Press Release
Contact: Adrienne Binenstock
Park Electrochemical Corp.
(516) 354-4100
PARK ELECTROCHEMICAL REPORTS SECOND QUARTER RESULTS
LAKE SUCCESS, New York, September 24, 1998...Park Electrochemical Corp. (NYSE-PKE) reported sales of $86,348,000 for the second quarter ended August 30, 1998 compared to $83,086,000 for the second quarter of last year. Park’s sales for the first six months were $186,203,000 compared to last year’s first six months sales of $174,719,000.
Park reported earnings of $225,000 for the second quarter compared to $4,852,000 for last year’s second quarter. Earnings for the first six months were $5,760,000 compared to $11,017,000 for last year’s first six months.
Park’s earnings per share for the second quarter were $.02 basic and diluted versus $.43 per share basic and $.41 per share diluted for last year’s second quarter. Park’s earnings per share for the six months were $.50 basic and $.49 diluted compared to $.98 per share basic and $.92 per share diluted for last year’s first six months.
The Company also reported that, as of the close of business on September 23, 1998, the Company had repurchased, pursuant to the share repurchase authorizations announced on June 24, 1998 and September 9, 1998, a total of 1,103,200 shares of Park Electrochemical common stock at an average price of approximately $12.19 per share.
Brian Shore, Park’s President and CEO, said, “While we are clearly unhappy with our second quarter performance, it is important that our investors understand the dynamics of this performance. First of all, the global electronic materials markets which we serve were very depressed during the quarter as the result of industry inventory excesses, the Asian financial crisis and underlying fundamental global economic weakness. Although inventory levels appear to have recently normalized, we believe the impact of the Asian financial crisis and the fundamental global economic weakness may be longer term in nature. Secondly, the loss of our largest customer, Delco Electronics, had a very significant negative impact on the second quarter. As we previously reported, Delco recently elected to close its circuit board operation and completely exit the circuit board fabrication business. As a result, our Company had essentially zero sales to Delco in the second quarter. As we have also reported in the past, we have sued Delco and its sister company, Delphi Automotive, in connection with these actions for damages of not less than $170 million. Delco’s actions, which we believe were in violation of our contract and our rights, have resulted in significant losses at our Arizona operation which essentially was designed to service Delco. These losses very negatively affected our second quarter performance and earnings.”
Brian Shore continued, “We have taken a number of steps in response to these problems. These steps include reducing our organizational costs and working more closely and effectively with our preferred suppliers in order to reduce our raw material costs. In addition, we have been given the opportunity to do significant amounts of additional business with certain of our key customers. Unfortunately, the positive financial impact of most of these actions will not be felt until the third quarter. Accordingly, the second quarter suffered with a very weak market and the significant losses of our Arizona operation without the offsetting benefits of our reduced cost structure and our increased market share.”
Brian Shore concluded, “Because of the actions we have put in place, we expect to see improvements in our financial performance in both the third and fourth quarters of this year. In addition, business has improved to some extent over the last few weeks, and this will also enhance our financial performance. As we proceed through these difficult times, we also have not lost sight of our very exciting future, as we continue to develop opportunities to enhance our position as a leader in the electronic materials industry. We remain optimistic about our business and its fundamentals, as evidenced by our recent investment of over $13 million in our Company’s common stock.”
Certain portions of this press release 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. Such factors include, but are not limited to, general conditions in the electronics industry, Park’s competitive position, the status of Park’s relationships with its customers, economic conditions in international markets, and the various factors set forth under the caption “Factors That May Affect Future Results” after Item 7 of Park’s Annual Report on Form 10-K for the fiscal year ended March 1, 1998.
Park Electrochemical Corp. is a leading designer and producer of advanced electronic materials used to fabricate complex multilayer printed circuit boards and interconnection systems. Park’s electronic materials business is operated by its “Nelco” group of companies. Park also manufactures specialty adhesive tapes and advanced composite materials for the electronics, aerospace and industrial markets.
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