of Operations

                                             Income and Expense Items
                                           as a Percentage of Net Sales

                                                Three Months Ended

                                        March 29, 2009       March 30, 2008

Net sales                                        100.0 %             100.0  %
Cost of goods sold                                84.0                 78.1


Production margin                                 16.0                 21.9

Marketing and administrative expenses              9.9                  9.4
Research and development expenses                  2.3                  2.2
Restructuring and other costs                      0.3                  0.5


Income from operations                             3.5                  9.8

Net income attributable to MTI 2.0 % 6.2 %

Executive Summary

Consolidated sales for the first quarter of 2009 declined 25% from the prior year to $208.3 million from $277.5 million. Foreign exchange had an unfavorable impact on sales growth of approximately $14.7 million or 5 percentage points of decline. Income from operations declined 73% to $7.3 million in the first quarter of 2009 from $27.1 million in the first quarter of 2008. Included in operating income for the first quarter of 2009 and 2008 are restructuring costs of $0.5 million and $1.4 million, respectively. Income from continuing operations declined 75% to $4.2 million as compared to $16.8 million in the prior year. Net income was $4.2 million as compared to $17.2 million in the prior year.

The Company continues to be affected by weak demand in the end markets we serve -- paper, steel, construction and automotive. This market weakness has caused a significant drop in demand for our products. The benefits derived from our announced restructuring programs, the contractual recovery of raw material increases in the PCC product line, and overall expense reduction initiatives were more than offset by the volume declines experienced in all product lines. The Company continues to take the necessary measures to manage through the worldwide economic recession through our cash conservation and cost containment strategies implemented in the fourth quarter of 2008.

We continue to face uncertainty in the economic environment as a result of the worldwide recession. However, as a result of 2007 initiatives to restructure and realign our business, which we continued in 2008, and due to our strong balance sheet and cash flow, the Company believes it is in a strong position to manage through these difficult and uncertain times.

We face some significant risks and challenges in the future:

• Our global business could continue to be adversely affected by decreases in economic activity. U.S. steel production is at its lowest levels since the mid 1980's at 1.0 million tons per week, approximately 50% of production levels experienced in the first three quarters of 2008. In the Paper industry, production levels for printing and writing papers within North America, our largest market, were down 25% as compared with last year. Housing starts are at 24 year lows with the February 2009 annualized rate at 583,000 units, as compared to 2.1 million units in 2005. In the automotive industry, light vehicle sales in the U.S. were down 38% in the first quarter of 2009 as compared to the first quarter of 2008.

During the third quarter of 2008, Katahdin Paper Company shut down indefinitely one of its paper machines in Millinocket, Maine, due to increased energy costs. The Company's satellite PCC facility has also shut down indefinitely in conjunction with the paper machine shut down. Katahdin Paper Company is evaluating the possibility of installing a biomass boiler. If the Millinocket mill does not resume operations, the Company would incur an impairment of assets charge of approximately $7.0 million.

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

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

Results of Operations

Sales


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

U.S                                            $   112.2         53.8 %     (24) %   $   148.5       53.5 %
International                                       96.1         46.2 %     (26) %       129.0       46.5 %

       Net sales                               $   208.3        100.0 %     (25) %   $   277.5      100.0 %


Paper PCC                                      $   112.5         54.0 %     (18) %   $   137.9       49.7 %
Specialty PCC                                       10.6          5.1 %     (31) %        15.3        5.5 %

       PCC Products                            $   123.1         59.1 %     (20) %   $   153.2       55.2 %

Talc                                           $     6.6          3.2 %     (28) %   $     9.2        3.3 %
Ground Calcium Carbonate                            13.9          6.7 %     (24)          18.4        6.6 %

       Processed Minerals Products             $    20.5          9.8 %     (26) %   $    27.6        9.9 %

       Specialty Minerals Segment              $   143.6         68.9 %     (21) %   $   180.8       65.1 %

Refractory Products                            $    53.5         25.7 %     (32) %   $    79.1       28.5 %
Metallurgical Products                              11.2          5.4 %     (36) %        17.6        6.4 %

       Refractories Segment                    $    64.7         31.1 %     (33) %   $    96.7       34.9 %


                      Net sales                $   208.3        100.0 %     (25) %   $   277.5      100.0 %

Worldwide net sales in the first quarter of 2009 declined 25% from the previous year to $208.3 million. Foreign exchange had an unfavorable impact on sales of approximately $14.7 million or 5 percentage points. Sales in the Specialty Minerals segment, which includes the PCC and Processed Minerals product lines, declined 21% to $143.6 million compared with $180.8 million for the same period in 2008. Sales in the Refractories segment declined 33% from the previous year to $64.7 million.

Worldwide net sales of PCC, which is primarily used in the manufacturing process of the paper industry, declined 20% in the first quarter to $123.1 million from $153.2 million in the prior year. Foreign exchange had an unfavorable impact on sales of approximately 6 percentage points. Unit volumes declined in both product lines. Paper PCC sales declined 18% to $112.5 million in the first quarter of 2009 from $137.9 million in the prior year. Paper PCC volumes declined 18% with weakness in all markets due to worldwide economic conditions. Sales of Specialty PCC declined 31% to $10.6 million from $15.3 million in the prior year.

Net sales of Processed Minerals products declined 26% in the first quarter to $20.5 million from $27.6 million in the first quarter of 2008 due to decreased volumes. This product line continues to be affected by weakness in the residential and commercial construction markets and the automotive market. Volumes have declined 26% from the prior year.

Net sales in the Refractories segment in the first quarter of 2009 declined 33% to $64.7 million from $96.7 million in the prior year. Sales of refractory products and systems to steel and other industrial applications declined 32 percent to $53.5 million from $79.1 million. Sales of metallurgical products within the Refractories segment decreased 36 percent to $11.2 million as compared with $17.6 million in the same period last year. The declines in all product lines in this segment are driven by lower volumes globally.

Net sales in the United States declined 24% to $112.2 million in the first quarter of 2009. International sales in the first quarter of 2009 declined 26% to $96.1 million from $129.0 million, primarily due to lower worldwide volumes and to the unfavorable effects of foreign exchange.

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

Cost of goods sold            $   175.0   $         216.8     (19) %
Marketing and administrative  $    20.5   $          26.0     (21) %
Research and development      $     4.9   $           6.1     (20) %
Restructuring and other costs $     0.5   $           1.4     (64) %

Cost of goods sold was 84.0% of sales compared with 78.1% of sales in the prior year. In the Specialty Minerals segment, production margin decreased 37% as compared with 21% decline in sales. This segment has been affected by weakness in the Processed Minerals product line, additional volume loss in the Paper PCC product line due to permanent and temporary shutdowns in the paper industry, price concessions in the Paper PCC product line and raw material cost increases in Paper PCC. This was partially offset by the contractual recovery of raw material costs in Paper PCC, the benefits of the restructuring program and manufacturing cost savings initiatives. In the Refractories segment, production margin declined 57% as compared with the 33% decline in sales. This segment has been affected by significant volume declines and higher costs of raw materials.

Marketing and administrative costs decreased 21% in the first quarter to $20.5 million from $26.0 million in the prior year, and represented 9.9% of net sales as compared with 9.4% of net sales in the prior year. The reduction in cost was due to the benefits of the restructuring program and other cost saving initiatives.

Research and development expenses decreased 20% to $4.9 million and represented 2.3% of net sales as compared with 2.2% of net sales in the prior year. This reduction in cost was due to lower trial expenses and general cost saving initiatives.

Restructuring and other costs during the first quarter of 2009 were $0.5 million and primarily related to additional provisions for severance and other employee benefits. Restructuring costs were $1.4 million in the first quarter of the prior year.

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

Income from operations $     7.3   $    27.1     (73) %

The Company recorded income from operations in the first quarter of 2009 of $7.3 million, a 73% decline as compared income from operations of $27.1 million in the prior year. Included in income from operations are restructuring charges of $0.5 million and $1.4 million for the first quarter 2009 and 2008, respectively.

Income from operations in the first quarter of 2009 for the Specialty Minerals segment was $9.8 million, as compared to income from operations of $18.4 million in the prior year. Operating loss for the Refractories segment was $2.2 million, as compared to operating income of $8.8 million in the prior year.

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


Non-operating deductions, net $   (0.3)     $    (1.5 )    (83) %

In the first quarter of 2009, net non-operating deductions decreased $1.2 million to $0.3 million. This decrease was primarily attributable to lower interest expense due to lower interest rates and reduced debt levels. In addition, there were foreign exchange losses of $0.8 million recorded in the first quarter of 2008.

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


Provision for taxes on income $     2.0     $     7.9       (75) %

The full year effective tax rate is expected to be approximately 27.75% as compared with 31.0% in the prior year. This reduction was primarily due to a change in the geographic mix of earnings.

                                                   First         First
Income from Continuing Operations, Net of Tax     Quarter       Quarter
(millions of dollars)                              2009          2008       Growth

Income from continuing operations,
      net of tax                                $     5.1     $    17.7       (71) %

The Company recorded income from continuing operations, net of tax, of $5.1 million as compared with $17.7 million in the prior year.

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

Income (loss) from discontinued operations $   (0.1)     $     0.4          * %

* Percentage not meaningful

In the first quarter of 2009 the Company recognized a loss from discontinued operations of $0.1 million as compared with income in the prior year of $0.4 million.

                                  First         First
Net Income attributable to MTI   Quarter       Quarter
(millions of dollars)             2009          2008       Growth

Net income attributable to MTI $     4.2     $    17.2       (76) %

Net income attributable to MTI was $4.2 million in the first quarter of 2009 as compared with income of $17.2 million in the prior year. Diluted earnings per common share were $0.22 per share in the first quarter of 2009 as compared with earnings per common share of $0.90 per share in the prior year.

Liquidity and Capital Resources

Cash flows in the first three months of 2009 provided from operations were applied principally to fund capital expenditures, repay short-term debt and pay the Company's dividend to common shareholders. Cash provided from operating activities amounted to $23.6 million in the first three months of 2009 as compared with $6.1 million for the same period last year. The increase in cash provided from operations was due to lower payments related to restructuring activities in 2009 as compared with first quarter 2008. Additionally, we had a decrease in working capital when compared with the prior year. Working capital is defined as trade accounts receivable, trade accounts payable and inventories. The working capital decrease was primarily due to a decrease in raw material inventories. Our inventory levels decreased from year-end levels particularly in the Refractories segment. In 2008, the Company had accelerated purchases of higher priced raw materials imported from China to avoid potential supply interruptions.

On October 24, 2007, the Company's Board of Directors authorized the Company's management to repurchase, at its discretion, up to $75 million of additional shares over the next two-year period. As of March 29, 2009, 615,674 shares have been purchased under this program at an average price of approximately $61.45 per share.

We have $168.5 million in uncommitted short-term bank credit lines, of which $10.9 million were in use at March 29, 2009. We anticipate that capital expenditures for 2009 should approximate $50 million, principally related to the construction of PCC plants and other opportunities that meet our strategic growth objectives. We expect to meet our other long-term financing requirements from internally generated funds, uncommitted bank credit lines and, where appropriate, project financing of certain satellite plants. The aggregate maturities of long-term debt are as follows: remainder of 2009 - $4.0 million; 2010 - $4.6 million; 2011 - $-- million; 2012 - $8.0 million; 2013 - $75 million; thereafter - $9.6 million.

Prospective Information and Factors That May Affect Future Results

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

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

Recently Issued Accounting Standards

In December 2008, The FASB issued FSP FAS 132(R) - 1, "Employer's Disclosure about Postretirement Benefit Plan Assets" which will require more detailed disclosures about employers' pension plan assets. The new disclosure requirement will require additional information regarding investment strategies, major categories of plan assets, concentrations of risk within plan assets and valuation techniques used to measure the fair value of plan assets. This new standard amends disclosure requirements for periods ending after December 15, 2009.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures About Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133." This statement amends the disclosure requirements under SFAS 133 and requires companies with derivative instruments to provide enhanced disclosures that would enable financial statement users to understand how derivative instruments affect a company's financial position, financial performance and cash flows. This statement is effective for fiscal years beginning on or after November 15, 2008, with early adoption encouraged. The Company adopted this pronouncement as of January 1, 2009.

In February 2008, the FASB issued FSP FAS 157-1, "Application of FASB No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements that Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13" and FSP FAS 157-2, "Effective Date of FASB Statement No. 157." FSP 157-1 excludes fair value measurements for purposes of lease classification or measurement under FASB Statement 13 from the fair value measurement under FASB Statement 157. FSP 157-2 deferred the effective date of Statement 157 for certain non-financial assets and non-financial liabilities to fiscal years beginning after November 15, 2008.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), "Business Combinations" ("Statement No. 141(R)"). Statement No. 141(R) changes the requirements for an acquirer's recognition and measurement of the assets acquired and the liabilities assumed in a business combination. Statement No. 141(R) is effective for annual periods beginning after December 15, 2008 and should be applied prospectively for all business combinations entered into after the date of adoption.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowance for doubtful accounts, valuation of inventories, valuation of long-lived assets, pension plan assumptions, stock-based compensation assumptions, income taxes, income tax valuation allowances and litigation and environmental liabilities. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that can not readily be determined from other sources. There can be no assurance that actual results will not differ from those estimates.