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 27, 2005

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.)

48 South Service Road, Melville, New York 11747
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code (631)465-3600

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 $457,505,581 August 27, 2004

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 19,978,760 May 6, 2005
share

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for Annual Meeting of Shareholders to be held
July 20, 2005 incorporated by reference into Part III of this
Report.

[cover page 2 of 2 pages]

TABLE OF CONTENTS

Page
PART I

Item 1. Business..................................... 4

Item 2. Properties................................... 17

Item 3. Legal Proceedings............................ 17

Item 4. Submission of Matters to a Vote of Security
Holders...................................... 18
Executive Officers of the Registrant......... 18

PART II

Item 5. Market for the Registrant's Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity Securities............... 20
Item 6. Selected Financial Data...................... 21
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 23
Factors That May Affect Future Results....... 39
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk............................. 42
Item 8. Financial Statements and Supplementary Data... 42
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........ 69
Item 9A Controls and Procedures....................... 69
Item 9B Other Information............................. 71

PART III

Item 10. Directors and Executive Officers of the Registrant 72
Registrant
Item 11. Executive Compensation........................ 72
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters 72
Item 13. Certain Relationships and Related Transactions 72
Item 14. Principal Accountant Fees and Services........ 72

PART IV

Item 15 Exhibits and Financial Statement Schedules 73

SIGNATURES.............................................. 74

FINANCIAL STATEMENT SCHEDULES

Schedule II - Valuation and Qualifying Accounts 75

EXHIBIT INDEX............................................ 76

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, development, production and marketing of
high-technology digital and RF/microwave printed circuit
materials and advanced composite materials for the electronics,
military, aerospace, wireless communication, specialty and
industrial markets.

Park's printed circuit materials business operates under the
"Nelco" and "Neltec" names through fully integrated business
units in Asia, Europe and North America. The Company's printed
circuit materials manufacturing facilities are located in
Singapore, China, France, New York, Arizona and California.

Park's advanced composite materials business operates under
the "FiberCote" name through a fully integrated business unit in
North America with its manufacturing facility located in
Waterbury, Connecticut.

Sales of Park's printed circuit materials were 92% and 94%,
respectively, of the Company's total net sales worldwide in the
2005 and 2004 fiscal years, and sales of Park's advanced
composite materials were 8% and 6%, respectively, of the
Company's total net sales worldwide in the 2005 and 2004 fiscal
years.

Park was founded in 1954 by Jerry Shore, who was the
Company's Chairman of the Board until July 14, 2004 and who is
one of the Company's 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.

COREFIX, EF, INNERLAM, LD, NELCO, NELTEC, PARKNELCO, RTFOIL
and SI are registered trademarks of Park Electrochemical Corp.,
and ELECTROVUE, FIBERCOTE, PEELCOTE and POWERBOND are common law
trademarks of Park Electrochemical Corp.

Printed Circuit Materials Operations

The Company is a leading global designer and producer of
advanced printed circuit 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.

Printed Circuit Materials - Industry Background

The printed circuit 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 was 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. This manufacturing facility is
intended to service customers in the Shanghai Nanjing corridor
and Guangdong province, which 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.

Printed Circuit Materials - 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.

Most of the Company's research and development expenditures
are attributable to the efforts of its printed circuit materials
operations. In response to the rapid technological changes in the
printed cirucit 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 ("BT") epoxies, non-MDA
polyimides, enhanced polyimides, SIr (Signal Integrity) products,
cyanate esters and polytetrafluoroethylene ("PTFE") formulations
for radio frequency ("RF")/microwave applications.

The Company's high performance printed circuit materials
consist of high-speed low-loss materials for digital applications
requiring increased, high bandwidth signal integrity, BT
materials, polyimides for applications that demand extremely high
thermal performance, cyanate esters, and PTFE materials for
RF/microwave systems that operate at frequencies up to 77 GHz.

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 was 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.

Printed Circuit Materials - Customers and End Markets

The Company's customers for its advanced printed circuit
materials include the leading independent printed circuit board
fabricators, electronic manufacturing service ("EMS") companies,
electronic contract manufacturers ("ECMs") 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 2005 fiscal year, approximately 13.7%
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 12.3% 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 2004 fiscal year, approximately 16.3% of the
Company's total worldwide sales from its continuing operations
were to Sanmina Corporation, and approximately 12.2% of the
Company's total worldwide sales from its continuing operations
were to Tyco Printed Circuit Group L.P. During the Company's 2005
and 2004 fiscal years, sales to no other customer of the Company
equaled or exceeded 10% of the Company's total worldwide sales
from continuing operations.

Although the printed cirucit 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 printed circuit materials business.

The Company's printed circuit 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.

Printed Circuit Materials - 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 was 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 the Company began
utilization of its higher technology product line manufacturing
facility in Arizona. During the 2005 fiscal year, the Company
installed one of its latest generation, high-technology treaters
in its newly expanded facility in Singapore. In addition, as
stated 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 13 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.

Printed Circuit Materials - Materials and Sources of Supply

The principal materials used in the manufacture of the
Company's printed circuit materials 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.

Printed Circuit Materials - 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 printed circuit 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 printed circuit 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 Materials Operations

The Company, through its advanced composite materials
business unit, FiberCote Industries, Inc., develops and produces
engineered composite materials for the aerospace, rocket motor,
radio frequency ("RF") and specialty industrial markets.

Advanced Composite Materials - Industry Background

The advanced composite materials manufactured by the Company
and its competitors are used primarily to fabricate light-weight,
high-strength structures with specifically designed performance
characteristics. Composite materials are typically highly
specified combinations of resin formulations and reinforcements.
Reinforcements can be woven fabrics, non-woven goods such as mats
or felts, or in some cases unidirectional fibers. Reinforcement
materials are constructed of: E-glass (fiberglass), carbon fiber,
S2 glass, aramids such as Kevlarr ("Kevlar" is a registered
trademark of E.I. du Pont de Nemours & Co.) and Twaronr ("Twaron"
is a registered trademark of Teijin Twaron B.V. LLC), quartz,
polyester, and other synthetic materials. Resin formulations are
typically highly proprietary, and include various chemical
mixtures. The Company produces resin formulations using various
epoxies, polyesters, phenolics, bismalimides, cyanate esters,
polyimides and other complex matrices. The reinforcement combined
with the resin is referred to as a "prepreg", which is an acronym
for pre-impregnated material. Advanced composite materials can be
broadly categorized as either a thermoset or a thermoplastic.
While both material types require the addition of heat and
pressure to achieve the molecular cross-linking of the matrices,
thermoplastics can be reformed using additional heat and
pressure. Once fully cured, thermoset materials can not be
further reshaped. The Company believes that the demand for
thermoset advanced materials is greater than that for
thermoplastics due to the fact that fabrication processes for
thermoplastics require much higher temperatures and pressures,
and are, therefore, typically more capital intensive than the
fabrication processes for thermoset materials.

The advanced composite materials industry suppliers have
historically been large chemical corporations. Over the past ten
years, the industry has seen considerable consolidation resulting
in three relatively large composite materials suppliers and a
number of smaller suppliers.

Composite part fabricators typically will design and specify
a material specifically to meet the needs of the part's end use
and the fabricators' processing methods. Fabricators sometimes
work with a supplier to develop the specific resin system and
reinforcement combination to match the application. Fabricators'
processing may include hand lay-up or more advanced automated lay-
up (ATL) techniques. Automated lay-up processes include automated
tape lay-up, fiber placement and filament winding. These
fabrication processes will significantly alter the material form
purchased. After the lay-up process is completed, the material
will be cured by the addition of heat and pressure. Cure
processes typically include vacuum bag oven curing, high pressure
autoclave, press forming and in some cases in-situ curing. Once
the part has been cured, final finishing and trimming, and
assembly of the structure is performed by the fabricator.

Advanced Composite Materials - Products

The products manufactured by the Company are primarily
thermoset curing prepregs. By analyzing the needs of the markets
in which it participates, and working with its customers, the
Company has developed proprietary resin formulations to suit the
needs of its markets. The complex process of developing resin
formulations and selecting the proper reinforcement is
accomplished through a collaborative effort of the Company's
research and development resources working with the customers'
technical staff. The Company focuses on developing a thorough
understanding of its customers' businesses, product lines,
processes and technical challenges. The Company believes that it
develops innovative solutions which utilize technologically
advanced materials and concepts for its customers.

The Company's products include prepregs manufactured from
proprietary formulations using modified epoxies, phenolics,
polyesters, cyanate esters, bismalimides, polyimides combined
with woven, non-woven, and unidirectional reinforcements.
Reinforcement materials used to produce the Company's products
include polyacrylonitrile ("PAN") and pitch based carbons,
aramids, E-glass, S2 glass, polyester, quartz and rayon. The
Company also sells certain specialty fabrics, such as Raycarb C2,
a carbonized rayon fabric produced by Snecma Propulsion Solide
and used mainly in the rocket motor industry.

Advanced Composite Materials - Customers and End Markets

The Company's advanced composite materials customers, the
majority of which are located in the United States, include
manufacturers in the aerospace, rocket motor, electronics, RF,
marine and specialty industrial markets. The Company's 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
either of the last two fiscal years, 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 Company's advanced composite materials business.

The Company's aerospace customers are fabricators of
aircraft composite hardware. The materials are used to produce
primary and secondary structures, aircraft interiors, and various
other aircraft components. The majority of the Company's
customers for aerospace materials do not produce hardware for
commercial aircraft, but for the general and corporate aviation,
kit aircraft and military segments. The majority of the Company's
customers for aerospace products are in the United States and
Europe.

Customers for the Company's rocket motor materials include
United States defense prime contractors and subcontractors. These
customers fabricate rocket motors for heavy lift space launchers,
strategic defense weapons, tactical motors and various other
applications. The Company's materials are used to produce heat
shields, exhaust gas management devices, and insulative and
ablative nozzle components. Rocket motors are primarily used for
commercial and military space launch, and for tactical and
strategic weapons. The Company also has customers for these
materials outside of the United States.

The Company sells materials for use in radio frequency (RF)
electrical applications. Customers buying these materials
typically fabricate antennas and radomes engineered to preserve
electrical signal integrity. A radome is a protective cover over
an electrical antenna or signal generator. The radome is designed
to minimize signal loss and distortion. Customers for these
products are primarily in the United States and Europe.

Advanced Composite Materials - Manufacturing

The Company's manufacturing facility for advanced composite
materials is currently located in Waterbury, Connecticut. The
Company also produces some products through the use of toll
coating services at other locations in North America.

The process for manufacturing composite materials is capital
intensive and requires sophisticated equipment, significant
technical know-how very tight process control. The key steps used
in the manufacturing process include chemical reactors, resin
mixing, reinforcement impregnation, and in some cases resin film
casting, and solvent drying processes.

Prepreg is manufactured by the Company using either solvent
(solution) coating methods on a treater or by hot melt
impregnation. A treater is a roll-to-roll continuous process
machine which sequences reinforcement through tension controllers
and combines solvated resin with the reinforcement. The
reinforcement is dipped in resin, passed through a drying oven
which removes the solvent and advances (or partially cures) the
resin. The prepreg material is interleafed with a carrier and cut
to the roll lengths desired by the customer. The Company also
manufactures prepreg using hot melt impregnation methods which
use no solvent. Hot melt prepreg manufacturing is achieved by
mixing a resin formulation in a heated resin vessel, casting a
thin film on a carrier paper, and laminating the reinforcement
with the resin film. Additional processing services such as
slitting, sheeting, biasing, sewing and cutting are also
completed if needed by the customer. Many of the products
manufactured also undergo extensive testing of the chemical,
physical and mechanical properties of the product. These testing
requirements are completed in the laboratories and facilities
located at the manufacturing facility. The Company laboratories
have been approved by several aerospace contractors. Once all
the processing has been completed, the product is inspected and
packaged for shipment to the customer. The Company typically
supplies final product to the customer in roll or sheet form.

In the 2006 fiscal year first quarter, the Company is
completing the installation of an additional large treater at its
FiberCote advanced composite materials facility in Waterbury,
Connecticut, which will effectively double FiberCote's treating
capacity.

Advanced Composite Materials - Materials and Sources of
Supply

The Company designs and manufactures its advanced composite
materials to its own specifications and to the specifications of
its customers. Product development efforts are focused on
developing prepreg materials that meet the specifications of the
customers. The materials used in the manufacture of these
engineered materials include graphite and carbon fibers and
fabrics, Kevlarr, quartz, fiberglass, polyester, specialty
chemicals, resins, films, plastics, adhesives and certain other
synthetic materials. The Company purchases these materials from
several suppliers. Substitutes for many of these materials are
not readily available, and demand has increased for certain
materials, such as carbon fiber during the 2005 fiscal year. The
supply of certain materials was limited during 2005 fiscal year,
but such limitation did not have a material adverse effect on the
Company's advanced composite materials business. The Company is
working globally to determine acceptable alternatives for several
raw materials with limited availability.

Advanced Composite Materials - Competition

The Company has many competitors in the advanced composite
materials business, ranging in size from large, international
corporations to small regional producers. Several of the
Company's largest competitors are vertically integrated. In some
cases, the competitor may also serve as a supplier to the
Company. The Company competes for business on the basis of
responsiveness, product performance, innovative new product
development, product qualification listing 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 1, 2005, the unfilled portion of all purchase
orders received by the Company and believed by it to be firm was
approximately $5,425,000, compared to $8,111,000 at May 2, 2004.
The backlog was lower at May 1, 2005 than at May 2, 2004 due
primarily to the upturn in the Company's business in the first
quarter of its 2005 fiscal year resulting from the temporary
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 27, 2005.

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 27 2005, the Company had approximately 1,030
employees. Of these employees, 930 were engaged in the Company's
printed circuit 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 and to approximately 1,200 at the end of the 2004 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 Melville, New York property, are
used principally as manufacturing and warehouse facilities.

The Company believes its facilities and equipment to be in
good condition and reasonably suited and adequate for its current
needs. During the 2005 fiscal year, certain of the Company's
printed circuit materials 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.

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 53

Stephen E. Gilhuley Senior Vice President, Secretary
and General Counsel 60

Emily J. Groehl Senior Vice President, Sales 58

John Jongebloed Senior Vice President,
Global Logistics 48

James W. Kelly Vice President, Taxes and
Planning 48

Steven P. Schaefer Senior Vice President, Marketing 44

Murray O. Stamer Senior Vice President and Chief
Financial Officer 47

Gary M. Watson Senior Vice President,
Engineering and Senior Vice
President, Asian Business Unit 57

Mr. Shore has served as a Director of the Company since 1983
and as Chairman of the Board of Directors since July 2004. 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, Sales and
Marketing of Park in May 1999 and Senior Vice President, Sales on
March 22, 2005. 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.
The Company has announced that Ms. Groehl is retiring from the
Company effective June 10, 2005.

Mr. Jongebloed was elected Senior Vice President, Global
Logistics 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. Kelly was elected Vice President, Taxes and Planning of
Park in March 2001. He had been Director of Taxes of the Company
since May 1997.

Mr. Schaefer has been employed by Park since January 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 and Senior Vice President, Marketing on March
22, 2005. 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. 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.

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, Related
Stockholder Matters and Issuer Purchases of Equity
Securities.

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 27, 2005 High Low Declared
First Quarter $26.70 $21.63 $ .06
Second Quarter 27.40 20.54 $ .06
Third Quarter 23.12 19.71 $1.14(a)
Fourth Quarter 22.67 18.25 $ .00

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

(a) During the 2005 fiscal year third quarter, the
Company declared its regular quarterly cash dividend of
$0.06 per share in September 2004, and in October 2004
the Company announced that its Board of Directors had
declared a one-time, special cash dividend of $1.00 per
share, payable December 15, 2004 to stockholders of
record on November 15, 2004, and approved an increase in
Park's quarterly cash dividend from $0.06 per share to
$0.08 per share and, at the same time, announced that
its Board of Directors also had declared a regular
fourth quarter dividend of $0.08 per share payable
February 8, 2005 to stockholders of record on January 6,
2005.

As of May 6, 2005, there were approximately 1,335 holders of
record of Common Stock.

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

The following table provides information with respect to
shares of the Company's Common Stock acquired by the Company
during each month included in the Company's 2005 fiscal year
fourth quarter ended February 27, 2005.

Maximum Number
Total Number (or Approximate
of Shares (or Dollar Value)
Total Units) of Shares (or
Number of Average Purchased as Units) that May
Shares Price Part of Yet Be
(or Paid per Publicly Purchased Under
Period Units) Share (or Announced the Plans or
Purchased Unit) Plans or Programs
Programs

November 29
- -December 31 0 - 0

January 1-31 0 - 0

February 1-27 0 - 0

Total 0 - 0 2,000,000(a)

(a)Aggregate number of shares available to be purchased
by the Company pursuant to a share purchase authorization
announced on October 20, 2004. Pursuant to such
authorization, the Company is authorized to purchase its
shares from time to time on the open market or in
privately negotiated transactions.

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 27, 2005 and is
as of the end of such periods, it is derived from the con
solidated financial statements for the fiscal year ended February
27, 2005 and as of such date audited by Grant Thornton LLP,
independent auditor, and from the consolidated financial
statements for the four fiscal years ended February 29, 2004 and
as of such dates audited by Ernst & Young LLP, independent
auditor. The consolidated financial statements as of February 27,
2005 and February 29, 2004 and for the three years ended February
27, 2005, together with the independent auditors' reports for the
three years ended February 27, 2005, appear in Item 8 of Part II
of this Report.

Fiscal Year Ended
(In thousands, except per share amounts)
February 27, February 29, March 2, March 3, February 25,
2005 2004 2003 2002 2001

STATEMENTS OF EARNINGS INFORMATION:

Net sales $211,187 $194,236 $195,578 $201,681 $469,121
Cost of sales 167,937 161,536 168,921 185,014 355,400
Gross profit 43,250 32,700 26,657 16,667 113,721
Selling, general and
administrative expenses 26,960 27,962 27,157 33,668 47,683
Gain on Delco lawsuit (Note 19) - (33,088) - - -
Asset impairment charge (Note 13) - - 49,035 - -
Restructuring and severance
Charges (Note 10) 625 8,469 4,794 806 -
Gain on insurance settlement
(Note 11) (4,745)
Gain on sale of DPI (Note 12) - - (3,170) - -
Gain on sale of UK real estate - (429) - - -
Loss on sale of NTI and closure
of related support facility - - - 15,707 -
Earnings (loss)from operations 20,410 29,786 (51,159) (33,514) 66,038
Interest and other income, net 3,386 2,958 3,260 5,373 2,720
Earnings (loss) from continuing
operations before income taxes 23,796 32,744 (47,899) (28,141) 68,758
Income tax provision (benefit)
from continuing operations 2,191 2,835 (4,035) (10,727) 20,963
Earnings (loss) from continuing
operations 21,605 29,909 (43,864) (17,414) 47,795
Earnings (loss) from discontinued
operations, net of taxes (Note 9) - (33,761) (6,895) (8,105) 1,624
Net earnings (loss) $ 21,605 $ (3,852) $(50,759) $(25,519) $49,419

Basic earnings (loss) per share:
Earnings (loss) from continuing
operations $ 1.09 $ 1.51 $ (2.23) $ (0.89) $ 3.00
(Loss) earnings from discontinued
operations, net of tax - (1.71) (0.35) (0.42) 0.10
Basic earnings (loss) per share $ 1.09 $ (0.20) $ (2.58) $ (1.31) $ 3.10

Diluted earnings (loss) per share:
Earnings (loss) from continuing
operations $ 1.08 $ 1.50 $ (2.23) $ (0.89) $ 2.57
(Loss) earnings from discontinued
operations, net of tax - (1.69) (0.35) (0.42) 0.08
Diluted earnings (loss) per share $ 1.08 $ (0.19) $ (2.58) $ (1.31) $ 2.65

Cash dividends per common share $ 1.26 $ 0.24 $ 0.24 $ 0.24 $ 0.23
share

Weighted average number of
common shares outstanding:
Basic 19,879 19,754 19,674 19,535 15,932
Diluted 20,075 19,991 19,674 19,535 20,002

BALANCE SHEET INFORMATION:
Working capital $201,501 $197,453 $170,274 $167,000 $188,511
Total assets 307,311 311,070 301,542 360,644 430,581
Long-term debt - - - - 97,672
Stockholders' equity 242,857 243,896 245,701 292,546 228,906

See Notes to Consolidated Financial Statements 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 global advanced materials company which develops,
manufactures and markets high technology digital and RF/microwave
printed circuit materials and advanced composite materials for
the electronics, military, aerospace, wireless communication,
specialty and industrial markets. The Company's manufacturing
facilities are located in Singapore, China (currently under
construction), France (two facilities), Connecticut, New York,
Arizona and California. The Company operates under the FiberCote,
Nelco and Neltec names.

The global electronics manufacturing industry, which had
become extremely and unsustainably overheated in the 1990s and
into calendar year 2000, collapsed in calendar year 2001, and has
not recovered since that collapse. The Company believes that that
industry has become a mature industry, and the Company does not
expect significant non-cyclical, sustainable growth from that
industry in the future. Although the condition of the global
markets for the Company's printed circuit materials products
improved somewhat in the second half of the 2004 fiscal year and
the first half of the 2005 fiscal year, those markets weakened in
the second half of the 2005 fiscal year. However, the Company's
sales increased during the 2005 fiscal year, with increased sales
of printed circuit materials and advanced composite materials in
all regions.

While the Company's sales from continuing operations
increased modestly in the 2005 fiscal year compared to the 2004
fiscal year, the Company's net earnings increased significantly
in the 2005 fiscal year compared to the Company's net profit from
continuing operations and net earnings in the 2004 fiscal year.
The Company's earnings from continuing operations were less in
the 2005 fiscal year than in the 2004 fiscal year preimarily
because of the $33.1 million pre-tax gain in the 2004 fiscal year
related to the payment by Delco Electronics Corporation, a
subsidiary of General Motors Corp. ("Delco"), of the judgment
against Delco in favor of the Company's subsidiary, Nelco
Technology, Inc. ("NTI").

Despite anemic conditions in almost all markets for
sophisticated printed circuit materials, the Company's gross
profit in the 2005 fiscal year was significantly greater than its
gross profit in the 2004 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.

The increases in sales and profits during the 2005 fiscal
year compared to the 2004 fiscal year were the result of
increases in sales by nearly all the Company's operations,
although the improvements were attributable principally to
increases in sales of the Company's high technology printed
circuit materials, cost reductions resulting from the
realignments of the Company's volume printed circuit materials
operations in the 2005 and 2004 fiscal years and increases in
sales by the Company's FiberCote advanced composite materials
business.

The printed circuit materials industry began to improve
slightly at the end of the 2004 fiscal year second quarter and
continued to improve in the 2004 fiscal year third and fourth
quarters and in the 2005 fiscal year first quarter. However, the
printed circuit materials industry slowed down to some extent in
the 2005 fiscal year second quarter. Consequently, sales of the
Company's printed circuit materials operations declined in the
third and fourth quarters of the 2005 fiscal year compared to the
third and fourth quarters of the 2004 fiscal year. Although the
global markets for the Company's printed circuit materials
improved to some degree during September 2004, those markets were
anemic during the remainder of the 2005 fiscal year.
Consequently, sales of the Company's printed circuit materials
continuing operations declined in the 2005 fiscal year third and
fourth quarters compared to the 2005 fiscal year first and second
quarters and compared to the 2004 fiscal year third and fourth
quarters. However, the military, aerospace, wireless
communication and industrial markets for the Company's FiberCote
advanced composite materials business were healthy during the
2005 fiscal year third quarter, with particular strength coming
from the rocket motor, airframe and radome components of those
markets, and, as a result, sales of the Company's advanced
composite materials increased in each quarter of the 2005 fiscal
year compared to the comparable period in the prior fiscal year.

While the global markets for the Company's printed circuit
materials continue to be very difficult to forecast, the Company
believes that the condition of the global markets for the
Company's printed circuit materials in the 2006 fiscal year first
quarter is similar to the condition of such markets during the
2005 fiscal year third and fourth quarters. On the other hand,
the military, aerospace and specialty applications markets for
the Company's advanced composite materials business continues to
be healthy during the 2006 fiscal year first quarter, with
particular strength coming from the rocket motor, unmanned aerial
vehicle and commercial aircraft components of those markets. The
Company believes that the markets for its advanced composite
materials will continue to be healthy during the 2006 fiscal year
first quarter.

The Company continues to invest its human and financial
resources in the higher technology portions of its printed
circuit materials business and in its advanced composite
materials business. During the 2005 fiscal year, the Company
installed one of its latest generation, high-technology treaters
in its newly expanded facility in Singapore, and the Company is
completing the installation of an additional large treater at its
FiberCote advanced composite materials facility in Waterbury,
Connecticut, which will effectively double FiberCote's treating
capacity.

While the Company continued to expand and invest in its
business in Asia during the 2005 fiscal year, it made additional
adjustments to its volume printed circuit materials businesses,
particularly in North America, which resulted in workforce
reductions at the Company's North American and European volume
printed circuit materials operations as a result of which the
Company recorded pre-tax charges of $0.6 million in the Company's
2005 fiscal year third quarter. In addition, in May 2005, the
Company announced that it was reducing the size of the workforce
at its Neltec Europe SAS subsidiary in Mirebeau, France, as a
result of further deterioration of the European market for high-
technology printed circuit materials and that it expects to
record a one-time termination benefits charge of approximately $1
million during the 2006 fiscal year first quarter ending May 29,
2005.

In the 2005 fiscal year third quarter, the Company also
settled an insurance claim for property and business interruption
losses sustained by the Company in Singapore as a result of an
explosion in one of the four treaters located at its Nelco
manufacturing facility in Singapore and recorded a pre-tax gain
of $4.7 million as a result of the settlement.

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, and completed the construction of its facility
expansion in Singapore.

During the first half of the 2004 fiscal year, the Company
realigned its North American volume printed circuit materials
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 workforce reductions at
the Company's New York facility and 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 portion
of the New York facility was mothballed. The realignment was
designed to help the Company achieve improved operating and cost
efficiencies in its North American volume printed circuit
materials operations 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 volume printed circuit materials operations and related
workforce reductions, the Company recorded pre-tax charges
totaling $1.9 million and $6.5 million in the Company's 2004
fiscal year first quarter and second quarter, respectively. 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 had 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 continues to service the higher technology European
digital and RF circuit board markets through its Neltec Europe
SAS business located in Mirebeau, France, and its Neltec SA
business located in Lannemezan, France.

In accordance with generally accepted accounting principles,
the Company treated 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, and 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. The Company's sales for the 2005 fiscal year
did not include any sales by Dielektra, and Dielektra had no
impact on the Company's results of operations during the 2005
fiscal year. Furthermore, the Company's sales from its 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. 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 volume
printed circuit materials 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, 12
and 13 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 Neltec 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 13 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, and the Company's wholly owned subsidiary,
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 pre-tax gain of $33.1
million in the 2004 fiscal year second quarter related to such
payment. See Note 19 of the Notes to Consolidated Financial
Statements in Item 8 of Part II of this Report for additional
information regarding 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, which include special items, such as
realignment and severance charges and the gains on the insurance
claim settlement, the Delco lawsuit and the sale of real estate.
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, since the Company's on-going,
normal business operations do not include such special items.
Such non-GAAP financial measures are provided to supplement the
results provided in accordance with GAAP.

Fiscal Year 2005 Compared with Fiscal Year 2004:

The Company's sales of both its printed circuit materials
and its advanced composite materials increased in the fiscal year
ended February 27, 2005 compared to the fiscal year ended
February 29, 2004, after a slight decline in the Company's sales
of printed circuit materials in the 2004 fiscal year compared to
the 2003 fiscal year. The increase in sales of printed circuit
materials was accomplished despite the continued anemic
conditions in the North American and European markets and, to a
lesser extent, in the Asian markets for printed circuit
materials.

The increased sales in the 2005 fiscal year and a further
improvement in the Company's gross profit margin in the 2005
fiscal year, following a substantial improvement in the 2004
fiscal year compared to the 2003 and 2002 fiscal years, enabled
the Company's continuing operations to generate a larger gross
profit than in the prior fiscal year.

The Company's gross profit in the 2005 fiscal year was
substantially higher than the gross profit in the prior fiscal
year as a result of increased sales, the Company's reductions of
its costs and expenses and higher percentages of sales by the
Company of its higher margin, high technology printed circuit
materials and advanced composite materials. These improvements in
gross profits occurred despite slightly lower levels of total
sales in the 2005 fiscal year fourth quarter than in the fourth
quarter of the 2004 fiscal year and lower levels of sales of
printed circuit materials in the 2005 fiscal year third and
fourth quarters than in the comparable periods of the 2004 fiscal
year and than in the 2005 fiscal year first and second quarters.
In addition, the operating inefficiencies resulting from
operating certain facilities at levels below their designed
manufacturing capacities and the competitive pressures that
existed in the 2004 fiscal year persisted in the 2005 fiscal
year.

The Company's financial results of operations were enhanced
by the pre-tax gain of $4.7 million that the Company recorded in
the 2005 fiscal year third quarter resulting from its settlement
of an insurance claim for property and business interruption
losses sustained by the Company in Singapore as a result of an
explosion in November 2002 in one of the four treaters located at
its Nelco manufacturing facility in Singapore, which was only
partially offset by the pre-tax charges of $0.6 million that the
Company recorded in the 2005 fiscal year third quarter related to
workforce reductions at the Company's North American and European
volume printed circuit materials operations.

Operating results of the Company's advanced composite
materials business improved during the 2005 fiscal year primarily
as a result of higher sales volumes related to strength in the
rocket motor and airframe components of the military, aerospace,
wireless communication and industrial markets for advanced
composite materials. Sales of the FiberCote advanced composite
materials business unit increased to 8% of the Company's total
net sales worldwide in the 2005 fiscal year compared with 6% of
the Company's total net sales worldwide in the 2004 fiscal year.

Results of Operations

Net sales from continuing operations for the fiscal year
ended February 27, 2005 increased 9% to $211.2 million from
$194.2 million for the fiscal year ended February 29, 2004. The
increase in net sales from continuing operations was the result
of increased sales by the Company's operations in all regions and
increased sales of the Company's high technology printed circuit
materials and an increase in sales of the Company's advanced
composite materials.

The Company's foreign operations accounted for $94.1 million
of sales, or 45% of the Company's total net sales worldwide from
continuing operations, during the 2005 fiscal year, compared with
$88.2 million of sales, or 45% of total net sales worldwide from
continuing operations, during the 2004 fiscal year and 40% and
34%, respectively, of total net sales worldwide from continuing
operating during the 2003 and 2002 fiscal years. Sales by the
Company's foreign operations during the 2005 fiscal year
increased from the 2004 fiscal year as sales by the Company's
operations in both Singapore and France increased.

For the fiscal year ended February 27, 2005, the Company's
sales in North America, Asia and Europe were 55%, 29% and 16%,
respectively, of the Company's total net sales worldwide compared
with the same percentages for the fiscal year ended February 29,
2004. The Company's sales in North America increased 10%, its
sales in Asia increased 7% and its sales in Europe increased 7%
in the 2005 fiscal year over the 2004 fiscal year.

The overall gross profit as a percentage of net sales for
the Company's worldwide continuing operations improved to 20.5%
during the 2005 fiscal year compared with 16.8% during the 2004
fiscal year. The improvement in the gross profit margin was
attributable to reduced operating costs resulting from the
realignments of the Company's North American volume printed
circuit materials operations in the 2005 and 2004 fiscal years
and higher percentages of sales of higher margin, high
temperature printed circuit materials and advanced composite
materials. High temperature printed circuit materials accounted
for 94% of the Company's total net printed circuit materials
sales worldwide from continuing operations for the 2005 fiscal
year compared with 89% for the prior fiscal year. The improvement
in the gross profit margin during the 2005 fiscal year also was
attributable to increased sales of the Company's printed circuit
materials and the Company's advanced composite materials from the
2004 fiscal year, which were only partially offset by slightly
lower levels of total sales in the 2005 fiscal year fourth
quarter than in the 2004 fiscal year fourth quarter and lower
levels of sales of electronic materials in the 2005 fiscal year
third and fourth quarters than in the 2004 fiscal year comparable
quarters and than in the 2005 fiscal year first and second
quarters. In addition, the operating inefficiencies resulting
from operating certain facilities at levels below their designed
manufacturing capacities and the competitive pressures that
existed in the 2004 fiscal year persisted in the 2005 fiscal
year.

During the fiscal year ended February 27, 2005, the
Company's total net sales worldwide of high temperature printed
circuit materials, which included high performance (non-FR4)
materials, were 94% of the Company's total net sales worldwide of
printed circuit materials, compared with 89% for last fiscal
year; while the Company's net sales of such high temperature
printed circuit materials in North America were 95% of the
Company's total net sales of printed circuit materials in North
America, compared with 92% for last fiscal year; and the
Company's net sales of such materials in Asia and Europe combined
were 93% of the company's total net sales of printed circuit
materials in Asia and Europe combined, compared with 87% for last
fiscal year.

The Company's high temperature printed circuit materials
include its high performance (non-FR4) materials, which consist
of high-speed low-loss materials for digital applications
requiring increased, high bandwidth signal integrity, bismalimide
triazine("BT") materials, polyimides for applications that demand
extremely high thermal performance, cyanate esters, and
polytetrafluoroethylene ("PTFE") materials for RF/microwave
systems that operate at frequencies up to 77GHz.

During the fiscal year ended February 27, 2005, the
Company's total net sales worldwide of high performance (non-FR4)
printed circuit materials were 35% of the Company's total net
sales worldwide of printed circuit materials, compared with 27%
for last fiscal year; while the Company's net sales of such high
performance printed circuit materials in North America were 44%
of the Company's total net sales of printed circuit materials in
North America, compared with 36% for last fiscal year; and the
Company's net sales of such materials in Asia and Europe combined
were 27% of the Company's total net sales of printed circuit
materials in Asia and Europe combined, compared with 21% for last
fiscal year.

The Company's cost of sales increased in the 2005 fiscal
year compared to the prior fiscal year in support of higher
production volumes compared to the prior fiscal year, but
decreased as a percentage of sales as a result of personnel
reductions and cost savings resulting from the Company's
realignment of its North American volume printed circuit
materials operations, and other cost reduction measures
implemented by the Company, including workforce reductions and
the reduction of overtime.

Selling, general and administrative expenses decreased
during the 2005 fiscal year compared with the 2004 fiscal year,
as these expenses, measured as a percentage of sales, were 12.8%
during the 2005 fiscal year compared with 14.4% during the 2004
fiscal year. The decrease in selling, general and administrative
expenses in the 2005 fiscal year resulted from the higher volume
of sales, lower shipping costs incurred by the Company to meet
its customers' customized manufacturing and quick-turn-around
requirements and cost reductions resulting from the realignment
of the Company's volume printed circuit materials operations.

In the 2005 fiscal year third quarter, the Company recorded
a pre-tax gain of $4.7 million resulting from the settlement of
an insurance claim for property and business interruption losses
sustained by the Company in Singapore as a result of an explosion
in November 2002 in one of the four treaters located at its Nelco
manufacturing facility in Singapore. In the same quarter, the
Company also recorded pre-tax charges of $0.6 million for
severance payments resulting from workforce reductions at the
Company's North American and European FR-4 business operations.

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 had 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 of the judgment against Delco in favor of the
Company's subsidiary, NTI, 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.

Interest and other income, net, principally investment
income, increased 14% to $3.4 million for the 2005 fiscal year
from $3.0 million for the 2004 fiscal year. The increase in
investment income was attributable to an increase in cash
available for investment and higher prevailing interest rates
during the 2005 fiscal year. The Company's investments were
primarily short-term taxable instruments. The Company incurred no
interest expense during the 2005, 2004 or 2003 fiscal years. See
"Liquidity and Capital Resources" elsewhere in this Item 7.

The Company's effective income tax rate was 9.2% for the
2005 fiscal year compared to 8.7% for the 2004 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 2005 fiscal year was 8.0% compared to 8.6% for the
2004 fiscal year.

For the reasons set forth above, the Company's net earnings
from continuing operations for the 2005 fiscal year, including
the pre-tax gain described above resulting from the insurance
settlement and the pre-tax charges described above for severance
payments resulting from workforce reductions, were $21.6 million
compared with net earnings from continuing operations for the
2004 fiscal year of $29.9 million, including the pre-tax gains
described above resulting from the sale of real estate in England
and the payment by Delco of the judgment in favor of NTI 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. The net impacts of the gains and the
charges described above were to increase the net earnings from
continuing operations by $3.5 million for the 2005 fiscal year
and by $22.9 million for the 2004 fiscal year.

The Company reported net earnings of $21.6 million for the
2005 fiscal year, including the gain and charges described above,
and a net loss of $3.9 million for the 2004 fiscal year,
including the gains and charges described above and the loss from
the discontinued Dielektra operations.

Basic and diluted earnings per share from continuing
operations, including the gain and charges described above, were
$1.09 and $1.08 per share, respectively, for the 2005 fiscal year
compared to basic and diluted earnings per share from continuing
operations of $1.51 and $1.50 per share, respectively, including
the gains and charges described above, for the 2004 fiscal year.
The net impacts of the gains and charges described above were to
increase the basic and diluted earnings per share from continuing
operations by $0.18 for the 2005 fiscal year and by $1.15 for the
2004 fiscal year.

The basic and diluted losses 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.

Fiscal Year 2004 Compared with Fiscal Year 2003:

The Company's volume printed circuit materials 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 the Company's 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 printed circuit materials and
advanced composite materials. These improvements in gross profits
occurred despite slightly lower levels of sales of printed
circuit 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 volume printed
circuit materials 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 of the judgment against Delco in
favor of NTI 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 volume printed circuit materials operations in the
first and second quarters.

In the 2004 fiscal year, the Company reclassified
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.

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 volume printed circuit materials 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 printed circuit materials and advanced
composite materials, as high temperature printed circuit
materials accounted for 89% of total net printed circuit material
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 volume printed circuit
materials operations, 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
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 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 of the judgment against Delco in favor of NTI 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
volume printed circuit materials 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. 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.

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 or 2003 fiscal years. See "Liquidity and
Capital Resources" elsewhere in this Item 7.

The Company's effective income tax rate for continuing
operations 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.

For the reasons set forth above, the Company's net earnings
from continuing operations for the 2004 fiscal year were $29.9
million, including the pre-tax gains described above resulting
from the sale of real estate in England and the payment by Delco
of the judgment in favor of NTI and the pre-tax charges described
above related to the realignment of the Company's North American
volume printed circuit materials operations and related workforce
reductions. This compares with a net loss from continuing
operations of $43.9 million 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 and the gain
described above related to the sale of DPI. The net impact of the
gains and charges described above was to increase the earnings
from continuing operations for the 2004 fiscal year by $22.9
million. The net loss from continuing operations for the 2003
fiscal year included a net, after-tax charge of $47.5 million for
the pre-tax gain and the pre-tax charges described 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 loss from discontinued operations of $33.8 million, and a net
loss of $50.8 million for the 2003 fiscal year, including the
gain and charges described above and a loss from discontinued
operations of $6.9 million.

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. The net impacts of the gains and charges described
above were to increase the basic and diluted earnings per share
from continuing operations for the 2004 fiscal year by $1.15. For
the 2003 fiscal year, the basic and diluted losses per share each
included a per share loss of $2.41 due to the net impact of the
charges and gain described above.

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.

Liquidity and Capital Resources:

At February 27, 2005, the Company's cash and temporary
investments were $189.6 million compared with $189.2 million at
February 29, 2004, the end of the Company's 2004 fiscal year. The
Company's working capital (which includes cash and temporary
investments) was $201.5 million at February 27, 2005 compared
with $197.5 million at February 29, 2004. The increase in working
capital at February 27, 2005 compared with February 29, 2004 was
due principally to higher inventories and lower accrued
liabilities, offset in part by higher income taxes payable. The
increase in inventories at February 27, 2005 compared with
February 29, 2004 was attributable mainly to an increase in raw
material stocks required by higher production and sales volumes,
especially FiberCote's sales of advanced composite materials for
aerospace applications, during the 2005 fiscal year. The lower
accrued liabilities were the result principally of the
elimination of the reserve for self-insured medical costs
resulting from the substitution of a fully-insured medical
program for the self-insured program and the reduction in the
restructuring accrual due to payments made during the 2005 fiscal
year. The increase in income taxes payable was attributable
mainly to the receipt of a $3.8 million income tax refund during
the first quarter of the 2005 fiscal year. The Company's current
ratio (the ratio of current assets to current liabilities) was
5.8 to 1 at February 27, 2005 compared with 5.6 to 1 at February
29, 2004.

During the 2005 fiscal year, net earnings from the Company's
operations, before depreciation and amortization, of $31.8
million and a net increase in working capital items, resulted in
$27.7 million of cash provided by operating activities. This
increase in cash provided by operating activities was partially
offset by $25.1 million of dividends paid during the year,
including a special cash dividend of $19.9 million paid during
the 2005 fiscal year fourth quarter. Cash dividends paid were
$4.7 million during each of the prior two fiscal years. Net
earnings excluding $12.0 million of depreciation and amortization
and $21.3 million of non-cash impairment charges related to
discontinued operations, but including a $33.1 million pre-tax
gain on the lawsuit with Delco, were $29.5 million in the 2004
fiscal year and resulted in $32.3 million of cash provided by
operating activities. For the 2003 fiscal year, net earnings
excluding $18.0 million of depreciation and amortization and
$52.4 million of non-cash fixed asset impairment and
restructuring charges were $19.6 million and resulted in $16.2
million of cash provided by operating activities.

Net expenditures for property, plant and equipment were $3.3
million, $2.4 million and $6.4 million in the 2005, 2004 and 2003
fiscal years, respectively. During the 2003 fiscal year, the
Company sold its Dielectric Polymers, Inc. subsidiary for $5
million.

The Company resolved with Royal Sun & Alliance Insurance
(Singapore) Limited the Company's property damage and business
interruption insurance claim resulting from the explosion in a
treater at the Company's subsidiary in Singapore on November 27,
2002, and the Company received $5.8 million in cash and recorded
a $4.7 million pre-tax gain in the 2005 fiscal year third quarter
as a result of such resolution. The Company has initiated a
lawsuit against CNA Insurance Co. to resolve the Company's claim
for business interruption damages in the United States resulting
from the explosion.

At February 27, 2005 and February 29, 2004, 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 $2.5 million to
secure the Company's obligations under its workers' compensation
insurance program and certain limited energy purchase contracts
intended to protect the Company from increased utilities costs.

As of February 27, 2005, the Company's significant
contractual obligations, including payments due by fiscal year,
were as follows:

Contractual Obligations
(Amounts in thousands) Total 2006 2007- 2009- 2011 and
2008 2010 thereafter

Operating lease
obligations $11,864 $1,873 $2,786 $2,478 $4,717
Purchase obligations 276 276 - - -
------- ------ ------ ------ -------
Total $12,140 $2,149 $2,796 $2,478 $4,717

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 2005, 2004 and 2003 fiscal years, the Company charged
approximately $0.0 million, $0.0 million and $0.1 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 27,
2005, 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 the same
recorded liabilities for environmental matters at February 29,
2004.

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.

Revenue Recognition

Sales revenue is recognized at the time title to product is
transferred to a customer. All material sales transactions are
for the shipment of manufactured prepreg and laminate products
and advanced composite materials. The Company ships its products
to customers based upon firm orders, with fixed selling prices,
when collection is reasonably assured.

Sales Allowances

The Company provides for the estimated costs of sales
allowances at the time such costs can be reasonably estimated.
The Company's products are made to customer specifications and
tested for adherence to such specifications before shipment to
customers. There are no future performance requirements other
than the products' meeting the agreed specifications. The
Company's bases for providing sales allowances for returns are
known situations in which products may have failed due to
manufacturing defects in the products supplied by the Company.
The Company is focused on manufacturing the highest quality
printed circuit materials and advanced composite materials
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. 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.

Allowance for 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

Inventories are stated at the lower of cost (first-in, first-
out method) or market. 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

The Company recorded significant charges in connection with
the realignment of its North American FR-4 business operations
during the fiscal years ended February 29, 2004 and March 2, 2003
and, to a lesser extent, during the fiscal year ended February
27, 2005. In addition, during the 2003 fiscal year, the Company
recorded charges in connection with the closure of the Company's
manufacturing facility in England. Prior to the Company's
treating Dielektra GmbH as a discontinued operation, the Company
recorded significant charges in connection with the closure of
the mass lamination operation of Dielektra and the realignment of
Dielektra during the fiscal years ended February 29, 2004, March
2, 2003 and March 3, 2002.

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 pension liability of Dielektra has been included in
liabilities from discontinued operations on the Company's balance
sheet.

The Company's obligations for workers' compensation claims
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 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, some 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 27, 2005, the Company's ten largest customers
accounted for approximately 69% 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-Printed
Circuit Materials Operations-Customers and End Markets"
and "Business-Advanced Composite Materials-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 and defense industries, which
are cyclical industries and which have experienced
recurring downturns. The downturns, such as occurred in
the electronics industry during 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, printed circuit materials and
advanced composite 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 introduction of new products and the
costs associated with the start-up of new facilities.

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

. Rapid technological advances in semiconductors and
electronic equipment have placed rigorous demands on the
printed circuit 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 maintain and increase its
technological and manufacturing capability and expertise
in this rapidly changing industry.

. The printed circuit materials and advanced
composite materials industries are intensely competitive
and the Company competes worldwide in the markets for
such materials. 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 positions in these industries.

. There are a limited number of qualified suppliers
of the principal materials used by the Company in its
manufacture of printed circuit materials and advanced
composite materials products. Substitutes for these
materials 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 conditions, both specific to the individual
customer and generally affecting the customer's
industry, can cause a customer to reduce or delay orders
previously anticipated by the Company.

. The Company, from time to time, is engaged in the
expansion of certain of its manufacturing facilities.
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
substantially 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
anticipated maturity of the investment portfolio at the end of
the 2005 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.

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

Stockholders and Board of Directors of
Park Electrochemical Corp.

We have audited the accompanying consolidated balance sheet of
Park Electrochemical Corp. and subsidiaries as of February 27,
2005, and the related consolidated statements of operations, cash
flows, and stockholders' equity for the year then ended. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.

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

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Park Electrochemical Corp. and subsidiaries
as of February 27, 2005 and the consolidated results of their
operations and their consolidated cash flows for the year then
ended, in conformity with accounting principles generally
accepted in the United States of America.

We have also audited Schedule II for the period from March 1,
2004 to February 27, 2005. In our opinion, this schedule, when
considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the
information therein.

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
effectiveness of Park Electrochemical Corp. and subsidiaries'
internal control over financial reporting as of February 27,
2005, based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the "COSO criteria")
and our report dated April 19, 2005 expressed an unqualified
opinion thereon.

GRANT THORNTON LLP

New York, New York
April 19, 2005 (except with respect to the matters described in
Note 22 as to which the date is May 12, 2005)

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

We have audited the accompanying consolidated balance sheet of
Park Electrochemical Corp. and subsidiaries as of February 29,
2004 and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the two years in
the period ended February 29, 2004. Our audits also included the
2004 and 2003 activity in the financial statement schedule listed
in the Index at Item 15(a) (2). These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (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. We were not engaged to perform an
audit of the Company's internal control over financial reporting.
Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly,
we express no such opinion. An audit also includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, and 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 the consolidated results of their
operations and their cash flows for each of the two years in the
period ended February 29, 2004, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the 2004
and 2003 activity in the related financial statement schedule,
when considered in relation to the basic 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 27, February 29,
2005 2004

ASSETS
Current assets:
Cash and cash equivalents $ 86,071 $111,989
Marketable securities (Note 2) 103,507 77,197
Accounts receivable, less allowance
for doubtful accounts of $1,984 and
$1,845, respectively 35,722 36,149
Inventories (Note 3) 15,418 11,707
Prepaid expenses and other
current assets 2,944 3,040
Total current assets 243,662 240,082

Property, plant and equipment, net
of accumulated depreciation and
amortization (Note 4) 63,251 70,569

Other assets 398 419
Total assets $307,311 $311,070

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,121 $ 14,913
Accrued liabilities (Note 5) 20,566 24,468
Income taxes payable 6,474 3,248
Total current liabilities 42,161 42,629

Deferred income taxes (Note 6) 5,042 5,107

Liabilities from discontinued
operations (Note 9) 17,251 19,438
Total liabilities 64,454 67,174

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
shares
Additional paid-in capital 134,206 133,335
Retained earnings 105,450 108,915
Accumulated other comprehensive income 4,605 3,734
------- -------
246,298 248,021
Less treasury stock, at cost, 449,213
and 582,061 shares, respectively (3,441) (4,125)
Total stockholders' equity 242,857 243,896
Total liabilities and stockholders'
equity $307,311 $311,070
======== ========

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 27, February 29, March 2,
2005 2004 2003

Net sales $211,187 $194,236 $195,578
Cost of sales 167,937 161,536 168,921
Gross profit 43,250 32,700 26,657
Selling, general and
administrative expenses 26,960 27,962 27,157
Gain on Delco lawsuit (Note 19) - (33,088) -
Asset impairment charge (Note 13) - - 49,035
Restructuring and severance
charges (Note 10) 625 8,469 4,794
Gain on sale of DPI (Note 12) - - (3,170)
Gain on sale of United
Kingdom real estate - (429) -
Gain on insurance settlement
(Note 11) (4,745) - -
Earnings (loss) from
continuing operations 20,410 29,786 (51,159)
Interest and other income, net 3,386 2,958 3,260
Earnings (loss) from continuing
operations before income taxes 23,796 32,744 (47,899)
Income tax provision (benefit)
from continuing operations 2,191 2,835 (4,035)
Earnings (loss) from continuing
operations 21,605 29,909 (43,864)
Loss from discontinued ooperations,
net of taxes (Note9) - (33,761) (6,895)
Net earnings (loss) $ 21,605 $(3,852) $(50,759) )

Basic earnings (loss) per share:
Earnings (loss) from continuing
operations $ 1.09 $ 1.51 $(2.23)
Loss from discontinued operations,
net of tax - (1.71) (0.35)

Basic earnings (loss) per share $ 1.09 $(0.20) $(2.58)
Basic weighted average shares 19,879 19,754 19,674
Diluted earnings (loss) per share:
Earnings (loss) from continuing
operations $ 1.08 $ 1.50 $(2.23)
Loss from discontinued operations,
net of tax - (1.69) (0.35)

Diluted earnings (loss) per share $ 1.08 $(0.19) $(2.58)
Diluted weighted average shares 20,075 19,991 19,674*

*For the fiscal year 2003 the effect of employee stock options was not
considered because it was antidilutive.

See notes to consolidated financial statements.

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

(Part 1 of 2)

Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings

Balance, March 3, 2002 20,369,986 $2,037 $131,138 $172,953
Net loss (50,759)
Exchange rate changes
Change in pension
liability adjustment
Unrealized gain on
marketable securities
Stock option activity 2,034
Cash dividends ($.24 per share) (4,688)
Comprehensive loss
---------- ----- ------- --------
Balance, March 2, 2003 20,369,986 2,037 133,172 117,506
Net loss (3,852)
Exchange rate changes
Change in pension
liability adjustment
Unrealized loss on marketable
securities
Stock option activity 163
Cash dividends ($.24 per share) (4,739)
Comprehensive income
---------- ----- ------- --------
Balance, February 29, 2004 20,369,986 2,037 133,335 108,915
Net earnings 21,605
Exchange rate changes
Unrealized loss on marketable
securities
Stock option activity 871
Cash dividends ($1.26 per share) (25,070)
Comprehensive income
---------- ------ ------- --------
Balance, February 27, 2005 20,369,986 $2,037 $134,206 $105,450

See notes to consolidated financial statements.

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

(Part 2 of 2)
Accumulated
Other Comprehensive
Comprehensive Treasury Stock Income
Income (Loss) Shares Amount (Loss)

Balance, March 3, 2002 $(7,890) 877,163 $(5,692)
Net loss $(50,759)
Exchange rate changes 5,174 5,174
Change in pension liability
adjustment 103 103
Unrealized gain on marketable
securities 181 181
Stock option activity (191,094) 1,110
Cash dividends ($.24 per share) --------
Comprehensive loss $(45,301)
=========
Balance, March 2, 2003 (2,432) 686,069 (4,582)
Net loss $(3,852)
Exchange rate changes 5,557 5,557
Change in pension liability
adjustment 742 742
Unrealized loss on marketable
securities (133) (133)
Stock option activity (104,008) 457
Cash dividends ($.24 per share) --------
Comprehensive income $ 2,314
=========
Balance, February 29, 2004 3,734 582,061 (4,125)
Net earnings $21,605
Exchange rate changes 1,529 1,529
Unrealized loss on marketable
securities (658) (658)
Stock option activity (132,848) 684
Cash dividends ($1.26 per share) --------
Comprehensive income $ 22,476
=========
Balance, February 27, 2005 $ 4,605 449,213 $ (3,441)
======= ======== =========

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Fiscal Year Ended
February 27, February 29, March 2,
2005 2004 2003

Cash flows from operating activities:
Net earnings (loss) $21,605 $(3,852) $(50,759)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 10,202 11,978 17,973
Loss (gain) on sale of fixed assets 35 (511) -
Gain from insurance settlement (4,745)
Proceeds from insurance settlement 5,816
Charge for impairment of fixed assets - - 50,255
Non-cash restructuring charges - - 2,150
Non-cash impairment charges related
to discontinued operations - 21,348 -
Gain on sale of DPI - - (3,170)
Provision for doubtful accounts
receivable 66 109 184
Provision for deferred income taxes (55) 515 (1,541)
Other, net - - (25)
Changes in operating assets and liabilities:
Accounts receivable 596 (6,082) 3,478
Inventories (3,553) 86 535
Prepaid expenses and other current assets 437 1,287 (719)
Other assets and liabilities (2,164) (57) 17
Accounts payable 91 2,851 430
Accrued liabilities (4,051) 4,441 (6,835)
Income taxes payable 3,423 217 4,216

Net cash provided by operating
activities 27,703 32,330 16,189

Cash flows from investing activities:
Purchases of property, plant and
equipment (3,328) (4,509) (6,468)
Proceeds from sale of DPI - - 5,000
Proceeds from sales of property,
plant and equipment 20 2,094 25
Purchases of marketable securities (66,833) (89,530) (85,211)
Proceeds from sales and maturities
of marketable securities 39,533 83,333 66,104

Net cash used in investing activities (30,608) (8,612) (20,550)

Cash flows from financing activities:
Dividends paid (25,070) (4,739) (4,688)
Proceeds from exercise of stock options 1,555 620 368

Net cash used in financing activities (23,515) (4,119) (4,320)

(Decrease) increase in cash and cash
equivalents before effect of
exchange rate changes (26,420) 19,599 (8,681)
Effect of exchange rate changes on
cash and cash equivalents 502 371 1,208

(Decrease) increase in cash and cash
equivalents (25,918) 19,970 (7,473)

Cash and cash equivalents, beginning
of year 111,989 92,019 99,492

Cash and cash equivalents, end of year $ 86,071 $111,989 $92,019

See notes to consolidated financial statements.

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three years ended February 27, 2005
(In thousands, except share, per share and option amounts)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Park Electrochemical Corp. ("Park"), through its
subsidiaries (collectively, the "Company"), is a global advanced
materials company which develops and manufactures high-technology
digital and RF/microwave printed circuit materials and advanced
composite materials for the electronics, military, aerospace,
wireless communication, specialty and industrial markets. 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.
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. Reclassifications - The accompanying consolidated
financial statements for the prior fiscal years contain
certain reclassifications to conform with the
presentation used in the fiscal year ended February 27,
2005. The reclassification of prior year balances
included $18,000 of auction rate securities previously
classified as cash equivalents to marketable
securities. The Company has classified any investment
in auction rate securities for which the underlying
security had a maturity greater than three months as
marketable securities on the balance sheet and has
included the purchases, sales and maturities of such
investments as marketable securities in the
accompanying consolidated statement of cash flows.
c. 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.
d. 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 2005, 2004 and 2003 fiscal years
ended on February 27, 2005, February 29, 2004, and
March 2, 2003 respectively. Fiscal years 2005, 2004 and
2003 each consisted of 52 weeks.
e. 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 (loss).
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. The
Company has classified any investment in auction rate
securities for which the underlying security had a
maturity greater than three months as marketable
securities.
f. Inventories - Inventories are stated at the lower of cost
(first-in, first-out method) or market. 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.
g. Revenue Recognition - Sales revenue is recognized at the
time title is transferred to a customer. All material sales
transactions are for the shipment of manufactured prepreg and
laminate products and advanced composite materials. The Company
ships its products to customers based upon firm orders, with
fixed selling prices, when collection is reasonably assured.
h. Sales Allowances and Product Warranties - The Company
provides for the estimated costs of sales allowances at the time
such costs can be reasonably estimated. The Company's products
are made to customer specifications and tested for adherence to
such specifications before shipment to customers. There are no
future performance requirements other than the products' meeting
the agreed specifications. The Company's bases for providing
sales allowances for returns are known situations in which
products may have failed due to manufacturing defects in the
products supplied by the Company. The Company is focused on
manufacturing the highest quality printed circuit and advance
composite materials 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. 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.
i. Allowance for Bad Debts - 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.
j. 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.
k. Shipping Costs - The amounts paid to third-party shippers
for transporting products to customers are classified as selling
expenses. The shipping costs included in selling, general and
administrative expenses were approximately $4,659, $5,296 and
$4,200 for fiscal years 2005, 2004 and 2003, respectively.
l. Depreciation and Amortization - Depreciation and
amortization are computed principally by the straight-line method
over the estimated useful lives. Machinery and equipment are
generally depreciated over 10 years. Building and leasehold
improvements are depreciated over 30 years or the term of the
lease, if shorter.
m. 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 $135,400 at February 27, 2005) of the
Company's foreign subsidiaries, because it is
management's practice and intent to reinvest such
earnings in the operations of such subsidiaries.
n. 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 certain 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.
o. Cash and Cash Equivalents - The Company considers all
money market securities and investments with
contractual maturities at the date of purchase of 90
days or less to be cash equivalents.

Supplemental cash flow information:
Fiscal Year
2005 2004 2003

Cash paid during the year for:
Income taxes (refunded) paid (1,124) 2,248 (6,278)

p. 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 27, 2005, 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 income (loss) and earnings (loss) per
share would have approximated the amounts shown below.

The weighted fair value for options was estimated at
the dates of grants using the Black-Scholes option-
pricing model to be $8.41 for fiscal year 2005, $8.69
for fiscal year 2004 and $12.81 for fiscal year 2003,
with the following weighted average assumptions: risk
free interest rate of 4.0% for fiscal years 2005, 2004
and 2003; expected volatility factors of 38%-46%, 49%-
54% and 58% for fiscal years 2005, 2004 and 2003,
respectively; expected dividend yield of 1.6% for
fiscal year 2005 and 1.0% for fiscal years 2004 and
2003; and estimated option lives of 4.0 years for
fiscal years 2005, 2004 and 2003.

2005 2004 2003

Net earnings (loss) $21,605 $(3,852) $(50,759)
Deduct: Total stock-based
employee compensation
determined under fair value
based method for all awards,
net of tax effects (1,803) (1,846) (1,928)

Pro forma net earnings (loss) $19,802 $(5,698) $(52,687)
======== ======== =========
EPS-basic as reported $ 1.09 $ (0.20) $ (2.58)
EPS-basic pro forma $ 1.00 $ (0.29) $ (2.68)

EPS-diluted as reported $ 1.08 $ (0.19) $ (2.58)
EPS-diluted pro forma $ 0.97 $ (0.29) $ (2.68)

2. MARKETABLE SECURITIES

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

Gross Gross
Unrealized Unrealized Estimated
Gains Losses Fair Value

February 27, 2005:
U.S. Treasury and other
government securities $ 11 $ 932 $ 64,265
U.S. corporate debt securities - - 39,151
Total debt securities 11 932 103,416
Equity securities 86 - 91
---- ------ -------
$ 97 $ 932 $103,507
==== ====== ========

February 29, 2004:
U.S. Treasury and other
government securities $116 $ 18 $ 56,091
U.S. corporate debt securities 8 - 21,030
Total debt securities 124 18 77,121
Equity securities 71 - 76
---- ------ -------
$195 $ 18 $77,197
==== ====== =======

The gross realized gains on the sales of securities were $4,
$40 and $6 for fiscal years 2005, 2004 and 2003,
respectively, and he gross realized losses were $13, $21,
and $17 for fiscal years 2005, 2004 and 2003, respectively.

The amortized cost and estimated fair value of the debt and
marketable securities at February 27, 2005, by contractual
maturity, are shown below:

Estimated Faor
Value

Due in one year or less $ 37,544
Due after one year through
five years 65,872
103,416
Equity securities 91
$103,507

3. INVENTORIES

February 27, February 29,
2005 2004

Raw materials $ 6,436 $ 4,088
Work-in-process 3,577 2,424
Finished goods 5,068 4,835
Manufacturing supplies 337 360
$15,418 $11,707

4. PROPERTY, PLANT AND EQUIPMENT

February 27. February 29,
2005 2004

Land, buildings and improvements $ 32,631 $ 31,591
Machinery, equipment, furniture
and fixtures 135,863 135,309
168,494 166,900
Less accumulated depreciation
and amortization 105,243 96,331
$ 63,251 $ 70,569

Property, plant and equipment are initially valued at cost.
Depreciation and amortization expense, for continuing
operations, relating to property, plant and equipment was
$10,202, $10,604 and $16,535 for fiscal years 2005, 2004 and
2003, respectively. Pretax charges of $15,349 and $52,248
were recorded in fiscal years 2004 and 2003, respectively,
for the write-downs of abandoned or impaired operating
equipment, including charges of $15,349 and $1,220 for such
years, respectively, related to Dielektra (see Notes 9, 10
and 13 below). The Company has $6,329 of equipment which is
idle, but which the Company intends to utilize in the
future.

5. ACCRUED LIABILITIES

February 27, February 29,
2005 2004

Payroll and payroll related $ 3,816 $ 3,650
Employee benefits 803 2,194
Workers compensation accrual 2,744 2,815
Environmental reserve (Note 15) 2,387 2,389
Restructuring accruals 5,797 6,756
Other 5,019 6,664
$20,566 $24,468

6. INCOME TAXES

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

Fiscal Year
2005 2004 2003

Current:
Federal $ (585) $ 467 $(3,806)
State and local 170 125 385
Foreign 2,672 1,732 927
2,257 2,324 (2,494)
Deferred:
Federal - - (1,087)
State and local (6) (7) (107)
Foreign (60) 518 (347)
(66) 511 (1,541)
$2,191 $2,835 $(4,035)

The components of income (loss) from continuing operations
before income tax were as follows:

Fiscal Year
2005 2004 2003

United States $ 1,198 $13,758 $(53,185)
Foreign 22,598 18,986 5,286
Earnings (loss) from
continuing operations
before income taxes $23,796 $32,744 $(47,899)

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
2005 2004 2003

Statutory U.S. Federal tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal benefit 0.5 0.3 (0.4)
Foreign tax rate differentials (20.2) (11.9) 1.4
Valuation allowance (8.0) 1.9 -
Impairment of deferred tax
assets - - (28.1)
Other, net 1.9 (16.6) 0.5
9.2% 8.7% 8.4%

The Company had total net operating loss carry-forwards from
continuing operations of approximately $22,100 and $15,700
in fiscal years 2005 and 2004, respectively. Approximately
$8,200 of the total net operating loss carry-forwards
related to U.S. operations and approximately $13,900 of the
total carry-forwards related to foreign operations in fiscal
year 2005, and approximately $2,900 of the total net
operating loss carry-forwards related to U.S. operations and
$12,800 of the total carry-forwards related to foreign
operations in fiscal year 2004. In fiscal years 2005 and
2004, the Company had net operating loss carry-forwards from
discontinued operations of $0 and $76,400, respectively.
Long term deferred tax assets resulting from these net
operating loss carry-forwards from continuing operations
were valued at $0 at February 27, 2005 and February 29,
2004, respectively. Long term deferred tax assets resulting
from discontinued operations were valued at $0 at February
27, 2005 and February 29, 2004, net of valuation reserves of
$0 and $32,598, respectively.

Approximately $690 of the foreign net operating loss carry-
forwards expire in fiscal year 2007, approximately $4,000 of
U.S. net operating loss carry-forwards expire in fiscal year
2024, approximately $4,100 of U.S. net operating loss carry-
forwards expire in fiscal year 2025, and the remainder have
no expiration.

The U.S. net operating loss carry-forwards include $2,000
and $1,000 of cumulative deductions relating to the taxable
disposition of incentive stock options during fiscal years
2005 and 2004, respectively. In the event that the Company
can utilize its U.S. net operating loss carry-forwards the
tax benefit relating to these deductions will be credited to
additional paid-in capital.

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 for income tax purposes. At February 27, 2005 and
February 29, 2004, 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
27, 2005 and February 29, 2004 from continuing operations
were as follows:

2005 2004

Deferred tax liabilities:
Depreciation $ 2,340 $ 2,929
Other, net 2,702 2,178
Total deferred tax liabilities 5,042 5,107

Deferred tax assets:
Impairment of fixed assets 5,900 9,210
Net operating loss carry-forwards 6,745 6,347
Other, net 5,567 6,007
Total deferred tax assets 18,212 21,564
Valuation allowance for deferred
tax assets (18,212) (21,564)
Net deferred tax assets - -

Net deferred tax liabilities $ 5,042 $ 5,107

7. STOCKHOLDERS' EQUITY

a. 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, and
expire ten years from 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, and expire ten
years from the date of 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, March 3, 2002 $ 4.67 - $43.63 1,243,707 $ 9.56
Granted 14.12 - 29.05 231,800 28.04
Exercised 4.67 - 16.54 (43,398) 13.06
Cancelled 12.21 - 43.63 (66,747) 28.29

Balance, March 2, 2003 $ 4.92 - $43.63 1,365,362 $18.92
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
Granted 19.89 - 23.41 183,900 22.86
Exercised 8.75 - 29.05 (152,327) 13.04
Cancelled 12.21 - 43.63 (144,407) 23.89

Balance, February 27, 2005 12.21 - $43.63 1,283,819 $20.71

Exercisable February 27,2005 $12.21 - $43.63 864,013 $19.37

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

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

12.21 - 19.99 711,210 4.5 16.64 588,925 15.95
22.62 - 43.63 572,600 7.38 25.76 275,088 26.68
--------- -------
1,283,819 864,013

Stock options available for future grant under the 2002
stock option plan at February 27, 2005 and February 29, 2004
were 565,885 and 705,725, respectively.

b. 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 prior
to such time as any person becomes an Acquiring
Person, 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.

c. Reserved Common Shares - At February 27, 2005,
1,849,704 shares of common stock were reserved for
issuance upon exercise of stock options.

d. Accumulated Other Comprehensive Income - Accumulated
balances related to each component of other
comprehensive income were as follows:

February 27, February 29,
2005 2004

Currency translation adjustment $5,148 $3,619
Unrealized gains on investments (543) 115

Accumulated balance $4,605 $3,734

8. EARNINGS (LOSS) PER SHARE

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

2005 2004 2003

Earnings (loss) from
continuing operrations $ 21,605 $29,909 $ (43,864)
Loss from discontinued
operations - (33,761) (6,895)

Net earnings (loss) $21,605 $(3,852) $ (50,759)

Weighted average common shares
outstanding for bsic EPS 19,879,278 19,754,000 19,674,000
Net effect of dilutive
options 195,741 237,000 *
Weighted average shares
outstanding for diluted EPS 20,075,019 19,991,000 19,674,000

Basic earnings (loss) per share:
Earnings (loss) from
continuing operations $1.09 $ 1.51 $(2.23)
Loss from discontinued
operations, net of tax - (1.71) (0.35)
Basic earnings (loss) per share $1.09 $(0.20) $(2.58)

Diluted earnings (loss) per share:
Earnings (loss) from
continuing operations $1.08 $ 1.50 $(2.23)
Loss from discontinued
operations, net of tax - (1.69) (0.35)
Diluted earnings (loss)
per share $1.08 $(0.19) $(2.58)

*For the fiscal year 2003 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 99,447, 151,585, and 865,287 for the
fiscal years 2005, 2004, 2003, respectively.

9. DISCONTINUED OPERATIONS and PENSION LIABILITY

a. 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 or
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 for discontinued operations
was $0 and $150 for fiscal years 2004 and 2003, respectively. The
liabilities from discontinued operations totaling $17,251 and
$19,438 at February 27, 2005 and February 29, 2004, respectively,
are reported separately in 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 27, 2005, February 29,
2004, and March 2, 2003, and assets and liabilities of
discontinued operations at February 27, 2005 and February
29, 2004 were as follows:

Fiscal Year
2005 2004 2003 __ __

Net sales $ - $14,429 $21,198
Operating loss - (5,596) (5,675)
Restructuring and
impairment charges - 28,165 1,220
Net loss $ - $(33,761) $(6,895)
)

February 27, February 29,
2005 2004

Current assets $ - $ -
Fixed assets - -
Total assets - -
Current and other liabilities 5,157 7,344
Pension liabilities 12,094 12,094
Total liabilities 17,251 19,438
Net liabilities $(17,251) $(19,438)

b. Pension Liability - The pension information provided below
relates to the Company's subsidiary, Dielektra. As described
above, the Company discontinued its financial support of
Dielektra during the fiscal year 2004 fourth quarter and,
accordingly, has included the $12,094 pension liability as
determined as of February 29, 2004 in liabilities from
discontinued operations, which represents the latest information
available to the Company.

Net pension costs included the following components:

Fiscal Year
Changes in Benefit Obligations 2004

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

Changes in Plan Assets

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

Under funded status $(12,094)
Unrecognized net loss -
Net accrued pension cost $(12,094)

Fiscal Year
Components of Net Periodic 2004 2003
Benefit Cost

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

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 year 2004.
Projected wage increases of 2.6% were also assumed for
fiscal year 2004.

10. RESTRUCTURING AND SEVERANCE CHARGES

During the 2005 fiscal year third quarter ended November 28,
2004, the Company recorded $625 of charges for severance
payments for workforce reductions at its North American and
European volume printed circuit materials operations. These
severance payments were made to employees during the 2005
fiscal year third quarter and there were no remaining
liabilities as of February 27, 2005.

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 volume printed circuit
materials 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 27, 2005
are set forth below.

Charges 2/27/05
Closure Incurred Remaining
Charges or Paid Reversals Liabilities

New York and California
and other realignment
charges:
Lease payments, taxes,
utilities and other $7,292 $1,495 - $5,797
Severance payments 1,258 1,258 - -

$8,550 $2,753 $ - $5,797

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 was paid to such employees
during the fiscal year 2005 first quarter. The lease charges
covered one lease obligation payable through December 2004
and a portion of another lease obligation payable through
September 2013.

The Company recorded pre-tax charges of $4,674 and $120 in
the fiscal year 2003 third quarter ended December 1, 2002 in
connection with the closure of its Nelco U.K. manufacturing
facility located in Skelmersdale, England, and severance
costs at a North American business unit. The Company
recorded an $81 gain on the sale of previously written off
equipment during the fourth quarter of fiscal 2004. As of
February 27, 2005, there were no remaining liabilities
relating to these charges recorded during fiscal year 2003.

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 1,000 as of February 27, 2005, approximately
1,200 as of February 29, 2004, and approximately 1,400 as of
March 2, 2003.

11. GAIN ON INSURANCE SETTLEMENT

In the 2005 fiscal year third quarter, the Company settled
an insurance claim for damages sustained by the Company in
Singapore as the result of an explosion that occurred in
November 2002 in one of the four treaters located at its
Nelco manufacturing facility in Singapore. During the 2005
fiscal year third quarter, the Company received $5,816
related to this insurance claim. The proceeds represent
reimbursement for assets destroyed in the accident and for
business interruption losses. As a result, the Company
recognized a $4,745 gain during the third quarter ended
November 28, 2004.

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. 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. 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. Accordingly, 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. The impairment charge
related to Dielektra is included in the loss from
discontinued operations.

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 estimated contributions are
accrued at the end of each fiscal year and paid to the plan
in the subsequent fiscal year. The Company's actual
contributions to the plan were $448 and $271 for fiscal
years 2004 and 2003, respectively. The contribution
estimated for fiscal year 2005 has not been paid.
Contributions are discretionary and may not exceed the
amount allowable as a tax deduction under the Internal
Revenue Code.

b.Savings Plan - The Company also 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 $236, $260 and $442 in fiscal years 2005,
2004 and 2003, respectively.

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 2012. 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 2054.

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

Fiscal Year Amount
2006 $ 1,873
2007 1,436
2008 1,360
2009 1,232
2010 1,246
Thereafter 4,717
$11,864

Rental expenses, inclusive of real estate taxes and other
costs, were $2,560, $2,659 and $2,948 for fiscal years 2005,
2004 and 2003, 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
$2, $1 and $131 in fiscal years 2005, 2004 and 2003,
respectively. The recorded liabilities included in accrued
liabilities for environmental matters were $2,387, $2,389
and $4,246 for fiscal years 2005, 2004 and 2003,
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.

Such recorded liabilities do not include environmental
liabilities and related legal expenses for which the Company
has concluded indemnification agreements with 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
three sites for which certain subsidiaries of the Company
have been named as potentially responsible parties, pursuant
to which agreements such insurance carriers have been paying
100% of the legal defense and remediation costs associated
with such three sites since 1985.

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" 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.

At February 27, 2005 and February 29, 2004 the Company had
outstanding foreign exchange contracts in notional amounts
totaling $0 and $4,306, respectively.

17. BUSINESS SEGMENTS

The Company considers itself to operate in one business
segment. The Company's printed circuit materials products
are marketed primarily to leading independent printed
circuit board fabricators, electronic manufacturing service
companies, electronic contract manufacturers and major
electronic original equipment manufacturers ("OEMs") located
throughout North America, Europe and Asia. The Company's
advanced composite materials customers, the majority of
which are located in the United States, include OEMs,
independent firms and distributors in the electronics,
aerospace and industrial industries.

Sales are attributed to geographic region based upon the
region from which the materials were shipped to the
customer. Sales between geographic regions were not
significant.

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

Fiscal Year
2005 2004 2003

United States $117,109 $106,080 $117,889
Europe 34,198 31,982 32,322
Asia 59,880 56,174 45,367
Total sales $211,187 $194,236 $195,578

United States $ 32,610 $ 38,549 $ 44,425
Europe 10,856 10,969 25,373
Asia 20,183 21,470 21,159
Total long-lived assets $ 63,649 $ 70,988 $ 90,957

18. CUSTOMER AND SUPPLIER CONCENTRATIONS

a. Customers - Sales to Sanmina Corporation were 13.7%, 16.3%
and 19.1% of the Company's total worldwide sales from its
continuing operations for fiscal years 2005, 2004 and 2003,
respectively. Sales to Tyco Printed Circuit Group L.P. were
12.3%, 12.2% and 11.0% of the Company's total worldwide sales
from its continuing operations for fiscal years 2005, 2004 and
2003. Sales to Multilayer Technology, Inc. were 9.5%, 9.7% and
11.1% of the Company's total worldwide sales from its continuing
operations for fiscal years 2005, 2004 and 2003, respectively.

While no other customer accounted for 10% or more of the
Company's total worldwide sales from its continuing
operations in fiscal years 2005, 2004 and 2003, and the
Company is not dependent on any single customer, the loss of
a major printed circuit 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 high-technology printed circuit
materials and advanced composite 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 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
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,
Nelco Technology, Inc. ("NTI"), in its lawsuit against Delco
Electronics Corporation, a subsidiary of Delphi Automotive
Systems Corporation ("Delco"), on NTI'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 from
Delco on July 1, 2003 in satisfaction of the judgment.

20. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

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

Fiscal 2005:
Net sales $58,518 $51,098 $50,359 $ 51,212
Gross profit 13,712 9,418 9,840 10,280

Net earnings 6,021 2,947 7,692 4,945

Basic earnings per share:
Net earnings per share $0.30 $0.15 $0.39 $0.25
Diluted earnings per share:
Net earnings per share $0.30 $0.15 $0.38 $0.25

Weighted average common
shares outstanding:
Basic 19,810 19,8855 19,901 19,920
Diluted 20,068 20,112 20,061 20,058

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 (6,807) (1,944) (1,838) (23,172)

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

Basic (loss) earnings per share:
(Loss) earnings from
continuing operations $(0.08) $1.06 $0.14 $ 0.39
Loss from discontinued
operations $(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

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 December 2004, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
No. 123(R), "Share-Based Payment" ("SFAS 123R"), which
replaces SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), and supersedes Accounting
Principle Board Opinion No. 25 ("APB 25"), "Accounting for
Stock Issued to Employees". SFAS 123R requires all share-
based payments to employees, including grants of employee
stock options, to be recognized in the financial statements
based on their fair values for fiscal years beginning after
June 15, 2005 (as delayed by the Securities and Exchange
Commission), with early adoption encouraged. For years
beginning after June 15, 2005, the pro forma disclosures
previously permitted under SFAS 123 will no longer be an
alternative to financial statement recognition. Under SFAS
123R, a determination must be made regarding the appropriate
fair value model to be used for valuing share-based payments,
the amortization method for compensation cost and the
transition method to be used at date of adoption. SFAS 123R
permits a prospective application or two modified versions of
retrospective application under which financial statements
for prior periods are adjusted on a basis consistent with the
pro forma disclosures required for those periods by the
original SFAS 123. The Company is required to adopt of SFAS
123R in the first quarter of fiscal year 2007, at which time
the Company will begin recognizing an expense for all
unvested share-based compensation that has been issued. Under
the retrospective options, prior periods may be restated
either as of the beginning of the year of adoption or for all
periods presented. The Company has not yet finalized its
decision concerning the transition option it will utilize to
adopt SFAS 123R and is in the process of evaluating the
impact of FAS 123R on its financial statements.

In November 2004, the FASB issued Statement of Financial
Accounting Standards No. 151 ("SFAS 151"), "Inventory Costs,
and an amendment of Accounting Research Bulletin No. 43
Chapter 4". SFAS 151 requires all companies to recognize a
current-period charge for abnormal amounts of idle facility
expense, freight, handling costs and wasted materials. SFAS
151 also requires that the allocation of fixed production
overhead to the costs of conversion be based on the normal
capacity of the production facilities. SFAS 151 will be
effective for fiscal years beginning after June 15, 2005. The
Company is currently evaluating the effect that the
accounting change will have on its financial position and
results of operations.

In October 2004, the American Jobs Creation Act of 2004 (the
"Act") was signed into law. The Act provides tax relief to
U.S. domestic manufacturers. The FASB directed its staff to
issue Financial Staff Position (FSP) FAS 109-1, "Application
of FASB Statement No. 109" ("SFAS 109"), "Accounting for
Income Taxes, for the Tax Deduction Provided to U.S. Based
Manufacturers by the American Jobs Creation Act of 2004"
("FSP FAS 109"). FSP FAS 109-1 states that a manufacturer's
deduction provided for under the Act should be accounted for
as a special deduction in accordance with SFAS 109 and not as
a tax rate reduction. The special deduction should be
considered by a company in measuring deferred taxes when the
company is subject to graduated tax rates, and in assessing
whether a valuation allowance is necessary as required by
SFAS 109. The adoption of FSP FAS 109-1 did not have a
material impact on our results of operations or financial
position for fiscal 2005.

In September 2004, the Emerging Issues Task Force issued
Statement No. 04-10, "Applying Paragraph 19 of Statement of
Financial Accounting Standard No. 131 in Determining Whether
to Aggregate Operating Segments That Do Not Meet the
Quantitative Thresholds", ("EITF 04-10"). EITF 04-10 gives
guidance to companies on issues to consider in determining
the aggregation criteria and guidance from paragraphs 17 and
19 of SFAS 131,"Disclosures about Segments of an Enterprise
and Related Information". Specifically, whether operating
segments must always have similar economic characteristics
and meet a majority of the remaining five aggregation
criteria, items (a)-(e), listed in paragraph 17 of SFAS 131,
or whether operating segments must meet a majority of all six
aggregation criteria (that is, the five aggregation criteria,
items (a)-(e), listed in paragraph 17 and similar economic
characteristics), in determining the appropriate segment
reporting disclosures. The FASB has issued FASB Staff
Position FSP FAS 131a for public comment. The final FSP is
expected to be issued during calendar year 2005. The Company
is in the process of assessing the impact that EITF 04-10 and
the proposed FSP FAS 131a will have on its financial
statement disclosures.

22. SUBSEQUENT EVENT

On May 12, 2005, the Company announced that it was reducing
the size of the workforce at its Neltec Europe SAS subsidiary
in Mirebeau, France, from 138 employees to 103 employees, as
a result of the further deterioration of the European market
for high-technology printed circuit materials. The Company
expects to record a one-time termination benefits charge of
approximately $1 million during the 2006 fiscal year first
quarter ending May 29, 2005. The payment of these termination
benefits is expected to be substantially completed by the end
of the 2006 fiscal year second quarter ending August 28,
2005.

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 27, 2005, the end of
the fiscal year 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
fiscal year, 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 and are effective in ensuring that information
required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is accumulated and
communicated to the Company's management, including the Company's
Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure.

(b) Managements Annual Report on Internal Control Over Financial
Reporting.

The management of the Company is responsible for
establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act. The Company's internal control over
financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles in the
United States of America. The Company's internal control over
financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company, (ii) provide
reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance
with authorizations of management and directors of the Company,
and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use of disposition
of the Company's assets that could have a material effect on the
financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company's internal
control over financial reporting as of February 27, 2005. In
making this assessment, management used the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") in Internal Control-Integrated Framework.
Based on management's assessment and those criteria, management
concluded that the Company maintained effective internal control
over financial reporting as of February 27, 2005.

The Company's independent auditor has issued its audit report on
management's assessment of the Company's internal control over
financial reporting. That report appears in Item 9A(c) below.

(c) Attestation Report of the Registered Public Accounting Firm.

Stockholders and Board of Directors of
Park Electrochemical Corp.

We have audited management's assessment, included in the
accompanying Management Report on Internal Control Over Financial
Reporting, that Park Electrochemical Corp. and subsidiaries
maintained effective internal control over financial reporting as
of February 27, 2005, based on criteria established in Internal
Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (the COSO
criteria). The Company's management is responsible for
maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control
over financial reporting. Our responsibility is to express an
opinion on management's assessment and an opinion on the
effectiveness of the Company's internal control over financial
reporting based on our audit.

We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control
over financial reporting, evaluating management's assessment,
testing and evaluating the design and operating effectiveness of
internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use,
or disposition of the company's assets that could have a material
effect on the financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that Park Electrochemical
Corp. and subsidiaries maintained effective internal control over
financial reporting as of February 27, 2005, is fairly stated, in
all material respects, based on the COSO criteria. Also, in our
opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of
February 27, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheet of the Company as of February 27,
2005, and the related consolidated statements of operations, cash
flows, and stockholders' equity, for the year then ended, and our
report dated April 19, 2005 expressed an unqualified opinion
thereon.

GRANT THORNTON LLP

New York, New York
April 19, 2005

(d) Changes in 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.

Item 9B. Other Information.

The Company is not disclosing under this item any
information required to be disclosed on Form 8-K during the
fourth quarter of the year covered by this Form 10-K annual
report, but not reported, whether or not otherwise required by
this Form 10-K.

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
2005 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
2005 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 information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the
2005 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
2005 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
2005 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:

Reports of Grant Thornton LLP and Ernst &
Young LLP, independent auditors 43

Balance Sheets 45

Statements of Operations 46

Statements of Stockholders' Equity 47

Statements of Cash Flows 48

Notes to Consolidated Financial Statements 49
(1-22)

(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 75
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 76 hereof.

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 13, 2005 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

/s/Brian E. Shore Chairman of the Board,
Brian E. Shore President and Chief Executive
Officer and Director
(principal executive officer) May 13, 2005

/s/Murray O. Stamer Senior Vice President and
Murray O. Stamer Chief Financial Officer
(principal financial and May 13, 2005
accounting officer)

/s/Mark S. Ain
Mark S. Ain Director May 13, 2005

/s/Dale Blanchfield
Dale Blanchfield Director May 13, 2005

/s/Anthony Chiesa
Anthony Chiesa Director May 13, 2005

/s/Lloyd Frank
Lloyd Frank Director May 13, 2005

/s/Steven T. Warshaw
Steven T. Warshaw Director May 13, 2005

Schedule II
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Part 1 of 2)
Column C
Additions
Column A Column B
Balance at
Beginning Costs and
Description of Period Expenses Other

DEFERRED INCOME TAX ASSET
VALUATION ALLOWANCE:
52 weeks ended
February 27, 2005 $21,564,000 $ 3,352,000 -
52 weeks ended
February 29, 2004 $18,710,000 $ 2,854,000 -
52 weeks ended
March 2, 2003 $ 3,916,000 $14,794,000 -

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 27, 2005 $1,845,000 $ 90,000
52 weeks ended
February 29, 2004 $1,893,000 $ 292,000
52 weeks ended
March 2, 2003 $1,817,000 $ 366,000

(A) Uncollectable accounts, net of recoveries.

Schedule II
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Part 2 of 2)

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

DEFERRED INCOME TAX
ASSET VALUATION
ALLOWANCE:
52 weeks ended
February 27, 2005 - $18,212,000
52 weeks ended
February 29, 2004 - $21,564,000
52 weeks ended
March 2, 2003 - $18,710,000

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 27, 2005 $(28,000) $ 77,000 $1,984,000
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

(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 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.).........................

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

10.6(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.)

10.7 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.)

10.7(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.)

10.8 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.)

10.8(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.)

10.8(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.)

10.9 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.)

10.10 Forms of Incentive Stock Option Contract for
employees, Non-Qualified Stock Option Contract
for employees and Non-Qualified Stock Option
Contract for directors under the 2002 Stock 81
Option Plan of the Company.

14.1 Code of Ethics for Chief Executive Officer and
Senior Financial Officers adopted on May 6, 2004
(Reference is made to Exhibit 14.1 of the
Company's Annual Report on Form 10-K for the
fiscal year ended February 29, 2004, Commission
File No. 1-4415, which is incorporated herein by -
reference.)

21.1 Subsidiaries of the Company 89

23.1 Consents of Ernst & Young LLP and Grant Thornton 90
LLP

31.1 Certification of Chief Executive Officer pursuant
to Exchange Act Rule 13a-14(a) or 15d- 91
14(a)

31.2 Certification of Chief Financial Officer pursuant
to Exchange Act Rule 13a-14(a) or 15d-14(a) 93

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 94

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 95
2002

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