Good morning. My name is Latanya, and I will be your conference operator today. At this time I would like to welcome everyone to the Minerals Technologies Inc. Fourth Quarter 2008 Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions) Thank you, I would now like to turn the call over to Mr. Rick Honey, Vice President of Investor Relations.

Good morning. Welcome to our fourth quarter 2008 earnings conference call which 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 full year and fourth quarter results, and then update on the steps we are taking to manage through this global recession. He will be followed by John Sorel, Senior Vice President and Chief Financial Officer, who will review our fourth 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 the company faces throughout 2009. Before we begin, I need to remind you that on Page 6 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 fourth quarter financial results which were hard hit by the economic downturns. Steel, paper, construction and automotive sectors, our primary end markets were particularly impacted. Our earnings excluding special items were $0.41 per share which compares to $0.84 in the fourth quarter of 2007, a 51% decline. The sequential decline from the third to the fourth quarter of 2008 was 61%, which provide some further perspectives into the significant drop in demand for our products. I'd like to point that, despite the perilous economic environment we are now mired in, MTI posted its record best annual earnings at 3.44 per share. I believe this is the direct results of the restructuring we undertook in the third quarter of 2007, when we refocused our strategy and placed the company on a stronger foundation, one that is helping us manage through this difficult period. As the economic crisis began to the surface we are able to adjust quickly by taking decisive steps to conserve cash and further reduced cost to maintain MTI's competitiveness. Today we continue to have a strong balance sheet with over a $190 million of cash, and a 170 million of unused credit lines at year-end. And our debt-to-capital ratio is very low at 14%. Cash flow itself during the quarter was a strong 53 million; I believe it is strength of our balance sheet that particularly differentiates Minerals Technologies from many others during these turbulent and uncertain times. The first part of this call is; I would like to provide a brief overview of our performance, take a closer look at the economic collapse we saw in our major end markets and provide some insights, into how we are managing through this recession. As you can see here…

Thank you Joe, and good morning everyone. I will review with you our consolidated and segment financial results focusing on the fourth quarter and highlight the key market operational elements of our performance in each of the major product lines. The first slide provides an overview with the company's consolidated results for the fourth quarter, total reported earnings per share were $0.31, of which $0.19 per share were from continuing operations and $0.12 were from discontinued operations, primarily the result of a gain from the sale of an idle facility. Earnings from continuing operations concluded restructuring charge of $0.22 per share associated with the program to reduce our work force by an additional 14% to both layoffs as well as permanent reduction in respond to the downturn and business activity. Excluding special items, earnings from continuing operations were $0.41 a share, a 51% drop from the fourth quarter of 2007. We have provided a reconciliation table on footnote three of the press release, which details the effect out of earnings of this special items, which are comprised of restructuring charges in both continuing and discontinued operations. Asset impairment charges engaged in the sale of idle facilities, which were previously written down. As Joe mentioned, our performance decline was steeper than we previously forecasted due to the precipitous downturn in our paper, steal, construction and automotive end market, which led to an unprecedented drop in demand for our products. Sales for the quarter decreased 13% or $34.3 million from the prior year. The sales reduction was driven by a substantial volume drop in all our major product lines, which more than offset the pricing gains we achieved during the year. In addition, due to a stronger dollar in the quarter, foreign exchange and non-favorable impact on the sales at $11.4 million…

Thanks John. While we go to questions, I have just a few additional thoughts I'd like to share with you. It's clear as I mentioned earlier that many companies today are facing great difficulty because of the economic downturn. MTI is no exception. Our biggest challenge at the moment is to steer the company through these unsorted waters with very limited forward visibility. The transformation initiatives that we undertook in 2007 have created a stronger and more responsive company than we had in the past. So, MTI is better able to deal with the conditions currently confronting us. Today the company is clearly also a more disciplined organization with a better sense of direction and purpose. Looking ahead, as I mentioned, there is no clear visibility on the economic front, our primary end markets are in the midst of a downturn that as yet does not seem to have hit bottom. We've already taken many actions as the company to manage through this global recession, and we'll continue to make the adjustments we find necessary to maintain our competitiveness including further restructuring. As I said earlier, our balance sheet continues to be strong, which I believe is one of our key strengths in these difficult times. We will also continue to execute the major initiatives we established in 2007, operation excellence is beginning to gain traction and we'll continue to maintain focus on it. Safety remains a top priority, and we'll also continue to our initiatives to make MTI a safer place to work. Expense reduction will continue to be a major focus and we will maintain our new product development efforts in filler fiber enforce and new refractory products, key areas for our future growth. Maintaining our lines of sight to our longer term objectives while making the adjustment necessary in the coming months to ensure our economic competitiveness will be our key challenges for 2009. We'll continue to take the necessary actions as I said to manage through this recession. Aggressive cash conservation, cost reduction, market position enhancements, selective repositioning and restructuring will be our key near term levers. For a strong balance sheet and cash position, they may well also be some opportunities out there that we can take advantage of to further strengthen the company and improve shareholders value. Given what the company and its employees have done so far to transform and strengthen MTI through a strong performance improvement focus and value based balanced approach to everything we do, I fully expect that we will come out of this recession stronger than when we went in. Now let's open it up for questions.

Thank you. (Operator Instructions). Your next question comes from the line of Jeffrey Zekauskas, JPMorgan.

Good morning. This is Silka Koopf for Jeff; how are you?

Hello, how are you?

Doing okay. A couple of questions; on PCC side, how many satellite plants do you have at the year? And what's your expectation of... how many may have to be like shutdown given the very steep decline in volumes? And are those costs already in the restructuring that has been... the restructuring costs that has been announced for the first quarter?

Yeah, I'm going to let D.J. Monagle answer this, and then to give you a perspective. D.J., as you know, is the business unit President of Paper PCC. D.J.?

Let me take... we may have to go back and fork on this. So I understand that sequence of the question. But let me give you the essence was, where do we close out the year on our number and how do we see this recession affecting our basic, our footprints of satellites that are out there. The best way I can answer that is as we close out the year, we have about 57 satellite locations and as we look forward to the year, we see probably in the neighborhood of five customers that are under stress, but it's very hard to project that whether they will or will not make it through the year. Those customers then... those customers that are... everyday we open up the paper, we see some level of curtailment or shut down, so the more likely scenario that was looking after the next two quarter is reduced volumes that's still keep our satellite plants there with the base. Does that help answer your question?

Yeah. That means the restructuring charge taken in the fourth quarter doesn't really include a provision for our plant shut down.

No, it does not.

No.

Okay. Secondly, regarding the restructuring taken... regarding the head count reduction, where are you today with that? Is half of that implemented or a third of that and what are the ultimate cost savings that you expect over the next 12 months?

Yeah. We have, if you recall when we announced the lay-offs and the restructuring, we announced around 340 people would be affected. As we moved into 2008 we made some additional adjustments and that number is now 380. The large majority of those folks are in our Minteq business. And I'd say probably at this point we have 70, 80% either through permanent or temporary layoffs or layoffs per say have occurred; occurred last year and then continued to occur in January. And the expectations on our estimated savings would be in the $6 to $7 million range in 2009, with the biggest impact obviously occurring in the third and fourth quarters.

Okay. And if I can ask last question on operating cash flow. So for the year you announced that you achieved very good operating cash flow of 132 million and with free cash flow of 115 million. How do you get to that number given that like CapEx was about, -- was I think about 30 million in the year as well?

Silka, this is John. We had cash flow from operations at about 132 at the capital of 31 we had proceeds in the sale of assets of about 14.

Okay.

Those are the major components that will bring you to 115.

And given that, this maybe -- run rate that you may be able to achieve and 9 and let's say it's only 100 million given that you have 190 million in cash in your balance sheet. What do you plan to do with that cash?

Well as I mentioned in my remarks, we're taking a very conservative approach to the future, because the future has, as we all know is quite uncertain right now. So, we do have a number of potential opportunities in our Paper PCC business that are under development right now, that could put us in a position to make some investments there later in the year. As you know we continue to be very active in certain parts of the world on new opportunities for growth and in satellites as I mentioned in previous call. So, there clearly is a potential for additional capital spending there. Again that remains to be seen relative to the economic climate and how that evolves through the rest of the year. And at this point in time we're going to conserve and work our way through the conditions we have right now. As I also mentioned we could presented with some opportunities, from an acquisition standpoint that might make sense later in the year and given our strong cash position, if it's something that can have a significant positive effect on the company from a repositioning standpoint long-term. And it is inline with our strategy then we would certainly consider doing that.

Would those be are there minerals businesses or what would you consider acquiring?

Well, as we've mentioned, we have a fairly comprehensive targeting process that where we look at a number of areas in the minerals industry as one particular area given that we are a minerals based company. There also potentially could be refractories opportunities for us that might make sense.

Thanks very much. I'll get back into queue.

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

Hi Rosemarie, how are you? Rosemarie Morbelli - Ingalls & Snyder: All right, how are you?

Good, thank you. Rosemarie Morbelli - Ingalls & Snyder: When you talked about the restructuring in December, you mentioned the additional layoffs but you didn't talk about the capacity. Could you give us any feel as to what you have done in that particular area and what is your capacity utilization at this particular low level?

Well, at company makes more sense to try to come at it by the two businesses that have been most affected and that is in our performance minerals business, process minerals business and the refractories business. In the performance minerals business, we are below 50% utilization, probably in the -- Doug would you say in the 40% range or a little lower than that right now. So it's quite low.

I would say that's right.

And looking the, the way we are adjusting there is by fundamentally, as I indicated in the remarks, reducing work hours number of people and making people adjustments. The refractories business which also was very hard hit is running in the range of 30 to 40% of capacity right now. And as we think about the future, and try to ascertain further areas where we can save money certainly things, such as further consolidations between some of our facilities or areas that we have on the table right now that we're beginning -- that we are taking to look at, not beginning to take a look at; but to see if we can conserve cash and also reduce cost by combining some of our operations around the world. Rosemarie Morbelli - Ingalls & Snyder: And as you combine operations, any thought of doing that announcing (ph) those particular steps in the sometime in the first quarter when you have a better feel if you do for what the industry is going to be like in the second half of this year. Or do you think that, that particular business should just be smaller regardless of the economic environment in order to repair it more efficiently in major downturns which I'm sure will come again?

Yes those are good questions, and they are very domain and they are the key questions we have on our table right now, in terms of at what point do you further consolidate, based on what you believe is going to happen over a longer time period. And so we're right in the middle of doing that right now, and trying to assess what makes sense for us as we move into the second half. At this point in time its hard to tell exactly what will make those decisions, but suffices to say that we're monitoring the forward situation as best we can on a day-to-day basis, while we make contingency plans for that business in particular in terms of how to maintain, stay cash positive in the business, because they are being impacted the most of the three businesses we have right now. Rosemarie Morbelli - Ingalls & Snyder: I wish I could ask one last question on PCC, you mentioned that your raw material costs for that particular business are continuing to increase, and you said that you would most likely pass the price increases in 2009. And I guess I am wondering what makes you think that you can pass them through when the demand is down the way it is. And if my memory serves me right, you also said that you have to give some price concessions when you renewed some contracts in 2008?

Rosemarie that's a -- a much as I can say, I have a lot of confidence in the head of my being President of PCC which I do; the reality is we're in uncharted waters as I said earlier, with regard to the impact on all industries today. And so there are never any guarantees in this kind of environment and our price increases, suffice it to say though that we are going to continue to wherever we can to make the adjustments in prices that we have contractual arrangements to. And then as we also have make adjustments where it makes sense to, make those adjustments, and I am going to let D. J. answered that if you'd like to D.J.?

Yeah, I would just reaffirm two elements that Joe said, Rosemarie. First one is that, we do have some contractual commitments, and many of our customers are committed to honoring that relationship with us. But as Joe, mentioned, we're in some uncharted waters. So; we are interested in the long term health or that relationship of that facility, and the proper cash generation overtime. So if there is something that we can do to help these viable customers, make it through this difficult time, we will do that. But its -- in general, I think we'll be able to recover most of those costs, but its going to be a tougher year than usual. Rosemarie Morbelli - Ingalls & Snyder: Excellent. Good luck.

Thank you.

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

Good morning everyone.

Good morning Steve.

John, thanks for the detail on operating steps and so forth. But I'd like to go back to operating income, and what happened there relative to revenue. If I understand you correctly in both segments unabsorbed overhead and higher costs without price increases are what really, really pinched operating income; is that true?

Yeah, it's the volume impact of the slowdown. The volume... unobserved volume issue was in excess of $40 million on quarter-to-quarter basis.

Okay.

By enlarge, it outweighs everything else; we have a little bit unfavorable on currency. We had some cost pressures, but we also had some savings as we showed you in the chart on the positive influence or programs we have, but those were just overwhelmed by the magnitude of the volumes decreases.

Okay. So were you losing up income at 30 to 40% of the revenue decline. We could expect to see that kind of dynamic for the next couple of quarters?

Not sequentially.

Okay. Because even sequentially, you dropped about 28... 27, 28 million in each of the segments. And op income dropped by 8 to 10 million and this is on an adjusted basis. But I mean you are looking at 30 to 35% decline in op income relative to the revenue decline. I guess the other thing that I need to ask about here is, your adjusted operating margin in refectories was about 2% in the fourth quarter. And I think you mentioned you're continuing to see higher costs and that will continue to be an issue in the first quarter. Is there a possibility your operating margin could go negative in the first quarter?

Yeah, I will not take that one Steve.

Okay.

As we look at the refractory sector, we are minimizing our costs. We're balancing our operating needs throughout the network to help us maintain our margins. We monitor the our breakeven ratios and really what it comes down to is we are in very unchartered waters as we had alluded, the volumes could lower in Q1 as compared to Q4 this year. So it's tough to predict, Steve, but again we are doing everything we possibly can to minimize any shortfall in volumes that we see.

And as far as these contracts resets and where you get pricing, what does that wave look like this year. I would imagine may you've modeled this out for what your pricing wave looks like. I guess if you could give me an idea both in the minerals and the refectories business?

Let me start, Steve. It's John. Let me come back to a couple of point to try and summarize little bit on the refractory side. And there is an overall view for the earlier question, I think, is we're touching back. There as we look at the leverage to operating income compared to decrease in sales.

Okay.

} Follow those through the production margin line, you'll see that that's really where the major variances coming. It's coming from the loss of gross margin. We're having savings as Joe pointed out, a very good success on reducing expenses. We've done... we've controlled cost for more than two years now. But that do not materially impact the wave of the volume decreases, which I said quarter-to-quarter was more than $40 million. So if you look at the segment, also look at the impact of the gross margin coming down to the operating income, so what that leads you to is just at these volumes, the very low utilization rates that you're having in the refractory business, you could go to a negative operating position in refractory business, if the steel mills don't operate particularly in North America and Europe.

And I think also for certain other segments of our businesses such process mineral, if there isn't a seasonal rebound that we typically would get as we move in the warm weather, then they also... some of those sub-business segments could be negative as well.

We said the fourth quarter process minerals was... did have an operating loss for the period. And it was the worst fourth quarter we had seen in the history of the company. On the other hand, it is seasonally typically a weak quarter. But in the strong quarter though usually comes in process minerals in the second quarter. And it's yet to be determined whether it will be a seasonally strong period for paint, housing, and those types of things in the second quarter; it's a bit early. Now coming to the... your third question was really around, I think the contract renewals for Paper PCC. It was at the major...

What the pricing looks like through the year? When do you expect to see or how do you expect to see that wave of pricing move through on these contracts this year?

Well, as you probably know, the long-term contracts generally provide for two adjustments per year. One in January based on fourth quarter data, one in July based on the second quarter data. But that's a normal cycle that most of them take in that all that way, but probably 65 to 70% of our contracts operate in that basis.

Okay. That's exactly what I was looking for. Okay, thank you John.

Okay your next question comes from the line of Richard O'Reilly with Standard & Poor's. Richard O'Reilly - Standard & Poor's: Good morning gentleman. One quick clarification and I have a bigger question for Joe. What was the volume decline for PCC in the fourth quarter?

John, do you... Q4, I think, was about 10% volume decline; is that...?

Yeah. Versus the third quarter, sequentially it was a decrease of 14% versus prior year was down 10%. Richard O'Reilly - Standard & Poor's: Okay. Fine great, okay good. And then my question for Joe; it's a bigger picture. There was couple questions... there was a question on possible M&A. But how open are you to a transaction in which Mineral Tech is not the surviving entity?

Right now our focus, to be quite candid with you, is on the company and what we need to do to stay what I call the strategic course, and make it through a very, very tough period. So, we have some core strength of the company. And as we've looked at our strategy for the long-term, it is one of looking at how do we enhance the positions we have, and how can we grow more profitability at faster rates than we have in the past. Those things become very difficult to have clear lines of sight to yet. They still are longer term objectives. So we are going to be looking for things in spite of the difficulty of doing transactions in these kinds of time periods of areas that can help us to future growth and the future strategies that we've laid out for the company. And I recognize and that this is tough for any company today to entertain any type of transaction with the degree of uncertainty. But in... potentially, in six to nine months, things maybe a little clearer and opportunities depending on the length of this recession could be even greater than they maybe today, which could provide a good opportunity for us to utilize the strong balance sheet we have. Richard O'Reilly - Standard & Poor's: Okay, good. Thank you for the answer.

And we have a follow-up question from the line of Jeff Zekauskas, JPMorgan.

Yes, good morning. I just want to touch one more time on the restructuring initiative. If I remember that right, in the first quarter of 2007, the restructuring that was announced then included the elimination of maybe 200 positions; and if I remember it correctly the related savings were about $10 million, should the ultimate cost savings that you expect from this restructuring be larger than the 6 to 7 million?

Yes. As you recall when we did our restructuring in '07, indicated that we expected to save $15 to 20 million. On our last call, we indicated that we actually were saving at a rate that was 20 to 25, and as we look at where we ended the year, from that again, just from that restructuring, the savings were approaching closer to 28 or $30 million. Okay. So, we've been able to capture on the bottom-line, although it gets harder to see because of the significant volume drop that occurred in the fourth quarter, but we were able to execute what we've set out to do and capture those savings. As got more into the fourth quarter, the 6 to 8 million that I mentioned that we expect from what we announced in the fourth quarter is in addition to what we were doing or what we were targeting in 2007. I'm going let John elaborate on that a little bit. John.

Okay. Thanks, Joe. A couple of points I'll tell, first of all that the 30 million gross that when we saved from restructuring last year included impairments as well, significant number of impairments there so that we had a depreciation savings. It wasn't the savings wasn't just from the reductions in man power it was also from the, significant portion came from depreciation as well. So you have to keep that in balance. And in addition to that, we as Joe pointed out, we ended up, at the time we said we would end up with savings of around $20 million or more because we had additional restructuring charges, coming in that were recorded until the first quarter of this year related to that one, so there are additional restructuring charges that goes with that first restructuring of third quarter 2007. Now when you come into 2008 we have an additional restructuring charge coming in. It includes no impairments; I think that was an answer to a question someone else asked. In this case it's a reduction in force, but no; additional impairment at this time although we looked carefully at the loadings that we've had. The other element of that is of the 380 people, that we talked about. A significant portion of those as we said in the prepared tax were related to layoffs in the steel mills. So those are savings directly of direct labor if you will, directly proportional to the business volume we have. It's the portion that's related to overheads that ultimately gives you the longer term savings. So it's a little different structure, considerably different structure than the last one.

That makes it clear. Thanks very much.

Thank you. At this time there are no further questions.

Alright. We'd like to conclude this call and thank everyone for their interest in Minerals Technologies.

Thank you. Bye-bye

Thank you. This concludes today's Minerals Technologies Inc. Fourth Quarter 2008 Earnings Conference Call. You may now disconnect.