<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 9, 1999
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RPM, INC.
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(Exact name of registrant as specified in its charter)
Ohio 1-14187 34-6550857
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
2628 Pearl Road, P.O. Box 777, Medina, Ohio 44258
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330) 273-5090
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ITEM 5. OTHER EVENTS.
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On August 9, 1999, RPM, Inc. (the "Company") issued three (3) news
releases, copies of which are filed herewith as Exhibits 99.1, 99.2 and 99.3.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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(a) Not applicable
(b) Not applicable
(c) Exhibits.
Number Description
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99.1 Press release, dated August 9, 1999
99.2 Press release, dated August 9, 1999
99.3 Press release, dated August 9, 1999
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
RPM, INC.
Date: August 10, 1999 By: /s/ P. Kelly Tompkins
_____________________________
P. Kelly Tompkins
Vice President, General Counsel
and Secretary
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EXHIBIT INDEX
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Number Description
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99.1 Press release, dated August 9, 1999
99.2 Press release, dated August 9, 1999
99.3 Press release, dated August 9, 1999
<PAGE> 1
Exhibit 99.1
RPM, INC. ANNOUNCES 52ND RECORD YEAR
------------------------------------
NEW YORK - August 9, 1999 - RPM, Inc. (NYSE: RPM) announced today that it
achieved its 52nd consecutive year of record sales and record earnings for the
fiscal year ended May 31, 1999.
For the year, the leading specialty coatings manufacturer said net sales
increased 6 percent, to $1.7 billion from $1.6 billion in the 1998 fiscal year.
Net income grew 8 percent, to $94.5 million from $87.8 million a year ago, while
diluted earnings per share were up 2 percent, to $0.86 from $0.84 in fiscal
1998.
In the fourth quarter, net sales were $475.3 million, up 5 percent from the $452
million reported a year ago. Net income grew 9 percent, to $35.4 million from
$32.6 million in the fiscal 1998 fourth quarter. Diluted earnings per share were
$0.32, compared to $0.30 a year ago.
Earnings per share comparisons for both the quarter and year were affected by
the redemption of $160 million in convertible notes on August 10, 1998. These
securities were redeemed for 10 million new shares of RPM stock, which
strengthened the company's debt to total capitalization ratio to 44 percent from
56 percent. The redemption will no longer have any impact on year-to-year
earnings per share comparisons after the first quarter of fiscal 2000.
Speaking to a group of security analysts in New York, Thomas C. Sullivan,
chairman and chief executive officer of the Medina, Ohio-based company, said,
"The fiscal 1999 operating environment was challenging. Our Industrial Division
faced continued depressed overseas markets, particularly in the financially
troubled Asian and South American economies; a softening North American market
and a strong dollar against most foreign currencies. Higher service and
distribution expense overall and continued weakness in the automotive
aftermarket had an impact on RPM's Consumer Division."
"Given these conditions, we are pleased to have achieved our 52nd consecutive
record year, although we are not satisfied with single digit earnings growth
rates," Mr. Sullivan said.
He said that on August 3, "RPM completed the acquisition of DAP, a $250 million
business and one of the premiere brand names in the North American consumer
do-it-yourself market." Products marketed to consumers under the DAP brand
include sealants, caulks, patch and repair compounds, wood preservatives, water
repellents and adhesives. The $290 million purchase was financed through RPM's
revolving line of credit.
RPM, Inc. is a world leader in specialty coatings, serving both the industrial
and consumer markets. Its industrial products include roofing systems, sealants,
corrosion control coatings, floor coatings and specialty chemicals. RPM's
consumer do-it-yourself products are used for home maintenance and automotive
and boat repair. RPM stock is traded on the New York Stock Exchange under the
symbol RPM.
# # #
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CONSOLIDATED CONDENSED STATEMENTS OF INCOME
In thousands, except per share data
<TABLE>
<CAPTION>
Year Ended May 31, Three Months Ended May 31,
------------------------------------------ --------------------------------------------
1999 1998 1999 1998
------------------ -------------------- --------------------- --------------------
<S> <C> <C> <C> <C>
NET SALES $1,712,154 $1,615,274 $475,290 $452,008
Cost of Sales 927,110 891,862 247,157 242,434
------------------ -------------------- --------------------- --------------------
Gross Profit $785,044 $723,412 $228,133 $209,574
Selling, General & Administrative
Expenses 592,666 537,156 162,538 148,668
Interest Expense, Net 32,781 36,700 5,948 7,275
------------------ -------------------- --------------------- --------------------
Income Before Income Taxes 159,597 149,556 59,647 53,631
Provision for Income Taxes 65,051 61,719 24,167 20,951
------------------ -------------------- --------------------- --------------------
NET INCOME $94,546 $87,837 $35,480 $32,680
================== ==================== ===================== ====================
Basic Earnings per Share $0.87 $0.89 $0.32 $0.33
================== ==================== ===================== ====================
Diluted Earnings per Share * $0.86 $0.84 $0.32 $0.30
================== ==================== ===================== ====================
Average Shares Outstanding - Basic 108,731 98,527 109,819 99,590
================== ==================== ===================== ====================
Average Shares Outstanding - Diluted 111,376 111,663 110,180 112,844
================== ==================== ===================== ====================
</TABLE>
CONSOLIDATED CONDENSED BALANCE SHEET
In thousands, except per share data
<TABLE>
<CAPTION>
May 31,
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1999 1998
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<S> <C> <C>
ASSETS
Current Assets $705,419 $675,112
Property, Plant & Equipment 339,697 305,897
Other Assets 692,120 704,908
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TOTAL ASSETS $1,737,236 $1,685,917
================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $302,549 $287,828
Long-Term Debt 582,109 716,989
Other Liabilities 109,702 114,763
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TOTAL LIABILITIES $994,360 $1,119,580
Shareholders' Equity 742,876 566,337
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TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $1,737,236 $1,685,917
================== ====================
Current Ratio 2.3:1 2.4:1
Shareholders' Equity per Share $6.83 $5.75
Working Capital $402,870 $387,284
</TABLE>
* Includes interest expense add-back, net of tax, on convertible debt
securities -- $1,005 and $5,638 for the twelve months, and $0 and $1,526
for the fourth quarters in 1999 and 1998, respectively.
<PAGE> 1
Exhibit 99.2
RPM, INC. RESTRUCTURES AND CONSOLIDATES OPERATIONS
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NEW YORK - AUGUST 9, 1999 - RPM, Inc. (NYSE: RPM) announced today that it is
implementing a restructuring and consolidation program that will generate
annualized pre-tax savings of $23 million, and will result in a $45 million
pre-tax charge to earnings for the fiscal 2000 first quarter ending August 31,
1999. The net cash impact of the charge will be approximately $4 million.
On a per-share basis, the after-tax charge to 2000 earnings will be
approximately $.24 and the annualized after-tax savings are expected to be $.13.
Thomas C. Sullivan, chairman and chief executive officer of the leading
specialty coatings company, said that the expected savings for fiscal year 2000
will be approximately $.03 per share, and $.10 for the following fiscal year. He
said that major features of the restructuring program include:
- - Closing 23 facilities to eliminate redundancies in manufacturing,
administration, and distribution.
- - Eliminating 730 positions, representing about 10 percent of the company's
May 31, 1999 headcount.
- - Consolidating consumer product line distribution and warehousing.
"We are not prepared to comment further on facilities affected by the
restructuring, pending notification of employees in these locations. We hope to
achieve part of the workforce reduction through normal attrition," Mr. Sullivan
said.
RECORD STREAK LIKELY TO END
"Given the size of the pre-tax charge in the first quarter of fiscal 2000, it is
likely that RPM's record of continuous annual sales and earnings increases, the
longest among publicly traded American companies, will come to an end in the
current fiscal year. However, we believe the strategic steps we are taking will
set the stage for stronger earnings growth ahead and will do more to build
long-term shareholder value than continuing the string of records," Mr. Sullivan
said.
"In addition to the restructuring program, RPM will be selling off non-core
product lines with sales of approximately $100 million. No net loss is
anticipated as a result of these transactions," he said.
"Without implementing these major changes, and the charges associated with them,
it is probable that Jim Karman and I could have retired at the end of fiscal
2002 with 55 years of record sales and record earnings intact. But we did not
believe this to be in the best interests of our shareholders, employees and
successor management," he said.
STRATEGIC CONSOLIDATIONS TO FOSTER SYNERGIES; IMPROVE EFFICIENCIES
To foster synergies among its operating companies with similar technologies,
manufacturing needs, channels of distribution and customer bases, and to
generate manufacturing and distribution efficiencies, RPM said it is
accelerating its consolidation program that began with the formation of the
Tremco Group after RPM acquired the Tremco roofing and sealants business from
The BFGoodrich Company in fiscal 1997.
<PAGE> 2
RPM, Inc. Restructures and Consolidates Operations
August 9, 1999
Page 2
"With the consolidations, we will still recognize the benefits of
entrepreneurship in sales and marketing, one of the hallmarks of RPM's past
success," said Mr. Sullivan.
RPM's $1 billion Industrial Division will now be comprised of three groups:
- - The Tremco Group, which now also includes the Euclid Chemical Company
concrete and masonry repair business, and will have annual sales of
approximately $400 million. It is a world leader in chemical construction
products.
- - The StonCor Group, which combines RPM's Stonhard, Carboline, Plasite
Protective Coatings and Fibergrate Composite Structures business units into
a $400 million worldwide leader in corrosion control coatings and
industrial polymer flooring.
- - RPM II, which will consist initially of RPM's Dryvit Systems, Kop-Coat
Industrial, TCI, Inc., Day-Glo Color Corp., American Emulsions Co., Alox
Corporation, Chemspec and RPM Belgium operations, and which will be the
entity that will continue to lead the portion of RPM's acquisition program
that attracts smaller entrepreneurial industrial coatings companies to the
company.
In the Consumer Division, with sales also totaling $1 billion, consolidations
will include:
- - DAP/Bondex, which combines RPM's recently acquired DAP unit, the North
American market leading producer of consumer caulks, sealants, glazing and
putty compounds and other patch and repair products, with RPM's existing
Bondex business, which produces a similar and complementary product line.
- - Wood Finishes Group, which unifies RPM's expertise in wood care. It
includes Mohawk and Star touch-up and repair products for furniture
manufacturers, retailers and refinishers; Chemical Coatings and Westfield
Coatings products for furniture manufacturers; and Flecto wood finishes for
the consumer market.
- - Bondo/Pettit, Woolsey/Z-Spar, which combines RPM's businesses that address
the automotive and pleasure marine aftermarket.
- - Canadian Consumer Operations, which combine Tremclad rust-preventative
paints and sealants, along with Rust-Oleum coatings and Flecto wood
finishes and which result in RPM being the leading marketer of consumer
rust-preventative coatings, wood finishes and sealants in Canada.
RPM's Rust-Oleum, Zinsser, and Testor operations are unaffected by the
consolidation program.
In a separate announcement, RPM said it is reorganizing its management team to
implement the restructuring and consolidation program.
RPM, Inc. is a world leader in specialty coatings, serving both the industrial
and consumer markets. Its industrial products include roofing systems, sealants,
corrosion control coatings, floor coatings and specialty chemicals. RPM's
consumer do-it-yourself products are used for home maintenance and automotive
and boat repair. RPM stock is traded on the New York Stock Exchange under the
symbol RPM.
####
===============================================================================
This press release contains "forward-looking statements" based on current
expectations which are covered under the "safe harbor" provision within the
Private Securities Litigation Reform Act of 1995. Actual results and events
related to the restructuring and consolidation program may differ from those
anticipated as a result of risks and uncertainties which include, but are not
limited to, the ability of the Company to realize the projected pre-tax savings
associated with the program, the Company's success in selling off non-core
product lines, the realization of synergies from its consolidation program and
the overall economic, market and industry conditions, as well as the risks
described from time to time in RPM's reports as filed with the Securities and
Exchange Commission.
<PAGE> 1
Exhibit 99.3
RPM, INC. ANNOUNCES MANAGEMENT REORGANIZATION
NEW YORK - August 9, 1999 - RPM, Inc. (NYSE: RPM) today announced that it has
reorganized its management team to more effectively implement a comprehensive
corporate restructuring and consolidation of operations, as reported in a
separate announcement today.
Speaking to a meeting of security analysts in New York, Thomas C. Sullivan,
chairman and chief executive officer of the leading specialty coatings company,
said that the reorganization "will create the environment for an orderly
transition of management upon the scheduled retirement of James A. Karman, RPM
president, and myself at the end of the 2002 fiscal year."
He said the company's Board of Directors made the following changes in the
company's corporate management team, effective today:
- - The formation of an Office of the Chairman, which will formulate and direct
overall corporate policy and administration. It will consist of Mr.
Sullivan, who remains chairman and chief executive officer, and who will be
responsible for long-term policies and strategies, corporate development
and corporate relations, and Mr. Karman, who, as vice chairman, will be
responsible for corporate annual performance, current strategy, and all
administrative functions, including finance, legal, risk management and
environmental affairs.
- - Succeeding Mr. Karman as president will be Frank C. Sullivan, currently
executive vice president and chief financial officer. He will have
day-to-day oversight responsibility for all RPM operating companies.
Reporting to him will be:
- Kenneth M. Evans, currently executive vice president of the Consumer
Division, who becomes President of the division. It includes RPM's
market-leading brands such as Rust-Oleum, DAP, Bondex, Zinsser, Bondo,
Testors and Flecto;
- Jeffrey L. Korach, who continues as president of the Tremco Group,
which includes RPM's Tremco and Euclid Chemical Company business
units;
- Jeffrey M. Stork, who continues as president of the StonCor Group,
which includes RPM's Stonhard, Carboline, Plasite Protective Coatings
and Fibergrate Composite Structures operations;
- Charles G. Pauli, who becomes president of RPM II, which includes the
company's Dryvit Systems, TCI, Inc., Day-Glo Color Corp., American
Emulsions Co., Alox Corporation, Chemspec, RPM/Belgium and Kop-Coat
Industrial operations. Mr. Pauli was previously president of Kop-Coat
Group. Its operations will be re-assigned within other RPM groups,
including RPM II, which will contain Kop-Coat's Industrial and Day-Glo
businesses; and
- Paul Hoogenboom, general manager of RPM's recently formed E-Commerce
Division.
- - John H. Morris, currently executive vice president of RPM's Industrial
Division and a corporate director since 1981, will take early retirement on
November 30, 1999 in order to participate in a private investment business
focusing on venture capital and turnaround opportunities.
- - David P. Reif, currently vice president - corporate finance, succeeds Mr.
Frank Sullivan as Chief Financial Officer.
- - Gordon M. Hyde was elected Vice President - Operations, a new position. He
previously served in a similar capacity with the Consumer Division.
<PAGE> 2
RPM, Inc.
RPM, Inc. Announces Management Reorganization
Page 2
- - Stephen J. Knoop was elected Vice- President - Corporate Development. He
was previously Director of Corporate Development.
- - Ronald A. Rice was elected Vice President - Risk Management and Benefits.
He was previously Director of Risk Management and Benefits.
- - Keith R. Smiley, currently treasurer, was elected Vice President -
Treasurer.
RPM, Inc. is a world leader in specialty coatings, serving both the industrial
and consumer markets. Its industrial products include roofing systems, sealants,
corrosion control coatings, floor coatings and specialty chemicals. RPM's
consumer do-it-yourself products are used for home maintenance and automotive
and boat repair. RPM stock is traded on the New York Stock Exchange under the
symbol RPM.
###
