8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 24, 2006

RPM INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)

Delaware	1-14187	02-0642224
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

P.O. Box 777, 2628 Pearl Road, Medina, Ohio	44258
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (330) 273-5090

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

     On July 24, 2006, the Company issued a press release announcing its year end results for fiscal year 2006, which provided detail not included in previously issued reports. A copy of the press release is furnished with this Current Report on Form 8-K as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.		Description
	99.1	Press release of the Company, dated July 24, 2006, announcing the Company’s year end results.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RPM International Inc.
Date July 24, 2006	/s/ P. Kelly Tompkins
	P. Kelly Tompkins
	Senior Vice President, General Counsel and Secretary

EXHIBIT INDEX

Exhibit No.		Description
	99.1	Press release of the Company, dated July 24, 2006, announcing the Company’s year end results.

EX-99.1

Exhibit 99.1

RPM Reports Record Fourth-Quarter and Fiscal-Year Sales and Earnings
Before 10-Year Asbestos Liability Reserve Charge

• Creation of 10-year, $321 million (undiscounted) asbestos liability reserve results in net loss for both current periods

• Fourth-quarter sales grow 21%, fueling 29% net income growth before asbestos charges

• Fiscal-year sales reach $3.0 billion, ahead 18%, lifting earnings 9% before asbestos charges

• Momentum continues, solid sales and earnings gains again anticipated for fiscal 2007

MEDINA, OH — July 24, 2006 — RPM International Inc. (NYSE: RPM) today reported record sales for the fourth quarter and fiscal year ended May 31, 2006, and net losses for both periods as the result of a charge for establishing a substantial long-term asbestos liability reserve.

Fourth-Quarter Results

Record net sales of $909.2 million in the fourth quarter were up 20.5% from $754.4 million achieved a year ago, with strong performance from both of the company’s operating segments.

Asbestos charges totaled $335.0 million in the quarter, including a long-term reserve of $321.0 million and current reserves of $14.0 million. As a result, the net loss for the period was $142.0 million, or $1.21 per diluted share, compared to net income of $46.2 million, or $0.37 per diluted share in the fiscal 2005 fourth quarter, which included a $16.0 million asbestos charge.

Excluding the asbestos charges, RPM’s net income for the fourth quarter grew 29.0% to a record $73.6 million from $57.0 million in the fiscal 2005 fourth quarter, and diluted earnings per share grew 26.1%, to a record $0.58 from $0.46 a year ago.

The fourth-quarter loss before interest and taxes was $209.5 million, compared to earnings before interest and taxes (EBIT) of $84.2 million a year ago. Excluding the asbestos charges, EBIT in the fiscal 2006 fourth quarter grew 25.3% to $125.5 million from $100.2 million in the 2005 fourth quarter.

“This was a great quarter for RPM. Spring demand for our products and services was strong in both the industrial and consumer markets, generating organic sales growth in excess of 12%, including the benefit of higher average selling prices and unit volume growth. Our higher prices were able to better offset increased raw material costs this quarter, resulting in significant EBIT margin recovery,” said Frank C. Sullivan, RPM president and chief executive officer.

Fourth-Quarter Segment Sales and Earnings

Robust sales growth continued for RPM’s industrial segment, driven by ongoing strength in commercial and industrial markets. Industrial segment sales increased 28.4% to $536.9 million from $418.0 million in the 2005 fourth quarter. Of the increase, 13.2% was organic and 15.2% resulted from acquisitions, primarily the illbruck purchase. Industrial EBIT increased 28.1% to $68.9 million from $53.8 million a year ago.

Consumer segment sales increased 10.7%, as organic growth of 11.0% was partly offset by the sale of Thibaut Inc. on January 11, 2006. Consumer segment EBIT was up 27.4% to $72.3 million from $56.7 million in the fiscal 2005 fourth quarter.

Aside from the differences in asbestos charges, corporate/other expenses increased $5.3 million over the prior year’s fourth quarter, due mainly to higher health care costs for U.S. and Canadian employees and other growth-related employment costs. Despite this increase, total SG&A expenses declined as a percent of sales to 29.3% from 30.4% a year ago.

Fiscal 2006 Sales and Earnings

For the 2006 fiscal year, net sales increased 17.7% to a record $3.01 billion from $2.56 billion a year ago. The net loss for the year, including asbestos charges, of $76.2 million compared to net income of $105.0 million a year ago, including asbestos charges. The fiscal 2006 net loss per diluted share was $0.65, compared to earnings per diluted share of $0.86 in fiscal 2005.

The fiscal 2006 loss before interest and taxes of $81.1 million compared with EBIT of $199.1 million in fiscal 2005.

Excluding the asbestos charges, fiscal 2006 net income increased 8.8% to a record $168.1 million from $154.5 million, while earnings per diluted share were up 8.0% to a record $1.35 from $1.25 in fiscal 2005. EBIT increased 7.9% to $298.9 million from $277.1 million a year ago, prior to asbestos charges.

Industrial segment sales grew 25.7% for the year, to $1.81 billion from $1.44 billion. Industrial growth was 13.3% organic and 12.4% acquisition related, reflecting mainly the purchase of illbruck Sealant Systems on August 31, 2005. Industrial EBIT increased 20.8% to $202.9 million from $168.0 million a year ago.

Consumer segment sales increased organically 7.4%, to $1.20 billion from $1.11 billion a year ago. Consumer EBIT increased 8.2% to $159.3 million from $147.2 million in fiscal 2005.

“Most RPM business units posted solid sales gains for the year despite numerous challenges, including the impact of the Gulf Coast hurricanes and dramatic increases in raw material costs. A number of newer products and programs that we’ve seeded in recent years also contributed nicely to our growth, including service businesses and geographic expansions,” said Sullivan.

Cash Flow and Financial Position

RPM businesses generated cash from operations of $185.5 million in fiscal 2006, up 17.9% from $157.4 million a year ago. Capital spending for the year totaled $61.2 million, compared to depreciation of $56.5 million. Total debt was $876.6 million at the end of fiscal 2006, compared to $838.0 million a year ago. This increase resulted from acquisition costs, primarily illbruck, offset by the retirement of $150.0 million in 7.0% bonds that matured June 15, 2005. Due to the fiscal year loss brought about by the long-term asbestos reserve charge, stockholders’ equity declined to $925.9 million from $1.04 billion a year ago.

At May 31, 2006, RPM’s net debt-to-total capital ratio of 45.3% compared to 38.7% at May 31, 2005. “This ratio is well within our historic norms, and still provides the continued financial flexibility to pursue acquisitions over the course of the next fiscal year and beyond,” Sullivan said.

Asbestos Liability

As previously reported, RPM retained an independent consulting firm with expertise in asbestos valuation work to perform a comprehensive review of potential liability for future, unasserted asbestos claims. Based upon this study and review by the company’s Board and outside auditors, the company increased its existing asbestos reserve by $321 million (undiscounted) to cover the costs of future claims through May 2016.

“Based on our current outlook, we anticipate that the draw down of this reserve will be higher in its earlier years and decline over time, which is consistent with our recent experience,” Sullivan said. “While we may have to augment our reserves in the future, we believe this study reflects well on how we have managed this particular liability challenge, evidenced by this year’s lower costs. We are further heartened by an improving legal environment at the state level and greater public scrutiny of the abuses inherent in this litigation. Separately, we continue to aggressively pursue legal action against our insurers, which could result in certain prior and future costs being covered by third party insurance,” he said.

Related payments for indemnity and defense costs of $12.9 million this fourth quarter bring the 2006 fiscal-year total to $59.9 million, or 11.1% lower than the $67.4 million paid during fiscal 2005. The company took an additional $14.0 million charge this fourth quarter to increase its asbestos liability reserves to fully provide for known, in-house claims at year end. Total asbestos reserves on RPM’s May 31, 2006 balance sheet amounting to $421.3 million will be drawn down as expenditures are made for indemnity and defense costs in coming years, and adjusted when necessary.

Business Outlook

“We’re hopeful that the long-term asbestos liability reserve established in the fourth quarter will help alleviate the cloud of uncertainty that has somewhat dampened investor interest in RPM and obscured our otherwise strong fundamental performance over the past several years,” Sullivan said.

“The nature of RPM’s diversified and well-balanced product portfolio is not overly reliant on a particular industry or segment of the economy, and most of our annual sales are tied to maintenance, repair, upgrade and improvement applications, which also gives us confidence for continuing growth despite today’s climate of rising interest rates,” he said. “Our unit sales volume remains strong and gross margins are beginning to improve. However, we remain concerned about the direction of raw material costs in light of the current geopolitical climate and associated impacts on the price of oil and commodities in general, as well as other related costs. For fiscal 2007, we anticipate 8% to 10% sales growth and 10% and 12% earnings growth, subject to those issues.

“In addition, our acquisition program, which increased sales by 6.9% this past year, remains in full gear and we will continue to pursue appropriate strategic transactions,” Sullivan concluded.

Webcast and Conference Call Information

RPM management will host a conference call to further discuss these results beginning at 10:00 a.m. Eastern Time today. The call can be accessed by dialing 800-638-4817 or 617-614-3943 for international callers. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. The call, which will last approximately one hour, will be open to the public, but only financial analysts will be permitted to ask questions. The media and all other participants will be in a listen-only mode. For those unable to listen to the live call, a replay will be available from approximately 12:00 noon Eastern Time on July 24 until 11:59 p.m. Eastern Time on July 31, 2006. The replay can be accessed by dialing 888-286-8010 or 617-801-6888. The access code is 52631654. The call also will be available both live and for replay, and as a written transcript, via the Internet on the RPM web site at http://www.rpminc.com.

About RPM

RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings and sealants serving both industrial and consumer markets. RPM’s industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Day-Glo, Euco and Dryvit. RPM’s consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement, automotive and boat repair and maintenance, and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane, Bondo and Testors.

For more information, contact Glenn R. Hasman, vice president — finance and communications, at 330-273-8820 or ghasman@rpminc.com.

This press release contains “forward-looking statements” relating to the business of the company. These forward-looking statements, or other statements made by the company, are made based on management’s expectations and beliefs concerning future events impacting the company and are subject to uncertainties and factors (including those specified below) which are difficult to predict and, in many instances, are beyond the control of the company. As a result, actual results of the company could differ materially from those expressed in or implied by any such forward-looking statements. These uncertainties and factors include (a) general economic conditions; (b) the price, supply and capacity of raw materials, including assorted resins and solvents; packaging, including plastic containers; and transportation services, including fuel surcharges; (c) continued growth in demand for the company’s products; (d) legal, environmental and litigation risks inherent in the company’s construction and chemicals businesses and risks related to the adequacy of the company’s insurance coverage for such matters; (e) the effect of changes in interest rates; (f) the effect of fluctuations in currency exchange rates upon the company’s foreign operations; (g) the 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 the company’s ongoing acquisition and divestiture activities; (i) risks related to the adequacy of its contingent liability reserves, including for the company’s existing and future asbestos-related claims; and other risks detailed in the company’s other reports and statements filed with the Securities and Exchange Commission, including the risk factors set forth in the company’s prospectus and prospectus supplement included as part of the company’s Registration Statement on Form S-4 (File No. 333-120536), as the same may be amended from time to time. RPM does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.

# # #

CONSOLIDATED STATEMENTS OF INCOME
IN THOUSANDS, EXCEPT PER SHARE DATA

	AS REPORTED										ADJUSTED (a)
	Year Ended					Three Months Ended					Year Ended				Three Months Ended
	May 31,					May 31,					May 31,				May 31,
	2006			2005		2006			2005		2006		2005		2006		2005
						(Unaudited)					(Unaudited)
Net Sales	$	3,008,338		$	2,555,735	$	909,161		$	754,416	$	3,008,338	$	2,555,735	$	909,161	$	754,416
Cost of sales		1,756,770			1,449,184		517,311			424,557		1,756,770		1,449,184		517,311		424,557
Gross profit		1,251,568			1,106,551		391,850			329,859		1,251,568		1,106,551		391,850		329,859
Selling, general & administrative expenses		952,700			829,445		266,375			229,696		952,700		829,445		266,375		229,696
Asbestos charges		380,000			78,000		335,000			16,000
Interest expense, net		41,343			35,378		12,952			9,893		41,343		35,378		12,952		9,893
Income (loss) before income taxes		(122,475	)		163,728		(222,477	)		74,270		257,525		241,728		112,523		90,270
Provision (benefit) for income taxes		(46,270	)		58,696		(80,471	)		28,064		89,406		87,194		38,945		33,237
Net Income (Loss)	$	(76,205	)	$	105,032	$	(142,006	)	$	46,206	$	168,119	$	154,534	$	73,578	$	57,033
Basic earnings (loss) per share of common stock	$	(0.65	)	$	0.90	$	(1.21	)	$	0.39	$	1.44	$	1.32	$	0.63	$	0.49
Diluted earnings (loss) per share of common stock (b)	$	(0.65	)	$	0.86	$	(1.21	)	$	0.37	$	1.35	$	1.25	$	0.58	$	0.46
Average shares of common stock outstanding — basic		116,837			116,899		117,213			117,489		116,837		116,899		117,213		117,489
Average shares of common stock outstanding — diluted (b)		116,837			126,364		117,213			126,973		127,676		126,364		128,103		126,973

(a)	Adjusted figures presented remove the impact of the additional asbestos charges taken during each period presented.
(b)	Conversion of the net issuable common share equivalents and the shares related to convertible securities for the three months and year ended May 31, 2006 as-reported figures were not assumed, since the results would have been anti-dilutive.

SUPPLEMENTAL SEGMENT INFORMATION
IN THOUSANDS

	AS REPORTED												ADJUSTED (a)
	Year Ended						Three Months Ended						Year Ended						Three Months Ended
	May 31,						May 31,						May 31,						May 31,
	2006			2005			2006			2005			2006			2005			2006			2005
							(Unaudited)						(Unaudited)
Net Sales:
Industrial Segment	$	1,811,590		$	1,441,548		$	536,868		$	418,008		$	1,811,590		$	1,441,548		$	536,868		$	418,008
Consumer Segment		1,196,748			1,114,187			372,293			336,408			1,196,748			1,114,187			372,293			336,408
Total	$	3,008,338		$	2,555,735		$	909,161		$	754,416		$	3,008,338		$	2,555,735		$	909,161		$	754,416
Income (Loss) Before Income Taxes (b):
Industrial Segment
Income Before Income Taxes (b)	$	201,230		$	168,578		$	67,764		$	54,015		$	201,230		$	168,578		$	67,764		$	54,015
Interest (Expense), Net		(1,711	)		532			(1,108	)		255			(1,711	)		532			(1,108	)		255
EBIT (c)	$	202,941		$	168,046		$	68,872		$	53,760		$	202,941		$	168,046		$	68,872		$	53,760
Consumer Segment
Income Before Income Taxes (b)	$	159,147		$	147,601		$	72,121		$	56,894		$	159,147		$	147,601		$	72,121		$	56,894
Interest (Expense), Net		(142	)		415			(173	)		148			(142	)		415			(173	)		148
EBIT (c)	$	159,289		$	147,186		$	72,294		$	56,746		$	159,289		$	147,186		$	72,294		$	56,746
Corporate/Other
(Loss) Before Income Taxes (b)	$	(482,852	)	$	(152,451	)	$	(362,362	)	$	(36,639	)	$	(102,852	)	$	(74,451	)	$	(27,362	)	$	(20,639	)
Interest (Expense), Net		(39,490	)		(36,325	)		(11,671	)		(10,296	)		(39,490	)		(36,325	)		(11,671	)		(10,296	)
EBIT (c)	$	(443,362	)	$	(116,126	)	$	(350,691	)	$	(26,343	)	$	(63,362	)	$	(38,126	)	$	(15,691	)	$	(10,343	)
Consolidated
Income (Loss) Before Income Taxes (b)	$	(122,475	)	$	163,728		$	(222,477	)	$	74,270		$	257,525		$	241,728		$	112,523		$	90,270
Interest (Expense), Net		(41,343	)		(35,378	)		(12,952	)		(9,893	)		(41,343	)		(35,378	)		(12,952	)		(9,893	)
EBIT (c)	$	(81,132	)	$	199,106		$	(209,525	)	$	84,163		$	298,868		$	277,106		$	125,475		$	100,163

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

CONSOLIDATED BALANCE SHEETS
IN THOUSANDS

	May 31, 2006			May 31, 2005
Assets
Current Assets
Cash and short-term investments	$	108,616		$	184,140
Trade accounts receivable		671,197			571,649
Allowance for doubtful accounts		(20,252	)		(18,565	)
Net trade accounts receivable		650,945			553,084
Inventories		399,014			334,404
Deferred income taxes		48,885			40,876
Prepaid expenses and other current assets		161,758			156,491
Total current assets		1,369,218			1,268,995
Property, Plant and Equipment, at Cost		887,276			775,564
Allowance for depreciation and amortization		(442,584	)		(385,586	)
Property, plant and equipment, net		444,692			389,978
Other Assets
Goodwill		750,635			663,224
Other intangible assets, net of amortization		321,942			275,744
Other		93,731			49,534
Total other assets		1,166,308			988,502
Total Assets	$	2,980,218		$	2,647,475
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	333,684		$	274,573
Current portion of long-term debt		6,141			97
Accrued compensation and benefits		136,384			95,667
Accrued loss reserves		66,678			65,452
Asbestos-related liabilities		58,925			55,000
Other accrued liabilities		111,688			84,550
Total current liabilities		713,500			575,339
Long-Term Liabilities
Long-term debt, less current maturities		870,415			837,948
Asbestos-related liabilities		362,360			46,172
Other long-term liabilities		108,002			71,363
Deferred income taxes		—			78,914
Total long-term liabilities		1,340,777			1,034,397
Total liabilities		2,054,277			1,609,736
Stockholders’ Equity
Preferred stock; none issued
Common stock (outstanding 118,743; 117,554)		1,187			1,176
Paid-in capital		545,422			526,434
Treasury stock, at cost
Accumulated other comprehensive income		29,839			10,004
Retained earnings		349,493			500,125
Total stockholders’ equity		925,941			1,037,739
Total Liabilities and Stockholders’ Equity	$	2,980,218		$	2,647,475

CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS

	Year Ended May 31,
	2006			2005
Cash Flows From Operating Activities
Net income (loss)	$	(76,205	)	$	105,032
Depreciation and amortization		74,299			65,992
Items not affecting cash and other		6,610			3,240
Changes in operating working capital		(25,881	)		(24,486	)
Changes in asbestos-related liabilities, net of tax		206,666			7,574
		185,489			157,352
Cash Flows From Investing Activities
Capital expenditures		(61,155	)		(55,609	)
Acquisition of businesses, net of cash acquired		(174,625	)		(20,100	)
Purchases of marketable securities		(59,416	)		(44,309	)
Proceeds from the sale of marketable securities		50,105			39,154
Proceeds from the sale of assets		9,282			5,426
Other		1,428			(530	)
		(234,381	)		(75,968	)
Cash Flows From Financing Activities
Additions to long-term and short-term debt		186,772			200,153
Reductions of long-term and short-term debt		(152,862	)		(79,665	)
Cash dividends		(74,427	)		(68,933	)
Exercise of stock options		10,636			12,543
		(29,881	)		64,098
Effect of Exchange Rate Changes on Cash and Short-Term Investments		3,249			4,099
Increase (Decrease) in Cash and Short-Term Investments	$	(75,524	)	$	149,581