Edgar Filing: RPM INC/OH/

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 22, 2002

REGISTRATION NO. 333-77028
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 4

TO
FORM S-3
REGISTRATION STATEMENT
UNDER

THE SECURITIES ACT OF 1933

RPM, INC.
(Exact Name of Registrant as Specified in Its Charter)

OHIO 34-6550857
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

P.O. BOX 777
2628 PEARL ROAD
MEDINA, OHIO 44258
(330) 273-5090
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

P. KELLY TOMPKINS, ESQ. COPY TO:
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY EDWARD W. MOORE, ESQ.
RPM, INC. CALFEE, HALTER & GRISWOLD LLP
P.O. BOX 777 1400 MCDONALD INVESTMENT CENTER
2628 PEARL ROAD 800 SUPERIOR AVENUE
MEDINA, OHIO 44258 CLEVELAND, OHIO 44114-2688
(330) 273-5090 (216) 622-8200

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by the Registrant.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS SUPPLEMENT DATED MARCH 22, 2002

PROSPECTUS SUPPLEMENT
------------------------------------
(to prospectus dated , 2002)

10,000,000 SHARES

[RPM LOGO]

COMMON SHARES
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RPM, Inc. is selling all of the common shares in this offering.

The common shares are listed on the New York Stock Exchange under the symbol
"RPM". On March 21, 2002, the last sale price of the shares as reported on the
New York Stock Exchange was $15.30 per share.

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INVESTING IN OUR COMMON SHARES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 3 OF THE ACCOMPANYING PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PER SHARE TOTAL
--------- -----

Public offering price $ $
Underwriting discount $ $
Proceeds to RPM, Inc., before expenses $ $

The underwriters may purchase up to an additional 1,500,000 shares from us at
the public offering price less underwriting discount to cover over-allotments,
if any.

The underwriters are severally underwriting the shares being offered. The
underwriters expect to deliver the common shares against payment in New York,
New York on , 2002.
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Joint Lead and Book-Running Managers

JPMORGAN LEHMAN BROTHERS
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MERRILL LYNCH & CO.
ROBERT W. BAIRD & CO.
MCDONALD INVESTMENTS INC.
, 2002

[Reserved for Artwork]

The RPM logo is centered on the inside front cover page that is organized
horizontally into two sections. The words "Consumer Division" and "Industrial
Division" are printed above and below the RPM logo, respectively. A border of
photographs surrounds the logo. The Consumer Division products appear above the
RPM logo; the Industrial Division products are shown below the RPM logo.
Starting from the upper left-hand corner of the page, the first photograph shows
a man using Zinnser's primer-sealer on the exterior of a home. The Zinsser logo
is superimposed on the top left-hand corner and the words "Primer-Sealers"
appear below the picture. Moving clockwise, the next photograph is of a woman
applying a product onto the arm of an outdoor metal chair. The Rust-Oleum logo
is superimposed in the lower left-hand corner and the words "Paints & Coatings"
are printed beneath the photograph. The top right-hand corner of the page shows
a picture of various cans, pails and tubes, as well as a close-up of DAP's
paintable silicone sealant being applied. The DAP logo is superimposed on the
top right-hand corner and the words "Adhesives & Sealants" are printed beneath
the picture. Immediately below this is a photograph of two model cars, a model
airplane, numerous craft paint bottles and other supplies. The Testors logo is
superimposed in the lower right-hand corner and the words "Hobby & Craft" appear
below the photograph. Next is a photograph of a building with the Dryvit logo
superimposed in the upper right-hand corner and the title "Exterior Insulation"
printed beneath the photo. Still moving clockwise, the next photograph is of a
drilling platform in the ocean. The Carboline logo is superimposed in the lower
right-hand corner and the words "Corrosion Control" appear beneath the
photograph. Immediately to the left is a photograph of the inside of a factory.
The Stonhard logo is superimposed in the lower right-hand corner and the title
"Flooring Systems" appears beneath the photograph. A photograph of an aerial
view of several commercial buildings occupies the lower left-hand corner of the
page. The Tremco logo is superimposed in the upper right-hand corner and the
words "Roofing Systems" are printed below the picture. Above this is a
photograph of an industrial walkway with railings. The Fibergrate logo is
superimposed in the top center and the words "Industrial Gratings" appear below
the picture. Finally, there is a picture of a pair of fluorescent yellow running
shoes. The side of the first shoe and the sole of the second shoe are visible.
The Day-Glo logo is superimposed in the lower right-hand corner and the title
"Fluorescent Pigments" appears below the photograph.

S-2

TABLE OF CONTENTS

PAGE
----

PROSPECTUS SUPPLEMENT
Summary of Offering......................................... S-4
Caution Regarding Forward-Looking Statements................ S-11
Use of Proceeds............................................. S-11
Price Range of Common Shares and Dividends.................. S-12
Capitalization.............................................. S-13
Selected Consolidated Financial Data........................ S-14
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. S-16
Industry Overview........................................... S-25
Business.................................................... S-27
Management.................................................. S-39
Underwriting................................................ S-42
Legal Matters............................................... S-44
Experts..................................................... S-44
Index to Financial Statements............................... F-1
PROSPECTUS
About this Prospectus....................................... 2
The Company................................................. 2
Risk Factors................................................ 3
Where You Can Find More Information......................... 6
Caution Regarding Forward-Looking Statements................ 7
Ratio of Earnings to Fixed Charges.......................... 7
Use of Proceeds............................................. 7
Description of our Common Shares............................ 7
Description of Debt Securities.............................. 12
Description of Warrants..................................... 16
Description of the Stock Purchase Contracts and Stock
Purchase Units............................................ 17
Plan of Distribution........................................ 18
Validity of Securities...................................... 19
Experts..................................................... 19

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You should only rely on the information contained in this prospectus
supplement and the accompanying prospectus to which we have referred you. We
have not authorized anyone to provide you with information that is different.
This prospectus supplement and the accompanying prospectus may only be used
where it is legal to sell these securities. The information in this prospectus
supplement and the accompanying prospectus may only be accurate on the date of
this prospectus supplement.

This prospectus supplement contains references to certain of our
trademarks. '33'(R), Alex Plus(R), American Accents(R), B-I-N(R), Bondex(R),
Bondo(R), Bulls Eye 1-2-3(R), Carboline(R), Chemspec(R), Cover-Stain(R), DAP(R),
Day-Glo(R), Drydex(R), Dryvit(R), Durabond(R), DYmeric(R), Euco(R),
Fibergrate(R), Flecto(R), Geoflex(R), Kop-Coat(R), Kwik Seal(R),
Mantrose-Haeuser(R), Mameco(R), Mohawk and Design(R), Papertiger(R), Plasite(R),
Plastic Wood(R), Rust-Oleum(R), Shieldz(R), Spectrem(R), Stonhard(R),
Stops-Rust(R), Testors(R), TCI(R), The Euclid Chemical Company(R), Thibaut(R),
Tremclad(R), Tremco(R), Varathane(R), Vulkem(R), Woolsey(R), Z-Spar(R) and
Zinsser(R) are registered trademarks of our subsidiary corporations.
Bondo/Mar-Hyde(TM), Chemical Coatings(TM), Crackle Creations(TM), CCI(TM),
Design/Craft(TM), DIF(TM), Dynatron/Bondo(TM), Hard Hat(TM), Hy-Shield(TM),
MarketScope(TM), Painter's Touch(TM), Pettit(TM), Renewal(TM), Republic(TM),
Star(TM), SideWinder(TM) and Westfield(TM) are trademarks of our subsidiary
corporations. Our other trademarks are Watco(R)/Watco Ltd., Weldwood(R)/Champion
International Corporation and Wolman(R)/Hickson Corp. All other trademarks or
tradenames referred to in this prospectus supplement are the property of their
respective owners.

S-3

SUMMARY OF OFFERING

This summary highlights information contained elsewhere in this
prospectus supplement and the accompanying prospectus. Because it is a summary,
it may not contain all of the information that is important to you. To
understand this offering fully, you should read this entire prospectus
supplement and the accompanying prospectus carefully, including the consolidated
financial statements included elsewhere in this prospectus supplement and the
documents incorporated by reference into the accompanying prospectus.

OVERVIEW OF RPM

RPM, Inc. is a worldwide leader in high quality specialty paints,
protective coatings and systems, sealants and adhesives focused on the
maintenance and improvement needs of both the industrial and consumer markets.
Our success is due to our balanced portfolio of businesses, as well as to our
strong management team and entrepreneurial culture, which provides our business
units the flexibility necessary to achieve leadership positions in high margin,
specialty niche markets. We also attribute our success to our position as a
well-recognized industry consolidator, as demonstrated by our completion of 52
acquisitions since 1991. Our strategy is to build upon our history of strong
financial performance and operational success through: organic growth via new
product introductions and market expansion; acquisitions of entrepreneurial,
synergistic and strategic businesses and product lines; and ongoing margin
improvement initiatives.

Our family of products includes many well-known brand names such as
Carboline, DAP, Day-Glo, Flecto, Rust-Oleum, Stonhard, Tremco and Zinsser. Our
portfolio of businesses is organized into two segments, industrial and consumer.
Our Industrial Division constitutes approximately 55 percent of sales and
includes maintenance and protection products for roofing and waterproofing
systems, flooring, corrosion control and other specialty applications. Our
Consumer Division constitutes approximately 45 percent of sales and includes
rust-preventative, special purpose and decorative paints, caulks, sealants,
primers and other branded consumer products. We sell our products in
approximately 130 countries with approximately 30 percent of sales generated in
international markets. For the twelve month period ending November 30, 2001, we
generated $1.97 billion in sales.

Industrial Division

The Industrial Division has operations primarily in North America and
Europe as well as a presence in regions of South America, Asia, South Africa,
Australia and the Middle East. Our industrial businesses, which account for the
majority of our international sales, sell directly to contractors, distributors
and end-users, such as industrial manufacturing facilities, educational and
governmental institutions and commercial establishments. Our Industrial Division
generated approximately $1.07 billion in sales for the twelve-month period ended
November 30, 2001 and includes the following major product lines in which we
are:

- a leading North American manufacturer and supplier of institutional
roofing systems and sealants used in building protection,
maintenance and weatherproofing applications marketed under our
well-established Tremco, Republic, Vulkem and DYmeric brand names;

- the worldwide leading manufacturer and supplier of high-performance
polymer flooring systems for industrial, institutional and
commercial facility floor surfaces under the Stonhard brand name. We
are also a leading manufacturer and supplier of molded and pultruded
fiberglass reinforced plastic gratings used for industrial
platforms, staircases and walkways marketed under the Fibergrate
brand name;

- a leading global manufacturer and supplier of high-performance,
heavy-duty corrosion control coatings and a well-recognized
manufacturer and supplier of structural and fireproofing protection
products and secondary containment linings for a wide variety of
industrial infrastructure applications under the Carboline and
Plasite brand names; and

S-4

- the leading North American manufacturer and supplier of exterior
insulating finishing systems, including textured finish coats,
sealers and variegated aggregate finishes marketed under the Dryvit
brand name.

Consumer Division

The Consumer Division manufactures and markets professional and
do-it-yourself, or DIY, products for home maintenance and improvement, auto
repair and maintenance and hobby and leisure applications. The Consumer
Division's major manufacturing and distribution operations are located in North
America. We market our products through a wide range of distribution channels
including home improvement centers, mass merchandisers, hardware stores, paint
stores and distributors. Our Consumer Division generated approximately $0.9
billion in sales in the twelve month period ended November 30, 2001 and includes
the following major product lines in which we are:

- the leading manufacturer and supplier of small project
rust-preventative, decorative and assorted specialty paints and
coatings for the DIY and professional markets in the U.S. and Canada
through our wide assortment of Rust-Oleum products. Leading brands
within the Rust-Oleum portfolio include Stops-Rust, American
Accents, Painter's Touch, Tremclad, Hard Hat, Flecto and Varathane;

- the leading North American manufacturer and supplier of a complete
line of caulks and sealants, patch and repair products and adhesives
for the home improvement, repair and construction markets through
our wide assortment of DAP products. Leading brands within the DAP
portfolio include Alex Plus, Kwik Seal, Weldwood, '33' Glazing and
Plastic Wood; and

- a leading independent manufacturer and supplier of a broad line of
specialty primers and sealers marketed under the Zinsser, B-I-N,
Bulls Eye 1-2-3 and Cover-Stain brand names, as well as a
manufacturer and supplier of wallcovering removal and preparation
coatings under the principal brands of DIF, Papertiger and Shieldz.

OUR BUSINESS STRATEGY

From 1947 to 2001, we recorded 54 consecutive years of sales growth with
earnings growth in 52 of those years interrupted only by our strategic
restructuring initiated in fiscal 2000 to reduce costs across our operations.
Our business objective continues to be to profitably grow our businesses within
new and existing domestic and foreign markets where we can achieve and maintain
significant market leadership with our high quality products. As a result, our
internal growth and acquisition strategies have consistently focused on
specialty, niche markets where we can acquire or enhance a leading market
position. We pursue this goal with an entrepreneurial strategy and structure
that allows us to tailor our products and services and respond quickly to
customer and market needs. Key elements of our strategy include the following:

- FOCUS ON DRIVING BASE BUSINESS GROWTH. We manage our operations for growth on
a decentralized basis to provide our operating units the flexibility to
perform in an entrepreneurial environment, build specific brand identity and
provide focused service capabilities in order to respond quickly in the
markets they serve. In the Industrial Division, drivers of our internal growth
include introducing value-added and cost-effective solutions, cross-selling
our product offerings and creating new markets for existing products. In the
Consumer Division, drivers of our internal growth include aligning our
operating units and products with the fastest growing customers and
distribution channels, expanding through select product line extensions and
introducing new products.

- WELL-RECOGNIZED INDUSTRY CONSOLIDATOR. We are a leading industry consolidator
and operate as a holding company for the businesses we acquire. We typically
retain the management teams of the companies we acquire and endeavor to
maintain management's operational independence at the subsidiary level, yet we
have demonstrated our ability, when appropriate, to integrate businesses to
improve the operating results of the acquired companies.

S-5

- ENHANCE PROFITABILITY VIA OPERATIONAL IMPROVEMENTS. We pursue initiatives to
enhance profitability by lowering our operating costs through focused
corporate leadership and operating company support. In August 1999, we
launched a comprehensive restructuring program aimed at permanently reducing
our fixed costs by more than $23 million. The restructuring, combined with
additional workforce reductions in response to slower economic conditions, is
believed to be generating savings in excess of management's initial
objectives. We also regularly review and evaluate our portfolio of businesses
based on various strategic, operational and financial performance criteria. In
addition, the combination of our internal growth and acquisitions over the
years has enabled us to take advantage of enhanced purchasing power for raw
materials and packaging. All of these actions are an integral part of our
efforts to leverage earnings growth.

OUR COMPETITIVE STRENGTHS

- GLOBAL LEADER IN MARKETS SERVED. We maintain the number one or two market
position in many of the markets we serve. We believe that customers of our
Industrial Division value our high quality products as well as our ability to
supply multiple products and customized solutions. In our Consumer Division,
we have developed and maintain our market leadership positions by building
upon our well-recognized brand name products and sales, marketing and service
organizations that strive to ensure that our product lines and product
development efforts are aligned with our customer needs.

- BALANCED PORTFOLIO OF LEADING BRAND NAMES. Our balanced product portfolio
contains some of the most well-recognized brands in the industrial and
consumer markets in which we compete. Our leading brands include Carboline,
DAP, Day-Glo, Flecto, Rust-Oleum, Stonhard, Tremco and Zinsser. We believe
that many of our brands are recognized in the markets as leaders in quality
and reliability providing us with important competitive advantages with
respect to introducing new products, maintaining or gaining market share and
developing a stable customer base. We also believe our balanced portfolio of
businesses, with their focus on maintenance, repair and improvement
applications, enables us to better weather economic cycles because our
exposure is spread across a wide range of industries, sales channels and
end-users.

- VALUE-ADDED CUSTOMER-ORIENTED SOLUTIONS. Our operating companies have
developed specialized sales, marketing and technical service organizations
that maintain close relationships with our customers to provide unique
solutions to their needs. We have not only worked to build a reputation for
customer responsiveness, but have also promoted product and brand development.
Examples of these solutions are as follows:

- Stonhard has developed and installed proprietary electrostatic
dissipating flooring systems for a leading worldwide
microelectronics manufacturer; and

- Rust-Oleum has been a pioneer in the home improvement market with
its MarketScope category management concept, which optimizes a
retailer's sales potential, shelf space and product offerings by
tailoring customer displays to match regional or local consumer
buying patterns.

- STRONG MANAGEMENT TEAM AND ENTREPRENEURIAL SPIRIT. Since our founding in 1947,
we have operated under a basic business philosophy -- "hire the best people
you can find, create an atmosphere that will keep them, and then let them do
their jobs." We have sustained a culture that balances an entrepreneurial
spirit with disciplined corporate oversight. Most of the members of our
operating management team have joined us as a result of significant
acquisitions and were either founders or second generation family members of
the founders of these acquired businesses. Our decentralized structure and
incentive-based compensation philosophy have contributed to our growth for the
past 50 years.

S-6

RISK FACTORS

For a discussion of some of the risks you should consider before
purchasing our common shares, see "Risk Factors" beginning on page 3 of the
accompanying prospectus, which include the following risks:

- The industry in which we operate is highly competitive and some of our
competitors may be larger and may have better resources than we do;

- 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 these
customers could harm our business;

- Many of our customers operate in cyclical industries and downward economic
cycles may reduce our business;

- If our efforts in acquiring/integrating other companies or product lines fail,
our business may not grow;

- We have a significant amount of indebtedness;

- We derive a substantial portion of our revenues from foreign markets, which
subjects us to additional business risks;

- Fluctuations in the supply and prices of raw materials could negatively impact
our financial results;

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

- The chemical and construction products industries we serve inherently expose
us to potential significant litigation-related costs; and

- Environmental laws and regulations could subject us to significant future
liabilities.
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Our principal executive offices are located at 2628 Pearl Road, Medina,
Ohio 44258. Our telephone number is (330) 273-5090. Our Internet address is
www.rpminc.com. The information contained on our website is not part of this
prospectus supplement and is not incorporated by reference in this prospectus
supplement or the accompanying prospectus.

S-7

THE OFFERING

Common Shares offered (1)(2).......................... 10,000,000 shares

Common Shares to be outstanding after the offering,
net of treasury shares (3).......................... 112,819,226 shares

Use of proceeds....................................... To repay indebtedness

New York Stock Exchange symbol........................ RPM

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(1) Does not include 1,500,000 common shares that we will sell if the
underwriters exercise their over-allotment option in full. Some of the
disclosures in this prospectus supplement will be different if the underwriters
exercise their option. Unless otherwise indicated, the information in this
prospectus supplement assumes that the underwriters will not exercise their
option.

(2) The common shares offered pursuant to this prospectus supplement
will be registered pursuant to a $300 million shelf registration statement on
Form S-3. After the sale of 10,000,000 common shares in this offering at an
assumed offering price of $15.30 per share (the last reported sale price on
March 21, 2002), we will be eligible to sell at a future date up to an
additional $147 million in securities under our shelf registration statement.

(3) Based on the number of shares outstanding as of February 28, 2002,
not including 8,333,765 shares held in treasury. Excludes, as of February 28,
2002, (a) 6,626,300 common shares issuable upon the exercise of outstanding and
unexercised options, and (b) 3,103,297 shares available for future issuance
under our stock option plans.

S-8

SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data shown below are as of and for
the three fiscal years ended May 31, 1999, 2000 and 2001 and for the six months
ended November 30, 2000 and 2001. The information for the three fiscal years
ended May 31, 1999, 2000 and 2001 is derived from our consolidated financial
statements for such years, which have been audited by Ciulla, Smith & Dale, LLP,
our independent auditors. The summary historical data for the six months ended
November 30, 2000 and 2001 are derived from our unaudited consolidated financial
statements for the respective periods. In the opinion of our management, the
unaudited consolidated financial statements reflect all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the results of operations and financial position of our company as of the date
of and for the periods presented. Operating results for the six months ended
November 30, 2001 are not necessarily indicative of the results that may be
expected for the entire fiscal year ending May 31, 2002. You should read this
information in conjunction with "Capitalization," "Selected Consolidated
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and our consolidated financial statements and
related notes included elsewhere in this prospectus supplement.

SIX MONTHS ENDED
FISCAL YEAR ENDED MAY 31, NOVEMBER 30,
------------------------------- ----------------------
1999 2000 2001 2000(a)(b) 2001
-------- -------- -------- ---------- --------
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Net sales............................... $1,720.6 $1,962.4 $2,007.8 $1,054.8 $1,021.2
Cost of sales........................... 927.1 1,099.6 1,127.8 570.3 548.6
-------- -------- -------- -------- --------
Gross profit............................ 793.5 862.8 880.0 484.5 472.6
Selling, general & administrative
expenses (c).......................... 601.1 687.2 713.3 377.1 355.7
Restructuring & asset impairment
charge................................ 0.0 52.0 0.0 0.0 0.0
SFAS 142 adjustment for amortization.... -- -- -- 11.1(a) --
Interest expense, net................... 32.8 51.8 65.2 33.7 24.4
-------- -------- -------- -------- --------
Income before income taxes.............. 159.6 71.8 101.5 84.8(a) 92.5
Provision for income taxes.............. 65.1 30.8 38.5 28.4(a) 31.4
-------- -------- -------- -------- --------
Net income.............................. $ 94.5 $ 41.0 $ 63.0 $ 56.4(a) $ 61.1
======== ======== ======== ======== ========
Earnings per share (basic).............. $ 0.87 $ 0.38(d) $ 0.62 $ 0.55(a) $ 0.60
Earnings per share (diluted)............ $ 0.86 $ 0.38(d) $ 0.62 $ 0.55(a) $ 0.60
Dividends per share..................... $ 0.4650 $ 0.4850 $ 0.4980 $ 0.2475 $ 0.2500
Average shares outstanding (basic)...... 108.7 107.2 102.2 102.2 102.3
Diluted shares outstanding (diluted).... 111.4 107.4 102.2 102.2 102.5
OTHER DATA:
EBIT (e)................................ $ 192.4 $ 183.5(g) $ 166.7 $ 118.5(a) $ 116.9
EBITDA (f).............................. $ 254.5 $ 262.7(g) $ 248.2 $ 146.1 $ 145.7
EBITDA Margin......................... 14.8% 13.4% 12.4% 13.9% 14.3%
Depreciation and amortization........... $ 62.1 $ 79.2 $ 81.5 $ 27.6 $ 28.8
Cash flows from operating activities.... 117.2 101.7 73.5 45.5 94.2
Cash flows from (used in) investing
activities............................ (98.1) (338.1) (18.0) (30.7) (13.1)
Cash flows from (used in) financing
activities............................ (40.2) 248.0 (62.8) (15.3) (59.4)
Capital expenditures.................... 63.4 63.2 54.1 29.1 13.1

S-9

MAY 31, NOVEMBER 30, 2001
------------------------------ ---------------------------
1999 2000 2001 actual as adjusted (h)
-------- -------- -------- -------- ----------------
(UNAUDITED)
(IN MILLIONS)

BALANCE SHEET DATA:
Cash and cash equivalents............. $ 19.7 $ 31.3 $ 23.9 $ 45.6 $ 45.6
Other current assets.................. 685.7 753.8 795.5 726.8 726.8
Working capital....................... 402.9 408.9 443.7 349.3 454.3
Property, plant and equipment, net.... 339.7 366.2 362.0 353.0 353.0
Total assets.......................... 1,737.2 2,099.2 2,078.5 2,018.2 2,018.2
Current and long-term debt............ 585.9 964.3 962.8 928.5 783.2
Shareholders' equity.................. 742.9 645.7 639.7 677.1 822.4

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(a) Adjusted for the application of Statement of Financial Accounting Standards,
or SFAS, No. 142, effective June 1, 2001, which requires that companies
cease amortization of goodwill and indefinite-lived intangible assets, while
also reviewing balances annually for impairment, or more frequently if
impairment indicators arise. Amortization of goodwill had been included in
selling, general and administrative expenses. Reported net income and
earnings per share (basic and diluted) were $45.7 million and $0.45,
respectively. Prior years have not been adjusted to reflect the accounting
change.

(b) Certain reclassifications have been made to provide consistency of account
classifications between segments and to conform with the current year
presentation. We have reclassified certain internal distribution costs from
cost of sales to selling, general and administrative expenses and a portion
of those costs are offset by the movement of certain employee benefits costs
out of selling, general and administrative expenses and into cost of sales.
For the six month period ended November 30, 2000, the net effect of the
reclassification of these expenses resulted in the movement of approximately
$16 million from cost of sales to selling, general and administrative
expenses.

(d) Excluding the effect of the restructuring and asset impairment charges and
related inventory write-down, fiscal year 2000 basic and diluted earnings
per share would have been $0.73.

(e) EBIT is defined as earnings before interest and taxes.

(f) EBITDA is defined as earnings before interest and taxes plus depreciation
and amortization. EBITDA is presented because it is a widely accepted
financial indicator used by certain investors and analysts to analyze and
compare companies on the basis of operating performance. EBITDA is not
intended to represent cash flows for the period, nor is it presented as an
alternative to operating income or as an indicator of operating performance.
EBITDA should not be considered in isolation, but with Generally Accepted
Accounting Principles in the U.S., and it is not indicative of operating
income or cash flow from operations as determined by those principles. Our
method of computation may or may not be comparable to other similarly titled
measures of other companies. EBITDA may not be indicative of our historical
operating results nor is it meant to be predictive of potential future
results.

(g) Fiscal year 2000 EBIT and EBITDA exclude restructuring and asset impairment
charges totaling $52.0 million and a related inventory write-down charge of
$7.9 million included in cost of sales.

(h) The as adjusted column below reflects the sale of 10,000,000 common shares
in this offering at an assumed offering price of $15.30 per share (the last
reported sale price on March 21, 2002) after deducting the underwriting
discount and estimated offering expenses that we will pay.

S-10

CAUTION REGARDING
FORWARD-LOOKING STATEMENTS

This prospectus supplement, the accompanying prospectus and the
documents incorporated by reference herein, contain forward-looking statements
regarding our plans, expectations, estimates and beliefs. Forward-looking
statements are typically identified by words such as "believes," "anticipates,"
"estimates," "expects," "intends," "will," "may" and other similar expressions.
These forward-looking statements may include, among other things, projections of
our future financial performance, our anticipated growth and anticipated trends
in our businesses. These statements are only predictions, based on our current
expectations about future events. Although we believe the expectations reflected
in the forward-looking statements are reasonable, we cannot guarantee future
results, performance or achievements or that predictions or current expectations
will be accurate. These forward-looking statements involve risks and
uncertainties, and our actual results, performance or achievements could differ
materially from those expressed or implied by the forward-looking statements.
These and other factors are discussed in the accompanying prospectus under "Risk
Factors," as well as under the section entitled "Forward-Looking Statements" in
"Management's Discussion and Analysis" in our 2001 Annual Report to Shareholders
and similar sections in the other documents incorporated herein by reference. We
encourage you to read these sections carefully. We disclaim any obligation to
subsequently revise any forward-looking statements to reflect events or
circumstances after the date of such statements.

USE OF PROCEEDS

We estimate that the net proceeds to us from this offering of common
shares will be approximately $145.3 million ($167.2 million if the underwriters
exercise their over-allotment option in full) after deducting the estimated
underwriting discount and other expenses of this offering. We plan to use the
net proceeds that we receive in this offering to reduce our bank debt, including
repaying portions of the following indebtedness:

- we had $200 million outstanding as of November 30, 2001 under our
one-year term loan, which expires on July 12, 2002 and bears
interest tied to LIBOR. As of November 30, 2001, the term loan, of
which $105 million is deemed short-term indebtedness, had an
interest rate equal to 2.975 percent. We borrowed the money
outstanding under this term loan primarily to refinance a $200
million, 364-day revolving credit facility which we had outstanding
at that time; and

- we had $405 million in the aggregate outstanding as of November 30,
2001 under our $500 million, 5-year revolving credit facility, which
expires on July 14, 2005 and bears interest tied to LIBOR. Of the
total outstanding amount, as of November 30, 2001, $300 million had
an interest rate of 4.32 percent and $105 million had an interest
rate of 2.955 percent.

As of February 28, 2002, total debt amounted to approximately $900
million, of which $575 million is outstanding under the above credit facilities.

S-11

PRICE RANGE OF COMMON SHARES AND DIVIDENDS

Our common shares are traded on the New York Stock Exchange under the
symbol "RPM." The following table sets forth the high and low sale prices on the
New York Stock Exchange for the periods indicated.

HIGH LOW
-------- --------

YEAR ENDED MAY 31, 2000
First Quarter............................................. $ 15.06 $ 13.13
Second Quarter............................................ 13.50 11.13
Third Quarter............................................. 11.88 9.50
Fourth Quarter............................................ 11.31 9.69
YEAR ENDED MAY 31, 2001
First Quarter............................................. $ 10.75 $ 8.63
Second Quarter............................................ 10.25 7.75
Third Quarter............................................. 9.94 8.25
Fourth Quarter............................................ 10.50 8.25
YEAR ENDED MAY 31, 2002
First Quarter............................................. $ 11.15 $ 8.02
Second Quarter............................................ 15.05 7.91
Third Quarter (through March 21, 2002).................... 17.08 12.90

On March 21, 2002, the last reported sale price of our common shares on
the New York Stock Exchange was $15.30 per share. As of February 28, 2002, we
had approximately 40,927 shareholders of record of our common shares.

Our shareholders are entitled to receive dividends out of assets legally
available at the times and in the amounts that our board of directors may from
time to time determine. In fiscal year 2000, we paid a dividend of $0.1175 per
share for the first quarter and dividends of $0.1225 per share for the remaining
quarters of the fiscal year. In fiscal year 2001, we paid a dividend of $0.1225
per share for the first quarter and dividends of $0.1250 per share for the
remaining quarters of the fiscal year. For the first two quarters of fiscal
2002, we paid dividends of $0.1250 per share per quarter.

S-12

CAPITALIZATION

The following table sets forth our capitalization as of November 30,
2001 and as adjusted to give effect to (i) the sale of 10,000,000 of our common
shares in this offering at the assumed offering price of $15.30 per share (the
last reported sale price on March 21, 2002) and (ii) the application of the net
proceeds from this offering to repay bank debt assuming the underwriters'
over-allotment option is not exercised and after deducting the underwriting
discount and estimated offering expenses.

The outstanding common shares information excludes common shares
issuable upon the exercise of outstanding options. This information should be
read in conjunction with our consolidated financial statements and the related
notes that we have included elsewhere in this prospectus supplement.

NOVEMBER 30, 2001
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(UNAUDITED)
(IN MILLIONS)

Current portion of long-term debt........................... $ 111.3 $ 6.3
-------- --------
Long-term debt, less current maturities..................... $ 817.2 $ 776.9
-------- --------
Shareholders' equity:
Common shares (stated value $.015 per share);
Authorized-200,000,000 shares; Shares issued, including
shares in treasury, 111,152,991 actual and 121,152,991
as adjusted)........................................... $ 1.6 $ 1.8
Paid-in capital........................................... 429.5 574.6
Treasury shares, at cost.................................. (97.2) (97.2)
Accumulated other comprehensive loss...................... (52.9) (52.9)
Retained earnings......................................... 396.1 396.1
-------- --------
Total shareholders' equity................................ $ 677.1 $ 822.4
-------- --------
Total capitalization........................................ $1,605.6 $1,605.6
======== ========

S-13

SELECTED CONSOLIDATED
FINANCIAL DATA

The following selected financial data for the five fiscal years ended
May 31, 2001 are derived from our audited consolidated financial statements for
such years, which have been audited by Ciulla, Smith & Dale, LLP, our
independent auditors. The financial data for the six month periods ended
November 30, 2000 and 2001 are derived from unaudited consolidated financial
statements. In the opinion of management, the unaudited consolidated financial
statements reflect all adjustments (consisting of normal recurring accruals)
which we consider necessary for a fair presentation of the financial position
and the results of operations for these periods. Operating results for the six
months ended November 30, 2001 are not necessarily indicative of the results
that may be expected for the entire fiscal year ending May 31, 2002. You should
read the data in conjunction with "Capitalization," "Summary Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements, related notes and other
financial information appearing elsewhere in this prospectus supplement.

SIX MONTHS ENDED
FISCAL YEAR ENDED MAY 31, NOVEMBER 30,
----------------------------------------------------- ------------------------
1997 1998 1999 2000 2001 2000(a)(b) 2001
-------- -------- -------- -------- -------- ---------- -----------
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Net sales..................... $1,356.6 $1,623.3 $1,720.6 $1,962.4 $2,007.8 $1,054.8 $1,021.2
Cost of sales................. 752.4 891.9 927.1 1,099.6 1,127.8 570.3 548.6
-------- -------- -------- -------- -------- -------- --------
Gross profit.............. 604.2 731.4 793.5 862.8 880.0 484.5 472.6
Selling, general and
administrative expenses..... 421.3 529.3 583.1 664.9 691.5 365.8 345.1
Research and development
expenses.................... 14.6 15.8 18.0 22.3 21.8 11.3 10.6
Restructuring and asset
impairment charge........... 0.0 0.0 0.0 52.0 0.0 0.0 0.0
SFAS 142 adjustment for
amortization................ -- -- -- -- -- 11.1(a) --
Interest expense, net......... 32.6 36.7 32.8 51.8 65.2 33.7 24.4
-------- -------- -------- -------- -------- -------- --------
Income before income taxes.... 135.7 149.6 159.6 71.8 101.5 84.8(a) 92.5
Provision for income taxes.... 57.4 61.8 65.1 30.8 38.5 28.4(a) 31.4
-------- -------- -------- -------- -------- -------- --------
Net income.................... $ 78.3 $ 87.8 $ 94.5 $ 41.0 $ 63.0 $ 56.4(a) $ 61.1
======== ======== ======== ======== ======== ======== ========
Earnings per share (basic).... $ 0.81 $ 0.89 $ 0.87 $ 0.38(c) $ 0.62 $ 0.55(a) $ 0.60
Earnings per share
(diluted)................... $ 0.76 $ 0.84 $ 0.86 $ 0.38(c) $ 0.62 $ 0.55(a) $ 0.60
Dividends per share........... $ 0.4080 $ 0.4400 $ 0.4650 $ 0.4850 $ 0.4980 $ 0.2475 $ 0.2500
Average shares outstanding
(basic)..................... 97.3 98.5 108.7 107.2 102.2 102.2 102.3
Diluted shares outstanding
(diluted)................... 110.1 111.7 111.4 107.4 102.2 102.2 102.5
OTHER DATA:
EBIT (d)...................... $ 168.3 $ 186.3 $ 192.4 $ 183.5(f) $ 166.7 $ 118.5(a) $ 116.9
EBITDA (e).................... $ 219.4 $ 243.3 $ 254.5 $ 262.7(f) $ 248.2 $ 146.1 $ 145.7
EBITDA Margin............... 16.2% 15.0% 14.8% 13.4% 12.4% 13.9% 14.3%
Depreciation and
amortization................ $ 51.1 $ 57.0 $ 62.1 $ 79.2 $ 81.5 $ 27.6 $ 28.8
Cash flows from operating
activities.................. 69.0 111.0 117.2 101.7 73.5 45.5 94.2
Cash flows from (used in)
investing activities........ (341.2) 11.2 (98.1) (338.1) (18.0) (30.7) (13.1)
Cash flows from (used in)
financing activities........ 289.8 (118.9) (40.2) 248.0 (62.8) (15.3) (59.4)
Capital expenditures.......... 35.8 60.3 63.4 63.2 54.1 29.1 13.1

S-14

MAY 31, NOVEMBER 30,
----------------------------------------------------- ----------------------
1997 1998 1999 2000 2001 2000 2001
-------- -------- -------- --------- -------- -------- -----------
(IN MILLIONS) (UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents.... $ 37.4 $ 40.8 $ 19.7 $ 31.3 $ 23.9 $ 30.7 $ 45.6
Other current assets......... 682.9 634.3 685.7 753.8 795.5 743.4 726.8
Working capital.............. 478.5 387.3 402.9 408.9 443.7 423.1 349.3
Property, plant and
equipment, net............. 270.3 305.9 339.7 366.2 362.0 376.5 353.0
Total assets................. 1,633.2 1,685.9 1,737.2 2,099.2 2,078.5 2,081.2 2,018.2
Current and long-term debt... 788.4 722.0 585.9 964.3 962.8 984.7 928.5
Shareholders' equity......... 493.4 566.3 742.9 645.7 639.7 644.5 677.1

---------------

(c) Excluding the effect of the restructuring and asset impairment charges and
related inventory write-down, fiscal year 2000 basic and diluted earnings
per share would have been $0.73.

(d) EBIT is defined as earnings before interest and taxes.

(e) EBITDA is defined as earnings before interest and taxes plus depreciation
and amortization. EBITDA is presented because it is a widely accepted
financial indicator used by certain investors and analysts to analyze and
compare companies on the basis of operating performance. EBITDA is not
intended to represent cash flows for the period, nor is it presented as an
alternative to operating income or as an indicator of operating performance.
EBITDA should not be considered in isolation, but with Generally Accepted
Accounting Principles in the U.S., and it is not indicative of operating
income or cash flow from operations as determined by those principles. Our
method of computation may or may not be comparable to other similarly titled
measures of other companies. EBITDA may not be indicative of our historical
operating results nor is it meant to be predictive of potential future
results.

(f) Fiscal year 2000 EBIT and EBITDA exclude restructuring and asset impairment
charges totaling $52.0 million and a related inventory write-down charge of
$7.9 million included in cost of sales.

S-15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

You should read the following discussions in conjunction with our
consolidated financial statements and related notes included in this prospectus
supplement and incorporated by reference in the accompanying prospectus. You
should also read the other documents that we have filed with the Securities and
Exchange Commission since the date of those periodic reports to obtain more
information about subsequent developments involving our company.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

REVENUE RECOGNITION

Our revenues are recognized when title and risk of loss passes to
customers. The Securities and Exchange Commission's Staff Accounting Bulletin
(SAB) No. 101 "Revenue Recognition," provides guidance on the application of
Generally Accepted Accounting Principles in the U.S. to selected revenue
recognition issues. Our management has concluded that our revenue recognition
policy is appropriate and in accordance with generally accepted accounting
principles and SAB No. 101.

CONTINGENCIES

We are party to claims and lawsuits arising in the normal course of
business. Although we cannot precisely predict the amount of any liability that
may ultimately arise with respect to any of these matters, we record provisions
when we consider the liability probable and reasonably estimable. The provisions
are based on historical experience and legal advice, are reviewed quarterly and
are adjusted according to developments. Changes in the amount of the provisions
affect our consolidated statements of income.

GOODWILL

RPM adopted two new accounting standards issued by the Financial
Accounting Standards Board in June 2001. Statement of Financial Accounting
Standards, or SFAS, No. 141, "Business Combinations," eliminates the pooling
method of accounting for all business combinations initiated after June 30,
2001, and addresses the initial recognition and measurement of goodwill and
intangible assets acquired in a business combination. Accordingly, we apply the
provisions of SFAS No. 141 to all business combinations initiated after its
effective date. We also adopted SFAS No. 142, "Goodwill and Other Intangible
Assets," effective June 1, 2001. Goodwill amortization ceased upon adoption of
the standard, and the required initial impairment tests were performed. Results
of these impairment tests have not generated any impairment loss to date.

Prospectively, goodwill will be tested on an annual basis, or more
frequently as impairment indicators arise. Impairment tests, which involve the
use of estimates related to the fair market values of the business operations
with which goodwill is associated, are performed at the end of our first
quarter. Losses, if any, resulting from impairment tests will be reflected in
operating income in our income statement.

S-16

TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS AND FOREIGN
CURRENCY TRANSACTIONS

Our reporting currency is the U.S. dollar. However, the functional
currency of all of our foreign subsidiaries is their local currency. We
translate the amounts included in the consolidated statements of income of our
foreign subsidiaries into U.S. dollars at year-to-date 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 we determine that the
functional currency of any of our foreign subsidiaries should be the U.S.
dollar, our financial statements would be affected. Should this occur, we would
adjust our reporting to appropriately account for these changes.

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

OTHER LONG-LIVED ASSETS

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

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

- significant changes in the manner of our use of the acquired assets or
the strategy for our overall business; and

- significant negative industry or economic trends.

When we determine that the carrying value of non-goodwill intangibles
and other long-lived assets may not be recoverable based upon the existence of
one or more of the above described indicators, any impairment would be measured
based on projected net cash flows expected from that asset, including eventual
disposition.

REPORTABLE SEGMENT INFORMATION

We have determined that we have two operating segments -- Industrial and
Consumer -- based on the nature of business activities, products and services;
the structure of management; and the structure of information as presented to
our Board of Directors. Within each segment, individual operating companies or
groups of companies generally address common markets, utilize similar
technologies, and can share manufacturing or distribution capabilities. We
evaluate the profit performance of our two segments

S-17

based on earnings before interest and taxes since interest expense is
essentially related to corporate acquisitions, as opposed to segment operations.
Comparative six month results on this basis are as follows:

SIX MONTHS ENDED NOVEMBER 30,
--------------------------------
2001 2000
----------------- ------------
(UNAUDITED)
(IN MILLIONS)

NET EXTERNAL SALES
Industrial segment.............................. $ 559.9 $ 588.8
Consumer segment................................ 461.3 466.0
-------- --------
TOTALS:......................................... $1,021.2 $1,054.8
======== ========
EARNINGS BEFORE INTEREST AND TAXES (EBIT)
Industrial segment.............................. $ 69.9 $ 79.4
Consumer segment................................ 58.5 39.5
Corporate/other................................. (11.5) (11.5)
-------- --------
TOTALS:......................................... $ 116.9 $ 107.4
======== ========

NOVEMBER 30, 2001 MAY 31, 2001
----------------- ------------
(UNAUDITED)

IDENTIFIABLE ASSETS
Industrial segment.............................. $ 971.3 $1,002.2
Consumer segment................................ 973.8 1,016.1
Corporate/other................................. 73.1 60.2
-------- --------
TOTALS:......................................... $2,018.2 $2,078.5
======== ========

See note K to our consolidated financial statements for comparable reportable
segment information for the fiscal years ended May 31, 2001, 2000 and 1999.

RESULTS OF OPERATIONS

SIX MONTHS ENDED NOVEMBER 30, 2001 AND 2000

Net Sales. Our net sales for the six months ended November 30, 2001 of
$1,021.2 million were $33.7 million, or 3.2 percent, lower than first half sales
a year ago. The March 2001 divestiture of DAP's $30 million commercial Durabond
unit accounted for nearly half of this difference, or 1.6 percent of net sales.
The U.S. dollar has been comparatively stronger year-over-year, primarily
against the Canadian dollar, for a foreign exchange translation effect of a
negative 0.4 percent. The remaining difference of approximately 1.2 percent in
our net sales was due to the soft economy and atmosphere of general economic
uncertainty which impacted ongoing operation's sales. The sales in our
Industrial Division were off 4.9 percent and sales in our Consumer Division,
excluding the impact of the Durabond sale, were ahead nearly 3 percent, as
compared to the same period last year when our sales were negatively affected by
the reduction of inventory by larger retailers.

Gross Profit Margin. Our gross profit margin improved to 46.3 percent in
the six months ended November 30, 2001 from 45.9 percent in the same period last
year. This increase can be attributed to internal margin improvements, including
reduced conversion costs resulting from our restructuring program, and effective
cost controls in light of slower sales, which more than offset the decline in
higher margin sales of flooring and roofing products year-over-year. The
divested Durabond business had also carried lower than average gross margins. By
segment, the Industrial Division margin was 47.4 percent as compared to 47.9
percent in the same period last year, while the gross profit margin in the
Consumer Division improved to 44.9 percent from 43.4 percent during the first
half of fiscal 2001.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses declined 5.7 percent to 34.8 percent of sales from 35.7
percent in the first half of last year. We adopted the Statement of Financial
Accounting Standards No. 142, or SFAS 142, "Goodwill and Other Intangible
Assets" as of June 1, 2001, the beginning of this fiscal year, and its impact is
reflected in selling, general

S-18

and administrative expenses. On a pro forma basis, last year's selling, general
and administrative percentage under FAS 142 accounting would have been 34.7
percent of sales. The sale of Durabond affected the Consumer Division since
Durabond had carried a lower selling, general and administrative percentage,
having a negative effect of approximately 0.4 percent of sales year over year.
Adjusting for both FAS 142 and the Durabond sale, last year's selling, general
and administrative percentage would have been approximately 35.1 percent of
sales. The improvement to 34.8 percent of sales this year on lower sales can be
attributed to cost benefits resulting from the restructuring program, as well as
declines in discretionary spending and other cost controls in response to the
slower sales. By segment, with last year's results presented on a pro forma
basis to reflect the adoption of FAS 142, the Industrial Division's selling,
general and administrative percentage for the first half of this year was 34.9
percent, compared with 33.5 percent last year, while our Consumer Division's
selling, general and administrative expenses improved to 32.2 percent of sales
from 33.7 percent a year ago. The decline in the Industrial Division's sales
volume has been the main factor driving that segment's higher selling, general
and administrative percentage this year. Our corporate/other expenditures were
essentially unchanged year-over-year and include credits of nearly $1.0 million
in each period derived from license fees and royalty income.

Net Interest Expense. Net interest expense for the six months ended
November 30, 2001 was $9.3 million lower than the same period last year as a
result of lower interest rates and reduced debt levels during the past year. The
overall effective interest rate for the first half of this year of 5.1 percent
compares with 7.0 percent for the same period last year.

Income Tax Rate. The change in the income tax rate to 34 percent
compared to last year's 38 percent rate is driven by the adoption of FAS 142.

Net Income. Net income through the current six month period has
increased as compared to the same period last year by $15.3 million, or 34
percent, to $61.1 million and reflects the benefits of lower interest costs and
the adoption of FAS 142, slightly offset by lower earnings before interest and
taxes performance from operations as the result of lower sales. Diluted earnings
per share have improved $.15, or 33 percent, to $.60 from $.45 for the same
period in 2000. On a pro forma basis, last year's diluted earnings per share
would have been $.10 higher under FAS 142.

FISCAL YEAR ENDED MAY 31, 2001 COMPARED TO FISCAL YEAR ENDED MAY 31, 2000

Net Sales. Net sales increased by $45 million, or 2 percent, for fiscal
year 2001 resulting in our 54th consecutive year of business growth.

On August 3, 1999, we acquired DAP Products, Inc. and DAP Canada Corp.,
or DAP, which, with annual sales of approximately $220 million, is a leading
manufacturer and marketer of caulks and sealants, spackling and glazing
compounds, contact cements, and other specialty adhesives. The brand names DAP,
Alex Plus and Kwik Seal are well known throughout the U.S. and Canada.

On a consolidated basis, the extra two months of DAP sales during fiscal
2001, reported within the Consumer Division, offset the loss of sales from
product lines in the Industrial Division that we sold in fiscal 2000. Comparable
base sales, including small product line additions, grew by 4 percent in the
Industrial Division, while base sales in the Consumer Division remained
relatively flat from 2000 to 2001. The 4 percent growth in the Industrial
Division reflects a combination of greater unit volume (2-3 percent) and higher
pricing (1-2 percent) which offset increased raw material and packaging costs
during the year. In addition, on a year to year basis, foreign exchange
differences had a negative impact on sales, primarily within the Industrial
Division, decreasing sales by approximately $20 million, or 1 percent.

The general slowdown in the economy impacted sales in both our Consumer
and Industrial Divisions during the 2001 fiscal year, causing firms to decrease
or defer spending in areas such as protective maintenance, which our products
and services provide. The severe cold this past winter extended much further
south than usual, and Europe was negatively impacted as well, causing our sales
to those regions to be much weaker than usual during the third fiscal quarter in
2001, the seasonally slowest time of the year. Furthermore, several of our major
Consumer Division accounts were aggressively de-stocking their inventories in
2001, which especially impacted our sales to those accounts during the months of
S-19

December and March. Our management believes that this de-stocking activity is
now largely completed and that sales to these accounts will normalize, all other
factors being equal, as we progress through 2002.

Gross Profit Margin. Gross profit margin in fiscal 2001 of 43.8 percent
closely matches the prior year's gross profit margin of 44 percent. The gross
profit margin for the Industrial Division improved to 46.4 percent from 45.7
percent in fiscal 2000, due to the product lines we sold during fiscal 2000,
which carried lower margins and, to a lesser extent, due to the leveraged
benefits from higher sales volume. We believe that timely pricing initiatives in
this division successfully offset rising material costs, principally oil-
related, during the year, and these material costs now appear to have
stabilized. The gross margin in the Consumer Division, in contrast, dipped to
40.7 percent in 2001 from 41.8 percent in 2000, principally reflecting this
division's less timely ability to gain price relief during periods of rising
material costs because operating companies in our Consumer Division for the most
part have servicing agreements with their accounts that renew annually. As these
agreements come up for renewal, we are generally successful in negotiating
pricing relief. In addition, the DAP acquisition accounted for two more months
of lower profit margins in 2001 as compared to 2000 in the Consumer Division. In
addition, we experienced lower profit margins in the Consumer Division in 2001
because we incurred premium costs to outsource some of our products in order to
seamlessly service customers as a result of brief periods of insufficient
capacity during information systems conversions. During 2000, the Consumer
Division incurred $7 million in inventory discontinuation costs associated with
the comprehensive restructuring program initiated in August 1999.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses amounted to 35.5 percent of sales in 2001, compared with
35 percent in 2000. The expenses of our Industrial Division increased to 35.3
percent from 34.7 percent in 2000, mainly because the product lines we sold
during fiscal 2000 had, on a relative basis, much lower selling, general and
administrative expenses, plus we incurred additional, related costs of
approximately $3 million in 2001 toward completion of the restructuring program.
The expenses in the Consumer Division increased to 33.8 percent from 33.4
percent in 2000, principally because we incurred approximately $5 million in
additional costs related to the restructuring program, tempered slightly by two
more months of accounting for DAP, with its comparatively lower selling, general
and administrative expense structure. Our Consumer Division also incurred higher
freight costs in the form of oil-driven fuel surcharges, premiums to expedite
certain shipments during restructuring and increased handling costs to service
more frequent shipments. Additional costs related to the conclusion of our
restructuring program initiated during 2000 are scheduled to be fully incurred
by the end of calendar 2001, and will be much lower than those incurred during
fiscal 2001. License fee and royalty income included as credits to selling,
general and administration expense approximated $1.7 million in each year.

Earnings Before Interest and Taxes ("EBIT"). EBIT is earnings before
interest and taxes. We believe that EBIT best reflects the performance of our
operating segments as interest expense and income taxes are not consistently
allocated to operating segments by the various constituencies utilizing our
financial statements. Requests for operating performance measures received from
research analysts, financial institutions and rating agencies typically focus on
EBIT, and we believe the EBIT disclosure is responsive to investors. 2001 EBIT
in the Industrial and Consumer Divisions were both well ahead of their reported
EBIT for fiscal 2000. Excluding the restructuring and asset impairment charges
and all related costs from 2000, totaling $59.8 million, pro forma EBIT results
for Industrial, Consumer and Corporate/ Other were $121.3 million, $79.8 million
and ($17.7) million, respectively, or $183.4 million in total. On that basis,
EBIT for the Industrial Division year-over-year appears flat ($122.0 million vs.
$121.3 million), but considering the loss of EBIT from the divestitures during
2000 and the additional $3 million spent in 2001 toward completion of the
restructuring program, EBIT for the Industrial Division during 2001 would have
been $7 million ahead of 2000, or up 6 percent on the 4 percent higher sales. On
the same pro forma basis, EBIT for our Consumer Division was off $17 million
($62.7 million vs. $79.8 million), or 21 percent, for the reasons discussed
above. Lastly, on the same pro forma basis, Corporate/Other costs were flat
year-over-year ($18.0 million vs. $17.7 million) as certain lower costs offset
the higher costs associated with our now completed e-commerce infrastructure
development.

S-20

In August 1999, we announced a comprehensive restructuring program to
generate manufacturing, distribution and administrative efficiencies, and to
better position ourselves for increased profitability and long-term growth.
Pre-tax restructuring and asset impairment charges of $45 million and $7 million
were taken during the first and fourth quarters of fiscal 2000, respectively.
Through year-end 2001, we had incurred all of these charges (refer to Note I to
the Consolidated Financial Statements for the fiscal year ended May 31, 2001).

Net Interest Expense. Net interest expense increased $13.4 million in
2001, reflecting higher average interest rates as compared to fiscal 2000, on
the variable rate portion (approximately 80 percent) of outstanding borrowings
(refer to Note B to the Consolidated Financial Statements for the fiscal year
ended May 31, 2001), two additional months of indebtedness related to our
acquisition of DAP in August 1999, and higher average indebtedness related to
the repurchase of 8,970,100 of our common shares between January 1999 and July
2000 (refer to Note D to the Consolidated Financial Statements for the fiscal
year ended May 31, 2001). The Federal Reserve Board cuts in interest rates that
began early in calendar 2001 translated into lower rates on the variable
portions of our outstanding borrowings, resulting in comparably lower interest
costs.

Income Tax Rate. The effective income tax rate in 2001 of 38 percent
compares favorably with the 42.9 percent rate in 2000. The 2000 rate was
impacted by our restructuring and asset impairment charges plus related costs
that year. Excluding those charges and costs, the pro forma tax rate for 2000
would have been 40.3 percent, still higher than the 2001 rate of 38 percent. The
2001 tax rate reduction mainly reflects an improved mix of foreign income,
including fewer unusable foreign tax losses in 2001 as compared to 2000, which
level we believe will be sustainable.

Net Income. Our 2001 net income of $63 million, or $.62 per diluted
share, compares favorably with $41 million in 2000, or $.38 per diluted share.
Excluding the $59.8 million pre-tax restructuring and asset impairment charges
plus related costs, pro forma net income for 2000 would have been $78.6 million,
or $.73 per diluted share. Against pro forma 2000, 2001 net income and earnings
per share were down 20 percent and 15 percent, respectively, as a result of the
factors discussed above. In addition, the difference in pro forma decline
year-over-year between net income and earnings per share reflected the net
benefit from the shares repurchased, which added $.01 per diluted share to 2001
results.

FISCAL YEAR ENDED MAY 31, 2000 COMPARED TO FISCAL YEAR ENDED MAY 31,
1999

Net Sales. Fiscal 2000 net sales were ahead of fiscal 1999 by $241.2
million, or 14 percent, representing our 53rd consecutive year of business
growth. Most of this increase was due to our acquisition of DAP and the addition
of several product lines, net of divestitures. DAP accounted for the majority of
the year 2000 sales increase, adjusted for our divestitures during 2000 and for
unfavorable foreign exchange differences from year-to-year. Our Industrial and
Consumer Divisions experienced growth in amounts of approximately 3 and 4
percent, respectively, before accounting for acquisitions, divestitures, and
exchange differences. These growth rates included several product line additions
and were generally reflective of real unit volume increases, as price levels
year-to-year remained fairly stable.

Gross Profit Margin. Gross profit margin in 2000 declined 2.1 percent,
ending at 44 percent, compared to 46.1 percent in 1999. Our Industrial Division
experienced a margin of 45.7 percent compared with 46.5 percent in 1999. The key
reason for the decrease was the difficulties we experienced in reorganizing to
combine certain of our businesses, most notably outside the U.S. Additionally,
contributing to the declining margin were sales mix differences and minor raw
material price increases during 2000. We believe that such cost increases can be
effectively managed in the future by our Purchasing Action Group. This group
focuses on purchasing major common raw and packaging materials used across
multiple business units and will continue its effort to identify and expand into
other select procurement opportunities going forward. Our Consumer Division
realized a margin of 41.8 percent in 2000 compared to 45.5 percent in 1999. The
majority of this margin reduction resulted from our acquisition of DAP. DAP's
entire cost structure generally differs when compared to the companies in our
Consumer Division, since DAP has much lower gross margins, but requires lower
support levels in the selling, general and administrative expense areas. Our
Consumer Division also incurred $7 million in inventory discontinuation
S-21

costs during 2000 associated with the restructuring program. In addition, our
Consumer Division experienced raw material cost movements similar to those
experienced by the Industrial Division.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were essentially unchanged from 1999 to 2000 as a
percentage of sales, ending both years at the 35 percent level. The expenses in
our Industrial and Consumer Divisions amounted to 34.7 percent and 33.4 percent
of net sales, respectively, in 2000 compared with 33.7 percent and 34.7 percent,
respectively, in 1999. The increase in the Industrial Division was almost
totally attributed to the divestiture of certain of our business units that
carried much lower selling, general and administrative expense levels.
Conversely, the spending difference in the Consumer Division was the result of
the lower selling, general and administrative structure of DAP. The license fee
and royalty income approximating $1.6 million in each period is reflected as
credits within selling, general and administrative.

Earnings Before Interest and Taxes. Excluding the restructuring and
asset impairment charges of $52 million and the related $7.9 million of
additional cost of sales, EBIT amounted to $183.4 million in fiscal 2000,
compared with $192.4 million in fiscal 1999. Within our Industrial Division, the
benefits of modest volume increases were principally offset by costs we incurred
in reorganizing to combine certain businesses and other cost increases not
recovered by price increases. The Consumer Division year-over-year comparisons
disclose similar events; however, our acquisition of DAP helped to more than
offset the spending increases. Weaker performance in certain business units,
along with general cost increases not timely covered by pricing actions,
resulted in a net cost increase which exceeded the benefit from our modest sales
growth. Our general corporate and other expenses increased just over 10 percent,
with the investment initiative for e-commerce infrastructure development
responsible for the remainder of this cost increase.

We sold two of our non-core product lines, with annual sales of $65
million, for a net gain during fiscal 2000. Non-recurring expenses offset this
net gain during the year.

Net Interest Expense. Our net interest expense increased $19.0 million
in 2000, reflecting primarily the additional indebtedness we incurred to acquire
DAP and smaller acquisitions throughout the year, and to repurchase our common
shares. These increases were partly offset by interest expense saved from our
redemption of convertible debt securities on August 10, 1998, which reduced
interest expense by $1.3 million, and from payments on our debt during 2000.
Fractionally higher interest rates in 2000 further increased our net interest
expense.

Income Tax Rate. The effective income tax rate in 2000 was 42.9 percent,
compared to a rate of 40.8 percent in 1999. The higher 2000 rate is attributable
to the restructuring and asset impairment charges and related costs referred to
above, totaling $59.8 million, before tax. Excluding those charges and costs,
the pro forma tax rate for 2000 would have been 40.3 percent, or just slightly
improved from the 1999 rate.

Net Income. The substantially lower net income in fiscal 2000 compared
to fiscal 1999 was again largely attributable to the $59.8 million of our
pre-tax restructuring and asset impairment charges and related costs taken and
incurred during 2000. Excluding such costs, pro forma 2000 net income would have
been $78.6 million, or $0.73 per diluted share, with this pro forma difference
attributable to the lower comparable performances in both operating segments,
combined with higher corporate expenses and the higher interest costs discussed
above.

LIQUIDITY AND CAPITAL RESOURCES

CASH PROVIDED FROM OPERATIONS

In the periods presented, we financed our operations primarily through
available generated cash. We generated $74.5 million in cash from operations in
fiscal 2001, $28.1 million less than during fiscal 2000. The major differences
between years occurred within working capitals, particularly accounts receivable
and inventory, where there was considerable, although temporary, net consumption
of cash in fiscal 2001 tied to the restructuring program and certain information
system conversions during the year. For the six months ended November 30, 2001,
we generated $94.2 million of cash from operations compared with $45.5 million
for the same period in 2000, a 107 percent increase. This improvement was
S-22

driven by our increase in earnings, with the majority of the balance of the
increase reflecting the effectiveness of our strong focus on working capital
management and control. The positive change in working capital for the six
months ended November 30, 2001, when compared to the same period in the prior
year, was $35.3 million.

We expect to continue to generate strong free cash flow from our
operations, which remains our primary source of financing internal growth with
limited use of short-term credit.

INVESTING ACTIVITIES

We are not capital intensive, and capital expenditures generally do not
exceed depreciation and amortization in a given year. We make capital
expenditures primarily to accommodate our continued growth through improved
production and distribution efficiencies and capacity, and to enhance
administration. Capital expenditures in 2001 of $54.1 million compare with
depreciation and amortization of $81.5 million. Approximately $10 million of
expenditures in 2001 were made to accommodate our restructuring program, which
is now completed, and $12 million was expended on information technology, or IT,
including the completion of several major IT platform conversions. In the six
month period ended November 30, 2001, completion of the restructuring program
and enhanced management review and control over the capital investment process
allowed for the majority of the realized $16 million reduction in cash outlays
for capital when compared to the same period a year ago. We plan to continue
this focus going forward.

Our captive insurance company invests in marketable securities in the
ordinary course of conducting its operations, and we expect this activity to
continue. The differences between fiscal years are attributable to the timing
and performance of its investments.

During 2001, we sold or divested certain non-core assets, generating
total proceeds of $31.7 million.

FINANCING ACTIVITIES

On January 22, 1999, we announced the authorization of a share
repurchase program, allowing the repurchase of up to 5 million of our common
shares over a period of 12 months. On October 8, 1999, we announced the
authorized expansion of this repurchase program to a total of 10 million shares.
As of November 30, 2001 we had repurchased 8,970,100 of our common shares at an
average price of $11.11 per share. We do not anticipate further share
repurchases under this program at this time.

On July 14, 2000, we refinanced our then-existing $300 million and $400
million revolving credit facilities with a $200 million, 364-day revolving
credit facility and a $500 million, 5-year revolving credit facility. These new
credit facilities have been available to back up our $700 million commercial
paper program to the extent they are not drawn upon. As of November 30, 2001 we
had drawn $405 million against the 5-year revolving credit facility and had no
outstanding commercial paper. Due to our current public debt ratings, access to
the commercial paper market is presently limited. During the current fiscal
year, we refinanced our $200 million facility with a one-year term loan due July
12, 2002 and, as of November 30, 2001, we had $200 million outstanding under
this facility.

On November 27, 2001, we issued and sold $30 million aggregate principal
amount of 7.3 percent Senior Unsecured Notes due 2008, $10 million aggregate
principal amount of 6.61 percent Senior Unsecured Notes due 2006, and $15
million aggregate principal amount of 6.12 percent Senior Unsecured Notes due
2004. We used the proceeds of this offering to reduce the outstanding balances
under our $500 million revolving credit agreement. Since the beginning of the
current fiscal year, our short-term debt increased to $111.3 million, reflecting
$105.0 million of the current portion of the term loan described above. We will
continue to reduce this debt through internally generated cash flow and intend
to refinance the remaining portion. Our debt-to-capital ratio was 57.8 percent
at November 30, 2001, compared to 60.1 percent at May 31, 2001.

S-23

The following summarizes our financial obligations and their expected
maturities at November 30, 2001, and the effect such obligations are expected to
have on our liquidity and cash flow in the periods indicated:

NOVEMBER 30, 2001
----------------------------------------
LESS THAN AFTER
TOTAL 1 YEAR 1-3 YEARS 3 YEARS
------ --------- --------- -------
($ IN MILLIONS)

Other short term borrowings.............. $111.3 $111.3 $ -- $ --
Long-term debt........................... 817.2 -- 26.8 790.4
Non-cancelable operating lease
obligations(1)......................... 58.1 13.6 17.1 27.4
------ ------ ----- ------
$986.6 $124.9 $43.9 $817.8
====== ====== ===== ======

---------------

(1) We calculate non-cancelable operating lease obligations on an annual basis
and consequently no financial information is available at November 30, 2001.
Therefore, the amounts shown above are for the fiscal year end May 31, 2001.

We are currently negotiating with several banks the terms of a
securitization transaction for certain of our subsidiaries and the related
documentation providing for a wholly-owned special purpose entity, or SPE, to
receive investments of up to $125 million. This securitization will be
accomplished by having certain of our subsidiaries sell various of their
receivable accounts to the SPE and by having the SPE transfer these receivables
to a conduit administered by the banks. The proposed securitization transaction
will be reflected in our financial statements and thus will not be an
off-balance sheet financing. We expect that the proposed transaction will reduce
financing costs by replacing up to $125 million of existing borrowings at
financing costs lower than current borrowing spreads. The securitization
transaction is expected to close in May 2002.

The effect in the second quarter of fiscal 2002 of the strengthening
dollar on our foreign net assets has tended to decrease shareholders' equity,
and this trend could continue if the dollar continues to strengthen. The
Canadian dollar was the principal currency weakening against the dollar.

We maintain excellent relations with our banks and other financial
institutions to further enable the financing of future growth opportunities.

OFF-BALANCE SHEET FINANCINGS

We do not have any off-balance sheet financings. We have no
majority-owned 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. A summary of our primary market risk exposures is presented
below.

Interest Rate Risk. Our primary interest rate risk exposure results from
floating rate debt including various revolving credit and other lines of credit.
At November 30, 2001, approximately 77 percent of our total long-term debt
consisted of floating rate debt. If interest rates were to increase 100 basis
points (1 percent) from November 30, 2001 rates, and assuming no changes in
long-term debt from the November 30, 2001 levels, the additional annual expense
would be approximately $7.14 million on a pre-tax basis. We currently do not
hedge our exposure to this floating rate interest rate risk.

Foreign Currency Risk. Our foreign sales and results of operations are
subject to the impact of foreign currency fluctuations. As most of our foreign
operations are in countries with fairly stable currencies, such as the United
Kingdom, Belgium and Canada, this effect has not been material. In addition,
foreign debt is denominated in the respective foreign currency, thereby
eliminating any related translation impact on earnings. If the dollar continues
to strengthen, our foreign results of operations will be negatively impacted,
but our management does not expect that the effect will be material. A 10
percent adverse change in foreign currency exchange rates would not have
resulted in a material impact on our net income for the year ended May 31, 2001
or the six months ended November 30, 2001. We do not currently hedge against the
risk of exchange rate fluctuations.

S-24

INDUSTRY OVERVIEW

PAINTS, COATINGS, ADHESIVES & SEALANTS INDUSTRY OVERVIEW

The global market for paints, coatings, adhesives and sealants was
estimated at approximately $88 billion in 2000, according to a compilation of
studies prepared by the Freedonia Group and The Adhesive and Sealant Council,
Inc. The paints and coatings industry encompasses a multitude of products, which
protect and decorate consumer and industrial products, as well as residential
and commercial structures. Adhesives and sealants bond, strengthen, protect,
seal and improve a wide variety of consumer, commercial, and industrial
products. Both industrial and retail consumers value the enhanced product appeal
as well as the performance and protective qualities provided by this wide range
of products.

The size of the U.S. paints and coatings market was estimated at $16.6
billion in 2000, according to a study prepared by the National Paint & Coatings
Association, and is commonly broken into three categories: architectural paints
for industrial, commercial and residential purposes; OEM industrial finishes;
and special purpose coatings for marine, automobile, road, corrosion inhibiting,
residential and other applications. The size of the U.S. adhesives and sealants
market was estimated at approximately $8.0 billion in 2000, according to a study
prepared by The Adhesive and Sealant Council, Inc., with adhesives representing
approximately 85 percent of the market and sealants representing the remaining
15 percent. End uses include packaging, industrial assembly, wood and related,
on-site construction, transportation, consumer, electrical/electronic and other
applications.

The market for paints, coatings, adhesives and sealants is fragmented
with the top ten producers accounting for approximately one-third of the global
market. In addition to us, leading suppliers such as Akzo Nobel, Benjamin Moore,
DuPont, ICI, PPG, Rohm and Haas, Sherwin-Williams and Valspar tend to focus on
coatings while companies such as 3M, Avery Dennison, Dow Chemical, General
Electric (Sealants & Adhesives), Henkel, H.B. Fuller, ICI and TotalFina
(Bostik-Findley) focus on adhesives and sealants. Like us, most of these
suppliers have a portfolio of products that span across the various markets.

The paints, coatings, adhesives and sealants industry has experienced
significant consolidation over the past several decades, driven by
manufacturers' interest in developing greater economies of scale and more
efficient distribution activities. However, the market remains fragmented, which
creates further consolidation opportunities. Barriers to market entry are
relatively high due to the lengthy interval between product development and
market acceptance, the importance of brand identity, and the difficulty in
establishing a reputation as a reliable supplier in this well-established
sector.

Consumer Home Improvement. Within our Consumer Division operations, we
generally serve the home improvement market with products designed for niche
architectural, rust-preventative, special purpose, caulking and sealing
applications. These market segments are generally characterized by higher growth
and less cyclicality due to the attractive demographic trends in the home
improvement channel and the typically maintenance-oriented nature of the
consumer purchases. Leading manufacturers of home improvement-related coatings,
adhesives and sealants market their products to DIY users, professional
contractors, industrial contractors, and industrial end-users through a wide
range of distribution channels including home improvement centers, mass
merchandisers, hardware stores, paint stores and industrial distributors. In
addition to us, leading companies in these markets include General Electric
(Sealants & Adhesives), ICI, Masco, Sherwin-Williams, Sovereign Specialty
Chemicals and Valspar.

Special Purpose -- Industrial Maintenance Protective Coatings. Our
management believes that the North American protective coatings market in which
we compete is valued at approximately $1.6 billion, based on a study published
by SRI International. Anti-corrosion protective coatings are required to
withstand the destructive elements of nature and other 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 waste water treatment plants. Protective coatings
consist mainly of epoxies, urethanes and acrylics although other chemicals,
including combinations of these, are often used. Although the market is

S-25

fragmented, in addition to us, leading suppliers include Ameron, PPG,
Sherwin-Williams, Tnemec and TotalFina (Sigma Kalon).

ROOFING SYSTEMS INDUSTRY OVERVIEW

The entire U.S. roofing industry was estimated at approximately $10
billion in 2000, according to the Freedonia Group, and is commonly broken down
into eight roofing products and material categories: (i) asphalt shingles; (ii)
metal roofing; (iii) single-ply roofing, including elastomeric (EPDM) and
plastic (thermoplastic polyolefin) systems and membranes; (iv) built-up roofing;
(v) modified bitumen roofing; (vi) roofing tile; (vii) wood shingles and shakes;
and (viii) roll roofing. Reroofing applications account for three-quarters of
U.S. demand, with the remaining quarter made up by the new roofing segment. The
largest roofing manufacturers and suppliers include Carlisle (Syntec),
CertainTeed, Firestone Building Products, GAF, Johns Manville and Owens Corning.
These manufacturers focus primarily on residential roofing as well as single-ply
systems for low-end commercial and institutional applications, competing mainly
on price and minimally on service. We compete primarily in the higher-end,
multi-ply and modified bitumen segments of the built-up and low-slope roofing
industry. This niche within the larger market tends to exhibit less
commodity-market characteristics with customers valuing the greater protection
and longer life provided by these roofing systems as well as ongoing
maintenance, inspection and technical services. Typical customers demanding
higher-performance roofing systems include governmental facilities,
universities, hospitals and certain other manufacturing facilities. In addition
to us, companies that operate in this higher value-added segment of the roofing
market include Centimark, Garland and Hickman, although some of the larger
industry participants compete selectively.

CONSTRUCTION CHEMICALS INDUSTRY OVERVIEW

We are a significant manufacturer and supplier of construction chemicals
consisting of (i) polymer flooring systems and (ii) sealants, concrete and
masonry products for use in a variety of industrial infrastructure and
construction applications.

Flooring Systems. Our management believes, based on market information
published by the Freedonia Group, that the polymer flooring market in which we
compete is valued at approximately $600 million in the United States. 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 products. Polymer flooring systems
are based primarily on epoxy resins, although urethane products have experienced
significant growth in recent years. Most flooring is applied during new
construction, but there is also a significant repair and renovation market. Key
performance attributes in polymer flooring systems that distinguish competitors
include static control, chemical resistance, contamination control, durability
and aesthetics. Although the market is fragmented, in addition to us, leading
suppliers including Degussa (SKW/Master Builders Technologies), Crossfield
Products (Dex-O-Tex), Dur-A-Flex, Garland, Sherwin-Williams and Valspar have
typically differentiated themselves by consistently providing high quality,
comprehensive systems and solutions for their customers.

Sealants, Concrete and Masonry Products. We believe that the sectors of
the construction chemicals market in which we compete, including a range of
sealants, concrete and masonry additives and grouts and mortars, is valued at
approximately $1.8 billion in the U.S., based on our analysis of data provided
by the Freedonia Group and the U.S. General Services Administration. Sealants
for construction applications include urethane and silicone-based products
designed for sealing windows and commercial buildings, waterproofing,
fireproofing and concrete sealing, among others. In the concrete and masonry
additives market, a variety of chemicals can be added to cement, concrete,
asphalt and other masonry to improve the processability, performance, or
appearance of these products. Chemical cement admixtures are typically grouped
according to functional characteristics, such as water-reducers,
set-controllers, superplasticizers and air-entraining agents. Key attributes
that differentiate competitors in these markets include quality assurance,
on-the-job consultation and the provision of value-added engineered products. In
addition to us, leading suppliers of sealants, concrete and masonry products
include Degussa (SKW/ Master Builders Technologies/Sonneborn), Dow-Corning,
General Electric (Sealants & Adhesives), Sika Finanz and W.R. Grace.

S-26

BUSINESS

SUMMARY

RPM, Inc. is a worldwide leader in high quality specialty paints,
protective coatings and systems, sealants and adhesives focused on the
maintenance and improvement needs of both the industrial and consumer markets.
Our success is due to our balanced portfolio of businesses, as well as our
strong management team and entrepreneurial culture, which provides our business
units the flexibility necessary to achieve leadership positions in high margin,
specialty niche markets. We also attribute our success to our position as a
well-recognized industry consolidator, as demonstrated by our completion of 52
acquisitions since 1991. Our strategy is to build upon our history of strong
financial performance and operational success through: organic growth via new
product introductions and market expansion; additional acquisitions of
entrepreneurial, synergistic and strategic businesses and product lines; and
ongoing margin improvement initiatives.

Our family of products includes many well-known brand names such as
Carboline, DAP, Day-Glo, Flecto, Rust-Oleum, Stonhard, Tremco and Zinsser. Our
portfolio of businesses is organized into two segments, industrial and consumer.
Our Industrial Division constitutes approximately 55 percent of sales and
includes maintenance and protection products for roofing and waterproofing
systems, flooring, corrosion control and other specialty applications sold. Our
Consumer Division constitutes approximately 45 percent of sales and includes
rust-preventative, special purpose and decorative paints, caulks, sealants,
primers and other branded consumer products. We sell our products in
approximately 130 countries with approximately 30 percent of sales generated in
international markets. For the twelve month period ending November 30, 2001, we
generated $1.97 billion in sales.

OUR BUSINESS STRATEGY

From 1947 to 2001, we recorded 54 consecutive years of sales growth with
earnings growth in 52 of those years interrupted only by our strategic
restructuring initiated in fiscal 2000 to reduce costs across our operations.
Our business objective continues to be to profitably grow our businesses within
new and existing domestic and foreign markets where we can achieve and maintain
significant market leadership with our high quality products. As a result, our
internal growth and acquisition strategies have consistently focused on
specialty, niche markets where we can acquire or enhance a leading market
position. We pursue this goal with an entrepreneurial strategy and structure
that allows us to tailor our products and services and respond quickly to
customer and market needs. We believe that localized customer and market focused
sales, marketing and product development efforts combined with the financial,
administrative and operational strengths and synergies of a large global
corporation are the best way to deliver value to our customers and shareholders.
Key elements of our strategy include the following:

The primary drivers of our internal growth include:

Industrial:

- introducing value-added, cost-effective problem-solving
capabilities, such as our development of specialized tank lining
systems for our customers in the soft drink and food processing
industries;

- cross-selling our product offerings, including our relationships
with customers in the pulp and paper sector and oil services
industries who have benefited from our ability to provide a
collection of Plasite and Carboline industrial coatings and
corrosion control products and Fibergrate floor systems;

- expanding geographically, such as Carboline's strategic
initiatives in a range of markets globally including Europe, the
Middle East and Asia;

S-27

- creating new markets for existing products, such as Fibergrate's
collaboration with our Dryvit subsidiary that developed an
architecturally acceptable protective screen for cell phone
towers that offers significantly less interference with
transmissions compared to traditional steel grating; and

- extending our product lines, such as Stonhard's introduction of a
lower cost epoxy terrazzo commercial flooring alternative to our
high-end industrial based polymer floor systems.

Consumer:

- aligning our operating units with the fastest growing customers
and distribution channels, such as Rust-Oleum, Zinsser and DAP in
the primary home improvement distribution channels;

- expanding through select product line extensions, such as
Zinsser's introduction of a new line of decorative paint products
and Rust-Oleum's introduction of the American Accents and
Painter's Touch lines;

- growing market share by leveraging the strength of our
distribution channels, as exemplified by Rust-Oleum's integration
of Flecto and the growth in demand for the Papertiger wall
covering tool which has benefitted from the strong market
presence of Zinsser's speciality paint primer and wallpaper
products; and

- introducing new products, such as DAP's Kwik Seal Plus with
Microban, Drydex spackle and SideWinder product lines.

- WELL-RECOGNIZED INDUSTRY CONSOLIDATOR. We are a leading industry consolidator
and operate as a holding company for the businesses we acquire. We typically
retain the management teams of the companies we acquire and endeavour to
maintain management's operational independence at the subsidiary level. Our
acquisitions fit into one of three categories:

- entrepreneurial companies with leading positions in niche markets,
such as Day-Glo (fluorescent pigments) and TCI (powder coatings);

- synergistic businesses or product lines that can be integrated into
existing operations, such as Rust-Oleum's integration of Flecto
(wood finishes) and Epoxi-Tech (breathable, water-based coatings for
basements, garages and driveways); and

- strategic acquisitions to complement our existing operations, such
as Rust-Oleum (rust-preventative and decorative coatings), Stonhard
(flooring systems), Tremco (roofing applications) and DAP (caulks
and sealants).

We have made 52 acquisitions since 1991. We are committed to preserving the
operational independence of most of our acquired businesses, yet have
consistently demonstrated our ability, when appropriate, to integrate
businesses to improve the operating results of the acquired companies. We
consider synergistic opportunities in manufacturing, marketing, product
research and materials purchasing when evaluating integration possibilities.

-ENHANCE PROFITABILITY VIA OPERATIONAL IMPROVEMENTS. We pursue initiatives to
enhance profitability by lowering our operating costs through focused corporate
leadership and operating company support. In August 1999, we launched a
comprehensive restructuring program aimed at permanently reducing our fixed
costs by more than $23 million. The major features of the restructuring program
included: (i) the closure of 17 facilities to eliminate redundancies in
manufacturing, administration and distribution; (ii) a reduction of
approximately 10 percent of our work force; and (iii) the consolidation of
certain consumer product line distribution and warehousing activities to reduce
costs and improve working capital efficiencies. The restructuring, combined
with additional workforce reductions in response to slower economic conditions,
is believed to be generating savings in excess of management's initial
objectives. We also regularly review and evaluate our portfolio of businesses
based on various strategic, operational and financial performance criteria. In
March 2001, for example, we divested the commercial Durabond

S-28

unit of DAP, which did not fit our long-term strategy for our business. All of
these actions are an integral part of our efforts to leverage earnings growth.

The combination of our internal growth and acquisitions over the years has
enabled us to take advantage of enhanced purchasing power for raw materials and
packaging, such as titanium dioxide, epoxy resins, aerosol propellants, solvents
and cans and pails. We have also extended this purchasing leverage into areas
such as insurance and employee benefits. The resulting reduction in costs
strengthen our ongoing operations and benefit the companies we acquire.

OUR COMPETITIVE STRENGTHS

- GLOBAL LEADER IN MARKETS SERVED. We maintain the number one or two market
position in many of the markets we serve. We believe that customers of our
Industrial Division value our high quality products, which are frequently
requested or specified for a variety of commercial and industrial projects, as
well as our ability to supply multiple products and customized solutions. In
our Consumer Division, we have developed and maintained our market leadership
positions by building upon our well-recognized brand name products and sales,
marketing and service organizations that strive to ensure that our product
lines and new product development efforts are aligned with our customer needs.
An important element of our long-term success is our ability to capitalize on
the strength of our leading brands to achieve premium pricing. We also seek to
align ourselves with the most attractive distribution channels to maintain
accelerated levels of growth.

Management estimates, based on various third party sources, including
trade association publications, databases, consulting reports and industry
studies, and internally generated analyses and reports, that we have
leadership positions in the following brands and markets:

Industrial Division

- Tremco: No. 1 in the North American high-end institutional roofing
market, based on market share, highlighted by range of Republic
Powdered Metals, Geoflex and Hy-Shield branded products, as well as
the No. 2 position in the North American sealants market, based on
market share, highlighted by range of Tremco, Vulkem and DYmeric
branded products

- Stonhard: No. 1 global supplier of industrial, high-performance
polymer flooring systems, based on market share

- Carboline: No. 1 U.S. supplier of and a global leader in industrial,
high-performance corrosion control coatings, based on market share

- Day-Glo: No. 1 globally in the market for fluorescent pigments and
colorants, based on market share

- Dryvit: No. 1 North American supplier of exterior insulation
finishing systems, based on market share

Consumer Division

- Rust-Oleum: No. 1 brand recognition and market share position in the
U.S. and Canada in the rust-preventative, decorative, specialty and
professional segments of the small project paint category

- DAP: No. 1 brand recognition and market share position in North
America for home improvement latex caulks and sealants and patch
repair products

- Flecto: No. 2 position in the Canadian wood finishes market, based
on market share, complemented by strong brand positioning in the
United States market

- Zinsser: A leader in brand recognition and market share position in
the United States market for specialty primers and sealers and
wallcovering sundries

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- BALANCED PORTFOLIO OF LEADING BRAND NAMES. Our balanced product portfolio
contains some of the most well-recognized brands in the industrial and
consumer markets in which we compete. We believe that many of our brands are
recognized in the markets as leaders in quality and reliability providing us
with important competitive advantages with respect to introducing new
products, maintaining or gaining market share and developing a stable customer
base. We also believe our balanced portfolio of businesses, with their focus
on maintenance, repair and improvement applications, enables us to better
weather economic cycles because our exposure is spread across a wide range of
industries, sales channels and end-users. In addition, our internal growth is
enhanced by the mutually beneficial customer relationships we have developed
with home centers, mass merchandisers and co-ops who value our brands and
proprietary MarketScope category management initiatives.

- VALUE-ADDED CUSTOMER-ORIENTED SOLUTIONS. Our operating companies have
developed specialized sales, marketing and service organizations that maintain
close relationships with our customers to provide unique solutions to their
needs. We have not only worked to build a reputation for customer
responsiveness, but have also promoted product and brand development. Examples
of these solutions include:

In the Industrial Division, we have developed, in conjunction with our
customers, proprietary customized solutions designed to reduce various
manufacturing inefficiencies and quality control problems such as:

- Stonhard has developed and installed proprietary electrostatic
dissipating flooring systems for a leading worldwide
microelectronics manufacturer as well as for circuit board assembly
companies and auto manufacturers which have reduced premature end
use product failures frequently caused by excessive static
electricity during the manufacturing or assembly process; and

- Carboline and Plasite have worked with a leading soft drink
manufacturer, as well as other food and beverage manufacturers, to
develop railcar tank linings to protect food and beverage
ingredients during transport. Carbon steel tanks protected by
Carboline and Plasite coatings provide these companies with a
quality, low-cost alternative to stainless steel railcar tanks.

In the Consumer Division, we have expanded our market share by focusing
on providing creative solutions to meet the needs of both our retail and
end-user customers. Some examples of these solutions include:

- DAP has simplified the use of certain DIY products by creating
consumer-friendly solutions for less experienced end-users. For
instance, DAP developed Drydex, a spackle with a color indicator
feature that changes from pink to white as it dries, indicating when
it is ready for sanding. DAP has also developed a packaging and
dispensing system that provides for the easy delivery of caulk; and

- Rust-Oleum has been a pioneer in the home improvement market with
its MarketScope category management concept. MarketScope optimizes a
retailer's sales potential, shelf space and product offerings by
tailoring customer displays to match regional or local consumer
buying patterns. This program has accelerated sales in the small
project paint category for our customers, including the major home
centers. We believe the value afforded to home centers and mass
retailers by our marketing programs, including MarketScope, is
evidenced by numerous Vendor of the Year titles awarded to our
franchises.

- STRONG MANAGEMENT TEAM AND ENTREPRENEURIAL SPIRIT. Since our founding in 1947,
we have operated under a basic business philosophy -- "hire the best people
you can find, create an atmosphere that will keep them, and then let them do
their jobs." We have sustained a culture that balances an entrepreneurial
spirit with disciplined corporate oversight. Our decentralized structure and
incentive-based compensation philosophy have contributed to our growth for the
past 50 years. Over the past 10 years, we have completed 52 acquisitions, the
most notable of which include Stonhard (1993),

S-30

Rust-Oleum Corp. (1994), Tremco Incorporated (1997) and DAP (1999). We believe
that we have strong and proven leadership both at the corporate and operating
segment levels.

- Our business strategy has been developed and led by Thomas C.
Sullivan, Chairman and CEO, James A. Karman, Vice Chairman, and
Frank C. Sullivan, President and COO, who collectively have 96 years
of service. Messrs. Sullivan and Karman have built a team of
experienced corporate managers who have been integral to executing
our strategy. Each of these managers, whose average tenure with our
company is nine years and whose average age is 44, has also been
actively involved with the challenges associated with our recent
restructuring and cost-containment initiatives. Thomas Sullivan and
James Karman are retiring as executive officers at the end of
calendar 2002. Thomas Sullivan will remain active in our business as
a non-executive Chairman of the Board and James Karman will remain
as a Director.

- Our corporate management team is complemented by a group of
operating company presidents and product line managers that have
broad-based industry experience. Most of our operating company
managers have come to us through significant acquisitions and were
either founders or second generation family members of the founders
of these acquired businesses. Importantly, our operating management
teams have been, and continue to be, integral to our customer
relationships, product development and long-term sales growth
objectives.

S-31

ACQUISITION HISTORY

Since 1966, we have made over 90 acquisitions, including 52 acquisitions
from 1991 to the present. Our acquisition criteria include strong brand
awareness and reputation with customers and end-market users, differentiated
products, solid profitability and above-average growth prospects. We seek to
attract and retain management teams committed to our culture and operating
philosophy. A selection of acquisitions illustrative of our three pronged
strategy is listed below:

DATE OF ACQUISITION ACQUIRED COMPANY BUSINESS DIVISION
------------------- -------------------------- ----------------- --------

ACQUISITIONS OF ENTREPRENEURIAL COMPANIES
October 1991 Day-Glo Color Corp. Fluorescent Consumer
pigments
June 1993 Dynatron/Bondo Corp. Automotive Consumer
fillers
September 1995 Dryvit Systems, Inc. Exterior Industrial
insulation and
finishing systems
January 1996 TCI, Inc. Powder coatings Industrial
June 1996 Fibergrate, Inc. Fiberglass Industrial
reinforced
plastic gratings
February 1999 The Euclid Chemical Co. Admixtures and Industrial
concrete
SYNERGISTIC ACQUISITIONS
December 1997 Papertiger Wall covering Consumer
removal
December 1997 Zehrung Corporation Primers and Consumer
mildewcides
March 1998 The Flecto Company Wood finishing Consumer
July 1998 Nullifire Ltd./Amtred Ltd. Intumescent Industrial
fireproofing
February 2000 Guardian Products, Inc. Flooring Industrial
March 2000 Epoxi-Tech, Inc. Water-based epoxy Consumer
coatings
STRATEGIC ACQUISITIONS
June 1991 Rust-Oleum/France S.A. Paints Consumer
October 1993 Stonhard, Inc. Polymer flooring Industrial
June 1994 Rust-Oleum Corporation Paints Consumer
February 1997 Tremco Incorporated Roofing Industrial
August 1999 DAP Products, Inc. Caulks and Consumer
sealants

We continually evaluate our portfolio and divest businesses that exhibit
commodity-type characteristics or that no longer meet our long-term growth
objectives, such as DAP's commercial Durabond business (March 2001), Alox
Corporation (March 2000) and Design/Craft Fabric Corporation (September 1999).
We have also divested portions of businesses that we acquired that did not fit
our acquisition criteria including the Swiggle (June 1997) and Autoglass
Adhesives (July 1997) businesses, which were a part of the Tremco acquisition
(February 1997).

S-32

PRODUCTS AND MARKETS

Industrial Division

The Industrial Division has operations primarily in North America and
Europe as well as a presence in regions of South America, Asia, South Africa,
Australia and the Middle East. Our industrial businesses, which account for the
majority of our international sales, sell directly to contractors, distributors
and end-users, such as industrial manufacturing facilities, educational and
governmental institutions and commercial establishments. Our Industrial Division
generated approximately $1.07 billion in sales for the twelve month period ended
November 30, 2001 and is comprised of the following major product lines:

- institutional roofing systems and sealants used in building
protection, maintenance and weatherproofing applications marketed
under our well-established Tremco, Republic, Vulkem and DYmeric
brand names;

- high-performance polymer flooring systems for industrial,
institutional and commercial facility floor surfaces marketed under
the Stonhard brand name. We also manufacture and supply molded and
pultruded fiberglass reinforced plastic gratings used for industrial
platforms, staircases and walkways marketed under the Fibergrate
brand name;

- high-performance, heavy-duty corrosion control coatings and a
supplier of structural and fireproofing protection products and
secondary containment linings for a wide variety of industrial
infrastructure applications marketed under the Carboline and Plasite
brand names;

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

- a variety of products for specialized applications, including powder
coatings for exterior and interior applications marketed under the
TCI brand name, fluorescent colorants and pigments marketed under
the Day-Glo brand name, concrete and masonry additives marketed
under the Euco brand name, commercial carpet cleaning solutions
marketed under the Chemspec brand name, wood and lumber treatments
marketed under the Kop-Coat brand name and pleasure marine coatings
marketed under the Pettit, Woolsey and Z-Spar brand names.

Consumer Division

The Consumer Division manufactures and markets professional and DIY
products for home maintenance and improvement, auto repair and maintenance and
hobby and leisure applications. The Consumer Division's major manufacturing and
distribution operations are located in North America. We market our products
through a wide range of distribution channels including home improvement
centers, mass merchandisers, hardware stores, paint stores and distributors. Our
Consumer Division generated approximately $0.9 billion in sales in the twelve
month period ended November 30, 2001 and is comprised of the following major
product lines:

- small project rust-preventative, decorative and assorted specialty
paints and coatings for the DIY and professional markets through our
wide assortment of Rust-Oleum products. Leading brands within the
Rust-Oleum portfolio include Stops-Rust, American Accents, Painter's
Touch, Tremclad, Hard Hat, Flecto and Varathane;

- a complete line of caulks and sealants, patch and repair products
and adhesives for the home improvement, repair and construction
markets through our wide assortment of DAP products. Leading brands
within the DAP portfolio include Alex Plus, Kwik Seal, Weldwood,
'33' Glazing and Plastic Wood;

- a broad line of specialty primers and sealers marketed under the
Zinsser, B-I-N, Bulls Eye 1-2-3 and Cover-Stain brand names, as well
as wallcovering removal and preparation coatings under the principal
brands of DIF, Papertiger and Shieldz; and

S-33

- an assortment of other products, including autobody paints and
repair products marketed under the Bondo brand name, hobby paints
and cements marketed under the Testors brand name, wood furniture
finishes and touch-up products marketed under the CCI and Mohawk
brand names, deck and fence restoration products marketed under the
Wolman brand name and shellac-based chemicals for industrial uses,
edible glazes and food coatings by Mantrose-Haeuser.

MANUFACTURING/OPERATIONS

In terms of manufacturing, our philosophy is to operate plants in
targeted geographic locations, near high-customer-concentration zones. Our
plants are configured in a capacity range that permits them to operate on normal
12-month schedules, adding additional shifts to production with temporary
employees during peak maintenance seasons.

FOREIGN OPERATIONS

Our foreign manufacturing operations for the fiscal year ended May 31,
2001 accounted for approximately 20 percent of our total sales (which does not
include exports directly from the United States), although we also receive
license fees and royalty income from numerous license agreements and also have
joint ventures accounted for under the equity method in various foreign
countries. We have manufacturing facilities in Argentina, Belgium, Brazil,
Canada, China, Colombia, Germany, Italy, Malaysia, Mexico, New Zealand, The
Netherlands, Poland, South Africa, the United Arab Emirates and the United
Kingdom, and sales offices or public warehouse facilities in Australia, Canada,
Finland, France, Germany, Hong Kong, Iberia, Mexico, the Philippines, Singapore,
Sweden, the United Kingdom and several other countries.

COMPETITION

We are engaged in a highly competitive industry and, with respect to all
of our major products, face competition from local and national firms. The
industry is highly fragmented, and we do not face competition from any one
company in particular. However, several of the companies with which we compete
have greater financial resources and sales organizations than us. While
third-party figures are not necessarily available with respect to the size of or
our position in the market for each of our products, we believe based on our
internal reports that we are a major producer of roofing systems, aluminum
coatings, cement-based paint, hobby paints, pleasure marine coatings, furniture
finishing repair products, automotive repair products, industrial corrosion
control products, consumer rust-preventative coatings, polymer flooring,
fluorescent coatings and pigments, exterior insulation finish systems, molded
and pultruded fiberglass reinforced plastic grating and shellac-based coatings.
However, we do not believe that we have a significant share of the total
protective coatings market. For further information on competition, see
"Industry Overview."

RAW MATERIALS

We do not have any single source suppliers of raw materials that are
material to our business, and we believe that alternate sources of supply of raw
materials are available to us for most of our raw materials. Where shortages of
raw materials have occurred, we have been able to reformulate products to use
more readily available raw materials. Although we have been able to reformulate
products to use more readily available raw materials in the past, we cannot
guarantee that we will have the ability to do so in the future.

SEASONAL FACTORS

Our business is dependent on external weather factors. We historically
experience strong sales and net income in our first, second and fourth fiscal
quarters comprised of the three month periods ending

S-34

August 31, November 30 and May 31, respectively, with weaker performance in our
third fiscal quarter (December through February).

RESEARCH AND DEVELOPMENT

Our research and development work is performed in various laboratory
locations throughout the United States. During fiscal years 2001, 2000 and 1999,
we invested approximately $21.8 million, $22.3 million and $18.0 million,
respectively, on research and development activities. The customer-sponsored
portion of these expenditures was not significant. An integral element of the
success of our research and development efforts stems from the strength of our
field technical services, whose consistent feedback to research and development
helps to foster more timely laboratory response toward product improvements and
enhancements, as well as the development of new products.

ENVIRONMENTAL MATTERS

We are subject to numerous foreign, federal, state and local
environmental protection and health and safety laws and regulations governing,
among other things:

- the sale, export, generation, storage, handling, use and
transportation of hazardous materials;

- the emission and discharge of hazardous materials into the soil,
water and air; and

- the health and safety of our employees.

We are also required to obtain permits from governmental authorities for
certain operations. We cannot assure you that we have been or will be at all
times in complete compliance with such laws, regulations and permits. If we
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 in the past, and will in the future, incur costs to comply with
environmental laws. Environmental laws and regulations are complex, change
frequently and have tended to become stringent over time. In addition, costs may
vary depending on the particular facts and development of new information. As a
result, our operating expenses and continuing capital expenditures may increase.
More stringent standards may also limit our operating flexibility. In addition,
to the extent hazardous materials exist on or under real property, the value and
future use of that real property may be adversely affected. Because our
competitors will have similar restrictions, we believe that compliance with more
stringent environmental laws and regulations is not likely to affect our
competitive position. However, a significant increase in these costs could
adversely affect our business, results of operations, financial condition or
cash flows.

Our environmental-related accruals are established and/or adjusted as
information becomes available upon which more accurate costs can be reasonably
estimated. Actual costs may vary from these estimates because of the inherent
uncertainties involved, including the identification of new sites and the

S-35

development of new information about contamination. Certain sites are still
being investigated and therefore we have been unable to fully evaluate the
ultimate cost for those sites. As a result, reserves have not been taken for
some of these sites and for other sites costs may exceed existing reserves. We
have received indemnities for potential environmental issues from purchasers of
certain of our properties and businesses and from sellers of properties or
businesses we have acquired. We have also purchased insurance to cover potential
environmental liabilities at certain sites. If the indemnifying or insuring
party fails to, or becomes unable to, fulfill its obligations under those
agreements or policies, we may incur additional environmental costs in addition
to any amounts reserved which may have a material adverse effect on our
financial condition, results of operations or cash flows. For additional
information about our environmental reserves, see note H -- Contingencies and
Loss Reserves to our consolidated financial statements.

EMPLOYEES

As of November 30, 2001, we employed 7,637 persons, of whom 596 were
represented by unions under contracts which expire at varying times in the
future. We believe that our relations with our employees are good.

PROPERTIES

Our corporate headquarters and a plant and offices for one subsidiary
are located on a 119-acre site in Medina, Ohio, which is owned by us. As of
November 30, 2001, our operations occupied a total of approximately 6.7 million
square feet, with the majority, approximately 5.5 million square feet, devoted
to manufacturing, assembly and storage. Of the approximately 6.7 million square
feet occupied, 5.2 million square feet are owned and 1.5 million square feet are
under operating leases. In addition, approximately 0.3 million owned square feet
is associated with property intended to be sold or sublet in conjunction with
our restructuring program.

Set forth below is a description, as of November 30, 2001, of our
principal manufacturing facilities which we believe are material to our
operations:

APPROXIMATE
SQUARE FEET
BUSINESS/ OF LEASED OR
LOCATION TYPE OF FACILITY SEGMENT FLOOR SPACE OWNED
-------- ---------------- --------- ----------- ---------

Pleasant Prairie, Manufacturing and Rust-Oleum 240,000 Owned
Wisconsin Warehouse (Consumer)
Toronto, Ontario, Manufacturing and Tremco 207,000 Owned
Canada Office (Industrial)
Cleveland, Ohio Manufacturing and Euclid Chemical 167,500 Owned
Warehouse (Industrial)
Cleveland, Ohio Manufacturing and Day-Glo 147,000 Owned
Warehouse (Industrial)
Tipp City, Ohio Manufacturing and DAP 140,000 Owned
Warehouse (Consumer)
Cleveland, Ohio Manufacturing and Mameco 135,300 Owned
Warehouse (Industrial)
Somerset, New Jersey Manufacturing and Zinsser 92,400 Owned
Warehouse (Consumer)

We lease certain of our properties under long-term leases. Some of the
leases provide for increased rent based on an increase in the cost-of-living
index. Under all of our leases, we are obligated to pay certain varying
insurance costs, utilities, real property taxes and other costs and expenses.

S-36

LEGAL PROCEEDINGS

EIFS Litigation

One of our subsidiaries, Dryvit Systems, Inc., is a manufacturer of
coatings for exterior insulating finishing systems, or EIFS. As of November 30,
2001, Dryvit was a defendant or co-defendant in approximately 750 single family
residential EIFS cases. The plaintiffs in these cases allege that EIFS products
manufactured by Dryvit and other defendants were defective. The vast majority of
Drivit's EIFS lawsuits and most of the allegations involve claims of water
intrusion into structures and related property damages, although a number of
claims also stem from alleged personal injuries from exposure to mold. Dryvit is
a defendant in attempted class actions filed in Alabama, Illinois, North
Carolina and Tennessee. Dryvit has previously settled a class action in North
Carolina. Certain of Dryvit's insurers have paid or are currently paying a
portion of Dryvit's defense costs in the class actions, and individual
commercial building and homeowner lawsuits. In addition, these insurance
carriers have regularly funded settlement of the individual homeowner and
commercial building cases when appropriate. Two of Dryvit's primary insurance
carriers have reported that they have exhausted their policy limits through the
payment of settlements. In addition, Dryvit has settled with and released two of
its other primary insurers. As a result, Dryvit has sought participation in the
EIFS litigation from First Colonial Insurance Company, our wholly-owned captive
insurance company, and certain umbrella insurance companies. Dryvit, First
Colonial and two of Dryvit's umbrella carriers have entered into two defense
cost sharing agreements to cover both the individual and class action cases;
these agreements have been subject to periodic renegotiation. Under these
cost-sharing agreements, our insurers have covered a substantial portion of the
EIFS indemnity and defense costs. Based on Dryvit's existing insurance
arrangements, we believe that the EIFS litigation will not have a material
adverse effect on our consolidated financial position or results of operations.

Asbestos Litigation

As we have disclosed regularly in our periodic reports for nearly 20
years, we and certain of our wholly-owned subsidiaries are defendants or
co-defendants in asbestos-related bodily injury lawsuits filed on behalf of
various individuals in various jurisdictions. We have actively defended these
lawsuits which generally seek damages for asbestos-related diseases based on
alleged exposures to asbestos-containing products which we previously
manufactured. In many cases, the plaintiffs are unable to demonstrate that any
injuries that they incurred, in fact resulted from exposure to any of our
products, and we are generally dismissed from those cases. With respect to those
cases where compensable disease, exposure and causation are established, we
generally settle for various amounts based on the seriousness of the case, the
particular jurisdiction and the number and solvency of co-defendants in a given
case.

As of February 28, 2002, we had a total of 1,865 active asbestos cases
compared to 919 as of February 28, 2001. During the quarter ended February 28,
2002, we secured dismissals and/or settlements of 71 claims for $396,000, net of
insurer payments and excluding defense costs, compared to 13 dismissals and/or
settlements for $164,193 for the quarter ended February 28, 2001. The increase
in the number of claims filed and the cost of resolving such claims is due, in
part, to the bankruptcy filings of various other asbestos litigation defendants.

We continue to vigorously defend all asbestos-related lawsuits. Under
cost-sharing arrangements with our insurers, our insurers have covered
substantially all of the indemnity and defense costs and we have paid the
balance. We cannot, however, assure you that the aggregate limits of such
insurance will be adequate to cover the costs of future asbestos claims.

We do not believe that our current asbestos suits will have a material
adverse effect on our business or operations. However, the potential cost of
liabilities associated with asbestos claims is subject to many uncertainties
including the ultimate number of claims filed, the cost of such claims, the
impact of bankruptcies of other companies currently involved in asbestos
litigation, unpredictable aspects of the litigation process from jurisdiction to
jurisdiction and from case to case, as well as potential legislative changes.
Accordingly, we cannot assure you that any additional suits will not have a
material adverse

S-37

effect on our business, financial condition, results of operations or cash
flows. We will continue to update developments on a quarterly basis.

ENVIRONMENTAL PROCEEDINGS

Various of our subsidiaries are, from time to time, identified as a
"potentially responsible party" under the Comprehensive Environmental Response,
Compensation and Liability Act and similar state environmental statutes. In some
cases, our subsidiaries are participating in the cost of certain clean-up
efforts or other remedial actions. However, our share of such costs has not been
material and we believe that these environmental proceedings will not have a
material adverse effect upon our consolidated financial position or results of
operations. See "Business -- Environmental Matters."

S-38

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors are described below. The authorized
number of directors is presently fixed at twelve, with the board divided into
three classes of four directors each, with each director serving a three year
term.

NAME AGE POSITION AND OFFICES WITH THE COMPANY
---- --- -------------------------------------

Thomas C. Sullivan 64 Chairman of the Board and Chief Executive Officer
James A. Karman 64 Vice Chairman
Frank C. Sullivan 41 President and Chief Operating Officer and a Director
Dennis F. Finn 49 Vice President - Environmental and Regulatory Affairs
Glenn R. Hasman 47 Vice President - Finance and Communications
Paul G. Hoogenboom 42 Vice President - Operations and Systems
Stephen J. Knoop 37 Vice President - Corporate Development
Robert L. Matejka 59 Vice President, Chief Financial Officer and Controller
Ronald A. Rice 39 Vice President - Administration
Keith R. Smiley 39 Vice President, Treasurer and Assistant Secretary
P. Kelly Tompkins 45 Vice President, General Counsel and Secretary
Dr. Max D. Amstutz 73 Director
Edward B. Brandon 70 Director
Lorrie Gustin 77 Director
E. Bradley Jones 74 Director
Donald K. Miller 70 Director
William A. Papenbrock 63 Director
Albert B. Ratner 74 Director
Jerry Sue Thornton 55 Director
Joseph P. Viviano 63 Director

Thomas C. Sullivan has been our Chairman of the Board and Chief
Executive Officer since October 1971. From June 1971 through September 1978, Mr.
Sullivan served as our President and, prior to that time, as Executive Vice
President. Mr. Sullivan commenced employment with us in 1961, and he has been a
Director since 1963. Mr. Sullivan is also a director of Pioneer-Standard
Electronics, Inc., National City Bank, Huffy Corporation and Kaydon Corporation.
Mr. Sullivan is the father of Frank C. Sullivan, our President and Chief
Operating Officer.

James A. Karman was elected Vice Chairman on August 5, 1999. From
September 1978 to August 1999, he served as our President and Chief Operating
Officer. Mr. Karman also served as Chief Financial Officer from October 1982 to
October 1993, and again from June 2001 to October 2001. From October 1973
through September 1978, Mr. Karman served as our Executive Vice President,
Secretary and Treasurer, and, prior to that time, as Vice President-Finance and
Treasurer. Mr. Karman is a director of A. Schulman, Inc., Metropolitan Financial
Corp. and Shiloh Industries, Inc.

Frank C. Sullivan was elected Chief Operating Officer on October 12,
2001 and President on August 5, 1999. From October 1995 to August 1999 he served
as Executive Vice President, and was Chief Financial Officer from October 1993
to August 1999. Mr. Sullivan served as a Vice President from October 1991 to
October 1995. Prior to these periods, he served as our Director of Corporate
Development from February 1989 to October 1991. Mr. Sullivan served as Regional
Sales Manager, from February 1988 to February 1989, and as a Technical Service
Representative, from February 1987 to February 1988, of AGR Company, an Ohio
General Partnership formerly owned by us. Prior to February 1987, Mr. Sullivan

S-39

was employed by First Union National Bank from 1985 to 1986 and Harris Bank from
1983 to 1985. Mr. Sullivan is the son of Thomas C. Sullivan, our Chairman of the
Board and Chief Executive Officer.

Dennis F. Finn was elected Vice President -- Environmental and
Regulatory Affairs on October 12, 2001. Prior to joining us in November 2000 as
director of environmental and regulatory affairs, Mr. Finn served for 10 years
as director of environmental health and safety at Day-Glo Color Corp., one of
our operating companies. He also held various positions with Nalco Chemical
Company and IIT Research Institute.

Glenn R. Hasman was elected Vice President -- Finance and Communications
on August 1, 2000. Mr. Hasman served as our Vice President-Controller from
August 1999 to August 2000 and served as Vice President-Financial Operations
from October 1993 to August 1999. From July 1990 to October 1993, Mr. Hasman
served as Controller. From September 1982 through July 1990, Mr. Hasman served
in a variety of management capacities, most recently Vice
President -- Operations and Finance, Chief Financial Officer and Treasurer, of
Proko Industries, Inc., one of our former wholly-owned subsidiaries. From 1979
to 1982, Mr. Hasman served as our Director of Internal Audit and from 1976 to
1979 he was associated with Ciulla, Smith & Dale, LLP, independent accountants.

Paul G. Hoogenboom was elected Vice President -- Operations on August 1,
2000. In 1999, Mr. Hoogenboom served as Vice President and General Manager of
our e-commerce subsidiary, RPM-e/c, Inc.. 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 consulting 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 Vice President -- Corporate Development on
August 5, 1999. From June 1996 to August 1999, Mr. Knoop served as our Director
of Corporate Development. From 1990 to May 1996, Mr. Knoop was an associate at
Calfee, Halter & Griswold LLP.

Robert L. Matejka was elected Chief Financial Officer on October 12,
2001 and Vice President -- Controller on August 1, 2000. From 1995 to 1999, he
served as Vice President -- Finance of the motor and drive systems businesses of
Rockwell International Corporation. From 1973 to 1995, Mr. Matejka served in
various capacities with Reliance Electric Company, most recently as its
Assistant Controller. From 1965 to 1973, he was an Audit Supervisor with Ernst &
Young.

Ronald A. Rice was elected Vice President -- Administration on October
12, 2001. He has also served as an Assistant Secretary since 1999. From August
1999 to October 2001, he served as our Vice President -- Risk Management and
Benefits. From 1997 to August 1999, he served as Director of Risk Management and
Employee Benefits, and from 1995 to 1997 he served as Director of Benefits. From
1985 to 1995, Mr. Rice served in various capacities with the Wyatt Company, most
recently he served as Senior Account Manager from 1992 to 1995.

Keith R. Smiley was elected Vice President and Assistant Secretary on
August 5, 1999, and has served as our Treasurer since February 1997. From
October 1993 to February 1997, he served as our Controller. From January 1992
until February 1997, Mr. Smiley also served as our Internal Auditor. Prior
thereto, he was associated with Ciulla, Smith & Dale, LLP.

P. Kelly Tompkins has served as Vice President, General Counsel and
Secretary since June 1998. From June 1996 to June 1998, Mr. Tompkins served as
Assistant General Counsel. From 1987 to 1995, Mr. Tompkins was employed by
Reliance Electric Company in various positions including Senior Corporate
Counsel, Director of Corporate Development and Director of Investor Relations.
From 1985 to 1987, Mr. Tompkins was employed as a litigation attorney by Exxon
Corporation and from 1981 to 1984, was employed as a corporate attorney by
Reliance Electric Company, an affiliate of Exxon.

Dr. Max D. Amstutz has been on our board of directors since 1995 and has
held his present position as Chairman of SGS-Societe Generale de Surviellance
Holding S.A., a leader in verification,

S-40

testing and certification, since 1998. From 1994 to 2000, Dr. Amstutz was
Chairman and Chief Executive Officer of Von Roll Holding Ltd. a designer and
manufacturer of environmental technology products, electrotechnical and
industrial insulation systems and industrial metal specialties.

Edward B. Brandon has been on our board of directors since 1989. Mr.
Brandon retired in 1995 as Chairman of National City Corporation on whose board
he continues to serve. Mr. Brandon also served as the Chief Executive Officer of
National City Corporation from 1987 until 1995.

Lorrie Gustin has been on our board of directors since 1992. Ms. Gustin
has been Director of the National Association of Investors Clubs Trust since
1982, and Secretary of the World Federation of Investment Clubs since 1978.

E. Bradley Jones has been on our board of directors since 1990. Mr.
Jones retired in 1984 as Chairman and Chief Executive Officer of LTV Steel
Company and Group Vice President of The LTV Corporation. Prior thereto, Mr.
Jones was Chairman and Executive Officer of Republic Steel Corporation. Mr.
Jones is also a director of CSX Corporation and a Trustee of Fidelity Charitable
Gift Fund.

Donald K. Miller has been on our board of directors since 1972. Since
1999, Mr. Miller has served as Chairman of Axiom International Investor LLC, an
international equity asset firm. From 1992 to 1997, Mr. Miller was Chairman of
Greylock Financial Inc., a venture capital firm. Mr. Miller is also a director
of Huffy Corporation.

William A. Papenbrock has been on our board of directors since 1972. Mr.
Papenbrock retired as partner of Calfee, Halter & Griswold LLP, a Cleveland law
firm that serves as counsel to us, in December 1999. Mr. Papenbrock became a
partner of the firm in 1969 and is the past Vice Chairman of the firm's
Executive Committee.

Albert B. Ratner has been on our board of directors since 1996. Mr.
Ratner has been Co-Chairman of the Board of Forest City Enterprises, Inc. since
1995. Prior thereto, he served as Chief Executive Officer and President of
Forest City Enterprises, Inc.

Dr. Jerry Sue Thornton has been on our board of directors since 1999.
Dr. Thornton has served as President of Cuyahoga Community College since 1992.
Dr. Thornton is also a director of National City Corporation, American Greetings
Corporation, Applied Industrial Technologies, Inc. and Office Max, Inc.

Joseph P. Viviano has been on our board of directors since 2001. Mr.
Viviano is the retired Vice Chairman of Hershey Foods. Prior to his retirement,
Mr. Viviano served as the Vice Chairman of Hershey Foods from 1999 to 2000, and
as its President and Chief Operating Officer form 1994 to 1999. Mr. Viviano is
also a director of Chesapeake Corporation, Harsco Corporation, Huffy Corporation
and R.J Reynolds Tobacco Holdings, Inc.

S-41

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting
agreement, the underwriters named below have severally agreed to purchase, and
we have agreed to sell each underwriter, the number of common shares set forth
opposite their name below. J.P. Morgan Securities Inc., Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Robert W. Baird & Co.
Incorporated and McDonald Investments Inc. are the representatives of the
underwriters.

NAME NUMBER OF SHARES
---- ----------------

J.P. Morgan Securities Inc..................................
Lehman Brothers Inc.........................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Robert W. Baird & Co. Incorporated..........................
McDonald Investments Inc....................................
Total.................................................. 10,000,000

The underwriting agreement provides that the obligations of the
underwriters to purchase our common shares included in this offering are subject
to the approval of the validity of the common shares by counsel and other
conditions. The underwriters are obligated to take and pay for all of the shares
(other than those covered by the over-allotment option described below) if any
are taken.

We have granted to the underwriters an option, exercisable for 30 days
from the date hereof, to purchase up to an additional 1,500,000 common shares at
the public offering price less the underwriting discount set forth on the cover
page of this prospectus. The underwriters may exercise that option solely for
the purpose of covering over-allotments, if any, made in connection with this
offering.

The following table shows the per share and total underwriting discount
to be paid to the underwriters by us. These amounts are shown assuming both no
exercise and full exercise of the underwriters' option to purchase additional
shares.

NO EXERCISE FULL EXERCISE
----------- -------------

Per share............................................ $ $
Total................................................ $ $
-------- --------

Shares sold by the underwriters to the public will initially be offered
at the public offering price set forth on the cover of this prospectus. Any
shares sold by the underwriters to securities dealers may be sold at a discount
of up to $ per share from the public offering price. Any such securities
dealers may resell any shares purchased from the underwriters to certain other
brokers or dealers at a discount of up to $ per share from the public
offering price. If all the shares are not sold at the public offering price, the
representatives may change the offering price and the other selling terms. In
addition, we may pay at our sole discretion to any representative(s) an
aggregate success fee of up to $ per share.

A prospectus in electronic format may be available on the web sites
maintained by one or more underwriters, or selling group members, if any,
participating in the offering. The underwriters may agree to allocate a number
of shares to underwriters and selling group members for sale to their online
brokerage account holders. Internet distributions will be allocated by the lead
managers to underwriters and selling group members that may make Internet
distributions on the same basis as other allocations.

We and our executive officers and directors have agreed not to sell or
transfer any common shares for 90 days after the date of this prospectus
supplement without first obtaining the written consent of J.P. Morgan Securities
Inc. and Lehman Brothers Inc. Specifically, we and these other individuals have
agreed not to directly or indirectly:

- offer for sale, sell, pledge or otherwise dispose of (or enter into
any transaction or device which is designed to, or could be expected
to, result in the disposition by any person at any time in the future
of) any common shares or securities convertible into or exchangeable
for common

S-42

shares, or sell or grant options, rights or warrants with respect to
any common shares or securities convertible into or exchangeable for
common shares, or

- enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of
ownership of such common shares,

whether any such transaction described above is to be settled by delivery of
common shares or other securities, in cash or otherwise.

The restrictions described in the preceding paragraph do not apply to:

- the sale of the common shares to the underwriters;

- the issuance by us of common shares pursuant to employee benefit
plans, qualified stock option plans or other employee compensation
plans existing on the date of this prospectus supplement or pursuant
to currently outstanding options, warrants or rights or the grant by
us of options pursuant to option plans existing on the date of this
prospectus supplement; or

- the issuance by us of common shares no earlier than 45 days after the
date of this prospectus supplement in an aggregate amount not to
exceed $15 million in connection with the acquisition of another
company.

We have agreed to indemnify the underwriters against, or contribute to
payments that the underwriters may be required to make in respect of certain
liabilities under the Securities Act of 1933, as amended.

The underwriters may engage in stabilizing transactions, syndicate
covering transactions and penalty bids in accordance with Rule 104 under the
Securities Exchange Act of 1934, as amended, in connection with this offering.
Stabilizing transactions permit bids to purchase the common shares so long as
the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the common shares in the open market following
completion of this offering to cover all or a portion of a syndicate short
position created by the underwriters selling more common shares in connection
with this offering than they are committed to purchase from us. In addition, the
underwriters may impose "penalty bids" under contractual arrangements between
the underwriters and dealers participating in this offering whereby they may
reclaim from a dealer participating in this offering the selling concession with
respect to common shares that are distributed in this offering but subsequently
purchased for the account of the underwriters in the open market. Such
stabilizing transactions, syndicate covering transactions and penalty bids may
result in the maintenance of the price of the common share at a level above that
which might otherwise prevail in the open market. None of the transactions
described in this paragraph is required and, if any are undertaken, they may be
discontinued at any time.

We estimate that our share of the total expenses of this offering,
excluding underwriting discount will be approximately $800,000.

Some of the underwriters or their affiliates are parties to certain of
our credit agreements currently in place and will receive their proportionate
shares of the debt repayments made from the proceeds of this offering. See "Use
of Proceeds." The Chase Manhattan Bank and Chase Securities Inc., affiliates of
J.P. Morgan Securities Inc., are the administrative agent and arranger,
respectively, and lenders under the $500 million, five-year revolving credit
agreement and the $200 million one-year term loan. Key Bank, an affiliate of
McDonald Investments Inc., is also a lender under those two loan agreements as
well as a $15 million committed bilateral loan. Because more than 10% of the
proceeds of the offering may be paid to members or affiliates of members of the
National Association of Securities Dealers, Inc. participating in this offering,
this offering will be conducted in accordance with Rule 2710(c)(8) of the
Conduct Rules of the National Association of Securities Dealers, Inc.

In the ordinary course of the underwriters' respective businesses, the
underwriters and their affiliates have engaged and may engage in commercial and
investment banking transactions with us and our affiliates for which they have
received customary fees and expenses.

S-43

As of December 31, 2001, J.P. Morgan Investment Management Inc. and J.P.
Morgan Private Bank, affiliates of J.P. Morgan Securities Inc., were deemed to
beneficially own, in their capacity as investment advisors, 15,400 and 20,768
common shares, respectively, of our company.

The underwriters have informed us that they do not intend sales to
discretionary accounts to exceed five percent of the total number of common
shares offered by them. No sales to discretionary accounts may be made without
the prior written approval of the customer.

A prospectus has not and will not be filed to qualify the sale of the
common shares in Canada or any Province or Territory thereof. Common shares are
not and may not be offered or sold, directly or indirectly, in any Province or
Territory of Canada or to or for the account of any resident of Canada except
pursuant to an exemption from the applicable registration and prospectus filing
requirements, and otherwise in compliance with the applicable securities laws
and regulations of such Province or Territory.

LEGAL MATTERS

The validity of the common shares offered by this prospectus supplement
will be passed upon for us by Calfee, Halter & Griswold LLP, Cleveland, Ohio.
Certain legal matters related to the offering will be passed upon for the
underwriters by Davis Polk & Wardwell.

EXPERTS

Ciulla, Smith & Dale, LLP, independent accountants, have audited our
consolidated financial statements and schedules for the years ended May 31,
2001, 2000 and 1999 included in this prospectus supplement, as set forth in
their report, which is also included in this prospectus supplement and
incorporated by reference in the accompanying prospectus. Our financial
statements and required schedules are included herein and incorporated by
reference in reliance on Ciulla, Smith & Dale, LLP's report, given on their
authority as experts in accounting and auditing.

S-44

INDEX TO FINANCIAL STATEMENTS

PAGE
----

Independent Auditor's Report................................ F-2
Consolidated Balance Sheets at May 31, 2001 and 2000........ F-3
Consolidated Statements of Income for the Fiscal Years Ended
May 31, 2001, 2000 and 1999............................... F-4
Consolidated Statements of Shareholders' Equity for the
Fiscal Years Ended May 31, 2001, 2000 and 1999............ F-5
Consolidated Statements of Cash Flows for the Fiscal Years
Ended May 31, 2001, 2000 and 1999......................... F-6
Notes to Consolidated Financial Statements for the Fiscal
Years Ended May 31, 2001, 2000 and 1999................... F-7
Consolidated Balance Sheets at November 30, 2001 (unaudited)
and May 31, 2001.......................................... F-24
Consolidated Statements of Income for the Six and Three
Months Ended November 30, 2001 and 2000 (unaudited)....... F-25
Consolidated Statements of Cash Flows for the Six Months
Ended November 30, 2001 and 2000 (unaudited).............. F-26
Notes to Consolidated Financial Statements for the Six and
Three Months Ended November 30, 2001 (unaudited).......... F-27

F-1

INDEPENDENT AUDITOR'S REPORT

To The Board of Directors and Shareholders
RPM, Inc. and Subsidiaries
Medina, Ohio

We have audited the accompanying consolidated balance sheets of RPM, Inc.
and Subsidiaries as of May 31, 2001 and 2000, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the years
in the three year period ended May 31, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the 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 financial position of RPM, Inc.
and Subsidiaries at May 31, 2001 and 2000, and the results of their operations
and their cash flows for each of the years in the three year period ended May
31, 2001, in conformity with accounting principles generally accepted in the
United States.

/s/ CIULLA, SMITH & DALE, LLP

Cleveland, Ohio
July 2, 2001

F-2

RPM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

MAY 31,
-----------------------
2001 2000
---------- ----------

ASSETS
Current assets:
Cash and short-term investments (Note A).................. $ 23,926 $ 31,340
Trade accounts receivable (less allowances of $17,705 in
2001 and $16,248 in 2000).............................. 411,718 399,683
Inventories (Note A)...................................... 277,494 244,559
Prepaid expenses and other current assets................. 106,282 109,510
---------- ----------
TOTAL CURRENT ASSETS........................................ 819,420 785,092
---------- ----------
Property, plant and equipment, at cost (Note A)
Land...................................................... 21,713 24,055
Buildings and leasehold improvements...................... 188,590 190,658
Machinery and equipment................................... 412,751 384,966
---------- ----------
623,054 599,679
Less allowance for depreciation and amortization.......... 261,018 233,451
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET.......................... 362,036 366,228
---------- ----------
Other assets:
Goodwill, net of amortization (Note A).................... 571,276 595,106
Other intangible assets, net of amortization (Note A)..... 300,372 320,631
Other..................................................... 25,386 32,146
---------- ----------
TOTAL OTHER ASSETS.......................................... 897,034 947,883
---------- ----------
TOTAL ASSETS................................................ $2,078,490 $2,099,203
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes and accounts payable................................ $ 152,307 $ 154,256
Current portion of long-term debt (Note B)................ 7,379 4,987
Accrued compensation and benefits......................... 74,888 76,314
Accrued loss reserves (Note H)............................ 55,416 64,765
Accrued restructuring reserve (Note I).................... -0- 13,540
Other accrued liabilities................................. 75,022 61,326
Income taxes payable (Notes A and C)...................... 10,756 1,014
---------- ----------
TOTAL CURRENT LIABILITIES................................... 375,768 376,202
---------- ----------
Long-term liabilities:
Long-term debt, less current maturities (Note B).......... 955,399 959,330
Other long-term liabilities............................... 53,479 57,381
Deferred income taxes (Notes A and C)..................... 54,134 60,566
---------- ----------
TOTAL LONG-TERM LIABILITIES................................. 1,063,012 1,077,277
---------- ----------
TOTAL LIABILITIES........................................... 1,438,780 1,453,479
---------- ----------
Shareholders' equity:
Common shares, stated value $.015 per share; authorized
200,000 shares; issued 111,153 and outstanding 102,211
in 2001; issued 110,947 and outstanding 103,134 in 2000
(Note D)............................................... 1,619 1,616
Paid-in capital........................................... 430,015 424,077
Treasury shares, at cost (Note D)......................... (99,308) (88,516)
Accumulated other comprehensive loss (Note A)............. (53,074) (39,555)
Retained earnings......................................... 360,458 348,102
---------- ----------
TOTAL SHAREHOLDERS' EQUITY.................................. 639,710 645,724
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $2,078,490 $2,099,203
========== ==========

See notes to consolidated financial statements.

F-3

RPM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

YEAR ENDED MAY 31,
--------------------------------------
2001 2000 1999
---------- ---------- ----------

Net Sales.............................................. $2,007,762 $1,962,410 $1,720,628
Cost of sales.......................................... 1,127,787 1,099,637 927,110
---------- ---------- ----------
Gross profit........................................... 879,975 862,773 793,518
Selling, general and administrative expenses........... 713,285 687,249 601,140
Restructuring and asset impairment charge (Note I)..... -0- 51,970 -0-
Interest expense, net.................................. 65,203 51,793 32,781
---------- ---------- ----------
Income before income taxes............................. 101,487 71,761 159,597
Provision for income taxes (Note C).................... 38,526 30,769 65,051
---------- ---------- ----------
Net Income............................................. $ 62,961 $ 40,992 $ 94,546
========== ========== ==========
Average shares outstanding (Note D).................... 102,202 107,221 108,731
========== ========== ==========
Basic earnings per common share (Note D)............... $ .62 $ .38 $ .87
========== ========== ==========
Diluted earnings per common share (Note D)............. $ .62 $ .38 $ .86
========== ========== ==========
Cash dividends per common share........................ $ .498 $ .485 $ .465
========== ========== ==========

See notes to consolidated financial statements.

F-4

RPM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)

COMMON SHARES ACCUMULATED
------------------ OTHER
NUMBER COMPREHENSIVE
OF SHARES STATED PAID-IN TREASURY LOSS RETAINED
(NOTE D) VALUE CAPITAL SHARES (NOTE A) EARNINGS TOTAL
--------- ------ -------- -------- ------------- -------- --------

BALANCE AT MAY 31, 1998...... 100,254 $1,460 $264,508 $ $(14,542) $314,911 $566,337
--------
Comprehensive income
Net income................. 94,546 94,546
Reclassification
adjustments.............. (65) (65)
Other comprehensive loss... (9,301) (9,301)
--------
Comprehensive income... 85,180
Dividends paid............... (50,446) (50,446)
Debt conversion.............. 10,135 148 156,896 157,044
Business combinations........ (24) (417) (417)
Repurchase of shares......... (1,296) (17,044) (17,044)
Stock option exercises....... 281 4 2,218 2,222
Restricted share awards...... 93 1 (1)
------- ------ -------- -------- -------- -------- --------
BALANCE AT MAY 31, 1999...... 109,443 1,613 423,204 (17,044) (23,908) 359,011 742,876
--------
Comprehensive income
Net income................. 40,992 40,992
Reclassification
adjustments.............. 738 738
Other comprehensive loss... (16,385) (16,385)
--------
Comprehensive income... 25,345
Dividends paid............... (51,901) (51,901)
Repurchase of shares......... (6,517) (71,472) (71,472)
Stock option exercises....... 100 1 875 876
Restricted share awards...... 108 2 (2)
------- ------ -------- -------- -------- -------- --------
BALANCE AT MAY 31, 2000...... 103,134 1,616 424,077 (88,516) (39,555) 348,102 645,724
--------
Comprehensive income Net
income..................... 62,961 62,961
Reclassification
adjustments.............. 1,015 1,015
Other comprehensive loss... (14,534) (14,534)
--------
Comprehensive income... 49,442
Dividends paid............... (50,605) (50,605)
Repurchase of shares......... (1,157) (11,101) (11,101)
Stock option exercises....... 59 1 101 309 411
Restricted share awards...... 175 2 5,837 5,839
------- ------ -------- -------- -------- -------- --------
BALANCE AT MAY 31, 2001...... 102,211 $1,619 $430,015 $(99,308) $(53,074) $360,458 $639,710
======= ====== ======== ======== ======== ======== ========

See notes to consolidated financial statements.

F-5

RPM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

YEAR ENDED MAY 31,
---------------------------------
2001 2000 1999
--------- --------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 62,961 $ 40,992 $ 94,546
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation......................................... 43,035 42,290 34,803
Amortization of goodwill............................. 19,694 18,352 13,625
Other amortization................................... 18,765 18,508 13,707
Asset impairment charge, net of gains................ 3,354 6,940
(Decrease) in deferred liabilities................... (6,432) (31,081) (4,189)
(Earnings) of unconsolidated affiliates.............. (275) (435) (2,332)
Changes in assets and liabilities, net of effect from
purchases and sales of businesses:
(Increase) decrease in accounts receivable........... (11,095) 6,251 (27,828)
(Increase) decrease in inventory..................... (37,578) 4,716 11,089
(Increase) in prepaid and other assets............... (9,735) (13,484) (11,523)
Increase (decrease) in accounts payable.............. (2,812) 1,615 (6,349)
Increase (decrease) in accrued restructuring......... (13,540) 13,540
Increase (decrease) in accrued liabilities........... 12,373 (11,285) 7,639
Other................................................ (4,220) 5,659 (5,467)
--------- --------- ---------
Cash From Operating Activities..................... 74,495 102,578 117,721
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures...................................... (54,118) (63,185) (63,406)
Acquisition of businesses, net of cash acquired........... (2,645) (323,033) (34,551)
Purchase of marketable securities......................... (21,906) (19,816) (31,666)
Proceeds from marketable securities....................... 28,283 13,142 29,895
Joint ventures (investments) and distributions............ 647 (500) 1,063
Proceeds from sale of assets and businesses............... 31,694 55,290 565
--------- --------- ---------
Cash From (Used For) Investing Activities.......... (18,045) (338,102) (98,100)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term and short-term debt................ 708,850 937,077 494,127
Reductions of long-term and short-term debt............... (710,389) (566,610) (469,022)
Cash dividends............................................ (50,605) (51,901) (50,446)
Exercise of stock options................................. 411 876 2,222
Repurchase of shares...................................... (11,101) (71,472) (17,044)
--------- --------- ---------
Cash From (Used For) Financing Activities.......... (62,834) 247,970 (40,163)
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH................... (1,030) (835) (512)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH........................... (7,414) 11,611 (21,054)
--------- --------- ---------
CASH AT BEGINNING OF YEAR................................. 31,340 19,729 40,783
--------- --------- ---------
CASH AT END OF YEAR....................................... $ 23,926 $ 31,340 $ 19,729
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Cash paid during the year for:
Interest................................................ $ 60,027 $ 55,253 $ 36,155
Income taxes............................................ $ 35,216 $ 70,086 $ 71,904
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Shares issued for restricted stock plan................... $ 1,459 $ 1,202 $ 1,385
Receivables (debt) from business combinations............. $ (6,724) $ (1,557)
Interest accreted on convertible securities............... $ 1,696
Shares (returned) in business combinations................ $ (417)
Conversion of debt to equity.............................. $ 157,044

See notes to consolidated financial statements.

F-6

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2001, 2000 AND 1999

NOTE A -- A SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

(1) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of RPM, Inc. and
its majority owned subsidiaries. The Company accounts for its investment in less
than majority owned joint ventures under the equity method. Intercompany
accounts, transactions and unrealized profits and losses are eliminated in
consolidation.

Certain reclassifications have been made to prior year amounts to conform
with the current year presentation.

(2) BUSINESS COMBINATIONS

During the two year period ended May 31, 2001, the Company completed
several acquisitions which have been accounted for by the purchase method of
accounting. The $199,435,000 difference between the fair value of net assets
acquired and the purchase consideration of $354,810,000 has been allocated to
goodwill. The assets, liabilities and operating results of these companies are
reflected in the Company's financial statements from their respective dates of
acquisition forward.

The Company also completed several divestitures of businesses and product
lines during the past two years, realizing proceeds of $74,262,000. The
resulting net gains of $823,000 for the year ended May 31, 2001 and $11,993,000
for the year ended May 31, 2000, when netted against non-recurring costs, had an
immaterial effect on net income.

Pro forma results of operations, reflecting the acquisitions and
divestitures for the years ended May 31, 2001 and May 31, 2000, were not
materially different from reported results.

(3) FOREIGN CURRENCY

The functional currency of foreign subsidiaries is their local currency.
Accordingly, for the periods presented, assets and liabilities have been
translated using exchange rates at year end while income and expense for the
periods have been translated using an annual average exchange rate. The
resulting translation adjustments have been recorded in other comprehensive
loss, a component of shareholders' equity, and will be included in net earnings
only upon the sale or liquidation of the underlying foreign investment, which is
not contemplated at this time. Transaction gains and losses have been immaterial
during the past three fiscal years.

F-7

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(4) COMPREHENSIVE INCOME

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

FOREIGN MINIMUM UNREALIZED
CURRENCY PENSION GAIN (LOSS)
TRANSLATION LIABILITY ON
ADJUSTMENTS ADJUSTMENTS SECURITIES TOTAL
------------ ----------- ----------- --------
(IN THOUSANDS)

Balance at May 31, 1998........................ $(13,821) $(786) $ 65 $(14,542)
Reclassification adjustments for (gains)
losses included in net income............. (65) (65)
Other Comprehensive Loss..................... (8,496) (67) (738) (9,301)
-------- ----- ------- --------
Balance at May 31, 1999........................ (22,317) (853) (738) (23,908)
Reclassification adjustments for (gains)
losses included in net income............. 738 738
Other Comprehensive Loss..................... (16,223) 853 (1,015) (16,385)
-------- ----- ------- --------
Balance at May 31, 2000........................ (38,540) (1,015) (39,555)
Reclassification adjustments for (gains)
losses included in net income............. 1,015 1,015
Other Comprehensive Loss..................... (14,552) (102) 120 (14,534)
-------- ----- ------- --------
BALANCE AT MAY 31, 2001........................ $(53,092) $(102) $ 120 $(53,074)
======== ===== ======= ========

(5) CASH AND SHORT-TERM INVESTMENTS

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents. The Company does not believe it is exposed to any
significant credit risk on cash and short-term investments.

(6) MARKETABLE SECURITIES

Marketable securities, all of which are classified as available for sale,
total $24,480,000 and $29,277,000 at May 31, 2001 and 2000, respectively. The
estimated fair values of these securities are included in other current assets
and are based on quoted market prices.

(7) FINANCIAL INSTRUMENTS

The Company's 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.

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

(8) INVENTORIES

Inventories are stated at the lower of cost or market, cost being
determined substantially on a first-in, first-out (FIFO) basis and market being
determined on the basis of replacement cost or net realizable

F-8

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

value. Inventory costs include raw material, labor and manufacturing overhead.
Inventories were composed of the following major classes:

MAY 31
-------------------
2001 2000
-------- --------
(IN THOUSANDS)

Raw material and supplies................................ $ 89,071 $ 86,755
Finished goods........................................... 188,423 157,804
-------- --------
Total Inventory.......................................... $277,494 $244,559
======== ========

(9) DEPRECIATION

Depreciation is computed over the estimated useful lives of the assets
primarily using the straight-line method. Depreciation expense charged to
operations for the three years ended May 31, 2001 was $43,035,000, $42,290,000
and $34,803,000, respectively. The annual depreciation rates are based on the
following ranges of useful lives:

Land improvements........................................... 10 to 50 years
Buildings and improvements.................................. 5 to 50 years
Machinery and equipment..................................... 3 to 20 years

(10) INTANGIBLES

The excess of cost over the underlying value of the net assets of companies
acquired is being amortized on the straight-line basis, primarily over 40 years.
Amortization expense charged to operations for the three years ended May 31,
2001 was $19,694,000, $18,352,000 and $13,625,000, respectively. Goodwill is
shown net of accumulated amortization of $103,494,000 at May 31, 2001
($88,060,000 at May 31, 2000).

Intangible assets also represent costs allocated to formulae, trademarks
and other specifically identifiable assets arising from business acquisitions.
These assets are being amortized using the straight-line method principally over
periods of 7 to 40 years. The Company assesses the recoverability of the excess
of cost over the assigned value of net assets acquired by determining whether
the amortization of the balance over its remaining life can be recovered through
undiscounted future operating cash flows of the acquired operations.
Amortization expense charged to operations for the three years ended May 31,
2001 was $16,602,000, $17,084,000 and $12,504,000, respectively.

Other intangible assets consist of the following major classes:

MAY 31
-------------------
2001 2000
-------- --------
(IN THOUSANDS)

Formulae................................................. $167,845 $170,146
Trademarks............................................... 105,466 106,363
Distributor networks..................................... 39,034 39,076
Workforce................................................ 38,107 40,589
Other.................................................... 30,627 34,635
-------- --------
381,079 390,809
Accumulated amortization................................. 80,707 70,178
-------- --------
OTHER INTANGIBLE ASSETS, NET............................. $300,372 $320,631
======== ========

F-9

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

(11) RESEARCH AND DEVELOPMENT

Research and development costs are charged to operations when incurred and
are included in operating expenses. The amounts charged for the three years
ended May 31, 2001 were $21,841,000, $22,328,000 and $18,022,000, respectively.
The customer sponsored portion of such expenditures was not significant.

(12) INTEREST EXPENSE, NET

Interest expense is shown net of investment income which consists of
interest, dividends and capital gains. Investment income for the three years
ended May 31, 2001 was $3,682,000, $2,643,000 and $4,880,000, respectively.

(13) INCOME TAXES

The Company and its wholly owned domestic subsidiaries file a consolidated
federal income tax return. The tax effects of transactions are recognized in the
year in which they enter into the determination of net income, regardless of
when they are recognized for tax purposes. As a result, income tax expense
differs from actual taxes payable. The accumulation of these differences at May
31, 2001 is shown as a noncurrent liability of $54,134,000 (net of a noncurrent
asset of $74,268,000). At May 31, 2000, the noncurrent liability was $60,566,000
(net of a noncurrent asset of $72,323,000). The Company does not intend to
distribute the accumulated earnings of consolidated foreign subsidiaries
amounting to $102,847,000 at May 31, 2001, and $92,706,000 at May 31, 2000, and
therefore no provision has been made for the taxes which would result if such
earnings were remitted to the Company.

(14) ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

(15) CHANGES IN ACCOUNTING POLICIES

DERIVATIVES

The Company adopted Statement of Financial Accounting Standards No. 133
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133")
beginning June 1, 2001. SFAS No. 133, as amended by SFAS No. 138, establishes
accounting and reporting standards that require derivative instruments to be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 also requires that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. The Company has only limited involvement with derivative
financial instruments and does not use them for trading purposes. The adoption
of SFAS No. 133 will not have a material impact on the Company's consolidated
results of operations, financial position or cash flows.

REVENUE RECOGNITION

The Company's subsidiaries recognize revenue when title and risk of loss
passes to customers. Staff Accounting Bulletin No. 101, "Revenue Recognition,"
issued by the Securities and Exchange Commission, did not have an impact on the
Company's operating revenues for any of the years presented.

F-10

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The Financial Accounting Standards Board's Emerging Issues Task Force
pronouncements issued during the current year covering shipping and handling
costs and certain sales incentives have been adopted. The net impact of these
accounting changes resulted in modest increases in net sales with offsets to
selling, general and administrative expenses. This change has no effect on the
dollar amount of the Company's net income. Prior year net sales and selling,
general and administrative expenses have been reclassified to conform to current
period presentation.

Shipping costs paid to third party shippers for transporting products to
customers are included in selling, general and administrative expense. For the
years ended May 31, 2001, 2000 and 1999, shipping costs were $75,400,000,
$66,100,000 and $56,000,000, respectively.

GOODWILL AND OTHER INTANGIBLES

The Company adopted Statement of Financial Accounting Standards No. 142
"Goodwill and Other Intangible Assets" effective June 1, 2001. The Standard
replaces the requirement to amortize goodwill and certain other intangible
assets with an impairment test requirement. The Company is in the process of
evaluating this Standard and its impact on net income.

F-11

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE B -- BORROWINGS

A description of long-term debt follows:

MAY 31,
-------------------
2001 2000
-------- --------
(IN THOUSANDS)

Revolving credit agreement for $500,000,000 with a syndicate
of banks through July 14, 2005. Interest, which is tied to
LIBOR, averaged 6.09% at May 31, 2001. The Chairman of the
Board and Chief Executive Officer of the Company is a
director of one of the banks providing this facility...... $500,000 $ -0-
Revolving 364-day credit agreement for $200,000,000 with a
syndicate of banks. Interest, which is tied to LIBOR,
averaged 5.62% at May 31, 2001............................ 155,700 -0-
Commercial Paper refinanced with proceeds from the credit
agreements described above................................ -0- 604,000
Short-term borrowings with a bank bearing interest of 5.63%
at May 31, 2001.
These obligations along with other short-term borrowings
have been reclassified as long-term debt reflecting the
Company's intent and ability, through unused credit
facilities, to refinance these obligations............. 33,000 75,000
7.00% unsecured senior notes due June 15, 2005.............. 150,000 150,000
Unsecured notes due March 1, 2008. Interest, which is tied
to LIBOR, averaged 5.10% at May 31, 2001.................. 100,000 100,000
Revolving multi-currency credit agreement for $15,000,000
with a bank through December 31, 2002. Interest, which is
tied to one of various rates, averaged 5.67% at May 31,
2001...................................................... 9,827 -0-
Revolving 364-day multi-currency credit agreement for
$23,445,000 with a bank. Interest, which is tied to one of
various rates, averaged 5.30% at May 31, 2000. ........... -0- 17,553
6.75% unsecured senior notes due to an insurance company in
annual installments through 2003.......................... 5,143 6,857
Other notes and mortgages payable at various rates of
interest due in installments through 2008, substantially
secured by property....................................... 9,108 10,907
-------- --------
962,778 964,317
Less current portion........................................ 7,379 4,987
-------- --------
TOTAL LONG-TERM DEBT, LESS CURRENT MATURITIES............... $955,399 $959,330
======== ========

Subsequent to year end, the Company refinanced the $200,000,000 credit
agreement with a one-year term loan due July 12, 2002.

At May 31, 2001, the Company had additional unused short-term lines of
credit with several banks totalling $51,600,000, in addition to the $44,300,000
available under the $200 million, 364-day revolving credit agreement.

The aggregate maturities of long-term debt for the five years subsequent to
May 31, 2001 are as follows: 2002 -- $7,379,000; 2003 -- $202,075,000;
2004 -- $2,960,000; 2005 -- $269,000; 2006 -- $650,030,000.

F-12

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE C -- INCOME TAXES

Consolidated income before taxes consists of the following:

YEAR ENDED MAY 31,
-----------------------------
2001 2000 1999
-------- ------- --------
(IN THOUSANDS)

United States................................... $ 81,853 $41,424 $124,965
Foreign......................................... 19,634 30,337 34,632
-------- ------- --------
$101,487 $71,761 $159,597
======== ======= ========
Provision for income taxes consists of the
following:
Current:
U.S. federal.................................. $ 38,991 $43,174 $ 48,609
State and local............................... 3,829 3,547 7,448
Foreign....................................... 2,138 15,129 13,183
-------- ------- --------
44,958 61,850 69,240
-------- ------- --------
Deferred:
U.S. federal.................................. (4,831) (29,028) (6,238)
Foreign....................................... (1,601) (2,053) 2,049
-------- ------- --------
(6,432) (31,081) (4,189)
-------- ------- --------
PROVISION FOR INCOME TAXES...................... $ 38,526 $30,769 $ 65,051
======== ======= ========

A reconciliation between the actual income tax expense provided and the
income tax expense computed by applying the statutory federal income tax rate of
35% to income before tax is as follows:

Income taxes at U.S. statutory rate............. $ 35,520 $25,116 $ 55,859
Difference in foreign taxes versus the U.S.
statutory rate................................ (1,563) 2,458 1,032
State and local income taxes net of federal
income tax benefit............................ 2,489 2,306 4,841
Tax credits..................................... (676) (340) (660)
Amortization of goodwill........................ 4,530 4,285 3,326
Tax benefits from foreign sales corporation..... (1,675) (1,725) (1,860)
Other........................................... (99) (1,331) 2,513
-------- ------- --------
ACTUAL TAX EXPENSE.............................. $ 38,526 $30,769 $ 65,051
======== ======= ========
ACTUAL TAX RATE................................. 37.96% 42.88% 40.76%
======== ======= ========

Deferred income taxes result from timing differences in recognition of
revenue and expense for book and tax purposes, primarily from the tax timing
differences relating to business combinations.

NOTE D -- COMMON SHARES

There are 200,000,000 common shares authorized with a stated value of $.015
per share. At May 31, 2001 and 2000, there were 102,211,000 and 103,134,000
shares outstanding, respectively, each of which is entitled to one vote.

Basic earnings per share is computed by dividing income available to common
shareholders, the numerator, by the weighted average number of common shares
outstanding during each year, the denominator (102,202,000 in 2001, 107,221,000
in 2000 and 108,731,000 in 1999). In computing diluted earnings per share, the
net income was increased in 1999 by the add back of interest expense, net of
tax, on convertible securities assumed to be converted. In addition, the number
of common shares was

F-13

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

increased by common stock options with exercisable prices lower than the average
market prices of common shares during each year and reduced by the number of
shares assumed to have been purchased with proceeds from the exercised options.
In 1999 the number of common shares was also increased by additional shares
issuable assuming conversion of convertible securities.

In April 1997, the Company adopted a Restricted Stock Plan. The Plan is
intended to replace, over a period of time, the Company's existing cash based
Benefit Restoration Plan. Under the terms of the Plan, up to 1,563,000 shares
may be awarded to certain employees through May 2007. For the year ended May 31,
2001, 175,000 shares were awarded under this Plan, net of forfeitures (108,000
shares in 2000). Substantially, none of these awards, which generally are
subject to forfeiture until the completion of five years of service, were vested
at May 31, 2001 or 2000.

In 1999, the Company authorized the repurchase of up to 10,000,000 of its
common shares. The repurchase of shares under this program were made in the open
market or in private transactions, at times and in amounts and prices that
management deemed appropriate. The Company terminated the repurchase program in
July 2000, through which time the Company had repurchased 8,970,000 shares
(7,813,000 through May 31, 2000) at an aggregate cost of $99,617,000
($88,516,000 at May 31, 2000). The Company has subsequently reissued 28,000 of
these shares in connection with its Stock Option program, bringing the balance
to 8,942,000 in treasury shares. Shares repurchased under this program are held
at cost and are included in Shareholders' Equity as treasury shares.

In April 1999, the Company adopted a Shareholder Rights Plan and declared a
dividend distribution of one right for each outstanding common share. The Plan
provides existing shareholders the right to purchase shares of the Company at a
discount in certain circumstances as defined by the Plan. The rights are not
exercisable at May 31, 2001 and expire in May 2009.

The Company has options outstanding under two stock option plans, the 1989
Stock Option Plan and the 1996 Key Employees Stock Option Plan, which provide
for the granting of options for up to 9,000,000 shares (4,500,000 shares in 2000
and 1999). These options are generally exercisable cumulatively in equal annual
installments commencing one year from the grant date and have expiration dates
ranging from July 2001 to April 2011. At May 31, 2001, 3,589,000 shares (291,000
at May 31, 2000) were available for future grant.

Transactions during the last two years are summarized as follows:

SHARES UNDER
OPTION
---------------
2001 2000
------ ------
(IN THOUSANDS)

Outstanding, beginning of year (weighted average price of
$13.01 ranging from $5.84 to $17.25 per share)............ 6,243 4,708
Granted (weighted average price of $9.21 ranging from $8.69
to $9.26 per share)....................................... 1,202 1,843
Cancelled (weighted average price of $13.26 ranging from
$8.81 to $17.25 per share)................................ (369) (208)
Exercised (weighted average price of $6.92 ranging from
$5.84 to $8.42 per share)................................. (59) (100)
----- -----
OUTSTANDING, END OF YEAR (WEIGHTED AVERAGE PRICE OF $12.39
RANGING FROM $8.42 TO $16.35 PER SHARE)................... 7,017 6,243
===== =====
EXERCISABLE, END OF YEAR (WEIGHTED AVERAGE PRICE OF $13.17
RANGING FROM $8.42 TO $16.35 PER SHARE)................... 3,947 3,103
===== =====

F-14

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

OPTIONS OUTSTANDING
AT MAY 31, 2001 OPTIONS EXERCISABLE
------------------------------ AT MAY 31, 2001
WEIGHTED --------------------
AVERAGE WEIGHTED WEIGHTED
RANGE OF SHARES REMAINING AVERAGE SHARES AVERAGE
EXERCISE PRICES (000'S) LIFE PRICE (000'S) PRICE
--------------- ------- --------- -------- -------- ---------

$ 5.00-$ 9.99.................... 2,364 8.5 $ 9.36 445 $ 9.41
$10.00-$14.99.................... 2,523 4.9 $12.64 2,110 $12.43
$15.00-$17.25.................... 2,130 6.7 $15.46 1,392 $15.50
----- -----
7,017 6.6 $12.39 3,947 $13.17
===== =====

The Company is accounting for its stock option plans under the provisions
of the Accounting Principle Board's Opinion No. 25 and, accordingly, no
compensation cost has been recognized. If compensation cost had been determined
based on the fair value at the grant date for awards under this plan consistent
with the method prescribed by Statement of Financial Accounting Standards No.
123, the Company's net income and earnings per share for the years ended May 31,
2001 and 2000, would have been reduced to the pro forma amounts indicated in the
following table:

2001 2000
--------- ---------
(IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)

Pro Forma Net Income....................................... $59,956 $38,169
======= =======
Pro Forma Earnings Per Share:
BASIC.................................................... $ .59 $ .36
======= =======
DILUTED.................................................. $ .59 $ .36
======= =======

The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions. The expected volatility rate is 32.5% for shares granted in 2001
and 28.9% for 2000. The expected life is 7.0 and 7.5 years, with dividend yields
of 3.5% and 3.3% and risk-free interest rates of 5.1% and 6.4%, for 2001 and
2000, respectively.

NOTE E -- LEASES

At May 31, 2001, certain property, plant and equipment were leased by the
Company under long-term leases. Certain of these leases provide for increased
rental based upon an increase in the cost-of-living index. Future minimum lease
commitments as of May 31, 2001 for all non-cancelable leases are as follows:

(IN THOUSANDS)
MAY 31,

2002........................................................ $ 13,572
2003........................................................ 10,627
2004........................................................ 6,445
2005........................................................ 4,766
2006........................................................ 4,241
Thereafter.................................................. 18,400
--------------
TOTAL MINIMUM LEASE COMMITMENTS............................. $ 58,051
==============

Rental expenses for all operating leases totalled $20,523,000 in 2001,
$17,183,000 in 2000 and $13,934,000 in 1999. Capitalized leases were
insignificant for the three years ended May 31, 2001.

F-15

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE F -- RETIREMENT PLANS

The Company sponsors a non-contributory defined benefit pension plan (The
Retirement Plan) covering substantially all domestic non-union employees.
Pension coverage for employees of the Company's foreign subsidiaries is
provided, to the extent deemed appropriate, through separate plans, many of
which are governed by local statutory requirements. In addition, benefits for
domestic union employees are provided by separate plans.

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. The
Company's funding policy is to contribute annually an amount that can be
deducted for federal income tax purposes using a different actuarial cost method
and different assumptions from those used for financial reporting.

Net periodic pension cost (income) consisted of the following for the three
years ended May 31, 2001:

U.S. PLANS NON-U.S. PLANS
--------------------------- ---------------------------
2001 2000 1999 2001 2000 1999
------- ------- ------- ------- ------- -------
(IN THOUSANDS)

Service cost.................................. $ 7,742 $ 6,650 $ 7,247 $ 1,112 $ 1,122 $ 1,041
Interest cost................................. 6,470 5,678 5,253 2,314 2,176 2,263
Expected return on plan assets................ (9,157) (6,123) (6,071) (3,396) (3,026) (3,183)
Amortization of:
Prior service cost.......................... 164 132 114
Net gain on adoption of SFAS No. 87......... (87) (96) (100)
Net actuarial (gains) losses recognized....... (62) 439 71 (85) 91 1
Curtailment/settlement (gains) losses......... (722) 103 (1,728) (24) (308)
------- ------- ------- ------- ------- -------
NET PENSION COST.............................. $ 4,348 $ 6,783 $ 4,786 $ (55) $ 339 $ (186)
======= ======= ======= ======= ======= =======

F-16

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The changes in benefit obligations and plan assets, as well as the funded
status of the Company's pension plans at May 31, 2001 and 2000 were as follows:

U.S. PLANS NON-U.S. PLANS
------------------- -----------------
2001 2000 2001 2000
-------- -------- ------- -------
(IN THOUSANDS)

Benefit obligation at beginning of year............. $ 81,892 $ 76,328 $32,343 $33,006
Service cost........................................ 7,742 6,650 1,112 1,122
Interest cost....................................... 6,470 5,678 2,314 2,176
Benefits paid....................................... (12,785) (3,820) (1,641) (1,376)
Participant contributions........................... 428 404
Actuarial (gains) losses............................ 4,156 (5,884) 2,219 (3,520)
Currency exchange rate changes...................... (2,600) 683
Curtailment/settlement (gains) losses............... (721) (11,184) (152)
Plan amendments..................................... 2,786
Acquisitions........................................ 445 11,338
-------- -------- ------- -------
BENEFIT OBLIGATION AT END OF YEAR................... $ 87,199 $ 81,892 $34,175 $32,343
======== ======== ======= =======
Fair value of plan assets at beginning of year...... $101,502 $ 61,715 $40,921 $36,469
Actual return on plan assets........................ (2,543) 22,675 186 4,138
Employer contributions.............................. 7,202 9,772 500 421
Participant contributions........................... 428 404
Benefits paid....................................... (12,785) (3,820) (1,641) (1,376)
Currency exchange rate changes...................... (2,837) 865
Curtailment/settlement gains (losses)............... (6,092)
Acquisitions........................................ 523 17,252
-------- -------- ------- -------
FAIR VALUE OF PLAN ASSETS AT END OF YEAR............ $ 93,899 $101,502 $37,557 $40,921
======== ======== ======= =======
Excess of plan assets versus benefit obligations at
end of year....................................... $ 6,700 $ 19,610 $ 3,382 $ 8,577
Contributions after measurement date................ 2,537 15 93 108
Unrecognized actuarial (gains) losses............... 2,715 (13,191) 3,514 (1,811)
Unrecognized prior service cost..................... 1,568 1,732
Unrecognized net transitional asset................. (198) (285)
-------- -------- ------- -------
NET AMOUNT RECOGNIZED............................... $ 13,322 $ 7,881 $ 6,989 $ 6,874
======== ======== ======= =======
Amounts recognized in the consolidated balance
sheets consist of:
Prepaid benefit cost................................ $ 14,057 $ 9,401 $ 7,973 $ 7,874
Accrued benefit liability........................... (781) (1,520) (1,041) (1,000)
Accumulated other comprehensive loss................ 46 56
-------- -------- ------- -------
NET AMOUNT RECOGNIZED............................... $ 13,322 $ 7,881 $ 6,988 $ 6,874
======== ======== ======= =======

For domestic plans with accumulated benefit obligations in excess of plan
assets, the projected benefit obligation, accumulated benefit obligation and
fair value of assets were $781,000, $781,000 and $ -0-, respectively, as of May
31, 2001 and $1,243,000, $1,243,000 and $ -0-, respectively, as of May 31, 2000.
For foreign plans with accumulated benefit obligations in excess of plan assets,
the projected benefit obligation, accumulated benefit obligation and fair value
of assets were $1,145,000, $1,042,000 and $ -0-, respectively, as of May 31,
2001 and $1,088,000, $944,000 and $ -0-, respectively, as of May 31, 2000.

F-17

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The following weighted average assumptions were used to determine the
Company's obligations under the plans:

NON-U.S.
U.S. PLANS PLANS
----------- -----------
2001 2000 2001 2000
---- ---- ---- ----

Discount rate............................................... 7.50% 8.00% 6.63% 6.17%
Expected return on plan assets.............................. 9.00% 9.00% 8.25% 8.25%
Rate of compensation increase............................... 4.00% 4.50% 4.00% 4.25%

The plans' assets consist primarily of stocks, bonds and fixed income
securities.

The Company also sponsors an employee savings plan under Section 401(k) of
the Internal Revenue Code, which covers substantially all non-union employees in
the United States. The Plan provides for matching contributions in Company
shares based upon qualified employee contributions. Matching contributions
charged to income were $5,170,000, $4,925,000 and $4,304,000 for years ending
May 31, 2001, 2000 and 1999, respectively.

NOTE G -- POSTRETIREMENT HEALTH CARE BENEFITS

In addition to the defined benefit pension plan, the Company also provides
health care benefits to certain of its retired employees through unfunded plans.
Employees become eligible for these benefits if they meet minimum age and
service requirements. The components of this expense for the three years ended
May 31, 2001 were as follows:

2001 2000 1999
----- ---- ----
(IN THOUSANDS)

Service cost -- Benefits earned during this period...... $ 81 $110 $ 99
Interest cost on the accumulated obligation............. 918 890 784
Amortization of unrecognized (gains).................... (124) (55) (40)
----- ---- ----
NET PERIODIC POSTRETIREMENT EXPENSE..................... $ 875 $945 $843
===== ==== ====

The changes in the benefit obligations of the plans at May 31, 2001 and
2000, were as follows:

2001 2000
------- -------
(IN THOUSANDS)

Accumulated postretirement benefit obligation at beginning
of year.................................................. $11,928 $11,548
Service cost............................................... 81 110
Interest cost.............................................. 918 890
Settlement/curtailment (gains) losses...................... (221)
Acquisitions............................................... 1,629
Benefit payments........................................... (972) (902)
Actuarial (gains) losses................................... 791 (1,238)
Currency exchange rate changes............................. (131) 112
------- -------
Accumulated postretirement benefit obligation at end of
year..................................................... 12,615 11,928
Unrecognized actuarial gains (losses)...................... 1,874 2,881
------- -------
ACCRUED POSTRETIREMENT HEALTH CARE BENEFITS................ $14,489 $14,809
======= =======

A 7.5% general discount rate was used in determining the accumulated
postretirement benefit obligation as of May 31, 2001 (8.0% for May 31, 2000). A
7.0% increase in the cost of covered health care benefits was generally assumed
for fiscal 2001 (8.0% for fiscal 2000). This trend rate in all cases is assumed
to decrease to 5.0% after several years and remain at that level thereafter
except for various union plans which will cap at alternate benefit levels. A
1.0% increase in the health care costs trend rate would have increased the
accumulated postretirement benefit obligation as of May 31, 2001 by $1,275,000
and

F-18

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

the net postretirement expense by $113,000. A 1.0% decrease in the health care
costs trend rate would have decreased the accumulated postretirement benefit
obligation as of May 31, 2001 by $1,116,000 and the net postretirement expense
by $94,000.

NOTE H -- CONTINGENCIES AND LOSS RESERVES

Accrued loss reserves consisted of the following classes:

MAY 31,
-----------------
2001 2000
------- -------
(IN THOUSANDS)

Accrued product liability reserves......................... $39,054 $41,176
Accrued warranty reserves -- Current....................... 5,170 7,908
Accrued environmental reserves............................. 9,557 14,116
Accrued other.............................................. 1,635 1,565
------- -------
Accrued loss reserves -- Current........................... 55,416 64,765
Accrued warranty reserves -- Long-term..................... 11,959 13,740
------- -------
TOTAL ACCRUED LOSS RESERVES................................ $67,375 $78,505
======= =======

The Company, through its wholly-owned insurance subsidiary, provides
certain insurance coverage, primarily product liability, to the Company's other
domestic subsidiaries. Excess coverage is provided by outside carriers. The
reserves reflected above provide for these potential losses as well as other
uninsured claims. Provision for estimated warranty costs is recorded at the time
of sale and periodically adjusted to reflect actual experience.

In addition, the Company, like others in similar businesses, is involved in
several proceedings relating to environmental matters. It is the Company's
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 and do not take into consideration any possible recoveries of
future insurance proceeds or claims against third parties.

Due to the uncertainty inherent in the loss reserve estimation process, it
is at least reasonably possible that actual costs will differ from estimates,
but, based upon information presently available, such future costs are not
expected to have a material adverse effect on the Company's competitive or
financial position or its ongoing results of operations. However, such costs
could be material to results of operations in a future period.

NOTE I -- RESTRUCTURING AND ASSET IMPAIRMENT CHARGE

For the year ended May 31, 2000, the Company recorded a restructuring
charge of $51,970,000. Included in this charge were severance and other employee
related costs of $21,986,000, contract exit and termination costs of $2,059,000,
facility closures and write-downs of property, plant and equipment of
$22,342,000 and write-downs of intangibles of $5,583,000.

In addition to the $51,970,000 restructuring charge, related costs were
incurred during the May 31, 2000 year primarily to account for inventory of
certain product lines that were being discontinued, totalling $7,876,000, and
these costs were charged to earnings and classified as a component of cost of
sales.

F-19

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Through May 31, 2001, the Company has paid or incurred all of the
$51,970,000 restructuring charge as reflected below:

PAID OR INCURRED IN
YEAR ENDED MAY 31,
TOTAL -------------------
CHARGE 2001 2000
------- -------- --------
(IN THOUSANDS)

Severance costs................................... $21,986 $12,058 $ 9,928
Exit and termination costs........................ 2,059 1,482 577
Property, plant and equipment..................... 22,342 22,342
Intangibles....................................... 5,583 5,583
------- ------- -------
RESTRUCTURING AND ASSET IMPAIRMENT CHARGE......... $51,970 $13,540 $38,430
======= ======= =======

The severance and other employee related costs provided for a reduction of
approximately 780 employees related to facility closures and streamlining of
operations for cost reduction initiatives. The costs of exit and contract
termination were comprised primarily of non-cancelable lease obligations on the
closed facilities. The charge for property, plant and equipment represents
write-downs to net realizable value of less efficient and duplicate facilities
and machinery and equipment no longer needed in the combined restructured
manufacturing operations.

NOTE J -- INTERIM FINANCIAL INFORMATION (UNAUDITED)

The following is a summary of the quarterly results of operations for the
years ended May 31, 2001 and 2000:

THREE MONTHS ENDED
------------------------------------------------
AUGUST 31 NOVEMBER 30 FEBRUARY 28 MAY 31
--------- ----------- ----------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

2001
Net sales....................................... $554,923 $499,904 $405,400 $547,535
Gross profit.................................... 249,252 219,102 167,537 244,084
Net income (loss)............................... 28,850 16,868 (7,018) 24,261
BASIC EARNINGS (LOSS) PER SHARE................. .28 .17 (.07) .24
======== ======== ======== ========
DILUTED EARNINGS (LOSS) PER SHARE............... .28 .17 (.07) .24
======== ======== ======== ========
DIVIDENDS PER SHARE............................. $ .1225 $ .1250 $ .1250 $ .1250
======== ======== ======== ========

THREE MONTHS ENDED
------------------------------------------------
AUGUST 31 NOVEMBER 30 FEBRUARY 29 MAY 31
--------- ----------- ----------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

2000
Net sales....................................... $497,869 $502,450 $413,178 $548,913
Gross profit.................................... 228,290 216,309 176,063 242,111
Net income...................................... 7,264 20,364 3,731 9,633
BASIC EARNINGS PER SHARE........................ .07 .19 .04 .09
======== ======== ======== ========
DILUTED EARNINGS PER SHARE...................... .07 .19 .04 .09
======== ======== ======== ========
DIVIDENDS PER SHARE............................. $ .1175 $ .1225 $ .1225 $ .1225
======== ======== ======== ========

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

F-20

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE K -- REPORTABLE SEGMENT AND GEOGRAPHIC AREA INFORMATION

The Company has determined that it has two operating segments -- Industrial
and Consumer -- based on the nature of business activities, products and
services; the structure of management; and the structure of information as
presented to the Board of Directors. Within each division, individual operating
companies or groups of companies generally address common markets, utilize
similar technologies, and can share manufacturing or distribution capabilities.
The Company evaluates the profit performance of the two divisions based on
earnings before interest and taxes since interest expense is essentially related
to corporate acquisitions, as opposed to segment operations.

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

The Consumer Division's products are sold throughout North America by mass
merchandisers, home centers, hardware stores, paint stores, automotive supply
stores and craft shops. Major customers include Ace Hardware Stores, Cotter &
Company, The Home Depot, Kmart, Lowe's Home Centers, Sherwin-Williams and
Wal-Mart. Consumer Division products are sold to retailers through a combination
of direct sales, sales representative organizations and distributor sales.

Sales to the seven largest customers represent approximately 17%, 16% and
12% of consolidated net sales for the years ended May 31, 2001, 2000 and 1999,
respectively. These sales are predominantly within the Consumer Division and
comprise approximately 38%, 37% and 32% of the division's sales for the
respective periods.

Sales for the fiscal years ended May 31, 2001, 2000 and 1999 do not include
sales of our products by joint ventures and licensees, amounting to
approximately $37.0 million, $35.0 million, and $72.0 million, respectively. The
Company reflects income from joint ventures on the equity method and receive
royalties from its licensees. Export sales were less than 10% of net sales for
each of the three years presented.

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

YEAR ENDED MAY 31,
------------------------------------
2001 2000(1) 1999
---------- ---------- ----------
SEGMENT INFORMATION (IN THOUSANDS)

Net sales
Industrial segment......................... $1,100,682 $1,092,976 $1,062,785
Consumer segment........................... 907,080 869,434 657,843
Corporate/Other............................
---------- ---------- ----------
TOTAL........................................ $2,007,762 $1,962,410 $1,720,628
========== ========== ==========

F-21

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

YEAR ENDED MAY 31,
------------------------------------
2001 2000(1) 1999
SEGMENT INFORMATION ---------- ---------- ----------
(IN THOUSANDS)

Earnings before interest and taxes
Industrial segment......................... $ 122,034 $ 98,980 $ 135,632
Consumer segment........................... 62,662 47,907 71,294
Corporate/Other............................ (18,006) (23,333) (14,548)
---------- ---------- ----------
TOTAL........................................ $ 166,690 $ 123,554 $ 192,378
========== ========== ==========
Identifiable assets
Industrial segment......................... $1,002,209 $ 993,239 $1,102,531
Consumer segment........................... 1,016,067 1,041,896 586,846
Corporate/Other............................ 60,214 64,068 47,859
---------- ---------- ----------
TOTAL........................................ $2,078,490 $2,099,203 $1,737,236
========== ========== ==========
Capital expenditures
Industrial segment......................... $ 30,123 $ 34,331 $ 35,779
Consumer segment........................... 23,629 27,929 26,648
Corporate/Other............................ 366 925 979
---------- ---------- ----------
TOTAL........................................ $ 54,118 $ 63,185 $ 63,406
========== ========== ==========
Depreciation and amortization
Industrial segment......................... $ 38,579 $ 38,519 $ 32,668
Consumer segment........................... 41,627 39,862 28,387
Corporate/Other............................ 1,288 769 1,080
---------- ---------- ----------
TOTAL........................................ $ 81,494 $ 79,150 $ 62,135
========== ========== ==========

YEAR ENDED MAY 31,
------------------------------------
2001 2000(1) 1999
GEOGRAPHIC INFORMATION ---------- ---------- ----------
(IN THOUSANDS)

Net sales (based on shipping locations)
United States.............................. $1,614,112 $1,572,919 $1,362,722
---------- ---------- ----------
Foreign
Canada.................................. 140,009 135,641 115,201
Europe.................................. 164,517 172,662 171,825
Other Foreign........................... 89,124 81,188 70,880
---------- ---------- ----------
Total Foreign.............................. 393,650 389,491 357,906
---------- ---------- ----------
TOTAL........................................ $2,007,762 $1,962,410 $1,720,628
========== ========== ==========

F-22

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

YEAR ENDED MAY 31,
------------------------------------
2001 2000(1) 1999
GEOGRAPHIC INFORMATION ---------- ---------- ----------
(IN THOUSANDS)

Assets employed
United States.............................. $1,732,238 $1,740,882 $1,445,599
---------- ---------- ----------
Foreign
Canada.................................. 128,159 130,064 88,965
Europe.................................. 144,619 155,330 144,636
Other Foreign........................... 73,474 72,927 58,036
---------- ---------- ----------
Total Foreign.............................. 346,252 358,321 291,637
---------- ---------- ----------
TOTAL........................................ $2,078,490 $2,099,203 $1,737,236
========== ========== ==========

---------------

(1) Includes restructuring and asset impairment charges and related costs
totaling $59.8 million, before taxes.

F-23

RPM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NOVEMBER 30, 2001 MAY 31, 2001
----------------- ------------
(UNAUDITED)

ASSETS
Current assets:
Cash and short-term investments........................... $ 45,600 $ 23,926
Trade accounts receivable (less allowance for doubtful
accounts $16,140 and $17,705, respectively)............ 353,287 411,718
Inventories............................................... 265,530 277,494
Prepaid expenses and other current assets................. 107,959 106,282
---------- ----------
TOTAL CURRENT ASSETS........................................ 772,376 819,420
---------- ----------
Property, plant and equipment, at cost...................... 634,978 623,054
Less: accumulated depreciation and amortization........... (282,026) (261,018)
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET.......................... 352,952 362,036
---------- ----------
Other assets:
Goodwill, net of amortization............................. 601,877 571,276
Intangible assets, net of amortization.................... 265,900 300,372
Other..................................................... 25,122 25,386
---------- ----------
TOTAL OTHER ASSETS.......................................... 892,899 897,034
---------- ----------
TOTAL ASSETS................................................ $2,018,227 $2,078,490
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes and accounts payable................................ $ 124,796 $ 152,307
Current portion of long term debt......................... 111,324 7,379
Accrued compensation and benefits......................... 63,888 74,888
Accrued loss reserves..................................... 52,826 55,416
Other accrued liabilities................................. 60,251 75,022
Income taxes payable...................................... 9,959 10,756
---------- ----------
TOTAL CURRENT LIABILITIES................................... 423,044 375,768
---------- ----------
Long-term liabilities:
Long-term debt, less current maturities................... 817,182 955,399
Other long-term liabilities............................... 48,327 53,479
Deferred income taxes..................................... 52,575 54,134
---------- ----------
TOTAL LONG-TERM LIABILITIES................................. 918,084 1,063,012
---------- ----------
Shareholders' equity:
Common shares, stated value $.015 per share; authorized
200,000 shares; outstanding 102,387 shares and 102,211
shares, respectively................................... 1,619 1,619
Paid-in capital........................................... 429,485 430,015
Treasury shares, at cost.................................. (97,210) (99,308)
Accumulated other comprehensive loss...................... (52,876) (53,074)
Retained earnings......................................... 396,081 360,458
---------- ----------
TOTAL SHAREHOLDERS' EQUITY.................................. 677,099 639,710
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $2,018,227 $2,078,490
========== ==========

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

F-24

RPM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

SIX MONTHS ENDED THREE MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
----------------------- -------------------
2001 2000 2001 2000
---------- ---------- -------- --------

Net sales....................................... $1,021,155 $1,054,827 $487,880 $499,904
Cost of sales................................... 548,513 570,351 265,912 271,744
---------- ---------- -------- --------
Gross profit.................................... 472,642 484,476 221,968 228,160
Selling, general and administrative expenses.... 355,695 377,034 174,076 183,827
Interest expense, net........................... 24,423 33,703 11,359 17,127
---------- ---------- -------- --------
Income before income taxes...................... 92,524 73,739 36,533 27,206
Provision for income taxes...................... 31,465 28,021 12,043 10,338
---------- ---------- -------- --------
Net income...................................... $ 61,059 $ 45,718 $ 24,490 $ 16,868
========== ========== ======== ========
Basic and diluted earnings per common share..... $ 0.60 $ 0.45 $ 0.24 $ 0.17
========== ========== ======== ========
Dividends per common share...................... $ 0.2500 $ 0.2475 $ 0.1250 $ 0.1250
========== ========== ======== ========

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

F-25

RPM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(IN THOUSANDS)

SIX MONTHS ENDED
NOVEMBER 30,
-----------------
2001 2000
------- -------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................ $61,059 $45,718
Depreciation and amortization............................. 28,818 38,681
Items not affecting cash and other........................ (7,773) (15,747)
Changes in operating working capital...................... 12,048 (23,202)
------- -------
94,152 45,450
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment....................... (13,117) (29,084)
Acquisition of new businesses, net of cash................ -0- (1,641)
------- -------
(13,117) (30,725)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercises...................... 345 598
Repurchase of common shares............................... -0- (11,101)
Increase (decrease) in debt............................... (34,271) 20,349
Dividends................................................. (25,435) (25,174)
------- -------
(59,361) (15,328)
------- -------
NET INCREASE (DECREASE) IN CASH............................. 21,674 (603)
Cash at beginning of period................................. 23,926 31,340
------- -------
CASH AT END OF PERIOD....................................... $45,600 $30,737
======= =======

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

F-26

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOVEMBER 30, 2001
(UNAUDITED)

NOTE A -- BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal, recurring accruals) considered necessary for
a fair presentation have been included for the six and three month periods ended
November 30, 2001 and 2000. For further information, refer to the consolidated
financial statements and notes included in the Company's Annual Report on Form
10-K for the year ended May 31, 2001.

Certain reclassifications have been made to prior year amounts to conform
with the current year presentation. In an effort to achieve improved reporting
consistency across divisions, and in conjunction with the migration to a new
reporting and consolidation system, the Company has adopted a new chart of
accounts. Accordingly, the Company has elected to reclassify certain internal
distribution costs from cost of sales to selling, general and administrative
expenses. Additionally, a portion of those costs are offset by the movement of
certain employee benefits costs respective to manufacturing personnel out of
selling, general and administrative expenses and into cost of sales. For the
three and six month periods ended November 30, 2000, the net effect of the
reclassification of these expenses resulted in the movement of approximately $9
million and $16 million, respectively, from cost of sales to selling, general
and administrative expenses.

NOTE B -- BUSINESS COMBINATIONS, GOODWILL AND INTANGIBLE ASSETS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards, ("SFAS") No. 141, "Business
Combinations," which eliminates the pooling method of accounting for all
business combinations initiated after June 30, 2001, and addresses the initial
recognition and measurement of goodwill and other intangible assets acquired in
a business combination. The Company has adopted this accounting standard for
business combinations initiated after June 30, 2001.

The Company also adopted SFAS No. 142, "Goodwill and Other Intangible
Assets," effective June 1, 2001. Under SFAS No. 142, goodwill is no longer
amortized, but is reviewed for impairment annually, or more frequently if
certain indicators arise. The Company has completed the transitional impairment
test required upon adoption of SFAS No. 142. The transitional test, which
involved the use of estimates related to the fair market values of the business
operations with which goodwill is associated, did not result in any impairment
loss. Prospectively, any losses resulting from the required annual impairment
tests will be reflected in operating income in the income statement.

F-27

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

Had the Company been accounting for its goodwill and other intangible
assets under SFAS No. 142 for all periods presented, the Company's net income
(in thousands) and earnings per share would have been as follows:

FOR THE SIX MONTHS FOR THE THREE MONTHS
ENDED NOVEMBER 30, ENDED NOVEMBER 30,
------------------- ---------------------
2001 2000 2001 2000
-------- -------- --------- ---------

NET INCOME:
Reported Net Income.................................. $61,059 $45,718 $24,490 $16,868
Add back goodwill amortization, net of tax........... -- 9,589 -- 4,757
Add back workforce amortization, net of tax.......... -- 802 -- 402
Add back tradename amortization, net of tax.......... -- 244 -- 121
------- ------- ------- -------
Adjusted net income.................................. $61,059 $56,353 $24,490 $22,148
======= ======= ======= =======
BASIC AND DILUTED EARNINGS PER SHARE:
Reported net income.................................. $ 0.60 $ 0.45 $ 0.24 $ 0.17
Goodwill amortization, net of tax.................... -- 0.09 -- 0.04
Workforce amortization, net of tax................... -- 0.01 -- 0.01
Tradename amortization, net of tax................... -- -- -- --
------- ------- ------- -------
Adjusted net income.................................. $ 0.60 $ 0.55 $ 0.24 $ 0.22
======= ======= ======= =======

NOTE C -- INVENTORIES

Inventories were composed of the following major classes:

NOVEMBER 30, 2001 MAY 31, 2001
----------------- ------------
(IN THOUSANDS)

Raw Materials and supplies.............................. $ 94,043 $ 89,071
Finished Goods.......................................... 171,487 188,423
-------- --------
$265,530 $277,494
======== ========

NOTE D -- COMPREHENSIVE INCOME

Other comprehensive income includes foreign currency translation
adjustments, minimum pension liability adjustments and unrealized gains or
losses on securities. Total comprehensive income, comprised of net income and
other comprehensive income, amounted to $18,540,000 and $6,164,000 during the
second quarter of fiscal years 2002 and 2001, respectively, and $61,257,000 and
$34,468,000 for the six months ended November 30, 2001 and 2000, respectively.

NOTE E -- REPORTABLE SEGMENT INFORMATION

The Company has determined that it has two operating segments -- Industrial
and Consumer -- based on the nature of business activities, products and
services; the structure of management; and the structure of information as
presented to the Board of Directors. Within each segment, individual operating
companies or groups of companies generally address common markets, utilize
similar technologies, and can share manufacturing or distribution capabilities.
The Company evaluates the profit performance of the two segments based on
earnings before interest and taxes since interest expense is essentially related
to

F-28

RPM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

corporate acquisitions, as opposed to segment operations. Comparable six month
and second quarter results on this basis are as follows:

SIX MONTHS ENDED QUARTER ENDED
NOVEMBER 30, NOVEMBER 30,
----------------------- -------------------
2001 2000 2001 2000
---------- ---------- -------- --------
(IN THOUSANDS)

Net sales
Industrial segment............................ $ 559,882 $ 588,811 $270,714 $281,211
Consumer segment.............................. 461,273 466,016 217,166 218,693
---------- ---------- -------- --------
TOTALS..................................... $1,021,155 $1,054,827 $487,880 $499,904
========== ========== ======== ========
Earnings before interest and taxes
Industrial segment............................ $ 69,937 $ 79,382 $ 27,759 $ 33,216
Consumer segment.............................. 58,519 39,561 24,539 15,769
Corporate/Other............................... (11,509) (11,501) (4,406) (4,652)
---------- ---------- -------- --------
TOTALS..................................... $ 116,947 $ 107,442 $ 47,892 $ 44,333
========== ========== ======== ========

NOVEMBER 30, 2001 MAY 31, 2001
----------------- ------------

Identifiable assets
Industrial segment........................................ $ 971,268 $1,002,209
Consumer segment.......................................... 973,837 1,016,067
Corporate/Other........................................... 73,122 60,214
---------- ----------
TOTALS................................................. $2,018,227 $2,078,490
========== ==========

F-29

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT THAT IS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED MARCH 22, 2002

PROSPECTUS

[RPM LOGO]

DEBT SECURITIES
COMMON SHARES
WARRANTS
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS

---------------------

We may offer and sell the securities listed above with an aggregate
offering price of up to $300 million in connection with this prospectus. We will
provide the specific terms of these securities in one or more supplements
accompanying this prospectus. You should read this prospectus and any
accompanying prospectus supplement carefully before you invest.

Our common shares are quoted on the New York Stock Exchange under the
symbol "RPM." The applicable prospectus supplement will contain information,
where applicable, as to any other listing on any securities exchange of the
securities covered by the prospectus supplement.

We may sell the securities directly to investors, through agents designated
from time to time or to or through underwriters or dealers. See "Plan of
Distribution." If any underwriters are involved in the sale of any securities in
respect of which this prospectus is being delivered, the names of such
underwriters and any applicable commissions or discounts will be set forth in a
prospectus supplement relating to those securities. The net proceeds we expect
to receive from such sale also will be set forth in the prospectus supplement.

This prospectus may not be used to offer or sell any securities unless
accompanied by a prospectus supplement.

---------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED BY THIS
PROSPECTUS OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is , 2002.

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, we may offer common shares, debt securities, warrants stock
purchase contracts, stock purchase units or any combination of these securities,
either separately or in units, in one or more offerings up to a total dollar
amount of $300 million. This prospectus provides you with a general description
of those securities. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read this prospectus and the prospectus
supplement together with the additional information described under the heading
"Where You Can Find More Information."

The registration statement that contains this prospectus (including the
exhibits to the registration statement) contains additional information about
our company and the securities offered under this prospectus. That registration
statement can be read at the SEC web site or at the SEC offices mentioned under
the heading "Where You Can Find More Information."

THE COMPANY

RPM, Inc. is a global leader in the protective coatings industry for both
industrial and consumer applications. As of May 31, 2001, we marketed our
products in approximately 130 countries and operated manufacturing facilities in
62 locations in the United States, Argentina, Belgium, Brazil, Canada, China,
Colombia, Germany, Italy, Malaysia, Mexico, New Zealand, The Netherlands,
Poland, South Africa, the United Arab Emirates and the United Kingdom.

Our industrial operating companies manufacture and market coatings for
various industrial applications including waterproofing, general maintenance,
flooring systems and coatings, corrosion control and other specialty chemical
applications. Our industrial products represented approximately 55% of our sales
for the fiscal year ended May 31, 2001. For consumer applications, we
manufacture do-it-yourself products for home maintenance, automotive repair,
marine applications and hobby and leisure items. Our consumer do-it-yourself
products are marketed through thousands of mass merchandise, home center and
hardware stores throughout North America. Our consumer products represented
approximately 45% of our sales for the fiscal year ended May 31, 2001.

When we refer to "RPM," "our company," "we," "our" and "us" in this
prospectus under the headings "The Company" and "Use of Proceeds," we mean RPM,
Inc. and its subsidiaries. When we use these terms in other places in this
prospectus, we refer only to RPM, Inc. unless the context indicates that we mean
something else.

Our principal executive offices are at 2628 Pearl Road, P.O. Box 777,
Medina, Ohio 44258, and our telephone number is (330) 273-5090.

RISK FACTORS

Before investing in our securities, you should carefully consider the risks
described below and any risks contained in the accompanying prospectus
supplement as well as the other information included or incorporated by
reference in this prospectus and the prospectus supplement. If any of these
risks occur, our business, prospects, results of operations and financial
condition could be harmed. In that case, the trading price of our securities
could decline, and you could lose all or part of your investment.

THE INDUSTRY IN WHICH WE OPERATE IS HIGHLY COMPETITIVE AND SOME OF OUR
COMPETITORS MAY BE LARGER AND MAY HAVE BETTER RESOURCES THAN WE DO.

The industry in which we operate is fragmented and we do not face
competition from any one company across our product lines. Any increase in
competition may cause us to lose market share or compel us to reduce prices to
remain competitive, which could result in reduced gross margins. This may impair
our ability to grow or even to maintain our current levels of revenues and
earnings. Certain companies that operate in our industry include Carlisle,
Degussa, GE Plastics, ICI, Masco, PPG, Rohm and Haas, Sika Finanz,
Sherwin-Williams and Valspar. Several of these companies are larger than us and
may have greater resources than we do. Increased competition with these
companies could prevent the institution of price increases or could require
price reductions or increased spending on research and development and marketing
and sales, 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 THESE
CUSTOMERS COULD HARM OUR BUSINESS.

Certain of our operating companies, particularly in the Consumer Division,
face a substantial amount of customer concentration. Our key customers include
Ace Hardware Stores, Cotter & Company, The Home Depot, Kmart, Lowe's,
Sherwin-Williams and Wal-Mart. Although no single customer has accounted for
more than 10% of sales in prior fiscal years, sales to our seven largest
customers accounted for approximately 17%, 16% and 12% of the consolidated net
sales for the fiscal years ended May 31, 2001, 2000 and 1999, respectively, and
38%, 37% and 32% of the Consumer Division's sales for the same years. For the
six months ended November 30, 2001, sales to The Home Depot slightly exceeded
10% of consolidated net sales. If we lose one or more of our key customers or
experience a delay or cancellation of a significant order or a decrease in the
level of purchases from any of our key customers, our net revenues could decline
and our operating results and business could be harmed. In addition, our net
revenues could decline and our operating results and business could be harmed if
we experience any difficulty in collecting amounts due from one or more of our
key customers.

MANY OF OUR CUSTOMERS OPERATE IN CYCLICAL INDUSTRIES AND DOWNWARD ECONOMIC
CYCLES MAY REDUCE OUR BUSINESS.

Many of our customers, especially in our Industrial Division, are in
businesses and industries that are cyclical in nature and sensitive to changes
in general economic conditions and other factors, including 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 industries of our customers may reduce sales of our products
resulting in reductions to our revenues and net earnings.

IF OUR EFFORTS IN ACQUIRING/INTEGRATING OTHER COMPANIES OR PRODUCT LINES FAIL,
OUR BUSINESS MAY NOT GROW.

As part of our growth strategy, we have pursued, and intend to continue
pursuing, acquisitions of complementary businesses or products and joint
ventures. Our ability to grow through acquisitions or joint ventures depends
upon our ability to identify, negotiate and complete suitable acquisitions or
joint venture

arrangements. In addition, acquisitions and integration of those acquisitions
involve a number of risks, including:

- inaccurate assessments of undisclosed liabilities;

- difficulties in assimilating acquired companies and products into our
existing business;

- delays in realizing the benefits from the acquired company or products,
including projected efficiencies, cost savings and revenue synergies;

- diversion of our management's time and attention from other business
concerns;

- difficulties because of our lack of or limited prior experience in any
new markets we may enter;

- difficulties in retaining key employees of the acquired businesses; and

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

WE HAVE A SIGNIFICANT AMOUNT OF INDEBTEDNESS.

We have a significant amount of indebtedness as a result of several of our
most recent acquisitions. Our total debt increased from $586 million at May 31,
1999 to $929 million at November 30, 2001. This compares with $677 million in
shareholders' equity at November 30, 2001. We intend to repay a portion of our
indebtedness with the proceeds of any equity offering under this prospectus.
Nevertheless, our level of indebtedness could have important consequences to our
shareholders. For example, it:

- may require us to dedicate a material portion of our cash flow from
operations to make payments on our indebtedness, thereby reducing the
cash flow available to fund working capital, capital expenditures,
acquisitions, dividend payments or other general corporate purposes; or

- may limit our flexibility to adjust to changing business and market
conditions and make us more vulnerable to a downturn in general economic
conditions as compared to a competitor that may have less debt.

WE DERIVE A SUBSTANTIAL PORTION OF OUR REVENUES FROM FOREIGN MARKETS, WHICH
SUBJECTS US TO ADDITIONAL BUSINESS RISKS.

Our foreign manufacturing operations accounted for approximately 20% of our
net sales for the fiscal year ended May 31, 2001, not including exports directly
from the United States which accounted for less than 10% of our net sales for
fiscal 2001. Our international operations could be adversely affected by changes
in political and economic conditions, trade protection measures, restrictions on
repatriation of earnings, differing intellectual property rights 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 increases or decreases in our costs and
earnings and may adversely affect the value of our assets outside the United
States.

FLUCTUATIONS IN THE SUPPLY AND PRICES OF RAW MATERIALS COULD NEGATIVELY IMPACT
OUR FINANCIAL RESULTS.

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

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 and maintaining widespread
acceptance of our products. However, a loss in the actual or perceived value of
our brands could limit or reduce the demand for our products.

THE CHEMICAL AND CONSTRUCTION PRODUCTS INDUSTRIES WE SERVE INHERENTLY EXPOSE US
TO POTENTIAL SIGNIFICANT LITIGATION-RELATED COSTS.

As a participant in the chemical and construction products industries, we
face an inherent risk of exposure to 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., a manufacturer of coatings for exterior insulating finishing systems, or
EIFS, is a defendant and co-defendant in ongoing property damage claims, some of
which involve attempted class actions in various states, related to the alleged
defects of EIFS. Some of the EIFS claims also stem from alleged personal
injuries from exposure to mold. Dryvit's and our insurers, which include First
Colonial Insurance Company, our wholly-owned captive insurance company, are
currently paying a substantial portion of Dryvit's defense and/or settlement
costs in the EIFS litigation.

In addition, along with certain of our subsidiaries, including Bondex
International and Republic Powdered Metals, we are defendants or co-defendants
in asbestos-related bodily injury lawsuits filed on behalf of various
individuals in several jurisdictions. Third party insurers have paid and are
currently paying a substantial portion of the defense and/or settlement costs in
our asbestos-related cases.

Our costs related to legal proceedings have not had, and are not expected
to have, a material adverse effect on our business, financial condition, results
of operations or cash flows. We cannot assure you, however, that the ultimate
cost of current known or future unknown litigation and claims will not exceed
management's current expectations. For a further discussion, please see the
discussion set forth in the section entitled "Legal Proceedings" in our most
recent Annual Report on Form 10-K, most recent Quarterly Report on Form 10-Q and
any accompanying prospectus supplement.

ENVIRONMENTAL LAWS AND REGULATIONS COULD SUBJECT US TO SIGNIFICANT FUTURE
LIABILITIES.

We are subject to numerous environmental laws and regulations that impose
various environmental controls on us or otherwise relate to environmental
protection, the sale and export of certain chemicals or hazardous materials, and
various health and safety matters, including among other things, 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 often impose strict, retroactive and joint and several liability for
the costs of, and damages resulting from, cleaning up our, or our predecessor's,
past or present facilities, and at 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, and currently unknown conditions could be discovered in the future.

Our expenditures related to environmental matters have not had, and are not
currently expected to have, a material adverse effect on our business, financial
condition, results of operations or cash flows. However, the environmental laws
under which we operate are numerous, complicated and often increasingly more
stringent, and may be applied retroactively. In addition, if we violate or fail
to comply with environmental laws, we could be fined or otherwise sanctioned by
regulators. We could also 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.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549. You can also obtain copies of the
documents at prescribed rates by writing to the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
facilities. Our SEC filings are also available at the office of the New York
Stock Exchange. For further information on obtaining copies of our public
filings at the New York Stock Exchange, you should call (212) 656-5060.

We "incorporate by reference" into this prospectus the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus. We incorporate by reference the documents
listed below and any filings we make with the SEC under Sections 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 that we file with the SEC
after the date of the initial filing of the registration statement and prior to
the time we sell all of the securities offered by this prospectus:

- Our Annual Report on Form 10-K for the fiscal year ended May 31, 2001;

- Our Quarterly Reports on Form 10-Q for the quarters ended August 31, 2001
and November 30, 2001;

- Our Proxy Statement pursuant to Section 14(a) of the Securities Exchange
Act of 1934, filed on August 29, 2001;

- The description of our common shares contained in our registration
statement on Form 8-A, dated June 2, 1998, and any amendments and reports
filed for the purpose of updating that description; and

- The description of the rights to purchase our common shares contained in
our registration statement on Form 8-A dated, May 11, 1999.

The information in this prospectus about RPM is not comprehensive and you
should also read the information in the documents incorporated by reference into
this prospectus. Information that we file later with the SEC and that is
incorporated by reference into this prospectus will automatically update and
supersede information in this prospectus.

You may request a copy of any or all of the documents incorporated by
reference in this prospectus at no cost, by writing to or telephoning us at the
following address:

Secretary
RPM, Inc.
P.O. Box 777
2628 Pearl Road
Medina, Ohio 44258
(330) 273-5090

You should rely only on the information included or incorporated by
reference in this prospectus or the prospectus supplement. We have not
authorized anyone else to provide you with different information. We may only
use this prospectus to sell securities if we also deliver a prospectus
supplement. We are only offering these securities in states where the offer is
permitted. You should not assume that the information in this prospectus or the
prospectus supplement is accurate as of any date other than the dates on the
front of those documents. Information on our web site is not a part of this
prospectus or a prospectus supplement.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This prospectus, including the documents that are and will be incorporated
by reference into this prospectus, contain forward-looking statements regarding
our plans, expectations, estimates and beliefs. Forward-looking statements in
this prospectus are typically identified by words such as "believes,"
"anticipates," "estimates," "expects," "intends," "will," "may" and other
similar expressions. These forward-looking statements may include, among other
things, projections of our future financial performance, our anticipated growth
and anticipated trends in our businesses. These statements are only predictions,
based on our current expectations about future events. Although we believe the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, performance or achievements or that predictions
or current expectations will be accurate. These forward-looking statements
involve risks and uncertainties, and our actual results, performance or
achievements could differ materially from those expressed or implied by the
forward-looking statements. The important factors that could cause our results
to differ include those discussed under the section entitled "Forward-Looking
Statements" in "Management's Discussion and Analysis" in our 2001 Annual Report
to Shareholders and similar sections in the other documents incorporated into
this prospectus by reference. We encourage you to read these sections carefully.
We do not undertake any responsibility to update information in this prospectus
or incorporated by reference into this prospectus if any forward-looking
statement later turns out to be inaccurate.

RATIO OF EARNINGS TO FIXED CHARGES

SIX MONTHS
ENDED YEAR ENDED MAY 31,
NOVEMBER 30, --------------------------------
2001(1) 2001 2000 1999 1998 1997
------------------- ---- ---- ---- ---- ----

Ratio of earnings to fixed
charges......................... 4.25 2.33 2.19 4.75 4.37 4.58

---------------

(1) RPM adopted Statement of Financial Accounting Standards No. 142, "Goodwill
and Other Intangible Assets," effective June 1, 2001, which resulted in a
reduction of amortization expense for the six months ended November 30, 2001
by approximately $11 million. Had RPM not adopted the required accounting
change, the ratio of earnings to fixed charges would have been 3.86 for the
six months ended November 30, 2001.

For purposes of calculating the ratios, fixed charges consist of interest
expense, amortized expenses related to debt and estimated interest portion of
operating leases. The ratio of earnings to fixed charges is calculated as
follows:

(income before income taxes) + (fixed charges)
---------------------------------------------------
(fixed charges)

USE OF PROCEEDS

We will use the net proceeds from the sale of the securities for our
general corporate purposes, which may include repaying indebtedness, funding
future acquisitions of other assets and companies, and making additions to our
working capital, or for any other purpose we describe in the applicable
prospectus supplement.

DESCRIPTION OF OUR COMMON SHARES

Our authorized capital stock consists of 200,000,000 common shares, without
par value. As of January 10, 2002, there were 102,442,951 common shares
outstanding, net of treasury shares, held by approximately 40,739 shareholders
of record. The holders of common shares are entitled to one vote per share on
all matters to be voted upon by shareholders, except that shareholders have the
right to cumulate their votes for the election of directors as permitted by Ohio
law. Holders of common shares are entitled
7

to receive ratably dividends, if any, as may be declared from time to time by
the board of directors out of funds legally available for that purpose. In the
event of our liquidation, dissolution or winding up, the holders of common
shares are entitled to share ratably in all assets remaining after payment of
liabilities, subject to prior distribution rights of outstanding preferred
shares, if any. The holders of common shares have no preemptive or similar
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to the common shares. All outstanding common shares are
legally issued, fully paid and nonassessable.

RIGHTS PLAN

Rights

Our board of directors has declared a dividend of one right for each
outstanding common share. Rights have been issued in connection with each
outstanding common share; and rights will be issued in connection with common
shares issued subsequently until the distribution date, and, in certain
circumstances, for common shares issued after the distribution date referred to
below. Each right, when it becomes exercisable as described below, will entitle
the registered holder to purchase from us one-tenth of a common share at a price
of $7.00 or $70.00 per whole share, subject to adjustment in certain
circumstances. The description and terms of the rights are set forth in a rights
agreement between us and the rights agent named therein. The rights will not be
exercisable until the distribution date and will expire on the tenth annual
anniversary of the rights agreement, unless earlier redeemed by us. Until a
right is exercised, the holder, as such, will have no rights as a shareholder,
including the right to vote or to receive dividends.

Distribution Date

Under the rights agreement, the "distribution date" is the earlier of:

(1) such time as we learn that a person or group, including any
affiliate or associate of such person or group, has acquired, or has
obtained the right to acquire, beneficial ownership of more than 15% of our
outstanding voting securities (such person or group being an "acquiring
person"), unless provisions preventing accidental triggering of the
distribution of the rights apply, and

(2) the close of business on such date, if any, as may be designated
by our board of directors following the commencement of, or first public
disclosure of an intent to commence, a tender or exchange offer for more
than 15% or more of the outstanding shares of voting securities.

Triggering Event and Effect of Triggering Event

When there is an acquiring person, the rights will entitle each holder,
other than such acquiring person, of a right to purchase, at the purchase price,
that number of common shares that at the time of such event would have a market
value of twice the purchase price.

If we are acquired in a merger or other business combination by an
acquiring person or an affiliate or associate of an acquiring person, or if 50%
or more of our assets or assets representing 50% or more of our earning power
are sold to an acquiring person or an affiliate or associate of an acquiring
person, each right will entitle its holder, other than rights beneficially owned
by such acquiring person, to purchase, for the purchase price, that number of
common shares of such corporation which at the time of the transaction would
have a market value of twice the purchase price.

Any rights that are at any time beneficially owned by an acquiring person,
or any affiliate or associate of an acquiring person, will be null and void and
nontransferable, and any holder of any such right will be unable to exercise or
transfer any such right.

Redemption

At any time prior to the earlier of (i) such time as a person or group
becomes an acquiring person and (ii) the expiration date, our board of directors
may redeem the rights in whole, but not in part, at a price of $.001 per right,
which amount shall be subject to adjustment as provided in the rights agreement.
Immediately upon the action of our board of directors ordering the redemption of
the rights, and without any further action and without any notice, the right to
exercise the rights will terminate and the only right of the holders of rights
will be to receive the redemption price.

In addition, at any time after there is an acquiring person, our board of
directors may elect to exchange each right for consideration per right
consisting of one common share, subject to adjustment.

Amendment

At any time prior to the distribution date, we may, without the approval of
any holder of any rights, supplement or amend any provision of the rights
agreement, including the date on which the expiration date or distribution date
shall occur, the definition of acquiring person or the time during which the
rights may be redeemed, except that no supplement or amendment shall be made
which reduces the redemption price other than under certain adjustments therein.

Certain Effects of the Rights Plan

The rights plan is designed to protect our shareholders in the event of
unsolicited offers to acquire us and other coercive takeover tactics which, in
the opinion of our board of directors, could impair its ability to represent
shareholder interests. The provisions of the rights plan may render an
unsolicited takeover of us more difficult or less likely to occur or might
prevent such a takeover, even though such takeover may offer our shareholders
the opportunity to sell their stock at a price above the prevailing market rate
and may be favored by a majority of our shareholders.

ANTI-TAKEOVER EFFECTS OF ARTICLES OF INCORPORATION, CODE OF REGULATIONS AND
THE OHIO GENERAL CORPORATION LAW

There are provisions in our amended articles of incorporation and code of
regulations, and the Ohio Revised Code that could discourage potential takeover
attempts. They could also make it more difficult for shareholders to change
management. These provisions could adversely affect the market price of our
shares. These provisions include:

Staggered Board. Our board of directors is divided into three classes,
with regular three-year staggered terms. This classification system increases
the difficulty of replacing a majority of the directors and may tend to
discourage a third-party from making a tender offer or otherwise attempting to
gain control of us. In addition, under Ohio law, directors of a corporation with
a classified board may be removed only for cause. These factors may maintain the
incumbency of our board of directors.

Supermajority Voting Provisions. The following provisions in our code of
regulations may not be repealed or amended without the vote of the holders of
not less than the applicable percentage of our total voting power:

- number, election, classification and nomination of directors (80%); and

- shareholder action by written consent to amend the code of regulations
(66 2/3%).

Article Seventh of our amended articles of incorporation provides that the
following proposals require the approval of two-thirds of our voting power:

- a merger, consolidation or acquisition as a result of which existing
shareholders would hold less than two-thirds of our voting power, or of
the surviving or new corporation, immediately after the consummation of
the transaction; and

- a sale of substantially all of our assets.
9

Article Eighth of our amended articles requires the affirmative vote of at
least 80% of our voting power to effect a merger or consolidation involving us,
or a sale, lease or exchange of substantially all of our assets, where the other
party to the transaction (including its affiliates and associates) is a holder
of 5% or more of the outstanding shares of any class of our stock entitled to
vote at a meeting called to consider such a transaction. Our board of directors,
voting in good faith, is required to make a determination as to whether the
proposed transaction requires an 80% vote of our shareholders. The requirement
for approval by an 80% vote shall not be applicable to proposals which received
the approval of our board of directors prior to the acquisition of the 5% share
interest of the other party, provided, however, with respect to such
transactions there has been a disclosure to all shareholders of any inducements
offered to our directors and officers which are not extended to all
shareholders.

Merger Moratorium Statute. We are an issuing public corporation under Ohio
law. Chapter 1704 of the Ohio Revised Code governs transactions between an
issuing public corporation and

- an "interested shareholder," which, generally means someone who becomes a
beneficial owner of 10% or more of the shares of the corporation without
the prior approval of the board of directors of the corporation; and

- persons affiliated or associated with an interested shareholder.

For at least three years after an interested shareholder becomes such, the
following transactions are prohibited if they involve both the issuing public
corporation and either an interested shareholder or anyone affiliated or
associated with an interested shareholder:

- the disposition or acquisition of any interest in assets;

- mergers, consolidations, combinations and majority share acquisitions;

- voluntary dissolutions or liquidations; and

- the issuance or transfer of shares or any rights to acquire shares in
excess of 5% of the outstanding shares.

If, before a person becomes an interested shareholder, the board of
directors of the corporation approves the transaction by which the person would
become an interested shareholder, then the prohibition imposed by Chapter 1704
does not apply. This prohibition continues indefinitely after the initial
three-year period unless the transaction is approved by the requisite vote of
the shareholders or satisfies statutory conditions relating to the fairness of
consideration received by shareholders, other than the interested shareholder.

The Merger Moratorium Statute does not apply to a corporation whose
articles of incorporation or code of regulations contain provisions opting out
of it. We have not opted out of the application of the Merger Moratorium
Statute.

Control Share Acquisition Act. Section 1701.831 of the Ohio Revised Code,
known as the Control Share Acquisition Act, provides that certain notice and
informational filings and special shareholder meetings and voting procedures
must occur prior to completion of a proposed "control share acquisition."
"Control share acquisition" is defined as any acquisition of an issuer's shares
that would entitle the acquirer to exercise or direct the voting power of the
issuer in the election of directors within any of the following ranges:

- one-fifth or more but less than one-third of the voting power of the
issuer in the election of directors;

- one-third or more but less than a majority of the voting power of the
issuer in the election of directors; or

- a majority or more of the voting power of the issuer in the election of
directors.

Assuming compliance with the notice and information filing requirements
prescribed by the statute, the proposed control share acquisition may take place
only if the acquisition is approved by both:

- a majority of the voting power of the issuer represented at a special
shareholder's meeting; and

- a majority of the voting power remaining after excluding the combined
voting power of the intended acquirer, directors of the issuer who are
also employees and officers of the issuer and persons that acquire
specified amounts of shares after the public disclosure of the proposed
control share acquisition.

The Control Share Acquisition Act does not apply to a corporation whose
articles of incorporation or code of regulations contain provisions opting out
of it. We have not opted out of the application of the Control Share Acquisition
Act.

Other Provisions of Ohio Law. In addition to the Merger Moratorium Statute
and the Control Share Acquisition Act, other provisions of Ohio law:

- provide a corporation, or in certain circumstances the shareholder of the
corporation, a cause of action to recover profits realized under certain
circumstances by persons who dispose of securities of a corporation
within 18 months of proposing to acquire such corporation; and

- impose advance filing and notice requirements for tenders of more than
10% of certain Ohio corporations.

LIMITATIONS ON LIABILITY; INDEMNIFICATION OF OFFICERS AND DIRECTORS

Under Ohio law, Ohio corporations may indemnify directors from liability if
the director acted in good faith and in a manner reasonably believed by the
director to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal actions, if the director had no reason to believe
his or her action was unlawful. In the case of an action by or on behalf of a
corporation, indemnification may not be made (1) if the person seeking
indemnification is adjudged liable for negligence or misconduct, unless the
court in which such action was brought determines such person is fairly and
reasonably entitled to indemnification or (2) if liability asserted against such
person concerns certain unlawful distributions. The indemnification provisions
of Ohio law require indemnification of a director who has been successful on the
merits or otherwise in defense of any action, suit or proceeding that he or she
was a party to by reason of the fact that he or she is or was a director of the
corporation. The indemnification authorized by Ohio law is not exclusive and is
in addition to any other rights granted to directors under the articles of
incorporation or regulations of the corporation or to any agreement between the
directors and the corporation.

Our indemnification arrangements are set forth in our regulations. Article
Sixth of the regulations provides that we shall indemnify any person against
expenses and liability actually imposed upon or reasonably incurred by such
person in connection with the defense of either any action, suit or proceeding
to which he or she may be a party defendant or any claim of liability asserted
against such person by reason of the fact that he or she is or was our director
or he or she is or was serving at our request as a director, trustee, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise provided that he or she acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to our best interests, and,
with respect to any criminal action or proceeding, if he or she had no
reasonable cause to believe his action was unlawful.

With respect to actions brought by us or in our right to procure a judgment
in our favor, we are not required to indemnify any director or officer in any
matter in which he is adjudged to be liable by reason of negligence or
misconduct in the performance of his duties as such director or officer unless
the court determines that the person is fairly and reasonably entitled to such
indemnity.

In addition, unless ordered by a court, indemnification shall be made by us
only as authorized in the specific case upon a determination that
indemnification of the director is proper. This determination is made by (i) a
majority vote of a quorum of directors who are not party to or threatened with
the action,
11

(ii) independent legal counsel, (iii) the shareholders or (iv) a court. The
indemnification provided for in our regulations is not exclusive of any other
rights to which a director may be entitled to under our articles or regulations,
any agreement, any insurance purchased by us, any vote of shareholders or
otherwise. We have also entered into indemnity agreements under which we have
agreed, among other things, to indemnify our directors to the maximum extent
then authorized or permitted by our code of regulations or Ohio law.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for our common shares is National City
Bank. Its address is 1900 E. 9th Street, Cleveland, Ohio 44114, and its
telephone number is (800) 622-6757.

LISTING

Our common shares have been approved for quotation on the New York Stock
Exchange under the trading symbol "RPM".

DESCRIPTION OF DEBT SECURITIES

The following description of the terms of the Debt Securities (as defined
below) sets forth certain general terms and provisions of the Debt Securities to
which any prospectus supplement may relate. The particular terms of the Debt
Securities offered by any prospectus supplement and the extent, if any, to which
such general provisions may apply to the Debt Securities so offered will be
described in the prospectus supplement relating to such debt securities.
Accordingly, for a description of the terms of a particular issue of Debt
Securities, reference must be made to both the prospectus supplement relating
thereto and to the following description.

The Debt Securities will be issued under an indenture (the "Indenture")
between us and The Bank of New York (the "Trustee"). As used in this prospectus,
"Debt Securities" means the debentures, notes, bonds and other evidences of
indebtedness that we issue and the Trustee authenticates and delivers under the
Indenture.

We have summarized certain terms and provisions of the Indenture in this
section. The summary is not complete. We have also filed the form of the
Indenture as an exhibit to the registration statement that included this
prospectus. You should read the form of Indenture for additional information
before you buy any Debt Securities. The summary that follows includes references
to section numbers of the Indenture so that you can more easily locate these
provisions. Capitalized terms used but not defined in this summary have the
meanings specified in the Indenture.

GENERAL

The Debt Securities will be our direct unsecured obligations. The Indenture
does not limit the amount of Debt Securities that we may issue and permits us to
issue Debt Securities from time to time. Debt Securities issued under the
Indenture will be issued as part of a series that has been established by us
pursuant to the Indenture (Section 2.01(b)). Unless a prospectus supplement
relating to Debt Securities states otherwise, the Indenture and the terms of the
Debt Securities will not contain any covenants designed to afford holders of any
Debt Securities protection in a highly leveraged or other transaction involving
us that may adversely affect holders of the Debt Securities.

A prospectus supplement relating to a series of Debt Securities being
offered will include specific terms relating to the offering. These terms will
include some or all of the following:

- the title and type of the Debt Securities;

- any limit on the total principal amount of the Debt Securities;

- the price at which the Debt Securities will be issued;

- the date or dates on which the principal of and premium, if any, on the
Debt Securities will be payable;

- the maturity date of the Debt Securities;

- if the Debt Securities will bear interest, and if so:

- the interest rate on the Debt Securities,

- the date from which interest will accrue,

- the record and interest payment dates for the Debt Securities or the
method of determining such rate,

- the first interest payment date, and

- any circumstances under which we may defer interest payments;

- if the amount of principal, interest or premium, if any, with respect to
the Debt Securities may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be
determined;

- any optional conversion provisions that would permit us or the Holders
(as defined below) of Debt Securities to elect to convert the Debt
Securities prior to their final maturity;

- any optional redemption provisions that would permit us or the Holders
(as defined below) of Debt Securities to elect redemption of the Debt
Securities prior to their final maturity;

- any sinking fund or analogous provisions that would obligate us to
redeem, purchase or repay the Debt Securities prior to their final
maturity;

- the currency or currencies in which the Debt Securities will be
denominated and payable, if other than U.S. dollars;

- any provisions that would permit us or the Holders of the Debt Securities
to elect the currency or currencies in which the Debt Securities are
paid;

- whether the Debt Securities will be subordinated to our other debt;

- any changes to or additional Events of Default (as defined below);

- any changes to or additional covenants or provisions to the Indenture;

- whether the Debt Securities will be issued in whole or in part in the
form of Global Securities and, if so, the Depositary for those Global
Securities (a "Global Security" means a Debt Security that we issue in
accordance with the Indenture to represent all or part of a series of
Debt Securities);

- any material United States federal income tax consequences of the Debt
Securities; and

- any other terms of the Debt Securities (which terms shall not be
prohibited by the provisions of the Indenture).

A "Holder" means the person in whose name a particular Security is
registered in the Security Register (Section 1.01).

PAYMENT AND TRANSFER

In the prospectus supplement, we will designate a "Place of Payment" where
you can receive payment of the principal of and any premium and interest on the
Debt Securities or transfer the Debt Securities. There will be no service charge
for any registration of transfer or exchange of the Debt Securities, but we may
require you to pay any tax or other governmental charge payable in connection
with a transfer or exchange of the Debt Securities.

All funds which we pay to any paying agent for the payment of principal,
interest or premium, if any, with respect to the Debt Securities that remain
unclaimed at the end of two years after such principal,

interest or premium shall have become due and payable will be repaid to us, and
the holders of such Debt Securities will thereafter look only to us for payment
thereof.

GLOBAL SECURITIES

A Global Security is a Debt Security that represents, and is denominated in
an amount equal to the aggregate principal amount of, all outstanding Debt
Securities of a series, or any portion thereof, in either case having the same
terms, including the same original issue date, date or dates on which principal
and interest are due and interest rate or method of determining interest. A
Global Security will be deposited with, or on behalf of, a depository, which
will be identified in the prospectus supplement relating to such Debt
Securities.

DENOMINATIONS

Unless the prospectus supplement states otherwise, the Debt Securities will
be issued only in registered form, without coupons, in denominations of $1,000
each, or multiples of $1,000.

ORIGINAL ISSUE DISCOUNT

Debt Securities may be issued under the Indenture as Original Issue
Discount Securities and sold at a substantial discount below their stated
principal amount. If a Debt Security is an "Original Issue Discount Security,"
that means that an amount less than the principal amount of the Debt Security
will be due and payable upon a declaration of acceleration of the maturity of
the Debt Security pursuant to the Indenture (Section 1.01). The prospectus
supplement will describe the federal income tax consequences and other special
factors which should be considered prior to purchasing any Original Issue
Discount Securities.

CONSOLIDATION, MERGER OR SALE OF ASSETS

The Indenture generally permits a consolidation or merger between us and
another corporation. It also permits the sale or transfer by us of all or
substantially all of our property and assets to another corporation or
corporations. These transactions are permitted if:

- the resulting or acquiring corporation or corporations (if other than us)
assumes all of our responsibilities and liabilities under the Indenture,
including the payment of all amounts due on the Debt Securities and
performance of the covenants in the Indenture; and

- immediately after the transaction, no Event of Default exists.

If we consolidate or merge with or into any other corporation or sell all
or substantially all of our assets according to the terms and conditions of the
Indenture, the resulting or acquiring corporation or their parent will be
substituted for us in the Indenture with the same effect as if it had been an
original party to the Indenture. As a result, the successor corporation may
exercise our rights and powers under the Indenture, in our name or in its own
name and we will be released from all our liabilities and obligations under the
Indenture and under the Debt Securities (Sections 11.01(a) and (b)).

MODIFICATION AND WAIVER

Under the Indenture, certain of our rights and obligations and certain of
the rights of Holders of the Debt Securities may be modified or amended with the
consent of the Holders of a majority in aggregate principal amount of the
outstanding Debt Securities of each series of Debt Securities affected by the
modification or amendment. The following modifications and amendments will not
be effective against any Holder without its consent:

- a change in the stated maturity date of any payment of principal or
interest;

- a reduction in the principal amount, change in the rate of interest or
any premium payable upon redemption;

- a reduction in the principal amount of an Original Issue Discount
Security that would be due and payable upon a declaration of acceleration
of the maturity of a Debt Security pursuant to the Indenture;

- a change in the Place of Payment or currency in which any payment on the
Debt Securities is payable;

- a limitation of a Holder's right to sue us for the enforcement of certain
payments due on the Debt Securities;

- a reduction in the percentage of outstanding Debt Securities required to
consent to a modification, waiver or amendment of the Indenture; and

- a modification of any of the foregoing requirements or a reduction in the
percentage of outstanding Debt Securities required to waive compliance
with certain provisions of the Indenture or to waive certain defaults
under the Indenture (Section 10.02).

EVENTS OF DEFAULT

The term "Event of Default" when used in the Indenture with respect to any
series of Debt Securities, means any of the following:

- failure to pay interest on any Debt Security of that series when due, and
continuance of such default for a period of 30 days;

- failure to pay the principal of or any premium on any Debt Security of
that series when due;

- failure to make any sinking fund payment when due;

- failure to perform any other covenant in the Indenture that applies to
Debt Securities of that series for 60 days after we have received written
notice of the failure to perform in the manner specified in the
Indenture;

- default in payment relating to any Indebtedness (the unpaid principal
amount of which is not less than the greater of $50 million or 10% of
consolidated shareholders' equity) which continues beyond any grace
period provided with respect thereto and results in such Indebtedness
becoming due prior to its stated maturity or occurs at the final maturity
of such Indebtedness;

- certain events in bankruptcy, insolvency or reorganization; or

- any other Event of Default that may be specified for the Debt Securities
of that series when that series is created. (Section 8.01(a))

If an Event of Default for any series of Debt Securities occurs and
continues, the Trustee or the Holders of at least 25% in aggregate principal
amount of the outstanding Debt Securities of the series may declare the entire
principal of all the Debt Securities of that series to be due and payable
immediately. If such a declaration occurs, the Holders of a majority of the
aggregate principal amount of the outstanding Debt Securities of that series
can, subject to certain conditions, rescind the declaration (Section 8.01(b) and
(c)).

The prospectus supplement relating to each series of Debt Securities that
are Original Issue Discount Securities will describe the particular provisions
that relate to the acceleration of maturity of a portion of the principal amount
of such series when an Event of Default occurs and continues.

An Event of Default for a particular series of Debt Securities does not
necessarily constitute an event of Default for any other series of Debt
Securities issued under the Indenture. The Indenture requires us to file an
Officers' Certificate with the Trustee each fiscal year that states that certain
defaults do not exist under the terms of the Indenture (Section 6.08).

Other than its duties in the case of a default, a Trustee is not obligated
to exercise any of its rights or powers under the Indenture at the request or
direction of any Holders, unless the Holders offer the Trustee
15

indemnification satisfactory to the Trustee (Section 9.02(e)). If such
indemnification is provided, then, subject to certain other rights of the
Trustee, the Holders of a majority in principal amount of the outstanding Debt
Securities of any series may, with respect to the Debt Securities of that
series, direct the time, method and place of:

- conducting any proceeding for any remedy available to the Trustee; or

- exercising any trust or power conferred upon the Trustee (Section 8.06).

The Holder of a Debt Security of any series will have the right to begin
any proceeding with respect to the Indenture or for any remedy only if:

- the Holder has previously given the Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of that
series;

- the Holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of that series have made a written request
of, and offered satisfactory indemnification to, the Trustee to begin
such proceeding;

- the Trustee has not started such proceeding within 60 days after
receiving the request; and

- the Trustee has not received directions inconsistent with such request
from the Holders of a majority in aggregate principal amount of the
outstanding Debt Securities of that series during those 60 days (Section
8.04).

However, the Holder of any Debt Security will have an absolute right to
receive payment of principal of and any premium and interest on the Debt
Security when due and to institute suit to enforce such payment (Section 8.09).

DESCRIPTION OF WARRANTS

We may issue warrants for the purchase of debt securities or common shares.
Warrants may be issued independently or together with debt securities or common
shares offered by any prospectus supplement and may be attached to or separate
from any such offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between us and a bank or trust
company, as warrant agent. The warrant agent will act solely as our agent in
connection with the warrants and will not assume any obligation or relationship
of agency or trust for or with any holders or beneficial owners of warrants. The
following summary of certain provisions of the warrants does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
provisions of the warrant agreement that will be filed with the SEC in
connection with the offering of such warrants.

DEBT WARRANTS

The prospectus supplement relating to a particular issue of debt warrants
will describe the terms of such debt warrants, including the following: (a) the
title of such debt warrants; (b) the offering price for such debt warrants, if
any; (c) the aggregate number of such debt warrants; (d) the designation and
terms of the debt securities purchasable upon exercise of such debt warrants;
(e) if applicable, the designation and terms of the debt securities with which
such debt warrants are issued and the number of such debt warrants issued with
each such debt security; (f) if applicable, the date from and after which such
debt warrants and any debt securities issued therewith will be separately
transferable; (g) the principal amount of debt securities purchasable upon
exercise of a debt warrant and the price at which such principal amount of debt
securities may be purchased upon exercise (which price may be payable in cash,
securities, or other property); (h) the date on which the right to exercise such
debt warrants shall commence and the date on which such right shall expire; (i)
if applicable, the minimum or maximum amount of such debt warrants that may be
exercised at any one time; (j) whether the debt warrants represented by the debt
warrant certificates or debt securities that may be issued upon exercise of the
debt warrants will be issued in registered or bearer form; (k) information with
respect to book-entry procedures, if any; (1) the

currency or currency units in which the offering price, if any, and the exercise
price are payable; (m) if applicable, a discussion of material United States
federal income tax considerations; (n) the antidilution provisions of such debt
warrants, if any; (o) the redemption or call provisions, if any, applicable to
such debt warrants; and (p) any additional terms of such debt warrants,
including terms, procedures and limitations relating to the exchange and
exercise of such debt warrants.

STOCK WARRANTS

The prospectus supplement relating to any particular issue of common share
warrants will describe the terms of such warrants, including the following: (a)
the title of such warrants; (b) the offering price for such warrants, if any;
(c) the aggregate number of such warrants; (d) the designation and terms of the
common shares purchasable upon exercise of such warrants; (e) if applicable, the
designation and terms of the offered securities with which such warrants are
issued and the number of such warrants issued with each such offered security;
(f) if applicable, the date from and after which such warrants and any offered
securities issued therewith will be separately transferable; (g) the number of
common shares purchasable upon exercise of a warrant and the price at which such
shares may be purchased upon exercise; (h) the date on which the right to
exercise such warrants shall commence and the date on which such right shall
expire; (i) if applicable, the minimum or maximum amount of such warrants that
may be exercised at any one time; (j) the currency or currency units in which
the offering price, if any, and the exercise price are payable, (k) if
applicable, a discussion of material United States federal income tax
considerations; (l) the antidilution provisions of such warrants, if any; (m)
the redemption or call provisions, if any, applicable to such warrants; and (n)
any additional terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.

DESCRIPTION OF THE STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS

We may issue stock purchase contracts representing contracts obligating
holders to purchase from us, and us to sell to the holders, a specified number
of our common shares (or a range of numbers of shares pursuant to a
predetermined formula) at a future date or dates. The price per common share and
the number of common shares may be fixed at the time the stock purchase
contracts are issued or may be determined by reference to a specific formula set
forth in the stock purchase contracts.

The stock purchase contracts may be issued separately or as a part of
units, often known as stock purchase units, consisting of a stock purchase
contract and either:

- our debt securities; or

- debt obligations of third parties, including U.S. Treasury securities;

securing the holders' obligations to purchase the common shares under the stock
purchase contracts.

The stock purchase contracts may require us to make periodic payments to
the holders of the stock purchase units or vice versa, and such payments may be
unsecured or prefunded on some basis. The stock purchase contracts may require
holders to secure their obligations in a specified manner and in certain
circumstances we may deliver newly issued prepaid stock purchase contracts,
often known as prepaid securities, upon release to a holder of any collateral
securing such holder's obligations under the original stock purchase contract.

The applicable prospectus supplement will describe the terms of any stock
purchase contracts or stock purchase units and, if applicable, prepaid
securities. The description in the applicable prospectus supplement will not
contain all of the information that you may find useful. For more information,
you should review the stock purchase contracts, the collateral arrangements and
depositary arrangements, if applicable, relating to such stock purchase
contracts or stock purchase units and, if applicable, the prepaid securities and
the document pursuant to which the prepaid securities will be issued. These
documents will be filed with the SEC promptly after the offering of the stock
purchase contracts or stock purchase units.

Material United States federal income tax considerations applicable to the stock
purchase contracts and the stock purchase units will also be discussed in the
applicable prospectus supplement.

PLAN OF DISTRIBUTION

The distribution of the securities may be effected from time to time in one
or more transactions at a fixed price or prices (which may be changed from time
to time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each prospectus
supplement will describe the method of distribution of the securities offered
therein.

Our company may sell securities directly, through agents designated from
time to time, through underwriting syndicates led by one or more managing
underwriters or through one or more underwriters acting alone. Each prospectus
supplement will describe the terms of the securities to which such prospectus
supplement relates, the name or names of any underwriters or agents with whom we
have entered into arrangements with respect to the sale of such securities, the
public offering or purchase price of such securities and the net proceeds we
will receive from such sale. In addition, each prospectus supplement will
describe any underwriting discounts and other items constituting underwriters'
compensation, any discounts and commissions allowed or paid to dealers, if any,
any commissions allowed or paid to agents and the securities exchange or
exchanges, if any, on which such securities will be listed. Dealer trading may
take place in certain of the securities, including securities not listed on any
securities exchange.

If so indicated in the applicable prospectus supplement, we will authorize
underwriters or agents to solicit offers by certain institutions to purchase
securities from us pursuant to delayed delivery contracts providing for payment
and delivery at a future date. Institutions with which such contracts may be
made include, among others:

- commercial and savings banks;

- insurance companies;

- pension funds;

- investment companies;

- educational and charitable institutions.

In all cases, such institutions must be approved by us. Unless otherwise
set forth in the applicable prospectus supplement, the obligations of any
purchaser under any such contract will not be subject to any conditions except
that (i) the purchase of the securities will not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is subject
and (ii) if the securities are also being sold to underwriters acting as
principals for their own account, the underwriters will have purchased such
securities not sold for delayed delivery. The underwriters and such other
persons will not have any responsibility in respect of the validity or
performance of such contracts.

Any underwriter or agent participating in the distribution of the
securities may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the securities so offered and sold and any discounts or
commissions received by them, and any profit realized by them on the same or
resale of the securities may be deemed to be underwriting discounts and
commissions under the Securities Act.

Certain of any such underwriters and agents, including their associates,
may be customers of, engage in transactions with and perform services for us and
our subsidiaries in the ordinary course of business.

We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act of 1933, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make as a result of those
certain civil liabilities.

Except as indicated in the applicable prospectus supplement, the securities
are not expected to be listed on a securities exchange, except for the common
shares, which are listed on the New York Stock Exchange, and any underwriters or
dealers will not be obligated to make a market in the securities. We cannot
predict the activity or liquidity of any trading in the securities.

VALIDITY OF SECURITIES

The validity of the securities offered hereby will be passed upon for us by
Calfee, Halter & Griswold LLP, Cleveland, Ohio. Any underwriters will be
represented by their own legal counsel.

EXPERTS

Ciulla, Smith & Dale, LLP, independent auditors, have audited our
consolidated financial statements and schedule incorporated by reference or
included in our annual report on Form 10-K for the year ended May 31, 2001, as
set forth in their report, which is incorporated by reference in this prospectus
and elsewhere in the registration statement. Our consolidated financial
statements and schedule are incorporated by reference in reliance on Ciulla,
Smith & Dale, LLP's report, given on their authority as experts in accounting
and auditing.

Description of Artwork

The outside cover also contains the RPM logo, centered on the page, and is
divided into two sections, with "Consumer Division" printed to the left, and
"Industrial Division" printed to the right of the logo. Above the words
"Consumer Division," the left section of the cover contains the following logos
(as appearing from left to right and top to bottom): Rust-Oleum, DAP, Zinsser,
Flecto and Testors. The following logos appear on the left section, below the
words "Consumer Division" (as appearing from left to right and top to bottom):
Bondo, Thibaut, Watco, Varathane, Mathys, Wolman and NatureSeal.

The right section, above the words "Industrial Division," contains the
following logos (as appearing from left to right and top to bottom): Tremco,
Tremco Vulkem Paraseal, Fibergrate, Plasite, Carboline and Dryvit. The following
logos appear below the title "Industrial Division" (as appearing from left to
right and top to bottom): American Emulsion, Mohawk, Westfield Coatings,
ValvTect, Pettit, Euco, CCI, Kop-Coat, Woolsey/Z-Spar, Republic Roofing Systems
and TCI Powder Coatings.

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--------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION
WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

10,000,000 SHARES

RPM LOGO

COMMON SHARES

-----------------------------------------------

PROSPECTUS SUPPLEMENT
-----------------------------------------------

Joint Lead and Book-Running Managers

JPMORGAN LEHMAN BROTHERS
---------------------
MERRILL LYNCH & CO.
ROBERT W. BAIRD & CO.
MCDONALD INVESTMENTS INC.

, 2002

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--------------------------------------------------------------------------------

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is an estimate, subject to future contingencies, of the
expenses to be incurred by the Registrant in connection with the issuance and
distribution of the securities being registered. All amounts are estimated
except the SEC registration fee:

SEC registration fee........................................ $ 27,600
Legal fees and expenses..................................... 80,000
Trustee fees and expenses................................... 10,000
Accounting fees and expenses................................ 20,000
Stock Exchange fees......................................... 15,000
Printing expenses........................................... 25,000
Miscellaneous............................................... 12,000
--------
Total....................................................... $189,600
========

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Ohio law, Ohio corporations are authorized to indemnify directors,
officers, employees and agents within prescribed limits and must indemnify them
under certain circumstances. Ohio law does not provide statutory authorization
for a corporation to indemnify directors, officers, employees and agents for
settlements, fines or judgments in the context of derivative suits. However, it
provides that directors (but not officers, employees and agents) are entitled to
mandatory advancement of expenses, including attorneys' fees, incurred in
defending any action, including derivative actions, brought against the
director, provided the director agrees to cooperate with the corporation
concerning the matter and to repay the amount advanced if it is proved by clear
and convincing evidence that his act or failure to act was done with deliberate
intent to cause injury to the corporation or with reckless disregard to the
corporation's best interests.

Ohio law does not authorize payment of judgments to a director, officer,
employee or agent after a finding of negligence or misconduct in a derivative
suit absent a court order. Indemnification is required, however, to the extent
such person succeeds on the merits. In all other cases, if a director, officer,
employee or agent acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, indemnification
is discretionary except as otherwise provided by a corporation's articles of
incorporation, code of regulations or by contract except with respect to the
advancement of expenses of directors.

Under Ohio law, a director is not liable for monetary damages unless it is
proved by clear and convincing evidence that his action or failure to act was
undertaken with deliberate intent to cause injury to the corporation or with
reckless disregard for the best interests of the corporation. There is, however,
no comparable provision limiting the liability of officers, employees or agents
of a corporation. The statutory right to indemnification is not exclusive in
Ohio, and Ohio corporations may, among other things, procure insurance for such
persons.

Article VI of the Registrant's Amended Code of Regulations provides for the
indemnification of directors and officers against certain liabilities, to the
maximum amount permitted by Ohio law. The Registrant has purchased a Directors
and Officers Liability Insurance Policy, which insures the directors and
officers of the Company against certain liabilities incurred in the performance
of their duties.

The Registrant has entered into Indemnification Agreements with each of its
directors and officers providing for additional indemnification protection
beyond that provided by the Directors and Officers Liability Insurance Policy.
In the Indemnification Agreements, the Registrant has agreed, subject to certain
exceptions, to indemnify and hold harmless the director or officer to the
maximum extent then authorized or
II-1

permitted by the provisions of the Company's Code of Regulations, the Ohio
Revised Code, or by any amendment(s) thereto.

ITEM 16. EXHIBITS

See Exhibit Index.

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes:

(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses

II-2

incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(d) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.

(e) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(f) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment no. 4 to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Cleveland, State of Ohio, on this 22nd
day of March, 2002.

RPM, INC.

BY: /s/ P. KELLY TOMPKINS
-----------------------------------
P. Kelly Tompkins
Vice President,
General Counsel and Secretary

Pursuant to the requirements of the Securities Act of 1933, this amendment
no. 4 to the registration statement has been signed by the following persons in
the capacities indicated on this 22nd day of March, 2002.

SIGNATURE TITLE
--------- -----

*
------------------------------------------------ Chairman of the Board of Directors and Chief
Thomas C. Sullivan Executive Officer (Principal Executive Officer)

*
------------------------------------------------
James A. Karman Vice Chairman of the Board of Directors

*
------------------------------------------------
Frank C. Sullivan President, Chief Operating Officer and a Director

* Vice President, Chief Financial Officer and
------------------------------------------------ Controller (Principal Financial and Accounting
Robert L. Matejka Officer)

*
------------------------------------------------
Max D. Amstutz Director

*
------------------------------------------------
Edward B. Brandon Director

*
------------------------------------------------
Lorrie Gustin Director

*
------------------------------------------------
E. Bradley Jones Director

*
------------------------------------------------
Donald K. Miller Director

*
------------------------------------------------
William A. Papenbrock Director

II-4

SIGNATURE TITLE
--------- -----

*
------------------------------------------------
Albert B. Ratner Director

*
------------------------------------------------
Jerry Sue Thornton Director

*
------------------------------------------------
Joseph P. Viviano Director

* P. Kelly Tompkins, by signing his name hereto, does hereby execute this
amendment no. 4 to the registration statement on behalf of the directors and
officers of RPM, Inc. indicated above by asterisks, pursuant to powers of
attorney duly executed by such directors and officers, which are filed with
the Securities and Exchange Commission on behalf of such directors and
officers.

/s/ P. KELLY TOMPKINS
------------------------------------------------
P. Kelly Tompkins
Attorney-in-fact

II-5

RPM, INC.

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------

1.1 Form of Equity Underwriting Agreement.
**1.2 Form of Debt Underwriting Agreement.
3.1 Amended Articles of Incorporation, as amended, 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 January 6, 1997.
3.2 Amended Code of Regulations, which is incorporated herein by
reference to Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 2001.
4.1 Specimen Certificate of Common Shares, without par value, of
RPM, Inc., which is incorporated herein by reference to
Exhibit 4.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended May 31, 1998.
4.2 Specimen Note Certificate for 7.0% Senior Notes Due 2005,
which is incorporated herein by reference to Exhibit 4.3 to
the Company's Registration Statement on Form S-4 as filed
with the Commission on August 3, 1995.
4.3 Specimen Note Certificate of Liquid Asset Notes With Coupon
Exchange ("LANCEs(SM)") Due 2008, which is incorporated
herein by reference to Exhibit 4.3 to the Company's Annual
Report on Form 10-K for the fiscal year ended May 31, 1998.
4.4 Rights Agreement by and between 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.
4.4.1 Amendment to Rights Agreement dated December 18, 2000 by and
among the Company, 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.
4.5 Indenture, dated as of June 1, 1995, between RPM, Inc. and
The First National Bank of Chicago, as trustee, with respect
to the 7.0% Senior Notes Due 2005, which is incorporated
herein by reference to Exhibit 4.5 to the Company's
Registration Statement on Form S-4 as filed with the
Commission on August 3, 1995.
4.6 First Supplemental Indenture, dated as of March 5, 1998 to
the Indenture dated as of June 1, 1995, between RPM, Inc.
and The First National Bank of Chicago, as trustee, with
respect to the Liquid Asset Notes with Coupon Exchange
("LANCEs(SM)") due 2008, which is incorporated herein by
reference to Exhibit 4.6 to the Company's Annual Report on
Form 10-K for the fiscal year ended May 31, 1998.
*4.7 Form of Indenture between RPM, Inc. and The Bank of New
York, as trustee.
**4.8 Form of Warrant Agreement.
**4.9 Form of Note.
**4.10 Form of Stock Purchase Contact (including form of stock
purchase contract certificate) and, if applicable, Pledge
Agreement.
**4.11 Form of Unit Agreement (including form of unit certificate).
*5.1 Opinion of Calfee, Halter & Griswold LLP.
*12.1 Statement regarding computation of ratio of earnings to
fixed charges.
*23.1 Consent of Calfee, Halter & Griswold LLP (included in
Exhibit 5.1).
23.2 Consent of Ciulla, Smith & Dale, LLP.
*24.1 Power of Attorney.
*24.2 Powers of Attorney for directors Max D. Amstutz and Joseph
P. Viviano.
*25.1 Statement of Eligibility of Trustee.

---------------

* Previously filed.

** To be filed as an exhibit to a Current Report on Form 8-K to be filed by the
Company in connection with a specific offering.