SEC Document

RPM INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

 

 

 

Available-For-Sale Securities

 

(In thousands)

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Fair Value

(Net Carrying

Amount)

 

May 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stocks - domestic

 

$

2,391

 

 

$

76

 

 

$

-

 

 

$

2,467

 

Mutual funds - foreign

 

 

35,169

 

 

 

2,470

 

 

 

(204

)

 

 

37,435

 

Mutual funds - domestic

 

 

102,671

 

 

 

2,084

 

 

 

(3,118

)

 

 

101,637

 

Total equity securities

 

 

140,231

 

 

 

4,630

 

 

 

(3,322

)

 

 

141,539

 

Fixed maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasury and other government

 

 

22,176

 

 

 

120

 

 

 

(177

)

 

 

22,119

 

Corporate bonds

 

 

706

 

 

 

97

 

 

 

(6

)

 

 

797

 

Total fixed maturity securities

 

 

22,882

 

 

 

217

 

 

 

(183

)

 

 

22,916

 

Total

 

$

163,113

 

 

$

4,847

 

 

$

(3,505

)

 

$

164,455

 

 

Marketable securities, included in other current and long-term assets totaling $72.4 million and $73.5 million at August 31, 2017, respectively, and included in other current and long-term assets totaling $89.5 million and $75.0 million at May 31, 2017, respectively, are composed of available-for-sale securities and are reported at fair value.  We carry a portion of our marketable securities portfolio in long-term assets since they are generally held for the settlement of our general and product liability insurance claims processed through our wholly owned captive insurance subsidiaries.

Marketable securities are composed of available-for-sale securities and are reported at fair value. Realized gains and losses on sales of investments are recognized in net income on the specific identification basis. Changes in the fair values of securities that are considered temporary are recorded as unrealized gains and losses, net of applicable taxes, in accumulated other comprehensive (loss) within stockholders’ equity. Other-than-temporary declines in market value from original cost are reflected in operating income in the period in which the unrealized losses are deemed other than temporary. In order to determine whether other-than-temporary declines in market value have occurred, the duration of the decline in value and our ability to hold the investment are considered in conjunction with an evaluation of the strength of the underlying collateral and the extent to which the investment’s amortized cost or cost, as appropriate, exceeds its related market value.

Gross gains realized on sales of investments were $4.0 million and $2.8 million for the quarters ended August 31, 2017 and 2016, respectively.  During the first quarter of fiscal 2018 and 2017, we recognized gross realized losses on sales of investments of $1.1 million and $0.2 million, respectively. During the first quarter of fiscal 2017, we recognized losses of approximately $0.2 million for securities deemed to have other-than-temporary impairments, while there were no such losses during the current three month period.  These amounts are included in investment (income), net in the Consolidated Statements of Income.

Summarized below are the securities we held at August 31, 2017 and May 31, 2017 that were in an unrealized loss position and that were included in accumulated other comprehensive (loss), aggregated by the length of time the investments had been in that position:

 

 

 

August 31, 2017

 

 

May 31, 2017

 

(In thousands)

 

Fair Value

 

 

Gross

Unrealized

Losses

 

 

Fair Value

 

 

Gross

Unrealized

Losses

 

Total investments with unrealized losses

 

$

44,094

 

 

$

(3,381

)

 

$

59,987

 

 

$

(3,505

)

Unrealized losses with a loss position for less than 12 months

 

 

9,808

 

 

 

(208

)

 

 

40,854

 

 

 

(2,983

)

Unrealized losses with a loss position for more than 12 months

 

 

34,286

 

 

 

(3,173

)

 

 

19,133

 

 

 

(522

)

 

We have reviewed all of the securities included in the table above and have concluded that we have the ability and intent to hold these investments until their cost can be recovered, based upon the severity and duration of the decline. Therefore, we did not recognize any other-than-temporary impairment losses on these investments. The unrealized losses generally relate to investments whose fair values at August 31, 2017 were less than 15% below their original cost. From time to time, we may experience significant volatility in general economic and market conditions.  If we were to experience unrealized losses that were to continue for longer periods of time, or arise to more significant levels of unrealized losses within our portfolio of investments in marketable securities in the future, we

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