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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended: February 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to _________
Commission file number: 1-8803
MATERIAL SCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-2673173
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2300 EAST PRATT BOULEVARD
ELK GROVE VILLAGE, ILLINOIS 60007
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 708-439-8270
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $.02 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
___ ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
The aggregate market value of the voting stock of the registrant held by
shareholders (not including any voting stock held by directors or officers of
the registrant (such exclusion shall not be deemed an admission that any such
person is an affiliate of the registrant)) of the registrant was approximately
$261,695,000 at April 28, 1995 (based on the closing sale price on the New York
Stock Exchange on such date, as reported by The Wall Street Journal (Midwest
Edition)).
At April 28, 1995, the registrant had issued and outstanding an aggregate
of 15,201,066 shares of its Common Stock.
Documents Incorporated by Reference
Portions of the following documents are incorporated herein by reference
into the Part of the Form 10-K indicated:
Part of Form 10-K
Document into which incorporated
-------- -----------------------
Registrant's 1995 annual Parts I, II, IV
report to shareholders
Registrant's proxy Part III
statement for the Annual
Meeting of Shareholders to
be held on June 22, 1995
PART I
ITEM 1. BUSINESS
- - ------ --------
Introduction
- - ------------
Material Sciences Corporation (unless otherwise indicated by the context,
including its subsidiaries, "MSC" or the "Company") develops, manufactures, and
markets continuously processed, coated, and laminated materials. These
materials are divided into four product groups: laminates and composites;
metallizing and coating; coil coating; and electrogalvanizing. The Company's
materials are used in motor vehicles, building products, appliances, office
equipment, furniture, lighting products, packaging, and a wide range of other
products. MSC develops proprietary value-added materials and processes to meet
specific customer and market requirements and believes it has achieved product
or technological leadership in each of its four product groups.
Customers generally benefit from the energy savings and environmental
advantages of MSC's manufacturing processes and products. In the laminates and
composites product group, and the metallizing and coating product group, the
Company is primarily a manufacturer and marketer of its own proprietary
products. In the coil coating product group and electrogalvanizing product
group, MSC generally acts as a "toll coater" by processing its customers' metal
for a fee, without ever taking ownership of the metal.
Headquartered near Chicago, the Company, through its Pre Finish Metals
Incorporated ("PFM") and Deposition Technologies, Inc. ("DTI") subsidiaries,
operates seven manufacturing plants. PFM operates three facilities in Elk Grove
Village, Illinois; one facility in Morrisville, Pennsylvania; and one facility
in Middletown, Ohio. PFM also operates a facility in Walbridge, Ohio on behalf
of Walbridge Coatings, an Illinois Partnership (the "Partnership"), formed among
subsidiaries of PFM, Inland Steel Industries, Inc. ("Inland") and Bethlehem
Steel Corporation ("Bethlehem"). DTI operates a thin film sputter-deposition
metallizing, coating, and laminating facility in San Diego, California.
Additional information concerning certain transactions and events is
incorporated herein by reference to Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's 1995 annual
report to shareholders, parts of which are incorporated herein by reference.
MSC, a Delaware corporation, was founded in 1971 and has been a publicly
traded company since 1984. The principal executive offices of the Company are
located at 2300 East Pratt Boulevard,
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Elk Grove Village, Illinois 60007, and its telephone number at that address is
(708) 439-8270.
Laminates and Composites
- - ------------------------
Laminates and composites combine layers of steel or other metals with
layers of polymers or other materials to achieve specific properties, such as
noise and vibration reduction, thermal insulation or high reflectivity in
lighting. These products range from decorative to functional engineered
materials and are designed to meet specific customer requirements. Products in
this group largely result from the Company's research and development efforts
and the proprietary equipment and processes designed and implemented by its
engineering and manufacturing organizations. The Company supplies its laminates
and composites to a variety of markets both in the United States and
internationally. The majority of these products are used in the automotive,
lighting, and appliance industries. The major products in this product group
are Polycore Composites(R), disc brake noise dampers, and Specular+(R).
Polycore Composites are multilayer composites consisting of various metals,
adhesives, and other components, typically consisting of metal outer skins
surrounding a thin viscoelastic core material. Polycore Composites are
engineered to meet a variety of needs. The Company believes it is a leader in
developing and manufacturing continuously processed coated materials that reduce
noise and vibration and create thermal barriers. The automotive industry is the
largest market for metal composites, which are being used to replace solid sheet
metal parts, including oil pans, valve covers, front engine covers and heat
shields. Polycore Composites are also being evaluated for use in dash panels,
floor pans, and other internal components in order to help reduce road noise.
Polycore Composites are also found in a number of other products, including lawn
mower engines, air conditioners, computer disk drive covers, and appliances,
with numerous other products under evaluation.
The disc brake noise damper market developed as manufacturers moved to
asbestos-free brake linings. The increased brake noise these linings produce
can be virtually eliminated by the composite materials pioneered by the Company.
The Company believes it accounts for over 50% of the sales of disc brake noise
dampers to the domestic original equipment market. The Company also believes it
is a significant supplier to the emerging domestic aftermarket, which it
estimates will grow to be at least three times as large as the domestic original
equipment market. Disc brake noise damper sales for the 1995 fiscal year set
another record as a result of the Company's original equipment supplier
relationship with General Motors Corporation ("General Motors"), increased sales
to Ford Motor Company and Chrysler Corporation, and as MSC further penetrated
the disc brake aftermarket.
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Specular+, a laminate of silver-sputtered coated film and sheet metal, was
developed by the Company for the growing high reflective fluorescent lighting
market. Because pure silver offers unsurpassed reflectivity and precise light
control, Specular+ produces virtually the same amount of light with only half
the bulbs of a typical white painted fixture. The result is a significant
reduction in the cost of electricity for lighting.
The market for laminate and composite materials is competitive, both
domestically and in the international markets in which the Company is seeking to
become established. There are several competitors in each product market served
by the Company, some of which have greater resources than the Company. The
Company believes, however, that it is competitive based upon its technology,
product development capability, technical support, and customer service.
Metallizing and Coating
- - -----------------------
The Company uses sputter-deposition technology to metallize wide rolls of
flexible substrates, generally consisting of thin polymeric films. In the
sputter-deposition process, a target material is disintegrated, in a vacuum
chamber by ion bombardment, into its component atoms or molecules, which are
then deposited onto the surface of the base material to be coated. Such base
material (commonly called the substrate or flexible web) can be polymeric film,
foil, fabric, or paper.
Sputter-deposition permits the use of a wide range of target materials,
singly or in combination (including metals, metal alloys and metal oxides), some
of which cannot be applied in any other way. This flexibility allows formation
of composites of metals, dielectrics, and semiconductors. Sputter-coated,
flexible polymeric substrates may be designed to have specific properties,
including energy reflectance, transmission, absorption and electrical
conductance. After the sputtering process, these materials are often further
enhanced with other coatings, adhesives, and films, resulting in a multilayer
laminate.
The Company's metallizing and coating sales consist principally of solar
control window films for use in the automotive aftermarket and building
applications. The Company sells these products through seven distributors, one
of which accounted for approximately 61% of fiscal 1995 metallizing and coating
sales. The Company believes there are significant growth opportunities in the
building market, since there is currently low market penetration and industrial,
commercial, and residential building owners are becoming more familiar with the
benefits of solar control window film. Solar control window films can lower
energy bills year-round by reducing heat penetration in the summer and retaining
residual warmth in the winter. They also reject ultraviolet light, thereby
eliminating the damage it causes. In
-3-
commercial environments, window film generally improves productivity by reducing
glare and heat generation.
This product group includes the silver-sputtered, coated film used in
Specular+, although intercompany sales of such film are excluded from this
product group's sales. The Company has developed other products for the high
reflective fluorescent lighting market. In addition, the Company participates
in the microwaveable food packaging market with its Insceptor(R) film products
that offer precise control of heating, browning and crisping of food during the
cooking process. The Company has established agreements with rigid and flexible
packaging companies to supply the U.S. market. This product group also includes
safety films and security seals. Safety films offer protection by making
windows shatter resistant. Security seals are used in tamper-evident packaging
and anti-counterfeit measures.
MSC believes that there are four major domestic companies producing
competitive metallized and coated materials in addition to the Company. Some of
these competitors have greater resources than the Company, including patented
technology. The Company competes on the basis of a number of factors, including
product performance and quality, completeness of product offering, new product
development capabilities, service, and price. The Company believes that it is
competitive in these areas.
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-----------------------------------
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Coil Coating
- - ------------
The Company believes that coil coating is the most environmentally safe and
energy-efficient method available for applying paint and other coatings to
metal. This continuous, highly automated, high speed process applies coatings
to wide coils of metal. In the process, sheet metal is unwound from a coil,
cleaned, chemically treated, coated, oven-cured, and rewound into coils for
shipment to manufacturers which fabricate the coated metal into finished
products that are sold into a variety of industrial and commercial markets. The
coatings are designed to produce both protective and decorative finishes.
Through techniques such as printing, embossing and striping, special finishing
effects can also be created. The finished product (i.e. prepainted or coil
coated metal) is a versatile material capable of being drawn, formed, bent,
bolted, riveted, chemically bonded and welded. The Company generally acts as a
"toll coater" by processing coils for steel mills, or their customers, without
taking ownership of the metal. The Company charges by weight or surface area
processed.
The Company's coil coated products are used by manufacturers in building
products, heating and air conditioning, fuel tanks, lighting, truck trailer,
above-ground swimming pools, and other products. The Company's strategy in its
coil coating business has been to produce high volume competitive coated
products at low cost as well as to identify, develop and produce specialty niche
products meeting specific customer requirements. The Company also offers
proprietary products such as Weldrite(R), a weldable coating; Enduratex(R), an
embossed plastisol coated material capable of being stained to simulate the look
of wood; and ER6, its patented high temperature non-stick coating designed for
bakeware and cookware products.
Coil coating technology reduces the environmental impact of painting and
reduces manufacturers' energy needs. In coil coating processes, over 95% of the
coating material is applied, in contrast with the significant waste from
"overspray" typical in post-fabrication painting. The energy required to cure
coil coated metal is substantially less than that required by other coating
methods. These savings are achieved because of high speed material processing
and because 90% to 95% of the coatings' volatile organic compounds are recycled
back into the curing ovens and used as fuel.
Manufacturers that use prepainted materials can eliminate or significantly
reduce on-site post paint lines and the associated compliance with complex
environmental and other regulations. Prepainted materials facilitate the
adoption of just-in-time and continuous process manufacturing techniques which
can result in improvements to work in process inventory, plant utilization, and
productivity. Since prepainted metal is cleaned, treated and painted while
flat, the result is a more uniform and higher quality
-5-
finished part than can be achieved by even the best post-fabrication painting
operation. There are no hidden areas where paint is difficult to reach and
where corrosion can begin after the product has been marketed. As a result,
companies using prepainted material generally benefit from lower manufacturing
costs and improved product quality. Use of prepainted metal may, however,
require product design or fabrication changes and more stringent handling
procedures during manufacturing.
The coil coating process competes with other methods of producing coated
sheet metal, principally post-fabrication finishing methods such as spraying,
dipping and brushing. The Company believes that coil coating accounts for
approximately 10% of all the sheet metal now being coated. The Company expects
that the market penetration of coil coated metal will increase as a result of
more stringent environmental regulation and the energy efficiency, quality, and
cost advantages provided by prepainted metal as compared to post-fabrication
painting, particularly in high-volume manufacturing operations. The Company
estimates that there are approximately 85 companies operating coil coating lines
in North America. The Company believes it is one of the largest coil coaters,
with approximately 15% of the total tons processed in the United States in
calendar 1994. Competition in the coil coating industry is heavily influenced
by geography, due to the high costs involved in transporting sheet metal coils.
Within geographic areas, coil coaters compete on the basis of quality, price,
customer service, technical support, and product development capability.
Electrogalvanizing
- - ------------------
Electrogalvanized ("EG") steel is the primary corrosion resistant steel
product used in automobile and light truck bodies. Significant domestic demand
for EG steel started in 1985 and is estimated to have been 3.6 million tons in
calendar 1994. The Company believes that demand will grow as automobile
manufacturers respond to consumer demands for longer warranty protection against
rust and, to a lesser extent, due to increased applications for EG steel in the
appliance and other non-automotive industries.
MSC participates in the electrogalvanizing market through its 50% financial
interest in and role as operator of the Partnership. The term of the Partnership
ends on June 30, 1998. Through the Partnership, MSC electrogalvanizes zinc and
zinc-alloy coatings, and applies organic coatings onto sheet metal. There is
growing demand by the automotive industry for a full complement of products such
as zinc-nickel, zinc-nickel with a thin organic coating, and other organic
coated zinc-nickel products such as fuel tanks that offer additional protection
against corrosion. As a result, a shift from pure zinc to differentiated
materials has commenced. These newer materials are particularly in demand by
Japanese automakers in the United States -- currently among the end-use
-6-
customers for the Partnership's services. The Partnership's facility is the
only facility in North America capable of meeting, in a single pass through its
line, the demand for this full complement of products.
Sales to the Partnership represented 22%, 24% and 27% of MSC's net sales in
fiscal 1995, 1994 and 1993, respectively. MSC's net sales for
electrogalvanizing consists of various fees charged to the Partnership for
operating the facility. Such fees are the predominant financial return from its
participation in the Partnership. There are both fixed fees (for selling,
general and administrative expenses, a portion of the financing, taxes, and
insurance) and variable fees based on production volumes (for the balance of the
financing, operating expenses, and profit). The Company pays the actual costs
of operating the facility, so the overall profitability of its participation in
the Partnership depends on its skill and efficiency. The operating expense
portion of the variable fee is based on standard costs, which may be adjusted to
reflect matters beyond the Company's control, upon agreement of the partners or
informal arbitration. The fees charged to Bethlehem and Inland by the
Partnership for services fund the standard operating costs of the Partnership
(including the Company's per ton profit allowance) and, at a defined contractual
production volume, all of the Partnership's financing costs. At lesser levels
of production, the Company is obligated to fund a portion (not to exceed 50%) of
the Partnership's financing costs.
Bethlehem and Inland are two of the major suppliers of sheet steel to the
U.S. automobile industry. The orders for the Partnership's toll coating
services are primarily and independently generated by Bethlehem and Inland for
their respective customers, although the Partnership may also accept orders from
outside parties to the extent of available capacity and production schedules.
Historically, third party sales have not been significant. The sales and
marketing responsibilities of the Partnership are split between Bethlehem and
Inland at 75% and 25%, respectively. During fiscal 1995, Inland utilized only
17% of available line time. Inland is reviewing its future involvement in the
Partnership, and therefore, there is no assurance that Inland will utilize its
full 25% of available line time on a long-term basis. The Company believes that
any short-term disruption in volume that might be caused by a reduction in
Inland's line time requirements could be replaced by additional volume from
Bethlehem and other customers.
Bethlehem and Inland have rights to purchase all the facility's production
for the 12-year life of the Partnership. The Company's potential alternatives
upon expiration of the Partnership term in June 1998, include, among other
things, extension of the Partnership, purchase of the facility or sale of the
facility.
-7-
Competition in the production and sale of electrogalvanized steel for the
automotive industry comes from other steel companies that, either directly or
through joint ventures, produce electrogalvanized steel on eight manufacturing
lines in the United States, including Inland's other facility. Limited
quantities of electrogalvanized steel also are imported from foreign steel
suppliers. The Company believes the Partnership's line is well-positioned to
serve the current and expected end-users of electrogalvanized steel. The
Company is unable to determine the effect, if any, on the market resulting from
the existence of excess capacity, the entrance of additional capacity, improved
galvanizing technology or the substitution of other materials.
International
- - -------------
The Company believes that significant opportunities exist internationally,
particularly for the Company's disc brake noise damper products, Polycore
Composites, Specular+, and solar control window and safety film. As a percent
of net sales, direct export sales represented 8%, 7% and 8% in fiscal 1995, 1994
and 1993, respectively.
The Company has certain distribution agreements and licensing and royalty
agreements with agents and companies in Europe, Latin America, and the Far East
that cover disc brake noise dampers, Polycore Composites, and lighting products.
These agreements provide the Company with opportunities for market expansion in
those geographic areas.
Approximately 33% of the Company's solar control window films are sold to
export markets directly or through domestic distributors. The Company believes
that export shipments will continue to grow as emerging markets increasingly
realize the energy saving and ultraviolet light blocking benefits this product
provides.
The Company is pursuing a variety of other business relationships,
including direct sales, distribution agreements, licensing, and other forms of
partnering, to further increase its international sales and expand its
international presence.
Marketing and Sales
- - -------------------
The Company markets its laminates and composites and coil coating products,
services and technologies primarily through its in-house sales organization and
also through independent distributors, agents and licensees. The Company
focuses its sales efforts on manufacturers, but also sells to steel mills and
their intermediaries, metal service centers, and metal brokers. Bethlehem and
Inland are the primary marketing partners for electrogalvanized steel. The
Company sells its metallized and coated products primarily to domestic and
international
-8-
distributors. All of the Company's selling activities are supported by
technical service departments that aid the customer in the choice of available
materials and their use in the customer's manufacturing process.
The Company estimates that customers in the transportation industry were
the end-users for approximately 52%, 52% and 49% of MSC's net sales in fiscal
1995, 1994 and 1993, respectively. The Company's direct sales to General Motors
were in excess of 5% during each of the last three fiscal years. In addition,
the Company believes that it has significant indirect sales to General Motors in
its coil coating and electrogalvanizing product groups. Due to concentration in
the automobile industry, the Company believes that sales to other individual
automobile companies, including indirect sales, are significant.
On June 30, 1993, the Company acquired the assets of a coil paint facility
owned by AK Steel Corporation ("AKS"), in Middletown, Ohio. The Company also
entered into a tolling agreement in which MSC agrees to provide AKS with coil
coating and other ancillary services from the facility of up to approximately
75% of the facility's capacity for 10 years. The balance of capacity is being
marketed by the Company's existing sales force and shifting production from
other MSC plants that, at times, reach their capacity. AKS represented 10% and
8% of MSC's net sales in fiscal 1995 and 1994, respectively.
The Company's backlog of orders as of February 28, 1995 was approximately
$43.6 million, all of which is expected to be filled during the remainder of the
current fiscal year. The Company's backlog was approximately $42.1 million as
of February 28, 1994.
MSC is generally not dependant on any one source for raw materials or
purchased components essential to its business, and it is believed that such raw
materials and components will be available in adequate quantities to meet
anticipated production schedules.
MSC believes that its business, in the aggregate, is not seasonal. Certain
of its products, however, sell more heavily in some seasons than in others.
Environmental Matters
- - ---------------------
The Company is subject to federal, state and local environmental laws. As
a result of these laws, the Company has incurred, and will continue to incur in
the future, significant capital expenditures and operating costs and charges.
The Company is involved in two Superfund sites located in Gary and Kingsbury,
Indiana. Although the ultimate cost of the Company's share of necessary cleanup
expenses is not yet known, the Company believes that it is adequately reserved
for environmental matters given the
-9-
information currently available. See Note 4 of the Notes to the Consolidated
Financial Statements entitled "Environmental and Legal Matters," on pages 30 and
31 of the annual report, which is incorporated by reference herein. The Company
cannot predict the impact of new or changed laws or regulations.
The Company believes it operates its facilities and conducts its business
in all material respects in accordance with all environmental laws presently
applicable to its facilities. The Company spent approximately $1.5 million in
fiscal 1995, and has budgeted approximately $1.5 million during fiscal 1996, for
maintenance or installation of environmental controls at the Elk Grove Village,
Illinois; Walbridge, Ohio; Morrisville, Pennsylvania; Middletown, Ohio; and San
Diego, California facilities. See Item 3 "Legal Proceedings" below.
Research and Development
- - ------------------------
Management estimates that it spent approximately $5.4 million in fiscal
1995, $4.0 million in fiscal 1994 and $3.1 million in fiscal 1993 for product
and process development activities.
The Company believes that the reputation associated with the names "Pre
Finish Metals" and "Deposition Technologies" is important. While it also
considers its various patents, licenses and trademarks to be important, it does
not believe that the loss of any individual patent, license, or trademark would
have a material adverse effect upon its business.
Employees
- - ---------
At February 28, 1995, the Company had 925 full-time employees. Of these,
approximately 687 were engaged in manufacturing, 117 in administrative and
clerical positions, 73 in marketing and sales, and 48 in process and product
development.
The employees at the San Diego, California and Walbridge, Ohio facilities
are not represented by a union. Hourly manufacturing employees at Elk Grove
Village, Illinois; Morrisville, Pennsylvania; and Middletown, Ohio, are covered
by separate union contracts expiring in February 1998, November 1995, and
October 1997, respectively. The Company believes that its relations with its
employees are good.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company as of April 28, 1995 are as follows:
Position and
Name Age Year First Elected
---- --- ------------------
G. Robert Evans...............63 Chairman and Chief
Executive Officer since
July 1991; previously
Chairman, President, and
Chief Executive Officer
since February 1991
Gerald G. Nadig...............50 President and Chief
Operating Officer, MSC
since July 1991;
previously President and
Chief Operating Officer,
PFM since 1990;
previously Executive Vice
President, PFM, since
1989
William H. Vrba...............63 Senior Vice President,
Chief Financial Officer,
and Secretary since July
1991
Frank D. Graziano.............62 Senior Vice President,
Technology since July
1991; previously Senior
Vice President, Research
and Development, PFM,
since 1990; previously
Senior Vice President,
Marketing, Research and
Development, PFM, since
1988
Anton F. Vitzthum.............60 Senior Vice President,
Manufacturing since
March, 1994; previously
Senior Vice President,
Operations, PFM since
1990; previously Vice
President, Manufacturing,
PFM since 1984
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Frank J. Lazowski, Jr. .......55 Vice President, Human
Resources since July
1991; previously Vice
President, Human
Resources PFM, since 1988
Robert J. Mataya..............52 Vice President, Business
Planning and Development
since July 1991;
previously Vice
President, Business
Planning and Development,
PFM, since 1990;
previously Vice
President, Marketing,
PFM, since 1986
James J. Waclawik, Sr. .......36 Vice President and
Controller since July
1991; previously Vice
President and Controller,
PFM, since 1989;
previously Controller,
PFM, since 1988
David A. Fletcher.............41 President and Chief
Operating Officer, DTI,
since September 1993;
previously Vice
President, Research and
Development, DTI, since
1989
During the past five years, Messrs. Nadig, Graziano, Vitzthum,
Lazowski, Mataya, Waclawik, and Fletcher have been principally employed in
management capacities by the Company.
From July 1990 until joining the Company in 1991, Mr. Evans served as
President, Chief Executive Officer, and a director of Corporate Finance
Associates Illinois, Inc., a financial intermediary and consulting firm. From
February 1987 until January 1990, Mr. Evans served as President, Chief Executive
Officer, and a director of Bemrose Group USA, a British-owned holding company
engaged in value-added manufacturing and sale of products to the advertising
specialty industry. Prior to this, from August 1984 until January 1987, Mr.
Evans served as President, Chief Executive Officer, and a director of Allsteel,
Inc., a manufacturer of office furniture systems. Mr. Evans also serves as a
director of Consolidated Freightways, Inc., Fiberboard Corporation, Elco
Industries, Inc., and Swift Energy Company.
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From May 1990 until joining the Company in 1991, Mr. Vrba was
Executive Vice President of Corporate Finance Associates Illinois, Inc., a
financial intermediary and consulting firm. From June 1987 to December 1989,
Mr. Vrba was Vice President and Chief Financial Officer of Grabill Aerospace
Industries, Ltd., a manufacturer and supplier to the aerospace industry. Prior
to this, he was Executive Vice President at Farley Industries, a holding company
for diversified companies engaged in manufacturing and distribution of consumer
products and industrial goods, since 1981.
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ITEM 2. PROPERTIES
- - ------- ----------
The Company owns or leases facilities with an aggregate of
approximately 1,046,000 square feet of space. The Company considers all of such
facilities to be in good operating condition. The table below summarizes the
principal physical properties used by the Company in its operations.
Approximate
Area in Lease Expiration
Location Square Feet (or Ownership)
- - -------- ----------- ----------------
Elk Grove Village, Illinois
Plant No. 1 58,000 Owner
Elk Grove Village, Illinois
Plant No. 2 205,000 Owner
Elk Grove Village, Illinois
Plant No. 3 152,000 Owner
Morrisville, Pennsylvania 121,000 Owner
Middletown, Ohio 127,000 Owner
San Diego, California 65,000 June, 1997
Walbridge, Ohio 311,000 June, 2003/(1)/
Elk Grove Village, Illinois
Sales Office 3,000 June, 1995
Southfield, Michigan
Sales Office 4,000 March, 1999
- - -----------------
(1) The lease is renewable, at the Company's option, for additional periods
totaling 25 years. Since April 1, 1986, this facility is subleased to the
Partnership until June 30, 1998 (see "Electrogalvanizing").
ITEM 3. LEGAL PROCEEDINGS
- - ------ -----------------
See Note 4 of the Notes to Consolidated Financial Statements entitled
"Environmental and Legal Matters," on pages 30 and 31 of the annual report,
which is incorporated by reference herein.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - ------ ---------------------------------------------------
There were no matters submitted to the Company's security holders
during the fourth quarter of fiscal 1995.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
- - ------ AND RELATED STOCKHOLDER MATTERS
-----------------------------------------
The Company's Common Stock, $.02 par value, is listed on the New York
Stock Exchange under the symbol "MSC." The table below sets forth, by fiscal
quarter, the high and low sales prices of the Company's Common Stock during its
past two fiscal years.
Fiscal Fiscal
Year Quarter High Low
------ ------- ------ ------
1995 1st 17 3/4 14 3/8
2nd 17 1/2 14 7/8
3rd 17 1/4 14 1/8
4th 17 1/8 13 3/4
Fiscal Fiscal
Year Quarter High Low
------ ------- ------ ------
1994 1st 12 3/8 10 5/8
2nd 14 3/8 12 1/4
3rd 17 3/8 14
4th 17 5/8 14 7/8
There were 1,038 holders of record of the Company's Common Stock at
the close of business on April 28, 1995. MSC has paid no cash dividends other
than a nominal amount in lieu of fractional shares in connection with stock
dividends. Management currently anticipates that all earnings will be retained
for development of the Company's business. If business circumstances should
change, the Board of Directors may declare, and instruct the Company to pay,
cash dividends.
Effective on October 15, 1993 the Company's common shares were listed
on the New York Stock Exchange. Trading of MSC's stock on the American Stock
Exchange (where the Company's stock was traded since MSC became a public company
in 1984), ceased on October 15, 1993.
-15-
ITEM 6. SELECTED FINANCIAL DATA
- - ------ -----------------------
Reference is made to the information found under the caption "Selected
Financial Data" on pages 36 and 37 of the annual report, which is incorporated
by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- - ------ FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Reference is made to the information found under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 22 through 25 of the annual report, which is incorporated
by reference herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- - ------ -------------------------------------------
(a) The Consolidated Statements of Income for the years ended
February 28, 1995, February 28, 1994 and February 28, 1993, Consolidated Balance
Sheets as of February 28, 1995 and February 28, 1994, Consolidated Statements of
Cash Flows for the years ended February 28, 1995, February 28, 1994 and February
28, 1993, Notes to Consolidated Financial Statements and the Report of
Independent Public Accountants, set forth on pages 26 through 35 and page 21 of
the annual report, are incorporated by reference herein.
(b) The unaudited selected quarterly financial data which is referred
to in Item 8(a) above and is set forth in Note 12 of the Notes to Consolidated
Financial Statements under the caption "Summary of Quarterly Data (Unaudited)"
on page 35 of the annual report is incorporated by reference herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- - ------ ACCOUNTING AND FINANCIAL DISCLOSURE
------------------------------------------------
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- - ------- --------------------------------------------------
Reference is made to the information found under the caption "Election
of Directors" on pages 2 and 3 of the Company's proxy statement for the 1995
annual meeting of shareholders (the "proxy statement"), all of which is
incorporated by reference herein, for information on the directors of the
Company. Reference is made to Part I of this report for information on the
executive officers of the Company.
-16-
ITEM 11. EXECUTIVE COMPENSATION
- - -------- ----------------------
Reference is made to the information under the captions "Compensation
of Executive Officers", "Compensation and Organization Committee Report", "MSC
Performance Graph", "Employment and Other Agreements", and "Employee and Other
Plans" on pages 7 through 16 of the proxy statement, all of which is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
- - ------- HOLDERS AND MANAGEMENT
----------------------------------------
Reference is made to the information set forth on pages 5 and 6 of the
proxy statement, all of which is incorporated by reference herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- - ------- ----------------------------------------------
There were no relationships or related transactions requiring
disclosure in fiscal 1995.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
-----------------------------------
-17-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
- - ------- REPORTS ON FORM 8-K
--------------------------------------------
(A) FINANCIAL STATEMENTS AND SCHEDULES OF THE COMPANY
I Financial Statements of the Company. Incorporated herein by
-----------------------------------
reference to pages 26 through 35 and page 21 of the Company's
annual report.
(i) Consolidated Statements of Income for the years ended
February 28, 1995, 1994 and 1993
(ii) Consolidated Balance Sheets - February 28, 1995
and February 28, 1994
(iii) Consolidated Statements of Cash Flows for the
years ended February 28, 1995, 1994 and 1993
(iv) Notes to Consolidated Financial Statements
(v) Report of Independent Public Accountants
II Supplemental Schedules
----------------------
(i) Report of Independent Public Accountants with respect to
Supplemental Schedules to the Financial Statements
(ii) Schedule II - Reserve for Doubtful Accounts
and Deferred Tax Asset Valuation Allowance
All other schedules have been omitted, since the required information
is not significant, is included in the financial statements or the notes
thereto, or is not applicable.
-18-
(C) EXHIBITS
Exhibit
Number Description of Exhibit
- - ------- ----------------------
2(a) Parent Agreement dated as of October 15, 1984, by and among
Bethlehem Steel Corporation, Inland Steel Company, Pre Finish
Metals Incorporated and Material Sciences Corporation.(1)
2(b) Partnership Agreement dated as of August 30, 1984, by and among
EGL Steel Inc., Inland Steel Electrogalvanizing Corporation and
Pre Finish Metals (EG) Incorporated.(1)
2(c) Amendment No. 1 to the Partnership Agreement dated as of August
30, 1984.(2)
2(d) Amendment No. 2 to the Partnership Agreement dated as of August
30, 1984.(2)
2(e) Operating Agreement dated as of October 15, 1984, by and between
Pre Finish Metals (EG) Incorporated and Walbridge Coatings, An
Illinois Partnership.(1)
2(f) Coating Agreement dated as of October 15, 1984, by and between
Bethlehem Steel Corporation and Walbridge Coatings, An Illinois
Partnership.(1)
2(g) Coating Agreement dated as of October 15, 1984, by and between
Inland Steel Company and Walbridge Coatings, An Illinois
Partnership.(1)
2(h) Amendments to Definitive Agreements dated as of March 31, 1986,
among EGL Steel Inc., Inland Steel Electrogalvanizing
Corporation, Pre Finish Metals (EG) Incorporated, Bethlehem Steel
Corporation, Inland Steel Company, Pre Finish Metals Incorporated
and Material Sciences Corporation.(6)
2(i) Further Amendments to Definitive Agreements dated as of July 24,
1986, among EGL Steel Inc., Inland Steel Electrogalvanizing
Corporation, Pre Finish Metals (EG) Incorporated, Bethlehem Steel
Corporation, Inland Steel Company, Inland Steel Industries, Inc.,
Pre Finish Metals Incorporated and Material Sciences
Corporation.(3)
-19-
Exhibit
Number Description of Exhibit
- - ------- ----------------------
2(j) Further Amendments to Definitive Agreements dated as of April 23,
1992, among EGL Steel Inc., Inland Steel Electrogalvanizing
Corporation, Pre Finish Metals (EG) Incorporated, Bethlehem Steel
Corporation, Inland Steel Company, Inland Steel Industries, Inc.,
Pre Finish Metals Incorporated and Material Sciences
Corporation.(7)
3(a) Registrant's Certificate of Incorporation, as amended.(1)
3(b) Amendment to Registrant's Certificate of Incorporation.(2)
3(c) Amendment to Registrant's Certificate of Incorporation.(4)
3(d) Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock.(4)
3(e) Registrant's By-laws, as amended.(6)
4(a) Form of Subordinated Convertible Notes due January 29, 1996 and
Terms and Conditions Applicable Thereto.(6)
4(b) Credit Agreement dated as of September 1, 1994, between Material
Sciences Corporation and Bank of America Illinois.(5)
4(c) First Amendment to Rights Agreement dated as of April 21, 1994 by
and between Material Sciences Corporation and Mellon Securities
Trust Company.(9)
There are omitted certain instruments with respect to long-term
debt, the total amount of securities authorized under each of
which does not exceed 10% of the total assets of the registrant
and its subsidiaries on a consolidated basis. A copy of each such
instrument will be furnished to the Commission upon request.
9 Form of Voting Trust Agreement dated January 29, 1986, among
Material Sciences Corporation, William N. Guthrie, Richard L.
Burns, Joyce Burns, O. Morris Sievert, and D. W. Watt.(6)
-20-
Exhibit
Number Description of Exhibit
- - ------- ----------------------
10(a) Material Sciences Corporation Stock Purchase Plan. (1)
10(b) Material Sciences Corporation Supplemental Pension Plan.(1)
10(c) Material Sciences Corporation Employee Stock Purchase Plan.(6)
10(d) Material Sciences Corporation 1985 Stock Option Plan for Key
Employees.(6)
10(e) Material Sciences Corporation 1985 Stock Option Plan for
Directors.(6)
10(f) Material Sciences Corporation 1992 Omnibus Stock Awards Plan for
Key Employees.(7)
10(g) Employment Agreement effective February 27, 1991, between the
Company and G. Robert Evans.(6)
10(h) Material Sciences Corporation 1991 Stock Option Plan for
Directors.(6)
10(i) Material Sciences Corporation Directors Deferred Compensation
Plan.(6)
10(j) Deferred Compensation Plan of Material Sciences Corporation and
Certain Participating Subsidiaries.(6)
10(k) Retirement Agreement dated as of February 27, 1991, between
Material Sciences Corporation and William N. Guthrie.(6)
10(l) Letter Agreement dated March 4, 1991, between Material Sciences
Corporation and James R. Deters, regarding termination of
employment.(6)
10(m) Letter Agreement dated March 1, 1988, between Material Sciences
Corporation and James R. Deters, regarding termination of
employment, together with Non-Qualified Stock Option Agreement of
same date between same parties.(6)
-21-
Exhibit
Number Description of Exhibit
- - ------- ----------------------
10(n) Lease dated March 1, 1972, between Exchange National Bank, as
trustee under Trust Nos. 26027 and 26091, and Pre Finish Metals
Incorporated, including First Amendment thereto dated July 10,
1972 and Second Amendment thereto dated August 9, 1973, relating
to Elk Grove Village, Illinois facility.(1)
10(o) Lease and Agreement dated as of December 1, 1980, between Line 6
Corp. and Pre Finish Metals Incorporated, relating to Walbridge,
Ohio facility.(1)
10(p) First Amendment to Lease and Agreement dated as of May 30, 1986,
between Corporate Property Associates and Corporate Property
Associates 2 and Pre Finish Metals Incorporated.(3)
10(q) Sublease dated as of May 30, 1986, between Pre Finish Metals
Incorporated and Walbridge Coatings, An Illinois Partnership.(3)
10(r) Lease Guaranty dated as of May 30, 1986, from Material Sciences
Corporation to Corporate Property Associates and Corporate
Property Associates 2.(3)
10(s) Note Purchase Agreement dated as of May 30, 1986, between
Material Sciences Corporation and Creditanstalt-Bankverein (New
York Branch).(3)
10(t) Agreement dated as of May 30, 1986, between Material Sciences
Corporation and Corporate Property Associates and Corporate
Property Associates 2.(3)
10(u) Term Loan Agreement dated as of July 23, 1986, among Walbridge
Coatings, An Illinois Partnership, Creditanstalt-Bankverein (New
York Branch) and The Toledo Trust Company, including the related
guaranties by Material Sciences Corporation and Pre Finish Metals
Incorporated.(3)
10(v) Amendment No. 1 to Term Loan Agreement dated as of March 31,
1987, among Walbridge Coatings, An Illinois Partnership,
Creditanstalt-Bankverein (New York Branch) and The Toledo Trust
Company.(3)
-22-
Exhibit
Number Description of Exhibit
- - ------- ----------------------
10(w) Amended and Restated Credit Facility Agreement dated as of July
23, 1986, between Walbridge Coatings, An Illinois Partnership,
and Creditanstalt-Bankverein, including the related guaranties by
Material Sciences Corporation and Pre Finish Metals
Incorporated.(3)
10(x) Amendment and Consent Agreement dated as of April 23, 1992, among
Walbridge Coatings, An Illinois Partnership, Bethlehem Steel
Corporation, EGL Steel, Inc., Inland Steel Industries, Inc.,
Inland Steel Company, Inland Steel Electrogalvanizing
Corporation, Material Sciences Corporation, Pre Finish Metals
Incorporated, Pre Finish Metals (EG) Incorporated, and
Creditanstalt-Bankverein, amending the Term Loan Agreement dated
as of July 23, 1986, as amended on March 31, 1987, and amending
the Amended and Restated Credit Facility Agreement dated as of
July 23, 1986, including the related guaranties by Material
Sciences Corporation and Pre Finish Metals Incorporated.(7)
10(y) Form of Standstill Agreement dated as of January 29, 1986, among
Material Sciences Corporation, Richard L. Burns and Joyce
Burns.(6)
10(z) Rights Agreement dated as of June 17, 1986, between Material
Sciences Corporation and Continental Illinois National Bank and
Trust Company of Chicago.(6)
10(aa) Form of Indemnification Agreement between Material Sciences
Corporation and each of its officers and directors.(7)
10(bb) Supplemental Retirement Agreement dated as of December 28, 1992
between Material Sciences Corporation and William H. Vrba.(8)
10(cc) Restricted Stock Agreement dated as of May 20, 1991 between
Material Sciences Corporation and William H. Vrba.(8)
10(dd) Letter Agreement dated as of May 8, 1991 between Material
Sciences Corporation and William H. Vrba. (8)
11 Statement re: computation of per share earnings.
-23-
Exhibit
Number Description of Exhibit
- - ------- ----------------------
13 Annual Report to Shareholders. (Except as specifically
incorporated herein by reference, this document shall not be
deemed "filed" as a part of this Form 10-K Annual Report.)
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.(10)
_______________
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (Registration No. 2-93414), which was declared effective on
November 27, 1984.
(2) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (Registration No. 33-00828), which was filed on October 11, 1985.
(3) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 28, 1989 (File No. 1-8803).
(4) Incorporated by reference to the Registrant's Form 8-A dated June 17, 1986
(File No. 1-8803).
(5) Incorporated by reference to the Registrant's Form 10-Q Quarterly Report
for the Quarter Ended August 31, 1994 (File No. 1-8803).
(6) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 28, 1991 (File No. 1-8803).
(7) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 29, 1992 (File No. 1-8803).
(8) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 28, 1993 (File No. 1-8803).
(9) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 28, 1994 (File No. 1-8803).
(10) Appears only in the electronic filing of this report with the Securities
and Exchange Commission.
-24-
(D) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth quarter.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
-----------------------------------
-25-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MATERIAL SCIENCES CORPORATION
By: /s/ G. Robert Evans
----------------------------------
G. Robert Evans
Chairman and Chief Executive Officer
Date: May 26, 1995
Pursuant to the requirements of the Securities Act of 1934, this
Report has been signed by the following persons in the capacities indicated on
May 26, 1995.
Signature Title
--------- -----
/s/G. Robert Evans Chairman and Chief Executive
- - ------------------------- Officer, and Director (Principal
G. Robert Evans Executive Officer)
/s/William H. Vrba Senior Vice President, Chief
- - ------------------------- Financial Officer, and Secretary
William H. Vrba (Principal Financial Officer)
/s/James J. Waclawik, Sr. Vice President and Controller
- - ------------------------- (Principal Accounting Officer)
James J. Waclawik, Sr.
/s/Jerome B. Cohen Director
- - -------------------------
Jerome B. Cohen
/s/Roxanne J. Decyk Director
- - -------------------------
Roxanne J. Decyk
/s/Eugene W. Emmerich Director
- - -------------------------
Eugene W. Emmerich
/s/E. F. Heizer, Jr. Director
- - -------------------------
E. F. Heizer, Jr.
Director
- - -------------------------
J. Frank Leach
/s/Irwin P. Pochter Director
- - -------------------------
Irwin P. Pochter
-26-
INDEX TO EXHIBITS
MATERIAL SCIENCES CORPORATION
ANNUAL REPORT ON FORM 10-K
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
- - ------- REPORTS ON FORM 8-K
--------------------------------------------
(A) FINANCIAL STATEMENTS AND SCHEDULES OF THE COMPANY
I Financial Statements of the Company. Incorporated herein by
-----------------------------------
reference to pages 26 through 35 and page 21 of the Company's
annual report.
(i) Consolidated Statements of Income for the years ended
February 28, 1995, 1994 and 1993
(ii) Consolidated Balance Sheets - February 28, 1995 and
February 28, 1994
(iii) Consolidated Statements of Cash Flows for the years ended
February 28, 1995, 1994 and 1993
(iv) Notes to Consolidated Financial Statements
(v) Report of Independent Public Accountants
II Supplemental Schedules
----------------------
(i) Report of Independent Public Accountants with respect to
Supplemental Schedules to the Financial Statements
(ii) Schedule II - Reserve for Doubtful Accounts and Deferred
Tax Asset Valuation Allowance
All other schedules have been omitted, since the required information
is not significant, is included in the financial statements or the notes
thereto, or is not applicable.
-27-
MATERIAL SCIENCES CORPORATION
ANNUAL REPORT ON FORM 10-K
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description of Exhibit Page*
- - --------- -------------------------------------- ------------
2(a) Parent Agreement dated as of
October 15, 1984, by and among
Bethlehem Steel Corporation, Inland
Steel Company, Pre Finish Metals
Incorporated and Material Sciences
Corporation.(1)
2(b) Partnership Agreement dated as of
August 30, 1984, by and among EGL
Steel Inc., Inland Steel
Electrogalvanizing Corporation and
Pre Finish Metals (EG)
Incorporated.(1)
2(c) Amendment No. 1 to the Partnership
Agreement dated as of August 30,
1984.(2)
2(d) Amendment No. 2 to the Partnership
Agreement dated as of August 30,
1984.(2)
2(e) Operating Agreement dated as of
October 15, 1984, by and between Pre
Finish Metals (EG) Incorporated and
Walbridge Coatings, An Illinois
Partnership.(1)
2(f) Coating Agreement dated as of
October 15, 1984, by and between
Bethlehem Steel Corporation and
Walbridge Coatings, An Illinois
Partnership.(1)
2(g) Coating Agreement dated as of
October 15, 1984, by and between
Inland Steel Company and Walbridge
Coatings, An Illinois Partnership.(1)
- - ---------
* This information appears only in the manually signed original
of the Form 10-K.
-28-
Sequentially
Exhibit Numbered
Number Description of Exhibit Page*
- - --------- -------------------------------------- ------------
2(h) Amendments to Definitive Agreements
dated as of March 31, 1986, among EGL
Steel Inc., Inland Steel
Electrogalvanizing Corporation, Pre
Finish Metals (EG) Incorporated,
Bethlehem Steel Corporation, Inland
Steel Company, Pre Finish Metals
Incorporated and Material Sciences
Corporation.(6)
2(i) Further Amendments to Definitive
Agreements dated as of July 24, 1986,
among EGL Steel Inc., Inland Steel
Electrogalvanizing Corporation, Pre
Finish Metals (EG) Incorporated,
Bethlehem Steel Corporation, Inland
Steel Company, Inland Steel
Industries, Inc.,Pre Finish Metals
Incorporated and Material Sciences
Corporation.(3)
2(j) Further Amendments to Definitive
Agreements dated as of April 23,
1992, among EGL Steel Inc., Inland
Steel Electrogalvanizing Corporation,
Pre Finish Metals (EG) Incorporated,
Bethlehem Steel Corporation, Inland
Steel Company, Inland Steel
Industries, Inc., Pre Finish Metals
Incorporated and Material Sciences
Corporation.(7)
3(a) Registrant's Certificate of
Incorporation, as amended.(1)
3(b) Amendment to Registrant's Certificate
of Incorporation.(2)
3(c) Amendment to Registrant's Certificate
of Incorporation.(4)
3(d) Certificate of Designation,
Preferences and Rights of Series A
Junior Participating Preferred
Stock.(4)
3(e) Registrant's By-laws, as amended.(6)
4(a) Form of Subordinated Convertible
Notes due January 29, 1996 and Terms
and Conditions Applicable Thereto.(6)
4(b) Credit Agreement dated as of
September 1, 1994 between Material
Sciences Corporation and Bank of
America Illinois.(5)
-29-
Sequentially
Exhibit Numbered
Number Description of Exhibit Page*
- - --------- -------------------------------------- ------------
4(c) First Amendment to Rights Agreement
dated as of April 21, 1994 by and
between Material Sciences Corporation
and Mellon Securities Trust
Company.(9)
There are omitted certain instruments
with respect to long-term debt, the
total amount of securities authorized
under each of which does not exceed
10% of the total assets of the
registrant and its subsidiaries on a
consolidated basis. A copy of each
such instrument will be furnished to
the Commission upon request.
9 Form of Voting Trust Agreement dated
January 29, 1986, among Material
Sciences Corporation, William N.
Guthrie, Richard L. Burns, Joyce
Burns, O. Morris Sievert, and D. W.
Watt.(6)
10(a) Material Sciences Corporation Stock
Purchase Plan. (1)
10(b) Material Sciences Corporation Supple-
mental Pension Plan.(1)
10(c) Material Sciences Corporation
Employee Stock Purchase Plan.(6)
10(d) Material Sciences Corporation 1985
Stock Option Plan for Key
Employees.(6)
10(e) Material Sciences Corporation 1985
Stock Option Plan for Directors.(6)
10(f) Material Sciences Corporation 1992
Omnibus Stock Awards Plan for Key
Employees(7).
10(g) Employment Agreement effective
February 27, 1991, between the
Company and G. Robert Evans.(6)
10(h) Material Sciences Corporation 1991
Stock Option Plan for Directors.(6)
10(i) Material Sciences Corporation
Directors Deferred Compensation
Plan.(6)
10(j) Deferred Compensation Plan of
Material Sciences Corporation and
Certain Participating
Subsidiaries.(6)
-30-
Sequentially
Exhibit Numbered
Number Description of Exhibit Page*
- - --------- -------------------------------------- ------------
10(k) Retirement Agreement dated as of
February 27, 1991, between Material
Sciences Corporation and William N.
Guthrie.(6)
10(l) Letter Agreement dated March 4, 1991,
between Material Sciences Corporation
and James R. Deters, regarding
termination of employment.(6)
10(m) Letter Agreement dated March 1, 1988,
between Material Sciences Corporation
and James R. Deters, regarding
termination of employment, together
with Non-Qualified Stock Option
Agreement of same date between same
parties.(6)
10(n) Lease dated March 1, 1972, between
Exchange National Bank, as trustee
under Trust Nos. 26027 and 26091, and
Pre Finish Metals Incorporated,
including First Amendment thereto
dated July 10, 1972 and Second
Amendment thereto dated August 9,
1973, relating to Elk Grove Village,
Illinois facility.(1)
10(o) Lease and Agreement dated as of
December 1, 1980, between Line 6
Corp. and Pre Finish Metals
Incorporated, relating to Walbridge,
Ohio facility.(1)
10(p) First Amendment to Lease and
Agreement dated as of May 30, 1986,
between Corporate Property Associates
and Corporate Property Associates 2
and Pre Finish Metals
Incorporated.(3)
10(q) Sublease dated as of May 30, 1986,
between Pre Finish Metals
Incorporated and Walbridge Coatings,
An Illinois Partnership.(3)
10(r) Lease Guaranty dated as of May 30,
1986, from Material Sciences
Corporation to Corporate Property
Associates and Corporate Property
Associates 2.(3)
10(s) Note Purchase Agreement dated as of
May 30, 1986, between Material
Sciences Corporation and
Creditanstalt-Bankverein (New York
Branch).(3)
-31-
Sequentially
Exhibit Numbered
Number Description of Exhibit Page*
- - --------- -------------------------------------- ------------
10(t) Agreement dated as of May 30, 1986,
between Material Sciences Corporation
and Corporate Property Associates and
Corporate Property Associates 2.(3)
10(u) Term Loan Agreement dated as of July
23, 1986, among Walbridge Coatings,
An Illinois Partnership,
Creditanstalt-Bankverein (New York
Branch) and The Toledo Trust Company,
including the related guaranties by
Material Sciences Corporation and Pre
Finish Metals Incorporated.(3)
10(v) Amendment No. 1 to Term Loan
Agreement dated as of March 31, 1987,
among Walbridge Coatings, An Illinois
Partnership, Creditanstalt-Bankverein
(New York Branch) and The Toledo
Trust Company.(3)
10(w) Amended and Restated Credit Facility
Agreement dated as of July 23, 1986,
between Walbridge Coatings, An
Illinois Partnership, and
Creditanstalt-Bankverein, including
the related guaranties by Material
Sciences Corporation and Pre Finish
Metals Incorporated.(3)
10(x) Amendment and Consent Agreement dated
as of April 23, 1992, among Walbridge
Coatings, An Illinois Partnership,
Bethlehem Steel Corporation, EGL
Steel, Inc., Inland Steel Industries,
Inc., Inland Steel Company, Inland
Steel Electrogalvanizing Corporation,
Material Sciences Corporation, Pre
Finish Metals Incorporated, Pre
Finish Metals (EG) Incorporated, and
Creditanstalt-Bankverein, amending
the Term Loan Agreement dated as of
July 23, 1986, as amended on March
31, 1987, and amending the Amended
and Restated Credit Facility
Agreement dated as of July 23, 1986,
including the related guaranties by
Material Sciences Corporation and Pre
Finish Metals Incorporated.(7)
10(y) Form of Standstill Agreement dated as
of January 29, 1986, among Material
Sciences Corporation, Richard L.
Burns and Joyce Burns.(6)
-32-
Sequentially
Exhibit Numbered
Number Description of Exhibit Page*
- - --------- -------------------------------------- ------------
10(z) Rights Agreement dated as of June 17,
1986, between Material Sciences
Corporation and Continental Illinois
National Bank and Trust Company of
Chicago.(6)
10(aa) Form of Indemnification Agreement
between the Company and each of its
officers and directors.(7)
10(bb) Supplemental Retirement Agreement
dated as of December 28, 1992 between
Material Sciences Corporation and
William H. Vrba.(8)
10(cc) Restricted Stock Agreement dated as
of May 20, 1991 between Material
Sciences Corporation and William H.
Vrba.(8)
10(dd) Letter Agreement dated as of May 8,
1991 between Material Sciences
Corporation and William H. Vrba.(8)
11 Statement re: computation of per
share earnings.
13 Annual Report to Shareholders.
(Except as specifically incorporated
herein by reference, this document
shall not be deemed "filed" as a part
of this Form 10-K Annual Report.)
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.(10)
____________________
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (Registration No. 2-93414), which was declared effective on
November 27, 1984.
(2) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (Registration No. 33-00828), which was filed on October 11, 1985.
(3) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 28, 1989 (File No. 1-8803).
(4) Incorporated by reference to the Registrant's Form 8-A dated June 17, 1986
(File No. 1-8803).
-33-
(5) Incorporated by reference to the Registrant's Form 10-Q Quarterly Report
for the Quarter Ended August 31, 1994 (File No. 1-8803).
(6) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 28, 1991 (File No. 1-8803).
(7) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 29, 1992 (File No. 1-8803).
(8) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 28, 1993 (File No. 1-8803).
(9) Incorporated by reference to the Registrant's Form 10-K Annual Report for
the Fiscal Year Ended February 28, 1994 (File No. 1-8803).
(10) Appears only in the electronic filing of this report with the Securities
and Exchange Commission.
-34-
MATERIAL SCIENCES CORPORATION
SUPPLEMENTAL SCHEDULES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
WITH RESPECT TO SUPPLEMENTAL SCHEDULES
TO THE FINANCIAL STATEMENTS
To Material Sciences Corporation:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in the Material
Sciences Corporation 1995 Annual Report to Shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated April 20,
1995. Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The supplemental financial
statement schedule is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. The supplemental financial statement schedule has been subjected
to the auditing procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
April 20, 1995
-35-
SCHEDULE II
MATERIAL SCIENCES CORPORATION AND SUBSIDIARIES
RESERVE FOR DOUBTFUL ACCOUNTS AND DEFERRED TAX ASSET VALUATION ALLOWANCE
(IN THOUSANDS)
Additions
--------------------
Balance at Charged to Charged Deductions Balance
beginning costs and to other from at end
of year expenses accounts reserve of year
---------- ---------- -------- ---------- -------
1993
- - ------------------------
Doubtful Accounts $2,672 $ 638 $ - $ 769 $2,541
Deferred Tax Asset
Valuation Allowance 1,620 - - - 1,620
------ ------ ------ ------ ------
Total $4,292 $ 638 $ - $ 769 $4,161
====== ====== ====== ====== ======
1994
- - ------------------------
Doubtful Accounts $2,541 $1,333 $ - $ 372 $3,502
Deferred Tax Asset
Valuation Allowance 1,620 - - - 1,620
------ ------ ------ ------ ------
Total $4,161 $1,333 $ - $ 372 $5,122
====== ====== ====== ====== ======
1995
- - ------------------------
Doubtful Accounts $3,502 $1,025 $ - $ 899 $3,628
Deferred Tax Asset
Valuation Allowance 1,620 - - 1,620 -
------ ------ ------ ------ ------
Total $5,122 $1,025 $ - $2,519 $3,628
====== ====== ====== ====== ======
36