SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549





FORM 10-K





(Mark One)
[x]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934



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

For the transition period from to

Commission File Number 0-27744



PCD INC.





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

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



Registrant's telephone number, including area code: (978) 532-8800

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value





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



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     [X]



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



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







PCD INC.
                                                          ANNUAL REPORT ON FORM 10-K
                                                   For the Fiscal Year Ended December 31, 2002



TABLE OF CONTENTS



|PART IItem 1.Item 2.Item 3.Item 4.                                                                 | Business
    Properties		
    Legal Proceedings
    Submission of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                | Page
  1
    12
    12
    12        
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------
|                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                        |                                      
|PART IIItem 5.Item 6.Item 7.Item 7A.Item 8.
         Item 9.                                       | Market for Registrant's Common Equity and Related Stockholder Matters
    Selected Financial Data
    Management's Discussion and Analysis of Financial Condition and Results Of Operations
    
    Quantitative and Qualitative Disclosures About Market Risk
    Financial Statements and Supplementary Data
    Changes in and Disagreements with Accountants on Auditing and Financial Disclosure | 13
    14
    14
    21
    22
    42
|                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                        |                                      
|PART III
         Item 10.
         Item 11.
         Item 12.
         Item 13.
         Item 14. | Directors and Executive Officers of the Registrant
    Executive Compensation
    Security Ownership of Certain Beneficial Owners and Management
    Certain Relationships and Related Transactions
    Controls and Procedures                                                                                                                                                                        | 43
    44
    45
    46
    47       
|                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                        |                                      
|PART IV
         Item 15.                                                                          | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                       | 48                                   
|                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                        |                                      
|Signatures                                                                                         | 55                                                                                                                                                                                                                                                                                                                                                                                                    



PART I

ITEM 1. BUSINESS

Recent Events

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

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

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



General



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



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

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



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



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



Market Overview



The electrical and electronic systems which utilize
connectors have become increasingly widespread and complex, in part as a result
of the increased automation of business systems and manufacturing equipment.
Consequently, over the long run, the electronic connector industry has grown in
size and electronic connectors have become more sophisticated. Demand for
smaller yet more powerful products have resulted in continued improvements in
electronic systems in general and electronic connectors in particular. Product
cycles continue to shorten and, as time to market becomes increasingly
important, equipment manufacturers seek to reduce inventory and contend with
pressures to keep up with new product innovations. The growing demand for
electronic connector complexity, coupled with reduced product development cycles
and delivery lead times, creates a need for closer cooperation between connector
suppliers and equipment manufacturers, often leading to new connector
requirements and market opportunities.



Bishop & Associates estimates the total 2002 worldwide market
at $23.1 billion. This market is highly fragmented with over 1,200
manufacturers. While many of these companies produce connectors which are
relatively standard and often produced in large quantities, a substantial
portion of the industry is comprised of companies which produce both proprietary
and standard products in relatively low volumes for specialized applications.
Fleck Research has identified over 1,100 separate electronic connector product
lines presently offered in the marketplace.



Although large and broad, the electronic connector market
experienced - as did most of electronic industry - the worst downturn in its
history during 2001 with an additional decline in 2002. According to Bishop and
Associates, the market declined 19% from 2000 to 2001 and another 9.6% from 2001
to 2002, from $31.6 billion in 2000 to $25.6 billion in 2001 and to $23.1
billion in 2002
.



PCD sales and profits during 2001 and 2002, as presented
elsewhere in the report, were very significantly impacted by market conditions,
and 2003 performance will be likewise related to the rate and nature of market
recovery.



PCD focuses its products and sales efforts in the selected
key markets listed below.



Semiconductor Burn-in Testing Market.

Most leading-edge
microprocessors, logic and memory ICs undergo an extensive reliability screening
and stress testing procedure known as burn-in. The burn-in process screens for
early failures by operating the IC at elevated temperatures, usually at 125(degrees)C
(257(degrees)F) to 150(degrees)C (302(degrees)F), for periods typically ranging from 8 to 48 hours.
During burn-in, the IC is secured in a socket, an electro-mechanical
interconnect, which is generally a permanent fixture on the burn-in printed
circuit board. The socket is designed to permit easy insertion and removal of
the IC before and after burn-in. Typically a burn-in socket must be able to
withstand 10,000 mechanical insertion and withdrawal cycles. Further, these
sockets must withstand thermal excursions from -10(degrees)C (14(degrees)F) to 150(degrees)C (302(degrees)F)
during the burn-in process. The nature of the semiconductor industry is such
that constant advances in technology and changes in IC packages require the
introduction of new styles and families of these sockets on a frequent and
ongoing basis.



Industrial Interconnect Market.

The industrial interconnect
market is comprised of a broad range of control, measurement and manufacturing
equipment. Terminal blocks are most commonly used in this equipment to provide
an electrical link between discrete functions, such as monitoring and measuring,
and controlling devices, such as programmable logic controllers ("PLCs"),
stand-alone PCs and single function controllers. The use of terminal blocks has
increased as electronic controllers and sensors in the industrial environment
have evolved to control more complex, multi-function activities. In addition to
increasing in number, these controllers and their connectors are becoming
smaller and are being configured in increasing variations.



Increased sophistication in industrial and process control
equipment has led to a demand for flexible, modular interconnection and
interface products. Control systems are used to facilitate the interface of
discrete factory wiring and cable systems with standard computer interconnects.
The Company has expanded its industrial market product offering with a broad
line of interface modules: printed board-mounted interconnect systems which
incorporate passive and often active components, and are designed in conjunction
with customer engineers. These interface systems allow industrial customers to
reduce installation time and decrease cabinet space, thereby improving their
overall system costs.



Avionics Market.

The avionics market requires a diverse range
of electronic connectors that are designed and manufactured specifically for
avionics applications. Over the last five years, commercial aircraft
applications have represented an increasingly important part of this market. The
Company participates in selected areas of the avionics market with junction
modules and relay sockets that perform similar functions as its industrial
connectors but are designed to operate in the harsher environment and meet the
more critical performance requirements of avionics applications. The two major
market sectors in which the Company participates are the 100+ seat capacity
large jet transports, and the smaller 30-95 seat capacity regional aircraft.
Business jets are also becoming an important market segment.



Strategy



The Company's goal had been to identify and expand into
selected electronic connector markets where it can establish a position of
leadership. The Company intended to increase its presence in the markets in
which it participates through internal investment in product development and
potential strategic acquisitions. The key elements of the Company's strategy had been to:



Be the Key Supplier In Selected Niche Markets: The
  electronic connector industry services a variety of different industries with
  connectors that are often unique to particular applications within a given
  industry. The Company actively identifies and pursues those markets which have
  the following characteristics: demand for electronic connectors with
  relatively high engineering content, high degree of customer interface,
  changing technology, significant growth opportunities and a market size
  appropriate to the Company's resources. Presently, the Company focuses on the
  semiconductor burn-in, industrial and avionics interconnect markets.



Grow Through Internal Product Development and Expansion of
  Existing Product and Customer Base: The Company has been committed to
  growing sales revenue at a rate that is higher than the connector industry
  projected growth rate. To accomplish this, the Company has invested heavily in
  new product development. Over the last five years the Company has spent
  approximately 5% of net sales on new product tooling. For 2002, 23% of sales
  were generated from products that were introduced in the last five years,
  including semiconductor burn-in sockets, specialty aircraft modules and
  interface modules and custom I/O terminal blocks for industrial applications.

Implement Reorganization and Cost Reductions: The
  Company took significant steps during 2001 and 2002 to restructure the
  organization and reduce costs. Production at the Wells-CTI Division
  manufacturing facility in South Bend, IN, was halted in October 2001, and
  stamping and molding operations for both Wells-CTI and the Industrial-Avionics
  Divisions were consolidated in Peabody, MA to reduce the effects of market
  volatility and maximize resources. Additional cost reductions were completed
  at each division in 2002.



Products and Applications



The Company markets over 6,800 electronic connector products
in three product categories, each targeting a specific market. These product
categories are: semiconductor burn-in sockets, industrial interconnects and
avionics terminal blocks and sockets. The products offered within each product
category can be characterized as proprietary, application-specific or industry
standard, as described below.



Proprietary connectors are unique Company designs that
  are introduced and sold to a broad market rather than a single customer.



Application-specific interconnects are products which
  are designed and developed for a specific application, typically for one
  customer. These products can be subsequently developed into proprietary
  product lines.



Industry standard connectors are normally produced in
  accordance with a relatively detailed industry or military design and
  performance specification and sold to the broad market to which that
  specification relates.



Semiconductor Burn-in Sockets



Most leading-edge microprocessors, logic and memory ICs
undergo an extensive reliability screening and stress testing procedure known as
burn-in. The burn-in process screens for early failures by operating the IC at
elevated temperatures between 125(degrees)C (257(degrees)F) to 150(degrees)C (302(degrees)F), for periods
typically ranging from 8 to 48 hours. During burn-in, the IC is secured in a
socket, an electro-mechanical interconnect, which is generally a permanent
fixture on the burn-in printed circuit board. The socket is designed to permit
easy insertion and removal of the IC before and after burn-in. Typically a
burn-in socket must be able to withstand 10,000 mechanical insertion and
withdrawal cycles. Further, these sockets must withstand thermal excursions from
-10(degrees)C (14(degrees)F) to 150(degrees)C (302(degrees)F) during the burn-in process.



ICs (which before being packaged are frequently referred to
as dies) are generally encased in a plastic or ceramic package to protect the
device and facilitate its connection with other system components. The IC
package industry offers a wide variety of evolving package designs. New package
designs are driven by the need to accommodate the increasing complexity, density
and higher I/O count of the ICs. Each unique IC package configuration requires a
socket that corresponds to the package's specific characteristics. The nature of
the semiconductor industry is such that constant advances in technology and
changes in IC packages require the introduction of new styles and families of
these sockets on a frequent and ongoing basis.



The IC packages on which PCD focuses its burn-in socket
efforts are listed below. These packages have been selected because the Company
believes that they represent the most advanced and fastest growing elements of
the semiconductor burn-in market.



Chip Scale Package: The chip scale ("CSP") is an
    array package that most often terminates via a solder sphere much like a
    ball grid array ("BGA"). The definition of a CSP package is that the package
    is no greater than 120% of the IC die area. Over several hundred versions of
    CSP packages are in existence and because the package outline is tied
    directly to the dies area, many socket versions are required to address the
    market. Pitches range from 0.5mm to 0.8mm and ball counts range from 6 to
    600.



Thin Small Outline Package Sockets: The thin small
    outline ("TSOP") is a plastic, rectangular package with leads on two sides,
    running along either pair of opposite edges. With lead counts from 20 to 86
    contacts , the TSOP houses memory circuits. The small size, low price and
    surface mount design of the TSOP makes it a highly desirable package. The
    Company currently produces seven distinct socket series to accommodate a
    variety of TSOP packages.



Quad Flat Pack Sockets: The quad flat pack ("QFP") is
    a plastic package with leads on four sides. It is used for high lead count
    surface mount applications and is characterized by lead counts typically
    ranging between 32 and 208 leads. The QFP is currently a predominant and
    rapidly growing technology for packaging a wide variety of ICs used in
    microcontroller, logic, communication and SRAM applications. The Company
    currently produces over 40 distinct sockets to accommodate a wide variety of
    QFP packages.



Pin Grid Array Sockets: The pin grid array ("PGA") is
    a square or rectangular through-hole device. The pins are generally placed
    on the package before insertion of the die. The differentiating feature of
    the PGA is that the contacts are placed in an array over the bottom of the
    packaged device, rather than protruding from the sides of the device in a
    perimeter pattern, as with the QFP. As a result, the PGA offers greater lead
    density and smaller overall profile. This makes the PGA ideal for devices
    with high lead counts, in excess of 208, the upper range in which the QFP
    becomes difficult to handle. The micro pin grid array ("m
    PGA") is a newer and higher density version of the PGA, and a prime focus of
    the Company's new product development work.



Ball Grid Array Sockets: An area array package, the
    BGA uses an underlying substrate, rather than a lead frame, for die
    attachment. The die is then encapsulated and solder balls are attached to
    the underside of the substrate. The solder balls ultimately connect the
    package to the printed circuit board. The die is placed on the substrate
    prior to the attachment of the solder balls to ensure a flat surface for the
    die during processing.



Land Grid Array Sockets: Another grid array package,
    the land grid array ("LGA") achieves maximum density by eliminating both
    pins and solder balls, and providing an array of tiny, gold plated contact
    pads on the bottom of the package for interconnect purposes. Because of high
    density and high performance, the LGA is primarily used in high lead count
    application specific integrated circuits ("ASICS") and microprocessors
    applications. Lower cost organic substrate versions are now being introduced
    to make this package style more attractive in the future.



Industrial Interconnects



The Company's product areas in this market are industrial
  terminal blocks and interface modules. Terminal blocks are most commonly used
  in industrial equipment to provide an electrical link between discrete
  functions, such as monitoring and measuring, and a controlling device.
  Interface modules facilitate the interface between discrete factory wiring and
  cabling for standard computer interconnects. The Company's industrial
  interconnects are targeted at the industrial and process control markets and
  affiliated markets and applications such as environmental control systems,
  food and beverage preparation, motor controls, machine tools, robotics,
  instrumentation and test equipment.



Terminal Blocks: Terminal blocks are used in
    applications where I/O power or signal wires are fed into a PLC or similar
    (and often simpler) control system, and a connector is required to interface
    between the electrical environment of relatively heavy wires and the
    electronic environment of controllers and sensors. The Company's terminal
    blocks connect to and capture the wires in spring-clamp or screw-clamp
    terminations, and interface with printed circuit boards in a variety of
    manners. The Company concentrates on four major product lines within this
    market: pluggable terminal blocks, fixed mount terminal blocks, edgecard
    terminal blocks, and application-specific terminal blocks.
    Application-specific terminal blocks are developed for customers who are of
    strategic importance to the Company, represent significant potential volume
    and are recognized market leaders.



Interface Modules: Interface modules are interconnect
    devices that incorporate terminal blocks, high density connectors and often
    additional electronic components and are used to form the interconnection
    between a system I/O card and field equipment. Often these interconnections
    require several discrete wire and standard computer connector interconnects.
    The interface module simplifies the interconnection by incorporating both
    the discrete wire and standard computer interconnects into a rail mounted
    printed circuit board assembly consisting of terminal blocks, additional
    connectors and possibly other electronic devices. Interface modules are
    typically application-specific and may contain electronic components for
    signal conditioning, fusing and various other electronic requirements.

Avionics Junction Modules and Relay Sockets



The Company concentrates on three major product lines in
  the avionics market:



Junction Modules: Junction modules are
    environmentally sealed, airborne terminal blocks. Avionics junction modules
    perform similar functions as industrial terminal blocks, linking discrete
    wires that are individually terminated to a connector. However, avionics
    terminal blocks are designed to withstand the harsher environment and far
    more critical operating requirements to which they are subject. The primary
    differences are that: contacts are gold plated; wires are terminated by the
    crimped (metal deformation) technique rather than screw clamps; and
    individual wires are installed and removed from the connector through use of
    spring-actuated locking devices. The avionics connectors are normally
    completely environmentally sealed through use of a silicone elastomer
    sealing grommet, or are designed to operate in a sealed compartment.



Relay Sockets: Relay sockets are used throughout
    aircraft as a means to facilitate installation, repair and maintenance of
    electro-mechanical relays which are utilized for a wide variety of control
    purposes ranging from main control circuits to landing gear.



Application-Specific Avionics Connectors:
    Application-specific junction modules have been developed in conjunction
    with Boeing Commercial Aircraft for use on the 717-737-747-757-767 series of
    commercial aircraft and the C17 military transport. Application-specific
    relay sockets are marketed to Boeing subcontractors for the 777 commercial
    aircraft program and the C17 aircraft. Application specific junction modules
    which incorporate electronic components and circuitry into module packages
    are supplied to (among others) Bombardier and British Aerospace fore
    regional jet programs.



Product Development



Currently, the Company markets over 6,800 products in a wide
variety of product lines. The Company seeks to broaden its product lines and to
expand its technical capabilities in order to meet anticipated needs of its
customers. The Company's product development strategy is to introduce new
products into markets where the Company has already established a leadership
position and to develop next generation products for other markets in which the
Company wishes to participate.



The Company's current product development projects in the
semiconductor burn-in market target new burn-in sockets for package device
designs such as IPGA, TSOP, CSP, LGA and BGA production packages. The Company
believes, based on industry trends, that TSOP and CSP will be the preferred
package for high-volume, high-density small outline IC devices.



Sales and Marketing



The Company distributes its products through a combination of
its own dedicated direct sales forces, a worldwide network of manufacturers
representatives and authorized distributors. The Company maintains separate
sales forces for the semiconductor burn-in markets and for the industrial
equipment and avionics markets. For the semiconductor burn-in markets, the
Company employs a global direct sales force with offices in England, Japan, and
the United States, augmented with sales representatives in smaller markets. For
the industrial and avionics markets, the Company generally uses its direct sales
forces and manufacturer representatives for large customers, new product
introductions and application-specific products and uses its authorized
distributors for smaller and medium-sized customers of standard and proprietary
products. The Company's sales and marketing program is focused on achieving and
maintaining close working relationships with its customers early in the design
phase of the customer's own product development cycle.

Customers



In 2002, the Company sold its products to over 650 customers
in a wide range of industries and applications. The top five customers of the
Company in 2002, 2001, and 2000 accounted for 29%, 39% and 47% of net sales,
respectively. In 2002, no single customer exceeded 10% of the Company's net
sales but for the years 2001 and 2000, Micron Technology, Inc. accounted for 18%
and 21% of net sales of the Company, respectively. Sales to customers located
outside the United States, either directly or through U.S. and foreign
distributors, accounted for approximately 32%, 20%, and 22% of the net sales of
the Company in the years ended 2002, 2001, and 2000, respectively.



Examples of end users of the Company's products, by category,
are presented below:





|Product Categories                   | Representative Customers                                                                                                                                                           
|------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Semiconductor burn-in sockets        | Advanced Micro Devices, Inc.
    Sharp Electronics Corporation
    Micron Technology, Inc.
    Motorola, Inc.                                                                      
|Industrial Interconnects             | Groupe Schneider (Modicon, Inc./Square D
         Co./Telemecanique)
    GE Fanuc
    Parker Hannifin Corporation
    Rockwell International Corp. (Allen-Bradley
         Company)
|Avionics Terminal Blocks and Sockets | The Boeing Company
    Bombardier Inc.
         (Canadair/deHavilland/Learjet Inc.)
    Empresa Brasileira de Aeronautica S/A
         (Embraer)                                   











Manufacturing and Engineering



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



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



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



Intellectual Property



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

Competition



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



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



Backlog



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



Environmental



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



Employees



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

Forward Looking Information/Risk Factors



Statements in this report concerning the future
revenues, expenses, profitability, financial resources, product mix, market
demand, product development and other statements in this report concerning the
future results of operations, financial condition and business of PCD Inc. are
"forward-looking" statements as defined in the Securities Act of 1933 and
Securities Exchange Act of 1934. Investors are cautioned that the Company's
actual results in the future may differ materially from those projected in the
forward-looking statements due to risks and uncertainties that exist in the
Company's operations and business environment, including:



Risks Related to Proposed Asset Sales in
Bankruptcy.



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

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



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



General Company and Industry Risks.



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



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



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



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



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



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



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



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



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



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



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



AVAILABLE INFORMATION



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





ITEM 2. PROPERTIES



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





ITEM 3. LEGAL PROCEEDINGS



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



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





ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



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







PART II



ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS



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





|                                                                             | High                                       | Low                                       
|---------------------------------------------------------------------------- | ------------------------------------------ | ------------------------------------------
|2002First Quarter 
    Second Quarter 
    Third Quarter 
    Fourth Quarter | $ 2.06
       1.54
       1.02
       0.32 | $ 0.62
       0.27
       0.05
       0.06
|                                                                             |                                            |                                           
|2001First Quarter 
    Second Quarter 
    Third Quarter 
    Fourth Quarter | $ 8.69
       7.44
       5.54
       3.00 | $ 6.00
       3.78
       2.38
       0.84





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



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



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



ITEM 6. SELECTED FINANCIAL DATA



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





|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Year Ended December 31,                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 2002                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (in thousands, except per share amounts)                                                                                                       
|Consolidated Statement of
    Operations Data:
    Net sales 
    Gross profit 
    Impairment of long-lived assets and other intangible assets 
    Impairment of goodwill 
    Income (loss) from operations 
    Interest income (expense), net 
    Income (loss) before extraordinary item and
      cumulative effect of change in accounting principle 
    Extraordinary item, net of income tax benefit 
    Cumulative effect of change in accounting principle 
    Net income (loss) | $ 25,142
         4,400
       15,284
       36,839
      (57,763)
        (3,362)
      (57,794)
        (3,867)
      (12,500)
      (74,161)
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                
|Income (loss) per share, basic:
      Income (loss) before extraordinary item and
        cumulative effect of change in accounting principle 
     Extraordinary item 
     Cumulative effect of change in accounting principle 
    Net income (loss)                                                                                                                                                                                                                                          | $    (6.46)
          (0.43)(1.40)$    (8.29)                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                
|Income (loss) per share, diluted:
      Income (loss) before extraordinary item and
        cumulative effect of change in accounting principle 
     Extraordinary item 
     Cumulative effect of change in accounting principle 
    Net income (loss)                                                                                                                                                                                                                                        | $    (6.46)
          (0.43)(1.40)$    (8.29)                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                
|Weighted Average Shares:
      Basic 
      Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                              | 8,947
    8,947                                                                                                                                







|                                                                                                                                     | December 31,                                            
|------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------
|                                                                                                                                     | 2002                                                    
|                                                                                                                                     | (in thousands)                                          
|Consolidated Balance Sheet Data:
    Working capital (deficit) 
    Total assets 
    Total debt 
    Stockholders' equity (deficit) | $ (35,205)
        14,631
        40,885
       (30,913)



________



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In 2002, net sales of the Company decreased to $25.1 million
from $36.6 million in 2001. Of this decrease, $6.5 million was due to lower
shipments of burn-in sockets resulting from the continued weak demand from
semiconductor manufacturers due mainly, we believe to the persistent downturn in
the electronics industry. Of the remaining decrease, $5.0 million was due to
reduced shipments of our interconnect products to aircraft manufacturers. The
Company realized approximately23% of its net sales in 2002 from products
introduced in the last five years. The Company distributes its products through
a combination of its own dedicated direct sales force, a worldwide network of
manufacturers' representatives and authorized distributors. Sales to customers
located outside the United States, either directly or through U.S. and foreign
distributors, accounted for approximately 32%, 20%, and 22% of the net
sales of the Company in the years ended December 31, 2002, 2001 and 2000,
respectively.

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



|Product Categories                                                                                                | 2002                            | 2001                            | 2000                          
|----------------------------------------------------------------------------------------------------------------- | ------------------------------- | ------------------------------- | ------------------------------
|Semiconductor burn-in sockets
    Industrial interconnects
    Avionic terminal blocks and sockets
         Total | 44.0%
    25.830.2  
    100.0% | 48.0%
    18.333.7  
    100.0% | 68.5%
    14.217.3 
    100.0%





Results of Operations

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



Year Ended December 31, Period-to-Period Change

|                                                                                                                                                                                                                                    | 2002                                                                     | 2001                                                        | 2000                                                   | 2002 vs. 2001                                                                   | 2001 vs. 2000                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ----------------------------------------------------------- | ------------------------------------------------------ | ------------------------------------------------------------------------------- | -----------------------------------------------------------------
|Net sales
    Gross profit
    Income (loss) from operations
    Non-operating expense, net
    Cumulative effect of change
      in accounting principle
    Extraordinary loss on
      debt extinguishment
    Net income (loss) | 100.0%
    17.5
    (229.7)
    (13.4)
    (49.7)
    (15.4)
    (295.0) | 100.0%
    30.9
    (17.2)
    (9.3)
    -
    -
    (58.9) | 100.0%
    45.9
    17.9
    (7.5)
    -
    -
    6.1 | (31.3%)
    (61.2)
    (817.9)
       (1.6)
    (100.0)
    (100.0)
    (243.6) | (40.9%)
    (60.2)
    (156.9)
    (26.2)
    -
    -
    (670.5)

Years Ended December 31, 2002 and 2001

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

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

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



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



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



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



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



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

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



Years Ended December 31, 2001 and 2000



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



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

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

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



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

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



Liquidity and Capital Resources

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

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



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





|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | InterestRate               | MaximumLoanCommitment | LoanAmount                | Principalrepayment schedule2003              2004 | MaturityDate                
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------------------- | ------------------------- | ------------------------------------------------- | ----------------------------
|Revolving Credit Loan (A-1) (1) (6)
    Revolving Credit Loan (A-2) (2) (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Variable
    Variable      | $ 2,500
    17,500    |                           |                                                   |                             
|Term Loan A (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Variable                   |                       | $ 10,000                  | $ 3,000                                           | $  7,000                    
|Term Loan B-1 (4)
    Term Loan B-2 (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Fixed - 8%
    Fixed - 10% | $ 20,000              | 8,000
     6,000 $ 24,000 | $ 3,000                                           | 8,000
       6,000   $21,000
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                            |                       |                           |                                                   |                             
|(1) Interest is paid
    monthly at LIBOR plus 200 to 250 basis points or prime rate plus 50 to 100
    basis points.
    (2) Interest is paid monthly at LIBOR plus 300 to 350
    basis points or prime rate plus 150 to 200 basis points.
         Beginning March 31, 2003, the commitment is reduced by
    $1.0 million per quarter until the Maturity Date.
    (3) Interest is paid monthly at LIBOR plus 300 to 350
    basis points or prime rate plus 150 to 200 basis points.
         Principal repayments are $500,000 during the first and second quarters
    of 2003, $1.0 million each
      succeeding quarter, with the balance due at the Maturity Date.
    (4) Interest and principal are due and payable at the
    Maturity Date.
    (5) Cash balances in excess of $1.0 million must be used
    to retire debt.
    (6) Borrowing availability is capped based upon lender approved, monthly
    projected borrowing needs of the Company.



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







Critical Accounting Policies

The Company believes the following represents its critical accounting
policies:

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



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



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



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

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



Recent Accounting Pronouncements

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



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



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

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



Contractual Obligations and Commercial Commitments



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





|                                                                                                                                         |  | Payments Due by Period                                                               
|---------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------
|                                                                                                                                        
|Contractual Obligations                                                                                                                  |  | Amount                                                                               
|                                                                                                                                        
|Term Loan A
    Term Loan B-1
    Term Loan B-2
    Revolving Credit Loans
    Operating Leases
      Total Contractual Cash Obligations |  | $ 10,000
           8,000
           6,000
         16,885
      2,449
      $ 43,334
|                                                                                                                                        



|                                                                                           |  | Commitment Expiration by Period      
|------------------------------------------------------------------------------------------ |  | -------------------------------------
|                                                                                          
|Commercial Commitments                                                                     |  | Amount                               
|                                                                                          
|Revolving Credit Loan A-1
    Revolving Credit Loan A-2
      Total Commercial Commitments |  | $   2,500
      17,500
      $ 20,000
|                                                                                          





Inflation and Costs

The cost of the Company's products is influenced by the
cost of a wide variety of raw materials, including precious metals such as gold
used in plating, copper and brass used for contacts, and plastic material used
in molding connector components. In the past, increases in the cost of raw
materials, labor and services have been offset by price increases, productivity
improvements and cost saving programs. There can be no assurance, however, that
the Company will be able to similarly offset such cost increases in the future.



ITEM 7A. MARKET RISK



Interest Rate Risk



PCD is exposed to fluctuations in interest rates in
connection with its Amended Senior Credit Facility.  The potential increase in the fair value of its term loan resulting from
a hypothetical 10% decrease in interest rates at December 31, 2002 was not
material.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



Index to Consolidated Financial Statements

|Report of Independent Accountants
    Consolidated Balance Sheets as of December 31, 2002 and 2001
    Consolidated Statements of Operations for the years ended December 31, 2002,
    2001 and 2000
    Consolidated Statements of Stockholders' Equity (Deficit) for the years
    ended December 31, 2002, 2001 and 2000
    Consolidated Statements of Cash Flows for the years ended December 31, 2002,
    2001 and 2000
    Notes to the Consolidated Financial Statements | Page
    23
    24
    25
    26
    27
    28
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------







REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of PCD, Inc.:

In our opinion, the accompanying consolidated balance sheetsand the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows present fairly, in all material respects, the
financial position of PCD, Inc. and its subsidiariesatDecember 31, 2002and 2001, and the results
of their operations and theircash flows for
each of the three years in the period ended
December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.



The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the consolidated financial statements, on March 21, 2003,
the Company filed for bankruptcy under Chapter 11 of the United States
Bankruptcy Code. The uncertainties inherent in the bankruptcy process, the
Company's recurring losses from operations and non-compliance with bank covenants raise
substantial doubt about the Company's ability to continue as a going concern.
Managment's plans in regard to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

As discussed in Note 2 to the consolidated financial
statements, in 2002 the Company changed its method of accounting for goodwill
and other intangible assets in accordance with Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets, and its method
of accounting for long-lived assets in accordance
with Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets.





/s/ PricewaterhouseCoopers LLP



Boston, Massachusetts
March 28, 2003





PCD INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)



|                                                                                                                                                                                                                                                                                                                                                                                                                                                           | December 31,                                    
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 2002                                            
|ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                 
|Current assets:
      Cash 
      Accounts receivable - trade (less allowance for uncollectible
        accounts of $192 in 2002 and $691 in 2001) 
      Inventory 
      Prepaid expenses and other current assets 
           Total current assets                                                                                                                                                                                                      | $   919  
    4,639  
    4,295 486 
    10,339 
|Equipment and improvements, net 
    Goodwill, net 
    Intangible assets, net 
    Debt financing fees 
    Other assets 
           Total assets                                                                                                                                                                                                                                                                                                         | 3,604 
    - 
    - 
    321 367 $14,631        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                 
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                                                                                                                                                                                                                             |                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                 
|Current liabilities:
      Short-term debt 
      Current portion of long-term debt 
      Accounts payable - trade 
      Accrued liabilities 
           Total current liabilities                                                                                                                                                                                                                                                                       | $16,885 
    24,000 
    1,483 3,176 
    45,544
|Long-term debt, revolver 
    Long-term debt, term loan 
           Total liabilities                                                                                                                                                                                                                                                                                                                                                                      | - - 
    45,544                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                 
|Commitments and contingencies (Notes 7 and 9)                                                                                                                                                                                                                                                                                                                                                                                                              |                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                 
|Stockholders' equity (deficit):
    Preferred stock - $0.10 par value; 1,000,000 shares authorized; no
      shares issued
    Common stock - $0.01 par value; 25,000,000 shares authorized;
      8,951,945 and 8,933,770 shares issued and outstanding in 2002 and
      2001, respectively 
    Additional paid-in capital 
    Accumulated deficit 
    Accumulated other comprehensive income (loss) 
           Total stockholders' equity (deficit) | 90 
    64,866 
    (95,909)40 (30,913)         
|Total liabilities and stockholders'
    equity (deficit)                                                                                                                                                                                                                                                                                                                                                                                                   | $14,631                                         



The accompanying notes are an integral part of these
consolidated financial statements.







PCD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Years Ended December 31,                                                                                                                                           
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 2002                                                                                                                                                               
|Net sales 
    Cost of sales 
      Gross profit 
    Operating expenses 
    Restructuring costs 
    Impairment of long-lived assets and other intangible assets 
    Impairment of goodwill 
    Amortization 
      Income (loss) from operations 
    Interest and other income (expense), net 
    Interest expense 
    Income (loss) before income taxes,
      extraordinary loss on debt extinguishment and
      cumulative effect of change in accounting principle 
    Provision for (benefit from) income taxes 
    Income (loss) before
      extraordinary loss on debt extinguishment and
      cumulative effect of change in accounting principle 
    Extraordinary loss on debt extinguishment 
    Cumulative effect of change in accounting principle 
    Net income (loss) | $ 25,142 20,742 
    4,400 
    9,015 
    (81)
 15,284 
    36,839 1,106 
    (57,763)
    12 (3,374)
    (61,125)(3,331)
    (57,794)
    3,867 12,500 $ (74,161)
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                    
|Income (loss) per share, basic:
      Income (loss) before extraordinary item and
        cumulative effect of change in accounting principle 
     Extraordinary loss on debt extinguishment 
     Cumulative effect of change in accounting principle 
    Net income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | $ (6.46)
    (0.43)(1.40)$ (8.29)                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                    
|Income (loss) per share, diluted:
      Income (loss) before extraordinary item and
        cumulative effect of change in accounting principle 
     Extraordinary loss on debt extinguishment 
     Cumulative effect of change in accounting principle 
    Net income (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $ (6.46)
    (0.43)(1.40)$ (8.29)                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                    
|Weighted average number of common and common
    equivalent
    shares outstanding:
      Basic 
      Diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 8,9478,947                                                                                                                                                         



The accompanying notes are an integral part of these
consolidated financial statements.





PCD INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For The Years Ended December 31, 2000, 2001 and 2002
(In thousands, except share amounts)



|                                                                                                                                                                                                                                                                                                                                          |                                            |                       |                                          |                                     | Accumulated               | Total                                                    |                         
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------------------- | ---------------------------------------- | ----------------------------------- | ------------------------- | -------------------------------------------------------- | ------------------------
|                                                                                                                                                                                                                                                                                                                                          |                                            |                       | Additional                               |                                     | Other                     | Stockholders                                             |                         
|                                                                                                                                                                                                                                                                                                                                          | Common Stock                               | Paid-in               | Accumulated                              | Comprehensive                       | Equity                    | Comprehensive                                           
|                                                                                                                                                                                                                                                                                                                                          | Shares                                     | Par Value             | Capital                                  | Deficit                             | Income (Loss)             | (Deficit)                                                | Income (loss)           
|                                                                                                                                                                                                                                                                                                                                          |                                            |                       |                                          |                                     |                           |                                                          |                         
|Balance, December 31, 1999                                                                                                                                                                                                                                                                                                                | 8,561,735                                  | $   86                | $61,913                                  | $(3,948)                            | $      (27)               | $58,024                                                  |                         
|                                                                                                                                                                                                                                                                                                                                          |                                            |                       |                                          |                                     |                           |                                                          |                         
|Comprehensive income:
    Net income 
    Foreign currency translation adjustment, net of taxes of $8 
      Comprehensive income 
    Employee stock purchase plan 
    Exercise of stock options 
    Exercise of warrant 
    Valuation of Stock Warrant 
    Tax benefit from stock options exercised 
    Balance, December 31, 2000 | 9,737
    90,350
    150,000
    8,811,822 | 1
    1
      
    88 | 42
    116
    149
    289133
    62,642 | 3,783
         
    (165)           | 9
           
    (18)    | 3,783
    9
    42
    117
    150
    289133
    62,547 | $ 3,7839$ 3,792         
|                                                                                                                                                                                                                                                                                                                                          |                                            |                       |                                          |                                     |                           |                                                          |                         
|Comprehensive income:
    Net income 
    Foreign currency translation adjustment, net of tax benefit of $27 
      Comprehensive income 
    Employee stock purchase plan 
    Exercise of stock options 
    Balance, December 31, 2001                                                                                                 | 11,948110,000
    8,933,770                | 189                   | 48159
    62,849                         | (21,583)
         
    (21,748)     | (29)
           
    (47) | (21,583)
    (29)
    48160
    41,143                   | $ (21,583)(29)$ (21,612)
|                                                                                                                                                                                                                                                                                                                                          |                                            |                       |                                          |                                     |                           |                                                          |                         
|Comprehensive loss:
    Net loss 
    Foreign currency translation adjustment, net of taxes of $74 
      Comprehensive loss 
    Employee stock purchase plan 
    Exercise of stock options 
    Valuation of Stock Warrant 
    Balance, December 31, 2002                                                                             | 13,925
    4,2508,951,945                  | 1
      $   90        | 12
    52,000$ 64,866                    | (74,161)
         
       $(95,909) | 87
           $     40    | (74,161)
    87
    13
    52,000$(30,913)               | $ (74,161)87$ (74,074)  



The accompanying notes are an integral part of these
consolidated financial statements.





PCD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Years Ended December 31,                                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2002                                                                                                                                                             
|Cash flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                  
|Net income (loss) 
      Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:
        Depreciation 
        Amortization 
        (Gain)/loss on disposal of equipment 
        Impairment of long-lived assets 
        Impairment of goodwill 
        Tax refunds 
        Tax benefit from stock options exercised 
        Provision for deferred taxes 
        Cumulative effect of change in accounting principle 
        Loss on debt extinguishment 
        Changes in operating assets and liabilities:
          Accounts receivable 
          Inventory 
          Prepaid expenses and other current assets 
          Other assets 
          Accounts payable 
          Accrued liabilities 
              Net cash provided by (used in) operating activities | $ (74,161)
    4,699 
    1,405 
    6 
    15,284 
    36,839 
    -  
    -  
    -  
    12,500 3,867 
    (576)
    957 
    203 
    (119)
    (440)(155)309
|Cash flows from investing activities:
      Proceeds from sale of machinery and equipment 
      Equipment and improvements expenditures 
              Net cash used in investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 18 (623)(605)                                                                                                                                                    
|Cash flows from financing activities:
      Borrowings of short-term debt 
      Payments of short-term debt 
      Payments of long-term debt 
      Proceeds from employee stock purchase plan 
      Proceeds from exercise of common stock options 
      Proceeds from exercise of warrant 
      Deferred financing and loan amendment fees 
              Net cash provided by (used in) financing activities                                                                                                                                                                                                                                                                                                                                                                                                                   | 3,850 
    (2,665)
    (50)
    13 
    5 
    -  (448)705                                                                                                       
|Net increase (decrease) in cash 
    Effect of exchange rate on cash 
    Cash and cash equivalents at beginning of year 
    Cash and cash equivalents at end of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 409
    (33)543 $     919                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                  
|Supplemental disclosures of cash
    flow information:
      Cash paid during the year for:
        Interest 
        Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $    1,674$       504                                                                                                                                            



The accompanying notes are an integral part of these
consolidated financial statements



PCD INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except per share amounts)

1.  Nature of Business:



PCD Inc. (the "Company" or "PCD") is engaged principally
in designing, manufacturing and marketing electronic connectors for use in
semiconductor burn-in applications, industrial equipment and avionics.
Electronic connectors are used in virtually all electronic systems, including
data communications, telecommunications, computers and computer peripherals,
industrial controls, automotive, avionics and test and measurement
instrumentation.

The accompanying consolidated financial statements have
been prepared on a basis which assumes that the Company will continue as a going
concern and which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has filed for
bankruptcy under Chapter 11 of the United States Bankruptcy Code as described
below (Note 9).  The uncertainty inherent in the bankruptcy process, the
Company's
recurring losses from operations and non-compliance with debt covenants raise substantial doubt about the Company's ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Management's plans with regards to these matters are as follows.

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

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



2.  Summary of Significant Accounting Policies:



Basis of Consolidation



The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.



Revenue Recognition



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



Cash and Cash Equivalents



The Company considers all highly liquid debt instruments
purchased with an original maturity of three months or fewer to be cash
equivalents. The Company had all its cash in interest bearing accounts at
December 31, 2002 and December 31, 2001.



Concentrations of Credit Risk



Financial instruments which potentially subject the
Company to concentrations of credit risk consist principally of trade
receivables. Collateral is not required for trade receivables, but ongoing
credit evaluations of customer's financial condition are performed.
Additionally, the Company maintains reserves for potential credit losses. Due to
these factors, no additional credit risk beyond amounts provided for collection
losses is believed by management to be inherent in the Company's accounts
receivables. The activity related to the allowance for doubtful accounts for the
years ended December 31, 2002, 2001 and 2000 is as follows:







|     |  | Balance at
    Beginning of Year |  | Additions
    Charged
    (Credits) to
    Costs and Expenses |  | Deductions |  | Balance
    End of Year
|---- |  | -------------------------------- |  | ------------------------------------------------------------- |  | ---------- |  | -----------------------
|2002 |  | $691                             |  | $(201)                                                        |  | $(298)     |  | $192                   
|2001 |  | $347                             |  | $ 372                                                         |  | $(  28)    |  | $691                   
|2000 |  | $367                             |  | $  33                                                         |  | $(  53)    |  | $347                   





Management Estimates



The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The most significant estimates included in these financial statements are
allowances for uncollectible accounts, allowances for inventory valuation,
goodwill, intangible assets and deferred taxes.



Inventory    Inventories are stated at the lower of
cost, determined on a first-in, first-out method, or market. The Company
maintains a reserve for inventory items to provide for the estimated amount of
inventory that is excess. The reserve is based upon an assessment of inventory
materials on hand as compared to its estimated future usage.The
activity related to the inventory reserve for the years ended December 31, 2002, 2001 and
2000 is as follows:





|     |  | Balance at
    Beginning of Year |  | Additions
    Charged to
    Costs and Expenses |  | Deductions |  | Balance
    End of Year
|---- |  | -------------------------------- |  | ----------------------------------------------- |  | ---------- |  | -----------------------
|2002 |  | $  914                           |  | $1,329                                          |  | $(   856)  |  | $1,387                 
|2001 |  | $1,247                           |  | $   741                                         |  | $(1,074)   |  | $  914                 
|2000 |  | $1,235                           |  | $2,362                                          |  | $(2,350)   |  | $1,247                 





Research and Development



Research and development costs are charged to expense as
incurred.



Warranty



The Company provides reserves for the estimated cost
of product warranties at the time revenue is recognized. The Company estimates
the costs of our warranty obligations based on our warranty policy or applicable
contractual warranty, our historical experience of known product failure rates,
and use of materials and service delivery costs incurred in correcting product
failures. In addition, from time to time, specific warranty accruals may be made
if unforeseen technical problems arise. The following table summarizes the
results of the Company's warranty reserve for the year December 31, 2002:





|Balance, December 31, 2001
    Accruals related to warranties issued in 2002
    Accruals related to pre-existing warranties and
    changes in estimates
    Settlements made
    Balance, December 31, 2002 |  | $  149 
    155 
    (47)(122)$   135
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------





Net Income (Loss) Per Common Share



The following table reconciles net income (loss) and
weighted average shares outstanding to the amounts used to calculate basic and
diluted earnings (loss) per share for each of the years ended December 31, 2002,
2001 and 2000.





|                                                                                                                            | Net Income(Loss)   | Shares        | Per ShareAmount      
|--------------------------------------------------------------------------------------------------------------------------- | ------------------ | ------------- | ---------------------
|For the year ended December 31, 2002Basic and diluted loss                                                                  | $ (74,161)         | 8,947         | $ (8.29)             
|For the year ended December 31, 2001
    Basic and diluted loss                                                             | $ (21,583)         | 8,890         | $ (2.43)             
|For the year ended December 31, 2000Basic earnings 
    Assumed exercise of options (treasury method) 
    Diluted earnings | $ 3,783 -  $ 3,783 | 8,6244649,088 | $     .44 -  $   0.42





In 2002, 2001 and 2000, anti-dilutive Common Stock
equivalents of 547, 569 and 145 shares, respectively, were not included in the
calculation of diluted EPS.

Equipment and Improvements

Equipment and improvements are recorded at cost and are
depreciated utilizing the straight-line method over their estimated useful lives
(Note 4). Maintenance and repairs which neither materially add to the value of
the property nor appreciably prolong its life are charged to expense as
incurred. Upon retirement or other disposition, the cost and related accumulated
depreciation are eliminated from the accounts and the resulting gain or loss is
included in the results of operations.

Income Taxes

The Company utilizes the asset and liability approach of
accounting for income taxes. Under the asset and liability approach, deferred
taxes are determined based on the difference between the financial statement and
tax bases of assets and liabilities using enacted tax rates in effect in the
years in which the differences are expected to reverse. Deferred tax expense
(benefit) represents the change in the deferred tax asset or deferred tax
liability balance. Tax credits are treated as reductions of income taxes in the
year in which the credits become available for tax purposes. A valuation
allowance is provided against the net deferred tax asset if, based on the weight
of available evidence, it is more likely than not that some or all of the
deferred tax asset will not be realized. In the event the Company determines in
the future that the deferred tax asset in excess of its carrying amount can be
realized, then an adjustment to the valuation allowance would increase net
income in the period such determination was made.









Goodwill and Intangible Assets

Goodwill represents costs in excess of net assets of the
business acquired. Prior to the year ended December 31, 2002, goodwill was
accounted for in accordance with Accounting Principles Board ("APB") No. 17, Intangible Assets and was amortized on a straight-line basis over the
expected periods to be benefited. On January 1, 2002, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and
Other Intangible Assets, which requires, among other things, the
discontinuance of goodwill amortization and the requirement to test goodwill and
other intangible assets for impairment at least annually. In addition, the
standard includes provisions for the reclassification of certain existing
recognized intangibles as goodwill, reassessment of the useful lives of existing
recognized intangibles, reclassification of certain intangibles out of
previously reported goodwill and the identification of reporting units for
purposes of assessing potential future impairments of goodwill. A two-step
impairment test is used to first identify potential goodwill impairment and then
measure the amount of goodwill impairment loss. Impairment losses that arose due
to the initial application of this standard were reported as a cumulative effect
of a change in accounting principle.



Impairment of Long-Lived Assets.



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



The Company's long-lived assets primarily consist of
equipment and improvements. In connection with our 2001 South Bend, IN plant
closure and restructuring we recorded an impairment charge of $727 in our
Wells-CTI segment related to equipment and improvements that were abandoned.
During 2002 we recorded an additional impairment charge of $15,284 consisting of
$9,343 of intangible assets and $5,941 of fixed assets. This impairment was
based on the fair value of the Wells-CTI reporting unit as determined by our proposed sale of our Wells-CTI
division to UMD.

Foreign Currency Translation Adjustment



The functional currency of the Company's foreign
operation is the foreign subsidiary's local currency. Assets and liabilities of
the foreign subsidiary are translated using the current exchange rate in effect
at the balance sheet date. Revenue and expense items are translated at average
exchange rates for the period. The resulting translation adjustments are
recorded as a component of stockholders' equity. Gains resulting from
foreign currency transactions of approximately $25 and $16 are included
in other expense in 2002 and 2001, respectively.



Stock Based Compensation



The Company accounts for stock based employee
compensation arrangements in accordance with the provisions of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and
comply with the disclosure provisions of SFAS No. 123, Accounting for
Stock-Based Compensation. SFAS No. 123 requires that companies either
recognize compensation expense for grants of stock, stock options, and other
equity instruments based on fair value, or provide pro forma disclosure of net
income and earnings per share in the notes to the financial statements. The
Company adopted the disclosure provisions of SFAS No. 123 in 1996 and has
applied APB Opinion 25 and related Interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized for its stock option
plans. Had compensation cost for the Company's stock-based compensation plans
been determined based on the fair value at the grant dates as calculated in
accordance with SFAS No. 123, the Company's net income and earnings per share
for the years ended December 31, 2002, 2001, and 2000 would have been reduced to
the pro forma amounts indicated below:





|                                                                                                                                                                                                                                 |  | 2002                                        |  | 2001                                        |  | 2000                                   
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------- |  | ------------------------------------------- |  | ---------------------------------------
|Net income (loss), as reported
    Deduct: Total stock-based employee
      compensation expense determined
      under fair value based method for
      all awards, net of related tax effects
    Pro forma net income (loss) |  | $(74,161)(38)$(74,199)                      |  | $(21,583)(395)$(21,978)                     |  | $   3,783(249)$  3,534                 
|                                                                                                                                                                                                                                 |  |                                             |  |                                             |  |                                        
|Earnings (loss) per share:
      Basic - as reported
      Basic - pro forma
      Diluted - as reported
      Diluted - pro forma                                                                                               |  | $(8.29)
    $(8.29)
    $(8.29)
    $(8.29) |  | $(2.43)
    $(2.47)
    $(2.43)
    $(2.47) |  | $ 0.44
    $ 0.41
    $ 0.42
    $ 0.39





Supplemental Disclosure for Stock Based Compensation:

The fair value of each stock option is estimated on the
date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions:





|                                                                                                | 2002                                  | 2001                                 | 2000                                 
|----------------------------------------------------------------------------------------------- | ------------------------------------- | ------------------------------------ | -------------------------------------
|                                                                                                |                                       |                                      |                                      
|Dividend yield 
    Expected volatility 
    Risk free interest rate 
    Expected life (years) | None 
    100.0%
      3.1%
      5.0 | None
    72.44%
      3.7%
      5.0 | None 
    119.3%
      5.0%
      5.0



Weighted average fair value of options granted at fair
value at date of grant:



|2002 
    2001 
    2000 | $ 0.21
    $ 3.07
    $ 5.44
|------------------------ | ----------------------------





The effect of applying SFAS No. 123 in this pro forma
disclosure is not indicative of future amounts.



Recent Accounting Pronouncements

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

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

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

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





3.  Inventory:



Inventory consisted of the following at December 31:



|                                                                                             | 2002                              | 2001                    
|-------------------------------------------------------------------------------------------- | --------------------------------- | ------------------------
|Raw materials and finished subassemblies 
    Work in process 
    Finished goods 
    Total | $ 2,940
      261,329
    $ 4,295 | $ 5,069
    14964$ 6,047





4.  Equipment and Improvements:



Equipment and improvements consisted of the following at
December 31:





|                                                                                                                                                                                                                                                                                     | Estimated Useful
    Life In Years                                         |  | 2002                                                                      | 2001                                                                                 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------- |  | ------------------------------------------------------------------------- | -------------------------------------------------------------------------------------
|Tools, dies and molds 
    Machinery and equipment 
    Office furniture and fixtures 
    Computer software 
    Transportation equipment 
    Leasehold improvements 
    Less accumulated depreciation 
    Capital expenditures in progress 
    Equipment and improvements, net | 5
    10
     5
     3
     4
    Shorter of lease term
    or useful life |  | $ 4,250
    4,167
    1,747
    1,006
    - 68711,8578,3923,465139$ 3,604 | $22,175
    5,991
    2,710
    1,373
    53945
    33,24720,445
    12,802699$13,501





Depreciation expense for the years ended December 31,
2002, 2001 and 2000 was $4,699, $4,810, and $4,885 million, respectively.

5.  Intangible Assets and Goodwill:



During 2002 we adopted SFAS No.
142 and recorded a transitional impairment charge of $12,500 during the first
quarter as a cumulative effect of a change in accounting principle. This charge
was based on discounted cash flow analysis for the Wells-CTI semiconductor burn
in division. This goodwill originated from our acquisition of Wells-Electronics
in 1997. We completed our required annual impairment test of goodwill as of
December 31, 2002 and recorded an additional impairment of $36,839. This
impairment
was based on the fair value of the Wells-CTI reporting unit as determined by our proposed sale of
our Wells-CTI division to UMD.



The following is a rollforward of balance of goodwill
(which has all been allocated to our semiconductor burn-in segment) for the year
ended December 31, 2002 and December 31, 2001:



|GoodwillBalance at December 31, 2000 Amortization 
    Balance at December 31, 2001 
    Cumulative effect of change in accounting principle 
    Additional impairment loss 
    Balance at December 31, 2002 |  | $52,423  (3,084)
    49,339 
    (12,500)(36,839)$         -
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------





The following is a reconciliation of previously reported financial
information to adjusted amounts excluding goodwill amortization for the years
ended December 31, 2001 and 2000:



|                                                                                                                           |  |                         |  | Income (Loss) per share
|-------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- |  | -----------------------
|                                                                                                                           |  | Income (Loss)           |  | Basic                  
|For the year ended December 31, 2001
    Reported net loss 
    Goodwill amortization, net of taxes 
    Adjusted net loss |  | $(21,583)3,084$(18,499) |  | $ (2.43)0.35$(2.08)    
|For the year ended December 31, 2000
    Reported net loss 
    Goodwill amortization, net of taxes 
    Adjusted net loss |  | $ 3,7831,812$ 5,595     |  | $ 0.440.21$ 0.65       



At December 31, 2002 we recorded an additional
impairment charge of $9,343 related to the intangible assets of our Wells-CTI
segment. This impairment was based on the fair value of the Wells-CTI business as
determined by our
proposed sale of our Wells-CTI division to UMD.



At December 31, 2001, intangible assets comprised of
patented technology with a basis of $10,384 and accumulated amortization of
$2,077; and tradenames/trademarks with a basis of $3,109 and accumulated
amortization of $2,073, which were being amortized over their estimated economic
lives of 20 years and 6 years, respectively. During the year ended December 31,
2002, the Company recorded amortization of $1,106. As discussed above, the Company
recorded an impairment charge of $9,343 during 2002 relating to such
intangibles.

6.  Accrued Liabilities:

Accrued liabilities consisted of the following at
December 31:



|                                                                                                                                                           | 2002                                                              | 2001                                                             
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | -----------------------------------------------------------------
|Compensation and benefits 
    Commissions 
    Income taxes payable 
    Interest 
    Professional fees 
    Restructuring charges 
    Other 
    Total | $    476
    179
    247
    1,076
    307
    386505
    $ 3,176 | $   798
    139
    1,076
    22
    363
    5561,251
    $ 4,205



7.  Line of Credit and Long-Term Debt:



On December 26, 1997, the Company entered into a secured
Revolving Credit Agreement ("Revolver") and secured term loan agreements
(collectively referred to as the "Senior Credit Facility") with several banks.
On February 27, 2002, the Senior Credit Facility was replaced by an Amended and
Restated Loan Agreement comprised of a $20,000 Revolving Credit Loan and
secured term loans aggregating $24,000 (collectively referred to as the
"Amended Senior Credit Facility"). The Amended Senior Credit Facility is
collateralized by all of the assets of PCD and its subsidiaries. In conjunction
with the Amended Senior Credit Facility, PCD and Wells-CTI (formerly Wells
Electronics, Inc. and CTI Technologies, Inc.) each entered into a stock pledge
agreement pledging all or substantially all of the stock of the subsidiaries of
PCD and Wells-CTI. Each of PCD, Wells-CTI and certain of their subsidiaries also
entered into a security agreement and certain other collateral or conditional
assignments of assets.



In connection with Amended Senior Credit Facility, the
lenders received warrants, exercisable immediately and for a period of ten
years, to purchase 1,450 shares of common stock of the Company at $0.01 per
share. In addition, warrants previously issued in 2000 to the lenders to
purchase 204 shares of the Company's common stock at $4.90 per share were
re-priced to $0.01 per share. The new and re-priced warrants were valued at $2,000 utilizing the Black Scholes pricing method. The assumptions utilized
under the Black Scholes method were 96% volatility, 1.82% riskfree rate of
return, no dividends and a term of ten years.



The replacement of the Senior Credit Facility with the
Amended Senior Credit Facility was accounted for as an extinguishment of the
existing debt and an issuance of new debt under the provisions of SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities, and Emerging Issues Task Force ("EITF") 96-19, Debtors
Accounting for a Modification or Exchange of Debt Instruments. The
transaction resulted in an extraordinary loss of $3,900 in 2002. Included
in this loss are the cost of the re-priced warrants. the new warrants issued
to the lenders ($2,100) and unamortized bank fees on the old debt ($1,800).



The key provisions of the Amended Senior Credit Facility are
summarized in the table below:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | InterestRate               | MaximumLoanCommitment | LoanAmount                | Principalrepayment schedule2003              2004 | MaturityDate                
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------------------- | ------------------------- | ------------------------------------------------- | ----------------------------
|Revolving Credit Loan (A-1) (1) (6)
    Revolving Credit Loan (A-2) (2) (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Variable
    Variable      | $ 2,500
    17,500    |                           |                                                   |                             
|Term Loan A (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Variable                   |                       | $ 10,000                  | $ 3,000                                           | $  7,000                    
|Term Loan B-1 (4)
    Term Loan B-2 (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Fixed - 8%
    Fixed - 10% | $ 20,000              | 8,000
     6,000 $ 24,000 | $ 3,000                                           | 8,000
       6,000   $21,000
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                            |                       |                           |                                                   |                             
|(1) Interest is paid
    monthly at LIBOR plus 200 to 250 basis points or prime rate plus 50 to 100
    basis points.
    (2) Interest is paid monthly at LIBOR plus 300 to 350
    basis points or prime rate plus 150 to 200 basis points.
         Beginning March 31, 2003, the commitment is reduced by
    $1.0 million per quarter until the Maturity Date.
    (3) Interest is paid monthly at LIBOR plus 300 to 350
    basis points or prime rate plus 150 to 200 basis points.
         Principal repayments are $500,000 during the first and second quarters
    of 2003, $1.0 million each
      succeeding quarter, with the balance due at the Maturity Date.
    (4) Interest and principal are due and payable at the
    Maturity Date.
    (5) Cash balances in excess of $1.0 million must be used
    to retire debt.
    (6) Borrowing availability is capped based upon lender approved, monthly
    projected borrowing needs of the Company.









The Company's aggregate borrowing availability under the
Amended and Restated Loan Agreement would have been $3,100 at December 31, 2002.
However, under current amendments and temporary waivers to the Amended Senior
Credit Facility, borrowing availability was capped based upon projected
borrowing needs as submitted by the Company and as approved by the lenders on a
monthly basis. The Company was only permitted to borrow during the first quarter
of 2003 to fund professional fees in connection with the bankruptcy ($400) and
to settle the South Bend lease ($300) in March 2003.



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



As of December 31, 2002 and 2001, long-term debt of
$40,885 and $39,750, gross of the above mentioned warrant valuation, consists of
the following at a weighted average interest rates of 6.46% and 5.18%,
respectively:





|                                                                              | 2002                                      | 2001                            
|----------------------------------------------------------------------------- | ----------------------------------------- | --------------------------------
|Revolver 
    Term loan 
    Total long-term debt 
    Less - current portion | $16,88524,000
    40,88540,885$         - | $15,70024,050
    39,750-$39,750



8.  Income Taxes:

The provision (benefit) for income taxes for the years
ended December 31, 2002, 2001, and 2000 was as follows:



|                                                                                                                                                                           | 2002                                                       | 2000                                                                 | 2001                                                                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | -------------------------------------------------------------------- | ----------------------------------------------------------------------
|Current
      Federal 
      State 
      Foreign 
        Total current 
    Deferred
      Federal 
      State 
      Foreign 
        Total deferred 
          Totals | $ (3,371)
    39 1 
    (3,331)
    - 
    - - - $ (3,331) | $          -
    136290
    426
    8,923
    2,29423011,447$ 11,873 | $    366 
    166 1,015 
    1,547 
    977 
    151 (21)1,107 $ 2,654







The components of the net deferred tax assets consisted of the
following at December 31, 2002 and 2001:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 2002                                                                                                                                          | 2001                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------
|Deferred tax assets (liabilities):
      Difference in accounting for inventory 
      Accounts receivable allowances 
      Difference in accounting for interest 
      Restructuring reserve 
      Vacation and other accruals 
      Net operating loss carryforwards 
      Foreign tax credit carryforwards 
      Amortization 
      In-process research and development 
      Difference in depreciation methods 
      Alternative minimum tax credits
        Impairment charges 
      Valuation allowance 
        Net deferred tax asset | $      669 
    70 
    419 
    134 
    387 
    7,840 
    284 
    1,790 
    10,230 
    (1,555)
    - 
    20,499 (20,767)$           - | $     335 
    267 
    62 
    217 
    400 
    4,439 
    1,250 
    (1,526)
    11,260 
    (1,766)
    26
     - (14,964)$           -





The deferred tax consequences of temporary differences in
reporting items for financial statement and income tax purposes are recognized,
if appropriate. Realization of the future tax benefits related to the deferred
tax assets is dependent on many factors, including the Company's ability to
generate sufficient future taxable income. Recognition of the deferred tax asset
under SFAS No. 109 is based upon the probability that it is more likely than not
that sufficient future taxable income will be generated. As required by SFAS No.
109, management of the Company has evaluated positive and negative evidence
bearing upon the realizability of the deferred tax assets and has determined
that it is more likely than not that the Company will not realize the benefit of
the net deferred tax asset. As a result, a full valuation allowance
has been recorded at December 31, 2002 and 2001 based on our recurring operating
losses.



At December 31, 2002, the Company has federal and state
net operating loss carryforwards of $19,500 and $13,500, respectively. The
federal net operating loss carryforwards begin to expire in 2021.
The state net operating loss carryforwards begin to expire in 2003. In addition,
the Company has foreign tax credit carryforwards of approximately $300
at December 31, 2002, which begin to expire in 2003.



A provision of the Job Creation and Worker Assistance Act
of 2002 passed by Congress in March 2002, allows companies to carry back their
2001 and 2002 tax operating losses for a period of five years instead of two.
The legislation allowed PCD to carry back tax losses from 2001 to offset taxable
income in 1996 and 1997, resulting in a refund of approximately $2,924 which was
recorded as tax benefit and a refund was received in July 2002.

The analysis of the variance of income taxes as reported
from income taxes compiled at the U.S. statutory federal income tax rate for
continuing operations is as follows:





|                                                                                                                                                                                                                                                                                                                                 | 2002                                                                                      | 2001                                                                       | 2000                                                                    
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------------------------
|Income taxes at U.S. statutory rate of 34% 
    State income taxes 
    Benefit of foreign sales corporation 
    Foreign investments and taxes 
    Federal benefit carryback claim
      Effect of extraordinary loss and cumulative
        effect of change in accounting principle 
    Valuation allowance 
    Other, net | $(20,783)
    (3,815)
 - 
    479 
    (2,924)
    (5,565) 
    29,717  (440) $   (3,331) | $ (3,302)
    1,604 
    - 
    516 
    - 
    - 
    13,166 (111)$11,873 | $ 2,189 
    209 
    (113)
    210
    - 
    - 
    
    - 159 $ 2,654





9.  Commitments and Contingencies:



Bankruptcy:

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

Litigation:

The Company and its subsidiaries are subject to legal
proceedings arising in the ordinary course of business. On the basis of
information presently available and advice received from legal counsel, it is
the opinion of management that the disposition or ultimate determination of such
legal proceedings will not have a material adverse effect on the Company's
consolidated financial position, its consolidated results of operations or its
consolidated cash flows.



Leases:



The Company leases office and production facilities in
Peabody, Massachusetts, Yokohama, Japan, and Phoenix, Arizona and leases
distribution and a technical sales support facility in Northhampton, England.
These rentals are subject to escalation in real estate taxes and operating
expenses. Rental expense for the years ended December 31, 2002, 2001, and 2000
was $1,000, $1,200 and $1,100, respectively.



Minimum future rental commitments under operating and
capital leases with remaining terms in excess of one year are approximately as
follows:



|Year Ended December 31,                                      | Amount                                                      
|------------------------------------------------------------ | ------------------------------------------------------------
|2003 
    2004 
    2005 
    2006 
    2007 
    Thereafter | $ 648
       295
       249
       252
       245
       760





Guarantees:

The Company, to the extent legally permissible under
Massachusetts law, indemnifies its officers and directors for certain events or
occurrences while the officer or director is, or was serving, at the Company's
request in such capacity. The term of the indemnification period is for the
officer's or director's lifetime. The potential amount of future payments the
Company could be required to make under these indemnification agreements is
unlimited. No person shall have any right to indemnification for liabilities or
expenses imposed or incurred in connection with any matter as to which such
person shall be finally adjudged in such action, suit or proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interest of the Company or to the extent that such matter relates to service
with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan. No claim for
indemnification has been made by any person covered by said agreements, and/or
the relevant provisions of the Company's Articles or By-laws, the Company
believes that its estimated exposure for these indemnification obligations is
currently minimal. Accordingly, the Company has no liabilities recorded for
these indemnity agreements as of December 31, 2002.



10. Stockholders Equity:

Stock Options:

Directors Stock Plan

The
Company's 1996 Eligible Directors Stock Plan (the "Directors Stock Plan") was
approved by the Board of Directors on January 30, 1996 and thereafter by the
Company's stockholders. Under the Directors Stock Plan, commencing with the 1997
annual meeting of stockholders, each director who is not an officer or employee
of the Company or any subsidiary of the Company (an "outside director") who has
not previously been granted an option to purchase shares of Common Stock will be
granted, on the thirtieth day after such meeting, an option to purchase 3
shares of Common Stock at an exercise price equal to the fair market value on
the date of grant. In addition, on the thirtieth day after such meeting held no
earlier than six months after initial election, each outside director will be
granted an option at each annual meeting of stockholders to purchase 2
shares of Common Stock at an exercise price equal to the fair market value on
the date of grant. For the year 2002, each director declined the automatic
option issuance identified above. A total of 36 shares of Common Stock are
available for awards under the Directors Stock Plan. Each option shall vest 6
months after, and expire 10 years from, the date of grant of such option. As of
December 31, 2002, 12 shares of the Company's common stock were available
for future grants and all of the 24 options which are outstanding under the
1996 Directors Stock Plan were exercisable. No options may be granted under the
Directors Stock Plan after January 29, 2006.



1996 Stock Plan



The Company's 1996 Stock Plan was approved by the Board
of Directors on January 30, 1996, and thereafter by the Company's stockholders.
The 1996 Stock Plan provides for the grant or award of stock options, restricted
stock and other performance awards which may or may not be denominated in shares
of Common Stock or other securities (collectively, the "Awards"). Stock options
granted under the 1996 Stock Plan may be either incentive stock options or
non-qualified options. The 1996 Stock Plan is administered by the Compensation
Committee. Subject to the provisions of the 1996 Stock Plan, the Committee has
the authority to designate participants, determine the types of Awards to be
granted, the number of shares to be covered by each Award, the time at which
each Award is exercisable or may be settled, the method of payment and any other
terms and conditions of the Awards. While the Committee determines the prices at
which options and other Awards may be exercised under the 1996 Stock Plan, the
exercise price of an option shall be at least 100% of the fair market value (as
determined under the terms of the 1996 Stock Plan) of a share of Common Stock on
the date of grant. The aggregate number of shares of Common Stock available for
awards under the Plan is 324. No option shall be exercisable with respect to
any shares later than 10 years after the date of grant of such options or 5
years in the case of incentive options granted to the owner of stock possessing
more than 10% of the value of all classes of stock of the Company. Vesting is
determined in the sole discretion of the Compensation Committee of the Board of
Directors and the typical vesting plan is in four approximately equal annual
installments, the first of which vests on the date of grant. As of December 31,
2002, 125 shares of the Company's common stock were available for future
grants and 152 of the 187 options which are outstanding under the 1996
Stock Plan were exercisable. No awards may be made under the 1996 Stock Plan
after January 29, 2006.



Stock Exchange Program



In April 2002, the Company announced a voluntary stock
option exchange program (the "Program") for the Company's employees. Under the
Program, employees had until May 21, 2002 to make an election to cancel their
outstanding stock options under the 1996 Stock Plan in exchange for an equal
number of new nonqualified stock options to be granted under the same plan. The
Program is not available to the Company's chief executive officer or directors
and does not apply to options under the 1992 Stock Option Plan. Options for
201 shares under the 1996 Stock Plan were surrendered. Under the Program,
new stock options to purchase 175 shares of common stock were granted on
November 26, 2002 at an exercise price of $0.24 per share which equaled PCD
stock price at that date. These newly granted options have a ten-year term and
vesting consistent with that of the surrendered options.

1992 Stock Option Plan

The Company's 1992 Stock Option Plan as amended on
January 30, 1996 provided for the grant or award of stock options, which may be
either incentive stock options or non-qualified stock options to key employees
and directors. The Compensation Committee administers the 1992 Stock Option
Plan. No option shall be exercisable with respect to any shares later than 10
years after the date of grant of such options or 5 years in the case of
incentive options granted to the owner of stock possessing more than 10% of the
value of all classes of stock of the Company. Vesting is determined in the sole
discretion of the Compensation Committee of the Board of Directors and the
typical vesting plan is in four approximately equal annual installments, the
first of which vests on the date of grant. The aggregate number of shares of
Common Stock available for awards under the Plan is 954. As of December 31,
2002, no shares of the Company's common stock were available for future grants
and all 109 options which are outstanding under the 1992 Stock Option Plan
are exercisable. Awards may no longer be made under the 1992 Stock Option Plan.

The following table summarizes the transactions from these plans:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Options                                                                                                     | Weighted
    Averageexercise price                                                                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Options outstanding at December 31, 1999 
    Options exercised 
    Options canceled 
    Options granted 
    Options outstanding at December 31, 2000 
    Options exercised 
    Options canceled. 
    Options granted 
    Options outstanding at December 31, 2001 
    Options exercised 
    Options granted 
    Options canceled. 
    Options cancelled in connection with exchange program 
    Options granted in connection with exchange program 
    Options outstanding at December 31, 2002 | 653 
    (90)
    (134)70 
    499 
    (110)
    (59)82 
    412 
    (4)
    6 
    (78)
    (192)175 319 | $   5.86
         1.30
       12.91
         6.21
         4.84
         1.46
         8.97
         3.85
         4.96
         1.15
         1.29
         3.20
         7.45
         0.24
         1.45



Summarized information about stock options outstanding
at December 31, 2002 is as follows:



|Range of Exercise prices                                                                                                            | Number ofOptionsOutstanding                                                               | Weighted
    AverageRemainingContractualLife                                          | WeightedAverageExercisePrice                                                                                     | Exercisable                WeightedNumber    Average     of         Exercise Options      Price
|----------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------
|$ 0.24
       1.15 
       1.29 
       1.54 
       2.40 
       3.75 
       4.95 - 5.00 
       8.88 
     11.00 
 16.75 - 17.00 | 175
      47
        5
      62
      10
        3
        5
        3
        36
    319 | 9.92
    0.72
    9.58
    2.08
    8.83
    8.42
    8.62
    8.92
    6.42
    5.27 | $ 0.24
       1.15
       1.29
       1.54
       2.40
       3.75
       4.97
       8.88
     11.00
     16.94 | 145
      47
       5
      62
        5
        3
        5
        3
        36
    284      





For the years ended December 31, 2002, 2001, and 2000,
options to purchase 284, 319, and 394 shares, at weighted average
exercise prices of $1.41, $4.81, and $4.06, respectively, of Common Stock were
exercisable with the remaining options becoming exercisable at various dates
through November 26, 2012.

Generally, when shares acquired pursuant to the
exercise of incentive stock options are sold within one year of exercise or
within two years from the date of grant, the Company derives a tax deduction
measured by the amount that the fair market value exceeds the option price at
the date the options are exercised. When nonqualified stock options are
exercised, the Company derives a tax deduction measured by the amount that the
fair market value exceeds the option price at the date the options are
exercised.



11. Profit Sharing Plan:

The Company has Employee Savings and Profit Sharing Plans
(the "Plans") under section 401(k) of the Internal Revenue Code of 1986, as
amended. All employees of the Company, after reaching the applicable service
level, are eligible to participate in the Plans. A participating employee may
elect to defer on a pre-tax basis up to 15% of his or her salary. This amount,
plus a matching amount provided by the Company, is contributed to the Plan. Due
to the Company's performance for the year ended December 31, 2001, the Company
did not make it's matching contribution in 2002. Company contributions to the
Plans for the years ended December 31, 2001, and 2000 amounted to $249 and $236,
respectively.



12. Employee Stock Purchase Plan:



During 1998, the stockholders of the Company approved the
1998 Employee Stock Purchase Plan (the "1998 Employee Stock Purchase Plan")
covering 80 shares of the Company's Common Stock. All employees who have
completed twelve months of employment, except for those employees who possess at
least 5% of the voting power of the Company's Common Stock are entitled, through
payroll deductions of amounts up to 10% of his or her salary, to purchase shares
of the Company's Common Stock at the lesser of 85% of the market price at the
offering date or the offering termination date. During the years 2002, 2001, and
2000, 14, 12 and 10 shares were issued, respectively, leaving 37
shares available for future issuance.



13. Restructuring Charges:



During the third quarter of 2001 the Company's senior
management approved plans to close the South Bend, Indiana manufacturing plant,
which was part of the Wells-CTI segment. The plant closure resulted in the
Company's eliminating 39 positions from all levels and vacating approximately 50 square feet of space. The Company recorded a restructuring charge of $773
for employee-related costs of $134 and $639 for continuing lease obligations for
the South Bend plant. The Company also wrote off $235 of obsolete South Bend
inventory through cost of sales. In addition, the Company wrote off $727 of
equipment and improvements that were abandoned (Note 2). The Company has paid
$135 for severance payments and $172 for facility related costs. We reached a settlement with the lessor to exit the lease for $342. The accrued
restructuring liability of $386 at December 31, 2002 has been adjusted by $81
to reflect this settlement.



14. Significant Customers:

In 2002, no one customer accounted for 10% or more of the
Company's net sales. In 2001 and 2000, one customer accounted for approximately
18% and 21%, respectively, of the Company's net sales. At December 31, 2002, the
Company has no one customer that constitutes 10% or more of the Company's gross
accounts receivable balance. At December 31, 2001, the Company had two customers
that each constituted at least 10% of its gross accounts receivable.



15. Segment Information:



The Company designs, manufactures and markets electronic
connectors for use in Semiconductor burn-in applications, industrial equipment
and avionics. The Company has two principal businesses: Semiconductor burn-in
segment and industrial and avionics segment. Each of these is a business segment
with its respective financial performance detailed in this report. Net income of
the two principal businesses excludes the effects of special charges and gains.
The results for Semiconductor burn-in include the effects of royalty revenues
from IC package-related cross-license agreements. Business assets are the owned
or allocated assets used by each business. Included in corporate activities are
general corporate expenses, net of elimination of inter-segment transactions,
which are generally intended to approximate market prices. Assets of corporate
activities include cash, corporate equipment and improvements, net.



|                                                                                                                                                                                                                              | 2002                                                       | 2001                                                    | 2000                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------- | ------------------------------------------------------
|Sales:Industrial/Avionics 
    Semiconductor burn-in 
      Totals                                                                                                                                                            | $ 14,084 11,058 $ 25,142                                   | $ 19,072 17,543 $ 36,615                                | $   19,516 42,441 $   61,957                          
|                                                                                                                                                                                                                              |                                                            |                                                         |                                                       
|Net income(loss):Industrial/Avionics 
    Semiconductor burn-in 
    Corporate activities. 
      Totals                                                                                                                      | $      827 
    (71,596)(3,392)$(74,161)                   | $   1,563 
    (23,182)36 $(21,583)                     | $    2,477 
    1,336 (30)$    3,783                  
|                                                                                                                                                                                                                              |                                                            |                                                         |                                                       
|Assets:Industrial/Avionics 
    Semiconductor burn-in 
    Corporate activities 
      Totals                                                                                                                                 | $   8,001 
    4,379 2,251 $ 14,631                        | $    8,289 
    76,390 2,158 $  86,837                  | $    9,255 
    86,976 12,882 $109,113                
|                                                                                                                                                                                                                              |                                                            |                                                         |                                                       
|Equipment and improvements (Gross):Industrial/Avionics 
    Semiconductor burn-in 
    Corporate activities 
      Totals                                                                                                     | $ 10,438 
    - 1,557 $ 11,995                             | $    9,780 
    22,575 1,591 $  33,946                  | $     8,588 
    21,920 1,608 $   32,116              
|                                                                                                                                                                                                                              |                                                            |                                                         |                                                       
|Additions:Industrial/Avionics 
    Semiconductor burn-in 
    Corporate activities 
      Totals                                                                                                                              | $      225 
    396 2 $      623                           | $       641 
    2,551 15 $     3,207                   | $       725 
    2,208 104 $    3,037                 
|                                                                                                                                                                                                                              |                                                            |                                                         |                                                       
|Depreciation expense:Industrial/Avionics 
    Semiconductor burn-in 
    Corporate activities 
      Totals                                                                                                                   | $      981 
    3,461 257 $   4,699                        | $       927 
    3,589 294 $     4,810                  | $    1,031 
    3,549 305 $    4,885                  
|                                                                                                                                                                                                                              |                                                            |                                                         |                                                       
|Goodwill and intangible assets:Industrial/Avionics 
    Semiconductor burn-in 
    Corporate activities 
      Totals                                                                                                         | $          -  
    -  -  $          -                      | $           -  
    75,167 -  $   75,167                | $           -  
    75,167 -  $  75,167               
|                                                                                                                                                                                                                              |                                                            |                                                         |                                                       
|Amortization expense and impairment losses:Industrial/Avionics 
    Semiconductor burn-in:
      Amortization 
      Cumulative change in accounting principle 
      Impairment loss 
    Corporate activities 
      Totals | $         -  
    1,106 
    12,500 
    52,123 - $ 65,725 | $           -  
    4,190 
    -  
    -  -  $    4,190 | $          -  
    4,190 
    -  
    -  -  $    4,190





The following geographic area data include trade revenues
based on product shipment destination and royalty payor per location, and
property, plant and equipment based on physical location:



|Geographic area net trade revenue:United States 
    Japan 
    Singapore 
    Rest of world 
      Totals | $ 17,076 
    2,113 
    1,361 4,592 $ 25,142 | $  29,346 
    1,474 
    927 4,868 $  36,615 | $   48,311 
    3,006 
    6,846 3,794 $   61,957
|---------------------------------------------------------------------------------------------------------- | --------------------------------------------- | --------------------------------------------- | -------------------------------------------------
|                                                                                                           |                                               |                                               |                                                  
|Geographic area equipment and improvements
    (Gross):United States 
    Japan 
      Totals              | $ 11,995 - $ 11,995                           | $   28,214 5,732 $    33,946                  | $  27,373 4,743 $  32,116                        













16. Summarized Quarterly Financial Data (Unaudited):



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | For the Three Months Ended                                                                                                                                                                                        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Mar 30,                                                                                                                                                                                                           
|2002
      Net sales 
      Gross profit 
      Income (loss) before extraordinary loss on debt extinguishment
       and cumulative effect of change in accounting principle 
      Extraordinary loss on debt extinguishment 
      Cumulative effect of change in accounting principle 
      Net income (loss) 
      Basic earnings (loss) per share: 
        Income (loss) before extraordinary loss on debt extinguishment
         and cumulative effect in change of accounting principle 
        Extraordinary loss on debt extinguishment 
        Cumulative effect of change in accounting principle 
        Net income (loss) per share 
      Diluted earnings (loss) per share:
        Income (loss) before extraordinary loss on debt extinguishment
         and cumulative effect in change of accounting principle 
        Extraordinary loss on debt extinguishment 
        Cumulative effect of change in accounting principle 
        Net income (loss) per share | $ 6,143 
    1,191 
    522 
    (3,867)
    (12,500)
    (15,845)
         $   0.06 
            (0.43)
         (1.40)
         $ (1.77)
         $   0.06 
            (0.43)
         (1.40)
         $ (1.77)





|                                                                                                                                   |                                                               
|---------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------
|                                                                                                                                   | For the Three Months Ended                                    
|                                                                                                                                   | Mar 31,                                                       
|2001
      Net sales 
      Gross profit 
      Net income (loss) 
      Earnings (loss) per share:
        Basic 
        Diluted | $ 14,461 
    6,327 
    427 
    $      0.05 
    $      0.05





ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AUDITING AND
FINANCIAL DISCLOSURE

None.



PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



Executive Officers



Set forth below are the executive officers of the Company
and their ages as of December 31, 2002 and positions held with the Company, as
follows:



|                                                                                                   |                                 |                                                                                                                                                                                                                                                                                                         
|-------------------------------------------------------------------------------------------------- | ------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name
    John L. Dwight, Jr.
    John T. Doyle 
    Jeffrey A. Farnsworth 
    John J. Sheehan III | Age
    58
    42
    56
    46 | Position
    Chairman of the Board, Chief Executive Officer, President and Director
    Vice President and General Manager, PCD Industrial/Avionics Division
    Vice President and General Manager,
Wells-CTI - USA
 Vice President, Finance and
Administration, Chief Financial Officer, and Treasurer



Mr. Dwight has served as Chairman of the Board, Chief
Executive Officer, President and a director of the Company since November 1980,
when he purchased a controlling interest in PCD. Mr. Dwight was previously Vice
President - International of Burndy Corporation, an electronic connector
manufacturer. Mr. Dwight has 30 years of management and operating experience in
the connector industry.



Mr. Doyle rejoined PCD as Vice President and General Manager,
Industrial/Avionics Division in August 1999. From January 1996 to July 1999, Mr.
Doyle held various positions with Thomas & Betts including Vice President -
Worldwide Engineering, VP/GM - Communications Division and VP/GM - Automotive
Division. From August 1992 to January 1996, he held positions at Amphenol Corp., RF/Microwave Division as Director of Engineering and Director of Operations.
Prior to August 1992, he was VP - Engineering & Quality Assurance at PCD. Mr.
Doyle has 19 years of experience in the connector industry.



Mr. Farnsworth has served as Vice President and General
Manager, Wells-CTI - USA since July 2000. From August 1999 to July 2000, he
served as Vice President - Sales and Marketing, Wells-CTI. From December 1997 to
August 1999, he was Vice President and General Manager - CTI. From October 1993
to December 1997, he was Vice President and General Manager - CTI. Mr.
Farnsworth was a founder of Component Technologies, Inc. in 1983, and remained
with the Company, in various positions in sales and marketing, following the
acquisition of Component Technologies, Inc. by the Company in 1988. Mr.
Farnsworth has 24 years of experience in the connector industry.



Mr. Sheehan joined PCD as Vice President Finance and
Administration, Chief Financial Officer and Treasurer in August 1999. From 1997
to 1999 he was Corporate Controller of Sappi Fine Paper North America, a
manufacturer and distributor of coated paper for the printing and publishing
industry. From 1991 to 1997 he was Corporate Controller of Value Health, Inc. a
NYSE - listed specialty health care services company. Mr. Sheehan is a certified
public accountant with previous experience as an auditor for
PricewaterhouseCoopers LLP.



Directors



|Name, Age, Principal Occupation or Position, Other
    Directorships                   | Served as
    Director Since
|-------------------------------------------------------------------------------------- | ----------------------------
|John L. Dwight, Jr., 58 Chairman, Chief Executive Officer and President of the Company | 1980                        

Mr. Dwight has served as Chairman of the Board, Chief
Executive Officer, President and a director of the Company since November 1980,
when Mr. Dwight purchased a controlling interest in PCD. Mr. Dwight was
previously Vice President -- International of Burndy Company, an electronic
connector manufacturer. Mr. Dwight has 30 years of management and operating
experience in the connector industry. Mr. Dwight was Chairman of the Board,
Chief Executive Officer, President and a director of PCD Inc. and Chief
Executive Officer and President of Wells-CTI, Inc. on March 21, 2003 at the time
each of these companies filed voluntary petitions under Chapter 11 of the U.S.
Bankruptcy Code.



Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's executive officers, directors, and persons
owning ten percent or more of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership of all equity
and derivative securities of the Company with the Securities and Exchange
Commission ("SEC"). SEC regulations also require that a copy of all such Section
16(a) forms filed must be furnished to the Company by such officers, directors
and shareholders.



Based solely on a review of the copies of such forms and
amendments thereto received by the Company, or written representations from the
Company's officers and directors that no Forms 5 were required to be filed, the
Company believes that during 2002 all Section 16(a) filing requirements
applicable to its officers, directors and shareholders were met.



ITEM 11. EXECUTIVE COMPENSATION



The following table sets forth certain information regarding
the Company's Chief Executive Officer and each of the other three executive
officers during the year ended December 31, 2002.





|Name and Principal Position                                                                                      | Year                   | Annual Compensation (1)
    Salary($)     Bonus($)(3)) | Long-TermCompensation(2)
    Number of
    Shares
    Underlying
    OptionsGranted(#) (4) | All-OtherCompensation($)(5)  
|---------------------------------------------------------------------------------------------------------------- | ---------------------- | ------------------------------------------------------ | ------------------------------------------------------------------------------------------ | -----------------------------
|John L. Dwight, Jr.
    Chairman of the Board
    Chief Executive Officer
    and President                      | 2002
    2001
    2000 | $ 243,000
    243,000
    229,923                      | $           -      
              -     
    157,000                                       | -
    -
    -                
|John T. Doyle
    Vice President and
    General Manager,
    Industrial/Avionics Division                       | 2002
    2001
    2000 | 160,000
    160,000
    153,927                        | -      
    -      
    67,200                                                             | 45,000
      5,000
    10,000
|Jeffrey A. Farnsworth
    Vice President and General
    Manager, Wells-CTI USA                                  | 2002
    2001
    2000 | 165,000
    165,000
    165,570                        | -      
    -      
    35,600                                                             | 10,000
    -
    -           
|John J. Sheehan III
    Vice President Finance and
    Administration, Chief Financial
    Officer and Treasurer | 2002
    2001
    2000 | 147,000
    147,000
    142,819                        | -      
    -      
    75,000                                                             | 35,000
      5,000
    10,000





(1) In accordance with the rules of the Securities and
  Exchange Commission, other compensation in the form of perquisites and other
  personal benefits has been omitted because such perquisites and other personal
  benefits constituted less than the lesser of $50,000 or ten percent of the
  total annual salary and bonus reported for the executive officer during the
  years reported.

(2) The Company did not grant any restricted stock awards
  or stock appreciation rights during the years reported. The Company does not
  have any "long term incentive plan" within the meaning set forth in Item
  402(a)(7) of Regulation S-K.

(3) The Company's officers are eligible for annual cash
  bonuses under the terms of the Company's Management Incentive Plan, adopted
  each year. Payments of bonuses are based upon achievement of specified
  individual and Company objectives determined by the Board of Directors at the
  beginning of each year.

(4) 2002 option grants consist of only grants that were
  awarded in connection with the Company's Stock Option Exchange Program.

(5) Includes amounts awarded pursuant to life insurance
premium remainders. For 2002, such amounts were, 
               respectively, Mr. Dwight, $1,333; Mr. Doyle, $180, Mr. Farnsworth,
$970; and Mr. Sheehan, $270. Mr.
               Dwight also received an
automobile allowance of $3,522.





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



SECURITY OWNERSHIP OF MANAGEMENT



The following table sets forth as of February 28, 2003,
certain information with respect to the security ownership of the Common Stock
by officers and directors of the Company:





|Directors and Executive Officers                                                                                                                                                | Amount and Nature
    of BeneficialOwnership (1)        |  | Percent                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- |  | ---------------------------------
|John L. Dwight, Jr. (2) 
    John T. Doyle (3) 
    Jeffrey A. Farnsworth (4) 
    John J. Sheehan III (5) 
    All directors and executive officers as a group (4 persons) (6) | 861,900
    50,236
    118,000
    33,750
    1,093,386 |  | 9.6%
    *
    1.3
    *
    10.9





* Less than 1%



(1) Beneficial ownership is determined in accordance with
  the rules of the Securities and Exchange Commission and includes voting or
  investment power with respect to the shares. Stock subject to options
  currently exercisable or exercisable within 60 days following February 28,
  2002 are deemed outstanding for the purpose of completing the share ownership
  and percentage of the person holding such options, but are not deemed
  outstanding for the purpose of computing the percentage of any other person.

(2) Includes 11,000 shares issuable upon exercise of stock
  options.

(3) Includes 43,750 shares issuable upon exercise of stock
options.

(4)  Includes 82,000 shares issuable upon exercise of stock
options.

(5) Comprised of 33,750 shares issuable upon exercise of
stock options.

(6) Includes 170,500 shares issuable upon exercise of stock
options.





PRINCIPAL STOCKHOLDERS



As of December 31, 2002, the only persons known to
  management to own beneficially 5% or more of the outstanding Common Stock of
  the Company are named below. The information in this table is based solely on
  Schedules 13G filed with the Securities and Exchange Commission by these
  persons:





|Name and Address of Beneficial Owner                                                                        | Amount and Nature ofBeneficial Ownership (1) | Percent
|----------------------------------------------------------------------------------------------------------- | -------------------------------------------- | -------
|Emerson Electric Co. 
    8000 West Florissant Avenue
    St. Louis, MO 63136                               | 2,068,080 (2)                                | 23.1%  
|John L. Dwight, Jr. 
    c/o PCD Inc.
    2 Technology Drive
    Centennial Park
    Peabody, MA 01960-7977 | 861,900 (3)                                  | 9.6%   
|Royce & Associates, Inc. 
    1414 Avenue of the Americas
    New York, NY 10019                            | 484,500 (4)                                  | 5.4%   
|FleetBoston Financial Corp. 
    100 Federal Street
    Boston, MA 02110                                    | 489,808 (5)                                  | 5.5%   



(1) Beneficial ownership is determined in accordance with
  the rules of the Securities and Exchange Commission and includes voting or
  investment power with respect to the shares. Stock subject to options or
  warrants exercisable currently or within 60 days following December 31, 2002
  are deemed outstanding for the purpose of completing the share ownership and
  percentage of the person holding such options, but are not deemed outstanding
  for the purpose of computing the percentage of any other person.

(2) Includes 1,324,800 shares owned by Emerson Electric Co.
  and 743,280 shares owned by its wholly-owned subsidiary InnoVen III
  Corporation and over which it has sole voting and dispositive power.

(3) John L. Dwight, Jr.'s beneficial ownership of Common
  Stock of the Company includes11,000 shares issuable upon exercise of stock
  options.

(4) Royce & Associates Inc.'s beneficial ownership of
  Common Stock of the Company consists of 484,500 over which it has sole voting
  power and sole dispositive power.

(5) Fleet Boston Corporation's beneficial ownership of
  Common Stock of the Company consists of 12,580 over which it has sole voting
  and dispositive power. Ownership also includes 477,228 shares issuable upon
  exercise of warrants issued to Fleet in February 2002.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



On February 27, 2002, the Company and its lenders,
including Fleet National Bank, amended and restated the Senior Credit Facility.
In connection with the new agreement, certain covenant violations as of December
31, 2001 were waived. The Maturity Date was extended by one year, to December
31, 2004 and the total borrowing facility was increased from $41.5 million to
$44 million. The Revolver Commitment was increased to $20 million consisting of
an A-1 Revolving Credit Loan ("the A-1 Loan") of $2.5 million and an A-2
Revolving Credit Loan ("the A-2 Loan") of $17.5 million. Pricing is at LIBOR
plus maximums of 250 and 350 basis points, respectively, for the A-1 and A-2
Loans. Beginning on March 31, 2003, the Revolver Commitment declines by $1.0
million per quarter until Maturity. The Term Loan of $24.0 million was divided
into a $10.0 million term loan ("the A Loan"), an $8.0 million term loan ("the
B-1 Loan") and a $6.0 million term loan ("the B-2 Loan"). Pricing for the A Loan
is at LIBOR plus a maximum of 350 basis points. Principal repayment obligations
under the A Loan begin in the first quarter of 2003. Interest accrues at 10% and
8% on the B-1 and B-2 Loans, respectively, and together with principal, is due
and payable on Maturity. Lenders received warrants, exercisable for a period of
10 years, to purchase 1,450,000 shares of common stock of the Company at $0.01
per share. In addition, lenders' existing warrants to purchase 203,949 shares of
the Company's common stock at $4.90 per share were re-priced to $0.01 per share.

ITEM 14. DISCLOSURE CONTROLS AND PROCEDURES

(a) Disclosure controls and procedures: Within the 90 days before filing this
report, the Company has evaluated the effectiveness of the design and operation
of its disclosure controls and procedures. Disclosure controls and procedures
are the controls and other procedures that designed to ensure that the Company
record, process, summarize and report in a timely manner the information it must
disclose in the reports filed with the SEC. John L. Dwight, Jr., Chairman of the
Board, Chief Executive Officer and President, and John J. Sheehan, III, Vice
President Finance and Administration, Chief Financial Officer and Treasurer,
reviewed and participated in this evaluation. Based on this review, Messrs.
Dwight and Sheehan concluded that, as of the date of their evaluation, the
Company's disclosure controls were effective in timely alerting them to material
information relating to the Company required to be included in this annual
report on Form 10-K.

(b) Internal controls: Since the date of the evaluation
described above, there have not been any significant changes in our internal
controls or in other factors that could significantly affect those controls.







PART IV



ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K



(a) Documents Filed as a part of the Form 10-K Report



1) Financial Statements



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | PAGE                                 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------
|PCD INC.
      DECEMBER 31, 2002 and 2001
        Report of Independent Accountants 
        Consolidated Balance Sheets as of December 31, 2002 and 2001 
        Consolidated Statements of Operations for
          the years ended December 31, 2002, 2001 and 2000 
        Consolidated Statements of Stockholders' Equity for
          the years ended December 31, 2002, 2001 and 2000 
        Consolidated Statements of Cash Flows for
          the years ended December 31, 2002, 2001 and 2000 
        Notes to Consolidated Financial Statements | 24
    25
    26
    27
    28
    29





None

3) Listing of Exhibits

Copies of all exhibits to this Form 10-K (including exhibits
incorporated by reference) are available without charge upon the request of any
stockholder addressed to John J. Sheehan III, PCD Inc., 2 Technology Drive,
Centennial Park, Peabody, MA 01960.



|2.1(4)    | - | Share Purchase Agreement among UL America, Inc., Wells
    Electronics, Inc. and PCD Inc. dated as of November 17, 1997.                                                                                                
|--------- | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.2(7)    | - | Undertaking to Furnish Copies of Omitted Schedules to
    Share Purchase Agreement dated as of November 17, 1997.                                                                                                       
|3.1(1)    | - | Restated Articles of Organization of Registrant effective
    March 22, 1996.                                                                                                                                           
|3.2(1)    | - | By-Laws of Registrant, as amended, effective April 1,
    1996.                                                                                                                                                         
|4.1(1)    | - | Articles 3, 4, 5 and 6 of the Restated Articles of
    Organization of Registrant (included in Exhibit 3.1).                                                                                                            
|4.2(1)    | - | Specimen Stock Certificate.                                                                                                                                                                                             
|10.1(1)   | - | Lease dated June 29, 1987, between Centennial Park
    Associates Realty Trust II and the Company, for premises located at Two
    Technology Drive, Centennial Park, Peabody, Massachusetts.                           
|10.2(1)   | - | Lease dated May 1995, between CMD Southwest Four and CTi
    Technologies, Inc., for premises located at 2102 W. Quail Avenue, Phoenix,
    Arizona.                                                                    
|10.3(1)   | - | Registrant's 1992 Stock Option Plan and related forms of
    stock option agreement.                                                                                                                                    
|10.4(1)   | - | Registrant's 1996 Stock Plan and superseded forms of
    stock option agreement.                                                                                                                                        
|10.5(1)   | - | Registrant's 1996 Eligible Directors Stock Plan and
    superseded form of stock option agreement.                                                                                                                      
|10.6(1)   | - | April 2, 1985 Stock Purchase Agreement and Amendment to
    Stock Purchase Agreement dated March 31, 1983.                                                                                                              
|10.7(1)   | - | Letter of Agreement dated September 18, 1995, between
    International Assemblers, Inc. and CTi Technologies, Inc.                                                                                                     
|10.8(2)   | - | Third Amendment to lease agreement dated as of June 25,
    1996, between the Company and Centennial Park Associates Limited Partnership
    III.                                                                       
|10.9(3)   | - | Form of option agreements for the 1996 Stock Plan.                                                                                                                                                                      
|10.10(3)  | - | Form of option agreement for the 1996 Eligible Directors
    Stock Plan.                                                                                                                                                
|10.11(4)  | - | Stock Pledge Agreement between PCD Inc. and Fleet
    National Bank dated as of December 26, 1997.                                                                                                                      
|10.12(4)  | - | Stock Pledge Agreement between Wells Electronics, Inc.
    and Fleet National Bank dated as of December 26, 1997.                                                                                                       
|10.13(5)  | - | Second Amendment to lease agreement dated July 15, 1993,
    between Centennial Park Associates Limited Partnership III and the Company.                                                                                
|10.14(5)  | - | Lease dated September 21, 1995, between Blackthorn Area
    Partners and Wells Electronics, Inc., for premises located at 52940 Olive
    Road, South Bend, Indiana.                                                    
|10.15(5)  | - | Amendment dated May 16, 1997 to Lease dated September 21,
    1995, between Blackthorn Area Partners and Wells Electronics, Inc., for
    premises located at 52940 Olive Road, South Bend, Indiana.                    
|10.16(5)  | - | Sublease dated October 10, 1992, between Daiwa House
    Kogyo Co., Ltd. and Wells Japan, Ltd. for premises located at Paleana
    Building 2-2-15, Shin-Yokahama, Kohuku-Ku, Yokohama, Japan (English
    translation).
|10.17(5)  | - | Management Incentive Plan.                                                                                                                                                                                              
|10.18(6)  | - | Registrant's Employee Stock Purchase Plan.                                                                                                                                                                              
|10.19(6)  | - | Form of option agreement for the 1998 Employee Stock
    Purchase Plan.                                                                                                                                                 
|10.20(8)  | - | Executive Separation Benefits Plan effective March 6,
    2000.                                                                                                                                                         
|10.21(9)  | - | Amended 1996 Eligible Directors Stock Plan.                                                                                                                                                                             
|10.22(9)  | - | Amended lease dated January 2000, between CMD Southwest
    Four and WELLS-CTI USA, for premises located at 2102 W. Quail Avenue,
    Phoenix, Arizona                                                                  
|10.23(10) | - | Amended and Restated Loan Agreement between PCD Inc. and
    Fleet National Bank dated as of February 27, 2002.                                                                                                         
|10.24(10) | - | Warrant Purchase Agreement from PCD Inc. to Fleet
    National Bank dated as of February 27, 2002.                                                                                                                      
|10.25(10) | - | Amended and Restated Registration Rights Agreement
    between PCD Inc. and Fleet National Bank dated as of February 27, 2002.                                                                                          
|10.26(10) | - | Form of Warrant issued to Fleet National Bank and other
    lenders dated as of February 27, 2002.                                                                                                                      
|10.27(10) | - | Form of Replacement Warrant issued to Fleet National Bank
    and other lenders dated as of February 27, 2002.                                                                                                          
|10.28(10) | - | Amended and Restated Patent Collateral Assignment and
    Security Agreement from PCD Inc. to Fleet National Bank dated as of February
    27, 2002.                                                                    
|10.29(10) | - | Amended and Restated Patent Collateral Assignment and
    Security Agreement from Wells-CTI, Inc. to Fleet National Bank dated as of
    February 27, 2002.                                                             
|10.30(10) | - | Amended and Restated Patent Collateral Assignment and
    Security Agreement from Wells-CTI KK to Fleet National Bank dated as of
    February 27, 2002.                                                                
|10.31(10) | - | Amended and Restated Security Agreement from PCD Inc. to
    Fleet National Bank dated as of February 27, 2002.                                                                                                         
|10.32(10) | - | Amended and Restated Security Agreement from Wells-CTI,
    Inc. to Fleet National Bank dated as of February 27, 2002.                                                                                                  
|10.33(10) | - | Amended and Restated Security Agreement from Wells-CTI KK
    to Fleet National Bank dated as of February 27, 2002.                                                                                                     
|10.34(10) | - | Amended and Restated Trademark Collateral Security
    Agreement from PCD Inc. to Fleet National Bank dated as of February 27,
    2002.                                                                                
|10.35(10) | - | Amended and Restated Trademark Collateral Security
    Agreement from Wells-CTI, Inc. to Fleet National Bank dated as of February
    27, 2002.                                                                         
|10.36(10) | - | Amended and Restated Trademark Collateral Security
    Agreement from Wells-CTI KK to Fleet National Bank dated as of February 27,
    2002.                                                                            
|10.37(11) | - | Registrant's Stock Option Exchange Program.                                                                                                                                                                             
|10.38(11) | - | Form of election for option exchange in connection with
    Company's Stock Option Exchange Program.                                                                                                                    
|10.39(11) | - | Form of promise to grant new option in connection with
    Company's Stock Option Exchange Program.                                                                                                                     
|10.40(11) | - | Form of form to change election in connection with
    Company's Stock Option Exchange Program.                                                                                                                         
|10.41(12) | - | Amendment No. 1 to the Amended and Restated Loan
    Agreement between PCD Inc. and Fleet National Bank dated as of
    June 29, 2002.                                                                                  
|10.42(13) | - | Amendment No. 2 to the Amended and Restated Loan
    Agreement between PCD Inc. and Fleet National Bank dated as of
    September 30, 2002.                                                                             
|10.43(14) | - | Amendment No. 3 to the Amended and Restated Loan
    Agreement between PCD Inc. and Fleet National Bank dated as of
    November 29, 2002.                                                                              
|10.44(15) | - | Amendment No. 4 to the Amended and Restated Loan
    Agreement between PCD Inc. and Fleet National Bank dated as of
    December 31, 2002.                                                                              
|21.1      | - | Subsidiaries of the Registrant                                                                                                                                                                                          
|23.1      | - | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                                                  
|99.1      | - | Chief Executive Officer Certification                                                                                                                                                                                   
|99.2      | - | Chief Financial Officer Certification                                                                                                                                                                                   





(1) A copy has been previously filed with the Company's
  registration statement on Form S-1 (Registration no.
  333-1266), as filed on February 12, 1996 and amended on March
15 and March 21, 1996, and is incorporated
  in this document by reference.

(2) A copy has been previously filed with the Company's
  annual report on Form 10-K (Commission file no.
  0-27744), as filed on March 28, 1997, and is incorporated
  in this document by reference.

(3) A copy has been previously filed with the Company's
  quarterly report on Form 10-Q (Commission file no.
  0-27744), as filed on September 27, 1997, and is
  incorporated in this document by reference.

(4) A copy has been previously filed with the Company's
  current report on Form 8-K (Commission file no.
  0-27744), as filed on January 9, 1998, and as amended on
  March 11 and 24, 1998 and April 20, 1998 and
  is incorporated in this document by reference.



(5)A copy has been previously filed with the Company's
  registration statement on form S-1 (Registration no.
  333-46137), as filed on February 12, 1998 and as amended on March 20, 1998
  and April 13, 1998 and is
  incorporated in this document by reference.



(6) A copy has been previously filed with the Company's
  registration statement on Form S-8 (Registration no.
  333-57805), as filed on June 26, 1998, and is incorporated
  in this document by reference.



(7) A copy has been previously filed with the Company's
  registration statement on Form 10-K (Commission file no. 0-27744),
  as filed on
  March 26, 1999, and is incorporated in this document by reference.



(8) A copy has been previously filed with the Company's
  registration statement on Form 10-K (Commission file no. 0-27744),
  as filed on
  March 17, 2000, and is incorporated in this document by reference.



(9) A copy has been previously filed with the Company's
  registration statement on Form 10-K (Commission file no. 0-27744),
  as filed on
  March 12, 2001, and is incorporated in this document by reference.



(10) A copy has been previously filed with the Company's
  current report on Form 8-K (Commission file no. 0-27744), as filed on March
  13, 2002, and is incorporated in this document by reference.



(11) A copy has been previously filed with the Company's
  registration statement on Schedule TO-I (Commission file no. 5-49968), as
  filed on April 22, 2002, and as amended on May 8, 2002 and May 24, 2002 and is
  incorporated in this document by reference.



(12) A copy has been previously filed with the Company's
  quarterly report on Form 10-Q (Commission file no.
  0-27744), as filed on August 13, 2002, and is
  incorporated in this document by reference.

(13) A copy has been previously filed with the Company's
  quarterly report on Form 10-Q (Commission file no.
  0-27744), as filed on November 12, 2002, and is
  incorporated in this document by reference.



(14) A copy has been previously filed with the Company's
  current report on Form 8-K (Commission file no. 0-27744),
  as filed on December
  6, 2002, and is incorporated in this document by reference.



(15) A copy has been previously filed with the Company's
  current report on Form 8-K (Commission file no. 0-27744),
  as filed on January
  17, 2003, and is incorporated in this document by reference.



Management Contracts and Compensatory Plans



|10.3(A)  | - | Registrant's 1992 Stock Option Plan and related forms of
    stock option agreement.                
|-------- | - | ----------------------------------------------------------------------------------------------------
|10.4(A)  | - | Registrant's 1996 Stock Plan and superceded forms of
    stock option agreement.                    
|10.5(A)  | - | Registrant's 1996 Eligible Directors Stock Plan and
    superceded form of stock option agreement.  
|10.9(B)  | - | Form of option agreements for the 1996 Stock Plan.                                                  
|10.10(B) | - | Form of option agreement for the 1996 Eligible Directors
    Stock Plan.                            
|10.17(C) | - | Management Incentive Plan.                                                                          
|10.18(D) | - | Registrant's Employee Stock Purchase Plan.                                                          
|10.19(D) | - | Form of option agreement for the 1998 Employee Stock
    Purchase Plan.                             
|10.20(E) | - | Executive Separation Benefits Plan effective March 6,
    2000.                                     
|10.21(F) | - | Amended 1996 Eligible Directors Stock Plan.                                                         
|10.37(G) | - | Registrant's Stock Option Exchange Program.                                                         
|10.38(G) | - | Form of election for option exchange in connection with
    Company's Stock Option Exchange Program.
|10.39(G) | - | Form of promise to grant new option in connection with
    Company's Stock Option Exchange Program. 
|10.40(G) | - | Form of form to change election in connection with
    Company's Stock Option Exchange Program.     



__________

(A) A copy has been previously filed with the Company's
registration statement on Form S-1 (Registration no.
 333-1266), as filed on February 12, 1996 and amended on
March 15 and March 21, 1996, and is incorporated
 in this document by reference.

(B) A copy has been previously filed with the Company's
  quarterly report on Form 10-Q (Commission file no.
  0-27744), as filed on September 27, 1997, and is
  incorporated in this document by reference.

(C)A copy has been previously filed with the Company's
  registration statement on form S-1 (Registration no.
  333-46137), as filed on February 12, 1998 and as amended on March 20, 1998
  and April 13, 1998 and is
  incorporated in this document by reference.

(D) A copy has been previously filed with the Company's
  registration statement on Form S-8 (Registration no.
  333-57805), as filed on June 26, 1998, and is incorporated in this
document by reference.

(E) A copy has been previously filed with the Company's registration
  statement on Form 10-K (Commission file no. 0-27744),
  as filed on March 17,
  2000, and is incorporated in this document by reference.

(F) A copy has been previously filed with the Company's registration
  statement on Form 10-K (Commission file no. 0-27744),
  as filed on March 12,
  2001, and is incorporated in this document by reference.



(G) A copy has been previously filed with the Company's registration
statement on Schedule TO-I (Commission
file no. 5-49968), as filed on April
22, 2002, and as amended on May 8, 2002 and May 24, 2002 and is
incorporated in this document by
reference.



(b) Reports on Form 8-K



Temporary Waiver No. 3 dated November 29, 2002 filed
  with the commission on December 6, 2002.

Temporary Waiver No. 4 dated December 31, 2002 filed
  with the commission on January 17, 2003.



Press Release, dated January 28, 2003,
entitled "PCD Inc. Announces Receipt of NASDAQ Delisting
           Notice." Filed with the commission on January 28, 2003.

Press Release, dated March 21, 2003, entitled "PCD Inc. Announces Sale
of Assets and Bankruptcy 
           Filing", and Press Release, dated March 27, 2003, entitled "First Day Orders
Enable PCD Inc. to Conduct 
           Business as Usual", filed with the Commission on Form 8-K on March
31,
2003.



CERTIFICATION

I, John L. Dwight, Jr., certify that:



1. I have reviewed this annual reporton Form 10-K of PCD Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
  statement of a material fact or omit to state a material fact necessary to
  make the statements made, in light of the circumstances under which such
  statements were made, not misleading with respect to the period covered by
  this annual report;
3. Based on my knowledge, the financial statements, and other financial
  information included in this annual report, fairly present in all material
  respects the financial condition, results of operations and cash flows of the
  registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
  establishing and maintaining disclosure controls and procedures (as defined in
  Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) Designed such disclosure controls and procedures
        to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others
        within those entities, particularly during the period in which this
        annual reportis being prepared;

b) Evaluated the effectiveness of the registrant's
        disclosure controls and procedures as of a date within 90 days prior to
        the filing date of this annual report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions
        about the effectiveness of the disclosure controls and procedures based
        on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
    disclosed, based on our most recent evaluation, to the registrant's auditors
    and the audit committee of registrant's board of directors (or persons
    performing the equivalent function):

a) All significant deficiencies in the design or
        operation of internal controls which could adversely affect the
        registrant's ability to record, process, summarize and report financial
        data and have identified for the registrant's auditors any material
        weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves
        management or other employees who have a significant role in the
        registrant's internal controls; and

6. The registrant's other certifying officers and I have
    indicated in this annual report whether or not there were significant
    changes in internal controls or in other factors that could significantly
    affect internal controls subsequent to the date of our most recent
    evaluation, including any corrective actions with regard to significant
    deficiencies and material weaknesses.



Date: March 31, 2003

/s/ John L. Dwight, Jr. 
                            John L. Dwight, Jr.
                            Chief Executive Officer





CERTIFICATION

I, John J. Sheehan, III, certify that:



1. I have reviewed this annual reporton Form 10-K of PCD Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
  statement of a material fact or omit to state a material fact necessary to
  make the statements made, in light of the circumstances under which such
  statements were made, not misleading with respect to the period covered by
  this annual report;
3. Based on my knowledge, the financial statements, and other financial
  information included in this annual report, fairly present in all material
  respects the financial condition, results of operations and cash flows of the
  registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
  establishing and maintaining disclosure controls and procedures (as defined in
  Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) Designed such disclosure controls and procedures
        to ensure that material information relating to the registrant,
        including its consolidated subsidiaries, is made known to us by others
        within those entities, particularly during the period in which this
        annual reportis being prepared;

b) Evaluated the effectiveness of the registrant's
        disclosure controls and procedures as of a date within 90 days prior to
        the filing date of this annual report (the "Evaluation Date"); and

c) Presented in this annual report our conclusions
        about the effectiveness of the disclosure controls and procedures based
        on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
    disclosed, based on our most recent evaluation, to the registrant's auditors
    and the audit committee of registrant's board of directors (or persons
    performing the equivalent function):

a) All significant deficiencies in the design or
        operation of internal controls which could adversely affect the
        registrant's ability to record, process, summarize and report financial
        data and have identified for the registrant's auditors any material
        weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves
        management or other employees who have a significant role in the
        registrant's internal controls; and

6. The registrant's other certifying officers and I have
    indicated in this annual report whether or not there were significant
    changes in internal controls or in other factors that could significantly
    affect internal controls subsequent to the date of our most recent
    evaluation, including any corrective actions with regard to significant
    deficiencies and material weaknesses.



Date: March 31, 2003

/s/ John J. Sheehan, III
                            John J. Sheehan, III
                            Chief Financial Officer







SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

PCD INC.

Dated: March 31, 2003                                                                                                        By: /s/ John L. Dwight, Jr.
                                                                                                                                                                          John L. Dwight, Jr.
                                                                                                                                                                          Chairman of the Board, President and
                                                                                                                                                                          Chief Executive Officer.

POWER OF ATTORNEY AND SIGNATURES



Each person whose signature appears below hereby authorizes
and appoints John L. Dwight, Jr. and John J. Sheehan III, and each of them, with
full power of substitution and full power to act without the other, as his true
and lawful attorney-in-fact and agent to act in his name, place and stead and to
execute in the name and on behalf of each person, individually and in each
capacity stated below, and to file, any and all amendments to this Form 10-K for
the fiscal year ended December 31, 2002. Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant in the capacities and on the
dates, indicated.

Dated: March 31, 2003                                                                                                        By: /s/ John L. Dwight, Jr.
                                                                                                                                                                          John L. Dwight, Jr.
                                                                                                                                                                          Chairman of the Board, President and
                                                                                                                                                                          Chief
Executive Officer (principal executive officer)



Dated: March 31, 2003                                                                                                        By: /s/ John
J. Sheehan III.
                                                                                                                                                                          John J. Sheehan III
                                                                                                                                                                          Vice President - Finance and Administration,
                                                                                                                                            Chief Financial Officer, and Treasurer
                                                                                                                                                                          (principal 
financial and accounting officer)