10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K

þ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended May 31, 2005

OR

o 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 No.)
Incorporation or Organization)
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 Common Stock	New York Stock Exchange

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 þ No o

     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. þ

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

     As of August 1, 2005, 117,648,591 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 30, 2004, the last business day of the Registrant’s most recently completed second fiscal quarter) was approximately $2,143,073,983. For purposes of this information, the 1,241,678 outstanding shares of Common Stock which were owned beneficially as of November 30, 2004 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 7, 2005 (the “2005 Proxy Statement”) and (ii) the Registrant’s 2005 Annual Report to Stockholders for the fiscal year ended May 31, 2005 (the “2005 Annual Report to Stockholders”).

     Except as otherwise stated, the information contained in this Annual Report on Form 10-K is as of May 31, 2005.

TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 4A. Executive Officers of the Registrant
PART II
	Item 5. Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
	Item 9A. Controls and Procedures
	Item 9B. Other Information
PART III
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
	Item 13. Certain Relationships and Related Transactions
	Item 14. Principal Accountant Fees and Services
PART IV
	Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
Exhibit Index
EX-10.15.3 Amendment No. 4 to Receivables Sale Agreement
EX-10.16.3 Amendment No. 4 to Receivables Purchase Agreement
Exhibit 10.26
EX-11.1 Consolidated Statements of Computations of Earnings
EX-13.1 Annual Report
EX-21.1 List of Subsidiaries
EX-23.1 Consent of Ciulla, Smith & Dale, LLP
EX-31.1 Rule 13A-14(A) Certification of CFO
EX-31.2 Rule 13A-14(A) Certification of CEO
EX-32.1 CFO Certification Pursuant to 18 U.S.C. Section 1350
EX-32.2 CEO Certification Pursuant to 18 U.S.C. Section 1350

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.

               In connection with the 2002 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 June 15, 2005, the Company borrowed $115.0 million under its $330.0 million, five-year revolving credit facility. The majority of the borrowing, along with cash in hand, was used to repay in full the principal and accrued interest on the Company’s $150.0 million 7.0% Senior Unsecured Notes due 2005. The remainder of the cash borrowed was used for general corporate purposes.

     On July 22, 2005, the Company’s subsidiary, Tremco Incorporated, signed a definitive purchase agreement to acquire Illbruck Sealant Systems (“Illbruck”). Illbruck, located in Leverkusen, Germany, is a provider of high-performance sealant and installation systems. The acquisition will increase the Company’s global presence in core waterproofing and sealants systems technology. The acquisition is expected to close in September 2005, pending appropriate European government approval.

BUSINESS

          RPM subsidiaries manufacture, market and sell 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, 2005, RPM subsidiaries marketed products in 149 countries and territories and operated manufacturing facilities in 71 locations in the United States, Argentina, Belgium, Canada, China, Colombia, Germany, Italy, Mexico, The Netherlands, New Zealand, Poland, South Africa, the United Arab Emirates and the United Kingdom. Approximately 24%

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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, 2005, the Company recorded sales of $2.556 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 56% 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 44% 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.

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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 majority of its international sales, sell directly to contractors, distributors and end-users, such as industrial manufacturing facilities, educational and governmental institutions and commercial establishments. The industrial segment generated $1.442 billion in net sales for the fiscal year ended May 31, 2005 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 as part of the STONBLEND RTZ product line. 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, structural and architectural fireproofing products, and primary and secondary containment linings for a wide variety of industrial infrastructure applications marketed under the CARBOLINE, NULLIFIRE, A/D FIRE 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 and related construction chemicals marketed under the EUCO brand name, commercial carpet and floor cleaning solutions marketed under the CHEMSPEC brand name, industrial and commercial floor systems marketed under the LOCK-TILE and ECOLOC brand names, specialty adhesives and sealants marketed under the COMPACTA and PACTAN brand names, fuel additives marketed under the VALVTECT 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

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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 $1.114 billion in sales in the fiscal year ended May 31, 2005 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 PERFORMANCE, HARD HAT, MATHYS, COMBI COLOR and NOXYDE;

• a complete line of caulks and sealants, patch and repair products and adhesives for the markets for home improvement, repair and construction and the autobody aftermarket, marketed through a wide assortment of DAP and BONDO branded products including ALEX PLUS, KWIK SEAL, SIDEWINDER ADVANCED SIDING and WINDOW SEALANT, WELDWOOD, ‘33’, PLASTIC WOOD, DRYDEX, EASY SOLUTIONS, CRACKSHOT, PHENOSEAL, BONDO and DYNATRON;

• a broad line of specialty products targeted to solve problems for the paint contractor and the DIYer for applications that include surface preparation, primers and sealers, mold and mildew prevention and maintenance, wallpaper removal and application, and waterproofing. Leading brand names include ZINSSER, B-I-N, BULLS EYE 1-2-3, COVER-STAIN, DIF, FAST PRIME, SEALCOAT, JOMAX, GARDZ, PERMA WHITE, SHIELDZ, WATERTITE, PARKS, PAPERTIGER and WALWORKS; and

• an assortment of other products, including hobby paints and cements marketed under the TESTORS brand name, wood furniture finishes and touch-up products marketed under the CCI, MOHAWK, CHEMICAL COATINGS, BEHLEN 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 and pharmaceutical 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, 2005 accounted for approximately 21% 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, Canada, China, Colombia, Germany, Italy, Mexico, New Zealand, The Netherlands, Poland, South Africa, the United Arab

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Emirates and the United Kingdom, and sales offices or public warehouse facilities in Australia, Belgium, Canada, Finland, France, Germany, Hong Kong, Italy, Mexico, Poland, Singapore, Sweden, the United Kingdom and several other countries. Information concerning the Company’s foreign operations 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 insulating 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

          The market for paints, coatings, adhesives and sealants has experienced significant consolidation over the past several decades, however, the market remains fragmented, which creates further consolidation opportunities. In addition to the Company, leading suppliers tend to focus on coatings while other companies focus on adhesives and sealants. 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 BONDO, DAP, RUST-OLEUM and ZINSSER brand names. Leading manufacturers of home improvement-related coatings, adhesives and sealants market their products to DIY users and contractors through a wide range of distribution channels including direct sales to home improvement centers, mass merchandisers, hardware, paint and automotive supply 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, NULLIFIRE, A/D FIRE and TCI brand names to these markets.

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          Roofing Systems Industry

          In the roofing industry, reroofing applications have historically accounted for three-quarters of U.S. demand, with the remaining quarter comprised of new roofing applications. 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, schools, 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 and is easy to clean and maintain. These materials are particularly well-suited for clean environments such as pharmaceutical, food and beverage, and healthcare facilities. In addition, the fast installation time and long-term durability of these products make them ideal for industrial floor repair and restoration. 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 in this fragmented industry include static control, chemical resistance, contamination control, durability and aesthetics. The Company primarily markets under the STONHARD brand name in this industry.

          FRP Grating and Structural Composites. Fiberglass reinforced plastic grating, or FRP, is used primarily in industrial and to a lesser extent commercial applications. FRP grating exhibits many features making it a beneficial alternative to traditional steel or aluminum grating. These include high strength to weight ratio, high corrosion resistance, electrical and thermal non-conductivity and molded in color (which eliminates repainting). FRP grating is used for platforms, walkways, stairs and structures for a variety of applications including those in the food and beverage, chemical processing, water-wastewater, pulp and paper and offshore oil and gas industries. Key attributes that differentiate competitors in these markets include quality assurance, depth of product line and value added design and fabrication services. The Company markets to this industry under the FIBERGRATE, CHEMGRATE and SAFE-T-SPAN brand names.

          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 and other masonry to improve the processability, performance, or appearance of these products. Chemical concrete 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 TREMCO, EUCO, REPUBLIC, VULKEM, DYMERIC, TUFF-N-DRI and WATCHDOG WATERPROOFING brand names in this industry.

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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^®, RUST-OLEUM^®, CARBOLINE^®, DAP^® and TREMCO^®, 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^®” 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 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^®” and other trademarks covering a variety of rust-preventative, decorative, general purpose, specialty, industrial and professional coatings sold by Rust-Oleum Corporation. There are also many foreign registrations for “RUST-OLEUM^®” 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^®.” 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^®.” 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, and related subsidiaries of the Company are the owners of more than 100 registrations for the mark and name “TREMCO^®” in numerous countries and the United States for a variety of roofing, 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^®, AVALON^®, B-I-N^®, BITUMASTIC^®, BONDO^®, BULLS EYE 1-2-3^®, CHEMGRATE^®, DRYVIT^®, DYMERIC^®, DYNALITE^®, DYNATRON^®, EASY FINISH^®, EUCO^®, FLECTO^®, EPOXSTEEL^®, FIBERGRATE^®, FLOQUIL^®, GEOFLEX^®, MAR-HYDE^®, MOHAWK and Design^®, OUTSULATION^®, PARASEAL^®, PERMAROOF^®, PETTIT™, PLASITE^®, SANITILE^®,

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STONBLEND^®, STONCLAD^®, STONHARD^®, STONLUX^®, TCI^®, TESTORS^®, ULTRALITE™, VARATHANE^®, VULKEM^®, WOOLSEY^®, ZINSSER^® and Z-SPAR^®; and, in Europe, NULLIFIRE^®, RADGLO^® and MARTIN MATHYS^®.

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.

          Costs of certain raw materials, particularly resins and petroleum-based feedstocks, have continued to increase over the last 18 months. For the fiscal year ended May 31, 2005, increased raw material costs negatively impacted our consolidated gross profit margin by approximately 260 basis points.

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

          Ten 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, 2005, compared to approximately 25% for the prior fiscal year. Sales to The Home Depot represented 11% of the Company’s total sales for fiscal 2005. 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 2005, 2004 and 2003, the Company invested approximately $28.9 million, $26.2 million and $23.8 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.

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Environmental Matters

               The Company and its subsidiaries are 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 its subsidiaries have been or will be at all times in complete compliance with such laws, regulations and permits. If the Company or its subsidiaries violate or fail to comply with these laws, regulations or permits, they 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 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, 2005, the Company employed 8,213 persons, of whom 667 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.

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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, 2005, the Company’s operations occupied a total of approximately 7.6 million square feet, with the majority, approximately 6.2 million square feet, devoted to manufacturing, assembly and storage. Of the approximately 7.6 million square feet occupied, 5.4 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, 2005, 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
Wisconsin	(Consumer)		303,200	Owned
Toronto, Ontario,	Tremco
Canada	(Industrial)		207,200	Owned
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)

11

          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, the Company’s Dryvit subsidiary is a defendant or co-defendant in numerous exterior insulated finish systems (“EIFS”) related lawsuits. As of May 31, 2005, Dryvit was a defendant or co-defendant in approximately 180 single family residential EIFS cases, the majority of which are pending in 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 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. After a series of appeals the judge reaffirmed the reasonableness, adequacy, and fairness of the national settlement class in all respects and found that the objecting parties had suffered no formal legal prejudice as a result of the settlement.

          During the pendency of the foregoing appeals, the court has allowed claims to be processed under the proposed Posey settlement. The claims submission deadline was June 5, 2004. As of May 31, 2005, approximately 7,187 total claims have been filed as of the claim filing deadline. Of these 7,187 claims, approximately 4,398 claims have been rejected or closed for various reasons under the terms of the settlement. The approximately 2,789 remaining claims are at various stages of

12

review and processing under the terms of the proposed settlement and it is possible that some of these claims will be rejected or closed without payment. As of July 12, 2005, approximately 658 of the 2,789 remaining homeowner claims have been paid for a total of approximately $6.27 million. Additional payments have and will continue to be made in connection with the ongoing administration of the settlement including, inspection costs, third party warranties and class counsel attorneys’ fees. Although Dryvit’s ultimate claims experience under Posey may vary from management’s current expectations, Dryvit believes that its reserves and anticipated recoveries from third party excess insurance will be adequate to substantially cover the anticipated costs of the Posey settlement.

          Third party excess insurers are currently paying a portion of Dryvit’s defense and settlement costs in the individual commercial and residential EIFS lawsuits. Under current cost-sharing agreements, the terms of which are subject to periodic renegotiations, third party excess insurers cover various portions of Dryvit’s indemnity and defense costs. Dryvit has, however, assumed a greater share of the costs associated with EIFS claims depending on the type of claim and applicable date of construction and, as various new excess insurers are requested to participate, Dryvit may have to assume an additional share of the litigation related costs pending negotiation of applicable cost-sharing agreements. Management believes Dryvit’s current EIFS lawsuits will not have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

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 alleged claims relate primarily to products that Bondex or its predecessors sold through 1977.

          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, 2005, the Company’s subsidiaries had a total of 8,646 active asbestos cases compared to a total of 5,913 cases as of May 31, 2004. Consistent with the last several quarters, the vast majority of the year to year increase in active cases continues to involve filings by non-malignant claimants although the rate of recent non-malignancy filing has slowed somewhat compared to prior periods. The Company’s subsidiaries continue to vigorously defend these non-malignant cases. Based upon past experience, these non-malignant claims are typically dismissed without payment. For the fourth quarter ended May 31, 2005, the Company’s subsidiaries secured dismissals and/or settlements of 305 claims and made total payments of $11.1 million, which included defense costs paid during the current first quarter of $8.1 million. For the fourth quarter ending May 31, 2004, dismissals and/or settlements covered 177 claims and total payments were $15.3 million, which included defense costs paid during the quarter of $3.5 million.

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          For the fiscal year ended May 31, 2005, the Company’s subsidiaries secured dismissals and/or settlements in 982 claims and made total payments of $67.4 million, which included defense costs paid during the year of $20.7 million. For the fiscal year ending 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 of then available third party insurance. Defense costs paid during the year were $8.5 million. 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 the amounts and rates can vary widely depending on a variety of factors including the mix of malignancy and non-malignancy claims and the amount of defense costs incurred during the period.

          The rate at which plaintiffs filed asbestos-related suits against the Company’s subsidiaries, particularly Bondex, has increased since the fourth fiscal quarter of 2002, 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 an examination of our subsidiaries’ historical insurance and, as previously disclosed, certain of our subsidiaries filed a complaint for declaratory judgment, breach of contract and bad faith against various third party insurers challenging their assertion that their policies covering asbestos-related claims have been exhausted. Since the July 3, 2003 filing in Ohio, this action was combined with a related case and, pursuant to a case management order, the parties are to complete fact discovery by March 31, 2006 and dispositive motions and expert discovery by September 1, 2006. A trial date of January 29, 2007 has been set; however, it is possible that this and other dates may be modified as the case progresses.

          We are unable at the present time to predict the timing or ultimate outcome of this insurance coverage 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 our asbestos reserve. Our wholly-owned captive insurance companies have not provided any insurance or re-insurance coverage for any of our subsidiaries’ asbestos-related claims.

          During 2003 and early fiscal 2004, new state liability laws were enacted in three states (Mississippi, Ohio and Texas) where at that time 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. During the third and fourth fiscal quarters of 2004, two of the three previously-mentioned states that adopted “proportional cause” liability in 2003, passed additional legislation impacting medical criteria and product identification in asbestos-related litigation. In 2005, additional states including Florida and Georgia have adopted various medical criteria-based asbestos legislation. While there have been

14

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 is not known at this time. Claims in Mississippi, Ohio and Texas at the fiscal year ended May 31, 2005, coupled with the non-malignancy filings in Florida, currently comprise approximately 80% of the aggregate claims filed against Bondex.

          At the end of 2002 and through the third fiscal quarter of 2003, Bondex had concluded it was not possible to estimate the cost of disposing all of the asbestos-related claims that might be filed 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 any future asbestos-related claims. As previously disclosed, during the fourth fiscal quarter of 2003, Bondex retained a consulting firm to assist in analyzing 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 and the prospect of potential federal asbestos-related legislation.

          Bondex provided these consultants with all relevant data regarding asbestos-related claims filed against Bondex through May 31, 2003. Management, with the consultants’ input, concluded at the time that it was not possible to currently estimate the full range of the cost of resolving all future asbestos-related claims against Bondex. Estimating the future cost of asbestos related contingent liabilities was and continues to be subject to many uncertainties, including (i) the ultimate number of claims filed; (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 a changing trial docket and the jurisdictions in which trials are scheduled; (vii) the outcome of any such trials including judgments or jury verdicts, as a result of our more aggressive defense posture which includes taking selective cases to verdict; (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; and (x) the potential impact of various proposed structured settlement transactions or subsidiary bankruptcies by other companies, some of which are the subject of federal appellate court review, the outcome of which could materially affect any future asbestos-related liability estimates. In addition, during both calendar years 2003 and 2005, passage by the United States Senate Judiciary Committee of proposed legislation to establish a trust fund to pay future asbestos related claims and remove such cases from federal and state courts with industry and insurers funding the trust continues to be a significant variable that has made it increasingly difficult to predict with certainty the full exposure of future, unknown asbestos-related claims. The ongoing prospect of federal trust fund legislation is expected to continue to be a significant variable in assessing our future asbestos-related liabilities.

          Based on the foregoing considerations, at May 31, 2003, we concluded that we could not fully estimate the liability that would result from all future asbestos claims. We established a reserve for those pending cases that had progressed to a stage where the cost to dispose of these cases could, at the time, reasonably be estimated, as well as a $51.2 million provision for future unasserted claims that were estimable at May 31, 2003. The estimation of even pending cases was and is always difficult due to the dynamic nature of asbestos litigation including the variables discussed above. The estimated range of potential loss covering measurable known asbestos claims and this 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

15

an asbestos charge to fiscal 2003 operations of $140.0 million. At the time of the reserve, we believed that this 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 included $15.0 million in total projected defense costs over the estimated three-year life of the reserve. By comparison, 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.

          Since May 31, 2003, we have reviewed and evaluated on a quarterly basis the adequacy of our asbestos reserve. The range of loss calculation for the $140 million reserve was based on an extensive analysis of the most critical factors that influence our asbestos-related costs including: (i) the gross number of open malignancy claims (principally mesothelioma claims) as these claims have the most significant impact on our asbestos settlement costs; (ii) historical and current settlement costs and dismissal rates by various categories; (iii) analysis of the jurisdiction and governing law of the states in which these claims are pending; and (iv) outside defense counsel’s opinions and recommendations with respect to the merits of such claims. Although the number of open malignancy claims has remained relatively constant, subject to some quarterly variability, since May 31, 2003 continuing through the year ended May 31, 2005, our average settlement costs for malignancy claims have declined and dismissal rates have increased. Several defense verdicts during the second half of fiscal 2004 further contributed to lower settlement values and higher dismissal rates. Our defense costs, however, have increased significantly as a result of our more aggressive defense strategy, which now includes taking selective cases to verdict.

          Based on our review of our asbestos reserve for the second quarter ended November 30, 2004, we concluded that the $56.0 million balance of the $140.0 million reserve would not likely be sufficient to cover our asbestos-related cash flow requirements for the remainder of the full three-year period originally contemplated by the reserve. Accordingly, we concluded that an increase in our existing reserve was appropriate and took an asbestos reserve adjustment of $47.0 million for the quarter ended November 30, 2004, which we believed would be sufficient to cover any incremental cash flow requirements through fiscal 2006 not covered by the $140.0 million reserve, as well as the additional cash flow requirements for the balance of our then pending known claims and anticipated higher defense costs. Approximately $32.0 million of the $47.0 million reserve adjustment was allocated to anticipated higher future defense costs. During the third quarter ended February 28, 2005, based on a review of our then pending known claims, coupled with a review of our defense costs, we concluded that an increase in our existing reserve was again appropriate. An asbestos reserve adjustment of $15.0 million was taken for the quarter ended February 28, 2005. With cash outlays of $21.9 million in the third quarter, our asbestos reserves aggregated $96.3 million at February 28, 2005, which we believed would be sufficient to cover the cash flow requirements for the balance of our then pending known claims and defense costs. Our $15.0 million reserve increase assumed that approximately $6.1 million will be allocated to higher future defense costs, which we expect to continue.

          During the fourth quarter ended May 31, 2005, an additional $16.0 million was added to the asbestos reserve based on management’s quarterly review of pending claims and defense costs. With cash outlays of $11.1 million during the fourth quarter, our asbestos reserves aggregate $101.2 million at May 31, 2005, which we believe will be sufficient to cover the cash flow requirements for the balance of our pending known claims, including defense costs. Of the $16.0 million reserve increase, approximately $15.8 million is expected to be allocated to anticipated higher future defense costs, which we expect to continue. As previously disclosed, as we review our asbestos reserve each quarter, we will make appropriate adjustments to the reserve based on our most recent experience to ensure that it is sufficient to cover the anticipated settlement and defense costs associated with our

16

then pending, known claims. We will continue to evaluate the appropriateness of estimating the value of any potential future unknown asbestos claims and at such time as we are able to quantify such future exposure, we will establish a reserve for such unknown future claims.

          We recognize that future facts, events and legislation, both state and/or federal, may alter our estimates of both pending and any such 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 potential settlement values associated with any such future claims, the ultimate resolution of such claims, the full impact of the state law changes enumerated above or the effect of pending federal trust fund legislation on future asbestos claims. Subject to the foregoing variables, including the timing and impact of such variables and the increase in the asbestos reserve, we believe that our asbestos reserves are sufficient to cover the asbestos-related cash flow requirements for the current inventory of our known claims. It is, however, reasonably possible that our actual costs for such claims could differ from current estimates, but, based upon information presently available, such costs are not expected to have a material effect on our competitive or financial position or our ongoing operations. As previously disclosed, however, our existing reserve at the present time does not presently cover the costs of future unknown claims and therefore, additional reserves will be required in future periods for any such future claims. Any such future reserve increases, when taken, could have a material impact on our results in such period.

          The Company will continue to evaluate its asbestos-related loss exposure each quarter and review the adequacy of our reserve and the related cash flow implications in light of our most recent 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 Company’s consolidated financial condition or results of operations. See “Item 1 — Business-Environmental Matters,” in this Annual Report on Form 10-K.

Item 4. Submission of Matters to a Vote of Security Holders.

          Not Applicable.

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Item 4A. Executive Officers of the Registrant*.

          The name, age and positions of each Executive Officer of the Company as of August 1, 2005 are as follows:

Name	Age		Position and Offices with the Company
Frank C. Sullivan		44	President and Chief Executive Officer
Ronald A. Rice		42	Senior Vice President — Administration and Assistant Secretary
P. Kelly Tompkins		48	Senior Vice President, General Counsel and Secretary
Paul G. P. Hoogenboom		45	Vice President — Operations and Chief Information Officer
Stephen J. Knoop		40	Vice President — Corporate Development
Robert L. Matejka		62	Vice President, Chief Financial Officer and Controller

* 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 renewals.** 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-Administration under an employment agreement that provides for automatic annual renewals.** 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 renewals.**

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          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 renewals.**

          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 renewals.**

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

** Such automatic renewal occurs unless the Compensation Committee of the Board of Directors or the Executive Officer gives the other party notice of non-renewal two months in advance of the annual renewal date.

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PART II

Item 5. Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

          The information required by this item is set forth at page 55 of the 2005 Annual Report to Stockholders under the heading “Quarterly Stock Price and Dividend Information,” which information is incorporated herein by reference.

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, 2005. 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,
	2005			2004			2003			20021			2001
	(Amounts in thousands, except per share and percentage date)
Net sales2	$	2,555,735		$	2,307,553		$	2,053,482		$	1,960,738		$	1,984,961
Income before income taxes		163,728			217,616			47,853			154,124			101,487
Net income		105,032			141,886			35,327			101,554			62,961
Return on sales %		4.1	%		6.1	%		1.7	%		5.2	%		3.2	%
Basic earnings per share	$	0.90		$	1.23		$	0.31		$	0.97		$	0.62
Diluted earnings per share3		0.86			1.16			0.30			0.97			0.62
Stockholders’ equity		1,046,509			975,292			877,008			858,106			639,710
Stockholders’ equity per share		8.95			8.42			7.61			8.22			6.26
Return on stockholders’ equity %		10.4	%		15.3	%		4.1	%		13.6	%		9.8	%
Average shares outstanding		116,899			115,777			115,294			104,418			102,202
Cash dividends paid	$	68,933		$	63,651		$	59,139		$	52,409		$	50,605
Cash dividends per share		0.5900			0.5500			0.5150			0.5000			0.4975
Retained earnings		500,125			464,026			385,791			409,603			360,458
Working capital		696,156			517,124			500,444			479,041			443,652
Total assets		2,656,245			2,350,091			2,243,455			2,078,844			2,078,490
Long-term debt		837,948			718,929			724,846			707,921			955,399
Depreciation and amortization		65,992			63,277			58,674			56,859			81,494

Note:	Acquisitions made by the Company during the periods presented may impact comparability from year to year.
1	Reflects adoption to SFAS No. 142 regarding Goodwill (See Note A[10] to the Consolidated Financial Statements, which appear in the 2005 Annual Report to the Stockholders, incorporated herein by reference).
2	Reflects the reclassification of cooperative advertising expenses as a component of net sales instead of a selling, general and administrative expense (See No. A[14] to the Consolidated Financial Statements, which appear in the 2005 Annual Report to Stockholders, incorporated herein by reference).
3	Reflects dilutive effect of EITF 04-8 beginning in fiscal 2003 (See Note D to the Consolidated Financials Statements, which appear in the 2005 Annual Report to Stockholders, incorporated herein by reference).

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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 29 of the 2005 Annual Report to Stockholders, which information is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

          The information required by this item is set forth at page 29 of the 2005 Annual Report to Stockholders, which information is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data.

          The information required by this item is set forth at pages 30 through 55 (not including the information on page 55 under the heading “Quarterly Stock Price and Dividend Information”) and 57 of the 2005 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, 2005 (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) Management’s Report on Internal Control over Financial Reporting.

          Management’s Report on Internal Control Over Financial Reporting and the attestation report of the Company’s independent registered public accounting firm are set forth at pages 56 and 58 of the 2005 Annual Report to Stockholders, which reports are incorporated herein by reference.

          (c) Changes in internal control over financial reporting.

          There were no changes in the Company’s internal control over financial reporting that occurred during the fourth fiscal quarter ended May 31, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Item 9B. Other Information

          None.

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 “Election of Directors” in the Company’s 2005 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 2005 Proxy Statement under the heading “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 2005 Proxy Statement under the heading “Information Regarding Meetings and Committees of the Board of Directors,” which information is incorporated herein by reference.

          The Charters of the Audit Committee, Compensation Committee and Governance and Nominating 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 2005 Proxy Statement under the heading “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 2005 Proxy Statement under the headings “Stock Ownership of Principal Holders and Management” and “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 2005 Proxy Statement under the heading “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 2005 Proxy Statement under the heading “Audit Fees,” which information is incorporated herein by reference.

22

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this 2005 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 registered public accounting firm thereon, included in the 2005 Annual Report to Stockholders on pages 30 through 55 (not including the information on page 55 under the heading “Quarterly Stock Price and Dividend Information”) and 57, are incorporated by reference in Item 8:

     Independent Registered Public Accounting Firm’s Report

     Consolidated Balance Sheets — May 31, 2005 and 2004

     Consolidated Statements of Income — years ended May 31, 2005, 2004 and 2003

     Consolidated Statements of Stockholders’ Equity — years ended May 31, 2005, 2004 and 2003

     Consolidated Statements of Cash Flows — years ended May 31, 2005, 2004 and 2003

     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 2005 Annual Report to Stockholders:

Schedule	Page No.
Independent Registered Public Accounting Firm’s Report	S-1
Schedule II — Valuation and Qualifying Accounts and Reserves	S-2

     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

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 15, 2005	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 Frank C. Sullivan	President and Chief Executive Officer and a Director (Principal Executive Officer)
/s/ Robert L. Matejka Robert L. Matejka	Vice President, Chief Financial Officer and Controller (Principal Financial and Accounting Officer)
/s/ Thomas C. Sullivan Thomas C. Sullivan	Chairman and a Director
/s/ Dr. Max D. Amstutz Dr. Max D. Amstutz	Director
/s/ Edward B. Brandon Edward B. Brandon	Director
/s/ Bruce A. Carbonari Bruce A. Carbonari	Director
/s/ James A. Karman James A. Karman	Director

24

/s/ Donald K. Miller Donald K. Miller	Director
/s/ William A. Papenbrock William A. Papenbrock	Director
/s/ Albert B. Ratner Albert B. Ratner	Director
/s/ William B. Summers, Jr. William B. Summers, Jr.	Director
/s/ Dr. Jerry Sue Thornton Dr. Jerry Sue Thornton	Director
/s/ Joseph P. Viviano Joseph P. Viviano	Director

Date: August 15, 2005

25

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 (File No. 001-14187).
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 (File No. 333-101501), as filed with the Commission on November 27, 2002.
3.2	Amended and Restated By-Laws of the Company, which are incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (File 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 (File 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 (File No. 033-61541).
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 (File No. 001-14187).
4.5	Specimen Note Certificate of 6.25% Senior Notes Due 2013, which is incorporated herein by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2004 (File No. 001-14187).
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 (File No. 001-14187).

E-1

Exhibit No.	Description
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 (File No. 001-14187).
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 (File 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 (File No. 033-61541).
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 (File No. 001-14187).
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 (File No. 001-14187).
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 (File 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 (File No. 001-14187).

E-2

Exhibit No.	Description
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 (File No. 333-114259), as filed with the Commission on April 7, 2004.
4.14	Indenture dated as of September 30, 2004 between the Company, as issuer, and The Bank of New York, as trustee, which is incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on September 30, 2004 (File No. 001-14187).
4.15	Form of 4.45% Senior Note Due 2009, which is incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, as filed with the Commission on September 30, 2004 (File No. 001-14187).
4.16	Registration Rights Agreement dated as of September 30, 2004 between the Company and Goldman, Sachs & Co., which is incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, as filed with the Commission on September 30, 2004 (File No. 001-14187).
*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 (File No. 001-14187).
*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 (File No. 001-14187).
*10.1.3	Extension to Post-Retirement Consulting Agreement, which is incorporated herein by reference to Exhibit 10.1.3 to the Company’s Current Report on Form 8-K, as filed with the Commission on June 29, 2005 (File No. 001-14187).
10.2	Credit Agreement among RPM International Inc., the Borrowers party thereto, the Lenders party thereto and National City Bank, as Administrative Agent, dated as of November 19, 2004, which is incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on November 24, 2004 (File No. 001-14187).
*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, Ronald A. Rice, Senior Vice President — Administration and Assistant Secretary, Paul G. Hoogenboom, Vice President-Operations and Chief Information Officer, Robert L. Matejka, Chief Financial Officer and Vice President — Controller, and Stephen J. Knoop, Vice President - Corporate Development, 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 (File No. 001-14187).

E-3

Exhibit No.	Description
*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, Paul G. Hoogenboom, Vice President-Operations and Chief Information Officer, Robert L. Matejka, Chief Financial Officer and Vice President — Controller, and Stephen J. Knoop, Vice President — Corporate Development, 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 (File No. 001-14187).
*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 (File No. 001-14187).
*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 (File No. 001-14187).
*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 (File 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 (File 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(File No. 001-14187).
*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 (File 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 (File No. 001-14187).
*10.7	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 (File No. 001-14187).

E-4

Exhibit No.	Description
*10.7.1	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 (File No. 001-14187).
*10.7.2	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 (File No. 001-14187).
*10.8	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 (File No. 001-14187).
*10.8.1	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 (File No. 001-14187).
*10.8.2	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 (File No. 333-101512), as filed with the Commission on November 27, 2002.
*10.8.3	Amendment No. 3 to RPM International Inc. Deferred Compensation Plan, which is incorporated herein by reference to Exhibit 10.10.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2004 (File No. 001-14187).
*10.9	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 (File No. 001-14187).
*10.9.1	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 (File No. 001-14187).
*10.9.2	Amendment No. 2 to RPM International Inc. Incentive Compensation 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 November 30, 2004 (File No. 001-14187).
*10.10	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 (File No. 001-14187).
*10.10.1	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 (File No. 001-14187).

E-5

Exhibit No.	Description
*10.10.2	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 (File No. 001-14187).
*10.10.3	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 (File No. 001-14187).
*10.10.4	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 (File No. 001-14187).
*10.10.5	Fifth Amendment to the 1997 RPM International Inc. Restricted Stock Plan, which is incorporated herein by reference to Exhibit 10.12.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2004 (File No. 001-14187).
*10.11	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 (File No. 001-14187).
*10.11.1	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 (File No. 001-14187).
*10.11.2	Amendment No. 2 to the RPM International Inc. Performance Accelerated Restricted Stock Plan, which is incorporated herein by reference to Exhibit 10.13.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2004 (File No. 001-14187).
*10.12	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 (File No. 001-14187).
*10.13	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 (File No. 001-14187).
10.14	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 (File No. 001-14187).

E-6

Exhibit No.	Description
10.14.1	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 reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended August 31, 2001 (File No. 001-14187).
10.14.2	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 (File No. 001-14187).
10.14.3	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 (File No. 001-14187).
10.15	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 (File No. 001-14187).
10.15.1	Amendment No. 2 to Receivables Sale Agreement among certain subsidiaries of the Company, the Company and RPM Funding Corporation, dated January 28, 2003, which is incorporated herein by reference to Exhibit 10.17.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2004 (File No. 001-14187).
10.15.2	Amendment No. 3 to Receivables Sale Agreement among certain subsidiaries of the Company, the Company and RPM Funding Corporation, dated April 30, 2004, which is incorporated herein by reference to Exhibit 10.17.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2004 (File No. 001-14187).
10.15.3	Amendment No. 4 to Receivables Sale Agreement among certain subsidiaries of the Company, the Company and RPM Funding Corporation, dated March 8, 2005.(x)
10.16	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 (File No. 001-14187).
10.16.1	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, which is incorporated herein by reference to Exhibit 10.18.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2004 (File No. 001-14187).

E-7

Exhibit No.	Description
10.16.2	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, which is incorporated herein by reference to Exhibit 10.18.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2004 (File No. 001-14187).
10.16.3	Amendment No. 4 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 24, 2005.(x)
10.17	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 (File No. 001-14187).
10.18	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 (File No. 001-14187).
10.19	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 (File No. 001-14187).
10.19.1	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 (File No. 001-14187).
10.20	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 (File No. 001-14187).
10.21	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 (File No. 001-14187).

E-8

Exhibit No.	Description
10.22	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 (File No. 001-14187).
10.23	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 (File No. 333-114259), as filed with the Commission on April 7, 2004.
*10.24	RPM International Inc. Omnibus Equity and Incentive Plan, which is incorporated herein by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 (File No. 333-120067), as filed with the Commission on October 29, 2004.
10.25	Purchase Agreement dated as of September 27, 2004 among the Company, Goldman, Sachs & Co. 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 Current Report on Form 8-K, as filed with the Commission on September 30, 2004 (File No. 001-14187).
*10.26	Form of Performance-Earned Restricted Stock (PERS) and Escrow Agreement. (x)
11.1	Computation of Net Income per share of Common Stock. (x)
13.1	Financial Information contained in 2005 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-9

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 7, 2005, 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, 2005. 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
(In thousands) Schedule II

				Additions
				Charged to
	Balance at		Additions	Selling,			Acquisitions		Insurance					Balance at
	Beginning		Charged to	General and			(Disposals)		Carrier					End
	of Period		Cost of Sales	Administrative			of Businesses		Funding		Deductions			of Period
Year Ended May 31, 2005
Allowance for doubtful accounts	$	18,147	$	$	5,457		$		$		$	5,039	(1)	$	18,565
Accrued product liability reserves	$	47,402	$	$	17,371		$		$	12,850	$	20,209	(2)	$	57,414
Accrued loss reserves - Current	$	9,297	$	$	5,774		$		$		$	7,033	(2)	$	8,038
Asbestos-related liabilities - Current	$	47,500	$	$	74,935		$		$		$	67,435	(2)	$	55,000
Accrued warranty and product liability reserves - Noncurrent	$	5,579	$	$	( 233	)	$		$	3,400	$	702	(2)	$	8,044
Asbestos-related liabilities - Noncurrent	$	43,107	$	$	3,065		$		$		$		(2)	$	46,172
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 and product liability reserves - Noncurrent	$	7,781	$	$	(1,816	)	$		$		$	386	(2)	$	5,579
Asbestos-related liabilities - Noncurrent	$	103,000	$	$			$		$		$	59,893	(3)	$	43,107

				Additions
				Charged to
	Balance at		Additions	Selling,			Acquisitions		Insurance					Balance at
	Beginning		Charged to	General and			(Disposals)		Carrier					End
	of Period		Cost of Sales	Administrative			of Businesses		Funding		Deductions			of Period
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 and product liability reserves - Long-term	$	9,655	$	$	(609	)	$	603	$		$	1,868	(2)	$	7,781
Asbestos-related liabilities - Noncurrent	$		$	$	103,000		$		$		$			$	103,000

(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

EX-10.15.3

Exhibit 10.15.3

AMENDMENT NO. 4 TO RECEIVABLES SALE AGREEMENT

     THIS AMENDMENT NO. 4 TO RECEIVABLES SALE AGREEMENT, dated as of March 8, 2005, is by and among Weatherproofing Technologies, Inc., a Delaware corporation, DAP Products Inc., a Delaware corporation, The Testor Corporation, an Ohio corporation, Zinsser Co., Inc., a New Jersey corporation, Tremco Incorporated, an Ohio corporation, Rust-Oleum Corporation, an Illinois corporation, The Euclid Chemical Company, an Ohio corporation, and Republic Powdered Metals, Inc., an Ohio corporation, Tremco Barrier Solutions, Inc., a Delaware corporation f/k/a Koch Waterproofing Solutions, Inc. (each of the foregoing, an “Originator” and collectively, the “Originators”), and RPM Funding Corporation, a Delaware corporation (“Buyer”), and pertains to that certain Receivables Sale Agreement dated as of June 6, 2002, by and among the Originators and Buyer, as heretofore amended (the “Agreement”). Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I thereto (or, if not defined in Exhibit I thereto, the meanings assigned to such terms in Exhibit I to the Purchase Agreement referred to therein).

PRELIMINARY STATEMENTS

          Rust-Oleum Corporation, an Illinois corporation (“Rust-Oleum”) wishes to exclude accounts receivable as to which AutoZone, Inc. is the Obligor from the Receivables it is selling to the Buyer pursuant to the Agreement.

          The Buyer is willing to exclude such accounts receivable from the Receivables under the Agreement.

          Accordingly, the parties hereby agree to modify the Agreement as hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and the other mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. Amendments.

     1.1. The definition of “Receivable” in Exhibit I to the Agreement is hereby amended and restated in its entirety to read as follows:

          “Receivable” means all rights to payment owed to an Originator (at the times it arises, and before giving effect to any transfer or conveyance under the Agreement) or Buyer (after giving effect to the transfers under the Agreement) constituting an account arising in connection with the sale of goods or the rendering of services by such Originator and further includes, without limitation, the obligation to pay any Finance Charges with respect thereto; provided,

however, that in no event shall the term “Receivable” include such right to payment arising from any sale of goods or the rendering of services by any Originator to any Excluded Obligor which occurs after the effective date of the amendment designating such Obligor as being an Excluded Obligor. Indebtedness and other rights and obligations arising from any one transaction, including, without limitation, indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided, further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless of whether the account debtor or such Originator treats such indebtedness, rights or obligations as a separate payment obligation.

     1.2. The following new definition is hereby inserted into Exhibit I to the Agreement in its appropriate alphabetical order:

     “Excluded Obligor” means AutoZone, Inc.

     2. Representations. In order to induce the other parties hereto to consent to this Amendment, (a) each of the Originators hereby represents and warrants that, as of the date of this Amendment, no event has occurred and is continuing that will constitute a Termination Event or a Potential Termination Event, and (b) Rust-Oleum Corporation hereby represents and warrants that from and after the date hereof, (i) no proceeds of any right to payment arising from the sale of goods or the rendering of services by Rust-Oleum Corporation to AutoZone, Inc. (“AutoZone Receivables”) will be directed to be deposited into any Lock-Box or Collection Account or otherwise “commingled” with the proceeds of any of the Receivables (as amended hereby) or the Related Security if such deposit or “commingling” cannot be traced and identified as being proceeds of AutoZone Receivables,, and (ii) Rust-Oleum can and will account for the AutoZone Receivables separately from the Receivables.

     3. Condition Precedent. This Amendment will become effective as of the date first above written upon receipt by the Agent of counterparts of this Amendment, duly executed by each of the parties hereto and consented to by the Agent.

     4. Miscellaneous.

     4.1. CHOICE OF LAW. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

     4.2. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AMENDMENT OR ANY OTHER TRANSACTION DOCUMENTS OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

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     4.3. Binding Effect. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy).

     4.4. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

<Signature pages follow>

3

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date hereof.

DAP PRODUCTS INC.,
THE TESTOR CORPORATION,
ZINSSER CO., INC.,
TREMCO INCORPORATED,
RUST-OLEUM CORPORATION,
THE EUCLID CHEMICAL COMPANY AND
REPUBLIC POWDERED METALS, INC.
By:	/s/P. Kelly Tompkins
Name:	P. Kelly Tompkins
Title:	Secretary
WEATHERPROOFING TECHNOLOGIES, INC.
By:	/s/Michael J. Drumm
Name:	Michael J. Drumm
Title:	Treasurer
TREMCO BARRIER SOLUTIONS, INC.
By:	/s/P. Kelly Tompkins
Name:	P. Kelly Tompkins
Title:	Secretary
RPM FUNDING CORPORATION
By:	/s/P. Kelly Tompkins
Name:	P. Kelly Tompkins
Title:	Vice President & Secretary

4

Consented to as of the date first above written:

JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA), AS AGENT

By:	/s/Sherri Gerner
Name:
Title:

5

EX-10.16.3

Exhibit 10.16.3

AMENDMENT NO. 4 TO RECEIVABLES PURCHASE AGREEMENT

     THIS AMENDMENT (this “Amendment”) is entered into as of May 24, 2005 by and among:

     (a) RPM Funding Corporation, a Delaware corporation (“Seller”),

     (b) RPM International Inc., a Delaware corporation (“RPM- Delaware”),

     (c) Jupiter Securitization Corporation, a Delaware corporation (“Jupiter” or a “Conduit”), and Blue Ridge Asset Funding Corporation, a Delaware corporation (“Blue Ridge” or a “Conduit”),

     (d) Wachovia Bank, National Association, a national banking association, individually (“Wachovia” or a “Liquidity Bank” and, together with Blue Ridge, the “Blue Ridge Group”), and as a co-agent (a “Co-Agent”), and

     (e) JPMorgan Chase Bank, N.A., successor by merger to Bank One, NA (Main Office Chicago), individually (“JPMorgan Chase” or a “Liquidity Bank” and, together with Jupiter, the “Jupiter Group”), as a co-agent (a “Co- Agent”) and as administrative agent the “Administrative Agent” and, together with each of the Co-Agents, the “Agents”),

with respect to the Receivables Purchase Agreement dated as of June 6, 2002 by and among the Seller, RPM-Delaware, the Jupiter Group, the Blue Ridge Group, and the Agents, as heretofore amended from time to time (the “RPA”).

Unless defined elsewhere herein, capitalized terms used in this Amendment shall have the meanings assigned to such terms in the RPA.

W I T N E S S E T H:

     WHEREAS, the parties wish to amend the RPA as hereinafter set forth.

             NOW, THEREFORE, in consideration of the premises and the other mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1

     1. Amendments.

     1.1. All references in the RPA to “Jupiter Securitization Corporation” and “Jupiter” (whether alone or as part of another defined term) are hereby replaced with “Blue Ridge Asset Funding Corporation” and “Blue Ridge,” respectively. From and after effectiveness of this Amendment in accordance with Section 4 below: (a) Blue Ridge hereby assumes all of Jupiter’s rights and obligations (if any) under the Transaction Documents, (b) Jupiter is hereby released from further obligation under the Transaction Documents, (c) Jupiter shall no longer be required to consent to or be a party to any amendment to or waiver or restatement of any Transaction Document, and (d) Seller and RPM are hereby released from further obligation under the Transaction Documents to the Jupiter Agent and the members of the Jupiter Group except that the rights and remedies of the Jupiter Agent and the Jupiter Group with respect to (i) any breach of any representation and warranty made by any Seller Party pursuant to Article V, (ii) the indemnification and payment provisions of Article X of the RPA and Sections 14.5 and 14.6 of the RPA shall be continuing and shall survive effectiveness of this Amendment and any subsequent termination of the RPA.

     1.2. All references in the RPA to “Bank One, NA” and “Bank One” are hereby replaced with “Wachovia Bank, National Association” and “Wachovia,” respectively. From and after effectiveness of this Amendment in accordance with Section 4 below: (a) Wachovia hereby assumes all of JPMorgan Chase’s rights and obligations under the Transaction Documents (including, without limitation, JPMorgan Chase’s Commitment as a Liquidity Bank and its rights and obligations as the Administrative Agent), (b) JPMorgan Chase is hereby released from further obligation under the Transaction Documents, and (c) JPMorgan Chase shall no longer be required to consent to or be a party to any amendment to or waiver or restatement of any Transaction Document.

     1.3. The definition of “Liquidity Termination Date” is hereby amended and restated (solely as to the Blue Ridge Group) to read as follows:

     “Liquidity Termination Date” means August 26, 2005.

     1.4. The definition of “Facility Termination Date” is hereby amended and restated (solely as to the Blue Ridge Group) to read as follows:

     “Facility Termination Date” means the earlier of (i) the Liquidity Termination Date, and (ii) the Amortization Date.

     2. Reaffirmation of Performance Undertaking. RPM-Delaware hereby ratifies the Performance Undertaking and confirms that its obligations thereunder remain in full force and effect.

     3. Representations. In order to induce the Agents and the Purchasers to agree to this Amendment, each of the Seller Parties hereby represents and warrants that (a) the representations and warranties set forth in Section 5.1 of the RPA (other than Section 5.1(m)) are true and correct on and as of the date hereof, and (b) no event has occurred and is continuing that constitutes an Amortization Event or Potential Amortization Event.

2

             4. Conditions Precedent. This Amendment will become effective as of the date first above written upon satisfaction of each of the following conditions precedent:

     (a) receipt by each of the Agents of executed counterparts of this Amendment, duly executed by each of the parties hereto;

     (b) execution and delivery by Wachovia and Blue Ridge of an amendment to the Blue Ridge Liquidity Agreement to increase the aggregate commitment thereunder to $127,500,000;

     (c) execution and delivery by Wachovia and each of the parties to the Collection Account Agreement with National City Bank dated June 6, 2002 of an assignment thereof in favor of Wachovia as the successor Administrative Agent; and

     (d) payment of all accrued and unpaid fees under the Fee Letters and, if applicable, all accrued and unpaid CP Costs and Yield, through May 24, 2005.

Upon effectiveness of this Amendment in accordance with this Section 4, Wachovia is hereby authorized to file UCC-3 amendments with respect to all financing statements filed against any of the Originators or the Seller pursuant to the Transaction Documents reflecting Wachovia’s replacement of JPMorgan Chase as the Administrative Agent.

             5. Bankruptcy Petition. With respect to each Conduit, each of the other parties hereto hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of such Conduit, it will not institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.

             6. CHOICE OF LAW. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

             7. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AMENDMENT OR ANY OTHER TRANSACTION DOCUMENTS OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

             8. Binding Effect. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy).

             9. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so

3

executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

4

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers or signatories as of the date hereof.

RPM FUNDING CORPORATION
By:	/s/ Keith R. Smiley
Name:	Keith R. Smiley
Title:	Vice President and Treasurer

5

RPM INTERNATIONAL INC.
By:	/s/ P. Kelly Tompkins
Name:	P. Kelly Tompkins
Title:	Secretary

6

JUPITER SECURITIZATION CORPORATION
By:	/s/ Maureen Marcon
Name:	Maureen Marcon
Title:	Authorized Signer

JPMORGAN CHASE BANK, N.A., individually , as Jupiter Agent And as retiring Administrative Agent
By:	/s/ Maureen Marcon
Name:	Maureen Marcon
Title:	Vice President

7

BLUE RIDGE ASSET FUNDING CORPORATION
By: Wachovia Capital Markets, LLC, attorney-in fact
By:	/s/ Douglas R. Wilson, Sr.
Name:	Douglas R. Wilson, Sr.
Title:	Vice President

8

WACHOVIA BANK, NATIONAL ASSOCIATION, Individually, as Blue Ridge Agent and as successor Administrative Agent
By:	/s/ Gary G. Fleming, Jr.
Name:	Gary G. Fleming, Jr.
Title:	Director

9

EX-10.26

Exhibit 10.26

RPM INTERNATIONAL INC.

RPM INTERNATIONAL INC. 2004 OMNIBUS EQUITY AND INCENTIVE PLAN

PERFORMANCE-EARNED RESTRICTED STOCK (PERS)
AND ESCROW AGREEMENT

     THIS PERFORMANCE-EARNED RESTRICTED STOCK AND ESCROW AGREEMENT (the “Agreement”), is entered into as of this ___day of ___(the “Effective Date”), by and between RPM International Inc., a Delaware corporation (the “Company”), and «NAME» (the “Grantee”).

WITNESSETH:

     WHEREAS, the Compensation Committee of the Board of Directors (the “Compensation Committee”) administers the RPM International Inc. 2004 Omnibus Equity and Incentive Plan (the “Plan”); and

     WHEREAS, the Committee has determined that the Grantee has satisfied previously established applicable performance measures for the fiscal year of the Company ending May 31, ___; and

     WHEREAS, as a result of the Grantee’s satisfaction of such performance measures, the Compensation Committee has determined that the Grantee has earned a grant of Restricted Stock under the Plan upon the terms and conditions set forth in this Agreement;

     NOW, THEREFORE, the Company and the Grantee agree as follows:

     1. Definitions. Unless otherwise specified in this Agreement, capitalized terms shall have the meanings attributed to them under the Plan.

     2. Grant of Restricted Stock. As of the Effective Date, the Company grants to the Grantee, upon the terms and conditions set forth in this Agreement and subject to the restrictions in Section 3, «SHARES» shares of Common Stock, par value $.01 per share, of RPM International Inc. (“Restricted Stock”). The Restricted Stock is granted in accordance with, and subject to, all the terms, conditions and restrictions of the Plan, which is hereby incorporated by reference in its entirety. The Grantee irrevocably agrees to, and accepts, the terms, conditions and restrictions of the Plan and this Agreement on his own behalf and on behalf of any heirs, successors and assigns.

     3. Restrictions on Stock. Except as otherwise provided in Sections 4 and 14, the Grantee cannot sell, transfer, assign, hypothecate or otherwise dispose of the Restricted Stock or pledge it as collateral for a loan. In addition, the Restricted Stock will be subject to such other restrictions as the Compensation Committee deems necessary or appropriate.

     4. Lapse of Restrictions on Stock. The restrictions described in Section 3 shall lapse and be of no further force or effect if and when the Compensation Committee determines in its sole and exclusive discretion, pursuant to Section 8, that the Grantee’s Vested Interest equals 100%.

     5. Forfeiture. Except as otherwise provided in Sections 6 and 7, the Grantee will forfeit any interests in the Restricted Stock if his or her employment with the Company, a Subsidiary or Allied Enterprise terminates before his or her Vested Interest equals 100%.

     6. Termination of Employment.

     (a) Normal Retirement. If the Compensation Committee determines in its sole and exclusive discretion that the Grantee’s employment with the Company, its Subsidiaries and Allied Enterprises has terminated due to Normal Retirement prior to the third anniversary of the date of this Agreement, the Grantee’s Vested Interest in the Restricted Stock will immediately become 100% (if it is not already), the restrictions described in Section 3 will immediately lapse and the shares of stock will become payable as soon as practicable thereafter, subject to the requirements of Section 10. “Normal Retirement” is the Grantee’s voluntary retirement (and not termination of employment by the Company, a Subsidiary or Allied Enterprise, whether with or without cause) after attaining age fifty-five (55) and completing at least five (5) consecutive years of service with the Company, its Subsidiaries and/or Allied Enterprises.

     (b) Death or Total Disability. If the Grantee dies or becomes totally disabled (within the meaning of the Company’s group long-term disability plan) while an employee of the Company, its Subsidiaries or Allied Enterprises or within thirty (30) days of the Grantee’s having ceased to be such an employee by reason of discharge and prior to the third anniversary of the Effective Date, the Compensation Committee may provide in its sole and exclusive discretion that the Grantee (or his or her Beneficiary or Beneficiaries) shall have a Vested Interest in all or a portion of the Restricted Stock. The Compensation Committee shall determine in its sole and exclusive discretion whether the Grantee’s employment with the Company, its Subsidiaries and Allied Enterprises has terminated because of his or her total disability (as defined in the Company’s group long-term disability plan).

     (c) Reasons Other Than Normal Retirement, Death or Total Disability. If the Compensation Committee determines in its sole and exclusive discretion that the Grantee’s employment with the Company, its Subsidiaries and Allied Enterprises has terminated prior to the third anniversary of the date of this Agreement for reasons other than those described in subsections (a) or (b) above, the Grantee will forfeit and shall to return to the Company or a third party designated by the Company all Restricted Stock subject to this Agreement. The Grantee will have no further interests under this Agreement after such a termination of employment.

     7. Change in Control. If a Change in Control as defined in the Plan has occurred or an event has occurred that the Board of Directors, in the good faith exercise of its discretion,

2

determines to be a Change in Control prior to the third anniversary of the date of this Agreement, the Grantee’s Vested Interest in the Restricted Stock will immediately become 100% (if it is not already), the restrictions described in Section 3 will immediately lapse and the shares of stock will become payable as soon as practicable thereafter, subject to the requirements of Section 10. Notwithstanding the foregoing, in the event of a Change in Control, the Compensation Committee may provide for payment of the Grantee’s interests in the Plan in cash rather than shares of stock.

     8. Vested Interest. If the Grantee continues to be an employee of the Company, its Subsidiaries or Allied Enterprises from the Effective Date until the third anniversary of the Effective Date, his or her Vested Interest will be 100%. Except as provided for in Sections 6 and 7 above, if the Grantee does not continue to be an employee of the Company, its Subsidiaries or Allied Enterprises until the third anniversary of the Effective Date, his or her Vested Interest will be 0% and he will immediately forfeit the Restricted Stock as provided in Section 5. So long as the Grantee shall continue to be an employee of the Company, a Subsidiary or Allied Enterprise, he or she shall not be considered to have experienced a break in continuous employment because of: (a) any temporary leave of absence approved in writing by the Company, a Subsidiary or Allied Enterprise; or (b) any change of duties or position (including transfer to or from a Subsidiary).

     9. Issuance of Stock. As soon as practicable after lapse of the restrictions, the Company will deliver to the Grantee (or his or her Beneficiary or Beneficiaries) the shares of stock to which the Grantee is entitled free and clear of any restrictions (except any applicable securities law restrictions).

     10. Sale of Shares of Stock to Satisfy Tax Obligations. Prior to issuing shares of stock pursuant to Section 9, the Compensation Committee will cause the Company to sell a portion of the stock sufficient to satisfy the Grantee’s projected tax liability (as described in Section 14 of the Plan) resulting from the vesting of the Restricted Stock. The Grantee will provide such irrevocable Stock Powers or additional information and documentation as the Company deems necessary to complete such sale. The Compensation Committee will cause the Company to deliver the proceeds of such sale to the appropriate taxing authorities in satisfaction of such tax liabilities. The Compensation Committee may, in its sole and exclusive discretion, require that any distributions to the Grantee’s Beneficiary or Beneficiaries be subject to this sale requirement.

     11. Escrow Agreement. During the term of this Agreement, the Restricted Stock will remain in the possession of the Company to be held by it in escrow. Alternatively, the Company may enter into an agreement with a third party whereby such third party will hold the Restricted Stock in escrow, subject to the terms of the Plan and this Agreement. To facilitate the escrow of the Restricted Stock and any reconveyance of the Restricted Stock to the Company or a third party upon forfeiture, the Grantee will execute in blank such irrevocable Stock Powers with respect to the Restricted Stock as the Company may require.

     12. Stockholder Rights While Restricted Stock is Held in Escrow. During the period the Restricted Stock is held in escrow and this Agreement has not terminated, and subject to the

3

Grantee’s execution of irrevocable Stock Powers in accordance with Section 11, the Grantee will be entitled to vote the Restricted Stock and to receive dividends declared and paid by the Company on such Restricted Stock.

     13. Section 83(b) Elections. The Grantee will not make an election under Section 83(b) of the Internal Revenue Code to recognize taxable ordinary income in the year the Restricted Stock is granted. The Grantee understands that by not making such an election, he or she will recognize taxable ordinary income at the time the restrictions lapse in an amount equal to the fair market value of the stock at that time.

     14. Designation of Beneficiary. By properly executing and delivering a Designation of Beneficiary Form to the Designated Representative at the address listed in Section 17(j), the Grantee may designate an individual or individuals as his or her Beneficiary or Beneficiaries under the Plan. In the event that the Grantee fails to properly designate a Beneficiary, his or her interests under the Plan will pass to the person or persons in the first of the following classes in which there are any survivors: (i) spouse at the time of death; (ii) issue, per stirpes; (iii) parents; and (iv) the executor or administrator of estate. Except as the Compensation Committee may determine in its sole and exclusive discretion, a properly completed Designation of Beneficiary Form shall be deemed to revoke all prior designations upon its receipt and approval by the Designated Representative.

     15. Non-Transferability and Legends. The Restricted Stock has not been registered under the Securities Act of 1933, as amended (the “Act”), and may not be sold, transferred or otherwise disposed of unless a registration statement under the Act with respect to the Restricted Stock has become effective or unless the Grantee establishes to the satisfaction of the Company that an exemption from such registration is available. The Restricted Stock will bear a legend stating the substance of such restrictions, as well as any other restrictions the Compensation Committee deems necessary or appropriate.

     16. Termination of Agreement. This Agreement will terminate on the earliest of: (1) the date of the Grantee’s termination of employment with the Company, its Subsidiaries and Allied Enterprises prior to the third anniversary of the date of this Agreement; (3) the date the restrictions described in Section 3 lapse in accordance with Section 4; or (4) such date as may be designated by the Company’s Board of Directors or Compensation Committee. Any terms or conditions of this Agreement that the Company determines are reasonably necessary to effectuate its purposes will survive the termination of this Agreement.

     17. Miscellaneous Provisions.

a. Effect of Corporate Reorganization or Other Changes Affecting Number or Kind of Restricted Stock. The provisions of this Agreement will be applicable to the Restricted Stock and to any Restricted Stock or other securities which may be acquired by the Grantee as a result of a liquidation, recapitalization, reorganization, redesignation or reclassification, split-up, reverse split, merger, consolidation, stock dividend, combination or exchange of Restricted Stock, exchange for

4

	other securities, a sale of all or substantially all assets or the like. The Committee may appropriately adjust the number and kind of shares of Restricted Stock under this Agreement to reflect such a change. As used in this Agreement, the term “Restricted Stock” will be deemed to include any such Restricted Stock or other securities.
b.	Successors and Legal Representatives. This Agreement will bind and inure to the benefit of the Company and the Grantee, and their respective successors, assigns and legal representatives.
c.	Integration. This Agreement, together with the Plan, constitutes the entire agreement between the Grantee and the Company with respect to the subject matter hereof, and may not be modified, amended, renewed or terminated, nor may any term, condition or breach of any term or condition be waived, except pursuant to the terms of the Plan or by a writing signed by the person or persons sought to be bound by such modification, amendment, renewal, termination or waiver. Any waiver of any term, condition or breach thereof will not be a waiver of any other term or condition or of the same term or condition for the future, or of any subsequent breach.
d.	Stockholder Approval. All benefits hereunder will be canceled and all terms of this Agreement will be null and void ab initio if the Plan is not approved by the Company’s stockholders, as provided in the Plan.
e.	Notice. Any notice relating to this grant must be in writing.
f.	No Employment Right Created. Nothing in this Agreement will be construed to confer upon the Grantee the right to continue in the employment or service of the Company, its Subsidiaries or Allied Enterprises, or to be employed or serve in any particular position therewith, or affect any right which the Company, its Subsidiaries or an Allied Enterprise may have to terminate the Grantee’s employment or service with or without cause.
g.	Separability. In the event of the invalidity of any part or provision of this Agreement, such invalidity will not affect the enforceability of any other part or provision of this Agreement.
h.	Section Headings. The section headings of this Agreement are for convenience and reference only and are not intended to define, extend or limit the contents of the sections.
i.	Amendment, Waiver and Revocation of Terms. The Compensation Committee may waive any term or condition in this Agreement that could have been excluded on the date of grant. No such waiver will be deemed

5

to be a waiver of similar terms under other agreements. The Compensation Committee may amend this Agreement to include or exclude any provision which could have been included in, or excluded from, this Agreement on the date of grant, but only with the Grantee’s written consent. Similarly, the Compensation Committee may revoke this Agreement at any time except that, after execution of the Agreement and its delivery to the Designated Representative, revocation may only be accomplished with the Grantee’s written consent.

j.

Plan Administration. The Plan is administered by the Compensation Committee, which has sole and exclusive power and discretion to interpret, administer, implement and construe the Plan and this Agreement. All elections, notices and correspondence relating to the Plan should be directed to the Designated Representative at:

RPM International Inc.
P.O. Box 777
2628 Pearl Road
Medina, OH 44258
Attn: Director of Human Resources and Administration

k. Governing Law. Except as may otherwise be provided in the Plan, this Agreement will be governed by, construed and enforced in accordance with the internal laws of the State of Delaware, without giving effect to its principles of conflict of laws.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer, and the Grantee has hereunto set his hand, all as of the day and year first above written.

Grantee	RPM INTERNATIONAL INC.
	By
«NAME»		Frank C. Sullivan
	Its	Chief Executive Officer and President

6

EX-11.1

Exhibit 11.1

RPM INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPUTATIONS OF EARNINGS
PER COMMON SHARE AND COMMON SHARE EQUIVALENTS

(In thousands, except per share amounts)

	Year Ended May 31
	2005		2004		2003
Net Income
Net income applicable to common shares for basic earnings per share	$	105,032	$	141,886	$	35,327
Add income effect of contingently issuable shares, net of tax (1)		3,099		3,142		158
Net income applicable to common shares for diluted earnings per share	$	108,131	$	145,028	$	35,485
Shares Outstanding
Weighted average shares for basic earnings per share		116,899		115,777		115,294
Net issuable common share equivalents		1,431		933		692
Additional shares issuable assuming conversion of convertible securities (1)		8,034		8,034		419
Total shares for diluted earnings per share		126,364		124,744		116,405
Basic Earnings Per Common Share	$	.90	$	1.23	$	.31
Diluted Earnings Per Common Share	$	.86	$	1.16	$	.30

(1) Represents effect of October 2004 EITF issue 04-8, accounting for treatment of contingently convertible securities.

EX-13.1

Exhibit 13.1

MANAGEMENT’S

          DISCUSSION and ANALYSIS

     of RESULTS of OPERATIONS

and FINANCIAL CONDITION

SEGMENT INFORMATION

     We operate a portfolio of businesses that manufacture and sell a variety of specialty paints, protective coatings and roofing systems, sealants and adhesives. We manage our portfolio by organizing our businesses into two operating segments — industrial and consumer — based on the nature of business activities; products and services; the structure of management; and the structure of information as presented to our Board of Directors. Within each segment, individual operating companies or groups of companies generally address common markets, utilize similar technologies, and can share manufacturing or distribution capabilities. We evaluate the profit performance of our segments based on earnings before interest and taxes (“EBIT”) because interest expense is essentially related to corporate acquisitions, as opposed to segment operations.

     Industrial segment products are sold throughout North America and account for most of our sales in Europe, South America, Asia, South Africa, Australia and the Middle East. The industrial product line is sold primarily to distributors, contractors and to end users, such as industrial manufacturing facilities, educational and governmental institutions, and commercial establishments. Industrial segment products reach their markets through a combination of direct sales, sales representative organizations, distributor sales and sales of licensees and joint ventures.

     Consumer segment products are sold throughout North America to mass merchandisers, home centers, hardware stores, paint stores, automotive supply stores and craft shops. Consumer segment products are sold to retailers through a combination of direct sales, sales representative organizations and distributor sales.

     In addition to two operating segments, there are certain business activities, referred to as corporate/other, that do not constitute an operating segment, including corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with either operating segment. Related assets consist primarily of investments, prepaid expenses, deferred pension assets, and headquarters’ property and equipment. These corporate and other assets and expenses reconcile operating segment data to total consolidated net sales, income before income taxes, identifiable assets, capital expenditures, and depreciation and amortization.

     The following table reflects the results of our operating segments consistent with our management philosophy, and represents the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses. For further information pertaining to our segments, refer to Note I, “Segment Information,” to our Consolidated Financial Statements.

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SEGMENT INFORMATION
(In thousands)

Year Ended May 31	2005			2004			2003
Net Sales
Industrial	$	1,441,548		$	1,272,781		$	1,117,877
Consumer		1,114,187			1,034,772			935,605
Corporate/Other
Consolidated	$	2,555,735		$	2,307,553		$	2,053,482
Income Before Income Taxes(a)
Industrial Segment
Income Before Income Taxes(a)	$	168,578		$	140,706		$	122,568
Interest (Expense), Net		532			192			253
Earnings Before Interest and Taxes (“EBIT”)(b)	$	168,046		$	140,514		$	122,315
Consumer Segment
Income Before Income Taxes(a)	$	147,601		$	142,852		$	131,100
Interest (Expense), Net		415			104			(284	)
Earnings Before Interest and Taxes (“EBIT”)(b)	$	147,186		$	142,748		$	131,384
Corporate/Other
(Loss) Before Income Taxes(a)	$	(152,451	)(c)	$	(65,942	)	$	(205,815	)(c)
Interest (Expense), Net		(36,325	)		(29,241	)		(26,681	)
(Loss) Before Interest and Taxes (“EBIT”)(b)	$	(116,126	)	$	(36,701	)	$	(179,134	)
Consolidated
Income Before Income Taxes(a)	$	163,728		$	217,616		$	47,853
Interest (Expense), Net		(35,378	)		(28,945	)		(26,712	)
Earnings Before Interest and Taxes (“EBIT”)(b)	$	199,106		$	246,561		$	74,565

(a)	The presentation includes a reconciliation of Income Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (GAAP) in the United States, to EBIT.
(b)	EBIT is defined as earnings 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.
(c)	The asbestos charge, reflected in Corporate/Other, relates primarily to our Bondex International, Inc. subsidiary.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our consolidated financial statements include the accounts of RPM International Inc. and its majority-owned subsidiaries. Preparation of our financial statements requires the use of estimates and assumptions that affect the reported amounts of our assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We continually evaluate these estimates, including those related to allowances for doubtful accounts; inventories; allowances for recoverable taxes; useful lives of property. plant and equipment; goodwill; environmental and other contingent liabilities; income tax valuation allowances; pension plans; and the fair value of financial instruments. We base our estimates on historical experience and other assumptions, which we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying value of our assets and liabilities. Actual results may differ from these estimates under different assumptions and conditions.

     We have identified the following accounting policies that are critical to our financial statements.

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Revenue Recognition

     Revenues are recognized when realized or realizable, and when earned. In general, this is when title and risk of loss passes to the customer. Further, revenues are realizable when we have persuasive evidence of a sales arrangement, the product has been shipped or the services have been provided to the customer, the sales price is fixed or determinable, and collectibility is reasonably assured. We reduce our revenues for estimated customer returns and allowances, and for certain rebates, sales incentives, and promotions in the same period the related sales are recorded.

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

     Our reporting currency is the U.S. dollar. However, the functional currency of all of our foreign subsidiaries is their local currency. We translate the amounts included in our consolidated statements of income from our foreign subsidiaries into U.S. dollars at weighted average exchange rates, which we believe are fairly representative of the actual exchange rates on the dates of the transactions. Our foreign subsidiaries’ assets and liabilities are translated into U.S. dollars from local currency at the actual exchange rates as of the end of each reporting date, and we record the resulting foreign exchange translation adjustments in our consolidated balance sheets as a component of accumulated other comprehensive income (loss). Translation adjustments will be included in net earnings in the event of a sale or liquidation of any of our underlying foreign investments, or in the event that we distribute the accumulated earnings of consolidated foreign subsidiaries. If we determine that the functional currency of any of our foreign subsidiaries should be the U.S. dollar, our financial statements would be affected. Should this occur, we would adjust our reporting to appropriately account for such change(s).

     As appropriate, we use permanently invested intercompany loans as a source of capital to reduce exposure to foreign currency fluctuations at our foreign subsidiaries. These loans are treated as analogous to equity for accounting purposes. Therefore, foreign exchange gains or losses on these intercompany loans are recorded in other comprehensive income (loss). If we were to determine that the functional currency of any of our subsidiaries should be the U.S. dollar, we would no longer record foreign exchange gains or losses on such intercompany loans.

Goodwill

     We apply the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations,” which addresses the initial recognition and measurement of goodwill and intangible assets acquired in a business combination. We also apply the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” which requires that goodwill be tested on an annual basis, or more frequently as impairment indicators arise. We have elected to perform the required impairment tests, which involve the use of estimates related to the fair market values of the business operations with which goodwill is associated, at the end of our first quarter. Calculating the fair market value of the reporting units requires significant estimates and assumptions by management. We estimate the fair value of our reporting units by applying third-party market value indicators to the respective reporting unit’s annual projected earnings before interest, taxes, depreciation and amortization. In applying this methodology, we rely on a number of factors, including future business plans, actual operating results and market data. In the event that our calculations indicate that goodwill is impaired, a fair value estimate of each tangible and intangible asset would be established. This process would require the application of discounted cash flows expected to be generated by each asset in addition to independent asset appraisals, as appropriate. Cash flow estimates are based on our historical experience and our internal business plans, and appropriate discount rates are applied. Losses, if any, resulting from goodwill impairment tests would be reflected in operating income in our income statement.

Other Long-Lived Assets

     We assess identifiable non-goodwill intangibles and other long-lived assets for impairment whenever events or changes in facts and circumstances indicate the possibility that the carrying value may not be recoverable. Factors considered important, which might trigger an impairment evaluation, include the following:

• significant under-performance relative to historical or projected future operating results;

• significant changes in the manner of our use of the acquired assets;

• significant changes in the strategy for our overall business; and

• significant negative industry or economic trends.

     Measuring a potential impairment of non-goodwill intangibles and other long-lived assets requires various estimates and assumptions, including determining which cash flows are directly related to the asset being evaluated, the useful life over which those cash flows will occur, their amount and the asset’s residual value, if any. If we determine that the carrying value of these assets may not be

RPM International Inc. and Subsidiaries

18

recoverable based upon the existence of one or more of the above-described indicators, any impairment would be measured based on projected net cash flows expected from the asset(s), including eventual disposition. The determination of impairment loss would be based on the best information available, including internal discounted cash flows, quoted market prices when available and independent appraisals as appropriate to determine fair value. Cash flow estimates would be based on our historical experience and our internal business plans, with appropriate discount rates applied. We have not incurred any impairment loss to date.

Deferred Income Taxes

     The provision for income taxes is calculated in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred income taxes using the liability method. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain changes in valuation allowances. We provide valuation allowances against deferred tax assets if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

     In determining the adequacy of the valuation allowance, management considers cumulative and anticipated amounts of domestic and international earnings or losses, anticipated amounts of foreign source income, as well as the anticipated taxable income resulting from the reversal of future taxable temporary differences.

     We intend to maintain the recorded valuation allowances until sufficient positive evidence (for example, cumulative positive foreign earnings or additional foreign source income) exists to support a reversal of the tax valuation allowances.

Contingencies

     We are party to claims and lawsuits arising in the normal course of business, including the various asbestos-related suits discussed herein and in Note H to our Consolidated Financial Statements. Although we cannot precisely predict the amount of any liability that may ultimately arise with respect to any of these matters, we record provisions when we consider the liability probable and reasonably estimable. The provisions are based on historical experience and legal advice, are reviewed quarterly and are adjusted according to developments. Estimating probable losses requires analysis of multiple forecasted factors that often depend on judgments about potential actions by third parties such as regulators, courts and state and federal legislatures. Changes in the amount of the provisions affect our consolidated statements of income. Due to the inherent uncertainties in the loss reserve estimation process, we are currently unable to estimate an additional range of loss in excess of our accruals. We may incur asbestos costs in addition to any amounts reserved, which may have a material adverse effect on our financial condition, results of operations or cash flows.

     Our environmental-related accruals are similarly established and/or adjusted as information becomes available upon which costs can be reasonably estimated. Here again, actual costs may vary from these estimates because of the inherent uncertainties involved, including the identification of new sites and the development of new information about contamination. Certain sites are still being investigated and, therefore, we have been unable to fully evaluate the ultimate cost for those sites. As a result, reserves have not been taken for certain of these sites and costs may ultimately exceed existing reserves for other sites. We have received indemnities for potential environmental issues from purchasers of certain of our properties and businesses and from sellers of properties or businesses we have acquired. We have also purchased insurance to cover potential environmental liabilities at certain sites. If the indemnifying or insuring party fails to, or becomes unable to, fulfill its obligations under those agreements or policies, we may incur environmental costs in addition to any amounts reserved, which may have a material adverse effect on our financial condition, results of operations or cash flows.

RESULTS OF OPERATIONS

Fiscal 2005 Compared with Fiscal 2004

     Net Sales Net sales for the year ended May 31, 2005 of $2.556 billion increased 10.8 percent, or $248.2 million, over last year’s net sales of $2.308 billion. Contributing to this improvement over last year was the continued growth in organic sales of $187.6 million, or 8.1 percent (1.9 percent pricing), plus eight small acquisitions in their first year with us, net of one small divestiture, supplying another 1.3 percent growth in sales, or $28.4 million. Favorable foreign exchange rates, relating primarily to the euro ($16.3 million) and the Canadian dollar ($12.0 million), provided the remaining 1.4 percent, or $32.2 million, of the growth in sales over last year.

     Industrial segment net sales grew 13.3 percent to $1.442 billion from last year’s $1.273 billion, comprising 56.0 percent of the current year’s consolidated net sales. This segment’s net sales growth comes primarily from

RPM International Inc. and Subsidiaries

19

organic sales growth of 9.4 percent (1.3 percent pricing), another 1.9 percent from favorable foreign exchange differences, and six small acquisitions, net of the one small divestiture, added the remaining 2.0 percent of growth to industrial sales. There were notable organic sales improvements among powder coatings, corrosion control coatings, roofing, including services, and in construction sealants, admixtures and exterior insulating finishes, with much of this latter growth related to increased U.S. commercial construction activity. The demand for most of our industrial product lines has increased as the economy in general, and the industrial sector in particular, have improved. We continue to secure new business and grow market share among our industrial segment operations.

     Consumer segment net sales grew 7.7 percent to $1.114 billion from last year’s $1.035 billion, comprising 44.0 percent of consolidated net sales. Organic sales growth added 6.6 percent (2.6 percent pricing) to the consumer segment sales total, in addition to 0.8 percent from favorable foreign exchange differences. Two small bolt-on product line acquisitions provided the remaining 0.3 percent of sales growth. There were notable organic sales improvements among wood care products, primer-sealers, caulks and sealants and small-project paints and coatings. This strong organic growth is the result of fairly steady retail demand by the consumer throughout 2005, coupled with continuous product development among our businesses.

     Gross Profit Margin Consolidated gross profit margin of 43.3 percent of net sales for 2005 declined from 44.7 percent a year ago. Continued higher costs of raw materials, particularly petroleum-based, impacted this margin by approximately 260 basis points (“bps”)(2.6%), and, combined with a lower-margin mix of sales among product lines and services, more than offset margin benefits generated primarily from the leverage of higher organic sales volume and price increases (170 bps) implemented by our businesses.

     Industrial segment gross profit margin for 2005 declined to 44.8 percent of net sales from 45.7 percent last year. The principal factors contributing to the decline in gross margins in this segment were continued higher raw material costs, which impacted margins by approximately 170 bps, partly offset by price increases of approximately 120 bps, and a lower-margin mix of sales.

     Consumer segment gross profit margin for the year declined to 41.3 percent of net sales from 43.4 percent last year. There was approximately 370 bps of negative margin impact from higher raw material and packaging costs in this segment, plus certain changes in the mix of sales this year which exceeded the 240 bps benefit from price increases implemented during 2005 plus margin leverage from the higher organic sales volume.

     Selling, General and Administrative Expenses (“SG&A”) Consolidated SG&A expense levels improved 150 bps to 32.5 percent of net sales compared with 34.0 percent a year ago. The leverage of organic sales growth over last year was the primary contributing factor to the improvement in this category. The higher cost of fuel, which contributed to higher distribution costs over last year (30 bps), this year’s adoption of SFAS No. 123 (refer to Notes A and D), in combination with the expensing of initial grants under the 2004 Omnibus Equity and Incentive Plan (the “Omnibus Plan”)(20 bps), increased compensation and other growth-related investments partially offset these gains.

     Industrial segment SG&A improved by 150 bps to 33.2 percent of net sales in 2005 from 34.7 percent a year ago. The main contributors to SG&A improvement were the leverage of organic sales growth along with cost containment and other savings programs. These improvements were partially offset by higher distribution costs (30 bps), increased compensation (50 bps) and other growth-related investments.

     Consumer segment SG&A improved by 160 bps to 28.1 percent of net sales for the year compared with 29.7 percent a year ago. This segment’s organic growth in sales over last year also provided leverage benefits along with continued cost containment and other savings programs. Partly offsetting these benefits were increased compensation and other growth-related investments made in this segment, in addition to increased fuel-related distribution costs (30 bps).

     Corporate/Other costs increased during this year to $38.1 million from $36.7 million last year. Generally lower insurance costs (approximately $3.1 million) and certain other expense reductions partly offset higher costs related to the combination of this year’s adoption of SFAS No. 123 and the expensing of initial grants under the Omnibus Plan, approximating $3.8 million, as well as higher corporate governance costs, principally start-up costs related to Sarbanes-Oxley Section 404 compliance, approximating $2.0 million.

     License fee and joint venture income of $0.6 million for the year ended May 31, 2005 and $0.7 million for the year ended May 31, 2004, is reflected as a reduction of consolidated SG&A expenses.

     We recorded total net periodic pension expense of $14.5 million and $15.9 million for the years ended May 31, 2005 and 2004, respectively. Additionally, we recorded net periodic postretirement expense of $1.5 million and $1.2

RPM International Inc. and Subsidiaries

20

million for the years ended May 31, 2005 and 2004, respectively. The decreased pension expense of $1.4 million was largely attributable to a net improvement in the expected return on plan assets, approximating $3.3 million, combined with decreased net actuarial losses recognized, which positively impacted year-over-year expense by approximately $0.9 million. Offsetting those benefits were increased pension service and interest cost totaling approximately $2.8 million. A change of 0.25% in the discount rate or expected return on plan assets assumptions would result in $0.9 million and $0.4 million higher pension expense, respectively. The assumptions and estimates used to determine the discount rate and expected return on plan assets are more fully described in Note F, “Pension Plans,” and Note G, “Postretirement Health Care Benefits,” to our Consolidated Financial Statements. We expect that pension expense will fluctuate on a year-to-year basis depending upon the performance of plan assets, but such changes are not expected to be material as a percent of income before income taxes.

     Asbestos Charges Certain of our wholly owned subsidiaries, principally Bondex International, Inc. (Bondex), along with many other U.S. companies, are and have been involved in a large number of asbestos-related suits filed primarily in state courts during the past two decades with a vast majority of current claims pending in five states – Illinois, Ohio, Mississippi, Texas and Florida. These suits principally allege personal injury resulting from exposure to asbestos-containing products previously manufactured by the Company’s subsidiaries. The alleged claims relate primarily to products that Bondex or its predecessors sold through 1977. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure or that injuries incurred resulted from exposure to Bondex products.

     The rate at which plaintiffs filed asbestos-related suits against the Company’s subsidiaries, particularly Bondex, has increased since the fourth fiscal quarter of 2002, 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 claims for the foreseeable future. We have reserved our rights with respect to various of our third-party insurers’ claims of exhaustion, and in late calendar 2002 commenced reviewing our known insurance policies to determine whether other insurance limits may be available to cover our asbestos liabilities.

     As a result of this examination and as previously disclosed, certain of our subsidiaries filed a complaint for declaratory judgment, breach of contract and bad faith against various third-party insurers, challenging their assertion that their policies covering asbestos-related claims have been exhausted. Since the July 3, 2003 filing in Ohio, this action was combined with a related case and, pursuant to a case management order, the parties are to complete fact discovery by March 31, 2006 and dispositive motions and expert discovery by September 1, 2006. A trial date of January 29, 2007 has been set; however, it is possible that this and other dates may be modified as the coverage case progresses.

     We are unable at the present time to predict the timing or ultimate outcome of this insurance coverage 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 our asbestos reserve. Our wholly-owned captive insurance companies have not provided any insurance or re-insurance coverage for any of our subsidiaries’ asbestos-related claims.

     During 2003 and early fiscal 2004, new state liability laws were enacted in three states (Mississippi, Ohio and Texas) where at that time 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. During the third and fourth fiscal quarters of 2004, two of the three previously mentioned states that adopted “proportional cause” liability in 2003 passed additional legislation impacting medical criteria and product identification in asbestos-related litigation. In 2005, additional states, including Florida and Georgia have adopted various medical criteria-based asbestos legislation. 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

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values is not known at this time. Claims in Mississippi, Ohio and Texas at the fiscal year ended May 31, 2005, coupled with the non-malignancy filings in Florida, currently comprise approximately 80% of the aggregate claims filed against Bondex.

     At the end of 2002 and through the third fiscal quarter of 2003, Bondex had concluded it was not possible to estimate the cost of disposing all of the 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 any future asbestos-related claims. As previously disclosed, during the fourth fiscal quarter of 2003, Bondex retained a consulting firm to assist 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 and the prospect of potential federal asbestos-related legislation.

     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 all future asbestos-related claims against Bondex. Estimating the future cost of asbestos-related contingent liabilities was and continues to be subject to many uncertainties, including (i) the ultimate number of claims filed; (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 a changing trial docket and the jurisdictions in which trials are scheduled; (vii) the outcome of any such trials including judgments or jury verdicts, as a result of our more aggressive defense posture which includes taking selective cases to verdict; (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; and (x) the potential impact of various proposed structured settlement transactions or subsidiary bankruptcies by other companies, some of which are the subject of federal appellate court review, the outcome of which could materially affect any future asbestos-related liability estimates. In addition, during both calendar years 2003 and 2005, passage by the United States Senate Judiciary Committee of proposed legislation to establish a trust fund to pay future asbestos-related claims and remove such cases from federal and state courts with industry and insurers funding the trust continues to be a significant variable that has made it increasingly difficult to predict with certainty the full exposure of future, unknown asbestos-related claims. The ongoing prospect of federal trust fund legislation is expected to continue to be a significant variable in assessing our future asbestos-related liabilities.

     Based on the foregoing considerations, at May 31, 2003, we concluded that we could not fully estimate the liability that would result from all future asbestos claims. We established a reserve for those pending cases that had progressed to a stage where the cost to dispose of these cases could, at the time, reasonably be estimated, as well as a $51.2 million provision for future unasserted claims that were estimable at May 31, 2003. The estimation of even pending cases was and is always difficult due to the dynamic nature of asbestos litigation including the variables discussed above. The estimated range of potential loss covering measurable known asbestos claims and the 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 fiscal 2003 operations of $140.0 million. At the time of the reserve, we believed that this 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 included $15.0 million in total projected defense costs over the estimated three-year life of the reserve. By comparison, Bondex’s share of costs (net of then-available third-party insurance) for asbestos-related product liability was $6.7 million and $2.8 million for the years ended May 31, 2003 and 2002, respectively.

     Since May 31, 2003, we have reviewed and evaluated on a quarterly basis the adequacy of our asbestos reserve. The range of loss calculation for the $140.0 million reserve was based on an extensive analysis of the most critical factors that influence our asbestos-related costs including: (i) the gross number of open malignancy claims (principally mesothelioma claims) as these claims have the most significant impact on our asbestos settlement costs; (ii) historical

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and current settlement costs and dismissal rates by various categories; (iii) analysis of the jurisdiction and governing law of the states in which these claims are pending; and (iv) outside defense counsel’s opinions and recommendations with respect to the merits of such claims. Although the number of open malignancy claims has remained relatively constant, subject to some quarterly variability, since May 31, 2003 continuing through the year ended May 31, 2005, our average settlement costs for malignancy claims have declined and dismissal rates have increased. Several defense verdicts during the second half of fiscal 2004 further contributed to lower settlement values and higher dismissal rates. Our defense costs, however, have increased significantly as a result of our more aggressive defense strategy, which now includes taking selective cases to verdict.

     Based on our review of our asbestos reserve for the second quarter ended November 30, 2004, we concluded that the $56.0 million balance of the $140.0 million reserve would not likely be sufficient to cover our asbestos-related cash flow requirements for the remainder of the full three-year period originally contemplated by the reserve. Accordingly, we concluded that an increase in our existing reserve was appropriate and took an asbestos reserve adjustment of $47.0 million for the quarter ended November 30, 2004, which we believed would be sufficient to cover any incremental cash flow requirements through fiscal 2006 not covered by the $140.0 million reserve, as well as the additional cash flow requirements for the balance of our then-pending known claims and anticipated higher defense costs. Approximately $32.0 million of the $47.0 million reserve adjustment was allocated to anticipated higher future defense costs. During the third fiscal quarter ended February 28, 2005, based on a review of our then-pending known claims, coupled with a review of our defense costs, we concluded that an increase in our existing reserve was again appropriate. An asbestos reserve adjustment of $15.0 million was taken for the quarter ended February 28, 2005. With cash outlays of $21.9 million in the third quarter, our asbestos reserves aggregated $96.3 million at February 28, 2005, which we believed would be sufficient to cover the cash flow requirements for the balance of our then pending known claims and defense costs. Our $15.0 million reserve increase assumed that approximately $6.1 million will be allocated to higher future defense costs, which we expect to continue.

     During the fourth quarter ended May 31, 2005, an additional $16.0 million was added to the asbestos reserve based on management’s quarterly review of pending claims and defense costs. With cash outlays of $11.1 million during the fourth quarter, our asbestos reserves totaled $101.2 million at May 31, 2005, which we believe will be sufficient to cover the cash flow requirements for the balance of our pending known claims, including defense costs. Of the $16.0 million reserve increase, approximately $15.8 million is expected to be allocated to anticipated higher future defense costs, which we expect to continue. As previously disclosed, as we review our asbestos reserve each quarter, we will make appropriate adjustments to the reserve based on our most recent experience to ensure that it is sufficient to cover the anticipated settlement and defense costs associated with our then-pending, known claims. We will continue to evaluate the appropriateness of estimating the value of any potential future unknown asbestos claims and at such time as we are able to quantify such future exposure, we will establish a reserve for such unknown future claims.

     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 potential settlement values associated with any such future claims, the ultimate resolution of such claims, the full impact of the state law changes enumerated above or the effect of pending federal trust fund legislation on future asbestos claims. Subject to the foregoing variables, including the timing and impact of such variables and the increase in the asbestos reserve, we believe that our asbestos reserves are sufficient to cover asbestos-related cash flow requirements for the current inventory of our known claims. It is, however, reasonably possible that our actual costs for claims could differ from current estimates but, based upon information presently available, such costs are not expected to have a material effect on our competitive or financial position or our ongoing operations. As previously disclosed, however, our existing reserve will not presently cover the costs of future unknown claims and, therefore, additional reserves will be required in future periods for any such future claims. Any such future reserve increases, when taken, could have a material impact on our results in such period.

     The Company will continue to evaluate its asbestos-related loss exposure each quarter and review the adequacy of its reserve and the related cash flow implications in light of our most recent actual claims experience, the impact of state law changes and the evolving nature of federal legislative efforts to address asbestos litigation. We will con-

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tinue to explore all feasible alternatives available to resolve our asbestos-related exposure in a manner consistent with the best interests of our stockholders.

     Net Interest Expense Net interest expense was $6.4 million higher this year than a year ago. Interest rates overall averaged 4.9 percent during the year, compared with 4.2 percent a year ago, accounting for $6.8 million of the interest cost increase. Additional debt outstanding during the past year cost approximately $1.6 million more during the year. These increases are primarily due to our debt refinancings (refer to “Liquidity and Capital Resources” section) during the past 18 months, including the $200 million 6.25% Senior Notes issued in December 2003 and the $200 million 4.45% Senior Unsecured Notes issued in September 2004. Higher average net borrowings this year of approximately $24.0 million, associated with recent acquisitions, added $0.8 million of interest cost, while investment income performance improved year-over-year, providing $2.8 million of additional income.

     Income Before Income Taxes (“IBT”) Consolidated IBT for this year of $163.7 million compares with $217.6 million last year, with $78.0 million of this decline resulting from the asbestos charges taken during this fiscal year. Excluding the charges, IBT for this year would have been an adjusted $241.7 million, or ahead by $24.1 million, or 11.1 percent, from last year’s $217.6 million, resulting in margins at 9.5 and 9.4 percent of sales for 2005 and 2004, respectively. This reflects the combined positive impacts from the higher organic sales volume, cost controls, productivity improvements and pricing initiatives, offsetting the approximate 260 bps impact of higher material costs, plus higher fuel-related distribution costs, the continuation of growth-related investments this year in both operating segments and higher interest expense.

     Industrial segment IBT grew by $27.9 million, or 19.8 percent, to $168.6 million, or 11.7 percent of sales, from last year’s $140.7 million, or 11.1 percent of sales, mainly from the higher organic sales volume. Consumer segment IBT grew by $4.7 million, or 3.3 percent, to $147.6 million, or 13.2 percent of sales, from last year’s $142.9 million, or 13.8 percent of sales, with the margin decline mainly from higher material costs more than offsetting pricing increases and organic sales growth leverage in this segment. Combined, operating IBT grew to $316.2 million, or 12.4 percent of sales, ahead $32.6 million, or 11.5 percent, over 2004’s $283.6 million, or 12.3% of sales.

     For a reconciliation of IBT to earnings before interest and taxes, see the Segment Information table located on page 17 of this Annual Report.

     Income Tax Rate The effective income tax rate was 35.8% for 2005 compared to an effective income tax rate of 34.8% for 2004. The effective income tax rate for 2005 reflects the impact of the $78 million asbestos liability charges taken during the year. Excluding the asbestos charges, the adjusted effective income tax rate for 2005 would have been 36.1%. This increase in the adjusted effective income tax rate, excluding the asbestos charges, is principally due to an increase in tax valuation allowances recorded in 2005, this year’s reduction in the extraterritorial income exclusion benefit, changes in the jurisdictional mix of income and the impact of our foreign operations.

     As of May 31, 2005, we have determined, based on the available evidence, that it is uncertain whether we will be able to recognize certain deferred tax assets. Therefore, in accordance with the provisions of Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” we intend to maintain the tax valuation allowances recorded at May 31, 2005 for certain deferred tax assets until sufficient positive evidence exists to support the reversal of the tax valuation allowances, such as cumulative positive foreign earnings or additional foreign source income.

     The valuation allowances relate to U.S. federal foreign tax credit carryforwards, certain foreign net operating losses and net foreign deferred tax assets recorded in purchase accounting. The most significant portion of the valuation allowance is associated with deferred tax assets recorded in purchase accounting. Any reversal of the valuation allowance that was recorded in purchase accounting would reduce goodwill. A reduction of the valuation allowance of $0.5 million was accordingly allocated to goodwill during 2005.

     Net Income Net income for this year of $105.0 million compares with last year’s $141.9 million, reflecting the $49.5 million after-tax cost of the asbestos liability charges taken during this fiscal year. Excluding the charges, this year’s adjusted net income would have been $154.5 million, ahead $12.6 million, or 8.9 percent, from last year. The margin on sales would have been an adjusted 6.0 and 6.1 percent of sales for 2005 and 2004, respectively, despite the net impact from higher material costs. Similarly, diluted earnings per common share would have increased to an adjusted $1.25, or by 7.8 percent, from $1.16 a year ago. As a result of our adoption of EITF 04-8, as outlined in Notes A and D, diluted earnings per share for the years ended May 31, 2005, 2004 and 2003 have been restated to include the 8,034,355 shares issuable upon conversion of our contingently convertible debt.

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FISCAL 2004 COMPARED WITH FISCAL 2003

     Net Sales Net sales for the year ended May 31, 2004 of $2.308 billion increased 12.4%, or approximately $254 million, over 2003 net sales of $2.053 billion. This growth was attributed primarily to a solid increase in organic sales of 6.6%, or $135 million, plus eleven acquisitions, which contributed 3.4%, or $69 million, to sales growth. Favorable foreign exchange rates provided the additional 2.4%, or $50 million, of increased sales over 2003, the majority of which related to the Canadian dollar for $21 million and the euro for $23 million.

     Industrial segment net sales for 2004 amounted to 55.0% of consolidated net sales, growing 13.9%, or $155 million, to $1.273 billion from $1.118 billion in 2003. This segment’s net sales growth came from organic sales growth of 5.7%, or $63 million; another 3.1%, or $35 million, from net favorable foreign exchange differences; and seven product line acquisitions, which added the remaining $57 million, or 5.1%, to industrial sales over 2003.

     Consumer segment net sales amounted to 45.0% of consolidated net sales, growing 10.6%, or $99 million, to $1.035 billion from $936 million in 2003. Growth in organic sales amounted to 7.7%, or $72 million, while another 1.6%, or $14 million, of sales growth came from favorable foreign exchange differences. Also contributing to growth in this segment year over year was the addition of four acquisitions, which added the remaining 1.3%, or $13 million, of sales growth.

     Gross Profit Margin Consolidated gross profit margin of 44.7% of sales for 2004 compares with 44.8% for 2003. This slight decline in margin was caused by higher raw material and packaging costs, which negatively impacted 2004 gross margin by 0.8% of sales, or 80 bps. Adding approximately 70 bps to the gross margin was the combination of certain procurement benefits from the weaker dollar, mainly against the Canadian dollar, and productivity gains. We also realized certain supplier rebates and generally higher margins from acquisitions, which offset lower-margin roofing services sales.

     The industrial segment gross profit margin held steady at 45.7% of sales in both years, despite higher raw material and packaging costs, which negatively impacted 2004 gross margin by 30 bps. The procurement benefits from the weaker dollar, generally higher margins from acquisitions and productivity gains, which added 80 bps, more than offset the impact of lower-margin roofing services sales.

     The consumer segment gross profit margin declined slightly, to 43.4% of net sales in 2004 from 43.7% in 2003. Higher raw material and packaging costs negatively influenced 2004 gross margins by 140 bps. Cost benefits from productivity gains, supplier rebates and procurement benefits from the weaker dollar combined to nearly offset raw material and packaging cost issues.

     Selling, General and Administrative Expenses (“SG&A”) Consolidated SG&A expense levels for 2004 improved to 34.0% of net sales from 34.3% in 2003. Primary additions to the SG&A percentage year over year were marketing and related investments to support continued growth, including 2004’s establishment of our European development office; higher pension costs (refer to Note F); and higher insurance, legal and other costs related to corporate governance. The primary reductions to the SG&A percentage were the benefits of lower cost-structure acquisitions and our fast-growing roofing services sales, along with the leverage from the growth in organic sales against fixed costs. These combined reductions reduced the 2004 SG&A percentage from 2003 by approximately 140 bps.

     Industrial segment SG&A at 34.7% of net sales during 2004 compares with 34.8% in 2003. This reduction in percentage of sales reflected growth in roofing services sales that require much lower SG&A support. Excluding those sales, SG&A expenses would have been 36.9% and 36.3% of net sales in 2004 and 2003, respectively. Primary additions to the SG&A percentage year over year were higher legal costs principally associated with Dryvit EIFS (refer to Note H), marketing and related investments to support continued growth, and higher pension costs, which combined to add 120 bps to cost levels. The offset came from leverage from organic sales growth against fixed costs in this category.

     Consumer segment SG&A expense at 29.7% of net sales compares to 29.6% in 2003. Primary additions to the SG&A percentage year over year were marketing and related investments to support continued growth and higher pension and legal costs totaling just over 100 bps. These increases were essentially neutralized by volume leverage from organic sales growth against the fixed cost portion of SG&A.

     Corporate/Other costs decreased in 2004 to $36.7 million from $39.1 million in 2003. Product liability costs of $5.7 million were accrued for in 2003, associated with our asbestos exposure, versus none in 2004, as a result of the asbestos charge taken in 2003, estimated to cover approximately three years’ worth of related costs at that time (refer to Note H). Offsetting this expense reduction were higher insurance and other costs, totaling $3.9 million, related primarily to corporate governance issues affecting essentially all U.S. publicly held companies, including Sarbanes-Oxley compliance.

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     We recorded total net periodic pension cost of $15.9 million and $9.9 million for the years ended May 31, 2004 and 2003, respectively. Additionally, net periodic postretirement health care benefits for 2004 and 2003 amounted to $1.2 million and $1.1 million, respectively. The $6.0 million increase in net periodic pension cost was largely attributable to increased net actuarial losses recognized, which negatively impacted year over year expense by approximately $2.5 million. The remaining difference relates primarily to increased pension service and interest cost for $1.5 million and $1.9 million, respectively. A change of 0.25% in the discount rate or expected return on plan assets assumption would have resulted in $0.9 million and $0.4 million higher pension expense, respectively. The assumptions and estimates used to determine the discount rate and expected return on plan assets are more fully described in Note F, “Pension Plans,” and Note G, “Postretirement Health Care Benefits,” to our Consolidated Financial Statements.

     Asbestos Charge As described above and in Note H to the Consolidated Financial Statements, certain of our wholly owned subsidiaries, principally Bondex, along with many other U.S. companies, are and have been involved in asbestos-related suits filed primarily in state courts during the past two decades. During the fiscal year ended May 31, 2003, we recorded an asbestos charge of $140.0 million for measurable and known claims, which included a $51.2 million provision for future claims estimable as of May 31, 2003. We believed then that this reserve would be sufficient to cover our asbestos-related cash flow requirements over the estimated three-year life of the reserve. The $140.0 million charge also included $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 claims was $6.7 million for the year ended May 31, 2003. In fiscal 2004, Bondex’s asbestos-related cash payments, net of insurance contributions, amounted to $54.0 million and were charged against the balance sheet reserve established in 2003.

     Net Interest Expense Net interest expense increased by $2.2 million in 2004. Debt refinancings effectively raised our interest rates year over year, averaging 4.2% in 2004 compared with 3.8% in 2003, costing an additional $2.8 million in interest expense in 2004. Interest costs associated with financing acquisitions added $1.6 million of interest expense in 2004. Net interest expense was reduced by greater investment income, of approximately $0.9 million during 2004, while debt repayments, averaging approximately $34 million during the year, saved $1.3 million in interest cost.

     Since our issuances of 2.75% Senior Convertible Notes in May 2003 and 6.25% Senior Notes in December 2003 (refer to “Liquidity and Capital Resources” section), the variable portion of our total debt structure was down to approximately 20-25% at the end of 2004.

     Income Before Income Taxes (“IBT”) Consolidated IBT in 2004 of $217.6 million compared with $47.9 million during fiscal 2003, with $140.0 million of this difference representing the asbestos liability charge taken in 2003. Excluding the charge, 2004 IBT would have been ahead of 2003 proforma IBT of $187.9 million by $29.7 million, or 15.8%.

     Industrial segment IBT grew $18.1 million, or 14.8%, on 13.9% sales growth, to 11.1% of net sales in 2004 compared with 11.0% of sales during fiscal 2003. Consumer segment IBT grew $11.8 million, or 9.0%, on 10.6% sales growth to 13.8% of net sales in 2004 compared with 14.0% of net sales during fiscal 2003. This combined operating IBT improvement totaling $29.9 million, an 11.8% increase on 12.4% sales growth, was generally the result of the growth in sales volume, including accretive acquisitions, in addition to productivity gains, offset by the 80 bps impact of higher raw material and packaging costs during 2004.

     For a reconciliation of IBT to earnings before interest and taxes see the segment information table located on page 17 of this Annual Report.

     Income Tax Rate The effective income tax rate was 34.8% for 2004 compared to an effective income tax rate of 26.2% for 2003. The effective income tax rate for 2003 reflects the impact of the $140 million asbestos liability charge. Excluding the asbestos charge, the adjusted effective tax rate for 2003 would have been 34.6%. This increase in the effective tax rate, excluding the asbestos charge, was principally due to slight changes in the 2004 jurisdictional mix of income.

     Net Income Net income of $141.9 million for 2004 increased $106.6 million over 2003 net income of $35.3 million, and 2004 diluted earnings per common share of $1.16 increased $0.86 per share compared with 2003 of $0.30 per share. Excluding the 2003 asbestos charge for comparability, 2004 net income grew $19.1 million, or 15.5%, from 2003 adjusted net income of $122.8 million, diluted earnings per common share increased by $0.10 per share, or 9.4%, to $1.16 from an adjusted $1.06 in 2003, and margin on sales of 6.1% in 2004 improved from an adjusted 6.0% in 2003.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

     Operating activities generated positive cash flow of $157.4 million during fiscal 2005 compared with $154.0 million generated during 2004, a net increase of 2.2% or

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$3.4 million. Factoring out the after-tax asbestos-related cash payments of $42.8 and $33.7 million, respectively, operating activities generated positive cash flow of $200.2 million in fiscal 2005 compared with $187.7 million during the prior year, up $12.5 million or 6.7%. During fiscal 2005 net income was affected by $78.0 million ($49.5 million after tax) in charges for asbestos-related liabilities, which had no effect on cash flow. Fiscal 2005 adjusted net income of $154.5 million, excluding the asbestos charges, represents a $12.6 million increase over 2004 net income of $141.9 million. Cash flow from operations during 2005 was positively impacted by additional depreciation and amortization of $2.7 million versus the prior year. Trade accounts receivable required additional cash flow of $22.1 million, principally associated with an increase in sales versus the prior year, but with a favorable reduction of 0.5 days sales outstanding (“DSO”) since May 31, 2004. Inventories required an additional $12.5 million of operating cash year-over-year as a result of the increased sales volume and the associated inventory necessary to support these levels, while our days outstanding in inventory also improved by 0.2 days since May 31, 2004, to slightly offset a portion of this cash usage. An increase in accounts payable provided $38.4 million of additional cash year-over-year mainly as a result of the increased inventory levels and the timing of payments.

     Prepaid expenses and other current assets were a year-over-year use of cash of $27.0 million, mostly as a result of an insurance receivable recorded during fiscal 2005. Accrued loss reserves were a source of cash of $16.3 million year-over-year, primarily as a result of recording additional loss reserves related to product liability. Accrued other liabilities were a use of cash of $12.0 million year-over-year mainly as a result of net reductions in interest, advertising, and compensation and benefit-related liabilities. Accrued other long-term liabilities were a source of cash of $8.7 million principally as a result of the year-over-year net increases in deferred income, deferred compensation and product warranty reserves.

     Payment reductions in long-term and short-term asbestos related reserves, net of taxes, of approximately $42.8 million in fiscal 2005 and $33.7 million in fiscal 2004 were a year-over-year additional use of cash of $9.1 million. As disclosed in our “Critical Accounting Policies and Estimates” and our discussion on asbestos litigation (also refer to Note H), the significant increase in asbestos claims activity and costs relating to our Bondex subsidiary caused our related third-party insurance to be depleted during the first quarter of fiscal 2004. Accordingly, we are now funding costs previously covered by insurance with cash from operations. We anticipate that cash from operations and other sources will continue to be sufficient to meet all asbestos-related obligations on a short-term and long-term basis.

     All other remaining balance sheet changes related to cash flows from operations had a net positive impact of $7.4 million, mostly due to timing or exchange differences.

     Cash provided from operations remains our primary source of financing internal growth, with limited use of short-term debt.

Investing Activities

     Capital expenditures, other than for ordinary repairs and replacements, are made to accommodate our continued growth through improved production and distribution efficiencies and capacity, and to enhance administration. Capital expenditures in fiscal 2005 of $55.6 million compare with depreciation of $49.8 million. Capital spending is expected to slightly outpace our depreciation levels for the next several years as additional capacity is brought on line to support our continued growth. With this additional minor plant expansion, we believe there will be adequate production capacity to meet our needs for the next several years at normal growth rates.

     During fiscal 2005, there were investments totaling $15.6 million (refer to Note A) for five acquisitions, net of proceeds from a divestiture.

     Our captive insurance companies invest in marketable securities in the ordinary course of conducting their operations, and this activity will continue (refer to Note A). Differences in these activities between years are attributable to the timing and performance of their investments.

Financing Activities

     In December 2003, we issued and sold $200 million of 6.25% Senior Notes due 2013 as a means of refinancing. The Notes were offered to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S. The entire net proceeds of $197 million from this offering were used to repay in full the $128 million of then-outstanding borrowings under our $500 million revolving credit facility and $69 million of the then-outstanding $72 million balance under our asset securitization program. On July 13, 2004, we completed an exchange offer so as to allow holders to exchange the initial notes for notes of the same principal amount registered under the Securities Act of 1933.

     On September 30, 2004, we issued and sold $200 million aggregate principal amount of 4.45% Senior Unsecured Notes due 2009 (“4.45% Senior Notes”), which we concur-

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rently swapped back to floating rate debt (refer to interest rate discussion below). The 4.45% Senior Notes were offered to qualified institutional buyers under Rule 144A. We used a portion of the net proceeds of $198.0 million from this offering to pay off our $15.0 million 6.12% Senior Notes due 2004, which matured on November 25, 2004 and our then-outstanding $68.0 million of commercial paper. On April 26, 2005, pursuant to a Registration Rights Agreement between the Company and the initial purchasers of the 4.45% Senior Notes, we completed an exchange offer so as to allow holders to exchange the 4.45% Senior Notes for the same principal amount of notes registered under the Securities Act of 1933.

     During November 2004, we refinanced our $500 million revolving credit facility, due July 14, 2005, with a $330 million 5-year credit facility (“Credit Agreement”), due November 19, 2009. This new facility will be used for general corporate purposes, including acquisitions and to provide back-up liquidity for the issuance of commercial paper. The facility provides for borrowings in U.S. dollars and several foreign currencies and provides sublimits for the issuance of letters of credit in an aggregate amount of up to $25.0 million and a swing-line of up to $20.0 million for short-term borrowings of less than 15 days. In addition, the size of the facility may be expanded upon our request by up to an additional $100.0 million, thus potentially expanding the facility to $430.0 million, subject to lender approval. As of May 31, 2005, we had no outstanding balance under this facility.

     Subsequent to year end, the Company borrowed $115.0 million under its Credit Agreement. A portion of the borrowing, along with cash on hand, was used to repay in full the principal and accrued interest on the Company’s $150.0 million 7.0% Senior Unsecured Notes due 2005. In addition, a portion of the cash borrowed was used for general corporate purposes.

     Our available liquidity beyond our cash balance at May 31, 2005 stood at $454.5 million (refer to Note B). Our debt-to-capital ratio was 44.5% at May 31, 2005, up from 42% at May 31, 2004. Had we been able to reduce our total outstanding debt by all of our cash and short-term investments available as of May 31, 2005 and May 31, 2004, to satisfy some of our indebtedness, much of which was earmarked at May 31, 2005 for the June 15, 2005 maturity described above, our adjusted net (of cash) debt-to-capital ratio would have been 38.5% and 41.3%, respectively.

     The following table summarizes our financial obligations and their expected maturities at May 31, 2005 and the effect such obligations are expected to have on our liquidity and cash flow in the periods indicated.

Contractual Obligations

			Payments Due In
	Total Contractual
(In thousands)	Payment Stream		2006		2007-08		2009-10		After 2010
Long-term debt obligations	$	838,045	$	97	$	260,217	$	377,697	$	200,034
Operating lease obligations		79,560		23,765		32,482		12,429		10,884
Other long-term liabilities(1)		144,000		13,200		22,700		30,900		77,200
Total	$	1,061,605	$	37,062	$	315,399	$	421,026	$	288,118

(1) These amounts represent our estimated cash contributions to be made in the periods indicated for our pension and postretirement plans in the U.S. and Canada, assuming no actuarial gains or losses, assumption change or plan changes occur in any period. Projections for our other non-U.S. plans are not currently determinable.

     The condition of the U.S. dollar fluctuated throughout the year, and was moderately weaker against other major currencies where we conduct operations at the fiscal year end over the previous year end, causing a favorable change in the accumulated other comprehensive income (loss) (refer to Note A) component of stockholders’ equity of $15.0 million this year versus $9.7 million last year. This change was in addition to changes of $(1.9) million and $0.7 million related to adjustments required for minimum pension liabilities and unrealized gain (loss) on securities, respectively.

     We maintain excellent relations with our banks and other financial institutions to provide continual access to financing for future growth opportunities.

Off-Balance Sheet Arrangements

     We do not have any off-balance sheet financings, other than the minimum leasing commitments described in Note E. We have no subsidiaries that are not included in our financial statements, nor do we have any interests in or relationships with any special purpose entities that are not reflected in our financial statements.

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QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk from changes in interest rates and foreign currency exchange rates because we fund our operations through long- and short-term borrowings and denominate our business transactions in a variety of foreign currencies. We utilize a sensitivity analysis to measure the potential loss in earnings based on a hypothetical 1% increase in interest rates and a 10% change in foreign currency rates. A summary of our primary market risk exposures follows.

Interest Rate Risk

     Our primary interest rate risk exposure results from our floating rate debt, including various revolving and other lines of credit (refer to Note B). At May 31, 2005, approximately 35.5% of our debt was subject to floating interest rates. If interest rates were to increase 100 bps from May 31, 2005 and assuming no changes in debt from the May 31, 2005 levels, the additional annual interest expense would amount to approximately $3.0 million on a pre-tax basis. A similar increase in interest rates in fiscal 2004 would have resulted in approximately $1.6 million in additional interest expense.

     Our hedged risks are associated with certain fixed rate debt whereby we have a $200.0 million notional amount interest rate swap contract designated as a fair value hedge to pay floating rates of interest based on six-month LIBOR that matures in fiscal 2010. Because critical terms of the debt and interest rate swap match, the hedge is considered perfectly effective against changes in the fair value of debt, and therefore, there is no need to periodically reassess the effectiveness during the term of the hedge.

     All derivative instruments are recognized on the balance sheet and measured at fair value. Changes in the fair values of derivative instruments that do not qualify as hedges and/or any ineffective portion of hedges are recognized as a gain or loss in our consolidated statement of income in the current period. Changes in the fair value of derivative instruments used effectively as fair value hedges are recognized in earnings (losses), along with the change in the value of the hedged item. Such derivative transactions are accounted for under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities,” as amended and interpreted. The Company does not hold or issue derivative instruments for speculative purposes.

Foreign Currency Risk

     Our foreign sales and results of operations are subject to the impact of foreign currency fluctuations (refer to Note A). As most of our foreign operations are in countries with fairly stable currencies, such as Belgium, Canada and the United Kingdom, this effect has not generally 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, our foreign results of operations will be positively impacted, but the effect is not expected to be material. A 10% change in foreign currency exchange rates would not have resulted in a material impact to net income for the years ended May 31, 2005 and 2004. We do not currently hedge against the risk of exchange rate fluctuations.

FORWARD-LOOKING STATEMENTS

     The foregoing discussion includes 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) that 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 and supply of raw materials, particularly petroleum-based, titanium dioxide, certain resins, aerosols and solvents; (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 reserves and 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 inherent in our contingent liability reserves, including asbestos; and other risks detailed in our other reports and statements filed with the Securities and Exchange Commission, including the risk factors set forth in our prospectus and prospectus supplement included as part of our Registration Statement on Form S-3 (file No. 333-120536), as the same may be amended from time to time.

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CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)

May 31	2005		2004
Assets
Current Assets
Cash and short-term investments (Note A)	$	184,140	$	34,559
Trade accounts receivable (less allowances of $18,565 in 2005 and $18,147 in 2004)		553,084		488,139
Inventories (Note A)		334,404		289,359
Deferred income taxes (Notes A and C)		40,876		40,919
Prepaid expenses and other current assets (Note A)		158,991		138,613
Total current assets		1,271,495		991,589
Property, Plant and Equipment, at Cost (Note A)
Land		24,510		24,687
Buildings and leasehold improvements		236,576		231,140
Machinery and equipment		514,478		511,245
		775,564		767,072
Less allowance for depreciation and amortization		385,586		386,017
Property, plant and equipment, net		389,978		381,055
Other Assets
Goodwill (Note A)		663,224		648,243
Other intangible assets, net of amortization (Note A)		275,744		282,372
Other		55,804		46,832
Total other assets		994,772		977,447
Total Assets	$	2,656,245	$	2,350,091
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	274,573	$	205,092
Current portion of long-term debt (Note B)		97		991
Accrued compensation and benefits		95,667		88,670
Accrued loss reserves (Note H)		65,452		56,699
Asbestos-related liabilities (Note H)		55,000		47,500
Other accrued liabilities		84,550		75,513
Total current liabilities		575,339		474,465
Long-Term Liabilities
Long-term debt, less current maturities (Note B)		837,948		718,929
Asbestos-related liabilities (Note H)		46,172		43,107
Other long-term liabilities		71,363		59,910
Deferred income taxes (Notes A and C)		78,914		78,388
Total long-term liabilities		1,034,397		900,334
Total liabilities		1,609,736		1,374,799
Stockholders’ Equity
Preferred stock, par value $0.01; authorized 50,000 shares; none issued
Common stock, par value $0.01; authorized 300,000 shares; issued and outstanding 117,554 as of May 2005; issued and outstanding 116,122 as of May 2004 (Note D)		1,176		1,161
Paid-in capital		535,204		513,986
Treasury stock, at cost
Accumulated other comprehensive income (loss) (Note A)		10,004		(3,881	)
Retained earnings		500,125		464,026
Total stockholders’ equity		1,046,509		975,292
Total Liabilities and Stockholders’ Equity	$	2,656,245	$	2,350,091

The accompanying notes to consolidated financial statements are an integral part of these statements.

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

Year Ended May 31	2005		2004		2003
Net Sales (Note A)	$	2,555,735	$	2,307,553	$	2,053,482
Cost of Sales		1,449,184		1,276,372		1,134,207
Gross Profit		1,106,551		1,031,181		919,275
Selling, General and Administrative Expenses		829,445		784,620		704,710
Asbestos Charges (Note H)		78,000				140,000
Interest Expense, Net (Note A)		35,378		28,945		26,712
Income Before Income Taxes		163,728		217,616		47,853
Provision for Income Taxes (Note C)		58,696		75,730		12,526
Net Income	$	105,032	$	141,886	$	35,327
Average Number of Shares of Common Stock Outstanding (Note D)
Basic		116,899		115,777		115,294
Diluted		126,364		124,744		116,405
Earnings per Common Share
Basic	$	0.90	$	1.23	$	0.31
Diluted	$	0.86	$	1.16	$	0.30
Cash Dividends per Share of Common Stock	$	0.590	$	0.550	$	0.515

The accompanying notes to consolidated financial statements are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)

													Accumulated
	Common Stock												Other
	Number			Par/									Comprehensive
	of Shares			Stated			Paid-in			Treasury			Income (Loss)			Retained
	(Note D)			Value			Capital			Stock			(Note A)			Earnings			Total
Balance at May 31, 2002		114,696		$	1,786		$	585,566		$	(88,364	)	$	(50,485	)	$	409,603		$	858,106
Comprehensive income
Net income																	35,327			35,327
Translation gain and other														33,316						33,316
Comprehensive income																				68,643
Dividends paid																	(59,139	)		(59,139	)
Treasury stock retired					(113	)		(85,723	)		85,836
Repurchase of stock		(100	)								(1,167	)								(1,167	)
Stock option exercises, net		300			2			2,015			1,269									3,286
Restricted stock awards		600			5			6,111			1,259									7,375
Par value adjustment and other					(524	)		428												(96	)
Balance at May 31, 2003		115,496			1,156			508,397			(1,167	)		(17,169	)		385,791			877,008
Comprehensive income
Net income																	141,886			141,886
Translation gain and other														13,288						13,288
Comprehensive income																				155,174
Dividends paid																	(63,651	)		(63,651	)
Stock option exercises, net		555			5			5,453			338									5,796
Restricted stock awards		71						136			829									965
Balance at May 31, 2004		116,122			1,161			513,986			-0-			(3,881	)		464,026			975,292
Comprehensive income
Net income																	105,032			105,032
Translation gain and other														13,885						13,885
Comprehensive income																				118,917
Dividends paid																	(68,933	)		(68,933	)
Stock option exercises, net		1,109			11			12,532												12,543
Grants of stock options								2,850												2,850
Restricted stock awards, net		323			4			5,836												5,840
Balance at May 31, 2005		117,554		$	1,176		$	535,204		$	-0-		$	10,004		$	500,125		$	1,046,509

The accompanying notes to consolidated financial statements are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Year Ended May 31	2005			2004			2003
Cash Flows From Operating Activities:
Net income	$	105,032		$	141,886		$	35,327
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		49,841			47,840			44,736
Amortization		16,151			15,437			13,938
Increase (decrease) in deferred income taxes		305			31,815			(46,733	)
(Earnings) of unconsolidated affiliates		(354	)		(314	)		(396	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
(Increase) decrease in receivables		(63,611	)		(41,516	)		(37,259	)
(Increase) decrease in inventory		(44,429	)		(31,949	)		997
(Increase) decrease in prepaid expenses and other current and long-term assets		(24,101	)		258			(34,131	)
Increase (decrease) in accounts payable		69,037			30,607			9,934
Increase (decrease) in accrued compensation and benefits		6,621			9,124			(3,831	)
Increase (decrease) in accrued loss reserves		8,753			(7,531	)		15,358
Increase (decrease) in other accrued liabilities		7,733			7,487			(761	)
Increase (decrease) in asbestos-related liabilities		10,565			(53,976	)		141,206
Other including exchange rate changes		15,809			4,867			17,891
Cash From Operating Activities		157,352			154,035			156,276
Cash Flows From Investing Activities:
Capital expenditures		(55,609	)		(51,253	)		(41,814	)
Acquisition of new businesses, net of cash acquired		(20,100	)		(37,703	)		(65,994	)
Purchase of marketable securities		(44,309	)		(36,955	)		(15,145	)
Proceeds from sales of marketable securities		39,154			21,410			11,376
(Investments in) and distributions from unconsolidated affiliates		136			(425	)		974
Proceeds from the sales of assets and businesses		5,426			3,664			202
Other		(666	)		(1,284	)		597
Cash (Used For) Investing Activities		(75,968	)		(102,546	)		(109,804	)
Cash Flows From Financing Activities:
Additions to long-term and short-term debt		200,153			200,345			305,200
Reductions of long-term and short-term debt		(79,665	)		(206,623	)		(294,099	)
Cash dividends		(68,933	)		(63,651	)		(59,139	)
Exercise of stock options		12,543			5,796			3,286
Repurchase of stock								(1,167	)
Cash From (Used For) Financing Activities		64,098			(64,133	)		(45,919	)
Effect of Exchange Rate Changes on Cash and Short-Term Investments		4,099			234			4,244
Net Change in Cash and Short-Term Investments		149,581			(12,410	)		4,797
Cash and Short-Term Investments at Beginning of Year		34,559			46,969			42,172
Cash and Short-Term Investments at End of Year	$	184,140		$	34,559		$	46,969
Supplemental Disclosures of Cash Flows Information:
Cash paid during the year for:
Interest	$	39,279		$	25,572		$	28,678
Income taxes	$	48,535		$	59,252		$	59,234
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Shares issued for restricted stock plan	$	5,840		$	965		$	7,375
Grants of stock options	$	2,850
Debt from business combinations							$	1,230
Receivables from the sale of assets				$	1,233

The accompanying notes to consolidated financial statements are an integral part of these statements.

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     NOTES to CONSOLIDATED

          FINANCIAL STATEMENTS

May 31, 2005, 2004, 2003

NOTE A — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1) Consolidation and Basis of Presentation

     Our financial statements consolidate all of our affiliates – companies that we control and in which we hold a majority voting interest. We account for our investments in less than majority-owned joint ventures under the equity method. Effects of transactions between related companies are eliminated.

     In reconciling income taxes payable for 2005, we identified certain fiscal 2003 tax payments that were not reflected in our financial statements. The impact of this discovery has resulted in our reclassification of the May 31, 2004 balance sheet. The reclassification had no impact on fiscal 2005, 2004 and 2003 net income or the cash and income taxes payable balances at May 31, 2005 nor does it impact cash flows for each of the two years ended May 31, 2005 and 2004. Previously reported cash flow for the year ended May 31, 2003 was reduced by $4.0 million.

     We have also reclassified certain prior-year amounts to conform to this year’s presentation.

2) Use of Estimates

     The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) in the United States requires us to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3) Business Combinations

     During the year ended May 31, 2005, we completed five acquisitions of product lines. As of the respective dates of acquisition, we recorded the following estimated fair values of assets and liabilities assumed:

(In thousands)
Current assets	$	2,920
Property, plant and equipment		2,283
Goodwill		10,386
Other intangible assets		6,285
Liabilities assumed		(1,774	)
Net Assets Acquired	$	20,100

     Our consolidated financial statements reflect the results of operations of these businesses as of their respective dates of acquisition.

     Pro forma results of operations for the years ended May 31, 2005 and May 31, 2004 were not materially different from reported results and, consequently, are not presented.

4) Foreign Currency

     The functional currency of our foreign subsidiaries is their local currency. Accordingly, for the periods presented, assets and liabilities have been translated using exchange rates at year end while income and expense for the periods have been translated using a weighted average exchange rate. The resulting translation adjustments have been recorded in accumulated other comprehensive income (loss), a component of stockholders’ equity, and will be included in net earnings only upon the sale or liquidation of the underlying foreign investment, neither of which is contemplated at this time. Transaction gains and losses have been immaterial during the past three fiscal years.

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5) Accumulated Other Comprehensive Income (Loss)

     Accumulated other comprehensive income (loss), which is shown net of taxes, consists of the following components:

	Foreign			Minimum			Unrealized
	Currency			Pension			Gain (Loss)
	Translation			Liability			on
(In thousands)	Adjustments			Adjustments			Securities			Total
Balance at May 31, 2002	$	(49,681	)	$	(253	)	$	(551	)	$	(50,485	)
Reclassification adjustments for (gains) losses included in net income								(149	)		(149	)
Other comprehensive gain (loss)		39,872			(8,695	)		(1,242	)		29,935
Deferred taxes					2,757			773			3,530
Balance at May 31, 2003		(9,809	)		(6,191	)		(1,169	)		(17,169	)
Reclassification adjustments for (gains) losses included in net income								97			97
Other comprehensive gain (loss)		9,686			1,603			2,645			13,934
Deferred taxes					(467	)		(276	)		(743	)
Balance at May 31, 2004		(123	)		(5,055	)		1,297			(3,881	)
Reclassification adjustments for (gains) losses included in net income								(73	)		(73	)
Other comprehensive gain (loss)		15,008			(2,379	)		1,082			13,711
Deferred taxes					529			(282	)		247
Balance at May 31, 2005	$	14,885		$	(6,905	)	$	2,024		$	10,004

6) Cash and Short-Term Investments

     For purposes of the statement of cash flows, we consider all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. We do not believe we are exposed to any significant credit risk on cash and short-term investments.

7) Marketable Securities

     Marketable securities, included in other current assets, are considered available for sale and are reported at fair value, based on quoted market prices. Changes in unrealized gains and losses, net of applicable taxes, are recorded in accumulated other comprehensive income (loss) within Stockholders’ Equity. If we were to experience any significant other-than-temporary declines in market value from original cost, those amounts would be reflected in operating income in the period in which the loss were to occur. In order to determine whether an other-than-temporary decline in market value has occurred, the duration of the decline in value and our ability to hold the investment to recovery are considered in conjunction with an evaluation of the strength of the underlying collateral and the extent to which the investment’s carrying value exceeds its related market value. Marketable securities totaled $49.1 million and $41.4 million at May 31, 2005 and 2004, respectively.

8) Financial Instruments

     Financial instruments recorded on the balance sheet include cash and short-term investments, accounts receivable, notes and accounts payable, and debt. The carrying amount of cash and short-term investments, accounts receivable and notes and accounts payable approximates fair value because of their short-term maturity.

     All derivative instruments are recognized on the balance sheet and measured at fair value. Changes in the fair values of derivative instruments that do not qualify as hedges and/or any ineffective portion of hedges are recognized as a gain or loss in our consolidated statement of income in the current period. Changes in the fair value of derivative instruments used effectively as fair value hedges are recognized in earnings (losses), along with the change in the value of the hedged item. Such derivative transactions are accounted for under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities,” as amended and interpreted. The Company does not hold or issue derivative instruments for speculative purposes.

     The carrying amount of our other debt instruments approximates fair value based on quoted market prices, variable interest rates or borrowing rates for similar types of debt arrangements.

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9) Inventories

     Inventories are stated at the lower of cost or market, cost being determined substantially on a first-in, first-out (FIFO) basis and market being determined on the basis of replacement cost or net realizable value. Inventory costs include raw material, labor and manufacturing overhead. Inventories were composed of the following major classes:

May 31	2005		2004
(In thousands)
Raw material and supplies	$	105,060	$	95,378
Finished goods		229,344		193,981
Total Inventory	$	334,404	$	289,359

10) Goodwill and Other Intangible Assets

     We elected to adopt the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” as of June 1, 2001, at which time we ceased the amortization of all goodwill. We also elected to perform the required annual impairment assessment in the first quarter of our fiscal year. If a loss were to result from the performance of the annual test, it would be reflected in operating income. The annual goodwill impairment assessment involves estimating the fair value of each reporting unit, which has been defined as one level below our industrial and consumer operating segments, and comparing it with its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, additional steps are followed to recognize a potential impairment loss. Calculating the fair value of the reporting units requires significant estimates and assumptions by management. We estimate the fair value of our reporting units by applying third-party market value indicators to each of our reporting units’ projected earnings before interest, taxes, depreciation and amortization. In applying this methodology, we rely on a number of factors, including future business plans, actual operating results and market data. In the event that our calculations indicate that goodwill is impaired, a fair value estimate of each tangible and intangible asset would be established. This process would require the application of discounted cash flows expected to be generated by each asset in addition to independent asset appraisals, as appropriate. Cash flow estimates are based on our historical experience and our internal business plans, and appropriate discount rates are applied. The results of our annual impairment tests for the fiscal years ended May 31, 2005 and 2004, performed during the first quarter of each respective fiscal year, did not require any adjustment to the carrying value of goodwill.

     The changes in the carrying amount of goodwill, by reporting segment, for the year ended May 31, 2005, are as follows:

	Industrial			Consumer
(In thousands)	Segment			Segment		Total
Balance as of May 31, 2004	$	303,743		$	344,500	$	648,243
Acquisitions		8,657			1,729		10,386
Purchase accounting adjustments*		590					590
Divestitures		(2,114	)				(2,114	)
Translation adjustments		5,550			569		6,119
Balance as of May 31, 2005	$	316,426		$	346,798	$	663,224

*Relates primarily to other accruals.

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Other intangible assets consist of the following major classes:

			Gross				Net Other
	Amortization		Carrying		Accumulated		Intangible
(In thousands)	Period (in Years)		Amount		Amortization		Assets
As of May 31, 2005
Amortized intangible assets
Formulae		10 to 33	$	176,884	$	65,628	$	111,256
Customer-related intangibles		7 to 33		69,152		19,346		49,806
Trademarks/names		5 to 40		9,812		3,270		6,542
Other		3 to 30		24,335		12,009		12,326
Total Amortized Intangibles				280,183		100,253		179,930
Unamortized intangible assets
Trade names				95,814				95,814
Total Other Intangible Assets			$	375,997	$	100,253	$	275,744
As of May 31, 2004
Amortized intangible assets
Formulae		10 to 33	$	175,694	$	57,749	$	117,945
Customer-related intangibles		7 to 33		67,202		16,119		51,083
Trademarks/names		5 to 40		6,637		2,887		3,750
Other		3 to 30		24,994		11,464		13,530
Total Amortized Intangibles				274,527		88,219		186,308
Unamortized intangible assets
Trade names				96,064				96,064
Total Other Intangible Assets			$	370,591	$	88,219	$	282,372

     The aggregate other intangible asset amortization expense for the fiscal years ended May 31, 2005, 2004 and 2003 was $13.0 million, $12.8 million and $11.9 million, respectively. For each of the next five fiscal years through May 31, 2010, the estimated annual intangible asset amortization expense will approximate $12.0 million.

11) Depreciation

     Depreciation is computed primarily using the straight-line method over the following ranges of useful lives:

Land improvements	5 to 42 years
Buildings and improvements	5 to 50 years
Machinery and equipment	2 to 20 years

12) Revenue Recognition

     Revenues are recognized when realized or realizable, and when earned. In general, this is when title and risk of loss passes to the customer. Further, revenues are realizable when we have persuasive evidence of a sales arrangement, the product has been shipped or the services have been provided to the customer, the sales price is fixed or determinable, and collectibility is reasonably assured. We reduce our revenues for estimated customer returns and allowances, certain rebates, sales incentives, and promotions in the same period the related sales are recorded.

13) Shipping Costs

     Shipping costs paid to third-party shippers for transporting products to customers are included in selling, general and administrative expenses. For the years ended May 31, 2005, 2004 and 2003, shipping costs were $100.1 million, $86.0 million and $78.9 million, respectively.

14) Advertising Costs

     Advertising costs are charged to operations when incurred and are included in selling, general and administrative expenses. For the years ended May 31, 2005, 2004 and 2003, advertising costs were $33.7 million, $37.1 million and $28.5 million, respectively.

     During the first quarter of fiscal 2005, we changed our accounting classification for cooperative advertising by reflecting the amounts paid as a reduction of sales as opposed to a component of selling, general and administrative expenses and reclassified the previous year’s information. The new classification represents only a movement of expense and therefore has no impact on our earnings or earnings per share.

15) Research and Development

     Research and development costs are charged to operations when incurred and are included in selling, general and administrative expenses. The amounts charged for the years ended May 31, 2005, 2004 and 2003 were $28.9 million, $26.2 million and $23.8 million, respectively. The customer-sponsored portion of such expenditures was not significant.

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16) Stock-Based Compensation

     Effective June 1, 2004, we voluntarily adopted the preferable fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” for our stock-based employee compensation plans. As outlined by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” we chose to apply the modified prospective method in adopting this accounting change. Under this method, stock-based employee compensation expense recognized in fiscal 2005 is the same as that which would have been recognized had the fair value recognition provisions of SFAS No. 123 been applied to account for all employee awards from its original effective date. Results of prior periods have not been restated.

     The adoption of SFAS No. 123 impacted net income, basic earnings per share and diluted earnings per share for the year ended May 31, 2005 by approximately $2.4 million, $0.02 per share and $0.02 per share. Prior to June 1,2004 the Company accounted for stock-based compensation in accordance with APB opinion No. 25, “Accounting for Stock Issued to Employees.” The following table represents the effect on net income and earnings per share for the years ended May 31, 2004 and 2003, as if compensation cost for stock options granted had been determined in accordance with the fair value method prescribed by SFAS No. 123:

Year Ended May 31	2004						2003
(In thousands, except per share amounts)	Basic			Diluted			Basic			Diluted
Net income, as reported	$	141,886		$	141,886		$	35,327		$	35,327
Add: Income effect of contingently convertible shares1					3,142						158
Adjusted net income, as reported		141,886			145,028			35,327			35,485
Add: Stock-based employee compensation expense from restricted stock plans included in reported net income, net of related tax effects		825			825			1,339			1,339
Deduct: Total stock-based employee compensation determined under fair value-based method for all awards, net of related tax effects		(3,969	)		(3,969	)		(4,517	)		(4,517	)
Pro Forma Net Income	$	138,742		$	141,884		$	32,149		$	32,307
Earnings per Share:
As Reported	$	1.23		$	1.16		$	0.31		$	0.30
Pro Forma	$	1.20		$	1.14		$	0.28		$	0.28

¹ Refer to Note D, Common Stock, for additional information regarding the accounting treatment of contingently convertible securities.

     The fair value of stock options granted is estimated as of the date of grant using a Black-Scholes option-pricing model with the following weighted average assumptions:

	2005			2004			2003
Risk-free interest rate		3.7	%		3.7	%		3.3	%
Expected life of option	6.4 yrs			7.0 yrs			7.0 yrs
Expected dividend yield		3.4	%		3.5	%		3.5	%
Expected volatility rate		31.0	%		35.9	%		37.3	%

17) Interest Expense, Net

     Interest expense is shown net of investment income, which consists of interest, dividends and capital gains (losses). Investment income for the years ended May 31, 2005, 2004 and 2003 was $5.0 million, $2.3 million and $1.4 million, respectively.

18) Income Taxes

     The provision for income taxes is calculated in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred income taxes using the liability method. Under the liability method, deferred income taxes are recognized for the tax effect of temporary differences between the financial statement carrying amount of assets and liabilities and the amounts used for income tax purposes and for certain changes in valuation allowances. Valuation allowances are recorded to reduce certain deferred tax assets when, in our estimation, it is more likely than not that a tax benefit will not be realized.

     We have not provided for U.S. income and foreign withholding taxes on approximately $447.1 million of foreign subsidiaries’ undistributed earnings as of May 31, 2005, because such earnings have been retained and reinvested

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by the subsidiaries. Accordingly, no provision has been made for U.S. or foreign withholding taxes which may become payable if undistributed earnings of foreign subsidiaries were paid to us as dividends. The additional income taxes and applicable withholding taxes that would result had such earnings actually been repatriated are not practically determinable.

19) Other Recent Accounting Pronouncements

     In October 2004, the Financial Accounting Standards Board ratified the consensus of the Emerging Issues Task Force (the “EITF”) with respect to EITF issue 04-8, “The Effect of Contingently Convertible Instruments on Diluted Earnings Per Share.” The consensus requires us to consider all instruments with contingent conversion features that include a market price trigger in our diluted earnings per share calculations, regardless of whether that market price trigger has been met. Therefore, our calculation of fully diluted earnings per share includes the 8,034,355 contingent shares of our common stock related to our convertible debt, which includes a market price trigger, by applying the “if-converted” method. EITF 04-8 also requires us to restate previously reported earnings per share for all prior periods presented.

     On October 22, 2004 the American Jobs Creation Act of 2004 (the “Act”) was signed into law. Included in the Act is a provision allowing, in general, a new special tax deduction of up to 9% (once fully phased-in) of the lesser of 1) “qualified production activities income” as defined in the Act or 2) taxable income for the tax year, after deduction for the utilization of any net operating loss carryforwards.

     As a result of the new special tax deduction provision included in the Act, the FASB issued FASB Staff Position No. 109-1, “Application of FASB Statement No. 109 (“SFAS 109”), ‘Accounting for Income Taxes,’ to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004” (“FSP 109-1”) in December 2004. FSP 109-1 provides that the new special tax deduction created in the Act should be accounted for as a special deduction in accordance with SFAS No. 109 and not as a tax rate reduction.

     The effective date of the new special tax deduction included in the Act is for tax years beginning after December 31, 2004. Accordingly, the new provision is not available for our current fiscal year ending May 31, 2005. Rather, the new provision is first available to us for our fiscal year ending May 31, 2006. We are currently evaluating the effect that the new special tax deduction will have on our results for the year ending May 31, 2006.

     Also included in the Act is a provision allowing corporate taxpayers to claim a special one-time dividends received deduction of certain foreign earnings that are repatriated to the U.S. In general, a deduction of 85% of certain dividends, in excess of a base-period amount, received from certain controlled foreign subsidiaries is allowable. The repatriation provision is comprised of an intricate set of rules and is subject to limitations and reinvestment requirements. The new provision is applicable, given our fiscal year-end, for qualified repatriations made prior to May 31, 2006.

     In response to the new special one-time dividends received deduction, the FASB issued FASB Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”) in December 2004. FSP 109-2 provides accounting and disclosure guidance for the repatriation process.

     Given the complexity of the repatriation provision, computing the tax effects of the repatriation provision is not practically determinable at this time. Accordingly, we have not elected the repatriation provision for our fiscal year ended May 31, 2005. We may elect to apply this provision during our year ending May 31, 2006. The Company expects to complete an evaluation of the effect the new special one-time dividends received deduction, including a comprehensive calculation of the applicable base-period amount and tax effect any repatriation may have on our results for the year ending May 31, 2006. We plan to complete our evaluation during our 2006 fiscal year.

     In December 2004 the FASB issued SFAS No. 123 (Revised 2004), “Share-Based Payment” (“Statement 123(R)”). Statement 123(R) requires that all share-based payments be recognized in the financial statements based on their fair values. The provisions of this statement are effective for reporting periods beginning after June 15, 2005. As discussed above we began expensing stock options as of June 1, 2004. As such, the adoption of Statement 123(R) is not expected to have a material impact on the Company’s results of operations or financial position.

     In November 2004 the FASB issued SFAS No. 151, “Inventory Costs, an amendment to ARB No. 43, Chapter 4.” SFAS No. 151 requires that certain costs, including abnormal idle capacity expense and freight, be excluded from the cost of inventory and that fixed production costs be allocated based on the normal capacity of the production facilities. The requirements of this statement are effective for periods ending after December 31, 2005. The adoption of Statement 151 is not expected to have a material impact on the Company’s results of operations or financial position.

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NOTE B — BORROWINGS

     A description of long-term debt follows:

May 31	2005		2004
(In thousands)
Unsecured 4.45% senior notes due October 15, 2009.1	$	197,637
Unsecured 6.25% senior notes due December 15, 2013.		200,000	$	200,000
Unsecured $297,000,000 face value at maturity 2.75% senior convertible notes due May 13, 2033.		150,042		150,042
Unsecured 7.00% senior notes due June 15, 2005.2		150,000		150,000
Unsecured notes due March 1, 2008. Interest, which is tied to LIBOR, averaged 2.91% at May 31, 2005.		100,000		100,000
Commercial paper with a weighted average interest rate at May 31, 2004 of 1.59%.				60,651
Unsecured senior notes due insurance companies: 6.61% due November 15, 2006 in the amount of $10,000,000 and 7.30% due November 15, 2008 in the amount of $30,000,000.		40,000		55,000
Revolving 364-day credit agreement for $28,000,000 with a bank through October 12, 2004. Interest was 1.56% at May 31, 2004.				2,955
Other unsecured notes payable at various rates of interest due in installments through 2011.		366		1,272
		838,045		719,920
Less current portion		97		991
Total Long-Term Debt, Less Current Maturities	$	837,948	$	718,929

1	We entered into an interest rate swap which has the effect of converting this fixed rate note to variable rates based on the six-month London Interbank Offered Rate (LIBOR). The weighted average effective rate was 4.03%.
2	These obligations which were refinanced in June 2005 have been classified as long-term debt.

     The aggregate maturities of long-term debt for the five years subsequent to May 31, 2005 are as follows: 2006 — $0.1 million; 2007 — $10.1 million; 2008 — $250.1 million (including $150.0 million of 2.75% Senior Convertible Notes based on the date of the noteholders’ first put option); 2009 — $30.0 million; 2010 — $347.7 million. Additionally, at May 31, 2005, we had unused lines of credit totaling $454.5 million.

     In June 2002, we established an accounts receivable securitization program with several banks for certain of our subsidiaries, providing for a wholly-owned special purpose entity (“SPE”) to receive investments of up to $125.0 million. The securitized accounts receivable are owned in their entirety by RPM Funding Corporation, a wholly owned consolidated subsidiary of RPM International Inc., and are not available to satisfy claims of our creditors until the participating banks’ obligations have been paid in full. This securitization is accomplished by having certain subsidiaries sell various of their accounts receivable to the SPE, and by having the SPE then transfer those receivables to a conduit administered by a bank. This transaction did not constitute a form of off-balance sheet financing, and is fully reflected in our financial statements. This transaction increased our liquidity and reduced our financing costs by replacing up to $125.0 million of existing borrowings at lower interest rates. The amounts available under the program are subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the underlying accounts receivable. As of May 31, 2005 and May 31, 2004, we had no outstanding balance under this arrangement.

     In May 2003, we issued $297.0 million face value at maturity unsecured 2.75% Senior Convertible Notes due May 13, 2033. The 2.75% Notes are convertible into 8,034,355 shares of RPM International Inc. common stock at a price of $18.68 per share, subject to adjustment, during any fiscal quarter for which the closing price of the common stock is greater than $22.41 per share for a defined duration of time. The Notes are also convertible during any period in which the credit rating of the Notes is below a specified level or if specified corporate transactions have occurred. The 2.75% Notes are redeemable by the holder for the issuance price plus accrued original issue discount in May 2008, 2013, 2018, 2023, 2028 and 2033. Interest on the 2.75% Notes is payable beginning November 13, 2003 until May 13, 2008. After that date, cash interest will not be paid prior to maturity subject to certain contingencies.

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     In December 2003, we issued and sold $200.0 million of 6.25% Senior Notes due 2013 as a means of refinancing. The entire net proceeds of $197.0 million from this offering were used to repay in full the $128.0 million of then-outstanding borrowings under our $500.0 million revolving credit facility and $69.0 million of the then-outstanding $72.0 million balance under our asset securitization program.

     On September 30, 2004, we issued and sold $200.0 million of 4.45% Senior Unsecured Notes due 2009, which we concurrently swapped back to floating interest rate debt. We used a portion of the net proceeds to pay off our $15.0 million 6.12% Senior Notes due 2004, which matured on November 15, 2004 and also our then outstanding $68.0 million of commercial paper.

     During November 2004, we refinanced our $500.0 million revolving credit facility, due July 14, 2005, with a $330.0 million 5-year credit facility, due November 19, 2009. This new facility will be used for general corporate purposes, including acquisitions and to provide back-up liquidity for the issuance of commercial paper. The facility provides for borrowings in U.S. dollars and several foreign currencies and provides sublimits for the issuance of letters of credit in an aggregate amount of up to $25.0 million and a swing-line of up to $20.0 million for short-term borrowings of less than 15 days. In addition, the size of the facility may be expanded upon our request by up to an additional $100.0 million, thus potentially expanding the facility to $430.0 million, subject to lender approval. As of May 31, 2005, we had no outstanding balance under the agreement.

     Subsequent to year end the Company borrowed $115.0 million under its $330.0 million five-year revolving credit facility. A portion of the borrowing, along with cash on hand, was used to repay in full the principal and accrued interest on the Company’s $150.0 million 7.0% Senior Unsecured Notes due 2005. In addition, a portion of the cash borrowed was used for general corporate purposes.

NOTE C — INCOME TAXES

     The provision for income taxes is calculated in accordance with SFAS No. 109, “Accounting for Income Taxes,” which requires the recognition of deferred income taxes using the liability method.

     Income before income taxes as shown in the consolidated statements of income consisted of the following:

Year Ended May 31	2005			2004			2003
(In thousands)
United States	$	115,192		$	182,032		$	19,025
Foreign		48,536			35,584			28,828
Income Before Income Taxes	$	163,728		$	217,616		$	47,853
Provision for income taxes consists of the following:
Current
U.S. federal	$	31,313		$	30,579		$	36,841
State and local		8,098			7,138			8,747
Foreign		19,160			14,260			13,671
		58,571			51,977			59,259
Deferred
U.S. federal		(2,544	)		21,077			(39,616	)
State and local		(218	)		3,011			(5,659	)
Foreign		2,887			(335	)		(1,458	)
		125			23,753			(46,733	)
Provision for Income Taxes	$	58,696		$	75,730		$	12,526

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     The significant components of deferred income tax assets and liabilities as of May 31, 2005 and 2004 were as follows:

(In thousands)	2005			2004
Deferred income tax assets related to:
Inventories	$	2,983		$	1,692
Allowance for losses		7,077			14,538
Accrued compensation and benefits		7,892			8,402
Asbestos related liabilities		36,964			33,978
Accrued other expenses		6,768			7,753
Other long-term liabilities		25,780			18,550
Net operating loss and credit carryforwards		33,131			23,261
Other		2,972			1,802
Total deferred income tax assets		123,567			109,976
Less: valuation allowance		(13,946	)		(9,734	)
Net deferred income tax assets		109,621			100,242
Deferred income tax (liabilities) related to:
Depreciation		(52,846	)		(40,660	)
Prepaid pension		(10,188	)		(10,245	)
Amortization of intangibles		(84,625	)		(86,806	)
Total deferred income tax (liabilities)		(147,659	)		(137,711	)
Deferred Income Tax Assets (Liabilities), Net	$	(38,038	)	$	(37,469	)

     At May 31, 2005, we had U.S. federal foreign tax credit carryforwards of approximately $21.5 million which expire starting in 2010. Additionally, we had foreign net operating loss carryforwards of approximately $35.4 million at May 31, 2005 of which approximately $0.9 million expire at various dates beginning in 2007 and approximately $34.5 million which have an indefinite carryforward period. These net operating loss and foreign tax credit carryforwards may be used to offset a portion of future taxable income and thereby reduce or eliminate our U.S federal or foreign income taxes otherwise payable.

     Management has determined, based on the available evidence, that it is uncertain that future taxable income of certain of the Company’s foreign subsidiaries as well as anticipated foreign source income will be significant enough to recognize certain of these deferred tax assets. As a result, a valuation allowance of approximately $4.3 million has been recorded during the year ended May 31, 2005.

     The valuation allowance relates to U.S. federal foreign tax credit carryforwards, certain foreign net operating losses and net foreign deferred tax assets recorded in purchase accounting. The most significant portion of the valuation allowance is associated with deferred tax assets recorded in purchase accounting. Any reversal of the valuation allowance that was recorded in purchase accounting would reduce goodwill. In the current year, a reduction of the valuation allowance of $0.5 million was allocated to goodwill as a result of changes in estimated deferred taxes recorded in purchase accounting.

     The following table reconciles income tax expense computed by applying the U.S. statutory federal income tax rate against income before income taxes to the provision for income tax expense:

Year Ended May 31	2005			2004			2003
(In thousands)
Income tax expense at the U.S. statutory federal income tax rate	$	57,305		$	76,166		$	16,749
Impact of foreign operations		(7,810	)		(2,930	)		(2,986	)
State and local income taxes net of federal income tax benefit		5,122			6,597			2,007
Tax benefits from the extraterritorial income exclusion		(754	)		(2,870	)		(1,250	)
Valuation allowance		4,287			278			115
Other		546			(1,511	)		(2,109	)
Provision for Income Tax Expense	$	58,696		$	75,730		$	12,526
Effective Income Tax Rate		35.8	%		34.8	%		26.2	%

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NOTE D — COMMON STOCK

     There were 300,000,000 shares of common stock authorized at May 31, 2005 and 2004 with a par value of $0.01 per share. At May 31, 2005 and 2004, there were 117,554,000 and 116,122,000 shares outstanding, respectively, each of which is entitled to one vote.

     Basic earnings per share are computed by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during each year. To compute diluted earnings per share, the weighted average number of shares of common stock outstanding during each year was increased by common stock options with exercisable prices lower than the average market prices of common stock during each year and reduced by the number of shares assumed to have been purchased with proceeds from the exercised options.

     In October 2004, the Financial Accounting Standards Board ratified the consensus of the Emerging Issues Task Force (the “EITF”) with respect to EITF issue 04-8, “The Effect of Contingently Convertible Instruments on Diluted Earnings Per Share.” The consensus requires us to consider all instruments with contingent conversion features that include a market price trigger in our diluted earnings per share calculations, regardless of whether that market price trigger has been met. Therefore, our calculation of fully diluted earnings per share includes the 8,034,355 contingent shares of our common stock related to our convertible debt, which includes a market price trigger, by applying the “if-converted” method. EITF 04-8 also requires us to restate previously reported earnings per share for all prior periods presented.

     Effective October 10, 2003, the RPM International Inc. 2003 Restricted Stock Plan for Directors (the “2003 Plan”) was approved by our stockholders. The plan was established primarily for the purpose of recruiting and retaining directors, and to align the interests of directors with the interests of our stockholders. Only directors who are not employees of RPM International Inc. are eligible to participate. Under the 2003 Plan, up to 500,000 shares of RPM International Inc. may be awarded. For the year ended May 31, 2005, 20,000 shares were granted, with 458,400 shares available for future grant. Unamortized deferred compensation expense relating to restricted stock grants for directors of $0.4 million at May 31, 2005, is being amortized over a 3-year vesting period.

     On October 8, 2004, our stockholders approved the RPM International Inc. Omnibus Equity and Incentive Plan (the “Omnibus Plan”). The Omnibus Plan is intended to be the primary stock-based award program for covered employees. A wide variety of stock and stock-based awards, as well as dollar-denominated performance-based awards, may be granted under the Omnibus Plan. A total of 6,000,000 shares of our common stock may be subject to awards under the Omnibus Plan. Of the 6,000,000 shares of common stock issuable under the Omnibus Plan, up to 3,000,000 shares may be subject to “full-value” awards such as restricted stock, restricted stock unit, performance stock and performance stock unit awards. For the year ended May 31, 2005, 321,500 shares of restricted stock were granted under the Omnibus Plan, with 5,678,500 shares available for future grant including 2,678,500 shares available for full-value awards.

     In addition to the restricted shares outstanding under the Omnibus Plan, we have restricted shares outstanding under two equity compensation plans for employees. Under the terms of these plans, up to 2,563,000 shares may be awarded to certain employees, generally subject to forfeiture until the completion of three, five or ten years of service. For the year ended May 31, 2005, 39,500 shares were awarded under these plans. At May 31, 2005, 59,500 shares were vested in these plans (42,000 at May 31, 2004) subject to certain resale restrictions. Unamortized deferred compensation expense of $3.8 million and $4.6 million at May 31, 2005, relating to restricted stock grants for employees, is being amortized over the 10-year and 3-year vesting periods, respectively.

     Gross compensation expense relating to restricted stock awards for the years ended May 31, 2005, 2004 and 2003 was $1.9 million, $1.3 million and $2.1 million, respectively.

     Our Shareholder Rights Plan provides existing stockholders the right to purchase stock of RPM International Inc. at a discount in certain circumstances as defined by the Plan. The rights are not exercisable at May 31, 2005 and expire in May 2009.

     We have options outstanding under two stock option plans, the 1989 Stock Option Plan and the 1996 Key Employees Stock Option Plan, the latter of which provides for the granting of options for up to 9,000,000 shares. Stock options are granted to employees and directors at an exercise price equal to the fair market value of RPM International Inc. stock at the date of grant. These options are generally exercisable cumulatively in equal annual installments commencing one year from the grant date, and have expiration dates ranging from October 2005 to October 2014. At May 31, 2005, 64,000 shares (648,000 at May 31, 2004) were available for future grant.

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     The following table summarizes option activity under the Plans during the last three fiscal years:

	2005					2004					2003
	Weighted		Number			Weighted		Number			Weighted		Number
	Average		of Shares			Average		of Shares			Average		of Shares
	Exercise		Under			Exercise		Under			Exercise		Under
Shares Under Option	Price		Option			Price		Option			Price		Option
(In thousands, except per share amounts)
Outstanding, beginning of year
(Prices ranging from $8.69 to $16.70)	$	13.23		7,403		$	12.86		6,937		$	12.57		6,223
Options granted
(Prices ranging from $15.15 to $17.63)		17.60		584			14.10		1,254			14.08		1,191
Options canceled/expired
(Prices ranging from $8.81 to $17.63)		13.57		(76	)		12.98		(206	)		13.98		(153	)
Options exercised
(Prices ranging from $8.69 to $16.35)		11.53		(1,147	)		10.73		(582	)		11.33		(324	)
Outstanding, end of year
(Prices ranging from $8.69 to $17.63)	$	13.90		6,764		$	13.23		7,403		$	12.86		6,937
Exercisable, end of year
(Prices ranging from $8.69 to $16.70)	$	13.41		4,578		$	13.15		4,775		$	13.19		4,477

	Options Outstanding						Options Exercisable
	at May 31, 2005						at May 31, 2005
(Shares in thousands)			Wtd. Avg.		Weighted				Weighted
			Remaining		Average				Average
			Contractual		Exercise				Exercise
Exercise Price Range	Shares		Life (Years)		Price		Shares		Price
$8.00 to $9.99		938		5.3	$	9.33		938	$	9.33
$10.00 to $11.99		194		6.3	$	10.26		133	$	10.26
$12.00 to $14.99		3,213		6.6	$	13.91		1,670	$	13.76
$15.00 to $16.99		1,845		2.7	$	15.41		1,837	$	15.41
$17.00 to $17.63		574		9.4	$	17.62
		6,764		5.6	$	13.90		4,578	$	13.41

     We apply Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” for our stock-based employee compensation plans. As outlined in SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” we chose to apply the modified prospective method in adopting this accounting change. Under this method, stock-based employee compensation expense in fiscal 2005 is the same as that which would have been recognized had the fair value recognition provisions of SFAS No. 123 been applied to account for all employee awards from its original effective date. Results of prior periods have not been restated. See Note A, “Summary of Significant Accounting Policies,” for the pro forma disclosures of net income and earnings per share required under SFAS No. 123 for fiscal years 2004 and 2003.

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NOTE E — LEASES

     We lease certain property, plant and equipment under long-term lease agreements, some of which provide for increased rental payments based upon increases in the cost-of-living index. The following table illustrates our future minimum lease commitments under all non-cancelable lease agreements, for each of the next five years and in the aggregate, as of May 31, 2005:

May 31
(In thousands)
2006	$	23,765
2007		18,412
2008		14,070
2009		7,126
2010		5,303
Thereafter		10,884
Total Minimum Lease Commitments	$	79,560

     Total rental expense for all operating leases amounted to $29.4 million in 2005, $27.1 million in 2004 and $24.3 million in 2003. Capitalized leases were immaterial for the three years ended May 31, 2005.

NOTE F — PENSION PLANS

     We sponsor several pension plans for our employees, including our principal plan (the “Retirement Plan”), which is a non-contributory defined benefit pension plan covering substantially all domestic non-union employees. Pension benefits are provided for certain domestic union employees through separate plans. Employees of our foreign subsidiaries receive pension coverage, to the extent deemed appropriate, through plans which are governed by local statutory requirements. The measurement date used to determine pension benefit measurements for both the U.S. and non-U.S. plans was February 28, 2005.

     The Retirement Plan provides benefits that are based upon years of service and average compensation with accrued benefits vesting after five years. Benefits for union employees are generally based upon years of service, or years of service and average compensation. Our funding policy is to contribute an amount on an annual basis that can be deducted for federal income tax purposes, using a different actuarial cost method and different assumptions from those used for financial reporting. For the fiscal year ending May 31, 2006, we expect to contribute approximately $10.1 million to the Retirement Plans in the U.S., in addition to the approximate $2.1 million that we expect to contribute to our foreign plans.

     Net periodic pension cost (income) consisted of the following for the three years ended May 31, 2005:

	U.S. Plans									Non-U.S. Plans
(In thousands)	2005			2004			2003			2005			2004			2003
Service cost	$	11,231		$	9,879		$	8,904		$	2,154		$	1,695		$	1,168
Interest cost		7,481			7,228			6,634			4,359			3,612			2,344
Expected return on plan assets		(9,759	)		(7,385	)		(7,769	)		(4,117	)		(3,188	)		(2,748	)
Amortization of:
Prior service cost		294			294			197
Net gain on adoption of SFAS No. 87		(3	)		(23	)		(85	)
Net actuarial (gains) losses recognized		1,500			2,542			952			1,394			1,237			324
Curtailment/settlement (gains) losses								11
Net Pension Cost	$	10,744		$	12,535		$	8,844		$	3,790		$	3,356		$	1,088

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     The changes in benefit obligations and plan assets, as well as the funded status of our pension plans at May 31, 2005 and 2004, were as follows:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2005			2004			2005			2004
Benefit obligation at beginning of year	$	128,666		$	112,271		$	77,533		$	59,588
Service cost		11,231			9,879			2,154			1,695
Interest cost		7,481			7,228			4,359			3,612
Benefits paid		(9,730	)		(10,696	)		(2,723	)		(2,304	)
Participant contributions								681			585
Acquisitions and new plans											755
Actuarial (gains) losses		10,857			9,984			2,487			3,477
Currency exchange rate changes								4,699			10,125
Benefit Obligation at End of Year	$	148,505		$	128,666		$	89,190		$	77,533
Fair value of plan assets at beginning of year	$	109,920		$	88,669		$	56,377		$	41,674
Actual return on plan assets		5,031			28,800			4,316			6,328
Employer contributions		12,870			3,147			3,642			2,895
Participant contributions								681			585
Benefits paid		(9,730	)		(10,696	)		(2,723	)		(2,304	)
Currency exchange rate changes								3,630			7,199
Fair Value of Plan Assets at End of Year	$	118,091		$	109,920		$	65,923		$	56,377
(Deficit) of plan assets versus benefit obligations at end of year	$	(30,414	)	$	(18,746	)	$	(23,267	)	$	(21,156	)
Contributions after measurement date		4			2,533			183			472
Unrecognized actuarial (gains) losses		47,992			33,907			28,826			26,406
Unrecognized prior service cost		2,546			2,840
Unrecognized net transitional asset		(2	)		(5	)
Net Amount Recognized	$	20,126		$	20,529		$	5,742		$	5,722
Amounts recognized in the consolidated balance sheets:
Prepaid benefit cost	$	20,369		$	21,107		$	8,676		$	7,350
Accrued benefit liability		(755	)		(663	)		(11,260	)		(10,878	)
Accumulated other comprehensive loss		481			85			8,326			9,250
Intangible asset		31
Net Amount Recognized	$	20,126		$	20,529		$	5,742		$	5,722
Accumulated Benefit Obligation	$	114,553		$	100,323		$	76,706		$	67,238

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     The following table summarizes the relationship between our plans’ benefit obligations and assets.

	U.S. Plans
	2005				2004
	Benefit		Plan		Benefit		Plan
(In thousands)	Obligation		Assets		Obligation		Assets
Plans with projected benefit obligation in excess of plan assets	$	145,633	$	114,840	$	124,704	$	104,891
Plans with accumulated benefit obligation in excess of plan assets	$	1,757	$	998	$	667
Plans with assets in excess of projected benefit obligations	$	2,872	$	3,251	$	3,962	$	5,029
Plans with assets in excess of accumulated benefit obligations	$	112,796	$	117,093	$	99,655	$	109,920

	Non-U.S. Plans
	2005				2004
	Benefit		Plan		Benefit		Plan
(In thousands)	Obligation		Assets		Obligation		Assets
Plans with projected benefit obligation in excess of plan assets	$	89,190	$	65,923	$	77,533	$	56,377
Plans with accumulated benefit obligation in excess of plan assets	$	48,839	$	37,396	$	43,705	$	32,403
Plans with assets in excess of accumulated benefit obligations	$	27,867	$	28,527	$	23,533	$	23,973

     To develop the expected long-term rate of return on pension plan assets assumption, we consider the current and expected target asset allocations of the pension portfolio, as well as historical returns and future expectations for returns on various categories of plan assets. The following weighted average assumptions were used to determine our year-end benefit obligations and net periodic pension cost under the plans:

	U.S. Plans									Non-U.S. Plans
Year-End Benefit Obligations	2005			2004			2003			2005			2004			2003
Discount rate		5.75	%		6.00	%		6.70	%		5.40	%		5.65	%		6.43	%
Rate of compensation increase		3.50	%		3.50	%		4.00	%		3.63	%		3.48	%		3.95	%

	U.S. Plans									Non-U.S. Plans
Net Periodic Pension Cost	2005			2004			2003			2005			2004			2003
Discount rate		6.00	%		6.70	%		7.25	%		5.68	%		6.43	%		6.63	%
Expected return on plan assets		8.75	%		8.75	%		9.00	%		7.31	%		7.25	%		8.25	%
Rate of compensation increase		3.50	%		4.00	%		4.00	%		3.66	%		3.95	%		4.00	%

     The following tables illustrate the weighted average actual and target allocation of plan assets:

U.S. Plans
				Actual Asset
	Target Allocation			Allocation
as of February 2005				2005			2004
Equity securities		70	%		70	%		70	%
Fixed income securities		25	%		16	%		21	%
Cash					9	%		5	%
Other		5	%		5	%		4	%
Total assets		100	%		100	%		100	%

Non-U.S. Plans
				Actual Asset
	Target Allocation			Allocation
	as of February 2005			2005			2004
Equity securities		58	%		58	%		59	%
Fixed income securities		37	%		36	%		38	%
Cash		1	%		2	%		1	%
Property and other		4	%		4	%		2	%
Total assets		100	%		100	%		100	%

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     The primary objective for the investments of the Retirement Plan is to provide for long-term growth of capital without undue exposure to risk. This is accomplished by utilizing a strategy of equities, fixed income securities and cash equivalents in a mix that is conducive to participation in a rising market while allowing for adequate protection in a falling market. The Plan Investment Committee oversees the investment allocation process, which includes the selection and evaluation of investment managers, the determination of investment objectives and risk guidelines, and the monitoring of actual investment performance. In order to properly manage investment risk, plan policy prohibits short selling, securities lending, financial futures, options and other specialized investments except for certain alternative investments specifically approved by the Investment Committee. The Investment Committee reviews, on a quarterly basis, reports of actual plan investment performance provided by independent third parties, in addition to their review of the plan investment policy on an annual basis.

     Outside the U.S., the investment objectives are similar, subject to local regulations. In general, investments are managed by private investment managers, reporting to our Investment Committee on a regular basis.

     In addition to the defined benefit pension plans discussed above, we also sponsor employee savings plans under Section 401 (k) of the Internal Revenue Code, which cover many employees in the United States. The majority of the plans provide for matching contributions based upon qualified employee contributions. Matching contributions are invested in the same manner that the participants invest their own contributions. Matching contributions charged to income were $8.2 million, $7.8 million and $6.1 million for years ending May 31, 2005, 2004 and 2003, respectively.

     The Company expects to pay the following estimated pension benefit payments in the next five years (in millions): $10.1 in 2006; $11.6 in 2007; $13.2 in 2008; $14.9 in 2009; $14.7 in 2010. In the five years thereafter (2011-2015) the Company expects to pay $99.3 million.

NOTE G — POSTRETIREMENT HEALTH CARE BENEFITS

     We sponsor several unfunded health care benefit plans for certain of our retired employees. Eligibility for these benefits is based upon minimum age and service requirements. The following table illustrates the effect on operations of these plans for the three years ended May 31, 2005:

	U.S. Plans							Non-U.S. Plans
(In thousands)	2005		2004		2003			2005		2004		2003
Service cost — Benefits earned during this period	$	11	$	11	$	9		$	265	$	205	$	168
Interest cost on the accumulated obligation		661		634		649			473		396		325
Amortization of unrecognized (gains) losses		27				(47	)		28
Net Periodic Postretirement Expense	$	699	$	645	$	611		$	766	$	601	$	493

     The changes in the benefit obligations of the plans at May 31, 2005 and 2004 were as follows:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2005			2004			2005			2004
Accumulated postretirement benefit obligation at beginning of year	$	11,465		$	9,884		$	6,815		$	4,970
Service cost		11			11			265			205
Interest cost		661			634			473			396
Benefit payments		(1,013	)		(908	)		(122	)		(129	)
Actuarial (gains) losses		353			1,844			333			822
Amendments		(308	)
Currency exchange rate changes								567			551
Accumulated postretirement benefit obligation at end of year		11,169			11,465			8,331			6,815
Unrecognized actuarial gains (losses)		(1,796	)		(1,470	)		(1,542	)		(1,142	)
Unrecognized prior service cost (benefit)		308
Accrued Postretirement Health Care Benefits	$	9,681		$	9,995		$	6,789		$	5,673

     Measurement dates of May 31, 2005 and 2004, respectively, were used to determine postretirement benefit measurements outlined above.

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     The following weighted average assumptions were used to determine our year-end benefit obligations and net periodic postretirement benefit costs under the plans:

	U.S. Plans							Non-U.S. Plans
Year-End Benefit Obligations		2005		2004		2003			2005		2004		2003
Discount rate		5.75	%	6.00	%	6.70	%		6.00	%	6.25	%	7.00	%
Current healthcare cost trend rate		10.00	%	10.00	%	9.00	%		8.00	%	9.00	%	9.00	%
Ultimate healthcare cost trend rate		5.00	%	5.00	%	5.00	%		5.00	%	5.00	%	5.00	%
Year ultimate healthcare cost trend rate will be realized		2015		2014		2008			2008		2008		2008

	U.S. Plans							Non-U.S. Plans
Net Periodic Postretirement Benefit Cost		2005		2004		2003			2005		2004		2003
Discount rate		6.00	%	6.70	%	7.25	%		6.25	%	7.00	%	7.25	%
Healthcare cost trend rate		10.00	%	9.00	%	8.00	%		9.00	%	9.00	%	9.00	%
Ultimate healthcare cost trend rate		5.00	%	5.00	%	5.00	%		5.00	%	5.00	%	5.00	%
Year ultimate healthcare cost trend rate will be realized		2014		2007		2008			2008		2007		2008

     Increasing or decreasing current healthcare cost trend rates by 1% would affect accumulated postretirement benefit obligation and net postretirement expense by the following amounts for the years ended May 31, 2005 and 2004:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2005			2004			2005			2004
1% Increase in trend rate
Accumulated Benefit Obligation	$	950		$	980		$	1,617		$	1,423
Postretirement Cost		60			50			163			135
1% Decrease in trend rate
Accumulated Benefit Obligation		(830	)		(850	)		(1,262	)		(1,177	)
Postretirement Cost		(50	)		(50	)		(123	)		(127	)

     The Company expects to pay approximately $1.0 million in estimated postretirement benefit expense in each of the next five years. In the five years thereafter (2011-2015) the Company expects to pay $5.3 million.

     We have determined that our postretirement medical plan provides prescription drug benefits that will qualify for the federal subsidy provided by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“Act”). For our current retirees who are not subject to cost caps, we have assumed that we will be eligible for the subsidy beginning in 2006 and for all future years. For our current and future retirees who are subject to cost caps, we have assumed that we will be eligible for the subsidy beginning in 2006 and ending on average in 2012.

     We have reflected the impact of the Act for the first time in the fiscal year end 2005 accumulated postretirement benefit obligation (“APBO”). We have reflected the change in the APBO as an actuarial gain in accordance with FASB Staff Position No. FAS 106-2. The impact will be reflected net of periodic expense for the first time beginning with the quarter ended August 31, 2005.

NOTE H — CONTINGENCIES AND LOSS RESERVES

     Accrued loss reserves and asbestos-related liabilities consist of the following:

May 31	2005		2004
(In thousands)
Accrued product liability reserves	$	57,414	$	47,402
Accrued warranty reserves		5,822		5,670
Accrued environmental reserves		2,216		3,627
Accrued loss reserves — current		65,452		56,699
Asbestos-related liabilities — current		55,000		47,500
Total Reserves — Current	$	120,452	$	104,199
Accrued warranty and product liability reserves — noncurrent	$	8,044	$	5,579
Asbestos-related liabilities — noncurrent		46,172		43,107
Total Reserves — Noncurrent	$	54,216	$	48,686

     We provide, through our wholly owned insurance subsidiaries, certain insurance coverage, primarily product liability, to our other subsidiaries. Excess coverage is provided by outside carriers. The reserves reflected above

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provide for these potential losses as well as other uninsured claims. In fiscal 2005, product liability reserves increased to $57.4 million, or by approximately $10.0 million, as a result of our continuing evaluation of our liability under a preliminarily court-approved class action lawsuit settlement covering our Dryvit exterior insulated finish systems product line. The Dryvit reserve increase was $16.2 million. The liability was substantially covered by excess coverage from outside insurance carriers, and offsetting receivables were recorded and are reflected as current and long-term receivables. The increase in the accrual in 2005 relating to the class action lawsuit had no impact on our statement of income as a result of the outside insurance funding. This accrual increase is expected to bring us nearer to closure on the class action lawsuit.

     Certain of our wholly owned subsidiaries, principally Bondex International, Inc. (“Bondex”), along with many other U.S. companies, are and have been involved in a large number of asbestos-related suits filed primarily in state courts during the past two decades, with a majority of claims pending in five states – Illinois, Ohio, Mississippi, Texas and Florida. These suits principally allege personal injury resulting from exposure to asbestos-containing products previously manufactured by the Company’s subsidiaries. The alleged claims relate primarily to products that Bondex or its predecessors sold through 1977. In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that injuries incurred resulted from exposure to Bondex products.

     The rate at which plaintiffs filed asbestos-related suits against Bondex increased in the fourth quarter of 2002 and the first two quarters of 2003, influenced by the bankruptcy filings of numerous other defendants in asbestos-related litigation. Based on the significant increase in asbestos claims activity which, in many cases, disproportionately increased Bondex’s exposure in joint and several liability law states, our third-party insurance was depleted within the first 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 fund asbestos loss payments 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 or not 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 consolidated with a related case and, pursuant to a case management order, the parties are to complete fact discovery by March 31, 2006 and dispositive motions and expert discovery by September 1, 2006. A trial date of January 29, 2007 has been set; however, it is possible that this and other dates may be modified as the coverage case progresses.

     We are unable at the present time to predict the timing or ultimate outcome of this insurance coverage 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 our asbestos reserve. Our wholly-owned captive insurance companies have not provided any insurance or re-insurance coverage of any asbestos-related claims.

     During 2003 and early fiscal 2004, new state liability laws were enacted in three states (Mississippi, Ohio and Texas) where at that time 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. During the third and fourth fiscal quarters of 2004, two of the three previously mentioned states that adopted “proportional cause” liability in 2003 passed additional legislation impacting medical criteria and product identification in asbestos-related litigation. In 2005, additional states including Florida and Georgia, have adopted various medical criteria-based asbestos legislation. 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 is not known at this time. Claims in Mississippi, Ohio and Texas at the year ended May 31, 2005, coupled with the non-malignancy filings in Florida, currently comprise approximately 80% of the aggregate claims filed against Bondex.

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     At the end of 2002 and through the third fiscal quarter of 2003, Bondex had concluded it was not possible to estimate the cost of disposing all of the 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 any future asbestos-related claims. As previously disclosed, during the fourth fiscal quarter of 2003, Bondex retained a consulting firm to assist 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 and the prospect of potential federal asbestos-related legislation.

     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 all future asbestos-related claims against Bondex. Estimating the future cost of asbestos-related contingent liabilities was and continues to be subject to many uncertainties, including (i) the ultimate number of claims filed; (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 a changing trial docket and the jurisdictions in which trials are scheduled; (vii) the outcome of any such trials including judgments or jury verdicts, as a result of our more aggressive defense posture which includes taking selective cases to verdict; (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; and (x) the potential impact of various proposed structured settlement transactions or subsidiary bankruptcies by other companies, some of which are the subject of federal appellate court review, the outcome of which could materially affect any future asbestos-related liability estimates. In addition, during both calendar years 2003 and 2005, passage by the United States Senate Judiciary Committee of proposed legislation to establish a trust fund to pay future asbestos related claims and remove such cases from federal and state courts with industry and insurers funding the trust continues to be a significant variable that has made it increasingly difficult to predict with certainty the full exposure of future, unknown asbestos-related claims. The ongoing prospect of federal trust fund legislation is expected to continue to be a significant variable in assessing our future asbestos-related liabilities.

     Based on the foregoing considerations, at May 31, 2003, we concluded that we could not fully estimate the liability that would result from all future asbestos claims. We established a reserve for those pending cases that had progressed to a stage where the cost to dispose of these cases could, at the time, reasonably be estimated, as well as a $51.2 million provision for future unasserted claims that were estimable at May 31, 2003. The estimation of even pending cases was and is always difficult due to the dynamic nature of asbestos litigation including the variables discussed above. The estimated range of potential loss covering measurable known asbestos claims and the 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 fiscal 2003 operations of $140.0 million. At the time of the reserve, we believed that this 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 included $15.0 million in total projected defense costs over the estimated three-year life of the reserve. By comparison, Bondex’s share of costs (net of then-available third-party insurance) for asbestos-related product liability was $6.7 million and $2.8 million for the years ended May 31, 2003 and 2002, respectively.

     Since May 31, 2003, we have reviewed and evaluated on a quarterly basis the adequacy of our asbestos reserve. The range of loss calculation for the $140 million reserve was based on an extensive analysis of the most critical factors that influence our asbestos-related costs including: (i) the gross number of open malignancy claims (principally mesothelioma claims) as these claims have the most significant impact on our asbestos settlement costs; (ii) historical and current settlement costs and dismissal rates by various categories; (iii) analysis of the jurisdiction and governing law of the states in which these claims are pending; (iv) and outside defense counsel’s opinions and recommendations

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with respect to the merits of such claims. Although the number of open malignancy claims has remained relatively constant, subject to some quarterly variability, since May 31, 2003 continuing through the year ended May 31, 2005, our average settlement costs for malignancy claims have declined and dismissal rates have increased. Several defense verdicts during the second half of fiscal 2004 further contributed to lower settlement values and higher dismissal rates. Our defense costs, however, have increased significantly as a result of our more aggressive defense strategy, which now includes taking selective cases to verdict.

     Based on our review of our asbestos reserve for the second quarter ended November 30, 2004, we concluded that the $56.0 million balance of the $140.0 million reserve would not likely be sufficient to cover our asbestos-related cash flow requirements for the remainder of the full three-year period originally contemplated by the reserve. Accordingly, we concluded that an increase in our existing reserve was appropriate and took an asbestos reserve adjustment of $47.0 million for the quarter ended November 30, 2004, which we believed would be sufficient to cover any incremental cash flow requirements through fiscal 2006 not covered by the $140.0 million reserve, as well as the additional cash flow requirements for the balance of our then pending known claims and anticipated higher defense costs. Approximately $32.0 million of the $47.0 million reserve adjustment was allocated to anticipated higher future defense costs. During the third fiscal quarter ended February 28, 2005, based on a review of our pending known claims coupled with a review of our defense costs, we concluded that an increase in our existing reserve was appropriate. An asbestos reserve adjustment of $15.0 million was taken for the quarter ended February 28, 2005. With cash outlays of $21.9 million in the third quarter, our asbestos reserves aggregated $96.3 million at February 28, 2005, which we believed would be sufficient to cover the cash flow requirements for the balance of our then-pending known claims and defense costs. Our $15.0 million reserve increase assumed that approximately $6.1 million will be allocated to anticipated higher future defense costs, which we expected to continue.

     During the fourth quarter ended May 31, 2005, an additional $16.0 million was added to the asbestos reserve based on management’s quarterly review of pending claims and defense costs. With cash outlays of $11.1 million in the quarter, our asbestos reserves aggregate $101.2 million at May 31, 2005, which we believe will be sufficient to cover the cash flow requirements for the balance of our pending known claims and defense costs. Of the $16.0 million reserve increase, approximately $15.8 million is expected to be allocated to anticipated higher future defense costs, which we expect to continue. As we review our asbestos reserve each quarter, we will make appropriate adjustments to the reserve based on our most recent experience to ensure that it is sufficient to cover the anticipated settlement and defense costs associated with our then pending, known claims. We will continue to evaluate the appropriateness of estimating the value of any potential future unknown asbestos claims and at such time as we are able to quantify such future exposure, we will establish a reserve for such unknown future claims.

     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 potential settlement values associated with any such future claims, the ultimate resolution of such claims, the full impact of the state law changes enumerated above or the effect of pending federal trust fund legislation on future asbestos claims. Subject to the foregoing variables, including the timing and impact of such variables and the increase in the asbestos reserve, we believe that our asbestos reserves are sufficient to cover asbestos-related cash flow requirements for the current inventory of our known claims. It is, however, reasonably possible that our actual costs for claims could differ from current estimates but, based upon information presently available, such costs are not expected to have a material effect on our competitive or financial position or our ongoing operations. As previously disclosed, however, our existing reserve will not presently cover the costs of future unknown claims and therefore, additional reserves will be required in future periods for any such future claims. Any such future reserve increases, when taken, could have a material impact on our results in such period.

     The Company will continue to evaluate its asbestos-related loss exposure each quarter and review the adequacy of its reserve and the related cash flow implications in light of our most recent 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.

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     The following table illustrates the movement of current and long-term asbestos-related liabilities for the three years ended May 31, 2005:

			Additions
			Charged to
	Balance at		Selling, General		Deductions		Balance at
	Beginning		and		(Primarily		End of
(In thousands)	of Period		Administrative		Claims Paid)		Year
Year Ended May 31, 2005	$	90,607	$	78,000	$	67,435	$	101,172
Year Ended May 31, 2004		144,583				53,976(a)		90,607
Year Ended May 31, 2003		3,377		146,650		5,444(b)		144,583

(a)	Represents the Company’s portion of total claims paid during the fiscal year ended May 31, 2004 of $63.4 million, net of insurer contributions totaling $9.4 million. Insurance coverage was depleted in the first quarter of fiscal year 2004.
(b)	Represents the Company’s portion of total claims paid during the fiscal year ended May 31, 2003 of $54.4 million, net of insurer contributions totaling $49.0 million.

     In addition, like others in similar businesses, we are involved in several proceedings relating to environmental matters. It is our policy to accrue remediation costs when it is probable that such efforts will be required and the related costs can be reasonably estimated. These liabilities are undiscounted. Provision for estimated warranty costs is recorded at the time of sale and periodically adjusted to reflect actual experience.

     Due to the uncertainty inherent in the loss reserve estimation process, we are unable to estimate an additional range of loss in excess of our accruals. It is at least reasonably possible that actual costs will differ from estimates, but, based upon information presently available, such future costs are not expected to have a material adverse effect on our competitive or financial position or our ongoing results of operations. However, such costs could be material to results of operations in a future period.

NOTE I — SEGMENT INFORMATION

     We operate a portfolio of businesses that manufacture and sell a variety of specialty paints, protective coatings and roofing systems, sealants and adhesives. We manage our portfolio by organizing our businesses into two operating segments — industrial and consumer — based on the nature of business activities, products and services; the structure of management; and the structure of information as presented to our Board of Directors. Within each segment, individual operating companies or groups of companies generally address common markets, utilize similar technologies, and can share manufacturing or distribution capabilities.

     In addition to two operating segments, there are certain business activities, referred to as corporate/other, that do not constitute an operating segment, including corporate headquarters and related administrative expenses, results of our captive insurance companies, gains or losses on the sales of certain assets and other expenses not directly associated with either operating segment. Related assets consist primarily of investments, prepaid expenses, deferred pension assets, and headquarters property and equipment. These corporate and other assets and expenses reconcile operating segment data to total consolidated net sales, income before income taxes, identifiable assets, capital expenditures, and depreciation and amortization.

     The ten largest consumer segment customers represented approximately 25%, 25% and 24% of our consolidated net sales and approximately 57%, 55% and 53% of consumer net sales for 2005, 2004 and 2003, respectively. Sales to The Home Depot represented 11%, 11% and 11% of our consolidated net sales and 26%, 25% and 24% of our consumer segment net sales for 2005, 2004 and 2003, respectively.

     We reflect income from our joint ventures on the equity method, and receive royalties from our licensees. Total income from royalties and joint ventures amounted to approximately 2% or less of income before income taxes for each of the periods presented, and is therefore included as an offset to selling, general and administrative expenses. Export sales amounted to less than 10% of net sales for each of the three years presented.

     The following table reflects the results of our operating segments consistent with our management philosophy, and represents the information we utilize, in conjunction with various strategic, operational and other financial performance criteria, in evaluating the performance of our portfolio of businesses.

RPM International Inc. and Subsidiaries

53

Year Ended May 31	2005			2004			2003
(In thousands)
Segment Information
Net Sales
Industrial	$	1,441,548		$	1,272,781		$	1,117,877
Consumer		1,114,187			1,034,772			935,605
Corporate/Other
Total	$	2,555,735		$	2,307,553		$	2,053,482
Income Before Income Taxes
Industrial	$	168,578		$	140,706		$	122,568
Consumer		147,601			142,852			131,100
Corporate/Other		(152,451	)		(65,942	)		(205,815	)
Total	$	163,728		$	217,616		$	47,853
Identifiable Assets
Industrial	$	1,271,145		$	1,111,978		$	1,067,921
Consumer		1,138,894			1,090,531			1,038,350
Corporate/Other		246,206			147,582			137,184
Total	$	2,656,245		$	2,350,091		$	2,243,455
Capital Expenditures
Industrial	$	30,714		$	26,043		$	18,741
Consumer		24,175			23,303			22,095
Corporate/Other		720			1,907			978
Total	$	55,609		$	51,253		$	41,814
Depreciation and Amortization
Industrial	$	33,213		$	30,764		$	27,537
Consumer		29,264			29,503			29,216
Corporate/Other		3,515			3,010			1,921
Total	$	65,992		$	63,277		$	58,674
Geographic Information
Net Sales (based on shipping location)
United States	$	2,009,748		$	1,841,837		$	1,655,609
Foreign
Canada		192,579			172,894			144,882
Europe		250,585			207,557			175,657
Other Foreign		102,823			85,265			77,334
Total Foreign		545,987			465,716			397,873
Total	$	2,555,735		$	2,307,553		$	2,053,482
Assets Employed
United States	$	2,167,285		$	1,884,387		$	1,827,910
Foreign
Canada		205,433			154,815			151,771
Europe		266,564			242,063			197,654
Other Foreign		16,963			68,826			66,120
Total Foreign		488,960			465,704			415,545
Total	$	2,656,245		$	2,350,091		$	2,243,455

NOTE J — QUARTERLY INFORMATION (UNAUDITED)

     The following is a summary of the quarterly results of operations for the years ended May 31, 2005 and 2004:

	For Quarter Ended
(In thousands, except per share amounts)	August 31		November 30		February 28			May 31
2005
Net Sales	$	661,513	$	623,469	$	516,337		$	754,416
Gross Profit	$	294,887	$	270,688	$	211,117		$	329,859
Net Income	$	54,486	$	9,112	$	(4,772	)	$	46,206
Basic Earnings Per Share	$	0.47	$	0.08	$	(0.04	)	$	0.39
Diluted Earnings Per Share(a)	$	0.44	$	0.08	$	(0.04	)(b)	$	0.37
Dividends Per Share	$	0.14	$	0.15	$	0.15		$	0.15

	For Quarter Ended
(In thousands, except per share amounts)	August 31		November 30		February 29		May 31
2004
Net Sales(c)	$	581,023	$	581,541	$	473,978	$	671,011
Gross Profit(c)	$	267,043	$	257,575	$	203,803	$	302,760
Net Income	$	47,672	$	35,223	$	6,018	$	52,973
Basic Earnings Per Share	$	0.41	$	0.30	$	0.05	$	0.46
Diluted Earnings Per Share(a)	$	0.39	$	0.29	$	0.05	$	0.43
Dividends Per Share	$	0.13	$	0.14	$	0.14	$	0.14

(a)	Includes dilutive effect of EITF 04-8 as discussed in Note D.
(b)	Dilutive effects of our contingently convertible debt not included as it would be anti-dilutive.
(c)	See cooperative advertising reclassifications as discussed in Note A.

     Quarterly earnings per share may not total to the yearly earnings per share due to the weighted average number of shares outstanding in each quarter.

RPM International Inc. and Subsidiaries

54

NOTE K — SUBSEQUENT EVENTS

     On July 22, 2005, our Tremco subsidiary entered into a definitive purchase agreement to acquire Illbruck Sealant Systems (“Illbruck”). Illbruck, located in Leverkusen, Germany, is a provider of high-performance sealant and installation systems. With sales of $190.0 million, the acquisition will increase RPM’s global presence in core waterproofing and sealants system technologies. The acquisition is expected to be finalized by early September, pending appropriate European government approval at which point Illbruck will be a wholly-owned subsidiary.

QUARTERLY STOCK PRICE AND DIVIDEND INFORMATION

     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 are set forth in the table below.

Range of Sales Prices and Dividends Paid

Fiscal 2005	High		Low		Dividends paid per share
First Quarter	$	16.02	$	13.85		$0.140
Second Quarter	$	18.99	$	15.71		$0.150
Third Quarter	$	19.95	$	17.58		$0.150
Fourth Quarter	$	19.25	$	16.51		$0.150

Fiscal 2004	High		Low		Dividends paid per share
First Quarter	$	14.20	$	12.28		$0.130
Second Quarter	$	15.28	$	12.90		$0.140
Third Quarter	$	17.24	$	14.93		$0.140
Fourth Quarter	$	17.00	$	13.29		$0.140

Source: The Wall Street Journal

     Cash dividends are payable quarterly, upon authorization of the Board of Directors. Regular payment dates are approximately the last day of July, October, January and April.

     The number of holders of record of RPM common stock as of August 1, 2005 was approximately 35,278.

RPM International Inc. and Subsidiaries

55

MANAGEMENT’S REPORT ON INTERNAL CONTROLS

     The management of RPM International Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for the company, as such term is defined in Rules 13a-15(f) under the Securities Exchange Act of 1934 (“Exchange Act”). RPM’s internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Consolidated Financial Statements.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

     Management assessed the effectiveness of RPM’s internal control over financial reporting as of May 31, 2005. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this assessment, management concluded that, as of May 31, 2005, RPM’s internal control over financial reporting is effective.

     Ciulla, Smith & Dale, LLP, who audited the consolidated financial statements of RPM International Inc. as of and for the year ended May 31, 2005, have also audited management’s assessment of internal control over financial reporting and issued a report which is included herein.

Frank C. Sullivan	Robert L. Matejka
President and Chief Executive Officer	Vice President, Chief Financial Officer and Controller
July 7, 2005

RPM International Inc. and Subsidiaries

56

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
RPM International Inc. and Subsidiaries
Medina, Ohio

     We have audited the accompanying consolidated balance sheets of RPM International Inc. and Subsidiaries (the “Company”) as of May 31, 2005 and 2004, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended May 31, 2005. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2005 and 2004 and the results of its operations and its cash flows for each of the three years in the period ended May 31, 2005, in conformity with U.S. generally accepted accounting principles.

     We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of May 31, 2005, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated July 7, 2005 expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Cleveland, Ohio
July 7, 2005, except as to Note K, which is as of July 22, 2005.

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57

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
RPM International Inc. and Subsidiaries
Medina, Ohio

     We have audited management’s assessment, included in the accompanying “Management’s Report on Internal Control Over Financial Reporting,” that RPM International Inc. and Subsidiaries (the “Company”) maintained effective internal control over financial reporting as of May 31, 2005 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

     A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

     Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

     In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of May 31, 2005, is fairly stated, in all material respects, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, 2005, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

     We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of RPM International Inc. and Subsidiaries as of May 31, 2005 and 2004, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended May 31, 2005, and our report dated July 7, 2005 expressed an unqualified opinion on those financial statements.

Ciulla, Smith & Dale, LLP
Cleveland, Ohio
July 7, 2005

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58

EX-21.1

Exhibit 21.1

The following is a list of subsidiaries of RPM International Inc.¹ as of July 20, 2005.

	Jurisdiction of
Name	Incorporation
First Colonial Insurance Company, Inc.	Vermont
First Continental Services Co.	Vermont
RPM Asia Pte. Ltd.	Singapore
Alumanation (M) Sdn. Bhd.	Malaysia
Espan Corporation Pte. Ltd.	Singapore
RPM China Pte. Ltd.	Singapore
Magnagro Industries Pte. Ltd.	Singapore
Dryvit Wall Systems (Suzhou) Co. Ltd.	China
RPM Consumer Holding Company	Delaware
DAP Products Inc.2	Delaware
DAP Holdings, LLC3	Delaware
Gloucester Co., Inc.	Massachusetts
Bondo Corporation	Ohio
Rust-Oleum Corporation4	Illinois
Rust-Oleum International, LLC5	Delaware
BPAG, Inc.	Delaware
ROC Sales, Inc.	Illinois
Rust-Oleum Sales Company, Inc.6	Ohio
Rust-Oleum Service Company	Delaware
The Flecto Company, Inc.7	California
Rust-Oleum Japan Corporation	Japan
The Testor Corporation8	Ohio
Zinsser Co., Inc. 9	New Jersey
Okon, Inc.	Colorado
Zinsser Asia Pacific Pty. Limited	Australia
Zinsser Holdings, LLC10	Delaware
Mantrose-Haeuser Co., Inc.	Massachusetts
Modern Masters Inc.	California
Thibaut Inc.	New York
RPM Enterprises, Inc.	Delaware
RPM, Inc.11	Ohio
American Emulsions Co., Inc.	Georgia
Select Dye & Chemical, Inc.	Georgia
Bondex International, Inc.	Ohio
Chemical Specialties Manufacturing Corporation	Maryland
Day-Glo Color Corp.12	Ohio
Dryvit Holdings, Inc.	Delaware
Dryvit Systems, Inc.13	Rhode Island
Dryvit Systems USA (Europe) Sp. zo.o.	Poland
Guardian Products, Inc.	Delaware
Kop-Coat, Inc.	Ohio

	Jurisdiction of
Name	Incorporation
Kop-Coat New Zealand Limited	New Zealand
Agpro (N.Z.) Limited	New Zealand
RPM Wood Finishes Group, Inc.14	Nevada
Chemical Coatings, Inc.	North Carolina
RPM of Mass., Inc.	Massachusetts
Westfield Coatings Corporation	Massachusetts
TCI, Inc.	Georgia
RPM Industrial Holding Company	Delaware
Carboline Company15	Delaware
PLB Holdings Inc.	Nevada
A/D Fire Protection Systems Corp.	Nevada
Carboline International Corporation16	Delaware
Carboline Dubai Corporation	Missouri
StonCor Africa (Pty.) Ltd.	South Africa
Chemrite Equipment Systems (Pty.) Ltd.	South Africa
StonCor Namibia (Pty.) Ltd.	South Africa
Republic Powdered Metals, Inc. 17	Ohio
StonCor Group, Inc.18	Delaware
Fibergrate Composite Structures Incorporated19	Delaware
Stonhard Nederland B.V.	Netherlands
National Building Facility Services, Inc.	Delaware
Parklin Management Group, Inc.20	New Jersey
Stonhard Agencia en Chile	Chile
StonCor Corrosion Specialists Group Ltda.21	Brazil
Tremco Incorporated22	Ohio
The Euclid Chemical Company23	Ohio
Euclid Chemical International Sales Corp.24	Ohio
Grandcourt N.V.25	Netherlands Antilles
Redwood Transport, Inc.26	Ohio
Paramount Technical Products, Inc.	South Dakota
Tremco A.B.	Sweden
Tremco Asia Pacific Pty. Limited	Australia
PABCO Products Pty. Limited	Australia
Tremco Pty. Limited	Australia
Tremco Asia Pte. Ltd.	Singapore
Tremco Barrier Solutions, Inc.	Delaware
Tremco GmbH	Germany
Weatherproofing Technologies, Inc.27	Delaware
RSIF International Limited	Ireland
Sierra Performance Coatings, Inc.	California

¹ RPM International Inc. owns 100% of the outstanding voting Common Stock of RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares of RPM Funding Corporation are held as follows: 100% of the outstanding Series A Preferred Stock (non-voting)

2

	by Republic Powdered Metals, Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.; 100% of the outstanding Series I Preferred Stock (non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
2	DAP Products Inc. owns 100% of the outstanding Series B Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares of RPM Funding Corporation are held as follows: 100% of the outstanding voting Common Stock by RPM International Inc.; 100% of the outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.; 100% of the Outstanding Series I Preferred Stock (non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
	DAP Products Inc. owns 94% of the outstanding shares of Portazul, S.A., a Dominican Republic corporation. The remaining 6% of the outstanding shares of Portazul, S.A. are held by the directors of Portazul, S.A.
3	DAP Holdings, LLC owns 100% of the outstanding Common Stock of DAP Brands Company, a Delaware corporation. RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and Series B Preferred Stock of DAP Brands Company.
	DAP Holdings, LLC owns 1.60% of the outstanding Common Stock of RPM Holdco Corp., a Delaware Corporation. The remaining outstanding Common Stock of RPM Holdco Corp. is held as follows: Carboline Company 2.93%, Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, Rust-

3

	Oleum International, LLC 15%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
	DAP Holdings, LLC owns 23.81% of the outstanding Preferred Stock of RPM Holdco Corp., a Delaware Corporation. The remaining outstanding Preferred Stock is held as follows: Rust-Oleum International, LLC 51.54% and Zinsser Holdings, LLC 24.65%.
	RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
4	Rust-Oleum Corporation owns 100% of the outstanding Series E Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares of RPM Funding Corporation are held as follows: 100% of the outstanding voting Common Stock by RPM International Inc.; 100% of the outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.; 100% of the outstanding Series I Preferred Stock (non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
	Rust-Oleum Corporation owns 99.992% of the outstanding shares of Rust-Oleum Argentina S.A., an Argentine corporation. The remaining .008% of the outstanding shares of Rust-Oleum Argentina S.A. are held by Rust-Oleum Sales Company, Inc.
5	Rust-Oleum International, LLC owns 100% of the outstanding Common Stock of Rust-Oleum Brands Company, a Delaware corporation. RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and Series B Preferred Stock of Rust-Oleum Brands Company.
	Rust-Oleum International, LLC owns 15% of the outstanding Common Stock of RPM Holdco Corp., a Delaware Corporation. The remaining Common Stock of RPM Holdco Corp. is held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.

4

	Rust-Oleum International, LLC owns 51.54% of the outstanding Preferred Stock of RPM Holdco Corp., a Delaware Corporation. The remaining outstanding Preferred Stock is held as follows: DAP Holdings, LLC 23.81% and Zinsser Holdings, LLC 24.65%.
	RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
6	Rust-Oleum Sales Company, Inc. owns .008% of the outstanding shares of Rust-Oleum Argentina S.A., an Argentine corporation. The remaining 99.992% of the outstanding shares of Rust-Oleum Argentina S.A. are held by Rust-Oleum Corporation.
7	The Flecto Company, Inc. owns 79% of the outstanding shares of Harry A. Crossland Investments, Ltd., a Nevada corporation. The remaining 21% of the outstanding shares of Harry A. Crossland Investments, Ltd. are held by RPM Canada Company.
	Harry A. Crossland Investments, Ltd. owns 100% of the outstanding shares of Crossland Distributors Ltd., a Canadian corporation.
8	The Testor Corporation owns 100% of the outstanding Series F Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares of RPM Funding Corporation are held as follows: 100% of the outstanding voting Common Stock by RPM International Inc.; 100% of the outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.; 100% of the outstanding Series I Preferred Stock (non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
9	Zinsser Co., Inc. owns 100% of the outstanding Series I Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares of RPM Funding Corporation are held as follows: 100% of the outstanding voting Common Stock by RPM International Inc.; 100% of the outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding Series F Preferred Stock (non-voting) by

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	The Testor Corporation; 100% of the outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
10	Zinsser Holdings, LLC owns 100% of the outstanding Common Stock of Zinsser Brands Company, a Delaware corporation. RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and Series B Preferred Stock of Zinsser Brands Company.
	Zinsser Holdings, LLC owns .27% of the outstanding Common Stock of RPM Holdco Corp., a Delaware Corporation. The remaining outstanding Common Stock of RPM Holdco Corp. is held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor Group, Inc. 12.87% and Tremco Incorporated 44.67%.
	Zinsser Holdings, LLC owns 24.65% of the outstanding Preferred Stock of RPM Holdco Corp., a Delaware Corporation. The remaining outstanding Preferred Stock is held as follows: DAP Holdings, LLC 23.81% and Rust-Oleum International, LLC 51.54%
	RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
11	RPM, Inc. owns 88% of the outstanding shares of RPM/Lux Consult S.A., a Luxembourg corporation. The remaining 12% of the outstanding shares of RPM/Lux Consult S.A. are held by Tremco Incorporated.
	RPM/Lux Consult S.A. owns .2% of the outstanding shares of Monile France S.A.R.L., a French corporation. The remaining 99.8% of the outstanding shares of Monile France S.A.R.L. are held by RPM/Belgium N.V.
12	Day-Glo Color Corp. owns 7.33% of the outstanding shares of RPM Holdco Corp., a Delaware Corporation. The remaining outstanding shares of RPM Holdco Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
	RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.

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	Day-Glo Color Corp. owns .32% of the outstanding shares of Radiant Color N.V., a Belgian corporation. The remaining 99.68% of the outstanding shares of Radiant Color N.V. are held by RPM Europe Holdco B.V.
	Radiant Color N.V. owns 99.99% of the outstanding shares of Martin Mathys N.V., a Belgian corporation. The remaining .01% of the outstanding shares of Martin Mathys N.V. are held by RPM/Belgium N.V.
	Radiant Color N.V. owns 85.71% of the outstanding shares of APSA S.p.A., an Italian corporation. Of the remaining outstanding shares of APSA S.p.A., 13.57% are held by RPOW France S.A.S. and .72% are held by RPM Europe Holdco B.V.
	Radiant Color N.V. owns 67.86% of the outstanding shares of Ecoloc N.V., a Belgian corporation. The remaining 32.14% of the outstanding shares of Ecoloc N.V. are held by Lock-Tile Belgium N.V.
	Radiant Color N.V. owns 99.96% of the outstanding shares of Lock-Tile Belgium N.V., a Belgian corporation. The remaining .04% of the outstanding shares of Lock-Tile Belgium N.V. are held by RPM/Belgium N.V.
13	Dryvit Systems, Inc. owns 8.40% of the outstanding shares of RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares of RPM Holdco Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Day-Glo Color Corp. 7.33%, The Euclid Chemical Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
	RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
	Dryvit Systems, Inc. owns 88% of the outstanding shares of Beijing Dryvit Chemical Building Materials Co., Ltd., a Peoples Republic of China company. The remaining outstanding shares of Beijing Dryvit Chemical Building Materials Co., Ltd. are held by a joint venture partner.
	Dryvit Systems, Inc. owns 27.03% of AWCI Insurance Company, Ltd., a Bermuda exempt company. The remaining outstanding shares of AWCI Insurance Company, Ltd. are held by other EIFS manufacturers.
14	RPM Wood Finishes Group, Inc. owns 5.66% of the outstanding shares of RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares of RPM Holdco Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, Rust-Oleum International, LLC 15%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.

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	RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
15	Carboline Company owns 2.93% of the outstanding shares of RPM Holdco Corp., a Delaware Corporation. The remaining outstanding shares of RPM Holdco Corp. are held as follows: DAP Holdings, LLC 1.60%, Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
	RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
16	Carboline International Corporation owns 49% of Carboline Korea Ltd.; 40% of Carboline Norge A/S; 49% of StonCor Middle East LLC; 33.33% of Japan Carboline Company Ltd.; and 40% of CDC Carboline (India) Ltd. All outstanding shares of these entities are held by joint venture partners. However, 5% of the outstanding shares of Carboline Norge A/S are held by RPM Funding Corporation.
17	Republic Powdered Metals, Inc. owns 100% of the outstanding Series A & D Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares of RPM Funding Corporation are held as follows: 100% of the outstanding voting Common Stock by RPM International Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical Company; 100% of the outstanding Series E Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.; 100% of the outstanding Series I Preferred Stock (non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
18	StonCor Group, Inc. owns 12.87% of the outstanding shares of RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares of RPM Holdco Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.

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	RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
	StonCor Group, Inc. owns 95% of the outstanding shares of StonCor South Cone S.A., an Argentine corporation. The remaining 5% of the outstanding shares of StonCor South Cone S.A. are held by Parklin Management Group, Inc.
	StonCor Group, Inc. owns 99% of the outstanding shares of Stonhard S.A., a Luxembourg corporation. The remaining 1% of the outstanding shares of Stonhard S.A. are held by Parklin Management Group, Inc.
	StonCor Group, Inc. owns 99.25% of the outstanding shares of Grupo StonCor, S.A. de C.V., a Mexican corporation. The remaining .75% of the outstanding shares of Grupo StonCor, S.A. de C.V. are held by Parklin Management Group, Inc.
	Grupo StonCor, S.A. de C.V. owns 100% of the outstanding shares of Plasite, S.A. de C.V. Mexico, a Mexican corporation and 100% of the outstanding shares of Grupo StonCor, S.A. de C.V., a Colombian corporation.
	Grupo StonCor, S.A. de C.V. owns .1% of the outstanding shares of Irving FRP, S.A. de C.V., a Mexican corporation The remaining 99.9% of the outstanding shares of Irving FRP, S.A. de C.V. are held by Fibergrate Composite Structures Incorporated.
	StonCor Group, Inc. owns 99.99% of the outstanding shares of Stonhard de Mexico S.A. de C.V., a Mexican corporation. The remaining .01% of the outstanding shares are held by Parklin Management Group, Inc.
	Stonhard de Mexico S.A. de C.V. owns 100% of the outstanding shares of Juarez Immobiliaria, S.A., a Mexican corporation.
	StonCor Group, Inc. owns .01% of the outstanding shares of StonCor Services, Ltda., a Brazilian corporation. The remaining 99.99% of the outstanding shares of StonCor Services, Ltda. are held by StonCor Corrosion Specialists Group Ltda.
19	Fibergrate Composite Structures Incorporated owns 99.9% of the outstanding shares of Irving FRP, S.A. de C.V., a Mexican corporation. The remaining .1% of the outstanding shares of Irving FRP, S.A. de C.V. are held by Grupo StonCor, S.A. de C.V.
20	Parklin Management Group, Inc. owns .875% of the outstanding shares of StonCor (Deutschland) GmbH, a German corporation. Of the remaining 99.125% of the outstanding shares of StonCor (Deutshland) GmbH, 98.25% are held by RPM Canada, a General Partnership and .875% are held by RPM Canada Company.
	StonCor (Deutschland) GmbH owns 100% of the outstanding shares of Alteco Technik GmbH, a German corporation.

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	Alteco Technik GmbH owns 1% of the outstanding shares of Alteco Chemical-Produtos Quimicos SA, a Portuguese company. Of the remaining outstanding shares of Alteco Chemical-Produtos Quimicos SA, 96% are held by RPM/Belgium N.V. and 3% are held by three directors of Alteco Chemical-Produtos Quimicos SA
	Parklin Management Group, Inc. owns .75% of the outstanding shares of Grupo StonCor, S.A. de C.V., a Mexican corporation. The remaining 99.25% of the outstanding shares of Grupo StonCor, S.A. de C.V. are held by StonCor Group, Inc.
	Parklin Management Group, Inc. owns .01% of the outstanding shares of Stonhard de Mexico S.A. de C.V., a Mexican corporation. The remaining 99.99% of the outstanding shares of Stonhard de Mexico S.A. de C.V. are held by StonCor Group, Inc.
	Parklin Management Group, Inc. owns 1% of the outstanding shares of Stonhard S.A., a Luxembourg corporation. The remaining 99% of the outstanding shares of Stonhard S.A. are held by StonCor Group, Inc.
	Parklin Management Group, Inc. owns 5% of the outstanding shares of StonCor South Cone S.A., an Argentine corporation. The remaining 95% of the outstanding shares of StonCor South cone S.A. are held by StonCor Group, Inc.
21	StonCor Corrosion Specialists Group Ltda. owns 99.99% of the outstanding shares of StonCor Services, Ltda., a Brazilian corporation. The remaining .01% of the outstanding shares of StonCor Services, Ltda. are held by StonCor Group, Inc.
22	Tremco Incorporated owns 100% of the outstanding Series G Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares of RPM Funding Corporation are held as follows: 100% of the outstanding voting Common Stock by RPM International Inc.; 100% of the outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.; 100% of the outstanding Series I Preferred Stock (non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
	Tremco Incorporated owns 44.67% of the outstanding shares of RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares of RPM Holdco Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Day-Glo Color Corp. 7.33%, Dryvit

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Systems, Inc. 8.40%, The Euclid Chemical Company 1.27%, RPM Wood Finishes Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor Group, Inc. 12.87%, and Zinsser Holdings, LLC .27%.

RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company.

RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and Series B Preferred Stock of DAP Brands Company, a Delaware corporation. DAP Holdings, LLC owns 100% of the outstanding Common Stock of DAP Brands Company.

RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and Series B Preferred Stock of Rust-Oleum Brands Company, a Delaware corporation. Rust-Oleum International, LLC owns 100% of the outstanding Common Stock of Rust-Oleum Brands Company.

RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and Series B Preferred Stock of Zinsser Brands Company, a Delaware corporation. Zinsser Holdings, LLC owns 100% of the outstanding Common Stock of Zinsser Brands Company.

RPM Canada Company owns 100% of the outstanding shares of RPM Canada Investment Company, a Canadian unlimited liability company.

RPM Canada Company is a 75% partner in RPM Canada, a General Partnership, an Ontario partnership. RPM Canada Investment Company is a 25% partner in RPM Canada, a General Partnership.

RPM Canada Company owns 21% of the outstanding shares of Harry A. Crossland Investments, Ltd., a Nevada corporation. The remaining 79% of the outstanding shares of Harry A. Crossland Investments, Ltd. are held by The Flecto Company, Inc.

Harry A. Crossland Investments, Ltd. owns 100% of the outstanding shares of Crossland Distributors Ltd., a Canadian corporation.

RPM Canada, a General Partnership owns 100% of the outstanding shares of Euclid Admixture Canada Inc., a Canadian corporation.

RPM Canada, a General Partnership owns 100% of the outstanding shares of A/D Fire Protection Systems Inc., a Canadian corporation.

A/D Fire Protection Systems Inc. owns 50% of the outstanding shares of the following Canadian corporations: Donalco Inc., Donalco Western Inc. and 2926253 Canada Ltd./Ltd. (dba Pro Firestop). The remain 50% of the outstanding shares are held by non-RPM shareholders.

RPM Canada, a General Partnership owns 100% of the outstanding shares of Tremco Limited, a United Kingdom corporation.

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Tremco Limited owns 100% of the outstanding shares of OY Tremco Ltd., a Finnish corporation and 100% of the outstanding shares of Tretol Group Limited, a United Kingdom corporation.

Tretol Group Limited owns 100% of the outstanding shares of Tretol Limited and Tretolbond Limited, both United Kingdom corporations.

RPM Canada Company owns 79% of the outstanding shares of RPM Europe Holdco B.V., a Netherlands corporation. The remaining 21% of the outstanding shares of RPM Europe Holco B.V. are held by RPM Canada, a General Partnership.

RPM Europe Holdco B.V. owns 100% of the outstanding shares of Rust-Oleum Netherlands B.V., StonCor Benelux B.V., and Tremco B.V., all Netherlands corporations, and RPOW U.K. Limited, a United Kingdom corporation.

RPM Europe Holdco B.V. owns 96.04% of the outstanding shares of RPM/Belgium N.V., a Belgian corporation. The remaining 3.96% of the outstanding shares of RPM/Belgium N.V. are held by Tremco Incorporated.

RPM Europe Holdco B.V. owns 100% of the outstanding shares of Compact Technology GmbH, a German corporation.

RPM Europe Holdco B.V. owns 99.68% of the outstanding shares of Radiant Color N.V., a Belgian corporation. The remaining .32% of the outstanding shares of Radiant Color N.V. are held by Day-Glo Color Corp.

Radiant Color N.V. owns 99.99% of the outstanding shares of Martin Mathys N.V., a Belgian corporation. The remaining .01% of the outstanding shares of Martin Mathys N.V. are held by RPM/Belgium N.V.

Radiant Color N.V. owns 85.71% of the outstanding shares of APSA S.p.A., an Italian corporation. Of the remaining outstanding shares of APSA S.p.A., 13.57% are held by RPOW France S.A.S. and .72% are held by RPM Europe Holdco B.V.

Radiant Color N.V. owns 67.86% of the outstanding shares of Ecoloc N.V., a Belgian corporation. The remaining 32.14% of the outstanding shares of Ecoloc N.V. are held by Lock-Tile Belgium N.V.

Radiant Color N.V. owns 99.96% of the outstanding shares of Lock-Tile Belgium N.V., a Belgian corporation. The remaining .04% of the outstanding shares of Lock-Tile Belgium N.V. are held by RPM/Belgium N.V.

RPM/Belgium N.V. owns 99.8% of the outstanding shares of Monile France S.A.R.L., a French corporation. The remaining .2% of the outstanding shares of Monile France S.A.R.L. are held by RPM/Lux Consult S.A.

RPM/Belgium N.V. owns 96% of the outstanding shares of Alteco Chemical-Produtos Quimicos SA, a Portuguese corporation. Of the remaining outstanding shares of Alteco Chemical-Produtos

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Quimicos SA, 1% are held by Alteco Technik GmbH and 3% are held by three directors of Alteco Chemical-Produtos Quimicos SA

RPM Europe Holdco B.V. owns 99% of the outstanding shares of Zinsser Europe N.V., a Belgian corporation. The remaining 1% of the outstanding shares of Zinsser Europe N.V. are held by RPM/Belgium N.V.

RPM Europe Holdco B.V. owns 100% of the outstanding shares of RPOW France S.A.S., a French corporation.

RPM Europe Holdco B.V. owns .72% of the outstanding shares of APSA S.p.A., an Italian corporation. Of the remaining outstanding shares of APSA S.p.A., 85.71% are held by Radiant Color N.V. and 13.57% are held by RPOW France S.A.S.

RPM Europe Holdco B.V. owns 99.04% of the outstanding shares of RPM Europe S.A., a Belgian corporation. The remaining .96% of the outstanding shares of RPM Europe S.A. are held by RPM/Lux Consult S.A.

RPOW France S.A.S. owns 13.57% of the outstanding shares of APSA S.p.A., an Italian corporation. Of the remaining outstanding shares of APSA S.p.A., 85.71% are held by Radiant Color N.V. and .72% are held by RPM Europe Holdco B.V.

RPOW France S.A.S. owns 100% of the outstanding shares of Corroline France S.A.S., a French corporation.

RPOW France S.A.S. owns 100% of the outstanding shares of Rust-Oleum France S.A.S., a French corporation.

RPOW France S.A.S. owns 70% of the outstanding shares of Rust-Oleum Mathys Italia S.r.l., an Italian corporation. The remaining 30% of the outstanding shares of Rust-Oleum Mathys Italia S.r.l. are held by a joint venture partner.

RPOW France S.A.S. owns 99.99% of the outstanding shares of Stonhard S.A.S., a French corporation. The remaining .01% of the outstanding shares are held by Rust-Oleum France S.A.S.

RPOW U.K. Limited owns 100% of the outstanding shares of each of the following United Kingdom corporations: Bondo U.K. Limited, Chemspec Europe Limited, Dryvit U.K. Limited, Fibergrate Composite Structures Limited, Mantrose U.K. Limited, RPM Holdings UK Limited, Rust-Oleum U.K. Limited and Stonhard U.K. Limited, as well as Stonhard (Ireland) Limited, an Irish corporation.

Mantrose U.K. Limited owns 100% of the outstanding shares of each of Agricoat Industries Limited and Wm. Zinsser Limited, both United Kingdom corporations.

RPM Holdings UK Limited owns 100% of the outstanding shares of Dore Holdings Limited, a United Kingdom corporation.

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Dore Holdings Limited owns 100% of the outstanding shares of each of Amtred Limited and Nullifire Limited, both United Kingdom corporations.

RPM Canada, a General Partnership, owns 98.25% of the outstanding shares of StonCor (Deutschland) GmbH, a German corporation. The remaining 1.75% of the outstanding shares of StonCor (Deutschland) GmbH are split equally between RPM Canada Company and Parklin Management Group, Inc., each holding .875% of the remaining outstanding shares.

StonCor (Deutschland) GmbH owns 100% of the outstanding shares of Alteco Technik GmbH, a German corporation.

Alteco Technik GmbH owns 1% of the outstanding shares of Alteco Chemical-Produtos Quimicos SA, a Portuguese company. Of the remaining outstanding shares of Alteco Chemical-Produtos Quimicos SA, 96% are held by RPM/Belgium N.V. and 3% are held by three directors of Alteco Chemical-Produtos Quimicos SA

Tremco Incorporated owns 3.96% of the outstanding shares of RPM/Belgium N.V., a Belgian corporation. The remaining 96.04% of the outstanding shares of RPM/Belgium N.V. are held by RPM Europe Holdco B.V.

RPM/Belgium N.V. owns 99.8% of the outstanding shares of Monile France S.A.R.L., a French corporation. The remaining .2% of the outstanding shares of Monile France S.A.R.L. are held by RPM/Lux Consult S.A.

RPM/Belgium N.V. owns 96% of the outstanding shares of Alteco Chemical-Produtos Quimicos SA, a Portuguese corporation. Of the remaining outstanding shares of Alteco Chemical-Produtos Quimicos SA, 1% are held by Alteco Technik GmbH and 3% are held by three directors of Alteco Chemical-Produtos Quimicos SA

RPM/Belgium N.V. owns .01% of the outstanding shares of Martin Mathys N.V., a Belgian corporation. The remaining 99.99% of the outstanding shares of Martin Mathys N.V. are held by Radiant Color N.V.

RPM/Belgium N.V. owns 1% of the outstanding shares of Zinsser Europe N.V., a Belgian corporation. The remaining 99% of the outstanding shares of Zinsser Europe N.V. are held by RPM Europe Holdco B.V.

RPM/Belgium N.V. owns .04% of the outstanding shares of Lock-Tile Belgium N.V., a Belgian corporation. The remaining 99.96% of the outstanding shares of Lock-Tile Belgium N.V. are held by Radiant Color N.V.

Lock-Tile Belgium N.V. owns 32.14% of Ecoloc N.V. The remaining 67.86% of the outstanding shares of Ecoloc N.V. are held by Radiant Color N.V.

Tremco Incorporated owns .0025% of the outstanding shares of Toxement S.A., a Colombian corporation. Of the remaining outstanding shares of Toxement S.A., Grandcourt N.V. owns

14

	50.99%, The Euclid Chemical Company owns 49% and Euclid Chemical International Sales Corp, Redwood Transport, Inc. and Weatherproofing Technologies, Inc. each own .0025%.
	Tremco Incorporated owns 50% of the outstanding shares of Sime Tremco Sdn. Bhd., a Malaysian corporation. The remaining outstanding shares of Sime Tremco Sdn. Bhd. are held by a joint venture partner.
	Sime Tremco Sdn. Bhd. Owns 100% of the outstanding shares of each of Sime Tremco (Malaysia) Sdn. Bhd. and Sime Tremco Specialty Chemicals Sdn, Bhd., both Malaysian corporations.
	Tremco Incorporated owns 99.999% of the outstanding shares of Tremco Far East Limited, a Hong Kong corporation. The remaining .001% of the outstanding shares of Tremco Far East Limited are held by a director of Tremco Far East Limited.
	Tremco Far East Limited owns 100% of the outstanding shares of Tremco (Malaysia) Sdn. Bhd., a Malaysian corporation and 100% of the outstanding shares of Shanghai Tremco International Trading Co., Ltd., a Chinese corporation.
	Tremco Incorporated owns 12% of the outstanding shares of RPM/Lux Consult S.A., a Luxembourg corporation. The remaining 88% of the outstanding shares of RPM/Lux Consult S.A. are held by RPM, Inc.
	RPM/Lux Consult S.A. owns .2% of the outstanding shares of Monile France S.A.R.L., a French corporation. The remaining 99.8% of the outstanding shares of Monile France S.A.R.L. are held by RPM/Belgium N.V.
	RPM/Lux Consult S.A. owns .96% of the outstanding shares of RPM Europe S.A., a Belgian corporation. The remaining 99.04% of the outstanding shares of RPM Europe S.A. are held by RPM Europe Holdco B.V.
23	The Euclid Chemical Company owns 60% interest in Euco Densit LLC, an Ohio limited liability company. The remaining 40% interest in Euco Densit LLC is held by a joint venture partner.
	The Euclid Chemical Company owns 100% of the outstanding Series C Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares of RPM Funding Corporation are held as follows: 100% of the outstanding voting Common Stock by RPM International Inc.; 100% of the outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100% of the outstanding Series D Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding Series H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.; 100% of the outstanding Series I Preferred Stock (non-

15

	voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
	The Euclid Chemical Company owns 1.27% of the outstanding shares of RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares of RPM Holdco Corp. are held as follows: Carboline Company 2.93%, DAP Holdings, LLC 1.60%, Day-Glo Color Corp. 7.33%, Dryvit Systems, Inc. 8.40%, RPM Wood Finishes Group, Inc. 5.66%, Rust-Oleum International, LLC 15%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.
	RPM Holdco Corp. owns 100% of the outstanding shares of RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
	The Euclid Chemical Company owns 99.997% of the outstanding shares of Eucomex S.A. de C.V., a Mexican corporation. The remaining .003% of the outstanding shares of Eucomex S.A. de C.V. are held by Redwood Transport, Inc.
	The Euclid Chemical Company owns 49% of the outstanding shares of Toxement S.A., a Colombian corporation. Of the remaining outstanding shares of Toxement S.A., Grandcourt N.V. owns 50.99% and Euclid Chemical International Sales Corp., Redwood Transport, Inc., Tremco Incorporated and Weatherproofing Technologies, Inc. each own .0025%.
24	Euclid Chemical International Sales Corp. owns .0025% of the outstanding shares of Toxement S.A., a Colombian corporation. Of the remaining outstanding shares of Toxement S.A., Grandcourt N.V. owns 50.99%, The Euclid Chemical Company owns 49% and Redwood Transport, Inc., Tremco Incorporated and Weatherproofing Technologies, Inc. each own .0025%.
25	Grandcourt N.V. owns 50.99% of the outstanding shares of Toxement S.A., a Colombian corporation. Of the remaining outstanding shares of Toxement S.A., The Euclid Chemical Company owns 49% and Euclid Chemical International Sales Corp., Redwood Transport, Inc., Tremco Incorporated and Weatherproofing Technologies, Inc. each own .0025%.
26	Redwood Transport, Inc. owns .003% of the outstanding shares of Eucomex S.A. de C.V., a Mexican corporation. The remaining 99.997% of the outstanding shares of Eucomex S.A. de C.V. are held by The Euclid Chemical Company.
	Redwood Transport, Inc. owns .0025% of the outstanding shares of Toxement S.A., a Colombian corporation. Of the remaining outstanding shares of Toxement S.A., Grandcourt N.V. owns 50.99%, The Euclid Chemical Company owns 49% and Euclid Chemical International Sales Corp., Tremco Incorporated and Weatherproofing Technologies, Inc. each own .0025%.

16

27	Weatherproofing Technologies, Inc. owns 100% of the outstanding Series H Preferred Stock (non-voting) of RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares of RPM Funding Corporation are held as follows: 100% of the outstanding voting Common Stock by RPM International Inc.; 100% of the outstanding Series A Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series B Preferred Stock (non-voting) by DAP Products Inc.; 100% of the outstanding Series C Preferred Stock (non-voting) by The Euclid Chemical Company; 100% of the outstanding Series D Preferred Stock (non-voting) by Republic Powdered Metals, Inc.; 100% of the outstanding Series E Preferred Stock (non-voting) by Rust-Oleum Corporation; 100% of the outstanding Series F Preferred Stock (non-voting) by The Testor Corporation; 100% of the outstanding Series G Preferred Stock (non-voting) by Tremco Incorporated; 100% of the outstanding Series I Preferred Stock (non-voting) by Zinsser Co., Inc.; and 100% of the outstanding Series J Preferred Stock (non-voting) by Tremco Barrier Solutions, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares of Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares of Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
	Weatherproofing Technologies, Inc. owns .0025% of the outstanding shares of Toxement S.A., a Colombian corporation. Of the remaining outstanding shares of Toxement S.A., Grandcourt N.V. owns 50.99%, The Euclid Chemical Company owns 49% and Euclid Chemical International Sales Corp., Redwood Transport, Inc. and Tremco Incorporated each own .0025%.

17

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

     We hereby consent to the incorporation by reference of our report dated July 7, 2005 in the Annual Report on Form 10-K for the year ending May 31, 2005, in RPM International Inc.’s Registration Statements on Form S-3 (Reg. No. 333-108647) and Forms S-8 (Reg. Nos. 33-32794, 1989 Stock Option Plan; 333-35967 and 333-60104, 1996 Stock Option Plan; 333-101512, Deferred Compensation Plan; 333-101501, 401(k) Trust and Plan and Union 401(k) Retirement Savings Trust and Plan; 333-117581, 2003 Restricted Stock Plan for Directors; and 333-120067, 2004 Omnibus Equity and Incentive Plan).

  /s/ Ciulla, Smith & Dale, LLP  

Ciulla, Smith & Dale, LLP 

August 15, 2005

EX-31.1

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION

I, Robert L. Matejka, certify that:

1.	I have reviewed this Annual Report on Form 10-K of RPM International Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 15, 2005
	/s/ Robert L. Matejka
	Robert L. Matejka
	Vice President, Chief Financial Officer and Controller

EX-31.2

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION

I, Frank C. Sullivan, certify that:

1.	I have reviewed this Annual Report on Form 10-K of RPM International Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 15, 2005
	/s/ Frank C. Sullivan
	Frank C. Sullivan
	President and Chief Executive Officer

EX-32.1

Exhibit 32.1

Certification

          Pursuant to 18 U.S.C. Section 1350, the undersigned officer of RPM International Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that the Company’s Annual Report on Form 10-K for the year ended May 31, 2005 (the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-K.

Dated: August 15, 2005	/s/ Robert L. Matejka
	Robert L. Matejka
	Vice President, Chief Financial Officer and Controller

          The foregoing Certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form 10-K or as a separate disclosure document.

EX-32.2

Exhibit 32.2

Certification

          Pursuant to 18 U.S.C. Section 1350, the undersigned officer of RPM International Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that the Company’s Annual Report on Form 10-K for the year ended May 31, 2005 (the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-K.

Dated: August 15, 2005	/s/ Frank C. Sullivan
	Frank C. Sullivan
	President and Chief Executive Officer

          The foregoing Certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form 10-K or as a separate disclosure document.