests	$	(304)	$	92	$	(110)	$	(101)

Net income (loss) attributable to AMCOL shareholders	$	6,128	$	16, 149	$	17,417	$	(9,347)

Basic earnings per share attributable to AMCOL shareholders (A)	$	0.20	$	0.52	$	0.56	$	(0.30)

Diluted earnings per share attributable to AMCOL shareholders (A)	$	0.20	$	0.51	$	0.55	$	(0.30)

Our minerals and materials segment recorded expenses of $2,982 and $2,779 in the third quarter ending September 30, 2010 and fourth quarter ending December 31, 2010, respectively, resulting from operational issues in our domestic personal care products business within our minerals and materials segment.

We also recorded the following charges during our fourth quarter ended December 31, 2010:

Non-cash losses from impairments associated with two of our joint ventures of $11,705, as disclosed more fully in Note 6;

Expenses of $2,665 associated with the retirement of our retired CEO; and

Tax expenses of $1,300 associated with the recognition of valuation allowances in foreign jurisdictions.

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 29, 2012


AMCOL INTERNATIONAL CORPORATION

By:		/s/ Ryan F. McKendrick
		Ryan F. McKendrick
		President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


/s/ John Hughes		February 29, 2012
John Hughes Chairman of the Board and Director

/s/ Ryan F. McKendrick		February 29, 2012
Ryan F. McKendrick President and Chief Executive Officer and Director

/s/ Donald W. Pearson		February 29, 2012
Donald W. Pearson
Vice President and Chief Financial Officer; Treasurer and Chief Accounting Officer

/s/ Arthur Brown		February 29, 2012
Arthur Brown Director

/s/ Daniel P. Casey		February 29, 2012
Daniel P. Casey Director

/s/ Frederick J. Palensky		February 29, 2012
Frederick J. Palensky Director

/s/ Jay D. Proops		February 29, 2012
Jay D. Proops Director

/s/ Clarence O. Redman		February 29, 2012
Clarence O. Redman Director

/s/ Dale E. Stahl		February 29, 2012
Dale E. Stahl Director

/s/Audrey L. Weaver		February 29, 2012
Audrey L. Weaver Director

/s/ Paul C. Weaver		February 29, 2012
Paul C. Weaver Director

INDEX TO EXHIBITS


Exhibit Number

3.1		Restated Certificate of Incorporation of the Company (1), as amended (2), as amended (3)
3.2		Bylaws of the Company as amended and restated (4), as amended (22)
4		Article Four of the Company’s Restated Certificate of Incorporation (1), as amended (3)
10.1		AMCOL International Corporation Nonqualified Deferred Compensation Plan (5)
10.2		AMCOL International Corporation 1998 Long-Term Incentive Plan (6), as amended* (7)
10.3		AMCOL International Corporation 2006 Long-Term Incentive Plan (8), as amended * (5)
10.4		AMCOL International Corporation Annual Cash Incentive Plan* (8)
10.5		AMCOL International Corporation Discretionary Cash Incentive Plan* (8)
10.6		AMCOL International Corporation Amended and Restated Supplementary Pension Plan for Employees* (5)
10.7		Employment Agreement effective as of March 25, 2009 by and between Registrant and Lawrence E. Washow* (9)
10.8		Employment Agreement effective as of February 2, 2009 by and between Registrant and Donald W. Pearson* (9)
10.9		Employment Agreement effective as of March 25, 2009 by and between Registrant and Gary Castagna* (9)
10.10		Employment Agreement effective as of March 25, 2009 by and between Registrant and Ryan F. McKendrick* (9)
10.11		A written description of compensation for the Board of Directors of the Company is set forth under the caption “Director Compensation” in the definitive Proxy Statement to be filed with the Securities and Exchange Commission and delivered to the Company’s shareholders in connection with the Annual Meeting of Shareholders held on May 5, 2011, and is hereby incorporated by reference.*
10.12		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 November 10, 2005 (10), as amended (11), as further amended (12), as further amended (13), as further amended (14)
10.13		Form of Indemnification Agreement between the Company and its directors and executive officers (4)
10.14		Employment Agreement effective as of January 1, 2010 by and between Registrant and Michael Johnson* (15)
10.15		Employment Agreement effective as of January 1, 2010 by and between Registrant and Robert Trauger* (15)
10.16		Form of Restricted Stock Award Agreement between Registrant and Gary Castagna and Ryan F. McKendrick* (16)
10.17		Note Purchase Agreement dated as of April 29, 2010 by and among the Registrant and the Lincoln National Life Insurance Company and the Lincoln Life and Annuity Company of New York (17)
10.18		AMCOL International Corporation 2010 Long-Term Incentive Plan* (18)
10.19		AMCOL International Corporation 2010 Cash Incentive Plan* (18)
10.20		Form of Option Award Agreement* (18)
10.21		Form of Annual Cash Award Agreement* (18)
10.22		Transition and Retirement Agreement dated as of November 19, 2010 by and between Registrant and Lawrence E. Washow* (19)
10.23		Performance based Restricted Stock Form Award Agreement * (20)
10.24		Credit Agreement dated as of January 20, 2012, by and among AMCOL International Corporation, certain wholly-owned AMCOL subsidiaries, B.M.O. Harris Bank N.A., as administrative agent, and certain other financial institutions as lenders therein (23)
10.25		Changes of Control Agreements dated March 11, 2011 by and between AMCOL International Corporation and Gary L. Castagna, Michael Johnson, Ryan F. McKendrick, Donald W. Pearson, and Robert Trauger * (21)
21		AMCOL International Subsidiary Listing
23.1		Consent of Independent Registered Public Accounting Firm
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the. Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certification of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350
95.1		Mine Safety Disclosure
101		Interactive Data File**

(1)	Exhibit is incorporated by reference to the Registrant’s Form S-3 filed with the Securities and Exchange Commission on September 15, 1993.

(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, 1995.

(3)	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.

(4)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed the Securities and Exchange Commission on February 13, 2009.

(5)	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, 2008.

(6)	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.

(7)	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.

(8)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 12, 2006.

(9)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on February 5, 2009.

(10)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on November 15, 2005.

(11)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on June 19, 2006.

(12)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 13, 2007.

(13)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed the Securities and Exchange Commission on May 23, 2008.

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

(15)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on January 5, 2010.

(16)	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, 2009.

(17)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on April 30, 2010.

(18)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on May 7, 2010.

(19)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on November 22, 2010.

(20)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on February 14, 2011.

(21)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on March 16, 2011.

(22)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on November 17, 2011.

(23)	Exhibit is incorporated by reference to the Registrant’s Form 8-K filed with the Securities and Exchange Commission on January 23, 2012.

*Management compensatory plan or arrangement

** As provided in Rule 406T of Regulation S-T, this information is deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, and is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and is not otherwise subject to liability under these sections.