SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number 1-3295
MINERALS TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Delaware 25-1190717
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
The Chrysler Building
405 Lexington Avenue
New York, New York 10174-1901
(address of principal executive office) (Zip Code)
(212) 878-1800
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each Name of each exchange
class on which registered
- ---------------------------------------------------------------------------
Common Stock, $.10 par value New York Stock Exchange
- ---------------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
None
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Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
---
The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based upon the closing price at which the stock was sold
as of January 30, 1998 was approximately $735.0 million. Shares of common
stock held by each officer and director and by each person who owns 5% or
more of the outstanding common stock have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.
As of March 3, 1998, the Registrant had outstanding 22,574,368 shares
of common stock, all of one class.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement dated April 3, 1998 Part III
<PAGE>
MINERALS TECHNOLOGIES INC.
1997 FORM 10-K ANNUAL REPORT
Table of Contents
Page
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PART I
Item 1. Business 1
Item 2. Properties 9
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Executive Officers of the Registrant 12
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 14
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 20
PART III
Item 10. Directors and Executive Officers of the Registrant 20
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners
and Management 20
Item 13. Certain Relationships and Related Transactions 21
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on
Form 8-K 21
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Signatures 24
<PAGE>
PART I
Item 1. Business
Minerals Technologies Inc. (the "Company") is a resource- and
technology-
based company that develops, produces and markets on a worldwide
basis a broad range of specialty mineral, mineral-based and synthetic
mineral products. The Company's principal products are: precipitated
calcium carbonate ("PCC"), used primarily by paper producers in the
alkaline papermaking process; monolithic and shaped refractory materials,
used primarily by the steel, cement and glass industries; and natural
mineral and mineral-based products, used primarily in the building
materials, steel, paints and coatings, glass, ceramic, polymers, food and
pharmaceutical industries. The Company emphasizes research and development.
The level of the Company's research and development spending as well as its
history of developing and introducing technologically advanced new products
has enabled the Company to anticipate and satisfy changing customer
requirements and create new market opportunities through new product
development and product application innovations.
PCC Products and Markets
PCC Products.
Paper can be produced under either acid or alkaline conditions.
Historically, in North America, paper was primarily produced using acid
technologies. In the mid-1980's, North American producers of uncoated
wood-free paper encountered significant increases in the cost of wood fiber
and other materials, such as titanium dioxide, which are necessary in
greater quantities in the acid process. In response, these paper producers
sought to convert their paper production to lower-cost alkaline-based
technologies, which permit mineral fillers to be substituted for more
expensive wood fiber and pigments used to increase brightness, resulting in
significant cost savings. As a result of these conditions, the Company
believed that a significant opportunity existed to provide paper producers
with a high performance filler product that could facilitate the transition
to the alkaline papermaking process. The Company's four-year development
effort culminated in the construction of the first commercial satellite PCC
plant at the Wisconsin Rapids paper mill of Consolidated Papers, Inc. in
1986. The Company believes the competitive advantages offered by the
improved economics and superior optical characteristics of the paper
produced using the PCC products manufactured by the Company's satellite PCC
plants resulted in the rapid growth in the number of the Company's
satellite PCC plants among uncoated wood-free paper producers. The Company
has also built satellite PCC plants that replace ground calcium carbonate.
In addition, the Company has constructed satellites for coating PCC and
more recently satellites for the use of its patented acid-tolerant PCC
technology. This technology provides higher performance qualities to
manufacturers of groundwood paper like newsprint, magazine and catalogue
papers. The following table shows the number of satellite PCC plants
operated by the Company at the end of the periods indicated. For
information with respect to the locations of the Company's satellite PCC
plants at December 31, 1997, see "Item 2--Properties" below.
Satellite PCC Plants
at End of Quarter
--------------------
Calendar Year First Second Third Fourth
------------- ----- ------ ----- ------
1993 30 31 31 34
1994 36 36 36 36
1995 37 37 38 38
1996 41 42 43 44
1997 45 46 48 49
In 1997, the Company commenced operations at five new satellite PCC
plants
in five different countries. These satellite PCC plants are located
in the United States, Slovakia, Indonesia, Finland and South Africa.
During 1997, the Company signed agreements to construct six new
satellite plants--four of which are now under construction. The satellite
PCC plants under construction are located in France, Germany and the United
States.
<PAGE> 1
The Company staffs, operates and maintains all of its satellite PCC
plants and owns the related technology used at its satellite PCC plants.
The Company and its paper mill customers enter into long-term agreements,
generally ten years in length, pursuant to which the Company supplies
substantially all of a customer's precipitated calcium carbonate filler
requirements. The Company is generally permitted to sell to third parties
PCC produced at a satellite plant in excess of the host paper mill's
requirements. The Company's satellite PCC plants and customers are listed
in Item 2 -- "Properties."
The Company currently manufactures several customized PCC product
forms through proprietary processes at its satellite PCC plants, each
designed to provide optimum brightness, opacity, bulking and/or paper
strength. While focusing on expanding sales at its existing satellite PCC
plants, the Company's research and development and technical service staffs
have pioneered a number of ancillary new technologies. These include
acid-tolerant PCC, which allows PCC to be introduced to the large
wood-containing segment of the printing and writing papers market, and
production of PCC crystal morphologies for coating paper. The Company
expects that research and development in coating technology will open up a
larger market for PCC that will build slowly as paper companies begin to
include PCC in their proprietary coating formulations.
The Company also produces a full range of slurry and dry PCC products
sold on a merchant basis. In the paper industry, the Company's merchant PCC
is used as a coating pigment and as a filler in the production of coated
and uncoated wood-free printing and writing papers. The Company sells
surface-treated and untreated grades of PCC to the polymers industry for
use in rigid polyvinyl chloride products (pipe and profiles), thermoset
polyesters (automotive body parts), sealants (automotive and construction
applications), adhesives, printing inks and coatings. The Company's PCC is
used by the food and pharmaceutical industries as a source of bio-available
calcium in tablets and foodstuffs, as a buffering agent in tablets, and as
a mild abrasive in toothpaste. The Company also sells PCC on a merchant
basis to the paints and coatings industry.
The Company's PCC product line net sales were $299.9 million, $263.1
million, $226.6 million for the years ended December 31, 1997, 1996 and
1995, respectively. See "Item 7--Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Key Markets.
The principal market for the Company's satellite PCC products is the
paper industry. The Company also produces PCC on a merchant basis for sale
to companies in the polymers, food and pharmaceutical and paints and
coatings industries.
Sales of PCC to the paper industry have accounted for a steadily
increasing percentage of the Company's total sales in the past five years,
a trend the Company expects to continue. The Company's sales of PCC have
been
and are expected to continue to be made to the printing and writing
papers segment of the paper industry. The Company's products are currently
used primarily by paper mills producing uncoated wood-free paper.
North American Wood-Free Printing and Writing Papers. In the
mid-1980's, North American producers of uncoated wood-free paper
encountered significant increases in the cost of wood fiber and other
materials. In response, these paper producers sought to convert their
paper production to lower-cost alkaline-based technologies, thereby
resulting in significant cost savings. Ground chalk has historically been
used by European alkaline-based paper producers as a low-cost substitute
for wood fiber. In North America, however, the use of ground chalk is not
practical as there is no naturally occurring chalk.
PCC must compete with other fillers, such as ground limestone and
clay, on a cost-effective basis. PCC costs more to produce than ground
limestone or clay since the production process is inherently more complex.
Limestone is mined, crushed and ground; clay is mined, ground and perhaps
calcined. PCC is manufactured via a chemical process which takes lime
(which itself is produced by calcining a mined product, limestone),
dissolves it, combines it with carbon dioxide and separates the final
product. Drying and transportation can add over $100 per ton to the product
cost. If shipped wet, additional freight costs would be incurred. The
Company believes that in many cases this added cost makes PCC from merchant
plants non-cost-competitive with other fillers.
<PAGE> 2
In response to these conditions and as a result of a concentrated
research and development effort, the Company developed the satellite PCC
plant concept. The Company's satellite PCC plants have facilitated the
conversion of a substantial percentage of the North American uncoated
wood-free printing and writing paper producers to alkaline papermaking. The
Company estimates that during 1997, more than 80% of North American
wood-free paper was produced employing alkaline technology.
Presently, the Company owns and operates 34 commercial satellite PCC
plants located at paper mills that produce wood-free printing and writing
papers in North America. Based upon its experience, the Company
anticipates that the aggregate volume of PCC used by these 34 paper mills
will increase. The Company also estimates that a few additional North
American paper mills producing wood-free paper are both suitable for
conversion to the more economical, and in the Company's view, more
ecologically sound, alkaline method and large enough to support a satellite
PCC plant.
The Company is also placing increased emphasis on the use of PCC to
coat paper. PCC increases gloss and printability of the sheet while
decreasing paper's cost per ton. The coating market is large and the
Company believes it will continue to grow at a higher average growth rate
than the uncoated market, and therefore provides a substantial market
opportunity for the Company. PCC coating products can be produced at
satellite PCC plants.
Worldwide Wood-Containing Printing and Writing Papers. To date, the
Company's PCC products have primarily been used in wood-free alkaline
papermaking processes. The wood-containing segments of the paper industry
still generally employ acid papermaking technology. The conversion to
alkaline technology by these segments has been hampered by the phenomenon
of alkaline darkening, the tendency of wood-containing papers to darken in
an alkaline environment. In an attempt to introduce PCC to the
wood-containing segments of the paper industry, the Company has developed
and patented a process for the manufacture of an acid-tolerant form of PCC
(AT[tm] PCC) that provides enhanced brightness and opacity properties
without the undesirable darkening phenomenon. During 1997, the Company
signed three contracts for the use of its patented acid-tolerant PCC
technology which will enable the Company to expand its sales to makers of
groundwood paper grades.
The Company believes PCC filler levels for uncoated wood-containing
paper generally will be less than those for uncoated wood-free paper. There
can be no assurance as to the number of producers of wood-containing paper
that will contract with the Company to purchase AT [TM)PCC.
International Wood-Free Printing and Writing Papers. The Company
estimates the production of uncoated wood-free printing and writing papers
outside of North America that can be served by its satellite PCC operations
is approximately the same size (measured in tons of paper produced) as the
North American uncoated wood-free paper market currently served by the
Company. A number of factors have influenced the acceptance of the
Company's satellite PCC technology in foreign markets. Although European
wood-free paper producers predominantly use alkaline papermaking processes,
PCC is not in prevalent use in this market. Ground chalk is readily
available in Europe and commonly used as a low-cost filler product in
alkaline systems. In addition, supplies of lime suitable for the
manufacture of PCC generally are not available at attractive prices.
However, the Company believes that the superior brightness and opacity
characteristics offered by its PCC products should allow it to compete with
suppliers of ground chalk and other filler products in certain locations in
this market. In Latin America and Asia, ground chalk is not readily
available, while supplies of lime suitable for PCC production are generally
available at attractive prices.
Refractory Products and Markets
Refractory Products.
The Company offers a broad range of monolithic refractory products as
well as pre-cast monolithic refractory shapes. Product sales are usually
combined with Company-supplied proprietary applications equipment and
on-site technical services support. The Company's proprietary applications
equipment is used to apply refractory materials to the walls of
steel-making furnaces and other high temperature vessels to maintain
and extend their lives. Robotic-type shooters, including the Company's
proprietary SEQUAD(R) sprayer, allow for remote-controlled applications
in steel-making furnaces, as well as in steel ladles and blast furnaces.
Since the steel-making industry is characterized by intense price
competition, which results in a continuing emphasis by
<PAGE> 3
steel mills on increased productivity, the SEQUAD(R) sprayer and the
related technologically advanced blast furnace maintenance materials
developed in the Company's research laboratories have been well accepted by
the Company's customers. These products allow steel makers to improve their
performance through, among other things, the application of monolithic
refractories to furnace linings while the furnace is at operating
temperature, thereby eliminating the need for furnace cool-down periods and
steel-production interruption. This also results in a lower overall
refractory cost to steel makers per ton of steel produced. The Company's
experienced technical service staff and advanced applications equipment
provide greater assurance that the desired productivity objectives of
customers are achieved. In addition, laser measurement of refractory wear
is conducted by the Company's technicians in certain plants. The Company
believes that these services, together with its refractory product
offerings, provide the Company with a strategic marketing advantage.
The Company has patented a new technology in the refractory product
line. The KILNTEQ(R) refractory technology system is a new concept for
lining the interior of lime and cement kilns. The KILNTEQ(R) system calls
for lining the huge, tube-like kilns with refractory material in a
polygonal shape. This shape, rather than the circular linings now
generally used, is believed to increase raw material throughput and to
decrease energy use.
The Company's refractory products are sold in the following three
product groups:
Steel Furnace Refractories. The Company sells gunnable monolithic
refractory products to users of basic oxygen furnaces and electric furnaces
for application on furnace walls to prolong the life of furnace linings.
Specialty Products for Iron and Steel. The Company sells monolithic
refractory materials and pre-cast refractory shapes for iron and steel
ladles, vacuum degassers, continuous casting tundishes, blast furnaces and
reheating furnaces. The Company is one of the few monolithic refractory
companies offering a full line of materials to satisfy all continuous
casting refractory applications. This full line consists of gunnable,
sprayable, trowellable and vibratable materials as well as refractory
shapes and permanent linings.
The Company uses proprietary processes to produce a number of products
that are technologically enhanced. These include calcium metal,
metallurgical wire and a number of metal treatment specialties. The Company
manufactures calcium metal at its Canaan, Connecticut facility and
purchases calcium in international markets. Calcium metal is used in the
manufacture of batteries and magnets. The Company sells metallurgical wires
and fluxes for use in the production of steel. The Company's metallurgical
wires are injected into molten steel to reduce imperfections. The steel
produced is used for high-pressure pipeline and other premium-grade steel
applications. The Company's fluxes are mineral products used to help purify
steel.
Non-Steel Refractory Products. This product line encompasses
refractory shapes and linings that are sold to the glass, cement, aluminum,
petrochemical and other non-steel industries.
The Company's refractory net sales were $195.9 million, $192.2 million
and $202.5 million for the years ended December 31, 1997, 1996 and 1995,
respectively. See "Item 7--Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Key Markets.
The principal market for the Company's refractory products is the
steel industry. For the year ended December 31, 1997, approximately 90% of
the Company's sales of refractory products was to the steel industry. Raw
steel production on a worldwide basis has shown only modest growth in the
past ten years. However, management believes that certain trends in the
steel-making industry will continue to provide growth opportunities for the
Company. These trends include the development of improved manufacturing
processes such as continuous casting, the need of steel producers for
increased productivity and higher grade refractories as well as a modest
shift toward electric steel making.
The use of the continuous casting method, measured in tons of steel
cast on a worldwide basis, has more than doubled in the past ten years. The
need for high quality refractory products for this process has generated
new market opportunities for the Company's refractory products. Product
offerings for continuous casting include
<PAGE> 4
advanced maintenance coatings and original linings for tundishes and
robotic applications equipment. The Company believes that the trend toward
electric steel-making mini-mills and away from integrated steel mills has
facilitated the acceptance of new refractory products and technologies.
Mini-mills require a broad line of refractory products and certain
metallurgical products that are also produced by the Company.
Processed Mineral Products and Markets
The Company mines and processes natural mineral products, limestone
and talc, and manufactures lime, a mineral-based product. The Company also
produces a number of technology-based products, including pyrolytic
graphite.
Over 60% of the Company's sales of limestone in 1997 were filler-grade
material, i.e., limestone having sufficient purity and color to enable it
to be utilized as a pigment and filler in building materials, paints and
coatings, polymers and joint compounds. The other component of this product
line represents sales of limestone aggregate, a commodity business.
Talc is mined, beneficiated and processed at the Company's Barretts
site, located near Dillon, Montana, and is sold worldwide in finely ground
form for paints and coatings, ceramics and polymers applications. Because
of the exceptional chemical purity of the Barretts ore, virtually all of
the automotive catalytic converter ceramic substrates manufactured in the
United States, Japan and Western Europe utilize the Company's Barretts
talc.
Limestone and talc are mined, crushed, screened and beneficiated and,
on occasion, subjected to surface chemical modification.
Lime, a mineral-based product, is sold commercially to the steel and
chemical industries and used as a raw material for the manufacture of PCC
at the Company's Adams, Massachusetts, facility.
The Company's net sales of processed mineral products were $106.5
million, $100.7 million and $95.4 million for the years ended December 31,
1997, 1996 and 1995, respectively. See "Item 7--Management's Discussion and
Analysis of Financial Condition and Results of Operations."
In March 1998, the Company entered into a Memorandum of Understanding
with another company for the sale of its Limestone Midwest business. Based
at the Port Inland mine in Gulliver, MI, Limestone Midwest is the Company's
only business unit competing for sales of limestone aggregate, a commodity
business.
The Company's natural mineral products are supported by the Company's
limestone reserves, which the Company believes are strategically located in
the western and eastern parts of the United States, and talc reserves,
which the Company believes are of outstanding quality. The Company
estimates these reserves, at current usage levels, to be from 40 to over 70
years at its limestone production facilities and in excess of 40 years at
its talc production facilities.
Marketing and Sales
The Company principally relies on its worldwide direct sales force to
market its products. The direct sales force is augmented by worldwide
technical service teams, employees who are familiar with the industries to
which the Company markets its products, and several regional distributors.
The Company's sales force works closely with the Company's technical
service staff to solve technical and other issues faced by the Company's
customers. The Company's technical service staff assists North American
paper producers in their conversion to alkaline papermaking and provides
post-conversion assistance to customers. In addition, the Company's
technical service personnel advise with respect to the use of monolithic
refractory materials and, in many cases, apply the refractory materials to
the customers' furnaces and other vessels pursuant to service agreements.
Continued use of skilled technical service teams is an important component
of the Company's business strategy.
The Company works closely with its customers to ensure that the
customers' requirements are satisfied and often trains and supports
customer personnel in the use of the Company's products. The Company
conducts domestic marketing and sales from its headquarters in New York and
from regional sales offices in the eastern and western United States. The
Company's international marketing effort is directed from Brussels,
Belgium;
<PAGE> 5
Tokyo, Japan; and Singapore. The Company believes its refractory
manufacturing facilities are strategically located to satisfy the stringent
delivery requirements of the steel industry. The Company also believes that
its worldwide network of sales personnel and manufacturing facilities
facilitates the international expansion of its satellite PCC operations.
Raw Materials
The Company uses lime in the production of PCC, and is a significant
purchaser of lime in North America. Generally, lime is purchased from
unaffiliated suppliers located in close geographic proximity to the
Company's satellite PCC plants, pursuant to long-term contracts, and to a
lesser extent, supplied by the Company from its Adams, Massachusetts,
facility. If there were to be an interruption in the supply of lime from
any particular lime supplier to the Company, the Company believes that it
would be able to obtain suitable lime from alternate sources, but at an
increased cost (resulting primarily from increased transportation costs).
Pursuant to the Company's contracts with its paper mill customers, this
increased cost would be effectively assumed by the host paper mills.
Accordingly, the Company believes that alternative sources of lime will be
available in the event of supply interruptions at effectively the same cost
to the Company. In Europe, supplies of lime suitable for the manufacture of
PCC are generally available but not at prices that are as attractive as
those prevailing in North America.
The principal raw materials used in the Company's monolithic
refractories products are refractory-grade magnesia and various forms of
aluminosilicates. The Company also purchases calcium metal, calcium
silicide, graphite, calcium carbide and various alloys for use in the
production of metallurgical wires and uses lime and aluminum in the
production of calcium metal. The Company purchases a significant portion of
its magnesite requirements from sources in the People's Republic of China.
During 1994, the Ministry of Foreign Trade and Economic Cooperation of the
People's Republic of China instituted a system under which Chinese
exporters must purchase, through competitive bidding, licenses to export
specified commodities, including magnesia. The exporters holding such
licenses generally attempt to pass the cost of the license fee on to their
customers. This license fee was increased significantly as of January
1995, resulting in turn in increased worldwide prices for Chinese magnesia.
The Company had initiated price increases in refractory products and had
located lower-cost alternative sources of supply of magnesia. However, the
price increases were not sufficient to fully offset the higher cost of
magnesia, and thus far alternative sources of supply of magnesia have been
limited. Since the second half of 1996, worldwide prices of Chinese
magnesia have decreased from peak prices and appear to have stabilized.
Except as noted above, the Company believes that it could obtain
adequate supplies from alternate sources in the event of supply
interruptions of its raw material requirements.
Competition
The Company is continually engaged in efforts to develop new products
and technologies and refine existing products and technologies in order to
remain competitive and, in certain circumstances, to position itself as a
market leader.
With respect to its PCC products, the Company competes for sales to
the paper industry based in large part upon technological know-how, patents
and processes that allow the Company to deliver PCC that the Company
believes imparts superior brightness and opacity properties to paper on an
economical basis. The Company is the leading manufacturer and supplier of
PCC to the North American paper industry. It competes with certain
companies both in North America and abroad that sell PCC or offer
alternative products for use in paper filling and coating applications.
Competition with respect to the Company's PCC sales is based upon price,
availability of materials and optical characteristics such as brightness,
opacity and paper strength.
With respect to the Company's refractory products, competitive
conditions vary by geographic region. Competition is based upon price, the
performance characteristics of the product (including strength, quality and
consistency and ease of application) and the availability of technical
support. The Company competes with different companies in different
geographic areas and in separate aspects of its product line.
<PAGE> 6
The Company competes in sales of its limestone and talc based
primarily upon product quality and the geographic location of the
purchaser.
Research and Development
Many of the Company's product lines are technology-based, and the
Company's business strategy for continued growth in sales and profitability
depends, to a large extent, on the continued success of its research and
development activities. Among the significant achievements of the Company's
research and development effort have been the satellite PCC plant concept,
acid-tolerant PCC, production of PCC crystal morphologies for coating paper
and the SEQUAD(R) sprayer, the KILNTEQ(R) system and numerous new
refractory products.
The Company maintains its main research facilities in Bethlehem and
Easton, Pennsylvania, with more than 170 employees engaged in research and
development. It also has smaller research and development facilities in
Finland, Ireland and Japan. Expertise in inorganic chemistry,
crystallography and structural analysis, fine particle technology and other
aspects of materials science applies to and supports all of the Company's
product lines.
For the years ended December 31, 1997, 1996 and 1995, the Company
expended approximately $20.4 million, $19.7 million and $19.7 million,
respectively, on research and development. The Company believes, based upon
its review of publicly available information regarding the reported
research and development spending of certain of its competitors, that its
investment in research and development as a percentage of net sales exceeds
comparable industry norms. The Company's research and development spending
for 1997 approximated 3.4% of net sales.
Patents and Trademarks
The Company owns or has the right to use approximately 390 patents and
approximately 700 trademark registrations related to its business. The
Company believes that its rights under its existing patents, patent
applications and trademarks are of value to its operations, but no one
patent, application or trademark is material to the conduct of the
Company's business as a whole.
Insurance
The Company maintains liability and property insurance and insurance
for business interruption in the event of damage to its production
facilities and certain other insurance covering risks associated with its
business. The Company believes such insurance is adequate for the operation
of its business. From time to time various types of insurance for companies
in the specialty minerals business have been very expensive or, in some
cases, unavailable. There is no assurance that in the future the Company
will be able to maintain the coverage initially obtained or that the
premiums therefore will not increase substantially.
Employees
At December 31, 1997, the Company employed approximately 2,250
persons, of whom approximately 650 were employed by the Company outside the
United States. The Company believes its relationships with its employees
are good.
<PAGE> 7
Environmental, Health and Safety Matters
The Company's operations are subject to federal, state, local and
foreign laws and regulations relating to the environment and health and
safety. Certain of the Company's operations involve and have involved the
use and release of substances that are classified as toxic or hazardous
substances within the meaning of these laws and regulations. Environmental
operating permits are, or may be, required for certain of the Company's
operations and such permits are subject to modification, renewal and
revocation. The Company regularly monitors and reviews its operations,
procedures and policies for compliance with these laws and regulations. The
Company believes its operations are in substantial compliance with these
laws and regulations and that there are no violations which should have a
material effect on the Company. Despite these compliance efforts, some risk
of environmental and other damage is inherent in the operation of the
business of the Company, as it is with other companies engaged in similar
businesses, and there can be no assurance that material damage will not
occur in the future. The cost of compliance with these laws and regulations
is not expected to have a material adverse effect on the Company. However,
future events, such as changes in or modifications of interpretations of
existing laws and regulations or enforcement policies or further
investigation or evaluation of the potential health hazards of certain
products may give rise to additional compliance and other costs that could
have a material adverse effect on the Company. The Company has a right of
indemnification for certain potential environmental, health and safety
liabilities under agreements entered into between the Company and Pfizer
Inc ("Pfizer") or Quigley Company, Inc. ("Quigley"), a wholly-owned
subsidiary of Pfizer, in connection with the reorganization. See "Certain
Relationships and Related Transactions" in Item 13.
Cautionary Factors That May Affect Future Results
The disclosure and analysis set forth in this report contains certain
forward-looking statements, particularly statements relating to future
actions, performance or results of current and anticipated products, sales
efforts, expenditures, and financial results. From time to time, the
Company also provides forward-looking statements in other publicly-released
materials, both written and oral. Forward-looking statements provide
current expectations or forecasts of future events such as new products,
revenues and financial performance, and are not limited to describing
historical or current facts. They can be identified by their use of words
such as "plans," "expects," "anticipated," "will" and other words and
phrases of similar meaning.
Forward-looking statements are necessarily based on assumptions,
estimates and limited information available at the time they are made. A
broad variety of risks and uncertainties, both known and unknown, as well
as the inaccuracy of assumptions and estimates, can affect the realization
of the expectations or forecasts in these statements. Consequently, no
forward-looking statement can be guaranteed. Actual future results may
vary materially.
The Company undertakes no obligation to update any forward-looking
statements. You should refer to the Company's subsequent filings under the
Securities Exchange Act of 1934 for further disclosures.
As permitted by the Private Securities Litigation Reform Act of 1995,
the Company is providing the following cautionary statements which identify
factors that could cause the Company's actual results to differ
materially from historical and expected results. It is not possible to
foresee or identify all such factors. You should not consider this list an
exhaustive statement of all potential risks, uncertainties and inaccurate
assumptions.
- -- Historical Growth Rate
Continuance of the historical growth rate of the Company depends upon
a number of uncertain events, including the outcome of the Company's
strategies of increasing its penetration into geographical markets such as
Asia, Latin America and Europe; increasing its penetration into product
markets such as the market for paper coating pigments and the market for
groundwood paper pigments; increasing sales to existing PCC customers by
increasing the amount of PCC used in each ton of paper produced; and
developing, introducing and selling new products. Difficulties, delays or
failures of any of these strategies could cause the future growth rate of
the Company to differ materially from its historical growth rate.
<PAGE> 8
- -- Contract Renewals
The Company's sales of PCC are predominantly pursuant to long-term
agreements, generally ten years in length, with paper mills at which the
Company operates satellite PCC plants. The terms of many of these
agreements have been extended, often in connection with an expansion of the
satellite PCC plant. To date, the Company's experience with extensions and
renewals of its satellite PCC agreements has been favorable. There is no
assurance, however, that this will continue to be the case. Failure of a
number of the Company's customers to renew existing agreements could cause
the future growth rate of the Company to differ materially from its
historical growth rate, and could have a substantial adverse effect on the
Company's results of operations.
-- Litigation; Environmental Exposures
The Company's operations are subject to international, federal, state
and local environmental, tax and other laws and regulations, and
potentially to claims for various legal, environmental and tax matters.
The Company is currently a party to various litigation matters, including
the Eaton litigation which has previously been disclosed in the
Management's Discussion and Analysis sections of the Company's most recent
filings under the Securities Exchange Act of 1934. While the Company
carries liability insurance which it believes to be appropriate to its
businesses, and has provided reserves for such matters which it believes to
be adequate, an unanticipated liability arising out of such a litigation
matter or a tax or environmental proceeding could have a material adverse
effect on the Company's financial condition or results of operations.
- -- New Products
The Company is engaged in a continuous effort to develop new products
in all of its product lines. Difficulties, delays or failures in the
development, testing, production, marketing or sale of such new products
could cause its actual results of operations to differ materially from
expected results.
- -- Competition; Protection of Intellectual Property
Particularly in its PCC and Refractory product lines, the Company
competes based in part upon proprietary knowledge, both patented and
unpatented. The Company's ability to achieve anticipated results depends
in part on its ability to defend its intellectual property against
inappropriate disclosure as well as against infringement. In addition,
development by the Company's competitors of new products or technologies
that are more effective or less expensive than those the Company offers
could have a material adverse effect on the Company's financial condition
or results of operations.
- -- Risks of Doing Business Abroad
As the Company expands its operations overseas, it faces the increased
risks of doing business abroad, including inflation, fluctuations in
interest rates and currency exchange rates, nationalization, expropriation,
limits on repatriation of funds, unstable governments and legal systems,
and other factors. Adverse developments in any of these areas could cause
actual results to differ materially from historical and expected results.
- -- Availability of Raw Materials
The Company's ability to achieve anticipated results depends in part
on having an adequate supply of raw materials for its manufacturing
operations, particularly lime and carbon dioxide for PCC operations and
magnesia for refractory operations, and on having adequate access to the
ore reserves at its mining operations. Unanticipated changes in the costs
or availability of such raw materials, or in the Company's ability to have
access to its ore reserves, could adversely affect the Company's results of
operations.
Item 2. Properties
Set forth below is the location of, and customer served by,
each of the Company's satellite PCC plants at December 31, 1997.
Generally, the land on which each satellite PCC plant is located
is leased at a nominal amount by
<PAGE> 9
the Company from the host paper mill pursuant to a lease, the term of which
runs concurrently with the term of the PCC production and sale agreement
between the Company and the host paper mill.
Location Customer
- -------- --------
Alabama, Jackson Boise Cascade Corporation
Alabama, Mobile International Paper Company
Alabama, Selma International Paper Company
Arkansas, Ashdown Georgia-Pacific Corporation
Brazil, Jacarei Votorantim Celulose e Papel
Brazil, Luiz Antonio Votorantim Celulose e Papel
Brazil, Suzano Cia Suzano de Papel e Celulose
California, Anderson Simpson Paper Company
Canada, Cornwall, Ontario Domtar Inc.
Canada, Dryden, Ontario Avenor Inc.
Canada, St. Jerome, Quebec Rolland Paper Inc.
Canada, Windsor, Quebec Domtar Inc.
Finland, Aanekoski(1) Metsa-Serla Group
Finland, Anjalankoski(1) Myllykoski Paper Oy
Finland, Lappeenranta(1)(2) Enzo-Gutzeit Group
Finland, Tervakoski(1) Enzo-Gutzeit Group
France, Saillat Sur Vienne Aussedat Rey (a subsidiary of International
Paper Company)
Indonesia, Perawang(1) PT Indah Kiat Pulp and Paper Corporation
Israel, Hadera American Israeli Paper Mills, Ltd.
Kentucky, Wickliffe Westvaco Corporation
Louisiana, Port Hudson Georgia-Pacific Corporation
Maine, Jay International Paper Company
Mexico, Chihuahua Corporativo Copamex, S.A. de C.V.
Michigan, Plainwell Simpson Plainwell Paper Company
(a division of Simpson Paper Company)
Michigan, Quinnesec Champion International Corporation
Minnesota, Cloquet Potlatch Corporation
Minnesota, International
Falls Boise Cascade Corporation
New York, Oswego International Paper Company
New York, Ticonderoga International Paper Company
North Carolina, Plymouth Weyerhaeuser Company
Ohio, Chillicothe The Mead Corporation
Ohio, West Carrollton Appleton Papers Inc.
Pennsylvania, Erie International Paper Company
Pennsylvania, Lock Haven International Paper Company
Poland, Kwidzyn International Paper Company
Portugal, Figueira da Foz(1) Soporcel - Sociedade Portuguesa de Celulose,
S.A.
Slovakia, Ruzomberok Severoslovenske Cululozky a Papierne s.p.
South Carolina, Eastover Union Camp Corporation
South Africa, Merebank(1) Mondi Paper Company Ltd.
Tennessee, Kingsport Willamette Industries Inc.
Texas, Pasadena Simpson Pasadena Paper Company
(a division of Simpson Paper Company)
Thailand, Tha Toom(1) Advance Agro Public Co. Ltd.
Virginia, Franklin Union Camp Corporation
Washington, Camas James River Corporation
Washington, Longview Weyerhaeuser Company
Washington, Wallula Boise Cascade Corporation
Wisconsin, Kimberly Repap Wisconsin Inc. (a subsidiary of Repap
Enterprises Corp., Inc.)
Wisconsin, Park Falls Cross Pointe Paper Corporation
Wisconsin, Wisconsin Rapids Consolidated Papers, Inc.
(1) These plants are owned through a joint venture.
(2) This PCC plant is not located on-site at the paper mill.
<PAGE> 10
The Company also owned at December 31, 1997 six plants engaged in the
mining, processing and/or production of lime, limestone and talc and
directly or indirectly owns or leases approximately 15 refractory
manufacturing facilities worldwide. The Company's corporate headquarters,
sales offices, research laboratories, plants and other facilities are owned
by the Company except as otherwise noted. Set forth below is certain
information relating to the Company's plants and office and research
facilities.
Location Facility Product Line
-------- -------- ------------
United States
Arizona, Pima County Plant; Quarry (4) Limestone
California, Los Angeles Sales Office (1) PCC, Lime, Limestone,
Talc
California, Lucerne Valley Plant; Quarry Limestone
Connecticut, Canaan Plant; Quarry Limestone, Metallurgical
Wire/Calcium
Indiana, Highland Plant Monolithic Refractories
Massachusetts, Adams Plant; Quarry Limestone, Lime, PCC
Michigan, Gulliver Plant; Quarry (5) Limestone
Montana, Dillon Plant; Quarry Talc
New Jersey, Old Bridge Plant Monolithic Refractories/
Shapes
New York, New York Headquarters (1); All Company Products
Sales Offices (1)
Ohio, Bryan Plant Monolithic Refractories
Ohio, Dover Plant Refractories
Pennsylvania, Bethlehem Research Laboratories; PCC, Lime, Limestone,
Sales Offices Talc, Pyrolytic
Graphite,
Pennsylvania, Easton Research Laboratories; PCC, Lime, Limestone,Talc
Plant Pyrolytic Graphite
Refractories,
Metallurgical Wire
Pennsylvania, Slippery Plant Refractory Shapes
Rock
International
-------------
Australia, Carlingford Sales Office (1) Monolithic Refractories
Belgium, Brussels Sales Office (1) Monolithic Refractories/
PCC
Brazil, Belo Horizonte Sales Office (1) Monolithic Refractories
Brazil, Sao Paulo Sales Office (1) PCC
Brazil, Volta Redonda Sales Office (1) Monolithic Refractories
Canada, Lachine Plant Refractory Shapes
China, Huzhou Plant (2) Monolithic Refractories
Ireland, Cork Plant; Sales Monolithic Refractories/
Office (1) Metallurgical Wire
Italy, Brescia Sales Office; Plant Monolithic Refractories/
Shapes
Japan, Gamagori Plant Monolithic Refractories/
Shapes, Calcium
Japan, Tokyo Sales Office (1) Monolithic Refractories/
Shapes, Calcium, PCC,
Talc
Mexico, Gomez Palacio Plant (1) Monolithic Refractories
Singapore Sales Office (1) PCC
Spain, Santander Sales Office (1) Monolithic Refractories
South Africa,
Pietermaritzburg Plant Monolithic Refractories
South Korea, Yangsan Plant (3) Monolithic Refractories
South Korea, Seoul Sales Office (1) Monolithic Refractories
United Kingdom, Rotherham Plant Monolithic Refractories/
Shapes
(1) Leased by the Company. The facilities in Cork, Ireland are operated
pursuant to a 99-year lease, the term of which commenced in 1963.
The Company's headquarters and sales offices in New York, New York are
held under a lease which expires in 2010.
(2) This plant is leased through a joint venture.
(3) This plant is owned through a joint venture.
(4) This plant is leased to another company.
(5) In March 1998, the Company entered into a Memorandum of Understanding
for the sale of this facility.
<PAGE> 11
The Company believes that its facilities, which are of varying
ages and are of different construction types, have been satisfactorily
maintained, are in good condition, are suitable for the Company's
operations and generally provide sufficient capacity to meet the Company's
production requirements. Based on past loss experience, the Company
believes it is adequately insured in respect of these assets, and for
liabilities which are likely to arise from its operations.
Item 3. Legal Proceedings
The Company and its subsidiary, Specialty Minerals Inc., are
defendants in a lawsuit, captioned Eaton Corporation v. Pfizer Inc,
Minerals Technologies Inc. and Specialty Minerals Inc. which was filed on
July 31, 1996 and is pending in the U.S. District Court for the Western
District of Michigan. The suit alleges that certain materials sold to
Eaton for use in truck transmissions were defective, necessitating repairs
for which Eaton seeks reimbursement. While all litigation contains an
element of uncertainty, the Company and Specialty Minerals Inc. believe
that they have valid defenses to the claims asserted by Eaton in this
lawsuit, are continuing to vigorously defend all such claims, and believe
that the outcome of this matter will not have a material adverse effect on
the Company's consolidated financial position or results of operations.
The Company and its subsidiaries are not party to any other
material pending legal proceedings, other than ordinary routine litigation
incidental to their business.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of 1997.
Executive Officers of the Registrant
Set forth below are the names and ages of all Executive Officers
of the Registrant, indicating all positions and offices with the Registrant
held by each such person, and each such person's principal occupations or
employment during the past five years.
Name Age Position
- ---- --- --------
Jean-Paul Valles 61 Chairman of the Board and Chief Executive
Officer
Paul R. Saueracker 56 Vice President of the Company and President,
Specialty Minerals Inc.
Anton Dulski 56 Vice President of the Company and President,
MINTEQ(R) International Inc.
S. Garrett Gray 59 Vice President, General Counsel and Secretary
John R. Stack 61 Vice President, Finance and Chief Financial
Officer
Howard R. Crabtree 53 Vice President, Organization & Human Resources
William A. Kromberg 52 Vice President, Taxes
Mario J. DiNapoli 62 Controller (to March 31, 1998)
Michael A. Cipolla 40 Controller (as of April 1, 1998)
Stephen E. Hluchan 56 Treasurer
Jean-Paul Valles, Ph.D., has served as Chairman of the Board and a
director of the Company since April 1989. He was elected Chief Executive
Officer in August 1992. Until the completion of the initial public
offering, Dr. Valles served as a Vice-Chairman of Pfizer, a position he had
held since March 1992. At Pfizer, Dr. Valles had been responsible for a
number of Pfizer's businesses, including, since 1989, the operations that
comprise the Company, and had served in a number of other executive
positions, including Executive Vice President from 1991 to 1992. Dr.
Valles continues to serve as a director of Pfizer. In addition, he is a
director of Junior Achievement of New York, Inc. and of The New York
Chapter of the French-American Chamber of Commerce in the U.S., Inc., and a
member of the American Economic Association and the Financial Executives
Institute.
<PAGE> 12
Paul R. Saueracker has served as Vice President of the Company and
President of Specialty Minerals Inc. since February 1994. Prior to that
time, he had been Executive Vice President of Specialty Minerals Inc. since
October 1993. Since 1989, he served as Vice President of Marketing and
Sales of Specialty Minerals Inc. Mr. Saueracker is a former President of
the Pulverized Limestone Division of the National Stone Association and a
member of the Technical Association of the Pulp and Paper Industry and the
Paper Industry Management Association.
Anton Dulski was appointed President of Minteq International Inc.
effective January 1, 1996. Previously, he served as Senior Vice President
of Minteq with responsibility for European operations from 1993 to 1995; as
Vice President of Minteq with responsibility for sales and marketing in
Europe from 1992 to 1993; and as President of Minteq's operations in Japan
from 1984 to 1992.
S. Garrett Gray has served as Vice President and Secretary of the
Company since April 1989. In August 1992, Mr. Gray was appointed General
Counsel of the Company. Prior to August 1992, Mr. Gray served as a member
of the legal staff of Pfizer as Assistant General Counsel, since 1989.
John R. Stack has served as Vice President-Finance and Chief Financial
Officer of the Company since August 1992. Prior to that time, Mr. Stack was
Vice President and Controller of the operations that comprise Specialty
Minerals Inc. and Barretts Minerals Inc. from 1987 to August 1992.
Howard R. Crabtree was appointed Vice President-Organization & Human
Resources of the Company in January 1997, having served as Vice
President-Human
Resources since August 1992. Prior to joining the Company, he held a
number of positions at Pfizer, including: Vice President Personnel,
Medical Devices from January 1992 to August 1992.
William A. Kromberg has served as Vice President-Taxes of the Company
since February 1993. From May 1989 to that time, he was Vice President-
Taxes of Culbro Corporation, a distributor and manufacturer of consumer and
industrial products.
Mario J. DiNapoli has served as Controller of the Company since August
1992. He served as the Director of Finance of the operations that comprise
Specialty Minerals Inc. and Barretts Minerals Inc. from January to August
1992. Mr. DiNapoli will retire from the Company as of April 1, 1998.
Michael A. Cipolla will serve as Controller of the Company effective
April 1, 1998. He has served as Assistant Corporate Controller since
December 1992. Prior to joining the Company, Mr. Cipolla was with KPMG
Peat Marwick LLP from 1983; and served as a Senior Manager from 1987.
Stephen E. Hluchan has served as Treasurer of the Company since August
1992. Prior to that time, Mr. Hluchan held the following positions for the
operations that comprise Minteq: Controller and Vice President, Planning
from January 1992 to August 1992; and Vice President, Strategic Planning
and Business Development, May 1989 to January 1992.
<PAGE> 13
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The Company's common stock is traded on the NYSE under the symbol
"MTX".
Information on market prices and dividends is set forth below:
1997 Quarters First Second Third Fourth
------------- ------ ------ -------- ------
Market Price Range of Common Stock
High 42 7/8 40 7/8 44 15/16 46 1/8
Low 34 32 1/8 36 1/8 39 1/2
Close 34 1/4 37 1/4 44 3/4 45 7/16
Dividends paid per common share $ .025 $. 025 $ .025 $ .025
1996 Quarters First Second Third Fourth
------------- ----- ------ -------- ------
Market Price Range of Common Stock
High 37 3/4 39 3/8 40 41 3/8
Low 30 1/4 33 34 1/8 36 3/8
Close 34 5/8 34 1/4 36 5/8 41
Dividends paid per common share $ .025 $ .025 $ .025 $ .025
On March 3, 1998, the last reported sale price on the NYSE was $50
per share. As of March 3, 1998, there were approximately 296 holders of
record of the common stock.
On January 22, 1998, the Company's Board of Directors declared a
quarterly dividend on its common stock of $.025 per share in respect of the
quarter ended December 31, 1997. Subject to satisfactory financial results
and declaration by the Board, the Company currently intends to pay
quarterly cash dividends on its common stock of at least $.025 per share.
Although the Company believes its historical earnings indicate that this
dividend policy is appropriate, it will be reviewed by the Board from time
to time in light of the Company's financial condition, results of
operations, current and anticipated capital requirements, contractual
restrictions and other factors deemed relevant by the Board. No dividend
will be payable unless declared by the Board and unless funds are legally
available for payment thereof.
On February 26, 1998, the Company's Board of Directors authorized a
$150 million stock repurchase program. The stock will be purchased on the
open market from time to time.
<PAGE> 14
Item 6. Selected Financial Data
Thousands of Dollars, Except
Per Share Data 1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
Income Statement Data:
Net sales $602,335 $555,988 $524,451 $472,637 $428,313
Cost of goods sold 424,612 396,345 375,655 335,327 302,810
Marketing, distribution and
administrative expenses 77,104 72,485 70,464 66,533 63,053
Research and development
expenses 20,391 19,740 19,658 18,187 16,082
------- ------- ------- ------- -------
Income from operations 80,228 67,418 58,674 52,590 46,368
Net income $ 50,312 $ 43,097 $ 39,529 $ 33,346 $ 28,973
======= ======= ======= ======= =======
Earnings per share:
Basic earnings per share $ 2.23 $ 1.91 $ 1.75 $ 1.48 $ 1.25
======= ======= ======= ======= =======
Diluted earnings per share $ 2.18 $ 1.86 $ 1.72 $ 1.46 $ 1.24
======= ======= ======= ======= =======
Weighted average number of
common shares outstanding
Basic 22,558 22,621 22,633 22,603 23,186
Diluted 23,113 23,132 23,001 22,805 23,383
Dividends declared per
common share $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
======= ======= ======= ======= =======
Balance Sheet Data:
Working capital $132,364 $115,540 $ 86,746 $135,844 $112,238
Total assets 741,407 713,861 649,144 588,124 549,160
Long-term debt 101,571 104,900 67,927 83,031 79,030
Total debt 115,560 130,239 95,817 83,031 79,030
Total shareholders' equity $466,997 $448,250 $416,153 $381,098 $343,005
======= ======= ======= ======= =======
<PAGE> 15
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Income and Expense Items As a Percentage of Net Sales
Year Ended December 31, 1997 1996 1995
----- ----- -----
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 70.5 71.3 71.6
Marketing, distribution and administrative
expenses 12.8 13.0 13.4
Research and development expenses 3.4 3.6 3.8
----- ----- -----
Income from operations 13.3 12.1 11.2
Net income 8.4% 7.8% 7.5%
===== ===== =====
Overview of 1997 and Outlook
In 1997, the Company adhered to its strategy of expanding its Precipitated
Calcium Carbonate ("PCC") product line. The Company commenced operations
at five new satellite PCC plants in five different countries (Indonesia,
Slovakia, the United States, Finland and South Africa) and signed
agreements for construction of six new satellite plants --four of which are
now under construction. These satellite PCC plants are located in France,
Germany and the United States, and together have production capacity
equivalent to approximately seven "satellite units." (A satellite unit is
equivalent to annual production capacity of between 25,000 and 35,000 tons
of PCC.) The Company has signed three contracts for the use of its
patented acid-tolerant PCC technology. This will enable the Company to
expand its sales to makers of groundwood paper grades. In addition, the
Company expanded several satellite plants at various locations around the
world. As a result, sales of PCC as a percentage of the Company's total
net sales, which were 37.4% in 1992, had risen to 49.8% by 1997. The
Company expects this trend to continue as sales and volume growth of PCC
continues to outpace such growth in the Processed Minerals and Refractory
product lines.
Presently, the Company operates or has under construction 53 satellite PCC
plants in 14 countries worldwide. The Company is optimistic that volume
growth will continue in 1998. The Company expects additional expansions at
existing satellite PCC plants to occur in 1998 and also expects to sign
contracts for additional satellite PCC plants in the United States and
abroad.
In 1998, the Company plans to continue its focus on the following growth
strategies for the PCC product line:
- -- Continued efforts to increase market penetration in North America,
Europe, Latin America, the Pacific Rim and elsewhere.
- -- Continued expansions of the capacity of existing satellite PCC plants
in response to increased demand, which is resulting from either
increased PCC filler levels in paper or the installation of new paper
machines.
- -- Continued research and development and marketing efforts of acid-
tolerant PCC, coating PCC and other products.
However, there can be no assurance that the Company will achieve success in
implementing any one or more of these strategies.
The Company's sales of PCC are predominantly pursuant to long-term
agreements, generally ten years in length, with paper mills at which the
Company operates satellite PCC plants. The terms of many of these
agreements have been extended, often in connection with an expansion of the
satellite PCC plant. To date, the Company's experience with extensions and
renewals of its satellite PCC agreements has been favorable. There is no
assurance, however, that these contracts will be renewed prior to or at
their respective expiration dates.
The Company will continue to emphasize specialty products in its Refractory
product lines and commercialize products, processes and equipment through
research and development efforts.
As the Company continues to expand its operations overseas, it faces
inherent risks of doing business abroad, including exchange rate
fluctuations, nationalization, expropriation, limits on repatriation of
funds and other factors. In addition, the Company's performance depends to
some extent on that of the industries it serves, particularly the paper,
steel and construction industries.
<PAGE> 16
The recent exchange rate movements and economic problems in Southeast Asia
are an indication of foreign business risks experienced by multinational
corporations. However, the Company's Asian operations are a minor part of
its overall business. In 1997, they represented approximately 7% of total
sales, while Japan and Australia accounted for about 70% of total Asian
sales.
Continued uncertainties in Thailand, Indonesia and South Korea
could have adverse repercussions in other parts of Asia and conceivably in
Europe and North America.
Results of Operations
Net Sales
In Millions 1997 Growth 1996 Growth 1995
------ ------ ------ ------ ------
Net sales $602.3 8.3% $556.0 6.0% $524.5
Worldwide net sales in 1997 increased 8.3% over the previous year to
$602.3 million. Higher volumes in the PCC, Processed Minerals, and
Refractory product lines were responsible for the increase in sales growth.
The stronger U.S. dollar had an unfavorable impact of approximately $11.3
million (or 2 percentage points) on sales growth. In 1996, worldwide net
sales increased 6.0% over the prior year to $556.0 million. This increase
was primarily attributable to growth in the PCC and Processed Minerals
product lines.
Worldwide net sales of PCC in 1997 increased 14.0% to $299.9 million from
$263.1 million in the prior year. This increase was primarily attributable
to the commencement of operations at five new satellite PCC plants, located
in Indonesia, Slovakia, the United States, Finland and South Africa. In
addition, a full year of operations at several satellite PCC plants that
began operating in 1996 and volume increases generated by the Company's
long-standing satellite PCC plants also contributed to the sales growth in
1997. Foreign exchange had an unfavorable impact of approximately $4.3
million on sales growth. PCC sales in 1996 increased 16.1% to $263.1
million from $226.6 million in 1995. This increase was primarily
attributed to the start-up of operations at six new satellite plants that
began operations during 1996 and expansion of production capacity at
several locations.
Net sales of Processed Minerals increased 5.8% to $106.5 million in 1997
and rose 5.6% to $100.7 million in 1996. The sales growth in both years
was primarily attributable to higher volumes.
Net sales of Refractory Products in 1997 increased 1.9% to $195.9 million
from $192.2 million in the prior year. Excluding the impact of foreign
exchange, sales growth was 5.6%. Strategic replacement of commodity
products with specialty products and systems dramatically increased the
profitability of this product line. In 1996, net sales of Refractory
Products decreased 5.1% from the prior year while profitability increased
significantly due to continued emphasis on higher margin specialty
products. The decrease in Refractory product sales was primarily
attributable to volume declines and unfavorable foreign exchange rates.
Net sales in the United States in 1997 increased 8.2% to $414.4 million
from $383.0 million in 1996. This increase was attributable to the growth
in the PCC and Processed Minerals product lines. Foreign sales in 1997
increased 8.7% to $187.9 million, primarily as a result of the continued
international expansion of the Company's PCC product line. In 1996, net
sales in the United States were 6.3% higher than in the prior year due to
growth in the PCC and Processed Minerals product lines. Foreign sales in
1996 were 5.3% higher than in the prior year, primarily due to the
international expansion of the Company's PCC product line.
Operating Costs and Expenses
In Millions 1997 Growth 1996 Growth 1995
----------- ------ ------- ------ ------- ------
Cost of goods sold $424.6 7.1% $396.3 5.5% $375.7
Marketing, distribution
and administrative $ 77.1 6.4% $ 72.5 2.9% $ 70.5
Research and development $ 20.4 3.3% $ 19.7 0.4% $ 19.7
Cost of goods sold was 70.5% of sales. This ratio was lower than the
prior year and was primarily attributable to improved profitability in the
Refractory product line. Cost of goods sold in 1996 was 71.3% of sales
which was slightly lower than the prior year. This was also attributable to
the improved profitability of the Refractory product lines.
Marketing, distribution and administrative costs increased 6.4% to $77.1
million and were 12.8% of sales, a slight reduction from the 1996 ratio.
In 1997, the Company recorded a $1.6 million provision for loss as
guarantor of indebtedness of a company which was the subject of an
involuntary bankruptcy petition under Chapter 7 of the U.S. Bankruptcy
Code. In addition, the Company recognized a gain of approximately $1.4
million related to the sale of property in Japan. Such non-recurring items
are included in marketing, distribution and administrative expenses. In
1996, marketing, distribution and administrative costs increased 2.9% to
$72.5 million and were 13.0% of sales.
<PAGE> 17
Research and development expenses during 1997 increased 3.3% to $20.4
million and represented 3.4% of sales, a slight reduction from the 1996
ratio. This reduction reflects a more efficient use of resources due to the
increasing worldwide infrastructure which allows the Company to support
trials and new plants at a lower cost while continuing its commitment to
research, particularly in the PCC product line. In 1996 and 1995 research
and development spending was $19.7 million.
Income from Operations
In Millions 1997 Growth 1996 Growth 1995
----------- ----- ------ ----- ------ -----
Income from operations $80.2 19.0% $67.4 14.9% $58.7
Income from operations in 1997 increased 19.0% to $80.2 million from
$67.4 million in 1996. This increase was due primarily to solid growth in
the PCC product line and improved profitability in the Refractory product
lines. This profitability occurred because of the successful
implementation of the Company's strategy of introducing high-value,
innovative products. Operating profits were negatively impacted by startup
costs associated with the five new satellite PCC plants and some weakness
in the Processed Minerals product line, specifically in talc products. In
1996, income from operations rose 14.9% to $67.4 million from $58.7 million
in 1995. This growth was achieved through higher sales volumes in the PCC
product line, greater profitability in the Refractory product lines and an
overall decrease in costs and expenses. Operating profits in 1996 were
negatively impacted by the higher cost of magnesia and startup costs
associated with the six new satellite PCC plants.
Non-Operating Deductions
In Millions 1997 Growth 1996 Growth 1995
----------- ------ ------ ------ ------ ------
Non-operating deductions,
net $(8.0) 67.7% $(4.8) 615.5% $(0.7)
Non-operating deductions in 1997 increased due to foreign exchange
losses and higher net interest expense which resulted from a reduction in
capitalized interest costs. These deductions were partially offset by
higher interest income. The reduction in capitalized interest was due to
lower levels of capital spending in the first nine months of 1997. Gross
interest expense decreased 2.6% from the prior year to $8.2 million. The
foreign exchange losses were approximately $1.7 million and occurred
primarily in the joint ventures in Thailand, Indonesia and Korea. Interest
expense increased in 1996 primarily as a result of higher interest costs
associated with additional borrowings. Interest income and other income
were significantly higher in 1995 due to higher levels of cash-on-hand and
foreign exchange gains, respectively.
Provision for Taxes on Income
In Millions 1997 Growth 1996 Growth 1995
----------- ----- ------ ----- ------ -----
Provision for taxes on income $23.1 18.6% $19.5 3.4% $18.9
The effective tax rate was 32.0% in 1997. In 1996, higher depletion
and utilization of foreign tax credits decreased the effective tax rate to
31.1%; down 1.4 percentage points from the effective tax rate in 1995.
Minority Interests
In Millions 1997 Growth 1996 Growth 1995
----------- ----- ------ ----- ------ ------
Minority interests $(1.2) N.A. $ -- N.A. $(0.4)
Although the Company's consolidated joint ventures reflected
profitable income from operations, they reported a net loss in 1997 due
primarily to the aforementioned foreign exchange losses in Thailand,
Indonesia and Korea. In 1996, foreign exchange had a minimal impact on
these joint ventures.
Net Income
In Millions 1997 Growth 1996 Growth 1995
----------- ----- ------ ----- ------ ------
Net income $50.3 16.7% $43.1 9.0% $39.5
Net income increased 16.7% in 1997 to $50.3 million. In 1996, net
income increased 9.0% to $43.1 million.
Liquidity and Capital Resources
The Company's financial position remained strong during 1997. Cash
flows in 1997 were provided principally from operations and were primarily
applied to fund $77.3 million of capital expenditures. In addition, the
Company remitted its required per annum principal payment of $13 million
under the Company's Guarantied Senior Notes due June 11, 2000 and reduced
its short-term debt. The Company also retired $7.3 million of Industrial
Development Bonds due 2009. Cash provided from operating activities was
the primary source of liquidity and amounted to $120.6 million in 1997,
$69.9 million in 1996 and $58.3 million in 1995.
<PAGE> 18
The Variable Fixed Rate Industrial Development Revenue Bonds due April 1,
2012 are tax-exempt 15-year instruments and were issued on April 1, 1997 to
finance the construction of a PCC plant in Jackson, Alabama. The bonds
bear interest at either a variable rate or fixed rate, at the option of the
Company. Interest is payable semi-annually under the fixed rate option and
monthly under the variable rate option. The Company has selected the
variable rate option on these borrowings and the average interest rate was
approximately 4%.
On August 4, 1997, the Company redeemed $1,455,000 of the Variable/Fixed
Rate Industrial Development Revenue Bonds due April 1, 2012. This
represented the unused portion of the original bond issuance proceeds
received on April 1, 1997 to finance the construction of a PCC plant in
Jackson, Alabama.
The Variable/Fixed Rate Industrial Development Revenue Bonds due August 1,
2012 are tax-exempt 15-year instruments that were issued on August 1, 1997
to finance the construction of a PCC plant in North America. The bonds
bear interest at either a variable rate or fixed rate, at the option of the
Company. Interest is payable semi-annually under the fixed rate option and
monthly under the variable rate option. The Company has selected the
variable rate option on these borrowings and the average interest rate was
approximately 4%.
On July 24, 1996, through a private placement, the Company issued $50
million of 7.49% Guaranteed Senior Notes due July 24, 2006. The proceeds
from the sale of the notes were used to refinance a portion of the short-
term commercial bank debt outstanding. No required principal payments are
due until July 24, 2006. Interest on the notes is payable semi-annually.
On February 26, 1998, the Company's Board of Directors authorized a $150
million stock repurchase program. The stock will be purchased on the open
market from time to time.
In March 1998, the Company entered into a Memorandum of Understanding with
another company for the sale of its Limestone Midwest business. Based at
the Port Inland mine in Gulliver, MI, Limestone Midwest is the Company's
only business unit competing for sales of limestone aggregate, a commodity
business. Sales for Limestone Midwest were approximately $20.8 million in
1997. The Company does not expect any significant gain or loss to result
from the sale of these operations.
The Company has also entered into a long-term lease of its Pima County,
Arizona limestone facility with the Georgia Marble Company. Sales for this
facility in 1997 were approximately $1.5 million.
The Company has available approximately $110 million in uncommitted, short-
term bank credit lines, none of which were in use at December 31, 1997.
The 1996 interest rate on the $12.0 million borrowed from these short-term
bank credit lines was 6.93%. The Company anticipates that capital
expenditures for 1998 will be approximately $90 million, principally
related to the construction of satellite PCC plants, expansion projects at
existing satellite PCC plants and other opportunities that meet the
strategic growth objectives of the Company. The Company expects to meet
its long-term financing requirements from internally generated funds, the
aforementioned uncommitted bank credit lines and, where appropriate,
project financing of certain satellite plants.
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 a company's future prospects and make informed investment
decisions. This annual report contains such forward-looking statements
that set out anticipated results based on management's plans and
assumptions. Words such as "anticipate," "estimate," "expects,"
"projects," and words and terms of similar substance used in connection
with any discussion of future operating or financial performance identify
these forward-looking statements.
<PAGE> 19
The Company cannot guarantee that any forward-looking statement will be
realized, although it believes it has been prudent in its plans and
assumptions. Achievement of future results are 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. Discussion of certain risks,
uncertainties and assumptions follow and are discussed under the heading
entitled "Cautionary Factors That May Affect Future Results" in Item 1.
Inflation
Historically, inflation has not had a material adverse impact on the
Company. The contracts pursuant to which the Company constructs and
operates its satellite PCC plants generally adjust pricing to reflect
increases in costs resulting from inflation.
Recently Issued Accounting Standards
In the fourth quarter of 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," which established standards for computing and presenting earnings
per share (EPS). The Statement simplifies the standards for computing EPS,
replaces the presentation of primary EPS with a presentation of basic EPS
and requires dual presentation of basic and diluted EPS on the face of the
income statement. This Statement required restatement of all prior-period
EPS data presented and did not have a material impact on previously
reported EPS data.
In 1998, the Company will adopt SFAS No. 130, "Reporting Comprehensive
Income," and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The Company does not expect adoption of these
standards to have a material impact on its Consolidated Financial
Statements.
Year 2000 Conversion
Management has initiated an enterprise-wide program to improve the
capability of the current information systems and to prepare the Company's
computer systems and applications for the year 2000. The Company is
presently in the midst of installing systems which are year 2000-compliant
and will replace the majority of the legacy information technology systems
and applications. It is anticipated that such systems will be installed by
the middle of 1999. The Company does not expect the total cost of the year
2000 conversion to have a material adverse effect on the Company's future
results of operations and financial condition.
Item 8. Financial Statements and Supplementary Data
The financial information required by Item 8 is contained in Item
14 of Part IV of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information concerning the Company's Board of Directors
required by this Item is incorporated herein by reference to the Company's
Proxy Statement.
The information concerning the Company's Executive Officers required
by this Item is incorporated herein by reference to the Section in Part I
under the caption "Executive Officers of the Registrant."
The information regarding compliance with Section 16(a) of the
Securities Exchange Act of 1934 required by this Item is incorporated
herein by reference to the Company's Proxy Statement.
Item 11. Executive Compensation
The information appearing in the Company's Proxy Statement under
the caption "Compensation of Executive Officers," excluding the information
under the captions "Performance Graph" and "Report of the Compensation and
Nominating Committee on Executive Compensation," is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information appearing under the caption "Security Ownership of
Certain Beneficial Owners and Management as of January 30, 1998" set forth
in the Company's Proxy Statement is incorporated herein by reference.
<PAGE> 20
Item 13. Certain Relationships and Related Transactions
The information appearing under the caption "Certain Relationships
and Related Transactions" set forth in the Company's Proxy Statement is
incorporated herein by reference.
Under the terms of certain agreements entered into in connection
with the reorganization, Pfizer and its wholly-owned subsidiary Quigley
Company, Inc. ("Quigley") agreed to indemnify the Company against certain
liabilities being retained by Pfizer and its subsidiaries including, but
not limited to, pending lawsuits and claims, and any lawsuits or claims
brought at any time in the future alleging damages or injury from the use,
handling of or exposure to any product sold by Pfizer's specialty minerals
business prior to the closing of the initial public offering.
Pfizer and Quigley also agreed to indemnify the Company against
any liability arising from on-site remedial waste site claims and for other
claims that may be made in the future with respect to waste disposed of
prior to the closing of the initial public offering. Further, Pfizer and
Quigley agreed to indemnify the Company for 50% of the liabilities in
excess of $1 million up to $10 million that may arise or accrue within ten
years after the closing of the initial public offering with respect to
remediation of on-site conditions existing at the time of the closing of
the initial public offering. The Company will be responsible for the first
$1 million of such liabilities, 50% of all such liabilities in excess of $1
million up to $10 million, and all such liabilities in excess of $10
million. Further, Pfizer and Quigley agreed to indemnify the Company for
non-remedial environmental claims resulting from activities or conditions
occurring or existing prior to the closing of the initial public offering
that are in excess of $10,000 and that are received within two years after
the closing of the initial public offering, exclusive of compliance costs
and consequential damages.
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
(a) The following documents are filed as part of this Report:
1. Financial Statements. The following Consolidated Financial
Statements of Minerals Technologies Inc. and Independent Auditors'
Report are set forth on pages F-1 to F-18.
Consolidated Balance Sheet as of December 31, 1997 and 1996
Consolidated Statement of Income for the years ended December
31, 1997, 1996 and 1995
Consolidated Statement of Cash Flows for the years ended
December 31, 1997, 1996 and 1995
Consolidated Statement of Shareholders' Equity for the years
ended December 31, 1997, 1996 and 1995
Notes to the Consolidated Financial Statements
Independent Auditors' Report
2. Financial Statement Schedule. The following financial statement
schedule is filed as part of this Report:
Page
----
Schedule II - Valuation and Qualifying Account S - 1
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore,
have been omitted.
3. Exhibits. The following exhibits are filed as part of or
incorporated by reference into this Report.
3.1 - Restated Certificate of Incorporation of the Company
3.2 - Restated By-Laws of the Company (1)
3.3 - Certificate of Designations authorizing issuance and
establishing designations, preferences and rights of Series A
Junior Preferred Stock of the Company
4.1 - Specimen Certificate of Common Stock
10.1 - Asset Purchase Agreement, dated as of September 28, 1992, by
and between Specialty Refractories Inc. and Quigley Company
Inc. (1)
<PAGE> 21
10.1(a) - Agreement dated October 22, 1992 between Specialty
Refractories Inc. and Quigley Company Inc., amending Exhibit
10.1 (2)
10.1(b) - Letter Agreement dated October 29, 1992 between Specialty
Refractories Inc. and Quigley Company Inc., amending Exhibit
10.1 (2)
10.2 - Reorganization Agreement, dated as of September 28, 1992, by
and between the Company and Pfizer Inc (1)
10.2(a) - Letter Agreement dated October 29, 1992 between the Company
and Pfizer Inc, amending Exhibit 10.2 (2)
10.3 - Asset Contribution Agreement, dated as of September 28, 1992,
by and between Pfizer Inc and Specialty Minerals Inc. (1)
10.4 - Asset Contribution Agreement, dated as of September 28, 1992,
by and between Pfizer Inc and Barretts Minerals Inc. (1)
10.4(a) - Agreement dated October 22, 1992 between Pfizer Inc, Barretts
Minerals Inc. and Specialty Minerals Inc., amending Exhibits
10.3 and 10.4 (2)
10.5 - Form of Employment Agreement, together with schedule
relating to executed Employment Agreements
10.6 - Form of Severance Agreement, together with schedule relating
to executed Severance Agreements (3)
10.7 - Company Employee Protection Plan, as amended August 25,
1994(3)
10.8 - Company Nonfunded Deferred Compensation and Unit Award Plan
for Non-Employee Directors, as amended January 25, 1996 (4)
10.9 - Company Stock and Incentive Plan, as amended and restated as
of May 25, 1995 (5)
10.10 - Company Retirement Annuity Plan, as amended May 25, 1995 (4)
10.11 - Company Nonfunded Supplemental Retirement Plan, as amended
October 27, 1994 (6)
10.12 - Company Savings and Investment Plan, as amended December 19,
1994 (7)
10.13 - Company Nonfunded Deferred Compensation and Supplemental
Savings Plan, as amended October 27, 1994 (6)
10.14 - Rights Agreement, dated as of October 26, 1992, by and between
the Company and Chemical Bank, as Rights Agent
10.15 - Grantor Trust Agreement, dated as of December 29, 1994,
between the Company and The Bank of New York, as Trustee (6)
10.16 - Note Purchase Agreement, dated as of June 28, 1993, between
the Company and Metropolitan Life Insurance Company with
respect to the Company's issuance of $65,000,000 in aggregate
principal amount of its 6.04% Guarantied Senior Notes
Due June 11, 2000; together with a schedule regarding other
contracts substantially identical in all material respects to
the foregoing (8)
10.17 - Note Purchase Agreement, dated as of July 24, 1996, between
the Company and Metropolitan Life Insurance Company with
respect to the Company's issuance of $50,000,000 in aggregate
principal amount of its 7.49% Guaranteed Senior Notes due
July 24, 2006 (9)
10.18 - Indenture, dated July 22, 1963, between the Cork Harbour
Commissioners and Roofchrome Limited (1)
10.19 - Agreement of Lease, dated as of May 24, 1993, between the
Company and Cooke Properties Inc (8)
21.1 - Subsidiaries of the Company
23.1 - Report and Consent of Independent Auditors
27 - Financial Data Schedule
(1) Incorporated by reference to the exhibit so designated filed with the
Company's Registration Statement on Form S-1 (Registration No. 33-
51292), originally filed on August 25, 1992.
(2) Incorporated by reference to the exhibit so designated filed with the
Company's Registration Statement on Form S-1 (Registration No. 33-
59510), originally filed on March 15, 1993.
(3) Incorporated by reference to the exhibit so designated filed with the
Company's Annual Report on Form 10-K for the year ended December 31,
1996.
(4) Incorporated by reference to the exhibit so designated filed with the
Company's Annual Report on Form 10-K for the year ended December 31,
1995.
(5) Incorporated by reference to the exhibit so designated filed with the
Company's Registration Statement on Form S-8 (Registration No.
33-96558), originally filed September 1, 1995.
(6) Incorporated by reference to the exhibit so designated filed with the
Company's Annual Report on Form 10-K for the year ended December 31,
1994.
<PAGE> 22
(7) Incorporated by reference to the exhibit so designated filed with the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 29, 1997.
(8) Incorporated by reference to the exhibit so designated filed with the
Company's Quarterly Report on Form 10-Q for the quarter ended July 4,
1993.
(9) Incorporated by reference to the exhibit so designated filed with the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during the
fourth quarter of 1997.
<PAGE> 23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: Jean-Paul Valles
--------------------------------
Jean-Paul Valles
Chairman of the Board
and Chief Executive Officer
March 16, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/Jean-Paul Valles
- --------------------
Jean-Paul Valles Chairman of the Board and Chief March 16, 1998
Executive Officer (principal
executive officer) and Director
/s/John R. Stack
- --------------------
John R. Stack Vice President-Finance and Chief March 16, 1998
Financial Officer (principal
financial officer)
/s/Mario J. DiNapoli
- --------------------
Mario J. DiNapoli Controller and Chief Accounting March 16, 1998
Officer (principal accounting
officer)
<PAGE> 24
SIGNATURE TITLE DATE
- --------- ----- ----
/s/John B. Curcio
- ------------------
John B. Curcio Director March 16, 1998
/s/Steven J. Golub
- -------------------
Steven J. Golub Director March 16, 1998
/s/William L. Lurie
- -------------------
William L. Lurie Director March 16, 1998
/s/Paul M. Meister
- -------------------
Paul M. Meister Director March 16, 1998
/s/Michael F. Pasquale
- ----------------------
Michael F. Pasquale Director March 16, 1998
/s/William C. Steere, Jr.
- -------------------------
William C. Steere, Jr. Director March 16, 1998
<PAGE> 25
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Audited Financial Statements:
Consolidated Balance Sheet as of December 31, 1997 and 1996 F-2
Consolidated Statement of Income for the years ended
December 31, 1997, 1996 and 1995 F-3
Consolidated Statement of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 F-4
Consolidated Statement of Shareholders' Equity for the years
ended December 31, 1997, 1996 and 1995 F-5
Notes to Consolidated Financial Statements F-6
Independent Auditor's Report F-18
<PAGE> F-1
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(thousands of dollars)
December 31,
------------
1997 1996
---- ----
Assets
Current assets:
Cash and cash equivalents $41,525 $15,446
Accounts receivable, less allowance for
doubtful accounts: 1997--$3,266; 1996--$2,497 108,146 102,494
Inventories 61,166 70,438
Other current assets 15,745 13,902
Total current assets 226,582 202,280
Property, plant and equipment,
less accumulated depreciation and depletion 500,731 501,067
Other assets and deferred charges 14,094 10,514
------- -------
Total assets $741,407 $713,861
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $ 501 $ 12,339
Current maturities of long-term debt 13,488 13,000
Accounts payable 33,163 29,223
Income taxes payable 11,101 6,609
Accrued compensation and related items 15,923 12,673
Other current liabilities 20,042 12,896
Total current liabilities 94,218 86,740
Long-term debt 101,571 104,900
Accrued postretirement benefits 19,746 20,047
Deferred taxes on income 44,664 39,238
Other noncurrent liabilities 14,211 14,686
Total liabilities 274,410 265,611
------- -------
Commitments and contingent liabilities
Shareholders' equity:
Preferred stock, without par value;
1,000,000 shares authorized; none issued -- --
Common stock at par, $0.10 par value;
100,000,000 shares authorized;
issued 25,370,402 shares in 1997 and
25,259,876 shares in 1996 2,537 2,526
Additional paid-in capital 139,113 135,676
Retained earnings 412,264 364,210
Currency translation adjustment (13,456) 11,560
Minimum pension liability adjustment (1,001) --
Unrealized holding gains 113 163
------- -------
539,570 514,135
Less common stock held in treasury, at cost;
2,830,017 shares in 1997 and 2,660,017 shares
in 1996 72,573 65,885
------- -------
Total shareholders' equity 466,997 448,250
------- -------
Total liabilities and shareholders' equity $741,407 $713,861
======= =======
See Notes to Consolidated Financial Statements which are an integral part
of these statements.
<PAGE> F-2
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(thousands of dollars, except per share data)
Year Ended December 31,
-----------------------------
1997 1996 1995
-------- -------- --------
Net sales $602,335 $555,988 $524,451
Operating costs and expenses:
Cost of goods sold 424,612 396,345 375,655
Marketing, distribution and administrative
expenses 77,104 72,485 70,464
Research and development expenses 20,391 19,740 19,658
------- ------- -------
Income from operations 80,228 67,418 58,674
Interest income 1,765 966 1,984
Interest expense (7,208) (5,899) (3,467)
Other income (deductions) (2,597) 139 813
------- ------- -------
Non-operating deductions, net (8,040) (4,794) (670)
------- ------- -------
Income before provision for taxes on
income and minority interests 72,188 62,624 58,004
Provision for taxes on income 23,104 19,488 18,850
Minority interests (1,228) 39 (375)
------- ------- -------
Net income $ 50,312 $ 43,097 $ 39,529
======= ======= =======
Basic earnings per share $ 2.23 $ 1.91 $ 1.75
======= ======= =======
Diluted earnings per share $ 2.18 $ 1.86 $ 1.72
======= ======= =======
See Notes to Consolidated Financial Statements which are an integral part
of these statements.
<PAGE> F-3
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(thousands of dollars)
Year Ended December 31,
---------------------------
1997 1996 1995
------- ------- -------
Operating Activities
Net income $50,312 $43,097 $39,529
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 52,936 46,183 40,330
Loss on disposal of property, plant and
equipment 947 786 243
Deferred income taxes 3,689 3,361 5,925
Other (681) (1,500) (1,818)
Changes in operating assets and liabilities:
Accounts receivable (11,195) (4,699) (9,406)
Inventories 7,512 (6,977) (20,505)
Other current assets (1,802) (7,672) (2,807)
Accounts payable and accrued liabilities 14,506 (2,744) 2,591
Income taxes payable 4,564 (269) 3,182
Other (174) 382 999
------- ------ ------
Net cash provided by operating activities 120,614 69,948 58,263
------- ------ ------
Investing Activities
Purchases of property, plant and equipment (77,331) (97,308) (115,051)
Proceeds from disposal of property, plant and
equipment 3,916 1,073 1,003
------ ------ -------
Net cash used in investing activities (73,415) (96,235) (114,048)
------ ------ -------
Financing Activities
Proceeds from issuance of short-term and
long-term debt 20,089 111,659 14,890
Repayment of short-term and long-term debt (34,679) (77,237) (2,100)
Purchase of common shares for treasury (6,688) (5,885) --
Cash dividends paid (2,258) (2,262) (2,264)
Proceeds from issuance of stock under stock
option plan 2,436 2,466 711
Equity and debt proceeds from minority
interests 3,214 2,500 816
------ ------ ------
Net cash (used in) provided by financing
activities (17,886) 31,241 12,053
------ ------ ------
Effect of exchange rate changes on cash
and cash equivalents (3,234) (826) (1,190)
------ ------ ------
Net increase (decrease) in cash and cash
equivalents 26,079 4,128 (44,922)
Cash and cash equivalents at beginning of year 15,446 11,318 56,240
------ ------ ------
Cash and cash equivalents at end of year $41,525 $15,446 $11,318
====== ====== ======
See Notes to Consolidated Financial Statements which are an integral part
of these statements.
<PAGE> F-4
[CAPTION]
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)
Additional Currency
Common Stock Paid-in Retained Translation
Shares Par Value Capital Earnings Adjustment
------ ---------- ------- -------- -----------
Balance as of
January 1, 1995 25,110 $2,511 $132,134 $286,110 $ 20,222
Net income -- -- -- 39,529 --
Dividends declared -- -- -- (2,264) --
Employee benefit
transactions 43 4 1,087 -- --
Currency translation
adjustment -- -- -- -- (3,291)
Unrealized holding
losses, net -- -- -- -- --
------ ----- ------- ------- ------
Balance as of
December 31, 1995 25,153 2,515 133,221 323,375 16,931
Net income -- -- -- 43,097 --
Dividends declared -- -- -- (2,262) --
Employee benefit
transactions 107 11 2,455 -- --
Currency translation
adjustment -- -- -- -- (5,371)
Purchase of common
stock -- -- -- -- --
Unrealized holding
gains, net -- -- -- -- --
------ ------ ------- ------- ------
Balance as of
December 31, 1996 25,260 2,526 135,676 364,210 11,560
Net income -- -- -- 50,312 --
Dividends declared -- -- -- (2,258) --
Employee benefit
transactions 110 11 2,837 -- --
Income tax benefit
arising from
employee stock
option plans -- -- 600 -- --
Currency translation
adjustment -- -- -- -- (25,016)
Minimum pension
liability adjustment -- -- -- -- --
Purchase of common
stock -- -- -- -- --
Unrealized holding
losses, net -- -- -- -- --
------ ------ -------- -------- --------
Balance as of
December 31, 1997 25,370 $2,537 $139,113 $412,264 $(13,456)
====== ====== ======== ======== ========
See Notes to Consolidated Financial Statements which are an integral part
of these statements.
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands)(Continued)
Minimum Unreal-
Pension ized
Liability Holding Treasury Stock
Adjustment Gains Shares Cost Total
---------- ------- ------ -------- --------
Balance as of
January 1, 1995 $ -- $121 (2,500) $(60,000) $381,098
Net income -- -- -- -- 39,529
Dividends declared -- -- -- -- (2,264)
Employee benefit
transactions -- -- -- -- 1,091
Currency translation
adjustment -- -- -- -- (3,291)
Unrealized holding
losses, net -- (10) -- -- (10)
----- ----- ------ ------ -------
Balance as of
December 31, 1995 -- 111 (2,500) (60,000) 416,153
Net income -- -- -- -- 43,097
Dividends declared -- -- -- -- (2,262)
Employee benefit
transactions -- -- -- -- 2,466
Currency translation
adjustment -- -- -- -- (5,371)
Purchase of common
stock -- -- (160) (5,885) (5,885)
Unrealized holding
gains, net -- 52 -- -- 52
----- ----- ------ ------ ------
Balance as of
December 31, 1996 -- 163 (2,660) (65,885) 448,250
Net income -- -- -- -- 50,312
Dividends declared -- -- -- -- (2,258)
Employee benefit
transactions -- -- -- -- 2,848
Income tax benefit
arising from
employee stock
option plans -- -- -- -- 600
Currency translation
adjustment -- -- -- -- (25,016)
Minimum pension
liability adjustment (1,001) -- -- -- (1,001)
Purchase of common
stock -- -- (170) (6,688) (6,688)
Unrealized holding
losses, net -- (50) -- -- (50)
------- ---- ------ -------- --------
Balance as of
December 31, 1997 $(1,001) $113 (2,830) $(72,573) $466,997
======= ==== ====== ======== ========
See Notes to Consolidated Financial Statements which are an integral part
of these statements.
<PAGE> F-5
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Minerals Technologies Inc. (the "Company") and its wholly and majority
owned subsidiaries. All intercompany balances and transactions have been
eliminated in consolidation.
Use of Estimates
The Company employs accounting policies that are in accordance with
generally accepted accounting principles in the United States and require
management to make estimates and assumptions relating to the reporting of
assets and liabilities and the disclosure of contingent liabilities at the
date of the financial statements. Actual results could differ from those
estimates.
Business
The Company is a resource - and technology-based company that develops,
produces and markets on a worldwide basis a broad range of specialty
mineral, mineral-based and synthetic mineral products. The Company's
products are used in manufacturing processes of the paper and steel
industries, as well as by the building materials, polymers, ceramics,
paints and coatings, glass and other manufacturing industries.
Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less at the date of purchase to be cash equivalents. Cash
equivalents amounted to $8.6 million and $6.0 million at December 31, 1997
and 1996, respectively.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
by the first-in, first-out (FIFO) method.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Significant
improvements are capitalized. In general, the straight line method of
depreciation is used for financial reporting purposes and accelerated
methods are used for U.S. and certain foreign tax reporting purposes. The
annual rates of depreciation are 4%-5% for buildings, 8%-12% for machinery
and equipment and 8%-12% for furniture and fixtures.
Depletion of the mineral and quarry properties is provided on a
unit-of-extraction basis as the related materials are mined for financial
reporting purposes and on a percentage depletion basis for tax purposes.
Mining costs associated with waste gravel and rock removal in excess of the
expected average life of mine stripping ratio are deferred. These costs
are charged to production on a unit-of-production basis when the ratio of
waste to ore mined is less than the average life of mine stripping ratio.
Foreign Currency
The assets and liabilities of most of the Company's international
subsidiaries are translated into U.S. dollars using current exchange rates
at the respective balance sheet date. The resulting translation
adjustments are recorded in the currency translation adjustment account in
shareholders' equity. Income statement items are generally translated at
average exchange rates prevailing during the period. Other foreign
currency gains and losses are included in net income.
International subsidiaries operating in highly inflationary economies
translate nonmonetary assets at historical rates, while net monetary assets
are translated at current rates, with the resulting translation adjustments
included in net income.
Income Taxes
Income taxes are provided for based on the asset and liability method
of accounting pursuant to Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109, deferred
tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates in effect for the year in which those temporary differences are
expected to be recovered or settled. Under SFAS 109, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
<PAGE> F-6
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying financial statements generally do not include a provision
for U.S. income taxes on international subsidiaries' unremitted earnings
which, for the most part, are expected to be reinvested overseas.
Stock-Based Compensation
The Company has adopted Statement of Financial Accounting Standards
No. 123, "Accounting for Stock Based Compensation" ("SFAS 123"), which
requires expanded disclosures of stock-based compensation arrangements with
employees. SFAS No. 123 establishes an alternative method of accounting
for stock-based compensation awarded to employees which provides for the
recognition of compensation cost to be measured based on the fair value of
the equity instrument awarded. The Company, however, has elected to
continue to recognize compensation cost based on the intrinsic value of the
equity instrument awarded as promulgated in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees." The Company
has disclosed below under "Capital Stock -- Stock and Incentive Plan" the
pro forma effect of the fair value method on net income and earnings per
share.
Postretirement Benefits
The Company accrues the cost of postretirement benefits during the
employee's active working career as required by Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits other than Pensions" ("SFAS 106").
Earnings Per Share
The Company has adopted Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings per Share," which established standards for
computing and presenting earnings per share (EPS). The statement
simplifies the standards for computing EPS, replaces the presentation of
primary EPS with a presentation of basic EPS and requires a dual
presentation of basic and diluted EPS on the face of the income statement.
Basic EPS are based upon the weighted average number of common shares
outstanding during the period.
Diluted EPS 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.
Income Taxes
Income before provision for taxes, by domestic and foreign source is
as follows:
Thousands of Dollars 1997 1996 1995
------- ------- -------
Domestic $48,746 $47,410 $42,799
Foreign 23,442 15,214 $15,205
------- ------- -------
Total income before provision
for income taxes $72,188 $62,624 $58,004
======= ======= =======
The provision for taxes on income consists of the following:
Thousands of Dollars 1997 1996 1995
------- ------- -------
Domestic
Taxes currently payable
Federal $7,862 $7,845 $6,455
State and local 2,938 3,593 2,044
Deferred income taxes 4,634 3,291 5,746
Domestic tax provision 15,434 14,729 14,245
Foreign
Taxes currently payable 8,615 4,689 4,426
Deferred income taxes (945) 70 179
------- ------- -------
Foreign tax provision 7,670 4,759 4,605
Total tax provision $23,104 $19,488 $18,850
======= ======= =======
The provision for taxes on income shown in the previous table is classified
based on the location of the taxing authority, regardless of the location
in which the taxable income is generated.
<PAGE> F-7
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The major elements contributing to the difference between the U.S. federal
statutory tax rate and the consolidated effective tax rate are as follows:
Percentages 1997 1996 1995
---- ----- -----
U.S. statutory tax rate 35.0% 35.0% 35.0%
Depletion (3.7) (5.5) ( 4.7)
Difference between tax provided on
foreign earnings and the U.S.
statutory rate (0.8) (0.9) (1.2)
State and local taxes 2.9 3.9 3.5
Tax credits (0.8) (2.4) ( 0.3)
Other (0.6) 1.0 0.2
---- ---- ----
Consolidated effective tax rate 32.0% 31.1% 32.5%
==== ==== ====
The Company believes that its accrued liabilities are sufficient to cover
its U.S. and foreign tax contingencies. The tax effects of temporary
differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities are presented below:
Thousands of Dollars 1997 1996
---- ----
Deferred tax assets:
Pension and postretirement benefits cost reported
for financial statement purposes in excess of
amounts deductible for tax purposes $7,196 $8,775
State and local taxes 2,789 2,650
Accrued expenses 3,121 2,684
Alternative minimum tax 3,686 8,324
Other 2,060 1,818
------ ------
Total deferred tax assets 18,852 24,251
------ ------
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation 61,093 61,353
Other 2,423 2,136
------ ------
Total deferred tax liabilities 63,516 63,489
------ ------
Net deferred tax liability $44,664 $39,238
====== ======
A valuation allowance for deferred tax assets has not been recorded since
management believes it is more likely than not that the existing net
deductible temporary differences will reverse during periods in which the
Company generates net taxable income.
Net cash paid for income taxes was $14.2 million, $15.4 million and $11.0
million for the years ended December 31, 1997, 1996 and 1995, respectively.
Foreign Operations
The Company has not provided for U.S. federal and foreign withholding
taxes on $57.0 million of foreign subsidiaries' undistributed earnings as
of December 31, 1997 because such earnings, for the most part, are intended
to be reinvested overseas. To the extent the parent company has received
foreign earnings as dividends, the foreign taxes paid on those earnings
have generated tax credits which have substantially offset related U.S.
income taxes. On repatriation, certain foreign countries impose
withholding taxes. The amount of withholding tax that would be payable on
remittance of the entire amount of undistributed earnings would approximate
$1.7 million.
Net foreign currency exchange gains (losses), included in other income
(deductions) in the Consolidated Statement of Income, were $(1,721,000),
$296,000 and $1,620,000 for the years ended December 31, 1997, 1996 and
1995, respectively.
<PAGE> F-8
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in the currency translation adjustment included in the
shareholders' equity section of the Consolidated Balance Sheet are as
follows:
Thousands of Dollars 1997 1996
-------- -------
Currency translation adjustment, January 1 $ 11,560 $16,931
Translation adjustments and hedges (25,016) (5,371)
------- ------
Currency translation adjustment, December 31 $(13,456) $11,560
======= ======
Inventories
The following is a summary of inventories by major category:
Thousands of Dollars 1997 1996
------- -------
Raw materials $19,605 $23,585
Work in process 5,858 8,513
Finished goods 19,812 20,670
Packaging and supplies 15,891 17,670
------- -------
Total inventories $61,166 $70,438
======= =======
Property, Plant and Equipment
The major categories of property, plant and equipment and accumulated
depreciation and depletion are presented below:
Thousands of Dollars 1997 1996
------- -------
Land $22,697 $22,503
Quarries/mining properties 24,148 23,143
Buildings 107,865 107,578
Machinery and equipment 598,190 569,066
Construction in progress 47,594 43,429
Furniture and fixtures and other 49,775 47,163
------- -------
850,269 812,882
Less: Accumulated depreciation and depletion 349,538 311,815
------- -------
$500,731 $501,067
======= =======
Financial Instruments and Concentrations of Credit Risk
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:
Cash and cash equivalents, accounts receivable and payable, and accrued
liabilities:
The carrying amounts approximate fair value because of the short maturity
of these instruments.
Available-for-sale securities:
The available-for-sale securities are presented in accordance with SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities."
The fair values are based on quoted market prices and are as follows:
1997 1996
------------------------ ------------------------
Thousands Market Gross Unrealized Market Gross Unrealized
of Dollars Value Holding Gains Value Holding Gains
- ---------- ------ ---------------- ------ ----------------
Common Stock $424 $230 $558 $340
1995
------------------------
Thousands Market Gross Unrealized
of Dollars Value Holding Gains
- ---------- ------ ----------------
Common Stock $427 $231
The unrealized holding gains, net of taxes, were $113,000, $163,000 and
$111,000, respectively, at December 31, 1997, 1996 and 1995 and are
included as a separate component of shareholders' equity.
<PAGE> F-9
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Short-term debt and other liabilities:
The carrying amounts of short-term debt and other liabilities approximate
fair value because of the short maturity of these instruments.
Long-term debt:
The fair value of the long-term debt of the Company is estimated based on
the quoted market prices for that debt or similar debt which approximates
the carrying amount.
Forward exchange contracts:
The fair value of forward exchange contracts (used for hedging purposes) is
estimated by obtaining quotes from brokers.
The Company enters into forward exchange contracts to hedge foreign
currency transactions on a continuing basis for periods consistent with its
committed exposures. It does not engage in speculation. The effect of this
practice is to delay on a rolling basis the impact of foreign exchange rate
movements on the Company's operating results. The Company's foreign
exchange contracts do not subject the Company to risk from exchange rate
movements because gains and losses on these contracts offset losses and
gains on the assets, liabilities and transactions being hedged. There were
no open forward exchange contracts outstanding at December 31, 1997. At
December 31, 1996, the Company had open forward exchange contracts to sell
$1.1 million of foreign currencies. The difference between these contract
values and the fair value of these instruments was not significant at
December 31, 1996.
Credit risk:
Substantially all of the Company's accounts receivable are due from
companies in the paper, construction and steel industries. Credit risk
results from the possibility that a loss may occur from the failure of
another party to perform according to the terms of the contract. The
Company regularly monitors the credit risk exposures and takes steps to
mitigate the likelihood of these exposures resulting in actual loss.
The Company's extension of credit is based on an evaluation of the
customer's financial condition and collateral is not required. Credit
losses are provided for in the financial statements and consistently have
been within management's expectations.
Long-Term Debt and Commitments
The following is a summary of long-term debt:
Thousands of Dollars 1997 1996
---- ----
7.70% Industrial Development Revenue Bond Series
1990 Due 2009 $ -- $ 7,300
7.75% Economic Development Revenue Bonds Series
1990 Due 2010 (secured) 4,600 4,600
Variable/Fixed Rate Industrial Development Revenue
Bonds Due 2009 4,000 4,000
Variable/Fixed Rate Industrial Development Revenue
Bonds Due April 1, 2012 7,545 --
Variable/Fixed Rate Industrial Development Revenue
Bonds Due August 1, 2012 8,000 --
6.04% Guarantied Senior Notes Due June 11, 2000 39,000 52,000
7.49% Guaranteed Senior Notes Due July 24, 2006 50,000 50,000
Other borrowings 1,914 --
------- -------
115,059 117,900
Less: Current maturities 13,488 13,000
------- -------
Long-term debt $101,571 $104,900
======= =======
The 7.70% Industrial Development Revenue Bond Due 2009 was a tax exempt,
19-year instrument issued to finance a PCC plant in Mobile, Alabama. The
bond was dated August 1, 1990 with a mandatory put by the purchaser on
August 1, 2002 and an optional put by the purchaser following a downgrade
in the rating of the bond below "A". The bond was subject to redemption in
whole or in part by the Development Board on or after August 1, 1997 at
varying prices. On July 31, 1997, the company retired this bond.
The 7.75% Economic Development Revenue Bonds Due 2010 are tax-exempt,
20-year instruments issued to finance a PCC plant in Eastover, South
Carolina.
The bonds are dated September 1, 1990 with a mandatory put on September 1,
2000 and an optional put by the purchaser following a downgrade in the
rating of the bonds below ``A''. Pfizer is a guarantor on these bonds.
<PAGE> F-10
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Variable/Fixed Rate Industrial Development Revenue Bonds Due 2009 are
tax-exempt 15-year instruments issued to finance the expansion of a PCC
plant in Selma, Alabama. The bonds are dated November 1, 1994, and provide
for an optional put by the holder (during the Variable Rate Period) and a
mandatory call by the issuer. The bonds bear interest at either a
variable rate or fixed rate, at the option of the Company. Interest is
payable semi-annually under the fixed rate option and monthly under the
variable rate option. The Company has selected the variable rate option
on these borrowings and the average interest rate was approximately 4%.
The Variable Fixed Rate Industrial Development Revenue Bonds due April 1,
2012 are tax-exempt 15-year instruments and were issued on April 1, 1997 to
finance the construction of a PCC plant in Jackson, Alabama. The bonds
bear interest at either a variable rate or fixed rate, at the option of the
Company. Interest is payable semi-annually under the fixed rate option and
monthly under the variable rate option. The Company has selected the
variable rate option on these borrowings and the average interest rate was
approximately 4%.
On August 4, 1997, the Company redeemed $1,455,000 of the Variable/Fixed
Rate Industrial Development Revenue Bonds due April 1, 2012. This
represented the unused portion of the original bond issuance proceeds
received on April 1, 1997 to finance the construction of a PCC plant in
Jackson, Alabama.
The Variable/Fixed Rate Industrial Development Revenue Bonds due August 1,
2012 are tax-exempt 15-year instruments that were issued on August 1, 1997
to finance the construction of a PCC plant in North America. The bonds
bear interest at either a variable rate or fixed rate, at the option of the
Company. Interest is payable semi-annually under the fixed rate option and
monthly under the variable rate option. The Company has selected the
variable rate option on these borrowings and the average interest rate was
approximately 4%.
On June 28, 1993, through a private placement, the Company issued $65
million of 6.04% Guarantied Senior Notes (the "Notes") due June 11, 2000.
The proceeds from the sale of the Notes were used to finance the purchase
of 2.5 million shares of treasury stock, and for other corporate purposes.
Interest on the Notes is payable semi-annually. Required principal
payments, in equal installments of $13 million per annum, commenced in
1996.
On July 24, 1996, through a private placement, the Company issued $50
million of 7.49% Guaranteed Senior Notes due July 24, 2006. The proceeds
from the sale of the notes were used to refinance a portion of the
short-term commercial bank debt outstanding. These notes rank pari passu
with the Company's other unsecured senior obligations. No required
principal
payments are due until July 24, 2006. Interest on the notes is payable
semi-annually.
The Company has available approximately $110 million in uncommitted,
short-term bank credit lines. There were no borrowings on these credit
lines
on December 31, 1997. On December 31, 1996, borrowings on these credit
lines amounted to $12.0 million with an interest rate of 6.93%. The
Company had approximately $108.0 million in unused lines of credit at
December 31, 1996.
During 1997, 1996 and 1995, respectively, the Company incurred interest
costs of $8,198,000, $8,417,000 and $5,308,000 including $990,000,
$2,518,000 and $1,841,000, respectively, which were capitalized. Interest
paid approximated the incurred interest costs.
Benefit Plans
Pension Plans
The Company and its subsidiaries have pension plans covering
substantially all eligible employees on a contributory or non-contributory
basis.
The components of net periodic pension cost are as follows:
Millions of Dollars 1997 1996 1995
---- ---- ----
Service cost -- benefits earned during the period $4.1 $4.6 $3.8
Interest cost on projected benefit obligations 5.2 5.0 4.3
Actual return on plan assets (13.0) (7.7) (9.9)
Net amortization and deferral 7.7 3.5 6.8
---- ---- ----
Net periodic pension cost $4.0 $5.4 $5.0
==== ==== ====
The long-term rate of return on plan assets used in the determination of
net periodic pension cost was 9.25% for 1997, 9% for 1996 and 10% for 1995.
<PAGE> F-11
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Actuarial assumptions used in the measurement of the projected benefit
obligations for U.S. plans were:
1997 1996 1995
---- ---- ----
Discount rate 7.25% 7.75% 7.25%
Rate of increase in salary levels 4.25% 4.75% 4.50%
The funded status of the Company's pension plans at December 31, 1997 and
1996 is as follows:
1997 1997 1996 1996
Over- Under- Over- Under-
Funded Funded Funded Funded
Millions of Dollars Plans Plans Plans Plans
------ ------ ------ ------
Actuarial present value of
accumulated benefit obligations:
Vested $(49.1) $(10.0) $(43.6) $(8.7)
Non-vested (9.1) (1.8) (8.2) (1.7)
----- ----- ----- -----
Total (58.2) (11.8) (51.8) (10.4)
Effect of future salary increases (6.9) (2.1) (6.1) (2.6)
Projected benefit obligations (65.1) (13.9) (57.9) (13.0)
Plan assets at fair value 78.0 5.2 65.4 4.4
----- ----- ----- -----
Plan assets in excess of/(less than)
projected benefit obligations 12.9 (8.7) 7.5 (8.6)
Unrecognized underfunding at date
of adoption 3.1 0.4 3.8 0.4
Unrecognized net (gains)/losses (8.4) 1.9 (5.6) 1.0
Unrecognized prior service costs 1.9 1.0 2.1 1.1
Additional minimum liability -- (1.9) -- (0.8)
----- ----- ----- -----
Net pension asset/(liability)
included in Consolidated
Balance Sheet $ 9.5 $(7.3) $ 7.8 $(6.9)
===== ===== ===== =====
Benefits under defined benefit plans are generally based on years of
service and the employee's career earnings. Employees become fully vested
after five years.
The Company's funding policy for U.S. plans generally is to contribute
annually into trust funds at a rate that is intended to remain at a level
percentage of compensation for covered employees. The funding policy for
the international plans conforms to local governmental and tax
requirements. The plans' assets are invested primarily in stocks and
bonds.
Savings and Investment Plans
The Company maintains a voluntary Savings and Investment Plan for most
non-union employees in the U.S. Within prescribed limits, the Company bases
its contribution to the Plan on employee contributions. The Company
contributions amounted to $3.1 million, $3.0 million and $3.0 million for
the years ended December 31, 1997, 1996 and 1995, respectively.
Postretirement Benefits
The Company provides postretirement health care and life insurance
benefits for substantially all of its U.S. retired employees. Employees are
generally eligible for benefits upon retirement and completion of a
specified number of years of creditable service. The Company does not
pre-fund these benefits and has the right to modify or terminate the plan
in the future.
The components of the net periodic postretirement benefit cost are as
follows:
Millions of Dollars 1997 1996 1995
- ------------------- ----- ----- -----
Service cost-benefits earned during the year $ 0.8 $ 0.8 $ 0.7
Interest cost on accumulated postretirement
benefit obligations 0.9 0.8 0.7
Amortization of prior service cost (1.7) (1.7) (1.7)
----- ----- -----
Net periodic postretirement benefits cost $ -- $(0.1) $(0.3)
===== ===== =====
<PAGE> F-12
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The actuarial and recorded liabilities for postretirement benefits are as
follows:
Millions of Dollars 1997 1996
- ------------------- ------- -------
Accumulated postretirement benefit obligation:
Retirees $ (2.31) $ (1.22)
Fully eligible active plan participants (4.20) (4.44)
Other active plan participants (7.43) (6.51)
------ ------
Total (13.94) (12.17)
Unrecognized prior service cost (7.18) (8.89)
Unrecognized net loss 1.37 1.01
------ ------
Accrued postretirement benefit liability $(19.75) $(20.05)
====== ======
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25% and 7.75% at December 31, 1997
and 1996, respectively. Compensation levels are assumed to increase at a
rate of 4.25% and 4.75%, respectively, at December 31, 1997 and 1996.
For measurement purposes, a health care cost trend rate of approximately
10.5% for pre-age-65 benefits and 8.5% for post-age-65 benefits was used.
This trend rate will decrease to 5.3% in the year 2005 and thereafter.
A 1% increase in this annual trend rate would have increased the
accumulated postretirement benefit obligation at December 31, 1997 by
approximately $110,000 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for the year then
ended by approximately $9,000.
Leases
Rent expense for the years ended December 31, 1997, 1996 and 1995,
amounted to approximately $4.2 million, $4.2 million and $4.3 million,
respectively. Total future minimum rental commitments under all
noncancellable leases for the years 1998 through 2002 and thereafter are
approximately $2.1 million, $2.0 million, $1.8 million, $1.8 million, $1.5
million and $16.7 million, respectively.
The Company has entered into a long-term direct financing lease of its Pima
County, Arizona limestone facility with another company. Total future
minimum payments to be received under direct financing leases for the years
1998 through 2002 and thereafter are approximately $0.1 million, $0.2
million, $0.2 million, $0.2 million, $0.2 million and $3.3 million,
respectively.
Litigation
Under the terms of certain agreements entered into in connection with
the reorganization prior to the initial public offering of the Company's
common stock in October 1992, Pfizer and its wholly owned subsidiary,
Quigley Company, Inc. ("Quigley") agreed to indemnify the Company against
certain liabilities being retained by Pfizer and its subsidiaries
including, but not limited to, pending lawsuits and claims and any lawsuits
or claims brought at any time in the future alleging damages or injury from
the use, handling of or exposure to any product sold by Pfizer's specialty
minerals business prior to the closing of the initial public offering.
Pfizer and Quigley also agreed to indemnify the Company against any
liability arising from on-site remedial waste site claims and for other
claims that may be made in the future with respect to wastes disposed of
prior to the closing of the initial public offering. Further, Pfizer and
Quigley agreed to indemnify the Company for 50% of the liabilities in
excess of $1 million up to $10 million that may arise or accrue within ten
years after the closing of the initial public offering with respect to
remediation of on-site conditions existing at the time of the closing of
the initial public offering. The Company will be responsible for the first
$1 million of such liabilities, 50% of such liabilities in excess of $1
million up to $10 million, and all such liabilities in excess of $10
million. Further, Pfizer and Quigley agreed to indemnify the Company for
non-remedial environmental claims resulting from activities or conditions
occurring or existing prior to the closing of the initial public offering
that are in excess of $10,000 and that were received within two years after
the closing of the initial public offering, exclusive of compliance costs
and consequential damages.
<PAGE> F-13
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The transfer by Quigley of certain real property in New Jersey to the
Company pursuant to the reorganization, including the former Quigley
facility in Old Bridge, triggered certain obligations under the New Jersey
Environmental Cleanup Responsibility Act ("ECRA"). Quigley retained
liability for compliance with ECRA including the assessment and, if
necessary, remediation of the Old Bridge property. Quigley's obligations
under ECRA are embodied in an Administrative Consent Order with the New
Jersey Department of Environmental Protection and Energy ("NJDEPE") that
requires Quigley to perform any necessary remediation and to provide
financial assurance of its ability to cover the costs of remediation as
estimated by NJDEPE with no obligation to the Company.
The Company and its subsidiary, Specialty Minerals Inc., are defendants in
a lawsuit, captioned Eaton Corporation v. Pfizer Inc, Minerals Technologies
Inc. and Specialty Minerals Inc. which was filed on July 31, 1996 and is
pending in the U.S. District Court for the Western District of Michigan.
The suit alleges that certain materials sold to Eaton for use in truck
transmissions were defective, necessitating repairs for which Eaton seeks
reimbursement. While all litigation contains an element of uncertainty,
the Company and Specialty Minerals Inc. believe that they have valid
defenses to the claims asserted by Eaton in this lawsuit, are continuing to
vigorously defend all such claims, and believe that the outcome of this
matter will not have a material adverse effect on the Company's
consolidated financial position or results of operations.
Capital Stock
The Company's authorized capital stock consists of 100 million shares of
common stock, par value $.10 per share, of which 22,540,385 shares and
22,599,859 shares were outstanding at December 31, 1997 and 1996,
respectively, and 1 million shares of preferred stock, none of which were
issued and outstanding.
Cash Dividends
Cash dividends of $2.3 million or $.10 per common share were paid during
1997. In January 1998, a cash dividend of approximately $565,000 or $ .025
per share, was declared, payable in the first quarter of 1998.
Preferred Stock Purchase Rights
Under the Company's Preferred Stock Purchase Rights Plan, each share of
the Company's common stock carries with it one preferred stock purchase
right. Subject to the terms and conditions set forth in the plan, the
rights will become exercisable if a person or group acquires beneficial
ownership of 15% or more of the Company's common stock or announces a
tender or exchange offer which would result in the acquisition of 30% or
more thereof. If the rights become exercisable, separate certificates
evidencing the rights will be distributed, and each right will entitle the
holder to purchase from the Company a new series of preferred stock,
designated as Series A Junior Preferred Stock, at a predefined price. The
rights also entitle the holder to purchase shares in a change-of-control
situation. The preferred stock, in addition to a preferred dividend and
liquidation right, will entitle the holder to vote on a pro rata basis with
the Company's common stock.
The rights are redeemable by the Company at a fixed price until 10 days, or
longer as determined by the Board, after certain defined events or at any
time prior to the expiration of the rights on October 26, 2002 if such
events do not occur.
Stock and Incentive Plan
The Company has adopted a Stock and Incentive Plan (the "Plan") which
provides for grants of incentive and nonqualified stock options, stock
appreciation rights, stock awards or performance unit awards. The Plan is
administered by the Compensation Committee of the Board of Directors. Stock
options granted under the Plan have a term not in excess of ten years. The
exercise price for stock options will not be less than the fair market
value of the common stock on the date of the grant, and each award of stock
options will vest ratably over a specified period, generally three years.
In 1995, the Shareholders approved an amendment to the Plan to increase the
number of shares of common stock available under the Plan by an additional
one million.
<PAGE> F-14
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes stock option activity for the Plan:
Under Option
---------------------------
Shares Weighted Average
Available Exercise Price
for Grant Shares Per Share ($)
--------- --------- ----------------
Balance January 1, 1995 881,128 1,112,414 22.77
Authorized 1,000,000 -- --
Granted (8,000) 8,000 29.75
Exercised -- (34,960) 22.625
Canceled 17,805 (17,805) 22.625
Balance December 31, 1995 1,890,933 1,067,649 22.83
Granted (804,111) 804,111 30.625
Exercised -- (108,911) 22.90
Canceled 15,069 (15,069) 30.06
Balance December 31, 1996 1,101,891 1,747,780 26.36
Exercised -- (96,290) 24.38
Canceled 23,473 (23,473) 30.35
Balance December 31, 1997 1,125,364 1,628,017 26.41
In 1996, the Company adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock Based Compensation." There were no stock options
granted in 1997. The weighted-average fair value per option at the date of
grant for options granted during 1996 was $9.64. The fair value was
estimated using the Black-Scholes option pricing model, modified for
dividends, and the following weighted-average assumptions:
Expected life (years) 5
Interest rate 6.20%
Volatility 21.53%
Expected dividend yield 0.33%
Pro forma net income and earnings per share reflecting compensation cost
for the fair value of stock options awarded in 1996 were as follows:
(Millions of dollars, except per share amounts) 1997 1996
- ----------------------------------------------- ----- -----
Net income As reported $50.3 $43.1
Pro forma $48.8 $41.6
Basic earnings per share As reported $2.23 $1.91
Pro forma $2.16 $1.84
Diluted earnings per share As reported $2.18 $1.86
Pro forma $2.11 $1.80
The amounts disclosed may not be representative of the effects on reported
net income for future years. The effect on reported net income for 1995
was not material and, accordingly, was not disclosed.
The following table summarizes information concerning Plan options
outstanding at December 31, 1997:
Options Outstanding Options Exercisable
- ------------------------------------------ -------------------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 12/31/97 Term (Years) Price at 12/31/97 Price
- --------------- ----------- ------------ -------- ----------- --------
$ 22.625-29.75 879,547 5.2 $ 22.83 879,547 $ 22.83
$ 30.625 748,470 8.1 $ 30.625 249,490 $ 30.625
<PAGE> F-15
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Earnings Per Share (EPS)
Basic EPS 1997 1996 1995
------- ------- -------
Net income $50,312 $43,097 $39,529
Weighted average shares outstanding 22,558 22,621 22,633
------- ------- -------
Basic earnings per share $ 2.23 $ 1.91 $ 1.75
======= ======= =======
Diluted EPS 1997 1996 1995
------- ------- -------
Net income $50,312 $43,097 $39,529
------- ------- -------
Weighted average shares outstanding 22,558 22,621 22,633
Dilutive effect of stock options 555 511 406
------- ------- -------
Weighted average shares outstanding,
adjusted 23,113 23,132 23,039
------- ------- -------
Diluted earnings per share $ 2.18 $ 1.86 $ 1.72
======= ======= =======
Geographic Data
The Company operates in one segment, i.e., specialty minerals. This segment
includes the sale of mineral-based products and services principally to the
paper, iron and steel, construction, paint and automotive industries.
The Company's consolidated operations outside the United States are
organized into geographic regions. All intercompany transactions have been
eliminated.
Identifiable assets are those assets applicable to the respective
geographic locations.
<TABLE>
<CAPTION>
Canada/
United Latin Elimina- Consoli-
($ 000) States Europe Asia America Africa tions dated
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997
Net sales $414,385 $ 76,023 $44,609 $ 59,925 $ 7,393 $ -- $602,335
Inter-
company
sales 20,847 -- -- -- -- (20,847) --
Total $435,232 $ 76,023 $44,609 $59,925 $ 7,393 $(20,847) $602,335
Income from
operations $ 47,896 $ 8,818 $ 6,916 $14,965 $ 1,633 $ -- $ 80,228
Identifiable
assets $507,601 $104,201 $57,594 $62,292 $ 9,719 $ -- $741,407
1996
Net sales $383,033 $ 69,540 $44,059 $52,282 $ 7,074 $ -- $555,988
Inter-
company
sales 20,307 735 -- -- -- $(21,042) --
Total $403,340 $ 70,275 $44,059 $52,282 $ 7,074 $(21,042) $555,988
Income from
operations $44,463 $ 5,767 $ 4,416 $11,466 $ 1,306 $ -- $ 67,418
Identifiable
assets $480,550 $ 99,064 $70,055 $59,432 $ 4,760 $ -- $713,861
1995
Net sales $360,171 $61,494 $54,102 $37,873 $10,811 $ -- $524,451
Inter-
company
sales 15,585 -- -- -- -- $(15,585) --
Total $375,756 $61,494 $54,102 $37,873 $10,811 $(15,585) $524,451
Income from
operations $39,080 $ 3,746 $ 1,692 $11,687 $ 2,469 $ -- $ 58,674
Identifiable
assets $432,090 $91,635 $72,971 $45,009 $ 7,439 $ -- $649,144
</TABLE>
- ----------------------------------------------------------------------------
<PAGE> F-16
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Quarterly Financial Data (unaudited)
Thousands of Dollars, Except Per Share Amounts
1997 Quarters First Second Third Fourth
-------- -------- -------- --------
Net sales $137,626 $151,765 $155,012 $157,932
Gross profit 40,525 44,365 46,424 46,409
Net income 10,568 12,361 13,713 13,670
Earnings per share:
Basic 0.47 0.55 0.61 0.61
Diluted 0.46 0.54 0.59 0.59
Market Price Range of Common Stock
High 42 7/8 40 7/8 44 15/16 46 1/8
Low 34 32 1/8 36 1/8 39 1/2
Close 34 1/4 37 1/4 44 3/4 45 7/16
Dividends paid per common share $.025 $.025 $.025 $.025
Thousands of Dollars, Except Per Share Amounts
1996 Quarters First Second Third Fourth
-------- -------- -------- --------
Net sales $128,109 $140,466 $144,121 $143,292
Gross profit 35,032 41,109 41,581 41,921
Net income 8,547 10,807 11,890 11,853
Earnings per share:
Basic 0.38 0.48 0.53 0.52
Diluted 0.37 0.47 0.51 0.51
Market Price Range of Common Stock
High 37 3/4 39 3/8 40 41 3/8
Low 30 1/4 33 34 1/8 36 3/8
Close 34 5/8 34 1/4 36 5/8 41
Dividends paid per common share $.025 $.025 $.025 $.025
<PAGE> F-17
- ---------------------------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Shareholders
Minerals Technologies Inc.:
We have audited the accompanying consolidated balance sheet of
Minerals Technologies Inc. and subsidiary companies as of December 31, 1997
and 1996 and the related consolidated statements of income, shareholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1997. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Minerals Technologies Inc. and subsidiary companies as of December 31, 1997
and 1996 and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1997 in conformity
with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
New York, New York
January 22, 1998
<PAGE> F-18
- ---------------------------------------------------------------------------
Management's Responsibility for Financial Statements and System of Internal
Control
The consolidated financial statements and all related financial
information herein are the responsibility of the Company's management. The
financial statements, which include amounts based on judgments, have been
prepared in accordance with generally accepted accounting principles.
Other financial information in the annual report is consistent with that in
the financial statements.
The Company maintains a system of internal control over financial reporting
which it believes provides reasonable assurance that transactions are
executed in accordance with management's authorization and are properly
recorded, that assets are safeguarded, and that accountability for assets
is maintained. Even an effective internal control system, no matter how
well designed, has inherent limitations and, therefore, can provide only
reasonable assurance with respect to financial statement preparation. The
system of internal control is characterized by a control-oriented
environment within the Company which includes written policies and
procedures, careful selection and training of personnel, and audits by a
professional staff of internal auditors.
The Company's independent accountants have audited and reported on the
Company's consolidated financial statements. Their audits were performed
in accordance with generally accepted auditing standards.
The Audit Committee of the Board of Directors is composed solely of outside
directors. The Audit Committee meets periodically with our independent
auditors, internal auditors and management to review accounting, auditing,
internal control and financial reporting matters. Recommendations made by
the independent auditors and the Company's internal auditors are considered
and appropriate action is taken with respect to these recommendations.
Both our independent auditors and internal auditors have free access to the
Audit Committee.
Jean-Paul Valles
Chairman of the Board and Chief Executive Officer
John R. Stack
Vice President, Finance and Chief Financial Officer
Mario J. DiNapoli
Controller and Chief Accounting Officer
January 22, 1998
<PAGE> F-19
MINERALS TECHNOLOGIES INC. & SUBSIDIARY COMPANIES
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
(thousands of dollars)
Additions
Balance at Charged to Balance
Beginning Costs and at End
Description of Period Expenses Deductions(a)(b) of Period
- ----------- --------- ---------- --------------- ---------
Year ended December 1997
Valuation and
qualifying accounts
deducted from assets to
which they apply
Allowance for doubtful
accounts $2,497 $1,554 $784 $3,267
====== ====== ==== ======
Year ended December 1996
Valuation and
qualifying accounts
deducted from assets to
which they apply
Allowance for doubtful
accounts $3,088 $79 $670 $2,497
====== ====== ==== ======
Year ended December 1995
Valuation and
qualifying accounts
deducted from assets to
which they apply
Allowance for doubtful
accounts $2,786 $448 $146 $3,088
====== ====== ==== ======
(a) Includes impact of translation of foreign currencies.
(b) Uncollectible accounts charged against allowance accounts.
<PAGE> S-1<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF MINERALS TECHNOLOGIES INC.
Minerals Technologies Inc. a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Minerals Technologies Inc. The
name under which it was originally incorporated was Composite Metal
Products, Inc. The date of filing its original Certificate of
Incorporation with the Secretary of State was February 19, 1968. A
certificate of amendment changing its name to Pfizer Specialty
Minerals Inc. was filed with the Secretary of State on August 5,
1988. An additional amendment changing its name to Minerals
Technologies Inc. was filed with the Secretary of State on August 14,
1992.
2. This Restated Certificate of Incorporation was duly adopted by
vote of the stockholders in accordance with Section 245 and Section
242 of the General Corporation Law of Delaware.
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby restated with further amendments or
changes to read as herein set forth in full:
FIRST: The name of the Corporation is and shall be Minerals
Technologies Inc. (hereinafter in this Restated Certificate of
Incorporation called the "Corporation").
SECOND: The registered office and place of business of the
Corporation in the State of Delaware is located at 1209 Orange
Street, in the City of Wilmington, County of New Castle; and the name
and post office address of the registered agent of the Corporation in
the State of Delaware is The Corporation Trust Company, 1209 Orange
Street, in the City of Wilmington, County of New Castle, Delaware.
THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on are as follows:
To engage in, conduct, perform or participate in every kind of
commercial, agricultural, mercantile, manufacturing, mining,
transportation, industrial or other enterprise, business, work,
contract, undertaking, venture or operation.
To buy, sell, manufacture, refine, import, export and deal in all
products, goods, wares, merchandise, substances, apparatus, and
property of every kind, nature and description, and to construct,
maintain, and alter any buildings, works or mines.
<PAGE>
To enter into, make and perform contracts of every kind with any
person, firm or corporation.
To take out patents, trademarks, trade names and copyrights, acquire
those taken out by others, acquire or grant licenses in respect of
any of the foregoing, or work, transfer, or do whatever else with
them may be thought fit.
To acquire the good-will, property, rights, franchises, contracts and
assets of every kind and undertake the liabilities of any person, firm,
association or corporation, either wholly or in part, and pay
for the same in the stock, bonds or other obligations of the
Corporation or otherwise.
To purchase, hold, own, sell, assign, transfer, mortgage, pledge or
otherwise dispose of shares of the capital stock of any other
corporation or corporations, association or associations, of any
state, territory or country, and while owner of such stock, to
exercise all the rights, powers and privileges of ownership including
the right to vote thereon.
To issue bonds, debentures or obligations of the Corporation, at the
option of the Corporation, secure the same by mortgage, pledge, deed
of trust or otherwise, and dispose of and market the same.
To purchase, hold and re-issue the shares of its capital stock and
its bonds and other obligations.
To do all and everything necessary, suitable, convenient or proper
for the accomplishment of any of the purposes or the attainment of
one or more of the objects herein enumerated, or of the powers herein
named, or which shall at any time appear conducive to or expedient
for the protection, or benefit of the Corporation, either as holder
of, or interested in, any property or otherwise, to the same extent
as natural persons might or could do, in any part of the world.
To conduct any of its business in the State of Delaware and
elsewhere, including in the term "elsewhere" any of the states,
districts, territories, colonies or dependencies of the United
States, and in any and all foreign countries and to have one or more
offices, and to hold, purchase, mortgage and convey real and personal
property, without limit as to amount, within or (except as and when
forbidden by local laws) without the State of Delaware.
<PAGE>
To carry on any other business to any extent and in any manner
permitted by the laws of Delaware or, where the Corporation may seek
to do such business elsewhere, by local laws. The foregoing clauses
shall be construed both as objects and powers, but no recitation or
declaration of specific or special objects or powers herein
enumerated shall be deemed to be exclusive; but in each and every
instance it is hereby expressly declared that all other powers, not
inconsistent therewith, now or hereafter permitted or granted under
the laws of Delaware, or by the laws of any other state or country
into which the Corporation may go or seek to do business, are hereby
expressly included as if such other or general powers were herein set
forth.
FOURTH:
A. Authorized Shares and Classes of Stock.
The total number of shares and classes of stock that the Company
shall have authority to issue is one hundred and one million
(101,000,000) shares, which shall be divided into two classes, as
follows: one million (1,000,000) shares of Preferred Stock, without
par value, and (100,000,000) shares of Common Stock of the par value
of $.10 per share.
B. Designations, Powers, Preferences and Rights,
in Respect of the Shares of Preferred Stock.
(1) Shares of the Preferred Stock may be issued in one or more
series at such time or times and for such consideration or
considerations as the Board of Directors may determine. All shares
of any one series shall be of equal rank and identical in all
respects.
(2) Authority is hereby expressly granted to the Board of
Directors to fix from time to time, by resolution or resolutions
providing for the issue of any series of Preferred Stock, the
designation of such series, and the powers, preferences and rights of
the shares of such series, and the qualifications, limitations or
restrictions thereof, including the following:
(a) The distinctive designation and number of shares
comprising such series, which number may (except where otherwise
provided by the Board of Directors in creating such series) be
increased or decreased (but not below the number of shares then
outstanding) from time to time by like action of the Board of
Directors;
(b) The dividend rate or rates on the shares of such
series and the preferences, if any, over any other series (or of any
other series over such series) with respect to dividends, the terms
and conditions upon which and the periods in respect of which
dividends shall be payable, whether and upon what conditions such
dividends shall be cumulative and, if cumulative, the date or dates
from which dividends shall accumulate;
(c) Whether or not the shares of such series shall be
redeemable, the limitations and restrictions with respect to such
redemptions, the time or times when, the price or prices at which and
the manner in which such shares shall be redeemable, including the
manner of selecting shares of such series for redemption if less than
all shares are to be redeemed;
<PAGE>
(d) The rights to which the holders of shares and such
series shall be entitled, and the preferences, if any, over any other
series (or of any other series over such series), upon the voluntary
or involuntary liquidation, dissolution, distribution of assets or
winding-up of the Corporation, which rights may vary depending on
whether such liquidation, dissolution, distribution or winding-up is
voluntary or involuntary, and, if voluntary, may vary at different
dates;
(e) Whether or not the shares of such series shall be
subject to the operation of a purchase, retirement or sinking fund,
and, if so, whether and upon what conditions such purchase,
retirement or sinking fund shall be cumulative or noncumulative, the
extent to which and the manner in which such fund shall be applied to
the purchase or redemption of the shares of such series for
retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof;
(f) Whether or not the shares of such series shall be
convertible into or exchangeable for shares of stock of any other class or
classes, or of any other series of the same class and, if so
convertible or exchangeable, the price or prices or the rate or rates
of conversion or exchange and the method, if any, of adjusting the
same, and any other terms and conditions of such conversion or
exchange;
(g) The voting powers, full and/or limited, if any, of the
shares of such series; and whether or not and under what conditions
the shares of such series (alone or together with the shares of one
or more other series having similar provisions) shall be entitled to
vote separately as a single class, for the election of one or more
additional directors of the Corporation in case of dividend
arrearages or other specified events, or upon other matters;
(h) Whether or not the issuance of any additional shares
of such series, or
<PAGE>
of any shares of any other series, shall be subject to restrictions
as to issuance, or as to the powers, preferences or rights of any
such other series;
(i) Whether or not the holders of shares of such series
shall be entitled, as a matter of right, to subscribe for or purchase
any part of any new or additional issue of stock of any class or of
securities convertible into stock of any class and, if so entitled,
the qualifications, conditions, limitations and restrictions of such
right; and
(j) Any other preferences, privileges and powers, and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions of such series, as the
Board of Directors may deem advisable and as shall not be
inconsistent with the provisions of this Certificate of
Incorporation.
(3) The shares of each series of Preferred Stock shall entitle
the holders thereof to receive, when, as and if declared by the Board
of Directors out of funds legally available for dividends, cash
dividends at the rate, under the conditions, for the periods and on
the dates fixed by the resolution or resolutions of the Board of
Directors pursuant to authority granted in this Section B, for each
series, and no more, before any dividends on the Common Stock, other
than dividends payable in Common Stock, shall be paid or set apart
for payment. No dividends shall be paid or declared or set apart for
payment on any particular series of Preferred Stock in respect of any
period unless dividends shall be or have been paid, or declared and
set apart for payment, pro rata on all shares of Preferred Stock at
the time outstanding of each other series which ranks equally as to
dividends with such particular series, so that the amount of
dividends declared on such particular series shall bear the same
ratio to the amount declared on each such other series as the
dividend rate of such particular series shall bear to the dividend
rate of such other series. No dividends shall be deemed to have
accrued on any share of Preferred Stock of any series with respect to
any period prior to the date of original issue of such share or the
dividend payment date immediately preceding or following such date of
original issue, as may be provided in the resolution or resolutions
creating such series. Accruals of dividends shall not bear interest.
(4) Any redemption of Preferred Stock shall be effected by
notice duly given as hereinafter specified and by payment at the
redemption price of the Preferred Stock to be redeemed. In case of
redemption of a part only of a series of the Preferred Stock at the
time outstanding, the selection of shares for redemption may be made
either by lot or pro rata or in such other manner as shall be
determined by the Board of Directors. Notice of every such
redemption, stating the redemption date and price, the place of
payment, and the expiration date of then existing rights, if any, of
conversion or exchange, shall be given
<PAGE>
by publication, not less than 30 nor more than 60 days prior to the
date fixed for redemption, at least twice in a newspaper customarily
published at least once a day for at least five days in each calendar
week and of general circulation in New York, New York, whether or not
published on Saturdays, Sundays, or holidays. Notice of such
redemption may also be mailed not less than 30 nor more than 60 days
prior to the date fixed for redemption to the holders of record of
the shares so to be redeemed at their respective addresses as the
same shall appear on the books of the Corporation, but no failure to
mail such notice or any defect therein or in the mailing thereof
shall affect the validity of such redemption proceedings. If
(a) such notice of redemption by publication shall have
been duly given or the Corporation shall have given to a bank or
trust company in New York, New York designated by the Board of
Directors and having capital and surplus of at least Two Million
Dollars ($2,000,000), irrevocable authorization promptly to give such
notice; and
(b) on or before the redemption date specified in such
notice the funds or other property necessary for such redemption
shall have been deposited by the Corporation with such bank or trust
company, designated in such notice, in trust for the pro rata benefit
of the holders of the shares so called for redemption; then,
notwithstanding that any certificate for shares so called for
redemption shall not have been surrendered for cancellation, from and
after the time of such deposit all shares of the Preferred Stock so
called for redemption shall no longer be deemed to be outstanding and
all rights with respect to such shares shall forthwith cease and
terminate, except only
(i) the right of the holders thereof to receive from
such bank or trust company the funds or other property so deposited,
without interest, upon surrender (and endorsement, if required by the
Board of Directors) of the certificates for such shares, and
(ii) the rights of conversion or exchange, if any,
not theretofore expired.
Any funds or other property so deposited and unclaimed at the end of
six years from such redemption date shall be released or repaid to
the Corporation, after which the holders of the shares so called for
redemption shall look only to the Corporation for payment thereof.
<PAGE>
(5) Shares of Preferred Stock which have been redeemed or
converted, or which have been issued and reacquired in any manner and
retired, shall have the status of authorized and unissued Preferred
Stock and may be reissued by the Board of Directors as shares of the
same or any other series.
(6) In the event of any voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up of the Corporation,
the holders of the shares of each series of Preferred Stock then
outstanding shall be entitled to receive out of the net assets of the
Corporation, but only in accordance with the preference, if any,
provided for such series, before any distribution or payment shall be
made to the holders of the Common Stock, the amount per share fixed
by the resolution or resolutions of the Board of Directors to be
received by the holders of shares of each such series on such
voluntary or involuntary liquidation, dissolution, distribution of
assets or winding-up, as the case may be. If such payment shall have
been made in full, to the holders of all outstanding Preferred Stock
of all series, or duly provided for, the remaining assets of the
Corporation shall be available for distribution among the holders of
the Common Stock. If upon any such liquidation, dissolution,
distribution, of assets or winding-up, the net assets of the
Corporation available for distribution among the holders of any one
or more series of the Preferred Stock which (a) are entitled to a
preference over the holders of the Common Stock upon such
liquidation, dissolution, distribution of assets or winding-up, and
(b) rank equally in connection therewith, shall be insufficient to
make payment in full of the preferential amount to which the holders
of such shares shall be entitled, then such assets shall be
distributed among the holders of each such series of the Preferred
Stock ratably according to the respective amounts to which they would
be entitled in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to such shares
were paid in full. Neither the consolidation or merger of the
Corporation, nor the sale, lease or conveyance of all or part of its
assets, shall be deemed a liquidation, dissolution, distribution of
assets or winding-up of the Corporation within the meaning of the
forgoing provisions.
(7) Unless and except to the extent otherwise required by law
or provided in the resolution or resolutions of the Board of
Directors pursuant to this Section B, the shares of Preferred Stock
shall have no voting power with respect to any matter whatsoever,
including, but not limited to, any action to
(a) increase the authorized number of shares of the
Preferred Stock or of any series thereof,
(b) create shares of stock of any class ranking prior to
or on a parity with any series of the Preferred Stock with respect to
any preferences or voting powers, and
<PAGE>
(c) authorize a new series of the Preferred Stock having
preferences or voting powers ranking prior to or on a parity with any
series of the Preferred Stock with respect to any preferences or
voting powers.
C. Limitations, Relative Rights and Powers
in Respect of Shares of Common Stock.
(1) After the requirements with respect to preferential
dividends, if any, on the Preferred Stock (fixed pursuant to Section
B) shall have been met and after the Corporation shall have complied
with all the requirements, if any, with respect to the setting aside
of sums as purchase, retirement or sinking funds (fixed pursuant to
Section B), then and not otherwise the holders of Common Stock shall
be entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed pursuant to Section B) to be distributed to the holders
of Preferred Stock in the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of the
Corporation, the holders of the Common Stock shall be entitled to
receive all the remaining assets of the Corporation of whatever kind
available for the distribution to stockholders ratably in proportion
to the number of shares of Common Stock held by them respectively.
D. Other Provisions.
(1) Except as may be provided in the resolution or resolutions
of the Board of Directors pursuant to Section B with respect to any
series of Preferred Stock, no holder of stock of any class of the
Corporation shall be entitled as of right to purchase or subscribe
for any part of any unissued stock of any class, or of any additional
stock of any class of Capital Stock of the Corporation, or to any
bonds, certificates of indebtedness, debentures, or other securities
convertible into stock of the Corporation, now or hereafter
authorized, but any such stock or other securities convertible into
stock may be issued and disposed of pursuant to resolution by the
Board of Directors to such persons, firms, corporations or
associations and upon such terms and for such consideration as the
Board of Directors in the exercise of its discretion may determine
and as may be permitted by law. Any and all shares of stock so
issued for which the consideration so fixed has been paid or
delivered to the Corporation shall be fully paid and not liable to
any further call.
(2) The minimum amount of capital with which the Corporation
will commence business is $1,000.
(3) Effective at the time of the filing with the Secretary of
State of the State of
<PAGE>
Delaware of the Restated Certificate of Incorporation of the Company
setting forth this paragraph, each share of the Company's Common
Stock, par value $.10 per share, issued and outstanding immediately
prior to such time shall, without any action on the part of the
holder thereof, automatically be reclassified into two thousand five
hundred (2,500) shares of Common Stock, par value $.10 per share, of
the Company's and each stock certificate that, immediately prior to
the time of such filing, represented one share of the Company's
Common Stock, par value $.10 per share, shall, from and after such
time and without the necessity of presenting the same for exchange,
represent two thousand five hundred (2,500) shares of Common Stock,
par value $.10 per share, until such stock certificates are transferred or
exchanged.
FIFTH: The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatever.
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: The following provisions are inserted for the management
of the business and for the conduct of the affairs of the
Corporation, and it is expressly provided that the same are intended
to be in furtherance and not in limitation or exclusion of the powers
conferred by statute:
(1) The number of directors of the Corporation (exclusive of
directors (the "Preferred Stock Directors") who may be elected by the
holders of any one or more series of Preferred Stock which may at any
time be outstanding, voting separately as a class or classes) shall
not be less than three nor more than twelve, the exact number within
said limits to be fixed from time to time solely by resolution of the
Board of Directors, acting by not less than a majority of the
directors then in office.
(2) The Board of Directors (exclusive of Preferred Stock
Directors) shall be divided into three classes, Class I, Class II and
Class III. The number of directors in each class shall be as nearly
equal as possible. The term of office of directors in Class I shall
expire at the annual meting of stockholders in 1993; the term of
office of directors in Class II shall expire at the annual meeting of
stockholders in 1994; and the term of office of directors in Class
III shall expire at the annual meeting of stockholders in 1995.
Commencing with the annual meeting of stockholders in 1993, directors
of each class the term of which shall then expire shall be elected to
hold office for a three-year term and until the election and
qualification of their respective successors in office. Election of
directors need not be by ballot unless the By-laws so provide.
(3) Subject to the rights of the holders of any one or more
series of Preferred
<PAGE>
Stock then outstanding, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies
in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause
shall be filled solely by the Board of Directors, acting by not less
than a majority of the directors then in office. Any director so
chosen shall hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(4) Subject to the rights of the holders of any one or more
series of Preferred Stock then outstanding, any director, or the
entire Board of Directors, may be removed from office at any time,
but only for cause and only by the affirmative vote of at least 80%
of the voting power of all of the outstanding shares of capital stock
of the Corporation as are entitled to vote generally in the election
of directors ("Voting Stock"), voting together as a single class.
(5) The By-laws may prescribe the number of directors
necessary to constitute a quorum and such number may be less than a
majority of the total number of directors, but shall not be less than
one-third of the total number of directors.
(6) Both stockholders and directors shall have power, if the
By-laws of the Corporation so provide, to hold their meetings either
within or without the State of Delaware, to have one or more offices
in addition to the principal office in the State of Delaware, and to
keep the books of the Corporation (subject to the provisions of the
statutes) outside of the State of Delaware at such places as may from
time to time be designated by them.
(7) The Board of Directors shall have power to determine from
time to time whether and if allowed under what conditions and
regulations the accounts, and except as otherwise provided by statute
or by this Certificate of Incorporation, the books of the Corporation
shall be open to the inspection of the stockholders, and the
stockholders' rights in this respect are and shall be restricted or
limited accordingly, and no stockholder shall have any right to
inspect any account or book or document of the Corporation except as
conferred by statute or by this Certificate of Incorporation, or
authorized by the Board of Directors or by a resolution of the
stockholders.
(8) The Board of Directors shall have the power to adopt,
amend or repeal the By-laws of the Corporation.
(9) The Board of Directors acting by a majority of the whole
board shall have
<PAGE>
power to appoint three or more of their number to constitute an
Executive Committee, which Committee shall, when the Board of
Directors is not in session and subject to the By-laws, have and
exercise any or all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it. The Board of Directors acting by a
majority of the whole board shall also have power to appoint any
other committee or committees, such committees to have and exercise
such powers as shall be conferred by the Board of Directors or be
authorized by the By-laws.
(10) Except as may be otherwise provided by statute or in this
Certificate of Incorporation, the business and affairs of this
Corporation shall be managed under the direction of the Board of
Directors.
(11) Directors, for their services as such, may be paid such
compensation as may be fixed from time to time by the Board of
Directors.
(12) The Board of Directors shall have power from time to time
to fix and determine and vary the amount of the working capital of
the Corporation and, subject to any restrictions contained in the
Certificate of Incorporation, to direct and determine the use and
disposition of any surplus over and above the capital stock paid in,
and in its discretion to use and apply any such surplus in purchasing or
acquiring property, bonds or other obligations of the Corporation
or shares of its own capital stock, to such extent and in such manner
and upon such terms as the Board of Directors shall deem expedient,
but any shares of such capital stock so purchased or acquired may be
resold unless such shares shall have been retired in the manner
provided by law for the purpose of decreasing the Corporation's
capital stock.
(13) The liability of the Corporation's Directors to the
Corporation or its stockholders shall be eliminated to the fullest
extent permitted by the Delaware General Corporation Law as amended
from time to time. No amendment to or repeal of this paragraph (13)
of Article SEVENTH shall apply to or have any effect on the liability
or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to
such amendment or repeal.
(14) Notwithstanding any other provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class of Voting
Stock required by law or this Certificate of Incorporation, the
affirmative vote of the holders of at least 80% of all of the then
outstanding shares of Voting Stock, voting together as a single
class, shall be required to alter, amend or repeal paragraphs (1),
(2), (3), (4), (5), (8), (10), (13) or this paragraph (14) of this
Article SEVENTH.
<PAGE>
(15) Any action required or permitted to be taken by the
stockholders of the Corporation must be effected solely at a duly
called annual or special meeting of such holders and may not be
effected by any consent in writing by such holders.
IN WITNESS WHEREOF, said Minerals Technologies Inc. has caused
this certificate to be signed by Jean-Paul Valles, the Chairman of
its Board of Directors, and attested by S. Garrett Gray, its
Secretary, this 29th day of September, 1992.
MINERALS TECHNOLOGIES INC.
By /s/J. P. Valles
__________________________________
Chairman of the Board of Directors
Attest:
By: /s/S. Garrett Gray
______________________
S. Garrett Gray
Secretary
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PREFERRED STOCK
OF
MINERALS TECHNOLOGIES INC.
Pursuant to Section 151 of the Delaware
General Corporation Law
I, John R. Stack, Vice President - Finance of Minerals
Technologies Inc., a corporation organized and existing under the
Delaware General Corporation Law (the "Company"), in accordance
with the provisions of Section 151 of such law, DO HEREBY CERTIFY
that pursuant to the authority conferred upon the Board of
Directors by the Amended and Restated Certificate of
Incorporation of the Company, the Board of Directors on October
26, 1992 adopted the following resolution which creates a series
of 280,000 shares of Preferred Stock designated as Series A
Junior Preferred Stock, as follows:
RESOLVED, that pursuant to Section 151(g) of the Delaware
General Corporation Law and the authority vested in the Board of
Directors of the Company in accordance with the provisions of
ARTICLE FOURTH, Section B of the Amended and Restated Certificate
of Incorporation of the Company, a series of Preferred Stock of
the Company be, and hereby is, created, and the powers,
designations, preferences and relative, participating, optional
or other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof, be, and
hereby are, as follows:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series A Junior Preferred Stock"
(the "Series A Preferred Stock") and the number of shares
constituting such series shall be 280,000.
Section 2. Dividends and Distributions.
(A) Subject to the provisions for adjustment
hereinafter set forth, the holders of shares of Series A
Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
for the purpose, (I) cash dividends in an amount per share
(rounded to the nearest cent) equal to 100 times the aggregate
per share amount of all cash dividends declared or paid on the
Common Stock, $0.10 par value per share, of the Company (the
"Common Stock") and (ii) preferential cash dividend (the
"Preferential Dividends"), if ny, in preference to the holders of
any class of Common Stock, on the first day of February, May,
August and November of each year (each a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
share of Series A Preferred Stock, payable in an amount (except
in the case of the first Quarterly Dividend Payment if the date
of the first issuance of Series A Preferred Stock is a date other
than a Quarterly Dividend Payment date, in which case such
payment shall be a prorated amount of such amount) equal to $1.00
per share of
<PAGE>
Series A Preferred Stock less the per share amount
of all cash dividends declared on the Series A Preferred Stock
pursuant to clause (I) of this sentence since the immediately
preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock.
In the event the Company shall, at any time after the issuance of any share
or fraction of a share of Series A Preferred Stock,
make any distribution on the shares of Common Stock of the
Company, whether by way of a dividend or a reclassification of
stock, a recapitalization, reorganization or partial liquidation
of the Company or otherwise, which is payable in cash or any debt
security, debt instrument, real or personal property or any other
property (other than cash dividends subject to the immediately
preceding sentence, a distribution of shares of Common Stock or
other capital stock of the Company or a distribution of rights or
warrants to acquire any such share, including any debt security
convertible into or exchangeable for any such share, at a price
less than the Fair Market Value (as hereinafter defined) of such
share), then, and in each such event, the Company shall
simultaneously pay on each then outstanding share of Series A
Preferred Stock of the Company a distribution, in like kind, of
100 times such distribution paid on a share of Common Stock
(subject to the provisions for adjustment hereinafter set forth).
The dividends and distributions on the Series A Preferred Stock
to which holders thereof are entitled pursuant to clause (I) of
the first sentence of this paragraph and pursuant to the second
sentence of this paragraph are hereinafter referred to as
"Dividends" and the multiple of such cash and non-cash dividends
on the Common Stock applicable to the determination of the
Dividends, which shall be 100 initially buy shall be adjusted
from time to time as hereinafter provided, is hereinafter
referred to as the "Dividend Multiple". In the event the Company
shall at any time after November 6, 1992 declare or pay any
dividend or make any distribution on Common Stock payable in
shares of Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding
shares of Common Stock into a greater or lesser number of shares
of Common Stock, then in each such case the Dividend Multiple
thereafter applicable to the determination of the amount of
Dividends which holders of shares of Series A Preferred Stock
shall be entitled to receive shall be the Dividend Multiple
applicable immediately prior to such event multiplied by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Company shall declare each Dividend at the same time
it declares any cash or non-cash dividend or distribution on the
Common Stock in respect of which a Dividend is required to be
paid. No cash or non-cash dividend or distribution on the Common
Stock in respect of which a Dividend is required to be paid shall
be paid or set aside for payment on the Common Stock unless a
<PAGE> 2
Dividend in respect of such dividend or distribution on the
Common Stock shall be simultaneously paid, or set aside for
payment, on the Series A Preferred Stock.
(C) Preferential Dividends shall begin to accrue on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issuance of any
shares of Series A Preferred Stock. Accrued but unpaid
Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of
the stockholders of the Company. The number of votes which a
holder of Series A Preferred Stock is entitled to cast, as the
same may be adjusted from time to time as hereinafter provided,
is hereinafter referred to as the "Vote Multiple". In the event
the Company shall at any time after November 6, 1992 declare or
pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination,
consolidation or reverse split of the outstanding shares of
Common Stock into a greater or lesser number of shares of Common
Stock, then in each such case the Vote Multiple thereafter
applicable to the determination of the number of votes per share
to which holders of shares of Series A Preferred Stock shall be
entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied by a fraction the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in the Amended and
Restated Certificate of Incorporation or By-laws, the holders of
shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(C) In the event that the Preferential Dividends accrued on
the Series A Preferred Stock for four or more quarterly dividend
periods, whether consecutive or not, shall not have been declared
and paid or irrevocably set aside for payment, the holders of
record of Preferred Stock of the Company of all series (including
the Series A Preferred Stock), other than any series in respect
of which such right is expressly withheld by the Amended and
Restated Certificate of Incorporation or the authorizing
resolutions included in any Certificate of Designations therefor,
shall have the right, at the next meeting of stockholders called
for the election of directors, to elect two members to the Board
of Directors, which directors shall be in addition to the number
<PAGE> 3
required by the By-laws prior to such event, to serve until the
next Annual Meeting and until their successors are elected and
qualified or their earlier resignation, removal or incapacity or
until such earlier time as all accrued and unpaid Preferential
Dividends upon the outstanding shares of Series A Preferred Stock
shall have been paid (or irrevocably set aside for payment) in
full. The holders of shares of Series A Preferred Stock shall
continue to have the right to elect directors as provided by the
immediately preceding sentence until all accrued and unpaid
Preferential Dividends upon the outstanding shares of Series A
Preferred Stock shall have been paid (or set aside for payment)
in full. Such directors may be removed and replaced by such
stockholders, and vacancies in such directorships may be filled
only by such stockholders (or by the remaining director elected
by such stockholders, if there be one) in the manner permitted by
law; provided, however, that any such action by stockholders
shall be taken at a meeting of stockholders and shall not be
taken by written consent thereto.
(D) Except as otherwise required by the Amended and Restated
Certificate of Incorporation or By-laws or set forth herein, holders of
Series A Preferred Stock shall have no other special
voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock
as set forth herein) for the taking of any corporate action.
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Dividends are in
arrears or the Company shall be in default of payment thereof,
thereafter and until all accrued and unpaid Preferential
Dividends and Dividends, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid or set
irrevocably aside for payment in full, and in addition to any and
all other rights which any holder of shares of Series A Preferred
Stock may have in such circumstances, the Company shall not
(I) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Series A Preferred Stock, unless dividends are
paid ratably on the Series A Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are
then entitled if the full dividends accrued thereon were to be
paid;
(iii) except as permitted by subparagraph (iv) of this
paragraph 4(A), redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, provided that the Company may at
any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Company
ranking junior (both as to dividends and upon liquidation,
<PAGE>
dissolution or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock (either as
to dividends or upon liquidation, dissolution or winding up),
except in accordance with a purchase offer made to all holders of
such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Company shall not permit any Subsidiary (as
hereinafter defined) of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company
unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in
such manner. A "Subsidiary" of the Company shall mean any
corporation or other entity of which securities or other
ownership interests having ordinary voting power sufficient to
elect a majority of the board of directors of such corporation or
other entity or other persons performing similar functions are
beneficially owned, directly or indirectly, by the Company or by
any corporation or other entity that is otherwise controlled by the Company.
(C) The Company shall not issue any shares of Series A
Preferred Stock except upon exercise of Rights issued pursuant to
that certain Rights Agreement dated as of October 26, 1992
between the Company and Chemical Bank, a copy of which is on file
with the Secretary of the Company at its principal executive
office and shall be made available to stockholders of record
without charge upon written request therefor addressed to said
Secretary. Notwithstanding the foregoing sentence, nothing
contained in the provisions hereof shall prohibit or restrict the
Company from issuing for any purpose any series of Preferred
Stock with rights and privileges similar to, different from, or
greater than, those of the Series A Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the Company in
any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares upon their
retirement and cancellation shall become authorized but unissued
shares of Preferred Stock, without designation as to series, and
such shares may be reissued as part of a new series of Preferred
Stock to be created by resolution or resolutions of the Board of
Directors.
6. Liquidation, Dissolution or Winding Up. Upon
any voluntary or involuntary liquidation, dissolution or winding
up of the Company, no distribution shall be made (I) to the
holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless the holders of shares of Series A
Preferred Stock shall have received, subject to adjustment as
hereinafter provided, (A) $100.00 per share plus an amount equal
to accrued
<PAGE>
and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment or, (B) if greater than
the amount specified in clause (I) (A) of this sentence, an
amount equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, as the same may
be adjusted as hereinafter provided and (ii) to the holders of
stock ranking on a parity upon liquidation, dissolution or
winding up with the Series A Preferred Stock, unless
simultaneously therewith distributions are made ratably on the
Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of
shares of Series A Preferred Stock are entitled under clause (I)
(A) of this sentence and to which the holders of such parity
shares are entitled, in each case upon such liquidation,
dissolution or winding up. The amount to which holders of Series
A Preferred Stock may be entitled upon liquidation, dissolution
or winding up of the Company pursuant to clause (I) (B) of the
foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount" and the multiple of the amount
to be distributed to holders of shares of Common Stock upon the
liquidation, dissolution or winding up of the Company applicable
pursuant to said clause to the determination of the Participating
Liquidation Amount, as said multiple may be adjusted from time to
time as hereinafter provided, is hereinafter referred to as the
"Liquidation Multiple". In the event the Company shall at any
time after November 6, 1992 declare or pay any dividend on Common
Stock payable in shares of Common Stock, or effect a subdivision
or split or a combination, consolidation or reverse split of the
outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then, in each such case, the Liquidation
Multiple thereafter applicable to the determination
of the Participating Liquidation Amount to which holders of
Series A Preferred Stock shall be entitled after such event shall
be the Liquidation Multiple applicable immediately prior to such
event multiplied by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such
event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock
of the Company receive after November 6, 1992 in respect of their
shares of Common Stock any share of capital stock of the Company
(other than any share of Common Stock of the Company), whether by
way of reclassification, recapitalization, reorganization,
dividend or other distribution or otherwise (a "Transaction"),
then, and in each such event, the dividend rights, voting rights
and rights upon the liquidation, dissolution or winding up of the
Company of the shares of Series A Preferred Stock shall be
adjusted so that after such event the holders of Series A
Preferred Stock shall be entitled, in respect of each share of
Series A Preferred Stock held, in addition to such rights in
respect thereof to which such holder was entitled immediately
<PAGE>
prior to such adjustment, to (I) such additional dividends as
equal the Dividend Multiple in effect immediately prior to such
Transaction multiplied by the additional dividends which the
holder of a share of Common Stock shall be entitled to receive by
virtue of the receipt in the Transaction of such capital stock,
(ii) such additional voting rights as equal the Vote Multiple in
effect immediately prior to such Transaction multiplied by the
additional voting rights which the holder of a share of Common
Stock shall be entitled to received by virtue of the receipt in
the Transaction of such capital stock and (iii) such additional
distributions upon liquidation, dissolution or winding up of the
Company as equal the Liquidation Multiple in effect immediately
prior to such Transaction multiplied by the additional amount
which the holder of a share of Common Stock shall be entitled to
receive upon liquidation, dissolution or winding up of the
Company by virtue of the receipt in the Transaction of such
capital stock, as the case may be, all as provided by the terms
of such capital stock.
(B) In the event that holders of shares of Common Stock of
the Company receive after November 6, 1992 in respect of their
shares of Common Stock any right or warrant to purchase Common
Stock (including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for
Common Stock) at a purchase price per share less than the Fair
Market Value of a share of Common Stock on the date of issuance
of such right or warrant, then and in each such event the
dividend rights, voting rights and rights upon the liquidation,
dissolution or winding up of the Company of the shares of Series
A Preferred Stock shall each be adjusted so that after such event
the Dividend Multiple, the Vote Multiple and the Liquidation
Multiple shall each be the product of the Dividend Multiple, the
Vote Multiple and the Liquidation Multiple, as the case may be,
in effect immediately prior to such event multiplied by a
fraction the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of
rights or warrants plus the maximum number of shares of Common
Stock which could be acquired upon exercise in full of all such
rights or warrants and the denominator of which shall be the number of
shares of Common Stock outstanding immediately before
such issuance of rights or warrants plus the number of shares of
Common Stock which could be purchased, at the Fair Market Value
of the Common Stock at the time of such issuance, by the maximum
aggregate consideration payable upon exercise in full of all such
rights or warrants.
(C) In the event that holders of shares of Common Stock of
the Company receive after November 6, 1992 in respect of their
shares of Common Stock any right or warrant to purchase capital
stock of the Company (other than shares of Common Stock),
including as such a right, for all purposes of this paragraph,
any security convertible into or exchangeable for capital stock
of the Company (other than Common Stock), at a purchase price per
share less than the Fair Market Value of such shares of capital
stock on the date of issuance of such right or warrant, then and
in each such event the dividend rights, voting rights and rights
<PAGE>
upon liquidation, dissolution or winding up of the Company of the
shares of Series A Preferred Stock shall each be adjusted so that
after such event each holder of a share of Series A Preferred
Stock shall be entitled, in respect of each share of Series A
Preferred Stock held, in addition to such rights in respect
thereof to which such holder was entitled immediately prior to
such event, to receive (I) such additional dividends as equal the
Dividend Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the
holder of a share of Common Stock shall be entitled upon exercise
of such right or warrant by virtue of the capital stock which
could be acquired upon such exercise and multiplied again by the
Discount Fraction (as hereinafter defined) and (ii) such
additional voting rights as equal the Vote Multiple in effect
immediately prior to such event multiplied, first, by the
additional voting rights to which the holder of a share of Common
Stock shall be entitled upon exercise of such right or warrant by
virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction and (iii)
such additional distributions upon liquidation, dissolution or
winding up of the Company as equal the Liquidation Multiple in
effect immediately prior to such event multiplied, first, by the
additional amount which theholder of a share of Common Stock
shall be entitled to receive upon liquidation, dissolution or
winding up of the Company upon exercise of such right or warrant
by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction. For
purposes of this paragraph, the "Discount Fraction" shall be a
fraction the numerator of which shall be the difference between
the Fair Market Value of a share of the capital stock subject to
a right or warrant distributed to holders of shares of Common
Stock of the Company as contemplated by this paragraph
immediately after the distribution thereof and the purchase price
per share for such share of capital stock pursuant to such right
or warrant and the denominator of which shall be the Fair Market
Value of a share of such capital stock immediately after the
distribution of such right or warrant.
(D) For purposes of this Certificate of Designations, the
"Fair Market Value" of a share of capital stock of the Company
(including a share of Common Stock) on any date shall be deemed
to be the average of the daily closing price per share thereof
over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that,
in the event that such Fair Market Value of any such share of
capital stock is determined during a period which includes any
date that is within 30 Trading Days after (i) the ex-dividend date for
a dividend or distribution on stock payable in shares of
such stock or securities convertible into shares of such stock,
or (ii) the effective date of any subdivision, split,
combination, consolidation, reverse stock split or
reclassification of such stock, then, and in each such case, the
Fair Market Value shall be appropriately adjusted by the Board of
Directors of the Company to take into account ex-dividend or
<PAGE>
post-effective date trading. The closing price for any day shall
be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way (in either case, as reported in the
applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange), or, if the shares are not listed or admitted to
trading on the New York Stock Exchange, as reported in the
applicable transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the shares are listed or admitted to trading or, if the
shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of
Securities Sealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or if on any such date the shares
are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional
market maker making a market in the shares selected by the Board
of Directors of the Company. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which
the shares are listed or admitted to trading is open for the
transaction of business or, if the shares are not listed or
admitted to trading on any national securities exchange, on which
the New York Stock Exchange or such other national securities
exchange as may be selected by the Board of Directors of the
Company is open. If the shares are not publicly held or not so
listed or traded on any day within the period of 30 Trading Days
applicable to the determination of Fair Market Value thereof as
aforesaid,"Fair Market Value" shall mean the fair market value
thereof per share as determined in good faith by the Board of
Directors of the Company. In either case referred to in the
foregoing sentence, the determination of Fair Market Value shall
be described in a statement filed with the Secretary of the
Company.
Section 8. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property, then in any such case each outstanding share of Series
A Preferred Stock shall at the same time be similarly exchanged
for or changed into the aggregate amount of stock, securities,
cash and/or other property (payable in like kind), as the case
may be, for which or into which each share of Common Stock is
changed or exchanged multiplied by the highest of the Vote
Multiple, the Dividend Multiple or the Liquidation Multiple in
effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series A Preferred Stock required by
the provisions hereof shall be effective as of the time at which
the event requiring such adjustments occurs.
(B) The Company shall give prompt written notice to each
<PAGE>
holder of a share of Series A Preferred Stock of the effect of
any adjustment to the voting rights, dividend rights or rights
upon liquidation, dissolution or winding up of the Company of
such shares required by the provisions hereof. Notwithstanding
the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of
or the requirement for such adjustment.
Section 10. No Redemption. The shares of Series A
Preferred Stock shall not be redeemable at the option of the
Company or any holder thereof. Notwithstanding the foregoing
sentence of this Section, the Company may acquire shares of
Series A Preferred Stock in any other manner permitted by law,
the provisions hereof and the Restated Certificate of
Incorporation of the Company.
Section 11. Ranking. Unless otherwise provided in the
Amended and Restated Certificate of Incorporation of the Company
or a Certificate of Designations relating to a subsequent series
of preferred stock of the Company, the Series A Preferred Stock
shall rank junior to all other series of the Company's preferred
stock as to the payment of dividends and the distribution of
assets on liquidation, dissolution or winding up and senior to
the Common Stock.
Section 12. Amendment. The provisions hereof and the
Amended and Restated Certificate of Incorporation of the Company
shall not be amended in any manner which would adversely affect
the rights, privileges or powers of the Series A Preferred Stock
without, in addition to any other vote of stockholders required
by law, the affirmative vote of the holders of two-thirds or more
of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, I have executed and subscribed this
Certificate of Designations and do affirm the foregoing as true
under the penalties of perjury this 4th day of November, 1992.
/s/ _________________________
Name: John R. Stack
Title: Vice President - Finance
ATTEST:
/s/_____________________________
Secretary
<PAGE>
COMMON STOCK COMMON STOCK
PAR VALUE $0.10 PAR VALUE $0.10
THIS CERTIFICATE IS TRANSFERABLE
IN BOSTON, MASSACHUSETTS
SHARES
CUSIP 603158 10 6
See reverse for certain
definitions
MINERALS TECHNOLOGIES INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
This certifies that
is the owner of
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Minerals Technologies Inc., transferable on the books of the Corporation by
the holder hereof in person or by duly authorized Attorney upon surrender
of this Certificate properly endorsed. This Certificate is not valid
unless countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
DATED:
Countersigned and Registered:
STATE STREET BANK AND TRUST COMPANY /s/ Chairman
(BOSTON, MASSACHUSETTS)
Transfer Agent and Registrar /s/ Secretary
By
Authorized Signature
This certificate also evidences and entitles the holder hereof to the
same number of Rights (subject to adjustment) as the number of shares of
Common Stock represented by this certificate, such Rights being on the
terms provided under the Rights Agreement between Minerals Technologies
Inc. and Chemical Bank (the "Rights Agent"), dated as of October 26, 1992,
as it may be amended from time to time (The "Rights Agreement"), the terms
of which are incorporated herein by reference and a copy of which is on
file at the principal executive offices of Minerals Technologies Inc.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights shall be evidenced by separate certificates and shall no longer be
evidenced by this certificate. Minerals Technologies Inc. shall mail to
the registered holder of this certificate a copy of the Rights Agreement
without charge within five days after receipt of a written request
therefor. Under certain circumstances as provided in Section 7(e) of the
Rights Agreement, Rights issued to or Beneficially Owned by Acquiring
Persons or their Affiliates or Associates (as such terms are defined in the
Rights Agreement) or any subsequent holder of such Rights shall be null and
void and may not be transferred to any Person.
Exhibit 10.5
The Company has entered into Employment Agreements, in the form
filed herewith, with certain individuals, as follows: In October
1995, the Company entered into employment agreements with the
following individuals for terms of three years: Howard R.
Crabtree, S. Garrett Gray, Paul R. Saueracker, and John R. Stack.
In January 1996, the Company entered into an employment agreement
with Anton Dulski for a term expiring October 22, 1998. In
October 1997, the Company entered into an employment agreement
with Jean-Paul Valles for a term expiring October 17, 2001.
Employment Agreements have been executed by the Company and the
indicated employees, each substantially identical in all material
respects to such form of Employment Agreement except as noted
below. Each Employment Agreement was executed by Dr. Valles,
except the agreement with Dr. Valles, which was executed by
Mr. Gray.
EMPLOYEE AND POSITION BASE SALARY
Howard R. Crabtree $176,543
- -- Vice President Organization and
Human Resources
Anton Dulski $180,000
- -- Vice President and President
and Chief Executive Officer
of Minteq International Inc.
S. Garrett Gray $182,814
- -- Vice President, General Counsel
and Secretary
Paul R. Saueracker $204,225
- -- Vice President and President
and Chief Executive Officer
of Specialty Minerals Inc.
John R. Stack $190,650
- -- Vice president--Finance
and Chief Financial Officer
Jean-Paul Valles $738,972
- -- Chairman and Chief
Executive Officer
<PAGE>
EMPLOYMENT AGREEMENT
---------------------
This Employment Agreement ("Agreement"), made as of the ____
day of _________________ 199__, by and between Minerals
Technologies Inc., 405 Lexington Avenue, New York, New York
10174-1901, a Delaware Corporation (hereinafter referred to as
"Employer"), and ___________________________________________
(hereinafter referred to as "Executive").
WHEREAS, in furtherance of Employer's commitment to the
continued success of the specialty minerals business, and in
recognition of the valuable contributions to be made by Executive
because of his experience in the specialty minerals business,
Employer has agreed to employ Executive for a period of three
years, commencing on the ________ day of _____________________ 199__,
("Commencement Date"), subject to certain terms and
conditions as hereinafter set forth, and Executive has indicated
his willingness to accept such employment;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, the parties agree as follows:
1. The employment of Executive by Employer will commence on
the Commencement Date and, unless terminated on an earlier date
in the manner hereinafter provided, shall terminate on the third
anniversary of the Commencement Date (the "Term"). During the
term of the employment hereunder, Executive will be employed by
Employer as a Vice President of employer and will paid an annual
salary of not less than $______________________________("Base
Salary"). By _________________________, 199______, and
thereafter, Employer will review Executive's salary on an annual
basis in accordance with Employer's policies, to determine
appropriate increases, if any. In addition to salary, Executive
will receive bonus payments as determined from time to time by
Employer's Board of Directors or the Compensation Committee
thereof. Any such payment with respect to a calendar year will
be made in the first quarter of the following year but shall be
deemed earned and due and owing so long as Executive is employed
on December 31st of the applicable calendar year regardless of
his status as of the payment date.
2. It is contemplated that, in connection with his
employment hereunder, Executive may be required to incur
reasonable and necessary travel, business entertainment and other
business expenses. Employer agrees to reimburse Executive for
all reasonable and necessary travel, business entertainment and
other business expenses incurred or expended by him incident to
the performance of his duties hereunder, upon submission by
Executive to Employer of vouchers or expense statements
satisfactorily evidencing such expenses, and subject to review
and approval by the Employer's Board of Directors.
<PAGE>
3. Employer will provide retirement, employee benefits
(pre- and post-retirement) and fringe benefit plans to Executive
no less favorable than those made available to Employer's
executive employees generally, to the extent that Executive
qualifies under the eligibility provisions of such plans.
Executive will be credited for his actual years of service with
Pfizer Inc., the former owner of Employer's specialty minerals
business, for purposes of eligibility and vesting under all such
plans, and for purposes of calculating benefits under all such
plans. Executive shall be entitled to five (5) weeks of paid
vacation each year.
4. Executive agrees that he shall use his best efforts to
promote and protect the interest of Employer, its subsidiaries
and related corporations, and to devote his full working time,
attention and energy to performing the duties of his position.
5. In the event of the Permanent Disability (as defined
below) of Executive during the Term, Employer shall have the
right, upon written notice to the Executive, to terminate his
employment hereunder, effective upon the giving of such notice.
Upon such termination, Employer shall be discharged and released
from any further obligations under this Agreement, but Executive
shall have the obligations provided for in Section 9 hereof. Disability
benefits, if any, due under applicable plans and
programs of the Employer shall be determined under the provisions
of such plans and programs. For purposes of this Section 5,
"Permanent Disability" means any physical or mental disability or
incapacity which permanently renders Executive incapable of
performing the services required of him by Employer.
6. In the event of the death of Executive during the Term,
the salary to which Executive is entitled hereunder shall
continue to be paid through the end of the month in which death
occurs, to the last beneficiary designated by the Executive by
written notice to Employer, or, failing such designation, to his
estate. Executive's designated beneficiary or personal
representative, as the case may be, shall accept the payments
provided for in this Section 6 in full discharge and release of
Employer of and from any further obligations under this
Agreement. Any other benefits due under applicable plans and
programs of Employer shall be determined under the provisions of
such plans and programs.
7. (a) In the event during the Term Employer terminates the
employment of Executive for reasons other than for Cause (as
defined below) or Executive resigns for Good Reason (as defined
below), Executive will be paid his Base Salary through the end of
the Term, plus any bonuses deemed earned and due and owing as
specified in Section 1 of this Agreement, less any severance
payments paid Executive pursuant to Employer policies.
<PAGE>
(b) Executive shall be required to mitigate the amount
of any payment provided for pursuant to Section 7(a) by seeking
other comparable employment within a reasonable commuting
distance of his home, taking into account the provisions of
Section 9 of this Agreement. Anything in this Agreement to the
contrary notwithstanding, in the event that Executive provides
services for pay to anyone other than Employer or any of its
affiliates or subsidiaries from the date Executive's employment
hereunder is terminated until the end of the Term, the amounts to
be paid to Executive during such period pursuant to this
Agreement shall be reduced by the amounts of salary, bonus or
other cash compensation earned by Executive during such period as
a result of Executive's performing such services.
(c) For purposes of this Agreement:
(i) "Cause" shall be limited to the following:
(A) Executive shall have failed to perform any
of his material obligations as set forth herein,
provided that Employer has advised Executive of such
failure and given Executive a reasonable period of time
to cure such failure and Executive has failed to do so;
(B) Executive shall commit acts constituting
(i) a felony involving moral turpitude materially
adversely reflecting on the Employer or (ii) fraud or
theft against Employer;
(ii) "Good Reason" shall mean termination at the
election of Executive based on any of the following:
(A) The assignment to Executive of any duties
substantially inconsistent with his status as Vice
President of Employer or a substantial adverse
alteration in the nature or status of his
responsibilities pursuant to this Agreement, except in
connection with the termination of his employment for
Cause, or normal retirement, death, or by the Executive
other than for Good Reason;
(B) A reduction on Executive's fringe or
retirement benefits as in effect on the date hereof
that is not applied by Employer to executives generally
or a reduction by Employer in Executive's Base Salary;
(C) The merger or consolidation of Employer into
or with any other entity, or the sale of all or
substantially all of the assets of Employer to an
unaffiliated entity unless the entity which survives
such merger or to whom such assets are transferred
shall assume and agree to perform the obligations of
Employer hereunder pursuant to an instrument reasonably
acceptable to Executive; or
<PAGE>
(D) Separation of Executive's office location
from the principal corporate office of Employer or
relocation outside the contiguous United States.
8. Employer shall have the right to terminate this
Agreement immediately with no further liability under the terms
of this Agreement should Executive terminate his employment
without Good Reason, or if Executive is discharged by Employer
for Cause, subject to payments that are due under this Agreement,
through the date of termination.
9. (a) Executive agrees that during the term of his
employment hereunder and, subject to the last sentence of this
Section 9(a), during the further period of two (2) years after
the termination of such employment, Executive shall not, without
the prior written approval of Employer, directly or indirectly
through any other person, firm or corporation, (i) engage or
participate in or become employed by or render advisory or other
services to or for any person, firm or corporation, or in
connection with any business enterprise, which is, directly or
indirectly, in competition with any of the business operations or
activities of Employer, or (ii) solicit, raid, entice or induce
any such person who on the date of termination of employment of
Executive is, or within the last six (6) months of Executive's
employment by Employer was, an employee of Employer, to become
employed by any person, firm or corporation which is, directly or
indirectly, in competition with any of the business operations or
activities of Employer, and Executive shall not approach any such
employee for such purpose or authorize or knowingly approve the
taking of such actions by any other person; provided, however,
that Executive shall not be bound by the restrictions contained
in clause (i) of this Section 9(a) if Employer terminates his
employment during the terms of this agreement other than for
"Cause" (as defined in Section 7c) hereof). The foregoing
restrictions shall apply to the geographical areas where Employer
does business and/or did business during the term of Executive's
employment and all places where, at the date of termination of employment of
Executive, Employer had plans or reasonable
expectations to do business; provided that if any Court construes
any portion of this provision or clause of this Agreement, or any
portion thereof, to be illegal, void or unenforceable because of
the duration of such provision or the area or matter covered
thereby, such Court shall reduce the duration, area, or matter of
such provision and, in its reduced form, such provision shall
then be enforceable and shall be enforced. Notwithstanding the
provisions of this Section 9, Employer shall be entitled to
enforce the provisions of Section 9(a)(i) following the end of
Executive's term of employment hereunder only if Employer
continues to pay Executive an amount equal to the Base Salary
that Executive was receiving at the time of such termination.
<PAGE>
(b) Recognizing that the knowledge, information and
relationship with customers, suppliers, and agents, and the
knowledge of Employer's and its subsidiary companies' business
methods, systems, plans and policies which Executive shall
hereafter establish, receive or obtain as an employee of Employer
or its subsidiary companies, are valuable and unique assets of
the respective businesses of Employer and its subsidiary
companies, Executive agrees that, during and after the term of
his employment hereunder, he shall not (otherwise than pursuant
to his duties hereunder) disclose, without the prior written
approval of Employer, any such knowledge or information
pertaining to Employer or any of its subsidiary companies, their
business, personnel or policies, to any person, firm, corporation
or other entity, for any reason or purpose whatsoever. The
provisions of this Section 9b) shall not apply to information
which is or shall become generally known to the public or the
trade (other than by reason of Executive's breach of his
obligations hereunder), information which is or shall become
available in trade or other publications, and information which
Executive is required to disclose by law or an order of a court
of competent jurisdiction. If Executive is required by law or a
court order to disclose such information, he shall notify
Employer of such requirement and provide Employer an opportunity
(if Employer so elects) to contest such law or court order.
10. Executive agrees that Employer shall withhold from any
and all payments required to be made to Executive pursuant to
this Agreement, all federal, state, local and/or other taxes
which Employer determines are required to be withheld in
accordance with applicable statutes and/or regulations from time
to time in effect.
11. This Agreement shall be construed under the laws of the
State of New York.
12. This Agreement supersedes all prior negotiations and
understandings of any kind with respect to the subject matter
hereof and contains all of the terms and provision of agreement
between the parties hereto with respect to the subject matter
hereof. Any representation, promise or condition, whether
written or oral, not specifically incorporated herein, shall be
of no binding effect upon the parties.
13. (a) If any portion of this Agreement is held invalid or
unenforceable by a court of competent jurisdiction, that portion
only shall be deemed deleted as though it had never been included
herein but the remainder of this Agreement shall remain in full force and
effect.
(b) Executive acknowledges and agrees that Employer's
remedies at law for a breach or threatened breach of any of the
provisions of Section 9 would be inadequate and, in recognition
of this fact, Executive agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law,
Employer, without posting any bond, shall be entitled to obtain
equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available.
<PAGE>
(c) This Agreement shall not be assignable by Executive.
14. No modification, termination or waiver of any provision
of this Agreement shall be valid unless it is in writing and
signed by both parties hereto.
15. Employer represents that it has all requisite power and
authority to execute and deliver this Agreement and to perform
its obligations under this Agreement, and that this Agreement is
enforceable against it in accordance with its terms.
MINERALS TECHNOLOGIES INC.
By: ____________________________________
Name: Jean-Paul Valles
Title: Chairman and Chief Executive Officer
Agreed to by:
____________________________________________
_________________________________________________________________________
MINERALS TECHNOLOGIES INC.
and
CHEMICAL BANK
as Rights Agent
----------------
Rights Agreement
Dated as of October 26, 1992
__________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
1. Certain Definitions 2
2. Appointment of Rights Agent 15
3. Issuance of Right Certificates 15
4. Form of Right Certificates 19
5. Countersignature and Registration 20
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates 22
7. Exercise of Rights; Exercise Price; Expiration Date of
Rights 24
8. Cancellation and Destruction of Right Certificates 29
9. Reservation and Availability of Shares of Preferred Stock 30
10. Preferred Stock Record Date 33
11. Adjustment of Exercise Price or Number of Shares 34
12. Certification of Adjusted Exercise Price or Number of
Shares 45
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power 46
14. Fractional Rights and Fractional Shares 54
15. Rights of Action 56
16. Agreement of Right Holders 57
17. Right Certificate Holder Not Deemed a Stockholder 58
18. Concerning the Rights Agent 59
19. Merger or Consolidation of, or Change in Name of, the
Rights Agent 60
<PAGE>
Section
20. Duties of Rights Agent 62
21. Change of Rights Agent 65
22. Issuance of New Right Certificates 68
23. Redemption 68
24. Notice of Proposed Actions 71
25. Notices 73
26. Supplements and Amendments 74
27. Successors 76
28. Benefits of this Rights Agreement 76
29. Delaware Contract 77
30. Counterparts 77
31. Descriptive Headings 77
32. Severability 77
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Certificate of Designations of
Series A Junior Preferred Stock
<PAGE> ii
RIGHTS AGREEMENT
Agreement, dated as of October 26, 1992, by and between MINERALS
TECHNOLOGIES INC., a Delaware corporation (the "Company"), and CHEMICAL
BANK, a New York banking corporation (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on October 26, 1992, the Board of Directors of the
Company authorized the issuance of, and declared a dividend payable in, one
right (a "Right") for each share of Common Stock, $0.10 par value per
share, of the Company outstanding as of the close of business on November
6, 1992 (the "Record Date"), each such Right representing the right to
purchase one one-hundredth of a share of Series A Junior Preferred Stock of
the Company ("Preferred Stock") having the rights and preferences set forth
in the form of Certificate of Designations attached hereto as Exhibit C
authorized by the Board of Directors on October 26, 1992, upon the terms
and subject to the conditions hereinafter set forth; and
WHEREAS, the Board of Directors of the Company further authorized
the issuance of one Right (subject to adjustment) with respect to each
share of Common Stock which may be issued between the Record Date and the
earlier to
<PAGE> 1
occur of the Expiration Date or the Final Expiration Date (as such terms
are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the shares of Voting Stock (as such
term is hereinafter defined) of the Company then outstanding; provided
that, an Acquiring Person shall not include an (i) Exempt Person (as such
term is hereinafter defined), or (ii) any Person, together with all
Affiliates and Associates of such Person, who or which would be an
Acquiring Person solely by reason of (A) being the Beneficial Owner of
shares of Voting Stock of the Company, the Beneficial
<PAGE> 2
Ownership of which was acquired by such Person pursuant to any action or
transaction or series of related actions or transactions approved by the
Board of Directors before such Person otherwise became an Acquiring Person
or (B) a reduction in the number of issued and outstanding shares of Voting
Stock of the Company pursuant to a transaction or a series of related
transactions approved by the Board of Directors of the Company; provided
further, that in the event such Person described in this clause (ii) does
not become an Acquiring Person by reason of subclause (A) or (B) of this
clause (ii), such Person nonetheless shall become an Acquiring Person in
the event such Person thereafter acquires Beneficial Ownership of an
additional 1% of the Voting Stock of the Company, unless the acquisition of
such additional Voting Stock would not result in such Person becoming an
Acquiring Person by reason of subclause (A) or (B) of this clause (ii).
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith (but only if at the time of such determination by
the Board of Directors there are then in office
<PAGE> 3
not less than two Continuing Directors and such action is approved by a
majority of the Continuing Directors then in office) that a Person who
would otherwise be an "Acquiring Person" as defined pursuant to the
foregoing provisions of this paragraph (a) has become such inadvertently,
and such Person divests as promptly as practicable a sufficient number of
shares of Common Stock so that such Person would no longer by an "Acquiring
Person" as defined pursuant to the foregoing provisions of this paragraph
(a), then such Person shall not be deemed an "Acquiring Person" for any
purposes of this Rights Agreement.
(b) "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), as in effect on the date
of this Rights Agreement.
(c) "Associate" of a Person shall mean (i) with respect to a
corporation, any officer or director thereof or of any Subsidiary (as such
term is hereinafter defined) thereof, or any Beneficial Owner (as such term
is hereinafter defined) of 10% or more of any class of equity
<PAGE> 4
security thereof, (ii) with respect to an association, any officer or
director thereof or of a Subsidiary thereof, (iii) with respect to a
partnership, any general partner thereof or any limited partner thereof who
is, directly or indirectly, the Beneficial Owner of a 10% ownership
interest therein, (iv) with respect to a business trust, any officer or
trustee thereof or of any Subsidiary thereof,(v) with respect to any other
trust or an estate, any trustee, executor or similar fiduciary or any
Person who has a 15% or greater interest as a beneficiary in the income
from or principal of such trust or estate, (vi) with respect to a natural
person, any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person, and (vii) any Affiliate of
such Person.
(d) A person shall be deemed the "Beneficial Owner" of, or to "Beneficially
Own", any securities (and correlative terms shall have correlative meanings):
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns,
<PAGE> 5
directly or indirectly, for purposes of Section 13(d) of the Exchange Act
and Regulations 13D or 13G thereunder (or any comparable or successor law
or regulation), in each case as in effect on the date hereof; or
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or the fulfillment of a
condition or both) pursuant to any agreement, arrangement or understanding,
or upon the exercise of conversion rights, exchange rights, other rights
(other than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own", securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange or (B)
the right to vote, alone or in concert with others, pursuant to any
<PAGE> 6
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to "Beneficially Own", any securities if the agreement, arrangement
or understanding to vote such security (1) arises solely from a revocable
proxy or consent given in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations
under the Exchange Act and (2) is not at the time reportable by such Person
on a Schedule 13D report under the Exchange Act (or any comparable or
successor report), other than by reference to a proxy or consent
solicitation being conducted by such Person; or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not
in writing) for the purpose
<PAGE> 7
of acquiring, holding, voting (except as described in clause (B) of
subparagraph (ii) of this paragraph (d)) or disposing of any securities of
the Company; provided, however, that for purposes of determining Beneficial
ownership of securities under this Rights Agreement, officers and directors
of the Company solely by reason of their status as such shall not
constitute a group (notwithstanding that they may be Associates of one
another or may be deemed to constitute a group for purposes of Section
13(d) the Exchange Act) and shall not be deemed to own shares owned by
another officer or director of the Company.
Notwithstanding anything in this paragraph (d) to the contrary, a Person
shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own,"
any security beneficially owned by another Person solely by reason of an
agreement, arrangement or understanding with such other Person for the
purposes of: (x) soliciting the Company's stockholders for the election of
director nominees or any other stockholder
<PAGE> 8
resolution, the formation of and membership on any committee for the
purpose of promoting or opposing any stockholder resolution or for electing
a slate of nominees to the Company's Board of Directors, service on such a
slate of nominees, or agreement to a slate of director nominees, provided
that such other Person retains the right at any time to withdraw as a
nominee or member of any such committee, and to withhold or revoke any vote
or proxy for or against any such stockholder resolution or for such slate
of nominees; (y) entering into revocable voting agreements or the granting
or solicitation of revocable proxies with respect to any of the matters
described in the foregoing clause (x); or (z) the sharing of expenses and
the indemnification against expenses and liabilities by any such other
Person with respect to expenses incurred or conduct occurring during the
time such other Person is a nominee or a member of any such committee
described in the foregoing clause (x). Further, notwithstanding anything
in this paragraph (d) to the contrary, a Person engaged in the business of
underwriting securities shall not be deemed the "Beneficial
<PAGE> 9
Owner" of, or to "Beneficially Own," any securities acquired in good faith
in a firm commitment underwriting until the expiration of forty days after
the date of such acquisition.
(e) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next succeeding
Business Day.
(g) "Common Stock" when used with reference to the Company shall mean
the Common Stock (presently $0.10 par value) of the Company. "Common
Stock" when used with reference to any Person other than the Company which
shall be organized in corporate form shall mean the capital stock or other
equity security with the greatest per share voting power of such Person.
"Common Stock" when used with reference to any Person other than the
Company which shall not be
<PAGE> 10
organized in corporate form shall mean units of beneficial interest which
shall represent the right to participate in profits, losses, deductions and
credits of such Person and which shall be entitled to exercise the greatest
voting power per unit of such Person.
(h) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is
not an Acquiring Person, or an Affiliate or Associate of any Acquiring
Person, or a representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and who either (i) was a member of the Board
of Directors prior to the time that any Person became an Acquiring Person
(other than pursuant to a Qualifying Tender Offer) or (ii) subsequently
became a member of the Board of Directors, and whose nomination for
election or election to the Board of Directors was recommended or approved
by a majority of the Continuing Directors then on the Board of Directors.
(i) "Distribution Date" shall have the meaning set forth in Section
3(b) hereof.
<PAGE> 11
(j) "Exchange Act" shall have the meaning set forth in Section 1(b)
hereof.
(k) "Exempt Person" shall mean (i) Pfizer Inc., for so long as such
corporation beneficially owns 15% or more of the shares of Voting Stock of
the Company, (ii) the Company, (iii) any Subsidiary of the Company or (iv)
any employee benefit plan or employee stock plan of the Company or any
Subsidiary of the Company, or any trust or other entity organized,
appointed, established or holding Common Stock for or pursuant to the terms
of any such plan.
(l) "Exercise Price" shall have the meaning set forth in Sections 4
and 7(b) hereof.
(m) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(n) "Fair Market Value" of any property shall mean the fair market
value of such property as determined in accordance with Section 11(b)
hereof.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(p) "Person" shall mean any individual, firm, corporation or other entity.
<PAGE> 12
(q) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(r) "Qualifying Tender Offer" shall mean a tender or exchange offer
for all outstanding shares of Common Stock of the Company approved by a
majority of the Board of Directors (provided that at the time of such
approval of the Board of Directors there are then in office not less than
two Continuing Directors and such offer is approved by a majority of the
Continuing Directors then in office), after taking into account the
potential long-term value of the Company and all other factors that they
consider relevant.
(s) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(t) "Right Certificate" shall have the meaning set forth in Section
3(d) hereof.
(u) "Stock Acquisition Date" shall mean the first date on which there
shall be a public announcement by the Company or an Acquiring Person that
an Acquiring Person has become such (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) or such earlier
<PAGE> 13
date as a majority of the Continuing Directors shall become aware of the
existence of an Acquiring Person.
(v) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests having voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or
indirectly, by such Person or by any corporation or other entity that is
otherwise controlled by such Person.
(w) "Summary of Rights" shall have the meaning set forth in Section
3(a) hereof.
(x) "Trading Day" shall have the meaning set forth in Section 11(b)
hereof.
(y) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in respect of any transfer of any security, instrument
or right, including Rights, shares of Common Stock and shares of Preferred
Stock.
<PAGE> 14
(z) "Voting Stock" shall mean (i) the Common Stock of the Company and
(ii) any other shares of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together with
the Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or
winding up.
Any determination required to be made by the Board of Directors of the
Company for purposes of applying the definitions contained in this Section
1 shall be made by the Board of Directors in its good faith judgment, which
determination shall be binding on the Rights Agent and the holders of the
Rights.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable.
Section 3. Issuance of Right Certificates.
(a) On the Record Date (or as soon as practicable thereafter), the
Company or the Rights Agent shall send a copy of a Summary of Rights, in
substantially the form
<PAGE> 15
attached hereto as Exhibit A (the "Summary of Rights"), by first class mail,
postage prepaid, to each record holder of the Common Stock as of the
close of business on the Record Date, at the address of such holder shown
on the records of the Company.
(b) Until the close of business on the day which is the earlier
of (i) the tenth day after the Stock Acquisition Date or (ii) the tenth
business day (or such later date as may be determined by action of the
Board of Directors (but only if at the time of such determination there are
then in office not less than two Continuing Directors and such action is
approved by a majority of the Continuing Directors then in office) prior to
such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or the first
public announcement of the intent of any Person (other than an Exempt
Person) to commence, a tender or exchange offer upon the successful
consummation of which such Person, together with its Affiliates and
Associates, would be the Beneficial Owner of 30% or more of the then
outstanding shares of Voting Stock of the Company (irrespective of whether
any shares are actually purchased pursuant to any such offer) (the earlier
of such dates being herein referred to as the "Distribution Date"), (x) the
<PAGE> 16
Rights shall be evidenced by the certificates for Common Stock registered
in the name of the holders of Common Stock (together with, in the case of
certificates for Common Stock outstanding as of the Record Date, the
Summary of Rights) and not by separate Right certificates and the record
holders of such certificates for Common Stock shall be the record holders
of the Rights represented thereby and (y) each Right shall be transferable
only simultaneously and together with the transfer of a share of Common
Stock (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Expiration Date or Final Expiration
Date), the surrender for transfer of any certificate for Common Stock shall
constitute the surrender for transfer of the Right or Rights associated
with the Common Stock evidenced thereby, whether or not accompanied by a
copy of the Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common
Stock that become outstanding after the Record Date but prior to the
earlier of the Distribution Date, the Expiration Date or the Final
Expiration Date and, in certain circumstances provided in Section 22
hereof, may be issued in respect of shares of Common Stock that become
outstanding after the Distribution Date. Certificates for Common Stock
issued (including, without limitation,
<PAGE> 17
certificates issued upon original issuance, disposition from the Company's
treasury or transfer or exchange of Common Stock) after the Record Date but
prior to the earliest of the Distribution Date, the Expiration Date, or the
Final Expiration Date (or, in certain circumstances as provided in Section
22 hereof, after the Distribution Date) shall have impressed, printed,
written or stamped thereon or otherwise affixed thereto the following
legend:
This certificate also evidences and entitles the holder hereof to
the same number of Rights (subject to adjustment) as the number
of shares of Common Stock represented by this certificate, such
Rights being on the terms provided under the Rights Agreement
between Minerals Technologies Inc. and Chemical Bank (the "Rights
Agent"), dated as of October 26, 1992, as it may be amended from
time to time (the Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file
at the principal executive offices of Minerals Technologies Inc.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights shall be evidenced by separate
certificates and shall no longer be evidenced by this
certificate. Minerals Technologies Inc. shall mail to the
registered holder of this certificate a copy of the Rights
Agreement without charge within five days after receipt of a
written request therefor. Under certain circumstances as
provided in Section 7(e) of the Rights Agreement, Rights issued
to or Beneficially owned by Acquiring Persons or their Affiliates
or Associates (as such terms are defined in the Rights Agreement
or any subsequent holder of
<PAGE> 18
such Rights shall be null and void and may not be transferred to
any Person.
(d) As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign, and
the Company will send or cause to be sent (and the Rights Agent will, if
requested, send), by first class mail, postage prepaid, to each record
holder of the Common Stock as of the close of business on the Distribution
Date, as shown by the records of the Company, at the address of such holder
shown on such records, a certificate in the for provided by Section 4
hereof (a "Right Certificate"), evidencing one Right (subject to adjustment
as provided herein) for each share of Common Stock so held. As of and
after the Distribution Date, the Rights shall be evidenced solely by Right
Certificates and may be transferred by the transfer of the Right
Certificate as permitted hereby, separately and apart from any transfer of
one or more shares of Common Stock.
Section 4. Form of Right Certificates.
The Right Certificates (and the forms of election to purchase
shares, certificate and assignment to be printed on the reverse thereof),
when, as and if issued, shall be substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as
<PAGE> 19
may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on
which the Common Stock or the Rights may from time to time be listed or as
the Company may deem appropriate to conform to usage or otherwise and as
are not inconsistent with the provisions of this Rights Agreement. Subject
to the provisions of Section 22 hereof, Right Certificates evidencing
Rights whenever issued, (i) shall be dated as of the date of issuance of
the Rights they represent and (ii) subject to adjustment from time to time
as provided herein, on their face shall entitle the holders thereof to
purchase such number of shares (including fractional shares which are
integral multiples of one-hundredth of a share) of Preferred Stock as shall
be set forth therein at the price payable upon exercise of a Right provided
by Section 7(b) hereof as the same may from time to time be adjusted as
provided herein (the "Exercise Price").
Section 5. Countersignature and Registration.
(a) Each Right Certificate shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either
<PAGE> 20
manually or by facsimile signature. Each Right Certificate shall be
countersigned by the Rights Agent either manually or by facsimile signature
and shall not be valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any Right Certificate
shall cease to be such officer of the Company before countersignature by
the Rights Agent and issuance and delivery of the certificate by the
Company, such Right Certificate, nevertheless, may be countersigned by the
Rights Agent and issued and delivered with the same force and effect as
though the person who signed such Right Certificates had not ceased to be
such officer of the Company. Any Right Certificate may be signed on behalf
of the Company by any person who, on the date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or one or more offices
designated as the appropriate place for surrender of Right Certificates
upon exercise or transfer, and in such other locations as may be required
by law, books for registration and transfer of the Right
<PAGE> 21
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number
of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stole Right Certificates.
(a) Subject to the provisions of Section 7(e), 7(f) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the earlier of the Expiration Date or the
Final Expiration Date, any Right Certificate, may be (i) transferred or
(ii) split up, combined or exchanged for one or more other right
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock as the Right Certificate or Rights Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer any Right Certificate shall surrender the Right
Certificate at the office of the Rights Agent designated for the surrender
of Right Certificates with the form of certificate and assignment on the
reverse side thereof duly endorsed (or enclosed with such Right Certificate
a written instrument of transfer in
<PAGE> 22
form satisfactory to the Company and the Rights Agent), duly executed by
the registered holder thereof or his attorney duly authorized in writing,
and with such signature duly guaranteed. Any registered holder desiring to
split up, combine or exchange any Right Certificate shall make such request
in writing delivered to the Rights Agent, and shall surrender the Right
Certificate to be split up, combined or exchanged at the office of the
Rights Agent designated therefor. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any Transfer Tax that may
be imposed in connection with any transfer, split up, combination or
exchange of any Right Certificates.
(b) Subject to the provisions of Section 7(e), 7(f) and 14 hereof,
upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a
Right Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them and, if requested by the
Company, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, or upon surrender to the Rights
Agent
<PAGE> 23
and cancellation of the Right Certificate if mutilated, the Company shall
issue and deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered owner in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; exercise Price; Expiration Date of
Rights.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth
in Section 7(e) and 23(a) hereof). Except as otherwise provided herein,
the Rights may be exercised, in whole or in part, at any time commencing
with the Distribution Date upon surrender of the Right Certificate, with
the form of election to purchase and certificate on the reverse side
thereof duly executed (with signatures duly guaranteed), to the Rights
Agent at the principal office of the Rights Agent in New York, New York,
together with payment of the Exercise Price for each Right exercised,
subject to adjustment as hereinafter provided, at or prior to the Close of
Business on the earlier of (i) October 26, 2002 (the "Final Expiration
Date") or (ii) the date on which the Rights are
<PAGE> 24
redeemed as provided in Section 23 hereof (such earlier date being herein
referred to as the "Expiration Date").
(b) The Exercise Price shall initially be $65.00 for each one one-
hundredth (1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of
Preferred Stock or other securities to be acquired upon exercise of a Right
shall be subject to adjustment from time to time as provided in Sections 11
and 13 hereof. The Exercise Price shall be payable in lawful money of the
United States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check,
cashier's check, bank draft or money order payable to the Company or the
Rights Agent of the Exercise Price for the shares to be purchased and an
amount equal to any applicable Transfer Tax required to be paid by the
holder of the Right Certificate in accordance with Section 9(e) hereof, the
Rights Agent shall thereupon promptly (i) requisition from any transfer
agent of the Preferred Stock of the Company one or more certificates
representing the number of shares of Preferred Stock to be so purchased,
and the Company hereby authorizes
<PAGE> 25
and directs such transfer agent to comply with all such requests, (ii) as
provided in Section 14(b), at the election of the Company, cause depositary
receipts to be issued in lieu of fractional shares of Preferred Stock,
(iii) if the election provided for in the immediately preceding clause (ii)
has not been made, requisition from the Company the amount of cash to be
paid in lieu of the issuance of fractional shares in accordance with
Section 14(b) hereof, (iv) after receipt of such Preferred Stock
certificates and, if applicable, depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (v) when appropriate, after receipt, promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate;
provided, however, that in the case of a purchase of securities, other than
Preferred Stock, pursuant to Section 13 hereof, the Rights Agent shall
promptly take the appropriate actions corresponding in such case to that
referred to in the foregoing clauses (i) through (v) of this Section 7(c).
Notwithstanding the foregoing provisions of this Section 7(c), the Company
may suspend the issuance of shares of Preferred Stock upon exercise of a
Right for a reasonable period, not in excess of 90 days, during which
<PAGE> 26
the Company seeks to register under the Securities Act of 1933, as amended
(the "Act"), and any applicable securities law of any other jurisdiction,
the shares of Preferred Stock to be issued pursuant to the Rights;
provided, however, that nothing contained in this Section 7(c) shall
relieve the Company of its obligations under Section 9(c) hereof.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or his assign, subject to the provisions of Section
14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person, other than pursuant to a Qualifying
Tender Offer, any Rights that are beneficially owned by (x) such Acquiring
Person (or any Associate or Affiliate of such Acquiring Person), (y) a
transferee of such Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee after the invalidation time or (z) a transferee of
such Acquiring Person (or any such Associate or Affiliate) who becomes a
transferee prior to or concurrently
<PAGE> 27
with the invalidation time pursuant to either (I) a transfer from the
Acquiring Person to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (II) a transfer which the Board of
Directors has determined is part of a plan, arrangement or understanding
which has the purpose or effect of avoiding the provisions of this Section
7(e), and subsequent transferees of such Persons referred to in clause (y)
and (z) above, shall be void without any further action and any holder of
such Rights shall thereafter have no rights whatsoever with respect to such
Rights under any provision of this Rights Agreement. The company shall use
all reasonable efforts to ensure that the provisions of this Section 7(e)
are complied with, but shall have no liability to any holder of Right
Certificates or any other Person as a result of its failure to make any
determination with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. No Right Certificate shall be issued
pursuant to Section 3 hereof that represents Rights beneficially owned by
an Acquiring Person whose Rights would be void pursuant to the provisions
of this Section 7(e) or any Associate or Affiliate thereof; no Right
Certificate shall be issued at any time upon the transfer of any Rights
<PAGE> 28
to an Acquiring Person whose Rights would be void pursuant to the
provisions of this Section 7(e) or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the provisions of this
Section 7(e) shall be cancelled.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate following the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or
to any of its agents, be delivered to the Rights Agent
<PAGE> 29
for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be canceled by it, and no Right Certificates shall be issued
in lieu thereof except as expressly permitted by any of the provisions of
this Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall cancel and retire,
any Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all cancelled
Right Certificates to the Company, or shall, at the written request of the
Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or out of authorized and issued shares of Preferred Stock
held in its treasury, such number of shares of Preferred Stock as will from
time to time be sufficient to permit the exercise in full of all
outstanding Rights.
(b) The Company shall use its best efforts to cause, from and
after such time as the Rights become
<PAGE> 30
exercisable, all shares of Preferred Stock issued or reserved for issuance
in accordance with this Rights Agreement to be listed, upon official notice
of issuance, upon the principal national securities exchange, if any, upon
which the Common Stock is listed or, if the principal market for the common
Stock is not on any national securities exchange, to be eligible for
quotation in the national Association of Securities Dealers' Automated
Quotation system or any successor thereto or other comparable quotation
system.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to insure that all shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price in
respect thereof), be duly and validly authorized and issued and fully paid
and nonassessable shares.
(d) The Company shall use its best efforts to (i) file, as soon
as practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Act, with
respect to the shares of Preferred Stock purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such
<PAGE> 31
registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for Preferred Stock, and (b) the date of the expiration of the
Rights. the company may temporarily suspend, for a period of time not to
exceed ninety days, the issuance of shares of Preferred Stock upon exercise
of a Right in order to prepare and file a registration statement under the
Act and permit it to become effective. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall
have been obtained and until a registration statement under the Act (if
required) shall have been declared effective.
(e) The Company covenants and agrees that it will pay when due and
payable any and all federal and state Transfer Taxes which may be payable
in respect of
<PAGE> 32
the issuance or delivery of the Right Certificates or of any shares of
Preferred Stock issued or delivered upon the exercise of Rights. The
Company shall not, however, be required to pay any Transfer Tax which may
be payable in respect of any transfer or delivery of a Right Certificate to
a Person other than, or the issuance or delivery of certificates for
Preferred Stock upon exercise of Rights in a name other than that of, the
registered holder of the Right Certificate, and the Company shall not be
required to issue or deliver a Right Certificate or certificate for
Preferred Stock to a Person other than such registered holder until any
such Transfer Tax shall have been paid (any such Transfer Tax being payable
by the holder of such Right Certificate at the time of surrender) or until
it has been established to the Company's satisfaction that no such Transfer
Tax is due.
Section 10. Preferred Stock Record Date. Each person in whose
name any certificate for shares of Preferred Stock is issued upon the
exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Preferred Stock represented thereby on, and such
certificate shall be dated as of, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Exercise
Price (and any
<PAGE> 33
applicable Transfer Taxes) was made; provided, however, that, if the date
of such surrender and payment is a date upon which the Preferred Stock
transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall
be dated as of, the next succeeding business Day on which the Preferred
Stock transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate, as such, shall
not be entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions
or to exercise any preemptive rights, and shall not be entitled to receive
any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of exercise Price or Number of Shares.
The Exercise Price and the number of shares of Preferred Stock which may be
purchased upon exercise of a Right are subject to adjustment from time to
time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Rights Agreement (A) declare or pay any dividend on Common Stock
<PAGE> 34
payable in shares of Common Stock, (B) subdivide or split the outstanding
shares of Common Stock into a greater number of shares or (C) combine or
consolidate the outstanding shares of Common Stock into a smaller number of
shares or effect a reverse split of the outstanding shares of Common Stock,
then and in each such event the number of shares of Preferred Stock
issuable upon the exercise of a Right after the record date for such event
(if one shall have been established or, if not, after the date of such
event) shall be the number of shares of Preferred Stock issuable
immediately prior to such event multiplied by a fraction the numerator of
which is the number of Rights outstanding immediately prior to such event
and the denominator of which is the number of Rights outstanding
immediately after such event and the Exercise Price after such event shall
be the Exercise Price in effect immediately prior to such event multiplied
by such fraction. If an event occurs which would require an adjustment
under both this Section 11(a)(i)and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to,
and
<PAGE> 35
shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) In the event that any Person (other than an Exempt Person),
alone or together with its Affiliates and Associates, shall become an
Acquiring Person, except pursuant to a Qualifying Tender Offer, then,
subject to the last sentence of Section 23(a) and except as otherwise
provided in this Section 11, each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive upon
exercise of such Right in accordance with the terms of this Rights
Agreement and payment of the Exercise Price, the greater of (1) the number
of one one-hundredths of a share of Preferred Stock for which such Right
was exercisable immediately prior to the first occurrence of the event
described in this Section 11(a)(ii) or (2) such number of one one-hundredths
of a share of Preferred Stock, based on the per share Fair
Market Value of the Preferred Stock (determined pursuant to Section 11(b)
hereof) on the date of such first occurrence, having a value equal to twice
the Exercise Price; provided, however, that if the
<PAGE> 36
transaction that would otherwise give rise to the foregoing adjustment is
also subject to the provisions of Section 13 hereof, then only the
provisions of Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) In the event that the Company does not have available
sufficient authorized but unissued Preferred Stock to permit the
adjustments required pursuant to the foregoing subparagraph (i) or the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be
necessary to authorize and reserve for issuance such number of additional
shares of Preferred Stock as may from time to time be required to be issued
upon the exercise in full of all Rights from time to time outstanding and,
if necessary, shall use its best efforts to obtain stockholder approval
thereof. In lieu of issuing shares of Preferred Stock in accordance with
the foregoing subparagraphs (i) and (ii), the Company may, if the Board of
Directors determines (but only if at the time of such determination by the
Board of Directors there
<PAGE> 37
are then in office not less than two Continuing Directors and such action
is approved by a majority of the Continuing Directors then in office) that
such action is necessary or appropriate and not contrary to the interests
of holders of Rights, elect to issue or pay, upon the exercise of the
Rights, cash, property, shares of Preferred or Common Stock, or any
combination thereof, having an aggregate Fair Market Value equal to the
Fair Market Value of the shares of Preferred Stock which otherwise would
have been issuable pursuant to Section 11(a)(ii), which Fair Market Value
shall be determined by an investment banking firm selected by the Board of
Directors (but only if at the time of such selection there are then in
office not less than two Continuing Directors and such selection is
approved by a majority of the Continuing Directors then in office). For
purposes of the preceding sentence, the Fair Market Value of the Preferred
Stock shall be as determined pursuant to Section 11(b). Subject to Section
23 hereof, any such election by the Board of Directors of the Company must
be made and publicly announced within thirty (30) days
<PAGE> 38
after the date on which the event described in Section 11(a)(ii) occurs.
(b) For the purpose of this Rights Agreement, the "Fair Market
Value" of any share of Preferred Stock, Common Stock or any other stock or
any Right or other security or any other property on any date shall be
determined as provided in this Section 11(b). In the case of a publicly-
traded stock or other security, the Fair Market Value on any date shall be
deemed to be the average of the daily closing prices per share of such
stock or per unit of such other security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the Fair Market Value per share
of any share of Common Stock is determined during a period which includes
any date that is within 30 Trading Days after (i) the ex-dividend date for
a dividend or distribution on such stock payable in shares of Common Stock
or securities convertible into shares of Common Stock, or (ii) the
effective date of any subdivision, split, combination, consolidation,
reverse stock split or reclassification of such stock, then, and in each
such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such
<PAGE> 39
day, the average of the closing bid and asked prices, regular way (in
either case, as reported in the applicable transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange), or, if the securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the applicable
transaction reporting system with respect to securities listed on the
principal national securities exchange on which such security is listed or
admitted to trading; or, if not listed or admitted to trading on any
national securities exchange, the last quoted price (or, if not so quoted,
the average of the high bid and low asked prices) in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use; or,
if no bids for such security are quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such security selected by the Board of
Directors of the Company. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which such security is listed
or admitted to trading is open for the transaction of
<PAGE> 40
business or, if such security is not listed or admitted to trading on any
national securities exchange, a Business Day. If a security is not
publicly held or not so listed or traded, "Fair Market Value" shall mean
the fair value per share of stock or per other unit of such other security,
as determined by an independent investment banking firm experienced in the
valuation of securities selected in good faith by the Board of Directors of
the Company, or, if no such investment banking firm is, in the good faith
judgment of the Board of Directors, available to make such determination,
in good faith by the Board of Directors of the Company; provided, however,
that for purposes of making the adjustment provided for by Section
11(a)(ii) hereof, the Fair Market Value of a share of Preferred Stock shall
not be less than 100% of the product of the Fair Market Value of a share of
Common Stock multiplied by the higher of the then Dividend Multiple or Vote
Multiple applicable to the Preferred Stock (as defined in the Certificate
of Designations relating to the Preferred Stock) and shall not exceed 105%
of the product of the then Fair Market Value of a share of Common Stock
multiplied by the higher of the then Dividend Multiple or Vote Multiple
applicable to the Preferred Stock. In the case of property other than
securities, the "Fair Market Value" thereof shall be
<PAGE> 41
determined in good faith by the Board of Directors of the Company based
upon such appraisals or valuation reports of such independent experts as
the Board of Directors of the Company shall in good faith determine to be
appropriate in accordance with good business practices and the interests of
the holders of Rights. Any such determination of Fair Market Value shall
be described in a statement filed with the Rights Agent and shall be
binding upon the Rights Agent.
(c) All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-hundredth of a share, as the case
may be.
(d) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of Preferred Stock issuable upon the exercise
of the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Exercise Price and the number of shares to be
issued upon exercise of the Rights as in the initial Right Certificates
issued hereunder but, nevertheless, shall represent the Rights as so adjusted.
(e) Before taking any action that would cause an adjustment
reducing the purchase price per whole share of Preferred Stock upon
exercise of the Rights below the then par value, if any, of the shares of
Preferred Stock, the Company shall use its best efforts to take any
corporate
<PAGE> 42
action which may, in the opinion of its counsel, be necessary in order that
the Company may validly and legally issue fully paid and non-assessable
shares of such Preferred Stock at such adjusted purchase price per share.
(f) Anything in this Section 11 to the contrary notwithstanding,
in the event of any reclassification of stock of the Company or any
recapitalization, reorganization or partial liquidation of the Company or
similar transaction, the Company shall be entitled to make such further
adjustments in the number of shares of Preferred Stock which may be
acquired upon exercise of the Rights, and such adjustments in the Exercise
Price therefor, in addition to those adjustments expressly required by the
other paragraphs of this Section 11, as the Board of Directors of the
Company shall determine to be necessary or appropriate in order for the
holders of the Rights in such event to be treated equitably and in
accordance with the purpose and intent of this Rights Agreement or in order
that any such event shall not, but for such adjustment, in the opinion of
counsel to the Company, result in the stockholders of the Company being
subject to any United States federal income tax liability by reason thereof.
(g) In the event the Company shall at any time after the Record
Date make any distribution on the shares of
<PAGE> 43
Common Stock of the Company whether by way of a dividend or a
reclassification of stock, a recapitalization, reorganization or partial
liquidation of the Company or otherwise, in cash or any debt security, debt
instrument, real or personal property or any other property (other than any
shares of Common Stock or other capital stock of the Company and other than
any right or warrant to acquire any such shares, including any debt
security convertible into or exchangeable for any such share, at less than
the Fair Market Value of such shares) and the amount of such cash dividend
or the Fair Market Value of such debt security, debt instrument or property
exceeds 150% of the aggregate amount of the cash dividends declared or paid
on the Common Stock of the Company in the 15-month period immediately
preceding such distribution, then and in each such event, unless such
distribution is part of or is made in connection with a transaction to
which Section 11(a)(ii) or Section 13 hereof applies, the Exercise Price
shall be reduced by an amount equal to the cash or the Fair Market Value of
such distribution, as the case may be, per share of Common Stock of the
Company. For purposes hereof, the Fair Market Value of any property
distributed to the holders of shares of Common Stock of the Company shall
be the Fair Market Value of such property as determined by an independent
investment
<PAGE> 44
banking firm experienced in the valuation of securities or the other
property so distributed, as the case may be, selected in good faith by the
Board of Directors of the Company, or, if no such investment banking firm
is in the good faith judgment of the Board of Directors available to make
such determination, in good faith by the Board of Directors of the Company,
whose determination shall be final and binding on the Company, the Rights
Agent and the holders of Rights.
Section 12. Certification of Adjusted Exercise Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11, 13 or
23(c), the Company shall (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts giving rise to such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance
with Section 25. Notwithstanding the foregoing sentence, the failure of
the Company to make such certification or give such notice shall not affect
the validity of or the force or effect of the requirement for such
adjustment. Any adjustment to be made pursuant to Section 11, 13 or 23(c)
of this Rights Agreement shall be effective as of the date of
<PAGE> 45
the event giving rise to such adjustment. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any adjustment
unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) Except for any transaction approved by the Board of Directors
(but only if at the time of such approval by the Board of Directors there
are then in office not less than two Continuing Directors and such action
is approved by a majority of the Continuing Directors then in office), in
the event that, at any time on or after the Distribution Date, (x) the
Company shall, directly or indirectly, consolidate with, or merge with and
into, any other Person or Persons (other than an Exempt Person) and the
Company shall not be the surviving or continuing corporation of such
consolidation or merger, or (y) any Person or Persons (other than an Exempt
Person) shall, directly or indirectly, consolidate with, or merge with and
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged
<PAGE> 46
for stock or other securities of any other Person (other than an Exempt
Person) or of the Company or cash or any other property, or (z) the Company
or one or more of its subsidiaries shall, directly or indirectly, sell or
otherwise transfer to any other Person or Affiliate or Associate of such
Person, in one or more transactions, or the Company or one or more of its
Subsidiaries shall sell or otherwise transfer to any Persons in one or a
series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole), then, on the first occurrence of any such event, proper
provision shall be made so that (i) each holder of record of a Right,
except as provided in Section 7(e) hereof, shall thereafter have the right
to receive, upon the exercise thereof and payment of the Exercise Price in
accordance with the terms of this Rights Agreement, such number of shares
of validly issued, fully paid, non-assessable and freely tradeable Common
Stock of the Principal Party (as defined herein), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall,
based on the Fair Market Value of the Common Stock of the Principal Party
on the date of the consummation of such consolidation, merger, sale or
transfer, equal twice the Exercise Price; (ii) such
<PAGE> 47
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, all the obligations and
duties of the Company pursuant to this Rights Agreement; (iii) the term
"Company" for all purposes of this Rights Agreement shall thereafter be
deemed to refer to such Principal Party; (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock in accordance with the
provisions of Section 9 hereof applicable to the reservation of Preferred
Stock) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; provided, however, that, upon
the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of
shares, reorganization or other extraordinary transaction in respect of
such Principal party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the Exercise Price, such
cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had it, at the time of such
<PAGE> 48
transaction, owned the shares of Common Stock of the Principal Party
purchasable upon the exercise of a Right, and such Principal Party shall
take such steps (including, but not limited to, reservation of shares of
stock) as may be necessary to permit the subsequent exercise of the Rights
in accordance with the terms hereof for such cash, shares, rights, warrants and
other property and (v) the provisions of section 11(a)(ii) hereof shall
be of no effect following the occurrence of any event described in clause
(x), (y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which shares of Common Stock of the Company
are changed or otherwise exchanged or converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer of the
Common Stock of which has the greatest market value or (B) if no securities
are so issued, (x) the Person that is the other party to the merger or
consolidation and that survives such merger or consolidation, or, if there
is more than one such Person, the Person the Common Stock of which has the
greatest market value or (y) if the Person that is the other party to the
<PAGE> 49
merger or consolidation does not survive the merger or consolidation, the
Person that does survive the merger or consolidation (including the Company
if it survives); and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions, or, if each Person that is a party to
such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of
such Persons as is the issuer of Common Stock having the greatest market
value of shares outstanding; provided, however, that in any such case, if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered, the
term "Principal Party" shall refer to such other Person, or if such Person
is a Subsidiary, directly or indirectly, of more than one Person, the Common
Stocks of all of which are and have been so registered, the term
"Principal Party" shall refer
<PAGE> 50
to whichever of such Persons is the issuer of the Common Stock having the
greatest market value of shares outstanding.
(c) The Company shall not consummate any consolidation, merger or
sale or transfer of assets or earning power referred to in Section 13(a)
unless the Principal Party shall have a sufficient number of authorized
shares of its Common Stock that have not been issued or reserved for
issuance to permit exercise in full of all Rights in accordance with this
Section 13 and unless prior thereto the Company and the Principal Party
involved therein shall have executed and delivered to the Rights Agent an
agreement confirming that the Principal Party shall, upon consummation of
such consolidation, merger or sale or transfer of assets or earning power,
assume this Rights Agreement in accordance with Section 13(a) hereof and
that all rights of first refusal or preemptive rights in respect of the
issuance of shares of Common Stock of the Principal Party upon exercise of
outstanding Rights have been waived and that such transaction shall not
result in a default by the Principal Party under this Rights Agreement, and
further providing that, as soon as practicable after the date of any
consolidation, merger or sale or transfer of assets or
<PAGE> 51
earning power referred to in Section 13(a) hereof, the Principal Party
will:
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the date of
expiration of the Rights, and similarly comply with applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing
of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any
<PAGE> 52
successor form) under the Exchange Act. In the event that any of the
transactions described in Section 13(a) hereof shall occur at any
time after the occurrence of a transaction described in Section
11(a)(ii) hereof, the Rights which have not theretofore been
exercised shall, subject to the provisions of Section 7(e) hereof,
thereafter be exercisable in the manner described in Section 13(a)
shall, subject to the provisions of Section 7(e) hereof, thereafter
be exercisable in the manner described in Section 13(a).
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or
other instrument governing its corporate affairs, which provision would
have the effect of (i) causing such Principal Party to issue, in connection
with, or as a consequence of, the consummation of a transaction referred to
in this Section 13, shares of Common Stock of such Principal Party at less
than the then Fair Market Value per share (determined pursuant to Section
11(b) hereof) or securities exercisable for, or convertible into, Common
Stock of such Principal Party at less than such then Fair Market Value
(other than to holders of Rights
<PAGE> 53
pursuant to this Section 13 or (ii) providing for any special tax or
similar payment in connection with the issuance to any holder of a Right of
Common Stock of such Principal Party pursuant to the provisions of this
Section 13, then, in such event, the Company shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have
been canceled, waived or amended, or that the authorized securities shall
be redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed
transaction.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights
(i.e., Rights to acquire less than one one-hundredth of a share of
Preferred Stock), unless such fractional Rights result from a transaction
referred to in Section 11(a)(i) hereof. If the Company shall determine not
to issue such fractional Rights, then, in lieu of such fractional Rights,
there shall be paid to
<PAGE> 54
the holders of record of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of
one-hundredth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which
are integral multiples of one-hundredth of a share). In lieu of issuing
fractions of shares of Preferred Stock, the Company may, at its election,
issue depositary receipts evidencing fractions of shares pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such
depositary receipts shall have all of the rights, privileges and
preferences to which they would be entitled as owners of the Preferred
Stock. With respect to fractional shares that are not integral multiples
of one-hundredth of a share, if the Company does not issue such fractional
shares or depositary receipts in lieu thereof, there shall be paid to the
holders of record of Right Certificates at the time such Right Certificates
are exercised as herein provided an amount in cash equal to the
<PAGE> 55
same fraction of the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right expressly
waives his right to receive any fractional Right or any fractional shares
of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share) upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect
of this Rights Agreement, except the rights of action given to the Rights
Agent in Section 18 hereof, are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the holders
of record of the Common Stock); and any holder of record of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and
in this Rights Agreement. Without limiting the foregoing or any remedies
<PAGE> 56
available to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for any
breach of this Rights Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual
or threatened violations of, the obligations of any Person subject to this
Rights Agreement.
Section 16. Agreement of Right Holders. Each holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced
by the certificates for Common Stock registered in the name of the holders
of Common Stock (together, as applicable, with the Summary of Rights),
which certificates for Common Stock shall also constitute certificates for
Rights, and not by separate Right Certificates, and each Right shall be
transferable only simultaneously and together with the transfer of shares
of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly
<PAGE> 57
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Right Certificates or the
associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company
nor the Rights Agent shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of Preferred
Stock or any other securities which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon the holder
of any Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof
<PAGE> 58
(except as provided in Section 7(f) hereof), or to give or withhold consent
to any corporate action (except as provided in Section 7(f) hereof), or to
receive notice of meetings or other actions affecting stockholders (except
as provided in Section 24 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and execution
of this Rights Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability, or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of
the Rights Agent, for anything done or omitted to be done by the Rights
Agent in connection with the acceptance and administration of this Rights
Agreement, including the cost and expenses of defending against any claim
of liability relating to the Rights or this Rights Agreement.
<PAGE> 59
(b) The Rights Agent shall be protected against, and shall
incur no liability for or in respect of, any action taken, suffered or
omitted by it in connection with its administration of this Rights
Agreement in reliance upon any Right Certificate or certificate for Preferred
Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation of, or Change in Name of,
the Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Rights Agreement without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided
<PAGE> 60
that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by
this Rights Agreement any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and
in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; in all such
cases such
<PAGE> 61
Right Certificates shall have the full force provided in the Right
Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Rights Agreement upon the
following terms and conditions, by all of which the Company and the holders
of Right Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman
of the Board, the President or any Vice President and by the Treasurer or
the Secretary of the Company and delivered to the Rights Agent. Any such
certificate shall be full authorization to the
<PAGE> 62
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or
in the Right Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Rights Agreement
or in any Right Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11 or 13 hereof or responsible for
the manner, method or amount of any such
<PAGE> 63
adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a certificate describing
any such adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of
any shares of Preferred Stock to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President or any Vice President or the
Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its
<PAGE> 64
duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not the Rights Agent under this Rights Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be
<PAGE> 65
discharged from its duties under this Rights Agreement upon 30 days' notice
in writing mailed to the Company and to each transfer agent of the Common
Stock and the Preferred Stock by registered or certified mail. The Company
may remove the Rights Agent or any successor Rights Agent (with or without
cause) upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of
the Common Stock and the Preferred Stock by registered or certified mail.
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights
Agent. Notwithstanding the foregoing provisions of this Section 21, in no
event shall the resignation or removal of a Rights Agent be effective until
a successor Rights Agent shall have been appointed and have accepted such
appointment. If the Company shall fail to make such appointment within a
period of 30 days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then
the incumbent Rights Agent or the holder of record of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of
<PAGE> 66
a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of any state thereof, in
good standing, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination
in the conduct of its corporate trust or stock transfer business by federal
or state authorities and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $5,000,000 or (b) an
Affiliate controlled by a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed, but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and Preferred Stock, and
mail a notice thereof in writing to the registered holders of the Right
<PAGE> 67
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be. Notwithstanding the foregoing
provisions, in the event of resignation, removal or incapacity of the
Rights Agent, the Company shall have the authority to act as the Rights
Agent until a successor Rights Agent shall have assumed the duties of the
Rights Agent hereunder.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Rights Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Exercise Price per share and the
number or kind or class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Rights Agreement.
Section 23. Redemption.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors, redeem all but not less than all of the
then outstanding Rights, at any time prior to the Close of Business on the
earlier of (i) the tenth day following the Stock Acquisition Date (subject
to extension by the Company as provided in Section 26 hereof) or (ii) the
<PAGE> 68
Final Expiration Date, at a redemption price of $.01 per Right, subject to
adjustments as provided in subsection (c) below (the "Redemption Price");
provided, however, that from and after the time that any person shall
become an Acquiring Person (other than pursuant to a Qualifying Tender
Offer), the Company may redeem the Rights only if at the time of the action
of the Board of Directors there are then in office not less than two
Continuing Directors and such redemption is approved by a majority of the
Continuing Directors then in office. Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable
pursuant to Section 11(a)(ii) prior to the expiration of the Company's
right of redemption hereunder.
(b) Without any further action and without any notice, the right
to exercise the Rights will terminate at the effective time of the action
of the Board of Directors ordering the redemption of the Rights and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the effective time of the action of
the Board of Directors ordering the
<PAGE> 69
redemption of the Rights, the Company shall give notice of such redemption
to the holders of the then outstanding Rights by mailing such notice to all
such holders at their last addresses as they appear upon the registry books
of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each notice of redemption will state the
method by which the payment of the Redemption Price will be made. At the
option of the Board of Directors, the Redemption Price may be paid in cash
to each Rights holder or by the issuance of shares (and, at the Company's
election pursuant to Section 14(b) hereof, cash or depositary receipts in
lieu of fractions of shares other than fractions which are integral
multiples of one one-hundredth (1/100) of a share) of Preferred Stock
having a Fair Market Value equal to such cash payment.
(c) In the event the Company shall at any time after the date of
this Rights Agreement (A) pay any dividend on Common Stock in shares of Common
Stock, (B) subdivide or split the outstanding shares of Common Stock
into a greater number of shares or (C) combine or consolidate the
outstanding shares of Common Stock into a smaller number of
<PAGE> 70
shares or effect a reverse split of the outstanding shares of Common Stock,
then, and in each such event, the Redemption Price shall be adjusted so
that the Redemption Price after such event shall equal the Redemption Price
immediately prior to such event multiplied by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock outstanding immediately prior to such event; provided, however, that
in each case such adjustment to the Redemption Price shall be made only if
the amount of the Redemption Price shall be reduced or increased by $.01
per Right.
Section 24. Notice of Proposed Actions.
(a) In case the company, after the Distribution Date, shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i)
or 11(g) or (ii) to offer to the holders of record of its Common
Stock options, warrants, or other rights to subscribe for or to purchase
shares of Common Stock (including any security convertible into or
exchangeable for Common Stock) or shares of stock of any class or any other
securities, options, warrants, convertible or exchangeable securities or
other rights, or (iii) to effect any reclassification of its Preferred
Stock or Common Stock or any recapitalization or reorganization of
<PAGE> 71
the Company, or (iv) to effect any consolidation or merger with or into, or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or
Persons, or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of
record of a Right Certificate, in accordance with Section 25, notice of
such proposed action, which shall specify the record date for the purposes
of such transaction referred to in Section 11(a)(i) or such dividend or
distribution, or the date on which such reclassification, recapitalization,
reorganization, consolidation, merger, sale or transfer of assets,
liquidation, dissolution, or winding up is to take place and the record
date for determining participation therein by the holders of record of Common
Stock or Preferred Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or
(ii) above at least 10 days prior to the record date for determining
holders of record of the Preferred Stock for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of
the taking of
<PAGE> 72
such proposed action or the date of participation therein by the holders of
record of Common Stock or Preferred Stock, whichever shall be the earlier.
The failure to give notice required by this Section 24 or any defect
therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) In case any of the transactions referred to in Section 11(a)(i),
11(g) or 13 of this Rights Agreement are proposed, then, in any
such case, the Company shall give to each holder of Rights, in accordance
with Section 25 hereof, notice of the proposal of such transaction at least
10 days prior to consummating such transaction, which notice shall specify
the proposed event and the consequences of the event to holders of Rights
under Section 11(a)(i), 11(g) or 13 hereof, as the case may be, and, upon
consummating such transaction, shall similarly give notice thereof to each
holder of rights.
Section 25. Notices. Notices or demand authorized by this
Rights Agreement to be given or made by the Rights Agent or by the holder
of record of any Right Certificate or Right to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent)
as follows;
<PAGE> 73
Minerals Technologies Inc.
235 East 42nd Street
New York, New York 10017
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Rights Agreement to be given or made by the Company or by the holder
of record of any Right Certificate or Right to or on the Rights Agent shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
Chemical Bank
450 West 33rd Street 15th Floor
New York, New York 10001
Attention: Equity Administration
Notices or demands authorized by this Rights Agreement to be given or made
by the Company or the Rights Agent to the holder of record of any Right
Certificate or Right shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. For as long as the
Rights are then redeemable and except as provided in the last sentence of
this Section 26, the Company may in its sole and absolute discretion, and
the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement without the approval
<PAGE> 74
of any holders of the Rights. At any time when the Rights are not then
redeemable and except as provided in the last sentence of this Section 26,
the Company may, and the Rights Agent shall if the Company so directs,
supplement or amend this Rights Agreement without the approval of any
holders of Rights Certificates (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein or (iii) to change or
supplement the provisions hereunder in any manner which the company may
deem necessary or desirable, provided that no such supplement or amendment
pursuant to this clause (iii) shall materially adversely affect the
interest of the holders of Right Certificates. Upon the delivery of a
certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of
this Section 26, the Rights Agent shall execute such supplement or
amendment. This Agreement may be amended or supplemented at any time with
the approval of a majority of the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).
Notwithstanding anything contained in this Rights Agreement to the
contrary, no supplement or amendment shall be made which changes the
Redemption Price or the Final Expiration
<PAGE> 75
Date and supplements or amendments may be made after the time that any
Person becomes an Acquiring Person (other than pursuant to a Qualifying
Tender Offer) only if at the time of the action of the Board of Directors
approving such supplement or amendment thee are then in office not less
than two Continuing Directors and such supplement or amendment is approved
by a majority of the Continuing Directors then in office.
Section 27. Successors. All of the covenants and provisions of
this Rights Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors
and assigns hereunder.
Section 28. Benefits of this Rights Agreement. Nothing in this
Rights Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered holders of the
Right Certificates (and, prior to the Distribution Date, the holders of Common
Stock in their capacity as holders of the Rights) any legal or
equitable right, remedy or claim under this Rights Agreement; but this
Rights Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the holders of record of the Right
Certificates (and, prior to the Distribution Date, the holders of Common
Stock in their capacity as holders of the Rights).
<PAGE> 76
Section 29. Delaware Contract. This Rights Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be
governed by and construed and enforced in accordance with the laws of such
state applicable to contracts to be made and performed entirely within such
state; provided, however, that Sections 18, 19, 20 and 21 of this Rights
Agreement shall be deemed to be a contract made under the laws of the State
of new York and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts made and to
be performed entirely within such State.
Section 30. Counterparts. This Rights Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 31. Descriptive Headings. Descriptive headings of the
several Sections of this Rights Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
Section 32. Severability. If any term, provision, covenant or
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other
<PAGE> 77
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Rights Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above
written.
MINERALS TECHNOLOGIES INC.
Attest:_________________________ By:______________________________
(SEAL) Name:
Title:
CHEMICAL BANK
By:______________________________
Name:
Title:
Attest:__________________________
(SEAL)
<PAGE> 78
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
Place of
Name of the Company Incorporation
- ------------------- -------------
Barretts Minerals Inc. Delaware
Comsource Trading Ltd. Delaware
Hi-Tech Specialty Minerals Company Limited Thailand
Huzhou Minteq Refractory Company Ltd. China
Minerals Technologies Europe N.V. Belgium
Minerals Technologies Holdings Ltd. United Kingdom
Minerals Technologies South Africa
(Proprietary) Ltd. South Africa
Mintech Canada Inc. Canada
Mintech Do Brasil Comercio Ltda. Brazil
Mintech Japan K.K. Japan
Minteq Australia Pty. Ltd. Australia
Minteq Europe Limited Ireland
Minteq International GmbH Germany
Minteq International Inc. Delaware
Minteq Italiana S.p.A. Italy
Minteq Korea Inc. Korea
Minteq Magnesite Limited Ireland
Minteq U.K. Ltd. United Kingdom
MTX Finance Inc. Delaware
MTX Finance Ireland Ireland
PT Sinar Mas Specialty Minerals Indonesia
Specialty Minerals Do Brasil - Comercio
e Industria Ltda. Brazil
Specialty Minerals FMT K.K. Japan
Specialty Minerals France S.A.R.L. France
Specialty Minerals Inc. Delaware
Specialty Minerals Inc. Poland Sp. Z o.o. Poland
Specialty Minerals International Inc. Delaware
Specialty Minerals Israel Limited Israel
Specialty Minerals (Mauritius) Private Ltd. Mauritius
Specialty Minerals (Michigan) Inc. Michigan
Specialty Minerals Nordic Oy Ab Finland
Specialty Minerals Philippines Inc. Philippines
Specialty Minerals (Portugal) -
Especialidades Minerais, S.A. Portugal
Specialty Minerals, S.A. de C.V. Mexico
Specialty Minerals Slovakia, Spol. S R. O. Slovakia
Specialty Minerals South Africa (Pty.) Ltd. South Africa
Specialty Minerals (Thailand) Limited Thailand
Specialty Minerals U.K. Ltd. United Kingdom
Specialty Pigments (India) Private Limited India
Tecnologias Minerales De Mexico, S.A. de C.V. Mexico
<PAGE>
EXHIBIT 23.1
REPORT AND CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Minerals Technologies Inc.:
The audits referred to in our report dated January 22, 1998,
included the related financial statement schedule for each of the
years in the three-year period ended December 31, 1997, as listed in
Item 14 of this Annual Report on Form 10-K. This financial
statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits. In our opinion,
such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
We consent to the use of our reports included herein and
incorporated by reference in the Registration Statements on
Form S-8 (Nos. 33-59080, 33-65268 and 33-96558).
KPMG PEAT MARWICK LLP
New York, New York
March 18, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated financial statements of Minerals Technologies Inc., and
is qualified in its entirety by reference to such condensed consolidated
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 41,525
<SECURITIES> 0
<RECEIVABLES> 111,412
<ALLOWANCES> 3,266
<INVENTORY> 61,166
<CURRENT-ASSETS> 226,582
<PP&E> 850,269
<DEPRECIATION> 349,538
<TOTAL-ASSETS> 741,407
<CURRENT-LIABILITIES> 94,218
<BONDS> 101,571
0
0
<COMMON> 2,537
<OTHER-SE> 551,377
<TOTAL-LIABILITY-AND-EQUITY> 741,407
<SALES> 602,335
<TOTAL-REVENUES> 602,335
<CGS> 424,612
<TOTAL-COSTS> 424,612
<OTHER-EXPENSES> 20,391
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,208
<INCOME-PRETAX> 72,188
<INCOME-TAX> 23,104
<INCOME-CONTINUING> 50,312
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,312
<EPS-PRIMARY> 2.23
<EPS-DILUTED> 2.18
</TABLE>
