Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No No☒ ☒..

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☒.

As of ~~October~~April 1, ~~2021,~~2022, the registrant had ~~129,715,706~~129,495,680 shares of common stock, $0.01 par value per share, outstanding.

* As used herein, the terms “RPM” and the “Company” refer to RPM International Inc. and its subsidiaries, unless the context indicates otherwise.


	August 31, 2021			May 31, 2021			February 28, 2022			May 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	213,212		$	246,704		$	193,191		$	246,704
Trade accounts receivable (less allowances of $52,181 and $55,922, respectively)		1,171,914			1,280,806
Trade accounts receivable (less allowances of $49,794 and $55,922, respectively)								1,085,396			1,280,806
Inventories		997,255			938,095			1,191,791			938,095
Prepaid expenses and other current assets		330,315			316,399			339,977			316,399
Total current assets		2,712,696			2,782,004			2,810,355			2,782,004
Property, Plant and Equipment, at Cost		1,949,817			1,967,482			2,080,631			1,967,482
Allowance for depreciation		(998,993	)		(1,002,300	)		(1,031,613	)		(1,002,300	)
Property, plant and equipment, net		950,824			965,182			1,049,018			965,182
Other Assets
Goodwill		1,349,137			1,345,754			1,343,962			1,345,754
Other intangible assets, net of amortization		626,244			628,693			601,641			628,693
Operating lease right-of-use assets		298,878			300,827			312,157			300,827
Deferred income taxes		26,671			26,804			23,122			26,804
Other		201,754			203,705			190,347			203,705
Total other assets		2,502,684			2,505,783			2,471,229			2,505,783
Total Assets	$	6,166,204		$	6,252,969		$	6,330,602		$	6,252,969
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	647,568		$	717,176		$	675,529		$	717,176
Current portion of long-term debt		1,649			1,282			703,250			1,282
Accrued compensation and benefits		156,031			258,380			206,632			258,380
Accrued losses		25,309			29,054			25,646			29,054
Other accrued liabilities		333,065			325,522			323,846			325,522
Total current liabilities		1,163,622			1,331,414			1,934,903			1,331,414
Long-Term Liabilities
Long-term debt, less current maturities		2,429,623			2,378,544			1,883,106			2,378,544
Operating lease liabilities		256,661			257,415			270,293			257,415
Other long-term liabilities		417,072			436,176			308,340			436,176
Deferred income taxes		108,506			106,395			97,315			106,395
Total long-term liabilities		3,211,862			3,178,530			2,559,054			3,178,530
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 15)
Stockholders' Equity
Preferred stock, par value $0.01; authorized 50,000 shares; 0ne issued		—			—			—			—
Common stock, par value $0.01; authorized 300,000 shares; issued 144,648 and outstanding 129,743 as of August 31, 2021; issued 144,199 and outstanding 129,573 as of May 31, 2021		1,297			1,295
Common stock, par value $0.01; authorized 300,000 shares; issued 144,678 and outstanding 129,496 as of February 28, 2022; issued 144,199 and outstanding 129,573 as of May 31, 2021								1,295			1,295
Paid-in capital		1,061,161			1,055,400			1,085,317			1,055,400
Treasury stock, at cost		(671,314	)		(653,006	)		(691,418	)		(653,006	)
Accumulated other comprehensive (loss)		(540,508	)		(514,884	)		(552,308	)		(514,884	)
Retained earnings		1,937,940			1,852,259			1,992,160			1,852,259
Total RPM International Inc. stockholders' equity		1,788,576			1,741,064			1,835,046			1,741,064
Noncontrolling Interest		2,144			1,961			1,599			1,961
Total equity		1,790,720			1,743,025			1,836,645			1,743,025
Total Liabilities and Stockholders' Equity	$	6,166,204		$	6,252,969		$	6,330,602		$	6,252,969

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.


	Three Months Ended						Three Months Ended						Nine Months Ended
	August 31,			August 31,			February 28,			February 28,			February 28,			February 28,
	2021			2020			2022			2021			2022			2021
Net Sales	$	1,650,420		$	1,606,670		$	1,433,879		$	1,269,395		$	4,723,838		$	4,361,981
Cost of Sales		1,037,069			953,015			935,293			797,454			3,029,287			2,650,213
Gross Profit		613,351			653,655			498,586			471,941			1,694,551			1,711,768
Selling, General and Administrative Expenses		418,850			395,953			433,569			402,186			1,290,245			1,197,556
Restructuring Expense		1,010			4,233			1,140			3,129			5,128			12,280
Interest Expense		21,109			21,745			22,016			20,964			64,127			63,975
Investment (Income), Net		(5,750	)		(12,763	)
Investment (Income) Expense, Net								4,355			(11,454	)		1,421			(33,735	)
(Gain) on Sales of Assets, Net								(249	)		-			(42,491	)		-
Other (Income) Expense, Net		(3,339	)		3,118			(2,742	)		1,256			(9,001	)		7,507
Income Before Income Taxes		181,471			241,369			40,497			55,860			385,122			464,185
Provision for Income Taxes		46,676			60,584			7,248			17,394			91,962			117,049
Net Income		134,795			180,785			33,249			38,466			293,160			347,136
Less: Net Income Attributable to Noncontrolling Interests		213			190			230			224			684			640
Net Income Attributable to RPM International Inc. Stockholders	$	134,582		$	180,595		$	33,019		$	38,242		$	292,476		$	346,496
Average Number of Shares of Common Stock Outstanding:
Basic		128,083			128,418			127,943			128,447			128,013			128,455
Diluted		128,570			128,783			129,702			129,949			129,622			129,052
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders:
Basic	$	1.04		$	1.39		$	0.26		$	0.30		$	2.27		$	2.68
Diluted	$	1.04		$	1.39		$	0.25		$	0.29		$	2.26		$	2.66

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.


	Three Months Ended						Nine Months Ended
	August 31,			August 31,			February 28,			February 28,
	2021			2020			2022			2021
Cash Flows from Operating Activities:
Net income	$	134,795		$	180,785		$	293,160		$	347,136
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		37,944			35,317			114,295			109,119
Restructuring charges, net of payments		(2,004	)		(1,972	)		(2,341	)		(3,830	)
Fair value adjustments to contingent earnout obligations		1,027			2,712			2,470			1,829
Deferred income taxes		(3,452	)		1,938			(16,908	)		24,473
Stock-based compensation expense		5,763			10,457			29,287			31,157
Net (gain) on marketable securities		(3,476	)		(11,784	)
Net loss (gain) on marketable securities								10,032			(29,652	)
Net (gain) on sales of assets								(42,491	)		0
Other		(76	)		(10	)		112			(394	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
Decrease in receivables		98,166			692			170,513			181,032
(Increase) decrease in inventory		(68,155	)		43,395
(Increase) in prepaid expenses and other current and long-term assets		(15,648	)		(5,526	)
(Increase) in inventory								(273,519	)		(57,702	)
Decrease in prepaid expenses and other current and long-term assets								506			19,133
(Decrease) increase in accounts payable		(42,912	)		4,945			(9,884	)		31,825
(Decrease) in accrued compensation and benefits		(100,201	)		(55,368	)		(47,442	)		(1,107	)
(Decrease) increase in accrued losses		(3,530	)		1,936			(2,985	)		3,054
Increase in other accrued liabilities		37,866			109,399
(Decrease) in other accrued liabilities								(68,854	)		(7,615	)
Other		-			1,173			-			3,448
Cash Provided by Operating Activities		76,107			318,089			155,951			651,906
Cash Flows from Investing Activities:
Capital expenditures		(51,888	)		(41,488	)		(152,401	)		(103,226	)
Acquisition of businesses, net of cash acquired		(35,802	)		0			(116,457	)		(114,355	)
Purchase of marketable securities		(5,843	)		(17,104	)		(13,674	)		(30,784	)
Proceeds from sales of marketable securities		2,766			16,070			9,004			28,773
Proceeds from sales of assets								51,913			0
Other		250			244			(55	)		1,664
Cash (Used For) Investing Activities		(90,517	)		(42,278	)
Cash (Used for) Investing Activities								(221,670	)		(217,928	)
Cash Flows from Financing Activities:
Additions to long-term and short-term debt		60,547			136			300,967			0
Reductions of long-term and short-term debt		(471	)		(213,090	)		(72,493	)		(249,518	)
Cash dividends		(48,901	)		(46,622	)		(152,575	)		(145,457	)
Repurchases of common stock		(12,500	)		0			(27,500	)		(24,628	)
Shares of common stock returned for taxes		(5,802	)		(7,115	)		(10,906	)		(17,083	)
Payments of acquisition-related contingent consideration		(60	)		(2,217	)		(5,774	)		(2,218	)
Cash (Used For) Financing Activities		(7,187	)		(268,908	)
Other								(3,824	)		(786	)
Cash Provided by (Used for) Financing Activities								27,895			(439,690	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		(11,895	)		11,446			(15,689	)		21,510
Net Change in Cash and Cash Equivalents		(33,492	)		18,349			(53,513	)		15,798
Cash and Cash Equivalents at Beginning of Period		246,704			233,416			246,704			233,416
Cash and Cash Equivalents at End of Period	$	213,212		$	251,765		$	193,191		$	249,214
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Interest	$	17,301		$	17,566		$	58,129		$	58,672
Income Taxes, net of refunds	$	28,016		$	16,845		$	130,862		$	117,546

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.


	Common Stock											Accumulated															Common Stock											Accumulated
	Number											Other						Total RPM									Number											Other						Total RPM
	of			Par/Stated			Paid-In		Treasury			Comprehensive			Retained			International			Noncontrolling			Total			of			Par/Stated			Paid-In		Treasury			Comprehensive			Retained			International			Noncontrolling			Total
	Shares			Value			Capital		Stock			Income (Loss)			Earnings			Inc. Equity			Interests			Equity			Shares			Value			Capital		Stock			Income (Loss)			Earnings			Inc. Equity			Interests			Equity
Balance at June 1, 2021		129,573		$	1,295		$	1,055,400	$	(653,006	)	$	(514,884	)	$	1,852,259		$	1,741,064		$	1,961		$	1,743,025			129,573		$	1,295		$	1,055,400	$	(653,006	)	$	(514,884	)	$	1,852,259		$	1,741,064		$	1,961		$	1,743,025
Net income		-			-			-		-			-			134,582			134,582			213			134,795			-			-			-		-			-			134,582			134,582			213			134,795
Other comprehensive loss		-			-			-		-			(25,624	)		-			(25,624	)		(30	)		(25,654	)
Other comprehensive (loss)																												-			-			-		-			(25,624	)		-			(25,624	)		(30	)		(25,654	)
Dividends declared and paid ($0.38 per share)		-			-			-		-			-			(48,901	)		(48,901	)		-			(48,901	)		-			-			-		-			-			(48,901	)		(48,901	)		-			(48,901	)
Share repurchases under repurchase program		(133	)		(1	)		1		(12,500	)		-			-			(12,500	)		-			(12,500	)		(133	)		(1	)		1		(12,500	)		-			-			(12,500	)		-			(12,500	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		303			3			5,760		(5,808	)		-			-			(45	)		-			(45	)		303			3			5,760		(5,808	)		-			-			(45	)		-			(45	)
Balance at August 31, 2021		129,743		$	1,297		$	1,061,161	$	(671,314	)	$	(540,508	)	$	1,937,940		$	1,788,576		$	2,144		$	1,790,720			129,743		$	1,297		$	1,061,161	$	(671,314	)	$	(540,508	)	$	1,937,940		$	1,788,576		$	2,144		$	1,790,720
Net income																												-			-			-		-			-			124,875			124,875			241			125,116
Other comprehensive (loss)																												-			-			-		-			(33,237	)		-			(33,237	)		(29	)		(33,266	)
Dividends declared and paid ($0.40 per share)																												-			-			-		-			-			(51,824	)		(51,824	)		(711	)		(52,535	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes																												(66	)		-			11,878		(4,157	)		-			-			7,721			-			7,721
Balance at November 30, 2021																												129,677		$	1,297		$	1,073,039	$	(675,471	)	$	(573,745	)	$	2,010,991		$	1,836,111		$	1,645		$	1,837,756
Net income																												-			-			-		-			-			33,019			33,019			230			33,249
Other comprehensive income																												-			-			-		-			21,437			-			21,437			8			21,445
Dividends paid ($0.40 per share)																												-			-			-		-			-			(51,850	)		(51,850	)		(284	)		(52,134	)
Share repurchases under repurchase program																												(172	)		(2	)		2		(15,000	)		-			-			(15,000	)		-			(15,000	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes																												(9	)		-			12,276		(947	)		-			-			11,329			-			11,329
Balance at February 28, 2022																												129,496		$	1,295		$	1,085,317	$	(691,418	)	$	(552,308	)	$	1,992,160		$	1,835,046		$	1,599		$	1,836,645

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

NOTE 3 — RESTRUCTURING

We record restructuring charges associated with management-approved restructuring plans to either reorganize one or more of our business segments, or to remove duplicative headcount and infrastructure associated with our businesses. Restructuring charges can include severance costs to eliminate a specified number of employees, infrastructure charges to vacate facilities and consolidate operations, contract cancellation costs and other costs. Restructuring charges are recorded based upon planned employee termination dates and site closure and consolidation plans. The timing of associated cash payments is dependent upon the type of restructuring charge and can extend over a multi-year period. We record the short-term portion of our restructuring liability in Other Accrued Liabilities and the long-term portion, if any, in Other Long-Term Liabilities in our Consolidated Balance Sheets.

MAP to Growth

Between May and August 2018, we approved and implemented the initial phases of a multi-year restructuring plan, which was originally referred to as the 2020 Margin Acceleration Plan (“2020 MAP to Growth”). The initial phases of our 2020 MAP to Growth affected all of our reportable segments, as well as our corporate/nonoperating segment, and focused on margin improvement by simplifying business processes; reducing inventory categories and rationalizing SKUs; eliminating underperforming businesses; reducing headcount and working capital; and improving operating efficiency.

The disruption caused by the outbreak of the Covid pandemic delayed the finalization of our 2020 MAP to Growth past the original target completion date of December 31, 2020. In recognition of the fact our restructuring plan extends past calendar year 2020, we began referring to it simply as our “MAP to Growth.”

On May 31, 2021, we formally concluded our MAP to Growth. However, certain projects identified prior to May 31, 2021 are not yet completed. Accordingly, we expect to incur restructuring expense throughout fiscal year 2022. The total expected costs are subject to change as we complete these projects.

Our execution of the MAP to Growth drove the de-layering and simplification of management and businesses associated with group realignment. We have implemented four center-led functional areas including manufacturing and operations; procurement and supply chain; information technology; and accounting and finance.

Our MAP to Growth optimized our manufacturing facilities and provided more efficient plant and distribution facilities. Through the balance sheet date, in association with our MAP to Growth, we have completed, or are in the process of completing, the planned closure of 2931 plants and 28 warehouses. We also expect to incur additional severance and benefit costs as part of our planned closure of these facilities.

The current total expected costs associated with this plan are outlined in the table below and ~~decreased~~increased by approximately $~~1.6~~0.2 million compared to our previous estimate, primarily attributable to ~~decreases~~an increase in expected severance and benefit charges of $~~0.8~~0.3 million, ~~and~~partially offset by a decrease in expected facility closure and other related costs of $~~0.8~~0.1 million.

910

Following is a summary of the charges recorded in connection with restructuring by reportable segment:


	Three Months Ended			Three Months Ended		Cumulative Costs		Total Expected		Three Months Ended			Nine Months Ended			Cumulative Costs		Total Expected
(In thousands)	August 31, 2021			August 31, 2020		to Date		Costs		February 28, 2022			February 28, 2022			to Date		Costs
Construction Products Group ("CPG") Segment:
Severance and benefit costs (credits) (a)	$	(493	)	$	180	$	20,795	$	20,928	$	(7	)	$	(322	)	$	20,966	$	21,066
Facility closure and other related costs		540			368		7,120		7,609		325			1,368			7,948		8,191
Other restructuring costs		4			36		1,982		1,982		0			4			1,982		1,982
Total Charges	$	51		$	584	$	29,897	$	30,519	$	318		$	1,050		$	30,896	$	31,239

Performance Coatings Group ("PCG") Segment:
Severance and benefit costs (b)	$	128		$	1,039	$	16,487	$	17,012	$	65		$	193		$	16,552	$	17,261
Facility closure and other related costs		408			288		7,037		7,968		121			779			7,408		8,188
Other restructuring costs		0			29		917		917		0			0			917		947
Total Charges	$	536		$	1,356	$	24,441	$	25,897	$	186		$	972		$	24,877	$	26,396

Consumer Segment:
Severance and benefit costs (c)	$	0		$	790	$	12,307	$	12,307
Severance and benefit costs										$	0		$	0		$	12,307	$	12,307
Facility closure and other related costs		240			597		12,321		13,015		277			788			12,869		13,088
Other restructuring costs		0			98		4,420		4,420		0			0			4,420		4,420
Total Charges	$	240		$	1,485	$	29,048	$	29,742	$	277		$	788		$	29,596	$	29,815

Specialty Products Group ("SPG") Segment:
Severance and benefit costs ~~(d)~~(c)	$	87		$	469	$	8,214	$	9,190	$	47		$	249		$	8,376	$	8,726
Facility closure and other related costs		98			268		5,688		6,706		312			557			6,147		6,380
Other restructuring costs (credits)		(2	)		71		1,219		1,219		0			(1	)		1,220		1,220
Total Charges	$	183		$	808	$	15,121	$	17,115	$	359		$	805		$	15,743	$	16,326

Corporate/Other Segment:
Severance and benefit costs(d)	$	0		$	0	$	13,538	$	13,538	$	0		$	1,513		$	15,051	$	15,051
Total Charges	$	0		$	0	$	13,538	$	13,538	$	0		$	1,513		$	15,051	$	15,051

Consolidated:
Severance and benefit costs (credits)	$	(278	)	$	2,478	$	71,341	$	72,975
Severance and benefit costs										$	105		$	1,633		$	73,252	$	74,411
Facility closure and other related costs		1,286			1,521		32,166		35,298		1,035			3,492			34,372		35,847
Other restructuring costs		2			234		8,538		8,538		0			3			8,539		8,569
Total Charges	$	1,010		$	4,233	$	112,045	$	116,811	$	1,140		$	5,128		$	116,163	$	118,827

(a) Severance and benefit recoveries are associated with the adjustment of previously estimated severance accruals partially offset by the elimination of 516 positions during the ~~three~~nine months ended ~~August 31, 2021. Severance and benefit costs for the three months ended August 31, 2020 are associated with the elimination of~~ February 28, 2022.9 ~~positions.~~

(b) Severance and benefit costs are associated with the elimination of 21 ~~positions~~position and 394 positions during the three and nine months ended ~~August 31, 2021 and 2020,~~February 28, 2022, respectively.

(c) Severance and benefit costs are associated with the elimination of 32 and 18 positions during the three and nine months ended ~~August 31, 2020.~~February 28, 2022, respectively.

(d) Severance and benefit costs are associated with the elimination of 161 ~~positions and~~ 28 ~~positions~~position during the ~~three~~nine months ended ~~August 31, 2021 and 2020, respectively.~~February 28, 2022.


	Three Months Ended			Nine Months Ended
(In thousands)	February 28, 2021			February 28, 2021

CPG Segment:
Severance and benefit costs (e)	$	255		$	1,829
Facility closure and other related costs		665			1,473
Other restructuring costs (credits)		(60	)		38
Total Charges	$	860		$	3,340

PCG Segment:
Severance and benefit costs (f)	$	118		$	1,959
Facility closure and other related costs		265			1,109
Other restructuring costs		0			213
Total Charges	$	383		$	3,281

Consumer Segment:
Severance and benefit costs (g)	$	11		$	797
Facility closure and other related costs		1,300			2,682
Other restructuring costs		0			302
Total Charges	$	1,311		$	3,781

SPG Segment:
Severance and benefit costs (h)	$	49		$	461
Facility closure and other related costs		385			1,160
Other restructuring costs		0			116
Total Charges	$	434		$	1,737

Corporate/Other Segment:
Severance and benefit costs	$	141		$	141
Total Charges	$	141		$	141

Consolidated:
Severance and benefit costs	$	574		$	5,187
Facility closure and other related costs		2,615			6,424
Other restructuring costs (credits)		(60	)		669
Total Charges	$	3,129		$	12,280

(e) Severance and benefit costs are associated with the elimination of 3 positions and 24 positions during the three and nine months ended February 28, 2021, respectively.

(f) Severance and benefit costs are associated with the elimination of 5 positions and 55 positions during the three and nine months ended February 28, 2021, respectively.

(g) Severance and benefit costs for the nine months ended February 28, 2021 are associated with the elimination of 3 positions, partially offset by the adjustment in severance accruals during the period. There were 0 position eliminations during the three months ended February 28, 2021.

(h) Severance and benefit costs are associated with the elimination of 3 positions and 27 positions during the three and nine months ended February 28, 2021, respectively.

A summary of the activity in the restructuring reserves related to our MAP to Growth is as follows:


(in thousands)													Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total
Balance at November 30, 2021													$	1,571		$	896		$	0		$	2,467
Additions charged to expense														105			1,035			0			1,140
Cash payments charged against reserve														(506	)		(868	)		0			(1,374	)
Non-cash charges and other adjustments														(95	)		(28	)		0			(123	)
Balance at February 28, 2022													$	1,075		$	1,035		$	0		$	2,110

(In thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total			Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total
Balance at June 1, 2021	$	4,430		$	1,290		$	0			5,720		$	4,430		$	1,290		$	0		$	5,720
Charges (credits) to expense		(278	)		1,286			2			1,010
Additions charged to expense														1,633			3,492			3			5,128
Cash payments charged against reserve		(1,766	)		(1,248	)		0			(3,014	)		(4,314	)		(3,155	)		0			(7,469	)
Non-cash charges and other adjustments		0			(377	)		(2	)		(379	)		(674	)		(592	)		(3	)		(1,269	)
Balance at August 31, 2021	$	2,386		$	951		$	0		$	3,337
Balance at February 28, 2022													$	1,075		$	1,035		$	0		$	2,110

(In thousands)													Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total
Balance at November 30, 2020													$	4,655		$	5,896		$	0		$	10,551
Additions charged to expense														574			2,615			(60	)		3,129
Cash payments charged against reserve														(1,699	)		(2,968	)		0			(4,667	)
Non-cash charges and other adjustments														71			(4,292	)		60			(4,161	)
Balance at February 28, 2021													$	3,601		$	1,251		$	0		$	4,852


(In thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total			Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total
Balance at June 1, 2020	$	7,357		$	5,880		$	0		$	13,237		$	7,357		$	5,880		$	0		$	13,237
Charges to expense		2,478			1,521			234			4,233
Additions charged to expense														5,187			6,424			669			12,280
Cash payments charged against reserve		(4,942	)		(1,263	)		0			(6,205	)		(9,014	)		(6,761	)		(335	)		(16,110	)
Non-cash charges and other adjustments		0			0			(234	)		(234	)		71			(4,292	)		(334	)		(4,555	)
Balance at August 31, 2020	$	4,893		$	6,138		$	0		$	11,031
Balance at February 28, 2021													$	3,601		$	1,251		$	0		$	4,852

NOTE 4 — FAIR VALUE MEASUREMENTS

Financial instruments recorded in the balance sheet include cash and cash equivalents, trade accounts receivable, derivative assets and liabilities, marketable securities, notes and accounts payable, and debt.

An allowance for credit losses is established for trade accounts receivable using assessments of current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made. All provisions for allowance for doubtful collection of accounts are included in selling, general, and administrative expense.

All derivative instruments are recognized in our Consolidated Balance Sheets and measured at fair value. Changes in the fair values of derivative instruments that do not qualify as hedges and/or any ineffective portion of hedges are recognized as a gain or (loss) in our Consolidated Statements of Income in the current period. Changes in the fair value of derivative instruments used effectively as cash flow hedges are recognized in other comprehensive income (loss), along with the change in the value of the hedged item. We do not hold or issue derivative instruments for speculative purposes.

The valuation techniques utilized for establishing the fair values of assets and liabilities are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect management’s market assumptions. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value, as follows:

Level 1 Inputs — Quoted prices for identical instruments in active markets.

Level 2 Inputs — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs — Instruments with primarily unobservable value drivers.

The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. In addition, with respect to our derivative assets and liabilities measured at fair value, refer to Note 5, “Derivatives and Hedging” for discussion of their classification within the fair value hierarchy.


(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Fair Value at August 31, 2021			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Fair Value at February 28, 2022
Available-for-sale debt securities:
U.S. Treasury and other government	$	0	$	26,758	$	0		$	26,758		$	-	$	26,193	$	-		$	26,193
Corporate bonds		0		188		0			188			-		171		-			171
Total available-for-sale debt securities		0		26,946		0			26,946			0		26,364		0			26,364
Marketable equity securities:
Stocks - foreign		949		0		0			949			807		-		-			807
Stocks - domestic		7,295		0		0			7,295			6,798		-		-			6,798
Mutual funds - foreign		0		48,770		0			48,770			-		43,658		-			43,658
Mutual funds - domestic		0		91,642		0			91,642			-		86,250		-			86,250
Total marketable equity securities		8,244		140,412		0			148,656			7,605		129,908		0			137,513
Contingent consideration		0		0		(14,042	)		(14,042	)		-		-		(9,746	)		(9,746	)
Total	$	8,244	$	167,358	$	(14,042	)	$	161,560		$	7,605	$	156,272	$	(9,746	)	$	154,131


(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Fair Value at May 31, 2021
Available-for-sale debt securities:
U.S. Treasury and other government	$	0	$	26,563	$	0		$	26,563
Corporate bonds		0		182		0			182
Total available-for-sale debt securities		0		26,745		0			26,745
Marketable equity securities:
Stocks - foreign		768		0		0			768
Stocks - domestic		6,975		0		0			6,975
Mutual funds - foreign		0		47,916		0			47,916
Mutual funds - domestic		0		86,428		0			86,428
Total marketable equity securities		7,743		134,344		0			142,087
Contingent consideration		0		0		(13,335	)		(13,335	)
Total	$	7,743	$	161,089	$	(13,335	)	$	155,497

Our investments in available-for-sale debt securities and marketable equity securities are valued using a market approach. The availability of inputs observable in the market varies from instrument to instrument and depends on a variety of factors, including the type of instrument, whether the instrument is actively traded and other characteristics particular to the transaction. For most of our financial instruments, pricing inputs are readily observable in the market, the valuation methodology used is widely accepted by market participants, and the valuation does not require significant management discretion. For other financial instruments, pricing inputs are less observable in the market and may require management judgment.

The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with recent acquisitions that is contingent upon the achievement of certain performance milestones. We estimated the fair value using expected future cash flows over the period in which the obligation is expected to be settled, and applied a discount rate that appropriately captures a market participant's view of the risk associated with the obligation, which are considered to be Level 3 inputs. During the first ~~three~~nine months of fiscal 2022, we recorded an increase in the accrual for approximately $~~1.0~~2.5 million related to fair value ~~adjustments.~~adjustments and paid approximately $5.8 million to satisfy contingent consideration obligations relating to certain performance milestones that were established in prior periods and achieved during the current year. During the first ~~three~~nine months of fiscal 2021, we paid approximately $2.8 million to satisfy contingent consideration obligations relating to certain performance milestones that were established in prior periods and achieved during the first half of last ~~year's first three months.~~year, and recorded an increase in the accrual for approximately $1.8 million related to fair value adjustments. In the Consolidated Statements of Cash Flows, payments of acquisition-related contingent consideration for the amount recognized at fair value as of the acquisition date are reported in cash flows from financing activities, while payments of contingent consideration in excess of fair value as of the acquisition date, are reported in cash flows from operating activities.

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, 2021~~February 28, 2022 and May 31, 2021, 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 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, 2021~~February 28, 2022 and May 31, 2021 are as follows:

At August 31, 2021

(In thousands)

Carrying Value

Fair Value

Cash and cash equivalents

$
213,212

$
213,212

Marketable equity securities

148,656

148,656

Available-for-sale debt securities

26,946

26,946

Long-term debt, including current portion

2,431,272

2,680,324

At May 31, 2021

(In thousands)

Carrying Value

Fair Value

Cash and cash equivalents

$
246,704

$
246,704

Marketable equity securities

142,087

142,087

Available-for-sale debt securities

26,745

26,745

Long-term debt, including current portion

2,379,826

2,570,206


	At February 28, 2022
(In thousands)	Carrying Value		Fair Value
Cash and cash equivalents	$	193,191	$	193,191
Marketable equity securities		137,513		137,513
Available-for-sale debt securities		26,364		26,364
Long-term debt, including current portion		2,586,356		2,734,424

	At May 31, 2021
(In thousands)	Carrying Value		Fair Value
Cash and cash equivalents	$	246,704	$	246,704
Marketable equity securities		142,087		142,087
Available-for-sale debt securities		26,745		26,745
Long-term debt, including current portion		2,379,826		2,570,206

NOTE 5 — DERIVATIVES AND HEDGING

Derivative Instruments and Hedging Activities

We are exposed to market risks, such as changes in foreign currency exchange rates and interest rates. To manage the volatility related to these exposures, from time to time, we enter into various derivative transactions. We use various types of derivative instruments including forward contracts and swaps. We formally assess, designate and document, as a hedge of an underlying exposure, each qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, we assess, both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transaction are effective at offsetting changes in either the fair values or cash flows of the underlying exposures.

Derivatives Designated as Hedges

In October 2017, as a means of mitigating the impact of currency fluctuations on our Euro investments in foreign entities, we executed a fair value hedge and 2 cross currency swaps, in which we paid variable rate interest in Euros and received fixed rate interest in U.S. Dollars with a combined notional amount of approximately €85.25 million ($100 million U.S. Dollar equivalent), and which had a maturity date of November 2022. This effectively converted a portion of our U.S. Dollar denominated fixed-rate debt to Euro denominated variable rate debt. The fair value hedge was recognized at fair value in our Consolidated Balance Sheets, while changes in the fair value of the hedge were recognized in interest expense in our Consolidated Statements of Income. We designated the swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. In February 2020, the fair value hedge and 2 cross-currency ~~swaps~~swap agreements were terminated, and we received cash in the amount of $9.3 million, representing the fair value of the swap and interest accrued through the date of termination. Accordingly, hedge accounting was discontinued and a hedge accounting adjustment to our Senior Notes of $1.5 million was recorded and is being amortized to interest expense in the Consolidated Statements of Income through the termination of the 3.450% Notes in November 2022. Changes in the fair value of the cross-currency swaps due to spot foreign exchange rates are recorded as cumulative translation adjustment within accumulated other comprehensive income ("AOCI") and will remain in AOCI until either the sale or substantially complete liquidation of the hedged subsidiaries.

Separately, in February 2020, as a means of mitigating the impact of currency fluctuations on our Euro investments in foreign entities, we executed a cash flow hedge and 2 cross currency ~~swaps,~~swap agreements, in which we will pay fixed rate interest in Euros and receive variable rate interest in U.S. Dollars with a combined notional amount of approximately €277.73 million ($300 million U.S. Dollar equivalent), and which have a maturity date of February 2023. This effectively converts our U.S. Dollar denominated variable rate debt to Euro denominated fixed rate debt. The cash flow hedge is recognized at fair value in our Consolidated Balance Sheets, while changes in the fair value of the hedge will be recognized in AOCI when the hedged items affect earnings. Amounts recognized in AOCI will be recognized in earnings in interest expense when the hedged interest payment is accrued. We designated the swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. The changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized in AOCI to offset the changes in the values of the net investments being hedged. In addition, in February 2020, as a means

of mitigating the variability of the functional-currency-equivalent cash flows associated with the U.S. Dollar denominated term loan facility (referred to as Foreign Borrower’s Term Loan), we executed a cash flow hedge, in which we will pay fixed rate interest in Euros and receive variable rate interest in U.S. Dollars with a notional amount of approximately €92.52 million ($100 million U.S. Dollar equivalent), and which have a maturity date of February 2023. This effectively converts our U.S. Dollar denominated variable rate debt to Euro denominated fixed rate debt. The cash flow hedge is recognized at fair value in our Consolidated Balance Sheets, while changes in the fair value of the hedge will be recognized in AOCI when the hedged items affect earnings. Amounts recorded in AOCI will be recognized in earnings in interest expense when the hedged interest payment is accrued. In addition, since this currency swap is a hedge of variability of the functional currency equivalent cash flows of a recognized liability to be remeasured at spot exchange rates under ASC 830, an amount that will offset the gain or loss arising from the remeasurement of the hedged liability will be reclassified each period from AOCI to earnings as foreign exchange gain/(loss), which is a component of SG&A expenses.

The following table summarizes the location and effects of our derivatives instruments on the Consolidated Statements of Comprehensive Income and Consolidated Statements of Income for gains or losses initially recognized in AOCI in the Consolidated Balance Sheet:


	Pretax gain/(loss) recognized in AOCI							Pretax gain/(loss) reclassified from AOCI into income						Pretax gain/(loss) recognized in AOCI						Pretax gain/(loss) reclassified from AOCI into income
	Three Months Ended							Three Months Ended						Three Months Ended						Three Months Ended
(In thousands) Derivatives in hedging relationships	August 31, 2021			August 31, 2020			Income statement location	August 31, 2021			August 31, 2020			February 28, 2022		February 28, 2021			Income statement location	February 28, 2022			February 28, 2021
Interest rate swap (cash flow)	$	(36	)	$	(598	)	Interest (expense)	$	(929	)	$	(766	)	$	1,723	$	27		Interest (expense) income	$	(884	)	$	(862	)
Cross currency swap (cash flow)		3,447			(7,356	)	Interest income		138			191			1,263		(907	)	Interest (expense) income		149			147
Cross currency swap (cash flow)		-			-		Foreign exchange gain (loss)		3,407			(7,455	)		-		-		Foreign exchange gain (loss)		1,061			(1,243	)
Cross currency swap (net investment)		10,303			(23,133	)	Gain or (loss) on sale of subsidiary		-			-			820		(4,036	)	Gain or (loss) on sale of subsidiary		-			-
Total	$	13,714		$	(31,087	)		$	2,616		$	(8,030	)	$	3,806	$	(4,916	)		$	326		$	(1,958	)

														Pretax gain/(loss) recognized in AOCI						Pretax gain/(loss) reclassified from AOCI into income
(In thousands)														Nine Months Ended						Nine Months Ended
Derivatives in hedging relationships														February 28, 2022		February 28, 2021			Income Statement Location	February 28, 2022			February 28, 2021
Interest rate swap (cash flow)														$	2,554	$	(720	)	Interest (expense) income	$	(2,744	)	$	(2,475	)
Cross currency swap (cash flow)															8,867		(8,211	)	Interest (expense) income		425			498
Cross currency swap (cash flow)															-		-		Foreign exchange gain (loss)		8,481			(8,623	)
Cross currency swap (net investment)															22,563		(28,126	)	Gain or (loss) on sale of subsidiary		-			-
Total														$	33,984	$	(37,057	)		$	6,162		$	(10,600	)

Derivatives Not Designated as Hedges

At ~~August 31, 2021,~~February 28, 2022, and May 31, 2021, we held 1 foreign currency forward contract at each period end 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 a hedges; therefore, the changes in fair value of the contracts are recognized in earnings as a component of SG&A expenses. Amounts recognized in earnings did not have a material impact on our Consolidated Financial Statements for any period presented. As of ~~August 31, 2021,~~February 28, 2022, and May 31, 2021, the notional amounts of the forward ~~contract~~contracts held to purchase foreign currencies ~~was~~were $~~174.3~~240.7 million and $191.7 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 ~~August 31, 2021~~February 28, 2022 and May 31, 2021 are as follows:


(In thousands)		Fair Value					Fair Value
Derivatives Designated as Hedging Instruments	Balance Sheet Location	August 31, 2021		May 31, 2021		Balance Sheet Location	February 28, 2022		May 31, 2021
Assets:
Cross Currency Swap (Net Investment)	Other Current Assets	$	5,924	$	6,233	Other Current Assets	$	2,139	$	6,233
Cross Currency Swap (Cash Flow)	Other Current Assets		539		516	Other Current Assets		-		516
Liabilities:
Interest Rate Swap (Cash Flow)	Other Accrued Liabilities	$	3,530	$	3,547	Other Accrued Liabilities	$	716	$	3,547
Cross Currency Swap (Cash Flow)						Other Accrued Liabilities		3,966		-
Cross Currency Swap (Net Investment)	Other Accrued Liabilities		955		1,321	Other Accrued Liabilities		13,603		1,321
Cross Currency Swap (Net Investment)	Other Long-Term Liabilities		28,787		39,228	Other Long-Term Liabilities		-		39,228
Cross Currency Swap (Cash Flow)	Other Long-Term Liabilities		10,035		13,786	Other Long-Term Liabilities		-		13,786
Interest Rate Swap (Cash Flow)	Other Long-Term Liabilities		1,591		2,467	Other Long-Term Liabilities		-		2,467

(In thousands)

Fair Value

Derivatives Not Designated as Hedging Instruments

Balance Sheet Location

August 31, 2021

May 31, 2021

Assets:

Foreign Currency Exchange

Other Current Assets

$
61

$
212


(In thousands)		Fair Value
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	February 28, 2022		May 31, 2021
Assets:
Foreign Currency Exchange	Other Current Assets	$	-	$	212
Liabilities:
Foreign Currency Exchange	Other Accrued Liabilities	$	64	$	-

(1) ~~Restricted~~For the three and nine months ended February 28, 2022, 0 restricted shares were excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive. For the three and nine months ended February 28, 2021, restricted shares totaling ~~157,700~~225,500 and ~~225,500~~231,450 ~~for the three months ended August 31, 2021 and 2020, respectively,~~ were excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive. In addition, stock appreciation rights (“SARs”) totaling ~~680,000~~320,000 and 655,000 for the three and nine months ended February 28, 2022, and 360,000 for both the three and nine months ended ~~August 31,~~February 28, 2021, ~~and 2020, respectively,~~ were excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive.

NOTE 1214 — PENSION PLANS

We offer defined benefit pension plans, defined contribution pension plans, and various postretirement benefit plans. The following tables provide the retirement-related benefit plans’ impact on income before income taxes for the three and nine months ended ~~August 31, 2021~~February 28, 2022 and ~~2020:~~2021:


	U.S. Plans						Non-U.S. Plans						U.S. Plans						Non-U.S. Plans
	Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended
(In thousands)	August 31,			August 31,			August 31,			August 31,			February 28,			February 28,			February 28,			February 28,
Pension Benefits	2021			2020			2021			2020			2022			2021			2022			2021
Service cost	$	11,914		$	11,130		$	1,348		$	1,406		$	11,914		$	11,130		$	1,348		$	1,406
Interest cost		3,842			3,806			1,282			1,122			3,842			3,806			1,282			1,122
Expected return on plan assets		(10,386	)		(8,279	)		(2,073	)		(1,607	)		(10,386	)		(8,279	)		(2,073	)		(1,607	)
Amortization of:
Prior service cost (credit)		1			2			(38	)		(35	)		1			2			(38	)		(35	)
Net actuarial losses recognized		4,225			7,501			114			526			4,225			7,501			114			526
Net Periodic Benefit Cost	$	9,596		$	14,160		$	633		$	1,412		$	9,596		$	14,160		$	633		$	1,412


	U.S. Plans						Non-U.S. Plans				U.S. Plans						Non-U.S. Plans
	Three Months Ended						Three Months Ended				Three Months Ended						Three Months Ended
(In thousands)	August 31,			August 31,			August 31,		August 31,		February 28,			February 28,			February 28,		February 28,
Postretirement Benefits	2021			2020			2021		2020		2022			2021			2022		2021
Service cost	$	-		$	-		$	432	$	431	$	-		$	-		$	432	$	431
Interest cost		10			19			299		283		10			19			299		283
Amortization of:
Prior service (credit)		(40	)		(42	)		-		-		(40	)		(42	)		-		-
Net actuarial losses recognized		15			10			32		130		15			10			32		130
Net Periodic Benefit (Credit) Cost	$	(15	)	$	(13	)	$	763	$	844	$	(15	)	$	(13	)	$	763	$	844


	U.S. Plans						Non-U.S. Plans
	Nine Months Ended						Nine Months Ended
(In thousands)	February 28,			February 28,			February 28,			February 28,
Pension Benefits	2022			2021			2022			2021
Service cost	$	35,742		$	33,390		$	4,044		$	4,218
Interest cost		11,526			11,418			3,846			3,366
Expected return on plan assets		(31,158	)		(24,837	)		(6,219	)		(4,821	)
Amortization of:
Prior service cost (credit)		3			6			(114	)		(105	)
Net actuarial losses recognized		12,675			22,503			342			1,578
Net Periodic Benefit Cost	$	28,788		$	42,480		$	1,899		$	4,236


	U.S. Plans						Non-U.S. Plans
	Nine Months Ended						Nine Months Ended
(In thousands)	February 28,			February 28,			February 28,		February 28,
Postretirement Benefits	2022			2021			2022		2021
Service cost	$	-		$	-		$	1,296	$	1,293
Interest cost		30			57			897		849
Amortization of:
Prior service (credit)		(120	)		(126	)		-		-
Net actuarial losses recognized		45			30			96		390
Net Periodic Benefit (Credit) Cost	$	(45	)	$	(39	)	$	2,289	$	2,532

1721

Due to strong asset returns for the year ending May 31, 2021, as well as contributions made during the year, net periodic pension and U.S. postretirement cost for fiscal 2022 is lower than our fiscal 2021 expense. We expect that pension expense will fluctuate on a year-to-year basis, depending upon the investment performance of plan assets and potential changes in interest rates, and these fluctuations may have a material impact on our consolidated financial results in the future. We previously disclosed in our financial statements for the fiscal year ended May 31, 2021 that we expected to contribute approximately $1.0 million to our retirement plans in the U.S. and approximately $5.0 million to plans outside the U.S. during the current fiscal ~~year. Throughout fiscal 2022,~~year and that we will evaluate whether to make additional ~~contributions.~~contributions throughout fiscal 2022. As a result, we contributed $64.6 million, to the pension plans in the U.S. during the current quarter, which will result in total expected U.S. contributions of $65.6 million.

One of our subsidiaries has been the subject of a proceeding in which one of its former distributors brought suit against our subsidiary for breach of contract. Following a June 2017 trial, a jury determined that the distributor was not entitled to any damages on the distributor’s claims against our subsidiary. On appeal, the Ninth Circuit Court of Appeals ordered a new trial with respect to certain issues. On December 10, 2021, a new jury awarded $6.0 million in damages to the distributor. Per the parties’ contracts, the distributor may also be entitled to recover some portion of its attorneys’ fees from our subsidiary. Our subsidiary is currently evaluating its options for an appeal, including contractual arguments limiting the distributor’s recoverable damages. As a result of the jury’s award and in consideration of our subsidiary’s potential arguments on appeal, we have accrued $2.6 million for this matter in the second quarter of fiscal 2022, which we believe to be the low end of the range of loss. While an ultimate loss in excess of the accrued amount is reasonably possible, we believe that the high end of the range of loss would not be materially more than the $6.0 million noted above.

NOTE 1416 – REVENUE

We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings, roofing systems, sealants and adhesives. We disaggregate revenues from the sales of our products and services based upon geographical location by each of our reportable segments, which are aligned by similar economic factors, trends and customers, which best depict the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. See Note ~~15,~~17, “Segment Information,” to the Consolidated Financial Statements for further details regarding our disaggregated revenues, as well as a description of each of the unique revenue streams related to each of our 4 reportable segments.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. The majority of our revenue is recognized at a point in time. However, we also record revenues generated under construction contracts, mainly in connection with the installation of specialized roofing and flooring systems and related services. For certain polymer flooring installation projects, we account for our revenue using the output method, as we consider square footage of completed flooring to be the best measure of progress toward the complete satisfaction of the performance obligation. In contrast, for certain of our roofing installation projects, we account for our revenue using the input method, as that method was the best measure of performance as it considers costs incurred in relation to total expected project costs, which essentially represents the transfer of control for roofing systems to the customer. In general, for our construction contracts, we record contract revenues and related costs as our contracts progress on an over-time model.

We have elected to apply the practical expedient to recognize revenue net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Payment terms and conditions vary by contract type, although our customers’ payment terms generally include a requirement to pay within 30 to 60 days of fulfilling our performance obligations. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined that our contracts generally do not include a significant financing component. We have elected to apply the practical expedient to treat all shipping and handling costs as fulfillment costs, as a significant portion of these costs are incurred prior to control transfer.

Significant Judgments

Our contracts with customers may include promises to transfer multiple products and/or services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. For example, judgment is required to determine whether products sold in connection with the sale of installation services are considered distinct and accounted for separately, or not distinct and accounted for together with installation services and recognized over time.

We provide customer rebate programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives. These customer programs and incentives are considered variable consideration and recognized as a reduction of net sales. Up-front consideration provided to customers is capitalized as a component of other assets and amortized over the estimated life of the contractual arrangement. We include in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved. In general, this determination is made based upon known customer program and incentive offerings at the time of sale, and expected sales volume forecasts as it relates to our volume-based incentives. This determination is updated each reporting period. Certain of our contracts include contingent consideration that is receivable only upon the final inspection and acceptance of a project. We include estimates of such variable consideration in our transaction price. Based on historical experience, we consider the probability-based expected value method appropriate to estimate the amount of such variable consideration.

Our products are generally sold with a right of return and we may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. We record a right of return liability to accrue for expected customer returns. Historical actual returns are used to estimate future returns as a percentage of current sales. Obligations for returns and refunds were not material individually or in the aggregate.

We offer assurance type warranties on our products as well as separately sold warranty contracts. Revenue related to warranty contracts that are sold separately is recognized over the life of the warranty term. Warranty liabilities for our assurance type warranties are discussed further in Note ~~13,~~15, “Contingencies and Accrued Losses,” to the Consolidated Financial Statements.

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing customers. Our contract assets are recorded for products and services that have been provided to our customer but have not yet been billed, and are included in prepaid expenses and other current assets in our consolidated balance sheets. Our short-term contract liabilities consist of advance payments, or deferred revenue, and are included in other accrued liabilities in our consolidated balance sheets.

Trade accounts receivable, net of allowances, and net contract assets consisted of the following:


(In thousands, except percentages)	August 31, 2021			May 31, 2021			$ Change			% Change			February 28, 2022			November 30, 2021			$ Change			% Change
Trade accounts receivable, less allowances	$	1,171,914		$	1,280,806		$	(108,892	)		-8.5	%	$	1,085,396		$	1,173,494		$	(88,098	)		-7.5	%

Contract assets	$	45,310		$	33,217		$	12,093			36.4	%	$	47,638		$	47,615		$	23			0.0	%
Contract liabilities - short-term		(35,155	)		(33,112	)		(2,043	)		6.2	%		(37,157	)		(36,279	)		(878	)		2.4	%
Net Contract Assets	$	10,155		$	105		$	10,050					$	10,481		$	11,336		$	(855	)		-7.5	%

(In thousands, except percentages)													February 28, 2022			May 31, 2021			$ Change			% Change
Trade accounts receivable, less allowances													$	1,085,396		$	1,280,806		$	(195,410	)		-15.3	%

Contract assets													$	47,638		$	33,217		$	14,421			43.4	%
Contract liabilities - short-term														(37,157	)		(33,112	)		(4,045	)		12.2	%
Net Contract Assets													$	10,481		$	105		$	10,376

The $~~10.1~~0.9 million ~~increase~~decrease in our net contract assets from ~~May 31,~~November 30, 2021 to ~~August 31, 2021~~February 28, 2022 resulted primarily due to the timing and volume of construction jobs in progress at ~~August 31, 2021~~February 28, 2022 versus ~~May 31,~~November 30, 2021. ~~During~~The change in performance is a function of relatively consistent weather during the first ~~quarter~~nine months of fiscal ~~2022, net sales at~~2022. This enabled our ~~U.S. based general contracting and roofing services business increased by $43.5~~ ~~million as compared~~teams to the fourth quarter of fiscal 2021. During the fourth quarter of fiscal 2021, we began to mobilize on the jobs that were scheduled to be executed during the peak summer months. In the first quarter of fiscal 2022, we performedperform a ~~substantial~~consistent amount of work on ~~these~~existing jobs ~~and as such,~~throughout the period, allowing our unbilled revenue ~~is higher as of August~~to remain elevated. The $10.4 million increase in our net contract assets from May 31, 2021 ~~than it was~~to February 28, 2022 resulted primarily due to the timing and volume of construction jobs in progress at February 28, 2022 versus May 31, 2021.

We also record long-term deferred revenue, which amounted to $~~67.4~~67.1 million, $67.2 million and $67.8 million as of ~~August 31,~~February 28, 2022, November 30, 2021, and May 31, 2021, respectively. The long-term portion of deferred revenue is related to warranty contracts and is included in other long-term liabilities in our consolidated balance sheets.

We have elected to adopt the practical expedient to not disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied as of the end of the reporting period for performance obligations that are part of a contract with an original expected duration of one year or less.

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. As our contract terms are primarily one year or less in duration, we have elected to apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include our internal sales force compensation program and certain incentive programs as we have determined annual compensation is commensurate with annual sales activities.

Allowance for Credit Losses

Our primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the trade accounts receivable balance to the estimated net realizable value equal to the amount that is expected to be collected. The allowance was based on assessments of current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made. All provisions for allowances for doubtful collection of accounts are included in selling, general and administrative expenses.

2024

The following tables summarize the activity for the allowance for credit losses for the three and nine months ended ~~August 31, 2021~~February 28, 2022 and ~~2020:~~2021:


				Three Months Ended						Nine Months Ended
				February 28,			February 28,			February 28,			February 28,
(In thousands)				2022			2021			2022			2021
Balance at June 1, 2021	$	55,922
Beginning Balance				$	50,932		$	53,542		$	55,922		$	55,847
Bad debt provision		1,205			571			3,800			2,645			4,968
Uncollectible accounts written off, net of recoveries		(4,087	)		(2,436	)		(5,661	)		(7,335	)		(11,008	)
Translation adjustments		(859	)		727			522			(1,438	)		2,396
Balance at August 31, 2021	$	52,181

(In thousands)
Balance at June 1, 2020	$	55,847
Bad debt provision		1,274
Uncollectible accounts written off, net of recoveries		(2,854	)
Translation adjustments		1,660
Balance at August 31, 2020	$	55,927
Ending Balance				$	49,794		$	52,203		$	49,794		$	52,203

NOTE 1517 — SEGMENT INFORMATION

We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings and roofing systems, flooring solutions, sealants, cleaners and adhesives. We manage our portfolio by organizing our businesses and product lines into four reportable segments as outlined below, which also represent our operating segments. Within each operating segment, we manage product lines and businesses which generally address common markets, share similar economic characteristics, utilize similar technologies and can share manufacturing or distribution capabilities. Our 4 operating segments represent components of our business for which separate financial information is available that is utilized on a regular basis by our chief operating decision maker in determining how to allocate the assets of the company and evaluate performance. These four operating segments are each managed by an operating segment manager, who is responsible for the day-to-day operating decisions and performance evaluation of the operating segment’s underlying businesses. We evaluate the profit performance of our segments primarily based on income before income taxes, but also look to earnings (loss) before interest and taxes (“EBIT”), as a performance evaluation measure because interest (income) expense, net (the combination of interest expense and investment income, net) is essentially related to corporate functions, as opposed to segment operations.

Our CPG reportable segment products are sold throughout North America and also account for the majority of our international sales. Our construction product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. Products and services within this reportable segment include construction sealants and adhesives, coatings and chemicals, roofing systems, concrete admixture and repair products, building envelope solutions, insulated cladding, flooring systems, and weatherproofing solutions.

Our PCG reportable segment products are sold throughout North America, as well as internationally, and are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. Products and services within this reportable segment include high-performance flooring solutions, corrosion control and fireproofing coatings, infrastructure repair systems, fiberglass reinforced plastic gratings and drainage systems.

Our Consumer reportable segment manufactures and markets professional use and do-it-yourself (“DIY”) products for a variety of mainly consumer applications, including home improvement and personal leisure activities. Our Consumer reportable segment’s major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe and other parts of the world. Our Consumer reportable segment products are primarily sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops and through distributors. The Consumer reportable segment offers products that include specialty, hobby and professional paints; caulks; adhesives; cleaners; sandpaper and other abrasives; silicone sealants and wood stains.

Our SPG reportable segment products are sold throughout North America and a few international locations, primarily in Europe. Our specialty product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. The SPG reportable segment offers products that include industrial cleaners, restoration services equipment, colorants, nail enamels, exterior finishes, edible coatings and specialty glazes for pharmaceutical and food industries, and other specialty original equipment manufacturer (“OEM”) coatings.

In addition to our four reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment. This category includes our corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with any reportable segment. Assets related to the corporate/other category consist primarily of investments, prepaid expenses and headquarters’ property and equipment. These corporate and other assets and expenses reconcile reportable segment data to total consolidated income before income taxes and identifiable assets.

We reflect income from our joint ventures on the equity method, and receive royalties from our licensees.

2225

The following tables present a disaggregation of revenues by geography, and reflect the results of our reportable segments consistent with our management philosophy, by representing the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses.


Three Months Ended August 31, 2021	CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
Three Months Ended February 28, 2022											CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	372,313	$	176,194	$	432,399	$	149,411	$	1,130,317	$	259,606	$	167,623	$	403,524	$	154,516	$	985,269
Foreign
Canada		76,559		18,452		33,942		2,140		131,093		39,479		17,220		29,432		1,378		87,509
Europe		130,418		57,835		60,267		24,335		272,855		114,226		54,057		46,695		24,121		239,099
Latin America		47,422		6,390		7,318		494		61,624		47,459		7,720		7,707		368		63,254
Asia Pacific		17,605		6,661		4,482		5,675		34,423		21,256		5,431		4,259		8,988		39,934
Other Foreign		45		20,063		0		0		20,108		-		18,814		-		-		18,814
Total Foreign		272,049		109,401		106,009		32,644		520,103		222,420		103,242		88,093		34,855		448,610
Total	$	644,362	$	285,595	$	538,408	$	182,055	$	1,650,420	$	482,026	$	270,865	$	491,617	$	189,371	$	1,433,879

Three Months Ended August 31, 2020	CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
Three Months Ended February 28, 2021											CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	327,961	$	156,062	$	509,584	$	133,497	$	1,127,104	$	195,193	$	132,075	$	381,712	$	139,862	$	848,842
Foreign
Canada		55,642		17,112		48,908		1,920		123,582		32,853		16,303		31,833		2,244		83,233
Europe		108,720		63,634		67,610		16,996		256,960		106,172		53,156		53,097		19,405		231,830
Latin America		34,853		5,594		7,392		465		48,304		39,555		6,681		7,593		409		54,238
Asia Pacific		17,639		4,886		7,674		5,146		35,345		19,020		5,640		3,507		7,241		35,408
Other Foreign		2,875		12,500		0		0		15,375		3,176		12,668		-		-		15,844
Total Foreign		219,729		103,726		131,584		24,527		479,566		200,776		94,448		96,030		29,299		420,553
Total	$	547,690	$	259,788	$	641,168	$	158,024	$	1,606,670	$	395,969	$	226,523	$	477,742	$	169,161	$	1,269,395

Nine Months Ended February 28, 2022											CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States											$	974,201	$	531,655	$	1,267,373	$	457,115	$	3,230,344
Foreign
Canada												184,940		54,355		93,714		5,609		338,618
Europe												377,220		172,850		162,032		74,446		786,548
Latin America												144,366		20,958		22,935		1,407		189,666
Asia Pacific												59,811		17,579		13,169		26,473		117,032
Other Foreign												40		61,590		-		-		61,630
Total Foreign												766,377		327,332		291,850		107,935		1,493,494
Total											$	1,740,578	$	858,987	$	1,559,223	$	565,050	$	4,723,838

Nine Months Ended February 28, 2021											CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States											$	784,246	$	436,617	$	1,332,531	$	413,571	$	2,966,965
Foreign
Canada												137,181		51,613		110,201		6,373		305,368
Europe												344,478		180,681		184,161		58,044		767,364
Latin America												114,545		19,413		23,755		1,290		159,003
Asia Pacific												57,607		16,323		15,770		23,961		113,661
Other Foreign												9,122		40,498		-		-		49,620
Total Foreign												662,933		308,528		333,887		89,668		1,395,016
Total											$	1,447,179	$	745,145	$	1,666,418	$	503,239	$	4,361,981

Three Months Ended

(In thousands)

August 31,

August 31,

Income (Loss) Before Income Taxes

2021

2020

CPG Segment

$
114,357

$
98,349

PCG Segment

35,077

28,514

Consumer Segment

45,915

132,722

SPG Segment

24,556

20,449

Corporate/Other

(38,434
)

(38,665
)
Consolidated

$
181,471

$
241,369


	Three Months Ended						Nine Months Ended
(In thousands)	February 28,			February 28,			February 28,			February 28,
Income (Loss) Before Income Taxes	2022			2021			2022			2021
CPG Segment	$	31,498		$	14,431		$	276,223		$	184,613
PCG Segment		24,917			12,158			97,849			64,719
Consumer Segment		16,893			42,724			95,912			263,813
SPG Segment		25,881			24,560			71,028			73,415
Corporate/Other		(58,692	)		(38,013	)		(155,890	)		(122,375	)
Consolidated	$	40,497		$	55,860		$	385,122		$	464,185


(In thousands)	August 31,		May 31,		February 28,		May 31,
Identifiable Assets	2021		2021		2022		2021
CPG Segment	$	1,959,388	$	1,815,303	$	1,938,999	$	1,815,303
PCG Segment		1,059,611		1,051,334		1,092,037		1,051,334
Consumer Segment		2,156,400		2,386,703		2,344,960		2,386,703
SPG Segment		770,902		772,540		823,342		772,540
Corporate/Other		219,903		227,089		131,264		227,089
Consolidated	$	6,166,204	$	6,252,969	$	6,330,602	$	6,252,969

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our financial statements include all of our majority-owned and controlled subsidiaries. Investments in less-than-majority-owned joint ventures over which we have the ability to exercise significant influence are accounted for under the equity method. Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate these estimates, including those related to our allowances for doubtful accounts; reserves for excess and obsolete inventories; allowances for recoverable sales and/or value-added taxes; uncertain tax positions; useful lives of property, plant and equipment; goodwill and other intangible assets; environmental, warranties and other contingent liabilities; income tax valuation allowances; pension plans; and the fair value of financial instruments. We base our estimates on historical experience, our most recent facts, and other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of our assets and liabilities. Actual results, which are shaped by actual market conditions, may differ materially from our estimates.

A comprehensive discussion of the accounting policies and estimates that are the most critical to our financial statements are set forth in our Annual Report on Form 10-K for the year ended May 31, 2021.

The following tables reflect the results of our reportable segments consistent with our management philosophy, and represent the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses.


	Three Months Ended						Three Months Ended						Nine Months Ended
	August 31,			August 31,			February 28,			February 28,			February 28,			February 28,
(In thousands)	2021			2020			2022			2021			2022			2021
Net Sales
CPG Segment	$	644,362		$	547,690		$	482,026		$	395,969		$	1,740,578		$	1,447,179
PCG Segment		285,595			259,788			270,865			226,523			858,987			745,145
Consumer Segment		538,408			641,168			491,617			477,742			1,559,223			1,666,418
SPG Segment		182,055			158,024			189,371			169,161			565,050			503,239
Consolidated	$	1,650,420		$	1,606,670		$	1,433,879		$	1,269,395		$	4,723,838		$	4,361,981
Income Before Income Taxes (a)
CPG Segment
Income Before Income Taxes (a)	$	114,357		$	98,349		$	31,498		$	14,431		$	276,223		$	184,613
Interest (Expense), Net (b)		(1,870	)		(2,110	)		(1,735	)		(2,074	)		(5,254	)		(6,325	)
EBIT (c)	$	116,227		$	100,459		$	33,233		$	16,505		$	281,477		$	190,938
PCG Segment
Income Before Income Taxes (a)	$	35,077		$	28,514		$	24,917		$	12,158		$	97,849		$	64,719
Interest Income (Expense), Net (b)		82			(31	)		76			75			407			53
EBIT (c)	$	34,995		$	28,545		$	24,841		$	12,083		$	97,442		$	64,666
Consumer Segment
Income Before Income Taxes (a)	$	45,915		$	132,722		$	16,893		$	42,724		$	95,912		$	263,813
Interest Income (Expense), Net (b)		75			(62	)		62			(60	)		211			(187	)
EBIT (c)	$	45,840		$	132,784		$	16,831		$	42,784		$	95,701		$	264,000
SPG Segment
Income Before Income Taxes (a)	$	24,556		$	20,449		$	25,881		$	24,560		$	71,028		$	73,415
Interest (Expense), Net (b)		(35	)		(82	)		(18	)		(64	)		(82	)		(219	)
EBIT (c)	$	24,591		$	20,531		$	25,899		$	24,624		$	71,110		$	73,634
Corporate/Other
(Loss) Before Income Taxes (a)	$	(38,434	)	$	(38,665	)	$	(58,692	)	$	(38,013	)	$	(155,890	)	$	(122,375	)
Interest (Expense), Net (b)		(13,611	)		(6,697	)		(24,756	)		(7,387	)		(60,830	)		(23,562	)
EBIT (c)	$	(24,823	)	$	(31,968	)	$	(33,936	)	$	(30,626	)	$	(95,060	)	$	(98,813	)
Consolidated
Net Income	$	134,795		$	180,785		$	33,249		$	38,466		$	293,160		$	347,136
Add: Provision for Income Taxes		46,676			60,584			7,248			17,394			91,962			117,049
Income Before Income Taxes (a)		181,471			241,369			40,497			55,860			385,122			464,185
Interest (Expense)		(21,109	)		(21,745	)		(22,016	)		(20,964	)		(64,127	)		(63,975	)
Investment Income, Net		5,750			12,763
Investment Income (Expense), Net								(4,355	)		11,454			(1,421	)		33,735
EBIT (c)	$	196,830		$	250,351		$	66,868		$	65,370		$	450,670		$	494,425

(a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by generally accepted accounting principles ("GAAP") in the U.S., to EBIT.

(b) Interest Income (Expense), Net includes the combination of Interest (Expense) and Investment Income, Net.

(c) EBIT is a non-GAAP measure, and is defined as Earnings (Loss) Before Interest and Taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT, as a performance evaluation measure because Interest (Income) Expense, Net is essentially related to corporate functions, as opposed to segment operations. We believe EBIT is useful to investors for this purpose as well, using EBIT as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, income before income taxes as determined in accordance with GAAP, since EBIT omits the impact of interest in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets' analysis of our segments' core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results.

Our CPG segment experienced significant organic growth during the ~~first~~third quarter of fiscal 2022 in nearly all business units in the segment when compared to the same quarter in the prior year. ~~Business units performing particularly well during the quarter were providers of commercial~~The increase is primarily driven by strong demand in North America for its construction and maintenance products, including insulated concrete forms, roofing systems, concrete admixtures and repair products, and ~~our insulated concrete forms business. Additionally, European operations~~commercial sealants. Performance in most international markets also generated strong ~~sales growth, due in part to an easier comparison to the prior year first quarter, when shelter-in-place requirements were most severe.~~top-line growth.

Our PCG segment experienced significant sales growth during the ~~first~~third quarter of fiscal 2022 in nearly all the major business units in the segment when compared to the same quarter in the prior ~~year. This growth was partially aided by~~year, particularly businesses that provide polymer flooring systems, corrosion control coatings and raised flooring systems. Driving the ~~prior year comparison, where there was a significant amount of deferrals of flooring~~strong top-line were increased industrial maintenance spending, recovery in energy markets and ~~coating projects as a result of restrictions associated with Covid, which impacted the ability of contractors to gain access to the facilities of our end customers.~~price increases.

Our Consumer segment experienced ~~significant~~ organic ~~declines~~growth in comparison to the prior year, which benefitted from unprecedented demand worldwide for its “do-it-yourself” home improvement and cleaning products, as a result of the Covid pandemic. Current quarter sales ~~were also~~continued to be impacted by ~~the lack of availability of~~ raw ~~materials, due to~~material shortages and supply chain disruptions. Despite these disruptions, underlying demand for these products remains strong, which resulted in fiscal 2022 ~~first~~third quarter sales that were still above the pre-pandemic levels of the ~~first~~third quarter in fiscal 2020.

Our SPG segment experienced significant sales growth due to strong demand for ~~our~~nearly all its businesses, especially those serving the ~~marine, powder coatings, wood stains~~OEM and ~~sealers and~~food additives markets. Additionally, the segment's disaster restoration equipment ~~markets. Additionally, our new~~ business ~~development efforts have accelerated as~~rebounded after securing a ~~result~~supply of ~~a number of recent management changes.~~semiconductor chips and reconfiguring its products to accommodate them.

Gross Profit Margin Our consolidated gross profit margin of ~~37.2%~~34.8% of net sales for the ~~first~~third quarter of fiscal 2022 compares to a consolidated gross profit margin of ~~40.7%~~37.2% for the comparable period a year ago. The current quarter gross profit margin decrease of approximately ~~3.5%~~2.4%, or ~~350~~240 basis points (“bps”), resulted primarily from lower ~~sales volume,~~absorption, inflationary pressures on raw materials versus the same period a year ago, higher freight costs, and production inefficiencies as a result of labor shortages due to the Omicron variant and supply chain ~~disruption and availability of raw materials.~~disruptions. Partially offsetting these decreases were the impact of selling price increases and MAP to Growth savings.

Overall, we experienced inflation in raw ~~material costs were inflationary~~materials, freight and wages during the ~~first~~third quarter of fiscal 2022. As indicated previously, several macroeconomic factors resulted in inflation, beginning in the fourth quarter of fiscal 2021. We expect that these increased costs will continue to be reflected in our results throughout the remainder of fiscal ~~2022.~~2022 and into fiscal 2023. We plan to continue working to offset these increased costs with commensurate increases in selling prices. Furthermore, ~~we have received~~ “force ~~majeure” notifications~~majeures” remain in effect from ~~many~~some of our ~~major~~ material suppliers, which may impact our ability to timely meet customer demand in certain of our businesses and across certain product categories.

The macroeconomic factors identified above include, but are not limited to, the following: (i) strained supply chains as inventories have not fully recovered from Winter Storm Uri in February 2021; (ii) ~~additional significant weather events causing further supply chain disruption, such as Hurricane Ida in August 2021; (iii)~~ intermittent supplier plant shutdowns due to ~~catastrophic failures or as a result of~~ the Covid pandemic; ~~(iv)~~(iii) significant worldwide demand during the Covid pandemic for key items such as packaging, solvents, and ~~chemicals used in cleaning products; (v)~~chemicals; (iv) availability of transportation and ~~fluctuating~~elevated costs to transport ~~products; (vi) reduction of global supply of materials~~products, which has been exacerbated as a result of ~~power curtailments in China;~~increased Covid infections and ~~(vii)~~associated restrictions and (v) high global demand as markets reopen and economic stimulus drives growth.

SG&A Our consolidated SG&A expense during the period was ~~$22.9~~$31.4 million higher versus the same period last year ~~and increased~~but decreased to ~~25.4%~~30.2% of net sales from ~~24.6%~~31.7% of net sales for the prior year quarter. Additional SG&A expense recognized by companies we recently

acquired approximated ~~$7.4~~$6.9 million during the ~~first~~third quarter of fiscal 2022. ~~During the first quarter of fiscal 2022, our MAP to Growth generated incremental savings of approximately $3.0 million.~~

Our CPG segment SG&A was approximately ~~$21.7~~$15.5 million higher for the first quarter of fiscal 2022 versus the comparable prior year period but decreased slightly as a percentage of net sales. The increase was mainly due to higher variable expense as a result of higher sales volumes, higher IT costs associated with ongoing ERP implementations, as well as increases in discretionary spending (i.e. meetings, travel, etc.) and restoring salaries which were reduced in the prior year in response to the impact of the Covid pandemic. Additionally, companies recently acquired generated approximately $0.5 million of additional SG&A expense.

~~Our PCG segment SG&A was approximately $6.5 million higher for the first~~third quarter of fiscal 2022 versus the comparable prior year period but decreased as a percentage of net sales. The increase in expense was mainly due to higher variable costs as a result of higher sales volumes, continued investment in growth initiatives, restoration of travel expenses, and higher incentive compensation accruals directly related to performance. Additionally, companies recently acquired generated approximately $4.1 million of additional SG&A expense.

Our PCG segment SG&A was approximately $10.9 million higher for the third quarter ~~over quarter~~of fiscal 2022 versus the comparable prior year period but decreased as a percentage of net sales. The increase in expense as compared to the prior year period is mainly due to increased variable expenses as a result of higher sales volumes, higher distribution costs, as well as ~~increases in IT costs associated with ongoing ERP implementations.~~restoration of travel expenses. Additionally, companies recently acquired generated approximately ~~$2.4~~$2.3 million of additional SG&A expense.

Our Consumer segment SG&A decreased by approximately ~~$6.8~~$5.7 million during the ~~first~~third quarter of fiscal 2022 versus the same period last year, ~~but increased~~and decreased as a percentage of net sales. The quarter-over-quarter decrease in SG&A was attributable to ~~lower~~decreases in advertising and promotional ~~costs~~expense, as well as reduced incentives when compared to the prior year quarter. These decreases were partially offset by merit increases and ~~distribution expenses, as a result~~the restoration of ~~lower sales volumes. Partially offsetting these decreases was approximately $4.3 million of additional SG&A expense generated from the company recently acquired.~~travel expenses.

Our SPG segment SG&A was approximately ~~$3.4~~$3.6 million higher during the ~~first~~third quarter of fiscal 2022 versus the comparable prior year period but decreased as a percentage of net sales. The increase in SG&A expense is attributable to investments in growth initiatives ~~merit increases, increases~~and restoring travel spending curtailed in ~~discretionary spending (i.e. meetings, travel, etc.), as well as increased distribution costs quarter over quarter.~~the prior year. Additionally, ~~the company~~companies recently acquired generated approximately ~~$0.2~~$0.5 million of additional SG&A expense.

SG&A expenses in our corporate/other category ~~decreased~~increased by ~~$1.9~~$7.1 million during the ~~first~~third quarter of fiscal 2022 as compared to last year’s ~~first~~third quarter mainly due to ~~lower incentive compensation.~~higher hospitalization, insurance and consulting expenses.

The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the three months ended ~~August 31,~~February 28, 2022 and 2021, ~~and 2020,~~ as ~~this activity~~the service cost component has a significant impact on our SG&A expense:

We expect that pension expense will fluctuate on a year-to-year basis, depending upon the investment performance of plan assets and potential changes in interest rates, both of which are difficult to predict, but which may have a material impact on our consolidated financial results in the future.

These charges are associated with closures of certain facilities as well as the elimination of duplicative headcount and infrastructure associated with certain of our businesses and are the result of our MAP to Growth, which focuses upon strategic shifts in operations across our entire business.

Our current expectation of future additional restructuring costs is summarized in the table below.

We previously expected these charges to be incurred by the end of calendar year 2020, upon which we expected to achieve an annualized pretax savings of approximately $290 million per year. However, the disruption caused by the outbreak of the Covid pandemic delayed the finalization of our MAP to Growth past the original target completion date of December 31, 2020. We utilized the remainder of fiscal 2021 to drive toward achieving the goals originally set forth in our MAP to Growth. On May 31, 2021, we formally concluded our MAP to Growth. However, certain projects identified prior to May 31, 2021 are not yet ~~completed.~~complete. Accordingly, we expect to incur restructuring expense throughout fiscal 2022, as projects related to our MAP to Growth are executed and completed.

See Note 3, “Restructuring,” to the Consolidated Financial Statements, for further details surrounding our MAP to Growth.

(a) The interest rate decrease was a result of lower market rates on the variable cost borrowings.

See Note 6, “Investment (Income), Expense, Net,” to the Consolidated Financial Statements for ~~additional~~ details.

See Note 7, “(Gain) on Sales of Assets, Net,” to the Consolidated Financial Statements for details.

See Note 8, “Other (Income) Expense, Net,” to the Consolidated Financial Statements for details.

Our CPG segment results reflect market share gains, operational improvements, proactive cost controls, and selling price increases, which more than offset production inefficiencies due to supply chain disruptions and material cost inflation. Our PCG segment results reflect improved pricing, incremental savings from operating improvement initiatives and recent acquisitions. Our Consumer segment results reflect inflation in materials, freight and labor, as well as the unfavorable impact of supply shortages on productivity. Our SPG segment results reflect higher sales and operational improvements, partially offset by raw material inflation, inefficiencies due to supply chain disruption, and investments in future growth initiatives. Our Non-Op segment results reflect the unfavorable swing in investment income.

Income Tax Rate The effective income tax rate of 17.9% for the three months ended February 28, 2022 compares to the effective income tax rate of 31.1% for the three months ended February 28, 2021. The effective income tax rates for the presented periods reflect variances from the 21% statutory rate due primarily to the impact of state and local income taxes, non-deductible business expenses and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, and the impact of tax benefits related to equity compensation. Additionally, the effective income tax rate for the three month period ended February 28, 2022 reflects net favorable period-over-period changes in foreign tax credit valuation allowances. Further, the effective tax rate for the three-month period ended February 28, 2021, includes a $5.3 million discrete charge for an increase to the deferred tax liability for withholding taxes on additional foreign earnings that were no longer considered to be permanently reinvested.

Our CPG segment experienced significant organic growth during the first nine months of fiscal 2022 in nearly all business units in the segment when compared to the same period in the prior year. Business units performing particularly well during the period were providers of commercial roofing systems, concrete admixtures and repair products, and our insulated concrete forms business. Additionally, European operations generated strong sales growth, due in part to an easier comparison to the prior year period, when shelter-in-place requirements were most severe.

Our PCG segment experienced sales growth during the first nine months of fiscal 2022 in nearly all the major business units in the segment when compared to the same period in the prior year. This growth was partially aided by the prior year comparison, where there was a significant number of deferrals of flooring and coating projects as a result of restrictions associated with Covid, which impacted the ability of contractors to gain access to the facilities of our end customers. Sales growth was also facilitated by price increases and more favorable product mix.

Our Consumer segment experienced significant organic declines in comparison to the prior year, which benefitted from unprecedented demand worldwide for its “do-it-yourself” home improvement and cleaning products, as a result of the Covid pandemic. Current period sales were also impacted by the lack of availability of raw materials, due to supply chain disruptions. Despite these disruptions, underlying demand for these products remains strong, which resulted in fiscal 2022 first nine-month sales that were still above the pre-pandemic levels in the comparable period of fiscal 2020.

Our SPG segment experienced strong demand for our businesses serving the marine, powder coatings and wood stains & sealers markets. Additionally, our new business development efforts have accelerated as a result of a number of recent management changes. The sales growth in this segment was slowed by disruptions in the disaster restoration equipment business, which struggled to meet customer demand due to the global semiconductor chip shortage.

Gross Profit Margin Our consolidated gross profit margin of 35.9% of net sales for the first nine months of fiscal 2022 compares to a consolidated gross profit margin of 39.2% for the comparable period a year ago. The current period gross profit margin decrease of approximately 3.3%, or 330 bps, resulted primarily from inflationary pressures on raw materials, freight and labor versus the same period a year ago, and production inefficiencies as a result of supply chain disruption and availability of raw materials. Partially offsetting these decreases were the impact of selling price increases and MAP to Growth savings.

Overall, raw material costs were inflationary during the first nine months of fiscal 2022. As indicated previously, several macroeconomic factors resulted in inflation, beginning in the fourth quarter of fiscal 2021. We expect that these increased costs will continue to be reflected in our results throughout the remainder of fiscal 2022 and into fiscal 2023. We plan to continue working to offset these increased costs with commensurate increases in selling prices. Furthermore, “force majeures” remain in effect from some of our material suppliers, which may impact our ability to timely meet customer demand in certain of our businesses and across certain product categories.

SG&A Our consolidated SG&A expense during the period was $92.7 million higher versus the same period last year but decreased slightly to 27.3% of net sales from 27.4% of net sales for the prior year period. Additional SG&A expense recognized by companies we recently acquired approximated $19.8 million during the first nine months of fiscal 2022.

Our CPG segment SG&A was approximately $55.2 million higher for the first nine months of fiscal 2022 versus the comparable prior year period but decreased as a percentage of net sales. The increase was mainly due to higher variable expense as a result of higher sales volumes, continued investment in growth and operating improvement initiatives, and restoring travel spending and salaries which were reduced in the prior year in response to the impact of the Covid pandemic. Additionally, companies recently acquired generated approximately $7.1 million of additional SG&A expense.

Our PCG segment SG&A was approximately $26.0 million higher for the first nine months of fiscal 2022 versus the comparable prior year period but decreased as a percentage of net sales. The period over period increase is mainly due to increases in commissions resulting from higher sales volume, restored travel expenses, and higher distribution costs. Additionally, companies recently acquired generated approximately $7.6 million of additional SG&A expense.

Our Consumer segment SG&A decreased by approximately $11.0 million during the first nine months of fiscal 2022 versus the same period last year, but increased as a percentage of net sales. The period over period decrease in SG&A was attributable to lower advertising and promotional costs and reduced incentives. Partially offsetting these decreases was approximately $4.3 million of additional SG&A expense generated from the company recently acquired.

Our SPG segment SG&A was approximately $13.6 million higher during the first nine months of fiscal 2022 versus the comparable prior year period but decreased slightly as a percentage of net sales. The increase in SG&A expense is attributable to investments in growth initiatives, merit increases, as well as a charge recorded during the second quarter of fiscal 2022 related to the legal matter described above in Note 15, "Contingencies and Accrued Losses," to the Consolidated Financial Statements. Additionally, companies recently acquired generated approximately $0.8 million of additional SG&A expense.

SG&A expenses in our corporate/other category increased by $8.9 million during the first nine months of fiscal 2022 as compared to last year’s first nine months mainly due to higher hospitalization, insurance, legal and consulting expenses.

The following table summarizes the retirement-related benefit plans’ impact on income before income taxes for the nine months ended February 28, 2022 and 2021, as the service cost component has a significant impact on our SG&A expense:

For further information and detail about our MAP to Growth, see "Restructuring Charges" in Results of Operations - Three Months Ended February 28, 2022, and Note 3, "Restructuring" to the Consolidated Financial Statements.

(a) The interest rate decrease was a result of lower market rates on the variable cost borrowings.

See Note 6, “Investment (Income) Expense, Net,” to the Consolidated Financial Statements for details.

See Note 7, “(Gain) on Sales of Assets, Net,” to the Consolidated Financial Statements for details.

See Note 8, “Other (Income) Expense, Net,” to the Consolidated Financial Statements for details.

Our CPG segment results reflect market share gains, operational improvements, proactive cost controls, selling price increases and the $41.9 million gain on the sale of certain real property assets for the Toronto, Ontario location, which more than offset production inefficiencies due to supply chain disruptions and material cost inflation. Our PCG segment results reflect improved pricing, incremental savings from operating improvement initiatives and recent acquisitions. Our Consumer segment results reflect the decrease in sales, inflation in materials, freight and labor, as well as the unfavorable impact of supply shortages on productivity. Our SPG segment results reflect ~~higher sales volume and incremental operating improvement program savings, which were partially offset by~~ raw material inflation, inefficiencies due to supply chain disruption and investments in future growth ~~initiatives.~~initiatives, somewhat offset by higher sales volume and incremental operating improvement program savings. Our Non-Op segment results reflect the unfavorable swing in investment income.

Income Tax Rate The effective income tax rate of ~~25.7%~~23.9% for the ~~three~~nine months ended ~~August 31, 2021,~~February 28, 2022 compares to the effective income tax rate of ~~25.1%~~25.2% for the ~~three~~nine months ended ~~August 31, 2020.~~February 28, 2021. The effective income tax rates for the ~~three months~~nine-month periods ended ~~August 31,~~February 28, 2022 and 2021 ~~and 2020~~ reflect variances from the 21% statutory rate due primarily to the unfavorable impact of state and local income taxes, non-deductible business expenses and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to equity compensation. Additionally, the nine month period ended February 28, 2022 reflects net favorable period-over-period changes in foreign tax credit valuation allowances. The nine month period ended February 28, 2021 includes, as noted above, a charge related to an increase in the deferred tax liability for withholding taxes on foreign earnings not considered permanently reinvested.

Approximately ~~$76.1~~$156.0 million of cash was provided by operating activities during the first ~~three~~nine months of fiscal 2022, compared with ~~$318.1~~$651.9 million of cash provided by operating activities during the same period last year. The net change in cash from operations includes the change in net income, which decreased by ~~$46.0~~$54.0 million during the first ~~three~~nine months of fiscal 2022 versus the same period during fiscal 2021. Cash provided from operations, along with the use of available credit lines, as required, remain our primary sources of liquidity.

The change in accounts receivable during the first three months of fiscal 2022 provided approximately $97.5 million more cash than during the same period a year ago. This resulted primarily from the timing of sales, particularly in our Consumer segment. Days sales outstanding (“DSO”) at August 31, 2021 decreased to 59.8 days from 60.4 days at August 31, 2020.

During the first ~~three~~nine months of fiscal 2022, the change in inventory used approximately ~~$111.6~~$215.8 million more cash compared to our spending during the same period a year ago, which resulted primarily from the ~~timing of purchases by retail customers.~~response to supply chain constraints. Days of inventory outstanding (“DIO”) was approximately ~~86.5~~114.7 and ~~74.0~~103.1 days at ~~August 31,~~February 28, 2022 and 2021, ~~and 2020,~~ respectively. The increase in DIO was driven mainly by ~~the Consumer segment, which resulted from~~ material price inflation and build-up of raw material inventory in order to mitigate supply chain disruptions.

The change in accounts payable during the first ~~three~~nine months of fiscal 2022 used approximately ~~$47.9~~$41.7 million more cash than during the first ~~three~~nine months of fiscal 2021 due principally to the timing of purchases, which were restrained at the ~~beginning~~end of fiscal ~~2021~~2020 due to the sharp business downturn caused by pandemic lockdown restrictions. ~~However, days~~Days payables outstanding (“DPO”) ~~increased~~decreased by approximately ~~9.1~~3.5 days to ~~84.9~~95.6 days at ~~August 31, 2021~~February 28, 2022 from ~~75.8~~99.1 days at ~~August 31, 2020. The longer DPO is a direct result of moving toward a center-led procurement process that includes negotiating modified payment terms.~~February 28, 2021.

The change in accrued compensation and benefits during the first ~~three~~nine months of fiscal 2022 used approximately ~~$44.8~~$46.3 million more cash than during the first ~~three~~nine months of fiscal 2021 due to higher incentive compensation earned during fiscal 2021 (which was paid out in the first quarter of fiscal 2022) as compared to fiscal 2020 (which was paid out in the first quarter of fiscal 2021). The change in other accrued liabilities during the first ~~three~~nine months of fiscal 2022 ~~provided~~used approximately ~~$71.5~~$61.2 million ~~less~~more cash than during the first ~~three~~nine months of fiscal 2021 due ~~principally~~to changes in pension, advertising, and customer rebate accruals and most notably due to the ~~timing of income taxes payable~~Coronavirus Aid, Relief, and Economic Security (“CARES”) Act deferral that was paid out during the ~~increase in customer rebate accruals. Additionally, certain~~period. Certain government entities located where we have operations have enacted various pieces of legislation designed to help businesses weather the economic impact of Covid and ultimately preserve jobs. Some of this legislation, such as the ~~Coronavirus Aid, Relief, and Economic Security (CARES)~~CARES Act in the United States, enables employers to defer the payment of various types of taxes over varying time horizons. As of May 31, 2021, we had a remaining deferral of $27.1 million of such government payments that would have normally been paid during fiscal 2020 and fiscal 2021, but which will be paid in future periods. During the first ~~quarter ended August 31, 2021,~~nine months of fiscal 2022, we did not defer any additional government payments that would have normally been paid during ~~our~~the first ~~quarter~~nine months of fiscal 2022. During the ~~prior year~~ first ~~quarter ended August 31, 2020,~~nine months of fiscal 2021, we deferred ~~$14.8~~$12.1 million of such government payments that would have normally been paid during ~~our~~the first ~~quarter~~nine months of fiscal 2021. OfDuring the ~~remaining $27.1 million, at August 31, 2021, we expect to pay approximately half of the balance during our~~ third quarter of fiscal 2022, ~~and~~we paid approximately ~~half of~~$13.5 million, which reduced the deferred government payments balance to $13.6 million at February 28, 2022. We expect to pay off the remaining balance during ~~our~~the third quarter of fiscal 2023.

For the first ~~three~~nine months of fiscal 2022, cash used for investing activities increased by ~~$48.2~~$3.8 million to ~~$90.5~~$221.7 million as compared to ~~$42.3~~$217.9 million in the prior year period. This year-over-year increase in cash used for investing activities was mainly driven by ~~$35.8~~the sales of assets, whose proceeds provided $51.9 million in ~~more cash spent on acquisitions as we did not have any acquisition activity during~~ the ~~first three months of fiscal 2021.~~current year, which was almost completely offset by the increase in capital expenditures.

~~Capital~~We paid for capital expenditures ~~other than for ordinary repairs~~of $152.4 million and ~~replacements, are made to~~$103.2 million during the first nine months of fiscal 2022 and fiscal 2021, respectively. Our capital expenditures accommodate our continued growth to achieve production and distribution efficiencies, expand capacity, introduce new technology, improve environmental health and safety capabilities, improve information systems, and enhance our administration capabilities. We ~~paid for capital expenditures of $51.9 million and $41.5 million during the first three months of fiscal 2022 and fiscal 2021, respectively. We~~ have ~~continued to maintain an elevated level of~~increased capital spending in fiscal 2022, ~~in an effort~~ to ~~consolidate ERP systems~~expand capacity to respond to brisk product demand and to continue our ~~plant footprint, as part of the finalization of our MAP to Growth.~~growth initiatives.

Our captive insurance companies invest their excess cash in marketable securities in the ordinary course of conducting their operations, and this activity will continue. Differences in the amounts related to these activities on a year-over-year basis are primarily attributable to differences in the timing and performance of their investments balanced against amounts required to satisfy claims. At ~~August 31, 2021~~February 28, 2022 and May 31, 2021, the fair value of our investments in available-for-sale debt securities and marketable equity securities, which includes captive insurance-related assets, totaled ~~$175.6~~$163.9 million and $168.8 million, respectively. The fair value of our portfolio of marketable securities is based on quoted market prices for identical, or similar, instruments in active or non-active markets or model-derived-valuations with observable inputs. We have no marketable securities whose fair value is subject to unobservable inputs.

As of ~~August 31, 2021,~~February 28, 2022, approximately ~~$191.3~~$175.5 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with $221.1 million at May 31, 2021. Undistributed earnings held at our foreign subsidiaries that are considered permanently reinvested will be used, for instance, to expand operations organically or for acquisitions in foreign jurisdictions. Further, our operations in the U.S. generate sufficient cash flow to satisfy U.S. operating requirements. Refer to Note 8,9, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.

For the first ~~three~~nine months of fiscal 2022, financing activities provided $27.9 million cash, which compares to cash used for financing activities ~~decreased by $261.7~~of $439.7 million ~~to $7.2 million as compared to $268.9 million in~~during the ~~prior year period.~~first nine months of fiscal 2021. The overall decrease in cash used for financing activities was driven principally by debt-related ~~activities, as~~activities. During the first nine months of fiscal 2022, we used approximately ~~$212.6~~$177.0 million less cash to paydown existing debt and provided approximately ~~$60.4~~$301.0 million more cash from additions to short and long-term debt, ~~during~~as a result of the ~~first three months~~issuance of ~~fiscal 2022 as compared to the prior year.~~our 2.95% Notes due 2032. See below for further details on the significant components of our debt.

The decrease in cash used for debt-related activities was partially offset by a $12.5 million increase in cash used for the repurchase of common stock during the first three months of fiscal 2022, as compared to the prior year. This increase was a result of the macroeconomic uncertainty in the prior year caused by the Covid pandemic, which led to the temporary suspension of our stock repurchase program during the fourth quarter of fiscal 2020, which lasted through the second quarter of fiscal 2021.

Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit facilities, stood at ~~$1.38 billion at August 31, 2021, compared with~~ $1.46 billion atas of both February 28, 2022 and May 31, 2021. ~~Significant components~~

On January 25, 2022, we closed an offering for $300 million aggregate principal amount of 2.95% Notes due 2032. The proceeds from the 2032 notes were used to repay a portion of the outstanding borrowings under our ~~debt include (refer~~revolving credit facility and for general corporate purposes. Interest on the Notes accrues from January 25, 2022 and will be payable semiannually in arrears on January 15 and July 15 of each year, beginning July 15, 2022, at a rate of 2.95% per year. The notes mature on January 15, 2032. The indenture governing this indebtedness includes cross-acceleration provisions. Under certain circumstances, where an event of default under our other instruments results in acceleration of the indebtedness under such instruments, holders of the indebtedness under the indenture are entitled to ~~“Note G – Borrowings” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2021 for more comprehensive details):~~declare amounts outstanding immediately due and payable.

During the quarter ended November 30, 2018, we replaced our previous $800.0 million revolving credit agreement, which was set to expire on December 5, 2019, with a $1.3 billion unsecured syndicated revolving credit facility (the “Revolving Credit Facility”), which expires on October 31, 2023. The Revolving Credit Facility includes sublimits for the issuance of swingline loans, which are comparatively short-term loans used for working capital purposes and letters of credit. The aggregate maximum principal amount of the commitments under the Revolving Credit Facility may be expanded upon our request, subject to certain conditions, up to $1.5 billion. The Revolving Credit Facility is available to refinance existing indebtedness, to finance working capital and capital expenditures, and for general corporate purposes.

The Revolving Credit Facility requires us to comply with various customary affirmative and negative covenants, including a leverage covenant (i.e., Net Leverage Ratio) and interest coverage ratio, which are calculated in accordance with the terms as defined by the Revolving Credit Facility. Under the terms of the leverage covenant, we may not permit our leverage ratio for total indebtedness to consolidated EBITDA for the four most recent fiscal quarters to exceed 3.75 to 1.00. During certain periods and per the terms of the Revolving Credit Facility, this ratio may be increased to 4.25 to 1.00 in connection with certain “material acquisitions.” The acquisition of Ali Industries, LLC occurred on September 1, 2020 and qualifies as a “material acquisition,” which enables us to request an increase in the maximum permitted Net Leverage Ratio covenant. We provided such notice to our Administrative Agent to trigger this provision

~~of the agreement during our second quarter of fiscal 2021, and therefore, our Net Leverage Ratio covenant has been increased to 4.25 to 1.00 through August 31, 2021. The~~ minimum required consolidated interest coverage ratio for EBITDA to interest expense is 3.50 to 1.00. The interest coverage ratio is calculated at the end of each fiscal quarter for the four fiscal quarters then ended using EBITDA as defined in the Revolving Credit Facility.

As of ~~August 31, 2021,~~February 28, 2022, we were in compliance with all financial covenants contained in our Revolving Credit Facility, including the Net Leverage Ratio and Interest Coverage Ratio covenants. At that date, our Net Leverage Ratio was ~~2.42~~2.78 to 1.00, while our Interest Coverage Ratio was ~~11.49~~10.64 to 1.00. As of ~~August 31, 2021,~~February 28, 2022, we had ~~$971.1 million~~$1.06 billion of borrowing availability on our Revolving Credit Facility.

Our access to funds under our Revolving Credit Facility is dependent on the ability of the financial institutions that are parties to the Revolving Credit Facility to meet their funding commitments. Those financial institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time. Moreover, the obligations of the financial institutions under our Revolving Credit Facility are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others.

As of ~~August 31, 2021, the~~February 28, 2022, we did not have an outstanding balance under our AR Program, ~~was $60.0 million,~~ which compares with the maximum availability of ~~$250.0~~$215.0 million on that date. The maximum availability under the AR Program is $250.0 million, but availability is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable being transferred and, therefore, at certain times, we may not be able to fully access the $250.0 million of funding available under the AR Program.

The AR Program contains various customary affirmative and negative covenants, as well as customary default and termination provisions. Our failure to comply with the covenants described above and other covenants contained in the Revolving Credit Facility could result in an event of default under that agreement, entitling the lenders to, among other things, declare the entire amount outstanding under the Revolving Credit Facility to be due and payable immediately. The instruments governing our other outstanding indebtedness generally include cross-default provisions that provide that, under certain circumstances, an event of default that results in acceleration of our indebtedness under the Revolving Credit Facility will entitle the holders of such other indebtedness to declare amounts outstanding immediately due and payable.

On February 21, 2020, we and our subsidiary, RPM Europe Holdco B.V. (formerly "RPM New Horizons Netherlands, B.V.") (the “Foreign Borrower”), entered into an unsecured syndicated term loan facility credit agreement (the “New Credit Facility”) with the lenders party thereto and PNC Bank, National Association, as administrative agent for the lenders. The New Credit Facility provides for a $300 million term loan to us and a $100 million term loan to the Foreign Borrower (together, the “Term Loans”), each of which was fully advanced on the closing date. The Term Loans mature on February 21, 2023, with no scheduled amortization before that date, and the Term Loans may be prepaid at any time without penalty or premium. We agreed to guarantee all obligations of the Foreign Borrower under the New Credit Facility. The proceeds of the Term Loans were used to repay a portion of the outstanding borrowings under our Revolving Credit Facility. See “Revolving Credit Agreement” above for further details.

The Term Loans will bear interest at either the base rate or the Eurodollar Rate, at our option, plus a spread determined by our debt rating. We, and the Foreign Borrower, have entered into multicurrency floating to fixed interest rate swap agreements that effectively fix interest payment obligations on the entire principal amount of the Term Loans through their maturity at (a) 0.612% per annum on our Term Loan, and (b) 0.558% per annum on the Foreign Borrower’s Term Loan.

The New Credit Facility contains customary covenants, including but not limited to, limitations on our ability, and in certain instances, our subsidiaries’ ability, to incur liens, make certain investments, or sell or transfer assets. Additionally, we may not permit (i) our consolidated interest coverage ratio to be less than 3.50 to 1.00, or (ii) our leverage ratio (defined as the ratio of total indebtedness, less unencumbered cash and cash equivalents in excess of $50 million, to consolidated EBITDA for the four most recent fiscal quarters) to exceed 3.75 to 1.00. Upon notification to the lenders, however, the maximum permitted leverage ratio can be relaxed to 4.25 to 1.00 for a one-year period in connection with certain material acquisitions. In addition, the agreement was amended on April 30, 2020 to allow the maximum permitted Net Leverage Ratio to be increased to 4.25 to 1.00 during certain periods (refer to the “Revolving Credit Agreement” section above). As noted in the “Revolving Credit Agreement” section above, we provided such notice to our Administrative Agent during our second quarter of fiscal 2021, and therefore, our Net Leverage Ratio covenant has been increased to 4.25 to 1.00 through August 31, 2021. The covenants contained in the New Credit Facility are substantially similar to those contained in our Revolving Credit Facility. See “Revolving Credit Agreement” above for details on our compliance with all significant financial covenants at ~~August 31, 2021.~~February 28, 2022.

Refer to Note G, "Borrowings," to the Consolidated Financial Statements, in our Annual Report on Form 10-K for the fiscal year ended May 31, 2021 for more comprehensive details on the significant components of our debt.

See Note ~~10,~~12, “Stock Repurchase Program” to the Consolidated Financial Statements, for further detail surrounding our stock repurchase program.

We do not have any off-balance sheet financings. We have no subsidiaries that are not included in our financial statements, nor do we have any interests in, or relationships with, any special purpose entities that are not reflected in our financial statements.

Environmental obligations continue to be appropriately addressed and, based upon the latest available information, it is not anticipated that the outcome of such matters will materially affect our results of operations or financial condition. Our critical accounting policies and estimates set forth above describe our method of establishing and adjusting environmental-related accruals and should be read in conjunction with this disclosure. For additional information, refer to “Part II, Item 1. Legal Proceedings.”

The foregoing discussion includes forward-looking statements relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) global markets and general economic conditions, including uncertainties surrounding the volatility in financial markets, the availability of capital and the effect of changes in interest rates, and the viability of banks and other financial institutions; (b) the prices, supply and capacity of raw materials, including assorted pigments, resins, solvents, and other natural gas- and oil-based materials; packaging, including plastic and metal containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our construction and chemicals businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) the timing of and the realization of anticipated cost savings from restructuring initiatives and the ability to identify additional cost savings opportunities; (j) risks related to the adequacy of our contingent liability reserves; (k) risks relating to the Covid pandemic; (l) risks related to adverse weather conditions or the impacts of climate change and natural disasters; and (m) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended May 31, 2021, as the same may be updated from time to time. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the filing date of this document.

We are exposed to market risk from changes in raw materials costs, interest rates and foreign exchange rates since we fund our operations through long- and short-term borrowings and conduct our business in a variety of foreign currencies. There were no material potential changes in our exposure to these market risks since May 31, 2021. However, refer to the "Gross Profit Margin" paragraphs in the "RESULTS OF OPERATIONS" for the "Three Months Ended ~~August 31, 2021" section~~February 28, 2022" and "Nine Months Ended February 28, 2022" sections above, for additional details on recent inflationary cost pressure and supply chain disruption at some of our businesses across certain product categories.

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of ~~August 31, 2021~~February 28, 2022 (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized and reported, within the time periods specified in the

Commission’s rules and forms, and (2) is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended ~~August 31, 2021~~February 28, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Like other companies participating in similar lines of business, some of our subsidiaries are identified as a “potentially responsible party” under the federal Comprehensive Environmental Response, Compensation and Liability Act and similar local environmental statutes or are participating in the cost of certain clean-up efforts or other remedial actions relating to environmental matters. Our share of such costs to date, however, has not been material and management believes that these environmental proceedings will not have a material adverse effect on our consolidated financial condition or results of operations. See “Item 1 — Business — Environmental Matters,” in our Annual Report on Form 10-K for the year ended May 31, 2021.

As permitted by SEC rules, and given the size of our operations, we have elected to adopt a quantitative threshold for environmental proceedings of $1 million. As of the date of this filing, we are not aware of any matters that exceed this threshold and meet the definition for disclosure.

In addition to the other information set forth in this report, you should carefully consider the other risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 31, 2021.

The following table presents information about repurchases of RPM International Inc. common stock made by us during the ~~first~~third quarter of fiscal 2022:

(1) ~~66,574~~All of the 10,351 shares of common stock that were disposed of back to us during the three month period ended February 28, 2022 were in satisfaction of tax obligations related to the vesting of restricted stock, which was granted under RPM International Inc.'s equity and incentive plans.

(2) The maximum dollar amount that may yet be repurchased under our program was approximately ~~$407.3~~$392.3 million at ~~August 31, 2021.~~February 28, 2022. Refer to Note 1012 “Stock Repurchase Program” to the Consolidated Financial Statements for further information regarding our stock repurchase program.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Delaware		02-0642224
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

P.O. BOX 777; 2628 PEARL ROAD; MEDINA, Ohio (Address of principal executive offices)		44258 (Zip Code)
		44258 (Zip Code)


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Stockholders’ Equity	7
	Notes to Consolidated Financial Statements	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2428
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3240
Item 4.	Controls and Procedures	3240

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3441
Item 1A.	Risk Factors	3441
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	3441
Item 6.	Exhibits	3542
Signatures		3643


	Three Months Ended						Three Months Ended						Nine Months Ended
	August 31,			August 31,			February 28,			February 28,			February 28,			February 28,
	2021			2020			2022			2021			2022			2021
Net Income	$	134,795		$	180,785		$	33,249		$	38,466		$	293,160		$	347,136
Other comprehensive income, net of tax:
Foreign currency translation adjustments (net of tax of $2,337 and $2,862, respectively)		(38,980	)		64,667
Pension and other postretirement benefit liability adjustments (net of tax of $1,466 and $786, respectively)		4,442			3,260
Unrealized gain on securities and other (net of tax of $145 and $82, respectively)		274			89
Unrealized gain (loss) on derivatives (net of tax of $2,571 and $5,542, respectively)		8,610			(18,112	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (net of tax of $296; $273; $3,562 and $3,216, respectively)								16,124			25,718			(69,722	)		102,880
Pension and other postretirement benefit liability adjustments (net of tax of $951; $1,356; $3,630 and $3,864, respectively)								3,057			4,719			11,086			13,623
Unrealized (loss) on securities and other (net of tax of $238; $330; $473 and $8, respectively)								(384	)		(957	)		(287	)		(787	)
Unrealized gain (loss) on derivatives (net of tax of $838; $763; $6,551 and $6,425, respectively)								2,648			(2,554	)		21,448			(21,043	)
Total other comprehensive income (loss)		(25,654	)		49,904			21,445			26,926			(37,475	)		94,673
Total Comprehensive Income		109,141			230,689			54,694			65,392			255,685			441,809
Less: Comprehensive Income Attributable to Noncontrolling Interests		183			259			238			268			633			752
Comprehensive Income Attributable to RPM International Inc. Stockholders	$	108,958		$	230,430		$	54,456		$	65,124		$	255,052		$	441,057


	Common Stock											Accumulated
	Number											Other						Total RPM
	of			Par/Stated			Paid-In		Treasury			Comprehensive			Retained			International			Noncontrolling			Total
	Shares			Value			Capital		Stock			Income (Loss)			Earnings			Inc. Equity			Interests			Equity
Balance at June 1, 2020		129,511		$	1,295		$	1,014,428	$	(580,117	)	$	(717,497	)	$	1,544,336		$	1,262,445		$	2,218		$	1,264,663
Net income		-			-			-		-			-			180,595			180,595			190			180,785
Other comprehensive income		-			-			-		-			49,835			-			49,835			69			49,904
Dividends declared and paid ($0.36 per share)		-			-			-		-			-			(46,622	)		(46,622	)		-			(46,622	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		464			5			10,451		(7,115	)		-			-			3,341			-			3,341
Balance at August 31, 2020		129,975		$	1,300		$	1,024,879	$	(587,232	)	$	(667,662	)	$	1,678,309		$	1,449,594		$	2,477		$	1,452,071
Net income		-			-			-		-			-			127,659			127,659			225			127,884
Other comprehensive income		-			-			-		-			17,843			-			17,843			-			17,843
Dividends declared and paid ($0.38 per share)		-			-			-		-			-			(49,397	)		(49,397	)		-			(49,397	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		131			1			10,660		(8,619	)		-			-			2,042			-			2,042
Balance at November 30, 2020		130,106		$	1,301		$	1,035,539	$	(595,851	)	$	(649,819	)	$	1,756,571		$	1,547,741		$	2,702		$	1,550,443
Net income		-			-			-		-			-			38,242			38,242			224			38,466
Other comprehensive income		-			-			-		-			26,882			-			26,882			44			26,926
Dividends paid ($0.38 per share)		-			-			-		-			-			(49,438	)		(49,438	)		-			(49,438	)
Other noncontrolling interest activity		-			-			-		-			-			-			-			(785	)		(785	)
Share repurchases under repurchase program		(290	)		(3	)		3		(24,628	)		-			-			(24,628	)		-			(24,628	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		(1	)		-			10,043		(1,357	)		-			-			8,686			-			8,686
Balance at February 28, 2021		129,815		$	1,298		$	1,045,585	$	(621,836	)	$	(622,937	)	$	1,745,375		$	1,547,485		$	2,185		$	1,549,670


(In thousands)	August 31, 2021		May 31, 2021
Raw material and supplies	$	474,781	$	447,220
Finished goods		522,474		490,875
Total Inventory, Net of Reserves	$	997,255	$	938,095


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	At August 31, 2021
(In thousands)	Carrying Value		Fair Value
Cash and cash equivalents	$	213,212	$	213,212
Marketable equity securities		148,656		148,656
Available-for-sale debt securities		26,946		26,946
Long-term debt, including current portion		2,431,272		2,680,324

	At May 31, 2021
(In thousands)	Carrying Value		Fair Value
Cash and cash equivalents	$	246,704	$	246,704
Marketable equity securities		142,087		142,087
Available-for-sale debt securities		26,745		26,745
Long-term debt, including current portion		2,379,826		2,570,206


		Three months ended																	Three months ended
(in millions, except percentages)		August 31, 2021		August 31, 2020		Total Growth			Organic Growth(1)			Acquisition Growth			Foreign Currency Exchange Impact				February 28, 2022		February 28, 2021		Total Growth			Organic Growth(1)			Acquisition Growth			Foreign Currency Exchange Impact
CPG Segment		$	644.4	$	547.7		17.7	%		15.0	%		0.5	%		2.2	%		$	482.0	$	396.0		21.7	%		23.2	%		2.2	%		-3.7	%
PCG Segment			285.6		259.8		9.9	%		3.8	%		3.7	%		2.4	%			270.9		226.5		19.6	%		17.8	%		3.4	%		-1.6	%
Consumer Segment			538.4		641.2		-16.0	%		-20.1	%		3.3	%		0.8	%			491.6		477.7		2.9	%		3.6	%		0.0	%		-0.7	%
SPG Segment			182.0		158.0		15.2	%		13.5	%		0.3	%		1.4	%			189.4		169.2		11.9	%		11.9	%		0.8	%		-0.8	%
Consolidated		$	1,650.4	$	1,606.7		2.7	%		-1.0	%		2.1	%		1.6	%		$	1,433.9	$	1,269.4		13.0	%		13.4	%		1.4	%		-1.8	%
(1) Organic growth includes the impact of price and volume.	(1) Organic growth includes the impact of price and volume.																	(1) Organic growth includes the impact of price and volume.


	Three months ended									Three months ended
(in millions)	August 31, 2021			August 31, 2020			Change			February 28, 2022			February 28, 2021			Change
Service cost	$	13.7		$	13.0		$	0.7		$	13.7		$	13.0		$	0.7
Interest cost		5.4			5.2			0.2			5.4			5.2			0.2
Expected return on plan assets		(12.5	)		(9.9	)		(2.6	)		(12.4	)		(9.9	)		(2.5	)
Amortization of:
Prior service (credit)		(0.1	)		(0.1	)		-			(0.1	)		(0.1	)		-
Net actuarial losses recognized		4.4			8.2			(3.8	)		4.4			8.2			(3.8	)
Total Net Periodic Pension & Postretirement Benefit Costs	$	10.9		$	16.4		$	(5.5	)	$	11.0		$	16.4		$	(5.4	)


(in millions)	As of August 31, 2021		As of February 28, 2022
Severance and benefit costs	$	1.7	$	1.2
Facility closure and other related costs		3.1		1.5
Other restructuring costs		-		-
Future Expected Restructuring Costs	$	4.8	$	2.7


(in millions)	Change in interest expense			Change in interest expense
Acquisition-related borrowings	$	0.7		$	0.6
Non-acquisition-related average borrowings		(0.8	)		0.4
Change in average interest rate		(0.5	)
Total Change in Interest Expense	$	(0.6	)	$	1.0


	Three months ended
(in millions, except percentages and per share amounts)	February 28, 2022		% of net sales			February 28, 2021		% of net sales
Net income	$	33.2		2.3	%	$	38.5		3.0	%
Net income attributable to RPM International Inc. stockholders		33.0		2.3	%		38.2		3.0	%
Diluted earnings per share		0.25					0.29


Exhibit Number		Description

4.1		Officers’ Certificate and Authentication Order dated January 25, 2022 for the 2.950% Notes due 2032 (which includes the form of Note) issued pursuant to the Indenture dated as of April 8, 2014, between the Company and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, which is incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 27, 2022 (File No. 1-14187).

31.1		Rule 13a-14(a) Certification of the Company’s Chief Executive Officer.(x)

31.2		Rule 13a-14(a) Certification of the Company’s Chief Financial Officer.(x)

32.1		Section 1350 Certification of the Company’s Chief Executive Officer.(x)

32.2		Section 1350 Certification of the Company’s Chief Financial Officer.(x)

101.INS		Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended February 28, ~~2021,~~2022, has been formatted in Inline XBRL


	RPM International Inc.

	By:		/s/ Frank C. Sullivan
			Frank C. Sullivan
			Chairman and Chief Executive Officer

	By:		/s/ Russell L. Gordon
			Russell L. Gordon
			Vice President and
			Chief Financial Officer

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company