MEDINA, Ohio, July 28 /PRNewswire-FirstCall/ -- RPM International Inc.
(NYSE: RPM) today reported continued growth in sales and operating results
from both operating segments for the fourth quarter and full fiscal year,
ended May 31, 2003. Fiscal year net sales grew 5 percent to a record
$2.083 billion, and earnings, before a charge for asbestos related costs, grew
to record levels as well. Net income increased 21 percent to $122.8 million
and diluted earnings per share improved by 9 percent to $1.06, both before an
$88 million after-tax charge for asbestos liability. Including the charge,
RPM reported net income of $35.3 million and diluted earnings per share of
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"It is difficult for us to estimate our potential new asbestos claims and
costs beyond the next couple of years given a number of recent events
including positive changes in state liability laws, particularly in a number
of key states related to our historic asbestos activity," stated Frank C.
Sullivan, CEO. "Over time, these changes at the state level should reduce the
number of claims and our ultimate costs, though it is still too soon to know
the full impact. There are other state tort reform initiatives underway, and
if the recently introduced Senate bill (S.1125 - FAIR Act) eventually becomes
law, this whole picture will change significantly. We obviously can't predict
when new laws may be enacted or what their effect may be on RPM," Sullivan
Accordingly, as previously indicated and anticipated, RPM recorded a
charge as of May 31, 2003 for its known asbestos claims and an estimated
provision for foreseeable future claims. The $88 million after-tax charge
impacted diluted earnings per share by ($0.76).
Sullivan continued, "We believe this asbestos reserve will be sufficient
to cover our asbestos related costs for approximately three years. We will
regularly evaluate the adequacy of this reserve and related cash flow
implications in light of actual claims experience, the impact of state law
changes and the evolving nature of federal legislative efforts to address
asbestos litigation, and will make and communicate appropriate adjustments as,
and when, necessary."
Fiscal Year Results
For the 2003 fiscal year, RPM reported record net sales of $2.083 billion,
a 5 percent improvement, compared with sales of $1.986 billion during fiscal
2002. The industrial and consumer segments reported sales growth of 6 percent
and 4 percent, respectively, including several smaller acquisitions and
generally favorable foreign exchange rates throughout the year.
Excluding the asbestos charge, fiscal 2003 net income increased 21 percent
to $122.8 million and diluted earnings per share improved 9 percent to $1.06,
compared with net income of $101.6 million and diluted earnings per share of
$0.97 in fiscal 2002. The charge to accrue for estimated asbestos related
liabilities resulted in net income of $35.3 million for the 2003 fiscal year
and diluted earnings per share of $0.30. The 11.5 million common shares
issued in connection with the March 2002 follow-on equity offering had a
dilutive effect of ($0.01) on reported diluted earnings per share in fiscal
Net sales for the fourth quarter were a record $589.5 million, an increase
of 6 percent against sales of $557.4 million in the fiscal 2002 fourth
quarter. Industrial segment sales increased 8 percent, reaching
$304.1 million, while consumer segment sales were ahead 4 percent, to
$285.4 million. Organic sales growth of 2 percent and 1 percent,
respectively, was complemented by the April 1, 2003 acquisition of Koch
Waterproofing Solutions and several other smaller acquisitions, plus favorable
foreign exchange rates.
Excluding the asbestos charge, fourth quarter net income increased 19
percent to $44.1 million and diluted earnings per share increased 15 percent
to $0.38, compared with net income of $37.2 million and diluted earnings per
share of $0.33 in the fiscal 2002 fourth quarter. The charge to accrue for
estimated asbestos related liabilities resulted in a net loss during the
fiscal 2003 fourth quarter of ($43.4) million and diluted earnings (loss) per
share of ($0.38). The 11.5 million common shares issued in connection with
the March 2002 follow-on equity offering had an accretive effect of $0.01 on
reported diluted earnings (loss) per share in the fourth quarter of fiscal
"We continue to be pleased that both of our operating segments have
managed to generate positive performance results despite a still-weak economy.
This is a great reminder that the asbestos issue is not impairing our
operating managers' ability to drive growth in their businesses. When the
asbestos issue fades from prominence in its effect on our results and our
discussions of our results, RPM will clearly be seen as the strong, consistent
performer that it is, and will continue to be," Sullivan stated.
"Despite the economic challenges we still face, RPM is focused on
delivering solid single-digit revenue growth and 10-12 percent earnings growth
in this new fiscal year," added Sullivan.