1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 14(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 1, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to__________
Commission file Number 1-4415
PARK ELECTROCHEMICAL CORP.
(Exact Name of Registrant as Specified in Its Charter)
New York 11-1734643
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5 Dakota Drive, Lake Success, N.Y. 11042
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (516) 354-
4100
Not Applicable
-----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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[ }
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Section 12,
13, or 15(d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a
court. Yes { } No { }
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 19,529,417 as of October 11, 2002.
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION: Number
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
September 1, 2002 (Unaudited) and March 3, 2002 3
Consolidated Statements of Operations
13 weeks and 26 weeks ended September 1, 2002
and August 26, 2001 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
for the 26 weeks ended September 1, 2002 and
August 26, 2001 Unaudited) 5
Notes to Condensed Consolidated Financial
Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
Factors That May Affect Future Results 21
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 21
Item 4. Controls and Procedures 21
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings 22
Item 4. Submission of Matters to a Vote of Security Holders 23
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURES...................................................... 24
CERTIFICATIONS.................................................. 25
EXHIBIT INDEX................................................... 29
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
September 1,
2002 March 3,
(Unaudited) 2002*
ASSETS
Current assets:
Cash and cash equivalents $104,921 $ 99,492
Marketable securities 49,798 51,917
Accounts receivable, net 32,466 33,628
Inventories (Note 2) 13,440 13,242
Prepaid expenses and other current assets 12,723 12,082
Total current assets 213,348 210,361
Property, plant and equipment, net 147,089 149,810
Other assets 942 473
Total $361,379 $360,644
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,368 $ 14,098
Accrued liabilities 24,772 27,862
Income taxes payable 666 1,401
Total current liabilities 40,806 43,361
Deferred income taxes 13,066 13,054
Deferred pension liability and other 12,891 11,683
Total liabilities 66,763 68,098
Stockholders' equity:
Common stock 2,037 2,037
Additional paid-in capital 131,308 131,138
Retained earnings 171,569 172,953
Treasury stock, at cost (5,707) (5,692)
Accumulated other non-owner changes (4,591) (7,890)
Total stockholders' equity 294,616 292,546
Total $361,379 $360,644
*The balance sheet at March 3, 2002 has been derived from the
audited financial statements at that date.
See accompanying Notes to the Consolidated Financial Statements.
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
13 Weeks Ended 26 Weeks Ended
(Unaudited) (Unaudited)
September 1, August 26, September 1, August 26,
2002 2001 2002 2001
Net sales $56,901 $51,743 $113,462 $120,845
Cost of sales 50,692 50,321 100,992 116,157
Gross profit 6,209 1,422 12,470 4,688
Selling, general and
administrative expenses 7,884 8,428 15,995 17,920
Gain on sale of DPI (Note 9) (3,170) - (3,170) -
Loss on sale of NTI
and closure of related
support facility (Note 4) - - - 15,707
Other severance costs - - - 681
Income(loss) from operations 1,495 (7,006) (355) (29,620)
Other income 771 1,607 1,713 3,347
Earnings(loss) before
income taxes 2,266 (5,399) 1,358 (26,273)
Income tax
Provision/(benefit) 679 (1,620) 407 (7,882)
Net earnings(loss) $ 1,587 $(3,779) $ 951 $(18,391)
Earnings(loss) per
share (Note 6):
Basic $ .08 $ (.19) $ .05 $ (.94)
Diluted $ .08 $ (.19) $ .05 $ (.94)
Weighted average number
of common and common
equivalent shares outstanding:
Basic 19,669 19,545 19,665 19,482
Diluted 20,013 19,545 20,094 19,482
Dividends per share $ .06 $ .06 $ .12 $ .12
See accompanying Notes to the Consolidated Financial Statements.
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
26 Weeks Ended
(Unaudited)
September 1, August 26,
2002 2001
Cash flows from operating activities:
Net income (loss) $ 951 $(18,391)
Depreciation and amortization 9,129 8,391
Gain on sale of business (3,170) -
Loss on sale of fixed assets - 10,636
Impairment of fixed assets - 2,058
Change in operating assets and
liabilities (2,940) 16,040
Net cash provided by operating activities 3,970 18,734
Cash flows from investing activities:
Purchases of property, plant and
equipment, net (4,095) (15,425)
Proceeds from the sale of business 5,000 -
Purchases of marketable securities (19,260) -
Proceeds from sales and maturities
of marketable securities 21,463 18,022
Net cash provided by investing activities 3,108 2,597
Cash flows from financing activities:
Redemption of long-term debt (Note 3) - (1,738)
Dividends paid (2,335) (2,326)
Proceeds from exercise of stock options 155 617
Net cash used in financing activities (2,180) (3,447)
Change in cash and cash equivalents before
exchange rate changes 4,898 17,884
Effect of exchange rate changes on cash
and cash equivalents 531 376
Change in cash and cash equivalents 5,429 18,260
Cash and cash equivalents, beginning
of period 99,492 123,726
Cash and cash equivalents, end of period $104,921 $141,986
Supplemental cash flow information:
Cash paid during the period for:
Income taxes $ 500 $ 4,875
See accompanying Notes to the Consolidated Financial Statements.
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of September
1, 2002, the consolidated statements of operations for the
13 weeks and 26 weeks ended September 1, 2002 and August
26, 2001, and the condensed consolidated statements of
cash flows for the 26 weeks then ended have been prepared
by the Company, without audit. In the opinion of
management, these unaudited condensed consolidated
financial statements contain all adjustments (which
include only normal recurring adjustments) necessary to
present fairly the financial position at September 1, 2002
and the results of operations and cash flows for all
periods presented.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with accounting principles generally accepted in the
United States have been condensed or omitted. It is
suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated
financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 2002.
2. INVENTORIES
Inventories consisted of the following:
(Amounts in thousands)
September 1, March 3,
2002 2002
Raw materials $ 4,819 $ 4,996
Work-in-process 3,364 2,916
Finished goods 4,635 4,784
Manufacturing supplies 622 546
$13,440 $13,242
3. LONG-TERM DEBT
On March 1, 2001, $95,934,000 principal amount of the
Company's 5.5% Convertible Subordinated Notes due March 1,
2006 was converted into 3,410,908 shares of the Company's
common stock, and the remaining $1,738,000 principal
amount of the Notes was redeemed by the Company on March
2, 2001 for cash.
4. SALE OF NELCO TECHNOLOGY, INC.
During the Company's 1998 fiscal year and for several
years prior thereto, more than 10% of the Company's total
worldwide sales were to Delco Electronics Corporation, a
subsidiary of General Motors Corp., and the Company's
wholly owned subsidiary, Nelco Technology, Inc. ("NTI")
located in Tempe, Arizona, had been Delco's principal
supplier of semi-finished multilayer printed circuit board
materials, commonly known as mass lamination, which were
used by Delco to produce finished multilayer printed
circuit boards. However, in March 1998, the Company was
informed by Delco that Delco planned to close its printed
circuit board fabrication plant and exit the printed
circuit board manufacturing business. As a result, the
Company's sales to Delco declined during the three-month
period ended May 31, 1998, were negligible during the
remainder of the 1999 fiscal year and have been nil in
subsequent years.
After March 1998, the business of NTI languished and its
performance was unsatisfactory due primarily to the
absence of the unique, high-volume, high-quality business
that had been provided by Delco Electronics and the
absence of any other customer in the North American
electronic materials industry with a similar demand for
the large volumes of semi-finished multilayer printed
circuit board materials that Delco purchased from NTI.
Although NTI's business experienced a resurgence in the
2001 fiscal year as the North American market for printed
circuit materials became extremely strong and demand
exceeded supply for the electronic materials manufactured
by NTI, the Company's internal expectations and
projections for the NTI business were for continuing
volatility in the business' performance over the
foreseeable future. Consequently, the Company commenced
efforts to sell the business in the second half of its
2001 fiscal year; and in April 2001, the Company sold the
assets and business of NTI and closed a related support
facility, also located in Tempe, Arizona. As a result of
this sale, the Company exited the mass lamination business
in North America.
In connection with the sale of NTI and the closure of the
related support facility, the Company recorded non-
recurring, pre-tax charges of $15.7 million in its fiscal
year 2002 first quarter ended May 27, 2001. The components
of these charges and the related liability balances and
activity from the May 27, 2001 balance sheet date to the
September 1, 2002 balance sheet date are set forth below.
(Amounts in thousands)
Charges 9/1/02
Closure Incurred or Remaining
Charges Paid Reversals Liabilities
NTI charges:
Loss on sale of assets
and business $10,580 $10,580 $ - $ -
Severance payments 387 387 - -
Medical and other costs 95 95 - -
Support facility charges:
Impairment of long
lived assets 2,058 2,058 - -
Write down of accounts
receivable 350 319 31 -
Write down of inventory 590 590 - -
Severance payments 688 688 - -
Medical and other costs 133 133 - -
Lease payments, taxes,
utilities, maintenance 781 275 - 506
Other 45 45 - -
------- ------- --- ----
$15,707 $15,170 $31 $506
======= ======= === ====
The severance payments and medical and other costs
incurred in connection with the sale of NTI and the
closure of the related support facility were for the
termination of hourly and salaried, administrative,
manufacturing and support employees, all of whom were
terminated during the first and second fiscal quarters
ended May 27, 2001 and August 26, 2001, respectively, and
substantially all of the severance payments and related
costs for such terminated employees (totaling $1.3
million) were paid during such quarters. The lease
obligations will be paid through August 2004 pursuant to
the related lease agreements.
NTI did not have a material effect on Park's consolidated
financial position, results of operations, capital
resources, liquidity or continuing operations, and the
sale of NTI is not expected to have a material effect on
the Company's future operating results.
5. RESTRUCTURING AND SEVERANCE CHARGES
The Company recorded non-recurring, pre-tax charges of
$2,921,000 in its fiscal year 2002 third quarter ended
November 25, 2001 in connection with the closure of the
conventional lamination line of Dielektra GmbH
("Dielektra"), its electronic materials business located
in Cologne, Germany, and the reduction of the size of
Dielektra's mass lamination operations to enable Dielektra
to focus on its DatlamT automated continuous lamination
and paneling technology and on the marketing and
manufacturing of high technology, higher layer count mass
lamination product. The charges included $2,020,000 for
severance payments and related costs for terminated
employees. In addition, the Company recorded non-
recurring, pre-tax severance charges of $681,000 in its
fiscal 2002 first quarter ended May 27, 2001 and $125,000
in its third quarter ended November 25, 2001 for severance
payments and related costs for terminated employees at the
Company's continuing operations in Asia, Europe and North
America. The terminated employees were hourly and
salaried, administrative, manufacturing and support
employees. The components of these charges and the related
liability balances and activity from the November 25, 2001
and May 27, 2001 balance sheet dates to the September 1,
2002 balance sheet date are set forth below.
(Amounts in thousands)
Charges 9/1/02
Closure Incurred or Remaining
Charges Paid Reversals Liabilities
Dielektra GmbH charges:
Impairment of long
lived assets $ 378 $ 378 $ - $ -
Write down of assets 523 523 - -
Severance payments and
related costs 2,020 2,020 - -
------ ------ ----- ----
2,921 2,921 - -
Other severance payments
and related costs 806 806 - -
------ ------ ----- ----
$3,727 $3,727 $ - $ -
====== ====== ===== ====
The charge for fixed asset impairments was comprised of
$378,000 to write off the net book value of machinery and
equipment and $523,000 to write down related land and
building that are no longer used as a result of the close-
down of the conventional lamination line of Dielektra. The
machinery and equipment have no residual value. The land
and building that previously housed the closed operations
are being held for sale and have been written down to
their estimated net realizable value of $2,050,000.
All the terminated employees referred to in this Note were
hourly and salaried, administrative, manufacturing and
support employees, all such employees were terminated
during the first, second and third fiscal quarters ended
May 27, 2001, August 26, 2001 and November 25, 2001,
respectively, and substantially all the severance payments
and related costs for such terminated employees were paid
during such quarters, except payments and costs of
$1,212,000 in Germany, which were paid in installments to
terminated employees in Germany during the six months
ended September 1, 2002.
As a result of the foregoing employee terminations and
other less significant employee terminations in connection
with business contractions and in the ordinary course of
business and substantial numbers of employee resignations
and retirements in the ordinary course of business, the
total number of employees employed by the Company declined
to approximately 1,700 as of March 3, 2002 from
approximately 3,000 as of February 25, 2001, the end of
the Company's 2001 fiscal year, and was approximately
1,700 as of September 1, 2002.
6. EARNINGS (LOSS) PER SHARE
Basic earning (loss) per share is computed by dividing the
net earnings (loss) by the weighted average number of
shares of common stock outstanding for the period. Diluted
earnings per share is computed by dividing net earnings by
the sum of (a) the weighted average number of shares of
common stock outstanding during the period and (b) the
potential common stock equivalents during the period.
Stock options are the only common stock equivalents and
are computed using the treasury stock method.
The table below sets forth the basic and diluted weighted
average number of shares of common stock and potential
common stock equivalents outstanding for the periods
specified:
(Amounts in thousands)
13 weeks ended 26 weeks ended
September 1, August 26, September 1, August 26,
2002 2001 2002 2001
Weighted average common shares
outstanding for basic EPS 19,669 19,545 19,665 19,482
Weighted averages shares
outstanding for diluted EPS 20,013 19,545 20,094 19,482
Common stock equivalents not included in the computation
of diluted loss per share because the effect would have
been antidilutive, were 439,011 and 455,350 for the 13
weeks and 26 weeks ended August 26, 2001, respectively.
Common stock equivalents, not included in the computation
of diluted earnings (loss) per share because the options'
exercise prices were greater than the average market price
of the common stock, were 90,582 and 73,574 for the 13
weeks ended September 1, 2002 and August 26, 2001,
respectively, and 54,089 and 55,111 for the 26 weeks ended
September 1, 2002 and August 26, 2001, respectively.
7. BUSINESS SEGMENTS
The Company's specialty adhesive tape and film business,
advanced composite materials business and plumbing
hardware business were previously aggregated into the
engineered materials and plumbing hardware segment. In
June 2002 the Company sold its specialty adhesive tape and
film business. During fiscal year 2001, the Company closed
and liquidated its plumbing hardware business. In fiscal
years 2001, 2000 and 1999, the specialty adhesive tape,
advanced composite materials and plumbing hardware
businesses comprised less than 10% of the Company's
consolidated revenues and assets, and the Company
considered itself to operate in one business segment. The
Company's electronic materials products are marketed
primarily to leading independent printed circuit board
fabricators, electronic manufacturing service companies,
electronic contract manufacturers and major electronic
original equipment manufacturers ("OEMs") located
throughout North America, Europe and Asia. The Company's
advanced composite materials customers, the majority of
which are located in the United States, include OEMs,
independent firms and distributors in the electronics,
aerospace and industrial industries.
Sales are attributed to geographic region based upon the
region from which the materials were shipped to the
customer. Sales between geographic regions were not
significant.
Financial information concerning the Company's operations
by geographic area follows:
(Amounts in thousands)
13 Weeks Ended 26 Weeks Ended
September 1, August 26, September 1, August 26,
2002 2001 2002 2001
Sales:
North America $31,079 $29,698 $ 63,327 $ 71,157
Europe 13,935 13,300 26,869 30,281
Asia 11,887 8,745 23,266 19,407
Total sales $56,901 $51,743 $113,462 $120,845
September 1. March 3,
2002 2002
Long-lived assets:
United States $ 99,000 $104,386
Europe 27,113 22,954
Asia 21,918 22,943
Total long-lived assets $148,031 $150,283
8. COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) for the 13 weeks ended
September 1, 2002 and August 26, 2001 was $3,041,000 and
$(1,937,000), respectively. Total comprehensive income
(loss) for the 26 weeks ended September 1, 2002 and August
26, 2001 was $4,250,000 and $(18,496,000), respectively.
Comprehensive income (loss) consisted primarily of net
income and foreign currency translation adjustments and
unrealized gains and losses on investments.
9. SALE OF DIELECTRIC POLYMERS, INC.
On June 27, 2002, the Company sold its Dielectric
Polymers, Inc. ("DPI") subsidiary to Adhesive
Applications, Inc. of Easthampton, Massachusetts. The
Company recorded a gain of approximately $3.2 million in
its fiscal year 2003 second quarter ended September 1,
2002 in connection with the sale.
10. SUBSEQUENT EVENTS
On October 2, 2002 the Company announced that it was
proposing to close its Nelco U.K. manufacturing facility
located in Skelmersdale, England and commence a
consultation process with its Nelco U.K. employees
regarding the proposed closure. The Company expects to
record a non-recurring, pre-tax charge of $4.0 million to
$5.0 million in its 2003 fiscal year third quarter in
connection with this proposed closure.
11. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2002, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
146, "Accounting for Costs Associated with Exit or
Disposal Activities" ("SFAS 146"). The Statement is
effective for exit or disposal activities initiated after
December 31, 2002. SFAS 146 addresses significant issues
relating to the recognition, measurement and reporting of
costs associated with exit and disposal activities,
including restructuring activities. The Company has not
yet determined what effect SFAS 146 will have on the
Company's consolidated results of operations or financial
position.
In June 2001, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
141, "Business Combinations", and Statement of Financial
Accounting Standards No. 142, "Goodwill and Other
Intangible Assets", effective for fiscal years beginning
after December 15, 2001. Under the new rules set forth in
these Statements, goodwill and other intangible assets
deemed to have indefinite lives will no longer be
amortized but will be subject to annual impairment tests
in accordance with the Statements. Other intangible assets
will continue to be amortized over their useful lives. In
addition, Statement 141 eliminates the pooling-of-
interests method of accounting for business combinations,
except for qualifying business combinations that were
initiated prior to July 1, 2001. The Company adopted SFAS
142 for the fiscal quarter ended June 2, 2002. The Company
does not have any goodwill on its balance sheet, has
virtually no intangible assets, and is not engaged in any
transactions that are affected by the Statements; and,
therefore, the application of the non-amortization
provisions of the Statements did not have a material
adverse effect on the Company's consolidated results of
operations or financial position.
In August 2001, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
143, "Accounting for Asset Retirement Obligations" ("SFAS
143") effective for fiscal years beginning after June 15,
2002. SFAS 143 requires the fair value of liabilities for
asset retirement obligations to be recognized in the
period in which the obligations are incurred if a
reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part
of the carrying amount of the long-lived asset. The
Company has not yet determined what effect SFAS 143 will
have on the Company's consolidated results of operations
or financial position.
In October 2001, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-
Lived Assets" ("SFAS 144"), which supercedes Statement No.
121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of" ("SFAS 121").
Although it retains the basic requirements of SFAS 121
regarding when and how to measure an impairment loss, SFAS
144 provides additional implementation guidance. SFAS 144
is effective for all fiscal years beginning after December
15, 2001. The Company adopted SFAS 144 for the quarter
ended June 2, 2002. The adoption did not have a material
effect on the Company's results of operations or financial
condition.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General
Park is a leading global designer and producer of
advanced electronic materials used to fabricate complex
multilayer printed circuit boards and other electronic
interconnect systems. The Company's customers include leading
independent printed circuit board fabricators, electronic
manufacturing service companies, electronic contract
manufacturers and major electronic original equipment
manufacturers in the computer, telecommunications,
transportation, aerospace and instrumentation industries.
The Company's sales increased in the three-month period
ended September 1, 2002 compared with last fiscal year's
comparable period, with increases in sales by the Company's
Asian, North American and European operations, while the
Company's sales in the six-month period ended September 1, 2002
declined compared with last year's comparable period, with
declines in sales by the Company's North American and European
operations, with the decline in Europe attributable primarily
to Germany. However, the Company's sales in last year's
comparable six-month period benefited from significantly higher
sales in March 2001 than in any subsequent month, as the
downturn in the global electronics industry and in the
Company's sales occurred in the 2002 fiscal year first quarter.
The earnings growth that the Company achieved during its
2001 and 2000 fiscal years halted in the 2002 fiscal year as a
result of the severe downturn in the global electronics
industry, and the global electronics industry continued to be
very depressed during the 2003 fiscal year first and second
quarters, with no clear signs of recovery.
In response to devastating losses in the U.K. high
technology circuit board industry, the Company announced on
October 2, 2002 that it was proposing to close its Nelco U.K.
manufacturing facility in Skelmersdale, England and that it was
commencing a consultation process with its Nelco U.K. employees
regarding the proposed closure. The Company also announced that
it expects to record a non-recurring, pre-tax charge of $4.0
million to $5.0 million in its 2002 fiscal year third quarter
in connection with this proposed closure.
The Company is not engaged in any related party
transactions involving relationships or transactions with
persons or entities that derive benefits from their non-
independent relationship with the Company or the Company's
related parties, or in any transactions with parties with whom
the Company or its related parties have a relationship that
enables the parties to negotiate terms of material transactions
that may not or would not be available from other, more clearly
independent parties on an arm's-length basis, or in any trading
activities involving non-exchange traded commodity or other
contracts that are accounted for at fair value or otherwise or
in any energy trading or risk management activities, other than
certain limited foreign currency contracts intended to hedge
the Company's contractual commitments to pay certain
obligations or to realize certain receipts in foreign
currencies.
Three and Six Months Ended September 1, 2002 Compared with
Three and Six Months Ended August 26, 2001
The Company's operations continued to be weak during the
three-month and six-month periods ended September 1, 2002 as
the North American, European and Asian markets for
sophisticated printed circuit materials continued to experience
severely depressed conditions during the 2003 fiscal year first
and second quarters.
Nevertheless, the Company's operating results in the
2003 fiscal year first and second quarters improved over last
year's comparable periods as a result of the Company's
reductions of its costs and expenses, higher sales volumes and
higher percentages of sales of higher technology, higher margin
products. In addition, the Company reported positive net
earnings in the three-month and six-month periods ended
September 1, 2002 as a result of the non-recurring, pre-tax
gain of $3.2 million that the Company realized during the 2003
fiscal year second quarter in connection with the sale of its
Dielectric Polymers, Inc. ("DPI") subsidiary, compared to
losses in last year's comparable periods, which included a non-
recurring, pre-tax charge of $15.7 million that the Company
incurred during the 2002 fiscal year first quarter in
connection with the sale of the assets and business of Nelco
Technology, Inc. ("NTI"), the Company's wholly owned subsidiary
that manufactured semi-finished printed circuit boards,
commonly known as mass lamination, in Tempe, Arizona, the
closure of a related support facility in Arizona and pre-tax
severance charges of $0.7 million that the Company incurred
during the 2002 fiscal year first quarter related to the layoff
of employees at the Company's continuing operations.
Results of Operations
Net sales for the three-month period ended September 1,
2002 increased 10% to $56.9 million, while net sales for the
six-month period ended September 1, 2002 declined 6.0% to
$113.5 million, from $51.7 million and $120.8 million,
respectively, for last fiscal year's comparable periods. The
increase in net sales during the three-month period was
primarily the result of higher unit volumes of materials
shipped by the Company's operations in Asia and North America,
while the decrease in net sales during the six-month period was
the result of lower unit volumes of materials shipped during
the first quarter of the 2003 fiscal year by the Company's
operations in Europe and North America, partially offset by
higher unit volumes of materials shipped by the Company's
operations in Asia. The comparative decrease in net sales
during the six-month period ended September 1, 2002 was also
influenced by the fact that the Company's net sales in the six-
month period ended August 26, 2001 benefited from significantly
higher sales in March 2001 than in any subsequent month, as the
downturn in the global electronics industry and in the
Company's sales occurred in the 2002 fiscal year first quarter.
The Company's foreign operations accounted for $25.8
million and $50.1 million, respectively, of sales, or 45% and
44% of the Company's total sales worldwide, during the three-
month and six-month periods ended September 1, 2002 compared
with $22.0 million and $49.7 million, respectively, of sales,
or 43% and 41%, respectively, of total sales worldwide, during
last fiscal year's comparable periods. Net sales by the
Company's foreign operations during the three-month and six-
month periods ended September 1, 2002 increased 17% and 1%,
respectively, from the 2002 fiscal year comparable periods. The
increases in sales by foreign operations were due primarily to
increases in sales in Asia, although sales by the Company's
operations in Europe declined during the first quarter of the
2003 fiscal year and compared with last fiscal year's first
quarter, and sales by the Company's operations in Germany
declined during the three-month and six-month periods ended
September 1, 2002 compared with last year's comparable periods.
The gross margins for the Company's worldwide operations
were 10.9% and 11.0%, respectively, during the three-month and
six-month periods ended September 1, 2002 compared with 2.7%
and 3.9%, respectively, for last fiscal year's comparable
periods. The improvements in the gross margins were
attributable to the Company's ongoing cost reduction measures,
including significant workforce reductions and production
efficiencies resulting from enhanced manufacturing automation,
and manufacturing efficiencies and improved plant utilization
resulting from the higher sales volumes in the three-month
period ended September 1, 2002. Gross profit was also
positively impacted by higher percentages of sales of higher
technology, higher margin products, as high performance
materials accounted for 76% and 77%, respectively, of worldwide
sales for the first and second quarters of the 2003 fiscal year
compared with 66% and 62%, respectively, for the first and
second quarters of the 2002 fiscal year. The Company also
continued to implement an annual salary freeze for significant
numbers of salaried employees, especially senior management
employees, and paid no performance bonuses or significantly
reduced bonuses and other incentives.
Selling, general and administrative expenses declined by
$0.5 million and $1.9 million, respectively, or by 6% and 11%,
during the three-month period and six-month period,
respectively, ended September 1, 2002 compared with last fiscal
year's comparable periods, and these expenses, measured as a
percentage of sales, were 14% during the three-month and six-
month periods ended September 1, 2002 compared with 16% and
15%, respectively, during last fiscal year's comparable
periods. The decreases in the expenses as percentages of sales
in the 2003 fiscal year periods resulted from higher sales and
lower expenses in the three-month period ended September 1,
2002 compared to the comparable period in the last fiscal year
and from lower expenses in the six-month period ended September
1, 2002 compared to the comparable periods in the last fiscal
year.
The Company incurred a non-recurring, pre-tax charge of
$15.7 million during the 2002 fiscal year first quarter in
connection with the sale of the assets and business of Nelco
Technology, Inc. ("NTI"), the Company's wholly owned subsidiary
that manufactured semi-finished printed circuit boards,
commonly known as mass lamination, in Tempe, Arizona, and the
closure of a related support facility in Arizona. NTI formerly
supplied Delco Electronics Corporation with semi-finished
printed circuit boards. The Company also incurred pre-tax
severance charges of $0.7 million during the 2002 fiscal year
first quarter related to the layoff of employees at the
Company's continuing operations.
The Company recorded a non-recurring, pre-tax gain of
$3.2 million in the 2003 fiscal year second quarter in
connection with the sale of DPI on June 27, 2002 for $5.0
million cash.
For the reasons set forth above, income from operations
was $1.5 million for the three months ended September 1, 2002,
including the non-recurring, pre-tax gain described above
relating to the sale of DPI, compared with a loss of $7.0
million for the three months ended August 26, 2001, and the
loss from operations was $0.4 million for the six months ended
September 1, 2002, including the non-recurring, pre-tax gain
described above, compared with $29.6 million for last fiscal
year's comparable period, including the non-recurring pre-tax
charges described above related to the sale of NTI, the closure
of a related support facility and severance for the lay-off of
employees at the Company's continuing operations.
Interest and other income, net, principally investment
income, was $0.8 million and $1.7 million, respectively, for
the three-month and six-month periods ended September 1, 2002
compared with $1.6 million and $3.3 million, respectively, for
last fiscal year's comparable periods. The decreases in
investment income were attributable to decreases in prevailing
interest rates. The Company's investments were primarily short-
term taxable instruments.
The Company's effective income tax rates for the three-
month and six-month periods ended September 1, 2002 were 30.0%
compared with the same rates for the three-month and six-month
periods ended August 26, 2001.
For the reasons set forth above, net income for the
three-month period ended September 1, 2002, including the non-
recurring, pre-tax gain described above relating to the sale of
DPI, was $1.6 million compared to a net loss of $3.8 million
for the three months ended August 26, 2001. Net income for the
six-month period ended September 1, 2002, including the non-
recurring, pre-tax gain described above, was $1.0 million
compared to a net loss of $18.4 million for the six-month
period ended August 26, 2001, including the non-recurring, pre-
tax charges described above related to the sale of NTI, the
closure of a related support facility and severance for the lay-
off of employees at the Company's continuing operations. Before
the non-recurring, pre-tax gain described above relating to the
sale of DPI, the net losses for the three-month and six-month
periods ended September 1, 2002 were $0.6 million and $1.3
million, respectively, compared to net losses for the three-
month and six-month periods ended August 26, 2001, before the
non-recurring, pre-tax charges described above of $3.8 million
and $6.9 million, respectively.
Basic and diluted earnings per share for the three-month
period ended September 1, 2002 were $0.08, including the non-
recurring, pre-tax gain described above relating to the sale of
DPI, compared to a loss of $0.19 for the three-month period
ended August 26, 2001.Basic and diluted earnings per share for
the six-month period ended September 1, 2002 were $0.05,
including the non-recurring, pre-tax gain, compared to a loss
of $0.94 for the six-month period ended August 26, 2001,
including the non-recurring, pre-tax charges. Basic and diluted
per share losses for the three-month and six-month periods
ended September 1, 2002, before the non-recurring, pre-tax
gain, were $0.03 and $0.06, respectively, compared to basic and
diluted per share losses before the non-recurring, pre-tax
charges for the prior year's comparable periods of $0.19 and
$0.36, respectively.
Liquidity and Capital Resources:
At September 1, 2002, the Company's cash and temporary
investments were $154.7 million compared with $151.4 million at
March 3, 2002, the end of the Company's 2002 fiscal year. The
Company's working capital (which includes cash and temporary
investments) was $172.5 million at September 1, 2002 compared
with $167.0 million at March 3, 2002. The Company's current
ratio (the ratio of current assets to current liabilities) was
5.2 to 1 and 4.9 to 1 at September 1, 2002 and at March 3,
2002, respectively.
During the six-months ended September 1, 2002, the
Company generated $4.0 million of cash from operating
activities. During the same six-month period, the Company
expended $4.1 million for the purchase of property, plant and
equipment compared with $15.4 million for the six-month period
ended August 26, 2001 and paid $2.3 million in dividends on its
common stock in each of such six-month periods. Net
expenditures for property, plant and equipment were $22.8
million in the 2002 fiscal year and $51.8 million in the 2001
fiscal year. During the past two fiscal years, the Company
completed significant expansions of its electronic materials
manufacturing facilities in California and New York and its
higher technology product line manufacturing facility in
Arizona.
The Company sold its DPI subsidiary on June 27, 2002 for
$5.0 million cash and recorded a non-recurring, pre-tax gain of
$3.2 million in the 2003 fiscal year second quarter in
connection with the sale.
At September 1, 2002, the Company had no long-term debt.
The Company believes its financial resources will be
sufficient, for the foreseeable future, to provide for
continued investment in working capital and property, plant and
equipment and for general corporate purposes. Such resources
would also be available for appropriate acquisitions and other
expansion of the Company's business.
The Company is not aware of any circumstances or events
that are reasonably likely to occur that could materially
affect its liquidity.
The Company's liquidity is not dependent on the use of,
and the Company is not engaged in, any off-balance sheet
financing arrangements, such as securitization of receivables
or obtaining access to assets through special purpose entities.
The Company's contractual obligations and other
commercial commitments to make future payments under contracts,
such as lease agreements, consist only of the operating lease
commitments. The Company has no long-term debt, capital lease
obligations, unconditional purchase obligations or other long-
term obligations, standby letters of credit, guarantees,
standby repurchase obligations or other commercial commitments
or contingent commitments, other than a standby letter of
credit in the amount of $1,042,000 to secure the Company's
obligations under the workers' compensation insurance program.
Environmental Matters:
In the six-month periods ended September 1, 2002 and
August 26, 2001, the Company charged less than $0.1 million
against pretax income for environmental remedial response and
voluntary cleanup costs (including legal fees). While annual
expenditures have generally been constant from year to year and
may increase over time, the Company expects it will be able to
fund such expenditures from available cash. The timing of
expenditures depends on a number of factors, including
regulatory approval of cleanup projects, remedial techniques to
be utilized and agreements with other parties. At September 1,
2002 and March 3, 2002, the recorded liability in accrued
liabilities for environmental matters was approximately $4.0
million. Management does not expect that environmental matters
will have a material adverse effect on the liquidity, capital
resources, business, consolidated results of operations or
consolidated financial position of the Company.
Critical Accounting Policies and Estimates:
In response to financial reporting release, FR-60,
"Cautionary Advice Regarding Disclosure About Critical
Accounting Policies", issued by the Securities and Exchange
Commission in December 2001, the following information is
provided regarding critical accounting policies that are
important to the Consolidated Financial Statements and that
entail, to a significant extent, the use of estimates,
assumptions and the application of management's judgment.
General
The Company's discussion and analysis of its financial
condition and results of operations are based upon the
Company's consolidated financial statements, which have been
prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these
financial statements requires the Company to make estimates,
assumptions and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and the related
disclosure of contingent liabilities. On an on-going basis, the
Company evaluates its estimates, including those related to
sales allowances, bad debts, inventories, valuation of long-
lived assets, income taxes, restructuring, pensions and other
employee benefit programs, and contingencies and litigation.
The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different
assumptions or conditions.
The Company believes the following critical accounting
policies affect its more significant judgments and estimates
used in the preparation of its consolidated financial
statements.
Sales Allowances
The Company provides for the estimated costs of sales
allowances at the time such costs can be reasonably estimated.
The Company is focused on manufacturing the highest quality
electronic materials and other products possible and employs
stringent manufacturing process controls and works with raw
material suppliers who have dedicated themselves to complying
with the Company's specifications and technical requirements.
However, if the quality of the Company's products declined, the
Company may incur higher sales allowances.
Bad Debt
The Company maintains allowances for doubtful accounts for
estimated losses resulting from the inability of its customers
to make required payments. If the financial condition of the
Company's customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional
allowances may be required.
Inventory
The Company writes down its inventory for estimated
obsolescence or unmarketability based upon the age of the
inventory and assumptions about future demand for the Company's
products and market conditions. If actual demand or market
conditions are less favorable than those projected by
management, additional inventory write-downs may be required.
Valuation of Long-lived Assets
The Company assesses the impairment of long-lived assets
whenever events or changes in circumstances indicate that the
carrying value of such assets may not be recoverable. Important
factors that could trigger an impairment review include, but
are not limited to, significant negative industry or economic
trends and significant changes in the use of the Company's
assets or strategy of the overall business.
Income Taxes
Carrying value of the Company's net deferred tax assets
assumes that the Company will be able to generate sufficient
future taxable income in certain tax jurisdictions, based on
estimates and assumptions. If these estimates and assumptions
change in the future, the Company may be required to record
additional valuation allowances against its deferred tax assets
resulting in additional income tax expense in the Company's
consolidated statement of operations. Management evaluates the
realizability of the deferred tax assets quarterly and assesses
the need for additional valuation allowances quarterly.
Restructuring
During the fiscal year ended March 3, 2002, the Company
recorded significant reserves in connection with the
restructuring relating to the sale of Nelco Technology, Inc.,
the closure of a related support facility and the realignment
of Dielektra, GmbH. These reserves include estimates pertaining
to employee separation costs and the settlements of contractual
obligations resulting from the Company's actions. Although the
Company does not anticipate significant changes, the actual
costs incurred by the Company may differ from these estimates.
Contingencies and Litigation
The Company is subject to a small number of proceedings,
lawsuits and other claims related to environmental, employment,
product and other matters. The Company is required to assess
the likelihood of any adverse judgments or outcomes in these
matters as well as potential ranges of probable losses. A
determination of the amount of reserves required, if any, for
these contingencies is made after careful analysis of each
individual issue. The required reserves may change in the
future due to new developments in each matter or changes in
approach such as a change in settlement strategy in dealing
with these matters.
Pension and Other Employee Benefit Programs
The Company's subsidiary in Germany has significant
pension costs that are developed from actuarial valuations.
Inherent in these valuations are key assumptions including
discount rates and wage inflation rates. The Company is
required to consider current market conditions, including
changes in interest rates and wage costs, in selecting these
assumptions. Changes in the related pension costs may occur in
the future in addition to changes resulting from fluctuations
in the Company's related headcount due to changes in the
assumptions.
The Company's obligations for workers' compensation claims
and employee-health care benefits are effectively self-insured.
The Company uses an insurance company administrator to process
all such claims and benefits. The Company accrues its workers'
compensation liability based upon the claim reserves
established by the third-party administrator and historical
experience. The Company's employee health insurance benefit
liability is based on its historical claims experience.
The Company and certain of its subsidiaries have a non-
contributory profit sharing retirement plan covering their
regular full-time employees. In addition, the Company's
subsidiaries have various bonus and incentive compensation
programs, most of which are determined at management's
discretion.
The Company's reserves associated with these self-insured
liabilities and benefit programs are reviewed by management for
adequacy at the end of each reporting period.
Factors that May Affect Future Results.
Certain portions of this Report which do not relate to
historical financial information may be deemed to constitute
forward-looking statements that are subject to various factors
which could cause actual results to differ materially from
Park's expectations or from results which might be projected,
forecast, estimated or budgeted by the Company in forward-
looking statements. Such factors include, but are not limited
to, general conditions in the electronics industry, the
Company's competitive position, the status of the Company's
relationships with its customers, economic conditions in
international markets, the cost and availability of utilities,
and the various factors set forth under the caption "Factors
That May Affect Future Results" after Item 7 of Park's Annual
Report on Form 10-K for the fiscal year ended March 3, 2002.
Item 3. Quantitative and Qualitative Disclosure About Market
Risk
The Company's market risk exposure at September 1, 2002
is consistent with, and not greater than, the types of market
risk and amount of exposures presented in the Annual Report on
Form 10-K for the fiscal year ended March 3, 2002.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. The
Company's Chief Executive officer and Senior Vice President,
Finance and Principal Financial Officer have evaluated the
effectiveness of the Company's disclosure controls and
procedures (as such term is defined in Rules 13a-14(c) and 15d-
14(c) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date").
Based on such evaluation, such officers have concluded that, as
of the Evaluation Date, the Company's disclosure controls and
procedures are effective in alerting them, on a timely basis,
to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the
Company's periodic filings under the Exchange Act.
(b) Changes in Internal Controls. Since the Evaluation Date,
there have not been any significant changes in the Company's
internal controls or in other factors that could significantly
affect such controls.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In May 1998, the Company and its Nelco Technology, Inc.
("NTI") subsidiary in Arizona filed a complaint against Delco
Electronics Corporation and the Delphi Automotive Systems unit
of General Motors Corp. in the United States District Court for
the District of Arizona. The complaint alleged, among other
things, that Delco breached its contract to purchase semi-
finished multilayer printed circuit boards from NTI and that
Delphi interfered with NTI's contract with Delco, that Delco
breached the covenant of good faith and fair dealing implied in
the contract, that Delco engaged in negligent misrepresentation
and that Delco fraudulently induced NTI to enter into the
contract. The Company and NTI sought substantial compensatory
and punitive damages.
On November 29, 2000, after a five day trial in Phoenix,
Arizona, a jury awarded damages to NTI in the amount of
$32,280,000, and on December 12, 2000 the judge in the United
States District Court entered judgment for NTI on its claim of
breach of the implied covenant of good faith and fair dealing
with damages in the amount of $32,280,000. Both parties filed
motions for post-judgment relief and a new trial, all of which
the judge denied, and both parties have appealed the decision
to the United States Court of Appeals for the Ninth Circuit in
San Francisco. The appeal has been fully briefed and the
parties await oral argument, which the Ninth Circuit has not
yet scheduled.
Park announced in March 1998 that it had been informed
by Delco Electronics that Delco planned to close its printed
circuit board fabrication plant and exit the printed circuit
board manufacturing business. After the plant closure, Delco
purchased all of its printed circuit boards from outside
suppliers and Delco was no longer a customer of the Company's.
As a result, the Company's sales to Delco declined
significantly during the three-month period ended May 31, 1998,
were negligible during the three-month period ended August 30,
1998, have been nil since that time. During the Company's 1999
fiscal year first quarter and during its 1998 fiscal year and
for several years prior thereto, more than 10% of the Company's
total worldwide sales were to Delco Electronics Corporation;
and the Company had been Delco's principal supplier of semi-
finished multilayer printed circuit board materials for more
than ten years. These materials were used by Delco to produce
finished multilayer printed circuit boards. See "Factors That
May Affect Future Results" after Item 2 of Part I of this
Report.
In the first quarter of the fiscal year ended March 3,
2002, the Company sold the assets and business of NTI and
recorded non-recurring, pre-tax charges of approximately $15.7
million in its 2002 fiscal year first quarter ended May 27,
2001 in connection with the sale of NTI and the closure of a
related support facility also located in Arizona. See Note 4 of
the Notes to Condensed Consolidated Financial Statements in
Item 2 of this Report.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Shareholders held on July 17,
2002:
(a) the persons elected as directors of the Company and the
voting for such persons were as follows:
Authority
Name Votes For Withheld
---- -------- --------
Mark S. Ain 16,282,071 1,168,029
Anthony Chiesa 16,226,611 1,223,489
Lloyd Frank 16,229,021 1,221,079
Brian E. Shore 14,456,206 2,993,894
Jerry Shore 16,337,504 1,112,596
(b) the Company's 2002 Stock Option Plan was approved by the
Shareholders. There were 13,456,451 votes for the Plan,
3,617,713 votes against, and 375,931 abstentions.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10.01. 2002 Stock Option Plan of the Company. (This exhibit is a
management contract or compensatory plan or arrangement.)
99.01. Certification of Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
99.02. Certification of Principal Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2202.
(b) No reports on Form 8-K have been filed during the fiscal
quarter ended September 1, 2002.
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.
Park Electrochemical Corp.
--------------------------
(Registrant)
/s/Brian E. Shore
Date: October 14, 2002 -----------------------------
Brian E. Shore
President and
Chief Executive Officer
/s/Murray O. Stamer
Date: October 14, 2002 ----------------------------
Murray O. Stamer
Senior Vice President, Finance
Principal Financial Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Brian E. Shore, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Park
Electrochemical Corp.;
2. Based on my knowledge, this quarterly 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
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-
14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
(c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Date: October 14, 2002
/s/Brian E. Shore
Brian E. Shore
President and Chief Executive Officer
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Murray O. Stamer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Park
Electrochemical Corp.;
2. Based on my knowledge, this quarterly 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
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-
14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
(c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Date: October 14, 2002
/s/Murray O. Stamer
Murray O. Stamer
Senior Vice President, Finance
Principal Financial Officer
EXHIBIT INDEX
Exhibit No. Name Page
----------- ---- ----
10.01 2002 Stock option Plan of the
Company. (This exhibit is a
management contract or compensatory
plan or arrangement)............
99.01. Certification of Chief Executive
Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of
2002...................
99.02. Certification of Principal Financial
Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of
2002...................