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Exhibit 99.2
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
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RPM, INC. AND SUBSIDIARIES
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AND
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NARRAGANSETT/DSI ACQUISITION CO., INC.
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The following unaudited pro forma condensed combined balance sheet as of
February 28, 1995, gives effect to the acquisition of Narragansett/DSI
Acquisition Co., Inc. by RPM, Inc. and Subsidiaries as if the acquisition
occurred on February 28, 1995. The following unaudited pro forma condensed
statements of income combine the condensed statement of income of RPM, Inc. and
Subsidiaries and Narragansett/DSI Acquisition Co., Inc. for the year ended May
31, 1994, assuming the purchase of Narragansett/DSI Acquisition Co., Inc. had
been consummated as of June 1, 1993, and for the nine months ended February 28,
1995, assuming the purchase had been consummated as of June 1, 1994. The pro
forma information is based on the historical financial statements of RPM, Inc.
and Subsidiaries and Narragansett/DSI Acquisition Co., Inc. giving effect to
the transaction under the purchase method of accounting and the assumptions and
adjustments in the accompanying notes to the pro forma financial statements.
The pro forma statements have been prepared by RPM, Inc.'s management based
upon the financial statements of Narragansett/DSI Acquisition Co., Inc.
included elsewhere herein. These pro forma statements may not be indicative of
the results that actually would have occurred if the combination had been in
effect on the dates indicated or which may be obtained in the future. The pro
forma financial statements should be read in conjunction with the audited
financial statements and notes of Narragansett/DSI Acquisition Co., Inc.
contained elsewhere herein.
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PRO FORMA CONDENSED COMBINED
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BALANCE SHEET (UNAUDITED)
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FEBRUARY 28, 1995
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(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
RPM, Inc. and Narragansett/
Subsidiaries DSI Acquisition Pro Forma Pro Forma
ASSETS (as Reported) Co., Inc. Adjustments Combined
------ ----------- ------------- ----------- --------
Current Assets
(a)$ 47,000
(b) (15,005)
Cash and short-term cash investments $ 24,347 $ 723 (c) (31,995) $ 25,070
Marketable securities, at cost 8,854 8,854
Trade accounts receivable, net 166,108 6,848 172,956
Inventories 168,095 3,022 171,117
Prepaid expenses and other current assets 14,181 1,083 15,264
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Total current assets 381,585 11,676 393,261
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(d) (92,795)
Investment in Subsidiaries (c) 92,795
Property, Plant and Equipment, At Cost 355,171 13,076 1,289 369,536
Less: Accumulated depreciation 157,875 4,138 ( 4,138) 157,875
-------- -------- -------- ----------
Property, plant and equipment, net 197,296 8,938 5,427 211,661
-------- -------- -------- ----------
Other Assets
Goodwill, net 173,911 20,556 (d) 34,000 228,467
Other intangible assets, net 160,715 (d) 70,000 230,715
Equity in unconsolidated affiliates 14,195 14,195
Other 24,010 1,306 25,316
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Total other assets 372,831 21,862 104,000 498,693
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Total Assets $951,712 $ 42,476 $109,427 $1,103,615
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PRO FORMA CONDENSED COMBINED
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BALANCE SHEET (UNAUDITED)
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FEBRUARY 28, 1995
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(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
RPM, Inc. and Narragansett/
Subsidiaries DSI Acquisition Pro Forma Pro Forma
LIABILITIES AND SHAREHOLDERS' EQUITY (as Reported) Co., Inc. Adjustments Combined
------------------------------------ ----------- ------------- ----------- --------
Current Liabilities
Notes and accounts payable $ 51,983 $ 2,746 $ 54,729
Current portion of long-term debt 608 765 (b)$( 765) 608
Accrued compensation and benefits 34,282 2,478 36,760
Accrued warranty and loss reserves 18,458 2,077 20,535
Other accrued liabilities 18,734 862 19,596
Income taxes payable 276 867 1,143
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Total current liabilities 124,341 9,795 (765) 133,371
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(a) 47,000
Long-Term Debt, Less Current Maturities 412,939 14,240 (b) (14,240) 459,939
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Deferred Income Taxes and Other 80,946 1,073 (d) 34,000 116,019
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Shareholders' Equity
Common shares 1,292 (c) 73 1,365
(c) 60,727
Paid-in capital 146,379 10,500 (d) (10,500) 207,106
Cumulative translation adjustment (1,231) 24 (d) ( 24) (1,231)
Retained earnings 187,046 6,844 (d) ( 6,844) 187,046
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Total shareholders' equity 333,486 17,368 43,432 394,286
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Total Liabilities And Shareholders' Equity $951,712 $ 42,476 $109,427 $1,103,615
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<FN>
(a) Reflects additional debt associated with the acquisition
(b) Reflects the repayment of the debt of Narragansett/DSI
Acquisition Co., Inc.
(c) Reflects the purchase of Narragansett/DSI Acquisition Co.,
Inc. for cash and 3,200,000 RPM, Inc. common shares
(d) Reflects the adjustment to fair value for the assets acquired
and the liabilities assumed with the difference allocated to
goodwill
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PRO FORMA CONDENSED COMBINED
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STATEMENT OF INCOME (UNAUDITED)
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FOR THE NINE MONTHS ENDED FEBRUARY 28, 1995
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(In Thousands Except Per Share Amounts)
RPM, Inc. and Narragansett/
Subsidiaries DSI Acquisition Pro Forma Pro Forma
(as Reported) Co., Inc. Adjustments Combined
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Net sales $736,509 $49,134 $785,643
Cost of sales 427,114 27,903 455,017
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Gross profit 309,395 21,231 330,626
(b)$ 59
Selling, general and administrative expenses 221,694 14,544 (c) 2,738 239,035
Interest expense, net 16,456 1,697 (a) 771 18,924
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Income before income taxes 71,245 4,990 (3,568) 72,667
Provision for income taxes 30,279 2,201 (d) (1,048) 31,432
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Net income $ 40,966 $ 2,789 $(2,520) $ 41,235
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Average shares outstanding 57,109 3,200 60,309
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Primary earnings per share $.72 $.68
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Fully diluted earnings per share $.69 $.66
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<FN>
(a) Reflects the incremental interest expense RPM, Inc. would have
incurred on the additional debt resulting from the
acquisition, along with the refinancing of acquired
Narragansett/DSI Acquisition Co., Inc. debt, calculated using
the applicable borrowing rates during the period.
(b) Reflects the increase in depreciation resulting from
adjustments to the fair value of Property, Plant and
Equipment.
(c) Reflects the increase in amortization resulting from
adjustments to the fair value of intangibles.
(d) Reflects the computation of taxes assuming Narragansett/DSI
Acquisition Co., Inc. was included in RPM, Inc. and
Subsidiaries federal income tax return for the period and
reflects the income tax effects related to the other pro forma
adjustments.
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PRO FORMA CONDENSED COMBINED
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STATEMENT OF INCOME (UNAUDITED)
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FOR THE YEAR ENDED MAY 31, 1994
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(In Thousands Except Per Share Amounts)
RPM, Inc. and Narragansett/
Subsidiaries DSI Acquisition Pro Forma Pro Forma
(as Reported) Co., Inc. Adjustments Combined
----------- ------------- ----------- --------
Net sales $815,598 $62,141 $877,739
Cost of sales 476,146 34,034 510,180
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Gross profit 339,452 28,107 367,559
(b)$ 79
Selling, general and administrative expenses 237,931 19,317 (c) 3,650 260,977
Interest expense, net 13,427 3,086 (a) 1,187 17,700
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Income before income taxes 88,094 5,704 (4,916) 88,882
Provision for income taxes 35,454 1,724 (d) ( 656) 36,522
-------- ------- ------- --------
Net income $ 52,640 $ 3,980 $(4,260) $ 52,360
======== ======= ======= ========
Average shares outstanding 56,717 3,200 59,917
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Primary earnings per share $.93 $.87
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Fully diluted earnings per share $.89 $.84
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<FN>
(a) Reflects the incremental interest expense RPM, Inc. would have
incurred on the additional debt resulting from the
acquisition, along with the refinancing of acquired
Narrangansett/DSI Acquisition Co., Inc. debt, calculated using
the applicable borrowing rates during the period.
(b) Reflects the increase in depreciation resulting from the
adjustments to the fair value of Property, Plant and
Equipment.
(c) Reflects the increase in amortization resulting from
adjustments to the fair value of intangibles.
(d) Taxes have been computed assuming Narragansett/DSI Acquisition
Co., Inc. was included in RPM, Inc. and Subsidiaries federal
income tax return for the period and reflects the income tax
effects related to the other pro forma adjustments.