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, 2007

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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

          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 such filing requirements for the past 90 days. Yes þ No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of 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. o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

          (Check one):

Large accelerated filer þ       Accelerated filer o       Non-accelerated filer o

          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

          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, 2006, the last business day of the Registrant’s most recently completed second fiscal quarter) was approximately $2,383,375,182. For purposes of this information, the 1,389,849 outstanding shares of Common Stock which were owned beneficially as of November 30, 2006 by executive officers and Directors of the Registrant were deemed to be the shares of Common Stock held by affiliates.

As of July 18, 2007, 121,178,494 shares of Common Stock were outstanding.

Documents Incorporated by Reference

          Portions of the Registrant’s 2007 Annual Report to Stockholders for the fiscal year ended May 31, 2007 (the “2007 Annual Report to Stockholders”) are incorporated by reference into Parts I and II of this Annual Report on Form 10-K. Portions of the definitive Proxy Statement to be used in connection with the Registrant’s Annual Meeting of Stockholders to be held on October 4, 2007 (the “2007 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K.

          Except as otherwise stated, the information contained in this Annual Report on Form 10-K is as of May 31, 2007.

Explanatory Note

Subsequent to the release of financial results on July 23, 2007 we have reclassified $11.6 million from Cash From Operating Activities to the Effect of Exchange Rate Changes on Cash and Short-Term Investments as shown in the Consolidated Statements of Cash Flows. The reclassification had no impact on net income or cash reported at year end. The Consolidated Statements of Cash Flows contained in Exhibit 13.1 of this Form 10-K reflect the reclassified balances.

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TABLE OF CONTENTS

PART I
	Item 1. Business
	Item 1A. Risk Factors
	Item 1B. Unresolved Staff Comments
	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 Registrant’s 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, Executive Officers and Corporate Governance
	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, and Director Independence
	Item 14. Principal Accountant Fees and Services
PART IV
	Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
Exhibit Index
Exhibit 10.6.3
Exhibit 10.13.3
Exhibit 10.13.5
Exhibit 10.13.6
Exhibit 10.13.7
Exhibit 10.15.6
Exhibit 10.16.3
Exhibit 10.17.1
Exhibit 10.18.3
Exhibit 13.1
Exhibit 21.1
Exhibit 23.1
Exhibit 23.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

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 our 2002 reincorporation, we established a new legal structure, which included the formation of two new, wholly-owned subsidiaries of RPM International Inc., the RPM Consumer Holding Company and the RPM Industrial Holding Company. These two holding companies and RPM, Inc. own the various operating companies and other legal entities that make up RPM International Inc. As an additional 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,” the “Company,” “we,” “our” and “us” refer to RPM International Inc. and all of our subsidiaries, unless the context indicates otherwise. Our principal executive offices are located at 2628 Pearl Road, P.O. Box 777, Medina, Ohio 44258, and our telephone number is (330) 273-5090.

BUSINESS

          Our subsidiaries manufacture, market and sell various specialty chemical product lines, including 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. Our family of products includes those marketed under brand names such as CARBOLINE, DAP, DAY-GLO, DRYVIT, EUCO, FLECTO, ILLBRUCK, RUST-OLEUM, STONHARD, TREMCO and ZINSSER. As of May 31, 2007, our subsidiaries marketed products in 149 countries and territories and operated manufacturing facilities in approximately 90 locations in the United States, Argentina, Belgium, Canada, China, Colombia, The Czech Republic, Germany, Italy, Mexico, The Netherlands, New Zealand, Poland, South Africa, the United Arab Emirates and the United Kingdom. Approximately 33% of our 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, 2007, we recorded net sales of $3.3 billion.

Available Information

          Our Internet website address is www.rpminc.com. We make available free of charge on or through our website our 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.

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Segment Information

          Our business is divided into two reportable operating segments: the consumer segment and the industrial segment. Within each reportable operating segment, individual groups of companies and product lines generally address common markets, utilize similar technologies and are able to share manufacturing or distribution capabilities. The industrial segment, which comprises approximately 63% of our total net sales, includes maintenance and protection products for roofing and waterproofing systems, flooring, corrosion control and other specialty applications. The consumer segment comprises approximately 37% of our total net sales and includes rust-preventative, special purpose and decorative paints, caulks, sealants, primers and other branded consumer products. See Note J (Segment Information) of the Notes to Consolidated Financial Statements, which appear in the 2007 Annual Report to Stockholders, incorporated herein by reference, for financial information relating to our two reportable operating segments and financial information by geographic area.

Industrial Segment

          Our industrial segment products are sold throughout North America and also account for the majority of our international sales. Our industrial product lines are sold directly to contractors, distributors and end-users, such as owners of industrial manufacturing facilities, public institutions and other commercial customers. Our industrial segment generated $2.1 billion in net sales for the fiscal year ended May 31, 2007 and is composed of the following major product lines and brand names:

• sealants and institutional roofing systems used in building protection, maintenance and weatherproofing applications marketed under our TREMCO, REPUBLIC, VULKEM and DYMERIC brand names;

• basement waterproofing sealants marketed under our TUFF-N-DRI and WATCHDOG WATERPROOFING brand names, and specialized roofing maintenance and related services marketed under our WEATHERPROOFING TECHNOLOGIES brand name;

• joint sealing tapes, flashing tapes, cartridge sealants and adhesives, strips, foils and accessories marketed under our ILLBRUCK, FESTIX, PERENNATOR and COCO brand names;

• high-performance polymer flooring systems for industrial, institutional and commercial facility floor surfaces marketed under our STONHARD brand name;

• industrial and commercial tile systems marketed under our LOCK-TILE and ECOLOC brand names;

• fiberglass reinforced plastic gratings and shapes used for industrial platforms, staircases and walkways marketed under our FIBERGRATE, CHEMGRATE and CORGRATE brand names;

• high-performance, heavy-duty corrosion-control coatings, fireproofing products and containment linings for a wide variety of industrial infrastructure applications marketed under our CARBOLINE, NULLIFIRE, A/D FIRE, NU-CHEM and PLASITE brand names;

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

• a variety of products for specialized applications, including powder coatings for exterior and interior applications marketed under our TCI brand name;

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• fluorescent colorants and pigments marketed under our DAY-GLO brand name;

• concrete and masonry additives and related construction chemicals marketed under our EUCO brand name;

• commercial carpet and floor cleaning solutions marketed under our CHEMSPEC brand name;

• specialty adhesives and sealants marketed under our COMPACTA and PACTAN brand names;

• fuel additives marketed under our VALVTECT brand name;

• wood treatments marketed under our KOP-COAT brand name;

• pleasure marine coatings marketed under our PETTIT, WOOLSEY and Z-SPAR brand names;

• and waterproofing and concrete repair products marketed under our VANDEX brand name.

Consumer Segment

          Our consumer segment manufactures and markets professional use and do-it-yourself (“DIY”) products for a variety of mainly consumer applications, including home improvement, automotive maintenance and boat repair, and personal leisure activities. Our consumer segment’s major manufacturing and distribution operations are located primarily in North America. Consumer segment products are sold throughout North America directly to mass merchandisers, home improvement centers, hardware stores, paint stores, automotive supply stores, craft shops and to other smaller customers through distributors. Our consumer segment generated $1.2 billion in net sales in the fiscal year ended May 31, 2007 and is composed of the following major product lines and brand names:

• a broad line of coating products to protect and decorate a wide variety of surfaces for the DIY and professional markets which are sold under several key RUST-OLEUM brand names, including STOPS RUST, AMERICAN ACCENTS, PAINTER’S TOUCH, SPECIALTY, PROFESSIONAL, TREMCLAD, VARATHANE, WATCO, EPOXY SHIELD, INDUSTRIAL CHOICE, LABOR SAVER, ROAD WARRIOR, SIERRA PERFORMANCE, HARD HAT, MATHYS, COMBI COLOR, NOXYDE and BLACKFRIAR;

• a complete line of caulks, sealants and adhesives for home improvement, construction and the autobody aftermarket, marketed through a wide assortment of DAP and BONDO branded products, including ALEX, ALEX PLUS, ALEX FAST DRY, KWIK SEAL, KWIK SEAL PLUS, SIDEWINDER, DYNAFLEX 230, PHENOSEAL, MONO, SEAL ‘N PEEL, WELDWOOD, BLUESTIK, ONE STIK, SPRAY ‘N STIK, STIKAROUNDS, STRONGSTIK, EPOXYSTIK, BEATS THE NAIL, ‘33’, BLEND STICK, PLASTIC WOOD, FAST ‘N FINAL , DRYDEX, EASY SOLUTIONS, CRACKSHOT, PRESTO PATCH, QUICK PLUG, DAPTEX, KWIK FOAM, 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, mold and mildew prevention, wallpaper removal and application, and waterproofing, under our ZINSSER, B-I-N, BULLS EYE 1-2-3, COVER-STAIN, DIF, FAST PRIME, SEALCOAT, JOMAX, GARDZ, PERMA WHITE, SHIELDZ, WATERTITE, OKON, PARKS, PAPERTIGER and WALWORKS brand names;

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• an assortment of other products, including hobby paints and cements marketed under our TESTORS brand name;

• wood furniture finishes and touch-up products marketed under our CCI, MOHAWK, CHEMICAL COATINGS, BEHLEN and WESTFIELD COATINGS brand names;

• deck and fence restoration products marketed under our WOLMAN brand name;

• metallic and faux finish coatings marketed under our MODERN MASTERS brand name;

• and shellac-based-specialty coatings for industrial and pharmaceutical uses, edible glazes and food coatings marketed under our MANTROSE-HAEUSER and NATURE SEAL brand names.

Foreign Operations

          For the fiscal year ended May 31, 2007, our foreign manufacturing operations accounted for approximately 30% of our total net sales, excluding any direct exports from the United States. Our direct exports from the United States were 3% of our total net sales for the fiscal year ended May 31, 2007. In addition, we receive license fees and royalty income from numerous international license agreements, and we also have several joint ventures, which are accounted for under the equity method, operating in various foreign countries. We have manufacturing facilities in Argentina, Belgium, Canada, China, Colombia, The Czech Republic, Germany, Italy, Mexico, The Netherlands, New Zealand, Poland, South Africa, the United Arab Emirates and the United Kingdom. We also have sales offices or warehouse facilities in Australia, Belgium, The Czech Republic, Canada, Finland, France, Germany, Hong Kong, Italy, Japan, Mexico, Poland, Russia, South Africa, Singapore, Sweden, the United Kingdom and several other countries. Information concerning our foreign operations is set forth in Management’s Discussion and Analysis of Results of Operations and Financial Condition, which appears in the 2007 Annual Report to Stockholders, incorporated herein by reference.

Competition

          We conduct our business in highly competitive markets, and all of our major products face competition from local, regional and national firms. Our markets, however, are fragmented, and we do not face competition across all of our products from any one competitor in particular. Several of our competitors have access to greater financial resources and larger sales organizations than we do. While third-party figures are not necessarily available with respect to the size of our position in the market for each of our products, we believe that we are a major producer of roofing systems, urethane sealants and waterproofing materials, 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, fiberglass-reinforced-plastic gratings, and shellac-based coatings. However, we do not believe that we have a significant share of the total protective coatings market (on a world-wide basis). The following is a summary of the competition our key products face in the various markets in which we compete.

          Paints, Coatings, Adhesives and Sealants Products

          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 for industry participants. Many leading suppliers tend to focus on coatings, while other companies focus on adhesives and sealants. Barriers to market entry are relatively high for new markets entrants due to the lengthy intervals between product development and market

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acceptance, the importance of brand identity and the difficulty in establishing a reputation as a reliable supplier of these products. Most of the suppliers, including us, who provide these items have a portfolio of products that span across a wide variety of applications.

          Consumer Home Improvement Products. Within the consumer segment, we generally serve the home improvement market with products designed for niche architectural, rust-preventative, decorative, special purpose, caulking and sealing applications. The products we sell for home improvement include, but are not limited to, those sold under our BONDO, DAP, PHENOSEAL, 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.

          Industrial Protective Coatings Products. 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. We and our competitors compete for market share by supplying a wide variety of high-quality products and offering customized solutions. Our industrial coating products are marketed primarily under our CARBOLINE, PLASITE, NULLIFIRE, A/D FIRE and TCI brand names.

          Roofing Systems Products

          In the roofing industry, reroofing applications have historically accounted for three-quarters of U.S. demand, with the remaining quarter generated by new roofing applications. The largest manufacturers of roofing systems products focus primarily on residential roofing as well as single-ply systems for low-end, commercial and institutional applications, competing mainly on price and, to a lesser degree, on service. In contrast, we compete primarily for the higher-end, multi-ply and modified bitumen applications in the built-up and low-slope roofing industry. This specialty niche within the larger market tends to exhibit fewer 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. Our roofing systems products are sold primarily under a number of our TREMCO brand names.

          Construction Chemical Products

          Flooring Systems Products. 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 while being easy to clean and maintain. These systems 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 systems and 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 of these flooring systems are applied during new construction, but there is also a significant repair and renovation market. Key performance attributes in polymer flooring systems that

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distinguish competitors for these applications include static control, chemical resistance, contamination control, durability and aesthetics. We market our flooring systems primarily under our STONHARD brand names.

          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 a high strength-to-weight ratio, high corrosion resistance, electrical and thermal non-conductivity, and molded-in color, which eliminates the need for 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 product quality, depth of product line, and design-and-fabrication services. Our products for these applications are sold under our FIBERGRATE, CHEMGRATE, CORGRATE and SAFE-T-SPAN brand names.

          Sealants, Concrete and Masonry Products. Sealants, which are used in a variety of construction applications, include urethane and silicone-based products designed for sealing windows, sealing concrete, for waterproofing and fireproofing primarily for commercial buildings. 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 their functional characteristics, such as water-reducers, set controllers, superplasticizers and air-entraining agents. The key attributes that differentiate competitors for these applications include quality assurance, on-the-job consultation and value-added, highly-engineered products. We primarily offer products marketed under our TREMCO, EUCO, ILLBRUCK, TAMMS, REPUBLIC, VULKEM, DYMERIC, TUFF-N-DRI and WATCHDOG WATERPROOFING brand names for this line of business.

Intellectual Property

          Our intellectual property portfolios include valuable patents, trade secrets and know-how, domain names, trademarks, trade and brand names. In addition, through our subsidiaries, we continue to conduct significant research and technology development activities. Among our most significant intangibles are our DAY-GLO^®, RUST-OLEUM^®, CARBOLINE^®, DAP^® and TREMCO^® trademarks.

          Day-Glo Color Corp., one of our subsidiaries, is the owner of 50 trademark registrations or applications for the trademark “DAY-GLO^®” in the United States and numerous other countries for a variety of fluorescent products. There are also many other foreign and domestic registrations or applications for other trademarks of the Day-Glo Color Corp., bringing the total number of registrations or applications to more than 120.

          Rust-Oleum Brands Company and some of our other subsidiaries own more than 500 trademark registrations or applications in the United States and numerous other countries for the trademark “RUST-OLEUM^®” and other trademarks covering a variety of rust-preventative, decorative, general purpose, specialty, industrial and professional coatings sold by Rust-Oleum Corporation and related companies.

          Carboline Company, one of our subsidiaries, is the owner of two United States trademark registrations for the trademark “CARBOLINE^®.” Carboline Company is also the owner of more than 200 other trademark registrations or applications in the United States and numerous other countries covering the products sold by the Carboline Company.

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          DAP Brands Company and other subsidiaries of the Company own more than 500 trademark registrations or applications in the United States and numerous other countries for the “DAP^®,” the “PUTTY KNIFE design” trademark and other trademarks covering products sold under the DAP brand and related brands.

          Tremco Incorporated and some of our other subsidiaries own more than 100 registrations for the trademark “TREMCO^®” in the United States and numerous countries covering a variety of roofing, sealants and coating products. There are also many other trademarks of Tremco Incorporated that are the subject of registrations or application in the United States and numerous other countries, bringing the total number of registrations and applications to more than 800.

          Our other principal product trademarks include: ALUMANATION^®, B-I-N^®, BITUMASTIC^®, BONDO^®, BULLS EYE 1-2-3^®, CHEMGRATE^®, DRYVIT^®, DYMERIC^®, DYNALITE^®, DYNATRON^®, EASY FINISH^®, EUCO^®, FLECTO^®, EPOXSTEEL^®, FIBERGRATE^®, FLOQUIL^®, GEOFLEX^®, ILLBRUCK^®, MAR-HYDE^®, MOHAWK^®, OUTSULATION^®, PARASEAL^®, PERMAROOF^®, PETTIT™, PLASITE^®, SANITILE^®, STONBLEND^®, STONCLAD^®, STONHARD^®, STONLUX^®, TCI^®, TESTORS^®, ULTRALITE™, VARATHANE^®, VULKEM^®, WOOLSEY^®, ZINSSER^® and Z-SPAR^®; and, in Europe, NULLIFIRE^®, RADGLO^® and MARTIN MATHYS™. Our existing and pending trademark registrations are valid for a variety of different terms of up to 20 years, and may be renewable as long as the trademarks continue to be used and all other local conditions for renewal are met. Our trademark registrations are maintained and renewed on a regular basis as required.

Raw Materials

          We do not have any single source suppliers of raw materials that are material to our business, and we believe that alternative sources of supply are available for most of our key raw materials. When shortages of raw materials have occurred, we have, on occasion, been able to reformulate our products to be able to use more readily available raw materials. Although we have been able to reformulate products to use more readily available raw materials in the past, we cannot guarantee that we 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 42 months. For the fiscal year ended May 31, 2007, increased raw material costs negatively impacted our consolidated gross profit margin by approximately 130 basis points compared to the prior year. (One hundred basis points is equivalent to one percentage point.)

Seasonal Factors

          Our business is dependent to a significant extent on external weather factors. We historically experience stronger sales and net income in our first, second and fourth fiscal quarters, which are the three month periods ending August 31, November 30 and May 31, respectively, while we have experienced weaker performance in our third fiscal quarter.

Customers

          Ten large consumer segment customers, such as DIY home centers, represented approximately 20% of our total net sales for the fiscal year ended May 31, 2007, while this same group accounted for approximately 22% of our total net sales for the prior fiscal year. Sales to The Home Depot represented 9% of our total sales for fiscal 2007. Except for sales to these customers, our

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business is not dependent upon any one customer or small group of customers, but is largely dispersed over a substantial number of customers.

Backlog

          We historically have not had a significant backlog of orders, and we did not have a significant backlog during the year ended May 31, 2007.

Research and Development

          Our research and development work is performed at various laboratory locations throughout the United States. During fiscal years 2007, 2006 and 2005, we spent approximately $34.7 million, $32.3 million and $28.9 million, respectively, on research and development activities. In addition to this laboratory work, we view our field technical service as being integral to the success of our research activities. Our research and development activities and our field technical service costs are both included as part of our selling, general and administrative expenses.

Environmental Matters

          We are subject to a broad range of laws and regulations dealing with the environment, health and safety in the various locations around the world in which we conduct our business. These laws and regulations include, but are not limited to, the following major areas:

• 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 our employees.

          We are also required to obtain permits from various governmental authorities for certain operations. We cannot guarantee that our subsidiaries or their plants have been or will be at all times in complete compliance with all such laws, regulations and permits. If we or any of our subsidiaries violate or fail to comply with these laws, regulations or permits, we 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 our 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, we or our 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.

          We have incurred in the past, and will continue to incur in the future, costs to comply with environmental laws. Environmental laws and regulations are complex, change frequently and have tended to become increasingly stringent over time. In addition, the related costs may vary

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depending on the particular facts and development of new information. As a result, our operating expenses and continuing capital expenditures related to compliance with environmental laws may increase, and more stringent standards also may limit our operating flexibility. A significant increase in these costs and capital expenditures could adversely affect our business, results of operations, financial condition or cash flows. In addition, to the extent hazardous materials exist on or under our real property, the value and future use of that real property may be adversely affected. For information regarding environmental accruals, see Note I (Contingencies and Loss Reserves) of the Notes to our Consolidated Financial Statements, which appear in the 2007 Annual Report to Stockholders, incorporated herein by reference.

Employees

          As of May 31, 2007, we employed 9,424 persons, of whom 683 were represented by unions under contracts which expire at varying times in the future. We believe that our relations with our employees and their unions are good.

Item 1A. Risk Factors.

          You should carefully consider the following risks, as well as the other information contained or incorporated by reference in this Annual Report on Form 10-K, in evaluating us, our business and your investment in us. If any of the following risks actually occur, our business, financial condition, operating results or cash flows could be harmed. Additional risks, uncertainties and other factors that are not currently known to us or that we believe are not currently material may also adversely affect our business, financial condition, operating results or cash flows.

Our significant amount of indebtedness or our asbestos liability could have a material adverse impact on our business.

          We have a significant amount of indebtedness and a large asbestos liability. Our total debt increased from $876.6 million at May 31, 2006 to $988.1 million at May 31, 2007, largely as a result of acquisition activities during that time period. Our asbestos reserve stood at $354.3 million at May 31, 2007. These items compare with $1,086.9 million in stockholders’ equity at May 31, 2007. Nevertheless, our level of indebtedness and our asbestos liability together or separately could have important consequences to you. For example, the presence of these items:

• may require us to dedicate a material portion of our cash flow from operations to make payments on our indebtedness or meet our asbestos obligations, thereby reducing the cash flow available to fund working capital, capital expenditures, acquisitions, dividend payments, stock repurchases or other general corporate requirements;

• could result in a downgrading of our credit rating, which would increase our borrowing costs, adversely affect our financial results, and make it more difficult for us to raise capital;

• may restrict our operational flexibility and reduce our ability to conduct certain transactions, since our credit facility contains certain restrictive financial and operating covenants;

• may limit our flexibility to adjust to changing business and market conditions, which would make us more vulnerable to a downturn in general economic conditions;

• and may have a material adverse effect on our short-term liquidity if large debt maturities and asbestos-related cash outlays occur in close succession.

10

Changes to the Company’s asbestos liability could impact our results of operations, and ultimately the amount of cash required to settle our current and future obligations.

          In the fourth quarter of 2006, we recorded an asbestos liability on our balance sheet to cover the estimated cost of pending claims and unasserted potential future claims, including defense-related costs, through fiscal 2016. The amount that we recorded for our asbestos-related liability was based on facts known to us at the time and the input of an independent third-party expert. In light of the uncertainties inherent in making long-term projections, we have determined that a ten-year period is the most reasonable time period over which reasonably accurate estimates might still be made for projecting asbestos liabilities and defense costs and, accordingly, the reserve does not include asbestos liabilities for any period beyond ten years. The process and methodology used to develop our long-term asbestos liability estimate are set forth in Note I of the Notes to Consolidated Financial Statements, which appear in the 2007 Annual Report to Stockholders. Our actual expenses for asbestos could be significantly higher or lower than those estimated and recorded, if the assumptions that we used or relied upon vary significantly from actual results or if federal trust fund legislation or other new legislation governing asbestos claims were enacted. We review our assumptions and currently known facts on a periodic basis to determine whether any adjustments are required to our asbestos-related liability. Adjustments, if any, to the estimate of our asbestos-related liability could negatively impact our results of operations for the period or periods in which such adjustments are made and, ultimately, increase the amount of cash necessary to meet our asbestos-related obligations. We do not maintain a sinking fund for our asbestos liability. See Note I of the Notes to Consolidated Financial Statements, which appear in the 2007 Annual Report to Stockholders for additional information regarding asbestos claims.

Fluctuations in the supply and prices of raw materials may negatively impact our financial results.

          We obtain the raw materials needed to manufacture our products from a number of suppliers. Many of our raw materials are petroleum-based derivatives, minerals and metals. Under normal market conditions, these materials are generally available on the open market and from a variety of producers. From time to time, however, the prices and availability of these raw materials fluctuate, which could impair our ability to procure necessary materials or increase the cost of manufacturing our products. If the prices of raw materials continue to increase and we are unable to pass these increases on to our customers, we will continue to experience reduced gross profit margins.

          Due to the broad impact of Hurricanes Katrina and Rita on the petrochemical industry and other factors, the costs of certain raw materials, particularly resins and petroleum-based feedstocks, have continued to increase over the last 42 months. For the fiscal year ended May 31, 2007, increased raw material costs negatively impacted our consolidated gross profit margin by approximately 130 basis points. If such cost increases continue and we are unable to raise our prices sufficiently, our results of operations will continue to be adversely affected.

The markets in which we operate are highly competitive and some of our competitors may be larger and may have greater financial resources than we do.

          The markets in which we operate are fragmented, and we do not face competition from any one company across all of our product lines. However, any significant increase in competition may cause us to lose market share or compel us to reduce prices to remain competitive, which could result in reduced gross margins. Increased competition may also impair our ability to grow or to maintain our current levels of revenues and earnings. Companies that compete in our

11

markets include Carlisle, Degussa, GE Plastics, ICI, Masco, PPG, Rohm and Haas, Sika Finanz, Sherwin-Williams and Valspar. Several of these companies are much larger than we are and may have greater financial resources than we do. Increased competition with these companies could prevent the institution of price increases or could require price reductions or increased spending to maintain our market share, any of which could adversely affect our results of operations.

We depend on a number of large customers for a significant portion of our net sales and, therefore, significant declines in the level of purchases by any of these key customers could harm our business.

          Some of our operating companies, particularly in the consumer segment, face a substantial amount of customer concentration. Our key customers include Ace Hardware Stores, Canadian Tire, Cotter & Company, Do It Best, The Home Depot, Lowe’s Home Centers, Menards, Orgill, W.W. Grainger and Wal-Mart. Sales to our ten largest customers accounted for approximately 20%, 22% and 25% of our consolidated net sales for the fiscal years ended May 31, 2007, 2006 and 2005, respectively, and 55%, 55% and 57%, respectively, of the consumer segment’s net sales for those same fiscal years. Sales to The Home Depot accounted for approximately 9%, 10% and 11% of our consolidated net sales and 24%, 25% and 26% of our consumer segment net sales for the fiscal years ended May 31, 2007, 2006 and 2005, respectively. If we were to lose one or more of our key customers, or experience a delay or cancellation of a significant order, or incur a significant decrease in the level of purchases from any of our key customers, or experience difficulty in collecting amounts due from a key customer, our net revenues could decline and our operating results could be reduced materially.

Many of our customers operate in cyclical industries, and downward economic cycles may have a material adverse effect on our business.

          Many of our customers, across both reportable segments, are in businesses and industries that are cyclical in nature and sensitive to changes in general economic conditions, interest rates, construction activity, and other factors, including changes in consumer spending and preferences. As a result, the demand for our products by these customers depends, in part, upon general economic conditions. Downward economic cycles affecting the markets of our customers may reduce the sales of our products resulting in material reductions to our revenues and net earnings.

A loss in the actual or perceived value of our brands could limit or reduce the demand for our products.

          Our family of products includes a number of well-known brand names that are used in a variety of industrial maintenance, consumer do-it-yourself and professional applications. We believe that continuing to maintain the strength of our brands is critical to increasing demand for our products and maintaining their widespread acceptance among our customers. The reputations of our branded products depend on numerous factors, including the successful advertising and marketing of our brand names, consumer acceptance, the availability of similar products from our competitors, and our ability to maintain our products’ quality and technological advantages. A loss in the actual or perceived value of our brands could limit or reduce the demand for our products.

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Our business and financial condition could be adversely affected if we are unable to protect our material trademarks and other proprietary information.

          We have numerous valuable patents, trade secrets and know-how, domain names, trademarks and trade names, including certain marks that are significant to our business, which are identified under Item 1 of this Report. Despite our efforts to protect our trademarks and other proprietary rights from unauthorized use or disclosure, other parties, including our former employees or consultants, may attempt to disclose, obtain or use our proprietary information or marks without our authorization. Unauthorized use of our trademarks, or unauthorized use or disclosure of our other intellectual property, could negatively impact our business and financial condition.

The chemical and construction products industries in which we serve expose us to inherent risks of legal claims and other litigation-related costs, which could adversely impact our business.

          As a participant in the chemical and construction products industries, we face an inherent risk of exposure to legal claims in the event that the failure, use or misuse of our products results, or is alleged to result, in bodily injury and/or property damage. For example, one of our subsidiaries, Dryvit Systems, Inc. (“Dryvit”), a manufacturer of coatings for exterior insulating finishing systems, or EIFS, is a defendant or co-defendant in numerous ongoing property damage claims related to the alleged defects of EIFS. Some of the EIFS claims also stem from alleged personal injuries from exposure to mold. Dryvit’s and our insurers, which include First Colonial Insurance Company, one of our wholly-owned, captive insurance companies, have in the past paid for a substantial portion of Dryvit’s defense and/or settlement costs in the EIFS-related litigation. Dryvit has recently sued certain of our third party insurers to cover certain of its EIFS claims. The status of this litigation is such that we have recorded an insurance receivable for amounts contractually due and payable to us under the related insurance policies. If, however, we are unable to secure payments from these insurers in an amount sufficient to cover this insurance receivable, our business, cash flows and results of operations may be materially and adversely impacted. For further information regarding our EIFS litigation, please refer to Note I of the Notes to Consolidated Financial Statements included in the 2007 Annual Report to Stockholders.

Compliance with environmental laws and regulations could subject us to unforeseen future expenditures or liabilities, which could have a material adverse impact on our business.

          We are subject to numerous environmental laws and regulations in the U.S., Canada and other foreign countries where we conduct business. Governmental and regulatory authorities impose various laws and regulations on us that relate to environmental protection, the sale and export of certain chemicals or hazardous materials, and various health and safety matters, including the discharge of pollutants into the air and water, the handling, use, treatment, storage and clean-up of solid and hazardous wastes, and the investigation and remediation of soil and groundwater affected by hazardous substances. These laws and regulations include the Clean Air Act, the Clean Water Act, RCRA, CERCLA, TSCA, and various other federal, state, provincial, local and international statutes. In addition, these laws and regulations often impose strict, retroactive and joint and several liability for the costs of, and damages resulting from, cleaning up our, or our predecessors’, past or present facilities, and third party disposal sites. We are currently undertaking remedial activities at a number of facilities and properties and have received notices under the federal Comprehensive Environmental Response, Compensation and Liability Act or analogous state laws of liability or potential liability in connection with the disposal of material from our current or former operations. Further, we also could be subject to future liability resulting from conditions that are currently unknown to us that could be discovered in the future.

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          The environmental laws under which we operate are numerous, complicated and often increasingly stringent, and may be applied retroactively. As a result, we have not always been and may not always be in full compliance with all environmental, health and safety laws and regulations in every jurisdiction in which we conduct our business. In addition, if we violate or fail to comply with environmental laws, we could be fined or otherwise sanctioned by regulators. We also could be liable for consequences arising out of human exposure to hazardous substances relating to our products or operations. Accordingly, we cannot guarantee that we will not be required to make additional expenditures to remain in or to achieve compliance with environmental laws in the future or that any such additional expenditures will not have a material adverse effect on our business, financial condition, results of operations or cash flows.

Our businesses are subject to extensive environmental and safety laws and regulations that may restrict or adversely impact our ability to conduct our business.

          Our businesses are also dependent on the issuance of operating permits and registrations required from government agencies. In connection with the performance of certain activities, our businesses are required to seek permission from agencies in the states, provinces, and countries in which they operate. If regulatory permits or registrations are delayed, restricted, or rejected, subsequent operations at our businesses could be delayed or restricted.

          Any regulatory agency could reject or delay the review of any of our business filings. Delays in obtaining necessary permits and registrations could have an adverse effect on our results of operations. Failure to comply with applicable environmental and safety laws and regulations or permit requirements could result in substantial civil or criminal fines and penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations, remedial or corrective measures, installations of pollution control equipment, or other actions. This could have a material adverse effect on our business, financial condition and operating results.

If our efforts in acquiring and integrating other companies or product lines or establishing joint ventures fail, our business may not grow.

          As part of our growth strategy, we intend to continue pursuing acquisitions of complementary businesses or products and creating joint ventures. Our ability to continue to grow in this manner depends upon our ability to identify, negotiate and finance suitable acquisitions or joint venture arrangements. In addition, acquisitions and their subsequent integration involve a number of risks, including, but not limited to:

• inaccurate assessments of disclosed liabilities and the potentially adverse effects of undisclosed liabilities;

• unforeseen difficulties in assimilating acquired companies, their products, and their culture into our existing business;

• unforeseen delays in realizing the benefits from acquired companies or product lines, including projected efficiencies, cost savings, revenue synergies and profit margins;

• unforeseen diversion of our management’s time and attention from other business matters;

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• unforeseen difficulties resulting from insufficient prior experience in any new markets we may enter;

• unforeseen difficulties in retaining key employees and customers of acquired businesses;

• and increases in our indebtedness and contingent liabilities, which could in turn restrict our ability to raise additional capital when needed or to pursue other important elements of our business strategy.

          Execution of our acquisition strategy with respect to some companies or product lines could fail or could result in unanticipated costs to us that were not apparent despite our due diligence efforts, either of which could hinder our growth or adversely impact our results of operations.

We derive a significant amount of our revenues from foreign markets, which subjects us to additional business risks that could adversely affect our results of operations.

          Our foreign manufacturing operations accounted for approximately 30% of our net sales for the fiscal year ended May 31, 2007, not including exports directly from the United States which accounted for approximately 3% of our net sales for fiscal 2007. Our international operations could be adversely affected by changes in political and economic conditions, inflation rates, trade protection measures, restrictions on foreign investments and repatriation of earnings, changing intellectual property rights, difficulties in staffing and managing foreign operations and changes in regulatory requirements that restrict the sales of our products or increase our costs. Also, changes in exchange rates between the U.S. dollar and other currencies could potentially result in material volatility in our costs and earnings and may also adversely affect the carrying values of our assets located outside the United States.

          In many foreign countries, it is acceptable to engage in certain business practices that we are prohibited from engaging in because of regulations that are applicable to us, such as the Foreign Corrupt Practices Act. Although we have internal control policies and procedures designed to ensure compliance with these regulations, there can be no assurance that our policies and procedures will prevent a violation of these regulations. Any violation could cause an adverse effect on our results of operations.

We could be adversely affected by global tax law changes.

          Our operations are subject to various federal, state, local and foreign tax laws and regulations which govern, among other things, taxes on worldwide income. Future tax law changes, if any, may increase applicable tax rates or impose stricter compliance requirements in the jurisdictions in which we operate, which could reduce our consolidated net earnings.

Terrorist activities and other acts of violence or war and natural disasters have negatively impacted in the past and could negatively impact in the future the U.S. and foreign countries, the financial markets, the industries in which we compete, our operations and profitability.

          Terrorist activities and natural disasters have contributed to economic instability in the United States and elsewhere, and further acts of terrorism, violence, war or natural disasters could affect the industries in which we compete, our ability to purchase raw materials, our results of operations and financial condition. In addition, terrorist activities and natural disasters may directly impact our physical facilities or those of our suppliers or customers, which could impact our sales, our production capability and our ability to deliver products to our customers. Any disruption of our

15

ability to produce or distribute our products could result in a material decrease in our revenues or significant additional costs to replace, repair or insure our assets, which could have a material adverse impact on our financial condition and results of operations.

Although we have insurance it may not cover every potential risk associated with our operations.

          Although we maintain insurance of various types to cover many of the risks and hazards that apply to our operations, our insurance will not cover every potential risk associated with our operations. The occurrence of a significant adverse event, the risks of which are not fully covered by insurance, could have a material adverse effect on our financial condition and results of operations. Moreover, no assurance can be given that we will be able to maintain adequate insurance in the future at rates we consider reasonable.

Adverse weather conditions may reduce the demand for some of our products and could have a negative effect on our sales.

          From time to time, adverse weather conditions in certain parts of the United States and other countries in which we do business have had an adverse effect on our sales of paint, coatings and related products. For example, unusually cold and rainy weather, especially during the general construction and exterior painting season, could have an adverse effect on sales of our exterior paint products.

Item 1B. Unresolved Staff Comments.

          Not Applicable.

Item 2. Properties.

          Our corporate headquarters and a plant and offices for one subsidiary are located on an 119-acre site, which we own in Medina, Ohio. As of May 31, 2007, the Company’s operations occupied a total of approximately 9.5 million square feet, with the majority, approximately 7.9 million square feet, devoted to manufacturing, assembly and storage. Of the approximately 9.5 million square feet occupied, 6.0 million square feet are owned and 3.5 million square feet are occupied under operating leases.

          Set forth below is a description, as of May 31, 2007, of our principal manufacturing facilities which we believe are material to our operations:

		Approximate
		Square Feet
	Business/	of
Location	Segment	Floor Space		Leased or Owned
Pleasant Prairie,	Rust-Oleum		303,200	Owned
Wisconsin	(Consumer)
Toronto, Ontario,	Tremco		207,200	Owned
Canada	(Industrial)
Newark,	Zinsser		182,418	Owned
New Jersey	(Consumer)
Cleveland,	Euclid Chemical		178,838	Owned
Ohio	(Industrial)

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		Approximate
		Square Feet
	Business/	of
Location	Segment	Floor Space		Leased or Owned
Cleveland, Ohio	Tremco		160,300	Owned
	(Industrial)
Bodenwoehr,	illbruck		151,171	Owned
Germany	(Industrial)
Cleveland, Ohio	Day-Glo		147,200	Owned
	(Industrial)
Baltimore,	DAP		144,200	Owned
Maryland	(Consumer)
Hagerstown,	Rust-Oleum		143,000	Owned
Maryland	(Consumer)
Arkel,	illbruck		140,067	Owned
Netherlands	(Industrial)
Tipp City, Ohio	DAP		140,000	Owned
	(Consumer)
Lake Charles,	Carboline		114,300	Owned
Louisiana	(Industrial)
Lesage, West	Zinsser		112,000	Owned
Virginia	(Consumer)
Somerset, New	Zinsser		110,000	Owned
Jersey	(Consumer)
Maple Shade,	Stonhard		77,500	Owned
New Jersey	(Industrial)

          We lease certain of our properties under long-term leases. Some of these 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 F (Leases) of the Notes to Consolidated Financial Statements, which appear in the 2007 Annual Report to Stockholders, incorporated herein by reference. Under all of our leases, we are obligated to pay certain varying insurance costs, utilities, real property taxes and other costs and expenses.

          We believe that our manufacturing plants and office facilities are well maintained and suitable for our operations.

Item 3. Legal Proceedings.

Asbestos Litigation

          Certain of our 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

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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 our subsidiaries or others.

          As of May 31, 2007, our subsidiaries had a total of 10,824 active asbestos cases compared to a total of 10,580 cases as of May 31, 2006. For the fourth quarter ended May 31, 2007, our subsidiaries secured dismissals and/or settlements of 608 claims and made total payments of $18.6 million, which included defense costs paid during the current quarter of $7.4 million. For the comparable period ended May 31, 2006, dismissals and/or settlements covered 106 claims and total payments were $12.9 million, which included defense costs paid during the quarter of $7.1 million. For the year ended May 31, 2007, our subsidiaries secured dismissals and/or settlements of 1,900 claims and made total payments of $67.0 million, which included defense costs paid during the current year of $27.7 million. For the comparable period ended May 31, 2006, dismissals and/or settlements covered 945 claims and total payments were $59.9 million, which included defense costs paid during the year of $24.0 million. Excluding defense costs, the average costs to resolve a claim, including dismissed claims, were $18,416 and $54,783 for each of the quarters ended May 31, 2007 and 2006, respectively; and $20,684 and $37,989 for each of the years ended May 31, 2007 and 2006, respectively. The amount and timing of dismissals and settlements can fluctuate significantly from period to period resulting in volatility in the average costs to resolve claims in any given quarter or year. In addition, 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.

          For additional information on our asbestos litigation, including a discussion of our asbestos reserve, see Note I of the Notes to Consolidated Financial Statements, which appear in the 2007 Annual Report to Stockholders.

EIFS Litigation

          As of May 31, 2007, Dryvit, one of our wholly-owned subsidiaries, was a defendant or co-defendant in various single family residential exterior insulated finish systems (“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.

          Dryvit is a defendant in a class action lawsuit 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”). A preliminary approval order was entered on April 8, 2002 in the Posey case for a proposed nationwide class action settlement which was subsequently approved after several appeals. The deadline for filing claims in the Posey class action expired on June 5, 2004 and claims have been processed during the pendency of the various appeals. On September 15, 2005, a final, non-appealable order was entered finally approving the nationwide class. As of June 30, 2007, 7,196

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total claims had been filed as of the June 5, 2004 claim filing deadline. Of these 7,196 claims, a total of 4,410 claims have been rejected or closed for various reasons under the terms of the settlement. A total of 1,158 of the remaining claims are at various stages of review and processing under the terms of the settlement and it is possible that some of these claims will be rejected or closed without payment. As of June 30, 2007, a total of 1,630 claims have been paid for a total of approximately $13.6 million. Additional payments have and will continue to be made under the terms of the settlement agreement, which include inspection costs, third party warranties and class counsel attorneys’ fees.

          Third party excess insurers have historically paid varying shares of Dryvit’s defense and settlement costs in the individual commercial and residential EIFS lawsuits under various cost-sharing agreements. Dryvit has assumed a greater share of the costs associated with its EIFS litigation as it seeks funding commitments from our third party excess insurers and will likely continue to do so pending the outcome of coverage litigation involving these same third party insurers. One of our excess insurers filed suit seeking a declaration with respect to its rights and obligations for EIFS related claims under its applicable policies. During last year’s third fiscal quarter, the court granted Dryvit’s motion to stay the federal filing based on a more complete state court complaint filed against these same insurers and the Company’s insurance broker. The coverage case is now proceeding in state court. Discovery in this litigation is ongoing. The trial is scheduled for December 3, 2007. For additional information on our Dryvit EIFS litigation, including a discussion of the existing reserves related to our Dryvit EIFS litigation, see Note I to the Consolidated Financial Statements, included in the 2007 Annual Report to Stockholders.

Environmental Proceedings

          As previously reported, several of our subsidiaries are, from time to time, identified as a “potentially responsible party” under the federal Comprehensive Environmental Response, Compensation and Liability Act and similar state environmental statutes. In some cases, our subsidiaries are participating in the cost of certain clean-up efforts or other remedial actions. Our share of such costs, however, has not been material and management believes that these environmental proceedings will not have a material adverse effect on our 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 July 30, 2007 are as follows:

Name	Age		Position and Offices with the Company
Frank C. Sullivan		46	President and Chief Executive Officer
Ronald A. Rice		44	Executive Vice President and Chief Operating Officer
P. Kelly Tompkins		50	Executive Vice President and Chief Administrative Officer
Paul G. Hoogenboom		47	Senior Vice President - Manufacturing and Operations and Chief Information Officer
Stephen J. Knoop		42	Senior Vice President - Corporate Development
Robert L. Matejka		64	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 1987 to February 1989 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 1987 and Harris Bank from 1983 to 1985. Mr. Sullivan is the son of Thomas C. Sullivan, Chairman of the Board of Directors of the Company.

          Ronald A. Rice was elected Executive Vice President and Chief Operating Officer on October 5, 2006. He served as Senior Vice President - Administration from October 11, 2002 to October 5, 2006 and Assistant Secretary from August 5, 1999 to October 5, 2006. 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 an Account Manager from 1992 to 1995.

          P. Kelly Tompkins was elected Executive Vice President and Chief Administrative Officer on October 5, 2006. He served as Senior Vice President of the Company from October 11, 2002 to October 5, 2006, served as General Counsel and Secretary from June 1998 to October 2006, 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.

          Paul G. Hoogenboom was elected Senior Vice President - Manufacturing and Operations and Chief Information Officer on October 5, 2006. Prior to that time, he served as Vice President - Operations, to which he was elected on August 1, 2000, and as Chief Information Officer, to

20

which he was elected 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.

          Stephen J. Knoop was elected Senior Vice President - Corporate Development on October 5, 2006. From August 1999 until October 2006, Mr. Knoop served as Vice President - Corporate Development. 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, specializing in the federal securities law compliance and merger and acquisitions practice areas.

          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.

PART II

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

          The information set forth at page 64 of the 2007 Annual Report to Stockholders under the heading “Quarterly Stock Price and Dividend Information” is incorporated herein by reference.

          The following table presents information about repurchases of RPM International Inc. Common Stock made by us during the fourth quarter of fiscal 2007:

							Maximum
	Total				Total Number of		Number of Shares
	Number of				Shares Purchased as		that May Yet be
	Shares				Part of Publicly		Purchased Under
	Purchased		Average Price		Announced Plans or		the Plans or
Period	(1)		Paid per Share		Programs		Programs
March 1, 2007 through March 31, 2007		—		—		—		—
April 1, 2007 through April 30, 2007		—		—		—		—
May 1, 2007 through May 31, 2007		4,021	$	22.70		—		—
TOTAL		4,021	$	22.70		—		—

(1) The number of shares reported as repurchased are attributable to shares that were withheld by us from employees in satisfaction of tax obligations of those employees related to the vesting of restricted stock which was granted under the 1997 Restricted Stock Plan and the 2004 Omnibus Equity and Incentive Plan.

Item 6. Selected Financial Data.

          The following table sets forth our selected consolidated financial data for each of the five years during the period ended May 31, 2007. The data was derived from our annual Consolidated Financial Statements which have been audited by Ernst & Young LLP, the Company’s independent

21

accountants for the fiscal years ended May 31, 2007 and 2006, and by Ciulla, Smith & Dale, LLP, our independent accountants for the fiscal years ended May 31, 2005, 2004 and 2003.

Fiscal Years Ended May 31,

	20071			20061			20051			2004			20031
	(Amounts in thousands, except per share and percentage data)
Net sales	$	3,338,764		$	3,008,338		$	2,555,735		$	2,307,553		$	2,053,482
Income (loss) before income taxes		307,535			(122,475	)		163,728			217,616			47,853
Net income (loss)		208,289			(76,205	)		105,032			141,886			35,327
Return on sales %		6.2	%		(2.5	)%		4.1	%		6.1	%		1.7	%
Basic earnings (loss) per share	$	1.76		$	(0.65	)	$	0.90		$	1.23		$	0.31
Diluted earnings (loss) per share		1.64			(0.65	)		0.86			1.16			0.30
Stockholders’ equity		1,086,870			925,941			1,037,739			970,402			871,752
Stockholders’ equity per share		9.20			7.93			8.88			8.38			7.56
Return on stockholders’ equity %		20.7	%		(7.8	)%		10.5	%		15.4	%		4.1	%
Average shares outstanding		118,179			116,837			116,899			115,777			115,294
Cash dividends paid	$	82,106		$	74,427		$	68,933		$	63,651		$	59,139
Cash dividends per share		0.685			0.630			0.590			0.550			0.515
Retained earnings		475,676			349,493			500,125			464,026			385,791
Working capital		705,509			655,718			693,656			516,542			499,838
Total assets		3,333,149			2,996,064			2,647,475			2,345,202			2,238,199
Long-term debt		886,416			870,415			837,948			718,929			724,846
Depreciation and amortization		81,607			74,299			65,992			63,277			58,674

Note:	Acquisitions made by the Company during the periods presented may impact comparability from year to year (See Note A to the Consolidated Financial Statements). Certain reclassifications have been made to prior year amounts to conform to the current year presentation.
1	Reflects the impact of the asbestos-related insurance settlement of $15.0 million ($9.7 million after-tax) in 2007, and asbestos charges of $380.0 million ($244.3 million after-tax) in fiscal 2006, $78.0 million ($49.5 million after-tax) in fiscal 2005 and $140.0 million ($87.5 million after-tax) in fiscal 2003 (See Note I to the Consolidated Financial Statements).

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 22 through 33 of the 2007 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 pages 32 through 33 of the 2007 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 34 through 63, 66 and 68 of the 2007 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.

22

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-15) as of May 31, 2007 (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 (1) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

   (b) Management’s Report on Internal Control over Financial Reporting.

          Management’s Report on Internal Control Over Financial Reporting and the attestation report of Ernst & Young LLP, the Company’s independent registered public accounting firm, are set forth at pages 65 and 67, respectively, of the 2007 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, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

          None.

23

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

          Information required by this item as to the Directors of the Company appearing under the caption “Election of Directors” in the Company’s 2007 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 2007 Proxy Statement under the heading “Section 16(a) Beneficial Ownership Reporting Compliance,” which information is incorporated herein by reference. Information required by Items 406, 407(c)(3), 407(d)(4) and 407(d)(5) of Regulation S-K is set forth in the 2007 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 2007 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 2007 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, and Director Independence.

          The information required by this item is set forth in the 2007 Proxy Statement under the headings “Related Person Transactions” and “Information Regarding Meetings and Committees of the Board of Directors,” 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 2007 Proxy Statement under the heading “Independent Registered Public Accounting Firm Services and Related Fee Arrangements,” which information is incorporated herein by reference.

24

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this 2007 Annual Report on Form 10-K:

          1. Financial Statements. The following consolidated financial statements of the Company and its subsidiaries, the report of the Company’s independent registered public accounting firm thereon and the report of the Company’s former principal accounting firm thereon, included in the 2007 Annual Report to Stockholders on pages 34 through 63, 66, and 68 are incorporated by reference in Item 8:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets -
May 31, 2007 and 2006

Consolidated Statements of Income -
fiscal years ended May 31, 2007, 2006 and 2005

Consolidated Statements of Stockholders’ Equity -
fiscal years ended May 31, 2007, 2006 and 2005

Consolidated Statements of Cash Flows -
fiscal years ended May 31, 2007, 2006 and 2005

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 reports of independent registered public accounting firms 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 2007 Annual Report to Stockholders:

Schedule	Page or Exhibit No.
Report of Independent Registered Public Accounting Firm	S-1
Schedule II — Valuation and Qualifying	S-2
Accounts and Reserves
Consent of Independent Registered Public Accounting Firm	Exhibit 23.1

          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.

25

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: July 30, 2007	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/ Edward B. Brandon Edward B. Brandon	Director
/s/ Bruce A. Carbonari Bruce A. Carbonari	Director
/s/ James A. Karman James A. Karman	Director

/s/ Donald K. Miller Donald K. Miller	Director
/s/ Frederick R. Nance Frederick R. Nance	Director
/s/ William A. Papenbrock William A. Papenbrock	Director
/s/ Charles A. Ratner Charles A. 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: July 30, 2007

RPM INTERNATIONAL INC.

Exhibit Index

Exhibit No.	Description
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	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).
4.2.1	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).
4.2.2	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.
4.3	Indenture, dated as of June 1, 1995, between RPM, Inc. and The First National Bank of Chicago, as trustee, 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).
4.3.1	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).

E-1

Exhibit No.	Description
4.3.2	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	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).
4.5	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).
4.5.1	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).
4.6	Indenture, dated as of December 9, 2003 between the Company, as issuer, and The Bank of New York, as trustee, with respect to the 6.25% Senior Notes Due 2013, 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.
4.6.1	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).
4.7	Indenture dated as of September 30, 2004 between the Company, as issuer, and The Bank of New York, as trustee, with respect to the 4.45% Senior Notes Due 2009, 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).
4.7.1	Form of 4.45% Senior Notes 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).
4.8	Indenture, dated as of October 24, 2005, among RPM United Kingdom G.P., by its general partners, RPM Canada and RPM Canada Investment Company, the Company, as guarantor, and The Bank of New York Trust Company, N.A., 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 October 25, 2005 (File No. 001-14187).
4.8.1	Form of 6.70% Senior Note Due 2015, 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 October 25, 2005 (File No. 001-14187).

E-2

Exhibit No.	Description
4.8.2	Form of Guarantee, 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 October 25, 2005 (File No. 001-14187).
10.1	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).
10.1.1	Amendment No. 1 to Credit Agreement among RPM International Inc., the Borrowers party thereto, the Lenders party thereto and National City Bank, as Administrative Agent, dated as of July 18, 2006, which is incorporated herein by reference to Exhibit 10.1.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2006 (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 December 29, 2006, 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 January 4, 2007 (File No. 001-14187).
10.3	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).
10.3.1	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).
10.3.2	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).
10.3.3	Amendment No. 4 to Receivables Sale Agreement among certain subsidiaries of the Company, the Company and RPM Funding Corporation, dated March 8, 2005, which is incorporated herein by reference to Exhibit 10.15.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2005 (File No. 001-14187).
10.3.4	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).

E-3

Exhibit No.	Description
10.4	Amended and Restated Receivables Purchase Agreement, among RPM Funding Corporation, RPM International Inc., as Servicer, Wachovia Bank, National Association, as Administrative Agent and Co-Agent, and The Bank of Tokyo - - Mitsubishi UFJ, Ltd., New York Branch as Co-Agent, dated as of May 10, 2006, which is incorporated herein by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2006 (File No. 001-14187).
10.4.1	Amended and Restated Performance Undertaking executed by RPM International Inc., in favor of RPM Funding Corporation, dated May 10, 2006, which is incorporated herein by reference to Exhibit 10.3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2006 (File No. 001-14187).
10.4.2	Amendment No. 1 to Amended and Restated Receivables Purchase Agreement among RPM Funding Corporation, RPM International Inc., as Servicer, Wachovia Bank, National Association, as Administrative Agent and Co-Agent, and The Bank of Tokyo — Mitsubishi UFJ, Ltd., New York Branch as Co-Agent, entered into July 18, 2006 effective as of May 31, 2006, which is incorporated herein by reference to Exhibit 10.3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2006 (File No. 001-14187).
10.5	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).
10.5.1	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).
*10.6	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).
*10.6.1	Letter of Amendment to Employment Agreement and Consulting Letter Agreement, dated as of October 14, 2002, by and between RPM, Inc., the Company and 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).
*10.6.2	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).
*10.6.3	Extension to Post-Retirement Consulting Agreement, by and between the Company and Thomas C. Sullivan, dated as of June 1, 2007. (x)

E-4

Exhibit No.	Description
*10.7	Amended and Restated Employment Agreement, entered into August 16, 2006, effective as of June 1, 2006, by and between the Company and Frank C. Sullivan, President and Chief Executive Officer, 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 August 22, 2006 (File No. 001-14187).
*10.8	Form of Amended and Restated Employment Agreement, entered into August 16, 2006, effective as of June 1, 2006, 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; and Robert L. Matejka — Vice President, Chief Financial Officer and Controller, which is incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, as filed with the Commission on August 22, 2006 (File No. 001-14187).
*10.8.1	Form of Amended and Restated Employment Agreement, dated as of October 5, 2006, by and between the Company and each of Ronald A. Rice, Executive Vice President, Chief Operating Officer and Assistant Secretary; P. Kelly Tompkins, Executive Vice President, Chief Administrative Officer and Secretary; and Paul G. Hoogenboom, Senior Vice President — Manufacturing and Operations and Chief Information Officer, which is incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, as filed with the Commission on October 12, 2006 (File No. 001-14187).
*10.9	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).
*10.10	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).
*10.10.1	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.
*10.11	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.
*10.11.1	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).

E-5

Exhibit No.	Description
*10.11.2	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).
*10.11.3	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, as filed with the Commission on November 27, 2002 (File No. 333-60104).
*10.11.4	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).
*10.12	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).
*10.12.1	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).
*10.12.2	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).
*10.13	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).
*10.13.1	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).
*10.13.2	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.
*10.13.3	Amendment No. 2 to the RPM International Inc. Deferred Compensation Plan. (x)
*10.13.4	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).
*10.13.5	Amendment No. 4 to the RPM International Inc. Deferred Compensation Plan. (x)
*10.13.6	Amendment No. 5 to the RPM International Inc. Deferred Compensation Plan. (x)
*10.13.7	Amendment No. 6 to the RPM International Inc. Deferred Compensation Plan. (x)

E-6

Exhibit No.	Description
*10.14	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).
*10.14.1	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).
*10.14.2	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).
*10.15	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).
*10.15.1	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).
*10.15.2	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).
*10.15.3	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).
*10.15.4	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).
*10.15.5	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).
*10.15.6	Sixth Amendment to the RPM International Inc. 1997 Restricted Stock Plan. (x)
*10.16	RPM International Inc. 2002 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).
*10.16.1	Amendment No. 1 to the RPM International Inc. 2002 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).

E-7

Exhibit No.	Description
*10.16.2	Amendment No. 2 to the RPM International Inc. 2002 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).
*10.16.3	Amendment No. 3 to the RPM International Inc. 2002 Performance Accelerated Restricted Stock Plan. (x)
*10.17	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).
*10.17.1	Amendment No. 1 to the RPM International Inc. 2003 Restricted Stock Plan for Directors. (x)
*10.18	RPM International Inc. 2004 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.
*10.18.1	Form of Performance-Earned Restricted Stock (PERS) and Escrow Agreement, which is incorporated herein by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2005 (File No. 001-14187).
*10.18.2	Form of Stock Appreciation Rights Agreement, 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, 2005 (File No. 001-14187).
*10.18.3	Amendment No. 1 to the RPM International Inc. 2004 Omnibus Equity and Incentive Plan. (x)
*10.19	RPM International Inc. 2007 Restricted Stock Plan, 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 October 12, 2006 (File No. 001-14187).
*10.20	RPM International Inc. 2007 Incentive Compensation Plan, which is incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, as filed with the Commission on October 12, 2006 (File No. 001-14187).
10.21	Share Purchase Agreement between illbruck GmbH, Sabina Illbruck, Michael Illbruck and Tremco Germany GmbH, RPOW UK Ltd., RPM International Inc. dated as of July 25, 2005, 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, 2005 (File No. 001-14187).
13.1	Portions of RPM International Inc.’s 2007 Annual Report to Stockholders. (x)
21.1	Subsidiaries of the Company. (x)
23.1	Consent of Independent Registered Public Accounting Firm. (x)
23.2	Consent of Independent Public Accounting Firm. (x)

E-8

Exhibit No.	Description
23.3	Consent of Crawford & Winiarski, which is incorporated herein by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, as filed with the Commission on April 24, 2007 (File No. 001-14187).
31.1	Rule 13a-14(a) Certification of the Company’s Chief Executive Officer. (x)
31.2	Rule 13a-14(a) Certification of the Company’s Chief Financial Officer. (x)
32.1	Section 1350 Certification of the Company’s Chief Executive Officer. (xx)
32.2	Section 1350 Certification of the Company’s Chief Financial Officer. (xx)

(x)	Filed herewith.
(xx)	Furnished 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 the year 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

July 30, 2007

S-1

Schedule II

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

(In thousands)

				Additions		Acquisitions
				Charged to		(Disposals)
	Balance at		Additions	Selling,		of Businesses			Insurance						Balance at
	Beginning		Charged to	General and		and			Carrier						End
	of Period		Cost of Sales	Administrative		Reclassifications			Funding		Deductions				of Period
Year Ended May 31, 2007
Allowance for doubtful accounts	$	20,252	$	$	4,178	$			$		$	5,263	(1	)	$	19,167
Accrued product liability reserves	$	53,764	$	$	23,833	$			$		$	22,534	(2	)	$	55,063
Accrued loss reserves - Current	$	12,914	$	$	9,098	$			$		$	3,897	(2	)	$	18,115
Asbestos-related liabilities - Current	$	58,925	$	$		$	61,092		$		$	67,017	(2	)	$	53,000
Accrued warranty and product liability reserves - Noncurrent	$	14,758	$	$	3,638	$			$		$	8,077	(2	)	$	10,319
Asbestos-related liabilities - Noncurrent	$	362,360	$	$		$	(61,092	)	$		$		(2	)	$	301,268
Year Ended May 31, 2006
Allowance for doubtful accounts	$	18,565	$	$	3,786	$	960		$		$	3,059	(1	)	$	20,252
Accrued product liability reserves	$	57,414	$	$	18,624	$	790		$	5,000	$	28,064	(2	)	$	53,764
Accrued loss reserves - Current	$	8,038	$	$	6,171	$	370		$		$	1,665	(2	)	$	12,914
Asbestos-related liabilities - Current	$	55,000	$	$	59,000	$	4,812		$		$	59,887	(2	)	$	58,925
Accrued warranty and product liability reserves - Noncurrent	$	8,044	$	$	8,412	$	700		$		$	2,398	(2	)	$	14,758

S-2

				Additions			Acquisitions
				Charged to			(Disposals)
	Balance at		Additions	Selling,			of Businesses			Insurance						Balance at
	Beginning		Charged to	General and			and			Carrier						End
	of Period		Cost of Sales	Administrative			Reclassifications			Funding		Deductions				of Period
Asbestos-related liabilities - Noncurrent	$	46,172	$	$	321,000		$	(4,812	)	$		$		(2	)	$	362,360
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

(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

S-3

EX-10.6.3

Exhibit 10.6.3

June 1, 2007

Mr. Thomas C. Sullivan
Chairman of the Board
RPM International Inc.
P. O. Box 777
Medina, OH 44258

RE: Extension to Post-Retirement Consulting Agreement

Dear Tom:

As you are aware, on June 1, 2005, you entered into a Post-Retirement Consulting Agreement (the “Consulting Agreement”) with RPM International Inc. (“RPM” or the “Company”). The Consulting Agreement provided that for the twenty-four (24) month period (June 1, 2005 through May 31, 2007), you would utilize your industry experience and business relationships to assist in corporate development related activities including identifying acquisition opportunities, as may be requested from time-to-time by the Company.

Whereas the Consulting Agreement is expiring and the Compensation Committee has recognized that your services to the Company in the corporate development area, particularly your work in identifying and introducing to the Company possible merger and acquisition candidates and assisting in the consummation of such transactions, have been very beneficial to the Company’s success. Therefore, since the Committee further recognizes that retaining your continued services as a consultant brings meaningful value to the Company and its stockholders, the Company would like to extend the consulting period for an additional one year period from June 1, 2007 to May 31, 2008 (the “Extension Period”). Given the material benefits to RPM, the Company has agreed to the following compensation and benefits and structure for the Extension Period:

1. No Employment Relationship — As you are aware, you have not been an employee of the Company since the date of your retirement on January 1, 2003. Accordingly, you are not entitled to participate in the Company’s Benefit Plans, except as required by law, the terms of the Benefit Plans, or as provided for during the Extension Period (see below).

6/01/07
Page 2

2. Consulting Services – During the twelve (12) month Extension Period, the Company will pay you a gross amount of $25,000 per month for your services as a consultant. Specifically, you agree to continue to utilize your industry experience and business relationships to assist in corporate development related activities including identifying acquisition opportunities, as may be requested from time-to-time by the Company. You also acknowledge that from time-to-time you will be required to travel internationally in connection with the performance of your consulting services. In addition, during the Extension Period, you will also be entitled to the following benefits at the Company’s sole cost and expense:

a.	Use of reasonable off-site office space;
b.	Use of a part-time administrative assistant;
c.	Continued use of your current company car;
d.	Continued coverage under the Company’s Health Insurance Plan for you and your eligible dependent;
e.	Continued payment of the standard monthly membership dues during the Extension Period for one country club, and the membership dues for The Union Club; and
f.	Continuation of financial planning services, as currently provided.

The Company believes the arrangements described above provide RPM and its management team with continued access to your unique knowledge, insights, experience and industry relationships. This letter constitutes the entire agreement concerning this subject matter and supersedes all prior and contemporaneous agreements, if any.

Sincerely yours,

RPM International Inc.

/s/ Ronald A. Rice

Ronald A. Rice
Executive Vice President and
Chief Operating Officer

cc:	Compensation Committee
	Frank C. Sullivan
	P. Kelly Tompkins

I HAVE READ, UNDERSTAND AND ACCEPT ALL OF THE TERMS AND CONDITIONS AS SET FORTH IN THIS LETTER AGREEMENT.

/s/ Thomas C. Sullivan	6/1/07
Thomas C. Sullivan	Date
/s/ Janet L. Corrigan	6/1/07
(Witness)	Date

EX-10.13.3

Exhibit 10.13.3

AMENDMENT NO. 2

TO THE

RPM INTERNATIONAL INC. DEFERRED COMPENSATION PLAN

     THIS AMENDMENT NO. 2 to the RPM International Inc. Deferred Compensation Plan (hereinafter known as the “Plan”) is executed by RPM International Inc. (hereinafter known as the “Company”) as of the date set forth below.

WITNESSETH:

     WHEREAS, the Company maintains the Plan for the benefit of a select group of management employees, highly compensated employees and directors of the Company and its subsidiaries; and

     WHEREAS, the Company desires to amend the Plan to make additional Measurement Funds available for the deemed investment of dividends, to provide for withdrawals from the Plan where the election to withdraw is given substantially before the date of the withdrawal, to provide for transfers from the Deferred Compensation Plan for Directors, to provide for crediting under this Plan of Restricted Stock cancelled and surrendered under the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan, to make certain amendments in administration procedures for consistency between the Plan and the Master Trust Agreement for RPM International Inc. Deferred Compensation Plan(s), to reflect the change in name of certain other plans sponsored and maintained by the Company which are referenced in the Plan and to make certain other necessary and desirable changes to the Plan; and

1

     WHEREAS, the Company reserved the right, pursuant to Section 13.2 of the Plan, to make certain amendments thereto;

     NOW, THEREFORE, pursuant to Section 13.2 of the Plan, the Company hereby amends the Plan as follows:

1. Effective as of May 31, 2002, Section 1.23 of the Plan is hereby amended by the deletion of said Section 1.23 in its entirety and the substitution in lieu thereof the following:

“1.23 ‘Deferral Account’ shall mean (i) that portion of a Participant’s Rollover Amount which is represented by the Participant’s aggregate deferral contributions described in Section 6.1 of the Predecessor Plan and in the Deferred Compensation Plan for Directors, as well as any appreciation (or depreciation) specifically attributable to such deferral contributions, plus (ii) the sum of all of a Participant’s Annual Deferral Amounts, plus (iii) amounts credited in accordance with all the applicable crediting and debiting provisions of this Plan that relate to the Participant’s Deferral Account, less (iv) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral Account.”

2. Effective as of June 1, 2002, Section 1.41 of the Plan is hereby amended by the deletion of said Section 1.41 in its entirety and the substitution in lieu thereof the following:

2

“1.41 ‘Restricted Stock’ shall mean rights to receive unvested shares of restricted stock selected by the Committee in its sole discretion and awarded to the Participant under the RPM International Inc. 1997 Restricted Stock Plan, the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan or any other similar stock incentive plan sponsored by the Company.”

3. Effective as of June 1, 2002, Section 1.42 of the Plan is hereby amended by the deletion of said Section 1.42 in its entirety and the substitution in lieu thereof the following:

“1.42. ‘Restricted Stock Account’ shall mean the aggregate value, measured on any given date, of (i) the number of shares of Restricted Stock deferred by a Participant as a result of all Annual Restricted Stock Amounts, plus (ii) the number of shares of Restricted Stock cancelled under the RPM International Inc. 1997 Restricted Stock Plan, the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan or any other similar stock incentive plan sponsored by the Company where a corresponding number of shares is to be credited to the Restricted Stock Account pursuant to the terms of the applicable stock incentive plan, plus (iii) the number of additional shares credited as a result of deemed reinvestment of dividends in accordance with all the applicable crediting provisions of the RPM, Inc. Stock Unit Fund I that relate to the Participant’s Restricted Stock Account, less (iv) the number of shares of Restricted Stock previously distributed to the Participant or his or her Beneficiary pursuant

3

to this Plan. This portion of the Participant’s Account Balance shall only be distributable in actual shares of Stock.”

4. Effective as of May 31, 2002, Section 2.1 of the Plan is hereby amended by the deletion of said Section 2.1 in its entirety and the substitution in lieu thereof the following:

“2.1  Selection by Committee. Participation in the Plan shall be limited to (i) a select group of management and highly compensated Employees and Directors of the Employer, as determined by the Committee in its sole discretion and/or (ii) any individual who was in a select group of management or highly compensated Employees and/or Directors of the Employer and who accumulated an account balance under the Predecessor Plan or the Deferred Compensation Plan for Directors. From that group, the Committee shall select, in its sole discretion, Employees and Directors to participate in the Plan.”

5. Effective as of June 1, 2002, subsection (c) of Section 3.3 of the Plan is hereby amended by the deletion of said subsection (c) in its entirety and the substitution in lieu thereof the following:

“(c)  Restricted Stock Deferral. Notwithstanding paragraphs (a) and (b), for an election to defer Restricted Stock to be valid: (i) a separate irrevocable Election Form must be completed and signed by the Participant, with respect to such Restricted Stock; and (ii) such Election Form must be timely delivered to and accepted by the Committee in accordance with the following: (i) for the first Plan Year, a Participant’s Election Form with

4

respect to such Restricted Stock must be delivered to and accepted by the Committee in accordance with the deadlines established by the Committee; and (ii) for each succeeding Plan Year, a Participant’s Election Form with respect to Restricted Stock must be timely delivered to and accepted by the Committee at least six (6) months prior to the date such Restricted Stock vests under the terms of the RPM International Inc. 1997 Restricted Stock Plan, the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan or any other similar stock incentive plan sponsored by the Company.”

6. Effective as of May 31, 2002, Section 3.5 of the Plan is hereby amended by the deletion of said Section 3.5 in its entirety and the substitution in lieu thereof the following:

“3.5  Rollover Amount. With respect to Participants who participated in the Predecessor Plan or the Deferred Compensation Plan for Directors, an amount equal to their “account” as set forth in the Predecessor Plan and the Deferred Compensation Plan for Directors, valued as of the Effective Date of this Plan, shall be the Rollover Amount. The Rollover Amount shall be comprised of (i) elective deferrals accumulated pursuant to Section 6.1 of the Predecessor Plan and pursuant to the Deferred Compensation Plan for Directors, (ii) a Participant’s Merger Account accumulated pursuant to Section 2.15A of the Predecessor Plan, and (iii) any dividends declared on Restricted Stock granted to a Participant and automatically deferred under the Predecessor Plan. The portion of a Participant’s Rollover Amount that is attributable to elective deferrals (i)

5

shall be credited to the Participant’s Deferral Account on the Effective Date of this Plan, and (ii) shall be subject to the terms and conditions of this Plan. The portion of a Participant’s Rollover Amount that is attributable to a Participant’s Merger Account (i) shall be credited to the Participant’s Merger Account on the Effective Date of this Plan and (ii) shall be subject to the terms and conditions of this Plan. The portion of a Participant’s Rollover Amount that is attributable to dividends declared on Restricted Stock granted to a Participant and automatically deferred under the Predecessor Plan (i) shall be credited to a Participant’s Stock Dividend Account on the Effective Date of this Plan and (ii) shall be subject to the terms and conditions of this Plan. Any Participant with a Rollover Amount shall have no right to demand distribution of such amounts other than as specifically provided for herein; provided, however, that any “in-service distribution” elections made by the Participant under the Predecessor Plan shall apply to the Rollover Amount under this Plan.”

7. Effective as of January 13, 2003, Section 3.6 of the Plan is hereby amended by the deletion of said Section 3.6 in its entirety and the substitution in lieu thereof the following:

“3.6.  Annual Stock Dividend Amount. For each Plan Year in which a dividend is declared and paid on Stock, an amount shall be credited as provided by this Section 3.6.

(a) An Employer shall automatically credit a Participant’s Stock Dividend Account with any cash dividends, stock dividends or

6

	other non-cash dividends that are payable on a Participant’s shares of Restricted Stock which have not been deferred or cancelled under any plan and that are to be credited for the Participant’s benefit under this Plan pursuant to the terms of the plan under which the Restricted Stock is granted. The amount so credited to a Participant pursuant to this Section 3.6(a) shall (i) be for that Participant the Annual Stock Dividend Amount, (ii) automatically be deemed to be invested in the Measurement Fund(s) selected by or for the Participant in accordance with Section 3.11(b), and (iii) be credited to the Participant’s Stock Dividend Account on a date or dates to be determined by the Committee, in its sole discretion.
(b)	An Employer shall automatically credit a Participant’s Restricted Stock Account with any cash dividends, stock dividends or other non-cash dividends that would have been payable on a Participant’s shares of Restricted Stock which have been deferred or cancelled and credited to this Plan. The amount so credited to a Participant pursuant to this Section 3.6(b) shall (i) automatically be deemed to be invested in the RPM International Inc. Stock Unit Fund I, and (ii) be credited to the Participant’s Restricted Stock Account on a date or dates to be determined by the Committee, in its sole discretion.
(c)	The amount credited to the Participant’s Stock Dividend Account or Restricted Stock Account under this Section 3.6 for a particular

7

cash dividend, stock dividend or other non-cash dividend shall be equal to the fair market value of the dividend on the date it is payable. For purposes of any dividend payable in Stock or in other securities traded on a national securities exchange, “fair market value” shall mean the closing price on the date the dividend is paid.”

8. Effective as of June 1, 2002, subsection (a) of Section 3.7 of the Plan is hereby amended by the deletion of said subsection (a) in its entirety and the substitution in lieu thereof the following:

“(a)  For each Plan Year, an Employer may be required to credit amounts to a Participant’s Company Contribution Account in accordance with the RPM International Inc. 1997 Restricted Stock Plan, employment agreements, or other plans and agreements providing for contributions to the Company Contribution Account. Such amounts shall be credited on the date or dates prescribed by such plans and agreements.”

9. Section 3.9 of the Plan is hereby amended by the deletion of said Section 3.9 in its entirety and the substitution in lieu thereof the following:

“3.9 Annual Restricted Stock Amount. Subject to Section 3.3(c) and any terms and conditions imposed by the Committee, Participants may elect to defer, under the Plan, Restricted Stock, which amount shall be for that Participant the Annual Restricted Stock Amount for that Plan Year. The portion of any Restricted Stock deferred shall, at the time all restrictions

8

with respect to the Restricted Stock would otherwise lapse under the terms of the RPM International Inc. 1997 Restricted Stock Plan, the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan or any other similar stock incentive plan sponsored by the Company, but for the election to defer, be reflected on the books of the Company as an unfunded, unsecured promise to deliver to the Participant a specific number of actual shares of Stock in the future.”

10. Effective as of June 1, 2002, subsection (c) of Section 3.10 of the Plan is hereby amended by the deletion of said subsection (c) in its entirety and the substitution in lieu thereof the following:

“(c)  A Participant shall be vested in his or her Company Contribution Account and Restricted Stock Account in accordance with the vesting schedule(s) set forth in his or her Plan Agreement, employment agreement, or any other agreement entered into between the Participant and his or her Employer. However, amounts credited to the Company Contribution Account and shares credited to the Restricted Stock Account as a result of cancellation or surrender of shares of Restricted Stock granted under the RPM International Inc. 1997 Restricted Stock Plan or any other similar stock incentive plan sponsored by the Company shall be fully vested when the restrictions with respect to the stock cancelled or surrendered would have otherwise lapsed. If not addressed in such agreements or plan, a Participant shall vest in his or her Company Contribution Account and

9

Restricted Stock Account in accordance with the schedule declared by the Committee in its sole discretion.”

11. Effective as of January 13, 2003, paragraph (i) of subsection 3.11 (d) of the Plan is hereby amended by the deletion of said paragraph (i) in its entirety and the substitution in lieu thereof the following:

“(i)  Subject to the restrictions found in Section 3.11(c), above, a Participant may allocate or re-allocate any portion of his or her Account Balance and/or Merger Account balance to the RPM, Inc. Stock Unit Fund II. In all events, new contributions to the Participant’s Stock Dividend Account shall automatically be deemed to be invested in the Measurement Fund(s) selected by or for the Participant in accordance with Section 3.11(b). Participants may re-allocate any portion of their Account Balance and/or Merger Account balance from the RPM, Inc. Stock Unit Fund II to any other Measurement Fund, at any time.”

12. Following Section 5.4 of the Plan and effective January 13, 2002, a new Section 5.5 shall be added to the Plan to read as follows:

“5.5 Delayed Withdrawal. A Participant may petition the Committee to withdraw all or a portion of his or her vested Account Balance and vested Merger Account balance excluding the portion of the Account Balance attributable to the Restricted Stock Account. The Participant shall make this election by giving written notice of the election to the Committee on a form determined from time to time by the Committee. The Participant

10

must specify the amount to be withdrawn and the future date on which the amount is to be paid. The requested future date of payment must be at least thirteen (13) months following the date of the written request. If the request is approved by the Committee, payment shall be made as soon as administratively possible after the first business day following the date specified by the Participant in his or her request. If prior to payment, however, an event occurs that triggers a benefit under Article 7, 8, 9, or 10 and distribution pursuant to the applicable Article occurs prior to distribution under this Section 5.5, the amount or portion of the Account Balance requested by the Participant as a delayed withdrawal shall be paid in accordance with the other applicable Article and not under this Section 5.5.”

13. Effective as of May 31, 2002, subsection (a) of Section 14.2 of the Plan is hereby amended by the deletion of said subsection (a) in its entirety and the substitution in lieu thereof the following:

“(a)  Administrator. For purposes of this Plan, the Committee shall be the “Administrator” at all times prior to the occurrence of a Change in Control. Upon and after the occurrence of a Change in Control, the “Administrator” shall be an independent third party selected by the individual who, immediately prior to such event, was the Company’s Chief Executive Officer or, if not so identified, the Company’s highest ranking officer (the “Ex-CEO”). In the event the Chief Executive Officer or highest ranking officer is not able to perform the duties and

11

responsibilities of the Ex-CEO, the next highest ranking officer of the Company able to perform such duties and responsibilities shall act as the Ex-CEO. The Committee, however, as constituted immediately prior to a Change in Control, shall continue to act as the Administrator of this Plan until the date on which the independent third party selected by the Ex-CEO accepts the responsibilities of Administrator under this Plan. The Administrator shall have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust except benefit entitlement determinations upon appeal; provided, however, upon and after the occurrence of a Change in Control, the Administrator shall have no power to direct the investment of Plan or Trust assets or select any investment manager or custodial firm for the Plan or Trust. Upon and after the occurrence of a Change in Control, the Company must: (1) pay all reasonable administrative expenses and fees of the Administrator; (2) indemnify the Administrator against any costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of the Administrator hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the Administrator or its employees or agents; and (3) supply full and timely information to the Administrator on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the Account Balances of the Participants, the Participants’ Merger Account

12

balances, the date and circumstances of the Retirement, Disability, death or Termination of Employment of the Participants, and such other pertinent information as the Administrator may reasonably require. Upon and after a Change in Control, the Administrator may only be terminated (and a replacement appointed) by the Ex-CEO. Upon and after a Change in Control, the Administrator may not be terminated by the Company.”

     IN WITNESS WHEREOF, RPM INTERNATIONAL INC., by its duly authorized officer, has caused this Amendment No. 2 to the RPM International Inc. Deferred Compensation Plan to be signed this 31st day of January, 2003.

RPM INTERNATIONAL INC.
By:	/s/ Ronald A. Rice
Its:	Sr. Vice President

13

EX-10.13.5

Exhibit 10.13.5

AMENDMENT NO. 4

TO THE

RPM INTERNATIONAL INC. DEFERRED COMPENSATION PLAN

     THIS AMENDMENT NO. 4 to the RPM International Inc. Deferred Compensation Plan (hereinafter known as the “Plan”) is executed by RPM International Inc. (hereinafter known as the “Company”) as of the date set forth below.

WITNESSETH:

     WHEREAS, the Company maintains the Plan for the benefit of a select group of management employees, highly compensated employees and directors of the Company and its subsidiaries; and

     WHEREAS, the Company through action taken by its Board of Directors has adopted the RPM International 2004 Omnibus Equity and Incentive Plan (the “Omnibus Plan”) which provides for a variety of equity-based and incentive awards; and

     WHEREAS, in order for the Omnibus Plan to be fully effective under the New York Stock Exchange rules, it must be approved by a vote of the stockholders of the Company; and

     WHEREAS, the Company desires to amend the Plan to provide for crediting of certain interests cancelled and surrendered under the Omnibus Plan and to create accounts and administrative procedures necessary for the implementation of such credits; and

     WHEREAS, the Company reserved the right, pursuant to Section 13.2 of the Plan, to make certain amendments thereto;

     NOW, THEREFORE, pursuant to Section 13.2 of the Plan and effective as of the date that the Company’s stockholders approve the Omnibus Plan, the Company hereby amends the Plan as follows:

     1. Section 1.1 of the Plan is hereby amended by the deletion of said Section 1.1 in its entirety and the substitution in lieu thereof the following:

“1.1  ‘Account Balance’ shall mean, with respect to a Participant, a credit on the records of the Employer equal to the sum of (i) the Deferral Account balance, (ii) the Company Contribution Account balance, (iii) the Company Restoration Matching Account balance, (iv) the Restricted Stock Account balance, (v) the Stock Dividend Account balance, (vi) the Performance Share Account balance, (vii) the Stock Appreciation Rights Account balance, (viii) the Option Account balance and (ix) the Dividend Equivalent Account balance. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan. The Account Balance shall not include a Participant’s Merger Account.”

     2. Article 1 of the Plan is hereby amended by the addition of a new Section 1.6A to read as follows:

“1.6A  ‘Annual Dividend Equivalent Amount’ shall mean, with respect to a Participant for any one Plan Year, the amount of Dividend Equivalents deferred in accordance with Section 3.9. In the event of a Participant’s Retirement, Disability (if deferrals cease in accordance with Section 9.1), death or Termination of Employment prior to the end of a Plan Year, such year’s Annual Dividend Equivalent Amount shall be the actual amount deferred prior to such event.”

     3. Article 1 of the Plan is hereby amended by the addition of a new Section 1.6B to read as follows:

“1.6B  ‘Annual Option Amount’ shall mean, with respect to a Participant for any one Plan Year, the value of the shares of Stock distributable in accordance with an Option deferred in accordance with Section 3.9, calculated using the closing price of Stock at the end of the business day closest to the date such Options would otherwise be exercised, but for the election to defer. In the event of a Participant’s Retirement, Disability (if deferrals cease in accordance with Section 9.1), death or a Termination of Employment prior to the end of a Plan Year, such year’s Annual Option Amount shall be the actual amount deferred prior to such event.”

     4. Article 1 of the Plan is hereby amended by the addition of a new Section 1.6C to read as follows:

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“1.6C  ‘Annual Performance Share Amount’ shall mean, with respect to a Participant for any one Plan Year, the amount of Performance Shares deferred in accordance with Section 3.9, calculated using the closing price of Stock at the end of the business day closest to the date such Performance Shares would otherwise vest if the Performance Shares or Performance Units are payable in shares of Stock, or the date such Performance Shares or Performance Units would otherwise be distributed if they are payable in cash, but for the election to defer. In the event of a Participant’s Retirement, Disability (if deferrals cease in accordance with Section 9.1), death or a Termination of Employment prior to the end of a Plan Year, such year’s Annual Performance Share Amount shall be the actual amount deferred prior to such event.”

     5. Article 1 of the Plan is hereby amended by the addition of a new Section 1.6D to read as follows:

“1.6D  ‘Annual Stock Appreciation Rights Amount’ shall mean, with respect to a Participant for any one Plan Year, the amount of Stock Appreciation Rights deferred in accordance with Section 3.9, calculated using the closing price of Stock at the end of the business day closest to the date such Stock Appreciation Rights would otherwise vest if the Stock Appreciation Rights are payable in shares of Stock, or the date such Stock Appreciation Rights would otherwise be distributed if the Stock Appreciation Rights are payable in cash, but for the election to defer. In the event of a Participant’s Retirement, Disability (if deferrals cease in accordance with Section 9.1), death or a Termination of Employment prior to the end of a Plan Year, such year’s Annual Stock Appreciation Rights Amount shall be the actual amount deferred prior to such event.”

     6. Article 1 of the Plan is hereby amended by the addition of a new Section 1.28A to read as follows:

“1.28A  ‘Dividend Equivalent’ shall mean rights to receive an amount of money equal to the dividends paid from time to time on a specified number of shares of Stock under the RPM International Inc. 2004 Omnibus Equity and Incentive Plan or any other similar stock incentive plan sponsored by the Company.”

     7. Article 1 of the Plan is hereby amended by the addition of a new Section 1.28B to read as follows:

“1.28B  ‘Dividend Equivalent Account’ shall mean (i) the sum of all of a Participant’s Annual Dividend Equivalent Amounts, plus (ii) amounts credited in accordance with all the applicable crediting and debiting provisions of this Plan that relate to the Participant’s Dividend Equivalent Account, less (iii) all distributions made to

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the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s Dividend Equivalent Account.”

     8. Article 1 of the Plan is hereby amended by the addition of a new Section 1.35B to read as follows:

“1.35B  ‘Option’ shall mean an option to purchase shares of Stock granted under the RPM International Inc. 2004 Omnibus Equity and Incentive Plan or any other similar stock incentive plan sponsored by the Company and, where the context requires, Stock distributable in accordance with such an option.”

     9. Article 1 of the Plan is hereby amended by the addition of a new Section 1.35C to read as follows:

“1.35C  ‘Option Account’ shall mean (i) the sum of all of a Participant’s Annual Option Amounts, plus (ii) amounts credited in accordance with all the applicable crediting and debiting provisions of this Plan that relate to the Participant’s Option Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s Option Account.”

     10. Article 1 of the Plan is hereby amended by the addition of a new Section 1.36A to read as follows:

“1.36A  ‘Performance Share’ shall mean a right to receive a specified number of shares of Stock, and/or an amount of money determined by reference to the fair market value of a specified number of shares of Stock, at a future time or times if a specified performance goal is attained granted under the RPM International Inc. 2004 Omnibus Equity and Incentive Plan or any other similar stock incentive plan sponsored by the Company. Except as otherwise provided, the term ‘Performance Share’ shall be deemed to include ‘Performance Units’ under the RPM International Inc. 2004 Omnibus Equity and Incentive Plan or any other similar stock incentive plan sponsored by the Company.”

     11. Article 1 of the Plan is hereby amended by the addition of a new Section 1.36B to read as follows:

“1.36B  ‘Performance Share Account’ shall mean (i) the sum of all of a Participant’s Annual Performance Share Amounts plus (ii) amounts credited in accordance with all the applicable crediting and debiting provisions of this Plan that relate to the Participant’s Performance Share Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s Performance Share Account.”

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     12. Article 1 of the Plan is hereby amended by the addition of a new Section 1.48A to read as follows:

“1.48A  ‘Stock Appreciation Rights’ shall mean rights to receive an amount of money, or a number shares of Stock that have a fair market value on the date of exercise of such Stock Appreciation Rights, or a combination of money and shares valued at fair market value on such date, equal to the amount by which the fair market value of a share of Stock on the date of such exercise exceeds the exercise price of the Stock Appreciation Rights, multiplied by the number of Stock Appreciation Rights exercised.”

     13. Article 1 of the Plan is hereby amended by the addition of a new Section 1.48B to read as follows:

“1.48B  ‘Stock Appreciation Rights Account’ shall mean (i) the sum of all of a Participant’s Annual Stock Appreciation Rights Amounts plus (ii) amounts credited in accordance with all the applicable crediting and debiting provisions of this Plan that relate to the Participant’s Stock Appreciation Rights Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s Stock Appreciation Rights Account.”

     14. Section 1.41 of the Plan is hereby amended by the deletion of said Section 1.41 in its entirety and the substitution in lieu thereof the following:

“1.41  ‘Restricted Stock’ shall mean rights to receive unvested shares of restricted stock selected by the Committee in its sole discretion and awarded to the Participant under the RPM International Inc. 2004 Omnibus Equity and Incentive Plan, the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan, the RPM International Inc. 1997 Restricted Stock Plan or any other similar stock incentive plan sponsored by the Company. The term ‘Restricted Stock’ shall be deemed to include ‘Restricted Share Units’ under the RPM International Inc. 2004 Omnibus Equity and Incentive Plan or any other similar stock incentive plan sponsored by the Company.”

     15. Section 1.42 of the Plan is hereby amended by the deletion of said Section 1.42 in its entirety and the substitution in lieu thereof the following:

“1.42.  ‘Restricted Stock Account’ shall mean the aggregate value, measured on any given date, of (i) the number of shares of Restricted Stock deferred by a Participant as a result of all Annual Restricted Stock Amounts, plus (ii)

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the number of shares of Restricted Stock cancelled under the RPM International Inc. 2004 Omnibus Equity and Incentive Plan, the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan, the RPM International Inc. 1997 Restricted Stock Plan or any other similar stock incentive plan sponsored by the Company where a corresponding number of shares is to be credited to the Restricted Stock Account pursuant to the terms of the applicable stock incentive plan, plus (iii) the number of additional shares credited as a result of deemed reinvestment of dividends in accordance with all the applicable crediting provisions of the RPM, Inc. Stock Unit Fund I that relate to the Participant’s Restricted Stock Account, less (iv) the number of shares of Restricted Stock previously distributed to the Participant or his or her Beneficiary pursuant to this Plan. Except as may otherwise be provided in Article 15, this portion of the Participant’s Account Balance shall only be distributable in actual shares of Stock.”

     16. Subsection (b) of Section 3.2 of the Plan is hereby amended by the deletion of said subsection (b) in its entirety and the substitution in lieu thereof the following:

“(b)  Annual Equity and Incentive Grants. For each equity and/or incentive grant, a Participant may elect to defer as follows:

Deferral	Minimum Percentage
Restricted Stock	0%
Dividend Equivalents	0%
Options and/or Stock distributable in accordance with an Option	0%
Performance Shares	0%
Stock Appreciation Rights	0%

If no election is made with respect to any category, the amount deferred for such category shall be zero.”

     17. Subsection (c) of Section 3.3 of the Plan is hereby amended by the deletion of said subsection (c) in its entirety and the substitution in lieu thereof the following:

“(c)  Annual Equity and Incentive Interest Deferrals. Notwithstanding paragraphs (a) and (b), for an election to defer Restricted Stock, Dividend Equivalents, Options, Performance Shares or Stock Appreciation Rights (each an “Equity or Incentive Interest”)to be valid: (i) a separate irrevocable Election Form must be completed and signed by the Participant, with respect to such Equity or Incentive Interest; and (ii) such

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Election Form must be timely delivered to and accepted by the Committee in accordance with the following: (i) for the first Plan Year, a Participant’s Election Form with respect to such Equity or Incentive Interest must be delivered to and accepted by the Committee in accordance with the deadlines established by the Committee; and (ii) for each succeeding Plan Year, a Participant’s Election Form with respect to such Equity or Incentive Interest must be timely delivered to and accepted by the Committee on a date on which they are determined by the Committee to be “Contingent Interests” under the RPM International Inc. 2004 Omnibus Equity and Incentive Plan or, with respect to Restricted Stock under the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan, the RPM International Inc. 1997 Restricted Stock Plan or any other similar stock incentive plan sponsored by the Company, at least six (6) months prior to the date such Restricted Stock vests under the terms of such plans.”

     18. Subsection (c) of Section 3.6 of the Plan is hereby amended by the deletion of said Subsection (c) in its entirety and the substitution in lieu thereof the following new Subsections (c) and (d):

“(c)

An Employer shall automatically credit a Participant’s Performance Share Account with any cash dividends, stock dividends or other non-cash dividends that would have been payable on a Participant’s Performance Shares which have been deferred or cancelled and credited to this Plan. The amount so credited to a Participant pursuant to this Section 3.6(c) shall (i) to the extent attributable to Performance Shares or Performance Units payable in shares of Stock, automatically be deemed to be invested in the RPM International Inc. Stock Unit Fund I, and (ii) be credited to the Participant’s Performance Share Account on a date or dates to be determined by the Committee, in its sole discretion.

(d)

The amount credited to the Participant’s Stock Dividend Account, Restricted Stock Account or Performance Share Account under this Section 3.6 for a particular cash dividend, stock dividend or other non-cash dividend shall be equal to the fair market value of the dividend on the date it is payable. For purposes of any dividend payable in Stock or in other securities traded on a national securities exchange, “fair market value” shall mean the closing price on the date the dividend is paid.”

     19. Section 3.9 of the Plan is hereby amended by the deletion of said Section 3.9 in its entirety and the substitution in lieu thereof the following:

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“3.9  Annual Equity and Incentive Amounts. Subject to Section 3.3(c) and any terms and conditions imposed by the Committee, Participants may elect to defer, under the Plan:

(a)	Restricted Stock, which shall be for that Participant the Annual Restricted Stock Amount for that Plan Year;
(b)	Dividend Equivalents, which shall be for that Participant the Annual Dividend Equivalent Amount for that Plan Year;
(c)	Options, which shall be for that Participant the Annual Option Amount for that Plan Year;
(d)	Performance Shares, which shall be for that Participant the Annual Performance Share Amount for that Plan Year; and
(e)	Stock Appreciation Rights, which shall be for that Participant the Annual Stock Appreciation Right Amount for that Plan Year.

The portion of any of the foregoing deferred interests shall, at the time such interests would have vested, or restrictions on such interests would have lapsed, under the terms of the RPM International Inc. 2004 Omnibus Equity and Incentive Plan, the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan, the RPM International Inc. 1997 Restricted Stock Plan or any other similar stock incentive plan sponsored by the Company, as applicable, but for the election to defer, be reflected on the books of the Company as an unfunded, unsecured promise to deliver to the Participant a specific number of actual shares of Stock or cash, as the case may be, in the future.”

     20. Subsection (c) of Section 3.10 of the Plan is hereby amended by the deletion of said subsection (c) in its entirety and the substitution in lieu thereof the following:

“(c)  A Participant shall be vested in his or her Company Contribution Account and Restricted Stock Account in accordance with the vesting schedule(s) set forth in his or her Plan Agreement, employment agreement, or any other agreement entered into between the Participant and his or her Employer. However, amounts credited to the Company Contribution Account and interests credited to the Restricted Stock Account, Dividend Equivalent Account, Option Account, Performance Share Account and Stock Appreciation Account as a result of cancellation or surrender of interests granted under the RPM International Inc. 2004 Omnibus Equity and Incentive Plan, the 2002 RPM International Inc. Performance Accelerated Restricted Stock Plan, the RPM International Inc. 1997 Restricted Stock Plan or any other similar stock incentive plan sponsored

8

by the Company shall be fully vested when they would have become fully vested, or when restrictions on such interests would have lapsed, but for the election to defer. If not addressed in such agreements or plan, a Participant shall vest in his or her Company Contribution Account and Restricted Stock Account in accordance with the schedule declared by the Committee in its sole discretion.”

     21. Subsection (c) of Section 3.11 of the Plan is hereby amended by the deletion of said subsection (c) in its entirety and the substitution in lieu thereof the following:

“(c)  RPM, Inc. Stock Unit Fund I.

(i)	Participants’ Restricted Stock Account, any portion of their Performance Share Account attributable to Performance Shares or Performance Units payable in shares of Stock and any portion of their Option Account attributable to shares of Stock will be automatically allocated to the RPM, Inc. Stock Unit Fund I Measurement Fund. Participants may not select any other Measurement Fund to be used to determine the amounts to be credited or debited to these accounts or portions of accounts. Furthermore, no other portion of the Participant’s Account Balance can be either initially allocated or re-allocated to the RPM, Inc. Stock Unit Fund I. Amounts allocated to the RPM, Inc. Stock Unit Fund I shall only be distributable in actual shares of Stock.
(ii)	Any stock dividends, cash dividends or other non-cash dividends that would have been payable on the Stock credited to a Participant’s Restricted Stock Account, Performance Share Account or Option Account shall be credited to the respective accounts in the form of additional shares of Stock and shall automatically and irrevocably be deemed to be re-invested in the RPM, Inc. Stock Unit Fund I until such amounts are distributed to the Participant. The number of shares credited to the Participant for a particular stock dividend shall be equal to (a) the number of shares of Stock credited to the Participant’s account as of the payment date for such dividend in respect of each share of Stock, multiplied by (b) the number of additional shares of Stock actually paid as a dividend in respect of each share of Stock. The number of shares credited to the Participant for a particular cash dividend or other non-cash dividend shall be equal to (a) the number of shares of Stock credited to the Participant’s account as of the payment date for such dividend in respect of each share of Stock, multiplied by (b) the fair market value of the dividend, divided by (c) the “fair market value” of the Stock on the payment date for such dividend.
(iii)	The number of shares of Stock credited to the Participant’s Restricted Stock Account, Performance Share Account and Option Account may be adjusted by the Committee, in its sole discretion, to prevent dilution or enlargement of a Participant’s rights in the event of any reorganization,

9

	reclassification, stock split, or other unusual corporate transaction or event which affects the value of the Stock, provided that any such adjustment shall be made taking into account any crediting of shares of Stock to the Participant under Section 3.11(c)(ii) above in connection with such transaction or event.
(iv)	For purposes of this Section 3.11(c), “fair market value” shall mean for any day the average of the high and low sales price or, in the event that no such sale takes place on such day, the average of the reported closing bid and asked prices, in either case as reported on the principal national securities exchange on which the Stock is listed or admitted to trading.”

     22. Section 5.3 of the Plan is hereby amended by the deletion of said Section 5.3 in its entirety and the substitution in lieu thereof the following:

“5.3  Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies. If the Participant experiences an Unforeseeable Financial Emergency, the Participant may petition the Committee (i) to suspend any deferrals required to be made by such Participant or (ii) to suspend any deferrals required to be made by such Participant and receive a partial or full payout from the Plan. The payout shall not exceed the lesser of the Participant’s vested Account Balance and vested Merger Account balance, excluding the portion of the Account Balance attributable to the Restricted Stock Account, Performance Share Account, Option Account, Dividend Equivalent Account and Stock Appreciation Right Account, calculated as if such Participant were receiving a Termination Benefit, or the amount reasonably needed to satisfy the Unforeseeable Financial Emergency. A Participant may not receive a payout from the Plan to the extent that the Unforeseeable Financial Emergency is or may be relieved (i) through reimbursement or compensation by insurance or otherwise, (ii) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship or (iii) by suspension of deferrals under this Plan. If the Committee, in its sole discretion, approves a Participant’s petition for suspension, the Participant’s deferrals under this Plan shall be suspended as of the date of such approval. If the Committee, in its sole discretion, approves a Participant’s petition for suspension and payout, the Participant’s deferrals under this Plan shall be suspended as of the date of such approval and the Participant shall receive a payout from the Plan within sixty (60) days of the date of such approval.”

     23. Section 5.4 of the Plan is hereby amended by the deletion of said Section 5.4 in its entirety and the substitution in lieu thereof the following:

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“5.4  Withdrawal Election. A Participant may elect, at any time, to withdraw all or a portion of his or her vested Account Balance, excluding the portion of the Account Balance attributable to the Restricted Stock Account, Performance Share Account, Option Account, Dividend Equivalent Account and Stock Appreciation Right Account. For purposes of this Section 5.4, the value of a Participant’s vested Account Balance shall be calculated as of the close of business on or around the date on which receipt of the Participant’s election is acknowledged by the Committee, as determined by the Committee in its sole discretion, less a withdrawal penalty equal to 10% of the amount withdrawn (the net amount shall be referred to as the “Withdrawal Amount”). This election can be made at any time, before or after Retirement or Disability, and whether or not the Participant is in the process of being paid pursuant to an installment payment schedule. The Participant shall make this election by giving the Committee advance written notice of the election in a form determined from time to time by the Committee. The Participant shall be paid the Withdrawal Amount within sixty (60) days of his or her election. Once the Withdrawal Amount is paid, the Participant’s participation in the Plan shall be suspended for the remainder of the Plan Year in which the withdrawal is elected and for one (1) full Plan Year thereafter.”

     24. Section 9.1 of the Plan is hereby amended by the deletion of said Section 9.1 in its entirety and the substitution in lieu thereof the following:

“9.1  Disability Waiver.

(a)

Waiver of Deferral. A Participant who is determined to be suffering from a Disability shall be (i) excused from fulfilling that portion of the Annual Deferral Amount commitment that would otherwise have been withheld from a Participant’s Base Annual Salary, Annual Bonus, Special Incentive Plan Amounts and/or Director Fees for the Plan Year during which the Participant first suffers a Disability, (ii) excused from fulfilling any existing unvested Restricted Stock commitments, and (iii) excused from fulfilling any existing unvested Performance Share commitments to the extent provided in the RPM International 2004 Omnibus Equity and Incentive Plan or other relevant stock incentive plan sponsored by the Company. During the period of Disability, the Participant shall not be allowed to make any additional deferral elections, but will continue to be considered a Participant for all other purposes of this Plan.

(b)

Deferral Following Disability. If a Participant returns to employment, or service as a Director, with an Employer after a Disability ceases, the Participant may elect to defer an Annual Deferral Amount, Annual Restricted Stock Amount, Annual Dividend Equivalent Amount, Annual Option Amount, Annual Performance Share Amount and Annual Stock

11

Appreciation Right Amount for the Plan Year following his or her return to employment or service and for every Plan Year thereafter while a Participant in the Plan; provided such deferral elections are otherwise allowed and an Election Form is delivered to and accepted by the Committee for each such election in accordance with Section 3.3 above.”

     25. Article 15 of the Plan is hereby amended by the deletion of said Article 15 in its entirety and the substitution in lieu thereof of the following new Article 15:

“ARTICLE 15
Satisfaction of Participants’ Tax Obligations

15.1

Mandatory Sale of Shares of Stock. Subject to the terms, conditions and restrictions specified under this Plan, the Committee shall, prior to making a payout in Stock from a Participant’s Account Balance and Merger Account (whether a lump sum, installment or other payout), sell or cause to be sold the fewest number of shares of Stock held in such accounts necessary to generate sufficient proceeds of such sale to equal (or exceed by not more than the actual sale price of a single share of Stock) the Participant’s projected tax liability determined by multiplying (A) the aggregate maximum marginal federal and applicable state and local income tax rates on the date of the distribution; by (B) the total number of shares of Stock to be distributed. The Committee shall withhold the proceeds of such sale for purposes of satisfying the Participant’s federal, state and local income taxes resulting from the payout of Stock. The Participant shall provide the Committee with such stock powers and additional information or documents as may be necessary for the Committee to discharge its obligations under this Section.

15.2

Payments to Satisfy Tax Liability. The Committee shall deliver the proceeds of the sale of shares of Stock pursuant to Section 15.1 to the Internal Revenue Service and/or other taxing authority in satisfaction of the Participant’s tax liability arising from the payout of Stock from such Participant’s Restricted Stock Account, Performance Share Account and Option Account.”

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     IN WITNESS WHEREOF, RPM INTERNATIONAL INC., by its duly authorized officer, has caused this Amendment No. 4 to the RPM International Inc. Deferred Compensation Plan to be signed this 10th day of June, 2004.

RPM INTERNATIONAL INC.
By: Its:	/s/ Janeen Kastner Director of Human Resources
	& Administration

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EX-10.13.6

Exhibit 10.13.6

AMENDMENT NO. 5

TO THE

RPM INTERNATIONAL INC. DEFERRED COMPENSATION PLAN

     THIS AMENDMENT NO. 5 to the RPM International Inc. Deferred Compensation Plan (the “Plan”) is executed by RPM International Inc. (the “Company”) as of the date set forth below.

WITNESSETH:

     WHEREAS, the Company established the Plan on May 31, 2002 and maintains the Plan for the benefit of a select group of management employees, highly compensated employees and directors of the Company and its subsidiaries; and

     WHEREAS, Section 409A of the Internal Revenue Code (the “Code”) generally is effective with respect to amounts deferred under the Plan after December 31, 2004; and

     WHEREAS, the Internal Revenue Service has issued transition guidance for amounts subject to Code Section 409A and such guidance permits initial deferral elections for salary and bonuses paid in 2005 to be made until March 15, 2005, permits participants to terminate participation in the Plan or to cancel deferral election until December 31, 2005 and permits participants to make distribution elections until December 31, 2006 (collectively the “Transition Rules”); and

     WHEREAS, the Company desires to amend the Plan to provide the elections permitted by the Transition Rules; and

     WHEREAS, the Company reserved the right, pursuant to Section 13.2 of the Plan, to make certain amendments thereto;

     NOW, THEREFORE, pursuant to Section 13.2 of the Plan and effective as of January 1, 2005, the Company hereby amends the Plan as follows:

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     1. Section 3.3 of the Plan is hereby amended by the addition of a new paragraphs (d) and (e) to read as follows:

“(d)

Notwithstanding paragraphs (a), (b) and (c) of this Section, and any other provision of the Plan that may provide, or may be interpreted to provide, to the contrary, a Participant may make an irrevocable deferral election as provided in this paragraph (d) with respect to amounts deferred under this Plan that are subject to Code Section 409A and that relate all or in part to services performed on or before December 31, 2005. Such irrevocable deferral election must be made on an Election Form that is completed, signed and submitted to the Committee by the earlier of (i) the date that such amounts have been paid or become payable, or (ii) March 15, 2005. The amount deferred pursuant to such election together with other amounts deferred for the Plan Year must satisfy the minimum deferral amounts of Section 3.1.

(e)

Notwithstanding paragraphs (a), (b) (c) and (d), and any other provision of the Plan that may provide, or may be interpreted to provide, to the contrary, with regard to amounts subject to Code Section 409A, a Participant may elect to terminate all or a level of his or her participation in the Plan or elect to cancel all or a portion of his or her deferral election provided such election is provided to the Committee on or before December 31, 2005. The amounts subject to the termination or cancellation election shall be paid to the Participant in, and included in the income of the Participant for, 2005 or, if later, on the date the Participant earns and is vested in such amounts.”

     2. Article 3 of the Plan is hereby amended by the addition of a new Section 3.13 to read as follows:

“3.13. Change In Distribution Elections Before December 31, 2006 For Code Section 409A Amounts. A Participant’s vested Account Balance shall be paid as provided by the Plan and, where permitted under the Plan, as elected by the Participant. On or before December 31, 2006, a Participant may change his or her payment elections (including any election regarding the form and timing of a payment) for vested amounts and benefits of the Plan that are subject to Code Section 409A and that are deferred prior to the election. A Participant may not in calendar year 2006, however, change any payment election with respect to any vested amounts or benefits subject to Code Section 409A that he or she would otherwise receive in calendar year 2006, or cause any such amount or benefit to be paid in calendar year 2006 that would otherwise not be received in calendar year 2006.”

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     IN WITNESS WHEREOF, RPM INTERNATIONAL INC., by its duly authorized officer, has caused this Amendment No. 5 to the RPM International Inc. Deferred Compensation Plan to be signed this 16th day of December, 2005.

RPM INTERNATIONAL INC.
By:	/s/ Ronald A. Rice
Its:	Senior Vice President

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EX-10.13.7

Exhibit 10.13.7

AMENDMENT NO. 6

TO THE

RPM INTERNATIONAL INC. DEFERRED COMPENSATION PLAN

          THIS AMENDMENT NO. 6 to the RPM International Inc. Deferred Compensation Plan (hereinafter known as the “Plan”) is executed by RPM International Inc. (hereinafter known as the “Company”) as of the date set forth below.

WITNESSETH:

          WHEREAS, the Company maintains the Plan for the benefit of a select group of management employees, highly compensated employees and directors of the Company and its subsidiaries; and

          WHEREAS, it is the desire of the Company to amend the Plan so that, upon a payout of stock from a Participant’s Account Balance and Merger Account, the committee shall automatically sell the number of such shares necessary to generate sufficient proceeds to satisfy the Participant’s minimum tax liability resulting from the payout; and

          WHEREAS, the Company reserved the right, pursuant to Section 13.2 of the Plan, to make certain amendments thereto;

          NOW, THEREFORE, pursuant to Section 13.2 of the Plan and effective as of the date hereof, the Company hereby amends the Plan as follows:

     1. Article 15.1 of the Plan is hereby amended by the deletion of said Article 15.1 in its entirety and the substitution in lieu thereof of the following new Article 15.1:

“15.1  Mandatory Sale of Shares of Stock. Subject to the terms, conditions and restrictions specified under this Plan, the Committee shall, prior to making a payout in Stock from a Participant’s Account Balance and Merger Account (whether a lump sum, installment or other payout), sell or cause to be sold the fewest number of shares of Stock held in such accounts necessary to generate

sufficient proceeds of such sale to equal (or exceed by not more than the actual sale price of a single share of Stock) the Participant’s minimum tax liability determined by multiplying (A) the aggregate minimum marginal federal and applicable state and local income tax rates on the date of the distribution; by (B) the total number of shares of Stock to be distributed. The Committee shall withhold the proceeds of such sale for purposes of satisfying the Participant’s federal, state and local income taxes resulting from the payout of Stock. The Participant shall provide the Committee with such stock powers and additional information or documents as may be necessary for the Committee to discharge its obligations under this Section.”

     IN WITNESS WHEREOF, RPM INTERNATIONAL INC., by its duly authorized officer, has caused this Amendment No. 6 to the RPM International Inc. Deferred Compensation Plan to be signed effective as of September 1, 2006.

RPM INTERNATIONAL INC.
By:	/s/ Ronald A. Rice
	Ronald A. Rice
Its:	Senior Vice President — Administration

2

EX-10.15.6

Exhibit 10.15.6

SIXTH AMENDMENT TO THE
RPM INTERNATIONAL INC. 1997 RESTRICTED STOCK PLAN

     THIS SIXTH AMENDMENT to the RPM International Inc. 1997 Restricted Stock Plan is executed by RPM International Inc. (hereinafter referred to as the “Company”) as of the date set forth below.

WITNESSETH:

     WHEREAS, the Company adopted and maintains the RPM International Inc. 1997 Restricted Stock Plan (hereinafter referred to as the “Plan”) for the benefit of certain of its employees and certain employees of the Company’s subsidiaries; and

     WHEREAS, the Company reserved the right, pursuant to Section 8 of the Plan, to make certain amendments thereto; and

     WHEREAS, it is the desire of the Company to amend the Plan so that, upon lapse of restrictions on stock awarded thereunder, the Company or the escrow agent shall automatically sell the number of shares necessary to generate sufficient proceeds to satisfy the grantee’s minimum tax liability arising from the lapse of restrictions;

     NOW, THEREFORE, pursuant to Section 8 of the Plan and effective as of the date hereof, the Company hereby amends the Plan as follows:

     1. Section 5.1 of the Plan is hereby amended by the deletion of Section 5.1 in its entirety and the substitution in lieu thereof of a new Section 5.1 to read as follows:

     “5.1 The Shares shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated (and any such sale, transfer or other disposition, pledge or other hypothecation being hereinafter referred to as “to dispose of” or a “disposition”) until the earliest of (a) the later of either the employee’s termination of

employment with the Company and any of its subsidiaries or the lapse of the right of the Company to a return of such Shares pursuant to Section 5.2 below; (b) a change in control that occurs with respect to the Company; or (c) the termination of the Plan. Notwithstanding the foregoing, but subject to the terms, conditions and restrictions specified under this Plan, after the date that a participant’s Shares become nonforfeitable in accordance with Article 5 or Article 6, and provided that the participant has not surrendered the Shares in accordance with Section 11.3, the Company or the escrow agent (as the case may be) shall sell the fewest number of such Shares with respect to which restrictions have lapsed necessary for the proceeds of such sale to equal (or exceed by not more than the actual sale price of a single Share) the participant’s minimum tax liability determined by multiplying (A) the aggregate minimum marginal federal and applicable state and local income tax rates on the date of the lapse of restrictions; by (B) the total number of Shares with respect to which restrictions have lapsed. The Company or the escrow agent (as the case may be) shall withhold the proceeds of such sale for purposes of satisfying the participant’s federal, state and local income taxes resulting from the lapse of restrictions. The Company or the escrow agent (as the case may be) shall deliver the proceeds of the sale of Shares to the Internal Revenue Service and/or other taxing authority in satisfaction of the participant’s tax liability arising from the lapse of restrictions. The participant shall provide the Committee, the Company and/or the escrow agent with such stock powers and additional information or documents as may be necessary for the Committee, the Company and/or the escrow agent to discharge their obligations under this Section.”

2

     IN WITNESS WHEREOF, RPM International Inc., by its officer duly authorized, has caused this Sixth Amendment to the RPM International Inc. 1997 Restricted Stock Plan to be signed effective as of September 1, 2006.

RPM INTERNATIONAL INC.
By:	/s/ Ronald A. Rice
	Ronald A. Rice
Its:	Senior Vice President — Administration

3

EX-10.16.3

Exhibit 10.16.3

AMENDMENT NO. 3

TO THE RPM INTERNATIONAL INC.

2002 PERFORMANCE ACCELERATED RESTRICTED STOCK PLAN

     THIS AMENDMENT NO. 3 to the RPM International Inc. 2002 Performance Accelerated Restricted Stock Plan is executed by RPM International Inc. (hereinafter known as the “Company”) as of the date set forth below.

WITNESSETH:

     WHEREAS, RPM International Inc. maintains the RPM International Inc. 2002 Performance Accelerated Restricted Stock Plan (hereinafter known as the “Plan) for the benefit of certain of its employees and certain employees of affiliated companies; and

     WHEREAS, it is the desire of the Company to amend the Plan so that, upon lapse of restrictions on restricted stock awarded thereunder, the Company or the escrow agent shall automatically sell the number of such shares necessary to generate sufficient proceeds to satisfy the Grantee’s minimum tax liability resulting from the lapse of restrictions; and

     WHEREAS, the Company has the right, pursuant to Section 12.1 of the Plan, to make certain amendments thereto;

     NOW, THEREFORE, pursuant to Section 12.1 of the Plan and effective as of the date hereof, the Company hereby amends the Plan as follows:

     1. Section 6.2 of the Plan is hereby amended by the deletion of said section in its entirety and the substitution in lieu thereof of a new Section 6.2 to read as follows:

     “6.2 Restricted Stock Agreements. The granting of Restricted Stock to an Eligible Employee under this Plan shall be contingent on such Eligible Employee

executing a Restricted Stock Agreement in the form prescribed by the Committee. Each Restricted Stock Agreement shall: (i) indicate the number of shares of Restricted Stock which will be granted to the Eligible Employee; (ii) include provisions reflecting the transfer restrictions imposed upon Restricted Stock under this Plan and the provisions for lapse of those restrictions under this Plan; (iii) include provisions requiring the sale of shares of Restricted Stock to satisfy the Grantee’s minimum federal, state and local income tax liability arising from lapse of restrictions on such shares; and (iv) include any other terms, conditions or restrictions the Committee deems necessary or appropriate. The Committee may solicit the recommendation of the Company’s Chief Executive Officer in determining the number of shares of Restricted Stock which shall be allocated to an Eligible Employee.”

     2. Section 8.4 of the Plan is hereby amended by the deletion of said section in its entirety and the substitution in lieu thereof of a new Section 8.4 to read as follows:

     “8.4 Mandatory Sale of Shares of Restricted Stock to Satisfy Grantee’s Tax Obligations. The Committee shall notify a Grantee of the lapse of restrictions on shares of Restricted Stock awarded to him or her under this Article VIII within an administratively practicable time after the lapse of restrictions. Subject to the terms, conditions and restrictions specified under this Plan, and provided that the Grantee has not surrendered such shares of Restricted Stock at least six (6) months before the date of the lapse of restrictions in accordance with Section 14.2, the Company or the escrow agent (as the case may be) shall sell the fewest number of Common Shares with respect to which restrictions have lapsed necessary for the proceeds of such sale to equal (or exceed by not more than the actual sale price of a single Common Share) the Grantee’s

2

minimum tax liability determined by multiplying (A) the aggregate minimum marginal federal and applicable state and local income tax rates on the date of the lapse of restrictions; by (B) the total number of Common Shares with respect to which restrictions have lapsed. The Company or the escrow agent (as the case may be) shall withhold the proceeds of such sale for purposes of satisfying the Grantee’s federal, state and local income taxes resulting from the lapse of restrictions. Prior to any such sale, the Committee shall cause new certificates for such shares to be issued, with any legend making reference to the restrictions imposed hereunder removed. The Grantee shall provide the Committee, the Company and/or the escrow agent with such Stock Powers and additional information or documents as may be necessary for the Committee, the Company and/or the escrow agent to discharge their obligations under this Section.”

     3. Section 9.5 of the Plan is hereby amended by the deletion of said section in its entirety and the substitution in lieu thereof of a new Section 9.5 to read as follows:

     “9.5 Mandatory Sale of Shares of Restricted Stock to Satisfy Grantee’s Tax Obligations. The Committee shall notify a Grantee of the lapse of restrictions on shares of Restricted Stock awarded to him or her under this Article IX within an administratively practicable time after the lapse of restrictions. Subject to the terms, conditions and restrictions specified under this Plan, and provided that the Grantee has not surrendered such shares of Restricted Stock at least six (6) months before the date of the lapse of restrictions in accordance with Section 14.2, the Company or the escrow agent (as the case may be) shall sell the fewest number of Common Shares with respect to which restrictions have lapsed necessary for the proceeds of such sale to equal (or exceed by not more than the actual sale price of a single Common Share) the Grantee’s

3

minimum tax liability determined by multiplying (A) the aggregate minimum marginal federal and applicable state and local income tax rates on the date of the lapse of restrictions; by (B) the total number of Common Shares with respect to which restrictions have lapsed. The Company or the escrow agent (as the case may be) shall withhold the proceeds of such sale for purposes of satisfying the Grantee’s federal, state and local income taxes resulting from the lapse of restrictions. Prior to any such sale, the Committee shall cause new certificates for such shares to be issued, with any legend making reference to the restrictions imposed hereunder removed. The Grantee shall provide the Committee, the Company and/or the escrow agent with such Stock Powers and additional information or documents as may be necessary for the Committee, the Company and/or the escrow agent to discharge their obligations under this Section.”

     IN WITNESS WHEREOF, RPM International Inc., by its duly authorized officer, has caused this Amendment No. 3 to the RPM International Inc. 2002 Performance Accelerated Restricted Stock Plan to be signed effective as of September 1, 2006.

RPM INTERNATIONAL INC.
By:	/s/ Ronald A. Rice
	Ronald A. Rice
Its:	Senior Vice President — Administration

4

EX-10.17.1

Exhibit 10.17.1

AMENDMENT NO. 1

TO THE RPM INTERNATIONAL INC.

2003 RESTRICTED STOCK PLAN FOR DIRECTORS

     THIS AMENDMENT NO. 1 to the RPM International Inc. 2003 Restricted Stock Plan for Directors is executed by RPM International Inc. (hereinafter known as the “Company”) as of the date set forth below.

WITNESSETH:

     WHEREAS, RPM International Inc. maintains the RPM International Inc. 2003 Restricted Stock Plan for Directors (hereinafter known as the “Plan) for the benefit of certain of its directors; and

     WHEREAS, it is the desire of the Company to amend the Plan so that, upon lapse of restrictions on restricted stock awarded thereunder, the Company or the escrow agent shall automatically sell the number of such shares necessary to generate sufficient proceeds to satisfy the Grantee’s minimum tax liability resulting from the lapse of restrictions; and

     WHEREAS, the Company has the right, pursuant to Section 12.1 of the Plan, to make certain amendments thereto;

     NOW, THEREFORE, pursuant to Section 12.1 of the Plan and effective as of the date hereof, the Company hereby amends the Plan as follows:

          1. Section 8.2 of the Plan is hereby amended by the deletion of said section in its entirety and the substitution in lieu thereof of a new Section 8.2 to read as follows:

          “8.2 Mandatory Sale of Shares of Restricted Stock to Satisfy Grantee’s Tax Obligations. The Committee shall notify a Grantee of the lapse of restrictions on shares of Restricted Stock awarded to him or her under the Plan within an

administratively practicable time after the lapse of restrictions. Provided that the Grantee has not surrendered such shares of Restricted Stock at least six (6) months before the date of the lapse of restrictions in accordance with Article 14, the Company or the escrow agent (as the case may be) shall sell the fewest number of shares of Common Stock with respect to which restrictions have lapsed necessary for the proceeds of such sale to equal (or exceed by not more than the actual sale price of a single share of Common Stock) the Grantee’s minimum tax liability determined by multiplying (A) the aggregate minimum marginal federal and applicable state and local income tax rates on the date of the lapse of restrictions; by (B) the total number of shares of Common Stock with respect to which restrictions have lapsed. The Company or the escrow agent (as the case may be) shall withhold the proceeds of such sale for purposes of satisfying the Grantee’s federal, state and local income taxes resulting from the lapse of restrictions. Prior to any such sale, the Committee shall cause new certificates for such shares to be issued, with any legend making reference to the restrictions imposed hereunder removed. The Grantee shall provide the Committee, the Company and/or the escrow agent with such Stock Powers and additional information or documents as may be necessary for the Committee, the Company and/or the escrow agent to discharge their obligations under this Section.”

2

          IN WITNESS WHEREOF, RPM International Inc., by its duly authorized officer, has caused this Amendment No. 1 to the RPM International Inc. 2003 Restricted Stock Plan for Directors to be signed effective as of September 1, 2006.

RPM INTERNATIONAL INC.
By:	/s/ Ronald A. Rice
	Ronald A. Rice
Its:	Senior Vice President — Administration

3

EX-10.18.3

Exhibit 10.18.3

AMENDMENT NO. 1

TO THE RPM INTERNATIONAL INC.

2004 OMNIBUS EQUITY AND INCENTIVE PLAN

     THIS AMENDMENT NO. 1 to the RPM International Inc. 2004 Omnibus Equity and Incentive Plan is executed by RPM International, Inc. (hereinafter known as the “Company”) as of the date set forth below.

WITNESSETH:

     WHEREAS, RPM International Inc. maintains the RPM International Inc. 2004 Omnibus Equity and Incentive Plan (hereinafter known as the “Plan”) for the benefit of certain of its employees and certain employees of affiliated companies; and

     WHEREAS, it is the desire of the Company to amend the Plan so that, upon any distribution incident to the Plan, the Company shall automatically sell the number of such shares necessary to generate sufficient proceeds to satisfy the Participant’s minimum tax liability resulting from such distributions; and

     WHEREAS, the Company has the right, pursuant to Section 17 of the Plan to make certain amendments thereto;

     NOW, THEREFORE, pursuant to Section 17 of the Plan and effective as of the date hereof, the Company hereby amends the Plan as follows:

     1. Section 14 of the Plan is hereby amended by the deletion of said section in its entirety and the substitution in lieu thereof of a new Section 14 to read as follows:

“14. Satisfaction of Minimum Withholding Tax Liabilities.

     (a) In General. The Committee shall cause the Company to withhold any taxes which it determines it is required by law or required by the terms of this Plan to withhold in connection with any distributions incident to this Plan.

     (i) Cash Distributions. The Committee shall cause the Company to require any withholding tax obligation arising in connection with a cash distribution (or the cash portion of a distribution), up to the minimum required federal, state and local withholding taxes, including payroll taxes, to be satisfied in whole or in part, with or without the consent of the Participant or Beneficiary.

     (ii) Share Distributions. The Committee shall cause the Company to withhold from any distribution of shares (including the portion of a distribution consisting of shares) under this Plan an amount equal to the Participant’s or Beneficiary’s minimum tax liability arising from such distribution. The withholding amount shall be obtained

pursuant to Section 14(b). The Participant or Beneficiary shall provide the Committee with such Stock Powers and additional information or documentation as may be necessary for the Committee to discharge its obligations under this Section.

     (b) Withholding from Share Distributions. With respect to a distribution of shares pursuant to the Plan, the Committee shall cause the Company to sell the fewest number of such shares for the proceeds of such sale to equal (or exceed by not more than that actual sale price of a single share) the Participant’s Minimum Withholding Tax Liability resulting from such distribution. The Committee shall withhold the proceeds of such sale for purposes of satisfying the Participant’s Minimum Withholding Tax Liability. Notwithstanding anything contained in this Section 14 to the contrary, the Committee shall have no obligation to withhold amounts from distributions of shares pursuant to the exercise of Incentive Stock Options except as may otherwise be required by law.

     (c) Delivery of Withholding Proceeds. The Committee shall cause the Company to deliver withholding proceeds to the Internal Revenue Service and/or other taxing authority in satisfaction of a Participant’s tax liability arising from a distribution.

     (d) Minimum Withholding Tax Liability. For purposes of this Section 14, the term “Minimum Withholding Tax Liability” is the product of: (i) the aggregate minimum applicable federal and applicable state and local income withholding tax rate on the date of a distribution pursuant to the Plan; and (ii) the Fair Market Value of shares distributable to the Participant determined as of the date of distribution.”

     IN WITNESS WHEREOF, RPM International Inc., by its duly authorized officer, has caused this Amendment No. 1 to the RPM International Inc. 2004 Omnibus Equity and Incentive Plan Directors to be signed effective as of September 1, 2006.

RPM INTERNATIONAL INC.
By:	/s/ Ronald A. Rice
	Ronald A. Rice
Its:	Senior Vice President — Administration

2

EX-13.1

Exhibit 13.1

Annual
Report	Financial Section Contents

22	Management’s Discussion and Analysis
34	Financial Statements
38	Notes to Financial Statements
64	Quarterly Stock Price and Dividend Information
65	Management’s Report on Internal Control
66	Auditors’ Reports
69	Stockholder Information
70	Subsidiaries

See Our Special Cover Fold-Out for Selected Financial Data

RPM International Inc. and Subsidiaries       21

management’s discussion and analysis

Management’s Discussion and Analysis
of Results of Operations and Financial Condition

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 our asbestos liability; 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, our most recent facts, and other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of our assets and liabilities. Actual results, which are shaped by actual market conditions, including legal settlements, may differ materially from our estimates.

We have identified below the accounting policies and estimates that are the most critical to our financial statements.

Revenue Recognition

Revenues are recognized when realized or realizable, and when earned. In general, this is when title and risk of loss pass 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.

We also record revenues generated under long-term construction-type contracts, mainly in connection with the installation of specialized roofing and flooring systems, and related services. In general, we account for long-term construction-type contracts under the percentage-of-completion method and, therefore, record contract revenues and related costs as our contracts progress. This method recognizes the economic results of contract performance on a timelier basis than does the completed-contract method; however, application of this method requires reasonably dependable estimates of progress toward completion, as well as other dependable estimates. When reasonably dependable estimates cannot be made, or if other factors make estimates doubtful, the completed-contract method is applied. Under the completed-contract method, billings and costs are accumulated on the balance sheet as the contract progresses, but no revenue is recognized until the contract is complete or substantially complete.

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 determined 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 accumulated 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

22       RPM International Inc. and Subsidiaries

management’s discussion and analysis

tests, which involve the use of estimates related to the fair market values of the business operations with which goodwill is associated, during our fourth fiscal 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.

Additionally, we test all indefinitely-lived intangible assets for impairment annually. 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 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 such impairment loss to date.

Deferred Income Taxes

The provision for income taxes is calculated 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 anticipated taxable income resulting from the reversal of future taxable temporary differences, cumulative and anticipated amounts of domestic and international earnings or losses, and anticipated amounts of foreign source income.

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.

We have not provided for U.S. income and foreign withholding taxes on approximately $601.8 million of foreign subsidiaries’ undistributed earnings as of May 31, 2007, because such earnings have been retained and reinvested 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.

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 I 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 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.

RPM International Inc. and Subsidiaries       23

management’s discussion and analysis

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 some of the 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.

Additionally, our operations are subject to various federal, state, local and foreign tax laws and regulations which govern, among other things, taxes on worldwide income. The calculation of our income tax expense is based on the best information available and involves significant management judgment. The actual income tax liability for each jurisdiction in any year can, in some instances, be ultimately determined several years after the financial statements are published.

We maintain reserves for estimated income tax exposures for many different jurisdictions. Tax exposures are settled primarily through the resolution of audits within each tax jurisdiction or the closing of a statute of limitation. Exposures can also be affected by changes in applicable tax law or other factors, which may cause management to believe a revision of past estimates is appropriate. Management believes that an appropriate liability has been established for income tax exposures; however, actual results may materially differ from these estimates.

SEGMENT INFORMATION

Our business is divided into two reportable operating segments: the consumer segment and the industrial segment. Within each reportable operating segment, individual groups of companies and product lines generally address common markets, utilize similar technologies, and are able to share manufacturing or distribution capabilities. We evaluate the profit performance of our segments based on income (loss) before income taxes, but also look to earnings (loss) before interest and taxes (“EBIT”) as a performance evaluation measure 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, Africa, Australia and the Middle East. Our industrial product lines are sold primarily to distributors, contractors and directly to certain 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 primarily 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 our two reportable operating segments, there are certain business activities, referred to as “corporate/other,” that do not constitute an operating segment, including corporate administration and results of our captive insurance activities. In addition to the results for these items, the category “corporate/other” also includes the gains or losses on the sales of certain assets and other expenses not directly associated with either of our two reportable operating segments. Corporate/other assets consist primarily of investments, prepaid expenses, deferred pension assets, and headquarters’ property and equipment. These corporate and other assets and expenses reconcile reportable operating segment data to total consolidated net sales, income (loss) before income taxes, identifiable assets, capital expenditures, and depreciation and amortization.

24       RPM International Inc. and Subsidiaries

management’s discussion and analysis

The following table reflects the results of our reportable 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 product lines. For further information pertaining to our segments, refer to Note J, “Segment Information,” to our Consolidated Financial Statements.

SEGMENT INFORMATION
(In thousands)

Year Ended May 31	2007			2006			2005
Net Sales
Industrial Segment	$	2,100,386		$	1,811,590		$	1,441,548
Consumer Segment		1,238,378			1,196,748			1,114,187
Consolidated	$	3,338,764		$	3,008,338		$	2,555,735
Income (Loss) Before Income Taxes(a)
Industrial Segment
Income Before Income Taxes(a)	$	233,120		$	201,230		$	168,578
Interest (Expense), Net		(1,937	)		(1,711	)		532
EBIT(b)	$	235,057		$	202,941		$	168,046
Consumer Segment
Income Before Income Taxes(a)	$	151,496		$	159,147		$	147,601
Interest (Expense), Net		(2,895	)		(142	)		415
EBIT(b)	$	154,391		$	159,289		$	147,186
Corporate/Other
(Expense) Before Income Taxes(a)	$	(77,081	)	$	(482,852	)(c)	$	(152,451	)(c)
Interest (Expense), Net		(42,201	)		(39,490	)		(36,325	)
EBIT(b)	$	(34,880	)	$	(443,362	)	$	(116,126	)
Consolidated
Income (Loss) Before Income Taxes(a)	$	307,535		$	(122,475	)	$	163,728
Interest (Expense), Net		(47,033	)		(41,343	)		(35,378	)
EBIT(b)	$	354,568		$	(81,132	)	$	199,106

(a)	The presentation includes a reconciliation of Income (Loss) Before Income Taxes, a measure defined by Generally Accepted Accounting Principles (GAAP) in the United States, to EBIT.
(b)	EBIT is defined as earnings (loss) before interest and taxes. We evaluate the profit performance of our segments based on income (loss) 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 charges, totaling $380.0 million in fiscal 2006 and $78.0 million in fiscal 2005, reflected in Corporate/Other, relate to our Bondex International, Inc. subsidiary (see Note I to the Consolidated Financial Statements).

RPM International Inc. and Subsidiaries       25

management’s discussion and analysis

RESULTS OF OPERATIONS

Fiscal 2007 Compared with Fiscal 2006

Net Sales On a consolidated basis, net sales of $3.339 billion for the current fiscal year ended May 31, 2007 grew 11.0%, or $330.4 million, over net sales of $3.008 billion during the comparable period last year. The August 31, 2005 acquisition of illbruck Sealant Systems (“illbruck”), plus nine other smaller acquisitions, slightly offset by one small divestiture, contributed 4.3%, or $129.9 million, to the growth over last year. Organic sales contributed 6.7% to the growth in sales from last year, or $200.5 million, and included 2.0% from pricing initiatives and 1.3% from net favorable foreign exchange rates year-over-year, primarily against the stronger euro and Canadian dollar, offset slightly by certain weaker Latin American and other currencies.

Industrial segment net sales, which comprised 62.9% of the current year’s consolidated net sales, totaled $2.100 billion; growing 15.9% from last year’s $1.812 billion. This segment’s net sales growth resulted from the combination of the acquisition of illbruck, plus six other smaller acquisitions, which contributed 5.6%, plus organic sales, which added 10.3%, including 2.7% from pricing and 1.7% from net favorable foreign exchange differences. Within the segment, several product lines provided notable organic growth over last year, including corrosion control coatings, fiberglass reinforced plastic grating composites and institutional roofing and related services. Internationally, product lines in this segment provided significant organic growth in Europe, Canada and Latin America. There were strong organic sales improvements throughout this segment, with much of this growth related to ongoing industrial and commercial maintenance and improvement activities primarily in North America, but also in Europe, Latin America and other regions of the world, as well as increased new construction in those sectors. We continue to secure new business and grow market share among our industrial segment operations.

Consumer segment net sales, which comprised 37.1% of the current year’s consolidated net sales, increased 3.5% to $1.238 billion from last year’s $1.197 billion. Organic sales contributed 1.1% to the growth in sales, which included pricing of 0.8% and 0.6% from net favorable foreign exchange differences. Contributions to sales from acquisitions of three product lines were slightly offset by a January 2006 divestiture, for a net contribution of 2.4% to sales. The contribution from organic sales in this segment has slowed over the past year, principally as a result of fluctuating order patterns among major retail customers in their efforts to manage their inventories, as well as declines in existing homes turnover and, to a lesser extent, new housing starts, which have affected several lines of the business.

Gross Profit Margin Consolidated gross profit margin of 40.8% of net sales this current fiscal year declined from 41.5% a year ago. This margin decline of 0.7%, or 70 basis points (“bps”), is the result of several factors, a main one being continued higher costs of a number of our raw materials, such as asphalts and various resins, net of higher pricing initiatives (approximately 40 bps). Numerous price increases have been initiated throughout both operating segments during the past year to help compensate or recover these higher material costs, a number of which are beginning to moderate. Several recent acquisitions, particularly illbruck, also carry inherently lower gross margin structures and further impacted gross margin this quarter, by approximately 20 bps. In addition, a comparatively lower-margin mix of sales, including increased services sales, which also generate structurally lower gross margin, further weighed on this margin.

Industrial segment gross profit margin for this year declined to 42.1% of net sales from 43.0% last year. This 90 bps margin decline in this segment essentially relates to the lower-margin illbruck acquisition (approximately 20 bps); higher raw material costs, net of higher pricing (approximately 40 bps); and the continued growth in the lower-margin, mainly service-driven mix of sales.

Consumer segment gross profit margin for this current fiscal year declined to 38.4% of net sales from 39.2% last year, or 80 bps. Higher raw material costs, net of higher pricing initiatives, amounted to approximately 30 bps, while the change in delivery terms with a major customer during this year’s second quarter impacted this segment’s margins by approximately 40 bps. The remaining difference results from the fluctuating order patterns among major retail customers in their efforts to manage their inventories, as well as continued declines in existing homes turnover and new housing starts, which have impacted several product lines within this segment.

Selling, General and Administrative Expenses (“SG&A”) Consolidated SG&A expense levels for this year improved by 100 bps to 30.6% of net sales compared with 31.6% a year ago. Reflected in the improvement is the leverage from the 5.4% organic sales growth, including higher pricing. Additionally, the prior year included approximately $10.2 million of one-time costs, which included the finalization of the Dryvit national residential class action settlement ($5.0 million), the sale of a small subsidiary ($2.7 million), hurricane-related costs ($1.0 million), and certain costs incurred for a European pension plan ($1.5 million). The mix of increased service sales over the prior year, which are characterized by relatively lower SG&A support requirements, also contributed to the improvement. Other factors having a favorable impact on margins included tighter spending controls across both segments and a change in delivery terms with a major customer, which occurred during this year’s second quarter and included an arrangement whereby this customer provides for its own shipping.

Industrial segment SG&A improved by 90 bps to 30.9% of net sales this current fiscal year from 31.8% a year ago, which principally reflects the leverage of organic sales growth of 8.6% for this segment, including higher pricing. This segment’s recent acquisitions also had a favorable impact on this year’s results, impacting margins by approximately 10 bps.

26       RPM International Inc. and Subsidiaries

management’s discussion and analysis

Consumer segment SG&A of 25.9% of net sales remained unchanged from a year ago, reflecting the change in delivery terms with a major customer, effective cost containment and other savings programs.

Corporate/Other SG&A expenses decreased during this year to $49.8 million from $63.4 million for the comparable period last year, principally reflecting last year’s $10.2 million of one-time costs, as previously discussed. Excluding the one-time costs from the prior year, SG&A expenses were further reduced by approximately $3.4 million this year, mainly from reductions in certain employment and benefit-related costs, including insurance and pensions. Certain other increases in employment-related costs, including compensation and additional grants made under the Omnibus Plan, slightly offset these savings.

License fee and joint venture income of approximately $2.5 million and $2.2 million for the years ended May 31, 2007 and 2006, respectively, are reflected as reductions of consolidated SG&A expenses.

We recorded total net periodic pension and postretirement benefit cost of $20.2 million and $19.7 million for the years ended May 31, 2007 and 2006, respectively. This increased pension expense of $0.5 million was attributable to increased pension service and interest cost approximating $1.9 million, in combination with additional net actuarial losses incurred of $0.3 million, offset by an improvement in the expected return on plan assets of $1.7 million. A change of 0.25% in the discount rate or expected rate of return on plan assets assumptions would result in $1.2 million and of $0.6 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 G, “Pension Plans,” and Note H, “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 investment performance of plan assets, but such changes are not expected to be material as a percentage of income before income taxes.

Asbestos Charge (Income) As described in Note I to the Consolidated Financial Statements, we recorded a pre-tax asbestos charge of $380.0 million for the fiscal year ended May 31, 2006 in connection with the completion of a calculation of our liability for unasserted potential future asbestos-related claims by an independent consulting firm. There was no related charge taken or incurred during the current fiscal year ended May 31, 2007; however, our Bondex subsidiary reached a cash settlement of $15.0 million, the terms of which are confidential by agreement of the parties, with one of our former insurance carriers regarding asbestos-matters and recorded income during our second fiscal quarter ended November 30, 2006. For additional information, refer to Note I to the Consolidated Financial Statements.

Net Interest Expense Net interest expense was $5.7 million higher in the current fiscal year of fiscal 2007 than 2006. Included in this increase is $1.1 million paid in association with the early retirement of our Private Placement Senior Notes during the quarter ended August 31, 2006 (refer to Liquidity and Capital Resources — Financing Activities, below). Interest rates overall averaged 5.6% during fiscal 2007, compared with 5.2% for fiscal 2006, accounting for $3.4 million of the interest expense increase. Higher average net borrowings associated with recent acquisitions, approximating $132.5 million, were offset by interest saved through net debt paydowns, for a net increase of $5.6 million of interest expense. Investment income performance improved year-over-year and provided $4.4 million of additional income in 2007.

Income (Loss) Before Income Taxes (“IBT”) Consolidated IBT for this year improved by $430.0 million, or 351.1%, to $307.5 million from a net loss of $122.5 million during the year ended May 31, 2006, with margin comparisons of 9.2% of net sales versus (4.1)% a year ago. While prior year IBT includes a pre-tax asbestos reserve charge of $380.0 million, the current year IBT includes pre-tax asbestos-related settlement income of $15.0 million. Excluding the impact of the asbestos-related items, IBT for this year would have improved by 13.6%, while current year margin of 8.8% would compare with last year’s adjusted margin of 8.5%.

Industrial segment IBT grew by $31.9 million, or 15.8%, to $233.1 million from last year’s $201.2 million, primarily from this segment’s organic unit sales growth. Consumer segment IBT declined by 4.8%, to $151.5 million from $159.1 million last year, mainly as a result of organic unit sales decline, excluding the favorable impacts of pricing and foreign exchange.

For a reconciliation of IBT to earnings (loss) before interest and taxes, see the Segment Information table located on page 25 of this Annual Report.

Income Tax Rate The effective income tax expense rate was 32.3% for the year ended May 31, 2007 compared to an effective income tax benefit rate of 37.8% for the year ended May 31, 2006.

For the year ended May 31, 2007 and, to a greater extent for the year ended May 31, 2006, the effective tax rate differed from the federal statutory rate due to decreases in the effective tax rate principally as a result of certain tax credits and by the U.S. tax impact of foreign operations. Furthermore, during the year ended May 31, 2007, a decrease in the effective income tax expense rate resulted from a one-time benefit relating to the resolution of prior years’ tax liabilities in the amount of $2.1 million. The year ended May 31, 2006 was impacted by a decrease in the effective tax rate as a result of a one-time state income tax benefit related to changes in Ohio tax laws, including the effect of lower tax rates, enacted on June 30, 2005.

RPM International Inc. and Subsidiaries       27

management’s discussion and analysis

For the year ended May 31, 2007, and to a greater extent for the year ended May 31, 2006, the decreases in the effective tax rate were partially offset by valuation allowances associated with losses incurred by certain of our foreign businesses, valuation allowances related to U.S. federal foreign tax credit carryforwards and state and local income taxes.

As of May 31, 2007, 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 SFAS No. 109, “Accounting for Income Taxes,” we have provided valuation allowances against such deferred tax assets. 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. We intend to maintain the valuation allowance recorded as of May 31, 2007 for certain deferred tax assets until sufficient positive evidence (for example, cumulative positive foreign earnings or additional foreign source income) exists to support the reversal of the tax valuation allowances. A 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.

The effective income tax expense rate for the year ended May 31, 2007 reflects the impact of a cash settlement with an insurance carrier regarding asbestos-matters, which resulted in income of $15.0 million. Excluding the asbestos-related settlement income, the effective income tax expense rate for this year would have been adjusted to a pro-forma annualized effective income tax rate of 32.1%. The effective income tax benefit rate for the year ended May 31, 2006 reflects the impact of the $380.0 million asbestos charge. Excluding the asbestos charge, the effective income tax rate for the prior year would have been adjusted to a pro-forma effective income tax expense rate of 34.7%.

Net Income Net income of $208.3 million for the year ended May 31, 2007 compares to net loss of $76.2 million for fiscal 2006. The prior year net loss reflects the impact of an after-tax asbestos reserve charge of $244.3 million, while the current year reflects a one-time gain of $2.1 million relating to the settlement of prior years’ tax liabilities, and income of $9.7 million (after-tax) related to the impact of a cash settlement received from one of the defendant insurers, as discussed previously. Excluding the impact of the asbestos-related items, this year’s net income would have reflected an improvement of $30.5 million, or 18.1%, to $198.6 million from last year’s adjusted $168.1 million. Margin on sales of 6.0% this year compares to last year’s adjusted 5.6%, excluding the asbestos items, with this 40 bps margin difference mostly the result of the combination of higher organic unit sales volume, the one-time costs a year ago, the movement in sales mix and the influence of several favorable acquisitions.

Diluted earnings per common share for this year improved by 352.3%, to $1.64 from a diluted loss per common share of $0.65 a year ago. Excluding the asbestos-related items previously discussed, diluted earnings per common share for this year improved by 16.3%, to $1.57, compared with last year’s adjusted $1.35.

Fiscal 2006 Compared with Fiscal 2005

Net Sales Consolidated net sales for 2006 of $3.008 billion improved 17.7%, or $452.6 million, over 2005 net sales of $2.556 billion. Contributing to this improvement was primarily growth in organic sales of approximately $272.1 million, or 10.7%, including 3.3% pricing, plus nine acquisitions, net of one small divestiture, resulting in another 6.9% growth in sales, or $176.9 million. Net favorable foreign exchange rates, relating primarily to the Canadian and Latin American currencies, partly offset by mainly the euro, provided the remaining 0.1%, or $3.6 million, of the growth in sales over 2005.

Industrial segment net sales for 2006 grew 25.7% to $1.812 billion from $1.442 billion in 2005, comprising 60.2% of consolidated net sales for 2006. This segment’s net sales growth resulted primarily from organic sales growth of 13.1%, including 3.2% pricing, plus 12.4% from the 2006 acquisition of illbruck and six smaller acquisitions, with the remaining 0.1% from net favorable foreign exchange differences. Within the segment, the most notable growth in organic sales occurred among molded composite structures, corrosion control coatings, construction sealants and admixtures, roofing, powder coatings and exterior insulating finishes. Much of this demand improvement relates to increased industrial sector maintenance and improvement activity across North America, but also in Europe, Latin America, Africa and the Middle East, as well as increased commercial and industrial construction. We continue to secure new business and grow market share among our industrial segment operations.

Consumer segment net sales for the year grew 7.4% to $1.197 billion from $1.114 billion in 2005, comprising 39.8% of consolidated net sales for 2006. Growth in organic sales added 7.5% (3.4% from pricing) to the consumer segment sales total, plus 0.1% from favorable foreign exchange differences, offset by 0.2% from a small divestiture, net of two small acquisitions. Beginning in February 2005, our retail merchandising services arrangements were changed with certain customers, resulting in a year-over-year reduction in net sales and gross profit, with a related reduction in selling expenses; otherwise, organic sales growth in 2006 would have been 8.4%, or 0.9% stronger. There were notable organic sales increases in this segment among caulks and sealants; primer-sealers; confectionary, sliced fruit and pharmaceutical glazes; and small-project paints and coatings. Retail demand by the consumer remained fairly steady throughout the year, augmented by continuous product development among our businesses.

28       RPM International Inc. and Subsidiaries

management’s discussion and analysis

Gross Profit Margin Consolidated gross profit margin of 41.6% of net sales in 2006 declined from 43.3% in 2005. This margin decline of 170 bps, resulted from several factors, including the higher costs of a number of our raw and packaging materials, particularly petrochemical-based, net of higher pricing initiatives (50 bps), coupled with the inherently lower gross margin structures of several of our recent acquisitions, particularly illbruck (60 bps). Numerous price increases were initiated throughout the operating segments to help compensate or recover these higher material costs, many of which have recently begun to moderate. The additional gross margin decline resulted from a comparatively lower-margin mix of sales, including increased services sales, which characteristically carry lower gross margins, plus the change in merchandising services arrangements (20 bps).

Industrial segment gross profit margin for 2006 declined to 43.0% of net sales from 44.8% in 2005. This 180 bps margin decline mainly related to the recent acquisitions, particularly illbruck (110 bps) and a primarily service-driven lower-margin mix of sales. The productivity gains from this segment’s 9.9% organic unit sales growth, combined with pricing initiatives, more than offset raw material cost increases in 2006.

Consumer segment gross profit margin for 2006 declined to 39.5% of net sales from 41.3% in 2005. The higher raw material costs, net of pricing initiatives, impacted this segment’s margin by approximately 100 bps, while the change in merchandising services arrangements had a negative impact of 50 bps. A partly service-driven lower-margin mix of sales accounted for the difference.

Selling, General and Administrative Expenses (“SG&A”) Consolidated SG&A expense levels improved by 80 bps, declining to 31.7% of net sales compared with 32.5% in 2005. The 7.4% organic unit sales growth, higher pricing initiatives during fiscal 2006 (90 bps), the favorable SG&A cost structure of illbruck and other acquisitions (30 bps), and the change in merchandising services arrangements (10 bps) primarily drove this expense level improvement. This combination of favorable factors more than offset higher employment-related costs, including health care and other benefits, compensation and incentives, as well as higher fuel-related distribution costs; warranty claims; legal, audit and environmental, and other growth-related expenditures and investments, in addition to the $10.2 million of one-time costs incurred during the second quarter of fiscal 2006, comprised primarily of additional costs associated with the finalization of the Dryvit national residential class action settlement ($5.0 million) and the loss on sale of a small non-core subsidiary ($2.7 million), along with uninsured hurricane-related losses and costs associated with a European pension plan.

Industrial segment SG&A improved by 140 bps to 31.8% of net sales in 2006 from 33.2% in 2005, reflecting principally the leverage benefit from 9.9% organic unit sales growth, higher pricing (80 bps), the favorable SG&A cost structure of illbruck and other acquisitions (50 bps), and cost containment and savings programs collectively more than offsetting higher employment-related costs, fuel-related distribution costs, legal costs, and other growth-related expenditures and investments.

Consumer segment SG&A improved by 190 bps to 26.2% of net sales in 2006 compared with 28.1% in 2005, reflecting principally higher pricing effect (90 bps), the leverage benefit from 5.0% organic unit sales growth, this segment’s change in merchandising servicing arrangements (40 bps), and cost containment and savings programs more than offsetting higher employment-related costs, warranty claims, certain environmental costs and other growth-related expenditures and investments.

Corporate/Other SG&A expenses increased during 2006 to $63.4 million from $38.1 million during 2005, reflecting primarily the $10.2 million of one-time costs incurred during the second quarter of fiscal 2006, outlined previously, plus $13.5 million toward increased employment-related costs, including $7.9 million in higher health care costs for covered U.S. and Canadian employees and $1.8 million for additional grants made under the October 2004 Omnibus Equity Incentive Plan.

License fee and joint venture income of approximately $2.2 million and $0.6 million for the years ended May 31, 2006 and 2005, respectively, are reflected as reductions of consolidated SG&A expenses.

We recorded total net periodic pension and postretirement benefit cost of $19.7 million and $16.0 million for 2006 and 2005, respectively. This combined expense increase of $3.7 million was essentially attributable to increased pension service and interest cost approximating $3.6 million, in combination with additional net actuarial losses incurred of $1.0 million, partly offset by improvement against the expected return on plan assets of $0.9 million. A change of 0.25% in the discount rate or expected rate of return on plan assets assumptions would result in $1.2 million and of $0.5 million higher pension expense, respectively. We expect that pension expense will continue to fluctuate on a year-to-year basis depending upon the investment performance of plan assets, but such changes are not expected to be material as a percentage of income before income taxes.

Asbestos Charges As described in Note I to the Consolidated Financial Statements, we recorded asbestos charges of $380.0 million and $78.0 million during 2006 and 2005, respectively. Please refer to our Consolidated Financial Statements for further information.

Net Interest Expense Net interest expense was $6.0 million higher in 2006 than in 2005. Interest rates averaged 5.19% during in 2006, compared with 4.85% in 2005, accounting for nearly $3.1 million in increased interest expense. This average rate increase was largely related to the Federal Reserve Bank rate increases during 2006, which directly affected the interest rates on our variable-rate indebtedness. Additional borrowings associated with acquisitions added approximately $6.6 million

RPM International Inc. and Subsidiaries       29

management’s discussion and analysis

more interest expense in 2006, while reductions of outstanding debt during fiscal 2006 reduced interest cost by approximately $2.2 million and improved investment income performance provided approximately $1.5 million of additional income.

Income (Loss) Before Income Taxes (“IBT”) Consolidated loss before taxes in 2006 of $122.5 million represents a decline of $286.2 million, or 174.8%, from IBT of $163.7 million in 2005, with margin comparisons of (4.1)% of net sales versus 6.4% in 2005. Excluding both years’ asbestos charges, consolidated IBT in 2006 would have amounted to $257.5 million, an improvement of $15.8 million, or 6.5%, from adjusted IBT of $241.7 million in 2005, with margin comparisons of 8.6% of net sales versus 9.5% in 2005. This decline in margin year-over-year reflects primarily the one-time costs incurred during the second quarter of fiscal 2006, as previously discussed, the negative margin impact from higher material costs in 2006, and relatively low first-year IBT results, as expected, from the illbruck acquisition.

Industrial segment IBT grew by $32.6 million, or 19.4%, to $201.2 million from $168.6 million in 2005, mainly from the strength of this segment’s organic sales growth. Consumer segment IBT improved by $11.5 million, or 7.8%, to $159.1 million from $147.6 million in 2005, also reflecting mainly organic sales growth along with cost controls, partly offset by the negative margin impact from higher material costs in this segment. Combined operating IBT improved by $44.2 million, or 14.0%, over 2005.

For a reconciliation of IBT to earnings (loss) before interest and taxes, see the Segment Information table located on page 25 of this Annual Report.

Income Tax Rate The effective income tax benefit rate was 37.8% for 2006 compared to an effective income tax expense rate of 35.8% for 2005.

In 2006, and to a lesser extent in 2005, the effective tax rate differed from the federal statutory rate due to increases principally as a result of an increase in valuation allowances associated with losses incurred by certain of our foreign businesses, valuation allowances related to U.S. federal foreign tax credit carryforwards and other non-deductible business operating expenses. The increases in the effective tax rate were partially offset by the U.S. tax impact of foreign operations and reductions in state and local taxes, including an income tax benefit relating to changes in state tax laws and the effects of lower tax rates enacted during fiscal 2006.

The effective income tax benefit rate for 2006 reflects the impact of the $380.0 million asbestos liability charges. Excluding these asbestos charges, the effective income tax rate for 2006 would have been adjusted to a pro forma effective income tax expense rate of 34.7%. The effective income tax rate for 2005 reflects the impact of the $78.0 million asbestos liability charges that year. Excluding those asbestos charges, the effective income tax rate for 2005 would have been adjusted to a pro forma effective income tax rate of 36.1%.

Net Income (Loss) Net loss of $76.2 million for 2006 compares to net income of $105.0 million in 2005. This $181.2 million decline reflects the impact of the $244.3 million after-tax asbestos charges taken in 2006, versus $49.5 million in 2005, for a net difference of $194.8 million. Excluding the impact of these asbestos charges, 2006 net income would have been an adjusted $168.1 million, representing an increase of $13.6 million, or 8.8%, from $154.5 million in 2005. Margin on sales would have been an adjusted 5.6% in 2006 compared with 6.0% of sales during 2005, with this 40 bps margin difference mainly the result of the higher year-over-year material costs and lower first-year earnings results, as expected, from the illbruck acquisition.

Diluted earnings (loss) per common share in 2006 of ($0.65) compare with $0.86 in 2005. Excluding the asbestos charges, adjusted 2006 diluted earnings per common share would have increased by 8.0%, to $1.35 from an adjusted $1.25 in 2005.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Operating activities generated positive cash flow of $202.3 million during fiscal 2007 compared with $185.5 million generated during fiscal 2006, an increase of $16.8 million or 9.1%. Factoring out the after-tax asbestos-related cash payments and insurance recoveries of $33.3 million and $37.7 million, respectively, operating activities generated positive cash flow of $235.5 million in fiscal 2007 compared with $223.1 million during fiscal 2006, up $12.4 million or 5.6%. Fiscal 2007 adjusted net income of $198.6 million, which excludes $15.0 million ($9.7 million after-tax) in asbestos-related insurance recoveries, reflects an improvement of $30.5 million over fiscal 2006 adjusted net income of $168.1 million, which was affected by $380.0 million ($244.3 million after-tax) in charges for asbestos-related liabilities but had no effect on cash flow. The improvement in cash flow of $12.4 million, as discussed above, was positively impacted by additional depreciation and amortization of $7.3 million versus the prior period, while trade accounts receivable required a usage of $15.5 million in cash flow year-over-year, principally associated with an increase in sales versus the prior year and an unfavorable increase of 2.1 days in days sales outstanding (“DSO”) since May 31, 2006. On the other hand, inventories provided $18.4 million in operating cash year-over-year as a result of a 1.3 days improvement in our days inventory outstanding (“DIO”) since May 31, 2006, while accounts payable required the usage of an additional $4.7 million of cash year-over-year as a result of the increased sales volume and the associated inventory purchases necessary to support these levels, offset by timing of payments and a 2.7 day improvement in our days accounts payable outstanding versus the prior fiscal year end. All other remaining year-over-year balance sheet changes related to cash flows from operations had a net unfavorable impact of $23.6 million.

30       RPM International Inc. and Subsidiaries

management’s discussion and analysis

Payments made for asbestos-related claims of $67.0 million ($42.9 million after-tax) in fiscal 2007 and $59.9 million ($37.7 million after-tax) in fiscal 2006 were a year-over-year usage in operating cash flow of $7.1 million ($5.2 million after-tax), while after-tax insurance recoveries of $15.0 million ($9.7 million after-tax) were a positive source of cash flow.

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 during fiscal 2007 of $70.4 million compare with depreciation of $59.3 million. While we are not a capital intensive business and capital expenditures generally do not exceed depreciation in a given year, 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 this fiscal year, we invested a total of $124.2 million for six acquisitions, which included product lines such as industrial and concrete coatings, fireproofing products, daylight fluorescent pigments, and a number of waterproofing, epoxy and sealants products.

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

Financing Activities

On December 29, 2006, we refinanced our $330.0 million revolving credit facility with a $400.0 million five-year credit facility (the “New Facility”). The New Facility will be used for working capital needs; general corporate purposes, including acquisitions; and to provide back-up liquidity for the issuance of commercial paper. The New Facility provides for borrowings in U.S. dollars and several foreign currencies and provides sub-limits for the issuance of letters of credit in an aggregate amount of up to $35.0 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 New Facility may be expanded upon our request by up to an additional $175.0 million, thus potentially expanding the New Facility to $575.0 million, subject to lender approval.

On July 18, 2006, we prepaid our 6.61% Senior Notes, Series B, due November 15, 2006, and our 7.30% Senior Notes, Series C, due November 15, 2008 (collectively, the “Notes”). We paid all amounts due pursuant to the terms of the Purchase Agreement and did not incur any material early termination penalties in connection with our termination of the Notes.

In July 2006, we amended both our accounts receivable securitization and revolving credit facility agreements to redefine EBITDA, effective May 31, 2006.

On October 19, 2005, we issued and sold $150.0 million aggregate principal amount of 6.7% Senior Unsecured Notes due 2015 (“6.7% Senior Unsecured Notes”) of our indirect wholly-owned subsidiary, RPM United Kingdom G.P. RPM International Inc. has fully and unconditionally guaranteed the payment obligations under the 6.7% Senior Unsecured Notes. The net proceeds of the offering of the 6.7% Senior Unsecured Notes were used by RPM United Kingdom G.P. for refinancing $138.0 million of revolving credit facility borrowings associated with the August 31, 2005 acquisition of illbruck and for other general corporate purposes. Concurrent with the issuance of the 6.7% Senior Unsecured Notes, RPM United Kingdom G.P. entered into a cross currency swap, which fixed the interest and principal payments in euros for the life of the 6.7% Senior Unsecured Notes and results in an effective euro fixed-rate borrowing of 5.31%. The 6.7% Senior Unsecured Notes were offered to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The Notes have not been and will not be registered under the Securities Act of 1933 or any state securities laws.

We are exposed to market risk associated with interest rates. We do not use financial derivative instruments for trading purposes, nor do we engage in foreign currency, commodity or interest rate speculation. In addition to the hedge risk associated with our 6.7% Senior Unsecured Notes discussed above, our only other hedged risks are associated with certain fixed 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 fair value of debt, and therefore, there is no need to periodically reassess the effectiveness during the term of the hedge.

Our available liquidity beyond our cash balance at May 31, 2007 stood at $320.2 million (refer to Note B). Our debt-to-capital ratio was 47.6% at May 31, 2007 compared with 48.6% at May 31, 2006. Had we been able to reduce our total outstanding debt by all of our cash and short-term investments available as of May 31, 2007 and May 31, 2006, our adjusted net (of cash) debt-to-capital ratio would have been 43.3% and 45.3%, respectively.

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

RPM International Inc. and Subsidiaries      31

management’s discussion and analysis

The following table summarizes our financial obligations and their expected maturities at May 31, 2007 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		2008		2009-10		2011-12		After 2012
Long-term debt obligations	$	988,057	$	101,641	$	260,469	$	273,620	$	352,327
Operating lease obligations		101,925		28,149		35,093		15,560		23,123
Other long-term liabilities1		365,370		61,769		77,776		76,636		149,189
Total	$	1,455,352	$	191,559	$	373,338	$	365,816	$	524,639

¹ These amounts represent our estimated cash contributions to be made in the periods indicated for our pension and postretirement plans, assuming no actuarial gains or losses, assumption changes or plan changes occur in any period. The projection results assume $10.3 million will be contributed to the U.S. plan in fiscal 2008; all other plans and years assume the required minimum contribution will be contributed. Also included are expected interest payments on long-term debt.

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 $26.0 million this year versus $30.2 million last year. This change was in addition to changes of $(41.6) million, $5.3 million and $5.7 million related to adjustments required for minimum pension and other postretirement liabilities, unrealized gains on derivatives and unrealized gains on securities, respectively.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financings, other than the minimum leasing commitments described in Note F to the Consolidated Financial Statements. 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.

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, 2007, approximately 49.1% of our debt was subject to floating interest rates.

If interest rates were to increase 100 bps from May 31, 2007 and assuming no changes in debt from the May 31, 2007 levels, the additional annual interest expense would amount to approximately $4.9 million on a pre-tax basis. A similar increase in interest rates in fiscal 2006 would have resulted in approximately $3.3 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. We do 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, Germany, the Netherlands 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.

32       RPM International Inc. and Subsidiaries

management’s discussion and analysis

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, 2007 and 2006. 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 for the Company’s existing and future asbestos-related claims; 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) and in our Annual Report on Form 10-K for the fiscal year ended May 31, 2007, as the same may be amended from time to time.

RPM International Inc. and Subsidiaries       33

Consolidated Balance Sheets
(In thousands, except per share amounts)

May 31	2007		2006
Assets
Current Assets
Cash and short-term investments	$	159,016	$	108,616
Trade accounts receivable (less allowances of $19,167 in 2007 and $20,252 in 2006)		744,259		650,945
Inventories		437,759		399,014
Deferred income taxes		39,276		48,885
Prepaid expenses and other current assets		189,939		163,768
Total current assets		1,570,249		1,371,228
Property, Plant and Equipment, at Cost
Land		28,149		28,849
Buildings and leasehold improvements		276,852		267,899
Machinery and equipment		658,199		590,528
		963,200		887,276
Less allowance for depreciation and amortization		489,904		442,584
Property, plant and equipment, net		473,296		444,692
Other Assets
Goodwill		830,177		750,635
Other intangible assets, net of amortization		351,435		321,942
Deferred income taxes, non-current		18,694		34,084
Other		89,298		73,483
Total other assets		1,289,604		1,180,144
Total Assets	$	3,333,149	$	2,996,064
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	385,003	$	333,684
Current portion of long-term debt		101,641		6,141
Accrued compensation and benefits		132,555		136,384
Accrued loss reserves		73,178		66,678
Asbestos-related liabilities		53,000		58,925
Other accrued liabilities		119,363		113,698
Total current liabilities		864,740		715,510
Long-Term Liabilities
Long-term debt, less current maturities		886,416		870,415
Asbestos-related liabilities		301,268		362,360
Other long-term liabilities		175,958		108,002
Deferred income taxes		17,897		13,836
Total long-term liabilities		1,381,539		1,354,613
Total liabilities		2,246,279		2,070,123
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 120,906 as of May 2007; issued and outstanding 118,743 as of May 2006		1,209		1,187
Paid-in capital		584,845		545,422
Treasury stock, at cost
Accumulated other comprehensive income		25,140		29,839
Retained earnings		475,676		349,493
Total stockholders’ equity		1,086,870		925,941
Total Liabilities and Stockholders’ Equity	$	3,333,149	$	2,996,064

     The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

34       RPM International Inc. and Subsidiaries

Consolidated Statements of Income
(In thousands, except per share amounts)

Year Ended May 31	2007			2006			2005
Net Sales	$	3,338,764		$	3,008,338		$	2,555,735
Cost of Sales		1,978,312			1,760,973			1,452,761
Gross Profit		1,360,452			1,247,365			1,102,974
Selling, General and Administrative Expenses		1,020,884			948,497			825,868
Asbestos (Income) Charges		(15,000	)		380,000			78,000
Interest Expense, Net		47,033			41,343			35,378
Income (Loss) Before Income Taxes		307,535			(122,475	)		163,728
Provision (Benefit) for Income Taxes		99,246			(46,270	)		58,696
Net Income (Loss)	$	208,289		$	(76,205	)	$	105,032
Average Number of Shares of Common Stock Outstanding
Basic		118,179			116,837			116,899
Diluted		128,711			116,837			126,364
Earnings (Loss) per Share of Common Stock
Basic	$	1.76		$	(0.65	)	$	0.90
Diluted	$	1.64		$	(0.65	)	$	0.86
Cash Dividends per Share of Common Stock	$	0.685		$	0.630		$	0.590

     The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

RPM International Inc. and Subsidiaries       35

Consolidated Statements of Cash Flows
(In thousands)

Year Ended May 31	2007			2006			2005
Cash Flows From Operating Activities:
Net income (loss)	$	208,289		$	(76,205	)	$	105,032
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		59,256			56,463			49,841
Amortization		22,351			17,836			16,151
Provision for asbestos-related liabilities					380,000			78,000
Deferred income taxes		32,740			(111,308	)		125
Earnings of unconsolidated affiliates		(914	)		(890	)		(354	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
(Increase) decrease in receivables		(75,185	)		(59,734	)		(63,611	)
(Increase) decrease in inventory		(23,864	)		(42,255	)		(44,429	)
(Increase) decrease in prepaid expenses and other current and long-term assets		(17,777	)		(20,260	)		(20,220	)
Increase (decrease) in accounts payable		37,656			42,315			69,037
Increase (decrease) in accrued compensation and benefits		(4,335	)		38,513			6,621
Increase (decrease) in accrued loss reserves		6,501			1,226			8,753
Increase (decrease) in other accrued liabilities		54,879			22,402			17,002
Payments made for asbestos-related claims		(67,017	)		(59,887	)		(67,435	)
Other, including exchange rate changes		(30,275	)		(2,727	)		2,839
Cash From Operating Activities		202,305			185,489			157,352
Cash Flows From Investing Activities:
Capital expenditures		(70,393	)		(61,155	)		(55,609	)
Acquisition of businesses, net of cash acquired		(124,154	)		(174,625	)		(20,100	)
Purchases of marketable securities		(96,695	)		(59,416	)		(44,309	)
Proceeds from sales of marketable securities		78,530			50,105			39,154
(Investments in) and distributions from unconsolidated affiliates		72			(895	)		136
Proceeds from sales of assets and businesses		1,516			9,282			5,426
Other		2,873			2,323			(666	)
Cash (Used For) Investing Activities		(208,251	)		(234,381	)		(75,968	)
Cash Flows From Financing Activities:
Additions to long-term and short-term debt		153,516			186,772			200,153
Reductions of long-term and short-term debt		(53,560	)		(152,862	)		(79,665	)
Cash dividends		(82,106	)		(74,427	)		(68,933	)
Tax benefit from exercise of stock options		1,549
Exercise of stock options		25,833			10,636			12,543
Cash From (Used For) Financing Activities		45,232			(29,881	)		64,098
Effect of Exchange Rate Changes on Cash and Short-Term Investments		11,114			3,249			4,099
Net Change in Cash and Short-Term Investments		50,400			(75,524	)		149,581
Cash and Short-Term Investments at Beginning of Year		108,616			184,140			34,559
Cash and Short-Term Investments at End of Year	$	159,016		$	108,616		$	184,140
Supplemental Disclosures of Cash Flows Information:
Cash paid during the year for:
Interest	$	57,929		$	50,690		$	39,279
Income taxes	$	51,971		$	68,263		$	48,535
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Share-based compensation activity	$	7,746		$	3,545		$	1,960
Debt from business combinations	$	7,828		$	10,259

     The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

36      RPM International Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity
(In thousands)

									Accumulated
	Common Stock								Other
	Number		Par/						Comprehensive
	of		Stated		Paid-in		Treasury		Income			Retained
	Shares		Value		Capital		Stock		(Loss)			Earnings			Total
Balance at June 1, 2004		116,122	$	1,161	$	509,096	$	-0-	$	(3,881	)	$	464,026		$	970,402
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
Stock-based compensation expense						2,850										2,850
Restricted stock awards, net		323		4		1,956										1,960
Balance at May 31, 2005		117,554		1,176		526,434		-0-		10,004			500,125			1,037,739
Comprehensive income
Net (loss)													(76,205	)		(76,205	)
Translation gain and other										19,835						19,835
Comprehensive (loss)																(56,370	)
Dividends paid													(74,427	)		(74,427	)
Stock option exercises, net		823		8		10,628										10,636
Stock-based compensation expense						4,818										4,818
Restricted stock awards, net		366		3		3,542										3,545
Balance at May 31, 2006		118,743		1,187		545,422		-0-		29,839			349,493			925,941
Comprehensive income
Net income													208,289			208,289
Translation gain and other										37,580						37,580
Comprehensive income																245,869
Impact of adoption of SFAS No. 158, net of taxes of $22,468										(42,279	)					(42,279	)
Dividends paid													(82,106	)		(82,106	)
Stock option exercises, net		1,798		18		25,815										25,833
Stock-based compensation expense						5,862										5,862
Restricted stock awards, net		365		4		7,746										7,750
Balance at May 31, 2007		120,906	$	1,209	$	584,845	$	-0-	$	25,140		$	475,676		$	1,086,870

The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.

RPM International Inc. and Subsidiaries     37

notes to consolidated financial statements

Notes to Consolidated Financial Statements

May 31, 2007, 2006, 2005

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 consolidation.

Our business is dependent on external weather factors. Historically, we have experienced strong sales and net income in our 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 our third fiscal quarter (December through February).

Certain reclassifications have been made to 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) Acquisitions/Divestitures

During the fiscal year ended May 31, 2007, we completed six acquisitions, which included product lines such as industrial and concrete coatings, fireproofing products, daylight fluorescent pigments, and a number of waterproofing, epoxy and sealant products. We have allocated the respective purchase prices for each of these acquisitions to the underlying preliminary, estimated fair values of the assets acquired and liabilities assumed at their dates of acquisition, as summarized in the following table:

	Intangible Asset
	Amortization Life
(In thousands)	(In Years)		Total
Current assets			$	34,678
Property, plant and equipment				15,145
Goodwill		N/A		71,918
Tradenames — indefinite lives		N/A		13,053
Other intangible assets		10 - 20		29,114
Total Assets Acquired			$	163,908
Liabilities assumed				(38,451	)
Net Assets Acquired			$	125,457

During the fiscal year ended May 31, 2006, Tremco Incorporated, a wholly-owned subsidiary of RPM, completed the acquisition of privately-owned illbruck Sealant Systems, located in Leverkusen, Germany, for approximately $134.2 million, plus debt assumption of approximately $10.3 million. The purchase price is reflective of certain post-closing adjustments finalized during fiscal 2007, which reduced the final purchase price by approximately $2.5 million. illbruck, a leading manufacturer of high-performance sealants and installation systems for pre-fabricated construction elements and for window and door applications, had sales of approximately $190.0 million for its fiscal year ended December 31, 2004. The acquisition has extended Tremco’s product line offerings to include joint sealing tapes, flashing tapes, cartridge sealants and adhesives, strips, foils and accessories marketed under brand names such as illbruck, Festix, Perennator and Coco.

The purchase price has been allocated to the underlying assets acquired and liabilities assumed based upon their fair values at the date of acquisition. We have determined these estimated fair values based on independent appraisals, discounted cash flow analyses, quoted market prices and estimates made by management. Goodwill has been recorded to the extent the purchase price exceeded the fair values of the net identifiable tangible and intangible assets acquired. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.

	Intangible Asset
	Amortization Life
(In thousands)	(In Years)		illbruck
Current assets			$	63,740
Property, plant and equipment				32,562
Goodwill		N/A		50,867
Tradenames — indefinite lives		N/A		27,190
Tradenames — other		12 - 15		1,639
Other intangible assets		4 - 12		21,805
Total Assets Acquired			$	197,803
Liabilities assumed				(63,633	)
Net Assets Acquired			$	134,170

Other acquisitions completed during fiscal 2006 and 2005 are not material to our Consolidated Financial Statements.

Our Consolidated Financial Statements reflect the results of operations of these acquired businesses as of their respective dates of acquisition.

Pro forma results of operations for the years ended May 31, 2007 and May 31, 2006 were not materially different from reported results and, consequently, are not presented.

38     RPM International Inc. and Subsidiaries

notes to consolidated financial statements

4) Foreign Currency

The functional currency of each 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.

5) Accumulated Other Comprehensive Income (Loss)

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

				Minimum Pension
	Foreign			and Other			Unrealized			Unrealized
	Currency			Postretirement			Gain (Loss)			Gain (Loss)
	Translation			Benefit Liability			on			on
(In thousands)	Adjustments			Adjustments			Derivatives			Securities			Total
Balance at June 1, 2004	$	(123	)	$	(5,055	)	$			$	1,297		$	(3,881	)
Reclassification adjustments for (gains) included in net income											(73	)		(73	)
Other comprehensive income (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
Reclassification adjustments for (gains) included in net (loss)											(17	)		(17	)
Other comprehensive income (loss)		30,160			(14,700	)		(3,010	)		1,443			13,893
Deferred taxes					5,413			1,011			(465	)		5,959
Balance at May 31, 2006		45,045			(16,192	)		(1,999	)		2,985			29,839
Reclassification adjustments for (gains) included in net income											(1,501	)		(1,501	)
Other comprehensive income (loss)		25,954			1,974			7,850			10,056			45,834
Deferred taxes					(1,317	)		(2,540	)		(2,896	)		(6,753	)
Impact of adopting SFAS No. 158, net of taxes of $22,468					(42,279	)								(42,279	)
Balance at May 31, 2007	$	70,999		$	(57,814	)	$	3,311		$	8,644		$	25,140

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. The carrying amounts of cash and short-term investments approximate fair value.

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. When we experience other-than-temporary declines in market value from original cost, those amounts are reflected in operating income in the period in which the losses 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, primarily consisting of equity securities, totaled $85.8 million and $59.5 million at May 31, 2007 and 2006, respectively. The unrealized gain on securities amounted to approximately $10.1 million in 2007, which related primarily to the impact of the stock market improvement over the last year, in addition to the significant growth of our minority investment in Kemrock Industries in September, 2006.

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.

RPM International Inc. and Subsidiaries     39

notes to consolidated financial statements

An allowance for anticipated uncollectible trade receivable amounts is established using a combination of specifically identified accounts to be reserved, and a reserve covering trends in collectibility. These estimates are based on an analysis of trends in collectibility, past experience, and individual account balances identified as doubtful based on specific facts and conditions. Receivable losses are charged against the allowance when management confirms uncollectibility.

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. We do not hold or issue derivative instruments for speculative purposes.

The carrying amount of our debt instruments approximates fair value based on quoted market prices, variable interest rates or borrowing rates for similar types of debt arrangements, with the exception of our contingently-convertible notes due 2033. At May 31, 2007, these notes had a carrying value of $150.0 million and an approximate fair value of $187.6 million.

9) Inventories

Inventories are stated at the lower of cost or market, cost being determined 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 materials, labor and manufacturing overhead. Inventories were composed of the following major classes:

May 31	2007		2006
(In thousands)
Raw materials and supplies	$	138,541	$	124,573
Finished goods		299,218		274,441
Total Inventories	$	437,759	$	399,014

10) Goodwill and Other Intangible Assets

We adopted 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 goodwill. We perform the required annual impairment assessments as of the first day of our fourth fiscal quarter (last day of our first fiscal quarter for years prior to 2006). 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 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 unit’s projected earnings before interest, taxes, depreciation and amortization. In applying this methodology, we rely on a number of factors, including actual and forecasted 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, and if impaired, these balances would be written down to fair value. Cash flow estimates are based on our historical experience and our internal business plans, and appropriate discount rates are applied. Additionally, we test all indefinitely-lived intangible assets for impairment annually. The results of our annual impairment tests for the fiscal years ended May 31, 2007, 2006 and 2005 did not require any adjustment to the carrying value of goodwill or other indefinite-lived intangible assets.

The changes in the carrying amount of goodwill, by reportable operating segment, for the year ended May 31, 2007 and 2006, are as follows:

	Industrial			Consumer
(In thousands)	Segment			Segment			Total
Balance as of June 1, 2005	$	316,426		$	346,798		$	663,224
Acquisitions		69,252			3,234			72,486
Purchase accounting adjustments1					2,204			2,204
Translation adjustments		11,134			1,587			12,721
Balance as of May 31, 2006		396,812			353,823			750,635
Acquisitions		20,636			51,282			71,918
Purchase accounting adjustments2		(1,208	)		(919	)		(2,127	)
Tax adjustments3		(577	)		(68	)		(645	)
Translation adjustments		7,397			2,999			10,396
Balance as of May 31, 2007	$	423,060		$	407,117		$	830,177

1	Relates primarily to other accruals.
2	Relates primarily to other accruals and illbruck purchase price settlement.
3	Represents valuation allowance adjustments related to the deferred tax assets recorded in purchase accounting. Refer to Note C, “Income Taxes,” for additional information.

40      RPM International Inc. and Subsidiaries

notes to consolidated financial statements      

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, 2007
Amortized intangible assets
Formulae		10 to 33	$	199,076	$	84,086	$	114,990
Customer-related intangibles		7 to 33		101,628		29,548		72,080
Trademarks/names		5 to 40		18,341		5,051		13,290
Other		3 to 30		27,064		14,914		12,150
Total Amortized Intangibles				346,109		133,599		212,510
Unamortized intangible assets
Trade names				138,925				138,925
Total Other Intangible Assets			$	485,034	$	133,599	$	351,435
As of May 31, 2006
Amortized intangible assets
Formulae		10 to 33	$	190,665	$	74,551	$	116,114
Customer-related intangibles		7 to 33		82,739		23,799		58,940
Trademarks/names		5 to 40		18,607		5,593		13,014
Other		3 to 30		26,468		13,626		12,842
Total Amortized Intangibles				318,479		117,569		200,910
Unamortized intangible assets
Trade names				121,032				121,032
Total Other Intangible Assets			$	439,511	$	117,569	$	321,942

The aggregate other intangible asset amortization expense for the fiscal years ended May 31, 2007, 2006 and 2005 was $17.5 million, $15.3 million and $13.2 million, respectively. For the next five fiscal years, we estimate annual intangible asset amortization expense related to our existing intangible assets to approximate the following: 2008 - $20.0 million, 2009 - $19.1 million, 2010 - $17.7 million, 2011 - $17.5 million and 2012 - $17.5 million.

11) Depreciation

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

Land improvements	5 to 40 years
Buildings and improvements	5 to 50 years
Machinery and equipment	2 to 40 years

Total depreciation expense for each fiscal period includes the charges to income that result from the amortization of assets recorded under capital leases.

As required by SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we review long-lived assets for impairment when circumstances indicate that the carrying value of an asset may not be recoverable. For assets that are to be held and used, an impairment charge is recognized when the estimated undiscounted future cash flows associated with the asset or group of assets are less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded for the difference between the carrying value and the fair value. Fair values are determined based on quoted market values, discounted cash flows, internal appraisals or external appraisals, as applicable. Assets to be disposed of are carried at the lower of their carrying value or estimated net realizable value.

12) Revenue Recognition

Revenues are recognized when realized or realizable, and when earned. In general, this is when title and risk of loss pass 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.

We also record revenues generated under long-term construction-type contracts, mainly in connection with the installation of specialized roofing and flooring systems, and related services. In general, we account for long-term construction-type contracts under the percentage-of-completion method, and therefore record contract revenues and related costs as our contracts progress. This method recognizes the economic results of contract performance on a timelier basis than does the completed-contract method; however, application of this method requires reasonably dependable estimates of progress toward completion, as well as other dependable estimates. When reasonably dependable estimates cannot be made, or if other factors make estimates

RPM International Inc. and Subsidiaries      41

notes to consolidated financial statements

doubtful, the completed contract method is applied. Under the completed contract method, billings and costs are accumulated on the balance sheet as the contract progresses, but no revenue is recognized until the contract is complete or substantially complete.

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, 2007, 2006 and 2005, shipping costs were $119.1 million, $117.5 million and $100.1 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, 2007, 2006 and 2005, advertising costs were $38.6 million, $33.9 million and $33.7 million, respectively.

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, 2007, 2006 and 2005 were $34.7 million, $32.3 million and $28.9 million, respectively.

16) Stock-Based Compensation

Stock-based compensation represents the cost related to stock-based awards granted to our employees and directors, which may include restricted stock, stock options and stock appreciation rights (“SARs”). We measure stock-based compensation cost at the date of grant, based on the estimated fair value of the award. We recognize the cost as expense on a straight-line basis (net of estimated forfeitures) over the related vesting period.

Effective June 1, 2006, we adopted the provisions of SFAS No. 123(R), “Share-Based Payment,” utilizing the modified-prospective method of accounting. Due to our previous adoption of the fair value recognition provisions under SFAS No. 123, “Accounting for Stock-Based Compensation,” as of June 1, 2004, and due to the fact that all unvested awards at the time of adoption were being recognized under a fair value approach, our adoption of SFAS No. 123(R) did not materially impact our operating income, earnings per share or cash flows for any of the periods presented herein. Refer to Note E, “Stock-Based Compensation,” for further discussion.

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, 2007, 2006 and 2005 was $11.0 million, $6.5 million and $5.0 million, respectively.

18) Income Taxes

The provision for income taxes is calculated 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 $601.8 million of foreign subsidiaries’ undistributed earnings as of May 31, 2007, because such earnings have been retained and reinvested 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.

42       RPM International Inc. and Subsidiaries

notes to consolidated financial statements      

19) Earnings (Loss) Per Share of Common Stock

The following table sets forth the computation of basic and diluted earnings (loss) per share of common stock:

Year ended May 31	2007		2006			2005
(In thousands, except per share amounts)
Shares Outstanding
For computation of basic earnings per share of common stock
Weighted average shares		118,179		116,837			116,899
Total shares for basic earnings per share		118,179		116,837			116,899
For computation of diluted earnings per share of common stock
Net issuable common share equivalents1		2,498					1,431
Additional shares issuable assuming conversion of convertible securities1		8,034					8,034
Total shares for diluted earnings per share		128,711		116,837			126,364
Net Income
Net income (loss) applicable to shares of common stock for basic earnings per share	$	208,289	$	(76,205	)	$	105,032
Add: Income effect of contingently issuable shares		3,085					3,099
Net income (loss) applicable to shares of common stock for diluted earnings per share	$	211,374	$	(76,205	)	$	108,131
Basic Earnings (Loss) Per Share of Common Stock	$	1.76	$	(0.65	)	$	0.90
Diluted Earnings (Loss) Per Share of Common Stock	$	1.64	$	(0.65	)	$	0.86

¹ For the year ended May 31, 2006, net issuable common share equivalents totaling 2.8 million shares, and shares relating to our convertible securities and their related income effect, totaling 8.0 million shares and $3.7 million, respectively, were not assumed in our computation of fully diluted earnings per share, since the result would have been anti-dilutive.

20) Other Recent Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48, which clarifies the accounting for uncertainty, if any, in income taxes as recognized in financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes,” represents a significant change in the accounting and reporting of income taxes. FIN 48 prescribes the accounting for uncertainty in income taxes by providing guidance on the recognition threshold and measurement of a position taken in a tax return or a position expected to be taken in a tax return. Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 requires the cumulative effect of adoption to be recorded as an adjustment to the opening balance of retained earnings. The effective date of FIN 48 is for fiscal years beginning after December 15, 2006. Accordingly, we will adopt FIN 48 in the first quarter of our fiscal year ending May 31, 2008. We are in the process of determining the impact of the adoption of FIN 48 on our financial statements.

In September 2006, the FASB issued Statement No. 157 (“SFAS No. 157”), “Fair Value Measurements.” SFAS No. 157 clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact, if any, the adoption of this statement will have on our financial statements.

In September 2006, the FASB issued Statement No. 158 (“SFAS No. 158”), “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R).” SFAS No. 158 requires an employer to recognize a net liability or asset and an offsetting adjustment to accumulated other comprehensive income to report the funded status of defined benefit pension and other postretirement benefit plans. The provisions of SFAS No. 158 were adopted pursuant to the transition provisions therein. Please refer to Note G, “Pension Plans,” for further details.

SFAS No. 158 requires employers to measure plan assets and obligations at their year-end balance sheet date. With the exception of balances related to newly-added plans associated with recent acquisitions, for which we have elected to apply a May 31 measurement date, we currently measure defined benefit pension plan assets and obligations as of the end of February each year and postretirement health care benefit obligations as of the end of May each year. We plan to change our measurement dates to May 31 for all of our plans in accordance with the transition provisions included per this new pronouncement.

RPM International Inc. and Subsidiaries      43

notes to consolidated financial statements

NOTE B — BORROWINGS

A description of long-term debt follows:

May 31	2007		2006
(In thousands)
Unsecured 4.45% senior notes due October 15, 2009.1	$	193,711	$	189,993
Unsecured 6.25% senior notes due December 15, 2013.		200,000		200,000
Unsecured $297,000 face value at maturity 2.75% senior convertible notes due May 13, 2033.		150,042		150,042
Unsecured notes due March 1, 2008. Interest, which is tied to LIBOR, averaged 5.36% at May 31, 2007.		100,000		100,000
Unsecured 6.70% senior notes due November 1, 2015.2		150,000		150,000
Unsecured senior notes due insurance companies.3				40,000
Revolving credit agreement for $400,000 with a syndicate of banks, through December 29, 2011. Interest, which is tied to LIBOR, averaged 5.845% for U.S. dollar denominated debt and 6.1875% for Sterling Pound denominated debt at May 31, 2007.		123,017		10,000
Accounts receivable securitization program for $125,000 with two banks, through May 12, 2009. Interest averaged 5.34% as of May 31, 2007.		65,000		25,000
Other obligations, including capital leases, and unsecured notes payable at various rates of interest due in installments through 2011.		6,287		11,521
		988,057		876,556
Less current portion		101,641		6,141
Total Long-Term Debt, Less Current Maturities	$	886,416	$	870,415

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 5.88% as of May 31, 2007.
2	We entered into a cross-currency swap, which fixed the interest and principal payments in euros, resulting in an effective fixed rate borrrowing of 5.31%.
3	On July 18, 2006, we prepaid our $10,000 – 6.61% Senior Notes, Series B, due November 15, 2006, and our $30,000 – 7.30% Senior Notes, Series C, due November 15, 2008. We did not incur any material early termination penalties in connection with our termination of these Notes.

The aggregate maturities of long-term debt for the five years subsequent to May 31, 2007 are as follows: 2008 — $101.6 million (including $100.0 million unsecured Notes); 2009 — $66.3 million; 2010 — $194.2 million; 2011 — $0.3 million; 2012 — $273.3 million (including $150.0 million of 2.75% Senior Convertible Notes); and thereafter $352.4 million. Additionally, at May 31, 2007, we had unused lines of credit totaling $320.2 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’

44       RPM International Inc. and Subsidiaries

notes to consolidated financial statements      

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 two banks. 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. In May 2006, we extended the program for an additional three years through May 2009. As of May 31, 2007 and 2006 we had an outstanding balance of $65.0 million and $25.0 million, respectively, under this agreement.

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 in which the closing price of the common stock is greater than $22.41 per share for at least 20 trading days, within the 30 consecutive trading day period on the last trading day of the calendar quarter. As further defined in the Indenture, 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. At these times, the purchase price may be paid in cash, common stock or a combination of cash and common stock, at our discretion. If we were to settle the purchase price in cash, we would utilize a portion of our available long-term financing arrangements. We may redeem for cash all or a portion of the Notes at any time on or after May 31, 2008. 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.

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 receivable 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. As of May 31, 2007 and 2006, the fair value of this interest-rate swap was $6.3 million and $10.0 million, respectively. These amounts are reflected in other long-term liabilities on the Consolidated Balance Sheets.

On October 19, 2005, RPM United Kingdom G.P., an indirect wholly-owned finance subsidiary of RPM International Inc., issued and sold $150.0 million of 6.70% Senior Unsecured Notes due 2015, which are fully and unconditionally guaranteed by RPM International Inc. The total net proceeds of the offering of the Senior Unsecured Notes were used to refinance $138.0 million of revolving credit facility borrowings in conjunction with the August 31, 2005 acquisition of illbruck Sealant Systems, and for other general corporate purposes. Concurrent with the issuance of the 6.70% Senior Unsecured Notes, RPM United Kingdom G.P. entered into a cross-currency swap, which fixed the interest and principal payments in euros for the life of the Senior Unsecured Notes and resulted in an effective euro fixed rate borrowing of 5.31%. As of May 31, 2007 and 2006, the fair value of this cross-currency swap was $13.5 million and $13.9 million, respectively, which are reflected in other long-term liabilities on the Consolidated Balance Sheets.

On December 29, 2006, we replaced our $330.0 million revolving credit facility with a new $400.0 million 5-year credit facility (the “New Facility”). The New Facility will be used for working capital needs, general corporate purposes, including acquisitions, and to provide back-up liquidity for the issuance of commercial paper. The New Facility provides for borrowings in U.S. dollars and several foreign currencies and also provides sublimits for the issuance of letters of credit in an aggregate amount of up to $35.0 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 New Facility may be expanded upon our request by up to an additional $175.0 million, thus potentially expanding the New Facility to $575.0 million, subject to lender approval. As of May 31, 2007, we had $123.0 million in outstanding borrowings under the New Facility.

RPM International Inc. and Subsidiaries      45

notes to consolidated financial statements

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 (loss) before income taxes as shown in the consolidated statements of income consisted of the following:

Year Ended May 31	2007		2006			2005
(In thousands)
United States	$	215,859	$	(181,282	)	$	115,192
Foreign		91,676		58,807			48,536
Income (Loss) Before Income Taxes	$	307,535	$	(122,475	)	$	163,728

Provision (benefit) for income taxes consists of the following:

Year Ended May 31	2007			2006			2005
(In thousands)
Current:
U.S. federal	$	28,276		$	35,035		$	31,313
State and local		7,007			7,232			8,098
Foreign		31,223			22,771			19,160
		66,506			65,038			58,571
Deferred:
U.S. federal		36,455			(108,373	)		(2,544	)
State and local		(264	)		(3,798	)		(218	)
Foreign		(3,451	)		863			2,887
		32,740			(111,308	)		125
Provision (Benefit) for Income Taxes	$	99,246		$	(46,270	)	$	58,696

The significant components of deferred income tax assets and liabilities as of May 31, 2007 and 2006 were as follows:

	2007			2006
(In thousands)
Deferred income tax assets related to:
Inventories	$	7,234		$	4,322
Allowance for losses		532			5,511
Accrued compensation and benefits		41,730			17,844
Asbestos-related liabilities		125,932			151,478
Accrued other expenses		3,348			7,986
Other long-term liabilities		21,145			28,183
Net operating loss and credit carryforwards		31,142			33,647
Total deferred income tax assets		231,063			248,971
Less: valuation allowances		(21,838	)		(18,981	)
Net deferred income tax assets		209,225			229,990
Deferred income tax (liabilities) related to:
Depreciation		(56,408	)		(58,449	)
Pension and other postretirement benefits		(10,101	)		(10,128	)
Amortization of intangibles		(102,643	)		(92,280	)
Total deferred income tax (liabilities)		(169,152	)		(160,857	)
Deferred Income Tax Assets, Net	$	40,073		$	69,133

46       RPM International Inc. and Subsidiaries

notes to consolidated financial statements      

At May 31, 2007, we had U.S. federal foreign tax credit carryforwards of approximately $16.6 million which expire starting in 2012. Additionally we had approximately $20.5 million of state net operating loss carryforwards that expire at various dates beginning in 2008 and foreign net operating loss carryforwards of approximately $43.7 million at May 31, 2007, of which approximately $2.2 million will expire at various dates beginning in 2008 and approximately $41.5 million that 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, state or foreign income taxes otherwise payable.

Management has determined, based on the available evidence, that it is uncertain whether future taxable income of certain of our foreign subsidiaries as well as anticipated foreign source income will be significant enough to recognize certain of these deferred tax assets. As a result, valuation allowances of approximately $21.8 million and $19.0 million have been recorded as of May 31, 2007 and 2006, respectively.

Valuation allowances relate to U.S. federal foreign tax credit carryforwards, certain foreign net operating losses and net foreign deferred tax assets. A portion of the valuation allowance is associated with deferred tax assets recorded in purchase accounting. Any reversal of a valuation allowance that was recorded in purchase accounting would reduce goodwill. In the current year, a reversal of approximately $0.6 million of valuation allowance was allocated to goodwill.

The following table reconciles the U.S. statutory federal income tax expense (benefit) rate to the effective income tax expense (benefit) rate:

Year Ended May 31	2007			2006			2005
Income tax expense at the U.S. statutory federal income tax rate		35.0	%		(35.0	%)		35.0	%
Impact of foreign operations		(3.8	%)		(6.4	%)		(4.8	%)
State and local income taxes net of federal income tax benefit		1.4	%		1.8	%		3.1	%
Tax benefits from the extraterritorial income exclusion		(0.1	%)		(0.7	%)		(0.5	%)
Valuation allowance		0.8	%		3.9	%		2.6	%
Other		(1.0	%)		(1.4	%)		0.4	%
Effective Income Tax Expense (Benefit) Rate		32.3	%		(37.8	%)		35.8	%

NOTE D — COMMON STOCK

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. Additionally, shares related to our convertible securities are also considered in our calculation of fully diluted earnings per share.

Our Stockholder 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, 2007 and expire in May 2009.

RPM International Inc. and Subsidiaries      47

notes to consolidated financial statements

NOTE E — STOCK-BASED COMPENSATION

Effective June 1, 2006, we adopted the provisions of SFAS No. 123(R), “Share-Based Payment,” utilizing the modified-prospective method of accounting. Stock-based compensation represents the cost related to stock-based awards granted to our employees and directors; these awards include restricted stock, stock options and stock appreciation rights (“SARs”). We measure stock-based compensation cost at the date of grant, based on the estimated fair value of the award. We recognize the cost as expense on a straight-line basis (net of estimated forfeitures) over the related vesting period.

The following table represents total stock-based compensation expense included in our Consolidated Statements of Income:

Year ended May 31	2007			2006			2005
(In thousands)
Selling, general and administrative expense	$	10,509		$	6,719		$	4,798
Income tax expense (benefit)		(3,381	)		(1,852	)		(1,177	)
Total stock-based compensation cost	$	7,128		$	4,867		$	3,621

Total unrecognized compensation cost related to non-vested awards at May 31, 2007 was $3.2 million, and is expected to be recognized over a weighted-average period of approximately three years.

We grant stock-based incentive awards to our employees and/or directors of the company under various share-based compensation plans. Plans which include stock option grants or share-based payment awards include the 1996 Key Employees Stock Option Plan and the 2004 Omnibus Equity and Incentive Plan (the “Omnibus Plan”), which includes provisions for grants of restricted stock, restricted stock units, performance stock, performance stock units and SARs. Other plans, which provide for restricted stock grants only, include the 2007 Restricted Stock Plan (the “2007 Plan”), the 2003 Restricted Stock Plan for Directors (the “2003 Plan”), the 2002 Performance Accelerated Restricted Stock Plan (the “PARS Plan”) and the 1997 Restricted Stock Plan (“1997 Plan”).

Stock Option Plans

Stock options are awards which allow our employees to purchase shares of RPM International Inc. common stock at a fixed price. We grant stock options at an exercise price equal to the stock price on the date of the grant. The fair value of stock options and SARs granted is estimated as of the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:

Year Ended May 31	2007			2006			2005
Risk-free interest rate		4.6	%		4.2	%		3.7	%
Expected life of option	6.7		yrs	6.0		yrs	6.4		yrs
Expected dividend yield		3.7	%		3.6	%		3.4	%
Expected volatility rate		27.4	%		27.7	%		31.0	%

The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The expected life of options granted is derived from the input of the option-pricing model and represents the period of time that options granted are expected to be outstanding. Expected volatilities are based on historical volatility of our shares of common stock.

The 1996 Key Employees Stock Option Plan, which expired by its terms on August 15, 2006, provided for the granting of stock options for up to 9,000,000 shares. Stock options were 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 2007 to October 2014. Compensation cost for these awards is recognized on a straight-line basis over the related vesting period. The total fair value of shares vested during the year ended May 31, 2007 was $3.1 million. Shares of common stock under option are not eligible for dividend payments until the shares are exercised.

The Omnibus Plan was approved by our stockholders on October 8, 2004, and 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, any number of shares that remain available after “full-value” awards are granted, or up to a maximum of 6,000,000 shares, may be in the form of SARs grants or other types of awards other than “full-value” awards such as restricted stock awards, restricted stock unit awards, performance share awards or performance unit awards. SARs are issued at fair value at the date of grant, have up to ten-year terms and have graded-vesting terms over four years. Compensation cost for these awards is recognized on a straight-line basis over the related vesting period. Currently all SARs outstanding are to be settled with stock. As of May 31, 2007, there were 921,500 SARs outstanding.

48       RPM International Inc. and Subsidiaries

notes to consolidated financial statements      

The following table summarizes option and share-based payment activity (including SARs) under these Plans during the three fiscal years ended May 31:

	2007					2006					2005
	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)
Balance at June 1	$	14.34		6,414		$	13.90		6,764		$	13.23		7,403
Options granted		18.80		380			17.65		560			17.60		584
Options canceled/expired		14.75		(43	)		14.48		(87	)		13.57		(76	)
Options exercised		14.37		(1,801	)		12.93		(823	)		11.53		(1,147	)
Balance at May 31	$	14.67		4,950		$	14.34		6,414		$	13.90		6,764
Exercisable at May 31	$	13.73		3,630		$	13.68		4,587		$	13.41		4,578

At May 31, 2007, the aggregate intrinsic value and weighted-average remaining contractual life of options outstanding was $39.9 million and 5.4 years respectively, while the aggregate intrinsic value and weighted-average remaining contractual life of options exercisable was $32.7 million and 4.4 years, respectively. Stock options granted during the years ended May 31, 2007, 2006 and 2005 included exercise prices equivalent to the stock price on the date of grant and weighted average grant date fair values of $4.34, $4.04 and $4.40, respectively. Total share options and SARs, included in the table above, had weighted-average exercise prices of $14.67, $14.34 and $13.90 for the years ended May 31, 2007, 2006 and 2005, respectively.

The total intrinsic value of options exercised during the years ended May 31, 2007, 2006 and 2005 was $12.8 million, $4.6 million and $7.0 million, respectively. There was a tax benefit of $3.7 million realized for the tax deductions from option exercises of the share-based payment for the year ended May 31, 2007.

The fair values of all nonvested share-based payment awards have been calculated using the market value of the shares on the date of issuance. We anticipate that approximately 1.2 million shares at a weighted-average exercise price of $17.27 and a weighted-average remaining contractual term of 8.04 years will ultimately vest under these plans.

A summary of the status of our nonvested share-based payment awards as of May 31, 2007, and the changes during the year then-ended, is incorporated as follows:

Nonvested Share-Based Payment Awards

(Shares in thousands)	Weighted		Number of			Weighted Average
	Average		Shares			Remaining
	Grant-Date		Under			Contractual
	Fair Value		Option			Term
June 1, 2006	$	4.15		1,829
Granted		4.34		380
Vested		4.15		(861	)
Forfeited/expired		4.12		(28	)
May 31, 2007	$	4.21		1,320			8.04

RPM International Inc. and Subsidiaries      49

notes to consolidated financial statements

Restricted Stock Plans

We also grant stock-based awards, which may be made in the form of restricted stock, restricted stock units, performance stock and performance stock units. These awards are granted to eligible employees or directors, and entitle the holder to shares of RPM International Inc. common stock as the award vests. The fair value of the awards is determined and fixed based on the stock price at the date of grant. Following is a description of our restricted stock plans.

Under the Omnibus Plan, as previously discussed, a total of 6,000,000 shares of our common stock may be subject to awards. 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. During the fiscal year ended May 31, 2007, we granted 378,600 shares of performance-earned restricted stock under the Omnibus Plan at a weighted-average grant price of $18.80. The restricted stock cliff vests after three years. Nonvested restricted shares of common stock under the Omnibus Plan are eligible for dividend payments.

The 2003 Plan was approved on October 10, 2003 by our stockholders, and 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 our common stock may be awarded, with awards cliff vesting over a 3-year period. For the year ended May 31, 2007, 27,000 shares were granted at a weighted-average price of $18.80 per share, with 411,400 shares available for future grant. Unamortized deferred compensation expense relating to restricted stock grants for directors of $0.5 million at May 31, 2007, is being amortized over a 3-year vesting period. Nonvested restricted shares of common stock under the 2003 Plan are eligible for dividend payments.

Under the terms of the PARS Plan, up to 1,000,000 shares may be awarded to certain employees, generally subject to forfeiture until the completion of ten years of service or the attainment of certain performance goals. All outstanding PARS were issued in fiscal 2003, and no shares have been issued under the PARS Plan during either of the years ended May 31, 2007 or 2006. However, the requirements for vesting were met at May 31, 2007 and all vesting provisions were approved by the Compensation Committee during July 2007. There is no remaining unamortized deferred compensation expense associated with the PARS plan.

Under the 1997 Plan, up to 1,562,500 shares may be awarded to certain employees, generally subject to forfeiture. The shares vest upon the latter of attainment of age 55 and the fifth anniversary of the May 31st immediately preceding the date of the grant. During the year ended May 31, 2007, a total of 38,149 shares were awarded under the 1997 Plan at a weighted-average price of $18.52. Unamortized deferred compensation expense of $2.2 million at May 31, 2007, relating to the 1997 Plan, is being amortized over the applicable vesting period associated with each participant. The 1997 Plan expired by its terms on May 31, 2007. Consequently, as of May 31, 2007 no shares were available for future issuance under the 1997 Plan. The 2007 Plan which was approved by our stockholders on October 5, 2006 and which became effective as of June 1, 2007 replaces the 1997 Plan. Under the 2007 Plan, up to 1,000,000 shares may be awarded to certain employees, generally subject to forfeitures.

The following table summarizes the activity for all nonvested restricted shares during the year ended May 31, 2007:

Nonvested Restricted Shares

(Shares in thousands)	Weighted
	Average
	Grant-Date		Number of
	Fair Value		Shares
June 1, 2006	$	14.92		1,367
Granted		18.78		444
Vested		15.76		(51	)
Forfeited/expired		13.26		(72	)
May 31, 2007	$	15.98		1,688

50       RPM International Inc. and Subsidiaries

notes to consolidated financial statements

The remaining weighted-average contractual term of nonvested restricted shares at May 31, 2007 is the same as the period over which the remaining cost of the awards will be recognized, which is approximately 2.1 years. The fair value of the nonvested restricted share awards have been calculated using the market value of the shares on the date of issuance. For the years ended May 31, 2007, 2006 and 2005, the weighted-average grant date fair value for restricted share grants was $18.78, $17.76 and $17.24, respectively. The total fair value of shares vested during the years ended May 31, 2007, 2006 and 2005 was $0.8 million, $0.5 million and $0.2 million, respectively. We anticipate that approximately 1.6 million shares at a weighted-average grant-date fair value of $15.84 and a weighted-average remaining contractual term of 2.1 years will ultimately vest, based upon the unique terms and participants of each plan. Approximately 3,471 shares of restricted stock were vested at June 1, 2006, with 23,139 restricted shares vested as of May 31, 2007. The total intrinsic value of restricted shares converted during the years ended May 31, 2007, 2006 and 2005 was $1.1 million, $0.9 million and $0.5 million, respectively.

Total unrecognized compensation cost related to nonvested restricted shares of common stock awards granted was $13.1 million as of May 31, 2007. That cost is expected to be recognized over a weighted-average period of 2.1 years. We did not receive any cash from employees as a result of employee vesting and release of restricted shares for the year ended May 31, 2007.

NOTE F — LEASES

We lease certain property, plant and equipment under long-term operating 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, 2007:

May 31
(In thousands)
2008	$	29,663
2009		21,253
2010		15,327
2011		9,771
2012		7,011
Thereafter		25,328
Total Minimum Lease Commitments	$	108,353

Total rental expense for all operating leases amounted to $28.8 million in fiscal 2007, $26.8 million in fiscal 2006 and $29.4 million in fiscal 2005.

NOTE G — 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 that are governed by local statutory requirements.

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 a combination of years of service and average compensation. Our pension 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, 2008, we expect to contribute approximately $10.3 million to the retirement plans in the U.S.; and approximately $8.7 million to our foreign plans.

During the fiscal year ended May 31, 2007, we adopted the provisions of Statement of Financial Accounting Standards No. 158 (“SFAS No. 158”), “Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R).” SFAS No. 158 requires the recognition of the funded status of each defined benefit pension plan and nonpension, postretirement benefit plan on the balance sheet. Under this new pronouncement, each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. The initial impact of SFAS No. 158, due to previously unrecognized actuarial gains and losses and prior service costs or credits, as well as future gains and losses and plan changes, is recognized as a component of accumulated other comprehensive income (loss) in the stockholders’ equity section of the balance sheet, net of applicable taxes.

RPM International Inc. and Subsidiaries     51

notes to consolidated financial statements

The following table presents the total incremental effect of applying SFAS No. 158 to our pension and postretirement benefit plans on the Consolidated Balance Sheets:

	Before Application					After Application
At May 31, 2007	of SFAS No. 158		Adjustments			of SFAS No. 158
(In thousands)
Prepaids and other current assets	$	204,830	$	(14,891	)	$	189,939
Intangible assets		351,443		(8	)		351,435
Deferred income taxes – current		39,539		(263	)		39,276
Total Assets		3,348,311		(15,162	)		3,333,149
Current liabilities		863,343		1,397			864,740
Other long-term liabilities		128,123		47,835			175,958
Deferred income taxes – non-current		40,012		(22,115	)		17,897
Total Liabilities		2,219,162		27,117			2,246,279
Accumulated other comprehensive income (loss), net of tax		67,419		(42,279	)		25,140
Total Stockholders’ Equity		1,129,149		(42,279	)		1,086,870

The transition provisions of SFAS No. 158 include a requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year end; this requirement becomes effective for fiscal years ending after December 15, 2008. With the exception of balances related to newly-added plans associated with recent acquisitions, the figures included herein are based on a measurement date of February 28, 2007 for both the U.S. and Non-U.S. plans. We have elected to apply a measurement date of May 31, 2007 for these newly-acquired plans in order to avoid a subsequent change in measurement date as required by SFAS No. 158.

Net periodic pension cost (income) consisted of the following for the three years ended May 31, 2007:

	U.S. Plans									Non-U.S. Plans
(In thousands)	2007			2006			2005			2007			2006			2005
Service cost	$	13,224		$	13,270		$	11,231		$	3,135		$	2,475		$	2,154
Interest cost		9,063			8,245			7,481			5,095			4,741			4,359
Expected return on plan assets		(11,428	)		(10,108	)		(9,759	)		(5,047	)		(4,599	)		(4,117	)
Amortization of:
Prior service cost		193			194			294			22
Net gain on adoption of SFAS No. 87					(2	)		(3	)
Net actuarial (gains) losses recognized		2,397			2,375			1,500			1,803			1,511			1,394
Curtailment/settlement (gains) losses		65
Net Pension Cost	$	13,514		$	13,974		$	10,744		$	5,008		$	4,128		$	3,790

52     RPM International Inc. and Subsidiaries

notes to consolidated financial statements

The changes in benefit obligations and plan assets, as well as the funded status of our pension plans at May 31, 2007 and 2006, were as follows:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2007			2006			2007			2006
Benefit obligation at beginning of year	$	161,669		$	148,505		$	103,713		$	89,190
Service cost		13,224			13,270			3,135			2,475
Interest cost		9,063			8,245			5,095			4,741
Benefits paid		(11,558	)		(9,627	)		(3,057	)		(3,067	)
Participant contributions								903			773
Acquisitions								5,422			1,230
Plan amendments											258
Actuarial losses		5,666			1,276			2,997			9,997
Settlements		(144	)
Premiums paid								(143	)
Currency exchange rate changes								5,515			(1,884	)
Benefit Obligation at End of Year	$	177,920		$	161,669		$	123,580		$	103,713
Fair value of plan assets at beginning of year	$	130,268		$	118,091		$	72,982		$	65,923
Actual return on plan assets		11,442			13,591			6,600			8,015
Employer contributions		13,790			8,213			7,597			2,661
Participant contributions								903			773
Acquisitions								5,612			119
Benefits paid		(11,558	)		(9,627	)		(3,057	)		(3,067	)
Settlements		(144	)
Premiums paid								(143	)
Currency exchange rate changes								3,865			(1,442	)
Fair Value of Plan Assets at End of Year	$	143,798		$	130,268		$	94,359		$	72,982
(Deficit) of plan assets versus benefit obligations at end of year	$	(34,122	)	$	(31,401	)	$	(29,221	)	$	(30,731	)
Contributions after measurement date		61			1,941			2,437			1,268
Unrecognized actuarial (gains) losses		N/A			43,409			N/A			33,147
Unrecognized prior service cost		N/A			2,352			N/A			232
Unrecognized net transitional asset		N/A						N/A
Net Amount Recognized	$	(34,061	)	$	16,301		$	(26,784	)	$	3,916
Accumulated Benefit Obligation	$	135,463		$	125,208		$	108,749		$	92,784

Amounts recognized in the consolidated balance sheets for years prior to the adoption of SFAS No. 158:

	U.S. Plans					Non-U.S. Plans
(In thousands)	2007		2006			2007		2006
Prepaid benefit cost		N/A	$	16,672			N/A	$	—
Accrued benefit liability		N/A		(848	)		N/A		(19,019	)
Accumulated other comprehensive loss		N/A		468			N/A		22,935
Intangible asset		N/A		9			N/A
Net Amount Recognized		N/A	$	16,301			N/A	$	3,916

Amounts recognized in the consolidated balance sheets for years after the adoption of SFAS No. 158:

	U.S. Plans					Non-U.S. Plans
(In thousands)	2007			2006		2007			2006
Noncurrent assets	$	—			N/A	$	275			N/A
Current liabilities		(104	)		N/A		(296	)		N/A
Noncurrent liabilities		(33,957	)		N/A		(26,763	)		N/A
Net Amount Recognized	$	(34,061	)		N/A	$	(26,784	)		N/A

RPM International Inc. and Subsidiaries     53

notes to consolidated financial statements

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

	U.S. Plans
	2007				2006
	Benefit		Plan		Benefit		Plan
(In thousands)	Obligation		Assets		Obligation		Assets
Plans with projected benefit obligation in excess of plan assets	$	177,920	$	143,798	$	161,669	$	130,268
Plans with accumulated benefit obligation in excess of plan assets	$	1,850	$	1,095	$	1,866	$	987
Plans with assets in excess of accumulated benefit obligations	$	133,613	$	142,703	$	123,342	$	129,281

	Non-U.S. Plans
	2007				2006
	Benefit		Plan		Benefit		Plan
(In thousands)	Obligation		Assets		Obligation		Assets
Plans with projected benefit obligation in excess of plan assets	$	117,909	$	88,414	$	103,713	$	72,982
Plans with accumulated benefit obligation in excess of plan assets	$	103,232	$	88,414	$	92,784	$	72,982
Plans with assets in excess of projected benefit obligations	$	5,671	$	5,945	$	—	$	—
Plans with assets in excess of accumulated benefit obligations	$	5,517	$	5,945	$	—	$	—

The following table presents the pre-tax net loss, prior service cost/(credits) and transition assets/(obligations) recognized in accumulated other comprehensive income (loss) not affecting retained earnings:

(In thousands)	U.S. Plans			Non-U.S. Plans
Net loss	$	(46,599	)	$	(33,626	)
Prior service costs/(credits)		(2,159	)		(234	)
Total recognized in accumulated other comprehensive income not affecting retained earnings	$	(48,758	)	$	(33,860	)

The following table presents estimated net loss, estimated prior service costs/(credits) and estimated transition assets/(obligations) of our pension plans that will be amortized from accumulated other comprehensive income (loss) not affecting retained earnings into net periodic pension cost and recorded in the consolidated statements of income during the fiscal year ending May 31, 2008:

(In thousands)	U.S. Plans			Non-U.S. Plans
Net loss	$	(2,581	)	$	(1,770	)
Prior service costs/(credits)		(240	)		(25	)

In measuring the projected benefit obligation and net periodic pension cost for our plans, we utilize actuarial valuations. These valuations include specific information pertaining to individual plan participants, such as salary, age and years of service, along with certain assumptions. The most significant assumptions applied include discount rates, expected return on plan assets and rate of compensation increases. We evaluate these assumptions, at a minimum, on an annual basis, and make required changes, as applicable. In developing our expected long-term rate of return on pension plan assets, 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.

54     RPM International Inc. and Subsidiaries

notes to consolidated financial statements

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	2007			2006			2005			2007			2006			2005
Discount rate		5.75	%		5.75	%		5.75	%		5.00	%		4.89	%		5.40	%
Rate of compensation increase		3.79	%		3.73	%		3.50	%		3.88	%		3.39	%		3.63	%

	U.S. Plans									Non-U.S. Plans
Net Periodic Pension Cost	2007			2006			2005			2007			2006			2005
Discount rate		5.75	%		5.75	%		6.00	%		4.89	%		5.40	%		5.68	%
Expected return on plan assets		8.75	%		8.75	%		8.75	%		6.68	%		6.93	%		7.31	%
Rate of compensation increase		3.73	%		3.50	%		3.50	%		3.39	%		3.63	%		3.66	%

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

U.S. Plans
				Actual Asset
				Allocation
	Target Allocation
	as of February 2007			2007			2006
Equity securities		70	%		69	%		65	%
Fixed income securities		25	%		20	%		20	%
Cash					6	%		10	%
Other		5	%		5	%		5	%
Total assets		100	%		100	%		100	%

Non-U.S. Plans
				Actual Asset
				Allocation
	Target Allocation
	as of February 2007			2007			2006
Equity securities		41	%		45	%		51	%
Fixed income securities		51	%		47	%		47	%
Cash		1	%		1	%
Property and other		7	%		7	%		2	%
Total assets		100	%		100	%		100	%

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 objective 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 manage investment risk properly, 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 its review of the Plan investment policy on an annual basis. The investment objectives are similar for our plans outside of the U.S., subject to local regulations. In general, investments for all plans 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 most of our employees in the United States. We record expense for defined contribution plans for any employer matching contributions made in conjunction with services rendered by employees. The majority of our plans provide for matching contributions made in conjunction with services rendered by employees. Matching contributions are invested in the same manner that the participants invest their own contributions. Matching contributions charged to income were $9.5 million, $8.6 million and $8.2 million for the years ending May 31, 2007, 2006 and 2005, respectively.

We expect to pay the following estimated pension benefit payments in the next five years (in millions): $12.6 in 2008; $14.5 in 2009; $15.0 in 2010; $16.6 in 2011; $18.9 million in 2012. In the five years thereafter (2013-2017) we expect to pay $118.5 million.

RPM International Inc. and Subsidiaries     55

notes to consolidated financial statements

NOTE H — 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, 2007:

	U.S. Plans								Non-U.S. Plans
(In thousands)	2007			2006			2005		2007		2006		2005
Service cost — Benefits earned during this period	$	—		$	—		$	11	$	468	$	365	$	265
Interest cost on the accumulated obligation		542			615			661		626		539		473
Amortization of prior service cost		(28	)		(27	)
Amortization of unrecognized (gains) losses					59			27		96		47		28
Net Periodic Postretirement Expense	$	514		$	647		$	699	$	1,190	$	951	$	766

The changes in the benefit obligations of the plans at May 31, 2007 and 2006 were as follows:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2007			2006			2007			2006
Accumulated postretirement benefit obligation at beginning of year	$	9,434		$	11,169		$	10,824		$	8,331
Service cost								468			365
Interest cost		542			615			626			539
Benefit payments		(862	)		(849	)		(220	)		(190	)
Medicare subsidy received		150
Actuarial (gains) losses		(192	)		(1,488	)					1,068
Amendments					(13	)
Currency exchange rate changes								674			711
Accumulated postretirement benefit obligation at end of year		9,072			9,434			12,372			10,824
Unrecognized actuarial gains (losses)		N/A			(249	)		N/A			(2,695	)
Unrecognized prior service cost (benefit)		N/A			294			N/A
Accrued Postretirement Health Care Benefits	$	9,072		$	9,479		$	12,372		$	8,129

In determining the postretirement benefit amounts outlined above, measurement dates as of May 31 for each period were applied.

Amounts recognized in the consolidated balance sheets for years prior to the adoption of SFAS No. 158:

	U.S. Plans					Non-U.S. Plans
(In thousands)	2007		2006			2007		2006
Prepaid benefit cost		N/A					N/A
Accrued benefit liability		N/A	$	(9,479	)		N/A	$	(8,129	)
Accumulated other comprehensive loss		N/A					N/A
Intangible asset		N/A					N/A
Net Amount Recognized		N/A	$	(9,479	)		N/A	$	(8,129	)

Amounts recognized in the consolidated balance sheets for years after the adoption of SFAS No. 158:

	U.S. Plans					Non-U.S. Plans
(In thousands)	2007			2006		2007			2006
Noncurrent assets	$	—			N/A	$	—			N/A
Current liabilities		(760	)		N/A		(238	)		N/A
Noncurrent liabilities		(8,312	)		N/A		(12,134	)		N/A
Net Amount Recognized	$	(9,072	)		N/A	$	(12,372	)		N/A

56     RPM International Inc. and Subsidiaries

notes to consolidated financial statements

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	2007			2006			2005			2007			2006			2005
Discount rate		6.00	%		6.00	%		5.75	%		5.50	%		5.50	%		6.00	%
Current healthcare cost trend rate		9.00	%		9.50	%		10.00	%		7.00	%		7.00	%		8.00	%
Ultimate healthcare cost trend rate		5.00	%		5.00	%		5.00	%		4.50	%		5.00	%		5.00	%
Year ultimate healthcare cost trend rate will be realized		2015			2015			2015			2012			2008			2008

	U.S. Plans									Non-U.S. Plans
Net Periodic Postretirement Benefit Cost	2007			2006			2005			2007			2006			2005
Discount rate		6.00	%		5.75	%		6.00	%		5.50	%		6.00	%		6.25	%
Healthcare cost trend rate		9.50	%		10.00	%		10.00	%		7.00	%		8.00	%		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			2015			2014			2008			2008			2008

Increasing or decreasing current healthcare cost trend rates by 1% would affect our accumulated postretirement benefit obligation and net postretirement expense by the following amounts for the years ended May 31, 2007 and 2006:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2007			2006			2007			2006
1% Increase in trend rate
Accumulated Benefit Obligation	$	760		$	808		$	2,753		$	2,408
Postretirement Cost		48			55			270			211
1% Decrease in trend rate
Accumulated Benefit Obligation	$	(666	)	$	(708	)	$	(1,603	)	$	(1,844	)
Postretirement Cost		(42	)		(49	)		(177	)		(151	)

We expect to pay approximately $1.0 million in estimated postretirement benefits in each of the next five years. In the five years thereafter (2013-2017) we expect to pay a cumulative total of $6.1 million.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“the Act”), was signed into law on December 8, 2003. The Act provides for prescription drug benefits under Medicare Part D and contains a subsidy to plan sponsors who provide “actuarially equivalent” prescription drug plans. Our actuary has determined that the prescription drug benefit provided by our postretirement plan is considered to be actuarially equivalent to the benefits provided under the Act for the 2006 calendar year.

In accordance with the provision of FASB Staff Position FSP FAS 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,” we have included the impact of our portion of the subsidy in the determination of accumulated postretirement benefit obligation for the U.S. nonpension postretirement benefit plan for the period ended May 31, 2007. The impact of the subsidy resulted in a reduction in our benefit obligation of approximately $1.7 million and $2.2 million at May 31, 2007 and 2006, respectively, and a $0.2 million and a $0.3 million decrease in net periodic cost for the years ended May 31, 2007 and 2006, respectively. As of May 31, 2007, we have received cumulative reimbursements from Medicare related to this new law amounting to $150,311.

RPM International Inc. and Subsidiaries     57

notes to consolidated financial statements

NOTE I — CONTINGENCIES AND LOSS RESERVES

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

	2007		2006
(In thousands)
Accrued product liability reserves	$	55,063	$	53,764
Accrued warranty reserves		7,195		7,524
Accrued environmental reserves		10,920		5,390
Accrued loss reserves — current		73,178		66,678
Asbestos-related liabilities — current		53,000		58,925
Total Reserves — Current	$	126,178	$	125,603
Accrued warranty and product liability reserves — noncurrent	$	10,319	$	14,758
Asbestos-related liabilities — noncurrent		301,268		362,360
Total Reserves — Noncurrent	$	311,587	$	377,118

Certain of our 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 our subsidiaries or others.

As of May 31, 2007, our subsidiaries had a total of 10,824 active asbestos cases compared to a total of 10,580 cases as of May 31, 2006. For the quarter ended May 31, 2007, our subsidiaries secured dismissals and/or settlements of 608 claims and made total payments of $18.6 million, which included defense costs paid during the current quarter of $7.4 million. For the comparable period ended May 31, 2006, dismissals and/or settlements covered 106 claims and total payments were $12.9 million, which included defense costs paid during the quarter of $7.1 million. For the year ended May 31, 2007, our subsidiaries secured dismissals and/or settlements of 1,900 claims and made total payments of $67.0 million, which included defense costs paid during the year of $27.7 million. For the comparable period ended May 31, 2006, dismissals and/or settlements covered 945 claims and total payments were $59.9 million, which included defense costs paid during the year of $24.0 million. Excluding defense costs, the average costs to resolve a claim, including dismissed claims, were $18,416 and $54,783 for each of the quarters ended May 31, 2007 and 2006, respectively; and $20,684 and $37,989 for each of the years ended May 31, 2007 and 2006, respectively. The amount and timing of dismissals and settlements can fluctuate significantly from period to period resulting in volatility in the average costs to resolve claims in any given quarter or year.

In addition, 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.

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 our subsidiaries; (v) the impact of bankruptcies of other companies whose share of liability may be imposed on our 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.

58      RPM International Inc. and Subsidiaries

notes to consolidated financial statements

In fiscal 2006, we retained Crawford & Winiarski (“C&W”), an independent, third-party consulting firm with expertise in the area of asbestos valuation work, to assist us in calculating an estimate of our liability for unasserted potential future asbestos-related claims. The methodology used by C&W to project our liability for unasserted potential future asbestos-related claims included C&W doing an analysis of (a) widely accepted forecast of the population likely to have been exposed to asbestos; (b) epidemiological studies estimating the number of people likely to develop asbestos-related diseases; (c) historical rate at which mesothelioma incidences resulted in the payment of claims by us; (d) historical settlement averages to value the projected number of future compensable mesothelioma claims; (e) historical ratio of mesothelioma related indemnity payments to non-mesothelioma indemnity payments; and (f) historical defense costs and their relationship with total indemnity payments.

As a result, at the end of fiscal 2006, we recorded a liability for asbestos claims in the amount of $335.0 million, while paying out $12.9 million for dismissals and/or settlements resulting in our reserve moving from $99.2 million at February 28, 2006 to $421.3 million at May 31, 2006. This reserve increase was based upon C&W’s analysis of our total estimated liability for unasserted potential future claims through May 31, 2016. This amount was calculated on a pre-tax basis and was not discounted for the time value of money. In light of the uncertainties inherent in making long-term projections, we have determined that a ten-year period is the most reasonable time period over which reasonably accurate estimates might still be made for projecting asbestos liabilities and defense costs and, accordingly, the reserve does not include asbestos liabilities for any period beyond ten years. As of May 31, 2007, total reserves were approximately $354.3 million, of which $269.3 million was reserved for unasserted potential future claims and $85.0 million was reserved for pending known claims estimated to be paid in fiscal 2008. The material components of the accruals are: (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) outside defense counsel’s opinions and recommendations with respect to the merits of such claims; and (v) analysis of projected liability for unasserted potential future claims.

In determining the amount of our asbestos reserves, we relied on assumptions that are based on currently known facts and projection models. Our actual expenses could be significantly higher or lower than those recorded if assumptions used in our calculations vary significantly from actual results. Key variables in these assumptions include the period of exposure to asbestos claims, the number and type of new claims to be filed each year, the rate at which mesothelioma incidences result in compensable claims against us, the average cost of disposing of each such new claim, the dismissal rates each year and the related annual defense costs. Furthermore, predictions with respect to these variables are subject to greater uncertainty as the projections period lengthens. A significant upward or downward trend in the number of claims filed, depending on the nature of the alleged injury, the jurisdiction where filed, the average cost of resolving each such claim and the quality of the product identification, could change our estimated liability, as could any substantial adverse verdict at trial. A federal legislative solution, further state tort reform or structured settlement transaction could also change the estimated liability.

Subject to the foregoing variables, based on currently available data, we believe that our current asbestos reserves are sufficient to cover asbestos-related cash flow requirements for our known pending and unasserted potential future asbestos-related claims. However, given the uncertainties associated with projecting matters into the future and numerous other factors outside of our control, we believe that it is reasonably possible we may incur asbestos liabilities for the period through 2017 and beyond in excess of our projection. 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. While it is reasonably possible that such excess liabilities could be material to operating results in any given quarter or year, we do not believe that it is reasonably possible that such excess liabilities would have a material adverse effect on our long-term results of operations, liquidity or consolidated financial position.

During fiscal 2004, our third-party insurers’ claimed exhaustion of coverage. Certain of our subsidiaries have filed a complaint for declaratory judgment, breach of contract and bad faith against these third-party insurers, challenging their assertion that their policies covering asbestos-related claims have been exhausted. The coverage litigation involves, among other matters, insurance coverage for claims arising out of alleged exposure to asbestos containing products manufactured by the previous owner of the Bondex tradename before March 1, 1966. On March 1, 1966, Republic Powdered Metals Inc. (as it was known then), purchased the assets and assumed the liabilities of the previous owner of the Bondex tradename. That previous owner subsequently dissolved and was never a subsidiary of Republic Powdered Metals, Bondex, RPM, Inc. or the Company. Because of the earlier assumption of liabilities, however, Bondex has historically and must continue to respond

RPM International Inc. and Subsidiaries     59

notes to consolidated financial statements

to lawsuits alleging exposure to these asbestos containing products. The Company discovered that the defendant insurance companies in the coverage litigation had wrongfully used cases alleging exposure to these pre-1966 products to erode their aggregate limits. This conduct, apparently known by the insurance industry based on discovery conducted to date, was in breach of the insurers’ policy language. Two of the defendant insurers have filed counterclaims seeking to recoup certain monies should the plaintiffs prevail on their claims. The parties have substantially completed all fact and expert discovery relating to the liability phase of the case. The parties have filed dispositive motions (including motions for summary judgment) and related briefs. It is difficult to predict when any such motions will be decided by the court or when the court will set a definitive trial date, although our subsidiaries anticipate a ruling on these pending motions during the 2007 calendar year.

During the second fiscal quarter ended November 30, 2006, Bondex reached a cash settlement of $15.0 million, the terms of which are confidential by agreement of the parties, with one of the defendant insurers. The settling defendant has been dismissed from the case. Our subsidiaries are aggressively pursuing their claims against the remaining insurers based on the terms of their respective policies.

We are unable at the present time to predict the timing or ultimate outcome of this insurance coverage litigation or whether there will be any further settlements. 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 in calculating our current asbestos reserve. Our wholly-owned captive insurance companies have not provided any insurance or reinsurance coverage for any of our subsidiaries’ asbestos-related claims.

The following table illustrates the movement of current and long-term asbestos-related liabilities through May 31, 2007:

Asbestos Liability Movement (Current and Long-Term)

	Balance at		Additions to		Deductions (Primarily		Balance at
(In thousands)	Beginning of Period		Asbestos Charge		Claims Paid)		End of Period
Year Ended May 31, 2007	$	421,285			$	67,017	$	354,268
Year Ended May 31, 2006		101,172	$	380,000		59,887		421,285
Year Ended May 31, 2005		90,607		78,000		67,435		101,172

60      RPM International Inc. and Subsidiaries

notes to consolidated financial statements

We provide, through our wholly-owned insurance subsidiaries, certain insurance coverage, primarily product liability, to our other subsidiaries. Excess coverage is provided by third-party insurers. Our reserves provide for these potential losses as well as other uninsured claims. As of May 31, 2007, the current portion of these reserves amounted to $55.0 million as compared with $53.8 million at May 31, 2006, while the total long-term reserves of $8.8 million at May 31, 2007 compare with $13.3 million at May 31, 2006. Product warranty expense is recorded within selling, general and administrative expense. The changes in the reserve balance have occurred primarily as a result of our continuing evaluation of our liability under a class action lawsuit settlement covering our Dryvit residential exterior insulated finish systems product line (“EIFS”). We also offer a warranty program for our roofing systems and have established a product warranty reserve. We review this reserve for adequacy on a quarterly basis and adjust it as necessary. The primary factors that could affect this reserve may include changes in the historical system performance rate as well as the costs of replacement.

Third-party excess insurers have historically paid varying shares of Dryvit’s defense and settlement costs for individual commercial and residential EIFS lawsuits under various cost-sharing agreements. Dryvit has assumed a greater share of the costs associated with its EIFS litigation as it seeks funding commitments from our third-party excess insurers and will likely continue to do so pending the outcome of coverage litigation involving these same third-party insurers. One of our excess insurers filed suit seeking a declaration with respect to its rights and obligations for EIFS related claims under its applicable policies. During last year’s fiscal third quarter, the court granted Dryvit’s motion to stay the federal filing based on a more complete state court complaint filed against these same insurers and the Company’s insurance broker. The coverage case is now proceeding in state court. Discovery in this litigation is ongoing. The trial is scheduled for December 3, 2007.

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.

NOTE J — SEGMENT INFORMATION

We operate a portfolio of businesses and product lines which manufacture and sell a variety of specialty paints, protective coatings and roofing systems, sealants and adhesives. We manage our portfolio by organizing our businesses and product lines into two reportable operating segments, the consumer segment and the industrial segment. Within each reportable operating segment, individual groups of companies and product lines generally address common markets, utilize similar technologies, and can share manufacturing or distribution capabilities.

Our industrial segment products are sold throughout North America and also account for the majority of our international sales. Our industrial product lines are sold directly to contractors, distributors and end-users, such as industrial manufacturing facilities, public institutions and other commercial customers.

Our consumer segment manufactures and markets professional use and do-it-yourself (“DIY”) products for a variety of mainly consumer applications, including home improvement, automotive maintenance and boat repair, and personal leisure activities. Our consumer segment’s major manufacturing and distribution operations are located primarily in North America. Consumer segment products are sold throughout North America directly to mass merchandisers, home improvement centers, hardware stores, paint stores, automotive supply stores, craft shops and to other smaller customers through distributors.

In addition to two reportable 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 reportable 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 reportable 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 20%, 22% and 25% of our consolidated net sales and approximately 55%, 55% and 57% of consumer net sales for 2007, 2006 and 2005, respectively. Sales to The Home Depot represented 9%, 10% and 11% of our consolidated net sales and 24%, 25% and 26% of our consumer segment net sales for 2007, 2006 and 2005, 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.

RPM International Inc. and Subsidiaries      61

notes to consolidated financial statements

The following table reflects the results of our reportable 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.

Year ended May 31	2007			2006			2005
(In thousands)
Segment Information
Net Sales
Industrial	$	2,100,386		$	1,811,590		$	1,441,548
Consumer		1,238,378			1,196,748			1,114,187
Total	$	3,338,764		$	3,008,338		$	2,555,735
Income (Loss) Before Income Taxes
Industrial	$	233,120		$	201,230		$	168,578
Consumer		151,496			159,147			147,601
Corporate/Other		(77,081	)		(482,852	)		(152,451	)
Total	$	307,535		$	(122,475	)1	$	163,728	1
Identifiable Assets
Industrial	$	1,708,606		$	1,628,038		$	1,278,234
Consumer		1,285,180			1,102,687			1,144,909
Corporate/Other		339,363			265,339			224,332
Total	$	3,333,149		$	2,996,064		$	2,647,475
Capital Expenditures
Industrial	$	49,235		$	39,274		$	30,714
Consumer		20,141			20,800			24,175
Corporate/Other		1,017			1,081			720
Total	$	70,393		$	61,155		$	55,609
Depreciation and Amortization
Industrial	$	46,453		$	40,536		$	33,213
Consumer		30,860			29,938			29,264
Corporate/Other		4,294			3,825			3,515
Total	$	81,607		$	74,299		$	65,992
Geographic Information
Net Sales (based on shipping location)
United States	$	2,341,008		$	2,248,259		$	2,009,748
Foreign
Canada		255,246			222,602			192,579
Europe		596,613			411,548			250,585
Other Foreign		145,897			125,929			102,823
Total Foreign		997,756			760,079			545,987
Total	$	3,338,764		$	3,008,338		$	2,555,735
Long-Lived Assets2
United States	$	1,208,981		$	1,190,722		$	1,158,138
Foreign
Canada		132,052			121,137			98,880
Europe		385,066			260,866			103,070
Other Foreign		18,107			18,027			18,392
Total Foreign		535,225			400,030			220,342
Total	$	1,744,206		$	1,590,752		$	1,378,480

1	Asbestos-related charges, totaling $380.0 million in fiscal 2006 and $78.0 million in fiscal 2005, reflected in Corporate/Other, relate to our Bondex International, Inc. subsidiary.
2	Long-lived assets include all non-current assets, excluding non-current deferred income taxes.

62       RPM International Inc. and Subsidiaries

notes to consolidated financial statements

NOTE K — QUARTERLY INFORMATION (UNAUDITED)

The following is a summary of the quarterly results of operations for the years ended May 31, 2007 and 2006:

	For Quarter Ended
(In thousands, except per share amounts)	August 31		November 30		February 28		May 31
2007
Net Sales	$	844,161	$	809,386	$	679,494	$	1,005,723
Gross Profit		345,073		326,071		263,485		425,823
Net Income		61,342		52,941		10,052		83,954
Basic Earnings Per Share	$	0.52	$	0.45	$	0.08	$	0.70
Diluted Earnings Per Share	$	0.49	$	0.42	$	0.08	$	0.65
Dividends Per Share	$	0.160	$	0.175	$	0.175	$	0.175

	For Quarter Ended
(In thousands, except per share amounts)	August 31		November 30		February 28			May 31
2006
Net Sales	$	747,352	$	739,350	$	612,475		$	909,161
Gross Profit		315,019		298,285		243,379			390,682
Net Income (Loss)		49,961		18,527		(2,687	)		(142,006	)b
Basic Earnings (Loss) Per Share	$	0.43	$	0.16	$	(0.02	)	$	(1.21	)
Diluted Earnings (Loss) Per Share	$	0.40	$	0.15	$	(0.02	)a	$	(1.21	)a
Dividends Per Share	$	0.150	$	0.160	$	0.160		$	0.160

a	Conversion of the net issuable common share equivalents and the shares related to convertible securities for the three month periods ended February 28, 2006 and May 31, 2006 were not assumed, since the results would have been anti-dilutive.
b	During the fourth fiscal quarter ended May 31, 2006, we increased our liability for asbestos claims by $335.0 million ($215.6 million after-tax), representing our estimation of our liability for pending and unasserted claims through May 31, 2016. See Note I to the Consolidated Financial Statements for discussion.

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       63

QUARTERLY STOCK PRICE AND DIVIDEND INFORMATION

Shares of RPM International Inc. 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

					Dividends paid
	High		Low		per share
Fiscal 2007
First Quarter	$	19.12	$	17.53	$	0.160
Second Quarter	$	20.36	$	17.40	$	0.175
Third Quarter	$	24.25	$	19.90	$	0.175
Fourth Quarter	$	24.14	$	21.04	$	0.175

					Dividends paid
	High		Low		per share
Fiscal 2006
First Quarter	$	19.21	$	17.47	$	0.150
Second Quarter	$	19.15	$	16.90	$	0.160
Third Quarter	$	19.00	$	16.96	$	0.160
Fourth Quarter	$	19.70	$	17.40	$	0.160

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 July 13, 2007 was approximately 31,955.

64       RPM International Inc. and Subsidiaries

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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 Rule 13a-15(f) under the Securities Exchange Act of 1934. 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 be 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, 2007. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. The scope of such assessment did not include Tor Coatings (“Tor”) and the acquired businesses of The Dane Group (“Dane”), which the Company acquired in 2007, and are included in our Consolidated Financial Statements, aggregating approximately $68.6 million of total assets as of May 31, 2007, approximately $17.8 million of net sales and approximately $0.4 million of pre-tax loss for the year then ended. Based on this assessment, management concluded that, as of May 31, 2007, RPM’s internal control over financial reporting is effective.

The independent registered public accounting firm Ernst & Young LLP, has also audited the Company’s assessment of internal control over financial reporting as of May 31, 2007 and their report thereon is included on page 67 of this report.

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

July 27, 2007

RPM International Inc. and Subsidiaries       65

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 (“RPM” or “the Company”) as of May 31, 2007 and 2006 and the related consolidated statements of income, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. 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, the Consolidated Financial Statements referred to above present fairly, in all material respects, the consolidated financial position of RPM at May 31, 2007 and 2006 and the consolidated results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

As discussed in Note A to the Consolidated Financial Statements, effective June 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123 (Revised 2004), Share-Based Payment. Also, as discussed in Note A to the Consolidated Financial Statements, effective on May 31, 2007, the Company adopted SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Post Retirement Plans, an amendment to FAS 87, 88, 106 and 132(R).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of RPM’s internal control over financial reporting as of May 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated July 27, 2007 expressed an unqualified opinion thereon.

Cleveland, Ohio
July 27, 2007

66       RPM International Inc. and Subsidiaries

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 (“RPM” or “the Company”) maintained effective internal control over financial reporting as of May 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). RPM’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 opinion.

A company’s internal control over financial reporting is a process designed 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include an assessment of the effectiveness of internal controls over financial reporting of Tor Coatings Limited (“Tor”) and the acquired businesses of The Dane Group (“Dane “), which were acquired by RPM in 2007, and are included in the 2007 Consolidated Financial Statements of RPM and constituted approximately $68.6 million of total assets as of May 31, 2007, approximately $17.8 million of revenue and approximately $0.4 million of pre-tax loss for the year then ended. Our audit of internal control over financial reporting of RPM as of May 31, 2007 also did not include an evaluation of the internal control over financial reporting of Tor and Dane.

In our opinion, management’s assessment that RPM maintained effective internal control over financial reporting as of May 31, 2007, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, RPM maintained, in all material respects, effective internal control over financial reporting as of May 31, 2007, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of RPM International Inc. and Subsidiaries as of May 31, 2007 and the related consolidated statements of income, stockholders’ equity and cash flows for the year then ended and our report dated July 27, 2007 expressed an unqualified opinion thereon.

Cleveland, Ohio
July 27, 2007

RPM International Inc. and Subsidiaries       67

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 statements of income, stockholders’ equity and cash flows of RPM International Inc. and Subsidiaries (the “Company”) for the year 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 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 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 audit provides a reasonable basis for our opinion.

In our opinion, such Consolidated Financial Statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended May 31, 2005, in conformity with U.S. Generally Accepted Accounting Principles.

Cleveland, Ohio

July 7, 2005, except as to Note K of the Annual Report on Form 10-K
for the year ended May 31, 2005, which is as of July 22, 2005.

68       RPM International Inc. and Subsidiaries

EX-21.1

Exhibit 21.1

The following is a list of subsidiaries of RPM International Inc.¹ as of June 14, 2007.

	Jurisdiction of
Name	Incorporation
First Colonial Insurance Company, Inc.	Vermont
First Continental Services Co.	Vermont
RPM Asia Pte. Ltd.	Singapore
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.	Ohio
Rust-Oleum Service Company	Delaware
The Flecto Company, Inc.6	California
Rust-Oleum Japan Corporation	Japan
The Testor Corporation7	Ohio
Zinsser Co., Inc. 8	New Jersey
Zinsser Asia Pacific Pty. Limited	Australia
Zinsser Holdings, LLC9	Delaware
Mantrose-Haeuser Co., Inc.	Massachusetts
Modern Masters Inc.	California
Zinsser Divestiture Co., Inc.	New York
RPM Enterprises, Inc.	Delaware
RPM, Inc.10	Ohio
American Emulsions Co., Inc.	Georgia
Select Dye & Chemical, Inc.	Georgia
Bondex International, Inc.	Ohio
Chemical Specialties Manufacturing Corporation	Maryland
Day-Glo Color Corp.11	Ohio
Dryvit Holdings, Inc.	Delaware
Dryvit Systems, Inc.12	Rhode Island
Dryvit Systems USA (Europe) Sp. zo.o.	Poland
Guardian Protection Products, Inc.	Delaware
Kop-Coat, Inc.	Ohio
Kop-Coat New Zealand Limited	New Zealand
Agpro (N.Z.) Limited	New Zealand

	Jurisdiction of
Name	Incorporation
RPM Wood Finishes Group, Inc.13	Nevada
Chemical Coatings, Inc.	North Carolina
RPM of Mass., Inc.	Massachusetts
Westfield Coatings Corporation	Massachusetts
TCI, Inc.	Georgia
RPM Industrial Holding Company	Delaware
Carboline Company14	Delaware
PLB Holdings Inc.	Nevada
A/D Fire Protection Systems Corp.	Nevada
Carboline International Corporation15	Delaware
Carboline Dubai Corporation	Missouri
StonCor Africa (Pty.) Ltd.	South Africa
Chemrite Equipment Systems (Pty.) Ltd.	South Africa
StonCor Namibia (Pty.) Ltd.	Namibia
Republic Powdered Metals, Inc. 16	Ohio
StonCor Group, Inc.17	Delaware
Fibergrate Composite Structures Incorporated18	Delaware
Stonhard Nederland B.V.	Netherlands
Parklin Management Group, Inc.19	New Jersey
Stonhard Agencia en Chile	Chile
StonCor Corrosion Specialists Group Ltda.20	Brazil
Tremco Incorporated21	Ohio
The Euclid Chemical Company22	Ohio
Euclid Chemical International Sales Corp.23	Ohio
Grandcourt N.V.24	Netherlands Antilles
Redwood Transport, Inc.25	Ohio
Paramount Technical Products, Inc.	South Dakota
Tremco illbruck AB	Sweden
Tremco Asia Pacific Pty. Limited	Australia
Tremco Pty. Limited	Australia
Tremco Asia Pte. Ltd.	Singapore
Tremco Barrier Solutions, Inc.26	Delaware
Tremco GmbH	Germany
Weatherproofing Technologies, Inc.27	Delaware
RSIF International Limited	Ireland
Sierra Performance Coatings, Inc.	California

1

RPM International Inc. owns a 14.99% investment interest in Kemrock Industries & Exports Ltd., a publicly traded Indian company traded on the Bombay Stock Exchange.

RPM International Inc. owns 100% of the outstanding voting Common Stock in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in RPM Funding Corporation are held as follows: 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

2

	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 in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in 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) in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in 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 in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in 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 in Portazul, S.A., a Dominican Republic corporation. The remaining 6% of the outstanding shares in Portazul, S.A. are held by the directors of Portazul, S.A.
3	DAP Holdings, LLC owns 100% of the outstanding Common Stock in DAP Brands Company, a Delaware corporation. RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and Series B Preferred Stock in DAP Brands Company.
	DAP Holdings, LLC owns 1.60% of the outstanding Common Stock in RPM Holdco Corp., a Delaware Corporation. The remaining outstanding Common Stock in 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-Oleum International, LLC 15%, StonCor Group, Inc. 12.87%, Tremco Incorporated 44.67% and Zinsser Holdings, LLC .27%.

3

	DAP Holdings, LLC owns 23.81% of the outstanding Preferred Stock in 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 in RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
4	Rust-Oleum Corporation owns 95% of the outstanding shares of Rust-Oleum Argentina S.A. The remaining 5% of the outstanding shares of Rust-Oleum Argentina S.A. are held by Rust-Oleum International, LLC.
	Rust-Oleum Corporation owns 100% of the outstanding Series E Preferred Stock (non-voting) in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in 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 in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
5	Rust-Oleum International, LLC owns 5% of the outstanding shares of Rust-Oleum Argentina S.A. The remaining 95% of the outstanding shares of Rust-Oleum Argentina S.A. are held by Rust-Oleum Corporation.
	Rust-Oleum International, LLC owns 100% of the outstanding Common Stock in Rust-Oleum Brands Company, a Delaware corporation. RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and Series B Preferred Stock in Rust-Oleum Brands Company.
	Rust-Oleum International, LLC owns 15% of the outstanding Common Stock in RPM Holdco Corp., a Delaware Corporation. The remaining Common Stock in 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 in 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 in RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
6	The Flecto Company, Inc. owns 79% of the outstanding shares in Harry A. Crossland Investments, Ltd., a Nevada corporation. The remaining 21% of the outstanding shares in Harry A. Crossland Investments, Ltd. are held by RPM Canada Company.
	Harry A. Crossland Investments, Ltd. owns 100% of the outstanding shares in Crossland Distributors Ltd., a Canadian corporation.
7	The Testor Corporation owns 100% of the outstanding Series F Preferred Stock (non-voting) in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in 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 in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
8	Zinsser Co., Inc. owns 100% of the outstanding Series I Preferred Stock (non-voting) in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in 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 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.

5

	RPM Funding Corporation owns 5% of the outstanding shares in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
9	Zinsser Holdings, LLC owns 100% of the outstanding Common Stock in Zinsser Brands Company, a Delaware corporation. RPM Canada Company owns 100% of the outstanding Series A Preferred Stock and Series B Preferred Stock in Zinsser Brands Company.
	Zinsser Holdings, LLC owns .27% of the outstanding Common Stock in RPM Holdco Corp., a Delaware Corporation. The remaining outstanding Common Stock in 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 in 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 in RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
10	RPM, Inc. owns 88% of the outstanding shares in RPM/Lux Consult S.A., a Luxembourg corporation. The remaining 12% of the outstanding shares in RPM/Lux Consult S.A. are held by Tremco Incorporated.
	RPM/Lux Consult S.A. owns .20% of the outstanding shares in Monile France S.àr.l., a French corporation. The remaining 99.80% of the outstanding shares in Monile France S.àr.l. are held by RPM/Belgium N.V.
	RPM/Lux Consult S.A. owns .96% of the outstanding shares in RPM Europe S.A., a Belgian corporation. The remaining 99.04% of the outstanding shares in RPM Europe S.A. are held by RPM Europe Holdco B.V.
11	Day-Glo Color Corp. owns 7.33% of the outstanding shares in 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 in RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.

6

	Day-Glo Color Corp. owns .32% of the outstanding shares in Radiant Color N.V., a Belgian corporation. The remaining 99.68% of the outstanding shares in Radiant Color N.V. are held by RPM Europe Holdco B.V.
	Radiant Color N.V. owns 99.99% of the outstanding shares in Martin Mathys N.V., a Belgian corporation. The remaining .01% of the outstanding shares in Martin Mathys N.V. are held by RPM/Belgium N.V.
	Radiant Color N.V. owns 85.71% of the outstanding shares in Carboline Italia S.p.A., an Italian corporation. Of the remaining outstanding shares in Carboline Italia 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 in Ecoloc N.V., a Belgian corporation. The remaining 32.14% of the outstanding shares in Ecoloc N.V. are held by Lock-Tile Belgium N.V.
	Radiant Color N.V. owns 99.96% of the outstanding shares in Lock-Tile Belgium N.V., a Belgian corporation. The remaining .04% of the outstanding shares in Lock-Tile Belgium N.V. are held by RPM/Belgium N.V.
12	Dryvit Systems, Inc. owns 8.40% of the outstanding shares in RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares in 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 in 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 in 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% in AWCI Insurance Company, Ltd., a Bermuda exempt company. The remaining outstanding shares in AWCI Insurance Company, Ltd. are held by other EIFS manufacturers.
13	RPM Wood Finishes Group, Inc. owns 5.66% of the outstanding shares in RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares in 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%.

7

	RPM Holdco Corp. owns 100% of the outstanding shares in RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
14	Carboline Company owns 2.93% of the outstanding shares in RPM Holdco Corp., a Delaware Corporation. The remaining outstanding shares in 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 in RPM Canada Company, a Canadian unlimited liability company. Subsidiaries of RPM Canada Company are listed under Tremco Incorporated footnote.
15	Carboline International Corporation owns 49% of the outstanding shares in Carboline Korea Ltd.; 40% in Carboline Norge A/S; 49% in StonCor Middle East LLC; 33.33% in Japan Carboline Company Ltd.; and 40% in CDC Carboline (India) Ltd. All outstanding shares of these entities are held by joint venture partners. However, 5% of the outstanding shares in Carboline Norge A/S are held by RPM Funding Corporation.
16	Republic Powdered Metals, Inc. owns 100% of the outstanding Series A & D Preferred Stock (non-voting) in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in 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 in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
17	StonCor Group, Inc. owns 12.87% of the outstanding shares in RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares in 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 in 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 in StonCor South Cone S.A., an Argentine corporation. The remaining 5% of the outstanding shares in StonCor South Cone S.A. are held by Parklin Management Group, Inc.
	StonCor Group, Inc. owns 99% of the outstanding shares in Stonhard S.A., a Luxembourg corporation. The remaining 1% of the outstanding shares in Stonhard S.A. are held by Parklin Management Group, Inc.
	StonCor Group, Inc. owns 99.55% of the outstanding shares in Grupo StonCor, S.A. de C.V., a Mexican corporation. The remaining .45% of the outstanding shares in 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 in Plasite, S.A. de C.V. Mexico, a Mexican corporation and 100% of the outstanding shares in Grupo StonCor, S.A. de C.V., a Colombian corporation.
	Grupo StonCor, S.A. de C.V. owns .1% of the outstanding shares in Corgrate Fiberglass Systems S.A. de C.V., a Mexican corporation The remaining 99.9% of the outstanding shares in Corgrate Fiberglass Systems S.A. de C.V. are held by Fibergrate Composite Structures Incorporated.
	StonCor Group, Inc. owns 99.67% of the outstanding shares in Stonhard de Mexico, S.A. de C.V., a Mexican corporation. The remaining .33% of the outstanding shares are held by Parklin Management Group, Inc.
	Stonhard de Mexico, S.A. de C.V. owns 99.59% of the outstanding shares in Juárez Inmobiliaria, S.A., a Mexican corporation. Of the remaining .41% outstanding shares in Juárez Inmobiliaria, S.A., .33% are held by Grupo StonCor, S.A. de C.V. and .08% are held by StonCor Group,Inc.
	StonCor Group, Inc. owns .01% of the outstanding shares in StonCor Services, Ltda., a Brazilian corporation. The remaining 99.99% of the outstanding shares in StonCor Services, Ltda. are held by StonCor Corrosion Specialists Group Ltda.
18	Fibergrate Composite Structures Incorporated owns 99.9% of the outstanding shares in Corgrate Fiberglass Systems S.A. de C.V., a Mexican corporation. The remaining .1% of the outstanding shares in Corgrate Fiberglass Systems S.A. de C.V. are held by Grupo StonCor, S.A. de C.V.
19	Parklin Management Group, Inc. owns .875% of the outstanding shares in StonCor (Deutschland) GmbH, a German corporation. Of the remaining 99.125% outstanding shares in StonCor (Deutshland) GmbH, 98.25% are held by RPM Canada, a General Partnership and .875% are held by RPM Canada Company.

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	StonCor (Deutschland) GmbH owns 100% of the outstanding shares in Alteco Technik GmbH, a German corporation.
	Parklin Management Group, Inc. owns .45% of the outstanding shares in Grupo StonCor, S.A. de C.V., a Mexican corporation. The remaining 99.55% of the outstanding shares in Grupo StonCor, S.A. de C.V. are held by StonCor Group, Inc.
	Parklin Management Group, Inc. owns .33% of the outstanding shares in Stonhard de Mexico, S.A. de C.V., a Mexican corporation. The remaining 99.67% of the outstanding shares in Stonhard de Mexico, S.A. de C.V. are held by StonCor Group, Inc.
	Parklin Management Group, Inc. owns 1% of the outstanding shares in Stonhard S.A., a Luxembourg corporation. The remaining 99% of the outstanding shares in Stonhard S.A. are held by StonCor Group, Inc.
	Parklin Management Group, Inc. owns 5% of the outstanding shares in StonCor South Cone S.A., an Argentine corporation. The remaining 95% of the outstanding shares in StonCor South cone S.A. are held by StonCor Group, Inc.
20	StonCor Corrosion Specialists Group Ltda. owns 99.99% of the outstanding shares in StonCor Services, Ltda., a Brazilian corporation. The remaining .01% of the outstanding shares in StonCor Services, Ltda. are held by StonCor Group, Inc.
21	Tremco Incorporated owns 100% of the outstanding Series G Preferred Stock (non-voting) in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in 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 in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in 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 in RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares in 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.

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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 in 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 in DAP Brands Company, a Delaware corporation. DAP Holdings, LLC owns 100% of the outstanding Common Stock in DAP Brands Company.

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

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

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

RPM Canada Investment Company owns 100% of the outstanding shares in Permaquik Corporation, a Canadian Corporation.

RPM Canada Company is a 73.77% partner in RPM Canada, a General Partnership, an Ontario partnership. RPM Canada Investment Company is a 26.23% partner in RPM Canada, a General Partnership.

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

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

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

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

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

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RPM Canada, a General Partnership owns 99% of the outstanding partnership interest in RPM United Kingdom G.P., a non-registered United Kingdom partnership. The remaining 1% of the outstanding partnership interest in RPM United Kingdom G.P. is held by RPM Canada Investment Company.

RPM United Kingdom G.P. owns 12% of the outstanding shares in RPM Europe Holdco B.V.. a Netherlands corporation. Of the remaining outstanding shares, RPM Canada Company owns 79% and RPM Canada, a General Partnership owns 9%.

RPM United Kingdom G.P. is the sole member of RPM Europe Coöperatief U.A., a Dutch cooperative with excluded liability.

RPM United Kingdom G.P. owns 100% of the outstanding shares in RPM Nova Scotia ULC, a Canadian Corporation.

RPM Europe Coöperatief U.A. owns 100% of the outstanding shares in RPM Germany GmbH, a German corporation and RPM Lux Holdco S.àr.l., a Luxembourg corporation.

RPM Lux Holdco S.àr.l. owns 100% of the outstanding shares in RPM Ireland IP Limited, an Irish corporation.

RPM Germany GmbH owns 100% of the outstanding shares in Compact Technology GmbH and Tremco illbruck International GmbH, both German Corporations.

Tremco illbruck International GmbH owns 100% of the outstanding shares in Tremco illbruck Produktion GmbH, a German Corporation; Tremco illbruck GmbH, an Austrian corporation; Tremco illbruck s.r.o., a Czech Republic corporation; Tremco illbruck Sp. zo.o., a Polish corporation; and illbruck Joints et Systèmes S.A.S., a French corporation.

Tremco illbruck Produktion GmbH is a general partner and Tremco illbruck International GmbH is a limited partner in Tremco illbruck GmbH & Co. KG, a German limited partnership.

Tremco illbruck International GmbH owns 99.75% of the outstanding shares in illbruck Sealant Systems N.V., a Belgian corporation. The remaining .25% of the outstanding shares in illbruck Sealant Systems N.V. are held RPM Germany GmbH, a German corporation.

illbruck Sealant Systems N.V. owns 100% of the outstanding shares in Colcon N.V., a Belgian corporation.

Colcon N.V. owns 100% of the outstanding shares in Colymit N.V. a Belgian corporation.

Colymit N.V. owns 100% of the outstanding shares in Caseko Sealants B.V., a Netherlands corporation.

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

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Tremco illbruck Production Limited owns 100% of the outstanding shares in Tremco illbruck OY, a Finnish corporation and 100% of the outstanding shares in Tremco illbruck Limited, illbruck Sealant Systems UK Limited, Tretol Group Limited and Tor Coatings Limited, all UK corporations.

Tremco illbruck OY owns 100% of the outstanding shares in Tremco illbruck ooo, a Russian corporation.

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

Tor Coatings Limited owns 100% of the outstanding shares in Ardenbrite Products Limited, Crossco (261) Limited, Crossco (754) Limited, Deancove Limited, Duratec Coatings Consultants Limited, Holdtite Adhesives Limited, Oakdyke Limited and Sandco 953 Limited, all UK corporations.

RPM Canada Company owns 79% of the outstanding shares in RPM Europe Holdco B.V., a Netherlands corporation. Of the remaining 21% of the outstanding shares in RPM Europe Holdco B.V., 9% of the outstanding shares are held by RPM Canada, a General Partnership and 12% are held by RPM United Kingdom G.P.

RPM Europe Holdco B.V. owns .20% of the outstanding shares in illbruck Sealant Systems Production S.A. The remaining 99.80% of the outstanding shares in illbruck Sealant Systems Production S.A. are held by Tremco illbruck Productie B.V.

RPM Europe Holdco B.V. owns 100% of the outstanding shares in Vandex Holding AG, a Swiss corporation.

Vandex Holding AG owns 100% of the outstanding shares in Vandex Isoliermittel-Gesellschaft mbH, a German corporation; Vandex UK Limited, a United Kingdom corporation; Vandex International AG and Vandex AG, both Swiss corporations; and 49% of the outstanding shares in Vandex (USA) LLC, a Pennsylvania corporation. The remaining outstanding shares in Vandex (USA) LLC are held by a joint venture partner.

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

Tremco illbruck Productie B.V. owns 9.214% of the outstanding shares in PDR GmbH and 8.32% of the outstanding shares in PDR Recycling GmbH & Co. KG, both German corporations. The remaining outstanding shares are held by joint venture partners.

Tremco illbruck Productie B.V. owns 100% of the outstanding shares in Arkelveste B.V., a Netherlands corporation.

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Tremco illbruck Productie B.V. owns 99.80% of the outstanding shares in illbruck Sealant Systems Production S.A., a Belgian corporation. The remaining ..20% of the outstanding shares in illbruck Sealant Systems Production S.A. are held by RPM Europe Holdco B.V.

illbruck Sealant Systems Production S.A. owns 100% of the outstanding shares in Eurobond S.A., a Belgian corporation.

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

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

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

Radiant Color N.V. owns 85.71% of the outstanding shares in Carboline Italia S.p.A., an Italian corporation. Of the remaining outstanding shares in Carboline Italia 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 in Ecoloc N.V., a Belgian corporation. The remaining 32.14% of the outstanding shares in Ecoloc N.V. are held by Lock-Tile Belgium N.V.

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

RPM/Belgium N.V. owns 99.80% of the outstanding shares in Monile France S.àr.l., a French corporation. The remaining .20% of the outstanding shares in Monile France S.àr.l. are held by RPM/Lux Consult S.A.

RPM/Belgium N.V. owns 100% of the outstanding shares in Alteco Chemical-Produtos Quimicos SA, a Portuguese corporation.

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

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

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RPM Europe Holdco B.V. owns .72% of the outstanding shares in Carboline Italia S.p.A., an Italian corporation. Of the remaining outstanding shares in Carboline Italia 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 in RPM Europe S.A., a Belgian corporation. The remaining .96% of the outstanding shares in RPM Europe S.A. are held by RPM/Lux Consult S.A.

RPOW France S.A.S. owns 13.57% of the outstanding shares in Carboline Italia S.p.A., an Italian corporation. Of the remaining outstanding shares in Carboline Italia 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 in Carboline France S.A.S., a French corporation.

RPOW France S.A.S. owns 100% of the outstanding shares in Rust-Oleum France S.A.S., a French corporation and Rust-Oleum Mathys Italia S.r.l., an Italian corporation.

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

Stonhard S.A.S. owns 100% of the outstanding shares in StonCor España SL, a Spanish corporation.

RPOW U.K. Limited owns 100% of the outstanding shares in each of the following United Kingdom corporations: Advanced Construction Materials Limited, Anglo Building Products Limited, Bondo U.K. Limited, Chemspec Europe Limited, Dane Color UK Limited, Dryvit U.K. Limited, Fibergrate Composite Structures Limited, illbruck Holdings Limited, Mantrose U.K. Limited, RPM Holdings UK Limited, Rust-Oleum U.K. Limited, Stonhard U.K. Limited, Timberex International Limited, Watco International Limited and Watco UK Limited.

illbruck Holdings Limited owns 100% of the outstanding shares in Alfas Group Limited, a United Kingdom corporation.

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

Watco UK Limited owns 100% of the outstanding shares in the following United Kingdom corporations: Industrial Flooring Services Limited, Watco Group Manufacturing Limited and Watco Limited, as well as 100% of the outstanding shares of Watco GmbH, a German corporation and Watco S.àr.l., a French corporation.

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

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

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

RPM Canada, a General Partnership, owns 100% of Permaquik (UK) Limited, a United Kingdom corporation.

RPM Canada, a General Partnership, owns 77% of the outstanding shares in Permaquik Western Ltd., a Canadian corporation. The remaining 23% of the outstanding shares in Permaquik Western Ltd. are held by a joint venture partner.

Permaquik Western Ltd. owns 66% of the outstanding ownership interest in Permaquik (Shanghai) Waterproofing Materials Co. Ltd., a Peoples Republic of China corporation. The remaining 34% of the outstanding shares in Permaquik Western Ltd. are held by a joint venture partner.

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

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

RPM/Belgium N.V. owns 100% of the outstanding shares in Alteco Chemical-Produtos Quimicos SA, a Portuguese corporation.

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

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

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

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

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

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	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 49% of the outstanding shares in Sime Tremco Sdn. Bhd., a Malaysian corporation. The remaining outstanding shares in Sime Tremco Sdn. Bhd. are held by a joint venture partner.
	Sime Tremco Sdn. Bhd. Owns 100% of the outstanding shares in Sime Tremco Specialty Chemicals Sdn. Bhd., a Malaysian corporation.
	Tremco Incorporated owns 99.999% of the outstanding shares in Tremco Far East Limited, a Hong Kong corporation. The remaining .001% of the outstanding shares in Tremco Far East Limited are held by a director of Tremco Far East Limited.
	Tremco Far East Limited owns 100% of the outstanding shares in Tremco (Malaysia) Sdn. Bhd., a Malaysian corporation and 100% of the outstanding shares in Shanghai Tremco International Trading Co., Ltd., a Chinese corporation.
	Tremco Incorporated owns 12% of the outstanding shares in RPM/Lux Consult S.A., a Luxembourg corporation. The remaining 88% of the outstanding shares in RPM/Lux Consult S.A. are held by RPM, Inc.
	RPM/Lux Consult S.A. owns .20% of the outstanding shares in Monile France S.àr.l., a French corporation. The remaining 99.80% of the outstanding shares in Monile France S.àr.l. are held by RPM/Belgium N.V.
	RPM/Lux Consult S.A. owns .96% of the outstanding shares in RPM Europe S.A., a Belgian corporation. The remaining 99.04% of the outstanding shares in RPM Europe S.A. are held by RPM Europe Holdco B.V.
22	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) in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in 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-

17

	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 in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in 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 in RPM Holdco Corp., a Delaware corporation. The remaining outstanding shares in 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 in 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 in Eucomex S.A. de C.V., a Mexican corporation. The remaining .003% of the outstanding shares in Eucomex S.A. de C.V. are held by Redwood Transport, Inc.
	The Euclid Chemical Company owns 49% of the outstanding shares in Toxement S.A., a Colombian corporation. Of the remaining outstanding shares in 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%.
23	Euclid Chemical International Sales Corp. owns ..0025% of the outstanding shares in Toxement S.A., a Colombian corporation. Of the remaining outstanding shares in 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%.
24	Grandcourt N.V. owns 50.99% of the outstanding shares in Toxement S.A., a Colombian corporation. Of the remaining outstanding shares in 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%.
25	Redwood Transport, Inc. owns .003% of the outstanding shares in Eucomex S.A. de C.V., a Mexican corporation. The remaining 99.997% of the outstanding shares in Eucomex S.A. de C.V. are held by The Euclid Chemical Company.
	Redwood Transport, Inc. owns .0025% of the outstanding shares in Toxement S.A., a Colombian corporation. Of the remaining outstanding shares in 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%.

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26	Tremco Barrier Solutions, Inc. owns 100% of the outstanding Series J Preferred Stock (non-voting) in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in 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 H Preferred Stock (non-voting) by Weatherproofing Technologies, Inc.
	RPM Funding Corporation owns 5% of the outstanding shares in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge A/S, Carboline International Corporation owns 40% and 55% are held by a joint venture partner.
27	Weatherproofing Technologies, Inc. owns 100% of the outstanding Series H Preferred Stock (non-voting) in RPM Funding Corporation, a Delaware corporation. The remaining outstanding shares in 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 in Carboline Norge A/S, a Norwegian corporation. Of the remaining outstanding shares in 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 in Toxement S.A., a Colombian corporation. Of the remaining outstanding shares in 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%.

19

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in this Annual Report (Form 10-K) of RPM International Inc. (RPM) of our reports dated July 27, 2007, with respect to the consolidated financial statements of RPM, RPM Management’s Report on Internal Control Over Financial Reporting, and the effectiveness of internal control over financial reporting of RPM, included in the 2007 Annual Report to Stockholders of RPM.

Our audits also included the financial statement schedule of RPM listed in Item 15(a) as of May 31, 2007 and 2006 and for the years then ended. This schedule is the responsibility of RPM’s management. Our responsibility is to express an opinion based on our audits. In our opinion, as to which the date is July 27, 2007, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statements (Form S-8 Nos. 033-32794, 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; 333-120067, 2004 Omnibus Equity and Incentive Plan; and 333-139906, 2007 Restricted Stock Plan)

of our reports dated July 27, 2007, with respect to the consolidated financial statements of RPM, RPM Management’s Report on Internal Control Over Financial Reporting and the effectiveness of internal control over financial reporting of RPM, incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule of RPM included in this Annual Report (Form 10-K) of RPM.

/s/ Ernst & Young LLP ERNST & YOUNG LLP

Cleveland, Ohio
July 27, 2007

EX-23.2

Exhibit 23.2

Consent of Independent Public Accounting Firm

     We consent to the incorporation by reference of our reports dated July 7, 2005 (except as to Note K of the Annual Report on Form 10-K for the year ended May 31, 2005, with respect to which our report is dated as of July 22, 2005), with respect to the consolidated financial statements of RPM International Inc. and the related Financial Statement Schedule: in the Annual Report on Form 10-K for the year ending May 31, 2007; and in RPM International Inc.’s Registration Statements on Form S-8 (Reg. Nos. 033-32794, 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; 333-120067, 2004 Omnibus Equity and Incentive Plan; and 333-139906, 2007 Restricted Stock Plan).

/s/ Ciulla, Smith & Dale, LLP  

Ciulla, Smith & Dale, LLP  

July 30, 2007

EX-31.1

Exhibit 31.1

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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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: July 30, 2007	/s/ Frank C. Sullivan
	Frank C. Sullivan
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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: July 30, 2007	/s/ Robert L. Matejka
	Robert L. Matejka
	Vice President, Chief Financial Officer and Controller

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, 2007 (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: July 30, 2007	/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.

  EX-32.2 18 l26082aexv32w2.htm EXHIBIT 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, 2007 (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: July 30, 2007	/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

exv32w2