UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2018March 31, 2019

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-11430
--
MINERALS TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

DELAWARE 25-1190717
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

622 Third Avenue, New York, NY 10017-6707
(Address of principal executive offices, including zip code)

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

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

Title of each class
 Trading SymbolName of exchange on which registered
Common Stock, $0.10 par value MTXNew York Stock Exchange

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 ☒
NO ☐
YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES ☒ NO ☐
YES ☒
NO ☐

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

Large Accelerated Filer ☒
Accelerated Filer ☐
Non- acceleratedNon-accelerated Filer ☐ (☐Do (Do not check if a smaller reporting company)
Smaller Reporting Company ☐
Emerging Growth Company☐Company ☐
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐ NO ☒
YES ☐
NO ☒

Indicate the numberAs of April 22, 2019, there were 35,235,161 shares outstanding of each of the issuer’s classes of common stock, aspar value of $0.10 per share, of the latest practicable date.registrant outstanding.
ClassOutstanding at April 18, 2018
Common Stock, $0.10 par value35,364,149


MINERALS TECHNOLOGIES INC.

INDEX TO FORM 10-Q

 
Page No.
PART I.   FINANCIAL INFORMATION 
  
Item 1.
Financial Statements:
 
  
 
Condensed Consolidated Statements of Income for the three-month periods ended March 31, 2019 and April 1, 2018 and April 2, 2017 (Unaudited)
3
  
 
Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2019 and April 1, 2018 and April 2, 2017 (Unaudited)
4
  
 
Condensed Consolidated Balance Sheets as of April 1, 2018March 31, 2019 (Unaudited) and December 31, 20172018
5
   
 
Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2019 and April 1, 2018 and April 2, 2017 (Unaudited)
6
Condensed Consolidated Statements of Shareholders' Equity for the three-month periods ended March 31, 2019 and April 1, 2018 (Unaudited)
7
  
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
78
   
 
Report of Independent Registered Public Accounting Firm
21 22
  
Item 2.
Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations
2223
  
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
3130
  
Item 4.
Controls and Procedures
3130
   
PART II.   OTHER INFORMATION 
  
Item 1.
Legal Proceedings
32
  
Item 1A.
Risk Factors
33
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
3433
   
Item 3.
Default Upon Senior Securities
3433
   
Item 4.
Mine Safety Disclosures
3433
   
Item 5.
Other Information
3433
  
Item 6.
Exhibits
3533
  
Signature
3634

Index
PART 1. FINANCIAL INFORMATION

ITEM 1.
ITEM 1.  Financial Statements

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

  Three Months Ended 
  
Apr. 1,
2018
  
Apr. 2,
2017
 
  (in millions, except per share data) 
Product sales $412.2  $386.3 
Service revenue  19.1   18.7 
Total net sales  431.3   405.0 
         
Cost of goods sold  305.0   279.0 
Cost of service revenue  12.8   12.3 
Total cost of sales  317.8   291.3 
         
Production margin  113.5   113.7 
         
Marketing and administrative expenses  44.4   44.0 
Research and development expenses  6.1   5.8 
Acquisition related transaction and integration costs  0.4   1.5 
Restructuring and other items, net  -   0.3 
         
Income from operations  62.6   62.1 
         
Interest expense, net  (10.7)  (11.8)
Debt modification costs and fees  -   (3.9)
Other non-operating income (deductions), net  (2.7)  (0.9)
Total non-operating deductions, net  (13.4)  (16.6)
         
Income before provision for taxes and equity in earnings  49.2   45.5 
         
Provision for taxes on income  9.3   10.1 
Equity in earnings of affiliates, net of tax  1.2   0.2 
Consolidated net income  41.1   35.6 
Less:        
Net income attributable to non-controlling interests  1.2   1.0 
Net income attributable to Minerals Technologies Inc. (MTI) $39.9  $34.6 
         
Earnings per share:        
         
Basic earnings per share attributable to MTI $1.13  $0.99 
         
Diluted earnings per share attributable to MTI $1.12  $0.97 
         
Cash dividends declared per common share $0.05  $0.05 
         
Shares used in computation of earnings per share:        
Basic  35.4   35.0 
Diluted  35.7   35.6 
See accompanying Notes to Condensed Consolidated Financial Statements.
MINERALS TECHNOLOGIES INC.  AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
  Three Months Ended 
  
Apr. 1,
2018
  
Apr. 2,
2017
 
  (millions of dollars) 
Consolidated net income $41.1  $35.6 
Other comprehensive income, net of tax:        
Foreign currency translation adjustments  15.2   13.0 
Pension and postretirement plan adjustments  1.9   1.2 
Unrealized gains on cash flow hedges  1.6   0.1 
Total other comprehensive income, net of tax  18.7   14.3 
Total comprehensive income including non-controlling interests  59.8   49.9 
Comprehensive income attributable to non-controlling interest  (1.8)  (1.5)
Comprehensive income attributable to MTI $58.0  $48.4 
  Three Months Ended 
(in millions of dollars, except per share data) 
Mar. 31,
2019
  
Apr. 1,
2018
 
       
Product sales $417.4  $412.2 
Service revenue  20.3   19.1 
Total net sales  437.7   431.3 
         
Cost of goods sold  314.0   305.0 
Cost of service revenue  14.0   12.8 
Total cost of sales  328.0   317.8 
         
Production margin  109.7   113.5 
         
Marketing and administrative expenses  42.9   44.4 
Research and development expenses  4.8   6.1 
Acquisition related transaction and integration costs  —   0.4 
         
Income from operations  62.0   62.6 
         
Interest expense, net  (11.4)  (10.7)
Other non-operating deductions, net  (1.4)  (2.7)
Total non-operating deductions, net  (12.8)  (13.4)
         
Income from operations before tax and equity in earnings  49.2   49.2 
         
Provision for taxes on income  9.3   9.3 
Equity in earnings of affiliates, net of tax  0.1   1.2 
         
Consolidated net income  40.0   41.1 
Less:        
Net income attributable to non-controlling interests  0.9   1.2 
Net income attributable to Minerals Technologies Inc. $39.1  $39.9 
         
Earnings per share:        
         
Basic:        
Income from operations attributable to Minerals Technologies Inc. $1.11  $1.13 
         
Diluted:        
Income from operations attributable to Minerals Technologies Inc. $1.11  $1.12 
         
Cash dividends declared per common share $0.05  $0.05 
         
Shares used in computation of earnings per share:        
Basic  35.2   35.4 
Diluted  35.3   35.7 

See accompanying Notes to Condensed Consolidated Financial Statements.

43
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

  Three Months Ended 
(millions of dollars) 
Mar. 31,
2019
  
Apr. 1,
2018
 
       
Consolidated net income $40.0  $41.1 
Other comprehensive income (loss), net of tax:        
Foreign currency translation adjustments  (0.4)  15.2 
Pension and postretirement plan adjustments  1.6   1.9 
Unrealized gains on derivative instruments  1.2   1.6 
Total other comprehensive income, net of tax  2.4   18.7 
Total comprehensive income including non-controlling interests  42.4   59.8 
Comprehensive income attributable to non-controlling interests  (1.4)  (1.8)
Comprehensive income attributable to Minerals Technologies Inc. $41.0  $58.0 

See accompanying Notes to Condensed Consolidated Financial Statements.

4


MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS

 
Apr. 1,
2018*
  
Dec. 31,
2017**
 
(millions of dollars) 
Mar. 31,
2019*
  
Dec. 31,
2018 **
 
(millions of dollars)       
ASSETS            
            
Current assets:            
Cash and cash equivalents $223.2  $212.2  $202.7  $208.8 
Short-term investments, at cost which approximates market  3.9   2.7 
Short-term investments  4.3   3.8 
Accounts receivable, net  398.6   383.0   406.4   387.3 
Inventories  221.2   219.3   254.4   239.2 
Prepaid expenses and other current assets  37.2   35.0   36.1   37.2 
Total current assets  884.1   852.2   903.9   876.3 
                
Property, plant and equipment  2,218.5   2,219.6   2,269.0   2,256.0 
Less accumulated depreciation and depletion  (1,152.7)  (1,158.3)  (1,167.9)  (1,153.1)
Property, plant and equipment, net  1,065.8   1,061.3   1,101.1   1,102.9 
Goodwill  779.5   779.3   812.4   812.4 
Intangible assets  194.5   196.5   211.8   214.1 
Deferred income taxes  25.1   25.6   24.8   26.3 
Other assets and deferred charges  57.3   55.5   109.4   55.1 
Total assets $3,006.3  $2,970.4  $3,163.4  $3,087.1 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY        
LIABILITIES AND SHAREHOLDERS' EQUITY        
                
Current liabilities:                
Short-term debt $6.6  $6.3  $104.7  $105.2 
Current maturities of long-term debt  3.8   3.8   2.7   3.3 
Accounts payable  177.3   179.0   178.2   169.1 
Other current liabilities  111.1   120.9   105.2   104.3 
Total current liabilities  298.8   310.0   390.8   381.9 
                
Long-term debt, net of unamortized discount and deferred financing costs  960.8   959.8   893.4   907.8 
Deferred income taxes  158.8   159.4   198.1   196.8 
Accrued pension and post-retirement benefits  151.1   155.0   124.0   124.2 
Other non-current liabilities  105.0   107.1   129.7   91.1 
Total liabilities  1,674.5   1,691.3   1,736.0   1,701.8 
                
Shareholders’ equity:        
Shareholders' equity:        
Common stock  4.9   4.9   4.9   4.9 
Additional paid-in capital  423.2   422.7   432.6   431.9 
Retained earnings  1,645.3   1,607.2   1,817.4   1,769.1 
Accumulated other comprehensive loss  (167.9)  (186.1)  (242.7)  (233.7)
Less common stock held in treasury  (602.7)  (597.0)  (618.7)  (618.7)
                
Total MTI shareholders’ equity  1,302.8   1,251.7 
Non-controlling interest  29.0   27.4 
Total shareholders’ equity  1,331.8   1,279.1 
Total liabilities and shareholders’ equity $3,006.3  $2,970.4 
Total Minerals Technologies Inc. shareholders' equity  1,393.5   1,353.5 
Non-controlling interests  33.9   31.8 
Total shareholders' equity  1,427.4   1,385.3 
Total liabilities and shareholders' equity $3,163.4  $3,087.1 

*Unaudited
**Condensed from audited financial statements

See accompanying Notes to Condensed Consolidated Financial Statements.

5
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 Three Months Ended  Three Months Ended 
 
Apr. 1,
2018
  
Apr. 2,
2017
 
(millions of dollars) 
Mar. 31,
2019
  
Apr. 1,
2018
 
 (millions of dollars)       
Operating Activities:            
            
Consolidated net income $41.1  $35.6  $40.0  $41.1 
                
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation, depletion and amortization  21.1   21.7   24.5   21.1 
Non-cash debt modification fees  -   1.8 
Amortization of right of use asset  3.4   — 
Other non-cash items  (1.1)  2.1   2.1   (1.1)
Net changes in operating assets and liabilities  (25.4)  (45.3)  (39.2)  (25.4)
Net cash provided by operating activities  35.7   15.9   30.8   35.7 
                
Investing Activities:                
                
Purchases of property, plant and equipment, net  (17.9)  (13.1)  (17.6)  (17.9)
Net purchases of short-term investments  (1.3)  (1.6)
Proceeds from sale of short-term investments  0.9   0.7 
Purchases of short-term investments  (1.5)  (2.0)
Net cash used in investing activities  (19.2)  (14.7)  (18.2)  (19.2)
                
Financing Activities:                
                
Repayment of long-term debt  (0.4)  (22.3)  (15.8)  (0.4)
Net issuance (repayment) of short-term debt  -   (0.4)
Purchase of common shares for treasury  (5.7)  - 
Repayment of short-term debt  (0.6)  — 
Purchase of common stock for treasury  —   (5.7)
Proceeds from issuance of stock under option plan  0.6   2.2   0.1   0.6 
Taxes paid on settlement of equity awards  (3.2)  (3.2)
Dividends paid to non-controlling interest  (0.1)  (0.2)
Excess tax benefits related to stock incentive programs  (1.9)  (3.2)
Dividends paid to non-controlling interests  (0.1)  (0.1)
Capital contribution from non-controlling interests  0.8   — 
Cash dividends paid  (1.8)  (1.7)  (1.7)  (1.8)
Net cash used in financing activities  (10.6)  (25.6)  (19.2)  (10.6)
                
Effect of exchange rate changes on cash and cash equivalents  5.1   4.4   0.5   5.1 
                
Net increase (decrease) in cash and cash equivalents  11.0   (20.0)
Net (decrease) increase in cash and cash equivalents  (6.1)  11.0 
Cash and cash equivalents at beginning of period  212.2   188.5   208.8   212.2 
Cash and cash equivalents at end of period $223.2  $168.5  $202.7  $223.2 
                
Supplemental disclosure of cash flow information:                
Interest paid $8.9  $11.3  $10.9  $10.5 
Income taxes paid $4.0  $4.8  $5.8  $4.0 
                
Non-cash financing activities:                
Treasury stock purchases settled after period end $0.3  $-  $—  $0.3 

See accompanying Notes to Condensed Consolidated Financial Statements.


6

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
IndexCONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)

  Equity Attributable to Minerals Technologies Inc.       
(millions of dollars) 
Common
Stock
  
Additional
Paid-in
Capital
  
Retained
Earnings
  
Accumulated
Other
Comprehensive
Income (Loss)
  
Treasury
Stock
  
Non-controlling
Interests
  Total 
Balance as of December 31, 2018 $4.9  $431.9  $1,769.1  $(233.7) $(618.7) $31.8  $1,385.3 
                             
Net income  —   —   39.1   —   —   0.9   40.0 
Other comprehensive income  —   —   —   1.9   —   0.5   2.4 
Dividends declared  —   —   (1.7)  —   —   —   (1.7)
Dividends paid to non-controlling interests  —   —   —   —   —   (0.1)  (0.1)
Cumulative effect of accounting change  —   —   10.9   (10.9)  —   —   — 
Capital contribution from non-controlling interests  —   —   —   —   —   0.8   0.8 
Issuance of shares pursuant to employee stock compensation plans  —   0.1   —   —   —   —   0.1 
Stock-based compensation  —   0.6   —   —   —   —   0.6 
Balance as of March 31, 2019 $4.9  $432.6  $1,817.4  $(242.7) $(618.7) $33.9  $1,427.4 

  Equity Attributable to Minerals Technologies Inc.       
(millions of dollars) 
Common
Stock
  
Additional
Paid-in
Capital
  
Retained
Earnings
  
Accumulated
Other
Comprehensive
Income (Loss)
  
Treasury
Stock
  
Non-controlling
Interests
  Total 
Balance as of December 31, 2017 $4.9  $422.7  $1,607.2  $(186.1) $(597.0) $27.4  $1,279.1 
                             
Net income  —   —   39.9   —   —   1.2   41.1 
Other comprehensive income  —   —   —   18.2   —   0.5   18.7 
Dividends declared  —   —   (1.8)  —   —   —   (1.8)
Dividends paid to non-controlling interests  —   —   —   —   —   (0.2)  (0.2)
Issuance of shares pursuant to employee stock compensation plans  —   0.5   —   —   —   —   0.5 
Purchase of common stock for treasury  —   —   —   —   (5.7)  —   (5.7)
Balance as of April 1, 2018 $4.9  $423.2  $1,645.3  $(167.9) $(602.7) $29.0  $1,331.8 

See Notes to Consolidated Financial Statements, which are an integral part of these statements.
7
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1.  Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared by management of Minerals Technologies Inc. (the “Company”, “MTI”, “we”, or “us”) in accordance with the rules and regulations of the United States Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2017.2018. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for a fair presentation of the financial information for the periods indicated, have been included. The results for the three-month periodperiods ended April 1, 2018March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.
Certain reclassifications were made to prior year amounts to conform to current year presentation as a result of the adoption of ASU 2017-07.2019.

Company Operations

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 4four reportable segments: Performance Materials, Specialty Minerals, Refractories and Energy Services.

- The Performance Materials segment is a leading global supplier of bentonite and bentonite-related products, chromite and leonardite.  This segment also provides products for non-residential construction, environmental and infrastructure projects worldwide, serving customers engaged in a broad range of construction projects.
–The Performance Materials segment is a leading global supplier of bentonite and bentonite-related products, chromite and leonardite. This segment also provides products for non-residential construction, environmental and infrastructure projects worldwide, serving customers engaged in a broad range of construction projects.
- 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.
- 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.
–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.

- The Energy Services segment provides services to improve the production, costs, compliance, and environmental impact of activities performed in the oil and gas industry.  The segment offers a range of patented and unpatented technologies, products and services to the upstream and downstream oil & gas sector throughout the world.
–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.

–The Energy Services segment provides services to improve the production, costs, compliance, and environmental impact of activities performed in the oil and gas industry. This segment offers a range of patented and unpatented technologies, products and services to the upstream and downstream oil and gas sector throughout the world.

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, valuation of long-lived assets, goodwill and other intangible assets, income taxes, including valuation allowances, and pension plan assumptions. Actual results could differ from those estimates.

Recently Issued Accounting Standards

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. All recently issued ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

LeasesRecently Adopted Accounting Standards

In February 2016,On January 1, 2019, the FASB issuedCompany adopted the provisions of ASU 2016-02, “Leases”, which requires lessees to recognize most leases on-balance sheet, thereby increasing their reported assets and liabilities, in some cases very significantly.  Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-02 mandates asheet. The Company has adopted this new standard under the modified retrospective transition method, using the effective date as our date of initial application. As such, financial information and required disclosures will not be provided for dates prior to January 1, 2019.  The new standard provides a number of optional practical expedients in transition. We have elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The new standard also provides practical expedients for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all entities.  The Company is currently evaluating the impactleases that qualify. On adoption, we recognized additional operating liabilities of this ASU$61.4 million with corresponding right-of-use assets of $50.5 million based on the Company’s consolidated financial statements andpresent value of the remaining lease payments under existing operating leases.  As of December 31, 2018, we had $10.9 million in deferred charges related disclosures.to some of our real estate leases that were recorded against the right of use asset as part of the transition.  The Company has performed a high level analysis of its current lease portfolio and is in process of establishing a cross-functional project team to assist in the implementation of this ASU.  Based on the current status of this assessment, the adoption of this guidance isstandard did not expected to have a material impact on the Company’sCompany's financial statements.
Intangibles – Goodwill and Other8
In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment”, which no longer requires an entity to perform a hypothetical purchase price allocation to measure goodwill impairment.  Instead, goodwill will be measured using the difference between the carrying amount and the fair value of the reporting unit.  The guidance is effective for the interim and annual periods beginning on or after December 15, 2019, with early adoption permitted.  The adoption of this guidance is not expected to have a material impact on the Company’s financial statements. We are currently evaluating the timing of adoption of this standard.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

ReclassificationOn January 1, 2019, the Company adopted the provisions of Certain Tax Effects from Accumulated Other Comprehensive Income

In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act.  The guidance is effective forAs a result, the interim and annual periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluatingCompany reclassified $10.9 million from "Accumulated other comprehensive loss" to "Retained earnings" on the timingCondensed Consolidated Balance Sheets as of adoption of this standard.March 31, 2019.

Adoption of New Accounting Standards
Note 2.  Leases
On January 1, 2018, the Company adopted the provisions of ASU No. 2014-09, “Revenue from Contracts with Customers”. The underlying principle
We determine if an arrangement is that an entity will recognize revenue to depict the transfer of goods or services to customersa lease at an amount that the entity expects to be entitled to in exchange for those goods or services.  The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized.  The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.inception.  The Company has electedoperating leases for premises, equipment, rail cars and automobiles.   Our leases have remaining lease terms of 1 year to 50 years, some of which may include options to extend the leases further. The Company considers these options in determining the lease term used to establish the right-of-use assets and lease liabilities.  As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based upon the cumulative effect transition methodinformation available at commencement date, or as of implementation of ASC 842, in determining the present value of lease payments.

Leases with an initial term of 12 months or less are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Certain lease agreements contain both lease and there has not been a changenon-lease components. We account for lease components together with non-lease components.

Operating lease cost for the quarter ended March 31, 2019 was $4.1 million.  Components of lease cost of are as follows:

(millions of dollars) Mar. 31, 2019 
    
Operating lease cost $4.0 
Short-term lease cost $0.1 

Supplemental cash flow information and non-cash activity related to our previously reported financial results.operating leases are as follows:

(millions of dollars) Mar. 31, 2019 
    
Operating cash flows information:   
Cash paid for amounts included in the measurement of lease liabilities $4.0 
Non-cash activity:    
Right-of-use assets obtained in the exchange for operating lease liabilities $0.2 

 
Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration we expect to receive in exchange for those goods or services. We measure revenue based on the consideration specified in the customer arrangementWeighted average remaining lease term, and revenue is recognized when the performance obligations in the customer arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct good or serviceweighted average discount rates related to the customer. Company’s operating leases were as follows:

Weighted-average remaining operating lease term (in years)7.87
Weighted-average operating leases discount rate5.0%

The transaction price of a contract is allocated to each distinct performance obligationfollowing table summarizes the Company's outstanding lease assets and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit as goods are deliveredliabilities and services are performed.
We utilized a comprehensive approach to assess the impact of the guidancetheir classification on our contract portfolio by reviewing our current accounting policies and practices to identify potential differences that would result from applying the new requirements to our revenue contracts, including evaluation of our performance obligations, principal versus agent considerations and variable consideration. We completed our contract and business process reviews and implemented changes to our controls to support recognition and disclosures under the new guidance. We recognize revenue when our performance obligation is satisfied.  See Note 2 to the Condensed Consolidated Financial Statements.Balance Sheet:

(millions of dollars)Balance Sheet Classification Mar. 31, 2019 
     
Right-of-use assetOther assets and deferred charges $47.4 
Lease liability - currentOther current liabilities  12.3 
Lease liability - non-currentOther non-current liabilities  46.1 

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

On January 1,Future minimum lease payments under the Company's operating leases as of March 31, 2019 were as follows:

(millions of dollars) Mar. 31, 2019 
    
For the remainder of 2019 $11.5 
2020  12.3 
2021  9.0 
2022  7.2 
2023  5.9 
Thereafter  25.3 
Total future minimum lease payments  71.2 
Less imputed interest  (13.0)
Total $58.2 

As of December 31, 2018, the  Company adopted the provisionsminimum lease payments under non-cancellable operating leases were expected to be as follows:

(millions of dollars) Dec. 31, 2018 
    
2019 $17.3 
2020  13.0 
2021  9.5 
2022  8.2 
2023  7.0 
Thereafter  24.8 
Total $79.8 

A summary of ASU 2017-07, “Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”, which requires companies to present the service cost component of the net benefit cost in the same line items in which they report compensation cost.  All other components of net periodic benefit cost will be presented outside operating income.  The provisions have been applied retrospectivelyrent expense for the income statement presentation requirements.  Prior to the adoption of the guidance, the Company classified all net periodic benefit costs within operating costs, primarily within “Marketingfiscal years ended December 31, 2018 and administrative expenses” on the Condensed Consolidated Statement of Income.  The line item classification changes required by the guidance did not impact the Company’s pre-tax earnings or net income; however, “Income from operations” and “Other non-operating income (deductions), net” changed by immaterial offsetting amounts. As a result of the accounting change, the Company reclassified approximately $0.4 million from marketing and administrative expenses to other deductions for the three months ended April 2,December 31, 2017 to conform to the current year presentation.
On January 1, 2018, the Company early adopted the provisions of ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which improves and simplifies existing guidance to allow companies to better reflect their risk management activities in the financial statements. The guidance expands the ability to hedge nonfinancial and financial risk components, eliminates the requirement to separately measure and recognize hedge ineffectiveness and eases requirements of an entity’s assessment of hedge effectiveness. The adoption of this guidance did not have an impact on the Company’s financial statements.was as follows:

(millions of dollars) Dec. 31, 2018  Dec. 31, 2017 
       
Rent expense $19.5  $19.3 

The Company has certain arrangements under which we are the lessor.  Lease income associated with these leases is not material.

10
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 2.3.  Revenue from Contracts with Customers
The Company’s revenues are primarily derived from the sale of products. Our primary performance obligation (the sale of products) is satisfied upon shipment or delivery to our customers based on written sales terms, which is also when control is transferred.  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 these 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 and control is transferred to the customer.
Revenue from sales of equipment, primarily in our Refractories segment, is recorded upon completion of installation and control is transferred to the customer. Revenue from services is recorded when the services have been performed.
Revenue from long-term construction, primarily in our Energy Services segment, where our performance obligations are satisfied in phases, is recognized over time using certain output measures based on the measurement of the value transferred to the customer, including milestones achieved.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table disaggregates our revenue by major source (product line) for the periodthree-month periods ended March 31, 2019 and April 1, 2018 and April 2, 2017:2018:

(millions of dollars) Three Months Ended 
Net Sales 
Mar. 31,
2019
  
Apr. 1,
2018
 
 Three Months Ended       
 
Apr. 1,
2018
  
Apr. 2,
2017
 
 (millions of dollars) 
Net Sales      
Metalcasting $79.2  $66.6  $73.2  $79.2 
Household, Personal Care and Specialty Products  48.7   41.1 
Household, Personal Care & Specialty Products  74.9   48.7 
Environmental Products  12.7   10.6   15.9   12.7 
Building Materials  18.9   17.4   15.3   18.9 
Basic Minerals  27.8   34.2   19.9   27.8 
Performance Materials  187.3   169.9   199.2   187.3 
                
Paper PCC  97.0   93.4   91.5   97.0 
Specialty PCC  17.0   17.0   18.1   17.0 
Ground Calcium Carbonate  22.3   22.5 
Talc  13.1   14.3   12.5   13.1 
Ground Calcium Carbonate  22.5   21.5 
Specialty Minerals  149.6   146.2   144.4   149.6 
                
Refractory Products  62.3   56.7   62.0   62.3 
Metallurgical Products  13.0   13.5   11.8   13.0 
Refractories  75.3   70.2   73.8   75.3 
                
Energy Services  19.1   18.7   20.3   19.1 
                
Total $431.3  $405.0  $437.7  $431.3 

Note 3.4.  Business Combination

On April 30, 2018, the Company completed the acquisition of Sivomatic Holding B.V. (“Sivomatic”), a leading European supplier of premium pet litter products. Sivomatic is a vertically integrated manufacturer, with production facilities in the Netherlands, Austria and Turkey. With a leading position in premier clumping products, Sivomatic’s product portfolio spans the range of pet litter derived from bentonite, sourced predominantly from wholly-owned mines in Turkey. The results of Sivomatic are included in our Performance Materials segment. The acquisition was financed through a combination of cash on hand and borrowings under the Company’s credit facilities. The fair value of the total consideration transferred, net of cash acquired, was $122.5 million.

The acquisition has been accounted for using the acquisition method of accounting, which requires, among other things, that we recognize the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. As of March 31, 2019, the purchase price allocation remains preliminary as the Company completes its assessment of property, mineral rights, certain reserves including environmental, legal and tax matters, obligations, intangible assets, taxes payable, impact of foreign exchange and deferred taxes, as well as complete our review of Sivomatic’s existing accounting policies.

11
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following table summarizes the Company’s preliminary purchase price allocation for the Sivomatic acquisition as of March 31, 2019, as compared with the allocation previously reported on the Company's Form 10-K for the year ended December 31, 2018:

(millions of dollars) Preliminary Allocation Previously Reported on Form 10-K as of December 31, 2018  
Increase/
(Decrease)
  Allocation as of March 31, 2019 
          
Accounts receivable $24.4  $—  $24.4 
Inventories  15.6   —   15.6 
Other current assets  0.6   —   0.6 
Mineral rights  39.7   —   39.7 
Property, plant and equipment  28.3   —   28.3 
Goodwill  35.0   —   35.0 
Intangible assets  26.4   —   26.4 
     Total assets acquired  170.0   —   170.0 
Current maturity of long-term debt  5.7   —   5.7 
Accounts payable  9.0   —   9.0 
Accrued expenses  5.6   —   5.6 
Long-term debt  5.3   —   5.3 
Non-current deferred tax liability  19.7   —   19.7 
Other non-current liabilities  2.2   —   2.2 
     Total liabilities assumed  47.5   —   47.5 
Net assets acquired $122.5  $—  $122.5 

The Company used the income, market, or cost approach (or a combination thereof) for the preliminary valuation, and used valuation inputs and analyses that were based on market participant assumptions. Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability. For certain items, the carrying value was determined to be a reasonable approximation of fair value based on the information available.

Goodwill was calculated as the excess of the consideration transferred over the assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The allocation will be completed during the second quarter of 2019. Goodwill recognized as a result of this acquisition is not deductible for tax purposes.

In connection with the acquisition, the Company recorded an additional deferred tax liability of $18.8 million with a corresponding increase to goodwill. The increase in the deferred tax liability represents the tax effect of the difference between the estimated assigned fair value of the tangible and intangible assets and the tax basis of such assets.

Mineral rights were valued using discounted cash flow method. Property, plant and equipment were valued using the cost method adjusted for age and deterioration.

Intangible assets acquired mainly include tradenames and customer relationships. Both tradenames and customer relationships have an estimated useful life of approximately 20 years.

The Company did not present pro forma and other financial information for the Sivomatic acquisition, as this is not considered to be a material business combination.

Note 5.  Earnings Perper Share (EPS)

Basic earnings per share are based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share are 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.

12
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following table sets forth the computation of basic and diluted earnings per share:

 Three Months Ended  Three Months Ended 
(in millions, except per share data) 
Mar. 31,
2019
  
Apr. 1,
2018
 
 
Apr. 1,
2018
  
Apr. 2,
2017
       
 (in millions, except per share data) 
      
Net income attributable to MTI $39.9  $34.6 
Net income attributable to Minerals Technologies Inc. $39.1  $39.9 
                
Weighted average shares outstanding  35.4   35.0   35.2   35.4 
Dilutive effect of stock options and stock units  0.3   0.6   0.1   0.3 
Weighted average shares outstanding, adjusted  35.7   35.6   35.3   35.7 
                
Basic earnings per share attributable to MTI $1.13  $0.99 
Basic earnings per share attributable to Minerals Technologies Inc. $1.11  $1.13 
                
Diluted earnings per share attributable to MTI $1.12  $0.97 
Diluted earnings per share attributable to Minerals Technologies Inc. $1.11  $1.12 

Options to purchase 362,443748,754 shares and 185,104362,443 shares of common stock for the three-month periods ended March 31, 2019 and April 1, 2018, and April 2, 2017, 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.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 4.6.  Restructuring and Other Items, net

At April 1, 2018,March 31, 2019, the Company had $7.6$2.3 million included within accrued liabilities in the Condensed Consolidated Balance Sheet for cash expenditures needed to satisfy remaining obligations under workforce reduction initiatives. The Company expects to pay these amounts by the end of December 2018.2019.

The following table is a reconciliation of our restructuring liability balance as of April 1, 2018:March 31, 2019:

 (millions of dollars) 
Restructuring liability, December 31, 2017$8.1 
Additional provisions - 
Cash payments (0.5)
Restructuring liability,  April 1, 2018$7.6 
(millions of dollars)   
Restructuring liability, December 31, 2018 $2.5 
Cash payments  (0.2)
Restructuring liability,  March 31, 2019 $2.3 

Note 5.7.  Income Taxes

During the fourth quarter of 2017, the U.S. Tax Cuts and Jobs Act (“U.S. Tax Reform”),Provision for taxes was enacted in the United States. Amongst its many provisions, U.S. Tax Reform reduced the U.S. corporate income tax rate from 35% to 21%, effective January 1, 2018, and created a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. As a result of the enactment of U.S. Tax Reform, we recognized a provisional net tax benefit of $47.3$9.3 million in the fourth quarter of 2017. We are applying the guidance in Staff Account Bulletin No. 118 (“SAB 118”), Income Tax Accounting Implications of the Tax Cuts and Jobs Act, issued by the Securities and Exchange Commission, when accounting for the enactment-date effects of U.S. Tax Reform. As permitted by SAB No. 118, some elements of the tax expense recorded in the fourth quarter of 2017 due to the enactment of U.S. Tax Reform were based on reasonable estimates and considered provisional. The Company is continuing to collect and analyze detailed information about the earnings and profits of its non-U.S. subsidiaries, the related taxes paid, the amounts which could be repatriated, the foreign taxes which may be incurred on repatriation and the associated impact of these items under U.S. Tax Reform. The Company may record adjustments to refine those estimates during the measurement period, as additional analysis is completed. See Note 5 to our consolidated financial statements in the Company’s Annual Report on Form 10-K for the yearthree-month periods ended DecemberMarch 31, 2017 for further information on this provisional net tax benefit. No adjustments to the provisional net tax benefit were recorded during the three months ended2019 and April 1, 2018.
U.S. Tax Reform also created a new requirement that certain income earned by foreign subsidiaries, known as global intangible low-tax income (“GILTI”), must be included in the gross income of their U.S. shareholder.2018. The FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a current-period expense when incurred. Given the complexity of the GILTI provisions, we are still evaluating the effects of the GILTI provisions and have not yet determined our accounting policy. At April 1, 2018, because we are still evaluating the GILTI provisions and our analysis of future taxable income that is subject to GILTI, we have included GILTI related to current-year operations only in our estimated annual effective tax rate was 18.9% for the three-month periods ended March 31, 2019 and have not provided additional GILTI on deferred items.April 1, 2018.
The recorded impact of U.S. Tax Reform is provisional and the final amount may differ, possibly materially, due to, among other things, changes in estimates, interpretations and assumptions we made, changes in IRS interpretations, the issuances of new guidance, legislative actions, or related interpretations in response to U.S. Tax Reform and future actions by states within the United States that have not currently adopted U.S. Tax Reform.

As of April 1, 2018,March 31, 2019, the Company had approximately $15.1$17.0 million of total unrecognized income tax benefits. Included in this amount were a total of $11.1$13.3 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, the Company does not expect the change to have a significant impact on the results of operations or the financial position of the Company.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company’s accounting policy 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 increase of approximately $0.2$0.3 million during the three monthsthree-months ended April 1, 2018,March 31, 2019 and had an accrued balance of $2.9 million and $1.8 million of interest and penalties as of March 31, 2019 and April 1, 2018.2018, respectively.

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 income tax examinations by tax authorities for years prior to 2010.

Provision for taxes was $9.3 million as compared to $10.1 million in the prior year.  The effective tax rate was 19.0% as compared to 22.2% in the prior year.  The lower effective tax rate was primarily due to U.S. Tax Reform.
13
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 6.8.  Inventories

The following is a summary of inventories by major category:

 
Apr. 1,
2018
  
Dec. 31,
2017
 
(millions of dollars) 
Mar. 31,
2019
  
Dec. 31,
2018
 
 (millions of dollars)       
Raw materials $84.1  $82.5  $102.8  $93.4 
Work-in-process  7.8   7.9   10.2   11.2 
Finished goods  89.5   92.3   97.5   92.2 
Packaging and supplies  39.8   36.6   43.9   42.4 
Total inventories $221.2  $219.3  $254.4  $239.2 

Note 7.9.  Goodwill and Other Intangible Assets

Goodwill and other intangible assets with indefinite lives are not amortized, but instead are assessed for impairment, at least annually. The carrying amount of goodwill was $779.5$812.4 million and $779.3 as of April 1, 2018March 31, 2019 and December 31, 2017.2018.

Intangible assets subject to amortization as of April 1, 2018March 31, 2019 and December 31, 20172018 were as follows:

 
Weighted
Average Useful
Life (Years)
Apr. 1, 2018  Dec. 31, 2017     
Mar. 31,
2019
  
Dec. 31,
2018
 
Gross
Carrying
Amount
  
Accumulated
Amortization
  
Gross
Carrying
Amount
  
Accumulated
Amortization
 
(millions of dollars) 
Weighted Average
Useful Life
(Years)
  
Gross
Carrying
Amount
  
Accumulated
Amortization
  
Gross
Carrying
Amount
  
Accumulated
Amortization
 
    (millions of dollars)                
Tradenames  34  $199.8  $22.1  $199.8  $20.7   35  $204.2  $28.1  $204.2  $26.6 
Technology  12   18.8   5.2   18.8   4.8   13   18.8   6.8   18.8   6.4 
Patents and trademarks  17   6.4   5.3   6.4   5.3 
Patents  19   6.4   5.7   6.4   5.6 
Customer relationships  30   4.5   2.4   4.5   2.2   22   26.5   3.5   26.5   3.2 
  28  $229.5  $35.0  $229.5  $33.0   32  $255.9  $44.1  $255.9  $41.8 

The weighted average amortization period for acquired intangible assets subject to amortization is approximately 2832 years. Estimated amortization expense is $5.9$7.0 million for the remainder of 2018, $31.62019, $36.7 million for 2019-2022,2020–2023 and $157.0$168.1 million thereafter.

Note 8.10.  Derivative Financial Instruments

As a multinational corporation with operations throughout the world, the Company is exposed to certain market risks. The Company uses a variety of practices to manage these market risks, including, when considered appropriate, derivative financial instruments. The Company’sCompany's objective is to offset gains and losses resulting from interest rates and foreign currency exposures with gains and losses on the derivative contracts used to hedge them. The Company uses derivative financial instruments only for risk management and not for trading or speculative purposes.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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.

14
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Cash flow hedges:Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the Company records the effective portion of the gain or loss in accumulated other comprehensive income (loss) as a separate component of shareholders’shareholders' equity. The Company subsequently reclassifies the effective portion of gain or loss into earnings in the period during which the hedged transaction is recognized in earnings.

The Company utilizes over-the-counter interest rate swaps to limit exposure to market fluctuations on floating-rate debt. DuringIn the second quarter of 2018, the Company entered into a floating to fixed interest rate swap for a notional amount of $150 million. The fair value of this swap is a liability of $4.1 million at March 31, 2019 and is recorded in other non-current liabilities on the Condensed Consolidated Balance Sheet. In addition, in the second quarter of 2016, the Company entered into a floating to fixed interest rate swap forwith an initial aggregate notional amount of $300 million. The notional amount was $129 million at April 1, 2018 was $186 million.  ThisMarch 31, 2019. The fair value of this swap is an asset of $1.9 million at March 31, 2019 and is recorded in other assets and deferred charges on the Condensed Consolidated Balance Sheet. These interest rate swap isswaps are designated as a cash flow hedge.  Thehedges. As a result, the gains and losses associated with thisthese interest rate swapswaps are recorded in accumulated other comprehensive income (loss).

Net Investment Hedges

For derivative instruments that are designated and qualify as net investment hedges, the Company records the effective portion of the gain or loss in accumulated other comprehensive income (loss) as a separate component of shareholders' equity.

To protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, the Company from time to time hedges a portion of our net investment in one or more of our foreign subsidiaries. During the second quarter of 2018, the Company entered into a cross currency rate swap with a total notional value of $150 million to exchange monthly fixed-rate interest payments in U.S. dollars for monthly fixed-rate interest rate payments in Euros. This contract matures in May 2023 and requires the exchange of Euros and U.S. dollar principal payments upon maturity. The fair value of this swap wasis an asset of $4.1$7.9 million at April 1, 2018March 31, 2019 and is recorded toin other non-current assets and deferred charges on the Condensed Consolidated Balance Sheet. Changes in the fair value of this financial instrument are recognized in accumulated other comprehensive income (loss) to offset the change in the carrying amount of the net investment being hedged. Amounts are reclassified out of accumulated other comprehensive income (loss) into earnings when the hedged net investment is either sold or substantially liquidated.

Assets and liabilities measured at fair value are based on one or more of three valuation techniques. 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.
●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.
●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.
●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 interest rate 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.

The fair value of our interest rate swaps and cross currency rate swap contract iscontracts 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.

15
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 9.11.  Long-Term Debt and Commitments

The following is a summary of long-term debt:

  
Apr. 1,
2018
  
Dec. 31,
2017
 
  (millions of dollars) 
Term Loan Facility-Variable Tranche due February 14, 2024, net of unamortized discount and deferred financing costs of $21.9 million and $22.7 million $656.1  $655.3 
Term Loan Facility- Fixed Tranche due May 9, 2021, net of unamortized discount of $0.4 million and $0.5 million  299.6   299.5 
Japan Loan Facilities  5.8   5.6 
China Loan Facilities  3.1   3.2 
Total $964.6  $963.6 
Less: Current maturities  3.8   3.8 
Long-term debt $960.8  $959.8 
(millions of dollars)
 
Mar. 31,
2019
  
Dec. 31,
2018
 
       
Term Loan Facility-Variable Tranche due February 14, 2024, net of unamortized discount and deferred financing costs of $18.6 million and $19.4 million $639.4  $638.6 
Term Loan Facility- Fixed Tranche due May 9, 2021, net of unamortized discount and deferred financing costs of $0.3 million and $0.3 million  247.8   262.6 
Netherlands Term Loan due 2020  2.8   3.4 
Netherlands Term Loan due 2022  1.2   1.4 
Japan Loan Facilities  4.9   5.1 
Total  896.1   911.1 
Less: Current maturities  2.7   3.3 
Total long-term debt $893.4  $907.8 
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On May 9, 2014, in connection with the acquisition of AMCOL International Corporation (“AMCOL”), the Company entered into a credit agreement providing for a $1,560 million$1.560 billion senior secured term loan facility (the “Term Facility”) and a $200 million senior secured revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Facilities”).

On June 23, 2015, the Company entered into an amendment (the “First Amendment”) to the credit agreement to reprice the $1.378 billion then outstanding on the Term Facility. As amended, the Term Facility had a $1.078 billion floating rate tranche and a $300 million fixed rate tranche. On February 14, 2017, the Company entered into an amendment (the “Second Amendment”) to the credit agreement to reprice the $788 million floating rate tranche then outstanding, which extended the maturity and lowered the interest costs by 75 basis points. On April 18, 2018, the Company entered into an amendment (the “Third Amendment”) to the credit agreement to refinance the Revolving Facility. As amended, the Revolving Facility has been increased to $300 million in aggregate commitments. Following the Second Amendment,amendments, the loans outstanding under the floating rate tranche of the Term Facility will mature on February 14, 2024, the loans outstanding under the fixed rate tranche of the Term Facility will mature on May 9, 2021 and the loans outstanding (if any) and commitments under the Revolving Facility will mature and terminate, as the case may be, on May 9, 2019.  After the Second Amendment, loansApril 18, 2023. Loans under the floating rate tranche of the Term Facility bear interest at a rate equal to an adjusted LIBOR rate (subject to a floor of 0.75%) plus an applicable margin equal to 2.25% per annum. Loans under the fixed rate tranche of the Term Facility bear interest at a rate of 4.75%. Loans under the Revolving Facility will bear interest at a rate equal to an adjusted LIBOR rate plus an applicable margin equal to 1.75%1.625% per annum. Such rates are subject to decrease by up to 25 basis points in the event that, and for so long as, the Company’s net leverage ratio (as defined in the credit agreement) is less than certain thresholds. The floating rate tranche of the Term Facility was issued at par and the fixed rate tranche of the Term Facility was issued at a 0.25% discount in connection with the First Amendment. The variable rate tranche of the Term Facility was issued at a 0.25% discount in connection with the Second Amendment. The variable rate tranche has a 1% required amortization per year. The Company will pay certain fees under the credit agreement, including customary annual administration fees. The loans under the fixed rate tranche of the Term Facility are subject to prepayment premiums in the event of certain prepayments prior to the third anniversary of the effective date of the First Amendment. The obligations of the Company under the Facilities are unconditionally guaranteed jointly and severally by, subject to certain exceptions, all material domestic subsidiaries of the Company (the “Guarantors”) and secured, subject to certain exceptions, by a security interest in substantially all of the assets of the Company and the Guarantors. On April 18, 2018,

During the first quarter of 2019, the Company entered into an amendment (the “Third Amendment”) to the credit agreement to refinance the Revolvingrepaid $15 million on its Term Facility. See Note 16.

The credit agreement contains certain customary affirmative and negative covenants that limit or restrict the ability of the Company and its restricted subsidiaries to enter into certain transactions or take certain actions. In addition, the credit agreement contains a financial covenant that requires the Company, if on the last day of any fiscal quarter loans or letters of credit were outstanding under the Revolving Facility (excluding up to $15 million of letters of credit), to maintain a maximum net leverage ratio (as defined in the credit agreement) of, initially, 5.25 to 1.00 for the four fiscal quarters preceding such day. Such maximum net leverage ratio requirement is subject to decrease during the duration of the facility to a minimum level (when applicable) of 3.50 to 1.00.  In connection with the Sivomatic acquisition, the Company incurred $113 million of short-term debt under the Revolving Facility. As of April 1, 2018,March 31, 2019, there were no$100 million in outstanding loans and $5.7$10.2 million in letters of credit outstanding under the Revolving Facility. The Company is in compliance with all the covenants associated with the Revolving Facility as of the end of the period covered by this report.
16
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

As part of the Sivomatic acquisition, the Company assumed $10.7 million in long-term debt, recorded at fair value, consisting of two term loans, one of which matures in 2020 and the other of which matures in 2022. These loans carry an interest rate of Euribor plus 2.0% and have quarterly repayments. During the first quarter of 2019, the Company repaid $0.7 million on these loans.

The Company has committed loan facilities for the funding of new manufacturing facilities in China.  In addition, the Company has a committed loan facility in Japan. As of April 1, 2018, on a combined basis, $8.9March 31, 2019, $4.9 million was outstanding under thesethis loan facilities.facility. Principal will be repaid in accordance with the payment schedulesschedule ending in 2021. The Company repaid $0.4$0.2 million on these loansthis facility during the first quarter of 2018.2019.

As of April 1, 2018,March 31, 2019, the Company had $38.4$43.2 million in uncommitted short-term bank credit lines, of which approximately $6.6$4.7 million was in use.

Note 10.12.  Benefit Plans

The Company and its subsidiaries have pension plans covering the majority of eligible employees on a contributory or non-contributory basis. The Company also provides postretirement health care and life insurance benefits for the majority of its U.S. retired employees. Disclosures for the U.S. plans have been combined with those outside of the U.S. as the international plans do not have significantly different assumptions, and together represent less than 25% of our total benefit obligation.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Components of Net Periodic Benefit Cost

 Pension Benefits  Pension Benefits 
 Three Months Ended  Three Months Ended 
 
Apr. 1,
2018
  
Apr. 2,
2017
 
(millions of dollars) 
Mar. 31,
2019
  
Apr. 1,
2018
 
 
(millions of dollars)
       
Service cost $2.0  $2.1  $1.8  $2.0 
Interest cost  3.0   3.1   3.5   3.0 
Expected return on plan assets  (4.8)  (4.5)  (4.6)  (4.8)
Amortization:                
Prior service cost  0.2   0.5   0.1   0.2 
Recognized net actuarial loss  2.7   2.1   2.3   2.7 
Net periodic benefit cost $3.1  $3.3  $3.1  $3.1 

Other Benefits  Other Benefits 
 Three Months Ended  Three Months Ended 
 
Apr. 1,
2018
  
Apr. 2,
2017
 
(millions of dollars) 
Mar. 31,
2019
  
Apr. 1,
2018
 
(millions of dollars)
       
Service cost $0.1  $0.1  $—  $0.1 
Interest cost  0.1   0.1   0.1   0.1 
Amortization:                
Prior service cost  (0.3)  (0.8)  —   (0.3)
Recognized net actuarial (gain)/loss  (0.2)  (0.1)
Recognized net actuarial (gain)  (0.2)  (0.2)
Net periodic benefit cost $(0.3) $(0.7) $(0.1) $(0.3)

Amortization amounts of prior service costs and recognized net actuarial losses are recorded, net of tax, as increases to accumulated other comprehensive income.

The Company expects to contribute approximately $15.0$9.7 million to its pension plans and $0.5$0.3 million to its other postretirement benefit plans in 2018.2019. As of April 1, 2018, $3.9March 31, 2019, approximately $1.4 million has been contributed to the pension plans.
On January 1, 2018,plans and no contributions to the Company retrospectively adopted the provisions of ASU 2017-07, “Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”.  Under the new guidance, the Company classifies all net periodicother postretirement benefit costs within the “Other non-operating income (deductions), net” line item on the consolidated statement of income.  The line item classification changes required by the guidance did not impact the Company’s pre-tax earnings or net income; however, “Income from operations” and “Other non-operating income (deductions), net” changed by immaterial offsetting amounts.plans.

17
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 11.13.  Comprehensive Income

The following table summarizes the amounts reclassified out of accumulated other comprehensive loss attributable to the Company:

Amounts Reclassified Out of Accumulated Other Comprehensive Loss
Three Months Ended 
Apr. 1,
2018
  
Apr. 2,
2017
 
 Three Months Ended 
(millions of dollars) 
Mar. 31,
2019
  
Apr. 1,
2018
 
(millions of dollars)       
Amortization of pension items:            
Pre-tax amount $2.4  $1.7  $2.2  $2.4 
Tax  (0.5)  (0.5)  (0.6)  (0.5)
Net of tax $1.9  $1.2  $1.6  $1.9 
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The pre-tax amounts in the table above are included within the components of net periodic pension benefit cost (see Note 1012 to the Condensed Consolidated Financial Statements) and the tax amounts are included within the provision for taxes on income line within the Condensed Consolidated Statements of Income.

The major components of accumulated other comprehensive loss, net of related tax, attributable to MTI are as follows:

  
Foreign
Currency
Translation
Adjustment
  
Unrecognized
Pension Costs
  
Net Gain
on Cash
Flow
 Hedges
  Total 
  (millions of dollars) 
             
Balance as of December 31, 2017 $(104.1) $(86.5) $4.5  $(186.1)
                 
Other comprehensive income  before reclassifications  14.7   -   1.6   16.3 
Amounts reclassified from AOCI  -   1.9   -   1.9 
Net current period other comprehensive income  14.7   1.9   1.6   18.2 
Balance as of April 1, 2018 $(89.4) $(84.6) $6.1  $(167.9)
(millions of dollars) 
Foreign Currency
Translation Adjustment
  
Unrecognized
Pension Costs
  
Net Gain (Loss)
on Derivative Instruments
  Total 
             
Balance as of December 31, 2018 $(170.1) $(69.7) $6.1  $(233.7)
                 
Other comprehensive loss before reclassifications  (1.0)  —   1.3   0.3 
Amounts reclassified from AOCI  —   1.6   —   1.6 
Net current period other comprehensive income (loss)  (1.0)  1.6   1.3   1.9 
Cumulative effect of accounting change  —   (10.4)  (0.5)  (10.9)
Balance as of March 31, 2019 $(171.1) $(78.5) $6.9  $(242.7)

In January 2019, the Company adopted the provisions of ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act.  As a result, the Company reclassified $10.9 million from "Accumulated other comprehensive loss" to "Retained earnings" on the Condensed Consolidated Balance Sheet as of March 31, 2019.


Note 12.14.  Accounting for Asset Retirement Obligations

The Company records asset retirement obligations for situations in which the Company will be required to incur costs to retire tangible long-lived assets. The fair value of the liability for an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made.

The Company also records liabilities related to land reclamation as a part of asset retirement obligations. The Company mines various minerals using a surface mining process that requires the removal of overburden. In certain areas and under various governmental regulations, the Company is obligated to restore the land comprising each mining site to its original condition at the completion of the mining activity. The obligation is adjusted to reflect the passage of time, mining activities, and changes in estimated future cash outflows.

The following is a reconciliation of asset retirement obligations as of April 1, 2018:March 31, 2019:

  (millions of dollars) 
Asset retirement liability, December 31, 2017 $22.1 
Accretion expense  0.1 
Other  (1.1)
Payments  (0.6)
Foreign currency translation  0.1 
Asset retirement liability,  April 1, 2018 $20.6 
(millions of dollars)   
Asset retirement liability, December 31, 2018 $23.4 
Accretion expense  0.9 
Payments  (0.7)
Asset retirement liability, March 31, 2019 $23.6 
18
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The asset retirement costs are capitalized as part of the carrying amount of the associated asset. The current portion of the liability of approximately $0.3$0.4 million is included in other current liabilities and the long-term portion of the liability of approximately $20.3$23.2 million is included in other non-current liabilities in the Condensed Consolidated Balance Sheet as of April 1, 2018.March 31, 2019.

Note 13.15.  Contingencies

The Company is party to a number of lawsuits arising in the normal course of our business.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

On May 8, 2013, Armada (Singapore) PTE Limited, an ocean shipping company now in bankruptcy (“Armada”) filed a case in federal court in the Northern District of Illinois against AMCOL and certain of its subsidiaries ( Armada (Singapore) PTE Limited v. AMCOL International Corp., et al., United States District Court for the Northern District of Illinois , Case No. 13 CV 3455).  We acquired AMCOL and its subsidiaries on May 9, 2014. A co-defendant is Ashapura Minechem Limited, a company located in Mumbai, India (“AML”).  During the relevant time period, 2008-2010, AMCOL owned slightly over 20% of the outstanding AML stock through December 2009, after which it owned approximately 19%.  In 2008, AML entered into two contracts of affreightment (“COA”) with Armada for over 60 ship loads of bauxite from India to China.  After one shipment, AML made no further shipments, which led Armada to file arbitrations in London against AML, one for each COA. AML did not appear in the London arbitrations and default awards of approximately $70 million were entered.  The litigation filed by Armada against AMCOL and AML relates to these awards, which AML has not paid.  The substance of the allegations by Armada is that AML and AMCOL engaged in illegal conduct to thwart Armada’s efforts to collect the arbitration award.   AMCOL won a motion for judgement on the pleadings that resulted in the successful dismissal of all but one count in the complaint, including a dismissal of all counts alleging violations of Illinois’ Fraudulent Transfer laws and federal RICO violations. On March 26, 2018, the U.S. Court of Appeals for the Seventh Circuit affirmed the district court’s dismissal of such counts.  The Company does not expect that the outcome of the one remaining count of the Armada lawsuit will have a material effect on our financial position, results of operations or cash flows.

Certain of the Company’sCompany'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 three pending silica cases and 22forty pending asbestos cases. To date, 1,493 silica cases and 5457 asbestos cases have been dismissed, not including any lawsuits against AMCOL or American Colloid Company dismissed prior to our acquisition of AMCOL. ThreeSeven new asbestos cases were filed during the first quarter of 2018, including one new case naming AMCOL as a defendant.  One2019, and three additional asbestos case was dismissed duringcases were filed subsequent to the firstend of the quarter. No asbestos or silica cases were dismissed during the period. 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’sCompany'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 settled only one silica lawsuit, for a nominal amount, and no asbestos lawsuits to date (not including any that may have been settled by AMCOL prior to completion of the acquisition). 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 continues to be insignificant. The majority of the costs of defense for these cases, excluding cases against AMCOL or American Colloid, are reimbursed by Pfizer Inc. pursuant to the terms of certain agreements entered into in connection with the Company’sCompany's initial public offering in 1992. The Company is entitled to indemnification, pursuant to agreement, for sales prior to the initial public offering. Of the 2240 pending asbestos cases, 1429 of the non-AMCOL cases are subject to indemnification, in whole or in part, because the plaintiffs claim liability based on sales of products that occurred either entirely before the initial public offering, or both before and after the initial public offering. In five of the sixseven remaining non-AMCOL cases, the plaintiffs have not alleged dates of exposure.exposure, and in the remaining two non-AMCOL cases, exposure is alleged to have been after the Company's initial public offering in 1992. The remaining four cases involve AMCOL only, so no Pfizer indemnity is available. 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 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”("PCBs") and mercury at a portion of the site. We have completed the required investigations and submitted several reports characterizing the contamination and assessing site-specific risks. We are awaiting regulators’ approval of the risk assessment report, which will form the basis for a proposal by the Company concerning eventual remediation.

We believe that the most likely form of overall site remediation will be to leave the existing contamination in place (with some limited soil removal), encapsulate it, and monitor the effectiveness of the encapsulation. We anticipate that a substantial portion of the remediation cost will be borne by the United States based on its involvement at the site from 1942 – 1964, as historic documentation indicates that PCBs and mercury were first used at the facility at a time of U.S. government ownership for production of materials needed by the military. Pursuant to a Consent Decree entered on October 24, 2014, the United States paid the Company $2.3 million in the 4th quarter of 2014 to resolve the Company’s claim for response costs for investigation and initial remediation activities at this facility through October 24, 2014. Contribution by the United States to any future costs of investigation or additional remediation has, by agreement, been left unresolved. Though the cost of the likely remediation remains uncertain pending completion of the phased remediation decision process, we have estimated that the Company’s share of the cost of the encapsulation and limited soil removal described above would approximate $0.4 million, which has been accrued as of April 1, 2018.March 31, 2019.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The Company is evaluating options for upgrading the wastewater treatment facilities at its Adams, Massachusetts plant. This work has been undertaken pursuant to an administrative Consent Order originally issued by the Massachusetts Department of Environmental Protection (“DEP”) on June 18, 2002. This order was amended on June 1, 2009 and on June 2, 2010. The amended Order includes the investigation by January 1, 2022 of options for ensuring that the facility’sfacility's wastewater treatment ponds will not result in unpermitted discharge to groundwater. Additional requirements of the amendment include the submittal by July 1, 2022 of a plan for closure of a historic lime solids disposal area. Preliminary engineering reviews completed in 2005 indicate that the estimated cost of wastewater treatment upgrades to operate this facility beyond 2024 may be between $6 million and $8 million. The Company estimates that the remaining remediation costs would approximate $0.4 million, which has been accrued as of April 1, 2018.March 31, 2019.

19
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The Company and its subsidiaries are not party to any other material pending legal proceedings, other than routine litigation incidental to their businesses.

Note 14.  Non-controlling interests

The following is a reconciliation of beginning and ending total equity, equity attributable to MTI, and equity attributable to non-controlling interests:

  Equity Attributable to MTI 
Total
 
  
Common
Stock
  
Additional
Paid-in
Capital
  
Retained
Earnings
  
Accumulated
Other
Comprehensive
Income (Loss)
  
Treasury
Stock
  
Non-controlling
Interests
  (millions of dollars) 
Balance as of December 31, 2017 $4.9  $422.7  $1,607.2  $(186.1) $(597.0) $27.4  $1,279.1 
                             
Net income  -   -   39.9   -   -   1.2   41.1 
Other comprehensive income  -   -   -   18.2   -   0.5   18.7 
Dividends declared  -   -   (1.8)  -   -   -   (1.8)
Dividends to non-controlling interest  -   -   -   -   -   (0.2)  (0.2)
Issuance of shares pursuant to employee stock compensation plans  -   0.5   -   -   -   -   0.5 
Stock based compensation  -   -   -   -   -   -   - 
Purchase of treasury stock  -   -   -   -   (5.7)  -   (5.7)
Balance as of April 1, 2018 $4.9  $423.2  $1,645.3  $(167.9) $(602.7) $29.0  $1,331.8 

The income attributable to non-controlling interests for the three-month periods ended April 1, 2018 and April 2, 2017 was from continuing operations.  The remainder of income was attributable to MTI.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 15.16.  Segment and Related Information

On a regular basis, the Company reviews its segments and the approach used by the chief operating decision maker to assess performance and allocate resources. The Company has 4four reportable segments: Performance Materials, Specialty Minerals, Performance Materials, Refractories and Energy Services. See Note 1 to the Condensed Consolidated Financial Statements. Segment information for the three-month periods ended March 31, 2019 and April 1, 2018 and April 2, 2017  is as follows:

 Three Months Ended  Three Months Ended 
 
Apr. 1,
2018
  
Apr. 2,
2017
 
(millions of dollars) 
Mar. 31,
2019
  
Apr. 1,
2018
 
 (millions of dollars)       
Net Sales            
Performance Materials $187.3  $169.9  $199.2  $187.3 
Specialty Minerals  149.6   146.2   144.4   149.6 
Refractories  75.3   70.2   73.8   75.3 
Energy Services  19.1   18.7   20.3   19.1 
Total $431.3  $405.0  $437.7  $431.3 
                
Income from Operations                
Performance Materials $26.2  $28.8  $26.3  $26.2 
Specialty Minerals  24.1   24.4   22.0   24.1 
Refractories  12.8   9.2   12.1   12.8 
Energy Services  1.5   1.7   2.4   1.5 
Total $64.6  $64.1  $62.8  $64.6 

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

 
Income from operations before
 provision for taxes on income
  Three Months Ended 
Three Months Ended 
Apr. 1,
2018
  
Apr. 2,
2017
 
(millions of dollars) 
Mar. 31,
2019
  
Apr. 1,
2018
 
 (millions of dollars)       
Income from operations for reportable segments $64.6  $64.1  $62.8  $64.6 
Acquisition related transaction and integration costs  (0.4)  (1.5)  —   (0.4)
Unallocated corporate expenses  (1.6)  (0.5)  (0.8)  (1.6)
Consolidated income from operations  62.6   62.1   62.0   62.6 
Non-operating deductions, net  (13.4)  (16.6)  (12.8)  (13.4)
        
Income from continuing operations before provision for taxes on income $49.2  $45.5 
Income from operations before tax and equity in earnings $49.2  $49.2 

1920
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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

  Three Months Ended 
  
Apr. 1,
2018
 
Apr. 2,
2017
  (millions of dollars) 
Paper PCC $97.0  $93.4 
Specialty PCC  17.0   17.0 
Talc  13.1   14.3 
Ground Calcium Carbonate  22.5   21.5 
Metalcasting  79.2   66.6 
Household, Personal Care and Specialty Products  48.7   41.1 
Environmental Products  12.7   10.6 
Building Materials  18.9   17.4 
Basic Minerals  27.8   34.2 
Refractory Products  62.3   56.7 
Metallurgical Products  13.0   13.5 
Energy Services  19.1   18.7 
Total $431.3  $405.0 
  Note 16.  Subsequent Events
  Three Months Ended 
(millions of dollars) 
Mar. 31,
2019
  
Apr. 1,
2018
 
       
Metalcasting $73.2  $79.2 
Household, Personal Care & Specialty Products  74.9   48.7 
Environmental Products  15.9   12.7 
Building Materials  15.3   18.9 
Basic Minerals  19.9   27.8 
Paper PCC  91.5   97.0 
Specialty PCC  18.1   17.0 
Ground Calcium Carbonate  22.3   22.5 
Talc  12.5   13.1 
Refractory Products  62.0   62.3 
Metallurgical Products  11.8   13.0 
Energy Services  20.3   19.1 
Total $437.7  $431.3 

On April 30, 2018, the Company completed the acquisition of Sivomatic Holding, B.V. (“Sivomatic”), a leading European supplier of premium pet litter products. Sivomatic is a vertically integrated manufacturer, with production facilities in the Netherlands, Austria and Turkey. With a leading position in premier clumping products, their product portfolio spans the range of pet litter derived from bentonite, sourced predominantly from wholly-owned mines in Turkey. Sivomatic has approximately 115 employees and generated revenue of €73 million in 2017. The acquisition was financed through a combination of cash on hand and the Company’s credit facilities.
On April 18, 2018, the Company entered into an amendment (the “Third Amendment”) to the credit agreement to refinance its $200 million Revolving Facility.  As amended, the Revolving Facility has been increased to $300 million in aggregate commitments, maturing on April 18, 2023.  Loans under the Revolving Facility will bear interest at a rate equal to an adjusted LIBOR rate plus an applicable margin equal to 1.625% per annum, subject to decrease by up to 25 basis points in the event that, and for as long as, the Company’s net leverage ratio (as defined in the credit agreement) is less than certain thresholds.
2021
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors
Minerals Technologies Inc.:

Results of Review of Interim Financial Information

We have reviewed the condensed consolidated balance sheet of Minerals Technologies Inc. and subsidiaries (the Company) as of April 1, 2018,March 31, 2019, the related condensed consolidated statements of income and comprehensive income for the three-month periods ended March 31, 2019 and April 1, 2018, and April 2, 2017, the related condensed consolidated statements of shareholders' equity and cash flows for the three-month periods ended March 31, 2019 and April 1, 2018, and April 2, 2017, and the related notes (collectively, the consolidated interim financial information). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial information for it to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2017,2018, and the related consolidated statements of income and comprehensive income, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 16, 2018,15, 2019, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2017,2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This consolidated interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with the standards of the PCAOB. A review of consolidated interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ KPMG LLP

New York, New York
May 4, 20183, 2019

2122
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

Consolidated sales forIn the first quarter of 2018 were $431.3 million as compared with $405.0 million in2019, the prior year.   Income from operations was $62.6 million and represented 14.5% of sales as compared with $62.1 million and 15.3% of sales in the prior year.   Net income was $39.9 million as compared to $34.6 million in the first quarter of 2017.
Diluted earnings in the first quarter ended April 1, 2018 were $1.12 per share.  Included in pre-tax income and earnings per share were $0.4 million acquisition related transaction costs.
The Company continued to advance the execution of its growth strategies of geographic expansion and new product innovation and development with a focus on operational excellence and productivity improvements. As a result, ourConsolidated sales for the first quarter of 2019 were $437.7 million, as compared with $431.3 million in the prior year. Income from operations was $62.0 million and represented 14.2% of sales, as compared with $62.6 million and 14.5% of sales in China and Asia continuethe prior year. Net income was $39.1 million, as compared to grow, driven by increased penetration in China from our Metalcasting business.
On April 30, 2018, the Company completed the acquisition of Sivomatic Holding B.V. (“Sivomatic”), a leading European supplier of premium pet litter products. Sivomatic is a vertically integrated manufacturer, with production facilities$39.9 million in the Netherlands, Austria and Turkey. With a leading positionfirst quarter of 2018.

Diluted earnings in premier clumping products, their product portfolio spans the range of pet litter derived from bentonite, sourced predominantly from wholly-owned minesfirst quarter ended March 31, 2019 were $1.11 per share compared with $1.12 per share in Turkey.2018.

Our balance sheet continues to be strong. Cash, cash equivalents and short-term investments were $227$207.0 million as of April 1, 2018. Cash flow from operations as $36March 31, 2019. We repaid $16 million forof our debt in the quarter.first quarter of 2019. Our intention iscontinues to be to maintain a balanced approach to capital deployment, by using excess cash flow for investments in growth, debt reduction and selective share repurchases.

Outlook

Looking forward, we remain cautious about the state of the global economy and the impact it will have on our product lines.

The Company will continue to focus on innovation and new product development and other opportunities for sales growth in 20182019 from its existing businesses, as follows:

·●Increase our presence and gain penetration of our bentonite-based foundry customers for the Metalcasting industry in emerging markets, such as China and India.
●Increase our presence and market share in global pet care products, particularly in emerging markets.
●Deploy new products in pet care such as lightweight litter.
●Increase our presence and market share in Asia and in the global powdered detergent market.
●Continue the development of our proprietary Enersol® products for agricultural applications worldwide.
●Pursue opportunities for our products in environmental and building and construction markets in the Middle East, Asia Pacific and South America regions.
●Increase our presence and market share for geosynthetic clay liners within the Environmental Products product line.
●Develop multiple high-filler technologies under the FulFill® platform of products, to increase the fill rate in freesheet paper and continue to progress with commercial discussions and full-scale paper machine trials.
·●
Develop products and processes for waste management and recycling opportunities to reduce the environmental impact of the paper mill, reduce energy consumption and improve the sustainability of the papermaking process, including our NewYield® and ENVIROFIL®products.
·●Further penetration into the packaging segment of the paper industry.
·●Increase 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.
·●Expand the Company’sCompany's PCC coating product line using the satellite model.
·Increase our presence and gain penetration of our bentonite based foundry customers for the Metalcasting industry in emerging markets, such as China and India.
·Increase our presence and market share in global pet care products, particularly in emerging markets.
·Deploy new products in pet care such as lightweight litter.
·●Promote the Company’sCompany's expertise in crystal engineering, especially in helping papermakers customize PCC morphologies for specific paper applications.
·●Expand PCC produced for paper filling applications by working with industry partners to develop new methods to increase the ratio of PCC for fiber substitutions.
·●Develop unique calcium carbonate and talc products used in the manufacture of novel biopolymers, a new market opportunity.
·●Deploy new talc and GCC products in paint, coating and packaging applications.
·●Deploy value-added formulations of refractory materials that not only reduce costs but improve performance.
·Expand our solid core wire product line into BRIC, Middle Eastern and other Asian countries.
·●Deploy our laser measurement technologies into new applications.
·●Expand our refractory maintenance model to other steel makers globally.
·Increase our presence and market share in Asia and in the global powdered detergent market.
·Continue the development of our proprietary Enersol® products for agricultural applications worldwide.
·Pursue opportunities for our products in environmental and building and construction markets in the Middle East, Asia Pacific and South America regions.
·Increase our presence and market share for geosynthetic clay liners within the Environmental Products product line.
·●Increase our presence and market penetration in offshore produced water and offshore filtration and well testing within the Energy Services segment.
·●Deploy operational excellence principles into all aspects of the organization, including system infrastructure and lean principles.
·●Continue to explore selective acquisitions to fit our core competencies in minerals and fine particle technology.


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

Results of Operations

Three months ended April 1, 2018March 31, 2019 as compared with three months ended April 2, 20171, 2018

Consolidated Income Statement Review

 Three Months Ended,  Growth  Three Months Ended    
 
Apr. 1,
2018
  
Apr. 2,
2017
  $   % 
(millions of dollars) 
Mar. 31,
2019
  
Apr. 1,
2018
  
%
Growth
 
 (Dollars in millions)       
Net sales $431.3  $405.0  $26.3   6.5% $437.7  $431.3   1%
Cost of sales  317.8   291.3   26.5   9.1%  328.0   317.8   3%
Production margin  113.5   113.7   (0.2)  -0.2%  109.7   113.5   (3)%
Production margin %  26.3%  28.1%          25.1%  26.3%    
                            
Marketing and administrative expenses  44.4   44.0   0.4   0.9%  42.9   44.4   (3)%
Research and development expenses  6.1   5.8   0.3   5.2%  4.8   6.1   (21)%
Acquisition related transaction and integration costs  0.4   1.5   (1.1)  -73.3%  —   0.4   (100)%
Restructuring and other items, net  -   0.3   (0.3)  100.0%
          -                 
Income from operations  62.6   62.1   0.5   0.8%  62.0   62.6   (1)%
Operating margin %  14.5%  15.3%          14.2%  14.5%    
                            
Interest expense, net  (10.7)  (11.8)  1.1   -9.3%  (11.4)  (10.7)  7%
Debt modification costs and fees  -   (3.9)  3.9   * 
Other non-operating income (deductions), net  (2.7)  (0.9)  (1.8)  * 
Other non-operating deductions, net  (1.4)  (2.7)  (48)%
Total non-operating deductions, net  (13.4)  (16.6)  3.2   -19.3%  (12.8)  (13.4)  (4)%
                            
Income before provision for taxes and equity in earnings  49.2   45.5   3.7   8.1%
Income from operations before tax and equity in earnings  49.2   49.2   — 
Provision for taxes on income  9.3   10.1   (0.8)  -7.9%  9.3   9.3   — 
Effective tax rate  18.9%  22.2%          18.9%  18.9%    
                            
Equity in earnings of affiliates, net of tax  1.2   0.2   1.0   500.0%  0.1   1.2   (92)%
                            
Net income  41.1   35.6   5.5   15.4%  40.0   41.1   (3)%
                            
Net income attributable to non-controlling interests  1.2   1.0   0.2   20.0%  0.9   1.2   (25)%
Net income attributable to Minerals Technologies Inc. (MTI) $39.9  $34.6  $5.3  $15.3% $39.1  $39.9   (2)%
Net Sales

Three Months Ended
Apr. 1, 2018
 
%
Growth
Three Months Ended
Apr. 2, 2017
 Three Months Ended Mar. 31, 2019     Three Months Ended Apr. 1, 2018 
Net Sales
% of Total
Sales
Net Sales
% of Total
Sales
(millions of dollars) Net Sales  % of Total Sales  % Growth  Net Sales  % of Total Sales 
 (Dollars in millions)    
U.S. $232.3   53.9%  3.6% $224.3   55.4% $231.7   52.9%  —  $232.3   53.9%
International  199.0   46.1%  10.1%  180.7   44.6%  206.0   47.1%  4%  199.0   46.1%
Total sales $431.3   100.0%  6.5% $405.0   100.0% $437.7   100.0%  1% $431.3   100.0%
                                        
Performance Materials Segment $187.3   43.4%  10.2% $169.9   42.0% $199.2   45.5%  6% $187.3   43.4%
Specialty Minerals Segment  149.6   34.7%  2.3%  146.2   36.1%  144.4   33.0%  (3)%  149.6   34.7%
Refractories Segment  75.3   17.5%  7.3%  70.2   17.3%  73.8   16.9%  (2)%  75.3   17.5%
Energy Services Segment  19.1   4.4%  2.1%  18.7   4.6%  20.3   4.6%  6%  19.1   4.4%
Total sales $431.3   100.0%  6.5% $405.0   100.0% $437.7   100.0%  1% $431.3   100.0%

Worldwide net sales were $431.3increased 1% to $437.7 million in the first quarter of 2018 as compared with $405.0from $431.3 million in the prior year.year. Foreign exchange had a favorablean unfavorable impact on sales of approximately $17.8$11.4 million or 4%3%.  The Company's first quarter results include $25.2 million of sales from Sivomatic, which we acquired in the second quarter of 2018.

24
Net sales in the United States increased 3.6%decreased to $232.3$231.7 million as compared with $224.3from $232.3 million in the prior year. International sales increased 10.1%4% to $199.0$206.0 million from $180.7$199.0 million in the prior year.

Operating Costs and Expenses

Cost of sales was $317.8 $328.0 million an increase of 9.1% from prior year and was 73.7%74.9% of sales as compared with 71.9%$317.8 million and 73.7% of sales in the prior year. Gross marginThis increase was due primarily to higher raw material, logistics and energy costs in the first quarter of 2018 was 26.3% of sales compared to 28.1% in the prior year. The decrease in gross margin percentage was primarily attributable to reduction in profitability in the Basic Minerals product line within the Performance Materials segment due to a reduction in pricing and volumes of bulk chromite. The Company plans to exit its bulk chromite operations in South Africa.all segments.

Marketing and administrative costs were $42.9 million and 9.8% of sales compared to $44.4 million as compared to $44.0 millionand 10.3% of sales in the prior year.

Research and development expenses were $6.1$4.8 million, as compared to $5.8with $6.1 million in the prior year.year, and represented 1.1% of sales compared with 1.4% of sales.

The Company incurred charges of $0.4 million and $1.5 million for acquisition-relatedacquisition related transaction and integration costs during the three months ended April 1, 2018 and April 2, 2017, respectively.  In addition, there were $0.3 million of restructuring charges during the three months ended April 2, 2017.2018.

Income from Operations

The Company recorded income from operations of $62.6$62.0 million as compared to $62.1 million in the comparable prior year period.  Operating income was 14.5% of sales in the first quarter of 2018 compared with 15.3% of sales in 2017.

Other Non-Operating Deductions

The Company recorded non-operating deductions of $13.4 million in the first quarter of 2018 as compared with $16.6$62.6 million in the prior year.  TheOperating income during the three months ended April 1, 2018 includes acquisition-related integration costs of $0.4 million.

Other Non-Operating Income (Deductions)

In the first quarter of 2019, non-operating deductions were $12.8 million as compared with $13.4 million in 2018 is primarily comprised of $10.7 million of interest expense and $0.7 million foreign exchange losses.  The $16.6 million in the prior year isyear. This decrease was primarily comprised of $11.8 million of net interest expense, $3.9 million in debt modification costs and fees relatingattributable to the February 2017 repricing of the variable tranche of the Company’s Term Loan debt, partially offset by $0.6 million in foreign exchange gains.gain in the current year as compared with foreign exchange losses in the prior year.
Provision for Taxes on Income

Provision for taxes on income was $9.3 million as compared to $10.1 million infor the prior year.three months ended March 31, 2019 and April 1, 2018.  The effective tax rate was 19.0% as compared to 22.2% in the prior year.  The reduction in the effective tax rate during 2018 was primarily due to the U.S. Tax Cuts and Jobs Act (“U.S. Tax Reform”) which was enacted in December 2017.18.9% for both periods.

Consolidated Net Income

Consolidated net income was $41.1$39.1 million for the three months ended April 1, 2018March 31, 2019 as compared with $35.6$39.9 million in the prior year.

Segment Review

The following discussions highlight the operating results for each of our four segments.

Performance Materials Segment
  Three Months Ended    
Performance Materials Segment 
Mar. 31,
2019
  
Apr. 1,
2018
  
%
Growth
 
  (millions of dollars)    
Net Sales         
Metalcasting $73.2  $79.2   (8)%
Household, Personal Care & Specialty Products  74.9   48.7   54%
Environmental Products  15.9   12.7   25%
Building Materials  15.3   18.9   (19)%
Basic Minerals  19.9   27.8   (28)%
        Total net sales $199.2  $187.3   6%
             
Income from operations $$ 26.3  $$ 26.2     
% of net sales  13.2%  14.0%    

Performance Materials Segment  Three Months Ended 
Growth
 
Apr. 1,
2018
  
Apr. 2,
2017
  (millions of dollars)       
Net Sales            
Metalcasting $79.2  $66.6  $12.6   18.9%
Household, Personal Care and Specialty Products  48.7   41.1   7.6   18.5%
Environmental Products  12.7   10.6   2.1   19.8%
Building Materials  18.9   17.4   1.5   8.6%
Basic Minerals  27.8   34.2   (6.4)  -18.7%
Total net sales $187.3  $169.9  $17.4   10.2%
                 
Income from operations $26.2  $28.8         
% of net sales  14.0%  17.0%        
25
Net sales in the Performance Materials segment increased 10.2%6% to $187.3$199.2 million from $169.9$187.3 million in the prior year.  Sales in metalcasting increased 18.9% to $79.2 million, primarily due to higher volumes in all regions.  Household, Personal Care and& Specialty Products sales increased 18.5% to $48.7 million, primarily54%, due to higherthe acquisition of Sivomatic in the second quarter of 2018, and the continued growth of our pet care revenue and increased European fabric care sales. Building Materials sales increased 8.6% to $18.9 million due to several large projectsproducts in the U.S. andNorth America.  Environmental Products sales increased 19.8% to $12.7 million due to higher volumes25% driven by an ongoing large international project. Sales growth in the U.S.  These sales weresegment was partially offset by decreased sales in Metalcasting, Building Materials and Basic Minerals. The decrease in Metalcasting sales was primarily due to weaker demand in China early in the first quarter. Sales of Building Materials decreased 19% primarily due to weather-related construction project delays.  The decrease in Basic Minerals sales of 18.7%was due to $27.8 million due lower drilling activity in the Permian Basin and to the plannedCompany's exit offrom the bulk chromite operationsbusiness in South Africa.the first quarter of 2018.

Income from operations was $26.3 million and 13.2% of sales as compared to $26.2 million and 14.0% of sales as compared to $28.8 million and 17.0% of sales in the prior year. Operating income growth in Metalcasting, Household, Personal Care & Specialty, and Building Materials wasPricing actions more than offset by the decline in bulk chromite which impacted year over yearhigher raw materials and logistics costs. However, operating income and margins were affected by approximately $7 million.
Specialty Minerals Segmentan unfavorable product mix due to the weather-related project delays.

Specialty Minerals Segment  Three Months EndedGrowth
 Three Months Ended    
Specialty Minerals Segment  
Apr. 1,
2018
  
Apr. 2,
2017
Growth 
Mar. 31,
2019
  
Apr. 1,
2018
  
%
Growth
 
(millions of dollars) (millions of dollars)    
Net Sales                     
Paper PCC $97.0  $93.4  $3.6   3.9% $91.5  $97.0   (6)%
Specialty PCC  17.0   17.0   -   0.0%  18.1   17.0   6%
PCC Products $114.0  $110.4  $3.6   3.3% $109.6  $114.0   (4)%
                            
Ground Calcium Carbonate $22.3  $22.5   (1)%
Talc $13.1  $14.3  $(1.2)  -8.4%  12.5   13.1   (5)%
Ground Calcium Carbonate  22.5   21.5   1.0   4.7%
Processed Minerals Products $35.6  $35.8  $(0.2)  -0.6% $34.8  $35.6   (2)%
                            
Total net sales $149.6  $146.2  $3.4   2.3% $144.4  $149.6   (3)%
                            
Income from operations $24.1  $24.4  $(0.3)  -1.2% $22.0  $24.1   (9)%
% of net sales  16.1%  16.7%          15.2%  16.1%    

Worldwide net sales in the Specialty Minerals segment which consists of the Precipitated Calcium Carbonate (PCC) and Processed Minerals product lines, were $144.4 million as compared with $149.6 million an increase of $3.4 million or 2.3% compared toin the prior year.
year, a decrease of 3%.

Worldwide net sales of PCC, products, which areis primarily used in the manufacturing process of the paper industry, increased 3.3%decreased 4% to $114.0$109.6 million from $110.4$114.0 million in the prior year.  Paper PCC sales increased 3.9%decreased 6% to $91.5 million from $97.0 million, as compared with $93.4primarily due to the unfavorable impact of foreign exchange and reduced sales in North America driven by previously announced customer paper machine shutdowns, including the closure of a U.S. paper mill in the first quarter of 2019.  Sales of Specialty PCC increased 6% to $18.1 million from $17.0 million in the prior year primarily due todriven by an expansion at our U.K. facility, higher sales in Asia, Europevolumes for the automotive, sealant and Latin America which were partially offset by reduced sales in North America.consumer markets as well as pricing actions.

Net sales of Processed Minerals products were $35.6decreased 2% to $34.8 million, approximatelyprimarily due to severe weather on the same level as the prior year.U.S. west coast resulting in construction project delays and logistics challenges. Ground Calcium Carbonate sales increased by $1.0decreased 1% to $22.3 million or 4.7% from $22.5 million in the prior year due to higher volumes within the construction and automotive markets.year. Talc sales decreased by $1.25% to $12.5 million or 8.4% fromas compared with $13.1 million in the prior year due lower volumes.year.

Income from operations for the Specialty Minerals segment was $24.1$22.0 million and represented 16.1% of sales as compared with $24.4$24.1 million and 16.7% of sales in the prior year. Operating marginsThe decrease was primarily due to previously announced paper machine shutdowns in North America, the first quarter were impacted byunfavorable impact of foreign exchange and higher energy costs, and severe weather conditions in the U.S.partially offset by higher pricing.
26

Refractories  Segment
  Three Months Ended    
Refractories Segment 
Mar. 31,
2019
  
Apr. 1,
2018
  
%
Growth
 
  (millions of dollars)    
Net Sales         
Refractory Products $62.0  $62.3   — 
Metallurgical Products  11.8   13.0   (9)%
Total net sales $73.8  $75.3   (2)%
             
Income from operations $12.1  $12.8   (5)%
% of net sales  16.4%  17.0%    

 Refractories Segment Three Months Ended  Growth
Apr. 1,
2018
Apr. 2,
2017
  (millions of dollars)       
Net Sales            
Refractory Products $62.3  $56.7  $5.6   9.9%
Metallurgical Products  13.0   13.5   (0.5)  -3.7%
Total net sales $75.3  $70.2  $5.1   7.3%
                 
Income from operations $12.8  $9.2  $3.6   39.1%
% of net sales  17.0%  13.1%        
Net sales in the Refractories segment increased 7.3%decreased 2% to $75.3$73.8 million from $70.2$75.3 million in the prior year.   year driven by lower Refractory sales in Turkey and Germany, as well as lower sales of Metallurgical Products.  Sales of refractory products and systems to steel and other industrial applications increased 9.9%decreased slightly to $62.3 million primarily due$62.0 million. Sales of metallurgical products decreased 9% to higher volumes.  This was partially offset by lower sales in the Metallurgical Products product line.$11.8 million.

27
Income from operations increased 39.1%decreased 5% to $12.8 million from $9.2$12.1 million in the prior year and represented 17.0%was 16.4% of sales as compared with 13.1% of sales in 2017.
Energy Services Segmentsales.

Energy Services SegmentThree Months Ended Growth
 Three Months Ended    
Energy Services Segment
Apr. 1,
2018
  
Apr. 2,
2017
 Growth 
Mar. 31,
2019
  
Apr. 1,
2018
  
%
Growth
 
(millions of dollars) (millions of dollars)    
        ��            
Net Sales $19.1  $18.7  $0.4   2.1% $20.3  $19.1   6%
                            
Income (loss) from operations $1.5  $1.7  $(0.2)  -11.8%
Income from operations $2.4  $1.5   60%
% of net sales  7.9%  9.1%          11.8%  7.9%    

Net sales in the Energy Services segment wereincreased 6% to $20.3 million from $19.1 million a 2.1% increase from the $18.7 million recorded in the prior year, primarily driven by higher filtrationwell testing activity.

Operating income was $2.4 million as compared with $1.5 million a decrease of 11.8% from prior year levels, primarily due to the mix of sales activity in the quarter.prior year.

Liquidity and Capital Resources

Cash provided from continuing operations during the three months ended April 1, 2018,March 31, 2019, was approximately $35.7$31 million. Cash flows provided from operations during the first three monthsquarter of 20182019 were principally used to repay debt, fund capital expenditures repurchase shares and to pay the Company’sCompany's dividend to common shareholders. The aggregate maturities of long-term debt are as follows: remainder of 2018 - $3.8 million; 2019 - $0.6$2.4 million; 2020 - $0.6$2.1 million; 2021 - $303.8$252.2 million; 2022 - $0.2 million; 2023 - $0.0 million; thereafter - $678.0$658.0 million.

On May 9, 2014, in connection with the acquisition of AMCOL International Corporation (“AMCOL”), the Company entered into a credit agreement providing for the $1.560 billion senior secured term loan facility (the “Term Facility”) and a $200 million senior secured revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Facilities”). The net proceeds of the Term Facility, together with the Company’s cash on hand, were used as cash consideration for the acquisition of AMCOL and to refinance certain existing indebtedness of the Company and AMCOL and to pay fees and expenses in connection with the foregoing.  Loans under the Revolving Facility will be used for working capital and other general corporate purposes of the Company and its subsidiaries.

On June 23, 2015, the Company entered into an amendment (the “First Amendment”) to the credit agreement to reprice the $1.378 billion then outstanding on the Term Facility. As amended, the Term Facility had a $1.078 billion floating rate tranche and a $300 million fixed rate tranche. On February 14, 2017, the Company entered into an amendment (the “Second Amendment”) to the credit agreement to reprice the $788 million floating rate tranche then outstanding, which extended the maturity and lowered the interest costs by 75 basis points. On April 18, 2018, the Company entered into an amendment (the “Third Amendment”) to the credit agreement to refinance the Revolving Facility. As amended, the Revolving Facility has been increased to $300 million in aggregate commitments. Following the amendments, the loans outstanding under the floating rate tranche of the Term Facility will mature on February 14, 2024, the loans outstanding under the fixed rate tranche of the Term Facility will mature on May 9, 2021 and the loans outstanding (if any) and commitments under the Revolving Facility will mature and terminate, as the case may be, on April 18, 2023. Loans under the floating rate tranche of the Term Facility bear interest at a rate equal to an adjusted LIBOR rate (subject to a floor of 0.75%) plus an applicable margin equal to 2.25% per annum. Loans under the fixed rate tranche of the Term Facility bear interest at a rate of 4.75%. Loans under the Revolving Facility will bear interest at a rate equal to an adjusted LIBOR rate plus an applicable margin equal to 1.625% per annum. Such rates are subject to decrease by up to 25 basis points in the event that, and for so long as, the Company’s net leverage ratio (as defined in the credit agreement) is less than certain thresholds. The floating rate tranche of the Term Facility was issued at par and the fixed rate tranche of the Term Facility was issued at a 0.25% discount in connection with the First Amendment. The variable rate tranche of the Term Facility was issued at a 0.25% discount in connection with the Second Amendment. The variable rate tranche has a 1% required amortization per year. The Company will pay certain fees under the credit agreement, including customary annual administration fees. The loans under the fixed rate tranche of the Term Facility are subject to prepayment premiums in the event of certain prepayments prior to the third anniversary of the effective date of the First Amendment. The obligations of the Company under the Facilities are unconditionally guaranteed jointly and severally by, subject to certain exceptions, all material domestic subsidiaries of the Company (the “Guarantors”) and secured, subject to certain exceptions, by a security interest in substantially all of the assets of the Company and the Guarantors.

2827
During the first quarter of 2019, the Company repaid $15 million on its Term Facility.

The credit agreement contains certain customary affirmative and negative covenants that limit or restrict the ability of the Company and its restricted subsidiaries to enter into certain transactions or take certain actions. In addition, the credit agreement contains a financial covenant that requires the Company, if on the last day of any fiscal quarter loans or letters of credit were outstanding under the Revolving Facility (excluding up to $15 million of letters of credit), to maintain a maximum net leverage ratio (as defined in the credit agreement) of, initially, 5.25 to 1.00 for the four fiscal quarter periodperiods preceding such day. Such maximum net leverage ratio requirement is subject to decrease during the duration of the facility to a minimum level (when applicable) of 3.50 to 1.00. In connection with the Sivomatic acquisition, the Company incurred $113.0 million of short-term debt under the Revolving Facility. As of April 1, 2018,March 31, 2019, there were no$100 million in outstanding loans and $5.7$10.2 million in letters of credit outstanding under the Revolving Facility. The Company is in compliance with all the covenants associated with the Revolving Facility as of the end of the period covered by this report.

TheAs part of the Sivomatic acquisition, the Company has committed loan facilities forassumed $10.7 million in long term debt, recorded at fair value, consisting of two term loans, one of which matures in 2020 and the fundingother of new manufacturing facilitieswhich matures in China.2022. In addition, the first quarter of 2019, the Company repaid $0.7 million on these loans.

The Company has a committed loan facility in Japan. As of April 1, 2018, on a combined basis, $8.9March 31, 2019, $4.9 million was outstanding under thesethis loan facilities.facility. Principal will be repaid in accordance with the payment schedulesschedule ending in 2021. The Company repaid $0.4$0.2 million on these loansthis facility during the first quarter of 2018.2019.

As of April 1, 2018,March 31, 2019, the Company had $38.4$43.2 million in uncommitted short-term bank credit lines, of which approximately $6.6$4.7 million was in use. The credit lines are primarily outside the U.S. and are generally one year in term at competitive market rates at large, well-established institutions. The Company typically uses its available credit lines to fund working capital requirements or local capital spending needs. We anticipate that capital expenditures for 20182019 should be between $70.0$70 million and $80.0$80 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, committed and uncommitted bank credit lines and, where appropriate, project financing of certain satellite plants.

On April 5, 2016, the Company entered into a floating to fixed interest rate swap for an initial aggregate notional amount of $300 million to limit exposure to interest rate increases related to a portion of the Company’s floating rate indebtedness. This swap agreement hedges a portion of contractual floating rate interest through its expiration in May 2021. As a result of the agreement, the Company’s effective fixed interest rate on the notional amount floating rate indebtedness will be 4.25%. The fair value of this instrument at April 1, 2018March 31, 2019 was an asset of $4.1$1.9 million.

During the second quarter of 2018, the Company entered into a floating to fixed interest rate swap for a notional amount of $150 million. Additionally, the Company entered into a cross currency rate swap with a total notional value of $150 million to exchange monthly fixed-rate interest payments in U.S. dollars for monthly fixed-rate interest rate payments in Euros. These swaps mature in May 2023. As a result of these swaps, the Company’s effective fixed interest rate on the notional floating rate indebtedness will be 2.5%. The combined fair value of these instruments at March 31, 2019 was an asset of $3.8 million.

On September 21, 2017, the Company’sCompany's Board of Directors authorized the Company’s management to repurchase, at its discretion, up to $150 million of the Company’s shares over a two-year period commencing October 1, 2017 after the previous program expired.2017. As of April 1, 2018, 82,174March 31, 2019, 333,184 shares were repurchased under this program for $5.7$21.7 million, or an average price of approximately $69.64$65.12 per share.  There were no share repurchases in the first quarter of 2019.

The Company is required to make future payments under various contracts, including debt agreements and lease agreements. The Company also has commitments to fund its pension plans and provide payments for other postretirement benefit plans. During the three months ended April 1, 2018,March 31, 2019, there were no material changes in the Company’s contractual obligations. For an in-depth discussion of the Company’s contractual obligations, see “Liquidity and Capital Resources” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.2018.

28
Cautionary Statement for “Safe Harbor” Purposes under the Private Securities Litigation Reform Act of 1995

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. This report contains statements that the Company believes may be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, particularly statements relating to the Company’s objectives, plans or goals, 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 “believes,” “expects,” “plans,” “intends,” “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. Many of these risks and uncertainties are difficult to predict or are beyond the Company’s control. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially. Significant factors affecting the expectations and forecasts are set forth under “Item 1A — Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017,2018, and in Exhibit 99 to this Quarterly Report on Form 10-Q.

The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances that arise after the date hereof. Investors should refer to the Company’sCompany's subsequent filings under the Securities Exchange Act of 1934 for further disclosures.

Recently Issued Accounting Standards

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. All recently issued ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.

LeasesRecently Adopted Accounting Standards

In February 2016,On January 1, 2019, the FASB issuedCompany adopted the provisions of ASU 2016-02, “Leases”, which requires lessees to recognize most leases on-balance sheet, thereby increasing their reported assets and liabilities, in some cases very significantly.  Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-02 mandates asheet. The Company has adopted this new standard under the modified retrospective transition method, using the effective date as our date of initial application. As such, financial information and required disclosures will not be provided for dates prior to January 1, 2019.  The new standard provides a number of optional practical expedients in transition. We have elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The new standard also provides practical expedients for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all entities.  The Company is currently evaluating the impactleases that qualify. On adoption, we recognized additional operating liabilities of this ASU$61.4 million with corresponding right-of-use assets of $50.5 million based on the Company’s consolidated financial statements andpresent value of the remaining lease payments under existing operating leases.  As of December 31, 2018, we had $10.9 million in deferred charges related disclosures.to some of our real estate leases that were recorded against the right of use asset as part of the transition.  The Company has performed a high level analysis of its current lease portfolio and is in process of establishing a cross-functional project team to assist in the implementation of this ASU.  Based on the current status of this assessment, the adoption of this guidance isstandard did not expected to have a material impact on the Company’sCompany's financial statements.

Intangibles – Goodwill and Other

InOn January 2017,1, 2019, the FASB issued ASU 2017-04, “Intangibles-Goodwill and Other: SimplifyingCompany adopted the Test for Goodwill Impairment”, which no longer requires an entity to perform a hypothetical purchase price allocation to measure goodwill impairment.  Instead, goodwill will be measured using the difference between the carrying amount and the fair valueprovisions of the reporting unit.  The guidance is effective for the interim and annual periods beginning on or after December 15, 2019, with early adoption permitted.  The adoption of this guidance is not expected to have a material impact on the Company’s financial statements. We are currently evaluating the timing of adoption of this standard.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act.  The guidance is effective forAs a result, the interim and annual periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluatingCompany reclassified $10.9 million from "Accumulated other comprehensive loss" to "Retained earnings" on the timingCondensed Consolidated Balance Sheets as of adoption of this standard.March 31, 2019.
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.

29
On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, valuation of long-lived assets, goodwill and other intangible assets, income taxes, including valuation allowances and pension plan assumptions. 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 cannot readily be determined from other sources. There can be no assurance that actual results will not differ from those estimates.

ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
ITEM 3.  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 decline in the value of foreign currencies would not have a material adverse effect on our financial condition and results of operations. A portion of our long-term bank debt bears interest at variable rates; therefore, our results of operations would be affected by interest rate changes to the extent of such outstanding bank debt. An immediate 10 percent change in interest rates would have a material effect on our results of operations over the next fiscal year. A one-percent change in interest rates, inclusive of the impact of our interest rate derivatives, would result in $4.9$3.8 million in incremental interest charges on an annual basis.

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, hedges 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, hedges 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.

On April 5, 2016, the Company entered into a floating to fixed interest rate swap for an initial aggregate notional amount of $300 million to limit exposure to interest rate increases related to a portion of the Company’s floating rate indebtedness. This swap agreement hedges a portion of contractual floating rate interest through its expiration in May 2021. As a result, the Company’s effective fixed interest rate on the notional amount floating rate indebtedness will be 4.25% through May 2021. The fair value of this instrument at April 1, 2018March 31, 2019 was an asset of $4.1$1.9 million.

ITEM 4.
Controls and Procedures
During the second quarter of 2018, the Company entered into a floating to fixed interest rate swap for a notional amount of $150 million. Additionally, the Company entered into a cross currency rate swap with a total notional value of $150 million to exchange monthly fixed-rate interest payments in U.S. dollars for monthly fixed-rate interest rate payments in Euros. These swaps mature in May 2023. As a result of these swaps, the Company’s effective fixed interest rate on the notional floating rate indebtedness will be 2.5%. The combined fair value of these instruments at March 31, 2019 was an asset of $3.8 million.

ITEM 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, and under the supervision and with participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

On January 1, 2018,2019, the Company adopted the provisions of ASU No. 2014-09, “Revenue from Contracts with Customers”2016-02, "Leases (Topic 842)." Adoption of this standard did not have a material impact on the Company’sCompany's financials, however, we did implementimplemented a new lease accounting system and implemented changes to our processes related to revenue recognitionleases and related control activities.  These included an update

During 2018, we closed on the acquisition of Sivomatic and we excluded Sivomatic from the scope of management's report on internal control over financial reporting for the year ended December 31, 2018.  We are in the process of integrating Sivomatic to our accounting policies based onoverall internal control over financial reporting and will include them in scope for the five-step model and implementation of controlsyear ending December 31, 2019.  This process may result in additions or changes to ensure ongoing contract review and assessment.our internal control over financial reporting.

3130
Except as described above, there
There were no other changes in the Company’sCompany's internal controls over financial reporting during the quarter ended April 1, 2018March 31, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’sCompany's internal control over financial reporting.

31
PART II – OTHER INFORMATION

Item 1.
Item 1.  Legal Proceedings

The Company and its subsidiaries are the subject of various pending legal actions in the ordinary course of their businesses. Except as described below, none of such legal proceedings are material.
Armada Litigation
On May 8, 2013, Armada (Singapore) PTE Limited, an ocean shipping company now in bankruptcy (“Armada”) filed a case in federal court in the Northern District of Illinois against AMCOL and certain of its subsidiaries ( Armada (Singapore) PTE Limited v. AMCOL International Corp., et al., United States District Court for the Northern District of Illinois , Case No. 13 CV 3455).  We acquired AMCOL and its subsidiaries on May 9, 2014. A co-defendant is Ashapura Minechem Limited, a company located in Mumbai, India (“AML”).  During the relevant time period, 2008-2010, AMCOL owned slightly over 20% of the outstanding AML stock through December 2009, after which it owned approximately 19%.  In 2008, AML entered into two contracts of affreightment (“COA”) with Armada for over 60 ship loads of bauxite from India to China.  After one shipment, AML made no further shipments, which led Armada to file arbitrations in London against AML, one for each COA. AML did not appear in the London arbitrations and default awards of approximately $70 million were entered.  The litigation filed by Armada against AMCOL and AML relates to these awards, which AML has not paid.  The substance of the allegations by Armada is that AML and AMCOL engaged in illegal conduct to thwart Armada’s efforts to collect the arbitration award.  AMCOL won a motion for judgement on the pleadings that resulted in the successful dismissal of all but one count in the complaint, including a dismissal of all counts alleging violations of Illinois’ Fraudulent Transfer laws and federal RICO violations. On March 26, 2018, the U.S. Court of Appeals for the Seventh Circuit affirmed the district court’s dismissal of such counts.  The Company does not expect that the outcome of the one remaining count of the Armada lawsuit will have a material effect on our financial position, results of operations or cash flows.

Silica and Asbestos Litigation

Certain of the Company’sCompany'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 three pending silica cases and 22forty pending asbestos cases. To date, 1,493 silica cases and 5457 asbestos cases have been dismissed, not including any lawsuits against AMCOL or American Colloid Company dismissed prior to our acquisition of AMCOL. ThreeSeven new asbestos cases were filed during the first quarter of 2018, including one new case naming AMCOL as a defendant.  One2019, and three additional asbestos case was dismissed duringcases were filed subsequent to the firstend of the quarter. No asbestos or silica cases were dismissed during the quarter.period. 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’sCompany'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 settled only one silica lawsuit, for a nominal amount, and no asbestos lawsuits to date (not including any that may have been settled by AMCOL prior to completion of the acquisition). 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 continues to be insignificant. The majority of the costs of defense for these cases, excluding cases against AMCOL or American Colloid, are reimbursed by Pfizer Inc. pursuant to the terms of certain agreements entered into in connection with the Company’sCompany's initial public offering in 1992. The Company is entitled to indemnification, pursuant to agreement, for sales prior to the initial public offering. Of the 2240 pending asbestos cases, 1429 of the non-AMCOL cases are subject to indemnification, in whole or in part, because the plaintiffs claim liability based on sales of products that occurred either entirely before the initial public offering, or both before and after the initial public offering. In five of the sixseven remaining non-AMCOL cases, the plaintiffs have not alleged dates of exposure.exposure, and in the remaining two non-AMCOL cases, exposure is alleged to have been after the Company's initial public offering in 1992. The remaining twofour cases involve AMCOL only, so no Pfizer indemnity is available. 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 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”("PCBs") and mercury at a portion of the site. We have completed the required investigations and submitted several reports characterizing the contamination and assessing site-specific risks. We are awaiting regulators’ approval of the risk assessment report, which will form the basis for a proposal by the Company concerning eventual remediation.

We believe that the most likely form of overall site remediation will be to leave the existing contamination in place (with some limited soil removal), encapsulate it, and monitor the effectiveness of the encapsulation. We anticipate that a substantial portion of the remediation cost will be borne by the United States based on its involvement at the site from 1942 – 1964, as historic documentation indicates that PCBs and mercury were first used at the facility at a time of U.S. government ownership for production of materials needed by the military. Pursuant to a Consent Decree entered on October 24, 2014, the United States paid the Company $2.3 million in the 4th4th quarter of 2014 to resolve the Company’s claim for response costs for investigation and initial remediation activities at this facility through October 24, 2014. Contribution by the United States to any future costs of investigation or additional remediation has, by agreement, been left unresolved. Though the cost of the likely remediation remains uncertain pending completion of the phased remediation decision process, we have estimated that the Company’s share of the cost of the encapsulation and limited soil removal described above would approximate $0.4 million, which has been accrued as of April 1, 2018.March 31, 2019.

The Company is evaluating options for upgrading the wastewater treatment facilities at its Adams, Massachusetts plant. This work has been undertaken pursuant to an administrative Consent Order originally issued by the Massachusetts Department of Environmental Protection (“DEP”) on June 18, 2002. This order was amended on June 1, 2009 and on June 2, 2010. The amended Order includes the investigation by January 1, 2022 of options for ensuring that the facility’sfacility's wastewater treatment ponds will not result in unpermitted discharge to groundwater. Additional requirements of the amendment include the submittal by July 1, 2022 of a plan for closure of a historic lime solids disposal area. Preliminary engineering reviews completed in 2005 indicate that the estimated cost of wastewater treatment upgrades to operate this facility beyond 2024 may be between $6 million and $8 million. The Company estimates that the remaining remediation costs would approximate $0.4 million, which has been accrued as of April 1, 2018.March 31, 2019.

ITEM 1A.
Risk Factors
32
ITEM 1A.  Risk Factors

For a description of Risk Factors, see Exhibit 99 attached to this report. There have been no material changes to our risk factors from those disclosed in our 20172018 Annual Report on Form 10-K.

33ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
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
 
             
January 1 - January 28  -   -   -  $150,000,000 
January 29 - February 25  25,927  $68.82   25,927  $148,215,719 
February 25 - April 1  56,247  $70.01   82,174  $144,277,662 
Total  82,174  $69.64         

On September 21, 2017, the Company’sCompany's Board of Directors authorized the Company’s management to repurchase, at its discretion, up to $150 million of the Company’s shares over a two-year period commencing October 1, 2017 after the previous program expired.2017. As of April 1, 2018, 82,174March 31, 2019, 333,184 shares were repurchased under this program for $5.7$21.7 million, or an average price of approximately $69.64$65.12 per share.  There were no share repurchases in the first quarter of 2019.

ITEM 3.
Default Upon Senior Securities
ITEM 3.  Default Upon Senior Securities

Not applicable.

ITEM 4.
Mine Safety Disclosures
ITEM 4.  Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

ITEM 5.
Other Information
ITEM 5.  Other Information

None

34ITEM 6.  Exhibits
ITEM 6.
Exhibits

Exhibit No. Exhibit Title
3.1
By-Laws of Minerals Technologies Inc., as amended and restated effective March 13, 2018 (incorporated by reference to the Exhibit 3.1 filed with the Company’s Current Report on form 8-K filed on March 19, 2018).
10.1
Third Amendment And Incremental Facility Amendment, dated as of April 18, 2018, among Minerals Technologies Inc., certain subsidiaries party thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to the Exhibit 10.1 filed with the Company’s Current Report on form 8-K filed on April 20, 2018).
15
 Letter Regarding Unaudited Interim Financial Information.
31.1
 Rule 13a-14(a)/15d-14(a) Certification executed by the Company’sCompany's principal executive officer.
31.2
 Rule 13a-14(a)/15d-14(a) Certification executed by the Company’sCompany's principal financial officer.
32
 Section 1350 Certifications.
95
 Information concerning Mine Safety Violations
99
 Risk Factors
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition Linkbase
101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE XBRL Taxonomy Extension Presentation Linkbase

3533
SIGNATURE

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

  Minerals Technologies Inc.
  
 By:/s/Matthew E. Garth
  Matthew E. Garth
  Senior Vice President, Finance and Treasury,
  Chief Financial Officer
May 3, 2019

May 4, 201834
36