1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 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 or Organization) Identification No.)
__5 Dakota Drive, Lake Success, N.Y.__ ___11042___
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (516) 354-
4100
Not Applicable
-----------------------------------------------------
- -
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes[X] No[ ]
Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange
Act). Yes[X] No[ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 19,761,958 as of October 10, 2003.
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION: Number
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
August 31, 2003 (Unaudited) and March
2,2003..................................... 3
Consolidated Statements of Operations
13 weeks and 26 weeks ended August 31, 2003
and September 1, 2002 (Unaudited)......... 4
Condensed Consolidated Statements of Cash
Flows 26 weeks ended August 31, 2003 and
September 1, 2002 (Unaudited)............. 5
Notes to Condensed Consolidated Financial
Statements (Unaudited).................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 13
Factors That May Affect Future Results.... 22
Item 3. Quantitive and Qualitative Disclosures About
Market Risk............................... 22
Item 4. Controls and Procedures................... 22
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings......................... 23
Item 4. Submission of Matters to a Vote of Security
Holders................................... 24
Item 6. Exhibits and Reports on Form 8-K.......... 24
SIGNATURES............................................... 25
............
EXHIBIT INDEX............................................ 26
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
August 31,
2003 March 2,
(Unaudited) 2003*
ASSETS
Current assets:
Cash and cash equivalents $115,016 $111,036
Marketable securities 76,673 51,899
Accounts receivable, net 27,200 30,272
Inventories (Note 2) 11,349 12,688
Prepaid expenses and other current 6,613 4,690
assets --------- ---------
Total current assets 236,851 210,585
Property, plant and equipment, net 86,815 90,503
Other assets 511 454
--------- ---------
Total $324,177 $301,542
========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 14,323 $ 15,145
Accrued liabilities 33,094 21,790
Income taxes payable 9,435 3,376
--------- ---------
Total current liabilities 56,852 40,311
Deferred income taxes 2,805 4,539
Deferred pension liability 11,132 10,991
Stockholders' equity:
Common stock 2,037 2,037
Additional paid-in capital 133,046 133,172
Retained earnings 125,726 117,506
Treasury stock, at cost (4,249) (4,582)
Accumulated other non-owner (3,172) (2,432)
changes --------- ---------
Total stockholders' equity 253,388 245,701
--------- ---------
Total $324,177 $301,542
========= =========
*The balance sheet at March 2, 2003 has been derived from the
audited financial statements at that date.
See accompanying Notes to the Consolidated Financial
Statements.
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
13 Weeks Ended 26 Weeks Ended
(Unaudited) (Unaudited)
----------------------- -----------------------
August 31, September 1, August 31, September 1,
2003 2002 2003 2002
---------- ----------- ---------- ------------
Net sales $47,127 $56,901 $97,097 $113,462
Cost of sales 42,510 50,692 87,829 100,992
Gross profit 4,617 6,209 9,268 12,470
Selling, general and
administrative expenses 6,861 7,884 13,761 15,995
Restructuring and
severance charges (Note 4) 6,504 - 14,580 -
Gain on sale of DPI - (3,170) - (3,170)
(Note 9)
Litigation settlement
gain (Notes 8 and 10) (33,088) - (33,088) -
Income (loss) from
operations 24,340 1,495 14,015 (355)
Other income 750 771 1,497 1,713
Earnings before income
taxes 25,090 2,266 15,512 1,358
Income tax Provision 6,052 679 4,925 407
Net earnings $ 19,038 $ 1,587 $10,587 $ 951
Earnings per share
(Note 5):
Basic $ .96 $ .08 $ .54 $ .05
Diluted $ .95 $ .08 $ .53 $ .05
Weighted average number
of common and common
equivalent shares
outstanding:
Basic 19,759 19,669 19,734 19,665
Diluted 19,943 20,013 19,856 20,094
Dividends per share $ .06 $ .06 $ .12 $ .12
See accompanying Notes to the Consolidated Financial Statements
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
26 Weeks Ended
(Unaudited)
-------------------------
August 31, September 1,
2003 2002
---------- ------------
Cash flows from operating activities:
Net earnings $ 10,587 $ 951
Depreciation and amortization 5,962 9,129
Gain on sale of business - (3,170)
Change in operating assets and
liabilities 16,480 (2,940)
--------- --------
Net cash provided by operating
activities 33,029 3,970
--------- --------
Cash flows from investing activities:
Purchases of property, plant and
equipment, net (2,088) (4,095)
Proceeds from the sale of business - 5,000
Purchases of marketable securities (64,677) (19,260)
Proceeds from sales and maturities
of marketable securities 39,903 21,462
--------- --------
Net cash (used in) provided by
investing activites (26,862) 3,108
--------- --------
Cash flows from financing activities:
Dividends paid (2,367) (2,335)
Proceeds from exercise of stock options 207 155
--------- --------
Net cash used in financing activities (2,160) (2,180)
--------- --------
Change in cash and cash equivalents before
exchange rate changes 4,007 4,898
Effect of exchange rate changes on cash
and cash equivalents (27) 531
--------- --------
Change in cash and cash equivalents 3,980 5,429
Cash and cash equivalents, beginning
of period 111,036 99,492
--------- --------
Cash and cash equivalents, end of period $115,016 $104,921
========= =========
Supplemental cash flow information:
Cash paid during the period for income
taxes $ 323 $ -
See accompanying Notes to the Consolidated Financial
Statements.
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except per share amounts)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of August 31,
2003, the consolidated statements of operations for the 13
weeks and 26 weeks ended August 31, 2003 and September 1,
2002, and the condensed consolidated statements of cash
flows for the 26 weeks then ended have been prepared by
the Company, without audit. In the opinion of management,
these unaudited condensed consolidated financial
statements contain all adjustments (which include only
normal recurring adjustments) necessary to present fairly
the financial position at August 31, 2003 and the results
of operations and cash flows for all periods presented.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with accounting principles generally accepted in the
United States have been condensed or omitted. It is
suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated
financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year
ended March 2, 2003.
2. INVENTORIES
Inventories consisted of the following:
August 31, March 2,
2003 2003
---------- --------
Raw materials $ 4,177 $ 4,072
Work-in-process 2,627 3,424
Finished goods 4,068 4,680
Manufacturing supplies 477 512
------- -------
$11,349 $12,688
======= =======
3. STOCK OPTIONS
As of August 31, 2003, the Company had two fixed stock
option plans. All options under the plans had an exercise
price equal to the market value of the underlying common
stock of the Company 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 earnings and earnings per share would
have approximated the amounts shown below.
13 weeks ended 26 weeks ended
August 31, September 1, August 31, September 1,
2003 2002 2003 2002
--------- ----------- --------- -----------
Net Earnings $ 19,038 $ 1,587 $ 10,587 $ 951
Deduct: Total stock-
based employee
compensation determined
under fair value based
method for all awards, 426 474 904 974
net of tax effects -------- -------- ------- ---------
Pro forma net income $ 18,612 $ 1,113 $ 9,683 $ (23)
(loss) ======== ======== ======= =========
EPS-basic as reported $ 0.96 $ 0.08 $ 0.54 $ 0.05
======== ======== ======= =========
EPS-basic pro forma $ 0.94 $ 0.06 $ 0.49 $ 0.00
======== ======== ======= =========
EPS-diluted as reported $ 0.95 $ 0.08 $ 0.53 $ 0.05
======== ======== ======= =========
EPS-diluted pro forma $ 0.93 $ 0.06 $ 0.49 $ 0.00
======== ======== ======= =========
4. RESTRUCTURING AND SEVERANCE CHARGES
The Company recorded pre-tax charges of $8,076 during the
first quarter of fiscal year 2004 related to the closure
of the Company's mass lamination operation in Cologne,
Germany, the realignment of its North American FR-4
business operations in Newburgh, New York and Fullerton,
California and related workforce reductions and recorded
pre-tax charges of $6,504 during the second quarter of
fiscal year 2004 related to the realignment of its North
American FR-4 business operations.
The components of these charges and the related liability
balances and activity for the quarter ended August 31,
2003 are set forth below.
Charges 8/31/03
Closure Incurred Remaining
Charges or Paid Reversals Liabilities
------- -------- --------- -----------
Dielektra charges:
Severance payments $6,142 $2,772 $ - $3,370
NY/CA Realignment charges:
Lease payments, taxes,
utilities and other 7,292 209 - 7,083
Severance payments 1,146 1,051 - 95
$14,580 $4,032 $ - $10,548
======= ====== ==== =======
The severance payments are for the termination of hourly
and salaried, administrative, manufacturing and support
employees. Some of such employees were terminated during
the 2004 fiscal year first and second quarters, and the
remaining employees were terminated during the 2004 fiscal
year third quarter. The severance payments are expected to
be paid to such employees in installments during fiscal
year 2004. The lease charges cover one lease obligation
payable through December 2004 and a portion of another
lease obligation payable through September 2013.
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 quarter ended August 31,
2003 are set forth below.
Charges 8/31/03
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 1,838 - 159
Utilities, maintenance,
taxes, other 684 684 - -
------ ------ ----- ----
4,674 4,515 - 159
Other severance payments
and related costs 120 120 - -
------ ------ ----- ----
$4,794 $4,635 $ - $159
====== ====== ===== ====
The severance payments and related costs are for the
termination of hourly and salaried, administrative,
manufacturing and support employees, most of whom were
terminated during the 2003 fiscal year third and fourth
quarters and the 2004 fiscal year first and second
quarters, and the remainder of whom are expected to be
terminated during the 2004 fiscal year third quarter.
Severance payments and related costs for such terminated
employees (totaling $1,958) were paid during such
quarters, except payments and costs of $159 which are
expected to be paid to such employees in installments
during the 2004 fiscal year third quarter.
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 employee resignations and retirements in the
ordinary course of business, the total number of employees
employed by the Company declined to approximately 1,200 as
of August 31, 2003 from approximately 1,400 as of March 2,
2003.
5. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net
earnings by the weighted average number of shares of
common stock outstanding during the period. Diluted
earnings per share is computed by dividing net earnings by
the sum of (a) the weighted average number of shares of
common stock outstanding during the period and (b) the
potential common stock equivalents outstanding during the
period. Stock options are the only common stock
equivalents and are computed using the treasury stock
method.
The following table sets forth the basic and diluted
weighted average number of shares of common stock and
potential common stock equivalents outstanding during the
periods specified:
13 weeks ended 26 weeks ended
------------------------ -----------------------
August 31, September 1, August 31, September 1,
2003 2002 2003 2002
---------- ----------- ---------- -----------
Weighted average
shares outstanding
for basic EPS 19,759 19,669 19,734 19,665
Weighted average
shares outstanding
for diluted EPS 19,943 20,013 19,856 20,094
Common stock equivalents, which were not included in the
computation of diluted earnings 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 176 and 90 for the thirteen
weeks ended August 31, 2003 and September 1, 2002,
respectively, and 258 and 54 for the twenty six weeks
ended August 31, 2003 and September 1, 2002, respectively.
6. BUSINESS SEGMENTS
The Company considers itself to operate in one business
segment. The Company's electronic materials products are
marketed primarily to leading independent printed circuit
board fabricators, electronic manufacturing service
companies, electronic contract manufacturers and major
electronic original equipment manufacturers ("OEMs")
located throughout North America, Europe and Asia. The
Company's advanced composite materials customers, the
majority of which are located in
the United States, include OEMs, independent firms and
distributors in the electronics, aerospace and industrial
industries.
Sales are attributed to geographic region based upon the
region from which the materials were shipped to the
customer. Sales between geographic regions were not
significant.
Financial information concerning the Company's operations
by geographic area follow:
13 Weeks Ended 26 Weeks Ended
------------------------ -------------------------
August 31, September 1, August 31, September 1,
2003 2002 2003 2002
---------- ------------ ---------- ------------
Sales:
------
North America $24,719 $31,079 $49,866 $63,327
Europe 9,460 13,935 22,832 26,869
Asia 12,948 11,887 24,399 23,266
------- ------- ------- --------
Total sales $47,127 $56,901 $97,097 $113,462
August 31, March 3,
2003 2002
---------- --------
Long-lived assets:
------------------
United States $41,596 $44,425
Europe 25,196 25,373
Asia 20,534 21,159
Total long-lived assets $87,326 $90,957
7. COMPREHENSIVE INCOME
Total comprehensive income for the 13 weeks ended August
31, 2003 and September 1, 2002 was $17,198 and $3,041,
respectively. Total comprehensive income for the 26 weeks
ended August 31, 2003 and September 1, 2002 was $9,847 and
$4,250, respectively. Comprehensive income consisted
primarily of net income and foreign currency translation
adjustments and unrealized gains and losses on marketable
securities.
8. SALE OF NELCO TECHNOLOGY, INC.
During the Company's 1998 fiscal year and for several
years prior thereto, more than 10% of the Company's total
worldwide sales were to Delco Electronics Corporation, a
subsidiary of General Motors Corp., and the Company's
wholly owned subsidiary, Nelco Technology, Inc. ("NTI")
located in Tempe, Arizona, had been Delco's principal
supplier of semi-finished multilayer printed circuit board
materials, commonly known as mass lamination, which were
used by Delco to produce finished multilayer printed
circuit boards. However, in March 1998, the Company was
informed by Delco that Delco planned to close its printed
circuit board fabrication plant and exit the printed
circuit board manufacturing business. As a result, the
Company's sales to Delco declined during the three-month
period ended May 31, 1998, were negligible during the
remainder of the 1999 fiscal year and have been nil in
subsequent years.
After March 1998, the business of NTI languished and its
performance was unsatisfactory due primarily to the
absence of the unique, high-volume, high-quality business
that had been provided by Delco Electronics and the
absence of any other customer in the North American
electronic materials industry with a similar demand for
the large volumes of semi-finished multilayer printed
circuit board materials that Delco purchased from NTI.
Although NTI's business experienced a resurgence in the
2001 fiscal year as the North American market for printed
circuit materials became extremely strong and demand
exceeded supply for the electronic materials manufactured
by NTI, the Company's internal expectations and
projections for the NTI business were for continuing
volatility in the business' performance over the
foreseeable future. Consequently, the Company commenced
efforts to sell the business in the second half of its
2001 fiscal year; and in April 2001, the Company sold the
assets and business of NTI and closed a related support
facility, also located in Tempe, Arizona. As a result of
this sale, the Company exited the mass lamination business
in North America.
In connection with the sale of NTI and the closure of the
related support facility, the Company recorded non-
recurring, pre-tax charges of $15,707 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
August 31, 2003 balance sheet date are set forth below:
Charges 8/31/03
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 of
accounts receivable 350 319 31 -
Write down of inventory 590 590 - -
Severance payments 688 688 - -
Medical and other costs 133 133 - -
Lease payments, taxes,
utilities, maint. 781 406 - 375
Other 45 45 - -
------- ------- --- ----
$15,707 $15,301 $31 $375
======= ======= ==== ====
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.
9. SALE OF DIELECTRIC POLYMERS, INC.
On June 27, 2002, the Company sold its Dielectric
Polymers, Inc. ("DPI") subsidiary to Adhesive
Applications, Inc. of Easthampton, Massachusetts. The
Company recorded a gain of approximately $3.2 million in
its fiscal year 2003 second quarter ended September 1,
2002 in connection with the sale.
10. LITIGATION SETTLEMENT
The United States District Court for the District of
Arizona has entered final judgment in favor of the
Company's subsidiary, Nelco Technology, Inc., in its
lawsuit against Delco Electronics Corporation, a
subsidiary of Delphi Automotive Systems Corporation, on
Nelco's claim for breach of the implied covenant of good
faith and fair dealing. As a result, the Company
received a net amount of $33.1 million from Delco on July
1, 2003 in settlement of the lawsuit.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General:
Park is a leading global designer and producer of
advanced electronic materials used to fabricate complex
multilayer printed circuit boards and other electronic
interconnect systems. The Company's customers include leading
independent printed circuit board fabricators, electronic
manufacturing service companies, electronic contract
manufacturers and major electronic original equipment
manufacturers in the computer, telecommunications,
transportation, aerospace and instrumentation industries.
The Company's sales declined in the three-month and six-
month periods ended August 31, 2003 compared with last fiscal
year's comparable periods as a result of declines in sales by
the Company's North American and European operations. The
earnings growth that the Company achieved during its 2001 and
2000 fiscal years halted in the 2002 fiscal year as a result of
a severe downturn in the global electronics industry, and the
industry continued to be very depressed throughout the 2003
fiscal year and during the 2004 fiscal year first and second
quarters. Although the electronics industry in North America
began to improve slightly at the end of the 2004 fiscal year
second quarter, it is not clear whether this recent improvement
is sustainable.
During the six months ended August 31, 2003, the Company
realigned its North American FR-4 business operations located
in New York and California and established a new business unit
called "Nelco/North America", which includes the Company's FR-4
manufacturing operations in New York and California and is
administered principally from Fullerton, California. As part of
the realignment, the New York operation has been scaled down to
a smaller focused operation and the California operation is
being scaled up to a larger volume operation, and there have
been significant workforce reductions at the Company's New York
facility and significant workforce increases at the Company's
California facility, with the end result being a net reduction
in the Company's workforce in North America. A large portion of
the New York facility has been mothballed, and 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 best
service all of its North American customers.
In the Company's 2004 fiscal year first quarter,
Dielektra GmbH, the Company's advanced electronic materials
business located in Cologne, Germany, closed 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. As a result of the closure of its mass
lamination operation, Dielektra's manufacturing operations
consist exclusively of high technology treating and Dielektra's
proprietary DatlamT automated continuous laminate
manufacturing. 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.
As a result of the Company's realignment of its North
American FR-4 business operations and closure of Dielektra's
mass lamination operation in Germany and related workforce
reductions, the Company recorded pre-tax charges totaling $8.1
million in the Company's 2004 fiscal year first quarter, and
the Company recorded additional pre-tax charges of $6.5 million
in the 2004 fiscal year second quarter due to such realignment.
See Note 4 of the Notes to Consolidated Financial Statements in
Item 1 of Part I 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.("Delco"), 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 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.
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. On June 17, 2003, the United States
District Court for the District of Arizona entered final
judgment in favor of NTI; and, on July 1, 2003, NTI received a
net amount of $33.1 million in payment of such judgment. The
Company recorded a non-recurring, pre-tax gain of $33.1 million
in the 2004 fiscal year second quarter related to such payment.
See Item 1 of Part II of this Report for additional information
regarding the lawsuit against Delco.
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.
Three and Six Months Ended August 31, 2003 Compared with Three
and Six Months Ended September 1, 2002:
The Company's operations continued to generate losses
during the three-month and six-month periods ended August 31,
2003 as the markets for sophisticated printed circuit materials
continued to experience depressed conditions during the 2004
fiscal year first and second quarters. However, the Company
reported net earnings of $19.0 million for the three months
ended August 31, 2003 after a non-recurring, pre-tax gain of
$33.1 million related to the payment by Delco Electronics
Corporation of the judgment against it in favor of the
Company's subsidiary, Nelco Technology, Inc., in the lawsuit
against Delco and after pre-tax charges of $6.5 million related
to the realignment of the Company's North American FR-4
business operations and net earnings of $10.6 million for the
six months ended August 31, 2003 after such non-recurring, pre-
tax gain of $33.1 million and after pre-tax charges totaling
$14.6 million related to such realignment and the closure of
Dielektra's mass lamination operation in Germany and related
workforce reductions.
Despite the Company's reductions of its costs and
expenses and higher percentages of sales of higher technology,
higher margin products, the Company's gross profits in the 2004
fiscal year first and second quarters were lower than the gross
profits in the prior year's comparable quarters primarily as a
result of lower levels of sales of electronic materials in the
2004 fiscal year first and second quarters, operating
inefficiencies resulting from operating certain facilities at
levels below their designed manufacturing capacities and from
the Company's realignment of it North American FR-4 business
operations and competitive pressures.
In addition to its depressed financial results of
operations, the Company recorded pre-tax charges of $8.1
million in the 2004 fiscal year first quarter related to the
Company's realignment of its North American FR-4 business
operations, the closure of Dielektra's mass lamination
operation and related workforce reductions and pre-tax charges
of $6.5 million in the 2004 fiscal year second quarter related
to such realignment.
Operating results of the Company's advanced composite
materials business improved sequentially during the 2004 fiscal
year second quarter due primarily to higher sales volumes and
improved profit margins resulting from a more favorable product
mix compared to the prior fiscal year's second quarter.
Results of Operations
Net sales for the three-month and six-month periods
ended August 31, 2003 declined 17% to $47.1 million and 14% to
$97.1 million, respectively, from $56.9 million and $113.5
million, respectively, for last fiscal year's comparable
periods. The declines in net sales were primarily the result of
lower sales by the Company's operations in Europe and North
America, which were only slightly offset by higher sales by the
Company's operations in Asia.
The Company's foreign operations accounted for $22.4
million and $47.2 million, respectively, of net sales, or 48%
and 49% of the Company's total net sales worldwide, during the
three-month and six-month periods ended August 31, 2003
compared with $25.8 million and $50.1 million, respectively, of
net sales, or 45% and 44%, respectively, of total net sales
worldwide, during last fiscal year's comparable periods. Net
sales by the Company's foreign operations during the three-
month and six-month periods ended August 31, 2003 declined 13%
and 6%, respectively, from the 2003 fiscal year comparable
periods. The declines in sales by foreign operations were due
to decreases in sales by the Company's operations in Europe,
which resulted from decreases in sales by the Company's
operations in Germany and the Company's closure of its UK
facility in the fourth quarter of its 2003 fiscal year.
The overall gross profit as a percentage of net sales
for the Company's worldwide operations declined to 9.8% and
9.5%, respectively, for the three months and six months ended
August 31, 2003 compared with 10.9% and 11.0% for last fiscal
year's comparable periods. The declines in the gross profit
were the result of lower sales volumes, operating
inefficiencies resulting from operating certain facilities at
levels below their designed manufacturing capacities and from
the Company's realignment of its North American FR-4 business
operations and competitive pressures, which were only partially
offset by higher percentages of sales of higher technology,
higher margin products.
The Company's cost of sales decreased significantly
compared to the comparable periods in the prior fiscal year as
a result of lower production volumes and cost reduction
measures implemented by the Company, including workforce
reductions and the reduction of overtime. In addition, 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
$1.0 million and $2.2 million, respectively, or by 13% and 14%,
during the three-month period and six-month period,
respectively, ended August 31, 2003 compared with last fiscal
year's comparable periods, and these expenses, measured as a
percentage of sales, were 14.6% and 14.2%, respectively, during
the three-month and six-month periods ended August 31, 2003
compared with 13.9% and 14.1%, respectively, during last fiscal
year's comparable periods. Notwithstanding the decrease in
selling, general and administrative expenses in dollar terms,
the increase in the expenses as percentages of sales in the
2004 fiscal year first and second quarters resulted from
proportionately lower sales compared to the comparable periods
in the last fiscal year.
The Company recorded a non-recurring, pre-tax gain of
$33.1 million during the 2004 fiscal year second quarter
related to the payment by Delco Electronics Corporation of the
judgment against Delco in favor of the Company's subsidiary,
Nelco Technology, Inc., in its lawsuit against Delco. The
Company also recorded pre-tax charges totaling $8.1 million,
and after-tax charges of $7.4 million, in the 2004 fiscal year
first quarter in connection with the realignment of its North
American FR-4 business operations, the closure of Dielektra's
mass lamination operation in Germany and related workforce
reductions and recorded additional pre-tax charges of $6.5
million, and after-tax charges of $4.9 million, in the 2004
fiscal year second quarter due to such realignment.
The Company recorded 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 cash.
For the reasons set forth above, income from operations
was $24.3 million for the three months ended August 31, 2003,
including the non-recurring, pre-tax gain described above
related to the payment by Delco Electronics Corporation of the
judgment against it in favor of the Company's subsidiary, Nelco
Technology, Inc., in Nelco's lawsuit against Delco and the pre-
tax charges described above related to the realignment of the
Company's North American FR-4 business operations, compared
with income from operations of $1.5 million for the three
months ended September 1, 2002, including the pre-tax gain
described above related to the sale of DPI, and income from
operations was $14.0 million for the six months ended August
31, 2003, including the non-recurring, pre-tax gain described
above related to the payment by Delco and the pre-tax charges
described above related to the realignment of the Company's
North American FR-4 business operations, the closure of
Dielektra's mass lamination operation and related workforce
reductions, compared with a loss from operations of $0.4
million for the six months ended September 1, 2002, including
the pre-tax gain described above. Excluding the pre-tax gains
and the pre-tax charges described above, the Company reported
losses from operations of $2.2 million and $4.5 million,
respectively, for the three months and six months ended August
31, 2003 compared with losses of $1.7 million and $3.5 million,
respectively, for the three months and six months ended
September 1, 2002.
Interest and other income, net, principally investment
income, was $0.8 million and $1.5 million, respectively, for
the three-month and six-month periods ended August 31, 2003
compared with $0.8 million and $1.7 million, respectively, for
last fiscal year's comparable periods. The decrease in
investment income for the six-month period was attributable to
declines in prevailing interest rates. The Company's
investments were primarily short-term taxable instruments.
The Company's effective income tax rates for continuing
operations, excluding the pre-tax gains and the pre-tax charges
described above, for the three-month and six-month periods
ended August 31, 2003 were 30.0% compared with the same rates
for the three-month and six-month periods ended September 1,
2002. The effective income tax rates on earnings, including the
pre-tax gains and the pre-tax charges, were 24.1% and 31.7% for
the three months and six months ended August 31, 2003,
principally as a result of the tax impact of the gain on the
Delco litigation payment compared with 30.0% for the three-
month and six-month periods ended September 1, 2002.
For the reasons set forth above, net earnings for the
three-month period ended August 31, 2003, including the non-
recurring, pre-tax gain described above related to the payment
by Delco Electronics Corporation of the judgment in favor of
the Company's subsidiary, Nelco Technology, Inc. and the pre-
tax charges described above related to the realignment of the
Company's North American FR-4 business operations, were $19.0
million compared with net earnings of $1.6 million for the
three-month period ended September 1, 2002, including the pre-
tax gain described above related to the sale of DPI, and net
earnings for the six-month period ended August 31, 2003,
including the non-recurring, pre-tax gain described above
related to the payment by Delco and the pre-tax charges
described above related to the realignment of the Company's
North American FR-4 business operations, the closure of
Dielektra's mass lamination operation and related workforce
reductions, were $10.6 million compared with net earnings of
$1.0 million for the six-month period ended September 1, 2002,
including the pre-tax gain described above related to the sale
of DPI. Excluding the non-recurring, pre-tax gain and the pre-
tax charges described above, the Company reported net losses of
$1.0 million and $2.1 million, respectively, for the three-
month and six-month periods ended August 31, 2003, compared
with net losses of $0.6 million and $1.3 million, respectively,
for the three-month and six-month periods ended September 1,
2002, excluding the pre-tax gain described above relating to
the sale of DPI.
Basic and diluted earnings per share, including the non-
recurring, pre-tax gain and pre-tax charges described above,
were $0.96 and $0.95, respectively, for the three-month period
ended August 31, 2003 and $0.54 and $0.53, respectively, for
the six-month period ended August 31, 2003, compared to basic
and diluted earnings per share of $0.08 and $0.05,
respectively, for the three-month and six-month periods ended
September 1, 2002, including the pre-tax gain described above
related to the sale of DPI. Basic and diluted per share losses
for the three-month and six-month periods ended August 31,
2003, excluding the non-recurring, pre-tax gain and the pre-tax
charges described above, were $0.05 and $0.11, respectively,
compared to basic and diluted per share losses, excluding the
pre-tax gain for the prior year's comparable periods, of $0.03
and $0.06, respectively.
Liquidity and Capital Resources:
At August 31, 2003, the Company's cash and temporary
investments were $191.7 million compared with $162.9 million at
March 2, 2003, the end of the Company's 2003 fiscal year. The
increase in the Company's cash and investments at August 31,
2003 was attributable to cash received from Delco Electronics
Corporation in payment of the judgment in favor of the
Company's subsidiary, Nelco Technology, Inc., in its lawsuit
against Delco. The Company's working capital (which includes
cash and temporary investments) was $180.0 million at August
31, 2003 compared with $170.3 million at March 2, 2003. The
increase in working capital at August 31, 2003 compared with
March 2, 2003 was due principally to the increases in cash and
temporary investments and other current assets, which were only
partially offset by a reduction in accounts receivable and
increases in accrued liabilities and income taxes payable. The
increase in accrued liabilities was due to the provision for
charges related to the Company's realignment of its North
American FR-4 business operations, and the increase in income
taxes payable was a result of the increase in the Company's
taxable income. The Company's current ratio (the ratio of
current assets to current liabilities) was 4.2 to 1 at August
31, 2003 compared to 5.2 to 1 at March 2, 2003.
During the six-months ended August 31, 2003, the Company
generated $3.8 million of cash from operating activities,
excluding $3.8 million paid as severance in connection with
workforce reductions and the $33.1 million that the Company
received on July 1, 2003 from Delco Electronics Corporation in
settlement of the lawsuit by the Company's subsidiary, Nelco
Technology, Inc., against Delco. See Notes 8 and 10 of the
Notes to Consolidated Financial Statements in Item 1 of Part I
of this Report and Item 1 of Part II of this Report for
additional information regarding the lawsuit. During the same
six-month period, the Company expended $2.1 million for the
purchase of property, plant and equipment compared with $4.1
million for the six-month period ended September 1, 2002 and
paid $2.4 million in dividends on its common stock during the
six months ended August 31, 2003 compared with $2.3 million
during the six months ended September 1, 2002.
At August 31, 2003, the Company had no long-term debt.
The Company believes its financial resources will be
sufficient, for the foreseeable future, to provide for
continued investment in working capital and property, plant and
equipment and for general corporate purposes. Such resources
would also be available for purchases of the Company's common
stock, 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 operating lease
commitments. The Company has no long-term debt, capital lease
obligations, unconditional purchase obligations or other long-
term obligations, standby letters of credit, guarantees,
standby repurchase obligations or other commercial commitments
or contingent commitments, other than a standby letter of
credit in the amount of $1,728,000 to secure the Company's
obligations under its workers' compensation insurance program.
Environmental Matters:
In the six-month periods ended August 31, 2003 and
September 1, 2002 the Company charged less than $0.1 million
against pretax income for environmental remedial response and
voluntary cleanup costs (including legal fees). While annual
expenditures have generally been constant from year to year and
may increase over time, the Company expects it will be able to
fund such expenditures from available cash. The timing of
expenditures depends on a number of factors, including
regulatory approval of cleanup projects, remedial techniques to
be utilized and agreements with other parties. At August 31,
2003 and March 2, 2003, the recorded liabilities in accrued
liabilities for environmental matters were approximately $4.1
million and $4.2 million, respectively. Management does not
expect that environmental matters will have a material adverse
effect on the liquidity, capital resources, business,
consolidated results of operations or consolidated financial
position of the Company.
Critical Accounting Policies and Estimates:
In response to financial reporting release, FR-60,
"Cautionary Advice Regarding Disclosure About Critical
Accounting Policies", issued by the Securities and Exchange
Commission in December 2001, the following information is
provided regarding critical accounting policies that are
important to the Consolidated Financial Statements and that
entail, to a significant extent, the use of estimates,
assumptions and the application of management's judgment.
General
The Company's discussion and analysis of its financial
condition and results of operations are based upon the
Company's consolidated financial statements, which have been
prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these
financial statements requires the Company to make estimates,
assumptions and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and the related
disclosure of contingent liabilities. On an on-going basis, the
Company evaluates its estimates, including those related to
sales allowances, bad debts, inventories, valuation of long-
lived assets, income taxes, restructuring, pensions and other
employee benefit programs, and contingencies and litigation.
The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different
assumptions or conditions.
The Company believes the following critical accounting
policies affect its more significant judgments and estimates
used in the preparation of its consolidated financial
statements.
Sales Allowances
The Company provides for the estimated costs of sales
allowances at the time such costs can be reasonably estimated.
The Company is focused on manufacturing the highest quality
electronic materials and other products possible and employs
stringent manufacturing process controls and works with raw
material suppliers who have dedicated themselves to complying
with the Company's specifications and technical requirements.
However, if the quality of the Company's products declined, the
Company may incur higher sales allowances.
Bad Debt
The Company maintains allowances for doubtful accounts for
estimated losses resulting from the inability of its customers
to make required payments. If the financial condition of the
Company's customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional
allowances may be required.
Inventory
The Company writes down its inventory for estimated
obsolescence or unmarketability based upon the age of the
inventory and assumptions about future demand for the Company's
products and market conditions. If actual demand or market
conditions are less favorable than those projected by
management, additional inventory write-downs may be required.
Valuation of Long-lived Assets
The Company assesses the impairment of long-lived assets
whenever events or changes in circumstances indicate that the
carrying value of such assets may not be recoverable. Important
factors that could trigger an impairment review include, but
are not limited to, significant negative industry or economic
trends and significant changes in the use of the Company's
assets or strategy of the overall business.
Income Taxes
Carrying value of the Company's net deferred tax assets
assumes that the Company will be able to generate sufficient
future taxable income in certain tax jurisdictions, based on
estimates and assumptions. If these estimates and assumptions
change in the future, the Company may be required to record
additional valuation allowances against its deferred tax assets
resulting in additional income tax expense in the Company's
consolidated statement of operations. Management evaluates the
realizability of the deferred tax assets quarterly and assesses
the need for additional valuation allowances quarterly.
Restructuring
During the fiscal year ended March 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; during the three-month period ended
June 1, 2003, the Company recorded additional significant
charges in connection with the realignment of its North
American FR-4 business operations, the closure of its mass
lamination operation in Germany and related employee severance
costs; and during the three-month period ended August 31, 2003,
the Company recorded additional significant charges in
connection with the realignment of its North American FR-4
business operations. 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 reporting period.
Factors that May Affect Future Results.
Certain portions of this Report which do not relate to
historical financial information may be deemed to constitute
forward-looking statements that are subject to various factors
which could cause actual results to differ materially from
Park's expectations or from results which might be projected,
forecast, estimated or budgeted by the Company in forward-
looking statements. Such factors include, but are not limited
to, general conditions in the electronics industry, the
Company's competitive position, the status of the Company's
relationships with its customers, economic conditions in
international markets, the cost and availability of utilities,
and the various factors set forth under the caption "Factors
That May Affect Future Results" after Item 7 of Park's Annual
Report on Form 10-K for the fiscal year ended March 2, 2003.
Item 3. Quantitative and Qualitative Disclosure About Market
Risk.
The Company's market risk exposure at August 31, 2003 is
consistent with, and not greater than, the types of market risk
and amount of exposures presented in the Annual Report on Form
10-K for the fiscal year ended March 2, 2003.
Item 4. Controls and Procedures.
(a) Disclosure Controls and Procedures. The Company's
management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, has evaluated
the effectiveness of the Company's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-
15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of August 31, 2003, the end of the
period covered by this quarterly report. Based on such
evaluation, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such
period, the Company's disclosure controls and procedures are
effective in recording, processing, summarizing and reporting,
on a timely basis, information required to be disclosed by the
Company in the reports that it files or submits under the
Exchange Act.
(b) Internal Control Over Financial Reporting. There have not
been any changes in the Company's internal control over
financial reporting (as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) during the fiscal quarter
to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Company's
internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In May 1998, the Company and its Nelco Technology, Inc.
("NTI") subsidiary in Arizona filed a complaint against Delco
Electronics Corporation and the Delphi Automotive Systems unit
of General Motors Corp. in the United States District Court for
the District of Arizona. The complaint alleged, among other
things, that Delco breached its contract to purchase semi-
finished multilayer printed circuit boards from NTI and that
Delphi interfered with NTI's contract with Delco, that Delco
breached the covenant of good faith and fair dealing implied in
the contract, that Delco engaged in negligent misrepresentation
and that Delco fraudulently induced NTI to enter into the
contract.
On November 29, 2000, after a five day trial in Phoenix,
Arizona, a jury awarded damages to NTI in the amount of $32.3
million, 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 $32.3 million. 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. On June 17, 2003, the
United States District Court for the District of Arizona
entered final judgment in favor of NTI, and Delco paid NTI on
July 1, 2003. NTI received a net amount of $33.1 million. See
Note 10 of the Notes to Condensed Consolidated Financial
Statements in Item 1 of Part I of this Report.
Park announced in March 1998 that it had been informed
by Delco Electronics that Delco planned to close its printed
circuit board fabrication plant and exit the printed circuit
board manufacturing business. After the plant closure, Delco
purchased all of its printed circuit boards from outside
suppliers and Delco was no longer a customer of the Company's.
As a result, the Company's sales to Delco declined
significantly during the three-month period ended May 31, 1998,
were negligible during the three-month period ended August 30,
1998, have been nil since that time. During the Company's 1999
fiscal year first quarter and during its 1998 fiscal year and
for several years prior thereto, more than 10% of the Company's
total worldwide sales were to Delco Electronics Corporation;
and the Company had been Delco's principal supplier of semi-
finished multilayer printed circuit board materials for more
than ten years. These materials were used by Delco to produce
finished multilayer printed circuit boards. See "Factors That
May Affect Future Results" after Item 2 of Part I of this
Report.
In the first quarter of the fiscal year ended March 3,
2002, the Company sold the assets and business of NTI and
recorded pre-tax charges of approximately $15.7 million in its
2002 fiscal year first quarter ended May 27, 2001 in connection
with the sale of NTI and the closure of a related support
facility also located in Arizona. See Note 8 of the Notes to
Condensed Consolidated Financial Statements in Item 1 of Part I
of this Report.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Shareholders held on July 17,
2003:
(a) the persons elected as directors of the Company and the
voting for such persons were as follows:
Authority
Name Votes For Withheld
---- -------- --------
Mark S. Ain 17,521,311 573,588
Anthony Chiesa 13,349,049 4,745,850
Lloyd Frank 13,694,808 4,400,091
Brian E. Shore 14,100,833 3,994,066
Jerry Shore 13,465,173 4,629,726
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
31.1 Certification of Chief Executive Officer pursuant to
78 U.S.C. Section 78m(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, and
Exchange Act Rules 13a-14(a) or 15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to
78 U.S.C. Section 78m(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, and
Exchange Act Rules 13a-14(a) or 15d-14(a).
32.1 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.
32.2 Certification of Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
Report on Form 8-K, dated June 26, 2003, Commission File
No. 1-4415, reporting in Item 12 that Park issued a news
release on June 26, 2003 reporting its results of
operations for the fiscal year 2004 first quarter ended
June 1, 2003 and furnishing the news release to the
Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Park Electrochemical Corp.
--------------------------
(Registrant)
/s/Brian E. Shore
Date: October 14, 2003 -----------------------
Brian E. Shore
President and
Chief Executive Officer
/s/Murray O. Stamer
Date: October 14, 2003 -----------------------
Murray O. Stamer
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Name Page
----------- ---- ----
31.1 Certification of Chief Executive
Officer pursuant to 78 U.S.C. Section
78m(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act
of 2002, and Exchange Act Rules 13a-
14(a) or 15d-14(a) 27
31.2 Certification of Chief Financial
Officer pursuant to 78 U.S.C. Section
78m(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act
of 2002, and Exchange Act Rules 13a-
14(a) or 15d-14(a) 29
32.1 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 2202 31
32.2 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 32