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           For the Fiscal Year Ended December 31, 2002
          
                            OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

                For the transition period from to

                                                               Commission File Number 0-27744

                                                          PCD INC.
                                        (Exact Name of Registrant as Specified in its Charter)

Massachusetts                                                                                                                        04-2604950
(State or Other Jurisdiction of                                                                                            (I.R.S. Employer
  Incorporation or Organization)                                                                                        Identification Number)

                                                         2 Technology Drive
                                                            Centennial Park
                                           Peabody, Massachusetts 01960-7977
                                 (Address of Principal Executive Offices, Including Zip Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   X     No       

Indicate by check mark 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]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes          No    X  

As of June 29, 2002 the aggregate market value of the registrant's Common Stock held by non-affiliates of the registrant was approximately $3,037,152, based upon the closing sales price on the Nasdaq Stock Market for that date. As of March 13, 2003, the number of issued and outstanding shares of the registrant's Common Stock, par value $0.01 per share, was 8,951,945.

     As used herein, the terms "Company" and "PCD," unless otherwise indicated or the context otherwise requires, refer to PCD Inc. and its subsidiaries.

     On March 21, 2003, PCD Inc. entered into definitive agreements to sell the assets of its two business units. PCD agreed to sell its Industrial/Avionics Division, headquartered in Peabody, MA, to Amphenol Corporation for $14 million, less assumed liabilities and has agreed to sell the Wells-CTI Division which has headquarters in Phoenix, AZ, to UMD Technology, Inc. ("UMD") for approximately $2 million plus assumed liabilities (the "Transactions"). On that same date, to facilitate the sales, PCD Inc. and its domestic subsidiary, Wells-CTI, Inc., filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Massachusetts. The Chapter 11 filings allow the sale of the assets of the domestic entities to be free and clear from certain liabilities that the prospective purchasers do not wish to assume. Assuming approval of the company's reorganization plan by the bankruptcy court and the closing of these transactions (the "Plan"), PCD's creditors will receive the proceeds from the sale of PCD's assets to Amphenol and UMD, as well as any additional cash on PCD's balance sheet after the close of the Transactions. The Company will then be liquidated. There will not be any distribution to shareholders upon liquidation.  There can be no assurance that the Plan will be approved by the Bankruptcy Court.  In the event the Plan is not confirmed by the United States Bankruptcy Court, the Company would likely convert the case to a liquidation under Chapter 7 of the Bankruptcy Code and engage in an orderly liquidation of its assets.

     PCD's lenders have agreed to terms and conditions to allow PCD to use its existing cash reserves and revenues from operations to meet all of its current operating requirements until the sales are completed. PCD's request to use the funds covered by its agreement with lenders was approved on March 25, 2003 by the Bankruptcy Court as part of the Company's first-day motions..

     PCD Inc. designs, manufactures and markets electronic connectors for use in semi-conductor burn-in, industrial interconnect and avionics industries. Electronic connectors, which enable an electrical current or signal to pass from one element to another within an electronic system, range from minute individual connections within an integrated circuit ("IC") to rugged, multiple lead connectors that couple various types of electrical/electronic equipment. Electronic connectors are used in virtually all electronic systems, including data communications, telecommunications, computers and computer peripherals, industrial controls, automotive, avionics and test and measurement instrumentation. The electronic connector market is both large and broad. Bishop & Associates, a leading electronic connector industry market research firm, estimates the total 2002 worldwide market at $23.1 billion with more than 1,200 manufacturers. This represents a 9.6% drop in market volume from the previous year. Bishop indicates the North American market segment as $7.6 billion, which is a 13.5% decline from the year 2001. These changes are discussed in greater detail in the Market Overview section below.

     The Company markets over 6,800 electronic connector products in three product categories, each targeting a specific market. These product categories are semiconductor burn-in sockets, industrial interconnects and avionics junction modules and relay sockets. Semiconductor burn-in sockets are specially designed electro-mechanical devices that connect ICs to printed circuit boards during the reliability testing stages of IC production. Industrial interconnects are used in industrial equipment systems both internally, as input/output ("I/O") connectors to link the rugged electrical environment of operating equipment to the electronic environment of controllers and sensors, and externally, to facilitate the interface between discrete factory wiring and cabling for standard computer interconnects. Avionics junction modules and relay sockets perform similar functions as industrial connectors, but are designed and built to operate in the harsher environment and meet the more critical performance requirements of avionics applications. Representative customers of the Company include Bombardier Inc., Micron Technology, Inc., Rockwell International Corp. (through its subsidiary, the Allen-Bradley Company) and Advanced Micro Devices, Inc.

     The Company has identified three long term trends affecting the electronics industry: (i) the increasing complexity of ICs and corresponding evolution of IC package designs, which lead to growth possibilities in PCD's semiconductor burn-in market; (ii) the global nature of semiconductor manufacturers, which requires suppliers with global design, manufacturing and marketing capabilities; and (iii) the use of increasingly complex electronic controllers and sensors in industrial and avionics applications, creating opportunities in PCD's industrial equipment and avionics markets.

     The Company's goal had been to identify and expand into selected electronic connector markets where it could establish a position of leadership. The Company has attempted to increase its presence in the markets in which it participates through internal investment in product development, and expansion of its existing product and customer base within each market.

     The Company was incorporated in Massachusetts on November 9, 1976 under the name Precision Connector Designs, Inc. In February 1996, the Company changed its name to PCD Inc. On March 21, 2003, PCD and its subsidiary, Wells-CTI, Inc., filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code.

     The Company is vertically integrated from the initial concept stage through final design and manufacturing with regard to the key production processes which the Company believes are critical to product performance and service. These processes include precision stamping, plastic injection molding and automated assembly. The Company believes that this vertical integration allows the Company to respond to customers quickly, control quality and reduce the time to market for new product development.

     The Company seeks to reduce costs in its manufacturing fabrication and assembly operations through formalized cost savings programs. Complementary programs are dedicated to maximizing the return on capital investments and reducing overhead expense.

     The Company subcontracts a portion of its labor-intensive product assembly to a U.S.-based subcontractor with a manufacturing facility in Mexico. Wells-CTI KK, the Company's Japanese subsidiary, subcontracts all of its product manufacturing and assembly operations to Asian vendors. The Company is not contractually obligated to do business with any subcontractor. The Company believes it could substitute other subcontractors without significant additional cost or delay, and could perform assembly itself if the need were to arise.

     The Company uses a combination of patents and other means to establish and protect its intellectual property rights in various products. Due to the nature of its products, the Company believes that intellectual property protection is less significant than the Company's ability to further develop, enhance and modify its current products. However, many of the Company's competitors have obtained or developed, and may be expected to obtain or develop in the future, patents or other proprietary rights that cover or affect products that perform functions similar to those performed by products offered by the Company. There can be no assurance that, in the future, the Company's products will not be held to infringe patent claims of its competitors, or that the Company is aware of all patents containing claims that may pose a risk of infringement by its products.

     The markets in which PCD operates are highly competitive, and the Company faces competition from a number of different manufacturers. The Company has experienced significant price pressure with respect to certain products, including its TSOP products, and fixed mount and pluggable terminal Industrial blocks. The principal competitive factors affecting the market for the Company's products include design, responsiveness, quality, price, reputation and reliability.

     Generally, the electronic connector industry is competitive and fragmented, with over 1,200 manufacturers worldwide. Competition in the semiconductor burn-in market, however, is highly concentrated among a small number of significant competitors. Competition among manufacturers of application-specific connectors in the industrial terminal blocks market depends greatly on the customer, market and specific nature of the requirement. Competition is fragmented in the avionics market, but there are fewer competitors due to the demanding nature of the military and customer specifications which control much of the markets and the cost and time required to tool and qualify military standard parts. In each of the markets in which the Company participates, the Company's significant competitors are much larger and have substantially broader product lines and greater financial resources than the Company.

     The Company defines its backlog as orders that are scheduled for delivery within the next 12 months. The Company estimates that its backlog of unfilled orders was approximately $7.5 million at December 31, 2002 and December 31, 2001. The level and timing of orders placed by the Company's customers vary due to customer attempts to manage inventory, changes in manufacturing strategy and variations in demand for customer products due to, among other things, introductions of new products, product life cycles, competitive conditions or general economic conditions. The Company generally does not obtain long-term purchase orders or commitments but instead seeks to work closely with its customers to anticipate the volume of future orders. Based on anticipated future volumes, the Company makes other significant decisions regarding the level of business it will accept, the timing of production and the levels and utilization of personnel and other resources. A variety of conditions, both specific to the individual customer and generally affecting the customer's industry, may cause customers to cancel, reduce or delay purchase orders that were either previously made or anticipated. Generally, customers may cancel, reduce or delay purchase orders and commitments without penalty. For these reasons, backlog may not be indicative of future demand or results of operations.

     The Company is subject to a wide range of environmental laws and regulations relating to the use, storage, discharge and disposal of hazardous chemicals used during its manufacturing process. A failure by the Company to comply with present or future laws and regulations could subject it to future liabilities or the suspension of production. Such laws and regulations could also restrict the Company's ability to expand its facilities or could require the Company to acquire costly equipment or incur other significant expenses.

     As of December 31, 2002, the Company had 175 employees and 49 contract workers. The Company's 224 employees and contract workers include 186 in manufacturing and engineering, 16 in sales and marketing and 22 in administration. No employees are currently covered under collective bargaining arrangements.

     On March 21, 2003, PCD Inc. entered into definitive agreements to sell the assets of its two business units. To facilitate the sales, PCD Inc. and its domestic subsidiary, Wells-CTI, Inc., filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Massachusetts. The Chapter 11 filings allow the sale of the assets of the domestic entities to be free and clear from certain liabilities that the prospective purchasers do not wish to assume. Assuming approval of the Company's reorganization plan (the "Plan") by the bankruptcy court and the closing of these Transactions, PCD's creditors will receive the proceeds from the sale of PCD's assets to Amphenol and UMD, as well as any additional cash on PCD's balance sheet after the close of the transactions. The Company will then be liquidated with all proceeds going to the Company's secured creditors.

     During the bankruptcy period PCD will attempt to maintain normal and regular trade terms with its suppliers and customers. The Plan contemplates that our trade suppliers, employees and customers will not be adversely affected while PCD is in bankruptcy. PCD's lenders have agreed to terms and conditions to allow PCD to use its existing cash reserves and revenues from operations to meet all of its current operating requirements until the sales are completed. PCD's request to use the funds covered by its agreement with lenders was approved on March 25, 2003 by the Bankruptcy Court as part of the Company's first-day motions. There can be no assurance that our suppliers will continue to provide normal trade credit or credit on normal terms acceptable to the Company, if at all, or that our customers will continue to do business or enter into new business with the Company.

     There can be no assurance that the Plan will be approved by the Bankruptcy Court. In the event the Plan is not confirmed by the United States Bankruptcy Court, the Company would likely convert the case to a liquidation under Chapter 7 of the Bankruptcy Code and engage in an orderly liquidation of its assets. All proceeds would go to the Company's secured creditors.

     Senior Credit Facility Obligations. The Company has been in default under its credit facility with Fleet Bank and other lenders (the "Amended Senior Credit Facility") since June 29, 2002 and had received waivers from its lenders only through March 31, 2003. PCD's lenders, however, have agreed to terms and conditions to allow PCD to use its existing cash reserves and revenues from operations to meet all of its current operating requirements until the sales are completed. PCD's request to use the funds covered by its agreement with lenders was approved on March 25, 2003 by the Bankruptcy Court as part of the Company's first-day motions.

     Dependence on Semiconductor Burn-in Industry. The Company's semiconductor burn-in sockets are used by producers and testers of ICs and original equipment manufacturers ("OEMs"). For the years ended December 31, 2002, 2001 and 2000, the Company derived 44%, 48% and 69% of its net sales, respectively, from these products. Historically, the semiconductor burn-in industry has been driven by both the technology requirements and unit demands of the semiconductor industry. Depressed general economic conditions and cyclical downturns in the semiconductor industry have had an adverse economic effect on the semiconductor burn-in market. In addition, the product cycle of existing IC package designs and the timing of new IC package development and introduction can affect the demand for semiconductor burn-in sockets. The semiconductor industry has experienced a severe downturn in 2001 and 2002.

     Dependence on Principal Customers. During 2002, no customer accounted for 10% or more of net sales of the Company. Micron Technology, Inc. ("Micron"), a provider of DRAMs, SRAMs and other semiconductor components, was the largest customer of the Company in the years 2001 and 2000. Micron accounted for 18% and 21% of the net sales of the Company for the years ended December 31, 2001, and 2000, respectively. The Company does not have written agreements with any of its customers, including Micron, and therefore, no customer has any minimum purchase obligations. Accordingly, there can be no assurance that any of the Company's customers will purchase the Company's products beyond those covered by released purchase orders.

     International Sales and Operations. Sales to customers located outside the United States, either directly or through U.S. and foreign distributors, accounted for approximately 32%, 20% and 22% of the net sales of the Company in the years ended December 31, 2002, 2001 and 2000, respectively. International revenues are subject to a number of risks, including: longer accounts receivable payment cycles; exchange rate fluctuations; difficulty in enforcing agreements and intellectual property rights and in collecting accounts receivable; tariffs and other restrictions on foreign trade; withholding and other tax consequences; economic and political instability; and the burdens of complying with a wide variety of foreign laws. Sales made to foreign customers or foreign distributors may be denominated in either U.S. dollars or in the currencies of the countries where sales are made. The Company has not to date sought to hedge the risks associated with fluctuations in foreign exchange rates and does not currently plan to do so. The Company's foreign sales and operations are also affected by general economic conditions in its international markets. A prolonged economic downturn in its foreign markets could have a material adverse effect on the Company's business. The Company has an operating subsidiary in Japan, and sales and technical support operations in England. The laws of certain countries do not protect the Company's products and intellectual property rights to the same extent as do the laws of the United States.

     Fluctuations in Operating Results. The variability of the level and timing of orders from, and shipments to, major customers may result in significant fluctuations in the Company's quarterly results of operations. The Company generally does not obtain long-term purchase orders or commitments but instead seeks to work closely with its customers to anticipate the volume of future orders. Generally, customers may cancel, reduce or delay purchase orders and commitments without penalty. Cancellations, reductions or delays in orders by a customer or groups of customers could have a material adverse effect on the financial condition, results of operations and business of the Company. In addition to the variability resulting from the short-term nature of its customers' commitments, other factors have contributed, and may in the future contribute, to such fluctuations. These factors may include, among other things, customers' and competitors' announcement and introduction of new products or new generations of products, evolutions in the life cycles of customers' products, timing of expenditures in anticipation of future orders, effectiveness in managing manufacturing processes, changes in cost and availability of labor and components, shifts in the Company's product mix and changes or anticipated changes in economic conditions. Because the Company's operating expenses are based on anticipated revenue levels and a high percentage of the Company's operating expenses are relatively fixed, any unanticipated shortfall in revenue in a quarter could have a material adverse impact on the Company's results of operations for the quarter. Results of operations for any period should not be considered indicative of the results to be anticipated for any future period.

     Technological Evolution. The rapid technological evolution of the electronics industry requires the Company to anticipate and respond rapidly to changes in industry standards and customer needs and to develop and introduce new and enhanced products on a timely and cost-effective basis. In particular, the Company must target its development of semiconductor burn-in sockets based on which next-generation IC package designs the Company expects to be successful. The Company must manage transitions from products using present technology to those that utilize next-generation technology in order to maintain or increase sales and profitability, minimize disruptions in customer orders and avoid excess inventory of products that are less responsive to customer demand. Any failure of the Company to respond effectively to changes in industry standards and customer needs, develop and introduce new products and manage product transitions would have a material adverse effect on the financial condition, results of operations and business of the Company.

     Proprietary Technology and Product Protection. The Company's success depends in part on its ability to maintain the proprietary and confidential aspects of its products as they are released. The Company seeks to use a combination of patents and other means to establish and protect its proprietary rights. There can be no assurance, however, that the precautions taken by the Company will be adequate to protect the Company's technology. In addition, many of the Company's competitors have obtained or developed, and may be expected to obtain or develop in the future, patents or other proprietary rights that cover or affect products that perform functions similar to those performed by products offered by the Company. .

     Competition. The electronic connector industry is highly competitive and fragmented, with more than 1,200 manufacturers worldwide. The Company believes that competition in its targeted segments is primarily based on design, responsiveness, quality, price, reputation and reliability. The Company has experienced significant price pressure with respect to certain products, including its thin, small outline package ("TSOP") and quad-flat pack ("QFP") products, and fixed mount and pluggable Industrial terminal blocks. The Company's significant competitors are much larger and have substantially broader product lines and greater financial resources than the Company. There can be no assurance that the Company will compete successfully, and any failure to compete successfully would have a material adverse effect on the financial condition, results of operations and business of the Company.

     Dependence Upon Independent Distributors. Sales through independent distributors accounted for 43%, 29%, and 29% of the net sales of the Company for the years ended December 31, 2002, 2001, and 2000, respectively. The Company's agreements with its independent distributors are nonexclusive and may be terminated by either party upon 30 days written notice, provided that if the Company terminates the agreement with an independent distributor, the Company will be obligated to purchase certain of such distributor's pre-designated unsold inventory shipped by the Company within an agreed-upon period prior to the effective date of such termination. The Company's distributors are not within the control of the Company, are not obligated to purchase products from the Company, and may also sell other lines of products. There can be no assurance that these distributors will continue their current relationships with the Company or that they will not give higher priority to the sale of other products, which could include products of competitors. A reduction in sales efforts or discontinuance of sales of the Company's products by its distributors could lead to reduced sales and could materially adversely affect the Company's financial condition, results of operations and business. The Company grants to certain of its distributors limited inventory return and stock rotation rights. If the Company's distributors were to increase their general levels of inventory of the Company's products, the Company could face an increased risk of product returns from its distributors. There can be no assurance that the Company's historical return rate will remain at a low level in the future or that such product returns will not have a material adverse effect on the Company's financial condition, results of operations and business.

     Product Liability. The Company's products provide electrical connections between various electrical and electronic components. Any failure by the Company's products could result in claims against the Company. Except with respect to avionics products, the Company does not maintain insurance to protect against possible claims associated with the use of its products. There can be no assurance that the Company will not be subject to product liability claims. A successful claim brought against the Company could have a material adverse effect on the financial condition, results of operations and business of the Company. Even unsuccessful claims could result in the Company's expenditure of funds in litigation and management time and resources.

     Environmental Compliance. The Company is subject to a wide range of environmental laws and regulations relating to the use, storage, discharge and disposal of hazardous chemicals used during its manufacturing process. A failure by the Company at any time to comply with environmental laws and regulations could subject it to liabilities or the suspension of production. Such laws and regulations could also restrict the Company's ability to expand its facilities or could require the Company to acquire costly equipment or incur other significant expense.

AVAILABLE INFORMATION

     Copies of all exhibits to this Form 10-K (including exhibits incorporated by reference) are available without charge upon the request of any stockholder addressed to John J. Sheehan III, PCD Inc., 2 Technology Drive, Centennial Park, Peabody, MA 01960. The Company's website is http://www.pcdinc.com. Stockholders may access, free of charge, through the Investor Relations portion of the website, the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practical after such material is electronically filed with, or furnished to, the Securities and Exchange Commission.

     PCD, headquartered in Peabody, Massachusetts, operates leased production facilities in Peabody, Massachusetts (60,000 square feet), Phoenix, Arizona (29,000 square feet), and Yokohama, Japan (3,600 square feet). The Peabody facility is responsible for stamping and molding for all Company operations, and assembly, manufacturing automation development and quality assurance functions relating to industrial terminal blocks and avionics terminal blocks. The Phoenix facility is responsible for assembly and quality assurance functions relating to burn-in sockets, as well as related product design and development. The Yokohama facilities are responsible for design, assembly, manufacturing automation development and quality assurance for burn-in sockets. The Company also maintains distribution and technical sales support facilities in Northhampton, England. The Company believes that its facilities are adequate for its operations for the foreseeable future.

     On March 21, 2003, PCD Inc. entered into definitive agreements to sell the assets of its two business units. PCD agreed to sell its Industrial/Avionics Division, headquartered in Peabody, MA, to Amphenol Corporation for $14 million, less assumed liabilities and has agreed to sell the Wells-CTI Division which has headquarters in Phoenix, AZ, to UMD for approximately $2 million plus assumed liabilities. On that same date, to facilitate the sales, PCD Inc. and its domestic subsidiary, Wells-CTI, Inc., filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Massachusetts. The Chapter 11 filings allow the sale of the assets of the domestic entities to be free and clear from certain liabilities that the prospective purchasers do not wish to assume. Assuming approval of the company's reorganization plan by the bankruptcy court and the closing of these transactions, PCD's creditors will receive the proceeds from the sale of PCD's assets to Amphenol and UMD, as well as any additional cash on PCD's balance sheet after the close of the Transactions. The Company will then be liquidated. There will not be any distribution to shareholders upon liquidation.

     PCD's lenders have agreed to terms and conditions to allow PCD to use its existing cash reserves and revenues from operations to meet all of its current operating requirements until the sales are completed. PCD's request to use the funds covered by its agreement with lenders was approved on March 25, 2003 by the Bankruptcy Court as part of the Company's first-day motions.

No matters were submitted to a vote of security holders in the fourth quarter of 2002.

     The Company's Common Stock was traded on the Nasdaq National Market of the Nasdaq Stock Market, Inc. under the symbol "PCDI" until July 26, 2002 when it was transferred to the Small Cap Market of the Nasdaq Stock Market Inc. On January 31, 2003, the Company's stock was delisted from Nasdaq and now trades on the Over-the-Counter Bulletin Board. The following table sets forth the reported high and low sale prices for the Common Stock for the periods indicated:

     On March 11, 2003, the last reported sale price for the Common Stock on the Over-the-Counter Bulletin Board Market was $0.03 per share. As of March 11, 2003, there were approximately 1,000 holders of record of Common Stock.

     The Company has never declared or paid any cash dividends on the Common Stock. The Company intends to apply proceeds from the Transactions to bank debt and to complete the liquidation of the Company. The Company will not pay dividends in the future nor will it distribute anything to shareholders upon liquidation.

     The Company's registrar and transfer agent is American Stock Transfer & Trust Company, 40 Wall Street, New York, NY 10005.

     The statement of operations data for the years ended 2002, 2001, and 2000 are derived from audited consolidated financial statements included elsewhere in this annual report on Form 10-K. The statement of operations data for the years ended 1999 and 1998 are derived from audited consolidated financial statements on file with the Securities and Exchange Commission. The balance sheet data as of December 31, 2002, and 2001 is derived from audited consolidated financial statements included elsewhere in this annual report on Form 10-K and the balance sheet data as of December 31, 2000, 1999 and 1998 are derived from audited consolidated financial statements on file with the Securities and Exchange Commission.

________

     In 2002, net sales of the Company decreased to $25.1 million from $36.6 million in 2001. Of this decrease, $6.5 million was due to lower shipments of burn-in sockets resulting from the continued weak demand from semiconductor manufacturers due mainly, we believe to the persistent downturn in the electronics industry. Of the remaining decrease, $5.0 million was due to reduced shipments of our interconnect products to aircraft manufacturers. The Company realized approximately 23% of its net sales in 2002 from products introduced in the last five years. The Company distributes its products through a combination of its own dedicated direct sales force, a worldwide network of manufacturers' representatives and authorized distributors. Sales to customers located outside the United States, either directly or through U.S. and foreign distributors, accounted for approximately 32%, 20%, and 22% of the net sales of the Company in the years ended December 31, 2002, 2001 and 2000, respectively.

     The following table sets forth the relative percentages of the total net sales of the Company attributable to each of the Company's product categories for the periods indicated.

     The following table sets forth certain items from the Company's Consolidated Statements of Operations as (1) a percentage of net sales and (2) the percentage period-to-period change in dollar amounts of such items for the periods indicated. The table and the discussion below should be read in conjunction with the Consolidated Financial Statements and Notes thereto.

Year Ended December 31, Period-to-Period Change

     Net Sales. Net sales decreased 31% to $25.1 million for 2002, from $36.6 million in 2001. Net sales of $11.1 million in the semiconductor burn-in socket product lines were down $6.5 million or 37% from 2001. The net sales decrease in this business can be attributed largely to the continued weak market conditions in the semiconductor industry during 2002 and in part by the significant sales backlog to start 2001 vs. 2002. Incoming orders for burn-in sockets declined $1.2 million or 10% to $10.7 million in 2002. Industrial/Avionics division net sales of $14.1 million were down $5.0 million or 26% from 2001 mainly as a result of decreased orders from aircraft manufacturers in 2002. Incoming orders for avionics interconnect products declined $4.1 million or 34% to $8.1 million in 2002. Incoming orders for industrial interconnect products approximated $6.5 million in both 2002 and 2001.

     Gross profit. Gross profit decreased by $6.9 million or 61.2% in 2002 from $11.3 million in 2001. As a percentage of net sales, gross profit was 17.5% in 2002 and 30.9% in 2001. The lower gross profit percentage in 2002 was the result of several factors. First, lower sales volume in 2002 contributed 13 percentage points to the gross margin decline. Second, non-cash inventory write-downs of approximately $1.5 million during 2002 (including $900,000 during the fourth quarter) reduced gross margin by an additional 5 percentage points, mainly due to reduced demand in some of our Wells-CTI product lines. Finally, the product mix shift away from higher margin avionics and burn-in products to industrial products contributed 1% to the gross margin reduction. The negative factors impacting gross profit percentage in 2002 were partly offset by the positive impact of a $1.9 million reduction in manufacturing overhead expense, due to cost reductions implemented at Wells-CTI during 2002 and 2001 and at the Industrial/Avionics division in 2002. These reductions included layoffs, attrition, salary and hiring freezes, and the closing of Wells-CTI's South Bend, Indiana plant during the fourth quarter of 2001.

     Operating expenses. Operating expenses include selling, general and administrative expenses and costs of product development. Operating expenses decreased by $2.9 million to $9.0 million in 2002. Of this decrease, $157,000 was due to lower selling expenses directly attributed to lower sales volume. Of the remaining decrease, $1.9 million occurred at the Wells-CTI division due mainly to cost reductions implemented in 2001 and 2002. In addition operating expenses at the Industrial/Avionics division were reduced by approximately $864,000 in 2002 due to reduced headcount and to increased control over discretionary spending.

     Restructuring Costs. In connection with our 2001 South Bend, IN plant closure we recorded a restructuring charge of $773,000 for employee-related costs of $134,000 and continuing lease obligations of $639,000 in 2001. We reached a settlement with the lessor to exit the lease for $342,000 and the accrued restructuring liability has been adjusted by $81,000 to reflect this settlement.

     Impairment of Long-Lived and Intangible Assets and Amortization. In connection with our 2001 South Bend, IN plant closure and restructuring we recorded an impairment charge of $727,000 in our Wells-CTI segment related to equipment and improvements that were abandoned. During 2002, we recorded amortization of $1.1 million as compared to $4.2 million in 2001. An additional impairment charge of $15.3 million consisting of $9.3 million of intangible assets and $6.0 million of fixed assets. This impairment to write down long-lived assets was based on the fair value of the Wells-CTI business as determined by our proposed sale of our Wells-CTI division to UMD.

     Goodwill Impairment. During 2002 we adopted SFAS No. 142 and recorded a transitional impairment charge of $12.5 million during the first quarter as a cumulative effect of a change in accounting principle. This charge was based on discounted cash flow analysis for the Wells-CTI semiconductor burn in division. This goodwill originated from our acquisition of Wells-Electronics in 1997. We completed our required annual impairment test of goodwill as of December 31, 2002 and recorded an additional impairment of $36.8 million. The impairment to write down our goodwill was based on the fair value of the Wells-CTI reporting unit as determined by our proposed sale of our Wells-CTI division to UMD.

     Extraordinary Loss on Debt Extinguishment. On February 27, 2002, the Senior Credit Facility was amended and restated. In connection with the February 2002 agreement, the lenders received warrants, exercisable immediately and for a period of ten years, to purchase 1,450,000 shares of common stock of the Company at $0.01 per share. In addition, lenders' existing warrants to purchase 203,949 shares of the Company's common stock at $4.90 per share were re-priced to $0.01 per share. The new and re-priced warrants were valued at $2.0 million utilizing the Black Scholes pricing method. The assumptions utilized under the Black Scholes method were 96% volatility, 1.82% riskless rate of return, no dividends and a term of ten years. We accounted for this transaction as an extinguishment of the existing debt and issuance of new debt under the provisions of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities and EITF No. 96-19, Debtors Accounting for a Modification or Exchange of Debt Instruments. This transaction resulted in an extraordinary loss in the amount of $3.9 million in the first quarter of 2002. Included in this loss is the cost of the repriced warrants and the new warrants issued to the lenders ($2.0 million), unamortized bank fees on the old debt ($1.7 million) and the remaining unamortized bank warrant ($125,000).

     Non-operating Expense, net. Interest expense was $3.4 million in 2002 as compared with $3.3 million in 2001. Interest expense includes interest on the Senior Credit Facility of which the average outstanding balance was up $4.4 million from 2001. The higher average debt balance and lower interest rates in 2001 accounted for the decreased interest expense.

     Provision for Income Taxes. In 2002 no tax benefit for losses incurred was recorded except for a net benefit of $3.3 million primarily due to a tax refund of approximately $2.7 million. The tax refund was a result of the Job Creation and Worker Assistance Act of 2002 passed by Congress in March 2002 ("the Act"). Under the Act, companies are allowed to carry back tax operating losses for a period of five years instead of two. In 2001, no tax benefit was recorded for losses incurred.  The Company recorded a $14.1 million valuation allowance against its deferred tax assets, as based on the weight of available evidence it was more likely than not these assets would not be recoverable.

     Net Sales. Net sales decreased 41% to $36.6 million for 2001, from $62.0 million in 2000. Net sales of $17.5 million in the semiconductor burn-in socket product lines were down $24.9 million or 59% from 2000. The net sales decrease in this business can be attributed largely to the weakest market conditions in the history of the semiconductor industry during 2001. Incoming orders for burn-in sockets declined $32.6 million or 73% to $11.9 million in 2001. Industrial/Avionics division net sales of $19.1 million were down $400,000 or 2% from 2000 as a result of the significant reduction in net sales during the fourth quarter. Net sales of $3.8 million during the fourth quarter of 2001 were down $1.5 million or 29% from the fourth quarter of 2000 and were down $800,000 from the third quarter of 2001. The reduction in net sales can be attributed in part to the impact of the events of September 11, particularly as they relate to the Company's Avionics business.

     Gross profit. Gross profit decreased by $17.1 million or 60% in 2001 from $28.5 million in 2000. As a percentage of net sales, gross profit was 30.9% in 2001 and 45.9% in 2000. The lower gross profit percentage in 2001 resulted in large part from the significant reduction in the Company's consolidated sales volume. The drop in sales volume occurred mainly in the (higher-margin) burn-in socket product lines, which caused an unfavorable product mix shift that also contributed to the lower gross profit percentage. Changes in the Company's product mix (most particularly in the burn-in socket business) can have a material impact on the Company's gross profit percentage and these changes cannot always be predicted with certainty. The negative factors impacting gross profit percentage in 2001 were partly offset by the positive impact of a $1.5 million reduction in manufacturing overhead expense, due primarily to cost reductions implemented at the Wells-CTI division during 2001. These reductions included layoffs, attrition, salary and hiring freezes, and the closing of the South Bend, Indiana plant during the fourth quarter.

     Operating expenses. Operating expenses include selling, general and administrative expenses and costs of product development. Operating expenses decreased by $1.3 million to $11.9 million in 2001. Of this decrease, approximately $400,000 was due to lower selling expenses directly attributed to lower sales volume. The remaining decrease was due primarily to cost reductions implemented at the Wells-CTI division in 2001.

     Restructuring Costs and Impairment of Long Lived Assets. During the third quarter of 2001 the Company's senior management approved plans to close the South Bend, Indiana manufacturing plant. The plant closure resulted in the Company eliminating 39 positions from all levels and vacating approximately 50,000 square feet of space. Management has estimated the plant closure will result in annualized savings of $1.7 million. The Company recorded a restructuring charge of $773,000 for employee-related costs of $134,000 and vacation of leased space of $639,000. The Company also wrote off $235,000 of obsolete South Bend inventory through cost of sales. In addition, the Company wrote off $727,000 of equipment and improvements that were abandoned. The plant closure is substantially complete and as of December 31, 2001 the balance of accrued restructuring charges is $556,000. Amounts accrued in this balance are primarily rent and other facility - related costs.

     Non-operating Expense, net. Interest expense was $3.3 million in 2001 as compared with $4.4 million in 2000. Interest expense includes interest on the Senior Credit Facility of which the average outstanding balance was down $7.3 million from 2000. The lower average debt balances and lower interest rates in 2001 accounted for the decreased interest expense.

     Provision for Income Taxes. In 2001 the Company wrote off its $14.1 million deferred tax asset in accordance with current tax accounting standards. Under these standards, the weight of available evidence emphasizing recent historical results and near - term prospects, indicated it was more likely than not that the deferred tax asset would not be realized. Accordingly, a full valuation allowance has been provided (Note 8). The effective income tax rate for 2000 was 41%.

     Cash provided by operating activities in 2002 was $309,000, compared to cash used in operating activities of $10,000 in 2001. Net borrowings in 2002 were $1.1 million and were used to fund capital expenditures of approximately $0.6 million and a portion of loan interest and fees. The Company currently anticipates that its capital expenditures until completion of the Transactions will be in the range of $100,000 to $150,000 and will consist primarily of purchased tooling and equipment required to support the Company's business. At December 31, 2002 and 2001, borrowings of $40.9 million (excluding accrued and unpaid interest of $1.1 million) and $39.8 million were outstanding under the Senior Credit Facility at weighted average interest rates of 6.46% and 5.18%, respectively.

     On March 21, 2003, PCD Inc. entered into definitive agreements to sell the assets of its two business units. PCD agreed to sell its Industrial/Avionics Division, headquartered in Peabody, MA, to Amphenol Corporation for $14 million, less assumed liabilities and has agreed to sell the Wells-CTI Division which has headquarters in Phoenix, AZ, to UMD for approximately $2 million plus assumed liabilities. On that same date, to facilitate the sales, PCD Inc. and its domestic subsidiary, Wells-CTI, Inc., filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Massachusetts. The Chapter 11 filings allow the sale of the assets of the domestic entities to be free and clear from certain liabilities that the prospective purchasers do not wish to assume. Assuming approval of the Company's reorganization plan by the bankruptcy court and the closing of these Transactions, PCD's creditors will receive the proceeds from the sale of PCD's assets to Amphenol and UMD, as well as any additional cash on PCD's balance sheet after the close of the Transactions. The Company will then be liquidated. There will not be any distribution to shareholders upon liquidation. The Company believes that its existing cash and cash flow from operations will be sufficient to fund its anticipated working capital and capital expenditure requirements until completion of the Transactions.  There can be no assurance that the Plan will be approved by the Bankruptcy Court.  In the event the Plan is not confirmed by the United States Bankruptcy Court, the Company would likely convert the case to a liquidation under Chapter 7 of the Bankruptcy Code and engage in an orderly liquidation of its assets.

     In February 2002, the Senior Credit Facility was further amended and restated. In connection with the February 2002 agreement, certain covenant violations as of December 31, 2001 were waived and the lenders received warrants, exercisable immediately and for a period of ten years, to purchase 1,450,000 shares of common stock of the Company at $0.01 per share. In addition, lenders' existing warrants to purchase 203,949 shares of the Company's common stock at $4.90 per share were re-priced to $0.01 per share. The new and re-priced warrants were valued at $2.0 million utilizing the Black Scholes pricing method. The assumptions utilized under the Black Scholes method were 96% volatility, 1.82% riskless rate of return, no dividends and a term of ten years. The key provisions of the February 2002 agreement are summarized in the table below.

    At December 31, 2002, the Company was not in compliance with the minimum EBITDA, interest coverage and total debt to EBITDA covenants. We received temporary waivers from our lenders through March 31, 2003 and filed for Bankruptcy on March 21, 2003. Based on our current business conditions and March 21, 2003 bankruptcy filing, we do not expect to be in compliance with certain bank covenants in the future. Accordingly, although the Maturity Date of the Senior Credit Facility is December 31, 2004, we have reported all debt as a current liability at December 31, 2002 in conformity with EITF 86-30, Classification of Obligations When a Violation is Waived by the Creditor.

     The Company believes the following represents its critical accounting policies:

     Revenue Recognition. The Company recognizes revenue once four basic criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed or determinable; and (4) collectibility is reasonably assured. Revenue is recognized upon shipment to customers. The Company grants to certain of its distributors limited return and stock rotation rights. Historically, the Company's return rate has been insignificant.

    Goodwill and Intangible Assets.  On January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, which requires, among other things, the discontinuance of goodwill amortization and the requirement to test goodwill and other intangible assets for impairment at least annually. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. A two-step impairment test is used to first identify potential goodwill impairment and then measure the amount of goodwill impairment loss. Impairment losses that arose due to the initial application of this standard were reported as a cumulative effect of a change in accounting principle.

     Impairment of Long-Lived Assets. On January 1, 2002, the Company adopted Statement of Financial Account Standards ("SFAS") No. 144, Accounting for the Impairment of Long-lived Assets. Accordingly, upon indication of possible impairment, we evaluate the recovery of held-for-use long- lived assets by measuring the carrying amount of the assets against the related estimated undiscounted future cash flows. When an evaluation indicates that the future undiscounted cash flows are not sufficient to recover the carrying value of the asset, the asset is adjusted to its estimated fair value. The following circumstances would be considered important and could lead to an impairment review; significant changes in the manner of our using the asset, negative industry or economic trends and underperformance relative to projected operating results.

   Warranty. The Company provides reserves for the estimated cost of product warranties at the time revenue is recognized. The Company estimates the costs of our warranty obligations based on our warranty policy or applicable contractual warranty, our historical experience of known product failure rates, and use of materials and service delivery costs incurred in correcting product failures. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise.

     Income Taxes. A valuation allowance is provided against the net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the event the Company determines in the future that the deferred tax assets in excess of its carrying amount can be realized, then an adjustment to the valuation allowance would increase net income in the period such determination was made.

     In May 2002, the Financial Accounting Standards Board, or FASB, issued SFAS No. 145, "Rescission of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002." Adoption of the standard is generally required in the fiscal year beginning after May 15, 2002, with certain provisions becoming effective for financial statements issued on or after May 15, 2002. Under the standard, transactions currently classified as extraordinary items will no longer be treated as such, but instead will be reported as other non-operating income or expenses.  The extraordinary loss currently presented by the Company will be reclassified as an other non-operating item upon adoption.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which supercedes the FASB's Emerging Issues Task Force ("EITF") 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The provisions of this Statement are required to be adopted for exit or disposal activities that are initiated after December 31, 2002. Under this standard, a liability for a cost associated with an exit or disposal activity formerly recognized upon the entity's commitment to an exit plan are now recognized when the liability is incurred. This standard will impact any future restructuring the Company approves on or after January 1, 2003.

     In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN No. 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The Company is currently assessing the impact of the recognition and measurement provisions of this interpretation on the Company's results of operations and financial condition and has not yet determined the impact of adoption.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No.148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. As provided for in SFAS No. 123, the Company has elected to apply Accounting Principles Board ("APB") No. 25 "Accounting for Stock Issued to Employees" and related interpretations in accounting for our stock based compensation plans. We intend to continue to apply the provisions of APB No. 25.

The following table presents the Company's contractual obligations and commercial commitments as of December 31, 2002 over the next five years and thereafter (in thousands):