SEC Document


amount for the mandatory purchase of a step-acquisitions, and $3.0 million for fair value adjustments to existing accruals. Additionally during fiscal 2017, we paid approximately $4.2 million for settlements of contingent consideration obligations relating to certain performance milestones that were established in prior periods and achieved during the current period. These amounts are reported in payments of acquisition-related contingent consideration in the Consolidated Statements of Cash Flows.

The carrying value of our current financial instruments, which include cash and cash equivalents, marketable securities, trade accounts receivable, accounts payable and short-term debt approximates fair value because of the short-term maturity of these financial instruments. At May 31, 2017 and May 31, 2016, the fair value of our long-term debt was estimated using active market quotes, based on our current incremental borrowing rates for similar types of borrowing arrangements, which are considered to be Level 2 inputs. Based on the analysis performed, the fair value and the carrying value of our financial instruments and long-term debt as of May 31, 2017 and May 31, 2016 are as follows:

     At May 31, 2017  
(In thousands)   

 

Carrying Value

    

 

Fair Value

 

  Cash and cash equivalents

   $ 350,497          $ 350,497      

  Marketable equity securities

     141,539            141,539      

  Marketable debt securities

     22,916            22,916      

  Long-term debt, including current portion

     2,090,082            2,243,167      
     At May 31, 2016  
(In thousands)    Carrying Value      Fair Value  

  Cash and cash equivalents

   $ 265,152          $ 265,152      

  Marketable equity securities

     124,094            124,094      

  Marketable debt securities

     22,862            22,862      

  Long-term debt, including current portion

     1,639,973            1,769,601      
 

 

NOTE E — BORROWINGS

A description of long-term debt follows:

 

May 31,    2017      2016      
(In thousands)              

Revolving credit facility with a syndicate of banks, through December 5, 2019 (1)

   $ 198,280      $ 199,037      

Unsecured 6.50% senior notes due February 14, 2018 (2)

     249,555        248,940      

Unsecured 6.125% senior notes due October 15, 2019 (3)

     452,778        453,821      

Unsecured $205,000 face value at maturity 2.25% senior convertible notes due December 15, 2020

     193,260        189,265      

Unsecured 3.45% senior notes due November 15, 2022

     298,370        298,067      

Unsecured 5.25% notes due June 1, 2045 (4)

     298,433        245,889      

Unsecured 3.75% notes due March 15, 2027 (5)

     395,638     

Other obligations, including capital leases and unsecured notes payable at various rates of interest due in installments through 2018

     3,768        4,954      
     2,090,082        1,639,973      

Less: current portion

     253,645        4,713      

Total Long-Term Debt, Less Current Maturities

   $   1,836,437      $   1,635,260      

 

(1) Interest was tied to AUD LIBOR at May 31, 2017, and averaged 2.705% for AUD denominated debt ($17,311) and 1.075% on EUR denominated debt ($183,012). Interest was tied to AUD LIBOR at May 31, 2016, and averaged 2.92% for AUD denominated debt ($13,050), 1.075% on EUR denominated debt ($131,692) and 1.544% on our swing-line ($57,139). At May 31, 2017 and 2016, the revolving credit facility is adjusted for debt issuance costs, net of amortization, for approximately $2.0 million and $2.8 million, respectively.

 

(2) The $250.0 million aggregate principal amount of the notes due 2018 is adjusted for the amortization of the original issue discount, which approximated $0.3 million and $0.6 million at May 31, 2017 and 2016, respectively. The original issue discount effectively reduced the ultimate proceeds from the financing. The effective interest rate on the notes, including the amortization of the discount, is 6.704% for both years presented. At May 31, 2017 and 2016, the notes are adjusted for debt issuance costs, net of amortization, for approximately $0.2 million and $0.4 million, respectively.

 

(3) Includes the combination of the October 2009 initial issuance of $300.0 million aggregate principal amount and the May 2011 issuance of an additional $150.0 million aggregate principal amount of these notes. The $300.0 million aggregate principal amount of the notes due 2019 from the initial issuance is adjusted for the amortization of the original issue discount, which approximated $0.1 million and $0.1 million at May 31, 2017 and 2016. The original issue discount effectively reduced the ultimate proceeds from the October 2009 financing. The effective interest rate on the notes issued in October 2009, including the amortization of the discount, is 6.139%. The additional $150.0 million aggregate principal amount of the notes due 2019 issued in May 2011 is adjusted for the unamortized premium received at issuance, which approximated $3.9 million and $5.5 million at May 31, 2017 and 2016, respectively. The premium effectively increased the proceeds from the financing. The effective interest rate on the $150.0 million notes issued in May 2011 is 4.934%. At May 31, 2017 and 2016, the notes are adjusted for debt issuance costs, net of amortization, for approximately $1.1 million and $1.6 million, respectively.

 

(4) The $250.0 million face amount of the notes due 2045 is adjusted for the amortization of the original issue discount, which approximated $1.5 million at May 31, 2017 and 2016. The original issue discount effectively reduced the ultimate proceeds from the financing. The effective interest rate on the notes, including the amortization of the discount, is 5.29%. In March 2017, as a further issuance of the 5.25% notes due 2045, we closed an offering of $50.0 million aggregate principal, which is adjusted for the unamortized premium received at issuance, which approximated $3.1 million at May 31, 2017. The premium effectively increased the proceeds from the financing. The effective interest rate on the $50.0 million notes issued March 2017 is 4.839%. At May 31, 2017 and 2016, the notes are adjusted for debt issuance costs, net of amortization, for approximately $3.2 million and $2.6 million, respectively.

 

(5) The $400.0 million face amount of the notes due 2027 is adjusted for the amortization of the original issue discount and debt issuance cost, net of amortization, which approximated $0.5 million and $3.8 million, respectively, at May 31, 2017. The original issue discount effectively reduced the ultimate proceeds from the financing. The effective interest rate on the notes, including the amortization of the discount, is 3.750%.

The aggregate maturities of long-term debt for the five years subsequent to May 31, 2017 are as follows: 2018 — $253.6 million; 2019 — none; 2020 — $650.8 million; 2021 — $193.3 million; 2022 — none and thereafter $992.4 million. Additionally, at May 31, 2017, we had unused lines of credit totaling $799.1 million.

 

46    RPM International Inc. and Subsidiaries


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