PARK ELECTROCHEMICAL CORP - 10-K Annual Report

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10K.02-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 3, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

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 of Organization) Identification
No.)

5 Dakota Drive, Lake Success, New 11042
York (Zip Code)
(Address of Principal Executive
Offices)

Registrant's telephone number, including area code
(516) 354-4100

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange
on Which Registered
Common Stock, par value $.10 per New York Stock
share Exchange
Preferred Stock Purchase Rights New York Stock
Exchange

Securities registered pursuant to Section 12(g) of the Act: None

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 [ ]

[cover page 1 of 2 pages]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X}

State the aggregate market value of the voting and non-
voting common equity held by non-affiliates of the registrant.
The aggregate market value shall be computed by reference to the
price at which the common equity was sold, or the average bid and
asked prices of such common equity, as of a specified date within
60 days prior to the date of filing.

As of Close of
Title of Class Aggregate Market Business On
Value
Common Stock,
par value $.10 per $577,617,597* May 24, 2002
share

Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.

Shares As of Close of
Title of Class Outstanding Business On
Common Stock,
par value $.10 per 19,514,108 May 24, 2002
share

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for Annual Meeting of Shareholders to be held
July 17, 2002 incorporated by reference into Part III of this
Report.

*Included in such amount are 1,442,298 shares of common stock
valued at $29.60 per share and held by Jerry Shore, the
Registrant's Chairman of the Board and a member of the
Registrant's Board of Directors.

[cover page 2 of 2 pages]

TABLE OF CONTENTS

Page
PART I

Item 1. Business 4

Item 2. Properties 15

Item 3. Legal Proceedings 15

Item 4. Submission of Matters to a Vote of Security
Holders 16
Executive Officers of the Registrant 16

PART II

Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 18

Item 6. Selected Financial Data 18

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 20

Factors That May Affect Future Results 30

Item 7A. Quantitative and Qualitative Disclosures
About Market Risk 32

Item 8. Financial Statements and Supplementary Data 33

Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 58

PART III

Item 10. Directors and Executive Officers of the
Registrant 58

Item 11. Executive Compensation 58

Item 12. Security Ownership of Certain Beneficial
Owners and Management 58

Item 13. Certain Relationships and Related Transactions 58

PART IV

Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 59

SIGNATURES 60

FINANCIAL STATEMENT SCHEDULES
Schedule II - Valuation and Qualifying Accounts 61

EXHIBIT INDEX 62

PART I

Item 1. Business.

General

Park Electrochemical Corp. ("Park"), through its
subsidiaries (unless the context otherwise requires, Park and its
subsidiaries are hereinafter called the "Company"), is primarily
engaged in the design, production and marketing of advanced
electronic materials used to fabricate complex multilayer printed
circuit boards and other electronic interconnection systems. Park
specializes in advanced materials for high layer count circuit
boards and high-speed digital broadband telecommunications,
internet and networking applications. Park's electronic materials
business operates under the "Nelco" name through fully integrated
business units in Asia, Europe and North America. The Company's
electronic materials manufacturing facilities are located in
Singapore, China, Germany, France, England, New York, Arizona and
California.

The Company is also engaged in the design, production and
marketing of advanced composite materials through its FiberCote
Industries subsidiary in Waterbury, Connecticut and specialty
adhesive tapes and films through its Dielectric Polymers
subsidiary in Holyoke, Massachusetts for the electronics,
aerospace and industrial markets.

Park was founded in 1954 by Jerry Shore, the Company's
Chairman of the Board and largest shareholder.

Unless otherwise indicated, all information in this Report
has been adjusted to give effect to the Company's three-for-two
stock split in the form of a stock dividend, which was
distributed November 8, 2000 to shareholders of record at the
close of business on October 20, 2000.

In the fiscal year ended February 27, 2000, the Company's
business was divided into two industry segments: (1) electronic
materials and (2) engineered materials and plumbing hardware.
However, during the fourth quarter of the 2000 fiscal year, the
Company decided to close and liquidate the plumbing hardware
portion of its engineered materials and plumbing hardware
business segment. See Note 16 of the Notes to Consolidated
Financial Statements in Item 8 of this Report for information
concerning the closure of the plumbing hardware business. In
addition, in the fiscal years ended February 25, 2001 and March
3, 2002, the engineered materials and plumbing hardware
businesses comprised less than 10% of the Company's consolidated
revenues, earnings and assets, and the Company considered itself
to operate in one business segment. See Note 14 of the Notes to
Consolidated Financial Statements in Item 8 of this Report for
information concerning the Company's business segments.

The sales and long-lived assets of the Company's operations
by geographic area for the last three fiscal years are set forth
in Note 14 of the Notes to Consolidated Financial Statements in
Item 8 of this Report. The Company's foreign operations are
conducted principally by the Company's subsidiaries in Singapore,
China, Germany, France and England. The Company's foreign
operations are subject to the impact of foreign currency
fluctuations. See Note 1 of the Notes to Consolidated Financial
Statements in Item 8 of this Report.

Electronic Materials Operations

The Company is a leading global designer and producer of
advanced electronic materials used to fabricate complex
multilayer printed circuit boards and other electronic
interconnect systems, such as multilayer back-planes, wireless
packages, high-speed/low-loss multilayers and high density
interconnects ("HDIs"). The Company's multilayer printed circuit
materials include copper-clad laminates and prepregs. The Company
has long-term relationships with its major customers, which
include leading independent printed circuit board fabricators,
electronic manufacturing service companies, electronic contract
manufacturers and major electronic original equipment
manufacturers ("OEMs"). 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 (such as microprocessors
and memory and logic devices), passive components (such as
resistors and capacitors) and connection devices (such as infra-
red couplings, fiber optics and surface mount connectors).
Examples of end uses of the Company's printed circuit materials
include high speed routers and servers, supercomputers, laptops,
satellite switching equipment, cellular telephones and
transceivers and wireless personal digital assistants ("PDAs").
The Company has developed long-term relationships with major
customers as a result of its leading edge products, extensive
technical and engineering service support and responsive
manufacturing capabilities.

Park believes it founded the modern day printed circuit
industry in 1957 by inventing a composite material consisting of
an epoxy resin substrate reinforced with fiberglass cloth which
was laminated together with sheets of thin copper foil. This
epoxy-glass copper-clad laminate system is still used to
construct the large majority of today's advanced printed circuit
products. The Company also believes that in 1962 it invented the
first multilayer printed circuit materials system used to
construct multilayer printed circuit boards. The Company also
pioneered vacuum lamination and many other manufacturing
technologies used in the industry today. In addition, the
Company's subsidiary, Dielektra GmbH in Germany, which the
Company acquired in 1997, owns a patented process for con
tinuously producing thin copper-clad laminates for printed
circuit board applications. The Company believes it is one of the
industry's technological leaders.

As a result of its leading edge products, extensive
technical and engineering service support and responsive
manufacturing capabilities, the Company expects to continue to
take advantage of several industry trends. These trends include
the increasing global demand for electronic products and
technology, the increasingly advanced electronic materials
required for interconnect performance and manufacturability, the
increasing miniaturization and portability of advanced electronic
equipment, the consolidation of the printed circuit board
fabrication industry and the time-to-market and time-to-volume
pressures requiring closer collaboration with materials
suppliers.

The Company believes that it is one of the world's largest
manufacturers of multilayer printed circuit materials and the
market leader in North America and Southeast Asia. It also
believes that it is the only significant independent manufacturer
of multilayer printed circuit materials in the world. The Company
was the first manufacturer in the printed circuit materials
industry to establish manufacturing presences in the three major
global markets of North America, Europe and Asia, with facilities
established in Europe in 1969 and Asia in 1986.

Industry Background

The electronic materials manufactured by the Company and its
competitors are used to construct and fabricate complex
multilayer printed circuit boards and other advanced electronic
interconnect systems. Multilayer printed circuit materials
consist of prepregs and copper-clad laminates, as well as semi-
finished multilayer printed circuit board panels. Prepregs are
chemically and electrically engineered plastic resin systems
which are impregnated into and reinforced by a specially
manufactured fiberglass cloth product or other woven or non-woven
reinforcing fiber. This insulating dielectric substrate is .030
inch to .002 inch in thickness or less in some cases. These resin
systems are usually based upon an epoxy chemistry. One or more
plies of prepreg are laminated together to form an insulating
dielectric substrate to support the copper circuitry patterns of
a multilayer printed circuit board. Copper-clad laminates consist
of one or more plies of prepreg laminated together with specialty
thin copper foil laminated on the top and bottom. Copper foil is
specially formed in thin sheets which may vary from .0030 inch to
...0002 inch in thickness and normally have a thickness of .0014
inch or .0007 inch. The Company supplies both copper-clad
laminates and prepregs to its customers, which use these products
as a system to construct multilayer printed circuit boards.

The printed circuit board fabricator processes copper-clad
laminates to form the inner layers of a multilayer printed
circuit board. The fabricator photoimages these laminates with a
dry film or liquid photoresist. After development of the
photoresist, the copper surfaces of the laminate are etched to
form the circuit pattern. The fabricator then assembles these
etched laminates by inserting one or more plies of dielectric
prepreg between each of the inner layer etched laminates and also
between an inner layer etched laminate and the outer layer copper
plane, and then laminating the entire assembly in a press.
Prepreg serves as the insulator between the multiple layers of
copper circuitry patterns found in the multilayer circuit board.
When the multilayer configuration is laminated, these plies of
prepreg form an insulating dielectric substrate supporting and
separating the multiple inner and outer planes of copper
circuitry. The fabricator drills vertical through-holes or vias
in the multilayer assembly and then plates the through-holes or
vias to form vertical conductors between the multiple layers of
circuitry patterns. These through holes or vias combine with the
conductor paths on the horizontal circuitry planes to create a
three-dimensional electronic interconnect system. In specialized
applications, an additional set of microvia layers (2 or 4,
typically) may be added through a secondary lamination process to
provide increased density and functionality to the design. The
outer two layers of copper foil are then imaged and etched to
form the finished multilayer printed circuit board. The completed
multilayer board is a three-dimensional interconnect system with
electronic signals traveling in the horizontal planes of multiple
layers of copper circuitry patterns, as well as the vertical
plane through the plated holes or vias.

The global market for advanced electronic products has grown
in recent years as a result of technological change and frequent
new product introductions. This growth is principally
attributable to increased sales and more complex electronic
content of newer products, such as cellular telephones, pagers,
personal computers and portable computing devices, and greater
use of electronics in other products, such as automobiles.
Further, large, almost completely untapped markets for advanced
electronic equipment have emerged in such areas as India and
China and other areas of the Pacific Rim. During its 2002 fiscal
year, the Company established a business center in Wuxi, China,
in the Shanghai-Nanjing corridor, which is an emerging region for
advanced multilayer printed circuit fabrication in China.

Semiconductor manufacturers have introduced successive
generations of more powerful microprocessors and memory and logic
devices. Electronic equipment manufacturers have designed these
advanced semiconductors into more compact and often portable
products. High performance computing devices in these smaller
portable platforms require greater reliability, closer
tolerances, higher component and circuit density and increased
overall complexity. As a result, the interconnect industry has
developed smaller, lighter, faster and more cost-effective
interconnect systems, including advanced multilayer printed
circuit boards

Advanced interconnect systems require higher technology
printed circuit materials to insure the performance of the
electronic system and to improve the manufacturability of the
interconnect platform. The growth of the market for more advanced
printed circuit materials has outpaced the market growth for
standard printed circuit materials in recent years. Printed
circuit board fabricators and electronic equipment manufacturers
require advanced printed circuit materials that have increasingly
higher temperature tolerances and more advanced electrical
properties in order to support high-speed computing in a
miniaturized and often portable environment.

With the very high density circuit demands of miniaturized
high performance interconnect systems, the uniformity, purity,
consistency, performance predictability, dimensional stability
and production tolerances of printed circuit materials have
become successively more critical. High density printed circuit
boards and interconnect systems often involve higher layer count
multilayer circuit boards where the multiple planes of circuitry
and dielectric insulating substrates are very thin (dielectric
insulating substrate layers may be .002 inch or less) and the
circuit line and space geometries in the circuitry plane are very
narrow (.002 inch or less). In addition, advanced surface mount
interconnect systems are typically designed with very small pad
sizes and very narrow plated through holes or vias which
electrically connect the multiple layers of circuitry planes.
High density interconnect systems must utilize printed circuit
materials whose dimensional characteristics and purity are
consistently manufactured to very high tolerance levels in order
for the printed circuit board fabricator to attain and sustain
acceptable product yields.

Shorter product life cycles and competitive pressures have
induced electronic equipment manufacturers to bring new products
to market and increase production volume to commercial levels
more quickly. These trends have highlighted the importance of
front-end engineering of electronic products and have increased
the level of collaboration among system designers, fabricators
and printed circuit materials suppliers. As the complexity of
electronic products increases, materials suppliers must provide
greater technical support to interconnect systems fabricators on
a timely basis regarding manufacturability and performance of new
materials systems.

Products and Services

The Company produces a broad line of advanced printed
circuit materials used to fabricate complex multilayer printed
circuit boards and other electronic interconnect systems,
including backplanes, wireless packages, high speed/low loss
multilayers and high density interconnects ("HDIs"). The
Company's subsidiary, Dielektra GmbH in Germany, also
manufactures semi-finished multilayer printed circuit board
panels. The Company's diverse advanced printed circuit materials
product line is designed to address a wide array of end-use
applications and performance requirements.

The Company's electronic materials products have been
developed internally and through long-term development projects
with its principal suppliers and, to a lesser extent, through
licensing arrangements. The Company focuses its research and
development efforts on developing industry leading product
technology to meet the most demanding product requirements and
has designed its product line with a focus on the higher
performance, higher technology end of the materials spectrum. All
of the Company's existing electronic materials products have been
introduced since 1990.

Most of the Company's research and development expenditures
are attributable to the efforts of its electronic materials
operations. In response to the rapid technological changes in the
electronic materials business, these expenditures on research and
product development have increased over the past several years.

The Company's products include high-speed, low-loss, digital
broadband engineered formulations, high-temperature modified
epoxies, bismaleimide triazine epoxies ("BT epoxy"), non-MDA
polyimides, enhanced polyimides, high performance epoxy
Thermountr materials ("Thermount" is a registered trademark of
E.I. duPont de Nemours & Co.), APPE resin technology (a licensed
product of Asahi Chemical Industry Co., Ltd.), SIT (Signal
Integrity) products, cyanate esters and polytetrafluoroethylene
("PTFE") formulations for RF/microwave applications.

The Company has developed long-term relationships with
select customers through broad-based technical support and
service, as well as manufacturing proximity and responsiveness at
multiple levels of the customer's organization. The Company
focuses on developing a thorough understanding of its customer's
business, product lines, processes and technological challenges.
The Company seeks customers which are industry leaders committed
to maintaining and improving their industry leadership positions
and which are committed to long-term relationships with their
suppliers. The Company also seeks business opportunities with the
more advanced printed circuit fabricators and electronic
equipment manufacturers which are interested in the full value of
products and services provided by their suppliers. The Company
believes its proactive and timely support in assisting its
customers with the integration of advanced materials technology
into new product designs further strengthens its relationships
with its customers.

The Company's emphasis on service and close relationships
with its customers is reflected in its short lead times. The
Company has developed its manufacturing processes and customer
service organizations to provide its customers with printed
circuit materials products on a just-in-time basis. The Company
believes that its ability to meet its customers quick-turn-around
("QTA") requirements is one of its unique strengths.

The Company has located its advanced printed circuit
materials manufacturing operations in strategic locations
intended to serve specific regional markets. By situating its
facilities in close geographical proximity to its customers, the
Company is able to rapidly adjust its manufacturing processes to
meet customers' new requirements and respond quickly to
customers' technical needs. The Company has technical staffs
based at each of its manufacturing locations, which allows the
rapid dispatch of technical personnel to a customer's facility to
assist the customer in quickly solving design, process,
production or manufacturing problems.

During the 2002 fiscal year, the Company established a
business center in Wuxi, China to support the rapidly growing
customer demand for advanced multilayer printed circuitry
materials in China.

Customers and End Markets

The Company's customers for its advanced electronic
materials include the leading independent printed circuit board
fabricators, electronic manufacturing service companies,
electronic contract manufacturers and major electronic original
equipment manufacturers ("OEMs") in the computer, networking,
telecommunications, transportation, aerospace and instrumentation
industries located throughout North America, Europe and Asia. The
Company seeks to align itself with the larger, more
technologically-advanced and better capitalized independent
printed circuit board fabricators and major electronic equipment
manufacturers which are industry leaders committed to maintaining
and improving their industry leadership positions and to building
long-term relationships with their suppliers. The Company's
selling effort typically involves several stages and relies on
the talents of Company personnel at different levels, from
management to sales personnel and quality engineers. In recent
years, the Company has augmented its traditional sales personnel
with an OEM marketing team and product technology specialists.
The Company's strategy emphasizes the use of multiple facilities
established in market areas in close proximity to its customers.

During the Company's 2002 fiscal year, approximately 18.1%
of the Company's total worldwide sales were to Sanmina
Corporation, a leading electronics contract manufacturer and
manufacturer of printed circuit boards and approximately 11.3% of
the Company's total worldwide sales were to Tyco Printed Circuit
Group L.P., a leading manufacturer of printed circuit boards.
During the Company's 2001 fiscal year, approximately 25.1% of the
Company's total worldwide sales were to Sanmina Corporation.

During the Company's 1998 fiscal year and for several years
prior thereto, more than 10% of the Company's total worldwide
sales were to Delco Electronics Corporation, a subsidiary of
General Motors Corp. However, in March 1998 the Company was
informed by Delco that Delco planned to close its printed circuit
board fabrication plant and exit the printed circuit board
manufacturing business. After the plant closure, Delco purchased
all of its printed circuit boards from outside suppliers and
Delco was no longer a customer of the Company's. After that time,
the Company marketed its semi-finished multilayer circuit board
material manufacturing capability to leading printed circuit
board fabricators, contract assemblers and electronic original
equipment manufacturers in North America. The Company had not
previously marketed this capability as its semi-finished
multilayer capacity had been largely committed to supplying Delco
Electronics. Although the Company's electronic materials business
was not dependent on this single customer, the loss of this
customer had a material adverse effect on the business in the
fiscal years ended February 27, 2000, February 25, 2001 and March
3, 2002. In the first quarter of the fiscal year ended March 3,
2002, the Company sold the assets and business of its subsidiary
in Arizona that conducted the mass lamination business and
recorded non-recurring, pre-tax charges of approximately $15.7
million in its 2002 fiscal year first quarter ended May 27, 2001
in connection with the sale and the closure of a related support
facility to the mass lamination business also located in Arizona.
See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in Item 7 of this Report for a
discussion of the significant pre-tax losses incurred during the
2000 fiscal year by the Company's Arizona based business unit
which formerly supplied Delco Electronics Corporation with semi-
finished circuit boards; and see Item 3 of this Report for a
discussion of legal proceedings initiated by the Company against
Delco Electronics Corporation.

Although the electronic materials business is not dependent
on any single customer, the loss of a major customer or of a
group of customers could have a material adverse effect on the
electronic materials business.

The Company's electronic materials products are marketed by
sales personnel in industrial centers in North America, Europe
and Asia. Such personnel include both salaried employees and
independent sales representatives who work on a commission basis.

Manufacturing

The process for manufacturing multilayer printed circuit
materials is capital intensive and requires sophisticated
equipment as well as clean-room environments. The key steps in
the Company's manufacturing process include: the impregnation of
specially designed fiberglass cloth with a resin system and the
partial curing of that resin system; the assembling of laminates
consisting of single or multiple plies of prepreg and copper foil
in a clean-room environment; the vacuum lamination of the copper-
clad assemblies under simultaneous exposure to heat, pressure and
vacuum; and the finishing of the laminates to customer
specifications.

Prepreg is manufactured in a treater. A treater is a roll-to-
roll continuous machine which sequences specially designed
fiberglass cloth or other reinforcement fabric into a resin tank
and then sequences the resin-coated cloth through a series of
ovens which partially cure the resin system into the cloth. This
partially cured product or prepreg is then sheeted or paneled and
packaged by the Company for sale to customers, or used by the
Company to construct its copper-clad laminates.

The Company manufacturers copper-clad laminates by first
setting up in a clean room an assembly of one or more plies of
prepreg stacked together with a sheet of specially manufactured
copper foil on the top and bottom of the assembly. This assembly,
together with a large quantity of other laminate assemblies, is
then inserted into a large, multiple opening vacuum lamination
press. The laminate assemblies are then laminated under
simultaneous exposure to heat, pressure and vacuum. After the
press cycle is complete, the laminates are removed from the press
and sheeted, paneled and finished to customer specifications. The
product is then inspected and packaged for shipment to the
customer. In addition, the Company manufactures very thin copper-
clad laminates utilizing Dielektra's unique, patented continuous
lamination technology.

The Company manufactures multilayer printed circuit
materials at eight fully integrated facilities located in the
United States, Europe and Southeast Asia. The Company opened its
California facility in 1965, its England facility in 1969, its
first Arizona and France facilities in 1984, its Singapore
facility in 1986 and its second France facility in 1992, and in
1997, the Company acquired Dielektra GmbH with a fully integrated
facility in Cologne, Germany. The Company services the North
America market principally through its United States
manufacturing facilities, the European market principally through
its manufacturing facilities in England, France and Germany, and
the Asian market principally through its Singapore manufacturing
facility. During its 2002 fiscal year, the Company established a
business center in China to supply the demand for advanced
multilayer printed circuitry materials in China. The Company has
located its manufacturing facilities in its important markets. By
maintaining technical and engineering staffs at each of its
manufacturing facilities, the Company is able to deliver fully-
integrated products and services on a timely basis.

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, and commenced
significant additional expansions of its electronic materials
operations in California and New York, which it completed in its
2002 fiscal year. During the 2001 fiscal year, the Company
commenced a significant expansion of its higher technology
product line manufacturing facility in Arizona, which the Company
completed during the first quarter of its 2002 fiscal year.
During the 2002 fiscal year, the Company established a business
center in China, redesigned its German electronic materials
business to focus its efforts and capabilities on its unique
DatlamT automated continuous lamination and paneling technology
and on the marketing and manufacturing of high technology, higher
layer count mass lamination product, and established the
capability to manufacture PTFE materials for RF/microwave
applications at its Neltec high performance materials facility in
Tempe, Arizona, augmenting the Company's PTFE manufacturing
capability in Lannemezan, France.

Materials and Sources of Supply

The principal materials used in the manufacture of the
Company's electronic products are specially manufactured copper
foil, fiberglass cloth and synthetic reinforcements, and
specially formulated resins and chemicals. The Company attempts
to develop and maintain close working relationships with
suppliers of those materials who have dedicated themselves to
complying with the Company's stringent specifications and
technical requirements. While the Company's philosophy is to work
with a limited number of suppliers, the Company has identified
alternate sources of supply for each of these materials. However,
there are a limited number of qualified suppliers of these
materials, substitutes for these materials are not readily
available, and, in the recent past, the industry has experienced
shortages in the market for certain of these materials. While the
Company has not experienced significant problems in the delivery
of these materials and considers its relationships with its
suppliers to be strong, a disruption of the supply of materials
could materially adversely affect the business, financial
condition and results of operations of the Company. Significant
increases in the cost of materials purchased by the Company could
also have a material adverse effect on the Company's business,
financial condition and results of operations if the Company were
unable to pass such price increases through to its customers.

Competition

The multilayer printed circuit materials industry is
characterized by intense competition and ongoing consolidation.
The Company's competitors are primarily divisions of subsidiaries
of very large, diversified multinational manufacturers which are
substantially larger and have greater financial resources than
the Company and, to a lesser degree, smaller regional producers.
Because the Company focuses on the higher technology segment of
the electronic materials market, technological innovation,
quality and service, as well as price, are significant
competitive factors.

The Company believes that there are approximately ten
significant multilayer printed circuit materials manufacturers in
the world and many of these competitors have or are developing
significant presences in the three major global markets of North
America, Europe and Asia. The Company believes that the
multilayer printed circuit materials industry is rapidly becoming
more global and that the remaining smaller regional manufacturers
will find it increasingly difficult to remain competitive. The
Company believes that it is currently one of the world's largest
multilayer printed circuit materials manufacturers. The Company
further believes it is the only significant independent
manufacturer of multilayer printed circuit materials in the world
today.

The markets in which the Company's electronic materials
operations compete are characterized by rapid technological
advances, and the Company's position in these markets depends
largely on its continued ability to develop technologically
advanced and highly specialized products. Although the Company
believes it is an industry technology leader and directs a
significant amount of its time and resources toward maintaining
its technological competitive advantage, there is no assurance
that the Company will be technologically competitive in the
future, or that the Company will continue to develop new products
that are technologically competitive.

Advanced Composites and Specialty Tape Operations

For many years, the Company was also engaged in the advanced
composite materials and specialty adhesive tape businesses and
the plumbing hardware business. However, during the fourth
quarter of the 2000 fiscal year, the Company decided to close and
liquidate its plumbing hardware business. See Notes 14 and 16 of
the Notes to Consolidated Financial Statements in Item 8 of this
Report for information concerning the Company's business segments
and the closure of the plumbing hardware business.

FiberCote Industries, Inc., the Company's composite
materials business, develops and produces engineered composite
materials for the aerospace, rocket motor, electronics, radio
frequency ("RF") and specialty industrial markets. Dielectric
Polymers, Inc., the Company's specialty adhesive tape and film
business, produces tapes and bonding films for a variety of
applications including joining industrial components together.

Marketing and Customers

The Company's advanced composite materials and specialty
adhesive tape customers, substantially all of which are located
in the United States, include manufacturers in the automotive,
graphic arts, aerospace, rocket motor, electronics, RF and
specialty industrial industries. Such materials are marketed by
sales personnel including both salaried employees and independent
sales representatives who work on a commission basis.

While no single advanced composite materials or specialty
adhesive tape customer accounted for 10% or more of the Company's
total sales during the last fiscal year, the loss of a major
customer or of a group of some of the largest customers of the
advanced composite materials and specialty adhesive tape business
could have a material adverse effect upon the business.

Manufacturing and Sources of Supply

The Company's advanced composite materials manufacturing
facility is located in Waterbury, Connecticut, and its specialty
adhesive tape and film business is located in Holyoke,
Massachusetts.

The Company designs and manufactures its advanced composite
materials and industrial tapes and films to its own
specifications and to the specifications of its customers.
Product development efforts are devoted toward the conforming of
the Company's advanced composites to the specifications of, and
the obtaining of approvals from, the Company's customers. The
materials used in the manufacture of these engineered materials
include graphite and carbon fibers and fabrics, Kevlarr ("Kevlar"
is a registered trademark of E.I. du Pont de Nemours & Co.),
quartz, fiberglass, polyester, chemicals, resins, films,
plastics, adhesives and certain other synthetic materials. The
Company purchases these materials from several suppliers.
Although satisfactory substitutes for many of these materials are
not readily available, the Company has experienced no
difficulties in obtaining such materials.

Competition

The Company has many competitors in the advanced composite
materials and specialty adhesive tape businesses, including some
major corporations which have substantially greater financial
resources than the Company. The Company competes for business on
the basis of product performance and development, product
qualification and approval, the ability to manufacture and
deliver products in accordance with customers' needs and
requirements, and price.

Backlog

The Company records an item as backlog when it receives a
purchase order specifying the number of units to be purchased,
the purchase price, specifications and other customary terms and
conditions. At May 5, 2002, the unfilled portion of all purchase
orders received by the Company and believed by it to be firm was
approximately $4,807,000, compared to $9,696,000 at April 29,
2001. The decline in backlog at May 5, 2002 compared to April 29,
2001 was due primarily to the continuing slump in the Company's
business that began during the first two months of its 2002
fiscal year resulting from the severe downturn and correction in
the global electronics industry.

Various factors contribute to the size of the Company's
backlog. Accordingly, the foregoing information may not be
indicative of the Company's results of operations for any period
subsequent to the fiscal year ended March 3, 2002.

Patents and Trademarks

The Company holds several patents and trademarks or licenses
thereto. In the Company's opinion, some of these patents and
trademarks are important to its products. Generally, however, the
Company does not believe that an inability to obtain new, or to
defend existing, patents and trademarks would have a material
adverse effect on the Company.

Employees

At March 3, 2002, the Company had approximately 1,700
employees. Of these employees, 1,525 were engaged in the
Company's electronic materials operations, 120 in its specialty
adhesive tape and advanced composite materials operations and 55
consisted of executive personnel and general administrative
staff. As a result of a severe correction and downturn in the
global electronics industry and, consequently, in the Company's
electronic materials business, the Company reduced its total
number of employees during the first two months of its 2002
fiscal year from approximately 2,850 total employees to
approximately 2,330 total employees at April 30, 2001, and during
the remainder of the 2002 fiscal year the Company's total number
of employee`s declined to approximately 1,700. None of the
Company's employees are subject to a collective bargaining
agreement. Management considers its employee relations to be
good.

Environmental Matters

The Company is subject to stringent environmental regulation
of its use, storage, treatment and disposal of hazardous
materials and the release of emissions into the environment. The
Company believes that it currently is in substantial compliance
with the applicable federal, state and local environmental laws
and regulations to which it is subject and that continuing
compliance therewith will not have a material effect on its
capital expenditures, earnings or competitive position. The
Company does not currently anticipate making material capital
expenditures for environmental control facilities for its
existing manufacturing operations during the remainder of its
current fiscal year or its succeeding fiscal year. However,
developments, such as the enactment or adoption of even more
stringent environmental laws and regulations, could conceivably
result in substantial additional costs to the Company.

The Company and certain of its subsidiaries have been named
by the Environmental protection Agency (the "EPA") or a
comparable state agency under the Comprehensive Environmental
Response, Compensation and Liability Act (the "Superfund Act") or
similar state law as potentially responsible parties in
connection with alleged releases of hazardous substances at nine
sites. In addition, a subsidiary of the Company has received cost
recovery claims under the Superfund Act from other private
parties involving two other sites and has received requests from
the EPA under the Superfund Act for information with respect to
its involvement at three other sites. Under the Superfund Act and
similar state laws, all parties who may have contributed any
waste to a hazardous waste disposal site or contaminated area
identified by the EPA or comparable state agency may be jointly
and severally liable for the cost of cleanup. Generally, these
sites are locations at which numerous persons disposed of
hazardous waste. In the case of the Company's subsidiaries,
generally the waste was removed from their manufacturing
facilities and disposed at the waste sites by various companies
which contracted with the subsidiaries to provide waste disposal
services. Neither the Company nor any of its subsidiaries have
been accused of or charged with any wrongdoing or illegal acts in
connection with any such sites. The Company believes it maintains
an effective and comprehensive environmental compliance program.
Management believes the ultimate disposition of known
environmental matters will not have a material adverse effect
upon the Company.

See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Environmental Matters"
included in Item 7 of this Report and Note 13 of the Notes to
Consolidated Financial Statements included in Item 8 of this
Report.

Item 2. Properties.

Set forth below are the locations of the significant
properties owned and leased by the Company, the businesses which
use the properties, and the size of each such property. All of
such properties, except for the Lake Success, New York property,
are used principally as manufacturing, warehouse and assembly
facilities.

The Company believes its facilities and equipment to be in
good condition and reasonably suited and adequate for its current
needs. During the 2002 fiscal year, certain of the Company's
electronic manufacturing facilities were utilized at less than
50% of their capacity.

Item 3. Legal Proceedings.

In May 1998, the Company and its Nelco Technology, Inc.
("NTI") 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 alleged, among other things,
that Delco breached its contract to purchase semi-finished
multilayer printed circuit boards from NTI and that Delphi
interfered with NTI's contract with Delco, that Delco breached
the covenant of good faith and fair dealing implied in the
contract, that Delco engaged in negligent misrepresentation and
that Delco fraudulently induced NTI to enter into the contract.
The Company and NTI sought substantial compensatory and punitive
damages.

On November 29, 2000, after a five day trial in Phoenix,
Arizona, a jury awarded damages to NTI in the amount of
$32,280,000, and on December 12, 2000 the judge in the United
States District Court entered judgment for NTI on its claim of
breach of the implied covenant of good faith and fair dealing
with damages in the amount of $32,280,000. Both parties filed
motions for post-judgment relief and a new trial, all of which
the judge denied, and both parties have appealed the decision to
the United States Court of Appeals for the Ninth Circuit in San
Francisco. The appeal has been fully briefed and the parties
await oral argument, which the Ninth Circuit has not yet
scheduled.

Park 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. After the plant closure, Delco purchased
all of its printed circuit boards from outside suppliers and
Delco was no longer a customer of the Company's. 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 and have been nil since that
time. During the Company's 1999 fiscal year first quarter and
during its 1998 fiscal year and for several years prior thereto,
more than 10% of the Company's total worldwide sales were to
Delco Electronics Corporation; and 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 "Business-Electronic Materials Operations-Customers
and End Markets" in Item 1 of this Report, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in Item 7 of this Report and "Factors That May Affect
Future Results" after Item 7 of this Report.

In the first quarter of the fiscal year ended March 3, 2002,
the Company sold the assets and business of NTI and recorded non-
recurring, pre-tax charges of approximately $15.7 million in its
2002 fiscal year first quarter ended May 27, 2001 in connection
with the sale of NTI and the closure of a related support
facility also located in Arizona. See Notes 10 and 11 of the
Notes to Consolidated Financial Statements in Item 8 of this
Report.

Item 4. Submission of Matters to a Vote of Security Holders.

None

Executive Officers of the Registrant.

Name Title Age
Brian E. Shore Chief Executive Officer,
President and a Director 50

Stephen E. Senior Vice President,
Gilhuley Secretary and General Counsel 57

Emily J. Groehl Senior Vice President, Sales
and Marketing 55

John Jongebloed Senior Vice President, Global 45
Logistics

Thomas T. Spooner Senior Vice President,
Corporate and Technology 65
Development

Murray O. Stamer Senior Vice President, 44
Finance

Gary M. Watson Senior Vice President,
Engineering and Technology 54

Brian Shore has served as a Director of the Company for more
than the past five years. Brian Shore was elected a Vice
President of the Company in January 1993, Executive Vice
President in May 1994, President effective March 4, 1996, the
first day of the Company's 1997 fiscal year, and Chief Executive
Officer in November 1996. Brian Shore also served as General
Counsel of the Company from April 1988 until April 1994.

Mr. Gilhuley has been General Counsel of the Company since
April 1994 and Secretary since July 1996. He was elected a Senior
Vice President in March 2001.

Ms. Groehl has been with one of Park's "Nelco" business
units for more than the past five years. She was elected Vice
President of New England Laminates Co., Inc. in 1988 and was Vice
President, Marketing and Sales of Nelco International Corporation
from 1993 until June 1999, when Nelco International Corporation
merged into Park Electrochemical Corp. She was elected Senior
Vice President of Park in May 1999.

Mr. Jongebloed has been employed by one of Park's "Nelco"
business units for more than the past ten years. He was Vice
President and General Manager of New England Laminates Co., Inc.
from January 1992 to May 1999, and he has been President and
General Manager of New England Laminates Co., Inc. since May 4,
1999. He was elected Senior Vice President of Park in July 2001.

Mr. Spooner has been employed by one of Park's "Nelco"
business units for more than the past five years. He was Vice
President, Technology of Nelco International Corporation from
1993 until June 1999, when Nelco International Corporation merged
into Park Electrochemical Corp. He was elected Senior Vice
President, Technology of Park in May 1999. His title was changed
to Senior Vice President, Corporate and Technology Development in
May 2001.

Mr. Stamer has been employed by the Company since 1989 and
served as the Company's Corporate Controller from 1993 to May
1999, when he was elected Treasurer. He was elected Senior Vice
President, Finance in March 2001.

Mr. Watson was elected Senior Vice President, Engineering in
June 2000. His title was changed to Senior Vice President,
Engineering and Technology in May 2001. Prior to June 2000, Mr.
Watson was Senior Director, Manufacturing Process Technology of
Fort James Corporation since March 1999; Vice President, Research
and Development of Boise Cascade Corporation from 1992 to March
1999; and Business Division Technology Manager of Weyerhauser
Company from 1986 to 1992.

There are no family relationships between the directors or
executive officers of the Company, except that Brian Shore is the
son of Jerry Shore, who is the Chairman of the Board and a
Director of the Company and who also served as President of the
Company for more than five years until March 4, 1996 and as Chief
Executive Officer of the Company for more than five years until
November 19, 1996.

The term of office of each executive officer of the Company
expires upon the election and qualification of his successor.

PART II

Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters.

The Company's Common Stock is listed and trades on the New
York Stock Exchange (trading symbol PKE). (The Common Stock also
trades on the Midwest Stock Exchange.) The following table sets
forth, for each of the quarterly periods indicated, the high and
low sales prices for the Common Stock as reported on the New York
Stock Exchange Composite Tape and dividends declared on the
Common Stock, all as adjusted for the three-for-two stock split
in the form of a stock dividend distributed November 8, 2000 to
stockholders of record at the close of business on October 20,
2000.

For the Fiscal Year Stock Price Dividends
Ended March 3, 2002 High Low Declared
First Quarter $35.45 $20.03 $.060
Second Quarter 26.73 21.22 $.060
Third Quarter 26.50 19.06 $.060
Fourth Quarter 27.97 24.30 $.060

For the Fiscal Year Stock Price Dividends
Ended February 25, 2001 High Low Declared
First Quarter $17.89 $14.87 $.053
Second Quarter 27.53 15.69 $.053
Third Quarter 49.72 26.45 $.060
Fourth Quarter 43.10 20.50 $.060

As of May 21, 2002, there were approximately 1,520 holders
of record of Common Stock.

The Company expects, for the immediate future, to continue
to pay regular cash dividends.

Item 6. Selected Financial Data.

The following selected consolidated financial data of Park
and its subsidiaries is qualified by reference to, and should be
read in conjunction with, the consolidated financial statements,
related notes, and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained elsewhere
herein. Insofar as such consolidated financial information
relates to the five fiscal years ended March 3, 2002 and is as of
the end of such periods, it is derived from the consolidated
financial statements for such periods and as of such dates
audited by Ernst & Young LLP, independent auditors. The
Consolidated financial statements as of March 3, 2002 and
February 25, 2001 and for the three years ended March 3, 2002,
together with the independent auditors' report for the three
years ended March 3, 2002, appear in Item 8 of this Report.

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.

General:

Park is a leading global designer and producer of advanced
electronic materials used to fabricate complex multilayer printed
circuit boards and other electronic interconnect systems. The
Company's customers include leading independent printed circuit
board fabricators, electronic manufacturing service companies,
electronic contract manufacturers and major electronic original
equipment manufacturers in the computer, telecommunications,
transportation, aerospace and instrumentation industries.

The sales and earnings growth that the Company achieved
during its 2001 and 2000 fiscal years halted in the 2002 fiscal
year as a result of a severe correction and downturn in the
global electronics industry. The Company's sales declined
dramatically in the fiscal year ended March 3, 2002, with steep
declines in sales by the Company's North American, European and
Asian operations. The Company's sales volumes during the 2002
fiscal year were less than one half of the sales levels during
the 2001 fiscal year, and the Company reported a substantial loss
in the 2002 fiscal year.

The Company's sales growth during the 2001 and 2000 fiscal
years was attributable to increased sales of electronic materials
in North America, excluding the loss of sales to Delco
Electronics, discussed below, and in Europe and Asia. The
Company's ongoing efforts to expand its higher technology, higher
margin product lines were significant factors in the growth of
the Company's sales of electronic materials.

The Company's earnings increased during each of the 2001 and
2000 fiscal years, despite the significant losses in the 2000
fiscal year incurred by the Company's mass lamination business in
Arizona which formerly supplied Delco Electronics and despite the
significant charges related to the closure and the write-down of
the assets of the plumbing hardware business and the 2000 fiscal
year operating loss of that business. In the 2001 fiscal year,
the Company's earnings reached record levels as a result of the
surge in demand for the Company's electronic materials products
throughout the global electronics markets served by the Company
and the Company's continuing emphasis on its higher technology
product lines.

Growth of the Company's electronic materials business was
constrained during the 2001 and 2000 fiscal years by the
Company's available manufacturing capacity, although the Company
has been expanding the manufacturing capacity of its electronic
materials facilities in recent years. Nevertheless, all the
Company's electronic materials facilities were operating at full
capacity during the 2001 fiscal year. During the 2000 fiscal
year, the Company completed expansions of its electronic
materials operations in Singapore and France, acquired additional
manufacturing capacity in California, and commenced significant
additional expansions of its electronic materials operations in
California and New York, which it completed in its 2002 fiscal
year. During the 2001 fiscal year, the Company commenced a
significant expansion of its higher technology product line
manufacturing facility in Arizona, which it completed in the 2002
fiscal year first quarter.

During the Company's 1998 fiscal year and for several years
prior thereto, more than 10% of the Company's total worldwide
sales were to Delco Electronics Corporation, a subsidiary of
General Motors Corp., and the Company's wholly owned subsidiary,
Nelco Technology, Inc. ("NTI") located in Tempe, Arizona, had
been Delco's principal supplier of semi-finished multilayer
printed circuit board materials, commonly known as mass
lamination, which were used by Delco to produce finished
multilayer printed circuit boards. However, in March 1998, the
Company was informed by Delco 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 during the three-month period ended May
31, 1998, were negligible during the remainder of the 1999 fiscal
year and have been nil since that time.

In May 1998, the Company and NTI 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 alleged, among other
things, that Delco breached its contract to purchase semi-
finished multilayer printed circuit boards from NTI and that
Delphi interfered with NTI's contract with Delco, that Delco
breached the covenant of good faith and fair dealing implied in
the contract, that Delco engaged in negligent misrepresentation
and that Delco fraudulently induced NTI to enter into the
contract. The Company and NTI sought substantial compensatory and
punitive damages. In November 2000, a jury awarded damages to NTI
in the amount of $32,280,000, and in December 2000 the judge in
the United States District Court for the District of Arizona
entered judgment for NTI on its claim of breach of the implied
covenant of good faith and fair dealing with damages in the
amount of $32,280,000. Both parties filed motions for post-
judgment relief and a new trial, all of which the judge denied,
and both parties have appealed the decision to the United States
Court of Appeals for the Ninth Circuit in San Francisco.

After March 1998, the business of NTI languished and its
performance was unsatisfactory due primarily to the absence of
the unique, high-volume, high-quality business that had been
provided by Delco Electronics and the absence of any other
customer in the North American electronic materials industry with
a similar demand for the large volumes of semi-finished
multilayer printed circuit board materials that Delco purchased
from NTI. Although NTI's business experienced a resurgence in the
2001 fiscal year as the North American market for printed circuit
materials became extremely strong and demand exceeded supply for
the electronic materials manufactured by the Company, the
Company's internal expectations and projections for the NTI
business were for continuing volatility in the business'
performance over the foreseeable future. Consequently, the
Company commenced efforts to sell the business in the second half
of its 2001 fiscal year; and in April 2001, the Company sold the
assets and business of NTI and closed a related support facility,
also located in Tempe, Arizona. In connection with the sale and
closure, the Company recorded non-recurring, pre-tax charges of
$15.7 million in its 2002 fiscal year first quarter ended May 27,
2001. As a result of this sale, the Company exited the mass
lamination business in North America.

Although the Company's electronic materials business was not
dependent on this single customer, the loss of this customer had
a material adverse effect on this business in the last three
fiscal years.

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.

Fiscal Year 2002 Compared with Fiscal Year 2001:

The Company experienced a sharp decline in its results of
operations for the fiscal year ended March 3, 2002 as the North
American, European and Asian markets for sophisticated printed
circuit materials experienced severe downturns during such
periods.

In addition to its severely depressed results of operations,
during the 2002 fiscal year first quarter, the Company incurred
non-recurring, pre-tax charges of $15.7 million in connection
with the sale of the assets and business of NTI and the closure
of a related support facility in Arizona and $0.7 million in
connection with workforce reductions at the Company's continuing
operations. The Company also incurred pre-tax charges during the
2002 fiscal year third quarter totaling $2.9 million in
connection with the realignment of the operations of its German
subsidiary, Dielektra GmbH, the Company's electronic materials
business located in Cologne, Germany. The realignment included
the closure of Dielektra's conventional lamination line to enable
it to better focus its efforts and capabilities on its unique
DatlamT automated continuous lamination and paneling
manufacturing technology and the reduction of the size of its
mass lamination operations in order to focus on the marketing and
manufacturing of high technology, higher layer count mass
lamination product. The Company incurred an additional $125,000
in pre-tax charges during the third quarter for a workforce
reduction at another business unit.

The significant reduction in the Company's sales of
electronic materials was largely responsible for the severe
decline in the Company's results of operations for the fiscal
year ended March 3, 2002. The North American, European and Asian
markets for sophisticated printed circuit materials collapsed
during the 2002 fiscal year, and the Company's electronic
materials operations located in each region suffered as a result,
although the Company believes it gained market share with certain
of its electronic materials customers.

The Company's results of operations and margins declined in
the 2002 fiscal year principally as a result of the electronic
material business' decrease in sales of all products and the
concomitant operation of the Company's facilities at levels far
below their designed manufacturing capacity.

Operating results of the Company's specialty adhesive tape
and advanced composite materials businesses also declined during
the 2002 fiscal year. This decline was attributable to lower
volumes of products sold.

While the Company's sales volumes during the 2002 fiscal
year were only about 44% of the robust sales volumes achieved by
the Company during the 2001 fiscal year, the Company has
experienced a small improvement in its sales levels during the
months of January through April 2002 compared to the preceding
seven months. The Company believes this improvement is
attributable to market share gains and to improvements in the
business of the Company's customers. However, the Company cannot
predict whether this small improvement is sustainable or to
ascertain whether the global electronics industry is in fact
beginning to recover.

Results of Operations

Net sales for the fiscal year ended March 3, 2002 declined
56% to $230.1 million from $522.2 million for the fiscal year
ended February 25, 2001. This decline in sales was the result of
lower unit volumes of materials shipped and the absence of sales
by NTI, which, as described above, the Company sold in the 2002
fiscal year first quarter.

Although the net sales of NTI during the 2001 fiscal year
were material relative to the Company's consolidated net sales
during such year, the operations of NTI were not material to the
Company's consolidated financial position, results of operations,
capital resources or liquidity, and the sale of NTI is not
expected to have any material effect on the Company's future
operating results, financial position, capital resources,
liquidity or continuing operations.

The Company's foreign operations accounted for $97.5 million
of sales, or 42% of the Company's total sales worldwide, during
the 2002 fiscal year, compared with $209.3 million of sales, or
40% of total sales worldwide, during the 2001 fiscal year. Sales
by the Company's foreign operations during the 2002 fiscal year
decreased 54% from the 2001 fiscal year. The decrease in sales by
the Company's foreign operations in the 2002 fiscal year was due
to decreases in sales in both Asia and Europe.

The overall gross margin as a percentage of net sales for
the Company's worldwide operations was 5.1% during the 2002
fiscal year compared with 22.5% during the 2001 fiscal year. The
deterioration in the gross margin was attributable to the
significant declines in sales volumes from the 2001 fiscal year,
the absence of growth in sales of higher technology, higher
margin products, which was only slightly offset by increases in
market share with certain key electronic materials customers and
inefficiencies caused by operating certain facilities at levels
below their designed manufacturing capacity. Although the
Company's cost of sales decreased significantly as a result of
lower production volumes and cost reduction measures implemented
by the Company, including significant workforce reductions, the
reduction of overtime and the decision to not implement annual
salary increases, the declines in sales and production volumes
resulted in lower volumes to absorb fixed overhead costs and,
consequently, an increase in the cost of sales as a percentage of
net sales in the 2002 fiscal year.

Although selling, general and administrative expenses
declined by $15.5 million, or by 31%, during the 2002 fiscal year
compared with the 2001 fiscal year, these expenses, measured as a
percentage of sales, were 14.9% during the 2002 fiscal year
compared with 9.5% during the 2001 fiscal year. The increase in
selling, general and administrative expenses as a percentage of
sales in the 2002 fiscal year resulted from proportionately lower
sales compared to the 2001 fiscal year.

For the reasons set forth above, for the 2002 fiscal year,
income from operations, including the non-recurring, pre-tax
charges, described above, related to the realignment of the
operations of the Company's German business unit, the sale of NTI
and the closure of a related support facility and severance for
workforce reductions at the Company's continuing operations,
declined to a loss of $42.0 million, and income from operations,
before the non-recurring, pre-tax charges, declined to a loss of
$22.6 million, in both cases compared to a profit of $67.8
million for the 2001 fiscal year.

Interest and other income, net, principally investment
income, declined 34% to $5.5 million for the 2002 fiscal year
from $8.4 million for the 2001 fiscal year. The decrease in
investment income was attributable to the reduction in cash
available for investment and lower prevailing interest rates
during the 2002 fiscal year. The Company's investments were
primarily short-term taxable instruments. The Company incurred no
interest expense during the 2002 fiscal year compared with $5.6
million during the 2001 fiscal year. The Company's interest
expense was related primarily to its $100 million principal
amount of 5.5% Convertible Subordinated Notes due 2006, issued in
1996, $2,328,000 principal amount of which was converted into
82,750 shares of the Company's common stock prior to February
25,2001, the end of the Company's 2001 fiscal year, $95,934,000
of which was converted into 3,410,908 shares of the Company's
common stock on March 1, 2001, and $1,738,000 of which was
redeemed by the Company for cash on March 2, 2001. See "Liquidity
and Capital Resources" elsewhere in this Item 7.

The Company's effective income tax rate was 30.0% for the
2002 fiscal year and the 2001 fiscal year.

Net earnings for the 2002 fiscal year, including the non-
recurring, pre-tax charges, described above, related to the
realignment of the operations of the Company's German business
unit, the sale of NTI and the closure of a related support
facility and severance for workforce reductions at the Company's
continuing operations, declined to a net loss of $25.5 million,
and net earnings, before the non-recurring, pre-tax charges,
declined to a net loss of $11.9 million, in both cases from net
earnings of $49.4 million for the 2001 fiscal year.

Basic and diluted earnings per share decreased from $3.10
and $2.65, respectively, for the 2001 fiscal year to a loss per
share of $1.31 including the non-recurring, pre-tax charges and
to a loss per share of $0.61 before the non-recurring, pre-tax
charges for the 2002 fiscal year.

The declines in net earnings and earnings per share were
primarily attributable to the decline in the profit from
operations and the charge for the closure of the business unit in
Arizona which formerly supplied Delco Electronics Corporation
with semi-finished multilayer circuit boards.

Fiscal Year 2001 Compared with Fiscal Year 2000:

The Company's electronic materials business was largely
responsible for the dramatic improvement in the Company's results
of operations for the fiscal year ended February 25, 2001. The
North American, Asian and European markets for sophisticated
printed circuit materials were extremely strong during the 2001
fiscal year, and the Company's electronic materials operations
located in all three geographic areas performed well as a result.

The Company's results of operations and margins improved in
the 2001 fiscal year principally as a result of the optimal
utilization of the electronic materials business' manufacturing
resources and the business' increase in its market share with
certain key customers and increase in its sales of higher
technology, higher margin products.

Results of Operations

Net sales for the fiscal year ended February 25, 2001
increased 23% to $522.2 million from $425.3 million for the
fiscal year ended February 27, 2000. This increase in sales was
principally the result of higher volume of materials shipped and
an increase in sales of higher technology products.

The Company's foreign operations accounted for $209.3
million of sales, or 40% of the Company's total sales worldwide,
during the 2001 fiscal year compared with $159.1 million of
sales, or 37% of total sales worldwide, during the 2000 fiscal
year. Sales by the Company's foreign operations during the 2001
fiscal year increased 32% from the 2000 fiscal year. The increase
in sales by the Company's foreign operations in the 2001 fiscal
year was due to increases in sales by both the Asian and European
operations of the Company.

The gross margin for the Company's continuing worldwide
operations was 22.5% during the 2001 fiscal year compared with
17.3% for the 2000 fiscal year. The increase in the gross margin
was attributable to efficiencies achieved by operating facilities
at levels close to their designed capacity in the 2001 fiscal
year, the continuing growth in sales of higher technology, higher
margin products as a percentage of total sales and increases in
market share with certain key electronic materials customers.

Selling, general and administrative expenses, measured as a
percentage of sales, were 9.5% during the 2001 fiscal year
compared with 10.7% during the 2000 fiscal year. This decrease
was a result of the partially fixed nature of these expenses and
the Company's increased sales in the 2001 fiscal year.

For the reasons set forth above, profit from operations for
the 2001 fiscal year increased 190% to $67.8 million from $23.4
million for the 2000 fiscal year.

Interest and other income, principally investment income,
increased 25% to $8.4 million for the 2001 fiscal year from $6.7
million for the 2000 fiscal year. The increase in investment
income was attributable to increased cash available for
investment and higher prevailing interest rates during the 2001
fiscal year. The Company's investments were primarily short-term
taxable instruments and government securities. Interest expense
for the 2001 fiscal year was $5.6 million compared with $5.7
million during the 2000 fiscal year. The Company's interest
expense was related primarily to its $100 million principal
amount of 5.5% Convertible Subordinated Notes due 2006 issued in
February 1996. See "Liquidity and Capital Resources" elsewhere in
this Item 7.

The Company's effective income tax rate for the 2001 fiscal
year was 30.0% compared with 25.0% for the 2000 fiscal year. This
increase in the effective tax rate was 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 2001 fiscal year increased 170% to
$49.4 million from $18.3 million for the 2000 fiscal year. Basic
and diluted earnings per share increased to $3.10 and $2.65,
respectively, for the 2001 fiscal year from $1.16 and $1.12,
respectively, for the 2000 fiscal year. This increase in net
earnings and earnings per share was primarily attributable to the
increase in the profit from operations offset, in part, by the
higher effective tax rate.

Liquidity and Capital Resources:

At March 3, 2002, the Company's cash and temporary
investments were $151.4 million compared with $155.7 million at
February 25, 2001, the end of the Company's 2001 fiscal year. The
decrease in the Company's cash and investment position at March
3, 2002 was attributable to reduced cash provided from operating
activities and cash used for the purchase of fixed assets, as
discussed below. The Company's working capital (which includes
cash and temporary investments) was $167.0 million at March 3,
2002 compared with $188.5 million at February 25, 2001. The
decrease at March 3, 2002 compared with February 25, 2001 was due
principally to lower cash and temporary investments, accounts
receivable and inventories, offset in part by lower current
liabilities. The decrease in accounts receivable, inventories and
current liabilities at March 3, 2002 compared with February 25,
2001 was a result principally of reduced operating activity in
support of lower sales volumes. The Company's current ratio (the
ratio of current assets to current liabilities) was 4.9 to 1 at
March 3, 2002 compared with 3.4 to 1 at February 25, 2001.

During the 2002 fiscal year, cash provided by the Company's
operations, before depreciation and amortization and before non-
cash losses related to the sale and impairment of fixed assets,
of $4.3 million was enhanced by a significant net reduction in
working capital items, resulting in $23.4 million of cash
provided from operating activities. A major portion of the 2002
fiscal year's capital expenditures related to the expansions of
the Company's electronic materials facilities in Arizona,
California and New York. These expansions increased the Company's
capacity and capability for the production of sophisticated
printed circuit materials. Net expenditures for property, plant
and equipment were $22.8 million, $51.8 million and $27.7 million
in the 2002, 2001 and 2000 fiscal years, respectively. The
Company expects the capital expenditures in the 2003 fiscal year
to be less than the expenditures in the 2002 fiscal year and in
the 2001 fiscal year.

At March 3, 2002, the Company had no long-term debt. During
the Company's 2001 fiscal year, $2,328,000 principal amount of
Notes was converted into 82,750 shares of the Company's common
stock, and immediately after the end of the 2001 fiscal year,
$95,934,000 principal amount of Notes was converted into
3,410,908 shares of the Company's common stock, all at a
conversion price of $28.125 per share. On March 2, 2001, the
Company redeemed $1,738,000 principal amount of Notes for a
redemption price of $1,000.15 (including accrued interest) for
each $1,000 principal amount Note pursuant to a previous
announcement that on March 2, 2001 it would redeem all of the
outstanding Notes that were not converted on or before March 1,
2001. See Note 6 of the Notes to Consolidated Financial
Statements in Item 8 of this Report.

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 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 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.

The Company's contractual obligations and other commercial
commitments to make future payments under contracts, such as
lease agreements, consist only of the operating lease commitments
described in Note 13 of the Notes to Consolidated Financial
Statements included elsewhere in this Report. 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 a
standby letter of credit in the amount of $1,042,000 to secure
the Company's obligations under its workers' compensation
insurance program.

Environmental Matters:

The Company is subject to various federal, state and local
government requirements relating to the protection of the
environment. The Company believes that, as a general matter, its
policies, practices and procedures are properly designed to
prevent unreasonable risk of environmental damage and that its
handling, manufacture, use and disposal of hazardous or toxic
substances are in accord with environmental laws and regulations.
However, mainly because of past operations and operations of
predecessor companies, which were generally in compliance with
applicable laws at the time of the operations in question, the
Company, like other companies engaged in similar businesses, is a
party to claims by government agencies and third parties and has
incurred remedial response and voluntary cleanup costs associated
with environmental matters. Additional claims and costs involving
past environmental matters may continue to arise in the future.
It is the Company's policy to record appropriate liabilities for
such matters when remedial efforts are probable and the costs can
be reasonably estimated.

In the 2002, 2001 and 2000 fiscal years, the Company charged
approximately $0.2 million, $0.3 million and $0.2 million,
respectively, against pre-tax income for 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 March 3, 2002,
the recorded liability in accrued liabilities for environmental
matters was $4.0 million compared with $4.4 million at February
25, 2001.

Management does not expect that environmental matters will
have a material adverse effect on the liquidity, capital
resources, business or consolidated financial position of the
Company. See Note 13 of the Notes to Consolidated Financial
Statements included in Item 8 of this Report for a discussion of
the Company's commitments and contingencies, including those
related to environmental matters.

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, bad
debts, inventories, valuation of long-lived assets, income taxes,
restructuring, 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 reasonable under 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.

Sales Allowances

The Company provides for the estimated costs of sales
allowances at the time such costs can be reasonably estimated.
The Company is focused on manufacturing the highest quality
electronic materials and other products 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.
However, if the quality of the Company's products declined, the
Company may incur higher sales allowances.

Bad Debt

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.

Inventory

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. If actual demand or market
conditions are less favorable than those projected by management,
additional inventory write-downs may be required.

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.

Restructuring

During the fiscal year ended March 3, 2002, the Company
recorded significant reserves in connection with the
restructuring relating to the sale of Nelco Technology, Inc., the
closure of a related support facility and the realignment of
Dielektra, GmbH. These reserves include estimates pertaining to
employee separation costs and the settlements of contractual
obligations resulting from the Company's actions. Although the
Company does not anticipate significant changes, the actual costs
incurred by the Company may differ from these estimates.

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

The Company's subsidiary in Europe 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 Company is required to consider current
market conditions, including changes in interest rates and wage
costs, in selecting these assumptions. Changes in the related
pension costs may occur in the future in addition to changes
resulting from fluctuations in the Company's related headcount
due to changes in the assumptions.

The Company's obligations for workers' compensation claims
and employee-health care benefits 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's employee health insurance benefit liability is based on
its historical claims 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.

The Private Securities Litigation Reform Act of 1995
provides a "safe harbor" for forward-looking statements to
encourage companies to provide prospective information about
their companies without fear of litigation so long as those
statements are identified as forward-looking and are accompanied
by meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those
projected in the statement. 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, forecasted, estimated or budgeted by the Company in
forward-looking statements. Accordingly, the Company hereby
identifies the following important factors which could cause the
Company's actual results to differ materially from any such
results which might be projected, forecast, estimated or budgeted
by the Company in forward-looking statements.

. The Company's customer base is concentrated, in
part, because the Company's business strategy has been
to develop long-term relationships with a select group
of customers. During the Company's fiscal year ended
March 3, 2002, the Company's ten largest customers
accounted for approximately 59% of net sales. The
Company expects that sales to a relatively small number
of customers will continue to account for a significant
portion of its net sales for the foreseeable future. A
loss of one or more of such key customers could affect
the Company's profitability. See "Business-Electronic
Materials Operations-Customers and End Markets" in Item
1 of this Report, "Legal Proceedings" in Item 3 of this
Report and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Item 7
of this Report for discussions of the loss of a key cus
tomer early in the 1999 fiscal year.

. The Company's business is dependent on certain
aspects of the electronics industry, which is a cyclical
industry and which has experienced recurring downturns.
The downturns, such as occurred in the first quarter of
the Company's fiscal year ended March 2, 1997 and in the
first quarter of the Company's fiscal year ended March
3, 2002, can be unexpected and have often reduced demand
for, and prices of, electronic materials.

. The Company's operating results are affected by a
number of factors, including various factors beyond the
Company's control. Such factors include economic
conditions in the electronics industry, the timing of
customer orders, product prices, process yields, the mix
of products sold and maintenance-related shutdowns of
facilities. Operating results also can be influenced by
development and introduction of new products and the
costs associated with the start-up of new facilities.

. The Company's production processes require the use
of substantial amounts of gas and electricity, the cost
and available supply of which are beyond the control of
the Company. Changes in the cost or availability of gas
or electricity could materially increase the Company's
cost of operations.

. Rapid technological advances in semiconductors and
electronic equipment have placed rigorous demands on the
electronic materials manufactured by the Company and
used in printed circuit board production. The Company's
operating results will be affected by the Company's
ability to maintain and increase its technological and
manufacturing capability and expertise in this rapidly
changing industry.

. The electronic materials industry is intensely
competitive and the Company competes worldwide in the
market for materials used in the production of complex
multilayer printed circuit boards. The Company's
principal competitors are substantially larger and have
greater financial resources than the Company, and the
Company's operating results will be affected by its
ability to maintain its competitive position in the
industry.

. There are a limited number of qualified suppliers
of the principal materials used by the Company in its
manufacture of electronic materials products.
Substitutes for these products are not readily
available, and in the recent past there have been
shortages in the market for certain of these materials.

. The Company typically does not obtain long-term
purchase orders or commitments. Instead, it relies
primarily on continual communication with its customers
to anticipate the future volume of purchase orders. A
variety of conditions, both specific to the individual
customer and generally affecting the customer's
industry, can cause a customer to reduce or delay orders
previously anticipated by the Company.

. The Company, from time to time, is engaged in the
expansion of certain of its manufacturing facilities for
electronic materials. The anticipated costs of such
expansions cannot be determined with precision and may
vary materially from those budgeted. In addition, such
expansions will increase the Company's fixed costs. The
Company's future profitability depends upon its ability
to utilize its manufacturing capacity in an effective
manner.

. The Company's business is capital intensive and, in
addition, the introduction of new technologies could
substantially increase the Company's capital
expenditures. In order to remain competitive the Company
must continue to make significant investments in capital
equipment and expansion of operations. This may require
that the Company continue to be able to access capital
on terms acceptable to the Company.

. The Company may acquire businesses, product lines
or technologies that expand or complement those of the
Company. The integration and management of an acquired
company or business may strain the Company's management
resources and technical, financial and operating
systems. In addition, implementation of acquisitions can
result in large one-time charges and costs. A given
acquisition, if consummated, may materially affect the
Company's business, financial condition and results of
operations.

. The Company's international operations are subject
to risks, including unexpected changes in regulatory
requirements, exchange rates, tariffs and other
barriers, political and economic instability and
potentially adverse tax consequences.

. A portion of the sales and costs of the Company's
international operations are denominated in currencies
other than the U.S. dollar and may be affected by
fluctuations in currency exchange rates.

. The Company's success is dependent upon its
relationship with key management and technical
personnel.

. The Company's future success depends in part upon
its intellectual property which the Company seeks to
protect through a combination of contract provisions,
trade secret protections, copyrights and patents.

. The Company's production processes require the use,
storage, treatment and disposal of certain materials
which are considered hazardous under applicable
environmental laws and the Company is subject to a
variety of regulatory requirements relating to the
handling of such materials and the release of emissions
and effluents into the environment. Other possible
developments, such as the enactment or adoption of
additional environmental laws, could result in
substantial costs to the Company.

. The market price of the Company's securities can be
subject to fluctuations in response to quarter to
quarter variations in operating results, changes in
analysts' earnings estimates, market conditions in the
electronic materials industry, as well as general
economic conditions and other factors external to the
Company.

. The Company's results could be affected by changes
in the Company's accounting policies and practices or
changes in the Company's organization, compensation and
benefit plans, or changes in the Company's material
agreements or understandings with third parties.

Item 7A.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 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 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 2002 fiscal year 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.

Item 8. Financial Statements and Supplementary Data.

The Company's Financial Statements begin on the next
page.

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of
Park Electrochemical Corp.
Lake Success, New York

We have audited the accompanying consolidated balance sheets of
Park Electrochemical Corp. and subsidiaries as of March 3, 2002
and February 25, 2001 and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the
three years in the period ended March 3, 2002. Our audits also
included the financial statement schedule listed in the Index at
Item 14(a)(2). These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Park Electrochemical Corp. and subsidiaries
as of March 3, 2002 and February 25, 2001 and the consolidated
results of their operations and their cash flows for each of the
three years in the period ended March 3, 2002, in conformity with
accounting principles generally accepted in the United States.
Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material
respects the information set forth therein.

ERNST & YOUNG LLP

New York, New York
April 22, 2002

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY