RPM 2020 Proxy Statement

APPENDIX A Adjustments to Diluted Earnings Per Share for Fiscal 2020 and Fiscal 2019 Fiscal 2019 adjusted diluted earnings per share of $2.71 excludes (i) $16.7 million resulting from more proactive management of inventory, partially offset by a true-up of prior year inventory write-offs at our Consumer Segment and charges related to restructuring activities at our Construction Products and Performance Coatings Segments, with a $0.12 diluted EPS impact; (ii) $32.5 million for restructuring expense, with a $0.24 diluted EPS impact; (iii) $4.3 million resulting from accelerated depreciation related to the shortened useful lives of facilities currently operating, but in the process of being prepared for closure, with a $0.03 diluted EPS impact; (iv) $6.3 million reflecting the net increase in allowance for doubtful accounts deemed uncollectible as a result of a change in market and leadership strategy, with a $0.05 diluted EPS impact; (v) $4.8 million associated with the implementation of an ERP consolidation plan, with a $0.04 diluted EPS impact; (vi) $19.9 million for professional fees in connection with our restructuring plan, with a $0.15 diluted EPS impact; (vii) $2.2 million related to fiscal 2019 acquisitions, including inventory disposals and step-ups recorded in gross profit and acquisition-related professional fees recorded in SG&A, with a $0.02 diluted EPS impact; (viii) $0.7 million for losses resulting from the redemption of our convertible notes, with no effect on diluted EPS; (ix) $1.8 million for fair value adjustments to contingent earnout obligations, with a $0.01 diluted EPS impact; (x) $0.4 million associated with a change in ownership of a business in South Africa, as required by local legislation in order to qualify for doing business in South Africa, having no effect on diluted EPS; (xi) $1.3 million related to unusual compensation costs recorded resulting from executive departures related to our MAP to Growth initiatives, including equity compensation and severance expense, with a $0.01 diluted EPS impact; (xii) $6.5 million related to unusual compensation costs recorded, net of insurance proceeds, resulting from executive departures unrelated to our MAP to Growth initiatives, including equity compensation and severance expense, with a $0.05 diluted EPS impact; (xiii) investment losses of $7.7 million from sales of investments and unrealized net gains and losses on equity securities pursuant to new accounting rules beginning in fiscal 2019, which are adjusted due to their inherent volatility, with a $0.06 diluted EPS impact; and (xiv) an adjustment to tax expense for ($11.0) million for U.S. tax reform, with an ($0.08) impact on diluted EPS. Fiscal 2020 adjusted diluted earnings per share of $3.07 excludes (i) $15.3 million resulting from product line and SKU rationalization at our Consumer Segment, as well as inventory write-offs in connection with restructuring activities at our Construction Products, Performance Coatings, and Specialty Products Segments, with a $0.12 diluted EPS impact; (ii) $27.7 million for restructuring expense, with a $0.21 diluted EPS impact; (iii) $17.3 million resulting from accelerated depreciation and amortization expense related to the shortened useful lives of facilities and equipment, ERP systems, and intangibles that are currently in use, but are in the process of being retired associated with MAP to Growth, including facility closures, exiting a business, and ERP consolidation, with a $0.13 diluted EPS impact; (iv) $2.6 million reflecting the net increase in allowance for doubtful accounts deemed uncollectible as a result of a change in market and leadership strategy, with a $0.02 diluted EPS impact; (v) $7.9 million associated with the implementation of an ERP consolidation plan, with a $0.06 diluted EPS impact; (vi) $15.6 million for professional fees in connection with our restructuring plan, with a $0.12 diluted EPS impact; (vii) $0.7 million related to fiscal 2020 acquisitions, including inventory disposals and step-ups recorded in gross profit and acquisition-related professional fees recorded in SG&A, with a $0.01 diluted EPS impact; (viii) $0.8 million related to unusual compensation costs recorded resulting from executive departures related to our MAP to Growth initiatives, including equity compensation and severance expense, with a $0.01 diluted EPS impact; (ix) ($1.8) million related to unusual compensation costs recorded, net of insurance proceeds, resulting from executive departures unrelated to our MAP to Growth initiatives, including equity compensation, with a ($0.01) diluted EPS impact; (x) $0.7 million related to loss incurred upon divestiture of businesses and/or assets, having no effect on diluted EPS; (xi) $6.6 million related to the discontinuation of a product line targeting OEM markets and related prepaid asset and inventory write-off that resulted from of ongoing product line rationalization efforts in connection with our MAP to Growth, with a $0.05 diluted EPS impact; (xii) $4.0 million reflecting the costs associated with exiting an unprofitable licensing agreement, with a $0.03 diluted EPS impact; (xiii) ($1.0) million reflecting the favorable adjustment that was the result of the resolution of a contingent liability related to a FY18 charge to exit our Flowcrete business in China, with a ($0.01) impact on diluted EPS; and (xiv) investment gains of $1.1 million from sales of investments and unrealized net gains and losses on equity securities pursuant to new accounting rules beginning in fiscal 2019, which are adjusted due to their inherent volatility, with a ($0.01) diluted EPS impact. See our Annual Report on Form 10-K, which can be found on our website at www.rpminc.com , for more information about these adjustments. The Compensation Committee considered our fiscal 2020 operating results, including our adjusted diluted earnings per share, in connection with its compensation decisions. A-1