RPM INTERNATIONAL INC/DE/ - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended May 31, 2004

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission File No. 1-14187

RPM INTERNATIONAL INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware 02-0642224
- ------------------------------------- -------------------------------------
(State or Other Jurisdiction of (IRS Employer Identification
Incorporation or Organization) No.)

P.O. Box 777, 2628 Pearl Road, Medina, Ohio 44258
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (330) 273-5090

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which Registered
- ----------------------------- --------------------------------------------
Common Stock, par value $0.01 New York Stock Exchange

Rights to Purchase Shares of New York Stock Exchange
Common Stock

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to the
filing requirements for the past 90 days. Yes [x] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Exchange Act Rule 12b-2). Yes [x] No [ ]

As of August 2, 2004, 116,170,990 shares of Common Stock were
outstanding.

The aggregate market value of the Common Stock of the Registrant
held by non-affiliates (based upon the closing price of the Common Stock as
reported on the New York Stock Exchange on November 28, 2003, the last business
day of the Registrant's most recently completed second fiscal quarter) was
approximately $1,727,749,909. For purposes of this information, the 1,508,810
outstanding shares of Common Stock which were owned beneficially as of November
28, 2003 by executive officers and Directors of the Registrant were deemed to be
the shares of Common Stock held by affiliates.

Documents Incorporated by Reference

Portions of the following documents are incorporated by reference to
Parts II, III and IV of this Annual Report on Form 10-K: (i) definitive Proxy
Statement to be used in connection with the Registrant's Annual Meeting of
Stockholders to be held on October 8, 2004 (the "2004 Proxy Statement") and (ii)
the Registrant's 2004 Annual Report to Stockholders for the fiscal year ended
May 31, 2004 (the "2004 Annual Report to Stockholders").

Except as otherwise stated, the information contained in this Annual
Report on Form 10-K is as of May 31, 2004.

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PART I

ITEM 1. BUSINESS.

THE COMPANY

RPM International Inc. ("RPM" or the "Company") is the successor to
the reporting obligations of RPM, Inc., an Ohio corporation, following a
statutory merger effective as of October 15, 2002, for the purpose of changing
RPM, Inc.'s state of incorporation to Delaware. RPM, Inc. was organized in 1947
as an Ohio corporation under the name Republic Powdered Metals, Inc., and, on
November 9, 1971, its name was changed to RPM, Inc. The October 2002
reincorporation occurred by merging RPM Merger Sub, a newly formed Ohio
corporation and wholly owned subsidiary of RPM International Inc., a newly
formed Delaware corporation, with and into RPM, Inc. Each outstanding common
share of RPM, Inc. was converted into the right to receive one share of Common
Stock of RPM International Inc., with the result that RPM, Inc. became a wholly
owned subsidiary of RPM International Inc.

In connection with the reincorporation, RPM International Inc.
realigned its various operating companies according to their product offerings,
served end markets, customer base and operating philosophy. Those operating
companies that tend to be entrepreneurial and serve niche markets continue to be
owned by RPM, Inc. Operating companies that primarily serve the consumer markets
were transferred to RPM Consumer Holding Company, which is wholly owned by RPM
International Inc. Ownership of operating companies that primarily serve the
industrial markets was transferred to another wholly owned subsidiary of RPM
International Inc., RPM Industrial Holding Company. As a result of the
reincorporation, RPM International Inc. became the successor issuer to RPM, Inc.
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
succeeded to RPM, Inc.'s reporting obligations thereunder.

As used herein, the terms "RPM" and the "Company" refer to RPM
International Inc. and its subsidiaries, unless the context indicates otherwise.
The Company has its principal executive offices at 2628 Pearl Road, P.O. Box
777, Medina, Ohio 44258, and its telephone number is (330) 273-5090.

RECENT DEVELOPMENTS

On December 9, 2003, the Company sold $200.0 million in aggregate
principal amount at maturity of 6.25 percent senior notes due 2013 (the "Notes")
to qualified institutional buyers, resulting in approximately $197 million in
gross proceeds to the Company. Each Note was issued at a price of $986.67. Cash
interest on the Notes is payable semi-annually in arrears on December 15 and
June 15 of each year, beginning June 15, 2004. Interest on the Notes began
accruing on December 9, 2003. The Notes are redeemable at any time and from time
to time at a redemption price equal to the greater of 100% of the principal
amount of Notes being redeemed and the "make-whole amount" described in the
Indenture executed in connection with the offering. The offering was made only
to qualified institutional buyers in accordance with Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"). The Company used the
entire net proceeds of the offering to repay in full the $128 million of
outstanding borrowings under its $500 million revolving credit facility and $69
million of the then outstanding $72 million balance under its asset
securitization program. Pursuant to a Registration Rights Agreement between the
Company and the initial purchasers of the Notes, the Company prepared and filed
a registration statement which allowed the holders of the Notes to exchange the
Notes for notes registered under the Securities Act (the "Exchange Notes"). On
July 13, 2004, the Company completed an exchange offer in which all of the Notes
were exchanged for Exchange Notes. The terms of the Notes and the Exchange Notes
are identical in all

3

material respects, except that the Exchange Notes are registered under the
Securities Act, and the transfer restrictions and registration rights relating
to the Notes do not apply to the Exchange Notes.

BUSINESS

RPM manufactures and markets high quality specialty paints,
protective coatings and roofing systems, sealants and adhesives, focusing on the
maintenance and improvement needs of both the industrial and consumer markets.
The Company's family of products includes those marketed under brand names such
as CARBOLINE, DAP, DAY-GLO, FLECTO, RUST-OLEUM, STONHARD, TREMCO and ZINSSER. As
of May 31, 2004, RPM marketed its products in over 140 countries and territories
and operated manufacturing facilities in 74 locations in the United States,
Argentina, Belgium, Brazil, Canada, China, Colombia, Germany, Italy, Mexico, New
Zealand, The Netherlands, Poland, South Africa, the United Arab Emirates and the
United Kingdom. Approximately 22% of the Company's sales are generated in
international markets through a combination of exports and direct sales by
affiliates in foreign countries. For the fiscal year ended May 31, 2004, the
Company recorded sales of $2.342 billion.

AVAILABLE INFORMATION

The Company's Internet website address is www.rpminc.com. The
Company makes available free of charge on or through its website its Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, and amendments to these reports, as soon as reasonably practicable after
such reports are electronically filed with, or furnished to, the Securities and
Exchange Commission.

OPERATING SEGMENT INFORMATION

The Company has determined that it has two operating segments:
industrial and consumer, based on the nature of its business activities,
products and services, the structure of management and the structure of
information as presented to the Board of Directors. Within each segment,
individual operating companies or groups of companies generally address common
markets, utilize similar technologies and are able to share manufacturing or
distribution capabilities. The industrial segment constitutes approximately 54%
of sales and includes maintenance and protection products for roofing and
waterproofing systems, flooring, corrosion control and other specialty
applications. The consumer segment constitutes approximately 46% of sales and
includes rust-preventative, special purpose and decorative paints, caulks,
sealants, primers and other branded consumer products. See Note I (Segment
Information) of the Notes to the Consolidated Financial Statements which appear
in the Annual Report to Stockholders, incorporated herein by reference, for
financial information relating to the Company's two operating segments.

4

INDUSTRIAL SEGMENT

Industrial segment products are sold throughout North America and
account for most of the Company's sales in Europe, South America, Asia, South
Africa, Australia and the Middle East. The Company's industrial businesses,
which account for the vast majority of its international sales, sell directly to
distributors, contractors and end-users, such as industrial manufacturing
facilities, educational and governmental institutions and commercial
establishments. The industrial segment generated $1.273 billion in net sales for
the fiscal year ended May 31, 2004 and is comprised of the following major
product lines:

- sealants and institutional roofing systems used in building
protection, maintenance and weatherproofing applications
marketed under the Company's TREMCO, REPUBLIC, VULKEM and
DYMERIC brand names. Recently introduced products include
basement waterproofing sealants marketed under the TUFF-N-DRI
and WATCHDOG WATERPROOFING brand names, and specialized
roofing maintenance and related services marketed under the
WEATHERPROOFING TECHNOLOGIES brand name;

- high-performance polymer flooring systems for industrial,
institutional and commercial facility floor surfaces marketed
under the STONHARD brand name, including flooring systems
marketed under the STONBLEND RTZ brand name. The Company also
manufactures and supplies molded and pultruded fiberglass
reinforced plastic gratings used for industrial platforms,
staircases and walkways marketed under the FIBERGRATE brand
name;

- high-performance, heavy-duty corrosion control coatings and
structural fireproofing protection products and secondary
containment linings for a wide variety of industrial
infrastructure applications marketed under the CARBOLINE,
NULLIFIRE and PLASITE brand names;

- exterior insulating finishing systems, including textured
finish coats, sealers and variegated aggregate finishes
marketed under the DRYVIT brand name; and

- a variety of products for specialized applications, including
powder coatings for exterior and interior applications
marketed under the TCI brand name, fluorescent colorants and
pigments marketed under the DAY-GLO brand name, concrete and
masonry additives marketed under the EUCO brand name,
commercial carpet and floor cleaning solutions marketed under
the CHEMSPEC brand name, wood and lumber treatments marketed
under the KOP-COAT brand name, and pleasure marine coatings
marketed under the PETTIT, WOOLSEY and Z-SPAR brand names.

CONSUMER SEGMENT

The consumer segment manufactures and markets professional use and
do-it-yourself ("DIY") products for home maintenance and improvement, automotive
and boat repair and maintenance, and hobby and leisure applications. The
consumer segment's major manufacturing and distribution operations are located
in North America. Consumer segment products are sold throughout North America to
mass merchandisers, home improvement centers, hardware stores, paint stores,
automotive supply stores, craft shops and through distributors. The consumer
segment generated $1.069

5

billion in sales in the fiscal year ended May 31, 2004 and is comprised of the
following major product lines:

- a broad line of coating products sold under various RUST-OLEUM
brands to protect and beautify metal, wood, and concrete
surfaces for the DIY and professional markets. Leading brands
within the RUST-OLEUM portfolio include STOPS RUST, AMERICAN
ACCENTS, PAINTER'S TOUCH, SPECIALTY, PROFESSIONAL, TREMCLAD,
VARATHANE, MONO, WATCO, EPOXY SHIELD, INDUSTRIAL CHOICE, LABOR
SAVER, ROAD WARRIOR, SIERRA HIGH PERFORMANCE, HARD HAT,
MATHYS, COMBI COLOR and NOXYDE;

- a complete line of caulks and sealants, patch and repair
products and adhesives for the home improvement, repair and
construction markets through a wide assortment of DAP brand
products. Leading brands within the DAP portfolio include ALEX
PLUS, KWIK SEAL PLUS with MICROBAN, SIDEWINDER ADVANCED SIDING
and WINDOW SEALANT, WELDWOOD, `33', PLASTIC WOOD, DRYDEX, EASY
SOLUTIONS, CRACKSHOT and PHENOSEAL;

- a broad line of specialty paint primers and sealers marketed
under the ZINSSER, B-I-N, BULLS EYE 1-2-3, COVER-STAIN and
SEALCOAT brand names, as well as wallcovering removal and
preparation coatings under the principal brands of DIF,
PAPERTIGER and SHIELDZ. Recently introduced products include
primers and sealers marketed under the WATERTITE and PERMA
WHITE brand names and wallpaper tools marketed under the
WALWORKS brand name; and

- an assortment of other products, including autobody
aftermarket paints and repair products marketed under the
BONDO brand name, hobby paints and cements marketed under the
TESTORS brand name, wood furniture finishes and touch-up
products marketed under the CCI, MOHAWK, CHEMICAL COATINGS and
WESTFIELD COATINGS brand names, deck and fence restoration
products marketed under the WOLMAN brand name, high-end
wallcoverings and fabrics marketed under the THIBAUT brand,
metallic and faux finish coatings marketed under the MODERN
MASTERS brand name and shellac-based specialty coatings for
industrial uses, edible glazes and food coatings by
MANTROSE-HAEUSER, and NATURE SEAL brand coatings that preserve
sliced fruit and vegetables.

FOREIGN OPERATIONS

The Company's foreign manufacturing operations for the fiscal year
ended May 31, 2004 accounted for approximately 20% of its total sales (which
does not include exports directly from the United States). The Company also
receives license fees and royalty income from numerous license agreements and
also has joint ventures accounted for under the equity method in various foreign
countries. The Company has manufacturing facilities in Argentina, Belgium,
Brazil, Canada, China, Colombia, Germany, Italy, Mexico, New Zealand, The
Netherlands, Poland, South Africa, the United Arab Emirates and the United
Kingdom, and sales offices or public warehouse facilities in Australia, Canada,
Finland, France, Germany, Hong Kong, Iberia, Mexico, the Philippines, Singapore,
Sweden, the United Kingdom and several other countries. Information concerning
the Company's foreign operations

6

is set forth in Management's Discussion and Analysis of Results of Operations
and Financial Condition, which appears in the Annual Report to Stockholders,
incorporated herein by reference.

COMPETITION

The Company is engaged in a highly competitive industry and, with
respect to all of its major products, faces competition from local, regional and
national firms. The industry is fragmented, and the Company does not face
competition from any one company in particular. However, several of the
Company's competitors have greater financial resources and sales organizations
than the Company. While third-party figures are not necessarily available with
respect to the size of the Company's position in the market for each of its
products, the Company believes that it is a major producer of roofing systems,
aluminum coatings, cement-based paints, hobby paints, pleasure marine coatings,
furniture finishing repair products, automotive repair products, industrial
corrosion control products, consumer rust-preventative coatings, polymer
floorings, fluorescent coatings and pigments, exterior insulation finish
systems, molded and pultruded fiberglass reinforced plastic gratings and
shellac-based coatings. However, the Company does not believe that it has a
significant share of the total protective coatings market. The following is a
summary of the competition faced by the Company in various markets.

Paints, Coatings, Adhesives and Sealants Industry

In the market for paints, coatings, adhesives and sealants, the top
ten producers account for approximately one-third of the global market. In
addition to the Company, leading suppliers tend to focus on coatings while other
companies focus on adhesives and sealants. This industry has experienced
significant consolidation over the past several decades, however, the market
remains fragmented, which creates further consolidation opportunities. Barriers
to market entry are relatively high due to the lengthy interval between product
development and market acceptance, the importance of brand identity, and the
difficulty in establishing a reputation as a reliable supplier in this sector.
Like the Company, most of the suppliers in this industry have a portfolio of
products that span across the various markets.

Consumer Home Improvement. Within the consumer segment, the Company
generally serves the home improvement market with products designed for niche
architectural, rust-preventative, decorative, special purpose, caulking and
sealing applications. Products sold by the Company in this market include, but
are not limited to, those sold under the RUST-OLEUM, DAP, ZINSSER and BONDO
brand names. Leading manufacturers of home improvement-related coatings,
adhesives and sealants market their products to DIY users, contractors, and
end-users through a wide range of distribution channels including direct sales
to home improvement centers, mass merchandisers, hardware stores and paint
stores, as well as sales through distributors and sales representative
organizations. Competitors in this market generally compete for market share by
marketing and building upon brand recognition, providing customer service and
developing new products based on customer needs.

Special Purpose-- Industrial Maintenance Protective Coatings.
Anti-corrosion protective coatings must withstand the destructive elements of
nature, and operating processes under harsh environments and conditions. Some of
the larger consumers of high-performance protective and corrosion control
coatings are the oil and gas, pulp and paper, petrochemical, shipbuilding and
public utility industries. In the public sector, corrosion control coatings are
used on structures such as bridges and in water and wastewater treatment plants.
These markets are highly fragmented. The Company and its competitors gain market
share in this industry by supplying a variety of high quality products and
offering customized solutions. The Company sells products marketed primarily
under the CARBOLINE, PLASITE, and TCI brand names to these markets.

7

Roofing Systems Industry

In the roofing industry, reroofing applications account for
three-quarters of U.S. demand, with the remaining quarter made up by the new
roofing segment. The largest manufacturers focus primarily on residential
roofing as well as single-ply systems for low-end commercial and institutional
applications, competing mainly on price and minimally on service. In contrast,
the Company competes primarily in the higher-end, multi-ply and modified bitumen
segments of the built-up and low-slope roofing industry. This niche within the
larger market tends to exhibit less commodity-market characteristics, with
customers valuing the greater protection and longer life provided by these
roofing systems, as well as ongoing maintenance, inspection and technical
services. Typical customers demanding higher-performance roofing systems include
governmental facilities, universities, hospitals, museums and certain
manufacturing facilities. The Company markets to this industry primarily under
its TREMCO line of products.

Construction Chemicals Industry

Flooring Systems. Polymer flooring systems are used in industrial,
commercial and, to a lesser extent, residential applications to provide a
smooth, seamless surface that is impervious to penetration by water and other
substances. Polymer flooring systems are based primarily on epoxy resins,
although urethane products have experienced significant growth in recent years.
Most flooring is applied during new construction, but there is also a
significant repair and renovation market. Key performance attributes in polymer
flooring systems that distinguish competitors include static control, chemical
resistance, contamination control, durability and aesthetics. The Company
primarily markets under the STONHARD and FIBERGRATE brand names in this
industry. This market is also fragmented.

Sealants, Concrete and Masonry Products. Sealants used in a variety
of construction applications include urethane and silicone-based products
designed for sealing windows and commercial buildings, and for waterproofing,
fireproofing and concrete sealing, among other uses. In the concrete and masonry
additives market, a variety of chemicals can be added to cement, concrete,
asphalt and other masonry to improve the processability, performance, or
appearance of these products. Chemical cement admixtures are typically grouped
according to functional characteristics, such as water-reducers, set
controllers, superplasticizers and air-entraining agents. Key attributes that
differentiate competitors in these markets include quality assurance, on-the-job
consultation and the provision of value-added engineered products. The Company
primarily offers products marketed under the EUCO, REPUBLIC, VULKEM, DYMERIC,
TUFF-N-DRI and WATCHDOG WATERPROOFING brand names in this industry.

INTELLECTUAL PROPERTY

The intellectual property portfolios of the subsidiaries of the
Company include numerous valuable patents, trade secrets and know-how, domain
names, trademarks and trade names. Significant research and technology
development continues to be conducted by the subsidiaries. However, no single
patent, trademark, name or license, or group of these rights, other than the
marks DAY-GLO(R), RUST-OLEUM(R), CARBOLINE(R), DAP(R) and TREMCO(R), are
material to the Company's business.

Day-Glo Color Corp., a subsidiary of the Company, is the owner of
more than 50 trademark registrations of the mark "DAY-GLO(R)" in numerous
countries and the United States for a variety of fluorescent products. There are
also many other foreign and domestic registrations for other trademarks of the
Day-Glo Color Corp., for a total of more than 100 registrations. These
registrations

8

are valid for a variety of terms ranging from one year to 20 years, which terms
are renewable as long as the marks continue to be used. These registrations are
maintained and renewed on a regular basis.

Rust-Oleum Brand Company, a subsidiary of the Company, is the owner
of more than 50 United States trademark registrations for the mark
"RUST-OLEUM(R)" and other trademarks covering a variety of rust-preventative
coatings sold by Rust-Oleum Corporation. There are also many foreign
registrations for "RUST-OLEUM(R)" and the other trademarks used on products sold
by Rust-Oleum Corporation, for a total of nearly 400 registrations. These
registrations are valid for a variety of terms ranging from one year to 20
years, which terms are renewable for as long as the marks continue to be used.
These registrations are maintained and renewed on a regular basis.

Carboline Company, a subsidiary of the Company, is the owner of a
United States trademark registration for the mark "CARBOLINE(R)." Carboline
Company is also the owner of several other United States registrations for other
trademarks. These registrations are valid for a variety of terms ranging from
one year to 20 years, which terms are renewable for as long as the marks
continue to be used. These registrations are maintained and renewed on a regular
basis.

DAP Brands Company, a subsidiary of the Company, is the owner of
more than 150 United States and foreign trademark applications and registrations
which include the mark "DAP(R)." DAP Products Inc. is also the owner of many
other United States and foreign registrations for other trademarks, including
the "PUTTY KNIFE design" mark. These registrations are valid for a variety of
terms ranging from one year to 20 years, which terms are renewable for as long
as the marks continue to be used. These registrations are maintained and renewed
on a regular basis.

Tremco Incorporated, a subsidiary of the Company, is the owner of
more than 100 registrations for the mark and name "TREMCO(R)" in numerous
countries and the United States for a variety of sealants and coating products.
There are also many other foreign and domestic registrations for other
trademarks of Tremco Incorporated, for a total of more than 800 registrations
and applications. These registrations are valid for a variety of terms ranging
from one year to 20 years, which terms are renewable as long as the marks
continue to be used. These registrations are maintained and renewed on a regular
basis.

The Company's other principal product trademarks include:
ALUMANATION(R), AVALON(R), B-I-N(R), BITUMASTIC(R), BONDO(R), BULLS EYE
1-2-3(R), DRYVIT(R), DYMERIC(R), DYNALITE(R), DYNATRON(R), EASY FINISH(R),
FLECTO(R), EPOXSTEEL(R), FIBERGRATE(R), FLOQUIL(R), GEOFLEX(R), MAR-HYDE(R),
MOHAWK and Design(R), OUTSULATION(R), PARASEAL(R), PERMAROOF(R), PETTIT(TM),
PLASITE(R), SANITILE(R), STONCLAD(R), STONHARD(R), STONLUX(R), TCI(R),
TESTORS(R), ULTRALITE(TM), VARATHANE(R), VULKEM(R), WOOLSEY(R), ZINSSER(R) and
Z-SPAR(R); and, in Europe, NULLIFIRE(R), RADGLO(R) and MARTIN MATHYS(R).

RAW MATERIALS

The Company does not have any single source suppliers of raw
materials that are material to its business, and the Company believes that
alternate sources of supply of raw materials are available to the Company for
most of its raw materials. Where shortages of raw materials have occurred, the
Company has been able to reformulate products to use more readily available raw
materials. Although the Company has been able to reformulate products to use
more readily available raw materials in the past, the Company cannot guaranty
that it will have the ability to do so in the future.

9

SEASONAL FACTORS

The Company's business is dependent on external weather factors. The
Company historically experiences strong sales and net income in its first,
second and fourth fiscal quarters comprised of the three month periods ending
August 31, November 30 and May 31, respectively, with weaker performance in its
third fiscal quarter (December through February).

CUSTOMERS

Nine large consumer segment accounts, such as DIY home centers,
represented approximately 25% of the Company's total sales for the fiscal year
ended May 31, 2004, compared to approximately 24% for the prior fiscal year.
Sales to The Home Depot represented 12% of the Company's total sales for fiscal
2004. Except for sales to these customers, the Company's business is not
dependent upon any one customer or small group of customers but is rather
dispersed over a substantial number of customers.

BACKLOG

The Company historically has not had a significant backlog of
orders, nor was there a significant backlog during the last fiscal year.

RESEARCH

The Company's research and development work is performed in various
laboratory locations throughout the United States. During fiscal years 2004,
2003 and 2002, the Company invested approximately $26.2 million, $23.8 million
and $20.9 million, respectively, on research and development activities. In
addition to this laboratory work, the Company views its field technical service
as being integral to the success of its research activities. The research and
development activities and the field technical service costs are both included
as part of selling, general and administrative expenses.

ENVIRONMENTAL MATTERS

The Company is subject to numerous foreign, federal, state and local
environmental protection and health and safety laws and regulations governing,
among other things:

- the sale, export, generation, storage, handling, use and
transportation of hazardous materials;

- the emission and discharge of hazardous materials into the soil,
water and air; and

- the health and safety of the Company's employees.

The Company is also required to obtain permits from governmental
authorities for certain operations. The Company cannot guarantee that it has
been or will be at all times in complete compliance with such laws, regulations
and permits. If the Company violates or fails to comply with these laws,
regulations or permits, it could be fined or otherwise sanctioned by regulators.

Certain environmental laws assess liability on current or previous
owners or operators of real property for the cost of removal or remediation of
hazardous substances. Persons who arrange for the disposal or treatment of
hazardous substances also may be responsible for the cost of removal or
remediation of these substances, even if such persons never owned or operated
any disposal or

10

treatment facility. Certain of the Company's subsidiaries are involved in
various environmental claims, proceedings and/or remedial activities relating to
facilities currently or previously owned, operated or used by these
subsidiaries, or their predecessors. In addition, the Company or its
subsidiaries, together with other parties, have been designated as potentially
responsible parties, or PRPs, under federal and state environmental laws for the
remediation of hazardous waste at certain disposal sites. In addition to
clean-up actions brought by federal, state and local agencies, plaintiffs could
raise personal injury, natural resource damage or other private claims due to
the presence of hazardous substances on a property. Environmental laws often
impose liability even if the owner or operator did not know of, or was not
responsible for, the release of hazardous substances.

The Company has in the past, and will in the future, incur costs to
comply with environmental laws. Environmental laws and regulations are complex,
change frequently and have tended to become stringent over time. In addition,
costs may vary depending on the particular facts and development of new
information. As a result, the Company's operating expenses and continuing
capital expenditures may increase. More stringent standards may also limit its
operating flexibility. In addition, to the extent hazardous materials exist on
or under real property, the value and future use of that real property may be
adversely affected. Because the Company's competitors will have similar
restrictions, the Company's management believes that compliance with more
stringent environmental laws and regulations is not likely to affect the
Company's competitive position. However, a significant increase in these costs
could adversely affect the Company's business, results of operations, financial
condition or cash flows. For information regarding environmental accruals, see
Note H (Contingencies and Loss Reserves) of the Notes to Consolidated Financial
Statements which appear in the Annual Report to Stockholders, incorporated
herein by reference.

EMPLOYEES

As of May 31, 2004, the Company employed 8,092 persons, of whom 676
were represented by unions under contracts which expire at varying times in the
future. The Company believes that its relations with its employees are good.

ITEM 2. PROPERTIES.

The Company's corporate headquarters and a plant and offices for one
subsidiary are located on an 119-acre site in Medina, Ohio, which is owned by
the Company. As of May 31, 2004, the Company's operations occupied a total of
approximately 7.7 million square feet, with the majority, approximately 6.3
million square feet, devoted to manufacturing, assembly and storage. Of the
approximately 7.7 million square feet occupied, 5.5 million square feet are
owned and 2.2 million square feet are occupied under operating leases. In
addition, approximately 0.1 million owned square feet is associated with
property intended to be sold or sublet.

Set forth below is a description, as of May 31, 2004, of the
Company's principal manufacturing facilities which management believes are
material to the Company's operations:

APPROXIMATE
SQUARE FEET
BUSINESS/ OF
LOCATION SEGMENT FLOOR SPACE LEASED OR OWNED
- --------------------- --------------- ----------- ---------------

Pleasant Prairie, Rust-Oleum 303,200 Owned
Wisconsin (Consumer)

Toronto, Ontario, Tremco 207,200 Owned
Canada (Industrial)

11

Cleveland, Ohio Euclid Chemical 173,000 Owned
(Industrial)

Cleveland, Ohio Tremco 160,300 Owned
(Industrial)

Cleveland, Ohio Day-Glo 147,200 Owned
(Industrial)

Baltimore, Maryland DAP 144,200 Owned
(Consumer)

Hagerstown, Maryland Rust-Oleum 143,000 Owned
(Consumer)

Tipp City, Ohio DAP 140,000 Owned
(Consumer)

Lake Charles, Carboline 114,300 Owned
Louisiana (Industrial)

LaSage, West Virginia Zinsser 112,000 Owned
(Consumer)

Somerset, New Jersey Zinsser 110,000 Owned
(Consumer)

Maple Shade, Stonhard 77,500 Owned
New Jersey (Industrial)

The Company leases certain of its properties under long-term leases.
Some of the leases provide for increased rent based on an increase in the
cost-of-living index. For information concerning the Company's rental
obligations, see Note E (Leases) of the Notes to Consolidated Financial
Statements which appear in the Annual Report to Stockholders, incorporated
herein by reference. Under all of its leases, the Company is obligated to pay
certain varying insurance costs, utilities, real property taxes and other costs
and expenses.

The Company believes that its manufacturing plants and office
facilities are well maintained and suitable for the operations of the Company.

ITEM 3. LEGAL PROCEEDINGS.

EIFS LITIGATION

As previously reported, Dryvit is a defendant or co-defendant in numerous
exterior insulated finish systems ("EIFS") related lawsuits. As of June 30,
2004, Dryvit was a defendant or co-defendant in approximately 275 single family
residential EIFS cases, the majority of which are pending in South Carolina and
other areas of the southeastern region of the country. Dryvit is also defending
EIFS lawsuits involving commercial structures, townhouses and condominiums. The
vast majority of Dryvit's EIFS lawsuits seek monetary relief for water intrusion
related property damages, although some claims in certain lawsuits allege
personal injuries from exposure to mold.

As previously reported, Dryvit settled the North Carolina class action
styled Ruff, et al. v. Parex, Inc., et al. ("Ruff"). As of June 30, 2004, a
cumulative total of 735 claims had been

12

submitted to the Ruff claims administrator of which 381 claims were paid in the
aggregate amount of approximately $6.2 million. The claim period for filing
claims in the Ruff class action expired on January 17, 2003. There are no more
pending claims in the Ruff North Carolina class action and the court has issued
a ruling that Dryvit may dispense with the claims administration process.

As previously reported, Dryvit is a defendant in an attempted state class
action filed on November 14, 2000 in Jefferson County, Tennessee styled Bobby R.
Posey, et al. v. Dryvit Systems, Inc. (formerly styled William J. Humphrey, et
al. v. Dryvit Systems, Inc.) (Case No. 17,715-IV) ("Posey"). As previously
reported, a preliminary approval order was entered on April 8, 2002 in the Posey
case for a proposed nationwide class action settlement covering, "All Persons
who, as of June 5, 2002, own a one- or two-family residential dwelling or
townhouse in any State other than North Carolina clad, in whole or in part, with
Dryvit EIFS installed after January 1, 1989, except persons who (1) prior to
June 5, 2002, have settled with Dryvit, providing a release of claims relating
to Dryvit EIFS; or (2) have not obtained a judgment against Settling Defendant
for a Dryvit EIFS claim, or had a judgment entered against them on such a claim
in Settling Defendants' favor; and (3) any employees of Dryvit." Nationwide
notice to all eligible class members began on or about June 13, 2002. Any person
who wished to be excluded from the Posey settlement was provided an opportunity
to individually "opt out" and thus not be bound by the final Posey order.

A fairness hearing was held to determine whether the proposed settlement
is fair, reasonable and adequate and an order and judgment granting final
approval of the settlement was entered on January 14, 2003. Notices of appeal
were filed by persons seeking to challenge certain provisions of the proposed
settlement including challenging the trial court's denial of certain builders
and one homeowner's right to appear at the fairness hearing and intervene in the
underlying action. On March 22, 2004, the Tennessee Court of Appeals dismissed
the homeowner's appeal but ruled that the builders should be allowed to
intervene to determine their rights and obligations, if any, under the proposed
national settlement. Dryvit has urged the trial court to expeditiously address
this issue on remand so the settlement can be finalized.

During the pendency of the foregoing issues, the court has allowed claims
to be processed under the proposed Posey settlement. As of the June 5, 2004
claim submission deadline, approximately 7,000 total claims have been filed. Of
these 7,000 claims, approximately 3,400 claims have been rejected or closed for
various reasons under the terms of the settlement. An additional 600 claims are
under review for potential filing deficiencies. The approximately 3,000
remaining claims are at various stages of review and processing under the terms
of the proposed settlement. As of June 5, 2004, approximately 170 claims have
been paid a total of $1.6 million.

Although Dryvit's claims experience under Posey is still evolving and it
is possible that future claims and payments may vary from management's current
expectations, Dryvit believes that its reserves and available third party excess
insurance will be adequate to cover the anticipated costs of the Posey
settlement.

Certain of Dryvit's insurers have paid or are currently paying a portion
of Dryvit's defense costs in the individual commercial and residential EIFS
lawsuits and are contributing to the settlement of claims. Under current
cost-sharing agreements, the terms of which are subject to periodic
renegotiations, Dryvit's insurers cover various portions of Dryvit's indemnity
and defense costs. Dryvit has and is expected to continue to assume a greater
share of the costs depending on the type of claim and applicable date of
construction. Management believes Dryvit's remaining EIFS lawsuits will not have
a material adverse effect on the Company's consolidated financial condition,
results of operations or cash flows.

13

ASBESTOS LITIGATION

As previously reported, certain of the Company's wholly-owned
subsidiaries, principally Bondex International, Inc. (collectively referred to
as "the Subsidiaries"), are defendants in various asbestos-related bodily injury
lawsuits filed in various state courts with the vast majority of current claims
pending in five states - Illinois, Ohio, Mississippi, Texas and Florida. These
cases generally seek unspecified damages for asbestos-related diseases based on
alleged exposures to asbestos-containing products previously manufactured by the
Company's Subsidiaries.

The Company's Subsidiaries vigorously defend these asbestos-related
lawsuits and in many cases, the plaintiffs are unable to demonstrate that any
injuries they have incurred, in fact, resulted from exposure to one of our
Subsidiaries' products. In such cases, the Subsidiaries are generally dismissed
without payment. With respect to those cases where compensable disease, exposure
and causation are established with respect to one of our Subsidiaries' products,
the Subsidiaries generally settle for amounts that reflect the confirmed
disease, the particular jurisdiction, applicable law, the number and solvency of
other parties in the case and various other factors which may influence the
settlement value each party assigns to a particular case at the time.

As of May 31, 2004, the Company's Subsidiaries had a total of 5,913
active asbestos cases compared to a total of 2,002 cases as of May 31, 2003. The
vast majority of the increase in cases involved non-malignant claimants. The
Company's Subsidiaries are vigorously defending these non-malignant cases. Based
upon past experience, these non-malignant claims are typically dismissed without
payment. For the fiscal year ended May 31, 2004, the Company's Subsidiaries
secured dismissals and/or settlements of 670 claims and made total payments of
$63.4 million which included $9.4 million covered by then available third party
insurance. For the comparable period ended May 31, 2003, dismissals and/or
settlements covered 1,846 claims and total payments were $54.4 million. For the
fourth quarter ended May 31, 2004, the Company's Subsidiaries secured dismissals
and/or settlements of 177 claims and made total payments of $15.3 million. The
Company's Subsidiaries secured dismissals and/or settlements of 503 claims and
made payments of $19.1 million for the prior year fourth quarter ended May 31,
2003. In some jurisdictions, cases may involve more than one individual
claimant. As a result, settlement or dismissal statistics on a per case basis
are not necessarily reflective of the payment amounts on a per claimant basis
and will vary widely depending on a variety of factors including the mix of
malignancy and nonmalignancy claims and defense costs involved.

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

14

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
Subsidiaries' 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
year 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 were
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 comprise 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 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 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. Estimating the future cost of these asbestos related contingent
liabilities was and continues to be subject to many uncertainties, including (i)
the ultimate number of claims filed against the Subsidiaries, (ii) the cost of
resolving both current known and future unknown claims, (iii) the amount of
insurance, if any, available to cover such claims, including the outcome of
coverage litigation against the Subsidiaries' third party insurers, (iv) future
earnings and cash flow of the Company's Subsidiaries, (v) the impact of
bankruptcies of other companies whose share of liability may be imposed on the
Company's Subsidiaries under certain state liability laws, (vi) the
unpredictable aspects of the litigation process including the scheduling of
trial dates and the jurisdictions in which trials are scheduled, (vii) the
outcome of any such trials including judgments or

15

jury verdicts, as a result of the Company's more aggressive defense posture
which includes taking selective cases to trial, (viii) the lack of specific
information in many cases concerning exposure to the Subsidiaries' products
and the claimants' diseases, (ix) potential changes in applicable federal
and/or state law, (x) and the potential impact of various pending structured
settlement transactions concerning other defendants.

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
were $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 sixteen 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.

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.

ENVIRONMENTAL PROCEEDINGS

As previously reported, several of the Company's Subsidiaries are, from
time to time, identified as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation and Liability Act and similar
state environmental statutes. In some cases, the Company's Subsidiaries are
participating in the cost of certain clean-up efforts or other remedial actions.
The Company's share of such costs, however, has not been material and management
believes that these environmental proceedings will not have a material adverse
effect on the

16

Company's consolidated financial condition or results of operations. See also
"Item 1-Business-Environmental Matters" included in this Annual Report on Form
10-K.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT*.

The name, age and positions of each executive officer of the Company
as of August 1, 2004 are as follows:

Name Age Position and Offices with the Company
- ---- --- -------------------------------------

Frank C. Sullivan 43 President and Chief Executive Officer
Ronald A. Rice 41 Senior Vice President - Administration and Assistant Secretary
P. Kelly Tompkins 47 Senior Vice President, General Counsel and Secretary
Dennis F. Finn 51 Vice President - Environmental and Regulatory Affairs
Glenn R. Hasman 50 Vice President - Finance and Communications
Paul G. P. Hoogenboom 44 Vice President - Operations and Chief Information Officer
Stephen J. Knoop 39 Vice President - Corporate Development
Robert L. Matejka 61 Vice President, Chief Financial Officer and Controller
Keith R. Smiley 42 Vice President, Treasurer and Assistant Secretary

- -----------------------

* Included pursuant to Instruction 3 to Item 401(b) of Regulation S-K.

Frank C. Sullivan was elected Chief Executive Officer on October 11,
2002 and President on August 5, 1999. From October 2001 to October 2002, Mr.
Sullivan served as the Company's Chief Operating Officer. From October 1995 to
August 1999 he served as Executive Vice President, and was Chief Financial
Officer from October 1993 to August 1999. Mr. Sullivan served as a Vice
President from October 1991 to October 1995. Prior thereto, he served as
Director of Corporate Development of the Company from February 1989 to October
1991. Mr. Sullivan served as Regional Sales Manager, from February 1988 to
February 1989, and as a Technical Service Representative, from February 1987 to
February 1988, of AGR Company, an Ohio General Partnership formerly owned by the
Company. Prior thereto, Mr. Sullivan was employed by First Union National Bank
from 1985 to 1986 and Harris Bank from 1983 to 1985. Mr. Sullivan is employed as
President and Chief Executive Officer under an employment agreement that
provides for automatic annual renewal. Mr. Sullivan is the son of Thomas C.
Sullivan, Chairman of the Board of Directors of the Company.

Ronald A. Rice was elected Senior Vice President-Administration on
October 11, 2002 and Assistant Secretary on August 5, 1999. From October 2001 to
October 2002, he served as Vice President-Administration. From August 1999 to
October 2001, Mr. Rice served as the Company's Vice President-Risk Management
and Benefits. From 1997 to August 1999, he served as Director of Risk Management
and Employee Benefits, and from 1995 to 1997 he served as Director of Benefits.
From 1985 to 1995, Mr. Rice served in various capacities with the Wyatt Company,
most recently he served as Senior Account Manager from 1992 to 1995. Mr. Rice is
employed as Senior Vice President-

17

Administration under an employment agreement that provides for automatic annual
renewal. Mr. Rice is also an Assistant Secretary of the Company.

P. Kelly Tompkins was elected Senior Vice President of the Company
on October 11, 2002. He has served as General Counsel and Secretary since June
1998, and served as Vice President from June 1998 to October 2002. From June
1996 to June 1998, Mr. Tompkins served as Assistant General Counsel. From 1987
to 1995, Mr. Tompkins was employed by Reliance Electric Company in various
positions including Senior Corporate Counsel, Director of Corporate Development
and Director of Investor Relations. From 1985 to 1987, Mr. Tompkins was employed
as a litigation attorney by Exxon Corporation. Mr. Tompkins is employed as
Senior Vice President, General Counsel and Secretary under an employment
agreement that provides for automatic annual renewal.

Dennis F. Finn was elected Vice President-Environmental and
Regulatory Affairs on October 12, 2001. Prior to joining the Company in November
2000 as director of environmental and regulatory affairs, Mr. Finn served for 10
years as director of environmental health and safety at Day-Glo Color Corp., one
of the Company's operating companies. He also held various positions with Nalco
Chemical Company and IIT Research Institute.

Glenn R. Hasman was elected Vice President-Finance and
Communications on August 1, 2000. Mr. Hasman served as Vice President-Controller
from August 1999 to August 2000, as Vice President-Financial Operations from
October 1997 to August 1999, as Vice President-Administration from October 1993
to October 1997 and as Controller from July 1990 to October 1993. From September
1982 through July 1990, Mr. Hasman served in a variety of management capacities,
most recently Vice President-Operations and Finance, Chief Financial Officer and
Treasurer, with a former wholly-owned subsidiary of the Company. From 1979 to
1982, Mr. Hasman served as RPM's Director of Internal Audit and from 1976 to
1979 he was associated with Ciulla, Smith & Dale, LLP, independent accountants.
Mr. Hasman is employed as Vice President-Finance and Communications under an
employment agreement that provides for automatic annual renewal.

Paul G. P. Hoogenboom was elected Vice President-Operations on
August 1, 2000 and as Chief Information Officer on October 11, 2002. Mr.
Hoogenboom served as Vice President and General Manager of the Company's
e-commerce subsidiary, RPM-e/c, Inc., in 1999. From 1998 to 1999, Mr. Hoogenboom
was a Director of Cap Gemini, a computer systems and technology consulting firm.
During 1997, Mr. Hoogenboom was employed as a strategic marketing consultant for
Xylan Corporation, a network switch manufacturer. From 1994 to 1997, Mr.
Hoogenboom was Director of Corporate I.T. and Communications for A.W. Chesterton
Company, a manufacturer of fluid sealing systems. Mr. Hoogenboom is employed as
Vice President-Operations and Chief Information Officer under an employment
agreement that provides for automatic annual renewal.

Stephen J. Knoop was elected Vice President-Corporate Development on
August 5, 1999. From June 1996 to August 1999, Mr. Knoop served as Director of
Corporate Development of the Company. From 1990 to May 1996, Mr. Knoop was an
attorney at Calfee, Halter & Griswold LLP. Mr. Knoop is employed as Vice
President-Corporate Development under an employment agreement that provides for
automatic annual renewal.

Robert L. Matejka was elected Chief Financial Officer on October 12,
2001 and Vice President-Controller on August 1, 2000. From 1995 to 1999, he
served as Vice President-Finance of the motor and drive systems businesses of
Rockwell International Corporation. From 1973 to 1995, Mr. Matejka served in
various capacities with Reliance Electric Company, most recently as its
Assistant Controller. From 1965 to 1973, he was an Audit Supervisor with Ernst &
Young. Mr. Matejka is

18

employed as Chief Financial Officer and Vice President-Controller under an
employment agreement that provides for automatic annual renewal.

Keith R. Smiley was elected Vice President and Assistant Secretary
on August 5, 1999, and has served as Treasurer of the Company since February
1997. From October 1993 to February 1997, he served as Controller of the
Company. From January 1992 until February 1997, Mr. Smiley also served as the
Company's Internal Auditor. Prior thereto, he was associated with Ciulla, Smith
& Dale, LLP. Mr. Smiley is employed as Vice President, Treasurer and Assistant
Secretary under an employment agreement that provides for automatic annual
renewal.

PART II

ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.

RPM shares of Common Stock are traded on the New York Stock Exchange
under the symbol RPM. The high and low sales prices for the shares of Common
Stock, and the cash dividends paid on the Common Stock, for each quarter of the
two most recent fiscal years is set forth in the table below.

RANGE OF SALES PRICES AND DIVIDENDS PAID

Dividends Paid
Fiscal 2004 High Low Per Share
- ----------- --------- --------- --------------

1st Quarter $ 14.20 $ 12.28 $ 0.130
2nd Quarter 15.28 12.90 $ 0.140
3rd Quarter 17.24 14.93 $ 0.140
4th Quarter 17.00 13.29 $ 0.140

Dividends Paid
Fiscal 2003 High Low Per Share
- ----------- ---------- ---------- --------------

1st Quarter $ 16.59 $ 11.58 $ 0.125
2nd Quarter 16.01 12.90 $ 0.130
3rd Quarter 15.90 9.29 $ 0.130
4th Quarter 12.50 9.10 $ 0.130

- --------------------
Source: The Wall Street Journal

Cash dividends are payable quarterly, upon authorization of the
Board of Directors. Regular payment dates are approximately the 30th day of
July, October, January and April. RPM maintains a Dividend Reinvestment Plan
whereby cash dividends, and a maximum of an additional $5,000 per month, may be
invested in RPM Common Stock purchased in the open market at no commission cost
to the participant.

The number of holders of record of RPM Common Stock as of August 2,
2004 was approximately 36,770.

RECENT SALES OF UNREGISTERED SECURITIES

None.

19

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data
of the Company for each of the five years during the period ended May 31, 2004.
The data was derived from the annual Consolidated Financial Statements of the
Company which have been audited by Ciulla, Smith & Dale, LLP, independent
accountants.

FISCAL YEARS ENDED MAY 31,
------------------------------------------------------------------------
2004 2003 2002* 2001 2000
------------ ------------ ------------ ------------ ------------
(Amounts in thousands, except per share and percentage data)

Net sales $ 2,341,572 $ 2,083,489 $ 1,986,126 $ 2,007,762 $ 1,962,410
Income before income taxes 217,616 47,853 154,124 101,487 71,761
Net income 141,886 35,327 101,554 62,961 40,992
Return on sales % 6.1% 1.7% 5.1% 3.1% 2.1%
Basic earnings per share 1.23 0.31 0.97 0.62 0.38
Diluted earnings per share 1.22 0.30 0.97 0.62 0.38
Stockholders' equity 975,292 877,008 858,106 639,710 645,724
Stockholders' equity per share 8.42 7.61 8.22 6.26 6.02
Return on stockholders' equity % 15.3% 4.1% 13.6% 9.8% 5.9%
Average shares outstanding 115,777 115,294 104,418 102,202 107,221
Cash dividends paid 63,651 59,139 52,409 50,605 51,901
Cash dividends per share 0.5500 0.5150 0.5000 0.4975 0.4850
Retained earnings 464,026 385,791 409,603 360,458 348,102
Working capital 517,124 500,444 479,041 443,652 408,890
Total assets 2,353,119 2,247,211 2,078,844 2,078,490 2,099,203
Long-term debt 718,929 724,846 707,921 955,399 959,330
Depreciation and amortization 63,277 58,674 56,859 81,494 79,150

- ------------

Note: Acquisitions made by the Company during the periods presented may impact
comparability from year to year. For information concerning acquisitions for
fiscal year 2004, see Note A of the Notes to Consolidated Financial Statements,
which appear in the Annual Report to Stockholders, incorporated herein by
reference.

*Reflects the adoption of SFAS No. 142 regarding "Goodwill and Other
Intangible Assets". See Note A to the Notes to Consolidated Financial
Statements, which appear in the Annual Report to Stockholders, incorporated
herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The information required by this item is set forth at pages 16
through 27 of the 2004 Annual Report to Stockholders, incorporated herein by
reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to market risk from changes in interest rates
and foreign currency exchange rates since it funds its operations through
long-and short-term borrowings and denominates its business transactions in a
variety of foreign currencies. A summary of the Company's primary market risk
exposures is presented below.

20

Interest Rate Risk

The Company's primary interest rate risk exposure results from
floating rate debt including various revolving credit and other lines of credit.
At May 31, 2004, approximately 23% of the Company's total long-term debt
consisted of floating rate debt. If interest rates were to increase 100 basis
points (1%) from May 31, 2004 rates, and assuming no changes in long-term debt
from the May 31, 2004 levels, the additional annual expense would be
approximately $1.6 million on a pre-tax basis. The Company currently does not
hedge its exposure to this floating rate interest rate risk.

Foreign Currency Risk

The Company's foreign sales and results of operations are subject to
the impact of foreign currency fluctuations. As most of the Company's foreign
operations are in countries with fairly stable currencies, such as the United
Kingdom, Belgium and Canada, this effect has not been material. In addition,
foreign debt is denominated in the respective foreign currency, thereby
eliminating any related translation impact on earnings. If the U.S. dollar
continues to weaken, the Company's foreign results of operations would be
positively impacted, but the effect would not be expected to be material. A 10%
change in foreign currency exchange rates would not have resulted in a material
impact on the Company's net income for the fiscal year ended May 31, 2004. The
Company does not currently hedge against the risk of exchange rate fluctuations.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this item is set forth at pages 28
through 50 of the 2004 Annual Report to Stockholders, which information is
incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

The Company's management with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, after evaluating the
effectiveness of the Company's disclosure controls and procedures (as defined in
Exchange Act Rule 13a-14) as of May 31, 2004 (the "Evaluation Date"), have
concluded that as of the Evaluation Date, the Company's disclosure controls and
procedures were effective in ensuring that information required to be disclosed
by the Company in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the Commission's rules and forms.

(b) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.

There were no changes in the Company's internal control over financial
reporting that occurred during the fiscal quarter ended May 31, 2004 that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

21

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information required by this item as to the Directors of the Company
appearing under the caption "Proposal One - Election of Directors" in the
Company's 2004 Proxy Statement is incorporated herein by reference. Information
required by this item as to the Executive Officers of the Company is included as
Item 4A of Part I of this Annual Report on Form 10-K as permitted by Instruction
3 to Item 401(b) of Regulation S-K. Information required by Item 405 of
Regulation S-K is set forth in the 2004 Proxy Statement under the heading
"Proposal One - Section 16(a) Beneficial Ownership Reporting Compliance," which
information is incorporated herein by reference. Information required by Item
406 of Regulation S-K is set forth in the 2004 Proxy Statement under the heading
"Proposal One - Information Regarding Meetings and Committees of the Board of
Directors," which information is incorporated herein by reference.

The charters of the Compensation Committee, Governance and
Nominating Committee and Audit Committee, and the Corporate Governance
Guidelines and Code of Business Conduct and Ethics are available on the
Company's website at www.rpminc.com and in print to any stockholder who requests
a copy. Requests for copies should be directed to Manager of Investor Relations,
RPM International Inc., P.O. Box 777, Medina, Ohio 44258. The Company intends to
disclose any amendments to the Code of Business Conduct and Ethics, and any
waiver of the Code of Business Conduct and Ethics granted to any Director or
executive officer of the Company, on the Company's website.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this item is set forth in the 2004 Proxy
Statement under the heading "Proposal One - Executive Compensation," which
information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

The information required by this item is set forth in the 2004 Proxy
Statement under the headings "Stock Ownership of Principal Holders and
Management" and "Proposal One - Equity Compensation Plan Information," which
information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is set forth in the 2004 Proxy
Statement under the heading "Proposal One - Executive Compensation," which
information is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this item is set forth in the 2004 Proxy
Statement under the heading "Proposal One - Audit Fees," which information is
incorporated herein by reference.

22

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) The following documents are filed as part of this 2004 Annual Report on
Form 10-K:

1. Financial Statements. The following consolidated financial
statements of the Company and its subsidiaries and the report of independent
auditors thereon, included in the 2004 Annual Report to Stockholders on pages 28
through 50, are incorporated by reference in Item 8:

Independent Registered Public Accounting Firm's Report

Consolidated Balance Sheets -
May 31, 2004 and 2003

Consolidated Statements of Income -
years ended May 31, 2004, 2003 and 2002

Consolidated Statements of Stockholders'
Equity - years ended May 31, 2004, 2003
and 2002

Consolidated Statements of Cash Flows -
years ended May 31, 2004, 2003 and 2002

Notes to Consolidated Financial
Statements (including Unaudited Quarterly
Financial Information)

2. Financial Statement Schedules. The following consolidated financial
statement schedule of the Company and its subsidiaries and the report of
independent registered public accounting firm thereon are filed as part of this
Annual Report on Form 10-K and should be read in conjunction with the
consolidated financial statements of the Company and its subsidiaries included
in the 2004 Annual Report to Stockholders:

Schedule Page No.
- -------- --------

Independent Registered Public Accounting Firm's Report S-1

Schedule II - Valuation and Qualifying S-2
Accounts and Reserves

All other schedules have been omitted because they are not applicable or
not required, or because the required information is included in the
consolidated financial statements or notes thereto.

3. Exhibits.

See the Index to Exhibits at page E-1 of this Annual Report on Form
10-K.

23

(b) Reports on Form 8-K.

The Company filed a Current Report on Form 8-K on April 8, 2004 to report
that it had issued a press release dated April 7, 2004, announcing the Company's
third quarter earnings.

24

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

RPM INTERNATIONAL INC.

Date: August 16, 2004 By: /s/ Frank C. Sullivan
--------------------------------
Frank C. Sullivan
President and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signature and Title

/s/ Frank C. Sullivan President and Chief Executive
- ------------------------------------ Officer and a Director
Frank C. Sullivan (Principal Executive Officer)

/s/ Robert L. Matejka Vice President, Chief Financial
- ------------------------------------ Officer and Controller
Robert L. Matejka (Principal Financial Officer)

/s/ Thomas C. Sullivan Chairman and a Director
- ------------------------------------
Thomas C. Sullivan

/s/ Dr. Max D. Amstutz Director
- ------------------------------------
Dr. Max D. Amstutz

/s/ Edward B. Brandon Director
- ------------------------------------
Edward B. Brandon

/s/ Bruce A. Carbonari Director
- ------------------------------------
Bruce A. Carbonari

/s/ James A. Karman Director
- ------------------------------------
James A. Karman

25

/s/ Donald K. Miller Director
- ------------------------------------
Donald K. Miller

/s/ William A. Papenbrock Director
- ------------------------------------
William A. Papenbrock

/s/ Albert B. Ratner Director
- ------------------------------------
Albert B. Ratner

/s/ William B. Summers, Jr. Director
- ------------------------------------
William B. Summers, Jr.

/s/ Dr. Jerry Sue Thornton Director
- ------------------------------------
Dr. Jerry Sue Thornton

/s/ Joseph P. Viviano Director
- ------------------------------------
Joseph P. Viviano

Date: August 16, 2004

26

RPM INTERNATIONAL INC.

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION
- ----------- ------------

2.1 Agreement and Plan of Merger, dated as of August 29, 2002, by and among, RPM, Inc., the Company and RPM Merger
Company, which is incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, as
filed with the Commission on October 15, 2002.

3.1 Amended and Restated Certificate of Incorporation of the Company, which is incorporated herein by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-8 (Registration No. 333-101501), as filed with the
Commission on November 27, 2002.

3.2 Amended and Restated By-Laws of the Company, which is incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-8 (Registration No. 333-101501), as filed with the Commission on
November 27, 2002.

4.1 Specimen Certificate of common stock, par value $0.01 per share, of the Company, which is incorporated herein by
reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8 (Registration No. 333-101501), as
filed with the Commission on November 27, 2002.

4.2 Specimen Note Certificate for 7.0% Senior Notes Due 2005, which is incorporated herein by reference to Exhibit 4.3
to the Company's Registration Statement on Form S-4 as filed with the Commission on August 3, 1995.

4.3 Specimen Note Certificate of Liquid Asset Notes with Coupon Exchange ("LANCEs(SM)") Due 2008, which is incorporated
herein by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1998 (File No. 001-14187).

4.4 Specimen Note Certificate for Senior Convertible Notes Due 2033, which is incorporated herein by reference to
Exhibit 4.4 to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2003.

4.5 Specimen Note Certificate of 6.25% Senior Note Due 2013. (x)

4.6 Rights Agreement by and between the Company (as successor to RPM, Inc.) and Harris Trust and Savings Bank dated as
of April 28, 1999, which is incorporated herein by reference to Exhibit 4.1 to the Company's Registration Statement
on Form 8-A as filed with the Commission on May 11, 1999.

4.6.1 Amendment to Rights Agreement dated as of December 18, 2000 by and among the Company (as successor to RPM, Inc.),
Computershare Investor Services (formerly Harris Trust and Savings Bank) and National City Bank, which is
incorporated herein by reference to Exhibit 4.4.1 to the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 2001.

E-1

EXHIBIT NO. DESCRIPTION
- ----------- ------------

4.6.2 Second Amendment to Rights Agreement, dated as of October 15, 2002, among RPM, Inc., National City Bank (as
successor rights agent to Computershare Investor Services, formerly Harris Trust and Savings Bank) and the Company,
which is incorporated herein by reference to Exhibit 4.4.2 to the Company's Registration Statement on Form S-8
(Registration No. 333-101501), as filed with the Commission on November 27, 2002.

4.7 Indenture, dated as of June 1, 1995, between RPM, Inc. and The First National Bank of Chicago, as trustee, with
respect to the 7.0% Senior Notes Due 2005, which is incorporated herein by reference to Exhibit 4.5 to the
Company's Registration Statement on Form S-4 as filed with the Commission on August 3, 1995.

4.8 First Supplemental Indenture, dated as of March 5, 1998 to the Indenture dated as of June 1, 1995, between RPM,
Inc. and the First National Bank of Chicago, as trustee, with respect to the Liquid Asset Notes with Coupon
Exchange ("LANCEs(SM)") due 2008, which is incorporated herein by reference to Exhibit 4.6 to the Company's Annual
Report on Form 10-K for the fiscal year ended May 31, 1998 (File No. 001-14187).

4.9 Second Supplemental Indenture, dated as of August 26, 2002, by and among the Company, RPM, Inc. and Bank One, N.A.
(f/k/a The First National Bank of Chicago) as Trustee, relating to the Indenture, dated as of June 1, 1995, by and
between the Company and the Trustee, which is incorporated herein by reference to Exhibit 10.6 to the Company's
Quarterly Report on Form 10-Q for the quarter ended August 31, 2002.

4.10 Indenture, dated as of May 13, 2003 between the Company, as issuer, and The Bank of New York, as trustee, with
respect to the Senior Convertible Notes due 2033, which is incorporated herein by reference to Exhibit 4.9 to the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2003.

4.11 Indenture, dated as of December 9, 2003 between the Company, as issuer, and The Bank of New York, as trustee, which
is incorporated herein by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-4
(Registration No. 333-114259), as filed with the Commission on April 7, 2004.

4.12 Registration Rights Agreement, dated as of May 13, 2003, among the Company, Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and each of the other Initial Purchasers named in Schedule A to the Purchase
Agreement, for whom Merrill Lynch is acting as Representative, with respect to the Senior Convertible Notes due
2033, which is incorporated herein by reference to Exhibit 4.10 to the Company's Annual Report on Form 10-K for the
fiscal year ended May 31, 2003.

4.13 Registration Rights Agreement, dated as of December 9, 2003, among the Company, Banc One Capital Markets, Inc.,
Wachovia Capital Markets, LLC, J.P. Morgan Securities, Inc., Fifth Third Securities, Inc., Mellon Financial
Markets, LLC and U.S. Bancorp Piper Jaffray Inc. and each of the other Initial Purchasers named in Schedule A to
the Purchase Agreement, which is incorporated herein by reference to Exhibit 4.3 to the Company's Registration
Statement on Form S-4 (Registration No. 333-114259), as filed with the Commission on April 7, 2004.

E-2

EXHIBIT NO. DESCRIPTION
- ----------- ------------

*10.1 Succession and Post-Retirement Consulting Letter Agreement, dated April 12, 2002, by and between RPM, Inc. and
Thomas C. Sullivan, which is incorporated herein by reference to Exhibit 10.1 to the Company's Annual Report on
Form 10-K for the year ended May 31, 2002.

*10.1.2 Letter of Amendment to Employment Agreement and Consulting Letter Agreement, dated as of October 14, 2002, by and
between RPM, Inc., the Company and Thomas C. Sullivan, which is incorporated herein by reference to Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2002.

*10.2 Succession and Post-Retirement Consulting Letter Agreement, dated April 12, 2002, by and between RPM, Inc. and
James A. Karman, which is incorporated herein by reference to Exhibit 10.2 to the Company's Annual Report on Form
10-K for the year ended May 31, 2002.

*10.2.1 Letter of Amendment to Employment Agreement and Consulting Letter Agreement, dated as of October 14, 2002, by and
between RPM, Inc., the Company and James A. Karman, which is incorporated herein by reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2002.

*10.3 Form of Employment Agreement entered into by and between the Company and each of P. Kelly Tompkins, Senior Vice
President, General Counsel and Secretary, Glenn R. Hasman, Vice President - Finance and Communications, Stephen J.
Knoop, Vice President - Corporate Development, Robert L. Matejka, Chief Financial Officer and Vice President -
Controller, Ronald A. Rice, Senior Vice President - Administration and Assistant Secretary, Keith R. Smiley, Vice
President, Treasurer and Assistant Secretary and Paul G. Hoogenboom, Vice President-Operations and Chief
Information Officer, which is incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended February 28, 2001.

*10.3.1 Form of Letter of Amendment to Employment Agreements entered into by and between RPM, Inc., the Company and each of
P. Kelly Tompkins, Senior Vice President, General Counsel and Secretary, Ronald A. Rice, Senior Vice President -
Administration and Assistant Secretary, Glenn R. Hasman, Vice President - Finance and Communications, Stephen J.
Knoop, Vice President - Corporate Development, Robert L. Matejka, Chief Financial Officer and Vice President -
Controller, Keith R. Smiley, Vice President, Treasurer and Assistant Secretary and Paul G. Hoogenboom, Vice
President-Operations and Chief Information Officer, which is incorporated herein by reference to Exhibit 10.3 to
the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2002.

*10.4 Amended and Restated Employment Agreement between the Company and Frank C. Sullivan - Chief Executive Officer and
President, which is incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
for the quarter ended November 30, 2002.

*10.4.1 Employment Agreement between the Company and Dennis F. Finn - Vice President - Environmental & Regulatory Affairs,
which is incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended February 28, 2003.

E-3

EXHIBIT NO. DESCRIPTION
- ----------- ------------

*10.5 RPM International Inc. 1989 Stock Option Plan, as amended, and form of Stock Option Agreements to be used in
connection therewith, which is incorporated herein by reference to Exhibit 10.4 to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 2001.

*10.5.1 Amendment No. 3 to RPM International Inc. 1989 Stock Option Plan, as amended, which is incorporated herein by
reference to Exhibit 4.5.1 to the Company's Registration Statement on Form S-8 (Registration No. 033-32794), as
filed with the Commission on November 27, 2002.

*10.6 RPM International Inc. 1996 Stock Option Plan, which is incorporated herein by reference to Exhibit 4.5 to the
Company's Registration Statement on Form S-8 (Registration No. 333-60104), as filed with the Commission on November
27, 2002.

*10.6.1 Amendment No. 1 to RPM International Inc. 1996 Stock Option Plan, which is incorporated herein by reference to
Exhibit 10.7.1 to the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1998 (File No.
001-14187).

*10.6.2 Amendment to RPM International Inc. 1996 Stock Option Plan, which is incorporated herein by reference to Exhibit
4.3.1 to the Company's Registration Statement on Form S-8 as filed with the Commission on May 3, 2001.

*10.6.3 Amendment No. 3 to RPM International Inc. 1996 Stock Option Plan, which is incorporated herein by reference to
Exhibit 4.5.3 to the Company's Registration Statement on Form S-8 (Registration No. 333-60104), as filed with the
Commission on November 27, 2002.

*10.6.4 Form of Stock Option Agreement to be used in connection with the RPM International Inc. 1996 Stock Option Plan, as
amended, which is incorporated herein by reference to Exhibit 10.6.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended November 30, 2002.

*10.7 RPM International Inc. 401(k) Trust and Plan, as amended, which is incorporated herein by reference to Exhibit 4.5
to the Company's Registration Statement on Form S-8 (Registration No. 333-101501), as filed with the Commission on
November 27, 2002.

*10.7.1 Amendment No. 1 to RPM International Inc. 401(k) Trust and Plan, which is incorporated herein by reference to
Exhibit 4.5.1 to the Company's Registration Statement on Form S-8 (Registration No. 333-101501), as filed with the
Commission on November 27, 2002.

*10.7.2 Amendment No. 2 to RPM International Inc. 401(k) Trust and Plan, as amended, which is incorporated by reference to
Exhibit 4.5.2 to the Company's Registration Statement on Form S-8 (Registration No. 333-101501), as filed with the
Commission on November 27, 2002.

*10.8 RPM International Inc. Union 401(k) Retirement Savings Trust and Plan, dated as of August 27, 2002, which is
incorporated herein by reference to Exhibit 4.6. to the Company's Registration Statement on Form S-8 (Registration
No. 333-101501), as filed with the Commission on November 27, 2002.

E-4

EXHIBIT NO. DESCRIPTION
- ----------- ------------

*10.8.1 Amendment No. 1 to RPM International Inc. Union 401(k) Retirement Savings Trust and Plan, dated as of August 27,
2002, which is incorporated herein by reference to Exhibit 4.6.1 to the Company's Registration Statement on Form
S-8 (Registration No. 333-101501), as filed with the Commission on November 27, 2002.

*10.8.2 Amendment No. 2 to RPM International Inc. Union 401(k) Retirement Savings Trust and Plan, as amended, which is
incorporated herein by reference to Exhibit 4.6.2 to the Company's Registration Statement on Form S-8 (Registration
No. 333-101501), as filed with the Commission on November 27, 2002.

*10.9 RPM International Inc. Benefit Restoration Plan, which is incorporated herein by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2001.

*10.9.1 Amendment No. 1 to the RPM International Inc. Benefit Restoration Plan, which is incorporated herein by reference
to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 2003.

*10.9.2 Amendment No. 2 to RPM International Inc. Benefit Restoration Plan, which is incorporated herein by reference to
Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2002.

*10.10 RPM International Inc. Deferred Compensation Plan, which is incorporated herein by reference to Exhibit 10.8.1 to
the Company's Annual Report on Form 10-K for the year ended May 31, 2002.

*10.10.1 Master Trust Agreement for RPM International Inc. Deferred Compensation Plan, which is incorporated herein by
reference to Exhibit 10.8.1 to the Company's Annual Report on Form 10-K for the year ended May 31, 2002.

*10.10.2 Amendment No. 1 to RPM International Inc. Deferred Compensation Plan, which is incorporated herein by reference to
Exhibit 4.5.1 to the Company's Registration Statement on Form S-8 (Registration No. 333-101512), as filed with the
Commission on November 27, 2002.

*10.10.3 Amendment No. 3 to RPM International Inc. Deferred Compensation Plan. (x)

*10.11 RPM International Inc. Incentive Compensation Plan, which is incorporated herein by reference to Exhibit 10.10 to
the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2001.

*10.11.1 Amendment No. 1 to RPM International Inc. Incentive Compensation Plan, which is incorporated herein by reference to
Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2002.

*10.12 1997 RPM International Inc. Restricted Stock Plan, and Form of Acceptance and Escrow Agreement to be used in
connection therewith, which is incorporated herein by reference to Exhibit 10.12 to the Company's Quarterly Report
on Form 10-Q for the quarter ended November 30, 2002.

*10.12.1 First Amendment to the RPM, Inc. 1997 Restricted Stock Plan, effective as of October 1, 1998, which is incorporated
herein by reference to Exhibit 10.10.1 to the Company's Annual Report on Form 10-K for the year ended May 31, 2002.

E-5

EXHIBIT NO. DESCRIPTION
- ----------- ------------

*10.12.2 Second Amendment to the RPM International Inc. 1997 Restricted Stock Plan, which is incorporated herein by
reference to Exhibit 10.10.2 to the Company's Annual Report on Form 10-K for the year ended May 31, 2002.

*10.12.3 Third Amendment to the 1997 RPM International Inc. Restricted Stock Plan, which is incorporated herein by reference
to Exhibit 10.12.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2002.

*10.12.4 Fourth Amendment to the 1997 RPM International Inc. Restricted Stock Plan, which is incorporated herein by
reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 2003.

*10.12.5 Fifth Amendment to the 1997 RPM International Inc. Restricted Stock Plan. (x)

*10.13 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan, which is incorporated herein by
reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 2003.

*10.13.1 Amendment No. 1 to the RPM International Inc. Performance Accelerated Restricted Stock Plan, which is incorporated
herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended February
28, 2003.

*10.13.2 Amendment No. 2 to the RPM International Inc. Performance Accelerated Restricted Stock Plan. (x)

*10.14 RPM International Inc. 2003 Restricted Stock Plan for Directors, which is incorporated herein by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2003.

*10.15 Form of Indemnification Agreement entered into by and between the Company and each of its Directors and Executive
Officers, which is incorporated herein by reference to Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q
for the quarter ended November 30, 2002.

10.16 Five-Year $500,000,000 Credit Agreement, dated as of July 14, 2000, among the Company, The Chase Manhattan Bank, as
Administrative Agent and Chase Securities Inc., which is incorporated herein by reference to Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2000.

10.16.1 Amendment No. 1, dated July 31, 2001, to the 364-Day Credit Agreement and the Five-Year Credit Agreement among the
Company, the Lenders party thereto and The Chase Manhattan Bank, as Administrative Agent, which is incorporated by
referred to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended August 31,
2001.

10.16.2 Amendment No. 2 to Five-Year Credit Agreement, dated as of July 12, 2002, by and among the Company, the Lender
parties thereto and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as administrative agent, which is
incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter
ended August 31, 2002.

E-6

EXHIBIT NO. DESCRIPTION
- ----------- ------------

10.16.3 Assignment, Assumption and Release Agreement, related to the Five-Year Credit Agreement, dated as of October 15,
2002, between RPM, Inc. and the Company, which is incorporated herein by reference to Exhibit 10.15 to the
Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 2002.

10.17 Receivables Sale Agreement among certain subsidiaries of the Company, the Company and RPM Funding Corporation,
dated June 6, 2002, which is incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the quarter ended August 31, 2002.

10.17.1 Amendment No. 2 to Receivables Sales Agreement among certain subsidiaries of the Company, the Company and RPM
Funding Corporation, dated January 28, 2003. (x)

10.17.2 Amendment No. 3 to Receivables Sale Agreement among certain subsidiaries of the Company, the Company and RPM
Funding Corporation, dated April 30, 2004. (x)

10.18 Receivables Purchase Agreement, among certain subsidiaries of the Company, RPM Funding Corporation and Bank One and
Wachovia Bank, NA, as co-agents and administrative agents, dated June 6, 2002, which is incorporated herein by
reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 2002.

10.18.1 Amendment No. 2 to Receivables Purchase Agreement, among certain subsidiaries of the Company, RPM Funding
Corporation and Bank One and Wachovia Bank, NA, as co-agents and administrative agents, dated May 27, 2003. (x)

10.18.2 Amendment No. 3 to Receivables Purchase Agreement, among certain subsidiaries of the Company, RPM Funding
Corporation and Bank One and Wachovia Bank, NA, as co-agents and administrative agents, dated May 27, 2003. (x)

10.19 Omnibus Amendment No. 1 to the Receivables Sale Agreement and the Receivables Purchase Agreement, by and among RPM,
Inc., the Company, certain subsidiaries of the Company, RPM Funding Corporation and Bank One, dated as of October
15, 2002, which is incorporated herein by reference to Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q
for the quarter ended November 30, 2002.

10.20 Performance Undertaking related to the Bank One, NA Receivables Sale Agreement and Receivables Purchase Agreement,
dated June 6, 2002, which is incorporated herein by reference to Exhibit 10.16.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended November 30, 2002.

10.21 Note Purchase Agreement, dated as of November 15, 2001, between the Company and the Purchasers thereto with respect
to the sale of $15 million principal amount of 6.12% Senior Notes, Series A, due November 15, 2004, $10 million
principal amount of 6.61% Senior Notes, Series B, due November 15, 2006, and $30 million principal amount of 7.3%
Senior Notes, Series C, due November, 2003, which is incorporated herein by reference to Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2001.

E-7

EXHIBIT NO. DESCRIPTION
- ----------- ------------

10.21.1 Assignment, Assumption and Amendment Agreement, dated as of August 23, 2002, between the Company, RPM International
Inc. and the holders of the Notes under the Private Placement Note Purchase Agreement, dated as of November 15,
2001, as the same may be amended or supplemented from time to time, between the Company and certain institutional
investors named therein, which is incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 31, 2002.

10.22 Commercial Paper Dealer Agreement between the Company, as Issuer, and U.S. Bancorp Piper Jaffray Inc., as Dealer,
dated as of April 21, 2003, which is incorporated herein by reference to Exhibit 10.21 to the Company's Annual
Report on Form 10-K for the fiscal year ended May 31, 2003.

10.23 Issuing and Paying Agent Agreement between U.S. Bank Trust National Association and the Company, dated as of April
21, 2003, which is incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K
for the fiscal year ended May 31, 2003.

10.24 Purchase Agreement, dated as of May 8, 2003, among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated and each of the other Initial Purchasers named in Schedule A to the Purchase Agreement, for
whom Merrill Lynch is acting as Representative, which is incorporated herein by reference to Exhibit 10.23 to the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2003.

10.25 Purchase Agreement, dated as of December 4, 2003 among the Company, Banc One Capital Markets, Inc., Wachovia
Capital Markets, LLC, J.P. Morgan Securities, Inc., Fifth Third Securities, Inc. Mellon Financial Markets, LLC and
U.S. Bancorp Piper Jaffray Inc. and each of the Initial Purchasers named in Schedule A to the Purchase Agreement,
which is incorporated herein by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-4
(Registration No. 333-114259), as filed with the Commission on April 7, 2004.

11.1 Computation of Net Income per share of Common Stock. (x)

13.1 Financial Information contained in 2004 Annual Report to Stockholders. (x)

21.1 Subsidiaries of the Company. (x)

23.1 Consent of Independent Registered Public Accounting Firm. (x)

31.1 Rule 13a-14(a) Certification of the Company's Chief Financial Officer. (x)

31.2 Rule 13a-14(a) Certification of the Company's Chief Executive Officer. (x)

32.1 Section 1350 Certification of the Company's Chief Financial Officer. (x)

32.2 Section 1350 Certification of the Company's Chief Executive Officer. (x)

- ------------------------------

(x) Filed herewith.

*Management contract or compensatory plan or arrangement.

E-8

Report of Independent Registered Public Accounting Firm
on Financial Statement Schedule

To The Board of Directors and
Stockholders
RPM International Inc. and Subsidiaries
Medina, Ohio

The audits referred to in our report to the Board of Directors and Stockholders
of RPM International Inc. and Subsidiaries dated July 2, 2004, relating to the
consolidated financial statements of RPM International Inc. and Subsidiaries
included the audit of the schedule listed under Item 15 of Form 10-K for each of
the three years in the period ended May 31, 2004. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based upon our
audits.

In our opinion such financial statement schedule presents fairly, in all
material respects, the information set forth therein.

/s/ Ciulla, Smith & Dale, LLP

CIULLA, SMITH & DALE, LLP

S-1

RPM INTERNATIONAL INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES Schedule II

(In thousands)

Additions
Additions Charged to
Balance at Charged Selling, Acquisitions Insurance Balance at
Beginning to Cost General and (Disposals) Carrier End
of Period of Sales Administrative of Businesses Funding Deductions of Period
---------- -------- -------------- ------------- --------- ---------- ----------

Year Ended May 31, 2004
Allowance for doubtful accounts $ 17,297 $ $ 7,613 $ 75 $ $ 6,838 (1) $ 18,147
======== ======== ======== ======== ========= ======== ========

Accrued product liability
reserves $ 53,207 $ $ 18,921 $ $ $ 24,726 (2) $ 47,402
======== ======== ======== ======== ========= ======== ========

Accrued loss reserves -
Current $ 11,023 $ $ 3,241 $ $ $ 4,967 (2) $ 9,297
======== ======== ======== ======== ========= ======== ========
Asbestos-related liabilities - 53,976 (2)
Current $ 41,583 $ $ $ $ $(59,893) (3) $ 47,500
======== ======== ======== ======== ========= ======== ========
Accrued warranty reserves -
Long-term $ 7,781 $ $ (1,816) $ $ $ 386 (2) $ 5,579
======== ======== ======== ======== ========= ======== ========
Asbestos-related liabilities -
Noncurrent $103,000 $ $ $ $ $ 59,893 (3) $ 43,107
======== ======== ======== ======== ========= ======== ========

Year Ended May 31, 2003
Allowance for doubtful
accounts $ 15,884 $ $ 5,609 $ 212 $ $ 4,408 (1) $ 17,297
======== ======== ======== ======== ========= ======== ========

Accrued product liability
reserves $ 36,670 $ $ 10,304 $ $ 36,450 $ 30,217 (2) $ 53,207
======== ======== ======== ======== ========= ======== ========

Accrued loss reserves - Current $ 11,867 $ $ 4,967 $ 335 $ $ 6,146 (2) $ 11,023
======== ======== ======== ======== ========= ======== ========
Asbestos-related liabilities -
Current $ 3,377 $ $ 43,650 $ $ $ 5,444 (2) $ 41,583
======== ======== ======== ======== ========= ======== ========
Accrued warranty reserves -
Long-term $ 9,655 $ $ ( 609) $ 603 $ $ 1,868 (2) $ 7,781
======== ======== ======== ======== ========= ======== ========
Asbestos-related liabilities -
Noncurrent $ $ $103,000 $ $ $ $103,000
======== ======== ======== ======== ========= ======== ========

Year Ended May 31, 2002
Allowance for doubtful accounts $ 17,705 $ $ 7,156 $ $ $ 8,977 (1) $ 15,884
======== ======== ======== ======== ========= ======== ========

Accrued product liability
reserves $ 37,572 $ $ 16,945 $ $ $ 17,847 (2) $ 36,670
======== ======== ======== ======== ========= ======== ========

Accrued loss reserves - Current $ 14,923 $ $ 4,199 $ (100) $ $ 7,155 (2) $ 11,867
======== ======== ======== ======== ========= ======== ========
Asbestos-related liabilities -
Current $ 3,117 $ $ 2,754 $ $ $ 2,494 (2) $ 3,377
======== ======== ======== ======== ========= ======== ========
Accrued warranty reserves -
Long-term $ 11,959 $ $ ( 235) $ $ $ 2,069 (2) $ 9,655
======== ======== ======== ======== ========= ======== ========

(1) Uncollectible accounts written off, net of recoveries

(2) Primarily claims paid during the year, net of insurance contributions

(3) Transfers between current and noncurrent