SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): June 29, 2001
MATERIAL SCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number: 1-8803
DELAWARE 95-2673173
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2200 EAST PRATT BOULEVARD
ELK GROVE VILLAGE, ILLINOIS 60007
(Address of principal executive offices) (Zip Code)
(847) 439-8270
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 29, 2001, Material Sciences Corporation ("MSC" or "Company")
completed the sale of substantially all the assets of its Specialty Films
segment (including the interests in Innovative Specialty Films, LLC ("ISF"),
owned by MSC's subsidiary, MSC Specialty Films, Inc. ("MSC/SFI")) to Bekaert
Corporation and its affiliates ("Bekaert"), pursuant to the terms of the
Purchase Agreement by and among MSC, MSC/SFI, Bekaert and N.V. Bekaert S.A.,
dated June 10, 2001 and the First Amendment to Purchase Agreement dated June 29,
2001 (the "Agreements"). The Company received cash at closing of approximately
$122.1 million and expects to record an after-tax gain of approximately $37.0 to
$43.0 million in the second quarter of fiscal 2002. The gain is subject to
adjustment based on certain post-closing adjustments to the purchase price and
transaction expenses incurred as a result of the transaction.
The Company intends to use the net proceeds of the sale to primarily reduce
long-term debt. Until the sale to Bekaert, ISF was a joint venture entity formed
and equally owned by MSC/SFI and Bekaert.
The description of the Agreements and transactions related thereto are
qualified in their entirety by reference to the full text of the Agreements
attached hereto as Exhibit 2.1 and Exhibit 2.2 and incorporated herein by
reference. A copy of the press release issued by MSC on July 2, 2001, with
respect to the completion of the disposition, is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information
(1) Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
February 28, 2001.
(2) Unaudited Pro Forma Condensed Consolidated Statement of Loss for the
year ended February 28, 2001.
(3) Unaudited Pro Forma Condensed Consolidated Statement of Income for the
year ended February 29, 2000.
(4) Unaudited Pro Forma Condensed Consolidated Statement of Income for the
year ended February 28, 1999.
2
(c) Exhibits
Exhibit 2.1 Purchase Agreement by and among MSC, MSC/SFI, Bekaert, and
N.V. Bekaert S.A., dated June 10, 2001.
Exhibit 2.2 First Amendment to Purchase Agreement dated June 29, 2001.
Exhibit 99.1 Press Release dated July 2, 2001.
SIGNATURES
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.
MATERIAL SCIENCES CORPORATION
Date: July 5, 2001 By: /s/ Gerald G. Nadig
--------------------------------
Gerald G. Nadig
Chairman, President and Chief
Executive Officer
By: /s/ James J. Waclawik, Sr.
--------------------------------
James J. Waclawik, Sr.
Vice President, Chief Financial
Officer and Secretary
3
MATERIAL SCIENCES CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information presents the
Company's unaudited pro forma condensed consolidated balance sheet as of
February 28, 2001 and the Company's unaudited pro forma condensed consolidated
statements of income (loss) for the years ended February 28, 2001, February 29,
2000 and February 28, 1999. The unaudited pro forma condensed consolidated
balance sheet as of February 28, 2001, assumes that the sale had occurred as of
February 28, 2001. The unaudited pro forma condensed consolidated statements of
income as of February 29, 2000 and February 28, 1999 excludes the results of
SFI. The unaudited pro forma condensed consolidated statement of loss as of
February 28, 2001 assumes that the sale had occurred at the beginning of the
period. The unaudited pro forma condensed consolidated statement of loss for the
year ended February 28, 2001, has been adjusted for the reduction in interest
expense as a result of the net proceeds received from the sale.
The unaudited pro forma financial information is presented for information
purposes only and is not necessarily indicative of the financial position or the
results of operations that would have been obtained had the disposition actually
occurred as of the dates assumed, nor is it necessarily indicative of the
financial position or future results of operations.
The pro forma adjustments are based upon information and assumptions
available at the time of the filing of this document. The unaudited pro forma
financial information should be read in conjunction with the Company's audited
consolidated financial statements and related notes thereto in its Annual Report
on Form 10-K for the year ended February 28, 2001.
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MATERIAL SCIENCES CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF FEBRUARY 28, 2001
(in thousands)
MSC Pro Forma MSC
As Reported Less: MSC/SFI (A) Adjustments Pro Forma
---------------- ----------------------- ---------------- ----------------
Assets
Current Assets:
Cash and Cash Equivalents $ 2,655 $ (300) $ - $ 2,355
Receivables, Less Reserves 52,827 (8,892) - 43,935
Income Taxes Receivable 1,637 - - 1,637
Prepaid Expenses 3,049 (348) - 2,701
Inventories:
Raw Materials 22,564 (2,312) - 20,252
Finished Goods 44,611 (8,435) - 36,176
Prepaid Taxes 3,004 - - 3,004
----------- ---------------- ----------- ----------
Total Current Assets $ 130,347 $ (20,287) $ - $ 110,060
----------- ---------------- ----------- ----------
Property, Plant and Equipment:
Land and Building $ 75,404 $ (259) $ - $ 75,145
Leasehold Improvements 1,556 (1,556) - -
Machinery and Equipment 287,053 (22,824) - 264,229
Capital Leases 17,252 (58) - 17,194
Construction in Progress 5,032 (28) - 5,004
----------- ---------------- ----------- ----------
$ 386,297 $ (24,725) $ - $ 361,572
Accumulated Depreciation and Amortization (179,490) 15,818 - (163,672)
----------- ---------------- ----------- ----------
Net Property, Plant and Equipment $ 206,807 $ (8,907) $ - $ 197,900
----------- ---------------- ----------- ----------
Other Assets:
Investment in Joint Ventures $ 23,491 $ (11,791) $ - $ 11,700
Intangible Assets, Net 22,062 (8,445) - 13,617
Other 2,236 (446) - 1,790
----------- ---------------- ----------- ----------
Total Other Assets $ 47,789 $ (20,682) $ - $ 27,107
----------- ---------------- ----------- ----------
Total Assets $ 384,943 $ (49,876) $ - $ 335,067
=========== ================ =========== ==========
Liabilities
Current Liabilities:
Current Portion of Long-Term Debt $ 8,315 $ (612) $ (7,143) (B) $ 560
Accounts Payable 42,233 (2,725) - 39,508
Accrued Payroll Related Expenses 15,164 (3,151) - 12,013
Accrued Expenses 8,373 (1,574) - 6,799
----------- ---------------- ----------- ----------
Total Current Liabilities $ 74,085 $ (8,062) $ (7,143) $ 58,880
----------- ---------------- ----------- ----------
Long-Term Liabilities:
Deferred Income Taxes $ 18,019 $ - $ - $ 18,019
Long-Term Debt, Less Current Portion 129,978 (216) (75,179) (B) 54,583
Other 14,249 (838) - 13,411
----------- ---------------- ----------- ----------
Total Long-Term Liabilities $ 162,246 $ (1,054) $ (75,179) $ 86,013
----------- ---------------- ----------- ----------
Shareowners' Equity
Preferred Stock $ - $ - $ - $ -
Common Stock 354 - - 354
Additional Paid-In Capital 63,334 - - 63,334
Treasury Stock at Cost (34,813) - - (34,813)
Retained Earnings 120,861 - 40,438 (C) 161,299
Accumulated Other Comprehensive Loss (1,124) - 1,124 (D) -
----------- ---------------- ----------- ----------
Total Shareowners' Equity $ 148,612 $ - $ 41,562 $ 190,174
----------- ---------------- ----------- ----------
Total Liabilities and Shareowners' Equity $ 384,943 $ (9,116) $ (40,760) $ 335,067
=========== ================ =========== ==========
See accompanying notes to the unaudited pro forma financial information.
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MATERIAL SCIENCES CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF LOSS
FOR THE YEAR ENDED FEBRUARY 28, 2001
(in thousands, except per share data)
MSC Pro Forma MSC
As Reported Less: MSC/SFI (E) Adjustments Pro Forma
-------------- ------------------ --------------- ---------------
Net Sales $ 481,976 $ (58,306) $ - $ 423,670
Cost of Sales 405,797 (31,336) - 374,461
-------------- ------------------ --------------- ---------------
Gross Profit $ 76,179 $ (26,970) $ - $ 49,209
Selling, General and Administrative Expenses 68,282 (18,000) - 50,282
-------------- ------------------ --------------- ---------------
Income from Operations $ 7,897 $ (8,970) $ - $ (1,073)
-------------- ------------------ --------------- ---------------
Other (Income) and Expense:
Interest Expense, Net $ 9,662 $ 8 $ (5,647)(F) $ 4,023
Equity in Results of Joint Ventures 405 789 - 1,194
Other, Net (334) 9 - (325)
-------------- ------------------ --------------- ---------------
Total Other Expense, Net $ 9,733 $ 806 $ (5,647) $ 4,892
-------------- ------------------ --------------- ---------------
Income (Loss) Before Provision (Benefit) for
Income Taxes $ (1,836) $ (9,776) $ 5,647 $ (5,965)
Provision (Benefit) for Income Taxes (1,152) (3,991) 2,321 (G) (2,822)
-------------- ------------------ --------------- ---------------
Net Income (Loss) $ (684) $ (5,785) $ 3,326 $ (3,143)
============== ================== =============== ===============
Basic Net Income (Loss) Per Share $ (0.05) $ (0.22)
============== ===============
Diluted Net Income (Loss) Per Share $ (0.05) $ (0.22)
============== ===============
Weighted Average Number of Common Shares Outstanding
Used for Basic Net Income (Loss) Per Share 14,027 14,027
Dilutive Shares - -
-------------- ---------------
Weighted Average Number of Common Shares Outstanding
Plus Dilutive Shares 14,027 14,027
============== ===============
See accompanying notes to the unaudited pro forma financial information.
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MATERIAL SCIENCES CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED FEBRUARY 29, 2000
(in thousands, except per share data)
MSC MSC
As Reported Less: MSC/SFI (E) Pro Forma
---------------- ----------------------- ----------------
Net Sales $ 507,014 $ (50,788) $ 456,226
Cost of Sales 408,406 (27,308) 381,098
---------------- ----------------------- ----------------
Gross Profit $ 98,608 $ (23,480) $ 75,128
Selling, General and Administrative Expenses 62,208 (15,718) 46,490
---------------- ----------------------- ----------------
Income from Operations $ 36,400 $ (7,762) $ 28,638
---------------- ----------------------- ----------------
Other (Income) and Expense:
Interest Expense, Net $ 9,060 $ 2 $ 9,062
Equity in Results of Joint Ventures 1,629 (357) 1,272
Other, Net 369 45 414
---------------- ----------------------- ----------------
Total Other Expense, Net $ 11,058 $ (310) $ 10,748
---------------- ----------------------- ----------------
Income Before Income Taxes $ 25,342 $ (7,452) $ 17,890
Income Taxes 8,627 (2,926) 5,701
---------------- ----------------------- ----------------
Net Income $ 16,715 $ (4,526) $ 12,189
================ ======================= ================
Basic Net Income Per Share $ 1.11 $ 0.81
================ ================
Diluted Net Income Per Share $ 1.10 $ 0.80
================ ================
Weighted Average Number of Common Shares Outstanding
Used for Basic Net Income Per Share 15,070 15,070
Dilutive Shares 130 130
---------------- ----------------
Weighted Average Number of Common Shares Outstanding
Plus Dilutive Shares 15,200 15,200
================ ================
See accompanying notes to the unaudited pro forma financial information.
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MATERIAL SCIENCES CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED FEBRUARY 28, 1999
(in thousands, except per share data)
MSC MSC
As Reported Less: MSC/SFI (E) Pro Forma
-------------- ------------------- -------------
Net Sales $ 471,651 $ (47,234) $ 424,417
Cost of Sales 387,192 (26,864) 360,328
-------------- ------------------- -------------
Gross Profit $ 84,459 $ (20,370) $ 64,089
Selling, General and Administrative Expenses 56,094 (15,270) 40,824
-------------- ------------------- -------------
Income from Operations $ 28,365 $ (5,100) $ 23,265
-------------- ------------------- -------------
Other (Income) and Expense:
Interest Expense, Net $ 11,356 $ 4 $ 11,360
Equity in Results of Joint Ventures 1,313 - 1,313
Other, Net (421) 105 (316)
-------------- ------------------- -------------
Total Other Expense, Net $ 12,248 $ 109 $ 12,357
-------------- ------------------- -------------
Income Before Income Taxes $ 16,117 $ (5,209) $ 10,908
Income Taxes 5,963 (2,050) 3,913
-------------- ------------------- -------------
Net Income $ 10,154 $ (3,159) $ 6,995
============== =================== =============
Basic Net Income Per Share $ 0.66 $ 0.46
============== =============
Diluted Net Income Per Share $ 0.66 $ 0.46
============== =============
Weighted Average Number of Common Shares Outstanding
Used for Basic Net Income Per Share 15,353 15,353
Dilutive Shares 11 11
-------------- -------------
Weighted Average Number of Common Shares Outstanding
Plus Dilutive Shares 15,364 15,364
============== =============
See accompanying notes to the unaudited pro forma financial information.
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MATERIAL SCIENCES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(in thousands)
Balance Sheet
The following notes describe the historical and pro forma adjustments found
on the accompanying balance sheet as a result of the sale of certain assets of
MSC/SFI.
(A) Represents the assets and liabilities of MSC/SFI sold.
(B) Represents the use of the after-tax proceeds resulting from the sale:
Gross Proceeds $115,937
Income Taxes (32,472)
--------
After-Tax Proceeds $ 83,465
========
Debt Repayments:
Current $ 7,143
Non-Current 75,179
Transaction Costs 1,143
--------
$ 83,465
========
(C) Represents the after-tax gain, net of transaction costs of $1,143, as of
February 28, 2001.
(D) Represents the elimination of the accumulated other comprehensive loss.
Statements of Income (Loss)
The following notes describe the historical and pro forma adjustments found
on the accompany statements of income (loss) as a result of the sale of certain
assets of MSC/SFI.
(E) Represents the results of operations of MSC/SFI. Pre-tax income (loss) has
been tax effected at MSC/SFI's effective tax rate.
(F) Represents the reduction in interest expense as a result of the estimated
after-tax proceeds being used to reduce long-term debt. Interest expense
was calculated using the weighted average interest rates in effect during
the pro forma periods presented for the long-term debt outstanding under
the Company's line of credit, the senior notes issued in 1997 and a portion
of the senior notes issued in 1998.
(G) The interest expense adjustment has been tax-effected at the Company's
statutory tax rate.
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MATERIAL SCIENCES CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit Number Description
-------------- -----------
2.1 Purchase Agreement by and among MSC, MSC/SFI, Bekaert, and
N.V. Bekaert S.A., dated June 10, 2001.
2.2 First Amendment to Purchase Agreement dated June 29, 2001.
99.1 Press Release dated July 2, 2001.
10