SEC Document

RPM INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

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 August 31, 2017 and May 31, 2017, 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 August 31, 2017 and May 31, 2017 are as follows:

 

 

 

At August 31, 2017

 

(In thousands)

 

Carrying Value

 

 

Fair Value

 

Cash and cash equivalents

 

$

236,191

 

 

$

236,191

 

Marketable equity securities

 

 

123,022

 

 

 

123,022

 

Marketable debt securities

 

 

22,891

 

 

 

22,891

 

Long-term debt, including current portion

 

 

2,122,290

 

 

 

2,270,329

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

NOTE 5 - INVESTMENT (INCOME), NET

Investment (income), net, consists of the following components:

 

 

 

Three Months Ended

 

 

 

August 31,

 

 

August 31,

 

(In thousands)

 

2017

 

 

2016

 

Interest (income)

 

$

(894

)

 

$

(1,140

)

Net (gain) on sale of marketable securities

 

 

(2,861

)

 

 

(2,584

)

Other-than-temporary impairment on securities

 

 

-

 

 

 

186

 

Dividend (income)

 

 

(698

)

 

 

(300

)

Investment (income), net

 

$

(4,453

)

 

$

(3,838

)

 

 

NOTE 6 - OTHER (INCOME) EXPENSE, NET

Other expense (income), net, consists of the following components:

 

 

 

Three Months Ended

 

 

 

August 31,

 

 

August 31,

 

(In thousands)

 

2017

 

 

2016

 

Royalty expense, net

 

$

268

 

 

$

756

 

(Income) related to unconsolidated equity affiliates

 

 

(273

)

 

 

(214

)

Other (income) expense, net

 

$

(5

)

 

$

542

 

 

 

NOTE 7 — INCOME TAXES

The effective income tax rate was 24.7% for the three months ended August 31, 2017 compared to an effective income tax rate of 23.6% for the three months ended August 31, 2016.  

The effective tax rate for the three months ended August 31, 2017 and 2016 reflect variances from the 35% federal statutory rate due to lower effective tax rate of certain of our foreign subsidiaries, the benefit of the domestic manufacturing deduction, partially offset by the unfavorable impact of state and local taxes. Additionally, we recorded favorable discrete tax adjustments for excess tax benefits

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