SEC Document


NOTE K — LEASES

We lease certain property, plant and equipment under long-term operating lease agreements, some of which provide for increased rental payments based upon increases in the cost-of-living index. The following table illustrates our future minimum lease commitments under all non-cancelable lease agreements, for each of the next five years and in the aggregate, as of May 31, 2017:

 

May 31,        
(In thousands)       

2018

   $ 55,836          

2019

     43,327          

2020

     29,873          

2021

     21,514          

2022

     16,031          

Thereafter

     59,610          

Total Minimum Lease Commitments

   $   226,191          

Total rental expense for all operating leases amounted to $61.3 million, $57.5 million and $53.8 million for the fiscal years ended May 31, 2017, 2016 and 2015, respectively.

NOTE L — PENSION PLANS

We sponsor several pension plans for our employees, including our principal plan (the “Retirement Plan”), which is a non-contributory defined benefit pension plan covering substantially all domestic non-union employees. Pension benefits are provided for certain domestic union employees through separate plans. Employees of our foreign subsidiaries receive pension coverage, to the extent deemed appropriate, through plans that are governed by local statutory requirements.

The Retirement Plan provides benefits that are based upon years of service and average compensation with accrued benefits vesting after five years. Benefits for union employees are generally based upon years of service, or a combination of years of service and average compensation. Our pension funding policy considers contributions in an amount on an annual basis that can be deducted for federal income tax purposes, using a different actuarial cost method and different assumptions from those used for financial reporting. For the fiscal year ending May 31, 2018, we expect to contribute approximately $1.0 million to the retirement plans in the U.S. and approximately $7.0 million to our foreign plans. We elected to accelerate our fiscal 2018 planned contribution to the RPM International Inc. Retirement Plan, and therefore contributed approximately $52.8 million to the plan in May 2017.

 

 

Net periodic pension cost consisted of the following for the year ended May 31:

 

        U.S. Plans         Non-U.S. Plans  
(In thousands)       2017       2016       2015            2017       2016      2015       

Service cost

    $ 37,603     $ 32,808      $ 30,359          $ 4,070     $ 4,061     $ 4,611       

Interest cost

      17,323       17,995        20,119            4,614       5,070       7,184       

Expected return on plan assets

      (25,007     (25,749)        (24,308)           (7,109     (7,571)       (8,611)      

Amortization of:

                

Prior service cost

      217       234        294            (24     (2     39       

Net actuarial losses recognized

      22,160       16,759        13,890            2,150       1,739       2,004       

Curtailment/settlement (gains) losses

      -       87                  904       57          

Net Pension Cost

    $ 52,296     $ 42,134      $ 40,354          $ 4,605     $ 3,354     $ 5,227       

The changes in benefit obligations and plan assets, as well as the funded status of our pension plans at May 31, 2017 and 2016, were as follows:

 

         U.S. Plans          Non-U.S. Plans  
(In thousands)        2017       2016             2017          2016       

Benefit obligation at beginning of year

     $ 589,046       $ 537,465           $ 187,064         $ 191,386       

Service cost

       37,603         32,808             4,070           4,061       

Interest cost

       17,323         17,995             4,614           5,070       

Benefits paid

       (28,587)        (26,932)            (4,977)          (7,078)      

Participant contributions

               933           830       

Plan amendments

               (196)          (349)      

Plan settlements/curtailments

          (272)            (4,546)          (630)      

Actuarial (gains)/losses

       (23,437)        27,982             16,697           1,778       

Acquisitions and transfers

                 

Premiums paid

               (109)          (121)      

Currency exchange rate changes

               (7,666)          (7,883)      

Benefit Obligation at End of Year

     $ 591,948       $ 589,046           $ 195,884         $ 187,064       

Fair value of plan assets at beginning of year

     $ 314,216       $ 327,427           $ 169,464         $ 176,437       

Actual return on plan assets

       44,924         (21,742)            21,216           1,619       

Employer contributions

       106,928         35,735             5,753           6,042       

Participant contributions

               933           830       

Benefits paid

       (28,587)        (26,932)            (4,977)          (7,078)      

Premiums paid

               (109)          (121)      

Plan settlements/curtailments

          (272)            (4,471)          (595)      

Currency exchange rate changes

               (7,881)          (7,670)      

Fair Value of Plan Assets at End of Year

     $ 437,481       $ 314,216           $ 179,928         $ 169,464       

(Deficit) of plan assets versus benefit obligations at end of year

     $ (154,467)      $ (274,830)          $ (15,956)        $ (17,600)      

Net Amount Recognized

     $ (154,467)      $ (274,830)          $ (15,956)        $ (17,600)      

Accumulated Benefit Obligation

     $ 489,918       $ 483,944           $ 183,038         $ 175,394       

 

54    RPM International Inc. and Subsidiaries


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