PARK ELECTROCHEMICAL CORP - 10-K Annual Report

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DRAFT 5/28/03
10K.03-1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 2, 2003

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 of Organization) Identification No.)

5 Dakota Drive, Lake Success, New York 11042
(Address of Principal Executive Offices) Zip Code

Registrant's telephone number, including area code (516)354-4100

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange
on Which Registered
Common Stock, par value $.10 per share New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No _

[cover page 1 of 2 pages]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X

Indicate by check mark whether the registrant is an
accelerated filer (as defined in Exchange Act Rule 12b-2).
Yes X No___

State the aggregate market value of the voting and non-
voting common equity held by non-affiliates computed by reference
to the price at which the common equity was sold, or the average
bid and asked prices of such common equity, as of the last
business day of the registrant's most recently completed second
fiscal quarter.

As of Close of
Title of Class Aggregate Market Value Business On
Common Stock,
par value $.10 per share $417,627,420* August 30, 2002

Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.

Shares As of Close of
Title of Class Outstanding Business On
Common Stock,
par value $.10 per share 19,755,755 May 23, 2003
share

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for Annual Meeting of Shareholders to be held
July 17, 2003 incorporated by reference into Part III of this
Report.

*Included in such amount are 1,442,298 shares of common stock
valued at $21.40 per share and held as of such date by Jerry
Shore, the Registrant's Chairman of the Board and a member of the
Registrant's Board of Directors.

[cover page 2 of 2 pages]

TABLE OF CONTENTS

Page
PART I

Item 1. Business 4
Item 2. Properties 15
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security 16
Holders
Executive Officers of the Registrant 16

PART II

Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 18
Item 6. Selected Financial Data 18
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 20
Factors That May Affect Future Results 33
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk 35
Item 8. Financial Statements and Supplementary Data 35
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 62

PART III

Item 10. Directors and Executive Officers of the 63
Registrant
Item 11. Executive Compensation 63
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder 63
Matters
Item 13. Certain Relationships and Related 64
Transactions
Item 14. Controls and Procedures 64

PART IV

Item 15 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 65

SIGNATURES 66

CERTIFICATIONS 67

FINANCIAL STATEMENT SCHEDULES

Schedule II - Valuation and Qualifying Accounts 71

EXHIBIT INDEX 72

PART I

Item 1. Business.

General

Park Electrochemical Corp. ("Park"), through its
subsidiaries (unless the context otherwise requires, Park and its
subsidiaries are hereinafter called the "Company"), is primarily
engaged in the design, production and marketing of advanced
electronic materials used to fabricate complex multilayer printed
circuit boards and other electronic interconnection systems. Park
specializes in advanced materials for high layer count circuit
boards and high-speed digital broadband telecommunications,
internet and networking applications and radio frequency wireless
systems. Park's electronic materials business operates under the
"Nelco" name through fully integrated business units in Asia,
Europe and North America. The Company's electronic materials
manufacturing facilities are located in Singapore, China,
Germany, France, New York, Arizona and California.

The Company is also engaged in the design, production and
marketing of advanced composite materials through its FiberCote
Industries subsidiary in Waterbury, Connecticut.

Park was founded in 1954 by Jerry Shore, the Company's
Chairman of the Board and one of its largest shareholders.

Unless otherwise indicated, all information in this Report
has been adjusted to give effect to the Company's three-for-two
stock split in the form of a stock dividend, which was
distributed November 8, 2000 to shareholders of record at the
close of business on October 20, 2000.

In the fiscal year ended February 27, 2000, the Company's
business was divided into two industry segments: (1) electronic
materials and (2) engineered materials and plumbing hardware,
consisting of the Company's advanced composite materials,
plumbing hardware and specialty adhesive tapes and films
businesses. However, during the 2001 fiscal year, the Company
closed and liquidated the plumbing hardware portion of its
engineered materials and plumbing hardware business segment; and
in the second quarter of the 2003 fiscal year, the Company sold
its specialty adhesive tapes and films business. See Notes 16, 18
and 10 of the Notes to Consolidated Financial Statements in Item
8 of this Report for information concerning the closure of the
plumbing hardware business and the sale of the specialty adhesive
tapes and films business. In addition, in the 2001 fiscal year
the plumbing hardware, specialty adhesive tapes and films and
advanced composite materials businesses, and in the 2002 and 2003
fiscal years the remaining specialty adhesive tapes and films and
advanced composite materials businesses, comprised less than 10%
of the Company's consolidated revenues, earnings and assets, and
the Company considered itself to operate in one business segment
in such fiscal years. See Note 16 of the Notes to Consolidated
Financial Statements in Item 8 of this Report for information
concerning the Company's business segments.

The sales and long-lived assets of the Company's operations
by geographic area for the last three fiscal years are set forth
in Note 16 of the Notes to Consolidated Financial Statements in
Item 8 of this Report. The Company's foreign operations are
conducted principally by the Company's subsidiaries in Singapore,
China, Germany and France. The Company's foreign operations are
subject to the impact of foreign currency fluctuations. See Note
1 of the Notes to Consolidated Financial Statements in Item 8 of
this Report.

The Company makes available free of charge on its Internet
website, www.parkelectro.com, its annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and
all amendments to those reports as soon as reasonably practicable
after such material is electronically filed with or furnished to
the Securities and Exchange Commission. None of the information
on the Company's website shall be deemed to be a part of this
Report.

Electronic Materials Operations

The Company is a leading global designer and producer of
advanced electronic materials used to fabricate complex
multilayer printed circuit boards and other electronic
interconnect systems, such as multilayer back-planes, wireless
packages, high-speed/low-loss multilayers and high density
interconnects ("HDIs"). The Company's multilayer printed circuit
materials include copper-clad laminates and prepregs. The Company
has long-term relationships with its major customers, which
include leading independent printed circuit board fabricators,
electronic manufacturing service companies, electronic contract
manufacturers and major electronic original equipment
manufacturers ("OEMs"). Multilayer printed circuit boards and
interconnect systems are used in virtually all advanced
electronic equipment to direct, sequence and control electronic
signals between semiconductor devices (such as microprocessors
and memory and logic devices), passive components (such as
resistors and capacitors) and connection devices (such as infra-
red couplings, fiber optics and surface mount connectors).
Examples of end uses of the Company's digital printed circuit
materials include high speed routers and servers, storage area
networks, supercomputers, laptops, satellite switching equipment,
cellular telephones and transceivers, wireless personal digital
assistants ("PDAs") and wireless local area networks ("LANs").
The Company's radio frequency ("RF") printed circuit materials
are used primarily for military avionics, antennas for cellular
telephone base stations, automotive adaptive cruise control
systems and avionic communications equipment. The Company has
developed long-term relationships with major customers as a
result of its leading edge products, extensive technical and
engineering service support and responsive manufacturing
capabilities.

Park believes it founded the modern day printed circuit
industry in 1957 by inventing a composite material consisting of
an epoxy resin substrate reinforced with fiberglass cloth which
was laminated together with sheets of thin copper foil. This
epoxy-glass copper-clad laminate system is still used to
construct the large majority of today's advanced printed circuit
products. The Company also believes that in 1962 it invented the
first multilayer printed circuit materials system used to
construct multilayer printed circuit boards. The Company also
pioneered vacuum lamination and many other manufacturing
technologies used in the industry today. In addition, the
Company's subsidiary, Dielektra GmbH in Germany, which the
Company acquired in 1997, owns a patented process, called
DatlamT, for continuously producing thin copper-clad laminates
for printed circuit board applications. The Company believes it
is one of the industry's technological leaders.

As a result of its leading edge products, extensive
technical and engineering service support and responsive
manufacturing capabilities, the Company expects to continue to
take advantage of several industry trends. These trends include
the increasingly advanced electronic materials required for
interconnect performance and manufacturability, the increasing
miniaturization and portability of advanced electronic equipment,
the consolidation of the printed circuit board fabrication
industry and the time-to-market and time-to-volume pressures
requiring closer collaboration with materials suppliers.

The Company believes that it is one of the world's largest
manufacturers of advanced multilayer printed circuit materials
and the market leader in North America and Southeast Asia. It
also believes that it is one of only a few significant
independent manufacturers of multilayer printed circuit materials
in the world. The Company was the first manufacturer in the
printed circuit materials industry to establish manufacturing
presences in the three major global markets of North America,
Europe and Asia, with facilities established in Europe in 1969
and Asia in 1986.

Industry Background

The electronic materials manufactured by the Company and its
competitors are used to construct and fabricate complex
multilayer printed circuit boards and other advanced electronic
interconnect systems. Multilayer printed circuit materials
consist of prepregs and copper-clad laminates. Prepregs are
chemically and electrically engineered thermosetting or
thermoplastic resin systems which are impregnated into and
reinforced by a specially manufactured fiberglass cloth product
or other woven or non-woven reinforcing fiber. This insulating
dielectric substrate is 0.030 inch to 0.002 inch in thickness or
less in some cases. These resin systems are usually based upon an
epoxy chemistry. One or more plies of prepreg are laminated
together to form an insulating dielectric substrate to support
the copper circuitry patterns of a multilayer printed circuit
board. Copper-clad laminates consist of one or more plies of
prepreg laminated together with specialty thin copper foil
laminated on the top and bottom. Copper foil is specially formed
in thin sheets which may vary from 0.0030 inch to 0.0002 inch in
thickness and normally have a thickness of 0.0014 inch or 0.0007
inch. The Company supplies both copper-clad laminates and
prepregs to its customers, which use these products as a system
to construct multilayer printed circuit boards.

The printed circuit board fabricator processes copper-clad
laminates to form the inner layers of a multilayer printed
circuit board. The fabricator photoimages these laminates with a
dry film or liquid photoresist. After development of the
photoresist, the copper surfaces of the laminate are etched to
form the circuit pattern. The fabricator then assembles these
etched laminates by inserting one or more plies of dielectric
prepreg between each of the inner layer etched laminates and also
between an inner layer etched laminate and the outer layer copper
plane, and then laminating the entire assembly in a press.
Prepreg serves as the insulator between the multiple layers of
copper circuitry patterns found in the multilayer circuit board.
When the multilayer configuration is laminated, these plies of
prepreg form an insulating dielectric substrate supporting and
separating the multiple inner and outer planes of copper
circuitry. The fabricator drills vertical through-holes or vias
in the multilayer assembly and then plates the through-holes or
vias to form vertical conductors between the multiple layers of
circuitry patterns. These through holes or vias combine with the
conductor paths on the horizontal circuitry planes to create a
three-dimensional electronic interconnect system. In specialized
applications, an additional set of microvia layers (2 or 4,
typically) may be added through a secondary lamination process to
provide increased density and functionality to the design. The
outer two layers of copper foil are then imaged and etched to
form the finished multilayer printed circuit board. The completed
multilayer board is a three-dimensional interconnect system with
electronic signals traveling in the horizontal planes of multiple
layers of copper circuitry patterns, as well as the vertical
plane through the plated holes or vias.

In the years immediately preceding the severe correction and
downturn that occurred in the global electronics industry in the
Company's 2002 fiscal year first quarter, the global market for
advanced electronic products grew as a result of technological
change and frequent new product introductions. This growth was
principally attributable to increased sales and more complex
electronic content of newer products, such as cellular
telephones, pagers, personal computers and portable computing
devices and the infrastructure equipment necessary to support the
use of these devices, and greater use of electronics in other
products, such as automobiles. Further, large, almost completely
untapped markets for advanced electronic equipment emerged in
such areas as India and China and other areas of the Pacific Rim.
During its 2002 fiscal year, the Company established a business
center in Wuxi, China, in the Shanghai-Nanjing corridor, which is
an emerging region for advanced multilayer printed circuit
fabrication in China.

Semiconductor manufacturers have introduced successive
generations of more powerful microprocessors and memory and logic
devices. Electronic equipment manufacturers have designed these
advanced semiconductors into more compact and often portable
products. High performance computing devices in these smaller
portable platforms require greater reliability, closer
tolerances, higher component and circuit density and increased
overall complexity. As a result, the interconnect industry has
developed smaller, lighter, faster and more cost-effective
interconnect systems, including advanced multilayer printed
circuit boards.

Advanced interconnect systems require higher technology
printed circuit materials to insure the performance of the
electronic system and to improve the manufacturability of the
interconnect platform. In the years immediately preceding the
severe correction and downturn that occurred in the global
electronics industry in the Company's 2002 fiscal year first
quarter, the growth of the market for more advanced printed
circuit materials outpaced the market growth for standard printed
circuit materials. Printed circuit board fabricators and
electronic equipment manufacturers require advanced printed
circuit materials that have increasingly higher temperature
tolerances and more advanced and stable electrical properties in
order to support high-speed computing in a miniaturized and often
portable environment.

With the very high density circuit demands of miniaturized
high performance interconnect systems, the uniformity, purity,
consistency, performance predictability, dimensional stability
and production tolerances of printed circuit materials have
become successively more critical. High density printed circuit
boards and interconnect systems often involve higher layer count
multilayer circuit boards where the multiple planes of circuitry
and dielectric insulating substrates are very thin (dielectric
insulating substrate layers may be 0.002 inch or less) and the
circuit line and space geometries in the circuitry plane are very
narrow (0.002 inch or less). In addition, advanced surface mount
interconnect systems are typically designed with very small pad
sizes and very narrow plated through holes or vias which
electrically connect the multiple layers of circuitry planes.
High density interconnect systems must utilize printed circuit
materials whose dimensional characteristics and purity are
consistently manufactured to very high tolerance levels in order
for the printed circuit board fabricator to attain and sustain
acceptable product yields.

Shorter product life cycles and competitive pressures have
induced electronic equipment manufacturers to bring new products
to market and increase production volume to commercial levels
more quickly. These trends have highlighted the importance of
front-end engineering of electronic products and have increased
the level of collaboration among system designers, fabricators
and printed circuit materials suppliers. As the complexity of
electronic products increases, materials suppliers must provide
greater technical support to interconnect systems fabricators on
a timely basis regarding manufacturability and performance of new
materials systems.

Products and Services

The Company produces a broad line of advanced printed
circuit materials used to fabricate complex multilayer printed
circuit boards and other electronic interconnect systems,
including backplanes, wireless packages, high speed/low loss
multilayers and HDIs. The Company's diverse advanced printed
circuit materials product line is designed to address a wide
array of end-use applications and performance requirements.

The Company's electronic materials products have been
developed internally and through long-term development projects
with its principal suppliers and, to a lesser extent, through
licensing arrangements. The Company focuses its research and
development efforts on developing industry leading product
technology to meet the most demanding product requirements and
has designed its product line with a focus on the higher
performance, higher technology end of the materials spectrum. All
of the Company's existing electronic materials products have been
introduced since 1990.

Most of the Company's research and development expenditures
are attributable to the efforts of its electronic materials
operations. In response to the rapid technological changes in the
electronic materials business, these expenditures on research and
product development have increased over the past several years.

The Company's products include high-speed, low-loss, digital
broadband engineered formulations, high-temperature modified
epoxies, bismaleimide triazine epoxies ("BT epoxy"), non-MDA
polyimides, enhanced polyimides, high performance epoxy
Thermountr materials ("Thermount" is a registered trademark of
E.I. duPont de Nemours & Co.), SIT (Signal Integrity) products,
cyanate esters and polytetrafluoroethylene ("PTFE") formulations
for RF/microwave applications.

The Company has developed long-term relationships with
select customers through broad-based technical support and
service, as well as manufacturing proximity and responsiveness at
multiple levels of the customer's organization. The Company
focuses on developing a thorough understanding of its customer's
business, product lines, processes and technological challenges.
The Company seeks customers which are industry leaders committed
to maintaining and improving their industry leadership positions
and which are committed to long-term relationships with their
suppliers. The Company also seeks business opportunities with the
more advanced printed circuit fabricators and electronic
equipment manufacturers which are interested in the full value of
products and services provided by their suppliers. The Company
believes its proactive and timely support in assisting its
customers with the integration of advanced materials technology
into new product designs further strengthens its relationships
with its customers.

The Company's emphasis on service and close relationships
with its customers is reflected in its short lead times. The
Company has developed its manufacturing processes and customer
service organizations to provide its customers with printed
circuit materials products on a just-in-time basis. The Company
believes that its ability to meet its customers customized
manufacturing and quick-turn-around ("QTA") requirements is one
of its unique strengths.

The Company has located its advanced printed circuit
materials manufacturing operations in strategic locations
intended to serve specific regional markets. By situating its
facilities in close geographical proximity to its customers, the
Company is able to rapidly adjust its manufacturing processes to
meet customers' new requirements and respond quickly to
customers' technical needs. The Company has technical staffs
based at each of its manufacturing locations, which allows the
rapid dispatch of technical personnel to a customer's facility to
assist the customer in quickly solving design, process,
production or manufacturing problems. During the 2002 fiscal
year, the Company established a business center in Wuxi, China to
support the growing customer demand for advanced multilayer
printed circuitry materials in China.

Customers and End Markets

The Company's customers for its advanced electronic
materials include the leading independent printed circuit board
fabricators, electronic manufacturing service companies,
electronic contract manufacturers and major electronic original
equipment manufacturers ("OEMs") in the computer, networking,
telecommunications, transportation, aerospace and instrumentation
industries located throughout North America, Europe and Asia. The
Company seeks to align itself with the larger, more
technologically-advanced and better capitalized independent
printed circuit board fabricators and major electronic equipment
manufacturers which are industry leaders committed to maintaining
and improving their industry leadership positions and to building
long-term relationships with their suppliers. The Company's
selling effort typically involves several stages and relies on
the talents of Company personnel at different levels, from
management to sales personnel and quality engineers. In recent
years, the Company has augmented its traditional sales personnel
with an OEM marketing team and product technology specialists.
The Company's strategy emphasizes the use of multiple facilities
established in market areas in close proximity to its customers.

During the Company's 2003 fiscal year, approximately 17.3%
of the Company's total worldwide sales were to Sanmina
Corporation, a leading electronics contract manufacturer and
manufacturer of printed circuit boards, and approximately 10.0%
of the Company's total worldwide sales were to Multilayer
Technology, Inc., a manufacturer of multilayer printed circuit
boards. During the Company's 2002 fiscal year, approximately
18.1% of the Company's total worldwide sales were to Sanmina
Corporation and approximately 11.3% of the Company's total
worldwide sales were to Tyco Printed Circuit Group L.P., a
leading manufacturer of printed circuit boards.

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. However, in 1998 Delco closed its printed
circuit board fabrication plant, exited the printed circuit board
manufacturing business, and ceased being a customer of the
Company's. After that time, the Company marketed its semi-
finished multilayer circuit board material manufacturing
capability to leading printed circuit board fabricators, contract
assemblers and electronic original equipment manufacturers in
North America. The Company had not previously marketed this
capability as its semi-finished multilayer capacity had been
largely committed to supplying Delco Electronics. In the first
quarter of the fiscal year ended March 3, 2002, the Company sold
the assets and business of its subsidiary in Arizona that
conducted the mass lamination business and recorded pre-tax
charges of approximately $15.7 million in its 2002 fiscal year
first quarter ended May 27, 2001 in connection with the sale and
the closure of a related support facility to the mass lamination
business also located in Arizona. See Item 3 of this Report for a
discussion of legal proceedings initiated by the Company against
Delco Electronics Corporation.

Although the electronic materials business is not dependent
on any single customer, the loss of a major customer or of a
group of customers could have a material adverse effect on the
electronic materials business.

The Company's electronic materials products are marketed by
sales personnel in industrial centers in North America, Europe
and Asia. Such personnel include both salaried employees and
independent sales representatives who work on a commission basis.

Manufacturing

The process for manufacturing multilayer printed circuit
materials is capital intensive and requires sophisticated
equipment as well as clean-room environments. The key steps in
the Company's manufacturing process include: the impregnation of
specially designed fiberglass cloth with a resin system and the
partial curing of that resin system; the assembling of laminates
consisting of single or multiple plies of prepreg and copper foil
in a clean-room environment; the vacuum lamination of the copper-
clad assemblies under simultaneous exposure to heat, pressure and
vacuum; and the finishing of the laminates to customer
specifications.

Prepreg is manufactured in a treater. A treater is a roll-to-
roll continuous machine which sequences specially designed
fiberglass cloth or other reinforcement fabric into a resin tank
and then sequences the resin-coated cloth through a series of
ovens which partially cure the resin system into the cloth. This
partially cured product or prepreg is then sheeted or paneled and
packaged by the Company for sale to customers, or used by the
Company to construct its copper-clad laminates.

The Company manufactures copper-clad laminates by first
setting up in a clean room an assembly of one or more plies of
prepreg stacked together with a sheet of specially manufactured
copper foil on the top and bottom of the assembly. This assembly,
together with a large quantity of other laminate assemblies, is
then inserted into a large, multiple opening vacuum lamination
press. The laminate assemblies are then laminated under
simultaneous exposure to heat, pressure and vacuum. After the
press cycle is complete, the laminates are removed from the press
and sheeted, paneled and finished to customer specifications. The
product is then inspected and packaged for shipment to the
customer. In addition, the Company manufactures very thin copper-
clad laminates utilizing Dielektra's unique, patented continuous
lamination technology.

The Company manufactures multilayer printed circuit
materials at seven fully integrated facilities located in the
United States, Europe and Southeast Asia. The Company opened its
California facility in 1965, its first Arizona and France
facilities in 1984, its Singapore facility in 1986 and its second
France facility in 1992, and in 1997, the Company acquired
Dielektra GmbH with a fully integrated facility in Cologne,
Germany. The Company services the North America market
principally through its United States manufacturing facilities,
the European market principally through its manufacturing
facilities in France and Germany, and the Asian market
principally through its Singapore manufacturing facility. During
its 2002 fiscal year, the Company established a business center
in China to supply the demand for advanced multilayer printed
circuitry materials in China. The Company has located its
manufacturing facilities in its important markets. By maintaining
technical and engineering staffs at each of its manufacturing
facilities, the Company is able to deliver fully-integrated
products and services on a timely basis.

The Company expanded the manufacturing capacity of its
electronic materials facilities in recent years. During the 2000
fiscal year, the Company completed expansions of its electronic
materials operations in Singapore and France, acquired additional
manufacturing capacity in California, and commenced significant
additional expansions of its electronic materials operations in
California and New York, which it completed in its 2002 fiscal
year. During the 2001 fiscal year, the Company commenced a
significant expansion of its higher technology product line
manufacturing facility in Arizona, which the Company completed
during the first quarter of its 2002 fiscal year. During the 2002
fiscal year, the Company established a business center in China,
realigned its German electronic materials business to focus its
efforts and capabilities on its unique DatlamT automated
continuous lamination and paneling technology and established the
capability to manufacture PTFE materials for RF/microwave
applications at its Neltec high performance materials facility in
Tempe, Arizona, augmenting the Company's PTFE manufacturing
capability in Lannemezan, France.

As a result of the persistent and pervasive depressed state
of the worldwide electronics manufacturing industry following the
severe downturn that occurred during the Company's 2002 fiscal
year first quarter, the Company closed its Nelco U.K.
manufacturing facility in Skelmersdale, England during its 2003
fiscal year third quarter and announced the closure of the mass
lamination operation of its Dielektra electronic materials
manufacturing business in Germany and the realignment of its
North American FR-4 electronic materials operations in New York
and California in its 2004 fiscal year first quarter. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Item 7 of this Report and Notes 12, 13
and 21 of the Notes to Consolidated Financial Statements in Item
8 of this Report for a discussion of the significant pre-tax
charges recorded by the Company in the 2003 fiscal year and
expected to be recorded by the Company in the first half of the
2004 fiscal year.

Materials and Sources of Supply

The principal materials used in the manufacture of the
Company's electronic products are specially manufactured copper
foil, fiberglass cloth and synthetic reinforcements, and
specially formulated resins and chemicals. The Company attempts
to develop and maintain close working relationships with
suppliers of those materials who have dedicated themselves to
complying with the Company's stringent specifications and
technical requirements. While the Company's philosophy is to work
with a limited number of suppliers, the Company has identified
alternate sources of supply for each of these materials. However,
there are a limited number of qualified suppliers of these
materials, substitutes for these materials are not readily
available, and, in the recent past, the industry has experienced
shortages in the market for certain of these materials. While the
Company has not experienced significant problems in the delivery
of these materials and considers its relationships with its
suppliers to be strong, a disruption of the supply of materials
could materially adversely affect the business, financial
condition and results of operations of the Company. Significant
increases in the cost of materials purchased by the Company could
also have a material adverse effect on the Company's business,
financial condition and results of operations if the Company were
unable to pass such price increases through to its customers.

Competition

The multilayer printed circuit materials industry is
characterized by intense competition and ongoing consolidation.
The Company's competitors are primarily divisions or subsidiaries
of very large, diversified multinational manufacturers which are
substantially larger and have greater financial resources than
the Company and, to a lesser degree, smaller regional producers.
Because the Company focuses on the higher technology segment of
the electronic materials market, technological innovation,
quality and service, as well as price, are significant
competitive factors.

The Company believes that there are approximately ten
significant multilayer printed circuit materials manufacturers in
the world and many of these competitors have significant
presences in the three major global markets of North America,
Europe and Asia. The Company believes that the multilayer printed
circuit materials industry has become more global and that the
remaining smaller regional manufacturers are finding it
increasingly difficult to remain competitive. The Company
believes that it is currently one of the world's largest
multilayer printed circuit materials manufacturers. The Company
further believes it is one of only a few significant independent
manufacturers of multilayer printed circuit materials in the
world today.

The markets in which the Company's electronic materials
operations compete are characterized by rapid technological
advances, and the Company's position in these markets depends
largely on its continued ability to develop technologically
advanced and highly specialized products. Although the Company
believes it is an industry technology leader and directs a
significant amount of its time and resources toward maintaining
its technological competitive advantage, there is no assurance
that the Company will be technologically competitive in the
future, or that the Company will continue to develop new products
that are technologically competitive.

Advanced Composite Operations

For many years, the Company was also engaged in the advanced
composite materials business, specialty adhesive tapes and films
business and plumbing hardware business. However, during the 2001
fiscal year, the Company closed and liquidated its plumbing
hardware business, and in June 2002 the Company sold its
specialty adhesive tapes and films business. See Notes 16, 18 and
10 of the Notes to Consolidated Financial Statements in Item 8 of
this Report for information concerning the Company's business
segments, the closure of the plumbing hardware business and the
sale of the specialty adhesive tapes and films business.

FiberCote Industries, Inc., the Company's advanced composite
materials business, develops and produces engineered composite
materials for the aerospace, rocket motor, electronics, radio
frequency and specialty industrial markets.

Marketing and Customers

The Company's advanced composite materials customers,
substantially all of which are located in the United States,
include manufacturers in the automotive, graphic arts, aerospace,
rocket motor, electronics, RF and specialty industrial
industries. Such materials are marketed by sales personnel
including both salaried employees and independent sales
representatives who work on a commission basis.

While no single advanced composite materials customer
accounted for 10% or more of the Company's total sales during the
last fiscal year, the loss of a major customer or of a group of
some of the largest customers of the advanced composite materials
business could have a material adverse effect upon the business.

Manufacturing and Sources of Supply

The Company's advanced composite materials manufacturing
facility is located in Waterbury, Connecticut.

The Company designs and manufactures its advanced composite
materials to its own specifications and to the specifications of
its customers. Product development efforts are devoted to
conforming the Company's advanced composites to the
specifications of, and obtaining approvals from, the Company's
customers. The materials used in the manufacture of these
engineered materials include graphite and carbon fibers and
fabrics, Kevlarr ("Kevlar" is a registered trademark of E.I. du
Pont de Nemours & Co.), quartz, fiberglass, polyester, chemicals,
resins, films, plastics, adhesives and certain other synthetic
materials. The Company purchases these materials from several
suppliers. Although satisfactory substitutes for many of these
materials are not readily available, the Company has experienced
no difficulties in obtaining such materials.

Competition

The Company has many competitors in the advanced composite
materials business, including some major corporations which have
substantially greater financial resources than the Company. The
Company competes for business on the basis of product performance
and development, product qualification and approval, the ability
to manufacture and deliver products in accordance with customers'
needs and requirements, and price.

Backlog

The Company records an item as backlog when it receives a
purchase order specifying the number of units to be purchased,
the purchase price, specifications and other customary terms and
conditions. At May 4, 2003, the unfilled portion of all purchase
orders received by the Company and believed by it to be firm was
approximately $3,966,000, compared to $4,807,000 at May 5, 2002.
The decline in backlog at May 4, 2003 compared to May 5, 2002 was
due primarily to the continuing slump in the Company's business
that began during the first two months of its 2002 fiscal year
resulting from the severe downturn and correction in the global
electronics industry and to the continuing trend of quick-turn-
around requirements of the Company's customers.

Various factors contribute to the size of the Company's
backlog. Accordingly, the foregoing information may not be
indicative of the Company's results of operations for any period
subsequent to the fiscal year ended March 2, 2003.

Patents and Trademarks

The Company holds several patents and trademarks or licenses
thereto. In the Company's opinion, some of these patents and
trademarks are important to its products. Generally, however, the
Company does not believe that an inability to obtain new, or to
defend existing, patents and trademarks would have a material
adverse effect on the Company.

Employees

At March 2, 2003, the Company had approximately 1,400
employees. Of these employees, 1,300 were engaged in the
Company's electronic materials operations, 45 in its advanced
composite materials operations and 55 consisted of executive
personnel and general administrative staff. As a result of a
severe correction and downturn in the global electronics industry
and, consequently, in the Company's electronic materials
business, the Company reduced its total number of employees
during the first two months of its 2002 fiscal year from
approximately 2,850 total employees to approximately 2,330 total
employees at April 30, 2001, and during the remainder of the 2002
fiscal year the Company's total number of employees declined to
approximately 1,700. None of the Company's employees are subject
to a collective bargaining agreement. Management considers its
employee relations to be good.

Environmental Matters

The Company is subject to stringent environmental regulation
of its use, storage, treatment and disposal of hazardous
materials and the release of emissions into the environment. The
Company believes that it currently is in substantial compliance
with the applicable federal, state and local environmental laws
and regulations to which it is subject and that continuing
compliance therewith will not have a material effect on its
capital expenditures, earnings or competitive position. The
Company does not currently anticipate making material capital
expenditures for environmental control facilities for its
existing manufacturing operations during the remainder of its
current fiscal year or its succeeding fiscal year. However,
developments, such as the enactment or adoption of even more
stringent environmental laws and regulations, could conceivably
result in substantial additional costs to the Company.

The Company and certain of its subsidiaries have been named
by the Environmental Protection Agency (the "EPA") or a
comparable state agency under the Comprehensive Environmental
Response, Compensation and Liability Act (the "Superfund Act") or
similar state law as potentially responsible parties in
connection with alleged releases of hazardous substances at eight
sites. In addition, a subsidiary of the Company has received cost
recovery claims under the Superfund Act from other private
parties involving two other sites and has received requests from
the EPA under the Superfund Act for information with respect to
its involvement at three other sites. Under the Superfund Act and
similar state laws, all parties who may have contributed any
waste to a hazardous waste disposal site or contaminated area
identified by the EPA or comparable state agency may be jointly
and severally liable for the cost of cleanup. Generally, these
sites are locations at which numerous persons disposed of
hazardous waste. In the case of the Company's subsidiaries,
generally the waste was removed from their manufacturing
facilities and disposed at the waste sites by various companies
which contracted with the subsidiaries to provide waste disposal
services. Neither the Company nor any of its subsidiaries have
been accused of or charged with any wrongdoing or illegal acts in
connection with any such sites. The Company believes it maintains
an effective and comprehensive environmental compliance program.
Management believes the ultimate disposition of known
environmental matters will not have a material adverse effect
upon the Company.

See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Environmental Matters"
included in Item 7 of this Report and Note 15 of the Notes to
Consolidated Financial Statements included in Item 8 of this
Report.

Item 2. Properties.

Set forth below are the locations of the significant
properties owned and leased by the Company, the businesses which
use the properties, and the size of each such property. All of
such properties, except for the Lake Success, New York property,
are used principally as manufacturing, warehouse and assembly
facilities.

The Company believes its facilities and equipment to be in
good condition and reasonably suited and adequate for its current
needs. During the 2003 fiscal year, certain of the Company's
electronic manufacturing facilities were utilized at less than
50% of their capacity.

Item 3. 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 appealed the decision to the
United States Court of Appeals for the Ninth Circuit in San
Francisco. The appeals were fully briefed, and on December 2,
2002 the parties presented their oral arguments to a panel of
three judges in the Court of Appeals for the Ninth Circuit. On
May 7, 2003, the three judge panel rendered a unanimous decision
affirming the jury verdict. The time period within which Delco
could have filed a petition for rehearing by the United States
Court of Appeals for the Ninth Circuit has expired. As of May 27,
2003, neither the Company nor NTI has received notice that Delco
has filed a petition for rehearing.

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 and 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 "Business-Electronic Materials Operations-Customers
and End Markets" in Item 1 of this Report, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in Item 7 of this Report and "Factors That May Affect
Future Results" after Item 7 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 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 Notes 11 and 12 of the Notes to Consolidated
Financial Statements in Item 8 of this Report.

Item 4. Submission of Matters to a Vote of Security Holders.

None

Executive Officers of the Registrant.

Name Title Age
Brian E. Shore Chief Executive Officer,
President and a Director 51

Stephen E. Gilhuley Senior Vice President,
Secretary and General Counsel 58

Emily J. Groehl Senior Vice President, Sales
and Marketing 56

John Jongebloed Senior Vice President, Global 46
Logistics

Thomas T. Spooner Senior Vice President, 66
Corporate and Technology
Development

Murray O. Stamer Senior Vice President, 45
Finance

Gary M. Watson Senior Vice President,
Engineering and Technology
and Senior Vice President, 55
Asian Business Unit

Brian Shore has served as a Director of the Company for more
than the past five years. Brian Shore was elected a Vice
President of the Company in January 1993, Executive Vice
President in May 1994, President effective March 4, 1996, the
first day of the Company's 1997 fiscal year, and Chief Executive
Officer in November 1996. Brian Shore also served as General
Counsel of the Company from April 1988 until April 1994.

Mr. Gilhuley has been General Counsel of the Company since
April 1994 and Secretary since July 1996. He was elected a Senior
Vice President in March 2001.

Ms. Groehl has been with one of Park's "Nelco" business
units for more than the past five years. She was elected Vice
President of New England Laminates Co., Inc. in 1988 and was Vice
President, Marketing and Sales of Nelco International Corporation
from 1993 until June 1999, when Nelco International Corporation
merged into Park Electrochemical Corp. She was elected Senior
Vice President of Park in May 1999.

Mr. Jongebloed has been employed by one of Park's "Nelco"
business units for more than the past ten years. He was Vice
President and General Manager of New England Laminates Co., Inc.
from January 1992 to May 1999, and President and General Manager
of New England Laminates Co., Inc. from May 1999 to August 2002
and since April 28, 2003. He was elected Senior Vice President of
Park in July 2001.

Mr. Spooner has been employed by one of Park's "Nelco"
business units for more than the past five years. He was Vice
President, Technology of Nelco International Corporation from
1993 until June 1999, when Nelco International Corporation merged
into Park Electrochemical Corp. He was elected Senior Vice
President, Technology of Park in May 1999. His title was changed
to Senior Vice President, Corporate and Technology Development in
May 2001.

Mr. Stamer has been employed by the Company since 1989 and
served as the Company's Corporate Controller from 1993 to May
1999, when he was elected Treasurer. He was elected Senior Vice
President, Finance in March 2001.

Mr. Watson was elected Senior Vice President, Engineering in
June 2000. His title was changed to Senior Vice President,
Engineering and Technology in May 2001. In addition, he became
Senior Vice President, Asian Business Unit in August 2002. Prior
to June 2000, Mr. Watson was Senior Director, Manufacturing
Process Technology of Fort James Corporation since March 1999;
Vice President, Research and Development of Boise Cascade
Corporation from 1992 to March 1999; and Business Division
Technology Manager of Weyerhauser Company from 1986 to 1992.

There are no family relationships between the directors or
executive officers of the Company, except that Brian Shore is the
son of Jerry Shore, who is the Chairman of the Board and a
Director of the Company and who also served as President of the
Company for more than five years until March 4, 1996 and as Chief
Executive Officer of the Company for more than five years until
November 19, 1996.

Each executive officer of the Company serves at the pleasure
of the Board of Directors of the Company.

PART II

Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters.

The Company's Common Stock is listed and trades on the New
York Stock Exchange (trading symbol PKE). (The Common Stock also
trades on the Midwest Stock Exchange.) The following table sets
forth, for each of the quarterly periods indicated, the high and
low sales prices for the Common Stock as reported on the New York
Stock Exchange Composite Tape and dividends declared on the
Common Stock.

For the Fiscal Year Stock Price Dividends
Ended March 2, 2003 High Low Declared
First Quarter $31.45 $26.76 $.06
Second Quarter 28.15 19.10 $.06
Third Quarter 21.70 14.00 $.06
Fourth Quarter 22.14 15.27 $.06

For the Fiscal Year Stock Price Dividends
Ended March 3, 2002 High Low Declared
First Quarter $35.45 $20.03 $.06
Second Quarter 26.73 21.22 $.06
Third Quarter 26.50 19.06 $.06
Fourth Quarter 27.97 24.30 $.06

As of May 21, 2003, there were approximately 1,520 holders
of record of Common Stock.

The Company expects, for the immediate future, to continue
to pay regular cash dividends.

Item 6. Selected Financial Data.

The following selected consolidated financial data of Park
and its subsidiaries is qualified by reference to, and should be
read in conjunction with, the consolidated financial statements,
related notes, and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained elsewhere
herein. Insofar as such consolidated financial information
relates to the five fiscal years ended March 2, 2003 and is as of
the end of such periods, it is derived from the consolidated
financial statements for such periods and as of such dates
audited by Ernst & Young LLP, independent auditors. The
Consolidated financial statements as of March 2, 2003 and March
3, 2002 and for the three years ended March 2, 2003, together
with the independent auditors' report for the three years ended
March 2, 2003, appear in Item 8 of this Report.

Item 7. 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 severe correction and downturn that occurred in the
global electronics industry early in the fiscal year ended March
3, 2002 and that dramatically affected the Company's financial
performance during that fiscal year, with steep declines in sales
by the Company's North American, European and Asian operations,
persisted during the fiscal year ended March 2, 2003 and caused
the global electronics industry to be very depressed throughout
the fiscal year, with no clear signs of recovery. Consequently,
the Company's sales declined during the 2003 fiscal year,
although not as steeply as in the prior fiscal year, with
decreased sales of electronic materials in North America and
Europe.

While the Company's operations continued to be weak during
the 2003 fiscal year as almost all markets for sophisticated
printed circuit materials continued to experience severely
depressed conditions, the Company's gross profit in the 2003
fiscal year was significantly more than its gross profit in the
2002 fiscal year as a result of the Company's reductions of its
costs and expenses and higher percentages of sales of higher
technology, higher margin products.

In addition to its depressed financial results of
operations, during the 2003 fiscal year the Company recorded pre-
tax charges totaling $55.0 million related to the closure of its
Nelco U.K. manufacturing facility and workforce reductions at a
North American business unit and the writedowns of fixed assets
at its continuing operations in North America and Germany
resulting from the realignment of its North American FR-4
business operations in New York and California and the closure of
the mass lamination operation in Germany. These charges were only
slightly offset by the pre-tax gain of $3.2 million realized by
the Company during the 2003 fiscal year second quarter in
connection with the sale of its Dielectric Polymers, Inc. ("DPI")
subsidiary for $5.0 million cash.

The Company recorded a pre-tax charge of $4.7 million in its
2003 fiscal year third quarter for the cost of closing its Nelco
U.K. manufacturing facility located in Skelmersdale, England,
which it announced in October 2002 in response to the almost
complete collapse of the U.K. high technology circuit board
industry. For many years, Nelco U.K. was one of the most vital
parts of the Company's global high technology circuit materials
business, but the U.K. high technology circuit board industry had
been devastated, and the closure of the Nelco U.K. facility was
unavoidable, as there was not enough business available in the
entire U.K. market to justify the Company's having an operation
in the U.K. in the future. The Company is supplying its few
remaining customers in the U.K. with product produced at its
Nelco facility located in Mirebeau, France and will continue to
provide these U.K. customers with local account management,
technical service and materials and inventory support. In
addition, the Company recorded a pre-tax charge of $0.1 million
during the 2003 fiscal year third quarter for severance payments
for workforce reductions at a North American business unit.

In its 2004 fiscal year first quarter, the Company announced
that Dielektra GmbH, the Company's advanced electronic materials
business located in Cologne, Germany, was closing its mass
lamination operation. Dielektra's mass lamination operation
supplied higher-end mass lamination products to European circuit
board manufacturers. However, the market for these products in
Europe had eroded to the point where the Company no longer
believed it was possible to operate a viable mass lamination
business in Europe, and the Company did not believe that, at any
time in the foreseeable future, the higher-end European mass
lamination market would recover to the extent necessary to
justify the Company's operating a mass lamination business in
Europe. After the closure of Dielektra's mass lamination
operation, its manufacturing operations will consist exclusively
of high technology treating and Dielektra's proprietary DatlamT
automated continuous laminate manufacturing, and the Dielektra
business will be focused exclusively on its unique high
technology manufacturing processes and product line. The Company
is developing new and more advanced products to be manufactured
by Dielektra on its DatlamT automated continuous manufacturing
lines. The Company believes that Dielektra's Datlam products
have certain unique technological capabilities which are useful
to high-technology circuit board customers which produce complex
high-density circuit boards.

In the 2004 fiscal year first quarter, the Company also
announced the realignment of its North American FR-4 business
operations located in New York and California and the
establishment of a new business unit called "Nelco/North
America", which will include the Company's FR-4 manufacturing
operations in New York and California and will be administered
principally from Fullerton, California. As part of the
realignment, the New York operation will be scaled down to a
smaller focused operation and the California operation will be
significantly scaled up to a larger volume operation, and there
will be significant workforce reductions at the Company's New
York facility and significant workforce increases at the
Company's California facility. After the New York operations have
been scaled back, a large portion of the New York facility will
be mothballed. The Company will have the flexibility in the
future to scale back up the Newburgh, New York facility if the
opportunity to do so presents itself. The realignment is designed
to help the Company achieve improved operating and cost
efficiencies in its North American FR-4 business and to help the
Company better service all of the its existing North American
customers. The Company does not contemplate losing any North
American customers as a result of the realignment. The Company
believes it has recently gained market share with two of its
major customers in North America.

As a result of continuing declines in the Company's North
American business operations and Dielektra's mass lamination
operation, during the fourth quarter of the 2003 fiscal year the
Company reassessed the recoverability of the fixed assets of
those operations based on cash flow projections and determined
that such fixed assets were impaired, and the Company recorded
pre-tax impairment charges of $50.3 million in the Company's 2003
fiscal year fourth quarter to reduce the book values of such
fixed assets to their estimated fair values. In the 2004 fiscal
year first quarter, the Company decided to realign its North
American FR-4 business operations located in Newburgh, New York
and Fullerton, California and to close Dielektra's mass
lamination operation, and the Company expects to record
additional pre-tax charges totaling approximately $16 million in
the first half of the Company's 2004 fiscal year as a result of
the North American realignment and the closure of Dielektra's
mass lamination operation and related workforce reductions. See
Notes 13 and 21 of the Notes to Consolidated Financial Statements
in Item 8 of this Report for additional information regarding the
realignment and closure.

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 since that time.

In May 1998, the Company and NTI 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. In November 2000, a jury awarded damages to NTI
in the amount of $32.3 million, and in December 2000 the judge in
the United States District Court for the District of Arizona
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 $32.3 million. Both parties appealed the decision to
the United States Court of Appeals for the Ninth Circuit in San
Francisco; and on May 7, 2003, a panel of three judges in the
Court of Appeals for the Ninth Circuit rendered a unanimous
decision affirming the jury verdict. The time period within which
Delco could have filed a petition for rehearing by the United
States Court of Appeals for the Ninth Circuit has expired. As of
May 27, 2003, neither the Company nor NTI has received notice
that Delco has filed a petition for rehearing.

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 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.

The Company believes that an evaluation of its ongoing
operations would be difficult if the disclosure of its financial
results were limited to generally accepted accounting principles
("GAAP") financial measures. Accordingly, in addition to
disclosing its financial results determined in accordance with
GAAP, the Company discloses non-GAAP operating results that
exclude certain items in order to assist its shareholders and
other readers in assessing the Company's operating performance.
Such non-GAAP financial measures are provided to supplement the
results provided in accordance with GAAP.

Fiscal Year 2003 Compared with Fiscal Year 2002:

The Company's operations continued to be weak during the
fiscal year ended March 2, 2003 as the North American, European
and, to a lesser extent, Asian markets for sophisticated printed
circuit materials continued to experience severely depressed
conditions during the 2003 fiscal year.

Nevertheless, the Company's gross profit in the fiscal year
ended March 2, 2003 was significantly more than the gross profit
in the fiscal year ended March 3, 2002 as a result of the
company's reductions of its costs and expenses and higher
percentages of sales of higher technology, higher margin
products.

In addition to its depressed financial results of
operations, the Company recorded pre-tax, fixed asset impairment
charges of $50.3 million in the 2003 fiscal year fourth quarter
related to the writedowns of fixed assets at its continuing
operations in North America and Germany. The Company also
recorded pre-tax charges of $4.8 million in the 2003 fiscal year
third quarter in connection with the closure of its Nelco U.K.
manufacturing facility in Skelmersdale, England and severance
costs at a North American business unit and realized a pre-tax
gain of $3.2 million in the 2003 fiscal year second quarter in
connection with the sale of its DPI subsidiary.

In the 2002 fiscal year, the Company recorded pre-tax
charges totaling $19.4 million related to the realignment of the
operations of Dielektra GmbH, the sale of the assets and business
of 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 severance payments for workforce
reductions at the Company's continuing operations.

The continuing low levels of sales of electronic materials
wwew largely responsible for the Company's results of operations
for the fiscal year ended March 2, 2003. The North American and
European markets for sophisticated printed circuits continued to
be severely depressed during the 2003 fiscal year, and the
Company's electronic materials operations located in those
regions suffered as a result, although the Company believes it
gained market share with certain of its electronic materials
customers.

The Company's results of operations and margins improved in
the 2003 fiscal year principally as a result of the electronic
material business' reductions in costs and expenses despite the
decrease in sales and the concomitant operation of the Company's
facilities at levels far below their designed manufacturing
capacities.

Operating results of the Company's advanced composite
materials business also improved during the 2003 fiscal year
primarily as a result of higher percentages of sales of higher
margin products.

Results of Operations

Net sales for the fiscal year ended March 2, 2003 declined
6% to $216.8 million from $230.1 million for the fiscal year
ended March 3, 2002. The decrease in net sales was principally
the result of lower unit volumes of materials shipped 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 was also influenced by the fact that the Company's net
sales in the fiscal year ended March 3, 2002 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 $98.9 million
of sales, or 46% of the Company's total sales worldwide, during
the 2003 fiscal year, compared with $97.5 million of sales, or
42% of total sales worldwide, during the 2002 fiscal year and 40%
of total sales worldwide during the 2001 fiscal year. Sales by
the Company's foreign operations during the 2003 fiscal year
increased slightly from the 2002 fiscal year due to increases in
sales in Asia while sales by the Company's operations in England
and Germany declined during the 2003 fiscal year compared with
the prior fiscal year.

The overall gross profit as a percentage of net sales for
the Company's worldwide operations improved to 10.7% during the
2003 fiscal year compared with 5.1% during the 2002 fiscal year.
The improvement in the gross margin was attributable to the
significant declines in costs and expenses from the 2002 fiscal
year, production efficiencies resulting from enhanced
manufacturing automation, and increases in market share with
certain key electronic materials customers, which were only
partially offset by lower sales volumes and inefficiencies caused
by operating certain facilities at levels below their designed
manufacturing capacities. Gross profit was also positively
impacted by higher percentages of sales of higher technology,
higher margin products, as high performance materials accounted
for 77% of worldwide sales for the 2003 fiscal year compared with
71% for the prior fiscal year. The Company's cost of sales
decreased significantly as a result of lower production volumes
and cost reduction measures implemented by the Company, including
significant workforce reductions and the reduction of overtime,
and the Company 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
$5.2 million, or by 15%, during the 2003 fiscal year compared
with the 2002 fiscal year, and these expenses, measured as a
percentage of sales, were 13.4% during the 2003 fiscal year
compared with 14.9% during the 2002 fiscal year. The decrease in
selling, general and administrative expenses as a percentage of
sales in the 2003 fiscal year was due to workforce reductions
resulting from the sale of DPI and the closure of the Company's
U.K. manufacturing facility in Skelmersdale, England and expense
reduction measures implemented by the Company during the 2003
fiscal year.

In the 2003 fiscal year fourth quarter, the Company recorded
pre-tax, fixed asset impairment charges of $50.3 million related
to the writedowns of fixed assets at continuing operations in
North America and Germany, which the Company announced in its
2004 fiscal year first quarter. The after-tax impact of these
fixed asset impairments was $46.0 million. In addition, the
Company recorded pre-tax charges totaling $4.8 million in the
2003 fiscal year third quarter related to the closure of its
Nelco U.K. manufacturing facility and severance costs at a North
American business unit and a 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 in cash. The net pre-tax
charge for all these items for the 2003 fiscal year was $51.9
million, and the net after-tax charge for the fiscal year was
$48.8 million.

For the reasons set forth above, loss from operations was
$57.9 million for the 2003 fiscal year, including the pre-tax
charges described above related to the writedowns of fixed assets
at continuing operations in North America and Germany, the
closure of the Nelco U.K. manufacturing facility and severance
costs at a North American business unit and the pre-tax gain
described above related to the sale of DPI, compared with a loss
from operations of $42.0 million for the 2002 fiscal year,
including the pre-tax charges described above related to the
realignment of the operations of the Company's German business
unit, a workforce reduction at another business unit, 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.
The loss from operations for the 2003 fiscal year, before the pre-
tax items described above, was $1.9 million, compared with a loss
from operations of $11.9 million before the pre-tax charges
described above for the 2002 fiscal year.

Interest and other income, net, principally investment
income, declined 41% to $3.3 million for the 2003 fiscal year
from $5.5 million for the 2002 fiscal year. The decrease in
investment income was attributable to lower prevailing interest
rates during the 2003 fiscal year. The Company's investments were
primarily short-term taxable instruments. The Company incurred no
interest expense during the 2003 or 2002 fiscal years. The
Company's interest expense in prior fiscal years was related to
its $100 million principal amount of 5.5% Convertible
Subordinated Notes due 2006. See "Liquidity and Capital
Resources" elsewhere in this Item 7.

The Company's effective income tax rate was 7.1% for the
2003 fiscal year compared to 30.0% for the 2002 fiscal year. This
decrease in the effective tax rate was the result of a valuation
allowance on the tax benefit from losses sustained in the 2003
fiscal year that will be carried forward to future years for tax
purposes. The valuation allowance eliminated the current
recognition of the tax benefit from the tax loss carryforward due
to the uncertainty of the use of such benefit.

The net loss for the 2003 fiscal year, including the after-
tax charges of $48.8 described above related to the writedowns of
fixed assets at continuing operations in North America and
Germany, the closure of the Nelco U.K. manufacturing facility and
severance costs at a North American business unit, was $50.8
million, compared to a net loss of $25.5 million for the 2002
fiscal year, including the pre-tax charges described above
related to the realignment of the operations of the Company's
German business unit, a workforce reduction at another business
unit, 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.

Basic and diluted losses per share for the 2003 fiscal year
were $2.58, including the pre-tax charges and gain described
above, compared to losses per share of $1.31 including the pre-
tax charges described above, for the 2002 fiscal year. Basic and
diluted losses per share, before the pre-tax charges and gain
described above, were $0.10 for the 2003 fiscal year, compared to
losses of $0.61 for the 2002 fiscal year, before the pre-tax
charges described above.

Fiscal Year 2002 Compared with Fiscal Year 2001:

The Company experienced a sharp decline in its results of
operations for the fiscal year ended March 3, 2002 as the North
American, European and Asian markets for sophisticated printed
circuit materials experienced severe downturns during such
periods.

In addition to its severely depressed results of operations,
during the 2002 fiscal year first quarter, the Company incurred
pre-tax charges of $15.7 million in connection with the sale of
the assets and business of NTI and the closure of a related
support facility in Arizona and $0.7 million in connection with
workforce reductions at the Company's continuing operations.

After Delco Electronics Corporation informed the Company in
March 1998 that Delco planned to close its printed circuit board
manufacturing business, 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 the Company, 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. In connection with the sale and
closure, the Company recorded pre-tax charges of $15.7 million in
its 2002 fiscal year first quarter ended May 27, 2001. As a
result of this sale, the Company exited the mass lamination
business in North America.

Although the Company's electronic materials business was not
dependent on this single customer, the loss of this customer had
a material adverse effect on this business in the last three
fiscal years.

The Company also incurred pre-tax charges during the 2002
fiscal year third quarter totaling $2.9 million in connection
with the realignment of the operations of its German subsidiary,
Dielektra GmbH, the Company's electronic materials business
located in Cologne, Germany. The realignment included the closure
of Dielektra's conventional lamination line to enable it to
better focus its efforts and capabilities on its unique DatlamT
automated continuous lamination and paneling manufacturing
technology and the reduction of the size of its mass lamination
operations in order to focus on the marketing and manufacturing
of high technology, higher layer count mass lamination product.
The closure of Dielektra's remaining mass lamination operations
was subsequently announced by the Company in the fiscal year 2004
first quarter. The Company incurred an additional $125,000 pre-
tax charge during the fiscal year 2002 third quarter for a
workforce reduction at another business unit.

The significant reduction in the Company's sales of
electronic materials was largely responsible for the severe
decline in the Company's results of operations for the fiscal
year ended March 3, 2002. The North American, European and Asian
markets for sophisticated printed circuit materials collapsed
during the 2002 fiscal year, and the Company's electronic
materials operations located in each region suffered as a result,
although the Company believes it gained market share with certain
of its electronic materials customers.

The Company's results of operations and margins declined in
the 2002 fiscal year principally as a result of the electronic
material business' decrease in sales of all products and the
concomitant operation of the Company's facilities at levels far
below their designed manufacturing capacity.

Operating results of the Company's specialty adhesive tape
business, which the Company sold in the 2003 fiscal year second
quarter, and advanced composite materials business also declined
during the 2002 fiscal year. This decline was attributable to
lower volumes of products sold.

Results of Operations

Net sales for the fiscal year ended March 3, 2002 declined
56% to $230.1 million from $522.2 million for the fiscal year
ended February 25, 2001. This decline in sales was the result of
lower unit volumes of materials shipped and the absence of sales
by NTI, which, as described above, the Company sold in the 2002
fiscal year first quarter.

Although the net sales of NTI during the 2001 fiscal year
were material relative to the Company's consolidated net sales
during such year, the operations of NTI were not material to the
Company's consolidated financial position, results of operations,
capital resources or liquidity, and the sale of NTI is not
expected to have any material effect on the Company's future
operating results, financial position, capital resources,
liquidity or continuing operations.

The Company's foreign operations accounted for $97.5 million
of sales, or 42% of the Company's total sales worldwide, during
the 2002 fiscal year, compared with $209.3 million of sales, or
40% of total sales worldwide, during the 2001 fiscal year. Sales
by the Company's foreign operations during the 2002 fiscal year
decreased 54% from the 2001 fiscal year. The decrease in sales by
the Company's foreign operations in the 2002 fiscal year was due
to decreases in sales in both Asia and Europe.

The overall gross profit as a percentage of net sales for
the Company's worldwide operations was 5.1% during the 2002
fiscal year compared with 22.5% during the 2001 fiscal year. The
deterioration in the gross profit was attributable to the
significant declines in sales volumes from the 2001 fiscal year
and inefficiencies caused by operating certain facilities at
levels below their designed manufacturing capacity, which was
only slightly offset by increases in market share with certain
key electronic materials customers and the growth in sales of
higher technology, higher margin products as a percentage of
total sales. Although the Company's cost of sales decreased
significantly as a result of lower production volumes and cost
reduction measures implemented by the Company, including
significant workforce reductions, the reduction of overtime and
the decision to not implement annual salary increases, the
declines in sales and production volumes resulted in lower
volumes to absorb fixed overhead costs and, consequently, an
increase in the cost of sales as a percentage of net sales in the
2002 fiscal year.

Although selling, general and administrative expenses
declined by $15.5 million, or by 31%, during the 2002 fiscal year
compared with the 2001 fiscal year, these expenses, measured as a
percentage of sales, were 14.9% during the 2002 fiscal year
compared with 9.5% during the 2001 fiscal year. The increase in
selling, general and administrative expenses as a percentage of
sales in the 2002 fiscal year resulted from lower sales compared
to the 2001 fiscal year and the fixed components of such
expenses.

For the reasons set forth above, for the 2002 fiscal year,
profit from operations, including the pre-tax charges, described
above, related to the realignment of the operations of the
Company's German business unit, the sale of NTI and the closure
of a related support facility and severance for workforce
reductions at the Company's continuing operations, declined to a
loss of $42.0 million, and profit from operations, before the pre-
tax charges, declined to a loss of $22.6 million, in both cases
compared to a profit of $67.8 million for the 2001 fiscal year.

Interest and other income, net, principally investment
income, declined 34% to $5.5 million for the 2002 fiscal year
from $8.4 million for the 2001 fiscal year. The decrease in
investment income was attributable to lower prevailing interest
rates and the reduction in cash available for investment during
the 2002 fiscal year. The Company's investments were primarily
short-term taxable instruments. The Company incurred no interest
expense during the 2002 fiscal year compared with $5.6 million
during the 2001 fiscal year. The Company's interest expense was
related primarily to its $100 million principal amount of 5.5%
Convertible Subordinated Notes due 2006, issued in 1996,
$2,328,000 principal amount of which was converted into 82,750
shares of the Company's common stock prior to February 25,2001,
the end of the Company's 2001 fiscal year, $95,934,000 of which
was converted into 3,410,908 shares of the Company's common stock
on March 1, 2001, and $1,738,000 of which was redeemed by the
Company for cash on March 2, 2001. See "Liquidity and Capital
Resources" elsewhere in this Item 7.

The Company's effective income tax rate was 30.0% for the
2002 fiscal year and the 2001 fiscal year.

Net earnings for the 2002 fiscal year, including the pre-tax
charges, described above, related to the realignment of the
operations of the Company's German business unit, the sale of NTI
and the closure of a related support facility and severance for
workforce reductions at the Company's continuing operations,
declined to a net loss of $25.5 million, and net earnings, before
the pre-tax charges, declined to a net loss of $11.9 million, in
both cases from net earnings of $49.4 million for the 2001 fiscal
year.

Basic and diluted earnings per share decreased from $3.10
and $2.65, respectively, for the 2001 fiscal year to a loss per
share of $1.31 including the pre-tax charges and to a loss per
share of $0.61 before the pre-tax charges for the 2002 fiscal
year.

The declines in net earnings and earnings per share were
primarily attributable to the decline in the profit from
operations and the charge for the closure of the business unit in
Arizona which formerly supplied Delco Electronics Corporation
with semi-finished multilayer circuit boards.

Liquidity and Capital Resources:

At March 2, 2003, the Company's cash and temporary
investments were $162.9 million compared with $151.4 million at
March 3, 2002, the end of the Company's 2002 fiscal year. The
increase in the Company's cash and investment position at March
2, 2003 was attributable to cash provided by operations, lower
non-cash working capital items, the proceeds from the sale of the
Company's Dielectric Polymers, Inc. subsidiary and the refund of
Federal income taxes paid for prior years. The Company's working
capital (which includes cash and temporary investments) was
$170.3 million at March 2, 2003 compared with $167.0 million at
March 3, 2002. The increase in working capital at March 2, 2003
compared with March 3, 2002 was due principally to higher cash
and cash equivalents and lower accrued liabilities, offset in
part by lower accounts receivable, inventories and prepaid
expenses and other current assets and higher income taxes
payable. The decrease in accrued liabilities, accounts
receivable, inventories and prepaid expenses and other current
assets at March 2, 2003 compared with March 3, 2002 was a result
principally of reduced operating activity in support of lower
sales volumes. The Company's current ratio (the ratio of current
assets to current liabilities) was 5.2 to 1 at March 2, 2003
compared with 4.9 to 1 at March 3, 2002.

During the 2003 fiscal year, cash provided by the Company's
operations was enhanced by a small net reduction in non-cash
working capital items, resulting in $16.2 million of cash
provided from operating activities. Net expenditures for
property, plant and equipment were $6.4 million, $22.8 million
and $51.8 million in the 2003, 2002 and 2001 fiscal years,
respectively. The Company expects the capital expenditures in the
2004 fiscal year to be approximately the same amount as the
expenditures in the 2003 fiscal year.

The Company sold its DPI subsidiary on June 27, 2002 for
$5.0 million in cash and recorded a pre-tax gain of $3.2 million
in the 2003 fiscal year second quarter in connection with the
sale.

At March 2, 2003 and March 3, 2002, the Company had no long-
term debt. During the Company's 2001 fiscal year, $2.3 million
principal amount of Notes was converted into 82,750 shares of the
Company's common stock, and immediately after the end of the 2001
fiscal year, $95.9 million principal amount of Notes was
converted into 3,410,908 shares of the Company's common stock,
all at a conversion price of $28.125 per share. On March 2, 2001,
the Company redeemed $1.7 million principal amount of Notes for a
redemption price of $1,000.15 (including accrued interest) for
each $1,000 principal amount Note pursuant to a previous
announcement that on March 2, 2001 it would redeem all of the
outstanding Notes that were not converted on or before March 1,
2001. See Note 6 of the Notes to Consolidated Financial
Statements in Item 8 of this Report.

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 expansions 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
described in Note 15 of the Notes to Consolidated Financial
Statements included elsewhere in this Report. 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 $1.4 million to secure
the Company's obligations under its workers' compensation
insurance program.

Environmental Matters:

The Company is subject to various federal, state and local
government requirements relating to the protection of the
environment. The Company believes that, as a general matter, its
policies, practices and procedures are properly designed to
prevent unreasonable risk of environmental damage and that its
handling, manufacture, use and disposal of hazardous or toxic
substances are in accord with environmental laws and regulations.
However, mainly because of past operations and operations of
predecessor companies, which were generally in compliance with
applicable laws at the time of the operations in question, the
Company, like other companies engaged in similar businesses, is a
party to claims by government agencies and third parties and has
incurred remedial response and voluntary cleanup costs associated
with environmental matters. Additional claims and costs involving
past environmental matters may continue to arise in the future.
It is the Company's policy to record appropriate liabilities for
such matters when remedial efforts are probable and the costs can
be reasonably estimated.

In the 2003, 2002 and 2001 fiscal years, the Company charged
approximately $0.1 million, $0.2 million and $0.3 million,
respectively, against pre-tax income for 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 cash flow from operations. 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 March 2, 2003,
the recorded liability in accrued liabilities for environmental
matters was $4.2 million compared with $4.0 million at March 3,
2002.

Management does not expect that environmental matters will
have a material adverse effect on the liquidity, capital
resources, business or consolidated financial position of the
Company. See Note 15 of the Notes to Consolidated Financial
Statements included in Item 8 of this Report for a discussion of
the Company's commitments and contingencies, including those
related to environmental matters.

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 2, 2003, the Company
recorded significant charges in connection with the realignment
of its North American FR-4 business operations, the closures of
its mass lamination operation in Germany and its manufacturing
facility in England and employee severance costs at a North
American business unit; and during the fiscal year ended March 3,
2002, the Company recorded significant charges 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 charges 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

One of the Company's subsidiaries in Europe 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 quarterly reporting period.

Factors That May Affect Future Results.

The Private Securities Litigation Reform Act of 1995
provides a "safe harbor" for forward-looking statements to
encourage companies to provide prospective information about
their companies without fear of litigation so long as those
statements are identified as forward-looking and are accompanied
by meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those
projected in the statement. 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, forecasted, estimated or budgeted by the Company in
forward-looking statements. Accordingly, the Company hereby
identifies the following important factors which could cause the
Company's actual results to differ materially from any such
results which might be projected, forecast, estimated or budgeted
by the Company in forward-looking statements.

.. The Company's customer base is concentrated, in part,
because the Company's business strategy has been to develop
long-term relationships with a select group of customers.
During the Company's fiscal year ended March 2, 2003, the
Company's ten largest customers accounted for approximately
62% of net sales. The Company expects that sales to a
relatively small number of customers will continue to
account for a significant portion of its net sales for the
foreseeable future. A loss of one or more of such key
customers could affect the Company's profitability. See
"Business-Electronic Materials Operations-Customers and End
Markets" in Item 1 of this Report, "Legal Proceedings" in
Item 3 of this Report and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
in Item 7 of this Report for discussions of the loss of a
key customer early in the 1999 fiscal year.

.. The Company's business is dependent on certain aspects of
the electronics industry, which is a cyclical industry and
which has experienced recurring downturns. The downturns,
such as occurred in the first quarter of the Company's
fiscal year ended March 2, 1997 and in the first quarter of
the Company's fiscal year ended March 3, 2002, and which
continues at the present time, can be unexpected and have
often reduced demand for, and prices of, electronic
materials.

.. The Company's operating results are affected by a number of
factors, including various factors beyond the Company's con
trol. Such factors include economic conditions in the elec
tronics industry, the timing of customer orders, product
prices, process yields, the mix of products sold and mainte
nance-related shutdowns of facilities. Operating results
also can be influenced by development and introduction of
new products and the costs associated with the start-up of
new facilities.

.. The Company's production processes require the use of
substantial amounts of gas and electricity, the cost and
available supply of which are beyond the control of the
Company. Changes in the cost or availability of gas or
electricity could materially increase the Company's cost of
operations.

.. Rapid technological advances in semiconductors and elec
tronic equipment have placed rigorous demands on the elec
tronic materials manufactured by the Company and used in
printed circuit board production. The Company's operating
results will be affected by the Company's ability to main
tain and increase its technological and manufacturing
capability and expertise in this rapidly changing industry.

.. The electronic materials industry is intensely competitive
and the Company competes worldwide in the market for materi
als used in the production of complex multilayer printed cir
cuit boards. The Company's principal competitors are substan
tially larger and have greater financial resources than the
Company, and the Company's operating results will be
affected by its ability to maintain its competitive position
in the industry.

.. There are a limited number of qualified suppliers of the
principal materials used by the Company in its manufacture
of electronic materials products. Substitutes for these
products are not readily available, and in the recent past
there have been shortages in the market for certain of these
materials.

.. The Company typically does not obtain long-term purchase
orders or commitments. Instead, it relies primarily on con
tinual communication with its customers to anticipate the
future volume of purchase orders. A variety of conditions,
both specific to the individual customer and generally
affecting the customer's industry, can cause a customer to
reduce or delay orders previously anticipated by the
Company.

.. The Company, from time to time, is engaged in the expansion
of certain of its manufacturing facilities for electronic
materials. The anticipated costs of such expansions cannot
be determined with precision and may vary materially from
those budgeted. In addition, such expansions will increase
the Company's fixed costs. The Company's future
profitability depends upon its ability to utilize its
manufacturing capacity in an effective manner.

.. The Company's business is capital intensive and, in addi
tion, the introduction of new technologies could substan
tially increase the Company's capital expenditures. In order
to remain competitive the Company must continue to make
significant investments in capital equipment and expansion
of operations. This may require that the Company continue to
be able to access capital on terms acceptable to the
Company.

.. The Company may acquire businesses, product lines or tech
nologies that expand or complement those of the Company. The
integration and management of an acquired company or
business may strain the Company's management resources and
technical, financial and operating systems. In addition,
implementation of acquisitions can result in large one-time
charges and costs. A given acquisition, if consummated, may
materially affect the Company's business, financial
condition and results of operations.

.. The Company's international operations are subject to
various risks, including unexpected changes in regulatory
requirements, exchange rates, tariffs and other barriers,
political and economic instability, potentially adverse tax
consequences, any impact on economic and financial
conditions around the world resulting from geopolitical
conflicts or acts of terrorism and the impact that severe
acute respiratory syndrome ("SARS") may have on the
Company's business and the economies of the countries in
which the Company operates.

.. A portion of the sales and costs of the Company's interna
tional operations are denominated in currencies other than
the U.S. dollar and may be affected by fluctuations in cur
rency exchange rates.

.. The Company's success is dependent upon its relationship
with key management and technical personnel.

.. The Company's future success depends in part upon its intel
lectual property which the Company seeks to protect through
a combination of contract provisions, trade secret
protections, copyrights and patents.

.. The Company's production processes require the use, storage,
treatment and disposal of certain materials which are consid
ered hazardous under applicable environmental laws and the
Company is subject to a variety of regulatory requirements
relating to the handling of such materials and the release
of emissions and effluents into the environment. Other
possible developments, such as the enactment or adoption of
additional environmental laws, could result in substantial
costs to the Company.

.. The market price of the Company's securities can be subject
to fluctuations in response to quarter to quarter variations
in operating results, changes in analysts' earnings
estimates, market conditions in the electronic materials
industry, as well as general economic conditions and other
factors external to the Company.

.. The Company's results could be affected by changes in the
Company's accounting policies and practices or changes in
the Company's organization, compensation and benefit plans,
or changes in the Company's material agreements or
understandings with third parties.

Item 7A.Quantitative and Qualitative Disclosures About Market
Risk.

The Company is exposed to market risks for changes in
foreign currency exchange rates and interest rates. The Company's
primary foreign currency exchange exposure relates to the
translation of the financial statements of foreign subsidiaries
using currencies other than the U.S. dollar as their functional
currency. The Company does not believe that a 10% fluctuation in
foreign exchange rates would have had a material impact on its
consolidated results of operations or financial position. The
exposure to market risks for changes in interest rates relates to
the Company's short-term investment portfolio. This investment
portfolio is managed in accordance with guidelines issued by the
Company. These guidelines are designed to establish a high
quality fixed income portfolio of government and highly rated
corporate debt securities with a maximum weighted maturity of
less than one year. The Company does not use derivative financial
instruments in its investment portfolio. Based on the average
maturity of the investment portfolio at the end of the 2003
fiscal year, a 10% increase in short-term interest rates would
not have had a material impact on the consolidated results of
operations or financial position of the Company.

Item 8. Financial Statements and Supplementary Data.

The Company's Financial Statements begin on the next
page.

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
Park Electrochemical Corp.
Lake Success, New York

We have audited the accompanying consolidated balance sheets of
Park Electrochemical Corp. and subsidiaries as of March 2, 2003
and March 3, 2002 and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the
three years in the period ended March 2, 2003. Our audits also
included the financial statement schedule listed in the Index at
Item 15(a)(2). These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Park Electrochemical Corp. and subsidiaries
as of March 2, 2003 and March 3, 2002 and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended March 2, 2003, in conformity with
accounting principles generally accepted in the United States.
Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material
respects the information set forth therein.

ERNST & YOUNG LLP

New York, New York
May 2, 2003, except for the second paragraph of
Note 21 as to which the date is May 13, 2003

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share and per share amounts)

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share and per share amounts)

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three years ended March 2, 2003
(in thousands, except shares, per share data and option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Park Electrochemical Corp. ("Park"), through its
subsidiaries (collectively, the "Company"), is a leading global
designer and producer of advanced electronic materials used to
fabricate complex multilayer printed circuit boards and other
electronic interconnection systems. The Company's multilayer
printed circuit board materials include copper-clad laminates and
prepregs. Multilayer printed circuit boards and interconnection
systems are used in virtually all advanced electronic equipment
to direct, sequence and control electronic signals between
semiconductor devices and passive components. The Company also
designs and manufactures advanced composite materials for the
electronics, aerospace and industrial markets.
a. Principles of Consolidation - The consolidated financial
statements include the accounts of Park and its
subsidiaries. All significant intercompany balances and
transactions have been eliminated.
b. Use of Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ from those
estimates. See "Critical Accounting Policies and Estimates"
under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of this Report.
c. Accounting Period - The Company's fiscal year is the 52 or
53 week period ending the Sunday nearest to the last day of
February. The 2003, 2002 and 2001 fiscal years ended on
March 2, 2003, March 3, 2002 and February 25, 2001,
respectively. Fiscal years 2003 and 2001 consisted of 52
weeks and fiscal year 2002 consisted of 53 weeks.
d. Marketable Securities - All marketable securities are
classified as available-for-sale and are carried at fair
value, with the unrealized gains and losses, net of tax,
included in comprehensive income. Realized gains and losses,
amortization of premiums and discounts, and interest and
dividend income are included in other income. The cost of
securities sold is based on the specific identification
method.
e. Inventories - Inventories are stated at the lower of cost
(first-in, first-out method) or market.
f. Revenue Recognition - Revenues are recognized at the time
product is shipped to the customer.
g. Product Warranties - The Company accrues for defective
products at the time the existence of the defect is known and the
amount is reasonably determinable. The Company's products are
made to specific customer order specifications, and there are no
future performance requirements for the Company's products other
than the products' meeting the agreed specifications. The amounts
of returns and allowances resulting from defective or damaged
products have been approximately 1.0% of sales for each of the
Company's last three fiscal years.
h. Shipping Costs - The amounts paid to third-party shippers
for transporting products to customers are classified as selling
expenses. The amounts included in selling, general and
administrative expenses were approximately $4,810, $4,034 and
$6,485 for fiscal years 2003, 2002 and 2001, respectively.
i. Depreciation and Amortization - Depreciation and
amortization are computed principally by the straight-line
method over the estimated useful lives of the related assets
or, with respect to leasehold improvements, the terms of the
leases, if shorter.
j. Income Taxes - Deferred income taxes are provided for
temporary differences in the reporting of certain items,
primarily depreciation, for income tax purposes as compared
with financial accounting purposes.
United States ("U.S.") Federal income taxes have not been
provided on the undistributed earnings (approximately
$102,500 at March 2, 2003) of the Company's foreign
subsidiaries, because it is management's practice and intent
to reinvest such earnings in the operations of such
subsidiaries.
k. Foreign Currency Translation - Assets and liabilities of
foreign subsidiaries using currencies other than the U.S.
dollar as their functional currency are translated into U.S.
dollars at fiscal year-end exchange rates, and income and
expense items are translated at average exchange rates for
the period. Gains and losses resulting from translation are
recorded as currency translation adjustments in
comprehensive income.
l. Consolidated Statements of Cash Flows - The Company
considers all money market securities and investments with
maturities at the date of purchase of 90 days or less to be
cash equivalents.

m. The Company implemented the disclosure provision of
Statement of Financial Accounting Standards (SFAS) No. 148,
"Accounting for Stock-Based Compensation - Transition and
Disclosure", in the fourth quarter of fiscal year 2003. This
statement amended the disclosure provisions of FASB Statement
No. 123, "Accounting for Stock Based Compensation", to require
prominent disclosure of the effect on reported net income of an
entity's accounting policy decisions with respect to stock-based
employee compensation and amended APB Opinion No. 28, "Interim
Financial Reporting", to require disclosure of those effects in
interim financial information.

As of March 2, 2003, the Company had two fixed stock
incentive plans which are more fully described in Note 8.
All options under the stock plans had an exercise price
equal to the market value of the underlying common stock
on the date of grant. The Company continues to apply
Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" (APB 25), and related
interpretations for the plans. If compensation costs of
the grants had been determined based upon the fair market
value at the grant dates consistent with the FASB No. 123
"Accounting for Stock-Based Compensation", the Company's
net (loss) income and (loss) earnings per share would
have approximated the amounts shown below.

The weighted averaged fair value for options was
estimated at the dates of grants using the Black-Scholes
option-pricing model to be $12.81 for fiscal year 2003,
$8.09 for fiscal year 2002 and $8.40 for fiscal year
2001, with the following weighted average assumptions:
risk free interest rate of 4.0% for fiscal year 2003,
4.0% for fiscal year 2002 and 5.0% for fiscal year 2001;
expected volatility factors of 58%, 41% and 39% for
fiscal years 2003, 2002 and 2001, respectively; expected
dividend yield of 1.0% for fiscal year 2003, 1.0% for
fiscal year 2002 and 1.5% for fiscal year 2001; and
estimated option lives of 4.0 years for fiscal years
2003, 2002 and 2001.

2003 2002 2001

Net (loss)income $(50,759) $(25,519) $49,419
Deduct: Total stock-based
employee compensation
determined under fair value
based method for all awards,
net of tax effects (1,928) (1,404) (1,484)
--------- --------- --------
Pro forma net (loss) income $(52,687) $(26,923) $47,935
========= ========= ========
EPS-basic as reported $ (2.58) $ (1.31) $ 3.10
EPS-basic pro forma $ (2.68) $ (1.38) $ 3.01

EPS-diluted as reported $ (2.58) $ (1.31) $ 2.65
EPS-diluted pro forma $ (2.68) $ (1.38) $ 2.58

2. MARKETABLE SECURITIES

The following is a summary of available-for-sale securities:

Gross Gross
Unrealized Unrealized Estimated
Amortized Cost Gains Losses Fair Value

March 2, 2003:
U.S. Treasury and
other government
securities $41,359 $ 256 $ 6 $41,609
U.S. corporate debt
securities 10,153 63 - 10,216
Total debt securities 51,512 319 6 51,825
Equity securities 5 69 - 74
$51,517 $388 $ 6 $51,899

March 3, 2002:
U.S. Treasury and
other government
securities $29,956 $ 76 $ 72 $29,960
U.S. corporate debt
securities 21,853 80 49 21,884
Total debt securities 51,809 156 121 51,844
Equity securities 5 68 - 73
$51,814 $224 $121 $51,917

The gross realized gains on the sales of securities were $6,
$0 and $26 for fiscal years 2003, 2002 and 2001,
respectively, and the gross realized losses were $17, $60,
and $0 for fiscal years 2003, 2002 and 2001, respectively.

The amortized cost and estimated fair value of the debt and
marketable equity securities at March 2, 2003, by
contractual maturity, are shown below:

Estimated Fair
Cost Value

Due in one year or less $14,614 $14,757
Due after one year through
five years 36,898 37,068
51,512 51,825
Equity securities 5 74
$51,517 $51,899

3. INVENTORIES

March 2, March 3,
2003 2002

Raw materials $ 4,072 $ 4,996
Work-in-process 3,424 2,916
Finished goods 4,680 4,784
Manufacturing supplies 512 546
$12,688 $13,242

4. PROPERTY, PLANT AND EQUIPMENT

March 2, March 3,
2003 2002

Land, buildings and $ 36,807 $ 60,689
improvements
Machinery, equipment,
furniture and fixtures 146,363 203,476
183,170 264,165
Less accumulated
depreciation and amortization 92,667 114,355
$ 90,503 $149,810

Depreciation and amortization expense relating to property,
plant and equipment was $17,973, $16,257 and $16,724 for
fiscal years 2003, 2002 and 2001, respectively. Pretax
charges of $ $52,248, $2,959 and $1,146 were recorded in
fiscal years 2003, 2002 and 2001, respectively, for the
write-downs of impaired operating equipment to its estimated
net realizable value (see Notes 10, 11, 12, 13, and 18
below). Interest expense capitalized to property, plant and
equipment was $239 for the 2001 fiscal year.

5. ACCRUED LIABILITIES

March 2, March 3,
2003 2002

Payroll and payroll related $ 4,535 $ 9,000
Taxes, other than income taxes 320 471
Employee benefits 1,660 5,525
Environmental reserve 4,246 3,975
Other 11,029 8,891
$21,790 $27,862

6. LONG-TERM DEBT

On February 28, 1996, the Company issued $100,000 principal
amount of 5.5% Convertible Subordinated Notes due 2006 (the
"Notes") with interest payable semiannually on March 1 and
September 1 of each year, commencing September 1, 1996. The
Notes were unsecured and subordinated to other long-term
debt and were convertible at the option of the holder at any
time prior to maturity, unless previously redeemed or
repurchased, into shares of the Company's common stock at
$28.125 per share, subject to adjustment under certain
conditions. The Notes were not redeemable at the option of
the Company prior to March 1, 1999; at any time on or after
such date, the Notes were redeemable at the option of the
Company, in whole or in part, initially at 102.75% of the
principal amount of such Notes redeemed and thereafter at
prices declining to 100% on March 1, 2001, together with
accrued interest. On March 1, 2001, $95,934 principal amount
of the Notes was converted into 3,410,908 shares of the
Company's common stock, and the remaining $1,738 principal
amount of the Notes was redeemed by the Company for cash.
Prior to February 25, 2001, $2,328 principal amount of the
Notes was converted into 82,750 shares of the Company's
common stock. At February 25, 2001, the fair value of the
Notes approximated $109,220.

7. INCOME TAXES

The income tax (benefit)provision includes the following:

Fiscal Year
2003 2002 2001

Current:
Federal $(3,806) $ (5,901) $ 8,367
State and local 385 18 1,509
Foreign 1,077 (364) 8,523
(2,344) (6,247) 18,399
Deferred:
Federal (1,087) (4,345) 1,722
State and local (107) (729) 259
Foreign (347) 384 800
(1,541) (4,690) 2,781
$(3,885) $(10,937) $21,180

The Company's effective income tax rate differs from the
statutory U.S. Federal income tax rate as a result of the
following:

Fiscal Year
2003 2002 2001

Statutory U.S. Federal tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal benefit (.3) 1.3 1.6
Foreign tax rate differentials (2.3) (5.5) (8.3)
Impairment of deferred
tax assets (24.7) - -
Other, net (0.6) (0.8) 1.7
7.1% 30.0% 30.0%

The Company had foreign net operating loss carryforwards of
approximately $72,300 and $53,500 in fiscal years 2003 and
2002, respectively. Most of the net operating loss
carryforwards were acquired in fiscal year 1998 when the
Company purchased the capital stock of Dielektra GmbH
("Dielektra"), a German corporation located in Cologne,
Germany. During fiscal year 2002, an audit of Dielektra's
tax filings relating to tax periods prior to its acquisition
by the Company was completed. The audit resulted in an
increase in pre-acquisition net operating losses of
approximately $25,000. Long-term deferred tax assets arising
from these net operating loss carryforwards were valued at
$0 at both March 2, 2003 and March 3, 2002, net of valuation
reserves of approximately $31,229 and $22,217, respectively.
None of the acquired net operating loss carryforwards relate
to goodwill or other intangible assets.

Approximately $1,300 of the foreign net operating loss
carryforwards expire in varying amounts from fiscal year
2004 through fiscal year 2005, and the remainder have no
expiration.

Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes. At March 2, 2003 and
March 3, 2002, current deferred tax assets of $0 and $7,006,
respectively, which were primarily attributable to expenses
not currently deductible, were included in other current
assets. Significant components of the Company's long-term
deferred tax liabilities and assets as of March 2, 2003 and
March 3, 2002 were as follows:

2003 2002

Deferred tax liabilities:
Depreciation $ 4,539 $ 9,450
Other, net 1,392 3,604
Total deferred tax liabilities 5,931 13,054

Deferred tax assets:
Impairment of fixed assets 11,657 -
Net operating loss carryforwards 31,229 22,217
Other, net 3,224 -
Total deferred tax assets 46,110 22,217
Valuation allowance for deferred
tax assets (44,718) (22,217)
Net deferred tax assets 1,392 -

Net deferred tax liabilities $ 4,539 $13,054

8. STOCKHOLDERS' EQUITY

a. Stock Split and Number of Authorized Shares - On October 10,
2000, the Company's Board of Directors approved a three-for-two
stock split in the form of a stock dividend. The stock dividend
was distributed November 8, 2000 to stockholders of record on
October 20, 2000. All share and per share data for prior periods
has been retroactively restated to reflect the stock split. In
addition, on October 10, 2000, the Company's stockholders
approved an increase in the number of authorized shares of common
stock from 30,000,000 to 60,000,000 shares.

b. Stock Options - Under the 1992 Stock Option Plan approved by
the Company's stockholders, directors and key employees may have
been granted options to purchase shares of common stock of the
Company exercisable at prices not less than the fair market value
at the date of grant. Options became exercisable 25% one year
from the date of grant, with an additional 25% exercisable each
succeeding anniversary of the date of grant. On July 12, 2000,
the Company's stockholders approved an amendment to the Plan to
increase the aggregate number of shares of Common Stock
authorized for issuance under the Plan by 450,000 shares. Options
to purchase a total of 2,625,000 shares of common stock were
authorized for grant under such Plan. The authority to grant
additional options under the Plan expired on March 24, 2002.

Under the 2002 Stock Option Plan approved by the
Company's stockholders, directors and key employees may
be granted options to purchase shares of common stock of
the Company exercisable at prices not less than the fair
market value at the date of grant. Options become
exercisable 25% one year from the date of grant, with an
additional 25% exercisable each succeeding anniversary of
the date of the grant. Options to purchase a total of
900,000 shares of common stock were authorized for grant
under such Plan.

Information with respect to options follows:

Range Weighted
of Average
Exercise Outstanding Exercise
Prices Options Price

Balance, February 27, 2000 $ 3.67 - $23.96 1,215,794 $13.87
Granted 15.92 - 43.63 360,075 23.71
Exercised 3.67 - 18.42 (156,667) 12.79
Cancelled 4.54 - 16.54 (61,050) 16.16

Balance, February 25,2001 $ 3.67 - $43.63 1,358,152 $16.50
Granted 22.62 - 26.77 275,725 23.62
Exercised 3.67 - 23.96 (162,831) 13.06
Cancelled 3.67 - 43.63 (227,339) 21.92

Balance, March 3, 2002 $ 4.67 - $43.63 1,243,707 $ 9.56
Granted 14.12 - 29.05 231,800 28.04
Exercised 4.67 - 16.54 (43,398) 13.06
Cancelled 12.21 - 43.63 (66,747) 28.29

Balance, March 2, 2003 $ 4.92 - $43.63 1,365,362 $18.92

Exercisable, March 2, 2003 $ 4.92 - $43.63 796,343 $15.23

The following table summarizes information concerning
currently outstanding and exercisable options.

Options Outstanding Options Exercisable
- -------------------------------------------------- -------------------
Weighted
Average
Number of Remaining Weighted Weighted
Options Contractual Average Number of Average
Range of Outstand- Life Exercise Options Exercise
Exercise Prices ing (Years) Price Exercisable Price
- --------------- --------- ----------- -------- ----------- --------

$ 4.92 - $ 9.99 156,525 .65 $ 6.62 156,525 $ 6.62
10.00 - 19.99 694,887 5.55 15.72 543,068 15.65
20.00 - 43.63 513,950 8.54 26.99 96,750 26.83
--------- -------
1,365,362 796,343

Stock options available for future grant under the 2002
stock option plan at March 2, 2003 were 885,000. Stock
options available for future grant under the 1992 stock
option plan at March 2, 2003 and March 3, 2002 were zero and
688,710, respectively.

c. Stockholders' Rights Plan - On February 2, 1989, the
Company adopted a stockholders' rights plan designed
to protect stockholder interests in the event the
Company is confronted with coercive or unfair takeover
tactics. Under the terms of the plan, as amended on
July 12, 1995, each share of the Company's common
stock held of record on February 15, 1989 or issued
thereafter received one right (subsequently adjusted
to two thirds (2/3) of one right in connection with
the Company's three-for-two stock split in the form of
a stock dividend distributed November 8, 2000 to
stockholders of record on October 20, 2000). In the
event that a person has acquired, or has the right to
acquire, 15% (25% in certain cases) or more of the
then outstanding common stock of the Company (an
"Acquiring Person") or tenders for 15% or more of the
then outstanding common stock of the Company, such
rights will become exercisable, unless the Board of
Directors otherwise determines. Upon becoming
exercisable as aforesaid, each right will entitle the
holder thereof to purchase one one-hundredth of a
share of Series A Preferred Stock for $75, subject to
adjustment (the "Purchase Price"). In the event that
any person becomes an Acquiring Person, each holder of
an unexercised exercisable right, other than an
Acquiring Person, shall have the right to purchase, at
a price equal to the then current Purchase Price, such
number of shares of the Company's common stock as
shall equal the then current Purchase Price divided by
50% of the then market price per share of the
Company's common stock. In addition, if after a person
becomes an Acquiring Person, the Company engages in
any of certain business combination transactions as
specified in the plan, the Company will take all
action to ensure that, and will not consummate any
such business combination unless, each holder of an
unexercised exercisable right, other than an Acquiring
Person, shall have the right to purchase, at a price
equal to the then current Purchase Price, such number
of shares of common stock of the other party to the
transaction for each right held by such holder as
shall equal the then current Purchase Price divided by
50% of the then market price per share of such other
party's common stock. The Company may redeem the
rights for a nominal consideration at any time, and
after any person becomes an Acquiring Person, but
before any person becomes the beneficial owner of 50%
or more of the outstanding common stock of the
Company, the Company may exchange all or part of the
rights for shares of the Company's common stock at a
one-for-one exchange ratio. Unless redeemed, exchanged
or exercised earlier, all rights expire on July 12,
2005.

d. Reserved Common Shares - At March 2, 2003, 2,250,362
shares of common stock were reserved for issuance upon
exercise of stock options.

e. Accumulated Other Non-Owner Changes - Accumulated
balances related to each component of other
comprehensive income (loss) were as follows:

March 2, March 3,
2003 2002

Currency translation adjustment $(1,938) $(7,112)
Pension liability adjustment (742) (845)
Unrealized gains on investments 248 67

Accumulated balance $(2,432) $(7,890)

9. (LOSS)/EARNINGS PER SHARE

The following table sets forth the calculation of basic and
diluted (loss)/earnings per share for the last three fiscal
years:

2003 2002 2001

Net (loss)income for basic EPS $(50,759) $(25,519) $49,419
Add interest on 5.5%
Convertible Subordinated Notes,
net of taxes - - 3,585
Net (loss)income for diluted EPS $(50,759) $(25,519) $53,004

Weighted average common shares
outstanding for basic EPS 19,674,000 19,535,000 15,932,000
Net effect of dilutive options * * 548,000
Assumed conversion of 5.5%
Convertible Subordinated Notes - - 3,522,000
Weighted average shares
outstanding for diluted EPS 19,674,000 19,535,000 20,002,000

Basic (loss)earnings per share $(2.58) $(1.31) $3.10
Diluted (loss)earnings per share $(2.58) $(1.31) $2.65

*For the fiscal years 2003 and 2002, the effect of employee stock
options was not considered because it was antidilutive.

Common stock equivalents, which were not included in the
computation of diluted loss per share because either the
effect would have been antidilutive or the options' exercise
prices were greater than the average market price of the
common stock, were 865,287, 637,550 and 188,769 for the fiscal
years 2003, 2002, 2001, respectively.

The weighted average number of shares outstanding and the
earnings per share for each year have been adjusted to give
retroactive effect to the three-for-two split of the Company's
common stock declared October 10, 2000 payable November 8,
2000 to stockholders of record on October 20, 2000.

10. 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
$3,170 in its fiscal year 2003 second quarter ended September
1, 2002 in connection with the sale.

11. 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 were nil during the 2000
through 2003 fiscal 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 the Company, 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 pre-tax charges
of $15,707 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 March 2, 2003 balance sheet date are set
forth below.

Charges 3/2/03
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 accounts
receivable 350 319 31 -
Write down inventory 590 590 - -
Severance payments 688 688 - -
Medical and other costs 133 133 - -
Lease payments, taxes,
utilities, maint. 781 331 - 450
Other 45 45 - -
------- ------- ----- -----
$15,707 $15,226 $31 $450
======= ======= ===== =====

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 $1,303) 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.

12. RESTRUCTURING AND SEVERANCE CHARGES

The Company recorded pre-tax charges of $4,674 and $120 in
the fiscal year 2003 third quarter ended December 1, 2002 in
connection with the closure of its Nelco U.K. manufacturing
facility, located in Skelmersdale, England, and severance
costs at a North American business unit. The components of
these charges and the related liability balances and
activity for the year ended March 2, 2003 are set forth
below.

Charges 3/02/03
Closure Incurred or Remaining
Charges Paid Reversals Liabilities

United Kingdom charges:
Impairment of long
lived assets $1,993 $1,993 $ - $ -
Severance payments and
related costs 1,997 1,703 - 294
Utilities, maintenance,
taxes, other 684 435 - 249
------ ------ ----- ----
4,674 4,131 - 543
Other severance payments
and related costs 120 120 - -
------ ------ ----- ----
$4,794 $4,251 $ - $543
====== ====== ===== ====

The Company recorded pre-tax charges of $2,921 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 for severance payments and related costs for
terminated employees. In addition, the Company recorded pre-
tax severance charges of $681 in its fiscal year 2002 first
quarter ended May 27, 2001 and $125 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 May 27, 2001 and November 25, 2001 balance sheet dates
to the March 2, 2003 balance sheet date are set forth below.

Charges 3/2/03
Closure Incurred or Remaining
Charges Paid 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
to write off the net book value of machinery and equipment and
$523 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.

As stated above in this Note and in the preceding Note 11, the
Company incurred charges (totaling $6,126) for severance
payments and related costs for employees whose employment was
terminated by the Company as follows: $2,020 for employees
terminated in Germany during the 2002 fiscal year third
quarter ended November 25, 2001; $681 and $125 for employees
terminated at its continuing operations in Asia, Europe and
North America during the 2002 fiscal year first quarter ended
May 27, 2001 and third quarter ended November 25, 2001,
respectively; $1,303 for employees terminated in connection
with the sale of NTI and the closure of a related support
facility in Arizona during the 2002 fiscal year first quarter
ended May 27, 2001; and $1,997 for employees terminated in
connection with the closure of the Nelco U.K. facility in
Skelmersdale, England in the 2003 fiscal year third quarter
ended December 1, 2002.

All the terminated employees were hourly or salaried,
administrative, manufacturing and support employees, all such
employees were terminated during the 2002 fiscal year first,
second and third quarters ended May 27, 2001, August 26, 2001
and November 25, 2001, respectively, and in the 2003 fiscal
year third quarter ended December 1, 2002; and substantially
all the severance payments and related costs for such
terminated employees (totaling $6,126) were paid during such
quarters, except payments and costs of $1,212 in Germany all
of which were paid in installments to terminated employees in
Germany during the Company's 2003 fiscal year first and second
quarters ended June 2, 2002 and September 1, 2002,
respectively, and except payments and costs of $1,703 in the
U.K. which were paid in installments to terminated employees
in the U.K. during the fourth quarter of fiscal year 2003 and
the remainder of which will be paid during the first and
second quarters of fiscal year 2004. All the severance
payments and related costs for the employees terminated in
connection with the sale of NTI and the closure of the related
support facility (totaling $1,303) were included in the
$15,707 of charges in connection with the sale of NTI and the
closure of the related support facility.

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 1,500 as of March 2, 2003.

13. ASSET IMPAIRMENT

As a result of continuing declines in the Company's North
American business operations and Dielektra's mass lamination
operation, during the fourth quarter of the 2003 fiscal year
the Company reassessed the recoverability of the fixed assets
of those operations based on cash flow projections and
determined that such fixed assets were impaired. The Company
recorded an impairment charge of $50.3 million in the
Company's 2003 fiscal year fourth quarter to reduce the book
values of such fixed assets to their estimated fair values.
In accordance with Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), the carrying values of such assets
exceeded their fair values and were not recoverable (see Note
21 below).

14. EMPLOYEE BENEFIT PLANS

a. Profit Sharing Plan - Park and certain of its subsidiaries
have a non-contributory profit sharing retirement plan covering
their regular full-time employees. The plan may be modified or
terminated at any time, but in no event may any portion of the
contributions revert back to the Company. The Company's contribu
tions under the plan amounted to $538, $403 and $4,597 for fiscal
years 2003, 2002 and 2001, respectively. Contributions are
discretionary and may not exceed the amount allowable as a tax
deduction under the Internal Revenue Code. In addition, the
Company sponsors a 401(k) savings plan, pursuant to which the
contributions of employees of certain subsidiaries were partially
matched by the Company in the amounts of $442, $527 and $751 in
fiscal years 2003, 2002 and 2001, respectively.

b. Pension Plans - The domestic subsidiary of the Company which
conducted the plumbing hardware business had two pension plans,
neither of which is active, covering its union employees. On
February 27, 2000, the two plans were merged in order to simplify
the administration of the plans. The Company's funding policy was
to contribute annually the amounts necessary to satisfy
applicable funding standards. There were no changes made to
funding levels or retiree benefits as a result of the merger of
the two plans. However, in connection with the closure of the
plumbing hardware business, the Company terminated the combined
plan and purchased annuity contracts to fund the pension
liability.

A subsidiary of the Company in Europe has a non-contributory
defined benefit pension plan which covers certain employees.
Under the terms of this plan, participants may not accrue
additional service time after December 31, 1987. The
Company's policy with respect to this plan is to contribute
annually the amounts necessary to meet current payment
obligations of the plan. The Company recorded deferred
pension liabilities relating to this plan in the amounts of
$10,991 and $8,908 at March 2, 2003 and March 3, 2002,
respectively, in accordance with SFAS 87. The effect on the
Company's consolidated financial statements in recording the
liability was to record a corresponding reduction to
accumulated non-owner changes of $742 and $845 at those same
dates.

Net pension costs included the following components:

Fiscal Year
Changes in Benefit Obligations 2003 2002
- ------------------------------ ---- ----

Benefit obligation at beginning of year $ 9,150 $ 9,408
Service cost 94 82
Interest cost 571 533
Actuarial loss (gain) (301) 108
Currency translation (gain)loss 2,163 (439)
Benefits paid (640) (542)
Payment for annuities - -
Benefit obligation at end of year $ 11,037 $ 9,150

Changes in Plan Assets

Fair value of plan assets at
beginning of year $ - $ -
Actual return on plan assets - -
Employer contributions 640 542
Benefits paid (640) (542)
Payment for annuities - -
Administrative expenses paid - -
Fair value of plan assets $ - $ -

Under funded status $(11,037) $(9,150)
Unrecognized net loss 1,238 1,317
Net accrued pension cost $ (9,799) $(7,833)

Fiscal Year
Components of Net Periodic Benefit Cost 2003 2002 2001

Service cost - benefits earned during the
period $ 94 $ 82 $ 96
Interest cost on projected benefit
obligation 571 533 839
Expected return on plan assets - - (252)
Amortization of unrecognized loss 50 40 -
Recognized net actuarial loss - - 38
Effect of curtailment - - 1,761
Net periodic pension cost $715 $655 $2,482

The projected benefit obligation for the terminated domestic
plan was determined using an assumed discount rate of 7.50%
for fiscal year 2000 and the assumed long-term rate of
return on plan assets was 8%. Projected wage increases were
not applicable as benefits pursuant to the plan were based
upon years of service without regard to levels of
compensation.

The projected benefit obligation for the foreign plan was
determined using assumed discount rates of 5.75% and 6% for
fiscal years 2003 and 2002, respectively. Projected wage
increases of 2.6% and 3.5% and inflation factors of 2.0%
were also assumed for fiscal years 2003 and 2002,
respectively. As previously stated, the Company's funding
policy with respect to this plan is to contribute annually
the amounts necessary to meet current payment obligations of
the plan.

15. COMMITMENTS AND CONTINGENCIES

a.Lease Commitments - The Company conducts certain of its
operations in leased facilities, which include several
manufacturing plants, warehouses and offices, and land
leases. The leases on facilities are for terms of up to 10
years, the latest of which expires in 2007. Many of the
leases contain renewal options for periods ranging from one
to ten years and require the Company to pay real estate
taxes and other operating costs. The latest land lease
expiration is 2013 and this land lease contains renewal
options of up to 35 years.

These non-cancelable operating leases have the following
payment schedule.

Fiscal Year Amount
2004 $ 2,307
2005 1,543
2006 797
2007 357
2008 263
Thereafter 684
$5,951

Rental expense, inclusive of real estate taxes and other
costs, amounted to $2,948, $3,933 and $3,711 for fiscal
years 2003, 2002 and 2001, respectively

b. Environmental Contingencies - The Company and certain of its
subsidiaries have been named by the Environmental Protection
Agency (the "EPA") or a comparable state agency under the
Comprehensive Environmental Response, Compensation and
Liability Act (the "Superfund Act") or similar state law as
potentially responsible parties in connection with alleged
releases of hazardous substances at eight sites. In
addition, a subsidiary of the Company has received cost
recovery claims under the Superfund Act from other private
parties involving two other sites and has received requests
from the EPA under the Superfund Act for information with
respect to its involvement at three other sites.

Under the Superfund Act and similar state laws, all parties
who may have contributed any waste to a hazardous waste
disposal site or contaminated area identified by the EPA or
comparable state agency may be jointly and severally liable
for the cost of cleanup. Generally, these sites are
locations at which numerous persons disposed of hazardous
waste. In the case of the Company's subsidiaries, generally
the waste was removed from their manufacturing facilities
and disposed at waste sites by various companies which
contracted with the subsidiaries to provide waste disposal
services. Neither the Company nor any of its subsidiaries
have been accused of or charged with any wrongdoing or
illegal acts in connection with any such sites. The Company
believes it maintains an effective and comprehensive environ
mental compliance program.

The insurance carriers that provided general liability
insurance coverage to the Company and its subsidiaries for
the years during which the Company's subsidiaries' waste was
disposed at these sites have agreed to pay, or reimburse the
Company and its subsidiaries for, 100% of their legal
defense and remediation costs associated with three of these
sites and 25% of such costs associated with another one of
these sites.

The total costs incurred by the Company and its subsidiaries
in connection with these sites, including legal fees
incurred by the Company and its subsidiaries and their
assessed share of remediation costs and excluding amounts
paid or reimbursed by insurance carriers, were approximately
$131, $200 and $300 in fiscal years 2003, 2002 and 2001,
respectively. The recorded liabilities included in accrued
liabilities for environmental matters were $4,246, $3,975
and $4,431 for fiscal years 2003, 2002 and 2001,
respectively.

Included in cost of sales are charges for actual
expenditures and accruals, based on estimates, for certain
environmental matters described above. The Company accrues
estimated costs associated with known environmental matters,
when such costs can be reasonably estimated and when the
outcome appears probable. The Company believes that the
ultimate disposition of known environmental matters will not
have a material adverse effect on the liquidity, capital
resources, business or consolidated financial position of
the Company. However, one or more of such environmental mat
ters could have a significant negative impact on the
Company's consolidated financial results for a particular
reporting period.

16. BUSINESS SEGMENTS

The Company's specialty adhesive tapes and films 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 tapes and films business
(see Note 10 above); and during the 2001 fiscal year, the
Company closed and liquidated its plumbing hardware business
(see Note 18 below). In the 2001, 2000 and 1999 fiscal
years, the specialty adhesive tapes and films, 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. Intersegment sales and sales between geographic
regions were not significant.

Financial information regarding the Company's operations by
geographic region follows:

Fiscal Year
2003 2002 2001

United States $117,889 $132,520 $312,851
Europe 53,520 55,507 121,329
Asia 45,367 42,033 88,017
Total sales $216,776 $230,060 $522,197

United States $44,425 $108,804 $104,386
Europe 25,373 22,954 24,657
Asia 21,159 22,943 26,596
Total long-lived assets $ 90,957 $150,283 $160,057

17. CUSTOMER AND SUPPLIER CONCENTRATIONS

a. Customers - Sales to Sanmina Corporation were 17.3%, 18.1%
and 25.1% of the Company's total worldwide sales for fiscal years
2003, 2002 and 2001, respectively. Sales to Tyco Printed Circuit
Group L.P. were less than 10% for fiscal years 2003 and 2001, and
11.3% of fiscal 2002. Sales to Multilayer Technology, Inc. were
10.0% of total worldwide sales for fiscal years 2003 and less
than 10% for fiscal years 2002 and 2001, respectively.

While no other customer accounted for 10% or more of the
Company's total worldwide sales in fiscal year 2003, and the
Company is not dependent on any single customer, the loss of
a major electronic materials customer or of a group of
customers could have a material adverse effect on the
Company's business and results of operations.

b.Sources of Supply - The principal materials used in the
manufacture of the Company's electronic materials products
are specially manufactured copper foil, fiberglass cloth and
synthetic reinforcements, and specially formulated resins
and chemicals. Although there are a limited number of
qualified suppliers of these materials, the Company has
nevertheless identified alternate sources of supply for each
of such materials. While the Company has not experienced
significant problems in the delivery of these materials and
considers its relationships with its suppliers to be strong,
a disruption of the supply of material from a principal
supplier could adversely affect the Company's electronic
materials business. Furthermore, substitutes for these
materials are not readily available and an inability to
obtain essential materials, if prolonged, could materially
adversely affect the Company's electronic materials
business.

18.CLOSURE OF PLUMBING HARDWARE BUSINESS

In the fourth quarter of the 2000 fiscal year, the Company
decided to close and liquidate its plumbing hardware
business. The pre-tax charges to earnings for the 2000 fiscal
year related to the closure of the plumbing hardware business
totaled $4,464, including $1,234 for the impairment of long-
lived assets, $1,111 for other asset write-offs, and $2,119
for facility and other costs related to the closure.

During the 2001 fiscal year, the Company closed and
liquidated its plumbing hardware business. In the fourth
quarter of the 2001 fiscal year, the Company realized $1,262
in gains from the sale of real estate and other plumbing
hardware business assets, collected $290 more of accounts
receivable than originally anticipated, and reversed $600 of
liabilities accrued in fiscal year 2000 for other costs to
close the business, which were no longer required. In the
fourth quarter of the 2001 fiscal year, an expense of $1,149
was incurred for the purchase of annuity contracts to fund
the liability of the pension plan that was terminated.

At March 2, 2003, there was $683 of accrued environmental
liabilities and $100 for workers' compensation claims
relating to the closure and liquidation of the plumbing
hardware business. At March 3, 2002, there was $669 of
accrued environmental liabilities and $150 for workers'
compensation claims. Although the plan for the closure and
liquidation of the Company's plumbing hardware business was
implemented during the Company's 2001 fiscal year, the
Company cannot reasonably estimate when the environmental
issues and workers' compensation claims will be resolved.

The operating results of the plumbing hardware business
included in the Consolidated Statement of Operations are as
follows:

Fiscal Year Ended
February 25,
2001

Net sales $1,883
Cost of sales 1,001

Gross profit 882
Selling, general and
administrative expenses 907

Loss from operations $ (25)

19. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarter
First Second Third Fourth
(In thousands, except per share
amounts)

Fiscal 2003:
Net sales $ 56,561 $ 56,901 $ 53,587 $ 49,727
Gross profit 6,261 6,209 5,408 5,209
Net (loss) gain (636) 1,587 (5,304) (46,406)

Loss per share:
Basic $(.03) $0.08 $(.27) $(2.35)
Diluted $(.03) $0.08 $(.27) $(2.35)

Weighted average common
shares outstanding:
Basic 19,661 19,669 19,682 19,684
Diluted 19,661 20,013 19,682 19,684

Fiscal 2002:
Net sales $ 69,102 $ 51,743 $ 52,625 $ 56,590
Gross profit 3,266 1,422 1,539 5,568
Net loss (14,612) (3,779) (6,117) (1,011)

Loss per share:
Basic $(.75) $(.19) $(.31) $(.05)
Diluted $(.75) $(.19) $(.31) $(.05)

Weighted average common
shares outstanding:
Basic 19,420 19,545 19,559 19,612
Diluted 19,420 19,545 19,559 19,612

(Loss)earnings per share are computed separately for each
quarter. Therefore, the sum of such quarterly per share
amounts may differ from the total for the years. The weighted
average number of shares outstanding and the (loss)earnings
per share for each period have been adjusted to give
retroactive effect to the three-for-two split of the
Company's common stock declared October 10, 2000 payable
November 8, 2000 to stockholders of record on October 20,
2000.

20.RECENTLY ISSUED ACCOUNTING PROUNOUNCEMENTS

In December 2002, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation - Transition and
Disclosure" ("SFAS 148"), which amends the disclosure
provisions of FASB Statement No. 123, "Accounting for Stock
Based Compensation", to require prominent disclosure of the
effect on reported net income of an entity's accounting
policy decisions with respect to stock-based employee
compensation and amends APB Opinion No. 28, "Interim
Financial Reporting", to require disclosure of those effects
in interim financial information. This statement is
effective for fiscal years ending after December 15, 2002.
The Company implemented this statement in the fourth quarter
of fiscal year 2003 and has made the appropriate
disclosures. See Notes 1 and 8 of the Notes to the
Consolidated Financial Statements.

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 adoption did not have a material effect on
the Company's consolidated results of operations or
financial condition.

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
consolidated results of operations or financial condition.

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 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.

21. SUBSEQUENT EVENTS

On March 27, 2003, the Company announced that Dielektra
GmbH, the Company's advanced electronic materials business
located in Cologne, Germany, was closing its mass lamination
operation; and on April 23, 2003, the Company announced the
realignment of its North America FR4 business operations
located in Newburgh, New York and Fullerton, California and
the establishment of a new business unit called "Nelco/North
America". (See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for
additional information regarding the closure and
realignment.) As a result of continuing declines in the
Company's North American business operations and Dielektra's
mass lamination operation and the Company's reassessment of
the recoverability of the fixed assets of those operations,
the Company recorded $50,255 of fixed asset impairment
charges in the fourth quarter of fiscal year 2003 (see Note
13 above). The Company expects to incur additional charges
of approximately $16,000 during the first half of the 2004
fiscal year.

On May 13, 2003, the Company announced that the United
States Court of Appeals for the Ninth Circuit in San
Francisco affirmed the jury verdict in favor of Park's
subsidiary, NTI, in its lawsuit filed against Delco
Electronics Corporation in the United States District Court
for the District of Arizona. Delco is a subsidiary of Delphi
Automotive Systems Corporation. In the lawsuit, NTI claimed,
among other things, that Delco breached its contract to
purchase semi-finished multilayer printed circuit boards
from NTI, 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. NTI sought
substantial compensatory and punitive damages. As previously
reported, on November 29, 2000, after a five day trial in
Phoenix, Arizona, a jury awarded damages to NTI in the
amount of $32,280, 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 that amount. Both parties filed
motions for post-judgment relief and a new trial, all of
which the judge denied, and both parties appealed the
decision to the United States Court of Appeals for the Ninth
Circuit in San Francisco. On May 7, 2003, a panel of three
judges in the Court of Appeals for the Ninth Circuit
rendered a unanimous decision affirming the jury verdict.
The time period within which Delco could have filed a
petition for rehearing by the United States Court of Appeals
for the Ninth Circuit has expired. As of May 27, 2003,
neither the Company nor NTI received notice that Delco has
filed a petition for rehearing.

*******

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

Not applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant.

The information called for by this item (except for
information as to the Company's executive officers, which
information appears elsewhere in this Report) is incorporated by
reference to the Company's definitive proxy statement for the
2003 Annual Meeting of Shareholders to be filed pursuant to
Regulation 14A.

Item 11. Executive Compensation.

The information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the
2003 Annual Meeting of Shareholders to be filed pursuant to
Regulation 14A.

Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.

The following table provides information as of the end of the
Company's most recent fiscal year with respect to compensation
plans (including individual compensation arrangements) under
which equity securities of the Company are authorized for
issuance.

Number of Number of
Securities to Weighted- securities remaining
be issued upon average available for future
exercise of exercise price issuance under equity
outstanding of outstanding compensation plans
options, options, (excluding securities
warrants and warrants and reflected in
Plan category rights rights column (A))
------------- -------------- --------------- ---------------------
(A) (B) (C)

Equity
compensation
approved by 1,365,362 $15.23 885,000
plans security
holders (a)

Equity
compensation
plans not
approved -0- -0- -0-
by security
holders
(a)

Total 1,365,362 $15.23 885,000
- ---------------

(a)The Company's only equity compensation plans are its 2002 Stock Option
Plan, which was approved by the Company's shareholders in July 2002,
and its 1992 Stock Option Plan, which was approved by the Company's
shareholders in July 1992. Authority to grant additional options under
the 1992 Plan expired on March 24, 2002, and all options granted under
the 1992 Plan will expire in March 2012 or earlier.

The other information called for by this Item is
incorporated by reference to the Company's definitive proxy
statement for the 2003 Annual Meeting of Shareholders to be filed
pursuant to Regulation 14A.

Item 13. Certain Relationships and Related Transactions.

The information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the
2003 Annual Meeting of Shareholders to be filed pursuant to
Regulation 14A.

Item 14. 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 annual 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 at recording, processing, summarizing and
reporting, on a timely basis, 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 IV

Item 15. Exhibits, Financial Statement Schedules, and Page
Reports on Form 8-K.

(a) Documents filed as a part of this Report

(1)Financial Statements:

The following Consolidated Financial

Statement of the Company are included in
Part II, Item 8:

Report of Ernst & Young LLP, independent 36
auditors

Balance Sheets 37

Statements of Operations 38

Statements of Stockholders' Equity 39

Statements of Cash Flows 40

Notes to Consolidated Financial Statement 41
(1-18)

(2)Financial Statement Schedules:

The following additional information should
be read in conjunction with the
Consolidated Financial Statements of the
Registrant described in item 15(a)(1)
above:

Schedule II - Valuation and Qualifying 71
Accounts

All other schedules have been omitted
because they are not applicable or not
required, or the information is included
elsewhere in the financial statements or
notes thereto.

(3)Exhibits:

The information required by this Item
relating to Exhibits to this Report is
included in the Exhibit Index beginning on
page 72 hereof.

(b) Reports on Form 8-K.

No reports on Form 8-K have been filed
during the fiscal quarter ended March 2,
2003.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of
the Securities Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Date: May 28, 2003 PARK ELECTROCHEMICAL CORP.

By:/s/Brian E. Shore
Brian E. Shore,
President and Chief
Executive Officer

Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

Signature Title Date

President and Chief
/s/Brian E. Shore Executive Officer and
Brian E. Shore Director May 28, 2003
(principal executive
officer)

Senior Vice President,
/s/Murray O. Stamer Finance
Murray O. Stamer (principal financial and May 28, 2003
accounting officer)

/s/Jerry Shore Chairman of the Board and
Jerry Shore Director May 28, 2003

/s/Mark S. Ain
Mark S. Ain Director May 28, 2003

/s/Anthony Chiesa
Anthony Chiesa Director May 28, 2003

/s/Lloyd Frank
Lloyd Frank Director May 28, 2003

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Brian E. Shore, certify that:

1. I have reviewed this annual report on Form 10-K of Park
Electrochemical Corp.;

2. Based on my knowledge, this annual 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 annual report;

3. Based on my knowledge, the financial statements, and
other financial information included in this annual 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
annual 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-14 and 15d-14) for the registrant and 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 annual 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 annual report (the
"Evaluation Date"); and
(c) presented in this annual 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 officer 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 functions):

(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 officer and I have
indicated in this annual report whether 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: May 28, 2003

/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 annual report on Form 10-K of Park
Electrochemical Corp.;

2. Based on my knowledge, this annual 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 annual report;

3. Based on my knowledge, the financial statements, and
other financial information included in this annual 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
annual 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-14 and 15d-14) for the registrant and 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 annual 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 annual report (the
"Evaluation Date"); and
(c) presented in this annual 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 officer 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 functions):

(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) 0any 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 officer and I have
indicated in this annual report whether 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: May 28, 2003

/s/Murray O. Stamer
Murray O. Stamer
Senior Vice President, Finance
Principal Financial Officer

Schedule II
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Column A Column B Column C
Additions
- -------------------------------------------------------------
Balance at
Beginning Costs and
Description of Period Expenses Other
----------- --------- --------- -----

DEFERRED INCOME TAX
ASSET VALUATION
ALLOWANCE:
52 weeks ended
March 2, 2003 $22,217,000 $22,501,000 -

53 weeks ended
March 3 2002 $11,400,000 $ 775,000 $10,042,000

52 weeks ended
February 25, 2001 $19,500,000 - -

Column A Column D Column E
- ------------------------------------------------------------
Balance at
End of
Description Reductions Period
----------- ---------- ----------

DEFERRED INCOME TAX
ASSET VALUATION
ALLOWANCE:

52 weeks ended
March 2, 2003 - $44,718,000

53 weeks ended
March 3 2002 - $22,217,000

52 weeks ended
February 25, 2001 $8,100,000 $11,400,000

Column A Column B Column C
- -------------------------------------------------------
Balance at Charged to
Beginning Cost and
Description of Period Expenses
----------- --------- --------

ALLOWANCE FOR
DOUBTFUL ACCOUNTS:
52 weeks ended
March 2, 2003 $1,817,000 $ 366,000

53 weeks ended
March 3 2002 $2,074,000 $ 123,000

52 weeks ended
February 25, 2001 $2,388,000 $ 228,000

(A) Uncollectable accounts, net of recoveries.

Column A Column D Column E
- ----------------------------------------------------------
Other
Balance at
Accounts Translation End of
Description Written Off Adjustment Period
----------- ----------- ----------- ----------
(A)

ALLOWANCE FOR
DOUBTFUL ACCOUNTS:
52 weeks ended
March 2, 2003 $(286,000) $ (4,000) $1,893,000

53 weeks ended
March 3 2002 $(366,000) $ (14,000) $1,817,000

52 weeks ended
February 25, 2001 $(477,000) $ (65,000) $2,074,000

(A) Uncollectable accounts, net of recoveries.

EXHIBIT INDEX

Exhibit
Numbers Description Page

3.01 Restated Certificate of Incorporation, dated
March 28, 1989, filed with the Secretary of State
of the State of New York on April 10, 1989, as
amended by Certificate of Amendment of the
Certificate of Incorporation, increasing the
number of authorized shares of Common stock from
15,000,000 to 30,000,000 shares, dated July 12,
1995, filed with the Secretary of State of the
State of New York on July 17, 1995, and by
Certificate of Amendment of the Certificate of
Incorporation, amending certain provisions
relating to the rights, preferences and
limitations of the shares of a series of
Preferred Stock, date August 7, 1995, filed with
the Secretary of State of the State of New York
on August 16, 1995 (Reference is made to Exhibit -
3.01 of the Company's Annual Report on Form 10-K
for the fiscal year ended March 3, 2002,
Commission File No. 1-4415, which is incorporated
herein by reference.)......................

3.02 Certificate of Amendment of the Certificate of
Incorporation, increasing the number of
authorized shares of Common Stock from 30,000,000
to 60,000,000 shares, dated October 10, 2000,
filed with the Secretary of State of the State of
New York on October 11,
2000......................

3.03 By-Laws, as amended May 21, 2002 (Reference is
made to Exhibit 3.03 of the Company's Annual
Report on Form 10-K for the fiscal year ended
March 3, 2002, Commission File No. 1-4415, which -
is incorporated herein by reference.)....

4.01 Amended and Restated Rights Agreement, dated as
of July 12, 1995, between the Company and
Registrar and Transfer Company, as Rights Agent,
relating to the Company's Preferred Stock
Purchase Rights. (Reference is made to Exhibit 1
to Amendment No. 1 on Form 8-A/A filed on August
10, 1995, Commission File No. 1-4415, which is -
incorporated herein by
reference.)......................................

10.01 Lease dated December 12, 1989 between Nelco
Products, Inc. and James Emmi regarding real
property located at 1100 East Kimberly Avenue,
Anaheim, California and letter dated December 29,
1994 from Nelco Products, Inc. to James Emmi exer
cising its option to extend such Lease (Reference
is made to Exhibit 10.01 of the Company's Annual
Report on Form 10-K for the fiscal year ended
March 3, 2002, Commission File No. 1-4415, which -
is incorporated herein by
reference.)......................................

10.02 Lease dated December 12, 1989 between Nelco
Products, Inc. and James Emmi regarding real
property located at 1107 East Kimberly Avenue,
Anaheim, California and letter dated December 29,
1994 from Nelco Products, Inc. to James Emmi exer
cising its option to extend such Lease (Reference
is made to Exhibit 10.02 of the Company's Annual
Report on Form 10-K for the fiscal year ended
March 3, 2002, Commission File No. 1-4415, which -
is incorporated herein by
reference.)......................................

10.03 Lease Agreement dated August 16, 1983 and Exhibit
C, First Addendum to Lease, between Nelco
Products, Inc. and TCLW/Fullerton regarding real
property located at 1411 E. Orangethorpe Avenue,
Fullerton, California (Reference is made to
Exhibit 10.03 of the Company's Annual Report on
Form 10-K for the fiscal year ended March 3,
2002, Commission File No. 1-4415, which is -
incorporated herein by reference.)...............

10.03(a)Second Addendum to Lease dated January 26, 1987
to Lease Agreement dated August 16, 1983 (see
Exhibit 10.03 hereto) between Nelco Products,
Inc. and TCLW/Fullerton regarding real property
located at 1421 E. Orangethorpe Avenue,

Fullerton, California (Reference is made to
Exhibit 10.03(a) of the Company's Annual Report
on Form 10-K for the fiscal year ended March 3, -
2002, Commission File No. 1-4415, which is
incorporated herein by reference.)..........

10.03(b)Third Addendum to Lease dated January 7, 1991 and
Fourth Addendum to Lease dated January 7, 1991 to
Lease Agreement dated August 16, 1983 (see
Exhibit 10.03 hereto) between Nelco Products,
Inc. and TCLW/Fullerton regarding real property
located at 1411, 1421 and 1431 E. Orangethorpe
Avenue, Fullerton, California. (Reference is made
to Exhibit 10.03(b) of the Company's Annual
Report on Form 10-K for the fiscal year ended -
March 2, 1997, Commission File No. 1-4415, which
is incorporated herein by reference.)....

10.03(c)Fifth Addendum to Lease dated July 5, 1995 to
Lease dated August 16, 1983 (see Exhibit 10.03
hereto) between Nelco Products, Inc. and
TCLW/Fullerton regarding real property located at
1411 E. Orangethorpe Avenue, Fullerton,
California (Reference is made to Exhibit 10.03(c)
of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 2002, Commission -
File No. 1-4415, which is incorporated herein by
reference.).........................

10.04 Lease Agreement dated May 26, 1982 between Nelco
Products Pte. Ltd. (lease was originally entered
into by Kiln Technique (Private) Limited, which
subsequently assigned this lease to Nelco
Products Pte. Ltd.) and the Jurong Town Cor
poration regarding real property located at 4 Gul
Crescent, Jurong, Singapore (Reference is made to
Exhibit 10.04 of the Company's Annual Report on
Form 10-K for the fiscal year ended March 3, -
2002, Commission File No. 1-4415, which is
incorporated herein by reference.).............

10.04(a) Deed of Assignment, dated April 17, 1986 between
Nelco Products Pte. Ltd., Kiln Technique
(Private) Limited and Paul Ma, Richard Law, and
Michael Ng, all of Peat Marwick & Co., of the
Lease Agreement dated May 26, 1982 (see Exhibit
10.04 hereto) between Kiln Technique (Private)
Limited and the Jurong Town Corporation regarding
real property located at 4 Gul Crescent, Jurong,
Singapore (Reference is made to Exhibit 10.04(a)
of the Company's Annual Report on Form 10-K for -
the fiscal year ended March 3, 2002, Commission
File No. 1-4415, which is incorporated herein by
reference.)....

10.05(b) 1992 Stock Option Plan of the Company, as amended
by First Amendment thereto. (Reference is made to
Exhibit 10.06(b) of the Company's Annual Report
on Form 10-K for the fiscal year ended March 1,
1998, Commission File No. 1-4415, which is
incorporated herein by reference. This exhibit is
a management contract or compensatory plan or -
arrangement.)....................................

10.06 Amended and Restated Employment Agreement dated
February 28, 1994 between the Company and Jerry
Shore. (Reference is made to Exhibit 10.06 of the
Company's Annual Report on Form 10-K for the
fiscal year ended March 3, 2002, Commission File
No. 1-4415, which is incorporated herein by
reference. This exhibit is a management contract -
or compensatory plan or
arrangement.).........................

10.06(a)Amendment No. 1 dated March 1, 1995 to the
Amended and Restated Employment Agreement dated
February 28, 1994 (see Exhibit 10.06 hereto)
between the Company and Jerry Shore. (Reference
is made to Exhibit 10.06(a) of the Company's
Annual Report on Form 10-K for the fiscal year
ended March 3, 2002, Commission File No. 1-4415,
which is incorporated herein by reference. This -
exhibit is a management contract or compensatory
plan or arrangement.)......................

10.06(b)Amendment No. 2 dated December 5, 1996 to the
Amended and Restated Employment Agreement dated
February 28, 1994 (see Exhibit 10.06 hereto)
between the Company and Jerry Shore. (Reference
is made to Exhibit 10.07(b) of the Company's
Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415,
which is incorporated herein by reference. This -
exhibit is a management contract or compensatory
plan or arrangement.)......................

10.06(c)Amendment No. 3 dated October 14, 1997 to the
Amended and Restated Employment Agreement dated
February 28, 1994 (see Exhibit 10.06 hereto)
between the Company and Jerry Shore. (Reference
is made to Exhibit 10.07(c) of the Company's
Annual Report on Form 10-K for the fiscal year
ended March 1, 1998, Commission File No. 1-4415,
which is incorporated herein by reference. This -
exhibit is a management contract or compensatory
plan or arrangement.)......................

10.07 Lease dated April 15, 1988 between FiberCote
Industries, Inc. (lease was initially entered
into by USP Composites, Inc., which subsequently
changed its name to FiberCote Industries, Inc.)
and Geoffrey Etherington, II regarding real
property located at 172 East Aurora Street,
Waterbury, Connecticut (Reference is made to
Exhibit 10.07 of the Company's Annual Report on
Form 10-K for the fiscal year ended March 3, -
2002, Commission File No. 1-4415, which is
incorporated herein by
reference.).........................

10.07(a)Amendment to Lease dated December 21, 1992 to
Lease dated April 15, 1988 (see Exhibit 10.07
hereto) between FiberCote Industries, Inc. and
Geoffrey Etherington II regarding real property
located at 172 East Aurora Street, Waterbury, Con
necticut (Reference is made to Exhibit 10.07(a)
of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 2002, Commission -
File No. 1-4415, which is incorporated herein by
reference.).........................

10.07(b)Letter dated June 30, 1997 from FiberCote
Industries, Inc. to Geoffrey Etherington II
extending the Lease dated April 15, 1988 (see
Exhibit 10.07 hereto) between FiberCote

Industries, Inc. and Geoffrey Etherington II
regarding real property located at 172 East
Aurora Street, Waterbury Connecticut. (Reference
is made to Exhibit 10.08(b) of the Company's
Annual Report on Form 10-K for the fiscal year -
ended March 1, 1998, Commission File No. 1-4415,
which is incorporated herein by
reference.).........................

10.08 Lease dated August 31, 1989 between Nelco
Technology, Inc. and Cemanudi Associates
regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona (Reference is made
to Exhibit 10.08 of the Company's Annual Report
on Form 10-K for the fiscal year ended March 3, -
2002, Commission File No. 1-4415, which is
incorporated herein by reference.)....

10.08(a)First Amendment to Lease dated October 21, 1994
to Lease dated August 31, 1989 (see Exhibit 10.08
hereto) between Nelco Technology, Inc. and
Cemanudi Associates regarding real property
located at 1104 West Geneva Drive, Tempe, Arizona
(Reference is made to Exhibit 10.08(a) of the
Company's Annual Report on Form 10-K for the
fiscal year ended March 3, 2002, Commission File -
No. 1-4415, which is incorporated herein by
reference.).........................

10.10 Lease dated December 12, 1990 between Neltec,
Inc. and NZ Properties, Inc. regarding real
property located at 1420 W. 12th Place, Tempe,
Arizona. (Reference is made to Exhibit 10.13 of
the Company's Annual Report on Form 10-K for the

fiscal year ended March 2, 1997, Commission File -
No. 1-4415, which is incorporated herein by
reference.)..........

10.10(a)Letter dated January 8, 1996 from Neltec, Inc. to
NZ Properties, Inc. exercising its option to
extend the Lease dated December 12, 1990 (see
Exhibit 10.10 hereto) between Neltec, Inc. and NZ
Properties, Inc. regarding real property located
at 1420 W. 12th Place, Tempe, Arizona. (Reference
is made to Exhibit 10.13(a) of the Company's
Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415, -
which is incorporated herein by reference.).....

10.12 Tenancy Agreement dated October 8, 1992 between
Nelco Products Pte. Ltd. and Jurong Town
Corporation regarding real property located at 36
Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual
Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, -
which is incorporated herein by
reference.)......................................

10.12(a)Tenancy Agreement dated November 3, 1995 between
Nelco Products Pte. Ltd. and Jurong Town
Corporation regarding real property located at 36
Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.16(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended
March 2, 1997, Commission File No. 1-4415, which -
is incorporated herein by reference.)...

10.13 Lease Contract dated February 26, 1988 between
the New York State Department of Transportation
and the Edgewater Stewart Company regarding real
property located at 15 Governor Drive in the
Stewart International Airport Industrial Park,
New Windsor, New York (Reference is made to
Exhibit 10.13 of the Company's Annual Report on
Form 10-K for the fiscal year ended March 3, -
2002, Commission File No. 1-4415, which is
incorporated herein by reference.)....

10.13(a) Assignment and Assumption of Lease dated February
16, 1995 between New England Laminates Co., Inc.
and the Edgewater Stewart Company regarding the
assignment of the Lease Contract (see Exhibit
10.13 hereto) for the real property located at 15
Governor Drive in the Stewart International
Airport Industrial Park, New Windsor, New York
(Reference is made to Exhibit 10.13(a) of the
Company's Annual Report on Form 10-K for the
fiscal year ended March 3, 2002, Commission File -
No. 1-4415, which is incorporated herein by
reference.)......................................

10.13(b) Lease Amendment No. 1 dated February 17, 1995
between New England Laminates Co., Inc. and the
New York State Department of Transportation to
Lease Contract dated February 26, 1988 (see
Exhibit 10.13 hereto) regarding the real property
located at 15 Governor Drive in the Stewart
International Airport Industrial Park, New
Windsor, New York (Reference is made to Exhibit
10.13(b) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 2002, -
Commission File No. 1-4415, which is incorporated
herein by reference.).................

10.14 Sale and Purchase Agreement dated 29 October 1997
between Dieter G. Weiss, Lothar Hubert Reinartz,
Nelco International Corporation and Park
Electrochemical Corp. relating to the sale and
purchase of shares of capital in Dielektra GmbH.
(Reference is made to Exhibit 10.01 of the
Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended November 30, 1997, -
Commission File No. 1-4415, which is incorporated
herein by reference.)..........

10.15 2002 Stock Option Plan of the Company (Reference
is made to Exhibit 10.01 of the Company's
Quarterly Report on Form 10-Q for the fiscal
quarter ended September 1, 2002, Commission File
No. 1-4415, which is incorporated herein by
reference. This exhibit is a management contract -
or compensatory plan or arrangement.)...........

21.01 Subsidiaries of the
Company................................

23.01 Consent of Ernst & Young
LLP...............................

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.............................