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 ☒.

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 ~~April 3, 2020,~~January 4, 2021, the registrant had ~~129,491,250~~130,102,785 shares of common stock, $0.01 par value per share, outstanding.

	February 29, 2020			May 31, 2019			November 30, 2020			May 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	212,242		$	223,168		$	272,945		$	233,416
Trade accounts receivable (less allowances of $58,492 and $54,748, respectively)		948,351			1,232,350
Trade accounts receivable (less allowances of $53,542 and $55,847, respectively)								1,081,841			1,137,957
Inventories		914,197			841,873			829,617			810,448
Prepaid expenses and other current assets		240,678			220,701			268,029			241,608
Total current assets		2,315,468			2,518,092			2,452,432			2,423,429
Property, Plant and Equipment, at Cost		1,731,101			1,662,859			1,851,794			1,755,190
Allowance for depreciation		(900,368	)		(843,648	)		(962,395	)		(905,504	)
Property, plant and equipment, net		830,733			819,211			889,399			849,686
Other Assets
Goodwill		1,265,237			1,245,762			1,300,777			1,250,066
Other intangible assets, net of amortization		597,018			601,082			620,399			584,380
Operating lease right-of-use assets		289,654			—			297,695			284,491
Deferred income taxes		36,601			34,908			37,154			30,894
Other		231,159			222,300			192,352			208,008
Total other assets		2,419,669			2,104,052			2,448,377			2,357,839
Total Assets	$	5,565,870		$	5,441,355		$	5,790,208		$	5,630,954
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	475,613		$	556,696		$	540,678		$	535,311
Current portion of long-term debt		71,234			552,446			75,709			80,890
Accrued compensation and benefits		154,129			193,345			161,515			185,531
Accrued losses		22,831			19,899			23,717			20,021
Other accrued liabilities		238,324			217,019			331,074			271,827
Total current liabilities		962,131			1,539,405			1,132,693			1,093,580
Long-Term Liabilities
Long-term debt, less current maturities		2,488,529			1,973,462			2,224,627			2,458,290
Operating lease liabilities		247,685			-			256,045			244,691
Other long-term liabilities		391,677			405,040			560,749			510,175
Deferred income taxes		122,499			114,843			65,651			59,555
Total long-term liabilities		3,250,390			2,493,345			3,107,072			3,272,711
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 13)
Stockholders' Equity
Preferred stock, par value $0.01; authorized 50,000 shares; NaN issued		—			—			—			—
Common stock, par value $0.01; authorized 300,000 shares; issued 143,220 and outstanding 129,879 as of February 29, 2020; issued 142,439 and outstanding 130,995 as of May 31, 2019		1,299			1,310
Common stock, par value $0.01; authorized 300,000 shares; issued 144,056 and outstanding 130,106 as of November 30, 2020; issued 143,261 and outstanding 129,511 as of May 31, 2020								1,301			1,295
Paid-in capital		1,013,561			994,508			1,035,539			1,014,428
Treasury stock, at cost		(553,663	)		(437,290	)		(595,851	)		(580,117	)
Accumulated other comprehensive (loss)		(592,024	)		(577,628	)		(649,819	)		(717,497	)
Retained earnings		1,481,339			1,425,052			1,756,571			1,544,336
Total RPM International Inc. stockholders' equity		1,350,512			1,405,952			1,547,741			1,262,445
Noncontrolling Interest		2,837			2,653			2,702			2,218
Total equity		1,353,349			1,408,605			1,550,443			1,264,663
Total Liabilities and Stockholders' Equity	$	5,565,870		$	5,441,355		$	5,790,208		$	5,630,954

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

	Three Months Ended					Nine Months Ended						Three Months Ended						Six Months Ended
	February 29,		February 28,			February 29,			February 28,			November 30,			November 30,			November 30,			November 30,
	2020		2019			2020			2019			2020			2019			2020			2019
Net Sales	$	1,173,976	$	1,140,630		$	4,048,033		$	3,963,150		$	1,485,915		$	1,401,292		$	3,092,586		$	2,874,056
Cost of Sales		739,229		731,208			2,509,133			2,510,643			899,743			871,894			1,852,759			1,769,904
Gross Profit		434,747		409,422			1,538,900			1,452,507			586,172			529,398			1,239,827			1,104,152
Selling, General and Administrative Expenses		381,866		374,153			1,185,791			1,175,049			399,418			403,357			795,370			803,923
Restructuring Charges		7,343		8,679			18,766			36,479			4,918			4,801			9,151			11,423
Interest Expense		23,972		26,525			78,630			74,058			21,266			26,341			43,011			54,658
Investment (Income) Expense, Net		3,836		(4,726	)		(10,354	)		(126	)
Investment (Income), Net													(9,519	)		(8,805	)		(22,281	)		(14,190	)
Other Expense, Net		1,422		327			5,158			4,052			3,133			1,951			6,251			3,736
Income Before Income Taxes		16,308		4,464			260,909			162,995			166,956			101,753			408,325			244,602
Provision (Benefit) for Income Taxes		4,218		(10,032	)		65,002			29,140
Provision for Income Taxes													39,072			24,431			99,655			60,784
Net Income		12,090		14,496			195,907			133,855			127,884			77,322			308,670			183,818
Less: Net Income Attributable to Noncontrolling Interests		237		306			835			677			225			292			416			600
Net Income Attributable to RPM International Inc. Stockholders	$	11,853	$	14,190		$	195,072		$	133,178		$	127,659		$	77,030		$	308,254		$	183,218
Average Number of Shares of Common Stock Outstanding:
Basic		128,426		130,105			128,572			131,019			128,500			128,393			128,459			128,639
Diluted		130,028		131,889			129,238			132,829			129,090			129,079			129,078			129,294
Earnings per Share of Common Stock Attributable to RPM International Inc. Stockholders:
Basic	$	0.09	$	0.11		$	1.51		$	1.01		$	0.98		$	0.60		$	2.38		$	1.42
Diluted	$	0.09	$	0.11		$	1.50		$	1.00		$	0.98		$	0.59		$	2.37		$	1.41

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

Three Months Ended

Nine Months Ended

February 29,

February 28,

February 29,

February 28,

2020

2019

2020

2019

Net Income

$
12,090

$
14,496

$
195,907

$
133,855

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

(14,515
)

20,823

(21,980
)

(32,111
)
Pension and other postretirement benefit liability adjustments
(net of tax of $1,335; $711; $3,454 and $2,801, respectively)

4,196

2,479

11,223

8,962

Unrealized gain on securities and other (net of tax of $0; $0; $1 and $543, respectively)

559

221

775

1,183

Unrealized gain (loss) on derivatives (net of tax of $1,275; $97; $1,001 and $346, respectively)

(5,565
)

(604
)

(4,402
)

2,667

Total other comprehensive income (loss)

(15,325
)

22,919

(14,384
)

(19,299
)
Total Comprehensive Income (Loss)

(3,235
)

37,415

181,523

114,556

Less: Comprehensive Income (Loss) Attributable to Noncontrolling Interests

229

(219
)

849

(14
)
Comprehensive Income (Loss) Attributable to RPM International Inc. Stockholders

$
(3,464
)

$
37,634

$
180,674

$
114,570

	Three Months Ended						Six Months Ended
	November 30,			November 30,			November 30,			November 30,
	2020			2019				2020			2019
Net Income	$	127,884		$	77,322		$	308,670		$	183,818
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (net of tax of $81; $0 $2,944 and $0, respectively)		12,495			20,967			77,162			(7,467	)
Pension and other postretirement benefit liability adjustments (net of tax of $1,722; $1,015; $2,508 and $2,119, respectively)		5,644			3,404			8,904			7,027
Unrealized gain (loss) on securities and other (net of tax of $240; $0; $322 and $1, respectively)		80			(155	)		170			216
Unrealized gain (loss) on derivatives (net of tax of $119; $305; $5,662 and $274, respectively)		(376	)		381			(18,489	)		1,165
Total other comprehensive income		17,843			24,597			67,747			941
Total Comprehensive Income		145,727			101,919			376,417			184,759
Less: Comprehensive Income Attributable to Noncontrolling Interests		225			343			484			620
Comprehensive Income Attributable to RPM International Inc. Stockholders	$	145,502		$	101,576		$	375,933		$	184,139

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

	Nine Months Ended						Six Months Ended
	February 29,			February 28,			November 30,			November 30,
	2020			2019			2020			2019
Cash Flows From Operating Activities:
Net income	$	195,907		$	133,855		$	308,670		$	183,818
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization		113,520			107,546			72,506			77,572
Restructuring charges, net of payments		(132	)		9,296			(2,291	)		(1,713	)
Fair value adjustments to contingent earnout obligations, net		-			1,558
Fair value adjustments to contingent earnout obligations								2,712			-
Deferred income taxes		2,505			(8,747	)		1,786			(5,426	)
Stock-based compensation expense		18,881			20,892			21,118			13,034
Other non-cash interest expense		-			1,552
Realized/unrealized (gains) losses on marketable securities		(3,063	)		5,906
Loss on extinguishment of debt		-			3,051
Net (gain) on marketable securities								(20,172	)		(8,741	)
Other		(371	)		179			(194	)		(705	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
Decrease in receivables		282,052			152,622			91,027			183,782
(Increase) in inventory		(73,566	)		(80,686	)
Decrease (increase) in inventory								21,655			(41,129	)
Decrease in prepaid expenses and other current and long-term assets		19,747			11,593			8,782			8,524
(Decrease) in accounts payable		(70,286	)		(166,951	)
Increase (decrease) in accounts payable								8,331			(70,712	)
(Decrease) in accrued compensation and benefits		(38,468	)		(32,503	)		(28,919	)		(53,589	)
Increase in accrued losses		3,120			1,578			3,377			1,894
(Decrease) in other accrued liabilities		(68,906	)		(20,952	)
Increase in other accrued liabilities								89,020			13,644
Other		237			5,716			2,095			(90	)
Cash Provided By Operating Activities		381,177			145,505			579,503			300,163
Cash Flows From Investing Activities:
Capital expenditures		(105,430	)		(84,491	)		(70,943	)		(71,393	)
Acquisition of businesses, net of cash acquired		(65,102	)		(167,712	)		(113,618	)		(36,281	)
Purchase of marketable securities		(17,076	)		(16,644	)		(23,292	)		(14,332	)
Proceeds from sales of marketable securities		21,325			67,550			21,189			13,100
Other		2,203			1,294			703			2,183
Cash (Used For) Investing Activities		(164,080	)		(200,003	)		(185,961	)		(106,723	)
Cash Flows From Financing Activities:
Additions to long-term and short-term debt		698,256			596,222			15			539,277
Reductions of long-term and short-term debt		(664,040	)		(253,343	)		(256,096	)		(542,744	)
Cash dividends		(138,784	)		(135,535	)		(96,019	)		(92,040	)
Repurchases of common stock		(100,000	)		(173,222	)		-			(100,000	)
Shares of common stock returned for taxes		(16,579	)		(17,834	)		(15,729	)		(10,155	)
Payments of acquisition-related contingent consideration		(227	)		(3,598	)		(2,218	)		(187	)
Other		(665	)		(640	)		-			(664	)
Cash (Used For) Provided By Financing Activities		(222,039	)		12,050
Cash (Used For) Financing Activities								(370,047	)		(206,513	)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		(5,984	)		(6,805	)		16,034			(1,922	)
Net Change in Cash and Cash Equivalents		(10,926	)		(49,253	)		39,529			(14,995	)
Cash and Cash Equivalents at Beginning of Period		223,168			244,422			233,416			223,168
Cash and Cash Equivalents at End of Period	$	212,242		$	195,169		$	272,945		$	208,173
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Interest	$	79,541		$	70,548		$	41,347		$	58,953
Income Taxes, net of refunds	$	89,042		$	33,859		$	95,069		$	73,322
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Conversion of Debt to Equity	$	-		$	38,239

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

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, 2019

130,995

$
1,310

$
994,508

$
(437,290
)

$
(577,628
)

$
1,425,052

$
1,405,952

$
2,653

$
1,408,605

Net income

-

-

-

-

-

106,188

106,188

308

106,496

Other comprehensive (loss)

-

-

-

-

(23,625
)

-

(23,625
)

(31
)

(23,656
)
Dividends declared and paid ($0.35 per share)

-

-

-

-

-

(45,323
)

(45,323
)

-

(45,323
)
Other noncontrolling interest activity

-

-

-

-

-

-

-

(297
)

(297
)
Share repurchases under repurchase program

(1,656
)

(16
)

16

(100,000
)

-

-

(100,000
)

-

(100,000
)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes

330

3

6,557

(6,360
)

-

-

200

-

200

Balance at August 31, 2019

129,669

$
1,297

$
1,001,081

$
(543,650
)

$
(601,253
)

$
1,485,917

$
1,343,392

$
2,633

$
1,346,025

Net income

-

-

-

-

-

77,030

77,030

292

77,322

Other comprehensive income

-

-

-

-

24,546

-

24,546

51

24,597

Dividends declared and paid ($0.36 per share)

-

-

-

-

-

(46,717
)

(46,717
)

-

(46,717
)
Other noncontrolling interest activity

-

-

-

-

-

-

-

(368
)

(368
)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes

97

1

6,473

(4,033
)

-

-

2,441

-

2,441

Balance at November 30, 2019

129,766

$
1,298

$
1,007,554

$
(547,683
)

$
(576,707
)

$
1,516,230

$
1,400,692

$
2,608

$
1,403,300

Net income

-

-

-

-

-

11,853

11,853

237

12,090

Other comprehensive (loss)

-

-

-

-

(15,317
)

-

(15,317
)

(8
)

(15,325
)
Dividends paid ($0.36 per share)

-

-

-

-

-

(46,744
)

(46,744
)

-

(46,744
)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes

113

1

6,007

(5,980
)

-

-

28

-

28

Balance at February 29, 2020

129,879

$
1,299

$
1,013,561

$
(553,663
)

$
(592,024
)

$
1,481,339

$
1,350,512

$
2,837

$
1,353,349

	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

	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, 2018		133,647		$	1,336		$	982,067		$	(236,318	)	$	(459,048	)	$	1,342,736		$	1,630,773		$	2,765		$	1,633,538
Cumulative-effect adjustment upon adoption of ASU 2014-09		-			-			-			-			-			(2,833	)		(2,833	)		-			(2,833	)
Balance at June 1, 2019																													130,995		$	1,310		$	994,508	$	(437,290	)	$	(577,628	)	$	1,425,052		$	1,405,952		$	2,653		$	1,408,605
Net income		-			-			-			-			-			69,764			69,764			422			70,186			-			-			-		-			-			106,188			106,188			308			106,496
Other comprehensive (loss)		-			-			-			-			(33,978	)		-			(33,978	)		(258	)		(34,236	)		-			-			-		-			(23,625	)		-			(23,625	)		(31	)		(23,656	)
Dividends declared and paid ($0.32 per share)		-			-			-			-			-			(42,715	)		(42,715	)		-			(42,715	)
Other noncontrolling interest activity		-			-			-			-			-			-			-			3			3
Share repurchases under repurchase program		(103	)		(1	)		1			(6,994	)		-			-			(6,994	)		-			(6,994	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		(136	)		(1	)		10,018			(13,587	)		-			-			(3,570	)		-			(3,570	)
Balance at August 31, 2018		133,408		$	1,334		$	992,086		$	(256,899	)	$	(493,026	)	$	1,366,952		$	1,610,447		$	2,932		$	1,613,379
Net income (loss)		-			-			-			-			-			49,224			49,224			(51	)		49,173
Other comprehensive income (loss)		-			-			-			-			(8,074	)		-			(8,074	)		91			(7,983	)
Dividends declared and paid ($0.35 per share)		-			-			-			-			-			(46,481	)		(46,481	)		-			(46,481	)		-			-			-		-			-			(45,323	)		(45,323	)		-			(45,323	)
Other noncontrolling interest activity		-			-			-			-			-			-			-			567			567			-			-			-		-			-			-			-			(297	)		(297	)
Share repurchases under repurchase program		(1,145	)		(11	)		11			(74,998	)		-			-			(74,998	)		-			(74,998	)		(1,656	)		(16	)		16		(100,000	)		-			-			(100,000	)		-			(100,000	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		274			2			7,277			(2,082	)		-			-			5,197			-			5,197			330			3			6,557		(6,360	)		-			-			200			-			200
Convertible bond redemption		599			6			(23,029	)		20,215			-			-			(2,808	)		-			(2,808	)
Balance at November 30, 2018		133,136		$	1,331		$	976,345		$	(313,764	)	$	(501,100	)	$	1,369,695		$	1,532,507		$	3,539		$	1,536,046
Balance at August 31, 2019																													129,669		$	1,297		$	1,001,081	$	(543,650	)	$	(601,253	)	$	1,485,917		$	1,343,392		$	2,633		$	1,346,025
Net income		-			-			-			-			-			14,190			14,190			306			14,496			-			-			-		-			-			77,030			77,030			292			77,322
Other comprehensive income (loss)		-			-			-			-			23,443			-			23,443			(524	)		22,919
Dividends paid ($0.35 per share)		-			-			-			-			-			(46,340	)		(46,340	)		-			(46,340	)
Other comprehensive income																													-			-			-		-			24,546			-			24,546			51			24,597
Dividends declared and paid ($0.36 per share)																													-			-			-		-			-			(46,717	)		(46,717	)		-			(46,717	)
Other noncontrolling interest activity		-			-			-			-			-			-			-			(248	)		(248	)		-			-			-		-			-			-			-			(368	)		(368	)
Share repurchases under repurchase program		(1,571	)		(16	)		16			(91,230	)		-			-			(91,230	)		-			(91,230	)
Stock compensation expense and other deferred compensation, shares granted less shares returned for taxes		(21	)		-			7,997			(1,373	)		-			-			6,624			-			6,624			97			1			6,473		(4,033	)		-			-			2,441			-			2,441
Balance at February 28, 2019		131,544		$	1,315		$	984,358		$	(406,367	)	$	(477,657	)	$	1,337,545		$	1,439,194		$	3,073		$	1,442,267
Balance at November 30, 2019																													129,766		$	1,298		$	1,007,554	$	(547,683	)	$	(576,707	)	$	1,516,230		$	1,400,692		$	2,608		$	1,403,300

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

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”) for interim financial information and the instructions to Form 10-Q. In our opinion, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation have been included for the ~~three- and nine-month~~three-and six-month periods ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019. For further information, refer to the Consolidated Financial Statements and Notes included in our Annual Report on Form 10-K for the year ended May 31, ~~2019.~~2020.

Our financial statements include all of our majority-owned subsidiaries. We account for our investments in less-than-majority-owned joint ventures, for which we have the ability to exercise significant influence, under the equity method. Effects of transactions between related companies are eliminated in consolidation.

Noncontrolling interests are presented in our Consolidated Financial Statements as if parent company investors (controlling interests) and other minority investors (noncontrolling interests) in partially-owned subsidiaries have similar economic interests in a single entity. As a result, investments in noncontrolling interests are reported as equity in our Consolidated Financial Statements. Additionally, our Consolidated Financial Statements include 100% of a controlled subsidiary’s earnings, rather than only our share. Transactions between the parent company and noncontrolling interests are reported in equity as transactions between stockholders, provided that these transactions do not create a change in control.

Our business is dependent on external weather factors. Historically, we have experienced strong sales and net income in our first, second and fourth fiscal quarters comprising the three-month periods ending August 31, November 30 and May 31, respectively, with weaker performance in our third fiscal quarter (December through February).

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which increases lease transparency and comparability among organizations. Under the new standard, lessees are required to recognize a right-of-use (“ROU”) asset representing our right to use an underlying asset and a lease liability representing our obligation to make lease payments over the lease term, with the exception of leases with a term of 12 months or less, which permits a lessee to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. In March 2018, the FASB approved an alternative transition method to the modified retrospective approach, which eliminates the requirement to restate prior period financial statements and requires the cumulative effect of the retrospective allocation to be recorded as an adjustment to the opening balance of retained earnings at the date of adoption.

We adopted the new leasing standard on the required effective date of June 1, 2019 using the alternative transition method as described above. Results for reporting periods beginning on June 1, 2019 are presented under Topic 842, while prior period amounts continue to be reported and disclosed in accordance with our historical accounting treatment under Accounting Standards Codification (“ASC”) 840, “Leases (ASC 840).” We elected to apply the package of practical expedients permitted under the ASC 842 transition guidance. Accordingly, we did not reassess whether any expired or expiring contracts contain leases, lease classification between finance and operating leases, and the recognition of initial direct costs of leases commencing before the effective date. We also applied the practical expedient to not separate lease and non-lease components to existing leases, as well as new leases through transition. However, we did not elect the hindsight practical expedient to determine the lease term for existing leases. As a result of our adoption procedures, we have determined that the new guidance had a material impact on our Consolidated Balance Sheets and did not have a material effect on our Consolidated Statements of Income, Consolidated Statements of Cash Flows or our debt covenants. The effects of our transition to ASC 842 resulted in 0 cumulative adjustment to retained earnings in the period of adoption. Refer to Note 13, “Leases,” for additional information.

In February 2018, the FASB issued ASU 2018-02, “Income Statement (Topic 220), Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” which allows for an entity to reclassify the tax effects of the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Act”) that were previously recorded in accumulated comprehensive income to retained earnings. The adoption of this new guidance, effective June 1, 2019, did not have a material effect on our Consolidated Financial Statements as we did not elect the option to reclassify to retained earnings the tax effects resulting from the Tax Act that were previously recorded in accumulated other comprehensive income (“AOCI”).

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” which requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Additionally, the standard amends the current available-for-sale ~~security~~securities other-than-temporary impairment model for debt securities. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods therein. ~~Early~~The adoption ~~is permitted beginning after December 15, 2018. We are currently reviewing the provisions~~ of this new ~~pronouncement, but do~~guidance, effective June 1, 2020, using the modified retrospective transition method, did not ~~expect our adoption~~result in a cumulative-effect adjustment to the opening balance of ~~this guidance to~~retained earnings at June 1, 2020 and did not have a material impact on ~~our~~the Company's Consolidated Financial Statements. Refer to Note 14, “Revenue” for additional information.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” to eliminate step two from the goodwill impairment test in order to simplify the subsequent measurement of goodwill. The guidance is effective for fiscal years beginning after December 15, 2019. ~~Early application is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Adoption~~The adoption of this new guidance, iseffective June 1, 2020, did not ~~expected to~~ have a material impact on our Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. ~~Early adoption is permitted upon issuance of the update. We do not expect our~~The adoption of this new guidance, toeffective June 1, 2020, did not have a material impact on our Consolidated Financial ~~Statements.~~Statements or disclosures.

In August 2018, the FASB issued ASU 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20), Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with employers that sponsor defined benefit or other postretirement plans. This guidance is effective for fiscal years ~~and interim periods within those fiscal years, beginning~~ending after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. We are

currently ~~reviewing~~evaluating the ~~provisions~~expected impact of this new pronouncement on our annual Consolidated Financial Statements, and disclosures, but do not expect our adoption of this guidance to have a material ~~impact on our Consolidated Financial Statements.~~impact.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740),” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption of the amendments is permitted, including adoption in any interim period for which financial statements have not yet been issued. Depending on the amendment, adoption may be applied on the retrospective, modified retrospective or prospective basis. We are currently reviewing the provisions of this new pronouncement, but do not expect our adoption of this guidance to have a material impact on our Consolidated Financial Statements.

During the first quarter of fiscal 2020, we changed our method of accounting for shipping and handling costs, which we have identified as costs paid to third-party shippers for transporting products to customers. Under the new method of accounting, we include shipping costs in cost of sales, whereas previously, they were included in SG&A expense.

We believe that including these expenses in cost of sales is preferable, as it better aligns these costs with the related revenue in the gross profit calculation and is consistent with the practices of other industry peers. This change in accounting principle has been applied retrospectively, and the Consolidated Statements of Income reflect the effect of this accounting principle change for all periods presented. This reclassification had no impact on income before income taxes, net income attributable to RPM International Inc. Stockholders, net income or earnings per share. The Consolidated Balance Sheets, Statements of Comprehensive Income, Statements of Stockholders’ Equity, and Statements of Cash Flows were not impacted by this accounting principle change.

The Consolidated Statements of Income for the three and nine months ended February 28, 2019 have been adjusted to reflect this change in accounting principle. The impact of the adjustment for the three and nine months ended February 28, 2019 was an increase of $36.7 million and $125.6 million, respectively, to cost of sales and a corresponding decrease to selling, general and administrative (“SG&A”) expense.

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.

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 ~~majority of the~~ activities included in the initial phases of the restructuring activities have been substantially completed.

During the quarter ended November 30, 2018, we formally announced the remainder of our 2020 MAP to Growth. This multi-year restructuring is expected to increase operational efficiency while maintaining our entrepreneurial growth culture and will include three additional phases originally expected to be implemented between September 2018 and December 2020. Recently, however, theThe disruption caused by the outbreak of ~~COVID-19 is expected to delay our implementation~~Covid-19 (“Covid”) 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 will now refer to it simply as “MAP to Growth.”

We now expect to utilize the remainder of fiscal year 2021 to achieve the goals originally set forth in our MAP to Growth. Certain of these projects may not be finalized until fiscal year 2022 and we would expect to continue to recognize restructuring expense throughout fiscal year 2022, as projects related to our MAP to Growth are executed and completed. As such, the final implementation and total expected costs are subject to change.

Our execution of the ~~2020~~ MAP to Growth will continue to drive 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 ~~2020~~ MAP to Growth optimizes our manufacturing facilities and will ultimately provide more efficient plant and distribution facilities. Through the balance sheet date, in association with our ~~2020~~ MAP to Growth, ~~initiative,~~ we have completed, or are in the process of completing, the planned closure of 1925 plants and 2427 warehouses. We also expect to incur additional severance and benefit costs as part of our planned closure of these facilities.

Throughout the ~~additional phases~~remainder of our ~~2020~~ MAP to Growth, ~~initiative,~~ we will continue to assess and find areas of improvement and cost savings. As such, the final implementation ~~of the aforementioned phases~~ and total expected costs are subject to change. In addition to the announced plan, we have continued to broaden the scope of our ~~2020~~ MAP to Growth, ~~initiative,~~ specifically in consolidation of the general and administrative areas, potential outsourcing, as well as additional future plant closures and consolidations; the estimated costs of which have not yet been finalized. The current total expected costs associated with this plan are outlined in the table below and ~~increased~~decreased by approximately ~~$7.5~~$3.4 million compared to our previous estimate, primarily attributable to ~~increases~~decreases in expected severance and benefit charges of ~~$4.6~~$4.5 million, partially offset by increases in expected facility closure and other related costs of ~~$2.5~~$0.6 million and ~~$0.4~~$0.5 million of other ~~asset write-offs.~~restructuring costs.

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

	Three Months Ended		Nine Months Ended		Cumulative Costs		Total Expected		Three Months Ended			Six Months Ended		Cumulative Costs		Total Expected
(In thousands)	February 29, 2020		February 29, 2020		to Date		Costs		November 30, 2020			November 30, 2020		to Date		Costs
Construction Products Group ("CPG") Segment:
Severance and benefit costs (a)	$	2,018	$	3,625	$	14,854	$	26,155	$	1,394		$	1,574	$	19,668	$	20,568
Facility closure and other related costs		484		1,282		4,251		8,094		440			808		5,285		6,503
Other asset write-offs		232		271		1,862		2,614
Other restructuring costs										62			99		2,039		2,634
Total Charges	$	2,734	$	5,178	$	20,967	$	36,863	$	1,896		$	2,481	$	26,992	$	29,705

Performance Coatings Group ("PCG") Segment:
Severance and benefit costs (b)	$	477	$	3,408	$	9,821	$	14,631	$	802		$	1,841	$	15,226	$	16,714
Facility closure and other related costs		762		1,507		4,981		5,920		556			844		6,191		7,905
Other asset write-offs		122		294		645		645
Other restructuring costs										184			213		814		824
Total Charges	$	1,361	$	5,209	$	15,447	$	21,196	$	1,542		$	2,898	$	22,231	$	25,443

Consumer Segment:
Severance and benefit costs (c)	$	445	$	1,992	$	9,370	$	12,138	$	(4	)	$	786	$	11,253	$	11,253
Facility closure and other related costs		563		1,423		8,115		9,615		785			1,382		10,319		12,719
Other asset write-offs		8		8		32		32
Other restructuring costs										204			302		4,421		4,481
Total Charges	$	1,016	$	3,423	$	17,517	$	21,785	$	985		$	2,470	$	25,993	$	28,453

Specialty Segment:
Specialty Products Group ("SPG") Segment:
Severance and benefit costs (d)	$	643	$	1,057	$	6,393	$	10,434	$	(57	)	$	411	$	7,341	$	8,012
Facility closure and other related costs		356		2,546		3,790		6,159		507			775		4,941		6,204
Other asset write-offs		-		104		1,107		1,140
Other restructuring costs										45			116		1,238		1,238
Total Charges	$	999	$	3,707	$	11,290	$	17,733	$	495		$	1,302	$	13,520	$	15,454

Corporate/Other Segment:
Severance and benefit costs ~~(e)~~	$	1,233	$	1,249	$	13,369	$	13,369	$	-		$	-	$	13,347	$	13,347
Total Charges	$	1,233	$	1,249	$	13,369	$	13,369	$	-		$	-	$	13,347	$	13,347

Consolidated:
Severance and benefit costs	$	4,816	$	11,331	$	53,807	$	76,727	$	2,135		$	4,612	$	66,835	$	69,894
Facility closure and other related costs		2,165		6,758		21,137		29,788		2,288			3,809		26,736		33,331
Other asset write-offs		362		677		3,646		4,431
Other restructuring costs										495			730		8,512		9,177
Total Charges	$	7,343	$	18,766	$	78,590	$	110,946	$	4,918		$	9,151	$	102,083	$	112,402

A summary of the activity in the restructuring reserves related to our ~~2020~~ MAP to Growth is as follows:

(In thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total
Balance at November 30, 2019	$	3,566		$	6,080		$	-		$	9,646
(in thousands)													Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total
Balance at August 31, 2020													$	4,893		$	6,138		$	-		$	11,031
Additions charged to expense		4,816			2,165			362			7,343			2,135			2,288			495			4,918
Cash payments charged against reserve		(3,182	)		(2,578	)		-			(5,760	)		(2,373	)		(2,530	)		(335	)		(5,238	)
Non-cash charges included above (k)		(161	)		-			(362	)		(523	)
Balance at February 29, 2020	$	5,039		$	5,667		$	-		$	10,706
Non-cash charges included above (i)														-			-			(160	)		(160	)
Balance at November 30, 2020													$	4,655		$	5,896		$	-		$	10,551

(In thousands)													Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total
Balance at June 1, 2020													$	7,357		$	5,880		$	-			13,237
Additions charged to expense														4,612			3,809			730			9,151
Cash payments charged against reserve														(7,314	)		(3,793	)		(335	)		(11,442	)
Non-cash charges included above (i)														-			-			(395	)		(395	)
Balance at November 30, 2020													$	4,655		$	5,896		$	-		$	10,551

(In thousands)													Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total
Balance at August 31, 2019													$	2,946		$	9,430		$	-		$	12,376
Additions charged to expense														2,729			1,821			251			4,801
Cash payments charged against reserve														(2,109	)		(5,016	)		-			(7,125	)
Non-cash charges included above (i)														-			(155	)		(251	)		(406	)
Balance at November 30, 2019													$	3,566		$	6,080		$	-		$	9,646

(In thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total			Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Restructuring Costs			Total
Balance at June 1, 2019	$	4,837		$	7,857		$	-			12,694		$	4,837		$	7,857		$	-		$	12,694
Additions charged to expense		11,331			6,758			677			18,766			6,515			4,593			315			11,423
Cash payments charged against reserve		(10,968	)		(7,928	)		-			(18,896	)		(7,786	)		(5,350	)		-			(13,136	)
Non-cash charges included above (k)		(161	)		(1,020	)		(677	)		(1,858	)
Balance at February 29, 2020	$	5,039		$	5,667		$	-		$	10,706

(In thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total
Balance at November 30, 2018	$	10,427		$	2,535		$	-		$	12,962
Additions charged to expense		3,420			4,337			922			8,679
Cash payments charged against reserve		(4,975	)		(1,872	)		-			(6,847	)
Non-cash charges included above (k)		-			(6	)		(922	)		(928	)
Balance at February 28, 2019	$	8,872		$	4,994		$	-		$	13,866

(In thousands)	Severance and Benefits Costs			Facility Closure and Other Related Costs			Other Asset Write-Offs			Total
Balance at June 1, 2018	$	9,957		$	6,184		$	1,373		$	17,514
Additions charged to expense		29,015			5,810			1,654			36,479
Cash payments charged against reserve		(23,563	)		(3,620	)		-			(27,183	)
Non-cash charges included above (k)		(6,537	)		(3,380	)		(3,027	)		(12,944	)
Balance at February 28, 2019	$	8,872		$	4,994		$	-		$	13,866
Non-cash charges included above (i)														-			(1,020	)		(315	)		(1,335	)
Balance at November 30, 2019													$	3,566		$	6,080		$	-		$	9,646

In connection with our ~~2020~~ MAP to Growth, during the three months ended ~~February 29, 2020,~~November 30, 2019, we incurred ~~inventory-related charges of~~ approximately ~~$0.2~~$6.3 million ~~at our Consumer segment~~ and ~~$0.1~~$1.0 million of inventory-related charges at ~~each of~~ our Consumer and PCG ~~CPG and Specialty segments.~~segments, respectively. During the ~~nine~~six months ended ~~February 29, 2020,~~November 30, 2019, we incurred ~~$7.4~~approximately $7.2 million, ~~$3.2 million, $0.3~~$3.1 million, and ~~$0.1~~$0.3 million of inventory-related charges at our Consumer, PCG CPG and Specialty segments, respectively. During the three months ended February 28, 2019, we incurred approximately $0.9 million, $0.8 million and $0.2 million of inventory-related charges at our PCG, Consumer and CPG segments, respectively. During the nine months ended February 28, 2019, we incurred $7.5 million, $2.1 million and $0.7 million of inventory-related charges at our PCG, Consumer and CPG segments, respectively. The ~~fiscal 2019 inventory-related~~ charges incurred during the three and six months ended November 30, 2020 were ~~partially offset by a favorable adjustment of approximately $0.2 million to the fiscal 2018 inventory write-off at our Consumer segment.~~immaterial. All of the aforementioned inventory-related charges are recorded in cost of sales in our Consolidated Statements of Income. These inventory charges were the result of the exit of a business or product line and SKU rationalization initiatives in connection with our overall plan of restructuring.

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

An allowance for ~~anticipated~~expected uncollectible trade receivable amounts is established using a combination of specifically identified accounts to be reserved, and a reserve covering trends in collectibility. These estimates are based on an analysis of trends in collectibility and past experience, but are primarily made up of individual account balances identified as doubtful based on specific facts and conditions. Receivable losses are charged against the allowance when we ~~confirm~~conclude on uncollectibility.

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 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.

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 February 29, 2020			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Fair Value at November 30, 2020
Available-for-sale debt securities:
U.S. Treasury and other government	$	-	$	25,045	$	-		$	25,045		$	-	$	26,955	$	-		$	26,955
Corporate bonds		-		445		-			445			-		194		-			194
Total available-for-sale debt securities		-		25,490		-			25,490			-		27,149		-			27,149
Trading and other equity securities:
Marketable equity securities:
Stocks - domestic		2,789		-		-			2,789			6,548		-		-			6,548
Mutual funds - foreign		-		33,349		-			33,349			-		36,639		-			36,639
Mutual funds - domestic		-		66,088		-			66,088			-		73,122		-			73,122
Total trading and other equity securities		2,789		99,437		-			102,226
Total marketable equity securities												6,548		109,761		-			116,309
Contingent consideration		-		-		(15,648	)		(15,648	)		-		-		(15,954	)		(15,954	)
Total	$	2,789	$	124,927	$	(15,648	)	$	112,068		$	6,548	$	136,910	$	(15,954	)	$	127,504

(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, 2019			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, 2020
Available-for-sale debt securities:
U.S. Treasury and other government	$	-	$	24,547	$	-		$	24,547		$	-	$	26,736	$	-		$	26,736
Corporate bonds		-		462		-			462			-		186		-			186
Total available-for-sale debt securities		-		25,009		-			25,009			-		26,922		-			26,922
Trading and other equity securities:
Marketable equity securities:
Stocks - domestic												3,870		-		-			3,870
Mutual funds - foreign		-		32,082		-			32,082			-		28,815		-			28,815
Mutual funds - domestic		-		67,739		-			67,739			-		63,536		-			63,536
Total trading and other equity securities		-		99,821		-			99,821
Total marketable equity securities												3,870		92,351		-			96,221
Contingent consideration		-		-		(21,551	)		(21,551	)		-		-		(15,682	)		(15,682	)
Total	$	-	$	124,830	$	(21,551	)	$	103,279		$	3,870	$	119,273	$	(15,682	)	$	107,461

Our investments in available-for-sale debt securities and ~~trading and other~~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 ~~nine months~~half of fiscal ~~2020,~~2021, we paid approximately $6.1 million for settlements of contingent consideration obligations relating to certain performance milestones that were established in prior periods and achieved during the current period. During the first nine months of fiscal 2019, we paid approximately $4.7$2.8 million for settlements of contingent consideration obligations relating to certain performance milestones that were established in prior periods and achieved during the current period, and recorded an increase in the accrual for approximately $2.7 million ~~and $5.8 million~~ related to fair value ~~adjustments~~adjustments. During the first half of fiscal 2020, we paid approximately $5.9 million for settlements of contingent consideration obligations relating to certain performance milestones that were established in prior periods and ~~new acquisitions, respectively.~~achieved during the first half of last year. 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 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 ~~February 29,~~November 30, 2020 and May 31, ~~2019,~~2020, 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 ~~February 29,~~November 30, 2020 and May 31, ~~2019~~2020 are as follows:

	At February 29, 2020				At November 30, 2020
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Cash and cash equivalents	$	212,242	$	212,242	$	272,945	$	272,945
Marketable equity securities		89,215		89,215		116,309		116,309
Marketable debt securities		25,490		25,490
Available-for-sale debt securities						27,149		27,149
Long-term debt, including current portion		2,559,763		2,725,297		2,300,336		2,528,830

	At May 31, 2019				At May 31, 2020
(In thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
Cash and cash equivalents	$	223,168	$	223,168	$	233,416	$	233,416
Marketable equity securities		87,525		87,525		87,111		87,111
Marketable debt securities		25,009		25,009
Available-for-sale debt securities						26,922		26,922
Long-term debt, including current portion		2,525,908		2,526,817		2,539,180		2,618,719

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.

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 ~~will pay~~paid variable rate interest in Euros and ~~receive~~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 ~~have~~had a maturity date of November 2022. This effectively ~~converts~~converted a portion of our U.S. Dollar denominated fixed-rate debt to Euro denominated variable rate debt. The fair value hedge iswas recognized at fair value in our Consolidated Balance Sheets, while changes in the fair value of the hedge ~~are~~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 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 ~~Operations~~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 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, 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 ~~the Company’s~~our derivatives instruments on the Consolidated Statements of Comprehensive Income and Consolidated Statements of ~~Operations~~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

(In thousands)

Three Months Ended

Three Months Ended

Derivatives in hedging relationships

February 29,
2020

February 28,
2019

Income Statement Location

February 29,
2020

February 28,
2019

Interest Rate Swap (Cash Flow)

$
(3,077
)
$
-

Interest Expense

$
22

$
-

Cross Currency Swap (Cash Flow)

(2,355
)

-

Interest Expense

47

-

Cross Currency Swap (Cash Flow)

-

-

Foreign Exchange Gain/(Loss)

(1,986
)

-

Cross Currency Swap (Net Investment)

(3,314
)

(400
)

Gain or (loss) on sale of subsidiary

-

-

Total

$
(8,746
)
$
(400
)

$
(1,917
)
$
-

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 29,
2020

February 28,
2019

Income Statement Location

February 29,
2020

February 28,
2019

Interest Rate Swap (Cash Flow)

$
(3,077
)
$
-

Interest Expense

$
22

$
-

Cross Currency Swap (Cash Flow)

(2,355
)

-

Interest Expense

47

-

Cross Currency Swap (Cash Flow)

-

-

Foreign Exchange Gain/(Loss)

(1,986
)

-

Cross Currency Swap (Net Investment)

(1,845
)

3,336

Gain or (loss) on sale of subsidiary

-

-

Total

$
(7,277
)
$
3,336

$
(1,917
)
$
-

	Pretax gain/(loss) recognized in AOCI						Pretax gain/(loss) reclassified from AOCI into income
(In thousands)	Three Months Ended						Three Months Ended
Derivatives in hedging relationships	November 30, 2020			November 30, 2019		Income statement location	November 30, 2020			November 30, 2019
Interest rate swap (cash flow)	$	(149	)	$	-	Interest expense	$	(846	)	$	-
Cross currency swap (cash flow)		51			-	Interest income		160			-
Cross currency swap (cash flow)		-			-	Foreign exchange gain		75			-
Cross currency swap (net investment)		(957	)		73	Gain or (loss) on sale of subsidiary		-			-
Total	$	(1,055	)	$	73		$	(611	)	$	-

	Pretax gain/(loss) recognized in AOCI						Pretax gain/(loss) reclassified from AOCI into income
(In thousands)	Six Months Ended						Six Months Ended
Derivatives in hedging relationships	November 30, 2020			November 30, 2019		Income Statement Location	November 30, 2020			November 30, 2019
Interest rate swap (cash flow)	$	(747	)	$	-	Interest expense	$	(1,613	)	$	-
Cross currency swap (cash flow)		(7,304	)		-	Interest income		351			-
Cross currency swap (cash flow)		-			-	Foreign exchange (loss)		(7,380	)		-
Cross currency swap (net investment)		(24,090	)		1,469	Gain or (loss) on sale of subsidiary		-			-
Total	$	(32,141	)	$	1,469		$	(8,642	)	$	-

At ~~February 29,~~November 30, 2020, and May 31, ~~2019,~~2020, 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. The contract has not been designated as a hedge; therefore, the changes in fair value of the derivative 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 ~~February 29,~~November 30, 2020, and May 31, ~~2019,~~2020, the notional amounts of the forward contract held to purchase foreign currencies was ~~$59.1~~$133.5 million and ~~$38.7~~$63.2 million, respectively.

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 ~~February 29,~~November 30, 2020 and May 31, ~~2019~~2020 are as follows:

(In thousands)		Fair Value					Fair Value
Derivatives Designated as Hedging Instruments	Balance Sheet Location	February 29, 2020		May 31, 2019		Balance Sheet Location	November 30, 2020		May 31, 2020

Assets:
Interest Rate Swap (Fair Value)	Other Current Assets	$	-	$	513
Cross Currency Swap (Net Investment)	Other Current Assets		5,592		2,482	Other Current Assets	$	5,681	$	5,352
Cross Currency Swap (Cash Flow)	Other Current Assets		1,562		-	Other Current Assets		604		750
Cross Currency Swap (Net Investment)	Other Assets (Long-Term)		4,773		6,163	Other Assets (Long-Term)		-		12,409
Liabilities:
Interest Rate Swap (Fair Value)	Other Accrued Liabilities		-		230
Interest Rate Swap (Cash Flow)	Other Accrued Liabilities		578		-	Other Accrued Liabilities	$	3,323	$	2,981
Cross Currency Swap (Net Investment)	Other Accrued Liabilities		504		-	Other Accrued Liabilities		726		294
Cross Currency Swap (Net Investment)	Other Long-Term Liabilities		14,558		4,276	Other Long-Term Liabilities		30,557		18,204
Cross Currency Swap (Cash Flow)	Other Long-Term Liabilities		3,990		-	Other Long-Term Liabilities		11,394		3,608
Interest Rate Swap (Cash Flow)	Other Long-Term Liabilities		2,522		-	Other Long-Term Liabilities		3,978		5,187

(In thousands)

Fair Value

Derivatives Not Designated as Hedging Instruments

Balance Sheet Location

February 29, 2020

May 31, 2019

Balance Sheet Location

November 30, 2020

May 31, 2020

Assets:

Liabilities:

Foreign Currency Exchange

Other Current Assets

193

Other Accrued Liabilities

394

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	February 29,			February 28,			February 29,			February 28,			November 30,			November 30,			November 30,			November 30,
(In thousands)	2020			2019			2020			2019			2020			2019			2020			2019
Interest (income)	$	(1,292	)	$	(1,076	)	$	(4,068	)	$	(2,808	)	$	(774	)	$	(1,429	)	$	(1,441	)	$	(2,776	)
Net (gain) loss on marketable securities		6,918			(1,683	)		(3,562	)		6,451
Net (gain) on marketable securities														(8,388	)		(6,939	)		(20,172	)		(10,479	)
Dividend (income)		(1,790	)		(1,967	)		(2,724	)		(3,769	)		(357	)		(437	)		(668	)		(935	)
Investment (income) expense, net	$	3,836		$	(4,726	)	$	(10,354	)	$	(126	)
Investment (income), net													$	(9,519	)	$	(8,805	)	$	(22,281	)	$	(14,190	)

Of the $6.9 million in net losses on marketable securities recognized during the third quarter of fiscal 2020, approximately $6.6 million related to unrealized losses on marketable equity securities and approximately $1.5 million was related to unrealized losses on trading securities. Additionally, of the $3.6 million in net gains on marketable securities recognized during the first nine months of fiscal 2020, approximately $2.3 million related to unrealized gains on marketable equity securities and $0.1 million in unrealized gains on trading securities.

During the third quarter of fiscal 2019, we recognized gross realized gains and losses on sales of marketable securities of $0.1 million and $2.2 million, respectively. Also during the third quarter of fiscal 2019, we recognized gross realized gains on sales of trading securities of $0.2 million and unrealized losses on trading securities of $0.1 million. For the first nine months of fiscal 2019, we recognized realized gains and losses on sales of marketable securities of $0.3 million and $3.4 million, respectively, realized gains on trading securities of $0.2 million and unrealized losses on trading securities of $0.7 million. During the three and nine-month periods ended February 28, 2019, we recognized unrealized gains of $3.7 million and unrealized losses of $2.9 million marketable equity securities.

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	February 29,			February 28,			February 29,			February 28,			November 30,			November 30,			November 30,			November 30,
(In thousands)	2020			2019			2020			2019			2020			2019			2020			2019
Royalty (income) expense, net	$	(61	)	$	88		$	(155	)	$	154		$	60		$	(360	)	$	29		$	(94	)
(Income) related to unconsolidated equity affiliates		(150	)		(133	)		(125	)		(299	)
(Income) expense related to unconsolidated equity affiliates														(297	)		(65	)		(484	)		25
Pension non-service costs		1,510			372			4,489			1,146			3,370			1,550			6,706			2,979
Loss on extinguishment of debt (a)		-			-			-			3,051
Loss on divestiture (b)		123			-			949			-
Loss on divestiture (a)														—			826			—			826
Other expense, net	$	1,422		$	327		$	5,158		$	4,052		$	3,133		$	1,951		$	6,251		$	3,736

The effective income tax rate of ~~25.9%~~23.4% for the three months ended ~~February 29,~~November 30, 2020 compares to the effective income tax ~~benefit~~ rate of ~~224.7%~~24.0% for the three months ended ~~February 28,~~November 30, 2019. The effective income tax rate of 24.4% for the six months ended November 30, 2020 compares to the effective income tax rate of 24.8% for the six months ended November 30, 2019. The effective income tax rates for the three and six months ended ~~February 29,~~November 30, 2020 ~~reflects~~and 2019 reflect variances from the 21% statutory rate due primarily to the unfavorable impact of state and local income taxes, non-deductible business expenses and ~~an increase in valuation allowances related to~~the net tax on foreign ~~net operating losses. Additionally, during~~subsidiary income resulting from the ~~quarter, we recorded a net favorable discrete tax adjustment totaling $0.3 million. The net favorable discrete tax adjustment is comprised of a $10.9 million charge for an increase to our deferred~~global intangible low-taxed income ~~tax liability for withholding taxes on additional unremitted foreign earnings not considered permanently reinvested which was~~provisions, partially offset ~~primarily~~ by tax benefits ~~associated with equity compensation, favorable adjustments~~ related to foreign tax credits, and favorable adjustments related to the global intangible low-tax provisions, resulting from final Treasury Regulations issued during this quarter, and as reported on our 2019 U.S. federal income tax return.

The effective income tax benefit rate of 224.7% for the three months ended February 28, 2019 reflects variances from the 21% statutory rate due primarily to the favorable impact of $12.7 million of net discrete tax benefits recorded during the quarter and the amplified impact of those tax benefits on the relatively low level of pre-tax earnings. The $12.7 million net discrete benefits recorded are primarily comprised of the net $8.1 million benefit resulting from completion of our SAB 118 accounting for the impact of the Tax Act, and the release of certain income tax reserves for uncertain tax positions.

The effective income tax rate of 24.9% for the nine months ended February 29, 2020 compares to the effective income tax rate of 17.8% for the nine months ended February 28, 2019. The effective income tax rate for nine months ended February 29, 2020 reflects variances from the 21% statutory rate due primarily to the unfavorable impact of state and local income taxes, an increase in valuation allowances related to foreign net operating losses and tax benefits associated with equity compensation.

The effective income tax rate of 17.8% for the nine months ended February 28, 2019 reflects variances from the 21% statutory rate due primarily to $16.5 million of net discrete tax benefits, which includes the $12.7 million net tax benefit described above with the remaining balance being recorded in the prior quarters of fiscal 2019. These discrete tax benefits were partially offset primarily by the unfavorable impact of state and local taxes and incremental valuation allowances associated with certain foreign net operating losses.

Our deferred tax liability for unremitted foreign earnings was ~~$29.7~~$12.0 million as of ~~February 29,~~November 30, 2020, which represents our estimate of the foreign tax cost associated with the ~~deemed~~ remittance of ~~$631.9~~$434.2 million of foreign earnings that are not considered to be permanently reinvested. We have not provided for foreign withholding or income taxes on the remaining foreign subsidiaries’ undistributed earnings because such earnings have been retained and reinvested by the subsidiaries as of ~~February 29,~~November 30, 2020. Accordingly, 0 provision has been made for foreign withholding or income taxes, which may become payable if the remaining undistributed earnings of foreign subsidiaries were remitted to us as dividends.

(In thousands)	February 29, 2020		May 31, 2019		November 30, 2020		May 31, 2020
Raw material and supplies	$	295,614	$	296,493	$	341,551	$	282,579
Finished goods		618,583		545,380		488,066		527,869
Total Inventory, Net of Reserves	$	914,197	$	841,873	$	829,617	$	810,448

On January 8, 2008, we announced our authorization of a stock repurchase program under which we may repurchase shares of RPM International Inc. common stock at management’s discretion for general corporate purposes. As announced on November 28, 2018, our goal is to return $1.0 billion in capital to stockholders by May 31, 2021 through share repurchases. On April 16, 2019, after taking into account share repurchases under our existing stock repurchase program to date, our Board of Directors authorized the repurchase of the remaining $600.0 million in value of RPM International Inc. common stock by May 31, 2021. As a result, we may repurchase shares from time to time in the open market or in private transactions at various times and in amounts and for prices that our management deems appropriate, subject to insider trading rules and other securities law restrictions. The timing of our purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time. Given macroeconomic uncertainty resulting from the Covid pandemic, we have suspended our stock repurchase program. During the three and six months ended ~~February 29,~~November 30, 2020, and three months ended November 30, 2019, we did 0t repurchase any shares of our common stock under this program. During the ~~three~~six months ended ~~February 28,~~November 30, 2019, we repurchased 1,570,647 shares of our common stock at a cost of approximately $91.2 million, or an average cost of $58.08 per share, under this program. During the nine months ended February 29, 2020, we repurchased 1,655,616 shares of our common stock at a cost of approximately $100.0 million, or an average cost of $60.40 per share, under this program. During the nine months ended February 28, 2019, we repurchased 2,819,045 shares of our common stock at a cost of approximately $173.2 million, or an average cost of $61.45 per share, under this program.

~~See Note 19, “Subsequent Events” for an update on additional repurchases and a decision to suspend our share buyback program.~~

The following table sets forth the reconciliation of the numerator and denominator of basic and diluted earnings per share for the three- and ~~nine-month~~six-month periods ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019.

	Three Months Ended					Nine Months Ended						Three Months Ended						Six Months Ended
	February 29,		February 28,			February 29,			February 28,			November 30,			November 30,			November 30,			November 30,
(In thousands, except per share amounts)	2020		2019			2020			2019			2020			2019			2020			2019
Numerator for earnings per share:
Net income attributable to RPM International Inc. stockholders	$	11,853	$	14,190		$	195,072		$	133,178		$	127,659		$	77,030		$	308,254		$	183,218
Less: Allocation of earnings and dividends to participating securities		-		(109	)		(1,199	)		(996	)		(1,130	)		(548	)		(2,517	)		(1,167	)
Net income available to common shareholders - basic		11,853		14,081			193,873			132,182			126,529			76,482			305,737			182,051
Add: Allocation of earnings and dividends to participating securities		-		109			2			996
Add: Undistributed earnings reallocated to unvested shareholders													4			1			9			3
Net income available to common shareholders - diluted	$	11,853	$	14,190		$	193,875		$	133,178		$	126,533		$	76,483		$	305,746		$	182,054
Denominator for basic and diluted earnings per share:
Basic weighted average common shares		128,426		130,105			128,572			131,019			128,500			128,393			128,459			128,639
Average diluted options and awards		1,602		1,784			666			1,810			590			686			619			655
Total shares for diluted earnings per share (1)		130,028		131,889			129,238			132,829			129,090			129,079			129,078			129,294
Earnings Per Share of Common Stock Attributable to
RPM International Inc. Stockholders:
Basic Earnings Per Share of Common Stock	$	0.09	$	0.11		$	1.51		$	1.01		$	0.98		$	0.60		$	2.38		$	1.42
Method used to calculate basic earnings per share	Treasury		Two-class			Two-class			Two-class			Two-class			Two-class			Two-class			Two-class
Diluted Earnings Per Share of Common Stock	$	0.09	$	0.11		$	1.50		$	1.00		$	0.98		$	0.59		$	2.37		$	1.41
Method used to calculate diluted earnings per share	Treasury		Treasury			Two-class			Treasury			Two-class			Two-class			Two-class			Two-class

We have leases for manufacturing facilities, warehouses, office facilities, equipment, and vehicles, which are primarily classified and accounted for as operating leases. We have a small portfolio of finance leases, which are not material to our Consolidated Financial Statements. Some leases include one or more options to renew, generally at our sole discretion, with renewal terms that can extend the lease term from one to five years or more. In addition, certain leases contain termination options, where the rights to terminate are held by either us, the lessor, or both parties. These options to extend or terminate a lease are included in the lease terms when it is reasonably certain that we will exercise that option. We have made an accounting policy election not to recognize ROU assets and lease liabilities for leases with a term of twelve months or less, with no purchase option that we are reasonably certain to exercise. ROU assets and lease liabilities are recognized based on the present value of the fixed and in-substance fixed lease payments over the lease term at the commencement date. The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by lease incentives. We use our incremental borrowing rate as the discount rate to determine the present value of the lease payments for leases, as our leases do not have readily determinable implicit discount rates. Our incremental borrowing rate is the rate of interest that we would have to borrow on a collateralized basis over a similar term and amount in a similar economic environment. We determine the incremental borrowing rates for our leases by adjusting the local risk-free interest rate with a credit risk premium corresponding to our credit rating.

Operating lease cost is recognized on a straight-line basis over the lease term. Finance lease cost is recognized as a combination of the amortization expense for the ROU assets and interest expense for the outstanding lease liabilities using the discount rate discussed above. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain vendors have the right to declare that we are in default of our agreements if any such vendor, including the lessors under its vehicle leases, determines that a change in our financial condition poses a substantially increased credit risk. Our lease agreements do not contain any significant residual value guarantees or material restrictive covenants. Income from subleases was not significant for any period presented.

During the three months ended February 29, 2020, we incurred lease costs of $20.3 million, which is primarily comprised of operating lease cost of $18.2 million and other costs of $2.1 million which include costs for our finance leases, short-term leases, and variable lease payments.

During the nine months ended February 29, 2020, we incurred lease costs of $62.5 million, which is primarily comprised of operating lease costs of $54.1 million and other costs of $8.4 million, which include costs for our finance leases, short-term leases and variable lease payments.

For the three and nine months ended February 29, 2020, we paid approximately $17.1 million and $51.1 million, respectively, for operating lease obligations. These payments are included in operating cash flows. In addition, during the nine months ended February 29, 2020, we recognized ROU assets for $54.8 million in exchange for new operating lease obligations. At February 29, 2020, the weighted-average remaining lease term under our operating leases was 9.4 years, while the weighted-average discount rate for our operating leases was approximately 3.7%.

~~The following represents our future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities, as of February 29, 2020:~~

~~As of February 29, 2020, our current lease liability balance was $51.1 million and recorded within Other Accrued Liabilities on our Consolidated Balance Sheet.~~

Following is a summary of our future minimum lease commitments, as determined under ASC 840, for all non-cancelable lease agreements, for each of the next five years and in the aggregate, as of May 31, 2019:

Related party leases and subleases were not significant during any period presented, and therefore are not disclosed. Further, we do not have leases that have not yet commenced, which would create significant rights and obligations for us, including any involvement with the construction or design of the underlying asset.

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~~six months ended ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019:

	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)	February 29,			February 28,			February 29,		February 28,		November 30,			November 30,			November 30,			November 30,
Postretirement Benefits	2020			2019			2020		2019
Pension Benefits											2020			2019			2020			2019
Service cost	$	-		$	-		$	429	$	392	$	11,130		$	9,856		$	1,406		$	1,391
Interest cost		37			48			282		291		3,806			5,104			1,122			1,193
Expected return on plan assets												(8,279	)		(8,573	)		(1,607	)		(1,834	)
Amortization of:
Prior service (credit)		(55	)		(55	)		-		-
Net actuarial (gains) losses recognized		(16	)		(6	)		158		115
Net Periodic Benefit (Credit) Cost	$	(34	)	$	(13	)	$	869	$	798
Prior service cost (credit)												2			2			(35	)		(9	)
Net actuarial losses recognized												7,501			4,629			526			523
Net Periodic Benefit Cost											$	14,160		$	11,018		$	1,412		$	1,264

	U.S. Plans						Non-U.S. Plans				U.S. Plans						Non-U.S. Plans
	Nine Months Ended						Nine Months Ended				Three Months Ended						Three Months Ended
(In thousands)	February 29,			February 28,			February 29,		February 28,		November 30,			November 30,			November 30,		November 30,
Postretirement Benefits	2020			2019			2020		2019		2020			2019			2020		2019
Service cost	$	-		$	-		$	1,287	$	1,176	$	-		$	-		$	431	$	429
Interest cost		111			144			846		873		19			37			283		282
Amortization of:
Prior service (credit)		(165	)		(165	)		-		-		(42	)		(55	)		-		-
Net actuarial (gains) losses recognized		(48	)		(18	)		474		345		10			(16	)		130		158
Net Periodic Benefit (Credit) Cost	$	(102	)	$	(39	)	$	2,607	$	2,394	$	(13	)	$	(34	)	$	844	$	869

Due to ~~slightly~~ lower discount rates, net periodic pension and U.S. postretirement cost for fiscal ~~2020~~2021 is higher than our fiscal ~~2019~~2020 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, ~~but such changes are not expected to be~~and these fluctuations may have a material toimpact on our consolidated financial ~~results.~~results in the future. We previously disclosed in our financial statements for the fiscal year ended May 31, ~~2019~~2020 that we expected to contribute approximately ~~$0.9 million~~$8,000 to our retirement plans in the U.S. and approximately ~~$6.4~~$6.7 million to plans outside the U.S. during the current fiscal ~~year. However, during February~~year, and as of November 30, 2020, those amounts remain unchanged. During the year, we ~~contributed an~~will evaluate whether to make additional ~~$51.5 million to the pension plans in the U.S., which will increase our total expected U.S. contributions in the fiscal year to $52.4 million.~~contributions.

We provide, through our wholly owned insurance subsidiaries, certain insurance coverage, primarily product liability coverage, to our other subsidiaries. Excess coverage is provided by third-party insurers. Our product liability accruals provide for these potential losses as well as other uninsured claims. Product liability accruals are established based upon actuarial calculations of potential liability using industry experience, actual historical experience and actuarial assumptions developed for similar types of product liability claims, including development factors and lag times. To the extent there is a reasonable possibility that potential losses could exceed the amounts already accrued, we believe that the amount of any such additional loss would be immaterial to our results of operations, liquidity and consolidated financial position.

We also offer warranties on many of our products, as well as long-term warranty programs at certain of our businesses, and have established product warranty liabilities. We review these liabilities for adequacy on a quarterly basis and adjust them as necessary. The primary factors that could affect these liabilities may include changes in performance rates as well as costs of replacement. Provision for estimated warranty costs is recorded at the time of sale and periodically adjusted, as required, to reflect actual experience. It is probable that we will incur future losses related to warranty claims we have received but that have not been fully investigated and related to claims not yet received. While our warranty liabilities represent our best estimates at ~~February 29,~~November 30, 2020, we can provide no assurances that we will not experience material claims in the future or that we will not incur significant costs to resolve such claims beyond the amounts accrued or beyond what we may recover from our suppliers. Based upon the nature of the expense, product warranty expense is recorded as a component of cost of sales or within SG&A.

Also, due to the nature of our businesses, the amount of claims paid can fluctuate from one period to the next. While our warranty liabilities represent our best estimates of our expected losses at any given time, from time-to-time we may revise our estimates based on our experience relating to factors such as weather conditions, specific circumstances surrounding product installations and other factors.

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	February 29,			February 28,			February 29,			February 28,			November 30,			November 30,			November 30,			November 30,
(In thousands)	2020			2019			2020			2019			2020			2019			2020			2019
Beginning Balance	$	10,555		$	9,863		$	10,414		$	11,721		$	12,836		$	10,069		$	11,106		$	10,414
Deductions (1)		(4,622	)		(4,283	)		(16,002	)		(17,557	)		(7,652	)		(5,721	)		(13,582	)		(11,380	)
Provision charged to expense		4,804			4,091			16,325			15,507			6,866			6,207			14,526			11,521
Ending Balance	$	10,737		$	9,671		$	10,737		$	9,671		$	12,050		$	10,555		$	12,050		$	10,555

Like other companies participating in similar lines of business, some of our subsidiaries are involved in several proceedings relating to environmental matters. It is our policy to accrue remediation costs when it is probable that such efforts will be required and the related costs can be reasonably estimated. In general, our environmental accruals are undiscounted liabilities, which are exclusive of claims against third parties, and are not material to our financial statements during any of the periods presented.

Carboline Company previously was identified as a potentially responsible party in connection with a matter filed on behalf of the U.S. EPA claiming that Carboline Company, among other potentially responsible parties, violated Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and seeking reimbursement for response costs incurred in connection with the release or threatened release of hazardous substances at the Lammers Barrel Superfund Site in Beavercreek, Ohio. During the third quarter of fiscal 2020, Carboline Company agreed in principle to settle this matter for $1.3 million, which amount is subject to final approval and court entry of the proposed consent decree relating to this matter. Other Contingencies

We were notified by the SEC on June 24, 2014, that we ~~are~~were the subject of a formal investigation pertaining to the timing of our disclosure and accrual of loss reserves in fiscal 2013 with respect to the previously disclosed U.S. Department Ofof Justice (the “DOJ”) and the U.S. General Services Administration (the “GSA”) Office of Inspector General investigation into compliance issues relating to Tremco Roofing Division’s GSA contracts. As previously disclosed, our Audit Committee completed an investigation into the facts and circumstances surrounding the timing of our disclosure and accrual of loss reserves with respect to the GSA and DOJ investigation, and determined that it was appropriate to restate our financial results for the first, second and third quarters of fiscal 2013. The restatement shifted accrual amounts among the three quarters, which had the effect of reducing net income by $7.2 million and $10.8 million for the quarterly periods ended August 31, 2012, and November 30, 2012, respectively, and increasing net income for the quarterly period ended February 28, 2013 by $18.0 million. These restatements had no impact on our audited financial statements for the fiscal years ended May 31, 2013 or 2014. ~~The Audit Committee’s investigation concluded that there was no intentional misconduct on the part of any of our officers.~~

In connection with the foregoing, on September 9, 2016, the SEC filed an enforcement action ~~in the U.S. District Court for the District of Columbia~~ against us and our General Counsel. We have cooperated with the SEC’s investigation and believe the allegations in the complaint mischaracterize both our and our General Counsel’s actions in connection with the matters related to our quarterly results in fiscal 2013 and are without merit. The complaint ~~seeks~~sought disgorgement of gains that may have resulted from the conduct alleged in the complaint, and payment of unspecified monetary penalties from us and our General Counsel pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. Further, the complaint ~~seeks~~sought to permanently enjoin us from violations of Sections 17(a)(2) and (a)(3) of the Securities Act, Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13, and to permanently enjoin our General Counsel from violations of Sections 17(a)(2) and (a)(3) of the Securities Act and Exchange Act Rules 13b2-1 and 13b2-2(a). ~~Both~~

On December 22, 2020, the Court entered its Final Judgment (the “Final Judgment”) resolving this matter with the SEC. In consenting to the terms of the Final Judgment, we and our General Counsel ~~filed motions~~neither admitted nor denied the SEC’s allegations. We

agreed to ~~dismiss~~pay a civil monetary penalty of $2.0 million under Section 21(d)(3) of the ~~complaint on February 24, 2017. Those motions~~Exchange Act, and we are permanently enjoined from violations of Section 13(a), 13(b)(2)(a) and 13(b)(2)(b) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13. The settlement amount is accrued for in our consolidated financial statements as of November 30, 2020. Our General Counsel agreed to ~~dismiss~~pay a civil monetary penalty of $22,500 under Section 21(d)(3) of the ~~complaint were denied by~~Exchange Act, and he is permanently enjoined from violations of Exchange Act Rule 13b2-1. Prior to the ~~Court on September 29, 2017. We~~date of this filing, both the Company and our General Counsel ~~filed answers to~~have paid their respective civil monetary penalties. For both the ~~complaint on October 16, 2017. Formal discovery commenced in January 2018~~Company and closed as of June 3, 2019, other than one remaining discovery dispute. The parties engaged in written discovery, and several fact witnesses were deposed. The dispositive motion briefing schedule was vacatedour General Counsel, the Final Judgment resolved all claims asserted by the ~~Court on July 2, 2019, due to the remaining discovery dispute, and will be reset once this dispute is fully resolved. We intend to continue to contest the allegations~~SEC in the ~~complaint vigorously.~~proceeding and included relief only with respect to certain books and records provisions of the securities laws, none of which require proof of intentional or willful misconduct.

Also, in connection with the foregoing, on April 28, 2017, a stockholder derivative action was filed in the United States District Court, Northern District of Ohio, Eastern Division, against certain of our current and former directors and officers. ~~The court has~~On February 2, 2018, the Court granted our request for a stay and stayed ~~this stockholder~~the derivative action pending the completion of the SEC enforcement action.

The ~~action~~stay will be revisited by the Court now that the SEC ~~could result~~enforcement action has been resolved. We do not believe a material loss in sanctions against us and/or our General Counsel and could impose substantial additional costs and distractions, regardless of its outcome. We have determined that it is probable that we will incur a loss relating to this matter ~~and have estimated a range of potential loss. We have accrued at the low end of the range of loss, as no amount within the range~~ is ~~more likely to occur, and no amount within the estimated range of loss would have a material impact on our consolidated financial condition, results of operations~~reasonably possible or ~~cash flows.~~probable.

We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings and 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 ~~17,~~15, “Segment Information,” 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.

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.~~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 ~~15,~~13, “Contingencies and ~~Other~~ Accrued Losses.”

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.

~~Accounts~~Trade accounts receivable, net of allowances, and net contract assets (liabilities) consisted of the following:

(In thousands, except percents)

February 29, 2020

November 30, 2019

$ Change

% Change

Accounts receivable, less allowance

$
948,351

$
1,047,813

$
(99,462
)

-9.5
%

Contract assets

$
16,143

$
18,959

$
(2,816
)

-14.9
%
Contract liabilities - short-term

(23,605
)

(25,205
)

1,600

-6.3
%
Net Contract Liabilities

$
(7,462
)

$
(6,246
)

$
(1,216
)

19.5
%

(In thousands, except percents)

February 29, 2020

May 31, 2019

$ Change

% Change

Accounts receivable, less allowance

$
948,351

$
1,232,350

$
(283,999
)

-23.0
%

Contract assets

$
16,143

$
21,628

$
(5,485
)

-25.4
%
Contract liabilities - short-term

(23,605
)

(25,896
)

2,291

-8.8
%
Net Contract Liabilities

$
(7,462
)

$
(4,268
)

$
(3,194
)

74.8
%

(In thousands, except percentages)	November 30, 2020			August 31, 2020			$ Change			% Change
Trade accounts receivable, less allowances	$	1,081,841		$	1,159,130		$	(77,289	)		-6.7	%

Contract assets	$	27,154		$	36,292		$	(9,138	)		-25.2	%
Contract liabilities - short-term		(28,310	)		(25,605	)		(2,705	)		10.6	%
Net Contract Assets (Liabilities)	$	(1,156	)	$	10,687		$	(11,843	)		-110.8	%

(In thousands, except percentages)	November 30, 2020			May 31, 2020			$ Change			% Change
Trade accounts receivable, less allowances	$	1,081,841		$	1,137,957		$	(56,116	)		-4.9	%

Contract assets	$	27,154		$	25,249		$	1,905			7.5	%
Contract liabilities - short-term		(28,310	)		(25,288	)		(3,022	)		12.0	%
Net Contract (Liabilities)	$	(1,156	)	$	(39	)	$	(1,117	)

The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. The $1.2$11.8 million ~~change~~decrease in our net contract ~~liabilities~~assets/(liabilities) from August 31, 2020 to November 30, ~~2019~~2020 resulted primarily due to ~~February 29,~~the timing and volume of construction jobs in progress at November 30, 2020 versus August 31, 2020. During the second quarter of fiscal 2021, net sales at our U.S. based general contracting and roofing services business decreased by $40.4 million as compared to the ~~$3.2~~first quarter of fiscal 2021. Due to the seasonal nature of our business, unbilled revenue is typically highest in the summer months (at the conclusion of RPM’s first fiscal quarter) when favorable weather generally allows our installers to maximize productivity, and is lower throughout the remainder of the year when inconsistent weather adversely impacts productivity. The $1.1 million ~~change~~decrease in our net contract ~~liabilities~~assets/(liabilities) from May 31, ~~2019~~2020 to ~~February 29,~~November 30, 2020 resulted primarily ~~from~~due to the ~~seasonality~~timing and ~~timing associated with our~~volume of construction jobs in progress at November 30, 2020 versus May 31, 2020. This relatively flat performance is a function of relatively consistent weather during ~~peak summer~~our fourth quarter of fiscal 2020 and ~~fall months versus the slower winter months.~~ our second quarter of fiscal 2021.

We also record long-term deferred revenue, which amounted to ~~$67.3~~$66.9 million, ~~$67.1~~$66.4 million and ~~$66.5~~$66.0 million as of ~~February 29, 2020,~~ November 30, ~~2019~~2020, August 31, 2020 and May 31, ~~2019,~~2020, 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.

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.

The following tables summarize the activity for the allowance for credit losses for the three and six months ended November 30, 2020:

Effective June 1, 2019, we realigned certain businesses and management structure to recognize how we allocate resources and analyze the operating performance of our businesses. Among other things, the realignment of certain businesses occurred as a result of the 2020 MAP to Growth that was approved and initiated between May and August 2018. As we began to execute on our operating improvement initiatives, we identified ways to realign certain businesses, and concluded that moving to an expanded reporting structure could help us to better manage our assets and improve synergies across the enterprise.

This realignment changed our reportable segments beginning with our first quarter of fiscal 2020. As such we now report under 4 reportable segments instead of our 3 previous reportable segments. Our four reporting segments are: the CPG reportable segment, PCG reportable segment, Consumer reportable segment and Specialty reportable segment. In connection with the realignment, we

shifted our Kirker business out of Consumer into Specialty, and also shifted our Dryvit and Nudura businesses out of Specialty into CPG. The newly formed CPG also includes our Tremco, Tremco illbruck, Euclid Chemical, Viapol, Vandex and Flowcrete businesses. PCG includes Stonhard, Carboline, USL and Fibergrate businesses, while Consumer comprises the Rust-Oleum and DAP businesses.

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 ~~above,~~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”)~~, and/or adjusted EBIT,~~ as a performance evaluation measure because interest expense is essentially related to acquisitions, 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 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 ~~Specialty~~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 ~~Specialty~~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.

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. ~~Information for all periods presented has been recast to reflect the current year change in reportable segments.~~

Three Months Ended February 29, 2020	CPG Segment		PCG Segment		Consumer Segment		Specialty Segment		Consolidated
Three Months Ended November 30, 2020											CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	190,741	$	151,012	$	319,838	$	119,526	$	781,117	$	261,092	$	148,480	$	441,235	$	140,212	$	991,019
Foreign
Canada		25,978		17,064		21,280		2,041		66,363		48,686		18,196		29,460		2,209		98,551
Europe		95,207		61,191		42,569		18,685		217,652		129,586		63,891		63,454		21,644		278,575
Latin America		38,803		8,946		6,987		397		55,133		40,137		7,139		8,769		415		56,460
Asia Pacific		18,390		5,705		6,159		6,816		37,070		20,948		5,797		4,590		11,574		42,909
Other Foreign		2,963		11,768		1,910		-		16,641		3,071		15,330		-		-		18,401
Total Foreign		181,341		104,674		78,905		27,939		392,859		242,428		110,353		106,273		35,842		494,896
Total	$	372,082	$	255,686	$	398,743	$	147,465	$	1,173,976	$	503,520	$	258,833	$	547,508	$	176,054	$	1,485,915

Three Months Ended February 28, 2019	CPG Segment		PCG Segment		Consumer Segment		Specialty Segment		Consolidated
Three Months Ended November 30, 2019											CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	170,959	$	147,553	$	298,022	$	124,273	$	740,807	$	270,908	$	173,747	$	358,500	$	124,560	$	927,715
Foreign
Canada		28,484		18,210		21,404		1,895		69,993		46,199		19,309		27,075		2,555		95,138
Europe		100,022		57,014		43,367		19,298		219,701		117,548		69,999		48,741		20,946		257,234
Latin America		35,735		8,685		6,781		306		51,507		43,084		8,842		7,327		349		59,602
Asia Pacific		20,087		8,328		6,903		7,988		43,306		19,468		6,670		6,874		9,760		42,772
Other Foreign		45		13,435		1,836		-		15,316		2,303		14,145		2,383		-		18,831
Total Foreign		184,373		105,672		80,291		29,487		399,823		228,602		118,965		92,400		33,610		473,577
Total	$	355,332	$	253,225	$	378,313	$	153,760	$	1,140,630	$	499,510	$	292,712	$	450,900	$	158,170	$	1,401,292

Nine Months Ended February 29, 2020	CPG Segment		PCG Segment		Consumer Segment		Specialty Segment		Consolidated
Six Months Ended November 30, 2020											CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	769,308	$	506,664	$	1,059,568	$	375,817	$	2,711,357	$	589,053	$	304,542	$	950,819	$	273,710	$	2,118,124
Foreign
Canada		122,620		57,345		80,860		6,824		267,649		104,328		35,309		78,368		4,129		222,134
Europe		327,057		195,650		142,319		60,470		725,496		238,305		127,526		131,064		38,639		535,534
Latin America		124,734		26,230		20,629		1,177		172,770		74,990		12,733		16,161		880		104,764
Asia Pacific		58,254		19,799		19,214		21,435		118,702		38,588		10,682		12,264		16,720		78,254
Other Foreign		5,724		39,951		6,384		-		52,059		5,946		27,830		-		-		33,776
Total Foreign		638,389		338,975		269,406		89,906		1,336,676		462,157		214,080		237,857		60,368		974,462
Total	$	1,407,697	$	845,639	$	1,328,974	$	465,723	$	4,048,033	$	1,051,210	$	518,622	$	1,188,676	$	334,078	$	3,092,586

Nine Months Ended February 28, 2019	CPG Segment		PCG Segment		Consumer Segment		Specialty Segment		Consolidated
Six Months Ended November 30, 2019											CPG Segment		PCG Segment		Consumer Segment		SPG Segment		Consolidated
(In thousands)
Net Sales (based on shipping location)
United States	$	690,142	$	494,528	$	1,003,493	$	404,704	$	2,592,867	$	578,567	$	355,653	$	739,729	$	256,291	$	1,930,240
Foreign
Canada		125,556		63,069		73,813		6,574		269,012		96,642		40,282		59,580		4,783		201,287
Europe		353,937		181,784		155,722		64,678		756,121		231,850		134,458		99,750		41,785		507,843
Latin America		110,028		26,877		20,183		976		158,064		85,931		17,283		13,642		781		117,637
Asia Pacific		59,775		27,852		21,733		23,560		132,920		39,864		14,094		13,055		14,618		81,631
Other Foreign		684		47,495		5,987		-		54,166		2,761		28,183		4,474		-		35,418
Total Foreign		649,980		347,077		277,438		95,788		1,370,283		457,048		234,300		190,501		61,967		943,816
Total	$	1,340,122	$	841,605	$	1,280,931	$	500,492	$	3,963,150	$	1,035,615	$	589,953	$	930,230	$	318,258	$	2,874,056

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
(In thousands)	February 29,			February 28,			February 29,			February 28,			November 30,			November 30,			November 30,			November 30,
Income (Loss) Before Income Taxes	2020			2019			2020			2019			2020			2019			2020			2019
CPG Segment	$	(478	)	$	(4,025	)	$	139,324		$	96,375		$	71,832		$	57,123		$	170,182		$	139,803
PCG Segment		22,240			14,365			83,617			44,990			24,047			33,320			52,561			61,377
Consumer Segment		29,798			25,272			123,413			118,078			88,368			34,456			221,089			93,614
Specialty Segment		12,942			16,115			55,031			66,049
SPG Segment														28,406			18,762			48,855			42,089
Corporate/Other		(48,194	)		(47,263	)		(140,476	)		(162,497	)		(45,697	)		(41,908	)		(84,362	)		(92,281	)
Consolidated	$	16,308		$	4,464		$	260,909		$	162,995		$	166,956		$	101,753		$	408,325		$	244,602

(In thousands)	February 29,		May 31,		November 30,		May 31,
Identifiable Assets	2020		2019		2020		2020
CPG Segment	$	1,518,968	$	1,573,329	$	1,631,168	$	1,622,632
PCG Segment		966,995		951,644		951,588		925,569
Consumer Segment		2,018,854		1,953,279		2,133,079		2,067,017
Specialty Segment		737,203		689,133
SPG Segment						754,153		728,449
Corporate/Other		323,850		273,970		320,220		287,287
Consolidated	$	5,565,870	$	5,441,355	$	5,790,208	$	5,630,954

We account for goodwill and other intangible assets in accordance with the provisions of ASC 350 and account for business combinations using the acquisition method of accounting and, accordingly, the assets and liabilities of the entities acquired are recorded at their estimated fair values at the acquisition date. Goodwill represents the excess of the purchase price paid over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets.

We assess goodwill for impairment annually during the fourth quarter, or more frequently, if events and circumstances indicate impairment may have occurred. We test goodwill for impairment at the reporting unit level. Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination as of the acquisition date. Once goodwill has been allocated to the reporting units, it no longer retains its identification with a particular acquisition and becomes identified with the reporting unit in its entirety. Accordingly, the fair value of the reporting unit as a whole is available to support the recoverability of its goodwill. We evaluate our reporting units when changes in our operating structure occur, and if necessary, reassign goodwill using a relative fair value allocation approach.

Subsequent to our prior annual impairment test as of the first day of our fourth fiscal quarter, the composition of our reportable segments was revised, as further discussed in Note 17, “Segment Information.” Prior to implementing the revised segment reporting structure beginning in fiscal 2020, our previously disclosed Industrial segment comprised 2 operating segments, the CPG operating segment and the PCG operating segment. Each of these operating segments comprised several reporting units, all of which were tested during our last annual goodwill impairment test during the fourth quarter of fiscal 2019.

Also, in connection with our 2020 Map to Growth, we realigned certain businesses and management structure within our Specialty segment. As such, our former Wood Finishes Group reporting unit was split into 2 separate reporting units: Guardian and Wood Finishes Group. Additionally, our former Kop-Coat Group reporting unit was split into 2 reporting units: Kop-Coat Industrial Protection Products and Kop-Coat Group. We performed a goodwill impairment test for each of the new reporting units upon the change in reportable segments, business realignment and management structure using a quantitative assessment. We concluded that the estimated fair values exceeded the carrying values for these new reporting units, and accordingly, no indications of impairment were identified as a result of these changes during the first quarter of fiscal 2020.

The following table summarizes the changes in the carrying amount of goodwill, by reportable segment, for the periods presented:

	CPG			PCG			Industrial			Consumer			Specialty						CPG		PCG		Consumer			SPG
(In thousands)	Segment			Segment			Segment			Segment			Segment			Total			Segment		Segment		Segment			Segment		Total
Balance as of May 31, 2019	$	-		$	-		$	526,419		$	499,387		$	219,956		$	1,245,762
Allocation to new segments		407,429			185,259			(526,419	)		-			(66,269	)		-
Balance as of May 31, 2020																			$	405,354	$	185,404	$	496,218		$	163,090	$	1,250,066
Translation adjustments & other																				21,396		265		4,075			2,732		28,468
Balance as of August 31, 2020																				426,750		185,669		500,293			165,822		1,278,534
Acquisitions		14,689			-			-			-			-			14,689			-		-		20,126			-		20,126
Translation adjustments		(3,578	)		(2,577	)		-			(3,568	)		(910	)		(10,633	)		1,238		458		(145	)		566		2,117
Balance as of August 31, 2019		418,540			182,682			-			495,819			152,777			1,249,818
Acquisitions		-			3,023			-			-			-			3,023
Translation adjustments		1,198			2,683			-			2,235			599			6,715
Balance as of November 30, 2019		419,738			188,388			-			498,054			153,376			1,259,556
Acquisitions		-			-			-			-			10,352			10,352
Translation adjustments		(3,321	)		(435	)		-			(473	)		(442	)		(4,671	)
Balance as of February 29, 2020	$	416,417		$	187,953		$	-		$	497,581		$	163,286		$	1,265,237
Balance as of November 30, 2020																			$	427,988	$	186,127	$	520,274		$	166,388	$	1,300,777

~~On March 11, 2020, subsequent~~Subsequent to the ~~balance sheet date,~~end of our second quarter, and as discussed in further detail above in Note 13, “Contingencies and Accrued Losses,” to the ~~World Health Organization characterized~~Consolidated Financial Statements, the ~~outbreak~~Court entered its Final Judgment resolving the "SEC Investigation & Enforcement Action" on December 22, 2020. The settlement amount has been accrued for in our consolidated financial statements as of the coronavirus disease known as COVID-19 as a global pandemic and recommended containment and mitigation measures. We are actively monitoring the impact of the coronavirus outbreak, which will negatively impact our business and results of operations for our fiscal fourth quarter and likely beyond. The extent to which our operations will be impacted by the outbreak will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact, among other things.

As of April 8, 2020, we have repurchased 386,231 shares of RPM common stock since February 29, 2020, at a cost of approximately $25.0 million, or an average of $64.73, under the stock repurchase program described in Note 11. Given recent macroeconomic uncertainty resulting from the COVID-19 pandemic, we have suspended our share buyback program.

Our financial statements include all of our majority-owned subsidiaries. Investments in less-than-majority-owned joint ventures for which we have the ability to exercise significant influence over 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, ~~2019.~~

~~This realignment changed our reportable segments beginning with our first quarter of fiscal~~ 2020. As such, as of June 1, 2019, we began reporting under four reportable segments instead of our three previous reportable segments. See Note 17, “Segment Information,” to the Consolidated Financial Statements for further detail.

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. ~~Information for all periods presented has been recast to reflect the current year change in reportable segments.~~

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	February 29,			February 28,			February 29,			February 28,			November 30,			November 30,			November 30,			November 30,
(In thousands)	2020			2019			2020			2019			2020			2019			2020			2019
Net Sales
CPG Segment	$	372,082		$	355,332		$	1,407,697		$	1,340,122		$	503,520		$	499,510		$	1,051,210		$	1,035,615
PCG Segment		255,686			253,225		$	845,639			841,605			258,833			292,712			518,622			589,953
Consumer Segment		398,743			378,313		$	1,328,974			1,280,931			547,508			450,900			1,188,676			930,230
Specialty Segment		147,465			153,760			465,723			500,492
SPG Segment														176,054			158,170			334,078			318,258
Consolidated	$	1,173,976		$	1,140,630		$	4,048,033		$	3,963,150		$	1,485,915		$	1,401,292		$	3,092,586		$	2,874,056
Income Before Income Taxes (a)
CPG Segment
Income (Expense) Before Income Taxes (a)	$	(478	)	$	(4,025	)	$	139,324		$	96,375
Income Before Income Taxes (a)													$	71,832		$	57,123		$	170,182		$	139,803
Interest (Expense), Net (b)		(2,130	)		(2,489	)		(6,231	)		(6,968	)		(2,141	)		(2,074	)		(4,251	)		(4,101	)
EBIT (c)	$	1,652		$	(1,536	)	$	145,555		$	103,343		$	73,973		$	59,197		$	174,433		$	143,904
PCG Segment
Income Before Income Taxes (a)	$	22,240		$	14,365		$	83,617		$	44,990		$	24,047		$	33,320		$	52,561		$	61,377
Interest Income (Expense), Net (b)		123			(62	)		20			(401	)		9			25			(22	)		(104	)
EBIT (c)	$	22,117		$	14,427		$	83,597		$	45,391		$	24,038		$	33,295		$	52,583		$	61,481
Consumer Segment
Income Before Income Taxes (a)	$	29,798		$	25,272		$	123,413		$	118,078		$	88,368		$	34,456		$	221,089		$	93,614
Interest (Expense), Net (b)		(57	)		(119	)		(219	)		(417	)		(64	)		(56	)		(127	)		(161	)
EBIT (c)	$	29,855		$	25,391		$	123,632		$	118,495		$	88,432		$	34,512		$	221,216		$	93,775
Specialty Segment
SPG Segment
Income Before Income Taxes (a)	$	12,942		$	16,115		$	55,031		$	66,049		$	28,406		$	18,762		$	48,855		$	42,089
Interest Income (Expense), Net (b)		(24	)		135			(6	)		332			(73	)		(7	)		(155	)		19
EBIT (c)	$	12,966		$	15,980		$	55,037		$	65,717		$	28,479		$	18,769		$	49,010		$	42,070
Corporate/Other
(Expense) Before Income Taxes (a)	$	(48,194	)	$	(47,263	)	$	(140,476	)	$	(162,497	)
(Loss) Before Income Taxes (a)													$	(45,697	)	$	(41,908	)	$	(84,362	)	$	(92,281	)
Interest (Expense), Net (b)		(25,720	)		(19,264	)		(61,840	)		(66,478	)		(9,478	)		(15,424	)		(16,175	)		(36,121	)
EBIT (c)	$	(22,474	)	$	(27,999	)	$	(78,636	)	$	(96,019	)	$	(36,219	)	$	(26,484	)	$	(68,187	)	$	(56,160	)
Consolidated
Net Income	$	12,090		$	14,496		$	195,907		$	133,855		$	127,884		$	77,322		$	308,670		$	183,818
Add: Provision (Benefit) for Income Taxes		4,218			(10,032	)		65,002			29,140
Add: Provision for Income Taxes														39,072			24,431			99,655			60,784
Income Before Income Taxes (a)		16,308			4,464			260,909			162,995			166,956			101,753			408,325			244,602
Interest (Expense)		(23,972	)		(26,525	)		(78,630	)		(74,058	)		(21,266	)		(26,341	)		(43,011	)		(54,658	)
Investment Income (Expense), Net		(3,836	)		4,726			10,354			126
Investment Income, Net														9,519			8,805			22,281			14,190
EBIT (c)	$	44,116		$	26,263		$	329,185		$	236,927		$	178,703		$	119,289		$	429,055		$	285,070

The following discussion describes our results of operations for the three- and nine-month periods ended February 29, 2020. While the recent outbreak of the coronavirus (COVID-19) did not have a material adverse effect on our reported results for our fiscal third quarter, we are actively monitoring the impact of the coronavirus outbreak, which will negatively impact our business and results of operations for our fiscal fourth quarter and likely beyond. The extent to which our operations will be impacted by the outbreak will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact, among other things.

Our CPG segment experienced modest organic growth quarter over quarter, despite commercial and institutional construction markets that continue to be soft in North America and Europe. The growth that was achieved during the ~~third~~second quarter of fiscal ~~2020 grew~~2021 was mainly driven by ~~approximately 2.9% from net sales~~a focus on renovation and restoration projects, which allowed CPG to expand its position as a single-source provider of ~~$1,140.6 million for last year’s third quarter. Organic sales, which include the impact of price and volume, contributed 3.0%~~building envelope systems. The segment also continued to ~~consolidated net sales while acquisitions added 0.7%. Unfavorable foreign currency exchange impacted consolidated net sales during the current quarter by 0.8%.~~

~~CPG segment net sales for the current quarter grew by 4.7% to $372.1 million, from net sales of $355.3 million during the same period a year ago. Organic growth contributed 5.1%~~gain market share during the quarter ~~mainly driven~~in construction technologies, led by ~~market share gains and the introduction of new products, with the fastest growth being generated in our roofing, below-grade waterproofing and~~its insulated concrete admixtures businesses. Recent acquisitions contributed 1.0% to net sales during the current quarter. Unfavorable foreign currency exchange negatively impacted CPG segment net sales by 1.4% during the current quarter. Construction activity picked up due to favorable weather early in this year’s third quarter, enabling CPG to catch up on projects that were delayed during the rainy spring and early summer months. form business.

Our PCG segment ~~net~~experienced organic sales ~~for the current quarter grew by 1.0% to $255.7 million, from net sales of $253.2 million during the same period a year ago. Organic growth was 1.6%~~declines during the quarter ~~driven mainly by selling price increases over~~as restrictions associated with Covid impacted the ~~comparable period last year while recent acquisitions contributed 0.2%~~ability of contractors to ~~net sales~~gain access to the facilities of our end customers. Furthermore, our customers in the energy sector are facing poor economic conditions, which is causing deferrals in industrial maintenance spending. The segment was particularly challenged in emerging markets. Lastly, a series of hurricanes throughout the Gulf region of the U.S. temporarily disrupted our coatings business.

Our Consumer segment experienced significant organic growth as it benefitted from unprecedented demand worldwide for its “do-it-yourself” home improvement products, as consumers are spending more time at home during the ~~current quarter. Unfavorable foreign currency exchange negatively impacted PCG segment net~~Covid shutdowns. Additionally, cleaning product sales ~~by 0.8%~~continue to grow with the increased emphasis during the ~~current quarter.~~ Covid pandemic.

Our ~~protective~~SPG segment experienced organic sales growth resulting from more significant hurricane and ~~marine coatings business unit~~wildfire activity, which drove demand for our water restoration equipment, as well as fluorescent pigments, which are used in fire retardant tracer dyes. Additionally, we experienced strong demand for our disinfectants, air purification equipment, and HEPA filters. Sales of our industrial wood protection products also increased market share and its continental European operations grew solidly, driven by a new global management structure. However, this growth was somewhat offset by the highway and bridge maintenance businesses, which was slowed by government budget constraints, particularly in the UK. Organic growth in the segment has further slowed due to recent strategic decisions to exit certain international businesses, while discontinued product lines reduced sales by approximately 1.5%.

Consumer segment net sales for the quarter grew by 5.4% to $398.7 million, from $378.3 million during last year’s third quarter. Organic growth provided 6.0%, while unfavorable foreign currency exchange negatively impacted net sales in the segment by 0.6% during the ~~current quarter versus the same~~ period, a year ago. Increased sales volume resulted from market share gains and unseasonably warm winter weather in North America that enabled consumers to complete more DIY home improvement projects. The fastest growth was achieved in our caulks, sealants, and patch and repair product lines.

~~Specialty segment net sales for the quarter decreased by 4.1% to $147.5 million, from $153.8 million during last year’s third quarter. Organic sales declined 7.1% during the current quarter, as~~ a result of ~~difficult comparisons to~~a stronger residential market, which has driven demand for lumber, furniture and cabinets in the ~~prior year for our water damage restoration products business when significant weather events drove demand in North America. Sales were~~U.S. We also ~~down~~expanded sales in our ~~OEM fluorescent pigments, nail polish,~~forestry chemicals business in Australia and ~~edible coatings businesses. These declines were somewhat offset by our wood coatings business which successfully outperformed its peers in~~New Zealand.

As demonstrated above, Covid has had a ~~challenging market. Additionally, foreign currency exchange had an unfavorable~~mixed impact on ~~Specialty segment~~our businesses, impacting some unfavorably and others favorably. RPM continues to be well-served by the strategic balance in its portfolio of businesses. It continues to be difficult to predict the future financial impact on net sales, ~~for the quarter of 0.3%, while acquisitions added 3.3% of net sales during the quarter.~~

~~We now expect our net sales in the fourth quarter of fiscal year 2020 to decrease in comparison to the prior year quarter,~~ as ~~a result of the disruption and uncertainty that COVID-19 is having on the global economy. As~~ we cannot predict the duration or scope of the pandemic, but the ~~future financial~~ impact ~~on net sales cannot be reasonably estimated, but~~ could be material. ~~The extent of the decline~~Future performance in ~~future~~net sales is dependent on several factors, including but not limited to: (i) the ability of our customers to continue ~~operations (currently, many of our customers are considered “essential” and are open for business);~~operations; (ii) ~~a potential for~~continued organic growth in DIY sales, as people spend more time at home; (iii) ~~a potential for~~continued organic growth in professional and consumer cleaning and disinfectant brands, some of which are effective against ~~COVID-19; and~~Covid; (iv) the nature and extent of facility closures as a result of ~~COVID-19.~~Covid; (v) the length and severity of the downturn in energy and construction markets and associated unfavorable impact on maintenance spending in these sectors; and (vi) the ability for our suppliers to meet demand requirements. With that being said, we expect to generate consolidated sales growth in the mid-single digits during the third quarter of fiscal 2021, which is more in line with recent quarters prior to the outbreak of Covid.

Gross Profit Margin Our consolidated gross profit margin of ~~37.0%~~39.4% of net sales for the ~~third~~second quarter of fiscal ~~2020~~2021 compares to a consolidated gross profit margin of ~~35.9%~~37.8% for the comparable period a year ago, after giving effect to the change in classification of shipping and handling costs. Last year’s reported gross profit margin of 39.1% has been recast to 35.9% in order to reflect the current year change in accounting principle related to shipping costs, which were previously recognized in SG&A expenses and are now recognized in cost of sales.ago. The current quarter gross profit margin increase of approximately ~~1.1% of net sales,~~1.6%, or ~~110~~160 basis points

(“bps”), resulted primarily from a combination of increases in selling prices, ~~2020~~ MAP to Growth savings, which include raw material savings due to our centralized procurement initiatives, and higher sales volume versus the same period a year ago.

~~Despite~~Raw material cost inflation was neutral during the ~~recent outbreak~~second quarter of ~~COVID-19, raw material costs inflation seems to be moderating in a number of~~fiscal 2021 overall, but has been recently rising fairly broadly across our key product categories. Our global supply chain remains ~~strong. Nearly all~~strong, despite some challenges at specific businesses in our portfolio. While we have had to temporarily shut down certain plants in response to Covid, we have generally been able to maintain our principal operations. While we have not yet experienced a material impact, we do anticipate that certain raw materials are likely

to create future cost pressure as our suppliers are struggling to meet demand in light of ~~our North American plants are operational and only some of our international plants have been closed temporarily.~~Covid. Despite these facts, as we cannot predict the duration or scope of the ~~COVID-19~~Covid pandemic, the future financial impact to gross profit margin cannot be reasonably estimated, but could be material.

SG&A&A Our consolidated SG&A expense during the ~~current~~ period was ~~$7.7~~$3.9 million ~~higher~~lower versus the same period last year ~~but~~and decreased to ~~32.5%~~26.9% of net sales from ~~32.8%~~28.8% of net sales for the prior year quarter. Last year’s reported SG&A percentage of net sales of 36.0% has been recast to 32.8% in order to reflect the current year change in accounting principle related to shipping and handling costs, which were previously recognized in SG&A expenses and are now recognized in cost of sales. During the ~~third~~second quarter of fiscal ~~2020,~~2021, we continued our ~~2020~~ MAP to Growth and have generated incremental savings of approximately ~~$3.8~~$5.7 million. Additional SG&A expense recognized by companies we recently acquired ~~during the last 12 months~~ approximated ~~$2.1~~$5.2 million during the ~~third~~second quarter of fiscal ~~2020.~~2021.

Our CPG segment SG&A was approximately $10.1 million higher for the third quarter of fiscal 2020 versus the comparable prior year period and increased as a percentage of net sales, mainly due to additional commissions directly associated with higher sales volume. Additionally, companies acquired during the past 12 months contributed approximately $1.0 million of additional SG&A expense during the current quarter.

~~Our PCG segment SG&A was approximately $0.5~~$10.2 million lower for the ~~third~~second quarter of fiscal ~~2020~~2021 versus the comparable prior year period and decreased as a percentage of net sales. The decrease was mainly due to reducing discretionary spending (i.e., meetings, travel, etc.), temporary salary cuts taken in response to the economic downturn, and MAP to Growth savings.

Our PCG segment SG&A was approximately $2.8 million lower for the second quarter of fiscal 2021 versus the comparable prior year period but increased as a percentage of net sales, mainly due to ~~transactional currency exchange~~the deleveraging effect from lower sales volume compared to the prior comparable quarter. Additionally, the quarter over quarter PCG segment SG&A decrease was primarily attributable to a reduction in discretionary spending and ~~2020~~ MAP to Growth ~~savings, partially offset by increases in commission expense directly associated with higher sales volumes versus~~savings. Finally, the ~~prior year. Additionally, companies~~company we recently acquired ~~during the past 12 months~~ contributed approximately ~~$0.2~~$0.1 million of additional SG&A expense during the current quarter.

Our Consumer segment SG&A increased by approximately ~~$2.2~~$3.5 million during the ~~third~~second quarter of fiscal ~~2020~~2021 versus the same period last year but decreased as a percentage of net sales. ~~This~~The quarter-over-quarter increase in SG&A was primarily attributable to the SG&A added from the company acquired during the second quarter of fiscal 2021, which totaled $4.0 million. Additionally, there were increases in distribution costs and ~~interplant freight expenses~~incentive compensation costs as a result of higher ~~volume. These~~volume, but these increases were ~~partially~~completely offset by a ~~decrease~~reduction in ~~advertising and promotional expense when compared to~~discretionary spending during the ~~prior year~~ quarter.

Our ~~Specialty~~SPG segment SG&A was approximately ~~$3.4~~$2.4 million ~~higher~~lower during the ~~third~~second quarter of fiscal ~~2020~~2021 versus the comparable prior year period and ~~increased~~decreased as a percentage of net sales. The ~~increase~~decrease in SG&A expense is ~~mainly~~ attributable to ~~additional costs associated with~~cost control measures and savings resulting from actions taken during the ~~ERP consolidation plan and the consolidation of certain accounting/financing functions~~past year associated with our ~~2020~~ MAP to Growth ~~partially offset by cost control measures associated with~~and lower ~~sales volumes.~~year-over-year spending on ERP implementations. Additionally, the company we recently acquired contributed approximately $1.1 million of additional SG&A expense during the current quarter.

SG&A expenses in our corporate/other category ~~of $20.1~~increased by $8.0 million during the ~~third~~second quarter of fiscal ~~2020 decreased by $7.5 million from $27.6 million recorded during~~2021 as compared to last year’s ~~third~~second quarter ~~resulting primarily from a decrease in professional fees in connection with our 2020 MAP~~due mainly to ~~Growth, which approximated $1.6 million, compared~~higher incentives related to ~~$7.4 million in the prior comparable quarter.~~performance and pension costs.

We recorded total net periodic pension and postretirement benefit costs of $13.1 million and $11.4 million for the third quarter of fiscal 2020 and 2019, respectively. The $1.7 million increase in pension expense resulted from the combination of higher net actuarial losses recognized during the current quarter versus last year’s third quarter for approximately $1.6 million and a higher service costs of approximately $0.7 million during the current quarter versus the same period a year ago. These increases were partially offset by a decrease of approximately $0.6 million in interest costs during the current quarter, when compared to the same period a year ago.

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 in light of the ~~recent outbreak of COVID-19.~~lingering macroeconomic uncertainties associated with Covid, but which may have a material impact on our consolidated financial results in the future.

As we cannot predict the duration or scope of the ~~COVID-19~~Covid pandemic, the future financial impact to SG&A cannot be reasonably estimated, but could be material. ~~As described further below, the~~The disruption caused by the outbreak of ~~COVID-19 is expected to delay our implementation of our 2020 MAP to Growth past the original target completion date of December 31, 2020, which~~Covid may impact our near-term ability to drive further reduction in SG&A as a percentage of sales. However, this will be offset to some degree by lower variable SG&A, such as reduced travel-related expenses incurred by our associates, due to travel restrictions in place because of the ~~COVID-19~~Covid outbreak.

Restructuring Charges ~~We recorded restructuring charges of $7.3 million during the third quarter of fiscal 2020, which compares with $8.7 million during the third quarter of fiscal 2019.~~

These charges were the result of our continued implementation of our 2020 MAP to Growth, which focuses upon strategic shifts in operations across our entire business. On a consolidated basis, we recognized $4.8 million of severance and benefit costs during the third quarter of fiscal 2020 compared with $3.4 million during the same period a year ago. Facility closure and other related costs totaled $2.2 million during the third quarter of fiscal 2020 versus $4.3 million during the third quarter of fiscal 2019. Finally, $0.4 million of other asset write-offs during the current period compared with $0.9 million

~~during the same period a year ago.~~ ~~These charges were~~are associated with closures of certain facilities as well as the elimination of duplicative headcount and infrastructure associated with certain of our ~~businesses.~~businesses and are the result of the continued implementation of our MAP to Growth, which focuses upon strategic shifts in operations across our entire business.

~~We currently expect to incur approximately $32.4 million~~Our current expectation of future additional ~~charges~~restructuring costs is shown in relation to implementation of our 2020 MAP to Growth. These additional charges include approximately $22.9 million of severance and benefit costs, $8.7 million of facility closure and other related charges, as well as $0.8 million of other asset write-offs. 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. ~~Recently, however,~~However, the disruption caused by the outbreak of ~~COVID-19 is expected to delay our implementation~~Covid delayed the finalization of our ~~2020~~ MAP to Growth past the original target completion date of December 31, 2020. We now expect to utilize the remainder of fiscal year 2021 to achieve the goals originally set forth in our MAP to Growth. Certain of these projects may not be finalized until fiscal year 2022 and we would expect to continue to recognize restructuring expense throughout fiscal year 2022, as projects related to our MAP to Growth are executed and completed.

Despite the delay in finalizing our MAP to Growth past the original target completion date, we expect we will have achieved our annualized pretax savings goal of approximately $290 million and made substantial progress on our $230 million working capital improvement goal by May 31, 2021. See Note 4,3, “Restructuring,” to the Consolidated Financial Statements, for further ~~detail~~details surrounding our ~~2020~~ MAP to Growth.

Interest Expense Interest expense was $24.0 million for the third quarter of fiscal 2020 versus $26.5 million for the same period a year ago. Excluding acquisition-related borrowings, higher average borrowings quarter over quarter increased interest expense by approximately $3.1 million during the third quarter of fiscal 2020 when compared to the prior year quarter. Higher average borrowings, related to recent acquisitions, increased interest expense during this year’s third quarter by approximately $0.5 million versus the same period a year ago. Lower interest rates, which averaged 3.63% overall for the third quarter of fiscal 2020 compared with 4.61% for the same period of fiscal 2019, decreased interest expense by approximately $6.2 million during the current quarter versus the same period last year.

The interest rate decrease was a result of lower market rates on the variable cost ~~borrowings as well as the October 2019 maturity of higher cost borrowing (i.e., our $450 million, 6.125% notes).~~borrowings.

Investment (Income)~~Expense,~~, Net Net investment expense of approximately $3.8 million for the third quarter of fiscal 2020 compares to net investment income of $4.7 million during the same period last year. Dividend and interest income totaled $3.1 million and $3.0 million for the third quarter of fiscal 2020 and 2019, respectively. Net loss on marketable securities totaled $6.9 million during the third quarter of fiscal 2020, while there were net realized gains of $1.7 million during the same period a year ago.

Income Before Income Taxes (“IBT”) Our consolidated IBT for the third quarter of fiscal 2020 of $16.3 million compares with IBT of $4.5 million for the same period a year ago. Our CPG segment had pretax losses of $0.5 million for the quarter ended February 29, 2020, versus pretax losses of $4.0 million for the same period a year ago.

Our CPG segment results reflect ~~selling price increases, moderating raw material costs, 2020~~proactive management to improve its product mix, MAP to Growth savings and the favorable leverage impact of higher sales volume, partially offset by increased SG&A. Our PCG segment had IBT of $22.2 million, or 8.7% of net sales, for the quarter ended February 29, 2020, versus IBT of $14.4 million, or 5.7% of net sales, for the same period a year ago.cost control measures. Our PCG segment results reflect ~~proactively managing a favorable product and service mix with a focus on higher margins,~~the impact of the Covid pandemic restrictions, challenges in emerging markets, as well as ~~2020 MAP to Growth~~disruptions in our coatings business ~~rationalization efforts. Our Consumer segment IBT approximated $29.8 million, or 7.5%~~caused by the series of ~~net sales, for~~hurricanes throughout the ~~third quarter of fiscal 2020, versus~~Gulf region in the ~~prior year third quarter IBT of $25.3 million, or 6.7% of net sales.~~U.S. Our Consumer segment results reflect the large increase in sales and related volume leveraging impact on margins, along with savings from ~~2020~~our MAP to ~~Growth, partially offset by inflation~~Growth. Our SPG segment results reflect sales increases in certain raw materials, and channel mix. Our Specialty segment had IBT of $12.9 million, or 8.8% of net sales for the quarter ended February 29, 2020, versus IBT of $16.1 million, or 10.5% of net sales, for the same period a year ago, reflecting declines in sales volume in our fluorescent pigment, water damage restoration, and our industrial wood protection products ~~fluorescent pigments, nail polish~~businesses, and ~~edible coatings businesses, which were somewhat mitigated by~~strong demand for our disinfectants, air purification equipment, and HEPA filters, in addition to savings from ~~2020~~our MAP to Growth and other cost cutting measures.

Income Tax Rate The effective income tax rate of ~~25.9%~~23.4% for the three months ended ~~February 29,~~November 30, 2020 compares to the effective income tax ~~benefit~~ rate of ~~224.7%~~24.0% for the three months ended ~~February 28,~~November 30, 2019. The effective income tax ~~rate~~rates for the three months ended ~~February 29,~~November 30, 2020 ~~reflects~~and 2019 reflect variances from the 21% statutory rate due primarily to the unfavorable impact of state and local income taxes and ~~an increase in valuation allowances related to~~the net tax on foreign ~~net operating losses. Additionally, during~~subsidiary income resulting from the third quarter, we recorded a net favorable discrete tax adjustment totaling $0.3 million. The net favorable discrete tax adjustment is comprised of a $10.9 million charge for an increase to our deferredglobal intangible low-taxed income ~~tax liability for withholding taxes on additional unremitted foreign earnings not considered permanently reinvested which was~~provisions, partially offset ~~primarily~~ by tax benefits ~~associated with equity compensation, favorable adjustments~~ related to foreign tax credits, and favorable adjustments related to the global intangible low-tax provisions, resulting from final Treasury Regulations issued during this quarter, and as reported on our 2019 U.S. federal income tax return.equity compensation.

Net Income Net income of $12.1 million for the quarter ended February 29, 2020 compares to net income of $14.5 million for the comparable prior year period. Net income attributable to RPM International Inc. stockholders for the third quarter of fiscal 2020 was

~~$11.9 million, or 1.0% of consolidated net sales, which compared to net income of $14.2 million, or 1.2% of consolidated net sales for the comparable prior year period.~~

~~Diluted earnings per share of common stock for the quarter ended February 29, 2020 of $0.09 compares with diluted earnings per share of common stock of $0.11 for the quarter ended February 28, 2019.~~

Net Sales Consolidated net sales of $4,048.0 million for the first nine months of fiscal 2020 grew by approximately 2.1% from net sales of $3,963.2 million for last year’s first nine months. Acquisitions added 1.3%, while organic sales, which include the impact of price and volume, increased consolidated net sales by 2.0%. Consolidated net sales for the period also reflect an unfavorable foreign currency exchange impact of 1.2%.

Our CPG segment net sales for the first nine months of fiscal 2020 grew by 5.0% to $1,407.7 million, from net sales of $1,340.1 million during the same period a year ago. The improvement resulted from recent acquisitions, which contributed 2.4% to net sales during the current period, andexperienced modest organic growth ~~which contributed 4.2% during the period. The organic growth was~~ driven mainly by ~~volume~~market share gains atin our construction technologies, led by our insulated concrete form business. In addition, our roofing business and market improvement at our business in Brazil, but was partially offset by weakening sales in Europe. Unfavorable foreign currency exchange impacted construction segment net sales by 1.6% during the current period.

~~PCG segment net sales for the first nine months of fiscal 2020~~ grew by 0.5% to $845.6 million, from net sales of $841.6 million during the same period a year ago. The improvement resulted from recent acquisitions, which contributed 0.7% to net sales during the current period, and organic growth, which contributed 1.2% during the period, driven mainly by the increases of selling prices over the comparable period last year. Unfavorable foreign currency exchange impacted PCG segment net sales by 1.4% during the current period. Sales growth was dampened by strategic decisions to exit low-margin businesses.

Consumer segment net sales for the first nine months of fiscal 2020 grew by 3.8% to $1,329.0 million, from $1,281.0 million during the same period a year ago. Recent acquisitions provided 0.7% of the growth in net sales, while organic growth provided 4.0%, during the current period, driven primarily by price increases and incremental volume from new customers. Unfavorable foreign currency exchange impacted net sales in the Consumer segment by 0.9% during the current period versus the same period a year ago. Sales improved in the U.S. as ~~there were new customer wins during the period, but these were slightly offset due to soft economy in the U.K. and continental Europe related to Brexit.~~

Specialty segment net sales for the first nine months of fiscal 2020 decreased by 7.0% to $465.7 million, from $500.5 million during last year’s first nine months. Organic sales declines of 7.4%, during the current period, resulted from decreases in our fluorescent pigments business (due to increased competition) and restoration equipment business (due to fewer significantwe experienced better weather ~~events~~ in the current year than the prior year when unfavorable conditions caused a delay in North American construction activity. Additionally, our commercial sealants business experienced sales increases during the first half of fiscal 2021 from distributors who did not order in April and May due to Covid lockdown restrictions.

Our PCG segment experienced organic declines during the period as ~~compared~~restrictions associated with Covid impacted the ability of contractors to gain access to the facilities of our end customers. Furthermore, our customers in the energy sector are facing poor economic conditions, which is causing deferrals in industrial maintenance spending. The segment was particularly challenged in emerging markets. Lastly, a series of hurricanes throughout the Gulf region of the U.S. temporarily disrupted our coatings business.

Our Consumer segment experienced significant organic growth resulting from a combination of higher “do-it-yourself” demand as consumers are spending more time at home during the Covid shutdowns and an easier comparison to the prior year, when sales were very low due to extremely wet weather. In addition, growth in our cleaning product businesses contributed to sales growth for the current period.

Our SPG segment experienced organic growth resulting from more significant wildfire activity, which drove demand for our fluorescent pigments, which are used in fire retardant tracer dyes. Additionally, sales of our industrial wood protection products increased during the period, a result of a stronger residential market, which has driven demand for lumber, furniture and cabinets in the U.S. Lastly, we experienced increases in sales due to favorable market conditions in our nail polish business, as ~~these weather events have~~Covid has led to more demand for our product offering with nails being done at home instead of at salons.

As demonstrated above, Covid has had a ~~favorable~~mixed impact on ~~sales). Additionally, foreign currency exchange had an~~our businesses, impacting some unfavorably and others favorably. RPM continues to be well-served by the strategic balance in its portfolio of businesses. It continues to be difficult to predict the future financial impact on net sales, as we cannot predict the duration or scope of the pandemic, but the impact could be material. Future performance in net sales is dependent on several factors, including but not limited to: (i) the ability of our customers to continue operations; (ii) continued organic growth in DIY sales, as people spend more time at home; (iii) continued organic growth in professional and consumer cleaning and disinfectant brands, some of which are effective against Covid; (iv) the nature and extent of facility closures as a result of Covid; and (v) the length and severity of the downturn in energy markets and associated unfavorable impact on ~~Specialty segment net~~maintenance spending in this sector. With that being said, we expect to generate consolidated sales ~~for~~growth in the ~~period~~mid-single digits, which is more in line with recent quarters prior to the outbreak of ~~0.6%. Partially offsetting these decreases were sales from acquisitions, which contributed 1.0% during the period.~~ Covid.

Gross Profit Margin Our consolidated gross profit margin of ~~38.0%~~40.1% of net sales for the first ~~nine months~~half of fiscal ~~2020~~2021 compares to a consolidated gross profit margin of ~~36.7%~~38.4% for the comparable period a year ~~ago, after giving effect to the change in classification of shipping and handling costs. Last year’s reported~~ago. The current period gross profit margin of 39.8% has been recast to 36.7% in order to reflect the current year change in accounting principle related to shipping and handling costs, which were previously recognized in SG&A expenses and are now recognized in cost of sales. This gross profit increase of approximately ~~1.3% of net sales reflects an improvement of approximately 130~~1.7%, or 170 bps, ~~resulting~~resulted primarily from a combination of increases in selling prices, ~~and 2020~~ MAP to Growth savings, ~~partially offset by the impact of labor cost inflation and unfavorable mix of product sold versus last year. Additionally, higher~~which include raw material savings due to our centralized procurement initiatives, and higher sales volume versus the same period a year ago.

Raw material costs inflation was neutral during the first half of fiscal 2021, but has been recently rising broadly across ~~RPM and~~our key product categories. Our global supply chain remains strong, despite some challenges ~~specifically~~at specific businesses in our ~~Consumer Segment negatively affected~~portfolio. While we have had to temporarily shut down certain plants in response to Covid, we have generally been able to maintain our principal operations. While we have not yet experienced a material impact, we do anticipate that certain raw materials and packaging components are likely to create future cost pressure, as our suppliers are struggling to meet demand in light of Covid. Despite these facts, as we cannot predict the duration or scope of the Covid pandemic, the future financial impact to gross profit ~~margin.~~margin cannot be reasonably estimated, but could be material.

SG&A Our consolidated SG&A expense during the ~~first nine months of fiscal 2020~~current period was ~~$10.7~~$8.6 million ~~higher~~lower versus the same period last year ~~but~~and decreased to ~~29.3%~~25.7% of net sales from ~~29.6%~~28.0% of net sales for the ~~comparable~~prior year period. Last year’s first nine months reported SG&A percentage of net sales of 32.8% has been recast to 29.6% in order to reflect the current year change in accounting principle related to shipping and handling costs, which were previously recognized in SG&A expenses and are now recognized in cost of sales. During the first ~~nine months~~half of fiscal ~~2020,~~2021, we continued our ~~2020~~ MAP to Growth and have generated ~~$15.2 million~~incremental savings of ~~incremental savings.~~approximately $12.5 million. Additional SG&A expense ~~incurred from~~recognized by companies we recently acquired ~~during the previous 12 months~~ approximated ~~$9.6~~$6.4 million during the first ~~nine months~~half of fiscal ~~2020.~~2021.

Our CPG segment SG&A was approximately $16.2 million higher for the first nine months of fiscal 2020 versus the comparable prior year period but decreased as a percentage of net sales, mainly due to increased commissions directly associated with higher sales volume, partially offset by 2020 MAP to Growth savings in the current period. Additionally, companies acquired during the past 12 months contributed approximately $6.3 million of additional SG&A expense.

~~Our PCG segment SG&A was approximately $8.6~~$19.6 million lower for the first ~~nine months~~half of fiscal ~~2020~~2021 versus the comparable prior year period and decreased as a percentage of net sales ~~mainly due~~when compared to 2020 MAP to Growth savings in the current period, decreased allowance for doubtful accounts associated with accounts deemed uncollectible as a result of changes in our market and leadership strategy and unfavorable transactional foreign exchange that occurred in the prior comparable period. ~~These decreases were slightly offset by~~The decrease in SG&A expense was mainly due to reducing discretionary spending (i.e., meetings, travel, etc.), temporary salary cuts taken in response to the economic downturn, and MAP to Growth savings.

Our PCG segment SG&A was approximately ~~$0.6~~$11.4 million lower for the first half of fiscal 2021 versus the comparable prior year period, but increased as a percentage of net sales, mainly due to the decrease in sales for the period. The decrease in SG&A was primarily attributable to a reduction in discretionary spending, as well as MAP to Growth savings. Additionally, the company we recently acquired contributed approximately $0.2 million of additional SG&A expense ~~generated from companies acquired~~ during the ~~past 12 months.~~current period.

Our Consumer segment SG&A increased by approximately ~~$6.5~~$17.2 million during the first ~~nine months~~half of fiscal ~~2020~~2021 versus the same period last year but decreased as a percentage of net sales. ~~This~~The period-over-period increase in SG&A was primarily attributable to increases in distribution costs and ~~commissions directly associated with~~incentives compensation costs as a result of higher ~~sales volume. In addition,~~volume, offset somewhat by a reduction in discretionary spending during the ~~second quarter of our current fiscal year,~~period. There were also slight increases in advertising and promotional expense. Additionally, the company we decided to no longer pursue a product line targeted for OEM markets. We performed a recoverability assessment for certain prepaid assets associated with this product line, which resulted in the recognition of a $6.9 million charge during the second quarter of our current fiscal year. These increases were partially offset by 2020 MAP to Growth savings. Lastly, companiesrecently acquired ~~during the past 12 months~~ contributed approximately ~~$1.8~~$4.0 million of additional SG&A ~~expense.~~expense during the current period.

Our ~~Specialty~~SPG segment SG&A was approximately ~~$4.5~~$3.1 million ~~higher~~lower during the first ~~nine months~~half of fiscal ~~2020~~2021 versus the comparable prior year period and ~~increased~~decreased as a percentage of net sales. The ~~increase~~decrease in SG&A expense is ~~mainly~~ attributable to ~~additional costs associated with~~cost control measures and savings resulting from actions taken during the ~~ERP consolidation plan and the consolidation of certain accounting/finance functions~~past year associated with our ~~2020~~ MAP to Growth ~~partially offset~~and lower year-over-year spending on ERP implementations. Partially offsetting these decreases was approximately $2.2 million of additional SG&A expense contributed by ~~cost control measures associated with lower sales volumes.~~ the company we recently acquired.

SG&A expenses in our corporate/other category ~~of $73.9~~increased by $8.5 million during the first ~~nine months~~half of fiscal ~~2020 decreased by $7.9 million from $81.8 million recorded during~~2021 as compared to last year’s first ~~nine months, as professional fees in connection with our 2020 MAP~~half due mainly to ~~Growth were lower when compared~~higher incentives related to ~~the prior year period.~~performance and pension costs.

We recorded total net periodic pension and postretirement benefit costs of $39.4 million and $34.1 million for the first nine months of fiscal 2020 and 2019, respectively. The $5.3 million increase in pension expense resulted principally from approximately $4.8 million of higher net actuarial losses recognized during the period versus the same period last year.

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 in light of the ~~recent~~lingering macroeconomic uncertainties associated with Covid, but which may have a material impact on our consolidated financial results in the future.

As we cannot predict the duration or scope of the Covid pandemic, the future financial impact to SG&A cannot be reasonably estimated, but could be material. The disruption caused by the outbreak of ~~COVID-19.~~Covid may impact our near-term ability to drive further reduction in SG&A as a percentage of sales. However, this will be offset to some degree by lower variable SG&A, such as reduced travel-related expenses incurred by our associates, due to travel restrictions in place because of the Covid outbreak.

Restructuring Charges We recorded restructuring charges of $18.8 million during the first nine months of fiscal 2020, which compares with $36.5 million during the first nine months of fiscal 2019. These charges were the result of our continued implementation of our 2020 MAP to Growth, which focuses upon strategic shifts in operations across our entire business. On a consolidated basis, we recognized $11.3 million of severance and benefit costs during the first nine months of fiscal 2020 compared with $29.0 million during the same period a year ago. Facility closure and other related costs totaled $6.8 million during the first nine months of fiscal 2020 versus $5.8 million during the first nine months of fiscal 2019. Finally, $0.7 million of other asset write-offs during the period compared with $1.7 million during the same period a year ago. These charges were associated with closures of certain facilities as well as the elimination of duplicative headcount and infrastructure associated with certain of our businesses.

For further information and detail about our ~~2020~~ MAP to Growth plan, see “Restructuring Charges” in Results of Operations – Three Months Ended ~~February 29,~~November 30, 2020, and Note 4, “Restructuring,” to the Consolidated Financial Statements.

The interest rate decrease was ~~$78.6 million for~~a result of lower market rates on the first nine months of fiscal 2020 versus $74.1 million for the same period a year ago. The reversal of the convertible bond interest accrual during the first nine months of fiscal 2019 increased interest expense by approximately $2.1 million versus the same period a year ago. Excluding acquisition-related borrowings, higher average borrowings period over period increased interest expense by approximately $6.1 million during the first nine months of fiscal 2020 versus the comparable period a year ago. Higher average borrowings, related to recent acquisitions, increased interest expense during this year’s first nine months by approximately $2.5 million versus the same period a year ago. Lower interest rates, which averaged 3.88% overall for the first nine months of fiscal 2020 compared with 4.24% for the same period of fiscal 2019, decreased interest expense by approximately $6.2 million during the current period versus the same period last year.variable cost borrowings.

Investment (Income) ~~Expense,~~, Net Net investment income of approximately $10.4 million for the first nine months of fiscal 2020 compares to net investment income of $0.1 million during the same period last year. Dividend and interest income totaled $6.8 million and $6.6 million for the first nine months of fiscal 2020 and 2019, respectively. Net gains on marketable securities totaled $3.6 million during the first nine months of fiscal 2020, while there were net realized losses of $6.5 million during the same period a year ago.

Income Before Income Taxes (“IBT”) Our consolidated IBT for the first nine months of fiscal 2020 of $260.9 million compares with IBT of $163.0 million for the same period a year ago. Our CPG segment had IBT of $139.3 million, or 9.9% of net sales, for the nine months ended February 29, 2020, versus IBT of $96.4 million, or 7.2% of net sales, for the same period a year ago.

Our CPG segment results reflect ~~2020~~proactive management to improve its product mix, MAP to Growth savings ~~selling price increases~~ and increased earnings from recent acquisitions. Our PCG segment had IBT of $83.6 million, or 9.9% of net sales, for the nine months ended February 29, 2020, versus IBT of $45.0 million, or 5.3% of net sales, for the same

~~period a year ago.~~cost control measures. Our PCG segment results reflect ~~2020 MAP to Growth savings and selling price increases. Our Consumer segment IBT approximated $123.4 million, or 9.3%~~the impact of ~~net sales, for~~ the ~~first nine months~~Covid pandemic restrictions, challenges in emerging markets, as well as disruptions in our coatings business caused a series of ~~fiscal 2020, versus~~hurricanes throughout the ~~prior year’s first nine months IBT of $118.1 million, or 9.2% of net sales.~~Gulf region in the U.S. Our Consumer segment results reflect ~~new customer wins partially offset by supply chain challenges. Additionally,~~ the ~~prior period~~large increase in sales and related volume leveraging impact on margins, along with savings from our MAP to Growth. Our SPG segment results reflect ~~higher unfavorable legal settlements and related legal fees than were incurred during the current year. Our Specialty segment had pretax income of $55.0 million, or 11.8% of net~~ sales ~~for the nine months ended February 29, 2020, versus pretax income of $66.0 million, or 13.2% of net sales, for the same period a year ago, reflecting declines in sales volume~~increases in our fluorescent pigment, ~~restoration equipment~~industrial wood protection products, and ~~specialty coatings businesses.~~nail polish businesses, in addition to savings from our MAP to Growth and other cost cutting measures.

Income Tax Rate The effective income tax rate of ~~24.9%~~24.4% for the ~~nine~~six months ended ~~February 29,~~November 30, 2020 compares to the effective income tax rate of ~~17.8%~~24.9% for the ~~nine~~six months ended ~~February 28,~~November 30, 2019. The effective income tax ~~rate~~rates for ~~nine~~the six months ended ~~February 29,~~November 30, 2020 ~~reflects~~and 2019 reflect variances from the 21% statutory rate due primarily to the unfavorable impact of state and local income taxes ~~an increase in valuation allowances~~and the net tax on foreign subsidiary income resulting from the global intangible low-taxed income provisions, partially offset by tax benefits related to ~~foreign net operating losses and tax benefits associated with~~ equity compensation.

Net Income Net income of $195.9 million for the nine months ended February 29, 2020 compares to net income of $133.9 million for the comparable prior year period. Net income attributable to RPM International Inc. stockholders for the first nine months of fiscal 2020 was $195.1 million, or 4.8% of consolidated net sales, which compared to net income of $133.2 million, or 3.4% of consolidated net sales for the comparable prior year period.

Diluted earnings per share of common stock for the nine months ended February 29, 2020 of $1.50 compares with diluted earnings per share of common stock of $1.00 for the nine months ended February 28, 2019.

Approximately ~~$381.2~~$579.5 million of cash was provided by operating activities during the first ~~nine~~six months of fiscal ~~2020,~~2021, compared with ~~$145.5~~$300.2 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 increased by ~~$62.1~~$124.9 million during the first ~~nine~~six months of fiscal ~~2020~~2021 versus the same period during fiscal 2019. During the first nine months of fiscal 2020, we recorded $18.8 million in restructuring charges and made cash payments of $18.9 million related to our 2020 MAP to Growth, as further described in Note 4, “Restructuring.” Changes in working capital accounts accounted for an improvement of approximately $233.2 million period over period, while all other accruals and adjustments to reconcile net income used approximately $59.6 million more cash flow during the first nine months of fiscal 2020 versus the same period last year.2020.

The change in accounts receivable during the first ~~nine months~~half of fiscal ~~2020~~2021 provided approximately ~~$129.4~~$92.8 million ~~more~~less cash than during the same period a year ago. This resulted from ~~improved margin initiatives that shifted approximately $100.0 million~~the timing of sales, which dipped sharply in ~~receipts from~~ the fourth quarter of ~~fiscal 2019 to~~last year, but rebounded sharply in the first ~~quarter~~half of ~~fiscal 2020.~~this year. Days sales outstanding (“DSO”) at ~~February 29,~~November 30, 2020 decreased to ~~68.7~~60.6 days from ~~71.0~~62.8 days at ~~February 28,~~November 30, 2019. ~~While many of our businesses~~Our CPG and Consumer segments achieved decreases in DSO during the current period versus last ~~year, those~~year. Those improvements were ~~more than~~partially offset by increased DSO at our ~~Consumer segment resulting from a reduction of the volume of cash collections subject to early payment discounts.~~PCG and SPG segments.

During the first ~~nine months~~half of fiscal ~~2020,~~2021, we spent approximately ~~$7.1~~$62.8 million less cash for inventory compared to our spending during the same period a year ago, which resulted primarily from the timing of purchases by retail customers. Days of inventory outstanding (“DIO”) was approximately ~~111.3~~83.0 and ~~112.8~~91.2 days at ~~February 29,~~November 30, 2020 and ~~February 28,~~ 2019, respectively. The ~~improvement~~decrease in DIO was driven mainly by the Consumer ~~segment,~~and SPG segments, which ~~has taken various actions~~was due to a significant increase in ~~conjunction with out 2020~~demand as well as our MAP to Growth efforts to ~~streamline~~improve our manufacturing ~~process~~ and ~~improve fill rates.~~ operational planning processes.

The change in accounts payable during the first ~~nine months~~half of fiscal ~~2020~~2021 used approximately ~~$96.7~~$79.0 million less cash than during the first ~~nine months~~half of fiscal ~~2019. Days~~2020 due principally to the timing of purchases, but also longer days payables outstanding (“DPO”) ~~improved~~which increased by approximately 96.3 days from ~~79.9~~75.1 days at ~~February 28,~~November 30, 2019 to ~~89.1~~81.4 days at ~~February 29, 2020, resulting principally from the timing~~November 30, 2020. The longer DPO is a direct result of ~~certain payments as we continue to move~~moving toward a center-led procurement process that includes negotiating modified payment terms. Cash provided from operations, along with the use of available credit lines, as required, remain our primary sources of liquidity.

The change in other accrued liabilities during the first half of fiscal 2021 used approximately $75.4 million less cash than during the first half of fiscal 2020 due principally to the timing of income taxes payable and the increase in customer rebate accruals. Additionally, 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) Act here in the U.S., enables employers to postpone the payment of various types of taxes over varying time horizons. As of May 31, 2020, we had deferred $17.7 million of such government payments that would have normally been paid during our fourth quarter of fiscal 2020, but which will be paid in future periods. During the six months ended November 30, 2020, we deferred an additional $10.7 million of such government payments that would have normally been paid

during our first half of fiscal 2021, but which will be paid in future periods. The $10.7 million of deferrals generated during the first half of fiscal 2021 is presented net of payments that occurred during the first half of fiscal 2021 but which normally would have been paid in prior periods.

As we cannot predict the duration or scope of the ~~COVID-19~~Covid pandemic and its impact on our customers and suppliers, the negative financial impact to our results cannot be reasonably estimated, but could be material. We are actively managing the business to maintain cash flow and we have significant liquidity. We believe that these factors will allow us to meet our anticipated funding requirements.

For the first half of fiscal 2021, cash used for investing activities increased by $79.2 million to $186.0 million as compared to $106.7 million in the prior year period. This year-over-year increase in cash used for investing activities was mainly driven by $77.3 million in more cash spent on acquisitions as we made a larger acquisition during the first half of fiscal 2021 as compared to the first half of fiscal 2020.

Capital expenditures, other than for ordinary repairs and replacements, are made to 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. ~~Capital~~We paid for capital expenditures of ~~$105.4~~$70.9 million and $71.4 million during the first ~~nine months~~halves of fiscal 2021 and fiscal 2020, ~~with depreciation for the same period of $76.6 million. In the comparable prior year period, capital expenditures were $84.5 million, which compared with depreciation of $71.9 million.~~respectively. We have ~~been increasing our~~continued to maintain an elevated level of capital spending in fiscal ~~2020,~~2021, in an effort to consolidate ERP systems and our plant footprint, as part of our ~~2020~~ MAP to Growth. ~~During the first nine months of fiscal 2020, we paid $65.1 million for acquisitions, net of cash acquired, versus $167.7 million during the comparable prior year period.~~

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 ~~February 29,~~November 30, 2020 and May 31, ~~2019,~~2020, the fair value of our investments in marketable securities, which includes captive insurance-related assets, totaled ~~$114.7~~$143.5 million and ~~$112.5~~$114.0 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 ~~February 29,~~November 30, 2020, approximately ~~$182.1~~$232.4 million of our consolidated cash and cash equivalents were held at various foreign subsidiaries, compared with ~~$205.8~~$199.6 million at May 31, ~~2019.~~2020. 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 9,8, “Income Taxes,” to the Consolidated Financial Statements for additional information regarding unremitted foreign earnings.

For the first half of fiscal 2021, cash used for financing activities increased by $163.5 million to $370.0 million as compared to $206.5 million in the prior year period. The overall increase in cash used for financing activities was driven principally by debt-related activities, as we received $539.3 million less cash related to new debt and used $286.6 million less cash to paydown existing debt in the first half of fiscal 2021 as compared to the prior year. See below for further details on the significant components of our debt.

The increase in cash used for financing activities generated by debt-related activities was somewhat offset by a $100.0 million decrease in cash used for the repurchase of common stock during the first half of fiscal 2021, as compared to the prior year, as we suspended our stock repurchase program during the fourth quarter of fiscal 2020, given macroeconomic uncertainty resulting from the Covid pandemic.

Our available liquidity, including our cash and cash equivalents and amounts available under our committed credit facilities, stood at ~~$1.14~~$1.56 billion at ~~February 29,~~November 30, 2020, compared with $1.28 billion at May 31, ~~2019.~~2020. Significant components of our debt include (refer to “Note G – Borrowings” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2020 for more comprehensive details):

On February 21, 2020, we and our subsidiary, 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 ~~the Company~~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. After giving effect to such repayment, we had approximately $820 million of borrowing availability on our~~ Revolving Credit Facility. See “Revolving Credit Agreement” below 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 3.5 to 1.0, or (ii) our leverage ratio (defined as the ratio of total indebtedness, ~~(less~~less unencumbered cash and cash equivalents in excess of $50 ~~million)~~million, to consolidated EBITDA for the four most recent fiscal quarters) to exceed 3.75 to 1.0. Upon notification to the lenders, however, the maximum permitted leverage ratio can be relaxed to 4.25 to 1.0 for a one-year period in connection with certain material acquisitions. The covenants contained in the New Credit Facility are substantially similar to those contained in our Revolving Credit Facility. See “Revolving Credit Agreement” below for details on our compliance with all significant financial covenants at ~~February 29,~~November 30, 2020.

As of ~~February 29,~~November 30, 2020, the outstanding balance under our AR Program was ~~$70.0~~$75.0 million, which compares with the maximum availability on that date of ~~$150.0~~$250.0 million. The maximum availability under the AR Program is ~~$200.0~~$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 ~~$200.0~~$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.

~~As noted in~~During the “~~Term Loan Facility Credit Agreement” section above, the proceeds of the Term Loans entered into during February 2020 were used to repay a portion of the outstanding borrowings under~~quarter ended November 30, 2018, we replaced our previous $800.0 million revolving credit facility. After giving effect to such repayment, we had approximately $820 million of borrowing availability on our Revolving Credit Facility. As of February 29, 2020, we had $847.3 million of borrowing availability on our Revolving Credit Facility.

~~At May 31, 2019, the outstanding balance on our 6.125% senior notes approximated $450.5 million,~~agreement, which was ~~included in the current portion of long-term debt~~set to expire on ~~our consolidated balance sheets. Accordingly, during~~December 5, 2019, with a $1.3 billion unsecured syndicated revolving credit facility (the “Revolving Credit Facility”), which expires on October ~~2019, we utilized available funds from our~~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 ~~repay our $450 million unsecured 6.125% senior notes, which matured on October 15, 2019.~~ 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 ~~credit agreement.~~ Revolving Credit Facility. On April 30, 2020, we amended both our Revolving Credit Facility and the New Credit Facility (see “Term Loan Facility Credit Agreement” section above for further details) to allow the maximum permitted Net Leverage Ratio to be increased from 3.75 to 1.00 to 4.25 to 1 for four consecutive fiscal quarters following notice to the Administrative Agent on or before June 30, 2021 and the payment of a ten basis point fee (“Increased Net Leverage Ratio Period”). Such increase is in addition to any increase requested by us in the maximum permitted Net Leverage Ratio following a Material Acquisition (any acquisition for which the aggregate consideration is $100.0 million or greater). During an Increased Net Leverage Ratio Period, the Euro-Rate Spread on loans under the Revolving Credit Facility shall be increased to 1.75% and the Base Rate Spread shall be 0.75% until the first day of the month following the Increased Net Leverage Ratio Period; provided, however, if at any time during an Increased Net Leverage Ratio, all three rating agencies rate us as non-investment grade, the Euro-Rate Spread shall be 2.00% and the Base Rate Spread shall be 1.0% in each case until earlier of the first day of the month after the Increased Net Leverage Ratio or the date on which at least one rating agency rates us as investment grade. As of November 30, 2020, we have not provided any notice to the Administrative Agent to trigger this provision.

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 1.0. During certain periods and per the terms of the Revolving Credit Facility, this ratio may be increased to 4.25 to 1.0 in connection with certain “material acquisitions”, or under the ~~event~~Increased Net Leverage Ratio Period. The acquisition of Ali Industries, LLC occurred on September 1, 2020 and qualifies as a “material acquisition,” which enables us to request an ~~acquisition for which~~increase in the ~~aggregate consideration is $100.0 million or greater.~~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 1.0. The minimum required consolidated interest coverage ratio for EBITDA to interest expense is 3.50 to 1. The interest coverage ratio is calculated at the end of each fiscal quarter for the four fiscal quarters then ~~ended. For purposes of these computations,~~ended using EBITDA isas defined in the Revolving Credit Facility.

As of ~~February 29,~~November 30, 2020, we were in compliance with all financial covenants contained in our Revolving Credit Facility, ~~Accounts Receivable Securitization Program, and Term Loan Facility Credit Agreement,~~ including the ~~leverage~~Net Leverage Ratio and interest coverage ratio covenants. At that date, our ~~leverage ratio~~Net Leverage Ratio was ~~2.90~~2.16 to 1, while our interest coverage ratio was ~~7.95~~11.12 to 1. As of November 30, 2020, we had $1.11 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.

~~On January 9, 2008, we announced~~See Note 10, “Stock Repurchase Program” to the Consolidated Financial Statements, for further detail surrounding our ~~authorization of a~~ stock repurchase program under which we may repurchase shares of RPM International Inc. common stock at management’s discretion. As announced on November 28, 2018, our goal is to return $1.0 billion in capital to stockholders by May 31, 2021 through share repurchases. On April 16, 2019, after taking into account share repurchases under our existing stock repurchase program to date, our Board of Directors authorized the repurchase of the remaining $600.0 million in value of RPM International Inc. common stock by May 31, 2021. As a result, we may repurchase shares from time to time in the open market or in private transactions at various times and in amounts and for prices that our management deems appropriate, subject to insider trading rules and other securities law restrictions. The timing of our purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time. During the three months ended February 29, 2020, we did not repurchase any shares of our common stock under this program. During the three months ended February 28, 2019, we repurchased 1,570,647 shares of our common stock at a cost of approximately $91.2 million, or an average cost of $58.08 per share, under this program. During the nine months ended February 29, 2020, we repurchased 1,655,616 shares of our common stock at a cost of approximately $100.0 million, or an average cost of $60.40 per share, under this program. During the nine months ended February 28, 2019, we repurchased 2,819,045 shares of our common stock at a cost of approximately $173.2 million, or an average cost of $61.45 per share, under this program.

~~See Note 19, “Subsequent Events” for an update on additional repurchases and a decision to suspend our share buyback program.~~

We do not have any off-balance sheet financings for the year ended May 31, 2019, other than the minimum operating lease commitments as previously disclosed in our Form 10-K for the year ended May 31, 2019. As of June 1, 2019, upon adoption of ASC 842, the minimum operating lease commitments are no longer 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 ~~recent~~ outbreak of the coronavirus ~~(COVID-19)~~(Covid); and (l) 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, ~~2019,~~2020, 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. ~~As discussed elsewhere~~There were no material potential changes in ~~this report, the recent outbreak of the coronavirus (COVID-19) will negatively impact~~ our ~~business and results of operations.~~ ~~As we cannot predict the duration or scope of the COVID-19 pandemic, the negative financial impact~~exposure to ~~our results cannot be reasonably estimated, but could be material~~.these market risks since May 31, 2020.

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 ~~February 29,~~November 30, 2020 (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 ~~February 29,~~November 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~As previously disclosed, we were notified by the SEC on June 24, 2014, that we are the subject of a formal investigation pertaining~~Refer to Note 13, “Contingencies and Accrued Losses,” to the timing of our disclosure and accrual of loss reserves in fiscal 2013 with respect to the previously disclosed DOJ and GSA Office of Inspector General investigation into compliance issues relating to Tremco Roofing Division’s GSA contracts. As previously disclosed, our audit committee completed an investigation into the facts and circumstances surrounding the timing of our disclosure and accrual of loss reserves with respect to the GSA and DOJ investigations, and determined that it was appropriate to restate our financial resultsConsolidated Financial Statements, for the first, second and third quarters of fiscal 2013. These restatements had no impact on our audited financial statements for the fiscal years ended May 31, 2013 or 2014. The audit committee’s investigation concluded that there was no intentional misconduct on the part of any of our officers.

~~In connection with the foregoing, on September 9, 2016, the SEC filed an enforcement action in the U.S. District Court for the District of Columbia against us~~further discussion and our General Counsel. We have cooperated with the SEC’s investigation and believe the allegations in the complaint mischaracterize both our and our General Counsel’s actions in connection with the matters related to our quarterly results in fiscal 2013 and are without merit. The complaint seeks disgorgement of gains that may have resulted from the conduct alleged in the complaint, and payment of unspecified monetary penalties from us and our General Counsel pursuant to Section 20(d)evaluation of the Securities Act and Section 21(d)(3) of the Exchange Act. Further, the complaint seeks to permanently enjoin us from violations of Sections 17(a)(2) and (a)(3) of the Securities Act, Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13, and to permanently enjoin our General Counsel from violations of Sections 17(a)(2) and (a)(3) of the Securities Act and Exchange Act Rules 13b2-1 and 13b2-2(a). Both we and our General Counsel filed motions to dismiss the complaint on February 24, 2017. Those motions to dismiss the complaint were denied by the Court on September 29, 2017. We and our General Counsel filed answers to the complaint on October 16, 2017. Formal discovery commenced in January 2018 and closed as of June 3, 2019, other than one remaining discovery dispute. The parties engaged in written discovery, and several fact witnesses were deposed. The dispositive motion briefing schedule was vacated by the Court on July 2, 2019, due to the remaining discovery dispute, and will be reset once this dispute is fully resolved. We intend to continue to contest the allegations in the complaint vigorously.above titled matter.

~~As previously reported, several~~Like other companies participating in similar lines of business, some of our subsidiaries are ~~from time to time,~~ identified as a “potentially responsible party” under the federal Comprehensive Environmental Response, Compensation and Liability Act and similar local environmental ~~statutes. In some cases, our subsidiaries~~statutes or are participating in the cost of certain clean-up efforts or other remedial ~~actions.~~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, ~~2019.~~2020.

On August ~~13, 2019, Kirker Enterprises Inc. received an Administrative Order~~26, 2020, the SEC issued Final Rule Release No. 33-10825, "Modernization of Regulation S-K Items 101, 103, and ~~Civil Administrative Penalty Assessment letter from~~105." This rule, which became effective on November 9, 2020, updated the ~~State~~disclosure threshold for environmental proceedings. Prior to this rule, environmental proceedings to which the government is a party were required to be disclosed if the proceeding was expected to result in sanctions of ~~New Jersey Department~~$100,000 or more. The above referenced rule increases the quantitative threshold to $300,000, but also permits the registrant to elect a higher threshold, limited to the lesser of ~~Environmental Protection Division~~$1 million or 1% of ~~Air Enforcement formally notifying it~~consolidated current assets, if the registrant determines that such threshold is more reasonably designed to result in the disclosure of ~~alleged failures to fulfill all conditions of an air permit applicable to its Patterson, New Jersey facility.~~material environmental proceedings. The ~~letter includes a proposed penalty of approximately $192,000.~~registrant must disclose this alternative threshold in each annual and quarterly report.

~~Carboline Company previously was identified as~~Given the size of our operations, we have elected to adopt a ~~potentially responsible party in connection with a matter filed on behalf~~threshold of $1 million. As of the ~~U.S. EPA claiming~~date of this filing, we are not aware of any matters that ~~Carboline Company, among other potentially responsible parties, violated Section 107 of~~exceed this threshold and meet the ~~Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and seeking reimbursement~~definition for response costs incurred in connection with the release or threatened release of hazardous substances at the Lammers Barrel Superfund Site in Beavercreek, Ohio. During the current quarter, Carboline Company agreed in principle to settle this matter for $1.3 million, which amount is subject to final approval and court entry of the proposed consent decree relating to this matter.disclosure.

~~The COVID-19 pandemic has disrupted our operations and could have a material adverse effect on our business.~~

Our business could be materially and adversely affected by the outbreak of a widespread health epidemic. The present coronavirus (or COVID-19) pandemic has disrupted our operations and will affect our business, including as government authorities impose mandatory closures, work-from-home orders and social distancing protocols, and seek voluntary facility closures or impose other restrictions that could materially adversely affect our ability to adequately staff and maintain our operations. Specifically, we have experienced, and expect to experience in the future, temporary facility closures in response to government mandates in certain jurisdictions in which we operate and in response to positive diagnoses for COVID-19 in certain facilities for the safety of our associates. The COVID-19 outbreak could also disrupt our supply chain and materially adversely impact our ability to secure supplies for our facilities and to provide personal protective equipment for our employees, which could materially adversely affect our operations. There may also be long-term effects on our customers in and the economies of affected countries. Even if a virus or other illness does not spread significantly, the perceived risk of infection or health risk may materially adversely affect our business. Any of the foregoing within the countries in which we or our customers and suppliers operate would severely disrupt our operations and could have a material adverse effect on our business, results of operations, cash flows and financial condition. As we cannot predict the duration or scope of the COVID-19 pandemic, the negative financial impact to our results cannot be reasonably estimated, but could be material.

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, ~~2019.~~2020.

(c) The following table presents information about repurchases of common stock we made during the ~~third~~second quarter of fiscal ~~2020:~~2021:

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	98
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3228
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4241
Item 4.	Controls and Procedures	4241

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	4342
Item 1A.	Risk Factors	4442
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	4442
Item 6.	Exhibits	4543
Signatures		4644

(In thousands)
Year ending May 31,	Operating Leases
2020 (excluding the nine months ended February 29)	$	16,157
2021		58,231
2022		47,303
2023		36,535
2024		30,324
Thereafter		175,896
Total lease payments	$	364,446
Less imputed interest		65,666
Total present value of lease liabilities	$	298,780

(In thousands)
Year ending May 31,	Operating Leases
2020	$	59,163
2021		49,731
2022		40,339
2023		32,798
2024		27,716
Thereafter		119,607
Total lease payments	$	329,354

	Three months ended
(in millions, except percentages)	November 30, 2020			November 30, 2019
Interest expense	$	21.3		$	26.3
Average interest rate		3.31	%		3.88	%

	Pretax gain/(loss) recognized in AOCI							Pretax gain/(loss) reclassified from AOCI into income
(In thousands)	Three Months Ended							Three Months Ended
Derivatives in hedging relationships	February 29, 2020			February 28, 2019			Income Statement Location	February 29, 2020			February 28, 2019
Interest Rate Swap (Cash Flow)	$	(3,077	)	$	-		Interest Expense	$	22		$	-
Cross Currency Swap (Cash Flow)		(2,355	)		-		Interest Expense		47			-
Cross Currency Swap (Cash Flow)		-			-		Foreign Exchange Gain/(Loss)		(1,986	)		-
Cross Currency Swap (Net Investment)		(3,314	)		(400	)	Gain or (loss) on sale of subsidiary		-			-
Total	$	(8,746	)	$	(400	)		$	(1,917	)	$	-

	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 29, 2020			February 28, 2019			Income Statement Location	February 29, 2020			February 28, 2019
Interest Rate Swap (Cash Flow)	$	(3,077	)	$	-		Interest Expense	$	22		$	-
Cross Currency Swap (Cash Flow)		(2,355	)		-		Interest Expense		47			-
Cross Currency Swap (Cash Flow)		-			-		Foreign Exchange Gain/(Loss)		(1,986	)		-
Cross Currency Swap (Net Investment)		(1,845	)		3,336		Gain or (loss) on sale of subsidiary		-			-
Total	$	(7,277	)	$	3,336			$	(1,917	)	$	-

(In thousands, except percents)	February 29, 2020			November 30, 2019			$ Change			% Change

Accounts receivable, less allowance	$	948,351		$	1,047,813		$	(99,462	)		-9.5	%

Contract assets	$	16,143		$	18,959		$	(2,816	)		-14.9	%
Contract liabilities - short-term		(23,605	)		(25,205	)		1,600			-6.3	%
Net Contract Liabilities	$	(7,462	)	$	(6,246	)	$	(1,216	)		19.5	%

(In thousands, except percents)	February 29, 2020			May 31, 2019			$ Change			% Change

Accounts receivable, less allowance	$	948,351		$	1,232,350		$	(283,999	)		-23.0	%

Contract assets	$	16,143		$	21,628		$	(5,485	)		-25.4	%
Contract liabilities - short-term		(23,605	)		(25,896	)		2,291			-8.8	%
Net Contract Liabilities	$	(7,462	)	$	(4,268	)	$	(3,194	)		74.8	%

(In thousands)
Balance at August 31, 2020	$	55,927
Bad debt provision		(106	)
Uncollectible accounts written off, net of recoveries		(2,493	)
Translation adjustments		214
Balance at November 30, 2020	$	53,542

(In thousands)
Balance at June 1, 2020	$	55,847
Bad debt provision		1,168
Uncollectible accounts written off, net of recoveries		(5,347	)
Translation adjustments		1,874
Balance at November 30, 2020	$	53,542

	Three months ended
(in millions)	November 30, 2020			November 30, 2019			Change
Service cost	$	13.0		$	11.7		$	1.3
Interest cost		5.2			6.6			(1.4	)
Expected return on plan assets		(9.9	)		(10.4	)		0.5
Amortization of:
Prior service (credit)		(0.1	)		(0.1	)		-
Net actuarial losses recognized		8.2			5.3			2.9
Total Net Periodic Pension & Postretirement Benefit Costs	$	16.4		$	13.1		$	3.3

(in millions)	As of November 30, 2020
Severance and benefit costs	$	3.0
Facility closure and other related costs		6.6
Other restructuring costs		0.7
Total Future Expected Restructuring Costs	$	10.3

(in millions)	Change in interest expense
Non-acquisition-related average borrowings	$	(2.9	)
Acquisition-related borrowings		0.6
Change in average interest rate		(2.7	)
Total Change in Interest Expense	$	(5.0	)

	Three months ended
(in millions, except percentages and per share amounts)	November 30, 2020		% of net sales			November 30, 2019		% of net sales
Net income	$	127.9		8.6	%	$	77.3		5.5	%
Net income attributable to RPM International Inc. stockholders		127.7		8.6	%		77.0		5.5	%
Diluted earnings per share		0.98					0.59

Exhibit Number		Description

~~10.1~~		Credit Agreement among RPM International Inc., RPM New Horizons Netherlands B.V., the Lenders party thereto and PNC Bank, National Association, as Administrative Agent, dated February 21, 2020, which is incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on February 27, 2020 (File No. 1-14187).

~~10.2~~		~~Amendment No. 6 to Second Amended and Restated Receivables Sale Agreement, dated as of December 26, 2019.(x)~~

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 29,~~November 30, 2020, 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