SEC Document


     Available-For-Sale Securities  
(In thousands)    Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
     Fair Value
(Net Carrying
Amount)
 

May 31, 2016

           

Equity securities:

           

Stocks - foreign

   $ 5,051          $ 439          $ (247)          $ 5,243      

Stocks - domestic

     27,717            3,831            (911)            30,637      

Mutual funds - foreign

     35,903            802            (4,357)            32,348      

Mutual funds - domestic

     60,354            99            (4,587)            55,866      

Total equity securities

     129,025            5,171            (10,102)            124,094      

Fixed maturity:

           

U.S. treasury and other government

     21,704            214            (80)            21,838      

Corporate bonds

     887            137            -             1,024      

Total fixed maturity securities

     22,591            351            (80)            22,862      

Total

   $   151,616          $       5,522          $   (10,182)          $   146,956      

 

Marketable securities, included in other current and long-term assets totaling $89.5 million and $75.0 million at May 31, 2017, respectively, and included in other current and long-term assets totaling $74.2 million and $72.8 million at May 31, 2016, respectively, are composed of available-for-sale securities and are reported at fair value. We carry a portion of our marketable securities portfolio in long-term assets since they are generally held for the settlement of our general and product liability insurance claims processed through our wholly owned captive insurance subsidiaries.

Marketable securities are composed of available-for-sale securities and are reported at fair value. Realized gains and losses on sales of investments are recognized in net income on the specific identification basis. Changes in the fair values of securities that are considered temporary are recorded as unrealized gains and losses, net of applicable taxes, in accumulated other comprehensive income (loss) within stockholders’ equity. Other-than-temporary declines in market value from original cost are reflected in investment income, net in the period in which the unrealized losses are deemed other than temporary. In order to determine whether other-

than-temporary declines in market value have occurred, the duration of the decline in value and our ability to hold the investment are considered in conjunction with an evaluation of the strength of the underlying collateral and the extent to which the investment’s amortized cost or cost, as appropriate, exceeds its related market value. During May 2017, we made the decision to shift a portion of our investments away from active equity portfolio management and into index funds, and from time to time, we may make additional changes to our investment portfolio and its management.

Gross gains realized on sales of investments were $12.6 million, $6.9 million and $8.8 million for the years ended May 31, 2017, 2016 and 2015, respectively. During fiscal 2017, 2016 and 2015, we recognized gross realized losses on sales of investments of $4.4 million, $0.4 million and $0.1 million, respectively. During fiscal 2017 and 2016, we recognized losses of approximately $0.4 million and $3.8 million, respectively, for securities deemed to have other-than-temporary impairments. During fiscal 2015, such losses were insignificant. These amounts are included in investment (income), net in the Consolidated Statements of Income.

 

 

Summarized below are the securities we held at May 31, 2017 and May 31, 2016 that were in an unrealized loss position and that were included in accumulated other comprehensive income (loss), aggregated by the length of time the investments had been in that position:

 

     May 31, 2017             May 31, 2016  
(In thousands)    Fair Value      Gross
Unrealized
Losses
            Fair Value      Gross
Unrealized
Losses
 

Total investments with unrealized losses

   $   59,987            $    (3,505)             $     89,360            $    (10,182)      

Unrealized losses with a loss position for less than 12 months

     40,854            (2,983)               41,762            (4,856)      

Unrealized losses with a loss position for more than 12 months

     19,133            (522)               47,598            (5,326)      

 

We have reviewed all of the securities included in the table above and have concluded that we have the ability and intent to hold these investments until their cost can be recovered, based upon the severity and duration of the decline. Therefore, we did not recognize any other-than-temporary impairment losses on these investments. The unrealized losses generally relate to investments whose fair values at May 31, 2017 were less than 15% below their original cost. From time to time, we may experience significant volatility in general economic and market conditions. If we were to experience unrealized losses that were to continue for longer periods of time, or arise to more significant levels of unrealized losses within our portfolio of investments in marketable securities in the future, we may recognize additional other-than-temporary impairment losses. Such potential losses could have a material impact on our results of operations in any given reporting period. As such, we continue to closely evaluate the status of our investments and our ability and intent to hold these investments.

The net carrying values of debt securities at May 31, 2017, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.

 

(In thousands)    Amortized Cost      Fair Value      

Due:

     

Less than one year

     $      4,618          $ 4,617      

One year through five years

     13,894            13,824      

Six years through ten years

     3,149            3,152      

After ten years

     1,221            1,323      
       $    22,882          $     22,916      
 

 

44    RPM International Inc. and Subsidiaries


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