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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
For the fiscal year ended May 31, 1994
OR
[] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from __________ to ___________
Commission File No. 0-5132
RPM, INC.
(Exact Name of Registrant as Specified in its Charter)
Ohio 34-6550857
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(State or Other Jurisdiction of (IRS Employer Identification
Incorporation or Organization) No.)
P.O. Box 777, 2628 Pearl Road, Medina, Ohio 44258
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (216)273-5090
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, Without Par Value
--------------------------------
(Title of Class)
Liquid Yield Option(TM) Notes Due 2012
--------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to the
filing requirements for the past 90 days. Yes x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
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As of August 19, 1994, 56,772,256 Common Shares were outstanding, and the
aggregate market value of the Common Shares of the registrant held by
non-affiliates (based upon the closing price of the Common Shares as reported
on the NASDAQ National Market System on August 19, 1994) was approximately
$971,729,098. For purposes of this information, the 2,409,789 outstanding
Common Shares which were owned beneficially as of August 19, 1994 by executive
officers and Directors of the registrant were deemed to be the Common Shares
held by affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement to be used in
connection with its Annual Meeting of Shareholders to be held on October 10,
1994 are incorporated by reference into Part III of this Form 10-K.
Except as otherwise stated, the information contained in this Annual Report
on Form 10-K is as of May 31, 1994.
_______________
(TM)Merrill Lynch & Co., Inc.
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PART I
ITEM 1. BUSINESS.
THE COMPANY
RPM, Inc. ("RPM" or the "Company") was organized in 1947 as an Ohio
corporation under the name Republic Powdered Metals, Inc. On November 9, 1971,
the Company's name was changed to RPM, Inc. As used herein, the terms "RPM"
and the "Company" refer to RPM, Inc. and its subsidiaries, unless the context
indicates otherwise. The Company has its principal executive offices at 2628
Pearl Road, P.O. Box 777, Medina, Ohio 44258, and its telephone number is (216)
273-5090.
RECENT DEVELOPMENTS
Since RPM's offering of Common Shares to the public in September 1969, the
Company has made a number of significant acquisitions that have been described
in previous reports on file with the Securities and Exchange Commission. RPM's
acquisition strategy focuses on companies with high performance and quality
products which are leaders in their respective markets. Part of RPM's
acquisition strategy is to locate companies with products that can also be
distributed through existing operating companies. RPM expects to continue its
acquisition program, although there is no assurance that any acquisitions will
be made.
As part of this acquisition program, on June 8, 1993 the Company acquired
all of the outstanding shares of Dynatron/Bondo Corporation, a manufacturer and
marketer of auto and marine body filler and related products, and on October
26, 1993 the Company acquired all of the outstanding shares of Stonhard, Inc.,
a manufacturer and marketer of polymer-based floorings, linings and
construction products for applications in industrial and commercial markets.
In addition, on June 28, 1994 the Company acquired all of the outstanding
shares of Rust-Oleum Corporation, a manufacturer and marketer of protective
coatings and specialty chemicals, including consumer rust-preventative
coatings. In 1991 the Company had acquired the European operations of
Rust-Oleum and, thus, the Company now owns all of Rust-Oleum.
On June 23, 1994 the Company entered into a $300 million three-year
revolving credit facility with National City Bank and The First National Bank
of Chicago, as Co-Agents, and The Chase Manhattan Bank (National Association),
as Administrative Agent (the "Credit Facility"). In connection therewith, the
Company's existing credit facility with a group of banks was terminated and all
amounts outstanding thereunder totalling approximately $47 million were repaid
pursuant to an advance under the Credit Facility. In addition, the Company
utilized a $176.5 million advance under the Credit Facility to pay for the
Rust-Oleum
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Corporation acquisition. As of August 19, 1994, there was approximately $233
million of principal advanced under the Credit Facility. There have not been
any other material changes or developments since June 1, 1994 in the business
done or intended to be done by the Company.
BUSINESS
RPM operates principally in one business segment, the manufacture and
marketing of protective coatings. These protective coatings products are used
for both industrial and consumer applications. For industrial applications,
RPM manufactures and markets coatings for waterproofing and general
maintenance, corrosion control, and other specialty chemical applications. For
consumer applications, RPM manufactures do-it-yourself products for the home
maintenance, automotive repair, and consumer hobby and leisure markets. RPM,
through its operating companies, serves niche markets within these broader
categories, thus providing a foundation for its strategy of growth through
product line extensions.
The protective coating products manufactured by RPM are used primarily on
property which already exists. RPM is not involved to any great degree in new
construction and, therefore, is generally less affected by cyclical movements
in the economy. RPM markets its products in approximately 110 countries and
operates manufacturing facilities in 45 locations in the United States,
Belgium, Canada, Luxembourg and The Netherlands.
INDUSTRIAL MARKETS AND PRODUCTS
WATERPROOFING AND GENERAL MAINTENANCE. Waterproofing and general
maintenance constitute RPM's original marketplace, having been served by
Republic Powdered Metals, Inc. since the Company's founding. Operating
companies and products include: REPUBLIC POWDERED METALS--heavy-duty protective
coatings and single-ply roofing systems; RPM NETHERLANDS B.V.--coatings for
industrial routine maintenance; MAMECO INTERNATIONAL--sealants, deck coatings
and membranes; MARTIN MATHYS--water-based coatings for commercial and
industrial maintenance; and STONHARD -- high-performance polymer floors,
linings and wall systems.
CORROSION CONTROL. RPM's CARBOLINE manufactures high-performance
corrosion-resistant protective coatings, fireproofing, tank linings and floor
coatings, and markets these products to industrial, architectural and
applicator companies throughout the world. WISCONSIN PROTECTIVE COATINGS
manufactures a complete line of liquid-applied, corrosion-resistant coatings
used for extremely harsh environments, such as rail cars, tank linings, and
smoke stacks.
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SPECIALTY CHEMICALS. RPM's specialty chemicals businesses address selected
niche markets within this broad industry category. Specialty chemical
companies and products include: DAY-GLO COLOR--fluorescent colorants and
pigments; MOHAWK FINISHING PRODUCTS--furniture repair, cleaning and polishing
products; ALOX--chemical additives used as rust preventatives, corrosion
inhibitors, special lubricants and metal working compounds; CHEMICAL
SPECIALTIES--chemicals used for cleaning carpet, upholstery and fabric wall
covering, and chemicals used in smoke and fire restoration cleanup; and
AMERICAN EMULSIONS--dye additives for textile dyeing and finishing, and water
treatment products for the paper industry.
CONSUMER MARKETS AND PRODUCTS
CONSUMER HOBBY AND LEISURE. The hobby and leisure marketplace is served by
TESTOR, America's largest producer and marketer of model paints and accessory
items to the hobby and model market, CRAFT HOUSE, producer of Paint-by-Numbers
sets, basic preschool activity sets, crafts and hobby products, and
FLOQUIL/POLY S COLOR, manufacturer of hobby, art and craft coatings. RPM's
consumer hobby and leisure products are marketed through thousands of mass
merchandise, toy and hobby stores throughout North America.
CONSUMER DO-IT-YOURSELF. RPM's six primary consumer do-it-yourself
businesses are RUST-OLEUM, WM. ZINSSER, KOP-COAT, BONDEX INTERNATIONAL,
DYNATRON/BONDO and TALSOL. RUST-OLEUM manufactures high-quality
corrosion-resistant coatings for the household maintenance and light industrial
markets. WM. ZINSSER is the nation's leading producer of shellac items used as
pharmaceutical glazes, confectioner's glazes, citrus fruit coatings and wood
coatings, including a broad line of specialty primers and sealers. KOP-COAT
manufactures pleasure marine coatings and compounds and manufactures wood
treatment products. BONDEX INTERNATIONAL produces a nationwide line of
household patch and repair products, in addition to basement waterproofing
products. DYNATRON/BONDO manufactures auto and marine body filler and related
products. TALSOL manufactures automotive paints and coatings. Other consumer
do-it-yourself products include fabrics, window treatments and wall coverings
sold by DESIGN/CRAFT FABRIC and RICHARD E. THIBAUT. RPM's consumer
do-it-yourself products are marketed through thousands of mass merchandise,
home center and hardware stores throughout North America.
FOREIGN OPERATIONS
The Company's foreign operations for the year ended May 31, 1994 accounted
for approximately 12.3% of its total sales, although it also receives license
fees and royalty income from numerous license agreements and joint ventures in
foreign countries. The Company has manufacturing facilities in Canada,
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Belgium, the Netherlands and Luxembourg, and sales offices or public
warehouse facilities in France, England, Iberia, Mexico, the Philippines
and several other countries. Information concerning the Company's foreign
operations is set forth in Note J (Industry Segment and Geographic Area
Information) of Notes to Consolidated Financial Statements, which appear
elsewhere in this Form 10-K Annual Report.
COMPETITION
The Company is engaged in a highly competitive industry and, with
respect to all of its major products, faces competition from local and national
firms. Several of the companies with which RPM competes have greater financial
resources and sales organizations than the Company. While no accurate figures
are available with respect to the size of or the Company's position in the
market for any particular product, management believes that the Company is a
major producer of aluminum coatings, cement-based paint, hobby paints, marine
coatings, furniture finishing repair products, automotive repair products,
industrial corrosion control and consumer rust-preventative coatings. The
Company, however, does not believe that it has a significant share of the total
protective coatings market.
PATENTS, TRADEMARKS AND LICENSES
No single patent, trademark (other than the marks Day-Glo, Rust-Oleum and
Carboline, which are material), name or license, or group of these rights, is
material to the Company's business.
Day-Glo Color Corp., a subsidiary of the Company, is the owner of over 50
trademark registrations of the mark and name "DAY-GLO" in numerous countries
and the United States for a variety of fluorescent products. There are also
many other foreign and domestic registrations for other trademarks of the
Day-Glo Color Corp., for a total of over 100 registrations. These
registrations are valid for a variety of terms ranging from one year to twenty
years, which terms are renewable as long as the marks continue to be used.
Many of these registrations are renewed on a regular basis.
Rust-Oleum Corporation, a subsidiary of the Company, is the owner of over 50
United States trademark registrations for the mark and name "RUST-OLEUM" and
other trademarks covering a variety of rust-preventative coatings sold by
Rust-Oleum Corporation. There are also many foreign registrations for
"RUST-OLEUM" and the other trademarks of Rust-Oleum Corporation, for a total of
nearly 400 registrations. These registrations are valid for a variety of terms
ranging from one year to twenty years, which terms are renewable for as long as
the marks continue to be used. Many of these registrations are renewed on a
regular basis.
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Carboline Company, a subsidiary of the Company, is the owner of a United
States trademark registration for the mark "CARBOLINE". Carboline Company is
also the owner of several other United States registrations for other
trademarks. Renewal of these registrations is done on a regular basis.
Product trade names include: ALOX, ALUMANATION, AVALON, B-I-N PRIMER-SEALER,
BITUMASTIC, BONDO, BONDEX, BULLS EYE SHELLAC, CARBOLINE, COLOR DOUGH, CRAFT
HOUSE, DAY-GLO, DYNALITE, DYNATRON, EASY FINISH, EPOXSTEEL, EZ WELD, FLOQUIL,
GEOFLEX, LUBRASPIN, MAR-HYDE, MOHAWK, PARASEAL, PERMAROOF, PETTIT, PLASITE,
RADGLO, RUST-OLEUM, SANITILE, STONCLAD, STONHARD, STONSHIELD, TALSOL, TESTORS,
ULTRALITE, VULKEM, WOOLSEY, ZINSSER and Z-SPAR; and, in Europe, RUST-OLEUM and
MARTIN MATHYS.
RAW MATERIALS
The Company believes that alternate sources of supply of raw materials are
available to the Company for most of its raw materials. Where shortages of raw
materials have occurred, the Company has been able to reformulate products to
use more readily available raw materials. Although the Company has been able
to reformulate products to use more readily available raw materials in the
past, there can be no assurance as to the Company's ability to do so in the
future.
SEASONAL FACTORS
The Company's business is seasonal due to outside weather factors. The
Company historically experiences strong sales and income in the first, second
and fourth fiscal quarters, with weaker performance in the third fiscal quarter
(December through February).
CUSTOMERS
No one customer accounted for 10% or more of the Company's total sales. The
Company's business is not dependent upon any one customer or small group of
customers and is dispersed over thousands of customers.
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BACKLOG
The Company historically has not had a significant backlog of orders, nor
was there a significant backlog during the last fiscal year.
RESEARCH
The Company's research and development work is performed in various
laboratory locations throughout the United States. During fiscal years 1994,
1993 and 1992, the Company invested approximately $11.1 million, $10.0 million
and $9.1 million, respectively, on research and development activities. The
customer sponsored portion of such expenditures was not significant.
ENVIRONMENTAL MATTERS
While the Company is involved in several environmental matters (see ITEM 3.
LEGAL PROCEEDINGS), compliance with environmental laws and regulations has not
had and is not expected to have a material adverse effect on capital
expenditures, earnings, or the competitive position of the Company.
EMPLOYEES
The Company employs approximately 4,500 persons, of whom approximately
800 were represented by unions under contracts which expire at varying
times in the future. The Company believes that its relations with its
employees are good.
ITEM 2. PROPERTIES.
The Company's corporate headquarters and a plant and offices for one
subsidiary are located on an 80-acre site in Medina, Ohio, which is owned by
the Company. The Company's operations occupy a total of approximately 4.9
million square feet, with the majority, approximately 4.4 million square feet,
devoted to manufacturing, assembly and storage. Of the approximately 4.9
million square feet occupied, 3.7 million square feet are owned and 1.2
million square feet are occupied under operating leases. The Company's
facilities of 100,000 square feet or larger, as of August 1, 1994, are set
forth in the table below.
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Approximate
Square Feet
Type of of Leased or
Location Facility Floor Space Owned
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Toledo, Manufacturing, 280,000 Owned
Ohio Office and
Warehouse
Newark, Manufacturing 195,200 Owned
New Jersey and Warehouse
Zelem, Office, 180,000 Owned
Belgium Manufacturing
and Warehouse
Atlanta, Office, 176,000 Owned(1)
Georgia Manufacturing
and Warehouse
Watertown, Manufacturing, 135,800 Owned
Massachusetts Office
and Warehouse
Amsterdam, Manufacturing, 134,100 Owned
New York Warehouse (20 Acres)
and Office
Cleveland, Office, 132,000 Owned
Ohio Warehouse and
Manufacturing
Rockford, Warehouse 131,200 Leased
Illinois (August 1, 1998)
Attleboro, Manufacturing 130,000 Owned
Massachusetts and Warehouse
Rockford, Manufacturing 119,100 Owned
Illinois
Kalkaska, Manufacturing, 105,000 Leased
Michigan Warehouse (January 1, 1997)
and Office
Pleasant Prairie, Manufacturing 298,000 Owned
Wisconsin and Warehouse
Hagerstown, Manufacturing 143,000 Owned
Maryland
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(1) Rental payments are being used to pay principal and interest on
Industrial Revenue Bonds issued by Wachovia National Bank on behalf of Fulton
County, Georgia Development Authority. At June 1, 1994 the outstanding balance
of such indebtedness was $1,950,000.
For information concerning the Company's rental obligations,
see Note F (Leases) of Notes to Consolidated Financial Statements, which appear
elsewhere in this Form 10-K Annual Report. Under all of its leases, the
Company is obligated to pay certain varying insurance costs, utilities, real
property taxes and other costs and expenses.
The Company believes that its manufacturing plants and office
facilities are well maintained and suitable for the operations of the Company.
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ITEM 3. LEGAL PROCEEDINGS.
Bondex International, Inc., a wholly-owned subsidiary of the
Company ("Bondex"), was dismissed with prejudice from a pending
asbestos-related bodily injury lawsuit which had consolidated the claims of
fourteen plaintiffs. The dismissal resulted from the inability of the
plaintiffs to produce evidence of exposure to any Bondex asbestos-containing
product. With the addition of 43 newly-filed cases (including 33 filed by one
law firm in Middlesex County, New Jersey), there are currently pending against
Bondex a total of 340 asbestos-related bodily injury cases filed on behalf of
various individuals in various jurisdictions in the United States. All of
these lawsuits name numerous other corporate defendants and all allege bodily
injury as a result of the exposure to or use of asbestos-containing products.
Bondex continues to deny liability in all asbestos-related lawsuits and
continues to vigorously defend them. Under a cost-sharing agreement among
Bondex and its insurers effected in February, 1994, the insurers are
responsible for payment of a substantial portion of defense costs and indemnity
payments, if any, with Bondex responsible for a minor portion of each.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1993, Carboline Company, a wholly-owned
subsidiary of the Company ("Carboline"), has been named as one of 21 corporate
defendants in RUFINO O. CAVAZOS, ET AL., V. CEILCOTE COMPANY, ET AL., District
Court, 73rd Judicial District, Bexar County, Texas; Cause No. 89-Cl-12651,
filed in March, 1990, and in similar suits subsequently filed on behalf of
individuals (and, where applicable, their spouses and children) employed at the
Comanche Peak Nuclear Plant. Several supplemental petitions have been filed in
Bexar County for the purposes of adding other spouses and children of the
worker plaintiffs, bringing the total number of Bexar County plaintiffs to
10,110. Another suit with virtually identical allegations was filed in Rusk
County, Texas on December 29, 1993. That suit, Cause No. 93-470; MARY GUNN, ET
AL. V. SOUTHERN IMPERIAL COATINGS CORP., 4th District Court, Rusk County,
Texas, involves 201 worker plaintiffs and 128 spouses. All of the suits allege
bodily injury as a result of exposure to defendants' products. As the result
of the institution of receivership proceedings against Employers Casualty
Insurance Company (the carrier previously defending three unrelated
defendants), a stay has been entered in all the cases, and is due to expire on
January 6, 1995. Prior to the stay, the litigation had been continuing in the
discovery stage. Carboline has denied all liability and is conducting a
vigorous defense. Several of Carboline's insurance carriers, and Carboline,
are defending the lawsuit under a cost sharing agreement.
As previously reported in the Company's Quarterly Report on
Form 10-Q for the quarter ended February 28, 1994, in September, 1991, Our Lady
of the Lake Hospital, Inc. ("OLOL") filed suit
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captioned OUR LADY OF THE LAKE HOSPITAL, INC. V. CARBOLINE COMPANY, ET AL.,
Number 373,498, Division "J", Nineteenth Judicial District Court, Parish of
East Baton Rouge, State of Louisiana, alleging damages to the structural steel
of the hospital which it owns and operates in Baton Rouge, Louisiana. The
petition alleged that the damages resulted from its use of a fireproofing
product known as Pyrocrete manufactured and supplied by Carboline and that
Pyrocrete is extremely corrosive when applied to structural steel, contains a
latent defect, and is defective. Carboline has contested liability in the case
vigorously, and on July 21, 1992, the trial court sustained an Exception of
Prescription filed on Carboline's behalf and dismissed the suit with prejudice.
OLOL appealed, and on December 29, 1993, the appellate court vacated the
judgment dismissing the suit and remanded the matter to the trial court for the
introduction of further evidence and further proceedings. On June 13, 1994,
OLOL filed a Second Supplemental and Amending Petition which joined as party
defendants Sun Company, Inc. ("Sun") and Carboline Company, a Missouri
corporation which was merged into Sun pursuant to a statutory merger in 1980
("Carboline Missouri"); made claims of breach of warranty and products
liability against all of the defendants; and alleged that the Pyrocrete had
lost its capacity as a fireproofing agent. Pursuant to an agreement between
Carboline and Sun, Carboline is providing a defense for Sun in this litigation.
The Petition does not set forth the amount of damages being claimed; however,
in one of the briefs filed in the appellate court, OLOL claimed it would cost
in excess of $20 million to repair the damages. In addition, OLOL is preparing
a substantial claim for alleged lost revenues and profits.
In August, 1992 OLOL filed suit against Sun captioned OUR LADY
OF THE LAKE HOSPITAL, INC. V. SUN COMPANY, INC., Number 384,867, Division "I",
Nineteenth Judicial District Court, Parish of East Baton Rouge, State of
Louisiana, making allegations similar to the allegations in Number 373,498,
described above, and seeking to recover alleged damages to the structural steel
of the OLOL hospital. In addition, in the original petition filed in this
suit, OLOL alleged that Carboline Missouri manufactured and supplied the
Pyrocrete to OLOL and thereafter merged with Sun in January, 1980, with Sun
remaining as the surviving corporation responsible for the obligations of
Carboline Missouri. On June 29, 1993 OLOL filed a First Supplemental and
Amending Petition ("Amended Petition") which added Carboline as an additional
defendant. The Amended Petition generally alleged that Carboline damaged OLOL
through fraud and also breached a contractual obligation of service after the
sale. The Amended Petition alleged that OLOL will incur expenses and costs in
excess of $20 million to repair the damages. Carboline has filed an Exception
of Lis Pendens on the basis that this suit arose out of the same transaction or
occurrence as the suit described above. Pursuant to an agreement between
Carboline and Sun, Carboline is providing a defense for Sun in this litigation.
Sun has filed an Exception of Lis Pendens and a Failure to Assert All Causes of
Action. In June,
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1994, the court transferred and consolidated this suit with the suit described
above.
Carboline has denied the allegations of both lawsuits and is
vigorously contesting them. Carboline's defense has been assumed by First
Colonial Insurance Company ("First Colonial"), a wholly-owned insurance
subsidiary of the Company. First Colonial is in the process of negotiating a
cost-sharing agreement with a group of Carboline's insurers to cover both
defense and indemnity obligations relating to the OLOL lawsuits.
As previously reported in the Company's Quarterly Report on
Form 10-Q for the quarter ended August 31, 1993, and as updated in the
Company's Quarterly Reports on Form 10-Q for the quarters ended November 30,
1993 and February 28, 1994, Carboline was, in May, 1993, named by the U.S.
Environmental Protection Agency ("EPA") together with 36 other entities as a
potentially responsible party ("PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act, as amended ("CERCLA") in connection
with the Powell Road Landfill Site, Huber Heights, Ohio (the "Site").
Carboline is alleged to be associated with the Site as a consequence of
disposal of waste originating at its Xenia, Ohio plant. Carboline has joined
with other PRPs (now totalling 45) in a "PRP Organization Agreement" for the
purpose of conducting a common response to any claim for removal or response
action asserted by the EPA or the State of Ohio or conducting a common defense
to any such claim. Between 1987 and 1991, the owner of the Site, Waste
Management, Inc., conducted a remedial investigation ("RI") and feasibility
study ("FS") and, in 1991, submitted the RI/FS to the EPA. The EPA approved
the RI in March, 1992 and approved the FS in March, 1993. Based on the RI/FS,
the EPA issued its Record of Decision in September, 1993, in which it selected
the remedy for the cleanup of the Site. The remedy is estimated to cost $20.5
million and take six years to implement. Four PRPs, including the owner of the
Site (but not Carboline), have entered into an Administrative Order on Consent
with the EPA to prepare the Remedial Design for the selected remedy. Several
other PRPs, including Carboline, have offered to participate with the four
settling PRPs outside of the terms of the Administrative Order on Consent by
funding a share of the Remedial Design costs, which are estimated to be
approximately $1.7 million. Carboline's share of the Remedial Design costs
would be approximately 1.7% of the total, or $28,900. This cost-sharing
agreement for the Remedial Design is without prejudice to future cost-
allocation activities regarding the cleanup itself. Based upon Carboline's
estimated allocated share of total waste volume at the Site (approximately 0.50
percent) the Company believes that ultimate resolution of this matter will not
have a material adverse effect on the Company's financial position or results
of operations.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1993, and as updated in
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the Company's Quarterly Report on Form 10-Q for the quarter ended August 31,
1993, the Company has been notified by the EPA that it may have liability as a
PRP under CERCLA, in connection with the Springfield Township Dump Site,
Davisburg, Michigan (the "Springfield Site"). The Company is alleged to be
associated with the Springfield Site as well as the Rose Township Site, Rose
Township, Michigan (the "Rose Township Site") as a consequence of the disposal
of waste originating at Mac-O-Lac Paints, Inc., a former subsidiary of the
Company whose assets were sold in February, 1982. The EPA issued a Record of
Decision ("ROD") setting forth the preferred remedial action for the
Springfield Site which includes removal of volatile organic compound
contaminants from soils and groundwater as well as removal of PCB contaminated
soils. The Company and other PRPs have organized a steering committee (the
"Steering Committee") which has engaged in negotiations with the EPA with
respect to a proposed Interim Remedial Action Phase involving removal of
volatile organic contaminants from soils and groundwater and reimbursement of
the EPA for past response costs. The Steering Committee has strongly disputed
the ROD's requirement for PCB removal and this issue is being reevaluated by
the EPA. The Company and other PRPs have entered into a Consent Order to
perform a portion of the remedial design work for a cleanup and to reimburse
the EPA for a portion of costs the EPA incurred at the site. The Steering
Committee is presently negotiating with the EPA regarding the performance of a
groundwater cleanup response action. The EPA is expected to issue a Section
106 Administrative Order to the Company and eleven other parties requiring the
performance of the groundwater cleanup in accordance with the negotiated work
plan. The remaining settlement issues are still under discussion with the EPA.
The Company is pursuing the issue of coverage for this matter with its
insurance carriers. The Company believes that the ultimate resolution of this
matter will not have material adverse effect on the Company's financial
position or results of operations.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1993, the Company and certain other
entities named by the EPA as PRPs under CERCLA in connection with the Rose
Township Site reached an agreement with the EPA on the terms of a Consent
Decree which, on July 18, 1989, was entered by the Court in UNITED STATES OF
AMERICA V. AKZO COATINGS OF AMERICA, INC. ET. AL., U.S. District Court,
Eastern District of Michigan, Southern Division; Civil Action No.
88-CV-73784-DT. Pursuant to the agreement, the PRPs established a $9 million
fund to cover costs of remediation at the Rose Township Site. The Company's
share of the fund, $300,000, has been paid. The PRPs are currently performing
the remedial action required under the Consent Decree. The settling defendants
have submitted to the EPA a Feasibility Study Report recommending soil vapor
extraction as a method of remediation to replace soil flushing or enhanced soil
flushing. The EPA had previously concluded that neither soil flushing nor
enhanced soil flushing would achieve
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target cleanup levels for certain materials within the time frames specified in
the remedial action plan attached to the Consent Decree. The Rose Township PRP
Agreement provides that, upon the occurrence of such an event, the
participating PRPs shall meet to discuss the allocation of the costs of
performing further work. No meetings to discuss any further allocation have
been held or scheduled. It is anticipated that soil vapor extraction, if
approved as a remediation method, will not cost more than soil flushing or
enhanced soil flushing would have cost. The Feasibility Study, and any
corrected deficiencies perceived by the EPA, must be approved by the EPA prior
to selection of an alternate remedy by means of an amendment to the Record of
Decision. The Company is pursuing the issue of coverage for this matter with
its insurance carriers.
On December 3, 1992 the Company together with seven other Rose
Township PRPs filed a Second Amended Complaint in AKZO COATINGS OF AMERICA,
INC., ET AL. V. AMERICAN RENOVATING, ET AL., U.S. District Court, Eastern
District of Michigan, Southern Division; Case No. 92-CV-74105-DT, against
numerous other Rose Township PRPs not parties to the Consent Degree asserting a
right of contribution from each equal to each defendant's equitable share of
EPA past and future oversight costs at the Rose Township Site. The litigation
is currently in the discovery stage.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1993, the EPA has named Mac-O-Lac
Paints, Inc. as a PRP under CERCLA in connection with the Metamora Landfill
Site in Lapeer County, Michigan (the "Metamora Site"). Mac-O-Lac Paints, Inc.
was the purchaser in 1982 of the assets, including the name, Mac-O-Lac Paints,
Inc., a former subsidiary of the Company, whose name was subsequently changed.
In May, 1991, a number of PRPs reached agreement with the EPA on the terms of
settlement for performance of remedial action at the Metamora Site. The
Company has not been named as a PRP in this case and consequently did not
participate in the settlement agreement with the EPA. The Company believes it
has no liability in connection with the Metamora Site and considers the matter
closed.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1993, Mohawk Finishing Products, Inc., a
wholly-owned subsidiary of the Company ("Mohawk"), had been named by the EPA as
a PRP under CERCLA in connection with the Galaxy/Spectron Site, Elkton,
Maryland (the "Site"). Mohawk participated with the other PRPs in Phase I
cleanup at the Site, completed at a total cost to Mohawk of $15,465 pursuant to
a cash-out settlement provided Mohawk and other PRPs who shipped minimal
quantities of materials to the Site. The Company believes that Mohawk's share
of Phase II cleanup costs, if and when determined, will be similarly
inconsequential; accordingly, for purposes hereof, this matter is considered
closed.
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16
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended Mary 31, 1993, Mohawk and Westfield Coatings
Corporation, a wholly-owned subsidiary of the Company ("Westfield"), were
notified by the EPA of their status as PRPs under CERCLA with respect to
environmental contamination at the Solvents Recovery of New England Site (the
"SRS Site") located in Southington, Connecticut. Since June, 1992, the EPA has
named in excess of 1,700 entities as PRPs in connection with the SRS Site. The
EPA recently issued a volumetric list in which Mohawk was assigned a volumetric
share of 0.1167% of the waste sent to the SRS Site and Westfield Coatings was
assigned a volumetric share of 0.93878%. The PRPs have not as yet agreed to
any allocation formula, whether based on volume or otherwise. In April, 1994,
the EPA issued the first phase of settlement offers to over 1,000 DE MINIMIS
parties, which were alleged to have sent 10,000 gallons or less of hazardous
substances to the SRS Site. Neither Mohawk nor Westfield was eligible to
participate in this first DE MINIMIS settlement offer. To date, the EPA has
expended in excess of $5 million in connection with the SRS Site, but has not
yet selected the final remedial action. The EPA has, however, proposed a
removal action with an estimated cost in the range of $3.5 million. PRPs not
participating in the DE MINIMIS settlement have been offered the opportunity to
perform the removal action. A group of several hundred PRPs, including
Westfield and Mohawk, has agreed to participate.
In January, 1994, the EPA notified Westfield of its status as
one of approximately 300 PRPs at the Old Southington Landfill Superfund Site
(the "Landfill") on the basis that process wastes from the SRS Site were sent
to the Landfill prior to October, 1967. The EPA has not issued a volumetric
list for the Landfill. In May, 1994, the EPA proposed a remedial action for
source control at the Landfill that includes a cap on the Landfill and a gas
collection system, at an estimated cost of approximately $16 million. The EPA
is currently evaluating whether mitigation of migration at the Landfill is
required and expects to issue a Record of Decision for source control later
this year.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1993, the Testor Corporation, a
wholly-owned subsidiary of the Company ("Testor"), which had been identified by
the EPA as a PRP under CERCLA in 1985 in connection with the Acme Solvent Site
in Rockford, Illinois (the "Acme Site"), participated with other Acme Site PRPs
in a voluntary remedial action pursuant to a Sharing Agreement entered into in
1986. That remedial action, Phase I of which is completed, involved removal
and disposal of contaminated source materials from the Acme Site and a
Supplemental Technical Investigation conducted by consultants to determine
actions required for permanent remediation of soils and groundwater at the Acme
Site in Phase II. Testor's share of Phase I remedial action costs totaled
approximately $965,000. In September, 1991, Testor entered into
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a Consent Decree with the EPA and a Sharing Agreement with 30 other Acme Site
PRPs with respect to Phase II remedial action at the Acme Site and to reimburse
the EPA for a portion of its past response costs, of which Testor's share of
$60,000 was paid to the EPA in December, 1991. The extent of Phase II has been
agreed upon in principal with the EPA subject to one exception noted herein.
The remedial action includes low temperature thermal stripping of contaminated
soils, filtration of VOCs and non-VOCs with carbon filtering of the
groundwater, provisions for an alternate water supply to the residents whose
wells have been affected, a pilot test for possible vapor extraction of the
bedrock, capping of the site, and maintenance of the various systems through
the year 2026. The latest cost projections for these activities is $20.4
million, although that number is subject to change due to possible
modifications of the remedial design and inflationary increases. Testor's
percentage has not been fixed pending an allocation of responsibility for other
PRPs which are expected to join the coalition. Current projections suggest
that Testor's share of these costs will be approximately 4.5%. The area of
remedial activity for which there is not an agreement in principal relates to
the southeast corner of an adjoining but unrelated CERCLA site. Groundwater
contamination has been found in that area but a determination has not been made
as to the source of the contamination.
Testor and other ACME Site PRPs filed suit in late 1986
against non-participating PRPs in ALLIED CORPORATION, ET AL. V. ACME SOLVENTS
RECLAIMING INC., ET AL., U.S. District Court, Northern District of Illinois,
Western Division; Case No. 86-C-2377, seeking contribution for Phase I costs.
As a result of a series of settlements, Testor has recovered a total of
$541,922 as its share of the amounts recovered from certain of the defendants.
The action has been dismissed. Counsel for the PRPs is currently exploring the
feasibility of collecting judgments against defunct or insolvent defendants but
no future recoveries of funds are anticipated.
Testor also filed a declaratory judgment action against its
general liability insurers seeking judicial determination of the carriers'
duties to defend and indemnify Testor in connection with the Acme Site; THE
TESTOR CORPORATION V. CONTINENTAL CASUALTY COMPANY, ET AL., Circuit Court, 17th
Judicial Circuit, Winnebago County, Illinois; Case No. 87-MR-69. Discovery in
that action had been stayed by the court pending resolution by the Illinois
Supreme Court of certain coverage issues which were to be decided in an
unrelated case. That stay was lifted in March, 1994 following a decision which
was largely favorable to the legal positions taken by Testor. The primary
insurers reimbursed Testor for some of its past defense costs by payment of
$339,000 on December 6, 1993 and $25,000 on April 4, 1994. The primary
insurers are paying current defense costs related to remedial activity at the
Acme Site. Negotiations are on-going regarding reimbursement of Testor's past
-17-
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response costs and acceptance of responsibility for future costs. No
meaningful settlement proposal has been made by the insurers to date and
preparations for trial are continuing.
In November, 1979, the EPA commenced an action captioned
UNITED STATES OF AMERICA V. MIDWEST SOLVENT RECOVERY, INC., ET AL., United
States District Court for the Northern District of Indiana, Eastern Division;
Civil No. H-79-556, pertaining to pollution allegedly occurring at and around
real property located at 7400 West Fifteenth Street, Gary, Indiana ("MIDCO
Sites"). The Complaint was subsequently amended in January, 1984 to join
Rust-Oleum Corporation, a wholly-owned subsidiary of the Company acquired on
June 28, 1994 ("Rust-Oleum"), and other entities as additional defendants.
Rust-Oleum, one of approximately 130 identified PRPs, is alleged to be
associated with the MIDCO Sites as a consequence of disposal of waste
originating at its former Evanston, Illinois plant in the mid-1970's. The
Court approved a Consent Decree in June, 1992 under which Rust-Oleum entered
into a Settlement Agreement with the other settling PRPs for the voluntary
cleanup of the MIDCO Sites consistent with the EPA Record of Decision ("ROD").
All surface hazardous wastes have been removed from the MIDCO Sites and cleanup
is now in the groundwater remediation stage. Remediation should be complete by
the end of 1996, with monitoring continuing for an undetermined period. Total
remediation and monitoring costs are currently estimated to be $30 million.
Included in the Consent Decree is an Agreement between the Settling PRPs,
including Rust-Oleum, and Third Parties who had been sued for contribution by
the generator PRPs, providing for payment by the Third Parties of their fair
share of the MIDCO Sites remedial and response costs. Third Party funds have
been placed into the MIDCO Trust Fund, which has been created to fund the MIDCO
Sites remedial actions. Rust-Oleum, as a Settling PRP, has provided financial
assurance for its share of the cleanup costs in the form of a Letter of Credit.
In March, 1988 the EPA named Rust-Oleum and 240 other entities
as PRPs under CERCLA in connection with the Ninth Avenue Site at 7537 Ninth
Avenue, Gary, Indiana (the "Ninth Avenue Site"). Rust-Oleum is alleged to be
associated with the Ninth Avenue Site as a consequence of disposal of waste
originating at its former Evanston, Illinois plant in the 1970's. Rust-Oleum
has cooperated with over twenty other PRPs in a voluntary cleanup under Phase I
and Phase I Participating Agreement and Implementation Trust Agreements. Total
Ninth Avenue Site remediation and monitoring costs are estimated to be
approximately $36 million, including past costs and the Final Site Remedy,
which includes groundwater remediation planned for completion by 1997 and
ongoing monitoring for an undetermined period. The EPA is in the process of
preparing an Amended ROD and Amended Unilateral Administrative Order under
which Rust-Oleum and other participating PRPs will commit to carry out the
Final Site Remedy. Rust-Oleum's allocation of cost is currently 6.048%, with
approximately $500,000 remaining to be paid,
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subject, however, to reduction to the extent settlements are made with
non-participating PRPs and funds are made available from a Trust fund
established by the EPA for DE MINIMIS settlors.
Based upon prior settlement agreements with insurance carriers
for potential costs and remediation liabilities in connection with the MIDCO
Sites and the Ninth Avenue Site, Rust-Oleum has established appropriate
reserves to cover such costs and liabilities. Accordingly, the Company
believes that ultimate resolution of these matters will not have a material
adverse effect on the Company's financial position or results of operations.
In March, 1987, the EPA named Rust-Oleum as a PRP under CERCLA
in connection with the American Chemical Service Superfund Site in Lake County,
Griffith, Indiana (the "ACS Site"). Rust-Oleum is alleged to be associated
with the ACS Site as a consequence of disposal of waste originating at its
former Evanston, Illinois plant in the 1960's. The EPA has offered DE MINIMIS
settlements to Rust-Oleum and other PRPs alleged to be responsible for small
percentages of the total waste sent to the ACS Site. Rust-Oleum has consented
to an Administrative Order on Consent ("AOC"), IN THE MATTER OF AMERICA
CHEMICAL SERVICES SUPERFUND SITE, United States Environmental Protection Agency
Region 5, authorizing settlement of Rust-Oleum's DE MINIMIS 0.16% share of the
estimated $70 million cleanup for the sum of $240,000. Under the provisions of
the AOC, Rust-Oleum will be protected from future suits by the EPA and the
State of Indiana and suits for contribution from other PRPs. Adequate accruals
have been made for the payment of the settlement amount in 1995. Rust-Oleum is
pursuing its liability insurance carriers for reimbursement of its ACS Site
settlement costs.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT*
The name, age and positions of each executive officer of the
Company as of August 19, 1994 are as follows:
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Position and
Offices with
Name Age the Company
---- --- ------------
Thomas C. Sullivan 57 Chairman of the Board and Chief Executive Officer
James A. Karman 57 President and Chief Operating Officer
John H. Morris, Jr. 52 Executive Vice President
Richard E. Klar 61 Vice President and Treasurer
Paul A. Granzier 67 Vice President, General Counsel and Secretary
Glenn R. Hasman 40 Vice President - Administration
Frank C. Sullivan 33 Vice President and Chief Financial Officer
Charles R. Brush 58 Vice President - Environmental Affairs
Keith R. Smiley 32 Controller
<FN>
_______________________
* Included pursuant to Instruction 3 to Item 401(b) of Regulation S-K.
Thomas C. Sullivan has been Chairman of the Board and Chief
Executive Officer of the Company since October 1971. From June 1971 through
September 1978, Mr. Sullivan served as President and, prior thereto, as
Executive Vice President of the Company. Mr. Sullivan's employment with the
Company commenced in 1961, and he has been a Director since 1963. Mr. Sullivan
is employed as Chairman and Chief Executive Officer under an employment
agreement for a five-year period ending June 1, 1999. Mr. Sullivan is the
father of Frank C. Sullivan, Vice President and Chief Financial Officer of the
Company.
James A. Karman has been President and Chief Operating Officer
since September 1978. From October 1982 to October 1993 Mr. Karman also was
the Chief Financial Officer of the Company. From October 1973 through September
1978 Mr. Karman served as Executive Vice President, Secretary and Treasurer,
and, prior thereto, as Vice President-Finance and Treasurer of the Company.
Mr. Karman's employment with the Company commenced in 1963, and he
-20-
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has been a Director since 1963. Mr. Karman is employed as President and Chief
Operating Officer under an employment agreement for a five-year period ending
June 1, 1999.
John H. Morris, Jr. has been Executive Vice President since
January 1981. Prior to that time, he was Corporate Vice President of the
Company, having been elected to that position in September 1977. Mr. Morris
was elected a Director of the Company in 1981. Mr. Morris is employed as
Executive Vice President under an employment agreement for a period ending July
31, 1995.
Richard E. Klar was elected Vice President in October 1981 and
has been Treasurer since July 1980. He served as Chief Accounting Officer from
July 1980 to October 1990. Mr. Klar was Treasurer of Mameco International,
Inc., a wholly owned subsidiary which was acquired by the Company in February
1979, from 1979 to 1980 and was Mameco's Controller prior thereto. Mr. Klar is
employed as Vice President and Treasurer under an employment agreement for a
period ending July 31, 1995.
Paul A. Granzier has served as Secretary since July 1988, and
as Vice President and General Counsel since October 1987. Prior thereto, he
served as General Counsel since he joined the Company in May 1985. Mr.
Granzier was engaged in the private practice of law from 1981 until he joined
the Company. Prior thereto, he served as Assistant Corporate Counsel and
Assistant Secretary of Midland-Ross Corporation. Mr. Granzier is employed as
Vice President, General Counsel and Secretary under an employment agreement for
a period ending July 31, 1995.
Glenn R. Hasman has served as Vice President-Administration
since October 1993. From July 1990 to October 1993 Mr. Hasman served as
Controller. From September 1982 through July 1990, Mr. Hasman served in a
variety of management capacities, most recently Vice President-Operations and
Finance, Chief Financial Officer and Treasurer, of Proko Industries, Inc., a
former wholly owned subsidiary of the Company. From 1979 to 1982, Mr. Hasman
served as RPM's Director of Internal Audit and from 1976 to 1979 he was
associated with Ciulla Stephens & Co., independent accountants. Mr. Hasman is
employed as Vice President-Administration under an employment agreement for a
period ending July 31, 1995.
Frank C. Sullivan has served as the Chief Financial Officer of
the Company since October 1993 and has been a Vice President since October
1991. Prior thereto, he served as Director of Corporate Finance of the Company
from February 1989 to October 1991. Mr. Sullivan served as Regional Sales
Manager, from February 1988 to February 1989, and as a Technical Service
Representative, from February 1987 to February 1988, of AGR Company, an Ohio
General Partnership owned by the Company. Prior thereto, Mr. Sullivan was
employed by First Union National Bank (1985-1986) and Harris Bank (1983-1985).
Mr. Sullivan is employed as Vice
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President and Chief Financial Officer under an employment agreement for a
period ending July 31, 1995. Mr. Sullivan is the son of Thomas C. Sullivan,
Chairman of the Board and Chief Executive Officer of the Company.
Charles R. Brush has served as Vice President-Environmental
Affairs of the Company since October 1993. From June 1991 to October 1993 he
served as the Company's Director Environmental & Regulatory Affairs. Prior
thereto, from 1988 to June 1991, he served as Vice President-Environmental &
Risk Management of Kop-Coat, Inc., a wholly-owned subsidiary of the Company.
Keith R. Smiley has served as Controller of the Company since
October 1993. From January 1992 until the present, Mr. Smiley also has served
as the Company's Internal Auditor. Prior thereto, he was a Manager at Ciulla
Stephens & Co.
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
RPM Common Shares, without par value, are traded on the NASDAQ
National Market System. Common Share prices are quoted daily under the symbol
RPOW. The high and low sales prices for the Common Shares, and the cash
dividends paid on the Common Shares, for each quarter of the two most recent
fiscal years is set forth in the table below.
Range of Sales Prices
------------------------
Dividend Paid
Fiscal 1994 High Low Per Share
- - ----------- ---- --- -------------
1st Quarter $18-1/2 $16-1/2 $ 0.12
2nd Quarter 18-5/8 16-3/4 0.13
3rd Quarter 19-3/8 16-5/8 0.13
4th Quarter 19-1/4 16-5/8 0.13
Fiscal 1993
- - -----------
1st Quarter* $ 15 7/8 $14 1/8 $0.113
2nd Quarter* 17 1/2 15 0.12
3rd Quarter 18 1/2 16 1/4 0.12
4th Quarter 19 3/8 17 3/8 0.12
<FN>
_______________
*Restated for 50% share dividend on December 4, 1992.
Source: The Wall Street Journal
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23
Cash dividends are payable quarterly, upon authorization of
the Board of Directors. Regular payment dates are approximately the 30th of
July, October, January and April. RPM maintains a Dividend Reinvestment Plan
whereby cash dividends, and a maximum of an additional $5,000 per month, may be
invested in RPM Common Shares purchased in the open market at no commission
cost.
The number of holders of record of RPM Common Shares as of
August 19, 1994 was approximately 25,000.
ITEM 6. SELECTED FINANCIAL DATA.(1)
The following table sets forth selected consolidated financial
data of the Company for each of the five (5) years during the period ended May
31, 1994 which has been restated to include the fiscal 1994 acquisitions of
Dynatron/Bondo Corporation and Stonhard, Inc. The data was derived from the
annual Consolidated Financial Statements of the Company which have been audited
by Ciulla Stephens & Co., independent accountants.
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24
FISCAL YEARS ENDED MAY 31,
--------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(AMOUNTS IN THOUSANDS EXCEPT
PER SHARE DATA)
Net sales 815,598 $768,372 $680,091 $619,613 $571,673
Income before income taxes 88,094 66,136 61,101 54,615 52,071
Net income 52,640 39,498 38,481 37,435 31,853
Return on sales % 6.5 5.1 5.7 6.0 5.6
Primary earnings per share 0.93 0.74 0.73 0.72 0.65
Fully diluted earnings per
share 0.89 0.72 0.72 0.71 0.63
Shareholders' equity 314,476 243,899 233,360 215,471 171,235
Shareholders' equity per share 5.54 4.58 4.42 4.13 3.49
Return on shareholders' equity
% 18.9 16.6 17.1 19.4 19.6
Average shares outstanding 56,717 53,267 52,790 52,219 49,070
Cash dividends paid 27,949 22,370 20,685 18,309 14,993
Cash dividends per share 0.51 0.47 0.44 0.40 0.36
Retained earnings 169,366 146,852 129,846 116,064 102,525
Working capital 226,994 191,872 205,419 142,581 152,576
Total assets 660,838 648,524 623,346 457,779 433,361
Long-term debt 233,039 258,712 273,871 120,250 168,051
Depreciation and amortization 25,905 22,283 20,436 15,589 13,567
<FN>
_______________
(1) For information concerning business acquisitions, see Note A(2) of
Notes to Consolidated Financial Statements, which appear elsewhere in
this Form 10-K Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The information required by this item is included under
Exhibit 99.4 to this Form 10-K Annual Report.
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25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is included under
Exhibit 99.5 to this Form 10-K Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by this item as to the Directors of the
Company appearing under the caption "Election of Directors" in the Company's
Proxy Statement to be used in connection with the Annual Meeting of
Shareholders to be held on October 10, 1994 (the "1994 Proxy Statement") is
incorporated herein by reference. Information required by this item as to the
executive officers of the Company is included in Part I of this Annual Report
on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated herein
by reference to "Executive Compensation" in the 1994 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information required by this item is incorporated herein
by reference to "Share Ownership of Management" in the 1994 Proxy Statement.
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26
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is incorporated herein
by reference to "Election of Directors" in the 1994 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) The following financial statements and schedules and supplementary
quarterly information are filed as part of this Report on Exhibit 99.5
as indicated:
1. Financial Statements.
---------------------
Financial Statements
--------------------
Independent Auditors' Report
Consolidated Balance Sheets - May 31, 1994
and 1993
Consolidated Statements of Income - years
ended May 31, 1994, 1993, and 1992
Consolidated Statements of Shareholders'
Equity - years ended May 31, 1994, 1993
and 1992
Consolidated Statements of Cash Flows -
years ended May 31, 1994, 1993 and 1992
Notes to Consolidated Financial
Statements
Quarterly Information
2. Financial Statement Schedules.
-----------------------------
Schedule
--------
Independent Auditors' Report
Schedule VIII - Valuation and Qualifying
Accounts and Reserves
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Schedule
--------
Schedule IX - Short-term Borrowings
Schedule X - Supplementary Income Statement
Information
All other schedules have been omitted because they are not
applicable or not required, or because the required information is included in
the consolidated financial statements or notes thereto.
3. Exhibits.
---------
See the Index to Exhibits at page E-1 of this Form 10-K.
(b) Reports on Form 8-K.
--------------------
There were no Current Reports on Form 8-K filed during the
fourth fiscal quarter ended May 31, 1994.
-27-
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
RPM, INC.
Date: August 25, 1994 By: /s/ Thomas C. Sullivan
-----------------------------
Thomas C. Sullivan
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Signature and Title
- - -------------------
Chairman of the Board of
/s/ Thomas C. Sullivan Directors and Chief Execu-
- - ------------------------ tive Officer (Principal
Thomas C. Sullivan Executive Officer)
/s/ James A. Karman President and Chief Operating
- - ------------------------ Officer and a Director
James A. Karman
/s/ Frank C. Sullivan Vice President and Chief
- - ------------------------ Financial Officer (Principal
Frank C. Sullivan Financial Officer)
/s/ Glenn R. Hasman Vice President-Administration
- - ------------------------ (Principal Accounting Officer)
Glenn R. Hasman
/s/ Edward B. Brandon Director
- - ------------------------
Edward B. Brandon
/s/ Lorrie Gustin Director
- - ------------------------
Lorrie Gustin
/s/ Roy H. Holdt Director
- - ------------------------
Roy H. Holdt
/s/ E. Bradley Jones Director
- - ------------------------
E. Bradley Jones
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29
/s/ Donald K. Miller Director
- - -------------------------
Donald K. Miller
/s/ John H. Morris, Jr. Executive Vice President
- - ------------------------- and a Director
John H. Morris, Jr.
/s/ Kevin O'Donnell Director
- - -------------------------
Kevin O'Donnell
/s/ William A. Papenbrock Director
- - -------------------------
William A. Papenbrock
/s/ Stephen Stranahan Director
- - -------------------------
Stephen Stranahan
Date: August 25, 1994
373/06821CIF.458
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RPM, INC.
EXHIBIT INDEX
Exhibit No. Description
- - ----------- -----------
3.1 Amended Articles of Incorporation, as
amended . . . . . . . . . . . . . . . . . . . . . (A)(B)(C)
3.2 Amended Code of Regulations . . . . . . . . . . . (D)
4.1 Specimen Certificate of Common Shares, without
par value, of RPM, Inc. . . . . . . . . . . . . . (E)
4.2 Specimen LYONs Certificate. . . . . . . . . . . . (C)
4.3 Credit Agreement, dated as of December 14, 1993,
by and between RPM, Inc., RPOW (France) S.A., RPM
Europe B.V., Radiant Color, N.V., Credit Lyonnais
Chicago Branch, Credit Lyonnais Cayman Island
Branch and Credit Lyonnais Belguim. . . . . . . . .
4.4 Installment Sale Agreement, dated as of
October 15, 1979, by and between Department
of Community Affairs and Economic
Development and Gates Engineering
Company, Inc. . . . . . . . . . . . . . . . . . . (F)
4.4.1 Indenture of Trust and Mortgage, dated as
of October 15, 1979, from Department of
Community Affairs and Economic Development
to the Bank of Delaware, as
Trustee . . . . . . . . . . . . . . . . . . . . . (F)
4.5 Credit Facility, dated as of June 23, 1994,
by and among RPM, Inc., National City Bank
and The First National Bank of Chicago, as
Co-Agents, and The Chase Manhattan Bank
(National Association), as Administrative
Agent . . . . . . . . . . . . . . . . . . . . . . (G)
E-1
31
Exhibit No. Description
- - ----------- -----------
4.6 Indenture, dated as of September 15, 1992,
between RPM, Inc. and The First National
Bank of Chicago, as trustee, with respect
to the LYONs . . . . . . . . . . . . . . . (C)
*10.1 Employment Agreement, dated as of July 22,
1981, by and between RPM, Inc. and
Thomas C. Sullivan, Chairman of the Board
and Chief Executive Officer . . . . . . . (H)
*10.1.1 Form of Amendment to Employment Agreement,
dated as of July 20, 1994, by and between
RPM, Inc. and Thomas C. Sullivan, Chairman
of the Board and Chief Executive Officer .
*10.2 Employment Agreement, dated as of
July 22, 1981, by and between RPM, Inc. and
James A. Karman, President
and Chief Operating Officer . . . . . . . . (H)
*10.2.1 Form of Amendment to Employment Agreement,
dated as of July 20, 1994, by and between
RPM, Inc. and James A. Karman, President
and Chief Operating Officer . . . . . . .
*10.3 Employment Agreement, dated as of July 15,
1992, by and between RPM, Inc. and Frank C.
Sullivan, Vice President and Chief
Financial Officer . . . . . . . . . . . . (I)
*10.4 Form of Employment Agreement entered into
by and between RPM, Inc. and each of
John H. Morris, Jr., Executive Vice
President, Richard E. Klar, Vice President
and Treasurer, Paul A. Granzier, Vice
President, General Counsel and Secretary,
and Glenn R. Hasman, Vice President -
Administration . . . . . . . . . . . . . . (J)
E-2
32
Exhibit No. Description
- - ----------- -----------
*10.4.1 Form of Amendments to Employment
Agreements, dated as of July 20, 1994, by
and between RPM, Inc. and each of John H.
Morris, Jr., Executive Vice President,
Richard E. Klar, Vice President and
Treasurer, Paul A. Granzier, Vice
President, General Counsel and Secretary,
Glenn R. Hasman, Vice President-
Administration, and Frank C. Sullivan, Vice
President and Chief Financial Officer . . . .
*10.5 RPM, Inc. 1979 Stock Option Plan and form
of Stock Option Agreements used in connection
therewith . . . . . . . . . . . . . . . . . . (A)(B)(K)
*10.6 RPM, Inc. 1989 Stock Option Plan and form
of Stock Option Agreements to be used in
connection therewith . . . . . . . . . . . . (E)(L)
*10.7 RPM, Inc. Retirement Savings Trust and
Plan . . . . . . . . . . . . . . . . . . . . (J)
*10.8 RPM, Inc. Benefit Restoration Plan . . . . . (L)
*10.9 RPM, Inc. Board of Directors' Deferred
Compensation Agreement, as amended and
restated . . . . . . . . . . . . . . . . . .
*10.10 RPM, Inc. Deferred Compensation Plan
for Key Employees . . . . . . . . . . . . . .
11.1 Computation of Net Income per Common Share .
21.1 Subsidiaries of the Company . . . . . . . . .
23.1 Consent of Independent Certified Public
Accountants . . . . . . . . . . . . . . . . .
*99.1 Executive Risk Policy . . . . . . . . . . . . (J)
*99.2 Form of Indemnification Agreement entered
into by and between the Company and each of
its Directors and Executive Officers . . . . (L)
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33
Exhibit No. Description
- - ----------- -----------
99.3 Part II, Legal Proceedings,
of the Company's Quarterly Reports on
Form 10-Q for the quarters ended August 31,
1993, November 30, 1993 and February 28,
1994 . . . . . . . . . . . . . . . . . . . .
99.4 Management's Discussion and Analysis of
Results of Operation and Financial
Condition . . . . . . . . . . . . . . . . .
99.5 Financial Statements and Schedules of RPM,
Inc. listed under Items 14(a)(1) and
14(a)(2) . . . . . . . . . . . . . . . . . .
<FN>
- - ------------------------------
*Management contract or compensatory plan or arrangement identified
pursuant to Item 14(c) of this Form 10-K.
(A) Incorporated herein by reference to the appropriate exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1984.
(B) Incorporated herein by referenced to the appropriate exhibit to
the Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1987.
(C) Incorporated herein by reference to the appropriate exhibit to
the Company's Form S-3 Registration Statement (Reg. No. 33-50868).
(D) Incorporated herein by reference to the appropriate exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1988.
(E) Incorporated herein by reference to the appropriate exhibit to
the Company's Registration Statement on Form S-3 (Reg. No. 33- 39849).
(F) Incorporated herein by reference to the appropriate exhibit to the
Company's Quarterly Report on Form 10-Q for the three-months ended November 30,
1979.
(G) Incorporated herein by reference to the appropriate exhibit to the
Company's Current Report on Form 8-K dated as of June 28, 1994.
(H) Incorporated herein by reference to the appropriate exhibits to
the Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1981.
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34
(I) Incorporated herein by reference to the appropriate exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1992.
(J) Incorporated herein by reference to the appropriate exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1989.
(K) Incorporated herein by reference to the appropriate exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1982.
(L) Incorporated herein by reference to the appropriate exhibit to
the Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1991.
373/06821CIF.458
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