Edgar Filing: MINERALS TECHNOLOGIES INC

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

[ ] 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 1-3295

MINERALS TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		25-1190717 (I.R.S. Employer Identification Number)
The Chrysler Building 405 Lexington Avenue New York, New York (Address of principal executive office)		10174-0002 (Zip Code)

(212) 878-1800
(Registrant's telephone number, including area code)

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




Title of each class	Name of each exchange on which registered
Common Stock, $.10 par value	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 [X] No [ ]

Indicate by check mark if Registrant is not required to file reports pursuant to Section 13 or 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 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 the 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. [X]

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 [ ]
(Do not check if 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 voting stock held by non-affiliates of the Registrant, based upon the closing price at which the stock was sold as of June 30, 2008, was approximately $847 million. Solely for the purposes of this calculation, shares of common stock held by officers, directors and beneficial owners of 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 6, 2009, the Registrant had outstanding 18,692,557 shares of common stock, all of one class.

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement dated April 6, 2009	Part III


MINERALS TECHNOLOGIES INC. 2008 FORM 10-K ANNUAL REPORT Table of Contents
		Page
	PART I
Item 1.	Business	1

Item 1A.	Risk Factors	6

Item 1B.	Unresolved Staff Comments	8

Item 2.	Properties	8

Item 3.	Legal Proceedings	10

Item 4.	Submission of Matters to a Vote of Security Holders	11

	PART II

Item 5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	11

Item 6.	Selected Financial Data	15

Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 8.	Financial Statements and Supplementary Data	28

Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	28

Item 9A.	Controls and Procedures	28

Item 9B.	Other Information	28

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance	29

Item 11.	Executive Compensation	30

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	30

Item 13.	Certain Relationships and Related Transactions, and Director Independence	30

Item 14.	Principal Accountant Fees and Services	30

	PART IV

Item 15.	Exhibits and Financial Statement Schedules	31


Signatures		33

PART I

Item 1. Business

Minerals Technologies Inc. (the "Company") is a resource- and technology-based company that develops, produces and markets worldwide a broad range of specialty mineral, mineral-based and synthetic mineral products and supporting systems and services. The Company has two reportable segments: Specialty Minerals and Refractories. The Specialty Minerals segment produces and sells the synthetic mineral product precipitated calcium carbonate ("PCC") and processed mineral product quicklime ("lime"), and mines mineral ores then processes and sells natural mineral products, primarily limestone and talc. This segment's products are used principally in the paper, building materials, paint and coatings, glass, ceramic, polymer, food, automotive and pharmaceutical industries. The Refractories segment produces and markets monolithic and shaped refractory materials and specialty products, services and application and measurement equipment, and calcium metal and metallurgical wire products. Refractories segment products are primarily used in high-temperature applications in the steel, non-ferrous metal and glass industries.

The Company maintains a research and development focus. The Company's research and development capability for developing and introducing technologically advanced new products has enabled the Company to anticipate and satisfy changing customer requirements, creating market opportunities through new product development and product application innovations.

Specialty Minerals Segment

PCC Products and Markets

The Company's PCC product line net sales were $605.7 million, $602.6 million and $557.0 million for the years ended December 31, 2008, 2007 and 2006, respectively. The Company's sales of PCC have been, and are expected to continue to be, made primarily to the printing and writing papers segment of the paper industry. The Company also produces PCC for sale to companies in the polymer, food and pharmaceutical industries. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

PCC Products - Paper

In the paper industry, the Company's PCC is used:

•	As a filler in the production of coated and uncoated wood-free printing and writing papers, such as office papers;
•	As a filler for coated and uncoated groundwood (wood-containing) paper such as magazine and catalog papers; and
•	As a coating pigment for both wood-free and groundwood papers.

The Company's Paper PCC product line net sales were $547.2 million, $542.0 million and $500.6 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Approximately 44% of the Company's sales consists of PCC sold to papermakers at "satellite" PCC plants. A satellite PCC plant is a PCC manufacturing facility located at a paper mill, thereby eliminating costs of transporting PCC from remote production sites to the paper mill. The Company believes the competitive advantages offered by improved economics and superior optical characteristics of paper produced with PCC manufactured by the Company's satellite PCC plants resulted in substantial growth in the number of the Company's satellite PCC plants since the first such plant was built in 1986. For information with respect to the locations of the Company's PCC plants as of December 31, 2008, see Item 2, "Properties," below.

The Company ®manufactures several customized PCC product forms using proprietary processes. Each product form is designed to provide optimum balance of paper properties including brightness, opacity, bulk, strength and improved printability. The Company's research and development and technical service staffs focus on expanding sales from its existing and potential new satellite PCC plants as well as developing new technologies for new applications. These technologies include, among others, acid-tolerant ("AT^®")PCC, which allows PCC to be introduced to the large wood-containing segment of the printing and writing paper market, and OPACARB^® PCC, a family of products for paper coating.

The Company owns, staffs, operates and maintains all of its satellite PCC facilities, and owns or licenses the related technology. Generally, the Company and its paper mill customers enter into long-term evergreen agreements, initially ten years in length, pursuant to which the Company supplies substantially all of the customer's precipitated calcium carbonate filler

requirements. The Company is generally permitted to sell to third-parties PCC produced at a satellite plant in excess of the host paper mill's requirement.

The Company also sells a range of PCC products to paper manufacturers from production sites not associated with paper mills. These merchant facilities are located at Adams, Massachusetts; Lifford, England; and Walsum, Germany.

PCC Markets - Paper

Uncoated Wood-Free Printing and Writing Papers - North America. Beginning in the mid-1980's, as a result of a concentrated research and development effort, the Company's satellite PCC plants facilitated the conversion of a substantial percentage of North American uncoated wood-free printing and writing paper producers to lower-cost alkaline papermaking technology. The Company estimates that during 2008, more than 90% of North American uncoated wood-free paper was produced employing alkaline technology. Presently, the Company owns and operates 19 commercial satellite PCC plants located at paper mills that produce uncoated wood-free printing and writing papers in North America.

Uncoated Wood-Free Printing and Writing Papers - Outside North America. The Company estimates the amount of uncoated wood-free printing and writing papers produced outside of North America at facilities that can be served by satellite and merchant PCC plants is more than twice as large (measured in tons of paper produced) as the North American uncoated wood-free paper market currently served by the Company. The Company believes that the superior brightness, opacity and bulking characteristics offered by its PCC products allow it to compete with suppliers of ground limestone and other filler products outside of North America. Presently, the Company owns and operates 24 commercial satellite PCC plants located at paper mills that produce uncoated wood-free printing and writing papers outside of North America.

Uncoated Groundwood Paper. The uncoated groundwood paper market, including newsprint, represents approximately 35% of worldwide paper production. Paper mills producing wood-containing paper still generally employ acid papermaking technology. The conversion to alkaline technology by these mills has been hampered by the tendency of wood-containing papers to darken in an alkaline environment. In an attempt to introduce PCC to the wood-containing segments of the paper industry, the Company has developed and patented a system for the manufacture of high-quality groundwood paper in an acidic environment using PCC (AT^® PCC). Furthermore, as groundwood or wood-containing paper mills use larger quantities of recycled fiber, there is a trend toward the use of neutral papermaking technology in this segment for which the Company presently supplies traditional PCC chemistries. The Company now supplies PCC to approximately 27 paper machines at about 14 groundwood paper mills around the world and licenses its technology to a ground calcium carbonate producer to help accelerate the conversion from acid to alkaline papermaking.

Coated Paper. The Company continues to pursue satellite PCC opportunities in coated paper markets where our products provide unique performance and/or cost reduction benefits to papermakers and printers. Our Opacarb product line is designed to create value to the paper maker and can be used alone or in combination with other coating pigments. PCC coating products are produced at 10 of the Company's PCC plants worldwide.

Specialty PCC Products and Markets

The Company also produces and sells a full range of dry PCC products on a merchant basis for non-paper applications. The Company's Specialty PCC product line net sales were $58.5 million, $60.6 million and $56.4 million for the years ended December 31, 2008, 2007 and 2006, respectively. The Company sells surface-treated and untreated grades of PCC to the polymer industry for use in automotive and construction applications, and to the adhesives and printing inks industries. The Company's PCC is also used by the food and pharmaceutical industries as a source of bio-available calcium in tablets and foodstuffs, as a buffering agent in tablets, and as a mild abrasive in toothpaste. The Company produces PCC for specialty applications from production sites at Adams, Massachusetts and Lifford, England.

Processed Minerals - Products and Markets

The Company mines and processes natural mineral products, primarily limestone and talc. The Company also manufactures lime, a limestone-based product. The Company's net sales of processed mineral products were $110.7 million, $114.0 million and $118.6 million for the years ended December 31, 2008, 2007 and 2006, respectively. Net sales of talc products were $35.9 million, $37.3 million and $38.9 million for the years ended December 31, 2008, 2007 and 2006, respectively. Net sales of ground calcium carbonate ("GCC") products, which are principally lime and limestone, were $74.8 million, $76.7 million and $79.7 million for the years ended December 31, 2008, 2007 and 2006, respectively. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Lime produced at the Company's Adams, Massachusetts, and Lifford, United Kingdom, facilities is used primarily as a raw material for the manufacture of PCC at these sites and at some satellite PCC plants, and is sold commercially to various chemical and other industries.

The Company mines and processes GCC products at its reserves in the eastern and western parts of the United States. GCC is used and sold in the construction, automotive and consumer markets.

The Company mines, beneficiates and processes talc at its Barretts site, located near Dillon, Montana. Talc is sold worldwide in finely ground form for ceramic applications and in North America for paint and coatings and polymer applications. Because of the exceptional chemical purity of the Barretts ore, a significant portion of worldwide automotive catalytic converter ceramic substrates contain the Company's Barretts talc.

The Company's natural mineral products are supported by the Company's limestone reserves located in the western and eastern parts of the United States, and talc reserves located in Montana. The Company estimates these reserves, at current usage levels, to be in excess of 30 years at its limestone production facilities and in excess of 20 years at its talc production facility.

Refractories Segment

Refractory Products and Markets

Refractories Products

The Company offers a broad range of monolithic and pre-cast refractory products and related systems and services. The Company's Refractory segment net sales were $395.8 million, $361.1 million and $347.9 million for the years ended December 31, 2008, 2007 and 2006, respectively. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Refractory product sales are often supported by Company-supplied proprietary application equipment and on-site technical service support. The Company's proprietary application equipment is used to apply refractory materials to the walls of steel-making furnaces and other high temperature vessels to maintain and extend their useful life. Net sales of refractory products, including those for non-ferrous applications, were $320.8 million, $290.5 million and $264.6 million for the years ended December 31, 2008, 2007 and 2006. The Company's proprietary application system, such as its MINSCAN^®, allow for remote-controlled application of the Company's refractory products in steel-making furnaces, as well as in steel ladles and blast furnaces. Since the steel-making industry is characterized by intense price competition, which results in a continuing emphasis on increased productivity, these application systems and the technologically advanced refractory materials developed in the Company's research laboratories have been well accepted by the Company's customers. These products allow steel makers to improve their performance through, among other things, the application of monolithic refractories to furnace linings while the furnace is at operating temperature, thereby eliminating the need for furnace cool-down periods and steel-production interruption. The result is a lower overall cost for steel produced by steel makers.

The Company's experienced technical service staff and advanced application equipment provide customers assurance that they will achieve their desired productivity objectives. The Company's technicians are also able to conduct laser measurement of refractory wear, sometimes in conjunction with robotic application tools, to improve refractory performance at many customer locations. The Company believes that these services, together with its refractory product offerings, provide it with a strategic marketing advantage.

Over the past several years the Refractories segment has continued to increase its growth due to its ability to reformulate its products and application technology to maintain its competitive advantage in the market place. Some of the new products the Company has introduced in the past few years include:

•	HOTCRETE^®: High durability shotcrete products for applications of high temperatures in ferrous applications such as steel ladles;
•	FASTFIRE^®: High durability castable and shotcrete products in the non-ferrous and ferrous industries with the added benefit of rapid dry-out capabilities;
•	OPTIFORM^®: A system of products and equipment for the rapid continuous casting of refractories for applications such as steel ladle safety linings;
•	ENDURATEQ^®: A high durability refractory shape for glass contact applications such as plungers and orifice rings; and
•	DECTEQ™: A system for the automatic control of electrical power feeding electrodes used in electric arc steel making furnaces.

The Company has also expanded its refractories business through selective acquisitions over the past several years. These acquisitions have increased both the breadth of the product lines and markets served by the Refractories segment.

Refractories Markets

The principal market for the Company's refractory products is the steel industry. Management believes that certain trends in the steel industry will continue to provide growth opportunities for the Company. These trends include rapid growth and quality improvements in select geographic regions (e.g., China, Eastern Europe and India) the development of improved manufacturing processes such as thin-slab casting, the trend in North America to shift production from integrated mills to electric arc furnaces (mini-mills) and the ever-increasing need for improved productivity and longer lasting refractories.

The Company sells its refractory products in the following markets:

Steel Furnace. The Company sells gunnable monolithic refractory products and application systems to users of basic oxygen furnaces and electric furnaces for application on furnace walls to prolong the life of furnace linings.

Other Iron and Steel. The Company sells monolithic refractory materials and pre-cast refractory shapes for iron and steel ladles, vacuum degassers, continuous casting tundishes, blast furnaces and reheating furnaces. The Company offers a full line of materials to satisfy most continuous casting refractory applications. This full line consists of gunnable materials, refractory shapes and permanent linings.

Industrial Refractory Systems. The Company sells refractory shapes and linings to non-steel refractories consuming industries including glass, cement, aluminum and petrochemicals, power generation and other non-steel industries. The Company also produces a specialized line of carbon composites and pyrolitic graphite primarily sold under the PYROID^® trademark, primarily to the aerospace and electronics industries.

Metallurgical Products and Markets

The Company produces a number of other technologically advanced products for the steel industry, including calcium metal, metallurgical wire products and a number of metal treatment specialty products. Net sales of metallurgical products were $75.0 million, $70.6 million and $83.3 million for the years ended December 31, 2008, 2007 and 2006. The Company manufactures calcium metal at its Canaan, Connecticut, facility and purchases calcium in international markets. Calcium metal is used in the manufacture of the Company's PFERROCAL^® solid-core calcium wire, and is also sold for use in the manufacture of batteries and magnets. The Company sells metallurgical wire products and associated wire-injection equipment for use in the production of high-quality steel. These metallurgical wire products are injected into molten steel to improve castability and reduce imperfections. The steel produced is used for high-pressure pipeline and other premium-grade steel applications.

Marketing and Sales

The Company relies principally on its worldwide direct sales force to market its products. The direct sales force is augmented by technical service teams that are familiar with the industries to which the Company markets its products, and by several regional distributors. The Company's sales force works closely with the Company's technical service staff to solve technical and other issues faced by the Company's customers. The Company's technical service staff assists paper producers in ongoing evaluations of the use of PCC for paper coating and filling applications. In the Refractory segment, the Company's technical service personnel advise on the use of refractory materials, and, in many cases pursuant to service agreements, apply the refractory materials to the customers' furnaces and other vessels. Continued use of skilled technical service teams is an important component of the Company's business strategy.

The Company works closely with its customers to ensure that their requirements are satisfied, and it often trains and supports customer personnel in the use of the Company's products. The Company conducts domestic marketing and sales from Bethlehem, Pennsylvania, and from regional sales offices in the eastern and western United States. The Company's international marketing efforts are directed from regional centers located in Brussels, Belgium; Sao Jose Dos Campos, Brazil; and Shanghai, China. The Company believes its processed minerals are at regional locations that satisfy the stringent delivery requirements of the industries they serve. The Company also believes that its worldwide network of sales personnel and manufacturing sites facilitates the continued international expansion.

Raw Materials

The Company's ability to achieve anticipated results depends in part on having an adequate supply of raw materials for its manufacturing operations, particularly lime and carbon dioxide for the PCC product line, magnesia and alumina for its Refractory operations, and on having adequate access to ore reserves at its mining operations.

The Company uses lime in the production of PCC and is a significant purchaser of lime worldwide. Generally, lime is purchased under long-term supply contracts from unaffiliated suppliers located in close geographic proximity to the Company's PCC plants.

The principal raw materials used in the Company's monolithic refractory products are refractory-grade magnesia and various forms of aluminasilicates. The Company also purchases calcium metal, calcium silicide, graphite, calcium carbide and various alloys for use in the production of metallurgical wire products and uses lime and aluminum in the production of calcium metal. The Company purchases a significant portion of its magnesia requirements from sources in China. High demand for bulk raw materials from China has caused price increases of some key raw materials which ultimately could affect the Company's sales to its customers. In addition, higher transportation costs have also increased the delivered cost of raw materials imported from China to North America and Europe. We continue to rely on China for the majority of our magnesium oxide and may be subject to uncertainty in availability and cost.

Competition

The Company is continually engaged in efforts to develop new products and technologies and refine existing products and technologies in order to remain competitive and to position itself as a market leader.

With respect to its PCC products, the Company competes for sales to the paper industry with other minerals, such as GCC and kaolin, based in large part upon technological know-how, patents and processes that allow the Company to deliver PCC that it believes imparts gloss, brightness, opacity and other properties to paper on an economical basis. The Company is the leading manufacturer and supplier of PCC to the paper industry.

The Company competes in sales of its limestone and talc based primarily upon quality, price, and geographic location.

With respect to the Company's refractory products, competitive conditions vary by geographic region. Competition is based upon the performance characteristics of the product (including strength, consistency and ease of application), price, and the availability of technical support.

Research and Development

Many of the Company's product lines are technologically advanced. Our expertise in inorganic chemistry, crystallography and structural analysis, fine particle technology and other aspects of materials science apply to and support all of our product lines, the Company's business strategy for continued growth in sales and profitability depends, to a large extent, on the continued success of its research and development activities. Among the significant achievements of the Company's research and development efforts have been: the satellite PCC plant concept; PCC crystal morphologies for paper coating; AT^® PCC for wood-containing papers; the development of FASTFIRE^® and OPTIFORM^® shotcrete refractory products; LACAM^® laser-based refractory measurement systems; and the MINSCAN^® and HOTCRETE^® application systems and EMforce^® for the Processed Minerals and Specialty PCC product lines.

Going forward, the Company will continue to develop its filler-fiber composite material, which would increase filler levels in uncoated freesheet paper to upwards of 30%. This product remains in development and is now in large-scale trials with customers. The Company will also continue to reformulate its refractory materials to be more competitive, and will also continue development of unique calcium carbonates for use in novel biopolymers.

For the years ended December 31, 2008, 2007 and 2006, the Company spent approximately $23.1 million, $26.3 million and $27.8 million, respectively, on research and development. The Company's research and development spending for 2008 was approximately 2.1% of net sales.

The Company maintains its primary research facilities in Bethlehem and Easton, Pennsylvania. It also has research and development facilities in China, Finland, Germany, Ireland, Japan and Turkey. Approximately 91 employees worldwide are engaged in research and development. In addition, the Company has access to some of the world's most advanced papermaking and paper coating pilot facilities.

Patents and Trademarks

The Company owns or has the right to use approximately 339 patents and approximately 785 trademarks related to its business. The Company believes that its rights under its existing patents, patent applications and trademarks are of value to its operations, but no one patent, application or trademark is material to the conduct of the Company's business as a whole.

Insurance

The Company maintains liability and property insurance and insurance for business interruption in the event of damage to its production facilities and certain other insurance covering risks associated with its business. The Company believes such insurance is adequate for the operation of its business. There is no assurance that in the future the Company will be able to maintain the coverage currently in place or that the premiums will not increase substantially.

Employees

At December 31, 2008, the Company employed 2,522 persons, of whom 1,250 were employed outside of the United States.

Environmental, Health and Safety Matters

The Company's operations are subject to federal, state, local and foreign laws and regulations relating to the environment and health and safety. Certain of the Company's operations involve and have involved the use and release of substances that have been and are classified as toxic or hazardous within the meaning of these laws and regulations. Environmental operating permits are, or may be, required for certain of the Company's operations and such permits are subject to modification, renewal and revocation. The Company regularly monitors and reviews its operations, procedures and policies for compliance with these laws and regulations. The Company believes its operations are in substantial compliance with these laws and regulations and that there are no violations that would have a material effect on the Company. Despite these compliance efforts, some risk of environmental and other damage is inherent in the Company's operations, as it is with other companies engaged in similar businesses, and there can be no assurance that material violations will not occur in the future. The cost of compliance with these laws and regulations is not expected to have a material adverse effect on the Company. The Company obtained indemnification for certain potential environmental, health and safety liabilities under agreements entered into between the Company and Pfizer Inc ("Pfizer") or Quigley Company, Inc., a wholly-owned subsidiary of Pfizer, in connection with the initial public offering of the Company in 1992. See "Certain Relationships and Related Transactions" in Item 13.

Available Information

The Company maintains an internet website located at http://www.mineralstech.com. It makes its reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as well as its Proxy Statement and filings under Section 16 of the Securities Exchange Act of 1934, available free of charge through the Investor Relations page of its website, as soon as reasonably practicable after they are filed with the Securities and Exchange Commission ("SEC"). Investors may access these reports through the Company's website by navigating to "Investor Relations" and then to "SEC Filings."

Item 1A. Risk Factors

The disclosure and analysis set forth in this report contains certain forward-looking statements, particularly statements relating to future actions, future performance or results of current and anticipated products, sales efforts, expenditures, and financial results. From time to time, the Company also provides forward-looking statements in other publicly-released materials, both written and oral. Forward-looking statements provide current expectations and forecasts of future events such as new products, revenues and financial performance, and are not limited to describing historical or current facts. They can be identified by the use of words such as "expects," "plans," "anticipates," and other words and phrases of similar meaning.

Forward-looking statements are necessarily based on assumptions, estimates and limited information available at the time they are made. A broad variety of risks and uncertainties, both known and unknown, as well as the inaccuracy of assumptions and estimates, can affect the realization of the expectations or forecasts in these statements. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially.

The Company undertakes no obligation to update any forward-looking statements. Investors should refer to the Company's subsequent filings under the Securities Exchange Act of 1934 for further disclosures.

As permitted by the Private Securities Litigation Reform Act of 1995, the Company is providing the following cautionary statements which identify factors that could cause the Company's actual results to differ materially from historical and expected

results. It is not possible to foresee or identify all such factors. Investors should not consider this list an exhaustive statement of all risks, uncertainties and potentially inaccurate assumptions.

•	Declining General Economic, Business, or Industry Conditions
	Recently, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage market and a declining real estate market in the U.S. have contributed to increased volatility and diminished expectations for the global economy and expectations of slower global economic growth going forward. These factors, combined with volatile raw material prices, declining global business, declining consumer confidence and increased unemployment, have precipitated an economic slowdown and a recession. If the economic climate in the U.S. or abroad continues to deteriorate, customers or potential customers could reduce or delay their growth and investments, which could impact the Company's global business, its ability to collect customer receivables, its worldwide pension assets and ultimately decrease the Company's net revenue and profitability.
•	Growth Rate
	Sales and income growth of the Company depends upon a number of uncertain events, including the outcome of the Company's strategies of increasing its penetration into geographic markets such as Asia and Europe; increasing its penetration into product markets such as the market for paper coating pigments and the market for groundwood paper pigments; increasing sales to existing PCC customers by increasing the amount of PCC used per ton of paper produced; developing, introducing and selling new products such as filler-fiber composite materials for the paper industry; and acquisitions. Difficulties, delays or failure of any of these strategies could affect the future growth rate of the Company.
•	Contract Renewals
	Generally, the Company's sales of PCC are pursuant to long-term evergreen agreements, initially ten years in length, with paper mills where the Company operates satellite PCC plants. The terms of many of these agreements have been extended, often in connection with an expansion of the satellite plant. However, failure of a number of the Company's customers to renew or extend existing agreements on terms as favorable to the Company as those currently in effect could have a substantial adverse effect on the Company's results of operations, and could also result in impairment of the assets associated with the PCC plant.
•	Consolidation in Customer Industries, Principally Paper and Steel
	Several consolidations in the paper industry have taken place in recent years. These consolidations could result in partial or total closure of some paper mills where the Company operates PCC satellites. Such closures would reduce the Company's sales of PCC, except to the extent that they resulted in shifting paper production and associated purchases of PCC to another location served by the Company. Similarly, following a string of bankruptcies, consolidations have occurred in the steel industry. Such consolidations in the two major industries we serve concentrate purchasing power in the hands of a smaller number of papermakers and steel manufacturers, enabling them to increase pressure on suppliers, such as the Company. This increased pressure could have an adverse effect on the Company's results of operations in the future.
•	Litigation; Environmental Exposures
	The Company's operations are subject to international, federal, state and local governmental, tax and other laws and regulations, and potentially to claims for various legal, environmental and tax matters. The Company is currently a party in various litigation matters. While the Company carries liability insurance, which it believes to be appropriate to its businesses, and has provided reserves for such matters, which it believes to be adequate, an unanticipated liability, arising out of such a litigation matter or a tax or environmental proceeding could have a material adverse effect on the Company's financial condition or results of operations.
	In addition, future events, such as changes in or modifications or interpretations of existing laws and regulations, or enforcement polices, or further investigation or evaluation of the potential health hazards of certain products, may give rise to additional compliance and other costs that could have a material adverse effect on the Company.
•	New Products
	The Company is engaged in a continuous effort to develop new products and processes in all of its product lines. Difficulties, delays or failures in the development, testing, production, marketing or sale of such new products could cause actual results of operations to differ materially from our expected results.
•	Competition; Protection of Intellectual Property
	The Company's ability to compete is based in part upon proprietary knowledge, both patented and unpatented. The Company's ability to achieve anticipated results depends in part on its ability to defend its intellectual property against inappropriate disclosure as well as against infringement. In addition, development by the Company's competitors of new products or technologies that are more effective or less expensive than those the Company offers could have a material adverse effect on the Company's financial condition or results of operations.

•		Risks of Doing Business Abroad
		As the Company expands its operations overseas, it faces increased risks of doing business abroad, including inflation, fluctuation in interest rates and currency exchange rates, changes in applicable laws and regulatory requirements, export and import restrictions, tariffs, nationalization, expropriation, limits on repatriation of funds, civil unrest, terrorism, unstable governments and legal systems, and other factors. Adverse developments in any of these areas could cause actual results to differ materially from historical and expected results.
•		Availability of Raw Materials
		The Company's ability to achieve anticipated results depends in part on having an adequate supply of raw materials for its manufacturing operations, particularly lime and carbon dioxide for the PCC product line, and magnesia and alumina for its Refractory operations and on having adequate access to ore reserves of appropriate quality at its mining operations. Unanticipated changes in the costs or availability of such raw materials, or in the Company's ability to have access to its ore reserves, could adversely affect the Company's results of operations.
•	Cyclical Nature of Customers' Businesses
	The majority of the Company's sales are to customers in industries which have historically been cyclical paper, steel and construction. The Company's exposure to variations in its customers' businesses has been reduced by the diversification of its portfolio of products and services; and by its geographic expansion. Also, the Company has structured some of its long-term satellite PCC contracts to provide a degree of protection against declines in the quantity of product purchased, since the price per ton of PCC generally rises as the number of tons purchased declines. In addition, many of the Company's product lines lower its customers' costs of production or increase their productivity, which should encourage them to use its products. In addition, our Processed Minerals and Specialty PCC product lines are impacted by the domestic building and construction markets. The residential component of this market is experiencing a significant slowdown which could adversely impact growth. However, a sustained economic downturn in one or more of the industries or geographic regions that the Company serves, or in the worldwide economy, could cause actual results of operations to differ materially from historical and expected results.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Set forth below is the location of, and the main customer served by, each of the Company's 52 satellite PCC plants as of December 31, 2008. Generally, the land on which each satellite PCC plant is located is leased at a nominal amount by the Company from the host paper mill pursuant to a lease, the term of which generally runs concurrently with the term of the PCC production and sale agreement between the Company and the host paper mill.

Location	Principal Customer
United States
Alabama, Courtland	International Paper Company
Alabama, Jackson	Boise Inc.
Alabama, Selma	International Paper Company
Arkansas, Ashdown	Domtar Inc.
Florida, Pensacola	Georgia-Pacific Corporation (Koch Industries)
Kentucky, Wickliffe	NewPage Corporation
Louisiana, Port Hudson	Georgia-Pacific Corporation (Koch Industries)
Maine, Jay	Verso Paper Holdings LLC
Maine, Madison	Madison Paper Industries
Maine, Millinocket	Katahdin Paper Company LLC
Michigan, Quinnesec	Verso Paper Holdings LLC
Minnesota, Cloquet	Sappi Ltd.
Minnesota, International Falls	Boise Inc.
New York, Ticonderoga	International Paper Company
North Carolina, Plymouth	Domtar Inc.
Ohio, Chillicothe	P.H. Glatfelter Co.
Ohio, West Carrollton	Appleton Papers Inc.
South Carolina, Eastover	International Paper Company
Virginia, Franklin	International Paper Company
Washington, Camas	Georgia-Pacific Corporation (Koch Industries)
Washington, Longview	Weyerhaeuser Company

Location	Principal Customer
Washington, Wallula	Boise Inc.
Wisconsin, Kimberly	Appleton Coated
Wisconsin, Park Falls	Flambeau River Papers LLC
Wisconsin, Wisconsin Rapids	New Page Corporation

International
Brazil, Guaiba	Aracruz Celulose S.A.
Brazil, Jacarei	Ahlstrom-VCP Industria de Papeis Especialis Ltda.
Brazil, Luiz Antonio	International Paper do Brasil Ltda.
Brazil, Mucuri	Suzano Papel e Celulose S. A.
Brazil, Suzano	Suzano Papel e Celulose S. A.
Canada, St. Jerome, Quebec	Cascades Fine Papers Group Inc.
Canada, Windsor, Quebec	Domtar Inc.
China, Dagang ¹	Gold East Paper (Jiangsu) Company Ltd.
China, Zhenjiang ¹	Gold East Paper (Jiangsu) Company Ltd.
China, Suzhou¹	Gold HuaSheng Paper Company Ltd.
Finland, Äänekoski	M-real Corporation
Finland, Anjalankoski	Myllykoski Paper Oy
Finland, Tervakoski	Trierenberg Holding
France, Alizay	M-real Corporation
France, Docelles	UPM Corporation
France, Saillat Sur Vienne	International Paper Company
Germany, Schongau	UPM Corporation
Indonesia, Perawang¹	PT Indah Kiat Pulp and Paper Corporation
Japan, Shiraoi¹	Nippon Paper Group Inc.
Malaysia, Sipitang	Sabah Forest Industries Sdn. Bhd.
Mexico, Chihuahua	Copamex, S.A. de C.V.
Poland, Kwidzyn	International Paper - Kwidzyn, S.A
Portugal, Figueira da Foz¹	Soporcel - Sociedade Portuguesa de Papel, S.A.
Slovakia, Ruzomberok	Mondi Business Paper SCP
South Africa, Merebank¹	Mondi Paper Company Ltd.
Thailand, Namphong	Phoenix Pulp & Paper Public Co. Ltd.
Thailand, Tha Toom¹	Advance Agro Public Co. Ltd.

^{1These plants are owned through joint ventures.

     The Company also owned at December 31, 2008, 9 plants
engaged in the mining, processing and/or production of lime, limestone,
precipitated calcium carbonate and talc, and owned or leased approximately 20
refractory manufacturing facilities worldwide. The Company's corporate
headquarters, sales offices, research laboratories, plants and other facilities
are owned by the Company except as otherwise noted. Set forth below is certain
information relating to the Company's plants and office and research facilities:

Location

Facility

Product Line

United States

Arizona, Pima County

Plant; Quarry¹

Limestone

California, Lucerne Valley

Plant; Quarry

Limestone

Connecticut, Canaan

Plant; Quarry

Limestone, Metallurgical Wire/Calcium

Indiana, Mt. Vernon

Plant⁴

Talc/Limestone

Indiana, Portage

Plant

Refractories/Shapes

Louisiana, Baton Rouge

Plant

Monolithic Refractories

Massachusetts, Adams

Plant; Quarry

Limestone, Lime, PCC

Montana, Dillon

Plant; Quarry

Talc

New Jersey, Old Bridge

Plant

Monolithic Refractories

New York, New York
Headquarters²

All Company Products

Ohio, Bryan
Plant

Monolithic Refractories

Ohio, Dover
Plant

Monolithic Refractories/Shapes

Pennsylvania, Bethlehem
Administrative Office; Research
laboratories; Sales Offices
PCC, Lime, Limestone, Talc

Pennsylvania, Easton
Administrative Office; Research
laboratories; Plant; Sales Offices
All Company Products

^{9

Location

Facility

Product Line

Pennsylvania, Slippery Rock
Plant; Sales Offices
Monolithic Refractories/Shapes

Texas, Bay City

Plant
Talc

International

Australia, Carlingford

SalesOffice²
Monolithic Refractories

Belgium, Brussels
Sales Office²/Administrative
Office
Monolithic Refractories/PCC

Brazil, Sao Jose dos Campos

Sales Office² PCC/Monolithic Refractories

China, Shanghai
Administrative Office/Sales
Office
PCC/Monolithic Refractories

China, Suzhou
Plant/Sales Office/Research
laboratories
Monolithic Refractories/PCC

Finland, Kaarina
Research Laboratory² PCC

Germany, Moers
Plant/Sales Office/Research
laboratories
Laser Scanning Instrumentation/
Probes/Monolithic Refractories

Germany, Walsum
Plant
PCC

Holland, Hengelo
Plant/Sales Office
Metallurgical Wire

India, Mumbai
Sales Office
Monolithic Refractories/
Metallurgical Wire

Ireland, Cork
Plant; Administrative Office/
Monolithic Refractories

Italy, Brescia
Sales Office; Plant
Monolithic Refractories/Shapes

Japan, Gamagori
Plant/Research laboratories
Monolithic Refractories/Shapes,
Calcium

Japan, Tokyo
Sales Office
Monolithic Refractories

Mexico, Gomez Palacio

Plant²/Sales Office
Monolithic Refractories

Singapore
Sales Office²

PCC

Spain, Santander
Plant/Sales Office²

Monolithic Refractories

South Africa, Pietermaritzburg

Plant/Sales Office
Monolithic Refractories

South Korea, Seoul
Sales Office²

Monolithic Refractories

South Korea, Yangsan

Plant³

Monolithic Refractories

Turkey, Gebze a
Plant/Research Laboratories
Monolithic Refractories/Shapes/
Application Equipment

Turkey, Istanbul
Administrative Office/Sales
Office
Monolithic Refractories

Turkey, Kutahya
Plant
Monolithic Refractories/Shapes

United Kingdom, Lifford

Plant
PCC, Lime

United Kingdom, Rotherham

Plant/Sales Office
Monolithic Refractories/Shapes

1 This plant is leased to another company.²Leased by the Company. The facilities in Cork, Ireland, are
operated pursuant to a 99-year lease, the term of which commenced in 1963. The
Company's headquarters in New York, New York, are held under a lease which
expires in 2010.³This plant is owned through a joint venture.⁴This plant is held for sale and are included in discontinued
operations.

     The Company believes that its facilities, which are of
varying ages and are of different construction types, have been satisfactorily
maintained, are in good condition, are suitable for the Company's operations and
generally provide sufficient capacity to meet the Company's production
requirements. Based on past loss experience, the Company believes it is
adequately insured with respect to these assets and for liabilities which are
likely to arise from its operations.

Item 3.   Legal Proceedings

     Certain of the Company's subsidiaries are among numerous
defendants in a number of cases seeking damages for exposure to silica or to
asbestos containing materials. The Company has 307 pending silica
cases and 26 pending asbestos cases. To date, 1,158 silica cases and 2 asbestos
cases have been dismissed. One new asbestos case was filed in the fourth quarter
of 2008. Most of these claims do not provide adequate information to assess
their merits, the likelihood that the Company will be found liable, or the
magnitude of such liability, if any. Additional claims of this nature may be
made against the Company or its subsidiaries. At this time management
anticipates that the amount of the Company's liability, if any, and the cost of
defending such claims, will not have a material effect on its financial position
or results of operations.
     The Company has not settled any silica or asbestos
lawsuits to date. We are unable to state an amount or range of amounts claimed
in any of the lawsuits because state court pleading practices do not require
identifying the amount of the claimed damage. The aggregate cost to the Company
for the legal defense of these cases since inception was approximately $0.1
million, the majority of which has been reimbursed by Pfizer Inc pursuant to the
terms of certain agreements entered into in connection with the Company's
initial public offering in 1992. During 2008, agreement was reached with Pfizer
for

10

reimbursement by Pfizer of past costs of defense, and direct
payment of such costs going forward, to the extent these cases allege exposure
to product sold prior to the formation of the Company. During the fourth quarter
of 2008 Pfizer reimbursed the Company in the amount of $0.1 million for past
defense costs. Our experience has been that the Company is not liable to
plaintiffs in any of these lawsuits and the Company does not expect to pay any
settlements or jury verdicts in these lawsuits.

Environmental Matters

     On April 9, 2003, the Connecticut Department of
Environmental Protection ("DEP") issued an administrative consent order relating
to our Canaan, Connecticut, plant where both our Refractories segment and
Specialty Minerals segment have operations. We agreed to the order, which
includes provisions requiring investigation and remediation of contamination
associated with historic use of polychlorinated biphenyls ("PCBs") at a portion
of the site. The following is the present status of the remediation efforts:

•

Building Decontamination. We have completed the
investigation of building contamination and submitted a report
characterizing the contamination. We are awaiting review and approval of
this report by the regulators. Based on the results of this investigation,
we believe that the contamination may be adequately addressed by means of
encapsulation through painting of exposed surfaces, pursuant to the
Environmental Protection Agency's ("EPA") regulations and have accrued such
liabilities as discussed below. However, this conclusion remains uncertain
pending completion of the phased remediation decision process required by
the regulations.

•
Groundwater. We have
completed investigations of potential groundwater contamination and have
submitted a report on the investigations finding that there is no PCB
contamination, but some oil contamination of the groundwater. We expect the
regulators to require confirmatory long term groundwater monitoring at the
site.

•

Soil. We have completed the investigation of soil
contamination and submitted a report characterizing contamination to the
regulators. Based on the results of this investigation, we believe that the
contamination may be left in place and monitored, pursuant to a
site-specific risk assessment, which is underway. However, this conclusion
is subject to completion of a phased remediation decision process required
by applicable regulations.

     We believe that the most likely form of remediation will
be to leave existing contamination in place, encapsulate it, and monitor the
effectiveness of the encapsulation.
     We estimate that the cost of the likely remediation
above would approximate $400,000, and that amount has been recorded as a
liability on our books and records.
     The Company is evaluating options for upgrading the
wastewater treatment facilities at its Adams, Massachusetts, plant. This work is
being undertaken pursuant to an administrative Consent Order issued by the
Massachusetts Department of Environmental Protection on June 18, 2002. The Order
required payment of a civil fine in the amount of $18,500, the investigation of
options for ensuring that the facility's wastewater treatment ponds will not
result in discharge to groundwater, and closure of a historic lime solids
disposal area. The Company informed the Massachusetts Department of
Environmental Protection of proposed improvements to the wastewater treatment
system on June 29, 2007, and is committed to implementing the improvements by
June 1, 2012. Preliminary engineering reviews indicate that the estimated cost
of these upgrades to operate this facility beyond 2012 may be between $6 million
and $8 million. The Company estimates that the remaining remediation costs would
approximate $400,000, which has been accrued as of December 31, 2008.
     The Company and its subsidiaries are not party to any
other material pending legal proceedings, other than routine litigation
incidental to their businesses.

Item 4.   Submission of Matters to a Vote of Security Holders

     No matters were submitted to a vote of security holders
during the fourth quarter of 2008.

PART II

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

     The Company's common stock is traded on the New York
Stock Exchange under the symbol "MTX."
11

     Information on market prices and dividends is set forth
below:

2008 Quarters

First

Second

Third

Fourth

Market Price Range Per Share of Common Stock

High

$

64.74

$

72.42

$

68.38

$

59.36

Low

52.29

62.80

60.73

37.89

Close

61.72

64.65

61.62

40.90

Dividends paid per common share

$

0.05

$

0.05

$

0.05

$

0.05

2007 Quarters

First

Second

Third

Fourth

Market Price Range Per Share of Common Stock

High

$

64.00

$

68.39

$

70.64

$

70.91

Low

56.80

62.58

63.07

63.62

Close

62.16

66.95

67.00

66.95

Dividends paid per common share

$

0.05

$

0.05

$

0.05

$

0.05

Equity Compensation Plan Information

Plan Category

Number of securities to be issued upon exercise of
outstanding options

Weighted average exercise price of outstanding options

Number of securities remaining available for future
issuance

Equity compensation plans
approved by security holders

661,781

$

55.14

435,850

Equity compensation plans not
approved by security holders

--

--

--

            Total

661,781

$

55.14

435,850

Issuer Purchases of Equity Securities

Period

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of the Publicly
Announced

Program

Dollar Value of Shares That May Yet be Purchased Under the
Program

September 29 - October 26

34,000

$

53.25

570,274

$

39,366,824

October 27 - November 23

39,200

$

49.14

609,474

$

37,440,619

November 24 - December 31

6,200

$

44.45

615,674

$

37,165,023

            Total

79,400

$

50.53

     On October 26, 2005, the Company's Board of Directors
authorized the Company's management, at its discretion, to repurchase up to $75
million in additional shares over the next three-year period. As of December 31,
2008, the Company repurchased 1,307,598 shares under this program at an average
price of approximately $57.36 per share. This program was completed in February
2008.
     On October 24, 2007, the Company's Board of Directors
authorized the Company's management to repurchase, at its discretion, up to $75
million of additional shares over the next two-year period. As of December 31,
2008, 615,674 shares have been purchased under this program at an average price
of approximately $61.45 per share.

12

     On January 28, 2009, the Company's Board of Directors
declared a regular quarterly dividend on its common stock of $0.05 per share. No
dividend will be payable unless declared by the Board and unless funds are
legally available for payment thereof.
     On February 6, 2009, the last reported sales price on
the NYSE was $37.66 per share. As of February 6, 2009, there were approximately
194 holders of record of the common stock.
     The following graph compares the cumulative 5-year total
return provided shareholders on Minerals Technologies Inc.'s common stock
relative to the cumulative total returns of the S&P 500 index and the S&P MidCap 400 Materials
Sector index. An investment of $100 (with reinvestment of all dividends) is
assumed to have been made in our common stock and in each of the indices on
12/31/2003 and its relative performance is tracked through 12/31/2008.



     The stock price performance included in this graph is not necessarily
indicative of future stock price performance.

13

     The following graph compares the cumulative 2-year total return provided
shareholders of Minerals Technologies Inc.'s common stock relative to the
cumulative total returns of the S & P 500 index and the S&P MidCap 400 Materials
Sector index. An investment of $100 (with reinvestment of all dividends) is
assumed to have been made in our common stock and in each of the indices on
12/31/2006 and its relative performance is tracked through 12/31/08.

The stock price performance included in this graph is not necessarily
indicative of future stock price performance.

14

Item 6.   Selected Financial Data

Dollars in
Millions, Except Per Share Data

Income
Statement Data:

2008

2007

2006

2005

2004

Net sales

$

1,112.2

$

1,077.7

$

1,023.5

$

956.8

$

889.7

Cost of goods
sold

891.7

845.1

798.7

744.0

676.3

Production margin

220.5

232.6

224.8

212.8

213.4

Marketing and
administrative expenses

101.8

104.6

104.6

98.1

93.0

Research and
development expenses

23.1

26.3

27.8

27.0

26.9

Impairment of
assets

0.2

94.1

--

0.3

--

Restructuring and
other costs

13.4

16.0

--

--

1.1

Acquisition
termination costs

--

--

--

--

1.0

Income (loss)
from operations

82.0

(8.5
)

92.4

87.4

91.4

Non-operating
income (deductions), net

0.3

(3.0
)

(5.9
)

(3.9
)

(4.5
)

Income (loss) before provision for taxes

82.3

(11.5

)

86.5

83.5

86.9

on income,
minority interests and


discontinued
operations

Provision for
taxes on income

24.1

11.3

27.0

25.1

25.1

Minority
interests

3.2

2.9

3.4

1.7

1.7

Income (loss)
from continuing operations

55.0

(25.7
)

56.1

56.7

60.1

Income (loss)
from discontinued operations, net of tax

10.3

(37.8
)

(6.1
)

(3.4
)

(1.5
)

Net income (loss)

$

65.3

$

(63.5
)

$

50.0

$

53.3

$

58.6

Earnings Per
Share

Basic:

Earnings (loss)
per share from continuing operations

$

2.91

$

(1.34
)

$

2.86

$

2.78

$

2.93

Earnings (loss)
per share from discontinued operations

0.54

(1.97
)

(0.31
)

(0.16
)

(0.08
)

     Basic
earnings (loss) per share

$

3.45

$

(3.31
)

$

2.55

$

2.62

$

2.85

Diluted:

Earnings (loss)
per share from continuing operations

$

2.90

$

(1.34
)

$

2.84

$

2.75

$

2.89

Earnings (loss)
per share from discontinued operations

0.54

(1.97
)

(0.31
)

(0.16
)

(0.07
)

     Diluted
earnings (loss) per share

$

3.44

$

(3.31
)

$

2.53

$

2.59

$

2.82

Weighted average
number of common shares outstanding:

       Basic

18,893

19,190

19,600

20,345

20,530

       Diluted

18,983

19,190

19,738

20,567

20,769

Dividends
declared per common share

$

0.20

$

0.20

$

0.20

$

0.20

$

0.20

Balance Sheet
Data:

Working capital

$

380.7

$

306.2

$

199.7

$

145.9

$

242.8

Total assets

1,067.6

1,128.9

1,193.1

1,156.3

1,154.9

Long-term debt

97.2

111.0

113.4

40.3

94.8

Total debt

116.2

127.7

203.1

156.9

128.7

Total
shareholders' equity

711.6

751.2

752.6

771.2

799.3

15

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

Income and Expense Items as a Percentage of Net Sales

Year Ended December 31,

2008

2007

2006

Net sales

100.0
%

100.0
%

100.0
%

Cost of goods sold

80.2

78.4

78.1

Production margin

19.8

21.6

21.9

Marketing and administrative expenses

9.1

9.7

10.2

Research and development expenses

2.1

2.4

2.7

Impairment of assets

--

8.8

--

Restructuring charges

1.2

1.5

--

Income (loss)
from operations

7.4

(0.8)

9.0

Income (loss)
before provision for taxes on income,

minority interests and
discontinued operations

7.4

(1.1)

8.5

Provision for
taxes on income

2.2

1.0

2.7

Minority
interests

0.3

0.3

0.3

Income (loss)
from continuing operations

4.9

(2.4)

5.5

Income (loss)
from discontinued operations

1.0

(3.5)

(0.6)


Net income (loss)

5.9
%

(5.9)
%

4.9
%

Executive Summary

     The Company reported earnings per share of $3.44 in 2008, the highest in
its history, as compared with a loss of $3.31 per share in 2007 when the Company
initiated a major restructuring program. During the first three quarters of
2008, the Company achieved an excellent earnings performance due to the
realization of savings from the restructuring program undertaken in 2007,
increased selling prices to mitigate the effect of escalating raw materials and
energy costs, the favorable effect of foreign exchange and manufacturing cost
savings. In the fourth quarter of 2008, however, the precipitous downturn in the
steel, paper, construction and automotive end markets resulted in a significant
drop in demand for the Company's products. As a result, earnings per share for
the fourth quarter decreased 64 percent from the fourth quarter of 2007 and 69
percent from the third quarter of 2008.
     In response to the downturn in business activity, the Company
established incremental procedures to generate and conserve its cash and reduce
costs by suspending its stock buyback program, curtailing production through
shortened work weeks, and by continuing its intensive expense control and
procurement initiatives. In addition, the Company reallocated its asset
portfolio in its pension plan to preserve capital and reduce exposure to market
risk. The Company also implemented an additional restructuring program to reduce
its workforce by approximately 14% through both layoffs and permanent
reductions. Severance related costs associated with this workforce reduction
were approximately $3.9 million.
     Worldwide net sales for 2008 were $1.112 billion, a three-percent
increase over 2007 sales of $1.078 billion. Foreign exchange had a favorable
impact on sales of $25 million, or 2 percentage points of growth. Income from
operations were $82.0 million in 2008 as compared with a loss of $8.5 million in
the prior year. Included in income from operations in 2008 were restructuring
and impairment charges of $13.6 million. Included in the operating loss of the
prior year were restructuring costs of $16.0 million and impairment of assets
charges of $94.1 million.
    Income from continuing operations was $55.0 million as compared with a
loss of $25.7 million in the prior year due to the restructuring charges. Income
from discontinued operations was $10.3 million in 2008, due primarily to gains
from the sale of four idle facilities previously written down. In 2007, we had a
loss from discontinued operations of $37.8 million primarily due to
restructuring and impairment charges. Net income was $65.3 million as compared
with a loss of $63.5 million in the prior year.
     The Company's balance sheet at December 31, 2008 continues to be very
strong. Cash, cash equivalents and short-term investments at December 31, 2008
was over $190 million. In addition, we have available lines of credit of $156
million, our debt to equity ratio was very low at 14%, and our current ratio was
3.5. Our cashflows from operations were in excess of $134 million in 2008.

16

    We are facing unprecedented uncertainty in the economic environment as a
result of the global financial crisis. However, as a result of the initiatives
we undertook in 2007 to restructure and realign our business, and due to our
strong balance sheet, the Company believes it is in a strong position to manage
through these difficult and uncertain times.
     However, we face some significant risks and challenges
in the future:

•

Our global business could continue to be adversely
affected by decreases in economic activity. U.S. steel production is at its
lowest levels since the mid 1980's at 1.2 million tons per week. Housing
starts are at 24 year lows with the December 2008 annualized rate at 550,000
units and the full year 2008 rate at 900,000 units, as compared to 2.1
million units in 2005. In the automotive industry, light vehicle sales were
down 18% in 2008 and 35% in the fourth quarter of 2008. In the Paper
industry, production levels within the North American and European uncoated
freesheet markets, our most significant market areas, continued to contract
to adjust to reduced demand.

•

The ongoing tightening of credit in the financial markets
could adversely affect the ability of our customers or our suppliers to
obtain financing.

•

The uncertainty in the global economy may also continue
to impact our pension costs. Changes in the fair market value of our pension
assets, rates of return on assets, and discount rates could have a
significant impact on our net periodic pension costs and well as our funding
requirements.

•

Our success depends in part on the performance of the
industries we serve, particularly paper, steel, construction and automotive.
Some of our customers may experience further consolidations and shutdowns or
may face increased liquidity issues, which could deteriorate the aging of
our accounts receivable, increase our bad debt exposure and possibly trigger
impairment of assets.

•

Consolidations in the paper and steel industries
concentrate purchasing power in the hands of fewer customers, increasing
pricing pressure on suppliers such as Minerals Technologies Inc.

•

Most of our Paper PCC sales are subject to long-term
contracts that may be terminated pursuant to their terms, or may be renewed
on terms less favorable to us.

•

Our filler-fiber composite technology continues in
development through customer trials, but has yet to be proven on a long-term
commercial scale.

•

We are subject to volatility in pricing and supply
availability of our key raw materials used in our Paper PCC product line and
Refractory product line. Our ability to recover increased costs is uncertain
and may become more difficult in this economic environment.

•

We continue to rely on China for the majority of our
supply of magnesium oxide in the Refractories segment and may be subject to
uncertainty in availability and cost.

•

The performance of our Processed Minerals and Specialty
PCC product lines are subject to fluctuations in energy costs.

•

As we expand our operations abroad we face the inherent
risks of doing business in many foreign countries, including foreign
exchange risk, import and export restrictions, and security concerns.

     During the third quarter of 2008, Katahdin Paper Company shut down
indefinitely one of its paper machines in Millinocket, Maine, due to increased
energy costs. The Company's satellite PCC facility has also shutdown
indefinitely in conjunction with the paper machine shut down. Katahdin Paper
Company is currently evaluating the possibility of installing a biomass boiler.
If the Millinocket mill does not resume operations, the Company would incur an
impairment of assets charge of approximately $7.0 million.
     The Company will continue to focus on innovation and new
product development and other opportunities for continued growth as follows:

•

Development of the filler-fiber composite program, which
continues to undergo large-scale paper machine trials, to increase the
fill-rate for uncoated freesheet paper.

•

Increasing our sales of PCC for paper by further
penetration of the markets for paper filling at both freesheet and
groundwood mills, particularly in emerging markets.

•

Further expansion of the Company's PCC coating product
line using the satellite model.

•

Leverage the Company's expertise in crystal engineering,
especially in helping papermakers customize PCC morphologies for specific
paper applications.

•

Development of unique calcium carbonates used in the
manufacture of novel biopolymers, a new market opportunity.

•

Rapid deployment of value-added formulations of
refractory materials that not only reduce costs but improve performance.

•

Continuing our penetration in emerging markets through
our manufacturing facilities in China and Turkey, both within the
Refractories segment.

17

     However, there can be no assurance that we will achieve
success in implementing any one or more of these opportunities.

Results of Operations

Sales
(Dollars in millions)

Net Sales

2008

% of Total Sales

Growth

2007

% of Total Sales

Growth

2006

% of Total Sales

U.S.

$

587.5

52.8

%

1
%

$

581.9

54.0
%

(2)
%

$

592.6

57.9
%

International

524.7

47.2

%

6
%

495.8

46.0
%

15
%

430.9

42.1
%

Net sales

$

1,112.2

100.0

%

3
%

$

1,077.7

100.0
%

5
%

$

1,023.5

100.0
%

Paper PCC

$

547.2

49.2

%

1
%

$

542.0

50.3
%

8
%

$

500.6

48.9
%

Specialty PCC

58.5

5.3

%

(3)
%

60.6

5.6
%

7
%

56.4

5.5
%


PCC Products

$

605.7

54.5

%

1
%

$

602.6

55.9
%

8
%

$

557.0

54.4
%

Talc

$

35.9

3.2

%

(4)
%

$

37.3

3.5
%

(4)
%

$

38.9

3.8
%

GCC

74.8

6.7

%

(2)
%

76.7

7.1
%

(4)
%

79.7

7.8
%

Processed Minerals Products

$

110.7

9.9

%

(3)
%

$

114.0

10.6
%

(4)
%

$

118.6

11.6
%

Specialty Minerals Segment

$

716.4

64.4

%

--
%

$

716.6

66.5
%

6
%

$

675.6

66.0
%

Refractory Products

$

320.8

28.9

%

10
%

$

290.5

27.0
%

10
%

$

264.6

25.9
%

Metallurgical
Products

75.0

6.7

%

6
%

70.6

6.5
%

(15)
%

83.3

8.1
%

Refractories Segment

$

395.8

35.6

%

10
%

$

361.1

33.5
%

4
%

$

347.9

34.0
%

Net sales

$

1,112.2

100.0

%

3
%

$

1,077.7

100.0
%

5
%

$

1,023.5

100.0
%

     Worldwide net sales in 2008 increased 3% from the
previous year to $1.112 billion. Foreign exchange had a favorable impact on
sales of $25.0 million or 2 percentage points of growth. Sales in the Specialty
Minerals segment, which includes the PCC and Processed Minerals product lines,
decreased slightly to $716.4 million compared with $716.6 million for the same
period in 2007. Sales in the Refractories segment grew 10% over the previous
year to $395.8 million. In 2007, worldwide net sales increased 5% to $1.078
billion from $1.024 billion in the prior year. Specialty Minerals segment sales
increased approximately 6% and Refractories segment sales increased
approximately 4% in 2007.
     Worldwide net sales of PCC, which is primarily used in
the manufacturing process of the paper industry, increased 1% to $605.7 million
from $602.6 million in the prior year. Foreign exchange had a favorable impact
on sales of approximately $15.6 million or 3 percentage points of growth.
Worldwide net sales of Paper PCC increased 1% to $547.2 million from $542.0
million in the prior year. In the fourth quarter of 2008, production levels
within the North American and European uncoated free sheet markets, our most
significant market areas, continued to contract to adjust to reduced demand and
inventories in reaction to the global economic crisis. Compared to the fourth
quarter of last year, we saw additional machine shutdowns and paper mill
closures, which could only be partially offset by increased volumes from our new
facilities in Thailand and Brazil. As a result, volume declines of 10% occurred
in the fourth quarter which resulted in full year Paper PCC sales volumes
declining by 4% from the prior year. Volume declines partially offset increased
selling prices from the pass through of raw material cost increases and foreign
exchange, resulting in 1% sales growth. Sales of Specialty PCC declined 3% to
$58.5 million from $60.6 million in 2007. This decrease was primarily
attributable to lower volumes.
     Worldwide net sales of PCC increased 8% in 2007 to
$602.6 million from $557.0 million in the prior year. Net sales of Paper PCC
increased 8% to $542.0 million while Paper PCC volumes grew slightly. In 2007,
sales growth was attributable to increased selling prices from the pass through
of raw material cost increases and to foreign currency. Sales of Specialty PCC
grew 7% in 2007 to $60.6 million from $56.4 million in the prior year. This
increase was primarily attributable to improved volumes, particularly in Europe,
and to favorable effects of foreign exchange.
     Net sales of Processed Minerals products in 2008
decreased 3% to $110.7 million from $114.0 million in 2007. GCC products and
talc products decreased 2% and 4% to $74.8 million and $35.9 million,
respectively. The decrease in the Processed Minerals product line was
attributable to further weakness in the residential and commercial construction
markets as well as the automotive market. As a result, volumes have declined 8%
from the prior year.
     Net sales of Processed Minerals products in 2007
decreased 4% to $114.0 million from $118.6 million in 2006. This decrease was
primarily attributable to weakness in the residential construction and
automotive markets.
18

     Net sales in the Refractories segment in 2008 increased
10% to $395.8 million from $361.1 million in the prior year. This segment was
positively affected by increased selling prices necessitated by significant raw
material increases, which more than offset volume declines, and to the favorable
effects of foreign exchange of $9.4 million or 3 percentage points of growth.
Sales of refractory products and systems to steel and other industrial
applications increased 10% to $320.8 million in 2008 from $290.5 million in the
prior year. Volume declined 7% for the full year but were down 27% during the
fourth quarter of 2008. Sales of metallurgical products within the Refractories
segment increased 6% to $75.0 million from $70.6 million in 2007. This increase
was primarily attributable to slightly higher volumes and favorable product mix,
particularly in North America.
     Net sales in the Refractories segment in 2007 increased
4% to $361.1 million from $347.9 million in the prior year. Sales of refractory
products and systems increased 10% to $290.5 million in 2007 from $264.6 million
in the prior year. This growth was attributable to foreign currency and the
Turkish acquisition. Sales of metallurgical products decreased 15% in 2007 to
$70.6 million from $83.3 million in the prior year. This decline was due to
volumes in all regions of the world and lower prices resulting from reduction in
the cost of raw materials for this product that is traditionally passed through
to the customers.
     Net sales in the United States increased approximately
1% to $587.5 million in 2008 and represented approximately 52.8% of consolidated
net sales. International sales increased approximately 6% to $524.7 million, due
primarily to foreign currency.

Operating Costs and
Expenses

(Dollars in millions)

2008

Growth

2007

Growth

2006

Cost of goods sold

$

891.7

6
%

$

845.1

6
%

$

798.7

Marketing and administrative

$

101.8

(3)
%

$

104.6

--
%

$

104.6

Research and development

$

23.1

(13)
%

$

26.3

(5)
%

$

27.8

Impairment of assets

$

0.2

*
%

$

94.1

*
%

$

--

Restructuring charges

$

13.4

(17)
%

$

16.0

*
%

$

--

*     Percentage not meaningful

     Cost of goods sold in 2008 was 80.2% of sales compared
with 78.4% in the prior year. Our cost of goods sold grew 6% compared with 3%
sales growth resulting in a 5% decrease in production margin. In the Specialty
Minerals segment, the production margin decreased 9% as compared with a
relatively flat sales growth. This segment has been affected by increased raw
materials and energy costs, lower volumes in the Processed Minerals product line
and the Paper PCC product line and price concessions in the Paper PCC product
line. This was partially offset by the recovery of raw material costs through
price increases, the benefits of the restructuring program, manufacturing cost
savings initiatives and foreign exchange. In the Refractories segment, the
production margin increased 1% as compared with 10% sales growth. This segment
has been affected by increased raw material costs and lower volumes, partially
offset by price increases, the benefits of the restructuring program, and
foreign exchange.
     Cost of goods sold in 2007 was 78.4% of sales compared
with 78.1% in the prior year. Our cost of goods sold grew 6%, compared with 5%
sales growth resulting in a 3% increase in production margin. In the Specialty
Minerals segment, the production margin increased 5% as compared with 6% sales
growth. This segment has been affected by reduced demand in the Processed
Minerals product line and paper machine and paper mill shutdowns, which were
partially offset by the recovery of raw material costs and the benefit of
foreign currency. In the Refractories segment, the production margin increased
1% as compared with 4% sales growth. This segment has been affected by lower
margins in the metallurgical product line.
     Marketing and administrative costs were $101.8 million
in 2008, a decline of 3% as compared to the prior year, and represented 9.1% of
net sales as compared with 9.7% in the prior year. This reduction was due to the
benefits of the restructuring program and other cost saving initiatives. In
2007, marketing and administrative expenses were the same as the prior year.
     Research and development expenses decreased 13% in 2008
to $23.1 million and represented 2.1% of net sales. This decline was due to cost
savings from the restructuring program as the Company realigned its research and
development structure to effectively bring new developments to market faster. In
2007, research and development expenses decreased 5% to $26.3 million and
represented 2.4% of net sales.
     The Company recorded restructuring charges of $13.4
million in 2008. Approximately $6.8 million related to a SFAS No. 88 pension
settlement loss in our defined benefit plan in the United States. The remainder
of the charges relate to additional provisions for severance and other employee
benefits as part of our restructuring program initiated in 2007, and to an
additional restructuring program initiated in the fourth quarter of 2008
resulting in charges of $3.9 million.
19

     In 2007, the Company initiated a plan to realign its
operations as a result of an in-depth strategic review of all of its operations.
This realignment resulted in impairment of assets charges and restructuring
charges in 2007 as follows:
Impairment of assets charges:

Paper PCC

$

65.3

Specialty PCC

12.7

Total PCC

78.0

Processed Minerals

1.3



Specialty Minerals Segment

79.3

Refractories Segment

14.8

$

94.1

     Restructuring and other costs:

Severance and
other employee benefits

$

13.5

Contract termination costs

1.8

Other exit
costs

0.7

$

16.0

     The restructuring program resulted in a reduction of
over 200 employees.

Income (Loss) from
Operations

(Dollars in millions)

2008

Growth

2007

Growth

2006

Income (loss) from operations

$

82.0

*
%

$

(8.5)

(109)
%

$

92.4

     The Company recorded income from operations in 2008 of
$82.0 million as compared with a loss from operations of $8.5 million in the
prior year. Included in the 2008 income from operations was a restructuring
charge of $13.4 million and impairment of assets charge of $0.2 million. The
loss in the prior year was primarily attributable to the aforementioned
impairment of assets charges and restructuring and other exit costs.
     The Specialty Minerals segment recorded income from
operations in 2008 of $57.0 million as compared with a loss from operations of
$20.0 million in 2007. Included in the prior year loss from operations was an
impairment of assets charge of $79.3 million and restructuring and other exit
costs of $11.3 million.
     The Refractories segment recorded income from operations
of $26.3 million in 2008 as compared with $11.5 million in the prior year.
Included in income from operations in 2008 was a restructuring charge of $5.7
million. Included in income from operations in 2007 was an impairment of assets
charge of $14.8 million and restructuring and other exit costs of $4.7 million.
     In 2007, the Specialty Minerals segment recorded a loss
from operations of $20.0 million as compared with income of $60.5 million in
2006. The Refractories segment recorded operating income in 2007 of $11.5
million as compared with $31.9 million in the previous year.

Non-Operating Income
(Deductions)

(Dollars in millions)

2008

Growth

2007

Growth

2006

Non-operating income (deductions), net

$

0.3

*
%

$

(3.0)

(49)
%

$

(5.9)

     The Company recorded non-operating income of $0.3
million in 2008 as compared with non-operating deductions of $3.0 million in the
prior year. This increase was primarily attributable to lower interest expense
due to lower interest rates and debt levels, higher interest income generated in
connection with increased cash on hand and foreign exchange gains.
     Non-operating deductions decreased 49% in 2007 to $3.0
million from the prior year. This decrease was primarily attributable to an
insurance recovery gain of approximately $3.0 million in 2007, $1.2 million
above the prior year. Additionally, the Company recorded higher interest income
of $1.3 over the prior year as a result of an increase in cash, and cash
equivalents in 2007.
20

Provision for Taxes on
Income

(Dollars in millions)

2008

Growth

2007

Growth

2006

Provision for taxes on income

$

24.1

114

%

$

11.3

(58)
%

$

27.0

     The effective tax rate in 2008 was 29.3%. In 2007, the
Company recorded a provision for income tax of $11.3 million on a loss before
taxes of $11.5 million. This was primarily attributable to the restructuring and
impairment losses recorded in certain jurisdictions in which we were unable to
record a tax benefit.

Minority Interests

(Dollars in millions)

2008

Growth

2007

Growth

2006

Minority interests

$

3.2

10
%

$

2.9

(15)
%

$

3.4

     The increase in the provision for minority interests is
attributable to improved profitability in our joint ventures.
     The decrease in the provision for minority interest in
2007 was primarily related to a reduction in profitability from our consolidated
joint ventures in China.

Income (Loss) from
Continuing Operations

(Dollars in millions)

2008

Growth

2007

Growth

2006

Income (loss) from continuing operations

$

55.0

*
%

$

(25.7)

(146)
%

$

56.1

     The Company recognized income from continuing operations
of $55.0 million in 2008 as compared with a loss of $25.7 million in 2007. The
loss in 2007 was due to the restructuring and impairment of assets charges.
     Income from continuing operations was $56.1 million in
2006.

Income (loss) from
Discontinued Operations

(Dollars in millions)

2008

Growth

2007

Growth

2006

Income (loss) from discontinued operations

$

10.3

*
%

$

(37.8)

(82)
%

$

(6.2)

*  Percentage not meaningful

      The Company recognized income from discontinued
operations in 2008 of $10.3 million as compared with a loss of $37.8 million in
the prior year. Included in the 2008 income from discontinued operations was a
pre-tax gain on sale of idle facilities previously written down of $13.9
million. In 2007, the loss from discontinued operations included pre-tax
impairment of asset charges of $46.9 million and restructuring and other exit
costs of $2.3 million. In 2006, the loss from discontinued operations included
foreign currency translation losses of $1.6 million recognized upon liquidation
of the Company's investment in Israel.
    In 2007, the Company reflected in discontinued operations
its Synsil^® product line and its two plants in the Midwest that
process imported ores. In 2006, the Company liquidated its wholly-owned
subsidiary in Hadera, Israel, and classified such business as discontinued
operations.

Net Income (Loss)

(Dollars in millions)

2008

Growth

2007

Growth

2006

Net income (loss)

$

65.3

*
%

$

(63.5)

(227)
%

$

50.0

     The Company recorded net income of $65.3 million in 2008
as compared with a net loss of $63.5 million in 2007. The loss in 2007 was
attributable to impairment of assets and restructuring charges in both
continuing operations and discontinued operations.
     The Company recorded net income of $50.0 million in
2006.
21

Outlook

     Looking forward, we remain concerned about the current
state of the global economy and the impact it will have on our product lines.
U.S. and global economic conditions worsened significantly in the last quarter
of 2008. The stress caused to international credit markets, initially driven in
large part by the devaluation of risky U.S. sub-prime debt, led to a dramatic
tightening in liquidity. The U.S. and foreign governments have responded with
several initiatives to alleviate the strain on the financial markets. While
these programs have had some positive effects on financial systems, credit
remains tight and economic conditions in the U.S. and globally have continued to
deteriorate. Both industrial production and consumer spending have fallen
sharply in the last half of 2008. As a result, we are presently experiencing
weakness in all of the industries we serve -- paper, steel, construction and
automotive. Steel production worldwide experienced steep declines in the fourth
quarter of 2008 and there were several paper machine shutdowns that affected our
satellite PCC product line as the paper industry continues to consolidate and
rationalize capacity. In addition, there is further deterioration in the
residential and commercial construction and automotive markets, which is
affecting our Processed Minerals product line. There is no clear indication as
to when global economic conditions will improve.
     However, as a result of the realigning and restructuring
of our operations in 2007, we strengthened the basic foundation of our
businesses. Therefore, we are in a better position to effectively manage through
these difficult economic times.
     The Company initiated the following actions in response
to the uncertainties in the global economy:

•

Intensified monitoring and review processes around
customers, suppliers and banking partners.

•

Established additional cash conservation strategies.

•

Suspended stock buyback program.

•

Reallocated our pension assets to conserve value.

•

Shortened work weeks.

•

Significantly reduced overtime.

•

Continued our intensive expense control initiatives.

•

Initiated an additional restructuring program with both
permanent reductions and layoffs.

     In 2009, we plan to focus on the following growth strategies:

•
Continue development and
potential commercial introduction of filler-fiber composite technology for
the paper industry to increase the fill-rates of uncoated freesheet paper.

•
Increase market penetration
of PCC for paper filling at both freesheet and groundwood mills,
particularly in emerging markets.

•
Further expansion of the
Company's PCC coating product line using the satellite model.

•
Emphasize higher value
specialty products and application systems to increase market penetration in
the Refractories segment.

•
Expand regionally into
emerging markets, particularly to China and Eastern Europe.

•
Development of unique calcium
carbonates used in the manufacture of biopolymers, a new market opportunity.

•
Continue to improve our cost
competitiveness in all product lines.

•
Explore selective
acquisitions to complement our existing businesses.

     However, there can be no assurances that we will achieve success in
implementing any one or more of these strategies.
     As we continue to expand our operations overseas, we
face the inherent risks of doing business abroad, including inflation,
fluctuations in interest rates and currency exchange rates, changes in
applicable laws and regulatory requirements, export and import restrictions,
tariffs, nationalization, expropriation, limits on repatriation of funds, civil
unrest, terrorism, unstable governments and legal systems and other factors.
Some of our operations are located in areas that have experienced political or
economic instability, including Indonesia, Brazil, Thailand, China and South
Africa. In addition, our performance depends to some extent on that of the
industries we serve, particularly the paper manufacturing, steel manufacturing,
and construction industries.
     Our sales of PCC are predominantly pursuant to long-term
evergreen contracts, initially about ten years in length, with paper companies
at whose mills we operate satellite PCC plants. The terms of many of these
agreements have been extended, generally in connection with an expansion of the
satellite PCC plant. Failure of a number of our customers to renew existing
22

agreements on terms as favorable to us as those currently in effect
could cause our future sales growth rate to differ materially from our
historical growth rate and, if not renewed, could also result in impairment of
the assets associated with the PCC plant.

Liquidity and Capital Resources

     Cash flows provided from operations in 2008 were used
principally to fund $31.0 million of capital expenditures, to repay long-term
debt of $17.1 million and to repurchase $45.3 million of common shares for
treasury. Cash provided from operating activities totaled $134.2 million in 2008
as compared with $179.7 million in 2007. The decrease in cash from operating
activities was primarily due to an increase in working capital and a decrease in
pension funding, as compared to the prior year. This increase primarily relates
to increased inventory levels as compared with December 2007. Early in 2008, the
Company accelerated purchases of higher priced raw materials imported from China
to avoid potential supply interruptions. Additionally, lower volumes in the
fourth quarter of 2008 affected inventory balances at December 31, 2008. As a
result, days of inventory on hand increased to 88 days from 71 days in the prior
year. Included in cash flow from operations was pension plan funding of
approximately $3.2 million, $24.1 million and $22.3 million for the years ended
December 31, 2008, 2007 and 2006, respectively.
     As a result of the market decline, the Company
reallocated its asset portfolio in its pension plan to fixed income securities
to prevent potential further declines in pension assets. The Company's pension
plans are over 95% funded, and presently there are no minimum funding
requirements necessary. The Company expects its net periodic pension expense to
increase significantly in 2009 as a result of a lower asset base and
amortization of unrealized losses on its investment assets due to market
conditions.
     On October 26, 2005, our Company's Board of Directors
authorized the Company's management, at its discretion, to repurchase up to $75
million in additional shares over the next three-year period. The Company
completed this program in February 2008 and repurchased 1,307,598 shares under
this program at an average price of approximately $57.36 per share.
     On October 24, 2007, the Company's Board of Directors
authorized the Company's management to repurchase, at its discretion, up to $75
million of additional shares over the next two-year period. As of December 31,
2008, 615,674 shares have been repurchased under this program at an average
price of a proximately $61.45 per share.
     On January 28, 2009, our Board of Directors declared a
regular quarterly dividend on our common stock of $0.05 per share. No dividend
will be payable unless declared by the Board and unless funds are legally
available for payment.
     We have $169.8 million in uncommitted short-term bank
credit lines, of which $13.4 million was in use at December 31, 2008. At the
present time, we have no indication that the financial institutions would be
unable to commit to these lines of credit should the need arise. We anticipate
that capital expenditures for 2009 should approximate $60 million, principally
related to the construction of PCC plants and other opportunities that meet our
strategic growth objectives. We expect to meet our other long-term financing
requirements from internally generated funds, uncommitted bank credit lines and,
where appropriate, project financing of certain satellite plants. The aggregate
maturities of long-term debt are as follows: 2009 - $4.0 million; 2010 - $4.6
million; 2011 - $-- million; 2012 - $8.0 million; 2013 - $-- million; thereafter
- $84.6 million.
     The Company's debt to capital ratio is 14%, which is
well below the financial covenant ratio in its debt agreements.
     The Company has contingent obligations associated with
unrecognized tax benefits, including interest and penalties, of approximately
$10.9 million.

Critical Accounting Policies

     Our discussion and analysis of our financial condition
and results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with U.S. generally accepted accounting
principles. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities.
     On an ongoing basis, we evaluate our estimates and
assumptions, including those related to revenue recognition, allowance for
doubtful accounts, valuation of inventories, valuation of long-term assets,
goodwill and other intangible assets, pension plan assumptions, income taxes,
asset retirement obligations, income tax valuation allowances, stock-based
compensation, and litigation and environmental liabilities. We base our
estimates on historical experience and on other assumptions that we believe to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that can
not readily be determined from other sources. There can be no assurance that
actual results will not differ from those estimates.

23

     We believe the following critical accounting policies
require us to make significant judgments and estimates in the preparation of our
consolidated financial statements:

•

Revenue recognition: Revenue from sale of products is
recognized at the time the goods are shipped and title passes to the
customer. In most of our PCC contracts, the price per ton is based upon the
total number of tons sold to the customer during the year. Under those
contracts, the price billed to the customer for shipments during the year is
based on periodic estimates of the total annual volume that will be sold to
the customer. Revenues are adjusted at the end of each year to reflect the
actual volume sold. There were no significant revenue adjustments in the
fourth quarter of 2008 and 2007, respectively. We have consignment
arrangements with certain customers in our Refractories segment. Revenues
for these transactions are recorded when the consigned products are consumed
by the customer. Revenues from sales of equipment are recorded upon
completion of installation and receipt of customer acceptance. Revenues from
services are recorded when the services are performed.

•

Allowance for doubtful accounts: Substantially all of our
accounts receivable are due from companies in the paper, construction and
steel industries. Accounts receivable are reduced by an allowance for
amounts that may become uncollectible in the future. Such allowance is
established through a charge to the provision for bad debt expenses. We
recorded bad debt expenses (recoveries) of $0.2 million, $(0.1) million and
$0.4 million in 2008, 2007 and 2006, respectively. In addition to specific
allowances established for bankrupt customers, we also analyze the
collection history and financial condition of our other customers
considering current industry conditions and determine whether an allowance
needs to be established or adjusted.

•

Property, plant and equipment, goodwill, intangible and
other long-lived assets: Property, plant and equipment are depreciated over
their useful lives. Useful lives are based on management's estimates of the
period that the assets can generate revenue, which does not necessarily
coincide with the remaining term of a customer's contractual obligation to
purchase products made using those assets. Our sales of PCC are
predominately pursuant to long-term evergreen contracts, initially ten years
in length, with paper mills at which we operate satellite PCC plants. The
terms of many of these agreements have been extended, often in connection
with an expansion of the satellite PCC plant. Failure of a PCC customer to
renew an agreement or continue to purchase PCC from our facility could
result in an impairment of assets or accelerated depreciation at such
facility.

•

Valuation of long-lived assets, goodwill and other
intangible assets: We assess the possible impairment of long-lived assets
and identifiable amortizable intangibles whenever events or changes in
circumstances indicate that the carrying value may not be recoverable.
Goodwill and other intangible assets with indefinite lives are reviewed for
impairment at least annually in accordance with the provisions of SFAS No.
142. Factors we consider important that could trigger an impairment review
include the following:

•

significant under-performance relative to historical or
projected future operating results;

•

significant changes in the manner of use of the acquired
assets or the strategy for the overall business;

•

significant negative industry or economic trends;

•

market capitalization below invested capital.

     When we determine that the carrying value of
intangibles, long-lived assets or goodwill may not be recoverable based upon
the existence of one or more of the above indicators of impairment, we
principally measure any impairment by our ability to recover the carrying
amount of the assets from expected future operating cash flow on a discounted
basis. Net intangible assets, long-lived assets, and goodwill amounted to
$507.7 million as of December 31, 2008.
      The Company conducts its goodwill impairment testing
in accordance with SFAS 142 for each Reporting Unit as of the beginning of the
fourth quarter with the assistance of valuation experts. SFAS 142 specifies a
two-step process for testing of goodwill impairment and measuring the
magnitude of any impairment. Step One involves a) developing the fair value of
total invested capital of each Reporting Unit in which goodwill is assigned;
and b) comparing the fair value of total invested capital for each Reporting
Unit to its carrying amount, to determine if there is goodwill impairment.
Should the carrying amount for a Reporting Unit exceed its fair value, then
the Step One test is failed, and the magnitude of any goodwill impairment is
determined under Step Two. The Step Two used to measure the amount of
impairment loss, compares the implied fair value of Reporting Unit goodwill
with the carrying amount of goodwill.
     The Company has three reporting units, PCC, Processed
Minerals and Refractories. The Company performs its valuation utilizing two
approaches to analyze and estimate value. These are the income approach and
the market approach. The income approach incorporates the discounted cash flow
method and focuses on the expected cash flow of the Reporting Unit. A number
of assumptions and estimates are involved in the application of the income
approach to forecast operating cash flows, including sales volumes and prices,
cost of sales, working capital, capital spending and discount rates. We
assumed minimal sales growth for 2009. Our sales growth assumptions longer
term ranged from 5% to 8%, which is consistent with our historical trends. We
also utilized a discount rate of 11% for each reporting unit and, in addition,
incorporated a company specific risk premium of 4% to adjust for the recent
economic conditions. The market approach utilizes two methodologies, the
Guideline Company Method and the Similar Transactions Method. The
24

Guideline Company Method focuses on comparing the Reporting
Units' risk profile and growth prospects to selected similar publicly-traded companies. The Similar Transactions
Method considers prices paid in recent transactions in the Reporting Unit's
industry or related industries.
     In 2008, the estimated fair value of each Reporting
Unit was in excess of each respective carrying value, resulting in no
impairment of goodwill.
     The impairment testing involves the use of accounting
estimates and assumptions, changes which could materially impact our financial
condition or operating performance if actual results differ from such
estimates and assumptions.

•

Accounting for income taxes: As part of the process of
preparing our consolidated financial statements, we are required to estimate
our income taxes in each of the jurisdictions in which we operate. This
process involves estimating current tax expense together with assessing
temporary differences resulting from differing treatments of items for tax
and accounting purposes. These differences result in deferred tax assets and
liabilities, which are included in the consolidated balance sheet. We must
then assess the likelihood that our deferred tax assets will be recovered
from future taxable income, and to the extent we believe that recovery is
not likely, we must establish a valuation allowance. To the extent we
establish a valuation allowance or increase this allowance in a period, we
must include an expense within the tax provision in the Consolidated
Statements of Operations.

The Company accounts for uncertain tax positions in
accordance with FASB Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" ("FIN 48"), an interpretation of FASB Statement No. 109 ("SFAS
109"). The application of income tax law is inherently complex. Laws and
regulations in this area are voluminous and are often ambiguous. As such, we
are required to make many subjective assumptions and judgments regarding our
income tax exposures. Interpretations of and guidance surrounding income tax
laws and regulations change over time. As such, changes in our subjective
assumptions and judgments can materially affect amounts recognized in the
consolidated balance sheets and statements of operations. See Note 5 to the
condensed consolidated financial statements, "Income Taxes," for additional
detail on our uncertain tax positions.

•

Pension Benefits: We sponsor pension and other retirement
plans in various forms covering the majority of employees who meet
eligibility requirements. Several statistical and actuarial models which
attempt to estimate future events are used in calculating the expense and
liability related to the plans. These models include assumptions about the
discount rate, expected return on plan assets and rate of future
compensation increases as determined by us, within certain guidelines. Our
assumptions reflect our historical experience and management's best judgment
regarding future expectations. In addition, our actuarial consultants also
use subjective factors such as withdrawal and mortality rates to estimate
these assumptions. The actuarial assumptions used by us may differ
materially from actual results due to changing market and economic
conditions, higher or lower withdrawal rates or longer or shorter life spans
of participants, among other things. Differences from these assumptions may
result in a significant impact to the amount of pension expense/liability
recorded by us follows:

     A one percentage point change in our major assumptions
would have the following effects.

Effect on Expense

(millions of dollars)

Discount Rate

Salary

Scale

Return on Asset

1% increase

$

(2.7)

$

0.4

$

(1.6)

1% decrease

$

2.8

$

(0.4)

$

1.6

Effect on Projected Benefit Obligation

(millions of dollars)

Discount Rate

Salary

Scale

1% increase

$

(21.9)

$

1.9

1% decrease

$

21.9

$

(1.9)

•

Asset Retirement Obligations: We currently record the
obligation for estimated asset retirement costs at a fair value in the
period incurred. Factors such as expected costs and expected timing of
settlement can affect the fair value of the obligations. A revision to the
estimated costs or expected timing of settlement could result in an increase
or decrease in the total obligation which would change the amount of
amortization and accretion expense recognized in earnings over time.
A one-percent increase or decrease in the discount rate
would change the total obligation by approximately $0.1 million.

26

A one-percent increase or decrease in the inflation rate
would change the total obligation by approximately $0.3 million.

•

The Company's accounts for stock-based compensation
expense under the provisions of SFAS No. 123R.
The Company uses the Black-Scholes option pricing model
to determine the fair value of stock options on their date of grant. This
model is based upon assumptions relating to the volatility of the stock
price, the life of the option, risk-free interest rate and dividend yield.
Of these, stock price volatility and option life require greater levels of
judgment and are therefore critical accounting estimates.
We used a stock price volatility assumption based upon
the historical and implied volatility of the Company's stock. We believe
this is a good indicator of future, actual and implied volatilities. For
stock options granted in the period ended December 31, 2008, the Company
used a volatility assumption of 25.20%.
The expected life calculation was based upon the observed
and expected time to post-vesting forfeiture and exercise. For stock options
granted during the fiscal year ended December 31, 2007, the Company used a
6.3 year life assumption.
The Company believes the above critical estimates are
based upon outcomes most likely to occur, however, were we to simultaneously
increase or decrease the option life by one year and the volatility by 100
basis points, recognized compensation expense would have changed
approximately $0.1 million in either direction for the year ended December
31, 2008.

     For a detailed discussion on the application of these
and other accounting policies, see "Summary of Significant Accounting Policies"
in the "Notes to the Consolidated Financial Statements" in Item 15 of this
report, beginning on page F-6. This discussion and analysis should be read in
conjunction with the consolidated financial statements and related notes
included elsewhere in this report.

Prospective Information and Factors That May Affect Future
Results

     The SEC encourages companies to disclose forward-looking
information so that investors can better understand companies' future prospects
and make informed investment decisions. This report may contain forward-looking
statements that set our anticipated results based on management's plans and
assumptions. Words such as "expects," "plans," "anticipates," and words and
terms of similar substance, used in connection with any discussion of future
operating or financial performance identify these forward-looking statements.
     We cannot guarantee that the outcomes suggested in any
forward-looking statement will be realized, although we believe we have been
prudent in our plans and assumptions. Achievement of future results is subject
to risks, uncertainties and the accuracy of assumptions. Should known or unknown
risks or uncertainties materialize, or should underlying assumptions prove
inaccurate, actual results could vary materially from those anticipated,
estimated or projected. Investors should bear this in mind as they consider
forward-looking statements and should refer to the discussion of certain risks,
uncertainties and assumptions in Item 1A, "Risk Factors."

Inflation

     Historically, inflation has not had a material adverse
effect on us. However, in recent years both business segments have been affected
by rapidly rising raw material and energy costs. The Company and its customers
will typically negotiate reasonable price adjustments in order to recover a
portion of these rapidly escalating costs. As the contracts pursuant to which we
construct and operate our satellite PCC plants generally adjust pricing to
reflect increases in costs resulting from inflation, there is a time lag before
such price adjustments can be implemented.

Cyclical Nature of Customers' Businesses

     The bulk of our sales are to customers in the paper
manufacturing, steel manufacturing and construction industries, which have
historically been cyclical. The pricing structure of some of our long-term PCC
contracts makes our PCC business less sensitive to declines in the quantity of
product purchased. However, we cannot predict the economic outlook in the
countries in which we do business, nor in the key industries we serve.
26

Recently Issued Accounting Standards

     In December 2008, The FASB issued FSP FAS 132(R)
- 1,
"Employer's Disclosure about Postretirement Benefit Plan Assets" which will
require more detailed disclosures about employers' pension plan assets. New
disclosure requirement will require additional information regarding investment
strategies, major categories of plan assets, concentrations of risk within plan
assets and valuation techniques used to measure the fair value of plan assets.
This new standard amends disclosure requirements only for periods ended after
December 15, 2009.
     In March 2008, the FASB issued Statement of Financial
Accounting Standards No. 161, "Disclosures About Derivative Instruments and
Hedging Activities - an amendment of FASB Statement No. 133." This statement
amends the disclosure requirements under SFAS 133 and requires companies with
derivative instruments to provide enhanced disclosures that would enable
financial statement users to understand how derivative instruments affect a
company's financial position, financial performance and cash flows. This
statement is effective for fiscal years beginning on or after November 15, 2008,
with early adoption encouraged. The Company will adopt this pronouncement as of
January 1, 2009.
     In February 2008, the FASB issued FSP FAS 157-1,
"Application of FASB No. 157 to FASB Statement No. 13 and Other Accounting
Pronouncements that Address Fair Value Measurements for Purposes of Lease
Classification or Measurement under Statement 13" and FSP FAS 157-2, "Effective
Date of FASB Statement No. 157." FSP 157-1 excludes fair measurements for
purposes of lease classification or measurement under FASB Statement 13 from the
fair value measurement under FASB Statement 157. FSP 157-2 defers the effective
date of Statement 157 for certain non-financial assets and non-financial
liabilities to fiscal years beginning after November 15, 2008.
     In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141 (revised 2007), "Business Combinations" ("Statement
No. 141(R)"). Statement No. 141(R) changes the requirements for an acquirer's
recognition and measurement of the assets acquired and the liabilities assumed
in a business combination. Statement No. 141(R) is effective for annual periods
beginning after December 15, 2008 and should be applied prospectively for all
business combinations entered into after the date of adoption.
     In December 2007, the FASB issued Financial Accounting
Standards No. 160, "Noncontrolling Interests in Consolidated Financial
Statements - an amendment of ARB No. 51" ("Statement No. 160"). Statement No.
160 requires (i) that noncontrolling (minority) interests be reported as a
component of shareholders' equity, (ii) that net income attributable to the
parent and to the noncontrolling interest be separately identified in the
consolidated statement of operations, (iii) that changes in a parent's ownership
interest while the parent retains its controlling interest be accounted for as
equity transactions, (iv) that any retained noncontrolling equity investment
upon the deconsolidation of a subsidiary be initially measured at fair value,
and (v) that sufficient disclosures are provided that clearly identify and
distinguish between the interests of the parent and the interests of the
noncontrolling owners. Statement No. 160 is effective for annual periods
beginning after December 15, 2008 and should be applied prospectively. However,
the presentation and disclosure requirements of the statement shall be applied
retrospectively for all periods presented. The adoption of the provisions of
Statement No. 160 is not anticipated to materially impact the Company's
consolidated financial position and results of operations.

Item 7A.  Quantitative and Qualitative Disclosures about
Market Risk

     Market risk represents the risk of loss that may impact
our financial position, results of operations or cash flows due to adverse
changes in market prices and foreign currency and interest rates. We are exposed
to market risk because of changes in foreign currency exchange rates as measured
against the U.S. dollar. We do not anticipate that near-term changes in exchange
rates will have a material impact on our future earnings or cash flows. However,
there can be no assurance that a sudden and significant change in the value of
foreign currencies would not have a material adverse effect on our financial
condition and results of operations. Approximately 55% of our bank debt bears
interest at variable rates; therefore our results of operations would only be
affected by interest rate changes to such bank debt outstanding. An immediate
10% change in interest rates would not have a material effect on our results of
operations over the next fiscal year.
     We do not enter into derivatives or other financial
instruments for trading or speculative purposes. When appropriate, we enter into
derivative financial instruments, such as forward exchange contracts and
interest rate swaps, to mitigate the impact of foreign exchange rate movements
and interest rate movements on our operating results. The counterparties are
major financial institutions. Such forward exchange contracts and interest rate
swaps would not subject us to additional risk from exchange rate or interest
rate movements because gains and losses on these contracts would offset losses
and gains on the assets, liabilities, and transactions being hedged. We had open
forward exchange contracts to purchase approximately $6.4 million and $5.3
million of foreign currencies as of December 31, 2008 and 2007, respectively.
These contracts mature between January and July of 2009. The fair value of these
instruments at December 31, 2008 and December 31, 2007 was a liability of $0.4
million and $0.1 million, respectively.
27

     In 2008, the Company entered into forward contracts to
purchase 30 million Euros as a hedge of its net investment in Europe. These
contracts mature in October 2013. The fair value of these instruments at
December 31, 2008 was an asset of $2.1 million.

Item 8.   Financial Statements and Supplementary Data

     The financial information required by Item 8 is
contained in Item 15 of Part IV of this report.

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

     None.

Item 9A.  Controls and Procedures

Disclosure Controls and Procedures

     The Company's management, under the supervision and with
the participation of the Company's Chief Executive Officer and Chief Financial
Officer, carried out an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures as of the end of
the period covered by this report pursuant to Exchange Act Rule 13a -15. The
Company's disclosure controls and procedures are designed to ensure that
information required to be disclosed is recorded, processed, summarized and
reported within the time periods specified in SEC rules and forms. Based upon
this evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures (as defined in
Rules 13(a)-15(b) under the Securities Exchange Act of 1934) were effective in
ensuring that material information required to be disclosed by the Company in
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported on a timely basis.
     Pursuant to Section 404 of the Sarbanes-Oxley Act of
2002, we have included a report of management's assessment of the design and
operating effectiveness of our internal controls as part of this report.
Management's report is included in our consolidated financial statements
beginning on page F-1 of this report under the caption entitled "Management's
Report on Internal Control Over Financial Reporting."
     The Company is in the process of implementing a global
enterprise resource planning ("ERP") system to manage our business operations.
As of December 31, 2008, all of our domestic locations were using the new
systems. The worldwide implementation is expected to be completed over the next
few years and involves changes in systems that include internal controls.
Although the transition has proceeded to date without material adverse effects,
the possibility exists that the migration to the new ERP system could adversely
affect the Company's disclosure controls and procedures or our results of
operations in future periods. We are reviewing each system as it is being
implemented and the controls affected by the implementation of the new systems,
and are making appropriate changes to affected internal controls as we implement
the new systems. We believe that the controls as modified are appropriate and
functioning effectively.

Changes in Internal Control Over Financial Reporting

     There was no change in the Company's internal control
over financial reporting during the most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

Item 9B.  Other Information

     None.

28

PART III

Item 10.  Directors, Executive Officers and Corporate Governance

     Set forth below are the names and ages of all Executive Officers of the
Registrant indicating all positions and offices with the Registrant held by each
such person, and each such person's principal occupations or employment during
the past five years.

Name

Age

Position

Joseph C. Muscari

62

Chairman of the Board and Chief
Executive Officer

D. Randy Harrison

57

Senior Vice President,
Organization and Human Resources

D.J. Monagle, III

46

Senior Vice President and
Managing Director, Paper PCC

John A. Sorel

61

Senior Vice President, Finance,
and Chief Financial Officer

William J.S. Wilkins

52

Senior Vice President and
Managing Director, Minteq International

Michael A. Cipolla

51

Vice President, Corporate
Controller and Chief Accounting Officer

Douglas T. Dietrich

39

Vice President, Corporate
Development and Treasury

Kirk G. Forrest

57

Vice President, General Counsel
and Secretary

William A. Kromberg

63

Vice President, Taxes

Douglas W. Mayger

51

Vice President and Managing
Director, Performance Minerals

     Joseph C. Muscari was elected Chairman of the Board and
Chief Executive Officer effective March 1, 2007. Prior to that he was Executive
Vice President and Chief Financial Officer of Alcoa Inc. He has served as a
member of the Board of Directors since 2005.
     D. Randy Harrison was elected Senior Vice President,
Organization and Human Resources effective January 1, 2008. Prior to that he had
been Vice President and Managing Director, Performance Minerals since January
2002.
     D.J. Monagle, III was elected Senior Vice President and
Managing Director, Paper PCC, effective October 1, 2008. Prior to that he had
been appointed to Vice President and Managing Director - Performance Minerals,
in November 2007. He joined the Company in January of 2003 and held positions of
increasing responsibility including Vice President, Americas, Paper PCC and
Global Marketing Director, Paper PCC.
     John A. Sorel was elected Senior Vice President, Finance
and Chief Financial Officer in November 2002. Prior to that time he was elected
Senior Vice President, Corporate Development and Finance on January 1, 2002 and
prior to 2002 he held positions of increasing authority with the Company, most
recently Vice President and Managing Director, Paper PCC.
     William J.S. Wilkins was elected Senior Vice President
and Managing Director, Minteq International in November 2007. He joined the
Company in June 2007 as Vice President, Global Supply Chain and Logistics. Prior
to that he had founded Management Services, a consulting firm. Before starting
his consultancy, he was President and Chief Executive Officer of Sermatech
International Inc.; Vice President and Chief Financial Officer of the Teleflex
Aerospace Group; and head of finance and administration at Howmet Castings, a
business unit of Alcoa, which he joined in 1994.
     Michael A. Cipolla was elected Vice President, Corporate
Controller and Chief Accounting Officer in July 2003. Prior to that he served as
Corporate Controller and Chief Accounting Officer of the Company since 1998.
From 1992 to 1998 he served as Assistant Corporate Controller.
     Douglas T. Dietrich was elected Vice President,
Corporate Development and Treasury effective August 2007. Prior to that he had
been Vice President, Alcoa Wheel Products since 2006 and President, Latin
America Extrusions and Global Rod and Bar Products since 2002.
     Kirk G. Forrest was elected Vice President, General
Counsel and Secretary effective January 26, 2005. Prior to that, Mr. Forrest had
been Vice President and General Counsel at SAM'S CLUB, and a Corporate Vice
President of its parent company, Wal-Mart Stores, Inc. and Associate General
Counsel at The Williams Companies, which he joined in 1998.
     William A. Kromberg has served as Vice President, Taxes
of the Company since 1993.
     Doug Mayger was elected Vice President and Managing
Director, Performance Minerals which encompasses the Processed Minerals product
line and the Specialty PCC product line, effective October 1, 2008. Prior to
that he was General Manager- Carbonates West, Performance Minerals and Business
Manager - Western Region. Prior to joining the Company as plant manager in
Lucerne Valley in 2002, he served as Vice President of Operations for Aggregate
Industries.
29

     The information concerning the Company's Board of
Directors required by this item is incorporated herein by reference to the
Company's Proxy Statement, under the caption "Committees of the Board of
Directors."
     The information regarding compliance with Section 16(a)
of the Securities Exchange Act of 1934 required by this Item is incorporated
herein by reference to the Company's Proxy Statement, under the caption "Section
16(a) Beneficial Ownership Reporting Compliance."
     The Board has established a code of ethics for the Chief
Executive Officer, the Chief Financial Officer, and the Chief Accounting Officer
entitled "Code of Ethics for the Senior Financial Officers," which is available
on our website, www.mineralstech.com, under the links entitled "Corporate
Responsibility, Corporate Governance and Policies and Charters."

Item 11.  Executive Compensation

     The information appearing in the Company's Proxy
Statement under the caption "Compensation of Executive Officers" is incorporated
herein by reference.

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

     The information appearing in the Company's Proxy
Statement under the caption "Security Ownership of Certain Beneficial Owners and
Management and Related Stockholders Matters as of January 31, 2008" is
incorporated herein by reference.

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

     The information appearing in the Company's Proxy
Statement under the caption "Certain Relationships and Related Transactions" is
incorporated herein by reference.
     Under the terms of certain agreements entered into in connection with
the Company's initial public offering in 1992, Pfizer Inc ("Pfizer") and its
wholly-owned subsidiary Quigley Company, Inc. ("Quigley") agreed to indemnify
the company against certain liabilities being retained by Pfizer and its
subsidiaries including, but not limited to, pending lawsuits and claims, and any
lawsuits or claims brought at any time in the future alleging damages or injury
from the use, handling of or exposure to any product sold by Pfizer's specialty
minerals business prior to the closing of the initial public offering. During
2008, agreement was reached with Pfizer providing for reimbursement by Pfizer of
past costs of defense, and direct payment of such costs going forward, for cases
alleging damages from exposure to product sold prior to the formation of the
Company. During the fourth quarter, Pfizer reimbursed the Company in the amount
of $0.1 million for past defense costs.
     Pfizer and Quigley also agreed to indemnify the Company
against any liability arising from claims for remediation, as defined in the
Agreement, of on-site environmental conditions relating to activities prior to
the closing of the initial public offering. Further, Pfizer and Quigley agreed
to indemnify the Company for 50% of the liabilities in excess of $1 million up
to $10 million in liabilities that may have arisen or accrued within ten years
after the closing of the initial public offering with respect to such
remediation of on-site conditions. The Company is responsible for the first $1
million of such liabilities, 50% of all such liabilities in excess of $1 million
up to $10 million, and all such liabilities in excess of $10 million. The
Company had asserted to Pfizer and Quigley a number of indemnification claims
pursuant to this agreement during the ten-year period following the closing of
the initial public offering. On January 30, 2006, Pfizer and the Company agreed
to settle those claims, along with certain other potential environmental
liabilities of Pfizer, in consideration of a payment by Pfizer of $4.5 million.
Such payment was recorded as additional paid-in capital, net of its related tax
effect.
     The Board has established Corporate Governance
principles which include guidelines for determining Director independence, which
is available on our website, www.mineralstech.com, under the links entitled
"Corporate Responsibility, Corporate Governance and Policies and Charters."

Item 14.  Principal Accountant Fees and Services

     The information appearing in the Company's Proxy
Statement under the caption "Principal Accountant Fees and Services" is
incorporated herein by reference.

30

PART IV

Item 15.  Exhibits and Financial Statement Schedules

(a)  The following documents are filed as part of this
report:

1.

Financial Statements. The following Consolidated
Financial Statements of Mineral Technologies Inc. and subsidiary companies
and Reports of Independent Registered Public Accounting Firm are set forth
on pages F-2 to F-35.

Consolidated Balance Sheets as of December 31, 2008 and
2007

Consolidated Statements of Operations for the years ended
December 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows for the years ended
December 31, 2008, 2007 and 2006

Consolidated Statements of Shareholders' Equity for the
years ended December 31, 2008, 2007 and 2006

Notes to the Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

Management's Report on Internal Control Over Financial
Reporting

2.

Financial Statement Schedule. The following financial
statement schedule is filed as part of this report:

Page

Schedule II -

Valuation and Qualifying Accounts

S-1

     All other schedules for which provision is made in
the applicable accounting regulations of the SEC are not required under the
related instructions or are inapplicable and, therefore, have been omitted.

3.

Exhibits. The following exhibits are filed as part of, or
incorporated by reference into, this report.

3.1

-

Restated Certificate of Incorporation of the Company (1)

3.2

-

By-Laws of the Company as amended and restated effective
May 25, 2005 (5)

3.3

-

Certificate of Designations authorizing issuance and
establishing designations, preferences and rights of Series A Junior
Preferred Stock of the Company (1)

4

-

Rights Agreement, executed effective as of September 13,
1999 (the "Rights Agreement"), between Minerals Technologies Inc. and Chase
Mellon Shareholders Services L.L.C., as Rights Agents, including as Exhibit
B the forms of Rights Certificate and of Election to Exercise (6)

4.1

-

Specimen Certificate of Common Stock (1)

10.1

-

Asset Purchase Agreement, dated as of September 28, 1992,
by and between Specialty Refractories Inc. and Quigley Company Inc. (2)

10.1(a)

-

Agreement dated October 22, 1992 between Specialty
Refractories Inc. and Quigley Company Inc., amending Exhibit 10.1 (3)

10.1(b)

-

Letter Agreement dated October 29, 1992 between Specialty
Refractories Inc. and Quigley Company Inc., amending Exhibit 10.1 (3)

10.2

-

Reorganization Agreement, dated as of September 28, 1992,
by and between the Company and Pfizer Inc (2)

10.3

-

Asset Contribution Agreement, dated as of September 28,
1992, by and between Pfizer Inc and Specialty Minerals Inc. (2)

10.4

-

Asset Contribution Agreement, dated as of September 28,
1992, by and between Pfizer Inc and Barretts Minerals Inc. (2)

10.4(a)

-

Agreement dated October 22, 1992 between Pfizer Inc,
Barretts Minerals Inc. and Specialty Minerals Inc., amending Exhibits 10.3
and 10.4 (3)

10.5

-

Form of Employment Agreement (4), together with schedule
relating to executed Employment Agreements (6) (+)

10.6

-

Form of Severance Agreement, together with schedule
relating to executed Severance Agreements (7) (+)

10.7

-

Company Employee Protection Plan, as amended August 27,
1999 (6) (+)

10.8

-

Company Nonfunded Deferred Compensation and Unit Award
Plan for Non-Employee Directors, as amended and restated effective January
1, 2008 (12)(+)

10.9

-

2001 Stock Award and Incentive Plan of the Company, as
amended and restated as of December 20, 2005 (7) (+)

10.10

-

Company Retirement Plan, as amended and restated
effective as of January 1, 2006 (4) (+)

10.10(a)

-

First Amendment to the Company's Retirement Plan,
effective as of January 1, 2008 (11) (+)

10.11

-

Company Nonfunded Supplemental Retirement Plan, as
amended effective April 24, 2003 (8) (+)

10.12

-

Company Savings and Investment Plan, as amended and
restated as of September 14, 2007 (11) (+)

10.13

-

Company Nonfunded Deferred Compensation and Supplemental
Savings Plan, as amended effective April 24, 2003 (8) (+)

31

10.14

-

Company Health and Welfare Plan, effective as of April 1,
2003 and amended and restated as of January 1, 2006 (4)(+)

10.15

-

Grantor Trust Agreement, as amended and restated as of
December 23, 2005, between the Company and The Bank of New York, as Trustee
(7)(+)

10.16

-

Note Purchase Agreement, dated as of October 5, 2006,
among the Company, Metropolitan Life Insurance Company and MetLife Insurance
Company of Connecticut with respect to the Company's issuance of $75,000,000
in aggregate principal amount of senior unsecured notes due October 5, 2013
(9)

10.17

-

Indenture, dated July 22, 1963, between the Cork Harbour
Commissioners and Roofchrome Limited (2)

10.18

-

Agreement of Lease, dated as of May 24, 1993, between the
Company and Cooke Properties Inc. (1)

10.19

-

Employment Agreement, dated November 27, 2006, between
the Company and Joseph C. Muscari (10)

21.1

-

Subsidiaries of the Company (*)

23.1

-

Consent of Independent Registered Public Accounting Firm
(*)

31.1

-

Rule 13a-14(a)/15d-14(a) Certification executed by the
Company's principal executive officer (*)

31.2

-

Rule 13a-14(a)/15d-14(a) Certification executed by the
Company's principal financial officer (*)

32

-

Section 1350 Certification (*)

(1)

Incorporated by reference to the exhibit so designated
filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 2003.

(2)

Incorporated by reference to the exhibit so designated
filed with the Company's Registration Statement on Form S-1 (Registration
No. 33-51292), originally filed on August 25, 1992.

(3)

Incorporated by reference to the exhibit so designated
filed with the Company's Registration Statement on Form S-1 (Registration
No. 33-59510), originally filed on March 15, 1993.

(4)

Incorporated by reference to the exhibit so designated
filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 2006.

(5)

Incorporated by reference to the exhibit so designated
filed with the Company's current Report on Form 8-K filed on May 27, 2005.

(6)

Incorporated by reference to the exhibit so designated
filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 2004.

(7)

Incorporated by reference to the exhibit so designated
filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 2005.

(8)

Incorporated by reference to the exhibit so designated
filed with the Company's Quarterly Report on Form 10-Q for the quarter ended
March 30, 2003.

(9)

Incorporated by reference to the exhibit 10.1 filed with
the Company's Current Report on Form 8-K filed on October 11, 2006.

(10)

Incorporated by reference to exhibit 10.1 filed with the
Company's Current Report on Form 8-K/A filed on December 1, 2006.

(11)

Incorporated by reference to the exhibit so designated
filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 2007.

(12)

Incorporated by reference to the exhibit so designated
filed with the Company's Quarterly Report on Form 10-Q for the quarter ended
March 30, 2008.

(*)

Filed herewith.

(+)

Management contract or compensatory plan or arrangement
required to be filed pursuant to Item 601 of Regulation S-K.

32

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

By:

/s/Joseph C. Muscari

Joseph C. Muscari

Chairman of the Board and Chief Executive Officer

February 25, 2009
     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 in the capacities and on the dates indicated:

SIGNATURE

TITLE

DATE

/s/ Joseph C. Muscari

Chairman of the Board and Chief Executive Officer

February 25, 2009

Joseph C. Muscari

(principal executive officer)

/s/ John A. Sorel

Senior Vice President-Finance and

February 25, 2009

John A. Sorel

Chief Financial Officer (principal financial officer)

/s/ Michael A. Cipolla

Vice President - Controller and

February 25, 2009

Michael A. Cipolla

Chief Accounting Officer (principal accounting officer)

33

SIGNATURE

TITLE

DATE

/s/ Paula H.J. Cholmondeley

Director

February 25, 2009

Paula H. J. Cholmondeley

/s/ Duane R. Dunham

Director

February 25, 2009

Duane R. Dunham

/s/ Steven J. Golub

Director

February 25, 2009

Steven J. Golub

/s/ Kristina M. Johnson

Director

February 25, 2009

Kristina M. Johnson

/s/ Michael F. Pasquale

Director

February 25, 2009

Michael F. Pasquale

/s/ John T. Reid

Director

February 25, 2009

John T. Reid

/s/ William C. Stivers

William C. Stivers

Director

February 25, 2009

34

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

_______________________________________

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Financial
Statements:

Page


Consolidated Balance
Sheets as of December 31, 2008 and 2007

F-2

Consolidated
Statements of Operations for the years ended December 31, 2008, 2007 and
2006

F-3

Consolidated
Statements of Cash Flows for the years ended December 31, 2008, 2007 and
2006

F-4

Consolidated
Statements of Shareholders' Equity for the years ended December 31, 2008,
2007 and 2006

F-5

Notes to
Consolidated Financial Statements

F-6

Reports of
Independent Registered Public Accounting Firm

F-34

Management's Report
on Internal Control Over Financial Reporting

F-36

F-1

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(thousands of dollars)



December 31,

2008

2007



Assets

Current assets:


Cash and cash
equivalents

$

181,876

$

128,985

Short-term
investments, at cost which approximates market

9,258

9,697

Accounts
receivable, less allowance for doubtful accounts:


2008 - $2,600;
2007 - $3,223

163,475

180,868


Inventories

133,983

103,373

Prepaid expenses
and other current assets

23,281

22,773

Assets held for
disposal

19,674

27,614

Total current
assets

531,547

473,310

Property, plant
and equipment, less accumulated depreciation and depletion

429,593

489,386

Goodwill

66,414

71,964

Prepaid pension
costs

483

53,667

Other assets and
deferred charges

39,583

40,566

Total assets

$

1,067,620

$

1,128,893

Liabilities and Shareholders' Equity

Current
liabilities:

Short-term debt

$

14,984

$

9,518

Current
maturities of long-term debt

4,000

7,210

Accounts payable

67,393

66,084

Income taxes
payable

--

3,826

Accrued
compensation and related items

27,100

26,714

Restructuring
liabilities

6,840

14,479

Other current
liabilities

29,802

34,517

Liabilities of
assets held for disposal

734

4,801

Total current liabilities

150,853

167,149

Long-term debt

97,221

111,006

Accrued pension
and postretirement benefits

51,922

42,412

Deferred taxes on
income

--

2,539

Other non-current
liabilities

56,040

54,614

Total liabilities

356,036

377,720

Commitments and
contingent liabilities (Notes 19 and 20)

Shareholders'
equity:

Preferred stock,
without par value; 1,000,000 shares authorized; none issued

--

--

Common stock at
par, $0.10 par value; 100,000,000 shares authorized;

issued 28,832,875
shares in 2008 and 28,539,812 shares in 2007

2,883

2,854

Additional
paid-in capital

312,972

294,367

Retained earnings

863,601

802,096

Accumulated other
comprehensive income (loss)

(31,634
)

45,365

Less common stock
held in treasury, at cost; 10,141,073

shares in 2008
and 9,449,673 shares in 2007

(436,238
)

(393,509
)

Total
shareholders' equity

711,584

751,173

Total liabilities and
shareholders' equity

$

1,067,620

$

1,128,893

See Notes to Consolidated Financial Statements, which are an integral part of
these statements.

F-2

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(thousands of dollars, except per share data)

Year Ended December 31,



2008

2007

2006

Net sales

$

1,112,212

$

1,077,721

$

1,023,544

Cost of goods
sold

891,738

845,136

798,730

Production margin

220,474

232,585

224,814

Marketing and
administrative expenses

101,857

104,649

104,633

Research and
development expenses

23,052

26,348

27,753

Impairment of
assets

209

94,070

--

Restructuring and
other costs

13,365

16,017

--

Income (loss)
from operations

81,991

(8,499
)

92,428


Interest income

4,905

3,083

1,762

Interest expense

(5,181
)

(8,701
)

(8,319
)

Foreign exchange
gains (losses)

1,694

513

(268
)

Other income
(deductions)

(1,142
)

2,105

955

Non-operating
income (deductions), net

276

(3,000
)

(5,870
)

Income (loss)
before provision for

taxes
on income, minority interests and discontinued operations

82,267

(11,499
)

86,558

Provision for
taxes on income

24,079

11,266

26,992

Minority
interests

3,183

2,904

3,441

Income (loss)
from continuing operations

55,005

(25,669
)

56,125

Income (loss)
from discontinued operations, net of tax

10,282

(37,845
)

(6,174
)

Net income (loss)

$

65,287

$

(63,514
)

$

49,951

Earnings per
share:

Basic:

Income (loss)
from continuing operations

$

2.91

$

(1.34
)

$

2.86

Income (loss)
from discontinued operations

0.54

(1.97
)

(0.31
)


Basic earnings (loss) per
share

$

3.45

$

(3.31
)

$

2.55

Diluted:

Income (loss)
from continuing operations

$

2.90

$

(1.34
)

$

2.84

Income (loss)
from discontinued operations

0.54

(1.97
)

(0.31
)


Diluted earnings (loss) per
share

$

3.44

$

(3.31
)

$

2.53

See Notes to Consolidated Financial Statements, which are an integral part of
these statements.

F-3

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands of dollars)

Year Ended December 31,

2008

2007

2006

Operating
Activities

Net income (loss)

$

65,287

$

(63,514
)

$

49,951

Income (loss)
from discontinued operations

10,282

(37,845
)

(6,174
)

Income (loss)
from continuing operations

55,005

(25,669
)

56,125

Adjustments to
reconcile income (loss) from continuing operations

to net cash provided by operating activities:

Depreciation, depletion and
amortization

80,146

84,565

80,535

Impairment of assets

209

94,070

--

Pension settlement loss and
amortization

11,293

5,604

4,592

Loss on disposal of property,
plant and equipment

989

1,639

839

Deferred income taxes

(3,001
)

(15,148
)

4,345

Provisions for bad debts

159

(49
)

377

Stock-based compensation

4,952

4,196

4,015

Other

3,184

2,729

3,475

Changes in
operating assets and liabilities, net of effects of acquisitions:


Accounts receivable

9,060

15,281

5,148

Inventories

(35,595
)

15,223

(2,744
)

Prepaid expenses and other
current assets

254

(923
)

2,951

Pension plan funding

(3,180
)

(24,050
)

(22,348
)

Accounts payable

3,959

4,049

(6,268
)

Restructuring liabilities

(7,639
)

14,479

--

Income taxes payable

4,333

3,956

3,040

Tax benefits related to stock
incentive programs

1,696

2,649

590

Other

4,295

(1,377
)

4,293

Net cash provided
by continuing operations

130,119

181,224

138,965

Net cash provided
by (used in) discontinued operations

4,092

(1,533
)

(3,366
)

Net cash provided
by operations

134,211

179,691

135,599

Investing
Activities

Purchases of
property, plant and equipment q

(31,027
)

(46,072
)

(57,426
)

Purchases of
short-term investments

(10,007
)

(14,798
)

(12,590
)

Proceeds from
sales of short-term investments

6,654

14,147

6,440

Proceeds from
disposal of property, plant and equipment

609

354

675

Proceeds from
insurance settlement

--

3,000

2,398

Acquisition of
businesses, net of cash acquired

--

--

(32,416
)

Net cash used in
investing activities - continuing operations

(33,771
)

(43,369
)

(92,919
)

Net cash provided
by (used in) investing activities - discontinued operations

14,978

(3,376
)

(27,733
)

Net cash used in
investing activities

(18,793
)

(46,745
)

(120,652
)

Financing
Activities

Proceeds from
issuance of long-term debt

--

7,741

75,000

Repayment of
long-term debt

(17,114
)

(5,411
)

(53,754
)

Net proceeds from
issuance (repayment) of short-term debt

4,840

(78,206
)

24,797

Purchase of
common shares for treasury

(45,281
)

(25,339
)

(53,372
)

Cash dividends
paid

(3,782
)

(3,845
)

(3,911
)

Proceeds from
issuance of stock under option plan

11,538

17,953

3,741

Excess tax
benefits related to stock incentive programs

610

889

152

Indemnification
proceeds from former parent company

--

--

4,500

Debt issuance
costs

--

--

(190
)

Net cash used in
financing activities

(49,189
)

(86,218
)

(3,037
)

Effect of
exchange rate changes on cash and cash equivalents

(13,338
)

14,328

4,919

Net increase in
cash and cash equivalents

52,891

61,056

16,829

Cash and cash
equivalents at beginning of year

128,985

67,929

51,100

Cash and cash
equivalents at end of year

$

181,876

$

128,985

$

67,929

Non-cash
Investing and Financing Activities:

Tax liability on
indemnification proceeds from former parent company

$

--

$

--

$

1,782

Treasury stock
purchases settled after year-end

$

--

$

2,552

$

--

See Notes to Consolidated Financial Statements, which are an integral part of
these statements.

F-4

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)

Common Stock Par Value

Additional

Paid-in Capital

Deferred

Compensation

Retained

Earnings

Accumulated

Other

Comprehensive

Income (Loss)

Treasury

Stock at Cost

Total

Balance as of January 1,
2006

$

2,800

$

261,159

$

(3,263
)

$

828,591

$

(5,879
)

$

(312,246
)

$

771,162

Comprehensive Income:

Net income

--

--

--

49,951

--

--

49,951

Currency translation
adjustment

--

--

--

--

35,924

--

35,924

Additional minimum liability

--

--

--

--

2,988

--

2,988

Cash flow hedge:

Net derivative losses arising
during the year

--

--

--

--

(62
)

--

(62
)

Reclassification adjustment

--

--

--

--

124

--

124

     Total comprehensive
income

--

--

--

49,951

38,974

--

88,925

Dividends declared

--

--

--

(3,911
)

--

--

(3,911
)

Opening retained earnings
adjustment due

     to adoption of EITF
04-06

--

--

--

(7,119
)

--

--

(7,119
)

Employee Benefit transactions

10

3,731

--

--

--

--

3,741

Income tax benefit arising
from employee

     stock option plans

--

741

--

--

--

--

741

Reclassification of unearned
compensation

--

(3,263
)

3,263

--

--

--

--

Amortization of restricted
stock

--

1,679

--

--

--

--

1,679

Indemnity proceeds, net of
tax

--

2,718

--

--

--

--

2,718

Adjustment to initially apply
SFAS 158,

     net of tax

--

--

--

--

(54,343
)

--

(54,343
)

Stock option expenses

--

2,336

--

--

--

--

2,336

Purchase of common stock for
treasury

(53,372
)

(53,372
)

Balance as of December 31,
2006

2,810

269,101

--

867,512

(21,248
)

(365,618
)

752,557

Comprehensive Income (loss):

Net income (loss)

--

--

--

(63,514
)

--

--

(63,514
)

Currency translation
adjustment

--

--

--

--

48,488

--

48,488

Unamortized gains and prior
service cost

--

--

--

--

18,106

--

18,106

Cash flow hedge:

Net derivative losses arising
during the year

--

--

--

--

(43
)

--

(43
)

Reclassification adjustment

--

--

--

--

62

--

62

     Total comprehensive
income (loss)

--

--

--

(63,514
)

66,613

--

3,099

Dividends declared

--

--

--

(3,845
)

--

--

(3,845
)

Opening retained earnings
adjustment due

--

--

--

--

--

--

--

     to adoption of FIN 48
(Note 5)

--

--

--

1,943

--

--

1,943

Employee benefit transactions

44

17,909

--

--

--

--

17,953

Income tax benefit arising
from employee

     stock option plans

--

3,161

--

--

--

--

3,161

Amortization of restricted
stock

--

1,813

--

--

--

--

1,813

Stock option expenses

--

2,383

--

--

--

--

2,383

Purchase of common stock for
treasury

--

--

--

--

--

(27,891
)

(27,891
)

Balance as of December 31,
2007

2,854

$

294,367

$

--

$

802,096

$

45,365

$

(393,509
)

$

751,173

Comprehensive Income (loss):

Net income (loss)

--

--

--

65,287

--

--

65,287

Currency translation
adjustment

--

--

--

--

(49,417
)

--

(49,417
)

Unamortized losses and prior
service cost

--

--

--

--

(28,751
)

--

(28,751
)

Cash flow hedge:

Net derivative gains arising
during the year

--

--

--

--

1,126

--

1,126

Reclassification adjustment

--

--

--

--

43

--

43

     Total comprehensive
income (loss)

--

--

--

65,287

(76,999
)

--

(11,712
)

Dividends declared

--

--

--

(3,782
)

--

--

(3,782)

Employee benefit transactions

29

11,509

--

11,538

Income tax benefit arising
from employee

     stock option plans

--

2,143

--

--

--

--

2,143

Amortization of restricted
stock

--

2,994

--

--

--

--

2,994

Stock option expenses

--

1,959

--

--

--

--

1,959

Purchase of common stock for
treasury

--

--

--

--

--

(42,729
)

(42,729
)

Balance as of December 31,
2008

$

2,883

$

312,972

$

--

$

863,601

$

(31,634
)

$

(436,238
)

$

711,584

See Notes to Consolidated Financial Statements, which are an integral part of
these statements.

F-5

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   Summary of Significant Accounting Policies

     Basis of Presentation

     The accompanying consolidated financial statements
include the accounts of Minerals Technologies Inc. (the "Company") and its
wholly and majority-owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.
     Certain reclassifications were made to prior year
amounts to conform with the current year presentation. See Note 4, "Discontinued
Operations" for further information.
     Use of Estimates

     The Company employs accounting policies that are in
accordance with U.S. generally accepted accounting principles and require
management to make estimates and assumptions relating to the reporting of assets
and liabilities and the disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenue and expenses during the reported period. Significant estimates include
those related to revenue recognition, allowance for doubtful accounts, valuation
of inventories, valuation of long-lived assets, goodwill and other intangible
assets, pension plan assumptions, income tax, valuation allowances, and
litigation and environmental liabilities. Actual results could differ from those
estimates.
     Business

     The Company is a resource- and technology-based company
that develops, produces and markets on a worldwide basis a broad range of
specialty mineral, mineral-based products and related systems and technologies.
The Company's products are used in the manufacturing processes of the paper and
steel industries, as well as by the building materials, polymers, ceramics,
paints and coatings, and other manufacturing industries.
     Cash Equivalents and Short-term Investments

     The Company considers all highly liquid investments with
original maturities of three months or less to be cash equivalents. Cash
equivalents were $4.7 million at December 31, 2007. Short-term investments
consist of financial instruments with original maturities beyond three months,
but less than twelve months. Short-term investments amounted to $9.3 million and
$9.7 million at December 31, 2008 and 2007, respectively.
     Trade Accounts Receivable

     Trade accounts receivables are recorded at the invoiced
amount and do not bear interest. The allowance for doubtful accounts is the
Company's best estimate of the amount of probable credit losses in the Company's
existing accounts receivable. The Company determines the allowance based on
historical write-off experience and specific allowances for bankrupt customers.
The Company also analyzes the collection history and financial condition of its
other customers, considering current industry conditions and determines whether
an allowance needs to be established. The Company reviews its allowance for
doubtful accounts monthly. Past due balances over 90 days based on payment terms
are reviewed individually for collectibility. Account balances are charged off
against the allowance after all means of collection have been exhausted and the
potential for recovery is considered remote. The Company does not have any
off-balance-sheet credit exposure related to its customers.
     Inventories

     Inventories are valued at the lower of cost or market.
Cost is determined by the first-in, first-out (FIFO) method.
     Additionally, as required by SFAS No. 151, "Inventory
Costs - an Amendment of ARB No. 43, Chapter 4," items such as idle facility
expense, excessive spoilage, freight handling costs and re-handling costs are
recognized as current period charges. The allocation of fixed production
overheads to the costs of conversion are based upon the normal capacity of the
production facility. Fixed overhead costs associated with idle capacity are
expensed as incurred.
     Property, Plant and Equipment

     Property, plant and equipment are recorded at cost.
Significant improvements are capitalized, while maintenance and repair
expenditures are charged to operations as incurred. The Company capitalizes
interest cost as a component of construction in progress. In general, the
straight-line method of depreciation is used for financial reporting purposes
and accelerated methods are used for U.S. and certain foreign tax reporting
purposes. The annual rates of depreciation are 3% - 6.67% for buildings, 6.67% -
12.5% for machinery and equipment, 8% - 12.5% for furniture and fixtures and
12.5% - 25% for computer equipment and software-related assets. The estimated
useful lives of our PCC production facilities and machinery and equipment
pertaining to our natural stone mining and processing plants and our chemical
plants are 15 years.
     Property, plant and equipment are depreciated over their
useful lives. Useful lives are based on management's estimates of the period
that the assets can generate revenue, which does not necessarily coincide with
the remaining term of a customer's contractual obligation to purchase products
made using those assets. The Company's sales of PCC are predominantly
F-6

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

pursuant to long-term evergreen contracts, initially ten
years in length, with paper mills at which the Company operates satellite PCC
plants. The terms of many of these agreements have been extended, often in
connection with an expansion of the satellite PCC plant. Failure of a PCC
customer to renew an agreement or continue to purchase PCC from a Company
facility could result in an impairment of assets charge or accelerated
depreciation at such facility.
     Depletion of mineral reserves is determined on a
unit-of-extraction basis for financial reporting purposes, based upon proven and
probable reserves, and on a percentage depletion basis of tax purposes.
     Stripping Costs Incurred During Production

     The Company accounts for stripping costs in accordance
with the consensus of Emerging Issues Task Force ("EITF") Issue No. 04-06,
"Accounting for Stripping Costs Incurred During Production in the Mining
Industry." Stripping costs are those costs incurred for the removal of waste
materials for the purpose of accessing ore body that will be produced
commercially. Stripping costs incurred during the production phase of a mine are
variable costs that are included in the costs of inventory produced during the
period that the stripping costs are incurred.
     Accounting for the Impairment of Long-Lived Assets

     The Company accounts for impairment of long-lived assets
in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived assets," and EITF 04-3, "Mining Assets: Impairment and Business
Combinations." SFAS No. 144 establishes a uniform accounting model for
long-lived assets to be disposed of. Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable, the Company estimates the undiscounted future cash flows (excluding
interest), resulting from the use of the asset and its ultimate disposition. If
the sum of the undiscounted cash flows (excluding interest) is less than the
carrying value, the Company recognizes an impairment loss, measured as the
amount by which the carrying value exceeds the fair value of the asset,
determined principally using discounted cash flows.
     Goodwill and Other Intangible Assets

     Goodwill represents the excess of purchase price and
related costs over the value assigned to the net tangible and identifiable
intangible assets of businesses acquired. The Company accounts for goodwill and
other intangible assets under SFAS No. 142, "Goodwill and Other Intangible
Assets." Under SFAS No. 142, goodwill and other intangible assets with
indefinite lives are not amortized, but instead tested for impairment at least
annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 also
requires that intangible assets with estimable useful lives be amortized over
their respective estimated lives to the estimated residual values, and reviewed
for impairment in accordance with SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets."
     The Company evaluates the recoverability of goodwill
using a two-step impairment test approach at the reporting unit level. In the
first step, the fair value for the reporting unit is compared to its book value
including goodwill. In the case that the fair value of the reporting unit is
less than book value, a second step is performed which compares the fair value
of the reporting unit's goodwill to the book value of the goodwill. The fair
value for the goodwill is determined based on the difference between the fair
values of the reporting unit and the net fair values of the identifiable assets
and liabilities of such reporting unit. If the fair value of the goodwill is
less than the book value, the difference is recognized as an impairment.
     Accounting for Asset Retirement Obligations

     The Company accounts for asset retirement obligations in
accordance with SFAS No. 143, "Accounting for Asset Retirement Obligations" and
under the provisions of FASB Interpretation No. 47, "Accounting for Conditional
Asset Retirement Obligations." SFAS No. 143 establishes the financial accounting
and reporting for obligations associated with the retirement of long-lived
assets and the associated asset retirement costs. This statement requires that
the fair value of a liability for an asset retirement obligation be recognized
in the period in which it is incurred if a reasonable estimate of fair value can
be made. The associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived asset. FASB Interpretation No. 47 includes
legal obligations to perform asset retirement activities where timing or method
of settlement are conditional on future events.
     Fair Value of Financial Instruments

     The recorded amounts of cash and cash equivalents,
receivables, short-term borrowings, accounts payable, accrued interest, and
variable-rate long-term debt approximate fair value because of the short
maturity of those instruments or the variable nature of underlying interest
rates. Short-term investments are recorded at cost, which approximates fair
market value.
F-7

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     Derivative Financial Instruments

     The Company accounts for derivative financial
instruments which are used to hedge certain foreign exchange risk in accordance
with SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities." See Note 13 for a full description
of the Company's hedging activities and related accounting policies.
     Revenue Recognition

     Revenue from sale of products is recognized at the time
the goods are shipped and title passes to the customer. In most of the Company's
PCC contracts, the price per ton is based upon the total number of tons sold to
the customer during the year. Under those contracts the price billed to the
customer for shipments during the year is based on periodic estimates of the
total annual volume that will be sold to such customer. Revenues are adjusted at
the end of each year to reflect the actual volume sold. The Company also has
consignment arrangements with certain customers in our Refractories segment.
Revenues for these transactions are recorded when the consigned products are
consumed by the customer.
     Revenues from sales of equipment are recorded upon
completion of installation and receipt of customer acceptance. Revenues from
services are recorded when the services have been performed.
     Foreign Currency

     The assets and liabilities of the Company's
international subsidiaries are translated into U.S. dollars using exchange rates
at the respective balance sheet date. The resulting translation adjustments are
recorded in accumulated other comprehensive income (loss) in shareholders'
equity. Income statement items are generally translated at monthly average
exchange rates prevailing during the period. International subsidiaries
operating in highly inflationary economies translate non-monetary assets at
historical rates, while net monetary assets are translated at current rates,
with the resulting translation adjustments included in net income. At December
31, 2008, the Company had no international subsidiaries operating in highly
inflationary economies.
     Income Taxes

     Income taxes are provided for based on the asset and
liability method of accounting pursuant to SFAS No. 109, "Accounting for Income
Taxes." Under SFAS No. 109, deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
     The Company operates in multiple taxing jurisdictions,
both within the U.S. and outside the U.S. In certain situations, a taxing
authority may challenge positions that the Company has adopted in its income tax
filings. The Company regularly assesses its tax position for such transactions
and includes reserves for those differences in position. The reserves are
utilized or reversed once the statute of limitations has expired or the matter
is otherwise resolved.

     The Company accounts for uncertain tax positions in
accordance with FASB Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes" ("FIN 48"), an interpretation of FASB Statement No. 109 ("SFAS
109"). The application of income tax law is inherently complex. Laws and
regulations in this area are voluminous and are often ambiguous. As such, we are
required to make many subjective assumptions and judgements regarding our income
tax exposures. Interpretations of and guidance surrounding income tax laws and
regulations change over time. As such, changes in our subjective assumptions and
judgements can materially affect amounts recognized in the consolidated balance
sheets and statements of operations. The Company's accounting policy is to
recognize interest and penalties as part of its provision for income taxes. See
Note 5 to the consolidated financial statements, "Income Taxes," for additional
detail on our uncertain tax positions.
     The accompanying financial statements generally do not
include a provision for U.S. income taxes on international subsidiaries'
unremitted earnings, which are expected to be permanently reinvested overseas.
     Research and Development Expenses

     Research and development expenses are expensed as
incurred.

     Accounting for Stock-Based Compensation

     The Company accounts for share-based compensation in
accordance with SFAS No. 123R, "Share-Based Payment." Under the provisions of
SFAS No. 123R, the Company recognizes compensation expense for share-based
awards based upon the grant date fair value over the vesting period.

F-8

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     Pension and Post-retirement Benefits

     The Company has defined benefit pension plans covering
the majority of its employees. The benefits are generally based on years of
service and an employee's modified career earnings.
     The Company also provides post-retirement healthcare
benefits for the majority of its retirees and employees in the United States.
The Company measures the costs of its obligation based on its best estimate. The
net periodic costs are recognized as employees render the services necessary to
earn the post-retirement benefits.
     Environmental

     Expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations and which do not contribute to current or
future revenue generation are expensed. Liabilities are recorded when it is
probable the Company will be obligated to pay amounts for environmental site
evaluation, remediation or related costs, and such amounts can be reasonably
estimated.
     Earnings Per Share

     Basic earnings per share have been computed based upon
the weighted average number of common shares outstanding during the period.
     Diluted earnings per share have been computed based upon
the weighted average number of common shares outstanding during the period
assuming the issuance of common shares for all potentially dilutive common
shares outstanding.

Note 2.   Stock-Based Compensation

     The Company has a 2001 Stock Award and Incentive Plan
(the "Plan"), which provides for grants of incentive and non-qualified stock
options, restricted stock, stock appreciation rights, stock awards or
performance unit awards. The Plan is administered by the Compensation Committee
of the Board of Directors. Stock options granted under the Plan generally have a
ten year term. The exercise price for stock options are at prices at or above
the fair market value of the common stock on the date of the grant, and each
award of stock options will vest ratably over a specified period, generally
three years.
     The Company accounts for stock-based compensation under
the fair value recognition provisions of SFAS No. 123R, "Share-Based Payments."
Stock-based compensation expense is recognized in the consolidated financial
statements for stock options based on the grant date fair value estimated in
accordance with the provisions of SFAS No. 123R.
     Net income (loss) for years ended 2008, 2007 and 2006
include $2.0 million, $2.4 million and $2.3 million pretax compensation costs,
respectively, related to stock option expense as a component of marketing and
administrative expenses. All stock option expense is recognized in the
consolidated statements of operations. The related tax benefit included in the
statement of operations on the non-qualified stock options is $0.7 million, $0.6
million and $0.5 million for 2008, 2007 and 2006, respectively.
      As required under SFAS No. 123R, the benefits of tax
deductions in excess of the tax benefit of compensation costs recognized or
would have been recognized under SFAS No. 123 for those options are classified
as financing inflows on the consolidated statement of cash flows.

Stock Options

     The fair value of options granted is estimated on the
date of grant using the Black-Scholes valuation model. Compensation expense is
recognized only for those options expected to vest, with forfeitures estimated
at the date of grant based on the Company's historical experience and future
expectations. The forfeiture rate assumption used for the period ended December
31, 2008 was approximately 8.8%.
     The weighted average grant date fair value for stock
options granted during the years ended December 31, 2008, 2007 and 2006 was
$19.11, $21.61and $18.97, respectively. The weighted average grant date fair
value for stock options vested during 2008, 2007 and 2006 was $21.12, $20.83 and
$20.83, respectively. The total intrinsic value of stock options exercised
during the years ended December 31, 2008, 2007 and 2006 was $5.9 million, $9.4
and $1.8 million, respectively.

F-9

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

      The fair value for stock awards was estimated at the
date of grant using the Black-Scholes option valuation model with the following
weighted average assumptions for the years ended December 31, 2008, 2007 and
2006:

2008

2007

2006

Expected life (years)

6.3

6.5

6.4

Interest rate

2.50
%

4.50
%

4.63
%

Volatility

25.20
%

25.10
%

24.78
%

Expected dividend yield

0.34
%

0.26
%

0.37
%

     The expected term of the options represents the
estimated period of time until exercise and is based on historical experience of
similar awards, based upon contractual terms, vesting schedules, and
expectations of future employee behavior. The expected stock-price volatility is
based upon the historical and implied volatility of the Company's stock. The
interest rate is based upon the implied yield on U.S. Treasury bills with an
equivalent remaining term. Estimated dividend yield is based upon historical
dividends paid by the Company.
     The following table summarizes stock option activity for
the year ended December 31, 2008:

Shares

Weighted Average Exercise Price Per Share

Weighted Average Remaining Contractual Life (Years)

Aggregate Intrinsic Value (in thousands)

Balance January 1, 2007 77

839,715

$

50.51

Granted

112,300

67.47

Exercised

(261,460
)

43.97

Canceled

(28,774
)

57.90

Balance December
31, 2008

661,781

55.14

5.93

$

188

Exercisable, December 31,
2008

436,591

$

51.40

3.00

$

188

     The aggregate intrinsic value above is calculated before
applicable income taxes, based on the Company's closing stock price of $40.90 as
of the last business day of the period ended December 31, 2008 had all options
been exercised on that date. The weighted average intrinsic value of the options
exercised during 2008, 2007 and 2006 was $22.47, $21.70 and $17.48 per share,
respectively. As of December 31, 2008, total unrecognized stock-based
compensation expense related to nonvested stock options was approximately $2.3
million, which is expected to be recognized over a weighted average period of
approximately three years.
     The Company issues new shares of common stock upon the
exercise of stock options.
     Non-vested stock option activity for the year ended
December 31, 2008 is as follows:

Shares

Weighted Average Exercise Price Per Share

Nonvested options outstanding
at December 31, 2007

235,928

$

58.98

Options granted

112,300

64.47

Options vested

(97,069
)

57.36

Options forfeited

(25,969
)

59.25

Nonvested options
outstanding, December 31, 2008

225,190

$

62.38

F-10

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     The following table summarizes additional information
concerning options outstanding at December 31, 2008:

Options Outstanding

Options Exercisable

Range of

Exercise Prices

Number Outstanding at 12/31/08

Weighted Average Remaining Contractual Term (Years)

Weighted Average Exercise Price

Number Exercisable at 12/31/08

Weighted Average Exercise Price

$

34.825

-

$

44.156

58,453

1.0

$

37.71

58,453

$

37.71

$

46.625

-

$

54.225

316,195

4.7

$

51.71

305,498

$

51.62

$

55.870

-

$

69.315

287,133

8.3

$

62.46

72,640

$

61.49

$

34.825

-

$

69.315

661,781

5.9

$

55.14

436,591

$

51.40

Restricted Stock

     The Company has granted certain corporate officers
rights to receive shares of the Company's common stock under the Company's 2001
Stock Award and Incentive Plan (the "Plan"). The rights will be deferred for a
specified number of years of service, subject to restrictions on transfer and
other conditions. Under the provisions of SFAS No. 123R, compensation expense
for these shares is recognized over the vesting period. The Company granted
68,600 shares, 87,650 shares and 50,300 shares for the periods ended December
31, 2008, 2007 and 2006, respectively. The fair value was determined based on
the market value of unrestricted shares. The discount for the restriction was
not significant. As of December 31, 2008, there was unrecognized stock-based
compensation related to restricted stock of $5.3 million, which will be
recognized over approximately the next three years. The compensation expense
amortized with respect to all units was approximately $3.6 million, $2.8 million
and $1.7 million for the periods ended December 31, 2008, 2007 and 2006,
respectively. In addition, the Company recorded reversals of $0.6 million and
$1.0 million for periods ended December 31, 2008 and December 31, 2007,
respectively, related to restricted stock forfeitures. Such costs and reversals
are included in marketing and administrative expenses. There were 28,267
restricted stock shares that vested as of December 31, 2008.

     The following table summarizes the restricted stock activity for the
Plan:

Shares

Weighted Average Grant Date Fair Value

Unvested balance at December
31, 2007

133,533

$

58.98

Granted

68,600

$

64.06

Vested

(28,267
)

$

56.45

Canceled

(12,572
)

$

58.30

Unvested balance at December
31, 2008

161,294

$

61.63

Note 3.   Earnings Per Share (EPS)

(thousand of
dollars, except per share amounts)

2008

2007

2006

Basic EPS

Income (loss) from
continuing operations

$

55,005

$

(25,669
)

$

56,125

Income (loss) from
discontinued operations

10,282

(37,845
)

(6,174
)

Net income (loss)

$

65,287

$

(63,514
)

$

49,951

Weighted average
shares outstanding

18,893

19,190

19,600

Basic earnings
(loss) per share from continuing operations

$

2.91

$

(1.34
)

$

2.86

Basic earnings
(loss) per share from discontinued operations

0.54

(1.97
)

(0.31
)

Basic earnings (loss) per share

$

3.45

$

(3.31
)

$

2.55

F-11

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Diluted EPS

2008

2007

2006

Income (loss) from
continuing operations

$

55,005

$

(25,669
)

$

56,125

Income (loss) from
discontinued operations

10,282

(37,845
)

(6,174
)

Net income (loss)

$

65,287

$

(63,514
)

$

49,951

Weighted average
shares outstanding

18,893

19,190

19,600

Dilutive effect of
stock options

90

--

138

Weighted average
shares outstanding, adjusted

18,983

19,190

19,738

Diluted earnings
(loss) per share from continuing operations

$

2.90

$

(1.34
)

$

2.84

Diluted earnings
(loss) per share from discontinued operations

0.54

(1.97
)

(0.31
)

Diluted earnings (loss) per
share

$

3.44

$

(3.31
)

$

2.53

     Options to purchase 603,828 shares, 154,133 shares and
371,587 shares of common stock for the years ended December 31, 2008, December
31, 2007 and December 31, 2006, respectively, were not included in the
computation of diluted earnings per share because they were anti-dilutive, as
the exercise prices of the options were greater than the average market price of
the common shares. Additionally, the weighted average diluted common shares
outstanding for the year ended December 31, 2007 excludes the dilutive effect of
stock options and restricted stock, as inclusion of these would be anti-dilutive.

Note 4.   Discontinued Operations

     During the third quarter of 2007, the Company conducted
an in-depth strategic review of its operations. This review resulted in a
realignment of its operations, which included the exiting of certain businesses.
     The Board of Directors approved the transactions during
the fourth quarter of 2007 and the Company classified its Synsil operations and
its plants at Mount Vernon and Wellsville as discontinued operations. These
operations were part of the Company's Specialty Minerals segment. The remaining
assets of these operations are held for disposal. During 2008, the Company sold
its idle Synsil facilities in Chester, South Carolina, Woodville, Ohio and
Cleburne, Texas. Additionally, the Company sold its operations in Wellsville,
Ohio. These sales resulted in pre-tax gains of $13.7 million ($8.6 million after
tax). The Company does not anticipate the ongoing cash flows of these operations
until disposition to be material.
     In April 2006, the Company ceased operation at its
one-unit satellite PCC facility in Hadera, Israel. In the fourth quarter, the
Company recorded a loss from discontinued operations of approximately $1.7
million upon liquidation of its investment in Israel. This loss was
predominantly related to the recognition of foreign currency translation losses
previously recognized in accumulated other comprehensive income (loss).
     The consolidated financial statements for all prior
periods presented have been reclassified to reflect these businesses in
discontinued operations.
     The following table details selected financial
information for the discontinued operation in the consolidated statements of
operations. The amounts exclude general corporate overhead and interest expense
which were previously allocated to the entities comprising discontinued
operations.

Thousands of
Dollars

2008

2007

2006

Net sales

$

23,148

$

30,187

$

37,232

Production margin

3,278

(5,238
)

(3,432
)

Expenses

850

4,129

4,035

Impairment of
assets

--

46,878

--

Restructuring and
other costs

74

2,317

--

Gain on sale of
assets

13,897

--

--

Income (loss)
from operations

$

16,251

$

(58,562
)

$

(7,467
)

Other income

--

82

481

Foreign currency
translation

loss from liquidation of
investment

--

--

(1,563
)

Provision
(benefit) for taxes on income

5,969

(20,635
)

(2,375
)

Income (loss)
from discontinued operations, net of tax

$

10,282

$

(37,845
)

$

(6,174
)

F-12

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     The major classes of assets and liabilities held for
disposals in the consolidated balance sheets are as follows:

Thousands of
Dollars

2008

2007

Assets:


Accounts
receivable

$

1,229

$

4,328

Inventories

7,198

10,146

Property, plant
and equipment, net

9,802

11,507

Goodwill

815

1,629

Other assets

630

4

Assets held for
disposal

$

19,674

$

27,614

Liabilities:

Accounts payable

$

610

$

2,897

Accrued
liabilities

124

1,904

Liabilities of
assets held for disposal

$

734

$

4,801

Note 5.   Income Taxes

     Income (loss) before provision for taxes, minority
interests, and discontinued operations by domestic and foreign source is as
follows:

Thousands of Dollars

2008

2007

2006

Domestic

$

36,512

$

8,243

$

48,074

Foreign

45,755

(19,742
)

38,484

Total income (loss) before
provision for income taxes

$

82,267

$

(11,499
)

$

86,558

     The provision for taxes on income consists of the following:

Thousands of
Dollars

2008

2007

2006

Domestic

Taxes currently
payable

Federal

$

10,199

$

11,257

$

8,609

State and local

2,090

1,362

2,877

Deferred income
taxes

(724
)

(9,955
)

5,044


Domestic tax
provision

11,565

2,664

16,530

Foreign

Taxes currently
payable

14,791

13,795

11,161

Deferred income
taxes

(2,277
)

(5,193
)

(699
)

Foreign tax
provision

12,514

8,602

10,462


Total tax provision

$

24,079

$

11,266

$

26,992

     The provision for taxes on income shown in the previous
table is classified based on the location of the taxing authority, regardless of
the location in which the taxable income is generated.

F-13

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     The major elements contributing to the difference
between the U.S. federal statutory tax rate and the consolidated effective tax
rate are as follows:

Percentages

2008

2007

2006

U.S. statutory
tax rate

35.0
%

(35.0)
%

35.0
%

Depletion

(4.2
)

(31.3)

(4.9)

Difference
between tax provided on foreign earnings

and the U.S. statutory rate

(4.6
)

(15.0)

(3.5)

Foreign
restructuring and impairment losses

with no tax benefit

--

145.3

--

State and local
taxes, net of Federal tax benefit

1.3

6.2

2.6

Tax credits and
foreign dividends

(0.5
)

6.1

0.8

Increase in
valuation allowance

0.3

4.6

1.2

Impact of FIN 48

0.9

8.2

--

Other

1.1

8.9

(0.1)

Consolidated
effective tax rate

29.3
%

98.0
%

31.1
%

     The Company believes that its accrued liabilities are
sufficient to cover its U.S. and foreign tax contingencies. The tax effects of
temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities are presented below:

Thousands of Dollars

2008

2007

Deferred tax assets:

State and local taxes

$

2,073

$

3,409

Accrued expenses

12,450

10,085

Deferred expenses

--

233

Net operating loss carry
forwards

4,073

3,502

Pension and post-retirement
benefits costs

24,022

87

Other

17,588

17,595

Total deferred tax assets

$

60,206

$

34,911

Thousands of Dollars

2008

2007

Deferred tax liabilities:

Plant and equipment, principally
due to differences in depreciation

$

33,049

$

15,689

Other

14,019

11,748

Total deferred tax liabilities

47,068

27,437

Net deferred tax (assets)
liabilities

$

(13,138
)

$

(7,474
)

     The current and long-term portion of net deferred tax
(assets) liabilities is as follows:

Thousands of Dollars

2008

2007

Net deferred tax assets, current

$

(5,065
)

$

(7,974
)

Net deferred assets, long term

(8,073
)

(2,039
)

Net deferred tax liabilities

--

2,539

$

(13,138
)

$

(7,474
)

     The current portion of the net deferred tax assets is
included in prepaid expenses and other current assets.
     The Company has $4.0 million of deferred tax assets
arising from tax loss carry forwards which will be realized through future
operations. Carry forwards of approximately $0.2 million expire in 5 years, $0.2
million expire in 7 years, $1.2 million expire over the next 15 years, and $2.4
million can be utilized over an indefinite period.
     On January 1, 2007, the Company adopted the provisions
of FASB Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income
Taxes." FIN 48 specifies the way companies are to account for uncertainty in
income tax reporting and prescribes a recognition threshold and measurement
attribute for tax positions taken or expected to be taken in a tax return. As a
result of the adoption of FIN 48, the Company recognized a $1.9 million decrease
in the liability for unrecognized income tax benefits, resulting in an increase
to the January 1, 2007 balance of retained earnings.
F-14

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     As of the date of adoption of FIN 48, the Company had
approximately $9.0 million of total unrecognized income tax benefits and $2.3
million of interest and penalties. On December 31, 2008, the Company had $10.9
million of total unrecognized tax benefits. Included in this amount were a total
of $6.4 million of unrecognized income tax benefits that, if recognized, would
affect the Company's effective tax rate. While it is expected that the amount of
unrecognized tax benefits will change in the next 12 months, we do not expect
the change to have a significant impact on the results of operations or the
financial position of the Company.
     The following table summarizes the activity related to
our unrecognized tax benefits:

(Thousands of Dollars)

2008

2007

Balance as of January 1,

$

10,395

$

9,035

Increases related to current
year positions

2,973

1,390

Increases (decreases) related to
new judgements

398

(109
)

Decreases related to audit
settlements

(2,204
)

(397
)

Other

(614
)

476

Balance as of December 31,

$

10,948

$

10,395

     The Company's accounting policy prior to the adoption of
FIN 48 and upon the adoption of FIN 48 is to recognize interest and penalties
accrued, relating to unrecognized income tax benefits as part of its provision
for income taxes. The Company had a net reversal of $0.4 million of interest and
penalties during 2008 and have a total accrued balance on December 31, 2008 of
$2.5 million.
     The Company operates in multiple taxing jurisdictions,
both within and outside the U.S. In certain situations, a taxing authority may
challenge positions that the Company has adopted in its income tax filings. The
Company, with a few exceptions (none of which are material), is no longer
subject to U.S. federal, state, local, and European income tax examinations by
tax authorities for years prior to 2003.
     Net cash paid for income taxes were $19.6 million, $16.8
million and $18.0 million for the years ended December 31, 2008, 2007 and 2006,
respectively.

Note 6.   Foreign Operations

     The Company has not provided for U.S. federal and
foreign withholding taxes on $183.4 million of foreign subsidiaries'
undistributed earnings as of December 31, 2008 because such earnings are
intended to be permanently reinvested overseas. To the extent the parent company
has received foreign earnings as dividends, the foreign taxes paid on those
earnings have generated tax credits, which have substantially offset related
U.S. income taxes. However, in the event that the entire $183.4 million of
foreign earnings were to be repatriated, incremental taxes may be incurred. We
do not believe this amount would be more than $22 million.
     Net foreign currency exchange gains (losses), included
in non-operating deductions in the Consolidated Statements of Income, were
$1,694,000, $513,000 and $(268,000) for the years ended December 31, 2008, 2007
and 2006, respectively.

Note 7.   Inventories

     The following is a summary of inventories by major
category:

Thousands of Dollars

2008

2007

Raw materials

$

67,498

$

41,998

Work in process

10,191

8,134

Finished goods

35,027

31,144

Packaging and supplies

21,267

22,097

Total inventories

$

133,983

$

103,373

F-15

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Note 8.   Property, Plant and Equipment

     The major categories of property, plant and equipment
and accumulated depreciation and depletion are presented below:

Thousands of Dollars

2008

2007

Land

$

25,182

$

21,720

Quarries/mining properties

39,596

39,123

Buildings

167,912

161,865

Machinery and equipment

959,291

975,177

Construction in progress

12,960

33,478

Furniture and fixtures and other

119,290

120,480

1,324,231

1,351,843

Less: Accumulated depreciation
and depletion

(894,638
)

(862,457
)

Property, plant and equipment,
net

$

429,593

$

489,386

      Depreciation and depletion expense for the years ended
December 31, 2008, 2007 and 2006 was $76.2 million, $80.4 million and $80.5
million, respectively.

Note 9.   Restructuring Costs

     Following an in-depth review of all our operations and
development of a new strategic focus, the Company recorded a pre-tax charge of
$16.0 million for restructuring and other costs during the second half of 2007.
This charge consists of severance and other employee benefit costs, contract
termination costs and other exit costs. Additional restructuring costs of $9.5
million were recorded in 2008 related to this program, of which a pension
settlement loss of approximately $6.8 million related to the distribution of
benefits was included. The restructuring resulted in a total workforce reduction
of approximately 250 employees, of which 230 reductions have been implemented as
of December 31, 2008.
     During the fourth quarter of 2008, the Company initiated
an additional restructuring program by reducing the workforce by approximately
14% through a combination of permanent reductions and layoffs. Severance-related
restructuring charges of $3.9 million were recorded in 2008 related to this
program.
     The following table reflects components of the
restructuring charges:

(millions of dollars)

2008

2007

Severance and other employee benefits

$

6.1

$

13.5

Pension settlement charges

6.8

--

Contract termination costs

--

1.8

Other exit costs

0.5

0.7

Total restructuring and other costs

$

13.4

$

16.0

     The restructuring charge in 2007 also resulted in
inventory write-downs of approximately $0.2 million which were included in cost
of goods sold.
     A reconciliation of the restructuring liability, as of
December 31, 2008, is as follows:

(millions of dollars)

Balance as of

December 31,

2007

Additional

Provisions

Cash

Expenditures

Other

Balance as of

December 31,

2008

Severance and other employee benefits

$

12.6

$

6.1

$

(13.2)

(0.3)

$

5.2

Contract termination costs

1.8

--

(0.2)

--

1.6

Other exit costs

0.1

0.5

(0.6)

--

--

$

14.5

$

6.6

$

(14.0)

(0.3)

$

6.8

Note 10.   Acquisitions

     In October 2006, the Company acquired all of the
outstanding stock of ASMAS, an Istanbul-based Turkish producer of refractories
for approximately $32.4 million in cash. The terms of the acquisition provide
for an additional purchase price of up to $5 million to be paid in 2009 based
upon performance criteria through 2008. The Company expects to pay $0.7 million
in the first quarter of 2009. The operations of this entity have been
included in the Refractories segment of the Company's financial statements since
the date of the acquisition.

F-16

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     The following table summarizes the estimated fair value
of the assets acquired and liabilities assumed at the date of the acquisition:

(Millions of
Dollars)

2006

Current assets

$

5.1

Property, plant
and equipment

13.5

Intangible assets

8.6

Goodwill

13.8

Total assets acquired

41.0

Liabilities
assumed

8.6

Net cash paid

$

32.4

     The weighted average amortization period for the
acquired intangible assets subject to amortization is approximately 13.5 years.
Goodwill associated with this transaction is not tax deductible.
     Pro forma financial information has not been presented
since this business combination was not material to the Company's total assets
or results of operations.

Note 11.  Goodwill and Other Intangible Assets

   The carrying amount of goodwill was $66.4 million and
$72.0 million as of December 31, 2008 and December 31, 2007, respectively. The
net change in goodwill since December 31, 2006 was primarily attributable to the
effect of foreign exchange.
     Acquired intangible assets included in other assets and
deferred charges subject to amortization as of December 31, 2008 and December
31, 2007 were as follows:

December 31, 2008

December 31, 2007

(Millions of Dollars)

Gross

Carrying

Amount

Accumulated

Amortization

Gross

Carrying

Amount

Accumulated

Amortization

Patents and trademarks

$

7.4

$

3.2

$

7.9

$

2.7

Customer lists

9.2

1.9

11.1

1.4

Other

0.4

0.2

0.4

0.1

$

17.0

$

5.3

$

19.4

$

4.2

     The weighted average amortization period for acquired
intangible assets subject to amortization is approximately 15 years.
Amortization expense was approximately $1.4 million, $1.5 million and $0.8
million for the years ended December 31, 2008, 2007 and 2006, respectively. The
estimated amortization expense is $1.2 million for each of the next five years
through 2013.
     Included in other assets and deferred charges is an
additional intangible asset of approximately $4.0 million which represents the
non-current unamortized amount paid to a customer in connection with contract
extensions at eight satellite PCC facilities. In addition, a current portion of
$1.5 million is included in prepaid expenses and other current assets. Such
amounts will be amortized as a reduction of sales over the remaining lives of
the customer contracts. Approximately $1.8 million was amortized in 2008, 2007
and 2006, respectively. Estimated amortization as a reduction of sales is as
follows: 2009 - $1.5 million; 2010 - $1.2 million; 2011 - $0.9 million; 2012 -
$0.6 million; 2013 - $0.6 million; with smaller reductions thereafter over the
remaining lives of the contracts.

Note 12.  Accounting for Impairment of Long-Lived Assets

     The Company accounts for impairment of long-lived assets
in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets." SFAS No. 144 also establishes a uniform accounting
model for the disposal of long-lived assets. Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In such instances, the
Company estimates the undiscounted future cash flows (excluding interest) that
result from the use of the asset and its ultimate disposition. If the sum of the

F-17

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

undiscounted cash flows (excluding interest) is less than the
carrying value, the Company recognizes an impairment loss, measured as the
amount by which the carrying value exceeds the fair value of the asset,
determined principally using discounted cash flows.
     During the fourth quarter of 2008, the Company recorded
a writedown of impaired assets of $0.2 million for the closure of its satellite
facility at Dryden, Canada.
     In 2007, following an in-depth strategic review of all
its operations, the Company recorded a charge of $140.9 million, of which $46.9
million was reclassified to discontinued operations, as part of a program to
realign its operations by consolidating operations within certain product lines
and exiting certain businesses. Major components of this realignment include an
exit from our Synsil^® Products product line; consolidation of our
Specialty PCC operations in the United States; sale of our two plants in the
Midwest that process imported ore in the Processed Minerals product line;
modification of our strategy for coating PCC resulting in the closure of one
facility; and a slower than anticipated market penetration at our refractories
facility in China resulting in an impairment of assets charge.
     The impairment charge relates to all product lines. The
following table reflects the components of the impairment of assets charge
included in continuing operations:

(millions of dollars)

Paper PCC

$

65.3

Specialty PCC

12.7

Total PCC

78.0

Processed Minerals

1.3


Specialty
Minerals Segment

79.3

Refractories
Segment

14.8

$

94.1

Note 13.   Derivative Financial Instruments and Hedging
Activities

     The Company is exposed to foreign currency exchange rate
fluctuations. As part of its risk management strategy, the Company uses forward
exchange contracts (FEC) to manage its exposure to foreign currency risk on
certain raw material purchases. The Company's objective is to offset gains and
losses resulting from these exposures with gains and losses on the derivative
contracts used to hedge them. The Company has not entered into derivative
instruments for any purpose other than to hedge certain expected cash flows. The
Company does not speculate using derivative instruments.
     By using derivative financial instruments to hedge
exposures to changes in interest rates and foreign currencies, the Company
exposes itself to credit risk and market risk. Credit risk is the risk that the
counterparty will fail to perform under the terms of the derivative contract.
When the fair value of a derivative contract is positive, the counterparty owes
the Company, which creates credit risk for the Company. When the fair value of a
derivative contract is negative, the Company owes the counterparty, and
therefore, it does not face any credit risk. The Company minimizes the credit
risk in derivative instruments by entering into transactions with major
financial institutions.
     Market risk is the adverse effect on the value of a
financial instrument that results from a change in interest rates, currency
exchange rates, or commodity prices. The market risk associated with interest
rate and forward exchange contracts is managed by establishing and monitoring
parameters that limit the types and degree of market risk that may be
undertaken.
     Based on criteria established by SFAS No. 133, the
Company designated its derivatives as cash flow hedges. The Company uses FEC's
designated as cash flow hedges to protect against foreign currency exchange rate
risks inherent in its forecasted inventory purchases. The Company had 18 open
foreign exchange contracts as of December 31, 2008.

     For derivative instruments that are designated and
qualify as cash flow hedges, the effective portion of the gain or loss on the
derivative instrument is initially recorded in accumulated other comprehensive
income (loss) as a separate component of shareholders' equity and subsequently
reclassified into earnings in the period during which the hedged transaction is
recognized in earnings. The gains and losses associated with these forward
exchange contracts are recognized into cost of sales. Gains and losses and hedge
ineffectiveness associated with these derivatives were not significant.
F-18

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Note 14.  Short-term Investments

     The composition of the Company's short-term investments
are as follows:

(in thousands of dollars)

2008

2007

Short-term
Investments -

Available for Sale
Securities:

Short-term bank deposits

$

9,258

$

9,697

         There were no unrealized holding gains and losses on the
short-term bank deposits held at December 31, 2008 since the carrying amount
approximates fair market value.

Note 15:  Fair Value of Financial Instruments

     Effective January 1, 2008, the Company adopted the
provisions of SFAS 157, "Fair Value Measurements" for its financial assets and
liabilities. While adoption of SFAS 157 has no material impact on its financial
statements, the Company is required to provide additional disclosures. SFAS 157
defines fair value as an exchange price that would be received for an asset or
paid to transfer a liability (exit price) in an orderly transaction between
market participants at the measurement date. The Company utilizes market data or
assumptions that market participants would use in pricing the asset or
liability. SFAS 157 establishes a three-tier fair value hierarchy, which
prioritizes the inputs used in measuring fair value. These tiers include: Level
1, defined as observable inputs such as quoted prices in active markets; Level
2, defined as inputs other than quoted prices in active markets that are either
directly or indirectly observable; and Level 3, defined as unobservable inputs
about which little or no market data exists, therefore requiring an entity to
develop its own assumptions.
     Assets and liabilities measured at fair value are based
on one or more of three valuation techniques noted in SFAS 157. The three
valuation techniques are as follows:

•

Market approach - prices and other relevant information
generated by market transactions involving identical or comparable assets or
liabilities.

•

Cost approach - amount that would be required to replace
the service capacity of an asset or replacement cost.

•

Income approach - techniques to convert future amounts to
a single present amount based on market expectations, including present
value techniques, option-pricing and other models.

     The Company primarily applies the income approach for
foreign exchange derivatives for recurring fair value measurements and attempts
to utilize valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs.
     As of December 31, 2008, the Company held certain
financial assets and liabilities that were required to be measured at fair value
on a recurring basis. These consisted of the Company's derivative instruments
related to foreign exchange rates. The fair values of foreign exchange rate
derivatives are determined based on inputs that are readily available in public
markets or can be derived from information available in publicly quoted markets
and are categorized as Level 2. The Company does not have any financial assets
or liabilities measured at fair value on a recurring basis categorized as Level
1 or Level 3, and there were no transfers in or out of Level 3 during the year
ended December 31, 2008. There were also no changes to the Company's valuation
techniques used to measure asset and liability fair values on a recurring basis.

F-19

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     The following table sets forth by level within SFAS
157's fair value hierarchy the Company's financial assets and liabilities
accounted for at fair value on a recurring basis as of December 31, 2008. As
required by SFAS 157, assets and liabilities are classified in their entirety
based on the lowest level of input that is significant to the fair value
measurement. The Company's assessment of the significance of a particular input
to the fair value measurement requires judgment, and may affect the valuation of
fair value assets and liabilities and their placement within the fair value
hierarchy levels.

Assets (Liabilities) at Fair Value as of December 31, 2008

Quoted Prices

In Active Markets for

Identical Assets

Significant Other

Observable Inputs

Significant

Unobservable Inputs

(Level 1)

(Level 2)

(Level 3)

Forward exchange
contracts

$

--

$

1,696

$

--

Total

$

--

$

1,696

$

--

Note 16.  Financial Instruments and Concentrations of Credit
Risk

     The following methods and assumptions were used to
estimate the fair value of each class of financial instrument:
     Cash and cash equivalents, short-term investments,
accounts receivable and payable: The carrying amounts approximate fair value
because of the short maturities of these instruments.
     Short-term debt and other liabilities: The
carrying amounts of short-term debt and other liabilities approximate fair value
because of the short maturities of these instruments.
     Long-term debt: The fair value of the long-term
debt of the Company is estimated based on the quoted market prices for that debt
or similar debt and approximates the carrying amount.
     Forward exchange contracts: The fair value of
forward exchange contracts (used for hedging purposes) is estimated by obtaining
quotes from brokers. If appropriate, the Company would enter into forward
exchange contracts to mitigate the impact of foreign exchange rate movements on
the Company's operating results. It does not engage in speculation. Such foreign
exchange contracts would offset losses and gains on the assets, liabilities and
transactions being hedged. At December 31, 2008, the Company had open foreign
exchange contracts with a financial institution to purchase approximately $6.4
million of foreign currencies. These contracts range in maturity from January,
2009 to July, 2009. The fair value of these instruments was a liability of $0.4
and $0.1 million, respectively, at both December 31, 2008 and December 31, 2007.
Additionally, the Company entered into forward contracts to
purchase 30 million Euros as a hedge of its net investment in Europe. These
contracts mature in October 2013. The fair value of these instruments at
December 31, 2008 was an asset of $2.1 million.
     Credit risk: Substantially all of the Company's
accounts receivables are due from companies in the paper, construction and steel
industries. Credit risk results from the possibility that a loss may occur from
the failure of another party to perform according to the terms of the contracts.
The Company regularly monitors its credit risk exposures and takes steps to
mitigate the likelihood of these exposures resulting in actual loss. The
Company's extension of credit is based on an evaluation of the customer's
financial condition and collateral is generally not required.
     The Company's bad debt expense (recoveries) for the
years ended December 31, 2008, 2007 and 2006 was $0.2 million, $(0.1) million
and $0.4 million, respectively.

F-20

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Note 17.  Long-Term Debt and Commitments

     The following is a summary of long term debt:

(thousands of
dollars)

Dec. 31,

2008



Dec. 31,

2007

5.53% Series
2006A Senior Notes

Due October 5,
2013

$ 50,000

$ 50,000

Floating Rate
Series 2006A Senior Notes

Due October 5,
2013

25,000

25,000

Variable/Fixed
Rate Industrial

Development
Revenue Bonds Due 2009

4,000

4,000

Economic
Development Authority Refunding

Revenue Bonds
Series 1999 Due 2010

4,600

4,600

Variable/Fixed
Rate Industrial

Development
Revenue Bonds Due August 1, 2012

8,000

8,000

Variable/Fixed
Rate Industrial

Development
Revenue Bonds Series 1999 Due November 1, 2014

8,200

8,200

Variable/Fixed
Rate Industrial

Development
Revenue Bonds Due March 31, 2020

--

5,000

Variable Rate
Renminbi Denominated Loan Agreement

Due 2009

--

4,785

Installment
obligations

Due 2013

1,421

7,886

Other borrowings

--

745

Total

101,221

118,216

Less: Current
maturities

4,000

7,210

Long-term debt

$ 97,221

$111,006

The Variable/Fixed Rate Industrial Development Revenue Bonds
due 2009 are tax-exempt 15-year instruments issued to finance the expansion of a
PCC plant in Selma, Alabama. The bonds are dated November 1, 1994, and provide
for an optional put by the holder (during the Variable Rate Period) and a
mandatory call by the issuer. The bonds bear interest at either a variable rate
or fixed rate at the option of the Company. Interest is payable semi-annually
under the fixed rate option and monthly under the variable rate option. The
Company has selected the variable rate option on these borrowings and the
average interest rates were approximately 2.53% and 3.69% for the years ended
December 31, 2008 and 2007, respectively.
     The Economic Development Authority Refunding Revenue
Bonds due 2010 were issued on February 23, 1999 to refinance the bonds issued in
connection with the construction of a PCC plant in Eastover, South Carolina. The
bonds bear interest at either a variable rate or fixed rate, at the option of
the Company. Interest is payable semi-annually under the fixed rate option and
monthly under the variable rate option. The Company has selected the variable
rate option on these borrowings and the average interest rates were
approximately 2.53% and 3.69% for the years ended December 31, 2008 and 2007,
respectively.
     The Variable/Fixed Rate Industrial Development Revenue
Bonds due August 1, 2012 are tax-exempt 15-year instruments that were issued on
August 1, 1997 to finance the construction of a PCC plant in Courtland, Alabama.
The bonds bear interest at either a variable rate or fixed rate, at the option
of the Company. Interest is payable semi-annually under the fixed rate option
and monthly under the variable rate option. The Company has selected the
variable rate option on these borrowings and the average interest rates were
approximately 2.53% and 3.69% for the years ended December 31, 2008 and 2007,
respectively.
     The Variable/Fixed Rate Industrial Development Revenue
Bonds due November 1, 2014 are tax-exempt 15-year instruments and were issued on
November 30, 1999 to refinance the bonds issued in connection with the
construction of a PCC plant in Jackson, Alabama. The bonds bear interest at
either a variable rate or fixed rate at the option of the Company. Interest is
payable semi-annually under the fixed rate option and monthly under the variable
rate option. The Company has selected the variable rate option on these
borrowings and the average interest rates were approximately 2.53% and 3.69% for
the years ended December 31, 2008 and 2007, respectively.
     On June 9, 2000 the Company entered into a twenty-year,
taxable, Variable/Fixed Rate Industrial Development Revenue Bond agreement to
finance a portion of the construction of a merchant manufacturing facility for
the production of Specialty PCC in Brookhaven, Mississippi. This facility has
ceased operations during the first quarter of 2008 and the Company repaid this
obligation on March 31, 2008.

F-21

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     On May 31, 2003, the Company acquired land and limestone
ore reserves from the Cushenbury Mine Trust for approximately $17.5 million.
Approximately $6.1 million was paid at the closing and $11.4 million was
financed through an installment obligation. The interest rate on this obligation
is approximately 4.25%. For the year ending December 31, 2008, $6.5 million of
principal was paid on this debt. The remaining principal payment of $1.4 million
will be made in 2013.
     On October 5, 2006, the Company, through private
placement, entered into a Note Purchase Agreement and issued $75 million
aggregate principal amount unsecured senior notes. These notes consist of two
tranches: $50 million aggregate principal amount 5.53% Series 2006A Senior Notes
(Tranche 1 Notes); and $25 million aggregate principal amount Floating Rate
Series 2006A Senior Notes (Tranche 2 Notes). Tranche 1 Notes bear interest of
5.53% per annum, payable semi-annually. Tranche 2 Notes bear floating rate
interest, payable quarterly. The average interest rate on Tranche 2 for the
years ended December 31, 2008 and December 31, 2007 was 4.09% and 5.73%,
respectively. The principal payment for both tranches is due on October 5, 2013.
     During the first quarter of 2007, the Company entered
into a series of Renminbi ("RMB") denominated loan agreements through two of its
consolidated joint ventures in China with Communication Bank of China, totaling
RMB 60,000,000. During 2007, the Company repaid RMB 25.0 million of principal
related to these loans. During 2008, the Company repaid the remaining RMB 35.0
million related to these loans. The interest rate on these loans was
approximately 7.56%.
     The aggregate maturities of long-term debt are as
follows: 2009 - $4.0 million; 2010 - $4.6 million; 2011 - $-- million; 2012 -
$8.0; 2013 - $-- million; thereafter - $84.6 million.
     The Company had available approximately $169.8 million
in uncommitted, short-term bank credit lines, of which $13.4 million was in use
at December 31, 2008.
     Short-term borrowings as of December 31, 2008 and 2007
were $15.0 million and $9.5 million, respectively. The weighted average interest
rate on short-term borrowings outstanding as of December 31, 2008 and 2007 was
6.15% and 6.22%, respectively.
     During 2008, 2007 and 2006, respectively, the Company
incurred interest costs of $5.3 million, $9.2 million and $8.9 million including
$0.1 million, $0.5 million and $0.6 million, respectively, which were
capitalized. Interest paid approximated the incurred interest cost.

Note 18.  Benefit Plans

     Pension Plans and Other Postretirement Benefit Plans

     The Company and its subsidiaries have pension plans
covering the majority of eligible employees on a contributory or
non-contributory basis.
     Benefits under defined benefit plans are generally based
on years of service and an employee's career earnings. Employees generally
become fully vested after five years.
     The Company provides postretirement health care and life
insurance benefits for the majority of its U.S. retired employees. Employees are
generally eligible for benefits upon retirement and completion of a specified
number of years of creditable service. The Company does not pre-fund these
benefits and has the right to modify or terminate the plan in the future.

F-22

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     The funded status of the Company's pension plans and
other postretirement benefit plans at December 31, 2008 and 2007 is as follows:
     Obligations and Funded Status

Pension Benefits

Post-retirement Benefits

Millions of Dollars

2008

2007

2008

2007

Change in benefit obligation

Benefit obligation at beginning of year

$

194.8

$

214.5

$

40.0

$

44.0

Service cost

7.1

8.8

2.1

2.6

Interest cost

11.1

11.4

2.4

2.4

Actuarial (gain) loss

5.4

(24.6
)

(0.3
)

(7.9
)

Benefits paid

(3.6
)

(17.0
)

(2.3
)

(1.1
)

Plan amendments

--

(2.1
)

--

--

Settlements

(19.6
)

--

--

--

Foreign exchange impact

(10.9
)

3.4

--

--

Other

0.4

0.4

--

--

Benefit obligation at end of year

$

184.7

$

194.8

$

41.9

$

40.0

Pension Benefits

Post-retirement Benefits

Millions of Dollars

2008

2007

2008

2007

Change in plan assets

Fair value of plan assets beginning of year

$

244.5

$

226.3

$

--

$

--

Actual return on plan assets

(40.1
)

8.3

--

--

Employer contributions

3.2

24.0

2.3

1.1

Plan participants' contributions

--

0.5

--

--

Benefits paid

(3.6
)

(17.0
)

(2.3
)

(1.1
)

Settlements

(19.6
)

--

--

--

Foreign exchange impact

(10.9
)

3.0

--

--

Other

--

2.4

--

--

Fair value of plan assets at end of year

$

173.5

$

244.5

$

--

$

--

Funded status

$

(11.2
)

$

49.7

$

(41.9
)

$

(40.0
)

    Amounts recognized in the consolidated balance sheet
consist of:

Pension Benefits

Post-retirement Benefits

Millions of Dollars

2008

2007

2008

2007

Non-current asset

$

0.5

$

53.7

$

--

$

--

Current liability

(0.2
)

--

(1.5
)

(1.5
)

Non-current liability

(11.5
)

(4.0
)

(40.4
)

(38.5
)

Recognized asset (liability)

$

(11.2
)

$

49.7

$

(41.9
)

$

(40.0
)

     The current portion of pension liabilities is included
in accrued compensation and related items.
     Amounts recognized in accumulated other comprehensive
income consist of:

Pension Benefits

Post-retirement Benefits

Millions of Dollars

2008

2007

2008

2007

Net actuarial loss

$

55.2

$

24.9

$

3.3

$

3.6

Prior service cost

5.4

6.3

1.1

1.4

Amount recognized end of year

$

60.6

$

31.2

$

4.4

$

5.0

     The accumulated benefit obligation for all defined
benefit pension plans was $168.4 million and $179.5 million at December 31, 2008
and 2007, respectively.

F-23

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     Changes in the Plan assets and benefit obligations
recognized in other comprehensive income:

(Millions of Dollars)

Pension Benefits

Post Retirement Benefits

Current year actuarial gain
(loss)

$

(33.2

)

$

1.7

Amortization of actuarial
(gain) loss

1.46

0.1

Amortization of prior service
credit loss

0.9

0.3

Total recognized in other
comprehensive income

$

(30.9

)

$

2.1

     The components of net periodic benefit costs are as
follows:

Pension Benefits

Post-retirement Benefits

Millions of
Dollars

2008

2007

2006

2008

2007

2006

Service cost

$

7.1

$

8.8

$

7.9

$

2.1

$

2.6

$

2.1

Interest cost

11.1

11.4

10.1

2.4

2.4

2.2

Expected return
on plan assets

(17.5
)

(18.8
)

(15.4
)

--

--

--

Amortization of
prior service cost

1.5

1.5

1.0

0.6

0.5

1.0

Recognized net
actuarial loss

2.3

2.8

3.2

0.2

0.8

0.2

SFAS No. 88
Settlement /curtailment

(gain) loss

7.1

0.1

(0.8
)

--

--

--

Net periodic
benefit cost

$

11.6

$

5.8

$

6.0

$

5.3

$

6.3

$

5.5

     Unrecognized prior service cost is amortized over the
average remaining service period of each active employee.
     In accordance with the provisions of SFAS No. 88,
"Employers' Accounting for Settlements and Curtailments of Defined Benefit Plans
and for Termination of Benefits," the Company recorded a pre-tax pension
settlement charge of $7.1 million relating to employees that received lump-sum
distributions in connection with the restructuring program initiated in 2007.
Approximately $0.3 million of this charge was included in discontinued
operations.
     Under the provisions of SFAS No. 88, lump-sum
distributions from terminations, resulted in a plan curtailment of one of the
Company's pension plans and also caused partial settlement of such plan. As a
result, there was a curtailment loss in income from operations of $0.1 million
in 2007 and a curtailment gain in income from operations of $0.8 million in
2006.
     The Company's funding policy for U.S. plans generally is
to contribute annually into trust funds at a rate that provides for future plan
benefits and maintains appropriate funded percentages. Annual contributions to
the U.S. qualified plans are at least sufficient to satisfy regulatory funding
standards and are not more than the maximum amount deductible for income tax
purposes. The funding policies for the international plans conform to local
governmental and tax requirements. The plans' assets are invested primarily in
stocks and bonds.
     The 2009 estimated amortization of amounts in other
comprehensive income are as follows:

(Millions of Dollars)

Pension Benefits

Post Retirement Benefits

Amortization of prior service
cost

$

1.6

$

0.5

Amortization of net loss

7.5

0.2

     Total costs to be
recognized

$

9.1

$

0.7

Additional Information

     The weighted average assumptions used to determine net
periodic benefit cost in the accounting for the pension benefit plans and other
benefit plans for the years ended December 31, 2008, 2007 and 2006 are as
follows:

2008

2007

2006

Discount rate

6.30
%

5.75
%

5.75
%

Expected return on plan assets

8.00
%

8.50
%

8.50
%

Rate of compensation increase

3.50
%

3.50
%

3.50
%

F-24

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     The weighted average assumptions used to determine
benefit obligations for the pension benefit plans and other benefit plans at
December 31, 2008, 2007 and 2006 are as follows:

2008

2007

2006

Discount rate

6.20
%

6.25
%

5.75
%

Rate of compensation increase

3.50
%

3.50
%

3.50
%

     For 2008, 2007 and 2006, the discount rate was based on
a Citigroup yield curve of high quality corporate bonds with cash flows matching
our plans' expected benefit payments. The expected return on plan assets is
based on our asset allocation mix and our historical return, taking into account
current and expected market conditions. The actual return (loss) on pension
assets was approximately (19%) in 2008, 4% in 2007 and 10.5 in 2006.
     The Company's Plan stipulates that the maximum health
care cost trend rate will be 5%.
     A one percentage-point change in assumed health care
cost trend rates would have the following effects:

Millions of Dollars

1-Percentage Point

Increase

1-Percentage Point

Decrease

Effect on total service and interest cost components

$

--

$

(0.4)

Effect on postretirement benefit obligations

$

--

$

(3.2)

Plan Assets

     The Company's pension plan weighted average asset
allocations at December 31, 2008 and 2007 by asset category are as follows:

Asset Category

2008

2007

Equity securities

11.7
%

62.5
%

Fixed income
securities

85.7
%

35.0
%

Real estate

0.1
%

0.2
%

Other

2.5
%

2.3
%

Total

100
%

100
%

     During 2008, due to the economic crisis, the assets for
all of the U.S. pension plans were moved to fixed income securities.
     The following table presents domestic and foreign
pension plan assets information at December 31, 2008, 2007 and 2006 (the
measurement date of pension plan assets):

U.S. Plans

International Plans

Millions of Dollars

2008

2007

2006

2008

2007

2006

Fair value of plan assets

$

132.8

$

188.7

$

177.9

$

40.7

$

55.8

$

48.4

     Conributions

     The Company expects to contribute $6 million to its
pension plans and $1.5 million to its other postretirement benefit plan in 2009.
     Estimated Future Benefit Payments

     The following benefit payments, which reflect expected
future service, as appropriate, are expected to be paid:

Millions of Dollars

Pension

Benefits

Other

Benefits

2009

$

8.4

$

1.5

2010

$

10.8

$

1.6

2011

$

11.4

$

1.8

2012

$

12.1

$

2.0

2013

$

13.9

$

2.3

2014 - 2018 $

$

83.1

$

17.0

F-25

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     Investment Strategies

     The investment strategy for pension plan assets is to
maintain a broadly diversified portfolio designed to achieve our target of an
average long-term rate of return of 8%. While we believe we can achieve a
long-term average rate of return of 8%, we cannot be certain that the portfolio
will perform to our expectations. Assets are strategically allocated among
equity, debt, and other investments in order to achieve a diversification level
that dampens fluctuations in investment returns.
     We have temporarily invested our assets in fixed income
securities due to the uncertainty in the markets, but have not changed our
long-term strategy.
     Savings and Investment Plans

     The Company maintains a voluntary Savings and Investment
Plan for most non-union employees in the U.S. Within prescribed limits, the
Company bases its contribution to the Plan on employee contributions. The
Company's contributions amounted to $3.2 million, $3.4 million and $3.3 million
for the years ended December 31, 2008, 2007 and 2006, respectively.

Notes 19.  Leases

     The Company has several non-cancelable operating leases,
primarily for office space and equipment. Rent expense amounted to approximately
$7.5 million, $7.0 million and $6.1 million for the years ended December 31,
2008, 2007 and 2006, respectively. Total future minimum rental commitments under
all non-cancelable leases for each of the years 2009 through 2013 and in
aggregate thereafter are approximately $6.2 million, $3.9 million, $2.4 million,
$1.3 million, $0.6 million, respectively, and $6.0 million thereafter. Total
future minimum rentals to be received under non-cancelable subleases were
approximately $2.9 million at December 31, 2008.
     Total future minimum payments to be received under
direct financing leases for each of the years 2009 through 2013 and the
aggregate thereafter are approximately: $6.7 million, $3.5 million, $2.4
million, 1.3 million, 1.0 million and $1.1 million thereafter.

Note 20.  Litigation

     Certain of the Company's subsidiaries are among numerous
defendants in a number of cases seeking damages for exposure to silica or to
asbestos containing materials. The Company currently has 307 pending silica
cases and 26 pending asbestos cases. To date, 1,158 silica cases and 2 asbestos
cases have been dismissed. One new asbestos case was filed in the fourth quarter
of 2008. Most of these claims do not provide adequate information to assess
their merits, the likelihood that the Company will be found liable, or the
magnitude of such liability, if any. Additional claims of this nature may be
made against the Company or its subsidiaries. At this time management
anticipates that the amount of the Company's liability, if any, and the cost of
defending such claims, will not have a material effect on its financial position
or results of operations.
     The Company has not settled any silica or asbestos
lawsuits to date. We are unable to state an amount or range of amounts claimed
in any of the lawsuits because state court pleading practices do not require
identifying the amount of the claimed damage. The aggregate cost to the Company
for the legal defense of these cases since inception was approximately $0.1
million, the majority of which has been reimbursed by Pfizer Inc. pursuant to
the terms of certain agreements entered into in connection with the Company's
initial public offering in 1992. During 2008, agreement was reached with Pfizer
for reimbursement by Pfizer of past costs of defense, and direct payment of such
costs going forward, to the extent these cases allege exposure to product sold
prior to the formation of the Company. During the fourth quarter, Pfizer
reimbursed the Company in the amount of $0.1 million for past defense costs. Our
experience has been that the Company is not liable to plaintiffs in any of these
lawsuits and the Company does not expect to pay any settlements or jury verdicts
in these lawsuits.

Environmental Matters

     On April 9, 2003, the Connecticut Department of
Environmental Protection ("DEP") issued an administrative consent order relating
to our Canaan, Connecticut, plant where both our Refractories segment and
Specialty Minerals segment have operations. We agreed to the order, which
includes provisions requiring investigation and remediation of contamination
associated with historic use of polychlorinated biphenyls ("PCBs") at a portion
of the site. The following is the present status of the remediation efforts:

F-26

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

•

Building Decontamination. We have completed the
investigation of building contamination and submitted a report
characterizing the contamination. We are awaiting review and approval of
this report by the regulators. Based on the results of this investigation,
we believe that the contamination may be adequately addressed by means of
encapsulation through painting of exposed surfaces, pursuant to the
Environmental Protection Agency's ("EPA") regulations and have accrued such
liabilities as discussed below. However, this conclusion remains uncertain
pending completion of the phased remediation decision process required by
the regulations.

•
Groundwater. We have
completed investigations of potential groundwater contamination and have
submitted a report on the investigations finding that there is no PCB
contamination, but some oil contamination of the groundwater. We expect the
regulators to require confirmatory long term groundwater monitoring at the
site.

•

Soil. We have completed the investigation of soil
contamination and submitted a report characterizing contamination to the
regulators. Based on the results of this investigation, we believe that the
contamination may be left in place and monitored, pursuant to a
site-specific risk assessment, which is underway. However, this conclusion
is subject to completion of a phased remediation decision process required
by applicable regulations.

     We believe that the most likely form of remediation will
be to leave existing contamination in place, encapsulate it, and monitor the
effectiveness of the encapsulation. We estimate that the cost of the likely
remediation above would approximate $400,000, and that amount has been recorded
as a liability on our books and records.
     The Company is evaluating options for upgrading the
wastewater treatment facilities at its Adams, Massachusetts, plant. This work is
being undertaken pursuant to an administrative Consent Order issued by the
Massachusetts Department of Environmental Protection on June 18, 2002. The Order
required payment of a civil fine in the amount of $18,500, the investigation of
options for ensuring that the facility's wastewater treatment ponds will not
result in discharge to groundwater, and closure of a historic lime solids
disposal area. The Company informed the Massachusetts Department of
Environmental Protection of proposed improvements to the wastewater treatment
system on June 29, 2007, and is committed to implementing the improvements by
June 1, 2012. Preliminary engineering reviews indicate that the estimated cost
of these upgrades to operate this facility beyond 2012 may be between $6 million
and $8 million. The Company estimates that the remaining remediation costs would approximate
$400,000, which has been accrued as of December 31, 2008.
     The Company and its subsidiaries are not party to any
other material pending legal proceedings, other than routine litigation
incidental to their businesses.

Note 21.  Stockholders' Equity

Capital Stock

     The Company's authorized capital stock consists of 100
million shares of common stock, par value $0.10 per share, of which 18,691,802
shares and 19,090,139 shares were outstanding at December 31, 2008 and 2007,
respectively, and 1,000,000 shares of preferred stock, none of which were issued
and outstanding.

Cash Dividends

     Cash dividends of $3.8 million or $0.20 per common share
were paid during 2008. In February 2009, a cash dividend of approximately $0.9
million or $0.05 per share, was declared, payable in the first quarter of 2009.

Preferred Stock Purchase Rights

     Under the Company's Preferred Stock Purchase Rights
Plan, each share of the Company's common stock carries with it one preferred
stock purchase right. Subject to the terms and conditions set forth in the plan,
the rights will become exercisable if a person or group acquires beneficial
ownership of 15% or more of the Company's common stock or announces a tender or
exchange offer that would result in the acquisition of 30% or more thereof. If
the rights become exercisable, separate certificates evidencing the rights will
be distributed, and each right will entitle the holder to purchase from the
Company a new series of preferred stock, designated as Series A Junior Preferred
Stock, at a predefined price. The rights also entitle the holder to purchase
shares in a change-of-control situation. The preferred stock, in addition to a
preferred dividend and liquidation right, will entitle the holder to vote on a
pro rata basis with the Company's common stock.
     The rights are redeemable by the Company at a fixed
price until 10 days or longer, as determined by the Board, after certain defined
events or at any time prior to the expiration of the rights on September 13,
2009 if such events do not occur.
F-27

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Stock and Incentive Plan

     The Company has adopted a Stock Award and Incentive Plan
(the "Plan"), which provides for grants of incentive and non-qualified stock
options, stock appreciation rights, stock awards or performance unit awards. The
Plan is administered by the Compensation Committee of the Board of Directors.
Stock options granted under the Plan have a term not in excess of ten years. The
exercise price for stock options will not be less than the fair market value of
the common stock on the date of the grant, and each award of stock options will
vest ratably over a specified period, generally three years.
     The following table summarizes stock option and
restricted stock activity for the Plan:

Stock Options

Restricted Stock

Shares Available for Grant

Shares

Weighted Average Exercise Price Per Share ($)

Shares

Weighted Average Exercise Price Per Share ($)

Balance January 1, 2006

849,107

1,185,765

45.15

84,755

54.20

Granted

(129,500
)

79,200

54.82

50,300

54.91

Exercised/vested

--

(103,392
)

39.02

(255
)

39.30

Canceled

9,504

(9,504
)

35.80

--

--

Balance December 31, 2006

729,111

1,152,069

46.44

134,800

55.61

Granted

(233,750
)

146,100

61.19

87,650

61.27

Exercised/vested

--

(433,965
)

43.01

(33,363
)

55.42

Canceled

80,043

(24,489
)

55.67

(55,554
)

56.56

Balance December 31, 2007

575,404

839,715

50.51

133,533

58.98

Granted

(180,900
)

112,300

64.47

68,600

64.06

Exercised/vested

--

(261,460
)

43.97

(28,267
)

56.45

Canceled

41,346

(28,774
)

57.90

(12,572
)

58.30

Balance December 31, 2008

435,850

661,781

55.14

161,294

61.63

Note 22.  Comprehensive Income

     Comprehensive income includes changes in the fair value
of certain financial derivative instruments that qualify for hedge accounting to
the extent they are effective, the recognition of deferred pension costs, and
cumulative foreign currency translation adjustments.
     The following table reflects the accumulated balances of
other comprehensive income (loss):

Millions of Dollars

Currency Translation Adjustment

Unrecognized Pension

Costs

Net Gain (Loss) On Cash Flow Hedges

Accumulated Other Comprehensive Income (Loss)

Balance at January 1, 2006

$

(2.8
)

(3.0
)

(0.1
)

(5.9
)

Current year net change

36.0

(51.3
)

--

(15.3
)

Balance at December 31, 2006

33.2

(54.3
)

(0.1
)

(21.2
)

Current year net change

48.5

18.1

--

66.6

Balance at December 31, 2007

81.7

(36.2
)

(0.1
)

45.4

Current year net change

(49.4
)

(28.8
)

1.2

(77.0
)

Balance at December 31, 2008

$

32.3

$

(65.0
)

$

1.1

$

(31.6
)

     The income tax expense (benefit) associated with items
included in other comprehensive income (loss) was approximately $(18.0) million,
$11.2 million and $1.9 million for the years ended December 31, 2008, 2007 and
2006, respectively.

Note 23.  Accounting for Asset Retirement Obligations

     SFAS No. 143, "Accounting for
Asset Retirement Obligations," establishes the financial accounting and
reporting for obligations associated with the retirement of long-lived assets
and the associated asset retirement costs. The Company
F-28

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

records asset retirement obligations in which the
Company will be required to retire tangible long-lived assets. These are
primarily related to its PCC satellite facilities and mining operations. The
Company has also applied the provisions of FIN 47 related to conditional asset
retirement obligations at its facilities. The Company has recorded asset
retirement obligations at all of its facilities except where there are no
contractual or legal obligations. The associated asset retirement costs are
capitalized as part of the carrying amount of the long-lived asset.
     The following is a reconciliation of asset retirement
obligations as of December 31, 2008 and 2007:

Millions of Dollars

2008

2007

Asset retirement liability,
beginning of period

$

12.9

$

11.7

Accretion expense

0.7

0.8

Payments

(0.2
)

(0.1
)

Foreign currency translation

(0.4
)

0.5

Asset retirement liability,
end of period

$

13.0

$

12.9

     The current portion of the liability of approximately
$0.4 million is included in other current liabilities. The long-term portion of
the liability of approximately $12.6 million is included in other noncurrent
liabilities.
     Accretion expense is included in cost of goods sold in
the Company's Consolidated Statements of Operations.

Note 24.  Non-Operating Income and Deductions

(Millions of
dollars)

Dec. 31, 2008

Dec. 31, 2007

Dec. 31, 2006

Interest income

$

4.9

$

3.1

$

1.8

Interest expense

(5.2
)

(8.7
)

(8.3
)

Gain on insurance settlement

--

3.0

1.8

Foreign exchange gains
(losses)

1.7

0.5

(0.3
)

Other income (deductions)

(1.1
)

(0.9
)

(0.9
)

Non-operating
income (deductions), net

$

0.3

$

(3.0
)

$

(5.9
)

     During the fourth quarter of 2007, the Company recognized a business
interruption insurance recovery gain of $3.0 million related to Hurricane Ivan
in 2004.
     During the first quarter of 2006, the Company recognized
an insurance settlement gain of $1.8 million, net of related deductible, for
property damage sustained at one of our facilities in 2004 as a result of
Hurricane Ivan. Claims submitted to the insurance carrier for damages related to
a combination of replacement costs for fixed assets and reimbursement of
expenses associated with the clean-up and repairs at the facility. The insurance
settlement gain related to the reimbursement of replacement costs for fixed
assets in excess of the net book value of such assets.

Note 25.  Transaction with Former Parent Company

     Under the terms of certain agreements entered into in connection with
the Company's initial public offering in 1992, Pfizer Inc ("Pfizer") agreed to
indemnify the Company against any liability arising from claims for remediation,
as defined in the agreements, of on-site environmental conditions relating to
activities prior to the closing of the initial public offering. The Company had
asserted to Pfizer a number of indemnification claims pursuant to those
agreements during the ten-year period following the closing of the initial
public offering. Since the initial public offering, the Company has incurred and
expensed approximately $6 million of environmental claims under these
agreements. On January 20, 2006, Pfizer and the Company agreed to settle those
claims, along with certain other potential environmental liabilities of Pfizer,
in consideration of a payment by Pfizer of $4.5 million. Such payment was
recorded as additional paid-in-capital, net of its related tax effect. During
2008, agreement was reached with Pfizer providing for reimbursement by Pfizer of
past costs of defense, and direct payment of such costs going forward, for cases
alleging damages from exposure to product sold prior to the formation of the
Company. During the fourth quarter, Pfizer reimbursed the Company in the amount
of $0.1 million for past defense costs.

F-29

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

Note 26.  Segment and Related Information

     Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. The Company's operating
segments are strategic business units that offer different products and serve
different markets. They are managed separately and require different technology
and marketing strategies.
     The Company has two reportable segments: Specialty
Minerals and Refractories. The Specialty Minerals segment produces and sells
precipitated calcium carbonate and lime, and mines, processes and sells the
natural mineral products limestone and talc. This segment's products are used
principally in the paper, building materials, paints and coatings, glass,
ceramic, polymers, food, automotive, and pharmaceutical industries. The
Refractories segment produces and markets monolithic and shaped refractory
products and systems used primarily by the steel, cement and glass industries as
well as metallurgical products used primarily in the steel industry.
     The accounting policies of the segments are the same as
those described in the summary of significant accounting policies. The Company
evaluates performance based on the operating income of the respective business
units. Depreciation expense related to corporate assets is allocated to the
business segments and is included in their income from operations. However, such
corporate depreciable assets are not included in the segment assets.
Intersegment sales and transfers are not significant.
     Segment information for the years ended December 31,
2008, 2007 and 2006 was as follows:

2008

(Millions of Dollars)

Specialty Minerals

Refractories

Total

Net sales

$

716.4

$

395.8

$

1,112.2

Income from operations

57.0

26.3

83.3

Impairment of assets

0.2

--

0.2

Restructuring and other
charges

7.7

5.7

13.4

Depreciation, depletion and
amortization

64.3

15.8

80.1

Segment assets

632.4

396.1

1,028.5

Capital expenditures

18.2

11.5

29.7

2007

(Millions of Dollars)

Specialty Minerals

Refractories

Total

Net sales

$

716.6

$

361.1

$

1,077.7

Income (loss) from operations

(20.0
)

11.5

(8.5
)

Impairment of assets

79.3

14.8

94.1

Restructuring and other
charges

11.3

4.7

16.0

Depreciation, depletion and
amortization

68.1

16.5

84.6

Segment assets

698.8

395.6

1,094.4

Capital expenditures

32.9

11.9

44.8

2006

Specialty Minerals

Refractories

Total

Net sales

$

675.6

$

347.9

$

1,023.5

Income from operations

60.5

31.9

92.4

Depreciation, depletion and
amortization

66.1

14.4

80.5

Segment assets

795.8

356.2

1,152.0

Capital expenditures

40.0

16.0

56.0

F-30

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

   A reconciliation of the totals reported for the operating
segments to the applicable line items in the consolidated financial statements
is as follows:

(Millions of
Dollars)

Income (loss)
before provision for taxes on income and


minority
interests and discontinued operations

2008

2007

2006

Income (loss)
from operations for reportable segments

$

83.3

$

(8.5
)

$

92.4

Unallocated
corporate expenses

(1.3
)

--

--

Interest income

4.9

3.1

1.8

Interest expense

(5.2
)

(8.7
)

(8.3
)

Other income
(deductions)

0.6

2.6

0.7


Income (loss)
before provision for taxes on income,


minority interests and
discontinued operations

$

82.3

$

(11.5
)

$

86.6

Total
assets

2008

2007

2006

Total segment
assets

$

1,028.5

$

1,094.4

$

1,152.0

Corporate assets

39.1

34.5

41.1




Consolidated total assets

$

1,067.6

$

1,128.9

$

1,193.1

Capital expenditures

2008

2007

2006

Total segment
capital expenditures

$

29.7

$

44.8

$

56.0

Corporate capital
expenditures

1.3

1.3

1.4




Consolidated total capital
expenditures

$

31.0

$

46.1

$

57.4

     The carrying amount of goodwill by reportable segment as
of December 31, 2008 and December 31, 2007 was as follows:

Goodwill

(Millions of
Dollars)

2008

2007

Specialty
Minerals

$

13.4

$

15.3

Refractories

53.0

56.7


Total

$

66.4

$

72.0

     The net change in goodwill since December 31, 2007 is
primarily attributable to the effect of foreign exchange.
     Financial information relating to the Company's
operations by geographic area was as follows:

(Millions of
Dollars)

Net Sales

2008

2007

2006

United States

$

586.5

$

581.9

$

592.6

Canada/Latin
America

83.8

83.3

80.7

Europe/Africa

352.7

337.4

278.4

Asia

89.2

75.1

71.8

Total
International

525.7

495.8

430.9




Consolidated total net sales

$

1,112.2

$

1,077.7

$

1,023.5

F-31

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

     Net sales and long-lived assets are attributed to
countries and geographic areas based on the location of the legal entity. No
individual foreign country represents more than 10% of consolidated net sales or
consolidated long-lived assets.

(Millions of
Dollars)

Long-lived assets

2008

2007

2006

United States

$

296.9

$

322.4

$

425.2

Canada/Latin
America

13.3

20.1

18.8

Europe/Africa

130.4

172.1

217.1

Asia

67.1

62.0

75.3

Total
International

210.8

254.2

311.2




Consolidated total long-lived
assets

$

507.7

$

576.6

$

736.4

     The Company's sales by product category are as
follows:

Millions of Dollars

2008

2007

2006

Paper PCC

$

547.2

$

542.0

$

500.6

Specialty PCC

58.5

60.6

56.4

Talc

35.9

37.3

38.9

GCC

74.8

76.7

79.7

Refractory Products

320.8

290.5

264.6

Metallurgical Products

75.0

70.6

83.3

Net sales

$

1,112.2

$

1,077.7

$

1,023.5

Note 27.  Quarterly Financial Data (unaudited)

     The financial information for all periods presented has
been reclassified to reflect discontinued operations. See Note 4 to the
Consolidated Financial Statements for further information.

Millions of Dollars, Except Per Share Amounts

2008
Quarters

First

Second

Third

Fourth

Net Sales by Major Product Line

PCC

$

153.2

$

158.0

$

157.2

$

137.3

Processed Minerals

27.6

31.1

29.5

22.5

Specialty
Minerals Segment

180.8

189.1

186.7

159.8

Refractories Segment

96.7

110.7

108.2

80.2

Net sales

277.5

299.8

294.9

240.0

Gross profit

60.7

62.3

59.4

38.0

Income from operations

27.1

28.8

23.0

3.1

Income from continuing operations

16.8

18.7

16.1

3.4

Income from discontinued operations

0.4

4.6

2.9

2.3

Net income

$

17.2

$

23.3

$

19.0

$

5.7

Earnings per
share:

Basic:

Earnings per share

from continuing operations

$

0.88

$

0.99

$

0.85

$

0.19

Earnings per share

from discontinued operations

0.02

0.24

0.16

0.12

Basic earnings per share

$

0.90

$

1.23

$

1.01

$

0.31

F-32

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES OF CONSOLIDATED FINANCIAL STATEMENTS

2008
Quarters

First

Second

Third

Fourth

Diluted:

Earnings per share

from continuing operations

$

0.88

$

0.98

$

0.85

$

0.19

Earnings per share

from discontinued operations

0.02

0.24

0.15

0.12

Diluted earnings per share

$

0.90

$

1.22

$

1.00

$

0.31

Market price
range per share of common stock:

High

$

64.74

$

72.42

$

68.38

$

59.36

Low

$

52.29

$

62.80

$

60.73

$

37.89

Close

$

61.72

$

64.65

$

61.62

$

40.90

Dividends paid per common share

$

0.05

$

0.05

$

0.05

$

0.05

2007 Quarters

First

Second

Third

Fourth

Net Sales by Major Product Line

PCC

$

148.6

$

149.5

$

150.3

$

154.1

Processed Minerals

27.4

31.3

29.2

26.3

Specialty
Minerals Segment

176.0

180.8

179.5

180.4

Refractories Segment

89.5

90.6

87.0

93.9

Net sales

265.5

271.4

266.5

274.3

Gross profit

56.5

60.1

56.3

59.6

Income (loss) from operations

22.7

26.9

(82.2
)

24.1

Income (loss) continuing operations

12.6

16.1

(71.8
)

17.4

Loss from discontinued operations

(1.8
)

(1.7
)

(33.7
)

(0.6
)

Net income (loss)

$

10.8

$

14.4

$

(105.5
)

$

16.8

Earnings (loss)
per share:

Basic:

Earnings (loss)
per share

from continuing operations

$

0.66

$

0.84

$

(3.72
)

$

0.90

Earnings (loss) per share

discontinued operations

(0.09
)

(0.09
)

(1.75
)

(0.03
)

Basic earnings (loss) per share

$

0.57

$

0.75

$

(5.47
)

$

0.87

Diluted:

Earnings (loss) per share

from continuing operations

$

0.65

$

0.83

$

(3.72
)

$

0.89

Earnings (loss) per share

from discontinued operations

(0.09
)

(0.09
)

(1.75
)

(0.03
)

Diluted earnings (loss) per share

$

0.56

$

0.74

$

(5.47
)

$

0.86

Market price
range per share of common stock:

High

$

64.00

$

68.39

$

70.64

$

70.91

Low

$

56.80

$

62.58

$

63.07

$

63.62

Close

$

62.16

$

66.95

$

67.00

$

66.95

Dividends paid per common share

$

0.05

$

0.05

$

0.05

$

0.05

F-33

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Minerals Technologies Inc.:
We have audited the accompanying consolidated balance sheets
of Minerals Technologies Inc. and subsidiary companies as of December 31, 2008
and 2007, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 2008. In connection with our audits of the consolidated financial
statements, we also have audited the related financial statement schedule. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule 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 financial
position of Minerals Technologies Inc. and subsidiary companies as of December
31, 2008 and 2007, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 2008, in
conformity with U.S. generally accepted
accounting principles.
Also in our opinion, the related financial statement schedule, when considered
in relation to the consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

As discussed in the notes to the consolidated financial
statements, effective January 1, 2007, the Company adopted FASB Interpretation
No. 48, "Accounting for Uncertainty in Income Taxes." In addition, effective
January 1, 2006, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 123R, "Share-Based Payment," SFAS No. 151, "Inventory Costs - an
Amendment of ARB No. 43, Chapter 4," and Emerging Issues Task Force Issue No.
04-06, "Accounting for Stripping Costs Incurred During Production in the Mining
Industry." Also as discussed in the notes to the consolidated financial
statements, effective December 31, 2006, the Company adopted SFAS No. 158,
"Employers' Accounting for Defined Benefit Pension and Other Post Retirement
Plans - An Amendment of FASB Statements No. 87, 88, 106, and 132(R)."
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), Mineral Technologies
Inc. and subsidiary companies' internal control over financial reporting as of
December 31, 2008, based on criteria
established in Internal Control - Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
and our report dated February 25, 2009 expressed an unqualified opinion on the
effectiveness of the Company's internal control over financial reporting.

/s/ KPMG LLP
New York, New York

February 25, 2009

F-34

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Minerals Technologies Inc.:
We have audited Minerals Technologies Inc. and subsidiary
companies' internal control over financial reporting as of December 31, 2008,
based on criteria established in Internal Control - Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Minerals Technologies Inc. and subsidiary companies' 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, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included 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, Minerals Technologies Inc. and subsidiary
companies maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2008, based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the consolidated
balance sheets of Minerals Technologies Inc. and subsidiary companies as of
December 31, 2008 and 2007, and the related consolidated statements of
operations, shareholders' equity, and cash flows and related financial statement
schedule for each of the years in the three-year period ended December 31, 2008,
and our report dated February 25, 2009 expressed an unqualified opinion
on those consolidated financial statements and financial statement schedule.

/s/ KPMG LLP

New York, New York

February 25, 2009

F-35

Management's Report On Internal Control Over Financial Reporting

     Management of Minerals Technologies Inc. is responsible
for the preparation, integrity and fair presentation of its published
consolidated financial statements. The financial statements have been prepared
in accordance with U.S. generally accepted accounting principles and, as such,
include amounts based on judgements and estimates made by management. The
Company also prepared the other information included in the annual report and is
responsible for its accuracy and consistency with the consolidated financial
statements.
     Management is also responsible for establishing and
maintaining effective internal control over financial reporting. The Company's
internal control over financial reporting includes those policies and procedures
that pertain to the Company's ability to record, process, summarize and report
reliable financial data. The Company maintains a system of internal control over
financial reporting, which is designed to provide reasonable assurance to the
Company's management and board of directors regarding the preparation of
reliable published financial statements and safeguarding of the Company's
assets. The system includes a documented organizational structure and division
of responsibility, established policies and procedures, including a code of
conduct to foster a strong ethical climate, which are communicated throughout
the Company, and the careful selection, training and development of our people.
     The Board of Directors, acting through its Audit
Committee, is responsible for the oversight of the Company's accounting
policies, financial reporting and internal control. The Audit Committee of the
Board of Directors is comprised entirely of outside directors who are
independent of management. The Audit Committee is responsible for the
appointment and compensation of the independent registered public accounting
firm. It meets periodically with management, the independent registered public
accounting firm and the internal auditors to ensure that they are carrying out
their responsibilities. The Audit Committee is also responsible for performing
an oversight role by reviewing and monitoring the financial, accounting and
auditing procedures of the Company in addition to reviewing the Company's
financial reports. The independent registered public accounting firm and the
internal auditors have full and unlimited access to the Audit Committee, with or
without management, to discuss the adequacy of internal control over financial
reporting, and any other matters which they believe should be brought to the
attention of the Audit Committee.
     Management recognizes that there are inherent
limitations in the effectiveness of any system of internal control over
financial reporting, including the possibility of human error and the
circumvention or overriding of internal control. Accordingly, even effective
internal control over financial reporting can provide only reasonable assurance
with respect to financial statement preparation and may not prevent or detect
misstatements. Further, because of changes in conditions, the effectiveness of
internal control over financial reporting may vary over time.
     The Company assessed its internal control system as of
December 31, 2008 in relation to criteria for effective internal control over
financial reporting described in "Internal Control - Integrated Framework"
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on its assessment, the Company has determined that, as of December 31,
2008, its system of internal control over financial reporting was effective.
     The consolidated financial statements have been audited
by the independent registered public accounting firm, which was given
unrestricted access to all financial records and related data, including minutes
of all meetings of stockholders, the Board of Directors and committees of the
Board. Reports of the independent registered public accounting firm, which
includes the independent registered public accounting firm's attestation of the
effectiveness of the Company's internal control over financial reporting are
also presented within this document.

/s/
Joseph C. Muscari

Chairman of the Board

and Chief Executive Officer
/s/
John A. Sorel

Senior Vice President, Finance

and Chief Financial Officer



/s/
Michael A. Cipolla

Vice President, Corporate Controller

and Chief Accounting Officer

February 25, 2009
F-36

MINERALS TECHNOLOGIES INC. & SUBSIDIARY COMPANIES

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

(thousands of dollars)

Description

Balance at Beginning of Period

Additions Charged to Costs, Provisions and` Expenses
(b)

Deductions (a)

Balance at End of Period

Year ended
December 31, 2008

Valuation and
qualifying accounts deducted from

assets to which they apply:

Allowance for
doubtful accounts

$

3,223

$

159

$

782

$

2,600

Year ended
December 31, 2007

Valuation and
qualifying accounts deducted from

assets to which they apply:

Allowance for
doubtful accounts

$

4,550

$

(49)

$

(1,278)

$

3,223

Year ended
December 31, 2006

Valuation and
qualifying accounts deducted from

assets to which they apply:

Allowance for
doubtful accounts

$

5,818

$

377

$

(1,645
)

$

4,550

(a)
Includes impact of translation
of foreign currencies.

(b)
Provision for bad debts, net of
reversal of recoveries of $0.2 million, $-- million and $0.4 million in
2008, 2007 and 2006, respectively.

S-1}}

Location	Facility	Product Line
United States
Arizona, Pima County	Plant; Quarry¹	Limestone
California, Lucerne Valley	Plant; Quarry	Limestone
Connecticut, Canaan	Plant; Quarry	Limestone, Metallurgical Wire/Calcium
Indiana, Mt. Vernon	Plant⁴	Talc/Limestone
Indiana, Portage	Plant	Refractories/Shapes
Louisiana, Baton Rouge	Plant	Monolithic Refractories
Massachusetts, Adams	Plant; Quarry	Limestone, Lime, PCC
Montana, Dillon	Plant; Quarry	Talc
New Jersey, Old Bridge	Plant	Monolithic Refractories
New York, New York	Headquarters²	All Company Products
Ohio, Bryan	Plant	Monolithic Refractories
Ohio, Dover	Plant	Monolithic Refractories/Shapes
Pennsylvania, Bethlehem	Administrative Office; Research laboratories; Sales Offices	PCC, Lime, Limestone, Talc
Pennsylvania, Easton	Administrative Office; Research laboratories; Plant; Sales Offices	All Company Products

•	Building Decontamination. We have completed the investigation of building contamination and submitted a report characterizing the contamination. We are awaiting review and approval of this report by the regulators. Based on the results of this investigation, we believe that the contamination may be adequately addressed by means of encapsulation through painting of exposed surfaces, pursuant to the Environmental Protection Agency's ("EPA") regulations and have accrued such liabilities as discussed below. However, this conclusion remains uncertain pending completion of the phased remediation decision process required by the regulations.
•	Groundwater. We have completed investigations of potential groundwater contamination and have submitted a report on the investigations finding that there is no PCB contamination, but some oil contamination of the groundwater. We expect the regulators to require confirmatory long term groundwater monitoring at the site.
•	Soil. We have completed the investigation of soil contamination and submitted a report characterizing contamination to the regulators. Based on the results of this investigation, we believe that the contamination may be left in place and monitored, pursuant to a site-specific risk assessment, which is underway. However, this conclusion is subject to completion of a phased remediation decision process required by applicable regulations.

2008 Quarters	First		Second		Third		Fourth

Market Price Range Per Share of Common Stock
High	$	64.74	$	72.42	$	68.38	$	59.36
Low		52.29		62.80		60.73		37.89
Close		61.72		64.65		61.62		40.90

Dividends paid per common share	$	0.05	$	0.05	$	0.05	$	0.05

2007 Quarters	First		Second		Third		Fourth

Market Price Range Per Share of Common Stock
High	$	64.00	$	68.39	$	70.64	$	70.91
Low		56.80		62.58		63.07		63.62
Close		62.16		66.95		67.00		66.95

Dividends paid per common share	$	0.05	$	0.05	$	0.05	$	0.05

Plan Category	Number of securities to be issued upon exercise of outstanding options	Weighted average exercise price of outstanding options		Number of securities remaining available for future issuance


Equity compensation plans approved by security holders	661,781	$	55.14	435,850

Equity compensation plans not approved by security holders	--		--	--


Total	661,781	$	55.14	435,850

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of the Publicly Announced Program		Dollar Value of Shares That May Yet be Purchased Under the Program


September 29 - October 26	34,000	$	53.25	570,274	$	39,366,824

October 27 - November 23	39,200	$	49.14	609,474	$	37,440,619

November 24 - December 31	6,200	$	44.45	615,674	$	37,165,023


Total	79,400	$	50.53

Dollars in Millions, Except Per Share Data

Income Statement Data:				2008				2007								2006							2005						2004


Net sales				$		1,112.2		$		1,077.7						$			1,023.5				$		956.8				$				889.7
Cost of goods sold						891.7				845.1									798.7						744.0								676.3

	Production margin					220.5				232.6									224.8						212.8								213.4

Marketing and administrative expenses						101.8				104.6									104.6						98.1								93.0
Research and development expenses						23.1				26.3									27.8						27.0								26.9
Impairment of assets						0.2				94.1									--						0.3								--
Restructuring and other costs						13.4				16.0									--						--								1.1
Acquisition termination costs						--				--									--						--								1.0

	Income (loss) from operations					82.0				(8.5		)							92.4						87.4								91.4

Non-operating income (deductions), net						0.3				(3.0		)							(5.9	)					(3.9			)					(4.5	)


	Income (loss) before provision for taxes					82.3				(11.5		)							86.5						83.5								86.9
			on income, minority interests and
			discontinued operations
Provision for taxes on income						24.1				11.3									27.0						25.1								25.1
Minority interests						3.2				2.9									3.4						1.7								1.7


	Income (loss) from continuing operations					55.0				(25.7		)							56.1						56.7								60.1
	Income (loss) from discontinued operations, net of tax					10.3				(37.8		)							(6.1	)					(3.4			)					(1.5	)


		Net income (loss)		$		65.3		$		(63.5		)				$			50.0				$		53.3				$				58.6




Earnings Per Share

Basic:
Earnings (loss) per share from continuing operations					$		2.91		$		(1.34		)		$			2.86						$		2.78				$		2.93
Earnings (loss) per share from discontinued operations							0.54				(1.97		)					(0.31			)					(0.16	)					(0.08			)


Basic earnings (loss) per share					$		3.45		$		(3.31		)		$			2.55						$		2.62				$		2.85




Diluted:
Earnings (loss) per share from continuing operations					$		2.90		$		(1.34		)		$			2.84						$		2.75				$		2.89
Earnings (loss) per share from discontinued operations							0.54				(1.97		)					(0.31			)					(0.16	)					(0.07			)


Diluted earnings (loss) per share					$		3.44		$		(3.31		)		$			2.53						$		2.59				$		2.82



Weighted average number of common shares outstanding:
Basic						18,893				19,190							19,600								20,345						20,530
Diluted						18,983				19,190							19,738								20,567						20,769
Dividends declared per common share				$		0.20		$		0.20				$			0.20					$			0.20				$		0.20

Balance Sheet Data:
Working capital				$		380.7		$		306.2				$			199.7					$			145.9				$		242.8
Total assets						1,067.6				1,128.9							1,193.1								1,156.3						1,154.9
Long-term debt						97.2				111.0							113.4								40.3						94.8
Total debt						116.2				127.7							203.1								156.9						128.7
Total shareholders' equity						711.6				751.2							752.6								771.2						799.3

Year Ended December 31,				2008		2007		2006


Net sales				100.0	%	100.0	%	100.0	%
Cost of goods sold				80.2		78.4		78.1

	Production margin			19.8		21.6		21.9

Marketing and administrative expenses				9.1		9.7		10.2
Research and development expenses				2.1		2.4		2.7
Impairment of assets				--		8.8		--
Restructuring charges				1.2		1.5		--

	Income (loss) from operations			7.4		(0.8)		9.0


	Income (loss) before provision for taxes on income,
			minority interests and discontinued operations	7.4		(1.1)		8.5
Provision for taxes on income				2.2		1.0		2.7
Minority interests				0.3		0.3		0.3

	Income (loss) from continuing operations			4.9		(2.4)		5.5
	Income (loss) from discontinued operations			1.0		(3.5)		(0.6)


		Net income (loss)		5.9	%	(5.9)	%	4.9	%

•	Our global business could continue to be adversely affected by decreases in economic activity. U.S. steel production is at its lowest levels since the mid 1980's at 1.2 million tons per week. Housing starts are at 24 year lows with the December 2008 annualized rate at 550,000 units and the full year 2008 rate at 900,000 units, as compared to 2.1 million units in 2005. In the automotive industry, light vehicle sales were down 18% in 2008 and 35% in the fourth quarter of 2008. In the Paper industry, production levels within the North American and European uncoated freesheet markets, our most significant market areas, continued to contract to adjust to reduced demand.
•	The ongoing tightening of credit in the financial markets could adversely affect the ability of our customers or our suppliers to obtain financing.
•	The uncertainty in the global economy may also continue to impact our pension costs. Changes in the fair market value of our pension assets, rates of return on assets, and discount rates could have a significant impact on our net periodic pension costs and well as our funding requirements.
•	Our success depends in part on the performance of the industries we serve, particularly paper, steel, construction and automotive. Some of our customers may experience further consolidations and shutdowns or may face increased liquidity issues, which could deteriorate the aging of our accounts receivable, increase our bad debt exposure and possibly trigger impairment of assets.
•	Consolidations in the paper and steel industries concentrate purchasing power in the hands of fewer customers, increasing pricing pressure on suppliers such as Minerals Technologies Inc.
•	Most of our Paper PCC sales are subject to long-term contracts that may be terminated pursuant to their terms, or may be renewed on terms less favorable to us.
•	Our filler-fiber composite technology continues in development through customer trials, but has yet to be proven on a long-term commercial scale.
•	We are subject to volatility in pricing and supply availability of our key raw materials used in our Paper PCC product line and Refractory product line. Our ability to recover increased costs is uncertain and may become more difficult in this economic environment.
•	We continue to rely on China for the majority of our supply of magnesium oxide in the Refractories segment and may be subject to uncertainty in availability and cost.
•	The performance of our Processed Minerals and Specialty PCC product lines are subject to fluctuations in energy costs.
•	As we expand our operations abroad we face the inherent risks of doing business in many foreign countries, including foreign exchange risk, import and export restrictions, and security concerns.

•	Development of the filler-fiber composite program, which continues to undergo large-scale paper machine trials, to increase the fill-rate for uncoated freesheet paper.
•	Increasing our sales of PCC for paper by further penetration of the markets for paper filling at both freesheet and groundwood mills, particularly in emerging markets.
•	Further expansion of the Company's PCC coating product line using the satellite model.
•	Leverage the Company's expertise in crystal engineering, especially in helping papermakers customize PCC morphologies for specific paper applications.
•	Development of unique calcium carbonates used in the manufacture of novel biopolymers, a new market opportunity.
•	Rapid deployment of value-added formulations of refractory materials that not only reduce costs but improve performance.
•	Continuing our penetration in emerging markets through our manufacturing facilities in China and Turkey, both within the Refractories segment.

Net Sales			2008	% of Total Sales		Growth			2007	% of Total Sales		Growth			2006	% of Total Sales

U.S.		$	587.5	52.8	%	1	%	$	581.9	54.0	%	(2)	%	$	592.6	57.9	%
International			524.7	47.2	%	6	%		495.8	46.0	%	15	%		430.9	42.1	%

	Net sales	$	1,112.2	100.0	%	3	%	$	1,077.7	100.0	%	5	%	$	1,023.5	100.0	%




Paper PCC		$	547.2	49.2	%	1	%	$	542.0	50.3	%	8	%	$	500.6	48.9	%
Specialty PCC			58.5	5.3	%	(3)	%		60.6	5.6	%	7	%		56.4	5.5	%

	PCC Products	$	605.7	54.5	%	1	%	$	602.6	55.9	%	8	%	$	557.0	54.4	%


Talc		$	35.9	3.2	%	(4)	%	$	37.3	3.5	%	(4)	%	$	38.9	3.8	%
GCC			74.8	6.7	%	(2)	%		76.7	7.1	%	(4)	%		79.7	7.8	%

	Processed Minerals Products	$	110.7	9.9	%	(3)	%	$	114.0	10.6	%	(4)	%	$	118.6	11.6	%


	Specialty Minerals Segment	$	716.4	64.4	%	--	%	$	716.6	66.5	%	6	%	$	675.6	66.0	%


Refractory Products		$	320.8	28.9	%	10	%	$	290.5	27.0	%	10	%	$	264.6	25.9	%
Metallurgical Products			75.0	6.7	%	6	%		70.6	6.5	%	(15)	%		83.3	8.1	%

	Refractories Segment	$	395.8	35.6	%	10	%	$	361.1	33.5	%	4	%	$	347.9	34.0	%


	Net sales	$	1,112.2	100.0	%	3	%	$	1,077.7	100.0	%	5	%	$	1,023.5	100.0	%

Operating Costs and Expenses (Dollars in millions)		2008	Growth			2007	Growth			2006


Cost of goods sold	$	891.7	6	%	$	845.1	6	%	$	798.7
Marketing and administrative	$	101.8	(3)	%	$	104.6	--	%	$	104.6
Research and development	$	23.1	(13)	%	$	26.3	(5)	%	$	27.8
Impairment of assets	$	0.2	*	%	$	94.1	*	%	$	--
Restructuring charges	$	13.4	(17)	%	$	16.0	*	%	$	--

Severance and other employee benefits	$	13.5
Contract termination costs		1.8
Other exit costs		0.7

	$	16.0

Income (Loss) from Operations (Dollars in millions)		2008	Growth			2007	Growth			2006


Income (loss) from operations	$	82.0	*	%	$	(8.5)	(109)	%	$	92.4

Non-Operating Income (Deductions) (Dollars in millions)		2008	Growth			2007	Growth			2006


Non-operating income (deductions), net	$	0.3	*	%	$	(3.0)	(49)	%	$	(5.9)

Provision for Taxes on Income (Dollars in millions)		2008	Growth			2007	Growth			2006


Provision for taxes on income	$	24.1	114	%	$	11.3	(58)	%	$	27.0

Minority Interests (Dollars in millions)		2008	Growth			2007	Growth			2006


Minority interests	$	3.2	10	%	$	2.9	(15)	%	$	3.4

Net Income (Loss) (Dollars in millions)		2008	Growth			2007	Growth			2006


Net income (loss)	$	65.3	*	%	$	(63.5)	(227)	%	$	50.0

•	Intensified monitoring and review processes around customers, suppliers and banking partners.
•	Established additional cash conservation strategies.
•	Suspended stock buyback program.
•	Reallocated our pension assets to conserve value.
•	Shortened work weeks.
•	Significantly reduced overtime.
•	Continued our intensive expense control initiatives.
•	Initiated an additional restructuring program with both permanent reductions and layoffs.

•	Continue development and potential commercial introduction of filler-fiber composite technology for the paper industry to increase the fill-rates of uncoated freesheet paper.
•	Increase market penetration of PCC for paper filling at both freesheet and groundwood mills, particularly in emerging markets.
•	Further expansion of the Company's PCC coating product line using the satellite model.
•	Emphasize higher value specialty products and application systems to increase market penetration in the Refractories segment.
•	Expand regionally into emerging markets, particularly to China and Eastern Europe.
•	Development of unique calcium carbonates used in the manufacture of biopolymers, a new market opportunity.
•	Continue to improve our cost competitiveness in all product lines.
•	Explore selective acquisitions to complement our existing businesses.

•	Revenue recognition: Revenue from sale of products is recognized at the time the goods are shipped and title passes to the customer. In most of our PCC contracts, the price per ton is based upon the total number of tons sold to the customer during the year. Under those contracts, the price billed to the customer for shipments during the year is based on periodic estimates of the total annual volume that will be sold to the customer. Revenues are adjusted at the end of each year to reflect the actual volume sold. There were no significant revenue adjustments in the fourth quarter of 2008 and 2007, respectively. We have consignment arrangements with certain customers in our Refractories segment. Revenues for these transactions are recorded when the consigned products are consumed by the customer. Revenues from sales of equipment are recorded upon completion of installation and receipt of customer acceptance. Revenues from services are recorded when the services are performed.
•	Allowance for doubtful accounts: Substantially all of our accounts receivable are due from companies in the paper, construction and steel industries. Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. Such allowance is established through a charge to the provision for bad debt expenses. We recorded bad debt expenses (recoveries) of $0.2 million, $(0.1) million and $0.4 million in 2008, 2007 and 2006, respectively. In addition to specific allowances established for bankrupt customers, we also analyze the collection history and financial condition of our other customers considering current industry conditions and determine whether an allowance needs to be established or adjusted.
•	Property, plant and equipment, goodwill, intangible and other long-lived assets: Property, plant and equipment are depreciated over their useful lives. Useful lives are based on management's estimates of the period that the assets can generate revenue, which does not necessarily coincide with the remaining term of a customer's contractual obligation to purchase products made using those assets. Our sales of PCC are predominately pursuant to long-term evergreen contracts, initially ten years in length, with paper mills at which we operate satellite PCC plants. The terms of many of these agreements have been extended, often in connection with an expansion of the satellite PCC plant. Failure of a PCC customer to renew an agreement or continue to purchase PCC from our facility could result in an impairment of assets or accelerated depreciation at such facility.
•	Valuation of long-lived assets, goodwill and other intangible assets: We assess the possible impairment of long-lived assets and identifiable amortizable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Goodwill and other intangible assets with indefinite lives are reviewed for impairment at least annually in accordance with the provisions of SFAS No. 142. Factors we consider important that could trigger an impairment review include the following:

•	significant under-performance relative to historical or projected future operating results;
•	significant changes in the manner of use of the acquired assets or the strategy for the overall business;
•	significant negative industry or economic trends;
•	market capitalization below invested capital.

•	Accounting for income taxes: As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating current tax expense together with assessing temporary differences resulting from differing treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the Consolidated Statements of Operations.
	The Company accounts for uncertain tax positions in accordance with FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN 48"), an interpretation of FASB Statement No. 109 ("SFAS 109"). The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of operations. See Note 5 to the condensed consolidated financial statements, "Income Taxes," for additional detail on our uncertain tax positions.
•	Pension Benefits: We sponsor pension and other retirement plans in various forms covering the majority of employees who meet eligibility requirements. Several statistical and actuarial models which attempt to estimate future events are used in calculating the expense and liability related to the plans. These models include assumptions about the discount rate, expected return on plan assets and rate of future compensation increases as determined by us, within certain guidelines. Our assumptions reflect our historical experience and management's best judgment regarding future expectations. In addition, our actuarial consultants also use subjective factors such as withdrawal and mortality rates to estimate these assumptions. The actuarial assumptions used by us may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants, among other things. Differences from these assumptions may result in a significant impact to the amount of pension expense/liability recorded by us follows:

(millions of dollars)		Discount Rate		Salary Scale		Return on Asset


1% increase	$	(2.7)	$	0.4	$	(1.6)
1% decrease	$	2.8	$	(0.4)	$	1.6

	A one-percent increase or decrease in the inflation rate would change the total obligation by approximately $0.3 million.

•	The Company's accounts for stock-based compensation expense under the provisions of SFAS No. 123R. The Company uses the Black-Scholes option pricing model to determine the fair value of stock options on their date of grant. This model is based upon assumptions relating to the volatility of the stock price, the life of the option, risk-free interest rate and dividend yield. Of these, stock price volatility and option life require greater levels of judgment and are therefore critical accounting estimates. We used a stock price volatility assumption based upon the historical and implied volatility of the Company's stock. We believe this is a good indicator of future, actual and implied volatilities. For stock options granted in the period ended December 31, 2008, the Company used a volatility assumption of 25.20%. The expected life calculation was based upon the observed and expected time to post-vesting forfeiture and exercise. For stock options granted during the fiscal year ended December 31, 2007, the Company used a 6.3 year life assumption. The Company believes the above critical estimates are based upon outcomes most likely to occur, however, were we to simultaneously increase or decrease the option life by one year and the volatility by 100 basis points, recognized compensation expense would have changed approximately $0.1 million in either direction for the year ended December 31, 2008.

Name	Age	Position

Joseph C. Muscari	62	Chairman of the Board and Chief Executive Officer
D. Randy Harrison	57	Senior Vice President, Organization and Human Resources
D.J. Monagle, III	46	Senior Vice President and Managing Director, Paper PCC
John A. Sorel	61	Senior Vice President, Finance, and Chief Financial Officer
William J.S. Wilkins	52	Senior Vice President and Managing Director, Minteq International
Michael A. Cipolla	51	Vice President, Corporate Controller and Chief Accounting Officer
Douglas T. Dietrich	39	Vice President, Corporate Development and Treasury
Kirk G. Forrest	57	Vice President, General Counsel and Secretary
William A. Kromberg	63	Vice President, Taxes
Douglas W. Mayger	51	Vice President and Managing Director, Performance Minerals

1.	Financial Statements. The following Consolidated Financial Statements of Mineral Technologies Inc. and subsidiary companies and Reports of Independent Registered Public Accounting Firm are set forth on pages F-2 to F-35.

	Consolidated Balance Sheets as of December 31, 2008 and 2007
	Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006
	Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
	Consolidated Statements of Shareholders' Equity for the years ended December 31, 2008, 2007 and 2006
	Notes to the Consolidated Financial Statements
	Reports of Independent Registered Public Accounting Firm
	Management's Report on Internal Control Over Financial Reporting

2.	Financial Statement Schedule. The following financial statement schedule is filed as part of this report:

					Page
	Schedule II -			Valuation and Qualifying Accounts	S-1

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and, therefore, have been omitted.

3.	Exhibits. The following exhibits are filed as part of, or incorporated by reference into, this report.

	3.1	-	Restated Certificate of Incorporation of the Company (1)
	3.2	-	By-Laws of the Company as amended and restated effective May 25, 2005 (5)
	3.3	-	Certificate of Designations authorizing issuance and establishing designations, preferences and rights of Series A Junior Preferred Stock of the Company (1)
	4	-	Rights Agreement, executed effective as of September 13, 1999 (the "Rights Agreement"), between Minerals Technologies Inc. and Chase Mellon Shareholders Services L.L.C., as Rights Agents, including as Exhibit B the forms of Rights Certificate and of Election to Exercise (6)
	4.1	-	Specimen Certificate of Common Stock (1)
	10.1	-	Asset Purchase Agreement, dated as of September 28, 1992, by and between Specialty Refractories Inc. and Quigley Company Inc. (2)
	10.1(a)	-	Agreement dated October 22, 1992 between Specialty Refractories Inc. and Quigley Company Inc., amending Exhibit 10.1 (3)
	10.1(b)	-	Letter Agreement dated October 29, 1992 between Specialty Refractories Inc. and Quigley Company Inc., amending Exhibit 10.1 (3)
	10.2	-	Reorganization Agreement, dated as of September 28, 1992, by and between the Company and Pfizer Inc (2)
	10.3	-	Asset Contribution Agreement, dated as of September 28, 1992, by and between Pfizer Inc and Specialty Minerals Inc. (2)
	10.4	-	Asset Contribution Agreement, dated as of September 28, 1992, by and between Pfizer Inc and Barretts Minerals Inc. (2)
	10.4(a)	-	Agreement dated October 22, 1992 between Pfizer Inc, Barretts Minerals Inc. and Specialty Minerals Inc., amending Exhibits 10.3 and 10.4 (3)
	10.5	-	Form of Employment Agreement (4), together with schedule relating to executed Employment Agreements (6) (+)
	10.6	-	Form of Severance Agreement, together with schedule relating to executed Severance Agreements (7) (+)
	10.7	-	Company Employee Protection Plan, as amended August 27, 1999 (6) (+)
	10.8	-	Company Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors, as amended and restated effective January 1, 2008 (12)(+)
	10.9	-	2001 Stock Award and Incentive Plan of the Company, as amended and restated as of December 20, 2005 (7) (+)
	10.10	-	Company Retirement Plan, as amended and restated effective as of January 1, 2006 (4) (+)
	10.10(a)	-	First Amendment to the Company's Retirement Plan, effective as of January 1, 2008 (11) (+)
	10.11	-	Company Nonfunded Supplemental Retirement Plan, as amended effective April 24, 2003 (8) (+)
	10.12	-	Company Savings and Investment Plan, as amended and restated as of September 14, 2007 (11) (+)
	10.13	-	Company Nonfunded Deferred Compensation and Supplemental Savings Plan, as amended effective April 24, 2003 (8) (+)

10.14	-	Company Health and Welfare Plan, effective as of April 1, 2003 and amended and restated as of January 1, 2006 (4)(+)
10.15	-	Grantor Trust Agreement, as amended and restated as of December 23, 2005, between the Company and The Bank of New York, as Trustee (7)(+)
10.16	-	Note Purchase Agreement, dated as of October 5, 2006, among the Company, Metropolitan Life Insurance Company and MetLife Insurance Company of Connecticut with respect to the Company's issuance of $75,000,000 in aggregate principal amount of senior unsecured notes due October 5, 2013 (9)
10.17	-	Indenture, dated July 22, 1963, between the Cork Harbour Commissioners and Roofchrome Limited (2)
10.18	-	Agreement of Lease, dated as of May 24, 1993, between the Company and Cooke Properties Inc. (1)
10.19	-	Employment Agreement, dated November 27, 2006, between the Company and Joseph C. Muscari (10)
21.1	-	Subsidiaries of the Company (*)
23.1	-	Consent of Independent Registered Public Accounting Firm (*)
31.1	-	Rule 13a-14(a)/15d-14(a) Certification executed by the Company's principal executive officer (*)
31.2	-	Rule 13a-14(a)/15d-14(a) Certification executed by the Company's principal financial officer (*)
32	-	Section 1350 Certification (*)

(1)	Incorporated by reference to the exhibit so designated filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2003.
(2)	Incorporated by reference to the exhibit so designated filed with the Company's Registration Statement on Form S-1 (Registration No. 33-51292), originally filed on August 25, 1992.
(3)	Incorporated by reference to the exhibit so designated filed with the Company's Registration Statement on Form S-1 (Registration No. 33-59510), originally filed on March 15, 1993.
(4)	Incorporated by reference to the exhibit so designated filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2006.
(5)	Incorporated by reference to the exhibit so designated filed with the Company's current Report on Form 8-K filed on May 27, 2005.
(6)	Incorporated by reference to the exhibit so designated filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2004.
(7)	Incorporated by reference to the exhibit so designated filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2005.
(8)	Incorporated by reference to the exhibit so designated filed with the Company's Quarterly Report on Form 10-Q for the quarter ended March 30, 2003.
(9)	Incorporated by reference to the exhibit 10.1 filed with the Company's Current Report on Form 8-K filed on October 11, 2006.
(10)	Incorporated by reference to exhibit 10.1 filed with the Company's Current Report on Form 8-K/A filed on December 1, 2006.
(11)	Incorporated by reference to the exhibit so designated filed with the Company's Annual Report on Form 10-K for the year ended December 31, 2007.
(12)	Incorporated by reference to the exhibit so designated filed with the Company's Quarterly Report on Form 10-Q for the quarter ended March 30, 2008.

(*)	Filed herewith.
(+)	Management contract or compensatory plan or arrangement required to be filed pursuant to Item 601 of Regulation S-K.

By:	/s/Joseph C. Muscari

	Joseph C. Muscari
	Chairman of the Board and Chief Executive Officer

SIGNATURE		TITLE	DATE

/s/ Joseph C. Muscari		Chairman of the Board and Chief Executive Officer	February 25, 2009

	Joseph C. Muscari	(principal executive officer)






/s/ John A. Sorel		Senior Vice President-Finance and	February 25, 2009

	John A. Sorel	Chief Financial Officer (principal financial officer)






/s/ Michael A. Cipolla		Vice President - Controller and	February 25, 2009

	Michael A. Cipolla	Chief Accounting Officer (principal accounting officer)