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RPM Reports Record Sales, Net Income for Fiscal 2008 Second Quarter

     - Sales increase 11.9%

     - Net income increases 3.6%; excluding a prior-year insurance recovery,
       net income increases 27.4%

     - Both industrial and consumer segments post solid growth in sales and
       EBIT

     - Sales and earnings growth of 8-10% expected for full fiscal year

MEDINA, Ohio, Jan. 8 /PRNewswire-FirstCall/ -- RPM International Inc. (NYSE: RPM) today reported record sales and net income for its fiscal 2008 second quarter ended November 30, 2007.

Second-Quarter Results

RPM's record net sales of $905.7 million were up 11.9% from the $809.4 million reported in the fiscal 2007 second quarter. Organic sales growth accounted for 9.3% of the increase, with 3.6% of that amount representing net foreign exchange gains. Net acquisition growth was 2.6% of the total.

Net income for the quarter increased 3.6%, to a record $54.9 million from $52.9 million a year ago, while diluted earnings per share increased 2.4% to $0.43 from $0.42. The year-ago second quarter included a $15.0 million settlement for asbestos-related claims against an insurance carrier. Excluding the year-ago insurance recovery, net income increased 27.4%, to $54.9 million from $43.1 million a year ago, while diluted earnings per share were up 26.5% to $0.43 from $0.34 in the fiscal 2007 second quarter.

"RPM's second-quarter operating results reflect the impact of new products, the diversity of our end-use markets, many of which are driven by maintenance and repair spending, good expense controls and strong international growth in virtually all of our industrial businesses," said Frank C. Sullivan, president and chief executive officer.

Consolidated earnings before interest and taxes (EBIT) were $93.0 million, a 1.8% improvement over the $91.4 million reported a year ago. Excluding the prior-year insurance recovery, EBIT increased 21.8%, to $93.0 million from $76.4 million.

Second-Quarter Segment Sales and Earnings

Sales in the company's industrial segment grew 14.5% to $605.2 million from $528.6 million in the year-ago second quarter. Organic sales increased 11.6%, including 4.5% in net favorable foreign exchange gains. Acquisitions accounted for the remaining 2.9% of the increase. Industrial segment EBIT for the second quarter increased 15.0% to $73.9 million, compared to EBIT of $64.3 million a year ago. "Industrial segment sales and EBIT growth continued to be robust across virtually the entire segment," said Sullivan. "Sales growth in the second quarter mirrored our first-quarter performance, with exceptional growth posted by RPM's flooring, corrosion control coatings and roofing products and services businesses. Many international businesses and maintenance and repair-based businesses continued to see good demand."

Sales by RPM's consumer segment increased 7.0% to $300.6 million from $280.8 million a year ago. Of the growth in sales, 5.0% was organic, including 2.0% in foreign exchange, and the remaining 2.0% growth was through acquisitions. Segment EBIT grew 13.0% to $30.9 million from $27.3 million in the fiscal 2007 second quarter. Excluding the $2.2 million pre-tax gain from the sale of the company's Bondo subsidiary, segment EBIT grew approximately 5%. "Our consumer businesses continue to face a difficult retail climate, largely attributable to the lingering effects of the weak domestic housing market that has impacted many of our large retail accounts. By continuing investments in marketing and new products, our consumer businesses have been able to post favorable same-store comps at several of our major accounts," Sullivan said.

Asbestos Liability

During the quarter, RPM paid $26.1 million in pre-tax asbestos costs, compared to $13.8 million in the year-ago period. Excluding transitional costs of $9.1 million, all of which were directly attributable to management- initiated changes to the company's defense and claims handling capabilities, the company's total pre-tax asbestos costs would have been $17.0 million.

"As noted during the first quarter, we have been making several changes in how we will manage our asbestos claims in the future. During the second quarter, we completed these changes and marked the peak of these transitional costs," Sullivan said. "It is also important to note that our year-to-date cash costs are not indicative of any adverse changes in the underlying litigation, nor in our key reserve assumptions. We are tracking consistent with these assumptions and if these transitional costs were excluded, our ongoing core defense costs would actually be lower than prior-year levels," he said. RPM's total asbestos reserve balance stood at $305.4 million at November 30, 2007.

StonCor Subsidiary Completes Acquisition; Bondo Subsidiary Sold

On September 25, 2007, RPM's StonCor Group acquired Star Maling, a Norwegian producer of specialty coatings for industrial and offshore/marine applications.

On November 9, 2007, RPM completed the sale of its Bondo auto body repair products subsidiary to 3M's Automotive Aftermarket Division. Sale proceeds of $45.0 million generated a one-time, pre-tax gain of $2.2 million, which has been included in the company's second-quarter and first-half results for fiscal 2008.

Cash Flow and Financial Position

For the first half of fiscal 2008, cash from operations was $104.1 million, compared to $91.4 million in the fiscal 2007 first half, a 13.9% improvement. Capital expenditures were $17.5 million, compared to depreciation of $31.0 million over the same period in fiscal 2008. Total debt at the end of the first half was $942.0 million, compared to $988.1 million at the end of fiscal 2007. RPM's net (of cash) debt-to-total capitalization ratio was 37.9%, compared to 43.3% at May 31, 2007.

Stock Repurchase Plan Announced

RPM also announced today that its board of directors has authorized a share repurchase program under which the company may repurchase shares of the company's common stock at management's discretion for general corporate purposes. Management presently intends to limit repurchases to amounts needed to offset dilution caused by shares issued in connection with equity-based compensation plans. Share repurchases under this program may be made in the open market or in private transactions at times and in amounts and prices that management deems appropriate, subject to insider trading rules and other securities law restrictions. Timing will be dependent on prevailing market conditions, alternative uses of capital and other factors. The company may terminate or limit the repurchase program at any time.

First-Half Sales and Earnings

First-half sales, net income and earnings per share were all records.

RPM's net sales for the fiscal 2008 first half were up 11.0%, to $1.84 billion from $1.65 billion a year ago. Net income for the first six months was $123.1 million, up 7.7% from the $114.3 million reported in the first half of fiscal 2007. Diluted earnings per share for the first half of fiscal 2008 increased 6.7%, to $0.96 from $0.90 a year ago. Prior-year net income included a $15.0 million pre-tax benefit from the asbestos insurance litigation settlement. Excluding the prior-year insurance recovery, first-half net income increased 17.9%, to $123.1 million, from $104.4 million in fiscal 2007, while diluted earnings per share increased to $0.96 from $0.83, a 15.7% increase.

First-half EBIT was $205.9 million, up 3.5% from the $198.8 million reported a year ago, including the prior-year asbestos-related insurance recovery. Excluding the prior-year recovery, EBIT increased 12.0%, to $205.9 million from $183.8 million in the fiscal 2007 first half.

RPM's industrial segment sales increased 13.0% in the fiscal 2008 first half, to $1.21 billion from $1.07 billion a year ago. Acquisitions represented 2.4% of the sales growth, with organic growth adding 10.6%, including 3.5% of net favorable foreign exchange gains. Industrial segment EBIT increased 11.5% to $154.2 million from $138.3 million in the fiscal 2007 first half.

First-half sales for the consumer segment increased 7.5% to $622.9 million from $579.7 million reported in the first half of fiscal 2007. Organic sales increased by 3.7%, including net favorable foreign exchange gains of 1.5%, while acquisitions contributed 3.8%. Consumer segment EBIT was up 7.8%, to $74.7 million from $69.3 million a year ago. Excluding the $2.2 million pre- tax gain from the sale of our Bondo subsidiary, segment EBIT grew approximately 5%.

Business Outlook

"Based on first-half performance and our business outlook for the remainder of fiscal 2008, we remain confident in meeting and likely exceeding our original fiscal 2008 guidance of overall sales and earnings growth in the 8% range, excluding the effect of asbestos-related items," Sullivan said. "On a comparable basis, we now expect sales and earnings growth for the year to be in the range of 8-10%," he said.

Webcast and Conference Call Information

Management will host a conference call to discuss the results beginning at 10:00 a.m. Eastern time today. The call can be accessed by dialing 800-901-5217 or 617-786-2964 for international callers. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.

For those unable to listen to the live call, a replay will be available from approximately 12:00 p.m. Eastern time on January 8 until 11:59 p.m. Eastern time on January 15, 2008. The replay can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers. The access code is 83895832. The call also will be available both live and for replay, and as a written transcript, via the Internet on the RPM web site at http://www.rpminc.com.

About RPM

RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings and sealants serving both industrial and consumer markets. RPM's industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Day-Glo, Euco and Dryvit. RPM's consumer products are used by professionals and do-it- yourselfers for home maintenance and improvement, automotive and boat repair and maintenance, and by hobbyists. Consumer brands include Zinsser, Rust- Oleum, DAP, Varathane and Testors.

For more information, contact P. Kelly Tompkins, executive vice president and chief administrative officer, at 330-273-5090 or ktompkins@rpminc.com.

This press release contains "forward-looking statements" relating to the business of the company. These forward-looking statements, or other statements made by the company, are made based on management's expectations and beliefs concerning future events impacting the company and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond the control of the company. As a result, actual results of the company could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) general economic conditions; (b) the price, supply and capacity of raw materials, including assorted resins and solvents; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for the company's products; (d) legal, environmental and litigation risks inherent in the company's construction and chemicals businesses and risks related to the adequacy of the company's insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon the company's 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 the company's ongoing acquisition and divestiture activities; (i) risks related to the adequacy of its contingent liabilities, including for asbestos- related claims; and (j) other risks detailed in the company's filings with the Securities and Exchange Commission, including the risk factors set forth in the company's Annual Report on Form 10-K for the year ended May 31, 2007, as the same may be updated from time to time. RPM does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.



    CONSOLIDATED STATEMENTS OF INCOME
    IN THOUSANDS, EXCEPT PER SHARE DATA
    (UNAUDITED)

                                                    AS REPORTED
                                      Six Months Ended     Three Months Ended
                                         November 30,         November 30,
                                      2007        2006      2007       2006

    Net Sales                     $1,836,047  $1,653,547  $905,708   $809,386
    Cost of sales                  1,084,407     982,403   537,970    483,315
    Gross profit                     751,640     671,144   367,738    326,071
    Selling, general &
     administrative expenses         545,753     487,300   274,718    249,715
    Asbestos (income)                            (15,000)             (15,000)
    Interest expense, net             24,825      24,518    12,107     11,315
    Income before income taxes       181,062     174,326    80,913     80,041
    Provision for income taxes        57,939      60,043    26,058     27,100
    Net Income                      $123,123    $114,283   $54,855    $52,941

    Basic earnings per share of
     common stock                      $1.03       $0.97     $0.46      $0.45

    Diluted earnings per share of
     common stock                      $0.96       $0.90     $0.43      $0.42

    Average shares of common stock
     outstanding - basic             120,027     117,501   120,057    117,600

    Average shares of common stock
     outstanding - diluted           130,474     128,380   130,608    128,674



                                                  ADJUSTED (a)
                                       Six Months Ended    Three Months Ended
                                         November 30,         November 30,
                                      2007        2006      2007       2006

    Net Sales                     $1,836,047  $1,653,547  $905,708   $809,386
    Cost of sales                  1,084,407     982,403   537,970    483,315
    Gross profit                     751,640     671,144   367,738    326,071
    Selling, general &
     administrative expenses         545,753     487,300   274,718    249,715
    Asbestos (income)
    Interest expense, net             24,825      24,518    12,107     11,315
    Income before income taxes       181,062     159,326    80,913     65,041
    Provision for income taxes        57,939      54,926    26,058     21,983
    Net Income                      $123,123    $104,400   $54,855    $43,058

    Basic earnings per share of
     common stock                      $1.03       $0.89     $0.46      $0.37

    Diluted earnings per share of
     common stock                      $0.96       $0.83     $0.43      $0.34

    Average shares of common stock
     outstanding - basic             120,027     117,501   120,057    117,600

    Average shares of common stock
     outstanding - diluted           130,474     128,380   130,608    128,674


    (a) Adjusted figures presented remove the impact of the asbestos (income)
        received during the quarter ended November 30, 2006.



    SUPPLEMENTAL SEGMENT INFORMATION
    IN THOUSANDS
    (UNAUDITED)

                                                  AS REPORTED
                                      Six Months Ended     Three Months Ended
                                        November 30,          November 30,
                                      2007        2006       2007      2006

    Net Sales:
      Industrial Segment           $1,213,110  $1,073,823  $605,157  $528,569
      Consumer Segment                622,937     579,724   300,551   280,817
           Total                   $1,836,047  $1,653,547  $905,708  $809,386

    Income (Loss) Before Income
     Taxes (b):
      Industrial Segment
           Income Before Income
            Taxes (b)                $152,564    $138,195   $72,990   $64,261
           Interest (Expense), Net     (1,665)       (109)     (920)      (34)
           EBIT (c)                  $154,229    $138,304   $73,910   $64,295
      Consumer Segment
           Income Before Income
            Taxes (b)                 $72,816     $67,871   $29,887   $26,513
           Interest (Expense), Net     (1,842)     (1,400)     (989)     (820)
           EBIT (c)                   $74,658     $69,271   $30,876   $27,333
      Corporate/Other
           (Expense) Before Income
            Taxes (b)                $(44,318)   $(31,740) $(21,964) $(10,733)
           Interest (Expense), Net    (21,318)    (23,009)  (10,198)  (10,461)
           EBIT (c)                  $(23,000)    $(8,731) $(11,766)    $(272)
           Consolidated
                Income Before
                 Income Taxes (b)    $181,062    $174,326   $80,913   $80,041
                Interest
                 (Expense), Net       (24,825)    (24,518)  (12,107)  (11,315)
                EBIT (c)             $205,887    $198,844   $93,020   $91,356



                                                    ADJUSTED (a)
                                       Six Months Ended    Three Months Ended
                                         November 30,          November 30,
                                       2007        2006      2007      2006

    Net Sales:
      Industrial Segment           $1,213,110  $1,073,823  $605,157  $528,569
      Consumer Segment                622,937     579,724   300,551   280,817
           Total                   $1,836,047  $1,653,547  $905,708  $809,386

    Income (Loss) Before Income
     Taxes (b):
      Industrial Segment
           Income Before Income
            Taxes (b)                $152,564    $138,195   $72,990   $64,261
           Interest (Expense), Net     (1,665)       (109)     (920)      (34)
           EBIT (c)                  $154,229    $138,304   $73,910   $64,295
      Consumer Segment
           Income Before Income
            Taxes (b)                 $72,816     $67,871   $29,887   $26,513
           Interest (Expense), Net     (1,842)     (1,400)     (989)     (820)
           EBIT (c)                   $74,658     $69,271   $30,876   $27,333
      Corporate/Other
           (Expense) Before Income
            Taxes (b)                $(44,318)   $(46,740) $(21,964) $(25,733)
           Interest (Expense), Net    (21,318)    (23,009)  (10,198)  (10,461)
           EBIT (c)                  $(23,000)   $(23,731) $(11,766) $(15,272)
           Consolidated
                Income Before
                 Income Taxes (b)    $181,062    $159,326   $80,913   $65,041
                Interest
                 (Expense), Net       (24,825)    (24,518)  (12,107)  (11,315)
                EBIT (c)             $205,887    $183,844   $93,020   $76,356


    (a) Adjusted figures presented remove the impact of the asbestos (income)
        received during the quarter ended November 30, 2006.

    (b) 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.

    (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. We believe EBIT is
        useful to investors for this purpose as well, using EBIT as a metric
        in their investment decisions. EBIT should not be considered an
        alternative to, or more meaningful than, 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.



    CONSOLIDATED BALANCE SHEETS
    IN THOUSANDS

                                          November 30, November 30,   May 31,
                                              2007        2006         2007
    Assets                                (Unaudited) (Unaudited)
    Current Assets
       Cash and short-term investments      $191,080    $134,504    $159,016
       Trade accounts receivable          635,847     575,715     763,426
       Allowance for doubtful accounts    (21,382)    (21,510)    (19,167)
       Net trade accounts receivable         614,465     554,205     744,259
       Inventories                           461,946     434,971     437,759
       Deferred income taxes                  40,612      51,677      39,276
       Prepaid expenses and other current
        assets                               202,615     191,424     189,939
       Total current assets                1,510,718   1,366,781   1,570,249

    Property, Plant and Equipment, at Cost   973,709     903,160     963,200
       Allowance for depreciation and
        amortization                        (514,529)   (464,376)   (489,904)
       Property, plant and equipment, net    459,180     438,784     473,296
    Other Assets
       Goodwill                              846,275     815,125     830,177
       Other intangible assets, net of
        amortization                         351,764     325,396     353,420
       Other                                  91,744      99,675     106,007
       Total other assets                  1,289,783   1,240,196   1,289,604

    Total Assets                          $3,259,681  $3,045,761  $3,333,149

    Liabilities and Stockholders' Equity
    Current Liabilities
       Accounts payable                     $297,099    $264,743    $385,003
       Current portion of long-term debt     101,455       4,857     101,641
       Accrued compensation and benefits     101,662     105,297     132,555
       Accrued loss reserves                  69,317      69,493      73,178
       Asbestos-related liabilities           57,500      58,458      53,000
       Other accrued liabilities             111,917     123,001     119,363
       Total current liabilities             738,950     625,849     864,740

    Long-Term Liabilities
       Long-term debt, less current
        maturities                           840,564     944,899     886,416
       Asbestos-related liabilities          247,895     332,626     301,268
       Other long-term liabilities           175,883     103,066     175,958
       Deferred income taxes                  25,288      13,836      17,897
       Total long-term liabilities         1,289,630   1,394,427   1,381,539
          Total liabilities                2,028,580   2,020,276   2,246,279

    Stockholders' Equity
       Preferred stock; none issued
       Common stock (outstanding 121,782;
        119,554; 120,906)                      1,218       1,196       1,209
       Paid-in capital                       596,644     554,689     584,845
       Treasury stock, at cost                (5,730)
       Accumulated other comprehensive
        income                                89,456      45,708      25,140
       Retained earnings                     549,513     423,892     475,676
       Total stockholders' equity          1,231,101   1,025,485   1,086,870

    Total Liabilities and Stockholders'
     Equity                               $3,259,681  $3,045,761  $3,333,149



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (UNAUDITED) IN THOUSANDS                     Six Months Ended November 30,
                                                    2007              2006

    Cash Flows From Operating Activities
        Net income                                $123,123          $114,283
        Depreciation and amortization               41,775            37,811
        Items not affecting cash and other          25,200             3,208
        Changes in operating working capital       (54,619)          (44,590)
        Changes in asbestos-related
         liabilities, net of tax                   (31,388)          (19,326)
                                                   104,091            91,386
    Cash Flows From Investing Activities
        Capital expenditures                       (17,477)          (22,203)
        Acquisition of businesses, net of
         cash acquired                              (9,291)          (79,560)
        Purchases of marketable securities         (43,731)          (32,222)
        Proceeds from the sale of
         marketable securities                      41,103            27,434
        Proceeds from the sale of assets            44,800
        Other                                         (338)            5,061
                                                    15,066          (101,490)
    Cash Flows From Financing Activities
        Additions to long-term and short-term debt   5,727           109,838
        Reductions of long-term and
         short-term debt                           (58,838)          (42,024)
        Cash dividends                             (44,328)          (39,883)
        Exercise of stock options,
         including tax benefit                       5,239             5,825
        Repurchase of stock                         (5,730)
                                                   (97,930)           33,756

    Effect of Exchange Rate Changes on
     Cash and Short-Term Investments                10,837             2,236

    Increase in Cash and Short-Term Investments    $32,064           $25,888

SOURCE RPM International Inc.
CONTACT: P. Kelly Tompkins, executive vice president and chief
administrative officer, 1-330-273-5090, ktompkins@rpminc.com
Web site: http://www.rpminc.com
(RPM)


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