<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 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 28, 1994
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,685,082 as of September 30,
1994.
<PAGE> 2
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
I N D E X
Page
Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
August 28, 1994 (Unaudited) and
February 27, 1994 ............................. 3
Consolidated Statements of Earnings
13 weeks and 26 weeks ended August 28, 1994
and August 29, 1993 (Unaudited)................ 4
Consolidated Statements of Cash Flows
26 weeks ended August 28, 1994 and August 29,
1993 (Unaudited)............................... 5
Notes to Condensed Consolidated Financial
Statements (Unaudited) ....................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ................................... 8
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings .............................. 10
Item 4. Submission of Matters to a Vote of Security
Holders......................................... 10
Item 6. Exhibits and Reports on Form 8-K ............... 10
SIGNATURES ................................................. 11
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<PAGE> 3
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
August 28, February 27,
1994 1994
<S> <C> <C>
ASSETS (Unaudited) *
Cash and cash equivalents $ 22,370 $ 14,135
Marketable securities 17,944 23,918
Accounts receivable, net 27,904 28,904
Inventories (Note 2) 18,037 16,144
Prepaid expenses & other current assets 3,713 2,738
-------- -------
TOTAL CURRENT ASSETS 89,968 85,839
Property, plant and equipment, net 55,267 51,398
Other assets (Note 3) 2,228 3,513
-------- --------
$147,463 $140,750
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank loans payable $ - $ 78
Accounts payable 24,495 24,443
Accrued liabilities 12,046 12,487
Income taxes payable 2,547 2,964
-------- --------
TOTAL CURRENT LIABILITIES 39,088 39,972
Long-term debt (Note 3) 9 32,861
Deferred income taxes 4,716 4,772
Deferred pension liability 1,691 1,691
Stockholders' Equity: (Note 3)
Common stock 679 520
Other stockholders' equity 101,280 60,934
-------- --------
TOTAL STOCKHOLDERS' EQUITY 101,959 61,454
-------- --------
$147,463 $140,750
======== ========
<FN>
*The Balance Sheet at February 27, 1994 has been taken from the
audited financial statements at that date, and condensed.
</TABLE>
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<PAGE> 4
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited - in thousands, except per share data)
<CAPTION>
13 weeks ended 26 weeks ended
August 28, August 29, August 28, August 29,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $58,795 $47,318 $121,564 $ 96,547
-------- -------- --------- ---------
Costs and expenses:
Cost of sales 46,275 38,416 95,797 79,614
Selling, general and
administrative 6,941 6,193 14,412 12,474
-------- -------- --------- ---------
Total costs and expenses 53,216 44,609 110,209 92,088
-------- -------- --------- ---------
Operating profit 5,579 2,709 11,355 4,459
-------- -------- --------- ---------
Other income (expense):
Interest expense - (641) (412) (1,240)
Other income, net 382 312 844 561
-------- -------- --------- ---------
Total other income (expense) 382 (329) 432 (679)
-------- -------- -------- --------
Earnings before income tax
provision 5,961 2,380 11,787 3,780
Income tax provision 2,205 792 4,361 1,300
-------- -------- -------- --------
NET EARNINGS $ 3,756 $ 1,588 $ 7,426 $ 2,480
======== ======== ======== ========
Net earnings per common share:
Primary $ .66 $ .40 $ 1.44 $ .62
Fully Diluted $ .65 $ .35 $ 1.33 $ .58
Dividends per common share $ .08 $ .08 $ .16 $ .16
Weighted average number of
common shares outstanding:
Primary 5,672 3,983 5,156 3,992
Fully Diluted 5,772 5,728 5,756 5,727
</TABLE>
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<PAGE> 5
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
<CAPTION>
26 weeks ended
August 28, August 29,
1994 1993
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES: $ 10,351 $ 7,842
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment, net (7,461) (2,946)
Purchases of marketable securities (9,997) (99,066)
Proceeds from sales of marketable
securities 15,841 105,079
--------- ---------
Net cash (used in) provided by
investing activities (1,617) 3,067
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payment) proceeds from short term debt (63) 274
Repayments of long-term borrowing (19) (10)
Dividends paid (859) (637)
Purchase of treasury stock - (6,566)
Proceeds from exercise of stock options 611 -
Debt conversion costs (100) -
--------- ---------
Net cash used in financing activities (430) (6,939)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS
BEFORE EXCHANGE RATE CHANGES 8,304 3,970
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (69) (22)
--------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 8,235 3,948
CASH AND CASH EQUIVALENTS BEGINNING OF
PERIOD 14,135 9,006
--------- ---------
CASH AND CASH EQUIVALENTS END OF PERIOD $ 22,370 $ 12,954
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 25 $ 1,217
Income taxes $ 4,747 $ 769
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON CASH FINANCING ACTIVITIES:
During the quarter ended May 29, 1994 the Company issued 1,586,184 shares of
Common Stock upon the conversion of $32,835,000 principal amount of Debentures.
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<PAGE> 6
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of August 28, 1994, the
consolidated statements of earnings for the 13 weeks and 26 weeks ended
August 28, 1994 and August 29, 1993, and the consolidated statements of
cash flows for the 26 week periods then ended have been prepared by the
Company, without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position at August 28, 1994, and the results of
operations and cash flows for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in
the Company's Form 10-K/A Amendment No. 2 to its Annual Report on Form
10-K for the fiscal year ended February 27, 1994.
2. INVENTORIES
<TABLE>
Inventories consist of the following:
<CAPTION>
(In thousands)
August 28, February 27,
1994 1994
----------- ------------
<S> <C> <C>
Raw materials $ 6,499 $ 4,727
Work-in-process 3,285 3,479
Finished goods 7,849 7,581
Manufacturing supplies 404 357
------- -------
$18,037 $16,144
======= =======
</TABLE>
3. LONG-TERM DEBT
<TABLE>
<CAPTION> (In thousands)
August 28, February 27,
1994 1994
----------- -------------
<S> <C> <C>
7.25% Convertible Subordinated
Debentures $ - $32,852
Other 12 71
---- -------
12 32,923
Less current portion (included
in accrued liabilities) 3 62
---- -------
$ 9 $32,861
==== =======
</TABLE>
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<PAGE> 7
On June 12, 1986, the Company issued $35,000,000 principal amount of 7.25%
Convertible Subordinated Debentures maturing on June 15, 2006 with
interest payable semiannually on June 15 and December 15 of each year.
The Debentures were unsecured, subordinated to bank loans payable and
other long-term debt and were convertible at any time prior to maturity,
or earlier redemption, into shares of the Company's common stock at $20.70
per share. The Company had the option to redeem the Debentures at
specified prices, plus accrued interest. On April 5, 1994, the Company
announced that it had elected to redeem the Debentures on May 31, 1994.
(Prior to that announcement, during the 1991 fiscal year, the Company had
repurchased, in the open market, an aggregate of $1,602,000 principal
amount of Debentures.) Including conversions prior to the call for
redemption, $33,381,000 principal amount of Debentures were converted into
1,612,558 shares of the Company's common stock. The remaining $17,000
principal amount of Debentures not converted into common stock were
redeemed on May 31, 1994. The $720,000 unamortized balance of deferred
issuance costs incurred in connection with this financing was transferred
from other assets to additional paid-in capital.
As a result of the conversion and redemption of the Debentures, virtually
all of the Company's long-term debt and associated interest expense has
been eliminated. Furthermore, $515,000 (net of taxes) of accrued interest
expense and costs related to the conversion of these Debentures has been
reclassified to additional paid-in capital during the current fiscal
year's first quarter.
4. SUPPLEMENTARY EARNINGS PER SHARE DATA
During the quarter ended May 29, 1994, the Company issued 1,586,184 shares
of its common stock upon the conversion of $32,835,000 principal amount
Debentures. Supplementary earnings per share for the 13 weeks and 26
weeks ended August 28, 1994 of $0.66 and $1.36 per share, respectively,
reflect the earnings per share that would have resulted if the conversion
of these shares had occurred at the beginning of the fiscal year.
-7-
<PAGE> 8
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Results of Operations
During the Company's current fiscal year's second quarter ended August 28,
1994, sales increased 24% to $58,795,000 from $47,318,000 during last year's
second quarter. In addition, operating profit increased 106% to $5,579,000
for the current fiscal year's second quarter from $2,709,000 for last year's
second quarter. During the current fiscal year's second quarter, the
Company's electronics segment accounted for $50,805,000 of its sales or 86% of
the Company's total sales worldwide. Electronics sales increased by 23%
during this fiscal year's second quarter from last year's second quarter
electronics sales of $41,374,000. The Company's foreign operations, which are
dedicated almost exclusively to the electronics segment, accounted for
$13,811,000 in sales or 23% of total sales worldwide during the second
quarter. Foreign sales during this fiscal year's second quarter increased 30%
from last year's second quarter foreign sales of $10,664,000. Fiscal second
quarter sales by the plumbing and industrial component segment increased 34%
to $7,990,000 from $5,944,000 during last year's second quarter.
The gross margin percentage for the Company's worldwide operations was
21.3% for the current fiscal year's second quarter as compared to 18.8% for
the prior year's second quarter.
The results for the second quarter improved due principally to the
performance of the Company's United States based electronics operations as
described below.
The performance of the electronics segment continued its trend of
improvement during the second quarter of the current fiscal year,
predominantly as the result of the strength of the Company's United States
based electronics operations. This improvement continues to be attributable
to increased sales volumes and enhanced manufacturing efficiencies. Downward
pricing pressure persists worldwide due to the competitive market environment,
and has shown no signs of abatement. The performance of the Company's
European electronics operations continues to suffer as the result of the
weakness of the European printed circuit industry. Although still weak, there
have been some signs of a slight improvement in the European markets served by
the Company's European operations during the second quarter of the current
year. The facility expansion of the Company's Far East based electronics
operation is expected to be completed during the current year.
The Company's plumbing and industrial component segment continued to
underperform in the second quarter, largely due to the poor results of the
plumbing hardware business. However, the plumbing hardware business started
to improve towards the end of the second quarter. The Company's advanced
composite business has continued its trend of improved results under it's new
management team. The Company's industrial adhesive tape business performed
well during the second quarter.
Selling, general and administrative expenses, measured as a percentage of
sales, were 11.8% during the current fiscal year's second quarter as compared
to 13.1% during the same period in the prior year.
-8-
<PAGE> 9
Virtually no interest expense was incurred during the current fiscal
year's second quarter, as compared to $641,000 during the prior fiscal year's
second quarter. During the first quarter of the current year the Company
elected to call it's 7 1/4% Convertible Debentures for redemption. As a
result of this call for redemption, nearly all of the Debentures outstanding
at the beginning of the fiscal year were converted into the Company's common
stock during the first quarter. This eliminated practically all of the
Company's long-term debt and the related debt service costs. The prior year
interest expenses represented the interest payments made by the Company on its
Convertible Debentures and, to a lesser extent, on the loans carried by
certain of the Company's foreign subsidiaries. Other income, which consists
principally of investment income, increased 22% to $382,000 for the current
fiscal year's second quarter from $312,000 for the prior fiscal year's second
quarter. The increase in investment income is attributable to the fact that
the Company had a greater amount of funds available for investment during the
current year's second quarter than during the prior year's second quarter.
The Company's cash reserves continue to be invested primarily in short term
taxable instruments and government securities.
The Company's effective income tax rate for the current fiscal year's
second quarter was 37%, as compared to 33% during the prior fiscal year's
second quarter. This increase is primarily due to the reduction of benefits
from favorable foreign tax rate differentials.
During the current fiscal year's second quarter, the Company's net
earnings increased 137% to $3,756,000 from $1,588,000 during the prior fiscal
year's second quarter. Primary earnings per share increased to $.66 for the
current year's second quarter from $.40 for the prior year's second quarter,
and fully diluted earnings per share increased to $.65 for the current year's
second quarter from $.35 for the comparable prior period. This increase in
net earnings was attributable to the increase in operating profit. The
primary earnings per share calculation for the current year's second quarter
reflects the issuance, by the Company, of 1,586,184 shares of its common stock
during the current fiscal year's first quarter as a result of the conversion
of the Debentures discussed above.
Liquidity and Capital Resources
At August 28, 1994, the Company's cash and temporary investments amounted
to $40,314,000, as compared to $38,053,000 at February 27, 1994, the end of
the Company's last fiscal year. The increase in the Company's cash and
investment position is attributable to several factors, including cash
generated from operations. The Company's working capital position was
$50,880,000 at August 28, 1994 as compared to $45,867,000 at February 27,
1994. The Company's current ratio, or the ratio of current assets to current
liabilities, was 2.3 to 1 at August 28, 1994 as compared to 2.1 to 1 at
February 27, 1994.
During the current fiscal year's first six months, the Company generated
$10,351,000 of funds from operations and expended $7,461,000 for the purchase
of property, plant and equipment. On April 5, 1994, the Company announced
that it had elected to redeem its 7 1/4% Convertible Subordinated Debentures
on May 31, 1994. As a result of the call for redemption, $32,835,000
principal amount of Debentures were converted into 1,586,184 shares of the
Company's common stock. The conversion of these Debentures eliminated
virtually all of the Company's long-term debt, along with the debt service
costs associated therewith. The Company believes its financial resources will
be sufficient, for the foreseeable future, to provide for continued investment
in property, plant and equipment and for general corporate purposes. Such
resources are also available for appropriate acquisitions and other expansions
of the Company's business.
-9-
<PAGE> 10
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
(a) There are no material pending legal proceedings
to which the Company is a party or to which any
of its properties is subject.
(b) No material pending legal proceeding was
terminated during the fiscal quarter ended
August 28, 1994.
Item 4. Submission of Matters to a Vote of Security Holders.
At the annual meeting of shareholders held on July
12, 1994:
(a) the persons elected as directors of the Company
and the voting for such persons were as follows:
Authority
Name Votes For Withheld
------------- --------- ---------
Anthony Chiesa 4,987,824 2,264
Lloyd Frank 4,986,824 3,264
Norman M. Schneider 4,987,424 2,664
Brian E. Shore 4,952,366 37,722
Jerry Shore 4,953,586 36,502
E. Philip Smoot 4,953,654 36,434
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
No. 11: Computation of Fully Diluted Earnings
Per Common Share.
(b) There were no reports on Form 8-K filed during the
fiscal quarter ended August 28, 1994.
-10-
<PAGE> 11
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
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)
Date: October 11, 1994 /s/Jerry Shore
---------------- -------------------------
Jerry Shore
Chairman of the Board and
President
Date: October 11, 1994 /s/Allen Levine
---------------- -------------------------
Allen Levine
Vice President and
Principal Financial Officer
-11-
<PAGE> 12
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
Quarterly Report on Form 10-Q
for the fiscal quarter ended August 28, 1994
Exhibit No. Name Page
11 Computation of fully diluted 13
earnings per common share
-12-
<PAGE> 13
EXHIBIT NO. 11
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED EARNINGS PER COMMON SHARE
(Unaudited - in thousands, except per share data)
<TABLE>
<CAPTION>
13 weeks ended 26 weeks ended
August 28, 1994 August 28, 1994
_______________ _______________
<S> <C> <C>
ADJUSTMENT OF NET EARNINGS:
Net earnings before adjustment $3,756 $7,426
Adjustments resulting from assumed
conversion of 7 1/4% Convertible
Subordinated Debentures:
Reduction of interest expenses and
amortization of deferred debt
financing costs - 389
Related tax effect of above - (136)
------- -------
Net earnings as adjusted $3,756 $7,679
======= =======
ADJUSTMENT OF WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING:
Weighted average number of common shares
outstanding 5,672 5,156
Additional shares assuming conversion of:
Convertible Subordinated Debentures - 504
Stock Options 100 96
------- -------
Adjusted weighted average number of common
shares outstanding during the period 5,772 5,756
======= =======
Earnings per share fully diluted $ .65 $ 1.33
======= =======
</TABLE>
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the financial statements of Park Electrochemical Corp. and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> FEB-26-1995
<PERIOD-END> AUG-28-1994
<CASH> 22,370
<SECURITIES> 17,944
<RECEIVABLES> 30,334
<ALLOWANCES> 2,430
<INVENTORY> 18,037
<CURRENT-ASSETS> 89,968
<PP&E> 114,483
<DEPRECIATION> 59,216
<TOTAL-ASSETS> 147,463
<CURRENT-LIABILITIES> 39,088
<BONDS> 9
<COMMON> 679
0
0
<OTHER-SE> 101,280
<TOTAL-LIABILITY-AND-EQUITY> 147,463
<SALES> 121,564
<TOTAL-REVENUES> 121,996
<CGS> 95,797
<TOTAL-COSTS> 110,209
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,787
<INCOME-TAX> 4,361
<INCOME-CONTINUING> 7,426
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,426
<EPS-PRIMARY> $1.44
<EPS-DILUTED> $1.33
</TABLE>
