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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 [NO FEE REQUIRED,EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended March 2, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to________
Commission file number 1-4415
Park Electrochemical Corp.
(Exact name of registrant as specified in its charter)
New York 11-1734643
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Dakota Drive, Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 354-4100
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $.10 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
5.5% Convertible Subordinated Notes New York Stock Exchange
due 2006
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 [ ]
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. [ ]
[cover page 1 of 2 pages]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of a specified date
within 60 days prior to the date of filing.
As of close
Title of Class Aggregate market value of business on
Common Stock, $256,464,800* May 2, 1997
$.10 par value
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
Title of Class outstanding of business on
Common Stock, 11,273,178 May 2, 1997
$.10 par value
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for Annual Meeting of Shareholders to be held July
16, 1997 incorporated by reference into Part III of this Report.
=====================================================================
*Included in such amount are 1,015,032 shares of common stock valued
at $22.75 per share and held by Jerry Shore, the Registrant's Chairman
of the Board and a member of the Registrant's Board of Directors.
[cover page 2 of 2 pages]
PART I
Item 1. Business.
General
Park Electrochemical Corp. ("Park"), through its subsidiaries
(unless the context otherwise requires, Park and its subsidiaries are
hereinafter called the "Company"), is primarily engaged in the design,
production and marketing of advanced electronic materials used to fabricate
complex multilayer printed circuit boards, semiconductor packages and other
electronic interconnect systems. The Company's electronic materials
business operates under the "Nelco" name. The Company is also engaged in
the design, production and marketing of specialty adhesive tapes and films,
advanced composite materials and microwave circuitry materials for the
electronics, aerospace and industrial markets and plumbing hardware. Park
was founded in 1954 by Jerry Shore, the Company's Chairman of the Board and
largest shareholder.
Unless otherwise indicated, all information in this Report has been
adjusted to give effect to the Company's two-for-one stock split in the form
of a stock dividend, which was distributed August 15, 1995 to shareholders
of record at the close of business on July 24, 1995.
The Company's business is divided into two industry segments: (1)
electronic materials and (2) engineered materials and plumbing hardware.
See Note 12 of the Notes to Consolidated Financial Statements included in
Item 8 of this Report for information concerning the amounts of sales to
unaffiliated customers, operating profit, identifiable assets, depreciation
and amortization, and capital expenditures attributable to each of the
Company's industry segments during its last three fiscal years.
The sales, operating profit and identifiable assets of the Company's
operations by geographic area for the last three fiscal years are also set
forth in Note 12 of the Notes to Consolidated Financial Statements included
in Item 8 of this Report. The Company's foreign operations are conducted
principally by the Company's subsidiaries in the United Kingdom, France and
Singapore. The Company's foreign operations are subject to the impact of
foreign currency fluctuations. See Note 1 of the Notes to Consolidated
Financial Statements included in Item 8 of this Report.
Electronic Materials Operations
The Company is a leading global designer and producer of advanced
electronic materials used to fabricate complex multilayer printed circuit
boards and other electronic interconnect systems, such as backplanes, PC
cards and semiconductor packaging systems. The Company's multilayer printed
circuit materials include copper-clad laminates, prepregs and semi-finished
multilayer printed circuit board panels. The Company has long-term
relationships with its major customers, which include leading independent
printed circuit board fabricators and major electronic equipment manufac-
turers. 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 micropro-
cessors and memory and logic devices) and passive components (such as
resistors and capacitors). Examples of end uses of the Company's printed
circuit materials range from supercomputers to laptops and from satellite
switching equipment to cellular telephones. 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 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. In 1962, the Company 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 increasing global demand for electronic products
and technology, the increasing complexity of electronic products, the
increasingly advanced electronic materials required for interconnect
performance and manufacturability, 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 multilayer printed circuit materials and the market leader
in North America and Southeast Asia. It also believes that it is the only
significant independent manufacturer 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 estab-
lished in Europe in 1969 and Asia in 1986.
Industry Background
The electronic materials manufactured by the Company and its
competitors are used to construct and fabricate complex multilayer printed
circuit boards and other advanced electronic interconnect systems.
Multilayer printed circuit materials consist of prepregs and copper-clad
laminates, as well as semi-finished multilayer printed circuit board panels.
Prepregs are chemically and electrically engineered plastic resin systems
which are impregnated into and reinforced by a specially manufactured
fiberglass cloth product or other woven or non-woven reinforcing fiber.
This insulating dielectric substrate is .030 inch to .002 inch in thickness
or less in some cases. These resin systems are usually based upon an epoxy
chemistry. One or more plies of prepreg are laminated together to form an
insulating dielectric substrate to support the copper circuitry patterns of
a multilayer printed circuit board. Copper-clad laminates consist of one or
more plies of prepreg laminated together with specialty thin copper foil
laminated on the top and bottom. Copper foil is specially formed in thin
sheets which may vary from .0030 inch to .0002 inch in thickness and
normally have a thickness of .0014 inch or .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 photo-
resist. 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. 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.
The global market for advanced electronic products is growing as a
result of technological change and frequent new product introductions. This
growth is principally attributable to increased sales and more complex
electronic content of newer products, such as cellular phones, pagers,
personal computers and portable computing devices, and greater use of
electronics in other products, such as automobiles. Further, large, almost
completely untapped markets for advanced electronic equipment have emerged
in such areas as India and China and other areas of the Pacific Rim.
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 and new types of
semiconductor packaging systems such as ball-grid arrays and multi-chip
modules.
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. The growth of
the market for more advanced printed circuit materials has outpaced the
market growth for standard printed circuit materials in recent years.
Printed circuit board fabricators and electronic equipment manufacturers
require advanced printed circuit materials that have increasingly higher
temperature tolerances and more advanced electrical properties in order to
support high speed computing in a miniaturized and often portable environ-
ment.
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 .002 inch or less) and the circuit line and space
geometries in the circuitry plane are very narrow (.003 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 dimension-
al characteristics and purity are consistently manufactured to very high
tolerance levels in order for the printed circuit board fabricator to attain
and sustain acceptable production yields.
Shorter product life cycles and competitive pressures have induced
electronic equipment manufacturers to bring new products to market and
increase production volume to commercial levels more quickly. These trends
have highlighted the importance of front-end engineering of electronic
products and have increased the level of collaboration among system
designers, fabricators and printed circuit materials suppliers. As the
complexity of electronic products increases, materials suppliers must
provide greater technical support to interconnect systems fabricators on a
timely basis regarding manufacturability and performance of new materials
systems.
Products and Services
The Company produces a broad line of advanced printed circuit
materials used to fabricate complex multilayer printed circuit boards and
other electronic interconnect systems, including backplanes, PC cards and
semiconductor packaging systems. The Company also manufactures semi-
finished multilayer printed circuit board panels for a select group of
customers. 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 product line has been developed internally and through
long-term development projects with its principal suppliers. The Company
focuses its research and development efforts on developing industry leading
product technology to meet the most demanding product requirements and has
designed its product line with a focus on the higher performance, higher
technology end of the materials spectrum. All of the Company's existing
electronic materials products have been introduced since 1990.
Most of the Company's research and development expenditures are
attributable to the efforts of its electronic materials operations. In
response to the rapid technological changes in the electronic materials
business, these expenditures on research and product development have
increased over the past several years.
The Company's products include high-temperature modified epoxies,
bismaleimide triazine epoxies ("BT epoxy"), non-MDA polyimides, enhanced
polyimides, high performance epoxy Thermount(R) materials ("Thermount" is a
registered trademark of E.I. duPont de Nemours & Co.), cyanate esters and
polytetrafluoroethylene ("PTFE") materials.
During the 1996 and 1997 fiscal years, the Company introduced
several new high technology electronic materials products, including:
. N4000-13 - Nelco's high-temperature product with advanced electrical
properties for high-speed computing and telecommunications applica-
tions, which is being marketed;
. N5000-30 and N5000-32 - Nelco's advanced BT-epoxy plastic laminate chip
packaging materials for complex microprocessor cavity boards and
plastic ball grid arrays and pin grid arrays, which are being sampled
and tested by North American and European customers, and are currently
entering the market;
. N4000-X-1 - Nelco's advanced new proprietary plastic laminate chip
packaging material, which is being tested and sampled by leading
customers in North America, Asia and Europe.
. N4500-6T - Nelco's high-temperature, high speed, non-woven Thermount(R)
reinforced material suitable for advanced microvia and laservia
applications, which is being marketed; and
. Metclad's PTFE - Metclad's woven, metal-backed PTFE laminate substrate
for microwave circuitry applications, which is being marketed in
Europe.
In addition to prepreg and copper-clad laminate printed circuit
materials products, the Company also manufactures semi-finished multilayer
printed circuit board panels as a value-added service for a limited number
of its key customers. Production of the Company's semi-finished multilayer
product involves several additional manufacturing steps beginning with the
photoimaging and etching of the copper-clad laminate product into the
circuitry patterns specified by the customer. These etched laminates form
the inner layers of the multilayer circuit board. The etched inner layers
are then laminated into a multilayer assembly with insulating dielectric
prepreg inserted between the multiple etched inner layers and outer layer
copper planes. The outer planes of copper foil are left in unprocessed
"blank" form and the product is delivered to the customer at this stage in
the process. The fabricator customer then drills and plates the through
holes or vias and finishes the outer layers of circuitry patterns to
complete the product.
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 organiza-
tion. 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 relationship with its
customers is reflected in its relatively short lead times. The Company has
designed its manufacturing processes and service organizations to provide
the customer with its printed circuit materials products on a just-in-time
basis.
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 full 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.
Customers and End Markets
The Company's customers for its advanced electronic materials include
the leading independent printed circuit board fabricators and major
electronic equipment manufacturers in the computer, 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 manufactur-
ers 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. The Company's
strategy emphasizes the use of multiple facilities established in market
areas in close proximity to its customers.
During the Company's 1997 fiscal year, more than 10% of the Company's
sales were made to Delco Electronics Corporation, a subsidiary of General
Motors Corp. Delco Electronics has purchased a significant amount of
product from the Company for more than three years, and the Company believes
its relations with this customer are strong and that this customer will
continue to make significant purchases of printed circuit materials product
from the Company in the immediate future. Although the Company's electronic
materials segment is not dependent on this single customer, the loss of this
customer could have a material adverse effect on the business of this
segment. Although no other single customer accounted for 10% or more of
total sales of the Company for the 1997 fiscal year and the electronic
materials segment is not dependent on any other single customer, the loss of
a major customer or of a group of this segment's customers could have a
material adverse effect on the business of this segment.
The Company's electronic materials segment's products are marketed by
sales personnel in industrial centers in North America, Europe and Asia.
Such personnel include both salaried employees and independent sales
representatives who work on a commission basis.
Manufacturing
The process for manufacturing multilayer printed circuit materials is
capital intensive and requires sophisticated equipment as well as clean-
room environments. The key steps in the Company's manufacturing process
include: the impregnation of specially designed fiberglass cloth with a
resin system and the partial curing of that resin system; the assembling of
laminates consisting of single or multiple plies of prepreg and copper foil
in a clean-room environment; the vacuum lamination of the copper-clad
assemblies under simultaneous exposure to heat, pressure and vacuum; and the
finishing of the laminates to customer specifications.
Prepreg is manufactured in a treater. A treater is a roll-to-roll
continuous machine which sequences specially designed fiberglass cloth or
other reinforcement fabric into a resin tank and then sequences the resin-
coated cloth through a series of ovens which partially cure the resin system
into the cloth. This partially cured product or prepreg is then sheeted or
paneled and packaged by the Company for sale to customers, or used by the
Company to construct its copper-clad laminates.
The Company manufactures copper-clad laminates by first setting up in
a clean room an assembly of one or more plies of prepreg stacked together
with a sheet of specially manufactured copper foil on the top and bottom of
the assembly. This assembly, together with a large quantity of other
laminate assemblies, is then inserted into a large, multiple opening vacuum
lamination press. The laminate assemblies are then laminated under
simultaneous exposure to heat, pressure and vacuum. After the press cycle
is complete, the laminates are removed from the press and sheeted, paneled
and finished to customer specifications. The product is then inspected and
packaged for shipment to the customer.
The Company manufactures multilayer printed circuit materials at eight
fully integrated facilities located in the United States, Europe and
Southeast Asia. The Company opened its California facility in 1965, its
United Kingdom facility in 1969, its first Arizona and France facilities in
1984, its Singapore facility in 1986 and its second Arizona and France
facilities in 1992. The Company services the North American market
principally through its United States manufacturing facilities, the European
market principally through its manufacturing facilities in the United
Kingdom and France, and the Asian market principally through its Singapore
manufacturing facility. The Company has located its manufacturing
facilities in its important markets. By maintaining full 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.
During the 1996 fiscal year, the Company expanded its New York State
operations to increase its production capacity for advanced printed circuit
materials principally for the North American market and expanded its Tempe,
Arizona operations to provide enhanced capability and capacity to produce
high density, semi-finished multilayer panels and interconnect systems. It
commenced commercial operations at these expanded facilities during the
early part of its 1997 fiscal year. The Company added to the manufacturing
capacity of its facilities in Arizona and Singapore during the latter part
of its 1997 fiscal year and is planning further expansions of its electronic
materials operations in one or more additional locations during the 1998
fiscal year, particularly in the United States and Asia.
All of the Company's multilayer printed circuit materials manufacturing
facilities are used for manufacturing, engineering and product development,
except for the facility located in Lannemezan, France, which is principally
a product research and development facility, but which in the 1997 fiscal
year introduced a new woven, metal-backed PTFE laminate substrate for
microwave circuitry applications in Europe. All of the Company's printed
circuit materials manufacturing facilities are ISO 9002 certified.
Materials and Sources of Supply
The principal materials used in the manufacture of the Company's
electronic products are specially manufactured copper foil, fiberglass cloth
and synthetic reinforcements, and specially formulated resins and chemicals.
The Company attempts to develop and maintain close working relationships
with suppliers of those materials who have dedicated themselves to complying
with the Company's stringent specifications and technical requirements.
While the Company's philosophy is to work with a limited number of
suppliers, the Company has identified alternate sources of supply for each
of these materials. However, there are a limited number of qualified
suppliers of these materials, substitutes for these materials are not
readily available, and, in the recent past, the industry has experienced
shortages in the market for certain of these materials. While the Company
has not experienced significant problems in the delivery of these materials
and considers its relationships with its suppliers to be strong, a
disruption of the supply of material from one of the Company's principal
suppliers or an inability to obtain essential materials could materially
adversely affect the business, financial condition and results of operations
of the Company. Significant increases in the cost of materials purchased by
the Company could also have a material adverse effect on the Company's
business, financial condition and results of operations if the Company were
unable to pass such price increases through to its customers.
Competition
The multilayer printed circuit materials industry is characterized by
intense competition and ongoing consolidation. The Company's competitors
are primarily divisions or subsidiaries of very large, diversified
multinational manufacturers which are substantially larger and have greater
financial resources than the Company and, to a lesser degree, smaller
regional producers. Because the Company focuses on the higher technology
segment of the electronic materials market, technological innovation,
quality and service, as well as price, are significant competitive factors.
The Company believes that there are approximately ten significant
multilayer printed circuit materials manufacturers in the world and many of
these competitors have or are developing significant presences in the three
major global markets of North America, Europe and Asia. The Company
believes that the multilayer printed circuit materials industry is rapidly
becoming more global and that the remaining smaller regional manufacturers
will find it increasingly difficult to remain competitive. The Company
believes that it is currently one of the world's largest multilayer printed
circuit materials manufacturers and the market leader in North America and
Southeast Asia. The Company further believes it is the only significant
independent manufacturer of multilayer printed circuit materials in the
world today.
The markets in which the Company's electronic materials operations
compete are characterized by rapid technological advances, and the Company's
position in these markets depends largely on its continued ability to
develop technologically advanced and highly specialized products. Although
the Company believes it is an industry technology leader and directs a
significant amount of its time and resources toward maintaining its
technological competitive advantage, there is no assurance that the Company
will be technologically competitive in the future, or that the Company will
continue to develop new products that are technologically competitive.
Engineered Materials and Plumbing Hardware
The Company's engineered materials and plumbing hardware segment is
comprised of its specialty adhesive tape and film, advanced composite
materials and plumbing hardware businesses. Dielectric Polymers, Inc., the
Company's specialty adhesive tape and film business, produces tapes and
bonding films for a variety of applications including joining industrial
components together. FiberCote Industries, Inc., the Company's composites
business, designs and produces engineered advanced composite materials for
the electronics, aerospace and industrial markets. Zin-Plas Corporation
markets plumbing hardware products, which it designs and manufactures
typically from chrome and brass plated zinc and plastic, and markets brass
cast and plastic plumbing hardware products and components.
Marketing and Customers
The Company's engineered materials and plumbing hardware customers,
substantially all of which are located in the United States, include
manufacturers in the electronics, aerospace and industrial industries and
original equipment manufacturers, hardware and plumbing wholesalers and home
improvement centers. All of such products are marketed by sales personnel
including both salaried employees and independent sales representatives who
work on a commission basis.
While no single engineered materials and plumbing hardware customer
accounted for 10% or more of the Company's total sales during the last
fiscal year, the loss of a major customer or of a group of some of the
largest customers of the engineered materials and plumbing hardware segment
could have a material adverse effect upon this segment.
Manufacturing and Sources of Supply
The Company's advanced composite materials manufacturing facility is
located in Waterbury, Connecticut. Holyoke, Massachusetts is the site of
the Company's specialty adhesive tape and film business. Zinc and plastic
plumbing hardware products are manufactured and assembled at the Company's
facilities in Grand Rapids and Comstock Park, Michigan. The Company's brass
cast plumbing hardware products are designed by the Company and manufactured
by a prominent Mexican faucet manufacturer under a long-term contract
between the Company and this manufacturer.
The Company designs and manufactures its advanced composite materials
and industrial tapes and films to its own specifications and to the
specifications of its customers. Product development efforts are devoted
toward the conforming of the Company's advanced composites to the specifica-
tions of, and the obtaining of approvals from, the Company's customers. The
materials used in the manufacture of these engineered materials include
chemicals, films, resins, fiberglass, plastics, and other fabricated
materials and adhesives. The Company purchases these materials from several
suppliers. Although satisfactory substitutes for many of these materials
are not readily available, the Company has experienced no difficulties in
obtaining such materials.
The Company designs and manufactures its plumbing hardware to its own
specifications and to the specifications of original equipment manufactur-
ers, using combinations of materials and product designs that are developed
by its personnel. The Company's product development efforts relating to its
plumbing hardware business operations are directed toward the development of
new decorative plumbing hardware product designs and new materials to be
used in the manufacture of plumbing products. This requires market
research, industrial design, engineering and testing for ease of installa-
tion and durability. The Company usually combines chrome-plated zinc and
plastic moldings for its products.
The principal materials used in the manufacture of the Company's
plumbing hardware products consist of zinc castings, plastics, plating
materials, and other component parts. The Company purchases these materials
from several suppliers. Although satisfactory substitutes for these
materials are not readily available, the Company has experienced no
difficulties in obtaining such materials. The Company purchases brass
castings from one supplier and the Company has a long-term contract with
this supplier.
Competition
The Company has many competitors in the engineered materials and
plumbing hardware segment, including some major corporations which have
substantially greater financial resources than the Company. The Company
competes for business on the basis of product performance and development,
product qualification and approval, the ability to manufacture and deliver
products in accordance with customers' needs and requirements, and price.
The Company's plumbing hardware business can be affected by fluctuations in
the housing industry.
Backlog
The Company records an item as backlog when it receives a purchase
order specifying the number of units to be purchased, the purchase price,
specifications and other customary terms and conditions. At May 2, 1997,
the unfilled portion of all purchase orders believed to be firm was
approximately $21,524,000, compared to $18,917,000 at May 3, 1996. Backlog
of the Company's two industry segments at May 2, 1997, compared to May 3,
1996, was as follows:
May 2, 1997 May 3, 1996
Electronic Materials $13,784,000 $ 9,747,000
Engineered Materials and
Plumbing Hardware 7,740,000 9,170,000
Total $21,524,000 $18,917,000
Various factors contribute to the size of the Company's backlog.
Accordingly, the foregoing information may not be indicative of the
Company's results of operations for any period subsequent to the fiscal year
ended March 2, 1997.
Patents and Trademarks
The Company holds several patents and trademarks or licenses thereto.
In the Company's opinion, some of these patents and trademarks are important
to its products. Generally, however, the Company does not believe that an
inability to obtain new, or to defend existing, patents and trademarks would
have a material adverse effect on the Company.
Employees
At March 2, 1997, the Company had approximately 2,340 employees. Of
these employees, 2,060 were engaged in the Company's electronic materials
operations, 260 in its engineered materials and plumbing hardware operations
and 20 consisted of executive personnel and general administrative staff.
Approximately 2% of the Company's employees, all of whom are engaged in the
plumbing hardware operations, are subject to collective bargaining
agreements. Management considers its labor relations to be satisfactory.
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 environ-
mental 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 nine
sites. In addition, a subsidiary of the Company has received cost recovery
claims under the Superfund Act from other private parties involving three
other sites and has received requests from the EPA under the Superfund Act
for information with respect to its involvement at two 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 comprehen-
sive environmental compliance program. Management believes the ultimate
disposition of known environmental matters will not have a material adverse
effect upon the Company.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Environmental Matters" included in Item 7 of this
Report and Note 11 of the Notes to Consolidated Financial Statements
included in Item 8 of this Report.
Item 2. Properties.
The following chart indicates the significant properties owned and
leased by the Company, the industry segment which uses the properties, and
the location and size of each such property. All of such properties, except
for the Lake Success, New York property, are used principally as manufactur-
ing, warehouse and assembly facilities.
Size
Owned or (Square
Location Leased Use Footage)
Lake Success, NY Leased Executive Offices 7,000
Walden, NY Owned Electronic Materials 51,000
Newburgh, NY Leased Electronic Materials 57,000
Fullerton, CA Leased Electronic Materials 95,000
Anaheim, CA Leased Electronic Materials 26,000
Tempe, AZ Leased Electronic Materials 86,000
Tempe, AZ Leased Electronic Materials 38,000
Tempe, AZ Leased Electronic Materials 15,000
Mirebeau, France Owned Electronic Materials 81,000
Lannemezan, France Owned Electronic Materials 29,000
Skelmersdale, England Owned Electronic Materials 54,000
Singapore Leased Electronic Materials 48,000
Singapore Leased Electronic Materials 10,000
Grand Rapids, MI Owned Plumbing Hardware 165,000
Comstock Park, MI Leased Plumbing Hardware 39,000
Holyoke, MA Leased Engineered Materials- 34,000
Specialty Adhesive
Tapes and Films
Waterbury, CT Leased Engineered Materials- 100,000
Advanced Composites
The Company believes its facilities and equipment to be in good
condition and reasonably suited and adequate for its current needs.
Item 3. Legal Proceedings.
(a) There are no material pending legal proceedings to which the
Company is a party or to which any of its properties is subject.
(b) No material pending legal proceeding was terminated during the
fiscal quarter ended March 2, 1997.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Executive Officers of the Registrant.
Name Title Age
Jerry Shore Chairman of the Board and a 71
Director
Brian E. Shore Chief Executive Officer, President 45
and a Director
E. Phillip Smoot Executive Vice President and a 59
Director
Susan J. Denenholz Vice President-Planning and Analysis 44
Jerry Shore has served the Company in the capacities stated above
for more than the past five years. He also served as President of the
Company for more than five years until March 4, 1996 and as Chief Executive
Officer of the Company for more than five years until November 19, 1996.
Brian Shore has served as a Director of the Company for more than
the past five years. Brian Shore was elected a Vice President of the
Company in January 1993, Executive Vice President in May 1994, President
effective March 4, 1996, the first day of the Company's last fiscal year,
and Chief Executive Officer in November 1996. Brian Shore also served as
General Counsel of the Company from April 1988 until April 1994.
Mr. Smoot has served the Company in the capacities stated above for
more than the past five years.
Ms. Denenholz became Vice President-Planning and Analysis in
December 1996. Prior to December 1996, she was employed by Dun & Bradstreet
Corporation, as Assistant Vice President, Acquisitions from 1992, Director,
Acquisitions Analysis, from 1982 to 1992 and Manager, Business Analysis from
1979 to 1982. From 1975 to 1979, she was employed by RCA Corporation. Ms.
Denenholz is a certified public accountant and a member of the New York
State Bar.
There are no family relationships between the directors or executive
officers of the Company, except that Brian Shore is the son of Jerry Shore.
The term of office of each executive officer of the Company expires
upon the election and qualification of his or her successor.
PART II
Item 5. Market for the Registrant's Common
Stock and Related Stockholder Matters.
The Company's Common Stock is listed and trades on the New York
Stock Exchange (trading symbol PKE). (The Common Stock also trades on the
Midwest Stock Exchange.) The following table sets forth, for each of the
quarterly periods indicated, the high and low sales prices for the Common
Stock as reported on the New York Stock Exchange Composite Tape and
dividends declared on the Common Stock, all as adjusted for the two-for-one
stock split in the form of a stock dividend distributed August 15, 1995 to
shareholders of record at the close of business on July 24, 1995.
For the Fiscal Year Stock Price Dividends
Ended March 2, 1997 High Low Declared
First Quarter $33 3/8 $21 3/4 $.08
Second Quarter 24 5/8 16 3/4 $.08
Third Quarter 24 17 1/2 $.08
Fourth Quarter 26 1/2 20 7/8 $.08
For the Fiscal Year Stock Price Dividends
Ended March 3, 1996 High Low Declared
First Quarter $20 1/16 $16 7/8 $.06
Second Quarter 31 1/2 17 1/8 $.06
Third Quarter 34 1/8 28 $.08
Fourth Quarter 37 7/8 28 3/8 $.08
As of May 2, 1997, there were 2,434 holders of record of Common
Stock.
The Company expects, for the immediate future, to continue to pay
regular cash dividends.
Item 6. Selected Financial Data.
The following selected consolidated financial data of Park and its
subsidiaries is qualified by reference to, and should be read in conjunction
with, the consolidated financial statements, related notes, and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained elsewhere herein. Insofar as such consolidated financial
information relates to the five fiscal years ended March 2, 1997 and is as
of the end of such periods, it is derived from the consolidated financial
statements for such periods and as of such dates audited by Ernst & Young
LLP, independent Certified Public Accountants, for the four fiscal years
ended March 2, 1997 and Deloitte & Touche LLP, independent Certified Public
Accountants, for the fiscal year ended February 28, 1993. The consolidated
financial statements as of March 2, 1997 and March 3, 1996 and for the three
years ended March 2, 1997, together with the auditors' reports for the three
years ended March 2, 1997, appear elsewhere in this Report.
Item 6
Fiscal Year Ended
Mar. 2, Mar. 3, Feb. 26, Feb. 27, Feb. 28,
1997 1996 1995 1994 1993
(In thousands, except per share amounts)
STATEMENT OF EARNINGS INFORMATION:
Net sales $334,490 $312,966 $253,022 $208,410 $175,176
Cost of sales 275,372 242,655 196,917 168,175 149,145
Gross profit 59,118 70,311 56,105 40,235 26,031
Selling, general and administrative
expenses 34,366 35,236 29,995 25,930 22,865
Profit from operations 24,752 35,075 26,110 14,305 3,166
Other income (expense):
Interest and other income, net 7,653 2,285 1,822 947 1,967
Interest expense (5,508) (96) (431) (2,407) (2,058)
Total other income 2,145 2,189 1,391 (1,460) (91)
Earnings before income taxes 26,897 37,264 27,501 12,845 3,075
Income tax provision 8,338 12,366 10,156 4,783 810
Net earnings $ 18,559 $ 24,898 $ 17,345 $ 8,062 $ 2,265
Earnings per share:
Primary $ 1.61 $ 2.11 $ 1.59 $ 1.01 $ .25
Fully diluted $ 1.59 $ 2.10 $ 1.52 $ .84 $ .25
Weighted average number of common
and common equivalent shares
outstanding:
Primary 11,551 11,794 10,858 7,986 9,068
Fully diluted 13,932 11,860 11,570 11,454 9,068
Cash dividends per common share $ .32 $ .28 $ .20 $ .16 $ .16
BALANCE SHEET INFORMATION:
Working capital $165,004 $160,965 $ 55,035 $ 45,867 $ 45,811
Total assets 307,862 298,975 162,051 140,750 129,009
Long-term debt 100,000 100,000 23 32,861 33,957
Stockholders' equity 143,355 134,427 112,048 61,454 60,700
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Park is a leading global designer and producer of advanced
electronic materials used to fabricate complex multilayer printed circuit
boards, semiconductor packages and other electronic interconnect systems.
The Company's customers for its advanced printed circuit materials include
leading independent circuit board fabricators and large electronic equipment
manufacturers in the computer, telecommunications, transportation, aerospace
and instrumentation industries. The Company's electronic materials
operations accounted for approximately 86% of net sales worldwide and more
than 89% of operating profit in each of the last three fiscal years. The
Company's foreign electronic materials operations accounted for approximate-
ly 29% of net sales worldwide for each of the last two fiscal years and
approximately 24% for the 1995 fiscal year.
Park is also engaged in the engineered materials and plumbing
hardware business, which consists of the Company's specialty adhesive tape
business, its advanced composite business and its plumbing hardware
business, all of which operate as independent business units. This segment
accounted for approximately 14% of the Company's total net sales worldwide
and less than 11% of operating profit in each of the last three fiscal
years.
The Company's sales growth during the last three fiscal years has
been led by strong growth in sales by its North American and Asian
electronic materials operations. During the last two fiscal years,
increased sales by the Company's European operations have also contributed
to this growth. The Company's ongoing efforts to expand its higher
technology, higher margin product lines have contributed to the growth of
the Company's sales of electronic materials during this period. The Company
introduced several new electronic materials products during the 1996 and
1997 fiscal years.
Sales volume of the Company's electronic materials segment has
increased during each of the last three fiscal years. However, growth of
the Company's electronic materials business was interrupted in the first
quarter of the 1997 fiscal year by an abrupt and unexpected weakening of the
market for the Company's products which continued until the fourth quarter
when the market strengthened. In addition, growth of the Company's
electronic materials business was constrained during the 1996 fiscal year
and the fourth quarter of the 1997 fiscal year by the Company's available
manufacturing capacity. During the 1996 fiscal year, the Company expanded
its manufacturing capacity in New York and Arizona and commenced commercial
operations in both locations during the early part of the 1997 fiscal year.
The Company further expanded the manufacturing capacity of its facilities in
Arizona and Singapore during the later part of the 1997 fiscal year and is
planning additional expansions of its electronic materials operations in the
1998 fiscal year.
Fiscal Year 1997 Compared with Fiscal Year 1996:
The Company's electronic materials business was responsible for the
decline in the Company's results of operations for the fiscal year ended
March 2, 1997. The North American, European and Asian markets for sophisti-
cated printed circuit materials experienced weakness during the first half
of the 1997 fiscal year which continued into the third quarter in the North
American and European markets. The Company believes this weakness was
principally attributable to an industry-wide inventory correction that began
in the first quarter.
During the 1997 fiscal year, the Company's electronic materials
business experienced inefficiencies caused by operating its facilities at
levels significantly lower than their designed manufacturing capacity in the
first three quarters and faced price pressure from its customers resulting
in an inability to pass along raw material cost increases which it received
earlier in the current year. These factors adversely affected the Company's
margins. The Company's performance during the 1997 fiscal year was also
adversely affected by significant disruptions of the Company's business with
its largest customer, Delco Electronics Corporation, caused by the Canadian
Auto Workers' and United Auto Workers' strikes against General Motors in the
first and third quarters of the fiscal year. The improvement in the
Company's margins in the second quarter over the first quarter was achieved
from internal operating adjustments in response to the industry downturn
that occurred in the first quarter and the return of Delco Electronics to
more normal business levels after the aforementioned strikes. The
improvement in the Company's margins in the fourth quarter over the third
quarter resulted from the return of Delco Electronics to more normal
business levels after the aforementioned strikes and the strengthening of
the market for the Company's products in the fourth quarter.
Operating results of the Company's engineered materials and plumbing
hardware business improved considerably during the 1997 fiscal year and
accounted for approximately 11% of the Company's total operating profit.
Results of Operations
Sales for the fiscal year ended March 2, 1997 increased 7% to $334.5
million from $313.0 million for the fiscal year ended March 3, 1996. Sales
of the electronic materials business for the 1997 fiscal year were $291.1
million, or 87% of total sales worldwide, compared with $274.9 million, or
88% of total sales worldwide, for the 1996 fiscal year. This 6% increase in
sales of electronic materials was principally the result of higher volume of
electronic materials shipped and an increase in sales of higher technology
products. Sales of the engineered materials and plumbing hardware business
for the 1997 fiscal year increased 14% to $43.3 million from $38.1 million
for the 1996 fiscal year due primarily to increased sales in the specialty
adhesive tape and advanced composite materials businesses resulting from new
products and higher volumes in both businesses.
The Company's foreign operations accounted for $99.5 million of sales,
or 30% of the Company's total sales worldwide, during the 1997 fiscal year
compared with $91.7 million of sales, or 29% of total sales worldwide,
during the 1996 fiscal year. Sales by the Company's foreign operations
during the 1997 fiscal year increased 9% from the 1996 fiscal year. While
sales by each of the Company's foreign operations were higher in the 1997
fiscal year compared with the 1996 fiscal year, the increase in sales by
foreign operations was principally due to an increase in sales by the
Company's Asian operations. A further expansion of the Company's Singapore
manufacturing facility is planned during the Company's 1998 fiscal year.
The gross margin for the Company's worldwide operations was 17.7%
during the 1997 fiscal year compared with 22.5% for the 1996 fiscal year.
The decline in the gross margin was attributable to inefficiencies resulting
from dramatic volume fluctuations during the year, the impact of disruptions
to the Company's business with its largest customer, Delco Electronics
Corporation, due to strikes against General Motors, selling price pressure
and operating certain facilities at levels lower than their designed
capacity, which were partially offset by the continuing growth in sales of
higher technology, higher margin products.
Selling, general and administrative expenses, measured as a percentage
of sales, were 10.3% during the 1997 fiscal year compared with 11.3% during
the 1996 fiscal year. This reduction was a function of the partially fixed
nature of the selling, general and administrative expenses relative to the
increase in sales and lower incentive payments due to lower operating
profits.
For the reasons set forth above, profit from operations for the 1997
fiscal year decreased 29% to $24.8 million from $35.1 million for the 1996
fiscal year.
Interest and other income, principally investment income, increased
235% to $7.7 million for the 1997 fiscal year from $2.3 million for the 1996
fiscal year. Interest expense for the 1997 fiscal year was $5.5 million
compared with $0.1 million during the 1996 fiscal year. The increases in
investment income and interest expense were attributable to the increase in
cash available for investment and the additional interest expense resulting
from the Company's issuance of $100 million principal amount of 5.5%
Convertible Subordinated Notes due 2006 at the end of the 1996 fiscal year.
The Company's investments were primarily short-term taxable instruments and
government securities.
The Company's effective income tax rate for the 1997 fiscal year was
31.0% compared with 33.2% for the 1996 fiscal year. This decrease in the
effective tax rate was primarily the result of favorable foreign tax rate
differentials.
Net earnings for the 1997 fiscal year were $18.6 million compared to
$24.9 million for the 1996 fiscal year. Primary and fully diluted earnings
per share decreased to $1.61 and $1.59, respectively, for the 1997 fiscal
year from $2.11 and $2.10, respectively, for the 1996 fiscal year. This
decrease in net earnings and earnings per share was primarily attributable
to the decrease in the profit from operations.
Fiscal Year 1996 Compared with Fiscal Year 1995:
The Company's electronic materials business was responsible for the
improvement in the Company's results of operations for the fiscal year ended
March 3, 1996. The North American and Asian markets for sophisticated
printed circuit materials were strong during the 1996 fiscal year, and the
Company's electronic materials operations located in these regions performed
well as a result. While the market in Europe for sophisticated printed
circuit materials was not as strong as in North America or Asia, it improved
over the prior fiscal year, and the Company's European operations benefitted
from this improvement.
During the 1996 fiscal year, the Company's electronic materials
business incurred raw material cost increases and additional costs
associated with the Company's major expansion projects in Newburgh, New York
and Tempe, Arizona. In addition, the electronic materials business
experienced temporary inefficiencies caused by operating certain facilities
at levels in excess of their designed manufacturing capacity. These cost
increases and temporary operating inefficiencies adversely affected the
Company's gross margins. However, the Company was able to offset such
effects by improving its overall operating efficiencies, in part, by
consolidating functions, by continuing to reduce manufacturing waste and
improve yields, and by improving the overall productivity of its workforce.
In addition, the Company redesigned product in order to reduce material
costs. The Company was also able to offset these cost increases and
inefficiencies through its ongoing efforts to expand its higher technology,
higher margin product lines.
Operating results of the Company's engineered materials and plumbing
hardware business improved slightly but were not significant during the 1996
fiscal year.
Results of Operations
Sales for the fiscal year ended March 3, 1996 increased 24% to $313.0
million from $253.0 million for the fiscal year ended February 26, 1995.
Sales of the electronic materials business for the 1996 fiscal year were
$274.9 million, or 88% of total sales worldwide, compared with $218.3
million, or 86% of total sales worldwide, for the 1995 fiscal year. This
26% increase in sales of electronic materials was principally the result of
higher volume of electronic materials shipped and an increase in sales of
higher technology products. Sales of the engineered materials and plumbing
hardware business for the 1996 fiscal year increased 10% to $38.1 million
from $34.7 million for the 1995 fiscal year due primarily to increased sales
in the specialty adhesive tape and plumbing hardware businesses resulting
from new products and higher volumes.
The Company's foreign operations accounted for $91.7 million of sales,
or 29% of the Company's total sales worldwide, during the 1996 fiscal year
compared with $61.9 million of sales, or 24% of total sales worldwide,
during the 1995 fiscal year. Sales by the Company's foreign operations
during the 1996 fiscal year increased 48% from the 1995 fiscal year. While
sales by each of the Company's foreign operations were higher in the 1996
fiscal year compared with the 1995 fiscal year, the increase in sales by
foreign operations was principally due to an increase in sales by the
Company's Asian operations. An expansion of the Company's Singapore
manufacturing facility was completed at the end of the Company's 1995 fiscal
year.
The gross margin for the Company's worldwide operations was 22.5%
during the 1996 fiscal year compared with 22.2% for the 1995 fiscal year.
The improvement in the gross margin was attributable to the increase in
sales volume over the prior fiscal year, the continuing growth in sales of
higher technology, higher margin products and improved operating efficien-
cies. This improvement was offset in part by higher raw material costs,
costs associated with the start-up of the new facilities in New York and
Arizona, and inefficiencies caused by operating certain facilities at levels
in excess of designed capacity.
Selling, general and administrative expenses, measured as a percentage
of sales, were 11.3% during the 1996 fiscal year compared with 11.9% during
the 1995 fiscal year. This reduction was a function of the partially fixed
nature of the selling, general and administrative expenses relative to the
increase in sales.
For the reasons set forth above, profit from operations for the 1996
fiscal year increased 34% to $35.1 million from $26.1 million for the 1995
fiscal year.
Interest and other income, principally investment income, increased
25% to $2.3 million for the 1996 fiscal year from $1.8 million for the 1995
fiscal year. The increase in investment income was attributable to the
increase in the prevailing interest rates during the current year and to the
increase in cash available for investment. The Company's investments were
primarily short-term taxable instruments and government securities.
Interest expense for the 1996 fiscal year was minimal compared with $0.4
million during the 1995 fiscal year. During the first quarter of the prior
fiscal year, the Company called its 7.25% Convertible Subordinated
Debentures for redemption; as a result, nearly all of such Debentures
outstanding at the beginning of the prior fiscal year were converted into
Common Stock during that fiscal year's first quarter, which eliminated the
Company's long-term debt and the associated interest expense.
The Company's effective income tax rate for the 1996 fiscal year was
33.2% compared with 36.9% for the 1995 fiscal year. This decrease in the
effective tax rate was primarily the result of favorable foreign tax rate
differentials.
Net earnings for the 1996 fiscal year increased 44% to $24.9 million
from $17.3 million for the 1995 fiscal year. Primary and fully diluted
earnings per share increased to $2.11 and $2.10, respectively, for the 1996
fiscal year from $1.59 and $1.52, respectively, for the 1995 fiscal year.
This increase in net earnings and earnings per share was primarily
attributable to the increase in the profit from operations, the effects of
the conversion of the Debentures and the lower effective tax rate.
Liquidity and Capital Resources:
At March 2, 1997, the Company's cash and temporary investments were
$144.6 million compared with $143.2 million at March 3, 1996, the end of the
Company's 1996 fiscal year. The increase in the Company's cash and
investment position at March 2, 1997 was attributable to cash provided from
operating activities in excess of investments in property, plant and
equipment, as discussed below. The Company's working capital was $165.0
million at March 2, 1997 compared with $161.0 million at March 3, 1996. The
increase at March 2, 1997 compared with March 3, 1996 was due to the
increases in cash and receivables, offset in part by lower inventories. The
increase in receivables at March 2, 1997 compared with March 3, 1996 was due
principally to increased sales; the decrease in inventories for the same
period was due to the utilization of raw materials accumulated in the 1996
fiscal year to ensure adequate supply of such materials. The Company's
current ratio (the ratio of current assets to current liabilities) was 4.0
to 1 at March 2, 1997 compared with 3.8 to 1 at March 3, 1996.
During the 1997 fiscal year, the Company generated funds from
operations of $29.2 million and expended $18.7 million for the purchase of
property, plant and equipment. Cash provided by net earnings before
depreciation and amortization of $30.1 million was reduced by a net increase
in non-cash working capital items, resulting in $29.2 million of cash
provided from operating activities. A significant portion of the 1997
fiscal year's capital expenditures related to installation of additional
capacity at the Company's electronic materials facilities in Tempe, Arizona
and Singapore. These expansions will increase the Company's capacity and
capability for the production of sophisticated printed circuit materials.
Expenditures for property, plant and equipment were $18.7 million, $24.5
million and $17.5 million in the 1997, 1996 and 1995 fiscal years, respec-
tively. The Company expects the level of capital expenditures in the 1998
fiscal year to be in excess of the expenditures in the 1997 fiscal year.
The Company is planning further expansions of its electronic materials
operations, particularly in the United States and Asia.
At March 2, 1997, the Company's only long-term debt was the 5.5%
Convertible Subordinated Notes due 2006 (the "Notes") issued at the end of
the 1996 fiscal year. The Company believes its financial resources will be
sufficient, for the foreseeable future, to provide for continued investment
in property, plant and equipment and for general corporate purposes. Such
resources, including the proceeds from the Notes, would also be available
for appropriate acquisitions and other expansions of the Company's business.
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 1997, 1996 and 1995 fiscal years, the Company charged
approximately $0.2 million, $0.1 million and $0.2 million, respectively,
against pretax income for remedial response and voluntary cleanup costs
(including legal fees). While annual expenditures have generally been
constant from year to year, and may increase over time, the Company expects
it will be able to fund such expenditures from cash flow from operations.
The timing of expenditures depends on a number of factors, including
regulatory approval of cleanup projects, remedial techniques to be utilized
and agreements with other parties. At March 2, 1997, the recorded liability
in accrued liabilities for environmental matters was $1.2 million.
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 11 of the Notes to
Consolidated Financial Statements included in Item 8 of this Report for a
discussion of the Company's commitments and contingencies, including those
related to environmental matters.
Factors That May Affect Future Results.
The Private Securities Litigation Reform Act of 1995 provides a new
"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. 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 state-
ments.
. The Company's business is dependent on certain aspects of the
electronics industry, which is a cyclical industry and which has
experienced recurring downturns. The downturns, such as occurred in
the first quarter of the Company's fiscal year ended March 2, 1997,
can be unexpected and have often reduced demand for, and prices of,
electronic materials.
. The Company's operating results are affected by a number of factors,
including various factors beyond the Company's control. Such factors
include economic conditions in the electronics industry, the timing of
customer orders, product prices, process yields, the mix of products
sold and maintenance-related shutdowns of facilities. Operating
results also can be influenced by development and introduction of new
products and the costs associated with the start-up of new facilities.
. Rapid technological advances in semiconductors and electronic
equipment have placed rigorous demands on the electronic 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 electronic materials industry is intensely competitive and the
Company competes worldwide in the market for materials used in the
production of complex multilayer printed circuit boards. The
Company's competitors are substantially larger and have greater
financial resources than the Company, and the Company's operating
results will be affected by its ability to maintain its competitive
position in the industry.
. There are a limited number of qualified suppliers of the principal
materials used by the Company in its manufacture of electronic
materials products. Substitutes for these products are not readily
available, and in the recent past there have been shortages in the
market for certain of these materials.
. The Company's customer base is concentrated, in part, because the
Company's business strategy has been to develop long-term relation-
ships with a select group of customers. During the Company's fiscal
year ended March 2, 1997, the Company's ten largest customers
accounted for approximately 46% 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.
. 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 for electronic materials. The
anticipated costs of such expansions cannot be determined with
precision and may vary materially from those budgeted. In addition,
such expansions will increase the Company's fixed costs. The
Company's future profitability depends upon its ability to utilize its
manufacturing capacity in an effective manner.
. The Company's business is capital intensive and, in 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. This may require that the
Company continue to be able to access capital on terms acceptable to
the Company.
. The Company may acquire businesses, product lines or 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 risks, including
unexpected changes in regulatory requirements, exchange rates, tariffs
and other barriers, political and economic instability and potentially
adverse tax consequences.
. 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 8. Financial Statements and Supplementary Data.
The Company's Financial Statements begin on the next page.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Park Electrochemical Corp.
Lake Success, New York
We have audited the accompanying consolidated balance sheets of Park
Electrochemical Corp. and subsidiaries as of March 2, 1997 and March 3, 1996
and the related consolidated statements of earnings, stockholders' equity,
and cash flows for each of the three years in the period ended March 2,
1997. Our audits also included the financial statement schedule listed in
the Index at Item 14(a)(2). These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Park Electrochemical Corp. and subsidiaries as of March 2, 1997
and March 3, 1996 and the consolidated results of their operations and their
cash flows for each of the three years in the period ended March 2, 1997, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
April 18, 1997
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share amounts)
March 2, March 3,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents $ 42,321 $ 75,970
Marketable securities (Note 2) 102,232 67,243
Accounts receivable, less allowance for
doubtful accounts of $1,746 and $1,857,
respectively 50,314 42,821
Inventories (Note 3) 20,458 27,712
Prepaid expenses and other current
assets (Note 7) 5,089 4,026
Total current assets 220,414 217,772
Property, plant and equipment, at cost, less
accumulated depreciation and amortization
(Note 4) 83,391 76,439
Other assets (Notes 7 and 10) 4,057 4,764
Total $307,862 $298,975
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,892 $ 35,924
Accrued liabilities (Note 5) 18,565 16,941
Income taxes payable 3,953 3,942
Total current liabilities 55,410 56,807
Long-term debt (Note 6) 100,000 100,000
Deferred income taxes (Note 7) 7,963 6,324
Deferred pension liability (Note 10) 1,134 1,417
Commitments and contingencies (Notes 10 and 11)
Stockholders' equity (Notes 6, 8, 9 and 10):
Preferred stock, $1 par value per share--
authorized, 500,000 shares; issued, none - -
Common stock, $.10 par value per share--
authorized, 30,000,000; issued, 13,580,018
shares 1,358 1,358
Additional paid-in capital 51,290 50,958
Retained earnings 108,804 93,892
Currency translation adjustments 831 1,328
Pension liability adjustment (850) (1,001)
Unrealized losses on investments (11) (30)
161,422 146,505
Less treasury stock, at cost, 2,307,765 and
2,033,704 shares, respectively (18,067) (12,078)
Total stockholders' equity 143,355 134,427
Total $307,862 $298,975
See notes to consolidated financial statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
March 2, March 3, February 26,
1997 1996 1995
Net sales $334,490 $312,966 $253,022
Cost of sales 275,372 242,655 196,917
Gross profit 59,118 70,311 56,105
Selling, general and administrative
expenses 34,366 35,236 29,995
Profit from operations 24,752 35,075 26,110
Other income (expense):
Interest and other income, net 7,653 2,285 1,822
Interest expense (Note 6) (5,508) (96) (431)
Total other income 2,145 2,189 1,391
Earnings before income taxes 26,897 37,264 27,501
Income tax provision (Note 7) 8,338 12,366 10,156
Net earnings $ 18,559 $ 24,898 $ 17,345
Earnings per share (Note 9):
Primary $1.61 $2.11 $1.59
Fully diluted $1.59 $2.10 $1.52
See notes to consolidated financial statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except shares and per share amounts)
Additional Currency Pension Unrealized
Common Stock Paid-in Retained Translation Liability Losses on Treasury Stock
Shares Amount Capital Earnings Adjustments Adjustment Investments Shares Amount
Balance, February 27, 1994 10,407,650 $1,041 $17,444 $ 57,098 $ 177 $(1,148) $ - 2,301,284 $(13,158)
Net earnings 17,345
Exchange rate changes 1,368
Change in pension
liability adjustment 176
Market revaluation (139)
Stock options exercised 696 (212,700) 1,220
Conversion of debentures 3,172,368 317 32,588
Cash dividends ($.20 per
share) (2,227)
Purchase of treasury stock 47,832 (750)
Balance, February 26, 1995 13,580,018 1,358 50,728 72,216 1,545 (972) (139) 2,136,416 (12,688)
Net earnings 24,898
Exchange rate changes (217)
Change in pension
liability adjustment (29)
Market revaluation 109
Stock options exercised 230 (102,726) 610
Cash dividends ($.28 per
share) (3,222)
Purchase of treasury stock 14 -
Balance, March 3, 1996 13,580,018 1,358 50,958 93,892 1,328 (1,001) (30) 2,033,704 (12,078)
Net earnings 18,559
Exchange rate changes (497)
Change in pension
liability adjustment 151
Market revaluation 19
Stock options exercised 332 (84,868) 547
Cash dividends ($.32 per
share) (3,647)
Purchase of treasury stock 358,929 (6,536)
Balance, March 2, 1997 13,580,018 $1,358 $51,290 $108,804 $ 831 $ (850) $ (11) 2,307,765 $(18,067)
See notes to consolidated financial statements.
/TABLE
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
52 Weeks 53 Weeks 52 Weeks
Ended Ended Ended
March 2, March 3, February 26,
1997 1996 1995
Cash flows from operating activities:
Net earnings $ 18,559 $ 24,898 $ 17,345
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 11,584 9,849 8,951
Provision for doubtful accounts receivable (306) (495) (44)
(Gain) loss on sale of marketable securities (16) (38) 17
Provision for deferred income taxes 1,596 1,425 355
Accrued interest in connection with
Debenture conversion - - 389
Other, net 65 64 (89)
Changes in operating assets and liabilities:
(Increase) in accounts receivable (7,612) (9,277) (3,536)
Decrease (increase) in inventories 7,202 (11,671) 249
(Increase) in prepaid expenses and
other current assets (1,456) (1,057) (77)
Decrease (increase) in other assets 122 (42) 25
(Decrease) increase in accounts payable (2,528) 11,409 (620)
Increase in accrued liabilities 1,700 1,108 3,719
Increase in income taxes payable 286 1,260 277
Net cash provided by operating activities 29,196 27,433 26,961
Cash flows from investing activities:
Purchases of property, plant and equipment, net (18,735) (24,510) (17,523)
Purchases of marketable securities (137,897) (74,881) (11,161)
Proceeds from sales of marketable securities 103,330 22,952 19,827
Net cash used in investing activities (53,302) (76,439) (8,857)
Cash flows from financing activities:
Convertible notes offering - 100,000 -
Convertible notes issuance costs - (3,250) -
Repayments of borrowings - - (84)
Dividends paid (3,647) (3,222) (2,227)
Proceeds from exercise of stock options 604 697 1,499
Purchase of treasury stock (6,535) - (750)
Other - 4 (100)
Net cash (used in) provided by
financing activities (9,578) 94,229 (1,662)
(Decrease) increase in cash and cash equivalents
before effect of exchange rate changes (33,684) 45,223 16,442
Effect of exchange rate changes on
cash and cash equivalents 35 (56) 226
(Decrease) increase in cash and cash equivalents (33,649) 45,167 16,668
Cash and cash equivalents, beginning of year 75,970 30,803 14,135
Cash and cash equivalents, end of year $ 42,321 $ 75,970 $ 30,803
See notes to consolidated financial statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three years ended March 2, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Park Electrochemical Corp. ("Park"), through its subsidiaries
(collectively, the "Company"), is a leading global designer and producer
of advanced electronic materials used to fabricate complex multilayer
printed circuit boards, semiconductor packages and other electronic
interconnect systems. The Company's multilayer printed circuit board
materials include copper-clad laminates, prepregs and semi-finished
multilayer printed circuit board panels. 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 and passive components. The Company also
designs and manufactures specialty adhesive tapes, advanced composite
materials, microwave circuitry materials and plumbing hardware for the
electronics, aerospace, industrial and plumbing markets.
a. Principles of Consolidation - The consolidated financial statements
include the accounts of Park and its subsidiaries, all of which are
wholly-owned. All significant intercompany balances and transactions
have been eliminated.
b. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
c. Accounting Period - The Company's fiscal year is the 52 or 53 week
period ending the Sunday nearest to the last day of February. The
1997, 1996 and 1995 fiscal years ended on March 2, 1997, March 3, 1996
and February 26, 1995, respectively. Fiscal 1997 and 1995 each
included 52 weeks; fiscal 1996 included 53 weeks.
d. Marketable Securities - All marketable securities are classified as
available-for-sale and are carried at fair value, with the unrealized
gains and losses, net of tax, reported as a separate component of
stockholders' equity. Realized gains and losses, amortization of
premiums and discounts, and interest and dividend income are included
in other income. The cost of securities sold is based on the specific
identification method.
e. Inventories - Inventories are stated at the lower of cost (first-in,
first-out method) or market.
f. Revenue Recognition - Revenues are recognized at the time product is
shipped to the customer.
g. Depreciation and Amortization - Depreciation and amortization are
computed principally by the straight-line method over the estimated
useful lives of the related assets or, with respect to leasehold
improvements, the term of the lease, if shorter.
h. Deferred Charges - Costs incurred in connection with the issuance of
debt financing are deferred and included in other assets and
amortized, using the effective interest method, over the respective
debt repayment period.
i. 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 $23,800,000 at March 2,
1997) of the Company's foreign subsidiaries, since it is management's
practice and intent to reinvest such earnings in the operations of
these subsidiaries.
j. 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 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
stockholders' equity.
k. Consolidated Statements of Cash Flows - The Company considers all
money market securities and investments with maturities at the date of
purchase of 90 days or less to be cash equivalents.
Supplemental cash flow information:
Fiscal Year
1997 1996 1995
Cash paid during the year for:
Interest $2,792,000 $ - $ 42,000
Income taxes 6,570,000 9,701,000 9,712,000
2. MARKETABLE SECURITIES
The following is a summary of available-for-sale securities:
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
March 2, 1997:
U.S. Treasury and other
government securities $ 35,423,000 $19,000 $47,000 $ 35,395,000
U.S. corporate debt
securities 66,822,000 20,000 40,000 66,802,000
Total debt securities 102,245,000 39,000 87,000 102,197,000
Equity securities 4,000 31,000 - 35,000
$102,249,000 $70,000 $87,000 $102,232,000
March 3, 1996:
U.S. Treasury and other
government securities $ 50,602,000 $32,000 $62,000 $ 50,572,000
U.S. corporate debt
securities 16,680,000 7,000 22,000 16,665,000
Total debt securities 67,282,000 39,000 84,000 67,237,000
Equity securities 6,000 - - 6,000
$ 67,288,000 $39,000 $84,000 $ 67,243,000
The gross realized gains on sales of available-for-sale securities
totalled $39,000 for 1997 and $50,000 for 1996, and the gross realized
losses totalled $23,000, $12,000 and $17,000 for 1997, 1996 and 1995,
respectively.
The amortized cost and estimated fair value of the debt and marketable
equity securities at March 2, 1997, by contractual maturity, are shown
below:
Estimated
Fair
Cost Value
Due in one year or less $ 82,007,000 $ 81,972,000
Due after one year through five years 20,238,000 20,225,000
102,245,000 102,197,000
Equity securities 4,000 35,000
$102,249,000 $102,232,000
3. INVENTORIES
March 2, March 3,
1997 1996
Raw materials $ 8,459,000 $13,040,000
Work-in-process 4,037,000 4,280,000
Finished goods 7,173,000 9,674,000
Manufacturing supplies 789,000 718,000
$20,458,000 $27,712,000
4. PROPERTY, PLANT AND EQUIPMENT
March 2, March 3,
1997 1996
Land, buildings and improvements $ 30,983,000 $ 27,054,000
Machinery, equipment, furniture
and fixtures 134,774,000 121,661,000
165,757,000 148,715,000
Less accumulated depreciation
and amortization 82,366,000 72,276,000
$ 83,391,000 $ 76,439,000
Depreciation and amortization expense relating to property, plant and
equipment amounted to $11,146,000, $9,382,000 and $8,501,000 for fiscal
1997, 1996 and 1995, respectively. Interest expense capitalized to
property, plant and equipment amounted to $260,000 for fiscal 1997.
5. ACCRUED LIABILITIES
March 2, March 3,
1997 1996
Payroll and commissions $ 4,239,000 $ 5,040,000
Taxes, other than income taxes 899,000 1,014,000
Interest 2,781,000 -
Other 10,646,000 10,887,000
$18,565,000 $16,941,000
6. LONG-TERM DEBT
On February 28, 1996, the Company issued $100,000,000 principal amount
of 5.5% Convertible Subordinated Notes due 2006 (the "Notes") with
interest payable semiannually on March 1 and September 1 of each year,
commencing September 1, 1996. The Notes are unsecured and subordinated
to other long-term debt and are convertible at the option of the holder
at any time prior to maturity, unless previously redeemed or
repurchased, into shares of the Company's common stock at $42.188 per
share, subject to adjustment under certain conditions. The Notes are
not redeemable at the option of the Company prior to March 1, 1999; at
any time on or after such date, the Notes will be redeemable at the
option of the Company, in whole or in part, initially at 102.75% of the
principal amount of such Notes redeemed and thereafter at prices
declining to 100% on March 1, 2001, together with accrued interest. At
March 2, 1997 and March 3, 1996, the fair value of the Notes
approximated $90,625,000 and $100,000,000, respectively.
Foreign lines of credit totalled $5,400,000 at March 2, 1997, all of
which remains available to the subsidiaries.
7. INCOME TAXES
The income tax provision includes the following:
Fiscal Year
1997 1996 1995
Current:
Federal $6,150,000 $ 9,980,000 $ 8,798,000
State and local 592,000 961,000 1,003,000
6,742,000 10,941,000 9,801,000
Deferred:
Federal 863,000 655,000 50,000
State and local 150,000 60,000 40,000
Foreign 583,000 710,000 265,000
1,596,000 1,425,000 355,000
$8,338,000 $12,366,000 $10,156,000
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
1997 1996 1995
Statutory U.S. Federal tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal benefit 1.8 1.8 2.5
Foreign tax rate differentials (7.8) (4.6) (1.5)
Other, net 2.0 1.0 .9
31.0% 33.2% 36.9%
The Company has foreign net operating loss carryforwards of
approximately $14,400,000, most of which were acquired in fiscal 1993
when the Company purchased 100% of the capital stock of Metclad, S.A.
("Metclad"), a French corporation located in Lannemezan, France.
Metclad has recently commenced operation, in commercial volumes, for the
production of PTFE laminates used in wireless communication
applications. Accordingly, long-term deferred tax assets arising from
these net operating loss carryforwards were valued at $0 at both March
2, 1997 and March 3, 1996, net of valuation reserves of approximately
$5,000,000 and $5,900,000, respectively. None of the acquired net
operating loss carryforwards relate to goodwill or other intangible
assets. Approximately $2,700,000 of the foreign net operating loss
carryforwards expire in varying amounts from fiscal 1998 through fiscal
2002; the remainder have an indefinite expiration.
At March 2, 1997 and March 3, 1996, current deferred tax assets of
$1,135,000 and $1,082,000, respectively, which were primarily
attributable to expenses not currently deductible for tax purposes, were
included in other current assets. The long-term deferred tax
liabilities consisted primarily of timing differences relating to
depreciation.
8. STOCKHOLDERS' EQUITY
a. Stock Split and Number of Authorized Shares - On July 12, 1995, the
Company's Board of Directors voted a two-for-one stock split in the
form of a 100% common stock dividend. The stock dividend was
distributed August 15, 1995, to shareholders of record on July 24,
1995. All share and per share data for prior periods have been
retroactively restated to reflect the stock split. In addition, on
July 12, 1995, the Company's stockholders approved an increase in
the number of authorized shares of common stock from 15,000,000 to
30,000,000 shares.
b. Stock Options - Under the stock option plans approved by the
Company's stockholders, key employees may be granted options to
purchase shares of common stock 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 year. The options expire 10 years
from the date of grant.
On July 14, 1992, the Company's stockholders approved the adoption
of a 1992 stock option plan (the "1992 Plan") pursuant to which
options to acquire 600,000 shares of the Company's common stock are
available for grant to key employees. On July 17, 1996, the
Company's stockholders approved an amendment to the 1992 Plan which
increased the number of shares of the Company's common stock
authorized for issuance under such Plan by 550,000 shares to
1,150,000 shares. The purchase price for common stock to be
acquired, upon the exercise of options, will be no less than 100% of
the fair market value of such stock at the date the options are
granted. The 1992 Plan will expire in March, 2002.
In October 1995, Statement of Financial Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123) was issued and
requires companies to either recognize compensation expense for
grants of stock options and other equity based instruments, or
provide pro forma disclosure of net income and earnings per share in
the notes to the financial statements. The Company has elected the
disclosure provision of SFAS 123, and continues to apply Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25) and related interpretations in accounting for
the option plans. Under APB 25, because the exercise price of the
granted options is not less than the market price at the date of the
grant, no compensation expense is recognized.
The weighted average fair value for options was estimated at the
date of grant using the Black-Scholes option pricing model to be
$7.78 for fiscal 1997 and $5.40 for fiscal 1996, with the following
weighted average assumptions for fiscal 1997 and 1996, respectively:
risk free interest rate of 6%; expected volatility factors of 34%
and 31%; expected dividend yield of 2%; and estimated option lives
of 4.6 years. For the purpose of pro forma disclosures, the effect
of applying SFAS 123 on net income and earnings per share for fiscal
1997 and 1996 would approximate the amounts shown below (in
thousands, except EPS data):
1997 1996
As Pro As Pro
Reported forma Reported forma
Net income $18,559 $18,330 $24,898 $24,805
EPS-primary $1.61 $1.59 $2.11 $2.11
EPS-fully diluted $1.59 $1.57 $2.10 $2.10
Information with respect to the Company's stock option plans
follows:
Weighted
Average
Range of Outstanding Exercise
Exercise Prices Options Price
Balance, February 26, 1995 $ 5.50 - $17.00 504,718 $ 8.63
Granted 18.31 - 27.19 124,000 19.03
Exercised 5.50 - 13.13 (102,726) 6.79
Cancelled 5.50 - 18.13 (6,374) 12.80
Balance, March 3, 1996 5.50 - 27.19 519,618 11.43
Granted 23.75 - 24.63 111,675 24.55
Exercised 5.50 - 18.31 (84,868) 7.11
Cancelled 7.38 - 27.19 (26,450) 20.68
Balance, March 2, 1997 $ 5.50 - $24.63 519,975 $14.48
Exercisable, March 2, 1997 $ 5.50 - $18.31 231,950 $ 9.89
The following table summarizes information concerning currently outstanding
and exercisable options.
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life(Years) Price Exercisable Price
$ 5.50 - $ 9.99 187,900 5.50 $ 7.02 148,925 $ 6.93
10.00 - 19.99 224,250 7.75 15.88 83,025 15.19
20.00 - 25.00 107,825 9.25 24.54 - -
519,975 231,950
Stock options available for future grant under the 1992 Plan at March 2,
1997 and March 3, 1996 were 603,881 and 136,356, respectively.
c. Treasury Stock - The Company repurchased 349,102, 14 and 24 shares of
its common stock under authorizations of the Board of Directors
during fiscal 1997, 1996 and 1995, respectively.
d. 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. In the
event that a person has acquired, or has the right to acquire, 15%
(25% in certain cases) or more of the then outstanding common stock
of the Company (an "Acquiring Person") or tenders for 15% or more of
the then outstanding common stock of the Company, such rights will
become exercisable, unless the Board of Directors otherwise
determines. Upon becoming exercisable as aforesaid, each right will
entitle the holder thereof to purchase one one-hundredth of a share
of Series A Preferred Stock for $75, subject to adjustment (the
"Purchase Price"). In the event that any person becomes an Acquiring
Person, each holder of an unexercised exercisable right, other than
an Acquiring Person, shall have the right to purchase, at a price
equal to the then current Purchase Price, such number of shares of
the Company's common stock as shall equal the then current Purchase
Price divided by 50% of the then market price per share of the
Company's common stock. In addition, if after a person becomes an
Acquiring Person, the Company engages in any of certain business
combination transactions as specified in the plan, the Company will
take all action to ensure that, and will not consummate any such
business combination unless, each holder of an unexercised
exercisable right, other than an Acquiring Person, shall have the
right to purchase, at a price equal to the then current Purchase
Price, such number of shares of common stock of the other party to
the transaction for each right held by such holder as shall equal the
then current Purchase Price divided by 50% of the then market price
per share of such other party's common stock. The Company may redeem
the rights for a nominal consideration at any time, and after any
person becomes an Acquiring Person, but before any person becomes the
beneficial owner of 50% or more of the outstanding common stock of
the Company, the Company may exchange all or part of the rights for
shares of the Company's common stock at a one-for-one exchange ratio.
Unless redeemed, exchanged or exercised earlier, all rights expire on
July 12, 2005.
e. Reserved Common Shares - At March 2, 1997, 2,370,342 shares of common
stock were reserved for issuance upon conversion of the Notes and
1,123,856 shares were reserved for issuance upon exercise of stock
options.
9. EARNINGS PER SHARE
Primary earnings per share are computed based on the weighted average
number of common and common equivalent shares outstanding during the
period.
The weighted average number of common and common equivalent shares used
to compute earnings per share are as follows:
Fiscal Year
1997 1996 1995
Primary 11,551,000 11,794,000 10,858,000
Fully diluted 13,932,000 11,860,000 11,570,000
10. EMPLOYEE BENEFIT PLANS
a. Profit Sharing Plan - Park and certain of its subsidiaries have a
noncontributory 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 to
the Company. The Company's contributions under the plan amounted to
$1,775,000, $2,329,000 and $2,297,000 for fiscal 1997, 1996 and 1995,
respectively. Contributions are discretionary and may not exceed the
amount allowable as a tax deduction under the Internal Revenue Code.
In addition, the Company sponsors a 401(k) savings plan; commencing
in fiscal 1996, the contributions of employees of certain
subsidiaries were partially matched by the Company, amounting to
$554,000 and $499,000 in fiscal 1997 and 1996, respectively.
b. Pension Plans - A subsidiary of the Company has two pension plans,
one of which is inactive, covering its union employees. The pension
plans are noncontributory defined benefit plans. The Company's
funding policy is to contribute annually the amounts necessary to
satisfy applicable funding standards.
In accordance with SFAS No. 87, the Company records its deferred
pension liability related to its two defined benefit pension plans,
which amounted to $1,134,000 and $1,417,000 at March 2, 1997 and
March 3, 1996, respectively. The effect on the Company's
consolidated financial statements in recording the liability was to
recognize an asset (included in other assets) of $284,000 and
$416,000 at March 2, 1997 and March 3, 1996, respectively, and to
record a corresponding reduction of stockholders' equity of $850,000
and $1,001,000 at those same dates.
Net pension cost includes the following components:
Fiscal Year
1997 1996 1995
Service cost--benefits earned
during the period $ 50,000 $ 51,000 $ 65,000
Interest cost on projected
benefit obligation 289,000 299,000 279,000
Return on plan assets--actual (155,000) (400,000) (24,000)
Net amortization and deferral 35,000 354,000 9,000
Effect of curtailment 75,000 - -
Net periodic pension cost $294,000 $304,000 $329,000
The funded status of the pension plans follows:
March 2, March 3,
1997 1996
Accumulated benefit obligation
(including vested benefit
obligation of $3,893,000
and $4,028,000, respectively) $3,931,000 $4,043,000
Projected benefit obligation $3,931,000 $4,043,000
Plan assets at fair value 2,937,000 2,616,000
Excess of projected benefit obligation
over plan assets 994,000 1,427,000
Unrecognized net loss (850,000) (1,001,000)
Unrecognized prior service cost (135,000) (237,000)
Unrecognized initial net obligation
being amortized over 15 years (149,000) (179,000)
Accrued pension (asset) liability $ (140,000) $ 10,000
The projected benefit obligation was determined using an assumed
discount rate of 7.75% and 7.5% for fiscal 1997 and 1996,
respectively, and the assumed long-term rate of return on plan assets
was 8% for both fiscal years. Projected wage increases are not
applicable as benefits pursuant to the plans are based upon years of
service without regard to levels of compensation.
At March 2, 1997, plan assets were invested in U.S. government
securities, corporate debt securities, mutual funds and money market
funds.
11. COMMITMENTS AND CONTINGENCIES
a. Lease Commitments - The Company conducts certain of its operations
from 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 2005.
Many of the leases contain renewal options for periods ranging from
one to ten years and require the Company to pay real estate taxes and
other operating costs. The latest land lease expiration is 2013 and
this land lease contains renewal options of up to 35 years.
These noncancelable operating leases have the following payment
schedule:
Fiscal Year Amount
1998 $2,079,000
1999 1,592,000
2000 1,370,000
2001 1,081,000
2002 905,000
Thereafter 2,817,000
$9,844,000
Rental expense, inclusive of real estate taxes and other costs,
amounted to $2,620,000, $2,259,000 and $2,226,000 for fiscal 1997,
1996 and 1995, respectively.
b. Environmental Contingencies - The Company and certain of its subsid-
iaries have been named by the Environmental Protection Agency (the
"EPA") or a comparable state agency under the Comprehensive Environ-
mental 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 nine sites. In
addition, a subsidiary of the Company has received cost recovery
claims under the Superfund Act from other private parties involving
three other sites, and has received requests from the EPA under the
Superfund Act for information with respect to its involvement at two
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
environmental 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, 35% of such costs associated with one of these
sites and 25% of such costs associated with another three 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 $0.2 million during each of the 1997, 1996 and 1995
fiscal years. At March 2, 1997, the recorded liability in other
liabilities for environmental matters was $1.2 million.
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. Management believes
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 matters could have a significant
negative impact on the Company's consolidated financial results for a
particular reporting period.
12. BUSINESS SEGMENTS
The Company has two major business segments: electronic materials and
engineered materials and plumbing hardware. The Company's electronic
materials products are marketed primarily to major independent printed
circuit board fabricators and to large electronic original equipment
manufacturers ("OEMs") that are located throughout North America, Europe
and Asia. The Company's engineered materials and plumbing hardware
customers, the majority of which are located in the United States, include
OEMs, independent firms and distributors in the electronics, aerospace,
industrial and plumbing industries.
Financial information concerning the Company's business segments follows
(in thousands):
Fiscal Year
1997 1996 1995
Sales to unaffiliated customers:
Electronic materials $291,146 $274,903 $218,288
Engineered materials and
plumbing hardware 43,344 38,063 34,734
Net sales $334,490 $312,966 $253,022
Operating profit(1):
Electronic materials $ 25,298 $ 37,699 $ 28,710
Engineered materials and
plumbing hardware 3,026 1,466 1,226
Total operating profit 28,324 39,165 29,936
General corporate expense (3,572) (4,090) (3,826)
Interest and other income, net 7,653 2,285 1,822
Interest expense (5,508) (96) (431)
Total other income 2,145 2,189 1,391
Earnings before income taxes $ 26,897 $ 37,264 $ 27,501
Identifiable assets(2):
Electronic materials $153,653 $146,549 $104,478
Engineered materials and
plumbing hardware 14,111 13,260 12,588
167,764 159,809 117,066
Corporate assets 140,098 139,166 44,985
Total assets $307,862 $298,975 $162,051
Depreciation and amortization:
Electronic materials $ 10,789 $ 9,013 $ 8,133
Engineered materials and
plumbing hardware 774 813 793
11,563 9,826 8,926
Corporate depreciation 21 23 25
Total depreciation and
amortization $ 11,584 $ 9,849 $ 8,951
Capital expenditures:
Electronic materials $ 18,030 $ 23,852 $ 16,302
Engineered materials and
plumbing hardware 795 689 1,472
18,825 24,541 17,774
Corporate capital expenditures 26 21 30
Total capital expenditures $ 18,851 $ 24,562 $ 17,804
(1) Operating profit is comprised of total operating revenues, less
costs and expenses other than interest expense, general corporate
expense and income taxes.
(2) Identifiable assets consist of those assets which are used by the
segments. Corporate identifiable assets consist primarily of cash,
cash equivalents and marketable securities.
Intersegment sales and sales between geographic areas were not
significant.
Financial information regarding the Company's operations by geographic
area follows (in thousands):
Fiscal Year
1997 1996 1995
Sales:
North America $235,773 $221,975 $191,652
Europe 48,421 47,368 34,540
Asia 50,296 43,623 26,830
$334,490 $312,966 $253,022
Operating income:
North America $ 21,550 $ 33,206 $ 28,366
Rest of World 6,774 5,959 1,570
$ 28,324 $ 39,165 $ 29,936
Identifiable assets:
North America $245,596 $241,191 $118,076
Europe 33,751 31,291 24,526
Asia 28,515 26,493 19,449
$307,862 $298,975 $162,051
13. CUSTOMER AND SUPPLIER CONCENTRATIONS
a. Customers - Sales to Delco Electronics Corporation, a subsidiary of
General Motors Corp., were 17.3%, 17.1% and 21.8% of the Company's
consolidated sales for fiscal 1997, 1996 and 1995, respectively.
The Company believes its relations with Delco Electronics to be very
satisfactory and further believes Delco Electronics will continue to
make significant purchases in the immediate future. Although the
Company's electronic materials segment is not dependent on this
single customer, the loss of this customer could have a material
adverse effect on the business of this segment.
Furthermore, while no other customer accounts for 10% or more of the
total sales of the Company in fiscal 1997 and the Company is not
dependent on any other single customer, the loss of a major customer
or of a group of customers within each significant business segment
could have a material adverse effect on the Company's business.
b. Sources of Supply - The principal materials used in the manufacture
of the Company's electronic materials products are specially
manufactured copper foil, fiberglass cloth and synthetic
reinforcements, and specially formulated resins and chemicals.
Although there are a limited number of qualified suppliers of these
materials, the Company has nevertheless identified alternate sources
of supply for each of the aforementioned 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 electronic materials
segment's business. Furthermore, substitutes for the aforesaid
materials are not readily available and an inability to obtain
essential materials, if prolonged, could materially adversely affect
the business of the electronic materials segment.
14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
[CAPTION]
Quarter
First Second Third Fourth
(In thousands, except per share amounts)
Fiscal 1997:
Net sales $75,406 $81,974 $88,972 $88,138
Gross profit 11,832 14,854 15,385 17,047
Net earnings 3,125 4,681 4,888 5,865
Earnings per share:
Primary $.26 $.40 $.43 $.51
Fully diluted $.26 $.40 $.42 $.49
Weighted average common and
common equivalent shares
outstanding:
Primary 11,829 11,590 11,444 11,477
Fully diluted 11,829 13,960 13,835 13,849
Fiscal 1996:
Net sales $75,412 $69,937 $81,866 $85,751
Gross profit 17,717 15,209 18,397 18,988
Net earnings 6,024 5,366 6,467 7,041
Earnings per share:
Primary $.51 $.45 $.55 $.59
Fully diluted $.51 $.45 $.55 $.59
Weighted average common and
common equivalent shares
outstanding:
Primary 11,708 11,801 11,857 11,881
Fully diluted 11,708 11,829 11,857 12,002
Earnings per share is computed separately for each quarter. Therefore, the
sum of such quarterly per share amounts may differ from the total for the
years.
*******
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information called for by this Item (except for information as
to the Company's executive officers, which information appears elsewhere in
this Report) is incorporated by reference to the Company's definitive proxy
statement for the 1997 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 1997 Annual
Meeting of Shareholders to be filed pursuant to Regulation 14A.
Item 12. Security Ownership of Certain
Beneficial Owners and Management.
The information called for by this Item is incorporated by
reference to the Company's definitive proxy statement for the 1997 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 1997 Annual
Meeting of Shareholders to be filed pursuant to Regulation 14A.
PART IV
Item 14. Exhibits, Financial Statement Page
Schedules, and Reports on Form 8-K.
(a) Documents filed as a part of this report
(1) Financial Statements:
The following Consolidated Financial
Statements of the Company are
included in Part II, Item 8:
Report of Ernst & Young LLP,
independent auditors 24
Balance sheets 25
Statements of earnings 26
Statements of stockholders' equity 27
Statements of cash flows 28
Notes to consolidated financial
statements (1-14) 29
(2) Financial Statement Schedules:
Schedule II - Valuation and qualifying
accounts 51
All other schedules have been omitted because
they are inapplicable or not required, or the
information is included elsewhere in the
financial statements or notes thereto.
(3)Exhibits:
Exhibit
Number Description
3.01 Restated Certificate of Incorporation, as amended (Reference is
made to Exhibit 3.01 of the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended August 27, 1995, Commission
File No. 1-4415, which is incorporated herein by reference.)
3.02 By-Laws, as amended (Reference is made to Exhibit 3(i) of the
Company's Current Report on Form 8-K dated January 23, 1996,
Commission File No. 1-4415, which is incorporated herein by
reference.)
4.01 Amended and Restated Rights Agreement, dated as of July 12,
1995, between the Company and Registrar and Transfer Company, as
Rights Agent, relating to the Company's Preferred Stock Purchase
Rights. (Reference is made to Exhibit 1 to Amendment No. 1 on
Form 8-A/A to the Company's Registration Statement on Form 8-A
filed on August 10, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
4.02 Form of Indenture, dated as of February 1, 1996, between the
Company and The Chase Manhattan Bank, N.A., as Trustee, relating
to the Company's 5.5% Convertible Subordinated Notes due 2006
(Reference is made to Exhibit 1.02 to Amendment No. 1 to the
Company's Form S-3 Registration Statement, Registration No. 333-
00213, as filed with the Securities and Exchange Commission on
February 1, 1996, which is incorporated herein by reference.)
Information concerning Registrant's long-term debt is set forth
in Note 6 of the Notes to Consolidated Financial Statements
included in Item 8 of this Report. Other than the Indenture
filed as Exhibit 4.02 hereto, no instrument defining the rights
of holders of such long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the consoli-
dated assets of Registrant and its subsidiaries; therefore, in
accordance with paragraph (iii) of Item 4 of Item 601(b) of
Regulation S-K, the other instruments defining the rights of
holders of long-term debt are not filed herewith. Registrant
hereby agrees to furnish a copy of any such other instruments to
the Securities and Exchange Commission upon request.
10.01 Lease dated December 12, 1989 regarding real property located at
1100 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising 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, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.02 Lease dated December 12, 1989 regarding real property located at
1107 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising 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, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.03 Lease Agreement dated August 16, 1983 and Exhibit C, First
Addendum to Lease, regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California between Nelco
Products, Inc. and TCLW/Fullerton. (Reference is made to
Exhibit 10.03 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.03(a) Second Addendum to Lease dated January 26, 1987 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real prop-
erty located at 1421 E. Orangethorpe Avenue, Fullerton, Califor-
nia. (Reference is made to Exhibit 10.03(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 between Nelco Products,
Inc. and TCLW/Fullerton to Lease Agreement dated August 16, 1983
(see Exhibit 10.03 hereto) regarding real property located at
1411, 1421 and 1431 E. Orangethorpe Avenue, Fullerton,
California.
10.03(c) Fifth Addendum to Lease dated July 5, 1995 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (See Exhibit 10.03 hereto) 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, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.04 Lease dated February 15, 1983 between Nelco Products, Inc. and
CMD Southwest, Inc. regarding real property located at 1130 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.04 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.04(a) First Amendment to Lease dated December 10, 1992 to Lease dated
February 15, 1983 (see Exhibit 10.04 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc., and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.,
regarding real property located at 1130 West Geneva Drive,
Tempe, Arizona. (Reference is made to Exhibit 10.04(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.05 Lease Agreement, dated May 26, 1982 between Nelco Products Pte.
Ltd. (lease was originally entered into by Kiln Technique (Pri-
vate) Limited, which subsequently assigned this lease to Nelco
Products Pte. Ltd.) and the Jurong Town Corporation regarding
real property located at 4 Gul Crescent, Jurong, Singapore.
(Reference is made to Exhibit 10.05 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
Exhibit
Number Description
10.05(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 10.05 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 10.05(a) of the Com-
pany's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is incorpo-
rated herein by reference.)
10.06(a) Amended and Restated 1982 Stock Option Plan of the Company.
(Reference is made to Exhibit 10.06(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 1, 1992,
Commission File No. 1-4415, which exhibit is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.06(b) 1992 Stock Option Plan of the Company. (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, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.06(c) First Amendment to 1992 Stock Option Plan of the Company (see
Exhibit 10.06(b) hereto). (This exhibit is a management
contract or compensatory plan or arrangement.)
10.07 Amended and Restated Employment Agreement dated February 28,
1994 between the Company and Jerry Shore. (Reference is made to
Exhibit 10.07(c) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 27, 1994, Commission File No. 1-
4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Amendment No. 1 dated March 1, 1995 to the Amended and Restated
Employment Agreement dated February 28, 1994 (see Exhibit 10.07
hereto) between the Company and Jerry Shore. (Reference is made
to Exhibit 10.07(c) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 26, 1995, Commission File No.
1-4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(b) Amendment No. 2 dated December 5, 1996 to the Amended and
Restated Employment Agreement dated February 28, 1994 (see
Exhibit 10.07 hereto) between the Company and Jerry Shore.
(This exhibit is a management contract or compensatory plan or
arrangement.)
10.08 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 10.08 of the Company's Annual Report on form 10-K for
the fiscal year ended February 26, 1995, Commission File No. 1-
4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.08(a) Amendment to Lease dated December 21, 1992 to Lease dated April
15, 1988 (see Exhibit 10.08 hereto) between FiberCote Indus-
tries, Inc. and Geoffrey Etherington II regarding real property
located at 172 East Aurora Street, Waterbury, Connecticut.
(Reference is made to Exhibit 10.08(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.09 Lease dated March 14, 1988 between Nelco Products, Inc. and CMD
Southwest One regarding real property located at 1117 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.09
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(a) First Amendment to Lease dated December 10, 1992 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona, and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.
(Reference is made to Exhibit 10.09(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.09(b) Second Amendment to Lease dated March 24, 1995 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(b) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.09(c) Third Amendment to Lease dated January 18, 1996 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(c) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.10 Lease dated October 1, 1991 between Zin-Plas Corporation and
Philip L. Johnson d/b/a Johnson Development Company regarding
real property located at 25 North Park, N.E., Comstock Park,
Michigan. (Reference is made to Exhibit 10.10 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
28, 1993, Commission File No. 1-4415, which is incorporated
herein by reference.) .
10.10(a) Letter dated October 17, 1996 from Zin-Plas Corporation to
Philip L. Johnson extending the Lease dated October 1, 1991 (see
Exhibit 10.10 hereto) between Zin-Plas Corporation and Philip L.
Johnson d/b/a Johnson Development Company regarding real
property located at 25 North Park, N.E., Comstock Park,
Michigan.
10.11 Lease dated August 31, 1989 between Nelco Technology, Inc. and
Cemanudi Associates regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.11 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.11(a) First Amendment to Lease dated October 21, 1994 to Lease dated
August 31, 1989 (see Exhibit 10.11 hereto) between Nelco
Technology, Inc. and Cemanudi Associates regarding real property
located at 1104 West Geneva Drive, Tempe, Arizona. (Reference
is made to Exhibit 10.11(a) of the Company's Annual Report on
Form 10-K for the fiscal year ended February 26, 1995,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.12 Lease dated March 24, 1995 between Nelco Technology, Inc. and
CMD Southwest Inc. regarding real property located at 1131 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.12
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.12(a) First Amendment to Lease dated January 18, 1996 to Lease dated
March 24, 1995 (see Exhibit 10.12 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc. regarding real property
located at 1131 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.12(a) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.13 Lease dated December 12, 1990 between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.13(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 10.13 hereto) between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(a) Extension of Lease dated May 30, 1986 to Indenture of Lease
dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(b) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts. (Reference is made to Exhibit
10.14(c) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 27, 1994, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(d) 1995 Extension to Amendment to Second Extension of Lease dated
October 19, 1995 to Indenture of Lease dated November 1, 1984
(see Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(d) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(e) Letter dated July 31, 1996 from Dielectric Polymers, Inc. to
Holyoke Supply Company, Inc. exercising its option to extend the
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts.
10.14(f) 1997 Extension to Amendment to Second Extension of Lease dated
March 26, 1997 to Indenture of Lease dated November 1, 1984 (see
Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts.
10.15 Lease dated January 8, 1992 between Nelco Technology, Inc. and
CMD Southwest, Inc. regarding real property located at 1135 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.15 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 1, 1992, Commission File No. 1-4415, which
exhibit is incorporated herein by reference.)
10.15(a) First Amendment dated July 8, 1996 to Lease dated January 8,
1992 (see Exhibit 10.15 hereto) between Nelco Technology, Inc.
and CMD Southwest, Inc. regarding real property located at 1135
West Geneva Drive, Tempe, Arizona.
10.16 Tenancy Agreement dated October 8, 1992 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 28, 1993, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.16(a) Tenancy Agreement dated November 3, 1995 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore.
10.17 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 10.19 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.17(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 10.17 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
10.19(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.17(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 10.17 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
10.19(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.18 Employment Agreement, dated March 18, 1996, between the Company
and E. Phillip Smoot. (Reference is made to Exhibit 10.20 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference. This exhibit is a management
contract or compensatory plan or arrangement.)
11.01 Computation of fully-diluted earnings per share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the fiscal quarter
ended March 2, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 28, 1997 PARK ELECTROCHEMICAL CORP.
By:/s/Brian E. Shore
Brian E. Shore,
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 Chief Executive Officer,
Brian E. Shore President and Director
(principal executive and May 28, 1997
financial officer)
/s/Murray O. Stamer Corporate Controller
Murray O. Stamer (principal accounting
officer) May 28, 1997
/s/E. Phillip Smoot Director
E. Phillip Smoot May 28, 1997
/s/Jerry Shore Chairman of the Board and
Jerry Shore Director May 28, 1997
/s/Anthony Chiesa Director
Anthony Chiesa May 28, 1997
/s/Lloyd Frank Director
Lloyd Frank May 28, 1997
/s/Norman M. Schneider Director
Norman M. Schneider May 28, 1997
Schedule II
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
Balance at Charged to Other Balance at
Beginning Cost and Accounts Translation End
Description of Period Expenses Written Off Adjustment of Period
(A)
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
52 weeks ended March 2, 1997 $1,857,000 $(306,000) $ 204,000 $ (9,000) $1,746,000
53 weeks ended March 3, 1996 $2,490,000 $(495,000) $(128,000) $(10,000) $1,857,000
52 weeks ended February 26, 1995 $2,673,000 $ (44,000) $(186,000) $ 47,000 $2,490,000
(A) Uncollectible accounts, net of recoveries.
=================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
EXHIBITS
filed with
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 2, 1997
___________________
PARK ELECTROCHEMICAL CORP.
=================================================
Exhibit
Number Description
3.01 Restated Certificate of Incorporation, as amended (Reference is
made to Exhibit 3.01 of the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended August 27, 1995, Commission
File No. 1-4415, which is incorporated herein by reference.)
3.02 By-Laws, as amended (Reference is made to Exhibit 3(i) of the
Company's Current Report on Form 8-K dated January 23, 1996,
Commission File No. 1-4415, which is incorporated herein by
reference.)
4.01 Amended and Restated Rights Agreement, dated as of July 12,
1995, between the Company and Registrar and Transfer Company, as
Rights Agent, relating to the Company's Preferred Stock Purchase
Rights. (Reference is made to Exhibit 1 to Amendment No. 1 on
Form 8-A/A to the Company's Registration Statement on Form 8-A
filed on August 10, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
4.02 Form of Indenture, dated as of February 1, 1996, between the
Company and The Chase Manhattan Bank, N.A., as Trustee, relating
to the Company's 5.5% Convertible Subordinated Notes due 2006
(Reference is made to Exhibit 1.02 to Amendment No. 1 to the
Company's Form S-3 Registration Statement, Registration No. 333-
00213, as filed with the Securities and Exchange Commission on
February 1, 1996, which is incorporated herein by reference.)
Information concerning Registrant's long-term debt is set forth
in Note 6 of the Notes to Consolidated Financial Statements
included in Item 8 of this Report. Other than the Indenture
filed as Exhibit 4.02 hereto, no instrument defining the rights
of holders of such long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the consoli-
dated assets of Registrant and its subsidiaries; therefore, in
accordance with paragraph (iii) of Item 4 of Item 601(b) of
Regulation S-K, the other instruments defining the rights of
holders of long-term debt are not filed herewith. Registrant
hereby agrees to furnish a copy of any such other instruments to
the Securities and Exchange Commission upon request.
10.01 Lease dated December 12, 1989 regarding real property located at
1100 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising 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, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.02 Lease dated December 12, 1989 regarding real property located at
1107 East Kimberly Avenue, Anaheim, California between Nelco
Products, Inc. and James Emmi and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi exercising 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, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.03 Lease Agreement dated August 16, 1983 and Exhibit C, First
Addendum to Lease, regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California between Nelco
Products, Inc. and TCLW/Fullerton. (Reference is made to
Exhibit 10.03 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.03(a) Second Addendum to Lease dated January 26, 1987 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) regarding real prop-
erty located at 1421 E. Orangethorpe Avenue, Fullerton, Califor-
nia. (Reference is made to Exhibit 10.03(a) of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 between Nelco Products,
Inc. and TCLW/Fullerton to Lease Agreement dated August 16, 1983
(see Exhibit 10.03 hereto) regarding real property located at
1411, 1421 and 1431 E. Orangethorpe Avenue, Fullerton,
California.
10.03(c) Fifth Addendum to Lease dated July 5, 1995 between Nelco
Products, Inc. and TCLW/Fullerton to Lease Agreement dated
August 16, 1983 (See Exhibit 10.03 hereto) 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, 1996, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.04 Lease dated February 15, 1983 between Nelco Products, Inc. and
CMD Southwest, Inc. regarding real property located at 1130 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.04 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.04(a) First Amendment to Lease dated December 10, 1992 to Lease dated
February 15, 1983 (see Exhibit 10.04 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc., and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.,
regarding real property located at 1130 West Geneva Drive,
Tempe, Arizona. (Reference is made to Exhibit 10.04(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.05 Lease Agreement, dated May 26, 1982 between Nelco Products Pte.
Ltd. (lease was originally entered into by Kiln Technique (Pri-
vate) Limited, which subsequently assigned this lease to Nelco
Products Pte. Ltd.) and the Jurong Town Corporation regarding
real property located at 4 Gul Crescent, Jurong, Singapore.
(Reference is made to Exhibit 10.05 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
Exhibit
Number Description
10.05(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 10.05 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 10.05(a) of the Com-
pany's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is incorpo-
rated herein by reference.)
10.06(a) Amended and Restated 1982 Stock Option Plan of the Company.
(Reference is made to Exhibit 10.06(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 1, 1992,
Commission File No. 1-4415, which exhibit is incorporated herein
by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.06(b) 1992 Stock Option Plan of the Company. (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, 1992, Commission File No. 1-4415,
which exhibit is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.06(c) First Amendment to 1992 Stock Option Plan of the Company (see
Exhibit 10.06(b) hereto). (This exhibit is a management
contract or compensatory plan or arrangement.)
10.07 Amended and Restated Employment Agreement dated February 28,
1994 between the Company and Jerry Shore. (Reference is made to
Exhibit 10.07(c) of the Company's Annual Report on Form 10-K for
the fiscal year ended February 27, 1994, Commission File No. 1-
4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(a) Amendment No. 1 dated March 1, 1995 to the Amended and Restated
Employment Agreement dated February 28, 1994 (see Exhibit 10.07
hereto) between the Company and Jerry Shore. (Reference is made
to Exhibit 10.07(c) of the Company's Annual Report on Form 10-K
for the fiscal year ended February 26, 1995, Commission File No.
1-4415, which is incorporated herein by reference. This exhibit
is a management contract or compensatory plan or arrangement.)
10.07(b) Amendment No. 2 dated December 5, 1996 to the Amended and
Restated Employment Agreement dated February 28, 1994 (see
Exhibit 10.07 hereto) between the Company and Jerry Shore.
(This exhibit is a management contract or compensatory plan or
arrangement.)
10.08 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 10.08 of the Company's Annual Report on form 10-K for
the fiscal year ended February 26, 1995, Commission File No. 1-
4415, which is incorporated herein by reference.)
Exhibit
Number Description
10.08(a) Amendment to Lease dated December 21, 1992 to Lease dated April
15, 1988 (see Exhibit 10.08 hereto) between FiberCote Indus-
tries, Inc. and Geoffrey Etherington II regarding real property
located at 172 East Aurora Street, Waterbury, Connecticut.
(Reference is made to Exhibit 10.08(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.09 Lease dated March 14, 1988 between Nelco Products, Inc. and CMD
Southwest One regarding real property located at 1117 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.09
of the Company's Annual Report on Form 10-K for the fiscal year
ended February 26, 1995, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.09(a) First Amendment to Lease dated December 10, 1992 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona, and novation
substituting Nelco Technology, Inc. for Nelco Products, Inc.
(Reference is made to Exhibit 10.09(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.09(b) Second Amendment to Lease dated March 24, 1995 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(b) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.09(c) Third Amendment to Lease dated January 18, 1996 to Lease dated
March 14, 1988 (see Exhibit 10.09 hereto) between Nelco
Technology, Inc. and CMD Southwest One regarding real property
located at 1117 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.09(c) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.10 Lease dated October 1, 1991 between Zin-Plas Corporation and
Philip L. Johnson d/b/a Johnson Development Company regarding
real property located at 25 North Park, N.E., Comstock Park,
Michigan. (Reference is made to Exhibit 10.10 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
28, 1993, Commission File No. 1-4415, which is incorporated
herein by reference.) .
10.10(a) Letter dated October 17, 1996 from Zin-Plas Corporation to
Philip L. Johnson extending the Lease dated October 1, 1991 (see
Exhibit 10.10 hereto) between Zin-Plas Corporation and Philip L.
Johnson d/b/a Johnson Development Company regarding real
property located at 25 North Park, N.E., Comstock Park,
Michigan.
10.11 Lease dated August 31, 1989 between Nelco Technology, Inc. and
Cemanudi Associates regarding real property located at 1104 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.11 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.11(a) First Amendment to Lease dated October 21, 1994 to Lease dated
August 31, 1989 (see Exhibit 10.11 hereto) between Nelco
Technology, Inc. and Cemanudi Associates regarding real property
located at 1104 West Geneva Drive, Tempe, Arizona. (Reference
is made to Exhibit 10.11(a) of the Company's Annual Report on
Form 10-K for the fiscal year ended February 26, 1995,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.12 Lease dated March 24, 1995 between Nelco Technology, Inc. and
CMD Southwest Inc. regarding real property located at 1131 West
Fairmont, Tempe, Arizona. (Reference is made to Exhibit 10.12
of the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.12(a) First Amendment to Lease dated January 18, 1996 to Lease dated
March 24, 1995 (see Exhibit 10.12 hereto) between Nelco
Technology, Inc. and CMD Southwest Inc. regarding real property
located at 1131 West Fairmont, Tempe, Arizona. (Reference is
made to Exhibit 10.12(a) of the Company's Annual Report on Form
10-K for the fiscal year ended March 3, 1996, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.13 Lease dated December 12, 1990 between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.13(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 10.13 hereto) between Neltec, Inc. and NZ
Properties, Inc. regarding real property located at 1420 W. 12th
Place, Tempe, Arizona.
10.14 Indenture of Lease dated November 1, 1984 between Dielectric
Polymers, Inc. and Holyoke Supply Company, Inc. regarding real
property located at 218 Race Street, Holyoke, Massachusetts.
(Reference is made to Exhibit 10.14 of the Company's Annual
Report on Form 10-K for the fiscal year ended February 28, 1993,
Commission File No. 1-4415, which is incorporated herein by
reference.)
10.14(a) Extension of Lease dated May 30, 1986 to Indenture of Lease
dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14(b) Second Extension of Lease dated May 30, 1991 to Indenture of
Lease dated November 1, 1984 (see Exhibit 10.14 hereto) between
Dielectric Polymers, Inc. and Holyoke Supply Company, Inc.
regarding real property located at 218 Race Street, Holyoke,
Massachusetts. (Reference is made to Exhibit 10.14(b) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
10.14(c) Amendment to Second Extension of Lease dated May 19, 1994 to
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts. (Reference is made to Exhibit
10.14(c) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 27, 1994, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(d) 1995 Extension to Amendment to Second Extension of Lease dated
October 19, 1995 to Indenture of Lease dated November 1, 1984
(see Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts. (Reference is made to
Exhibit 10.14(d) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(e) Letter dated July 31, 1996 from Dielectric Polymers, Inc. to
Holyoke Supply Company, Inc. exercising its option to extend the
Indenture of Lease dated November 1, 1984 (see Exhibit 10.14
hereto) between Dielectric Polymers, Inc. and Holyoke Supply
Company, Inc. regarding real property located at 218 Race
Street, Holyoke, Massachusetts.
10.14(f) 1997 Extension to Amendment to Second Extension of Lease dated
March 26, 1997 to Indenture of Lease dated November 1, 1984 (see
Exhibit 10.14 hereto) between Dielectric Polymers, Inc. and
Holyoke Supply Company, Inc. regarding real property located at
218 Race Street, Holyoke, Massachusetts.
10.15 Lease dated January 8, 1992 between Nelco Technology, Inc. and
CMD Southwest, Inc. regarding real property located at 1135 West
Geneva Drive, Tempe, Arizona. (Reference is made to Exhibit
10.15 of the Company's Annual Report on Form 10-K for the fiscal
year ended March 1, 1992, Commission File No. 1-4415, which
exhibit is incorporated herein by reference.)
10.15(a) First Amendment dated July 8, 1996 to Lease dated January 8,
1992 (see Exhibit 10.15 hereto) between Nelco Technology, Inc.
and CMD Southwest, Inc. regarding real property located at 1135
West Geneva Drive, Tempe, Arizona.
10.16 Tenancy Agreement dated October 8, 1992 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore. (Reference is
made to Exhibit 10.18 of the Company's Annual Report on Form 10-
K for the fiscal year ended February 28, 1993, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.16(a) Tenancy Agreement dated November 3, 1995 between Nelco Products
Pte. Ltd. and Jurong Town Corporation regarding real property
located at 36 Gul Lane, Jurong Town, Singapore.
10.17 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 10.19 of the Company's
Annual Report on Form 10-K for the fiscal year ended February
26, 1995, Commission File No. 1-4415, which is incorporated
herein by reference.)
Exhibit
Number Description
10.17(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 10.17 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
10.19(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.17(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 10.17 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
10.19(b) of the Company's Annual Report on Form 10-K for the
fiscal year ended February 26, 1995, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.18 Employment Agreement, dated March 18, 1996, between the Company
and E. Phillip Smoot. (Reference is made to Exhibit 10.20 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 3, 1996, Commission File No. 1-4415, which is
incorporated herein by reference. This exhibit is a management
contract or compensatory plan or arrangement.)
11.01 Computation of fully-diluted earnings per share.
22.01 Subsidiaries of the Company.
24.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule