SEC Document

RPM INTERNATIONAL INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

 

Tremco Roofing Division’s GSA contracts. As previously disclosed, our audit committee completed an investigation into the facts and circumstances surrounding the timing of our disclosure and accrual of loss reserves with respect to the GSA and DOJ investigation, and determined that it was appropriate to restate our financial results for the first, second and third quarters of fiscal 2013.  These restatements had no impact on our audited financial statements for the fiscal years ended May 31, 2013 or 2014. The audit committee’s investigation concluded that there was no intentional misconduct on the part of any of our officers.

In connection with the foregoing, on September 9, 2016, the SEC filed an enforcement action against us and our General Counsel.  We have cooperated with the SEC’s investigation and believe the allegations in the complaint mischaracterize both our and our General Counsel’s actions in connection with the matters related to our quarterly results in fiscal 2013 and are without merit.  Both we and our General Counsel filed motions to dismiss the complaint on February 24, 2017.  Those motions to dismiss the complaint were denied by the Court on September 29, 2017.  We and our General Counsel filed answers to the complaint on October 16, 2017.  No trial date has been set, but formal discovery will commence in January 2018.  We intend to continue to contest the allegations in the complaint vigorously.

The action by the SEC could result in sanctions against us and/or our General Counsel and could impose substantial additional costs and distractions, regardless of its outcome. We have determined that it is probable that we will incur a loss relating to this matter and have estimated a range of potential loss. We have accrued at the low end of the range of loss, as no amount within the range is more likely to occur, and no amount within the estimated range of loss would have a material impact on our consolidated financial condition, results of operations or cash flows.

With respect to a case pending against one of our subsidiaries in which there is alleged both trade secret and trademark infringement, during the quarter ended August 31, 2017, the court denied our motion for summary judgment and based on our current understanding of the claim we have determined that it is reasonably possible that we may incur a loss related to this claim; however we cannot estimate the amount or range of any potential loss.

 

 

NOTE 15 – EQUITY

The following tables illustrate the components of total equity and comprehensive income for the three months ended November 30, 2017 and 2016:

 

(In thousands)

 

Total RPM

International

Inc. Equity

 

 

Noncontrolling

Interest

 

 

Total Equity

 

Total equity at August 31, 2017

 

$

1,559,111

 

 

$

3,092

 

 

$

1,562,203

 

Net income

 

 

95,463

 

 

 

395

 

 

 

95,858

 

Other Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(8,086

)

 

 

(72

)

 

 

(8,158

)

Pension and other postretirement benefit liability

   adjustments, net of tax

 

 

3,066

 

 

 

 

 

 

 

3,066

 

Unrealized gain on securities, net of tax

 

 

2,549

 

 

 

 

 

 

 

2,549

 

Unrealized (loss) on derivatives, net of tax

 

 

(2,746

)

 

 

 

 

 

 

(2,746

)

Total Other Comprehensive (Loss), net of tax

 

 

(5,217

)

 

 

(72

)

 

 

(5,289

)

Comprehensive Income

 

 

90,246

 

 

 

323

 

 

 

90,569

 

Dividends paid

 

 

(42,789

)

 

 

 

 

 

 

(42,789

)

Other noncontrolling interest activity

 

 

 

 

 

 

(647

)

 

 

(647

)

Shares repurchased and returned for taxes

 

 

(6,779

)

 

 

 

 

 

 

(6,779

)

Stock based compensation expense

 

 

6,964

 

 

 

 

 

 

 

6,964

 

Total Equity at November 30, 2017

 

$

1,606,753

 

 

$

2,768

 

 

$

1,609,521

 

20



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