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Change in Accounting Principle
9 Months Ended
Feb. 29, 2020
Accounting Changes And Error Corrections [Abstract]  
Change in Accounting Principle

NOTE 3 — CHANGE IN ACCOUNTING PRINCIPLE

 

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.