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RPM Reports Fourth-Quarter And Year-End Results For Fiscal 2013
- Fourth-quarter sales increase 6% over prior year
- Net income for the quarter up 16% over prior year, on an as-adjusted basis
- Fiscal 2013 sales increase 8% over prior year
- Fiscal 2013 net income up 15% over prior year, on an as-adjusted basis
- Free cash flow improves 43%

MEDINA, Ohio, July 22, 2013 /PRNewswire/ -- RPM International Inc. (NYSE: RPM) today reported financial results  for its fiscal 2013 fourth quarter and year ended May 31, 2013, which reflected strong operating performance offset by non-operating adjustments for both the quarter and full year.

Fourth-Quarter Results

On an as-reported basis, fourth-quarter net sales increased 6.3% to $1.17 billion from $1.10 billion.  Consolidated earnings before interest and taxes (EBIT) declined 9.6% to $126.1 million, from $139.5 million a year ago.  As-reported net income for the fourth quarter was $65.4 million, down 20.8% from the $82.6 million reported in the fourth quarter of fiscal 2012. As-reported diluted earnings per share were $0.49, off 22.2% from $0.63 a year ago. 

One-time pre-tax adjustments totaling $42.7 million during the quarter included a $22.5 million write down of RPM's remaining financial investments in Kemrock Industries and Exports Limited in India, which continues to struggle in the face of a difficult Indian economy and significant debt. As of the end of fiscal 2013, RPM has no remaining investment on its books in Kemrock. The second adjustment related to an agreement in principle between RPM's roofing division and the U.S. General Services Administration (GSA), which resulted in a $3.7 million reversal of the third-quarter estimated accrual of $68.8 million and a related $4.5 million restructuring charge. The GSA investigation related to roofing contracts with the GSA, principally between 2002 and 2008. The last adjustment of $19.4 million was for restructuring related write-offs, resulting from two plant closings within the Rust-Oleum Group to better align production capacity with demand and eliminate overhead in its hobby and European businesses.

On an as-adjusted basis, net sales grew 6.3% to $1.17 billion from $1.10 billion in the fiscal 2012 fourth quarter. EBIT grew 11.3%, to $155.2 million from $139.5 million a year ago. As-adjusted net income was up 15.5% to $95.4 million, or $0.72 per diluted share, from $82.6 million, or $0.63 per diluted share, in the fiscal 2012 final period. 

"Our overall operating results for both the quarter and year were strong, especially given the headwinds in Europe and previously reported difficulties in our roofing division," stated Frank C. Sullivan, chairman and chief executive officer. "Net sales, net income and diluted earnings per share experienced significant growth, on an as-adjusted basis, as our consumer segment continued its robust performance and many industrial segment businesses posted gains."

Fourth-Quarter Segment Sales and Earnings

On an as-reported basis, fiscal 2013 fourth-quarter industrial segment sales declined 2.1% to $709.2 million from $724.8 million a year ago. Organic sales declined 5.0% and foreign exchange translation was unfavorable 1.0%, while acquisition growth added 3.9%. As-reported industrial segment EBIT declined 4.7% to $86.1 million from $90.4 million in the prior year. The as-adjusted industrial segment EBIT for the fourth quarter of fiscal 2013 was $91.0 million, up 0.6% from the $90.4 million reported a year ago.

"Most of our North American industrial businesses, particularly those serving the commercial construction markets, performed well in the quarter. We experienced good growth in our flooring, waterproofing, admixture and restoration product lines. Given the deep recession in most of Europe, we are pleased that our industrial units operating there experienced only a modest sales decline. Our North American roofing business struggled, as a result of exiting unprofitable projects during the year, combined with a steep drop in demand from the public sector due to spending constraints attributable to cutbacks by federal, state and local governments," stated Sullivan.

As-reported net sales for RPM's consumer segment grew 22.4% to $461.6 million from $377.0 million in the fiscal 2012 fourth quarter. Organic sales were up 9.6% and foreign exchange translation was unfavorable 0.5%, while acquisition growth added 13.3%. As-reported consumer segment EBIT decreased 3.0% in fiscal 2013 from $60.3 million to $58.5 million, which reflected the impact of facility closings within the Rust-Oleum Group, including a Testors factory in Rockford, Illinois and a factory in Roosendaal, The Netherlands. Both of these actions were taken to eliminate overhead in Rust-Oleum's hobby and European businesses. On an as-adjusted basis, consumer segment EBIT improved 29.2% to $78.0 million from $60.3 million in the fourth quarter of fiscal 2012.

"Our traditional consumer product lines are benefiting from continued gains in market share, along with the ongoing recovery in the North American housing market. Further, our newer consumer products, many of which are sold at price points beyond our traditional lines for both our retail partners and us, continue to enjoy brisk retail take away. The consumer segment also benefited from strong performance by three recently acquired businesses:  Kirker and Synta in fiscal 2013 and Hi-Chem towards the end of fiscal 2012," stated Sullivan.

Cash Flow and Financial Position

For fiscal 2013, cash from operations increased 25.0% to $368.5 million, compared to $294.9 million in fiscal 2012. Capital expenditures during the year were $91.4 million, while depreciation was
$55.7 million. Total debt at the end of fiscal 2013 was $1.37 billion, compared to $1.12 billion at the end of fiscal 2012. RPM's net (of cash) debt-to-total capitalization ratio was 46.2%, compared to 40.3% at May 31, 2012. Free cash flow increased 43.5% in fiscal 2013 to $159.4 million, from $111.1 million a year ago.

"We are comfortable with RPM's capital position.  Free cash flow was very strong and will continue to help fund our acquisition program, internal growth initiatives and a growing cash dividend. In addition, we enhanced our capital structure during the second quarter of fiscal 2013 when we sold $300 million aggregate principal amount of 3.450% Notes due November 15, 2022, thereby lowering the effective average interest rate on our long-term debt from 6.1% to 5.0%. Proceeds from this offering were used to repay a portion of outstanding borrowings under RPM's revolving credit facility. At May 31, 2013, RPM had $1.1 billion in liquidity, including cash and long-term committed available credit, which we believe easily covers financing requirements for any of the acquisition candidates that are on our horizon," Sullivan stated.

Fiscal 2013 Consolidated Sales and Earnings

On an as-reported basis, fiscal 2013 consolidated net sales increased 8.0% to $4.08 billion from $3.78 billion in fiscal 2012. Consolidated EBIT decreased 36.8% to $250.6 million from $396.1 million in fiscal 2012. Net income declined 54.3% to $98.6 million from $215.9 million in fiscal 2012. Diluted earnings per share fell 55.2% to $0.74 from $1.65 a year ago.

Fiscal 2013 Adjustments

Pre-tax adjustments during the 2013 fiscal year included the following:

  • Kemrock Industries and Exports Limited – RPM made an initial equity investment in this Indian manufacturer of fiberglass reinforced composites in 2006. In September 2011, RPM increased its equity ownership above the 20% threshold, requiring RPM to recognize its equity in Kemrock's earnings in RPM's income statement.  As a result, RPM reported a one-time gain of $5.2 million, or $0.04 per diluted share, in the second quarter of fiscal 2012. This rapidly growing business performed well for several years until a declining Indian economy and stock market, combined with significant debt, reversed its fortunes. RPM's one-time adjustments regarding this business in fiscal 2013 included:  a $55.9 million write-down of equity investments in Kemrock, a $13.7 million write-down of a Kemrock convertible bond and a $9.0 million write-down of a past-due receivable.  These fiscal 2013 charges were all non-cash charges, and RPM no longer has any financial exposure to Kemrock. 
  • Building Solutions Group – An adjustment related to an agreement in principle between the roofing division and the GSA resulted in a $3.7 million reversal of the third quarter estimated accrual of $68.8 million.  Other charges included $11.0 million related to closing an unprofitable overseas effort in the roofing division and other restructuring of $4.5 million relating to the GSA investigation. 
  • Performance Coatings Group – Charges include $6.1 million attributable to a strategic repositioning of RPM's existing flooring business in Brazil in light of the Viapol acquisition, which also resulted in a $7.7 million tax benefit.
  • Rust-Oleum Group – The combination of restructuring expenses and inventory write-offs at two plants were $19.5 million.

On an as-adjusted basis, RPM's EBIT grew 7.9% to $421.7 million from $390.9 million in fiscal 2012.  As-adjusted net income increased 14.5% to $241.3 million in fiscal 2013 from $210.7 million a year ago, and as-adjusted earnings per share increased 13.0% to $1.82 per share from $1.61 per share in fiscal 2012. 

Fiscal 2013 Segment Sales and Earnings

On an as-reported basis, sales for RPM's industrial segment increased 4.0% to $2.64 billion from $2.54 billion in fiscal 2012. Organic sales decreased 0.2% and foreign exchange translation was unfavorable 1.5%, with acquisition growth contributing 5.8%. As-reported industrial segment EBIT declined 38.1% to $174.9 million from $282.4 million in fiscal 2012. As-adjusted industrial segment EBIT decreased 0.7% to $275.4 million from $277.2 million in fiscal 2012.

As-reported consumer segment sales for fiscal 2013 increased 16.1% to $1.44 billion from $1.24 billion reported last year. Organic sales increased by 6.6% and acquisition growth added 10.0%, which were partially offset by unfavorable foreign currency translation of 0.5%.  As-reported consumer segment EBIT increased 19.1%, to $190.6 million from $160.1 million a year ago. As-adjusted consumer segment EBIT grew 31.2% to $210.1 million from $160.1 million in fiscal 2012. 

Business Outlook

"We anticipate 5% to 7% growth in consolidated net sales, with the consumer segment trending towards the higher end of the range and the industrial segment trending towards the lower end. Net income is expected to increase 9% to 13%, resulting in diluted earnings per share in the range of $1.98 to $2.05 for fiscal 2014.  This expectation is predicated on continued robust growth within our consumer segment, as a result of continued recovery in the North American housing market, market share gains and market acceptance of new products at higher price points than our traditional consumer product lines. In the industrial segment, we expect modest overall growth, with stronger performances by our businesses serving the North American commercial construction market.  We anticipate that the roofing division and our European businesses will continue to experience deterioration through the first half of fiscal 2014, with improving performance during the second half, resulting in fairly flat year-over-year performance for these businesses," Sullivan stated.

Webcast and Conference Call Information

Management will host a conference call to further discuss these results beginning at 10:00 a.m. EDT today. The call can be accessed by dialing 866-270-6057 or 617-213-8891 for international callers. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.

For those unable to listen to the live call, a replay will be available from approximately 1 p.m. EDT today until 11:59 p.m. EDT on July 29, 2013. The replay can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers. The access code is 49666464. The call also will be available both live and for replay, and as a written transcript, via the RPM web site at www.rpminc.com.  

About RPM

RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services serving both industrial and consumer markets. RPM's industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Universal Sealants and Euco. RPM's consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors. Additional details can be found at www.RPMinc.com and by following RPM on Twitter at www.twitter.com/RPMintl.

For more information, contact Barry M. Slifstein, vice president – investor relations and planning, at 330-273-5090 or bslifstein@rpminc.com.

This press release contains "forward-looking statements" relating to our business.  These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond our control.  As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements.  These uncertainties and factors include (a) global markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital and the effect of changes in interest rates, and the viability of banks and other financial institutions; (b) the prices, supply and capacity of raw materials, including assorted pigments, resins, solvents and other natural gas- and oil-based materials; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our construction and chemicals businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) risks related to the adequacy of our contingent liability reserves; (j) risks and uncertainties associated with the SPHC bankruptcy proceedings; and (k) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended May 31, 2012, as the same may be updated from time to time.  We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

 

CONSOLIDATED STATEMENTS OF INCOME



















IN THOUSANDS, EXCEPT PER SHARE DATA





























































































































AS REPORTED



ADJUSTED (a)









Three Months Ended


Year Ended



Three Months Ended


Year Ended









May 31,


May 31,


May 31,


May 31,



May 31,


May 31,


May 31,


May 31,









2013


2012


2013


2012



2013


2012


2013


2012









(Unaudited)





(Unaudited)



























Net Sales





$  1,170,779


$  1,101,770


$     4,078,655


$   3,777,416



$     1,170,779


$   1,101,770


$    4,081,533


$  3,777,416



Cost of sales





670,505


641,354


2,375,936


2,235,153



666,638


641,354


2,369,528


2,235,153



Gross profit





500,274


460,416


1,702,719


1,542,263



504,141


460,416


1,712,005


1,542,263



Selling, general & administrative expenses





353,896


322,161


1,309,235


1,155,714



349,853


322,161


1,294,604


1,155,714



Estimated loss contingency





(3,712)


-


65,134


-



-


-


-


-



Restructuring expense





20,072


-


20,072


-



-


-


-


-



Interest expense





21,042


18,433


79,846


72,045



21,042


18,433


79,846


72,045



Investment expense (income), net





8,477


(927)


(6,178)


(4,186)



(5,193)


(927)


(19,848)


(4,186)



Other expense (income), net





3,889


(1,230)


57,719


(9,599)



(911)


(1,230)


(4,260)


(4,389)



Income before income taxes





96,610


121,979


176,891


328,289



139,350


121,979


361,663


323,079



Provision for income taxes





28,521


33,399


67,040


94,526



39,419


33,399


105,615


94,526



Net income





68,089


88,580


109,851


233,763



99,931


88,580


256,048


228,553



Less:  Net income attributable to noncontrolling interests




2,711


6,011


11,248


17,827



4,565


6,011


14,708


17,827



Net income attributable to RPM International Inc. Stockholders

$       65,378


$       82,569


$          98,603


$      215,936



$          95,366


$        82,569


$       241,340


$     210,726



























Earnings per share of common stock attributable to























RPM International Inc. Stockholders:























Basic





$           0.49


$           0.63


$              0.75


$            1.65



$              0.72


$            0.63


$             1.83


$           1.61



























Diluted





$           0.49


$           0.63


$              0.74


$            1.65



$              0.72


$            0.63


$             1.82


$           1.61



























Average shares of common stock outstanding - basic 




129,121


128,301


128,956


128,130



129,121


128,301


128,956


128,130



























Average shares of common stock outstanding - diluted




130,021


129,005


129,801


128,717



130,021


129,005


129,801


128,717



























(a)  

Refer to the attached page for a reconciliation of as reported figures to adjusted figures presented above.









































































SUPPLEMENTAL SEGMENT INFORMATION




















IN THOUSANDS





















































AS REPORTED



ADJUSTED (a)









Three Months Ended


Year Ended



Three Months Ended


Year Ended









May 31,


May 31,


May 31,


May 31,



May 31,


May 31,


May 31,


May 31,









2013


2012


2013


2012



2013


2012


2013


2012









(Unaudited)





(Unaudited)



Net Sales:
























Industrial Segment





$     709,229


$     724,759


$     2,635,976


$   2,535,238



$        709,229


$      724,759


$    2,638,854


$  2,535,238




Consumer Segment





461,550


377,011


1,442,679


1,242,178



461,550


377,011


1,442,679


1,242,178




     Total





$  1,170,779


$  1,101,770


$     4,078,655


$   3,777,416



$     1,170,779


$   1,101,770


$    4,081,533


$  3,777,416



























Income Before Income Taxes (b):
























Industrial Segment
























     Income Before Income Taxes (b)





$       83,422


$       89,484


$        164,578


$      278,676



$          88,239


$        89,484


$       265,070


$     273,466




     Interest (Expense), Net (c)





(2,724)


(914)


(10,318)


(3,770)



(2,724)


(914)


(10,318)


(3,770)




     EBIT (d)





$       86,146


$       90,398


$        174,896


$      282,446



$          90,963


$        90,398


$       275,388


$     277,236




Consumer Segment
























     Income Before Income Taxes (b)





$       58,542


$       60,303


$        190,611


$      160,099



$          77,995


$        60,303


$       210,064


$     160,099




     Interest (Expense), Net (c)





24


(33)


(10)


18



24


(33)


(10)


18




     EBIT (d)





$       58,518


$       60,336


$        190,621


$      160,081



$          77,971


$        60,336


$       210,074


$     160,081




Corporate/Other
























     (Expense) Before Income Taxes (b)





$     (45,354)


$      (27,808)


$      (178,298)


$    (110,486)



$        (26,884)


$      (27,808)


$      (113,471)


$    (110,486)




     Interest (Expense), Net (c)





(26,819)


(16,559)


(63,340)


(64,107)



(13,149)


(16,559)


(49,670)


(64,107)




     EBIT (d)





$     (18,535)


$      (11,249)


$      (114,958)


$      (46,379)



$        (13,735)


$      (11,249)


$        (63,801)


$      (46,379)




     Consolidated
























          Income Before Income Taxes (b)





$       96,610


$     121,979


$        176,891


$      328,289



$        139,350


$      121,979


$       361,663


$     323,079




          Interest (Expense), Net (c)





(29,519)


(17,506)


(73,668)


(67,859)



(15,849)


(17,506)


(59,998)


(67,859)




          EBIT (d)





$     126,129


$     139,485


$        250,559


$      396,148



$        155,199


$      139,485


$       421,661


$     390,938



























(a)

Refer to the attached page for a reconciliation of as reported figures to adjusted figures presented above.

(b)  

The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles in the United States (GAAP), to EBIT.

(c)  

Interest (expense), net includes the combination of interest (expense) and investment income/(expense), net.

(d)  

EBIT is defined as earnings (loss) before interest and taxes.  We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure because interest expense is essentially related to corporate acquisitions, as opposed to segment operations.  For that reason, we believe EBIT is also useful to investors as a metric in their investment decisions.  EBIT should not be considered an alternative to, or more meaningful than, operating income as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness and ongoing tax obligations.  Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance.  We also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing.  Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing.  EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results.

























 

 

 

CONSOLIDATED STATEMENTS OF INCOME













RECONCILIATION OF "AS REPORTED" TO "ADJUSTED"













IN THOUSANDS, EXCEPT PER SHARE DATA













































































Three Months Ended May 31, 2013


























AS REPORTED


Adjustments


ADJUSTED











(Unaudited)







Net Sales



$     1,170,779


$              -


$  1,170,779







Cost of sales


670,505


(3,867)


666,638







Gross profit



500,274


3,867

(1)

504,141







Selling, general & administrative expenses


353,896


(4,043)

(2)

349,853







Estimated loss contingency


(3,712)


3,712

(3)

-







Restructuring expense


20,072


(20,072)

(4)

-







Interest expense


21,042




21,042







Investment expense (income), net


8,477


(13,670)

(5)

(5,193)







Other expense (income), net


3,889


(4,800)

(6)

(911)







Income before income taxes


96,610


42,740


139,350







Provision for income taxes


28,521


10,898


39,419







Net income



68,089


31,842


99,931







Less: Net income attributable to noncontrolling interests


2,711


1,854


4,565







Net income attributable to RPM International Inc. Stockholders

$          65,378


$      29,988


$       95,366






















Earnings per share attributable to RPM International Inc. Stockholders:


























Basic



$              0.49


$          0.23


$           0.72







Diluted



$              0.49


$          0.23


$           0.72























(1)

Inventory write downs in conjunction with restructuring at the Rust-Oleum Group (consumer segment); see note (4) below.


(2)

Bad debt write-off for a past due receivable from Kemrock of $4,043 (industrial segment)


(3)

Adjustment to the fiscal 2013 third quarter estimated accrual of $68,846 at the Roofing division for an agreement in principle with the General Services Administration (GSA).  The final expense of $65,134 is comprised of settlement costs and related legal fees (industrial segment).


(4)

Restructuring charges related to rationalizing production at the Rust-Oleum Group, both for Testors and Roosendaal, for $15,586 (Consumer Segment), and restructuring charges at BSG for $4,486 (industrial segment).


(5)

Write-off of Kemrock FCCB convertible bonds issued by Kemrock of $13,670 (non-operating segment).


(6)

Write-off of remaining investment in Kemrock relating to foreign exchange changes.




















Year Ended May 31, 2013


Year Ended May 31, 2012




















AS REPORTED


Adjustments


ADJUSTED


AS REPORTED


Adjustments


ADJUSTED







(Unaudited)




(Unaudited)

Net Sales



$     4,078,655


$        2,878


$  4,081,533


$    3,777,416


$             -


$  3,777,416

Cost of sales


2,375,936


(6,408)


2,369,528


2,235,153




2,235,153

Gross profit



1,702,719


9,286

(7), (1)

1,712,005


1,542,263




1,542,263

Selling, general & administrative expenses


1,309,235


(14,631)

(8), (2)

1,294,604


1,155,714




1,155,714

Estimated loss contingency


65,134


(65,134)

(3)

-







Restructuring expense


20,072


(20,072)

(4)

-







Interest expense


79,846


-


79,846


72,045




72,045

Investment (income), net


(6,178)


(13,670)

(5)

(19,848)


(4,186)




(4,186)

Other expense (income), net


57,719


(61,979)

(9), (6)

(4,260)


(9,599)


5,210

(10)

(4,389)

Income before income taxes


176,891


184,772


361,663


328,289


(5,210)


323,079

Provision for income taxes


67,040


38,575


105,615


94,526




94,526

Net income



109,851


146,197


256,048


233,763


(5,210)


228,553

Less: Net income attributable to noncontrolling interests


11,248


3,460


14,708


17,827




17,827

Net income attributable to RPM International Inc. Stockholders

$          98,603


$    142,737


$     241,340


$       215,936


$      (5,210)


$     210,726
















Earnings per share attributable to RPM International Inc. Stockholders:


























Basic



$              0.75


$          1.08


$           1.83


$             1.65


$        (0.04)


$           1.61

Diluted



$              0.74


$          1.08


$           1.82


$             1.65


$        (0.04)


$           1.61

















(7)

Represents an adjustment for revised cost estimates in the Roofing Division in conjunction with unprofitable contracts outside of North America of $5,419 during the first quarter of fiscal 2013 (industrial segment). 


(8)

Adjustment includes $5,588 in Roofing exit costs and $5,000 of bad debt charges relating to a Kemrock receivable during the first quarter of fiscal 2013 (industrial segment).


(9)

Adjustments include the write-downs of Kemrock investments, including $35,538 at Corporate and $4,735 at RPM's Performance Coatings Group (industrial segment) during the first quarter of fiscal 2013 and an additional $10,819 write-down at Corporate in the second quarter of fiscal 2013. Adjustments also reflect the $6,087 impact of the loss on repositioning of certain industrial segment subsidiaries in Brazil. Included in the loss was the impact of an adjustment for accumulated foreign currency translation losses that were previously recorded as an unrealized foreign exchange loss in the currency translation account as a component of other comprehensive income.




(10)

Adjustment removes the income recognized by the industrial segment related to RPM's equity method investment in Kemrock recognized during the second quarter of fiscal 2012 of $5,210, which included a $4,631 cumulative catch-up. Adjustment excludes approximately $0.4 million of net earnings recognized by the industrial segment for its share of Kemrock's earnings during the third quarter of fiscal 2012.

































 

 

CONSOLIDATED BALANCE SHEETS




IN THOUSANDS











May 31, 2013


May 31, 2012






Assets




Current Assets





Cash and cash equivalents

$             343,554


$             315,968


Trade accounts receivable

816,421


772,048


Allowance for doubtful accounts

(28,904)


(26,507)


Net trade accounts receivable

787,517


745,541


Inventories

548,680


489,978


Deferred income taxes

36,565


18,752


Prepaid expenses and other current assets

169,956


167,080


Total current assets

1,886,272


1,737,319






Property, Plant and Equipment, at Cost

1,128,123


1,050,965


Allowance for depreciation and amortization

(635,760)


(632,133)


Property, plant and equipment, net

492,363


418,832

Other Assets





Goodwill

1,113,831


849,346


Other intangible assets, net of amortization

459,613


345,620


Other

163,447


210,696


Total other assets

1,736,891


1,405,662






Total Assets

$          4,115,526


$          3,561,813






Liabilities and Stockholders' Equity




Current Liabilities





Accounts payable

$             478,185


$             391,467


Current portion of long-term debt

4,521


2,584


Accrued compensation and benefits

154,844


157,298


Accrued loss reserves

27,591


28,880


Other accrued liabilities

262,889


144,911


Total current liabilities

928,030


725,140






Long-Term Liabilities





Long-term debt, less current maturities

1,369,176


1,112,952


Other long-term liabilities

417,160


381,619


Deferred income taxes

46,227


28,119


Total long-term liabilities

1,832,563


1,522,690


   Total liabilities

2,760,593


2,247,830






Stockholders' Equity





Preferred stock; none issued





Common stock (outstanding 132,596; 131,555)

1,326


1,316


Paid-in capital

763,505


742,895


Treasury stock, at cost

(72,494)


(69,480)


Accumulated other comprehensive (loss)

(159,253)


(177,893)


Retained earnings

667,774


686,818


     Total RPM International Inc. stockholders' equity

1,200,858


1,183,656


Noncontrolling interest

154,075


130,327


     Total equity

1,354,933


1,313,983






Total Liabilities and Stockholders' Equity

$          4,115,526


$          3,561,813






 

CONSOLIDATED STATEMENTS OF CASH FLOWS



IN THOUSANDS











Year Ended



May 31,


May 31,



2013


2012






Cash Flows From Operating Activities:




  Net income

$        109,851


$        233,763

  Adjustments to reconcile net income to net




          cash provided by operating activities:




               Depreciation

55,715


51,939

               Amortization

28,029


21,759

               Impairment loss on investment in Kemrock

51,092



               Estimated loss contingency

65,134



               Asset impairment charge

7,416



               Other than temporary impairments on marketable securities

14,279


1,604

               Deferred income taxes

(40,991)


(7,088)

               Stock-based compensation expense

17,145


13,904

               Other 

(2,190)


(6,590)

  Changes in assets and liabilities, net of effect




          from purchases and sales of businesses:




               (Increase) decrease in receivables

(7,639)


980

               (Increase) decrease in inventory

(40,039)


7,115

               Decrease in prepaid expenses and other




                    current and long-term assets

7,045


14,948

               Increase in accounts payable

72,070


13,635

               (Decrease) increase in accrued compensation and benefits

(7,402)


3,016

               (Decrease) in accrued loss reserves

(1,873)


(5,712)

               Increase in other accrued liabilities

28,474


47,508

               Other

12,338


(95,909)

                    Cash From Operating Activities

368,454


294,872

Cash Flows From Investing Activities:




     Capital expenditures

(91,367)


(71,615)

     Acquisition of businesses, net of cash acquired

(397,425)


(163,414)

     Purchase of marketable securities

(106,301)


(69,824)

     Proceeds from sales of marketable securities

103,501


51,415

     Proceeds from sales of assets or businesses

128


2,171

     Investments in unconsolidated affiliates



(31,842)

     Other


14,060


15,787

                    Cash (Used For) Investing Activities

(477,404)


(267,322)

Cash Flows From Financing Activities:




     Additions to long-term and short-term debt

300,902


27,894

     Reductions of long-term and short-term debt

(49,376)


(36,128)

     Cash dividends

(117,647)


(112,153)

     Repurchase of stock

(3,013)


(6,985)

     Other


7,284


9,931

                    Cash Provided By (Used For) Financing Activities

138,150


(117,441)






Effect of Exchange Rate Changes on Cash and 




     Cash Equivalents

(1,614)


(29,152)






Net Change in Cash and Cash Equivalents

27,586


(119,043)






Cash and Cash Equivalents at Beginning of Period

315,968


435,011






Cash and Cash Equivalents at End of Period

$        343,554


$        315,968
















 

SOURCE RPM International Inc.



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