10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended August 30, 2020

OR

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

For the transition period from ________ to__________

Commission file number 1-4415

PARK AEROSPACE CORP.

(Exact Name of Registrant as Specified in Its Charter)

New York	11-1734643
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
1400 Old Country Road, Westbury, N.Y.	11590
(Address of Principal Executive Offices)	(Zip Code)
(631) 465-3600
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $.10 per share	PKE	New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 20,381,426 as of October 2, 2020.

PARK AEROSPACE CORP. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page Number
PART I.	FINANCIAL INFORMATION:
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets August 30, 2020 (Unaudited) and March 1, 2020	3
	Consolidated Statements of Operations 13 weeks and 26 weeks ended August 30, 2020 and September 1, 2019 (Unaudited)	4
	Consolidated Statements of Comprehensive Earnings 13 weeks and 26 weeks ended August 30, 2020 and September 1, 2019 (Unaudited)	5
	Consolidated Statements of Shareholders’ Equity August 30, 2020 and September 1, 2019  (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows 26 weeks ended August 30, 2020 and  September 1, 2019 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Factors That May Affect Future Results	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION:
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	28
Item 6.	Exhibits	28
EXHIBIT INDEX		29
SIGNATURES		30

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

PARK AEROSPACE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

	August 30, 2020 (Unaudited)			March 1, 2020*
ASSETS
Current assets
Cash and cash equivalents	$	2,287		$	5,410
Marketable securities (Note 3)		116,403			116,945
Accounts receivable, less allowance for doubtful accounts of $81 and $73, respectively		7,270			10,925
Inventories (Note 4)		5,103			6,379
Prepaid expenses and other current assets		3,783			5,535
Total current assets		134,846			145,194
Property, plant and equipment, net		19,479			16,100
Operating right-of-use assets (Note 5)		341			420
Goodwill and other intangible assets		9,800			9,804
Other assets		257			268
Total assets	$	164,723		$	171,786
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	1,899		$	4,735
Operating lease liability (Note 5)		132			152
Accrued liabilities		1,408			1,709
Income taxes payable		2,641			2,111
Total current liabilities		6,080			8,707
Long-term operating lease liability (Note 5)		221			268
Non-current income taxes payable (Note 9)		14,303			15,986
Deferred income taxes (Note 9)		738			834
Other liabilities		4,421			4,316
Total liabilities		25,763			30,111
Commitments and contingencies (Note 12)
Shareholders' equity (Note 8)
Common stock		2,096			2,096
Additional paid-in capital		169,955			169,862
Accumulated deficit		(22,939	)		(21,774	)
Accumulated other comprehensive earnings		669			668
		149,781			150,852
Less treasury stock, at cost		(10,821	)		(9,177	)
Total shareholders' equity		138,960			141,675
Total liabilities and shareholders' equity	$	164,723		$	171,786

* The balance sheet at March 1, 2020 has been derived from the audited consolidated financial statements at that date.

See Notes to Consolidated Financial Statements (Unaudited).

3

PARK AEROSPACE CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

	13 Weeks Ended (Unaudited)					26 Weeks Ended (Unaudited)
	August 30,			September 1,		August 30,			September 1,
	2020			2019		2020			2019
Net sales	$	9,250		$	13,723	$	21,463		$	28,673
Cost of sales		6,612			9,910		15,151			20,056
Gross profit		2,638			3,813		6,312			8,617
Selling, general and administrative expenses		1,552			1,914		3,182			3,836
Earnings from continuing operations		1,086			1,899		3,130			4,781
Interest and other income		525			863		1,181			1,811
Earnings from continuing operations before income taxes		1,611			2,762		4,311			6,592
Income tax provision (Note 9)		460			710		1,188			1,826
Net earnings from continuing operations		1,151			2,052		3,123			4,766
(Loss) earnings from discontinued operations, net of tax (Note 11)		(197	)		83		(212	)		(44	)
Net earnings	$	954		$	2,135	$	2,911		$	4,722
Earnings (loss) per share (Note 7)
Basic:
Continuing operations	$	0.06		$	0.10	$	0.15		$	0.23
Discontinued operations		(0.01	)		-		(0.01	)		-
Basic earnings per share	$	0.05		$	0.10	$	0.14		$	0.23
Basic weighted average shares		20,381			20,499		20,392			20,495
Diluted:
Continuing operations	$	0.06		$	0.10	$	0.15		$	0.23
Discontinued operations		(0.01	)		-		(0.01	)		-
Diluted earnings per share	$	0.05		$	0.10	$	0.14		$	0.23
Diluted weighted average shares		20,433			20,601		20,447			20,593
Dividends declared per share	$	0.10		$	0.10	$	0.20		$	0.20

See Notes to Consolidated Financial Statements (Unaudited).

4

PARK AEROSPACE CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(Amounts in thousands)

	13 Weeks Ended (Unaudited)						26 Weeks Ended (Unaudited)
	August 30,			September 1,			August 30,			September 1,
	2020			2019			2020			2019
Net earnings	$	954		$	2,135		$	2,911		$	4,722
Other comprehensive (loss) earnings, net of tax:
Unrealized gains on marketable securities:
Unrealized holding gains arising during the period		109			225			397			569
Less: reclassification adjustment for gains included in net earnings		(37	)		(15	)		(54	)		(23	)
Unrealized losses on marketable securities:
Unrealized holding losses arising during the period		(275	)		(24	)		(342	)		(27	)
Less: reclassification adjustment for losses included in net earnings		-			7			-			20
Other comprehensive (loss) earnings		(203	)		193			1			539
Total comprehensive earnings	$	751		$	2,328		$	2,912		$	5,261

See Notes to Consolidated Financial Statements (Unaudited).

5

PARK AEROSPACE CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands, except share and per share amounts)

										Accumulated
					Additional					Other
	Common Stock				Paid-in		Accumulated			Comprehensive			Treasury Stock
	Shares		Amount		Capital		Deficit			Earnings (Loss)			Shares		Amount
Balance, March 1, 2020		20,965,144	$	2,096	$	169,862	$	(21,774	)	$	668			446,321	$	(9,177	)
Net earnings		-		-		-		1,957			-			-		-
Unrealized gain on marketable securities, net of tax		-		-		-		-			204			-		-
Stock-based compensation		-		-		43		-			-			-		-
Repurchase of treasury shares		-		-		-		-			-			137,397		(1,644	)
Cash dividends ($0.10 per share)		-		-		-		(2,038	)		-			-		-
Balance, May 31, 2020		20,965,144		2,096		169,905		(21,855	)		872			583,718		(10,821	)
Net earnings		-		-		-		954			-			-		-
Unrealized loss on marketable securities, net of tax		-		-		-		-			(203	)		-		-
Stock-based compensation		-		-		50		-			-			-		-
Cash dividends ($0.10 per share)		-		-		-		(2,038	)		-			-		-
Balance, August 30, 2020		20,965,144	$	2,096	$	169,955	$	(22,939	)	$	669			583,718	$	(10,821	)

											Accumulated
					Additional						Other
	Common Stock				Paid-in			Accumulated			Comprehensive			Treasury Stock
	Shares		Amount		Capital			Deficit			Earnings (Loss)			Shares			Amount
Balance, March 3, 2019		20,965,144	$	2,096	$	169,395		$	(2,605	)	$	(22	)		479,191		$	(9,853	)
Net earnings		-		-		-			2,587			-			-			-
Unrealized gain on marketable securities, net of tax		-		-		-			-			346			-			-
Stock options exercised		-		-		(56	)		-			-			(6,200	)		127
Stock-based compensation		-		-		124			-			-			-			-
Cash dividends ($0.10 per share)		-		-		-			(2,049	)		-			-			-
Balance, June 2, 2019		20,965,144		2,096		169,463			(2,067	)		324			472,991			(9,726	)
Net earnings		-		-		-			2,135			-			-			-
Unrealized gain on marketable securities, net of tax		-		-		-			-			193			-			-
Stock options exercised		-		-		(179	)		-			-			(22,974	)		473
Stock-based compensation		-		-		141			-			-			-			-
Cash dividends ($0.10 per share)		-		-		-			(2,050	)		-			-			-
Balance, September 1, 2019		20,965,144	$	2,096	$	169,425		$	(1,982	)	$	517			450,017		$	(9,253	)

See Notes to Consolidated Financial Statements (Unaudited).

6

PARK AEROSPACE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	26 Weeks Ended (Unaudited)
	August 30,			September 1,
	2020			2019
Cash flows from operating activities:
Net earnings from continuing operations	$	3,123		$	4,766
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization		556			733
Stock-based compensation		93			265
Deferred income taxes		(96	)		65
Amortization of bond premium		120			(52	)
Changes in operating assets and liabilities		2,525			(6,708	)
Net cash provided by (used in) operating activities - continuing operations		6,321			(931	)
Net cash used in operating activities - discontinued operations		(212	)		(44	)
Net cash provided by (used in) operating activities		6,109			(975	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(3,935	)		(2,254	)
Purchases of marketable securities		(32,909	)		(70,270	)
Proceeds from sales and maturities of marketable securities		33,332			31,457
Net cash used in investing activities - continuing operations		(3,512	)		(41,067	)
Net cash used in investing activities - discontinued operations		-			-
Net cash used in investing activities		(3,512	)		(41,067	)
Cash flows from financing activities:
Dividends paid		(4,076	)		(4,099	)
Proceeds from exercise of stock options		-			365
Purchase of treasury stock		(1,644	)		-
Net cash used in financing activities - continuing operations		(5,720	)		(3,734	)
Net cash used in financing activities - discontinued operations		-			-
Net cash used in financing activities		(5,720	)		(3,734	)
Decrease in cash and cash equivalents		(3,123	)		(45,776	)
Cash and cash equivalents, beginning of period		5,410			71,007
Cash and cash equivalents, end of period	$	2,287		$	25,231
Supplemental cash flow information:
Cash paid during the period for income taxes, net of refunds	$	254		$	6,981

See Notes to Consolidated Financial Statements (Unaudited).

7

PARK AEROSPACE CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except share (unless otherwise stated), per share and option amounts)

1. CONSOLIDATED FINANCIAL STATEMENTS

The Condensed Consolidated Balance Sheet and the Consolidated Statements of Shareholders’ Equity as of August 30, 2020, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended August 30, 2020 and September 1, 2019, and the Condensed Consolidated Statements of Cash Flows for the 26 weeks then ended have been prepared by Park Aerospace Corp. (the “Company”), without audit. In the opinion of management, these unaudited consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at August 30, 2020 and the results of operations and cash flows for all periods presented. The Consolidated Statements of Operations are not necessarily indicative of the results to be expected for the full fiscal year or any subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 1, 2020. There have been no significant changes to such accounting policies during the 26 weeks ended August 30, 2020.

2. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

Fair value measurements are broken down into three levels based on the reliability of inputs as follows:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals or current market) and contractual prices for the underlying financial instrument, as well as other relevant economic measures.

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

8

The fair value of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying value due to their short-term nature. Certain assets and liabilities of the Company are required to be recorded at fair value on either a recurring or non-recurring basis. On a recurring basis, the Company records its marketable securities at fair value using Level 1 or Level 2 inputs (See Note 3).

The Company’s non-financial assets measured at fair value on a non-recurring basis include goodwill and any long-lived assets written down to fair value. To measure fair value of such assets, the Company uses Level 3 inputs consisting of techniques including an income approach and a market approach. The income approach is based on a discounted cash flow analysis and calculates the fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate. Assumptions used in the discounted cash flow analysis require the exercise of significant judgment, including judgment about appropriate discount rates, terminal values, growth rates and the amount and timing of expected future cash flows. With respect to goodwill, the Company first assesses qualitative factors to determine whether it is more likely than not that fair value is less than carrying value. If, based on that assessment, the Company believes it is more likely than not that fair value is less than carrying value, a goodwill impairment test is performed. There have been no changes in events or circumstances which required impairment charges to be recorded during the 13 weeks and 26 weeks ended August 30, 2020.

3. MARKETABLE SECURITIES

All marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, included in comprehensive earnings. Realized gains and losses, amortization of premiums and discounts, and interest and dividend income are included in interest and other income in the Consolidated Statements of Operations. The costs of securities sold are based on the specific identification method.

The following is a summary of available-for-sale securities:

	August 30, 2020
	Total		Level 1		Level 2		Level 3
U.S. Treasury and other  government securities	$	93,948	$	93,948	$	-	$	-
U.S. corporate debt securities		22,455		22,455		-		-
Total marketable securities	$	116,403	$	116,403	$	-	$	-

	March 1, 2020
	Total		Level 1		Level 2		Level 3
U.S. Treasury and other  government securities	$	101,390	$	101,390	$	-	$	-
U.S. corporate debt securities		15,555		15,555		-		-
Total marketable securities	$	116,945	$	116,945	$	-	$	-

9

The following table shows the amortized cost basis of, and gross unrealized gains and losses on, the Company’s available-for-sale securities:

	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses
August 30, 2020:
U.S. Treasury and other government securities	$	93,211	$	762	$	25
U.S. corporate debt securities		22,345		119		9
Total marketable securities	$	115,556	$	881	$	34
March 1, 2020:
U.S. Treasury and other  government securities	$	100,626	$	764	$	-
U.S. corporate debt securities		15,473		82		-
Total marketable securities	$	116,099	$	846	$	-

The estimated fair values of such securities at August 30, 2020 by contractual maturity are shown below:

Due in one year or less	$	45,917
Due after one year through five years		70,486
	$	116,403

4. INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company’s products and market conditions. Work-in-process and finished goods inventories cost valuations include direct material costs as well as a portion of the Company’s overhead expenses.  The Company’s overhead expenses that are applied to its finished goods inventories are based on actual expenses related to the procurement, storage, shipment and production of the finished goods. Inventories consisted of the following:

	August 30,		March 1,
	2020		2020
Inventories:
Raw materials	$	3,883	$	5,319
Work-in-process		200		254
Finished goods		1,020		806
	$	5,103	$	6,379

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5. LEASES

The Company has operating leases related to land, office space, warehouse space and equipment. All of the Company’s leases have been assessed to be operating leases. Renewal options are included in the lease term to the extent the Company is reasonably certain to exercise the option. The exercise of lease renewal options is at the Company’s sole discretion. The incremental borrowing rate represents the Company’s ability to borrow on a collateralized basis over a term similar to the lease term. The leases typically contain renewal options for periods ranging from one year to ten years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is 2068 assuming exercise of all applicable renewal options by the Company. The Company’s existing leases are not subject to any restrictions or covenants which preclude its ability to pay dividends, obtain financing or exercise its available renewal options.

Future minimum lease payments under non-cancellable operating leases as of August 30, 2020 are as follows:

Fiscal Year:
2021	$	76
2022		90
2023		61
2024		61
2025		-
Thereafter		161
Total undiscounted operating lease payments		449
Less imputed interest		(96	)
Present value of operating lease payments	$	353

The above payment schedule includes renewal options that the Company is reasonably likely to exercise. Leases with an initial term of 12 months or less are not recorded on the Company’s balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the terms of the leases. The above payment schedule does not include lease payments of $66 in 2021 for the Company’s idle facility in Fullerton, California that have been accrued on the condensed consolidated balance sheets in accrued liabilities.

For the 13 weeks and 26 weeks ended August 30, 2020, the Company’s operating lease expense was $40 and $80, respectively. Cash payments of $76, pertaining to operating leases, are reflected in the cash flow statement under cash flows from operating activities.

The following table sets forth the right-of-use assets and operating lease liabilities as of August 30, 2020:

Operating right-of-use assets	$	341
Operating lease liabilities	$	132
Long-term operating lease liabilities		221
Total operating lease liabilities	$	353

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The Company’s weighted average remaining lease term for its operating leases is 6.1 years.

In December 2018, the Company’s wholly-owned subsidiary Park Aerospace Technologies Corp. (“PATC”) entered into a Development Agreement with the City of Newton, Kansas and the Board of County Commissioners of Harvey County, Kansas.  Pursuant to this agreement, PATC agreed to construct and operate an additional manufacturing facility approximately 90,000 square feet in size for the design, development and manufacture of advanced composite materials and parts, structures and assemblies for aerospace. PATC further agreed to equip the facility through the purchase of machinery, equipment and furnishings and to create additional new full-time employment of specified levels during a five-year period.  In exchange for these agreements, the City and the County agreed to lease to PATC three acres of land at the Newton City/County Airport, in addition to the eight acres previously leased to PATC by the City and County.  The City and the County further agreed to provide financial and other assistance toward the construction of the additional facility as set forth in the Development Agreement. The Company estimates the total cost of the additional facility to be approximately $18.0 million, and the Company expects to complete the construction of the additional facility in the beginning of 2021 calendar year. As of August 30, 2020, the Company had $960 in equipment purchase obligations and $11,198 of construction-in-progress related to the additional facility. On July 16, 2019, PATC was merged into the Company and ceased to exist, and the Company assumed the rights and obligations of PATC, including the rights and obligations of PATC under the Development Agreement.

6. STOCK-BASED COMPENSATION

As of August 30, 2020, the Company had a 2018 Stock Option Plan (the “2018 Plan”) and no other stock-based compensation plan. The 2018 Plan was adopted by the Board of Directors of the Company on May 8, 2018 and approved by the shareholders of the Company at the Annual Meeting of Shareholders of the Company on July 24, 2018 and provides for the grant of options to purchase up to 800,000 shares of common stock of the Company. Prior to the 2018 Plan, the Company had the 2002 Stock Option Plan (the “2002 Plan”) which had been approved by the Company’s shareholders and provided for the grant of stock options to directors and key employees of the Company. All options granted under the 2018 Plan and 2002 Plan have exercise prices equal to the fair market value of the underlying common stock of the Company at the time of grant which, pursuant to the terms of such Plans, is the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date the option is granted. Options granted under the Plans become exercisable 25% one year after the date of grant, with an additional 25% exercisable each succeeding anniversary of the date of grant, and expire 10 years after the date of grant. Upon termination of employment or service as a director, all options held by the optionee that have not previously become exercisable shall terminate and all other options held by such optionee may be exercised, to the extent exercisable on the date of such termination, for a limited time after such termination. Any shares of common stock subject to an option under the 2018 Plan which expire or are terminated unexercised as to such shares shall again become available for issuance under the 2018 Plan.

The 2002 Plan terminated on May 21, 2018, and authority to grant additional options under the 2002 Plan expired on that date. All options granted under the 2002 Plan will expire in April 2028 or earlier.

During the 13 weeks and 26 weeks ended August 30, 2020, the Company granted options under the 2018 Plan to purchase a total of 3,000 and 132,100, respectively, shares of common stock to its directors and certain of its employees. The future compensation expense to be recognized in earnings before income taxes is $273 and will be recorded on a straight-line basis over the requisite service period. The weighted average fair value of the granted options was $2.12 per share using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 0.23%-0.42%; expected volatility factor of 26.9%-30.0%; expected dividend yield of 3.18%-3.49%; and estimated option term of 4.3-7.6 years.

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The risk-free interest rates were based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the estimated terms of the options at the date of the grant. Volatility factors were based on historical volatility of the Company’s common stock. The expected dividend yields were based on the regular quarterly cash dividend per share most recently declared by the Company and on the exercise price of the options granted during the 13 weeks and 26 weeks ended August 30, 2020. The estimated term of the options was based on evaluations of the historical and expected future employee exercise behavior.

The following is a summary of option activity for the 26 weeks ended August 30, 2020:

	Outstanding Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance, March 1, 2020		510,634		$	12.45			$	-
Granted		132,100			12.55
Exercised		-			-
Terminated or expired		(2,550	)		14.58
Balance, August 30, 2020		640,184		$	12.46		5.71	$	-
Vested and exercisable, August 30, 2020		427,397		$	11.88		3.94	$	-

7. EARNINGS PER SHARE

Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potentially dilutive securities outstanding during the period. Stock options are the only potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method.

The following table sets forth the calculation of basic and diluted earnings per share:

	13 Weeks Ended					26 Weeks Ended
	August 30, 2020			September 1, 2019		August 30, 2020			September 1, 2019
Net earnings - continuing operations	$	1,151		$	2,052	$	3,123		$	4,766
Net (loss) earnings - discontinued operations		(197	)		83		(212	)		(44	)
Net earnings	$	954		$	2,135	$	2,911		$	4,722
Weighted average common shares outstanding for basic EPS		20,381			20,499		20,392			20,495
Net effect of dilutive options		52			102		55			98
Weighted average shares outstanding for diluted EPS		20,433			20,601		20,447			20,593
Basic earnings per share - continuing operations	$	0.06		$	0.10	$	0.15		$	0.23
Basic (loss) earnings per share - discontinued operations		(0.01	)		0.00		(0.01	)		(0.00	)
Basic earnings per share	$	0.05		$	0.10	$	0.14		$	0.23
Diluted earnings per share - continuing operations	$	0.06		$	0.10	$	0.15		$	0.23
Diluted (loss) earnings per share - discontinued operations		(0.01	)		0.00		(0.01	)		(0.00	)
Diluted earnings per share	$	0.05		$	0.10	$	0.14		$	0.23

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Potentially dilutive securities, which were not included in the computation of diluted earnings per share because either the effect would have been anti-dilutive or the options’ exercise prices were greater than the average market price of the common stock, were 474,000 and 77,000 for the 13 weeks ended August 30, 2020 and September 1, 2019, respectively, and 450,000 and 134,000, respectively, for the 26 weeks ended August 30, 2020 and September 1, 2019, respectively.

8. SHAREHOLDERS’ EQUITY

On January 8, 2015, the Company announced that its Board of Directors authorized the Company’s purchase, on the open market and in privately negotiated transactions, of up to 1,250,000 shares of its common stock, representing approximately 6% of the Company’s 20,945,634 total outstanding shares as of the close of business on January 7, 2015. This authorization superseded all prior Board of Directors’ authorizations to purchase shares of the Company’s common stock.

On March 10, 2016, the Company announced that its Board of Directors authorized the Company’s purchase, on the open market and in privately negotiated transactions, of up to 1,000,000 additional shares of its common stock, in addition to the unused prior authorization to purchase shares of the Company’s common stock announced on January 8, 2015. As a result, the Company is authorized to purchase up to a total of 1,394,015 shares of its common stock, representing approximately 6.8% of the Company’s 20,381,426 total outstanding shares as of the close of business on October 2, 2020.

The Company purchased 137,397 and 0 shares of its common stock during the 26 weeks ended August 30, 2020 and September 1, 2019, respectively.

9. INCOME TAXES

For the 13 weeks and 26 weeks ended August 30, 2020, the Company recorded income tax provisions from continuing operations of $460 and $1,188, respectively, which included discrete income tax provisions of $42 and $84, respectively. For the 13 weeks and 26 weeks ended September 1, 2019, the Company recorded income tax provisions from continuing operations of $710 and $1,826, respectively.

The Company’s effective tax rates for the 13 weeks and 26 weeks ended August 30, 2020 were 28.6% and 27.5%, respectively, compared to 25.7% and 27.7%, respectively, in the comparable prior year periods. The effective tax rates for the 13 weeks and 26 weeks ended August 30, 2020 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and discrete income tax provisions for the accrual of interest related to unrecognized tax benefits. The effective rates for the 13 weeks and 26 weeks ended September 1, 2019 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes, discrete income tax provisions for stock compensation and the accrual of interest related to unrecognized tax benefits.

Notwithstanding the U.S. taxation of the deemed repatriated earnings as a result of the mandatory one-time transition tax on the accumulated untaxed earnings of foreign subsidiaries of U.S. shareholders included in the 2017 Tax Cuts and Jobs Act, the Company intends to indefinitely invest approximately $25 million of undistributed earnings outside of the U.S. If these future earnings are repatriated to the U.S., or if the Company determines such earnings will be remitted in the foreseeable future, the Company may be required to accrue U.S. deferred taxes.

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10. GEOGRAPHIC REGIONS

The Company’s products are sold to customers in North America, Asia and Europe. The Company’s manufacturing facilities are located in Kansas. Sales are attributed to geographic regions based upon the region in which the materials were delivered to the customer. Sales between geographic regions were not significant.

Financial information regarding the Company’s continuing operations by geographic region is as follows:

	13 Weeks Ended				26 Weeks Ended
	August 30, 2020		September 1, 2019		August 30, 2020		September 1, 2019
Sales:
North America	$	8,636	$	12,887	$	20,382	$	27,078
Asia		115		157		304		408
Europe		499		679		777		1,187
Total sales	$	9,250	$	13,723	$	21,463	$	28,673

	August 30, 2020		March 1, 2020
Long-lived assets:
North America	$	28,306	$	24,942
Asia		1,571		1,650
Europe		-		-
Total long-lived assets	$	29,877	$	26,592

11. DISCONTINUED OPERATIONS

On July 25, 2018, the Company entered into a definitive agreement to sell its Electronics Business for $145,000 in cash. The Company completed this transaction on December 4, 2018.

The Company has classified the operating results of its Electronics Business, together with certain costs related to the transaction, as discontinued operations, net of tax, in the Consolidated Statements of Operations.

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The following table shows the summary operating results of the discontinued operations:

	13 Weeks Ended (Unaudited)						26 Weeks Ended (Unaudited)
	August 30,			September 1,			August 30,			September 1,
	2020			2019			2020			2019
Net sales	$	-		$	-		$	-		$	-
Cost of sales		-			-			-			-
Gross profit		-			-			-			-
Selling, general and administrative expenses		-			95			-			231
Restructuring charges		264			82			284			115
Loss from discontinued operations		(264	)		(177	)		(284	)		(346	)
Other income		-			288			-			288
(Loss) earnings from discontinued operations before income taxes		(264	)		111			(284	)		(58	)
Income tax (benefit) provision		(67	)		28			(72	)		(14	)
Net (loss) earnings from discontinued operations	$	(197	)	$	83		$	(212	)	$	(44	)

During the 2018 fiscal year, the Company consolidated its Nelco Products, Inc. Business Unit located in Fullerton, California and its Neltec, Inc. Business Unit located in Tempe, Arizona. The Company estimates the remaining pre-tax charge in connection with the consolidation to be approximately $136, which the Company expects to incur primarily during the fiscal year ending February 28, 2021.

The following table sets forth the charges and accruals related to the consolidation:

	Accrual March 1, 2020		Current Period Charges		Cash Payments			Non-Cash Charges		Accrual August 30, 2020		Total Expense Accrued to Date		Total Expected Costs
Facility Lease Costs	$	432	$	24	$	(389	)	$	-	$	67	$	2,953	$	3,079
Severance Costs		-		-		-			-		-		1,081		1,081
Equipment Removal		-		224		(224	)		-		-		810		816
Other		-		36		(36	)		-		-		963		967
Total Restructuring Charges	$	432	$	284	$	(649	)	$	-	$	67	$	5,807	$	5,943

12. CONTINGENCIES

Litigation 

The Company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. The Company believes that the ultimate disposition of such proceedings, lawsuits and claims will not have a material adverse effect on the liquidity, capital resources, business, consolidated results of operations or financial position of the Company.

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Environmental Contingencies 

The Company and certain of its subsidiaries have been named by the Environmental Protection Agency (the “EPA”) or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the “Superfund Act”) or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at three sites.

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

The insurance carriers which provided general liability insurance coverage to the Company and its subsidiaries for the years during which the Company’s subsidiaries’ waste was disposed at these three sites have in the past reimbursed the Company and its subsidiaries for 100% of their legal defense and remediation costs associated with two of these sites.

The Company does not record environmental liabilities and related legal expenses for which the Company believes that it and its subsidiaries have general liability insurance coverage for the years during which the Company’s subsidiaries’ waste was disposed at two sites for which certain subsidiaries of the Company have been named as potentially responsible parties. Pursuant to such general liability insurance coverage, three insurance carriers reimburse the Company and its subsidiaries for 100% of the legal defense and remediation costs associated with the two sites.

Included in selling, general and administrative expenses are charges for actual expenditures and accruals, based on estimates, for certain environmental matters described above. The Company accrues estimated costs associated with known environmental matters when such costs can be reasonably estimated and when the outcome appears probable. The Company believes that the ultimate disposition of known environmental matters will not have a material adverse effect on the Company’s results of operations, cash flows or financial position.

13. ACCOUNTING PRONOUNCEMENTS

Recently Adopted

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. This ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). This ASU is effective for the Company’s fiscal year ending February 28, 2021 and for the interim periods within that year. The Company adopted this ASU in the first quarter of its 2021 fiscal year. The adoption of ASU 2018-13 did not have an impact on the Company’s consolidated financial statements and disclosures.

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In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  This ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.  This ASU is effective for the Company’s fiscal year ending February 28, 2021 and for the interim periods within that year. The Company adopted this ASU in the first quarter of its 2021 fiscal year. The adoption of ASU 2016-13 did not have an impact on the Company’s consolidated financial statements and disclosures.

Recently Issued

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.  The changes simplify the accounting for a number of topics, some of which are narrow. Some of the proposed amendments eliminate specific exceptions to the general principles of income tax accounting while other changes clarify a handful of narrow issues within the broad topic of income tax accounting. The amendments in ASU 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the requirements are effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted for public business entities for periods for which financial statements have not yet been issued. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements and disclosures.

14. COVID-19 PANDEMIC

In December 2019, a novel strain of coronavirus was reported in Wuhan, China and has since spread worldwide, including to the United States, posing public health risks that have reached pandemic proportions (the “COVID-19 Pandemic”).

The COVID-19 Pandemic and resultant global economic crisis had significant impacts on the Company’s results of operations and cash flow for the 13 weeks and 26 weeks ended August 30, 2020. The COVID-19 Pandemic and crisis had significant impacts on the markets the Company sells into, particularly the commercial and business aircraft markets. As a result, the Company has experienced a significant reduction in sales and backlog.

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

General:

Park Aerospace Corp. (“Park” or the “Company”) develops and manufactures solution and hot-melt advanced composite materials used to produce composite structures for the global aerospace markets. These materials include lightning strike protection materials. Park offers an array of composite materials specifically designed for hand lay-up or automated fiber placement (“AFP”) manufacturing applications. Park’s advanced composite materials are used to produce primary and secondary structures for jet engines, large and regional transport aircraft, military aircraft, Unmanned Aerial Vehicles (UAVs commonly referred to as “drones”), business aircrafts, general aviation aircraft and rotary wing aircraft. Park also offers specialty ablative materials for rocket motors and nozzles and specially designed materials for radome applications. As a complement to Park’s advanced composite materials offering, Park designs and fabricates composite parts, structures and assemblies and low volume tooling for the aerospace industry. Target markets for Park’s composite parts and structures (which include Park’s proprietary composite SigmaStrut^TM and AlphaStrut^TM product lines) are, among others, prototype and development aircraft, special mission aircraft, spares for legacy military and civilian aircraft and exotic spacecraft.

Financial Overview

The Company's total net sales from continuing operations in the 13 weeks and 26 weeks ended August 30, 2020 were $9.3 million and $21.5 million, respectively, compared to $13.7 million and $28.7 million, respectively, in the 13 weeks and 26 weeks ended September 1, 2019.

The Company’s gross profit margins from continuing operations, measured as percentages of sales, were 28.5% and 29.4%, respectively, in the 13 weeks and 26 weeks ended August 30, 2020 compared to 27.8% and 30.1%, respectively, in the 13 weeks and 26 weeks ended September 1, 2019.

The Company’s earnings from continuing operations before income taxes and net earnings from continuing operations decreased 41.7% and 43.9%, respectively, in the 13 weeks ended August 30, 2020 compared to the 13 weeks ended September 1, 2019 primarily as a result of lower sales and lower interest income, partially offset by lower selling, general and administrative expenses and a lower tax provision compared to last year’s comparable period.

The Company’s earnings from continuing operations before income taxes and net earnings from continuing operations decreased 34.6% and 34.5%, respectively, in the 26 weeks ended August 30, 2020 compared to the 26 weeks ended September 1, 2019 primarily as a result of lower sales and lower interest income, partially offset by lower selling, general and administrative expenses and a lower tax provision compared to last year’s comparable period.

The Company has a long-term contract pursuant to which one of its customers, which represents a substantial portion of the Company’s revenue, places orders. The long-term contract with the customer is requirements based and does not guarantee quantities. An order forecast and pricing were agreed upon in the contract. However, this order forecast is updated periodically during the term of the contract. Purchase orders generally are received by the Company in excess of three months in advance of delivery by the Company to the customer.

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In December 2019, a novel strain of coronavirus was reported in Wuhan, China and has since spread worldwide, including to the United States, posing public health risks that have reached pandemic proportions (the “COVID-19 Pandemic”).

The COVID-19 Pandemic and resultant global economic crisis had significant impacts on the Company’s results of operations and cash flow for the quarter ended August 30, 2020. The COVID-19 Pandemic and crisis had significant impacts on the markets the Company sells into, particularly the commercial and business aircraft markets. As a result, the Company has experienced a significant reduction in sales and backlog.

Even after the COVID-19 Pandemic has subsided, the Company may continue to experience adverse impacts to its business as a result of the potential continuing impact of the economic crisis on the markets the Company serves.

Results of Operations:

The following table sets forth the components of the Consolidated Statements of Operations:

	13 Weeks Ended								26 Weeks Ended
(amounts in thousands, except per share	August 30,			September 1,		%			August 30,			September 1,			%
amounts)	2020			2019		Change			2020			2019			Change
Net sales	$	9,250		$	13,723		(33	)%	$	21,463		$	28,673			(25	)%
Cost of sales		6,612			9,910		(33	)%		15,151			20,056			(24	)%
Gross profit		2,638			3,813		(31	)%		6,312			8,617			(27	)%
Selling, general and administrative expenses		1,552			1,914		(19	)%		3,182			3,836			(17	)%
Earnings from continuing operations		1,086			1,899		(43	)%		3,130			4,781			(35	)%
Interest and other income		525			863		(39	)%		1,181			1,811			(35	)%
Earnings from continuing operations before income taxes		1,611			2,762		(42	)%		4,311			6,592			(35	)%
Income tax provision		460			710		(35	)%		1,188			1,826			(35	)%
Net earnings from continuing operations		1,151			2,052		(44	)%		3,123			4,766			(34	)%
(Loss) earnings from discontinued operations, net of tax		(197	)		83		(337	)%		(212	)		(44	)		382	%
Net earnings	$	954		$	2,135		(55	)%	$	2,911		$	4,722			(38	)%
Earnings (loss) per share:
Basic:
Continuing operations	$	0.06		$	0.10		(40	)%	$	0.15		$	0.23			(35	)%
Discontinued operations		(0.01	)		-		100	%		(0.01	)		-			100	%
Basic earnings per share	$	0.05		$	0.10		(50	)%	$	0.14		$	0.23			(39	)%
Diluted:
Continuing operations	$	0.06		$	0.10		(40	)%	$	0.15		$	0.23			(35	)%
Discontinued operations		(0.01	)		-		100	%		(0.01	)		-			100	%
Diluted earnings per share	$	0.05		$	0.10		(50	)%	$	0.14		$	0.23			(39	)%

Net Sales

The Company’s total net sales from continuing operations worldwide in the 13 weeks and 26 weeks ended August 30, 2020 decreased to $9.3 million and $21.5 million, respectively, from $13.7 million and $28.7 million, respectively, in the 13 weeks and 26 weeks ended September 1, 2019. The decrease in sales was principally due to the lower sales to customers servicing the commercial and business aircraft markets.

The sharp decrease in air travel due to the COVID-19 Pandemic has significantly impacted both the commercial airline manufacturers and business aircraft manufacturers. As a result, the Company’s customers are experiencing order delays and cancellations from their commercial airline and business aircraft customers. As such, the programs the Company’s materials feed into have experienced reduced manufacturing rates and the Company has also experienced order push-outs and cancellations.

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Gross Profit

The Company’s gross profit from continuing operations in the 13 weeks ended August 30, 2020 was lower than its gross profit from continuing operations in the prior year’s comparable period; however, the gross profit from continuing operations as a percentage of sales for the Company’s worldwide operations in the 13 weeks ended August 30, 2020 increased to 28.5% from 27.8% in the 13 weeks ended September 1, 2019. The higher gross profit margin from continuing operations for the 13 weeks ended August 30, 2020 compared to the 13 weeks ended September 1, 2019 was principally a result of a favorable sales mix partially offset by lower sales and the partially fixed nature of overhead expenses in the 13 weeks ended August 30, 2020 compared to the 13 weeks ended September 1, 2019.

The Company’s gross profit from continuing operations in the 26 weeks ended August 30, 2020 was lower than its gross profit from continuing operations in the prior year’s comparable period, and the gross profit from continuing operations as a percentage of sales for the Company’s worldwide operations in the 26 weeks ended August 30, 2020 decreased to 29.4% from 30.1%, in the 26 weeks ended September 1, 2019. The lower gross profit margin from continuing operations for the 26 weeks ended August 30, 2020 compared to the 26 weeks ended September 1, 2019 was principally a result of lower sales and the partially fixed nature of overhead expenses in the 26 weeks ended August 30, 2020 compared to the 26 weeks ended September 1, 2019, partially offset by decreased direct labor and supplies expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses from continuing operations decreased by $362,000 and $654,000, respectively, during the 13 weeks and 26 weeks ended August 30, 2020, or by 19% and 17%, respectively, compared to last fiscal year's comparable periods, and these expenses, measured as a percentage of sales from continuing operations, were 16.8% and 14.8%, respectively, in the 13 weeks and 26 weeks ended August 30, 2020 compared to 13.9% and 13.4%, respectively, in the 13 weeks and 26 weeks ended September 1, 2019. The decreases in such expenses during the 13 weeks and 26 weeks ended August 30, 2020 was primarily the result of lower payroll, travel and entertainment, tradeshow and stock option expenses.

Selling, general and administrative expenses from continuing operations included stock option expenses of $50,000 and $93,000, respectively, for the 13 weeks and 26 weeks ended August 30, 2020, compared to stock option expenses of $141,000 and $265,000, respectively, for the 13 weeks and 26 weeks ended September 1, 2019.

Earnings from Continuing Operations

For the reasons set forth above, the Company’s earnings from continuing operations were $1.1 million and $3.1 million, respectively, for the 13 weeks and 26 weeks ended August 30, 2020 compared to $1.9 million and $4.8 million, respectively, for the 13 weeks and 26 weeks ended September 1, 2019.

Interest and Other Income

Interest and other income from continuing operations was $525,000 and $1.2 million, respectively, for the 13 weeks and 26 weeks ended August 30, 2020, compared to $863,000 and $1.8 million, respectively, for last fiscal year's comparable periods. Interest income decreased 39% and 35%, respectively, for the 13 weeks and 26 weeks ended August 30, 2020 primarily as a result of lower average balances of marketable securities held by the Company in the 13 weeks and 26 weeks ended August 30, 2020, compared to last fiscal year's comparable periods, and lower weighted average interest rates. During the 13 weeks and 26 weeks ended August 30, 2020, the Company earned interest income principally from its investments, which consisted primarily of short-term instruments and money market funds.

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Income Tax Provision

For the 13 weeks and 26 weeks ended August 30, 2020, the Company recorded income tax provisions from continuing operations of $460,000 and $1.2 million, respectively, which included a discrete income tax provision of $83,000 pertaining to the accrual of interest related to unrecognized tax benefits. For the 13 weeks and 26 weeks ended September 1, 2019, the Company recorded income tax provisions from continuing operations of $710,000 and $1.8 million, respectively, which included a discrete income tax provision of $169,000 pertaining to expired stock options of former employees who transferred to AGC Inc. in the sale of the Company’s Electronics Business. 

The Company’s effective tax rates for the 13 weeks and 26 weeks ended August 30, 2020 were 28.6% and 27.5%, respectively, compared to 25.7% and 27.7%, respectively, in the comparable prior year periods. The effective tax rates for the 13 weeks and 26 weeks ended August 30, 2020 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and the accrual of interest related to unrecognized tax benefits. The effective rates for the 13 weeks and 26 weeks ended September 1, 2019 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes, discrete income tax provisions for stock compensation and the accrual of interest related to unrecognized tax benefits.

Net Earnings from Continuing Operations

For the reasons set forth above, the Company's net earnings from continuing operations for the 13 weeks and 26 weeks ended August 30, 2020 were $1.2 million and $3.1 million, respectively, compared to net earnings from continuing operations of $2.1 million and $4.8 million, respectively, for the 13 weeks and 26 weeks ended September 1, 2019.

Discontinued Operations

On July 25, 2018, the Company entered into a definitive agreement to sell its Electronics Business for $145.0 million in cash. The Company completed this transaction on December 4, 2018.

The operating results of the Electronics Business are classified, together with certain costs related to the transaction, as discontinued operations, net of tax, in the Consolidated Statements of Operations.

The Company’s net earnings from discontinued operations included costs in connection with the vacated facility in Fullerton, California in the 13 weeks and 26 weeks ended August 30, 2020. The Company’s net earnings from discontinued operations included expenses pertaining to the sale transaction and costs related to the Company’s vacated facility in Fullerton, California in the 13 weeks and 26 weeks ended September 1, 2019.

Basic and Diluted Earnings Per Share

In the 13 weeks and 26 weeks ended August 30, 2020, basic and diluted earnings per share from continuing operations were $0.06 and $0.15, respectively. This compared to basic and diluted earnings per share from continuing operations of $0.10 and $0.23, respectively, in the 13 weeks and 26 weeks ended September 1, 2019. The net impact of the tax benefit described above decreased basic and diluted earnings per share by $0.01 for the 26 weeks ended September 1, 2019.

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Liquidity and Capital Resources - Continuing Operations:

(amounts in thousands)	August 30,		March 1,
	2020		2020		Change
Cash and cash equivalents and marketable securities	$	118,690	$	122,355	$	(3,665	)
Working capital		128,766		136,487		(7,721	)

	26 Weeks Ended
(amounts in thousands)	August 30,			September 1,
	2020			2019			Change
Net cash provided by (used in) operating activities	$	6,321		$	(931	)	$	7,252
Net cash used in investing activities		(3,512	)		(41,067	)		37,555
Net cash used in financing activities		(5,720	)		(3,734	)		(1,986	)

Cash and Marketable Securities

Of the $118.7 million of cash and cash equivalents and marketable securities at August 30, 2020, $29.7 million was owned by one of the Company’s wholly owned foreign subsidiaries.

The change in cash and cash equivalents and marketable securities at August 30, 2020 compared to March 1, 2020 was the result of capital expenditures and dividends paid to shareholders partially offset by cash provided by operating activities and a number of additional factors. The significant changes in cash provided by operating activities were as follows:

● accounts receivable decreased by 33% at August 30, 2020 compared to March 1, 2020 primarily due to lower sales in the quarter ended August 30, 2020 compared to the fourth quarter of the 2020 fiscal year; 

● inventories decreased by 20% at August 30, 2020 compared to March 1, 2020 primarily due to lower sales and the timing of raw material purchases;

● prepaid expenses and other current assets decreased by 32% at August 30, 2020 compared to March 1, 2020 primarily due to a reduction of tax refunds;

● accounts payable decreased by 60% at August 30, 2020 compared to March 1, 2020 primarily due to the timing of vendor payments, raw material purchases from suppliers and lower construction in progress;

● accrued liabilities decreased by 18% at August 30, 2020 compared to March 1, 2020 primarily due to decreases in restructuring accruals and bonus accruals; and

23

● income taxes payable increased by 25% at August 30, 2020 compared to March 1, 2020 primarily due to the income tax provision for the 26 weeks ended August 30, 2020.

In addition, the Company paid $4.1 million in cash dividends in each of the 26-week periods ended August 30, 2020 and September 1, 2019.

Working Capital

The decrease in working capital at August 30, 2020 compared to March 1, 2020 was due principally to the decreases in accounts receivable, inventories, and prepaid and other current assets, an increase in income taxes payable and a decrease in cash and cash equivalents and marketable securities, partially offset by the decrease in accounts payable.

The Company's current ratio (the ratio of current assets to current liabilities) was 22.2 to 1.0 at August 30, 2020 compared to 16.7 to 1.0 at March 1, 2020.

Cash Flows

During the 26 weeks ended August 30, 2020, the Company's net earnings, before depreciation and amortization, stock-based compensation, amortization of bond premium and changes in operating assets and liabilities, were $6.3 million. During the same 26-week period, the Company expended $3.9 million for the purchase of property, plant and equipment, compared with $2.3 million during the 26 weeks ended September 1, 2019. The Company paid $4.1 million in cash dividends in each of the 26-week periods ended August 30, 2020 and September 1, 2019.

Other Liquidity Factors

The Company believes its financial resources will be sufficient, through the 12 months following the filing of this Form 10-Q Quarterly Report and for the foreseeable future thereafter, to provide for continued investment in working capital and property, plant and equipment and for general corporate purposes. The Company’s financial resources are also available for purchases of the Company's common stock, cash dividend payments, appropriate acquisitions and other expansions of the Company's business, including the expansion in Kansas.

The Company is not aware of any circumstances or events that are reasonably likely to occur that could materially affect its liquidity. The Company further believes its balance sheet and financial position to be very strong, and the Company believes it is well positioned to not only weather the impact of the COVID-19 Pandemic on its business, but to take advantage of the opportunities presented by it.

Contractual Obligations:

The Company’s contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of (i) operating lease commitments and (ii) commitments to purchase raw materials. The Company has no other long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than two standby letters of credit in the total amount of $170,000, to secure the Company’s obligations under its workers’ compensation insurance program.

24

Off-Balance Sheet Arrangements:

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

Critical Accounting Policies and Estimates:

The foregoing Discussion and Analysis of Financial Condition and Results of Operations is based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these Consolidated Financial Statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to sales allowances, allowances for doubtful accounts, inventories, valuation of long-lived assets, income taxes, contingencies and litigation, and employee benefit programs. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company’s critical accounting policies that are important to the Consolidated Financial Statements and that entail, to a significant extent, the use of estimates and assumptions and the application of management’s judgment are described in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in the Company’s Annual Report on Form 10-K for the fiscal year ended March 1, 2020. There have been no significant changes to such accounting policies during the 2021 fiscal year second quarter.

Contingencies:

The Company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters.

Factors That May Affect Future Results.

Certain portions of this Report which do not relate to historical financial information may be deemed to constitute forward-looking statements that are subject to various factors which could cause actual results to differ materially from the Company’s expectations or from results which might be projected, forecasted, estimated or budgeted by the Company in forward-looking statements. Such factors include, but are not limited to, general conditions in the aerospace industry, the Company’s competitive position, the status of the Company’s relationships with its customers, economic conditions in international markets, the cost and availability of raw materials, transportation and utilities, and the various factors set forth under the caption “Factors That May Affect Future Results” in Item 1 and in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended March 1, 2020.

25

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

The Company’s market risk exposure at August 30, 2020 is consistent with, and not greater than, the types of market risk and amount of exposures presented in the Annual Report on Form 10-K for the fiscal year ended March 1, 2020.

Item 4.  Controls and Procedures.

(a) Disclosure Controls and Procedures.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of August 30, 2020, the end of the quarterly fiscal period covered by this quarterly report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting.

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

26

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There have been no material changes in the risk factors as previously disclosed in the Company’s Form 10-K Annual Report for the fiscal year ended March 1, 2020.

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

The following table provides information with respect to shares of the Company’s common stock acquired by the Company during each month included in the Company’s 2020 fiscal year second quarter ended August 30, 2020.

Period	Total Number of Shares (or Units) Purchased		Average Price Paid Per Share (or Unit)		Total Number of Shares (or Units) Purchased As Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
June 1 - June 30		0	$	-		0
July 1 - July 30		0	$	-		0
July 31 - August 30		0	$	-		0
Total		0	$	-		0		1,394,015 (a)

(a) Aggregate number of shares available to be purchased by the  Company pursuant to share purchase authorizations announced on January 8, 2015 and March 10, 2016. Pursuant to such  authorizations, the Company is authorized to purchase its  shares from time to time on the open market or in  privately negotiated transactions.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

27

Item 5. Other Information.

None.

Item 6. Exhibits.

31.1 Certification of principal executive officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

31.2 Certification of principal financial officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

32.1 Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended August 30, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at August 30, 2020 (unaudited) and March 1, 2020; (ii) Consolidated Statements of Operations for the 13 weeks and 26 weeks ended August 30, 2020 and September 1, 2019 (unaudited); (iii) Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended August 30, 2020 and September 1, 2019 (unaudited); (iv) Consolidated Statements of Shareholders’ Equity at August 30, 2020 (unaudited) and September 1, 2019; and (v) Condensed Consolidated Statements of Cash Flows for the 13 weeks and 26 weeks ended August 30, 2020 and September 1, 2019 (unaudited). * +

*     Filed electronically herewith.

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

28

EXHIBIT INDEX

Exhibit No. -----------	Name ----
31.1	Certification of principal executive officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).
31.2	Certification of principal financial officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).
32.1	Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended August 30, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at August 30, 2020 (unaudited) and March 1, 2020; (ii) Consolidated Statements of Operations for the 13 weeks and 26 weeks ended August 30, 2020 and September 1, 2019 (unaudited); (iii) Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended August 30, 2020 and September 1, 2019 (unaudited); (iv) Consolidated Statements of Shareholders’ Equity at August 30, 2020 (unaudited) and September 1, 2019; and (v) Condensed Consolidated Statements of Cash Flows for the 13 weeks and 26 weeks ended August 30, 2020 and September 1, 2019 (unaudited). * +
*	Filed electronically herewith.
+	Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

29

SIGNATURES

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

	Park Aerospace Corp.
	(Registrant)
Date:  October 8, 2020	/s/ Brian E. Shore
	Brian E. Shore
	Chief Executive Officer
	(principal executive officer)
	/s/ P. Matthew Farabaugh
Date:  October 8, 2020	P. Matthew Farabaugh
	Senior Vice President and Chief Financial Officer
	(principal financial officer)
	(principal accounting officer)

30

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive Officer

Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)

I, Brian E. Shore, as Chief Executive Officer of Park Aerospace Corp., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended August 30, 2020 of Park Aerospace Corp.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 8, 2020
/s/	Brian E. Shore
Name:	Brian E. Shore
Title:	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Principal Financial Officer

Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)

I, P. Matthew Farabaugh, as Senior Vice President and Chief Financial Officer of Park Aerospace Corp., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended August 30, 2020 of Park Aerospace Corp.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 8, 2020
/s/	P. Matthew Farabaugh
Name:	P. Matthew Farabaugh
Title:	Senior Vice President and Chief Financial Officer

EX-32.1

 EXHIBIT 32.1

Certification of Principal Executive Officer Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Park Aerospace Corp. (the “Company”) for the quarterly period ended August 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Brian E. Shore, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/	Brian E. Shore
Name:	Brian E. Shore
Title:	Chief Executive Officer
Date:	October 8, 2020

EX-32.2

EXHIBIT 32.2

Certification of Principal Financial Officer Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Park Aerospace Corp. (the “Company”) for the quarterly period ended August 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), P. Matthew Farabaugh, as Senior Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/	P. Matthew Farabaugh
Name:	P. Matthew Farabaugh
Title:	Senior Vice President and Chief Financial Officer
Date:	October 8, 2020

XML

Document And Entity Information - shares	6 Months Ended
	Aug. 30, 2020	Oct. 02, 2020
Document Information [Line Items]
Entity Registrant Name	PARK Aerospace CORP
Entity Central Index Key	0000076267
Trading Symbol	pke
Current Fiscal Year End Date	--03-01
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		20,381,426
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Aug. 30, 2020
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Title of 12(b) Security	Common Stock, par value $.10 per share

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Aug. 30, 2020	Mar. 01, 2020
Current assets
Cash and cash equivalents	$ 2,287	$ 5,410	[1]
Marketable securities (Note 3)	116,403	116,945	[1]
Accounts receivable, less allowance for doubtful accounts of $81 and $73, respectively	7,270	10,925
Inventories (Note 4)	5,103	6,379	[1]
Prepaid expenses and other current assets	3,783	5,535	[1]
Total current assets	134,846	145,194	[1]
Property, plant and equipment, net	19,479	16,100	[1]
Operating right-of-use assets	341	420	[1]
Goodwill and other intangible assets	9,800	9,804	[1]
Other assets	257	268	[1]
Total assets	164,723	171,786	[1]
Current liabilities
Accounts payable	1,899	4,735	[1]
Operating lease liability (Note 5)	132	152	[1]
Accrued liabilities	1,408	1,709	[1]
Income taxes payable	2,641	2,111	[1]
Total current liabilities	6,080	8,707	[1]
Long-term operating lease liability (Note 5)	221	268	[1]
Non-current income taxes payable (Note 9)	14,303	15,986	[1]
Deferred income taxes (Note 9)	738	834	[1]
Other liabilities	4,421	4,316	[1]
Total liabilities	25,763	30,111	[1]
Commitments and contingencies (Note 12)			[1]
Shareholders' equity (Note 8)
Common stock	2,096	2,096	[1]
Additional paid-in capital	169,955	169,862	[1]
Accumulated deficit	(22,939)	(21,774)	[1]
Accumulated other comprehensive earnings	669	668	[1]
Stockholders' Equity, Including Treasury Stock	149,781	150,852	[1]
Less treasury stock, at cost	(10,821)	(9,177)	[1]
Total shareholders' equity	138,960	141,675	[1]
Total liabilities and shareholders' equity	$ 164,723	$ 171,786	[1]

[1] The balance sheet at March 1, 2020 has been derived from the audited consolidated finacial statements at that date.

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Aug. 30, 2020	Mar. 01, 2020
Accounts receivable, allowance for doubtful accounts	$ 81	$ 73

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 30, 2020	Sep. 01, 2019	Aug. 30, 2020	Sep. 01, 2019
Net sales	$ 9,250	$ 13,723	$ 21,463	$ 28,673
Cost of sales	6,612	9,910	15,151	20,056
Gross profit	2,638	3,813	6,312	8,617
Selling, general and administrative expenses	1,552	1,914	3,182	3,836
Earnings from continuing operations	1,086	1,899	3,130	4,781
Interest and other income	525	863	1,181	1,811
Earnings from continuing operations before income taxes	1,611	2,762	4,311	6,592
Income tax provision (Note 9)	460	710	1,188	1,826
Net earnings from continuing operations	1,151	2,052	3,123	4,766
(Loss) earnings from discontinued operations, net of tax (Note 11)	(197)	83	(212)	(44)
Net earnings	$ 954	$ 2,135	$ 2,911	$ 4,722
Basic:
Continuing operations (in dollars per share)	$ 0.06	$ 0.10	$ 0.15	$ 0.23
Discontinued operations (in dollars per share)	(0.01)	0	(0.01)	0
Basic earnings per share (in dollars per share)	$ 0.05	$ 0.10	$ 0.14	$ 0.23
Basic weighted average shares (in shares)	20,381	20,499	20,392	20,495
Diluted:
Continuing operations (in dollars per share)	$ 0.06	$ 0.10	$ 0.15	$ 0.23
Discontinued operations (in dollars per share)	(0.01)	0	(0.01)	0
Diluted earnings per share (in dollars per share)	$ 0.05	$ 0.10	$ 0.14	$ 0.23
Diluted weighted average shares (in shares)	20,433	20,601	20,447	20,593
Cash dividends, per share (in dollars per share)	$ 0.10	$ 0.10	$ 0.20	$ 0.20

XML

Consolidated Statements of Comprehensive Earnings (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 30, 2020	Sep. 01, 2019	Aug. 30, 2020	Sep. 01, 2019
Net earnings	$ 954	$ 2,135	$ 2,911	$ 4,722
Other comprehensive (loss) earnings, net of tax:
Other comprehensive (loss) earnings	(203)	193	1	539
Total comprehensive earnings	751	2,328	2,912	5,261
Gains on Marketable Securities [Member]
Other comprehensive (loss) earnings, net of tax:
Unrealized holding gains (losses) arising during the period	109	225	397	569
Less: reclassification adjustment for gains (losses) included in net earnings	(37)	(15)	(54)	(23)
Losses on Marketable Securities [Member]
Other comprehensive (loss) earnings, net of tax:
Unrealized holding gains (losses) arising during the period	(275)	(24)	(342)	(27)
Less: reclassification adjustment for gains (losses) included in net earnings		$ 7		$ 20

XML

Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock [Member]	Total
Balance	$ 2,096	$ 169,395	$ (2,605)	$ (22)	$ (9,853)
Balance (in shares) at Mar. 03, 2019	20,965,144				479,191
Balance at Mar. 03, 2019	$ 2,096	169,395	(2,605)	(22)	$ (9,853)
Net earnings			2,587
Unrealized gain (loss) on marketable securities, net of tax				346
Stock-based compensation		124
Cash dividends ($0.10 per share)			(2,049)
Outstanding options, exercised (in shares)					(6,200)
Stock options exercised		(56)			$ 127
Balance at Jun. 02, 2019	$ 2,096	169,463	(2,067)	324	$ (9,726)
Stock options exercised (in shares)					6,200
Balance (in shares) at Jun. 02, 2019	20,965,144				472,991
Balance	$ 2,096	169,463	(2,067)	324	$ (9,726)
Balance (in shares) at Mar. 03, 2019	20,965,144				479,191
Balance at Mar. 03, 2019	$ 2,096	169,395	(2,605)	(22)	$ (9,853)
Net earnings						$ 4,722
Balance at Sep. 01, 2019	$ 2,096	169,425	(1,982)	517	$ (9,253)
Balance (in shares) at Sep. 01, 2019	20,965,144				450,017
Balance	$ 2,096	169,425	(1,982)	517	$ (9,253)
Balance	$ 2,096	169,463	(2,067)	324	$ (9,726)
Balance (in shares) at Jun. 02, 2019	20,965,144				472,991
Balance at Jun. 02, 2019	$ 2,096	169,463	(2,067)	324	$ (9,726)
Net earnings			2,135			2,135
Unrealized gain (loss) on marketable securities, net of tax				193
Stock-based compensation		141
Cash dividends ($0.10 per share)			(2,050)
Outstanding options, exercised (in shares)					22,974
Stock options exercised		(179)			$ 473
Balance at Sep. 01, 2019	$ 2,096	169,425	(1,982)	517	$ (9,253)
Stock options exercised (in shares)					(22,974)
Balance (in shares) at Sep. 01, 2019	20,965,144				450,017
Balance	$ 2,096	169,425	(1,982)	517	$ (9,253)
Balance	2,096	169,425	(1,982)	517	(9,253)
Balance	$ 2,096	169,862	(21,774)	668	$ (9,177)	141,675	[1]
Balance (in shares) at Mar. 01, 2020	20,965,144				446,321
Balance at Mar. 01, 2020	$ 2,096	169,862	(21,774)	668	$ (9,177)	141,675	[1]
Net earnings			1,957
Unrealized gain (loss) on marketable securities, net of tax				204
Stock-based compensation		43
Repurchase of treasury shares (in shares)					137,397
Repurchase of treasury shares					$ (1,644)
Cash dividends ($0.10 per share)			(2,038)
Balance at May. 31, 2020	$ 2,096	169,905	(21,855)	872	$ (10,821)
Balance (in shares) at May. 31, 2020	20,965,144				583,718
Balance	$ 2,096	169,905	(21,855)	872	$ (10,821)	141,675	[1]
Balance (in shares) at Mar. 01, 2020	20,965,144				446,321
Balance at Mar. 01, 2020	$ 2,096	169,862	(21,774)	668	$ (9,177)	141,675	[1]
Net earnings						$ 2,911
Outstanding options, exercised (in shares)
Balance at Aug. 30, 2020	$ 2,096	169,955	(22,939)	669	$ (10,821)	$ 138,960
Stock options exercised (in shares)
Balance (in shares) at Aug. 30, 2020	20,965,144				583,718
Balance	$ 2,096	169,955	(22,939)	669	$ (10,821)	$ 141,675	[1]
Balance	$ 2,096	169,905	(21,855)	872	$ (10,821)
Balance (in shares) at May. 31, 2020	20,965,144				583,718
Balance at May. 31, 2020	$ 2,096	169,905	(21,855)	872	$ (10,821)
Net earnings			954			954
Unrealized gain (loss) on marketable securities, net of tax				(203)
Stock-based compensation		50
Cash dividends ($0.10 per share)			(2,038)
Balance at Aug. 30, 2020	$ 2,096	169,955	(22,939)	669	$ (10,821)	138,960
Balance (in shares) at Aug. 30, 2020	20,965,144				583,718
Balance	$ 2,096	169,955	(22,939)	669	$ (10,821)	138,960
Balance	$ 2,096	$ 169,955	$ (22,939)	$ 669	$ (10,821)	$ 138,960

[1] The balance sheet at March 1, 2020 has been derived from the audited consolidated finacial statements at that date.

XML

Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Aug. 30, 2020	May 31, 2020	Sep. 01, 2019	Jun. 02, 2019
Retained Earnings [Member]
Cash dividends, per share (in dollars per share)	$ 0.10	$ 0.10	$ 0.10	$ 0.10
Cash dividends, per share (in dollars per share)	$ 0.10		$ 0.10

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Aug. 30, 2020	Sep. 01, 2019
Cash flows from operating activities:
Net earnings from continuing operations	$ 3,123	$ 4,766
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	556	733
Stock-based compensation	93	265
Deferred income taxes	(96)	65
Amortization of bond premium	120	(52)
Changes in operating assets and liabilities	2,525	(6,708)
Net cash provided by (used in) operating activities - continuing operations	6,321	(931)
Net cash used in operating activities - discontinued operations	(212)	(44)
Net cash provided by (used in) operating activities	6,109	(975)
Cash flows from investing activities:
Purchase of property, plant and equipment	(3,935)	(2,254)
Purchases of marketable securities	(32,909)	(70,270)
Proceeds from sales and maturities of marketable securities	33,332	31,457
Net cash used in investing activities - continuing operations	(3,512)	(41,067)
Net cash used in investing activities - discontinued operations
Net cash used in investing activities	(3,512)	(41,067)
Cash flows from financing activities:
Dividends paid	(4,076)	(4,099)
Proceeds from exercise of stock options		365
Purchase of treasury stock	(1,644)
Net cash used in financing activities - continuing operations	(5,720)	(3,734)
Net cash used in financing activities - discontinued operations
Net cash used in financing activities	(5,720)	(3,734)
Decrease in cash and cash equivalents	(3,123)	(45,776)
Cash and cash equivalents, beginning of period	5,410	71,007
Cash and cash equivalents, end of period	2,287	25,231
Supplemental cash flow information:
Cash paid during the period for income taxes, net of refunds	$ 254	$ 6,981

XML

Note 1 - Consolidated Financial Statements

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1

.

CONSOLIDATED FINANCIAL STATEMENTS

The Condensed Consolidated Balance Sheet and the Consolidated Statements of Shareholders' Equity as of

August 30, 2020,

the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Earnings for the

13

weeks and

26

weeks ended

August 30, 2020

and

September 1, 2019,

and the Condensed Consolidated Statements of Cash Flows for the

26

weeks then ended have been prepared by Park Aerospace Corp. (the “Company”), without audit. In the opinion of management, these unaudited consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at

August 30, 2020

and the results of operations and cash flows for all periods presented. The Consolidated Statements of Operations are

not

necessarily indicative of the results to be expected for the full fiscal year or any subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form

10

-K for the fiscal year ended

March 1, 2020.

There have been

no

significant changes to such accounting policies during the

26

weeks ended

August 30, 2020.

XML

Note 2 - Fair Value Measurements

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Fair Value Disclosures [Text Block]

2

.

FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (

i.e

., the “exit price”) in an orderly transaction between market participants at the measurement date.

Fair value measurements are broken down into

three

levels based on the reliability of inputs as follows:

Level

1

inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level

2

inputs are inputs other than quoted prices included within Level

1

that are observable for the asset or liability, either directly or indirectly. Level

2

inputs include quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (

e.g.

, interest rates and yield curves observable at commonly quoted intervals or current market) and contractual prices for the underlying financial instrument, as well as other relevant economic measures.

Level

3

inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are

not

available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The fair value of the Company's cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying value due to their short-term nature. Certain assets and liabilities of the Company are required to be recorded at fair value on either a recurring or non-recurring basis. On a recurring basis, the Company records its marketable securities at fair value using Level

1

or Level

2

inputs (See Note

3

).

The Company's non-financial assets measured at fair value on a non-recurring basis include goodwill and any long-lived assets written down to fair value. To measure fair value of such assets, the Company uses Level

3

inputs consisting of techniques including an income approach and a market approach. The income approach is based on a discounted cash flow analysis and calculates the fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate. Assumptions used in the discounted cash flow analysis require the exercise of significant judgment, including judgment about appropriate discount rates, terminal values, growth rates and the amount and timing of expected future cash flows. With respect to goodwill, the Company

first

assesses qualitative factors to determine whether it is more likely than

not

that fair value is less than carrying value. If, based on that assessment, the Company believes it is more likely than

not

that fair value is less than carrying value, a goodwill impairment test is performed. There have been

no

changes in events or circumstances which required impairment charges to be recorded during the

13

weeks and

26

weeks ended

August 30, 2020.

XML

Note 3 - Marketable Securities

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

3

.

MARKETABLE SECURITIES

All marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, included in comprehensive earnings. Realized gains and losses, amortization of premiums and discounts, and interest and dividend income are included in interest and other income in the Consolidated Statements of Operations. The costs of securities sold are based on the specific identification method.

The following is a summary of available-for-sale securities:

	August 30, 2020
	Total		Level 1		Level 2		Level 3
U.S. Treasury and other  government securities	$	93,948	$	93,948	$	-	$	-
U.S. corporate debt securities		22,455		22,455		-		-
Total marketable securities	$	116,403	$	116,403	$	-	$	-

	March 1, 2020
	Total		Level 1		Level 2		Level 3
U.S. Treasury and other  government securities	$	101,390	$	101,390	$	-	$	-
U.S. corporate debt securities		15,555		15,555		-		-
Total marketable securities	$	116,945	$	116,945	$	-	$	-

The following table shows the amortized cost basis of, and gross unrealized gains and losses on, the Company's available-for-sale securities:

	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses
August 30, 2020:
U.S. Treasury and other government securities	$	93,211	$	762	$	25
U.S. corporate debt securities		22,345		119		9
Total marketable securities	$	115,556	$	881	$	34
March 1, 2020:
U.S. Treasury and other  government securities	$	100,626	$	764	$	-
U.S. corporate debt securities		15,473		82		-
Total marketable securities	$	116,099	$	846	$	-

The estimated fair values of such securities at

August 30, 2020

by contractual maturity are shown below:

Due in one year or less	$	45,917
Due after one year through five years		70,486
	$	116,403

XML

Note 4 - Inventories

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Inventory Disclosure [Text Block]

4

.

INVENTORIES

Inventories are stated at the lower of cost (

first

-in,

first

-out method) or net realizable value. The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company's products and market conditions. Work-in-process and finished goods inventories cost valuations include direct material costs as well as a portion of the Company's overhead expenses.  The Company's overhead expenses that are applied to its finished goods inventories are based on actual expenses related to the procurement, storage, shipment and production of the finished goods. Inventories consisted of the following:

	August 30,		March 1,
	2020		2020
Inventories:
Raw materials	$	3,883	$	5,319
Work-in-process		200		254
Finished goods		1,020		806
	$	5,103	$	6,379

XML

Note 5 - Leases

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

5.

L

EASES

The Company has operating leases related to land, office space, warehouse space and equipment. All of the Company's leases have been assessed to be operating leases. Renewal options are included in the lease term to the extent the Company is reasonably certain to exercise the option. The exercise of lease renewal options is at the Company's sole discretion. The incremental borrowing rate represents the Company's ability to borrow on a collateralized basis over a term similar to the lease term. The leases typically contain renewal options for periods ranging from

one

year to

ten

years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is

2068

assuming exercise of all applicable renewal options by the Company. The Company's existing leases are

not

subject to any restrictions or covenants which preclude its ability to pay dividends, obtain financing or exercise its available renewal options.

Future minimum lease payments under non-cancellable operating leases as of

August 30, 2020

are as follows:

Fiscal Year:
2021	$	76
2022		90
2023		61
2024		61
2025		-
Thereafter		161
Total undiscounted operating lease payments		449
Less imputed interest		(96	)
Present value of operating lease payments	$	353

The above payment schedule includes renewal options that the Company is reasonably likely to exercise. Leases with an initial term of

12

months or less are

not

recorded on the Company's balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the terms of the leases. The above payment schedule does

not

include lease payments of

$66

in

2021

for the Company's idle facility in Fullerton, California that have been accrued on the condensed consolidated balance sheets in accrued liabilities.

For the

13

weeks and

26

weeks ended

August 30, 2020,

the Company's operating lease expense was

$40

and

$80,

respectively. Cash payments of

$76

,

pertaining to operating leases, are reflected in the cash flow statement under cash flows from operating activities.

The following table sets forth the right-of-use assets and operating lease liabilities as of

August 30, 2020:

Operating right-of-use assets	$	341
Operating lease liabilities	$	132
Long-term operating lease liabilities		221
Total operating lease liabilities	$	353

The Company's weighted average remaining lease term for its operating leases is

6.1

years.

In

December 2018,

the Company's wholly-owned subsidiary Park Aerospace Technologies Corp. (“PATC”) entered into a Development Agreement with the City of Newton, Kansas and the Board of County Commissioners of Harvey County, Kansas.  Pursuant to this agreement, PATC agreed to construct and operate an additional manufacturing facility approximately

90,000

square feet in size for the design, development and manufacture of advanced composite materials and parts, structures and assemblies for aerospace. PATC further agreed to equip the facility through the purchase of machinery, equipment and furnishings and to create additional new full-time employment of specified levels during a

five

-year period.  In exchange for these agreements, the City and the County agreed to lease to PATC

three

acres of land at the Newton City/County Airport, in addition to the

eight

acres previously leased to PATC by the City and County.  The City and the County further agreed to provide financial and other assistance toward the construction of the additional facility as set forth in the Development Agreement. The Company estimates the total cost of the additional facility to be approximately

$18.0

million, and the Company expects to complete the construction of the additional facility in the beginning of

2021

calendar year. As of

August 30, 2020,

the Company had

$960

in equipment purchase obligations and

$11,198

of construction-in-progress related to the additional facility. On

July 16, 2019,

PATC was merged into the Company and ceased to exist, and the Company assumed the rights and obligations of PATC, including the rights and obligations of PATC under the Development Agreement.

XML

Note 6 - Stock-based Compensation

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

6

. STOCK-BASED COMPENSATION

As of

August 30, 2020,

the Company had a

2018

Stock Option Plan (the

“2018

Plan”) and

no

other stock-based compensation plan. The

2018

Plan was adopted by the Board of Directors of the Company on

May 8, 2018

and approved by the shareholders of the Company at the Annual Meeting of Shareholders of the Company on

July 24, 2018

and provides for the grant of options to purchase up to

800,000

shares of common stock of the Company. Prior to the

2018

Plan, the Company had the

2002

Stock Option Plan (the

“2002

Plan”) which had been approved by the Company's shareholders and provided for the grant of stock options to directors and key employees of the Company. All options granted under the

2018

Plan and

2002

Plan have exercise prices equal to the fair market value of the underlying common stock of the Company at the time of grant which, pursuant to the terms of such Plans, is the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date the option is granted. Options granted under the Plans become exercisable

25%

one

year after the date of grant, with an additional

25%

exercisable each succeeding anniversary of the date of grant, and expire

10

years after the date of grant. Upon termination of employment or service as a director, all options held by the optionee that have

not

previously become exercisable shall terminate and all other options held by such optionee

may

be exercised, to the extent exercisable on the date of such termination, for a limited time after such termination. Any shares of common stock subject to an option under the

2018

Plan which expire or are terminated unexercised as to such shares shall again become available for issuance under the

2018

Plan.

The

2002

Plan terminated on

May 21, 2018,

and authority to grant additional options under the

2002

Plan expired on that date. All options granted under the

2002

Plan will expire in

April 2028

or earlier.

During the

13

weeks and

26

weeks ended

August 30, 2020,

the Company granted options under the

2018

Plan to purchase a total of

3,000

and

132,100,

respectively, shares of common stock to its directors and certain of its employees. The future compensation expense to be recognized in earnings before income taxes is

$273

and will be recorded on a straight-line basis over the requisite service period. The weighted average fair value of the granted options was

$2.12

per share using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of

0.23%

-

0.42%;

expected volatility factor of

26.9%

-

30.0%;

expected dividend yield of

3.18%

-

3.49%;

and estimated option term of

4.3

-

7.6

years.

The risk-free interest rates were based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the estimated terms of the options at the date of the grant. Volatility factors were based on historical volatility of the Company's common stock. The expected dividend yields were based on the regular quarterly cash dividend per share most recently declared by the Company and on the exercise price of the options granted during the

13

weeks and

26

weeks ended

August 30, 2020.

The estimated term of the options was based on evaluations of the historical and expected future employee exercise behavior.

The following is a summary of option activity for the

26

weeks ended

August 30, 2020:

	Outstanding Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance, March 1, 2020		510,634		$	12.45			$	-
Granted		132,100			12.55
Exercised		-			-
Terminated or expired		(2,550	)		14.58
Balance, August 30, 2020		640,184		$	12.46		5.71	$	-
Vested and exercisable, August 30, 2020		427,397		$	11.88		3.94	$	-

XML

Note 7 - Earnings Per Share

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

7

.

EARNINGS PER SHARE

Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potentially dilutive securities outstanding during the period. Stock options are the only potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method.

The following table sets forth the calculation of basic and diluted earnings per share:

	13 Weeks Ended					26 Weeks Ended
	August 30, 2020			September 1, 2019		August 30, 2020			September 1, 2019
Net earnings - continuing operations	$	1,151		$	2,052	$	3,123		$	4,766
Net (loss) earnings - discontinued operations		(197	)		83		(212	)		(44	)
Net earnings	$	954		$	2,135	$	2,911		$	4,722
Weighted average common shares outstanding for basic EPS		20,381			20,499		20,392			20,495
Net effect of dilutive options		52			102		55			98
Weighted average shares outstanding for diluted EPS		20,433			20,601		20,447			20,593
Basic earnings per share - continuing operations	$	0.06		$	0.10	$	0.15		$	0.23
Basic (loss) earnings per share - discontinued operations		(0.01	)		0.00		(0.01	)		(0.00	)
Basic earnings per share	$	0.05		$	0.10	$	0.14		$	0.23
Diluted earnings per share - continuing operations	$	0.06		$	0.10	$	0.15		$	0.23
Diluted (loss) earnings per share - discontinued operations		(0.01	)		0.00		(0.01	)		(0.00	)
Diluted earnings per share	$	0.05		$	0.10	$	0.14		$	0.23

Potentially dilutive securities, which were

not

included in the computation of diluted earnings per share because either the effect would have been anti-dilutive or the options' exercise prices were greater than the average market price of the common stock, were

474,000

and

77,000

for the

13

weeks ended

August 30, 2020

and

September 1, 2019,

respectively, and

450,000

and

134,000,

respectively, for the

26

weeks ended

August 30, 2020

and

September 1, 2019,

respectively.

XML

Note 8 - Shareholders' Equity

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

8

.

SHAREHOLDERS

'

EQUITY

On

January 8, 2015,

the Company announced that its Board of Directors authorized the Company's purchase, on the open market and in privately negotiated transactions, of up to

1,250,000

shares of its common stock, representing approximately

6%

of the Company's

20,945,634

total outstanding shares as of the close of business on

January 7, 2015.

This authorization superseded all prior Board of Directors' authorizations to purchase shares of the Company's common stock.

On

March 10, 2016,

the Company announced that its Board of Directors authorized the Company's purchase, on the open market and in privately negotiated transactions, of up to

1,000,000

additional shares of its common stock, in addition to the unused prior authorization to purchase shares of the Company's common stock announced on

January 8, 2015.

As a result, the Company is authorized to purchase up to a total of

1,394,015

shares of its common stock, representing approximately

6.8%

of the Company's

20,381,426

total outstanding shares as of the close of business on

October 2, 2020.

The Company purchased

137,397

and

0

shares of its common stock during the

26

weeks ended

August 30, 2020

and

September 1, 2019,

respectively.

XML

Note 9 - Income Taxes

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9

.

INCOME TAXES

For the

13

weeks and

26

weeks ended

August 30, 2020,

the Company recorded income tax provisions from continuing operations of

$460

and

$1,188,

respectively, which included discrete income tax provisions of

$42

and

$84,

respectively. For the

13

weeks and

26

weeks ended

September 1, 2019,

the Company recorded income tax provisions from continuing operations of

$710

and

$1,826,

respectively.

The Company's effective tax rates for the

13

weeks and

26

weeks ended

August 30, 2020

were

28.6%

and

27.5%,

respectively, compared to

25.7%

and

27.7%,

respectively, in the comparable prior year periods. The effective tax rates for the

13

weeks and

26

weeks ended

August 30, 2020

were higher than the U.S. statutory rate of

21%

primarily due to state and local taxes and discrete income tax provisions for the accrual of interest related to unrecognized tax benefits. The effective rates for the

13

weeks and

26

weeks ended

September 1, 2019

were higher than the U.S. statutory rate of

21%

primarily due to state and local taxes, discrete income tax provisions for stock compensation and the accrual of interest related to unrecognized tax benefits.

Notwithstanding the U.S. taxation of the deemed repatriated earnings as a result of the mandatory

one

-time transition tax on the accumulated untaxed earnings of foreign subsidiaries of U.S. shareholders included in the

2017

Tax Cuts and Jobs Act, the Company intends to indefinitely invest approximately

$25

million of undistributed earnings outside of the U.S. If these future earnings are repatriated to the U.S., or if the Company determines such earnings will be remitted in the foreseeable future, the Company

may

be required to accrue U.S. deferred taxes.

XML

Note 10 - Geographic Regions

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Geographic Regions [Text Block]

1

0

.

GEOGRAPHIC REGIONS

The Company's products are sold to customers in North America, Asia and Europe. The Company's manufacturing facilities are located in Kansas. Sales are attributed to geographic regions based upon the region in which the materials were delivered to the customer. Sales between geographic regions were

not

significant.

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

	13 Weeks Ended				26 Weeks Ended
	August 30, 2020		September 1, 2019		August 30, 2020		September 1, 2019
Sales:
North America	$	8,636	$	12,887	$	20,382	$	27,078
Asia		115		157		304		408
Europe		499		679		777		1,187
Total sales	$	9,250	$	13,723	$	21,463	$	28,673

	August 30, 2020		March 1, 2020
Long-lived assets:
North America	$	28,306	$	24,942
Asia		1,571		1,650
Europe		-		-
Total long-lived assets	$	29,877	$	26,592

XML

Note 11 - Discontinued Operations

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

1

1

.

DISCONTINUED OPERATIONS

On

July 25, 2018,

the Company entered into a definitive agreement to sell its Electronics Business for

$145,000

in cash. The Company completed this transaction on

December 4, 2018.

The Company has classified the operating results of its Electronics Business, together with certain costs related to the transaction, as discontinued operations, net of tax, in the Consolidated Statements of Operations.

The following table shows the summary operating results of the discontinued operations:

	13 Weeks Ended (Unaudited)						26 Weeks Ended (Unaudited)
	August 30,			September 1,			August 30,			September 1,
	2020			2019			2020			2019
Net sales	$	-		$	-		$	-		$	-
Cost of sales		-			-			-			-
Gross profit		-			-			-			-
Selling, general and administrative expenses		-			95			-			231
Restructuring charges		264			82			284			115
Loss from discontinued operations		(264	)		(177	)		(284	)		(346	)
Other income		-			288			-			288
(Loss) earnings from discontinued operations before income taxes		(264	)		111			(284	)		(58	)
Income tax (benefit) provision		(67	)		28			(72	)		(14	)
Net (loss) earnings from discontinued operations	$	(197	)	$	83		$	(212	)	$	(44	)

During the

2018

fiscal year, the Company consolidated its Nelco Products, Inc. Business Unit located in Fullerton, California and its Neltec, Inc. Business Unit located in Tempe, Arizona. The Company estimates the remaining pre-tax charge in connection with the consolidation to be approximately

$136,

which the Company expects to incur primarily during the fiscal year ending

February 28, 2021.

The following table sets forth the charges and accruals related to the consolidation:

	Accrual March 1, 2020		Current Period Charges		Cash Payments			Non-Cash Charges		Accrual August 30, 2020		Total Expense Accrued to Date		Total Expected Costs
Facility Lease Costs	$	432	$	24	$	(389	)	$	-	$	67	$	2,953	$	3,079
Severance Costs		-		-		-			-		-		1,081		1,081
Equipment Removal		-		224		(224	)		-		-		810		816
Other		-		36		(36	)		-		-		963		967
Total Restructuring Charges	$	432	$	284	$	(649	)	$	-	$	67	$	5,807	$	5,943

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Note 12 - Contingencies

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Contingencies Disclosure [Text Block]

1

2

.

CONTINGENCIES

Litigation

 

The Company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves

may

change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. The Company believes that the ultimate disposition of such proceedings, lawsuits and claims will

not

have a material adverse effect on the liquidity, capital resources, business, consolidated results of operations or financial position of the Company.

Environmental Contingencies

The Company and certain of its subsidiaries have been named by the Environmental Protection Agency (the “EPA”) or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the “Superfund Act”) or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at

three

sites.

Under the Superfund Act and similar state laws, all parties who

may

have contributed any waste to a hazardous waste disposal site or contaminated area identified by the EPA or comparable state agency

may

be jointly and severally liable for the cost of cleanup. Generally, these sites are locations at which numerous persons disposed of hazardous waste. In the case of the Company's subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at waste sites by various companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its subsidiaries have been accused of or charged with any wrongdoing or illegal acts in connection with any such sites. The Company believes it maintains an effective and comprehensive environmental compliance program.

The insurance carriers which provided general liability insurance coverage to the Company and its subsidiaries for the years during which the Company's subsidiaries' waste was disposed at these

three

sites have in the past reimbursed the Company and its subsidiaries for

100%

of their legal defense and remediation costs associated with

two

of these sites.

The Company does

not

record environmental liabilities and related legal expenses for which the Company believes that it and its subsidiaries have general liability insurance coverage for the years during which the Company's subsidiaries' waste was disposed at

two

sites for which certain subsidiaries of the Company have been named as potentially responsible parties. Pursuant to such general liability insurance coverage,

three

insurance carriers reimburse the Company and its subsidiaries for

100%

of the legal defense and remediation costs associated with the

two

sites.

Included in selling, general and administrative expenses are charges for actual expenditures and accruals, based on estimates, for certain environmental matters described above. The Company accrues estimated costs associated with known environmental matters when such costs can be reasonably estimated and when the outcome appears probable. The Company believes that the ultimate disposition of known environmental matters will

not

have a material adverse effect on the Company's results of operations, cash flows or financial position.

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Note 13 - Accounting Pronouncements

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

1

3

.

A

CCOUNT

I

NG

P

RONOUNCEMENTS

Recently

Adopted

In

August 2018,

the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")

No.

2018

-

13,

Fair Value Measurement (Topic

820

):

Disclosure

Framework—Changes to the Disclosure Requirements for Fair Value Measurement

. This ASU modifies the disclosure requirements for fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level

1

and Level

2

of the fair value hierarchy and the policy for timing of such transfers. This ASU expands the disclosure requirements for Level

3

fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). This ASU is effective for the Company's fiscal year ending

February 28, 2021

and for the interim periods within that year. The Company adopted this ASU in the

first

quarter of its

2021

fiscal year. The adoption of ASU

2018

-

13

did

not

have an impact on the Company's consolidated financial statements and disclosures.

In

June 2016,

the FASB issued ASU

No.

2016

-

13,

Financial Instruments – Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

.  This ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.  This ASU is effective for the Company's fiscal year ending

February 28, 2021

and for the interim periods within that year. The Company adopted this ASU in the

first

quarter of its

2021

fiscal year. The adoption of ASU

2016

-

13

did

not

have an impact on the Company's consolidated financial statements and disclosures.

Recently Issued

In

December 2019,

the FASB issued ASU

No.

2019

-

12,

Income Taxes (Topic

740

): Simplifying the Accounting for Income Taxes

.  The changes simplify the accounting for a number of topics, some of which are narrow. Some of the proposed amendments eliminate specific exceptions to the general principles of income tax accounting while other changes clarify a handful of narrow issues within the broad topic of income tax accounting. The amendments in ASU

2019

-

12

are effective for public business entities for fiscal years beginning after

December 15, 2020,

and interim periods within those fiscal years. For all other entities, the requirements are effective for fiscal years beginning after

December 15, 2021

and interim periods within fiscal years beginning after

December 15, 2022.

Early adoption is permitted for public business entities for periods for which financial statements have

not

yet been issued. The Company is currently evaluating the potential impact of adopting this guidance on its consolidated financial statements and disclosures.

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Note 14 - COVID-19 Pandemic

6 Months Ended

Aug. 30, 2020

Notes to Financial Statements

Effect of COVID-19 Pandemic [Text Block]

14.

COVID-

19

PANDEMIC

In

December 2019,

a novel strain of coronavirus was reported in Wuhan, China and has since spread worldwide, including to the United States, posing public health risks that have reached pandemic proportions (the “COVID-

19

Pandemic”).

The COVID-

19

Pandemic and resultant global economic crisis had significant impacts on the Company's results of operations and cash flow for the

13

weeks and

26

weeks ended

August 30, 2020.

The COVID-

19

Pandemic and crisis had significant impacts on the markets the Company sells into, particularly the commercial and business aircraft markets. As a result, the Company has experienced a significant reduction in sales and backlog.

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Note 3 - Marketable Securities (Tables)

6 Months Ended

Aug. 30, 2020

Notes Tables

Debt Securities, Available-for-sale [Table Text Block]

	August 30, 2020
	Total		Level 1		Level 2		Level 3
U.S. Treasury and other  government securities	$	93,948	$	93,948	$	-	$	-
U.S. corporate debt securities		22,455		22,455		-		-
Total marketable securities	$	116,403	$	116,403	$	-	$	-

	March 1, 2020
	Total		Level 1		Level 2		Level 3
U.S. Treasury and other  government securities	$	101,390	$	101,390	$	-	$	-
U.S. corporate debt securities		15,555		15,555		-		-
Total marketable securities	$	116,945	$	116,945	$	-	$	-

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	Amortized Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses
August 30, 2020:
U.S. Treasury and other government securities	$	93,211	$	762	$	25
U.S. corporate debt securities		22,345		119		9
Total marketable securities	$	115,556	$	881	$	34
March 1, 2020:
U.S. Treasury and other  government securities	$	100,626	$	764	$	-
U.S. corporate debt securities		15,473		82		-
Total marketable securities	$	116,099	$	846	$	-

Investments Classified by Contractual Maturity Date [Table Text Block]

Due in one year or less	$	45,917
Due after one year through five years		70,486
	$	116,403

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Note 4 - Inventories (Tables)

6 Months Ended

Aug. 30, 2020

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	August 30,		March 1,
	2020		2020
Inventories:
Raw materials	$	3,883	$	5,319
Work-in-process		200		254
Finished goods		1,020		806
	$	5,103	$	6,379

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Note 5 - Leases (Tables)

6 Months Ended

Aug. 30, 2020

Notes Tables

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Fiscal Year:
2021	$	76
2022		90
2023		61
2024		61
2025		-
Thereafter		161
Total undiscounted operating lease payments		449
Less imputed interest		(96	)
Present value of operating lease payments	$	353

Schedule of Right-of-use Assets and Operating Lease Liabilities [Table Text Block]

Operating right-of-use assets	$	341
Operating lease liabilities	$	132
Long-term operating lease liabilities		221
Total operating lease liabilities	$	353

XML

Note 6 - Stock-based Compensation (Tables)

6 Months Ended

Aug. 30, 2020

Notes Tables

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Outstanding Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance, March 1, 2020		510,634		$	12.45			$	-
Granted		132,100			12.55
Exercised		-			-
Terminated or expired		(2,550	)		14.58
Balance, August 30, 2020		640,184		$	12.46		5.71	$	-
Vested and exercisable, August 30, 2020		427,397		$	11.88		3.94	$	-

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Note 7 - Earnings Per Share (Tables)

6 Months Ended

Aug. 30, 2020

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	13 Weeks Ended					26 Weeks Ended
	August 30, 2020			September 1, 2019		August 30, 2020			September 1, 2019
Net earnings - continuing operations	$	1,151		$	2,052	$	3,123		$	4,766
Net (loss) earnings - discontinued operations		(197	)		83		(212	)		(44	)
Net earnings	$	954		$	2,135	$	2,911		$	4,722
Weighted average common shares outstanding for basic EPS		20,381			20,499		20,392			20,495
Net effect of dilutive options		52			102		55			98
Weighted average shares outstanding for diluted EPS		20,433			20,601		20,447			20,593
Basic earnings per share - continuing operations	$	0.06		$	0.10	$	0.15		$	0.23
Basic (loss) earnings per share - discontinued operations		(0.01	)		0.00		(0.01	)		(0.00	)
Basic earnings per share	$	0.05		$	0.10	$	0.14		$	0.23
Diluted earnings per share - continuing operations	$	0.06		$	0.10	$	0.15		$	0.23
Diluted (loss) earnings per share - discontinued operations		(0.01	)		0.00		(0.01	)		(0.00	)
Diluted earnings per share	$	0.05		$	0.10	$	0.14		$	0.23

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Note 10 - Geographic Regions (Tables)

6 Months Ended

Aug. 30, 2020

Notes Tables

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	13 Weeks Ended				26 Weeks Ended
	August 30, 2020		September 1, 2019		August 30, 2020		September 1, 2019
Sales:
North America	$	8,636	$	12,887	$	20,382	$	27,078
Asia		115		157		304		408
Europe		499		679		777		1,187
Total sales	$	9,250	$	13,723	$	21,463	$	28,673

	August 30, 2020		March 1, 2020
Long-lived assets:
North America	$	28,306	$	24,942
Asia		1,571		1,650
Europe		-		-
Total long-lived assets	$	29,877	$	26,592

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Note 11 - Discontinued Operations (Tables)

6 Months Ended

Aug. 30, 2020

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

	13 Weeks Ended (Unaudited)						26 Weeks Ended (Unaudited)
	August 30,			September 1,			August 30,			September 1,
	2020			2019			2020			2019
Net sales	$	-		$	-		$	-		$	-
Cost of sales		-			-			-			-
Gross profit		-			-			-			-
Selling, general and administrative expenses		-			95			-			231
Restructuring charges		264			82			284			115
Loss from discontinued operations		(264	)		(177	)		(284	)		(346	)
Other income		-			288			-			288
(Loss) earnings from discontinued operations before income taxes		(264	)		111			(284	)		(58	)
Income tax (benefit) provision		(67	)		28			(72	)		(14	)
Net (loss) earnings from discontinued operations	$	(197	)	$	83		$	(212	)	$	(44	)

Restructuring and Related Costs [Table Text Block]

	Accrual March 1, 2020		Current Period Charges		Cash Payments			Non-Cash Charges		Accrual August 30, 2020		Total Expense Accrued to Date		Total Expected Costs
Facility Lease Costs	$	432	$	24	$	(389	)	$	-	$	67	$	2,953	$	3,079
Severance Costs		-		-		-			-		-		1,081		1,081
Equipment Removal		-		224		(224	)		-		-		810		816
Other		-		36		(36	)		-		-		963		967
Total Restructuring Charges	$	432	$	284	$	(649	)	$	-	$	67	$	5,807	$	5,943

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Note 3 - Marketable Securities - Summary of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Aug. 30, 2020	Mar. 01, 2020
Available-for-sale securities	$ 116,403	$ 116,945
Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities	116,403	116,945
Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities
Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities
US Treasury and Government [Member]
Available-for-sale securities	93,948	101,390
US Treasury and Government [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities	93,948	101,390
US Treasury and Government [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities
US Treasury and Government [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities
Debt Security, Corporate, US [Member]
Available-for-sale securities	22,455	15,555
Debt Security, Corporate, US [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities	22,455	15,555
Debt Security, Corporate, US [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities
Debt Security, Corporate, US [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities

XML

Note 3 - Marketable Securities - Summary of Unrealized Gains and Losses on Available-for-sale Securities (Details) - USD ($) $ in Thousands	Aug. 30, 2020	Mar. 01, 2020
Amortized cost basis	$ 115,556	$ 116,099
Gross unrealized gains	881	846
Gross unrealized losses	34
US Treasury and Government [Member]
Amortized cost basis	93,211	100,626
Gross unrealized gains	762	764
Gross unrealized losses	25
Debt Security, Corporate, US [Member]
Amortized cost basis	22,345	15,473
Gross unrealized gains	119	82
Gross unrealized losses	$ 9

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Note 3 - Marketable Securities - Estimated Fair Value of Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Aug. 30, 2020	Mar. 01, 2020
Due in one year or less	$ 45,917
Due after one year through five years	70,486
Debt Securities, Available-for-sale, Total	$ 116,403	$ 116,945

XML

Note 4 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands	Aug. 30, 2020	Mar. 01, 2020
Raw materials	$ 3,883	$ 5,319
Work-in-process	200	254
Finished goods	1,020	806
Inventory, Net, Total	$ 5,103	$ 6,379	[1]

[1] The balance sheet at March 1, 2020 has been derived from the audited consolidated finacial statements at that date.

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Note 5 - Leases (Details Textual) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Dec. 31, 2018 USD ($) ft²	Aug. 30, 2020 USD ($)	Aug. 30, 2020 USD ($)
Operating Lease, Expense		$ 40	$ 80
Operating Lease, Payments		$ 76	$ 76
Operating Lease, Weighted Average Remaining Lease Term (Year)		6 years 36 days	6 years 36 days
Additional Manufacturing Facility [Member]
Area of Land (Square Foot) | ft²	90,000
Construction in Progress Estimated Cost	$ 18,000
Purchase Obligation, Total		$ 960	$ 960
Construction in Progress, Gross		11,198	11,198
Accounts Payable and Accrued Liabilities [Member]
Lessee, Operating Lease, Liability, to be Paid, Remainder of Fiscal Year		$ 66	$ 66
Minimum [Member]
Lessee, Operating Lease, Renewal Term (Year)		1 year	1 year
Maximum [Member]
Lessee, Operating Lease, Renewal Term (Year)		10 years	10 years

XML

Note 5 - Leases - Future Minimum Lease Payments (Details) $ in Thousands	Aug. 30, 2020 USD ($)
Present value of operating lease payments	$ 353
Leases with Renewal Options [Member]
2021	76
2022	90
2023	61
2024	61
2025
Thereafter	161
Total undiscounted operating lease payments	449
Less imputed interest	(96)
Present value of operating lease payments	$ 353

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Note 5 - Leases - Schedule of Right-of-use Assets and Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Aug. 30, 2020	Mar. 01, 2020	[1]
Operating right-of-use assets	$ 341	$ 420
Operating lease liabilities	132	152
Long-term operating lease liabilities	221	$ 268
Total operating lease liabilities	$ 353

[1] The balance sheet at March 1, 2020 has been derived from the audited consolidated finacial statements at that date.

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Note 6 - Stock-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended	6 Months Ended
	Jul. 24, 2018	Aug. 30, 2020	Aug. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)			132,100
Share-based Payment Arrangement, Option [Member]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total		$ 273	$ 273
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)			$ 2.12
The 2018 Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)	800,000
Percentage of Stock Options, Exercisable One Year From Date of Grant	25.00%
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)	1 year
Percentage of Stock Options Exercisable On Each Succeeding Year from Date of Grant	25.00%
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year)	10 years
The 2018 Stock Option Plan [Member] | Directors and Certain of Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares)		3,000	132,100
The 2018 Stock Option Plan [Member] | Directors and Certain of Employees [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			0.23%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate			26.90%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			3.18%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term (Year)			4 years 109 days
The 2018 Stock Option Plan [Member] | Directors and Certain of Employees [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			0.42%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate			30.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate			3.49%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term (Year)			7 years 219 days

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Note 6 - Stock-based Compensation - Option Activity (Details)	6 Months Ended
	Aug. 30, 2020 USD ($) $ / shares shares	Mar. 01, 2020 USD ($)
Outstanding options (in shares) | shares	510,634
Balance, weighted average exercise price (in dollars per share) | $ / shares	$ 12.45
Outstanding aggregate intrinsic value | $
Outstanding options, granted (in shares) | shares	132,100
Granted, weighted average exercise price (in dollars per share) | $ / shares	$ 12.55
Outstanding options, exercised (in shares) | shares
Exercised, weighted average exercise price (in dollars per share) | $ / shares
Outstanding options, terminated or expired (in shares) | shares	(2,550)
Terminated or expired, weighted average exercise price (in dollars per share) | $ / shares	$ 14.58
Outstanding options (in shares) | shares	640,184
Balance, weighted average exercise price (in dollars per share) | $ / shares	$ 12.46
Balance, weighted average remaining contractual term (Year)	5 years 259 days
Outstanding options, vested and exercisable (in shares) | shares	427,397
Vested and exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 11.88
Vested and exercisable, weighted average remaining contractual term (Year)	3 years 343 days
Vested and exercisable, aggregate intrinsic value | $

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Note 7 - Earnings Per Share (Details Textual) - shares	3 Months Ended		6 Months Ended
	Aug. 30, 2020	Sep. 01, 2019	Aug. 30, 2020	Sep. 01, 2019
Share-based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	474,000	77,000	450,000	134,000

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Note 7 - Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 30, 2020	Sep. 01, 2019	Aug. 30, 2020	Sep. 01, 2019
Net earnings - continuing operations	$ 1,151	$ 2,052	$ 3,123	$ 4,766
Net (loss) earnings - discontinued operations	(197)	83	(212)	(44)
Net earnings	$ 954	$ 2,135	$ 2,911	$ 4,722
Weighted average common shares outstanding for basic EPS (in shares)	20,381	20,499	20,392	20,495
Net effect of dilutive options (in shares)	52	102	55	98
Weighted average shares outstanding for diluted EPS (in shares)	20,433	20,601	20,447	20,593
Basic earnings per share - continuing operations (in dollars per share)	$ 0.06	$ 0.10	$ 0.15	$ 0.23
Basic (loss) earnings per share - discontinued operations (in dollars per share)	(0.01)	0	(0.01)	0
Basic earnings per share (in dollars per share)	0.05	0.10	0.14	0.23
Diluted earnings per share - continuing operations (in dollars per share)	0.06	0.10	0.15	0.23
Diluted (loss) earnings per share - discontinued operations (in dollars per share)	(0.01)	0	(0.01)	0
Diluted earnings per share (in dollars per share)	$ 0.05	$ 0.10	$ 0.14	$ 0.23

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Note 8 - Shareholders' Equity (Details Textual) - shares		6 Months Ended
	Mar. 10, 2016	Aug. 30, 2020	Sep. 01, 2019	Oct. 02, 2020	Jan. 08, 2015	Jan. 07, 2015
Stock Repurchase Program, Number of Shares Authorized to be Repurchased (in shares)					1,250,000
Stock Repurchase Program, Percentage of Outstanding Shares Authorized to be Repurchased						6.00%
Common Stock, Shares, Outstanding, Ending Balance (in shares)						20,945,634
Stock Repurchase Program, Number of Additional Shares Authorized to be Repurchased (in shares)	1,000,000
Stock Repurchased During Period, Shares (in shares)		137,397	0
Subsequent Event [Member]
Stock Repurchase Program, Percentage of Outstanding Shares Authorized to be Repurchased				6.80%
Common Stock, Shares, Outstanding, Ending Balance (in shares)				20,381,426
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased (in shares)				1,394,015

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Note 9 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 30, 2020	Sep. 01, 2019	Aug. 30, 2020	Sep. 01, 2019	Mar. 01, 2020
Income Tax Expense (Benefit), Total	$ 460	$ 710	$ 1,188	$ 1,826
Income Tax Expense (Benefit), Discrete Amount	$ 42		$ 84
Effective Income Tax Rate Reconciliation, Percent, Total	28.60%	25.70%	27.50%	27.70%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent		21.00%		21.00%
Undistributed Earnings, Basic, Total					$ 25,000

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Note 10 - Geographic Regions - Financial Information by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 30, 2020	Sep. 01, 2019	Aug. 30, 2020	Sep. 01, 2019	Mar. 01, 2020
Net sales	$ 9,250	$ 13,723	$ 21,463	$ 28,673
Long-lived assets	29,877		29,877		$ 26,592
North America [Member]
Net sales	8,636	12,887	20,382	27,078
Long-lived assets	28,306		28,306		24,942
Asia [Member]
Net sales	115	157	304	408
Long-lived assets	1,571		1,571		1,650
Europe [Member]
Net sales	499	$ 679	777	$ 1,187
Long-lived assets

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Note 11 - Discontinued Operations (Details Textual) - USD ($) $ in Thousands	Aug. 30, 2020	Dec. 04, 2018
Consolidation of Nelco Products, Inc. and Neltec, Inc. [Member]
Restructuring and Related Cost, Expected Cost Remaining	$ 136
Electronics Business [Member] | Discontinued Operations, Disposed of by Sale [Member]
Disposal Group, Including Discontinued Operation, Consideration		$ 145,000

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Note 11 - Discontinued Operations - Summary of Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 30, 2020	Sep. 01, 2019	Aug. 30, 2020	Sep. 01, 2019
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses		95		231
Restructuring charges	264	82	284	115
Loss from discontinued operations	(264)	(177)	(284)	(346)
Other income		288		288
(Loss) earnings from discontinued operations before income taxes	(264)	111	(284)	(58)
Income tax (benefit) provision	(67)	28	(72)	(14)
Net (loss) earnings from discontinued operations	$ (197)	$ 83	$ (212)	$ (44)

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Note 11 - Discontinued Operations - Restructuring Charges (Details) - Consolidation of Nelco Products, Inc. and Neltec, Inc. [Member] $ in Thousands	6 Months Ended
	Aug. 30, 2020 USD ($)
Accrued, Beginning Balance	$ 432
Current Period Charges	284
Cash Payments	(649)
Non-Cash Charges
Accrued, Ending Balance	67
Total Costs Accrued to Date	5,807
Total Expected Costs	5,943
Facility Lease Costs [Member]
Accrued, Beginning Balance	432
Current Period Charges	24
Cash Payments	(389)
Non-Cash Charges
Accrued, Ending Balance	67
Total Costs Accrued to Date	2,953
Total Expected Costs	3,079
Employee Severance [Member]
Accrued, Beginning Balance
Current Period Charges
Cash Payments
Non-Cash Charges
Accrued, Ending Balance
Total Costs Accrued to Date	1,081
Total Expected Costs	1,081
Equipment Removal [Member]
Accrued, Beginning Balance
Current Period Charges	224
Cash Payments	(224)
Non-Cash Charges
Accrued, Ending Balance
Total Costs Accrued to Date	810
Total Expected Costs	816
Other Restructuring [Member]
Accrued, Beginning Balance
Current Period Charges	36
Cash Payments	(36)
Non-Cash Charges
Accrued, Ending Balance
Total Costs Accrued to Date	963
Total Expected Costs	$ 967

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Note 12 - Contingencies (Details Textual) $ in Thousands	6 Months Ended
	Aug. 30, 2020 USD ($)
Number of Sites of Company or Subsidiaries That Have Been Named for Potential Environmental Remediation Liability	3
Percentage of Legal Defense and Remediation Costs Associated with Sites Reimbursed by Insurance Carriers	100.00%
Number of Units Covered Under General Liability Insurance Coverage	2
Accrual for Environmental Loss Contingencies, Ending Balance	$ 0
Number of Insurance Carriers	3