Exhibit 99.1
[RPM logo]
RPM ANNOUNCES RECORD FISCAL 2003 SALES RESULTS,
EARNINGS GROWTH BEFORE ASBESTOS CHARGE
MEDINA, Ohio-July 28, 2003-RPM International Inc. (NYSE:RPM) today reported
continued growth in sales and operating results from both operating segments for
the fourth quarter and full fiscal year, ended May 31, 2003. Fiscal year net
sales grew 5 percent to a record $2.083 billion and earnings, before a charge
for asbestos related costs, grew to record levels as well. Net income increased
21 percent to $122.8 million and diluted earnings per share improved by 9
percent to $1.06, both before an $88 million after-tax charge for asbestos
liability. Including the charge, RPM reported net income of $35.3 million and
diluted earnings per share of $0.30.
ASBESTOS CHARGE
"It is difficult for us to estimate our potential new asbestos claims and costs
beyond the next couple of years given a number of recent events including
positive changes in state liability laws, particularly in a number of key states
related to our historic asbestos activity," stated Frank C. Sullivan, CEO. "Over
time, these changes at the state level should reduce the number of claims and
our ultimate costs, though it is still too soon to know the full impact. There
are other state tort reform initiatives underway, and if the recently introduced
Senate bill (S.1125 - FAIR Act) eventually becomes law, this whole picture will
change significantly. We obviously can't predict when new laws may be enacted or
what their effect may be on RPM," Sullivan added.
Accordingly, as previously indicated and anticipated, RPM recorded a charge as
of May 31, 2003 for its known asbestos claims and an estimated provision for
foreseeable future claims. The $88 million after-tax charge impacted diluted
earnings per share by ($0.76).
Sullivan continued, "We believe this asbestos reserve will be sufficient to
cover our asbestos related costs for approximately three years. We will
regularly evaluate the adequacy of this reserve and 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, and will make and communicate appropriate adjustments as,
and when, necessary."
FISCAL YEAR RESULTS
For the 2003 fiscal year, RPM reported record net sales of $2.083 billion, a 5
percent improvement, compared with sales of $1.986 billion during fiscal 2002.
The industrial and consumer segments reported sales growth of 6 percent and 4
percent, respectively, including several smaller acquisitions and generally
favorable foreign exchange rates throughout the year.
Excluding the asbestos charge, fiscal 2003 net income increased 21 percent to
$122.8 million and diluted earnings per share improved 9 percent to $1.06,
compared with net income of $101.6 million and diluted
earnings per share of $0.97 in fiscal 2002. The charge to accrue for estimated
asbestos related liabilities resulted in net income of $35.3 million for the
2003 fiscal year and diluted earnings per share of $0.30. The 11.5 million
common shares issued in connection with the March 2002 follow-on equity offering
had a dilutive effect of ($0.01) on reported diluted earnings per share in
fiscal 2003.
FOURTH-QUARTER RESULTS
Net sales for the fourth quarter were a record $589.5 million, an increase of 6
percent against sales of $557.4 million in the fiscal 2002 fourth quarter.
Industrial segment sales increased 8 percent, reaching $304.1 million, while
consumer segment sales were ahead 4 percent, to $285.4 million. Organic sales
growth of 2 percent and 1 percent, respectively, was complemented by the April
1, 2003 acquisition of Koch Waterproofing Solutions and several other smaller
acquisitions, plus favorable foreign exchange rates.
Excluding the asbestos charge, fourth quarter net income increased 19 percent to
$44.1 million and diluted earnings per share increased 15 percent to $0.38,
compared with net income of $37.2 million and diluted earnings per share of
$0.33 in the fiscal 2002 fourth quarter. The charge to accrue for estimated
asbestos related liabilities resulted in a net loss during the fiscal 2003
fourth quarter of ($43.4) million and diluted earnings (loss) per share of
($0.38). The 11.5 million common shares issued in connection with the March 2002
follow-on equity offering had an accretive effect of $0.01 on reported diluted
earnings (loss) per share in the fourth quarter of fiscal 2003.
BUSINESS OUTLOOK
"We continue to be pleased that both of our operating segments have managed to
generate positive performance results despite a still-weak economy. This is a
great reminder that the asbestos issue is not impairing our operating managers'
ability to drive growth in their businesses. When the asbestos issue fades from
prominence in its effect on our results and our discussions of our results, RPM
will clearly be seen as the strong, consistent performer that it is, and will
continue to be," Sullivan stated. "Despite the economic challenges we still
face, RPM is focused on delivering solid single-digit revenue growth and 10-12
percent earnings growth in this new fiscal year," added Sullivan.
ABOUT RPM
RPM International Inc., a holding company, owns subsidiaries that are world
leaders in specialty coatings serving both industrial and consumer markets.
RPM's industrial products include roofing systems, sealants, corrosion control
coatings, flooring coatings and specialty chemicals. RPM's consumer products are
used by professionals and do-it-yourselfers for home maintenance and
improvement, automotive and boat repair and maintenance, and by hobbyists.
Industrial brands include Stonhard, Tremco, Carboline, Day-Glo, Euco and Dryvit.
Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane, Bondo and Testors.
For more information, contact: Glenn R. Hasman, vice president finance and
communications for RPM at (330) 273-8820.
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 insurance coverage inherent in the
Company's disclosed litigation; (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 potential impact of the euro currency conversion; (h) 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; (i) risks and uncertainties
associated with the Company's ongoing acquisition and divestiture activities;
and other risks detailed in the Company's other reports and statements filed
with the Securities and Exchange Commission, including the risk factors set
forth in the Company's prospectus and prospectus supplement included as part of
the Company's Registration Statement on Form S-3 (File No. 333-77028), as the
same may be amended from time to time.
RPM expects that its corporate representatives will meet privately during the
quarter with investors, the media, investment analysts and others. At these
meetings, RPM may reiterate the guidance published in this press release. At
the same time, RPM will keep this press release publicly available on its
website (www.rpminc.com). The public can continue to rely on the guidance
published in this press release as still being RPM's current expectations on
its projected financial performance unless RPM publishes a notice stating
otherwise.
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except per share data
Year Ended May 31, Three Months Ended May 31,
---------------------------- -----------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
NET SALES $2,083,489 $1,986,126 $ 589,546 $ 557,433
Cost of sales 1,128,937 1,073,910 315,298 296,495
---------- ---------- ---------- ----------
Gross profit 954,552 912,216 274,248 260,938
Selling, general & administrative expenses 739,987 717,628 201,043 195,908
Asbestos charge 140,000 140,000
Interest expense, net 26,712 40,464 6,422 8,381
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Income (loss) before income taxes 47,853 154,124 (73,217) 56,649
Provision (benefit) for income taxes 12,526 52,570 (29,848) 19,428
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 35,327 $ 101,554 $ (43,369) $ 37,221
========== ========== ========== ==========
Basic earnings (loss) per share of common stock $ 0.31 $ 0.97 $ (0.38) $ 0.34
========== ========== ========== ==========
Diluted earnings (loss) per share of common stock $ 0.30 $ 0.97 $ (0.38) $ 0.33
========== ========== ========== ==========
Average shares of common stock outstanding - basic 115,294 104,418 115,593 110,567
========== ========== ========== ==========
Average shares of common stock outstanding - diluted 115,986 105,131 115,911 112,015
========== ========== ========== ==========
CONSOLIDATED CONDENSED BALANCE SHEETS
In thousands
May 31,
----------------------------
2003 2002
---------- ----------
ASSETS
Current assets $ 928,094 $ 843,755
Property, plant & equipment (net) 370,789 355,797
Other assets 948,328 879,292
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TOTAL ASSETS $2,247,211 $2,078,844
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 427,650 $ 364,714
Long-term debt, less current maturities 724,846 707,921
Other liabilities 217,707 148,103
---------- ----------
TOTAL LIABILITIES 1,370,203 1,220,738
Stockholders' equity 877,008 858,106
---------- ----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $2,247,211 $2,078,844
========== ==========
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
In thousands
Year Ended May 31,
---------------------------
2003 2002
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 35,327 $ 101,554
Depreciation and amortization 58,674 56,859
Items not affecting cash and other 102,435 (1,567)
Changes in operating working capital (35,807) 34,524
--------- ---------
160,629 191,370
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (41,814) (39,931)
Acquisition of new businesses, net of cash acquired (65,994) (3,138)
Other (2,593) 5,371
--------- ---------
(110,401) (37,698)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in debt 11,101 (248,981)
Cash dividends (59,139) (52,409)
Sale of common stock 155,934
Repurchase of common stock (1,167)
Exercise of stock options 3,286 9,504
--------- ---------
(45,919) (135,952)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 4,244 526
--------- ---------
Net Increase in Cash and Short-term Investments $ 8,553 $ 18,246
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