PARK ELECTROCHEMICAL CORP - 10-K Annual Report

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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 February 29, 2004

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 $457,489,328* August 29,2003

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 19,847,937 May 7, 2004

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for Annual Meeting of Shareholders to be held
July 14, 2004 incorporated by reference into Part III of this
Report.

*Included in such amount are 1,487,286 shares of common stock
valued at $23.15 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..................................... 3
Item 2. Properties................................... 14
Item 3. Legal Proceedings............................ 14
Item 4. Submission of Matters to a Vote of Security
Holders.................................... 15
Executive Officers of the Registrant......... 15

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....... 35
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk............................ 37
Item 8. Financial Statements and Supplementary Data.. 37
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure....... 64
Item 9A Controls and Procedures...................... 64

PART III

Item 10. Directors and Executive Officers of the
Registrant................................... 65
Item 11. Executive Compensation....................... 65
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder
Matters...................................... 65
Item 13. Certain Relationships and Related Transactions 66
Item 14. Principal Accountant Fees and Services....... 66

PART IV

Item 15 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.......................... 67

SIGNATURES.............................................. 68

FINANCIAL STATEMENT SCHEDULES

Schedule II - Valuation and Qualifying
Accounts................................ 69

EXHIBIT INDEX........................................... 70

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 and radio frequency microwave electronic
systems and digital broadband telecommunications, internet and
networking applications. 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, 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.

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 17 of the Notes to Consolidated Financial Statements in
Item 8 of Part II of this Report. The Company's foreign
operations are conducted principally by the Company's
subsidiaries in Singapore, China 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 Part II of this Report.

In February 2004, the Company discontinued its
financial support of Dielektra GmbH, the Company's wholly owned
subsidiary located in Cologne, Germany. Dielektra had required
substantial financial support from the Company, and the
discontinuation of the Company's financial support resulted in
the filing of an insolvency petition by Dielektra, which the
Company believes will result in the eventual reorganization, sale
or liquidation of Dielektra. In accordance with generally
accepted accounting principles, the Company is treating Dielektra
GmbH as a discontinued operation. Accordingly, the information in
this Report has been adjusted to give effect to the Company's
treatment of Dielektra GmbH as a discontinued operation. See Note
9 of the Notes to Consolidated Financial Statements in Item 8 of
Part II of this Report and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in Item 7 of
Part II 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
interconnection 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. 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.
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 primarily to construct and fabricate complex
multilayer printed circuit boards and other advanced electronic
interconnection 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 generally is 0.030 inch to 0.002 inch in
thickness or less in some cases. While these resin systems
historically have been based on epoxy resin chemistry, in recent
years, increasingly demanding OEM requirements have driven the
industry to utilize proprietary enhanced epoxies as well as other
higher performance resins, such as bismalimide triazine ("BT"),
cyanate ester, polyimide, or polytetrafluoroethylene ("PTFE").
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, and in
March 2004, the Company announced that it is establishing a new
manufacturing facility in the Zhuhai Free Trade Zone
approximately 50 miles west of Hong Kong in the Guangdong
province in southern China. Both the Shanghai Nanjing corridor
and Guangdong province are emerging regions 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 radio frequency ("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 near
Shanghai in central China, and in March 2004, the Company
announced that it is establishing a new manufacturing facility in
the Zhuhai Free Trade Zone approximately 50 miles west of Hong
Kong in southern 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 2004 fiscal year, approximately 16.3%
of the Company's total worldwide sales from its continuing
operations were to Sanmina Corporation, a leading electronics
contract manufacturer and manufacturer of printed circuit boards,
and approximately 12.2% of the Company's total worldwide sales
from its continuing operations were to Tyco Printed Circuit Group
L.P., a leading manufacturer of printed circuit boards. During
the Company's 2003 fiscal year, approximately 19.1% of the
Company's total worldwide sales from its continuing operations
were to Sanmina Corporation, approximately 11.1% of the Company's
total worldwide sales from its continuing operations were to
Multilayer Technology, Inc., a manufacturer of multilayer printed
circuit boards, and approximately 11.0% of the Company's total
worldwide sales from its continuing operations were to Tyco
Printed Circuit Group L.P. During the Company's 2004 and 2003
fiscal years, sales to no other customer of the Company equaled
or exceeded 10% of the Company's total worldwide sales from
continuing operations.

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.

The Company manufactures multilayer printed circuit
materials at six 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. 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 the Asian market
principally through its Singapore manufacturing facility. During
its 2002 fiscal year, the Company established a business center
in central China, and in March 2004, the Company announced that
it is establishing a new manufacturing facility in the Zhuhai
Free Trade Zone approximately 50 miles west of Hong Kong in
southern China to supply the growing 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. During the 2002
fiscal year, the Company completed a significant expansion of its
higher technology product line manufacturing facility in Arizona
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. During the
2004 fiscal year, the Company completed the expansion of its
manufacturing facility in Singapore and began the process of
installing one of its latest generation high-technology treaters
in its newly expanded facility in Singapore and the Company
began utilization of its higher technology product line
manufacturing facility in Arizona. In addition, as state above,
the Company announced in March 2004 that it is establishing a new
manufacturing facility in the Zhuhai Free Trade Zone in southern
China, approximately 50 miles west of Hong Kong.

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, 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, and
discontinued its financial support of its Dielektra GmbH
subsidiary located in Cologne, Germany in its fiscal year 2004
fourth quarter ended February 29, 2004, which resulted in the
insolvency of Dielektra GmbH. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in
Item 7 of Part II of this Report and Notes 9, 10 and 11 of the
Notes to Consolidated Financial Statements in Item 8 of Part II
of this Report for a discussion of the significant pre-tax
charges recorded by the Company in the 2003 and 2004 fiscal
years.

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

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 2, 2004, the unfilled portion of all purchase
orders received by the Company and believed by it to be firm was
approximately $8,111,000, compared to $3,966,000 at May 4, 2003.
The increase in backlog at May 2, 2004 compared to May 4, 2003
was due primarily to the upturn in the Company's business that
began during the second half of its 2004 fiscal year resulting
from the improvement in the global electronics industry.

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 February 29, 2004.

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 February 29 2004, the Company had approximately 1,200
employees. Of these employees, 1,100 were engaged in the
Company's electronic materials operations, 50 in its advanced
composite materials operations and 50 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. The total number of employees further
declined to approximately 1,400 at the end of the 2003 fiscal
year. 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 Part II of this Report and Note 15 of the
Notes to Consolidated Financial Statements included in Item 8 of
Part II 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 2004 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.

In November 2000, after a trial in Phoenix, Arizona, 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
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 in May 2003, a panel of three judges in the Court
of Appeals for the Ninth Circuit rendered a unanimous decision
affirming the jury verdict. In June 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 19 of the Notes to
Consolidated Financial Statements in Item 8 of Part II 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 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 in connection with the sale of NTI and the
closure of a related support facility also located in Arizona.
See Notes 10 and 13 of the Notes to Consolidated Financial
Statements in Item 8 of Part II 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 52

Stephen E. Senior Vice President,
Gilhuley Secretary and General Counsel 59

Emily J. Groehl Senior Vice President, Sales
and Marketing 57

John Jongebloed Senior Vice President, Global 47
Logistics

Steven P. Senior Vice President, 43
Schaefer Technology

Thomas T. Spooner Senior Vice President,
Corporate and Technology 67
Development

Murray O. Stamer Senior Vice President and
Chief Financial Officer 46

Gary M. Watson Senior Vice President,
Engineering and Technology
and Senior Vice President, 56
Asian Business Unit

Mr. Shore has served as a Director of the Company since
1983. He 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. Mr. 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 was elected Senior Vice President of Park in May
1999. Prior to May 1999, she had been with one of Park's "Nelco"
business units for more than ten 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.

Mr. Jongebloed was elected Senior Vice President of Park in
July 2001. Prior to July 2001, he had been employed by one of
Park's "Nelco" business units for more than nine 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.

Mr. Schaefer has been employed by Park since January 15,
2001 when he became Product Director, High Volume Products of
Park. He was promoted to Senior Director of Product Technology in
March 2002 and appointed Vice President of Business Development
in February 2003. He was elected Senior Vice President,
Technology on July 17, 2003. Mr. Schaefer was Business Manager,
Electronic Chemicals of OM Group, Inc. from February 1999 to
January 2001; and prior to February 1999, Mr. Schaefer was
employed by LeaRonal, Inc. in various positions, including
National Sales Manager.

Mr. Spooner 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. Prior to May
1999, he had been employed by one of Park's "Nelco" business
units for more than 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. Mr. Spooner retired as Senior Vice
President, Corporate and Technology Development on March 21, 2004
and became a part-time employee of the Company providing advisory
services to the Company.

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 and Senior Vice President and
Chief Financial Officer on July 17, 2003.

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 and to Senior Vice
President, Engineering in July 2003. 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 has been the Chairman of the Board
and a Director since the Company was founded in 1954, and who
also served as President of the Company for many years until
March 4, 1996 and as Chief Executive Officer of the Company for
forty-two 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 February 29, 2004 High Low Declared
First Quarter $19.67 $14.03 $.06
Second Quarter 23.35 17.91 $.06
Third Quarter 25.55 22.35 $.06
Fourth Quarter 30.18 23.39 $.06

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

As of May 7, 2004, there were approximately 1,371 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 February 29, 2004 and is
as of the end of such periods, it is derived from the con
solidated financial statements for such periods and as of such
dates audited by Ernst & Young LLP, independent auditors. The
consolidated financial statements as of February 29, 2004 and
March 2, 2003 and for the three years ended February 29, 2004,
together with the independent auditors' report for the three
years ended February 29, 2004, appear in Item 8 of Part II 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 and during the fiscal year
ended March 2, 2003, with declines in sales by the Company's
North American, European and Asian operations, abated during the
second half of the fiscal year ended February 29, 2004. And, in
the second half of the 2004 fiscal year, the electronic materials
market in Asia and the markets for the Company's higher
technology products strengthened. Nevertheless, the Company's
sales declined during the 2004 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 FR-4 operations in North America and
Europe continued to be weak during the 2004 fiscal year as almost
all markets for sophisticated printed circuit materials continued
to experience depressed conditions, the Company's gross profit in
the 2004 fiscal year was significantly greater than its gross
profit in the 2003 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.

Although the Company's sales increased slightly in the six-
month period ended February 29, 2004 compared with last fiscal
year's comparable period principally as a result of increases in
sales of the Company's advanced technology products, sales by the
Company's operations in Asia and sales by the Company's FiberCote
advanced composite materials business, the Company's sales for
the 2004 fiscal year were lower than its sales for the 2003
fiscal year as a result of declines in sales by the Company's
North American and European FR-4 operations.

The electronics industry began to improve slightly at the
end of the 2004 fiscal year second quarter and continued to
improve in the third and fourth quarters, and there exist some
indications that the improvement will continue. However, it is
not completely clear whether and to what degree the improvement
is sustainable. The Company's advanced electronic materials
business, its Asian business unit and its FiberCote advanced
composite materials business performed reasonably well during the
six-month and twelve-month periods ended February 29, 2004, while
the Company's higher-volume FR-4 business units in Europe and
North America performed poorly.

During the 2004 fiscal year, the Company opened a facility
at its advanced products business unit in Arizona that had been
completed in its 2002 fiscal year and that is now being well
utilized, completed the construction of its facility expansion in
Singapore and proceeded with its final planning for the
installation of a new manufacturing facility in China.

During the first half of the 2004 fiscal year, the Company
realigned its North American FR-4 business operations located in
New York and California. As part of the realignment, the New York
operation was scaled down to a smaller focused operation and the
California operation was scaled up to a larger volume operation,
and there were 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 was mothballed. The Company has
the flexibility in the future to scale back up the Newburgh, New
York facility if the opportunity to do so presents itself. The
realignment was 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.

As a result of the Company's realignment of its North
American FR-4 business operations and related workforce
reductions, the Company recorded pre-tax charges totaling $2.0
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. The
Company also recorded a pre-tax gain of $0.4 million in the 2004
fiscal year third quarter resulting from the sale of real estate
previously used by its Nelco UK subsidiary, which ceased
operations after its closure in the 2003 fiscal year third
quarter. See Note 10 of the Notes to Consolidated Financial
Statements in Item 8 of Part II of this Report for additional
information regarding the realignment and closure.

In February 2004, the Company discontinued its financial
support of Dielektra GmbH, the Company's wholly owned subsidiary
located in Cologne, Germany ("Dielektra"), which supplied
electronic materials to European circuit board manufacturers. The
Company discontinued its support of Dielektra because the market
in Europe had eroded to the point where the Company believed it
would not be possible, at any time in the foreseeable future, for
the Dielektra business to be viable. Dielektra had required
substantial financial support from the Company. The
discontinuation of the Company's financial support resulted in
the filing of an insolvency petition by Dielektra. The Company
believes that the insolvency procedure in Germany will result in
the eventual reorganization, sale or liquidation of Dielektra.
The Company intends to continue to service the higher technology
European digital and RF circuit board markets through its Nelco,
SAS business located in Mirebeau, France, and its Neltec, SA
business located in Lannemezan, France.

In accordance with generally accepted accounting principles,
the Company is treating Dielektra as a discontinued operation.
Accordingly, the Company reclassified Dielektra's operating
losses and charges and recorded a net loss from discontinued
operations of $33.8 million in the 2004 fiscal year, comprised of
$5.6 million of operating losses incurred by Dielektra, $6.2
million related to the closure of Dielektra's mass lamination
operation and related workforce reductions in the 2004 fiscal
year first quarter and $22.0 million for the write-off of assets
of Dielektra and other costs, the Company recorded a net loss
from discontinued operations in the 2003 fiscal year of $6.9
million, comprised of $5.7 million of operating losses incurred
by Dielektra and $1.2 million for after-tax fixed asset
impairment charges, and the Company recorded a net loss from
discontinued operations in the 2002 fiscal year of $8.1 million,
comprised of $5.2 million of operating losses incurred by
Dielektra and $2.9 million related to the realignment of the
operations of Dielektra. Furthermore, the Company's sales from
its continuing operations did not include sales by Dielektra of
$14.4 million for the 2004 fiscal year, $21.2 million for the
2003 fiscal year and $28.4 million for the 2002 fiscal year. See
Note 9 of the Notes to Consolidated Financial Statements in Item
8 of Part II of this Report for additional information regarding
the discontinued operations.

During the 2003 fiscal year, the Company recorded pre-tax
charges totaling $53.8 million related to the write-downs of
fixed assets at its continuing operations in North America
resulting from the realignment of its North American FR-4
business operations in New York and California, workforce
reductions at a North American business unit, and the closure of
its Nelco U.K. manufacturing facility. 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. See Notes 10, 11 and 12 of the
Notes to Consolidated Financial Statements in Item 8 of Part II
of this Report for additional information regarding the asset
write-downs, workforce reductions and closure and the sale of
DPI.

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 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. 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. See Note 10 of the Notes to Consolidated Financial
Statements in Item 8 of Part II of this Report for additional
information regarding the closure and severance payments.

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 $49.0 million in the Company's 2003
fiscal year fourth quarter to reduce the book values of such
fixed assets to their estimated fair values. See Note 11 of the
Notes to Consolidated Financial Statements in Item 8 of Part II
of this Report for additional information regarding the asset
impairment charges.

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 in May 2003,
a panel of three judges in the Court of Appeals for the Ninth
Circuit rendered a unanimous decision affirming the jury verdict.
In June 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 Notes 13 and 19 of the Notes to Consolidated
Financial Statements in Item 8 of Part II of this Report for
additional information regarding the sale of NTI and the gain on
the lawsuit against Delco and Item 3 of Part I 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 and certain limited energy purchase contracts intended
to protect the Company from increased utilities costs.

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 2004 Compared with Fiscal Year 2003:

The Company's FR-4 operations in North America and Europe
continued to be weak during the fiscal year ended February 29,
2004 as the North American, European and, to a lesser extent,
Asian markets for sophisticated printed circuit materials
continued to experience depressed conditions.

Nevertheless, the Company's continuing operations generated
a profit during the 2004 fiscal year as a result of a significant
improvement in its gross profit.

The Company's gross profit in the 2004 fiscal year was
substantially higher than the gross profit in the prior fiscal
year and improved significantly in the six months ended February
29, 2004 as a result of the Company's reductions of its costs and
expenses and higher percentages of sales by the Company of its
higher margin, advanced technology products. These improvements
in gross profits occurred despite slightly lower levels of sales
of electronic materials in the 2004 fiscal year and only slightly
increased sales in the third and fourth quarters, operating
inefficiencies resulting from operating certain facilities at
levels far below their designed manufacturing capacities and from
the Company's realignment of its North American FR-4 business
operations, and competitive pressures.

The Company's financial results of operations were
substantially enhanced by the pre-tax gain of $33.1 million that
the Company recorded in 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, which more
than offset the pre-tax charges of $8.5 million that the Company
recorded in the 2004 fiscal year related to the Company's
realignment of its North American FR-4 business operations in the
first and second quarters.

In the 2004 fiscal year, the Company classified Dielektra's
operating losses and charges and accordingly recorded a net loss
from discontinued operations of $33.8 million as a result of the
Company's discontinuation of its financial support of Dielektra
in February 2004, the ensuing insolvency of Dielektra, and the
Company's treatment of Dielektra as a discontinued operation. The
net loss from discontinued operations was comprised of $5.6
million of operating losses incurred by Dielektra, $6.2 million
related to the closure of Dielektra's mass lamination operation
and related workforce reductions in the 2004 fiscal year first
quarter and $22.0 million for the write-off of assets of
Dielektra and other costs. In the 2003 fiscal year, the Company
recorded a net loss from discontinued operations of $6.9 million,
comprised of $5.7 million of operating losses incurred by
Dielektra and $1.2 million for after-tax fixed asset impairment
charges. In addition, the Company's sales from its continuing
operations excluded sales by Dielektra of $14.4 million for the
portion of the 2004 fiscal year during which the Company was
supporting Dielektra and $21.2 million for the 2003 fiscal year.

Operating results of the Company's advanced composite
materials business also improved significantly during the 2004
fiscal year primarily as a result of increased sales and higher
percentages of sales of higher margin products.

Results of Operations

Net sales from continuing operations for the fiscal year
ended February 29, 2004 declined less than 1% to $194.2 million
from $195.6 million for the fiscal year ended March 2, 2003. The
decrease in net sales from continuing operations was principally
the result of lower unit volumes of materials shipped by the
Company's FR-4 operations in North America and Europe, almost
entirely offset by higher unit volumes of materials shipped by
the Company's operations in Asia.

The Company's sales from continuing operations did not
include sales by Dielektra of $14.4 million for the 2004 fiscal
year and $21.2 million for the 2003 fiscal year.

The Company's foreign operations accounted for $88.2 million
of sales, or 45% of the Company's total sales worldwide from
continuing operations, during the 2004 fiscal year, compared with
$77.7 million of sales, or 40% of total sales worldwide from
continuing operations, during the 2003 fiscal year and 34% of
total sales worldwide from continuing operating during the 2002
fiscal year. Sales by the Company's foreign operations during the
2004 fiscal year increased from the 2003 fiscal year due to
increases in sales in Asia and France while sales by the
Company's operations in England were nil during the 2004 fiscal
year.

The overall gross profit as a percentage of net sales for
the Company's worldwide continuing operations improved to 16.8%
during the 2004 fiscal year compared with 13.6% during the 2003
fiscal year. The improvement in the gross profit margin was
attributable to higher percentages of sales of higher margin,
advanced technology products, as high performance materials
accounted for 89% of worldwide sales from continuing operations
for the 2004 fiscal year compared with 84% for the prior fiscal
year, and reductions in the Company's costs from the 2003 fiscal
year, which were only partially offset by lower sales volumes and
inefficiencies caused by operating certain facilities at levels
below their designed manufacturing capacities.

The Company's cost of sales decreased in the 2004 fiscal
year compared to the prior fiscal year due to personnel
reductions and cost savings resulting from the Company's
realignment of its North American FR-4 business, other cost
reduction measures implemented by the Company, including
workforce reductions and the reduction of overtime, and lower
production volumes during the first and second quarters of the
2004 fiscal year. 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 increased
slightly during the 2004 fiscal year compared with the 2003
fiscal year, and these expenses, measured as a percentage of
sales, were 14.4% during the 2004 fiscal year compared with 13.9%
during the 2003 fiscal year. The slight increase in selling,
general and administrative expenses in the 2004 fiscal year was a
result of increased shipping costs incurred by the Company to
meet its customers' customized manufacturing and quick-turn-
around requirements.

The Company recorded a pre-tax gain of $0.4 million in the
2004 fiscal year third quarter resulting from the sale of real
estate in Skelmersdale, England previously used by its Nelco UK
subsidiary, which ceased operations after its closure in the 2003
fiscal year third quarter, and a 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 $8.5 million in the 2004 fiscal year first and second
quarters in connection with the realignment of its North American
FR-4 business operations and related workforce reductions. The
net pre-tax gain for all these items for the 2004 fiscal year was
$25.0 million, and the net after-tax gain for the fiscal year was
$22.9 million.

In the 2003 fiscal year fourth quarter, the Company recorded
pre-tax, fixed asset impairment charges of $49.0 million related
to the write-downs of fixed assets at continuing operations in
North America, which the Company announced in its 2004 fiscal
year first quarter. The after-tax impact of these fixed asset
impairments was $44.6 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 $50.7 million,
and the net after-tax charge for the fiscal year was $47.5
million.

For the reasons set forth above, earnings from continuing
operations were $29.8 million for the 2004 fiscal year, including
the pre-tax gains described above resulting from the sale of real
estate in England and 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 and related workforce reductions. This compares with a
loss from continuing operations of $51.2 million for the 2003
fiscal year, including the pre-tax charges described above
related to the write-downs of fixed assets at continuing
operations in North America, 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. Excluding the pre-tax gains and the pre-tax charges
described above, the Company reported income from continuing
operations of $4.7 million for the 2004 fiscal year, compared
with a loss of $0.5 million for the 2003 fiscal year.

Interest and other income, net, principally investment
income, declined 9% to $3.0 million for the 2004 fiscal year from
$3.3 million for the 2003 fiscal year. The decrease in investment
income was attributable to lower prevailing interest rates during
the 2004 fiscal year. The Company's investments were primarily
short-term taxable instruments. The Company incurred no interest
expense during the 2004, 2003 or 2002 fiscal years. See
"Liquidity and Capital Resources" elsewhere in this Item 7.

The Company's effective income tax rate was 8.7% for the
2004 fiscal year compared to an income tax benefit of 8.4% for
the 2003 fiscal year. The Company's effective income tax rate for
continuing operations, excluding the pre-tax gains and the pre-
tax charges described above, for the 2004 fiscal year was 8.6%
compared with an income tax benefit of 30% for the 2003 fiscal
year.

The Company's net earnings from continuing operations for
the 2004 fiscal year were $29.9 million, including the gains
described above resulting from the sale of real estate in England
and the payment by Delco Electronics Corporation of the judgment
in favor of the Company's subsidiary, Nelco Technology, Inc., and
the charges described above related to the realignment of the
Company's North American FR-4 business operations and related
workforce reductions. This compares with a net loss of $43.9
million for the 2003 fiscal year, including the charges of $47.5
million described above related to the write-downs of fixed
assets at continuing operations in North America, the closure of
the Nelco U.K. manufacturing facility and severance costs at a
North American business unit and the gain described above related
to the sale of DPI. Excluding the gains and the charges described
above, the Company reported net earnings from continuing
operations of $7.0 million for the 2004 fiscal year, compared
with net earnings from continuing operations of $3.6 million for
the 2003 fiscal year.

For the reasons set forth above, the Company reported a net
loss of $3.9 million for the 2004 fiscal year, including the
gains and charges described above, and a net loss of $50.8
million for the 2003 fiscal year, including the gain and charges
described above.

Basic and diluted earnings per share from continuing
operations, including the gains and charges described above, were
$1.51 and $1.50 per share, respectively, for the 2004 fiscal year
compared to basic and diluted losses per share of $2.23,
including the gain and charges described above, for the 2003
fiscal year. Excluding such gains and charges, the basic and
diluted earnings per share were $0.36 and $0.35, respectively,
for the 2004 fiscal year compared to basic and diluted earnings
per share of $0.18 for the 2003 fiscal year.

The basic loss per share and the diluted loss per share were
$0.20 and $0.19, respectively, for the 2004 fiscal year,
including losses from the discontinued Dielektra operations of
$1.71 and $1.69 per share, respectively, and the pre-tax gains
and charges described above. This compares to basic and diluted
losses per share of $2.58 for the 2003 fiscal year, including the
basic and diluted loss from the discontinued Dielektra operations
of $0.35 per share and the pre-tax gains and charges described
above.

Fiscal Year 2003 Compared with Fiscal Year 2002:

The Company's continuing 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 $49.0 million in the 2003 fiscal year fourth quarter
related to the writedowns of fixed assets at its continuing
operations in North America. 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 $16.5 million related to 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.

As a result of the Company's discontinuation of its
financial support of Dielektra in February 2004, the ensuing
insolvency of Dielektra and the Company's treatment of Dielektra
as a discontinued operation, the Company reclassified Dielektra's
operating losses and charges and accordingly recorded a net loss
from discontinued operations of $6.9 million in the 2003 fiscal
year, comprised of $5.7 million of operating losses incurred by
Dielektra and $1.2 million for after-tax fixed asset impairment
charges, and the Company recorded a net loss from discontinued
operations in the 2002 fiscal year of $8.1 million, comprised of
$5.2 million of operating losses incurred by Dielektra and $2.9
million related to the realignment of the operations of
Dielektra. In addition, the Company's sales from its continuing
operations do not include sales by Dielektra of $21.2 million for
the 2003 fiscal year and $28.4 million for the 2002 fiscal year.

The continuing low levels of sales of electronic materials
were largely responsible for the Company's results of continuing
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 continuing operations and gross
profit improved in the 2003 fiscal year compared to the 2002
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 from continuing operations for the fiscal year
ended March 2, 2003 declined 3% to $195.6 million from $201.7
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 North America,
partially offset by higher unit volumes of materials shipped by
the Company's operations in Asia and Europe. 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 sales from continuing operations do not
include sales by Dielektra of $21.2 million for the 2003 fiscal
year and $28.4 million for the 2002 fiscal year.

The Company's foreign operations accounted for $77.7 million
of sales, or 40% of the Company's total sales worldwide from
continuing operations, during the 2003 fiscal year, compared with
$69.2 million of sales, or 34% of total sales worldwide from
continuing operations, during the 2002 fiscal year and 33% of
total sales worldwide from continuing operations 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 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 continuing operations improved to 13.6%
during the 2003 fiscal year compared with 8.3% 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 84% of worldwide sales from continuing operations for the
2003 fiscal year compared with 78% 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
$6.5 million, or by 19%, during the 2003 fiscal year compared
with the 2002 fiscal year, and these expenses, measured as a
percentage of sales, were 13.9% during the 2003 fiscal year
compared with 16.7% 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 the sale of DPI, 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 $49.0 million related
to the writedowns of fixed assets at continuing operations in
North America. The after-tax impact of these fixed asset
impairments was $44.6 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 $50.7 million,
and the net after-tax charge for the fiscal year was $47.5
million.

For the reasons set forth above, the loss from continuing
operations was $51.2 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, 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 continuing operations of $33.5 million for the 2002 fiscal
year, including the pre-tax charges described above related to a
workforce reduction a 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
continuing operations for the 2003 fiscal year, before the pre-
tax items described above, was $0.5 million, compared with a loss
from continuing operations of $17.0 million before the pre-tax
charges described above for the 2002 fiscal year.

Interest and other income, net, principally investment
income, declined 39% to $3.3 million for the 2003 fiscal year
from $5.4 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. See
"Liquidity and Capital Resources" elsewhere in this Item 7.

The Company's effective income tax rate was a benefit of
8.4% for the 2003 fiscal year compared to a benefit of 38.1% for
the 2002 fiscal year. This decrease in the effective tax rate
benefit 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 loss from continuing operations for the 2003 fiscal
year, including the after-tax charges of $47.5 million described
above related to the write-downs of fixed assets at continuing
operations in North America, the closure of the Nelco U.K.
manufacturing facility and severance costs at a North American
business unit, was $43.9 million, compared to a loss from
continuing operations of $17.4 million for the 2002 fiscal year,
including the pre-tax charges described above related to a
workforce reduction at a 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 losses from the discontinued Dielektra
operations of $0.35 and the pre-tax charges and gain described
above, compared to losses per share of $1.31, including losses
from the discontinued Dielektra operations of $0.42 and the pre-
tax charges described above, for the 2002 fiscal year. Basic and
diluted losses per share from continuing operations for the 2003
fiscal year, including the pre-tax charges and gain described
above, were $2.23 compared to basic and diluted losses per share
from continuing operations for the 2002 fiscal year, including
the pre-tax charges described above, of $0.89, and basic and
diluted losses per share, excluding the pre-tax charges and gain
described above, were $0.18 for the 2003 fiscal year, compared to
losses of $0.35 for the 2002 fiscal year, excluding the pre-tax
charges described above.

Liquidity and Capital Resources:

At February 29, 2004, the Company's cash and temporary
investments were $189.2 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 investment position at
February 29, 2004 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, partially offset by purchases of property, plant
and equipment and the payment of dividends. The Company's working
capital (which includes cash and temporary investments) was
$197.5 million at February 29, 2004 compared with $170.3 million
at March 2, 2003. The increase in working capital at February 29,
2004 compared with March 2, 2003 was due principally to higher
cash and cash equivalents and higher accounts receivable, offset
in part by lower inventories and other current assets and higher
accrued liabilities. The increase in accounts receivable at
February 29, 2004 compared with March 2, 2003 was a result
principally of higher sales in the fiscal year 2004 fourth
quarter than in the fiscal year 2003 fourth quarter. The
Company's current ratio (the ratio of current assets to current
liabilities) was 5.6 to 1 at February 29, 2004 compared with 5.2
to 1 at March 2, 2003.

During the 2004 fiscal year, $32.3 million of cash provided
by the Company's operating activities included $6.9 million paid
as severance in connection with workforce reductions and $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 13 and 19 of the Notes to Consolidated Financial Statements
in Item 8 of Part II of this Report and Item 3 of Part I of this
Report for additional information regarding the lawsuit. Net
expenditures for property, plant and equipment were $2.4 million,
$6.4 million and $22.8 million in the 2004, 2003 and 2002 fiscal
years, respectively.

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 February 29, 2004 and March 2, 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 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 two
standby letters of credit in the total amount of $2.7 million to
secure the Company's obligations under its workers' compensation
insurance program.

As of February 29, 2004, the Company's significant
contractual obligations, including payments due by fiscal year,
were as follows:

Contractual Obligations
(Amounts in thousands) Total 2005 2006- 2008- 2010 and
2007 2009 thereafter

Operating lease
obligations $10,033 $2,097 $2,252 $1,530 $4,154

Purchase obligations 183 183 - - -

Total $10,216 $2,280 $2,252 $1,530 $4,154

Off-Balance Sheet Arrangements:

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.

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 2004, 2003 and 2002 fiscal years, the Company charged
approximately $0.0 million, $0.1 million and $0.2 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 February 29,
2004, the recorded liability in liabilities from discontinued
operations for environmental matters related to Dielektra was
$2.1 million and the recorded liability in accrued liabilities
for environmental matters was $2.4 million compared with a total
record liability in accrued liabilities for environmental matters
of $4.2 million at March 2, 2003.

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 Part II of this Report for a
discussion of the Company's commitments and contingencies, includ
ing 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.

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 years ended February 29, 2004 and March 2,
2003, the Company recorded significant charges in connection with
the realignment of its North American FR-4 business operations,
the closures of the mass lamination operation of Dielektra GmbH
in Germany and the Company's manufacturing facility in England
and employee severance costs; 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

Dielektra 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 February 29, 2004,
the Company's ten largest customers accounted for
approximately 71% 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 Part I of this Report, "Legal
Proceedings" in Item 3 of Part I of this Report and
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" in Item 7 of Part II 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 to a lesser extent 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 control. Such factors include economic conditions
in the electronics industry, the timing of customer orders,
product prices, process yields, the mix of products sold and
maintenance-related shutdowns of facilities. Operating
results also can be influenced by development and intro
duction 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 materials used in the production of complex multilayer
printed circuit boards. The Company's principal competitors
are substantially 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
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 continual communication with its customers to anticipate
the future volume of purchase orders. A variety of condi
tions, both specific to the individual customer and gener
ally 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 expan
sion of certain of its manufacturing facilities for elec
tronic 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
addition, 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.

. The Company may acquire businesses, product lines or
technologies 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
international operations are denominated in currencies other
than the U.S. dollar and may be affected by fluctuations in
currency 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
intellectual 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 considered 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 2004
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 February 29,
2004 and March 2, 2003 and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the
three years in the period ended February 29, 2004. 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 February 29, 2004 and March 2, 2003 and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended February 29, 2004, 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
April 21, 2004

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

February 29, March 2,
2004 2003

ASSETS
Current assets:
Cash and cash equivalents $129,989 $111,036
Marketable securities (Note 2) 59,197 51,899
Accounts receivable, less
allowance for doubtful accounts
of $1,845 and $1,893, respectively 36,149 30,272
Inventories (Note 3) 11,707 12,688
Prepaid expenses and other 3,040 4,690
Total current assets 240,082 210,585

Property, plant and equipment, net
of accumulated depreciation and
amortization (Notes 4, 9, and 11) 70,569 90,503

Other assets 419 454
Total assets $311,070 $301,542

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,913 $ 15,145
Accrued liabilities (Note 5) 24,468 21,790
Income taxes payable 3,248 3,376
Total current liabilities 42,629 40,311

Deferred income taxes (Note 6) 5,107 4,539

Deferred pension liability (Note 9
and 14) - 10,991
Liabilities from discontinued
operations (Note 9) 19,438 -
Total liabilities 67,174 55,841

Commitments and contingencies (Note 15)

Stockholders' equity (Note 7):
Preferred stock, $1 par value per
share-authorized, 500,000 shares;
issued, none - -
Common stock, $.10 par value per
share-authorized, 60,000,000
shares; issued, 20,369,986 shares 2,037 2,037
Additional paid-in capital 133,335 133,172
Retained earnings 108,915 117,506
Accumulated other non-owner changes 3,734 (2,432)
248,021 250,283
Less treasury stock, at cost, 582,061
and 686,069 shares, respectively (4,125) (4,582)
Total stockholders' equity 243,896 245,701
Total liabilities and
stockholders' equity $311,070 $301,542

See notes to consolidated financial statements.

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

Fiscal Year Ended
February 29, March 2, March 3,
2004 2003 2002

Net sales $194,236 $195,578 $201,681
Cost of sales 161,536 168,921 185,014
Gross profit 32,700 26,657 16,667
Selling, general and
administrative expenses 27,962 27,157 33,668
Gain on Delco lawsuit (Note 19) (33,088) - -
Asset impairment charge (Note 11) - 49,035 -
Restructuring and severance
charges (Note 10) 8,469 4,794 806
Gain on sale of DPI (Note 12) - (3,170) -
Gain on sale of United
Kingdom real estate (429) - -
Loss on sale of NTI and closure
of related support facility (Note 13) - - 15,707
Earnings (loss) from
continuing operations 29,786 (51,159) (33,514)
Interest and other income, net 2,958 3,260 5,373
Earnings (loss) from continuing
operations before income taxes 32,744 (47,899) (28,141)
Income tax provision (benefit)
from continuing operations 2,835 (4,035) (10,727)
Earnings (loss) from
continuing operations 29,909 (43,864) (17,414)
Loss from discontinued
operations, net of taxes (Note 9) (33,761) (6,895) (8,105)

Net loss $(3,852) $(50,759) $(25,519)

Basic earnings (loss) per share:
Earnings (loss) from
continuing operations $ 1.51 $(2.23) $(0.89)
Loss from discontinued
operations, net of tax (1.71) (0.35) (0.42)

Basic loss per share $(0.20) $(2.58) $(1.31)

Diluted earnings (loss) per share:
Earnings (loss) from
continuing operations $ 1.50 $ (2.23) $(0.89)
Loss from discontinued
operations, net of tax (1.69) (0.35) (0.42)

Diluted loss per share $(0.19) $ (2.58) $(1.31)

See notes to consolidated financial statements.

Part 1 of table
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share and per share amounts)

Accumulated
Additional Other
Common Paid-in Retained Non-Owner
Stock Capital Earnings Changes
Shares Amount

Balance, February 25, 2001 20,369,986 $2,037 $ 57,318 $203,150 $(5,764)
Net loss (25,519)
Exchange rate changes (1,257)
Change in pension
liability adjustment (802)
Market revaluation (67)
Conversion of long-term
debt 72,634
Stock option activity 1,186
Purchase of treasury stock
Cash dividends ($.24
per share) (4,678)
Comprehensive loss

Balance, March 3, 2002 20,369,986 2,037 131,138 172,953 (7,890)
Net loss (50,759)
Exchange rate changes 5,174
Change in pension
liability adjustment 103
Market revaluation 181
Stock option activity 2,034
Cash dividends ($.24
per share) (4,688)
Comprehensive loss

Balance, March 2, 2003 20,369,986 2,037 133,172 117,506 (2,432)
Net loss (3,852)
Exchange rate changes 5,557
Change in pension
liability adjustment 742
Market revaluation (133)
Stock option activity 163
Cash dividends ($.24
per share) (4,739)
Comprehensive loss

Balance, February 29, 2004 20,369,986 $2,037 $133,335 $108,915 $3,734

See notes to consolidated financial statements.

Part 2 of table
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share and per share amounts)

Treasury Stock Comprehensive
Shares Amount Income

Balance, February 25, 2001 4,441,359 $(27,835)
Net loss $(25,519)
Exchange rate changes (1,257)
Change in pension
liability adjustment (802)
Market revaluation (67)
Conversion of long-term
debt (3,411,204) 21,381
Stock option activity (162,830) 1,027
Purchase of treasury stock 9,838 (265)
Cash dividends ($.24
per share)
Comprehensive loss $(27,645)

Balance, March 3, 2002 877,163 (5,692)
Net loss $(50,759)
Exchange rate changes 5,174
Change in pension
liability adjustment 103
Market revaluation 181
Stock option activity (191,094) 1,110
Cash dividends ($.24
per share)
Comprehensive loss $(45,301)

Balance, March 2, 2003 686,069 (4,582)
Net loss (3,852)
Exchange rate changes 5,557
Change in pension
liability adjustment 742
Market revaluation (133)
Stock option activity (104,008) 457
Cash dividends ($.24
per share)
Comprehensive loss $ 2,314

Balance, February 29, 2004 582,061 $ (4,125)

See notes to consolidated financial statements

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

Fiscal Year Ended
February 29, March 2, March 3,
2004 2003 2002

Cash flows from operating activities:
Net loss $(3,852) $(50,759) $(25,519)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 11,978 17,973 16,257
(Gain)loss on sale of fixed assets (511) - 10,636
Charge for impairment of fixed assets - 50,255 2,959
Non-cash restructuring charges - 2,150 -
Non-cash charges related to
discontinued operations 21,348 - -
Gain on sale of DPI - (3,170) -
Provision for doubtful accounts
receivable 109 184 123
Provision for deferred income taxes 515 (1,541) (4,690)
Other, net - (25) (63)
Changes in operating assets and
liabilities:
Accounts receivable (6,082) 3,478 36,907
Inventories 86 535 18,793
Prepaid expenses and other current assets 1,287 (719) 4,511
Other assets and liabilities (57) 17 29
Accounts payable 2,851 430 (13,617)
Accrued liabilities 4,441 (6,835) (9,744)
Income taxes payable 217 4,216 (13,176)

Net cash provided by operating
activities 32,330 16,189 23,406

Cash flows from investing activities:
Purchases of property, plant and
equipment (4,509) (6,468) (25,786)
Proceeds from sale of business - 5,000 -
Proceeds from sales of property,
plant and equipment 2,094 25 2,986
Purchases of marketable securities (76,530) (66,194) (47,355)
Proceeds from sales and maturities
of marketable securities 69,316 66,104 27,036

Net cash used in investing activities (9,629) (1,533) (43,119)

Cash flows from financing activities:
Redemption of long term debt - - (1,738)
Dividends paid (4,739) (4,688) (4,678)
Proceeds from exercise of stock options 620 368 1,959

Net cash used in financing activities (4,119) (4,320) (4,457)

Effect of exchange rate changes on
cash and cash equivalents 371 1,208 (64)

Increase (decrease) in cash and cash
equivalents 18,953 11,544 (24,234)

Cash and cash equivalents, beginning of year 111,036 99,492 123,726

Cash and cash equivalents, end of year $129,989 $111,036 $ 99,492

See notes to consolidated financial statements.

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three years ended February 29, 2004
(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" in Item 7 of Part
II 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 2004, 2003 and 2002 fiscal years
ended on February 29, 2004, March 2, 2003, and March 3,
2002 respectively. Fiscal years 2004 and 2003 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 $5,296,
$4,200 and $3,498 for fiscal years 2004, 2003 and 2002,
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 $119,200 at February 29, 2004) 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.
The Company enters into foreign currency exchange
contracts to manage its exposure to currency rate
fluctuations on anticipated sales, purchases and inter-
company transactions. These types of exchange contracts
generally qualify for accounting as designated hedges.
The realized and unrealized gains and losses on
qualified contracts are deferred and included as
components of the related transactions. Any contracts
that do not qualify as hedges for accounting purposes
are marked to market with the resulting gains and
losses recognized in other income or expense.
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.

Supplemental cash flow information:
Fiscal Year
2004 2003 2002

Cash paid during the year for:
Interest $ - $ - $2,700
Income taxes paid (refunded) 2,248 (6,278) 6,847

m. Stock based Compensation - The Company implemented the
disclosure provisions 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 February 29, 2004, the Company had two fixed stock
incentive plans which are more fully described in Note 7.
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 $8.69 for fiscal year 2004,
$12.81 for fiscal year 2003 and $8.09 for fiscal year
2002, with the following weighted average assumptions:
risk free interest rate of 4.0% for fiscal years 2004,
2003 and 2002; expected volatility factors of 49%-54%,
58% and 41% for fiscal years 2004, 2003 and 2002,
respectively; expected dividend yield of 1.0% for fiscal
years 2004, 2003 and 2002; and estimated option lives of
4.0 years for fiscal years 2004, 2003 and 2002.

2004 2003 2002

Net loss $(3,852) $(50,759) $(25,519)
Deduct: Total stock-based
employee compensation
determined under fair value
based method for all awards,
net of tax effects (1,846) (1,928) (1,404)

Pro forma net loss $(5,698) $(52,687) $(26,923)

EPS-basic as reported $ (0.20) $ (2.58) $ (1.31)
EPS-basic pro forma $ (0.29) $ (2.68) $ (1.38)

EPS-diluted as reported $ (0.19) $ (2.58) $ (1.31)
EPS-diluted pro forma $ (0.29) $ (2.68) $ (1.38)

2. MARKETABLE SECURITIES

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

Gross Gross Estimated
Unrealized Unrealized Fair
Amortized Cost Gains Losses Value

February 29, 2004:
U.S. Treasury and other
government securities $55,993 $ 116 $ 18 $56,091
U.S. corporate debt
securities 3,022 8 - 3,030
Total debt securities 59,015 124 18 59,121
Equity securities 5 71 - 76
$59,020 $195 $ 18 $59,197

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

The gross realized gains on the sales of securities were
$40, $6 and $0 for fiscal years 2004, 2003 and 2002,
respectively, and the gross realized losses were $21, $17,
and $60 for fiscal years 2004, 2003 and 2002, respectively.

The amortized cost and estimated fair value of the debt and
marketable equity securities at February 29, 2004, by
contractual maturity, are shown below:

Estimated
Fair
Cost Value

Due in one year or less $10,021 $10,030
Due after one year through five years 48,994 49,091
59,015 59,121
Equity securities 5 76
$59,020 $59,197

3. INVENTORIES

February 29, March 2,
2004 2003

Raw materials $ 4,088 $ 4,072
Work-in-process 2,424 3,424
Finished goods 4,835 4,680
Manufacturing supplies 360 512
$11,707 $12,688

4. PROPERTY, PLANT AND EQUIPMENT

February 29, March 2,
2004 2003

Land, buildings and improvements $ 31,591 $ 36,807
Machinery, equipment, furniture
and fixtures 135,309 146,363
166,900 183,170
Less accumulated depreciation
and amortization 96,331 92,667
$ 70,569 $ 90,503

Depreciation and amortization expense, for continuing
operations, relating to property, plant and equipment was
$10,604, $16,535 and $14,880 for fiscal years 2004, 2003 and
2002, respectively. Pretax charges of $15,349, $52,248 and
$2,959 were recorded in fiscal years 2004, 2003 and 2002,
respectively, for the write-downs of abandoned or impaired
operating equipment, including charges of $15,349, $1,220
and $901, respectively, related to Dielektra, to its
estimated net realizable value (see Notes 10 and 11 below).

5. ACCRUED LIABILITIES

February 29, March 2,
2004 2003

Payroll and payroll related $ 3,650 $ 4,535
Taxes, other than income taxes 343 320
Employee benefits 2,194 1,660
Environmental reserve (Note 15) 2,389 4,246
Other 15,892 11,029
$24,468 $21,790

6. INCOME TAXES

The income tax (benefit) provision for continuing operations
includes the following:

Fiscal Year
2004 2003 2002

Current:
Federal $ 467 $(3,806) $ (5,901)
State and local 125 385 18
Foreign 1,732 927 (154)
2,324 (2,494) (6,037)
Deferred:
Federal - (1,087) (4,345)
State and local (7) (107) (729)
Foreign 518 (347) 384
511 (1,541) (4,690)
$ 2,835 $(4,035) $(10,727)

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
2004 2003 2002

Statutory U.S. Federal tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal benefit 0.3 (0.4) 1.6
Foreign tax rate differentials (11.9) 1.4 0.7
Valuation allowance 1.9 - -
Impairment of deferred
tax assets - (28.1) -
Other, net (16.6) 0.5 0.8
8.7% 8.4% 38.1%

The Company had foreign net operating loss carry-forwards
from continuing operations of approximately $15,700 and
$12,700 in fiscal years 2004 and 2003, respectively. In
fiscal years 2004 and 2003, the Company had net operating
loss carry-forwards from discontinued operations of $76,400
and $59,600, respectively. Long-term deferred tax assets
arising from these net operating loss carry-forwards from
continuing operations were valued at $0 at February 29, 2004
and March 2, 2003, net of valuation reserves of
approximately $6,347 and $5,221, respectively. Long-term
deferred tax assets arising from these net operating loss
carry-forwards from discontinued operations were valued at
$0 at February 29, 2004 and March 2, 2003, net of valuation
reserves of approximately $32,598 and $26,008, respectively.
The income tax provision (benefit) for discontinued
operations was $0, $150 and $(210) for fiscal years 2004,
2003 and 2002, respectively.

Approximately $702 of the foreign net operating loss carry-
forwards expire in fiscal year 2005, $2,900 of the net
operating loss carry-forwards expire in fiscal year 2025,
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 February 29, 2004
and March 2, 2003, the Company did not have any current
deferred tax assets. Significant components of the Company's
long-term deferred tax liabilities and assets as of February
29, 2004 and March 2, 2003 from continuing operations were
as follows:

2004 2003

Deferred tax liabilities:
Depreciation $ 2,929 $ 4,539
Other, net 2,178 1,392
Total deferred tax liabilities 5,107 5,931

Deferred tax assets:
Impairment of fixed assets 9,210 11,657
Net operating loss carry-forwards 6,347 5,221
Other, net 6,007 3,224
Total deferred tax assets 21,564 20,102
Valuation allowance for deferred
tax assets (21,564) (18,710)
Net deferred tax assets - 1,392

Net deferred tax liabilitie s $ 5,107 $ 4,539

7. STOCKHOLDERS' EQUITY

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. 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 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 - 4.67 (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
Granted 19.95 - 29.17 194,275 20.42
Exercised 4.92 - 24.08 (121,837) 8.18
Cancelled 14.12 - 43.63 (41,147) 23.95

Balance, February 29, 2004 $ 8.75 - $43.63 1,396,653 $19.91

Exercisable February 29, 2004 $ 8.75 - $43.63 878,202 $17.79

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

Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Number of Remaining Average Number of Average
Range of Options Contractual Exercise Options Exercise
Exercise Prices Outstanding Life in Years Price Exercisable Price

$ 8.75 - 9.99 65,175 .21 $ 8.75 65,175 $ 8.75
10.00 - 19.99 837.078 5.53 16.68 605,515 15.73
20.00 - 43.63 494,400 7.60 26.87 207,512 26.63
--------- -------
1,396,653 878,202

Stock options available for future grant under the 2002
stock option plan at February 29, 2004 and March 2, 2003
were 705,725 and 885,000, 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 February 29, 2004,
2,102,378 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:

February 29, March 2,
2004 2003

Currency translation adjustment $3,619 $(1,938)
Pension liability adjustment - (742)
Unrealized gains on investments 115 248

Accumulated balance $3,734 $(2,432)

8. (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:

2004 2003 2002

Earnings (loss) from
continuing operations $29,909 $ (43,864) $ (17,414)
Loss from discontinued
operations (33,761) (6,895) (8,105)

Net loss $(3,852) $ (50,759) $ (25,519)

Weighted average common shares
outstanding for basic EPS 19,754,000 19,674,000 19,535,000
Net effect of dilutive options 237,000 * *
Weighted average shares
outstanding for diluted EPS 19,991,000 19,674,000 19,535,000

Basic earnings (loss) per share:
Earnings (loss) from
continuing operations $ 1.51 $(2.23) $(0.89)
Loss from discontinued
operations, net of tax $(1.71) $ (0.35) $(0.42)
Basic loss per share $(0.20) $(2.58) $(1.31)

Diluted earnings (loss) per share:
Earnings (loss) from
continuing operations $ 1.50 $ (2.23) $(0.89)
Loss from discontinued
operations, net of tax $(1.69) $ (0.35) $(0.42)
Diluted loss per share $(0.19) $ (2.58) $(1.31)

*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 151,585, 865,287, and 637,550 for the
fiscal years 2004, 2003, 2002, respectively.

9. DISCONTINUED OPERATIONS

On February 4, 2004, the Company announced that it was
discontinuing its financial support of its Dielektra GmbH
("Dielektra") subsidiary located in Cologne, Germany, due to
the continued erosion of the European market for the
Company's high technology products. Without Park's financial
support, Dielektra filed an insolvency petition, which may
result in the reorganization, sale or liquidation of
Dielektra. In accordance with SFAS No. 144, "Accounting for
the Impairment of Disposal of Long-Lived Assets", Dielektra
is treated as a discontinued operation. As a result of the
discontinuation of financial support for Dielektra, the
Company recognized an impairment charge of $22,023 for the
write-off of Dielektra assets and other costs during the
fourth quarter of the 2004 fiscal year. The income tax
provision (benefit) for discontinued operations was $0, $150
and $(210) for fiscal years 2004, 2003 and 2002,
respectively. The liabilities from discontinued operations
totaling $19,438 at February 29, 2004 are reported
separately on the consolidated balance sheet. These
liabilities from discontinued operations included $12,094
for Dielektra's deferred pension liability. The Company
expects to recognize a gain of approximately $17 million
related to the reversal of these liabilities when the
Dielektra insolvency process is completed, although it is
unclear when the process will be completed. In addition to
the impairment charge described above recognized in the 2004
fiscal year, the losses from operations of $5,596 and $6,142
for termination and other costs related to Dielektra,
recorded in the first quarter of the 2004 fiscal year, have
been included in discontinued operations in the Consolidated
Statements of Operations in the periods in which they
occurred. At the time of the discontinuation of support for
Dielektra, $5,539 of the $6,142 of termination and other
costs had been paid and the remaining $603 was included in
liabilities from discontinued operations in the Consolidated
Balance Sheet.

Dielektra's net sales and operating results for each of the
three fiscal years ended February 29, 2004, March 2, 2003,
and March 3, 2002, and assets and liabilities of
discontinued operations at February 29, 2004 and March 2,
2003 were as follows:

Fiscal Year
2004 2003 2002

Net sales $ 14,429 $21,198 $28,379
Operating loss (5,596) (5,675) (5,184)
Restructuring and
impairment charges 28,165 1,220 2,921
Net loss $(33,761) $(6,895) $(8,105)

February 29, March 2,
2004 2003

Current Assets $ - $ 5,697
Fixed Assets - 15,612
Total Assets - 21,309
Current and other liabilites 7,344 9,654
Pension liabilities 12,094 10,991
Total liabilities 19,438 20,645
Net (liabilities) assets $(19,438) $ 664

10. RESTRUCTURING AND SEVERANCE CHARGES

The Company recorded pre-tax charges totaling $8,438 during
the first and second quarters of fiscal year 2004 related to
the realignment of its North America FR-4 business
operations in Newburgh, New York and Fullerton, California.
During the fourth quarter of fiscal year 2004 the Company
recorded pretax charges of $112 related to workforce
reductions in Europe and recovered $81 from sales of
impaired assets related to its European operations. The
components of these charges and the related liability
balances and activity for the year ended February 29, 2004
are set forth below.

Charges 2/29/04
Closure Incurred or Remaining
Charges Paid Reversals Liabilities

New York and
California and other
realignment charges:
Lease payments, taxes,
utilities and other $7,292 648 - 6,644
Severance payments 1,258 1,146 - 112

$8,550 $1,794 $ - $6,756

The severance payments were for the termination of hourly and
salaried, administrative, manufacturing and support
employees. Such employees were terminated during the 2004
fiscal year first, second and third quarters. The remaining
liability for severance payments is expected to be paid to
such employees during the fiscal year 2005 first quarter. 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. As of February 29, 2004,
there were no remaining liabilities. The Company recorded an
$81 gain on the sale of previously written off equipment
during the fourth quarter of fiscal 2004. The components of
these charges and the charges incurred and paid since the
third quarter of fiscal 2003 are set forth below.

Charges Recoveries 2/29/04
Closure Incurred or or Remaining
Charges Paid Reversals Liabilities

United Kingdom charges:
Impairment of long
lived assets $1,993 $1,912 $ 81 $ -
Severance payments
and related costs 1,997 1,997 - -
Utilities, maintenance,
taxes, other 684 684 - -

4,674 4,593 81 -
Other severance payments
and related costs 120 120 - -

$4,794 $4,713 $ 81 $ -

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 and the reduction of the size of Dielektra's mass
lamination operations. Such restructuring charges related to
Dielektra have been included in loss from discontinued
operations. 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.
As of March 2, 2003 there were no remaining liabilities
relating to these charges.

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 1,200 as of February 29, 2004 from approximately
1,500 as of March 2, 2003, and 1700 at the end of the
Company's 2002 fiscal year.

11. ASSET IMPAIRMENT CHARGES

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 $50,255, of which $1,220
related to Dielektra, 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", the carrying values of such assets
exceeded their fair values and were not recoverable.

12. 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.

13. 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 since then. See
Note 19 for a description of the gain on NTI's lawsuit against
Delco.

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 February 29, 2004 balance sheet date are set
forth below.

Charges 2/29/04
Closure Incurred Remaining
Charges or 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. 781 485 - 296
Other 45 45 - -

$15,707 $15,380 $ 31 $296

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.

14. EMPLOYEE BENEFIT PLANS

a. Profit Sharing Plan - The Company 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 contributions are accrued at the end of each fiscal
year and paid to the plan in the subsequent fiscal year. The
Company's contributions to the plan were $271 and $403 for fiscal
years 2003 and 2002, respectively. The contribution for fiscal
year 2004 has not been paid. 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 $260, $442 and $527 in fiscal years 2004, 2003 and
2002, respectively.

b. Pension Plan - The pension information provided below
relates to the Company's subsidiary, Dielektra. As described in
Note 9 above, the Company discontinued its financial support of
Dielektra during the fiscal year 2004 fourth quarter and,
accordingly, has included the February 29, 2004 pension liability
in liabilities from discontinued operations. The pension plan is
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 recorded deferred pension liabilities relating to this
plan in the amounts of $12,094 and $10,991 at February 29, 2004
and March 2, 2003, respectively.

Net pension costs included the following components:

Fiscal Year
Changes in Benefit Obligations 2004 2003

Benefit obligation at beginning of year $ 10,991 $ 9,150
Service cost 58 94
Interest cost 661 571
Actuarial loss (gain) (558) (301)
Currency translation (gain)loss 1,707 2,117
Benefits paid (765) (640)
Payment for annuities - -
Benefit obligation at end of year $ 12,094 $ 10,991

Changes in Plan Assets

Fair value of plan assets at
beginning of year $ - $ -
Actual return on plan assets - -
Employer contributions 764 640
Benefits paid (764) (640)
Payment for annuities - -
Administrative expenses paid - -
Fair value of plan assets $ - $ -

Under funded status $(12,094) $(10,991)
Unrecognized net loss - 1,192
Net accrued pension cost $(12,094) $ (9,799)

Fiscal Year
Components of Net Periodic Benefit Cost 2004 2003 2002

Service cost - benefits earned
during the period $ 58 $ 94 $ 82
Interest cost on projected
benefit obligation 661 571 533
Expected return on plan assets - - -
Amortization of unrecognized loss 18 55 40
Recognized net actuarial loss - - -
Effect of curtailment - - -
Net periodic pension cost $737 $720 $655

Fiscal Year
2004 2003
Projected benefit obligation $12,094 $10,991
Accumulated benefit obligation 12,094 10,991
Plan assets - -

The projected benefit obligation for the plan was determined
using assumed discount rates of 5.75% for fiscal years 2004
and 2003. Projected wage increases of 2.6% were also assumed
for fiscal years 2004 and 2003.

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 Amount
Year
2005 $ 2,097
2006 1,346
2007 906
2008 838
2009 692
Thereafter 4,154
$10,033

Rental expenses, inclusive of real estate taxes and other
costs, were $2,659, $2,948 and $3,933 for fiscal years 2004,
2003 and 2002, 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
$1, $131 and $200 in fiscal years 2004, 2003 and 2002,
respectively. The recorded liabilities included in accrued
liabilities for environmental matters were $2,389, $4,246
and $3,975 for fiscal years 2004, 2003 and 2002,
respectively. As discussed in Note 9, liabilities from
discontinued operations have been segregated on the
Consolidated Balance Sheet and include $2,121 for
environmental matters related to Dielektra.

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. FOREIGN CURRENCY CONTRACTS

Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"), as amended by Statement of
Financial Accounting Standards No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging
Activities". SFAS 133, as amended, requires that all
derivative instruments be recognized on the balance sheet at
fair value. In addition, the standard specifies criteria for
designation and effectiveness of hedging relationships and
establishes accounting rules for reporting changes in the
fair value of a derivative instrument depending on the
designated type of hedge.

The Company is exposed to foreign currency exchange rate
fluctuations in the normal course of business. The Company
uses derivative instruments (forward contracts) to hedge
certain foreign currency exposures as part of its risk
management strategy. The objective is to offset gains and
losses resulting from these exposures with gains and losses
on the derivative contracts used to hedge them, thereby
reducing the volatility of earnings or protecting fair
values of assets and liabilities. The Company does not enter
into any trading or speculative positions with regard to
derivative instruments.

The Company primarily enters into forward contracts, with
maturities of three months or less, designated as cash flow
hedges to protect against the foreign currency exchange rate
risks inherent in its forecasted transactions related to
purchase commitments and sales, denominated in various
currencies. For derivative instruments that are designated
and qualify as cash flow hedges, the effective portion of
the gain or loss on the derivative instrument is initially
recorded in accumulated other comprehensive income as a
separate component of stockholders' equity. Once the hedged
transaction is recognized, the gain or loss is reclassified
into earnings. The foreign currency forward contracts held
by the Company at February 29, 2004 were not designated
hedges under SFAS 133 and, accordingly, the contracts were
marked to market and the resulting gains and losses were
recognized in the income statement.

At February 29, 2004 and March 2, 2003, the Company had
outstanding foreign exchange contracts in notional amounts
totaling $4,306 and $0, respectively.

17. 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. Inter-segment sales and sales between geographic
regions were not significant.

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

Fiscal Year
2004 2003 2002

United States $106,080 $117,889 $132,520
Europe 31,982 32,322 27,128
Asia 56,174 45,367 42,033
Total sales $194,236 $195,578 $201,681

United States $ 38,549 $ 44,425 $104,386
Europe 10,969 25,373 22,954
Asia 21,470 21,159 22,943
Total long-lived assets $ 70,988 $ 90,957 $150,283

18. CUSTOMER AND SUPPLIER CONCENTRATIONS

a. Customers - Sales to Sanmina Corporation were 16.3%, 19.1%
and 20.7% of the Company's total worldwide sales from its
continuing operations for fiscal years 2004, 2003 and 2002,
respectively. Sales to Tyco Printed Circuit Group L.P. were
12.2%, 11.0% and 12.9% of the Company's total worldwide sales
from its continuing operations for fiscal years 2004, 2003 and
2002. Sales to Multilayer Technology, Inc. were 9.7%, 11.1% and
8.9% of the Company's total worldwide sales from its continuing
operations for fiscal years 2004, 2003 and 2002, respectively.

While no other customer accounted for 10% or more of the
Company's total worldwide sales from its continuing
operations in fiscal year 2004, 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.

19. GAIN ON DELCO LAWSUIT

The United States District Court for the District of Arizona
entered final judgment in favor of the Company's subsidiary,
NTI, 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 $33,088 million from Delco on July 1, 2003 in
satisfaction of the judgment. See Note 13 above for
information regarding the sale of NTI.

20. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

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

Fiscal 2004:
Net sales $44,323 $ 43,566 $ 51,058 $ 55,289
Gross profit 4,623 5,919 9,764 12,394
(Loss) earnings from
continuing operations (1,644) 20,982 2,823 7,748

Loss from discontinued
operations (6,807) (1,944) (1,838) (23,172)

Net (loss) earnings (8,451) 19,038 985 (15,424)

Basic (loss) income per
share:
(Loss) earnings from
continuing operations $(0.08) $ 1.06 $ 0.14 $ 0.39
Loss from discontinued
operatings $(0.35) $ (0.10) $(0.09) $(1.17)
Net (loss) earnings per share $(0.43) $ 0.96 $ 0.05 $(0.78)
Diluted (loss) earnings
per share:
(Loss) earnings from
continuing operations $(0.08) $ 1.05 $ 0.14 $ 0.38
Loss from discontinued
operations $(0.35) $ (0.10) $(0.09) $(1.14)
Net (loss) earnings per share $(0.43) $ 0.95 $ 0.05 $(0.76)

Weighted average common
shares outstanding:
Basic 19,709 19,759 19,764 19,783
Diluted 19,709 19,943 20,083 20,167

Fiscal 2003:
Net sales $ 51,172 $ 51,343 $ 47,967 $ 45,096
Gross profit 7,010 7,272 6,311 6,064
Earnings (loss)from
continuing operations 735 3,336 (3,808) (44,127)

Loss from discontinued
operations (1,371) (1,749) (1,496) (2,129)

Net (loss) earnings (636) 1,587 (5,304) (46,406)

Basic (loss) earnings per share:
Earnings (loss) from
continuing operations $ 0.04 $ 0.17 $ (0.19) $ (2.24)
Loss from discontinued
operations $(0.07) $ (0.09) $ (0.08) $ (0.12)
Net (loss) earnings per share $(0.03) $ 0.08 $ (0.27) $ (2.36)
Diluted (loss) earnings
per share:
Earnings (loss) from
continuing operations $ 0.04 $ 0.17 $ (0.19) $ (2.24)
Loss from discontinued
operations $(0.07) $ (0.09) $ (0.08) $ (0.12)
Net (loss) earnings per share $(0.03) $ 0.08 $ (0.27) $ (2.36)

Weighted average common
shares outstanding:
Basic 19,661 19,669 19,682 19,684
Diluted 20,176 20,013 19,682 19,684

Earnings (loss) 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.

21. RECENTLY ISSUED ACCOUNTING PROUNOUNCEMENTS

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

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

Not applicable.

Item 9A. 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 February 29, 2004, the end of the period covered by
this annual 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 has not
been any change 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 fourth fiscal quarter of
the fiscal year to which this report relates that has materially
affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

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
2004 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
2004 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 securities
Number of remaining available
securities for future issuance
to be issued upon Weighted-average under equity
exercise of exercise price compensation plans
outstanding of outstanding (excluding
options, warrants options, warrants securities reflected
Plan category and rights and rights in column (A))
- ------------- ----------------- ----------------- --------------------
(A) (B) (C)

Equity compensation
approved by plans
security holders (a) 1,396,653 $19.91 705,725

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

Total 1,396,653 $19.91 705,725
- ---------------

(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; and authority to grant additional options under the 2002
Plan will expire on May 21, 2012, and all options granted to date
under the 2002 Plan will expire in January 2014 or earlier.

The other information called for by this Item is
incorporated by reference to the Company's definitive proxy
statement for the 2004 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
2004 Annual Meeting of Shareholders to be filed pursuant to
Regulation 14A.

Item 14. Principal Accountant Fees and Services.

This information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the
2004 Annual Meeting of Shareholders to be filed pursuant to
Regulation 14A.

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

Report of Ernst & Young LLP, independent 38
auditors

Balance Sheets 39

Statements of Operations 40

Statements of Stockholders' Equity 41

Statements of Cash Flows 42

Notes to Consolidated Financial Statements 43
(1-21)

(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 69
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 70 hereof.

(b) Reports on Form 8-K.

(1) Report on Form 8-K, dated December 23,
2003, Commission File No. 1-4415, reporting
in Item 12 that the Company issued a news
release on December 23, 2003 reporting its
results of operations for the fiscal year
2004 third quarter ended November 30, 2003
and furnishing the news release to the
Securities and Exchange Commission pursuant
to Item 12 of Form 8-K as Exhibit 99.1
thereto.

(2) Report on Form 8-K, dated February 4,
2004, Commission File No. 1-4415, reporting
in Item 9 that the Company issued a news
release on February 4, 2004 announcing that
it was discontinuing its financial support
of Dielektra GmbH, the Company's wholly
owned subsidiary located in Cologne,
Germany, which supplies electronic
materials to European circuit board
manufacturers, and furnishing the news
release to the Securities and Exchange
Commission pursuant to Item 9 of Form 8-K
as Exhibit 99.1 thereto.

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 12, 2004 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 12, 2004
(principal executive
officer)

Senior Vice President and
/s/Murray O. Stamer Chief Financial Officer
Murray O. Stamer (principal financial and May 12, 2004
accounting officer)

/s/Jerry Shore Chairman of the Board and
Jerry Shore Director May 12, 2004

/s/Mark S. Ain
Mark S. Ain Director May 12, 2004

/s/Anthony Chiesa
Anthony Chiesa Director May 12, 2004

/s/Lloyd Frank
Lloyd Frank Director May 12, 2004

Schedule II
Part 1 of table
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column C
Column A Column B Additions
- ------------------- --------- --------------------
Balance at
Beginning of Costs and
Description Period Expenses Other

DEFERRED INCOME TAX ASSET
VALUATION ALLOWANCE:
52 weeks ended
February 29, 2004 $18,710,000 $ 2,854,000 -
52 weeks ended
March 2, 2003 $ 3,916,000 $14,794,000 -
53 weeks ended
March 3, 2002 $ 3,193,000 $ 723,000 -

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

ALLOWANCE FOR
DOUBTFUL ACCOUNTS:
52 weeks ended
February 29, 2004 $1,893,000 $ 292,000
52 weeks ended
March 2, 2003 $1,817,000 $ 366,000
53 weeks ended
March 3 2002 $2,074,000 $ 123,000

(A) Uncollectable accounts, net of recoveries.

Schedule II
Part 2 of table
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

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

DEFERRED INCOME TAX
ASSET VALUATION
ALLOWANCE:
52 weeks ended
February 29, 2004 - $21,564,000
52 weeks ended
March 2, 2003 - $18,710,000
53 weeks ended
March 3, 2002 - $ 3,916,000

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
February 29, 2004 $ 145,000 $(195,000) $1,845,000
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

(A) Uncollectable accounts, net of recoveries.

EXHIBIT INDEX

Exhibit
Numbers Description Page

3.1 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.)............................ -

3.2 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...................... -

3.3 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.)......... -

4.1 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.)............. -

10.1 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.).......... -

10.2 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.)........... -

10.3 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.)............. -

10.3(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.).......... -

10.3(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.).......... -

10.3(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.).................................... -

10.4 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.)............. -

10.4(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.)................................... -

10.5(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.).................................... -

10.6 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.)........... -

10.6(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.).......................... -

10.6(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.).......................... -

10.6(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.)........................... -

10.7 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.)............. -

10.7(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.)..................................... -

10.7(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.)...... -

10.8 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.)............. -

10.8(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.)............................ -

10.15 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.)........... -

14.1 Code of Ethics for Chief Executive Officer and
Senior Financial Officers............... 76

21.1 Subsidiaries of the Company.................. 78

23.1 Consent of Ernst & Young LLP................. 79

31.1 Certification of Chief Executive Officer pursuant
to Exchange Act Rule 13a-14(a) or 15d-14(a)..... 80

31.2 Certification of Chief Financial Officer pursuant
to Exchange Act Rule 13a-14(a) or 15d-14(a)..... 82

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... 84

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 85

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