PARK AEROSPACE CORP - Quarter Report: 2014 November (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended November 30, 2014

OR

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

For the transition period from ________ to__________

Commission file number 1-4415

PARK ELECTROCHEMICAL CORP.

(Exact Name of Registrant as Specified in Its Charter)

(Registrant's Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐ Accelerated Filer ☒ Non-Accelerated Filer ☐ Smaller Reporting Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 20,945,634 as of January 5, 2015.

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item I.     Financial Statements.

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

 See accompanying Notes to Consolidated Financial Statements (Unaudited).

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(Amounts in thousands)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except per share amounts)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

General:

Park Electrochemical Corp. (“Park” or the “Company”) is a global advanced materials company which develops, manufactures, markets and sells high-technology digital and RF/microwave printed circuit materials products principally for the telecommunications and internet infrastructure and high-end computing markets and advanced composite materials, parts and assemblies products and low volume tooling for the aerospace markets. Park’s core capabilities are in the areas of polymer chemistry formulation and coating technology. The Company’s manufacturing facilities are located in Singapore, France, Kansas, Arizona and California. The Company also maintains research and development facilities in Arizona, Kansas and Singapore.

Financial Overview

The Company's total net sales worldwide in the 13 weeks ended November 30, 2014 were lower than in last year's comparable period principally as a result of lower sales of the Company’s printed circuit materials products in North America and Asia, partially offset by higher sales of the Company’s aerospace composite materials, parts and assemblies. The Company's total net sales worldwide in the 39 weeks ended November 30, 2014 were lower than in last year's comparable period principally as a result of lower sales of the Company’s printed circuit materials products in North America, partially offset by higher sales of the Company’s aerospace composite materials, parts and assemblies and higher sales of the Company’s printed circuit materials products in Asia, primarily in the 2015 fiscal year first quarter. The Company’s total net sales worldwide in the 13 weeks ended November 30, 2014 were lower than in the 13 weeks ended August 31, 2014 principally as a result of lower sales of the Company’s printed circuit materials products in Asia and North America.

The Company’s gross profit margin, measured as a percentage of sales, decreased to 24.8% in the 2015 fiscal year third quarter from 27.8% in the 2014 fiscal year third quarter principally as a result of lower sales and production levels of its printed circuit materials products in North America and Asia and the fixed nature of certain overhead costs, which were partially offset by the higher sales of its aerospace products. Such lower sales and production levels were also partially offset by the benefits from the higher percentage of sales of higher margin, high performance printed circuit materials products in the 2015 fiscal year third quarter than in the 2014 fiscal year third quarter and the growing percentage of sales of the more technically advanced high performance products.

The Company’s gross profit margin increased to 30.0% in the 39-week period ended November 30, 2014 from 29.5% in last year’s comparable period. Such gross profit margin increase resulted from higher sales of its aerospace products and higher sales of its printed circuit materials products in Asia, primarily in the 2015 fiscal year first quarter, and the fixed nature of certain overhead costs. Such gross profit margin increase was also attributable to the benefits from the higher percentage of sales of higher margin, high performance printed circuit materials products in the 39-week period ended November 30, 2014 than in the 39-week period ended December 1, 2013 and the growing percentage of sales of the more technically advanced high performance products. The benefits of the aforementioned items on the Company’s gross profit margin were partially offset by lower sales and production levels at the Company’s printed circuit materials products at the Company’s business units in North America.

The Company’s gross profit margins in the 13 and 39 weeks ended November 30, 2014 also benefited from cost reduction initiatives in the United States.

The Company’s earnings from operations and net earnings were lower in the 13 weeks ended November 30, 2014 than in last year’s comparable period primarily as a result of the decrease in sales and the lower margin described above and the restructuring charges recorded in the 13 weeks ended November 30, 2014. Earnings from operations in the 13 weeks ended November 30, 2014, included pre-tax restructuring charges of $636,000 in connection with cost reduction initiatives in the United States and the closure in fiscal year 2013 of the Nelco Technology (Zhuhai FTZ) Ltd. (“Nelco Zhuhai”) facility located in the Free Trade Zone in Zhuhai, China and the closure in fiscal year 2009 of the New England Laminates Co., Inc. facility located in Newburgh, New York.

The Company’s earnings from operations and net earnings were lower in the 39 weeks ended November 30, 2014 than in last year’s comparable period primarily as a result of an increase in restructuring charges and a tax benefit recorded in the 39 weeks ended December 1, 2013. Earnings from operations in the 39 weeks ended November 30, 2014 included pre-tax restructuring charges of $986,000 related to the cost reduction initiatives and closures of the facilities mentioned above and a pre-tax charge of $260,000, included in selling, general and administrative expenses, for additional fees incurred in connection with the 2014 fiscal year-end audit. Earnings from operations in the 39 weeks ended December 1, 2013 included pre-tax restructuring charges of $319,000 related to the closure of the Nelco Zhuhai facility. Net earnings in the 39 weeks ended December 1, 2013 included a tax benefit of $2.2 million in connection with a tax refund related to amended federal income tax returns.

Results of Operations:

The following table provides the components of the consolidated statements of operations.

Net Sales

The Company’s total net sales worldwide in the 13 weeks ended November 30, 2014 decreased to $34.7 million from $39.7 million in the 13 weeks ended December 1, 2013 primarily as a result of lower sales of the Company’s printed circuit materials products in North America and Asia, partially offset by higher sales of the Company’s aerospace composite materials, parts and assemblies.

The Company’s total net sales worldwide in the 39 weeks ended November 30, 2014 decreased to $125.8 from $127.6 million in the 39 weeks ended December 1, 2013 primarily as a result of lower sales of the Company’s printed circuit materials products in North America, partially offset by higher sales of the Company’s aerospace composite materials, parts and assemblies and higher sales of the Company’s printed circuit materials products in Asia, primarily in the 2015 fiscal year first quarter.

The Company’s total net sales of its printed circuit materials products were $25.4 million and $99.0 million in the 13 weeks and 39 weeks, respectively, ended November 30, 2014, or 73% and 79%, respectively, of the Company’s total net sales worldwide in such periods, compared to $31.5 million and $105.2 million in the 13 weeks and 39 weeks, respectively, ended December 1, 2013, or 79% and 82%, respectively, of the Company’s total net sales worldwide in such periods. The Company’s total net sales of its aerospace composite materials, parts and assemblies products were $9.3 million and $26.9 million in the 13 weeks and 39 weeks, respectively, ended November 30, 2014, or 27% and 21%, respectively, of the Company’s total net sales worldwide in such periods, compared to $8.2 million and $22.4 million in the 13 weeks and 39 weeks, respectively, ended December 1, 2013, or 21% and 18%, respectively, of the Company’s total net sales worldwide in such periods.

The Company's foreign sales were $17.3 million and $67.9 million, respectively, during the 13 weeks and 39 weeks ended November 30, 2014, or 50% and 54%, respectively, of the Company's total net sales worldwide during such periods, compared with $19.5 million and $63.8 million, respectively, of foreign sales, or 49% and 50%, respectively, of total net sales worldwide during last fiscal year's comparable periods. The Company’s foreign sales during the 13-week and 39-week periods ended November 30, 2014 decreased 11% and increased 6%, respectively, from the 2014 fiscal year comparable periods. The decrease in the 13-week period was primarily due to lower sales in Asia and the increase in the 39-week period was primarily due to higher sales in Asia in those comparable periods.

For the 13 weeks ended November 30, 2014, the Company’s sales in North America, Asia and Europe were 50%, 41% and 9%, respectively, of the Company’s total net sales worldwide compared to 51%, 43% and 6%, respectively, for the 13 weeks ended December 1, 2013. For the 39 weeks ended November 30, 2014, the Company’s sales in North America, Asia and Europe were 46%, 47% and 7%, respectively, of the Company’s total net sales worldwide compared to 50%, 43% and 7%, respectively, for the 39 weeks ended December 1, 2013. The Company’s sales in North America decreased 14%, its sales in Asia decreased 17% and its sales in Europe increased 31% in the 13-week period ended November 30, 2014 compared to the 13-week period ended December 1, 2013, and its sales in North America decreased 9%, its sales in Asia increased 8% and its sales in Europe decreased 3% in the 39-week period ended November 30, 2014 compared to the 39-week period ended December 1, 2013.

During the 13 weeks and 39 weeks ended November 30, 2014, the Company’s total net sales worldwide of high performance printed circuit materials were 92% of the Company’s total net sales worldwide of printed circuit materials, compared to 89% and 87%, respectively, in the 13 weeks and 39 weeks ended December 1, 2013.

The Company’s high performance printed circuit materials (non-FR4 printed circuit materials) include high-speed, low-loss materials for digital and RF/microwave applications requiring lead-free compatibility and high bandwidth signal integrity, bismalimide triazine (“BT”) materials, polyimides for applications that demand extremely high thermal performance and reliability, cyanate esters, quartz reinforced materials, and polytetrafluoroethylene (“PTFE”) and modified epoxy materials for RF/microwave systems that operate at frequencies up to 77GHz.

Gross Profit

The Company’s gross profit in the 13 weeks ended November 30, 2014 was lower than the gross profit in the prior year’s comparable period and the gross profit as a percentage of sales for the Company’s worldwide operations in the 13 weeks ended November 30, 2014 decreased to 24.8% from 27.8% in the 13 weeks ended December 1, 2013 primarily due to lower sales and production levels of its printed circuit materials products in North America and Asia and the fixed nature of certain overhead costs, which were partially offset by the higher sales of its aerospace products. Such lower sales and production levels were also partially offset by the benefits from the higher percentage of sales of higher margin, high performance printed circuit materials products in the 2015 fiscal year third quarter than in the 2014 fiscal year third quarter and the growing percentage of sales of the more technically advanced high performance products.

The Company’s gross profit in the 39 weeks ended November 30, 2014 was relatively flat compared to the gross profit in the prior year’s comparable period and the gross profit as a percentage of sales for the Company’s worldwide operations in the 39 weeks ended November 30, 2014 increased to 30.0% from 29.5% in the 39 weeks ended December 1, 2013 primarily due to higher sales of its aerospace products and higher sales of its printed circuit materials products in Asia, primarily in the 2015 fiscal year first quarter, and the fixed nature of certain overhead costs. Such gross profit margin increase was also attributable to the benefits from the higher percentage of sales of higher margin, high performance printed circuit materials products in the 39-week period ended November 30, 2014 than in the 39-week period ended December 1, 2013, and the growing percentage of sales of the more technically advanced high performance products. The benefits of the aforementioned items on the Company’s gross profit margin were partially offset by lower sales and production levels of the printed circuit materials products at the Company’s business units in North America.

The Company’s gross profit margins in the 13 and 39 weeks ended November 30, 2014 also benefited from cost reduction initiatives in the United States.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $352,000 and by $101,000 during the 13 weeks and 39 weeks, respectively, ended November 30, 2014, or by 6% and 1%, respectively, compared with last fiscal year's comparable periods, and these expenses, measured as a percentage of sales, were 16.6% and 14.8%, respectively, in the 13 weeks and 39 weeks ended November 30, 2014 compared with 15.4% and 14.7%, respectively, in the 13 weeks and 39 weeks ended December 1, 2013. Selling, general and administrative expenses included stock option expenses of $306,000 and $912,000, respectively, for the 13 weeks and 39 weeks ended November 30, 2014, compared to stock option expenses of $240,000 and $787,000, respectively, for the 13 weeks and 39 weeks ended December 1, 2013.

The increase in selling, general and administrative expenses as a percentage of sales in the 13 weeks ended November 30, 2014 was related primarily to the decrease in sales discussed above and the fixed nature of certain of such expenses. The decrease in such expenses in the 13 weeks ended November 30, 2014 was primarily the result of a decrease in shipping expenses as a result of the decrease in sales, a decrease in legal expenses and a decrease in employment related expenses, partially offset by unfavorable changes in foreign exchange rates.

Restructuring Charges

In the 13 weeks and 39 weeks ended November 30, 2014, the Company recorded pre-tax restructuring charges of $636,000 and $986,000, respectively, in connection with cost reduction initiatives in the United States and the closure in prior years of its facilities located in Zhuhai, China and Newburgh, New York, compared to $0 and $319,000, respectively, for the 13 weeks and 39 weeks ended December 1, 2013 in connection with the closure of the facility in Zhuhai.

Earnings from Operations

For the reasons set forth above, the Company's earnings from operations were $2.2 million and $18.1 million, respectively, for the 13 weeks and 39 weeks ended November 30, 2014, which included the aforementioned restructuring charges of $636,000 and $986,000, respectively, and the additional fees of $260,000 in connection with the 2014 fiscal year-end audit, compared to $4.9 million and $18.6 million, respectively, for the 13 weeks and 39 weeks ended December 1, 2013, which included the aforementioned restructuring charges of $0 and $319,000, respectively.

Interest Expense

Interest expense in the 13 weeks and 39 weeks ended November 30, 2014 related to the Company’s outstanding borrowings under the four-year amended and restated revolving credit facility agreement that the Company entered into with PNC Bank, National Association in the fourth quarter of the 2014 fiscal year. The amended and restated agreement provides for loans of up to $104 million to the Company and letters of credit up to $2 million for the account of the Company and, subject to the terms and conditions of the agreement, an interest rate on the outstanding loan balance of LIBOR plus 1.10%. See “Liquidity and Capital Resources” and Note 5 of the Notes to Consolidated Financial Statements included elsewhere in this Report for additional information.

Interest Income

Interest income was $222,000 and $595,000, respectively, for the 13 weeks and 39 weeks ended November 30, 2014 compared to $139,000 and $284,000, respectively, for last fiscal year's comparable periods. Interest income increased 60% and 110%, respectively, for the 13 weeks and 39 weeks ended November 30, 2014 primarily as a result of a higher weighted average interest rate based on a larger amount of marketable securities held by the Company for the 13 weeks and 39 weeks ended November 30, 2014 compared with last fiscal year's comparable periods. During the 2015 and 2014 fiscal year periods, the Company earned interest income principally from its investments, which were primarily in short-term instruments and money market funds.

Income Tax Provision

The Company's effective income tax rates for the 13 weeks and 39 weeks ended November 30, 2014 were 1.8% and 13.8%, respectively, compared to 3.3% and 3.7%, respectively, for the 13 weeks and 39 weeks ended December 1, 2013. The effective tax rate for the 13 weeks ended November 30, 2014 was lower than the effective tax rate for the 39 weeks ended November 30, 2014 primarily as a result of discrete tax adjustments recorded in the 13 weeks ended November 30, 2014 related to restructuring charges. The rate for the 39 weeks ended December 1, 2013 was favorably affected by a tax benefit of $2.2 million recorded by the Company in the 2014 fiscal year second quarter in connection with a tax refund related to amended federal income tax returns.

Net Earnings

For the reasons set forth above, the Company's net earnings for the 13 weeks and 39 weeks ended November 30, 2014 were $2.0 million and $15.2 million, respectively, including in both such periods the pre-tax restructuring charges described above and the additional fees in connection with the 2014 fiscal year-end audit in the 39 week period, compared to net earnings of $4.7 million and $17.7 million, respectively, for the 13 weeks and 39 weeks ended December 1, 2013, including the $319,000 pre-tax restructuring charge in such 39 weeks and the tax benefit of $2.2 million recorded by the Company in the 2014 fiscal year second quarter in connection with a tax refund related to amended federal income tax returns.

Basic and Diluted Earnings Per Share

In the 13 weeks ended November 30, 2014, basic and diluted earnings per share were $0.10 and in the 39 weeks ended November 30, 2014 basic and diluted earnings per share were $0.73 and $0.72, respectively, including, in both such periods, the restructuring charges described above and the additional fees in connection with the 2014 fiscal year-end audit in the 39-week period. This compared to basic and diluted earnings per share of $0.23 and $ 0.85 in the 13 weeks and 39 weeks ended December 1, 2013, respectively, including, in both such periods, the restructuring charges in connection with the closure of Nelco Zhuhai and the tax benefit in connection with the tax refund related to amended federal income tax returns in the 39-week period. The net impact of the restructuring charges, additional fees and tax benefits discussed above reduced basic and diluted earnings per share by $0.2 in the 13 weeks ended November 30, 2014, reduced basic and diluted earnings per share by $0.04 in the 39 weeks ended November 30, 2014 and increased both basic and diluted earnings per share by $0.09 in both the 13 weeks and 39 weeks ended December 1, 2013.

Liquidity and Capital Resources:

Cash and Marketable Securities

Of the $285.3 million of cash and marketable securities at November 30, 2014, approximately $239.5 million was owned by certain of the Company’s wholly owned foreign subsidiaries. In the fourth quarter of fiscal year 2014, the Company recorded a non-cash charge for the accrual of U.S. deferred income taxes in the amount of $64.0 million on the undistributed earnings of the Company’s subsidiary in Singapore. The charge included $34.4 million related to the U.S. income tax that would be payable if the Company were to repatriate funds in an after-tax amount necessary to repay the Company’s existing $104.0 million principal amount bank loan from PNC Bank and an additional $29.6 million relating to the remainder of the undistributed earnings of the Company’s subsidiary in Singapore at March 2, 2014. The Company has no current plan to repatriate the undistributed earnings of its subsidiary in Singapore. The Company believes it has sufficient liquidity in the United States to fund its activities in the United States for the foreseeable future.

The change in cash, marketable securities and restricted cash at November 30, 2014 compared to March 2, 2014 was the result of cash provided by operating activities and a number of additional factors, including the following:

In addition, as described below, the Company paid $6.3 million in cash dividends in both the 39 weeks ended November 30, 2014 and the 39 weeks ended December 1, 2013.

Working Capital

The increase in working capital at November 30, 2014 compared to March 2, 2014 was due principally to the increase in cash and marketable securities and the decrease in accounts payable partially offset by the increases in accrued liabilities, income taxes payable and the current portion of long-term debt.

The Company's current ratio (the ratio of current assets to current liabilities) was 10.1 to 1 at November 30, 2014 compared to 12.8 to 1 at March 2, 2014.

Cash Flows

During the 39 weeks ended November 30, 2014, net earnings from the Company's operations, before depreciation and amortization, stock based compensation, provision for deferred income taxes and amortization of bond premium, of $17.5 million increased by a net reduction in working capital items, resulted in $21.0 million of cash provided by operating activities. During the same 39 weeks, the Company expended $381,000 for the purchase of property, plant and equipment, compared with $773,000 for the 39 weeks ended December 1, 2013, and paid $6.3 million in dividends on its common stock in each of such 39-week periods.

Debt

At November 30, 2014 and March 2, 2014, the Company had $104.0 million of bank debt. In the fourth quarter of 2014, the Company entered into a four-year amended and restated revolving credit facility agreement (the “Amended Credit Agreement”) with PNC Bank, National Association. The Amended Credit Agreement provides for loans up to $104.0 million to the Company and letters of credit up to $2.0 million for the account of the Company, and subject to the terms and conditions of the Amended Credit Agreement, an interest rate on the outstanding loan balance of LIBOR plus 1.10%. Other interest rate options are available to the Company under the Amended Credit Agreement. At the end of 2014, the Company borrowed $104.0 million under the Amended Credit Agreement and used all of such borrowed funds to finance the payment of a special cash dividend of $2.50 per share, totaling $52.2 million, paid to its shareholders on February 25, 2014 and to continue the $52.0 million loan that was provided under the credit facility agreement that the Company entered into with PNC Bank in January 2013 to finance the payment of a special cash dividend of $2.50 per share, totaling $52.0 million, paid to the Company’s shareholders on February 26, 2013. The Amended Credit Agreement entered into in 2014 replaced the credit facility agreement entered into in 2013. The Company incurred $1.1 million of interest expense in the 39 weeks ended November 30, 2014 under the Amended Credit Agreement. The $104.0 million outstanding amount under the Amended Credit Agreement is payable as follows: $10.0 million due on February 12, 2015 followed by four quarterly installments of $2.5 million and then eight quarterly installments of $3.8 million with the remaining amount outstanding payable on February 12, 2018 and excludes a pre-payment penalty. The Amended Credit Agreement also contains certain customary affirmative and negative covenants and customary financial covenants, including maintaining minimum domestic liquid assets of $25,000 in cash and marketable securities. See Note 5 of the Notes to Consolidated Financial Statements included elsewhere in this Report.

Other Liquidity Factors

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. The Company’s financial resources are also available for purchases of the Company's common stock, appropriate acquisitions and other expansions of the Company's business.

The Company is not aware of any circumstances or events that are reasonably likely to occur that could materially affect its liquidity.

Contractual Obligations:

The Company's contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of (i) operating lease commitments and commitments to purchase raw materials and (ii) the bank debt described above. The Company has no other long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than two standby letters of credit in the total amount of $1.1 million to secure the Company's obligations under its workers' compensation insurance program.

Off-Balance Sheet Arrangements:

The Company's liquidity is not dependent on the use of, and the Company is not engaged in, any off-balance sheet financing arrangements, such as securitization of receivables or obtaining access to assets through special purpose entities.

Critical Accounting Policies and Estimates:

The foregoing Discussion and Analysis of Financial Condition and Results of Operations is based upon the Company's Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these Consolidated Financial Statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent liabilities. On an on-going basis, the Company evaluates its estimates, including those related to sales allowances, allowances for doubtful accounts, inventories, valuation of long-lived assets, income taxes, contingencies and litigation, and employee benefit programs. 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’s critical accounting policies that are important to the Consolidated Financial Statements and that entail, to a significant extent, the use of estimates and assumptions and the application of management’s judgment are described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in the Company’s Annual Report on Form 10-K for the fiscal year ended March 2, 2014. There have been no significant changes to such accounting policies during the 2015 fiscal year third quarter.

Contingencies:

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.

Factors That May Affect Future Results.

Certain portions of this Report which do not relate to historical financial information may be deemed to constitute forward-looking statements that are subject to various factors which could cause actual results to differ materially from Park's expectations or from results which might be projected, forecast, estimated or budgeted by the Company in forward-looking statements. Such factors include, but are not limited to, general conditions in the electronics and aerospace industries, the Company's competitive position, the status of the Company's relationships with its customers, economic conditions in international markets, the cost and availability of raw materials, transportation and utilities, and the various factors set forth in Item 1A “Risk Factors” and 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 2, 2014.

Item 3.     Quantitative and Qualitative Disclosure About Market Risk.

The Company's market risk exposure at November 30, 2014 is consistent with, and not greater than, the types of market risk and amount of exposures presented in the Annual Report on Form 10-K for the fiscal year ended March 2, 2014.

Item 4.     Controls and Procedures.

(a)     Disclosure Controls and Procedures.

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of November 30, 2014, the end of the quarterly fiscal period covered by this quarterly report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)     Changes in Internal Control Over Financial Reporting.

There has not been any change in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.     Legal Proceedings.

None.

Item 1A. Risk Factors.

There have been no material changes in the risk factors as previously disclosed in the Company’s Form 10-K Annual Report for the fiscal year ended March 2, 2014.

Item 2.          Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information with respect to shares of the Company's Common Stock acquired by the Company during each month included in the Company’s 2015 fiscal year third quarter ended November 30, 2014.

Item 3.     Defaults Upon Senior Securities.

None.

Item 4.     Mine Safety Disclosures.

None.

Item 5.     Other Information.

None.

Item 6.     Exhibits.

*     Filed electronically herewith.

+     Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

EXHIBIT INDEX