SEC Document

RPM INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

related to equity compensation of $1.5 million and $10.4 million, respectively, in the three-month periods ended August 31, 2017 and 2016.  

During the three months ended August 31, 2017, we identified an opportunity and executed a transaction related to an intercompany loan and foreign distribution, which was taxable in the U.S. and resulted in a net $9.0 million discrete tax benefit.  The net tax benefit is comprised of a $7.3 million discrete tax charge related to an intercompany distribution, which is taxable in the U.S.  The net tax benefit also includes a discrete tax benefit of $16.3 million resulting from a related subsequent foreign distribution. The $16.3 million discrete tax benefit is attributable to a reduction in the previously recorded estimated deferred income tax liability for the U.S. tax cost associated with unremitted foreign earnings that are not considered permanently reinvested.

As of August 31, 2017, the amount of unremitted earnings that may be repatriated and the corresponding deferred tax liability have been adjusted to $290.4 million and $85.4 million, respectively. The reduction to the amount of unremitted foreign earnings that may be repatriated is a result of the above noted intercompany transaction, partially offset by the impact of foreign currency translation. The reduction to the deferred tax liability was primarily comprised of the above noted $16.3 million adjustment, offset by a $7.6 million increase due to foreign currency translation. The increase to the deferred tax liability related to foreign currency translation was recorded as a component of accumulated other comprehensive income.

We have not provided for U.S. income and foreign withholding taxes on the remaining foreign subsidiaries’ undistributed earnings because such earnings have been retained and reinvested by the subsidiaries as of August 31, 2017.  Accordingly, no provision has been made for U.S. income taxes or foreign withholding taxes, which may become payable if the remaining undistributed earnings of foreign subsidiaries were paid to us as dividends.

 

 

NOTE 8 — INVENTORIES

Inventories, net of reserves, were composed of the following major classes:

 

 

 

August 31, 2017

 

 

May 31, 2017

 

(In thousands)

 

 

 

Raw material and supplies

 

$

267,588

 

 

$

248,426

 

Finished goods

 

 

583,724

 

 

 

539,771

 

Total Inventory, Net of Reserves

 

$

851,312

 

 

$

788,197

 

 

 

NOTE 9 — STOCK REPURCHASE PROGRAM

On January 8, 2008, we announced our authorization of a stock repurchase program under which we may repurchase shares of RPM International Inc. common stock at management’s discretion for general corporate purposes. Our current intent is to limit our repurchases only to amounts required to offset dilution created by stock issued in connection with our equity-based compensation plans, or approximately one to two million shares per year. As a result of this authorization, we may repurchase shares from time to time in the open market or in private transactions at various times and in amounts and for prices that our management deems appropriate, subject to insider trading rules and other securities law restrictions. The timing of our purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time. During the three month periods ended August 31, 2017 and 2016, we did not repurchase any shares of our common stock under this program.

 

 

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