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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, 1995
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. ___
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As of August 15, 1995, 56,967,191 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 15, 1995) was approximately
$1,102,561,080. For purposes of this information, the 1,839,137 outstanding
Common Shares which were owned beneficially as of August 15, 1995 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 12,
1995 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, 1995.
_______________
(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. RPM expects to
continue its acquisition program, although there is no assurance that any
acquisitions will be made.
DRYVIT. As part of this acquisition program, on July 24, 1995, the Company
entered into a Plan and Agreement of Merger (the "Merger Agreement") with
Narragansett/DSI Acquisition Co., Inc., a Delaware corporation ("NDSI"), and
NDSI's securityholders. Pursuant to the Merger Agreement the Company agreed to
acquire NDSI through the merger (the "Merger") of the Company's wholly owned
subsidiary, RPM of Delaware, Inc., a Delaware corporation, with and into NDSI,
whereby NDSI would become a wholly owned subsidiary of the Company. The
completion of the Merger is subject to customary conditions, including
applicable governmental approvals, and the concurrent Securities and Exchange
Commission registration for resale of the 3,200,000 Common Shares to be issued
at the closing of the Merger.
NDSI is a non-operating holding company with one direct wholly owned
operating subsidiary, Dryvit Systems, Inc., a Rhode Island corporation
("Dryvit"). Dryvit manufactures, distributes and markets insulated, exterior
wall materials which are used in both new and retrofit construction.
NOTE OFFERING. On June 20, 1995 the Company sold $150 million aggregate
principal amount of 7.0% Senior Notes Due 2005 (the "Notes") pursuant to a
Purchase Agreement dated as of June 15, 1995 (the "Purchase Agreement"), by and
among the Company, and Chase Securities, Inc. and Bear, Stearns & Co., Inc.
(the "Initial Purchasers"). The Initial Purchasers resold the Notes in
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transactions not requiring registration under the Securities Act of 1933, as
amended (the "Securities Act"). Pursuant to the terms of the Purchase
Agreement the Company is obligated to undertake a registered exchange offer for
the Notes under the Securities Act and to complete such offer in November 1995.
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 100 countries and
operates manufacturing facilities in 48 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; RUST-OLEUM 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/POLLY 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, 1995 accounted
for approximately 11.6% 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, Singapore, 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.
Renewal of these registrations is done 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. Renewal of these registrations is done 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, STONLUX, 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.
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 1995,
1994 and 1993, the Company invested
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approximately $12.3 million, $11.1 million and $10.0 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 4.1 million square feet,
devoted to manufacturing, assembly and storage. Of the approximately 4.9
million square feet occupied, 4.0 million square feet are owned and 900,000
square feet are occupied under operating leases. The Company's facilities of
100,000 square feet or larger, as of August 1, 1995, are set forth in the table
below.
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Approximate
Square Feet
Type of of Leased or
Location Facility Floor Space Owned
------------ ------------ ----------- ---------------
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
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
Fairfield, Warehouse 126,000 Owned
Ohio
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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<FN>
(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
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June 1, 1995 the outstanding balance of such indebtedness was $1,650,000.
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.
ITEM 3. LEGAL PROCEEDINGS.
Bondex International, Inc., a wholly owned subsidiary of the
Company ("Bondex"), was dismissed with prejudice from nine asbestos-related
bodily injury lawsuits which had been filed in the Court of Common Pleas,
Philadelphia County, PA. The dismissals resulted from the inability of
plaintiffs to produce evidence of use of or exposure to any Bondex
asbestos-containing product. With the addition of 83 newly-filed cases, there
are currently pending against Bondex a total of 400 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 of
these cases 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, 1994, and as updated in the Company's
Quarterly Report on Form 10-Q for the quarter ended November 30, 1994,
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-CI-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 and the South
Texas Nuclear Plant. Several supplemental petitions have been filed in Bexar
County for the purpose of adding other spouses and children of the worker
plaintiffs, bringing the total number of Bexar County plaintiffs to 10,556.
Another suit with virtually identical allegations was filed on December 29,
1993
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in Rusk County, Texas. That suit, Cause No. 93-470; MARY GUNN, ET AL. V.
SOUTHERN IMPERIAL COATINGS CORP., 4th District Court, Rusk County Texas,
involved 201 worker plaintiffs and 128 spouses. All of the suits allege bodily
injury as a result of exposure to defendants' products. The litigation is
continuing in the discovery stage. With respect to the Bexar County cases, the
court has indicated that two summary jury trials, involving 10 plaintiffs in
each trial, will occur within the next several months (although no specific
dates have been scheduled). 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 Annual Report on Form
10-K for the fiscal year ended May 31, 1994, in September, 1991, Our Lady of
the Lake Hospital, Inc. ("OLOL") filed suit 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 the 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"); claimed that the
product was not fit for its intended purpose, claimed fraud, breach of
contract, breach of warranty and product liability and sought punitive damages
and attorneys fees. In July, 1995, OLOL filed a motion seeking leave of court
to further amend its petition and allow it to make additional allegations of
fraud, concealment, misrepresentation, failure to warn, and breach of contract;
claimed damages from the presence of chlorides and amended its claim for
punitive damages, attorneys fees, and interest. 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.
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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 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 Annual Report on Form
10-K for the fiscal year ended May 31, 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 totaling 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
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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, 1994, 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 has arranged for the performance of a groundwater cleanup
response action. 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.
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1994, 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
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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 as 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 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 are scheduled.
It is anticipated that soil vapor extraction, if approved as a remediation
method, will not cost more than what 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. VS. 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 Decree 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
was dismissed as to all parties in January 1995 based upon certain changes in
the law and a reassessment of the strength of the case against the named
defendants by Chrysler Corporation, which paid all legal costs for the action.
Based upon a July 14, 1995 decision of the United States Court
of Appeals for the Sixth Circuit in UNITED SATES OF AMERICA VS. CORDOVA
CHEMICAL COMPANY, ET AL., Case No. 92-2288, the Company believes it has no
liability under CERCLA with respect to either the Springfield Township Site or
the Rose Township Site. It is anticipated, however, that the decision will be
appealed by the United States. In any event, the Company believes that the
ultimate resolution of these matters will not have a material adverse effect on
the Company's financial position or results of operations.
-14-
15
As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1994, Mohawk Finishing Products, Inc.
("Mohawk") and Westfield Coatings Corporation ("Westfield"), both wholly owned
subsidiaries of the Company, have been 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 reduced volumetric share of 0.11118% of the
waste sent to the SRS Site and Westfield was assigned a reduced volumetric
share of 0.89440%. The PRPs have not as yet agreed to any final allocation
formula, whether based on volume or otherwise. The EPA recently completed an
early DE MINIMIS settlement with almost 1,000 PRPs who had sent less than
10,000 gallons to the SRS Site. Neither Mohawk nor Westfield qualified for
that settlement. To date, the EPA and the State of Connecticut have expended
in excess of $5 million in connection with the SRS Site but the final remedial
action has not been selected. Several hundred PRPs, including Mohawk and
Westfield, have consented to an administrative order to perform a non-time
critical removal action to contain contaminated water in the shallow aquifer at
the SRS Site. The EPA is currently negotiating with the PRPs to perform both
the Remedial Investigation and Feasibility Study for the SRS Site and a second
non-time critical removal action to contain contamination in the deep bedrock
aquifer.
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 Site") on the basis that process wastes from the SRS Site were
sent to the Landfill Site prior to October 1967. The EPA has not issued a
volumetric list for the Landfill Site, although it has issued a volumetric list
of PRPs who sent materials to the SRS Site prior to October 1967. Westfield's
share on that list is .90247%. In September 1994, the EPA issued a Record of
Decision which selected a source control remedy that consists of installation
of a cap on the Landfill Site together with a gas collection system. The
estimated cost of the source control remedy is $16.1 million. The EPA has
deferred to a second operable unit the issue of whether to actively remediate
groundwater at the Landfill Site. The EPA and the PRPs are currently engaged
in mediation in an attempt to reach a settlement with respect to response
costs.
The Company believes that the ultimate resolution of the SRS
Site and the Landfill Site matters 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, 1994, the Testor
-15-
16
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 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, which also provided for reimbursement of 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. Testor made a payment toward Phase II remediation costs on
February 16, 1994 in the sum of $206,015. A new levy has been authorized by
the Executive Committee of the PRP group which will be payable in approximately
August 1995. Although the portion to be paid by Testor has not been finalized,
as there may be a change in Testor's percentage to account for new members in
the Settlors' Coalition, it is believed that Testor's share will be
approximately $34,500.
The most recent future cost estimates provided by the
environmental contractor working on behalf of the PRPs have established a range
of $17.8 million to $26.5 million for future costs at the Acme Site, including
a 30% contingency over the actual current cost estimates. These amounts would
be payable through the year 2026, although the costs to be incurred through
1997 for capital expenditures account for nearly half of the projected costs.
Testor's share will be 4.5%, subject to change if new members are added to the
Settlor's Coalition or present members withdraw.
Testor filed a declaratory judgment action against its primary
and excess insurers which had issued comprehensive general liability (CGL
policies) over an interval from 1962 through 1986, seeking determination of the
carriers' duty to defend and indemnify Testor in connection with the Acme Site.
That action, THE TESTOR CORPORATION V. CONTINENTAL CASUALTY COMPANY, ET AL., is
pending in the Circuit Court of the 17th Judicial Circuit, Winnebago County,
Illinois, bearing docket number 87 MR 69. Recently Testor and the insurers
reached an agreement in principle to settle the litigation. Subject to
execution of releases and related settlement documents, the insurers have
agreed to pay Testor $2.2 million to compensate Testor for past response costs
incurred and for Testor' 4.5% share of Phase II costs to be incurred through
the year 2026. Upon finalization of the settlement agreement, anticipated to
occur in September 1995, the declaratory judgment action will be dismissed.
-16-
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As previously reported in the Company's Annual Report on Form
10-K for the fiscal year ended Mary 31, 1994, the EPA, in November 1979,
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 I") and 5900 Industrial Highway, Gary, Indiana
("MIDCO II") (collectively, the MIDCO Sites"). The Complaint was subsequently
amended in January 1984 to join Rust-Oleum Corporation, a wholly owned
subsidiary of the Company ("Rust-Oleum"), and other entities as additional
defendants. Rust-Oleum, one of approximately 130 identified PRPs, is alleged
to be associated with the MIDCO Site 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. 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 year 2002, with monitoring continuing for an undetermined period. Total
remediation and monitoring costs are currently estimated to be $33 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 20 other PRPs in a voluntary cleanup under Phase I and
Phase II Participation Agreements 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 issued an Amended
Record of Decision on September 13, 1994 regarding the Final Site Remedy and an
Amended Unilateral Administrative Order to Rust-Oleum and the other
participating PRPs on December 27, 1994 to undertake the Final Site Remedy.
Rust-Oleum and eighteen other PRPs have entered into a Final Participation
Agreement for Final Remedial Action at the Ninth Avenue Site. Rust-Oleum's
allocation of cost is
-17-
18
currently 6.048%, with approximately $500,000 remaining to be paid, 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. Rust-Oleum has provided financial
assurance for its share of the Final Site Remedy in the form of a Letter of
Credit.
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.
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 15, 1995 are as follows:
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Position and
Offices with
Name Age the Company
---- --- ------------
Thomas C. Sullivan 58 Chairman of the Board and Chief Executive Officer
James A. Karman 58 President and Chief Operating Officer
John H. Morris, Jr. 53 Executive Vice President
Richard E. Klar 62 Vice President and Treasurer
Paul A. Granzier 68 Vice President, General Counsel and Secretary
Glenn R. Hasman 41 Vice President - Administration
Frank C. Sullivan 34 Vice President and Chief Financial Officer
Charles R. Brush 59 Vice President - Environmental Affairs
Keith R. Smiley 33 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, 2000. 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
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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, 2000.
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, 1996.
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, 1996.
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, 1996.
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, 1996.
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 from 1985 to 1986 and Harris Bank from
1983 to 1985. Mr. Sullivan is employed
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as Vice President and Chief Financial Officer under an employment agreement for
a period ending July 31, 1996. 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 of 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 associated with
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 1995 High Low Per Share
----------- ---- --- -------------
1st Quarter $18-1/4 $16-1/4 $ 0.13
2nd Quarter 19-5/8 17-1/2 0.14
3rd Quarter 19-1/4 17-3/8 0.14
4th Quarter 20-7/8 18-1/8 0.14
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
<FN>
Source: The Wall Street Journal
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
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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 15, 1995 was approximately 31,027.
ITEM 6. SELECTED FINANCIAL DATA.(1)
The following table sets forth selected consolidated financial
data of the Company for each of the five years during the period ended May 31,
1995 including the fiscal 1994 acquisitions of Dynatron/Bondo Corporation and
Stonhard, Inc., which were accounted for on a pooling-of-interests basis. 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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23
FISCAL YEARS ENDED MAY 31,(1)
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(AMOUNTS IN THOUSANDS
EXCEPT PER SHARE DATA)
Net sales $1,016,954 $815,598 $768,372 $680,091 $619,613
Income before income taxes 106,857 88,094 66,136 61,101 54,615
Net income 61,099 52,640 39,498 38,481 37,435
Return on sales % 6.0 6.5 5.1 5.7 6.0
Primary earnings per share 1.07 0.93 0.74 0.73 0.72
Fully diluted earnings per
share 1.01 0.89 0.72 0.72 0.71
Shareholders' equity 347,591 314,476 243,899 233,360 215,471
Shareholders' equity per
share 6.07 5.54 4.58 4.42 4.13
Return on shareholders'
equity % 18.5 18.9 16.6 17.1 19.4
Average shares outstanding 57,243 56,717 53,267 52,790 52,219
Cash dividends paid 31,259 27,949 22,370 20,685 18,309
Cash dividends per share
0.55 0.51 0.47 0.44 0.40
Retained earnings 199,206 169,366 146,852 129,846 116,065
Working capital 270,226 230,512 191,872 205,419 142,581
Total assets 959,140 660,838 648,524 623,346 457,779
Long-term debt 406,375 233,039 258,712 273,871 130,800
Depreciation and
amortization 36,946 25,905 22,283 20,436 15,589
_______________
<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 99.3 to this Form 10-K Annual Report.
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24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is included under
Exhibit 99.4 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 12, 1995 (the "1995 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 1995 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 Principal Holders and Management" in the 1995
Proxy Statement.
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25
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is incorporated herein
by reference to "Election of Directors" in the 1995 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 99.4
as indicated:
1. Financial Statements.
--------------------
Financial Statements
--------------------
Independent Auditors' Report
Consolidated Balance Sheets - May 31, 1995
and 1994
Consolidated Statements of Income - years
ended May 31, 1995, 1994 and 1993
Consolidated Statements of Shareholders'
Equity - years ended May 31, 1995, 1994
and 1993
Consolidated Statements of Cash Flows -
years ended May 31, 1995, 1994 and 1993
Notes to Consolidated Financial
Statements
Quarterly Information
2. Financial Statement Schedules.
-----------------------------
Schedule
--------
Independent Auditors' Report
Schedule II - Valuation and Qualifying
Accounts and Reserves
All other schedules have been omitted because they are not
applicable or not required, or because the required information
-25-
26
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, 1995.
-26-
27
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 24, 1995 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/ Max D. Amstutz Director
-----------------------
Max D. Amstutz
/s/ Edward B. Brandon Director
-----------------------
Edward B. Brandon
/s/ Lorrie Gustin Director
-----------------------
Lorrie Gustin
/s/ Roy H. Holdt Director
-----------------------
Roy H. Holdt
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28
/s/ E. Bradley Jones Director
-----------------------
E. Bradley Jones
/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 24, 1995
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29
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 Belgium . . . . . . . . . . . . . . . . . . . . . . . . . . . . (F)
4.4 Specimen Note Certificate for 7.0% Senior
Exchange Notes Due 2005 . . . . . . . . . . . . . . . . . . . . . . . . . (G)
4.5 Specimen Note Certificate for 7.0% Senior
Notes Due 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (G)
4.6 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (H)
4.7 Indenture, dated as of June 1, 1995,
between RPM, Inc. and The First National
Bank of Chicago, as trustee, with respect
to the 7.0% Senior Notes Due 2005 . . . . . . . . . . . . . . . . . . . . (G)
4.8 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)
E-1
30
*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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (I)
*10.1.1 Form of Amendment to Employment Agreement,
dated as of July 18, 1995, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (I)
*10.2.1 Form of Amendment to Employment Agreement,
dated as of July 18, 1995, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (J)
*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 . . . . . . . . . . . . . . . . . (K)
*10.4.1 Form of Amendments to Employment Agreements,
dated as of July 18, 1995, 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) (L)
*10.6 RPM, Inc. 1989 Stock Option Plan and form of
Stock Option Agreements to be used in
connection therewith . . . . . . . . . . . . . . . . . . . . . . . . . . (E) (M)
*10.7 RPM, Inc. Retirement Savings Trust and
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (K)
E-2
31
*10.8 RPM, Inc. Benefit Restoration Plan . . . . . . . . . . . . . . . . . . . (M)
*10.9 RPM, Inc. Board of Directors' Deferred
Compensation Agreement, as amended and
restated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (N)
*10.10 RPM, Inc. Deferred Compensation Plan
for Key Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . (N)
11.1 Computation of Net Income per Common Share . . . . . . . . . . . . . . .
21.1 Subsidiaries of the Company . . . . . . . . . . . . . . . . . . . . . . .
23.1 Consent of Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27.1 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . . .
*99.1 Executive Risk Policy . . . . . . . . . . . . . . . . . . . . . . . . . . (K)
*99.2 Form of Indemnification Agreement entered
into by and between the Company and each of
its Directors and Executive Officers . . . . . . . . . . . . . . . . . . (M)
99.3 Management's Discussion and Analysis of
Results of Operation and Financial
Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99.4 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).
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32
(F) 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,
1994.
(G) Incorporated herein by reference to the appropriate exhibit to
the Company's Registration Statement on Form S-4 (Reg. No. 33-61541).
(H) Incorporated herein by reference to the appropriate exhibit to
the Company's Current Report on Form 8-K dated as of June 28, 1994.
(I) 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.
(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,
1992.
(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,
1989.
(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,
1982.
(M) 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.
(N) 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,
1994.
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