Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. MINERALS TECHNOLOGIES INC (891014) 10-Q published on May 03, 2019 at 3:24 pm
Reporting Period: Mar 30, 2019
On January 1, 2019, the Company adopted the provisions of 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. As a result, the Company reclassified $10.9 million from "Accumulated other comprehensive loss" to "Retained earnings" on the Condensed Consolidated Balance Sheets as of March 31, 2019.
We determine if an arrangement is a lease at inception. The Company has operating leases for premises, equipment, rail cars and automobiles. Our leases have remaining lease terms of 1 year to 50 years, some of which may include options to extend the leases further. The Company considers these options in determining the lease term used to establish the right-of-use assets and lease liabilities. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based upon the information available at commencement date, or as of implementation of ASC 842, in determining the present value of lease payments.
Leases with an initial term of 12 months or less are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Certain lease agreements contain both lease and non-lease components. We account for lease components together with non-lease components.
Net sales in the Performance Materials segment increased 6% to $199.2 million from $187.3 million in the prior year. Sales in Household, Personal Care & Specialty Products increased 54%, due to the acquisition of Sivomatic in the second quarter of 2018, and the continued growth of our pet care products in North America. Environmental Products sales increased 25% driven by an ongoing large international project. Sales growth in the segment was partially offset by decreased sales in Metalcasting, Building Materials and Basic Minerals. The decrease in Metalcasting sales was primarily due to weaker demand in China early in the first quarter. Sales of Building Materials decreased 19% primarily due to weather-related construction project delays. The decrease in Basic Minerals sales was due to lower drilling activity in the Permian Basin and to the Company's exit from the bulk chromite business in the first quarter of 2018.
Worldwide net sales of PCC, which is primarily used in the manufacturing process of the paper industry, decreased 4% to $109.6 million from $114.0 million in the prior year. Paper PCC sales decreased 6% to $91.5 million from $97.0 million, primarily due to the unfavorable impact of foreign exchange and reduced sales in North America driven by previously announced customer paper machine shutdowns, including the closure of a U.S. paper mill in the first quarter of 2019. Sales of Specialty PCC increased 6% to $18.1 million from $17.0 million in the prior year driven by an expansion at our U.K. facility, higher volumes for the automotive, sealant and consumer markets as well as pricing actions.
On January 1, 2019, the Company adopted the provisions of ASU No. 2016-02, "Leases (Topic 842)." Adoption of this standard did not have a material impact on the Company's financials, however, we implemented a new lease accounting system and implemented changes to our processes related to leases and related control activities.