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RPM Third Quarter Achieves Record Sales, 49% Earnings Growth, Contributing to Record Nine-Month Results, Fiscal 2003

MEDINA, Ohio, April 14 /PRNewswire-FirstCall/ -- RPM International Inc. (NYSE: RPM) today reported continued growth in sales, net income and earnings per share for both the third quarter and first nine months of fiscal 2003, ended February 28, compared with the same periods a year ago.

Third-Quarter Results
The specialty coatings manufacturer reported net sales in its fiscal 2003 third quarter of $433.6 million, an increase of 6 percent compared with sales of $407.5 million in the fiscal 2002 third quarter. Consumer segment sales were essentially flat, reflective of the recently softened retail environment, while industrial segment sales grew 11 percent, mainly from continued strength of services sales. This growth includes several small acquisitions and favorable foreign exchange rates, which contributed approximately 3 percent sales growth to each segment.

Net income improved by 49 percent, to $4.9 million, and earnings per share grew 33 percent to $0.04, compared with net income of $3.3 million and earnings per share of $0.03 in the fiscal 2002 third quarter. The 2003 results reflect reduced interest expense in addition to solid earnings improvements in both operating segments. The 11.5 million common shares issued in connection with the March 2002 follow-on equity offering had no dilutive effect on earnings per share in this year's third quarter.

Nine-Month Results
For the first nine months of fiscal 2003, RPM reported record net sales of $1,493.9 million, a 5 percent improvement compared with sales of $1,428.7 million in the first nine months of fiscal 2002. The industrial and consumer segments reported sales growth of 5 percent and 4 percent, respectively, including 1 percent contribution to each segment from small acquisitions and favorable foreign exchange rates.

Record nine-month net income of $78.7 million strengthened by 22 percent compared with net income of $64.3 million in the first nine months of fiscal 2002, while record earnings per share of $0.68 climbed 8 percent compared with earnings per share of $0.63 in the prior year period. The 11.5 million common shares issued in connection with the March 2002 follow-on equity offering had a dilutive effect on earnings per share of approximately $0.05 in the fiscal 2003 nine-month period.

Through nine months, RPM has generated $51 million of free cash flow after capital expenditures and dividends, enabling the internal funding of several acquisitions, totaling $20 million, and debt reduction of $15 million.

Business Outlook
"We are pleased that we were able to maintain our positive momentum in the third quarter, which is historically RPM's weakest quarter because of seasonal effects," said Frank C. Sullivan, chief executive officer and president. "Our ability to increase net income at a faster rate than sales reflects the leverage gained from strategic actions over the past several years to lower our costs and strengthen our capital structure. As a result of our performance to date, and in spite of a still weak economic outlook, we remain confident that our operations will continue to deliver strong results through the end of our fiscal year."

Asbestos Liability
"Separately," Sullivan noted that, "as we have previously communicated, based on recent asbestos claims activity our third party insurance may be depleted in the coming months. In view of this situation and while keeping a watchful eye on federal and state legislative activities, we have begun a formal process to estimate the cost of our future asbestos liabilities," he said. "The timing of this effort is uncertain, but we hope to complete this process with the reporting of our fiscal 2003 year-end results. At the conclusion of this process, we would anticipate accruing a liability sufficient to cover those estimated future costs."

Dividend Payment
On April 4, 2003, RPM's board of directors approved the company's current quarterly cash dividend of $0.13 per share, payable April 30, 2003, to shareholders of record as of April 14, 2003. This payment represents a 4 percent increase over the quarterly cash dividend paid at this time last year. RPM's latest cash dividend increase in October 2002 marked its 29th consecutive year of increased cash dividends paid to its shareholders

About RPM
RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings serving both industrial and consumer markets. RPM's industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. 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. Industrial brands include Stonhard, Tremco, Carboline, Day-Glo, Euco and Dryvit. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane, Bondo and Testors.

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 and supply of raw materials, particularly titanium dioxide, certain resins, aerosols and solvents; (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 insurance coverage inherent in the Company's disclosed litigation; (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; and other risks detailed in the Company's other reports and statements filed with the Securities and Exchange Commission, including the risk factors set forth in the Company's prospectus and prospectus supplement included as part of the Company's Registration Statement on Form S-3 (File No. 333-77028), as the same may be amended from time to time.


                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (Unaudited)
                       In thousands, except per share data
    
                                     Nine Months Ended     Three Months Ended 
                                        February 28,          February 28,
                                      2003        2002       2003      2002
    
    Net Sales                      $1,493,943  $1,428,693  $433,562  $407,538
    Cost of sales                     813,639     777,415   246,610   228,902
    Gross profit                      680,304     651,278   186,952   178,636
    Selling, general &            
     administrative expenses          538,944     521,720   173,338   166,025
    Interest expense, net              20,290      32,083     6,102     7,660
    Income before income taxes        121,070      97,475     7,512     4,951
    Provision for income taxes         42,374      33,142     2,629     1,677
    Net Income                        $78,696     $64,333    $4,883    $3,274
    
    Basic earnings per share of   
     common stock                       $0.68       $0.63     $0.04     $0.03
    
    Diluted earnings per share of 
     common stock                       $0.68       $0.63     $0.04     $0.03
    
    Average shares of common stock
     outstanding - basic              115,193     102,346   115,583   102,508
    
    Average shares of common stock
     outstanding - diluted            116,022     102,857   116,121   103,720


                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (Unaudited)
                                   In thousands
    
                                                          February 28,
                                                     2003              2002
    Assets
        Current assets                             $766,196          $736,735
        Property, plant & equipment (net)           357,164           345,326
        Other assets                                894,423           886,134
          Total Assets                           $2,017,783        $1,968,195
    
    Liabilities and Stockholders' Equity
        Current liabilities                        $302,314          $385,952
        Long-term debt, less current maturities     694,774           814,606
        Other liabilities                           101,241           103,009
          Total Liabilities                       1,098,329         1,303,567
        Stockholders' equity                        919,454           664,628
          Total Liabilities & 
            Stockholders' Equity                 $2,017,783        $1,968,195


                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                   In thousands
    
                                                Nine Months Ended February 28,
                                                     2003              2002
    Cash Flows From Operating Activities
        Net income                                  $78,696           $64,333
        Depreciation and amortization                42,285            41,785
        Items not affecting cash and other              563            (8,716)
        Changes in operating working capital         (4,237)           34,037
                                                    117,307           131,439
    
    Cash Flows From Investing Activities
        Capital expenditures                        (22,017)          (16,241)
        Acquisition of new businesses, net of
          cash acquired                             (19,547)               --
                                                    (41,564)          (16,241)
    
    Cash Flows From Financing Activities
        (Decrease) in debt                          (14,922)          (63,033)
        Cash dividends                              (44,123)          (38,167)
        Exercise of stock options                     3,286             4,932
                                                    (55,759)          (96,268)
    
        Net Increase in Cash and 
          Short-Term Investments                    $19,984           $18,930
SOURCE  RPM International Inc.
    -0-                             04/14/2003
    /CONTACT:  Glenn R. Hasman, Vice President of Finance and Communications of RPM International Inc., +1-330-273-8820/
    /First Call Analyst: /
    /FCMN Contact: /
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    /Web site:  http://www.rpminc.com/
    (RPM)

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