UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 28, 2005 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 Oganization) Identification No.) 48 South Service Road, Melville, N.Y. 11747 ------------------------------------- ----------- (Address of Principal Executive Offices) (Zip Code) (631) 465-3600 -------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable --------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes[X] No[ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes[X] No[ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes[ ] No[X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 20,104,137 as of October 4, 2005. PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION: Number ----- Item 1. Financial Statements Condensed Consolidated Balance Sheets August 28, 2005 (Unaudited) and February 27, 2005...... 3 Consolidated Statements of Earnings 13 weeks and 26 weeks ended August 28, 2005 and August 29, 2004 (Unaudited)............................ 4 Consolidated Statements of Stockholders' Equity 13 weeks and 26 weeks ended August 28, 2005 and August 29, 2004 (Unaudited)............................ 5 Condensed Consolidated Statements of Cash Flows 26 weeks ended August 28, 2005 and August 29, 2004 (Unaudited) ........................................... 6 Notes to Condensed Consolidated Financial Statements (Unaudited)............................................ 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 13 Factors That May Affect Future Results................. 22 Item 3. Quantitive and Qualitative Disclosures About Market Risk................................................... 22 Item 4. Controls and Procedures................................ 22 PART II. OTHER INFORMATION: Item 1. Legal Proceedings...................................... 24 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds............................................... 24 Item 3. Defaults Upon Senior Securities........................ 24 Item 4. Submission of Matters to a Vote of Security Holders.... 24 Item 5. Other Information...................................... 25 Item 6. Exhibits............................................... 25 SIGNATURES.......................................................... 26 EXHIBIT INDEX....................................................... 27 PART I. FINANCIAL INFORMATION ----------------------------- Item 1. Financial Statements. - ------ --------------------- PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) <TABLE> <CAPTION> August 28, 2005 February 27, (Unaudited) 2005* ----------- ------------- <s> <c> <c> ASSETS Current assets: Cash and cash equivalents $77,990 $86,071 Marketable securities 121,911 103,507 Accounts receivable, net 32,260 35,722 Inventories (Note 2) 14,550 15,418 Prepaid expenses and other current assets 5,586 2,944 -------- -------- Total current assets 252,297 243,662 Property, plant and equipment, net 59,554 63,251 Other assets 344 398 -------- -------- Total assets $312,195 $307,311 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 11,238 $ 15,121 Accrued liabilities 18,821 20,566 Income taxes payable 6,709 6,474 -------- -------- Total current liabilities 36,768 42,161 Deferred income taxes 6,156 5,042 Liabilities from discontinued operations (Note 4) 17,251 17,251 -------- -------- Total liabilities 60,175 64,454 Stockholders' equity: Common stock 2,037 2,037 Additional paid-in capital 136,087 134,206 Retained earnings 113,642 105,450 Treasury stock, at cost (2,204) (3,441) Accumulated other non-owner changes 2,458 4,605 -------- -------- Total stockholders' equity 252,020 242,857 -------- -------- Total liabilities and stockholders'equity $312,195 $307,311 ======== ======== <FN> *The balance sheet at February 27, 2005 has been derived from the audited financial statements at that date. </TABLE> See accompanying Notes to the Condensed Consolidated Financial Statements. PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in thousands, except per share amounts) <TABLE> <CAPTION> 13 weeks ended 26 weeks ended (Unaudited) (Unaudited) --------------- ---------------- August 28, August 29, August 28, August 29, 2005 2004 2005 2004 --------- --------- --------- ---------- <s> <c> <c> <c> <c> Net sales $52,442 $51,098 $108,118 $109,616 Cost of sales 40,847 41,680 84,493 86,486 -------- -------- -------- -------- Gross profit 11,595 9,418 23,625 23,130 Selling, general and administrative expenses 5,953 6,521 12,222 14,862 Realignment and severance charges (Note 5) - - 1,059 - Profit from operations 5,642 2,897 10,344 8,268 Interest and other income 1,483 776 2,819 1,427 -------- -------- -------- -------- Earnings from operations before income taxes 7,125 3,673 13,163 9,695 Income tax provision 1,068 726 1,778 727 -------- -------- -------- -------- Net earnings $ 6,057 $ 2,947 $ 11,385 $ 8,968 ======== ======== ======== ======== Earnings per share (Note 6): Basic $ 0.30 $ .15 $ 0.57 $ 0.45 Diluted $ 0.30 $ .15 $ 0.57 $ 0.45 Weighted average number of common and common equivalent shares outstanding: Basic shares 20,032 19,885 19,989 19,847 Diluted shares 20,223 20,112 20,149 20,090 Dividends per share $ 0.08 $ 0.06 $ 0.16 $ 0.12 </TABLE> See accompanying Notes to the Condensed Consolidated Financial Statements. PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Amounts in thousands) <TABLE> <CAPTION> 13 weeks ended 26 weeks ended (Unaudited) (Unaudited) --------------- ---------------- August 28, August 29, August 28, August 29, 2005 2004 2005 2004 --------- --------- --------- ---------- <s> <c> <c> <c> <c> Common stock and paid-in capital Balance, beginning of period $136,621 $135,745 $136,243 $135,372 Stock option activity 1,503 164 1,881 537 -------- -------- -------- -------- Balance, end of period 138,124 135,909 138,124 135,909 -------- -------- -------- -------- Retained earnings Balance, beginning of period 109,184 113,749 105,450 108,915 Net income 6,057 2,947 11,385 8,968 Dividends (1,599) (1,194) (3,193) (2,381) -------- -------- -------- -------- Balance, end of period 113,642 115,502 113,642 115,502 -------- -------- -------- -------- Accumulated other non-owner changes Balance, beginning of period 3,326 3,547 4,605 3,734 Net unrealized investment gains (losses) (233) 342 (236) (246) Translation adjustments (635) (904) (1,911) (503) -------- -------- -------- -------- Balance, end of period 2,458 2,985 2,458 2,985 -------- -------- -------- -------- Treasury stock Balance, beginning of period (2,968) (3,693) (3,441) (4,125) Stock option activity 764 142 1,237 574 -------- -------- -------- -------- Balance, end of period (2,204) (3,551) (2,204) (3,551) -------- -------- -------- -------- Total stockholders' equity $252,020 $250,845 $252,020 $250,845 ========= ========= ========= ========= </TABLE> See accompanying Notes to the Condensed Consolidated Financial Statements. PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) <TABLE> <CAPTION> 26 Weeks Ended (Unaudited) ------------------ August 28, August 29, 2005 2004 ----------- ----------- <s> <c> <c> Cash flows from operating activities: Net earnings $ 11,385 $ 8,968 Depreciation and amortization 4,861 5,124 Change in operating assets and liabilities (1,984) (726) --------- --------- Net cash provided by operating activities 14,262 13,336 --------- --------- Cash flows from investing activities: Purchases of property, plant and equipment, net (1,967) (1,706) Purchases of marketable securities (24,670) (19,988) Proceeds from sales and maturities of marketable securities 6,000 18,416 --------- --------- Net cash used in investing activities (20,637) (3,278) --------- --------- Cash flows from financing activities: Dividends paid (3,193) (2,381) Proceeds from exercise of stock options 2,801 1,111 --------- --------- Net cash used in financing activities (392) (1,270) --------- --------- Change in cash and cash equivalents before exchange rate changes (6,767) 8,818 Effect of exchange rate changes on cash and cash equivalents (1,314) (8) --------- --------- Change in cash and cash equivalents (8,081) 8,810 Cash and cash equivalents, beginning of Period 86,071 129,989 --------- --------- Cash and cash equivalents, end of period $ 77,990 $138,799 ========= ========= Supplemental cash flow information: Cash paid (refunded) during the period for income taxes $ 2,131 $ (1,426) </TABLE> See accompanying Notes to the Condensed Consolidated Financial Statements. PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Amounts in thousands, except per share amounts) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated balance sheet as of August 28, 2005, the consolidated statements of earnings and the consolidated statements of stockholders' equity for the 13 weeks and 26 weeks ended August 28, 2005 and August 29, 2004, and the condensed consolidated statements of cash flows for the 26 weeks then ended have been prepared by the Company, without audit. In the opinion of management, these unaudited consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at August 28, 2005 and the results of operations, stockholders' equity and cash flows for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. It is suggested that these 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, 2005. <TABLE> 2. INVENTORIES Inventories consisted of the following: <CAPTION> August 28, February 27, 2005 2005 ----------- ----------- <s> <c> <c> Raw materials $ 6,168 $ 6,436 Work-in-process 3,393 3,577 Finished goods 4,628 5,068 Manufacturing supplies 361 337 $14,550 $15,418 </TABLE> 3. STOCK OPTIONS As of August 28, 2005, the Company had two fixed stock option plans. All options under the plans had exercise prices equal to the market value of the underlying common stock of the Company on the dates of grants. The Company continues to apply Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations for the plans. If compensation costs of the grants had been determined based upon the fair market value at the grant dates consistent with Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation", the Company's net earnings and earnings per share would have approximated the amounts shown below. <TABLE> <CAPTION> 13 weeks ended 26 weeks ended ---------------- ---------------- August 28, August 29, August 28, August 29, 2005 2004 2005 2004 --------- --------- --------- ---------- <s> <c> <c> <c> <c> Net earnings $6,057 $2,947 $11,385 $8,968 Deduct: Total stock-based employee compensation determined under fair value based method for all awards, net of tax effects 399 444 838 903 --- --- --- --- Pro forma net income $5,658 $2,503 $10,547 $ 8,065 ======= ======= ======= ======== EPS-basic as reported $ 0.30 $ 0.15 $ 0.57 $ 0.45 ======= ======= ======= ======== EPS-basic pro forma $ 0.28 $ 0.13 $ 0.53 $ 0.41 ======= ======= ======= ======== EPS-diluted as reported $ 0.30 $ 0.15 $ 0.57 $ 0.45 ======= ======= ======= ======== EPS-diluted pro forma $ 0.28 $ 0.12 $ 0.52 $ 0.40 ======= ======= ======= ======== </TABLE> 4. DISCONTINUED OPERATIONS On February 4, 2004, the Company announced that it was discontinuing its financial support of its Dielektra GmbH ("Dielektra") subsidiary located in Cologne, Germany, due to the continued erosion of the European market for the Company's high technology products. Without Park's financial support, Dielektra filed an insolvency petition, which may result in the reorganization, sale or liquidation of Dielektra. In accordance with SFAS No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets", Dielektra is treated as a discontinued operation. As a result of the discontinuation of financial support for Dielektra, the Company recognized an impairment charge of $22,023 for the write-off of Dielektra assets and other costs during the fourth quarter of the 2004 fiscal year. The liabilities from discontinued operations are reported separately on the consolidated balance sheet. These liabilities from discontinued operations included $12,094 for Dielektra's deferred pension liability. The Company expects to recognize a gain of approximately $17 million related to the reversal of these liabilities when the Dielektra insolvency process is completed, although it is unclear when the process will be completed. Liabilities for discontinued operations as of the August 28, 2005 and February 27, 2005 consisted of the following: <TABLE> <CAPTION> August 28, February 27, 2005 2005 --------- --------- <s> <c> <c> Current and other liabilities $ 5,157 $5,157 Pension liabilities 12,094 12,094 --------- --------- Total liabilities $17,251 $17,251 </TABLE> 5. REALIGNMENT AND SEVERANCE CHARGES During the 2006 fiscal year first quarter ended May 29, 2005, the Company recorded a $1,059 charge for one-time termination benefits for workforce reductions at its Neltec Europe SAS subsidiary in Mirebeau, France. During the 2006 fiscal year second quarter ended August 28, 2005, $456 of these benefits were paid. The remaining portion of these benefits is expected to be paid during the 2006 fiscal year third quarter. The related liability balance and activity through August 28, 2005 are set forth below. <TABLE> <CAPTION> Charges 8/28/05 Severance Incurred or Remaining Charges Paid Reversals Liabilities ---------- ------------ ---------- ----------- <s> <c> <c> <c> <c> Neltec Europe SAS: Termination benefits $1,059 $ 485 $ - $574 $1,059 $485 $ - $574 ========= ====== ======= ====== </TABLE> The Company recorded pre-tax charges of $1,934 and $6,504 during the first and second quarters, respectively, of fiscal year 2004 related to the realignment of its North American volume printed circuit materials operations in Newburgh, New York and Fullerton, California. During the fourth quarter of fiscal year 2004, the Company recorded pre-tax charges of $112 related to workforce reductions in Europe. The components of these charges and the related liability balances and activity through August 28, 2005 are set forth below. <TABLE> <CAPTION> 8/28/05 Realignment Charges Remaining Charges Paid Reversals Liabilities ----------- --------- --------- ----------- <s> <c> <c> <c> <c> New York and California and other realignment charges: Lease payments, taxes, utilities and other $7,292 $ 1,800 $ - $5,492 Severance payments 1,258 1,258 - - ------- -------- ------ -------- $8,550 $3,058 $ - $5,492 ======= ======== ====== ======== </TABLE> The severance payments were for the termination of hourly and salaried, administrative, manufacturing and support employees. Such employees were terminated during the 2004 fiscal year first, second and third quarters. The severance payments were paid to such employees in installments during fiscal year 2004. The lease charges covered one lease obligation payable through December 2004 and a portion of another lease obligation payable through September 2013. For the 13 weeks and 26 weeks ended August 28, 2005, the Company applied $170 and $305, respectively, of payments against the liability. 6. EARNINGS PER SHARE Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potential common stock equivalents outstanding during the period. Stock options are the only common stock equivalents, and the number of dilutive options is computed using the treasury stock method. The following table sets forth the basic and diluted weighted average number of shares of common stock and potential common stock equivalents outstanding during the periods specified: <TABLE> <CAPTION> 13 weeks ended 26 weeks ended ------------------------ ------------------------ August 28, August 29, August 28, August 29, 2005 2004 2005 2004 --------- --------- ---------- ---------- <s> <c> <c> <c> <c> Weighted average shares outstanding for basic EPS 20,032 19,885 19,989 19,847 Net effect of dilutive options 191 227 160 243 ------ ------ ------ ------ Weighted average shares outstanding for diluted EPS 20,223 20,112 20,149 20,090 ====== ====== ====== ====== </TABLE> Common stock equivalents, which were not included in the computation of diluted earnings per share because either the effect would have been antidilutive or the options' exercise prices were greater than the average market price of the common stock, were 241 and 67 for the 13 weeks ended August 28, 2005 and August 29, 2004, respectively, and 184 and 62 for the 26 weeks ended August 28, 2005 and August 29, 2004, respectively. 7. BUSINESS SEGMENTS The Company considers itself to operate in one business segment because the Company's advanced composite materials business comprises less than 10% of the Company's assets, revenues and profit from operations on an absolute basis. The Company's printed circuit materials products are marketed primarily to leading independent printed circuit board fabricators, electronic manufacturing service companies, electronic contract manufacturers and major electronic original equipment manufacturers ("OEMs") located throughout North America, Europe and Asia. The Company's advanced composite materials customers, the majority of which are located in the United States, include OEMs, independent firms and distributors in the electronics, aerospace, and industrial industries. Sales are attributed to geographic region based upon the region from which the materials were shipped to the customer. Sales between geographic regions were not significant. Financial information concerning the Company's continuing operations by geographic region follows: <TABLE> <CAPTION> 13 weeks ended 26 weeks ended ------------------------ ------------------------ August 28, August 29, August 28, August 29, 2005 2004 2005 2004 --------- --------- ---------- ---------- <s> <c> <c> <c> <c> Sales: North America $29,855 $29,596 $ 60,647 $61,860 Europe 7,911 8,759 16,249 17,876 Asia 14,676 12,743 31,222 29,880 ------- ------- -------- -------- Total sales $52,442 $51,098 $108,118 $109,616 ======= ======= ======== ======== </TABLE> <TABLE> <CAPTION> August 28, February 27, 2005 2005 --------- ----------- <s> <c> <c> Long-lived assets: North America $30,516 $32,610 Europe 9,722 10,856 Asia 19,660 20,183 -------- -------- Total long-lived assets $59,898 $63,649 ======== ======== </TABLE> 8. COMPREHENSIVE INCOME Total comprehensive income for the 13 weeks ended August 28, 2005 and August 29, 2004 was $5,189 and $2,385, respectively. Total comprehensive income for the 26 weeks ended August 28, 2005 and August 29, 2004 was $9,238 and $8,219, respectively. Comprehensive income consisted primarily of net income and foreign currency translation adjustments and unrealized gains and losses on marketable securities. 9. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154 ("SFAS No. 154"), "Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3". SFAS No. 154 requires retrospective application to prior periods financial statements for changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle should be recognized in the period of the accounting change. SFAS No. 154 further requires a change in depreciation, amortization or depletion method for long- lived, non-financial assets to be accounted for as a change in accounting estimate effected by a change in accounting principle. SFAS No. 154 will become effective for the Company's 2007 fiscal year and is not expected to have a material effect on the Company's Consolidated Financial Statements. FASB Interpretation No. 47 ("FIN 47"), "Accounting for Conditional Asset Retirement Obligations", was issued by the FASB in March 2005. FIN 47 provides guidance relating to the identification of and financial reporting for legal obligations to perform an asset retirement activity. FIN 47 requires recognition of a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The adoption of FIN 47 is not expected to have a material effect on the Company's Consolidated Financial Statements. In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 123(R), "Share- Based Payment" ("SFAS 123R"), which replaces SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), and supersedes Accounting Principle Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees". SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values for fiscal years beginning after June 15, 2005 (as delayed by the Securities and Exchange Commission), with early adoption encouraged. For years beginning after June 15, 2005, the pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. Under SFAS 123R, a determination must be made regarding the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. SFAS 123R permits a prospective application or two modified versions of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods by the original SFAS 123. The Company is required to adopt SFAS 123R in the first quarter of fiscal year 2007, at which time the Company will begin recognizing an expense for all unvested share-based compensation that has been issued. Under the retrospective options, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The Company has not yet finalized its decision concerning the transition option it will utilize to adopt SFAS 123R and is in the process of evaluating the impact of FAS 123R on its financial statements. Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations. --------------------- General: Park is a leading global advanced materials company which develops, manufactures and markets high technology digital and RF/microwave printed circuit materials and advanced composite materials for the electronics, military, aerospace, wireless communication, specialty and industrial markets. The Company's manufacturing facilities are located in Singapore, China (currently under construction), France (two facilities), Connecticut, New York, Arizona and California. The Company operates under the FiberCote (Trademark), Nelco (Registered Trademark and Neltec (Registered Trademark) names. The Company's net sales increased slightly in the three-month period ended August 28, 2005 and decreased slightly in the six-month period ended August 28, 2005 compared with last year's comparable periods as a result of decreases in sales by the Company's printed circuit materials operations in North America and Europe, although the Company achieved higher operating profits in the 2006 fiscal year second quarter and first half than in the 2005 fiscal year comparable periods. The Company's net earnings also increased in the three-month and six-month periods ended August 28, 2005 compared with last year's comparable periods. Although the condition of the global markets for the Company's printed circuit materials products improved somewhat in the second half of the 2004 fiscal year and the first half of the 2005 fiscal year, those markets weakened in the second half of the 2005 fiscal year and continued to be mixed in the first and second quarters of the 2006 fiscal year. Consequently, sales of the Company's printed circuit materials operations declined in the 2006 fiscal year first quarter and first half compared to the 2005 fiscal year first quarter and first half. However, the military, aerospace, wireless communication and industrial markets for the Company's advanced composite materials business were healthy during the 2006 fiscal year first and second quarters, and, as a result, sales of the Company's advanced composite materials increased in the first quarter and first half of the 2006 fiscal year compared to the comparable periods in the prior fiscal year. Despite mixed conditions in almost all markets for sophisticated printed circuit materials, the Company's operating profits in the 2006 fiscal year second quarter and first half were greater than its operating profits in the 2005 fiscal year second quarter and first half as a result of the Company's reductions of its costs and expenses and higher percentages of sales of higher margin, high temperature printed circuit materials products. While the global markets for the Company's printed circuit materials continue to be very difficult to forecast, the Company believes that the condition of the global markets for the Company's printed circuit materials in the 2006 fiscal year third quarter is similar to the condition of such markets during the 2006 fiscal year first and second quarters and the 2005 fiscal year third and fourth quarters. On the other hand, the military, aerospace and specialty applications markets for the Company's advanced composite materials business continued to be healthy during the 2006 fiscal year second quarter. The Company believes that the markets for its advanced composite materials will continue to be healthy during the 2006 fiscal year third quarter. The Company continues to invest its human and financial resources in the higher technology portions of its printed circuit materials business and in its advanced composite materials business. During the 2005 fiscal year, the Company installed one of its latest generation, high technology treaters in its newly expanded facility in Singapore; and during the 2006 fiscal year second quarter, the Company completed the installation of an additional treater at its FiberCote advanced composite materials facility in Waterbury, Connecticut, which has significantly increased FiberCote's treating capacity. While the Company continued to expand and invest in its business in Asia during the 2005 fiscal year, it made additional adjustments to its volume printed circuit materials businesses, particularly in North America, which resulted in workforce reductions at the Company's North American and European volume printed circuit materials operations. In addition, in the 2006 fiscal year first and second quarters, the Company reduced the size of the workforce at its Neltec Europe SAS subsidiary in Mirebeau, France, as a result of further deterioration of the European market for high technology printed circuit materials. The Company is not engaged in any related party transactions involving relationships or transactions with persons or entities that derive benefits from their non-independent relationship with the Company or the Company's related parties, or in any transactions with parties with whom the Company or its related parties have a relationship that enables the parties to negotiate terms of material transactions that may or would not be available from other, more clearly independent parties on an arm's-length basis, or in any trading activities involving non-exchange traded commodity or other contracts that are accounted for at fair value or otherwise or in any energy trading or risk management activities, other than certain limited foreign currency contracts intended to hedge the Company's contractual commitments to pay certain obligations or to realize certain receipts in foreign currencies and certain limited energy purchase contracts intended to protect the Company from increased utilities costs. The Company believes that an evaluation of its ongoing operations would be difficult if the disclosure of its financial results were limited to generally accepted accounting principles ("GAAP") financial measures, which include special items, such as realignment and severance charges and the gains on the insurance claim settlement and the sale of real estate. Accordingly, in addition to disclosing its financial results determined in accordance with GAAP, the Company discloses non-GAAP operating results that exclude certain items in order to assist its shareholders and other readers in assessing the Company's operating performance, since the Company's on-going, normal business operations do not include such special items. Such non-GAAP financial measures are provided to supplement the results provided in accordance with GAAP. Three and Six Months Ended August 28, 2005 Compared with Three and Six Months Ended August 29, 2004: The Company's total net sales increased in Asia and North America and declined in Europe during the three-month period ended August 28, 2005 compared to the three-month period ended August 29, 2004 and increased in Asia and declined in Europe and North America during the six-month period ended August 28, 2005 compared to the six-month period ended August 29, 2004. The Company's net sales of printed circuit materials increased in Asia and declined in Europe and North America during the three-month and six-month periods ended August 28, 2005 compared to the three-month and six-month periods ended August 29, 2004, although the Company's total sales of printed circuit materials during the three-month period ended August 28, 2005 were higher than such sales during the prior year's third and fourth quarters; and the net sales of the Company's advanced composite materials business increased during the three-month and six-month periods ended August 28, 2005 compared to the three-month and six-month periods ended August 27, 2004. Sales of advanced composite materials increased to 8% of the Company's total net sales worldwide in the three-month and six-month periods ended August 28, 2005 quarter compared to 7% of the Company's total net sales worldwide in the 2005 fiscal year comparable periods. Despite the reduced sales in the six-month period ended August 28, 2005, the Company realized lower costs of sales and higher gross profits in the three-month and six-month periods ended August 28, 2005 than in the three-month and six-month periods ended August 29, 2004. The Company's gross profits in the three-month and six-month periods ended August 28, 2005 were higher than the gross profits in the prior year's comparable periods primarily as a result of higher percentages of sales of higher margin, high temperature printed circuit material products and the Company's reduction of its operating costs. In addition, significant reductions in selling, general and administrative expenses also enabled the Company to report profits from operations and net earnings for the three-month and six month periods ended August 28, 2005 in amounts that were higher than profits from operations and net earnings for the three-month and six-month periods ended August 29, 2004, although the results for the six-month period ended August 28, 2005 were negatively affected by the $1.1 million employment termination benefits charge related to a workforce reduction at the Company's Neltec Europe SAS facility in France. Results of Operations The Company's total net sales for the three-month period ended August 28, 2005 increased 3% to $52.4 million from $51.1 million for last fiscal year's comparable period. Sales volumes increased 15% in Asia and 1% in North America and decreased 10% in Europe during the 2006 fiscal year second quarter compared to the sales for the same period in the prior year. Total net sales in the 2006 fiscal year second quarter were 4% and 2% higher than the sales in the prior year's third and fourth quarters, respectively. The Company's total net sales for the six-month period ended August 28, 2005 decreased 1% to $108.1 million from $109.6 million for last fiscal year's comparable period. The Company's foreign operations accounted for $22.6 million and $47.5 million, respectively, of net sales, or 43% and 44% of the Company's total net sales worldwide, during the three-month and six-month periods ended August 28, 2005 compared with $21.5 million and $47.8 million, respectively, of net sales, or 42% and 44%, respectively, of total net sales worldwide, during last year's comparable periods. Net sales by the Company's foreign operations during the three-month and six-month periods ended August 28, 2005 increased 5% and decreased 1%, respectively, from the 2005 fiscal year comparable periods, as a result of increases in sales in Asia during the three-month period and as a result of lower sales in Europe during the six-month period. For the three-month period ended August 28, 2005, the Company's sales in North America, Asia and Europe were 57%, 28% and 15%, respectively, of the Company's total net sales worldwide compared with 58%, 25% and 17%, respectively, for the three-month period ended August 29, 2004; and for the six-month period ended August 28, 2005, the Company's sales in North America, Asia and Europe were 56%, 29% and 15% of the Company's total net sales worldwide compared with 57%, 27% and 16%, respectively, for the six-month period ended August 29, 2004. The Company's sales in North America increased 1%, its sales in Asia increased 15% and its sales in Europe decreased 10% in the three-month period ended August 28, 2005 compared with the three-month period ended August 29, 2004, and its sales in North America and Europe decreased 2% and 9%, respectively, and its sales in Asia increased 4% in the six-month period ended August 28, 2005 compared with the six-month period ended August 29, 2004. The overall gross profit as a percentage of net sales for the Company's worldwide operations improved to 22.1% and 21.9%, respectively, for the three months and six months ended August 28, 2005 compared with 18.4% and 21.1% for last fiscal year's comparable periods. The improvements in the gross profit margins were attributable to increased sales volumes in the three months ended August 28, 2005, higher percentages of sales of higher margin, high performance printed circuit materials products, and reductions of the Company's operating costs. During the three-month and six-month periods ended August 28, 2005, the Company's total net sales worldwide of high temperature printed circuit materials, which include high performance (non-FR4) materials, were 96% and 96%, respectively, of the Company's total net sales worldwide of printed circuit materials, compared with 94% and 93%, respectively, for last fiscal year's comparable periods; while the Company's net sales of such high temperature printed circuit materials in North America were 97% and 97%, respectively, of the Company's total net sales of printed circuit materials in North America, compared with 95% and 94%, respectively, for last fiscal year's comparable periods; and the Company's net sales of such materials in Asia and Europe combined, were 94% and 94%, respectively, of the Company's total net sales of printed circuit materials in Asia and Europe combined, compared with 92% and 92%, respectively, for last fiscal year's comparable periods. The Company's high temperature printed circuit materials include its high performance (non-FR4) materials, which consists of high-speed, low-loss materials for digital and RF/microwave applications requiring increased, high bandwidth signal integrity, bismalimide triazine ("BT") materials, polyimides for applications that demand extremely high thermal performance, cyanate esters, and polytetrafluoroethylene ("PTFE") materials for RF/microwave systems that operate at frequencies up to 77GHz. During the three-month and six-month periods ended August 28, 2005, the Company's total net sales worldwide of high performance (non-FR4) printed circuit materials were 39% and 38%, respectively, of the Company's total net sales worldwide of printed circuit materials, compared with 37% and 35%, respectively, for last fiscal year's comparable periods; while the Company's net sales of such high performance printed circuit materials in North America were 46% and 45%, respectively, of the Company's total net sales of printed circuit materials in North America, compared with 44% and 42%, respectively, for last fiscal year's comparable periods; and the Company's net sales of such materials in Asia and Europe combined, were 32% and 31%, respectively, of the Company's total net sales of printed circuit materials in Asia and Europe combined, compared with 30% and 27%, respectively, for last fiscal year's comparable periods. The Company's cost of sales decreased by 2% in the three-month and six-month periods ended August 28, 2005, despite higher sales and higher production volumes in the three-month period, compared to the comparable periods in the prior fiscal year as a result of cost reduction measures implemented by the Company, including workforce reductions. Selling, general and administrative expenses decreased by $0.6 million and $2.6 million, respectively, or by 9% and 18%, during the three-month period and six-month period, respectively, ended August 28, 2005 compared with last fiscal year's comparable periods, and these expenses, measured as percentages of sales, were 11.3% and 11.4%, respectively, during the three-month and six-month periods ended August 28, 2005 compared with 12.7% and 13.6%, respectively, during last fiscal year's comparable periods. The decreases in selling, general and administrative expenses in the 2006 fiscal year periods were results of decreases in almost all categories of expenses. The Company incurred a charge of $1.1 million, for which there was no tax benefit, during the 2006 fiscal year first quarter for employment termination benefits related to a workforce reduction at its Neltec Europe SAS subsidiary in Mirebeau, France. For the reasons set forth above, the Company's profit from operations was $5.6 million for the three months ended August 28, 2005 compared to profit from operations of $2.9 million for the three months ended August 29, 2004, and its profit from operations was $10.3 million for the six months ended August 28, 2005, including the $1.1 million employment termination benefits charge described above, compared with profit from operations of $8.3 million for the six months ended August 29, 2004. Interest and other income, net, principally investment income, was $1.5 million and $2.8 million, respectively, for the three-month and six- month periods ended August 28, 2005 compared with $0.8 million and $1.4 million, respectively, for last fiscal year's comparable periods. The increases in investment income were attributable principally to higher prevailing interest rates during the 2006 fiscal year first and second quarters than during the 2005 fiscal year first and second quarters. The Company's investments were primarily short-term taxable instruments and money market funds. The Company's effective income tax rates for the three-month and six-month periods ended August 28, 2005 were 15.0% and 13.5%, respectively, compared with effective income tax rates of 19.8% and 7.5% for the three months and six months ended August 29, 2004. The lower tax provision for the three-month period ended August 28, 2005 was primarily the result of the expected full utilization of net operating loss carry-forwards in the United States, while the higher provision for the six-month period ended August 28, 2005 was primarily the result of higher taxable income in jurisdictions with higher income tax rates. The Company's net earnings for the three months ended August 28, 2005 were $6.1 million compared to net earnings of $2.9 million for the three months ended August 29, 2004, and net earnings for the six months ended August 28, 2005 were $11.4 million, including the $1.1 million employment termination benefits charge described above, compared with net earnings of $9.0 million for the six-month period ended August 29, 2004. Basic and diluted earnings per share were $0.30 and $0.57 for the three-month period and six-month period, respectively, ended August 28, 2005, compared to basic and diluted earnings per share of $0.15 and $0.45, respectively, for the three-month period and six-month period, respectively, ended August 29, 2004. Liquidity and Capital Resources: At August 28, 2005, the Company's cash and temporary investments were $199.9 million compared with $189.6 million at February 27, 2005, the end of the Company's 2005 fiscal year. The increase in the Company's cash and investment position at August 28, 2005 was attributable to cash generated by operating activities, partially offset by purchases of property, plant and equipment and the payment of dividends. The Company's working capital (which includes cash and temporary investments) was $215.5 million at August 28, 2005 compared with $201.5 million at February 27, 2005. The increase in working capital at August 28, 2005 compared to February 27, 2005 was due principally to the increase in cash and temporary investments and an increase in prepaid expenses and other current assets and decreases in accounts payable and accrued liabilities partially offset by decreases in accounts receivable and inventories. The increase in prepaid expenses and other assets was primarily attributable to increases in prepaid income taxes, prepaid insurance and prepaid property taxes. The decrease in accounts payable was the result of the timing of the Company's payment of its payables, and the decrease in accrued liabilities was primarily the result of payments for workers' compensation insurance. The decrease in accounts receivable was primarily due to lower sales volumes during the last several weeks of the second quarter compared to sales volumes for the last several weeks of the quarter ended February 27, 2005, and the decrease in inventories was a result of reduced levels of raw materials, work-in-process and finished goods on hand. The Company's current ratio (the ratio of current assets to current liabilities) was 6.9 to 1 at August 28, 2005 compared to 5.8 to 1 at February 27, 2005. During the six months ended August 28, 2005, net earnings from the Company's operations, before depreciation and amortization, of $16.2 million and a net increase in working capital items, resulted in $13.9 million of cash provided by operating activities. During the same six-month period, the Company expended $2.0 million for the purchase of property, plant and equipment compared with $1.7 million for the six-month period ended August 29, 2004. In addition, the Company paid $3.2 million in dividends on its common stock in the six-month period ended August 28, 2005 compared to $2.4 million in the six-month period ended August 29, 2004. The higher amount in the six-month period ended August 28, 2005 was the result of an increase in the dividend rate from $0.06 to $0.08 per share declared in the 2005 fiscal year third quarter. Net expenditures for property, plant and equipment were $3.3 million in the 2005 fiscal year, $2.4 million in the 2004 fiscal year and $6.4 million in the 2003 fiscal year. At August 28, 2005 and at February 27, 2005, the Company had no long-term debt. The Company believes its financial resources will be sufficient, for the foreseeable future, to provide for continued investment in working capital and property, plant and equipment and for general corporate purposes. Such resources would also be available for purchases of the Company's common stock, appropriate acquisitions and other expansions of the Company's business. The Company is not aware of any circumstances or events that are reasonably likely to occur that could materially affect its liquidity. The Company's contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of operating lease commitments. The Company has no long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than two standby letters of credit in the total amount of $2.0 million to secure the Company's obligations under its workers' compensation insurance program and certain limited energy purchase contracts intended to protect the Company from increased utilities costs. As of August 28, 2005, there were no material changes outside the ordinary course of the Company's business in the Company's contractual obligations disclosed in Item 7 of Part II of its Form 10-K Annual Report for the fiscal year ended February 27, 2005. Off-Balance Sheet Arrangements: The Company's liquidity is not dependent on the use of, and the Company is not engaged in, any off-balance sheet financing arrangements, such as securitization of receivables or obtaining access to assets through special purpose entities. Environmental Matters: In the six-month periods ended August 28, 2005 and August 29, 2004, the Company charged less than $0.1 million against pretax income for environmental remedial response and voluntary cleanup costs (including legal fees). While annual expenditures have generally been constant from year to year and may increase over time, the Company expects it will be able to fund such expenditures from available cash. The timing of expenditures depends on a number of factors, including regulatory approval of cleanup projects, remedial techniques to be utilized and agreements with other parties. At August 28, 2005 and February 27, 2005, the recorded liability in liabilities from discontinued operations for environmental matters related to Dielektra was $2.1 million and the recorded liability in accrued liabilities for environmental matters was $2.2 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. Critical Accounting Policies and Estimates: In response to financial reporting release, FR-60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies", issued by the Securities and Exchange Commission in December 2001, the following information is provided regarding critical accounting policies that are important to the Consolidated Financial Statements and that entail, to a significant extent, the use of estimates, assumptions and the application of management's judgment. General The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent liabilities. On an on-going basis, the Company evaluates its estimates, including those related to sales allowances,allowances for bad debts, inventories, valuation of long-lived assets, income taxes, restructurings, pensions and other employee benefit programs, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonableunder the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements. Revenue Recognition Sales revenue is recognized at the time title to product is transferred to a customer. All material sales transactions are for the shipment of manufactured prepreg and laminate products and advanced composite materials. The Company ships its products to customers based upon firm orders, with fixed selling prices, when collection is reasonably assured. Sales Allowances The Company provides for the estimated costs of sales allowances at the time such costs can be reasonably estimated. The Company's products are made to customer specifications and tested for adherence to such specifications before shipment to customers. There are no future performance requirements other than the products' meeting the agreed specifications. The Company's bases for providing sales allowances for returns are known situations in which products may have failed due to manufacturing defects in the products supplied by the Company. The Company is focused on manufacturing the highest quality printed circuit materials and advanced composite materials possible and employs stringent manufacturing process controls and works with raw material suppliers who have dedicated themselves to complying with the Company's specifications and technical requirements. The amounts of returns and allowances resulting from defective or damaged products have been approximately 1.0% of sales for each of the Company's last three fiscal years. Allowances for Bad Debts The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Inventories Inventories are stated at the lower of cost (first-in, first-out method) or market. The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company's products and market conditions. Valuation of Long-lived Assets The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Important factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends and significant changes in the use of the Company's assets or strategy of the overall business. Income Taxes Carrying value of the Company's net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets resulting in additional income tax expense in the Company's consolidated statement of operations. Management evaluates the realizability of the deferred tax assets quarterly and assesses the need for additional valuation allowances quarterly. Restructurings The Company recorded significant charges in connection with the realignment of its Neltec Europe SAS business in France during the three months ended May 29, 2005 and its North American volume printed circuit materials operations during the fiscal years ended February 29, 2004 and March 2, 2003. To a lesser extent, the Company also recorded realignment charges in its North American operations during the fiscal year ended February 27, 2005. In addition, during the 2003 fiscal year, the Company recorded charges in connection with the closure of the Company's manufacturing facility in England. Prior to the Company's treating Dielektra GmbH as a discontinued operation, the Company recorded significant charges in connection with the closure of the mass lamination operation of Dielektra and the realignment of Dielektra during the fiscal years ended February 29, 2004, March 2, 2003 and March 3, 2002. Contingencies and Litigation The Company is subject to a small number of proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. Pension and Other Employee Benefit Programs Dielektra GmbH has significant pension costs that are developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates and wage inflation rates. The pension liability of Dielektra has been included in liabilities from discontinued operations on the Company's balance sheet. The Company's obligations for workers' compensation claims are effectively self-insured. The Company uses an insurance company administrator to process all such claims and benefits. The Company accrues its workers' compensation liability based upon the claim reserves established by the third-party administrator and historical experience. The Company and certain of its subsidiaries have a non-contributory profit sharing retirement plan covering their regular full-time employees. In addition, the Company's subsidiaries have various bonus and incentive compensation programs, most of which are determined at management's discretion. The Company's reserves associated with these self-insured liabilities and benefit programs are reviewed by management for adequacy at the end of each reporting period. Factors that May Affect Future Results. - --------------------------------------- Certain portions of this Report which do not relate to historical financial information may be deemed to constitute forward-looking statements that are subject to various factors which could cause actual results to differ materially from Park's expectations or from results which might be projected, forecast, estimated or budgeted by the Company in forward-looking statements. Such factors include, but are not limited to, general conditions in the electronics industry, the Company's competitive position, the status of the Company's relationships with its customers, economic conditions in international markets, the cost and availability of utilities, and the various factors set forth under the caption "Factors That May Affect Future Results" after Item 7 of Park's Annual Report on Form 10-K for the fiscal year ended February 27, 2005. Item 3. Quantitative and Qualitative Disclosure About Market Risk. - ------ ---------------------------------------------------------- The Company's market risk exposure at August 28, 2005 is consistent with, and not greater than, the types of market risk and amount of exposures presented in the Annual Report on Form 10-K for the fiscal year ended February 27, 2005. Item 4. Controls and Procedures. - ------- ------------------------ (a) Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Accounting Officer (the person currently performing the functions similar to those performed by a principal financial officer), has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of August 28, 2005, the end of the quarterly fiscal period covered by this quarterly report. Based on such evaluation, the Company's Chief Executive Officer and Chief Accounting Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing,summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosure. (b) Changes in Internal Control Over Financial Reporting. There has not been any change in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. PART II. OTHER INFORMATION Item 1. Legal Proceedings. - ------- ------------------ None. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - ------- ----------------------------------------------------------- The following table provides information with respect to shares of the Company's Common Stock acquired by the Company during each month included in the Company's 2006 fiscal year second quarter ended August 28, 2005. <TABLE> <CAPTION> Maximum Number (or Total Number of Approximate Dollar Shares (or Value) of Shares Units) Purchased (or Units) that Total Number Average as Part of May yet Be of Shares Price paid Publicly Purchased Under (or units) per Share Announced Plan the Plans or Period Purchased or unit) or Programs Programs ------- --------- --------- ----------- ------------- <s> <c> <c> <c> <c> May 30 - June 30 0 - 0 July 1-31 2,880(a) $25.98 0 August 1-28 0 - 0 Total 2,880(a) $25.98 0 2,000,000(b) </TABLE> (a) Acquired by the Company upon surrender of such shares to the Company in payment of the exercise price of stock options issued pursuant to the Company's 1992 Stock Option Plan. (b) Aggregate number of shares available to be purchased by the Company pursuant to a previous share purchase authorization announced on October 20, 2004. Pursuant to such authorization, the Company is authorized to purchase its shares from time to time on the open market or in privately negotiated transactions. Item 3. Defaults Upon Senior Securities. - ------- -------------------------------- None. Item 4. Submission of Matters to a Vote of Security Holders. - ------- ---------------------------------------------------- At the Annual Meeting of Shareholders held on July 20, 2005. (a) the persons elected as directors of the Company and the voting for such persons were as follows: Authority Name Votes For Withheld ---- --------- --------- Dale Blanchfield 16,856,503 36,149 Anthony Chiesa 15,957,962 934,690 Lloyd Frank 16,447,857 444,795 Brian E. Shore 16,827,331 65,321 Steven T. Warshaw 16,788,024 104,628 Item 5. Other Information. - ------- ------------------ None. Item 6. Exhibits. - ------- --------- 31.1 Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a). 31.2 Certification of Chief Accounting Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a). 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Park Electrochemical Corp. -------------------------- (Registrant) /s/Brian E. Shore Date: October 6, 2005 --------------------------- Brian E. Shore President and Chief Executive Officer /s/James W. Kelly Date: October 6, 2005 --------------------------- James W. Kelly Vice President, Taxes and Planning Chief Accounting Officer EXHIBIT INDEX Exhibit No. Name Page - ----------- ---- ---- 31.1 Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).................................... 28 31.2 Certification of Chief Accounting Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).................................... 30 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002................... 32 32.2 Certification of Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002................... 33