SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15661
AMCOL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 36-0724340
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
</TABLE>
1500 West Shure Drive, Suite 500, Arlington Heights, Illinois 60004-7803
(Address of principal executive offices) (Zip Code)
(847) 394-8730
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at August 11, 2000
(Common stock, $.01 par value) 27,986,049
<PAGE>
AMCOL INTERNATIONAL CORPORATION
INDEX
Part I - Financial Information
Item 1 Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 2000 and December 31, 1999 1
Condensed Consolidated Statements of Operations -
six months and three months ended June 30, 2000 and 1999 2
Condensed Consolidated Statements of Comprehensive Income -
six months and three months ended June 30, 2000 and 1999 3
Condensed Consolidated Statements of Cash Flows -
six months ended June 30, 2000 and 1999 4
Notes to Condensed Consolidated Financial Statements 5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Item 3 Quantitative and Qualitative Disclosure About Market Risk 12
Part II - Other Information
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 6 Exhibits and Reports on Form 8-K 13
<PAGE>
Part I, Item 1 - FINANCIAL INFORMATION
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
(Unaudited)
Current assets: *
<S> <C> <C>
Cash $ 6,189 $ 3,954
Cash equivalents 240,571 -
Accounts receivable, net 61,577 52,056
Inventories 31,437 30,965
Prepaid expenses 4,380 6,566
Net assets from discontinued operations - 40,147
Current deferred tax asset 6,344 6,347
Total current assets 350,498 140,035
Investment in and advances to joint ventures 10,592 9,111
Property, plant, equipment and mineral reserves 193,849 195,322
Less accumulated depreciation 109,235 106,062
84,614 89,260
Intangible assets, net 369 452
Net assets from discontinued operations - 80,046
Other long-term assets, net 5,449 5,047
$ 451,522 $ 323,951
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Current liabilities:
<S> <C> <C>
Notes payable and current maturities of debt $ 17 $ 509
Accounts payable 10,119 10,776
Accrued income taxes 213,232 2,301
Accrued liabilities 27,289 21,394
Total current liabilities 250,657 34,980
Long-term debt 60,047 93,914
Deferred credits and other liabilities 9,612 8,617
Stockholders' equity:
Common stock 320 320
Additional paid-in capital 78,288 76,440
Foreign currency translation adjustment (2,370) (2,607)
Retained earnings 81,272 142,270
Treasury stock (26,304) (29,983)
131,206 186,440
$ 451,522 $ 323,951
</TABLE>
*Condensed from audited financial statements.
The accompanying notes are an integral part of
these condensed financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
Continuing operations 2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net sales $ 140,564 $ 147,900 $ 71,986 $ 77,265
Cost of sales 105,921 114,223 54,249 60,226
Gross profit 34,643 33,677 17,737 17,039
General, selling and administrative
expenses 26,068 30,515 13,071 15,092
Operating profit 8,575 3,162 4,666 1,947
Other income (expense):
Investment income 3,084 - 3,084 --
Interest expense, net (1,417) (1,952) (832) (994)
Other income, net (51) 48 - 29
1,616 (1,904) 2,252 (965)
Income from continuing
operations before income taxes
and equity in income of joint
ventures 10,191 1,258 6,918 982
Income taxes 3,929 436 2,811 352
Income from continuing
operations before equity in
income of joint ventures 6,262 822 4,107 630
Equity in income of
joint ventures 151 124 21 58
Income from continuing
operations 6,413 946 4,128 688
Discontinued operations (Note 5)
Income from operations of
absorbent polymers segment
(net of income taxes) 7,766 12,542 4,314 7,061
Gain on disposal of absorbent
polymers segment (net of
income taxes of $207,570) 313,871 - 313,871 -
321,637 12,542 318,185 7,061
Extraordinary loss on early
extinguishment of debt (net of
income tax benefit of $238) (443) - (443) -
Net income $ 327,607 $ 13,488 $ 321,870 $ 7,749
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except number of shares and per share data)
(continued)
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Weighted average common shares 26,997,866 26,761,617 27,088,225 26,733,521
Weighted average common and
common equivalent shares 27,509,216 27,070,269 27,583,451 27,141,612
Basic earnings per share
Continuing operations $ .24 $ .04 $ .15 $ .03
Discontinued operations
From operations .29 .47 .16 .26
Gain on sale $ 11.63 $ - $ 11.59 $ -
$ 11.92 $ .47 $ 11.75 $ .26
Extraordinary item $ (.02) $ - $ (.02) $ --
Net income $ 12.13 $ .50 $ 11.88 $ .29
Diluted earnings per share
Continuing operations $ .23 $ .03 $ .15 $ .03
Discontinued operations
From operations $ .28 $ .46 $ .16 $ .26
Gain on sale $ 11.41 $ - $ 11.38 $ --
$ 11.69 $ .46 $ 11.54 $ .26
Extraordinary item $ (.02) $ - $ (.02) $ --
Net income $ 11.91 $ .50 $ 11.67 $ .29
</TABLE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net income $ 327,607 $ 13,488 $ 321,870 $7,749
Other comprehensive income:
Foreign currency translation adjustment (4,909) (1,316) (4,417) (375)
Reclassification adjustment for
foreign currency losses included
in net income 5,146 - 5,146 -
Comprehensive income $ 327,844 $ 12,172 $ 322,599 $7,374
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
Cash flow from operating activities:
<S> <C> <C>
Income from continuing operations $ 6,413 $ 946
Adjustments to reconcile income from continuing
operations to net cash provided by operating activities:
Depreciation, depletion, and amortization 8,898 9,769
Other 909 2,023
(Increase) decrease in current assets (1,045) 3,610
Increase (decrease) in current liabilities 2,164 (4,283)
Net cash provided by operating activities of
continuing operations 17,339 12,065
Net cash provided by discontinued operations 665 1,345
Cash flow from investing activities:
Acquisition of land, mineral reserves,
depreciable and intangible assets (6,732) (9,554)
Net proceeds from sale of absorbent polymers segment 648,815 -
Other 599 (3,993)
Net cash provided by (used in) investing activities 642,682 (13,547)
Cash flow from financing activities:
Net change in outstanding debt (34,359) 6,452
Dividends paid (3,776) (3,476)
Partial liquidation distribution (384,829) -
Early extinguishment of debt (443) -
Treasury stock transactions 5,527 (1,671)
Net cash provided by (used in) financing activities (417,880) 1,305
Net increase in cash and cash equivalents 242,806 1,168
Cash and cash equivalents at beginning of period 3,954 6,206
Cash and cash equivalents at end of period $ 246,760 $ 7,374
Supplemental disclosure of cash flow information
Actual cash paid for:
Interest $ 3,913 $ 3,315
Income taxes $ 9,460 $ 8,973
</TABLE>
The accompanying notes are an integral part of
these condensed financial statements.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
Note 1: BASIS OF PRESENTATION
The financial information included herein, other than the condensed
consolidated balance sheet as of December 31, 1999, has been prepared by
management without audit by independent certified public accountants. The
condensed consolidated balance sheet as of December 31, 1999, has been derived
from and does not include all the disclosures contained in the audited
consolidated financial statements for the year ended December 31, 1999. The
information furnished herein includes all adjustments which are, in the opinion
of management, necessary for a fair statement of the financial position and
operating results of the interim periods, and all such adjustments are of a
normal recurring nature. Management recommends the accompanying consolidated
financial information be read in conjunction with the consolidated financial
statements and related notes included in the Company's 1999 Form 10-K, which
accompanies the 1999 Corporate Report.
The results of operations for the six-month period ended June 30, 2000, are
not necessarily indicative of the results to be expected for the full year.
Note 2: INVENTORIES
Inventories at June 30, 2000 have been valued using the same methods as at
December 31, 1999. The composition of inventories at June 30, 2000 and December
31, 1999, was as follows:
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
<S> <C> <C>
Crude stockpile and in-process inventories $ 18,008 $ 19,099
Other raw material, container and supplies inventories 13,429 11,866
$31,437 $ 30,965
</TABLE>
Note 3: EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding. Diluted earnings per share is
computed by dividing the net income by the weighted average common shares
outstanding after consideration of the dilutive effect of stock options
outstanding during each period. The number of options outstanding increased from
approximately 1.1 million to approximately 6.3 million with the closing of the
sale of the absorbent polymers segment. The dilutive impact of options will be
more significant in the future as a result.
<TABLE>
<CAPTION>
Six months ended June 30 Three months ended June 30
2000 1999 2000 1999
Weighted average common
<S> <C> <C> <C> <C>
shares outstanding - Basic 26,997,866 26,761,617 27,088,225 26,733,521
Assumed exercise of stock options 511,350 308,652 495,226 408,091
Weighted average common
shares outstanding - Diluted 27,509,216 27,070,269 27,583,451 27,141,612
</TABLE>
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited) (In thousands)
(continued)
Note 4: DERIVATIVES
From time to time, the Company uses financial derivatives, principally
swaps, forward contracts and options in its management of foreign currency and
interest rate exposures. These contracts hedge transactions and balances for
periods consistent with committed exposures. As of June 30, 2000, derivatives
outstanding were related to foreign currency hedging and an interest rate swap
with a notional amount on $15 million of the outstanding revolving credit.
Note 5: DISCONTINUED OPERATIONS
In 1999, the Company announced that it had entered into an agreement to
sell its absorbent polymers segment to BASF AG, subject to the approval of the
Company's shareholders. The Company's shareholders approved the sale transaction
at a special meeting held on May 25, 2000, and accordingly, the absorbent
polymers segment is reported as a discontinued operation in the accompanying
condensed consolidated financial statements as of and for the six months ended
June 30, 2000. The condensed consolidated financial statements have been
reclassified to report separately the net assets and operating results of the
absorbent polymers segment for all periods presented.
The transaction closed on June 1, 2000, at which time the Company received
proceeds of approximately $656.5 million. The sale resulted in a pretax gain of
approximately $534.0 million ($313.9 million after income taxes), which was net
of estimated costs to be incurred in connection with the sale. The Company is
currently negotiating the final settlement of certain working capital items, and
expects to resolve these matters during the third quarter of 2000. Provisions
have been made for estimated working capital adjustments in determining the gain
on sale. Substantially all of the net proceeds from the sale transaction were
distributed to the Company's shareholders on June 30, 2000.
Summary operating results of the absorbent polymers segment for the six and
three months ended June 30, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
Six months ended June 30,* Three months ended June 30,*
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net sales $86,000 $123,325 $35,390 $64,678
Operating profit 12,436 21,500 6,096 11,973
Income taxes 3,920 7,083 1,653 3,976
Net income 7,766 12,542 4,314 7,061
<FN>
*The 2000 information is for five and two months, respectively.
</FN>
</TABLE>
<PAGE>
Item 2 - AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the Company's
financial position and operating results during the periods included in the
accompanying condensed consolidated financial statements.
Six Months Ended June 30, 2000 vs. 1999
Net sales from continuing operations decreased by $7.3 million, or 5.0%,
while gross profit increased by $1.0 million, or 2.9%, and operating profit
increased by $5.4 million, or 171.2%. General, selling and administrative
expenses were $4.4 million, or 14.6%, lower than the previous year. Investment
income related to the proceeds from the sale of the absorbent polymers segment
amounted to $3.1 million for 2000. Net interest expense decreased by $.5
million, or 27.4%, as a result of lower average debt levels. Net income from
continuing operations was $6.4 million compared with $.9 million in the prior
year period, an increase of $5.5 million. Earnings from continuing operations
were $.23 per diluted share for the 2000 period, compared with $.03 per diluted
share for the prior-year period on 1.6% higher weighted average shares
outstanding. The investment income, net of taxes, amounted to $.07 per diluted
share, or approximately 35% of the improvement.
On June 1, 2000, the absorbent polymers segment was sold to BASF AG
resulting in a net gain of $313.9 million, or $11.41 per diluted share. The
results of operations for the polymer segment prior to disposition amounted to
$7.8 million, net of taxes, for the 2000 period compared to $12.5 million, net
of taxes, in the prior-year period. This equated to $.28 per diluted share
compared with $.46 per diluted share in 1999. The 2000 results were for five
months compared to six months for 1999. An extraordinary net charge of $.4
million, or $.02 per diluted share, was incurred in 2000 for the early
extinguishment of long-term debt.
A brief discussion by business segment follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
2000 1999 2000 vs. 1999
Minerals (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $81,130 100.0% $ 77,690 100.0% $ 3,440 4.4%
Cost of sales 63,253 78.0% 60,979 78.5%
Gross profit 17,877 22.0% 16,711 21.5% 1,166 7.0%
General, selling and
administrative expenses 7,731 9.5% 9,025 11.6% (1,294) (14.3%)
Operating profit 10,146 12.5% 7,686 9.9% 2,460 32.0%
</TABLE>
Sales increased by $3.4 million, or 4.4%, from the prior-year period.
Stronger international sales, with the exception of the U.K. operation,
accounted for the majority of the improvement. Gross profit margins improved by
50 basis points, or 2.3%. General, selling and administrative expenses were $1.3
million, or 14.3%, lower than the prior-year period. Reduced general, selling
and administrative expenses in the United Kingdom and lower domestic bad debt
provisions accounted for much of the change.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
<TABLE>
<CAPTION>
Six Months Ended June 30,
2000 1999 2000 vs. 1999
Environmental (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 42,902 100.0% $ 53,879 100.0% $(10,977) (20.4%)
Cost of sales 27,902 65.0% 38,740 71.9%
Gross profit 15,000 35.0% 15,139 28.1% (139) (0.9%)
General, selling and
administrative expenses 9,634 22.5% 13,024 24.2% (3,390) (26.0%)
Operating profit 5,366 12.5% 2,115 3.9% 3,251 153.7%
</TABLE>
Sales decreased by $11.0 million, or 20.4%. Approximately 73% of the sales
decrease was related to businesses divested in 1999. Weakness in sales from the
U.K. operation accounted for the balance of the sales decrease. Sales for the
U.S. operations were higher in all sectors, with the exception of geosynthetic
clay liners and exports. Gross profit margins improved by 690 basis points, or
24.6%, primarily as a result of the divestitures of businesses in 1999. General,
selling and administrative expenses decreased by $3.4 million, or 26.0%,
reflecting the results of the divestitures and cost reduction initiatives
instituted in 1999.
<TABLE>
<CAPTION>
Six Months Ended June 30,
2000 1999 2000 vs. 1999
Transportation (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 16,532 100.0% $ 16,329 100.0% $ 203 1.2%
Cost of sales 14,766 89.3% 14,502 88.8%
Gross profit 1,766 10.7% 1,827 11.2% (61) (3.3%)
General, selling and
administrative expenses 1,037 6.3% 1,052 6.4% (15) (1.4%)
Operating profit 729 4.4% 775 4.8% (46) (5.9%)
</TABLE>
Revenues increased $.2 million, or 1.2%. Gross profit margins declined by
50 basis points, or 4.5%, primarily as a result of higher fuel costs.
<TABLE>
<CAPTION>
Six Months Ended June 30,
2000 1999 2000 vs. 1999
Corporate (Dollars in Thousands) $ Change % Change
General, selling and
<S> <C> <C> <C> <C>
administrative expenses $ 7,666 $ 7,414 $ 252 3.4%
Operating loss (7,666) (7,414) (252) 3.4%
</TABLE>
Corporate costs include management information systems, human resources,
investor relations and corporate communications, corporate finance and corporate
governance. The start-up of the nanocomposite business is also included in the
corporate costs. The $.3 million, or 3.4%, increase in costs is attributable to
increased investments in nanocomposite business development.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Three Months Ended June 30, 2000 vs. 1999
Net sales from continuing operations decreased by $5.3 million, or 6.8%,
while gross profit increased by $.7 million, or 4.1%, and operating profit
increased by $2.7 million, or 139.7%. General, selling and administrative
expenses decreased by $2.0 million, or 13.4%. Investment income related to the
proceeds from the sale of the absorbent polymers segment amounted to $3.1
million. Net interest expense decreased by $.2 million, or 16.3%. Net income
from continuing operations amounted to $4.1 million in 2000 compared to $.7
million in 1999. Earnings from continuing operations were $.15 per diluted share
for the 2000 quarter, compared with $.03 per diluted share for the prior-year
quarter on 1.6% higher weighted average shares outstanding. The investment
income, net of taxes, amounted to $.07 per diluted share, or approximately 58%
of the improvement.
On June 1, 2000, the absorbent polymers segment was sold to BASF AG
resulting in a net gain of $313.9 million, or $11.38 per diluted share. The
results of operations for the polymer segment prior to disposition amounted to
$4.3 million, net of taxes, for the 2000 period compared to $7.1 million, net of
taxes, in the prior-year period. This equated to $.16 per diluted share compared
with $.26 per diluted share in 1999. The 2000 results were for two months
compared to three months for 1999. An extraordinary net charge of $.4 million,
or $.02 per diluted share, was incurred in 2000 for the early extinguishment of
long-term debt.
A brief discussion by business segment follows:
<TABLE>
<CAPTION>
Three Months Ended June 30,
2000 1999 2000 vs. 1999
Minerals (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 38,922 100.0% $ 38,081 100.0% $ 841 2.2%
Cost of sales 30,413 78.1% 30,026 78.9%
Gross profit 8,509 21.9% 8,055 21.1% 454 5.6%
General, selling and
administrative expenses 3,887 10.0% 4,381 11.5% (494) (11.3%)
Operating profit 4,622 11.9% 3,674 9.6% 948 25.8%
</TABLE>
Sales increased by $.8 million, or 2.2%, over the prior-year period. The
improvement in sales was attributable to the Asian businesses. Gross profit
margins improved by 80 basis points, or 3.7%. General, selling and
administrative expenses decreased by $.5 million, or 11.3%.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
<TABLE>
<CAPTION>
Three Months Ended June 30,
2000 1999 2000 vs. 1999
Environmental (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 24,467 100.0% $ 30,697 100.0% $ (6,230) (20.3%)
Cost of sales 16,167 66.1% 22,662 73.8%
Gross profit 8,300 33.9% 8,035 26.2% 265 3.3%
General, selling and
administrative expenses 4,980 20.4% 6,642 21.6% (1,662) (25.0%)
Operating profit 3,320 13.5% 1,393 4.6% 1,927 138.3%
</TABLE>
Sales decreased by $6.2 million, or 20.3%. Approximately 63% of the sales
decrease was related to businesses divested in 1999. Weakness in sales from the
U.K. operation accounted for the balance of the sales decrease. Sales for the
U.S. operations were higher in all sectors, with the exception of geosynthetic
clay liners and exports. Gross profit margins improved by 770 basis points, or
29.4%, primarily as a result of the divestitures of businesses in 1999. General,
selling and administrative expenses decreased by $1.7 million, or 25.0%,
reflecting the results of the divestitures and cost reduction initiatives
instituted in 1999.
<TABLE>
<CAPTION>
Three Months Ended June 30,
2000 1999 2000 vs. 1999
Transportation (Dollars in Thousands) $ Change % Change
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 8,597 100.0% $ 8,485 100.0% $ 112 1.3%
Cost of sales 7,669 89.2% 7,536 88.8%
Gross profit 928 10.8% 949 11.2% (21) (2.2%)
General, selling and
administrative expenses 522 6.1% 522 6.2% - -%
Operating profit 406 4.7% 427 5.0% (21) (4.9%)
</TABLE>
Revenues increased 1.3%, while gross margins declined by 40 basis points,
or 3.6%, as a result of higher fuel costs.
<TABLE>
<CAPTION>
Three Months Ended June 30,
2000 1999 2000 vs. 1999
Corporate (Dollars in Thousands) $ Change % Change
General, selling and
<S> <C> <C> <C> <C>
administrative expenses $ 3,682 $ 3,547 $ 135 3.8%
Operating income (loss) (3,682) (3,547) (135) 3.8%
</TABLE>
Higher expenditures for nanocomposite business development accounted for
the 3.8% increase in corporate costs.
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Liquidity and Capital Resources
At June 30, 2000, the Company had outstanding debt of $60.1 million
(including both long- and short-term debt), cash of $6.2 million and cash
equivalents of $240.6 million, compared with $94.4 million in debt and $4.0
million in cash at December 31, 1999. The cash equivalents of $240.6 million
primarily relate to the proceeds from the sale of the absorbent polymers
segment. Accrued income taxes related to the transaction totaled $209.3 million.
The Company currently intends to use the difference of $31.3 million to reduce
debt. On a proforma basis, net debt would be $22.6 million. The long-term debt
(on a proforma basis) would thus represent 17.9% of total capitalization at June
30, 2000, compared with 33.5% at December 31, 1999.
The Company had a current ratio of 1.40-to-1 at June 30, 2000, with
approximately $99.9 million in working capital, compared with 2.64-to-1 and
$101.8 million, respectively, at December 31, 1999. The proforma current ratio
at June 30, 2000, excluding cash equivalents and accrued income taxes related to
the sale of the absorbent polymers segment, was 2.66-to-1, with working capital
of $68.6 million.
During the first six months of 2000, the Company generated $17.3 million in
cash from continuing operations, compared with $12.1 million for the previous
year six-month period. The Company paid dividends of $3.8 million and acquired
property, plant and equipment and intangible assets totaling $6.7 million. The
Company received $648.8 million in net proceeds from the sale of the absorbent
polymers segment. From these proceeds, the Company distributed $384.8 million to
its shareholders and repaid debt totaling approximately $34.4 million.
The Company had approximately $73.5 million in unused, committed credit
lines at June 30, 2000. These credit facilities, in conjunction with funds
generated from operations, are adequate to fund the capital expenditure program
approved by the board of directors at this time. On August 2, the board of
directors declared a quarterly cash dividend of $.01 per share.
Forward-Looking Statements
Certain statements made from time-to-time by the Company, including
statements in the Management's Discussion and Analysis section above, constitute
"forward-looking statements" made in reliance upon the safe harbor contained in
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include statements relating to the Company or its
operations that are preceded by terms such as "expects," "believes,"
"anticipates," "intends" and similar expressions, and statements relating to
anticipated growth, levels of capital expenditures, future dividends, expansion
into global markets and the development of new products. Such forward-looking
statements are not guarantees of future performance and involve
<PAGE>
AMCOL INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Forward-Looking Statements (continued)
risks and uncertainties. The Company's actual results, performance or
achievements could differ materially from the results, performance or
achievements expressed in, or implied by, these forward-looking statements as a
result of various factors, including, but not limited to the actual growth in
AMCOL's various markets, utilization of AMCOL's plants, competition in the
minerals segments, operating costs, raw material prices, weather, currency
exchange rates, currency devaluations, delays in development, production and
marketing of new products, integration of acquired businesses, and other factors
detailed from time-to-time in AMCOL's annual report and other reports filed with
the Securities and Exchange Commission.
Item 3: Quantitative and Qualitative Disclosure About Market Risk
The information required by this item is provided in Footnote 4 "Derivative
Financial Instruments and Market Risks" under Item I.
<PAGE>
PART II - OTHER INFORMATION
Item 4: Submission of Matters to a Vote of Security Holders
(a) The Annual Stockholders Meeting of the Company was held on May 11,
2000.
(b) At the Annual Stockholders Meeting, the Stockholders voted on the
following uncontested matters: each nominee for director was elected
by a vote of the Stockholders; and each matter was approved by a vote
of the Stockholders as follows:
1. Election of the below-named Nominees of the Board of Directors of
AMCOL International Corporation:
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
Robert E. Driscoll, III 24,009,210 263,514
C. Eugene Ray 24,007,367 265,411
Dale E. Stahl 24,009,264 263,514
</TABLE>
2. Ratification of Appointment of KPMG LLP as independent
accountants for the Company for its 2000 fiscal year.
For Against Abstain
24,251,965 13,388 7,425
(c) A Special Meeting of Stockholders was held on May 25, 2000.
(d) At the Special Stockholders Meeting, the Stockholders voted on the
following uncontested matters: approval of the sale of the absorbent
polymers segment to BASF AG; approval of amendments to AMCOL's 1993
Stock Plan and 1998 Long-Term Incentive Plan; and both matters were
approved by a vote of the Stockholders as follows:
1. Approve the sale of the absorbent polymers segment to BASF AG.
For Against Abstain
21,595,042 129,751 85,629
2. Approve amendments to the 1993 Stock Plan and 1998 Long-Term
Incentive Plan.
For Against Abstain
20,103,208 1,490,504 216,711
<PAGE>
Item 6: Exhibits and Reports on Form 8-K
(a) See Index to Exhibits immediately following the signature page.
(b) No reports on Form 8-K have been filed during the quarter ended June
30, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMCOL INTERNATIONAL CORPORATION
Date: August 14, 2000 /s/ Lawrence E. Washow
Lawrence E. Washow
President and Chief Executive Officer
Date: August 14, 2000 /s/ Paul G. Shelton
Paul G. Shelton
Senior Vice President and Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
<S> <C>
3.1 Restated Certificate of Incorporation of the Company (5), as amended (10), as amended (16)
3.2 Bylaws of the Company (10)
4 Article Four of the Company's Restated Certificate of Incorporation (5), as amended (16)
10.1 AMCOL International Corporation 1983 Incentive Stock Option Plan (1); as amended (3)
10.3 Lease Agreement for office space dated September 29, 1986, between the Company and American National
Bank and Trust Company of Chicago; (1) First Amendment dated June 2, 1994 (8); Second Amendment dated
June 2, 1997 (13)
10.4 AMCOL International Corporation 1987 Non-Qualified Stock Option Plan (2); as amended (6)
10.7 Change in Control Agreement dated February 16, 1998, by and between Registrant and Lawrence E. Washow
(14)
10.8 Change in Control Agreement dated April 1, 1997, by and between Registrant and Peter L. Maul (12)
10.9 AMCOL International Corporation Dividend Reinvestment and Stock Purchase Plan (4); as amended (6)
10.10 AMCOL International Corporation 1993 Stock Plan, as amended and restated (10)
10.11 Credit Agreement by and among AMCOL International Corporation and Harris Trust and Savings Bank,
individually and as agent, NBD Bank, LaSalle National Bank and the Northern Trust Company dated
October 4, 1994, (7); as amended, First Amendment to Credit Agreement dated September 25, 1995 (9), as
amended, Second Amendment to Credit Agreement dated March 28, 1996, Third Amendment to Credit
Agreement dated September 12, 1996 (11), Fourth Amendment to Credit Agreement dated December 15, 1998
(18) and Fifth Amendment to Credit Agreement dated May 26, 2000.
10.16 Change in Control Agreement dated February 4, 1999 by and between Registrant and Ryan F. McKendrick (17)
10.17 Asset and Stock Purchase Agreement dated November 22, 1999 by and between the Company and BASF
Aktiengesellschaft (19)
10.18 Change in Control Agreement dated March 31, 2000 by and between Registrant and Frank B. Wright, Jr.
10.19 Change in Control Agreement dated April 1, 2000, by and between Registrant and Paul G. Shelton.
27 Financial Data Schedule
(1) Exhibit is incorporated by reference to the Registrant's Form 10 filed with the Securities and
Exchange Commission on July 27, 1987.
(2) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1988.
(3) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1993.
(4) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1992.
(5) Exhibit is incorporated by reference to the Registrant's Form S-3 filed with the Securities and
Exchange Commission on September 15, 1993.
(6) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1993.
(7) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and
Exchange Commission for the quarter ended September 30, 1994.
(8) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1994.
(9) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and
Exchange Commission for the quarter ended September 30, 1995.
(10) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1995.
(11) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1996.
(12) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and
Exchange Commission for the quarter ended March 31, 1997.
(13) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and
Exchange Commission for the quarter ended June 30, 1997.
<PAGE>
(14) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1997.
(15) Exhibit is incorporated by reference to the Registrant's Form S-8 (File 333-56017) filed with the
Securities and Exchange Commission on June 4, 1998.
(16) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and
Exchange Commission for the quarter ended June 30, 1998.
(17) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1998.
(18) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and
Exchange Commission for the quarter ended September 30, 1999.
(19) Exhibit is incorporated by reference to the Registrant's Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1999.
(20) Exhibit is incorporated by reference to the Registrant's Form 10-Q filed with the Securities and
Exchange Commission for the quarter ended March 31, 2000.
</TABLE>
