<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 November 28, 1993
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: 3,986,184 as of December 30,
1993.
<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
November 28, 1993 (Unaudited) and
February 28, 1993 (As Restated)................ 3
Consolidated Statements of Earnings
13 weeks and 39 weeks ended November 28, 1993
(Unaudited) and November 29, 1992 (Unaudited -
As Restated)................................... 4
Consolidated Statements of Cash Flows
39 weeks ended November 28, 1993 (Unaudited)
and November 29, 1992 (Unaudited - As Restated) 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 4. Submission of Matters to a Vote of Security
Holders......................................... 11
Item 6. Exhibits and Reports on Form 8-K ............... 11
SIGNATURES ................................................. 12
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<PAGE> 3
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
November 28, February 28,
1993 1993
<S> <C> <C>
ASSETS (Unaudited) *
Cash and cash equivalents $ 14,067 $ 9,006
Marketable securities 21,995 23,762
Accounts receivable, net 26,169 26,114
Inventories (Note 2) 16,762 14,233
Prepaid expenses & other current assets 1,852 1,853
-------- -------
TOTAL CURRENT ASSETS 80,845 74,968
Property, plant and equipment, net 49,575 50,478
Other assets (Note 3) 3,287 3,563
-------- --------
$133,707 $129,009
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank loans payable $ 597 $ 120
Accounts payable 23,864 19,226
Accrued liabilities 11,403 8,735
Income taxes payable 2,378 1,076
-------- --------
TOTAL CURRENT LIABILITIES 38,242 29,157
Long-term debt 33,579 33,957
Deferred income taxes (Note 3) 3,305 4,395
Deferred pension liability 800 800
Stockholders' Equity:
Common stock 518 518
Other stockholders' equity 57,263 60,182
-------- --------
TOTAL STOCKHOLDERS' EQUITY 57,781 60,700
-------- --------
$133,707 $129,009
======== ========
<FN>
*The Balance Sheet at February 28, 1993 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 39 weeks ended
November 28, November 29, November 28, November 29,
1993 1992 1993 1992
(As Restated (As Restated
- Note 4) - Note 4)
<S> <C> <C> <C> <C>
Net sales $54,063 $43,801 $150,610 $131,070
-------- -------- --------- ---------
Costs and expenses:
Cost of sales 43,685 37,530 123,299 111,821
Selling, general and
administrative 6,591 5,655 19,065 16,750
-------- -------- --------- ---------
Total costs and expenses 50,276 43,185 142,364 128,571
-------- -------- --------- ---------
Operating profit 3,787 616 8,246 2,499
-------- -------- --------- ---------
Other income (expense):
Interest expense (606) (552) (1,846) (1,865)
Other income, net 225 268 786 1,526
-------- -------- --------- ---------
Total other income (expense) (381) (284) (1,060) (339)
-------- -------- -------- --------
Earnings before income tax
provision 3,406 332 7,186 2,160
Income tax provision 1,229 100 2,529 583
-------- -------- -------- --------
NET EARNINGS $ 2,177 $ 232 $ 4,657 $ 1,577
======== ======== ======== ========
Net earnings per common share:
Primary $ .55 $ .05 $ 1.17 $ .35
Fully Diluted $ .45 $ .05 $ 1.03 $ .35
Dividends per common share $ .08 $ .08 $ .24 $ .24
Weighted average number of
common shares outstanding:
Primary 3,983 4,542 3,989 4,531
Fully Diluted 5,728 4,542 5,727 4,531
</TABLE>
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<PAGE> 5
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
<CAPTION>
39 weeks ended
November 28, November 29,
1993 1992
(As Restated)
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES: $ 15,699 $ 6,937
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment, net (5,462) (8,080)
Purchases of marketable securities (172,713) (224,639)
Proceeds from sales of marketable
securities 174,547 226,796
Acquisition, net of cash acquired - 13
--------- ---------
Net cash used in investing activities (3,628) (5,910)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of borrowings 491 -
Repayment of bank loans - (1,177)
Repayments of long-term borrowing (12) (115)
Dividends paid (956) (1,087)
Purchase of treasury stock (6,566) -
Proceeds from exercise of stock options - 125
--------- ---------
Net cash used in financing activities (7,043) (2,254)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS BEFORE EXCHANGE RATE CHANGES 5,028 (1,227)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 33 (113)
--------- --------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,061 (1,340)
CASH AND CASH EQUIVALENTS BEGINNING OF
PERIOD 9,006 7,927
--------- ---------
CASH AND CASH EQUIVALENTS END OF PERIOD $ 14,067 $ 6,587
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,217 $ 1,303
Income taxes $ 1,984 $ 1,061
</TABLE>
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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 November 28,
1993, the consolidated statements of earnings for the 13 weeks
and 39 weeks ended November 28, 1993 and November 29, 1992, and
the consolidated statements of cash flows for the 39 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 November 28, 1993, 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. 1 to its Annual Report on
Form 10-K for the fiscal year ended February 28, 1993.
2. INVENTORIES
Inventories consist of the following:
(in thousands)
November 28, February 28,
1993 1993
(As Restated)
Raw materials $ 5,947 $ 4,580
Work-in-process 3,402 2,331
Finished goods 7,005 6,835
Manufacturing supplies 408 487
------- -------
$16,762 $14,233
======= =======
3. INCOME TAXES
Effective March 1, 1993, the Company adopted SFAS No. 109, "Accounting
for Income Taxes", which requires increased recording of deferred
income tax assets. As a result, the Company recorded additional
deferred income tax assets, included in other assets, of $30,000,
after a valuation allowance of $961,000. The cumulative effect of the
accounting change is not material to the results of operations of the
Company.
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<PAGE> 7
4. RESTATEMENTS
On September 20, 1993, the Company announced that its internal
accounting staff had recently uncovered financial and accounting
errors and irregularities at FiberCote Industries, Inc. ("FiberCote"),
its 80% owned advanced composites subsidiary. On the basis of the
Company's investigation, the Company determined to restate the
previously reported results for certain prior periods in order to
reverse the effect of these financial and accounting irregularities
and errors. These reversals primarily involved the write-off of the
improperly recorded receivables and the recognition of previously
unrecorded liabilities at FiberCote. The results for the following
prior periods ended November 29, 1992 have been restated to reverse
the overstatements of net earnings in those periods in the following
amounts:
<TABLE>
<CAPTION>
13 weeks ended 39 weeks ended
November 29, 1992 November 29, 1992
<S> <C> <C>
Earnings before income taxes, as
previously reported $ 541,000 $2,525,000
Adjustments (209,000) (365,000)
----------- -----------
Earnings before income taxes, as
restated $ 332,000 $2,160,000
=========== ===========
Net earnings, as previously reported $ 370,000 $1,818,000
Adjustments (138,000) (241,000)
----------- -----------
Net earnings, as restated $ 232,000 $1,577,000
=========== ===========
Earnings per common share -
Primary and fully diluted,
as previously reported $ 0.08 $ 0.40
Adjustments (0.03) (0.05)
----------- -----------
Primary and fully diluted,
as restated $ 0.05 $ 0.35
=========== ===========
</TABLE>
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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 third quarter ended
November 28, 1993, sales increased 23% to $54,063,000 from
$43,801,000 during last year's third quarter. Sales for the nine
month period ended November 28, 1993 increased 15% to $150,610,000
from $131,070,000 for last fiscal year's comparable period.
Operating profits increased 515% to $3,787,000 for the current
fiscal year's third quarter from $616,000 for last year's third
quarter. During the nine month period ended November 28, 1993,
operating profit increased 230% to $8,246,000 from $2,499,000 during
last fiscal year's comparable period. During the current fiscal
year's third quarter, the Company continued its emphasis on its
electronics segment, which accounted for $47,764,000 in sales or 88%
of the Company's total sales worldwide. The Company's foreign
operations, which are dedicated almost exclusively to the
electronics segment, accounted for $11,927,000 in sales or 22% of
total sales worldwide during this quarter. Foreign sales during
this fiscal year's third quarter increased 4% from last year's third
quarter's foreign sales of $11,476,000. Fiscal third quarter sales
of the plumbing hardware segment decreased by 2% to $4,310,000 from
$4,399,000 during last year's third quarter. Fiscal third quarter
sales in the industrial components segment were $1,989,000, as
compared to $2,257,000 during last year's third quarter.
The gross margin percentage for the Company's worldwide
operations was 19.2% during the current fiscal year's third quarter,
as compared to last year's third quarter gross margin percentage of
14.3%. The gross margin percentage for the current fiscal year's
first nine months was 18.1%, as compared to 14.7% for last fiscal
year's comparable period.
The improved results for the third quarter were predominantly
due to the performance of the Company's United States based
electronics operations described below.
During the third quarter of the current fiscal year the
performance of the electronics segment continued to improve,
principally as the result of improvements in the Company's United
States based electronics operations. However, this improvement was
more attributable to increased sales volumes and enhanced operating
and manufacturing efficiencies, rather than to improved pricing.
Pricing pressure has not yet abated, even in the United States
markets. The extreme weakness in the European printed circuit
manufacturing industry persisted during the third quarter of the
current fiscal year, and there was no relief during the quarter for
the Company's European electronics operations. The Company's Far
East based electronics operation, which serves the printed circuit
markets in that region, was somewhat disappointing during the third
quarter.
The Company's plumbing hardware segment continued to struggle
during the quarter. A sustained recovery in domestic housing
starts, and particularly multi-family housing starts, is expected to
have a favorable impact on the plumbing hardware segment. This
segment's performance should improve on this basis during the fourth
quarter and into next year.
-8-
<PAGE> 9
The Company's industrial components segment consists
principally of its advanced composite and industrial adhesive tape
businesses. The advanced composite business continues to suffer as
the result of slow-downs and cut-backs in the military and aerospace
markets it serves. The industrial adhesive tape business performed
reasonably well during the third quarter.
Selling, general and administrative expenses, measured as a
percentage of sales, were 12.2% during the current fiscal year's
third quarter, as compared to 12.9% during the prior fiscal year's
third quarter. Selling, general and administrative expenses were
12.7% during the current fiscal year's first nine month period, as
compared to 12.8% during the last fiscal year's comparable period.
Interest expense for the current fiscal year's third quarter
was $606,000, as compared to $552,000 during the prior fiscal year's
third quarter. During the nine month period ended November 28,
1993, interest expense was $1,846,000, as compared to $1,865,000
during last year's comparable period. These expenses represent 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, principally
investment income, decreased 16% to $225,000 for the current fiscal
year's third quarter from $268,000 for the prior fiscal year's third
quarter. Other income during the nine months ended November 28,
1993 decreased by 48% to $786,000 from $1,526,000 during last year's
comparable period. The reduction in other income is attributable to
the inclusion of a $359,000 gain in the prior fiscal year's nine
month period ended November 29, 1992 derived from foreign currency
transactions, and to the fact that market rates of interest were
lower on the Company's investments during the current period. The
Company's cash reserves continued to be invested primarily in short
term taxable instruments and government securities.
The Company's effective income tax rate for the fiscal nine
month's ended November 28, 1993 was 35%, as compared to 27% during
the same period last year. The increase in effective tax rate was
predominantly due to the loss of certain foreign tax benefits which
were available to the Company during last year's comparable period.
During the current fiscal year's third quarter, the Company's
net earnings increased to $2,177,000 from $232,000 during the prior
fiscal year's third quarter. Primary and fully diluted earnings per
share increased to $.55 and $.45 respectively for the current year's
third quarter from the prior year's third quarter primary and fully
diluted earnings per share of $.05. During the nine month period
ended November 28, 1993, the Company's net earnings increased to
$4,657,000 from $1,577,000 during last fiscal year's first nine
months. Primary and fully diluted earnings per share increased to
$1.17 and $1.03 respectively for the current fiscal year's first
nine months from primary and fully diluted earnings per share of
$.35 during last fiscal year's first nine months. This increase in
earnings was primarily attributable to the increase in the operating
profit of the U.S. based electronics businesses.
-9-
<PAGE> 10
Liquidity and Capital Resources
At November 28, 1993, the Company's cash and temporary
investments amounted to $36,062,000, as compared to $32,768,000 at
February 28, 1993, the end of the Company's last fiscal year. The
increase in the Company's cash and investment position was
principally attributable to cash generated from operations. The
Company's working capital position was $42,603,000 at November 28,
1993 as compared to $45,811,000 at February 28, 1993. The Company's
current ratio, or the ratio of current assets to current
liabilities, was 2.1 to 1 at November 28, 1993, as compared to 2.6
to 1 at February 28, 1993.
During the current fiscal year's first nine months, the
Company generated $15,699,000 of funds from operations and expended
$6,566,000 for the purchase of treasury stock and $5,462,000 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
November 28, 1993.
Item 4. Submission of Matters to a Vote of Security Holders.
At the annual meeting of shareholders held on July
14, 1993:
(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 3,694,468 29,860
Lloyd Frank 3,691,085 33,243
Norman M. Schneider 3,694,069 30,259
Brian E. Shore 3,699,056 25,272
Jerry Shore 3,696,130 28,198
E. Philip Smoot 3,697,491 26,837
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
No. 11: Computation of Fully Diluted Earnings
Per Common Share.
(b) During the fiscal quarter ended November 28,
1993, the Company filed a current report on Form
8-K dated September 20, 1993.
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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: January 11, 1994 /s/Jerry Shore
---------------- -------------------------
Jerry Shore
Chairman of the Board and
President
Date: January 11, 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 November 28, 1993
Exhibit No. Name Page
11 Computation of fully diluted 14
earnings per common share
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<PAGE> 14
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 39 weeks ended
November 28, 1993 November 28,1993
<S> <C> <C>
ADJUSTMENT OF NET EARNINGS:
Net earnings before adjustment $2,177 $4,657
Adjustments resulting from assumed conversion
of 7 1/4% convertible subordinated debentures:
Reduction of interest expenses and
amortization of deferred debt financing
costs 620 1,861
Related tax effect of above (211) (633)
------- -------
Net earnings as adjusted $2,586 $5,885
======= =======
ADJUSTMENT OF WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Weighted average number of common shares
outstanding 3,983 3,989
Additional shares assuming conversion of:
Convertible Subordinated Debentures 1,613 1,613
Stock Options 132 125
------- -------
Adjusted weighted average number of common
shares outstanding during the period 5,728 5,727
======= =======
Earnings per share fully diluted $ .45 $ 1.03
======= =======
</TABLE>
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