Minerals (MTX) 10-Q 2000 Q3 Quarterly report

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

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

For the quarterly period ended September 24, 2000

OR

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

COMMISSION FILE NUMBER 1-3295
--

MINERALS TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

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

405 Lexington Avenue, New York, New York 10174-1901
(Address of principal executive offices, including zip code)

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

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

YES  X  NO

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

CLASS	OUTSTANDING AT October 20, 2000
Common Stock, $0.10 par value	20,272,646

MINERALS TECHNOLOGIES INC.

INDEX TO FORM 10-Q

PART I.	FINANCIAL INFORMATION
			Page No.
Item 1.
	Financial Statements:
		Condensed Consolidated Statement of Income for the three-month and nine-month periods ended September 24, 2000 and September 26, 1999		3
		Condensed Consolidated Balance Sheet as of September 24, 2000 and December 31, 1999		4
		Condensed Consolidated Statement of Cash Flows for the nine-month periods ended September 24, 2000 and September 26, 1999		5
		Notes to Condensed Consolidated Financial Statements		6
	Independent Auditors' Review Report			10
Item 2.
	Management's Discussion and Analysis of Financial Condition and Results of Operation			11
Item 3.
	Quantitative and Qualitative Disclosures about Market Risk			14
PART II.	OTHER INFORMATION
Item 1.
	Legal Proceedings			14
Item 6.
	Exhibits and Reports on Form 8-K			15
Signature				16

2

PART I.   FINANCIAL INFORMATION

ITEM 1. Financial Statements

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

Three Months Ended  

 

Nine Months Ended  

(thousands of dollars, except per share data)

Sept. 24,
2000  

Sept. 26,
1999  

 

Sept. 24,
2000  

Sept. 26,
1999  

      

Net sales

$160,938

$159,807

 

$480,824 

$467,220

Operating costs and expenses:

     

      Cost of goods sold

112,502

110,248

 

331,233 

322,581

      Marketing, distribution and administrative expenses

17,588

18,347

 

56,284 

55,961

      Research and development expenses

   6,605

   6,001

 

  19,069

  18,176

      

Income from operations

24,243

25,211

 

74,238 

70,502

Non-operating deductions, net

   1,604

   1,892

 

   3,376

   3,679

Income before provision for taxes
    on income and minority interests

22,639

23,319

 

70,862 

66,823

Provision for taxes on income

7,097

7,311

 

22,214 

20,956

Minority interests

       408

      100

 

    1,336

      506

      

Net income

$  15,134
=====

$ 15,908
=====

 

$  47,312
===== 

$  45,361
======

Earnings per share:

     

          Basic

$      0.74

$      0.75

 

$       2.30 

$      2.11

          Diluted

$      0.72

$      0.71

 

$       2.23 

$      2.03

      

Cash dividends declared per common share

$    0.025

$    0.025

 

$     0.075 

$    0.075

      

Shares used in the computation of earnings per share:

     

          Basic

20,408

21,349

 

20,591 

21,518

          Diluted

21,125

22,281

 

21,207 

22,351

      

See accompanying Notes to Condensed Consolidated Financial Statements.

3

MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET

ASSETS

     (thousands of dollars)

Sept. 24,
2000*

 

Dec. 31,
   1999**

    

Current assets:

   

     Cash and cash equivalents

$   9,962 

 

$  20,378 

     Accounts receivable, net

122,171 

 

118,327 

     Inventories

66,660 

 

67,427 

     Other current assets

  15,501

 

  13,815

               Total current assets

214,294 

 

219,947 

    

Property, plant and equipment, less accumulated
    depreciation and depletion September 24, 2000 -
    $466,836; December 31, 1999 - $433,047

541,976 

 

521,996 

Other assets and deferred charges

 36,464 

 

  27,188

               Total assets

$792,734 
====== 

 

$769,131
====== 

    

LIABILITIES AND SHAREHOLDERS' EQUITY

    

Current liabilities:

   

     Short-term debt and current maturities of long-term debt

$  34,287 

 

$  13,439 

     Accounts payable

38,722 

 

46,703 

     Other current liabilities

  45,251

 

  57,400

               Total current liabilities

118,260 

 

117,542 

    

Long-term debt

91,237 

 

75,238 

Other non-current liabilities

  95,947

 

  91,315

               Total liabilities

305,444

 

284,095

    

Shareholders' equity:

   

     Common stock

2,585

 

2,571 

     Additional paid-in capital

154,955 

 

150,315 

     Retained earnings

572,790 

 

527,022 

     Accumulated other comprehensive loss

(47,637)

 

(28,865)

 

682,693 

 

651,043 

     Less treasury stock

195,403

 

166,007

               Total shareholders' equity

487,290

 

485,036

    

               Total liabilities and shareholders' equity

$792,734
====== 

 

$769,131
====== 

*   Unaudited
**  Condensed from audited financial statements.

See accompanying Notes to Condensed Consolidated Financial Statements.

4

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

	Nine Months Ended
(thousands of dollars)	Sept. 24,    2000	Sept. 26,   1999
Operating Activities
Net income	$  47,312	$  45,361
Adjustments to reconcile net income to net cash   provided by operating activities:
Depreciation, depletion and amortization	45,901	42,926
Other non-cash items	3,901	3,897
Net changes in operating assets and liabilities	(22,210)	947
Net cash provided by operating activities	74,904	93,131
Investing Activities
Purchases of property, plant and equipment	(81,883)	(52,023)
Other investing activities, net	(12,665)	(854)
Net cash used in investing activities	(94,548)	(52,877)
Financing Activities
Proceeds from issuance of short-term and long-term debt	93,903	28,898
Repayment of debt	(56,389)	(42,253)
Purchase of common shares for treasury	(29,396)	(37,291)
Other financing activities, net	3,109	5,221
Net cash used in financing activities	11,227	(45,425)
Effect of exchange rate changes on cash and cash equivalents	(1,999)	915
Net decrease in cash and cash equivalents	(10,416)	(4,256)
Cash and cash equivalents at beginning of period	20,378	20,697
Cash and cash equivalents at end of period	$     9,962  ======	$   16,441  =====
Interest paid	$     5,767  ======	$     5,030  ======
Income taxes paid	$   20,063  =====	$     9,499  ======

See accompanying Notes to Condensed Consolidated Financial Statements.

5

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

Note 1 -- Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have been prepared by management 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 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's Annual Report on Form 10-K for the year ended December 31, 1999. 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 and nine-month periods ended September 24, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000.

Note 2 -- Inventories

     The following is a summary of inventories by major category:

(thousands of dollars)	September 24,  2000	December 31, 1999
Raw materials	$ 26,603	$ 25,049
Work-in-process	6,106	5,171
Finished goods	16,020	19,913
Packaging and supplies	17,931	17,294
Total inventories	$ 66,660 ======	$ 67,427 ======

Note 3 -- Long-Term Debt and Commitments

     The following is a summary of long-term debt:

(thousands of dollars)	September 24,  2000	December 31, 1999
6.04% Guarantied Senior Notes     Due June 11, 2000	$           --	$  13,000
7.49% Guaranteed Senior Notes    Due July 24, 2006	50,000	50,000
Yen-denominated Guaranteed Credit    Agreement Due March 31, 2007	10,685	--
Variable/Fixed Rate Industrial    Development Revenue Bonds    Due 2009	4,000	4,000
Economic Development Authority    Refunding   Revenue Bonds    Series 1999 Due 2010	4,600	4,600
Variable/Fixed Rate Industrial    Development Revenue Bonds    Due August 1, 2012	8,000	8,000
Variable/Fixed Rate Industrial    Development Revenue Bonds Series 1999    Due November 1, 2014	8,200	8,200
Variable/Fixed Rate Industrial     Development Revenue Bonds     Due March 31, 2020	5,000	--
Other borrowings	939	877
	91,424	88,677
Less: Current maturities	187	13,439
Long-term debt	$  91,237 ======	$  75,238 ======

     On May 17, 2000, the Company's majority owned subsidiary, Specialty Minerals FMT K.K., entered into a Yen-denominated  Guaranteed Credit Agreement with the Bank of New York due March 31, 2007. The proceeds were used to finance the construction of a PCC satellite facility in Japan. Principal payments begin on June 30, 2002.  Interest is payable quarterly at a rate of 2.05% per annum.

6

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

     On June 9, 2000, the Company entered into a twenty-year, taxable, Variable/Fixed Rate Industrial Development Revenue Bond agreement to finance a portion of the construction of a merchant manufacturing facility for the production of specialty PCC in Mississippi. The Company selected the variable rate option for this borrowing and the average interest rate was approximately 7% for the nine months ended September 24, 2000.

     On June 11, 2000, the Company remitted its final principal payment under the 6.04% Guarantied Senior Notes.

     The Company had available approximately $85 million in uncommitted, short-term bank credit lines, of which $34.1 million were in use at September 24, 2000. The interest rate on these borrowings was approximately 7% for the nine months ended September 24, 2000.

Note 4 -- Earnings Per 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 dilutive potential common shares outstanding. The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended		Nine Months Ended
Basic EPS (in thousands, except per share data)	Sept. 24, 2000	Sept. 26, 1999	Sept. 24, 2000	Sept. 26, 1999
Net income	$15,134	$15,908	$47,312	$45,361
Weighted average shares outstanding	20,408	21,349	20,591	21,518
Basic earnings per share	$    0.74 =====	$    0.75 =====	$    2.30 =====	$    2.11 =====
Diluted EPS
Net income	$15,134	$15,908	$47,312	$45,361
Weighted average shares outstanding	20,408	21,349	20,591	21,518
Dilutive effect of stock options	717	932	616	833
Weighted average shares outstanding, adjusted	21,125	22,281	21,207	22,351
Diluted earnings per share	$    0.72 =====	$     0.71 =====	$    2.23 =====	$    2.03 =====

Note 5 -- Comprehensive Income (Loss)

     The following are the components of comprehensive income:

	Three Months Ended		Nine Months Ended
(thousands of dollars)	Sept. 24, 2000	Sept. 26, 1999	Sept. 24, 2000	Sept. 26, 1999
Net income	$  15,134	$15,908	$47,312	$  45,361
Other comprehensive income, net of tax:
Foreign currency translation adjustments	(10,566)	5,450	(18,772)	(16,883)
Unrealized holding gains (losses),         net of reclassification adjustments	--	--	--	(86)
Comprehensive income	$   4,568 =====	$21,358 =====	$28,540 =====	$28,392  =====

7

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

The components of accumulated other comprehensive loss, net of related tax are as follows:

	Sept. 24, 2000	Dec. 31,    1999
Foreign currency translation adjustments	$(46,636)	$(27,864)
Minimum pension liability adjustments	(1,001)	(1,001)
Accumulated other comprehensive loss	$(47,637) =====	$(28,865) =====

Note 6 -- Segment and Related Information

     Segment information for the three-month and nine-month periods ended September 24, 2000 and September 26, 1999 was as follows:

	Net Sales
(thousands of dollars)	Three Months Ended		Nine Months Ended
	Sept. 24, 2000	Sept. 26, 1999	Sept. 24, 2000	Sept. 26, 1999
Specialty Minerals Segment	$116,305	$115,380	$345,637	$339,466
Refractories Segment	44,633	44,427	135,187	127,754
Total	$160,938 ======	$159,807 ======	$480,824 ======	$467,220 ======

	Income from Operations
(thousands of dollars)	Three Months Ended		Nine Months Ended
	Sept. 24, 2000	Sept. 26, 1999	Sept. 24, 2000	Sept. 26, 1999
Specialty Minerals Segment	$16,884	$18,388	$52,259	$51,372
Refractories Segment	7,359	6,823	21,979	19,130
Total	$24,243 =====	$25,211 =====	$74,238 =====	$70,502 =====

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

(thousands of dollars)	Three Months Ended		Nine Months Ended
	Sept. 24, 2000	Sept. 26, 1999	Sept. 24, 2000	Sept. 26, 1999
Income from operations for reportable segments	$24,243	$25,211	$74,238	$70,502
Non-operating deductions, net	1,604	1,892	3,376	3,679
Income before provision for taxes on income     and minority interests	$22,639 =====	$23,319 =====	$70,862 =====	$66,823 =====

8

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

Note 7 -- Subsequent Event

        MTI's largest customer, International Paper Company ("IP"), announced on October 18, 2000 that it plans to reduce production capacity by closing its mills at Mobile, Alabama, Lock Haven, Pennsylvania and Camden, Arkansas, and by reducing production at its mill in Courtland, Alabama. The Company currently owns and operates PCC satellite plants at Mobile, Lock Haven and Courtland. As a result, MTI expects to take a one-time, pre-tax write-off of assets in the fourth quarter of 2000 of between $2.5 million and $3.0 million. 

9

INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors and Shareholders
Minerals Technologies Inc.:

     We have reviewed the condensed consolidated balance sheet of Minerals Technologies Inc. and subsidiary companies as of September 24, 2000 and the related condensed consolidated statements of income for each of the three-month and nine-month periods ended September 24, 2000 and September 26, 1999, and cash flows for the nine-month periods then ended. These financial statements are the responsibility of the company's management.

     We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, 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.

     Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles.

     We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Minerals Technologies Inc. and subsidiary companies as of December 31, 1999, and the related consolidated statements of income, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated January 19, 2000, 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, 1999 is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

KPMG LLP

New York, New York
October 19, 2000

10

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

	Income and Expense Items                           As a Percentage of Net Sales
	Three Months Ended		Nine Months Ended
	Sept. 24, 2000	Sept. 26, 1999	Sept. 24, 2000	Sept. 26, 1999
Net sales	100.0%	100.0%	100.0%	100.0%
Cost of goods sold	69.9	69.0	68.9	69.0
Marketing, distribution and administrative expenses	10.9	11.5	11.7	12.0
Research and development expenses	4.1	3.7	4.0	3.9
Income from operations	15.1	15.8	15.4	15.1
Net income	9.4% ===	10.0% ===	9.8% ===	9.7% ===

Results of Operations

Three Months Ended September 24, 2000 as Compared with Three Months Ended September 26, 1999

     Net sales in the third quarter of 2000 increased 0.7% to $160.9 million from $159.8 million in the third quarter of 1999. Foreign exchange had a negative effect on sales of approximately $2.4 million, or 1.5 percentage points of growth.

     Net sales in the Specialty Minerals segment, which includes the Precipitated Calcium Carbonate ("PCC") and Processed Minerals product lines, grew 0.8% in the third quarter of 2000 to $116.3 million as compared with $115.4 million in the prior year.

     Worldwide net sales of PCC grew 1.0% to $96.8 million from $95.8 million in the third quarter of 1999. Foreign exchange had a negative effect of approximately $1.5 million. This was primarily due to the stronger U.S. dollar as compared to the European currencies. Growth in sales of PCC products was also adversely affected by unplanned paper mill shutdowns and slowdowns to reduce inventories and a continued decline in sales of PCC for non-paper applications. Excluding the unfavorable impact of foreign exchange, sales of PCC from satellite facilities increased 6% in the third quarter while volumes also increased 6%. Volume growth for PCC satellite facilities in operation for more than a year was approximately 4% in the third quarter despite the aforementioned paper mill shutdowns and slowdowns. The Company began operation of two new satellite PCC plants at paper mills in Brazil and Japan, as well as at a major satellite expansion in Portugal. Combined, these new satellite PCC plants and expansion are equivalent to approximately seven satellite units. A satellite unit produces between 25,000 and 35,000 tons of PCC per year.

     Sales of PCC for non-paper applications declined approximately 14% in the third quarter. This product line was affected by difficult market conditions, primarily in the healthcare sector, and some loss of market share in calcium supplement products. In addition, export sales of specialty PCC from the Company's merchant PCC facility in the United Kingdom to Europe were negatively affected by the stronger British pound against the euro.

     Net sales of Processed Minerals products decreased 0.5% in the third quarter to $19.5 million from $19.6 million in 1999. A slight softening in demand for the Company's ground calcium carbonate products and talc in the construction-related industries affected the sales growth.

     Net sales in the Refractories segment were $44.6 million for the third quarter of 2000, a 0.5% increase compared with the same period last year. Sales of metallurgical wire products in the Refractories segment declined and were affected by a slowdown in steel production in the United States in the third quarter of 2000.

     Net sales in the United States in the third quarter of 2000 decreased approximately 2% from the comparable period in 1999. Foreign sales increased approximately 7% in the third quarter of 2000 from the comparable 1999 period.

     Income from operations decreased 4.0% to $24.2 million in the third quarter of 2000. Lower sales volume, higher fuel costs, reduced output as a result of mandated "brownouts" to save energy at the Company's facility in California, and costs associated with the later than expected start-up of the new manufacturing facility in Brookhaven, Mississippi were the primary reasons for the operating income decline. Operating income in the

11

Specialty Minerals segment decreased 8.2% in the third quarter to $16.9 million, which represented 14.5% of its net sales. This decrease was due to significant declines in  PCC for non-paper applications and in the Processed Minerals product line.  Income from  operations in the Refractories segment increased 7.9% in the third quarter to $7.3 million and was 16.5% of its net sales.

     Net income decreased 5.0% to $15.1 million from $15.9 million in the prior year. Diluted earnings per common share increased 1% to $0.72 in the third quarter of 2000, compared with $0.71 in the prior year.

Nine Months Ended September 24, 2000 as Compared with Nine Months Ended September 26, 1999

     Net sales for the first nine months of 2000 increased 2.9% to $480.8 million from $467.2 million in 1999. Foreign exchange had an unfavorable impact on sales of approximately $6.4 million or 1.4 percentage points of growth.

     Net sales in the Specialty Minerals segment increased 1.8% in the first nine months of 2000 to $345.6 million. Worldwide net sales in the PCC product line grew 2.1% to $287.2 million in the first nine months of 2000. Sales of PCC for non-paper applications declined 11%. Net sales in the Processed Minerals product line increased slightly in the first nine months of 2000.

     Net sales in the Refractories segment increased 5.8% to $135.2 million.

     Income from operations rose 5.3% to $74.2 million in the first nine months of 2000 from $70.5 million in the prior year. Income from operations in the Specialty Minerals segment increased 1.8% in the first nine months of 2000 to $52.2 million. Income from operations in the Refractories segment increased 15.2% for the first nine months of 2000 to $22.0 million.

     Net income increased 4.2% to $47.3 million from $45.4 million in 1999. Diluted earnings per common share increased 10% to $2.23 as compared with $2.03 for the first nine months of 1999.

Liquidity and Capital Resources

     The Company's financial position remained strong as of September 24, 2000. Cash flows of $74.9 million were provided from operations and from short-term and long-term financing, and were applied principally to fund capital expenditures, to repurchase common shares for treasury and to remit the required final principal payment of $13 million under the Company's Guarantied Senior Notes due June 11, 2000.

     On February 26, 1998, the Company's Board of Directors authorized a $150 million program to repurchase Company stock on the open market from time to time. The Company has repurchased approximately 2.6 million shares under this program at an average price of approximately $46 per share.

     On May 17, 2000, the Company's majority owned subsidiary, Specialty Minerals FMT K.K. entered into a Yen- denominated Guaranteed Credit Agreement with the Bank of New York, due March 31, 2007. The proceeds were used to finance the construction of a PCC satellite facility in Japan. Principal payments begin on June 30, 2002. Interest is payable quarterly at a rate of 2.05% per annum.

     On June 9, 2000, the Company entered into a twenty-year, taxable, Variable/Fixed Rate Industrial Development Revenue Bond agreement to finance a portion of the construction of a merchant manufacturing facility for the production of specialty PCC in Mississippi. The Company has selected the variable rate option in this borrowing and the average interest rate was approximately 7% for the nine months ended September 24, 2000.

     The Company has available approximately $85 million in uncommitted, short-term bank credit lines, of which $34.1 million were in use at September 24, 2000. The interest rate on these borrowings was approximately 7% for the nine months ended September 24, 2000. The Company anticipates that capital expenditures for 2000 will be between $90-$110 million. The capital expenditures will principally be related to construction of satellite PCC plants, expansion projects at existing satellite PCC plants, the specialty PCC merchant manufacturing facility in Brookhaven, Mississippi, and other opportunities that meet the strategic growth objectives of the Company. The Company expects to meet such requirements from internally generated funds, the aforementioned uncommitted bank credit lines and, where appropriate, project financing of certain satellite plants.

12

Prospective Information and Factors That May Affect Future Results

     The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand companies' future prospects and make informed investment decisions. This report may contain forward-looking statements that set out anticipated results based on management's plans and assumptions. Words such as "expects," "plans," "anticipate," "will," and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify these forward-looking statements.

     The Company cannot guarantee that the outcomes suggested in any forward-looking statement will be realized, although it believes it has been prudent in its plans and assumptions. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements and should refer to the discussion of certain risks, uncertainties and assumptions under the heading "Cautionary Factors That May Affect Future Results" in Exhibit 99 to this Quarterly Report.

     Several acquisitions in the paper industry have taken place in recent months. Such acquisitions could result in partial or total closure of some paper mills at which Minerals Technologies Inc. ("MTI") operates PCC satellites. Such closures would reduce MTI's sales of PCC, except to the extent that they resulted in paper production and associated purchases of PCC shifting to another location served by MTI. There can be no assurance, however, that this will occur. In addition, such acquisitions concentrate purchasing power in the hands of a smaller number of papermakers, enabling them to increase competitive pressure on their suppliers, such as MTI. Such increased pressure could have an adverse effect on MTI's results of operations in the future.

     MTI's largest customer, International Paper Company ("IP"), announced on October 18, 2000 that it plans to reduce production capacity by closing its mills at Mobile, Alabama, Lock Haven, Pennsylvania and Camden, Arkansas, and by reducing production at its mill in Courtland, Alabama. The Company currently owns and operates PCC satellite plants at Mobile, Lock Haven and Courtland. As a result, MTI expects to take a one-time, pre-tax write-off of assets in the fourth quarter of 2000 of between $2.5 million and $3.0 million. Excluding this write-off, and assuming that none of the sales of the affected IP paper mills will be recovered elsewhere, either by IP or by other makers of uncoated paper that purchase PCC from the Company, the estimated impact of these capacity reductions on the results of operations in the fourth quarter will be small due to the timing of the plant IP closures. The estimated impact on the Company's results in the year 2001 would be about 5 to 6 cents per share. It is possible, however, that some production of uncoated paper will shift to other facilities served by MTI and cause more PCC to be used at those locations, thereby mitigating the overall impact of these shutdowns and partial shutdowns.

     The Courtland facility currently has production capacity of six units, and the Company expects that the decision by IP will result in the continued normal operation of the PCC satellite plant. The satellite facilities at Mobile and Lock Haven currently have production capacity of three and two units, respectively. A satellite unit produces between 25,000 and 35,000 tons of PCC per year. These satellites have been running short of full capacity. In addition, as IP has previously disclosed, it had already reduced its production of uncoated paper in the third quarter in order to reduce inventory, which had a negative impact on the Company's results for the third quarter. The Company does not know by how much, if at all, IP's total production of uncoated paper will be further reduced as a result of the reductions in capacity.

     On November 2, 2000, Plainwell Inc. announced that it would close its paper mill at Plainwell, Michigan effective November 6, 2000. MTI operates a PCC satellite at that location with a capacity of one satellite unit. This plant has run at substantially less than its full capacity, and over half of its sales have been to third parties. MTI is currently operating this PCC plant to serve third-party customers and intends to continue to do so as long as economically feasible. If the PCC plant were to be shut down, then the Company would serve third-party customers from other MTI locations and the impact would be a one-time, pre-tax write-off of approximately $1 million.

     Excluding the  plants  to be closed, there are six satellite locations, serving four customers, at which our contracts with the customers have recently expired or are due to expire by the end of 2001. The Company continues to supply PCC at all of these locations and expects to negotiate long-term contract extensions at all of them. There is no assurance, however, that these negotiations will be successful.

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Recently Issued Accounting Standards

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The statement, as amended, is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The Company will adopt SFAS 133 by January 1, 2001. Adoption of SFAS 133 is not expected to have a material effect on the consolidated financial statements.

Adoption of a Common European Currency

     On January 1, 1999, eleven European countries adopted the euro as their common currency. From that date until January 1, 2002, debtors and creditors may choose to pay or be paid in euros or in the former national currencies. On and after January 1, 2002, the former national currencies will cease to be legal tender.

     The Company's information technology systems are now able to convert among the former national currencies and the euro, and to process transactions and balances in euros, as required. The financial institutions with which the Company does business are capable of receiving deposits and making payments both in euros and in the national currencies. The Company does not expect that adapting its information technology systems to the euro will have a material impact on its financial condition or results of operations. The Company is also reviewing contracts with customers and vendors calling for payments in currencies that are to be replaced by the euro, and intends to complete in a timely way any required changes to those contracts.

     Adoption of the euro is likely to have competitive effects in Europe, as prices that had been stated in different national currencies become directly comparable to one another. In addition, the adoption of a common monetary policy by the countries adopting the euro can be expected to have an effect on the economy of the region. These competitive and economic effects had no material effect on the Company's financial condition or results of operations during the second quarter of 2000, and the Company does not expect any such effect to occur. There can be no assurance, however, that the transition to the euro will not have a material effect on the Company's business in Europe in the future.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

     Market Risk

     The Company is exposed to various market risks, including the potential loss arising from adverse changes in foreign currency exchange rates. The Company does not enter into derivatives or other financial instruments for trading or speculative purposes. When appropriate, the Company enters into derivative financial instruments, such as forward exchange contracts, to mitigate the impact of foreign exchange rate movements on the Company's operating results. The counterparties are major financial institutions. Such forward exchange contracts would not subject the Company to additional risk from exchange rate movements because gains and losses on these contracts would offset losses and gains on the assets, liabilities and transactions being hedged. There were no open forward exchange contracts outstanding at September 24, 2000 or September 26, 1999.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

     On or about October 5, 1999, the Company was notified by the U.S. Department of Justice that it had received an enforcement referral from the U.S. Environmental Protection Agency regarding alleged violations by the Company's subsidiary Barretts Minerals Inc. ("BMI") of a state-issued permit regulating pit dewatering and storm water discharge at BMI's talc mine in Barretts, Montana. The threatened federal enforcement action would duplicate in part a state enforcement action that was resolved in May 1999 through settlement and payment of a civil penalty of $14,000. BMI has entered into prefiling negotiations with the Department of Justice, and as of October 30, 2000, no complaint had been filed. We anticipate that any settlement of this matter would include a monetary penalty as well as other relief, such as a supplemental environment project at the Barretts site. There can be no assurance that the amount of monetary penalty or the cost of other relief sought by the Department of Justice in any such complaint, if filed, would not be substantially in excess of the amount for which the previous state enforcement action was settled.

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     On or about July 14, 2000, MTI, Specialty Minerals Inc. and Minteq International Inc. received from the Connecticut Department of Environmental Protection ("DEP") a proposed administrative consent order relating to the Canaan, Connecticut site at which both Minteq and Specialty Minerals have operations. The proposed order would settle claims relating to an accidental discharge of machine oil alleged to have contained polychlorinated biphenyls at or above regulated levels. The Company's employees immediately took steps to contain and clean up the discharge and notified the Connecticut DEP as required by law. The proposed order also alleges certain violations of other environmental requirements, including violations of the Canaan site's existing permit for discharge of stormwater, and of regulations governing the management of underground storage tanks. The proposed order would require payment of a civil penalty of $515,750, remediation of certain conditions at the site, and other injunctive relief. MTI and the other respondents dispute many of the factual allegations forming the basis of the proposed order, and plan to contest them vigorously. There can be no assurance, however, that the Company will be successful in doing so.

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

ITEM 6.   Exhibits and Reports on Form 8-K

a)   Exhibits:
      3 - Restated By-Laws of the Company.
     15 - Accountants' Acknowledgment.
     27 - Financial Data Schedule for the nine months ended September 24, 2000.
     99 - Statement of Cautionary Factors That May Affect Future Results.
b)   No reports on Form 8-K were filed during the third quarter of 2000.

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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/Neil M. Bardach
	Neil M. Bardach
	Vice President-Finance and
	Chief Financial Officer, Treasurer
	(principal financial officer)

November 6, 2000

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