SEC Document

      Non-U.S. Plans                  
(In thousands)    Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
   Significant Other
Inputs (Level 2)
(Level 3)
   Fair Value at
May 31, 2016

Pooled equities

     $ -      $ 70,452      $ -      $ 70,452    

Pooled fixed income

            67,144             67,144    

Foreign bonds

            231             231    

Insurance contracts

                 30,379        30,379    

Mutual funds

            1,214             1,214    

Cash and cash equivalents

       44                              44    


     $           44      $  139,041      $   30,379      $   169,464    

The following table includes the activity that occurred during the years ended May 31, 2017 and 2016 for our Level 3 assets:


         Actual Return on Plan Assets For:         
(In thousands)  

Balance at

Beginning of Period

   Assets Still Held
at Reporting Date
   Assets Sold
During Year
   Purchases, Sales and
Settlements, net (1)
  Balance at
End of Period

Year ended May 31, 2017

  $  30,673        1,096        -        (1,382 )     $       30,387    

Year ended May 31, 2016

  31,669        191        9        (1,196 )       30,673    


(1) Includes the impact of exchange rate changes during the year.


The primary objective for the investments of the Retirement Plan is to provide for long-term growth of capital without undue exposure to risk. This objective is accomplished by utilizing a strategy of equities, fixed income securities and cash equivalents in a mix that is conducive to participation in a rising market, while allowing for adequate protection in a falling market. Our Investment Committee oversees the investment allocation process, which includes the selection and evaluation of investment managers, the determination of investment objectives and risk guidelines, and the monitoring of actual investment performance. In order to manage investment risk properly, Plan policy prohibits short selling, securities lending, financial futures, options and other specialized investments except for certain alternative investments specifically approved by the Investment Committee. The Investment Committee reviews, on a quarterly basis, reports of actual Plan investment performance provided by independent third parties, in addition to its review of the Plan investment policy on an annual basis. The investment objectives are similar for our plans outside of the U.S., subject to local regulations.

The goals of the investment strategy for pension assets include: The total return of the funds shall, over an extended period of time, surpass an index composed of the MSCI World Stock Index (equity), the Barclays Aggregate Bond Index (fixed income), and 30-day Treasury Bills (cash), weighted appropriately to match the asset allocation of the plans. The equity portion of the funds shall surpass the MSCI World Stock Index over a full market cycle, while the fixed income portion shall surpass Barclays Aggregate Bond Index over a full market cycle. The purpose of the core fixed income fund is to increase return in the form of cash flow, provide a hedge against inflation and to reduce the volatility of the fund overall. Therefore, the primary objective

of the core fixed income portion is to match the Barclays Aggregate Bond Index. The purpose of including opportunistic fixed income assets such as, but not limited to, global and high yield securities in the portfolio is to enhance the overall risk-return characteristics of the Fund.

In addition to the defined benefit pension plans discussed above, we also sponsor employee savings plans under Section 401(k) of the Internal Revenue Code, which cover most of our employees in the U.S. We record expense for defined contribution plans for any employer matching contributions made in conjunction with services rendered by employees. The majority of our plans provide for matching contributions made in conjunction with services rendered by employees. Matching contributions are invested in the same manner that the participants invest their own contributions. Matching contributions charged to income were $17.4 million, $16.3 million and $14.9 million for the years ending May 31, 2017, 2016 and 2015, respectively.

We expect to pay the following estimated pension benefit payments in the next five years (in millions): $49.9 in 2018, $51.6 in 2019, $55.7 in 2020, $53.6 million in 2021 and $55.7 in 2022. In the five years thereafter (2023-2027) we expect to pay $293.1 million.


We sponsor several unfunded-health-care-benefit plans for certain of our retired employees as well as post-retirement life insurance for certain key former employees. Eligibility for these benefits is based upon various requirements. The following table illustrates the effect on operations of these plans for the three years ended May 31, 2017:



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

Service cost - Benefits earned during the period

    $ -      $ -        $ -             $   1,097        $   1,061        $   1,173    

Interest cost on the accumulated obligation

      229        235          263               854          832          1,155    

Amortization of:


Prior service (credit)

      (235      (247        (247)                     

Net actuarial (gains) losses

              (136)              230          229          391    

Net Periodic Postretirement (Benefit) Expense

    $ (6    $ (12      $  (120)            $ 2,181        $ 2,122        $ 2,719    


58    RPM International Inc. and Subsidiaries

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