-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vw3fu3FZPApYD+LjyOTCzyRhM+91I/yzXTK3fNOCy0c97qSLXQ8j2/iGM3mr542o XBFPgzDdMO5sR/jb0TvT1Q== 0000076267-03-000028.txt : 20031014 0000076267-03-000028.hdr.sgml : 20031013 20031014160432 ACCESSION NUMBER: 0000076267-03-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030831 FILED AS OF DATE: 20031014 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARK ELECTROCHEMICAL CORP CENTRAL INDEX KEY: 0000076267 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 111734643 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04415 FILM NUMBER: 03939745 BUSINESS ADDRESS: STREET 1: 5 DAKOTA DR CITY: LAKE SUCCESS STATE: NY ZIP: 11042 BUSINESS PHONE: 5163544100 MAIL ADDRESS: STREET 1: 5 DAKOTA DR CITY: LAKE SUCCESS STATE: NY ZIP: 11042 10-Q 1 e10q204.txt FORM 10-Q 2ND QUARTER 1 UNITED STATES 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 August 31, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to__________ Commission file Number 1-4415 PARK ELECTROCHEMICAL CORP. (Exact Name of Registrant as Specified in Its Charter) __________New York___________ _____11-1734643_____ (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) __5 Dakota Drive, Lake Success, N.Y.__ ___11042___ (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (516) 354- 4100 Not Applicable ----------------------------------------------------- - - (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes[X] No[ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 19,761,958 as of October 10, 2003. PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION: Number Item 1. Financial Statements Condensed Consolidated Balance Sheets August 31, 2003 (Unaudited) and March 2,2003..................................... 3 Consolidated Statements of Operations 13 weeks and 26 weeks ended August 31, 2003 and September 1, 2002 (Unaudited)......... 4 Condensed Consolidated Statements of Cash Flows 26 weeks ended August 31, 2003 and September 1, 2002 (Unaudited)............. 5 Notes to Condensed Consolidated Financial Statements (Unaudited).................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................ 13 Factors That May Affect Future Results.... 22 Item 3. Quantitive and Qualitative Disclosures About Market Risk............................... 22 Item 4. Controls and Procedures................... 22 PART II. OTHER INFORMATION: Item 1. Legal Proceedings......................... 23 Item 4. Submission of Matters to a Vote of Security Holders................................... 24 Item 6. Exhibits and Reports on Form 8-K.......... 24 SIGNATURES............................................... 25 ............ EXHIBIT INDEX............................................ 26 PART I. FINANCIAL INFORMATION Item 1. Financial Statements. PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands)
August 31, 2003 March 2, (Unaudited) 2003* ASSETS Current assets: Cash and cash equivalents $115,016 $111,036 Marketable securities 76,673 51,899 Accounts receivable, net 27,200 30,272 Inventories (Note 2) 11,349 12,688 Prepaid expenses and other current 6,613 4,690 assets --------- --------- Total current assets 236,851 210,585 Property, plant and equipment, net 86,815 90,503 Other assets 511 454 --------- --------- Total $324,177 $301,542 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 14,323 $ 15,145 Accrued liabilities 33,094 21,790 Income taxes payable 9,435 3,376 --------- --------- Total current liabilities 56,852 40,311 Deferred income taxes 2,805 4,539 Deferred pension liability 11,132 10,991 Stockholders' equity: Common stock 2,037 2,037 Additional paid-in capital 133,046 133,172 Retained earnings 125,726 117,506 Treasury stock, at cost (4,249) (4,582) Accumulated other non-owner (3,172) (2,432) changes --------- --------- Total stockholders' equity 253,388 245,701 --------- --------- Total $324,177 $301,542 ========= ========= *The balance sheet at March 2, 2003 has been derived from the audited financial statements at that date.
See accompanying Notes to the Consolidated Financial Statements. PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts)
13 Weeks Ended 26 Weeks Ended (Unaudited) (Unaudited) ----------------------- ----------------------- August 31, September 1, August 31, September 1, 2003 2002 2003 2002 ---------- ----------- ---------- ------------ Net sales $47,127 $56,901 $97,097 $113,462 Cost of sales 42,510 50,692 87,829 100,992 Gross profit 4,617 6,209 9,268 12,470 Selling, general and administrative expenses 6,861 7,884 13,761 15,995 Restructuring and severance charges (Note 4) 6,504 - 14,580 - Gain on sale of DPI - (3,170) - (3,170) (Note 9) Litigation settlement gain (Notes 8 and 10) (33,088) - (33,088) - Income (loss) from operations 24,340 1,495 14,015 (355) Other income 750 771 1,497 1,713 Earnings before income taxes 25,090 2,266 15,512 1,358 Income tax Provision 6,052 679 4,925 407 Net earnings $ 19,038 $ 1,587 $10,587 $ 951 Earnings per share (Note 5): Basic $ .96 $ .08 $ .54 $ .05 Diluted $ .95 $ .08 $ .53 $ .05 Weighted average number of common and common equivalent shares outstanding: Basic 19,759 19,669 19,734 19,665 Diluted 19,943 20,013 19,856 20,094 Dividends per share $ .06 $ .06 $ .12 $ .12
See accompanying Notes to the Consolidated Financial Statements PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
26 Weeks Ended (Unaudited) ------------------------- August 31, September 1, 2003 2002 ---------- ------------ Cash flows from operating activities: Net earnings $ 10,587 $ 951 Depreciation and amortization 5,962 9,129 Gain on sale of business - (3,170) Change in operating assets and liabilities 16,480 (2,940) --------- -------- Net cash provided by operating activities 33,029 3,970 --------- -------- Cash flows from investing activities: Purchases of property, plant and equipment, net (2,088) (4,095) Proceeds from the sale of business - 5,000 Purchases of marketable securities (64,677) (19,260) Proceeds from sales and maturities of marketable securities 39,903 21,462 --------- -------- Net cash (used in) provided by investing activites (26,862) 3,108 --------- -------- Cash flows from financing activities: Dividends paid (2,367) (2,335) Proceeds from exercise of stock options 207 155 --------- -------- Net cash used in financing activities (2,160) (2,180) --------- -------- Change in cash and cash equivalents before exchange rate changes 4,007 4,898 Effect of exchange rate changes on cash and cash equivalents (27) 531 --------- -------- Change in cash and cash equivalents 3,980 5,429 Cash and cash equivalents, beginning of period 111,036 99,492 --------- -------- Cash and cash equivalents, end of period $115,016 $104,921 ========= ========= Supplemental cash flow information: Cash paid during the period for income taxes $ 323 $ - See accompanying Notes to the Consolidated Financial Statements.
PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Amounts in thousands, except per share amounts) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated balance sheet as of August 31, 2003, the consolidated statements of operations for the 13 weeks and 26 weeks ended August 31, 2003 and September 1, 2002, and the condensed consolidated statements of cash flows for the 26 weeks then ended have been prepared by the Company, without audit. In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at August 31, 2003 and the results of operations and cash flows for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 2, 2003. 2. INVENTORIES Inventories consisted of the following:
August 31, March 2, 2003 2003 ---------- -------- Raw materials $ 4,177 $ 4,072 Work-in-process 2,627 3,424 Finished goods 4,068 4,680 Manufacturing supplies 477 512 ------- ------- $11,349 $12,688 ======= =======
3. STOCK OPTIONS As of August 31, 2003, the Company had two fixed stock option plans. All options under the plans had an exercise price equal to the market value of the underlying common stock of the Company on the date of grant. The Company continues to apply Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), and related interpretations for the plans. If compensation costs of the grants had been determined based upon the fair market value at the grant dates consistent with the FASB No. 123 "Accounting for Stock-Based Compensation", the Company's net earnings and earnings per share would have approximated the amounts shown below.
13 weeks ended 26 weeks ended August 31, September 1, August 31, September 1, 2003 2002 2003 2002 --------- ----------- --------- ----------- Net Earnings $ 19,038 $ 1,587 $ 10,587 $ 951 Deduct: Total stock- based employee compensation determined under fair value based method for all awards, 426 474 904 974 net of tax effects -------- -------- ------- --------- Pro forma net income $ 18,612 $ 1,113 $ 9,683 $ (23) (loss) ======== ======== ======= ========= EPS-basic as reported $ 0.96 $ 0.08 $ 0.54 $ 0.05 ======== ======== ======= ========= EPS-basic pro forma $ 0.94 $ 0.06 $ 0.49 $ 0.00 ======== ======== ======= ========= EPS-diluted as reported $ 0.95 $ 0.08 $ 0.53 $ 0.05 ======== ======== ======= ========= EPS-diluted pro forma $ 0.93 $ 0.06 $ 0.49 $ 0.00 ======== ======== ======= =========
4. RESTRUCTURING AND SEVERANCE CHARGES The Company recorded pre-tax charges of $8,076 during the first quarter of fiscal year 2004 related to the closure of the Company's mass lamination operation in Cologne, Germany, the realignment of its North American FR-4 business operations in Newburgh, New York and Fullerton, California and related workforce reductions and recorded pre-tax charges of $6,504 during the second quarter of fiscal year 2004 related to the realignment of its North American FR-4 business operations. The components of these charges and the related liability balances and activity for the quarter ended August 31, 2003 are set forth below.
Charges 8/31/03 Closure Incurred Remaining Charges or Paid Reversals Liabilities ------- -------- --------- ----------- Dielektra charges: Severance payments $6,142 $2,772 $ - $3,370 NY/CA Realignment charges: Lease payments, taxes, utilities and other 7,292 209 - 7,083 Severance payments 1,146 1,051 - 95 $14,580 $4,032 $ - $10,548 ======= ====== ==== =======
The severance payments are for the termination of hourly and salaried, administrative, manufacturing and support employees. Some of such employees were terminated during the 2004 fiscal year first and second quarters, and the remaining employees were terminated during the 2004 fiscal year third quarter. The severance payments are expected to be paid to such employees in installments during fiscal year 2004. The lease charges cover one lease obligation payable through December 2004 and a portion of another lease obligation payable through September 2013. The Company recorded pre-tax charges of $4,674 and $120 in the fiscal year 2003 third quarter ended December 1, 2002 in connection with the closure of its Nelco U.K. manufacturing facility located in Skelmersdale, England and severance costs at a North American business unit. The components of these charges and the related liability balances and activity for the quarter ended August 31, 2003 are set forth below.
Charges 8/31/03 Closure Incurred or Remaining Charges Paid Reversals Liabilities ------- ----------- --------- ----------- United Kingdom charges: Impairment of long lived assets $1,993 $1,993 $ - $ - Severance payments and related costs 1,997 1,838 - 159 Utilities, maintenance, taxes, other 684 684 - - ------ ------ ----- ---- 4,674 4,515 - 159 Other severance payments and related costs 120 120 - - ------ ------ ----- ---- $4,794 $4,635 $ - $159 ====== ====== ===== ====
The severance payments and related costs are for the termination of hourly and salaried, administrative, manufacturing and support employees, most of whom were terminated during the 2003 fiscal year third and fourth quarters and the 2004 fiscal year first and second quarters, and the remainder of whom are expected to be terminated during the 2004 fiscal year third quarter. Severance payments and related costs for such terminated employees (totaling $1,958) were paid during such quarters, except payments and costs of $159 which are expected to be paid to such employees in installments during the 2004 fiscal year third quarter. As a result of the foregoing employee terminations and other less significant employee terminations in connection with business contractions and in the ordinary course of business and employee resignations and retirements in the ordinary course of business, the total number of employees employed by the Company declined to approximately 1,200 as of August 31, 2003 from approximately 1,400 as of March 2, 2003. 5. EARNINGS PER SHARE Basic earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potential common stock equivalents outstanding during the period. Stock options are the only common stock equivalents and are computed using the treasury stock method. The following table sets forth the basic and diluted weighted average number of shares of common stock and potential common stock equivalents outstanding during the periods specified:
13 weeks ended 26 weeks ended ------------------------ ----------------------- August 31, September 1, August 31, September 1, 2003 2002 2003 2002 ---------- ----------- ---------- ----------- Weighted average shares outstanding for basic EPS 19,759 19,669 19,734 19,665 Weighted average shares outstanding for diluted EPS 19,943 20,013 19,856 20,094
Common stock equivalents, which were not included in the computation of diluted earnings per share because either the effect would have been antidilutive or the options' exercise prices were greater than the average market price of the common stock, were 176 and 90 for the thirteen weeks ended August 31, 2003 and September 1, 2002, respectively, and 258 and 54 for the twenty six weeks ended August 31, 2003 and September 1, 2002, respectively. 6. BUSINESS SEGMENTS The Company considers itself to operate in one business segment. The Company's electronic materials products are marketed primarily to leading independent printed circuit board fabricators, electronic manufacturing service companies, electronic contract manufacturers and major electronic original equipment manufacturers ("OEMs") located throughout North America, Europe and Asia. The Company's advanced composite materials customers, the majority of which are located in the United States, include OEMs, independent firms and distributors in the electronics, aerospace and industrial industries. Sales are attributed to geographic region based upon the region from which the materials were shipped to the customer. Sales between geographic regions were not significant. Financial information concerning the Company's operations by geographic area follow:
13 Weeks Ended 26 Weeks Ended ------------------------ ------------------------- August 31, September 1, August 31, September 1, 2003 2002 2003 2002 ---------- ------------ ---------- ------------ Sales: ------ North America $24,719 $31,079 $49,866 $63,327 Europe 9,460 13,935 22,832 26,869 Asia 12,948 11,887 24,399 23,266 ------- ------- ------- -------- Total sales $47,127 $56,901 $97,097 $113,462
August 31, March 3, 2003 2002 ---------- -------- Long-lived assets: ------------------ United States $41,596 $44,425 Europe 25,196 25,373 Asia 20,534 21,159 Total long-lived assets $87,326 $90,957
7. COMPREHENSIVE INCOME Total comprehensive income for the 13 weeks ended August 31, 2003 and September 1, 2002 was $17,198 and $3,041, respectively. Total comprehensive income for the 26 weeks ended August 31, 2003 and September 1, 2002 was $9,847 and $4,250, respectively. Comprehensive income consisted primarily of net income and foreign currency translation adjustments and unrealized gains and losses on marketable securities. 8. SALE OF NELCO TECHNOLOGY, INC. During the Company's 1998 fiscal year and for several years prior thereto, more than 10% of the Company's total worldwide sales were to Delco Electronics Corporation, a subsidiary of General Motors Corp., and the Company's wholly owned subsidiary, Nelco Technology, Inc. ("NTI") located in Tempe, Arizona, had been Delco's principal supplier of semi-finished multilayer printed circuit board materials, commonly known as mass lamination, which were used by Delco to produce finished multilayer printed circuit boards. However, in March 1998, the Company was informed by Delco that Delco planned to close its printed circuit board fabrication plant and exit the printed circuit board manufacturing business. As a result, the Company's sales to Delco declined during the three-month period ended May 31, 1998, were negligible during the remainder of the 1999 fiscal year and have been nil in subsequent years. After March 1998, the business of NTI languished and its performance was unsatisfactory due primarily to the absence of the unique, high-volume, high-quality business that had been provided by Delco Electronics and the absence of any other customer in the North American electronic materials industry with a similar demand for the large volumes of semi-finished multilayer printed circuit board materials that Delco purchased from NTI. Although NTI's business experienced a resurgence in the 2001 fiscal year as the North American market for printed circuit materials became extremely strong and demand exceeded supply for the electronic materials manufactured by NTI, the Company's internal expectations and projections for the NTI business were for continuing volatility in the business' performance over the foreseeable future. Consequently, the Company commenced efforts to sell the business in the second half of its 2001 fiscal year; and in April 2001, the Company sold the assets and business of NTI and closed a related support facility, also located in Tempe, Arizona. As a result of this sale, the Company exited the mass lamination business in North America. In connection with the sale of NTI and the closure of the related support facility, the Company recorded non- recurring, pre-tax charges of $15,707 in its fiscal year 2002 first quarter ended May 27, 2001. The components of these charges and the related liability balances and activity from the May 27, 2001 balance sheet date to the August 31, 2003 balance sheet date are set forth below:
Charges 8/31/03 Closure Incurred or Remaining Charges Paid Reversals Liabilities ------- ----------- --------- ----------- NTI charges: Loss on sale of assets and business $10,580 $10,580 $ - $ - Severance payments 387 387 - - Medical and other costs 95 95 - - Support facility charges: Impairment of long lived assets 2,058 2,058 - - Write down of accounts receivable 350 319 31 - Write down of inventory 590 590 - - Severance payments 688 688 - - Medical and other costs 133 133 - - Lease payments, taxes, utilities, maint. 781 406 - 375 Other 45 45 - - ------- ------- --- ---- $15,707 $15,301 $31 $375 ======= ======= ==== ====
The severance payments and medical and other costs incurred in connection with the sale of NTI and the closure of the related support facility were for the termination of hourly and salaried, administrative, manufacturing and support employees, all of whom were terminated during the first and second fiscal quarters ended May 27, 2001 and August 26, 2001, respectively, and substantially all of the severance payments and related costs for such terminated employees (totaling $1,303) were paid during such quarters. The lease obligations will be paid through August 2004 pursuant to the related lease agreements. 9. SALE OF DIELECTRIC POLYMERS, INC. On June 27, 2002, the Company sold its Dielectric Polymers, Inc. ("DPI") subsidiary to Adhesive Applications, Inc. of Easthampton, Massachusetts. The Company recorded a gain of approximately $3.2 million in its fiscal year 2003 second quarter ended September 1, 2002 in connection with the sale. 10. LITIGATION SETTLEMENT The United States District Court for the District of Arizona has entered final judgment in favor of the Company's subsidiary, Nelco Technology, Inc., in its lawsuit against Delco Electronics Corporation, a subsidiary of Delphi Automotive Systems Corporation, on Nelco's claim for breach of the implied covenant of good faith and fair dealing. As a result, the Company received a net amount of $33.1 million from Delco on July 1, 2003 in settlement of the lawsuit. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. General: Park is a leading global designer and producer of advanced electronic materials used to fabricate complex multilayer printed circuit boards and other electronic interconnect systems. The Company's customers include leading independent printed circuit board fabricators, electronic manufacturing service companies, electronic contract manufacturers and major electronic original equipment manufacturers in the computer, telecommunications, transportation, aerospace and instrumentation industries. The Company's sales declined in the three-month and six- month periods ended August 31, 2003 compared with last fiscal year's comparable periods as a result of declines in sales by the Company's North American and European operations. The earnings growth that the Company achieved during its 2001 and 2000 fiscal years halted in the 2002 fiscal year as a result of a severe downturn in the global electronics industry, and the industry continued to be very depressed throughout the 2003 fiscal year and during the 2004 fiscal year first and second quarters. Although the electronics industry in North America began to improve slightly at the end of the 2004 fiscal year second quarter, it is not clear whether this recent improvement is sustainable. During the six months ended August 31, 2003, the Company realigned its North American FR-4 business operations located in New York and California and established a new business unit called "Nelco/North America", which includes the Company's FR-4 manufacturing operations in New York and California and is administered principally from Fullerton, California. As part of the realignment, the New York operation has been scaled down to a smaller focused operation and the California operation is being scaled up to a larger volume operation, and there have been significant workforce reductions at the Company's New York facility and significant workforce increases at the Company's California facility, with the end result being a net reduction in the Company's workforce in North America. A large portion of the New York facility has been mothballed, and the Company will have the flexibility in the future to scale back up the Newburgh, New York facility if the opportunity to do so presents itself. The realignment is designed to help the Company achieve improved operating and cost efficiencies in its North American FR-4 business and to help the Company best service all of its North American customers. In the Company's 2004 fiscal year first quarter, Dielektra GmbH, the Company's advanced electronic materials business located in Cologne, Germany, closed its mass lamination operation. Dielektra's mass lamination operation supplied higher-end mass lamination products to European circuit board manufacturers. However, the market for these products in Europe had eroded to the point where the Company no longer believed it was possible to operate a viable mass lamination business in Europe, and the Company did not believe that, at any time in the foreseeable future, the higher-end European mass lamination market would recover to the extent necessary to justify the Company's operating a mass lamination business in Europe. As a result of the closure of its mass lamination operation, Dielektra's manufacturing operations consist exclusively of high technology treating and Dielektra's proprietary DatlamT automated continuous laminate manufacturing. The Company believes that Dielektra's Datlam products have certain unique technological capabilities which are useful to high-technology circuit board customers which produce complex high-density circuit boards. As a result of the Company's realignment of its North American FR-4 business operations and closure of Dielektra's mass lamination operation in Germany and related workforce reductions, the Company recorded pre-tax charges totaling $8.1 million in the Company's 2004 fiscal year first quarter, and the Company recorded additional pre-tax charges of $6.5 million in the 2004 fiscal year second quarter due to such realignment. See Note 4 of the Notes to Consolidated Financial Statements in Item 1 of Part I of this Report for additional information regarding the realignment and closure. During the Company's 1998 fiscal year and for several years prior thereto, more than 10% of the Company's total worldwide sales were to Delco Electronics Corporation, a subsidiary of General Motors Corp.("Delco"), and the Company's wholly owned subsidiary, Nelco Technology, Inc. ("NTI") located in Tempe, Arizona, had been Delco's principal supplier of semi- finished multilayer printed circuit board materials, commonly known as mass lamination, which were used by Delco to produce finished multilayer printed circuit boards. However, in March 1998, the Company was informed by Delco that Delco planned to close its printed circuit board fabrication plant and exit the printed circuit board manufacturing business. As a result, the Company's sales to Delco declined during the three-month period ended May 31, 1998, were negligible during the remainder of the 1999 fiscal year and have been nil since that time. In May 1998, the Company and NTI filed a complaint against Delco and the Delphi Automotive Systems unit of General Motors Corp. in the United States District Court for the District of Arizona. The complaint alleged, among other things, that Delco breached its contract to purchase semi-finished multilayer printed circuit boards from NTI and that Delphi interfered with NTI's contract with Delco, that Delco breached the covenant of good faith and fair dealing implied in the contract, that Delco engaged in negligent misrepresentation and that Delco fraudulently induced NTI to enter into the contract. In November 2000, a jury awarded damages to NTI in the amount of $32.3 million, and in December 2000 the judge in the United States District Court for the District of Arizona entered judgment for NTI on its claim of breach of the implied covenant of good faith and fair dealing with damages in the amount of $32.3 million. Both parties appealed the decision to the United States Court of Appeals for the Ninth Circuit in San Francisco; and on May 7, 2003, a panel of three judges in the Court of Appeals for the Ninth Circuit rendered a unanimous decision affirming the jury verdict. On June 17, 2003, the United States District Court for the District of Arizona entered final judgment in favor of NTI; and, on July 1, 2003, NTI received a net amount of $33.1 million in payment of such judgment. The Company recorded a non-recurring, pre-tax gain of $33.1 million in the 2004 fiscal year second quarter related to such payment. See Item 1 of Part II of this Report for additional information regarding the lawsuit against Delco. The Company is not engaged in any related party transactions involving relationships or transactions with persons or entities that derive benefits from their non- independent relationship with the Company or the Company's related parties, or in any transactions with parties with whom the Company or its related parties have a relationship that enables the parties to negotiate terms of material transactions that may or would not be available from other, more clearly independent parties on an arm's-length basis, or in any trading activities involving non-exchange traded commodity or other contracts that are accounted for at fair value or otherwise or in any energy trading or risk management activities, other than certain limited foreign currency contracts intended to hedge the Company's contractual commitments to pay certain obligations or to realize certain receipts in foreign currencies. The Company believes that an evaluation of its ongoing operations would be difficult if the disclosure of its financial results were limited to generally accepted accounting principles ("GAAP") financial measures. Accordingly, in addition to disclosing its financial results determined in accordance with GAAP, the Company discloses non-GAAP operating results that exclude certain items in order to assist its shareholders and other readers in assessing the Company's operating performance. Such non-GAAP financial measures are provided to supplement the results provided in accordance with GAAP. Three and Six Months Ended August 31, 2003 Compared with Three and Six Months Ended September 1, 2002: The Company's operations continued to generate losses during the three-month and six-month periods ended August 31, 2003 as the markets for sophisticated printed circuit materials continued to experience depressed conditions during the 2004 fiscal year first and second quarters. However, the Company reported net earnings of $19.0 million for the three months ended August 31, 2003 after a non-recurring, pre-tax gain of $33.1 million related to the payment by Delco Electronics Corporation of the judgment against it in favor of the Company's subsidiary, Nelco Technology, Inc., in the lawsuit against Delco and after pre-tax charges of $6.5 million related to the realignment of the Company's North American FR-4 business operations and net earnings of $10.6 million for the six months ended August 31, 2003 after such non-recurring, pre- tax gain of $33.1 million and after pre-tax charges totaling $14.6 million related to such realignment and the closure of Dielektra's mass lamination operation in Germany and related workforce reductions. Despite the Company's reductions of its costs and expenses and higher percentages of sales of higher technology, higher margin products, the Company's gross profits in the 2004 fiscal year first and second quarters were lower than the gross profits in the prior year's comparable quarters primarily as a result of lower levels of sales of electronic materials in the 2004 fiscal year first and second quarters, operating inefficiencies resulting from operating certain facilities at levels below their designed manufacturing capacities and from the Company's realignment of it North American FR-4 business operations and competitive pressures. In addition to its depressed financial results of operations, the Company recorded pre-tax charges of $8.1 million in the 2004 fiscal year first quarter related to the Company's realignment of its North American FR-4 business operations, the closure of Dielektra's mass lamination operation and related workforce reductions and pre-tax charges of $6.5 million in the 2004 fiscal year second quarter related to such realignment. Operating results of the Company's advanced composite materials business improved sequentially during the 2004 fiscal year second quarter due primarily to higher sales volumes and improved profit margins resulting from a more favorable product mix compared to the prior fiscal year's second quarter. Results of Operations Net sales for the three-month and six-month periods ended August 31, 2003 declined 17% to $47.1 million and 14% to $97.1 million, respectively, from $56.9 million and $113.5 million, respectively, for last fiscal year's comparable periods. The declines in net sales were primarily the result of lower sales by the Company's operations in Europe and North America, which were only slightly offset by higher sales by the Company's operations in Asia. The Company's foreign operations accounted for $22.4 million and $47.2 million, respectively, of net sales, or 48% and 49% of the Company's total net sales worldwide, during the three-month and six-month periods ended August 31, 2003 compared with $25.8 million and $50.1 million, respectively, of net sales, or 45% and 44%, respectively, of total net sales worldwide, during last fiscal year's comparable periods. Net sales by the Company's foreign operations during the three- month and six-month periods ended August 31, 2003 declined 13% and 6%, respectively, from the 2003 fiscal year comparable periods. The declines in sales by foreign operations were due to decreases in sales by the Company's operations in Europe, which resulted from decreases in sales by the Company's operations in Germany and the Company's closure of its UK facility in the fourth quarter of its 2003 fiscal year. The overall gross profit as a percentage of net sales for the Company's worldwide operations declined to 9.8% and 9.5%, respectively, for the three months and six months ended August 31, 2003 compared with 10.9% and 11.0% for last fiscal year's comparable periods. The declines in the gross profit were the result of lower sales volumes, operating inefficiencies resulting from operating certain facilities at levels below their designed manufacturing capacities and from the Company's realignment of its North American FR-4 business operations and competitive pressures, which were only partially offset by higher percentages of sales of higher technology, higher margin products. The Company's cost of sales decreased significantly compared to the comparable periods in the prior fiscal year as a result of lower production volumes and cost reduction measures implemented by the Company, including workforce reductions and the reduction of overtime. In addition, the Company continued to implement an annual salary freeze for significant numbers of salaried employees, especially senior management employees, and paid no performance bonuses or significantly reduced bonuses and other incentives. Selling, general and administrative expenses declined by $1.0 million and $2.2 million, respectively, or by 13% and 14%, during the three-month period and six-month period, respectively, ended August 31, 2003 compared with last fiscal year's comparable periods, and these expenses, measured as a percentage of sales, were 14.6% and 14.2%, respectively, during the three-month and six-month periods ended August 31, 2003 compared with 13.9% and 14.1%, respectively, during last fiscal year's comparable periods. Notwithstanding the decrease in selling, general and administrative expenses in dollar terms, the increase in the expenses as percentages of sales in the 2004 fiscal year first and second quarters resulted from proportionately lower sales compared to the comparable periods in the last fiscal year. The Company recorded a non-recurring, pre-tax gain of $33.1 million during the 2004 fiscal year second quarter related to the payment by Delco Electronics Corporation of the judgment against Delco in favor of the Company's subsidiary, Nelco Technology, Inc., in its lawsuit against Delco. The Company also recorded pre-tax charges totaling $8.1 million, and after-tax charges of $7.4 million, in the 2004 fiscal year first quarter in connection with the realignment of its North American FR-4 business operations, the closure of Dielektra's mass lamination operation in Germany and related workforce reductions and recorded additional pre-tax charges of $6.5 million, and after-tax charges of $4.9 million, in the 2004 fiscal year second quarter due to such realignment. The Company recorded a pre-tax gain of $3.2 million in the 2003 fiscal year second quarter in connection with the sale of DPI on June 27, 2002 for $5.0 million cash. For the reasons set forth above, income from operations was $24.3 million for the three months ended August 31, 2003, including the non-recurring, pre-tax gain described above related to the payment by Delco Electronics Corporation of the judgment against it in favor of the Company's subsidiary, Nelco Technology, Inc., in Nelco's lawsuit against Delco and the pre- tax charges described above related to the realignment of the Company's North American FR-4 business operations, compared with income from operations of $1.5 million for the three months ended September 1, 2002, including the pre-tax gain described above related to the sale of DPI, and income from operations was $14.0 million for the six months ended August 31, 2003, including the non-recurring, pre-tax gain described above related to the payment by Delco and the pre-tax charges described above related to the realignment of the Company's North American FR-4 business operations, the closure of Dielektra's mass lamination operation and related workforce reductions, compared with a loss from operations of $0.4 million for the six months ended September 1, 2002, including the pre-tax gain described above. Excluding the pre-tax gains and the pre-tax charges described above, the Company reported losses from operations of $2.2 million and $4.5 million, respectively, for the three months and six months ended August 31, 2003 compared with losses of $1.7 million and $3.5 million, respectively, for the three months and six months ended September 1, 2002. Interest and other income, net, principally investment income, was $0.8 million and $1.5 million, respectively, for the three-month and six-month periods ended August 31, 2003 compared with $0.8 million and $1.7 million, respectively, for last fiscal year's comparable periods. The decrease in investment income for the six-month period was attributable to declines in prevailing interest rates. The Company's investments were primarily short-term taxable instruments. The Company's effective income tax rates for continuing operations, excluding the pre-tax gains and the pre-tax charges described above, for the three-month and six-month periods ended August 31, 2003 were 30.0% compared with the same rates for the three-month and six-month periods ended September 1, 2002. The effective income tax rates on earnings, including the pre-tax gains and the pre-tax charges, were 24.1% and 31.7% for the three months and six months ended August 31, 2003, principally as a result of the tax impact of the gain on the Delco litigation payment compared with 30.0% for the three- month and six-month periods ended September 1, 2002. For the reasons set forth above, net earnings for the three-month period ended August 31, 2003, including the non- recurring, pre-tax gain described above related to the payment by Delco Electronics Corporation of the judgment in favor of the Company's subsidiary, Nelco Technology, Inc. and the pre- tax charges described above related to the realignment of the Company's North American FR-4 business operations, were $19.0 million compared with net earnings of $1.6 million for the three-month period ended September 1, 2002, including the pre- tax gain described above related to the sale of DPI, and net earnings for the six-month period ended August 31, 2003, including the non-recurring, pre-tax gain described above related to the payment by Delco and the pre-tax charges described above related to the realignment of the Company's North American FR-4 business operations, the closure of Dielektra's mass lamination operation and related workforce reductions, were $10.6 million compared with net earnings of $1.0 million for the six-month period ended September 1, 2002, including the pre-tax gain described above related to the sale of DPI. Excluding the non-recurring, pre-tax gain and the pre- tax charges described above, the Company reported net losses of $1.0 million and $2.1 million, respectively, for the three- month and six-month periods ended August 31, 2003, compared with net losses of $0.6 million and $1.3 million, respectively, for the three-month and six-month periods ended September 1, 2002, excluding the pre-tax gain described above relating to the sale of DPI. Basic and diluted earnings per share, including the non- recurring, pre-tax gain and pre-tax charges described above, were $0.96 and $0.95, respectively, for the three-month period ended August 31, 2003 and $0.54 and $0.53, respectively, for the six-month period ended August 31, 2003, compared to basic and diluted earnings per share of $0.08 and $0.05, respectively, for the three-month and six-month periods ended September 1, 2002, including the pre-tax gain described above related to the sale of DPI. Basic and diluted per share losses for the three-month and six-month periods ended August 31, 2003, excluding the non-recurring, pre-tax gain and the pre-tax charges described above, were $0.05 and $0.11, respectively, compared to basic and diluted per share losses, excluding the pre-tax gain for the prior year's comparable periods, of $0.03 and $0.06, respectively. Liquidity and Capital Resources: At August 31, 2003, the Company's cash and temporary investments were $191.7 million compared with $162.9 million at March 2, 2003, the end of the Company's 2003 fiscal year. The increase in the Company's cash and investments at August 31, 2003 was attributable to cash received from Delco Electronics Corporation in payment of the judgment in favor of the Company's subsidiary, Nelco Technology, Inc., in its lawsuit against Delco. The Company's working capital (which includes cash and temporary investments) was $180.0 million at August 31, 2003 compared with $170.3 million at March 2, 2003. The increase in working capital at August 31, 2003 compared with March 2, 2003 was due principally to the increases in cash and temporary investments and other current assets, which were only partially offset by a reduction in accounts receivable and increases in accrued liabilities and income taxes payable. The increase in accrued liabilities was due to the provision for charges related to the Company's realignment of its North American FR-4 business operations, and the increase in income taxes payable was a result of the increase in the Company's taxable income. The Company's current ratio (the ratio of current assets to current liabilities) was 4.2 to 1 at August 31, 2003 compared to 5.2 to 1 at March 2, 2003. During the six-months ended August 31, 2003, the Company generated $3.8 million of cash from operating activities, excluding $3.8 million paid as severance in connection with workforce reductions and the $33.1 million that the Company received on July 1, 2003 from Delco Electronics Corporation in settlement of the lawsuit by the Company's subsidiary, Nelco Technology, Inc., against Delco. See Notes 8 and 10 of the Notes to Consolidated Financial Statements in Item 1 of Part I of this Report and Item 1 of Part II of this Report for additional information regarding the lawsuit. During the same six-month period, the Company expended $2.1 million for the purchase of property, plant and equipment compared with $4.1 million for the six-month period ended September 1, 2002 and paid $2.4 million in dividends on its common stock during the six months ended August 31, 2003 compared with $2.3 million during the six months ended September 1, 2002. At August 31, 2003, the Company had no long-term debt. The Company believes its financial resources will be sufficient, for the foreseeable future, to provide for continued investment in working capital and property, plant and equipment and for general corporate purposes. Such resources would also be available for purchases of the Company's common stock, appropriate acquisitions and other expansions of the Company's business. The Company is not aware of any circumstances or events that are reasonably likely to occur that could materially affect its liquidity. The Company's liquidity is not dependent on the use of, and the Company is not engaged in, any off-balance sheet financing arrangements, such as securitization of receivables or obtaining access to assets through special purpose entities. The Company's contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of operating lease commitments. The Company has no long-term debt, capital lease obligations, unconditional purchase obligations or other long- term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than a standby letter of credit in the amount of $1,728,000 to secure the Company's obligations under its workers' compensation insurance program. Environmental Matters: In the six-month periods ended August 31, 2003 and September 1, 2002 the Company charged less than $0.1 million against pretax income for environmental 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 available cash. 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 August 31, 2003 and March 2, 2003, the recorded liabilities in accrued liabilities for environmental matters were approximately $4.1 million and $4.2 million, respectively. Management does not expect that environmental matters will have a material adverse effect on the liquidity, capital resources, business, consolidated results of operations or consolidated financial position of the Company. Critical Accounting Policies and Estimates: In response to financial reporting release, FR-60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies", issued by the Securities and Exchange Commission in December 2001, the following information is provided regarding critical accounting policies that are important to the Consolidated Financial Statements and that entail, to a significant extent, the use of estimates, assumptions and the application of management's judgment. General The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent liabilities. On an on-going basis, the Company evaluates its estimates, including those related to sales allowances, bad debts, inventories, valuation of long- lived assets, income taxes, restructuring, pensions and other employee benefit programs, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements. Sales Allowances The Company provides for the estimated costs of sales allowances at the time such costs can be reasonably estimated. The Company is focused on manufacturing the highest quality electronic materials and other products possible and employs stringent manufacturing process controls and works with raw material suppliers who have dedicated themselves to complying with the Company's specifications and technical requirements. However, if the quality of the Company's products declined, the Company may incur higher sales allowances. Bad Debt The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Inventory The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company's products and market conditions. If actual demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Valuation of Long-lived Assets The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Important factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends and significant changes in the use of the Company's assets or strategy of the overall business. Income Taxes Carrying value of the Company's net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets resulting in additional income tax expense in the Company's consolidated statement of operations. Management evaluates the realizability of the deferred tax assets quarterly and assesses the need for additional valuation allowances quarterly. Restructuring During the fiscal year ended March 2, 2003, the Company recorded significant charges in connection with the realignment of its North American FR-4 business operations, the closures of its mass lamination operation in Germany and its manufacturing facility in England and employee severance costs at a North American business unit; during the three-month period ended June 1, 2003, the Company recorded additional significant charges in connection with the realignment of its North American FR-4 business operations, the closure of its mass lamination operation in Germany and related employee severance costs; and during the three-month period ended August 31, 2003, the Company recorded additional significant charges in connection with the realignment of its North American FR-4 business operations. During the fiscal year ended March 3, 2002, the Company recorded significant charges in connection with the restructuring relating to the sale of Nelco Technology, Inc., the closure of a related support facility and the realignment of Dielektra, GmbH. These charges include estimates pertaining to employee separation costs and the settlements of contractual obligations resulting from the Company's actions. Although the Company does not anticipate significant changes, the actual costs incurred by the Company may differ from these estimates. Contingencies and Litigation The Company is subject to a small number of proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters. Pension and Other Employee Benefit Programs One of the Company's subsidiaries in Europe has significant pension costs that are developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates and wage inflation rates. The Company is required to consider current market conditions, including changes in interest rates and wage costs, in selecting these assumptions. Changes in the related pension costs may occur in the future in addition to changes resulting from fluctuations in the Company's related headcount due to changes in the assumptions. The Company's obligations for workers' compensation claims and employee-health care benefits are effectively self-insured. The Company uses an insurance company administrator to process all such claims and benefits. The Company accrues its workers' compensation liability based upon the claim reserves established by the third-party administrator and historical experience. The Company's employee health insurance benefit liability is based on its historical claims experience. The Company and certain of its subsidiaries have a non- contributory profit sharing retirement plan covering their regular full-time employees. In addition, the Company's subsidiaries have various bonus and incentive compensation programs, most of which are determined at management's discretion. The Company's reserves associated with these self-insured liabilities and benefit programs are reviewed by management for adequacy at the end of each reporting period. Factors that May Affect Future Results. 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, forecast, estimated or budgeted by the Company in forward- looking statements. Such factors include, but are not limited to, general conditions in the electronics industry, the Company's competitive position, the status of the Company's relationships with its customers, economic conditions in international markets, the cost and availability of utilities, and the various factors set forth under the caption "Factors That May Affect Future Results" after Item 7 of Park's Annual Report on Form 10-K for the fiscal year ended March 2, 2003. Item 3. Quantitative and Qualitative Disclosure About Market Risk. The Company's market risk exposure at August 31, 2003 is consistent with, and not greater than, the types of market risk and amount of exposures presented in the Annual Report on Form 10-K for the fiscal year ended March 2, 2003. Item 4. Controls and Procedures. (a) Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of August 31, 2003, the end of the period covered by this quarterly report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act. (b) Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. PART II. OTHER INFORMATION Item 1. Legal Proceedings. In May 1998, the Company and its Nelco Technology, Inc. ("NTI") subsidiary in Arizona filed a complaint against Delco Electronics Corporation and the Delphi Automotive Systems unit of General Motors Corp. in the United States District Court for the District of Arizona. The complaint alleged, among other things, that Delco breached its contract to purchase semi- finished multilayer printed circuit boards from NTI and that Delphi interfered with NTI's contract with Delco, that Delco breached the covenant of good faith and fair dealing implied in the contract, that Delco engaged in negligent misrepresentation and that Delco fraudulently induced NTI to enter into the contract. On November 29, 2000, after a five day trial in Phoenix, Arizona, a jury awarded damages to NTI in the amount of $32.3 million, and on December 12, 2000 the judge in the United States District Court entered judgment for NTI on its claim of breach of the implied covenant of good faith and fair dealing with damages in the amount of $32.3 million. Both parties filed motions for post-judgment relief and a new trial, all of which the judge denied, and both parties appealed the decision to the United States Court of Appeals for the Ninth Circuit in San Francisco. The appeals were fully briefed, and on December 2, 2002 the parties presented their oral arguments to a panel of three judges in the Court of Appeals for the Ninth Circuit. On May 7, 2003, the three judge panel rendered a unanimous decision affirming the jury verdict. On June 17, 2003, the United States District Court for the District of Arizona entered final judgment in favor of NTI, and Delco paid NTI on July 1, 2003. NTI received a net amount of $33.1 million. See Note 10 of the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this Report. Park announced in March 1998 that it had been informed by Delco Electronics that Delco planned to close its printed circuit board fabrication plant and exit the printed circuit board manufacturing business. After the plant closure, Delco purchased all of its printed circuit boards from outside suppliers and Delco was no longer a customer of the Company's. As a result, the Company's sales to Delco declined significantly during the three-month period ended May 31, 1998, were negligible during the three-month period ended August 30, 1998, have been nil since that time. During the Company's 1999 fiscal year first quarter and during its 1998 fiscal year and for several years prior thereto, more than 10% of the Company's total worldwide sales were to Delco Electronics Corporation; and the Company had been Delco's principal supplier of semi- finished multilayer printed circuit board materials for more than ten years. These materials were used by Delco to produce finished multilayer printed circuit boards. See "Factors That May Affect Future Results" after Item 2 of Part I of this Report. In the first quarter of the fiscal year ended March 3, 2002, the Company sold the assets and business of NTI and recorded pre-tax charges of approximately $15.7 million in its 2002 fiscal year first quarter ended May 27, 2001 in connection with the sale of NTI and the closure of a related support facility also located in Arizona. See Note 8 of the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this Report. Item 4. Submission of Matters to a Vote of Security Holders. At the Annual Meeting of Shareholders held on July 17, 2003: (a) the persons elected as directors of the Company and the voting for such persons were as follows: Authority Name Votes For Withheld ---- -------- -------- Mark S. Ain 17,521,311 573,588 Anthony Chiesa 13,349,049 4,745,850 Lloyd Frank 13,694,808 4,400,091 Brian E. Shore 14,100,833 3,994,066 Jerry Shore 13,465,173 4,629,726 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 31.1 Certification of Chief Executive Officer pursuant to 78 U.S.C. Section 78m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and Exchange Act Rules 13a-14(a) or 15d-14(a). 31.2 Certification of Chief Financial Officer pursuant to 78 U.S.C. Section 78m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and Exchange Act Rules 13a-14(a) or 15d-14(a). 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K: Report on Form 8-K, dated June 26, 2003, Commission File No. 1-4415, reporting in Item 12 that Park issued a news release on June 26, 2003 reporting its results of operations for the fiscal year 2004 first quarter ended June 1, 2003 and furnishing the news release to the Securities and Exchange Commission. SIGNATURES 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. Park Electrochemical Corp. -------------------------- (Registrant) /s/Brian E. Shore Date: October 14, 2003 ----------------------- Brian E. Shore President and Chief Executive Officer /s/Murray O. Stamer Date: October 14, 2003 ----------------------- Murray O. Stamer Senior Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit No. Name Page ----------- ---- ---- 31.1 Certification of Chief Executive Officer pursuant to 78 U.S.C. Section 78m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and Exchange Act Rules 13a- 14(a) or 15d-14(a) 27 31.2 Certification of Chief Financial Officer pursuant to 78 U.S.C. Section 78m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and Exchange Act Rules 13a- 14(a) or 15d-14(a) 29 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2202 31 32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32 EX-31 3 exhibit311.txt CEO CERTIFICATION EXHIBIT 31.1 Certification of Chief Executive Officer Pursuant to 78 U.S.C. Section 78m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and Exchange Act Rules 13a-14(a) or 15d-14(a) I, Brian E. Shore, certify that: 1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended August 31, 2003 of Park Electrochemical Corp.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 14, 2003 /s/Brian E. Shore____________________ Brian E. Shore President and Chief Executive Officer [exhibit3101]ll EX-31 4 exhibit312.txt CFO CERTIFICATION EXHIBIT 31.2 Certification of Chief Financial Officer Pursuant to 78 U.S.C. Section 78m(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and Exchange Act Rules 13a-14(a) or 15d-14(a) I, Murray O. Stamer, certify that: 1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended August 31, 2003 of Park Electrochemical Corp.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 14, 2003 /s/Murray O. Stamer Murray O. Stamer Senior Vice President and Chief Financial Officer [exhibit3102]ll EX-32 5 exhibit321.txt CEO CERTIFICATION Exhibit 32.1 EXHIBIT 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-Q of Park Electrochemical Corp.(the "Company") for the quarterly period ended August 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Brian E. Shore, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (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. /s/Brian E. Shore Name: Brian E. Shore Title: President and Chief Executive Officer Date: October 14, 2003 EX-32 6 exhibit322.txt CFO CERTIFICATION Exhibit 32.2 EXHIBIT 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-Q of Park Electrochemical Corp.(the "Company") for the quarterly period ended August 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Murray O. Stamer, as Senior Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes- Oxley Act of 2002, that, to the best of his knowledge: (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. /s/Murray O. Stamer Name: Murray O. Stamer Title: Senior Vice President and Chief Financial Officer Date: October 14, 2003 -----END PRIVACY-ENHANCED MESSAGE-----