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Europe, primarily from the operations in Bahrain, were offset by lower demand in North America, and lower sales to non-steel applications. Sales of metallurgical products within the Refractories segment increased 6% to $84.4 million as compared with $79.3 million last year primarily attributable to higher volumes in North America and Europe. 

Net sales in the Refractories segment in 2012 decreased 7% to $343.4 million from $368.8 million in the prior year. Foreign exchange had an unfavorable impact on 2012 sales of $9.3 million, or approximately 3 percentage points. Sales of refractory products and systems to steel and other industrial applications decreased 8% to $264.1 million from $287.4 million. Sales of metallurgical products within the Refractories segment decreased 3% to $79.3 million as compared with $81.4 million in the prior year. The decreases in all product lines within this segment were primarily due to volume reductions in all regions and the effects of foreign exchange. 

Net sales in the United States grew slightly to $563.5 million in 2013 and represented approximately 55.3% of consolidated net sales. International sales increased approximately 5% to $454.7 million from $434.3 million. 

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* Percentage not meaningful 

Cost of goods sold in 2013 was 77.1% of sales compared with 77.7% in the prior year. Production margin increased $11.3 million, or 5% as compared with a 2% increase in sales. In the Specialty Minerals segment, production margin increased 8%, or $10.9 million, as compared with a 3% increase in sales. This was primarily attributable to improved profitability in Asia and volume increases of approximately $3.5 million, price increases, net of raw material cost increases, of $8.5 million, and continued productivity and cost improvements of $2.9 million. This was partially offset by higher energy costs of $2.6 million and the effect foreign exchange of $1.4 million. In the Refractories segment, production margin increased $0.5 million, or 1% as compared with a 2% increase in sales. Production Margin increased due to higher sales to SULB in Bahrain, volume increases of metallurgical products, and improved productivity. This was partially offset by lower profits from equipment sales and to the effects of foreign exchange 

Cost of goods sold in 2012 was 77.7% of sales compared with 79.3% in the prior year. Production margin increased $8.1 million, or 4% as compared with a 4% decrease in sales. In the Specialty Minerals segment, production margin increased 7%, or $9.0 million, as compared with a 2% decrease in sales. This increase was primarily attributable to increased pricing of $20 million, lower energy costs of $1.3 million, continued productivity improvements and cost improvements of $4 million and combined higher volumes from our new satellite facilities and processed minerals product lines of $7 million. These items were offset by increased material costs of $12 million, the effects of continued permanent and temporary PCC facility closures and other volume declines of $8 million and the effects of foreign exchange of approximately $2.9 million. In the Refractories segment, production margin decreased $0.9 million, or 1% as compared with a 7% decrease in sales. Volume declines, lower equipment sales of $10 million and the effects of foreign exchange were partially offset by lower material costs of $9 million and increased pricing of $1.5 million. 

Marketing and administrative costs increased 1% to $89.2 million in 2013 from $88.5 million in the prior year. Marketing and administrative costs as a percentage of net sales were 8.8% which was the same as the prior year. In 2012, marketing and administrative expenses were 3.0% lower than in the prior year. 

Research and development expenses decreased 1% in 2013 to $20.1 million from $20.2 million and represented 2.0% of net sales. In 2012, research and development expense increased 5% from 2011 and represented 2.0% of net sales. 

The Company recognized a one-time insurance settlement gain of $2.5 million in the fourth quarter of 2013. 

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The Company recorded income from operations in 2013 of $126.9 million as compared with $113.6 million in the prior year. Income from operations represented 12.5% of sales compared with 11.4% of sales in the prior year. The Specialty Minerals segment recorded income from operations of $98.4 million in 2013 as compared with $87.7 million in the prior year. The Refractories segment 

