NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Three years ended March 2, 2003
(in thousands, except shares, per share data and option data)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Park Electrochemical Corp. ("Park"), through its subsidiaries (collectively, the "Company"), is a leading global designer and producer of advanced electronic materials used to fabricate complex multilayer printed circuit boards and other electronic interconnection systems. The Company's multilayer printed circuit board materials include copper-clad laminates and prepregs. Multilayer printed circuit boards and interconnection systems are used in virtually all advanced electronic equipment to direct, sequence and control electronic signals between semiconductor devices and passive components. The Company also designs and manufactures advanced composite materials for the electronics, aerospace and industrial markets.
a. Principles of Consolidation - The consolidated financial statements include the accounts of Park and its subsidiaries. All significant intercompany balances and transactions have been eliminated.
b. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. See "Critical Accounting Policies and Estimates" under "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Report.
c. Accounting Period - The Company's fiscal year is the 52 or 53 week period ending the Sunday nearest to the last day of February. The 2003, 2002 and 2001 fiscal years ended on March 2, 2003, March 3, 2002 and February 25, 2001, respectively. Fiscal years 2003 and 2001 consisted of 52 weeks and fiscal year 2002 consisted of 53 weeks.
d. Marketable Securities - All marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, included in comprehensive income. Realized gains and losses, amortization of premiums and discounts, and interest and dividend income are included in other income. The cost of securities sold is based on the specific identification method.
e. Inventories - Inventories are stated at the lower of cost (first-in, first-out method) or market.
f. Revenue Recognition - Revenues are recognized at the time product is shipped to the customer.
g. Product Warranties - The Company accrues for defective products at the time the existence of the defect is known and the amount is reasonably determinable. The Company's products are made to specific customer order specifications, and there are no future performance requirements for the Company's products other than the products' meeting the agreed specifications. The amounts of returns and allowances resulting from defective or damaged products have been approximately 1.0% of sales for each of the Company's last three fiscal years.
h. Shipping Costs - The amounts paid to third-party shippers for transporting products to customers are classified as selling expenses. The amounts included in selling, general and administrative expenses were approximately $4,810, $4,034 and $6,485 for fiscal years 2003, 2002 and 2001, respectively.
i. Depreciation and Amortization - Depreciation and amortization are computed principally by the straight-line method over the estimated useful lives of the related assets or, with respect to leasehold improvements, the terms of the leases, if shorter.
j. Income Taxes - Deferred income taxes are provided for temporary differences in the reporting of certain items, primarily depreciation, for income tax purposes as compared with financial accounting purposes. United States ("U.S.") Federal income taxes have not been provided on the undistributed earnings (approximately $102,500 at March 2, 2003) of the Company's foreign subsidiaries, because it is management's practice and intent to reinvest such earnings in the operations of such subsidiaries.
k. Foreign Currency Translation - Assets and liabilities of foreign subsidiaries using currencies other than the U.S. dollar as their functional currency are translated into U.S. dollars at fiscal year-end exchange rates, and income and expense items are translated at average exchange rates for the period. Gains and losses resulting from translation are recorded as currency translation adjustments in comprehensive income.
l. Consolidated Statements of Cash Flows - The Company considers all money market securities and investments with maturities at the date of purchase of 90 days or less to be cash equivalents.

          Supplemental cash flow information:
                                         Fiscal Year
                                   2003      2002      2001
Cash paid during the year for:
  Interest                        $   -    $2,700     $5,593

  Income taxes (refunded) paid   (6,278)    6,847     12,281

m. The Company implemented the disclosure provision of Statement of Financial Accounting Standards (SFAS) No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure", in the fourth quarter of fiscal year 2003. This statement amended the disclosure provisions of FASB Statement No. 123, "Accounting for Stock Based Compensation", to require prominent disclosure of the effect on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation and amended APB Opinion No. 28, "Interim Financial Reporting", to require disclosure of those effects in interim financial information.

As of March 2, 2003, the Company had two fixed stock incentive plans which are more fully described in Note 8. All options under the stock plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The Company continues to apply Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), and related interpretations for the plans. If compensation costs of the grants had been determined based upon the fair market value at the grant dates consistent with the FASB No. 123 "Accounting for Stock-Based Compensation", the Company's net (loss) income and (loss) earnings per share would have approximated the amounts shown below.

The weighted averaged fair value for options was estimated at the dates of grants using the Black-Scholes option-pricing model to be $12.81 for fiscal year 2003, $8.09 for fiscal year 2002 and $8.40 for fiscal year 2001, with the following weighted average assumptions:
risk free interest rate of 4.0% for fiscal year 2003, 4.0% for fiscal year 2002 and 5.0% for fiscal year 2001; expected volatility factors of 58%, 41% and 39% for fiscal years 2003, 2002 and 2001, respectively; expected dividend yield of 1.0% for fiscal year 2003, 1.0% for fiscal year 2002 and 1.5% for fiscal year 2001; and estimated option lives of 4.0 years for fiscal years 2003, 2002 and 2001.

                                 2003       2002        2001
Net (loss)income              $(50,759)  $(25,519)    $49,419
Deduct: Total  stock-based
employee compensation
determined under fair value
based method for all awards,
net of tax effects              (1,928)    (1,404)     (1,484)
                              ---------  ---------    --------
Pro forma net (loss) income   $(52,687)  $(26,923)    $47,935
                              =========  =========    ========
EPS-basic as reported         $  (2.58)  $  (1.31)    $  3.10
EPS-basic pro forma           $  (2.68)  $  (1.38)    $  3.01

EPS-diluted as reported       $  (2.58)  $  (1.31)    $  2.65
EPS-diluted pro forma         $  (2.68)  $  (1.38)    $  2.58

    The following is a summary of available-for-sale securities:
                                         Gross         Gross
                                        Unrealized  Unrealized  Estimated
                         Amortized Cost   Gains       Losses    Fair Value
March 2, 2003:
U.S. Treasury and
other government
securities                   $41,359     $ 256         $ 6       $41,609
U.S. corporate debt
securities                    10,153        63           -        10,216
   Total debt securities      51,512       319           6        51,825
Equity securities                  5        69           -            74
                             $51,517      $388         $ 6       $51,899

March 3, 2002:
U.S. Treasury and
other government
securities                   $29,956      $ 76        $ 72       $29,960
U.S. corporate debt
securities                    21,853        80          49        21,884
   Total debt securities      51,809       156         121        51,844
Equity securities                  5        68           -            73
                             $51,814      $224        $121       $51,917

The gross realized gains on the sales of securities were $6, $0 and $26 for fiscal years 2003, 2002 and 2001, respectively, and the gross realized losses were $17, $60, and $0 for fiscal years 2003, 2002 and 2001, respectively.

The amortized cost and estimated fair value of the debt and marketable equity securities at March 2, 2003, by contractual maturity, are shown below:

                                            Estimated Fair
                                 Cost           Value
Due in one year or less        $14,614          $14,757
Due  after one year through
five years                      36,898           37,068
                                51,512           51,825
Equity securities                    5               74
                               $51,517          $51,899

                               March 2,    March 3,
                                 2003        2002
Raw materials                 $ 4,072     $ 4,996
Work-in-process                 3,424       2,916
Finished goods                  4,680       4,784
Manufacturing supplies            512         546
                              $12,688     $13,242

                               March 2,    March 3,
                                 2003        2002
Land, buildings and           $ 36,807    $ 60,689
improvements
Machinery, equipment,
furniture and fixtures         146,363     203,476
                               183,170     264,165
Less accumulated
depreciation and amortization   92,667     114,355
                              $ 90,503    $149,810

Depreciation and amortization expense relating to property, plant and equipment was $17,973, $16,257 and $16,724 for fiscal years 2003, 2002 and 2001, respectively. Pretax charges of $ $52,248, $2,959 and $1,146 were recorded in fiscal years 2003, 2002 and 2001, respectively, for the write-downs of impaired operating equipment to its estimated net realizable value (see Notes 10, 11, 12, 13, and 18 below). Interest expense capitalized to property, plant and equipment was $239 for the 2001 fiscal year.

                                    March 2,    March 3,
                                      2003        2002
Payroll and payroll related        $ 4,535     $ 9,000
Taxes, other than income taxes         320         471
Employee benefits                    1,660       5,525
Environmental reserve                4,246       3,975
Other                               11,029       8,891
                                   $21,790     $27,862

6. LONG-TERM DEBT

On February 28, 1996, the Company issued $100,000 principal amount of 5.5% Convertible Subordinated Notes due 2006 (the "Notes") with interest payable semiannually on March 1 and September 1 of each year, commencing September 1, 1996. The Notes were unsecured and subordinated to other long-term debt and were convertible at the option of the holder at any time prior to maturity, unless previously redeemed or repurchased, into shares of the Company's common stock at $28.125 per share, subject to adjustment under certain conditions. The Notes were not redeemable at the option of the Company prior to March 1, 1999; at any time on or after such date, the Notes were redeemable at the option of the Company, in whole or in part, initially at 102.75% of the principal amount of such Notes redeemed and thereafter at prices declining to 100% on March 1, 2001, together with accrued interest. On March 1, 2001, $95,934 principal amount of the Notes was converted into 3,410,908 shares of the Company's common stock, and the remaining $1,738 principal amount of the Notes was redeemed by the Company for cash. Prior to February 25, 2001, $2,328 principal amount of the Notes was converted into 82,750 shares of the Company's common stock. At February 25, 2001, the fair value of the Notes approximated $109,220.

                              Fiscal Year
                        2003       2002        2001
Current:
 Federal             $(3,806)  $ (5,901)    $ 8,367
 State and local         385         18       1,509
 Foreign               1,077       (364)      8,523
                      (2,344)    (6,247)     18,399
Deferred:
 Federal              (1,087)    (4,345)      1,722
 State and local        (107)      (729)        259
 Foreign                (347)       384         800
                      (1,541)    (4,690)      2,781
                     $(3,885)  $(10,937)    $21,180

The Company's effective income tax rate differs from the statutory U.S. Federal income tax rate as a result of the following:

                                      Fiscal Year
                                  2003    2002   2001

Statutory U.S. Federal tax rate  35.0%   35.0%  35.0%
State and local taxes, net of
 Federal benefit                  (.3)    1.3     1.6
Foreign tax rate differentials   (2.3)   (5.5)   (8.3)
Impairment of deferred
tax assets                      (24.7)      -       -
Other, net                       (0.6)   (0.8)    1.7
                                  7.1%   30.0%  30.0%

The Company had foreign net operating loss carryforwards of approximately $72,300 and $53,500 in fiscal years 2003 and 2002, respectively. Most of the net operating loss carryforwards were acquired in fiscal year 1998 when the Company purchased the capital stock of Dielektra GmbH ("Dielektra"), a German corporation located in Cologne, Germany. During fiscal year 2002, an audit of Dielektra's tax filings relating to tax periods prior to its acquisition by the Company was completed. The audit resulted in an increase in pre-acquisition net operating losses of approximately $25,000. Long-term deferred tax assets arising from these net operating loss carryforwards were valued at $0 at both March 2, 2003 and March 3, 2002, net of valuation reserves of approximately $31,229 and $22,217, respectively. None of the acquired net operating loss carryforwards relate to goodwill or other intangible assets.

Approximately $1,300 of the foreign net operating loss carryforwards expire in varying amounts from fiscal year 2004 through fiscal year 2005, and the remainder have no expiration.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At March 2, 2003 and March 3, 2002, current deferred tax assets of $0 and $7,006, respectively, which were primarily attributable to expenses not currently deductible, were included in other current assets. Significant components of the Company's long-term deferred tax liabilities and assets as of March 2, 2003 and March 3, 2002 were as follows:

                                       2003      2002
Deferred tax liabilities:
Depreciation                        $ 4,539    $ 9,450
Other, net                            1,392      3,604
 Total deferred tax liabilities       5,931     13,054

Deferred tax assets:
Impairment of fixed assets           11,657          -
Net operating loss carryforwards     31,229     22,217
Other, net                            3,224          -
Total deferred tax assets            46,110     22,217
 Valuation allowance for deferred
  tax assets                        (44,718)   (22,217)
 Net deferred tax assets              1,392          -

 Net deferred tax liabilities       $ 4,539    $13,054

8. STOCKHOLDERS' EQUITY

a. Stock Split and Number of Authorized Shares - On October 10, 2000, the Company's Board of Directors approved a three-for-two stock split in the form of a stock dividend. The stock dividend was distributed November 8, 2000 to stockholders of record on October 20, 2000. All share and per share data for prior periods has been retroactively restated to reflect the stock split. In addition, on October 10, 2000, the Company's stockholders approved an increase in the number of authorized shares of common stock from 30,000,000 to 60,000,000 shares.

b. Stock Options - Under the 1992 Stock Option Plan approved by the Company's stockholders, directors and key employees may have been granted options to purchase shares of common stock of the Company exercisable at prices not less than the fair market value at the date of grant. Options became exercisable 25% one year from the date of grant, with an additional 25% exercisable each succeeding anniversary of the date of grant. On July 12, 2000, the Company's stockholders approved an amendment to the Plan to increase the aggregate number of shares of Common Stock authorized for issuance under the Plan by 450,000 shares. Options to purchase a total of 2,625,000 shares of common stock were authorized for grant under such Plan. The authority to grant additional options under the Plan expired on March 24, 2002.

Under the 2002 Stock Option Plan approved by the Company's stockholders, directors and key employees may be granted options to purchase shares of common stock of the Company exercisable at prices not less than the fair market value at the date of grant. Options become exercisable 25% one year from the date of grant, with an additional 25% exercisable each succeeding anniversary of the date of the grant. Options to purchase a total of 900,000 shares of common stock were authorized for grant under such Plan.

       Information with respect to options follows:
                                  Range                       Weighted
                                   of                         Average
                                Exercise       Outstanding    Exercise
                                 Prices          Options       Price
Balance, February 27, 2000  $ 3.67  - $23.96    1,215,794      $13.87
Granted                     15.92   -  43.63      360,075       23.71
Exercised                   3.67    -  18.42     (156,667)      12.79
Cancelled                   4.54    -  16.54      (61,050)      16.16

Balance, February 25,2001   $ 3.67  - $43.63    1,358,152      $16.50
Granted                     22.62   -  26.77      275,725       23.62
Exercised                   3.67    -  23.96     (162,831)      13.06
Cancelled                   3.67    -  43.63     (227,339)      21.92

Balance, March 3, 2002      $ 4.67  - $43.63    1,243,707      $ 9.56
Granted                     14.12   -  29.05      231,800       28.04
Exercised                   4.67    -  16.54      (43,398)      13.06
Cancelled                   12.21   -  43.63      (66,747)      28.29

Balance, March 2, 2003      $ 4.92  - $43.63    1,365,362      $18.92

Exercisable, March 2, 2003  $ 4.92  - $43.63      796,343      $15.23

The following table summarizes information concerning currently outstanding and exercisable options.

                Options Outstanding                    Options Exercisable
--------------------------------------------------     -------------------
                               Weighted
                                Average
                  Number of    Remaining  Weighted                Weighted
                   Options    Contractual  Average    Number of    Average
    Range of      Outstand-      Life     Exercise     Options    Exercise
Exercise Prices      ing        (Years)     Price    Exercisable    Price
---------------   ---------   ----------- --------   -----------  --------
$ 4.92 - $ 9.99   156,525        .65      $ 6.62      156,525      $ 6.62
  10.00 - 19.99   694,887       5.55       15.72      543,068       15.65
  20.00 - 43.63   513,950       8.54       26.99       96,750       26.83
                ---------                             -------
                1,365,362                             796,343

Stock options available for future grant under the 2002 stock option plan at March 2, 2003 were 885,000. Stock options available for future grant under the 1992 stock option plan at March 2, 2003 and March 3, 2002 were zero and 688,710, respectively.

c. Stockholders' Rights Plan - On February 2, 1989, the Company adopted a stockholders' rights plan designed to protect stockholder interests in the event the Company is confronted with coercive or unfair takeover tactics. Under the terms of the plan, as amended on July 12, 1995, each share of the Company's common stock held of record on February 15, 1989 or issued thereafter received one right (subsequently adjusted to two thirds (2/3) of one right in connection with the Company's three-for-two stock split in the form of a stock dividend distributed November 8, 2000 to stockholders of record on October 20, 2000). In the event that a person has acquired, or has the right to acquire, 15% (25% in certain cases) or more of the then outstanding common stock of the Company (an "Acquiring Person") or tenders for 15% or more of the then outstanding common stock of the Company, such rights will become exercisable, unless the Board of Directors otherwise determines. Upon becoming exercisable as aforesaid, each right will entitle the holder thereof to purchase one one-hundredth of a share of Series A Preferred Stock for $75, subject to adjustment (the "Purchase Price"). In the event that any person becomes an Acquiring Person, each holder of an unexercised exercisable right, other than an Acquiring Person, shall have the right to purchase, at a price equal to the then current Purchase Price, such number of shares of the Company's common stock as shall equal the then current Purchase Price divided by 50% of the then market price per share of the Company's common stock. In addition, if after a person becomes an Acquiring Person, the Company engages in any of certain business combination transactions as specified in the plan, the Company will take all action to ensure that, and will not consummate any such business combination unless, each holder of an unexercised exercisable right, other than an Acquiring Person, shall have the right to purchase, at a price equal to the then current Purchase Price, such number of shares of common stock of the other party to the transaction for each right held by such holder as shall equal the then current Purchase Price divided by 50% of the then market price per share of such other party's common stock. The Company may redeem the rights for a nominal consideration at any time, and after any person becomes an Acquiring Person, but before any person becomes the beneficial owner of 50% or more of the outstanding common stock of the Company, the Company may exchange all or part of the rights for shares of the Company's common stock at a one-for-one exchange ratio. Unless redeemed, exchanged or exercised earlier, all rights expire on July 12, 2005.

d. Reserved Common Shares - At March 2, 2003, 2,250,362 shares of common stock were reserved for issuance upon exercise of stock options.

e. Accumulated Other Non-Owner Changes - Accumulated balances related to each component of other comprehensive income (loss) were as follows:

                                               March 2,    March 3,
                                    2003         2002
Currency translation adjustment   $(1,938)     $(7,112)
Pension liability adjustment         (742)        (845)
Unrealized gains on investments       248           67

Accumulated balance               $(2,432)     $(7,890)

                                        2003       2002         2001
Net (loss)income for basic EPS      $(50,759)    $(25,519)    $49,419
Add interest on 5.5%
Convertible Subordinated Notes,
net of taxes                               -            -       3,585
Net (loss)income for diluted EPS    $(50,759)    $(25,519)    $53,004

Weighted average common shares
outstanding for basic EPS         19,674,000   19,535,000  15,932,000
Net effect of dilutive options        *            *          548,000
Assumed conversion of 5.5%
Convertible Subordinated Notes             -            -   3,522,000
Weighted average shares
outstanding for diluted EPS       19,674,000   19,535,000  20,002,000

Basic (loss)earnings per share        $(2.58)      $(1.31)      $3.10
Diluted (loss)earnings per share      $(2.58)      $(1.31)      $2.65

*For the fiscal years 2003 and 2002, the effect of employee stock
options was not considered because it was antidilutive.

Common stock equivalents, which were not included in the computation of diluted loss per share because either the effect would have been antidilutive or the options' exercise prices were greater than the average market price of the common stock, were 865,287, 637,550 and 188,769 for the fiscal years 2003, 2002, 2001, respectively.

The weighted average number of shares outstanding and the earnings per share for each year have been adjusted to give retroactive effect to the three-for-two split of the Company's common stock declared October 10, 2000 payable November 8, 2000 to stockholders of record on October 20, 2000.

10. SALE OF DIELECTRIC POLYMERS, INC.

On June 27, 2002, the Company sold its Dielectric Polymers, Inc. ("DPI") subsidiary to Adhesive Applications, Inc. of Easthampton, Massachusetts. The Company recorded a gain of $3,170 in its fiscal year 2003 second quarter ended September 1, 2002 in connection with the sale.

11. SALE OF NELCO TECHNOLOGY, INC.

During the Company's 1998 fiscal year and for several years prior thereto, more than 10% of the Company's total worldwide sales were to Delco Electronics Corporation, a subsidiary of General Motors Corp., and the Company's wholly owned subsidiary, Nelco Technology, Inc. ("NTI") located in Tempe, Arizona, had been Delco's principal supplier of semi-finished multilayer printed circuit board materials, commonly known as mass lamination, which were used by Delco to produce finished multilayer printed circuit boards. However, in March 1998, the Company was informed by Delco that Delco planned to close its printed circuit board fabrication plant and exit the printed circuit board manufacturing business. As a result, the Company's sales to Delco declined during the three-month period ended May 31, 1998, were negligible during the remainder of the 1999 fiscal year and were nil during the 2000 through 2003 fiscal years.

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

In connection with the sale of NTI and the closure of the related support facility, the Company recorded pre-tax charges of $15,707 in its fiscal year 2002 first quarter ended May 27, 2001. The components of these charges and the related liability balances and activity from the May 27, 2001 balance sheet date to the March 2, 2003 balance sheet date are set forth below.

                                        Charges                 3/2/03
                           Closure    Incurred or              Remaining
                           Charges        Paid     Reversals  Liabilities

NTI charges:
 Loss on sale of assets
  and business            $10,580      $10,580      $   -           $  -
 Severance payments           387          387          -              -
 Medical and other
  Costs                        95           95          -              -

Support facility charges:
 Impairment of long
  lived assets              2,058        2,058          -              -
 Write down accounts
  receivable                  350          319         31              -
 Write down inventory         590          590          -              -
 Severance payments           688          688          -              -
 Medical and other costs      133          133          -              -
 Lease payments, taxes,
  utilities, maint.           781          331          -            450
 Other                         45           45          -              -
                          -------      -------      -----          -----
                          $15,707      $15,226        $31           $450
                          =======      =======      =====          =====

The severance payments and medical and other costs incurred in connection with the sale of NTI and the closure of the related support facility were for the termination of hourly and salaried, administrative, manufacturing and support employees, all of whom were terminated during the first and second fiscal quarters ended May 27, 2001 and August 26, 2001, respectively, and substantially all of the severance payments and related costs for such terminated employees (totaling $1,303) were paid during such quarters. The lease obligations will be paid through August 2004 pursuant to the related lease agreements.

NTI did not have a material effect on Park's consolidated financial position, results of operations, capital resources, liquidity or continuing operations, and the sale of NTI is not expected to have a material effect on the Company's future operating results.

12. RESTRUCTURING AND SEVERANCE CHARGES

The Company recorded pre-tax charges of $4,674 and $120 in the fiscal year 2003 third quarter ended December 1, 2002 in connection with the closure of its Nelco U.K. manufacturing facility, located in Skelmersdale, England, and severance costs at a North American business unit. The components of these charges and the related liability balances and activity for the year ended March 2, 2003 are set forth below.

                                       Charges                3/02/03
                          Closure    Incurred or             Remaining
                          Charges       Paid     Reversals  Liabilities

United Kingdom charges:
 Impairment of long
  lived assets             $1,993      $1,993      $   -       $   -
 Severance payments and
  related costs             1,997       1,703          -         294
 Utilities, maintenance,
taxes, other                  684         435          -         249
                           ------      ------       -----       ----
                            4,674       4,131          -         543
Other severance payments
and related costs             120         120          -           -
                           ------      ------       -----       ----
                           $4,794      $4,251       $   -       $543
                           ======      ======       =====       ====

The Company recorded pre-tax charges of $2,921 in its fiscal year 2002 third quarter ended November 25, 2001 in connection with the closure of the conventional lamination line of Dielektra GmbH ("Dielektra"), its electronic materials business located in Cologne, Germany, and the reduction of the size of Dielektra's mass lamination operations to enable Dielektra to focus on its DatlamT automated continuous lamination and paneling technology and on the marketing and manufacturing of high technology, higher layer count mass lamination product. The charges included $2,020 for severance payments and related costs for terminated employees. In addition, the Company recorded pre- tax severance charges of $681 in its fiscal year 2002 first quarter ended May 27, 2001 and $125 in its third quarter ended November 25, 2001 for severance payments and related costs for terminated employees at the Company's continuing operations in Asia, Europe and North America. The terminated employees were hourly and salaried, administrative, manufacturing and support employees. The components of these charges and the related liability balances and activity from the May 27, 2001 and November 25, 2001 balance sheet dates to the March 2, 2003 balance sheet date are set forth below.

                                           Charges      3/2/03
                             Closure     Incurred or  Remaining
                             Charges        Paid     Liabilities

Dielektra GmbH charges:
Impairment of long
 lived assets                $  378        $  378       $    -
Write down of assets            523           523            -
Severance payments
and related costs             2,020         2,020            -
                             ------        ------       ------
                              2,921         2,921            -
Other severance payments
and related costs               806           806            -
                             ------        ------       ------
                             $3,727        $3,727       $    -
                             ======        ======       ======

The charge for fixed asset impairments was comprised of $378 to write off the net book value of machinery and equipment and $523 to write down related land and building that are no longer used as a result of the close-down of the conventional lamination line of Dielektra. The machinery and equipment have no residual value. The land and building that previously housed the closed operations are being held for sale and have been written down to their estimated net realizable value of $2,050.

As stated above in this Note and in the preceding Note 11, the Company incurred charges (totaling $6,126) for severance payments and related costs for employees whose employment was terminated by the Company as follows: $2,020 for employees terminated in Germany during the 2002 fiscal year third quarter ended November 25, 2001; $681 and $125 for employees terminated at its continuing operations in Asia, Europe and North America during the 2002 fiscal year first quarter ended May 27, 2001 and third quarter ended November 25, 2001, respectively; $1,303 for employees terminated in connection with the sale of NTI and the closure of a related support facility in Arizona during the 2002 fiscal year first quarter ended May 27, 2001; and $1,997 for employees terminated in connection with the closure of the Nelco U.K. facility in Skelmersdale, England in the 2003 fiscal year third quarter ended December 1, 2002.

All the terminated employees were hourly or salaried, administrative, manufacturing and support employees, all such employees were terminated during the 2002 fiscal year first, second and third quarters ended May 27, 2001, August 26, 2001 and November 25, 2001, respectively, and in the 2003 fiscal year third quarter ended December 1, 2002; and substantially all the severance payments and related costs for such terminated employees (totaling $6,126) were paid during such quarters, except payments and costs of $1,212 in Germany all of which were paid in installments to terminated employees in Germany during the Company's 2003 fiscal year first and second quarters ended June 2, 2002 and September 1, 2002, respectively, and except payments and costs of $1,703 in the U.K. which were paid in installments to terminated employees in the U.K. during the fourth quarter of fiscal year 2003 and the remainder of which will be paid during the first and second quarters of fiscal year 2004. All the severance payments and related costs for the employees terminated in connection with the sale of NTI and the closure of the related support facility (totaling $1,303) were included in the $15,707 of charges in connection with the sale of NTI and the closure of the related support facility.

As a result of the foregoing employee terminations and other less significant employee terminations in connection with business contractions and in the ordinary course of business and substantial numbers of employee resignations and retirements in the ordinary course of business, the total number of employees employed by the Company declined to approximately 1,700 as of March 3, 2002 from approximately 3,000 as of February 25, 2001, the end of the Company's 2001 fiscal year, and was approximately 1,500 as of March 2, 2003.

13. ASSET IMPAIRMENT

As a result of continuing declines in the Company's North American business operations and Dielektra's mass lamination operation, during the fourth quarter of the 2003 fiscal year the Company reassessed the recoverability of the fixed assets of those operations based on cash flow projections and determined that such fixed assets were impaired. The Company recorded an impairment charge of $50.3 million in the Company's 2003 fiscal year fourth quarter to reduce the book values of such fixed assets to their estimated fair values. In accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), the carrying values of such assets exceeded their fair values and were not recoverable (see Note 21 below).

14. EMPLOYEE BENEFIT PLANS

a. Profit Sharing Plan - Park and certain of its subsidiaries have a non-contributory profit sharing retirement plan covering their regular full-time employees. The plan may be modified or terminated at any time, but in no event may any portion of the contributions revert back to the Company. The Company's contribu tions under the plan amounted to $538, $403 and $4,597 for fiscal years 2003, 2002 and 2001, respectively. Contributions are discretionary and may not exceed the amount allowable as a tax deduction under the Internal Revenue Code. In addition, the Company sponsors a 401(k) savings plan, pursuant to which the contributions of employees of certain subsidiaries were partially matched by the Company in the amounts of $442, $527 and $751 in fiscal years 2003, 2002 and 2001, respectively.

b. Pension Plans - The domestic subsidiary of the Company which conducted the plumbing hardware business had two pension plans, neither of which is active, covering its union employees. On February 27, 2000, the two plans were merged in order to simplify the administration of the plans. The Company's funding policy was to contribute annually the amounts necessary to satisfy applicable funding standards. There were no changes made to funding levels or retiree benefits as a result of the merger of the two plans. However, in connection with the closure of the plumbing hardware business, the Company terminated the combined plan and purchased annuity contracts to fund the pension liability.

A subsidiary of the Company in Europe has a non-contributory defined benefit pension plan which covers certain employees. Under the terms of this plan, participants may not accrue additional service time after December 31, 1987. The Company's policy with respect to this plan is to contribute annually the amounts necessary to meet current payment obligations of the plan. The Company recorded deferred pension liabilities relating to this plan in the amounts of $10,991 and $8,908 at March 2, 2003 and March 3, 2002, respectively, in accordance with SFAS 87. The effect on the Company's consolidated financial statements in recording the liability was to record a corresponding reduction to accumulated non-owner changes of $742 and $845 at those same dates.

Net pension costs included the following components:

                                                Fiscal Year
Changes in Benefit Obligations               2003           2002
------------------------------               ----           ----
Benefit obligation at beginning of year    $  9,150      $ 9,408
Service cost                                     94           82
Interest cost                                   571          533
Actuarial loss (gain)                          (301)         108
Currency translation (gain)loss               2,163         (439)
Benefits paid                                  (640)        (542)
Payment for annuities                             -            -
Benefit obligation at end of year          $ 11,037      $ 9,150

Changes in Plan Assets

Fair value of plan assets at
beginning of year                          $      -      $     -
Actual return on plan assets                      -            -
Employer contributions                          640          542
Benefits paid                                  (640)        (542)
Payment for annuities                             -            -
Administrative expenses paid                      -            -
Fair value of plan assets                  $      -      $     -

Under funded status                        $(11,037)     $(9,150)
Unrecognized net loss                         1,238        1,317
Net accrued pension cost                   $ (9,799)     $(7,833)

<caption

                                                 Fiscal Year
Components of Net Periodic Benefit Cost    2003     2002     2001
Service cost - benefits earned during the
period                                    $ 94      $ 82    $   96
Interest cost on projected benefit
obligation                                 571       533       839
Expected return on plan assets               -         -      (252)
Amortization of unrecognized loss           50        40         -
Recognized net actuarial loss                -         -        38
Effect of curtailment                        -         -      1,761
Net periodic pension cost                 $715      $655     $2,482

The projected benefit obligation for the terminated domestic plan was determined using an assumed discount rate of 7.50% for fiscal year 2000 and the assumed long-term rate of return on plan assets was 8%. Projected wage increases were not applicable as benefits pursuant to the plan were based upon years of service without regard to levels of compensation.

The projected benefit obligation for the foreign plan was determined using assumed discount rates of 5.75% and 6% for fiscal years 2003 and 2002, respectively. Projected wage increases of 2.6% and 3.5% and inflation factors of 2.0% were also assumed for fiscal years 2003 and 2002, respectively. As previously stated, the Company's funding policy with respect to this plan is to contribute annually the amounts necessary to meet current payment obligations of the plan.

15. COMMITMENTS AND CONTINGENCIES

a.Lease Commitments - The Company conducts certain of its operations in leased facilities, which include several manufacturing plants, warehouses and offices, and land leases. The leases on facilities are for terms of up to 10 years, the latest of which expires in 2007. Many of the leases contain renewal options for periods ranging from one to ten years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is 2013 and this land lease contains renewal options of up to 35 years.

These non-cancelable operating leases have the following payment schedule.

Fiscal Year      Amount
    2004      $ 2,307
    2005        1,543
    2006          797
    2007          357
    2008          263
 Thereafter       684
               $5,951

Rental expense, inclusive of real estate taxes and other costs, amounted to $2,948, $3,933 and $3,711 for fiscal years 2003, 2002 and 2001, respectively

b. Environmental Contingencies - The Company and certain of its subsidiaries have been named by the Environmental Protection Agency (the "EPA") or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the "Superfund Act") or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at eight sites. In addition, a subsidiary of the Company has received cost recovery claims under the Superfund Act from other private parties involving two other sites and has received requests from the EPA under the Superfund Act for information with respect to its involvement at three other sites.

Under the Superfund Act and similar state laws, all parties who may have contributed any waste to a hazardous waste disposal site or contaminated area identified by the EPA or comparable state agency may be jointly and severally liable for the cost of cleanup. Generally, these sites are locations at which numerous persons disposed of hazardous waste. In the case of the Company's subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at waste sites by various companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its subsidiaries have been accused of or charged with any wrongdoing or illegal acts in connection with any such sites. The Company believes it maintains an effective and comprehensive environ mental compliance program.

The insurance carriers that provided general liability insurance coverage to the Company and its subsidiaries for the years during which the Company's subsidiaries' waste was disposed at these sites have agreed to pay, or reimburse the Company and its subsidiaries for, 100% of their legal defense and remediation costs associated with three of these sites and 25% of such costs associated with another one of these sites.

The total costs incurred by the Company and its subsidiaries in connection with these sites, including legal fees incurred by the Company and its subsidiaries and their assessed share of remediation costs and excluding amounts paid or reimbursed by insurance carriers, were approximately $131, $200 and $300 in fiscal years 2003, 2002 and 2001, respectively. The recorded liabilities included in accrued liabilities for environmental matters were $4,246, $3,975 and $4,431 for fiscal years 2003, 2002 and 2001, respectively.

Included in cost of sales are charges for actual expenditures and accruals, based on estimates, for certain environmental matters described above. The Company accrues estimated costs associated with known environmental matters, when such costs can be reasonably estimated and when the outcome appears probable. The Company believes that the ultimate disposition of known environmental matters will not have a material adverse effect on the liquidity, capital resources, business or consolidated financial position of the Company. However, one or more of such environmental mat ters could have a significant negative impact on the Company's consolidated financial results for a particular reporting period.

16. BUSINESS SEGMENTS

The Company's specialty adhesive tapes and films business, advanced composite materials business and plumbing hardware business were previously aggregated into the engineered materials and plumbing hardware segment. In June 2002, the Company sold its specialty adhesive tapes and films business (see Note 10 above); and during the 2001 fiscal year, the Company closed and liquidated its plumbing hardware business (see Note 18 below). In the 2001, 2000 and 1999 fiscal years, the specialty adhesive tapes and films, advanced composite materials and plumbing hardware businesses comprised less than 10% of the Company's consolidated revenues and assets, and the Company considered itself to operate in one business segment. The Company's electronic materials products are marketed primarily to leading independent printed circuit board fabricators, electronic manufacturing service companies, electronic contract manufacturers and major electronic original equipment manufacturers ("OEMs") located throughout North America, Europe and Asia. The Company's advanced composite materials customers, the majority of which are located in the United States, include OEMs, independent firms and distributors in the electronics, aerospace and industrial industries.

Sales are attributed to geographic region based upon the region from which the materials were shipped to the customer. Intersegment sales and sales between geographic regions were not significant.

Financial information regarding the Company's operations by geographic region follows:

                                    Fiscal Year
                             2003       2002      2001
United States              $117,889   $132,520  $312,851
Europe                       53,520     55,507   121,329
Asia                         45,367     42,033    88,017
  Total sales              $216,776   $230,060  $522,197

United States               $44,425   $108,804  $104,386
Europe                       25,373     22,954    24,657
Asia                         21,159     22,943    26,596
  Total long-lived assets  $ 90,957   $150,283  $160,057

17. CUSTOMER AND SUPPLIER CONCENTRATIONS

a. Customers - Sales to Sanmina Corporation were 17.3%, 18.1% and 25.1% of the Company's total worldwide sales for fiscal years 2003, 2002 and 2001, respectively. Sales to Tyco Printed Circuit Group L.P. were less than 10% for fiscal years 2003 and 2001, and 11.3% of fiscal 2002. Sales to Multilayer Technology, Inc. were 10.0% of total worldwide sales for fiscal years 2003 and less than 10% for fiscal years 2002 and 2001, respectively.

While no other customer accounted for 10% or more of the Company's total worldwide sales in fiscal year 2003, and the Company is not dependent on any single customer, the loss of a major electronic materials customer or of a group of customers could have a material adverse effect on the Company's business and results of operations.

b.Sources of Supply - The principal materials used in the manufacture of the Company's electronic materials products are specially manufactured copper foil, fiberglass cloth and synthetic reinforcements, and specially formulated resins and chemicals. Although there are a limited number of qualified suppliers of these materials, the Company has nevertheless identified alternate sources of supply for each of such materials. While the Company has not experienced significant problems in the delivery of these materials and considers its relationships with its suppliers to be strong, a disruption of the supply of material from a principal supplier could adversely affect the Company's electronic materials business. Furthermore, substitutes for these materials are not readily available and an inability to obtain essential materials, if prolonged, could materially adversely affect the Company's electronic materials business.

18.CLOSURE OF PLUMBING HARDWARE BUSINESS

In the fourth quarter of the 2000 fiscal year, the Company decided to close and liquidate its plumbing hardware business. The pre-tax charges to earnings for the 2000 fiscal year related to the closure of the plumbing hardware business totaled $4,464, including $1,234 for the impairment of long- lived assets, $1,111 for other asset write-offs, and $2,119 for facility and other costs related to the closure.

During the 2001 fiscal year, the Company closed and liquidated its plumbing hardware business. In the fourth quarter of the 2001 fiscal year, the Company realized $1,262 in gains from the sale of real estate and other plumbing hardware business assets, collected $290 more of accounts receivable than originally anticipated, and reversed $600 of liabilities accrued in fiscal year 2000 for other costs to close the business, which were no longer required. In the fourth quarter of the 2001 fiscal year, an expense of $1,149 was incurred for the purchase of annuity contracts to fund the liability of the pension plan that was terminated.

At March 2, 2003, there was $683 of accrued environmental liabilities and $100 for workers' compensation claims relating to the closure and liquidation of the plumbing hardware business. At March 3, 2002, there was $669 of accrued environmental liabilities and $150 for workers' compensation claims. Although the plan for the closure and liquidation of the Company's plumbing hardware business was implemented during the Company's 2001 fiscal year, the Company cannot reasonably estimate when the environmental issues and workers' compensation claims will be resolved.

The operating results of the plumbing hardware business included in the Consolidated Statement of Operations are as follows:

                            Fiscal Year Ended
                                February 25,
                                    2001
 Net sales                       $1,883
 Cost of sales                    1,001

 Gross profit                       882
Selling, general and
 administrative expenses            907

 Loss from operations             $ (25)

                                         Quarter
                            First   Second     Third   Fourth
                             (In thousands, except per share
                                        amounts)
Fiscal 2003:
 Net sales               $ 56,561  $ 56,901  $ 53,587  $ 49,727
 Gross profit               6,261     6,209     5,408     5,209
 Net (loss) gain             (636)    1,587    (5,304)  (46,406)

 Loss per share:
  Basic                     $(.03)    $0.08     $(.27)   $(2.35)
  Diluted                   $(.03)    $0.08     $(.27)   $(2.35)

 Weighted average common
 shares outstanding:
  Basic                    19,661    19,669    19,682    19,684
  Diluted                  19,661    20,013    19,682    19,684

Fiscal 2002:
 Net sales               $ 69,102  $ 51,743  $ 52,625  $ 56,590
 Gross profit               3,266     1,422     1,539     5,568
 Net loss                 (14,612)   (3,779)   (6,117)   (1,011)

 Loss per share:
  Basic                     $(.75)    $(.19)    $(.31)    $(.05)
  Diluted                   $(.75)    $(.19)    $(.31)    $(.05)

 Weighted average common
 shares outstanding:
  Basic                    19,420    19,545    19,559    19,612
  Diluted                  19,420    19,545    19,559    19,612

(Loss)earnings per share are computed separately for each quarter. Therefore, the sum of such quarterly per share amounts may differ from the total for the years. The weighted average number of shares outstanding and the (loss)earnings per share for each period have been adjusted to give retroactive effect to the three-for-two split of the Company's common stock declared October 10, 2000 payable November 8, 2000 to stockholders of record on October 20, 2000.

20.RECENTLY ISSUED ACCOUNTING PROUNOUNCEMENTS

In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure" ("SFAS 148"), which amends the disclosure provisions of FASB Statement No. 123, "Accounting for Stock Based Compensation", to require prominent disclosure of the effect on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation and amends APB Opinion No. 28, "Interim Financial Reporting", to require disclosure of those effects in interim financial information. This statement is effective for fiscal years ending after December 15, 2002. The Company implemented this statement in the fourth quarter of fiscal year 2003 and has made the appropriate disclosures. See Notes 1 and 8 of the Notes to the Consolidated Financial Statements.

In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS 146"). The Statement is effective for exit or disposal activities initiated after December 31, 2002. SFAS 146 addresses significant issues relating to the recognition, measurement and reporting of costs associated with exit and disposal activities, including restructuring activities. The adoption did not have a material effect on the Company's consolidated results of operations or financial condition.

In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which supercedes Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). Although it retains the basic requirements of SFAS 121 regarding when and how to measure an impairment loss, SFAS 144 provides additional implementation guidance. SFAS 144 is effective for all fiscal years beginning after December 15, 2001. The Company adopted SFAS 144 for the quarter ended June 2, 2002. The adoption did not have a material effect on the Company's consolidated results of operations or financial condition.

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"), effective for fiscal years beginning after June 15, 2002. SFAS 143 requires the fair value of liabilities for asset retirement obligations to be recognized in the period in which the obligations are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Company has not yet determined what effect SFAS 143 will have on the Company's consolidated results of operations or financial position.

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, "Business Combinations", and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets", effective for fiscal years beginning after December 15, 2001. Under the new rules set forth in these Statements, goodwill and other intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. In addition, Statement 141 eliminates the pooling-of-interests method of accounting for business combinations, except for qualifying business combinations that were initiated prior to July 1, 2001. The Company adopted SFAS 142 for the fiscal quarter ended June 2, 2002. The Company does not have any goodwill on its balance sheet, has virtually no intangible assets, and is not engaged in any transactions that are affected by the Statements; and, therefore, the application of the non- amortization provisions of the Statements did not have a material adverse effect on the Company's consolidated results of operations or financial position.

21. SUBSEQUENT EVENTS

On March 27, 2003, the Company announced that Dielektra GmbH, the Company's advanced electronic materials business located in Cologne, Germany, was closing its mass lamination operation; and on April 23, 2003, the Company announced the realignment of its North America FR4 business operations located in Newburgh, New York and Fullerton, California and the establishment of a new business unit called "Nelco/North America". (See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information regarding the closure and realignment.) As a result of continuing declines in the Company's North American business operations and Dielektra's mass lamination operation and the Company's reassessment of the recoverability of the fixed assets of those operations, the Company recorded $50,255 of fixed asset impairment charges in the fourth quarter of fiscal year 2003 (see Note 13 above). The Company expects to incur additional charges of approximately $16,000 during the first half of the 2004 fiscal year.

On May 13, 2003, the Company announced that the United States Court of Appeals for the Ninth Circuit in San Francisco affirmed the jury verdict in favor of Park's subsidiary, NTI, in its lawsuit filed against Delco Electronics Corporation in the United States District Court for the District of Arizona. Delco is a subsidiary of Delphi Automotive Systems Corporation. In the lawsuit, NTI claimed, among other things, that Delco breached its contract to purchase semi-finished multilayer printed circuit boards from NTI, that Delco breached the covenant of good faith and fair dealing implied in the contract, that Delco engaged in negligent misrepresentation and that Delco fraudulently induced NTI to enter into the contract. NTI sought substantial compensatory and punitive damages. As previously reported, on November 29, 2000, after a five day trial in Phoenix, Arizona, a jury awarded damages to NTI in the amount of $32,280, and on December 12, 2000 the judge in the United States District Court entered judgment for NTI on its claim of breach of the implied covenant of good faith and fair dealing with damages in that amount. Both parties filed motions for post-judgment relief and a new trial, all of which the judge denied, and both parties appealed the decision to the United States Court of Appeals for the Ninth Circuit in San Francisco. On May 7, 2003, a panel of three judges in the Court of Appeals for the Ninth Circuit rendered a unanimous decision affirming the jury verdict. The time period within which Delco could have filed a petition for rehearing by the United States Court of Appeals for the Ninth Circuit has expired. As of May 27, 2003, neither the Company nor NTI received notice that Delco has filed a petition for rehearing.

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