|
RPM INTERNATIONAL INC/DE/ - 10-K - 20040816 - BALANCE_SHEET
RPM International Inc. and Subsidiaries
27
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
May 31 2004 2003
------ ----------- -----------
ASSETS
CURRENT ASSETS
Cash and short-term investments (Note A) $ 38,561 $ 50,725
Trade accounts receivable (less allowances of $18,147 in 2004 and
$17,297 in 2003) 484,847 439,623
Inventories (Note A) 289,359 253,204
Deferred income taxes (Notes A and C) 51,164 51,285
Prepaid expenses and other current assets (Note A) 130,686 133,257
----------- -----------
TOTAL CURRENT ASSETS 994,617 928,094
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, AT COST (NOTE A)
Land 24,687 23,401
Buildings and leasehold improvements 231,140 221,954
Machinery and equipment 511,245 468,654
----------- -----------
767,072 714,009
Less allowance for depreciation and amortization 386,017 343,220
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, NET 381,055 370,789
----------- -----------
OTHER ASSETS
Goodwill (Note A) 648,243 631,253
Other intangible assets, net of amortization (Note A) 282,372 282,949
Other 46,832 34,126
----------- -----------
TOTAL OTHER ASSETS 977,447 948,328
----------- -----------
TOTAL ASSETS $ 2,353,119 $ 2,247,211
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 205,092 $ 171,956
Current portion of long-term debt (Note B) 991 1,282
Accrued compensation and benefits 88,670 77,577
Accrued loss reserves (Note H) 56,699 64,230
Asbestos-related liabilities (Note H) 47,500 41,583
Other accrued liabilities 72,222 59,759
Income taxes payable (Notes A and C) 6,319 11,263
----------- -----------
TOTAL CURRENT LIABILITIES 477,493 427,650
----------- -----------
LONG-TERM LIABILITIES
Long-term debt, less current maturities (Note B) 718,929 724,846
Asbestos-related liabilities (Note H) 43,107 103,000
Other long-term liabilities 59,910 59,951
Deferred income taxes (Notes A and C) 78,388 54,756
----------- -----------
TOTAL LONG-TERM LIABILITIES 900,334 942,553
----------- -----------
TOTAL LIABILITIES 1,377,827 1,370,203
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, par value $0.01; authorized 50,000 shares; none issued
Common stock, par value $0.01; authorized 300,000 shares; issued and
outstanding 116,122 as of May 2004; issued 115,596 and outstanding
115,496 as of May 2003 (Note D) 1,161 1,156
Paid-in capital 513,986 508,397
Treasury stock, at cost (Note D) (1,167)
Accumulated other comprehensive loss (Note A) (3,881) (17,169)
Retained earnings 464,026 385,791
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 975,292 877,008
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,353,119 $ 2,247,211
=========== ===========
|
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
RPM International Inc. and Subsidiaries
28
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Year Ended May 31 2004 2003 2002
----------------- ---------- ---------- ----------
NET SALES $2,341,572 $2,083,489 $1,986,126
Cost of Sales 1,276,372 1,134,207 1,079,774
---------- ---------- ----------
Gross Profit 1,065,200 949,282 906,352
Selling, General and Administrative Expenses 818,639 734,717 711,764
Asbestos Charge (Note H) 140,000
Interest Expense, Net (Note A) 28,945 26,712 40,464
---------- ---------- ----------
Income Before Income Taxes 217,616 47,853 154,124
Provision for Income Taxes (Note C) 75,730 12,526 52,570
---------- ---------- ----------
NET INCOME $ 141,886 $ 35,327 $ 101,554
========== ========== ==========
Average Number of Shares of Common Stock Outstanding
(Note D)
Basic 115,777 115,294 104,418
Diluted 116,710 115,986 105,131
Earnings per Common Share
Basic $ 1.23 $ 0.31 $ 0.97
Diluted $ 1.22 $ 0.30 $ 0.97
Cash Dividends per Share of Common Stock $ 0.550 $ 0.515 $ 0.500
========== ========== ==========
|
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
RPM International Inc. and Subsidiaries
29
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
Common Stock Accumulated
------------------------ Other
Number Par/ Comprehensive
of Shares Stated Paid-in Treasury Loss Retained
(Note D) Value Capital Stock (Note A) Earnings Total
--------- --------- --------- --------- ------------- --------- ---------
BALANCE AT MAY 31, 2001 102,211 $ 1,619 $ 430,015 $ (99,308) $ (53,074) $ 360,458 $ 639,710
---------
Comprehensive income
Net income 101,554 101,554
Translation gain and other 2,589 2,589
---------
Comprehensive income 104,143
Dividends paid (52,409) (52,409)
Sale of stock 11,500 167 155,767 155,934
Stock option exercises, net 847 92 9,412 9,504
Restricted stock awards 138 (308) 1,532 1,224
------- --------- --------- --------- --------- --------- ---------
BALANCE AT MAY 31, 2002 114,696 1,786 585,566 (88,364) (50,485) 409,603 858,106
---------
Comprehensive income
Net income 35,327 35,327
Translation gain and other 33,316 33,316
---------
Comprehensive income 68,643
Dividends paid (59,139) (59,139)
Treasury stock retired (113) (85,723) 85,836
Repurchase of stock (100) (1,167) (1,167)
Stock option exercises, net 300 2 2,015 1,269 3,286
Restricted stock awards 600 5 6,111 1,259 7,375
Par value adjustment and other (524) 428 (96)
------- --------- --------- --------- --------- --------- ---------
BALANCE AT MAY 31, 2003 115,496 1,156 508,397 (1,167) (17,169) 385,791 877,008
---------
Comprehensive income
Net income 141,886 141,886
Translation gain and other 13,288 13,288
---------
Comprehensive income 155,174
Dividends paid (63,651) (63,651)
Stock option exercises, net 555 5 5,453 338 5,796
Restricted stock awards 71 136 829 965
------- --------- --------- --------- --------- --------- ---------
BALANCE AT MAY 31, 2004 116,122 $ 1,161 $ 513,986 $ -0- $ (3,881) $ 464,026 $ 975,292
======= ========= ========= ========= ========= ========= =========
|
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
RPM International Inc. and Subsidiaries
30
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended May 31 2004 2003 2002
----------------- --------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 141,886 $ 35,327 $ 101,554
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 47,840 44,736 43,541
Amortization 15,437 13,938 13,318
Increase (decrease) in deferred income taxes 21,422 (46,733) (3,930)
(Earnings) of unconsolidated affiliates (314) (396) (391)
Changes in assets and liabilities, net of effect from
purchases and sales of businesses:
(Increase) decrease due to receivables (38,225) (37,258) 14,048
(Increase) decrease due to inventory (31,949) 1,262 25,929
(Increase) decrease due to prepaid expenses and
other assets 7,762 (27,378) (7,464)
Increase (decrease) due to accounts payable 30,606 9,156 8,489
Increase (decrease) due to accrued other liabilities 16,120 77 (5,062)
Increase (decrease) due to accrued loss reserves (7,531) 9,914 (3,502)
Increase (decrease) due to asbestos-related
liabilities (53,976) 146,650 2,754
Other including exchange rate changes 3,919 11,334 2,086
--------- --------- ---------
Cash From Operating Activities 152,997 160,629 191,370
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (51,253) (41,814) (39,931)
Acquisition of businesses, net of cash acquired (37,703) (65,994) (3,138)
Purchase of marketable securities (36,955) (15,145) (15,693)
Proceeds from sales of marketable securities 21,410 11,376 19,495
(Investments in) and distributions from
unconsolidated affiliates (425) 974 16
Proceeds from sale of assets and businesses 3,664 202 1,553
--------- --------- ---------
Cash (Used For) Investing Activities (101,262) (110,401) (37,698)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term and short-term debt 200,345 305,200 236,681
Reductions of long-term and short-term debt (206,623) (294,099) (485,662)
Cash dividends (63,651) (59,139) (52,409)
Exercise of stock options 5,796 3,286 9,504
Repurchase of stock (1,167)
Sale of stock 155,934
--------- --------- ---------
Cash (Used For) Financing Activities (64,133) (45,919) (135,952)
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND SHORT-TERM INVESTMENTS 234 4,244 526
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND SHORT-TERM INVESTMENTS (12,164) 8,553 18,246
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF YEAR 50,725 42,172 23,926
--------- --------- ---------
CASH AND SHORT-TERM INVESTMENTS AT END OF YEAR $ 38,561 $ 50,725 $ 42,172
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Cash paid during the year for:
Interest $ 25,572 $ 28,678 $ 50,353
Income taxes $ 59,252 $ 55,479 $ 59,774
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued for restricted stock plan $ 965 $ 7,375 $ 1,224
Debt from business combinations $ 1,230
Receivables from sale of assets $ 1,233
|
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
RPM International Inc. and Subsidiaries
31
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2004, 2003, 2002
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1) CONSOLIDATION AND BASIS OF PRESENTATION
Our financial statements consolidate all of our affiliates - companies
that we control and in which we hold a majority voting interest. We account for
our investments in less than majority-owned joint ventures under the equity
method. Effects of transactions between related companies are eliminated.
We have reclassified certain prior-year amounts to conform to this year's
presentation.
2) USE OF ESTIMATES
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles in the United States requires us to make
estimates and assumptions that affect reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3) BUSINESS COMBINATIONS
During the year ended May 31, 2004, we completed four acquisitions of
product lines and one minority interest acquisition. As of the respective dates
of acquisition, we recorded the following estimated fair values of assets and
liabilities assumed:
(In thousands)
--------------
Current assets $13,312
Property, plant and equipment 8,208
Other intangible assets 11,418
Goodwill 12,635
Liabilities assumed (7,128)
-------
NET ASSETS ACQUIRED $38,445
=======
|
Our Consolidated Financial Statements reflect the results of operations of
these businesses as of their respective dates of acquisition.
Pro forma results of operations for the years ended May 31, 2004 and May
31, 2003 were not materially different from reported results and, consequently,
are not presented.
4) FOREIGN CURRENCY
The functional currency of our foreign subsidiaries is their local
currency. Accordingly, for the periods presented, assets and liabilities have
been translated using exchange rates at year end while income and expense for
the periods have been translated using a weighted average exchange rate. The
resulting translation adjustments have been recorded in accumulated other
comprehensive loss, a component of stockholders' equity, and will be included in
net earnings only upon the sale or liquidation of the underlying foreign
investment, neither of which is contemplated at this time. Transaction gains and
losses have been immaterial during the past three fiscal years.
RPM International Inc. and Subsidiaries
32
5) ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss (which is shown net of taxes)
consists of the following components:
Foreign Minimum Unrealized
Currency Pension Gain (Loss)
Translation Liability on
(In thousands) Adjustments Adjustments Securities Total
-------------- ----------- ----------- ---------- --------
Balance at May 31, 2001 $(53,092) $ (102) $ 120 $(53,074)
Reclassification adjustments for (gains) losses
included in net income (120) (120)
Other comprehensive gain (loss) 3,411 (288) (851) 2,272
Deferred taxes 137 300 437
-------- -------- -------- --------
Balance at May 31, 2002 (49,681) (253) (551) (50,485)
Reclassification adjustments for (gains) losses
included in net income (149) (149)
Other comprehensive gain (loss) 39,872 (8,695) (1,242) 29,935
Deferred taxes 2,757 773 3,530
-------- -------- -------- --------
Balance at May 31, 2003 (9,809) (6,191) (1,169) (17,169)
Reclassification adjustments for (gains) losses
included in net income 97 97
Other comprehensive gain (loss) 9,686 1,603 2,645 13,934
Deferred taxes (467) (276) (743)
-------- -------- -------- --------
Balance at May 31, 2004 $ (123) $ (5,055) $ 1,297 $ (3,881)
======== ======== ======== ========
|
6) CASH AND SHORT-TERM INVESTMENTS
For purposes of the statement of cash flows, we consider all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents. We do not believe we are exposed to any significant credit risk on
cash and short-term investments.
7) MARKETABLE SECURITIES
Marketable securities, included in other current assets, are considered
available for sale and are reported at fair value, based on quoted market
prices. Changes in unrealized gains and losses, net of applicable taxes, are
recorded in accumulated other comprehensive loss within stockholders' equity. If
we were to experience any significant other-than-temporary declines in market
value from original cost, those amounts would be reflected in operating income
in the period in which the loss were to occur. In order to determine whether an
other-than-temporary decline in market value has occurred, the duration of the
decline in value and our ability to hold the investment to recovery are
considered in conjunction with an evaluation of the strength of the underlying
collateral and the extent to which the investment's carrying value exceeds its
related market value. Marketable securities totaled $41.4 million and $22.1
million at May 31, 2004 and 2003, respectively.
8) FINANCIAL INSTRUMENTS
Financial instruments recorded on the balance sheet include cash and
short-term investments, accounts receivable, notes and accounts payable, and
debt. The carrying amount of cash and short-term investments, accounts
receivable, and notes and accounts payable approximates fair value because of
their short-term maturity.
The carrying amount of our debt instruments approximates fair value based
on quoted market prices, variable interest rates or borrowing rates for similar
types of debt arrangements.
9) INVENTORIES
Inventories are stated at the lower of cost or market, cost being
determined substantially on a first-in, first-out (FIFO) basis and market being
determined on the basis of replacement cost or net realizable value. Inventory
costs include raw material, labor and manufacturing overhead. Inventories were
composed of the following major classes:
May 31 2004 2003
------ -------- --------
(In thousands)
Raw material and supplies $ 95,378 $ 80,517
Finished goods 193,981 172,687
-------- --------
TOTAL INVENTORY $289,359 $253,204
======== ========
|
RPM International Inc. and Subsidiaries
33
10) GOODWILL AND OTHER INTANGIBLE ASSETS
We elected to adopt the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets," as of June
1, 2001, at which time we ceased the amortization of all goodwill. We also
elected to perform the required annual impairment assessment in the first
quarter of our fiscal year. If a loss were to result from the performance of the
annual test, it would be reflected in operating income. The annual goodwill
impairment assessment involves estimating the fair value of each reporting unit,
which has been defined as one level below our industrial and consumer operating
segments, and comparing it with its carrying amount. If the carrying amount of
the reporting unit exceeds its fair value, additional steps are followed to
recognize a potential impairment loss. Calculating the fair value of the
reporting units requires significant estimates and assumptions by management. We
estimate the fair value of our reporting units by applying third-party market
value indicators to each of our reporting unit's projected earnings before
interest, taxes, depreciation and amortization. In applying this methodology, we
rely on a number of factors, including future business plans, actual operating
results and market data. In the event that our calculations indicated that
goodwill was impaired, a fair value estimate of each tangible and intangible
asset would be established. This process would require the application of
discounted cash flows expected to be generated by each asset in addition to
independent asset appraisals, as appropriate. Cash flow estimates are based on
our historical experience and our internal business plans, and appropriate
discount rates are applied. The results of our annual impairment tests for the
fiscal years ended May 31, 2004 and 2003, performed during the first quarter of
each respective fiscal year, did not require any adjustment to the carrying
value of goodwill.
The changes in the carrying amount of goodwill, by reporting segment, for
the year ended May 31, 2004, are as follows:
Industrial Consumer
(In thousands) Segment Segment Total
-------------- ---------- -------- --------
Balance as of
May 31, 2003 $290,797 $340,456 $631,253
Acquisitions 9,222 3,413 12,635
Purchase accounting
adjustments* 1,344 1,344
Translation adjustments 2,380 631 3,011
-------- -------- --------
Balance as of
May 31, 2004 $303,743 $344,500 $648,243
======== ======== ========
|
*Relates primarily to other accruals.
RPM International Inc. and Subsidiaries
34
Other intangible assets consist of the following major classes:
Gross Net Other
Amortization Carrying Accumulated Intangible
(In thousands) Period (in Years) Amount Amortization Assets
-------------- ----------------- -------- ------------ ----------
As of May 31, 2004
Amortized intangible assets
Formulae 10 to 33 $175,694 $ 57,749 $117,945
Customer-related intangibles 7 to 33 67,202 16,119 51,083
Trademarks/names 5 to 40 6,637 2,887 3,750
Other 3 to 30 24,994 11,464 13,530
-------- -------- --------
Total Amortized Intangibles 274,527 88,219 186,308
Unamortized intangible assets
Trade names 96,064 96,064
-------- -------- --------
TOTAL OTHER INTANGIBLE ASSETS $370,591 $ 88,219 $282,372
======== ======== ========
As of May 31, 2003
Amortized intangible assets
Formulae 10 to 33 $173,102 $ 49,849 $123,253
Customer-related intangibles 7 to 33 65,317 13,097 52,220
Trademarks/names 5 to 40 5,544 1,779 3,765
Other 3 to 30 23,583 10,419 13,164
-------- -------- --------
Total Amortized Intangibles 267,546 75,144 192,402
Unamortized intangible assets
Trade names 90,547 90,547
-------- -------- --------
TOTAL OTHER INTANGIBLE ASSETS $358,093 $ 75,144 $282,949
======== ======== ========
|
The aggregate other intangible asset amortization expense for the fiscal
years ended May 31, 2004, 2003 and 2002 was $12.8 million, $11.9 million and
$11.3 million, respectively. For each of the next five fiscal years through May
31, 2009, the estimated annual intangible asset amortization expense will
approximate $13.0 million.
11) DEPRECIATION
Depreciation is computed primarily using the straight-line method over
the following ranges of useful lives:
Land improvements 5 to 42 years
Buildings and improvements 5 to 50 years
Machinery and equipment 3 to 20 years
|
12) REVENUE RECOGNITION
Revenues are recognized when realized or realizable, and when earned. In
general, this is when title and risk of loss pass to the customer. Further,
revenues are realizable when we have persuasive evidence of a sales arrangement,
the product has been shipped or the services have been provided to the customer,
the sales price is fixed or determinable, and collectibility is reasonably
assured. We reduce our revenues for estimated customer returns and allowances,
certain rebates, sales incentives and promotions in the same period the related
sales are recorded.
13) SHIPPING COSTS
Shipping costs paid to third-party shippers for transporting products to
customers are included in selling, general and administrative expenses. For the
years ended May 31, 2004, 2003 and 2002, shipping costs were $86.0 million,
$78.9 million and $77.9 million, respectively.
14) ADVERTISING COSTS
Advertising costs are charged to operations when incurred and are included
in selling, general and administrative expenses. For the years ended May 31,
2004, 2003 and 2002, advertising costs were $71.1 million, $58.7 million and
$53.4 million, respectively.
15) RESEARCH AND DEVELOPMENT
Research and development costs are charged to operations when incurred and
are included in selling, general and administrative expenses. The amounts
charged for the years ended May 31, 2004, 2003 and 2002 were $26.2 million,
$23.8 million and $20.9 million, respectively. The customer-sponsored portion of
such expenditures was not significant.
RPM International Inc. and Subsidiaries
35
16) STOCK-BASED COMPENSATION
At May 31, 2004, we had two stock-based compensation plans accounted for
under the recognition and measurement principles of Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations, as more fully described in Note D. In applying the intrinsic
value method of accounting for stock-based compensation, we record expense in an
amount equal to the excess of the market price of the underlying shares of RPM
International Inc. stock at the date of grant over the exercise price of the
stock-related award. In general, the market price of stock options at the grant
date has not exceeded the exercise price and, therefore, no expense has been
recorded for any of the periods presented. Pro forma information regarding the
impact of all stock-based compensation on net income and earnings per share is
required by SFAS No. 123, "Accounting for Stock-Based Compensation," and SFAS
No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure."
The following table summarizes our pro forma operating results as if
compensation cost for stock options granted had been determined in accordance
with the fair-value method prescribed by SFAS No. 123.
Year Ended May 31 2004 2003 2002
----------------- ----------- ----------- -----------
(In thousands, except per share amounts)
Net income, as reported $ 141,886 $ 35,327 $ 101,554
Add: Stock-based
employee compensation
expense from restricted
stock plans included
in reported net income,
net of related tax effects 825 1,339 806
Deduct: Total stock-based
employee compensation
determined under fair
value-based method
for all awards, net of
related tax effects (3,969) (4,517) (2,949)
----------- ----------- -----------
PRO FORMA NET INCOME $ 138,742 $ 32,149 $ 99,411
=========== =========== ===========
EARNINGS PER SHARE:
BASIC, AS REPORTED $ 1.23 $ 0.31 $ 0.97
=========== =========== ===========
DILUTED, AS REPORTED $ 1.22 $ 0.30 $ 0.97
=========== =========== ===========
BASIC, PRO FORMA $ 1.20 $ 0.28 $ 0.95
=========== =========== ===========
DILUTED, PRO FORMA $ 1.19 $ 0.28 $ 0.95
=========== =========== ===========
|
The fair value of stock options granted is estimated as of the date of
grant using a Black-Scholes option-pricing model with the following weighted
average assumptions:
2004 2003 2002
----- ----- -----
Risk-free interest rate 3.7% 3.3% 4.4%
Expected life of option 7 yrs 7 yrs 7 yrs
Expected dividend yield 3.5% 3.5% 3.0%
Expected volatility rate 35.9% 37.3% 34.2%
|
17) INTEREST EXPENSE, NET
Interest expense is shown net of investment income, which consists of
interest, dividends and capital gains (losses). Investment income for the years
ended May 31, 2004, 2003 and 2002 was $2.3 million, $1.4 million and $2.1
million, respectively.
18) INCOME TAXES
We file a consolidated federal income tax return that includes the results
of RPM International Inc. and our wholly owned domestic subsidiaries. The tax
effects of transactions are recognized in the year in which they enter into the
determination of net income, regardless of when they are recognized for tax
purposes. As a result, income tax expense differs from actual taxes payable. We
do not intend to distribute the accumulated earnings of our consolidated foreign
subsidiaries totaling approximately $130.0 million at May 31, 2004, and,
therefore, no provision has been made for the taxes that would result if such
earnings were remitted to us.
19) OTHER RECENT ACCOUNTING PRONOUNCEMENTS
In December 2003, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other
Postretirement Benefits - an amendment of FASB Statement No. 87, 88 and 106,"
which was effective as of December 15, 2003. This new SFAS No. 132 expands the
disclosure requirements previously included in the pronouncement, including a
requirement to disclose the actual and target allocation percentages for broad
asset categories, expected employer contributions during the next fiscal year,
the accumulated benefit obligation, significant assumptions applied in
determining plan obligations and measurement date(s) used. In accordance with
the transition provisions of SFAS No. 132 (revised 2003), Note F, "Pension
Plans," and Note G,
RPM International Inc. and Subsidiaries
36
"Postretirement Health Care Benefits," have been expanded to include the new
disclosures required for the current reporting period.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires that a
liability for costs associated with an exit or disposal activity be recognized
and measured initially at fair value only when the liability is incurred, and is
effective for exit or disposal activities that are initiated after December 31,
2002. Our adoption of the provisions of SFAS No. 146 did not have a material
impact on our results of operations, cash flows or financial position.
NOTE B - BORROWINGS
A description of long-term debt follows:
May 31 2004 2003
------ -------- --------
(In thousands)
Revolving credit agreement for $500,000 with a syndicate of banks through
July 14, 2005. Interest is tied to LIBOR. $113,000
Accounts Receivable Securitization Program for $125,000 with two banks,
through May 24, 2005, subject to annual renewal. 91,000
Unsecured 6.25% senior notes due December 15, 2013. $200,000
Unsecured $297,000 face value at maturity 2.75% senior convertible notes
due May 13, 2033. 150,042 150,042
Unsecured 7.00% senior notes due June 15, 2005. 150,000 150,000
Unsecured notes due March 1, 2008. Interest, which is tied to LIBOR, averaged
1.33% at May 31, 2004. 100,000 100,000
Commercial paper with a weighted average interest rate at May 31, 2004 of 1.59%
These obligations, along with other short-term borrowings, have been reclassified
as long-term debt, reflecting our intent and ability, through unused credit
facilities, to refinance these obligations. 60,651 51,735
Unsecured senior notes due insurance companies: 6.12% due November 15, 2004 in
the amount of $15,000; 6.61% due November 15, 2006 in the amount of
$10,000; and 7.30% due November 15, 2008 in the amount of $30,000. 55,000 55,000
Revolving 364-day credit agreement for $28,000 with a bank through October
12, 2004. Interest, which is tied to one of various rates, was 1.56% at
May 31, 2004. 2,955 11,200
Revolving multi-currency credit agreement for $15,000 with a bank through
December 31, 2005. Interest is tied to one of various rates. 1,930
Other unsecured notes payable at various rates of interest due in
installments through 2011. 1,272 2,221
-------- --------
719,920 726,128
Less current portion 991 1,282
-------- --------
TOTAL LONG-TERM DEBT, LESS CURRENT MATURITIES $718,929 $724,846
======== ========
|
RPM International Inc. and Subsidiaries
37
The aggregate maturities of long-term debt for the five fiscal years
subsequent to May 31, 2004 are as follows: 2005 - $1.0 million; 2006 - $228.7
million; 2007 - $10.1 million; 2008 - $250.1 million (including $150.0 million
of 2.75% Senior Convertible Notes based on the date of the noteholders' first
put option); 2009 - $30.0 million. Additionally, at May 31, 2004, we had unused
lines of credit totaling $605.6 million.
In June 2002, we established an accounts receivable securitization program
with several banks for certain of our subsidiaries, providing for a wholly owned
special purpose entity ("SPE") to receive investments of up to $125.0 million.
The securitized accounts receivable are owned in their entirety by RPM Funding
Corporation, a wholly owned consolidated subsidiary of RPM International Inc.,
and are not available to satisfy claims of our creditors until the participating
banks' obligations have been paid in full. This securitization is accomplished
by having certain subsidiaries sell various of their accounts receivable to the
SPE, and by having the SPE then transfer those receivables to a conduit
administered by the banks. This transaction did not constitute a form of
off-balance sheet financing, and is fully reflected in our financial statements.
This transaction increases our liquidity and reduces our financing costs by
replacing up to $125.0 million of existing borrowings at lower interest rates.
The amounts available under the program are subject to changes in the credit
ratings of our customers, customer concentration levels or certain
characteristics of the underlying accounts receivable. As of May 31, 2004, we
had no outstanding balance under this arrangement.
In May 2003, we issued $297.0 million face value at maturity unsecured
2.75% Senior Convertible Notes due May 13, 2033. The 2.75% Notes are convertible
into 8,034,355 shares of RPM International Inc. common stock at a price of
$18.68 per share, subject to adjustment, during any fiscal quarter for which the
closing price of the common stock is greater than $22.41 per share for a defined
duration of time. The Notes are also convertible during any period in which the
credit rating of the Notes is below a specified level or if specified corporate
transactions have occurred. The 2.75% Notes are redeemable by the holder for the
issuance price plus accrued original issue discount in May 2008, 2013, 2018,
2023, 2028 and 2033. Interest on the 2.75% Notes is payable at a rate of 2.75%
beginning November 13, 2003 until May 13, 2008. After that date, cash interest
will not be paid prior to maturity, subject to certain contingencies.
NOTE C - INCOME TAXES
Consolidated income before taxes consists of the following:
Year Ended May 31 2004 2003 2002
-------------------------------------------------------------------------------------------
(In thousands)
United States $ 182,032 $ 19,025 $ 128,883
Foreign 35,584 28,828 25,241
-------------------------------------------------------------------------------------------
CONSOLIDATED INCOME BEFORE TAXES $ 217,616 $ 47,853 $ 154,124
===========================================================================================
Provision for income taxes consists of the following:
Current
U.S. federal $ 30,579 $ 36,841 $ 42,230
State and local 7,138 8,747 5,441
Foreign 14,260 13,671 8,829
-------------------------------------------------------------------------------------------
$ 51,977 $ 59,259 $ 56,500
-------------------------------------------------------------------------------------------
Deferred
U.S. federal $ 21,077 $ (39,616) $ (4,699)
State and local 3,011 (5,659) (671)
Foreign (335) (1,458) 1,440
-------------------------------------------------------------------------------------------
$ 23,753 $ (46,733) $ (3,930)
-------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES $ 75,730 $ 12,526 $ 52,570
===========================================================================================
|
RPM International Inc. and Subsidiaries
38
A reconciliation between the actual income tax expense provided and the
income tax expense computed by applying the statutory federal income tax rate of
35% to income before tax is as follows:
Year Ended May 31 2004 2003 2002
-----------------------------------------------------------------------------------------------------
(In thousands)
Income taxes at U.S. statutory rate $ 76,166 $ 16,749 $ 53,943
Difference in foreign taxes versus the U.S. statutory rate (2,930) (2,986) (3,155)
State and local income taxes net of federal income tax benefit 6,597 2,007 3,101
Tax benefits from foreign sales corporation and extraterritorial
income exclusion (2,870) (1,250) (1,362)
Other (1,233) (1,994) 43
-----------------------------------------------------------------------------------------------------
ACTUAL TAX EXPENSE $ 75,730 $ 12,526 $ 52,570
=====================================================================================================
ACTUAL TAX RATE 34.8% 26.2% 34.1%
=====================================================================================================
|
Deferred income taxes result from temporary differences in recognition of
revenue and expenses for book and tax purposes. Temporary differences and
carryforwards that give rise to deferred tax assets and liabilities as of May
31, 2004 and 2003 are as follows:
(In thousands) 2004 2003
------------------------------------------------------------------------
Deferred income tax assets related to:
Inventories $ 1,692 $ 1,679
Allowance for losses 14,538 18,146
Accrued compensation and benefits 8,402 9,864
Asbestos-related liabilities 33,978 54,219
Accrued other expenses 7,753 4,596
Other long-term liabilities 18,550 16,153
Tax loss/credit carryforwards 13,527 11,749
Other 1,802 1,047
------------------------------------------------------------------------
TOTAL $ 100,242 $ 117,453
------------------------------------------------------------------------
Deferred income tax (liabilities) related to:
Depreciation $ (40,660) $ (36,806)
Amortization of intangibles (86,806) (84,118)
------------------------------------------------------------------------
TOTAL $(127,466) $(120,924)
------------------------------------------------------------------------
DEFERRED INCOME TAX ASSETS (LIABILITIES), NET $ (27,224) $ (3,471)
========================================================================
|
Deferred tax detail above is included in the consolidated balance sheet as
follows:
(In thousands) 2004 2003
---------------------------------------------------------------------
Deferred income taxes - current asset $ 51,164 $ 51,285
Deferred income taxes - noncurrent (liability) (78,388) (54,756)
---------------------------------------------------------------------
TOTAL $(27,224) $ (3,471)
=====================================================================
|
NOTE D - COMMON STOCK
There are 300,000,000 shares of common stock authorized at May 31, 2004
and 2003 with a par value of $0.01 per share. At May 31, 2004 and 2003, there
were 116,122,000 and 115,496,000 shares outstanding, respectively, each of which
is entitled to one vote.
Basic earnings per share are computed by dividing income available to
common stockholders by the weighted average number of shares of common stock
outstanding during each year. To compute diluted earnings per share, the
weighted average number of shares of common stock outstanding during each year
was increased by common stock options with exercisable prices lower than the
average market prices of common stock during each year and reduced by the number
of shares assumed to have been purchased with proceeds from the exercised
options. Our convertible notes, while potentially dilutive, are not currently
considered common stock equivalents.
Effective October 10, 2003, the RPM International Inc. 2003 Restricted
Stock Plan for Directors (the "2003 Plan") was approved by our stockholders. The
Plan was established primarily for the purpose of recruiting and retaining
directors, and to align the interests of directors with the interests of our
stockholders. Only directors who are not employees of RPM International Inc. are
eligible to participate. Under the 2003 Plan, up to 500,000 shares of RPM
International Inc. common stock may be awarded. For the year ended May 31, 2004,
21,600 shares were granted, with 478,400 shares available for future grant.
Unamortized deferred compensation expense relating to restricted stock grants
for directors of $0.2 million at May 31, 2004 is being amortized over a
three-year vesting period.
RPM International Inc. and Subsidiaries
39
We have shares outstanding under two restricted stock plans for employees.
Under the terms of the plans, up to 2,563,000 shares may be awarded to certain
employees, generally subject to forfeiture until the completion of five or 10
years of service. For the year ended May 31, 2004, 49,500 shares were awarded
under these plans. At May 31, 2004, 42,000 vested shares remained in these plans
(26,000 at May 31, 2003). Unamortized deferred compensation expense of $4.7
million at May 31, 2004, relating to restricted stock grants for employees, is
being amortized over the 10-year vesting period.
Total deferred compensation expense for the years ended May 31, 2004, 2003
and 2002 was $1.3 million, $2.1 million and $1.2 million, respectively.
Our Shareholder Rights Plan provides existing stockholders the right to
purchase stock of RPM International Inc. at a discount in certain circumstances,
as defined by the Plan. The rights are not exercisable at May 31, 2004 and
expire in May 2009.
We have options outstanding under two stock option plans, the 1989 Stock
Option Plan and the 1996 Key Employees Stock Option Plan, the latter of which
provides for the granting of options for up to 9,000,000 shares. Stock options
are granted to employees and directors at an exercise price equal to the fair
market value of RPM International Inc. stock at the date of grant. These options
are generally exercisable cumulatively, in equal annual installments commencing
one year from the grant date, and have expiration dates ranging from October
2004 to October 2013. At May 31, 2004, 648,000 shares (1,902,000 at May 31,
2003) were available for future grant.
The following table summarizes option activity under the Plans during the
last three fiscal years:
2004 2003 2002
-------------------- -------------------- --------------------
Weighted Number Weighted Number Weighted Number
Average of Shares Average of Shares Average of Shares
Exercise Under Exercise Under Exercise Under
Shares Under Option Price Option Price Option Price Option
-------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
Outstanding, beginning of year
(Prices ranging from $8.69 to $16.70) $12.86 6,937 $12.57 6,223 $12.39 7,017
Options granted 14.10 1,254 14.08 1,191 11.83 496
Options canceled/expired
(Prices ranging from $8.81 to $16.35) 12.98 (206) 13.98 (153) 11.17 (390)
Options exercised
(Prices ranging from $8.69 to $16.35) 10.73 (582) 11.33 (324) 11.54 (900)
-----------------------------------------------------------------------------------------------------------
OUTSTANDING, END OF YEAR
(PRICES RANGING FROM $8.69 TO $16.70) $13.23 7,403 $12.86 6,937 $12.58 6,223
===========================================================================================================
EXERCISABLE, END OF YEAR
(PRICES RANGING FROM $8.69 TO $16.70) $13.15 4,775 $13.19 4,477 $13.50 3,987
===========================================================================================================
|
Options Outstanding Options Exercisable
at May 31, 2004 at May 31, 2004
------------------------------------------------------------------------------
(Shares in thousands) Wtd. Avg. Weighted Weighted
Remaining Average Average
Contractual Exercise Exercise
Exercise Price Range Shares Life (Years) Price Shares Price
------------------------------------------------------------------------------
$ 8.00 to $ 9.99 1,455 6.3 $ 9.35 1,186 $ 9.38
$10.00 to $11.99 240 7.2 $10.28 114 $10.31
$12.00 to $14.99 3,781 7.0 $13.79 1,553 $13.40
$15.00 to $16.75 1,927 3.7 $15.44 1,922 $15.43
----- -----
7,403 6.0 $13.23 4,775 $13.15
===== =====
|
We apply APB Opinion No. 25 and related interpretations in accounting for
our employee stock options. Under APB Opinion No. 25, because the exercise price
of our employee stock options is not less than the market price of the shares at
the date of grant, no compensation expense is recognized in the financial
statements. See Note A, "Summary of Significant Accounting Policies," for the
pro forma disclosures of net income and earnings per share required under SFAS
No. 123.
RPM International Inc. and Subsidiaries
40
NOTE E - LEASES
We lease certain property, plant and equipment under long-term lease
agreements, some of which provide for increased rental payments based upon
increases in the cost-of-living index. The following table illustrates our
future minimum lease commitments under all non-cancelable lease agreements, for
each of the next five years and in the aggregate, as of May 31, 2004:
May 31
------------------------------------------
(In thousands)
2005 $ 20,002
2006 14,790
2007 11,507
2008 6,085
2009 4,684
Thereafter 14,311
------------------------------------------
TOTAL MINIMUM LEASE COMMITMENTS $ 71,379
==========================================
|
Total rental expense for all operating leases amounted to $27.1 million in
2004, $24.3 million in 2003 and $23.1 million in 2002. Capitalized leases were
immaterial for the three years ended May 31, 2004.
NOTE F - PENSION PLANS
We sponsor several pension plans for our employees, including our
principal plan (the "Retirement Plan"), which is a non-contributory defined
benefit pension plan covering substantially all domestic non-union employees.
Pension benefits are provided for certain domestic union employees through
separate plans. Employees of our foreign subsidiaries receive pension coverage,
to the extent deemed appropriate, through plans that are governed by local
statutory requirements. The measurement date used to determine pension benefit
measurements for both the U.S. and non-U.S. plans was February 29, 2004.
The Retirement Plan provides benefits that are based upon years of service
and average compensation, with accrued benefits vesting after five years.
Benefits for union employees are generally based upon years of service, or years
of service and average compensation. Our funding policy is to contribute an
amount on an annual basis that can be deducted for federal income tax purposes,
using a different actuarial cost method and different assumptions from those
used for financial reporting. For the fiscal year ending May 31, 2005, we expect
to contribute approximately $10.0 million to the Retirement Plan in the U.S., in
addition to the approximate $1.7 million that we expect to contribute to our
foreign plans.
Net periodic pension cost (income) consisted of the following for the
three years ended May 31, 2004:
U.S. Plans Non-U.S. Plans
--------------------------------------- -------------------------------- --------------------------------
(In thousands) 2004 2003 2002 2004 2003 2002
--------------------------------------- -------------------------------- --------------------------------
Service cost $ 9,879 $ 8,904 $ 8,310 $ 1,695 $ 1,168 $ 1,073
Interest cost 7,228 6,634 6,706 3,612 2,344 2,305
Expected return on plan assets (7,385) (7,769) (8,589) (3,188) (2,748) (3,118)
Amortization of:
Prior service cost 294 197 188
Net gain on adoption of SFAS No. 87 (23) (85) (85)
Net actuarial (gains) losses recognized 2,542 952 (11) 1,237 324 87
Curtailment/settlement (gains) losses 11
--------------------------------------- -------------------------------- --------------------------------
NET PENSION COST $ 12,535 $ 8,844 $ 6,519 $ 3,356 $ 1,088 $ 347
======================================= ================================ ================================
|
RPM International Inc. and Subsidiaries
41
The changes in benefit obligations and plan assets, as well as the funded
status of our pension plans at May 31, 2004 and 2003, were as follows:
U.S. Plans Non-U.S. Plans
---------------------------------------------- ---------------------- ----------------------
(In thousands) 2004 2003 2004 2003
---------------------------------------------- ---------------------- ----------------------
Benefit obligation at beginning of year $ 112,271 $ 96,217 $ 59,588 $ 35,244
Service cost 9,879 8,904 1,695 1,168
Interest cost 7,228 6,634 3,612 2,344
Benefits paid (10,696) (6,738) (2,304) (1,403)
Participant contributions 585 415
Acquisitions and new plans 755 12,062
Actuarial (gains) losses 9,984 6,001 3,477 5,471
Currency exchange rate changes 10,125 4,287
Curtailment/settlement (gains) losses (194)
Plan amendments 1,447
---------------------------------------------- ---------------------- ----------------------
BENEFIT OBLIGATION AT END OF YEAR $ 128,666 $ 112,271 $ 77,533 $ 59,588
============================================== ====================== ======================
Fair value of plan assets at beginning of year $ 88,669 $ 85,345 $ 41,674 $ 33,477
Actual return on plan assets 28,800 (11,687) 6,328 (3,579)
Employer contributions 3,147 21,749 2,895 419
Acquisitions and new plans 9,604
Participant contributions 585 415
Benefits paid (10,696) (6,738) (2,304) (1,485)
Currency exchange rate changes 7,199 2,823
---------------------------------------------- ---------------------- ----------------------
FAIR VALUE OF PLAN ASSETS AT END OF YEAR $ 109,920 $ 88,669 $ 56,377 $ 41,674
============================================== ====================== ======================
(Deficit) of plan assets versus benefit
obligations at end of year $ (18,746) $ (23,602) $ (21,156) $ (17,914)
Contributions after measurement date 2,533 44 472 116
Unrecognized actuarial (gains) losses 33,907 47,881 24,298 24,523
Unrecognized prior service cost 2,840 3,135
Unrecognized net transitional asset (5) (28)
---------------------------------------------- ---------------------- ----------------------
NET AMOUNT RECOGNIZED $ 20,529 $ 27,430 $ 3,614 $ 6,725
============================================== ====================== ======================
Amounts recognized in the consolidated
balance sheets consist of:
Prepaid benefit cost $ 21,107 $ 27,957 $ 7,350 $ 6,691
Accrued benefit liability (663) (1,036) (11,451) (8,441)
Accumulated other comprehensive loss 85 473 7,715 8,475
Intangible asset 36
---------------------------------------------- ---------------------- ----------------------
NET AMOUNT RECOGNIZED $ 20,529 $ 27,430 $ 3,614 $ 6,725
---------------------------------------------- ---------------------- ----------------------
ACCUMULATED BENEFIT OBLIGATION $ 100,323 $ 86,164 $ 67,238 $ 54,071
============================================== ====================== ======================
|
RPM International Inc. and Subsidiaries
42
The following tables summarize the relationship between our plans' benefit
obligations and assets.
U.S. Plans
---------------------------------------------
2004 2003
------------------------------------------------ --------------------- ---------------------
Benefit Plan Benefit Plan
(In thousands) Obligation Assets Obligation Assets
------------------------------------------------ ---------------------------------------------
Plans with projected benefit obligation in
excess of plan assets $124,704 $104,891 $109,609 $ 85,008
Plans with accumulated benefit obligation in
excess of plan assets $ 667 $ 1,670 $ 612
Plans with assets in excess of projected benefit
obligations $ 3,962 $ 5,029 $ 2,662 $ 3,661
Plans with assets in excess of accumulated
benefit obligations $ 99,665 $109,920 $ 84,494 $ 88,057
------------------------------------------------ --------------------- ---------------------
|
Non-U.S. Plans
-------------------------------------------
2004 2003
------------------------------------------------ -------------------- --------------------
Benefit Plan Benefit Plan
(In thousands) Obligation Assets Obligation Assets
------------------------------------------------ -------------------------------------------
Plans with projected benefit obligation in
excess of plan assets $77,533 $56,377 $47,525 $32,070
Plans with accumulated benefit obligation in
excess of plan assets $43,705 $32,403 $22,837 $14,279
Plans with assets in excess of accumulated
benefit obligations $23,533 $23,973 $17,771 $17,790
------------------------------------------------ -------------------- --------------------
|
To develop the expected long-term rate of return on pension plan assets
assumption, we consider the current and expected target asset allocations of the
pension portfolio, as well as historical returns and future expectations for
returns on various categories of plan assets. The following weighted average
assumptions were used to determine our year-end benefit obligations and net
periodic pension cost under the plans:
U.S. Plans Non-U.S. Plans
------------------------------ ----------------------------- -----------------------------
Year-End Benefit Obligations 2004 2003 2002 2004 2003 2002
------------------------------ ----------------------------- -----------------------------
Discount rate 6.00% 6.70% 7.25% 5.65% 6.43% 6.63%
Rate of compensation increase 3.50% 4.00% 4.00% 3.48% 3.95% 4.00%
------------------------------ ----------------------------- ----------------------------
|
U.S. Plans Non-U.S. Plans
------------------------------ ----------------------------- -----------------------------
Net Periodic Pension Cost 2004 2003 2002 2004 2003 2002
------------------------------ ----------------------------- -----------------------------
Discount rate 6.70% 7.25% 7.50% 6.43% 6.63% 6.63%
Expected return on plan assets 8.75% 9.00% 9.00% 7.25% 8.25% 8.13%
Rate of compensation increase 4.00% 4.00% 4.00% 3.95% 4.00% 4.00%
------------------------------ ----------------------------- ----------------------------
|
RPM International Inc. and Subsidiaries
43
The following tables illustrate the weighted average actual and target
allocation of plan assets:
U.S. Plans
-------------------------------
Actual Asset
Target Allocation
Allocation as ------------
of February 2004 2004 2003
----------------------- ---------------- ------------
Equity securities 70% 70% 51%
Fixed income securities 25% 21% 25%
Cash 5% 5% 24%
Other 4%
----------------------- --------- -----------
Total assets 100% 100% 100%
======================= ========= ===========
|
Non-U.S. Plans
-------------------------------
Actual Asset
Target Allocation
Allocation as ------------
of February 2004 2004 2003
----------------------- ---------------- ------------
Equity securities 49% 59% 58%
Fixed income securities 47% 38% 40%
Cash 1% 1% 2%
Property and other 3% 2%
----------------------- --------- -----------
Total assets 100% 100% 100%
======================= ========= ===========
|
The primary objective for the investments of the Retirement Plan is to
provide for long-term growth of capital without undue exposure to risk. This is
accomplished by utilizing a strategy of equities, fixed income securities and
cash equivalents in a mix that is conducive to participation in a rising market,
while allowing for adequate protection in a falling market. The Plan Investment
Committee oversees the investment allocation process, which includes the
selection and evaluation of investment managers, the determination of investment
objectives and risk guidelines, and the monitoring of actual investment
performance. In order to properly manage investment risk, plan policy prohibits
short selling, securities lending, financial futures, options and other
specialized investments, except for certain alternative investments specifically
approved by the Investment Committee. The Investment Committee reviews, on a
quarterly basis, reports of actual plan investment performance provided by
independent third parties, in addition to its review of the plan investment
policy on an annual basis.
Outside the U.S., the investment objectives are similar, subject to local
regulations. In general, investments are managed by private investment managers,
reporting to our Investment Committee on a regular basis.
In addition to the defined benefit pension plans discussed above, we also
sponsor employee savings plans under Section 401(k) of the Internal Revenue
Code, which cover many employees in the United States. The majority of the plans
provide for matching contributions based upon qualified employee contributions.
Matching contributions are invested in the same manner in which the participants
invest their own contributions. Matching contributions charged to income were
$7.8 million, $6.1 million and $5.2 million for the years ended May 31, 2004,
2003 and 2002, respectively.
NOTE G - POSTRETIREMENT HEALTH CARE BENEFITS
We sponsor several unfunded health care benefit plans for certain of our
retired employees. Eligibility for these benefits is based upon minimum age and
service requirements. The following table illustrates the effect on operations
of these plans for the three years ended May 31, 2004:
(In thousands) 2004 2003 2002
---------------------------------------------------------------------------
Service cost -
Benefits earned during this period $ 216 $ 177 $ 131
Interest cost on the accumulated obligation 1,030 974 945
Amortization of unrecognized (gains) (47) (51)
---------------------------------------------------------------------------
NET PERIODIC POSTRETIREMENT EXPENSE $ 1,246 $ 1,104 $ 1,025
===========================================================================
|
RPM International Inc. and Subsidiaries
44
The changes in the benefit obligations of the plans at May 31, 2004 and
2003 were as follows:
(In thousands) 2004 2003
------------------------------------------------------------------
Accumulated postretirement benefit
obligation at beginning of year $ 14,854 $ 13,482
Service cost 216 177
Interest cost 1,030 974
Benefit payments (1,037) (933)
Actuarial (gains) losses 2,666 839
Currency exchange rate changes 551 315
------------------------------------------------------------------
Accumulated postretirement benefit
obligation at end of year 18,280 14,854
Unrecognized actuarial gains (losses) (2,612) 86
------------------------------------------------------------------
ACCRUED POSTRETIREMENT HEALTH CARE BENEFITS $ 15,668 $ 14,940
==================================================================
|
A measurement date of May 31, 2004 was used to determine postretirement
benefit measurements outlined above.
A 6.0% general discount rate was used in determining the accumulated
postretirement benefit obligation as of May 31, 2004 (6.7% for 2003). A general
discount rate of 6.7% was used to determine the net periodic postretirement
expense for the year ended May 31, 2004 (7.25% for 2003). Also used in
determining the year-end accumulated postretirement benefit obligation was a
10.0% increase in the cost of covered health care benefits for fiscal 2004 (9.0%
for 2003). This trend rate in all cases is assumed to decrease to 5.0% after
several years and remain at that level thereafter, except for various union
plans, which will cap at alternate benefit levels. A health care cost trend rate
of 9.0% was used in measuring the net periodic postretirement expense for the
year ended May 31, 2004 (8.0% for 2003). Increasing the health care costs trend
rate by 1.0% would have increased the accumulated postretirement benefit
obligation as of May 31, 2004 by $2.4 million and the net postretirement expense
by $0.2 million. Decreasing the health care costs trend rate by 1.0% would have
decreased the accumulated postretirement benefit obligation as of May 31, 2004
by $2.0 million and the net postretirement expense by $0.2 million.
The Medicare Prescription Drug, Improvement and Modernization Act (the
"Act") was enacted on December 8, 2003. The Act introduces a prescription drug
benefit under Medicare Part D, in addition to a federal subsidy to sponsors of
postretirement benefit plans that provide a prescription drug benefit that is at
least actuarially equivalent to Medicare Part D. In accordance with FASB Staff
Position No. FAS 106-1, "Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003," we have
elected to defer recognition of the Act. Therefore, the effects of this Act have
not been reflected in the accumulated postretirement benefit obligation or net
periodic postretirement benefit cost.
Upon clarification of accounting for the Act, we may be required to change
previously reported information. Also upon clarification, we may choose to amend
our postretirement medical plan to reflect the benefits of the Act.
NOTE H - CONTINGENCIES AND LOSS RESERVES
Accrued loss reserves and asbestos-related liabilities consist of the
following:
May 31 2004 2003
---------------------------------------------------------------
(In thousands)
Accrued product liability reserves $ 47,402 $ 53,207
Accrued warranty reserves 5,670 6,328
Accrued environmental reserves 3,627 4,695
---------------------------------------------------------------
Accrued loss reserves - current 56,699 64,230
Asbestos-related liabilities - current 47,500 41,583
---------------------------------------------------------------
TOTAL RESERVES - CURRENT $104,199 $105,813
===============================================================
Accrued warranty reserves - noncurrent $ 5,579 $ 7,781
Asbestos-related liabilities - noncurrent 43,107 103,000
---------------------------------------------------------------
TOTAL RESERVES - NONCURRENT $ 48,686 $110,781
===============================================================
|
We provide, through our wholly owned insurance subsidiaries, certain
insurance coverage, primarily product liability, to our other subsidiaries.
Excess coverage is provided by outside carriers. The reserves reflected above
provide for these potential losses as well as other uninsured claims. In fiscal
2003, product liability reserves increased to $53.2 million, or by approximately
$16.5 million, as a result of a preliminary determination of liability under
RPM International Inc. and Subsidiaries
45
a proposed class action lawsuit settlement covering Dryvit's exterior insulated
finish systems product line. The liability was substantially covered by excess
coverage from outside insurance carriers, and offsetting receivables were
recorded at that time. Portions of those receivables have already been funded in
cash at the end of fiscal 2004, with the remainder reflected as short- and
long-term receivables. The increase in the accrual in 2003 relating to the class
action lawsuit had no impact on our statement of operations as a result of the
outside insurance funding. This accrual increase is expected to be a one-time
event, caused by the class action lawsuit. Accrual movement has returned to
historic patterns in fiscal 2004.
Certain of our wholly owned subsidiaries, principally Bondex
International, Inc. (Bondex), along with many other U.S. companies, are and have
been involved in a large number of asbestos-related suits filed primarily in
state courts during the past two decades. These suits principally allege
personal injury resulting from exposure to asbestos-containing products. The
alleged claims relate primarily to products that Bondex sold through 1977. In
many cases, plaintiffs are unable to demonstrate that they have suffered any
compensable loss as a result of such exposure, or that injuries incurred
resulted from exposure to Bondex products.
The rate at which plaintiffs filed asbestos-related suits against Bondex
increased in the fourth quarter of 2002 and the first two quarters of 2003,
influenced by the bankruptcy filings of numerous other defendants in
asbestos-related litigation. Based on the significant increase in asbestos
claims activity, which in many cases disproportionately increased Bondex's
exposure in joint and several liability law states, our third-party insurance
was depleted within the first fiscal quarter of 2004, as previously reported.
Our third-party insurers historically had been responsible, under various
cost-sharing arrangements, for the payment of approximately 90% of the indemnity
and defense costs associated with our asbestos litigation. Prior to this sudden
precipitous increase in loss rates, the combination of book loss reserves and
insurance coverage was expected to adequately cover asbestos liabilities for the
foreseeable future. We have reserved our rights with respect to various of our
third-party insurers' claims of exhaustion, and in late calendar 2002 commenced
reviewing our known insurance policies to determine whether other insurance
limits may be available to cover our asbestos liabilities. As a result of this
examination and as previously disclosed, certain of our subsidiaries filed a
complaint for declaratory judgment, breach of contract and bad faith against
various third-party insurers, challenging their assertion that their policies
covering asbestos-related claims have been exhausted. Since the July 3, 2003
filing in Ohio, this action was combined with a related case and, pursuant to a
December 9, 2003 case management order, the parties are to complete discovery by
April 30, 2005. The court order provides other deadlines for various stages of
the case, including dispositive motions, and the court has established a trial
date of March 6, 2006. It is possible that these dates may be modified as the
case progresses. We are unable at the present time to predict the timing or
ultimate outcome of this litigation. Consequently, we are unable to predict
whether, or to what extent, any additional insurance may be available to cover a
portion of our asbestos liabilities. We have not included any potential benefits
from this litigation either in our financial statements or in calculating the
$140.0 million reserve, which was established in the fourth quarter of fiscal
2003. Our wholly owned captive insurance companies have not provided any
insurance or re-insurance coverage of any asbestos-related claims.
During the last seven months of 2003, new state liability laws were
enacted in three states (Ohio, Mississippi and Texas) where more than 80% of the
claims against Bondex were pending. Effective dates for the last two of the law
changes were April 8, 2003 and July 1, 2003. The changes generally provided for
liability to be determined on a "proportional cause" basis, thereby limiting
Bondex's responsibility to only its share of the alleged asbestos exposure. At
the end of 2003, the ultimate impact of these initial state law changes was
difficult to predict given the limited time following enactment. The full
influence of these initial state law changes on legal settlement values was not
expected to be significantly visible until the latter part of fiscal 2004.
Claims in the three subject states at year-end 2004 represent approximately 70%
of aggregate claims. During the third and fourth quarters of 2004, two of the
three previously mentioned states that adopted "proportional cause" liability in
2003 passed additional legislation impacting asbestos liability lawsuits. Among
the recent changes are enhanced medical criteria and product identification to
be presented by plaintiffs in litigation. While there have been some changes in
the type of claims filed in
RPM International Inc. and Subsidiaries
46
certain of these states, the ultimate influence these law changes may have on
future claims activity and settlement values remains uncertain.
At the end of 2002 and through the third quarter of 2003, Bondex had
concluded it was not possible to estimate its cost of disposing of
asbestos-related claims that might be filed against Bondex in the future due to
a number of reasons, including its lack of sufficient comparable loss history
from which to assess either the number or value of future asbestos-related
claims. During the fourth quarter of 2003, Bondex retained a nationally
recognized consulting firm with broad experience in estimating resolution costs
associated with mass tort litigation, including asbestos, to assist it in
analyzing its loss history data, to evaluate whether it would be possible to
estimate the cost of disposing of pending claims in light of both past and
recent loss history, and to assist in determining whether future
asbestos-related claims reasonably expected to be filed against Bondex were
measurable, given recent changes in various state laws.
Bondex provided the consultants with all relevant data regarding
asbestos-related claims filed against Bondex through May 31, 2003. Management,
with the consultants' input, concluded that it was not possible to currently
estimate the full range of the cost of resolving future asbestos-related claims
against Bondex because of various uncertainties associated with those potential
future claims. These uncertainties, which hindered the consultant's and Bondex's
ability to project future claim volumes and resolution costs, included the
following:
- The bankruptcies of other companies facing large asbestos liability were a
likely contributing cause of a sharp increase in filings against many
defendants, including Bondex.
- The recent state law changes in states wherein the vast majority of our
claims are pending and have been historically filed are expected to
materially affect future losses and future claim filing activity and
resolution costs.
- The currently proposed federal legislative initiative aimed at
establishment of a federal asbestos trust fund has influenced and changed
the demand behavior of plaintiffs from that of historic levels, creating
further uncertainty in the estimation process.
At May 31, 2003, we could not estimate the liability that would result
from all future claims. We established a reserve for those pending cases that
had progressed to a stage where the cost to dispose of these cases could
reasonably be estimated. The estimation of even pending cases was and is always
difficult due to the dynamic nature of asbestos litigation. The estimated range
of potential loss covering measurable known asbestos claims and a provision for
future claims that were estimable at May 31, 2003 was $140.0 million to $145.0
million. Accordingly, we established a reserve equal to the lower end of this
range of potential loss by taking an asbestos charge to 2003 operations of
$140.0 million. We believed then and continue to believe that the asbestos
reserve would be sufficient to cover asbestos-related cash flow requirements
over the estimated three-year life of the reserve. The $140.0 million charge
also includes $15.0 million in total projected defense costs over the estimated
three-year life of the reserve. Additionally, Bondex's share of costs (net of
then-available third-party insurance) for asbestos-related product liability was
$6.7 million and $2.8 million for the years ended May 31, 2003 and 2002,
respectively.
We recognize that future facts, events and legislation, both state and/or
federal, may alter our estimates of both pending and future claims. We cannot
estimate possible liabilities in excess of those accrued because we cannot
predict the number of additional claims that may be filed in the future, the
grounds for such claims, the damages that may be demanded, the probable outcome,
or the impact of the last 16 months of state law changes and pending federal
legislation on prospective asbestos claims. Subject to the foregoing variables,
including the timing and impact of such variables, our asbestos reserve should
be sufficient to cover asbestos-related cash flow requirements through fiscal
2006. It is, however, reasonably possible that our actual costs for claims could
differ from current estimates, but, based upon information presently available,
such future costs are not expected to have a material effect on our competitive
or financial position or our ongoing operations. However, our existing reserve
will not likely be adequate to cover the costs of future claims beyond the
three-year period contemplated by the reserve. Accordingly, it is probable that
an additional charge will be required in some future period as those
unforeseeable claims (as of the time the reserve was established) become
measurable. Any such future charge, when taken, could therefore have a material
impact on our results in such period.
RPM International Inc. and Subsidiaries
47
In conjunction with outside advisors, we will continue to study our
asbestos-related exposure and regularly evaluate the adequacy of this reserve
and the related cash flow implications in light of actual claims experience, the
impact of state law changes and the evolving nature of federal legislative
efforts to address asbestos litigation. We will continue to explore all feasible
alternatives available to resolve our asbestos-related exposure in a manner
consistent with the best interests of our Stockholders.
The following table illustrates the movement of current and long-term
asbestos-related liabilities for the three years ended May 31, 2004:
Additions
Charged to
Balance at Selling, General Deductions Balance at
Beginning and (Primarily End of
(In thousands) of Period Administrative Claims Paid) Period
-----------------------------------------------------------------------------------
Year ended May 31, 2004 $144,583 $ 53,976 $ 90,607
Year ended May 31, 2003 3,377 $146,650 5,444 144,583
Year ended May 31, 2002 3,117 2,754 2,494 3,377
---------------------------------------------------------------------------------
|
In addition, like others in similar businesses, we are involved in several
proceedings relating to environmental matters. It is our policy to accrue
remediation costs when it is probable that such efforts will be required and the
related costs can be reasonably estimated. These liabilities are undiscounted
and do not take into consideration any possible recoveries of future insurance
proceeds or claims against third parties. Provision for estimated warranty costs
is recorded at the time of sale and periodically adjusted to reflect actual
experience.
Due to the uncertainty inherent in the loss reserve estimation process, we
are unable to estimate an additional range of loss in excess of our accruals. It
is at least reasonably possible that actual costs will differ from estimates,
but, based upon information presently available, such future costs are not
expected to have a material adverse effect on our competitive or financial
position or our ongoing results of operations. However, such costs could be
material to results of operations in a future period.
NOTE I - SEGMENT INFORMATION
We operate a portfolio of businesses that manufacture and sell a variety
of specialty paints, protective coatings and roofing systems, sealants and
adhesives. We manage our portfolio by organizing our businesses into two
operating segments - industrial and consumer - based on the nature of business
activities, products and services; the structure of management; and the
structure of information as presented to our Board of Directors. Within each
segment, individual operating companies or groups of companies generally address
common markets, utilize similar technologies, and can share manufacturing or
distribution capabilities.
In addition to two operating segments, there are certain business
activities, referred to as corporate/other, that do not constitute an operating
segment, including corporate headquarters and related administrative expenses,
results of our captive insurance companies, gains or losses on the sales of
certain assets, and other expenses not directly associated with either operating
segment. Related assets consist primarily of investments, prepaid expenses,
deferred pension assets, and headquarters property and equipment. These
corporate and other assets and expenses reconcile operating segment data to
total consolidated net sales, income before income taxes, identifiable assets,
capital expenditures, and depreciation and amortization.
The nine largest consumer segment customers represented approximately 25%,
24% and 24% of our consolidated net sales and approximately 55%, 53% and 50% of
consumer segment net sales for 2004, 2003 and 2002, respectively. Sales to The
Home Depot represented 12%, 12% and 11% of our consolidated net sales and 26%,
25% and 24% of consumer segment net sales for 2004, 2003 and 2002, respectively.
We reflect income from our joint ventures on the equity method, and
receive royalties from our licensees. Total income from royalties and joint
ventures amounted to approximately 2% or less of income before income taxes for
each of the periods presented, and is therefore included
RPM International Inc. and Subsidiaries
48
as an offset to selling, general and administrative expenses. Export sales
amounted to less than 10% of net sales for each of the three years presented.
The following table reflects the results of our operating segments
consistent with our management philosophy, and represents the information we
utilize, in conjunction with various strategic, operational and other financial
performance criteria, in evaluating the performance of our portfolio of
businesses.
Year Ended May 31 2004 2003 2002
---------------------------------------------------------------------
(In thousands)
SEGMENT INFORMATION
Net Sales
Industrial $ 1,272,781 $ 1,117,877 $ 1,053,632
Consumer 1,068,791 965,612 932,494
Corporate/Other
---------------------------------------------------------------------
TOTAL $ 2,341,572 $ 2,083,489 $ 1,986,126
=====================================================================
Income Before
Income Taxes
Industrial $ 140,706 $ 122,568 $ 106,703
Consumer 142,852 131,100 117,717
Corporate/Other (65,942) (205,815) (70,296)
---------------------------------------------------------------------
TOTAL $ 217,616 $ 47,853 $ 154,124
=====================================================================
Identifiable Assets
Industrial $ 1,111,978 $ 1,067,916 $ 962,742
Consumer 1,087,239 1,038,350 1,000,928
Corporate/Other 153,902 140,945 115,174
---------------------------------------------------------------------
TOTAL $ 2,353,119 $ 2,247,211 $ 2,078,844
=====================================================================
Capital Expenditures
Industrial $ 26,043 $ 18,741 $ 17,743
Consumer 23,303 22,095 20,559
Corporate/Other 1,907 978 1,629
---------------------------------------------------------------------
TOTAL $ 51,253 $ 41,814 $ 39,931
=====================================================================
Depreciation and
Amortization
Industrial $ 30,764 $ 27,537 $ 26,883
Consumer 29,503 29,216 28,605
Corporate/Other 3,010 1,921 1,371
---------------------------------------------------------------------
TOTAL $ 63,277 $ 58,674 $ 56,859
=====================================================================
GEOGRAPHIC INFORMATION
Net Sales (based on
shipping location)
United States $ 1,873,257 $ 1,683,435 $ 1,615,159
---------------------------------------------------------------------
Foreign
Canada 175,493 147,063 135,694
Europe 207,557 175,657 158,328
Other Foreign 85,265 77,334 76,945
---------------------------------------------------------------------
Total Foreign 468,315 400,054 370,967
---------------------------------------------------------------------
TOTAL $ 2,341,572 $ 2,083,489 $ 1,986,126
=====================================================================
Assets Employed
United States $ 1,887,414 $ 1,831,666 $ 1,706,128
---------------------------------------------------------------------
Foreign
Canada 154,815 151,771 147,568
Europe 242,063 197,654 160,426
Other Foreign 68,827 66,120 64,722
---------------------------------------------------------------------
Total Foreign 465,705 415,545 372,716
---------------------------------------------------------------------
TOTAL $ 2,353,119 $ 2,247,211 $ 2,078,844
=====================================================================
|
NOTE J - QUARTERLY INFORMATION (UNAUDITED)
The following is a summary of the quarterly results of operations for the
years ended May 31, 2004 and 2003:
For Quarter Ended
-------------------------------------------------------------------------------------------
(In thousands, except per share amounts) August 31 November 30 February 29 May 31
-------------------------------------------------------------------------------------------
2004
Net Sales $590,091 $589,834 $480,769 $680,878
Gross Profit $276,111 $265,868 $210,594 $312,627
Net Income $ 47,672 $ 35,223 $ 6,018 $ 52,973
BASIC EARNINGS PER SHARE $ 0.41 $ 0.30 $ 0.05 $ 0.46
DILUTED EARNINGS PER SHARE $ 0.41 $ 0.30 $ 0.05 $ 0.45
-------------------------------------------------------------------------------------------
DIVIDENDS PER SHARE $ 0.130 $ 0.140 $ 0.140 $ 0.140
===========================================================================================
|
For Quarter Ended
-------------------------------------------------------------------------------------------
(In thousands, except per share amounts) August 31 November 30 February 28 May 31
-------------------------------------------------------------------------------------------
2003
Net Sales $ 542,413 $ 517,968 $ 433,562 $ 589,546
Gross Profit $ 258,111 $ 232,771 $ 185,380 $ 273,020
Net Income (Loss) $ 44,173 $ 29,640 $ 4,883 $ (43,369)
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ 0.38 $ 0.26 $ 0.04 $ (0.38)
-------------------------------------------------------------------------------------------
DIVIDENDS PER SHARE $ 0.125 $ 0.130 $ 0.130 $ 0.130
===========================================================================================
|
Quarterly earnings per share may not total to the yearly earnings per
share due to the weighted average number of shares outstanding in each quarter.
RPM International Inc. and Subsidiaries
49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
RPM INTERNATIONAL INC. AND SUBSIDIARIES
MEDINA, OHIO
We have audited the accompanying consolidated balance sheets of RPM
International Inc. and Subsidiaries as of May 31, 2004 and 2003, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended May 31, 2004. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of RPM
International Inc. and Subsidiaries at May 31, 2004 and 2003, and the results of
their operations and their cash flows for each of the three years in the period
ended May 31, 2004, in conformity with U.S. generally accepted accounting
principles.
CIULLA, SMITH & DALE, LLP
Cleveland, Ohio
July 2, 2004
RPM International Inc. and Subsidiaries
50
Exhibit 21.1
The following is a list of subsidiaries of RPM International Inc.(1) as of
August 5, 2004.
Jurisdiction of
Name Incorporation
---- -------------
First Colonial Insurance Company, Inc. Vermont
First Continental Services Co. Vermont
RPM Asia Pte. Ltd. Singapore
Alumanation (M) Sdn. Bhd. Malaysia
Espan Corporation Pte. Ltd. Singapore
RPM China Pte. Ltd. Singapore
Magnagro Industries Pte. Ltd. Singapore
Dryvit Wall Systems (Suzhou) Co. Ltd. China
RPM Consumer Holding Company Delaware
Bondo Corporation Ohio
DAP Products Inc.(2) Delaware
DAP Holdings, LLC(4) Delaware
Gloucester Co., Inc. Massachusetts
Rust-Oleum Corporation(4) Illinois
Rust-Oleum International, LLC(5) Delaware
ROC Sales, Inc. Illinois
Rust-Oleum Sales Company, Inc.(6) Ohio
The Flecto Company, Inc.(7) California
Rust-Oleum Japan Corporation Japan
The Testor Corporation(8) Ohio
Zinsser Co., Inc.(9) New Jersey
Zinsser Holdings, LLC(10) Delaware
Mantrose-Haeuser Co., Inc. Massachusetts
Modern Masters Inc. California
Thibaut Inc. New York
RPM Enterprises, Inc. Delaware
RPM, Inc.(11) Ohio
American Emulsions Co., Inc. Georgia
Select Dye & Chemical, Inc. Georgia
Bondex International, Inc. Ohio
Chemical Specialties Manufacturing Corporation Maryland
Day-Glo Color Corp.(12) Ohio
Dryvit Holdings, Inc. Delaware
Dryvit Systems, Inc.(13) Rhode Island
Dryvit Systems USA (Europe) Sp. zo.o. Poland
Guardian Products, Inc. Delaware
Kop-Coat, Inc. Ohio
Kop-Coat New Zealand Limited New Zealand
Agpro (N.Z.) Limited New Zealand
|
RPM Wood Finishes Group, Inc.(14) Nevada
Chemical Coatings, Inc. North Carolina
RPM of Mass., Inc. Massachusetts
Westfield Coatings Corporation Massachusetts
TCI, Inc. Georgia
RPM Industrial Holding Company Delaware
Carboline Company(15) Delaware
Carboline International Corporation(16) Delaware
Carboline Dubai Corporation Missouri
StonCor Africa (Pty.) Ltd. South Africa
Chemrite Equipment Systems
(Pty.) Ltd. South Africa
StonCor Namibia (Pty.) Ltd. South Africa
Republic Powdered Metals, Inc.(17) Ohio
StonCor Group, Inc.(18) Delaware
Fibergrate Composite Structures Incorporated Delaware
Fibergrate B.V. Netherlands
Parklin Management Group, Inc.(19) New Jersey
Stonhard Agencia en Chile Chile
StonCor Corrosion Specialists Group Ltda.(20) Brazil
Tremco Incorporated(21) Ohio
The Euclid Chemical Company(22) Ohio
Euclid Chemical International Sales Corp.(23) Ohio
Grandcourt N.V.(24) Netherlands Antilles
Redwood Transport, Inc.(25) Ohio
Paramount Technical Products, Inc. South Dakota
Tremco A.B. Sweden
Tremco Asia Pacific Pty. Limited Australia
PABCO Products Pty. Limited Australia
Tremco Pty. Limited Australia
Tremco Asia Pte. Ltd. Singapore
Tremco Barrier Solutions, Inc. Delaware
Tremco GmbH Germany
Weatherproofing Technologies, Inc.(26) Delaware
RSIF International Limited Ireland
Sierra Performance Coatings, Inc. California
|
(1) RPM International Inc. owns 100% of the outstanding voting Common Stock of
RPM Funding Corporation, a Delaware corporation. The remaining outstanding
shares of RPM Funding Corporation are held as follows: 100% of the outstanding
Series A Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of
the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100%
of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical
Company; 100% of the outstanding Series D Preferred Stock (non-voting) by
Republic Powdered Metals, Inc.; 100% of the outstanding Series E Preferred Stock
(non-
2
voting) by Rust-Oleum Corporation; 100% of the outstanding Series F Preferred
Stock (non-voting) by The Testor Corporation; 100% of the outstanding Series G
Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding
Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.;
100% of the outstanding Series I Preferred Stock (non-voting) by Zinsser Co.,
Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by
Tremco Barrier Solutions, Inc.
RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge
A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline
Norge A/S, Carboline International Corporation owns 40% and 55% are held by a
joint venture partner.
(2) DAP Products Inc. owns 100% of the outstanding Series B Preferred Stock
(non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining
outstanding shares of RPM Funding Corporation are held as follows: 100% of the
outstanding voting Common Stock by RPM International Inc.; 100% of the
outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals,
Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by The
Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock
(non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E
Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding
Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the
outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100%
of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing
Technologies, Inc.; 100% of the Outstanding Series I Preferred Stock
(non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J
Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge
A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline
Norge A/S, Carboline International Corporation owns 40% and 55% are held by a
joint venture partner.
DAP Products Inc. owns 90% of the outstanding shares of DAP Chile S.A., a
Chilean corporation. The remaining 10% of the outstanding shares of DAP Chile
S.A. are held by RPM Canada Company.
DAP Products Inc. owns 94% of the outstanding shares of Portazul, S.A., a
Dominican Republic corporation. The remaining 6% of the outstanding shares of
Portazul, S.A. are held by the directors of Portazul, S.A.
(3) DAP Holdings, LLC owns 100% of the outstanding Common Stock of DAP Brands
Company, a Delaware corporation. RPM Canada Company owns 100% of the outstanding
Series A Preferred Stock and Series B Preferred Stock of DAP Brands Company.
DAP Holdings, LLC owns 1.60% of the outstanding shares of RPM Holdco Corp., a
Delaware Corporation. The remaining outstanding shares of RPM Holdco Corp. are
held as follows: Carboline Company 2.93%, Day-Glo Color Corp. 7.33%, Dryvit
Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM Wood Finishes Group,
Inc. 5.66%, Rust-Oleum
3
International, LLC 15%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67%
and Zinsser Holdings, LLC .27%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company. Subsidiaries of RPM Canada Company are
listed under Tremco Incorporated footnote.
(4) Rust-Oleum Corporation owns 100% of the outstanding Series E Preferred Stock
(non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining
outstanding shares of RPM Funding Corporation are held as follows: 100% of the
outstanding voting Common Stock by RPM International Inc.; 100% of the
outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals,
Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP
Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by
The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock
(non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series F
Preferred Stock (non-voting) by The Testor Corporation; 100% of the outstanding
Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the
outstanding Series H Preferred Stock (non-voting) by Weatherproofing
Technologies, Inc.; 100% of the outstanding Series I Preferred Stock
(non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J
Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge
A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline
Norge A/S, Carboline International Corporation owns 40% and 55% are held by a
joint venture partner.
Rust-Oleum Corporation owns 99.992% of the outstanding shares of Rust-Oleum
Argentina S.A., an Argentine corporation. The remaining .008% of the outstanding
shares of Rust-Oleum Argentina S.A. are held by Rust-Oleum Sales Company, Inc.
(5) Rust-Oleum International, LLC owns 100% of the outstanding Common Stock of
Rust-Oleum Brands Company, a Delaware corporation. RPM Canada Company owns 100%
of the outstanding Series A Preferred Stock and Series B Preferred Stock of
Rust-Oleum Brands Company.
Rust-Oleum International, LLC owns 15% of the outstanding shares of RPM Holdco
Corp., a Delaware Corporation. The remaining outstanding shares of RPM Holdco
Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%,
Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical
Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, StonCor Group, Inc. 12.87%,
Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company. Subsidiaries of RPM Canada Company are
listed under Tremco Incorporated footnote.
4
(6) Rust-Oleum Sales Company, Inc. owns .008% of the outstanding shares of
Rust-Oleum Argentina S.A., an Argentine corporation. The remaining 99.992% of
the outstanding shares of Rust-Oleum Argentina S.A. are held by Rust-Oleum
Corporation.
(7) The Flecto Company, Inc. owns 79% of the outstanding shares of Harry A.
Crossland Investments, Ltd., a Nevada corporation. The remaining 21% of the
outstanding shares of Harry A. Crossland Investments, Ltd. are held by RPM
Canada Company.
Harry A. Crossland Investments, Ltd. owns 100% of the outstanding shares of
Crossland Distributors Ltd., a Canadian corporation.
(8) The Testor Corporation owns 100% of the outstanding Series F Preferred Stock
(non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining
outstanding shares of RPM Funding Corporation are held as follows: 100% of the
outstanding voting Common Stock by RPM International Inc.; 100% of the
outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals,
Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP
Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by
The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock
(non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E
Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding
Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the
outstanding Series H Preferred Stock (non-voting) by Weatherproofing
Technologies, Inc.; 100% of the outstanding Series I Preferred Stock
(non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J
Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge
A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline
Norge A/S, Carboline International Corporation owns 40% and 55% are held by a
joint venture partner.
(9) Zinsser Co., Inc. owns 100% of the outstanding Series I Preferred Stock
(non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining
outstanding shares of RPM Funding Corporation are held as follows: 100% of the
outstanding voting Common Stock by RPM International Inc.; 100% of the
outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals,
Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP
Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by
The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock
(non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E
Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding
Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the
outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100%
of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing
Technologies, Inc.; and 100% of the outstanding Series J Preferred Stock
(non-voting) by Tremco Barrier Solutions, Inc.
5
RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge
A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline
Norge A/S, Carboline International Corporation owns 40% and 55% are held by a
joint venture partner.
(10) Zinsser Holdings, LLC owns 100% of the outstanding Common Stock of Zinsser
Brands Company, a Delaware corporation. RPM Canada Company owns 100% of the
outstanding Series A Preferred Stock and Series B Preferred Stock of Zinsser
Brands Company.
Zinsser Holdings, LLC owns .27% of the outstanding shares of RPM Holdco Corp., a
Delaware Corporation. The remaining outstanding shares of RPM Holdco Corp. are
held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Day-Glo Color
Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM
Wood Finishes Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor
Group, Inc. 12.87% and Tremco Incorporated 44.67%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company. Subsidiaries of RPM Canada Company are
listed under Tremco Incorporated footnote.
(11) RPM, Inc. owns 88% of the outstanding shares of RPM/Lux Consult S.A., a
Luxembourg corporation. The remaining 12% of the outstanding shares of RPM/Lux
Consult S.A. are held by Tremco Incorporated.
RPM/Lux Consult S.A. owns .2% of the outstanding shares of Monile France
S.A.R.L., a French corporation. The remaining 99.8% of the outstanding shares of
Monile France S.A.R.L. are held by RPM/Belgium N.V.
(12) Day-Glo Color Corp. owns 7.33% of the outstanding shares of RPM Holdco
Corp., a Delaware Corporation. The remaining outstanding shares of RPM Holdco
Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%,
Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM Wood Finishes
Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor Group, Inc.
12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company. Subsidiaries of RPM Canada Company are
listed under Tremco Incorporated footnote.
Day-Glo Color Corp. owns .32% of the outstanding shares of Radiant Color N.V., a
Belgian corporation. The remaining 99.68% of the outstanding shares of Radiant
Color N.V. are held by RPM Europe Holdco B.V.
Radiant Color N.V. owns 99.99% of the outstanding shares of Martin Mathys N.V.,
a Belgian corporation. The remaining .01% of the outstanding shares of Martin
Mathys N.V. are held by RPM/Belgium N.V.
6
Radiant Color N.V. owns 85.71% of the outstanding shares of APSA S.p.A., an
Italian corporation. Of the remaining outstanding shares of APSA S.p.A., 13.57%
are held by RPOW France S.A. and .72% are held by RPM Europe Holdco B.V.
Radiant Color N.V. owns 99.97% of the outstanding shares of Ecoloc N.V., a
Belgian corporation. The remaining .03% of the outstanding shares of Ecoloc N.V.
are held by RPM/Belgium N.V.
Radiant Color N.V. owns 99.96% of the outstanding shares of Lock-Tile Belgium
N.V., a Belgian corporation. The remaining .04% of the outstanding shares of
Lock-Tile Belgium N.V. are held by RPM/Belgium N.V.
(13) Dryvit Systems, Inc. owns 8.40% of the outstanding shares of RPM Holdco
Corp., a Delaware corporation. The remaining outstanding shares of RPM Holdco
Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%,
Day-Glo Color Corp. 7.33%, The Euclid Chemical Company 1.27%, RPM Wood Finishes
Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor Group, Inc.
12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company. Subsidiaries of RPM Canada Company are
listed under Tremco Incorporated footnote.
Dryvit Systems, Inc. owns 88% of the outstanding shares of Beijing Dryvit
Chemical Building Materials Co., Ltd., a Peoples Republic of China company. The
remaining outstanding shares of Beijing Dryvit Chemical Building Materials Co.,
Ltd. are held by a joint venture partner.
Dryvit Systems, Inc. owns 27.03% of AWCI Insurance Company, Ltd., a Bermuda
exempt company. The remaining outstanding shares of AWCI Insurance Company, Ltd.
are held by other EIFS manufacturers.
(14) RPM Wood Finishes Group, Inc. owns 5.66% of the outstanding shares of RPM
Holdco Corp., a Delaware corporation. The remaining outstanding shares of RPM
Holdco Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC
1.60%, Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid
Chemical Company 1.27%, Rust-Oleum International, LLC 15%, StonCor Group, Inc.
12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company. Subsidiaries of RPM Canada Company are
listed under Tremco Incorporated footnote.
(15) Carboline Company owns 2.93% of the outstanding shares of RPM Holdco Corp.,
a Delaware Corporation. The remaining outstanding shares of RPM Holdco Corp. are
held as follows: DAP Holdings, LLC 1.60%, Day-Glo Color Corp. 7.33%, Dryvit
Systems, Inc. 8.40%, The Euclid
7
Chemical Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, Rust-Oleum
International, LLC 15%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67%
and Zinsser Holdings, LLC .27%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company. Subsidiaries of RPM Canada Company are
listed under Tremco Incorporated footnote.
(16) Carboline International Corporation owns 49% of Carboline Korea
Ltd.; 40% of Carboline Norge A/S; 49% of StonCor Middle East LLC; 33.33% of
Japan Carboline Company Ltd.; and 40% of CDC Carboline (India) Ltd. All
outstanding shares of these entities are held by joint venture partners.
However, 5% of the outstanding shares of Carboline Norge A/S are held by RPM
Funding Corporation.
(17) Republic Powdered Metals, Inc. owns 100% of the outstanding Series A & D
Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation.
The remaining outstanding shares of RPM Funding Corporation are held as follows:
100% of the outstanding voting Common Stock by RPM International Inc.; 100% of
the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100%
of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical
Company; 100% of the outstanding Series E Preferred Stock (non-voting) by
Rust-Oleum Corporation; 100% of the outstanding Series F Preferred Stock
(non-voting) by The Testor Corporation; 100% of the outstanding Series G
Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding
Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.;
100% of the outstanding Series I Preferred Stock (non-voting) by Zinsser Co.,
Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by
Tremco Barrier Solutions, Inc.
RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge
A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline
Norge A/S, Carboline International Corporation owns 40% and 55% are held by a
joint venture partner.
(18) StonCor Group, Inc. owns 12.87% of the outstanding shares of RPM Holdco
Corp., a Delaware corporation. The remaining outstanding shares of RPM Holdco
Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%,
Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical
Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, Rust-Oleum International,
LLC 15%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company. Subsidiaries of RPM Canada Company are
listed under Tremco Incorporated footnote.
StonCor Group, Inc. owns 95% of the outstanding shares of StonCor South Cone
S.A.. The remaining 5% of the outstanding shares of StonCor South Cone S.A. are
held by Parklin Management Group, Inc.
8
StonCor Group, Inc. owns 99% of the outstanding shares of Stonhard S.A., a
Luxembourg corporation. The remaining 1% of the outstanding shares of Stonhard
S.A. are held by Parklin Management Group, Inc.
StonCor Group, Inc. owns 99.25% of the outstanding shares of Grupo StonCor, S.A.
de C.V., a Mexican corporation. The remaining .75% of the outstanding shares of
Grupo StonCor, S.A. de C.V. are held by Parklin Management Group, Inc.
Grupo StonCor, S.A. de C.V. owns 100% of the outstanding shares of Plasite, S.A.
de C.V. Mexico, a Mexican corporation and 100% of the outstanding shares of
Grupo StonCor, S.A. de C.V., a Colombian corporation.
StonCor Group, Inc. owns 99.99% of the outstanding shares of Stonhard de Mexico
S.A. de C.V., a Mexican corporation. The remaining .01% of the outstanding
shares are held by Parklin Management Group, Inc.
Stonhard de Mexico S.A. de C.V. owns 100% of the outstanding shares of Juarez
Immobiliaria, S.A., a Mexican corporation.
StonCor Group, Inc. owns .01% of the outstanding shares of StonCor Services,
Ltda., a Brazilian corporation. The remaining 99.99% of the outstanding shares
of StonCor Services, Ltda. are held by StonCor Corrosion Specialists Group Ltda.
(19) Parklin Management Group, Inc. owns .875% of the outstanding shares of
StonCor (Deutschland) GmbH, a German corporation. Of the remaining 99.125% of
the outstanding shares of StonCor (Deutschland) GmbH, 98.25% are held by RPM
Canada, a General Partnership and .875% are held by RPM Canada Company.
StonCor (Deutschland) GmbH owns 100% of the outstanding shares of Alteco Technik
GmbH, a German corporation.
Alteco Technik GmbH owns 1% of the outstanding shares of Alteco
Chemical-Produtos Quimicos SA, a Portuguese company. Of the remaining
outstanding shares of Alteco Chemical-Produtos Quimicos SA, 96% are held by
RPM/Belgium N.V. and 3% are held by three directors of Alteco Chemical-Produtos
Quimicos SA
Parklin Management Group, Inc. owns .75% of the outstanding shares of Grupo
StonCor, S.A. de C.V., a Mexican corporation. The remaining 99.25% of the
outstanding shares of Grupo StonCor, S.A. de C.V. are held by StonCor Group,
Inc.
Parklin Management Group, Inc. owns .01% of the outstanding shares of Stonhard
de Mexico S.A. de C.V., a Mexican corporation. The remaining 99.99% of the
outstanding shares of Stonhard de Mexico S.A. de C.V. are held by StonCor Group,
Inc.
9
Parklin Management Group, Inc. owns 1% of the outstanding shares of Stonhard
S.A., a Luxembourg corporation. The remaining 99% of the outstanding shares of
Stonhard S.A. are held by StonCor Group, Inc.
Parklin Management Group, Inc. owns 5% of the outstanding shares of StonCor
South Cone S.A. The remaining 95% of the outstanding shares of StonCor South
Cone S.A. are held by StonCor Group, Inc.
(20) StonCor Corrosion Specialists Group Ltda. owns 99.99% of the outstanding
shares of StonCor Services, Ltda., a Brazilian corporation. The remaining .01%
of the outstanding shares of StonCor Services, Ltda. are held by StonCor Group,
Inc.
(21) Tremco Incorporated owns 100% of the outstanding Series G Preferred Stock
(non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining
outstanding shares of RPM Funding Corporation are held as follows: 100% of the
outstanding voting Common Stock by RPM International Inc.; 100% of the
outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals,
Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP
Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by
The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock
(non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E
Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding
Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the
outstanding Series H Preferred Stock (non-voting) by Weatherproofing
Technologies, Inc.; 100% of the outstanding Series I Preferred Stock
(non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J
Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge
A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline
Norge A/S, Carboline International Corporation owns 40% and 55% are held by a
joint venture partner.
Tremco Incorporated owns 44.67% of the outstanding shares of RPM Holdco Corp., a
Delaware corporation. The remaining outstanding shares of RPM Holdco Corp. are
held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Day-Glo Color
Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM
Wood Finishes Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor
Group, Inc. 12.87%, and Zinsser Holdings, LLC .27%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company.
RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and
Series B Preferred Stock of DAP Brands Company, a Delaware corporation. DAP
Holdings, LLC owns 100% of the outstanding Common Stock of DAP Brands Company.
10
RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and
Series B Preferred Stock of Rust-Oleum Brands Company, a Delaware corporation.
Rust-Oleum International, LLC owns 100% of the outstanding Common Stock of
Rust-Oleum Brands Company.
RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and
Series B Preferred Stock of Zinsser Brands Company, a Delaware corporation.
Zinsser Holdings, LLC owns 100% of the outstanding Common Stock of Zinsser
Brands Company.
RPM Canada Company owns 100% of the outstanding shares of RPM Canada Investment
Company, a Canadian unlimited liability company.
RPM Canada Company is a 75% partner in RPM Canada, a General Partnership, an
Ontario partnership. RPM Canada Investment Company is a 25% partner in RPM
Canada, a General Partnership.
RPM Canada Company owns 21% of the outstanding shares of Harry A. Crossland
Investments, Ltd., a Nevada corporation. The remaining 79% of the outstanding
shares of Harry A. Crossland Investments, Ltd. are held by The Flecto Company,
Inc.
Harry A. Crossland Investments, Ltd. owns 100% of the outstanding shares of
Crossland Distributors Ltd., a Canadian corporation.
RPM Canada, a General Partnership owns 100% of the outstanding shares of Tremco
Limited, a United Kingdom corporation.
RPM Canada, a General Partnership owns 100% of the outstanding shares of Euclid
Admixture Canada Inc., a Canadian corporation.
Tremco Limited owns 100% of the outstanding shares of OY Tremco Ltd., a Finnish
corporation and 100% of the outstanding shares of each of Tretolbond Limited.,
Tretol Group Limited and Tretol Limited, all United Kingdom corporations.
RPM Canada Company owns 10% of the outstanding shares of DAP Chile S.A., a
Chilean corporation. The remaining 90% of the outstanding shares of DAP Chile
S.A. are held by DAP Products Inc.
RPM Canada Company owns 79% of the outstanding shares of RPM Europe Holdco B.V.,
a Netherlands corporation. The remaining 21% of the outstanding shares of RPM
Europe Holco B.V. are held by RPM Canada, a General Partnership.
RPM Europe Holdco B.V. owns 100% of the outstanding shares of Rust-Oleum
Netherlands B.V., StonCor Benelux B.V., and Tremco B.V., all Netherlands
corporations, and RPOW U.K. Limited, a United Kingdom corporation.
11
RPM Europe Holdco B.V. owns 96.04% of the outstanding shares of RPM/Belgium
N.V., a Belgian corporation. The remaining 3.96% of the outstanding shares of
RPM/Belgium N.V. are held by Tremco Incorporated.
RPM Europe Holdco B.V. owns 100% of the outstanding shares of Compact
Technologies GmbH, a German corporation.
RPM Europe Holdco B.V. owns 99.68% of the outstanding shares of Radiant Color
N.V., a Belgian corporation. The remaining .32% of the outstanding shares of
Radiant Color N.V. are held by Day-Glo Color Corp.
Radiant Color N.V. owns 99.99% of the outstanding shares of Martin Mathys N.V.,
a Belgian corporation. The remaining .01% of the outstanding shares of Martin
Mathys N.V. are held by RPM/Belgium N.V.
Radiant Color N.V. owns 85.71% of the outstanding shares of APSA S.p.A., an
Italian corporation. Of the remaining outstanding shares of APSA S.p.A., 13.57%
are held by RPOW France S.A. and .72% are held by RPM Europe Holdco B.V.
Radiant Color N.V. owns 99.97% of the outstanding shares of Ecoloc N.V., a
Belgian corporation. The remaining .03% of the outstanding shares of Ecoloc N.V.
are held by RPM/Belgium N.V.
Radiant Color N.V. owns 99.96% of the outstanding shares of Lock-Tile Belgium
N.V., a Belgian corporation. The remaining .04% of the outstanding shares of
Lock-Tile Belgium N.V. are held by RPM/Belgium N.V.
RPM/Belgium N.V. owns 99.8% of the outstanding shares of Monile France S.A.R.L.,
a French corporation. The remaining .2% of the outstanding shares of Monile
France S.A.R.L. are held by RPM/Lux Consult S.A.
RPM/Belgium N.V. owns 96% of the outstanding shares of Alteco Chemical-Produtos
Quimicos SA, a Portuguese corporation. Of the remaining outstanding shares of
Alteco Chemical-Produtos Quimicos SA, 1% are held by Alteco Technik GmbH and 3%
are held by three directors of Alteco Chemical-Produtos Quimicos SA
RPM Europe Holdco B.V. owns 99% of the outstanding shares of Zinsser Europe
N.V., a Belgian corporation. The remaining 1% of the outstanding shares of
Zinsser Europe N.V. are held by RPM/Belgium N.V.
RPM Europe Holdco B.V. owns 99.99% of the outstanding shares of RPOW France
S.A., a French corporation. The remaining .01% of the outstanding shares of RPOW
France S.A. are held by the directors of RPOW France S.A.
12
RPM Europe Holdco B.V. owns .72% of the outstanding shares of APSA S.p.A., an
Italian corporation. Of the remaining outstanding shares of APSA S.p.A., 85.71%
are held by Radiant Color N.V. and 13.57% are held by RPOW France S.A.
RPM Europe Holdco B.V. owns 99.04% of the outstanding shares of RPM Europe S.A.,
a Belgian corporation. The remaining .96% of the outstanding shares of RPM
Europe S.A. are held by RPM/Lux Consult S.A.
RPOW France S.A. owns 13.57% of the outstanding shares of APSA S.p.A., an
Italian corporation. Of the remaining outstanding shares of APSA S.p.A., 85.71%
are held by Radiant Color N.V. and .72% are held by RPM Europe Holdco B.V.
RPOW France S.A. owns 99.95% of the outstanding shares of Corroline France S.A.,
a French corporation. The remaining .05% of the outstanding shares of Corroline
France S.A. are held by the directors of Corroline France S.A.
RPOW France S.A. owns 99.99% of the outstanding shares of Rust-Oleum France
S.A., a French corporation. The remaining .01% of the outstanding shares of
Rust-Oleum France S.A. are held by the directors of Rust-Oleum France S.A.
RPOW France S.A. owns 70% of the outstanding shares of Rust-Oleum Mathys Italia
S.r.l., an Italian corporation. The remaining 30% of the outstanding shares of
Rust-Oleum Mathys Italia S.r.l. are held by a joint venture partner.
RPOW France S.A. owns 99.99% of the outstanding shares of Stonhard S.A.S., a
French corporation. The remaining .01% of the outstanding shares are held by
Rust-Oleum France S.A.
RPOW U.K. Limited owns 100% of the outstanding shares of each of the following
United Kingdom corporations: Bondo U.K. Limited, Carboline U.K. Limited,
Chemspec Europe Limited, Dryvit U.K. Limited, Fibergrate Composite Structures
Limited, Mantrose U.K. Limited, RPM Holdings UK Limited, Rust-Oleum U.K. Limited
and Stonhard U.K. Limited, as well as Stonhard (Ireland) Limited, an Irish
corporation.
Mantrose U.K. Limited owns 100% of the outstanding shares of each of Agricoat
Industries Limited and Wm. Zinsser Limited, both United Kingdom corporations.
RPM Holdings UK Limited owns 100% of the outstanding shares of Dore Holdings
Limited, a United Kingdom corporation.
Dore Holdings Limited owns 100% of the outstanding shares of each of Amtred
Limited and Nullifire Limited, both United Kingdom corporations.
RPM Canada, a General Partnership, owns 98.25% of the outstanding shares of
StonCor (Deutschland) GmbH, a German corporation. The remaining 1.75% of the
outstanding shares of StonCor (Deutschland) GmbH are split equally between RPM
Canada Company and Parklin Management Group, Inc.
13
StonCor (Deutschland) GmbH owns 100% of the outstanding shares of Alteco Technik
GmbH, a German corporation.
Alteco Technik GmbH owns 1% of the outstanding shares of Alteco
Chemical-Produtos Quimicos SA, a Portuguese company. Of the remaining
outstanding shares of Alteco Chemical-Produtos Quimicos SA, 96% are held by
RPM/Belgium N.V. and 3% are held by three directors of Alteco Chemical-Produtos
Quimicos SA
Tremco Incorporated owns 3.96% of the outstanding shares of RPM/Belgium N.V., a
Belgian corporation. The remaining 96.04% of the outstanding shares of
RPM/Belgium N.V. are held by RPM Europe Holdco B.V.
RPM/Belgium N.V. owns 99.8% of the outstanding shares of Monile France S.A.R.L.,
a French corporation. The remaining .2% of the outstanding shares of Monile
France S.A.R.L. are held by RPM/Lux Consult S.A.
RPM/Belgium N.V. owns 96% of the outstanding shares of Alteco Chemical-Produtos
Quimicos SA, a Portuguese corporation. Of the remaining outstanding shares of
Alteco Chemical-Produtos Quimicos SA, 1% are held by Alteco Technik GmbH and 3%
are held by three directors of Alteco Chemical-Produtos Quimicos SA
RPM/Belgium N.V. owns .01% of the outstanding shares of Martin Mathys N.V., a
Belgian corporation. The remaining 99.99% of the outstanding shares of Martin
Mathys N.V. are held by Radiant Color N.V.
RPM/Belgium N.V. owns 1% of the outstanding shares of Zinsser Europe N.V., a
Belgian corporation. The remaining 99% of the outstanding shares of Zinsser
Europe N.V. are held by RPM Europe Holdco B.V.
RPM/Belgium N.V. owns .03% of the outstanding shares of Ecoloc N.V., a Belgian
corporation. The remaining 99.97% of the outstanding shares of Ecoloc N.V. are
held by Radiant Color N.V.
RPM/Belgium N.V. owns .04% of the outstanding shares of Lock-Tile Belgium N.V.,
a Belgian corporation. The remaining 99.96% of the outstanding shares of
Lock-Tile Belgium N.V. are held by Radiant Color N.V.
Tremco Incorporated owns .0025% of the outstanding shares of Toxement S.A., a
Colombian corporation. Of the remaining outstanding shares of Toxement S.A.,
Grandcourt N.V. owns 50.99%, The Euclid Chemical Company owns 49% and Euclid
Chemical International Sales Corp, Redwood Transport, Inc. and Weatherproofing
Technologies, Inc. each own .0025%.
Tremco Incorporated owns 50% of the outstanding shares of Sime Tremco Sdn. Bhd.,
a Malaysian corporation. The remaining outstanding shares of Sime Tremco Sdn.
Bhd. are held by a joint venture partner.
14
Sime Tremco Sdn. Bhd. Owns 100% of the outstanding shares of each of Sime Tremco
(Malaysia) Sdn. Bhd. and Sime Tremco Specialty Chemicals Sdn, Bhd., both
Malaysian corporations.
Tremco Incorporated owns 99.999% of the outstanding shares of Tremco Far East
Limited, a Hong Kong corporation. The remaining .001% of the outstanding shares
of Tremco Far East Limited are held by a director of Tremco Far East Limited.
Tremco Far East Limited owns 100% of the outstanding shares of Tremco (Malaysia)
Sdn. Bhd., a Malaysian corporation and 100% of the outstanding shares of
Shanghai Tremco International Trading Co., Ltd., a Chinese corporation.
Tremco Incorporated owns 12% of the outstanding shares of RPM/Lux Consult S.A.,
a Luxembourg corporation. The remaining 88% of the outstanding shares of RPM/Lux
Consult S.A. are held by RPM, Inc.
RPM/Lux Consult S.A. owns .2% of the outstanding shares of Monile France
S.A.R.L., a French corporation. The remaining 99.8% of the outstanding shares of
Monile France S.A.R.L. are held by RPM/Belgium N.V.
RPM/Lux Consult S.A. owns .96% of the outstanding shares of RPM Europe S.A., a
Belgian corporation. The remaining 99.04% of the outstanding shares of RPM
Europe S.A. are held by RPM Europe Holdco B.V.
(22) The Euclid Chemical Company owns 60% interest in Euco Densit LLC, an Ohio
limited liability company. The remaining 40% interest in Euco Densit LLC is held
by a joint venture partner.
The Euclid Chemical Company owns 100% of the outstanding Series C Preferred
Stock (non-voting) of RPM Funding Corporation, a Delaware corporation. The
remaining outstanding shares of RPM Funding Corporation are held as follows:
100% of the outstanding voting Common Stock by RPM International Inc.; 100% of
the outstanding Series A Preferred Stock (non-voting) by Republic Powdered
Metals, Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by
DAP Products Inc.; 100% of the outstanding Series D Preferred Stock (non-voting)
by Republic Powdered Metals, Inc.; 100% of the outstanding Series E Preferred
Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding Series F
Preferred Stock (non-voting) by The Testor Corporation; 100% of the outstanding
Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the
outstanding Series H Preferred Stock (non-voting) by Weatherproofing
Technologies, Inc.; 100% of the outstanding Series I Preferred Stock
(non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J
Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge
A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline
Norge A/S, Carboline International Corporation owns 40% and 55% are held by a
joint venture partner.
15
The Euclid Chemical Company owns 1.27% of the outstanding shares of RPM Holdco
Corp., a Delaware corporation. The remaining outstanding shares of RPM Holdco
Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%,
Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, RPM Wood Finishes Group,
Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor Group, Inc. 12.87%,
Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a
Canadian unlimited liability company. Subsidiaries of RPM Canada Company are
listed under Tremco Incorporated footnote.
The Euclid Chemical Company owns 99.997% of the outstanding shares of Eucomex
S.A. de C.V., a Mexican corporation. The remaining .003% of the outstanding
shares of Eucomex S.A. de C.V. are held by Redwood Transport, Inc.
The Euclid Chemical Company owns 49% of the outstanding shares of Toxement S.A.,
a Colombian corporation. Of the remaining outstanding shares of Toxement S.A.,
Grandcourt N.V. owns 50.99% and Euclid Chemical International Sales Corp.,
Redwood Transport, Inc., Tremco Incorporated and Weatherproofing Technologies,
Inc. each own .0025%.
(23) Euclid Chemical International Sales Corp. owns .0025% of the outstanding
shares of Toxement S.A., a Colombian corporation. Of the remaining outstanding
shares of Toxement S.A., Grandcourt N.V. owns 50.99%, The Euclid Chemical
Company owns 49% and Redwood Transport, Inc., Tremco Incorporated and
Weatherproofing Technologies, Inc. each own .0025%.
(24) Grandcourt N.V. owns 50.99% of the outstanding shares of Toxement S.A., a
Colombian corporation. Of the remaining outstanding shares of Toxement S.A., The
Euclid Chemical Company owns 49% and Euclid Chemical International Sales Corp.,
Redwood Transport, Inc., Tremco Incorporated and Weatherproofing Technologies,
Inc. each own .0025%.
(25) Redwood Transport, Inc. owns .003% of the outstanding shares of Eucomex
S.A. de C.V., a Mexican corporation. The remaining 99.997% of the outstanding
shares of Eucomex S.A. de C.V. are held by The Euclid Chemical Company.
Redwood Transport, Inc. owns .0025% of the outstanding shares of Toxement S.A.,
a Colombian corporation. Of the remaining outstanding shares of Toxement S.A.,
Grandcourt N.V. owns 50.99%, The Euclid Chemical Company owns 49% and Euclid
Chemical International Sales Corp., Tremco Incorporated and Weatherproofing
Technologies, Inc. each own .0025%.
(26) Weatherproofing Technologies, Inc. owns 100% of the outstanding Series H
Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation.
The remaining outstanding shares of RPM Funding Corporation are held as follows:
100% of the outstanding voting Common Stock by RPM International Inc.; 100% of
the outstanding Series A Preferred Stock (non-voting) by Republic Powdered
Metals, Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by
DAP Products Inc.; 100% of the outstanding Series C Preferred Stock
16
(non-voting) by The Euclid Chemical Company; 100% of the outstanding Series D
Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the
outstanding Series E Preferred Stock (non-voting) by Rust-Oleum Corporation;
100% of the outstanding Series F Preferred Stock (non-voting) by The Testor
Corporation; 100% of the outstanding Series G Preferred Stock (non-voting) by
Tremco Incorporated; 100% of the outstanding Series I Preferred Stock
(non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J
Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge
A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline
Norge A/S, Carboline International Corporation owns 40% and 55% are held by a
joint venture partner.
Weatherproofing Technologies, Inc. owns .0025% of the outstanding shares of
Toxement S.A., a Colombian corporation. Of the remaining outstanding shares of
Toxement S.A., Grandcourt N.V. owns 50.99%, The Euclid Chemical Company owns 49%
and Euclid Chemical International Sales Corp., Redwood Transport, Inc. and
Tremco Incorporated each own .0025%.
17
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference of our report dated
July 2, 2004 in the Annual Report on Form 10-K for the year ending May 31, 2004,
in RPM International Inc.'s Registration Statements on Form S-3 (Reg. No.
333-108647) and Forms S-8 (Reg. Nos. 33-32794, 1989 Stock Option Plan; 333-35967
and 333-60104, 1996 Stock Option Plan; 333-101512, Deferred Compensation Plan;
333-101501, 401(k) Trust and Plan and Union 401(k) Retirement Savings Trust and
Plan; and 333-117581, 2003 Restricted Stock Plan for Directors).
/s/ Ciulla, Smith & Dale, LLP
-----------------------------
Ciulla, Smith & Dale, LLP
August 16, 2004
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EXHIBIT 31.1
RULE 13A-14(a) CERTIFICATION
I, Robert L. Matejka, certify that:
1. I have reviewed this Annual Report on Form 10-K of RPM International
Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: August 16, 2004
/s/ Robert L. Matejka
-----------------------------------------
Robert L. Matejka, Vice President,
Chief Financial Officer and Controller
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EXHIBIT 31.2
RULE 13A-14(a) CERTIFICATION
I, Frank C. Sullivan, certify that:
1. I have reviewed this Annual Report on Form 10-K of RPM International
Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: August 16, 2004
/s/ Frank C. Sullivan
-----------------------------------
Frank C. Sullivan, President and
Chief Executive Officer
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EXHIBIT 32.1
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, the undersigned officer of
RPM International Inc., a Delaware corporation (the "Company"), does hereby
certify, to such officer's knowledge, that the Company's Annual Report on Form
10-K for the year ended May 31, 2004 (the "Form 10-K") fully complies with the
requirements of Section 13(a) or 15(d), as applicable, of the Securities
Exchange Act of 1934 and that the information contained in the Form 10-K fairly
presents, in all material respects, the financial condition and results of
operations of the Company as of, and for, the periods presented in the Form
10-K.
Dated: August 16, 2004 /s/ Robert L. Matejka
----------------------------
Robert L. Matejka
Vice President, Chief Financial Officer
and Controller
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The foregoing Certification is being furnished solely pursuant to 18
U.S.C. Section 1350 and is not being filed as part of the Form 10-K or as a
separate disclosure document.
EXHIBIT 32.2
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350, the undersigned officer of
RPM International Inc., a Delaware corporation (the "Company"), does hereby
certify, to such officer's knowledge, that the Company's Annual Report on Form
10-K for the year ended May 31, 2004 (the "Form 10-K") fully complies with the
requirements of Section 13(a) or 15(d), as applicable, of the Securities
Exchange Act of 1934 and that the information contained in the Form 10-K fairly
presents, in all material respects, the financial condition and results of
operations of the Company as of, and for, the periods presented in the Form
10-K.
Dated: August 16, 2004 /s/ Frank C. Sullivan
---------------------------------
Frank C. Sullivan
President and Chief Executive Officer
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The foregoing Certification is being furnished solely pursuant to 18
U.S.C. Section 1350 and is not being filed as part of the Form 10-K or as a
separate disclosure document.
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