RPM International (RPM) 8-K RPM’s INTERNAL GROWTH DRIVES RECORD FIRST-QUARTER SALES AND EARNINGS

Exhibit 99.1

RPM’s INTERNAL GROWTH DRIVES RECORD FIRST-QUARTER SALES AND EARNINGS

• Fiscal 2005 first-quarter sales rise 14 percent

• Earnings per share increase 15 percent

MEDINA, Ohio, – October 6, 2004 – RPM International Inc. (NYSE: RPM) today announced a record quarter for sales, earnings and earnings per share for its fiscal 2005 first quarter ended August 31, 2004.

“Market demand remained solid in both our industrial and consumer segments during our first quarter,” said Frank C. Sullivan, president and CEO. “We continue to successfully supplement underlying growth with the introduction of new products and services, which are quickly gaining market acceptance.”

First-Quarter Sales and Earnings

RPM reported net sales of $661.5 million for the fiscal 2005 first quarter, a 13.9 percent increase over last year’s first quarter. Organic growth increased sales by $65.5 million, or 11.3 percent. Acquisitions, net of a small divestiture, added $8.2 million, or 1.4 percent, and net favorable foreign exchange rates contributed $6.8 million, or 1.2 percent, to the sales growth. A reclassification of co-op advertising expense was made to better conform with industry practice, which, on a comparative basis, reduced reported fiscal 2004 first-quarter net sales and selling, general and administrative expenses (SG&A) by $9.1 million. This change in classification for co-op advertising expense does not affect earnings before interest and taxes (EBIT), net income or earnings per share.

Net income reached $54.5 million, an improvement of 14.3 percent over last year’s first quarter, while diluted earnings per share rose to a record $0.47, a 14.6 percent improvement compared with the fiscal 2004 first quarter. The company elected early adoption of FAS 123 (“Accounting for Stock-Based Compensation”) effective June 1, 2004, which reduced fiscal 2005 first-quarter earnings by approximately one-half cent per share.

Consolidated EBIT increased 15.3 percent to $92.4 million compared with last year’s $80.2 million. The EBIT margin improved to 14.0 percent of sales from 13.8 percent a year ago. The margin improvement reflects strong growth in sales volume, productivity gains, cost controls, initial price increases and accretive acquisitions, which collectively more than offset the impact of higher raw material costs. The company will continue to implement price increases in an effort to recover higher raw material costs, which have negatively affected gross margins, particularly in the consumer segment.

Both operating segments grew substantially year over year during the first quarter. RPM’s industrial segment continued to benefit from the organic growth that began in the second half of fiscal 2004. Industrial segment net sales grew by 15.6 percent, of which 11.9 percent was organic, including strength in roofing services, commercial construction sealants, admixtures, exterior insulation finishing systems (EIFS), and powder coatings. The industrial segment continued to benefit from earnings leverage on strong sales, boosting EBIT by 19.3 percent.

Consumer segment net sales grew 11.8 percent compared with first-quarter 2004, with 10.5 percent of this growth being organic as strong retail demand continued nearly throughout this segment, including wood care products

and EPOXYShield® garage floor coatings. Consumer segment EBIT grew by 9.9 percent, with higher raw material costs more than offsetting this segment’s earnings leverage from the higher sales.

Reconciliations of EBIT to the most comparable Generally Accepted Accounting Principles (GAAP) measures and an explanation of how RPM uses EBIT in managing its businesses are provided in the supplemental data attached to this release.

Cash flow from operations was $41.0 million, an increase over fiscal 2004 first-quarter cash flow of $30.9 million. After-tax asbestos-related payments during the 2005 first quarter were $11.9 million versus last year’s $4.8 million; however, last year’s first quarter had the benefit of the remaining third party insurance supplement, amounting to $9.4 million. Therefore, before taxes and insurance, total asbestos-related payments of $19.0 million this year compare with $17.1 million last year. Capital expenditures of $7.4 million during the 2005 quarter compare with depreciation of $12.3 million. Total debt increased by $3.9 million, to $723.8 million, including a $4.5 million note given in a small acquisition during the 2005 quarter. The debt-to-capital ratio remained unchanged from the fiscal year ended May 31, 2004, at 42 percent, but improved from 45 percent one year ago.

Business Outlook

“We are pleased with the strong growth in our first quarter, though it is important to note that we may not be able to sustain this level of sales growth as we face tougher comparisons to the prior year in the coming quarters,” Sullivan said. “Additionally, rising raw material prices will continue to be a concern. Despite these challenges, we continue to anticipate high single-digit growth in revenues and 10 to 12 percent earnings growth for the full 2005 fiscal year.”

Webcast Information

RPM will host a conference call at 10:00 a.m. Eastern time on Wednesday, October 6, 2004. The call may be accessed by dialing 800-299-7089 or over the Internet through RPM’s web site at http://www.rpminc.com. Please access approximately 10 minutes before the call to complete registration. A replay will be available from approximately noon Eastern time on October 6 until 8:00 p.m. Eastern time on October 13, on RPM’s web site or by dialing 888-286-8010 and citing access code 50958063. A transcript of the call will be posted on the web site as soon as possible.

About RPM

RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings and sealants serving both industrial and consumer markets. RPM’s industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, Carboline, Day-Glo, Euco and Dryvit. RPM’s consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement, automotive and boat repair and maintenance, and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane, Bondo and Testors.

For more information, contact Glenn R. Hasman, vice president – finance and communication, at 330-273-8820 or ghasman@rpminc.com.

This press release contains “forward-looking statements” relating to the business of the company. These forward-looking statements, or other statements made by the company, are made based on management’s expectations and beliefs concerning future events impacting the company and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond the control of the company. As a result, actual results of the company could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) general economic conditions; (b) the price and supply of raw materials, particularly titanium dioxide, certain resins, aerosols and solvents; (c) continued growth in demand for the company’s products; (d) legal, environmental and litigation risks inherent in the company’s construction and chemicals businesses and risks related to the adequacy of the company’s insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon the company’s foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with the company’s ongoing acquisition and divestiture activities; (i) risks related to the adequacy of its contingent liability reserves, including for asbestos-related claims; and other risks detailed in the company’s other reports and statements filed with the Securities and Exchange Commission, including the risk factors set forth in the company’s prospectus and prospectus supplement included as part of the company’s Registration Statement on Form S-4 (File No. 333-114259), as the same may be amended from time to time. RPM does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

# # #

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
In thousands, except per share data

	Three Months Ended August 31,
	2004		2003
Net Sales	$	661,513	$	581,023
Cost of sales		366,626		313,980
Gross profit		294,887		267,043
Selling, general & administrative expenses		202,442		186,850
Interest expense, net		7,970		6,283
Income before income taxes		84,475		73,910
Provision for income taxes		29,989		26,238
Net Income	$	54,486	$	47,672
Basic earnings per share of common stock	$	0.47	$	0.41
Diluted earnings per share of common stock	$	0.47	$	0.41
Average shares of common stock outstanding — basic		116,163		115,557
Average shares of common stock outstanding — diluted		117,078		116,233

SUPPLEMENTAL SEGMENT INFORMATION
(Unaudited)
In thousands

	Three Months Ended August 31,
	2004			2003
Net Sales:
Industrial Segment	$	365,508		$	316,194
Consumer Segment		296,005			264,829
Total	$	661,513		$	581,023
Income Before Income Taxes(a):
Industrial Segment Income Before Income Taxes(a)	$	56,136		$	47,020
Interest (Expense), Net		11			(25	)
EBIT(b)	$	56,125		$	47,045
Consumer Segment
Income Before Income Taxes(a)	$	46,355		$	42,146
Interest (Expense), Net		49			11
EBIT(b)	$	46,306		$	42,135
Corporate/Other
Income Before Income Taxes(a)	$	(18,016	)	$	(15,256	)
Interest (Expense), Net		(8,030	)		(6,269	)
EBIT(b)	$	(9,986	)	$	(8,987	)
Consolidated
Income Before Income Taxes(a)	$	84,475		$	73,910
Interest (Expense), Net		(7,970	)		(6,283	)
EBIT(b)	$	92,445		$	80,193

(a)

The presentation includes a reconciliation of EBIT to Income Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (GAAP) in the United States.

(b)

EBIT is defined as earnings before interest and taxes. We believe that EBIT provides one of the best comparative measures of pure operating performance, and it is a widely accepted financial indicator used by certain investors and analysts to analyze and compare companies. EBIT is not intended to represent cash flows for the period, nor is it presented as an alternative to operating income or as an indicator of operating performance. EBIT should not be considered in isolation, but with GAAP, and it is not indicative of operating income or cash flow from operations as determined by those principles. Our method of computation may or may not be comparable to other similarly titled measures of other companies. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In thousands

	Three Months Ended August 31,
	2004			2003
Cash Flows From Operating Activities
Net income	$	54,486		$	47,672
Depreciation and amortization		16,275			15,127
Items not affecting cash and other		3,043			(2,177	)
Changes in operating working capital		(20,901	)		(24,908	)
Changes in asbestos-related liabilities, net of tax		(11,879	)		(4,829	)
		41,024			30,885
Cash Flows From Investing Activities
Capital expenditures		(7,413	)		(6,808	)
Acquisition of businesses, net of cash acquired		(9,900	)		(13,000	)
Proceeds from the sale of assets		4,500
Other		908			(4,166	)
		(11,905	)		(23,974	)
Cash Flows From Financing Activities
Additions to long-term and short-term debt		3,926			4,042
Cash dividends		(16,253	)		(15,019	)
Exercise of stock options		1,062			853
		(11,265	)		(10,124	)
Increase (Decrease) in Cash and Short-Term Investments	$	17,854		$	(3,213	)

CONSOLIDATED BALANCE SHEETS
In thousands

Assets	August 31, 2004			August 31, 2003			May 31, 2004
	(Unaudited)			(Unaudited)
Current Assets
Cash and short-term investments	$	56,415		$	47,512		$	38,561
Trade accounts receivable		483,845			443,782			502,994
Allowance for doubtful accounts		(18,497	)		(17,117	)		(18,147	)
Net trade accounts receivable		465,348			426,665			484,847
Inventories		295,938			255,627			289,359
Deferred income taxes		52,943			51,285			51,164
Prepaid expenses and other current assets		140,567			137,653			130,686
Total current assets		1,011,211			918,742			994,617
Property, Plant and Equipment, at Cost		768,992			717,811			767,072
Less allowance for depreciation and amortization		(392,528	)		(350,681	)		(386,017	)
Property, plant and equipment, net		376,464			367,130			381,055
Other Assets
Goodwill		650,879			633,820			648,243
Other intangible assets, net of amortization		285,044			279,881			282,372
Other		45,410			34,705			46,832
Total other assets		981,333			948,406			977,447
Total Assets	$	2,369,008		$	2,234,278		$	2,353,119
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	208,993		$	154,222		$	205,092
Current portion of long-term debt		233,562			1,802			991
Accrued compensation and benefits		57,304			52,864			88,670
Accrued loss reserves		53,628			59,764			56,699
Asbestos-related liabilities		47,500			41,583			47,500
Other accrued liabilities		70,536			61,166			72,222
Income taxes payable		18,190			17,628			6,319
Total current liabilities		689,713			389,029			477,493
Long-Term Liabilities
Long-term debt, less current maturities		490,284			728,367			718,929
Asbestos-related liabilities		24,101			95,274			43,107
Other long-term liabilities		59,658			58,896			59,910
Deferred income taxes		86,961			61,108			78,388
Total long-term liabilities		661,004			943,645			900,334
Total liabilities		1,350,717			1,332,674			1,377,827
Stockholders’ Equity
Preferred stock; none issued
Common stock (outstanding 116,271; 116,122)		1,163			1,156			1,161
Paid-in capital		514,777			509,332			513,986
Treasury stock, at cost		829			(589	)
Accumulated other comprehensive loss		(737	)		(26,739	)		(3,881	)
Retained earnings		502,259			418,444			464,026
Total stockholders’ equity		1,018,291			901,604			975,292
Total Liabilities and Stockholders’ Equity	$	2,369,008		$	2,234,278		$	2,353,119