10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2013

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 incorporation or organization)	(IRS employer identification number)
2200 East Pratt Boulevard
Elk Grove Village, Illinois	60007
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (847) 439-2210

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of October 1, 2013, there were 10,322,055 outstanding shares of common stock, $0.02 par value.

MATERIAL SCIENCES CORPORATION

FORM 10-Q

For the Quarter Ended August 31, 2013

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

(a) Condensed financial statements of Material Sciences Corporation and Subsidiaries

2

Condensed Consolidated Statements of Operations (Unaudited)

Material Sciences Corporation and Subsidiaries

	Three Months Ended					Six Months Ended
	August 31,					August 31,
(In thousands, except per share data)	2013		2012			2013		2012
Net Sales	$	27,553	$	29,927		$	56,273	$	64,761
Cost of Sales		21,553		23,374			44,185		49,653
Gross Profit		6,000		6,553			12,088		15,108
Selling, General and Administrative Expenses		4,577		4,985			9,477		10,443
Gain on Sale of Assets		—		3,216			—		3,216
Income from Operations		1,423		4,784			2,611		7,881
Other Income, Net:
Interest Income, Net		14		12			23		6
Equity in Results of Joint Venture		78		67			116		115
Rental Income		64		348			93		629
Other, Net		11		(40	)		47		(34	)
Total Other Income, Net		167		387			279		716
Income from Operations Before Provision for Income Taxes		1,590		5,171			2,890		8,597
Provision for Income Taxes		576		1,918			507		3,126
Net Income	$	1,014	$	3,253		$	2,383	$	5,471
Basic Net Income Per Share	$	0.10	$	0.31		$	0.23	$	0.53
Diluted Net Income Per Share	$	0.10	$	0.31		$	0.23	$	0.52
Weighted Average Number of Common Shares Outstanding
Used for Basic Net Income Per Share		10,271		10,332			10,244		10,393
Dilutive Shares		162		119			163		117
Weighted Average Number of Common Shares Outstanding
Plus Dilutive Shares		10,433		10,451			10,407		10,510
Outstanding Common Stock Options Having No Dilutive Effect		304		407			280		412

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

Material Sciences Corporation and Subsidiaries

	Three Months Ended						Six Months Ended
	August 31,						August 31,
	2013			2012			2013			2012
Net Income	$	1,014		$	3,253		$	2,383		$	5,471
Other Comprehensive Income:
Foreign Currency Translation Adjustments		(110	)		(92	)		(187	)		(1,036	)
Pension/Postretirement Adjustments, Net of Benefit for Income Taxes of $55, $82, $149 and $143, Respectively		152			133			241			232
Comprehensive Income	$	1,056		$	3,294		$	2,437		$	4,667

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Condensed Consolidated Balance Sheets

Material Sciences Corporation and Subsidiaries

	August 31,			February 28,
(In thousands)	2013			2013
	(unaudited)			(audited)
Assets:
Current Assets:
Cash and Cash Equivalents	$	38,470		$	37,508
Restricted Cash		1,123			—
Receivables, Less Reserves and Allowances of $523 and $489, Respectively		16,924			17,675
Income Taxes Receivable		55			1,392
Prepaid Expenses		1,054			554
Inventories		24,176			24,944
Short Term Deferred Tax Assets		3,925			4,191
Total Current Assets		85,727			86,264
Property, Plant and Equipment		123,449			120,586
Accumulated Depreciation		(93,427	)		(91,426	)
Net Property, Plant and Equipment		30,022			29,160
Other Assets:
Investment in Joint Venture		2,209			2,394
Long Term Deferred Tax Assets		8,697			9,147
Other		215			141
Total Other Assets		11,121			11,682
Total Assets	$	126,870		$	127,106
Liabilities:
Current Liabilities:
Accounts Payable	$	11,960		$	11,061
Accrued Payroll Related Expenses		2,609			2,594
Accrued Expenses		4,352			5,799
Total Current Liabilities		18,921			19,454
Long-Term Liabilities:
Pension and Postretirement Liabilities		5,511			7,344
Long-Term Incentives		1,594			2,652
Other		2,615			2,720
Total Long-Term Liabilities		9,720			12,716
Commitments and Contingencies		—			—
Shareowners’ Equity:
Preferred Stock		—			—
Common Stock		383			381
Additional Paid-In Capital		81,943			81,089
Treasury Stock at Cost		(76,756	)		(76,756	)
Retained Earnings		95,429			93,046
Accumulated Other Loss		(2,770	)		(2,824	)
Total Shareowners’ Equity		98,229			94,936
Total Liabilities and Equity	$	126,870		$	127,106

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Condensed Consolidated Statements of Cash Flows (Unaudited)

Material Sciences Corporation and Subsidiaries

	Six Months Ended
	August 31,
(In thousands)	2013			2012
Cash Flows From:
Operating Activities:
Net Income	$	2,383		$	5,471
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation, Amortization and Accretion		1,962			2,450
Equity in Results of Joint Venture		(116	)		(115	)
Deferred Income Taxes		567			2,884
Gain on Sales of Assets		—			(3,216	)
Compensatory Effect of Stock Plans		401			292
Changes in Assets and Liabilities:
Receivables		772			2,015
Income Taxes Receivable		1,367			(1,489	)
Prepaid Expenses		(500	)		(429	)
Inventories		792			(1,134	)
Accounts Payable		1,641			(1,152	)
Accrued Expenses		(1,466	)		(904	)
Pension and Postretirement Liabilities		(1,833	)		(692	)
Other, Net		(754	)		(93	)
Net Cash Provided by Operating Activities		5,216			3,888
Investing Activities:
Capital Expenditures		(3,536	)		(2,060	)
Restricted Cash		(1,123	)		—
Investment in Research Entity		(105	)		—
Proceeds from Sale of Assets		—			9,180
Net Cash Provided by (Used In) Investing Activities		(4,764	)		7,120
Financing Activities:
Purchases of Treasury Stock		—			(1,999	)
Issuance of Common Stock		455			3
Net Cash Provided by ( Used In) Financing Activities		455			(1,996	)
Effect of Exchange Rate Changes on Cash		55			(48	)
Net Increase in Cash and Cash Equivalents		962			8,964
Cash and Cash Equivalents at Beginning of Period		37,508			28,201
Cash and Cash Equivalents at End of Period	$	38,470		$	37,165
Non-Cash Transactions:
Capital Expenditures in Accounts Payable at End of Period	$	424		$	634
Treasury Stock Purchases in Accrued Liabilities at Period-End	$	—		$	14
Supplemental Cash Flow Disclosures:
Interest Paid	$	12		$	16
Income Taxes Paid (Refunded), Net	$	(1,415	)	$	1,827

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

MATERIAL SCIENCES CORPORATION and SUBSIDIARIES

The financial information as of August 31, 2013, and for the three and six months ended August 31, 2013 and 2012, has not been audited by our independent registered public accounting firm. In the opinion of Material Sciences Corporation and Subsidiaries (the “Company,” “we,” “our,” “us” or “MSC”), the information reflects all adjustments (consisting of only normal, recurring adjustments) necessary for a fair presentation of the information at that date and for those periods. The financial information contained in this report should be read in conjunction with the Company’s Annual Report on Form 10-K (“Form 10-K”) filed with the Securities and Exchange Commission on May 6, 2013, for the fiscal year ended February 28, 2013. A reclassification has been made to the prior years’ consolidated financial statements to conform to the 2014 presentation—“Pension and Postretirement Liabilities” was reclassified from “Other, Net” in the Condensed Consolidated Statements of Cash Flows.

(1) Joint Venture. In November 2000, a subsidiary of MSC formed a joint venture with Tekno S.A. (“Tekno”) for the manufacture and sale of Quiet Steel^® and disc brake noise damping material for the South American market. The Company includes its portion of the joint venture’s results in the Condensed Consolidated Statements of Operations under Equity in Results of Joint Venture. The Equity in Results of Joint Venture was income of $78,000 and $116,000 for the three and six months ended August 31, 2013, respectively, compared with $67,000 and $115,000 for the three and six months ended August 31, 2012.

(2) Preferred Stock. Preferred Stock, $1.00 Par Value; 10,000,000 Shares Authorized; 1,000,000 Designated Series B Junior Participating Preferred; None Issued.

(3) Common Stock. Common Stock, $0.02 Par Value; 40,000,000 Shares Authorized; 19,140,186 Shares Issued and 10,316,014 Shares Outstanding as of August 31, 2013, and 19,058,923 Shares Issued and 10,198,121 Shares Outstanding as of February 28, 2013.

(4) Treasury Stock. The Company’s Board of Directors authorized the repurchase of 1,000,000 shares of the Company’s common stock on September 14, 2011, and again on September 27, 2012. The shares may be repurchased from time-to-time on the open market, subject to market conditions and other factors, and generally will be funded with internally generated cash. The Company did not repurchase any shares under the September 2011 or September 2012 authorizations during the six months ended August 31, 2013. At August 31, 2013, there were 364,476 shares available for purchase under the September 2011 authorization and 1,000,000 shares available for purchase under the September 2012 authorization.

	Shares		Cost of Shares Purchased (in thousands)		Average Price per Share
Treasury Stock as of February 28, 2013		8,824,172	$	76,756	$	8.70
Repurchases During the Six Months Ended August 31, 2013		—		—
Treasury Stock as of August 31, 2013		8,824,172	$	76,756	$	8.70

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On February 15, 2013, the Company entered into a written trading plan to purchase up to 364,476 shares under Rule 10b5-1 of the Exchange Act as part of the existing share repurchase program. The plan will expire on February 15, 2014, or when all the shares have been repurchased, whichever occurs first.

(5) Commodity Contracts. MSC is exposed to certain risks related to ongoing business operations. We use derivative instruments with the objective of managing our financial and operational exposure arising from these risks: primarily commodity price risk. From time-to-time in the ordinary course of business, the Company enters into purchase contracts for procuring nickel carbonate, zinc shot and natural gas, which are commodities used in our manufacturing processes. MSC maintains a commodity forward purchase policy. This policy seeks to ensure that, at any time, the majority of the expected consumption over the next 12 months is secured under a purchase contract at a pre-determined price. When MSC enters into these contracts, it applies the Normal Purchase/Normal Sale election, which excludes the contracts from being accounted for as derivative instruments at fair value for as long as they qualify for the election.

At August 31, 2013, we did not have any commodity contracts that we accounted for at fair value.

(6) Cash, Cash Equivalents and Restricted Cash. The Company maintains its cash balances in interest-bearing bank accounts and highly liquid investments with maturities of three months or less. At August 31, 2013, MSC had $27.0 million of U.S. Treasury bills and $11.5 million of cash.

We have issued two letters of credit in connection with our Midco environmental liability and a workers’ compensation insurance obligation. The Midco letter of credit is $1.0 million and the insurance letter of credit is $0.1 million. The letters of credit are secured by restricted cash deposited with JPMorgan Chase Bank. At August 31, 2013, we had restricted cash of $1.1 million.

(7) Inventory. Inventories consist of the following:

(in thousands)	August 31, 2013		February 28, 2013
Raw Materials	$	9,230	$	8,802
Finished Goods		14,946		16,142
Total Inventories	$	24,176	$	24,944

(8) Long-Term Incentives. The Long-Term Incentives balances of $1.6 million and $2.7 million at August 31, 2013, and February 28, 2013, respectively, consisted entirely of Phantom Stock Liability. Phantom Stock Liability represents the value of long-term phantom stock units held by members of the Board of Directors. The units were awarded each quarter from June 2004 through June 2012 and are redeemed in cash after five years at the average of the closing prices for the preceding 30 trading days. The liability is adjusted to the current market value each quarter.

8

We also carry a current liability of $1.4 million (at the August 31, 2013 market value) for phantom stock units which will be redeemed within one year. This liability is included in Accrued Expenses within Current Liabilities.

(9) Significant Customers. Due to the concentration in the automotive industry, management believes that sales to individual automotive customers—both Tier 1 and Tier 2 (including US Steel)—are significant. The following table shows sales to the Company’s major customers as a percentage of consolidated net sales for the three and six months ended August 31, 2013 and 2012.

	% of Consolidated Net Sales for the Three Months Ended August 31,						% of Consolidated Net Sales for the Six Months Ended August 31,
Customer	2013			2012			2013			2012
Chrysler		19	%		21	%		20	%		20	%
US Steel		14	%		15	%		13	%		15	%

The following table shows gross accounts receivable from these significant customers as a percentage of total consolidated gross accounts receivable as of August 31, 2013, and February 28, 2013.

	% of Consolidated Gross Accounts Receivable
Customer	August 31, 2013			February 28, 2013
Chrysler		18	%		18	%
US Steel		7	%		12	%

(10) Income Taxes. The Company evaluates its deferred income taxes on a quarterly basis to determine if valuation allowances are required, in full or in part. This includes considering available positive and negative evidence, such as past operating results, the existence of cumulative losses in the most recent fiscal years and our forecast of future taxable income on a jurisdiction-by-jurisdiction basis. In determining future taxable income, we review the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. At August 31, 2013, MSC had valuation allowance relating to certain state net operating losses.

The Company estimates that it is reasonably possible that the total amount of unrecognized tax benefits of $0.5 million at August 31, 2013, will significantly change during the next 12 months. The estimated range is a decrease of zero to $0.2 million.

For the three and six months ended August 31, 2013, MSC’s effective income tax rate for continuing operations was 36.2% and 17.5%, respectively, compared with 37.1% and 36.4%, respectively in the same periods last year. The lower rate in the six-month period ended August 31, 2013, was primarily due to filing amended returns to claim foreign tax credits.

(11) Retirement and Savings Plans. The Company has one defined contribution retirement plan qualifying under the Internal Revenue Code Section 401(k): The Material Sciences Savings & Investment Plan (the “SIP”). All MSC employees can elect to participate in the SIP.

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MSC also has non-contributory defined benefit pension plans, all of which are frozen, and other postretirement plans for certain of its employees. The following table provides the components of net periodic benefit cost for the Company’s defined benefit plans and other post-retirement plans.

	Pension Benefits						Other Benefits
(in thousands)	Three Months Ended August 31,
	2013			2012			2013			2012
Service Cost	$	—		$	—		$	6		$	6
Interest Cost		137			146			19			19
Amortization of Unrecognized Prior Service Cost		—			—			(69	)		(69	)
Expected Return on Plan Assets		(163	)		(143	)		—			—
Amortization of Net Loss		150			164			50			49
Total Net Periodic Benefit Cost	$	124		$	167		$	6		$	5

	Pension Benefits						Other Benefits
(in thousands)	Six Months Ended August 31,
	2013			2012			2013			2012
Service Cost	$	—		$	—		$	11		$	11
Interest Cost		273			291			38			39
Amortization of Unrecognized Prior Service Cost		—			—			(138	)		(138	)
Expected Return on Plan Assets		(326	)		(285	)		—			—
Amortization of Net Loss		299			327			101			98
Total Net Periodic Benefit Cost	$	246			333		$	12		$	10

MSC previously disclosed in the notes to its financial statements for the year ended February 28, 2013, that it expected to contribute $3.1 million—including $1.1 million of required minimum contributions and $2.0 million of additional contributions—toward its qualified and nonqualified defined benefit pension plans and $0.1 million toward its other post-retirement benefit plans other than pension plans in fiscal 2014. As of August 31, 2013, $1.6 million of contributions/payments have been made toward the pension plans and less than $0.2 million of net contributions/payments have been made to the other post-retirement plans, which is higher than expected due to higher than normal health care claims for certain retirees.

(12) Equity and Compensation Plans. The Company has one active equity award plan, the Material Sciences Corporation 2012 Incentive Compensation Plan (“2012 Plan”). There are 2,130,789 shares authorized under the 2012 Plan to provide stock options, restricted stock and other equity awards under various programs to both employees and non-employee directors. Non-qualified stock options generally vest over three years from the date of grant and expire between five and 10 years from the date of grant. Restricted stock awards generally vest over three to five years from the date of grant.

10

The Company also has one inactive equity award plan, the Material Sciences Corporation 2001 Compensation Plan for Non-Employee Directors (“2001 Directors Plan”). The 2001 Directors Plan expired on February 29, 2004, and no additional grants will be made under the plan. There were 3,537 stock options outstanding and exercisable under this plan at August 31, 2013.

Stock option activity during fiscal years 2012 and 2013 is listed below.

• In March 2012, 200,000 options with a Black-Scholes value of $4.24 were granted.

• In March 2013, 100,000 options with a Black-Scholes value of $4.70 were granted.

• In May 2013, 67,680 options were exercised.

There were 720,458 stock options outstanding, of which 220,458 were exercisable, at August 31, 2013.

In March 2013, the Company issued 2,100 shares of restricted stock in lieu of salary increases, which will vest over one year. In March 2012, MSC issued 5,900 shares of restricted stock in lieu of salary increases, of which 5,754 have vested and 146 were forfeited.

In May 2012, MSC issued 10,000 shares of restricted stock, which will vest over three years, to our CEO for meeting performance objectives in fiscal 2012.

In September 2012, MSC began making quarterly grants of restricted stock to the non-employee directors of the Company. Each grant to a director represents the number of shares of our common stock equal to the quotient of $8,500 divided by the closing sale price of our common stock on the day preceding the grant date. The shares will vest on the third anniversary of the grant date. Restricted shares granted are listed below:

Grant Date	Fiscal 2014		Fiscal 2013
March 1		5,028		—
June 1		6,069		—
September 1		—		5,754
December 1		—		5,676

(13) Segments. MSC operates in one segment based on how the Chief Operating Decision Maker views its business for evaluating performance and making operating decisions. The Company provides material-based solutions for acoustical and coated applications. The acoustical material-based solutions include multilayer composites consisting of metals, polymers, rubber and other coated materials used to manage noise and vibration. The coated metal material-based solutions include painted, electrogalvanized (“EG”), rubber and film coatings that provide protective, decorative and functional performance. The coatings are applied to coiled metal of various widths and thicknesses. MSC’s material-based solutions are designed to meet specific customer requirements for the transportation, appliance, building products, lighting and electronics markets. Some customers purchase products from several different product categories.

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We use a significant level of shared assets, and share resources for sales, general and administrative expense, and management across each of our product categories. Capital projects—whether for cost savings or generating incremental revenue—are evaluated individually based on estimated economic returns (e.g., net present value, return on investment), not based on related product line or geographic location. We use a centralized functional management structure, and share administration and production resources, to deliver individual products that, together, provide solutions to our customers.

	Three Months Ended August 31,										Six Months Ended August 31,
	2013					2012					2013					2012
($ in thousands)	$		%			$		%			$		%			$		%
Acoustical		17,942		65			19,360		65			36,363		65			39,283		61
Coated		9,611		35			10,567		35			19,910		35			25,478		39
Total Net Sales	$	27,553		100	%	$	29,927		100	%	$	56,273		100	%	$	64,761		100	%

Net sales of our domestic and foreign units are presented in the table below. No one foreign country comprised greater than 10% of consolidated net sales for any period presented.

($ in thousands)	Three Months Ended August 31,				Six Months Ended August 31,
	2013		2012		2013		2012
Domestic Net Sales	$	23,073	$	26,228	$	47,107	$	56,752
Foreign Net Sales		4,480		3,699		9,166		8,009
Total Net Sales	$	27,553	$	29,927	$	56,273	$	64,761

(14) Commitments and Contingencies. MSC is a party to various legal proceedings in connection with the remediation of certain environmental matters. The Company’s environmental accruals were approximately $1.1 million as of August 31, 2013, and $1.2 million as of February 28, 2013. Management does not believe that the outcome of its environmental legal proceedings will have a material adverse effect on its financial statements, given the accruals recorded as of August 31, 2013, and, where applicable, taking into account contributions from other potentially responsible parties. There are, however, a number of uncertainties. These include, without limitation, the eventual final cost of site cleanup, the discretionary authority of federal and state regulatory authorities in bringing enforcement actions and other factors that could affect the Company’s exposure.

On October 4, 2013, the Company received a letter from the electric utility serving its Walbridge, Ohio facility alleging that the facility had exceeded power consumption limits during a declared Emergency Curtailment Event (i.e., a period of time in which the utility can require that certain customers reduce electricity demand to avoid over-stressing the utility’s distribution or transmission infrastructure) in September 2013 (the “Emergency Curtailment Event”). Pursuant to the terms of its agreement with the utility, the Company has agreed to reduce its use of energy provided by the utility during an Energy Curtailment Event, subject to specified procedures, terms and conditions included in such agreement, in exchange for the utility’s issuance of program credits to the Company, which credits reduce the facility’s monthly payments for usage to the utility. In connection with the alleged failure by the Company to meet its obligations regarding the Emergency Curtailment Event, in October 2013 the utility assessed a penalty to the Company of approximately $2.4 million, substantially all of which represents a forfeiture of program credits issued to the Company during the prior 12 months. The Company plans to administratively challenge (i.e. appeal) the penalty at the Public Utilities Commission of Ohio and seek the elimination of the amount of such penalty. While the Company believes it has reasonable grounds to challenge the penalty assessed by the utility, there can be no assurance that the penalty will be eliminated, or reduced in any material respect. If the Company does not prevail in having the payment of the penalty withdrawn or significantly reduced, this would have a material adverse effect on the Company’s results of operations, financial position and cash flows.

MSC is also a party to various legal actions and customer disputes arising in the ordinary course of its business. These legal actions and customer disputes cover a broad variety of claims spanning MSC’s entire business. The Company believes that the resolution of these legal actions and customer disputes will not, individually or in the aggregate, have a material adverse effect on its results of operations, financial position or cash flows.

(15) Restructuring. During fiscal 2012, MSC recognized approximately $0.6 million in employee termination benefit and related expenses. All of the benefits were fully paid as of the end of the second quarter of fiscal 2013. There was no restructuring accrual as of August 31, 2013.

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(16) Sale of Elk Grove Village Building. In April 2011, after receiving authorization from the Board of Directors, management committed to a plan to sell the building located at 2200 East Pratt Boulevard in Elk Grove Village, Illinois (the “Facility”). This building houses our corporate offices and housed our coil coating assets before they were sold in April 2010.

On July 23, 2012, MSC began leasing a portion of the Facility to Main Steel Polishing Company, Inc. The lease includes approximately 240,000 square feet of the 280,000 square foot Facility. MSC entered into this lease to enhance the attractiveness of the Facility to potential buyers.

On August 31, 2012, MSC sold the Facility to Torburn Partners, Inc. (“Torburn”) for cash. The net proceeds from the sale were approximately $9.2 million, which reflects all selling costs and the executory costs related to the lease discussed above. The Company recognized a gain of approximately $3.2 million on the sale. MSC entered into a four-year lease with Torburn under which MSC continues to occupy approximately 35,000 square feet of office space in the Facility to house its corporate and domestic operations.

13

MATERIAL SCIENCES CORPORATION and SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and related notes, included in Item 1 of this Form 10-Q, and the audited Consolidated Financial Statements and related notes and the MD&A included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2013, filed on May 6, 2013 (“Form 10-K”), as well as the Company’s other filings with the Securities and Exchange Commission.

Executive Summary

Material Sciences Corporation and its subsidiaries (the “Company,” “MSC,” “we,” “our” or “us”) design, manufacture and market material-based solutions for acoustical and coated applications. The acoustical material-based solutions include multilayer composites consisting of metals, polymers, rubber and other coated materials used to manage noise and vibration. The coated metal material-based solutions include painted, electrogalvanized (“EG”), rubber and film coatings that provide protective, decorative and functional performance. The coatings are applied to coiled metal of various widths and thicknesses. MSC’s material-based solutions are designed to meet specific customer requirements for the transportation, appliance, building products, lighting and electronics markets. Some customers purchase products from several different product categories. The Company uses a significant level of shared assets, and share resources for sales, general and administrative expense, and management across each of our product categories.

We continue our efforts to expand existing relationships in Asia through our sales offices in Korea, Malaysia and China, and have an ongoing relationship with Hae Won Steel in Korea and Federal Iron Works in Malaysia for the production of our products.

As a part of our strategic planning process, management evaluates the strategic position, growth and economic value potential of our businesses with the objective of creating additional value for our shareholders. This planning process includes a review of organic growth opportunities, potential sales of assets, acquisitions of products or businesses, strategic partnerships, and optimum capital allocation. As a result of this process, during the second quarter of fiscal 2014, we entered into an exclusive licensing agreement with, and began investing in, Productive Research LLC, which owns proprietary technology surrounding lightweight metal composites.

Separately, we also received our first customer approvals to provide EG coatings for advanced high-strength steel. As we discussed in our Form 10-K, vehicle manufacturers are considering the use of high-strength steel as a means of achieving weight-reduction in their vehicles.

Results of Operations

Here is a summary of our consolidated financial performance:

	Three Months Ended August 31,									Six Months Ended August 31,
($ in thousands)	2013			2012			% Variance			2013			2012			% Variance
Net Sales	$	27,553		$	29,927			(7.9	)%	$	56,273		$	64,761			(13.1	)%
Gross Profit	$	6,000		$	6,553			(8.4	)%	$	12,088		$	15,108			(20.0	)%
% of Net Sales		21.8	%		21.9	%					21.5	%		23.3	%
Selling, General and Administrative	$	4,577		$	4,985			(8.2	)%	$	9,477		$	10,443			(9.3	)%
% of Net Sales		16.6	%		16.7	%					16.8	%		16.1	%

14

Sales

($ in thousands)	Net Sales for the Three Months Ended August 31,
Application	2013		2012		$ Variance			% Variance
Acoustical	$	17,942	$	19,360	($	1,418	)		(7.3	)%
Coated		9,611		10,567		(956	)		(9.0	)%
Total	$	27,553	$	29,927	($	2,374	)		(7.9	)%

($ in thousands)	Net Sales for the Six Months Ended August 31,
Application	2013		2012		$ Variance			% Variance
Acoustical	$	36,363	$	39,283	($	2,920	)		(7.4	)%
Coated		19,910		25,478		(5,568	)		(21.9	)%
Total	$	56,273	$	64,761	($	8,488	)		(13.1	)%

Comparison of Results of Operations for the Three Months Ended August 31, 2013 and 2012

Net sales in the quarter ended August 31, 2013 were $27.6 million, a decrease of $2.4 million from the prior fiscal year quarter.

Acoustical sales decreased $1.4 million from the prior year quarter. Body panel Quiet Steel^® sales for the quarter declined $0.7 million due to lower vehicle builds at Chrysler, Nissan and General Motors. Sales of engine-related products declined $0.5 million due to lower shipments of OE automotive products, mainly the result of end-of-life programs and lower vehicle and Class 8 truck production versus fiscal 2013. Brake sales were lower by $0.1 million primarily due to weaker aftermarket and OE brake sales in the North American market, partially offset by stronger OE brake sales in Europe and brake sales in Asia. Other acoustical sales, net of returns and allowances, decreased $0.1 million due to lower scrap sales related to lower production volumes.

Sales of coated products declined by $1.0 million. Fuel tank sales decreased by $1.2 million from the prior year; $0.9 million due to the continued conversion to plastic fuel tanks at Ford, and the remaining decline due to lower shipments of other fuel tank applications. Electrobrite^® sales declined $0.2 million due to lower shipments of appliance related products. These declines were partially offset by an increase of $0.6 million of EG sales —due to stronger shipments to one mill customer, partially offset by lower shipments to another mill customer which lost business to a competitor. Aluminum pretreatment sales, used in automotive applications, increased $0.2 million. Other coated sales, net of returns and allowances, declined by $0.4 million, driven primarily by a decline in other coated product sales and lower scrap sales due to lower production volumes.

15

Gross Profit

Second quarter gross profit was $6.0 million or 21.8% of net sales for fiscal year 2014 compared with $6.6 million or 21.9% of net sales for fiscal year 2013. The primary cause of the lower gross profit was our lower sales in both the acoustical and coated product groups.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses for the three months ended August 31, 2013, were $4.6 million, or 16.6% of net sales, compared with $5.0 million, or 16.7% of net sales, in the same period last year. SG&A expenses in the second quarter of fiscal 2014 were lower by $0.4 million due to lower director stock incentive expense—based on stock price—and lower management incentive expenses, partially offset by higher professional services expenses.

Gain on Sale of Assets

On August 31, 2012, MSC sold the Elk Grove Village Plant #7 to Torburn Partners, Inc. for cash. The net proceeds from the sale were approximately $9.2 million. The Company recognized a gain of approximately $3.2 million on the sale.

Total Other Income, Net

Total other income, net was $0.2 million for the three months ended August 31, 2013, and $0.4 million for the three months ended August 31, 2012. A decrease in rental income due to the sale of the Elk Grove Village building was partially offset by increases in foreign exchange and joint venture income.

Income Taxes

The Company evaluates its deferred income taxes on a quarterly basis to determine if valuation allowances are required, in full or in part. This includes considering available positive and negative evidence, such as past operating results, the existence of cumulative losses in the most recent fiscal years and our forecast of future taxable income on a jurisdiction-by-jurisdiction basis. In determining future taxable income, we review the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. At August 31, 2013, MSC had a valuation allowance relating to certain state net operating losses. The Company estimates that it is reasonably possible that the total amount of unrecognized tax benefits of $0.5 million at August 31, 2013, will significantly change during the next 12 months. The estimated range is a decrease of zero to $0.2 million.

For the three months ended August 31, 2013, MSC’s effective income tax rate for continuing operations was 36.2% compared with 37.1% in the same period last year.

Comparison of Results of Operations for the Six Months Ended August 31, 2013 and 2012

Net sales in the six months ended August 31, 2013, were $56.3 million, a decrease of $8.5 million from the prior fiscal year period.

Acoustical sales decreased $2.9 million from the prior year period. Body panel Quiet Steel sales declined $1.1 million due to lower vehicle builds at Chrysler, Nissan and General Motors. Sales of engine related products declined $1.3 million due to lower shipments of OE automotive products, mainly the result of end-of-life programs and lower vehicle and Class 8 truck production versus fiscal 2013. Brake sales were lower by $0.6 million primarily due to weaker aftermarket and OE brake sales in the North American market, partially offset by higher OE brake sales in Europe and increased brake sales in Asia. Other acoustical sales, net of returns and allowances, increased $0.1 million driven by higher sales of disk drive-related products.

16

Sales of coated products decreased $5.6 million. Fuel tank sales decreased by $2.7 million from the prior year, primarily due to the continued conversion to plastic fuel tanks at Ford. Sales of EG material declined $2.7 million, principally due to lower sales to one of our steel mill customers, which lost sales to a competitor. Electrobrite sales declined $0.2 million due to lower shipments of appliance-related products. These declines were partially offset by an increase of $1.0 million of aluminum pretreatment sales used in automotive applications. Other coated sales, net of returns and allowances, declined by $1.0 million, driven by a decline of $0.5 million in other coated product sales and a decrease of $0.5 million in scrap sales due to lower production volumes.

Gross Profit

Gross profit for the six months ended August 31, 2013, was $12.1 million, or 21.5% of net sales, compared to $15.1 million, or 23.3% or net sales, for the same period in fiscal year 2013. The decline of $3.0 million was primarily due to lower sales and the higher operating cost associated with lower facility utilization. In addition, scrap sales declined due to lower production volume.

Selling, General and Administrative Expenses

SG&A expenses were $9.5 million, or 16.8% of net sales, for the six months ended August 31, 2013, compared to $10.4 million, or 16.1% of net sales, in the same period last year. The decrease in expenses was principally due to lower management incentive expenses and director stock incentive expenses—based on stock price—as well as lower facility expenses due to the sale of the Elk Grove Village building and lower product development costs. These decreases were partially offset by higher employee-related expenses from higher staffing levels in sales and marketing, and higher professional services expenses.

Gain on Sale of Assets

On August 31, 2012, MSC sold the Elk Grove Village Plant #7 to Torburn Partners, Inc. for cash. The net proceeds from the sale were approximately $9.2 million. The Company recognized a gain of approximately $3.2 million on the sale.

Total Other Income, Net

Total other income, net for the six months ended August 31, 2013, was $0.3 million compared with $0.7 million in the same period of fiscal 2013. The decrease was primarily due to lower rental income due to the sale of the Elk Grove Village building, partially offset by foreign exchange gains.

Income Taxes

The Company estimates that it is reasonably possible that the total amount of unrecognized tax benefits of $0.5 million at August 31, 2013, will significantly change during the next 12 months. The estimated range is a decrease of zero to $0.2 million.

For the six months ended August 31, 2013, MSC’s effective income tax rate for continuing operations was 17.5%, compared with 36.4% in the same period last year. The lower rate in the period ended August 31, 2013, was primarily due to filing amended returns to claim foreign tax credits.

17

Liquidity and Capital Resources

We have historically financed our operations with funds generated from operating activities, borrowings under credit facilities and sales of various assets. We believe that our cash on hand and cash generated from operations will be sufficient to fund our operations and meet our working capital needs for the foreseeable future.

During the first six months of fiscal 2014, we generated $5.1 million of cash from operating activities compared with $3.9 million during the first six months of last fiscal year. The increase was primarily because:

• We generated $0.8 million in cash by reducing inventory during the first six months of fiscal 2014 because we began the year with higher inventory levels. We used $1.1 million of cash increasing inventory in the same prior year period, resulting in a $1.9 million increase in cash when comparing the two periods.

• Cash generated from accounts payable was $1.6 million in the first six months of fiscal 2014, compared with cash used of $1.2 million in the prior year period. The change of $2.7 million is due to normal changes in accounts payable related to changes in production activities.

• Income taxes receivable decreased $1.4 million in the first six months of fiscal 2014 principally due to the receipt of an income tax refund of $1.5 million. In the first six months of fiscal 2013, income taxes receivable increased $1.5 million, resulting in a $2.9 million increase in cash generated when comparing the two periods. The tax refund was principally due to the tax loss on the sale of the Elk Grove Village building.

These increases were partially offset by:

• Net income after adjustment for noncash items decreased $2.6 million from the prior year period.

• Cash generated from accounts receivable activities in the current year period was $1.2 million less than in the prior year period due to reduced sales in the current period.

• Accrued expenses and other net assets and liabilities caused a $2.5 million decrease in cash due to higher payments of management incentives, payment of a previously accrued workers’ compensation claim, higher contributions to defined benefit pension plans, and a reduction in phantom stock liability.

In the first six months of fiscal 2014, we invested $3.5 million in capital improvement projects, compared with $2.1 million in the same period last year. The increase was primarily attributable to additional investments for production equipment at our Walbridge, Ohio facility to broaden our production capabilities and improve efficiency. We invested $1.1 million in restricted cash to support two letters of credit. We also made an initial quarterly equity investment of $0.1 million in Productive Research LLC that owns proprietary technology surrounding lightweight metal composites for use in the transportation industry—the investment is included in Other under Other Assets in the Condensed Consolidated Balance Sheets. In fiscal 2013, we generated $9.2 million from the sale of our Elk Grove Village building.

In the first six months of fiscal 2014, we did not repurchase any of our common stock compared with $2.0 million of repurchases in the prior year period. In May 2013, key employees exercised approximately 68,000 stock options, generating approximately $0.5 million of cash.

18

Our Board of Directors authorized the repurchase of 1,000,000 shares of the Company’s common stock on September 14, 2011 and again on September 27, 2012. The shares may be repurchased from time-to-time on the open market, subject to market conditions and other factors, and generally will be funded with internally generated cash. The Company did not repurchase any shares under the September 2011 or September 2012 authorizations during the three months ended August 31, 2013. At August 31, 2013, there were 364,476 shares available for purchase under the September 2011 authorization and 1,000,000 shares available for purchase under the September 2012 authorization.

MSC is a party to various legal proceedings in connection with the remediation of certain environmental matters. The Company’s environmental reserves were approximately $1.1 million at August 31, 2013, and $1.2 million at February 28, 2013. Refer to Note 14 of the Notes to the Condensed Consolidated Financial Statements entitled “Commitments and Contingencies” for additional information.

On October 4, 2013, the Company received a letter from the electric utility serving its Walbridge, Ohio facility alleging that the facility had exceeded power consumption limits during a declared Emergency Curtailment Event (i.e., a period of time in which the utility can require that certain customers reduce electricity demand to avoid over-stressing the utility’s distribution or transmission infrastructure) in September 2013 (the “Emergency Curtailment Event”). Pursuant to the terms of its agreement with the utility, the Company has agreed to reduce its use of energy provided by the utility during an Energy Curtailment Event, subject to specified procedures, terms and conditions included in such agreement, in exchange for the utility’s issuance of program credits to the Company, which credits reduce the facility’s monthly payments for usage to the utility. In connection with the alleged failure by the Company to meet its obligations regarding the Emergency Curtailment Event, in October 2013 the utility assessed a penalty to the Company of approximately $2.4 million, substantially all of which represents a forfeiture of program credits issued to the Company during the prior 12 months. The Company plans to administratively challenge (i.e. appeal) the penalty at the Public Utilities Commission of Ohio and seek the elimination of the amount of such penalty. While the Company believes it has reasonable grounds to challenge the penalty assessed by the utility, there can be no assurance that the penalty will be eliminated, or reduced in any material respect. If the Company does not prevail in having the payment of the penalty withdrawn or significantly reduced, this would have a material adverse effect on the Company’s results of operations, financial position and cash flows.

Contractual Obligations

As of August 31, 2013, there were no significant changes to the contractual obligations table presented in our Form 10-K.

Critical Accounting Policies

We have identified significant accounting policies that—as a result of the judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved—could result in material changes to our financial condition or results of operations under different conditions or using different assumptions. Our most critical accounting policies, to which there have been no changes, are related to the following areas: revenue recognition, allowance for doubtful accounts, inventory, long-lived assets, income taxes, environmental reserves and defined benefit retirement plans. Details on our use of these policies and the related estimates are described fully in our Form 10-K.

Cautionary Statement Concerning Forward-Looking Statements

The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors and shareowners can better understand a company’s future prospects and make informed investment decisions. This Form 10-Q contains forward-looking statements that include, without limitation, information about our anticipated results based on our plans and assumptions. We have tried, wherever possible, to identify these statements by using words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “will,” “plans,” “believes” and similar words and terms in connection with any discussion of future operating or financial performance.

Achievement of future results is subject to risks, uncertainties and assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from what we anticipate, estimate or project in this Form 10-Q. Many of the factors that could cause this are discussed in detail in Part I, Item 1A, “Risk Factors” of our Form 10-K.

19

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. This discussion of potential risks and uncertainties is by no means complete but is designed to highlight important factors that may affect our financial condition or results of operations. Other sections of this Form 10-Q may include additional factors that could have an adverse impact on our business and financial performance. In addition, we operate in a competitive environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we assess the impact of all these risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those in any forward-looking statements. Given this situation, stockholders should not place undue reliance on forward-looking statements as a prediction of actual results.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the assessment of our sensitivity to market risk since the presentation in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on May 6, 2013, for the fiscal year ended February 28, 2013.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. MSC maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our controls and procedures also ensure this information is accumulated and communicated to management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions on required disclosure. MSC periodically reviews the design and effectiveness of its disclosure controls and internal control over financial reporting. The Company makes modifications to improve the design and effectiveness of its disclosure controls and internal control over financial reporting, and may take other corrective actions if its reviews identify a need for these.

There are inherent limitations to the effectiveness of any system of disclosure controls and internal control over financial reporting, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and internal control over financial reporting can only provide reasonable assurance of achieving their control objectives.

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the design and operation of MSC’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, management concluded that MSC’s disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report.

Changes in internal control over financial reporting. During the quarter ended August 31, 2013, there were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

20

The required certifications of our principal executive and financial officers are included as exhibits to this Quarterly Report on Form 10-Q. The disclosures in this Item 4 contain information on the evaluation of our disclosure controls and procedures and changes in internal control over financial reporting referred to in those certifications. For a more complete understanding of the matters covered by the certifications, these should be read in conjunction with Item 9A of the Company’s 2013 Annual Report on Form 10-K filed with the SEC on May 6, 2013.

21

MATERIAL SCIENCES CORPORATION

FORM 10-Q

For the Quarter Ended August 31, 2013

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

MSC is party to various legal actions arising in the ordinary course of its business. These legal actions cover a broad variety of claims spanning our entire business. We believe that the resolution of these legal actions will not, individually or in the aggregate, have a material adverse effect on the Company’s financial statements. See Note 14 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors

Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition and results of operations, cash flows, and liquidity, and the market price of our common stock. Item 1A of our Annual Report on Form 10-K for the year ended February 28, 2013, includes a detailed discussion of the risk factors we believe still exist in our business. In addition to those factors, other risks and uncertainties may have a material adverse effect on our business, financial condition, and/or operating results, cash flows and liquidity.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None

(b) None

(c) Our Board of Directors authorized the repurchase of 1,000,000 shares of the Company’s common stock on September 14, 2011 and again on September 27, 2012. The shares may be repurchased from time-to-time on the open market, subject to market conditions and other factors, and generally will be funded with internally generated cash. The Company did not repurchase any shares under the September 2011 or September 2012 authorizations during the six months ended August 31, 2013. At August 31, 2013, there were 364,476 shares available for purchase under the September 2011 authorization and 1,000,000 shares available for purchase under the September 2012 authorization.

On February 15, 2013, the Company entered into a written trading plan to purchase up to 364,476 shares under Rule 10b5-1 of the Exchange Act as part of the existing share repurchase program. The plan will expire on February 15, 2014, or when all the shares have been repurchased, whichever occurs first.

Item 6. Exhibits

Reference is made to the attached Index to Exhibits.

22

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, thereunto duly authorized, on the 10th day of October 2013.

MATERIAL SCIENCES CORPORATION
	By:	/s/ Clifford D. Nastas
		Clifford D. Nastas Chief Executive Officer
	By:	/s/ James D. Pawlak
		James D. Pawlak
		Vice President, Chief Financial Officer, Corporate Controller and Corporate Secretary

23

MATERIAL SCIENCES CORPORATION

Quarterly Report on Form 10-Q

For the Quarter Ended August 31, 2013

Index to Exhibits

Exhibit Number	Description of Exhibit
31.1	Rule 13a-14(a)/ 15(d)-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/ 15(d)-14(a) Certification of Chief Financial Officer.
32	Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
101	The following data from the Material Sciences Corporation Quarterly Report on Form 10-Q for the quarter ended August 31, 2013, formatted in eXtensible Business Reporting Language (XBRL®): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows, and (v) the related notes. (1)

(1) This information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

EX-31.1

Exhibit 31.1

Rule 13a-14(a)/ 15(d)-14(a) Certification of Chief Executive Officer

I, Clifford D. Nastas, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Material Sciences Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 10, 2013

/s/ Clifford D. Nastas

Clifford D. Nastas

Chief Executive Officer

2

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/ 15(d)-14(a) Certification of Chief Financial Officer

I, James D. Pawlak, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Material Sciences Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 10, 2013

/s/ James D. Pawlak

James D. Pawlak

Vice President, Chief Financial Officer,

Corporate Controller and Corporate Secretary

2

EX-32

Exhibit 32

SECTION 1350 CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF

FINANCIAL OFFICER

In connection with the Quarterly Report of Material Sciences Corporation (the “Company”) on Form 10-Q for the fiscal quarter ended August 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Clifford D. Nastas, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

	October 10, 2013
By:	/s/ Clifford D. Nastas
	Clifford D. Nastas
	Chief Executive Officer

In connection with the Report, I, James D. Pawlak, Vice President, Chief Financial Officer, Corporate Controller and Corporate Secretary of the Company, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

	October 10, 2013
By:	/s/ James D. Pawlak
	James D. Pawlak
	Vice President, Chief
	Financial Officer, Corporate Controller and Corporate Secretary

XML

Significant Customers

6 Months Ended

Aug. 31, 2013

Significant Customers

(9) Significant Customers. Due to the concentration in the automotive industry, management believes that sales to individual automotive customers—both Tier 1 and Tier 2 (including US Steel)—are significant. The following table shows sales to the Company’s major customers as a percentage of consolidated net sales for the three and six months ended August 31, 2013 and 2012.

	% of Consolidated Net Sales for the Three Months Ended August 31,						% of Consolidated Net Sales for the Six Months Ended August 31,
Customer	2013			2012			2013			2012
Chrysler		19	%		21	%		20	%		20	%
US Steel		14	%		15	%		13	%		15	%

The following table shows gross accounts receivable from these significant customers as a percentage of total consolidated gross accounts receivable as of August 31, 2013, and February 28, 2013.

	% of Consolidated Gross Accounts Receivable
Customer	August 31, 2013			February 28, 2013
Chrysler		18	%		18	%
US Steel		7	%		12	%

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Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012
Pension/Postretirement Adjustments, Income Taxes	$ 55	$ 82	$ 149	$ 143

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Preferred Stock

6 Months Ended

Aug. 31, 2013

Preferred Stock

(2) Preferred Stock. Preferred Stock, $1.00 Par Value; 10,000,000 Shares Authorized; 1,000,000 Designated Series B Junior Participating Preferred; None Issued.

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Sale of Elk Grove Village Building

6 Months Ended

Aug. 31, 2013

Sale of Elk Grove Village Building

(16) Sale of Elk Grove Village Building. In April 2011, after receiving authorization from the Board of Directors, management committed to a plan to sell the building located at 2200 East Pratt Boulevard in Elk Grove Village, Illinois (the “Facility”). This building houses our corporate offices and housed our coil coating assets before they were sold in April 2010.

On July 23, 2012, MSC began leasing a portion of the Facility to Main Steel Polishing Company, Inc. The lease includes approximately 240,000 square feet of the 280,000 square foot Facility. MSC entered into this lease to enhance the attractiveness of the Facility to potential buyers.

On August 31, 2012, MSC sold the Facility to Torburn Partners, Inc. (“Torburn”) for cash. The net proceeds from the sale were approximately $9.2 million, which reflects all selling costs and the executory costs related to the lease discussed above. The Company recognized a gain of approximately $3.2 million on the sale. MSC entered into a four-year lease with Torburn under which MSC continues to occupy approximately 35,000 square feet of office space in the Facility to house its corporate and domestic operations.

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Income Taxes

6 Months Ended

Aug. 31, 2013

Income Taxes

(10) Income Taxes. The Company evaluates its deferred income taxes on a quarterly basis to determine if valuation allowances are required, in full or in part. This includes considering available positive and negative evidence, such as past operating results, the existence of cumulative losses in the most recent fiscal years and our forecast of future taxable income on a jurisdiction-by-jurisdiction basis. In determining future taxable income, we review the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. At August 31, 2013, MSC had valuation allowance relating to certain state net operating losses.

The Company estimates that it is reasonably possible that the total amount of unrecognized tax benefits of $0.5 million at August 31, 2013, will significantly change during the next 12 months. The estimated range is a decrease of zero to $0.2 million.

For the three and six months ended August 31, 2013, MSC’s effective income tax rate for continuing operations was 36.2% and 17.5%, respectively, compared with 37.1% and 36.4%, respectively in the same periods last year. The lower rate in the six-month period ended August 31, 2013, was primarily due to filing amended returns to claim foreign tax credits.

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified			1 Months Ended
	Aug. 31, 2013	Feb. 28, 2013	Oct. 31, 2013 Subsequent Event Unfavorable Regulatory Action
Commitments and Contingencies [Line Items]
Reserve for environmental legal proceedings	$ 1.1	$ 1.2
Possible penalty for allegedly exceeding power consumption limits during a declared Emergency Curtailment Event			$ 2.4

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Long-Term Incentives - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Aug. 31, 2013	Feb. 28, 2013
Schedule Of Other Liabilities Noncurrent [Line Items]
Long-Term incentives	$ 1,594	$ 2,652
Accrued Expenses	4,352	5,799
Phantom Stock Liability
Schedule Of Other Liabilities Noncurrent [Line Items]
Long-Term incentives	1,600	2,700
Redemption period	5 years
Number of preceding trading days used in calculation of redemption amount	30 days
Accrued Expenses	$ 1,400
Redemption period current	1 year

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Significant Customers (Tables)

6 Months Ended

Aug. 31, 2013

Sales Revenue, Goods, Net

Concentration Risk, Percentage for Significant Customers

The following table shows sales to the Company’s major customers as a percentage of consolidated net sales for the three and six months ended August 31, 2013 and 2012.

	% of Consolidated Net Sales for the Three Months Ended August 31,						% of Consolidated Net Sales for the Six Months Ended August 31,
Customer	2013			2012			2013			2012
Chrysler		19	%		21	%		20	%		20	%
US Steel		14	%		15	%		13	%		15	%

Accounts Receivable

Concentration Risk, Percentage for Significant Customers

The following table shows gross accounts receivable from these significant customers as a percentage of total consolidated gross accounts receivable as of August 31, 2013, and February 28, 2013.

	% of Consolidated Gross Accounts Receivable
Customer	August 31, 2013			February 28, 2013
Chrysler		18	%		18	%
US Steel		7	%		12	%

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Inventory (Tables)

6 Months Ended

Aug. 31, 2013

Inventories

 Inventories consist of the following:

(in thousands)	August 31, 2013		February 28, 2013
Raw Materials	$	9,230	$	8,802
Finished Goods		14,946		16,142
Total Inventories	$	24,176	$	24,944

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Net Sales by Product Category Net of Intercompany Activity (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012
Segment Reporting Information [Line Items]
Net Sales	$ 27,553	$ 29,927	$ 56,273	$ 64,761
Percentage of net sales	100.00%	100.00%	100.00%	100.00%
Acoustical
Segment Reporting Information [Line Items]
Net Sales	17,942	19,360	36,363	39,283
Percentage of net sales	65.00%	65.00%	65.00%	61.00%
Coated
Segment Reporting Information [Line Items]
Net Sales	$ 9,611	$ 10,567	$ 19,910	$ 25,478
Percentage of net sales	35.00%	35.00%	35.00%	39.00%

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Treasury Stock - Additional Information (Detail)	Feb. 15, 2013	Feb. 15, 2013 Maximum	Aug. 31, 2013 September 2011 authorization	Sep. 14, 2011 September 2011 authorization	Aug. 31, 2013 September 2012 authorization
Equity, Class of Treasury Stock [Line Items]
Number of shares authorized to be repurchased		364,476		1,000,000
Common stock available for repurchase			364,476		1,000,000
Stock repurchase program, expiration date	Feb. 15, 2014

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Gross Accounts Receivable from Significant Customers as Percentage of Total Consolidated Gross Accounts Receivable (Detail) (Accounts Receivable, Customer Concentration Risk)	Aug. 31, 2013	Feb. 28, 2013
Chrysler
Concentration Risk [Line Items]
Percentage of Consolidated Gross Accounts Receivable	18.00%	18.00%
U.S. Steel
Concentration Risk [Line Items]
Percentage of Consolidated Gross Accounts Receivable	7.00%	12.00%

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Restructuring - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Feb. 28, 2013
Restructuring Cost and Reserve [Line Items]
Employee termination benefit and related expenses	$ 0.6

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Joint Venture - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012
Schedule of Equity Method Investments [Line Items]
Net income under equity method investments	$ 78	$ 67	$ 116	$ 115

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Components of Net Periodic Benefit Cost for Defined Benefit Plans and Other Post Retirement Plan (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Interest Cost	$ 137	$ 146	$ 273	$ 291
Expected Return on Plan Assets	(163)	(143)	(326)	(285)
Amortization of Net Loss	150	164	299	327
Total Net Periodic Benefit Cost	124	167	246	333
Other Postretirement Benefit Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Service Cost	6	6	11	11
Interest Cost	19	19	38	39
Amortization of Unrecognized Prior Service Cost	(69)	(69)	(138)	(138)
Amortization of Net Loss	50	49	101	98
Total Net Periodic Benefit Cost	$ 6	$ 5	$ 12	$ 10

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Treasury Stock (Tables)

6 Months Ended

Aug. 31, 2013

Treasury Stock

	Shares		Cost of Shares Purchased (in thousands)		Average Price per Share
Treasury Stock as of February 28, 2013		8,824,172	$	76,756	$	8.70
Repurchases During the Six Months Ended August 31, 2013		—		—
Treasury Stock as of August 31, 2013		8,824,172	$	76,756	$	8.70

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2013	Feb. 28, 2013
Receivables, Reserves and Allowances	$ 523	$ 489

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Basis of Accounting

6 Months Ended

Aug. 31, 2013

Basis of Accounting

The financial information as of August 31, 2013, and for the three and six months ended August 31, 2013 and 2012, has not been audited by our independent registered public accounting firm. In the opinion of Material Sciences Corporation and Subsidiaries (the “Company,” “we,” “our,” “us” or “MSC”), the information reflects all adjustments (consisting of only normal, recurring adjustments) necessary for a fair presentation of the information at that date and for those periods. The financial information contained in this report should be read in conjunction with the Company’s Annual Report on Form 10-K (“Form 10-K”) filed with the Securities and Exchange Commission on May 6, 2013, for the fiscal year ended February 28, 2013. A reclassification has been made to the prior years’ consolidated financial statements to conform to the 2014 presentation—“Pension and Postretirement Liabilities” was reclassified from “Other, Net” in the Condensed Consolidated Statements of Cash Flows.

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Common Stock

6 Months Ended

Aug. 31, 2013

Common Stock

(3) Common Stock. Common Stock, $0.02 Par Value; 40,000,000 Shares Authorized; 19,140,186 Shares Issued and 10,316,014 Shares Outstanding as of August 31, 2013, and 19,058,923 Shares Issued and 10,198,121 Shares Outstanding as of February 28, 2013.

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Joint Venture

6 Months Ended

Aug. 31, 2013

Joint Venture

(1) Joint Venture. In November 2000, a subsidiary of MSC formed a joint venture with Tekno S.A. (“Tekno”) for the manufacture and sale of Quiet Steel^® and disc brake noise damping material for the South American market. The Company includes its portion of the joint venture’s results in the Condensed Consolidated Statements of Operations under Equity in Results of Joint Venture. The Equity in Results of Joint Venture was income of $78,000 and $116,000 for the three and six months ended August 31, 2013, respectively, compared with $67,000 and $115,000 for the three and six months ended August 31, 2012.

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Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012
Income Tax [Line Items]
Unrecognized tax benefits	$ 0.5		$ 0.5
Estimated change in tax rate lower bound	0		0
Estimated change in tax rate Upper bound	$ 0.2		$ 0.2
Income tax rate	36.20%	37.10%	17.50%	36.40%

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Retirement and Savings Plans (Tables)

6 Months Ended

Aug. 31, 2013

Components of Net Periodic Benefit Cost for Defined Benefit Plans and Other Post Retirement Plan

The following table provides the components of net periodic benefit cost for the Company’s defined benefit plans and other post-retirement plans.

	Pension Benefits						Other Benefits
(in thousands)	Three Months Ended August 31,
	2013			2012			2013			2012
Service Cost	$	—		$	—		$	6		$	6
Interest Cost		137			146			19			19
Amortization of Unrecognized Prior Service Cost		—			—			(69	)		(69	)
Expected Return on Plan Assets		(163	)		(143	)		—			—
Amortization of Net Loss		150			164			50			49
Total Net Periodic Benefit Cost	$	124		$	167		$	6		$	5

	Pension Benefits						Other Benefits
(in thousands)	Six Months Ended August 31,
	2013			2012			2013			2012
Service Cost	$	—		$	—		$	11		$	11
Interest Cost		273			291			38			39
Amortization of Unrecognized Prior Service Cost		—			—			(138	)		(138	)
Expected Return on Plan Assets		(326	)		(285	)		—			—
Amortization of Net Loss		299			327			101			98
Total Net Periodic Benefit Cost	$	246			333		$	12		$	10

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Preferred Stock - Additional Information (Detail) (USD $)	Aug. 31, 2013
Preferred Stock [Line Items]
Preferred stock, par value	$ 1.00
Preferred stock, shares authorized	10,000,000
Preferred stock, designated	1,000,000
Preferred stock, issued

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Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Aug. 31, 2013	Feb. 28, 2013
Inventory [Line Items]
Raw Materials	$ 9,230	$ 8,802
Finished Goods	14,946	16,142
Total Inventories	$ 24,176	$ 24,944

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Sale of Elk Grove Village Building - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Aug. 31, 2012 sqft	Aug. 31, 2012 sqft	Jul. 23, 2012 sqft
Discontinued Operations [Line Items]
Facility leased to Main Steel Polishing Company, Inc.			240,000
Leasable area of facility			280,000
Proceeds from Sale of Assets		$ 9,180
Gain on sales of assets	$ 3,216	$ 3,216
Lease agreement with Torburn	35,000	35,000
Lease term		4 years

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Restricted shares granted (Detail)	1 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Dec. 01, 2012	Sep. 01, 2012
Stock Based Compensation [Line Items]
Restricted Shares Granted	6,069	5,028	5,676	5,754

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012
Net Income	$ 1,014	$ 3,253	$ 2,383	$ 5,471
Other Comprehensive Income:
Foreign Currency Translation Adjustments	(110)	(92)	(187)	(1,036)
Pension/Postretirement Adjustments, Net of Benefit for Income Taxes of $55, $82, $149 and $143, Respectively	152	133	241	232
Comprehensive Income	$ 1,056	$ 3,294	$ 2,437	$ 4,667

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Cash, Cash Equivalents and Restricted Cash

6 Months Ended

Aug. 31, 2013

Cash, Cash Equivalents and Restricted Cash

(6) Cash, Cash Equivalents and Restricted Cash. The Company maintains its cash balances in interest-bearing bank accounts and highly liquid investments with maturities of three months or less. At August 31, 2013, MSC had $27.0 million of U.S. Treasury bills and $11.5 million of cash.

We have issued two letters of credit in connection with our Midco environmental liability and a workers’ compensation insurance obligation. The Midco letter of credit is $1.0 million and the insurance letter of credit is $0.1 million. The letters of credit are secured by restricted cash deposited with JPMorgan Chase Bank. At August 31, 2013, we had restricted cash of $1.1 million.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Aug. 31, 2013	Feb. 28, 2013
Current Assets:
Cash and Cash Equivalents	$ 38,470	$ 37,508
Restricted Cash	1,123
Receivables, Less Reserves and Allowances of $523 and $489, Respectively	16,924	17,675
Income Taxes Receivable	55	1,392
Prepaid Expenses	1,054	554
Inventories	24,176	24,944
Short Term Deferred Tax Assets	3,925	4,191
Total Current Assets	85,727	86,264
Property, Plant and Equipment	123,449	120,586
Accumulated Depreciation	(93,427)	(91,426)
Net Property, Plant and Equipment	30,022	29,160
Other Assets:
Investment in Joint Venture	2,209	2,394
Long Term Deferred Tax Assets	8,697	9,147
Other	215	141
Total Other Assets	11,121	11,682
Total Assets	126,870	127,106
Current Liabilities:
Accounts Payable	11,960	11,061
Accrued Payroll Related Expenses	2,609	2,594
Accrued Expenses	4,352	5,799
Total Current Liabilities	18,921	19,454
Long-Term Liabilities:
Pension and Postretirement Liabilities	5,511	7,344
Long-Term incentives	1,594	2,652
Other	2,615	2,720
Total Long-Term Liabilities	9,720	12,716
Commitments and Contingencies
Shareowners' Equity:
Preferred Stock
Common Stock	383	381
Additional Paid-In Capital	81,943	81,089
Treasury Stock at Cost	(76,756)	(76,756)
Retained Earnings	95,429	93,046
Accumulated Other Loss	(2,770)	(2,824)
Total Shareowners' Equity	98,229	94,936
Total Liabilities and Equity	$ 126,870	$ 127,106

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012
Net Sales	$ 27,553	$ 29,927	$ 56,273	$ 64,761
Cost of Sales	21,553	23,374	44,185	49,653
Gross Profit	6,000	6,553	12,088	15,108
Selling, General and Administrative Expenses	4,577	4,985	9,477	10,443
Gain on Sale of Assets		3,216		3,216
Income from Operations	1,423	4,784	2,611	7,881
Other Income, Net:
Interest Income, Net	14	12	23	6
Equity in Results of Joint Venture	78	67	116	115
Rental Income	64	348	93	629
Other, Net	11	(40)	47	(34)
Total Other Income, Net	167	387	279	716
Income from Operations Before Provision for Income Taxes	1,590	5,171	2,890	8,597
Provision for Income Taxes	576	1,918	507	3,126
Net Income	$ 1,014	$ 3,253	$ 2,383	$ 5,471
Basic Net Income Per Share	$ 0.10	$ 0.31	$ 0.23	$ 0.53
Diluted Net Income Per Share	$ 0.10	$ 0.31	$ 0.23	$ 0.52
Weighted Average Number of Common Shares Outstanding Used for Basic Net Income Per Share	10,271	10,332	10,244	10,393
Dilutive Shares	162	119	163	117
Weighted Average Number of Common Shares Outstanding Plus Dilutive Shares	10,433	10,451	10,407	10,510
Outstanding Common Stock Options Having No Dilutive Effect	304	407	280	412

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Equity and Compensation Plans (Tables)

6 Months Ended

Aug. 31, 2013

Restricted Shares Granted

Restricted shares granted are listed below:

Grant Date	Fiscal 2014		Fiscal 2013
March 1		5,028		—
June 1		6,069		—
September 1		—		5,754
December 1		—		5,676

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Restructuring

6 Months Ended

Aug. 31, 2013

Restructuring

(15) Restructuring. During fiscal 2012, MSC recognized approximately $0.6 million in employee termination benefit and related expenses. All of the benefits were fully paid as of the end of the second quarter of fiscal 2013. There was no restructuring accrual as of August 31, 2013.

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Equity and Compensation Plans - Additional Information (Detail) (USD $)	1 Months Ended				1 Months Ended				6 Months Ended
	May 31, 2013	Mar. 31, 2013	Mar. 31, 2012	Aug. 31, 2013	Mar. 31, 2013 Restricted Stock	May 31, 2012 Restricted Stock	Mar. 31, 2012 Restricted Stock	Aug. 31, 2013 2012 Plan CompensationPlan	Aug. 31, 2013 2012 Plan Minimum	Aug. 31, 2013 2012 Plan Maximum	Aug. 31, 2013 2012 Plan Stock Options	Aug. 31, 2013 2012 Plan Restricted Stock Minimum	Aug. 31, 2013 2012 Plan Restricted Stock Maximum	Aug. 31, 2013 2001 Directors Plan CompensationPlan	Sep. 30, 2012 Non-employee directors Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of active equity award plan								1
Shares authorized under compensation plans								2,130,789
Share based payment award, award vesting period					1 year	3 years	1 year				3 years	3 years	5 years
Non-qualified stock options, expiration period from date of grant									5 years	10 years
Number of inactive equity award plans														1
Stock options outstanding and exercisable														3,537
Share based payment award, stock option granted		100,000	200,000
Share based payment award, value of each option granted		$ 4.70	$ 4.24
Options exercised	67,680
Share based payment award, stock options outstanding				720,458
Share based payment award, stock options exercisable				220,458
Share based payment award, restricted stock issued					2,100	10,000	5,900
Vested shares							5,754
Forfeited shares							146
Share based payment award, stock option granted															$ 8,500

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Sales to Major Customer As Percentage of Consolidated Net Sales (Detail)	3 Months Ended		6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012
Concentration Risk [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%	100.00%
Sales Revenue, Goods, Net | Customer Concentration Risk | Chrysler
Concentration Risk [Line Items]
Concentration risk, percentage	19.00%	21.00%	20.00%	20.00%
Sales Revenue, Goods, Net | Customer Concentration Risk | U.S. Steel
Concentration Risk [Line Items]
Concentration risk, percentage	14.00%	15.00%	13.00%	15.00%

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Treasury Stock (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Aug. 31, 2013
Equity, Class of Treasury Stock [Line Items]
Treasury Stock as of February 28, 2013	8,824,172
Repurchases During the Six Months Ended August 31, 2013
Treasury Stock as of August 31, 2013	8,824,172
Treasury Stock as of February 28, 2013	$ 76,756
Repurchases During the Six Months Ended August 31, 2013
Treasury Stock as of August 31, 2013	$ 76,756
Treasury Stock as of February 28, 2013	$ 8.70
Repurchases During the Six Months Ended August 31, 2013
Treasury Stock as of August 31, 2013	$ 8.70

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Cash, Cash Equivalents and Restricted Cash - Additional Information (Detail) (USD $)	6 Months Ended
	Aug. 31, 2013 CreditFacility
Restricted Cash and Cash Equivalents Items [Line Items]
U.S. Treasury bills	$ 27,000,000
Cash Available	11,500,000
Number of letters of credit	2
Restricted Cash	1,123,000
Midco environmental liability
Restricted Cash and Cash Equivalents Items [Line Items]
Letter of credit	1,000,000
workers compensation insurance obligation
Restricted Cash and Cash Equivalents Items [Line Items]
Letter of credit	$ 100,000

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Commodity Contracts

6 Months Ended

Aug. 31, 2013

Commodity Contracts

(5) Commodity Contracts. MSC is exposed to certain risks related to ongoing business operations. We use derivative instruments with the objective of managing our financial and operational exposure arising from these risks: primarily commodity price risk. From time-to-time in the ordinary course of business, the Company enters into purchase contracts for procuring nickel carbonate, zinc shot and natural gas, which are commodities used in our manufacturing processes. MSC maintains a commodity forward purchase policy. This policy seeks to ensure that, at any time, the majority of the expected consumption over the next 12 months is secured under a purchase contract at a pre-determined price. When MSC enters into these contracts, it applies the Normal Purchase/Normal Sale election, which excludes the contracts from being accounted for as derivative instruments at fair value for as long as they qualify for the election.

At August 31, 2013, we did not have any commodity contracts that we accounted for at fair value.

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Segments (Tables)

6 Months Ended

Aug. 31, 2013

Segments

	Three Months Ended August 31,										Six Months Ended August 31,
	2013					2012					2013					2012
($ in thousands)	$		%			$		%			$		%			$		%
Acoustical		17,942		65			19,360		65			36,363		65			39,283		61
Coated		9,611		35			10,567		35			19,910		35			25,478		39
Total Net Sales	$	27,553		100	%	$	29,927		100	%	$	56,273		100	%	$	64,761		100	%

Net Sales of Domestic and Foreign Units

Net sales of our domestic and foreign units are presented in the table below. No one foreign country comprised greater than 10% of consolidated net sales for any period presented.

($ in thousands)	Three Months Ended August 31,				Six Months Ended August 31,
	2013		2012		2013		2012
Domestic Net Sales	$	23,073	$	26,228	$	47,107	$	56,752
Foreign Net Sales		4,480		3,699		9,166		8,009
Total Net Sales	$	27,553	$	29,927	$	56,273	$	64,761

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Retirement and Savings Plans - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended	12 Months Ended
	Aug. 31, 2013	Feb. 28, 2013
Employee Benefit And Retirement Plans [Line Items]
Number of defined contribution retirement plans	1
Pension Plans, Defined Benefit
Employee Benefit And Retirement Plans [Line Items]
Employer expected contribution to defined benefit plans		$ 3.1
Employer contribution made to defined benefit plan	1.6
Employer expected contribution to defined benefit plans		2.0
Pension Plans, Defined Benefit | Minimum
Employee Benefit And Retirement Plans [Line Items]
Employer expected contribution to defined benefit plans		1.1
Other Postretirement Benefit Plans, Defined Benefit
Employee Benefit And Retirement Plans [Line Items]
Employer expected contribution to defined benefit plans		0.1
Other Postretirement Benefit Plans, Defined Benefit | Maximum
Employee Benefit And Retirement Plans [Line Items]
Employer contribution made to defined benefit plan	$ 0.2

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Long-Term Incentives

6 Months Ended

Aug. 31, 2013

Long-Term Incentives

(8) Long-Term Incentives. The Long-Term Incentives balances of $1.6 million and $2.7 million at August 31, 2013, and February 28, 2013, respectively, consisted entirely of Phantom Stock Liability. Phantom Stock Liability represents the value of long-term phantom stock units held by members of the Board of Directors. The units were awarded each quarter from June 2004 through June 2012 and are redeemed in cash after five years at the average of the closing prices for the preceding 30 trading days. The liability is adjusted to the current market value each quarter.

We also carry a current liability of $1.4 million (at the August 31, 2013 market value) for phantom stock units which will be redeemed within one year. This liability is included in Accrued Expenses within Current Liabilities.

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Treasury Stock

6 Months Ended

Aug. 31, 2013

Treasury Stock

(4) Treasury Stock. The Company’s Board of Directors authorized the repurchase of 1,000,000 shares of the Company’s common stock on September 14, 2011, and again on September 27, 2012. The shares may be repurchased from time-to-time on the open market, subject to market conditions and other factors, and generally will be funded with internally generated cash. The Company did not repurchase any shares under the September 2011 or September 2012 authorizations during the six months ended August 31, 2013. At August 31, 2013, there were 364,476 shares available for purchase under the September 2011 authorization and 1,000,000 shares available for purchase under the September 2012 authorization.

	Shares		Cost of Shares Purchased (in thousands)		Average Price per Share
Treasury Stock as of February 28, 2013		8,824,172	$	76,756	$	8.70
Repurchases During the Six Months Ended August 31, 2013		—		—
Treasury Stock as of August 31, 2013		8,824,172	$	76,756	$	8.70

On February 15, 2013, the Company entered into a written trading plan to purchase up to 364,476 shares under Rule 10b5-1 of the Exchange Act as part of the existing share repurchase program. The plan will expire on February 15, 2014, or when all the shares have been repurchased, whichever occurs first.

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Condensed Consolidated Statements of Cash Flow (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012
Cash Flows From: Operating Activities:
Net Income	$ 2,383	$ 5,471
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation, Amortization and Accretion	1,962	2,450
Equity in Results of Joint Venture	(116)	(115)
Deferred Income Taxes	567	2,884
Gain on Sales of Assets		(3,216)
Compensatory Effect of Stock Plans	401	292
Changes in Assets and Liabilities:
Receivables	772	2,015
Income Taxes Receivable	1,367	(1,489)
Prepaid Expenses	(500)	(429)
Inventories	792	(1,134)
Accounts Payable	1,641	(1,152)
Accrued Expenses	(1,466)	(904)
Pension and Postretirement Liabilities	(1,833)	(692)
Other, Net	(754)	(93)
Net Cash Provided by Operating Activities	5,216	3,888
Investing Activities:
Capital Expenditures	(3,536)	(2,060)
Restricted Cash	(1,123)
Investment in Research Entity	(105)
Proceeds from Sale of Assets		9,180
Net Cash Provided by (Used In) Investing Activities	(4,764)	7,120
Financing Activities:
Purchases of Treasury Stock		(1,999)
Issuance of Common Stock	455	3
Net Cash Provided by ( Used In) Financing Activities	455	(1,996)
Effect of Exchange Rate Changes on Cash	55	(48)
Net Increase in Cash and Cash Equivalents	962	8,964
Cash and Cash Equivalents at Beginning of Period	37,508	28,201
Cash and Cash Equivalents at End of Period	38,470	37,165
Non-Cash Transactions:
Capital Expenditures in Accounts Payable at End of Period	424	634
Treasury Stock Purchases in Accrued Liabilities at Period-End		14
Supplemental Cash Flow Disclosures:
Interest Paid	12	16
Income Taxes Paid (Refunded), Net	$ (1,415)	$ 1,827

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Net Sales of Domestic and Foreign Units (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012
Segment Reporting Information [Line Items]
Net Sales	$ 27,553	$ 29,927	$ 56,273	$ 64,761
Domestic Net Sales
Segment Reporting Information [Line Items]
Net Sales	23,073	26,228	47,107	56,752
Foreign Net Sales
Segment Reporting Information [Line Items]
Net Sales	$ 4,480	$ 3,699	$ 9,166	$ 8,009

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Common Stock - Additional Information (Detail) (USD $)	Aug. 31, 2013	Feb. 28, 2013
Common Shares [Line Items]
Common stock, par value	$ 0.02	$ 0.02
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	19,140,186	19,058,923
Common stock, shares outstanding	10,316,014	10,198,121

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Retirement and Savings Plans

6 Months Ended

Aug. 31, 2013

Retirement and Savings Plans

(11) Retirement and Savings Plans. The Company has one defined contribution retirement plan qualifying under the Internal Revenue Code Section 401(k): The Material Sciences Savings & Investment Plan (the “SIP”). All MSC employees can elect to participate in the SIP.

MSC also has non-contributory defined benefit pension plans, all of which are frozen, and other postretirement plans for certain of its employees. The following table provides the components of net periodic benefit cost for the Company’s defined benefit plans and other post-retirement plans.

	Pension Benefits						Other Benefits
(in thousands)	Three Months Ended August 31,
	2013			2012			2013			2012
Service Cost	$	—		$	—		$	6		$	6
Interest Cost		137			146			19			19
Amortization of Unrecognized Prior Service Cost		—			—			(69	)		(69	)
Expected Return on Plan Assets		(163	)		(143	)		—			—
Amortization of Net Loss		150			164			50			49
Total Net Periodic Benefit Cost	$	124		$	167		$	6		$	5

	Pension Benefits						Other Benefits
(in thousands)	Six Months Ended August 31,
	2013			2012			2013			2012
Service Cost	$	—		$	—		$	11		$	11
Interest Cost		273			291			38			39
Amortization of Unrecognized Prior Service Cost		—			—			(138	)		(138	)
Expected Return on Plan Assets		(326	)		(285	)		—			—
Amortization of Net Loss		299			327			101			98
Total Net Periodic Benefit Cost	$	246			333		$	12		$	10

MSC previously disclosed in the notes to its financial statements for the year ended February 28, 2013, that it expected to contribute $3.1 million—including $1.1 million of required minimum contributions and $2.0 million of additional contributions—toward its qualified and nonqualified defined benefit pension plans and $0.1 million toward its other post-retirement benefit plans other than pension plans in fiscal 2014. As of August 31, 2013, $1.6 million of contributions/payments have been made toward the pension plans and less than $0.2 million of net contributions/payments have been made to the other post-retirement plans, which is higher than expected due to higher than normal health care claims for certain retirees.

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Inventory

6 Months Ended

Aug. 31, 2013

Inventory

(7) Inventory. Inventories consist of the following:

(in thousands)	August 31, 2013		February 28, 2013
Raw Materials	$	9,230	$	8,802
Finished Goods		14,946		16,142
Total Inventories	$	24,176	$	24,944

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Commitments and Contingencies

6 Months Ended

Aug. 31, 2013

Commitments and Contingencies

(14) Commitments and Contingencies. MSC is a party to various legal proceedings in connection with the remediation of certain environmental matters. The Company’s environmental accruals were approximately $1.1 million as of August 31, 2013, and $1.2 million as of February 28, 2013. Management does not believe that the outcome of its environmental legal proceedings will have a material adverse effect on its financial statements, given the accruals recorded as of August 31, 2013, and, where applicable, taking into account contributions from other potentially responsible parties. There are, however, a number of uncertainties. These include, without limitation, the eventual final cost of site cleanup, the discretionary authority of federal and state regulatory authorities in bringing enforcement actions and other factors that could affect the Company’s exposure.

On October 4, 2013, the Company received a letter from the electric utility serving its Walbridge, Ohio facility alleging that the facility had exceeded power consumption limits during a declared Emergency Curtailment Event (i.e., a period of time in which the utility can require that certain customers reduce electricity demand to avoid over-stressing the utility’s distribution or transmission infrastructure) in September 2013 (the “Emergency Curtailment Event”). Pursuant to the terms of its agreement with the utility, the Company has agreed to reduce its use of energy provided by the utility during an Energy Curtailment Event, subject to specified procedures, terms and conditions included in such agreement, in exchange for the utility’s issuance of program credits to the Company, which credits reduce the facility’s monthly payments for usage to the utility. In connection with the alleged failure by the Company to meet its obligations regarding the Emergency Curtailment Event, in October 2013 the utility assessed a penalty to the Company of approximately $2.4 million, substantially all of which represents a forfeiture of program credits issued to the Company during the prior 12 months. The Company plans to administratively challenge (i.e. appeal) the penalty at the Public Utilities Commission of Ohio and seek the elimination of the amount of such penalty. While the Company believes it has reasonable grounds to challenge the penalty assessed by the utility, there can be no assurance that the penalty will be eliminated, or reduced in any material respect. If the Company does not prevail in having the payment of the penalty withdrawn or significantly reduced, this would have a material adverse effect on the Company’s results of operations, financial position and cash flows.

MSC is also a party to various legal actions and customer disputes arising in the ordinary course of its business. These legal actions and customer disputes cover a broad variety of claims spanning MSC’s entire business. The Company believes that the resolution of these legal actions and customer disputes will not, individually or in the aggregate, have a material adverse effect on its results of operations, financial position or cash flows.

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Equity and Compensation Plans

6 Months Ended

Aug. 31, 2013

Equity and Compensation Plans

(12) Equity and Compensation Plans. The Company has one active equity award plan, the Material Sciences Corporation 2012 Incentive Compensation Plan (“2012 Plan”). There are 2,130,789 shares authorized under the 2012 Plan to provide stock options, restricted stock and other equity awards under various programs to both employees and non-employee directors. Non-qualified stock options generally vest over three years from the date of grant and expire between five and 10 years from the date of grant. Restricted stock awards generally vest over three to five years from the date of grant.

The Company also has one inactive equity award plan, the Material Sciences Corporation 2001 Compensation Plan for Non-Employee Directors (“2001 Directors Plan”). The 2001 Directors Plan expired on February 29, 2004, and no additional grants will be made under the plan. There were 3,537 stock options outstanding and exercisable under this plan at August 31, 2013.

Stock option activity during fiscal years 2012 and 2013 is listed below.

• In March 2012, 200,000 options with a Black-Scholes value of $4.24 were granted.

• In March 2013, 100,000 options with a Black-Scholes value of $4.70 were granted.

• In May 2013, 67,680 options were exercised.

There were 720,458 stock options outstanding, of which 220,458 were exercisable, at August 31, 2013.

In March 2013, the Company issued 2,100 shares of restricted stock in lieu of salary increases, which will vest over one year. In March 2012, MSC issued 5,900 shares of restricted stock in lieu of salary increases, of which 5,754 have vested and 146 were forfeited.

In May 2012, MSC issued 10,000 shares of restricted stock, which will vest over three years, to our CEO for meeting performance objectives in fiscal 2012.

In September 2012, MSC began making quarterly grants of restricted stock to the non-employee directors of the Company. Each grant to a director represents the number of shares of our common stock equal to the quotient of $8,500 divided by the closing sale price of our common stock on the day preceding the grant date. The shares will vest on the third anniversary of the grant date. Restricted shares granted are listed below:

Grant Date	Fiscal 2014		Fiscal 2013
March 1		5,028		—
June 1		6,069		—
September 1		—		5,754
December 1		—		5,676

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Document and Entity Information	6 Months Ended
	Aug. 31, 2013	Oct. 01, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Aug. 31, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	MASC
Entity Registrant Name	MATERIAL SCIENCES CORP
Entity Central Index Key	0000755003
Current Fiscal Year End Date	--02-28
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		10,322,055

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Segments

6 Months Ended

Aug. 31, 2013

Segments

(13) Segments. MSC operates in one segment based on how the Chief Operating Decision Maker views its business for evaluating performance and making operating decisions. The Company provides material-based solutions for acoustical and coated applications. The acoustical material-based solutions include multilayer composites consisting of metals, polymers, rubber and other coated materials used to manage noise and vibration. The coated metal material-based solutions include painted, electrogalvanized (“EG”), rubber and film coatings that provide protective, decorative and functional performance. The coatings are applied to coiled metal of various widths and thicknesses. MSC’s material-based solutions are designed to meet specific customer requirements for the transportation, appliance, building products, lighting and electronics markets. Some customers purchase products from several different product categories.

We use a significant level of shared assets, and share resources for sales, general and administrative expense, and management across each of our product categories. Capital projects—whether for cost savings or generating incremental revenue—are evaluated individually based on estimated economic returns (e.g., net present value, return on investment), not based on related product line or geographic location. We use a centralized functional management structure, and share administration and production resources, to deliver individual products that, together, provide solutions to our customers.

	Three Months Ended August 31,										Six Months Ended August 31,
	2013					2012					2013					2012
($ in thousands)	$		%			$		%			$		%			$		%
Acoustical		17,942		65			19,360		65			36,363		65			39,283		61
Coated		9,611		35			10,567		35			19,910		35			25,478		39
Total Net Sales	$	27,553		100	%	$	29,927		100	%	$	56,273		100	%	$	64,761		100	%

Net sales of our domestic and foreign units are presented in the table below. No one foreign country comprised greater than 10% of consolidated net sales for any period presented.

($ in thousands)	Three Months Ended August 31,				Six Months Ended August 31,
	2013		2012		2013		2012
Domestic Net Sales	$	23,073	$	26,228	$	47,107	$	56,752
Foreign Net Sales		4,480		3,699		9,166		8,009
Total Net Sales	$	27,553	$	29,927	$	56,273	$	64,761