"Our Specialty Products business benefitted from strong demand, primarily in the magnesia chemicals product line, where volume records were achieved for several product lines. The Specialty Products business reported record quarterly net sales of $49.1 million, an 18% increase over the prior-year quarter. Record first-quarter earnings from operations of $15.1 million grew 35% compared with the prior-year quarter, reflecting increased product demand and our continued cost control efforts. Thus, while we expect strong performance from this business segment for the remainder of the year, prospective prior-year comparisons will be versus record 2010 quarterly performance.

"Our continuous commitment to cost control is evident in our SG&A expenses, down $4.3 million, or 190 basis points as a percentage of net sales, primarily due to lower personnel and pension costs. Consolidated direct production costs increased 7%, primarily due to a 14% increase in noncontrollable energy costs. Higher energy prices also increased embedded freight costs for the quarter, as transportation providers passed on their rising energy costs.

"For the first quarter 2011, we reported a loss from operations of $6.1 million, a significant improvement compared with a loss from operations of $12.9 million for the first quarter 2010.

"The overall effective tax rate for the quarter was 27% compared with 17% for the first quarter 2010. The 2010 effective tax rate includes the effect of a $2.8 million charge resulting from the Patient Protection and Affordable Care Act (the "Act").

Liquidity and Capital Resources

"We continue the attentive management of our balance sheet, liquidity and cash flow generation. Cash from operating activities for the first quarter was $21.3 million compared with $27.1 million for 2010, primarily due to the timing of federal income tax refunds. Working capital management remains a priority and to that end, days sales outstanding was 45 days, essentially flat with 2010 and the change in net working capital improved nearly $9 million in the first quarter compared with 2010.

"During the first quarter, we invested $30.7 million of capital in organic growth projects. In May 2011, we will begin the construction of a $53 million dolomitic lime kiln at our Specialty Products location in Woodville, Ohio. This project is expected to be completed by the end of 2012.

"On March 31, 2011, we entered into a new $600 million credit agreement that provides a $350 million four-year unsecured revolving facility ("Revolving Facility") and a $250 million senior unsecured term loan ("Term Loan Facility"). At closing, we borrowed $250 million under the Term Loan Facility and on April 1, 2011, we borrowed $100 million on our accounts receivable credit facility. These borrowings were used to repay amounts outstanding under our previous term loan as of March 31, 2011, and also $242 million of Notes that matured on April 1, 2011. The new credit agreement retained the leverage ratio covenant that limits our ratio of consolidated debt to consolidated earnings before interest expense, tax expense, and depreciation, depletion and amortization expense (EBITDA), as defined, for the trailing twelve-months to 3.5 times. However, if no amounts are outstanding under both the new revolving facility and our accounts receivable securitization facility, consolidated debt may be reduced by our cash and cash equivalents in excess of $50 million, such reduction not to exceed $200 million, for purposes of the covenant calculation. At March 31, 2011, our ratio of consolidated debt to consolidated EBITDA, as defined, for the trailing twelve-months was 2.73 times. We are pleased that Standard & Poor's recently reaffirmed our credit rating and upgraded our outlook from negative to stable.

2011 Outlook