Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Nov. 30, 2015 | Dec. 31, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Nov. 30, 2015 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | RPM | |
Entity Registrant Name | RPM INTERNATIONAL INC/DE/ | |
Entity Central Index Key | 110,621 | |
Current Fiscal Year End Date | --05-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 132,832,418 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Nov. 30, 2015 | May. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 190,609 | $ 174,711 |
Trade accounts receivable (less allowances of $25,110 and $24,526, respectively) | 816,814 | 956,211 |
Inventories | 710,282 | 674,205 |
Deferred income taxes | 28,620 | 29,892 |
Prepaid expenses and other current assets | 265,090 | 264,827 |
Total current assets | 2,011,415 | 2,099,846 |
Property, Plant and Equipment, at Cost | 1,262,062 | 1,258,304 |
Allowance for depreciation | (687,426) | (668,658) |
Property, plant and equipment, net | 574,636 | 589,646 |
Other Assets | ||
Goodwill | 1,187,204 | 1,215,688 |
Other intangible assets, net of amortization | 577,324 | 604,130 |
Deferred income taxes, non-current | 2,902 | 5,685 |
Other | 164,751 | 179,245 |
Total other assets | 1,932,181 | 2,004,748 |
Total Assets | 4,518,232 | 4,694,240 |
Current Liabilities | ||
Accounts payable | 396,896 | 512,165 |
Current portion of long-term debt | 2,593 | 2,038 |
Accrued compensation and benefits | 119,482 | 169,370 |
Accrued losses | 22,468 | 22,016 |
Other accrued liabilities | 197,229 | 197,647 |
Total current liabilities | 738,668 | 903,236 |
Long-Term Liabilities | ||
Long-term debt, less current maturities | 1,673,471 | 1,654,037 |
Other long-term liabilities | 732,467 | 752,821 |
Deferred income taxes | 81,402 | 90,681 |
Total long-term liabilities | $ 2,487,340 | $ 2,497,539 |
Commitments and contingencies (Note 13) | ||
Stockholders' Equity | ||
Preferred stock, par value $0.01; authorized 50,000 shares; none issued | ||
Common stock, par value $0.01; authorized 300,000 shares; issued 139,979 and outstanding 133,318 as of November 30, 2015; issued 138,828 and outstanding 133,203 as of May 31, 2015 | $ 1,333 | $ 1,332 |
Paid-in capital | 887,650 | 872,127 |
Treasury stock, at cost | (170,220) | (124,928) |
Accumulated other comprehensive (loss) | (477,470) | (394,135) |
Retained earnings | 1,048,968 | 936,996 |
Total RPM International Inc. stockholders' equity | 1,290,261 | 1,291,392 |
Noncontrolling Interest | 1,963 | 2,073 |
Total equity | 1,292,224 | 1,293,465 |
Total Liabilities and Stockholders' Equity | $ 4,518,232 | $ 4,694,240 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Nov. 30, 2015 | May. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Trade accounts receivable, allowances | $ 25,110 | $ 24,526 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 50,000,000 | 50,000,000 |
Preferred stock, issued | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized | 300,000,000 | 300,000,000 |
Common stock, issued | 139,979,000 | 138,828,000 |
Common stock, outstanding | 133,318,000 | 133,203,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | ||
Income Statement [Abstract] | |||||
Net Sales | $ 1,155,984 | $ 1,071,128 | $ 2,398,510 | $ 2,275,024 | |
Cost of Sales | 662,050 | 617,185 | 1,371,618 | 1,312,688 | |
Gross Profit | 493,934 | 453,943 | 1,026,892 | 962,336 | |
Selling, General and Administrative Expenses | 352,594 | 334,889 | 725,448 | 681,414 | |
Interest Expense | 22,478 | 19,404 | 44,938 | 38,819 | |
Investment (Income), Net | (1,100) | (5,058) | (5,168) | (8,861) | |
Other (Income), Net | (299) | (1,042) | (788) | (2,864) | |
Income (Expense) Before Income Taxes | [1] | 120,261 | 105,750 | 262,462 | 253,828 |
Provision for Income Taxes | 36,112 | 31,894 | 77,951 | 75,133 | |
Net Income | 84,149 | 73,856 | 184,511 | 178,695 | |
Less: Net Income Attributable to Noncontrolling Interests | 716 | 4,090 | 1,263 | 9,850 | |
Net Income Attributable to RPM International Inc. Stockholders | $ 83,433 | $ 69,766 | $ 183,248 | $ 168,845 | |
Average Number of Shares of Common Stock Outstanding: | |||||
Basic | 129,398 | 130,028 | 129,723 | 130,061 | |
Diluted | [2],[3] | 136,734 | 134,966 | 137,072 | 135,000 |
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders: | |||||
Basic | $ 0.63 | $ 0.52 | $ 1.39 | $ 1.27 | |
Diluted | 0.62 | 0.52 | 1.36 | 1.24 | |
Cash Dividends Declared per Share of Common Stock | $ 0.275 | $ 0.260 | $ 0.535 | $ 0.500 | |
[1] | The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (GAAP) in the United States, to EBIT. | ||||
[2] | For the six months ended November 30, 2014, approximately 3.0 million shares of stock granted under stock-based compensation plans were excluded from the calculation of diluted EPS, as the effect would have been anti-dilutive. | ||||
[3] | For the three months ended November 30, 2014, approximately 3.2 million shares of stock granted under stock-based compensation plans were excluded from the calculation of diluted EPS, as the effect would have been anti-dilutive. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net Income | $ 84,149 | $ 73,856 | $ 184,511 | $ 178,695 |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustments | (53,814) | (91,222) | (84,420) | (112,488) |
Pension and other postretirement benefit liability adjustments (net of tax of $1,803; $2,573; $3,817; $4,165, respectively) | 3,640 | 4,985 | 7,800 | 7,914 |
Unrealized (loss) gain on securities (net of tax of $632; $(1,276); $(2,595); $(1,155), respectively) | 369 | (2,567) | (6,715) | (2,491) |
Unrealized gain (loss) on derivatives (net of tax of $0; $75; $0; $33, respectively) | 283 | 217 | ||
Total other comprehensive (loss) | (49,805) | (88,521) | (83,335) | (106,848) |
Total Comprehensive Income (Loss) | 34,344 | (14,665) | 101,176 | 71,847 |
Less: Comprehensive Income Attributable to Noncontrolling Interests | 716 | 3,008 | 1,263 | 5,388 |
Comprehensive Income (Loss) Attributable to RPM International Inc. Stockholders | $ 33,628 | $ (17,673) | $ 99,913 | $ 66,459 |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Pension and Other Postretirement Benefit Liability Adjustments, Tax | $ 1,803 | $ 2,573 | $ 3,817 | $ 4,165 |
Unrealized gain (loss) on securities, Tax | 632 | (1,276) | (2,595) | (1,155) |
Unrealized gain (loss) on derivatives, Tax Benefit | $ 0 | $ 75 | $ 0 | $ 33 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Nov. 30, 2015 | Nov. 30, 2014 | |
Cash Flows From Operating Activities: | ||
Net income | $ 184,511 | $ 178,695 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Depreciation | 33,509 | 30,132 |
Amortization | 22,144 | 16,015 |
Reversal of contingent consideration obligations | (14,500) | (18,080) |
Deferred income taxes | (680) | 2,170 |
Stock-based compensation expense | 15,524 | 15,706 |
Other non-cash interest expense | 4,862 | 1,329 |
Other | 1,441 | (2,551) |
Changes in assets and liabilities, net of effect from purchases and sales of businesses: | ||
Decrease in receivables | 117,358 | 44,564 |
(Increase) in inventory | (49,781) | (41,392) |
Decrease in prepaid expenses and other current and long-term assets | 4,617 | 1,306 |
(Decrease) in accounts payable | (105,841) | (133,960) |
(Decrease) in accrued compensation and benefits | (45,649) | (57,837) |
Increase (decrease) in accrued losses | 715 | (8,471) |
Increase in other accrued liabilities | 7,375 | 37,229 |
Other | (8,532) | (9,599) |
Cash Provided By Operating Activities | 167,073 | 55,256 |
Cash Flows From Investing Activities: | ||
Capital expenditures | (31,295) | (26,498) |
Acquisition of businesses, net of cash acquired | (12,006) | (33,355) |
Purchase of marketable securities | (14,213) | (14,308) |
Proceeds from sales of marketable securities | 11,737 | 19,205 |
Other | 5,355 | 6,515 |
Cash (Used For) Investing Activities | (40,422) | (48,441) |
Cash Flows From Financing Activities: | ||
Additions to long-term and short-term debt | 38,765 | 83,312 |
Reductions of long-term and short-term debt | (18,774) | (6,501) |
Cash dividends | (71,276) | (66,763) |
Shares repurchased and returned for taxes | (45,292) | (8,954) |
Payments of acquisition-related contingent consideration | (1,631) | (24,750) |
Other | 270 | 1,048 |
Cash (Used For) Financing Activities | (97,938) | (22,608) |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (12,815) | (20,548) |
Net Change in Cash and Cash Equivalents | 15,898 | (36,341) |
Cash and Cash Equivalents at Beginning of Period | 174,711 | 332,868 |
Cash and Cash Equivalents at End of Period | $ 190,609 | $ 296,527 |
Consolidation, Noncontrolling I
Consolidation, Noncontrolling Interests and Basis of Presentation | 6 Months Ended |
Nov. 30, 2015 | |
Accounting Policies [Abstract] | |
Consolidation, Noncontrolling Interests and Basis of Presentation | NOTE 1 — CONSOLIDATION, NONCONTROLLING INTERESTS AND BASIS OF PRESENTATION Our financial statements include all of our majority-owned subsidiaries, except for certain subsidiaries that were deconsolidated during the period from May 31, 2010 through December 31, 2014. We reconsolidated such subsidiaries as of January 1, 2015 (refer to Note 2). We account for our investments in less-than-majority-owned joint ventures, for which we have the ability to exercise significant influence, under the equity method. Effects of transactions between related companies are eliminated in consolidation. Noncontrolling interests are presented in our consolidated financial statements as if parent company investors (controlling interests) and other minority investors (noncontrolling interests) in partially-owned subsidiaries have similar economic interests in a single entity. As a result, investments in noncontrolling interests are reported as equity in our consolidated financial statements. Additionally, our consolidated financial statements include 100% of a controlled subsidiary’s earnings, rather than only our share. Transactions between the parent company and noncontrolling interests are reported in equity as transactions between stockholders, provided that these transactions do not create a change in control. The accompanying unaudited consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”) for interim financial information and the instructions to Form 10-Q. In our opinion, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation have been included for the three and six months ended November 30, 2015 and 2014. For further information, refer to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended May 31, 2015. Our business is dependent on external weather factors. Historically, we have experienced strong sales and net income in our first, second and fourth fiscal quarters comprising the three month periods ending August 31, November 30 and May 31, respectively, with weaker performance in our third fiscal quarter (December through February). |
Specialty Products Holding Corp
Specialty Products Holding Corp. ("SPHC") | 6 Months Ended |
Nov. 30, 2015 | |
Text Block [Abstract] | |
Specialty Products Holding Corp. ("SPHC") | NOTE 2 — SPECIALTY PRODUCTS HOLDING CORP. (“SPHC”) Prior to May 31, 2010, Bondex International, Inc. (“Bondex”) and its parent, SPHC, were defendants in various asbestos-related bodily injury lawsuits filed in various state courts. These cases generally sought unspecified damages for asbestos-related diseases based on alleged exposures to asbestos-containing products. On May 31, 2010, Bondex and SPHC, filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to reorganize under chapter 11 of the Bankruptcy Code. SPHC and Bondex took this action in an effort to permanently and comprehensively resolve all pending and future asbestos-related liability claims associated with Bondex and SPHC. Similarly, Republic Powdered Metals, Inc. (“Republic”) and NMBFiL, Inc. (“NMBFiL”), both of which are indirect wholly owned subsidiaries of RPM International Inc. (“RPM”), filed to reorganize under chapter 11 of the Bankruptcy Code in August 2014 to resolve all their pending and future asbestos-related liability claims. Both Republic and NMBFiL remained consolidated subsidiaries of RPM, considering the short-term nature of the bankruptcy and that RPM maintained control of them from a participating rights perspective. On December 10, 2014 a plan of reorganization was confirmed (the “Bankruptcy Plan”), and, effective as of December 23, 2014 (the “Effective Date”), Bondex, SPHC, Republic and NMBFiL emerged from bankruptcy. In accordance with the Bankruptcy Plan, trusts were established under Section 524(g) of the United States Bankruptcy Code (together, the “Trust”) and funded with first installments. Pursuant to the Bankruptcy Plan, the Trust assumed all liability and responsibility for current and future asbestos personal injury claims of Bondex, SPHC, Republic and NMBFiL, and such entities will have no further liability or responsibility for, and will (along with affiliates) be permanently protected from, such asbestos claims. The Trust was funded with $450.0 million in cash and a promissory note, bearing no interest and maturing on or before the fourth anniversary of the Effective Date (the “Bankruptcy Note”). The net present value of the Bankruptcy Note, or $331.5 million, is classified as other long-term liabilities in our consolidated financial statements at November 30, 2015. Borrowings under our $800.0 million revolving credit facility were used to fund the initial payment of $450.0 million, which is classified as long-term debt in our Consolidated Balance Sheets. A portion of the payments due under the Bankruptcy Note is secured by a right to the equity of SPHC, Republic and Bondex. The Bankruptcy Plan, and Bankruptcy Note, provide for the following additional contributions to the Trust: · On or before the second anniversary of the Effective Date, an additional $102.5 million in cash, RPM stock or a combination thereof (at our discretion in this and all subsequent cases) will be deposited into the Trust; · On or before the third anniversary of the Effective Date, an additional $120.0 million in cash, RPM stock or a combination thereof will be deposited into the Trust; and · On or before the fourth anniversary of the Effective Date, a final payment of $125.0 million in cash, RPM stock or a combination thereof will be deposited into the Trust. Total current and future contributions to the Trust are deductible for U.S. income tax purposes. Effective with the filing of the Notice of Entry of Order confirming the Bankruptcy Plan, which required the funding of the Trust, we regained control of SPHC and its subsidiaries, and accordingly, we have accounted for the event as a business combination. The funding of the Trust represents the total consideration transferred in the transaction, or $772.6 million. The opening balance sheets are based upon closing balances as of December 31, 2014 and results of operations have been included in our consolidated financial statements beginning on January 1, 2015 (the “Accounting Effective Date”) forward, as we concluded that the activity occurring between the date control was obtained (December 23, 2014) and the Accounting Effective Date was not significant. The fair values of SPHC and its subsidiaries have been determined as of January 1, 2015. Additionally, the fair value of RPM Holdco, of which SPHC owns 21.39% of the outstanding common stock, has been determined in order to account for our increase in ownership of the noncontrolling interest as an equity transaction. The total consideration has been allocated on a relative fair value basis between the noncontrolling interest in RPM Holdco, or approximately $208.4 million, and the net assets of SPHC, or approximately $564.2 million. The difference between the fair value of the noncontrolling interest in RPM Holdco and the carrying value of the noncontrolling interest was recorded as an equity transaction. The portion of the transaction accounted for as a business combination resulted in preliminary goodwill of $118.7 million and intangible assets of $176.0 million. The acquired intangible assets totaling $176.0 million comprise the following $118.7 million of customer and distributor relationships, $2.0 million of definite-lived tradenames, $52.7 million of indefinite-lived tradenames and $2.6 million of formulas. Income tax assets of $271.7 million were recorded in connection with the deductibility of current and future contributions to the Trust. Additionally, deferred tax liabilities of $72.3 million were recorded for the excess of the fair value book basis of certain assets over the corresponding tax basis. The fair values of net tangible assets, intangible assets and the noncontrolling interest were based upon valuations, which required our significant use of estimates and assumptions. While the valuations of consideration transferred and total assets acquired and liabilities assumed are substantially complete, measurement period adjustments may be recorded in the future as we finalize certain fair value estimates. The primary areas that remain preliminary relate to the fair values of deferred income taxes. |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Nov. 30, 2015 | |
Accounting Changes And Error Corrections [Abstract] | |
New Accounting Pronouncements | NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which establishes a comprehensive revenue recognition standard for virtually all industries in GAAP. Under the original issuance, the new standard would have applied to annual periods beginning after December 15, 2016, including interim periods therein. However, in August 2015, the FASB issued ASU 2015-14, which extends the standard effective date by one year and includes an option to apply the standard on the original effective date. We have not yet determined the effects, if any, adoption of this pronouncement may have on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-03 "Interest-Imputation of Interest," which changes the presentation of debt issuance costs in financial statements and specifies that debt issuance costs related to a note shall be reported in the balance sheet as a direct deduction from the face amount of the note. The guidance does not change the current requirements surrounding the recognition and measurement of debt issuance costs, and the amortization of debt issuance costs will continue to be reported as interest expense. The guidance is effective for years and interim periods within those fiscal years beginning after December 15, 2015. Early adoption is allowed for all entities and the new guidance shall be applied to all prior periods retrospectively. We do not expect the adoption of this guidance to have a significant impact on our consolidated financial position and results of operations, although it will change the financial statement classification of the deferred debt cost. As of November 30, 2015, we had $3.0 million and $9.8 million of current and long-term net deferred debt costs, respectively. As of May 31, 2015, we had $3.0 million and $11.5 million of current and long-term net deferred debt costs, respectively. Current and long-term deferred debt costs are included in our Consolidated Balance Sheets and are reflected in prepaid expenses and other current assets, and other long-term assets, respectively. Under the new guidance, the net deferred debt costs would offset the carrying amount of the respective debt on the Consolidated Balance Sheets. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” which will require entities to present deferred tax assets and liabilities as noncurrent in a classified balance sheet. This guidance simplifies the current guidance, which requires entities to separately present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, and may be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented. We are currently evaluating the impact this guidance will have on our consolidated financial statements. |
Marketable Securities
Marketable Securities | 6 Months Ended |
Nov. 30, 2015 | |
Investments Debt And Equity Securities [Abstract] | |
Marketable Securities | NOTE 4 — MARKETABLE SECURITIES The following tables summarize marketable securities held at November 30, 2015 and May 31, 2015 by asset type: Available-For-Sale Securities (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Net Carrying Amount) November 30, 2015 Equity securities: Stocks - foreign $ 4,282 $ 415 $ (248 ) $ 4,449 Stocks - domestic 32,032 3,991 (955 ) 35,068 Mutual funds - foreign 33,605 948 (2,398 ) 32,155 Mutual funds - domestic 57,862 124 (4,030 ) 53,956 Total equity securities 127,781 5,478 (7,631 ) 125,628 Fixed maturity: U.S. treasury and other government 21,714 85 (258 ) 21,541 Corporate bonds 1,032 135 - 1,167 Foreign bonds 36 2 - 38 Mortgage-backed securities 18 23 - 41 Total fixed maturity securities 22,800 245 (258 ) 22,787 Total $ 150,581 $ 5,723 $ (7,889 ) $ 148,415 Available-For-Sale Securities (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Net Carrying Amount) May 31, 2015 Equity securities: Stocks - foreign $ 3,722 $ 339 $ (85 ) $ 3,976 Stocks - domestic 34,368 5,649 (559 ) 39,458 Mutual funds - foreign 32,657 2,114 (230 ) 34,541 Mutual funds - domestic 56,442 228 (2,779 ) 53,891 Total equity securities 127,189 8,330 (3,653 ) 131,866 Fixed maturity: U.S. treasury and other government 21,340 171 (162 ) 21,349 Corporate bonds 1,218 171 - 1,389 Foreign bonds 36 2 - 38 Mortgage-backed securities 81 47 - 128 Total fixed maturity securities 22,675 391 (162 ) 22,904 Total $ 149,864 $ 8,721 $ (3,815 ) $ 154,770 Marketable securities, included in other current and long-term assets totaling $72.8 million and $75.6 million at November 30, 2015, respectively, and included in other current and long-term assets totaling $69.3 million and $85.5 million at May 31, 2015, respectively, are composed of available-for-sale securities and are reported at fair value. We carry a portion of our marketable securities portfolio in long-term assets since they are generally held for the settlement of our general and product liability insurance claims processed through our wholly owned captive insurance subsidiaries. Marketable securities are composed of available-for-sale securities and are reported at fair value. Realized gains and losses on sales of investments are recognized in net income on the specific identification basis. Changes in the fair values of securities that are considered temporary are recorded as unrealized gains and losses, net of applicable taxes, in accumulated other comprehensive income (loss) within stockholders’ equity. Other-than-temporary declines in market value from original cost are reflected in operating income in the period in which the unrealized losses are deemed other than temporary. In order to determine whether other-than-temporary declines in market value have occurred, the duration of the decline in value and our ability to hold the investment are considered in conjunction with an evaluation of the strength of the underlying collateral and the extent to which the investment’s amortized cost or cost, as appropriate, exceeds its related market value. Gross gains realized on sales of investments were $2.1 million and $3.2 million for the quarters ended November 30, 2015 and 2014, respectively. During the three months ended November 30, 2015, we recognized gross realized losses on sales of investments of $0.1 million, while we recognized no such losses during the three months ended November 30, 2014. During the three months ended November 30, 2015, we recognized losses of approximately $2.5 million for securities deemed to have other-than-temporary impairments, while we recognized no such losses during the second quarter of fiscal 2015. These amounts are included in investment (income), net in the Consolidated Statements of Income. Gross gains realized on sales of investments were $4.6 million and $5.3 million for the six months ended November 30, 2015 and 2014, respectively. During the first six months of fiscal 2016, we recognized gross realized losses on sales of investments of $0.2 million, while we recognized no such losses during the first six months of fiscal 2015. During the six months ended November 30, 2015, we recognized losses of approximately $2.5 million for securities deemed to have other-than-temporary impairments, while we recognized no such losses during the first half of fiscal 2015. Summarized below are the securities we held at November 30, 2015 and May 31, 2015 that were in an unrealized loss position and that were included in accumulated other comprehensive income (loss), aggregated by the length of time the investments had been in that position: November 30, 2015 May 31, 2015 (In thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Total investments with unrealized losses $ 97,059 $ (7,889 ) $ 58,978 $ (3,815 ) Unrealized losses with a loss position for less than 12 months 55,461 (4,872 ) 32,693 (1,441 ) Unrealized losses with a loss position for more than 12 months 41,598 (3,017 ) 26,285 (2,374 ) We have reviewed all of the securities included in the table above and have concluded that we have the ability and intent to hold these investments until their cost can be recovered, based upon the severity and duration of the decline. Therefore, we did not recognize any other-than-temporary impairment losses on these investments. The unrealized losses generally relate to investments whose fair values at November 30, 2015 were less than 15% below their original cost. From time to time, we may experience significant volatility in general economic and market conditions. If we were to experience unrealized losses that were to continue for longer periods of time, or arise to more significant levels of unrealized losses within our portfolio of investments in marketable securities in the future, we may recognize additional other-than-temporary impairment losses. Such potential losses could have a material impact on our results of operations in any given reporting period. As such, we continue to closely evaluate the status of our investments and our ability and intent to hold these investments. The net carrying values of debt securities at November 30, 2015, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties. (In thousands) Amortized Cost Fair Value Due: Less than one year $ 3,738 $ 3,706 One year through five years 15,818 15,683 Six years through ten years 2,135 2,150 After ten years 1,109 1,248 $ 22,800 $ 22,787 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Nov. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 5 — FAIR VALUE MEASUREMENTS Financial instruments recorded in the balance sheet include cash and cash equivalents, trade accounts receivable, marketable securities, notes and accounts payable, and debt. An allowance for anticipated uncollectible trade receivable amounts is established using a combination of specifically identified accounts to be reserved, and a reserve covering trends in collectibility. These estimates are based on an analysis of trends in collectibility and past experience, but are primarily made up of individual account balances identified as doubtful based on specific facts and conditions. Receivable losses are charged against the allowance when we confirm uncollectibility. All derivative instruments are recognized in our Consolidated Balance Sheets and measured at fair value. Changes in the fair values of derivative instruments that do not qualify as hedges and/or any ineffective portion of hedges are recognized as a gain or (loss) in our Consolidated Statements of Income in the current period. Changes in the fair value of derivative instruments used effectively as cash flow hedges are recognized in other comprehensive income (loss), along with the change in the value of the hedged item. We do not hold or issue derivative instruments for speculative purposes. The valuation techniques utilized for establishing the fair values of assets and liabilities are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect management’s market assumptions. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value, as follows: Level 1 Inputs — Quoted prices for identical instruments in active markets. Level 2 Inputs — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 Inputs — Instruments with primarily unobservable value drivers. The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. (In thousands) Quoted in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at November 30, 2015 U.S. Treasury and other government $ - $ 21,541 $ - $ 21,541 Foreign bonds 38 38 Mortgage-backed securities 41 41 Corporate bonds 1,167 1,167 Stocks - foreign 4,449 4,449 Stocks - domestic 35,068 35,068 Cash and cash equivalents 1,545 1,545 Mutual funds - foreign 32,155 32,155 Mutual funds - domestic 53,956 53,956 Foreign currency forward contract (8,678 ) (8,678 ) Contingent consideration (11,706 ) (11,706 ) Total $ 41,062 $ 100,220 $ (11,706 ) $ 129,576 (In thousands) Quoted in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at May 31, 2015 U.S. Treasury and other government $ - $ 21,349 $ - $ 21,349 Foreign bonds 38 38 Mortgage-backed securities 128 128 Corporate bonds 1,389 1,389 Stocks - foreign 3,976 3,976 Stocks - domestic 39,458 39,458 Mutual funds - foreign 34,541 34,541 Mutual funds - domestic 53,891 53,891 Foreign currency forward contract (6,369 ) (6,369 ) Contingent consideration (27,598 ) (27,598 ) Total $ 43,434 $ 104,967 $ (27,598 ) $ 120,803 Our marketable securities are primarily composed of available-for-sale securities, and are valued using a market approach. The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors including the type of instrument, whether the instrument is actively traded, and other characteristics particular to the transaction. For most of our financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment. At November 30, 2015, we had a foreign currency forward contract with a fair value of approximately $8.7 million, which is classified in other accrued liabilities in our Consolidated Balance Sheets. At May 31, 2015, we had a foreign currency forward contract with a fair value of approximately $6.4 million, which is classified in other accrued liabilities in our Consolidated Balance Sheets. Our foreign currency forward contract, which has not been designated as a hedge, was designed to reduce our exposure to the changes in the cash flows of intercompany foreign-currency-denominated loans related to changes in foreign currency exchange rates by fixing the functional currency cash flows. The foreign exchange rates included in the forward contract are based upon observable market data, but are not quoted market prices, and therefore, the forward currency forward contract is considered a Level 2 liability on the fair value hierarchy. The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with recent acquisitions that is contingent upon the achievement of certain performance milestones. We estimated the fair value using expected future cash flows over the period in which the obligation is expected to be settled, and applied a discount rate that appropriately captures a market participant's view of the risk associated with the obligation, which are considered to be Level 3 inputs. During the quarter ended November 30, 2015, we reversed approximately $14.5 million for contingent earnout targets that were not expected to be met, due to a delay in new business that will push the majority of orders previously anticipated for fiscal 2016 into our 2017 fiscal year. Additionally, during the first six months of fiscal 2016, we paid approximately $1.6 million for settlements of contingent consideration obligations relating to certain performance milestones that were established in prior periods and achieved during the current period. These amounts are reported in payments of acquisition-related contingent consideration in the Consolidated Statements of Cash Flows. The carrying value of our current financial instruments, which include cash and cash equivalents, marketable securities, trade accounts receivable, accounts payable and short-term debt approximates fair value because of the short-term maturity of these financial instruments. At November 30, 2015 and May 31, 2015, the fair value of our long-term debt was estimated using active market quotes, based on our current incremental borrowing rates for similar types of borrowing arrangements, which are considered to be Level 2 inputs. Based on the analysis performed, the fair value and the carrying value of our financial instruments and long-term debt as of November 30, 2015 and May 31, 2015 are as follows: At November 30, 2015 (In thousands) Carrying Value Fair Value Cash and cash equivalents $ 190,609 $ 190,609 Marketable equity securities 125,628 125,628 Marketable debt securities 22,787 22,787 Long-term debt, including current portion 1,676,064 1,724,147 At May 31, 2015 (In thousands) Carrying Value Fair Value Cash and cash equivalents $ 174,711 $ 174,711 Marketable equity securities 131,866 131,866 Marketable debt securities 22,904 22,904 Long-term debt, including current portion 1,656,075 1,783,962 |
Investment (Income), Net
Investment (Income), Net | 6 Months Ended |
Nov. 30, 2015 | |
Other Income And Expenses [Abstract] | |
Investment (Income), Net | NOTE 6 — INVESTMENT (INCOME), NET Investment (income), net, consists of the following components: Three Months Ended Six Months Ended November 30, November 30, (In thousands) 2015 2014 2015 2014 Interest (income) $ (1,218 ) $ (1,601 ) $ (2,582 ) $ (3,005 ) (Gain) on sale of marketable securities (2,042 ) (3,204 ) (4,418 ) (5,320 ) Other-than-temporary impairment on securities 2,472 - 2,472 - Dividend (income) (312 ) (253 ) (640 ) (536 ) Investment (income), net $ (1,100 ) $ (5,058 ) $ (5,168 ) $ (8,861 ) |
Other (Income), Net
Other (Income), Net | 6 Months Ended |
Nov. 30, 2015 | |
Other Income And Expenses [Abstract] | |
Other (Income), Net | NOTE 7 — OTHER (INCOME), NET Other (income), net, consists of the following components: Three Months Ended Six Months Ended November 30, November 30, (In thousands) 2015 2014 2015 2014 Royalty (income) expense, net $ 174 $ (378 ) $ 163 $ (1,595 ) (Income) related to unconsolidated equity affiliates (473 ) (664 ) (951 ) (1,269 ) Other (income), net $ (299 ) $ (1,042 ) $ (788 ) $ (2,864 ) |
Income Taxes
Income Taxes | 6 Months Ended |
Nov. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8 — INCOME TAXES The effective income tax rate was 30.0% for the three months ended November 30, 2015 compared to an effective income tax rate of 30.2% for the three months ended November 30, 2014. The effective income tax rate was 29.7% for the six months ended November 30, 2015 compared to an effective income tax rate of 29.6% for the six months ended November 30, 2014. The effective tax rate for the three and six months ended November 30, 2015 and 2014 reflect variances from the 35% federal statutory rate primarily due to lower effective tax rate of certain of our foreign subsidiaries, the benefit of the domestic manufacturing deduction and the unfavorable impact of state and local taxes. At May 31, 2015, we determined that it was possible that we could repatriate approximately $419.1 million of undistributed foreign earnings in the foreseeable future. Accordingly, as of May 31, 2015, we recorded a deferred income tax liability of $108.5 million, which represented our estimate of the U.S income and foreign withholding tax associated with the $419.1 million of undistributed foreign earnings. Based on November 30, 2015 exchange rates, the amount of undistributed earnings that may be repatriated has been revalued to $401.5 million and the corresponding deferred tax liability has been reduced to $101.9 million. This reduction in the deferred tax liability is due to the impact of foreign exchange and is recorded in accumulated other comprehensive income (loss). We have not provided for U.S. income and foreign withholding taxes on the remaining foreign undistributed earnings because such earnings have been retained and reinvested by the foreign subsidiaries as of November 30, 2015. Accordingly, no provision has been made for U.S. income taxes or foreign withholding taxes, which may become payable if the remaining undistributed earnings of foreign subsidiaries were distributed to the U.S. Subsequent to November 30, 2015, on December 18, 2015, President Obama signed into law the Consolidated Appropriations Act, 2016 (the “Act”) that reinstated certain tax benefits and credits that had expired. The Act also made a number of the provisions permanent, including the research and development credit, extended others for five years and extended the remainder two years. Although we are still in the process of analyzing this new legislation, we do not expect this law to have a material impact on our consolidated financial results. |
Inventories
Inventories | 6 Months Ended |
Nov. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 9 — INVENTORIES Inventories, net of reserves, were composed of the following major classes: November 30, 2015 May 31, 2015 (In thousands) Raw material and supplies $ 229,766 $ 235,649 Finished goods 480,516 438,556 Total Inventory, Net of Reserves $ 710,282 $ 674,205 |
Stock Repurchase Program
Stock Repurchase Program | 6 Months Ended |
Nov. 30, 2015 | |
Equity [Abstract] | |
Stock Repurchase Program | NOTE 10 — STOCK REPURCHASE PROGRAM On January 8, 2008, we announced our authorization of a stock repurchase program under which we may repurchase shares of RPM International Inc. common stock at management’s discretion for general corporate purposes. Our current intent is to limit our repurchases to approximately one to two million shares per year, which would include amounts required to offset dilution created by stock issued in connection with our equity-based compensation plans and other repurchases. As a result of this authorization, we may repurchase shares from time to time in the open market or in private transactions at various times and in amounts and for prices that our management deems appropriate, subject to insider trading rules and other securities law restrictions. The timing of our purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time. During the three and six months ended November 30, 2015, we repurchased approximately 100,000 shares and 400,000 shares of our common stock under this program, respectively. These shares of common stock were repurchased during the current quarter and six month period for approximately $4.4 million and $17.2 million, respectively. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Nov. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE 11 — EARNINGS PER SHARE The following table sets forth the reconciliation of the numerator and denominator of basic and diluted earnings per share, as calculated using the two-class method for the three and six month periods ended November 30, 2014. For the three and six month periods ended November 30, 2015, basic earnings per share were calculated using the two-class method, while diluted earnings per share were calculated using the treasury method, as the results under the two-class method were less dilutive. Three Months Ended Six Months Ended November 30, November 30, (In thousands, except per share amounts) 2015 2014 2015 2014 Numerator for earnings per share: Net income attributable to RPM International Inc. stockholders $ 83,433 $ 69,766 $ 183,248 $ 168,845 Less: Allocation of earnings and dividends to participating securities (1,571 ) (1,602 ) (3,068 ) (3,673 ) Net income available to common shareholders - basic 81,862 68,164 180,180 165,172 Add: Undistributed earnings reallocated to unvested shareholders 6 18 Reverse: Allocation of earnings and dividends to participating securities 1,571 3,068 Add: Income effect of contingently issuable shares 1,354 1,340 2,706 2,679 Net income available to common shareholders - diluted $ 84,787 $ 69,510 $ 185,954 $ 167,869 Denominator for basic and diluted earnings per share: Basic weighted average common shares 129,398 130,028 129,723 130,061 Average diluted options 3,453 1,063 3,466 1,064 Additional shares issuable assuming conversion of convertible securities 3,883 3,875 3,883 3,875 Total shares for diluted earnings per share (1), (2) 136,734 134,966 137,072 135,000 Earnings Per Share of Common Stock Attributable to RPM International Inc. Stockholders: Basic Earnings Per Share of Common Stock $ 0.63 $ 0.52 $ 1.39 $ 1.27 Diluted Earnings Per Share of Common Stock $ 0.62 $ 0.52 $ 1.36 $ 1.24 (1) For the three months ended November 30, 2014 (2) For the , approximately 3.0 million shares of stock granted under stock-based compensation plans were excluded from the calculation of diluted EPS, as the effect would have been anti-dilutive. |
Pension Plans
Pension Plans | 6 Months Ended |
Nov. 30, 2015 | |
Compensation And Retirement Disclosure [Abstract] | |
Pension Plans | NOTE 12 — PENSION PLANS We offer defined benefit pension plans, defined contribution pension plans, as well as several unfunded health care benefit plans primarily for certain of our retired employees. Historically, we estimated the service and interest cost components of net periodic pension and postretirement benefit cost by applying a single weighted-average discount rate, derived from the yield curve used to measure the benefit obligation at the beginning of the period. During the first quarter of the current fiscal year, we elected to change our approach in estimating service and interest cost by applying the split discount rate approach. Under the split discount rate approach, we estimate service and interest cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. We made this change in order to more precisely measure our service and interest costs, and the split discount rate approach achieves this by improving the correlation between projected benefit cash flows and the corresponding spot yield curve rates. This change will not affect the measurement of our total benefit obligation at our annual measurement date, as the change in service and interest cost is completely offset by deferred actuarial (gains)/losses that will arise at the next annual measurement date. As this change is treated as a change in estimate, the impact is reflected in the first quarter of the current fiscal year and prospectively, and historical measurements of service and interest cost were not affected. This change in estimate is anticipated to reduce our current year annual net periodic benefit expense by approximately $5.4 million for our U.S. Plans and by approximately $1.0 million for our non-U.S. plans. Accordingly, for the three months ended November 30, 2015, total service cost and interest cost for all plans was $9.6 million and $6.1 million, respectively, a reduction of $0.2 million and $1.4 million, respectively, as a result of implementing the new approach. For the six months ended November 30, 2015, total service cost and interest cost for all plans was $19.2 million and $12.2 million, respectively, a reduction of $0.4 million and $2.8 million, respectively, as a result of implementing the new approach. This resulted in an increase in income from continuing operations and net income for the three months ended November 30, 2015 of approximately $1.6 million and $1.1 million, respectively, and an increase in both basic and diluted earnings per share of $0.01. For the six months ended November 30, 2015, this resulted in an increase in income from continuing operations and net income of approximately $3.2 million and $2.2 million, respectively, and an increase in both basic and diluted earnings per share of $0.02. The following tables provide the retirement-related benefit plans’ impact on income before income taxes for the three and six months ended November 30, 2015 and 2014: U.S. Plans Non-U.S. Plans Three Months Ended Three Months Ended November 30, November 30, Pension Benefits 2015 2014 2015 2014 (In thousands) Service cost $ 8,202 $ 7,564 $ 1,067 $ 1,231 Interest cost 4,499 5,002 1,323 1,891 Expected return on plan assets (6,437 ) (6,034 ) (1,983 ) (2,296 ) Amortization of: Prior service cost 58 74 10 Net actuarial losses recognized 4,190 3,472 457 536 Settlement 91 Net Periodic Benefit Cost $ 10,512 $ 10,078 $ 955 $ 1,372 U.S. Plans Non-U.S. Plans Three Months Ended Three Months Ended November 30, November 30, Postretirement Benefits 2015 2014 2015 2014 (In thousands) Service cost $ - $ - $ 281 $ 313 Interest cost 59 66 221 308 Amortization of: Prior service (credit) (62 ) (62 ) Net actuarial (gains) losses recognized (34 ) 61 104 Net Periodic Benefit Cost $ (3 ) $ (30 ) $ 563 $ 725 U.S. Plans Non-U.S. Plans Six Months Ended Six Months Ended November 30, November 30, Pension Benefits 2015 2014 2015 2014 (In thousands) Service cost $ 16,404 $ 15,128 $ 2,134 $ 2,462 Interest cost 8,998 10,004 2,646 3,782 Expected return on plan assets (12,874 ) (12,068 ) (3,966 ) (4,592 ) Amortization of: Prior service cost 116 148 20 Net actuarial losses recognized 8,380 6,944 914 1,072 Settlement 91 Net Periodic Benefit Cost $ 21,024 $ 20,156 $ 1,819 $ 2,744 U.S. Plans Non-U.S. Plans Six Months Ended Six Months Ended November 30, November 30, Postretirement Benefits 2015 2014 2015 2014 (In thousands) Service cost $ - $ - $ 562 $ 626 Interest cost 118 132 442 616 Amortization of: Prior service (credit) (124 ) (124 ) Net actuarial (gains) losses recognized (68 ) 122 208 Net Periodic Benefit Cost $ (6 ) $ (60 ) $ 1,126 $ 1,450 Note that the information reflected above for the U.S. plans includes the Day-Glo plan as of its reconsolidation date of January 1, 2015. We previously disclosed in our financial statements for the fiscal year ended May 31, 2015 that we expected to contribute approximately $32.0 million to our retirement plans in the U.S. and approximately $5.7 million to plans outside the U.S. during the current fiscal year. As of November 30, 2015, we expect to contribute an additional $3.8 million to the Retirement Plan in the U.S., which will increase our total expected U.S. contributions for the 2016 fiscal year to $35.8 million. |
Contingencies and Other Accrued
Contingencies and Other Accrued Losses | 6 Months Ended |
Nov. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Contingencies and Other Accrued Losses | NOTE 13 — CONTINGENCIES AND OTHER ACCRUED LOSSES We provide, through our wholly owned insurance subsidiaries, certain insurance coverage, primarily product liability coverage, to our other subsidiaries. Excess coverage is provided by third-party insurers. Our product liability accruals provide for these potential losses as well as other uninsured claims. Product liability accruals are established based upon actuarial calculations of potential liability using industry experience, actual historical experience and actuarial assumptions developed for similar types of product liability claims, including development factors and lag times. To the extent there is a reasonable possibility that potential losses could exceed the amounts already accrued, we believe that the amount of any such additional loss would be immaterial to our results of operations, liquidity and consolidated financial position. We also offer warranties on many of our products, as well as long-term warranty programs at certain of our businesses, and have established product warranty liabilities. We review these liabilities for adequacy on a quarterly basis and adjust them as necessary. The primary factors that could affect these liabilities may include changes in performance rates as well as costs of replacement. Provision for estimated warranty costs is recorded at the time of sale and periodically adjusted, as required, to reflect actual experience. It is probable that we will incur future losses related to warranty claims we have received but that have not been fully investigated and related to claims not yet received. While our warranty liabilities represent our best estimates at November 30, 2015, we can provide no assurances that we will not experience material claims in the future or that we will not incur significant costs to resolve such claims beyond the amounts accrued or beyond what we may recover from our suppliers. Product warranty expense is recorded within selling, general and administrative expense within our Consolidated Statements of Income. Also, due to the nature of our businesses, the amount of claims paid can fluctuate from one period to the next. While our warranty liabilities represent our best estimates of our expected losses at any given time, from time-to-time we may revise our estimates based on our experience relating to factors such as weather conditions, specific circumstances surrounding product installations and other factors. The following table includes the changes in our accrued warranty balances: Three Months Ended Six Months Ended November 30, November 30, 2015 2014 2015 2014 (In thousands) Beginning Balance $ 10,112 $ 7,421 $ 11,663 $ 14,741 Deductions (1) (4,890 ) (5,066 ) (9,550 ) (19,741 ) Provision charged to SG&A expense 4,218 6,603 7,327 13,958 Ending Balance $ 9,440 $ 8,958 $ 9,440 $ 8,958 (1) Primarily claims paid during the year. In addition, like other companies participating in similar lines of business, some of our subsidiaries are involved in several proceedings relating to environmental matters. It is our policy to accrue remediation costs when it is probable that such efforts will be required and the related costs can be reasonably estimated. These liabilities are undiscounted and are not material to our financial statements during any of the periods presented. We were notified by the SEC on June 24, 2014, that we are the subject of a formal investigation pertaining to the timing of our disclosure and accrual of loss reserves in fiscal 2013 with respect to the previously disclosed U.S. Department Of Justice (the “DOJ”) and the U.S. General Services Administration (the “GSA”) Office of Inspector General investigation into compliance issues relating to Tremco Roofing Division’s GSA contracts. As previously disclosed, our audit committee completed an investigation into the facts and circumstances surrounding the timing of our disclosure and accrual of loss reserves with respect to the GSA and DOJ investigations, and determined that it was appropriate to restate our financial results for the first, second and third quarters of fiscal 2013. These restatements had no impact on our audited financial statements for the fiscal years ended May 31, 2013 or 2014. The audit committee’s investigation concluded that there was no intentional misconduct on the part of any of our officers. We are cooperating with the SEC in its ongoing investigation and continue to be engaged in discussions with the staff of the SEC’s Division of Enforcement (the “Staff”) concerning potential issues arising out of the SEC’s investigation. As previously disclosed, on October 26, 2015, we and our General Counsel received Wells notices from the SEC’s Division of Enforcement in connection with its investigation. A Wells notice is not a formal allegation or a finding of wrongdoing, but is a preliminary determination by the Staff that it may recommend to the SEC that a civil enforcement action or administrative proceeding be brought against the recipient. Our Wells notice also indicated that the Staff had preliminarily determined to recommend that the SEC pursue a clawback claim relating to incentive compensation payments paid to our Chief Executive Officer and Chief Financial Officer during the periods prior to the restatement. The Staff did not indicate an intention to recommend any charges against either of these officers. Under SEC procedures, a recipient of a Wells notice has an opportunity to respond in the form of a Wells submission that seeks to persuade the SEC that such an action should not be brought. In November 2015, we made a Wells submission to further explain RPM’s views concerning such matters and our belief that no enforcement action is warranted against us or our officers. We intend to contest any charges that may be brought. Any action by the SEC could result in sanctions against us and/or certain of our officers. A protracted investigation could impose substantial additional costs and distractions, regardless of its outcome. We have determined that it is probable that we will incur a loss relating to this matter and have estimated a range of potential loss. We have accrued at the low end of the range of loss, as no amount within the range is more likely to occur, and no amount within the estimated range of loss would have a material impact on our consolidated financial condition, results of operations or cash flows. A consolidated class-action complaint is pending against Rust-Oleum seeking to have a class certified and alleging breach of warranty, breach of contract and other claims regarding certain deck coating products of Rust-Oleum. Rust-Oleum is vigorously defending this action, including any attempts at class certification. At this time, we are unable to predict the outcome of this matter or provide any quantification of how the final resolution of this matter may impact our future consolidated financial condition, results of operations or cash flows. |
Equity
Equity | 6 Months Ended |
Nov. 30, 2015 | |
Equity [Abstract] | |
Equity | NOTE 14 — EQUITY The following tables illustrate the components of total equity and comprehensive income for the three months ended November 30, 2015 and 2014: (In thousands) Total RPM International Inc. Equity Noncontrolling Interest Total Equity Total equity at August 31, 2015 $ 1,294,402 $ 2,620 $ 1,297,022 Net income 83,433 716 84,149 Other Comprehensive Income: Foreign currency translation adjustments (53,814 ) (53,814 ) Pension and other postretirement benefit liability adjustments, net of tax 3,640 3,640 Unrealized (loss) on securities, net of tax 369 369 Total Other Comprehensive Income, net of tax (49,805 ) - (49,805 ) Comprehensive Income 33,628 716 34,344 Dividends paid (36,642 ) (36,642 ) Other noncontrolling interest activity (1,373 ) (1,373 ) Shares repurchased and returned for taxes (9,944 ) (9,944 ) Stock based compensation expense 8,817 8,817 Total Equity at November 30, 2015 $ 1,290,261 $ 1,963 $ 1,292,224 (In thousands) Total RPM International Inc. Equity Noncontrolling Interest Total Equity Total equity at August 31, 2014 $ 1,436,234 $ 198,134 $ 1,634,368 Net income 69,766 4,090 73,856 Other Comprehensive Income: Foreign currency translation adjustments (89,462 ) (1,760 ) (91,222 ) Pension and other postretirement benefit liability adjustments, net of tax 4,374 611 4,985 Unrealized (loss) gain on securities, net of tax (2,574 ) 7 (2,567 ) Unrealized gain on derivatives, net of tax 223 60 283 Total Other Comprehensive (Loss), net of tax (87,439 ) (1,082 ) (88,521 ) Comprehensive Income (17,673 ) 3,008 (14,665 ) Dividends paid (34,776 ) (34,776 ) Other noncontrolling interest activity 51 (51 ) - Shares repurchased (1,788 ) (1,788 ) Stock option exercises, net of shares returned for taxes 4,956 4,956 Stock based compensation expense (3,796 ) (3,796 ) Restricted awards, net 7,179 7,179 Total Equity at November 30, 2014 $ 1,390,387 $ 201,091 $ 1,591,478 The following table illustrates the components of total equity and comprehensive income for the six months ended November 30, 2015 and 2014: (In thousands) Total International Inc. Equity Noncontrolling Interest Total Equity Total equity at May 31, 2015 $ 1,291,392 $ 2,073 $ 1,293,465 Net income 183,248 1,263 184,511 Other Comprehensive Income: Foreign currency translation adjustments (84,420 ) (84,420 ) Pension and other postretirement benefit liability adjustments, net of tax 7,800 7,800 Unrealized (loss) on securities, net of tax (6,715 ) (6,715 ) Total Other Comprehensive (Loss), net of tax (83,335 ) - (83,335 ) Comprehensive Income 99,913 1,263 101,176 Dividends paid (71,276 ) (71,276 ) Other noncontrolling interest activity (1,373 ) (1,373 ) Shares repurchased and returned for taxes (45,292 ) (45,292 ) Stock based compensation expense 15,524 15,524 Total Equity at November 30, 2015 $ 1,290,261 $ 1,963 $ 1,292,224 (In thousands) Total International Inc. Equity Noncontrolling Interest Total Equity Total equity at May 31, 2014 $ 1,382,844 $ 195,750 $ 1,578,594 Net income 168,845 9,850 178,695 Other Comprehensive Income: Foreign currency translation adjustments (107,200 ) (5,288 ) (112,488 ) Pension and other postretirement benefit liability adjustments, net of tax 7,134 780 7,914 Unrealized (loss) on securities, net of tax (2,491 ) (2,491 ) Unrealized gain on derivatives, net of tax 171 46 217 Total Other Comprehensive (Loss), net of tax (102,386 ) (4,462 ) (106,848 ) Comprehensive Income 66,459 5,388 71,847 Dividends paid (66,763 ) (66,763 ) Other noncontrolling interest activity 47 (47 ) - Shares repurchased (1,788 ) (1,788 ) Stock option exercises, net 505 505 Stock based compensation expense 1,904 1,904 Restricted awards, net 7,179 7,179 Total Equity at November 30, 2014 $ 1,390,387 $ 201,091 $ 1,591,478 |
Segment Information
Segment Information | 6 Months Ended |
Nov. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 15 — SEGMENT INFORMATION As disclosed in our Annual Report on Form 10-K for the year ended May 31, 2015, during July 2015, our Board of Directors approved the realignment of certain businesses and management structure to recognize how we allocate resources and analyze the operating performance of our operating segments. This realignment did not change our reportable segments at May 31, 2015. During August 2015, we made the determination to combine our former RPM2-Industrial operating segment and our former SPHC operating segment into a single operating segment, called the “Specialty Products Group,” which is discussed in further detail below. Information for all periods presented has been recast to reflect this change. We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings and roofing systems, sealants and adhesives. We manage our portfolio by organizing our businesses and product lines into three reportable segments: the industrial reportable segment, the specialty reportable segment and the consumer reportable segment. Within each reportable segment, we aggregate operating segments or product lines that consist of individual companies or groups of companies and product lines, which generally address common markets, share similar economic characteristics, utilize similar technologies and can share manufacturing or distribution capabilities. Our seven operating segments represent components of our business for which separate financial information is available that is utilized on a regular basis by our chief operating decision maker in determining how to allocate the assets of the company and evaluate performance. These seven operating segments are each managed by an operating segment manager, who is responsible for the day-to-day operating decisions and performance evaluation of the operating segment’s underlying businesses. We evaluate the profit performance of our segments primarily based on income before income taxes, but also look to earnings (loss) before interest and taxes (“EBIT”) as a performance evaluation measure because interest expense is essentially related to acquisitions, as opposed to segment operations. Our industrial reportable segment products are sold throughout North America and also account for the majority of our international sales. Our industrial product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The industrial reportable segment comprises three separate operating segments — Tremco Group, tremco illbruck Group and Performance Coatings Group. Products and services within this reportable segment include construction chemicals; roofing systems; weatherproofing and other sealants; and polymer flooring. Our specialty reportable segment products are sold throughout North America and a few international locations, primarily in Europe. Our specialty product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The specialty reportable segment is a single operating segment, which offers products that include industrial cleaners; restoration services equipment; colorants; exterior finishes; edible coatings and specialty glazes for pharmaceutical and food industries; and other specialty OEM coatings. As discussed in Note 2, this segment includes the SPHC businesses, which were reconsolidated as of January 1, 2015. Our consumer reportable segment manufactures and markets professional use and do-it-yourself (“DIY”) products for a variety of mainly consumer applications, including home improvement and personal leisure activities. Our consumer segment’s major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe and other parts of the world. Our consumer reportable segment products are primarily sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops, cosmetic companies and through distributors. This reportable segment comprises three operating segments — Rust-Oleum Group, DAP Group and RPM2-Consumer Group. Products within this reportable segment include specialty, hobby and professional paints; nail care enamels; caulks; adhesives; silicone sealants and wood stains. In addition to our three reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment. This category includes our corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with any reportable segment. Assets related to the corporate/other category consist primarily of investments, prepaid expenses and headquarters’ property and equipment. These corporate and other assets and expenses reconcile reportable segment data to total consolidated income before income taxes, interest expense and earnings before interest and taxes; as well as identifiable assets, capital expenditures and depreciation and amortization. We reflect income from our joint ventures on the equity method, and receive royalties from our licensees. The following tables reflect the results of our reportable segments consistent with our management philosophy, and represent the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses. Information for all periods presented has been recast to reflect the current year change in reportable segments. Three Months Ended Six Months Ended November 30, November 30, November 30, November 30, 2015 2014 2015 2014 (In thousands) Net Sales Industrial Segment $ 610,201 $ 647,836 $ 1,273,530 $ 1,342,120 Specialty Segment 186,729 70,511 370,369 150,113 Consumer Segment 359,054 352,781 754,611 782,791 Consolidated $ 1,155,984 $ 1,071,128 $ 2,398,510 $ 2,275,024 Income Before Income Taxes Industrial Segment Income Before Income Taxes (a) $ 62,962 $ 62,810 $ 145,713 $ 148,233 Interest (Expense), Net (b) (1,535 ) (1,976 ) (3,034 ) (4,647 ) EBIT (c) $ 64,497 $ 64,786 $ 148,747 $ 152,880 Specialty Segment Income Before Income Taxes (a) $ 29,324 $ 14,299 $ 57,530 $ 31,340 Interest Income, Net (b) 199 78 395 116 EBIT (c) $ 29,125 $ 14,221 $ 57,135 $ 31,224 Consumer Segment Income Before Income Taxes (a) $ 65,429 $ 61,562 $ 131,552 $ 138,231 Interest Income (Expense), Net (b) 42 (4 ) 100 (12 ) EBIT (c) $ 65,387 $ 61,566 $ 131,452 $ 138,243 Corporate/Other (Expense) Before Income Taxes (a) $ (37,454 ) $ (32,921 ) $ (72,333 ) $ (63,976 ) Interest (Expense), Net (b) (20,084 ) (12,444 ) (37,231 ) (25,415 ) EBIT (c) $ (17,370 ) $ (20,477 ) $ (35,102 ) $ (38,561 ) Consolidated Income Before Income Taxes (a) $ 120,261 $ 105,750 $ 262,462 $ 253,828 Interest (Expense), Net (b) (21,378 ) (14,346 ) (39,770 ) (29,958 ) EBIT (c) $ 141,639 $ 120,096 $ 302,232 $ 283,786 November 30, 2015 May 31, 2015 Identifiable Assets Industrial Segment $ 1,944,190 $ 2,105,364 Specialty Segment 791,719 798,893 Consumer Segment 1,552,852 1,626,097 Corporate/Other 229,471 163,886 Consolidated $ 4,518,232 $ 4,694,240 (a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (GAAP) in the United States, to EBIT. (b) Interest (expense), net includes the combination of interest (expense) and investment income/(expense), net. (c) EBIT is defined as earnings (loss) before interest and taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure because interest expense is essentially related to acquisitions, as opposed to segment operations. We believe EBIT is useful to investors for this purpose as well, using EBIT as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, income before taxes as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness and ongoing tax obligations. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. |
Marketable Securities (Tables)
Marketable Securities (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Investments Debt And Equity Securities [Abstract] | |
Summary of Marketable Securities by Asset Type | The following tables summarize marketable securities held at November 30, 2015 and May 31, 2015 by asset type: Available-For-Sale Securities (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Net Carrying Amount) November 30, 2015 Equity securities: Stocks - foreign $ 4,282 $ 415 $ (248 ) $ 4,449 Stocks - domestic 32,032 3,991 (955 ) 35,068 Mutual funds - foreign 33,605 948 (2,398 ) 32,155 Mutual funds - domestic 57,862 124 (4,030 ) 53,956 Total equity securities 127,781 5,478 (7,631 ) 125,628 Fixed maturity: U.S. treasury and other government 21,714 85 (258 ) 21,541 Corporate bonds 1,032 135 - 1,167 Foreign bonds 36 2 - 38 Mortgage-backed securities 18 23 - 41 Total fixed maturity securities 22,800 245 (258 ) 22,787 Total $ 150,581 $ 5,723 $ (7,889 ) $ 148,415 Available-For-Sale Securities (In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value (Net Carrying Amount) May 31, 2015 Equity securities: Stocks - foreign $ 3,722 $ 339 $ (85 ) $ 3,976 Stocks - domestic 34,368 5,649 (559 ) 39,458 Mutual funds - foreign 32,657 2,114 (230 ) 34,541 Mutual funds - domestic 56,442 228 (2,779 ) 53,891 Total equity securities 127,189 8,330 (3,653 ) 131,866 Fixed maturity: U.S. treasury and other government 21,340 171 (162 ) 21,349 Corporate bonds 1,218 171 - 1,389 Foreign bonds 36 2 - 38 Mortgage-backed securities 81 47 - 128 Total fixed maturity securities 22,675 391 (162 ) 22,904 Total $ 149,864 $ 8,721 $ (3,815 ) $ 154,770 |
Summary of Securities in Unrealized Loss Position and Included in Accumulated Other Comprehensive Income (Loss), Aggregated by Length of Time Investments | Summarized below are the securities we held at November 30, 2015 and May 31, 2015 that were in an unrealized loss position and that were included in accumulated other comprehensive income (loss), aggregated by the length of time the investments had been in that position: November 30, 2015 May 31, 2015 (In thousands) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Total investments with unrealized losses $ 97,059 $ (7,889 ) $ 58,978 $ (3,815 ) Unrealized losses with a loss position for less than 12 months 55,461 (4,872 ) 32,693 (1,441 ) Unrealized losses with a loss position for more than 12 months 41,598 (3,017 ) 26,285 (2,374 ) |
Net Carrying Values of Debt Securities by Contractual Maturity | The net carrying values of debt securities at November 30, 2015, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties. (In thousands) Amortized Cost Fair Value Due: Less than one year $ 3,738 $ 3,706 One year through five years 15,818 15,683 Six years through ten years 2,135 2,150 After ten years 1,109 1,248 $ 22,800 $ 22,787 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on Recurring Basis and Categorized using Fair Value Hierarchy | The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. (In thousands) Quoted in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at November 30, 2015 U.S. Treasury and other government $ - $ 21,541 $ - $ 21,541 Foreign bonds 38 38 Mortgage-backed securities 41 41 Corporate bonds 1,167 1,167 Stocks - foreign 4,449 4,449 Stocks - domestic 35,068 35,068 Cash and cash equivalents 1,545 1,545 Mutual funds - foreign 32,155 32,155 Mutual funds - domestic 53,956 53,956 Foreign currency forward contract (8,678 ) (8,678 ) Contingent consideration (11,706 ) (11,706 ) Total $ 41,062 $ 100,220 $ (11,706 ) $ 129,576 (In thousands) Quoted in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at May 31, 2015 U.S. Treasury and other government $ - $ 21,349 $ - $ 21,349 Foreign bonds 38 38 Mortgage-backed securities 128 128 Corporate bonds 1,389 1,389 Stocks - foreign 3,976 3,976 Stocks - domestic 39,458 39,458 Mutual funds - foreign 34,541 34,541 Mutual funds - domestic 53,891 53,891 Foreign currency forward contract (6,369 ) (6,369 ) Contingent consideration (27,598 ) (27,598 ) Total $ 43,434 $ 104,967 $ (27,598 ) $ 120,803 |
Fair Value and Carrying Value of Financial Instruments and Long-Term Debt | Based on the analysis performed, the fair value and the carrying value of our financial instruments and long-term debt as of November 30, 2015 and May 31, 2015 are as follows: At November 30, 2015 (In thousands) Carrying Value Fair Value Cash and cash equivalents $ 190,609 $ 190,609 Marketable equity securities 125,628 125,628 Marketable debt securities 22,787 22,787 Long-term debt, including current portion 1,676,064 1,724,147 At May 31, 2015 (In thousands) Carrying Value Fair Value Cash and cash equivalents $ 174,711 $ 174,711 Marketable equity securities 131,866 131,866 Marketable debt securities 22,904 22,904 Long-term debt, including current portion 1,656,075 1,783,962 |
Investment (Income), Net (Table
Investment (Income), Net (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Other Income And Expenses [Abstract] | |
Investment (Income), Net | Investment (income), net, consists of the following components: Three Months Ended Six Months Ended November 30, November 30, (In thousands) 2015 2014 2015 2014 Interest (income) $ (1,218 ) $ (1,601 ) $ (2,582 ) $ (3,005 ) (Gain) on sale of marketable securities (2,042 ) (3,204 ) (4,418 ) (5,320 ) Other-than-temporary impairment on securities 2,472 - 2,472 - Dividend (income) (312 ) (253 ) (640 ) (536 ) Investment (income), net $ (1,100 ) $ (5,058 ) $ (5,168 ) $ (8,861 ) |
Other (Income), Net (Tables)
Other (Income), Net (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Other Income And Expenses [Abstract] | |
Other (Income), Net | Other (income), net, consists of the following components: Three Months Ended Six Months Ended November 30, November 30, (In thousands) 2015 2014 2015 2014 Royalty (income) expense, net $ 174 $ (378 ) $ 163 $ (1,595 ) (Income) related to unconsolidated equity affiliates (473 ) (664 ) (951 ) (1,269 ) Other (income), net $ (299 ) $ (1,042 ) $ (788 ) $ (2,864 ) |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Major Classes of Inventories, Net of Reserves | Inventories, net of reserves, were composed of the following major classes: November 30, 2015 May 31, 2015 (In thousands) Raw material and supplies $ 229,766 $ 235,649 Finished goods 480,516 438,556 Total Inventory, Net of Reserves $ 710,282 $ 674,205 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerator and Denominator of Basic and Diluted Earnings Per Share Calculated using Two-Class Method | The following table sets forth the reconciliation of the numerator and denominator of basic and diluted earnings per share, as calculated using the two-class method for the three and six month periods ended November 30, 2014. For the three and six month periods ended November 30, 2015, basic earnings per share were calculated using the two-class method, while diluted earnings per share were calculated using the treasury method, as the results under the two-class method were less dilutive. Three Months Ended Six Months Ended November 30, November 30, (In thousands, except per share amounts) 2015 2014 2015 2014 Numerator for earnings per share: Net income attributable to RPM International Inc. stockholders $ 83,433 $ 69,766 $ 183,248 $ 168,845 Less: Allocation of earnings and dividends to participating securities (1,571 ) (1,602 ) (3,068 ) (3,673 ) Net income available to common shareholders - basic 81,862 68,164 180,180 165,172 Add: Undistributed earnings reallocated to unvested shareholders 6 18 Reverse: Allocation of earnings and dividends to participating securities 1,571 3,068 Add: Income effect of contingently issuable shares 1,354 1,340 2,706 2,679 Net income available to common shareholders - diluted $ 84,787 $ 69,510 $ 185,954 $ 167,869 Denominator for basic and diluted earnings per share: Basic weighted average common shares 129,398 130,028 129,723 130,061 Average diluted options 3,453 1,063 3,466 1,064 Additional shares issuable assuming conversion of convertible securities 3,883 3,875 3,883 3,875 Total shares for diluted earnings per share (1), (2) 136,734 134,966 137,072 135,000 Earnings Per Share of Common Stock Attributable to RPM International Inc. Stockholders: Basic Earnings Per Share of Common Stock $ 0.63 $ 0.52 $ 1.39 $ 1.27 Diluted Earnings Per Share of Common Stock $ 0.62 $ 0.52 $ 1.36 $ 1.24 (1) For the three months ended November 30, 2014 (2) For the , approximately 3.0 million shares of stock granted under stock-based compensation plans were excluded from the calculation of diluted EPS, as the effect would have been anti-dilutive. |
Pension Plans (Tables)
Pension Plans (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Compensation And Retirement Disclosure [Abstract] | |
Retirement-Related Benefit Plans' Impact on Income Before Income Taxes | The following tables provide the retirement-related benefit plans’ impact on income before income taxes for the three and six months ended November 30, 2015 and 2014: U.S. Plans Non-U.S. Plans Three Months Ended Three Months Ended November 30, November 30, Pension Benefits 2015 2014 2015 2014 (In thousands) Service cost $ 8,202 $ 7,564 $ 1,067 $ 1,231 Interest cost 4,499 5,002 1,323 1,891 Expected return on plan assets (6,437 ) (6,034 ) (1,983 ) (2,296 ) Amortization of: Prior service cost 58 74 10 Net actuarial losses recognized 4,190 3,472 457 536 Settlement 91 Net Periodic Benefit Cost $ 10,512 $ 10,078 $ 955 $ 1,372 U.S. Plans Non-U.S. Plans Three Months Ended Three Months Ended November 30, November 30, Postretirement Benefits 2015 2014 2015 2014 (In thousands) Service cost $ - $ - $ 281 $ 313 Interest cost 59 66 221 308 Amortization of: Prior service (credit) (62 ) (62 ) Net actuarial (gains) losses recognized (34 ) 61 104 Net Periodic Benefit Cost $ (3 ) $ (30 ) $ 563 $ 725 U.S. Plans Non-U.S. Plans Six Months Ended Six Months Ended November 30, November 30, Pension Benefits 2015 2014 2015 2014 (In thousands) Service cost $ 16,404 $ 15,128 $ 2,134 $ 2,462 Interest cost 8,998 10,004 2,646 3,782 Expected return on plan assets (12,874 ) (12,068 ) (3,966 ) (4,592 ) Amortization of: Prior service cost 116 148 20 Net actuarial losses recognized 8,380 6,944 914 1,072 Settlement 91 Net Periodic Benefit Cost $ 21,024 $ 20,156 $ 1,819 $ 2,744 U.S. Plans Non-U.S. Plans Six Months Ended Six Months Ended November 30, November 30, Postretirement Benefits 2015 2014 2015 2014 (In thousands) Service cost $ - $ - $ 562 $ 626 Interest cost 118 132 442 616 Amortization of: Prior service (credit) (124 ) (124 ) Net actuarial (gains) losses recognized (68 ) 122 208 Net Periodic Benefit Cost $ (6 ) $ (60 ) $ 1,126 $ 1,450 |
Contingencies and Other Accru30
Contingencies and Other Accrued Losses (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Changes in Accrued Warranty Balances | The following table includes the changes in our accrued warranty balances: Three Months Ended Six Months Ended November 30, November 30, 2015 2014 2015 2014 (In thousands) Beginning Balance $ 10,112 $ 7,421 $ 11,663 $ 14,741 Deductions (1) (4,890 ) (5,066 ) (9,550 ) (19,741 ) Provision charged to SG&A expense 4,218 6,603 7,327 13,958 Ending Balance $ 9,440 $ 8,958 $ 9,440 $ 8,958 (1) Primarily claims paid during the year. |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Equity [Abstract] | |
Components of Total Equity and Comprehensive Income | The following tables illustrate the components of total equity and comprehensive income for the three months ended November 30, 2015 and 2014: (In thousands) Total RPM International Inc. Equity Noncontrolling Interest Total Equity Total equity at August 31, 2015 $ 1,294,402 $ 2,620 $ 1,297,022 Net income 83,433 716 84,149 Other Comprehensive Income: Foreign currency translation adjustments (53,814 ) (53,814 ) Pension and other postretirement benefit liability adjustments, net of tax 3,640 3,640 Unrealized (loss) on securities, net of tax 369 369 Total Other Comprehensive Income, net of tax (49,805 ) - (49,805 ) Comprehensive Income 33,628 716 34,344 Dividends paid (36,642 ) (36,642 ) Other noncontrolling interest activity (1,373 ) (1,373 ) Shares repurchased and returned for taxes (9,944 ) (9,944 ) Stock based compensation expense 8,817 8,817 Total Equity at November 30, 2015 $ 1,290,261 $ 1,963 $ 1,292,224 (In thousands) Total RPM International Inc. Equity Noncontrolling Interest Total Equity Total equity at August 31, 2014 $ 1,436,234 $ 198,134 $ 1,634,368 Net income 69,766 4,090 73,856 Other Comprehensive Income: Foreign currency translation adjustments (89,462 ) (1,760 ) (91,222 ) Pension and other postretirement benefit liability adjustments, net of tax 4,374 611 4,985 Unrealized (loss) gain on securities, net of tax (2,574 ) 7 (2,567 ) Unrealized gain on derivatives, net of tax 223 60 283 Total Other Comprehensive (Loss), net of tax (87,439 ) (1,082 ) (88,521 ) Comprehensive Income (17,673 ) 3,008 (14,665 ) Dividends paid (34,776 ) (34,776 ) Other noncontrolling interest activity 51 (51 ) - Shares repurchased (1,788 ) (1,788 ) Stock option exercises, net of shares returned for taxes 4,956 4,956 Stock based compensation expense (3,796 ) (3,796 ) Restricted awards, net 7,179 7,179 Total Equity at November 30, 2014 $ 1,390,387 $ 201,091 $ 1,591,478 The following table illustrates the components of total equity and comprehensive income for the six months ended November 30, 2015 and 2014: (In thousands) Total International Inc. Equity Noncontrolling Interest Total Equity Total equity at May 31, 2015 $ 1,291,392 $ 2,073 $ 1,293,465 Net income 183,248 1,263 184,511 Other Comprehensive Income: Foreign currency translation adjustments (84,420 ) (84,420 ) Pension and other postretirement benefit liability adjustments, net of tax 7,800 7,800 Unrealized (loss) on securities, net of tax (6,715 ) (6,715 ) Total Other Comprehensive (Loss), net of tax (83,335 ) - (83,335 ) Comprehensive Income 99,913 1,263 101,176 Dividends paid (71,276 ) (71,276 ) Other noncontrolling interest activity (1,373 ) (1,373 ) Shares repurchased and returned for taxes (45,292 ) (45,292 ) Stock based compensation expense 15,524 15,524 Total Equity at November 30, 2015 $ 1,290,261 $ 1,963 $ 1,292,224 (In thousands) Total International Inc. Equity Noncontrolling Interest Total Equity Total equity at May 31, 2014 $ 1,382,844 $ 195,750 $ 1,578,594 Net income 168,845 9,850 178,695 Other Comprehensive Income: Foreign currency translation adjustments (107,200 ) (5,288 ) (112,488 ) Pension and other postretirement benefit liability adjustments, net of tax 7,134 780 7,914 Unrealized (loss) on securities, net of tax (2,491 ) (2,491 ) Unrealized gain on derivatives, net of tax 171 46 217 Total Other Comprehensive (Loss), net of tax (102,386 ) (4,462 ) (106,848 ) Comprehensive Income 66,459 5,388 71,847 Dividends paid (66,763 ) (66,763 ) Other noncontrolling interest activity 47 (47 ) - Shares repurchased (1,788 ) (1,788 ) Stock option exercises, net 505 505 Stock based compensation expense 1,904 1,904 Restricted awards, net 7,179 7,179 Total Equity at November 30, 2014 $ 1,390,387 $ 201,091 $ 1,591,478 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Nov. 30, 2015 | |
Segment Reporting [Abstract] | |
Results of Reportable Segments | The following tables reflect the results of our reportable segments consistent with our management philosophy, and represent the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses. Information for all periods presented has been recast to reflect the current year change in reportable segments. Three Months Ended Six Months Ended November 30, November 30, November 30, November 30, 2015 2014 2015 2014 (In thousands) Net Sales Industrial Segment $ 610,201 $ 647,836 $ 1,273,530 $ 1,342,120 Specialty Segment 186,729 70,511 370,369 150,113 Consumer Segment 359,054 352,781 754,611 782,791 Consolidated $ 1,155,984 $ 1,071,128 $ 2,398,510 $ 2,275,024 Income Before Income Taxes Industrial Segment Income Before Income Taxes (a) $ 62,962 $ 62,810 $ 145,713 $ 148,233 Interest (Expense), Net (b) (1,535 ) (1,976 ) (3,034 ) (4,647 ) EBIT (c) $ 64,497 $ 64,786 $ 148,747 $ 152,880 Specialty Segment Income Before Income Taxes (a) $ 29,324 $ 14,299 $ 57,530 $ 31,340 Interest Income, Net (b) 199 78 395 116 EBIT (c) $ 29,125 $ 14,221 $ 57,135 $ 31,224 Consumer Segment Income Before Income Taxes (a) $ 65,429 $ 61,562 $ 131,552 $ 138,231 Interest Income (Expense), Net (b) 42 (4 ) 100 (12 ) EBIT (c) $ 65,387 $ 61,566 $ 131,452 $ 138,243 Corporate/Other (Expense) Before Income Taxes (a) $ (37,454 ) $ (32,921 ) $ (72,333 ) $ (63,976 ) Interest (Expense), Net (b) (20,084 ) (12,444 ) (37,231 ) (25,415 ) EBIT (c) $ (17,370 ) $ (20,477 ) $ (35,102 ) $ (38,561 ) Consolidated Income Before Income Taxes (a) $ 120,261 $ 105,750 $ 262,462 $ 253,828 Interest (Expense), Net (b) (21,378 ) (14,346 ) (39,770 ) (29,958 ) EBIT (c) $ 141,639 $ 120,096 $ 302,232 $ 283,786 November 30, 2015 May 31, 2015 Identifiable Assets Industrial Segment $ 1,944,190 $ 2,105,364 Specialty Segment 791,719 798,893 Consumer Segment 1,552,852 1,626,097 Corporate/Other 229,471 163,886 Consolidated $ 4,518,232 $ 4,694,240 (a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (GAAP) in the United States, to EBIT. (b) Interest (expense), net includes the combination of interest (expense) and investment income/(expense), net. (c) EBIT is defined as earnings (loss) before interest and taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure because interest expense is essentially related to acquisitions, as opposed to segment operations. We believe EBIT is useful to investors for this purpose as well, using EBIT as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, income before taxes as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness and ongoing tax obligations. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. |
Specialty Products Holding Co33
Specialty Products Holding Corp. ("SPHC") - Additional Information (Detail) - USD ($) | 6 Months Ended | |
Nov. 30, 2015 | May. 31, 2015 | |
Reorganization [Line Items] | ||
Amount funded for trust as per agreement | $ 450,000,000 | |
Initial payment for long term debt | 450,000,000 | |
Business combination, total consideration transferred | 772,600,000 | |
Business acquisition, preliminary fair value of goodwill | $ 1,187,204,000 | $ 1,215,688,000 |
RPM Holdco | ||
Reorganization [Line Items] | ||
Percentage of ownership | 21.39% | |
Business acquisition, allocation of total consideration | $ 208,400,000 | |
Business acquisition, preliminary fair value of goodwill | 118,700,000 | |
Business acquisition, preliminary fair value of intangible assets | 176,000,000 | |
Business acquisition, preliminary fair value of income tax assets | 271,700,000 | |
Business acquisition, preliminary fair value of net deferred tax liabilities | 72,300,000 | |
SPHC | ||
Reorganization [Line Items] | ||
Business acquisition, allocation of total consideration | 564,200,000 | |
Indefinite-Lived Trade Names | SPHC | ||
Reorganization [Line Items] | ||
Business acquisition, preliminary fair value of intangible assets | 52,700,000 | |
Formulas | SPHC | ||
Reorganization [Line Items] | ||
Business acquisition, preliminary fair value of intangible assets | 2,600,000 | |
Customer Relationships | SPHC | ||
Reorganization [Line Items] | ||
Business acquisition, preliminary fair value of intangible assets | 118,700,000 | |
Definite-Lived Trade Names | SPHC | ||
Reorganization [Line Items] | ||
Business acquisition, preliminary fair value of intangible assets | 2,000,000 | |
Second Anniversary | ||
Reorganization [Line Items] | ||
Amount funded for trust as per agreement | 102,500,000 | |
Third Anniversary | ||
Reorganization [Line Items] | ||
Amount funded for trust as per agreement | 120,000,000 | |
Fourth Anniversary | ||
Reorganization [Line Items] | ||
Amount funded for trust as per agreement | 125,000,000 | |
Revolving Credit Facility | ||
Reorganization [Line Items] | ||
Revolving credit facility, maximum borrowing capacity | 800,000,000 | |
Other Long-Term Liabilities | ||
Reorganization [Line Items] | ||
Bankruptcy Note, net present value | $ 331,500,000 |
New Accounting Pronouncements -
New Accounting Pronouncements - Additional Information (Detail) - USD ($) $ in Millions | Nov. 30, 2015 | May. 31, 2015 |
Accounting Policies [Abstract] | ||
Deferred debt cost, Current | $ 3 | $ 3 |
Deferred debt costs, long term net | $ 9.8 | $ 11.5 |
Summary of Marketable Securitie
Summary of Marketable Securities by Asset Type (Detail) - USD ($) $ in Thousands | Nov. 30, 2015 | May. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | $ 150,581 | $ 149,864 |
Available-for-Sale Securities, Gross Unrealized Gains | 5,723 | 8,721 |
Available-for-Sale Securities, Gross Unrealized Losses | (7,889) | (3,815) |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 148,415 | 154,770 |
Equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 127,781 | 127,189 |
Available-for-Sale Securities, Gross Unrealized Gains | 5,478 | 8,330 |
Available-for-Sale Securities, Gross Unrealized Losses | (7,631) | (3,653) |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 125,628 | 131,866 |
Equity securities | Stocks | Foreign | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 4,282 | 3,722 |
Available-for-Sale Securities, Gross Unrealized Gains | 415 | 339 |
Available-for-Sale Securities, Gross Unrealized Losses | (248) | (85) |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 4,449 | 3,976 |
Equity securities | Stocks | Domestic | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 32,032 | 34,368 |
Available-for-Sale Securities, Gross Unrealized Gains | 3,991 | 5,649 |
Available-for-Sale Securities, Gross Unrealized Losses | (955) | (559) |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 35,068 | 39,458 |
Equity securities | Mutual funds | Foreign | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 33,605 | 32,657 |
Available-for-Sale Securities, Gross Unrealized Gains | 948 | 2,114 |
Available-for-Sale Securities, Gross Unrealized Losses | (2,398) | (230) |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 32,155 | 34,541 |
Equity securities | Mutual funds | Domestic | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 57,862 | 56,442 |
Available-for-Sale Securities, Gross Unrealized Gains | 124 | 228 |
Available-for-Sale Securities, Gross Unrealized Losses | (4,030) | (2,779) |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 53,956 | 53,891 |
Fixed maturity | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 22,800 | 22,675 |
Available-for-Sale Securities, Gross Unrealized Gains | 245 | 391 |
Available-for-Sale Securities, Gross Unrealized Losses | (258) | (162) |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 22,787 | 22,904 |
Fixed maturity | U.S. Treasury and other government | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 21,714 | 21,340 |
Available-for-Sale Securities, Gross Unrealized Gains | 85 | 171 |
Available-for-Sale Securities, Gross Unrealized Losses | (258) | (162) |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 21,541 | 21,349 |
Fixed maturity | Foreign bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 36 | 36 |
Available-for-Sale Securities, Gross Unrealized Gains | 2 | 2 |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 38 | 38 |
Fixed maturity | Mortgage-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 18 | 81 |
Available-for-Sale Securities, Gross Unrealized Gains | 23 | 47 |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | 41 | 128 |
Corporate bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available-for-Sale Securities, Amortized Cost | 1,032 | 1,218 |
Available-for-Sale Securities, Gross Unrealized Gains | 135 | 171 |
Available-for-Sale Securities, Fair Value (Net Carrying Amount) | $ 1,167 | $ 1,389 |
Marketable Securities - Additio
Marketable Securities - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | May. 31, 2015 | |
Schedule of Available-for-sale Securities [Line Items] | |||||
Available-for-sale securities, current | $ 72,800,000 | $ 72,800,000 | $ 69,300,000 | ||
Available-for-sale securities, long-term | 75,600,000 | 75,600,000 | $ 85,500,000 | ||
Gross gains realized on sales of investments | 2,100,000 | $ 3,200,000 | 4,600,000 | $ 5,300,000 | |
Gross realized losses on sales of investments | 100,000 | 0 | 200,000 | 0 | |
Losses recognized for securities deemed to have other-than-temporary impairments | $ 2,500,000 | $ 0 | $ 2,500,000 | $ 0 | |
Maximum | |||||
Schedule of Available-for-sale Securities [Line Items] | |||||
Investments with unrealized loss, percentage of fair values less than original cost | 15.00% | 15.00% |
Summary of Securities in Unreal
Summary of Securities in Unrealized Loss Position and Included in Accumulated Other Comprehensive Income (Loss), Aggregated by Length of Time Investments (Detail) - USD ($) $ in Thousands | Nov. 30, 2015 | May. 31, 2015 |
Investments Debt And Equity Securities [Abstract] | ||
Total investments with unrealized losses, fair value | $ 97,059 | $ 58,978 |
Unrealized losses with a loss position for less than 12 months, fair value | 55,461 | 32,693 |
Unrealized losses with a loss position for more than 12 months, fair value | 41,598 | 26,285 |
Total investments with unrealized losses, gross unrealized losses | (7,889) | (3,815) |
Unrealized losses with a loss position for less than 12 months, gross unrealized losses | (4,872) | (1,441) |
Unrealized losses with a loss position for more than 12 months, gross unrealized losses | $ (3,017) | $ (2,374) |
Net Carrying Values of Debt Sec
Net Carrying Values of Debt Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands | Nov. 30, 2015 | May. 31, 2015 |
Available-for-Sale Securities, amortized cost | ||
Less than one year, amortized cost | $ 3,738 | |
One year through five years, amortized cost | 15,818 | |
Six years through ten years, amortized cost | 2,135 | |
After ten years, amortized cost | 1,109 | |
Available-for-sale Debt Securities, Amortized Cost Basis, Total | 22,800 | |
Available-for-Sale Securities, fair value | ||
Less than one year, fair value | 3,706 | |
One year through five years, fair value | 15,683 | |
Six years through ten years, fair value | 2,150 | |
After ten years, fair value | 1,248 | |
Marketable debt securities, carrying value | $ 22,787 | $ 22,904 |
Assets and Liabilities Measured
Assets and Liabilities Measured at Fair Value on Recurring Basis and Categorized using Fair Value Hierarchy (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Nov. 30, 2015 | May. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ (11,706) | $ (27,598) |
Assets (liabilities) at fair value | 129,576 | 120,803 |
U.S. Treasury and other government | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 21,541 | 21,349 |
Foreign bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 38 | 38 |
Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 41 | 128 |
Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 1,167 | 1,389 |
Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 1,545 | |
Foreign currency forward contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency forward contract | (8,678) | (6,369) |
Foreign | Stocks | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 4,449 | 3,976 |
Foreign | Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 32,155 | 34,541 |
Domestic | Stocks | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 35,068 | 39,458 |
Domestic | Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 53,956 | 53,891 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets (liabilities) at fair value | 41,062 | 43,434 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 1,545 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Foreign | Stocks | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 4,449 | 3,976 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Domestic | Stocks | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 35,068 | 39,458 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets (liabilities) at fair value | 100,220 | 104,967 |
Significant Other Observable Inputs (Level 2) | U.S. Treasury and other government | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 21,541 | 21,349 |
Significant Other Observable Inputs (Level 2) | Foreign bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 38 | 38 |
Significant Other Observable Inputs (Level 2) | Mortgage-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 41 | 128 |
Significant Other Observable Inputs (Level 2) | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 1,167 | 1,389 |
Significant Other Observable Inputs (Level 2) | Foreign currency forward contract | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Foreign currency forward contract | (8,678) | (6,369) |
Significant Other Observable Inputs (Level 2) | Foreign | Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 32,155 | 34,541 |
Significant Other Observable Inputs (Level 2) | Domestic | Mutual funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value on recurring basis | 53,956 | 53,891 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | (11,706) | (27,598) |
Assets (liabilities) at fair value | $ (11,706) | $ (27,598) |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2015 | Nov. 30, 2015 | Nov. 30, 2014 | May. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Settlements of contingent consideration obligations | $ 1,600 | |||
Reversal for contingent earn out targets | $ 14,500 | 14,500 | $ 18,080 | |
Fair Value, Measurements, Recurring | Foreign currency forward contract | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Foreign currency contracts, fair value of liability | $ 8,678 | $ 8,678 | $ 6,369 |
Fair Value and Carrying Value o
Fair Value and Carrying Value of Financial Instruments and Long-Term Debt (Detail) - USD ($) $ in Thousands | Nov. 30, 2015 | May. 31, 2015 | Nov. 30, 2014 | May. 31, 2014 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Cash and cash equivalents, carrying value | $ 190,609 | $ 174,711 | $ 296,527 | $ 332,868 |
Marketable equity securities, carrying value | 125,628 | 131,866 | ||
Marketable debt securities, carrying value | 22,787 | 22,904 | ||
Long-term debt, including current portion, carrying value | 1,676,064 | 1,656,075 | ||
Cash and cash equivalents, fair value | 190,609 | 174,711 | ||
Marketable securities, fair value | 148,415 | 154,770 | ||
Long-term debt, including current portion, fair value | 1,724,147 | 1,783,962 | ||
Equity securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Marketable securities, fair value | 125,628 | 131,866 | ||
Fixed maturity | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Marketable securities, fair value | $ 22,787 | $ 22,904 |
Investment (Income), Net (Detai
Investment (Income), Net (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | |
Other Income And Expenses [Abstract] | ||||
Interest (income) | $ (1,218) | $ (1,601) | $ (2,582) | $ (3,005) |
(Gain) on sale of marketable securities | (2,042) | (3,204) | (4,418) | (5,320) |
Other-than-temporary impairment on securities | 2,472 | 2,472 | ||
Dividend (income) | (312) | (253) | (640) | (536) |
Investment (income), net | $ (1,100) | $ (5,058) | $ (5,168) | $ (8,861) |
Other (Income), Net (Detail)
Other (Income), Net (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | |
Other Income And Expenses [Abstract] | ||||
Royalty (income) expense, net | $ 174 | $ (378) | $ 163 | $ (1,595) |
(Income) related to unconsolidated equity affiliates | (473) | (664) | (951) | (1,269) |
Other (income), net | $ (299) | $ (1,042) | $ (788) | $ (2,864) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | May. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate | 30.00% | 30.20% | 29.70% | 29.60% | |
Federal statutory rate | 35.00% | 35.00% | |||
Undistributed foreign earnings | $ 401,500,000 | $ 401,500,000 | $ 419,100,000 | ||
Deferred income tax liability | 101,900,000 | 101,900,000 | $ 108,500,000 | ||
Provision for deferred income taxes | $ 0 | $ 0 |
Major Classes of Inventories, N
Major Classes of Inventories, Net of Reserves (Detail) - USD ($) $ in Thousands | Nov. 30, 2015 | May. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw material and supplies | $ 229,766 | $ 235,649 |
Finished goods | 480,516 | 438,556 |
Total Inventory, Net of Reserves | $ 710,282 | $ 674,205 |
Stock Repurchase Program - Addi
Stock Repurchase Program - Additional Information (Detail) $ in Millions | 3 Months Ended | 6 Months Ended |
Nov. 30, 2015USD ($)shares | Nov. 30, 2015USD ($)shares | |
Stock Repurchase Programs [Line Items] | ||
Authorization of stock repurchase program | Jan. 8, 2008 | |
Shares repurchased | 100,000 | 400,000 |
Shares repurchased, value | $ | $ 4.4 | $ 17.2 |
Minimum | ||
Stock Repurchase Programs [Line Items] | ||
Shares authorized to be repurchased, per year | 1,000,000 | 1,000,000 |
Maximum | ||
Stock Repurchase Programs [Line Items] | ||
Shares authorized to be repurchased, per year | 2,000,000 | 2,000,000 |
Reconciliation of Numerator and
Reconciliation of Numerator and Denominator of Basic and Diluted Earnings Per Share, Calculated using Treasury Method and Two-Class Method (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | ||
Numerator for earnings per share: | |||||
Net income attributable to RPM International Inc. stockholders | $ 83,433 | $ 69,766 | $ 183,248 | $ 168,845 | |
Less: Allocation of earnings and dividends to participating securities | (1,571) | (1,602) | (3,068) | (3,673) | |
Net income available to common shareholders - basic | 81,862 | 68,164 | 180,180 | 165,172 | |
Add: Undistributed earnings reallocated to unvested shareholders | 6 | 18 | |||
Reverse: Allocation of earnings and dividends to participating securities | 1,571 | 3,068 | |||
Add: Income effect of contingently issuable shares | 1,354 | 1,340 | 2,706 | 2,679 | |
Net income available to common shareholders - diluted | $ 84,787 | $ 69,510 | $ 185,954 | $ 167,869 | |
Denominator for basic and diluted earnings per share: | |||||
Basic weighted average common shares | 129,398 | 130,028 | 129,723 | 130,061 | |
Average diluted options | 3,453 | 1,063 | 3,466 | 1,064 | |
Additional shares issuable assuming conversion of convertible securities | 3,883 | 3,875 | 3,883 | 3,875 | |
Total shares for diluted earnings per share | [1],[2] | 136,734 | 134,966 | 137,072 | 135,000 |
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders: | |||||
Basic Earnings Per Share of Common Stock | $ 0.63 | $ 0.52 | $ 1.39 | $ 1.27 | |
Diluted Earnings Per Share of Common Stock | $ 0.62 | $ 0.52 | $ 1.36 | $ 1.24 | |
[1] | For the six months ended November 30, 2014, approximately 3.0 million shares of stock granted under stock-based compensation plans were excluded from the calculation of diluted EPS, as the effect would have been anti-dilutive. | ||||
[2] | For the three months ended November 30, 2014, approximately 3.2 million shares of stock granted under stock-based compensation plans were excluded from the calculation of diluted EPS, as the effect would have been anti-dilutive. |
Reconciliation of Numerator a48
Reconciliation of Numerator and Denominator of Basic and Diluted Earnings Per Share, Calculated using Treasury Method and Two-Class Method (Parenthetical) (Detail) - shares shares in Millions | 3 Months Ended | 6 Months Ended |
Nov. 30, 2014 | Nov. 30, 2014 | |
Earnings Per Share [Abstract] | ||
Stock-based compensation plans, excluded from the calculation of diluted earnings per share, anti-dilutive shares of stock | 3.2 | 3 |
Pension Plans - Additional Info
Pension Plans - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | May. 31, 2015 | |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Service cost | $ 9,600 | $ 19,200 | |||
Interest cost | 6,100 | 12,200 | |||
Reduction of service cost | (200) | (400) | |||
Reduction of interest cost | (1,400) | (2,800) | |||
Increase in income from continuing operations | 1,600 | 3,200 | |||
Increase in net income | $ 1,100 | $ 2,200 | |||
Increase in basic and diluted earnings per share | $ 0.01 | $ 0.02 | |||
Pension Benefits, U.S. Plans | |||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Expected reduction to net periodic benefit expense | $ (5,400) | ||||
Service cost | $ 8,202 | $ 7,564 | 16,404 | $ 15,128 | |
Interest cost | 4,499 | 5,002 | 8,998 | 10,004 | |
Contribution to retirement plans in current fiscal year | 35,800 | $ 32,000 | |||
Contribution to retirement plans in the current remaining fiscal year | 3,800 | ||||
Pension Benefits, Non-U.S. Plans | |||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Expected reduction to net periodic benefit expense | (1,000) | ||||
Service cost | 1,067 | 1,231 | 2,134 | 2,462 | |
Interest cost | $ 1,323 | $ 1,891 | $ 2,646 | $ 3,782 | |
Contribution to retirement plans in current fiscal year | $ 5,700 |
Retirement-Related Benefit Plan
Retirement-Related Benefit Plans' Impact on Income Before Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | $ 9,600 | $ 19,200 | ||
Interest cost | 6,100 | 12,200 | ||
Pension Benefits, U.S. Plans | ||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | 8,202 | $ 7,564 | 16,404 | $ 15,128 |
Interest cost | 4,499 | 5,002 | 8,998 | 10,004 |
Expected return on plan assets | (6,437) | (6,034) | (12,874) | (12,068) |
Prior service cost (credit) | 58 | 74 | 116 | 148 |
Net actuarial (gains) losses recognized | 4,190 | 3,472 | 8,380 | 6,944 |
Net Periodic Benefit Cost | 10,512 | 10,078 | 21,024 | 20,156 |
Pension Benefits, Non-U.S. Plans | ||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | 1,067 | 1,231 | 2,134 | 2,462 |
Interest cost | 1,323 | 1,891 | 2,646 | 3,782 |
Expected return on plan assets | (1,983) | (2,296) | (3,966) | (4,592) |
Prior service cost (credit) | 10 | 20 | ||
Net actuarial (gains) losses recognized | 457 | 536 | 914 | 1,072 |
Settlement | 91 | 91 | ||
Net Periodic Benefit Cost | 955 | 1,372 | 1,819 | 2,744 |
Postretirement Benefits, U.S. Plans | ||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Interest cost | 59 | 66 | 118 | 132 |
Prior service cost (credit) | (62) | (62) | (124) | (124) |
Net actuarial (gains) losses recognized | (34) | (68) | ||
Net Periodic Benefit Cost | (3) | (30) | (6) | (60) |
Postretirement Benefits, Non-U.S. Plans | ||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | 281 | 313 | 562 | 626 |
Interest cost | 221 | 308 | 442 | 616 |
Net actuarial (gains) losses recognized | 61 | 104 | 122 | 208 |
Net Periodic Benefit Cost | $ 563 | $ 725 | $ 1,126 | $ 1,450 |
Changes in Accrued Warranty Bal
Changes in Accrued Warranty Balances (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | ||
Commitments And Contingencies Disclosure [Abstract] | |||||
Beginning Balance | $ 10,112 | $ 7,421 | $ 11,663 | $ 14,741 | |
Deductions | [1] | (4,890) | (5,066) | (9,550) | (19,741) |
Provision charged to SG&A expense | 4,218 | 6,603 | 7,327 | 13,958 | |
Ending Balance | $ 9,440 | $ 8,958 | $ 9,440 | $ 8,958 | |
[1] | Primarily claims paid during the year. |
Components of Total Equity and
Components of Total Equity and Comprehensive Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | |
Stockholders Equity Note [Line Items] | ||||
Total equity, beginning of period | $ 1,297,022 | $ 1,634,368 | $ 1,293,465 | $ 1,578,594 |
Net income | 84,149 | 73,856 | 184,511 | 178,695 |
Other Comprehensive Income: | ||||
Foreign currency translation adjustments | (53,814) | (91,222) | (84,420) | (112,488) |
Pension and other postretirement benefit liability adjustments, net of tax | 3,640 | 4,985 | 7,800 | 7,914 |
Unrealized (loss) gain on securities, net of tax | 369 | (2,567) | (6,715) | (2,491) |
Total other comprehensive (loss) | (49,805) | (88,521) | (83,335) | (106,848) |
Unrealized gain on derivatives, net of tax | 283 | 217 | ||
Total Comprehensive Income (Loss) | 34,344 | (14,665) | 101,176 | 71,847 |
Dividends paid | (36,642) | (34,776) | (71,276) | (66,763) |
Other noncontrolling interest activity | (1,373) | (1,373) | ||
Shares repurchased and returned for taxes | (9,944) | (1,788) | (45,292) | (1,788) |
Stock option exercises, net of shares returned for taxes | 4,956 | 505 | ||
Stock based compensation expense | 8,817 | (3,796) | 15,524 | 1,904 |
Restricted awards, net | 7,179 | 7,179 | ||
Total Equity, end of period | 1,292,224 | 1,591,478 | 1,292,224 | 1,591,478 |
Total RPM International Inc. Equity | ||||
Stockholders Equity Note [Line Items] | ||||
Total equity, beginning of period | 1,294,402 | 1,436,234 | 1,291,392 | 1,382,844 |
Net income | 83,433 | 69,766 | 183,248 | 168,845 |
Other Comprehensive Income: | ||||
Foreign currency translation adjustments | (53,814) | (89,462) | (84,420) | (107,200) |
Pension and other postretirement benefit liability adjustments, net of tax | 3,640 | 4,374 | 7,800 | 7,134 |
Unrealized (loss) gain on securities, net of tax | 369 | (2,574) | (6,715) | (2,491) |
Total other comprehensive (loss) | (49,805) | (87,439) | (83,335) | (102,386) |
Unrealized gain on derivatives, net of tax | 223 | 171 | ||
Total Comprehensive Income (Loss) | 33,628 | (17,673) | 99,913 | 66,459 |
Dividends paid | (36,642) | (34,776) | (71,276) | (66,763) |
Other noncontrolling interest activity | 51 | 47 | ||
Shares repurchased and returned for taxes | (9,944) | (1,788) | (45,292) | (1,788) |
Stock option exercises, net of shares returned for taxes | 4,956 | 505 | ||
Stock based compensation expense | 8,817 | (3,796) | 15,524 | 1,904 |
Restricted awards, net | 7,179 | 7,179 | ||
Total Equity, end of period | 1,290,261 | 1,390,387 | 1,290,261 | 1,390,387 |
Noncontrolling Interest | ||||
Stockholders Equity Note [Line Items] | ||||
Total equity, beginning of period | 2,620 | 198,134 | 2,073 | 195,750 |
Net income | 716 | 4,090 | 1,263 | 9,850 |
Other Comprehensive Income: | ||||
Foreign currency translation adjustments | (1,760) | (5,288) | ||
Pension and other postretirement benefit liability adjustments, net of tax | 611 | 780 | ||
Unrealized (loss) gain on securities, net of tax | 7 | |||
Total other comprehensive (loss) | (1,082) | (4,462) | ||
Unrealized gain on derivatives, net of tax | 60 | 46 | ||
Total Comprehensive Income (Loss) | 716 | 3,008 | 1,263 | 5,388 |
Other noncontrolling interest activity | (1,373) | (51) | (1,373) | (47) |
Total Equity, end of period | $ 1,963 | $ 201,091 | $ 1,963 | $ 201,091 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 6 Months Ended |
Nov. 30, 2015Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Number of operating segments | 7 |
Results of Reportable Segments
Results of Reportable Segments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Nov. 30, 2015 | Nov. 30, 2014 | Nov. 30, 2015 | Nov. 30, 2014 | May. 31, 2015 | ||
Segment Reporting Information [Line Items] | ||||||
Net Sales | $ 1,155,984 | $ 1,071,128 | $ 2,398,510 | $ 2,275,024 | ||
Income (Expense) Before Income Taxes | [1] | 120,261 | 105,750 | 262,462 | 253,828 | |
Interest Income (Expense), Net | [2] | (21,378) | (14,346) | (39,770) | (29,958) | |
EBIT | [3] | 141,639 | 120,096 | 302,232 | 283,786 | |
Total Assets | 4,518,232 | 4,518,232 | $ 4,694,240 | |||
Operating Segments | Industrial Segment | ||||||
Segment Reporting Information [Line Items] | ||||||
Net Sales | 610,201 | 647,836 | 1,273,530 | 1,342,120 | ||
Income (Expense) Before Income Taxes | [1] | 62,962 | 62,810 | 145,713 | 148,233 | |
Interest Income (Expense), Net | [2] | (1,535) | (1,976) | (3,034) | (4,647) | |
EBIT | [3] | 64,497 | 64,786 | 148,747 | 152,880 | |
Total Assets | 1,944,190 | 1,944,190 | 2,105,364 | |||
Operating Segments | Specialty Segment | ||||||
Segment Reporting Information [Line Items] | ||||||
Net Sales | 186,729 | 70,511 | 370,369 | 150,113 | ||
Income (Expense) Before Income Taxes | [1] | 29,324 | 14,299 | 57,530 | 31,340 | |
Interest Income (Expense), Net | [2] | 199 | 78 | 395 | 116 | |
EBIT | [3] | 29,125 | 14,221 | 57,135 | 31,224 | |
Total Assets | 791,719 | 791,719 | 798,893 | |||
Operating Segments | Consumer Segment | ||||||
Segment Reporting Information [Line Items] | ||||||
Net Sales | 359,054 | 352,781 | 754,611 | 782,791 | ||
Income (Expense) Before Income Taxes | [1] | 65,429 | 61,562 | 131,552 | 138,231 | |
Interest Income (Expense), Net | [2] | 42 | (4) | 100 | (12) | |
EBIT | [3] | 65,387 | 61,566 | 131,452 | 138,243 | |
Total Assets | 1,552,852 | 1,552,852 | 1,626,097 | |||
Corporate/Other | ||||||
Segment Reporting Information [Line Items] | ||||||
Income (Expense) Before Income Taxes | [1] | (37,454) | (32,921) | (72,333) | (63,976) | |
Interest Income (Expense), Net | [2] | (20,084) | (12,444) | (37,231) | (25,415) | |
EBIT | [3] | (17,370) | $ (20,477) | (35,102) | $ (38,561) | |
Total Assets | $ 229,471 | $ 229,471 | $ 163,886 | |||
[1] | The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (GAAP) in the United States, to EBIT. | |||||
[2] | Interest (expense), net includes the combination of interest (expense) and investment income/(expense), net. | |||||
[3] | EBIT is defined as earnings (loss) before interest and taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure because interest expense is essentially related to acquisitions, as opposed to segment operations. We believe EBIT is useful to investors for this purpose as well, using EBIT as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, income before taxes as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness and ongoing tax obligations. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. |