of Operations

                                                           Income and Expense Items
                                                         as a Percentage of Net Sales

                                           Three Months Ended                 Nine Months Ended

                                         Sept.             Sept.
                                          27,                28,                               Sept.
                                         2009              2008         Sept. 27, 2009        28, 2008

Net sales                                 100.0 %         100.0  %              100.0  %        100.0  %
Cost of goods sold                         81.2             79.8                 83.2             79.1

Production margin                          18.8             20.2                 16.8             20.9
Marketing and administrative expenses      10.5              8.8                 10.4              9.0
Research and development expenses           2.2              1.9                  2.2              2.0
Impairment of assets                         --               --                  5.8               --
Restructuring and other costs               0.6              1.7                  1.8              0.9

Income from operations                      5.5              7.8                 (3.3)             9.0

Executive Summary

Consolidated sales for the third quarter of 2009 declined 21% from prior year to $234.3 million from $294.9 million. This decline was primarily due to lower volumes in all businesses. In addition, foreign exchange had an unfavorable impact on sales growth of approximately $8.7 million or 3 percentage points of decline. Income from operations declined 44% to $12.8 million from $23.0 million in the prior year. Included in operating income for the third quarters of 2009 and 2008 were restructuring costs of $1.4 million and $5.0 million, respectively. Income from continuing operations declined 46% to $8.6 million from $16.0 million in the third quarter of 2008. Net income decreased 53% to $8.9 million from $19.0 million in the prior year.

As a result of the economic downturn and worldwide recession which accelerated in the fourth quarter of 2008, the Company continues to be affected by weak demand in the primary end markets we serve - paper, steel, construction, automotive. These economic conditions have caused a significant drop in demand for our products. Volume declines from prior year in all product lines more than offset the benefits derived from our announced restructuring programs and overall expense reduction initiatives.

Although there were signs of sequential economic improvement in the third quarter of 2009, there remains uncertainty as to the long-term sustainability of this market upturn and health of the overall economy. The Company believes, however, that due to our strong balance sheet, cash flow and the benefits derived as the result of the restructuring initiatives undertaken in 2007 and 2008, coupled with the realignment of our operations in the second quarter of 2009, the Company is well positioned to achieve sustainable profitable growth when the economy recovers.

We face some significant risks and challenges in the future:

· Our global business could continue to be adversely affected by a weak economic environment.
·North American and European steel production in the third quarter of 2009 was approximately 40% below production levels experienced in the first three quarters of 2008.
·In the Paper industry, production levels for printing and writing papers within North America and Europe, our two largest markets, were down 15% as compared with last year.
·Housing starts in the third quarter 2009 were at an annualized rate of approximately 590,000 units, as compared to an annualized rate of 868,000 units in the third quarter of last year. Housing starts were at a peak rate of 2.1 million units in 2005. In the automotive industry, North American car and truck production was down 22% in the third quarter of 2009 as compared to 2008.
· The availability of credit in the financial markets could adversely affect the ability of our customers and/or our suppliers to obtain financing.

· The industries we serve, primarily paper, steel, construction and automotive have been adversely affected by the global economic climate. Some of our customers may experience further consolidations and shutdowns or may face increased liquidity issues, which could deteriorate the aging of our accounts receivable, increase our bad debt exposure and possibly trigger impairment of assets or realignment of our businesses.
· Consolidations in the paper and steel industries concentrate purchasing power in the hands of fewer customers, increasing pricing pressure on the Company.
· Most of our Paper PCC sales are subject to long-term contracts that may be terminated pursuant to their terms, or may be renewed on terms less favorable to us.
· Our filler-fiber composite technology continues in development through customer trials, but has yet to be proven on a long-term commercial scale.
· We are subject to volatility in pricing and availability of our key raw materials used in our Paper PCC product line and Refractory product line. Our ability to recover increased costs is uncertain and may become more difficult in this economic environment.
· We continue to rely heavily upon Chinese suppliers for the majority of our magnesium oxide in the Refractories segment which may be subject to uncertainty in availability and cost.
· Fluctuations in energy costs have an impact on all of our businesses.
· Changes in the fair market value of our pension assets, rates of return on assets, and discount rates could have a significant impact on our net periodic pension costs and well as our funding requirements.
· As we expand our operations abroad we face the inherent risks of doing business in many foreign countries, including foreign exchange risk, import and export restrictions, and security concerns.
· The Company's operations, particularly in the mining and environmental areas (discharges, emissions and greenhouse gases), are subject to heavy regulation by federal, state and foreign authorities; the Company may be subject to, and presumably will be required to comply with, additional laws, regulations and guidelines which may be adopted in the future.

In October 2009, Domtar Corporation announced its intention to convert its Plymouth, North Carolina paper mill to 100% fluff pulp production and International Paper announced the potential closure of it Franklin, Virginia
mill. The Company presently has satellite PCC facilities at these paper mills and is currently evaluating these announcements. We expect that these events will have a negative impact on our operating performance in 2010 and could result in future impairment charges or accelerated depreciation. The net book value of these facilities was $2.4 million as of September 27, 2009. Combined sales for these facilities for the nine months ended September 27, 2009 were $8.1 million.

The Company will continue to focus on innovation and new product development and other opportunities for continued growth as follows:

· Development of the filler-fiber composite program, which continues to undergo large-scale paper machine trials, to increase the fill-rate for uncoated freesheet paper.
· Increasing our sales of PCC for paper by further penetration of the markets for paper filling at both freesheet and groundwood mills, particularly in emerging markets.
· Further growth of the Company's PCC coating product sales using the satellite model.
· Leveraging the Company's expertise in crystal engineering, especially in helping papermakers customize PCC morphologies for specific paper applications.
· Development of unique calcium carbonates used in the manufacture of novel biopolymers, a new market opportunity.
· Rapid deployment of value-added formulations of refractory materials that not only reduce costs but improve performance.
· Continuing our penetration in emerging markets.
· S Further growth of PCC produced for paper filling applications by working with industry partners to develop new methods to increase the ratio of PCC for fiber substitution.

Results of Operations

   Three months ended September 27, 2009 as compared with three months ended
September 28, 2008.

Sales
(millions of dollars)
                                         Third                                            Third
                                        Quarter        % of Total                        Quarter        % of Total
             Net Sales                    2009           Sales           Growth            2008           Sales


U.S                                    $    126.3             53.9 %          (18 ) %   $    154.2             52.3   %
International                               108.0             46.1 %          (23 ) %        140.7             47.7   %
Net sales                              $    234.3            100.0 %          (21 ) %   $    294.9            100.0   %


Paper PCC                              $    124.1             53.0 %          (12 ) %   $    141.7             48.0   %
Specialty PCC                                13.4              5.7 %          (14 ) %         15.5              5.3   %
PCC Products                           $    137.5             58.7 %          (13 ) %   $    157.2             53.3   %

Talc                                   $      8.6              3.7 %          (12 ) %   $      9.8              3.3   %
Ground Calcium
Carbonate                                    16.4              7.0 %          (17 ) %         19.7              6.7   %
Processed Minerals Products            $     25.0             10.7 %          (15 ) %   $     29.5             10.0   %
Specialty Minerals Segment             $    162.5             69.4 %          (13 ) %   $    186.7             63.3   %


Refractory
Products                               $     56.8             24.2 %          (34 ) %   $     86.7             29.4   %
Metallurgical
Products                                     15.0              6.4 %          (30 ) %         21.5              7.3   %
Refractories Segment                   $     71.8             30.6 %          (34 ) %   $    108.2             36.7   %

Net sales                              $    234.3            100.0 %          (21 ) %   $    294.9            100.0   %

Worldwide net sales in the third quarter of 2009 decreased 21% to $234.3 million from $294.9 million in the previous year. Foreign exchange had an unfavorable impact on sales of approximately $8.7 million or 3 percentage points of decline. Sales in the Specialty Minerals segment, which includes the PCC and Processed Minerals product lines, decreased 13% to $162.5 million compared with $186.7 million for the same period in 2008. Sales in the Refractories segment declined 34% from the previous year to $71.8 million.

Worldwide net sales of PCC, which is primarily used in the manufacturing process of the paper industry, decreased 13% in the third quarter to $137.5 million from $157.2 million in the prior year. Foreign exchange had an unfavorable impact on sales of $6.5 million or approximately 4 percentage points of decline. Paper PCC sales declined 12% to $124.1 million in the third quarter of 2009 from $141.7 million in the prior year. Paper PCC volumes declined 11% and declined in all regions except Latin America, accounting for $15.7 million of the decline. In addition, approximately $5.6 million or 4 percentage points of decline was attributable to the effects of foreign exchange. This was partially offset by contractual price increases of $3.5 million. Sales of Specialty PCC decreased 14% to $13.4 million from $15.5 million in the prior year. This decline was due to 13% lower volumes and the effect of foreign exchange of $1.0 million.

Net sales of Processed Minerals products decreased 15% in the third quarter to $25.0 million from $29.5 million in the third quarter of 2008. This decrease was primarily attributable to the continued weakness in the residential and commercial construction markets and the automotive market. Volumes declined 16% from prior year levels.

Net sales in the Refractories segment in the third quarter of 2009 decreased 34% to $71.8 million from $108.2 million in the prior year. The declines in all product lines within this segment were driven by lower worldwide volumes as this segment continues to be severely affected by the downturn in the steel industry, particularly in North America and Europe. Foreign exchange had an unfavorable impact on sales of $2.1 million or approximately 2 percentage points of decline. Sales of refractory products and systems to steel and other industrial applications decreased 34% to $56.8 million from $86.7 million. Sales of metallurgical products within the Refractories segment decreased 30 percent to $15.0 million as compared with $21.5 million in the same period last year.

Net sales in the United States decreased 18% to $126.3 million in the third quarter of 2009. International sales in the third quarter of 2009 decreased 23% to $108.0 million, primarily due to lower worldwide volumes and the effects of foreign exchange.

                                 Third       Third
Operating Costs and Expenses    Quarter     Quarter
(millions of dollars)            2009        2008     Growth


Cost of goods sold            $   190.3   $   235.5     (19) %
Marketing and administrative  $    24.6   $    26.0      (5) %
Research and development      $     5.1   $     5.4      (5) %
Restructuring and other costs $     1.4   $     5.0     (72) %

Production margin decreased $15.4 million, or 26%, from the prior year. Although all product lines experienced lower volumes related to the weak market conditions, the reduction in production margin was attributable to the Refractories segment. The effect of foreign exchange on production margin in the quarter was minimal. In the Specialty Minerals segment, production margin increased 1% or $0.2 million from the prior year. This was attributable to the benefits from the restructuring programs of $1.6 million, lower raw material costs in Paper PCC of $1.5 million, lower energy costs of $1.0 million, as well as other manufacturing cost savings initiatives. This was mostly offset by lower volumes of $5.4 million due to weak market conditions in both the PCC and Processed Minerals product line and permanent and temporary shutdowns in the Paper PCC product line. In the Refractories segment, production margin declined 58% or $15.6 million from the prior year. This was attributable to volume decreases of approximately $11.5 million and consumption of higher cost raw materials of $5.4 million for MgO purchased last summer at the peak of the demand cycle for this Chinese sourced material. This was partially offset by benefits from the restructuring programs of $3.0 million.

Marketing and administrative costs decreased in the third quarter to $24.6 million from $26.0 million in the prior year. This decline was due to the benefits derived from our restructuring program as well as other cost savings initiatives. Marketing and administrative costs represented 10.5% of net sales in the third quarter of 2009 as compared with 8.8% of net sales in the prior year.

Research and development expenses decreased 5% to $5.1 million. This decrease was primarily in the Refractories segment. Research and development represented 2.2% of net sales in the third quarter of 2009 as compared with 1.9% of net sales in the prior year.

Restructuring and other costs (2007 program):

In the third quarter of 2007, the Company initiated a plan to realign its business operations to improve profitability and increase shareholder value by exiting certain businesses and consolidating some product lines. As part of this program, the Company reduced its workforce by approximately 7 percent to better control operating expenses and to improve efficiencies and recorded a pre-tax charge of $16.0 million for restructuring and other exit costs during the second half of 2007.

Restructuring costs incurred in the third quarter of 2009 and 2008 relating to the 2007 restructuring program were as follows:

                                             Third Quarter      Third Quarter
                                                 2009               2008

Severance and other employee               $         (0.1)    $           0.3
benefits
Pension settlement                                     --                 4.7
costs
                                           $         (0.1)    $           5.0

The Company expects incremental annualized savings in 2009 of approximately $2.0 million from this program over 2008 of which approximately $0.3 million was realized in the third quarter. The total expected annualized savings in 2009 is approximately $13 million from this program and we realized savings of $11 million in 2008. Approximately $0.3 million and $1.1 million in severance payments were paid in the third quarter of 2009 and 2008, respectively. A restructuring liability of $0.8 million remains at September 27, 2009 and will be paid in 2009. Such amounts will be funded from operating cash flows.

Restructuring and other costs (2008 program):

In the fourth quarter of 2008, as a result of the acceleration of the worldwide economic downturn and the resulting impact on the Company's sales and operating profits, the Company initiated an additional restructuring program by reducing its workforce by approximately 14% through a combination of permanent reductions and temporary layoffs. The Company recorded a charge of $3.9 million associated with this program.

Restructuring costs incurred in the third quarter of 2009 relating to the 2008 restructuring program were as follows:

                                        Third Quarter
                                            2009

Severance and other employee benefits $         (0.2)
                                      $         (0.2)

The Company expects annualized savings of between $6 million to $8 million as it relates to this program. The Company realized compensation and related expense savings of approximately $2.7 million in the third quarter of 2009 which was as expected. Approximately $0.5 million in severance payments was paid in the third quarter of 2009. The remaining liability of $0.2 million will be paid in 2009 from cash flows from operations.

Restructuring and other costs (2009 program):

In the second quarter of 2009, as a result of the continuation of the severe downturn in the worldwide steel industry, the Company initiated a restructuring program, primarily in the Refractories segment, to improve efficiencies through consolidation of manufacturing operations and reduction of costs. This realignment resulted in impairment of asset charges and restructuring charges in the second quarter of 2009 of $37.5 million and $8.9 million, respectively.

Restructuring costs incurred in the third quarter of 2009 related to the 2009 restructuring program were as follows:

                                          Third
                                         Quarter
(millions of dollars)                      2009

Severance and other employee benefits    $   1.2
Pension settlement cost                      0.5
                                         $   1.7

The restructuring program will reduce the current workforce by approximately 200 employees worldwide. This reduction in force relates to plant consolidations as well as a streamlining of corporate and divisional management structures to operate more efficiently. The Company expects to realize annualized pre-tax cost savings of approximately $16 million to $20 million upon completion of the program, of which $10 million relates to lower compensation and related expenses and $5 million relates to annualized pre-tax depreciation savings on the write down of fixed assets. The Company realized compensation and related expense savings of approximately $0.7 million in the third quarter of 2009, which was as expected. The Company realized $1.3 million in pre-tax depreciation savings in the third quarter of 2009, as expected. Approximately $2.1 million in severance payments were paid in the third quarter of 2009. The Company expects to pay the remaining $7.5 million liability by the second half of 2010. The payments will be funded from operating cash flows.

                                             Third          Third
Income from Operations                      Quarter        Quarter
(millions of dollars)                         2009           2008       Growth


Income (loss) from
operations                                $     12.8     $     23.0        (44) %

Income from operations in the third quarter of 2009 was 12.8 million as compared with $23.0 million in the prior year. Income from operations represented 5.5% of net sales in the third quarter of 2009 as compared with 7.8% of sales in the prior year.

Income from operations for the Specialty Minerals segment increased 6% to $14.2 million from $13.4 million in the prior year and was 8.7% of its net sales as compared with 7.2% in the third quarter of 2008. Loss from operations for the Refractories segment was $0.9 million as compared with income from operations of $9.9 million in the prior year.

                                           Third            Third
Non-Operating Income (Deductions)         Quarter          Quarter
(millions of dollars)                       2009             2008         Growth


Non-operating deductions,
net                                     $    (0.7)       $      0.3         *     %

* Percentage not meaningful

In the third quarter of 2009, net non-operating deductions increased to $0.7 million from income of $0.3 million in the prior year. This increase was due to lower interest income in the current year due to lower interest rates and foreign exchange losses in the current year on our US dollar and Euro denominated cash holdings, as compared with gains in the prior year.

                                      Third         Third
Provision for Taxes on Income        Quarter       Quarter
(millions of dollars)                 2009          2008       Growth

Provision for taxes on
income                             $     2.6     $     6.3       (59) %

Provision for taxes on income during the third quarter of 2009 was $2.6 million as compared to $6.3 million during the third quarter of 2008. The effective tax rate for the third quarter of 2009 was 21.3% compared to 27.2% for the third quarter of 2008. This decrease primarily relates to the reduction in income taxes resulting from a change in the earnings in the foreign jurisdictions and the related foreign tax rates, the increase in the tax benefit of depletion as a percentage of the decreased earnings and the effect of the restructuring and impairments. The tax benefit on the restructuring and impairment of assets charge was $0.4 million or an effective tax benefit of 26.0% on such charge.

                                                 Third         Third
Income from Continuing Operations, net of tax   Quarter       Quarter
(millions of dollars)                            2009          2008       Growth

Income from continuing operations, net of tax $     8.6     $    16.1       (46) %

Income from continuing operations was $8.6 million as compared with $16.1 million in the prior year.

                                       Third         Third
Income from Discontinued Operations   Quarter       Quarter
(millions of dollars)                  2009          2008       Growth

Income from discontinued operations $     0.3     $     3.0       (91) %

In the third quarter of 2009 the Company recognized income from discontinued operations of $0.3 million as compared with income of $3.0 million in the prior year. Included in income from discontinued operations for 2008 was a gain of approximately $2.4 million, net of tax, for the sale of our Synsil® facility in Cleburne, Texas.

                                          Third         Third
Net Income Attributable to MTI           Quarter       Quarter
(million of dollars)                      2009          2008       Growth

Net income                             $     8.9     $    19.0       (53) %

Net income in the third quarter of 2009 was $8.9 million as compared with $19.0 million in the prior year. Diluted earnings per common share was $0.47 per share in the third quarter of 2009 as compared with $1.01 per share in the prior year.

Nine months ended September 27, 2009 as compared with nine months ended September 28, 2008

(millions of dollars)
                                        Nine Months       % of Total                        Nine Months       % of Total
             Net Sales                     2009             Sales           Growth             2008             Sales


U.S                                    $       349.1             53.6 %          (24 ) %   $       461.0             52.9   %
International                                  302.0             46.4 %          (27 ) %           411.2             47.1   %
Net sales                              $       651.1            100.0 %          (25 ) %   $       872.2            100.0   %


Paper PCC                              $       352.3             54.1 %          (16 ) %   $       421.7             48.3   %
Specialty PCC                                   36.1              5.6 %          (23 ) %            46.6              5.4   %
PCC Products                           $       388.4             59.7 %          (17 ) %   $       468.3             53.7   %

Talc                                   $        23.0              3.5 %          (19 ) %   $        28.5              3.3   %
Ground Calcium
Carbonate                                       46.7              7.2 %          (22 ) %            59.8              6.8   %
Processed Minerals Products            $        69.7             10.7 %          (21 ) %   $        88.3             10.1   %


Specialty Minerals Segment             $       458.1             70.4 %          (18 ) %   $       556.6             63.8   %

Refractory
Products                               $       156.9             24.1 %          (39 ) %   $       255.6             29.3   %
Metallurgical
Products                                        36.1              5.5 %          (40 ) %            60.0              6.9   %
Refractories Segment                   $       193.0             29.6 %          (39 ) %   $       315.6             36.2   %

Net sales                              $       651.1            100.0 %          (25 ) %   $       872.2            100.0   %
. . .