Material Sciences Corporation Reports Fiscal 2001 Results; New Strategic Vision Outlined

Apr 24, 2001, 01:00 ET from Materials Sciences Corporation

    ELK GROVE VILLAGE, Ill., April 24 /PRNewswire Interactive News Release/ --
 Material Sciences Corporation (NYSE:   MSC) today reported lower sales and a net
 loss for the fiscal year ended February 28, 2001.
     Net sales for fiscal 2001 were $482.0 million compared with $507.0 million
 in fiscal 2000.  Excluding Pinole Point Steel, for which MSC is exploring
 strategic alternatives, net sales for the year were $332.2 million versus
 $329.5 million last year.  The net loss for fiscal 2001 was $0.7 million, or
 $0.05 per diluted share compared with net income of $16.7 million, or
 $1.10 per diluted share last year.  The major reasons for the decline included
 a softer economy, higher overall natural gas and electricity costs, which
 reduced earnings by $0.18 per diluted share, and significantly lower results
 at Pinole Point Steel, which accounted for an $18.5 million decrease in pre-
 tax income compared with last year.
     Fourth quarter net sales declined by 14.8 percent to $103.5 million from
 $121.5 million in the same period a year ago.  Excluding Pinole Point Steel,
 net sales in the fourth quarter were $74.3 million compared with $80.5 million
 last year.  The net loss in the fourth quarter was $4.5 million, or $0.33 per
 diluted share compared with net income of $3.7 million, or $0.25 per diluted
 share last year.  For the latest three months, Pinole Point Steel accounted
 for a $6.1 million decrease in pre-tax income compared with last year.  The
 company reported that overall higher natural gas and electricity costs reduced
 fiscal 2001 fourth quarter earnings by $0.11 per diluted share.
 
     Exploring Alternatives for Pinole Point Steel
     MSC also announced that it engaged TC Graham Associates to help improve
 the profitability of and assist the company in exploring strategic
 alternatives for its Pinole Point Steel subsidiary.  "Tom Graham is widely
 known as one of the steel industry's most successful and innovative
 executives, who has helped improve steel operations going back to the 1970s,"
 said Gerald G. Nadig, chairman, president and chief executive officer.  "Tom
 and his associates bring a wealth of knowledge and hands-on experience that
 should assist MSC to significantly improve the value of its Pinole Point Steel
 investment.  We are continuing to pursue all strategic alternatives available
 with respect to Pinole Point Steel.  In addition, we have taken steps to lower
 expenses and reduce inventories."
 
     Several Factors Contributed to a Weaker Year
     "Pinole Point Steel had an overriding impact on our business in fiscal
 2001, especially in the fourth quarter," said Nadig.  "Like many other
 companies, rising energy costs and a cooling economy also affected our
 results. Our Engineered Materials and Specialty Films segments fared the best,
 largely as a result of their new product and market initiatives.  Our Coated
 Products and Services segment was affected by softer demand, particularly in
 the automotive sector, and by higher costs for natural gas.
     "Halfway through our seasonally stronger first quarter, we are seeing some
 positive signs. Market conditions, although still soft, are much improved from
 fiscal year end," added Nadig.
     Due to management's decision to explore strategic alternatives for Pinole
 Point Steel (formerly included in the Coated Products and Services segment),
 the company is disclosing this operation as a separate segment.  As a result,
 MSC's four principal business segments are Engineered Materials, Specialty
 Films, Coated Products and Services, and Pinole Point Steel.
     A review of each business segment follows (dollars in millions).
 
     Engineered Materials
 
                     Fourth Quarter    Change      Full Year      Change
                      2001    2000                2001   2000
 
     Sales           $20.2   $19.9      1.5%     $87.0   $79.6     9.4%
     Income before
      income taxes    $1.8    $2.9    (38.5%)     $9.4   $12.0   (21.6%)
 
 
     Engineered Materials, which includes the company's Laminates and
 Composites business, recorded higher sales and lower pre-tax income for the
 fourth quarter and the full year.  The increase in sales was due to higher
 shipments of Quiet Steel(R) laminates for computer disk drives and automotive
 body panels, partially offset by lower shipments of disc brake noise dampers.
 Pre-tax income was affected by a less favorable product mix, inefficiencies
 associated with the ramping up of Quiet Steel(R) for Ford Motor Company's
 sport utility vehicle (SUV) dash panels, and planned higher research and
 development and marketing spending to support new product initiatives in the
 U.S. and offshore.
 
     Ford Adopts Quiet Steel(R) for Major Engine Line
     The company also announced that Ford will begin using Quiet Steel(R) in
 the oil pans of its Triton 4.6L and 5.4L V8 truck engines.  The 4.6L engine
 has been specified for use in the redesigned Ford Explorer and Mercury
 Mountaineer SUVs. The 5.4L engine will be used in the Ford Expedition and
 Lincoln Navigator SUVs later this year.  The company recently began supplying
 Quiet Steel(R) for the dash panels of these vehicles.  "Ford chose Quiet
 Steel(R) because of its ability to reduce engine noise and contribute to a
 quiet vehicle cabin.  It produces more than 1 million Triton V8s for its
 trucks annually.  These applications represent approximately 16 million to
 17 million pounds of material per year ? making it one of the biggest
 opportunities for Quiet Steel(R) in the global auto industry," said Nadig.
 
     Specialty Films
 
                     Fourth Quarter    Change      Full Year      Change
                      2001    2000                2001   2000
 
     Sales           $12.4   $12.3      0.2%     $58.3   $50.8    14.8%
     Income before
      income taxes    $1.8    $2.0    (12.2%)     $9.8    $7.5    31.2%
 
 
     Specialty Films sales and pre-tax income in fiscal 2001 both exceeded last
 year's levels.  Higher sales resulted from increases in solar control window
 film shipments both in the U.S. and internationally, as well as more coating
 and laminating products for the industrial market.  The increase in pre-tax
 income was due largely to higher sales and, to a lesser degree, a litigation
 settlement in the company's favor.  The decrease in income before income taxes
 in the fourth quarter was due to planned increased spending in research and
 development and marketing.
 
 
     Coated Products and Services
                     Fourth Quarter    Change       Full Year      Change
                      2001    2000                2001    2000
 
     Sales           $42.4   $49.0    (13.4%)    $191.1  $201.6     (5.2%)
     Income before
      income taxes    $0.2    $4.9    (95.2%)     $12.9   $20.9    (38.2%)
 
 
     Coated Products and Services, which includes the company's coil coating
 and electrogalvanizing operations, reported lower sales and pre-tax income for
 the fourth quarter and the full year.  Coil coating sales for fiscal 2001 were
 largely on par with last year, while income before income taxes declined due
 to changes in mix, and significantly higher natural gas costs of $2.2 million.
 Electrogalvanizing sales and income before income taxes were down compared
 with last year due to a decline in electrogalvanized steel shipments to the
 automotive industry. Electrogalvanizing capacity utilization was approximately
 71 percent in fiscal 2001 compared with 92 percent last year."
 
     Pinole Point Steel
 
                     Fourth Quarter    Change       Full Year      Change
                      2001    2000                2001    2000
 
     Sales           $29.2   $40.9    (28.8%)    $149.8  $177.6    (15.6%)
     Loss before
      income taxes   ($9.0)  ($2.9)  (215.0%)    ($22.0)  ($3.5)   (531.1%)
 
     *Includes interest allocation
 
     Pinole Point Steel reported lower sales and a pre-tax loss in the fourth
 quarter and for the full year.  Sales were affected by inadequate steel
 deliveries from suppliers in the early part of the year, a softer West Coast
 building and construction market, and higher customer inventories.  The full
 year loss before income taxes was due to a higher cost of steel than could be
 recovered through increased prices to customers, lower volume, and higher
 utility costs of $0.9 million versus last year. The pre-tax loss included an
 allocation of consolidated interest expense totaling $8.8 million in fiscal
 2001 and $8.3 million in fiscal 2000.  The allocations were based on the debt
 associated with the original purchase of Pinole Point Steel and Pinole Point
 Steel's subsequent cash flow. In addition, the operation was affected by
 California energy curtailments, particularly in the fourth quarter, which
 disrupted production and increased costs.
 
     New Strategic Vision Outlined
     "Last summer, our senior management team began an important strategic
 planning process, which led us to redefine MSC's vision and operating model,"
 said Nadig.  "MSC's new strategic vision is to be a leading provider of
 materials-based solutions. The company will leverage its expertise in
 materials through relationships and a network of partners.  This will allow it
 to solve customer-specific problems by overcoming technical barriers and
 enhancing product performance.  MSC will differentiate itself through its
 strong customer orientation, knowledge of materials, a deep understanding of
 its markets, and by offering specific value propositions that create economic
 value that will be shared with its customers.
     "In the past, the company had a narrow view of its markets -- one that
 hampered its imagination and growth potential.  This new vision expands our
 view, which should result in a broader range of products and investment
 options," Nadig added.
     "The company's new solution provider strategy is being facilitated by a
 new skills transfer operating model," said Nadig.  "The operating model is
 characterized by a number of initiatives, such as sharing skills, knowledge,
 and technology across business units; sharing processes that emphasize ongoing
 strategy development, external relationships, and capabilities building; and
 promoting a culture and organization focused on creating value for
 shareowners.  We are focusing on five key skills transfer areas to enable our
 solution provider strategy: 1) solutions knowledge, 2) customer orientation,
 3) consultative selling, 4) partnering and acquisitions, and 5) e-business.
 Each of these skills require attitude and behavioral shifts, as well as
 ongoing education and training, in order to become part of MSC's culture. We
 are developing and implementing programs to communicate the vision and to
 recognize and reward employees for adopting the new culture and expanding
 their skills.
     "In conjunction with the new vision, we also took a hard look at the
 strategic position, growth, and EVA potential of each of our businesses,"
 Nadig continued.  "MSC will focus on those businesses with the greatest
 potential and either fix or find strategic alternatives for those that do not
 fit its new operating model.
     "Our overall goal is to change our mix of businesses.  We have been too
 heavily weighted in mature foundation businesses. These businesses will
 continue to be run efficiently and generate cash, while we change our focus to
 faster growing businesses on which we can build for the future.  Part of our
 success in achieving this goal will depend on developing alliances,
 partnerships and, where appropriate, our ability to make acquisitions that
 broaden our capabilities and skills so we can gain a presence in high-growth
 markets," Nadig explained.
     "In addition to performance and growth, MSC will increase its focus on
 options creation," Nadig added.  "We intend to invest in options in order to
 position MSC to have as many valuable opportunities for future growth as
 possible.  In essence, we believe there is value in increasing our flexibility
 -- to invest or disinvest when the time is right.  While it is difficult to
 predict the future, we will do our best to position MSC to win across a range
 of possible scenarios.
     "MSC is not the company it was a year ago," said Nadig.  "We have
 redefined our strategy and begun implementing a new operating model.  We also
 are re-evaluating our business portfolio and taking action to create
 additional value.  With EVA as our primary management tool and way to keep
 score, we believe that our actions will lead to new opportunities for
 profitable growth, which will create value for shareowners.
     "This is a time of substantial and promising change for MSC.  Many of the
 steps we have taken have been significant, some subtle, but we are emerging as
 a stronger company and more committed then ever to MSC's long-term success.
 As we begin fiscal 2002, we know that it all comes down to execution, and we
 will continue to do what is necessary to move the company's transformation
 forward.  I am confident in our ability to achieve our objectives," Nadig
 concluded.
 
     New Credit Facility Agreement
     The company also reported that it has amended its bank credit facility.
 The amendment reduces the size of the facility to $50.0 million and relaxes
 the financial covenants relating to net worth, debt to cash flow, and fixed
 charge coverage.  The company is in compliance with the covenants as amended.
 In addition, the amendment prohibits the company from paying dividends and
 repurchasing its stock, and places certain limitations on the company's
 ability to make acquisitions and investments.  The company will consider re-
 financing this facility later this year.
 
     Webcast of Year-End Results Conference Call
     MSC will hold a conference call to discuss its results on Tuesday,
 April 24, at 10:00 a.m. Central Time.  A Webcast of the call will be available
 over Vcall (at www.vcall.com) and CCBN's Investor Distribution Network.
 (Individual investors can listen to the call through CCBN's individual
 investor center at www.companyboardroom.com, or by visiting any of the
 investor sites in CCBN's Individual Investor Network -- such as America
 Online's Personal Finance Channel and Fidelity.com.  Institutional investors
 can access the call via CCBN's password-protected event management site,
 StreetEvents, at www.streetevents.com.)  The Webcast will be archived on all
 of these sites for 30 days.
 
     Material Sciences Corporation is a leading provider of material-based
 solutions for industrial and consumer applications around the world.  It uses
 its expertise in materials, which it leverages through relationships and a
 network of partners, to solve customer-specific problems, overcoming technical
 barriers and enhancing performance.  MSC will differentiate itself on the
 basis of its strong customer orientation, knowledge of materials, deep
 understanding of its markets, and the offer of specific value propositions
 that define how it will create and share economic value with its customers.
 The company's stock is traded on the New York Stock Exchange under the symbol
 MSC and is included in the Standard & Poor's SmallCap 600 Index.
 
     Forward-looking statements in this press release are qualified by the
 cautionary language in Part II, Item 7 of the company's 2000 annual report on
 Form 10-K, filed with the Securities and Exchange Commission, pursuant to the
 Securities Exchange Act of 1934, as amended.  Uncertainties and factors that
 could cause forward-looking statements to differ materially from those set
 forth or implied herein include, but are not limited to, successful
 development and introduction of new products and technologies; competitive
 factors; changes in the business environment, including the automobile,
 building and construction and durable goods industries; increases in the
 prices of raw and other material inputs used by the company; adverse changes
 in government laws and regulations; and environmental risks associated with
 the company's manufacturing operations.
 
     For further information on Material Sciences by Fax, dial 1-800-PRO-INFO,
 ext. MSC.  Information about Material Sciences through the Internet is
 available at  www.matsci.com and www.frbinc.com.
 
 
 
                           MATERIAL SCIENCES CORPORATION
                      CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
                       (In thousands, except per share data)
 
                                                   Three Months Ended
                                                   February 28 or 29,
                                                                       Percent
                                               2001         2000        Change
 
     Net Sales                               $103,482     $121,469      -14.8%
     Cost of Sales                             91,575       99,652       -8.1%
     Gross Profit                             $11,907      $21,817      -45.4%
     Selling, General and Administrative
      Expenses                                 16,791       14,768       13.7%
     Income from Operations                   $(4,884)      $7,049     -169.3%
     Other (Income) and Expense:
        Interest Expense, Net                  $2,479       $2,186       13.4%
        Equity in Results of Joint
         Ventures                                 194           47      312.8%
        Other, Net                               (499)         160     -411.9%
          Total Other Expense, Net             $2,174       $2,393       -9.2%
 
     Income (Loss) Before Provision
      (Benefit) for Income Taxes              $(7,058)      $4,656     -251.6%
     Provision (Benefit) for Income Taxes      (2,562)         973     -363.3%
     Net Income (Loss)                        $(4,496)      $3,683     -222.1%
 
     Basic Net Income (Loss) Per Share         $(0.33)       $0.25     -232.0%
 
     Diluted Net Income (Loss) Per Share       $(0.33)       $0.25     -232.0%
 
     Weighted Average Number of Common
      Shares Outstanding
        Used for Basic Net Income (Loss)
         Per Share                             13,693       14,862
     Dilutive Shares                                -          155
     Weighted Average Number of Common
      Shares Outstanding
        Plus Dilutive Shares                   13,693       15,017
 
 
                           MATERIAL SCIENCES CORPORATION
                      CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
                       (In thousands, except per share data)
 
                                                  Twelve Months Ended
                                                   February 28 or 29,
                                                                       Percent
                                               2001         2000        Change
 
     Net Sales                               $481,976     $507,014       -4.9%
     Cost of Sales                            405,797      408,406       -0.6%
     Gross Profit                             $76,179      $98,608      -22.7%
     Selling, General and Administrative
      Expenses                                 68,282       62,208        9.8%
     Income from Operations                    $7,897      $36,400      -78.3%
     Other (Income) and Expense:
        Interest Expense, Net                  $9,662       $9,060        6.6%
        Equity in Results of Joint
         Ventures                                 405        1,629      -75.1%
        Other, Net                               (334)         369     -190.5%
          Total Other Expense, Net             $9,733      $11,058      -12.0%
 
     Income (Loss) Before Provision
      (Benefit) for Income Taxes              $(1,836)     $25,342     -107.2%
     Provision (Benefit) for Income Taxes      (1,152)       8,627     -113.4%
     Net Income (Loss)                          $(684)     $16,715     -104.1%
 
     Basic Net Income (Loss) Per Share         $(0.05)       $1.11     -104.5%
 
     Diluted Net Income (Loss) Per Share       $(0.05)       $1.10     -104.5%
 
     Weighted Average Number of Common
      Shares Outstanding
        Used for Basic Net Income (Loss)
         Per Share                             14,027       15,070
     Dilutive Shares                                -          130
     Weighted Average Number of Common
      Shares Outstanding
        Plus Dilutive Shares                   14,027       15,200
 
 
 
                           MATERIAL SCIENCES CORPORATION
                            CONSOLIDATED BALANCE SHEETS
 
                                  (In thousands)
 
                                                     Feb. 28,         Feb. 29,
                                                       2001             2000
     Assets:
       Current Assets:
         Cash and Cash Equivalents                    $2,655            $4,223
         Receivables, Less Reserves                   52,827            58,331
         Income Taxes Receivable                       1,637                 -
         Prepaid Expenses                              3,049             2,418
         Inventories                                  67,175            60,251
         Prepaid Taxes                                 3,004             4,209
 
           Total Current Assets                     $130,347          $129,432
 
       Property, Plant and Equipment                $386,297          $373,519
       Accumulated Depreciation and
        Amortization                                (179,490)         (152,417)
 
           Net Property, Plant and
            Equipment                               $206,807          $221,102
 
       Other Assets:
         Investment in Joint Ventures                $23,491           $20,306
         Intangible Assets, Net                       22,062            23,980
         Other                                         2,236             2,475
 
           Total Other Assets                        $47,789           $46,761
 
           Total Assets                             $384,943          $397,295
 
     Liabilities:
       Current Liabilities:
         Current Portion of Long-Term Debt            $8,315            $2,688
         Accounts Payable                             42,233            50,667
         Accrued Expenses                             23,537            27,452
 
           Total Current Liabilities                 $74,085           $80,807
 
       Long-Term Liabilities:
         Deferred Income Taxes                       $18,019           $21,486
         Long-Term Debt, Less Current
          Portion                                    129,978           120,896
         Other                                        14,249            15,707
 
           Total Long-Term Liabilities              $162,246          $158,089
 
     Shareowners' Equity:
       Preferred Stock                                    $-                $-
       Common Stock                                      354               347
       Additional Paid-In Capital                     63,334            59,164
       Treasury Stock at Cost                        (34,813)          (22,074)
       Retained Earnings                             120,861           121,545
       Accumulated Other Comprehensive Loss           (1,124)             (583)
 
           Total Shareowners' Equity                $148,612          $158,399
 
           Total Liabilities and
            Shareowners' Equity                     $384,943          $397,295
 
 
 
                           MATERIAL SCIENCES CORPORATION
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                  (In thousands)
 
                                        Three Months Ended  Twelve Months Ended
                                        February 28 or 29,   February 28 or 29,
                                            2001     2000      2001      2000
     Cash Flows From:
     Operating Activities:
     Net Income (Loss)                    $(4,496)  $3,683     $(684)  $16,715
     Adjustments to Reconcile Net Income
      (Loss) to Net Cash Provided by
         Operating Activities:
         Depreciation and Amortization      7,466    6,844    30,334    29,632
         Provision (Benefit) for Deferred
          Income Taxes                       (948)     476    (1,906)    2,620
         Compensatory Effect of Stock
          Plans                               695      641     2,794     2,397
         Other, Net                           207      126       311     1,693
             Operating Cash Flow Prior to
              Changes in Assets and
              Liabilities                  $2,924  $11,770   $30,849   $53,057
 
     Changes in Assets and Liabilities:
         Receivables                       $4,920  $(1,406)   $5,504   $(5,953)
         Income Taxes Receivable           (1,268)       -    (1,637)      968
         Prepaid Expenses                   2,170      575      (631)     (291)
         Inventories                        2,222   (1,802)   (6,924)   (7,390)
         Accounts Payable                  (1,152)    (630)   (8,434)    2,451
         Accrued Expenses                   3,961    4,425    (3,915)    4,799
         Other, Net                        (1,077)   1,092    (2,205)    1,493
             Cash Flow from Changes in
              Assets and Liabilities       $9,776   $2,254  $(18,242)  $(3,923)
                Net Cash Provided by
                 Operating Activities     $12,700  $14,024   $12,607   $49,134
 
     Investing Activities:
     Capital Expenditures, Net            $(3,455) $(2,575) $(13,205) $(13,864)
     Acquisitions, Net of Cash Acquired         -      (94)     (176)   (1,016)
     Investment in Joint Ventures            (958)    (595)   (3,759)   (1,253)
     Distribution from Joint Ventures         169        -       169         -
     Other                                    (95)    (280)     (457)     (957)
                Net Cash Used in
                 Investing Activities     $(4,339) $(3,544) $(17,428) $(17,090)
 
     Financing Activities:
     Net Proceeds (Payments) Under Lines
      of Credit                           $(5,700) $(5,600)  $17,300  $(17,000)
     Payments of Debt                        (134)    (102)   (2,591)   (1,980)
     Notes Issued for Acquisitions              -        -      (100)     (600)
     Purchase of Treasury Stock                 -   (3,789)  (12,739)  (11,583)
     Issuance of Common Stock                 128      247     1,383     2,115
                Net Cash Provided by
                 (Used in) Financing
                 Activities               $(5,706) $(9,244)   $3,253  $(29,048)
 
     Net Increase (Decrease) in Cash       $2,655   $1,236   $(1,568)   $2,996
     Cash and Cash Equivalents at
      Beginning of Period                       -    2,987     4,223     1,227
     Cash and Cash Equivalents at End of
      Period                               $2,655   $4,223    $2,655    $4,223
 
     Supplemental Cash Flow Disclosures:
         Notes Issued for Acquisitions         $-       $-      $100      $600
         Cash Portion of Acquisitions and
          Related Costs                         -       94       176     1,016
         Total Consideration Paid for
          Acquisitions                         $-      $94      $276    $1,616
 
     The Changes in Assets and Liabilities above for the three and twelve
     months ended February 28, 2001 and February 29, 2000 are net of assets and
     liabilities acquired.
 
 
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SOURCE Materials Sciences Corporation
    ELK GROVE VILLAGE, Ill., April 24 /PRNewswire Interactive News Release/ --
 Material Sciences Corporation (NYSE:   MSC) today reported lower sales and a net
 loss for the fiscal year ended February 28, 2001.
     Net sales for fiscal 2001 were $482.0 million compared with $507.0 million
 in fiscal 2000.  Excluding Pinole Point Steel, for which MSC is exploring
 strategic alternatives, net sales for the year were $332.2 million versus
 $329.5 million last year.  The net loss for fiscal 2001 was $0.7 million, or
 $0.05 per diluted share compared with net income of $16.7 million, or
 $1.10 per diluted share last year.  The major reasons for the decline included
 a softer economy, higher overall natural gas and electricity costs, which
 reduced earnings by $0.18 per diluted share, and significantly lower results
 at Pinole Point Steel, which accounted for an $18.5 million decrease in pre-
 tax income compared with last year.
     Fourth quarter net sales declined by 14.8 percent to $103.5 million from
 $121.5 million in the same period a year ago.  Excluding Pinole Point Steel,
 net sales in the fourth quarter were $74.3 million compared with $80.5 million
 last year.  The net loss in the fourth quarter was $4.5 million, or $0.33 per
 diluted share compared with net income of $3.7 million, or $0.25 per diluted
 share last year.  For the latest three months, Pinole Point Steel accounted
 for a $6.1 million decrease in pre-tax income compared with last year.  The
 company reported that overall higher natural gas and electricity costs reduced
 fiscal 2001 fourth quarter earnings by $0.11 per diluted share.
 
     Exploring Alternatives for Pinole Point Steel
     MSC also announced that it engaged TC Graham Associates to help improve
 the profitability of and assist the company in exploring strategic
 alternatives for its Pinole Point Steel subsidiary.  "Tom Graham is widely
 known as one of the steel industry's most successful and innovative
 executives, who has helped improve steel operations going back to the 1970s,"
 said Gerald G. Nadig, chairman, president and chief executive officer.  "Tom
 and his associates bring a wealth of knowledge and hands-on experience that
 should assist MSC to significantly improve the value of its Pinole Point Steel
 investment.  We are continuing to pursue all strategic alternatives available
 with respect to Pinole Point Steel.  In addition, we have taken steps to lower
 expenses and reduce inventories."
 
     Several Factors Contributed to a Weaker Year
     "Pinole Point Steel had an overriding impact on our business in fiscal
 2001, especially in the fourth quarter," said Nadig.  "Like many other
 companies, rising energy costs and a cooling economy also affected our
 results. Our Engineered Materials and Specialty Films segments fared the best,
 largely as a result of their new product and market initiatives.  Our Coated
 Products and Services segment was affected by softer demand, particularly in
 the automotive sector, and by higher costs for natural gas.
     "Halfway through our seasonally stronger first quarter, we are seeing some
 positive signs. Market conditions, although still soft, are much improved from
 fiscal year end," added Nadig.
     Due to management's decision to explore strategic alternatives for Pinole
 Point Steel (formerly included in the Coated Products and Services segment),
 the company is disclosing this operation as a separate segment.  As a result,
 MSC's four principal business segments are Engineered Materials, Specialty
 Films, Coated Products and Services, and Pinole Point Steel.
     A review of each business segment follows (dollars in millions).
 
     Engineered Materials
 
                     Fourth Quarter    Change      Full Year      Change
                      2001    2000                2001   2000
 
     Sales           $20.2   $19.9      1.5%     $87.0   $79.6     9.4%
     Income before
      income taxes    $1.8    $2.9    (38.5%)     $9.4   $12.0   (21.6%)
 
 
     Engineered Materials, which includes the company's Laminates and
 Composites business, recorded higher sales and lower pre-tax income for the
 fourth quarter and the full year.  The increase in sales was due to higher
 shipments of Quiet Steel(R) laminates for computer disk drives and automotive
 body panels, partially offset by lower shipments of disc brake noise dampers.
 Pre-tax income was affected by a less favorable product mix, inefficiencies
 associated with the ramping up of Quiet Steel(R) for Ford Motor Company's
 sport utility vehicle (SUV) dash panels, and planned higher research and
 development and marketing spending to support new product initiatives in the
 U.S. and offshore.
 
     Ford Adopts Quiet Steel(R) for Major Engine Line
     The company also announced that Ford will begin using Quiet Steel(R) in
 the oil pans of its Triton 4.6L and 5.4L V8 truck engines.  The 4.6L engine
 has been specified for use in the redesigned Ford Explorer and Mercury
 Mountaineer SUVs. The 5.4L engine will be used in the Ford Expedition and
 Lincoln Navigator SUVs later this year.  The company recently began supplying
 Quiet Steel(R) for the dash panels of these vehicles.  "Ford chose Quiet
 Steel(R) because of its ability to reduce engine noise and contribute to a
 quiet vehicle cabin.  It produces more than 1 million Triton V8s for its
 trucks annually.  These applications represent approximately 16 million to
 17 million pounds of material per year ? making it one of the biggest
 opportunities for Quiet Steel(R) in the global auto industry," said Nadig.
 
     Specialty Films
 
                     Fourth Quarter    Change      Full Year      Change
                      2001    2000                2001   2000
 
     Sales           $12.4   $12.3      0.2%     $58.3   $50.8    14.8%
     Income before
      income taxes    $1.8    $2.0    (12.2%)     $9.8    $7.5    31.2%
 
 
     Specialty Films sales and pre-tax income in fiscal 2001 both exceeded last
 year's levels.  Higher sales resulted from increases in solar control window
 film shipments both in the U.S. and internationally, as well as more coating
 and laminating products for the industrial market.  The increase in pre-tax
 income was due largely to higher sales and, to a lesser degree, a litigation
 settlement in the company's favor.  The decrease in income before income taxes
 in the fourth quarter was due to planned increased spending in research and
 development and marketing.
 
 
     Coated Products and Services
                     Fourth Quarter    Change       Full Year      Change
                      2001    2000                2001    2000
 
     Sales           $42.4   $49.0    (13.4%)    $191.1  $201.6     (5.2%)
     Income before
      income taxes    $0.2    $4.9    (95.2%)     $12.9   $20.9    (38.2%)
 
 
     Coated Products and Services, which includes the company's coil coating
 and electrogalvanizing operations, reported lower sales and pre-tax income for
 the fourth quarter and the full year.  Coil coating sales for fiscal 2001 were
 largely on par with last year, while income before income taxes declined due
 to changes in mix, and significantly higher natural gas costs of $2.2 million.
 Electrogalvanizing sales and income before income taxes were down compared
 with last year due to a decline in electrogalvanized steel shipments to the
 automotive industry. Electrogalvanizing capacity utilization was approximately
 71 percent in fiscal 2001 compared with 92 percent last year."
 
     Pinole Point Steel
 
                     Fourth Quarter    Change       Full Year      Change
                      2001    2000                2001    2000
 
     Sales           $29.2   $40.9    (28.8%)    $149.8  $177.6    (15.6%)
     Loss before
      income taxes   ($9.0)  ($2.9)  (215.0%)    ($22.0)  ($3.5)   (531.1%)
 
     *Includes interest allocation
 
     Pinole Point Steel reported lower sales and a pre-tax loss in the fourth
 quarter and for the full year.  Sales were affected by inadequate steel
 deliveries from suppliers in the early part of the year, a softer West Coast
 building and construction market, and higher customer inventories.  The full
 year loss before income taxes was due to a higher cost of steel than could be
 recovered through increased prices to customers, lower volume, and higher
 utility costs of $0.9 million versus last year. The pre-tax loss included an
 allocation of consolidated interest expense totaling $8.8 million in fiscal
 2001 and $8.3 million in fiscal 2000.  The allocations were based on the debt
 associated with the original purchase of Pinole Point Steel and Pinole Point
 Steel's subsequent cash flow. In addition, the operation was affected by
 California energy curtailments, particularly in the fourth quarter, which
 disrupted production and increased costs.
 
     New Strategic Vision Outlined
     "Last summer, our senior management team began an important strategic
 planning process, which led us to redefine MSC's vision and operating model,"
 said Nadig.  "MSC's new strategic vision is to be a leading provider of
 materials-based solutions. The company will leverage its expertise in
 materials through relationships and a network of partners.  This will allow it
 to solve customer-specific problems by overcoming technical barriers and
 enhancing product performance.  MSC will differentiate itself through its
 strong customer orientation, knowledge of materials, a deep understanding of
 its markets, and by offering specific value propositions that create economic
 value that will be shared with its customers.
     "In the past, the company had a narrow view of its markets -- one that
 hampered its imagination and growth potential.  This new vision expands our
 view, which should result in a broader range of products and investment
 options," Nadig added.
     "The company's new solution provider strategy is being facilitated by a
 new skills transfer operating model," said Nadig.  "The operating model is
 characterized by a number of initiatives, such as sharing skills, knowledge,
 and technology across business units; sharing processes that emphasize ongoing
 strategy development, external relationships, and capabilities building; and
 promoting a culture and organization focused on creating value for
 shareowners.  We are focusing on five key skills transfer areas to enable our
 solution provider strategy: 1) solutions knowledge, 2) customer orientation,
 3) consultative selling, 4) partnering and acquisitions, and 5) e-business.
 Each of these skills require attitude and behavioral shifts, as well as
 ongoing education and training, in order to become part of MSC's culture. We
 are developing and implementing programs to communicate the vision and to
 recognize and reward employees for adopting the new culture and expanding
 their skills.
     "In conjunction with the new vision, we also took a hard look at the
 strategic position, growth, and EVA potential of each of our businesses,"
 Nadig continued.  "MSC will focus on those businesses with the greatest
 potential and either fix or find strategic alternatives for those that do not
 fit its new operating model.
     "Our overall goal is to change our mix of businesses.  We have been too
 heavily weighted in mature foundation businesses. These businesses will
 continue to be run efficiently and generate cash, while we change our focus to
 faster growing businesses on which we can build for the future.  Part of our
 success in achieving this goal will depend on developing alliances,
 partnerships and, where appropriate, our ability to make acquisitions that
 broaden our capabilities and skills so we can gain a presence in high-growth
 markets," Nadig explained.
     "In addition to performance and growth, MSC will increase its focus on
 options creation," Nadig added.  "We intend to invest in options in order to
 position MSC to have as many valuable opportunities for future growth as
 possible.  In essence, we believe there is value in increasing our flexibility
 -- to invest or disinvest when the time is right.  While it is difficult to
 predict the future, we will do our best to position MSC to win across a range
 of possible scenarios.
     "MSC is not the company it was a year ago," said Nadig.  "We have
 redefined our strategy and begun implementing a new operating model.  We also
 are re-evaluating our business portfolio and taking action to create
 additional value.  With EVA as our primary management tool and way to keep
 score, we believe that our actions will lead to new opportunities for
 profitable growth, which will create value for shareowners.
     "This is a time of substantial and promising change for MSC.  Many of the
 steps we have taken have been significant, some subtle, but we are emerging as
 a stronger company and more committed then ever to MSC's long-term success.
 As we begin fiscal 2002, we know that it all comes down to execution, and we
 will continue to do what is necessary to move the company's transformation
 forward.  I am confident in our ability to achieve our objectives," Nadig
 concluded.
 
     New Credit Facility Agreement
     The company also reported that it has amended its bank credit facility.
 The amendment reduces the size of the facility to $50.0 million and relaxes
 the financial covenants relating to net worth, debt to cash flow, and fixed
 charge coverage.  The company is in compliance with the covenants as amended.
 In addition, the amendment prohibits the company from paying dividends and
 repurchasing its stock, and places certain limitations on the company's
 ability to make acquisitions and investments.  The company will consider re-
 financing this facility later this year.
 
     Webcast of Year-End Results Conference Call
     MSC will hold a conference call to discuss its results on Tuesday,
 April 24, at 10:00 a.m. Central Time.  A Webcast of the call will be available
 over Vcall (at www.vcall.com) and CCBN's Investor Distribution Network.
 (Individual investors can listen to the call through CCBN's individual
 investor center at www.companyboardroom.com, or by visiting any of the
 investor sites in CCBN's Individual Investor Network -- such as America
 Online's Personal Finance Channel and Fidelity.com.  Institutional investors
 can access the call via CCBN's password-protected event management site,
 StreetEvents, at www.streetevents.com.)  The Webcast will be archived on all
 of these sites for 30 days.
 
     Material Sciences Corporation is a leading provider of material-based
 solutions for industrial and consumer applications around the world.  It uses
 its expertise in materials, which it leverages through relationships and a
 network of partners, to solve customer-specific problems, overcoming technical
 barriers and enhancing performance.  MSC will differentiate itself on the
 basis of its strong customer orientation, knowledge of materials, deep
 understanding of its markets, and the offer of specific value propositions
 that define how it will create and share economic value with its customers.
 The company's stock is traded on the New York Stock Exchange under the symbol
 MSC and is included in the Standard & Poor's SmallCap 600 Index.
 
     Forward-looking statements in this press release are qualified by the
 cautionary language in Part II, Item 7 of the company's 2000 annual report on
 Form 10-K, filed with the Securities and Exchange Commission, pursuant to the
 Securities Exchange Act of 1934, as amended.  Uncertainties and factors that
 could cause forward-looking statements to differ materially from those set
 forth or implied herein include, but are not limited to, successful
 development and introduction of new products and technologies; competitive
 factors; changes in the business environment, including the automobile,
 building and construction and durable goods industries; increases in the
 prices of raw and other material inputs used by the company; adverse changes
 in government laws and regulations; and environmental risks associated with
 the company's manufacturing operations.
 
     For further information on Material Sciences by Fax, dial 1-800-PRO-INFO,
 ext. MSC.  Information about Material Sciences through the Internet is
 available at  www.matsci.com and www.frbinc.com.
 
 
 
                           MATERIAL SCIENCES CORPORATION
                      CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
                       (In thousands, except per share data)
 
                                                   Three Months Ended
                                                   February 28 or 29,
                                                                       Percent
                                               2001         2000        Change
 
     Net Sales                               $103,482     $121,469      -14.8%
     Cost of Sales                             91,575       99,652       -8.1%
     Gross Profit                             $11,907      $21,817      -45.4%
     Selling, General and Administrative
      Expenses                                 16,791       14,768       13.7%
     Income from Operations                   $(4,884)      $7,049     -169.3%
     Other (Income) and Expense:
        Interest Expense, Net                  $2,479       $2,186       13.4%
        Equity in Results of Joint
         Ventures                                 194           47      312.8%
        Other, Net                               (499)         160     -411.9%
          Total Other Expense, Net             $2,174       $2,393       -9.2%
 
     Income (Loss) Before Provision
      (Benefit) for Income Taxes              $(7,058)      $4,656     -251.6%
     Provision (Benefit) for Income Taxes      (2,562)         973     -363.3%
     Net Income (Loss)                        $(4,496)      $3,683     -222.1%
 
     Basic Net Income (Loss) Per Share         $(0.33)       $0.25     -232.0%
 
     Diluted Net Income (Loss) Per Share       $(0.33)       $0.25     -232.0%
 
     Weighted Average Number of Common
      Shares Outstanding
        Used for Basic Net Income (Loss)
         Per Share                             13,693       14,862
     Dilutive Shares                                -          155
     Weighted Average Number of Common
      Shares Outstanding
        Plus Dilutive Shares                   13,693       15,017
 
 
                           MATERIAL SCIENCES CORPORATION
                      CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
                       (In thousands, except per share data)
 
                                                  Twelve Months Ended
                                                   February 28 or 29,
                                                                       Percent
                                               2001         2000        Change
 
     Net Sales                               $481,976     $507,014       -4.9%
     Cost of Sales                            405,797      408,406       -0.6%
     Gross Profit                             $76,179      $98,608      -22.7%
     Selling, General and Administrative
      Expenses                                 68,282       62,208        9.8%
     Income from Operations                    $7,897      $36,400      -78.3%
     Other (Income) and Expense:
        Interest Expense, Net                  $9,662       $9,060        6.6%
        Equity in Results of Joint
         Ventures                                 405        1,629      -75.1%
        Other, Net                               (334)         369     -190.5%
          Total Other Expense, Net             $9,733      $11,058      -12.0%
 
     Income (Loss) Before Provision
      (Benefit) for Income Taxes              $(1,836)     $25,342     -107.2%
     Provision (Benefit) for Income Taxes      (1,152)       8,627     -113.4%
     Net Income (Loss)                          $(684)     $16,715     -104.1%
 
     Basic Net Income (Loss) Per Share         $(0.05)       $1.11     -104.5%
 
     Diluted Net Income (Loss) Per Share       $(0.05)       $1.10     -104.5%
 
     Weighted Average Number of Common
      Shares Outstanding
        Used for Basic Net Income (Loss)
         Per Share                             14,027       15,070
     Dilutive Shares                                -          130
     Weighted Average Number of Common
      Shares Outstanding
        Plus Dilutive Shares                   14,027       15,200
 
 
 
                           MATERIAL SCIENCES CORPORATION
                            CONSOLIDATED BALANCE SHEETS
 
                                  (In thousands)
 
                                                     Feb. 28,         Feb. 29,
                                                       2001             2000
     Assets:
       Current Assets:
         Cash and Cash Equivalents                    $2,655            $4,223
         Receivables, Less Reserves                   52,827            58,331
         Income Taxes Receivable                       1,637                 -
         Prepaid Expenses                              3,049             2,418
         Inventories                                  67,175            60,251
         Prepaid Taxes                                 3,004             4,209
 
           Total Current Assets                     $130,347          $129,432
 
       Property, Plant and Equipment                $386,297          $373,519
       Accumulated Depreciation and
        Amortization                                (179,490)         (152,417)
 
           Net Property, Plant and
            Equipment                               $206,807          $221,102
 
       Other Assets:
         Investment in Joint Ventures                $23,491           $20,306
         Intangible Assets, Net                       22,062            23,980
         Other                                         2,236             2,475
 
           Total Other Assets                        $47,789           $46,761
 
           Total Assets                             $384,943          $397,295
 
     Liabilities:
       Current Liabilities:
         Current Portion of Long-Term Debt            $8,315            $2,688
         Accounts Payable                             42,233            50,667
         Accrued Expenses                             23,537            27,452
 
           Total Current Liabilities                 $74,085           $80,807
 
       Long-Term Liabilities:
         Deferred Income Taxes                       $18,019           $21,486
         Long-Term Debt, Less Current
          Portion                                    129,978           120,896
         Other                                        14,249            15,707
 
           Total Long-Term Liabilities              $162,246          $158,089
 
     Shareowners' Equity:
       Preferred Stock                                    $-                $-
       Common Stock                                      354               347
       Additional Paid-In Capital                     63,334            59,164
       Treasury Stock at Cost                        (34,813)          (22,074)
       Retained Earnings                             120,861           121,545
       Accumulated Other Comprehensive Loss           (1,124)             (583)
 
           Total Shareowners' Equity                $148,612          $158,399
 
           Total Liabilities and
            Shareowners' Equity                     $384,943          $397,295
 
 
 
                           MATERIAL SCIENCES CORPORATION
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                  (In thousands)
 
                                        Three Months Ended  Twelve Months Ended
                                        February 28 or 29,   February 28 or 29,
                                            2001     2000      2001      2000
     Cash Flows From:
     Operating Activities:
     Net Income (Loss)                    $(4,496)  $3,683     $(684)  $16,715
     Adjustments to Reconcile Net Income
      (Loss) to Net Cash Provided by
         Operating Activities:
         Depreciation and Amortization      7,466    6,844    30,334    29,632
         Provision (Benefit) for Deferred
          Income Taxes                       (948)     476    (1,906)    2,620
         Compensatory Effect of Stock
          Plans                               695      641     2,794     2,397
         Other, Net                           207      126       311     1,693
             Operating Cash Flow Prior to
              Changes in Assets and
              Liabilities                  $2,924  $11,770   $30,849   $53,057
 
     Changes in Assets and Liabilities:
         Receivables                       $4,920  $(1,406)   $5,504   $(5,953)
         Income Taxes Receivable           (1,268)       -    (1,637)      968
         Prepaid Expenses                   2,170      575      (631)     (291)
         Inventories                        2,222   (1,802)   (6,924)   (7,390)
         Accounts Payable                  (1,152)    (630)   (8,434)    2,451
         Accrued Expenses                   3,961    4,425    (3,915)    4,799
         Other, Net                        (1,077)   1,092    (2,205)    1,493
             Cash Flow from Changes in
              Assets and Liabilities       $9,776   $2,254  $(18,242)  $(3,923)
                Net Cash Provided by
                 Operating Activities     $12,700  $14,024   $12,607   $49,134
 
     Investing Activities:
     Capital Expenditures, Net            $(3,455) $(2,575) $(13,205) $(13,864)
     Acquisitions, Net of Cash Acquired         -      (94)     (176)   (1,016)
     Investment in Joint Ventures            (958)    (595)   (3,759)   (1,253)
     Distribution from Joint Ventures         169        -       169         -
     Other                                    (95)    (280)     (457)     (957)
                Net Cash Used in
                 Investing Activities     $(4,339) $(3,544) $(17,428) $(17,090)
 
     Financing Activities:
     Net Proceeds (Payments) Under Lines
      of Credit                           $(5,700) $(5,600)  $17,300  $(17,000)
     Payments of Debt                        (134)    (102)   (2,591)   (1,980)
     Notes Issued for Acquisitions              -        -      (100)     (600)
     Purchase of Treasury Stock                 -   (3,789)  (12,739)  (11,583)
     Issuance of Common Stock                 128      247     1,383     2,115
                Net Cash Provided by
                 (Used in) Financing
                 Activities               $(5,706) $(9,244)   $3,253  $(29,048)
 
     Net Increase (Decrease) in Cash       $2,655   $1,236   $(1,568)   $2,996
     Cash and Cash Equivalents at
      Beginning of Period                       -    2,987     4,223     1,227
     Cash and Cash Equivalents at End of
      Period                               $2,655   $4,223    $2,655    $4,223
 
     Supplemental Cash Flow Disclosures:
         Notes Issued for Acquisitions         $-       $-      $100      $600
         Cash Portion of Acquisitions and
          Related Costs                         -       94       176     1,016
         Total Consideration Paid for
          Acquisitions                         $-      $94      $276    $1,616
 
     The Changes in Assets and Liabilities above for the three and twelve
     months ended February 28, 2001 and February 29, 2000 are net of assets and
     liabilities acquired.
 
 
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 SOURCE  Materials Sciences Corporation