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, 2008
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 (State or Other Jurisdiction of Incorporation or Organization)	02-0642224 (IRS Employer Identification No.)
P.O. Box 777, 2628 Pearl Road, Medina, Ohio (Address of Principal Executive Offices)	44258 (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.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
	(Do not check if a smaller reporting company)

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, 2007, the last business day of the Registrant’s most recently completed second fiscal quarter) was approximately $2,288,315,147. For purposes of this information, the 1,660,697 outstanding shares of Common Stock which were owned beneficially as of November 30, 2007 by executive officers and Directors of the Registrant were deemed to be the shares of Common Stock held by affiliates.

As of July 28, 2008, 130,181,558 shares of Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s 2008 Annual Report to Stockholders for the fiscal year ended May 31, 2008 (the “2008 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 10, 2008 (the “2008 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, 2008.

TABLE OF CONTENTS

PART I
	Item 1. Business.
THE COMPANY
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
EX-10.16.3
EX-13.1
EX-21.1
EX-23.1
EX-23.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I

Item 1.   Business.

THE COMPANY

RPM International Inc., a Delaware corporation, succeeded to the reporting obligations of RPM, Inc., an Ohio corporation, following a 2002 reincorporation transaction. RPM, Inc. was incorporated in 1947 under the name Republic Powdered Metals, Inc., and changed its name to RPM, Inc. in 1971. In connection with the 2002 reincorporation from Ohio to Delaware, 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, in addition to RPM, Inc., which remained as one of our subsidiaries following the reincorporation, own the various operating companies and other legal entities that make up RPM International Inc.

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, 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, Flowcrete, illbruck, Rust-Oleum, Stonhard, Tremco, Watco and Zinsser. As of May 31, 2008, our subsidiaries marketed products in 148 countries and territories and operated manufacturing facilities in approximately 91 locations in the United States, Argentina, Belgium, Canada, China, Colombia, The Czech Republic, France, Germany, Italy, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, South Africa, Sweden, the United Arab Emirates and the United Kingdom. Approximately 37% of our sales are generated in international markets through a combination of exports and direct sales in foreign countries. For the fiscal year ended May 31, 2008, we recorded net sales of $3.6 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.

Segment Information

Our business is divided into two reportable segments: the consumer reportable segment (“consumer segment”) and the industrial reportable segment (“industrial segment”). Within each reportable segment, we aggregate three operating segments which comprise individual reporting units and product lines that generally address common markets, utilize similar technologies and are able to share manufacturing or distribution capabilities. The industrial segment (Tremco Group, StonCor Group and RPM II/Industrial), which comprises approximately 65% 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 (Rust-Oleum/Zinsser Group, DAP Group and RPM II/Consumer) comprises approximately 35% 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 2008 Annual Report to Stockholders, incorporated herein by reference, for financial information relating to our two reportable segments and financial information by geographic area.

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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 $2.4 billion in net sales for the fiscal year ended May 31, 2008 and is composed of the following major product lines and brand names:

Tremco Group:

•  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;

•  concrete and masonry additives and related construction chemicals marketed under our EUCO, Increte and Tamms brand names; and

•  joint sealing tapes, flashing tapes, cartridge sealants and adhesives, strips, foils and accessories marketed under our illbruck, Festix, Perennator and Coco brand names;

StonCor Group:

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

•  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, Corgrate and Safe-T-Span brand names; and

•  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;

RPM II/Industrial Group:

•  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;

•  fluorescent colorants and pigments marketed under our Day-Glo, Radiant and Dane Color brand names;

•  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 and Tru-Core brand names;

•  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 and personal leisure activities. Our consumer segment’s major manufacturing and distribution operations are located primarily in North America,

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along with a few locations in Europe. Consumer segment products are sold directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops and to other smaller customers through distributors. Our consumer segment generated $1.3 billion in net sales in the fiscal year ended May 31, 2008 and is composed of the following major product lines and brand names:

Rust-Oleum/Zinsser Group:

•  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, Universal, Varathane, Watco, Epoxy Shield, Industrial Choice, Labor Saver, Road Warrior, Sierra Performance, Hard Hat, Mathys, Combi Color, Noxyde and Blackfriar. In addition, Rust-Oleum branded products in Canada are marketed under the Mono brand name;

•  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;

•  metallic and faux finish coatings marketed under our Modern Masters brand name; and

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

DAP Group:

•  a complete line of caulks, sealants and adhesives for home improvement and construction marketed through a wide assortment of DAP branded products, including ’33’, ’1012’, 2000, 4000, 7000, Alex, Alex Fast Dry, Alex Plus, Alex Ultra, Beats The Nail, Blend Stick, Blockade, Butyl-Flex, Caulk-Be-Gone, CrackShot, Custom Patch, DAPtex, DAPtex Plus, DryDex, Dynaflex 230, Dynaflex 3.0, Easy Solutions, Elastopatch, Epoxy Stik, Fast ’N Final, Kwik Foam, Kwik Seal, Kwik Seal 3.0, Kwik Seal Plus, One Stik2, Patch Stick, Painter’s Putty ’53’, Patch-N-Paint, Plastic Wood, Presto Patch, Project Solutions, Quick Plug, Rely-On, Seal ’N Peel, SIDE Winder, Spray ’N Stik, StikARounds, StrongStik, Titanium, Weatherflex, Weldwood and Phenoseal, which is a brand of Gloucester Company Inc., which is a subsidiary of DAP Products Inc.;

RPM II/Consumer Group:

•  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; 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, 2008, our foreign manufacturing operations accounted for approximately 35% of our total net sales, excluding any direct exports from the United States. Our direct exports from the United States were approximately 2% of our total net sales for the fiscal year ended May 31, 2008. 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, France, Germany, Italy, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Poland, South Africa, Sweden, 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

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operations is set forth in Management’s Discussion and Analysis of Results of Operations and Financial Condition, which appears in the 2008 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, 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 that 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 market entrants due to the lengthy intervals between product development and market 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 DAP, Phenoseal, Rust-Oleum, Watco 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 and paint 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 by 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, re-roofing 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

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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 distinguish competitors for these applications include static control, chemical resistance, contamination control, durability and aesthetics. We market our flooring systems primarily under our Stonhard and Flowcrete 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 specialized features, which make 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, primarily for commercial buildings, include urethane and silicone-based products designed for sealing windows, sealing concrete, for waterproofing and fireproofing. 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, Increte, 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^®, illbruck^® and Tremco^® trademarks.

Day-Glo Color Corp., one of our subsidiaries, is the owner of 40 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 80.

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.

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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 250 other trademark registrations or applications in the United States and numerous other countries covering the products sold by the Carboline Company.

DAP Brands Company and other subsidiaries of the Company own more than 450 trademark registrations or applications in the United States and numerous other countries for the “DAP^®” trademark, 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^®, Bulls Eye 1-2-3^®, Chemgrate^®, Dryvit^®, Dymeric^®, EUCO^®, Flecto^®, Fibergrate^®, Floquil^®, Geoflex^®, illbruck^®, Mohawk^®, Outsulation^®, Paraseal^®, Permaroof^®, Pettit^tm, Plasite^®, Sanitile^®, Stonblend^®, Stonclad^®, Stonhard^®, Stonlux^®, TCI^®, Testors^®, Varathane^®, Vulkem^®, Woolsey^®, Zinsser^® and Z-Spar^®; and, in Europe, Flowcrete^tm, Nullifire^®, Radglo^® and Martin Mathys^tm. 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

The sources and availability of the raw materials we use in our business continue to be adequate to meet our current and projected needs. The costs of the raw materials we use are under generally upward pressure due to escalating energy and related feedstock costs, increased levels of global demand, improved levels of supplier pricing discipline and the falling value of the United States dollar.

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 21%, 20% and 22% of our total net sales for the fiscal years ended May 31, 2008, 2007 and 2006, respectively. Sales to The Home Depot represented 9%, 9% and 10% of our total sales for fiscal 2008, 2007 and 2006, respectively. Except for sales to these customers, our 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 at the year ended May 31, 2008.

Research and Development

Our research and development work is performed at various laboratory locations throughout the United States. During fiscal years 2008, 2007, and 2006, we spent approximately $40.2, $34.7 million, and $32.3 million, respectively, on research and development activities. In addition to this laboratory work, we view our field technical

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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 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 2008 Annual Report to Stockholders, incorporated herein by reference. For more information concerning environmental matters affecting us, see “Item 3 — Legal Proceedings - Environmental Proceedings,” in this Annual Report on Form 10-K.

Employees

As of May 31, 2008, we employed 10,360 persons, of whom 543 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.

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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 $988.1 million at May 31, 2007 to $1.1 billion at May 31, 2008, as a result of acquisition activities during the year and our issuance of $250.0 million of notes, a portion of which was used to repay short-term obligations. Our asbestos reserve stood at $559.7 million at May 31, 2008. These items compare with $1.1 billion in stockholders’ equity at May 31, 2008. 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.

Changes to our 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 2008, 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 our fiscal year ending May 31, 2028. 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 twenty-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 liability does not include asbestos liabilities for any period beyond twenty years. The process and methodology used to develop our long-term asbestos liability estimate are set forth in Note I (Contingencies and Loss Reserves) of the Notes to Consolidated Financial Statements, which appear in the 2008 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 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  (Contingencies and Loss Reserves) of the Notes to Consolidated Financial Statements, which appear in the 2008 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. The costs of the raw materials we use are under generally upward pressure due to escalating energy and related feedstock costs, increased levels of global demand, improved levels of

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supplier pricing discipline and the falling value of the United States dollar. If the prices of raw materials continue to increase and we are unable to pass these increases on to our customers, we could experience reduced gross profit margins.

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 profit 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 markets include AkzoNobel, Carlisle, Degussa, Ferro, GE Plastics, H.B. Fuller, 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, Rona, 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 21%, 20%, and 22% of our consolidated net sales for the fiscal years ended May 31, 2008, 2007, and 2006, respectively, and 59%, 55%, and 55%, respectively, of the consumer segment’s net sales for those same fiscal years. Sales to The Home Depot accounted for approximately 9%, 9%, and 10% of our consolidated net sales and 26%, 24% and 25% of our consumer segment net sales for the fiscal years ended May 31, 2008, 2007 and 2006, 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 Continental Services Co., 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 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 results of operations may be materially and adversely impacted in the period during which such non-payment occurs. For further information regarding our EIFS litigation, please refer to Note I (Contingencies and Loss Reserves) of the Notes to Consolidated Financial Statements included in the 2008 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.

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.

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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;

•  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 35% of our net sales for the fiscal year ended May 31, 2008, not including exports directly from the United States which accounted for approximately 2% of our net sales for fiscal 2008. 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

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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 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, 2008, our operations occupied a total of approximately 10.4 million square feet, with the majority, approximately 8.6 million square feet, devoted to manufacturing, assembly and storage. Of the approximately 10.4 million square feet occupied, 5.8 million square feet are owned and 4.6 million square feet are occupied under operating leases.

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Set forth below is a description, as of May 31, 2008, of our principal manufacturing facilities which we believe are material to our operations:

		Approximate
		Square Feet
	Business/	of	Leased or
Location	Segment	Floor Space	Owned
Pleasant Prairie, Wisconsin	Rust-Oleum (Consumer)	303,200	Owned
Toronto, Ontario, Canada	Tremco (Industrial)	207,160	Owned
Newark, New Jersey	Zinsser (Consumer)	182,418	Owned
Cleveland, Ohio	Euclid Chemical (Industrial)	178,838	Owned
Cleveland, Ohio	Tremco (Industrial)	160,300	Owned
Bodenwoehr, Germany	illbruck (Industrial)	151,171	Owned
Cleveland, Ohio	Day-Glo (Industrial)	147,223	Owned
Baltimore, Maryland	DAP (Consumer)	144,200	Owned
Hagerstown, Maryland	Rust-Oleum (Consumer)	143,000	Owned
Arkel, Netherlands	illbruck (Industrial)	140,067	Owned
Tipp City, Ohio	DAP (Consumer)	140,000	Owned
Lake Charles, Louisiana	Carboline (Industrial)	114,287	Owned
Lesage, West Virginia	Zinsser (Consumer)	112,000	Owned
Somerset, New Jersey	Zinsser (Consumer)	110,000	Owned
Maple Shade, New Jersey	Stonhard (Industrial)	77,500	Owned

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 our rental obligations, see Note F (Leases) of the Notes to Consolidated Financial Statements, which appear in the 2008 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 six states — Ohio, Texas, Florida, Mississippi, Maryland, and Illinois.

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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, 2008, our subsidiaries had a total of 11,202 active asbestos cases compared to a total of 10,824 cases as of May 31, 2007. For the fourth quarter ended May 31, 2008, our subsidiaries secured dismissals and/or settlements of 664 cases and made total payments of $15.0 million, which included defense-related payments paid during the current quarter of $7.7 million. For the comparable period ended May 31, 2007, dismissals and/or settlements covered 608 cases and total payments were $18.6 million, which included defense-related payments paid during the quarter of $7.4 million. For the year ended May 31, 2008, our subsidiaries secured dismissals and/or settlements of 1,546 cases and made total payments of $82.6 million, which included defense-related payments paid during the current year of $39.7 million. For the comparable period ended May 31, 2007, dismissals and/or settlements covered 1,900 cases and total payments were $67.0 million, which included defense-related payments paid during the year of $27.7 million. During the current fiscal year, our subsidiaries have had higher year-over-year, defense-related payments as a result of implementing various changes to our management and defense of asbestos claims, including transitioning to a new claims intake and database service provider. To facilitate this transition and other related changes, we have necessarily incurred some duplicate defense-related payments over the prior-year period. We estimate that our subsidiaries have spent approximately $13.0 million more on defense than they otherwise would have spent due to these added transitional expenses, which were completed during the quarter ended February 29, 2008. Excluding these added year-to-date transitional payments, our subsidiaries’ ongoing core defense expenditures would be in line with comparable prior-year levels.

Excluding defense-related payments, the average payment made to settle or dismiss a case approximated $11,000 and $18,000 for each of the quarters ended May 31, 2008 and 2007, respectively; and $28,000 and $21,000 for each of the years ended May 31, 2008 and 2007, respectively. The amount and timing of dismissals and settlements can fluctuate significantly from period to period, resulting in volatility in the average cost to resolve a case 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 payments on a per case basis are not necessarily reflective of the payment amounts on a per claimant basis. For example, the average amount paid to settle or dismiss a case can vary widely depending on a variety of factors, including the mix of malignancy and non-malignancy claimants and the amount of defense expenditures incurred during the period.

For additional information on our asbestos litigation, including a discussion of our asbestos-related loss contingencies, see Note I (Contingencies and Loss Reserves) of the Notes to Consolidated Financial Statements, which appear in the 2008 Annual Report to Stockholders.

EIFS Litigation

As of May 31, 2008, 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, 2008, 7,198 total claims had been filed as of the June 5, 2004 claim filing deadline. Of these 7,198 claims, a total of 4,410 claims have been rejected or closed for various reasons under the terms of the settlement. A total of 1,094 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, 2008, a total of 1,694 claims have been paid for a total of approximately $13.8 million.

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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. The court granted Dryvit’s motion to dismiss the federal filing based on a more complete state court complaint filed against this same insurer, another insurer, and our insurance broker. The coverage case is now proceeding in state court. Discovery in this litigation is ongoing. In accordance with a Court order, the parties filed dispositive motions on certain of the coverage issues. Briefing on these motions was completed on June 16, 2008. A trial date has not yet been scheduled. For additional information, see Note I (Contingencies and Loss Reserves) of the Notes to Consolidated Financial Statements, which appear in the 2008 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 to date, 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.

Item 4A.   Executive Officers of the Registrant*.

The name, age and positions of each of our Executive Officers as of July 30, 2008 are as follows:

Name	Age		Position and Offices Held
Frank C. Sullivan		47	President and Chief Executive Officer
Ronald A. Rice		45	Executive Vice President and Chief Operating Officer
P. Kelly Tompkins		51	Executive Vice President — Administration and Chief Financial Officer
Paul G. Hoogenboom		48	Senior Vice President — Manufacturing and Operations and Chief Information Officer
Stephen J. Knoop		43	Senior Vice President — Corporate Development
Edward W. Moore		51	Vice President, General Counsel and Secretary

* Included pursuant to Instruction 3 to Item 401(b) of Regulation S-K.

Frank C. Sullivan was elected Chief Executive Officer in 2002 and President in 1999. From 2001 to 2002, Mr. Sullivan served as our Chief Operating Officer. From 1995 to 1999 he served as Executive Vice President, and was Chief Financial Officer from 1993 to 1999. Mr. Sullivan served as a Vice President from 1991 to 1995. Prior thereto, he served as our Director of Corporate Development from 1989 to 1991. Mr. Sullivan served as Regional Sales Manager from 1987 to 1989 of AGR Company, an Ohio General Partnership formerly owned by us. 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 our Board of Directors.

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Ronald A. Rice was elected Executive Vice President and Chief Operating Officer in 2006. He served as Senior Vice President — Administration from 2002 to 2006. From 2001 to 2002, he served as Vice President — Administration. From 1999 to 2001, Mr. Rice served as our Vice President — Risk Management and Benefits. From 1997 to 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 — Administration and Chief Financial Officer in 2008. Prior to that time, he served as Executive Vice President and Chief Administrative Officer from 2006 to 2008. He served as our Senior Vice President from 2002 to 2006, served as General Counsel and Secretary from 1998 to 2006, and served as Vice President from 1998 to 2002. From 1996 to 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 in 2006. Prior to that time, he served as Vice President — Operations, to which he was elected in 2000, and as Chief Information Officer, to which he was elected in 2002. Mr. Hoogenboom served as Vice President and General Manager of our 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 in 2006. From 1999 until 2006, Mr. Knoop served as Vice President — Corporate Development. From 1996 to 1999, Mr. Knoop served as our Director of Corporate Development. From 1990 to 1996, Mr. Knoop was an attorney at Calfee, Halter & Griswold LLP, specializing in the federal securities law compliance and merger and acquisitions practice areas.

Edward W. Moore was elected Vice President, General Counsel and Secretary in January 2007. From 1982 to 1989, Mr. Moore was an associate attorney, and from 1990 to 2006, a partner at Calfee, Halter & Griswold LLP. While at Calfee, Mr. Moore served in various capacities, including as a member of the Executive Committee, Chair of the Associates Committee, and most recently, Co-Chair of the Securities and Capital Markets Group.

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 63 of the 2008 Annual Report to Stockholders under the heading “Quarterly Stock Price and Dividend Information” is incorporated herein by reference.

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The following table presents information about repurchases of RPM International Inc. Common Stock made by us during the fourth quarter of fiscal 2008:

							Maximum
					Total Number of		Number of Shares
	Total				Shares Purchased as		that May Yet be
	Number of		Average		Part of Publicly		Purchased Under
	Shares		Price Paid		Announced Plans or		the Plans or
Period	Purchased(1)		per Share		Programs		Programs(2)
March 1, 2008 through March 31, 2008		—		—		—		—
April 1, 2008 through April 30, 2008		396	$	22.98		—		—
May 1, 2008 through May 31, 2008		5,002	$	23.39		—		—
TOTAL		5,398	$	23.36		—		—

(1)

The number of shares reported as repurchased are attributable to shares that were disposed of back to us in satisfaction of tax obligations related to the vesting of restricted stock which was granted under RPM International Inc.’s 2004 Omnibus Equity and Incentive Plan.

(2)

On January 8, 2008, we announced our authorization of a stock repurchase program under which we may repurchase shares of RPM International Inc. common stock at management’s discretion for general corporate purposes. Our current intent is to limit its repurchases only to amounts required to offset dilution created by stock issued in connection with its equity-based compensation plans, or approximately one to two million shares per year. As a result of this authorization, we may repurchase shares from time-to-time in the open market or in private transactions at various times and in amounts and for prices that management deems appropriate, subject to insider trading rules and other securities law restrictions. The timing of our purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time.

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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, 2008. The data was derived from our annual Consolidated Financial Statements which have been audited by Ernst & Young LLP, our independent accountants for the fiscal years ended May 31, 2008, 2007 and 2006, and by Ciulla, Smith & Dale, LLP, our independent accountants for the fiscal years ended May 31, 2005 and 2004.

	Fiscal Years Ended May 31,
	2008(1)			2007(1)			2006(1)			2005(1)			2004
	(Amounts in thousands, except per share and percentage data)
Net sales	$	3,643,791		$	3,338,764		$	3,008,338		$	2,555,735		$	2,307,553
Income (loss) before income taxes		39,054			307,535			(122,475	)		163,728			217,616
Net income (loss)		47,709			208,289			(76,205	)		105,032			141,886
Return on sales %		1.3	%		6.2	%		(2.5	)%		4.1	%		6.1	%
Basic earnings (loss) per share	$	0.40		$	1.76		$	(0.65	)	$	0.90		$	1.23
Diluted earnings (loss) per share		0.39			1.64			(0.65	)		0.86			1.16
Stockholders’ equity		1,136,556			1,086,870			925,941			1,037,739			970,402
Stockholders’ equity per share		9.46			9.20			7.93			8.88			8.38
Return on stockholders’ equity %		4.3	%		20.7	%		(7.8	)%		10.5	%		15.4	%
Average shares outstanding		120,151			118,179			116,837			116,899			115,777
Cash dividends paid	$	90,638		$	82,106		$	74,427		$	68,933		$	63,651
Cash dividends per share		0.745			0.685			0.630			0.590			0.550
Retained earnings		427,788			475,676			349,493			500,125			464,026
Working capital		937,614			705,509			655,718			693,656			516,542
Total assets		3,763,567			3,333,149			2,996,064			2,647,475			2,345,202
Long-term debt		1,066,687			886,416			870,415			837,948			718,929
Depreciation and amortization		85,366			81,607			74,299			65,992			63,277
Cash from operating activities		234,714			202,305			185,489			157,352			154,035

Note:  Acquisitions made by us during the periods presented may impact comparability from year to year (See Note A (Summary of Significant Accounting Policies) 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 $288.1 million ($185.1 million after-tax) in 2008; $380.0 million ($244.3 million after-tax) in fiscal 2006; and $78.0 million ($49.5 million after-tax) in fiscal 2005 (see Note I (Contingencies and Loss Reserves) 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 2008 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 2008 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 62 and 65 of the 2008 Annual Report to Stockholders, which information is incorporated herein by reference.

19

Item 9.   Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A.   Controls and Procedures.

(a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15) as of May 31, 2008 (the “Evaluation Date”), have concluded that as of the Evaluation Date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports we file or submit 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 our 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, our independent registered public accounting firm, are set forth at pages 64 and 66, respectively, of the 2008 Annual Report to Stockholders, which reports are incorporated herein by reference.

(c) Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the fourth fiscal quarter ended May 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.   Other Information.

None.

PART III

Item 10.   Directors, Executive Officers and Corporate Governance.

Information required by this item as to our Directors appearing under the caption “Election of Directors” in our 2008 Proxy Statement is incorporated herein by reference. Information required by this item as to our Executive Officers 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 2008 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 2008 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 our 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. We intend 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 of our Directors or Executive Officers on our website.

Item 11.   Executive Compensation.

The information required by this item is set forth in the 2008 Proxy Statement under the headings “Executive Compensation” and “Director Compensation,” which information is incorporated herein by reference.

20

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 2008 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 2008 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 2008 Proxy Statement under the heading “Independent Registered Public Accounting Firm Services and Related Fee Arrangements,” which information is incorporated herein by reference.

PART IV

Item 15.   Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this 2008 Annual Report on Form 10-K:

1. Financial Statements.  The following consolidated financial statements of RPM and the report of our independent registered public accounting firm thereon, included in our 2008 Annual Report to Stockholders on pages 34 through 62 and 65, are incorporated by reference in Item 8:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets —
May 31, 2008 and 2007

Consolidated Statements of Income —
fiscal years ended May 31, 2008, 2007 and 2006

Consolidated Statements of Stockholders’ Equity —
fiscal years ended May 31, 2008, 2007 and 2006

Consolidated Statements of Cash Flows —
fiscal years ended May 31, 2008, 2007 and 2006

Notes to Consolidated Financial Statements (including Unaudited Quarterly
Financial Information)

2. Financial Statement Schedules.  The following consolidated financial statement schedule of RPM and the report of our independent registered public accounting firm thereon are filed as part of this Annual Report on Form 10-K and should be read in conjunction with our consolidated financial statements included in our 2008 Annual Report to Stockholders:

Schedule	Page or Exhibit No.
Schedule II — Valuation and Qualifying Accounts and Reserves	S-1
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.

21

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.

By:  /s/   Frank C. Sullivan

Frank C. Sullivan

President and Chief Executive Officer

Date: July 30, 2008

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/  P. Kelly Tompkins P. Kelly Tompkins		Executive Vice President — Administration and Chief Financial Officer (Principal Financial and Accounting Officer)
/s/  Thomas C. Sullivan Thomas C. Sullivan		Chairman and a Director
/s/  John P. Abizaid John P. Abizaid		Director
/s/  Bruce A. Carbonari Bruce A. Carbonari		Director
/s/  David A. Daberko David A. Daberko		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

	Signature and Title
/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, 2008

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 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2007 (File No. 001-14187).
	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 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	.3.1	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	.4	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	.4.1	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	.5	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	.5.1	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	.6	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	.6.1	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-1

Exhibit No.			Description
	4	.6.2	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).
	4	.7	Indenture, dated as of February 14, 2008, between the Company, as issuer, and The Bank of New York Trust Company, as trustee, with respect to the 6.5% Senior Notes Due 2018, which is incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3, as filed with the Commission on February 14, 2008 (File No. 333-149232).
	4	.7.1	Form of 6.50% Senior Note Due 2018, 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 February 20, 2008 (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 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	.2	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	.2.1	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	.2.2	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	.2.3	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	.2.4	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).
	10	.3	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	.3.1	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	.3.2	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	.4	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).

E-2

Exhibit No.			Description
	*10	.4.1	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	.4.2	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	.4.3	Extension to Post-Retirement Consulting Agreement, by and between the Company and Thomas C. Sullivan, dated as of June 1, 2007, which is incorporated herein by reference to Exhibit 10.6.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2007 (File No. 001-14187).
	*10	.5	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	.6	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	.6.1	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	.7	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	.8	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	.8.1	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	.9	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	.9.1	Amendment No. 1 to RPM International Inc. 1996 Stock Option Plan, which is incorporated herein by reference to Exhibit 10.7.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 1998 (File No. 001-14187).
	*10	.9.2	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	.9.3	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).

E-3

Exhibit No.			Description
	*10	.9.4	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	.10	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	.10.1	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	.10.2	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	.11	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	.11.1	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	.11.2	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	.11.3	Amendment No. 2 to the RPM International Inc. Deferred Compensation Plan, which is incorporated herein by reference to Exhibit 10.13.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2007 (File No. 001-14187).
	*10	.11.4	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	.11.5	Amendment No. 4 to the RPM International Inc. Deferred Compensation Plan, which is incorporated herein by reference to Exhibit 10.13.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2007 (File No. 001-14187).
	*10	.11.6	Amendment No. 5 to the RPM International Inc. Deferred Compensation Plan, which is incorporated herein by reference to Exhibit 10.13.6 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2007 (File No. 001-14187).
	*10	.11.7	Amendment No. 6 to the RPM International Inc. Deferred Compensation Plan, which is incorporated herein by reference to Exhibit 10.13.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2007 (File No. 001-14187).
	*10	.12	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	.12.1	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	.12.2	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	.13	RPM, Inc. 1997 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	.13.1	First Amendment to the RPM, Inc. 1997 Restricted Stock Plan, effective as of October 1, 1998, which is incorporated herein by reference to Exhibit 10.10.1 to the Company’s Annual Report on Form 10-K for the year ended May 31, 2002 (File No. 001-14187).

E-4

Exhibit No.			Description
	*10	.13.2	Second Amendment to the RPM, 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	.13.3	Third Amendment to the RPM, Inc. 1997 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	.13.4	Fourth Amendment to the RPM International Inc. 1997 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	.13.5	Fifth Amendment to the RPM International Inc. 1997 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	.13.6	Sixth Amendment to the RPM International Inc. 1997 Restricted Stock Plan, which is incorporated herein by reference to Exhibit 10.15.6 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2007 (File No. 001-14187).
	*10	.14	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	.14.1	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).
	*10	.14.2	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	.14.3	Amendment No. 3 to the RPM International Inc. 2002 Performance Accelerated Restricted Stock Plan, which is incorporated herein by reference to Exhibit 10.16.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2007 (File No. 001-14187).
	*10	.15	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	.15.1	Amendment No. 1 to the RPM International Inc. 2003 Restricted Stock Plan for Directors, 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, 2007 (File No. 001-14187).
	*10	.16	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	.16.1	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	.16.2	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	.16.3	Form of Performance-Contingent Restricted Stock (PCRS) and Escrow Agreement. (x)
	*10	.16.4	Amendment No. 1 to the RPM International Inc. 2004 Omnibus Equity and Incentive Plan, which is incorporated herein by reference to Exhibit 10.18.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2007 (File No. 001-14187).
	*10	.17	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).

E-5

Exhibit No.			Description
	*10	.18	RPM International Inc. Amended and Restated Incentive Compensation Plan, 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, 2007 (File No. 001-14187).
	10	.19	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).
	*10	.20	Consultancy Agreement between RPM International Inc. and Robert L. Matejka, effective January 16, 2008, 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 January 18, 2008 (File No. 001-14187).
	13	.1	Portions of RPM International Inc.’s 2008 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 Crawford & Winiarski.(x)
	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-6

Schedule II

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

				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
	(In thousands)
Year Ended May 31, 2008
Allowance for doubtful accounts	$	19,167	$	$	5,134	$			$		$	(253	)(1)	$	24,554
Accrued product liability reserves	$	55,063	$	$	15,032	$	163		$		$	13,758	(2)	$	56,500
Accrued loss reserves — Current	$	18,115	$	$	3,438	$	(4,625	)(3)	$		$	1,447	(2)	$	15,481
Asbestos-related liabilities — Current	$	53,000	$	$		$	94,623	(3)	$		$	82,623	(2)	$	65,000
Accrued warranty and product liability reserves — Noncurrent	$	10,319	$	$	820	$	5,451	(3)	$		$	2,617	(2)	$	13,973
Asbestos-related liabilities — Noncurrent	$	301,268	$	$	288,100	$	(94,623	)(3)	$		$			$	494,745
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	(3)	$		$	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	)(3)	$		$			$	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	(3)	$		$	59,887	(2)	$	58,925
Accrued warranty and product liability reserves — Noncurrent	$	8,044	$	$	8,412	$	700		$		$	2,398	(2)	$	14,758
Asbestos-related liabilities — Noncurrent	$	46,172	$	$	321,000	$	(4,812	)(3)	$		$			$	362,360

(1)	Uncollectible accounts written off, net of recoveries
(2)	Primarily claims paid during the year
(3)	Transfers between current and noncurrent

S-1

EX-10.16.3

Exhibit 10.16.3

RPM INTERNATIONAL INC.

RPM INTERNATIONAL INC. 2004 OMNIBUS EQUITY AND INCENTIVE PLAN

PERFORMANCE-CONTINGENT RESTRICTED STOCK (PCRS)
AND ESCROW AGREEMENT

     THIS PERFORMANCE-CONTINGENT RESTRICTED STOCK AND ESCROW AGREEMENT (the “Agreement”), is entered into as of this 16^th day of July, 2007 (the “Effective Date”), by and between RPM International Inc., a Delaware corporation (the “Company”), and «NAME» (the “Grantee”).

WITNESSETH:

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

     WHEREAS, the Committee has determined to award the Grantee Shares of PCRS, the vesting of which is contingent upon attainment of performance goals set forth in Exhibit A hereto; and

     WHEREAS, the Compensation Committee has determined that the award of PCRS will be subject to the terms and conditions set forth in this Agreement;

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

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

     2. Grant of Restricted Stock. As of the Effective Date, the Company grants to the Grantee, upon the terms and conditions set forth in this Agreement and subject to the restrictions in Section 3, «SHARES» («NO») shares of Common Stock, par value $.01 per share, of RPM International Inc. (“Restricted Stock”). The Restricted Stock is granted in accordance with, and subject to, all the terms, conditions and restrictions of the Plan, which is hereby incorporated by reference in its entirety. The Grantee irrevocably agrees to, and accepts, the terms, conditions and restrictions of the Plan and this Agreement on his own behalf and on behalf of any heirs, successors and assigns.

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

     4. Lapse of Restrictions on Stock. The restrictions described in Section 3 shall lapse and be of no further force or effect with respect to that percentage of shares that is equal to the

1

Grantee’s Vested Interest percentage as determined by the Compensation Committee in its sole and exclusive discretion, pursuant to Section 8. The number of shares to which the restrictions shall lapse shall be rounded up to the nearest whole number of shares.

     5. Forfeiture. Except as otherwise provided in Sections 6 and 7, the Grantee will forfeit any interests in the Restricted Stock (i) if his or her employment with the Company, a Subsidiary or Allied Enterprise terminates before the third anniversary of the Effective Date or (ii) with respect to that percentage of the Restricted Stock that is determined not to be vested by the Compensation Committee in its sole and exclusive discretion, pursuant to Section 8.

     6. Termination of Employment.

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

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

     7. Change in Control. If a Change in Control as defined in the Plan has occurred or an event has occurred that the Board of Directors, in the good faith exercise of its discretion, determines to be a Change in Control prior to the third anniversary of the Effective Date, the Grantee’s Vested Interest in the Restricted Stock will immediately become 100%, the restrictions described in Section 3 will immediately lapse and the shares of stock will become payable as soon as practicable thereafter, subject to the requirements of Section 10. Notwithstanding the foregoing, in the event of a Change in Control, the Compensation Committee may provide for payment of the Grantee’s interests in the Plan in cash rather than shares of stock.

     8. Vested Interest. If the Grantee continues to be an employee of the Company, its Subsidiaries or Allied Enterprises from the Effective Date until the third anniversary of the Effective Date and the performance goals set forth on Exhibit A are met, his or her Vested Interest percentage will be determined as set forth on Exhibit A. Except as provided for in

2

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

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

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

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

     12. Stockholder Rights While Restricted Stock is Held in Escrow. During the period the Restricted Stock is held in escrow and this Agreement has not terminated, and subject to the Grantee’s execution of irrevocable Stock Powers in accordance with Section 11, the Grantee will be entitled to vote the Restricted Stock and to receive dividends declared and paid by the Company on such Restricted Stock.

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

3

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

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

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

     17. Miscellaneous Provisions.

a.

Effect of Corporate Reorganization or Other Changes Affecting Number or Kind of Restricted Stock. The provisions of this Agreement will be applicable to the Restricted Stock and to any Restricted Stock or other securities which may be acquired by the Grantee as a result of a liquidation, recapitalization, reorganization, redesignation or reclassification, split-up, reverse split, merger, consolidation, stock dividend, combination or exchange of Restricted Stock, exchange for other securities, a sale of all or substantially all assets or the like. The Committee shall appropriately adjust the number and kind of shares of Restricted Stock under this Agreement to reflect such a change. As used in this Agreement, the term “Restricted Stock” will be deemed to include any such Restricted Stock or other securities.

b.

Successors and Legal Representatives. This Agreement will bind and inure to the benefit of the Company and the Grantee, and their respective successors, assigns and legal representatives.

4

c.	Integration. This Agreement, together with the Plan, constitutes the entire agreement between the Grantee and the Company with respect to the subject matter hereof, and may not be modified, amended, renewed or terminated, nor may any term, condition or breach of any term or condition be waived, except pursuant to the terms of the Plan or by a writing signed by the person or persons sought to be bound by such modification, amendment, renewal, termination or waiver. Any waiver of any term, condition or breach thereof will not be a waiver of any other term or condition or of the same term or condition for the future, or of any subsequent breach.
d.	Stockholder Approval. All benefits hereunder will be canceled and all terms of this Agreement will be null and void ab initio if the Plan is not approved by the Company’s stockholders, as provided in the Plan.
e.	Notice. Any notice relating to this grant must be in writing.
f.	No Employment Right Created. Nothing in this Agreement will be construed to confer upon the Grantee the right to continue in the employment or service of the Company, its Subsidiaries or Allied Enterprises, or to be employed or serve in any particular position therewith, or affect any right which the Company, its Subsidiaries or an Allied Enterprise may have to terminate the Grantee’s employment or service with or without cause.
g.	Separability. In the event of the invalidity of any part or provision of this Agreement, such invalidity will not affect the enforceability of any other part or provision of this Agreement.
h.	Section Headings. The section headings of this Agreement are for convenience and reference only and are not intended to define, extend or limit the contents of the sections.
i.	Amendment, Waiver and Revocation of Terms. The Compensation Committee may waive any term or condition in this Agreement that could have been excluded on the date of grant. No such waiver will be deemed to be a waiver of similar terms under other agreements. The Compensation Committee may amend this Agreement to include or exclude any provision which could have been included in, or excluded from, this Agreement on the date of grant, but only with the Grantee’s written consent. Similarly, the Compensation Committee may revoke this Agreement at any time except that, after execution of the Agreement and its delivery to the Designated Representative, revocation may only be accomplished with the Grantee’s written consent.

5

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

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

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

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

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

6

EX-13.1

		Exhibit 13.1
Annual
Report		Financial Section Contents
22	Management’s Discussion and Analysis
34	Consolidated Financial Statements
38	Notes to Consolidated Financial Statements
63	Quarterly Stock Price and Dividend Information
64	Management’s Report on Internal Control
65	Auditor’s Reports

21

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 and other intangible assets; 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 contracts, mainly in connection with the installation of specialized roofing and flooring systems, and related services. In general, we account for long-term, construction 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 for each of our foreign subsidiaries is its 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 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). If the U.S. dollar continues to weaken, we will continue to reflect the resulting gains as a component of accumulated other comprehensive income. Conversely, if the U.S. dollar were to strengthen, foreign exchange translation losses could result, which would negatively impact accumulated other comprehensive income. 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 any such changes.

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, on a consolidated basis, are treated as being 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 at least on an annual basis, or more frequently as impairment indicators arise, using a fair-value approach at the reporting unit level. Our reporting units have been identified at the component level, or one level below our operating segments. We have elected to perform our annual required impairment tests, which involve the use of estimates

22     RPM International Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS

related to the fair market values of the reporting units with which goodwill is associated, during our fourth fiscal quarter. Calculating the fair market values of reporting units requires our significant use of estimates and assumptions. We estimate the fair values of our reporting units by applying a combination of third-party market value indicators and discounted future cash flows 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 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 estimation of the 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. Our 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 pre-tax income in our income statement. We have not incurred any such impairment losses to date.

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 values of these assets may not be recoverable over their estimated remaining useful lives. Factors considered important in our assessment, 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 indefinite-lived intangible assets for impairment at least annually during our fiscal fourth quarter. Measuring a potential impairment of non-goodwill intangibles and other long-lived assets requires the use of various estimates and assumptions, including the determination of which cash flows are directly related to the assets being evaluated, the respective useful lives over which those cash flows will occur and potential residual values, if any. If we determine that the carrying values of these assets may not be recoverable based upon the existence of one or more of the above-described indicators or other factors, any impairment amounts would be measured based on the projected net cash flows expected from these assets, including any net cash flows related to eventual disposition activities. The determination of any impairment losses would be based on the best information available, including internal estimates of discounted cash flows, quoted market prices, when available, and independent appraisals, as appropriate, to determine fair values. 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 losses to date.

Deferred Income Taxes

Our 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. 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 valuation allowances, we consider cumulative and anticipated amounts of domestic and international earnings or losses, anticipated amounts of foreign source income, as well as the anticipated taxable income resulting from the reversal of future taxable temporary differences.

We intend to maintain any 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 $782.2 million of foreign subsidiaries’ undistributed earnings as of May 31, 2008, 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 in Note I “Contingencies and Loss Reserves,” 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. Our provisions are based on historical experience and legal advice, are reviewed quarterly and are adjusted according to developments. Estimating probable losses requires the 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 amounts of our loss provisions, which can be material, affect our Consolidated Statements of Income. Due to the inherent uncertainties in the process undertaken to estimate potential losses, we are unable to estimate an additional range of loss in excess of our accruals. While it is reasonably possible that

RPM International Inc. and Subsidiaries     23

such excess liabilities, if they were to occur, could be material to operating results in any given quarter or year of their recognition, 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.

Our environmental-related accruals are similarly established and/or adjusted as more 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 costs for those sites. As a result, accruals have not been estimated for certain of these sites and costs may ultimately exceed existing estimated accruals 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 accrued, 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 our significant judgment. The actual income tax liability for each jurisdiction in any year can be, in some instances, determined ultimately several years after the financial statements have been published.

We maintain accruals 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. Tax exposures can also be affected by changes in applicable tax laws or other factors, which may cause us to believe a revision of past estimates is appropriate. We believe that appropriate liabilities have been established for income tax exposures; however, actual results may differ materially from our estimates.

Allowance for Doubtful Accounts Receivable

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 we confirm uncollectibility. Actual collections of trade receivables could differ from our estimates due to changes in future economic or industry conditions or specific customer’s financial conditions.

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. We review the net realizable value of our inventory in detail on an on-going basis, with consideration given to various factors, which include our estimated reserves for excess, obsolete, slow moving or distressed inventories. If actual market conditions differ from our projections, and our estimates prove to be inaccurate, write-downs of inventory values and adjustments to cost of sales may be required. Historically, our inventory reserves have approximated actual experience.

SEGMENT INFORMATION

Our business is divided into two reportable segments: the consumer reportable segment (“consumer segment”) and the industrial reportable segment (“industrial segment”). Within each reportable segment, we aggregate three operating segments that consist of individual groups of companies and product lines, which generally address common markets, share similar economic characteristics, utilize similar technologies and can share manufacturing or distribution capabilities. Our six operating segments represent components of our business for which separate financial information is available that is utilized on a regular basis by our chief executive officer in determining how to allocate the assets of the company and evaluate performance. These six operating segments are each managed by an operating segment manager, who is responsible for the day-to-day operating decisions and performance evaluation of the operating segment’s underlying businesses. We evaluate the profit performance of our segments primarily based on gross profit, and, to a lesser extent, 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.

Our industrial reportable 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. This reportable segment comprises three separate operating segments — our Tremco Group, StonCor Group, and RPM II/Industrial Group. Products and services within this reportable segment include construction chemicals, roofing systems, weatherproofing and other sealants, flooring, and specialty chemicals.

Our consumer reportable segment manufactures and markets professional use and do-it-yourself (“DIY”) products for a variety of mainly consumer applications, including home improvement and personal leisure activities. Our consumer segment’s major manufacturing and distribution operations are located primarily in North America, along with a few locations in Europe. Consumer segment products are sold

24     RPM International Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS

directly to mass merchandisers, home improvement centers, hardware stores, paint stores, craft shops and to other smaller customers through distributors. This reportable segment comprises three operating segments — our DAP Group, Rust-Oleum/Zinsser Group, and RPM II/Consumer Group. Products within this reportable segment include specialty, hobby and professional paints; caulks; adhesives; silicone sealants; wood stains and specialty confectionary coatings and films.

In addition to our two reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment. This category includes our 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 segment. Assets related to the corporate/other category 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 income (loss) before income taxes.

The following table reflects the results of our reportable 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	2008			2007			2006
Net Sales
Industrial Segment	$	2,365,496		$	2,100,386		$	1,811,590
Consumer Segment		1,278,295			1,238,378			1,196,748
Consolidated	$	3,643,791		$	3,338,764		$	3,008,338
Gross Profit
Industrial Segment	$	999,063		$	885,141		$	778,672
Consumer Segment		499,474			475,311			468,693
Consolidated	$	1,498,537		$	1,360,452		$	1,247,365
Income (Loss) Before Income Taxes(a)
Industrial Segment
Income Before Income Taxes(a)	$	259,452		$	233,120		$	201,230
Interest (Expense), Net		(2,205	)		(1,937	)		(1,711	)
EBIT(b)	$	261,657		$	235,057		$	202,941
Consumer Segment
Income Before Income Taxes(a)	$	155,778		$	151,496		$	159,147
Interest (Expense), Net		(5,434	)		(2,895	)		(142	)
EBIT(b)	$	161,212		$	154,391		$	159,289
Corporate/Other
(Expense) Before Income Taxes(a)	$	(376,176	)(c)	$	(77,081	)	$	(482,852	)(c)
Interest (Expense), Net		(39,325	)		(42,201	)		(39,490	)
EBIT(b)	$	(336,851	)	$	(34,880	)	$	(443,362	)
Consolidated
Income (Loss) Before Income Taxes(a)	$	39,054		$	307,535		$	(122,475	)
Interest (Expense), Net		(46,964	)		(47,033	)		(41,343	)
EBIT(b)	$	86,018		$	354,568		$	(81,132	)

(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 primarily based on gross profit, and, to a lesser extent, 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 $288.1 million in fiscal 2008 and $380.0 million in fiscal 2006, 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

RESULTS OF OPERATIONS

Fiscal 2008 Compared with Fiscal 2007

Net Sales On a consolidated basis, net sales of $3.64 billion for the current fiscal year ended May 31, 2008 grew 9.1%, or $305.0 million, over net sales of $3.34 billion during the comparable period last year. Organic sales improvements accounted for 6.9%, or $230.8 million, of the growth in net sales over the prior year, including pricing initiatives representing 1.6% of the sales growth, or $53.1 million, and the impact of net favorable foreign exchange rates year-over-year, which provided 3.1%, or $102.7 million, of the sales growth. Foreign exchange gains resulted from the weak dollar against nearly all major foreign currencies, with the majority of the gain resulting from the stronger euro and the Canadian dollar. Fifteen small acquisitions accounted for 3.4% of the growth in net sales over last year, while the loss of the revenue related to our Bondo divestiture during this year’s second fiscal quarter represented a negative impact of 1.2% of net sales from the prior year, for a net acquisition impact of 2.2% of the growth in net sales over last year, or $74.2 million.

Industrial segment net sales, which comprised 64.9% of the current year’s consolidated net sales, totaled $2.37 billion, growing 12.6% from last year’s $2.10 billion. This segment’s net sales growth resulted from the combination of 11 small acquisitions, which contributed 3.7%, plus organic sales growth, which accounted for 8.9% of the increase, including 2.2% from pricing and 3.9% from net favorable foreign exchange differences. The strong organic sales improvements in the industrial segment resulted from growth in most international businesses, polymer flooring, protective coatings and roofing. Much of this growth resulted from ongoing industrial and commercial maintenance and improvement activities, primarily in Europe and North America, but also in Latin America and other regions of the world. There was also a slight increase in new construction in certain of those sectors, which also contributed to increased revenues in the current period. In order to offset the weakness in the economy, which is beginning to impact certain sectors of our domestic construction markets, we continue to secure new business through our strong brand offerings, high level of service and technical support, new product innovations and international expansion.

Consumer segment net sales, which comprised 35.1% of the current year’s consolidated net sales, increased 3.2% to $1.28 billion from $1.24 billion during the same period last year. This segment’s net sales growth resulted primarily from organic sales improvements, which provided 3.4% of the net sales growth, including 0.6% from pricing and 1.6% from net favorable foreign exchange. Despite weakening economic conditions, this segment was able to grow organic sales by launching various new product offerings, increasing market penetration at major retail accounts, and refocusing efforts on our various repair and maintenance products. Partially offsetting the organic growth in net sales over the prior year in this segment was the impact of the divestiture of our Bondo subsidiary during this year’s second fiscal quarter, representing a negative impact of 3.2% of consumer segment net sales over the prior year, which was partially offset by recent acquisitions for a 3.0% increase in net sales over the prior year, for a net negative impact of 0.2%, or $2.9 million.

Gross Profit Margin Our consolidated gross profit improved to 41.1% of net sales this current fiscal year from 40.8% for the same period a year ago. While the cost of certain of our key raw materials remained higher over the same period a year ago, such as epoxies, various solvents and resins, we saw the costs of certain of our other key materials stabilize versus the prior period, such as zinc and seedlac. The net 30 basis point (“bps”) improvement in the gross profit margin during the current fiscal year primarily reflects the leverage of the 3.8% organic growth in net sales, a favorable mix of product and operational improvements. Higher raw material costs, which impacted the fiscal 2008 gross profit margin by approximately 0.9% of net sales, or 90 bps, were offset by the impact of selling price increases that have been initiated throughout the past twelve months, and will continue into the new fiscal year.

Our industrial segment gross profit for the current fiscal year improved to 42.2% of net sales from 42.1% of net sales last year. This 10 bps improvement in this segment resulted from higher selling prices, which were partially offset by certain continued higher raw material costs during the year. In addition, productivity gains related to the 2.8% pure unit organic growth in sales and a favorable mix of sales contributed to the improved gross profit margin in fiscal 2008.

Our consumer segment gross profit for the 2008 fiscal year improved to 39.1% of net sales from 38.4% last year. The leverage of the 1.2% pure unit growth in organic sales in this segment, combined with a favorable sales mix, more than overcame certain higher raw material costs during the year, resulting in a net improvement of 70 bps in the gross profit margin year-over-year.

Selling, General and Administrative Expenses (“SG&A”) Our consolidated SG&A expense levels for fiscal 2008 increased by 20 bps to 30.8% of net sales compared with 30.6% a year ago. The increase mainly reflects additional expenditures made to support the 3.8% organic growth in sales, including certain employee-compensation-related expenses, in addition to certain higher legal and audit-related expenditures, which were partially offset by the combination of the gain on the sale of our Bondo subsidiary during this year’s second fiscal quarter, certain favorable environmental accrual adjustments and reductions in distribution and certain benefit-related costs.

Our industrial segment SG&A increased by 20 bps to 31.1% of net sales in fiscal 2008 from 30.9% a year ago, reflecting principally higher employment-related costs, legal and foreign exchange expense, partially offset by the operating leverage related to this segment’s 5.0% organic sales growth.

Our consumer segment SG&A as a percentage of net sales for fiscal 2008 increased by 60 bps to 26.5% compared with 25.9% a year ago, reflecting certain higher employee-compensation

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MANAGEMENT’S DISCUSSION AND ANALYSIS

costs and additional expense related to environmental accruals. Partially offsetting these costs was the combination of the $1.1 million gain on the sale of our Bondo subsidiary during the current year’s second fiscal quarter, reductions in certain advertising and promotional expenditures, and lower distribution expense year-over-year.

SG&A expenses reported in our corporate/other category decreased during fiscal 2008 to $48.5 million from $49.8 million during fiscal 2007. This decrease is mainly the result of favorable environmental-related accrual adjustments, foreign exchange gains, certain lower employee compensation and pension-related benefit costs. Partially offsetting these gains were higher legal and audit-related costs, higher insurance and other employment-related expenses, and additional restricted stock activity under our Omnibus Equity and Incentive Plan, mostly related to accelerated vesting of grants for retirees.

License fee and joint venture income of approximately $3.3 million and $2.5 million for the years ended May 31, 2008 and 2007, respectively, are reflected as reductions of consolidated SG&A expenses.

We recorded total net periodic pension and postretirement benefit cost of $18.6 million and $20.2 million for the years ended May 31, 2008 and 2007, respectively. This decreased pension expense of $1.6 million was attributable to an improvement in the expected return on plan assets of $3.6 million, a curtailment gain of $0.7 million during the current fiscal year, and fewer net actuarial losses recognized during fiscal 2008 for $1.3 million. These gains were partly offset by increased service and interest cost approximating $4.0 million. A change of 0.25% in the discount rate or expected rate of return on plan assets assumptions would result in $1.3 million and of $0.7 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, “Contingencies and Loss Reserves,” to the Consolidated Financial Statements, we recorded pre-tax asbestos charges of $288.1 million and $380.0 million during the fiscal years ended May 31, 2008 and 2006, respectively, in connection with the 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 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 the resulting settlement income during fiscal 2007. For additional information, please refer to Note I, “Contingencies and Loss Reserves,” to the Consolidated Financial Statements.

Net Interest Expense Net interest expense for fiscal 2008 remained unchanged at $47.0 million from fiscal 2007. Our improved net investment income of $13.3 million versus $11.0 million from fiscal 2007 provided approximately $2.3 million more in income year-over-year. However, this improvement was offset by current year interest expense of $60.3 million versus $58.0 million from last year. Included in current year interest expense was the impact of our higher weighted-average net borrowings associated with recent acquisitions, which averaged $102.2 million during fiscal 2008, and resulted in additional interest expense of approximately $6.5 million, plus interest totaling $1.5 million from generally higher weighted-average borrowings. A reduction in year-over-year interest expense of approximately $4.6 million resulted from favorable fluctuations in our interest rates, which overall averaged 5.2% during fiscal 2008 compared with 5.6% last year. Finally, during last year’s first fiscal quarter, 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, which included a nonrecurring $1.1 million make-whole payment.

Income (Loss) Before Income Taxes (“IBT”) Our consolidated IBT for fiscal 2008 declined by $268.5 million, or 87.3%, to $39.0 million from $307.5 million last year, for a 1.1% margin on net sales versus 9.2% a year ago. This decline in margin on sales results from the current year $288.1 million pre-tax asbestos-related liability increase, and the prior-year $15.0 million pre-tax, asbestos-related insurance settlement.

Industrial segment IBT improved by $26.3 million, to $259.5 million from last year’s $233.1 million, as a result of the favorable growth in organic sales, offset partially by higher foreign exchange losses, legal expenses and compensation-related costs. Consumer segment IBT improved by $4.3 million, to $155.8 million from $151.5 million last year, as a net result of the favorable impact of acquisitions and the gain on the sale of Bondo, offset partially by certain higher compensation-related costs and unfavorable environmental-related accruals.

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 22.2% for the year ended May 31, 2008 compared to an effective income tax expense rate of 32.3% for the year ended May 31, 2007.

For the year ended May 31, 2008 and, to a lesser extent, for the year ended May 31, 2007, the effective tax rate differed from the federal statutory rate due to decreases in the effective tax rate principally as a result of the impact of certain foreign operations on our U.S. taxes, U.S. tax benefits associated with the domestic manufacturing deduction and lower effective tax rates in certain of our foreign jurisdictions. In addition, for the year ended May 31, 2008, the effective tax rate decreased as a result of the reversal of $2.1 million of the valuation allowances associated with foreign tax credit carryovers. Furthermore, during the year ended May 31, 2008,

RPM International Inc. and Subsidiaries     27

various foreign taxing jurisdictions enacted new tax laws, including income tax rate reductions, which resulted in a one-time decrease in the effective tax rate of $2.8 million. The year ended May 31, 2007 was impacted by a decrease in the effective tax rate as a result of a one-time benefit relating to the resolution of prior-year’s tax liabilities.

For the years ended May 31, 2008 and May 31, 2007, the decreases in the effective tax rates were partially offset by valuation allowances associated with losses incurred by certain of our foreign businesses, state and local income taxes, and other non-deductible business operating expenses. In addition, the decreases in the effective tax rate for the year ended May 31, 2007 were further offset by valuation allowances associated with foreign tax credit carryforwards.

As of May 31, 2008, 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 intend to maintain the tax valuation allowances recorded at May 31, 2008 for certain deferred tax assets until sufficient positive evidence (for example, cumulative positive foreign earnings or additional foreign source income) exists to support their reversal. These valuation allowances relate to U.S. foreign tax credit carryforwards, certain foreign net operating losses and net foreign deferred tax assets recorded in purchase accounting. Any reversal of a tax valuation allowance that was recorded in purchase accounting would be recorded as a reduction to goodwill.

The effective income tax benefit rate for the year ended May 31, 2008 reflects the $288.1 million adjustment to our asbestos liability. Excluding the asbestos liability adjustment, the effective income tax rate for the year would have been adjusted to a pro-forma effective income tax expense rate of 28.9%. The effective income tax 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 rate for last year would have been adjusted to a pro-forma effective income tax rate of 32.1%.

Net Income Net income of $47.7 million for the year ended May 31, 2008 compares to $208.3 million for the same period last year, for a net margin on sales of 1.3% and 6.2% for fiscal 2008 and 2007, respectively. The decline from the prior year reflects the $185.1 million after-tax asbestos-related liability adjustment taken during the fourth fiscal quarter of 2008. Also, the prior year figures reflect the combination of 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 an asbestos-related cash settlement received from one of the defendant insurers during fiscal 2007, as previously discussed.

Reflected in net income for fiscal 2008 is the combination of the operating leverage related to our 3.8% organic sales growth, the impact of favorable acquisitions throughout the year and the net impact of higher selling prices offsetting certain increased raw materials costs. Diluted earnings per common share for fiscal 2008 declined by 76.2% to $0.39 from $1.64 for fiscal 2007.

Fiscal 2007 Compared with Fiscal 2006

Net Sales On a consolidated basis, net sales of $3.34 billion for the fiscal year ended May 31, 2007 grew 11.0%, or $330.4 million, over net sales of $3.01 billion during the fiscal year ended May 31, 2006. 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 fiscal 2006. Organic sales for fiscal 2007 contributed 6.7% to the growth in sales from fiscal 2006, 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 fiscal 2007 consolidated net sales, totaled $2.10 billion, which grew 15.9% from $1.81 billion from fiscal 2006. 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 for fiscal 2007 over fiscal 2006, 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.

Consumer segment net sales, which comprised 37.1% of the fiscal 2007 consolidated net sales, increased 3.5% to $1.24 billion from $1.20 billion during fiscal 2006. 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 slowed during fiscal 2007, 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.

28     RPM International Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS

Gross Profit Margin Consolidated gross profit margin of 40.8% of net sales in fiscal 2007 declined from 41.5% during fiscal 2006. This margin decline of 0.7%, or 70 bps, was 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 had been initiated throughout both operating segments during fiscal 2007 to help compensate or recover these higher material costs, a number of which had begun to moderate by the end of fiscal 2007. Several acquisitions, particularly illbruck, also carry inherently lower gross margin structures and further impacted gross margin during fiscal 2007, 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 fiscal 2007 declined to 42.1% of net sales from 43.0% during fiscal 2006. 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 fiscal 2007 declined to 38.4% of net sales from 39.2% during fiscal 2006, 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 the second fiscal quarter of 2007 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.

SG&A Consolidated SG&A expense levels for fiscal 2007 improved by 100 bps to 30.6% of net sales compared with 31.6% from fiscal 2006. Reflected in the improvement is the leverage from the 5.4% organic sales growth, including higher pricing. Additionally, fiscal 2006 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 the second fiscal quarter of 2007 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 for fiscal 2007 from 31.8% during fiscal 2006, 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 fiscal 2007 results, impacting margins by approximately 10 bps.

Consumer segment SG&A of 25.9% of net sales remained unchanged from fiscal 2006, reflecting the change in delivery terms with a major customer, effective cost containment and other savings programs.

Corporate/Other SG&A expenses decreased during fiscal 2007 to $49.8 million from $63.4 million for fiscal 2006, principally reflecting $10.2 million of one-time costs during fiscal 2006, as previously discussed. Excluding the one-time costs from fiscal 2006, SG&A expenses were further reduced by approximately $3.4 million during fiscal 2007, 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. 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, “Contingencies and Loss Reserves,” 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 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, “Contingencies and Loss Reserves,” to the Consolidated Financial Statements.

RPM International Inc. and Subsidiaries     29

Net Interest Expense Net interest expense was $5.7 million higher in 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 fiscal 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 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 fiscal 2007.

IBT Consolidated IBT for fiscal 2007 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)%. While fiscal 2006 IBT includes a pre-tax asbestos charge of $380.0 million, fiscal 2007 IBT includes pre-tax asbestos-related settlement income of $15.0 million. Excluding the impact of the asbestos-related items, IBT for fiscal 2007 would have improved by 13.6%, while fiscal 2007 margin of 8.8% would compare with the fiscal 2006 adjusted margin of 8.5%.

Industrial segment fiscal 2007 IBT grew by $31.9 million, or 15.8%, to $233.1 million from $201.2 million during fiscal 2006, primarily from this segment’s organic unit sales growth. Consumer segment fiscal 2007 IBT declined by 4.8%, to $151.5 million from $159.1 million during fiscal 2006, 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.

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.

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 fiscal 2007 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 fiscal 2006 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 a net loss of $76.2 million for fiscal 2006. The fiscal 2006 net loss reflects the impact of an after-tax asbestos reserve charge of $244.3 million, while the fiscal 2007 results reflect a one-time gain of $2.1 million relating to the settlement of fiscal 2006 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, fiscal 2007 net income would have reflected an improvement of $30.5 million, or 18.1%, to $198.6 million from adjusted $168.1 million for fiscal 2006. Margin on sales of 6.0% for fiscal 2007 compares to an adjusted 5.6% for fiscal 2006, 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 during fiscal 2006, the movement in sales mix and the influence of several favorable acquisitions.

Diluted earnings per common share for fiscal 2007 improved by 352.3%, to $1.64 from a diluted loss per common share of $0.65 for fiscal 2006. Excluding the asbestos-related items previously discussed, diluted earnings per common share for fiscal 2007 improved by 16.3%, to $1.57, compared with an adjusted $1.35 for fiscal 2006.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities

Operating activities generated cash flow of $234.7 million during the current fiscal year compared with $202.3 million of cash flow generated during fiscal 2007, for a net increase of $32.4 million or 16.0%. Net income of $47.7 million for fiscal 2008 includes the impact of the $288.1 million pre-tax ($185.1 million after-tax) increase in our provision for asbestos-related liabilities, while the prior-year net income reflects pre-tax income of $15.0 million ($9.7 million after-tax) related to an asbestos-related settlement with one of the defendant insurers, as previously discussed.

30     RPM International Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS

A higher trade accounts receivable balance at the end of fiscal 2008 required $55.1 million in cash versus last year’s cash use of $75.2 million, using approximately $20.1 million less during fiscal 2008 versus fiscal 2007. Inventory balances increased during fiscal 2008 and fiscal 2007, which required $28.4 million of cash in fiscal 2008 versus $23.9 million of cash during fiscal 2007, or $4.5 million more in cash year-over-year. Finally, we used $27.0 million more in cash on our accounts payable compared to last year, as a result of a change in the timing of certain payments and increased activity levels.

Cash provided from operations, along with the use of available credit lines, as required, remain our primary sources of liquidity.

Investing Activities

Capital expenditures, other than for ordinary repairs and replacements, are made to accommodate our continued growth to achieve production and distribution efficiencies, to expand capacity and to enhance our administration capabilities. Capital expenditures of $71.8 million during fiscal 2008 compare with current-year depreciation of $62.2 million. Capital spending is expected to outpace our depreciation levels for the next several fiscal years as additional capacity is brought on-line to support our continued growth. With this additional plant expansion, we believe there will be adequate production capacity to meet our needs for the next several years at normal growth rates.

We invested $132.3 million for acquisitions during fiscal 2008, which was offset by the $9.2 million in cash we received from the businesses we acquired, for a net use of cash of $123.1 million. Conversely, the sale of our Bondo subsidiary during the second quarter of the current fiscal year generated net proceeds of $44.8 million.

Our captive insurance companies invest their excess cash in marketable securities in the ordinary course of conducting their operations, and this activity will continue. Differences in the amounts related to these activities on a year-over-year basis are primarily attributable to differences in the timing and performance of their investments balanced against amounts required to satisfy claims.

Financing Activities

On February 20, 2008 we issued and sold $250.0 million of 6.50% Notes due February 15, 2018. The proceeds were used to repay our $100.0 million Senior Unsecured Notes due March 1, 2008, the outstanding principal under our $125.0 million accounts receivable securitization program and $19.0 million in short-term borrowings under our revolving credit facility. This new financing has strengthened our credit profile and liquidity position, as well as lengthened the average maturity of our outstanding debt obligations.

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

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. 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.

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. Concurrent with the issuance of our 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 resulted in an effective euro fixed rate borrowing of 5.31%. In addition to hedging the risk associated with our 6.7% Senior Unsecured Notes, 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, including our cash and short-term investments and amounts available under our committed credit facilities, stood at $626.3 million at May 31, 2008. Our debt-to-capital ratio was 48.6% at May 31, 2008 compared with 47.6% at May 31, 2007. As previously mentioned, subsequent to the end of our third fiscal quarter, we repaid our $100.0 million Senior Unsecured Notes due March 1, 2008 with the proceeds from the issuance of the $250.0 million 6.50% Notes.

Subsequent to the end of our current fiscal year, we called for redemption all of our outstanding Senior Convertible Notes due May 13, 2033. Prior to the redemption, virtually all of the holders converted their Notes into shares of our common stock. For additional information, refer to Note L, “Subsequent Events,” to the Consolidated Financial Statements.

RPM International Inc. and Subsidiaries     31

The following table summarizes our financial obligations and their expected maturities at May 31, 2008 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		2009		2010-11		2012-13		After 2013
Long-term debt obligations	$	1,073,621	$	6,934	$	205,868	$	261,816	$	599,003
Capital lease obligations		5,478		965		1,476		1,309		1,728
Operating lease obligations		145,258		36,408		46,389		22,734		39,727
Other long-term liabilities(1):
Interest payments on long-term debt obligations		312,568		45,679		81,634		78,169		107,086
Contributions to pension and postretirment plans(2)		213,600		18,700		38,300		52,700		103,900
Total	$	1,750,525	$	108,686	$	373,667	$	416,728	$	851,444
-

(1)

Excluded from other long-term liabilities is our liability for unrecognized tax benefits, which totaled $4.7 million at May 31, 2008. Currently, we cannot predict with reasonable reliability the timing of cash settlements to the respective taxing authorities.

(2)

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. plans in fiscal 2009; 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 versus the previous year end, causing a favorable change in the accumulated other comprehensive income (loss) (refer to Note A) component of stockholders’ equity of $55.9 million this year versus $26.0 million last year. The change in fiscal 2008 was in addition to net changes of $(0.5) million, $4.8 million and $4.2 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, “Leases,” 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, “Borrowings”). At May 31, 2008, approximately 30.3% of our debt was subject to floating interest rates.

If interest rates were to increase 100 bps from May 31, 2008 and, assuming no changes in debt from the May 31, 2008 levels, the additional annual interest expense would amount to approximately $3.3 million on a pre-tax basis. A similar increase in interest rates in fiscal 2007 would have resulted in approximately $4.9 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.

32     RPM International Inc. and Subsidiaries

MANAGEMENT’S DISCUSSION AND ANALYSIS

Foreign Currency Risk

Our foreign sales and results of operations are subject to the impact of foreign currency fluctuations (refer to Note A, “Summary of Significant Accounting Policies”). As most of our foreign operations are in countries with fairly stable currencies, such as Belgium, Canada, France, 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.

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, 2008 and 2007. We do not currently hedge against the risk of exchange rate fluctuations.

FORWARD-LOOKING STATEMENTS

The foregoing discussion contains “forward-looking statements” relating to our business. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) general economic conditions; (b) the price, supply and capacity of raw materials, including assorted pigments, resins, solvents and other natural gas- and oil-based materials; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for our products; (d) legal, environmental and litigation risks inherent in our construction and chemicals businesses and risks related to the adequacy of our insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon our foreign operations; (g) the effect of non-currency risks of investing in and conducting operations in foreign countries, including those relating to domestic and international political, social, economic and regulatory factors; (h) risks and uncertainties associated with our ongoing acquisition and divestiture activities; (i) risks related to the adequacy of our contingent liabilities, including for asbestos-related claims; and (j) other risks detailed in our filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended May 31, 2008, as the same may be updated from time to time. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of the filing of the report containing such statements.

RPM International Inc. and Subsidiaries     33

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

May 31	2008			2007
Assets
Current Assets
Cash and short-term investments	$	231,251		$	159,016
Trade accounts receivable (less allowances of $24,554 in 2008 and $19,167 in 2007)		817,241			744,259
Inventories		476,149			437,759
Deferred income taxes		37,644			39,276
Prepaid expenses and other current assets		221,690			189,939
Total current assets		1,783,975			1,570,249
Property, Plant and Equipment, at Cost
Land		33,299			28,149
Buildings and leasehold improvements		302,375			276,852
Machinery and equipment		719,045			658,199
		1,054,719			963,200
Less allowance for depreciation and amortization		556,998			489,904
Property, plant and equipment, net		497,721			473,296
Other Assets
Goodwill		908,358			830,177
Other intangible assets, net of amortization		384,370			353,420
Deferred income taxes, non-current		88,754			18,694
Other		100,389			87,313
Total other assets		1,481,871			1,289,604
Total Assets	$	3,763,567		$	3,333,149
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	411,448		$	385,003
Current portion of long-term debt		6,934			101,641
Accrued compensation and benefits		151,493			132,555
Accrued loss reserves		71,981			73,178
Asbestos-related liabilities		65,000			53,000
Other accrued liabilities		139,505			119,363
Total current liabilities		846,361			864,740
Long-Term Liabilities
Long-term debt, less current maturities		1,066,687			886,416
Asbestos-related liabilities		494,745			301,268
Other long-term liabilities		192,412			175,958
Deferred income taxes		26,806			17,897
Total long-term liabilities		1,780,650			1,381,539
Total liabilities		2,627,011			2,246,279
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 122,189 as of May 2008; issued and outstanding 120,906 as of May 2007		1,222			1,209
Paid-in capital		612,441			584,845
Treasury stock, at cost		(6,057	)
Accumulated other comprehensive income		101,162			25,140
Retained earnings		427,788			475,676
Total stockholders’ equity		1,136,556			1,086,870
Total Liabilities and Stockholders’ Equity	$	3,763,567		$	3,333,149

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

34     RPM International Inc. and Subsidiaries

CONSOLIDATED FINANCIAL STATEMENTS

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

Year Ended May 31	2008			2007			2006
Net Sales	$	3,643,791		$	3,338,764		$	3,008,338
Cost of Sales		2,145,254			1,978,312			1,760,973
Gross Profit		1,498,537			1,360,452			1,247,365
Selling, General and Administrative Expenses		1,124,419			1,020,884			948,497
Asbestos Charges (Settlement Income)		288,100			(15,000	)		380,000
Interest Expense, Net		46,964			47,033			41,343
Income (Loss) Before Income Taxes		39,054			307,535			(122,475	)
Provision (Benefit) for Income Taxes		(8,655	)		99,246			(46,270	)
Net Income (Loss)	$	47,709		$	208,289		$	(76,205	)
Average Number of Shares of Common Stock Outstanding
Basic		120,151			118,179			116,837
Diluted		130,539			128,711			116,837
Earnings (Loss) per Share of Common Stock
Basic	$	0.40		$	1.76		$	(0.65	)
Diluted	$	0.39		$	1.64		$	(0.65	)
Cash Dividends Declared per Share of Common Stock	$	0.745		$	0.685		$	0.630

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	2008			2007			2006
Cash Flows From Operating Activities:
Net income (loss)	$	47,709		$	208,289		$	(76,205	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		62,238			59,256			56,463
Amortization		23,128			22,351			17,836
Provision for asbestos-related liabilities		288,100						380,000
Deferred income taxes		(73,888	)		32,740			(111,308	)
Earnings of unconsolidated affiliates		(1,645	)		(914	)		(890	)
Changes in assets and liabilities, net of effect from purchases and sales of businesses:
(Increase) in receivables		(55,056	)		(75,185	)		(59,734	)
(Increase) in inventory		(28,361	)		(23,864	)		(42,255	)
(Increase) in prepaid expenses and other current and long-term assets		(10,954	)		(17,777	)		(20,260	)
Increase in accounts payable		10,654			37,656			42,315
Increase (decrease) in accrued compensation and benefits		15,810			(4,335	)		38,513
Increase (decrease) in accrued loss reserves		(5,382	)		6,501			1,226
Increase in other accrued liabilities		38,613			54,879			22,402
Payments made for asbestos-related claims		(82,623	)		(67,017	)		(59,887	)
Other		6,371			(30,275	)		(2,727	)
Cash From Operating Activities		234,714			202,305			185,489
Cash Flows From Investing Activities:
Capital expenditures		(71,840	)		(70,393	)		(61,155	)
Acquisition of businesses, net of cash acquired		(123,130	)		(124,154	)		(174,625	)
Purchase of marketable securities		(110,225	)		(96,695	)		(59,416	)
Proceeds from sales of marketable securities		92,383			78,530			50,105
(Investments in) and distributions from unconsolidated affiliates		30			72			(895	)
Proceeds from sale of assets and businesses		46,544			1,516			9,282
Other		(2,976	)		2,873			2,323
Cash (Used For) Investing Activities		(169,214	)		(208,251	)		(234,381	)
Cash Flows From Financing Activities:
Additions to long-term and short-term debt		251,765			153,516			186,772
Reductions of long-term and short-term debt		(181,074	)		(53,560	)		(152,862	)
Cash dividends		(90,638	)		(82,106	)		(74,427	)
Repurchase of stock		(6,057	)
Tax benefit from exercise of stock options		3,792			1,549
Exercise of stock options		10,689			25,833			10,636
Cash From (Used For) Financing Activities		(11,523	)		45,232			(29,881	)
Effect of Exchange Rate Changes on Cash and Short-Term Investments		18,258			11,114			3,249
Net Change in Cash and Short-Term Investments		72,235			50,400			(75,524	)
Cash and Short-Term Investments at Beginning of Year		159,016			108,616			184,140
Cash and Short-Term Investments at End of Year	$	231,251		$	159,016		$	108,616
Supplemental Disclosures of Cash Flows Information:
Cash paid during the year for:
Interest	$	58,650		$	57,929		$	50,690
Income taxes	$	59,978		$	51,971		$	68,263
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Share-based compensation activity	$	11,698		$	7,750		$	3,545
Debt from business combinations	$	3,306		$	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 FINANCIAL STATEMENTS

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, 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
Impact of adoption of measurement date provisions of SFAS No. 158:
Net periodic benefit cost for the period March 1, 2007 — May 31, 2007, net of taxes of $1,722																(3,270	)		(3,270	)
Change in fair value and benefit obligation from March 1, 2007 — May 31, 2007, net of taxes of $6,203													11,658						11,658
Impact of adoption of FIN No. 48																(1,689	)		(1,689	)
Balance at May 31, 2007, as adjusted		120,906			1,209			584,845		-0-			36,798			470,717			1,093,569
Comprehensive income
Net income																47,709			47,709
Translation gain and other													64,364						64,364
Comprehensive income																			112,073
Dividends paid																(90,638	)		(90,638	)
Stock option exercises, net		750			8			10,665											10,673
Stock-based compensation expense								5,239											5,239
Restricted stock awards, cancelled to treasury		(284	)		(3	)		3		(6,057	)								(6,057	)
Restricted stock awards, net		817			8			11,689											11,697
Balance at May 31, 2008		122,189		$	1,222		$	612,441	$	(6,057	)	$	101,162		$	427,788		$	1,136,556

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 May 31, 2008, 2007, 2006

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

We account for business combinations using the purchase method of accounting and accordingly, the assets and liabilities of the acquired entities are recorded at their estimated fair values at the acquisition date.

During the fiscal year ended May 31, 2008, we completed nine acquisitions, the majority of which report through our industrial reportable segment. The acquired product lines and assets included a specialty coatings provider for industrial and marine applications in Scandinavia, a manufacturer of concrete admixture products in Chile, a decorative concrete system manufacturer based in the southern U.S., a sealant supplier for window assembly markets in southern and eastern Europe, and a manufacturer of high-performance flooring systems in England. The purchase price for each acquisition has been allocated to the preliminary, estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition. Acquisitions completed during fiscal 2008 have been aggregated in the following table:

	Weighted-Average
	Intangible Asset
	Amortization Life
(In thousands)	(In Years)		Total
Current assets			$	66,983
Property, plant and equipment				12,808
Goodwill		N/A		61,101
Tradenames — indefinite lives		N/A		3,800
Other intangible assets		10		38,745
Other long-term assets				8,254
Total Assets Acquired			$	191,691
Liabilities assumed				(58,293	)
Net Assets Acquired			$	133,398

During our second fiscal quarter of 2008, we completed the sale of our Bondo subsidiary, formerly one of our consumer segment product lines, to an outside third party. Sale proceeds of $45.0 million generated a one-time, pre-tax net gain of $1.1 million, which has been included in selling, general and administrative expense for fiscal 2008. The reported amount of the gain is net of approximately $4.2 million of transaction-related costs, including $1.5 million for involuntary employee terminations and related costs, approximately $1.6 million in adjustments for product returns and product liability accruals, and approximately $1.0 million for closing costs and other fees.

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 fair values of the assets acquired and liabilities assumed at their dates of acquisition, as summarized in the following table:

	Weighted-Average
	Intangible Asset
	Amortization Life
(In thousands)	(In Years)		Total
Current assets			$	41,127
Property, plant and equipment				15,145
Goodwill		N/A		71,844
Tradenames — indefinite lives		N/A		13,053
Other intangible assets		13		29,114
Total Assets Acquired			$	170,283
Liabilities assumed				(39,722	)
Net Assets Acquired			$	130,561

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, 2008 and May 31, 2007 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 for each of our foreign subsidiaries is its 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) consists of the following components:

			Minimum Pension
			and Other			Unrealized			Unrealized
	Foreign		Postretirement			Gain (Loss)			Gain (Loss)
	Currency		Benefit Liability			on			on
	Translation		Adjustments,			Derivatives,			Securities,
(In thousands)	Adjustments		Net of Tax			Net of Tax			Net of Tax			Total
Balance at June 1, 2005	$	14,885	$	(6,905	)	$	—		$	2,024		$	10,004
Reclassification adjustments for (gains) included in net (loss)										(1,677	)		(1,677	)
Other comprehensive income (loss)		30,160		(14,700	)		(3,010	)		3,543			15,993
Deferred taxes				5,413			1,011			(905	)		5,519
Balance at May 31, 2006		45,045		(16,192	)		(1,999	)		2,985			29,839
Reclassification adjustments for (gains) losses included in net income										(2,774	)		(2,774	)
Other comprehensive income (loss)		25,954		1,974			7,850			12,180			47,958
Deferred taxes				(1,317	)		(2,540	)		(3,747	)		(7,604	)
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
Impact of adoption of SFAS No. 158 for change in fair value and benefit obligation from March 1, 2007 — May 31, 2007, net of taxes of $6,203				11,658									11,658
Balance at May 31, 2007, as adjusted		70,999		(46,156	)		3,311			8,644			36,798
Reclassification adjustments for (gains) losses included in net income										(882	)		(882	)
Other comprehensive income (loss)		55,857		(1,433	)		7,195			7,842			69,461
Deferred taxes				946			(2,404	)		(2,757	)		(4,215	)
Balance at May 31, 2008	$	126,856	$	(46,643	)	$	8,102		$	12,847		$	101,162

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 and long-term assets, are composed mainly of available for sale securities 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 $110.8 million and $85.8 million at May 31, 2008 and 2007, respectively. The unrealized gain on securities amounted to approximately $7.8 million and $12.2 million in 2008 and 2007, respectively, which related primarily to the impact of the stock market improvement over the last two fiscal years, in addition to the significant growth of our minority investment in Kemrock Industries.

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

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 we confirm 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, 2008, these notes had a carrying value of $150.2 million and an approximate fair value of $197.8 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	2008		2007
(In thousands)
Raw materials and supplies	$	151,400	$	138,541
Finished goods		324,749		299,218
Total Inventories	$	476,149	$	437,759

10) Goodwill and Other Intangible Assets

We account for goodwill and other intangible assets in accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” and account for business combinations using the purchase method of accounting and accordingly, the assets and liabilities of the entities acquired are recorded at their estimated fair values at the acquisition date. Goodwill represents the excess of the purchase price paid over the fair value of net assets acquired, including the amount assigned to identifiable intangible assets. We perform the required annual impairment assessments as of the first day of our fourth fiscal quarter, using a fair-value approach at the reporting unit level. Our reporting units have been identified at the component level, or one level below our operating segments. If a loss were to result from the performance of the annual test, it would be reflected in pre-tax 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 determine and recognize, if appropriate, an impairment loss. Calculating the fair value of the reporting units requires our significant use of estimates and assumptions. We estimate the fair values of our reporting units by applying a combination of third-party market-value indicators and discounted future cash flows 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 estimation of the 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. Our cash flow estimates are based on our historical experience and our internal business plans, and appropriate discount rates are applied. Additionally, we test all indefinite-lived intangible assets for impairment annually. The results of our annual impairment tests for the fiscal years ended May 31, 2008, 2007 and 2006 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 segment, for the years ended May 31, 2008 and 2007, are as follows:

	Industrial			Consumer
(In thousands)	Segment			Segment			Total
Balance as of June 1, 2006	$	396,812		$	353,823		$	750,635
Acquisitions		20,636			51,282			71,918
Purchase accounting adjustments(1)		(1,208	)		(919	)		(2,127	)
Translation adjustments		6,820			2,931			9,751
Balance as of May 31, 2007		423,060			407,117			830,177
Acquisitions, net of divestitures		60,953			(7,378	)		53,575
Purchase accounting adjustments(2)		(621	)		547			(74	)
Translation adjustments		21,054			3,626			24,680
Balance as of May 31, 2008	$	504,446		$	403,912		$	908,358

(1)	Relates primarily to other accruals and illbruck purchase price settlement.
(2)	Relates primarily to other accruals.

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, 2008
Amortized intangible assets
Formulae		4 to 33	$	203,084	$	94,980	$	108,104
Customer-related intangibles		5 to 33		115,250		36,436		78,814
Trademarks/names		5 to 40		25,493		7,198		18,295
Other		1 to 40		55,454		21,324		34,130
Total Amortized Intangibles				399,281		159,938		239,343
Unamortized intangible assets
Trade names				145,027				145,027
Total Other Intangible Assets			$	544,308	$	159,938	$	384,370
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		21,341		5,635		15,706
Other		3 to 30		32,739		18,603		14,136
Total Amortized Intangibles				354,784		137,872		216,912
Unamortized intangible assets
Trade names				136,508				136,508
Total Other Intangible Assets			$	491,292	$	137,872	$	353,420

The aggregate intangible asset amortization expense for the fiscal years ended May 31, 2008, 2007 and 2006 was $20.6 million, $20.1 million and $15.7 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: 2009 — $21.1 million, 2010 — $20.1 million, 2011 — $19.4 million, 2012 — $18.8 million and 2013 — $18.5 million.

11) Depreciation

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

Land improvements	3 to 25 years
Buildings and improvements	3 to 50 years
Machinery and equipment	1 to 25 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 values of these assets 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 contracts, mainly in connection with the installation of specialized roofing and flooring systems, and related services. In general, we account for long-term construction 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.

RPM International Inc. and Subsidiaries     41

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, 2008, 2007 and 2006, shipping costs were $124.2 million, $119.1 million and $117.5 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, 2008, 2007 and 2006, advertising costs were $39.9 million, $38.6 million and $33.9 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 to expense for the years ended May 31, 2008, 2007 and 2006 were $40.2 million, $34.7 million and $32.3 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, 2008, 2007 and 2006 was $13.3 million, $11.0 million and $6.5 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 $782.2 million of foreign subsidiaries’ undistributed earnings as of May 31, 2008, 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.

19) Earnings (Loss) Per Share of Common Stock

Our basic earnings per share calculation is based on the weighted-average number of shares of common stock outstanding. Our diluted earnings per share calculation is based on the weighted-average number of shares of common stock outstanding adjusted for the number of additional shares that would have been outstanding had all potentially dilutive common shares been issued. Potentially dilutive shares of common stock include stock options, nonvested share awards and shares issuable under our employee stock purchase plan, as well as shares of common stock that would have been issued pursuant to the assumed conversion of our convertible notes. Since the potentially dilutive shares related to the convertible notes are included in the calculation of diluted earnings per share, the related interest expense, net of tax, is added back to net earnings, as this interest would not have been paid if the convertible notes had been converted to common stock. Nonvested market-based stock awards and nonvested performance-based awards are included in the average diluted shares outstanding each period if established market or performance criteria have been met at the end of the respective periods.

42     RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Year ended May 31	2008		2007		2006(1)
(In thousands, except per share amounts)
Shares Outstanding
For computation of basic earnings per share of common stock
Weighted-average shares — used for basic earnings per share		120,151		118,179		116,837
For computation of diluted earnings per share of common stock
Net issuable common share equivalents		2,355		2,498
Additional shares issuable assuming conversion of convertible securities		8,033		8,034
Total shares for diluted earnings per share		130,539		128,711		116,837
Net Income (Loss)
Net income (loss) applicable to shares of common stock for basic earnings per share	$	47,709	$	208,289	$	(76,205	)
Add: Income effect of contingently issuable shares		3,065		3,085
Net income (loss) applicable to shares of common stock for diluted earnings per share	$	50,774	$	211,374	$	(76,205	)
Basic Earnings (Loss) Per Share of Common Stock	$	0.40	$	1.76	$	(0.65	)
Diluted Earnings (Loss) Per Share of Common Stock	$	0.39	$	1.64	$	(0.65	)

⁽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. We adopted this interpretation as of June 1, 2007. See Note C, “Income Taxes,” for further details.

In September 2006, the FASB issued 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. In accordance with the transition requirements of this pronouncement, we adopted the funded-status provisions in our Consolidated Balance Sheets as of May 31, 2007. Separately, SFAS No. 158 also requires employers to measure plan assets and obligations at their fiscal year-end balance sheet date. This requirement is effective for fiscal years ending after December 31, 2008. We decided to early-adopt the measurement date provisions of SFAS No. 158 for defined benefit plans as of the beginning of our current fiscal year, or June 1, 2007, with the exception of certain newly-added plans associated with acquisitions completed during fiscal 2007, for which we had already elected to apply a May 31, 2007 measurement date. Please refer to Note G, “Pension Plans,” for further details.

In September 2006, the FASB issued 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. SFAS No. 157 is effective for our fiscal year ending May 31, 2009. We are currently evaluating the impact, if any, the adoption of this statement will have on our financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115.” SFAS No. 159 provides companies with the option to measure, at fair value, certain financial instruments and other items that are not currently required to be measured at fair value. Entities choosing the fair value option would be required to recognize subsequent changes in the fair value of those instruments and other items directly in earnings. This standard also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. This statement is effective for our fiscal year ending May 31, 2009. We are currently evaluating the impact that the adoption of this statement will have on our financial statements.

RPM International Inc. and Subsidiaries     43

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations,” and SFAS No. 160, “Accounting and Reporting of Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.” SFAS No. 141(R) and SFAS No. 160 are required to be adopted simultaneously. Under SFAS No. 141(R), upon initially obtaining control of another entity or business, an acquirer will recognize 100% of the fair values of assets acquired, including goodwill, and liabilities assumed, with limited exceptions, even if the acquirer has not acquired 100% of the target. Also, under SFAS No. 141(R), transaction costs will no longer be considered part of the fair value of an acquisition, and will be expensed as incurred. SFAS No. 160 requires entities to report noncontrolling (minority) interests in subsidiaries as equity in the Consolidated Financial Statements. We will adopt the provisions of these statements for our fiscal year ending May 31, 2010. The impact of the adoption will depend on the nature and significance of any future acquisitions subject to this statement.

In May 2008, the FASB issued FASB Staff Position (“FSP”) APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement).” The FSP requires the issuer of certain convertible debt instruments that may be settled in cash upon conversion to separately account for liability and equity components of the instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The FSP is effective for our fiscal year ending May 31, 2010.

Subsequent to the end of our fiscal year ended May 31, 2008, we called for redemption all of our outstanding Senior Convertible Notes due May 13, 2033. However, the transition guidance of the FSP requires retrospective application to all years presented. We do not expect the adoption of this FSP to have a material effect on our financial statements.

NOTE B — BORROWINGS

A description of long-term debt follows:

May 31	2008		2007
(In thousands)
Unsecured 4.45% senior notes due October 15, 2009.(1)	$	200,899	$	193,711
Unsecured 6.25% senior notes due December 15, 2013.		200,000		200,000
Unsecured 6.50% senior notes due February 14, 2018.(2)		246,416
Unsecured $297,000 face value at maturity 2.75% senior convertible notes due May 13, 2033.		150,214		150,042
Unsecured notes due March 1, 2008. Interest, which is tied to LIBOR, averaged 5.36% at May 31, 2007.				100,000
Unsecured 6.70% senior notes due November 1, 2015.(3)		150,000		150,000
Revolving credit agreement for $400,000 with a syndicate of banks, through December 29, 2011. Interest, which is tied to LIBOR, averaged 2.91% for U.S. dollar denominated debt and 5.98% for Sterling Pound denominated debt at May 31, 2008.		110,777		123,017
Accounts receivable securitization program for $125,000 with two banks, through May 12, 2009. Interest averaged 3.11%				65,000
Other obligations, including capital leases, and unsecured notes payable at various rates of interest due in installments through 2011.		15,315		6,287
		1,073,621		988,057
Less current portion		6,934		101,641
Total Long-Term Debt, Less Current Maturities	$	1,066,687	$	886,416

(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 3.41% as of May 31, 2008.
(2)	The $250.0 million face amount of the notes due 2018 is adjusted for the original issue discount of $3.6 million, which effectively reduced the ultimate proceeds from the financing. The effective interest rate on the notes, including the amortization of the discount, is 6.704%.
(3)	We entered into a cross-currency swap, which fixed the interest and principal payments in euros, resulting in an effective fixed-rate borrowing of 5.31%.

44     RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The aggregate maturities of long-term debt for the five years subsequent to May 31, 2008 are as follows: 2009 — $6.9 million; 2010 — $205.1 million; 2011 — $0.8 million; 2012 — $261.4 million (including $150.2 million of 2.75% Senior Convertible Notes); 2013 — $0.4 million; and thereafter $599.0 million. Additionally, at May 31, 2008, we had unused lines of credit totaling $395.1 million.

In June 2002, we established an accounts receivable securitization program with several banks for certain of our subsidiaries, providing for a wholly owned special purpose entity (“SPE”) to receive investments of up to $125.0 million. The securitized accounts receivable are owned in their entirety by RPM Funding Corporation, a wholly-owned consolidated subsidiary of RPM International Inc., and are not available to satisfy claims of our creditors until the participating banks’ obligations have been paid in full. This securitization is accomplished by having certain subsidiaries sell various of their accounts receivable to the SPE, and by having the SPE then transfer those receivables to a conduit administered by 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. Under this agreement, we had no outstanding balance as of May 31, 2008 and an outstanding balance of $65.0 million as of May 31, 2007.

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. In June 2008, we called for redemption all of our outstanding Senior Convertible Notes due May 13, 2033. Refer to Note L, “Subsequent Events,” for further details.

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, 2008 and 2007, the fair value of this interest-rate swap was $(0.9) million and $6.3 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, 2008 and 2007, the fair value of this cross-currency swap was $32.5 million and $13.5 million, respectively, which is 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 five-year credit facility (the “Credit Facility”). The Credit Facility will be used for working capital needs and general corporate purposes, including acquisitions. The Credit 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 Credit Facility may be expanded upon our request by up to an additional $175.0 million, thus potentially expanding the Credit Facility to $575.0 million, subject to lender approval. As of May 31, 2008, we had $110.8 million in outstanding borrowings under the Credit Facility.

On February 20, 2008, we sold $250.0 million of 6.50% Senior Notes due February 15, 2018. The net proceeds of the sale, approximating $244.7 million, were used to repay $100.0 million of our Unsecured Senior Notes due March 1, 2008; $125.0 million outstanding under our accounts receivable securitization program; and $19.0 million in short-term borrowings under our revolving credit facility.

RPM International Inc. and Subsidiaries     45

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	2008			2007		2006
(In thousands)
United States	$	(94,164	)	$	215,859	$	(181,282	)
Foreign		133,218			91,676		58,807
Income (Loss) Before Income Taxes	$	39,054		$	307,535	$	(122,475	)

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

Year Ended May 31	2008			2007			2006
(In thousands)
Current:
U.S. federal	$	19,793		$	28,276		$	35,035
State and local		8,145			7,007			7,232
Foreign		37,295			31,223			22,771
Total Current		65,233			66,506			65,038
Deferred:
U.S. federal		(69,643	)		36,455			(108,373	)
State and local		(3,039	)		(264	)		(3,798	)
Foreign		(1,206	)		(3,451	)		863
Total Deferred		(73,888	)		32,740			(111,308	)
Provision (Benefit) for Income Taxes	$	(8,655	)	$	99,246		$	(46,270	)

The significant components of deferred income tax assets and liabilities as of May 31, 2008 and 2007 were as follows:

	2008			2007
(In thousands)
Deferred income tax assets related to:
Inventories	$	7,572		$	7,234
Allowance for losses		759			532
Accrued compensation and benefits		30,920			41,730
Asbestos-related liabilities		196,413			125,932
Accrued other expenses		2,041			3,348
Other long-term liabilities		24,062			21,145
Net operating loss and credit carryforwards		30,898			31,142
Total Deferred Income Tax Assets		292,665			231,063
Less: valuation allowances		(23,222	)		(21,838	)
Net Deferred Income Tax Assets		269,443			209,225
Deferred income tax (liabilities) related to:
Depreciation		(54,754	)		(56,408	)
Pension and other postretirement benefits		(7,531	)		(10,101	)
Amortization of intangibles		(107,566	)		(102,643	)
Total Deferred Income Tax (Liabilities)		(169,851	)		(169,152	)
Deferred Income Tax Assets (Liabilities), Net	$	99,592		$	40,073

46     RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At May 31, 2008, we had U.S. federal foreign tax credit carryforwards of approximately $13.4 million, which expire starting in 2012. Additionally we had approximately $13.3 million of state net operating loss carryforwards that expire at various dates beginning in 2009 and foreign net operating loss carryforwards of approximately $52.0 million at May 31, 2008, of which approximately $3.3 million will expire at various dates beginning in 2010 and approximately $48.7 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.

We have 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 $23.2 million and $21.8 million have been recorded as of May 31, 2008 and 2007, 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 $0.4 million of valuation allowance was allocated to goodwill.

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

Year Ended May 31	2008			2007			2006
(In thousands)
Income tax expense (benefit) at the U.S. statutory federal income tax rate	$	13,669		$	107,637		$	(42,866	)
Impact of foreign operations		(23,478	)		(11,627	)		(7,859	)
State and local income taxes, net of federal income tax benefit		3,319			4,383			2,232
Tax benefits from the extraterritorial income exclusion		—			(348	)		(783	)
Tax benefits from the domestic manufacturing deduction		(1,894	)		(1,352	)		(1,026	)
Nondeductible business expense		1,591			1,516			1,378
Valuation allowance		(1,614	)		2,527			4,760
Other		(248	)		(3,490	)		(2,106	)
Provision (Benefit) for Income Tax Expense	$	(8,655	)	$	99,246		$	(46,270	)
Effective Income Tax Rate		(22.2	)%		32.3	%		37.8	%

On June 1, 2007, we adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). The cumulative effect of applying this interpretation has been recorded as a $1.7 million decrease to retained earnings. Our unrecognized tax benefits upon adoption were $2.8 million, of which $1.9 million would affect the effective tax rate, if recognized. As of May 31, 2008 our unrecognized tax benefits were $3.2 million, of which $2.4 million would impact the effective tax rate, if recognized. The following table reconciles the unrecognized tax benefits from June 1, 2007 to May 31, 2008:

(In millions)
Balance at June 1, 2007	$	2.8
Additions based on tax positions related to current year		0.4
Additions for tax positions of prior years		—
Reductions for tax positions of prior years		—
Settlements		—
Balance at May 31, 2008	$	3.2

We recognize interest and penalties related to unrecognized tax benefits in income tax expense, consistent with our accounting method prior to adopting FIN 48. At May 31, 2008, the accrual for interest and penalties totaled $1.3 million. We do not anticipate any significant changes to the total unrecognized tax benefits within the next 12 months. In conjunction with the adoption of FIN 48, unrecognized tax benefits have been classified as other long-term liabilities unless expected to be paid in one year.

We file income tax returns in the U.S. and various state, local and foreign jurisdictions. As of May 31, 2008 we are subject to U.S. federal income tax examinations for the fiscal years 2005 through 2008. In addition, with limited exceptions, we are subject to state and local or non-U.S. income tax examinations by tax authorities for the fiscal years 2002 through 2008.

RPM International Inc. and Subsidiaries     47

NOTE D — COMMON STOCK

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, 2008 and expire in May 2009.

On January 8, 2008, we announced our authorization of a stock repurchase program under which we may repurchase shares of RPM International Inc. common stock at our discretion for general corporate purposes. Our current intent is to limit our repurchases only to amounts required to offset dilution created by stock issued in connection with our equity-based compensation plans, or approximately one to two million shares per year. As a result of this authorization, we may repurchase shares from time to time in the open market or in private transactions at various times and in amounts and for prices that we deem appropriate, subject to insider trading rules and other securities law restrictions. The timing of our purchases will depend upon prevailing market conditions, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time. We expect to repurchase between approximately one to two million shares during our fiscal year ending May 31, 2009.

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 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	2008			2007			2006
(In thousands)
Selling, general and administrative expense	$	13,396		$	10,509		$	6,719
Income tax (benefit)		(4,074	)		(3,381	)		(1,852	)
Total stock-based compensation expense	$	9,322		$	7,128		$	4,867

Total unrecognized compensation cost related to non-vested awards at May 31, 2008 was $4.4 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 that include stock option grants or share-based payment awards include the 1996 Key Employees Stock Option Plan (the “1996 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 2003 Restricted Stock Plan for Directors (the “2003 Plan”) and the 2007 Restricted Stock Plan (the “2007 Plan”). The 2007 Plan succeeded the 1997 Restricted Stock Plan (“1997 Plan”), which expired by its terms at May 31, 2007.

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	2008			2007			2006
Risk-free interest rate		4.5	%		4.6	%		4.2	%
Expected life of option		7.5	yrs		6.7	yrs		6.0	yrs
Expected dividend yield		3.3	%		3.7	%		3.6	%
Expected volatility rate		26.7	%		27.4	%		27.7	%

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 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 2008 to October 2014. Compensation cost for these awards is recognized on a straight-line basis over the related vesting period. The total

48     RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

fair value of shares vested during the year ended May 31, 2008 was $1.8 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, 2008, there were 1,512,000 SARs outstanding.

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

	2008					2007					2006
	Weighted		Number			Weighted		Number			Weighted		Number
	Average		of Shares			Average		of Shares			Average		of Shares
	Exercise		Under			Exercise		Under			Exercise		Under
Share-Based Payments	Price		Option			Price		Option			Price		Option
(In thousands, except per share amounts)
Balance at June 1	$	14.67		4,950		$	14.34		6,414		$	13.90		6,764
Options granted	$	22.88		600		$	18.80		380		$	17.65		560
Options canceled/expired	$	15.58		(24	)	$	14.75		(43	)	$	14.48		(87	)
Options exercised	$	14.64		(784	)	$	14.37		(1,801	)	$	12.93		(823	)
Balance at May 31	$	15.71		4,742		$	14.67		4,950		$	14.34		6,414
Exercisable at May 31	$	14.09		3,548		$	13.73		3,630		$	13.68		4,587

At May 31, 2008, the aggregate intrinsic value and weighted-average remaining contractual life of options outstanding was $41.8 million and 5.3 years respectively, while the aggregate intrinsic value and weighted-average remaining contractual life of options exercisable was $37.0 million and 4.2 years, respectively. Stock options granted during the years ended May 31, 2008, 2007 and 2006 included exercise prices equivalent to the stock price on the date of grant and weighted-average grant-date fair values of $5.61, $4.34 and $4.04, respectively. Total share options and SARs, included in the table above, had weighted-average exercise prices of $15.71, $14.67 and $14.34 for the years ended May 31, 2008, 2007 and 2006, respectively.

The total intrinsic value of options exercised during the years ended May 31, 2008, 2007 and 2006 was $6.6 million, $12.8 million and $4.6 million, respectively. There was a tax benefit of $1.8 million, $3.7 million and $0.4 million realized for the tax deductions from option exercises of the share-based payment for the year ended May 31, 2008, 2007 and 2006, respectively.

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 1.1 million shares at a weighted-average exercise price of $20.51 and a weighted-average remaining contractual term of 8.46 years will ultimately vest under these plans.

A summary of the status of our nonvested share-based payment awards as of May 31, 2008, 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, 2007	$	4.21		1,320
Granted	$	5.61		600
Vested	$	4.18		(724	)
Forfeited/expired	$	4.10		(2	)
May 31, 2008	$	4.94		1,194			8.46

RPM International Inc. and Subsidiaries     49

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. A description of our restricted stock plans follows.

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, 2008, we granted 415,250 shares of performance-earned restricted stock under the Omnibus Plan at a weighted-average grant price of $22.88. The restricted stock cliff vests after three years. Nonvested restricted shares of common stock under the Omnibus Plan are eligible for dividend payments. In July 2007, performance-contingent restricted stock (“PCRS”) awards were approved. PCRS awards were made pursuant to the Omnibus Plan and are contingent upon the level of attainment of performance goals for the three-year period from June 1, 2007 ending May 31, 2010. During the fiscal year ended May 31, 2008, we granted PCRS awards covering 351,000 shares at a weighted-average grant price of $23.47. Up to 1,205,150 shares of our common stock may be subject to awards under the Omnibus Plan.

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 three-year period. For the year ended May 31, 2008, 22,000 shares were granted at a weighted-average price of $22.88 per share, with 389,400 shares available for future grant. Unamortized deferred compensation expense relating to restricted stock grants for directors of $0.6 million at May 31, 2008, is being amortized over a three-year vesting period. Nonvested restricted shares of common stock under the 2003 Plan are eligible for dividend payments.

The 1997 Plan expired by its terms at May 31, 2007, and was succeeded by the 2007 Plan. Under the 2007 Plan, up to 1,000,000 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, 2008, a total of 48,009 shares were awarded under the 2007 Plan at a weighted-average price of $23.47. As of May 31, 2008, 951,991 shares were available for future issuance under the 2007 Plan. At May 31, 2008, unamortized deferred compensation expense of $0.6 million relating to the 2007 Plan, and an additional $0.6 million remaining under the 1997 Plan, is being amortized over the applicable vesting period associated with each participant.

The following table summarizes the activity for all nonvested restricted shares during the year ended May 31, 2008:

Nonvested Restricted Shares

(Shares in thousands)	Weighted
	Average
	Grant-Date		Number of
	Fair Value		Shares
June 1, 2007	$	15.98		1,688
Granted	$	23.16		836
Vested	$	14.82		(870	)
Forfeited/expired	$	19.15		(20	)
May 31, 2008	$	20.23		1,634

The remaining weighted-average contractual term of nonvested restricted shares at May 31, 2008 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, 2008, 2007 and 2006, the weighted-average grant-date fair value for restricted share grants was $23.16, $18.78 and $17.76, respectively. The total fair value of shares vested during the years ended May 31, 2008, 2007 and 2006 was $12.9 million, $0.8 million and $0.8 million, respectively. We anticipate that approximately 1.6 million shares at a weighted-average grant-date fair value of $20.23 and a weighted-average remaining contractual term of 2.2 years will ultimately vest, based upon the unique terms and participants of each plan. Approximately 23,139 shares of restricted stock were vested at June 1, 2007, with 13,994 restricted shares vested as of May 31, 2008. The total intrinsic value of restricted shares converted during the years ended May 31, 2008, 2007 and 2006 was $8.5 million, $1.1 million and $0.9 million, respectively.

Total unrecognized compensation cost related to nonvested restricted shares of common stock awards granted was $15.8 million as of May 31, 2008. That cost is expected to be recognized over a weighted-average period of 2.2 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, 2008.

50     RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2008:

May 31

(In thousands)
2009	$	37,373
2010		28,331
2011		19,534
2012		13,521
2013		10,522
Thereafter		41,455
Total Minimum Lease Commitments	$	150,736

Total rental expense for all operating leases amounted to $38.5 million in fiscal 2008, $28.8 million in fiscal 2007 and $26.8 million in fiscal 2006.

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, 2009, we expect to contribute approximately $10.3 million to the retirement plans in the U.S. and approximately $7.5 million to our foreign plans.

Net periodic pension cost consisted of the following for the three years ended May 31, 2008:

	U.S. Plans									Non-U.S. Plans
(In thousands)	2008			2007			2006			2008			2007			2006
Service cost	$	14,240		$	13,224		$	13,270		$	3,282		$	3,135		$	2,475
Interest cost		10,296			9,063			8,245			6,545			5,095			4,741
Expected return on plan assets		(13,319	)		(11,428	)		(10,108	)		(6,725	)		(5,047	)		(4,599	)
Amortization of:
Prior service cost		240			193			194			16			22
Net gain on adoption of SFAS No. 87								(2	)
Net actuarial (gains) losses recognized		1,415			2,397			2,375			1,509			1,803			1,511
Curtailment/settlement (gains) losses					65						(699	)
Net Pension Cost	$	12,872		$	13,514		$	13,974		$	3,928		$	5,008		$	4,128

RPM International Inc. and Subsidiaries     51

The changes in benefit obligations and plan assets, as well as the funded status of our pension plans at May 31, 2008 and 2007, were as follows:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2008			2007			2008			2007
Benefit obligation at beginning of year	$	177,920		$	161,669		$	123,580		$	103,713
Service cost		14,240			13,224			3,282			3,135
Interest cost		10,296			9,063			6,545			5,095
Service and interest cost during gap period*		6,100						2,252
Benefits paid		(14,985	)		(11,558	)		(4,937	)		(3,057	)
Participant contributions								883			903
Acquisitions								2,084			5,422
Plan amendments		1,208
Actuarial (gains) losses		(9,210	)		5,666			(14,887	)		2,997
Settlements/Curtailments					(144	)		(888	)
Premiums paid								(58	)		(143	)
Currency exchange rate changes								12,715			5,515
Benefit Obligation at End of Year	$	185,569		$	177,920		$	130,571		$	123,580
Fair value of plan assets at beginning of year	$	143,798		$	130,268		$	94,359		$	72,982
Actual return on plan assets		8,588			11,442			1,291			6,600
Employer contributions		10,483			13,790			11,229			7,597
Participant contributions								883			903
Acquisitions								1,361			5,612
Benefits paid		(14,985	)		(11,558	)		(4,937	)		(3,057	)
Settlements					(144	)
Premiums paid								(58	)		(143	)
Currency exchange rate changes								11,296			3,865
Fair Value of Plan Assets at End of Year	$	147,884		$	143,798		$	115,424		$	94,359
(Deficit) of plan assets versus benefit obligations at end of year	$	(37,685	)	$	(34,122	)	$	(15,147	)	$	(29,221	)
Contributions after measurement date					61						2,437
Net Amount Recognized	$	(37,685	)	$	(34,061	)	$	(15,147	)	$	(26,784	)
Accumulated Benefit Obligation	$	142,408		$	135,463		$	114,576		$	108,749

* Adjustments resulting from the current-year adoption of SFAS No. 158 measurement date provisions.

Amounts recognized in the Consolidated Balance Sheets for the years ended May 31, 2008 and 2007 are as follows:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2008			2007			2008			2007
Noncurrent assets	$	334		$	—		$	3,394		$	275
Current liabilities		(104	)		(104	)		(442	)		(296	)
Noncurrent liabilities		(37,915	)		(33,957	)		(18,099	)		(26,763	)
Net Amount Recognized	$	(37,685	)	$	(34,061	)	$	(15,147	)	$	(26,784	)

52     RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

	U.S. Plans
	2008				2007
	Benefit		Plan		Benefit		Plan
(In thousands)	Obligation		Assets		Obligation		Assets
Plans with projected benefit obligation in excess of plan assets	$	182,142	$	144,122	$	177,920	$	143,798
Plans with accumulated benefit obligation in excess of plan assets	$	1,864	$	1,305	$	1,850	$	1,095
Plans with assets in excess of projected benefit obligations	$	3,427	$	3,762
Plans with assets in excess of accumulated benefit obligations	$	140,544	$	146,579	$	133,613	$	142,703

	Non-U.S. Plans
	2008				2007
	Benefit		Plan		Benefit		Plan
(In thousands)	Obligation		Assets		Obligation		Assets
Plans with projected benefit obligation in excess of plan assets	$	110,230	$	91,689	$	117,909	$	88,414
Plans with accumulated benefit obligation in excess of plan assets	$	47,080	$	40,292	$	103,232	$	88,414
Plans with assets in excess of projected benefit obligations	$	20,341	$	23,735	$	5,671	$	5,945
Plans with assets in excess of accumulated benefit obligations	$	67,496	$	75,132	$	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 for the year ended May 31, 2008:

(In thousands)	U.S. Plans			Non-U.S. Plans
Net loss	$	(43,169	)	$	(26,343	)
Prior service costs/(credits)		(3,067	)		(32	)
Total recognized in accumulated other comprehensive income not affecting retained earnings	$	(46,236	)	$	(26,375	)

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, 2009:

(In thousands)	U.S. Plans			Non-U.S. Plans
Net loss	$	(2,235	)	$	(1,243	)
Prior service costs/(credits)	$	(341	)	$	(4	)

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.

RPM International Inc. and Subsidiaries     53

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	2008			2007			2008			2007
Discount rate		6.50	%		5.75	%		5.88	%		5.00	%
Rate of compensation increase		3.78	%		3.79	%		3.97	%		3.88	%

	U.S. Plans									Non-U.S. Plans
Net Periodic Pension Cost	2008			2007			2006			2008			2007			2006
Discount rate		6.00	%		5.75	%		5.75	%		5.23	%		4.89	%		5.40	%
Expected return on plan assets		8.75	%		8.75	%		8.75	%		6.38	%		6.68	%		6.93	%
Rate of compensation increase		3.79	%		3.73	%		3.50	%		3.88	%		3.39	%		3.63	%

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

U.S. Plans
			Actual Asset
Target Allocation			Allocation
as of May 31, 2008			2008			2007
Equity securities	70	%		70	%		69	%
Fixed income securities	25	%		21	%		20	%
Cash				4	%		6	%
Other	5	%		5	%		5	%
Total assets	100	%		100	%		100	%

Non-U.S. Plans
			Actual Asset
Target Allocation			Allocation
as of May 31, 2008			2008			2007
Equity securities	45	%		46	%		45	%
Fixed income securities	48	%		48	%		47	%
Cash	1	%		2	%		1	%
Property and other	6	%		4	%		7	%
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 $10.7 million, $9.5 million and $8.6 million for the years ending May 31, 2008, 2007 and 2006, respectively.

We expect to pay the following estimated pension benefit payments in the next five years (in millions): $15.4 in 2009; $16.2 in 2010; $17.8 in 2011; $21.4 in 2012; and $21.8 in 2013. In the five years thereafter (2014-2018) we expect to pay $138.5 million.

Implementation of SFAS No. 158

As outlined in Note A, “Summary of Significant Accounting Policies,” during the fiscal year ended May 31, 2007, we adopted the provisions of SFAS No. 158. Note A (20) outlines in detail the provisions under SFAS No. 158, which requires the recognition of the funded status of each defined benefit pension plan and nonpension, postretirement benefit plan on the balance sheet. Under these new provisions, each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. The initial impact

54     RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, was recognized as a component of accumulated other comprehensive income (loss) in the stockholders’ equity section of the balance sheet, net of applicable taxes.

Separately, SFAS No. 158 also requires employers to measure plan assets and obligations at their fiscal year-end balance sheet date. This requirement is effective for fiscal years ending after December 31, 2008. We decided to early-adopt the measurement date provisions of SFAS No. 158 for defined benefit plans as of the beginning of our current fiscal year, June 1, 2007. The transition from a previous measurement date of February 28 to May 31, beginning with our fiscal year ended May 31, 2008, required us to reduce our consolidated retained earnings as of June 1, 2007 by $3.3 million to recognize the one-time after-tax effect of an additional three months of net periodic benefit expense for our retirement and postretirement benefit plans.

As a result of applying the measurement-date provisions, the balance sheet adjustments as of June 1, 2007 were as follows:

	Increase
(In thousands)	(Decrease)
Other long-term assets	$	(3,428	)
Deferred income tax liabilities		1,053
Other long-term liabilities		(12,870	)
Retained earnings		(3,270	)
Accumulated other comprehensive income		11,658

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, 2008:

	U.S. Plans									Non-U.S. Plans
(In thousands)	2008			2007			2006			2008		2007		2006
Service cost — Benefits earned during this period	$	—		$	—		$	—		$	531	$	468	$	365
Interest cost on the accumulated obligation		522			542			615			725		626		539
Amortization of prior service cost		(28	)		(28	)		(27	)
Amortization of unrecognized losses								59			96		96		47
Net Periodic Postretirement Expense	$	494		$	514		$	647		$	1,352	$	1,190	$	951

The changes in the benefit obligations of the plans at May 31, 2008 and 2007 were as follows:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2008			2007			2008			2007
Accumulated postretirement benefit obligation at beginning of year	$	9,072		$	9,434		$	12,372		$	10,824
Service cost								531			468
Interest cost		522			542			725			626
Benefit payments		(736	)		(862	)		(262	)		(220	)
Medicare subsidy received		107			150
Actuarial (gains)		(2,013	)		(192	)		(2,542	)
Currency exchange rate changes								948			674
Accumulated and accrued postretirement benefit obligation at end of year	$	6,952		$	9,072		$	11,772		$	12,372

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

RPM International Inc. and Subsidiaries 55

The following table presents the amounts recognized in the Consolidated Balance Sheets for the years ended May 31, 2008 and 2007:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2008			2007			2008			2007
Current liabilities	$	(626	)	$	(760	)	$	(291	)	$	(238	)
Noncurrent liabilities		(6,326	)		(8,312	)		(11,481	)		(12,134	)
Net Amount Recognized	$	(6,952	)	$	(9,072	)	$	(11,772	)	$	(12,372	)

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	2008			2007			2008			2007
Discount rate		6.50	%		6.00	%		6.50	%		5.50	%
Current healthcare cost trend rate		8.50	%		9.00	%		6.50	%		7.00	%
Ultimate healthcare cost trend rate		5.00	%		5.00	%		4.50	%		4.50	%
Year ultimate healthcare cost trend rate will be realized		2015			2015			2012			2012

	U.S. Plans									Non-U.S. Plans
Net Periodic Postretirement Benefit Cost	2008			2007			2006			2008			2007			2006
Discount rate		6.00	%		6.00	%		5.75	%		5.50	%		5.50	%		6.00	%
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

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, 2008 and 2007:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2008			2007			2008			2007
1% Increase in trend rate
Accumulated Benefit Obligation	$	540		$	760		$	2,901		$	2,753
Postretirement Cost		46			48			371			270
1% Decrease in trend rate
Accumulated Benefit Obligation	$	(477	)	$	(666	)	$	(1,902	)	$	(1,603	)
Postretirement Cost		(40	)		(42	)		(149	)		(177	)

We expect to pay approximately $1.0 million in estimated postretirement benefits in each of the next five years. In the five years thereafter (2014-2018) we expect to pay a cumulative total of $5.6 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 all years since inception.

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 periods ended May 31, 2008 and 2007. The impact of the subsidy resulted in a reduction in our benefit obligation of approximately $1.5 million and $1.7 million at May 31, 2008 and 2007, respectively, and a $0.1 million and $0.2 million decrease in net periodic cost for the years ended May 31, 2008 and 2007, respectively. For the fiscal years ended May 31, 2008 and 2007, we received reimbursements from Medicare related to this new law amounting to $106,820 and $150,311, respectively.

56 RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE I — CONTINGENCIES AND LOSS RESERVES
Accrued loss reserves and asbestos-related liabilities consist of the following:

May 31	2008		2007
(In thousands)
Accrued product liability reserves	$	56,500	$	55,063
Accrued warranty reserves		8,055		7,195
Accrued environmental reserves		7,426		10,920
Accrued loss reserves — current		71,981		73,178
Asbestos-related liabilities — current		65,000		53,000
Total Reserves — Current	$	136,981	$	126,178
Accrued product liability reserves — noncurrent	$	8,518	$	8,837
Accrued warranty reserves — noncurrent				1,482
Accrued environmental reserves — noncurrent		5,455
Accrued loss reserves — noncurrent		13,973		10,319
Asbestos-related liabilities — noncurrent		494,745		301,268
Total Reserves — Noncurrent	$	508,718	$	311,587

Certain of our wholly owned subsidiaries, collectively referred to as the “subsidiaries,” principally Bondex International, Inc., are defendants in various asbestos-related bodily injury lawsuits filed in various state courts with the vast majority of current claims pending in six states — Ohio, Texas, Florida, Mississippi, Maryland and Illinois. 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, 2008, our subsidiaries had a total of 11,202 active asbestos cases compared to a total of 10,824 cases as of May 31, 2007. For the quarter ended May 31, 2008, our subsidiaries secured dismissals and/or settlements of 664 cases and made total payments of $15.0 million, which included defense-related payments of $7.7 million. For the comparable period ended May 31, 2007, dismissals and/or settlements covered 608 cases and total payments were $18.6 million, which included defense-related payments of $7.4 million. For the year ended May 31, 2008, our subsidiaries secured dismissals and/or settlements of 1,546 cases and made total payments of $82.6 million, which included defense-related payments of $39.7 million. For the comparable period ended May 31, 2007, dismissals and/or settlements covered 1,900 cases and total payments were $67.0 million, which included defense-related payments of $27.7 million. During the current fiscal year, our subsidiaries have had higher year-over-year, defense-related payments as a result of implementing various changes to our management and defense of asbestos claims, including transitioning to a new claims intake and database service provider. To facilitate this transition and other related changes, we have necessarily incurred some duplicate defense-related payments over the prior-year period. We estimate that our subsidiaries have spent approximately $13.0 million more on defense than they otherwise would have spent due to these added transitional expenses, which were completed during the quarter ended February 29, 2008. Excluding these added year-to-date transitional payments, our subsidiaries’ ongoing core defense expenditures would be in line with comparable prior-year levels.

Excluding defense-related payments, the average payment made to settle or dismiss a case approximated $11,000 and $18,000 for each of the quarters ended May 31, 2008 and 2007, respectively; and $28,000 and $21,000 for each of the years ended May 31, 2008 and 2007, respectively. The amount and timing of dismissals and settlements can fluctuate significantly from period to period, resulting in volatility in the average cost to resolve a case in any given quarter or year. In addition, in some jurisdictions, cases may involve more than one individual claimant. As a result, average settlement or dismissal payments made on a per case basis are not necessarily reflective of the payment amounts on a per claimant basis. For example, the average amount paid to settle or dismiss a case can vary widely depending on a variety of factors, including the mix of malignancy and non-malignancy claimants, and the amount of defense expenditures incurred during the period.

Estimating the future cost of asbestos-related contingent liabilities was and continues to be subject to many uncertainties that may change over time, including (i) the ultimate number of claims filed; (ii) the amounts required to resolve both currently 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

RPM International Inc. and Subsidiaries 57

concerning exposure to products for which one of our subsidiaries is responsible and the claimants’ diseases; (ix) potential changes in applicable federal and/or state law; and (x) the potential impact of various proposed structured settlement transactions or subsidiary bankruptcies by other companies, some of which are the subject of federal appellate court review, the outcome of which could materially affect any future asbestos-related liability estimates.

In 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.

During fiscal 2006, we recorded a liability for asbestos claims in the amount of $380.0 million, while paying out $59.9 million for dismissals and/or settlements, which resulted in our accrued liability balance moving from $101.2 million at May 31, 2005 to $421.3 million at May 31, 2006. This increase was based largely upon C&W’s analysis of our total estimated liability for unasserted-potential-future-asbestos-related claims through May 31, 2016. This amount was also 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 determined at that time that a ten-year period was the most reasonable time period over which reasonably accurate estimates might still be made for projecting asbestos liabilities and defense costs and, accordingly, our accrual did not include asbestos liabilities for any period beyond ten years.

We have reviewed and evaluated our ten-year asbestos liability established as of May 31, 2006, for developments in the fiscal year ending May 31, 2008. As part of this review and evaluation process, the credibility of epidemiological studies of our mesothelioma claims, first introduced to management by C&W some two-and-one-half years ago, was validated. At the core of our evaluation process and the basis of C&W’s actuarial work on behalf of Bondex, is the Nicholson Study. The Nicholson Study is the most widely recognized reference in bankruptcy trust valuations, global settlement negotiations and the Congressional Budget Offices’ work done on the proposed FAIR Act in 2006. Based on our ongoing comparison of the Nicholson Study projections and Bondex’s specific actual experience, which continues to bear an extremely close correlation to the study’s projections, we decided to extend our asbestos liability projection out to twenty years. C&W assisted us in calculating an estimate of our liability for unasserted-potential-future-asbestos-related claims out to that twenty-year period.

C&W has projected that the cost of extending the asbestos liability to twenty years, coupled with an updated evaluation of our current known claims to reflect our most recent actual experience, would be $288.1 million. By adding $288.1 million to our existing asbestos liability, the total asbestos-related balance sheet liabilities at May 31, 2008 are $559.7 million, with $65.0 million thereof estimated to be the short-term liability due in fiscal 2009. The balance of $494.7 million is reflected as a long-term liability. 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 laws 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 liabilities for unasserted potential future claims.

In determining the amount of our asbestos liability, 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 projection 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 a structured-settlement transaction could also change the estimated liability.

Subject to the foregoing variables, and based on currently available data, we believe that our current asbestos liability is sufficient to cover asbestos-related expenses for our known pending and unasserted-potential-future-asbestos-related claims through 2028. 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 additional material asbestos liabilities in periods before 2028. Due to the uncertainty inherent in the process undertaken to estimate our losses, we are unable at the present time to estimate an additional range of loss in excess of our existing 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.

58     RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During fiscal 2004, certain of our subsidiaries’ 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 responded, and must continue to respond, to lawsuits alleging exposure to these asbestos-containing products. We 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. While we had anticipated a ruling on these motions before the end of fiscal 2008, the court has not yet rendered its decision. It remains difficult to predict when the motions will be ruled upon or when a trial date will be scheduled.

During last year’s second fiscal quarter ended November 30, 2006, Bondex reached a 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 liability. 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, 2008:

Asbestos Liability Movement (Current and Long-Term)

	Balance at		Additions to				Balance at
(In thousands)	Beginning of Period		Asbestos Charge		Deductions*		End of Period
Year Ended May 31, 2008	$	354,268	$	288,100	$	82,623	$	559,745
Year Ended May 31, 2007		421,285				67,017		354,268
Year Ended May 31, 2006		101,172		380,000		59,887		421,285

* Deductions include payments for defense-related costs and amounts paid to settle claims.

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, 2008, the current portion of these reserves amounted to $56.5 million as compared with $55.0 million at May 31, 2007, while the total long-term reserves of $8.5 million at May 31, 2008 compare with $8.8 million at May 31, 2007. Product warranty expense is recorded within selling, general and administrative expense. The changes in the product warranty liability 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 (“EIFS”) product line. We also offer a warranty program for our roofing systems and have established a product warranty liability. We review this liability for adequacy on a quarterly basis and adjust it as necessary. The primary factors that could affect this liability may include changes in the historical system performance rate as well as the costs of replacement. Provision for estimated warranty costs is recorded at the time of sale and periodically adjusted, as required, to reflect actual experience.

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 the third quarter of fiscal 2006, the court granted Dryvit’s motion to dismiss that federal filing based on a more complete state court complaint filed against this same insurer, another insurer, and the Company’s insurance broker. The coverage case is now proceeding in state court. Discovery in this litigation is ongoing. One insurer appealed the trial court’s order granting Dryvit certain discovery of allegedly privileged claim file documents, and the court of appeals dismissed the appeal on September 12, 2007. That insurer filed a motion for reconsideration, which has been dismissed. No further appeal of that discovery ruling has been granted. The case, therefore, has been placed back on the trial

RPM International Inc. and Subsidiaries     59

court’s docket. In accordance with a court order, the parties filed dispositive motions on certain of the coverage issues. Briefing on these motions was completed on June 16, 2008. A trial date has not yet been scheduled.

In addition, like other companies participating in similar lines of business, some of our subsidiaries 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.

NOTE J — SEGMENT INFORMATION

We operate a portfolio of businesses and product lines that manufacture and sell a variety of specialty paints, protective coatings and roofing systems, sealants and adhesives. We manage our portfolio by organizing our businesses and product lines into two reportable segments: the consumer reportable segment and the industrial reportable segment. Within each reportable segment, we aggregate three operating segments that consist of individual groups of companies and product lines, which generally address common markets, share similar economic characteristics, utilize similar technologies and can share manufacturing or distribution capabilities. Our six operating segments represent components of our business for which separate financial information is available that is utilized on a regular basis by our chief executive officer in determining how to allocate the assets of the company and evaluate performance. These six operating segments are each managed by an operating segment manager, who is responsible for the day-to-day operating decisions and performance evaluation of the operating segment’s underlying businesses.

Our industrial reportable 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. This reportable segment comprises three separate operating segments — our Tremco Group, StonCor Group, and RPM II/Industrial Group. Products and services within this reportable segment include construction chemicals, roofing systems, weatherproofing and other sealants, flooring, and specialty chemicals.

Our consumer reportable segment manufactures and markets professional use and do-it-yourself (“DIY”) products for a variety of mainly consumer applications, including home improvement 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, craft shops and to other smaller customers through distributors. This reportable segment comprises three operating segments — our DAP Group, Rust-Oleum/Zinsser Group, and RPM II/Consumer Group. Products within this reportable segment include specialty, hobby and professional paints; caulks; adhesives; silicone sealants; wood stains and specialty confectionary coatings and films. Sales to the Home Depot represented less than 10% of our consolidated net sales for 2008 and 2007; 10% of our consolidated net sales for 2006; and 26%, 24% and 25% of our consumer segment net sales for 2008, 2007 and 2006, respectively.

In addition to our two reportable segments, there is a category of certain business activities and expenses, referred to as corporate/other, that does not constitute an operating segment. This category includes our 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 segment. Assets related to the corporate/other category 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 income (loss) before income taxes, identifiable assets, capital expenditures, and depreciation and amortization.

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 $3.3 million; $2.5 million and $2.2 million for the years ended May 31, 2008, 2007 and 2006, respectively, and are therefore included as an offset to selling, general and administrative expenses.

60     RPM International Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table reflects the results of our reportable 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	2008			2007			2006
(In thousands)
Segment Information
Net Sales
Industrial	$	2,365,496		$	2,100,386		$	1,811,590
Consumer		1,278,295			1,238,378			1,196,748
Total	$	3,643,791		$	3,338,764		$	3,008,338
Gross Profit
Industrial	$	999,063		$	885,141		$	778,672
Consumer		499,474			475,311			468,693
Total	$	1,498,537		$	1,360,452		$	1,247,365
Income (Loss) Before Income Taxes(1)
Industrial	$	259,452		$	233,120		$	201,230
Consumer		155,778			151,496			159,147
Corporate/Other		(376,176	)		(77,081	)		(482,852	)
Total	$	39,054		$	307,535		$	(122,475	)
Identifiable Assets
Industrial	$	2,130,532		$	1,814,736		$	1,668,774
Consumer		1,342,572			1,344,833			1,165,368
Corporate/Other		290,463			173,580			161,922
Total	$	3,763,567		$	3,333,149		$	2,996,064
Capital Expenditures
Industrial	$	47,523		$	49,235		$	39,274
Consumer		23,247			20,141			20,800
Corporate/Other		1,070			1,017			1,081
Total	$	71,840		$	70,393		$	61,155
Depreciation and Amortization
Industrial	$	48,739		$	46,453		$	40,536
Consumer		31,923			30,860			29,938
Corporate/Other		4,704			4,294			3,825
Total	$	85,366		$	81,607		$	74,299
Geographic Information
Net Sales (based on shipping location)
United States	$	2,384,357		$	2,341,008		$	2,248,259
Foreign
Canada		306,339			255,246			222,602
Europe		775,651			596,613			411,548
Other Foreign		177,444			145,897			125,929
Total Foreign		1,259,434			997,756			760,079
Total	$	3,643,791		$	3,338,764		$	3,008,338
Long-Lived Assets (2)
United States	$	1,219,649		$	1,208,981		$	1,190,722
Foreign
Canada		144,027			132,052			121,137
Europe		501,828			385,066			260,866
Other Foreign		25,334			18,107			18,027
Total Foreign		671,189			535,225			400,030
Total	$	1,890,838		$	1,744,206		$	1,590,752

(1)	Asbestos-related charges, totaling $288.1 million and $380.0 million in fiscal 2008 and 2006, respectively, 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.

RPM International Inc. and Subsidiaries     61

NOTE K — QUARTERLY INFORMATION (UNAUDITED)

The following is a summary of the quarterly results of operations for the years ended May 31, 2008 and 2007:

	For Quarter Ended
(In thousands, except per share amounts)	August 31		November 30		February 29		May 31
2008
Net Sales	$	930,339	$	905,708	$	731,773	$	1,075,971
Gross Profit	$	383,902	$	367,738	$	291,245	$	455,652
Net Income	$	68,268	$	54,855	$	12,150	$	(87,564	)(a)
Basic Earnings Per Share	$	0.57	$	0.46	$	0.10	$	(0.73	)
Diluted Earnings Per Share	$	0.53	$	0.43	$	0.10	$	(0.73	)(b)
Dividends Per Share	$	0.175	$	0.190	$	0.190	$	0.190

(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	(b)	$	0.65
Dividends Per Share	$	0.160	$	0.175	$	0.175		$	0.175

(a)	During the fourth fiscal quarter ended May 31, 2008, we increased our liability for asbestos-related payments by $288.1 million ($185.1 million after-tax), representing our estimation of our liability for pending and unasserted claims through May 31, 2028. See Note I to the Consolidated Financial Statements for further details.
(b)	Conversion of the shares related to convertible securities for the three month periods ended May 31, 2008 and February 28, 2007 was not assumed, since the results would have been anti-dilutive.

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.

NOTE L — SUBSEQUENT EVENTS

Subsequent to the end of our current fiscal year, our Senior Convertible Notes (the “Convertible Notes”) due May 13, 2033 became eligible for conversion based upon the price of RPM International Inc. stock during our most recently completed fiscal quarter ended May 31, 2008. Subsequent to this event, on June 13, 2008, we called for redemption all of our outstanding Convertible Notes on the effective date of July 14, 2008 (the“Redemption Date”). Prior to the Redemption Date, virtually all of the holders had already converted their Convertible Notes into 8,030,455 shares of RPM International Inc. common stock, or 27.0517 shares of common stock for each $1,000 Face Value Convertible Note they held. Any fractional shares from the conversion were paid in cash.

62     RPM International Inc. and Subsidiaries

QUARTERLY STOCK PRICE AND DIVIDEND INFORMATION

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
Fiscal 2008	High		Low		per share
First Quarter	$	25.74	$	20.19	$	0.175
Second Quarter	$	24.44	$	17.25	$	0.190
Third Quarter	$	22.50	$	18.77	$	0.190
Fourth Quarter	$	24.74	$	19.30	$	0.190

					Dividends paid
Fiscal 2007	High		Low		per share
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

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 14, 2008 was approximately 30,740.

RPM International Inc. and Subsidiaries     63

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, 2008. 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. Based on this assessment, management concluded that, as of May 31, 2008, RPM’s internal control over financial reporting is effective.

The independent registered public accounting firm Ernst & Young LLP, has also audited the Company’s internal control over financial reporting as of May 31, 2008 and their report thereon is included on page 66 of this report.

Frank C. Sullivan	P. Kelly Tompkins
President and Chief Executive Officer	Executive Vice President — Administration and Chief Financial Officer

July 28, 2008

64 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 the accompanying consolidated balance sheets of RPM International Inc. and Subsidiaries (“RPM” or “the Company”) as of May 31, 2008 and 2007 and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended May 31, 2008. 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, 2008 and 2007 and the consolidated results of its operations and its cash flows for each of the three years in the period ended May 31, 2008, 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 and June 1, 2007, the Company adopted the recognition and measurement date provisions, respectively, of 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, 2008, 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 28, 2008 expressed an unqualified opinion thereon.

Cleveland, Ohio
July 28, 2008

RPM International Inc. and Subsidiaries 65

Ernst & Young LLP

Report of Independent Registered Public Accounting Firm

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS

RPM International Inc. and Subsidiaries
Medina, Ohio

We have audited RPM International Inc. and Subsidiaries (“RPM” or “the Company”) internal control over financial reporting as of May 31, 2008, 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 included in the accompanying, “Management’s Report on Internal Control Over Financial Reporting.” Our responsibility is to express 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.

In our opinion, RPM maintained, in all material respects, effective internal control over financial reporting as of May 31, 2008, 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, 2008 and 2007 and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended May 31, 2008 and our report dated July 28, 2008 expressed an unqualified opinion thereon.

Cleveland, Ohio
July 28, 2008

66 RPM International Inc. and Subsidiaries

Ernst & Young LLP

EX-21.1

Exhibit 21.1

The following is a list of subsidiaries of RPM International Inc.¹ as of July 24, 2008.

	Jurisdiction of
Name	Incorporation
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
NMBFil, Inc.	Ohio
Rust-Oleum Corporation4	Illinois
Rust-Oleum International, LLC5	Delaware
BPAG, Inc.	Delaware
Rust-Oleum Sales Company, Inc.	Ohio
Rust-Oleum Service Company	Delaware
Rust-Oleum Japan Corporation	Japan
The Testor Corporation6	Ohio
Zinsser Co., Inc. 7	New Jersey
Zinsser Asia Pacific Pty. Limited	Australia
Zinsser Holdings, LLC8	Delaware
Mantrose-Haeuser Co., Inc. 9	Massachusetts
Modern Masters Inc.	California
Zinsser Divestiture Co., Inc.	New York
RPM Enterprises, Inc.	Delaware
RPM FCP I, Inc.10	Delaware
RPM FCP II, Inc.11	Delaware
RPM, Inc.12	Ohio
American Emulsions Co., Inc.	Georgia
Select Dye & Chemical, Inc.	Georgia
Bondex International, Inc.	Ohio
Chemical Specialties Manufacturing Corporation	Maryland
Day-Glo Color Corp.13	Ohio
Dryvit Holdings, Inc.	Delaware
Dryvit Systems, Inc.14	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
RPM Wood Finishes Group, Inc.15	Nevada

	Jurisdiction of
Name	Incorporation
Chemical Coatings, Inc.	North Carolina
RPM of Mass., Inc.	Massachusetts
Westfield Coatings Corporation	Massachusetts
TCI, Inc.	Georgia
RPM Industrial Holding Company	Delaware
Carboline Company16	Delaware
PLB Holdings Inc.	Nevada
A/D Fire Protection Systems Corp.	Nevada
Carboline International Corporation17	Delaware
Carboline Dubai Corporation	Missouri
Star Maling og Lakkfabrikk AS18	Norway
Carboline Marine Europe AS	Norway
StonCor Africa (Pty.) Ltd.	South Africa
Chemrite Equipment Systems
(Pty.) Ltd.	South Africa
StonCor Namibia (Pty.) Ltd.	Namibia
Republic Powdered Metals, Inc. 19	Ohio
StonCor Group, Inc.20	Delaware
Fibergrate Composite Structures Incorporated21	Delaware
Stonhard Nederland B.V.	Netherlands
Parklin Management Group, Inc.22	New Jersey
Stonhard Agencia en Chile	Chile
StonCor Corrosion Specialists Group Ltda.23	Brazil
StonCor (Zhangjiagang Bonded Logistics Park)
Trading Co., Inc.	China
Tremco Incorporated24	Ohio
The Euclid Chemical Company25	Ohio
Euclid Chemical International Sales Corp.26	Ohio
Grandcourt N.V.27	Netherlands Antilles
Redwood Transport, Inc.28	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.	Delaware
Tremco GmbH	Germany
Weatherproofing Technologies, Inc.	Delaware
RSIF International Limited	Ireland

¹ 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 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-

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	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 AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.
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 AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.
	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%.

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	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 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.
	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 AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.
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.

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	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%.
	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 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 AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.
7	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.

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	RPM Funding Corporation owns 5% of the outstanding shares in Carboline Norge AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.
8	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.
9	Mantrose-Haeuser Co., Inc. owns 83% of the outstanding shares in NatureSeal, Inc., a Delaware corporation. The remaining 17% of outstanding shares are held by a joint venture partner.
10	RPM FCP I, Inc. owns 50% of the outstanding shares in RPM FCP Belgium SPRL, a Belgian corporation. The remaining 50% of the outstanding shares are held by RPM FCP II, Inc.
11	RPM FCP II, Inc. owns 50% of the outstanding shares in RPM FCP Belgium SPRL, a Belgian corporation. The remaining 50% of the outstanding shares are held by RPM FCP I, Inc.
12	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.
13	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:

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	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.
	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.
14	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.

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15	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%.
	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.
16	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.
17	Carboline International Corporation owns 49% of the outstanding shares in Carboline Korea Ltd.; 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.
	Carboline International Corporation owns 40% of the outstanding shares in Carboline Norge AS, a Norwegian corporation. Of the remaining 60% of the outstanding shares in Carboline Norge AS, Star Maling og Lakkfabrikk AS owns 55% and RPM Funding Corporation owns 5%.
18	Star Maling og Lakkfabrikk AS owns 55% of the outstanding shares in Carboline Norge AS, a Norwegian corporation. Of the remaining 45% of the outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and RPM Funding Corporation owns 5%.
19	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-

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	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 AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.
20	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%.
	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.

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	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.
	StonCor Group, Inc. owns 50% of the outstanding shares in SK Polymers FZCO, a United Arab Emirate corporation. The remaining 50% of the outstanding shares in SK Polyers FZCO are held by a joint venture partner.
21	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.
	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.
24	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

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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 AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.

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. 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 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.

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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.

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 Export Limited, a United Kingdom corporation; 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 Tremco illbruck SAS, a French corporation.

Tremco illbruck SAS owns 100% of the outstanding shares in Prosytec S.A.S., a French corporation.

Prosytec S.A.S. owns 100% of the outstanding shares in Prosytec s.r.l., an Italian corporation.

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Tremco illbruck Produktion GmbH is a general partner with a 99.80% ownership interest in Tremco illbruck GmbH & Co. KG, a German limited partnership. The remaining .20% is held by Tremco illbruck International GmbH, a limited partner.

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 Tremco illbruck NV, a Belgian corporation.

Tremco illbruck NV 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.

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, Tremco Roofing UK Limited and Tor Coatings Limited, all UK corporations.

Tremco illbruck Production Limited owns 100% of the preference shares and 99.999% of the ordinary shares in Tretol Group Limited, a United Kingdom corporation. The remaining .001% of the outstanding ordinary shares are held by RPM Canada, a General Partnership.

Tremco illbruck Production Limited owns 99.90% of the outstanding shares in Tretol Limited and 99% of the outstanding shares in Tretolbond Limited, both United Kingdom corporations. The remaining outstanding shares of both are held by Tretol Group Limited.

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.

13

RPM Europe Holdco B.V. owns .20% of the outstanding shares in illbruck Sealant Systems Production S.A., a Belgian corporation. 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 99% of the outstanding shares in Vandex Holding AG, a Swiss corporation. The remaining 1% of the outstanding shares in Vandex Holding AG are divided equally among the five directors.

Vandex Holding AG owns 100% of the outstanding shares in Vandex Isoliermittel-Gesellschaft mbH, a German corporation; and 100% of the outstanding shares in Vandex UK Limited, a United Kingdom corporation.

Vandex Holding AG owns 99.88% of the outstanding shares in Vandex International AG and 95% of the outstanding shares in Vandex AG, both Swiss corporations. The remaining outstanding shares of each are divided equally among the five directors of each company.

Vandex Holding AG owns 95% of the outstanding shares in CAI-Tec GmbH, a Swiss corporation. The remaining outstanding shares are held by Vandex AG.

Vandex Holding AG owns 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.

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.

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.

14

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.

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.

15

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; 100% of the outstanding shares in StonCor Lux S.àr.l, a Luxembourg corporation; and 100% of the outstanding shares in StonCor Poland Sp. zo.o., a Polish corporation.

RPOW UK Limited owns 100% of the outstanding shares in each of the following United Kingdom corporations: Advanced Construction Materials Limited, Anglo Building Products Limited, NMBFil UK Limited, Chemspec Europe Limited, Dane Color UK Limited, Dryvit UK Limited, Fibergrate Composite Structures Limited, Flowcrete Group Limited, illbruck Holdings Limited, Mantrose UK Limited, RPM Holdings UK Limited, Rust-Oleum UK 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.

Flowcrete Group Limited owns 100% of the outstanding shares in Flowcrete Europe Limited, Isocrete Floor Screeds Limited and Flowcrete International Limited, all United Kingdom Corporations.

Flowcrete Group Limited owns 60% of the outstanding shares in Flowcrete Middle East FZCO, a United Arab Emirates corporation. The remaining 40% of the outstanding shares are held by Flowcrete International Limited.

Flowcrete International Limited owns 100% of the outstanding shares in Flowcrete (Hong Kong) Limited, a Hong Kong corporation; Flowcrete Asia Sdn. Bhd., a Malaysian corporation; Flowcrete Europe s.r.o., a Czech Republic corporation; Flowcrete New Zealand Limited, a New Zealand corporation; Flowcrete Australia Pty. Ltd., an Australian corporation, Flowcrete S.A. (Pty.) Limited, a South African corporation; and Flowcrete US Inc. and Flowcrete North America, Inc., both US corporations.

Flowcrete Europe Limited owns 100% of the outstanding shares in Flowcrete UK Limited, a United Kingdom corporation; and Flowcrete Sweden AB, a Swedish corporation.

Flowcrete Sweden AB owns 100% of the outstanding shares in Flowcrete Polska Sp. zo.o., a Polish corporation and Flowcrete Norway AS, a Norwegian corporation.

Flowcrete Sweden AB owns 20% of the outstanding shares in Perstorp Industrial Surfaces Limited, a Chinese corporation. The remaining outstanding shares are held by a joint venture partner.

Flowcrete S.A. (Pty.) Limited owns 100% of the outstanding shares in Ivory Industrials (Pty.) Limited, a South African corporation.

16

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

Mantrose UK Limited owns 83% of the outstanding shares in AgriCoat NatureSeal Limited, a United Kingdom corporation. The remaining 17% of the outstanding shares are held by a joint venture partner.

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.

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.

17

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 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.

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25	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-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 AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.
	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%.
	The Euclid Chemical Company owns 99.98% of the outstanding shares in Productos Cave S.A., a Chilean corporation. The remaining .02% of the outstanding shares are held by Redwood Transport, Inc.

19

26	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%.
27	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%.
28	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%.
29	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 AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.
30	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

20

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 AS, a Norwegian corporation. Of the remaining outstanding shares in Carboline Norge AS, Carboline International Corporation owns 40% and Star Maling og Lakkfabrikk AS owns 55%.

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%.

21

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 28, 2008, with respect to the consolidated financial statements of RPM, and the effectiveness of internal control over financial reporting of RPM, included in the 2008 Annual Report to Stockholders of RPM.

Our audits also included the financial statement schedule of RPM listed in Item 15(a). 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 28, 2008, 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); and

(2) Registration Statement (Form S-3 No. 333-149232) of RPM International Inc.

of our reports dated July 28, 2008, with respect to the consolidated financial statements of RPM, 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 28, 2008

EX-23.2

Exhibit 23.2

Consent of Crawford & Winiarski

We consent to references to our firm which are included in the Annual Report on Form 10-K for the year ended May 31, 2008 of RPM International Inc. (the “Company”), and to the incorporation by reference of such references into the Company’s following Registration Statements on Forms 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; and on Form S-3: Reg. No. 333-149232, and any supplements and amendments thereto (collectively, the “Registration Statements”). We further consent to references to our firm which may be included in any of the Company’s current or periodic reports that may be filed subsequent to the date of this consent, and to the incorporation by reference of such references into the Registration Statements.

	Crawford & Winiarski
	By:	/s/ Robert J. Winiarski
July 25, 2008	Its: Member

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, 2008	/s/ Frank C. Sullivan
	Frank C. Sullivan
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION

I, P. Kelly Tompkins, 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, 2008	/s/ P. Kelly Tompkins
	P. Kelly Tompkins
	Executive Vice President - Administration and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

     Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of RPM International Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

(1) The Annual Report on Form 10-K for the period ended May 31, 2008 (the “Form 10-K”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) 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.

Date: July 30, 2008	/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.

     A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

     Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of RPM International Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

(1) The Annual Report on Form 10-K for the period ended May 31, 2008 (the “Form 10-K”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) 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.

Date: July 30, 2008	/s/ P. Kelly Tompkins
	P. Kelly Tompkins
	Executive Vice President - Administration and Chief Financial 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.

     A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.