<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 May 29, 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: 5,665,439 as of July 2, 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
May 29, 1994 (Unaudited) and
February 27, 1994 .................................. 3
Consolidated Statements of Earnings
13 weeks ended May 29, 1994 and
May 30, 1993 (Unaudited)............................ 4
Consolidated Statements of Cash Flows
13 weeks ended May 29, 1994 and
May 30, 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 ................................... 11
Item 6. Exhibits and Reports on Form 8-K .................... 11
SIGNATURES ..................................................... 12
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<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
May 29, February 27,
1994 1994
<S> <C> <C>
ASSETS (Unaudited) *
Cash and cash equivalents $ 23,249 $ 14,135
Marketable securities 18,077 23,918
Accounts receivable, net 28,882 28,904
Inventories (Note 2) 17,568 16,144
Prepaid expenses & other current assets 3,288 2,738
-------- -------
TOTAL CURRENT ASSETS 91,064 85,839
Property, plant and equipment, net 53,043 51,398
Other assets 2,327 3,513
-------- --------
$146,434 $140,750
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank loans payable $ 22 $ 78
Accounts payable 26,316 24,443
Accrued liabilities 11,916 12,487
Income taxes payable 4,025 2,964
-------- --------
TOTAL CURRENT LIABILITIES 42,279 39,972
Long-term debt (Note 3) 26 32,861
Deferred income taxes 4,682 4,772
Deferred pension liability 1,691 1,691
Stockholders' Equity (Note 3):
Common stock 679 520
Other stockholders' equity 97,077 60,934
-------- --------
TOTAL STOCKHOLDERS' EQUITY 97,756 61,454
-------- --------
$146,434 $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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<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited - in thousands, except per share data)
<CAPTION>
13 Weeks Ended
-------------------------
May 29, May 30,
1994 1993
<S> <C> <C>
Net sales $62,769 $49,229
-------- --------
Costs and expenses:
Cost of sales 49,522 41,198
Selling, general and administrative 7,471 6,281
-------- --------
Total costs and expenses 56,993 47,479
-------- --------
Operating profit 5,776 1,750
-------- --------
Other income (expense):
Interest expense (412) (599)
Other income, net 462 249
-------- --------
Total other income (expense) 50 (350)
-------- --------
Earnings before income tax provision 5,826 1,400
Income tax provision 2,156 508
-------- --------
NET EARNINGS $ 3,670 $ 892
======== ========
Net earnings per common share:
Primary $ .78 $ .22
Fully diluted $ .68 $ .22
Dividends per common share $ .08 $ .08
Weighted average number of common
shares outstanding:
Primary 4,708 4,002
Fully diluted 5,732 4,002
</TABLE>
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<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands, except share amounts)
<CAPTION>
13 weeks ended
----------------------
May 29, May 30,
1994 1993
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES: $ 7,155 $ 6,001
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment, net (3,484) (1,499)
Purchases of marketable securities (8,017) (39,102)
Proceeds from sales of marketable
securities 13,841 41,949
-------- --------
Net cash provided by investing activities 2,340 1,348
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payment) proceeds from short-term debt (57) 45
Dividends paid (406) (318)
Purchase of treasury stock - (6,566)
Proceeds from exercise of stock options 283 -
Debt conversion costs and other (101) (5)
-------- --------
Net cash used in financing activities (281) (6,844)
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS
BEFORE EXCHANGE RATE CHANGES 9,214 505
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (100) (27)
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 9,114 478
CASH AND CASH EQUIVALENTS BEGINNING OF
PERIOD 14,135 9,006
-------- --------
CASH AND CASH EQUIVALENTS END OF PERIOD $23,249 $ 9,484
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 24 $ 6
Income taxes $ 1,132 $ 145
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.
</TABLE>
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PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of May 29, 1994, the
consolidated statements of earnings for the 13 weeks ended May 29, 1994
and May 30, 1993, and the consolidated statements of cash flows for the
13 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 May 29, 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 February 27, 1994 annual report to stockholders.
<TABLE>
2. INVENTORIES
Inventories consist of the following:
<CAPTION> (In thousands)
May 29, February 27,
1994 1994
------- ------------
<S> <C> <C>
Raw materials $ 5,960 $ 4,727
Work-in-process 3,100 3,479
Finished goods 8,101 7,581
Manufacturing supplies 407 357
------- -------
$17,568 $16,144
======= =======
</TABLE>
<TABLE>
3. LONG-TERM DEBT
<CAPTION> (In thousands)
May 29, February 27,
1994 1994
------- ------------
<S> <C> <C>
7.25% convertible subordinated
debentures $ 17 $32,852
Other 13 71
---- -------
30 32,923
Less current portion (included
in accrued liabilities) 4 62
---- -------
$ 26 $32,861
</TABLE> ==== =======
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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.) The redemption price was $1,021.75, plus accrued
interest through the redemption date, for each $1,000 principal amount.
A $1,000 principal amount debenture was convertible into 48.31 shares of
the Company's common stock at any time prior to the close of business on
May 27, 1994. On or before May 27, 1994, $33,381,000 principal amount of
debentures had been 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 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 common stock upon the conversion of $32,835,000 principal amount
debentures. Supplementary earnings per share for the quarter ended May
29, 1994 of $.70 per share reflects the earnings per share that would have
resulted if the conversion of these shares had occurred at the beginning
of the period.
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<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 first quarter ended May 29,
1994, sales increased 28% to $62,769,000 from $49,229,000 during last year's
first quarter. In addition, operating profit increased 230% to $5,776,000
for the current fiscal year's first quarter from $1,750,000 for last year's
first quarter. During the current fiscal year's first quarter, the
Company's electronics segment accounted for $54,499,000 in sales or 87% of
the Company's total sales worldwide. Electronics sales increased 31% during
this fiscal year's first quarter from last year's first quarter electronics
sales of $41,610,000. The Company's foreign operations, which are dedicated
almost exclusively to the electronics segment, accounted for $14,525,000 in
sales or 23% of total sales worldwide during the first quarter. Foreign
sales during this fiscal year's first quarter increased 31% from last year's
first quarter's foreign sales of $11,096,000. Due to the relative size of
the Company's plumbing hardware segment and industrial components segment
and the fact that these segments have been placed under common management,
the Company has decided to combine these two segments into one business
segment for financial reporting purposes effective at the beginning of the
current fiscal year. This new combined business segment is called the
plumbing and industrial component segment. The total sales of this combined
segment during the current year's first quarter amounted to $8,270,000, or
13% of the Company's total worldwide sales, compared to $7,619,000, or 15%
of total worldwide sales for the same period last year. The sales of the
plumbing and industrial component segment increased 9% compared to the same
period last year.
The gross profit percentage for the Company's worldwide operations was
21.1% for the current fiscal year's first quarter, as compared to 16.3% for
the prior year's first quarter.
The Company's better overall performance for the first quarter was
primarily attributable to the improvement in the Company's United States
based electronics business.
The Company's electronic segment continued to improve on the strength
of the U.S. based operations. This group has been successful in offsetting
the downward pricing pressure in the U.S. through increased volume and
improved efficiency in the utilization of plant and equipment, materials and
other resources. In contrast, the Company's foreign based electronic
operations have not been able to alleviate the impact of similar pricing
pressure on those operations. The Company is continuing its investment in
the expansion of its manufacturing capacity and capabilities in the Far
East, as well as the expansion of its Arizona and New York facilities.
As mentioned above, the Company's non-electronic businesses have been
combined into one segment for financial reporting purposes, namely the
plumbing and industrial components segment. Prior to the current fiscal
year, these businesses had been reported as two segments, each of which
would currently represent less than 10% of the Company's sales, earnings and
assets. These businesses have recently been placed under common, central
management. This new combined plumbing and industrial components segment is
comprised of the Company's plumbing hardware, advanced composite and
industrial adhesive tape businesses.
-8-
<PAGE> 9
The Company's plumbing hardware business had disappointing results
during the first quarter. Two significant long-term contracts were entered
into by the plumbing hardware business during the first quarter, and these
contracts have substantially increased this business' potential markets.
However, the impact of these new contracts will not begin to be felt until
the third quarter. A new management team has recently been put in place at
the Company's advanced composite business, and this business is responding
to the management change. The industrial adhesive tape business continued
to perform well during the first quarter.
Selling, general and administrative expenses, measured as a percentage
of sales, were 11.9% during the current fiscal year's first quarter, as
compared to 12.8% during the prior fiscal year's first quarter.
Interest expense was $412,000 for the current fiscal year's first
quarter, as compared to $599,000 during the prior fiscal year's first
quarter. The Company elected to redeem it's 7 1/4% Convertible Debentures
during the quarter. As a result, all but $17,000 principal amount of the
Debentures outstanding at the beginning of the quarter were converted into
the Company's common stock. The reduction in interest expense was the
result of the reduction in the amount of Debentures outstanding during the
quarter due to conversions. These conversions eliminated practically all of
the Company's long-term debt. Investment income, which is included in other
income, was $323,000 for the current quarter, compared to $249,000 in the
prior year's first quarter. This 30% increase in investment income was
primarily due to the increase in cash available for investment during the
current quarter compared to the same period last year. Income of $139,000
arising from the mandatory revaluation of marketable securities was included
in other income during the quarter. This resulted from the adoption of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", during this 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
first quarter was 37%, compared to 36% for the prior fiscal year's first
quarter.
During the current fiscal year's first quarter, the Company's net
earnings increased 311% to $3,670,000 from $892,000 during the prior fiscal
year's first quarter. Primary earnings per share increased 255% to $.78 for
the current year's first quarter from $.22 for the prior year's first
quarter. Fully diluted earnings per share increased 209% for the current
year's first quarter to $.68 from $.22 for the prior year's first quarter.
This increase in net earnings is primarily attributable to the improved
operating profit of the United States electronics operations. As a result
of the call for redemption mentioned above, $32,835,000 of the Company's
Debentures were converted into 1,586,184 shares of the Company's common
stock during the first quarter. The remaining $17,000 of Debentures were
repaid.
Liquidity and Capital Resources
At May 29, 1994, the Company's cash and temporary investments amounted
to $41,326,000, 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
$48,785,000 at May 29, 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 2.2 to 1 at May 29, 1994, compared to 2.1 to 1 at
February 27, 1994.
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<PAGE> 10
On April 5, 1994, the Company announced that it had elected to redeem
its 7 1/4% Convertible Subordinated Debentures on May 31, 1994. The
redemption price was $1,021.75, plus accrued interest through the redemption
date, for each $1,000 principal amount. A $1,000 principal amount Debenture
was convertible into 48.31 shares of the Company's common stock at any time
prior to the close of business on May 27, 1994. $33,381,000 principal
amount of Debentures were converted into 1,612,558 shares of the Company's
common stock on or before May 27, 1994. The remaining $17,000 of Debentures
were repaid on May 31, 1994, the redemption date. As a result, virtually
all of the Company's long-term debt was eliminated, along with the debt
service costs associated therewith.
During the current fiscal year's first quarter, the Company generated
$7,155,000 of funds from operations and expended $3,484,000 for the purchase
of property, plant and equipment. 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.
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<PAGE> 11
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 May 29, 1994.
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 May 29, 1994.
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<PAGE> 12
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: July 12, 1994 /s/Jerry Shore
------------- ---------------------------
Jerry Shore
Chairman of the Board and
President
Date: July 12, 1994 /s/Allen Levine
------------- ---------------------------
Allen Levine
Vice President and
Principal Financial Officer
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<PAGE> 13
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
Quarterly Report on Form 10-Q
for the fiscal quarter ended May 29, 1994
Exhibit No. Name Page
11 Computation of fully diluted 14
earnings per common share
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<PAGE> 14
<TABLE>
EXHIBIT NO. 11
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED EARNINGS PER COMMON SHARE
(Unaudited - in thousands, except per share data)
<CAPTION>
13 weeks ended
May 29, 1994
--------------
<S> <C>
ADJUSTMENT OF NET EARNINGS:
Net earnings before adjustment $ 3,670
Adjustments resulting from assumed conversion
of 7 1/4% convertible subordinated debentures:
Reduction of interest expenses and amortization
of deferred debt financing costs 388
Related tax effect of above (136)
--------
Net earnings as adjusted $ 3,922
========
ADJUSTMENT OF WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Weighted average number of common shares
outstanding 4,708
Additional shares assuming conversion of:
Convertible Subordinated Debentures 931
Stock options 93
--------
Adjusted weighted average number of common
shares outstanding during the period 5,732
========
Earnings per share fully diluted $ .68*
========
<FN>
*Calculation of fully diluted earnings per share for the 13 weeks ended May
29, 1994 assumes conversion of the Convertible Subordinated Debentures and
Stock Options occurred at the beginning of the period.
</TABLE>
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