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Minerals Technologies Reports First Quarter 2019 Earnings Per Share of $1.11

Highlights:

  • Sales Increase to $438 Million
  • Double Digit Operating Margins Across All Segments
  • Productivity Improvement of 4 Percent
  • Start-up of 125,000 Ton PCC Satellite Plant in Indonesia

NEW YORK, May 02, 2019 (GLOBE NEWSWIRE) -- Minerals Technologies Inc. (MTX) (“MTI” or “the Company”) today reported diluted earnings per share of $1.11 for the first quarter ended March 31, 2019. 

Worldwide net sales increased 1 percent to $437.7 million. Sales increased 4 percent excluding the impact of foreign exchange. Operating income was $62.0 million and represented 14.2 percent of sales.

“MTI delivered solid first quarter results despite a slow start to the year in several of our markets and geographies. Productivity improvements, expense control and continued pricing actions offset lower volumes early in the quarter,” said Douglas T. Dietrich, Chief Executive Officer. “Customer demand accelerated in March, and we expect this momentum to continue into our seasonally stronger second quarter.”

Mr. Dietrich added, “We made progress on several growth initiatives, highlighted by new product launches and capacity expansions to meet customer demand, including the recent start-up of our 125,000 ton PCC facility in Indonesia.”

Segment Information

Performance Materials and Specialty Minerals
Sales in the Minerals businesses, which include the Performance Materials and Specialty Minerals segments, grew 2 percent in the first quarter to $343.6 million. Sales grew 4 percent excluding the impact of foreign exchange. Operating income for the Minerals businesses was $48.3 million and represented 14.1 percent of sales.

Performance Materials segment sales increased 6 percent to $199.2 million. Sales grew 8 percent excluding the impact of foreign exchange.

Sales in Household, Personal Care & Specialty Products increased 54 percent 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 percent 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 percent primarily due to weather-related construction project delays.

Operating income for the segment increased slightly to $26.3 million and represented 13.2 percent of sales. Pricing actions more than offset higher raw materials and logistics costs. However, operating income and margins were affected by an unfavorable product mix due to the weather-related project delays.

The Performance Materials segment provides a wide range of bentonite-based and synthetic materials for industrial and consumer markets and for non-residential construction, environmental remediation and infrastructure projects worldwide.

Specialty Minerals segment sales, which consist of the Precipitated Calcium Carbonate (PCC) and Processed Minerals product lines, decreased 3 percent to $144.4 million. Sales were flat excluding the impact of foreign exchange.

Worldwide sales of PCC, which is used mainly in the manufacturing processes of the paper industry, decreased 4 percent to $109.6 million largely due to previously announced customer paper machine shutdowns in North America, including the closure of a U.S. paper mill in the first quarter of 2019, and foreign exchange. Sales of Specialty PCC increased 6 percent driven by an expansion at our U.K. facility, higher volumes for the automotive, sealant and consumer markets and pricing actions.

Processed Minerals sales decreased 2 percent to $34.8 million, primarily due to slower demand in the paints, coatings, and construction markets, particularly on the West Coast. Processed Minerals products are used in the building materials, polymers, ceramics, consumer products, paints and coatings, glass and other manufacturing industries.  

Segment operating income decreased to $22.0 million and was 15.2 percent of sales. The lower operating income was driven by the shutdowns in North America, unfavorable foreign exchange and higher energy costs, which was partially offset by higher pricing.

Refractories and Energy Services
Sales in the Service businesses, which include the Refractories and Energy Services segments, were essentially flat compared to the prior year period at $94.1 million. Sales increased 3 percent excluding the impact of foreign exchange. Operating income for the Service businesses rose 1 percent to $14.5 million and represented 15.4 percent of sales.

Refractories segment sales decreased 2 percent to $73.8 million, primarily due to lower Refractory sales in Turkey and Germany, as well as lower sales of Metallurgical Products. The Refractories segment operating income decreased to $12.1 million and was 16.4 percent of sales. The Refractories segment provides products and services primarily to the worldwide steel industry.

Energy Services segment sales rose 6 percent to $20.3 million, primarily driven by higher well testing activity. Operating income increased to $2.4 million and was 11.8 percent of sales. Energy Services offers a range of patented technologies, products and services for off-shore filtration and well testing to the worldwide oil and gas industry.

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Minerals Technologies will host a conference call tomorrow, May 3, 2019 at 11 a.m. Eastern Time. The conference call will be broadcast live on our website: www.mineralstech.com. To listen to the call, go to the website and click on "Investor Relations," then click on "Quarterly Results & Conference Calls." A presentation for the call will be available at the same location at approximately 10:30 a.m. Eastern Time on May 3, 2019.

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FORWARD-LOOKING STATEMENTS

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, which describe or are based on current expectations. Actual results may differ materially from these expectations. In addition, any statements that are not historical fact (including statements containing the words "believes," "plans," "anticipates," "expects," "estimates," and similar expressions) should also be considered to be forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements in this document should be evaluated together with the many uncertainties that affect our businesses, particularly those mentioned in the risk factors and other cautionary statements in our 2018 Annual Report on Form 10-K and in our other reports filed with the Securities and Exchange Commission.

About Minerals Technologies Inc.
New York-based Minerals Technologies Inc. (MTI) is a resource- and technology-based growth company that develops, produces and markets worldwide a broad range of specialty mineral, mineral-based and synthetic mineral products and related systems and services. MTI serves the paper, foundry, steel, construction, environmental, energy, polymer and consumer products industries. The Company reported sales of $1.808 billion in 2018. For further information, please visit our website at www.mineralstech.com. (MTI-E)

Investor Contact:
Cindi Buckwalter, (212) 878-1831

Media Contact:
Michael Landau, (212) 878-1840

 

                       
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES 
  (in millions, except per share data)
   (unaudited)
                       
      Quarter Ended   % Growth
      Mar. 31,   Dec. 31,   Apr. 1,        
      2019    2018    2018    Prior Qtr. Prior Year
                       
  Net sales                    
  Product sales $ 417.4   $ 427.2   $ 412.2     (2 )%   1 %
  Service revenue   20.3     20.3     19.1     0 %   6 %
  Total net sales   437.7     447.5     431.3     (2 )%   1 %
                       
  Cost of sales                    
  Cost of goods sold   314.0     320.9     305.0     (2 )%   3 %
  Cost of service revenue   14.0     13.8     12.8     1 %   9 %
  Total cost of sales   328.0     334.7     317.8     (2 )%   3 %
                       
  Production margin   109.7     112.8     113.5     (3 )%   (3 )%
                       
  Marketing and administrative expenses   42.9     43.5     44.4     (1 )%   (3 )%
  Research and development expenses   4.8     5.2     6.1     (8 )%   (21 )%
  Acquisition related transaction and integration costs   0.0     0.0     0.4     *     *  
  Restructuring and other items, net   0.0     1.8     0.0     *     *  
                       
   Income from operations   62.0     62.3     62.6     (0 )%   (1 )%
                       
  Interest expense, net   (11.4 )   (12.0 )   (10.7 )   (5 )%   7 %
  Non-cash pension settlement costs   0.0     (0.8 )   0.0     *     *  
  Other non-operating deductions, net   (1.4 )   (1.0 )   (2.7 )   40 %   (48 )%
  Total non-operating deductions, net   (12.8 )   (13.8 )   (13.4 )   (7 )%   (4 )%
                       
  Income from operations before tax and equity in earnings   49.2     48.5     49.2     1 %   (0 )%
                       
  Provision for taxes on income    9.3     5.1     9.3     82 %   0 %
  Equity in earnings of affiliates, net of tax   0.1     0.6     1.2     (83 )%   (92 )%
                       
  Consolidated net income   40.0     44.0     41.1     (9 )%   (3 )%
                       
  Less: Net income attributable to non-controlling interests   0.9     0.9     1.2     0 %   (25 )%
                       
  Net Income attributable to Minerals Technologies Inc. (MTI) $ 39.1   $ 43.1   $ 39.9     (9 )%   (2 )%
                       
  Weighted average number of common shares outstanding:                    
                       
  Basic   35.2     35.2     35.4          
                       
  Diluted   35.3     35.4     35.7          
                       
  Earnings per share attributable to MTI:                    
                       
  Basic $ 1.11   $ 1.22   $ 1.13     (9 )%   (2 )%
                       
  Diluted $ 1.11   $ 1.22   $ 1.12     (9 )%   (1 )%
                       
  Cash dividends declared per common share $ 0.05   $ 0.05   $ 0.05          
                       
  * Percentage not meaningful                    
                       

 

                 
     MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
    NOTES TO CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                 
                 
  1 ) For comparative purposes, the quarterly periods ended March 31, 2019, December 31, 2018, and April 1, 2018 consisted of 90 days, 92 days, and 91 days, respectively. 
                 
  2 ) In the fourth quarter of 2018, the Company recorded impairment of assets charges relating to the shut-down of one of our Paper PCC facilities in the U.S. in the first quarter of 2019 and additional restructuring costs relating to our exited Energy Services businesses.
    (millions of dollars)   Quarter Ended
        Mar. 31,   Dec. 31,   Apr. 1,
        2019    2018    2018 
                 
    Impairment of assets            
    Specialty Minerals $ 0.0   $ 0.7   $ 0.0  
         Total impairment of assets charge $ 0.0   $ 0.7   $ 0.0  
                 
    Restructuring and other items, net            
    Severance, lease termination and other related costs   0.0     1.1     0.0  
      $ 0.0   $ 1.1   $ 0.0  
                 
         Total restructuring and other items, net $ 0.0   $ 1.8   $ 0.0  
                 
                 
  3 ) To supplement the Company's consolidated financial statements presented in accordance with GAAP, the following is a presentation of the Company's non-GAAP earnings per share, excluding special items, for the quarterly periods ended March 31, 2019, December 31, 2018, and April 1, 2018, and a reconciliation to reported earnings per share for such periods.  The Company's management believes these non-GAAP measures provide meaningful supplemental information regarding its performance as inclusion of such special items are not indicative of the ongoing operating results and thereby affect the comparability of results between periods. The Company believes inclusion of these non-GAAP measures also provides consistency in its financial reporting and facilitates investors' understanding of historic operating trends.
                 
    (millions of dollars)   Quarter Ended
        Mar. 31,   Dec. 31,   Apr. 1,
        2019    2018    2018 
                 
    Income from continuing operations attributable to MTI $ 39.1   $ 43.1   $ 39.9  
                 
    Special items:            
    Acquisition related transaction and integration costs   0.0     0.0     0.4  
    Non-cash pension settlement costs   0.0     0.8     0.0  
    Restructuring and other items, net   0.0     1.1     0.0  
    Impairment of assets    0.0     0.7     0.0  
    Related tax effects on special items   0.0     (0.5 )   (0.1 )
    Effect of U.S. tax law change    0.0     (3.7 )   0.0  
                 
    Income from continuing operations attributable to MTI, excluding special items $ 39.1   $ 41.5   $ 40.2  
                 
    Diluted earnings per share, excluding special items $   1.11   $   1.17   $   1.13  
                 
                 
  4 ) Free cash flow is defined as cash flow from continuing operations less capital expenditures.  The following is a presentation of the Company's non-GAAP free cash flow for the quarterly periods ended March 31, 2019, December 31, 2018, and April 1, 2018 and a reconciliation to cash flow from operations for such periods.  The Company's management believes this non-GAAP measure provides meaningful supplemental information as management uses this measure to evaluate the Company's ability to maintain capital assets, satisfy current and future obligations, repurchase stock, pay dividends and fund future business opportunities.  Free cash flow is not a measure of cash available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure.  The Company's definition of free cash flow may not be comparable to similarly titled measures reported by other companies.
        Quarter Ended
    (millions of dollars)   Mar. 31,   Dec. 31,   Apr. 1,
        2019   2018   2018
    Cash flow from continuing operations $ 30.8   $ 70.2   $ 35.7  
    Capital expenditures   17.6     19.5     17.9  
    Free cash flow  $ 13.2   $ 50.7   $ 17.8  
                 
                 
  5 ) On December 22, 2017, tax reform legislation was signed into law, encompassing a broad range of tax reform proposals, including a reduction of U.S. corporate tax rates from 35% to 21%, transitioning U.S. international taxation from a worldwide tax system to a territorial tax system and imposing a repatriation tax that is payable over eight years on deemed repatriated accumulated earnings of foreign subsidiaries.  As required under ASC 740, Income Taxes, the Company is required to recognize the effects of changes in tax laws and rates on deferred tax positions and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted.  As such, the Company recorded a provisional $47 million income tax benefit in the fourth quarter of 2017, comprised of a tax benefit primarily from the lower U.S. tax rate, resulting in a reduction of deferred tax liabilities of $82 million and a $35 million charge related to the repatriation of accumulated foreign earnings. Such provisional amounts were based on reasonable estimates and subject to adjustment during the measurement period.  Accordingly, in the fourth quarter of 2018, the Company recorded a $3.7 million reduction related to the repatriation of accumulated foreign earnings. 
                 
  6 ) The following table reflects the components of non-operating income and deductions:        
                 
    (millions of dollars)   Quarter Ended
        Mar. 31,   Dec. 31,   Apr. 1,
        2019   2018   2018
      Interest income $ 0.6   $ 0.6   $ 0.5  
      Interest expense   (11.9 )   (12.6 )   (11.2 )
      Non-cash pension settlement costs   0.0     (0.8 )   0.0  
      Foreign exchange gains (losses)   0.9     0.3     (0.7 )
      Other deductions   (2.4 )   (1.3 )   (2.0 )
      Non-operating deductions, net $ (12.8 ) $ (13.8 ) $ (13.4 )
                 
    Included in non-operating deductions for the three-month period ended December 31, 2018 are non-cash pension settlement costs of $0.8 million associated with some of our pension plans in the U.S. 
                 
  7 ) The analyst conference call to discuss operating results for the first quarter is scheduled for Friday, May 3, 2019 at 11:00 am and will be broadcast over the Company's website (www.mineralstech.com).  The broadcast will remain on the Company's website for no less than one year.
                 

 

                                   
  SUPPLEMENTARY DATA
  MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
  (millions of dollars)
  (unaudited)
                                   
      Quarter Ended   % Growth
  SALES DATA   Mar. 31,   % of   Dec. 31,   % of   Apr. 1,   % of        
      2019   Total Sales   2018   Total Sales   2018   Total Sales   Prior Qtr.   Prior Year
                                   
  United States $ 231.7   53 % $ 235.4   53 % $ 232.3   54 %   (2 )%   (0 )%
  International   206.0   47 %   212.1   47 %   199.0   46 %   (3 )%   4 %
    Net Sales $ 437.7   100 % $ 447.5   100 % $ 431.3   100 %   (2 )%   1 %
                                   
  Metalcasting $ 73.2   17 % $ 83.1   19 % $ 79.2   18 %   (12 )%   (8 )%
  Household, Personal Care & Specialty Products   74.9   17 %   69.6   16 %   48.7   11 %   8 %   54 %
  Environmental Products   15.9   4 %   16.1   4 %   12.7   3 %   (1 )%   25 %
  Building Materials   15.3   3 %   15.5   3 %   18.9   4 %   (1 )%   (19 )%
  Basic Minerals   19.9   5 %   22.5   5 %   27.8   6 %   (12 )%   (28 )%
  Performance Materials Segment $ 199.2   46 % $ 206.8   46 % $ 187.3   43 %   (4 )%   6 %
                                   
  Paper PCC $ 91.5   21 % $ 93.9   21 % $ 97.0   22 %   (3 )%   (6 )%
  Specialty PCC   18.1   4 %   15.7   4 %   17.0   4 %   15 %   6 %
  PCC Products $ 109.6   25 % $ 109.6   24 % $ 114.0   26 %   (0 )%   (4 )%
                                   
  Ground Calcium Carbonate  $ 22.3   5 % $ 20.3   5 % $ 22.5   5 %   10 %   (1 )%
  Talc   12.5   3 %   12.6   3 %   13.1   3 %   (1 )%   (5 )%
  Processed Minerals Products $ 34.8   8 % $ 32.9   7 % $ 35.6   8 %   6 %   (2 )%
                                   
  Specialty Minerals Segment $ 144.4   33 % $ 142.5   32 % $ 149.6   35 %   1 %   (3 )%
                                   
  Total Minerals Businesses $ 343.6   79 % $ 349.3   78 % $ 336.9   78 %   (2 )%   2 %
                                   
  Refractory Products $ 62.0   14 % $ 65.4   15 % $ 62.3   14 %   (5 )%   (0 )%
  Metallurgical Products   11.8   3 %   12.5   3 %   13.0   3 %   (6 )%   (9 )%
  Refractories Segment $ 73.8   17 % $ 77.9   17 % $ 75.3   17 %   (5 )%   (2 )%
                                   
  Energy Services Segment $ 20.3   4 % $ 20.3   5 % $ 19.1   4 %   0 %   6 %
                                   
  Total Service Businesses $ 94.1   21 % $ 98.2   22 % $ 94.4   22 %   (4 )%   (0 )%
                                   
    Net Sales $ 437.7   100 % $ 447.5   100 % $ 431.3   100 %   (2 )%   1 %
                                   
                                   

 

                         
  SUPPLEMENTARY DATA  
  MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES  
  (millions of dollars)  
  (unaudited)  
                         
      Quarter Ended   % Growth  
      Mar. 31,   Dec. 31,   Apr. 1,   Prior   Prior  
  SEGMENT OPERATING INCOME DATA   2019    2018    2018    Qtr.   Year  
                         
  Performance Materials Segment $ 26.3   $ 29.2   $ 26.2     (10 )%   0 %  
  % of Sales   13.2 %   14.1 %   14.0 %          
  Specialty Minerals Segment $ 22.0   $ 21.2   $ 24.1     4 %   (9 )%  
  % of Sales   15.2 %   14.9 %   16.1 %          
  Total Minerals Businesses $ 48.3   $ 50.4   $ 50.3     (4 )%   (4 )%  
  % of Sales   14.1 %   14.4 %   14.9 %          
  Refractories Segment $ 12.1   $ 10.8   $ 12.8     12 %   (5 )%  
  % of Sales   16.4 %   13.9 %   17.0 %          
  Energy Services Segment $ 2.4   $ 1.2   $ 1.5     100 %   60 %  
  % of Sales   11.8 %   5.9 %   7.9 %          
  Total Service Businesses $ 14.5   $ 12.0   $ 14.3     21 %   1 %  
  % of Sales   15.4 %   12.2 %   15.1 %          
                         
  Unallocated Corporate Expenses $ (0.8 ) $ (0.1 ) $ (1.6 )   *     (50 )%  
                         
  Acquisition related transaction and integration costs $ 0.0   $ 0.0   $ (0.4 )   *     *    
                         
  Consolidated $ 62.0   $ 62.3   $ 62.6     (0 )%   (1 )%  
  % of Sales   14.2 %   13.9 %   14.5 %          
                         
   SPECIAL ITEMS                      
                         
  Performance Materials Segment $ 0.0   $ 0.0   $ 0.0     *     *    
                         
  Specialty Minerals Segment $ 0.0   $ 0.7   $ 0.0     *     *    
                         
  Total Minerals Businesses $ 0.0   $ 0.7   $ 0.0     *     *    
                         
  Refractories Segment $ 0.0   $ 0.0   $ 0.0     *     *    
                         
  Energy Services Segment $ 0.0   $ 1.1   $ 0.0     *     *    
                         
  Total Service Businesses $ 0.0   $ 1.1   $ 0.0     *     *    
                         
  Unallocated and Other Corporate Expenses $ 0.0   $ 0.0   $ 0.0     *     *    
                         
  Acquisition related transaction and integration costs $ 0.0   $ 0.0   $ 0.4     *     *    
                         
  Consolidated $ 0.0   $ 1.8   $ 0.4     *     *    
                         
  To supplement the Company's consolidated financial statements presented in accordance with GAAP, the following is a presentation of the Company's non-GAAP operating income, excluding special items (set forth in the above table), for the quarterly periods ended March 31, 2019, December 31, 2018,  and April 1, 2018,  constituting a reconciliation to GAAP operating income set forth above.  The Company's management believe these non-GAAP measures provide meaningful supplemental information regarding its performance as inclusion of such special items are not indicative of ongoing operating results and thereby affect the comparability of results between periods.  The Company believes inclusion of these non-GAAP measures also provides consistency in its financial reporting and facilitates investors' understanding of historic operating trends.  
                         
      Quarter Ended   % Growth  
  SEGMENT OPERATING INCOME,   Mar. 31,   Dec. 31,   Apr. 1,          
    EXCLUDING SPECIAL ITEMS   2019    2018    2018    Prior Qtr.   Prior Year  
                         
  Performance Materials Segment $ 26.3   $ 29.2   $ 26.2     (10 )%   0 %  
  % of Sales   13.2 %   14.1 %   14.0 %          
  Specialty Minerals Segment $ 22.0   $ 21.9   $ 24.1     0 %   (9 )%  
  % of Sales   15.2 %   15.4 %   16.1 %          
  Total Minerals Businesses $ 48.3   $ 51.1   $ 50.3     (5 )%   (4 )%  
  % of Sales   14.1 %   14.6 %   14.9 %          
  Refractories Segment $ 12.1   $ 10.8   $ 12.8     12 %   (5 )%  
  % of Sales   16.4 %   13.9 %   17.0 %          
  Energy Services Segment $ 2.4   $ 2.3   $ 1.5     4 %   60 %  
  % of Sales   11.8 %   11.3 %   7.9 %          
  Total Service Businesses $ 14.5   $ 13.1   $ 14.3     11 %   1 %  
  % of Sales   15.4 %   13.3 %   15.1 %          
                         
  Unallocated Corporate Expenses $ (0.8 ) $ (0.1 ) $ (1.6 )   *     (50 )%  
                         
  Consolidated $ 62.0   $ 64.1   $ 63.0     (3 )%   (2 )%  
  % of Sales   14.2 %   14.3 %   14.6 %          
  * Percentage not meaningful                      
                         

 

         
MINERALS TECHNOLOGIES INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
         
         
         
ASSETS
         
(In Millions of Dollars)        
    Mar. 31,   December 31,
    2019*   2018**
         
Current assets:        
Cash & cash equivalents $ 202.7   $ 208.8  
Short-term investments   4.3     3.8  
Accounts receivable, net   406.4     387.3  
Inventories   254.4     239.2  
Prepaid expenses and other current assets   36.1     37.2  
Total current assets   903.9     876.3  
         
Property, plant and equipment   2,269.0     2,256.0  
Less accumulated depreciation   (1,167.9 )   (1,153.1 )
Net property, plant & equipment   1,101.1     1,102.9  
         
Goodwill   812.4     812.4  
Intangible assets   211.8     214.1  
Other assets and deferred charges   134.2     81.4  
         
         
Total assets $ 3,163.4   $ 3,087.1  
         
         
LIABILITIES AND SHAREHOLDERS' EQUITY
         
Current liabilities:        
Short-term debt $ 104.7   $ 105.2  
Current maturities of long-term debt   2.7     3.3  
Accounts payable   178.2     169.1  
Other current liabilities   105.2     104.3  
Total current liabilities   390.8     381.9  
         
Long-term debt   893.4     907.8  
Deferred income taxes   198.1     196.8  
Other non-current liabilities   253.7     215.3  
Total liabilities   1,736.0     1,701.8  
         
Total MTI shareholders' equity   1,393.5     1,353.5  
Non-controlling Interests   33.9     31.8  
Total shareholders' equity   1,427.4     1,385.3  
         
Total liabilities and shareholders' equity $ 3,163.4   $ 3,087.1  
         
         
*Unaudited        
**Condensed from audited financial statements.