The accompanying unaudited condensed consolidated financial statements have been prepared by management of Minerals Technologies Inc. (the “Company”"Company", “MTI”"MTI", “we”"we", or “us”"us") in accordance with the rules and regulations of the United States Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. Therefore, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.2017. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments necessary for a fair presentation of the financial information for the periods indicated, have been included. The results for the three-month and nine-month periods ended October 1, 2017September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.2018.

The Company is a resource-andresource- and technology-based company that develops, produces and markets worldwide a broad range of specialty mineral, mineral-based and synthetic mineral products and supporting systems and services.

The Company employs accounting policies that are in accordance with U.S. generally accepted accounting principles and require management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported period. Significant estimates include those related to revenue recognition, valuation of accounts receivable, valuation of inventories, valuation of long-lived assets, goodwill and other intangible assets, pension plan assumptions, valuation of product liability and asset retirement obligation, income tax, income taxtaxes, including valuation allowances, and litigation and environmental liabilities.pension plan assumptions. Actual results could differ from those estimates.

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’sFASB's Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.

In February 2016, the FASB issued ASU 2016-02, “Leases”"Leases", which requires lessees to recognize most leases on-balance sheet, thereby increasing their reported assets and liabilities, in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP. ASU 2016-02 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2018. ASU 2016-02 mandates a modified retrospective transition method for all entities. The Company is currently evaluatinghas made considerable progress in completing its assessment of the impact of this ASU onstandard. The Company has performed a high level analysis of its current lease portfolio and has established a cross-functional project team to assist in the Company’s consolidated financial statementsimplementation of this ASU.  We have assembled an inventory of our current leases, are developing processes and related disclosures.tools, including lease management software, to implement the new standard, and are identifying and designing changes to internal controls. Based on the current status of this assessment, the adoption of this guidancestandard is not expected to have a material impact on the Company’sCompany's financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles-Goodwill"Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment”Impairment", which no longer requires an entity to perform a hypothetical purchase price allocation to measure goodwill impairment. Instead, goodwill will be measured using the difference between the carrying amount and the fair value of the reporting unit. The guidancestandard is effective for the interim and annual periods beginning on or after December 15, 2019, with early adoption permitted. The adoption of this guidancestandard is not expected to have a material impact on the Company’sCompany's financial statements. We are currently evaluating the timing of adoption of this standard.

In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act. The standard is effective for the interim and annual periods beginning after December 15, 2018, with early adoption permitted. The adoption of this standard is not expected to have a material impact on the Company's financial statements.

In March 2017,August 2018, the FASB issued ASU 2018-14, "Compensation – Retirement Benefits – Defined Benefit Plans – General:  Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans," which removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of certain disclosures and adds disclosure requirements identified as relevant.  The standard is effective for annual periods beginning after December 15, 2020, with early adoption permitted.  We are currently evaluating the timing of adoption of this standard. The adoption of this standard is not expected to have a material impact on the Company's financial statements.

On January 1, 2018, the Company adopted the provisions of ASU 2017-07, “Compensation"Compensation – Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”Cost", which requires companies to present the service cost component of the net benefit cost in the same line items in which they report compensation cost. All other components of net periodic benefit cost will be presented outside operating income. The guidance is effectiveprovisions have been applied retrospectively for the interim and annual periods beginning on or after December 15, 2017. Theincome statement presentation requirements. Prior to the adoption of this guidance is not expected to have a material impactthe standard, the Company classified all net periodic benefit costs within operating costs, primarily within "Marketing and administrative expenses" on the Company’s financial statements.

On January 1, 2017,2018, the Company early adopted the provisions of ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which improves and simplifies existing standard to allow companies to better reflect their risk management activities in the financial statements. The standard expands the ability to hedge nonfinancial and financial risk components, eliminates the requirement to separately measure and recognize hedge ineffectiveness and eases requirements of an entity's assessment of hedge effectiveness. The adoption of this standard did not have an impact on the Company's financial statements.

On January 1, 2018, the Company adopted the provisions of ASU 2016-09, “Stock Compensation – Improvements2017-01, "Business Combinations," which clarifies the definition of a business with the objective of adding guidance to Employee Share-Based Payment Accounting”, an amendment to account standards codification (“ASC”) 718, which simplifies several aspectsassist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting for share-based payments, including accounting for income taxes, forfeitures, statutory withhold rates as well as presentationacquisitions, disposals, goodwill, and consolidation. The adoption of this new standard did not have an impact on the statementCompany's financial statements.

The Company's revenues are primarily derived from the sale of cash flows.products. Our primary performance obligation (the sale of products) is satisfied upon shipment or delivery to our customers based on written sales terms, which is also when control is transferred. In most of the Company's PCC contracts, the price per ton is based upon the total number of tons sold to the customer during the year. Under these contracts, the price billed to the customer for shipments during the year is based on periodic estimates of the total annual volume that will be sold to such customer. Revenues are adjusted at the end of each year to reflect the actual volume sold. The Company also has electedconsignment arrangements with certain customers in our Refractories segment. Revenues for these transactions are recorded when the consigned products are consumed by the customer and control is transferred to adopt the standardcustomer.

Revenue from long-term construction, primarily in our Energy Services segment, where our performance obligations are satisfied in phases, is recognized over time using certain output measures based on a prospective basis. As a result of this adoption, the Company recognizes excess tax benefits in the current account period. The cash flow benefitmeasurement of the excess tax benefit is included as an operating activity invalue transferred to the Condensed Consolidated Statement of Cash Flows for the period ended October 1, 2017.  Additionally, taxes paid for shares withheld for tax-withholding purposes are reported as financing activities in the Condensed Consolidated Statements of Cash Flows. Previously, this activity was included in operating activities.  Prior year Condensed Consolidated Statement of Cash Flows has not been restated. In accordance with the standard, the Company will continue to account for forfeitures using an estimated forfeiture rate.customer, including milestones achieved.

Basic earnings per share are based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share are based upon the weighted average number of common shares outstanding during the period assuming the issuance of common shares for all potentially dilutive common shares outstanding.

The following table sets forth the computation of basic and diluted earnings per share:

Options to purchase 184,569352,625 shares and 10,239184,569 shares of common stock for the three-month and nine-month periods ended September 30, 2018 and October 1, 2017, and October 2, 2016, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive, as the exercise prices of the options were greater than the average market price of the common shares.

The following table is a reconciliation of our restructuring liability balance as of October 1, 2017:September 30, 2018 :

As of October 1, 2017,September 30, 2018, the Company had approximately $14.5$15.7 million of total unrecognized income tax benefits. Included in this amount were a total of $11.8$12.1 million of unrecognized income tax benefits that, if recognized, would affect the Company’sCompany's effective tax rate. While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, the Company does not expect the change to have a significant impact on the results of operations or the financial position of the Company.

The Company’sCompany's accounting policy is to recognize interest and penalties accrued relating to unrecognized income tax benefits as part of its provision for income taxes. The Company had a net decreaseincrease of approximately $0.1$0.2 million and $0.7 million during the three monthsand nine-months ended October 1, 2017, an increase of $0.2 million during the nine months ended October 1, 2017,September 30, 2018 and had an accrued balance of $1.4$2.3 million of interest and penalties as of October 1, 2017.September 30, 2018.

The Company operates in multiple taxing jurisdictions, both within and outside the U.S. In certain situations, a taxing authority may challenge positions that the Company has adopted in its income tax filings. The Company, with a few exceptions (none of which are material), is no longer subject to income tax examinations by tax authorities for years prior to 2010.2010.

Provision for taxes was $12.1$9.7 million and $35.6$29.3 million during the three and nine-months ended October 1, 2017,September 30, 2018, respectively. The effective tax rate was 22.6%18.8% as compared to 21.4%22.6% in the prior year. The higherlower effective tax rate was primarily due to a change in the mix of earnings and non-deductible acquisition costs in the prior year.

Goodwill and other intangible assets with indefinite lives are not amortized, but instead are assessed for impairment, at least annually. The carrying amount of goodwill was $779.6$808.1 million, and $778.7$779.3 million as of October 1, 2017September 30, 2018 and December 31, 2016,2017, respectively. The net change in goodwill since December 31, 20162017 was primarily attributable to the effectsacquisition of Sivomatic (see Note 3 to the Condensed Consolidated Financial Statements) and to the impact of foreign exchange.

Intangible assets subject to amortization as of October 1, 2017September 30, 2018 and December 31, 20162017 were as follows:

The weighted average amortization period for acquired intangible assets subject to amortization is approximately 28 years. Estimated amortization expense is $2.0$2.2 million for the remainder of 2017, $7.92018, $34.8 million per year for 2018–20212019–2022 and $164.8$173.3 million thereafter.

As a multinational corporation with operations throughout the world, the Company is exposed to certain market risks. The Company uses a variety of practices to manage these market risks, including, when considered appropriate, derivative financial instruments. The Company's objective is to offset gains and losses resulting from interest rates and foreign currency exposures with gains and losses on the derivative contracts used to hedge them. The Company uses derivative financial instruments only for risk management and not for trading or speculative purposes.

By using derivative financial instruments to hedge exposures to changes in interest rates and foreign currencies, the Company exposes itself to credit risk and market risk. Credit risk is the risk that the counterparty will fail to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty, and therefore, it does not face any credit risk. The Company minimizes the credit risk in derivative instruments by entering into transactions with major financial institutions.

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates, currency exchange rates, or commodity prices. The market risk associated with interest rate and forward exchange contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

For derivative instruments that are designated and qualify as cash flow hedges, the Company records the effective portion of the gain or loss in accumulated other comprehensive income (loss) as a separate component of shareholders' equity. The Company subsequently reclassifies the effective portion of gain or loss into earnings in the period during which the hedged transaction is recognized in earnings.

The Company utilizes interest rate swaps to limit exposure to market fluctuations on floating-rate debt. DuringIn the second quarter of 2018, the Company entered into a floating to fixed interest rate swap for a notional amount of $150 million. The fair value of this swap is a liability of $0.2 million at September 30, 2018 and is recorded in other non-current liabilities on the Condensed Consolidated Balance Sheet. In addition, in the second quarter of 2016, the Company entered into a floating to fixed interest rate swap forwith an initial aggregate notional amount of $300 million. The notional amount was $157 million at October 1, 2017 was $214 million. This interest rate swap is designated as a cash flow hedge.  The gains and losses associated with this interest rate swap are recorded in accumulated other comprehensive income (loss).September 30, 2018. The fair value of this swap wasis an asset of $2.1$3.7 million at October 1, 2017September 30, 2018 and is recorded in other non-current assets on the Condensed Consolidated Balance Sheet. These interest rate swaps are designated as cash flow hedges. The gains and losses associated with these interest rate swaps are recorded in accumulated other comprehensive income (loss).

Assets and liabilities measured at fair value are based on one or more of three valuation techniques. The three valuation techniques are as follows:

The Company primarily applies the income approach for interest rate derivatives for recurring fair value measurements and attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value of our interest rate swap contract iscontracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets and are categorized as Level 2.

The following is a summary of long-term debt:

On May 9, 2014, in connection with the acquisition of AMCOL International Corporation (“AMCOL”("AMCOL"), the Company entered into a credit agreement providing for a $1,560 million$1.560 billion senior secured term loan facility (the “Term Facility”"Term Facility") and a $200 million senior secured revolving credit facility (the “Revolving Facility”"Revolving Facility" and, together with the Term Facility, the “Facilities”"Facilities").

On June 23, 2015, the Company entered into an amendment (the “First Amendment”"First Amendment") to the credit agreement to reprice the $1.378 billion then outstanding on the Term Facility. As amended, the Term Facility had a $1.078 billion floating rate tranche and a $300 million fixed rate tranche. On February 14, 2017, the Company entered into an amendment (the “Second Amendment”"Second Amendment") to the credit agreement to reprice the $788 million floating rate tranche then outstanding, which extended the maturity and lowered the interest costs by 75 basis points. On April 18, 2018, the Company entered into an amendment (the "Third Amendment") to the credit agreement to refinance the Revolving Facility. As amended, the Revolving Facility has been increased to $300 million in aggregate commitments. Following the Second Amendment,amendments, the loans outstanding under the floating rate tranche of the Term Facility will mature on February 14, 2024, the loans outstanding under the fixed rate tranche of the Term Facility will mature on May 9, 2021 and the loans outstanding (if any) and commitments under the Revolving Facility will mature and terminate, as the case may be, on May 9, 2019.  After the Second Amendment, loansApril 18, 2023. Loans under the floating rate tranche of the Term Facility bear interest at a rate equal to an adjusted LIBOR rate (subject to a floor of 0.75%) plus an applicable margin equal to 2.25% per annum. Loans under the fixed rate tranche of the Term Facility bear interest at a rate of 4.75%. Loans under the Revolving Facility will bear interest at a rate equal to an adjusted LIBOR rate plus an applicable margin equal to 1.75%1.625% per annum. Such rates are subject to decrease by up to 25 basis points in the event that, and for so long as, the Company’sCompany's net leverage ratio (as defined in the credit agreement) is less than certain thresholds. The floating rate tranche of the Term Facility was issued at par and the fixed rate tranche of the Term Facility was issued at a 0.25% discount in connection with the First Amendment. The variable rate tranche of the Term Facility was issued at a 0.25% discount in connection with the Second Amendment. The variable rate tranche has a 1% required amortization per year. The Company will pay certain fees under the credit agreement, including customary annual administration fees. The loans under the fixed rate tranche of the Term Facility are subject to prepayment premiums in the event of certain prepayments prior to the third anniversary of the effective date of the First Amendment.  The obligations of the Company under the Facilities are unconditionally guaranteed jointly and severally by, subject to certain exceptions, all material domestic subsidiaries of the Company (the “Guarantors”"Guarantors") and secured, subject to certain exceptions, by a security interest in substantially all of the assets of the Company and the Guarantors.

The credit agreement contains certain customary affirmative and negative covenants that limit or restrict the ability of the Company and its restricted subsidiaries to enter into certain transactions or take certain actions. In addition, the credit agreement contains a financial covenant that requires the Company, if on the last day of any fiscal quarter loans or letters of credit were outstanding under the Revolving Facility (excluding up to $15 million of letters of credit), to maintain a maximum net leverage ratio (as defined in the credit agreement) of, initially, 5.25 to 1.00 for the four fiscal quarters preceding such day. Such maximum net leverage ratio requirement is subject to decrease during the duration of the facility to a minimum level (when applicable) of 3.50 to 1.00.  During the first nine months of 2017, the Company repaid $80 million on its Term Facility. 

As of October 1, 2017,September 30, 2018, there were no$103 million in outstanding loans and $12.0$8.9 million in letters of credit outstanding under the Revolving Facility. The Company is in compliance with all the covenants associated with the Revolving Facility as of the end of the period covered by this report.

The Company has four committed loan facilities for the funding of new manufacturing facilities in China, comprised of facilities of 94.8 million RMB, or approximately $10.3 million, and a $1.8 million facility.China. In December 2016,addition, the Company entered intohas a committed loan facility in Japan in the amount of 680 million Yen (approximately $5.8 million).Japan. As of October 1, 2017,September 30, 2018, on a combined basis, $12.6$6.1 million was outstanding under these loan facilities. Principal will be repaid in accordance with the payment schedules ending in 2021. The Company repaid $3.0$2.7 million on these loans induring the first nine months of 2017.2018.

As of October 1, 2017,September 30, 2018, the Company had $36.3$36.6 million in uncommitted short-term bank credit lines, of which approximately $6.2$5.3 million was in use.

The Company and its subsidiaries have pension plans covering the majority of eligible employees on a contributory or non-contributory basis. The Company also provides postretirement health care and life insurance benefits for the majority of its U.S. retired employees. Disclosures for the U.S. plans have been combined with those outside of the U.S. as the international plans do not have significantly different assumptions, and together represent less than 25% of our total benefit obligation.

Amortization amounts of prior service costs and recognized net actuarial losses are recorded, net of tax, as increases to accumulated other comprehensive income.

The following table summarizes the amounts reclassified out of accumulated other comprehensive income (loss)loss attributable to the Company:

The pre-tax amounts in the table above are included within the components of net periodic pension benefit cost (see Note 911 to the Condensed Consolidated Financial Statements) and the tax amounts are included within the provision for taxes on income line within the Condensed Consolidated Statements of Income.