SEGMENT INFORMATION

12 Months Ended

May 31, 2012

SEGMENT INFORMATION

NOTE P — SEGMENT INFORMATION

We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings and roofing systems, sealants and adhesives. We manage our portfolio by organizing our businesses and product lines into two reportable segments: the industrial reportable segment and the consumer reportable segment. Within each reportable segment, we aggregate several operating segments that consist of individual groups of companies and product lines, which generally address common markets, share similar economic characteristics, utilize similar technologies and can share manufacturing or distribution capabilities. Our five operating segments represent components of our business for which separate financial information is available that is utilized on a regular basis by our chief executive officer in determining how to allocate the assets of the company and evaluate performance. These five 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.

Our industrial reportable segment products are sold throughout North America and also account for the majority of our international sales. Our industrial product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers. This reportable segment comprises three separate operating segments — Building Solutions Group, Performance Coatings Group and RPM2 Group. Products and services within this reportable segment include construction chemicals; roofing systems; weatherproofing and other sealants; polymer flooring; edible coatings and specialty glazes for pharmaceutical, cosmetic and food industries; and other specialty chemicals.

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. Consumer segment products are sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops and to other smaller customers through distributors. This reportable segment comprises two operating segments — DAP Group and Rust-Oleum Group. Products within this reportable segment include specialty, hobby and professional paints; caulks; adhesives; silicone sealants and wood stains.

In addition to our two 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 either 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, identifiable assets, capital expenditures, and depreciation and amortization.

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

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.

Year Ended May 31,	2012			2011			2010
(In thousands)
Net Sales
Industrial	$	2,535,238		$	2,259,809		$	2,328,194
Consumer		1,242,178			1,122,032			1,084,522
Total	$	3,777,416		$	3,381,841		$	3,412,716
Income (Loss) Before Income Taxes
Industrial
Income Before Income Taxes(a)	$	278,676		$	232,544		$	225,528
Interest (Expense), Net(b)		(3,770	)		(3,304	)		(1,709	)
EBIT(c)	$	282,446		$	235,848		$	227,237
Consumer
Income Before Income Taxes(a)	$	160,099		$	146,035		$	147,019
Interest (Expense), Net(b)		18			63			37
EBIT(c)	$	160,081		$	145,972		$	146,982
Corporate/Other
Income Before Income Taxes(a)	$	(110,486	)	$	(83,526	)	$	(104,093	)
Interest (Expense), Net(b)		(64,107	)		(46,504	)		(50,025	)
EBIT(c)	$	(46,379	)	$	(37,022	)	$	(54,068	)
Consolidated
Income Before Income Taxes(a)	$	328,289		$	295,053		$	268,454
Interest (Expense), Net(b)		(67,859	)		(49,745	)		(51,697	)
EBIT(c)	$	396,148		$	344,798		$	320,151
Identifiable Assets
Industrial	$	2,195,702		$	1,992,143		$	1,666,005
Consumer		1,184,609			1,195,849			1,135,211
Corporate/Other		179,709			327,037			202,808
Total	$	3,560,020		$	3,515,029		$	3,004,024
Capital Expenditures
Industrial	$	47,529		$	29,687		$	17,887
Consumer		17,156			9,665			4,400
Corporate/Other		6,930			474			954
Total	$	71,615		$	39,826		$	23,241
Depreciation and Amortization
Industrial	$	48,701		$	46,352		$	56,104
Consumer		23,656			24,954			26,771
Corporate/Other		1,341			1,447			1,378
Total	$	73,698		$	72,753		$	84,253

(a) The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (GAAP) in the United States, to EBIT.

(b) Interest (expense), net includes the combination of interest expense and investment expense (income), net.

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

Year Ended May 31,	2012		2011		2010
(In thousands)
Net Sales(a)
United States	$	2,219,680	$	1,983,238	$	2,148,893
Foreign
Canada		346,238		330,613		308,395
Europe		919,124		812,735		728,118
Other Foreign		292,374		255,255		227,310
Total Foreign		1,557,736		1,398,603		1,263,823
Total	$	3,777,416	$	3,381,841	$	3,412,716
Long-Lived Assets(b)
United States	$	1,065,324	$	965,235	$	966,453
Foreign
Canada		128,392		137,380		127,672
Europe		298,496		287,874		230,923
United Kingdom		192,155		209,217		184,488
Other Foreign		64,316		47,353		44,327
Total Foreign		683,359		681,824		587,410
Total	$	1,748,683	$	1,647,059	$	1,553,863

(a) It is not practicable to obtain the information needed to disclose revenues attributable to each of our product lines.

(b) Long-lived assets include all non-current assets, excluding non-current deferred income taxes.