Parlex Corporation

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Parlex Corporation

1 Parlex Place
Methuen, Massachusetts 01844
U.S.A.
Telephone: (978) 685-4341
Fax: (978) 685-8809
Web site: http://www.parlex.com

Public Company
Incorporated: 1970
Employees: 507
Sales: $82.8 million (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: PRLX
NAIC: 331491 Nonferrous Metal (Except Copper and Aluminum) Rolling, Drawing, and Extruding; 334412 Printed Circuit Board Manufacturing; 334413 Semiconducting and Related Device Manufacturing; 335931 Current-Carrying Wiring Device Manufacturing

Parlex Corporation is a world leader in the flexible circuitry and laminated cable assemblies used throughout the computer and electronics markets. Based in Massachusetts, the company has manufacturing facilities in Rhode Island, Mexico, China, and the United Kingdom. While few have heard of Parlex and even fewer have ever seen one of the firm's flexible interconnects, most people probably interact with them every day. Parlex components are used in cars, SUVs, planes, computers, printers, cellular phones, handheld electronics, medical equipment, and more. As an industry leader with stringent quality control, Parlex has met industry standards for ISO and QS certification, as well a number of other compliance qualifications.

Flexibility Is the Key: 1970–97

Parlex Corporation was founded in 1970 and began operations at a 125,000-square-foot facility in Methuen, Massachusetts. Parlex's primary production centered on flexible circuits used in a number of electronics products. Parlex's threedimensional flexible printable circuit boards, used in computers, phones, and other products, were thin, lightweight, bendable, and compact; their predecessors, however, were twodimensional, rigid, heavier, less reliable, and prone to breakage. Parlex also made laminated cable, which produced higherspeed, sturdier interconnects for electronics (computers, disk drives, printers), automotive (stereo systems, vehicle sensors), medical (scanning devices, electronic scales), and military (night vision systems, aircraft ID systems) industries.

By the end of its first decade, Parlex had grown slowly but steadily with sales close to $10 million. In the 1980s the company had reached its capacity at its Methuen plant and went shopping for additional space. In 1986 Parlex began leasing a 46,000-square-foot manufacturing facility for its laminated cable production, situated in nearby Salem, New Hampshire. The new plant was a stone's throw (nine miles) from Parlex's headquarters and flexible circuitry operations. Two years later, in 1988, Parlex bought Cirtec Nevada, Inc. and formed a new subsidiary called Parlex Nevada, Inc. The Nevada venture, however, did not work out as planned; by 1990 certain operations were dissolved and the remainder of the subsidiary was sold in 1992.

Despite its Nevada snafu, Parlex's flexible circuit boards and laminated cables were selling well. By 1993 sales for the fiscal year (ending in June) reached $31.3 million and in the following year Parlex had earned ISO 9002 certification for its products. Sales rose to $34.9 million for 1994. Revenues continued to climb for the next several years; in 1995 sales topped $40.2 million, and in 1996 sales reached $47.3 million.

Part of what drove sales in the middle of the decade was a 1995 joint venture with the People's Republic of China to create Parlex (Shanghai) Circuit Company Ltd. The new operation acquired a 35,000-square-foot plant in downtown Shanghai to serve Parlex's growing Asian market in flexible printed circuit boards. Parlex's workforce grew from 1995's 450 to 475 in 1997, and sales for 1997 hit $55.1 million.

Innovations: 1998 to 2000

As demand for Parlex's products grew, the company spent more and more on research and development (R&D) not only to stay ahead of its competitors but to improve its flexible circuits and laminated cables. By the late 1990s Parlex was an established leader in the electronic interconnects market; its increased R&D spending had paid off with several new developments, including PALFlex, Spray Mask, and other patented technology. PALFlex was a new "plate to film" technique that allowed the company to shave several steps from its manufacturing process, while Spray Mask eliminated a soldering step from its circuit panel production, and expected to save as much as $1 for every panel manufactured using the new technology.

As Parlex prepared to switch its facilities over to the new money-saving processes (to be completed by early 1998), the company opened a new manufacturing plant in Empalmé, Mexico, and received lucrative contracts with Iomega Corporation and Samsung Electronics Company Ltd. Iomega, located in San Diego, California, was known for its computer components, such as portable zip disk drives, while the Seoul, South Korea-based Samsung Electronics Company, Ltd. was known throughout the world for its consumer electronics products including televisions, radios, cameras, computer monitors, memory drives, and printers. In addition, Parlex had secured QS 9000 certification for both its cable and circuit operations, and major clients Motorola and Siemens had increased their production demands.

By the end of the decade, Parlex had expanded its headquarters and nearby manufacturing facility and bought a 55 percent stake in Dynaflex, a printed circuit board producer based in New Hampshire. Parlex paid Hadco Corporation, the parent company of Dynaflex, $2.7 million for the majority stake with an opportunity to purchase the remainder of the business in the future. Dynaflex's manufacturing facility in San Jose, California, mainly used for small orders needing a fast turnaround, became a Parlex entity once the dust settled. Parlex ended the century with revenues totaling $67 million and a workforce of more than 1,000 employees worldwide.

In 2000 Parlex continued to lead the electronic interconnects market; the firm was also in an enviable position with no debt, a multitude of patents protecting its proprietary technology, and a vastly untapped market in Europe to pursue. After having little or no sales in Europe for the last several years, by the early 2000s Parlex had $15 million in sales with every expectation of more. Further, Parlex was not as dependent on any one particular market for the majority of its revenues, as sales for its five business segments (automotive, aerospace/military, industrial/medical, electronic, and telecom/datacom) were more evenly spread than in past years.

A new international purchase bolstered the flexible circuits division, when Parlex paid just under $20 million to the Cookson Group PLC for its two Poly-Flex Circuits subsidiaries. With the U.S. subsidiary located in Cranston, Rhode Island, and the other based in Newport, Isle of Wight, Parlex hoped the Britishbased subsidiary would open a larger gateway to the United Kingdom's electronic interconnects market. Fiscal sales for 2000 reached $101.8 million and Parlex's workforce numbered 1,500.

Highs and Lows: 2001 and Beyond

In 2001 Parlex was named as one of Forbes magazine's best 200 small companies in the United States, and made the Boston Globe 's "Globe 100" list of Massachusetts companies for the third year in a row. Other highlights of the year included increasing technological breakthroughs in electronic identification, such as RFID (radio frequency identification) and "Smart Card" applications. With the RFID market poised for takeoff, Parlex segued into the design and production of tiny chips for low cost antennas (which then transferred data across radio waves) as well as Smart Cards that placed tiny chips in credit cards, airline tickets, and passports for instant identification. Parlex also had a number of new and pending patents for its constantly evolving technology. Sales for fiscal 2001, which ended June 30th, reached $103.6 million; yet the brunt of the economic downturn that occurred after September 11th showed up in Parlex's 2002 revenues as sales fell to $87.1 million.

Near the end of 2001 (but in Parlex's fiscal 2002 year), the company took measures to shore up its performance by slashing its workforce and closing its Salem, New Hampshire plant (operations were transferred to the Shanghai facility). Despite the firm's difficulties, however, there were a number of highlights in 2002, including a second Chinese joint venture called Parlex Shanghai Interconnect Products, the acquisition of another 40 percent ownership in its original Chinese partnership, and two prestigious awards: making Samsung Electronic's "Outstanding Supplier" list, one of only 10 suppliers to receive such a commendation in 2002; and Johnson Controls Inc.'s "Gold Supplier" award for outstanding performance as a flexible circuits supplier.

In 2003 Parlex banked on its growing RFID product development by forming a partnership with the New Hampshirebased Nashua Corporation to design and manufacture flexible circuitry for use in the cellular, automotive, and radio frequency markets. Despite its new partnership with Nashua and other innovations, Parlex experienced another year of disappointing sales and was forced to transfer more of its production to its plants in China. To make up for losses in the telecom market, Parlex concentrated on its medical and military applications for the coming years. Revenues for 2003 were slightly lower than the previous year's $87.1 million, at $82.3 million.

Company Perspectives:

At Parlex, we continue to develop cost-effective technology solutions to improve the performance and reliability of our customers' products. As a global leader in developing flexible interconnect technology, Parlex leads the industry in new product introduction. Our application-driven engineering teams design products that support our OEM (original equipment manufacturers) partners' aggressive time-tomarket and cost requirements. Supporting the front-end engineering effort is a global manufacturing footprint. The Company has manufacturing operations in Asia, North America, and Europe.

Aside from two years operating at a loss, Parlex remained a world leader in the flexible interconnects marketplace. In just over three decades Parlex parlayed its way from a relatively unknown electronics designer and manufacturer into a technological trailblazer servicing Fortune 500 companies including Johnson Controls, Lockheed Martin, Raytheon, Delco, Motorola, Siemens, Whirlpool, Dell, Iomega, Nortel, Hewlett-Packard, and Pitney-Bowes. With applications in the automotive, aerospace, telecommunications/networking, home appliance, computer, military, and medical fields, Parlex continued to set the standard for flexible circuitry and laminated cable interconnects. Never content to rest on its laurels, Parlex continually sought ways to upgrade its technology and remain a step ahead of its competitors.

Key Dates:

1970:: Parlex Corporation is founded in Methuen, Massachusetts.
1986:: Parlex leases a manufacturing facility in Salem, New Hampshire, for its laminated cable production.
1988:: The company acquires Cirtec Nevada, Inc.
1995:: Parlex forms a joint venture with the People's Republic of China, and opens a manufacturing plant in Mexico.
1991:: Parlex buys a controlling stake in Dynaflex and gains a California subsidiary.
1997:: Parlex inks deals with Iomega Corporation and Samsung Electronics Company Ltd.
1998:: A new addition is built to Parlex's laminated cable manufacturing facility in New Hampshire.
2000:: The Cookson Group's Poly-Flex subsidiaries are bought for just under $19.7 million.
2002:: Parlex establishes a second joint venture with China.
2003:: Parlex acquires the remaining shares of Dynaflex and begins a joint venture with Nashua Corporation.

Principal Subsidiaries

Parlex Asia Pacific Ltd.; Parlex Acquisition Corporation; Parlex (Shanghai) Circuit Company, Ltd. (China); Parlex Dynaflex Corporation; Parlex International Corporation.