10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE              SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended September 28, 2002
		OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE              SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to
Commission File Number 0-27744
PCD INC. (Exact Name of Registrant as Specified in its Charter)
Massachusetts                                                                                                             04-2604950 (State or Other Jurisdiction of                                                                                (I.R.S. Employer Incorporation or Organization)                                                                               Identification Number)
2 Technology Drive Centennial Park Peabody, Massachusetts 01960-7977 (Address of Principal Executive Offices, Including Zip Code)
Registrant's telephone number, including area code: (978) 532-8800
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 a check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)  Yes     No X
Number of shares of common stock, $0.01 par value, outstanding at November 4, 2002: 8,951,945.
PCD INC. TABLE OF CONTENTS
			Page
PART I.   FINANCIAL INFORMATION Item 1.  Financial Statements Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3.  Quantitative and Qualitative Disclosures About Market Risk Item 4.  Controls and Procedures			3  12  15 15
PART II.  OTHER INFORMATION Item 1.  Legal Proceedings Item 5.  Other Information Item 6.  Exhibits and Reports on Form 8-K			16 16 17
Signatures Certifications			18 19

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                                                               PCD Inc.

                                                            FORM 10-Q

                                           FOR THE QUARTER ENDED

                                                    SEPTEMBER 28, 2002

                                 FORWARD-LOOKING INFORMATION

Statements in this report concerning the future revenues, expenses, profitability, financial resources, product mix, market demand, product development and other statements in this report concerning the future results of operations, financial condition and business of PCD Inc. are "forward-looking" statements as defined in the Securities Act of 1933 and Securities Exchange Act of 1934. Investors are cautioned that the Company's actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the Company's operations and business environment, including the Company's dependence on the semiconductor industry which is currently experiencing a severe downturn, the Company's ability to generate sufficient revenue to fund its working capital, capital expenditure and debt payment requirements, the company's ability to obtain waivers to the extent that it is unable to meet its debt covenants, fluctuations in deman d for the Company's products, the Company's dependence on its principal customers and independent distributors, international sales and operations, rapid technological evolution in the electronics industry, ability to meet public stock listing requirements and the like. The Company's most recent filings with the Securities and Exchange Commission, including Form 10-K, contain additional information concerning many of these risk factors, and copies of these filings are available from the Company upon request and without charge.

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PCD INC. CONSOLIDATED BALANCE SHEETS (Condensed and unaudited) (In thousands, except share data)
ASSETS	9/28/02	12/31/01
Current assets:   Cash and cash equivalents   Accounts receivable, net   Inventory   Prepaid expenses and other current assets     Total current assets Equipment and improvements:   Equipment and improvements   Accumulated depreciation     Equipment and improvements, net Goodwill, net Intangible assets, net Debt financing fees Other assets     Total assets	$    827  4,394  5,165       402  10,788  34,065    23,534  10,531  36,839  8,566  361     1,510  $ 68,595	$    543  4,010  6,047      669  11,269  33,946    20,445  13,501  49,339  9,343  1,897     1,488  $ 86,837
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:   Current portion of revolver   Current portion of long-term debt   Accounts payable - trade   Accrued liabilities     Total current liabilities Long-term debt, revolver - net of current portion Long-term debt, term loan - net of current portion Accumulated other comprehensive loss Stockholders' equity     Total liabilities and stockholders' equity	$ 16,285  24,000  1,693     3,842  45,820  - -  - -  (3)   22,778  $ 68,595	$      -  - -  1,877     4,205  6,082  15,700  23,912  (47)   41,190  $ 86,837

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PCD INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Condensed and unaudited) (In thousands, except per share data)
	Three Months Ended		Nine Months Ended
	9/28/02	9/29/01	9/28/02	9/29/01
Net sales Cost of sales Gross profit Operating expenses Restructuring charges Amortization of goodwill and other intangibles Loss from operations Interest expense / (other income/expense), net Loss before income taxes,   extraordinary loss on debt extinguishment and   cumulative effect of change in accounting principle Benefit from income taxes Loss before   extraordinary loss on debt extinguishment and   cumulative effect of change in accounting principle Extraordinary loss on debt extinguishment Cumulative effect of change in accounting principle Net loss	$ 6,091    5,563  528  2,289  - -      277  (2,038)     854  (2,892)         -  (2,892) - -         -  $(2,892)	$ 6,886    5,613  1,273  2,779  1,500    1,047  (4,053)     800  (4,853)  (1,187) (3,666) - -        -  $(3,666)	$18,756   15,307  3,449  6,992  - -       830  (4,373)    2,390  (6,763)  (2,700) (4,063) (3,867)  (12,500)  $(20,430)	$30,613   20,449  10,164  9,477  1,500    3,142  (3,955)   2,668  (6,623)  (1,573) (5,050) - -        -  $(5,050)
Net loss per share, basic and diluted:   Loss before     extraordinary loss on debt extinguishment and     cumulative effect of change in accounting principle   Extraordinary loss on debt extinguishment   Cumulative effect of change in accounting principle Net loss per share	$  (0.32)        -          -  $  (0.32)	$  (0.41)        -          -  $  (0.41)	$ (0.45) (0.43)   (1.40) $ (2.28)	$  (0.57)        -          -  $  (0.57)
Weighted average number of shares outstanding:   Basic and diluted	8,950	8,924	8,945	8,876

The accompanying notes are an integral part of the condensed consolidated financial statements.

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PCD INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Condensed and unaudited) (In thousands)
	Nine months Ended
	9/28/02	9/29/01
Cash flows from operating activities:   Net loss   Adjustments to reconcile net loss to net cash     provided by operating activities     Depreciation     Amortization     Deferred taxes     Impairment of goodwill     Loss on debt extinguishment     Changes in operating assets and liabilities:       Accounts receivable       Inventory       Prepaid expenses and other current assets       Other assets       Accounts payable       Accrued liabilities         Net cash provided by operating activities	$(20,430) 3,562  1,087  - -  12,500  3,867  (469) 960  289  (68) (220)    (311) 767	$(5,050) 3,644  3,693  (26) - - - - 3,478  (77) 338  42  (2,626)  (2,313) 1,103
Cash flows from investing activities:   Proceeds from sale of equipment   Capital expenditures         Net cash used in investing activities	20      (612) (592)	- -    (2,729) (2,729)
Cash flows from financing activities:   Borrowings on revolving line-of-credit   Payments on revolving line of credit   Payments of long-term debt   Deferred financing and loan amendment fees   Proceeds from employee stock purchase plans   Exercise of common stock options         Net cash provided by financing activities	3,180  (2,645) - -  (448) 13          5  105	9,700  (3,600) (4,600) (590) 48      163  1,121
Net increase (decrease) in cash Effect of exchange rate on cash Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	280  4      543  $   827	(505) (15)     837  $   317

The accompanying notes are an integral part of the condensed consolidated financial statements

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                                                               PCD Inc.

 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                          (September 28, 2002 Unaudited)

Note 1. INTERIM FINANCIAL STATEMENTS:

     The condensed consolidated financial statements included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation. This financial data should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2001 included in the Company's latest annual report on Form 10-K filed on March 20, 2002. Certain reclassificati ons have been made within the footnotes to conform to this year's presentation.

Note 2. NET LOSS PER SHARE:

     The following tables reconcile net loss and weighted average shares outstanding to the amounts used to calculate basic and diluted loss per share for the three and nine month periods ended September 28, 2002 and September 29, 2001:

	Net Loss	Shares	Per Share Amount
For the three month period ended September 28, 2002 Basic and diluted loss	$ (2,892,000)	8,950,044	$(0.32)
For the three month period ended September 29, 2001 Basic and diluted loss	$ (3,666,000)	8,923,706	$(0.41)
For the nine month period ended September 28, 2002 Basic and diluted loss	$(20,430,000)	8,944,954	$(2.28)
For the nine month period ended September 29, 2001 Basic and diluted loss	$ (5,050,000)	8,875,528	$(0.57)

     Potential common stock shares of 1,776,492 and 541,259 for the quarters ended September 28, 2002 and September 29, 2001, respectively, and 806,855 and 247,664 for the nine month periods ended September 28, 2002 and September 29, 2001, respectively, have been excluded from the calculation of EPS, as their inclusion would be anti-dilutive.

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Note 3. INVENTORY:

     Inventory consisted of the following:

	9/28/02	12/31/01
	(In thousands)
Raw materials and finished subassemblies Work in process Finished goods Total	$4,024 5  1,136 $5,165	$5,069 14    964 $6,047

Note 4. COMPREHENSIVE INCOME/(LOSS):

     Our only other comprehensive income (loss) is foreign currency translation adjustments. For the three and nine month periods ended September 28, 2002 and September 29, 2001, our total comprehensive income (loss) was as follows:

	Three Months Ended		Nine Months Ended
		(In thousands)
	9/28/02	9/29/01		9/28/02	9/29/01
Net loss Other comprehensive income (loss), net Total comprehensive loss	$(2,892)     (22) $(2,914)	$(3,666)     (20) $(3,686)		$(20,430)       26  $(20,404)	$(5,050)      24  $(5,026)

Note 5. RECENT ACCOUNTING PRONOUNCEMENTS:

     In May 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 145, "Rescission of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002." Adoption of the standard is generally required in the fiscal year beginning after May 15, 2002, with certain provisions becoming effective for financial statements issued on or after May 15, 2002. Under the standard, transactions currently classified by the Company as extraordinary items will no longer be treated as such but instead will be reported as other non-operating income or expenses. As a result of this pronouncement the Company will reclassify the previously recorded extraordinary loss on debt extinguishment as a non-operating loss beginning on January 1, 2003.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which supercedes Emerging Issues Task Force ("EITF") 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The provisions of this Statement are required to be adopted for exit or disposal activities that are initiated after December 31, 2002. The provisions of EITF 94-3 will continue to apply with regard to the Company's previously announced restructuring plans. Under this standard, a liability for a cost associated with an exit or disposal activity formerly recognized upon the entity's commitment to an exit plan are now recognized when the liability is incurred. This standard would impact any future restructurings that may be approved by the Company on or after January 1, 2003.

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Note 6. LITIGATION:

     The Company and its subsidiaries are subject to legal proceedings arising in the ordinary course of business. On the basis of information presently available and on the advice received from legal counsel, it is our opinion that the disposition or ultimate determination of such legal proceedings will not have a material adverse effect on the Company's consolidated financial position, its consolidated results of operations or its consolidated cash flows.

Note 7. TAX REFUND:

     A provision of the Job Creation and Worker Assistance Act of 2002 passed by Congress in March 2002, allows companies to carry back their 2001 and 2002 tax operating losses for a period of five years instead of two. The legislation allowed us to carry back tax losses from 2001 to offset taxable income in 1996 and 1997, resulting in a refund of approximately $2.7 million. We recorded a tax benefit and receivable for this amount in the first quarter and received the refund in July 2002.

Note 8. DEBT:

     In February 2002, the Senior Credit Facility was amended and restated. In connection with the February 2002 agreement, the lenders received warrants, exercisable immediately and for a period of ten years, to purchase 1,450,000 shares of common stock of the Company at $0.01 per share. In addition, lenders' existing warrants to purchase 203,949 shares of the Company's common stock at $4.90 per share were re-priced to $0.01 per share. The new and re-priced warrants were valued at $2.0 million utilizing the Black Scholes pricing method. The assumptions utilized under the Black Scholes method were 96% volatility, 1.82% riskless rate of return, no dividends and a term of ten years.

      We accounted for this transaction as an extinguishment of the existing debt and issuance of new debt under the provisions of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities and EITF No. 96-19, Debtors Accounting for a Modification or Exchange of Debt Instruments. This transaction resulted in an extraordinary loss in the amount of $3.9 million in the first quarter of 2002. Included in this loss is the cost of the repriced warrants and the new warrants issued to the lenders ($2.0 million), unamortized bank fees on the old debt ($1.7 million) and the remaining unamortized bank warrant ($125,000).

     Our aggregate Borrowing Availability under the Amended and Restated Loan Agreement would have been $3.6 million at September 28, 2002. However, under Amendment No. 2 and Temporary Waiver, borrowing availability is now capped based upon our projected borrowing needs as submitted by the Company and as approved by the lenders on a monthly basis. The Company's borrowing cap for the month of October 2002 was $400,000.

     At June 29, 2002 and September 28, 2002 the Company was not in compliance with the minimum EBITDA, interest coverage and total debt to EBITDA covenants. We have received temporary waivers from our lenders through November 29, 2002. Based on current business conditions we do not expect to be in compliance with certain bank covenants through the end of this year. Accordingly, although the Maturity Date of the Senior Credit Facility (the "Facility") is December 31, 2004, we have reported all debt as a current liability at September 28, 2002 in conformity with EITF 86-30, Classification of Obligations When a Violation is Waived by the Creditor.

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Note 9. GOODWILL AND INTANGIBLE ASSETS:

     During the quarter ended March 30, 2002, we adopted SFAS No. 142, Goodwill and Other Intangible Assets, which requires, among other things, the discontinuance of goodwill amortization and the requirement to test goodwill and other intangible assets for impairment at least annually. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill.

     Atwo-step impairment test is used to first identify potential goodwill impairment and then measure the amount of goodwill impairment loss. Impairment losses that arise due to the initial application of this standard will be reported as a cumulative effect of a change in accounting principle.

     In accordance with SFAS No. 142, goodwill amortization was discontinued as of January 1, 2002. The Company completed the transitional impairment test and has recorded a goodwill impairment charge of $12,500,000, related to our semiconductor burn-in segment as a cumulative effect of change in accounting principle in the first quarter of 2002. Under SFAS No. 142, we have elected to complete the annual impairment test on the remaining goodwill balance during the fourth quarter. Subject to this evaluation, there may be additional goodwill impairment.

     The following is a rollforward of our goodwill balance (which has all been allocated to our semiconductor burn-in segment) from December 31, 2001 to September 28, 2002:

Goodwill
Balance at December 31, 2001
Impairment losses during the period
Balance at September 28, 2002 (In thousands)
$ 49,339
 (12,500)
$ 36,839

     Amortized intangible assets consisted of the following:

	9/28/02         12/31/01 (In thousands)		Weighted Average Life
Trademarks Accumulated amortization   Net trademarks Patents Accumulated amortization   Net patents     Net amortized intangible assets	$10,384    (2,466)    7,918     3,109    (2,461)       648  $ 8,566	$10,384    (2,077)    8,307     3,109    (2,073)    1,036  $ 9,343	20 Years  6 Years

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     Aggregate amortization expense for the three and nine month periods ended September 28, 2002 was $259,000 and $777,000, respectively. Aggregate amortization expense for the year ended December 31, 2001 was $1,036,000 and is estimated to be $1,036,000 per year for 2002 and 2003 and $519,000 per year for the succeeding 14 years.

     The following is a reconciliation of previously reported financial information to adjusted amounts excluding goodwill amortization for the three and nine month periods ended September 29, 2001:

	Loss	Loss per share
	(In thousands)		Basic	Diluted
For the three month period ended September 28 , 2001 Reported net loss Goodwill amortization, net of taxes Adjusted net loss	$(3,666)     582  $(3,084)		$(0.41)   0.06  $(0.35)	$(0.41)   0.06  $(0.35)
For the six month period ended September 29, 2001 Reported net loss Goodwill amortization, net of taxes Adjusted net loss	$(5,050)   1,763  $  (3,287)		$(0.57)   0.20  $(0.37)	$(0.57)   0.20  $(0.37)

Note 10. SEGMENT INFORMATION:

	Three Months Ended		Nine Months Ended
	9/28/02	9/29/01	9/28/02	9/29/01
		(In thousands)
Sales: Industrial/Avionics Semiconductor Burn-in   Totals	$ 3,268   2,823 $ 6,091	$ 4,625    2,261  $ 6,886	$10,260   8,496 $18,756	$15,292   15,321  $30,613
Net income (loss): Industrial/Avionics Semiconductor Burn-in Corporate activities   Totals	$    (92) (1,953)     (847) $(2,892)	$    292  (3,107)     (851) $(3,666)	$    358  (17,905)   (2,883) $(20,430)	$ 1,354  (4,428)   (1,976)  $(5,050)
Assets: Industrial/Avionics Semiconductor Burn-in Corporate activities Totals			9/28/02 $   7,999 58,441     2,155 $ 68,595	12/31/01 $   8,289 76,390     2,158 $ 86,837

Note 11. RESTRUCTURING CHARGE:

     During the third quarter of 2001, the Company's senior management approved plans to close the South Bend, Indiana manufacturing plant. The plant closure resulted in the Company's eliminating 39 positions from all levels and vacating approximately 50,000 square feet of space. The Company recorded a restructuring charge of $773,000 for employee-related costs of $134,000 and vacation of leased space of $639,000. The Company also wrote off $235,000

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of obsolete South Bend inventory through cost of sales. In addition, the Company wrote off $727,000 of equipment and improvements that were abandoned. The Company has paid $135,000 for severance payments and $268,000 for facility related costs. The plant closure is substantially complete and as of September 28, 2002 the balance of accrued restructuring charges is $370,000 for facility-related expenditures.

Note 12. STOCK OPTION EXCHANGE PROGRAM:

     In April 2002, the Company announced a voluntary stock option exchange program (the "Program") for the Company's employees. Under the Program, employees had until May 21, 2002 to make an election to cancel their outstanding stock options under the 1996 Stock Plan in exchange for an equal number of new nonqualified stock options to be granted under the same plan. The Program is not available to the Company's chief executive officer or directors and does not apply to options under the 1992 Stock Option Plan. Options for 200,500 shares under the 1996 Stock Plan were surrendered. The new stock options will be granted on November 26, 2002 or later at a price equal to 100% of the then fair market value, will have a ten-year term and vesting will be consistent with that of the surrendered options.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
QUARTER AND NINE MONTHS ENDED SEPTEMBER 28, 2002 COMPARED TO THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 29, 2001

Net Sales. Net sales of $6.1 million for the quarter ended September 28, 2002 decreased by $0.8 million or 12% from net sales of $6.9 million during the prior year quarter. Net sales of $2.8 million in our Wells-CTI semiconductor burn-in division, were up $0.6 million or 25% from the prior year quarter due to the higher sales backlog in June 2002 while Industrial/Avionics division net sales of $3.3 million were down $1.4 million or 29% from the prior year. The decrease was due to decreased demand from aircraft manufacturers. Net sales of $18.8 million for the nine months ended September 28, 2002 were down $11.9 million or 39% from the prior year period. Wells-CTI net sales of $8.5 million were down $6.8 million or 45% while Industrial/Avionics division sales of $10.3 million were down $5.0 million or 33% from the prior year period. The decrease in Wells-CTI net sales was due to continued weak demand from semiconductor manufacturers and the decrease in net sales for the Industria l/Avionics division was due primarily to decreased demand from aircraft manufacturers.

Gross Profit. Gross profit was $0.5 million for the quarter ended September 28, 2002 as compared with $1.3 million during the prior year quarter. During the quarter ended September 28, 2002, the Company recorded a non-cash inventory write-down of $0.6 million. The write-down was primarily the result of management's decision to phase out a number of low volume product lines at the Wells-CTI division. As a percentage of net sales, gross profit was 9% during the quarter ended September 28, 2002 as compared with 18% during the prior year quarter. The negative margin impact from the inventory write-down was 9% of net sales. The negative margin impact of lower sales volume during the current quarter was offset by the positive impact of $400,000 in reduced fixed manufacturing expense. The decrease in manufacturing expense was due primarily to cost reductions implemented at our Wells-CTI division in 2001. For the nine months ended September 28, 2002, gross profit was $3.4 million, down from $10.2 million during the prior year period. As a percentage of net sales, gross profit was 18%, down from 33% during the nine months ended September 29, 2001. The decrease from the prior year was due to reduced sales volume, the inventory write-down and a product mix shift away from semiconductor burn-in products to industrial products, which carry lower margins. Lower fixed manufacturing overhead expense of $1.6 million during the nine months ended September 28, 2002 did not fully offset the negative impacts of reduced volume and less favorable product mix

Operating Expenses. Operating expenses include selling, general and administrative expenses and costs of product development. Operating expenses of $2.3 million and $7.0 million for the quarter and nine month periods ended September 28, 2002 were down approximately $0.5 million and $2.5 million, respectively from the prior year period. The decreases were due to cost reductions implemented at our Wells-CTI division during 2001 and to reduced spending at our Industrial/Avionics division and corporate headquarters in 2002.

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Interest Expense and Other Income, Net. Interest expense, net was $863,000 and $2.4 million for the quarter and nine months ended September 28, 2002 as compared with $845,000 and $2.6 million during the prior year periods. For the quarter, the increase from 2001was due to higher average loan balances this year. The decrease from 2001 for the nine - month period was due to lower amortization of debt financing fees and expenses, most of which were written off in connection with our debt restructuring during the first quarter of this year.

Extraordinary Loss. In connection with our debt restructuring, we recognized a non-cash charge of $3.9 million during the quarter ended March 30, 2002. The charge consists of $2.0 million for the value of new and re-priced warrants as well as $1.9 million of unamortized bank fees and previous warrant valuation.

Amortization of Goodwill and Other Intangibles and Cumulative Effect of Change in Accounting Principle. We adopted Statement of Financial Accounting Standards ("SFAS") No. 142, on January 1, 2002. In accordance with SFAS No. 142, goodwill amortization was discontinued as of January 1, 2002. The Company completed the transitional impairment test and has recorded a goodwill impairment charge of $12.5 million, related to our semiconductor burn-in segment as a cumulative effect of change in accounting principle in the first quarter of 2002. Under SFAS No. 142, we have elected to complete the required annual impairment test on the remaining goodwill balance during the fourth quarter. Subject to this evaluation, there may be additional goodwill impairment. Amortization of $277,000 and $830,000 during the quarter and nine months ended September 28, 2002, respectively, consists of amortization of other intangible assets, principally patents and trademarks.

Benefit From Income Taxes. During the quarters ended September 28, 2002 and June 29, 2002 we recognized no benefit or provision for income taxes due to our recent operating losses, near term projection for continued operating losses. Accordingly, we have carried a full valuation allowance on our net deferred tax benefit since December 31, 2001. During the quarter ended March 30, 2002 we recognized a tax benefit of $2.7 million resulting from recent legislation that extended the tax loss carry back period for 2001 and 2002 tax years from two to five years. The $2.7 million benefit consists entirely of an anticipated tax refund, which was received in July 2002. The benefit for income taxes during the quarter and nine-month periods ended September 29, 2001 was 24%.

LIQUIDITY AND CAPITAL RESOURCES

     Cash provided by operating activities (including the tax refund of approximately $2.7 million) was $0.8 million for the nine months ended September 28, 2002 as compared with $1.1 million during the nine months ended September 29, 2001. Without the tax refund, operating cash flow this year would have been negative, due primarily to lower sales volume. Capital expenditures were $0.6 million during the nine months ended September 29, 2002 as compared with $2.7 million during the prior year period. Capital expenditures consist primarily of purchased tooling and equipment to support our business. The level of capital expenditures will frequently change based on future changes in business plans, conditions of the Company and changes in economic conditions.

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     Borrowings (net of repayments) under our Revolving Credit Facility ("Revolver") during the nine months ended September 29, 2002 were $535,000. Our aggregate Borrowing Availability under the Amended and Restated Loan Agreement would have been $3.6 million at September 28, 2002. However, under Amendment No. 2 and Temporary Waiver which is filed as an exhibit to this report on Form 10-Q, borrowing availability is now capped based upon our projected borrowing needs as submitted by the Company and as approved by the lenders on a monthly basis. The Company's borrowing cap for the month of October 2002 was $400,000.

     At June 29, 2002 and September 28, 2002 the Company was not in compliance with the minimum EBITDA, interest coverage and total debt to EBITDA covenants. The Company has received temporary waivers from its lenders through November 29, 2002 and is discussing longer term solutions with them. Based on current business conditions we do not expect to be in compliance with certain bank covenants for the fourth quarter of this year. Accordingly, although the Maturity Date of the Senior Credit Facility (the "Facility") is December 31, 2004, we have reported all debt as current at September 28, 2002.

     Failure to meet future debt covenants would constitute an event of default under the Facility. To avoid an event of default we are attempting to obtain waivers from our lenders, amend the Facility or secure alternative financing. If such waivers or financing are not available, there would be a material adverse effect on the Company and we would be forced to consider other alternatives. Under these scenarios, there can be no assurance that other alternatives would be available or that, if available, the terms and conditions would be satisfactory to the Company or not disadvantageous to our stockholders. Subject to the foregoing, we believe that our existing working capital and borrowing capacity together with funds generated from operations will be sufficient to fund our anticipated working capital, capital expenditure and debt payment requirements through the end of 2002.

RECENT ACCOUNTING PRONOUNCEMENTS

      In May 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 145, "Rescission of FASB Statements Nos. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002." Adoption of the standard is generally required in the fiscal year beginning after May 15, 2002, with certain provisions becoming effective for financial statements issued on or after May 15, 2002. Under the standard, transactions currently classified by the Company as extraordinary items will no longer be treated as such but instead will be reported as other non-operating income or expenses. As a result of this pronouncement the Company will reclassify the previously recorded extraordinary loss on debt extinguishment as a non-operating loss beginning on January 1, 2003.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which supercedes Emerging Issues Task Force ("EITF") 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The provisions of this Statement are required to be adopted for exit or disposal activities that are initiated after December 31, 2002. The provisions of EITF 94-3 will continue to apply with regard to the Company's previously announced restructuring plans. Under this standard, a liability for a cost associated with an exit or disposal activity formerly recognized upon the entity's commitment to an exit plan are now recognized when the liability is incurred. This standard would impact any future restructurings that may be approved by the Company on or after January 1, 2003.

- 14 -

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company is exposed to certain market risks including primarily the effects of changes in foreign currency exchange rates and interest rates. Investments in foreign subsidiaries, and their resultant operations, denominated in foreign currencies, create exposures to changes in exchange rates. The Company is exposed to fluctuations in interest rates in connection with its variable rate debt. In the past in order to minimize the effect of changes in interest rates on earnings, we had entered into an interest rate swap agreement. We may enter into another swap agreement if and when conditions warrant.

ITEM 4. CONTROLS AND PROCEDURES

     Within the 90 days prior to the date of this Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chairman of the Board, Chief Executive Officer and President along with the Company's Vice President, Finance and Administration, Chief Financial Officer and Treasurer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the Company's Chairman of the Board, Chief Executive Officer and President along with the Company's Vice President, Finance and Administration, Chief Financial Officer and Treasurer, concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic SEC filings. There have been no sig nificant changes in the Company's internal controls or in other factors which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

- 15 -

                                                               PART II

                                               OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

               See Note 6 to the Company's Condensed Consolidated Financial Statements (above).

 ITEM 5. OTHER INFORMATION

     The market price of our common stock has significantly declined during the past year. As a result, our common stock failed to achieve a minimum market value of publicly held shares of $5.0 million for a period of thirty days as required for continued listing on the Nasdaq National Market. The Company requested a transfer of the listing of its common stock from Nasdaq National Market to the Nasdaq SmallCap Market. Our request was granted. As a result, effective July 26, 2002, listing of our common stock was transferred to the Nasdaq SmallCap Market. Also on July 26, 2002 the Nasdaq Listing Qualifications Panel (the "Panel") notified us that for 30 consecutive days our common stock had traded below the minimum $1.00 per share requirement for continued listing under Marketplace Rule 4310c(4 ). Therefore, in accordance with Nasdaq rules, we have been provided 180 calendar days or until January 22, 2003, to regain compliance. The Panel advised us that if, at any time before January 22, 2003 the bid price of our common stock closes above $1.00 per share for a minimum of 10 consecutive trading days, Nasdaq Staff will provide written notice that the Company complies with this rule. If compliance with this rule is not demonstrated by January 22, 2003, Nasdaq Staff will determine whether the Company meets the initial listing criteria for the Nasdaq SmallCap Market under Marketplace Rule 4310c(2)(A). This rule requires the Company to meet one of three conditions, including having stockholders' equity of at least $5 million. We currently meet this condition. If we meet the initial listing criteria, the Panel has advised us that Staff will notify the Co mpany that it will be granted an additional 180-day grace period to demonstrate compliance. Otherwise, Nasdaq may decide to delist the Company's common stock.

     On October 22, 2002 we received further notification from Nasdaq that for 30 consecutive days the Company's common stock had not maintained a minimum market value of publicly held shares ("MVPHS") of at least $1 million as required for continued inclusion on the Nasdaq SmallCap market pursuant to Marketplace Rule 4310c (7). In accordance with Marketplace Rule 4310c(8)(B), the Company will be provided 90 calendar days, or until January 21, 2003 to regain compliance. If, at any time before January 21, 2003, the MVPHS of our common stock is $1 million or more for 10 consecutive trading days, Nasdaq Staff will provide written notification that the Company complies with this rule. If compliance with the rule cannot be demonstrated by January 21, 2003, Nasdaq may decide to delist the Company's common stock.

- 16 -

     The Company would have the right to appeal any delisting decision. We cannot assure you that our bid price will comply with the requirements for continued listing of our common stock on the Nasdaq SmallCap, that the MVPHS of our common stock will meet the minimum listing requirements or that any appeal of a decision to delist our common stock will be successful. If our common stock loses its Nasdaq SmallCap Market status, shares of our common stock would likely trade in the over-the-counter market.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

               (a) Exhibits

               10.1 Amendment No. 2 and Temporary Waiver, Exhibit A to Amendment No. 2 and Temporary Waiver omitted and filed separately
                       with the Commission
               99.1 Chief Executive Officer Certification
               99.2 Chief Financial Officer Certification

               (b) Reports on Form 8-K

               NONE

- 17 -

S I G N A T U R E S

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PCD Inc. (Registrant)
Dated: November 12, 2002	/s/ John L. Dwight, Jr. John L. Dwight, Jr. Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)
Dated: November 12, 2002	/s/ John J. Sheehan III John J. Sheehan III Vice President, Finance and Administration, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

- 18 -

CERTIFICATIONS

I, John L. Dwight, Jr., certify that:

    1.  I have reviewed this quarterly report on Form 10-Q of PCD Inc.;

    2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
        make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
        this quarterly report;

    3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects
        the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

    4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
        Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

             a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including it consolidated
             subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

             b)  evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this
             quarterly report (the "Evaluation Date"); and

             c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation
             as of the Evaluation Date;

    5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

             a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process,
             summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

             b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
             controls; and

     6.  The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

         Date: November 12, 2002

                                                                                  /s/ John L. Dwight, Jr.                    
                                                                                  John L. Dwight, Jr.
                                                                                  Chairman of the Board, Chief
                                                                                  Executive Officer and President
                                                                                  (Principal Executive Officer)

                                                                                                            - 19 -

CERTIFICATIONS

I, John J. Sheehan III, certify that:

    1.  I have reviewed this quarterly report on Form 10-Q of PCD Inc.;

    2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
        make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
        this quarterly report;

    3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects
        the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

    4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
        Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

             a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including it consolidated
             subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

             b)  evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this
             quarterly report (the "Evaluation Date"); and

             c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation
             as of the Evaluation Date;

    5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

             a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process,
             summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

             b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
             controls; and

     6.  The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

         Date: November 12, 2002

                                                                                  /s/ John J. Sheehan III                 
                                                                                  John J. Sheehan III
                                                                                  Vice President, Finance and
                                                                                  Administration, Chief Financial
                                                                                  Officer and Treasurer
                                                                                  (Principal Financial and Accounting Officer)

                                                                                                   - 20 -

EX-1

Exhibit 10.1

                                                                 AMENDMENT No. 2 AND TEMPORARY WAIVER

          This AMENDMENT NO. 2 AND WAIVER (this "Amendment"), dated as of September 28, 2002 is by and among (a) PCD Inc. (the "Borrower"), (b) the Guarantors listed on the signature pages hereto (the "Guarantors" and together with the Borrower, the "Obligors"), (c) Fleet National Bank as Agent (in such capacity, the "Agent"), and (d) the other lending institutions listed on the signature pages hereto (collectively, the "Lenders").

          WHEREAS, the Borrower, the Lenders, and the Agent are parties to that certain Amended and Restated Loan Agreement, dated as of February 27, 2002 (as amended and in effect from time to time, the "Loan Agreement"), pursuant to which the Agent and the Lenders, upon certain terms and conditions, have agreed to make loans and otherwise extend credit to the Borrower;

          WHEREAS, capitalized terms which are used herein without definition and which are defined in the Loan Agreement shall have the same meanings herein as in the Loan Agreement;

          WHEREAS, the Borrower has failed to comply with the terms of the Loan Agreement and the Financing Documents as described on Schedule 1 attached hereto and made a part hereof, and as such, certain Events of Default exist under the Loan Documents (solely for the time periods referenced on Schedule 1, the "Specified Defaults"); and

          WHEREAS, the Lenders and the Agent have agreed, subject to the satisfaction of the conditions precedent set forth herein, to waive the Specified Defaults on a temporary basis until November 29, 2002 and to so amend the Loan Agreement and the other Financing Documents as set forth herein.

          NOW, THEREFORE, the Obligors, the Lenders and the Agent hereby agree as follows:

          1.     Acknowledgement of Default. The Borrower acknowledges and agrees that the Specified Defaults constitute a Default and an Event of Default under the Loan Agreement. The Borrower also acknowledges and agrees that the Agent and the Lenders may (other than during the Waiver Period referred to below), if they so elect, proceed further to enforce their rights and remedies under the Financing Documents to collect the Borrower's indebtedness to the Agent and the Lenders under, and the other Obligations evidenced by, the Financing Documents. The Borrower also acknowledges and agrees that, as a result of the Specified Defaults, the Lenders and the Agent are under no obligation (other than during the Waiver Period referred to below) to advance additional funds to, or otherwise extend credit on behalf of, the Borrower pursuant to the Loan Agreement. The Borrower agrees that the Obligations of the Borrowe r to the Agent and the Lenders as evidenced by or otherwise arising under the Loan Agreement and the other Financing Documents, except as otherwise expressly modified in this Amendment upon the terms set forth herein, are, by the Borrower's execution of this Amendment, ratified and confirmed in all respects and the Borrower confirms that the Obligations are not subject to any claims or defenses whatsoever.

          2.     Temporary Waiver. Subject to the satisfaction of the conditions precedent set forth herein and in consideration of and reliance upon the agreements of the Obligors contained herein, each of the Lenders agrees to waive any Event of Default arising from the occurrence of the Specified Defaults, solely for the period from the date of the Specified Defaults until 5:00 p.m. (Boston time) on November 29, 2002 (the "Waiver Period"). Such waiver shall automatically, and without any action, notice, demand or any other occurrence, expire as of the end of the Waiver Period. Upon the expiration of the Waiver Period, (i) the Lenders and the Agent shall retain all of the rights and remedies relating to the Specified Defaults (including, without limitation, the right to accelerate the Obligations and pursue their rights and remedies under the Financing Documents and applicable law) and (ii) the Specified Defaults shall be reinstated and shall be in full force and effect.

          3.     Amendments to the Loan Agreement. Effective as of the date hereof, the Loan Agreement shall be amended as follows:

          3.1   Definitions.

                (a)  Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of "Current Liabilities" set forth therein and substituting in
                     lieu thereof the following new definition:

                           "Current Liabilities" means all liabilities of the Borrower and the Subsidiaries which would, in accordance with GAAP on a
                           consolidated basis, be classified as current liabilities of corporations conducting a business the same as or similar to that of the
                           Borrower and any Subsidiaries, including without limitation, the capitalized amount of Capitalized Lease Obligations and fixed
                           prepayments of, and sinking fund payments and reserves with respect to, Indebtedness, in each case required to be made within one
                           year from the date of determination; provided, however, for the period from June 29, 2002 until November 29, 2002, Current
                           Liabilities shall not include the Obligations (as defined herein)."

                (b)  The definition of "Adjusted Projected Outstandings" contained in Section 1.1 of the Loan Agreement is hereby amended by deleting the
                     text "105% of" in the second line thereof.

         3.2   Consultant. The Loan Agreement is hereby amended by deleting Section 5.1.26 in its entirety and substituting in lieu thereof the following:

                5.1.26 Strategic Consultant. The Lenders shall have the right to engage, either directly or through the Agent's counsel, a financial consulting
                firm (the "Lenders' Consultant") to conduct an evaluation of the Borrower's business, operations and strategic prospects. The scope of such
                evaluation shall include, without limitation, an examination of the Borrower's enterprise value, an analysis of cost cutting measures taken by the
                Borrower, the Borrower's share of the semiconductor and avionics markets and an evaluation of potential sources of repayment of the
                Obligations. The Borrower shall pay all fees and expenses of the Lenders' Consultant upon receipt of each invoice therefrom and shall pay to
                the Lenders' Consultant a retainer in the amount of $25,000 to be held by the Lenders' Consultant during the term of their engagement by the
                Lenders or the Agent's counsel as the case may be; provided that the aggregate amount of fees and expenses paid by the Borrower to the
                Lenders' Consultant shall not exceed $100,000 during the period from the engagement of the Lenders' Consultant until November 29, 2002.
                All fees and expenses at any time owing to the Lenders' Consultant shall be Obligations under this Loan Agreement."

          4.     Agreement of the Lenders. The Lenders hereby approve, in accordance with Section 5.3.3(B) of the Loan Agreement, the 13-week cash flow forecast delivered by the Borrower on October 1, 2002 and attached hereto as Exhibit A.

          5.     Other Defaults. The waiver set forth in Section 2 shall apply only to the Specified Defaults. No waiver with respect to any other Default or Event of Default, whether presently existing or hereafter arising, is granted hereby. Any obligation of the Lenders to make Loans shall at all times be subject to the satisfaction of the conditions precedent set forth in Section 3.1 of the Loan Agreement, exclusive, during the Waiver Period, of those conditions precedent relating to whether or not the Specified Defaults have occurred and are continuing. The Lenders and the Agent shall, at all times, retain all of the rights and remedies in respect of any Default or Event of Default under the Loan Agreement other than, during the Waiver Period, the Specified Defaults.

          6.     No Present Claims. Each Obligor acknowledges and agrees that: (a) none of the Obligors has any claim or cause of action against any of the Lenders or the Agent (or any of their directors, officers, employees, attorneys or agents); (b) none of the Obligors has offset rights, counterclaims or defenses of any kind against any of their obligations, indebtedness or liabilities to any of the Lenders or the Agent; and (c) each of the Lenders and the Agent have heretofore properly performed and satisfied in a timely manner all of their obligations to the Borrower and the other Obligors. The Lenders and the Agent wish (and the Obligors agree) to eliminate any possibility that any past conditions, acts, omissions, events, circumstances or matters would impair or otherwise adversely affect any of the rights, interests, contracts, collateral security or remedies of the Lenders or the Agent. Therefore, ea ch of the Obligors, on its own behalf and on behalf of each of its respective successors and assigns, hereby waives, releases and discharges the Lenders and the Agent (including their respective subsidiaries, parents and affiliates) and all of their directors, officers, employees, attorneys and agents, and their respective heirs, successors and assigns, from any and all claims, demands, actions or causes of action arising out of or in any way relating to the Financing Documents and any documents, instruments, agreements (including this Amendment), dealings or other matters connected with the Financing Documents, including, without limitation, all known and unknown matters, claims, transactions or things occurring on or prior to the date of this Amendment related to the Financing Documents. The waivers, releases, and discharges in this paragraph shall be effective regardless of any other event that may occur or not occur on or after the date hereof.

          7.     Representations and Warranties. The Borrower hereby represents and warrants to the Agent as of the date hereof:

(a) All of the representations and warranties made by the Borrower in the Loan Agreement and the other Financing Documents are true and correct on the date hereof as if made on and as of the date hereof, except to the extent that any of such representations and warranties relate by their terms to a prior date or relate to the Borrower's compliance with the provisions referred to in the definition of "Specified Defaults" for the period of time referred to therein.

(b) The execution, delivery and performance by the Borrower of its obligations hereunder, and under the Loan Agreement as amended hereby, do not violate, constitute a default under, or result in the breach of, any agreement, instrument or indenture binding upon the Borrower or any of the Subsidiaries.

          8.     Conditions Precedent. This Amendment shall be effective as of the date hereof upon the satisfaction of the following conditions precedent:

(a)     The Borrower, the Guarantors, and the Majority Lenders shall have executed and delivered to the Agent this Amendment.

(b)     The Borrower shall have paid or reimbursed the Agent and each of the Lenders for all of the reasonable costs and expenses incurred by the Agent and each of the Lenders in connection with the preparation, execution, and delivery of this Amendment; including, without limitation reasonable attorney's fees.

          9.     No Waiver. Except as otherwise expressly provided for in this Amendment, nothing in this Amendment shall extend to or affect in any way any of the rights or obligations of the Borrower or any Guarantor or any of the Agent's or the Lenders' obligations, rights and remedies arising under the Financing Documents, and, except as expressly set forth herein, neither the Agent nor any Lender shall be deemed to have waived any or all of its rights or remedies with respect to any Default or Event of Default existing on the date hereof or arising hereafter.

          10.    Ratification of Agreements. Each of the Obligors hereby affirms its absolute and unconditional promise to perform and pay to each Lender and the Agent the Obligations under the Notes, the Loan Agreement as amended hereby, and the other Financing Documents to which it is a party at the times and in the amounts provided for therein. This Amendment shall constitute a Financing Document and (i) any failure of any Obligor to comply with any of the provisions of this Amendment and/or (ii) the failure of any representation or warranty contained herein to be true and correct in all material respects shall constitute a Default and an immediate Event of Default under the Loan Agreement.

          11.    Expenses. The Borrower agrees to pay to the Agent and the Lenders upon demand (a) an amount equal to any and all reasonable out-of-pocket costs or expenses (including, without limitation, reasonable legal fees and disbursements, collateral audit and appraisal expenses) incurred or sustained by the Agent or any of the Lenders in connection with the preparation of this Amendment and related matters, (b) from time to time any and all reasonable out-of-pocket costs or expenses, legal fees, disbursements and other expenses hereafter incurred or sustained by the Agent or any of the Lenders in connection with the administration of credit extended by the Agent to the Borrower or the preservation of or enforcement of their rights under the Financing Documents or in respect of any of the Borrower's other obligations to the Agent and the Lenders and (c) the fees and expenses of the Lenders' Consultant. The B orrower agrees that the Agent and the Lenders may debit any account maintained by the Borrower (other than payroll accounts) with them to pay any fees, expenses and other amounts payable by the Borrower to the Agent and/or the Lenders under the Loan Agreement or hereunder. In addition, the Agent may instruct each depository institution with which the Agent shall have entered into an agency account agreement to debit any account maintained by the Borrower with such depository institution and remit any amounts on deposit therein to the Agent in payment of such amounts.

          12.    Miscellaneous. This Amendment may be executed in counterparts, each of which may be delivered by telecopier. This Amendment shall be governed by the laws of the Commonwealth of Massachusetts.

            IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date first written above.

                                                                       PCD INC.

                                                                       By:  /s/ John L. Dwight, Jr.                       
                                                                       Name: John L. Dwight, Jr.
                                                                       Title: Chairman of the Board

                                                                       FLEET NATIONAL BANK, individually and as Agent
                                                                       By:  /s/ Corinne Barrett                           
                                                                       Name: Corinne Barrett
                                                                       Title: Senior Vice President

                                                                       CITIZENS BANK OF MASSACHUSETTS

                                                                       By:                                                
                                                                       Name:
                                                                       Title:

                                                                       COMERICA BANK - California, successor by merger to Imperial Bank
                                                                       By:                                                
                                                                       Name:
                                                                       Title:

                                                                       EASTERN BANK
                                                                       By:  /s/ John P. Farmer                            
                                                                       Name: John P. Farmer
                                                                       Title: Vice President

                                                                       RESTORATION FUNDING CLO, LTD.
                                                                       By: Highland Capital Management, Ltd.
                                                                           as Collateral Manager
                                                                       By:  /s/ Louis Koven                               
                                                                       Name: Louis Koven
                                                                       Title: Executive Vice President, CFO

                                                                       WACHOVIA BANK NATIONAL ASSOCIATION
                                                                       Formerly know as First Union National Bank
                                                                       By:  /s/ Ernest May                                
                                                                       Name: Ernest May
                                                                       Title: Vice President

                                                                       FIRST SOURCE LOAN OBLIGATIONS TRUST
                                                                       By: FIRST SOURCE FINANCIAL, INC., its Servicer and Administrator
                                                                       By:  /s/ Kathi J. Inorio                             
                                                                       Name: Kathi J. Inorio
                                                                       Title: Senior Vice President

                                                                       GUARANTORS

                                                                       WELLS-CTI, INC.
                                                                       By:  /s/ John L. Dwight, Jr.                       
                                                                       Name: John L. Dwight, Jr.
                                                                       Title: Chairman of the Board

                                                                       WELLS INTERNATIONAL CORPORATION, INC.
                                                                       By:  /s/ John L. Dwight, Jr.                       
                                                                       Name: John L. Dwight, Jr.
                                                                       Title: Chairman of the Board

                                                                       WELLS-CTI KK

                                                                       By:  /s/ John L. Dwight, Jr.                       
                                                                       Name: John L. Dwight, Jr.
                                                                       Title: Director

                                                                       PCD USVI, INC.
                                                                       By:  /s/ John L. Dwight, Jr.                       
                                                                       Name: John L. Dwight, Jr.
                                                                       Title: Director

                                                                                                              Schedule 1

                                                                                                           Specified Defaults

1. Failure to comply with Section 5.1.10(A) of the Loan Agreement due to an EBITDA of $527,099 (minimum of $1,100,000 required) for the fiscal quarter ended June 29, 2002.

2. Failure to comply with Section 5.1.12 of the Loan Agreement due to a Ratio of Total Indebtedness for Borrowed Money to EBTDA of 13.39:1.00 (maximum of 6:20:1.00 permitted) for the fiscal quarter ended June 29, 2002.

3. Failure to comply with Section 5.1.24 of the Loan Agreement due to an Interest Coverage Ratio of 1.11:1.00 (1.40:1.00 required) for the fiscal quarter ended June 29, 2002.

4. Failure to comply with Section 5.1.10(A) of the Loan Agreement due to a projected EBITDA of ($145,117) (minimum of $2,000,000 required) for the fiscal quarter ended September 28, 2002, provided that the actual EBITDA for the fiscal quarter ended September 28, 2002 is not less than ($150,000). To the extent deducted in the calculation of Net Income, there shall be added back to EBITDA for the fiscal quarter ended September 28, 2002 up to $600,000 of non-cash inventory impairment charges during such quarter.

5. Failure to comply with Section 5.1.12 of the Loan Agreement due to a negative Ratio of Total Indebtedness for Borrowed Money to EBITDA (3.25:1.00 required) for the fiscal quarter ended September 28, 2002.

6. Failure to comply with Section 5.1.24 of the Loan Agreement due to a negative Interest Coverage Ratio (3.50:1.00 required) for the fiscal quarter ended September 28, 2002.

                                                                                                                Exhibit A

                                                                                                 October Cash Flow Forecast*

*Omitted and filed separately with the Commission.

EX-2

Exhibit 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of PCD Inc. (the "Company") on Form 10-Q for the period ended September 28, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John L. Dwight, Jr., Chief Executive Officer of the Company, certify, pursuant to U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

          1.     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

          2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
                Company as of September 28, 2002 (the last date of the period covered by the Report).

                                                                                                              /s/ John L. Dwight, Jr.
                                                                                                              John L. Dwight, Jr.
                                                                                                              Chief Executive Officer
                                                                                                              November 12, 2002

EX-3

Exhibit 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of PCD Inc. (the "Company") on Form 10-Q for the period ended September 28, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John J. Sheehan, III, Chief Financial Officer of the Company, certify, pursuant to U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

          1.     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

          2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
                 Company as of September 28, 2002 (the last date of the period covered by the Report).

                                                                                                                      /s/ John J. Sheehan III
                                                                                                                      John J. Sheehan, III
                                                                                                                      Chief Financial Officer
                                                                                                                      November 12, 2002