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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
For the fiscal year ended February 28, 1999
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 and non-voting
common equity held by non-affiliates of the registrant. The aggregate
market value shall be computed by reference to the price at which the
common equity was sold, or the average bid and asked prices of such
common equity, as of 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, $248,199,336* May 14, 1999
$.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, 10,341,639 May 14, 1999
$.10 par value
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for Annual Meeting of Shareholders to be held July
13, 1999 incorporated by reference into Part III of this Report.
=====================================================================
*Included in such amount are 1,015,032 shares of common stock valued
at $24.00 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]
TABLE OF CONTENTS
Page
PART I
Item 1. Business............................................ 3
Item 2. Properties.......................................... 12
Item 3. Legal Proceedings................................... 13
Item 4. Submission of Matters to a Vote of Security Holders. 14
Executive Officers of the Registrant................ 14
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters........................ 16
Item 6. Selected Financial Data............................. 16
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 18
Factors That May Affect Future Results.............. 25
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk........................................ 27
Item 8. Financial Statements and Supplementary Data......... 27
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................ 47
PART III
Item 10. Directors and Executive Officers of the Registrant.. 47
Item 11. Executive Compensation.............................. 47
Item 12. Security Ownership of Certain Beneficial Owners
and Management..................................... 47
Item 13. Certain Relationships with Related Transactions..... 47
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K........................................ 48
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 interconnection systems. The Company's electronic materials
business is operated by its "Nelco" group of companies. 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.
In October 1997, the Company acquired Dielektra GmbH, located in
Cologne, Germany. Dielektra manufactures advanced electronic materials,
including continuously produced copper-clad laminates and mass-laminated
multilayer panels, used to produce sophisticated multilayer printed circuit
boards. Dielektra became part of Park's Nelco group of companies. See Note
14 of the Notes to Consolidated Financial Statements in Item 8 of this
Report.
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 in Item 8 of
this Report for information concerning the 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 and long-lived 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 in Item 8 of this
Report. The Company's foreign operations are conducted principally by the
Company's subsidiaries in the United Kingdom, France, Germany 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 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. In addition, the
Company's subsidiary, Dielektra GmbH in Germany, which the Company acquired
in 1997, owns a patented process for continuously producing thin copper-clad
laminates for printed circuit board applications. The Company believes it
is one of the industry's technological leaders.
As a result of its leading edge products, extensive technical and
engineering service support and responsive manufacturing capabilities, the
Company expects to continue to take advantage of several industry trends.
These trends include the 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 1999 fiscal year, the Company introduced several new high
technology electronic materials products, including:
. N4000-6FC - Nelco's faster curing version of its high-performance,
high-temperature N4000-6 product, which improves customers' cycle
times in processing the product;
. N4000-7 - Nelco's completely new mid-range product with exceptional
CTE (coefficient of thermal expansion) and thermal properties, which
provides customers with a cost effective alternative material that
can be designed into very complex circuit boards;
. N4000-13SI - Nelco's new version of the N4000-13 product introduced
during the 1997 fiscal year, which has even more advanced electrical
properties than the N4000-13 product and which is intended for high
frequency digital applications; and
. N6000 and N6000SI - These products, which have been developed under
license from Asahi Chemical of Japan, are designed for very high
frequency digital applications and will be utilized principally in
the wireless communications industry and form a very attractive
bridge between Nelco's advanced digital products and the microwave
circuitry material products offered by Park's Metclad business.
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 certain of its
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 organization. The Company focuses on developing a thorough
understanding of its customer's business, product lines, processes and
technological challenges. The Company seeks customers which are industry
leaders committed to maintaining and improving their industry leadership
positions and which are committed to long-term relationships with their
suppliers. The Company also seeks business opportunities with the more
advanced printed circuit fabricators and electronic equipment manufacturers
which are interested in the full value of products and services provided by
their suppliers. The Company believes its proactive and timely support in
assisting its customers with the integration of advanced materials
technology into new product designs further strengthens its relationships
with its customers.
The Company's emphasis on service and close 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 1999 fiscal year, approximately 10.5% of the
Company's sales were to Hadco Corporation, the largest manufacturer of
printed circuit boards in North America. During the Company's 1998 fiscal
year, more than 10% of the Company's sales were to Delco Electronics
Corporation, a subsidiary of General Motors Corp. Delco Electronics had
purchased a significant amount of product from the Company for more than
three years. However, in March 1998 the Company was informed by Delco that
Delco planned to close its printed circuit board fabrication plant and exit
the printed circuit board manufacturing business. After the plant closure,
Delco purchased all of its printed circuit boards from outside suppliers and
Delco was no longer a customer of Park's. During the 1998 and 1997 fiscal
years, sales to Delco Electronics represented 15.8% and 17.3%, respectively,
of the Company's total worldwide sales. The Company is aggressively
marketing its unique high technology semi-finished multilayer circuit board
material manufacturing capability to leading printed circuit board
fabricators, contract assemblers and electronic original equipment
manufacturers in North America. The Company had not previously been able to
aggressively market this capability as its semi-finished multilayer capacity
had been largely committed to supplying Delco Electronics. Although the
Company's electronic materials segment was not dependent on this single
customer, the loss of this customer had a material adverse effect on the
business of this segment in the fiscal year ended February 28, 1999 and may
have a material adverse effect on the business of this segment in the fiscal
year ending February 27, 2000 and in subsequent fiscal years. Although the
electronic materials segment is not dependent on any 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. In addition, the Company manufactur-
es very thin copper-clad laminates utilizing Dielektra's unique, patented
continuous lamination technology.
The Company manufactures multilayer printed circuit materials at
nine 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, and in October 1997, the Company acquired Dielektra GmbH
with a fully integrated facility in Cologne, Germany. The Company services
the North American market principally through its United States manufactur-
ing facilities, the European market principally through its manufacturing
facilities in the United Kingdom, France and Germany, 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 manufactur-
ing facilities, the Company is able to deliver fully-integrated products and
services on a timely basis.
The Company expanded the manufacturing capacity of its New York,
California, Arizona and Singapore facilities during the last three fiscal
years, will complete an additional expansion of its electronic materials
operation in Singapore during the 2000 fiscal year, and is planning to
commence significant additional expansion of its electronic materials
operations in California and New York during the 2000 fiscal year.
All of the Company's multilayer printed circuit materials manufac-
turing facilities are used for manufacturing, engineering and product
development. All of the Company's Nelco and Dielektra 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. 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 Walker, Michigan.
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
specifications 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
manufacturers, 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
installation 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.
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 April 30, 1999,
the unfilled portion of all purchase orders believed to be firm was
approximately $19,072,000, compared to $18,918,000 at May 1, 1998. Backlog
of the Company's two industry segments at April 30, 1999, compared to May 1,
1998, was as follows:
April 30, 1999 May 1, 1998
Electronic Materials $12,350,000 $10,436,000
Engineered Materials and
Plumbing Hardware 6,722,000 8,482,000
Total $19,072,000 $18,918,000
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 February 28, 1999.
Patents and Trademarks
The Company holds several patents and trademarks or licenses thereto.
In the Company's opinion, some of these patents and trademarks are important
to its products. Generally, however, the Company does not believe that an
inability to obtain new, or to defend existing, patents and trademarks would
have a material adverse effect on the Company.
Employees
At February 28, 1999, the Company had approximately 2,680 employees.
Of these employees, 2,460 were engaged in the Company's electronic materials
operations, 200 in its engineered materials and plumbing hardware operations
and 20 consisted of executive personnel and general administrative staff.
Approximately 1% of the Company's employees, all of whom are engaged in the
plumbing hardware operations, are subject to a collective bargaining
agreement. 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
Cologne, Germany Owned Electronic Materials 193,000
Sindelfingen, Germany Leased Electronic Materials 14,000
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
Walker, MI Leased Plumbing Hardware 38,000
Holyoke, MA Leased Engineered Materials- 37,000
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.
In May 1998, the Company and its Nelco subsidiary in Arizona filed
a complaint against Delco Electronics Corporation and Delphi Automotive
Systems, Inc. in the United States District Court for the District of
Arizona. The complaint alleges, among other things, that Delco breached its
contract to purchase semi-finished multilayer printed circuit boards from
Nelco and that Delphi interfered with Nelco's contract with Delco and seeks
compensatory and punitive damages of not less than $170 million.
Park announced in March 1998 that it had been informed by Delco
Electronics that Delco planned to close its printed circuit board fabrica-
tion plant and exit the printed circuit board manufacturing business. After
the plant closure, Delco purchased all of its printed circuit boards from
outside suppliers and Delco was no longer a customer of the Company's. The
Company had been Delco's principal supplier of semi-finished multilayer
printed circuit board materials for more than ten years. These materials
were used by Delco to produce finished multilayer printed circuit boards.
Sales to Delco Electronics represented 15.8% and 17.3% of the Company's
total worldwide sales for the 1998 and 1997 fiscal years, respectively. See
"Business-Electronic Materials Operations-Customers and End Markets" in Item
1 of this Report, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Item 7 of this Report, "Factors That
May Affect Future Results" after Item 7 of this Report and Note 13 of the
Notes to Consolidated Financial Statements in Item 8 of this Report.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Executive Officers of the Registrant.
Name Title Age
Brian E. Shore Chief Executive Officer, President 47
and a Director
E. Phillip Smoot Executive Vice President and a 61
Director
Robert A. Forcier Senior Vice President, Advanced 49
Product Marketing
Emily J. Groehl Senior Vice President, Sales and 52
Marketing
Lee H. Newton Senior Vice President, Finance 55
and Planning
Carl W. Smith Senior Vice President, North 51
American Business Unit
Thomas T. Spooner Senior Vice President, Technology 62
Brian Shore has served as a Director of the Company for more than the
past five years. Brian Shore was elected a Vice President of the Company in
January 1993, Executive Vice President in May 1994, President effective
March 4, 1996, the first day of the Company's 1997 fiscal year, and Chief
Executive Officer in November 1996. Brian Shore also served as General
Counsel of the Company from April 1988 until April 1994.
Mr. Smoot has served the Company in the capacities stated above for more
than the past five years.
Mr. Forcier has been employed by Park's "Nelco" group of companies for
more than the past five years. He was president of Nelco Technology, Inc.
from December 1987 to August 1992 and he has been Vice President, New
Product Marketing, of Nelco International Corporation since 1993.
Ms. Groehl has been with Park's "Nelco" group of companies for more than
the past five years. She was elected Vice President of New England Laminates
Co., Inc. in 1988 and Vice President, Marketing and Sales of Nelco
International Corporation in 1993.
Mr. Newton has been employed by Park's "Nelco" group of companies for
more than the past five years. He was elected Treasurer of New England
Laminates Co., Inc. in 1981, Vice President of Nelco Products, Inc. in 1986,
Vice President of Nelco Technology, Inc. in 1987 and Vice President, Finance
and Chief Financial Officer of Nelco International Corporation in 1993.
Mr. Smith joined the Company in April 1998 as Vice President and Chief
Operating Officer of Nelco International Corporation. Prior to April 1998,
Mr. Smith held various management and technical positions at General
Dynamics Convair, Martin Marietta Corporation and Fiberite, Inc. Most
recently, Mr. Smith served as President and Chief Operating Officer of
Fiberite, Inc.
Mr. Spooner has been employed by Park's "Nelco" group of companies for
more than the past five years. He has been Vice President, Technology of
Nelco International Corporation since 1993.
There are no family relationships between the directors or executive
officers of the Company, except that Brian Shore is the son of Jerry Shore,
who is the Chairman of the Board and a Director of the Company and who also
served as President of the Company for more than five years until March 4,
1996 and as Chief Executive Officer of the Company for more than five years
until November 19, 1996.
The term of office of each executive officer of the Company expires upon
the election and qualification of his 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.
For the Fiscal Year Stock Price Dividends
Ended February 28, 1999 High Low Declared
First Quarter $32 3/8 $23 5/8 $.08
Second Quarter 23 3/4 14 13/16 $.08
Third Quarter 21 10 15/16 $.08
Fourth Quarter 31 3/8 18 5/8 $.08
For the Fiscal Year Stock Price Dividends
Ended March 1, 1998 High Low Declared
First Quarter $25 3/4 $21 1/4 $.08
Second Quarter 31 3/4 24 7/8 $.08
Third Quarter 31 3/4 25 1/8 $.08
Fourth Quarter 32 1/2 26 $.08
As of May 25, 1999, there were approximately 2,200 holders of record
of Common Stock.
The Company expects, for the immediate future, to continue to pay
regular cash dividends.
Item 6. Selected Financial Data.
The following selected consolidated financial data of Park and its
subsidiaries is qualified by reference to, and should be read in conjunction
with, the consolidated financial statements, related notes, and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained elsewhere herein. Insofar as such consolidated financial
information relates to the five fiscal years ended February 28, 1999 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. The consolidated financial
statements as of February 28, 1999 and March 1, 1998 and for the three years
ended February 28, 1999, together with the auditors' reports for the three
years ended February 28, 1999, appear in Item 8 of this Report.
Fiscal Year Ended
Feb. 28, Mar. 1, Mar. 2, Mar. 3, Feb. 26,
1999 1998 1997 1996 1995
(In thousands, except per share amounts)
STATEMENT OF EARNINGS INFORMATION:
Net sales $387,634 $376,158 $334,490 $312,966 $253,022
Cost of sales 328,884 301,968 275,372 242,655 196,917
Gross profit 58,750 74,190 59,118 70,311 56,105
Selling, general and administrative
expenses 41,279 39,418 34,366 35,236 29,995
Profit from operations 17,471 34,772 24,752 35,075 26,110
Other income (expense):
Interest and other income, net 7,642 8,382 7,653 2,285 1,822
Interest expense (5,400) (5,468) (5,508) (96) (431)
Total other income 2,242 2,914 2,145 2,189 1,391
Earnings before income taxes 19,713 37,686 26,897 37,264 27,501
Income tax provision 4,337 12,436 8,338 12,366 10,156
Net earnings $ 15,376 $ 25,250 $ 18,559 $ 24,898 $ 17,345
Earnings per share:
Basic $ 1.40 $ 2.22 $ 1.64 $ 2.17 $ 1.60
Diluted $ 1.38 $ 2.07 $ 1.58 $ 2.11 $ 1.51
Weighted average number of common
shares outstanding:
Basic 10,980 11,353 11,349 11,500 10,858
Diluted 11,138 13,948 13,932 11,843 11,630
Cash dividends per common share $ .32 $ .32 $ .32 $ .28 $ .20
BALANCE SHEET INFORMATION:
Working capital $166,840 $176,553 $165,004 $160,965 $ 55,035
Total assets 351,698 359,329 307,862 298,975 162,051
Long-term debt 100,000 100,000 100,000 100,000 23
Stockholders' equity 164,646 166,404 143,355 134,427 112,048
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 interconnection systems.
In October 1997, the Company acquired Dielektra GmbH, a manufacturer of
advanced electronic materials, including continuously produced copper-clad
laminates and mass-laminated multilayer panels, located in Cologne, Germany.
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 90% of the Company's total net sales
worldwide in the 1999 fiscal year and approximately 89% and 87% of net sales
worldwide in the 1998 and 1997 fiscal years, respectively. The Company's
foreign electronic materials operations accounted for approximately 39% of
the Company's total net sales worldwide in the 1999 fiscal year and approxi-
mately 31% and 29% of net sales worldwide in the 1998 and 1997 fiscal years,
respectively.
Park is also engaged in the engineered materials business, which
consists of the Company's specialty adhesive tape business and advanced
composite business, both of which operate as independent business units. In
addition, Park operates a plumbing hardware business. The Company's
engineered materials and plumbing hardware businesses accounted for
approximately 10% of the Company's total net sales worldwide in the 1999
fiscal year and approximately 11% and 13% of net sales worldwide in the 1998
and 1997 fiscal years, respectively.
The Company's sales growth during the last three fiscal years has
been led by strong growth in sales by its Asian electronic materials
operations and its North American electronic materials operations, excluding
the loss of sales to Delco Electronics in the 1999 fiscal year, discussed
below. During the 1999 and 1998 fiscal years, the sales of Dielektra
contributed to this growth. The Company's ongoing efforts to expand its
higher technology, higher margin product lines have been significant factors
in the growth of the Company's sales of electronic materials during this
period. The Company introduced several new electronic materials products
during the past three fiscal years.
Sales volume of the Company's electronic materials segment increased
during each of the last three fiscal years but was adversely affected in the
last fiscal year by the loss of sales to Delco Electronics, discussed below.
However, the earnings growth that the Company achieved during its 1998
fiscal year did not continue in the 1999 fiscal year primarily as a result
of an earnings decline in the Company's North American electronic materials
operations, which was caused by the loss of sales to Delco Electronics. In
addition, growth of the Company's electronic materials business was
constrained during these fiscal years by the Company's available manufactur-
ing capacity. The Company has expanded the manufacturing capacity of its
New York, California, Arizona and Singapore facilities during the last three
fiscal years, will complete an additional expansion of its electronic
materials operation in Singapore during the 2000 fiscal year, and is
planning to commence significant additional expansions of its electronic
materials operations in California and New York during the 2000 fiscal year.
During the Company's 1998 fiscal year and for several years prior
thereto, more than 10% of the Company's total sales were to Delco Electron-
ics Corporation, a subsidiary of General Motors Corp. Sales to Delco
Electronics represented 15.8% and 17.3% of the Company's total sales
worldwide for the 1998 and 1997 fiscal years, respectively.
However, in March 1998, the Company was informed by Delco that Delco
planned to close its printed circuit board fabrication plant and completely
exit the printed circuit board manufacturing business. As a result, the
Company's sales to Delco declined during the three-month period ended May
31, 1998, were negligible during the three-month period ended August 30,
1998, were nil during the remainder of the 1999 fiscal year and are expected
to be nil in future years. In May 1998, the Company and its Nelco
subsidiary in Arizona filed a complaint against Delco Electronics Corpora-
tion and the Delphi Automotive Systems unit of General Motors Corp. in the
United States District Court for the District of Arizona. The complaint
alleges, among other things, that Delco breached its contract to purchase
semi-finished multilayer printed circuit boards from Nelco and that Delphi
interfered with Nelco's contract with Delco, and seeks compensatory and
punitive damages of not less than $170 million.
Although the Company's electronic materials segment was not
dependent on this single customer, the loss of this customer had a material
adverse effect on the business of this segment in the fiscal year ended
February 28, 1999 and may have a material adverse effect on the business of
this segment in the fiscal year ending February 27, 2000 and in subsequent
fiscal years.
Fiscal Year 1999 Compared with Fiscal Year 1998:
The Company's electronic materials business was largely responsible
for the decline in the Company's results of operations for the fiscal year
ended February 28, 1999. The North American and Asian markets for
sophisticated printed circuit materials strengthened during the 1999 fiscal
year, and the Company's electronic materials operations located in Asia
performed well as a result. However, the reduction in the volume of the
Company's business with Delco Electronics during the first quarter and the
absence of such business during the second, third and fourth quarters
reduced the Company's sales volume in North America and negatively affected
the Company's margins.
During the first three quarters of the 1999 fiscal year, the
Company's electronic materials business experienced inefficiencies caused by
operating certain of its facilities at levels lower than their designed
manufacturing capacity and faced intense price pressure from its customers,
and these factors adversely affected the Company's gross margins. The
Company's performance was also adversely affected by the weakness in the
market for sophisticated printed circuit materials during the 1999 fiscal
year first and second quarters and to a lesser extent during the 1999 fiscal
year third quarter. The Company believes this weakness was attributable to
an industry-wide inventory correction, the Asian financial crisis and global
economic weakness.
The Company's results of operations and margins improved in the
latter part of the 1999 fiscal year principally as a result of the
electronic material business' reducing its internal costs and maximizing the
utilization of its manufacturing resources, working closely with its
suppliers to reduce its raw material costs, and increasing its market share
with certain key customers. During most of the fourth quarter of the 1999
fiscal year, the Company's electronic materials business experienced
improved efficiencies resulting from the operation of its facilities at
levels close to their designed manufacturing capacity, which favorably
impacted the Company's margins.
Operating results of the Company's engineered materials and plumbing
hardware business segment declined during the 1999 fiscal year. This
decline was attributable to the advanced composite materials business. The
results of the Company's specialty adhesive tape and plumbing hardware
businesses improved during the 1999 fiscal year.
Results of Operations
Sales for the fiscal year ended February 28, 1999 increased 3% to
$387.6 million from $376.2 million for the fiscal year ended March 1, 1998.
Sales of the electronic materials business for the 1999 fiscal year were
$350.3 million, or 90% of total sales worldwide, compared with $335.2
million, or 89% of total sales worldwide, for the 1998 fiscal year. This 5%
increase in sales of electronic materials was principally the result of
higher volume of electronic materials shipped, an increase in sales of
higher technology products and the inclusion of Dielektra in the Company's
sales for the complete fiscal year. Sales of the engineered materials and
plumbing hardware businesses declined during the 1999 fiscal year as the
result of reduced volume of materials shipped. The sales increase by the
specialty adhesive tape business was overshadowed by the reduced sales of
the advanced composite and plumbing hardware businesses, which resulted in
an overall decline of 9% in the engineered materials and plumbing hardware
segment to $37.3 million in the 1999 fiscal year from $40.9 million in the
1998 fiscal year.
The Company's foreign operations accounted for $151.9 million of
sales, or 39% of the Company's total sales worldwide, during the 1999 fiscal
year compared with $115.7 million of sales, or 31% of total sales worldwide,
during the 1998 fiscal year. Sales by the Company's foreign operations
during the 1999 fiscal year increased 31% from the 1998 fiscal year. The
increase in sales by the Company's foreign operations in the 1999 fiscal
year was principally due to the inclusion of Dielektra in the Company's
sales for the complete fiscal year and an increase in sales by the Company's
Asian electronic materials operations. An expansion of the Company's
Singapore manufacturing facility was completed at the end of the Company's
1997 fiscal year, and the Company further expanded the manufacturing
capacity of its facility in Singapore during the 1999 and 1998 fiscal years.
The gross margin for the Company's worldwide operations was 15.2%
during the 1999 fiscal year compared with 19.7% for the 1998 fiscal year.
The decline in the gross margin was attributable to inefficiencies caused by
operating facilities at levels lower than their designed capacity in the
first three quarters of the 1999 fiscal year, price pressure exerted by
customers, and reduced sales volumes with Delco Electronics, which offset
the continuing growth in sales of higher technology, higher margin products.
However, the gross margin improved in each of the three-month periods ended
November 29, 1998 and February 28, 1999 compared with the prior three-month
periods as a result of reductions in internal costs and in raw material
costs in the Company's electronic materials operations and increases in
market share with certain key electronic materials customers.
Selling, general and administrative expenses, measured as a
percentage of sales, were 10.7% during the 1999 fiscal year compared with
10.5% during the 1998 fiscal year. This increase was a function of
increased selling expenses.
For the reasons set forth above, profit from operations for the 1999
fiscal year decreased 50% to $17.5 million from $34.8 million for the 1998
fiscal year.
Interest and other income, principally investment income, declined
9% to $7.6 million for the 1999 fiscal year from $8.4 million for the 1998
fiscal year. The decrease in investment income was attributable to the
reduction in cash available for investment and a decline in the prevailing
interest rates during the 1999 fiscal year. The Company's investments were
primarily short-term taxable instruments and government securities.
Interest expense for the 1999 fiscal year was $5.4 million compared with
approximately the same amount during the 1998 fiscal year. The Company's
interest expense is related primarily to its $100 million principal amount
of 5.5% Convertible Subordinated Notes due 2006 (the "Notes") issued in
February 1996.
The Company's effective income tax rate for the 1999 fiscal year was
22.0% compared with 33.0% for the 1998 fiscal year. This decrease in the
effective tax rate was primarily the result of more favorable foreign tax
rate differentials, a change in the Company's income mix among the tax
jurisdictions in which the Company does business and unusual tax credits in
the fourth quarter.
Net earnings for the 1999 fiscal year declined 39% to $15.4 million
from $25.3 million for the 1998 fiscal year. Basic and diluted earnings per
share declined to $1.40 and $1.38, respectively, for the 1999 fiscal year
from $2.22 and $2.07, respectively, for the 1998 fiscal year. This decline
in net earnings and earnings per share was primarily attributable to the
decrease in the profit from operations offset, in part, by the lower
effective tax rate.
Fiscal Year 1998 Compared with Fiscal Year 1997:
The Company's electronic materials business was largely responsible
for the improvement in the Company's results of operations for the fiscal
year ended March 1, 1998. The North American and Asian markets for
sophisticated printed circuit materials were strong during the 1998 fiscal
year, and the Company's electronic materials operations located in these
regions performed well as a result. The market in Europe for sophisticated
printed circuit materials was not as strong as in North America or Asia,
although the Company's European operations benefited from the acquisition of
Dielektra, resulting in higher sales and improved profitability.
During most of the 1998 fiscal year, the Company's electronic
materials business experienced improved efficiencies resulting from the
operation of its facilities at levels close to their designed manufacturing
capacity, which favorably impacted the Company's margins.
Operating results of the Company's engineered materials businesses
and plumbing hardware business improved during the 1998 fiscal year.
Results of Operations
Sales for the fiscal year ended March 1, 1998 increased 12% to
$376.2 million from $334.5 million for the fiscal year ended March 2, 1997.
Sales of the electronic materials business for the 1998 fiscal year were
$335.2 million, or 89% of total sales worldwide, compared with $291.1
million, or 87% of total sales worldwide, for the 1997 fiscal year. This
15% increase in sales of electronic materials was principally the result of
higher volume of electronic materials shipped, an increase in sales of
higher technology products and the inclusion of Dielektra in the Company's
sales since the date of acquisition. Sales of the engineered materials
businesses continued to grow during the 1998 fiscal year as the result of
increased volume of materials shipped and the addition of new products. The
sales increase by the engineered materials business was overshadowed by the
reduced sales of the plumbing hardware business, which resulted in an
overall decline of 6% in the engineered materials and plumbing hardware
segment to $40.9 million in the 1998 fiscal year from $43.3 million in the
1997 fiscal year.
The Company's foreign operations accounted for $115.7 million of
sales, or 31% of the Company's total sales worldwide, during the 1998 fiscal
year compared with $98.7 million of sales, or 30% of total sales worldwide,
during the 1997 fiscal year. Sales by the Company's foreign operations
during the 1998 fiscal year increased 17% from the 1997 fiscal year. The
increase in sales by the Company's foreign operations in the 1998 fiscal
year was principally due to the inclusion of Dielektra in the Company's
sales and an increase in sales by the Company's Asian electronic materials
operations. An expansion of the Company's Singapore manufacturing facility
was completed at the end of the Company's 1997 fiscal year, and the Company
further expanded the manufacturing capacity of its facility in Singapore
during the 1998 fiscal year.
The gross margin for the Company's worldwide operations was 19.7%
during the 1998 fiscal year compared with 17.7% for the 1997 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 efficiencies resulting from
operating the Company's facilities at levels close to their designed
capacity. This improvement was partially offset by a $1.4 million pre-tax
charge included in the cost of sales in the fourth quarter of the 1998
fiscal year to write down certain fixed assets that will no longer be
utilized in the Company's plumbing hardware business and in the Company's
semi-finished multilayer printed circuit board business.
Selling, general and administrative expenses, measured as a
percentage of sales, were 10.5% during the 1998 fiscal year compared with
10.3% during the 1997 fiscal year. This increase was a function of
increased general and administrative expenses, resulting, in part, from
higher employee bonus and profit sharing expenses due to higher operating
profits.
For the reasons set forth above, profit from operations for the 1998
fiscal year increased 40% to $34.8 million from $24.8 million for the 1997
fiscal year.
Interest and other income, principally investment income, increased
9% to $8.4 million for the 1998 fiscal year from $7.7 million for the 1997
fiscal year. The increase in investment income was attributable to the
increase in cash available for investment and an increase in the prevailing
interest rates during the current year. The Company's investments were
primarily short-term taxable instruments and government securities.
Interest expense for the 1998 fiscal year was $5.5 million compared with the
same amount during the 1997 fiscal year.
The Company's effective income tax rate for the 1998 fiscal year was
33.0% compared with 31.0% for the 1997 fiscal year. This increase in the
effective tax rate was primarily the result of less favorable foreign tax
rate differentials and a change in the domestic sales mix into states with
higher tax rates.
Net earnings for the 1998 fiscal year increased 36% to $25.3 million
from $18.6 million for the 1997 fiscal year. Basic and diluted earnings per
share increased to $2.22 and $2.07, respectively, for the 1998 fiscal year
from $1.64 and $1.58, respectively, for the 1997 fiscal year. This increase
in net earnings and earnings per share was primarily attributable to the
increase in the profit from operations offset, in part, by the higher
effective tax rate.
Liquidity and Capital Resources:
At February 28, 1999, the Company's cash and temporary investments
were $139.7 million compared with $158.5 million at March 1, 1998, the end
of the Company's 1998 fiscal year. The decrease in the Company's cash and
investment position at February 28, 1999 was attributable to investments in
property, plant and equipment and purchases of the Company's Common Stock in
excess of cash provided from operating activities, as discussed below. The
Company's working capital was $166.8 million at February 28, 1999 compared
with $176.6 million at March 1, 1998. The decrease at February 28, 1999
compared with March 1, 1998 was due principally to the reduction in cash and
temporary investments, offset in part by higher receivables and lower
accounts payable. The increase in receivables at February 28, 1999 compared
with March 1, 1998 was a result principally of longer outstanding receiv-
ables due primarily to a different customer mix and the elimination of
discount terms. The Company's current ratio (the ratio of current assets
to current liabilities) was 3.6 to 1 at February 28, 1999 compared with 3.5
to 1 at March 1, 1998.
During the 1999 fiscal year, the Company generated funds from
operations of $22.2 million and expended $24.4 million for the net purchase
of property, plant and equipment and $13.5 million for purchases of the
Company's Common Stock. Cash provided by net earnings before depreciation
and amortization of $29.7 million combined with a net increase in non-cash
working capital items resulted in $22.2 million of cash provided from
operating activities. A significant portion of the 1999 fiscal year's
capital expenditures related to installation of additional capacity at the
Company's electronic materials facilities in Arizona, California and
Singapore. These expansions will increase the Company's capacity and
capability for the production of sophisticated printed circuit materials.
Net expenditures for property, plant and equipment were $24.4 million, $18.3
million and $18.7 million in the 1999, 1998 and 1997 fiscal years, respec-
tively. The Company expects the capital expenditures in the 2000 fiscal
year to exceed the expenditures in the 1999 fiscal year. The Company is
planning further expansions of its electronic materials operations in
California, New York and Asia.
At February 28, 1999, 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 environmen-
tal 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 1999, 1998 and 1997 fiscal years, the Company charged
approximately $0.2 million, $0.4 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 February 28, 1999, the recorded
liability in accrued liabilities for environmental matters was $3.5 million
compared with approximately the same amount at March 1, 1998.
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.
Year 2000:
Year 2000 issues relate to system failures or errors resulting from
computer programs and embedded computer chips which utilize dates with only
two digits instead of four digits to represent a year. A dated field with
two digits representing a year may result in an error or failure due to the
system's inability to recognize "00" as the Year 2000.
To address Year 2000 issues, the Company has initiated a plan
comprised of the following four phases: inventory, assessment, remediation
and testing. The Company is applying this plan to the areas of information
technology related to internal systems and processes, embedded systems
related to manufacturing and other facility equipment, and external
relationships which includes evaluating the Year 2000 readiness of third
parties such as suppliers, customers and service providers. The Company is
utilizing external information technology consultants, in addition to the
Company's internal resources, to evaluate and monitor the Company's Year
2000 readiness.
In the information technology and embedded systems areas, the
Company has completed the inventory and assessment phases and is conducting
the remediation and testing phases. The Company anticipates that the
remediation and testing phases for all critical systems will be completed by
September 30, 1999 and that after it has completed any necessary modifica-
tions, Year 2000 issues will not pose significant operating problems. The
Company is also in the process of assessing the Year 2000 compliance of
third parties it relies upon, and is developing contingency plans where
possible. Such contingency plans may include using alternate suppliers and
increasing inventory levels. The Company will continue to evaluate the
readiness of its suppliers and to refine its contingency plans on an ongoing
basis.
The Company is upgrading its information systems to improve their
functionality and efficiency. As part of this ongoing system development,
the Company is modifying or replacing existing computer programs so that
they will function properly with respect to dates beyond December 31, 1999.
A major component of this project includes the replacement of legacy
computer programs with a fully integrated Oracle based system. The Oracle
system is being implemented at one Company location at a time. The Company
has developed a contingency plan to upgrade the existing legacy system to
function beyond 1999 for those locations which have not completed the
conversion to the Oracle based system.
As mentioned in the preceding paragraph, the primary reason for the
extensive system modifications which are being undertaken by the Company was
the improvement of the functionality and efficiency of the Company's
existing information systems. Accordingly, the Company's budget for these
information technology improvements included enhanced Year 2000 compliant
software. Management does not expect that the incremental cost of its Year
2000 compliance program will have a material adverse effect on the
liquidity, capital resources, business, consolidated results of operations
or consolidated financial position of the Company.
Although the Company believes it is taking appropriate measures to
avoid any material adverse effects relating to Year 2000 issues, no amount
of preparation and testing can guarantee Year 2000 compliance. In addition
to the risks of the failure to locate and correct Year 2000 problems in the
Company's information systems and software programs that control various
equipment functions, the Company is exposed to the risk of the Year 2000
readiness of its suppliers, as well as suppliers to its suppliers,
customers, other third parties and infrastructure failures. Although the
Company has initiated a program to communicate with all of its significant
suppliers and customers to determine the extent to which the Company is
vulnerable to a failure by such a third party to adequately address its own
Year 2000 issues, the Company does not have control over these third parties
and, as a result, cannot currently estimate to what extent the failure of
these third parties to successfully address their Year 2000 issues may
adversely affect the Company's liquidity, capital resources, business,
consolidated results of operations or consolidated financial position.
Factors That May Affect Future Results.
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements to encourage companies to
provide prospective information about their companies without fear of
litigation so long as those statements are identified as forward-looking and
are accompanied by meaningful cautionary statements identifying important
factors that could cause actual results to differ materially from those
projected in the statement. Certain portions of this Report which do not
relate to historical financial information may be deemed to constitute
forward-looking statements that are subject to various factors which could
cause actual results to differ materially from Park's expectations or from
results which might be projected, forecasted, estimated or budgeted by the
Company in forward-looking statements. Accordingly, the Company hereby
identifies the following important factors which could cause the Company's
actual results to differ materially from any such results which might be
projected, forecast, estimated or budgeted by the Company in forward-looking
statements.
. The Company's customer base is concentrated, in part, because the
Company's business strategy has been to develop long-term relation-
ships with a select group of customers. During the Company's
fiscal year ended February 28, 1999, the Company's ten largest
customers accounted for approximately 54% of net sales. The
Company expects that sales to a relatively small number of
customers will continue to account for a significant portion of its
net sales for the foreseeable future. A loss of one or more of
such key customers could affect the Company's profitability. See
"Business-Electronic Materials Operations-Customers and End
Markets" in Item 1 of this Report, "Legal Proceedings" in item 3 of
this Report, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Item 7 of this Report and
Note 13 of the Notes to Consolidated Financial Statements in Item
8 of this Report for discussions of the loss of a key customer
early in the 1999 fiscal year.
. The Company's business is dependent on certain aspects of the
electronics industry, which is a cyclical industry and which has
experienced recurring downturns. The downturns, such as occurred
in the first quarter of the Company's fiscal year ended March 2,
1997, 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 typically does not obtain long-term purchase orders or
commitments. Instead, it relies primarily on continual communica-
tion 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 instabil-
ity 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.
. Although the Company believes it is taking appropriate measures to
avoid any material adverse effects relating to Year 2000 issues, no
amount of preparation and testing can guarantee Year 2000 compli-
ance. In addition to the risks of the failure to locate and correct
Year 2000 problems in the Company's information systems and
software programs that control various equipment functions, the
Company is exposed to the risk of the Year 2000 readiness of its
suppliers, as well as suppliers to its suppliers, customers, other
third parties and infrastructure failures. Although the Company has
initiated a program to communicate with all of its significant
suppliers and customers to determine the extent to which the
Company is vulnerable to a failure by such a third party to
adequately address its own Year 2000 issues, the Company does not
have control over these third parties and, as a result, cannot
currently estimate to what extent the failure of these third
parties to successfully address their Year 2000 issues may
adversely affect the Company's liquidity, capital resources,
business, consolidated results of operations or consolidated
financial position.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risks for changes in foreign
currency exchange rates and interest rates. The Company's primary foreign
currency exchange exposure relates to the translation of the financial
statements of foreign subsidiaries using currencies other than the U.S.
dollar as their functional currency. The Company does not believe that a
10% fluctuation in foreign exchange rates would have had a material impact
on its consolidated results of operations or financial position. The
exposure to market risks for changes in interest rates relates to the
Company's short-term investment portfolio. This investment portfolio is
managed by outside professional managers in accordance with guidelines
issued by the Company. These guidelines are designed to establish a high
quality fixed income portfolio of government and highly rated corporate debt
securities with a maximum weighted average maturity of less than one year.
The Company does not use derivative financial instruments in its investment
portfolio. Based on the average maturity of the investment portfolio at the
end of the 1999 fiscal year a 10% increase in short term interest rates
would not have had a material impact on the consolidated results of opera-
tions or financial position of the Company.
Item 8. Financial Statements and Supplementary Data.
The Company's Financial Statements begin on the next page.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Park Electrochemical Corp.
Lake Success, New York
We have audited the accompanying consolidated balance sheets of Park
Electrochemical Corp. and subsidiaries as of February 28, 1999 and March 1,
1998 and the related consolidated statements of earnings, stockholders'
equity, and cash flows for each of the three years in the period ended
February 28, 1999. 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 February 28,
1999 and March 1, 1998 and the consolidated results of their operations and
their cash flows for each of the three years in the period ended February
28, 1999, 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 23, 1999
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and per share amounts)
February 28, March 1,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $ 36,682 $ 45,102
Marketable securities (Note 2) 103,020 113,358
Accounts receivable, less allowance for
doubtful accounts of $2,030 and $1,858,
respectively 56,917 53,511
Inventories (Note 3) 25,703 26,953
Prepaid expenses and other current
assets (Note 7) 7,874 8,456
Total current assets 230,196 247,380
Property, plant and equipment, at cost, less
accumulated depreciation and amortization
(Note 4) 118,012 108,116
Other assets (Notes 7 and 10) 3,490 3,833
Total $351,698 $359,329
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 31,019 $ 37,426
Accrued liabilities (Note 5) 23,154 25,261
Income taxes payable 9,183 8,140
Total current liabilities 63,356 70,827
Long-term debt (Note 6) 100,000 100,000
Deferred income taxes (Note 7) 9,501 8,781
Deferred pension liability and other (Note 10) 14,195 13,317
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 53,108 52,990
Retained earnings 142,336 130,435
Accumulated other non-owner changes (1,802) (1,266)
195,000 183,517
Less treasury stock, at cost, 3,258,379 and
2,181,247 shares, respectively (30,354) (17,113)
Total stockholders' equity 164,646 166,404
Total $351,698 $359,329
See notes to consolidated financial statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
52 Weeks
Ended
February 28, March 1, March 2,
1999 1998 1997
Net sales $387,634 $376,158 $334,490
Cost of sales 328,884 301,968 275,372
Gross profit 58,750 74,190 59,118
Selling, general and administrative
expenses 41,279 39,418 34,366
Profit from operations 17,471 34,772 24,752
Other income (expense):
Interest and other income, net 7,642 8,382 7,653
Interest expense (Note 6) (5,400) (5,468) (5,508)
Total other income 2,242 2,914 2,145
Earnings before income taxes 19,713 37,686 26,897
Income tax provision (Note 7) 4,337 12,436 8,338
Net earnings $ 15,376 $ 25,250 $ 18,559
Earnings per share (Note 9):
Basic $1.40 $2.22 $1.64
Diluted $1.38 $2.07 $1.58
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 Accumulated
Common Stock Paid-in Retained Other Non- Treasury Stock Comprehensive
Shares Amount Capital Earnings Owner Changes Shares Amount Income
Balance, March 3, 1996 13,580,018 $1,358 $50,958 $ 93,892 $ 297 2,033,704 $(12,078)
Net earnings 18,559 $18,559
Exchange rate changes (497) (497)
Change in pension
liability adjustment 151 151
Market revaluation 19 19
Stock options exercised 332 (84,868) 546
Cash dividends ($.32 per
share) (3,647)
Purchase of treasury stock 358,929 (6,535)
Comprehensive income $18,232
Balance, March 2, 1997 13,580,018 1,358 51,290 108,804 (30) 2,307,765 (18,067)
Net earnings 25,250 $25,250
Exchange rate changes (1,122) (1,122)
Change in pension
liability adjustment (189) (189)
Market revaluation 75 75
Stock options exercised 228 (49,529) 352
Cash dividends ($.32 per
share) (3,619)
Purchase of treasury stock 11 -
Shares issued in business
acquisition 1,472 (77,000) 602
Comprehensive income $24,014
Balance, March 1, 1998 13,580,018 1,358 52,990 130,435 (1,266) 2,181,247 (17,113)
Net earnings 15,376 $15,376
Exchange rate changes 98 98
Change in pension
liability adjustment (634) (634)
Market revaluation - -
Stock options exercised 118 (26,080) 211
Cash dividends ($.32 per
share) (3,475)
Purchase of treasury stock 1,103,212 (13,452)
Comprehensive income $14,840
Balance, February 28, 1999 13,580,018 $1,358 $53,108 $142,336 $(1,802) 3,258,379 $(30,354)
See notes to consolidated financial statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
52 Weeks
Ended
February 28, March 1, March 2,
1999 1998 1997
Cash flows from operating activities:
Net earnings $ 15,376 $ 25,250 $ 18,559
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 14,291 13,207 11,584
Provision for write-down of fixed assets - 1,400 -
Provision for doubtful accounts receivable 237 75 (306)
Provision (benefit) for deferred income taxes 828 (301) 1,596
Other, net (165) (11) 49
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (3,624) 1,273 (7,612)
Decrease (increase) in inventories 1,298 (3,138) 7,202
Decrease (increase) in prepaid expenses and
other current assets 333 (1,950) (1,456)
Decrease (increase) in other assets 579 (544) 122
(Decrease) increase in accounts payable (6,481) 1,235 (2,528)
(Decrease) increase in accrued liabilities (1,627) (250) 1,700
Increase in income taxes payable 1,137 4,204 286
Net cash provided by operating activities 22,182 40,450 29,196
Cash flows from investing activities:
Purchases of property, plant and equipment, net (24,375) (18,274) (18,735)
Purchases of marketable securities (129,693) (135,390) (137,897)
Proceeds from sales of marketable securities 140,031 124,264 103,330
Business acquisition net of cash acquired (Note 14) - (4,585) -
Net cash used in investing activities (14,037) (33,985) (53,302)
Cash flows from financing activities:
Dividends paid (3,475) (3,619) (3,647)
Proceeds from exercise of stock options 232 228 604
Purchase of treasury stock (13,452) - (6,535)
Net cash used in financing activities (16,695) (3,391) (9,578)
(Decrease) increase in cash and cash equivalents
before effect of exchange rate changes (8,550) 3,074 (33,684)
Effect of exchange rate changes on
cash and cash equivalents 130 (293) 35
(Decrease) increase in cash and cash equivalents (8,420) 2,781 (33,649)
Cash and cash equivalents, beginning of year 45,102 42,321 75,970
Cash and cash equivalents, end of year $ 36,682 $ 45,102 $ 42,321
See notes to consolidated financial statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three years ended February 28, 1999
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
interconnection 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 interconnection systems are used in virtually all advanced
electronic equipment to direct, sequence and control electronic signals
between semiconductor devices and passive components. The Company also
designs and manufactures 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 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
1999, 1998 and 1997 fiscal years ended on February 28, 1999, March 1,
1998 and March 2, 1997, respectively. Fiscal 1999, 1998 and 1997 each
included 52 weeks.
d. Marketable Securities - All marketable securities are classified as
available-for-sale and are carried at fair value, with the unrealized
gains and losses, net of tax, included in comprehensive income.
Realized gains and losses, amortization of premiums and discounts, and
interest and dividend income are included in other income. The cost
of securities sold is based on the specific identification method.
e. Inventories - Inventories are stated at the lower of cost (first-in,
first-out method) or market.
f. Revenue Recognition - Revenues are recognized at the time product is
shipped to the customer.
g. 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 $50,300,000 at February 28,
1999) 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
comprehensive income.
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
1999 1998 1997
Cash paid during the year for:
Interest $5,500,000 $5,519,000 $2,792,000
Income taxes 2,159,000 8,289,000 6,570,000
l. Recently Issued Accounting Pronouncements - In June 1998, the
Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes standards
for the recognition and measurement of derivatives and hedging
activities and requires all derivative instruments to be recorded on
the balance sheet at fair value. Unless specific hedge accounting
criteria are met SFAS 133 requires changes in the fair value of the
derivative instrument to be currently recognized in earnings. This
statement is effective for fiscal years beginning after June 15, 2000.
It is the Company's policy to only enter into forward foreign currency
contracts to hedge specific transactions in order to reduce exposure
to foreign exchange risks. The Company believes the adoption of this
standard will not have a material effect on the Company's consolidated
results of operation or financial position.
2. MARKETABLE SECURITIES
The following is a summary of available-for-sale securities:
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
February 28, 1999:
U.S. Treasury and other
government securities $ 14,729,000 $ 32,000 $25,000 $ 14,736,000
U.S. corporate debt
securities 88,187,000 74,000 49,000 88,212,000
Total debt securities 102,916,000 106,000 74,000 102,948,000
Equity securities 5,000 67,000 - 72,000
$102,921,000 $173,000 $74,000 $103,020,000
March 1, 1998:
U.S. Treasury and other
government securities $ 6,177,000 $ 44,000 $ - $ 6,221,000
U.S. corporate debt
securities 107,077,000 51,000 47,000 107,081,000
Total debt securities 113,254,000 95,000 47,000 113,302,000
Equity securities 4,000 52,000 - 56,000
$113,258,000 $147,000 $47,000 $113,358,000
The gross realized gains on sales of available-for-sale securities
totalled $39,000, $18,000 and $39,000 for 1999, 1998 and 1997,
respectively, and the gross realized losses totalled $9,000, $6,000 and
$23,000 for 1999, 1998 and 1997, respectively.
The amortized cost and estimated fair value of the debt and marketable
equity securities at February 28, 1999, by contractual maturity, are shown
below:
Estimated
Fair
Cost Value
Due in one year or less $98,555,000 $ 98,593,000
Due after one year through five years 4,361,000 4,355,000
102,916,000 102,948,000
Equity securities 5,000 72,000
$102,921,000 $103,020,000
3. INVENTORIES
February 28, March 1,
1999 1998
Raw materials $ 8,787,000 $10,686,000
Work-in-process 4,590,000 5,740,000
Finished goods 11,533,000 9,806,000
Manufacturing supplies 793,000 721,000
$25,703,000 $26,953,000
4. PROPERTY, PLANT AND EQUIPMENT
February 28, March 1,
1999 1998
Land, buildings and improvements $ 44,626,000 $ 41,598,000
Machinery, equipment, furniture
and fixtures 178,859,000 160,888,000
223,485,000 202,486,000
Less accumulated depreciation
and amortization 105,473,000 94,370,000
$118,012,000 $108,116,000
Depreciation and amortization expense relating to property, plant and
equipment amounted to $14,255,000, $12,884,000 and $11,146,000 for
fiscal 1999, 1998 and 1997, respectively. A pretax charge of $1,400,000
was recorded in fiscal 1998, for the write-down of operating equipment
that will no longer be utilized, to its estimated net realizable value.
Interest expense capitalized to property, plant and equipment amounted
to $395,000, $294,000 and $260,000 for fiscal 1999, 1998 and 1997,
respectively.
5. ACCRUED LIABILITIES
February 28, March 1,
1999 1998
Payroll and commissions $ 5,946,000 $ 6,091,000
Taxes, other than income taxes 1,109,000 1,130,000
Interest 2,750,000 2,765,000
Other 13,349,000 15,275,000
$23,154,000 $25,261,000
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
February 28, 1999 and March 1, 1998, the fair value of the Notes
approximated $87,000,000 and $99,000,000, respectively.
Foreign lines of credit totalled $5,100,000 at February 28, 1999, all
of which remains available to the subsidiaries.
7. INCOME TAXES
The income tax provision includes the following:
Fiscal Year
1999 1998 1997
Current:
Federal $ 724,000 $10,181,000 $6,150,000
State and local 608,000 1,332,000 592,000
Foreign 2,177,000 1,224,000 -
3,509,000 12,737,000 6,742,000
Deferred:
Federal 31,000 (680,000) 863,000
State and local 62,000 94,000 150,000
Foreign 735,000 285,000 583,000
828,000 (301,000) 1,596,000
$4,337,000 $12,436,000 $8,338,000
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
1999 1998 1997
Statutory U.S. Federal tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal benefit 2.0 2.5 1.8
Foreign tax rate differentials (13.7) (7.4) (7.8)
Reversal of reserves no longer
required (3.5) - -
Other, net 2.2 2.9 2.0
22.0% 33.0% 31.0%
The Company had foreign net operating loss carryforwards of
approximately $44,300,000 and $37,500,000 in fiscal 1999 and 1998,
respectively. Most of the net operating loss carryforwards were
acquired in fiscal 1998 when the Company purchased the capital stock of
Dielektra GmbH ("Dielektra"), a German corporation located in Cologne,
Germany. Long-term deferred tax assets arising from these net operating
loss carryforwards were valued at $0 at both February 28, 1999 and March
1, 1998, net of valuation reserves of approximately $22,400,000 and
$19,500,000, respectively. None of the acquired net operating loss
carryforwards relate to goodwill or other intangible assets.
Approximately $2,200,000 of the foreign net operating loss carryforwards
expire in varying amounts from fiscal 2000 through fiscal 2004; the
remainder have an indefinite expiration.
At February 28, 1999 and March 1, 1998, current deferred tax assets of
$2,147,000 and $2,254,000, respectively, which were primarily
attributable to expenses not currently deductible 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 Options - Under the 1992 Stock Option Plan (the "Plan")
approved by the Company's stockholders, key employees may be granted
options to purchase shares of common stock of the Company
exercisable at prices not less than the fair market value at the
date of grant. Options become exercisable 25% one year from the
date of grant, with an additional 25% exercisable each succeeding
year. The options expire 10 years from the date of grant. Options
to purchase a total of 1,450,000 shares of common stock are
authorized for grant under such Plan. The Plan will expire in
March, 2002.
The Company has elected the disclosure provision of Statement of
Financial Standards No. 123, "Accounting for Stock-Based
Compensation," 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
$7.38 for fiscal 1999, $7.17 for fiscal 1998 and $7.78 for fiscal
1997, with the following weighted average assumptions; risk free
interest rate of 5.5% for fiscal 1999 and 6.0% for fiscal 1998 and
1997; expected volatility factors of 41%, 33% and 34% for fiscal
1999, 1998 and 1997, respectively; expected dividend yield of 2% for
fiscal 1999, 1998 and 1997; and estimated option lives of 4.1 years
for fiscal 1999 and 4.6 years for fiscal 1998 and 1997. For the
purpose of pro forma disclosures, the effect of applying SFAS 123 on
net income and earnings per share for fiscal 1999, 1998 and 1997
would approximate the amounts shown below (in thousands, except EPS
data):
1999 1998 1997
As Pro As Pro As Pro
Reported forma Reported forma Reported forma
Net income $15,376 $14,692 $25,250 $24,810 $18,559 $18,330
EPS-basic $1.40 $1.34 $2.22 $2.19 $1.64 $1.62
EPS-diluted $1.38 $1.33 $2.07 $2.04 $1.58 $1.57
Information with respect to the Company's stock option plans follows:
Weighted
Average
Range of Outstanding Exercise
Exercise Prices Options Price
Balance, March 2, 1997 $ 5.50 - $24.63 519,975 $14.48
Granted 23.75 - 28.00 211,700 25.01
Exercised 5.50 - 24.63 (51,041) 8.80
Cancelled 6.00 - 28.00 (55,909) 26.59
Balance, March 1, 1998 5.50 - 27.63 624,725 17.43
Granted 18.88 - 23.75 179,600 23.34
Exercised 5.50 - 24.63 (26,080) 8.89
Cancelled 13.13 - 24.63 (17,420) 22.31
Balance, February 28, 1999 $ 5.50 - $27.63 760,825 $19.00
Exercisable, February 28, 1999 $ 5.50 - $27.63 391,213 $14.76
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 - $ 9.99 127,100 3.57 $ 7.02 127,100 $ 7.02
10.00 - 19.99 217,900 5.99 16.13 178,625 15.61
20.00 - 28.00 415,825 8.44 24.17 85,488 24.49
760,825 391,213
Stock options available for future grant under the 1992 Plan at February
28, 1999 and March 1, 1998 were 585,710 and 447,890, respectively.
b. Stockholders' Rights Plan - On February 2, 1989, the Company adopted
a stockholders' rights plan designed to protect stockholder interests
in the event the Company is confronted with coercive or unfair
takeover tactics. Under the terms of the plan, as amended on July
12, 1995, each share of the Company's common stock held of record on
February 15, 1989 or issued thereafter received one right. 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.
c. Reserved Common Shares - At February 28, 1999, 2,370,342 shares of
common stock were reserved for issuance upon conversion of the Notes
and 1,346,535 shares were reserved for issuance upon exercise of
stock options.
d. Accumulated Other Non-Owner Changes - Beginning in fiscal 1999, the
Company adopted Statement of Financial Accounting Standards No. 130
(SFAS 130), "Reporting Comprehensive Income," which establishes
standards for reporting and displaying comprehensive income and its
components in the financial statements. SFAS 130 requires foreign
currency translation adjustments, changes in pension liability and
unrealized gains or losses on the Company's available-for-sale
securities to be included in other comprehensive income. These
items, which were previously reported as separate components of
stockholder's equity, have been reclassified to conform to the
requirements of SFAS 130. Adoption of SFAS 130 had no effect on the
Company's earnings or stockholders' equity. Reclassification
adjustments in each year are not material.
Accumulated balances related to each component of other comprehensive
income (loss) are as follows:
February 28, March 1,
1999 1998
Currency translation adjustment $ (193) $ (291)
Pension liability adjustment (1,673) (1,039)
Unrealized gains on investments 64 64
Accumulated balance $(1,802) $(1,266)
9. EARNINGS PER SHARE
The following table sets forth the calculation of basic and diluted
earnings per share for the fiscal years:
1999 1998 1997
Net income for basic EPS $15,376,000 $25,250,000 $18,559,000
Add interest on 5.5% convertible
subordinated notes, net of taxes - 3,554,000 3,523,000
Net income for diluted EPS $15,376,000 $28,804,000 $22,082,000
Weighted average common shares
outstanding for basic EPS 10,980,000 11,353,000 11,349,000
Net effect of dilutive options 158,000 225,000 213,000
Assumed conversion of 5.5%
convertible subordinated notes - 2,370,000 2,370,000
Weighted average shares
outstanding for diluted EPS 11,138,000 13,948,000 13,932,000
EPS-basic $1.40 $2.22 $1.64
EPS-diluted $1.38 $2.07 $1.58
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
$1,641,000, $2,179,000 and $1,775,000 for fiscal 1999, 1998 and 1997,
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
$789,000, $692,000 and $554,000 in fiscal 1999, 1998 and 1997,
respectively.
b. Pension Plans - A domestic subsidiary of the Company has two pension
plans, one of which is active, 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. On October 29,
1997, the Company acquired Dielektra GmbH, ("Dielektra"), including
its pension plan. Dielektra has a noncontributory defined benefit
plan which covers certain employees. Under the terms of the plan,
participants may not accrue additional service time after December
31, 1987. The Company's policy with respect to this plan is to
contribute annually the amounts necessary to meet current payment
obligations of the plan.
In fiscal 1999, the Company adopted Statement of Financial Accounting
Standards No. 132, "Employer's Disclosures about Pensions and Other
Post Retirement Benefits," which changed the financial statement
disclosure requirements under Statement of Financial Standards No. 87
(SFAS 87) "Employers' Accounting for Pensions," but did not change
the existing measurement or recognition of provisions of SFAS 87.
In accordance with SFAS 87, the Company records its deferred pension
liability related to its three defined benefit pension plans, which
amounted to $10,956,000 and $10,172,000 at February 28, 1999 and
March 1, 1998, respectively. The effect on the Company's consolidated
financial statements in recording the liability was to recognize an
asset (included in other assets) of $175,000 and $230,000 at February
28, 1999 and March 1, 1998, respectively, and to record a
corresponding reduction to accumulated non-owner changes of
$1,673,000 and $1,039,000 at those same dates.
Net pension costs include the following components:
Fiscal Year
Change in Benefit Obligation 1999 1998
Benefit obligation at beginning of year $ 13,336,000 $ 3,931,000
Benefit obligation due to acquisition - 9,626,000
Service cost 131,000 54,000
Interest cost 949,000 494,000
Actuarial loss 974,000 123,000
Currency translation loss/(gain) 71,000 (416,000)
Benefits paid (860,000) (476,000)
Benefit obligation at end of year $ 14,601,000 $ 13,336,000
Change in Plan Assets
Fair value of plan assets at beginning
of year $ 3,164,000 $ 2,937,000
Actual return on plan assets 132,000 143,000
Employer contributions 825,000 560,000
Benefits paid (860,000) (476,000)
Fair value of plan assets $ 3,261,000 $ 3,164,000
Underfunded status $(11,340,000) $(10,172,000)
Unrecognized net transition obligation 90,000 119,000
Unamortized prior service cost 85,000 109,000
Unrecognized net loss 2,058,000 1,039,000
Net accrued pension cost $ (9,107,000) $ (8,905,000)
Component of Net Periodic Fiscal Year
Benefit Cost 1999 1998 1997
Service cost - benefits earned
during the period $ 131,000 $ 54,000 $ 50,000
Interest cost on projected
benefit obligation 949,000 494,000 289,000
Expected return on plan assets (250,000) (238,000) (220,000)
Amortization of unrecognized
transition obligation 29,000 30,000 30,000
Amortization of prior service cost 24,000 23,000 28,000
Recognized net actuarial loss 53,000 31,000 42,000
Effect of curtailment - - 75,000
Net periodic pension cost $ 936,000 $ 394,000 $ 294,000
The projected benefit obligation for the domestic plans was determined
using an assumed discount rate of 6.75% and 7.25% for fiscal 1999 and
1998, 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.
The projected benefit obligation for the foreign plan was determined
using an assumed discount rate of 7.00% for fiscal years 1999 and
1998. Projected wage increases of 2.50% and an inflation factor of
2.00% were also assumed for both years. As previously stated, the
Company's funding policy with respect to this plan is to contribute
annually the amounts necessary to meet current payment obligations of
the plan.
At February 28, 1999, domestic 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
2000 $2,722,000
2001 2,397,000
2002 1,954,000
2003 1,606,000
2004 1,077,000
Thereafter 2,309,000
$12,065,000
Rental expense, inclusive of real estate taxes and other costs,
amounted to $2,861,000, $2,781,000 and $2,620,000 for fiscal 1999,
1998 and 1997, 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 $200,000, $400,000 and $200,000 in fiscal 1999,
1998 and 1997, respectively. The recorded liabilities in other
liabilities for environmental matters were $3,500,000 at February 28,
1999 and March 1, 1998. The environmental liability at March 1, 1998,
included an accrual of $2,300,000 which was acquired when the Company
purchased Dielektra in October, 1997. Dielektra's liability is for
various compliance and remediation costs expected to be incurred at
its facility in Cologne, Germany over the next several years.
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
In fiscal 1999, the Company adopted Statement of Financial Standards
No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS 131). SFAS 131 establishes standards for public
business enterprises to report information regarding operating
segments and disclosures about products and services, geographic
areas, and major customers. The Company has two 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 specialty
adhesive tape and film business, advanced composite business and
plumbing hardware business are aggregated into the engineered
materials and plumbing hardware segment. 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
1999 1998 1997
Electronic materials $350,294 $335,227 $291,146
Engineered materials and
plumbing hardware 37,340 40,931 43,344
Net sales $387,634 $376,158 $334,490
Electronic materials $ 18,523 $ 35,132 $ 25,298
Engineered materials and
plumbing hardware 3,273 3,928 3,026
General corporate expense (4,325) (4,288) (3,572)
Interest and other income, net 7,642 8,382 7,653
Interest expense (5,400) (5,468) (5,508)
Earnings before income taxes $ 19,713 $ 37,686 $ 26,897
Electronic materials $233,886 $210,714 $153,653
Engineered materials and
plumbing hardware 11,752 13,884 14,111
Corporate (1) 106,060 134,731 140,098
Total assets $351,698 $359,329 $307,862
Electronic materials $ 13,546 $ 12,403 $ 10,789
Engineered materials and
plumbing hardware 716 785 774
Corporate 29 19 21
Total depreciation and
amortization $ 14,291 $ 13,207 $ 11,584
Electronic materials $ 23,635 $ 18,161 $ 18,030
Engineered materials and
plumbing hardware 1,093 868 795
Corporate 32 11 26
Total capital expenditures $ 24,760 $ 19,040 $ 18,851
(1) Corporate assets consist primarily of cash, cash equivalents and
marketable securities.
Sales are attributed to geographic region based upon the region from
which the materials were shipped to the customer. Intersegment sales and
sales between geographic areas were not significant.
Financial information regarding the Company's operations by geographic
area follows (in thousands):
Fiscal Year
1999 1998 1997
United States $235,699 $260,498 $235,773
Europe 90,112 59,134 48,421
Asia 61,823 56,526 50,296
Total sales $387,634 $376,158 $334,490
United States $ 65,231 $ 61,914 $ 59,538
Europe 30,948 29,645 10,116
Asia 22,814 17,607 14,754
Total long-lived assets $118,993 $109,166 $ 84,408
13. CUSTOMER AND SUPPLIER CONCENTRATIONS
a. Customers - Sales to Hadco Corporation were 10.5% of the Company's
total worldwide sales for fiscal 1999. During fiscal 1998 and 1997
sales to Delco Electronics Corporation, a subsidiary of General
Motors Corp., were 15.8% and 17.3%, respectively, of the Company's
total worldwide sales. In March 1998, Delco informed the Company of
Delco's decision to close its printed circuit board fabrication plant
and exit the printed circuit board manufacturing business. Delco
Electronics ceased being a customer of the Company during fiscal
1999.
While no other customer accounts for 10% or more of the total sales
of the Company in fiscal 1999, 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. ACQUISITION
On October 29, 1997, the Company acquired Dielektra GmbH ("Dielektra").
Dielektra, located in Cologne, Germany, is a manufacturer of advanced
electronic materials used to produce sophisticated multilayer printed
circuit boards. Dielektra's advanced circuit materials product line
includes very high layer count semi-finished multilayer printed circuit
boards and very thin continuously produced copper-clad laminates. The
purchase price was comprised of $8.8 million in cash, 77,000 shares of
Park common stock having a fair market value of $2.1 million and an
additional 103,000 shares of Park common stock, having a fair market
value of $2.7 million, due five years after the purchase date. The
acquisition of Dielektra is being accounted for as a purchase. The
purchase price of the acquisition has been allocated on the basis of
the estimated fair value of the assets acquired and liabilities
assumed. There was no goodwill recognized as a result of this
acquisition. Dielektra's operating results are included in the
Company's consolidated statements of earnings from the date of
acquisition. Pro forma operating results are not presented because the
impact of including Dielektra on the Company's consolidated operating
income was immaterial for fiscal 1998 and 1997.
15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
[CAPTION]
Quarter
First Second Third Fourth
(In thousands, except per share amounts)
Fiscal 1999:
Net sales $99,855 $86,348 $103,290 $98,141
Gross profit 17,371 8,993 15,996 16,390
Net earnings 5,535 225 4,249 5,367
Earnings per share:
Basic $.48 $.02 $.41 $.52
Diluted $.46 $.02 $.40 $.47
Weighted average common shares
outstanding:
Basic 11,502 11,512 10,483 10,422
Diluted 14,073 11,633 12,941 13,014
Fiscal 1998:
Net sales $91,633 $83,086 $ 97,625 $103,814
Gross profit 18,041 14,940 19,851 21,358
Net earnings 6,165 4,852 6,996 7,237
Earnings per share:
Basic $.55 $.43 $.62 $.63
Diluted $.51 $.41 $.56 $.58
Weighted average common shares
outstanding:
Basic 11,273 11,283 11,366 11,492
Diluted 13,847 13,915 13,993 14,118
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 1999 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 1999 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 1999 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 1999 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 28
Balance sheets 29
Statements of earnings 30
Statements of stockholders' equity 31
Statements of cash flows 32
Notes to consolidated financial
statements (1-15) 33
(2) Financial Statement Schedules:
Schedule II - Valuation and qualifying
accounts 58
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 March 15, 1999. (Reference is made to
Exhibit 3(i) of the Company's Current Report on Form 8-K dated
March 15, 1999, 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 total 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 between Nelco Products, Inc. and
James Emmi regarding real property located at 1100 East Kimberly
Avenue, Anaheim, California and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi 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 between Nelco Products, Inc. and
James Emmi regarding real property located at 1107 East Kimberly
Avenue, Anaheim, California and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi 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, between Nelco Products, Inc. and
TCLW/Fullerton regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California. (Reference is made
to Exhibit 10.03 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.03(a) Second Addendum to Lease dated January 26, 1987 to Lease
Agreement dated August 16, 1983 (see Exhibit 10.03 hereto)
between Nelco Products, Inc. and TCLW/Fullerton regarding real
property located at 1421 E. Orangethorpe Avenue, Fullerton,
California. (Reference is made to Exhibit 10.03(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 26, 1995, Commission File No. 1-4415, which is incorpo-
rated herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) between Nelco
Products, Inc. and TCLW/Fullerton regarding real property
located at 1411, 1421 and 1431 E. Orangethorpe Avenue,
Fullerton, California. (Reference is made to Exhibit 10.03(b) of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.03(c) Fifth Addendum to Lease dated July 5, 1995 to Lease Agreement
dated August 16, 1983 (See Exhibit 10.03 hereto) between Nelco
Products, Inc. and TCLW/Fullerton regarding real property
located at 1411 E. Orangethorpe Avenue, Fullerton, California.
(Reference is made to Exhibit 10.03(c) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 3, 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.)
10.04(b) Letter dated August 28, 1997 from Nelco Technology, Inc. to SPT
Real Estate Corp. E extending the Lease dated February 15, 1983
(see Exhibit 10.04 hereto) and Second Amendment to Lease dated
February 2, 1998 to Lease dated February 15, 1993 (see Exhibit
10.04 hereto) between Nelco Technology, Inc. and SPT Real Estate
Corp. E regarding real property located at 1130 West Geneva
Drive, Tempe, Arizona. (Reference is made to Exhibit 10.04(b) of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 1, 1998, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
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.)
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, as amended by First
Amendment thereto. (Reference is made to Exhibit 10.06(b) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 1, 1998, Commission File No. 1-4415, which is incorporated
herein by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.07 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.
(Reference is made to Exhibit 10.07(b) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 2, 1997,
Commission File No. 1-4415, which is incorporated herein by
reference. This exhibit is a management contract or
compensatory plan or arrangement.)
Exhibit
Number Description
10.07(c) Amendment No. 3 dated October 14, 1997 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 March 1, 1998,
Commission File No. 1-4415, which is incorporated herein by
reference. This exhibit is a management contract or compensatory
plan or arrangement.)
10.08 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.)
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.)
10.08(b) Letter dated June 30, 1997 from FiberCote Industries, Inc. to
Geoffrey Etherington II extending the Lease dated April 15, 1988
(see Exhibit 10.08 hereto) between FiberCote Industries, Inc.
and Geoffrey Etherington II regarding real property located at
172 East Aurora Street, Waterbury, Connecticut. (Reference is
made to Exhibit 10.08(b) of the Company's Annual Report on Form
10-K for the fiscal year ended March 1, 1998, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.09 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.)
Exhibit
Number Description
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. (Reference is made to Exhibit 10.10(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 2, 1997, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.11 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.)
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. (Reference is made to Exhibit 10.13 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
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. (Reference is made to Exhibit 10.13(a) of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14 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.)
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. (Reference is made to Exhibit
10.14(e) of the Company's Annual Report on Form 10-K for the
fiscal year ended March 2, 1997, Commission File No. 1-4415,
which is incorporated herein by reference.)
Exhibit
Number Description
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. (Reference is made to
Exhibit 10.14(f) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 2, 1997, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(g) Letter dated August 27, 1997 from Dielectric Polymers, Inc. to
Holyoke Supply Company, Inc. extending the Indenture of Lease
(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(g) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1998, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.15 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 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. (Reference is made to Exhibit
10.15(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended March 2, 1997, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.16 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. (Reference is
made to Exhibit 10.16(a) of the Company's Annual Report on Form
10-K for the fiscal year ended March 2, 1997, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.17 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.)
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.)
Exhibit
Number Description
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(a) 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.)
10.18(b) Employment and Consulting Agreement, dated February 9, 1999,
between the Company and E. Phillip Smoot. (This exhibit is a
management contract or compensatory plan or arrangement.)
10.19 Sale and Purchase Agreement dated 29 October 1997 between Dieter
G. Weiss, Lothar Hubert Reinartz, Nelco International
Corporation and Park Electrochemical Corp. relating to the sale
and purchase of shares of capital in Dielektra GmbH. (Reference
is made to Exhibit 10.01 of the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended November 30, 1997,
Commission File No. 1-4415, which is incorporated herein by
reference.)
21.01 Subsidiaries of the Company.
23.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule (Filed only by electronic transmission
with EDGAR filing with the Securities and Exchange Commission.)
(b) No reports on Form 8-K have been filed during the fiscal quarter
ended February 28, 1999.
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 26, 1999 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 26, 1999
financial officer)
/s/Murray O. Stamer Treasurer
Murray O. Stamer (principal accounting
officer) May 26, 1999
/s/Jerry Shore Chairman of the Board and
Jerry Shore Director May 26, 1999
/s/Mark S. Ain Director
Mark S. Ain May 26, 1999
/s/Anthony Chiesa Director
Anthony Chiesa May 26, 1999
/s/Lloyd Frank Director
Lloyd Frank May 26, 1999
/s/E. Phillip Smoot Director
E. Phillip Smoot May 26, 1999
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 February 28, 1999 $1,858,000 $ 238,000 $ (63,000) $ (3,000) $2,030,000
52 weeks ended March 1, 1998 $1,746,000 $ 75,000 $ 46,000 (B) $ (9,000) $1,858,000
52 weeks ended March 2, 1997 $1,857,000 $(306,000) $ 204,000 $ (9,000) $1,746,000
(A) Uncollectible accounts, net of recoveries.
(B) Includes $169,000 acquired in business acquisition.
=================================================
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 1, 1998
___________________
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 March 15, 1999. (Reference is made to
Exhibit 3(i) of the Company's Current Report on Form 8-K dated
March 15, 1999, 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 total 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 between Nelco Products, Inc. and
James Emmi regarding real property located at 1100 East Kimberly
Avenue, Anaheim, California and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi 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 between Nelco Products, Inc. and
James Emmi regarding real property located at 1107 East Kimberly
Avenue, Anaheim, California and letter dated December 29, 1994
from Nelco Products, Inc. to James Emmi 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, between Nelco Products, Inc. and
TCLW/Fullerton regarding real property located at 1411 E.
Orangethorpe Avenue, Fullerton, California. (Reference is made
to Exhibit 10.03 of the Company's Annual Report on Form 10-K for
the fiscal year ended March 3, 1996, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.03(a) Second Addendum to Lease dated January 26, 1987 to Lease
Agreement dated August 16, 1983 (see Exhibit 10.03 hereto)
between Nelco Products, Inc. and TCLW/Fullerton regarding real
property located at 1421 E. Orangethorpe Avenue, Fullerton,
California. (Reference is made to Exhibit 10.03(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
February 26, 1995, Commission File No. 1-4415, which is incorpo-
rated herein by reference.)
10.03(b) Third Addendum to Lease dated January 7, 1991 and Fourth
Addendum to Lease dated January 7, 1991 to Lease Agreement dated
August 16, 1983 (see Exhibit 10.03 hereto) between Nelco
Products, Inc. and TCLW/Fullerton regarding real property
located at 1411, 1421 and 1431 E. Orangethorpe Avenue,
Fullerton, California. (Reference is made to Exhibit 10.03(b) of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.03(c) Fifth Addendum to Lease dated July 5, 1995 to Lease Agreement
dated August 16, 1983 (See Exhibit 10.03 hereto) between Nelco
Products, Inc. and TCLW/Fullerton regarding real property
located at 1411 E. Orangethorpe Avenue, Fullerton, California.
(Reference is made to Exhibit 10.03(c) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 3, 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.)
10.04(b) Letter dated August 28, 1997 from Nelco Technology, Inc. to SPT
Real Estate Corp. E extending the Lease dated February 15, 1983
(see Exhibit 10.04 hereto) and Second Amendment to Lease dated
February 2, 1998 to Lease dated February 15, 1993 (see Exhibit
10.04 hereto) between Nelco Technology, Inc. and SPT Real Estate
Corp. E regarding real property located at 1130 West Geneva
Drive, Tempe, Arizona. (Reference is made to Exhibit 10.04(b) of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 1, 1998, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
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.)
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, as amended by First
Amendment thereto. (Reference is made to Exhibit 10.06(b) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 1, 1998, Commission File No. 1-4415, which is incorporated
herein by reference. This exhibit is a management contract or
compensatory plan or arrangement.)
10.07 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.
(Reference is made to Exhibit 10.07(b) of the Company's Annual
Report on Form 10-K for the fiscal year ended March 2, 1997,
Commission File No. 1-4415, which is incorporated herein by
reference. This exhibit is a management contract or
compensatory plan or arrangement.)
Exhibit
Number Description
10.07(c) Amendment No. 3 dated October 14, 1997 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 March 1, 1998,
Commission File No. 1-4415, which is incorporated herein by
reference. This exhibit is a management contract or compensatory
plan or arrangement.)
10.08 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.)
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.)
10.08(b) Letter dated June 30, 1997 from FiberCote Industries, Inc. to
Geoffrey Etherington II extending the Lease dated April 15, 1988
(see Exhibit 10.08 hereto) between FiberCote Industries, Inc.
and Geoffrey Etherington II regarding real property located at
172 East Aurora Street, Waterbury, Connecticut. (Reference is
made to Exhibit 10.08(b) of the Company's Annual Report on Form
10-K for the fiscal year ended March 1, 1998, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.09 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.)
Exhibit
Number Description
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. (Reference is made to Exhibit 10.10(a) of the
Company's Annual Report on Form 10-K for the fiscal year ended
March 2, 1997, Commission File No. 1-4415, which is incorporated
herein by reference.)
10.11 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.)
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. (Reference is made to Exhibit 10.13 of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415, which is
incorporated herein by reference.)
Exhibit
Number Description
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. (Reference is made to Exhibit 10.13(a) of
the Company's Annual Report on Form 10-K for the fiscal year
ended March 2, 1997, Commission File No. 1-4415, which is
incorporated herein by reference.)
10.14 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.)
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. (Reference is made to Exhibit
10.14(e) of the Company's Annual Report on Form 10-K for the
fiscal year ended March 2, 1997, Commission File No. 1-4415,
which is incorporated herein by reference.)
Exhibit
Number Description
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. (Reference is made to
Exhibit 10.14(f) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 2, 1997, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.14(g) Letter dated August 27, 1997 from Dielectric Polymers, Inc. to
Holyoke Supply Company, Inc. extending the Indenture of Lease
(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(g) of the Company's Annual Report on Form 10-K for
the fiscal year ended March 1, 1998, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.15 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 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. (Reference is made to Exhibit
10.15(a) of the Company's Annual Report on Form 10-K for the
fiscal year ended March 2, 1997, Commission File No. 1-4415,
which is incorporated herein by reference.)
10.16 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. (Reference is
made to Exhibit 10.16(a) of the Company's Annual Report on Form
10-K for the fiscal year ended March 2, 1997, Commission File
No. 1-4415, which is incorporated herein by reference.)
10.17 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.)
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.)
Exhibit
Number Description
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(a) 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.)
10.18(b) Employment and Consulting Agreement, dated February 9, 1999,
between the Company and E. Phillip Smoot. (This exhibit is a
management contract or compensatory plan or arrangement.)
10.19 Sale and Purchase Agreement dated 29 October 1997 between Dieter
G. Weiss, Lothar Hubert Reinartz, Nelco International
Corporation and Park Electrochemical Corp. relating to the sale
and purchase of shares of capital in Dielektra GmbH. (Reference
is made to Exhibit 10.01 of the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended November 30, 1997,
Commission File No. 1-4415, which is incorporated herein by
reference.)
21.01 Subsidiaries of the Company.
23.01 Consent of Ernst & Young LLP.
27.01 Financial Data Schedule (Filed only by electronic transmission
with EDGAR filing with the Securities and Exchange Commission.)