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News Release

RPM Announces Record First Quarter Results

MEDINA, Ohio, Oct. 8 /PRNewswire-FirstCall/ -- RPM International Inc. (NYSE:RPM) today reported record sales, earnings, and earnings per share results for its first quarter of fiscal 2004, ended August 31, 2003.

First Quarter Results

The specialty coatings manufacturer reported record net sales of $590.1 million, up 9 percent from last year's first quarter net sales of $542.4 million. RPM's industrial segment sales increased more than 8 percent and its consumer segment sales increased more than 9 percent over last year's results, including net favorable foreign exchange differences and the impact of several smaller acquisitions.

Record net income of $47.7 million was 8 percent higher than the prior year's first quarter net income of $44.2 million. Record first quarter earnings per common share of $0.41 topped $0.38 a year ago by 8 percent.

"We are pleased with the continued strong results our strategies were able to deliver this first quarter, especially the year-over-year growth in our consumer business," said Frank C. Sullivan, RPM's president and chief executive officer. "As expected, we did experience a number of higher raw material costs during the quarter, including oil-derivative materials such as acetones and solvents, which had a slight negative impact on our gross profit margin."

Business Outlook

Sullivan added, "We continue to feel that definitive signs of a business upturn are not yet apparent on the industrial side of our business. That said, we continue to secure new business and grow market share in many of our industrial segment operations. Likewise, we continue to actively look at acquisition possibilities both here and in Europe, and we remain focused on cost control and operating leverage, in order to position our industrial businesses for strong profit growth when a better economy returns."

Webcast Information

In conjunction with this news release, RPM will be hosting a conference call at 10 a.m. Eastern time today, October 8. The call may be accessed by dialing 719-457-2630 or over the Internet through RPM's web site at . Please access approximately 10 minutes before the call to complete registration. A replay will be available from 1 p.m. Eastern time on October 8 until 8 p.m. Eastern time on October 15, 2003 on RPM's web site or by dialing 719-457-0820 and citing access code 710273. A transcript of the call will also be posted on the web site as soon as possible.

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. Leading 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 the adequacy of the Company's existing reserves and 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 inherent in its contingent liability reserves, including asbestos; 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. 333-108647), as the same may be amended 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.

                     In thousands, except per share data

                                                 Three Months Ended August 31,
                                                    2003              2002

    Net Sales                                     $590,091          $542,413
    Cost of sales                                  313,980           284,302
    Gross profit                                   276,111           258,111
    Selling, general & administrative
     expenses                                      195,918           183,014
    Interest expense, net                            6,283             7,204
    Income before income taxes                      73,910            67,893
    Provision for income taxes                      26,238            23,720
    Net Income                                     $47,672           $44,173

    Basic earnings per share of common
     stock                                           $0.41             $0.38

    Diluted earnings per share of common
     stock                                           $0.41             $0.38

    Average shares of common stock
     outstanding -- basic                          115,557           114,765

    Average shares of common stock
     outstanding -- diluted                        116,233           115,760

                                 In thousands

                                                 Three Months Ended August 31,
                                                    2003              2002
    Cash Flows From Operating Activities
         Net income                                $47,672           $44,173
         Depreciation and amortization              15,127            14,083
         Items not affecting cash and
          other                                     (7,006)           (3,055)
         Changes in operating working
          capital                                  (29,074)          (33,195)
                                                    26,719            22,006

    Cash Flows From Investing Activities
         Capital expenditures                       (6,808)           (5,252)
         Acquisition of new businesses,
          net of cash acquired                     (13,000)           (7,595)
                                                   (19,808)          (12,847)

    Cash Flows From Financing Activities
         Increase in debt                            4,042             2,456
         Cash dividends                            (15,019)          (14,261)
         Exercise of stock options                     853               721
                                                   (10,124)          (11,084)

    Net (Decrease) in Cash and Short-Term
     Investments                                    (3,213)           (1,925)

    Cash and Short-Term Investments at
     Beginning of Period                            50,725            42,172

    Cash and Short-Term Investments at
     End of Period                                 $47,512           $40,247

                         CONSOLIDATED BALANCE SHEETS
                                 In thousands

                                             August 31,  August 31,   May 31,
    Assets                                     2003        2002        2003
                                            (Unaudited) (Unaudited)

    Current Assets
        Cash and short term investments       $47,512     $40,247     $50,725
        Trade accounts receivable             443,782     409,135     456,920
        Allowance for doubtful accounts       (17,117)    (16,503)    (17,297)
        Net trade accounts receivable         426,665     392,632     439,623
        Inventories                           255,627     254,859     253,204
        Deferred income taxes                  51,285      42,441      51,285
        Prepaid expenses and other current
         assets                               137,653     106,325     133,257
        Total current assets                  918,742     836,504     928,094

    Property Plant and Equipment, At Cost     717,811     661,600     714,009
        Allowance for depreciation and
         amortization                        (350,681)   (309,882)   (343,220)
        Property, plant and equipment, net    367,130     351,718     370,789

    Other Assets
        Goodwill                              633,820     596,250     631,253
        Other intangible assets, net of
         amortization                         279,881     262,260     282,949
        Other                                  34,705      23,116      34,126
        Total other assets                    948,406     881,626     948,328

    Total Assets                           $2,234,278  $2,069,848  $2,247,211

    Liabilities and Stockholders' Equity

    Current Liabilities
        Accounts payable                     $154,222    $141,728    $171,956
        Current portion of long-term debt       1,802       6,063       1,282
        Accrued compensation and benefits      52,864      57,987      77,577
        Accrued loss reserves                  59,764      47,775      64,230
        Asbestos-related liabilities           41,583       3,598      41,583
        Other accrued liabilities              61,166      51,925      59,759
        Income taxes payable                   17,628      16,251      11,263
        Total current liabilities             389,029     325,327     427,650

    Long-Term Liabilities
        Long-term debt, less current
         maturities                           728,367     710,189     724,846
        Asbestos-related liabilities           95,274           -     103,000
        Other long-term liabilities            58,896      51,279      59,951
        Deferred income taxes                  61,108      92,046      54,756
        Total long-term liabilities           943,645     853,514     942,553
           Total liabilities                1,332,674   1,178,841   1,370,203

    Stockholders' Equity
        Preferred stock; none issued                -           -           -
        Common stock (outstanding 115,624;
         114,886; 115,496)                      1,156       1,786       1,156
        Paid-in capital                       509,332     585,737     508,397
        Treasury stock, at cost                  (589)    (86,253)     (1,167)
        Accumulated other comprehensive
         loss                                 (26,739)    (49,778)    (17,169)
        Retained earnings                     418,444     439,515     385,791
        Total stockholders' equity            901,604     891,007     877,008

    Total Liabilities and Stockholders'
     Equity                                $2,234,278  $2,069,848  $2,247,211

Source: RPM International Inc.

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