Good morning. My name is Stephanie and I will be your conference operator today. At this time, I would like to welcome everyone to the Minerals Technologies Incorporated Second Quarter 2008 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions). Thank you. Mr. Honey, you may begin your conference.

Good morning. I am Rick Honey, Vice President of Investor Relations. Welcome to our second quarter 2008 earnings conference call. This call is being broadcast on the company’s website, www.mineralstech.com. Joe Muscari, Chairman and Chief Executive Officer will begin today’s call with an overview of the quarter and an update on the progress of some of the initiatives we have implemented in the last year. He will be followed by John Sorel, Senior Vice President and Chief Financial Officer, who will review our first quarter financial results. After the review of our financial performance, Joe will provide some further thoughts on MTI's path forward and some of the challenges we faced in the second half of 2008. Before we begin, I need to remind you that on page 7 of our 2007 10-K, we list the various factors and conditions that may affect future results. Statements related to future performance by members of our management are subject to these cautionary remarks and conditions. Now I will turn the call over to Joe Muscari. Joe?

Thanks, Rick. Good morning, everyone. Last night we released our second quarter financial results with earnings from continuing operations of $0.98 per share for the quarter, and net income of a little over $23 million. We achieved record earnings in the last two quarters, resulting in the best first half the company has had since its inception in 1992. In the first part of this call, I would like to bring you up-to-date on the progress we've achieved in some key target areas, primarily our efforts to improve profitability and return on capital. As I related to you in the last call, I considered the results we achieved in the first quarter to be pivotal. Pivotal in the sense that they represented a significant improvement from the relatively flat performance track the company had been on for the previous five years. Our second quarter performance, as you can see in this earnings graph is a continuation of that higher performance track. The improvement in our return on capital in the second quarter is another strong indicator that we have moved to another place. The second quarter ROC was at an annualized rate of 9.2%, while the first half of 2008 was at 8.7%. This compares to 6% for the full year 2006 and 6.8% in the second quarter of 2007, and it is representative of a 45% improvement over 2006. We achieved these improved results despite increased energy costs that affected all product lines. We had significantly higher raw materials and chemical costs as well as weak market conditions in the US housing and automotive industries. We continue to realize the savings we had targeted from our restructuring initiatives, and we are, in fact, exceeding them. As a company, we continue to do a good job of executing this multifaceted…

Thank you, Joe, and good morning, everyone. I'll now provide you with an overview of our consolidated and segment financial results for the second quarter and highlight the key market and operational elements of our performance. First slide provides an overview of the company's consolidated results for the second quarter. Overall, the company recorded earnings per share of $1.22, $0.98 were derived from continuing operation representing the company's strongest quarterly earnings performance is in its history. Earnings from discontinued operations were $0.24 per share of which $0.22 relates to a gain on the sale of two of the idle Synsil facilities. Sales increased 10%, or $28 million over prior year. Foreign exchange had a favorable impact on sales growth of $14 million, or 5 percentage points of growth. The additional sales growth was primarily reflected in refractory segment due to price increases necessitated by a dramatic rise in the price of raw materials and chemicals and due to volume increases of metallurgical product as a result of the continued strong demand in the US steel industry. Volumes were below prior year in the specialty minerals segment, in both the PCC and processed minerals product lines. Operating income increased 7% to $28.8 million, and represented 9.6% of sales, including $900,000 of additional restructuring costs. Operating income growth occurred in all product lines and was derived primarily from the savings achieved through the execution of the restructuring program laid out in third quarter of last year and the favorable effect of foreign exchange which more than offset the market and cost pressures that Joe discussed. Income from continuing operations, which includes the benefit of lower interest expense and lower tax rate compared to last year, grew 16% to $18.7 million. Total EPS grew 65% to $1.22 per share reflecting the improved income…

Thanks, John. Before we turn it over to questions, just a few additional thoughts that I wanted to share with you. We've accomplished a great deal in the last 16 months. We've been able to reverse many of the downward trends in performance the company has been experiencing in the past six years. We've established a clearer sense of direction and purpose that has resulted, I believe, in a stronger foundation that we can now continue to build upon. Our restructuring was well executed and is now tracking to exceed the savings levels that we targeted. Cash flow remains strong and we've been able to buyback, as John mentioned, 381,000 shares of our stock in the first half of around $24 million. The second quarter is significant in that it is a continuation of the performance improvement we had in the first quarter. We have a long way to go in terms of the growth potential, and value potential ahead of us, but as you can see from our shareholder value checklist, many things came together well for us in spite of the challenge and economic difficulties that confronted us in the quarter. We're now fundamentally better positioned to move forward and we'll continue the improvement process begun last year to increase shareholder value. We're also much better positioned to focus on growth and begin to seriously evaluate and consider acquisitions and alliances that can enhance and compliment some of our strong product and market positions. As we look ahead, we do face, as I mentioned earlier and as John mentioned, some increased challenges and greater uncertainty in some of our market and input factors. But we also have a more comprehensive set of tools in place along with a stronger leadership team and a higher level of employee involvement to deal with them. Now let's open it up to questions.

(Operator Instructions). Your first question comes from the line of Mike Judd with Greenwich Consultants.

Yes. Congratulations on a good quarter.

Thank you, Mike.

Just trying to get my hands around some of these leads and lags in the second half in terms of the higher raw material costs and the time lags, and I'm just wondering if you could maybe help us understand perhaps on both the talc side and also on the refractory side, the impact of the higher raw materials and how does that flow through? And is there a greater impact, let's say, in the third quarter than there is in the fourth quarter? Just a little help would be appreciated. Thank you.

Yeah. Typically we're expecting for PCC to have some lag, primarily it will hit us more in the fourth quarter than the third quarter, but it's the size of the increases and the way it will flow, and our ability through our contracts to recover those. The flow itself will not be much different from what we've experienced before, if we look back in time. The movement or the flow, there's nothing different relative to what we've experienced over the years. So it's going to be more of the size of the increases due to the size of the energy increases that, where we have our supply lines linked to and our supply sources linked to that will drive those and how we turn those around and the timing of the contracts relative to our customers. Talc will tend to be more immediate and when I say immediate, we recently announced a price increase on talc and we're working through those right now, where there isn't necessarily a delay, it's a different competitive type of situation, the number of contracts that are long-term are much less for that business. So there we should expect to see a more immediate effect of the actions that we are taking. Refractories, the negotiating cycles are on six months. So right now, we've been negotiating for the second half, we've been in that process, we have more to go, we're not complete yet, so we've got some uncertainty around there. But for the most part, the contracts in refractories are on a six-month period. It can vary some for that for some other customers, but on balance, it's a six-month period.

Okay. And just as a follow-up on the refractories, I realize that you have made some changes there obviously in China, you've cutback on your operating rates, etcetera. But if you were to look at it on a year-over-year basis, is it fair to say that you would anticipate that the operating profits in refractories would be up or down in the third quarter just as an example? So that really supports quarter at this point is well off.

Well, fortunately we have a nice product mix, which gives us some balance. And right now we are getting a good improvement, operating income improvement, sales improvement in our metallurgical line, which is helping to offset in some parts of our dealing with refractories business where we haven't been able to achieve as higher level, or that may be flat. So I'm going to ask Bill if he could offer any additional insight to that.

If we look at the forecast for the back half of the year, certainly, we have to deal with as John had mentioned, some unprecedented movement in our raw material costs, which we are in process of mitigating through price increases and internal improvement activities. As we look at the coming quarter, certainly, we have every opportunity to mitigate most of what is coming at us. So my expectation for the third quarter would be similar level of activity as we saw prior year.

Thanks for the help.

Thank you. Your next question comes from the line of Bob Koort with Goldman Sachs.

Good morning, this is Amy Zhang sitting in for Bob. I have a couple questions. I think in the prepared remark you were saying the company exceeded the cost savings target. I think that is probably $15 million to $20 million on an annualized basis. Did I understand your commentary in the right way?

Yes. And if I could elaborate a little on that it basically says we've been able to achieve savings sooner. If you recall, after the restructuring, we laid out that we expected to get $15 million to $20 million and report on that in the last quarter that we were tracking. And what we've been able to do is actually achieve some of those savings sooner, savings that we thought would be further out, we've been able to capture.

Okay. Then at this point do you have a new savings target for this year?

Well, again, we've got a number of things coming at us, and it gets difficult to predict. But where we were look at $15 million to $20 million in savings right now, we're looking at 20 to 25.

Okay. And the second question is regarding your ROC. For the first six months you have achieved a very impressive ROC improvement, and that that has made your 9% target look a little bit conservative. Do you expect the ROC improvement to continue in the second half at a similar, or even an accelerating base, even the fundamentals may not come as strong as the first half.

Well, thank you for expressing that so kindly. One, we have an entire year to go through yet. But the reality is we have done better relative to being able to do more in a shorter period of time. And that required a total organizational effort on all fronts, including working capital. We have some additional things coming at us for the balance of the year. Would that suggest that the target we have for 2010, which is exceeding cost of capital by then, could be brought in some? Probably could, but I prefer to let's get through this year, see where we are and then we can reset our target.

Okay. My last question is, the raw material pressure on your refractory business. See this MgO, raw materials have spiked in particular, and it looks like the traditional price hikes you are pushing, you are trying to pushing through is sufficient to offset those input costs. Why not do you just implement more aggressive actions like surcharges given the underlying demand from the steel industry is still pretty strong?

Yeah, rest assure the Minteq team is using every lever they possibly can. The reminder here is, we are in a competitive environment and so, I think they've done a good job of pushing through as much as possible and then working hard at trying to make up the rest. And I think they've done a pretty good job there as well of trying to reformulations, cost savings to make up the balance. But it does suggest we need to obviously continue to go after and wherever possible continue to get price increases and that's true with every one of our business segments.

Okay. Thank you.

Thank you. Your next question comes from the line of Steve Schwartz from First Analysis.

Hi, good morning gentlemen.

Hi, Steve.

Going to slide 7 and I'm recalling this off of memory, I couldn't find a presentation on your website, but I got it through the web cast. That's a nice slide, because it lays out some of the components and quantifies. It looks like restructuring was $15 million in the quarter. Am I ballparking that right?

It's a little under that, but that's the ballpark.

Okay. And then if we could frame the discussion for the second half around that slide, where you show raw materials being about $16 million and energy about 6 or so, pricing at 17. For the second half, can you put some numbers around it in that context?

Well, at this point in time, as we look at , let's say the cost pressure side, we're still working through contract negotiations, particularly in the refractories area, also, on the material supply area. So we know enough right now , to share with you it's going to be more than the first half. Where we end up we will have a better sense within the next couple months.

Okay. If you did you that chart for the first quarter, would it look similar, with the exception of restructuring? Because we know that was lower?

We've started to see more lime and phosphorics coming in the second quarter, or other types of chemical increases coming into the second quarter. MgO as well was higher in the second quarter.

Okay. So that 16 number was lower. How about pricing in the first quarter? It looks like about $17 million in the second quarter. Was it about the same?

Again, the pricing goes over a six-month period and you have different contracts over different periods. It's hard to go to a point-to-point. John would like to offer a comment.

Just one clarification here, Steve, the chart on page 7 is a full half at six months.

It's first half?

Yeah.

Okay. I missed that then. I'm sorry.

I wasn't sure if you had taken it as a quarter or the half, I just wanted to clarify that.

I was trying to play catch-up. Next question, you are talking about margin compression in refractories and Paper PCC. When you make that comment, is that sequentially from the second quarter, or year-over-year? Because you had some interesting things on your comp quarter last year for the third.

Steve, I'm not totally with you. Would you mind repeating that again?

I'm sorry. When you say refractory margin compression is it reflected in Paper PCC, when you say compression, are you saying relative to the second quarter of this year what you just reported, or relative to the third quarter of last year, so your comp quarter?

Well, relative quarter-to-quarter sequentially, we were relating compression.

Right.

And that's also the way we're forecasting it, Steve. Further compression that chart I showed on the refractor and the MgO price, shows that acceleration, and so it takes some time to catch up there.

Okay.

So an acceleration in sequential, not year-over-year.

Okay.

The MgO had doubled second quarter to second quarter so it's that curve we are trying to account for.

Okay. And then just one last one before I get back in queue, you mentioned or noted on one slide that ForEx and refractories did carry through to op income. For every dollar you've realize in revenue for ForEx, how much of that hits op income?

Yeah. Obviously, our expenses as well are impacted by the ForEx. So on sales dollar basis, down to operating income on a companywide basis, it's probably in the range of 20%.

20%? That's great. Thank you very much.

Thank you. Your next question comes from the line of Jeff Zekauskas.

Hi, good morning. I assume you've made some further progress on your tax rate. How did you do that? And is there more to go?

Our tax man keeps it a secret. He doesn't tell us how does he that. I'm just kidding.

Okay.

I'm going to let John review that with you. Please, John.

There's actually a very minor difference between the first quarter and the second quarter. We're at 30.8, I think, for the second quarter, and year-to-date is about 30.9, so roughly running at about 31. The change from last year, which is about 32.7, at the half, was mostly related to geographic mix. There's nothing really structurally in the overall tax strategy or structure that has a big impact.

So where are you selling that's giving that you benefit?

We're doing less in Germany, and rates are down. As you know, some of the higher tax countries in Europe have reduced their rate to more or less equalize or unify throughout the European region, and that has some favorable impact on us as well.

And you talked about your cost savings being ahead of schedule, so how much did you pull out in the first quarter and how much did you pull out in the second?

Well, on the chart roughly for the first half, we're estimating it's a little under $15 million.

So, I mean, all things being equal you've got 5 to 10 to go?

Yeah. What basically it's not that what we also have things that get netted against that, so we have more of that coming. That's why I said if before we were saying 15 to 20, now we're look at $20 million to $25 million on an annual basis. And the potential is higher than that but I wouldn't want to really give you a sense that it, at this point in time. We'll obviously know better once we get through the third quarter.

Has your amount of gross Paper PCC capacity gone up since the beginning of the years and how much do you expect it to be up this year, if at all?

I'm going to let Ken review that with you. Ken, please.

Jeff, really, we haven't seen volume growth at all at this point, to be frank with you. We've seen some compression in volume, frankly due to the uncertainty in the market and some of the shutdowns that we have been experiencing. And we really do continue to expect to see those shutdowns continuing in the third and the fourth quarter, especially with the volatility in the marketplace and thigh energy prices, so really I don't expect to see significant volume growth at all.

And what I'd like to add to that, what tends to get masked is we have seen some pretty decent volume growth in Asia where we had had on a half-year basis the Asia growth was over 4%. So when we have a number of those things happening, at our different businesses, there's so much downward pressure in total that they get masked in the numbers. But we actually had improvements in some volume improvements in performance minerals, but you don’t see it because the base business is fundamentally down because of the market and PCC is pretty much the same way.

So your CapEx spend, you're running at about $10 million a quarter, and there shouldn't be much change in that.

We’re so far along in the year, there still could be, if you recall from last time, on the last call, we talked about the capital expenditures target. There was an expectation of having additional growth projects as well as, we've moved further into the year, companies have moved their plans out. So that's pushed those capital expenditures out. Last estimate we gave you, we expected to be around 50. It could be less than that. If project were to come in, in the next month or so, we could still have some additional spending in the fourth quarter.

Well, we're really open in our screening process that Doug Dietrich and the corporate development team goes, we're really looking for opportunities in all business segments. So we're not really limiting to one of the other. Obviously some have more opportunities than others.

And just, I guess, a couple of last things. If there's a margin squeeze in the second half, presumably the squeeze is greater in the fourth quarter than in the third quarter?

That's what we're seeing right now.

Right. And all things being equal, should your earnings be higher in the second half than they were last year? Or you can't tell?

Well, you have the restructuring. It's a little difficult. John, do you have some better insights

Yeah. The comparison to the third quarter is going to be extremely difficult as you know, because of the P&L was done before the restatement, so it will be a bit challenging to do that comparison, but if you look at sequentially the way we're going, you would expect to show continuing operations improvements over both of those quarter. Remember in the fourth quarter of last year, although we did the major restructuring in the third quarter. In the fourth quarter, we only got the benefit of the fixed portion of depreciation portion of the restructuring. The other part of the program didn't begin to kick in until the first of this year. So you would expect some push from that quarter-over-quarter.

We thought it more meaningful, Jeff, as we were just reviewing information that we're going to share in this call, that we hope you'd be better served by having a sense of sequentially what we see happening, because we've got a much more stable platform now in the first half.

And then lastly, what kind of alliance might be of interest to you?

Well, it could range from a partner in Asia to an alliance in marketing with people in the paper, and supplying the paper industry. So alliances can take many different forms. And it could range from something in the refractories business to better position ourselves to the paper industry as well to be able to compliment some of our products with other companies that have strong positions.

Okay. Thank you very much.

You're welcome.

Thank you. Your next question comes from the line of Rosemarie Morbelli from Ingalls & Snyder. Rosemarie Morbelli - Ingalls & Snyder: Good morning, all.

Hello Rosemarie Rosemarie Morbelli - Ingalls & Snyder: Following up on Jeff's question regarding the second half, last year in the third quarter you earned $0.59, and John said that the third quarter would be a difficult comparison with '07, and it is going to be down sequentially from the $0.98 in the second quarter of this year. Are we dropping below $0.69, or are you looking at another number for Q3 of last year? Am I missing something? Is that $0.69 wrong?

Yeah, John is looking, is pulling out some backup material. He can better answer the question.

Yeah. I'm not sure I can derive the $0.59. Rosemarie Morbelli - Ingalls & Snyder: $0.69.

Third quarter last year we had. Rosemarie Morbelli - Ingalls & Snyder: $0.69, John.

We have 540, $0.60 there you go, as the $0.69 sounds better. The $0.69 was taking out the all the restructuring charges we took but that still left operations that have been discontinued, that’s before we restated it to discontinued ops. So that's not a direct comparison, and that was my point. Rosemarie Morbelli - Ingalls & Snyder: Okay. So when we are talking about a difficult comparison, it does not reverse that $0.69. You have to adjust it for the discontinued ops

Right, that's correct. What became discontinued operations were obviously a significant drag embedded in that. Rosemarie Morbelli - Ingalls & Snyder: Do you have a feel for, how much of a drag?

I don't recall, off hand now. But it is restated. It will be restated when we do obviously the reporting next quarter. I don't know if it's been stated before that. Rosemarie Morbelli - Ingalls & Snyder: Okay.

Yeah. I could probably derive that for you Rosemarie, if you want to call me I’ll go back to the K, if you want me to give me a call offline, I’ll go back and derive that for you. Rosemarie Morbelli - Ingalls & Snyder: Okay thanks. That would be quite helpful. You said also, John that you expected no change in economic outlook for the second half. Isn't the general expectation based on what I am reading that actually the second half is going to be weaker than the first half, at least in Western Europe, and most likely in the US?

Yeah, that's what I thought I said. Expect I wasn't clear. I'll be happy to repeat that. My conclusion on the summary, I said because of all these factors, we expect second quarter to be weaker. We're expecting downward revisions in housing and automotive. We're concerned that some of the things that have already affected the processed minerals group will begin to affect the steel industry as well and the paper industry has been reporting downward trends in demand. And as we pointed out, the lime cost increases generally impact the fourth quarter more heavily than any other quarter of the year. And remember, and a norm and a good year, there is some seasonality in the processed minerals business and the fourth quarter tends to be weak. Rosemarie Morbelli - Ingalls & Snyder: Okay.

So our direction is downward for the second half. Rosemarie Morbelli - Ingalls & Snyder: I understood that your direction was downward, but I was wondering if you had been looking at a flat economy as opposed to a down economy, so sorry for missing your comment.

It's okay. Now, it was the economy was the primary driver for it. We’ve said the business performance is really ahead of schedule on some of the things. We're needing that to cover these economic conditions. Rosemarie Morbelli - Ingalls & Snyder: Okay. And on the MgO, you are putting through price increases and so on, do you think you will ever catch up, or are you going to have, because of competitive pressure, to give up some of that, and in the end, until you find a substitute minerals, it is going to be quite a difficult environment?

This is Bill Wilkins. I guess to answer your question, Rosemarie, it's a balancing act that we have to really play, particularly with relationships we have, very close relationships we have with many of our key customers. It's never easy, conversations are never easy relative to pricing, but given the cost of magnesium oxide and the bauxite based materials that we source from China it's pretty evident that we do have to pass on these costs. What we try to do is certainly not due to a lack of aggressiveness on our part, but again, we try to balance what we do since we are a service based business, and so in many respects, yeah, we will be recovering as much as we can. I believe that we will not be recovering dollar-for-dollar, because, again, as Joe had had mentioned earlier that we do to have balance what we do with the competitive nature of the marketplace we're in. So the way that we try to recover to the best degree possible, again is through internal improvements that we are beginning to enjoy the benefits of in addition to the continued reformulation activities and looking at substitute materials. I mean, that's the smart approach and the balanced approach which we'll continue to undertake. Rosemarie Morbelli - Ingalls & Snyder: How long do you think it will take before you find a substitute that works, and is accepted by your customers?

Difficult question. It's an ongoing activity relative to looking at materials such as dollar-based as opposed to MgO-based and also other things and we use many of these products in some of our reformulations today. Again, it's a balancing act because of the fact that MgO has particularly unique qualities for quality for that matter and so as a business that drives itself on high levels of quality in the products that we produce. Finding substitutions is a difficult thing to undertake, given the acceptance that we have for this material in the marketplace. So it takes time, Rosemarie. I really wouldn’t be able to put a timeframe on it but it's something we're actively pursuing. Rosemarie Morbelli - Ingalls & Snyder: Okay. Lastly, if I may, any chance of changing the length of the contract whether in PCC or in refractory?

One of the challenges that PCC has had, I will start with them is to where, we do have longer contract’s, attempt to shorten as they come up. But again, as new contracts come up, it is a negotiation process. So if we're able to shorten, then we're trading potentially something else off, and Ken and his team have also, as contracts have come due, look carefully at some of the terms we have, the formulas that are being used to help shorten that timeframe, as well as some of the indexes to make sure we've got effective indexes that we're tying these increases to. And in the refractories area, the team there is also trying as much as possible to shorten wherever they can, so in the upward market to minimize the time exposure. It is again different customer by customer based on what the relationship has been, and also the degree sometimes of if the customer is global, we're negotiating a global contract or the framework for the various regions. Rosemarie Morbelli - Ingalls & Snyder: Okay. Thank you very much.

Thank you. Your next question comes from the line of Daniel Rizzo with Sidoti & Company. Daniel Rizzo with Sidoti & Company: Thanks, guys. Actually, everything was just covered. Thank you.

Thank you, Daniel. (Operator Instructions). Your next question comes from the line of Steve Schwartz with First Analysis

Well, thank you for taking the follow-up here. On R&D expense, it looks like $6 million a quarter is your new run rate. Is that safe to say going forward?

Well, it could be higher. If we move into more filler-fiber trials, you could see that move up pretty quickly. And that's our objective, is to, one, increase the level of trial activity there. The recent trial we held was successful, in the sense that we moved our own learning and the customers forward and we're scheduled at this customer for another trial in September. Ken, perhaps you'd like to elaborate on that a little bit?

No problem. I think, just to add to what Joe is saying, in terms of focusing the R&D expenses, I think the key opportunity for us is that we will fund what we need to fund to make sure that we're continuing to grow our new product programs the way we need to, for the future. With respect to the filler-fiber, we do have another trial planned, though we continue to make good progress, if it's still albeit a development program, but we are making progress. Matter of fact, in that regard, we are going to actually another potential customer is now expected to trial a product in the late third quarter, or early fourth quarter. So as the opportunities come up to spend the money to support our new programs you can be assured that's definitely what we're going do.

Okay. And the $6 million that we've seen over each of the past three-quarters, have you been comfortable at that level with what you've been doing in biopolymers, for refractory, PCC and then the filler-fiber, or do you feel like you need to do more there and would that drive an increase?

Right now, and I'll let D.J. Monagle add to that. I think in the biopolymers, we have the right compliment of people focused on it, where we've had our first commercialization. I think we've got a good marketing and sales team and we're well-positioned to move that forward. And again, if we need to add there, we clearly will. But I think what I've seen so far we've got a nice team focused on it. D.J. you want to add to that?

I would affirm those statements. I think from my perspective, the current run rate in that area is good. As Joe mentioned in the highlights, we've commercialized with our first recurring customer. So the continued development in spend will be on taking that technology to other locations. But also, as biopolymers develop, it will be augmenting the product portfolio with some new products that would be adjustments to support the evolution of biopolymers. So to answer the root of your question, I'm pretty comfortable that the current spend will allow us to grow in that area.

Okay.

Steve if I could just add to that a little bit just from a reference standpoint, if you look at where we were, let's say in 2006 versus where we are now, a good percentage of the delta was in Synsil and we no longer have Synsil. We also had a refocusing in the revised strategy for our performance minerals business that fundamental mine-to-market strategy that allowed us to hone in on the key areas where we felt we had the greatest chance of success in the shortest period of time. The other area, where we had consolidation in our coatings development and in our facilities for coating, again, because we've shifted to a satellite model focus from a merchant model focus, so if you think of those three areas, those are the major reasons for the delta that will you find over the period.

Okay, and then just one last one. This will be quick. Regarding your gross interest expense, even though your average debt level stayed about the same, your interest expense sequentially here in the recent quarter dropped 25%, almost $0.5 million. What was behind that?

Debt levels are down. Half-over-half, debt levels are down from about $50 million, from 180 down to about 130.

From the first half of last year to the first half of this year?

Right.

Okay. Am I missing something here, though, in terms of you spent about $1.5 million on interest in the first quarter, $1.1 million in second quarter?

Right.

But your average debt in the first quarter was at about 132 and it's now at about 129?

Yeah. This is Doug. It's about $121 million at the end of the second quarter. But I think its two things. It's both, year-over-year debt levels are down about $50 million as John said, but also our interest rates are down year-over-year about 120 basis points.

Okay. Thank you.

Thank you. At this time I'm showing no further questions. Do you have any comments or closing remarks?

No, I think we're all set, Stephanie. I want to thank everybody for their interest in Minerals Technologies and have a good day.

Thank you.

Thank you, ladies and gentlemen. This concludes today's Minerals Technologies Inc. second quarter 2008 conference call. You may now disconnect.