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 27, 2000
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: 10,515,992 as of October 6,
2000.
<PAGE> 2
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Number
------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
August 27, 2000 (Unaudited) and
February 27, 2000 ................................. 4
Consolidated Statements of Earnings
13 weeks and 26 weeks ended August 27, 2000 and
August 29, 1999 (Unaudited)........................ 5
Condensed Consolidated Statements of Cash Flows
26 weeks ended August 27, 2000 and
August 29, 1999 (Unaudited)........................ 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) ............................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ........................................ 10
Factors That May Affect Future Results....................... 13
Item 3.Quantitative and Qualitative Disclosures About Market
Risk............................................... 13
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings .................................. 15
Item 4. Submission of Matters to a Vote of
Security Holders.................................... 15
Item 6. Exhibits and Reports on Form 8-K ................... 15
SIGNATURES .................................................... 16
EXHIBIT INDEX................................................... 17
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<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The Company's Financial Statements begin on the next page.
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<PAGE> 4
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
August 27, February 27,
2000 2000
----------- ------------
<S> <C> <C>
ASSETS (Unaudited) *
Current assets:
Cash and cash equivalents $ 45,040 $ 53,153
Marketable securities 99,807 78,309
Accounts receivable, net 75,904 68,335
Inventories (Note 2) 32,112 27,368
Prepaid expenses and other current assets 8,461 9,614
-------- --------
Total current assets 261,324 236,779
Property, plant and equipment, net 135,529 125,977
Other assets 3,313 2,496
-------- --------
$400,166 $365,252
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,514 $ 24,964
Accrued liabilities 36,778 28,973
Income taxes payable 8,454 6,729
-------- --------
Total current liabilities 79,746 60,666
Long-term debt 100,000 100,000
Deferred income taxes 12,879 11,933
Deferred pension and other liabilities 12,719 13,535
Stockholders' equity:
Common stock 1,358 1,358
Additional paid-in capital 54,989 54,794
Retained earnings 176,115 157,308
Treasury stock, at cost (28,799) (29,051)
Accumulated other non-owner changes (Note 5) (8,841) (5,291)
--------- ---------
Total stockholders' equity 194,822 179,118
--------- ---------
$400,166 $365,252
========= =========
<FN>
*The balance sheet at February 27, 2000 has been derived from the audited
financial statements at that date.
</TABLE>
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<PAGE> 5
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited--in thousands, except per share amounts)
<CAPTION>
13 Weeks Ended 26 Weeks Ended
------------------------ ------------------------
August 27, August 29, August 27, August 29,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $129,902 $107,729 $250,061 $212,183
Cost of sales 101,509 88,311 197,973 173,735
--------- --------- --------- ---------
Gross profit 28,393 19,418 52,088 38,448
Selling, general and
administrative expenses 12,572 11,460 24,499 23,125
--------- -------- --------- ---------
Profit from operations 15,821 7,958 27,589 15,323
--------- -------- --------- ---------
Other income (expense):
Interest and other
income, net 2,055 1,502 3,864 3,132
Interest expense (1,402) (1,397) (2,804) (2,795)
--------- -------- --------- ---------
Total other income 653 105 1,060 337
--------- -------- --------- ---------
Earnings before income taxes 16,474 8,063 28,649 15,660
Income tax provision 4,819 2,016 8,165 3,915
--------- -------- --------- ---------
Net earnings $ 11,655 $ 6,047 $ 20,484 $ 11,745
========= ========= ========= =========
Earnings per share (Note 3):
Basic $ 1.10 $ .58 $ 1.94 $ 1.12
Diluted $ .95 $ .53 $ 1.69 $ 1.04
Weighted average number of
common and common equivalent
shares outstanding:
Basic 10,588 10,489 10,580 10,459
Diluted 13,293 13,096 13,181 13,034
Dividends per share $ .08 $ .08 $ .16 $ .16
</TABLE>
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<PAGE> 6
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited--in thousands)
<CAPTION>
26 Weeks Ended
------------------------
August 27, August 29,
2000 1999
---------- -----------
<S> <C> <C>
Net cash provided by operating activities $34,952 $ 8,760
-------- --------
Cash flows from investing activities:
Purchases of property, plant and
equipment, net (19,702) (12,267)
Purchases of marketable securities (67,659) (97,620)
Proceeds from sales/maturities of marketable
securities 47,036 101,023
-------- --------
Net cash used in investing
activities (40,325) (8,864)
-------- --------
Cash flows from financing activities:
Dividends paid (1,676) (1,653)
Proceeds from exercise of stock options 447 2,103
-------- --------
Net cash (used in) provided by financing
activities (1,229) 450
-------- --------
(Decrease) increase in cash and cash equivalents
before effect of exchange rate changes (6,602) 346
Effect of exchange rate changes on cash
and cash equivalents (1,511) (423)
-------- --------
Decrease in cash and cash equivalents (8,113) (77)
Cash and cash equivalents, beginning of period 53,153 36,682
-------- --------
Cash and cash equivalents, end of period $45,040 $36,605
======== ========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 2,750 $ 2,750
Income taxes $ 3,739 $ 2,707
</TABLE>
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<PAGE> 7
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 27, 2000, the
consolidated statements of earnings for the 13 weeks and 26 weeks ended
August 27, 2000 and August 29, 1999, and the condensed 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 27, 2000, 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 consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year
ended February 27, 2000.
<TABLE>
2. INVENTORIES
Inventories consist of the following:
<CAPTION> (In thousands)
August 27, February 27,
2000 2000
---------- ------------
<S> <C> <C>
Raw materials $12,876 $10,870
Work-in-process 6,766 5,249
Finished goods 11,215 10,323
Manufacturing supplies 1,255 926
------- -------
$32,112 $27,368
</TABLE> ======= =======
<TABLE>
3. EARNINGS PER SHARE
The following table sets forth the calculation of basic and diluted
earnings per share for the periods specified (in thousands, except per
share amounts):
<CAPTION> 13 weeks ended 26 weeks ended
-------------- --------------
August 27, August 29, August 27, August 29,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income for basic EPS $11,655 $ 6,047 $20,484 $11,745
Add interest on 5.5% convertible
subordinated notes, net of taxes 911 908 1,823 1,816
------- ------- ------- -------
Net income for diluted EPS $12,566 $ 6,955 $22,307 $13,561
======= ======= ======= =======
Weighted average common shares
outstanding for basic EPS 10,588 10,489 10,580 10,459
Net effect of dilutive options 335 237 231 205
Assumed conversion of 5.5%
convertible subordinated notes 2,370 2,370 2,370 2,370
------- ------- ------- -------
Weighted average shares
outstanding for diluted EPS 13,293
======= ======= ======= =======
EPS-basic $ 1.10 $ .58 $ 1.94 $ 1.12
EPS-diluted $ .95 $ .53 $ 1.69 $ 1.04
<FN>
</TABLE>
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<PAGE> 8
4. BUSINESS SEGMENTS
Park Electrochemical Corp. ("Park"), through its subsidiaries
(collectively, the "Company"), is a leading global designer and
producer of advanced electronic materials used to fabricate complex
multilayer printed circuit boards, semiconductor packages and other
electronic interconnect systems. The Company's multilayer printed
circuit board materials include copper-clad laminates, prepregs and
semi-finished multilayer printed circuit board panels. Multilayer
printed circuit boards and interconnect systems are used in virtually
all advanced electronic equipment to direct, sequence and control
electronic signals between semiconductor devices and passive
components. The Company also designs and manufactures specialty
adhesive tapes, advanced composite materials and microwave circuitry
materials for the electronics, aerospace and industrial markets.
During the first half of the 2001 fiscal year, the Company closed and
liquidated its plumbing hardware business.
Financial information concerning the Company's business segments
follows (in thousands):
<TABLE>
<CAPTION>
13 weeks ended 26 weeks ended
-------------- --------------
August 27, August 29, August 27, August 29,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues
Electronic materials $123,868 $ 98,516 $236,499 $194,153
Engineered materials 6,034 9,213 13,562 18,030
--------- --------- --------- ---------
Net sales $129,902 $107,729 $250,061 $212,183
========= ========= ========= =========
Profit/(Loss)
Electronic materials $ 18,544 $ 8,915 $ 31,911 $ 17,445
Engineered materials 694 504 910 1,201
General corporate expense (3,417) (1,461) (5,232) (3,324)
Interest and other income, net 2,055 1,502 3,864 3,132
Interest expense (1,402) (1,397) (2,804) (2,794)
--------- --------- --------- ---------
Earnings before income taxes $ 16,474 $ 8,063 $ 28,649 $ 15,660
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
August 27, February 27,
2000 2000
---------- ------------
<S> <C> <C>
Assets
Electronic materials $291,001 $253,015
Engineered materials 9,077 10,147
Corporate(1) 100,088 102,090
--------- ---------
Total assets $400,166 $365,252
========= =========
<FN>
(1) Corporate assets consist primarily of cash, cash equivalents and marketable
securities.
</TABLE>
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<PAGE> 9
5. COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130 - "Reporting
Comprehensive Income" (SFAS No. 130), establishes standards for reporting
changes in equity from non-owner sources in the financial statements.
Total non-owner changes in stockholders' equity for the 13 weeks ended
August 27, 2000 and August 29, 1999 were $10,579,000 and $5,594,000,
respectively. Total non-owner changes for the 26 weeks ended August 27,
2000 and August 29, 1999 were $16,934,000 and $10,244,000, respectively.
Comprehensive income consists primarily of net income and foreign
currency translation adjustments.
6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 (SFA 133), "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 establishes
standards for the recognition and measurement of derivatives and hedging
activities and requires all derivative instruments to be recorded on the
balance sheet at fair value. This statement is effective for fiscal years
beginning after June 15, 2000. The Company's policy is to enter into
forward foreign currency contracts only to hedge specific transactions
in order to reduce exposure to foreign exchange risks. The Company
believes the adoption of these standards will not have a material adverse
effect on the Company's consolidated results of operation or financial
position.
-9-
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Park is a leading global designer and producer of advanced
electronic materials used to fabricate complex multilayer printed circuit
boards, semiconductor packages and other electronic interconnect systems.
Park's electronic materials business is operated under the "Nelco" name.
The Company's customers for its advanced printed circuit materials include
leading independent printed circuit board fabricators, contract
manufacturers and large electronic equipment manufacturers in the computer,
telecommunications, transportation, aerospace and instrumentation indus-
tries.
The Company's electronic materials operations accounted for
approximately 92% and 90%, respectively, of net sales worldwide in the last
two fiscal years, approximately 95% in the three-month and six-month periods
ended August 27, 2000 and approximately 91% and 92% in the three-month
period and six-month period, respectively, ended August 29, 1999. The
Company's foreign electronic materials operations accounted for
approximately 37% and 39%, respectively, of net sales worldwide in the 2000
and 1999 fiscal years, approximately 40% in the three-month and six-month
periods ended August 27, 2000 and approximately 35% and 36% in the three-
month period and six-month period, respectively, ended August 29, 1999.
Park is also engaged in the engineered materials business, which
consists of the Company's specialty adhesive tape and film business and its
advanced composite materials business, both of which operate as independent
business units. In addition, Park operated a plumbing hardware business,
which it closed and liquidated in the 2001 fiscal year first half. The
Company's engineered materials and plumbing hardware businesses accounted
for approximately 8% and 10%, respectively, of the Company's total net sales
worldwide in the last two fiscal years, approximately 5% in the three-month
and six-month periods ended August 27, 2000 and approximately 9% and 8% in
the three-month period and six-month period, respectively, ended August 29,
1999.
The Company's sales continued to grow in the three-month and
six-month periods ended August 27, 2000, as a result of strong growth in
sales by the Company's electronic materials operations in North America,
Europe and Asia. The earnings growth that the Company achieved during its
2000 fiscal year continued in the 2001 fiscal year first and second
quarters. This continued growth was primarily a result of strong
performances by the Company's electronic materials operations. The Company's
ongoing efforts to expand its higher technology, higher margin product lines
have also been significant factors in the growth of the Company's sales of
electronic materials and in the growth of its earnings.
Growth of the Company's electronic materials business was constrained
during the last fiscal year and the three-month and six-month periods ended
August 27, 2000 by the Company's available manufacturing capacity. The
Company has been expanding the manufacturing capacity of its electronic
materials facilities in recent years. During the 2000 fiscal year, the
Company completed expansions of its electronic materials operations in
Singapore and France, acquired additional manufacturing capacity in
California in the second quarter, and commenced significant additional
expansions of its electronic materials operations in California and New
York. During the 2001 fiscal year second quarter, the Company commenced a
significant expansion of its higher technology product line manufacturing
facility in Arizona, which the Company expects to complete during the first
half of the Company's next fiscal year.
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<PAGE> 11
Three and Six Months Ended August 27, 2000 Compared with Three and Six
Months Ended August 29, 1999:
The Company's electronic materials business was responsible for
the improvement in the Company's results of operations for the three-month
and six-month periods ended August 27, 2000. The strengthening of the
Company's printed circuit materials businesses during the 2000 fiscal year
continued in the 2001 fiscal year first and second quarters.
The Company's results of operations and margins improved in the
2001 fiscal year first and second quarters principally as a result of the
electronic materials business' maximizing the utilization of its
manufacturing resources and increasing its sales of higher technology,
higher margin products.
Operating results of the Company's engineered materials
businesses also improved during the three-month and six-month periods ended
August 27, 2000 due to improved results achieved by the advanced composite
materials business. The operating loss of the plumbing hardware business,
which had been part of the Company's engineered materials and plumbing
hardware business segment but which the Company closed and liquidated in the
2001 fiscal year first half, negatively affected the Company's operating
results for the three-month and six-month periods ended August 27, 2000.
Results of Operations
Sales for the three-month and six-month periods ended August 27,
2000 increased 21% to $129.9 million and 18% to $250.1 million,
respectively, from $107.7 million and $212.2 million for last fiscal year's
comparable periods. Sales of the electronic materials business for the
three-month and six-month periods ended August 27, 2000 were $123.9 million
and $236.5 million, respectively, or approximately 95% of total sales
worldwide, compared with $98.5 million and $194.2 million, respectively, or
approximately 91% and 92%, respectively, of total sales worldwide for last
fiscal year's comparable periods. The increases in sales of electronic
materials were principally the result of higher volumes of electronic
materials shipped and increases in sales of higher technology products.
Sales of the engineered materials businesses for the three-month and six-
month periods ended August 27, 2000 were $6.0 million and $13.6 million,
respectively, compared with $9.2 million and $18.0 million, respectively,
for last fiscal year's comparable periods. These decreases in sales were
the result of significantly reduced sales of plumbing hardware products as
the Company closed and liquidated its plumbing hardware business during the
2001 fiscal year first half.
The Company's foreign electronic materials operations accounted
for $51.4 million and $99.1 million, respectively, of sales, or 40% of the
Company's total sales worldwide, during the three-month and six-month
periods ended August 27, 2000 compared with $37.6 million and $75.7 million,
respectively, of sales, or 35% and 36% of total sales worldwide, during last
fiscal year's comparable periods. Both the Asian and the European
operations of the Company achieved significant increases in sales.
The gross margins for the Company's worldwide operations were
21.9% and 20.8%, respectively, during the three-month and six-month periods
ended August 27, 2000 compared with 18.0% and 18.1%, respectively, for last
fiscal year's comparable periods. The improvements in the gross margins
were attributable to the increases in sales volumes over last fiscal year's
comparable periods, the continuing growth in sales of higher technology,
higher margin products and efficiencies resulting from operating the
Company's electronic materials facilities at their designed capacity levels.
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<PAGE> 12
Selling, general and administrative expenses, measured as a
percentage of sales, were 9.7% and 9.8% during the three-month period and
six-month period, respectively, ended August 27, 2000 compared with 10.6%
and 10.9%, respectively, during last fiscal year's comparable periods. The
declines resulted from proportionately greater sales compared to the
comparable periods during the last fiscal year.
For the reasons set forth above, profit from operations for the
three-month period ended August 27, 2000 increased 98% to $15.8 million from
$8.0 million for last fiscal year's comparable period, and profit from
operations for the six-month period ended August 27, 2000 increased 80% to
$27.6 million from $15.3 million for last fiscal year's comparable period.
Interest and other income, principally investment income, was
$2.1 million and $3.9 million, respectively, for the three-month and six-
month periods ended August 27, 2000 compared with $1.5 million and $3.1
million, respectively, for last fiscal year's comparable periods. The
increases in investment income were attributable to an increase in cash
available for investment and an increase in prevailing interest rates. The
Company's investments were primarily short-term taxable instruments and
government securities. Interest expense for the three-month and six-month
periods ended August 27, 2000 was $1.4 million and $2.8 million,
respectively, compared with approximately the same amounts during last
fiscal year's comparable periods. The Company's interest expense is related
primarily to its $100 million principal amount of 5.5% Convertible
Subordinated Notes due 2006 (the "Notes") issued in February 1996.
The Company's effective income tax rate for the three-month
period ended August 27, 2000 was 29.3% compared with 25.0% for the three-
month period ended August 29, 1999, and the Company's effective income tax
rate for the six-month period ended August 27, 2000 was 28.5% compared with
25.0% for last fiscal year's comparable period. The increases in the
effective tax rates were primarily the result of a change in the Company's
income mix among the tax jurisdictions in which the Company does business.
Net earnings for the three-month and six-month periods ended
August 27, 2000 increased to $11.7 million and $20.5 million, respectively,
from $6.0 million and $11.7 million, respectively, for last fiscal year's
comparable periods. Basic and diluted earnings per share increased to $1.10
and $0.95, respectively, for the three-month period ended August 27, 2000
from $0.58 and $0.53, respectively, for last fiscal year's comparable
period, and basic and diluted earnings per share increased to $1.94 and
$1.69, respectively, for the six-month period ended August 27, 2000 from
$1.12 and $1.04, respectively, for last fiscal year's comparable period.
These increases in net earnings and earnings per share were attributable to
the Company's significantly improved operating results.
Liquidity and Capital Resources:
At August 27, 2000, the Company's cash and temporary investments
were $144.8 million compared with $131.5 million at February 27, 2000, the
end of the Company's 2000 fiscal year. The increase in the Company's cash
and investment position at August 27, 2000 was attributable to cash provided
from operating activities in excess of investments in property, plant and
equipment, as discussed below. The Company's working capital was $181.6
million at August 27, 2000 compared with $176.1 million at February 27,
2000. The increase at August 27, 2000 compared with February 27, 2000 was
due principally to higher cash and temporary investments, accounts
receivable and inventories, offset in part by higher accounts payable and
accrued liabilties. The Company's current ratio (the ratio of current assets
to current liabilities) was 3.3 to 1 at August 27, 2000 and 3.9 to 1 at
February 27, 2000.
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<PAGE> 13
During the six-months ended August 27, 2000, cash provided by
net earnings before depreciation and amortization of $28.7 million was
increased by a net reduction in working capital items, resulting in $35.0
million of cash from operating activities. During the same six-months
period, the Company expended $19.7 million for the purchase of property,
plant and equipment. Net expenditures for property, plant and equipment were
$27.7 million in the 2000 fiscal year. In the 2000 fiscal year second
quarter, the Company announced large expansion programs relating to its
electronic materials operations in New York and California, which it expects
to complete in the 2001 fiscal year fourth quarter, and the Company
completed an expansion of its electronic materials operations in Asia during
the 2000 fiscal year. During the 2001 fiscal year second quarter, the
Company commenced a significant expansion of its higher technology product
line manufacturing facility in Arizona, which the Company expects to
complete during the first half of the next fiscal year.
At August 27, 2000, the Company's only long-term debt was the
Notes. 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,
including the proceeds from the Notes, would also be available for
appropriate acquisitions and other expansions of the Company's business.
Environmental Matters:
In the six-month periods ended August 27, 2000 and August 29,
1999, 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 cash flow from operations. 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 27, 2000 and February 27, 2000, the recorded
liability in accrued liabilities for environmental matters was $4.4 million.
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.
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, and the various factors set
forth under the caption "Factors That May Affect Future Results" after Item
7 of the Company's Annual Report on Form 10-K for the fiscal year ended
February 27, 2000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risks for changes in foreign
currency exchange rates and interest rates. The Company's primary foreign
currency exchange exposure relates to the translation of the financial
statements of foreign subsidiaries using currencies other than the U.S.
dollar as their functional currency. The Company does not believe that a
10% fluctuation in foreign exchange rates would have had a material impact
on its consolidated results of operations or financial position. The
exposure to market risks for changes in interest rates relates to the
Company's short-term investment portfolio. This investment portfolio is
-13-
<PAGE> 14
managed by outside professional managers in accordance with guidelines
issued by the Company. These guidelines are designed to establish a high
quality fixed income portfolio of government and highly rated corporate debt
securities with a maximum weighted average maturity of less than one year.
The Company does not use derivative financial instruments in its investment
portfolio. Based on the average maturity of the investment portfolio at the
end of the 2000 fiscal year and at August 27, 2000, a 10% increase in short
term interest rates would not have had a material impact on the consolidated
results of operations or financial position of the Company.
-14-
<PAGE> 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In May 1998, the Company and its Nelco 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 alleges, among
other things, that Delco breached its contract to purchase semi-finished
multilayer printed circuit boards from Nelco and that Delphi interfered with
Nelco's contract with Delco and seeks compensatory damages of not less than
$70 million and substantial punitive damages.
The Company 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.
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 and are
expected to be nil in future periods. 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 in 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 12, 2000:
(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 8,137,584 1,118,113
Anthony Chiesa 8,099,975 1,155,722
Lloyd Frank 8,099,227 1,156,470
Ronald F. Ostrow 8,134,891 1,120,806
Brian E. Shore 8,108,735 1,146,962
Jerry Shore 8,108,253 1,147,444
(b) amendments to the Company's 1992 Stock Option Plan were approved
by the Shareholders to increase the aggregate number of shares of Common
Stock of the Company authorized for issuance under such Plan by 300,000
shares. There were 6,830,971 votes for these amendments, 2,250,970 votes
against, and 173,833 abstentions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number
27.01 Financial data schedule
(b) No reports on Form 8-K have been filed during the fiscal quarter
ended August 27, 2000.
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<PAGE> 16
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 9, 2000 /s/ Brian E. Shore
---------------- ---------------------------
Brian E. Shore
President and
Chief Executive Officer
Date: October 10, 2000 /s/ Murray O. Stamer
---------------- ---------------------------
Murray O. Stamer
Treasurer and
Chief Accounting Officer
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<PAGE> 17
EXHIBIT INDEX
Exhibit No. Name Page
27.01 Financial Data Schedule (Filed
only by electronic transmission
with EDGAR filing with the
Securities and Exchange Commission).......... -
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