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RPM Achieves Record Performance During Second Quarter, First Half of Fiscal 2003

MEDINA, Ohio, Jan. 9 /PRNewswire-FirstCall/ -- RPM International Inc. (NYSE: RPM) today reported continued solid financial results for its second quarter, ended November 30, 2002, and for the first half of its 2003 fiscal year.

Second Quarter Results
The specialty coatings manufacturer reported record net sales of $518.0 million, 6 percent over last year's second quarter net sales of $487.9 million. RPM experienced continued and relatively balanced growth between its two operating segments. The industrial and consumer business segments had organic sales growth of 5 percent and 6 percent, respectively, plus approximately 1 percent growth in each segment from small product line acquisitions and foreign exchange benefits.

The Company reported earnings before interest and taxes (EBIT) of $52.6 million, up 10 percent over the prior year's second quarter EBIT of $47.9 million. Record net earnings reached $29.6 million, up 21 percent over the prior year's second quarter net earnings of $24.5 million, reflecting reduced interest expense in addition to the EBIT improvement. Record earnings per share of $0.26 grew $0.02, or 8 percent over last year's $0.24. The 11.5 million common shares issued in connection with the March 2002 equity offering had a dilutive effect of approximately $0.02 per share in this year's second quarter.

Six-Month Results
For the first half of its 2003 fiscal year, RPM reported 4 percent higher net sales, reaching a record $1.060 billion from $1.021 billion a year ago. Both operating segments, industrial and consumer, have achieved organic growth of 3 percent and 4 percent, respectively, so far this year, along with minimal contribution from small product line acquisitions and foreign exchange benefits. EBIT has grown by 9 percent on the 4 percent sales increase, to $127.7 million from $116.9 million a year ago. Record net earnings of $73.8 million topped last year's six-month net earnings of $61.1 million by 21 percent, boosted by continued lower interest costs. Record six-month earnings per share of $0.64 surpassed $0.60 a year ago by 7 percent. The 11.5 million common shares issued in connection with the March 2002 equity offering had a dilutive effect of approximately $0.05 per share in this first half.

Through six months, RPM's cash flow is nearly matching the record-setting performance of its last fiscal year. Free cash flow of $48 million has been generated to date, after capital expenditures and dividends.

Business Outlook
"We are pleased with our results in the second quarter, especially the continuing improvement in our industrial business," stated Frank C. Sullivan, RPM CEO and president. "However, it's important to note that the second quarter results in part reflect comparison to the disruptions of last fall, following the events of September 11, 2001. In addition, our industrial segment results reflect the rapid growth of our relatively newer Tremco services business, which currently carries lower margins than our average industrial product margins. Our industrial products revenues remain flat to only slightly up, and we are not yet seeing signs of renewed momentum in the industrial and manufacturing sectors we serve. Nonetheless, following the strong results of RPM in the first half of our 2003 fiscal year, we are on track to meet our goals and to deliver a year of record sales, earnings and earnings per share."

Dividend Payment
On January 3, RPM's board of directors voted to maintain the company's current quarterly cash dividend of $0.13 per share, payable January 31, 2003, to shareholders of record as of January 13, 2003. This quarterly dividend payment represents a 4 percent increase over the quarterly cash dividend paid at this same time last year.

President Bush's recent proposal to eliminate taxes paid by shareholders on corporate dividends would certainly add to the shareholder value already created by public companies, such as RPM, that have demonstrated clear commitment to paying cash dividends. 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 potential impact of the euro currency conversion; (h) 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; (i) 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
   
                                      Six Months Ended     Three Months Ended 
                                        November 30,          November 30,
                                      2002        2001       2002      2001
    
    Net Sales                      $1,060,381  $1,021,155  $517,968  $487,880
    Cost of sales                     567,029     548,513   283,820   265,912
    Gross profit                     $493,352    $472,642  $234,148  $221,968
    Selling, general &            
     administrative expenses          365,606     355,695   181,499   174,076
    Interest expense, net              14,188      24,423     6,984    11,359
    Income before income taxes       $113,558     $92,524   $45,665   $36,533
    Provision for income taxes         39,745      31,465    16,025    12,043
    Net Income                        $73,813     $61,059   $29,640   $24,490
    
    Basic earnings per share of   
     common stock                       $0.64       $0.60     $0.26     $0.24
    
    Diluted earnings per share of 
     common stock                       $0.64       $0.60     $0.26     $0.24
    
    Average shares of common stock
     outstanding - basic              115,001     102,266   115,240   102,321
    
    Average shares of common stock
     outstanding - diluted            115,981     102,512   116,201   102,828



                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (Unaudited)
                                  In thousands
    
                                                          November 30,
                                                    2002              2001
    Assets
          Current assets                          $781,701          $772,376
          Property, plant & equipment    
           (net)                                   349,528           352,952
          Other assets                             888,124           892,899
             Total Assets                       $2,019,353        $2,018,227
    
    Liabilities and Stockholders' Equity
          Current liabilities                     $316,235          $423,044
          Long-term debt                           687,197           817,182
          Other liabilities                        100,814           100,902
             Total Liabilities                  $1,104,246        $1,341,128
          Stockholders' equity                     915,107           677,099
          Total Liabilities &
            Stockholders' Equity                $2,019,353        $2,018,227


                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                  In thousands
    
                                                 Six Months Ended November 30,
                                                    2002               2001
    Cash Flows From Operating Activities
           Net income                              $73,813           $61,059
           Depreciation and amortization            28,081            28,818
           Items not affecting cash and  
            other                                   (2,872)           (7,773)
           Changes in operating working  
            capital                                 (8,489)           12,048
                                                   $90,533           $94,152
    
    Cash Flows From Investing Activities
           Additions to property and     
            equipment                             $(13,702)         $(13,117)
           Acquisition of new businesses,
            net of cash                             (9,387)                -
                                                  $(23,089)         $(13,117)
    
    Cash Flows From Financing Activities
           (Decrease) in debt                     $(22,900)         $(34,271)
           Cash dividends                          (29,111)          (25,435)
           Exercise of stock options                 2,828               345
                                                  $(49,183)         $(59,361)
    
           Net Increase in Cash and Short
            Term Investments                       $18,261           $21,674
SOURCE  RPM International Inc.
CONTACT:  Glenn R. Hasman, vice president of finance and communications of RPM International Inc., 330-273-8820


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