SEC Document

RPM INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

Derivatives Not Designated as Hedges

At November 30, 2017, we held three foreign currency forward contracts designed to reduce our exposure to changes in the cash flows of intercompany foreign-currency-denominated loans related to changes in foreign currency exchange rates by fixing the functional currency cash flows.  These contracts have not been designated as hedges; therefore, the changes in fair value of these derivatives are recognized in earnings as a component of other (income) expense. Amounts recognized in earnings did not have a material impact on our Consolidated Financial Statements for any period presented. As of November 30, 2017 and May 31, 2017, the notional amounts of the forward contracts held to purchase foreign currencies was $151.7 million and $49.4 million, respectively.

Disclosure about Derivative Instruments

All of our derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. We determine the fair value of our derivatives based on valuation methods, which project future cash flows and discount the future amounts to present value using market based observable inputs, including interest rate curves, foreign currency rates, as well as future and basis point spreads, as applicable.

The fair values of qualifying and non-qualifying instruments used in hedging transactions as of November 30, 2017 and May 31, 2017 are as follows:

 

(in thousands)

 

 

 

Fair Value

 

Derivatives Designated as Hedging Instruments

 

Balance Sheet Location

 

November 30, 2017

 

 

May 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Exchange (Cash Flow)

 

Other Current Assets

 

 

438

 

 

 

15

 

 

Cross Currency Swap (Net Investment)

 

Other Current Assets

 

 

1,905

 

 

 

-

 

 

Interest Rate Swap (Fair Value)

 

Other Current Assets

 

 

260

 

 

 

-

 

 

Cross Currency Swap (Net Investment)

 

Other Assets (Long-Term)

 

 

1,658

 

 

 

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Exchange (Cash Flow)

 

Other Accrued Liabilities

 

 

29

 

 

 

-

 

 

Cross Currency Swap (Net Investment)

 

Other Long-Term Liabilities

 

 

6,807

 

 

 

-

 

 

Interest Rate Swap (Fair Value)

 

Other Long-Term Liabilities

 

 

994

 

 

 

-

 

 

(in thousands)

 

 

 

Fair Value

 

Derivatives Not Designated as Hedging Instruments

 

Balance Sheet Location

 

November 30, 2017

 

 

May 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Exchange

 

Other Current Assets

 

 

525

 

 

 

24

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Exchange

 

Other Accrued Liabilities

 

 

202

 

 

 

-

 

 

NOTE 7 - INVESTMENT (INCOME), NET

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

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

November 30,

 

 

November 30,

 

 

November 30,

 

 

November 30,

 

(In thousands)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Interest (income)

 

$

(1,297

)

 

$

(1,093

)

 

$

(2,191

)

 

$

(2,233

)

Net (gain) on sale of marketable securities

 

 

(2,037

)

 

 

(1,114

)

 

 

(4,897

)

 

 

(3,698

)

Other-than-temporary impairment on securities

 

 

 

 

 

 

217

 

 

 

 

 

 

 

403

 

Dividend (income)

 

 

(405

)

 

 

(426

)

 

 

(1,104

)

 

 

(726

)

Investment (income), net

 

$

(3,739

)

 

$

(2,416

)

 

$

(8,192

)

 

$

(6,254

)

 

14



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