RPM International (RPM) 8-K RPM Reports Decline in Sales, Net Income for Fiscal 2009 Second Quarter

Exhibit 99.1

RPM Reports Decline in Sales, Net Income for Fiscal 2009 Second Quarter

• Industrial segment sales continue growth, but EBIT declines as pace slows

• Consumer segment posts declines in sales and EBIT

• Liquidity, capital position and cash flow remain strong

MEDINA, OH — January 8, 2009 — RPM International Inc. (NYSE: RPM) today reported lower sales and net income for its fiscal 2009 second quarter ended November 30, 2008.

Second-Quarter Results

RPM’s net sales of $890.0 million were down 1.7% from the $905.7 million reported in the fiscal 2008 second quarter. Organic sales declined 4.6%, with 3.8% of that amount representing net foreign exchange losses. Net acquisition growth of 2.9% offset part of the organic decline.

Net income for the quarter decreased 23.9%, to $41.7 million from $54.9 million a year ago, while diluted earnings per share decreased 23.3% to $0.33 from $0.43.

“RPM’s second-quarter operating results indicate the impact of the worldwide recession, particularly on our consumer products segment. Our industrial segment, which has been experiencing robust growth for the past several years, also felt the impact of recession as sales continued to grow, albeit at a slower pace,” stated Frank C. Sullivan, chairman and chief executive officer.

Consolidated earnings before interest and taxes (EBIT) were $77.7 million, a 16.4% decline from the $93.0 million reported a year ago.

Second-Quarter Segment Sales and Earnings

Sales in the company’s industrial segment grew 3.3% to $625.6 million from $605.8 million in the year-ago second quarter. Organic sales declined 2.9%, including 4.3% in net foreign exchange losses as a result of the dollar strengthening against most other worldwide currencies. Growth from acquisitions was 6.2%. Industrial segment EBIT for the second quarter decreased 4.0% to $71.0 million, compared to EBIT of $74.0 million a year ago.

“Industrial segment sales growth slowed across most of our businesses,” stated Sullivan. “Sales growth remained brisk in our protective coatings, fiberglass reinforced plastics and international polymer flooring product lines. However, previously high growth lines, such as North American polymer flooring, began feeling the impact of the overall economic decline in the second quarter, while formerly strong international markets reflected the migration of the U.S. recession to Europe and our other overseas markets,” Sullivan stated.

Sales by RPM’s consumer segment fell 11.8% to $264.4 million from $299.9 million a year ago. Of the decline in sales, 8.0% was organic, including 2.7% in net foreign exchange losses, while acquisitions less divestitures accounted for 3.8% of the decline, largely representing the sale of the

RPM Reports Decline in Sales, Net Income Fiscal 2009 Second Quarter
January 8, 2009
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company’s Bondo subsidiary in the fiscal 2008 second quarter. Consumer segment EBIT declined 48.5% to $15.9 million from $30.8 million in the fiscal 2008 second quarter.

“Our consumer businesses continue to face a difficult retail climate, largely attributable to the lingering effects of the weak domestic housing market that has impacted many of our large retail accounts. New, high value products introduced by both our Rust-Oleum and DAP subsidiaries over the summer months have experienced good market acceptance and are performing consistent with our expectations. Our other consumer product lines are maintaining market share in this difficult retail environment,” Sullivan stated.

Asbestos Liability

During the quarter, RPM paid $16.4 million in pre-tax asbestos costs, compared to $26.1 million in the year-ago period. RPM’s total asbestos reserve balance stood at $527.3 million at November 30, 2008.

Cash Flow and Financial Position

For the first half of fiscal 2009, cash from operations was $104.0 million, compared to $104.1 million in the fiscal 2008 first half. Capital expenditures were $24.9 million, compared to depreciation of $32.2 million over the same period in fiscal 2009. Total debt at the end of the first half was $962.6 million, compared to $1,073.6 million at the end of fiscal 2008. RPM’s net (of cash) debt-to-total capitalization ratio was 40.3%, compared to 42.6% at May 31, 2008, and both are at the low end of the company’s historic norms. “At November 30, 2008, liquidity, including cash and long-term committed available credit, stood at a very strong $523.4 million,” Sullivan stated.

Stock Repurchase Update

RPM said it purchased 1,239,544 shares of its stock during the quarter at an average cost of $16.62.

First-Half Sales and Earnings

Net sales for the first half of fiscal 2009 increased 2.2% to $1.88 billion from $1.84 billion a year ago. Net income declined 9.6%, from $123.1 million to $111.1 million during the period.

Diluted earnings per share for the first half of fiscal 2009 decreased 10.4%, to $0.86 from $0.96 a year ago. First-half EBIT was $188.6 million, down 8.4% from the $205.9 million reported a year ago.

RPM’s industrial segment sales increased 9.0% in the fiscal 2009 first half, to $1.32 billion from $1.21 billion a year ago. Acquisitions represented 7.5% of the sales growth, with organic growth adding 1.5%, including 0.7% of net foreign exchange losses. Industrial segment EBIT increased 5.3% to $162.6 million from $154.4 million in the fiscal 2008 first half.

First-half sales for the consumer segment declined 11.2% to $552.3 million from $621.6 million reported in the first half of fiscal 2008. Organic sales decreased by 6.4%, including net foreign exchange losses of 0.8%, while acquisitions less divestitures accounted for 4.8% of the decline,

RPM Reports Decline in Sales, Net Income Fiscal 2009 Second Quarter
January 8, 2009
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primarily due to the Bondo sale. Consumer segment EBIT was down 32.3%, to $50.5 million from $74.5 million a year ago.

Business Outlook

“We are likely to experience a loss in our fiscal third quarter, which will end February 28, 2009, due to a combination of factors. The third quarter is RPM’s seasonally low period, and our performance will be further impacted by continuing revenue declines, along with employee severance costs resulting from adjustments in certain RPM businesses to address the deteriorating business environment,” stated Sullivan.

“As we announced during the second quarter, it is likely that our current fiscal year results will be below those of fiscal 2008, given the significant deterioration of economic conditions worldwide. Also as previously announced, we are discontinuing guidance for the current fiscal year until such time as we see more predictability in overall economic conditions,” he stated.

Webcast and Conference Call Information

Management will host a conference call to discuss the results beginning at 10:00 a.m. Eastern time today. The call can be accessed by dialing 866-713-8565 or 617-597-5324 for international callers. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode.

For those unable to listen to the live call, a replay will be available from approximately 12:00 p.m. Eastern time on January 8, 2009 until 11:59 p.m. Eastern time on January 15, 2009. The replay can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers. The access code is 76795536.

The call also will be available both live and for replay, and as a written transcript, via the Internet on the RPM web site at http://www.rpminc.com.

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, illbruck, Carboline, Day-Glo, Euco and Dryvit. RPM’s consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement, boat repair and maintenance, and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors.

For more information, contact P. Kelly Tompkins, executive vice president — administration and chief financial officer, at 330-273-5090 or ktompkins@rpminc.com.

# # #

RPM Reports Decline in Sales, Net Income Fiscal 2009 Second Quarter
January 8, 2009
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This press release contains “forward-looking statements” relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results 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, supply and capacity of raw materials, including assorted pigments, resins, solvents and other natural gas- and oil-based materials; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our construction and chemicals businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our 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 our ongoing acquisition and divestiture activities; (i) risks related to the adequacy of our contingent liabilities, including for asbestos-related claims; and (j) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended May 31, 2008, as the same may be updated from time to time. We do 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
IN THOUSANDS, EXCEPT PER SHARE DATA
(UNAUDITED)

	Three Months Ended				Six Months Ended
	November 30,				November 30,
	2008		2007		2008		2007
Net Sales	$	889,965	$	905,708	$	1,875,430	$	1,836,047
Cost of sales		533,239		537,970		1,115,115	��	1,084,407
Gross profit		356,726		367,738		760,315		751,640
Selling, general & administrative expenses		278,982		274,718		571,672		545,753
Interest expense, net		17,394		12,107		27,980		24,825
Income before income taxes		60,350		80,913		160,663		181,062
Provision for income taxes		18,624		26,058		49,420		57,939
Net Income	$	41,726	$	54,855	$	111,243	$	123,123
Basic earnings per share of common stock	$	0.33	$	0.46	$	0.88	$	1.03
Diluted earnings per share of common stock	$	0.33	$	0.43	$	0.86	$	0.96
Average shares of common stock outstanding — basic		127,090		120,057		126,158		120,027
Average shares of common stock outstanding — diluted		128,137		130,608		129,197		130,474

SUPPLEMENTAL SEGMENT INFORMATION
IN THOUSANDS
(UNAUDITED)

	Three Months Ended						Six Months Ended
	November 30,						November 30,
	2008			2007			2008			2007
Net Sales:
Industrial Segment	$	625,578		$	605,846		$	1,323,160		$	1,214,446
Consumer Segment		264,387			299,862			552,270			621,601
Total	$	889,965		$	905,708		$	1,875,430		$	1,836,047
Gross Profit:
Industrial Segment	$	264,409		$	254,315		$	556,184		$	509,859
Consumer Segment		92,317			113,423			204,131			241,781
Total	$	356,726		$	367,738		$	760,315		$	751,640
Income (Loss) Before Income Taxes (a):
Industrial Segment
Income Before Income Taxes (a)	$	70,958		$	73,058		$	162,470		$	152,710
Interest (Expense), Net		(37	)		(915	)		(96	)		(1,657	)
EBIT (b)	$	70,995		$	73,973		$	162,566		$	154,367
Consumer Segment
Income Before Income Taxes (a)	$	14,806		$	29,819		$	48,071		$	72,670
Interest (Expense), Net		(1,074	)		(994	)		(2,416	)		(1,850	)
EBIT (b)	$	15,880		$	30,813		$	50,487		$	74,520
Corporate/Other
(Expense) Before Income Taxes (a)	$	(25,414	)	$	(21,964	)	$	(49,878	)	$	(44,318	)
Interest (Expense), Net		(16,283	)		(10,198	)		(25,468	)		(21,318	)
EBIT (b)	$	(9,131	)	$	(11,766	)	$	(24,410	)	$	(23,000	)
Consolidated
Income Before Income Taxes (a)	$	60,350		$	80,913		$	160,663		$	181,062
Interest (Expense), Net		(17,394	)		(12,107	)		(27,980	)		(24,825	)
EBIT (b)	$	77,744		$	93,020		$	188,643		$	205,887

(a)

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

(b)

EBIT is defined as earnings (loss) before interest and taxes. We evaluate the profit performance of our segments based on income before income taxes, but also look to EBIT as a performance evaluation measure because interest expense is essentially related to corporate acquisitions, as opposed to segment operations. We believe EBIT is useful to investors for this purpose as well, using EBIT as a metric in their investment decisions. EBIT should not be considered an alternative to, or more meaningful than, operating income as determined in accordance with GAAP, since EBIT omits the impact of interest and taxes in determining operating performance, which represent items necessary to our continued operations, given our level of indebtedness and ongoing tax obligations. Nonetheless, EBIT is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community all of whom believe, and we concur, that this measure is critical to the capital markets’ analysis of our segments’ core operating performance. We also evaluate EBIT because it is clear that movements in EBIT impact our ability to attract financing. Our underwriters and bankers consistently require inclusion of this measure in offering memoranda in conjunction with any debt underwriting or bank financing. EBIT may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results.

CONSOLIDATED BALANCE SHEETS
IN THOUSANDS

	November 30, 2008			November 30, 2007			May 31, 2008
	(Unaudited)			(Unaudited)
Assets
Current Assets
Cash and short-term investments	$	205,289		$	191,080		$	231,251
Trade accounts receivable		627,653			635,847			841,795
Allowance for doubtful accounts		(20,464	)		(21,382	)		(24,554	)
Net trade accounts receivable		607,189			614,465			817,241
Inventories		493,241			461,946			476,149
Deferred income taxes		36,974			40,612			37,644
Prepaid expenses and other current assets		194,596			202,615			221,690
Total current assets		1,537,289			1,510,718			1,783,975
Property, Plant and Equipment, at Cost		1,007,208			973,709			1,054,719
Allowance for depreciation and amortization		(552,053	)		(514,529	)		(556,998	)
Property, plant and equipment, net		455,155			459,180			497,721
Other Assets
Goodwill		844,980			846,275			908,358
Other intangible assets, net of amortization		348,770			351,764			384,370
Other		167,008			91,744			189,143
Total other assets		1,360,758			1,289,783			1,481,871
Total Assets	$	3,353,202		$	3,259,681		$	3,763,567
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	282,429		$	297,099		$	411,448
Current portion of long-term debt		171,247			101,455			6,934
Accrued compensation and benefits		102,716			101,662			151,493
Accrued loss reserves		73,673			69,317			71,981
Asbestos-related liabilities		65,000			57,500			65,000
Other accrued liabilities		126,106			111,917			139,505
Total current liabilities		821,171			738,950			846,361
Long-Term Liabilities
Long-term debt, less current maturities		791,364			840,564			1,066,687
Asbestos-related liabilities		462,309			247,895			494,745
Other long-term liabilities		137,884			175,883			192,412
Deferred income taxes		19,729			25,288			26,806
Total long-term liabilities		1,411,286			1,289,630			1,780,650
Total liabilities		2,232,457			2,028,580			2,627,011
Stockholders’ Equity
Preferred stock; none issued
Common stock (outstanding 128,381; 121,782; 122,189)		1,284			1,218			1,222
Paid-in capital		775,459			596,644			612,441
Treasury stock, at cost		(50,279	)		(5,730	)		(6,057	)
Accumulated other comprehensive income (loss)		(94,280	)		89,456			101,162
Retained earnings		488,561			549,513			427,788
Total stockholders’ equity		1,120,745			1,231,101			1,136,556
Total Liabilities and Stockholders’ Equity	$	3,353,202		$	3,259,681		$	3,763,567

CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)

	Six Months Ended November 30,
	2008			2007
Cash Flows From Operating Activities:
Net income	$	111,243		$	123,123
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		32,175			30,962
Amortization		11,254			10,813
Deferred income taxes		5,034			20,294
Earnings of unconsolidated affiliates		(931	)		(606	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
Decrease in receivables		212,078			120,336
(Increase) in inventory		(15,607	)		(29,130	)
(Increase) decrease in prepaid expenses and other current and long-term assets		18,138			(4,648	)
(Decrease) in accounts payable		(130,500	)		(85,437	)
(Decrease) in accrued compensation and benefits		(48,776	)		(32,304	)
Increase (decrease) in accrued loss reserves		1,693			(6,692	)
(Decrease) in other accrued liabilities		(37,279	)		(4,278	)
Payments made for asbestos-related claims		(32,436	)		(48,873	)
Other		(22,038	)		10,531
Cash From Operating Activities		104,048			104,091
Cash Flows From Investing Activities:
Capital expenditures		(24,887	)		(17,477	)
Acquisition of businesses, net of cash acquired		(3,733	)		(9,291	)
Purchase of marketable securities		(69,133	)		(43,731	)
Proceeds from sales of marketable securities		63,612			41,103
Proceeds from the sales of assets or businesses					44,800
Other		3,296			(338	)
Cash From (Used For) Investing Activities		(30,845	)		15,066
Cash Flows From Financing Activities:
Additions to long-term and short-term debt		87,209			5,727
Reductions of long-term and short-term debt		(49,576	)		(58,838	)
Cash dividends		(50,470	)		(44,328	)
Repurchase of stock		(45,184	)		(5,730	)
Exercise of stock options, including tax benefit		1,690			5,239
Cash (Used For) Financing Activities		(56,331	)		(97,930	)
Effect of Exchange Rate Changes on Cash and Short-Term Investments		(42,834	)		10,837
Net Change in Cash and Short-Term Investments		(25,962	)		32,064
Cash and Short-Term Investments at Beginning of Period		231,251			159,016
Cash and Short-Term Investments at End of Period	$	205,289		$	191,080