0001437749-21-000341.txt : 20210107 0001437749-21-000341.hdr.sgml : 20210107 20210107131947 ACCESSION NUMBER: 0001437749-21-000341 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 63 CONFORMED PERIOD OF REPORT: 20201129 FILED AS OF DATE: 20210107 DATE AS OF CHANGE: 20210107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARK AEROSPACE CORP CENTRAL INDEX KEY: 0000076267 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 111734643 STATE OF INCORPORATION: NY FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04415 FILM NUMBER: 21513719 BUSINESS ADDRESS: STREET 1: 48 S. SERVICE ROAD STREET 2: SUITE 300 CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 6314653600 MAIL ADDRESS: STREET 1: 48 SOUTH SERVICE ROAD STREET 2: SUITE 300 CITY: MELVILLE STATE: NY ZIP: 11747 FORMER COMPANY: FORMER CONFORMED NAME: PARK ELECTROCHEMICAL CORP DATE OF NAME CHANGE: 19920703 10-Q 1 pke20201129_10q.htm FORM 10-Q pke20201129_10q.htm
 

 

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 November 29, 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 Incorporation or Organization) (I.R.S. Employer 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 January 4, 2021.

 

 

 

 
 

PARK AEROSPACE CORP. AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

   

Page

Number

PART I.

FINANCIAL INFORMATION:

 

     

Item 1.

Financial Statements

 
     
 

Condensed Consolidated Balance Sheets November 29, 2020 (Unaudited) and March 1, 2020

3

     
 

Consolidated Statements of Operations 13 weeks and 39 weeks ended November 29, 2020 and December 1, 2019 (Unaudited)

4

     
 

Consolidated Statements of Comprehensive Earnings 13 weeks and 39 weeks ended November 29, 2020 and December 1, 2019 (Unaudited)

5

     
 

Consolidated Statements of Shareholders’ Equity November 29, 2020 and December 1, 2019  (Unaudited)

6

     
 

Condensed Consolidated Statements of Cash Flows 39 weeks ended November 29, 2020 and  December 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

28

     

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)


   

November 29,

2020

(Unaudited)

   

March 1,

2020*

 
                 

ASSETS

               

Current assets

               

Cash and cash equivalents

  $ 3,789     $ 5,410  

Marketable securities (Note 3)

    113,177       116,945  

Accounts receivable, less allowance for doubtful accounts of $85 and $73, respectively

    8,372       10,925  

Inventories (Note 4)

    4,712       6,379  

Prepaid expenses and other current assets

    3,842       5,535  

Total current assets

    133,892       145,194  
                 

Property, plant and equipment, net

    20,481       16,100  

Operating right-of-use assets (Note 5)

    304       420  

Goodwill and other intangible assets

    9,799       9,804  

Other assets

    160       268  

Total assets

  $ 164,636     $ 171,786  
                 

LIABILITIES AND SHAREHOLDERS' EQUITY

               

Current liabilities

               

Accounts payable

  $ 3,338     $ 4,735  

Operating lease liability (Note 5)

    113       152  

Accrued liabilities

    1,510       1,709  

Income taxes payable

    2,242       2,111  

Total current liabilities

    7,203       8,707  
                 

Long-term operating lease liability (Note 5)

    206       268  

Non-current income taxes payable (Note 9)

    14,303       15,986  

Deferred income taxes (Note 9)

    953       834  

Other liabilities

    4,476       4,316  

Total liabilities

    27,141       30,111  
                 

Commitments and contingencies (Note 12)

               
                 

Shareholders' equity (Note 8)

               

Common stock

    2,096       2,096  

Additional paid-in capital

    170,004       169,862  

Accumulated deficit

    (24,056 )     (21,774 )

Accumulated other comprehensive earnings

    272       668  
      148,316       150,852  

Less treasury stock, at cost

    (10,821 )     (9,177 )

Total shareholders' equity

    137,495       141,675  

Total liabilities and shareholders' equity

  $ 164,636     $ 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)

   

39 Weeks Ended (Unaudited)

 
                                 
   

November 29,

   

December 1,

   

November 29,

   

December 1,

 
   

2020

   

2019

   

2020

   

2019

 
                                 

Net sales

  $ 10,372     $ 15,847     $ 31,835     $ 44,520  

Cost of sales

    7,819       10,825       22,970       30,881  

Gross profit

    2,553       5,022       8,865       13,639  

Selling, general and administrative expenses

    1,536       1,949       4,718       5,785  

Earnings from continuing operations

    1,017       3,073       4,147       7,854  

Interest and other income

    389       802       1,570       2,613  

Earnings from continuing operations before income taxes

    1,406       3,875       5,717       10,467  

Income tax provision (Note 9)

    369       1,069       1,557       2,895  

Net earnings from continuing operations

    1,037       2,806       4,160       7,572  

Loss from discontinued operations, net of tax (Note 11)

    (116 )     (360 )     (328 )     (404 )

Net earnings

  $ 921     $ 2,446     $ 3,832     $ 7,168  
                                 

Earnings (loss) per share (Note 7)

                               

Basic:

                               

Continuing operations

  $ 0.05     $ 0.14     $ 0.20     $ 0.37  

Discontinued operations

    -       (0.02 )     (0.01 )     (0.02 )

Basic earnings per share

  $ 0.05     $ 0.12     $ 0.19     $ 0.35  

Basic weighted average shares

    20,381       20,518       20,388       20,503  
                                 

Diluted:

                               

Continuing operations

  $ 0.05     $ 0.14     $ 0.20     $ 0.37  

Discontinued operations

    -       (0.02 )     (0.01 )     (0.02 )

Diluted earnings per share

  $ 0.05     $ 0.12     $ 0.19     $ 0.35  

Diluted weighted average shares

    20,434       20,617       20,442       20,601  
                                 

Dividends declared per share

  $ 0.10     $ 0.10     $ 0.30     $ 0.30  

 

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)

   

39 Weeks Ended (Unaudited)

 
   

November 29,

   

December 1,

   

November 29,

   

December 1,

 
   

2020

   

2019

   

2020

   

2019

 
                                 

Net earnings

  $ 921     $ 2,446     $ 3,832     $ 7,168  

Other comprehensive (loss) earnings, net of tax:

                               

Unrealized gains on marketable securities:

                               

Unrealized holding gains arising during the period

    19       24       416       594  

Less: reclassification adjustment for gains included in net earnings

    (32 )     (1 )     (86 )     (24 )

Unrealized losses on marketable securities:

                               

Unrealized holding losses arising during the period

    (384 )     (248 )     (726 )     (274 )

Less: reclassification adjustment for losses included in net earnings

    -       15       -       33  

Other comprehensive (loss) earnings

    (397 )     (210 )     (396 )     329  

Total comprehensive earnings

  $ 524     $ 2,236     $ 3,436     $ 7,497  

 

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 )

Net earnings

    -       -       -       921       -       -       -  

Unrealized loss on marketable securities, net of tax

    -       -       -       -       (397 )     -       -  

Stock-based compensation

    -       -       49       -       -       -       -  

Cash dividends ($0.10 per share)

    -       -       -       (2,038 )     -       -       -  

Balance, November 29, 2020

    20,965,144     $ 2,096     $ 170,004     $ (24,056 )   $ 272       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 )

Net earnings

    -       -       -       2,446       -       -       -  

Unrealized gain on marketable securities, net of tax

    -       -       -       -       (210 )     -       -  

Stock options exercised

    -       -       (22 )     -       -       (2,812 )     58  

Stock-based compensation

    -       -       139       -       -       -       -  

Cash dividends ($0.10 per share)

    -       -       -       (2,051 )     -       -       -  
Balance, December 1, 2019      20,965,144     $ 2,096     $ 169,542     $ (1,587 )   $ 307       447,205     $ (9,195 )

 

See Notes to Consolidated Financial Statements (Unaudited).

 

6

 

 

PARK AEROSPACE CORP. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

 


 

   

39 Weeks Ended (Unaudited)

 
   

November 29,

   

December 1,

 
   

2020

   

2019

 

Cash flows from operating activities:

               

Net earnings from continuing operations

  $ 4,160     $ 7,572  

Adjustments to reconcile net earnings to net cash provided by operating activities:

               

Depreciation and amortization

    870       1,142  

Stock-based compensation

    142       404  

Deferred income taxes

    119       103  

Amortization of bond premium

    266       (36 )

Changes in operating assets and liabilities

    3,053       (6,492 )

Net cash provided by operating activities - continuing operations

    8,610       2,693  

Net cash used in operating activities - discontinued operations

    (328 )     (404 )

Net cash provided by operating activities

    8,282       2,289  
                 

Cash flows from investing activities:

               

Purchase of property, plant and equipment

    (5,251 )     (4,363 )

Purchases of marketable securities

    (62,876 )     (100,454 )

Proceeds from sales and maturities of marketable securities

    65,982       43,950  

Net cash used in investing activities - continuing operations

    (2,145 )     (60,867 )

Net cash used in investing activities - discontinued operations

    -       -  

Net cash used in investing activities

    (2,145 )     (60,867 )
                 

Cash flows from financing activities:

               

Dividends paid

    (6,114 )     (6,150 )

Proceeds from exercise of stock options

    -       401  

Purchase of treasury stock

    (1,644 )     -  

Net cash used in financing activities - continuing operations

    (7,758 )     (5,749 )

Net cash used in financing activities - discontinued operations

    -       -  

Net cash used in financing activities

    (7,758 )     (5,749 )
                 

Decrease in cash and cash equivalents

    (1,621 )     (64,327 )

Cash and cash equivalents, beginning of period

    5,410       71,007  

Cash and cash equivalents, end of period

  $ 3,789     $ 6,680  
                 
                 

Supplemental cash flow information:

               

Cash paid during the period for income taxes, net of refunds

  $ 717     $ 7,614  

 

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 November 29, 2020, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Earnings for the 13 weeks and 39 weeks ended November 29, 2020 and December 1, 2019, and the Condensed Consolidated Statements of Cash Flows for the 39 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 November 29, 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 39 weeks ended November 29, 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 39 weeks ended November 29, 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:

 

   

November 29, 2020

 
   

Total

   

Level 1

   

Level 2

   

Level 3

 
                                 

U.S. Treasury and other government securities

  $ 93,071     $ 93,071     $ -     $ -  

U.S. corporate debt securities

    20,106       20,106       -       -  

Total marketable securities

  $ 113,177     $ 113,177     $ -     $ -  

 

 

   

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

 
                         

November 29, 2020:

                       

U.S. Treasury and other government securities

  $ 92,783     $ 497     $ 209  

U.S. corporate debt securities

    20,050       74       18  

Total marketable securities

  $ 112,833     $ 571     $ 227  
                         

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 November 29, 2020 by contractual maturity are shown below:

 

Due in one year or less

  $ 74,868  

Due after one year through five years

    38,309  
    $ 113,177  

 

 

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:

 

   

November 29,

   

March 1,

 
   

2020

   

2020

 
                 

Inventories:

               
Raw materials   $ 3,175     $ 5,319  

Work-in-process

    150       254  

Finished goods

    1,387       806  
    $ 4,712     $ 6,379  

 

10

 

 

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 November 29, 2020 are as follows:

 

Fiscal Year:

       

2021

  $ 38  

2022

    90  

2023

    61  

2024

    61  

2025

    -  

Thereafter

    161  

Total undiscounted operating lease payments

    411  

Less imputed interest

    (92 )

Present value of operating lease payments

  $ 319  

 

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.

 

For the 13 weeks and 39 weeks ended November 29, 2020, the Company’s operating lease expense was $40 and $120, respectively. Cash payments of $114, 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 November 29, 2020:

 

Operating right-of-use assets

  $ 304  
         

Operating lease liabilities

  $ 113  

Long-term operating lease liabilities

    206  

Total operating lease liabilities

  $ 319  

 

The Company’s weighted average remaining lease term for its operating leases is 6.25 years.

 

11

 

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 2021 calendar year. As of November 29, 2020, the Company had $1,033 in equipment purchase obligations and $12,390 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 November 29, 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 also provided for the grant of stock options to purchase shares 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 39 weeks ended November 29, 2020, the Company granted options under the 2018 Plan to purchase a total of 0 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.

 

12

 

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 39 weeks ended November 29, 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 39 weeks ended November 29, 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             $ 480  

Granted

    132,100       12.55                  

Exercised

    -       -                  

Terminated or expired

    (5,850 )     12.88                  

Balance, November 29, 2020

    636,884     $ 12.46       5.44     $ 592  

Vested and exercisable, November 29, 2020

    427,709     $ 11.88       3.69     $ 646  

 

 

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

   

39 Weeks Ended

 
   

November 29,
2020

   

December 1,
2019

   

November 29,
2020

   

December 1,
2019

 
                                 

Net earnings - continuing operations

  $ 1,037     $ 2,806     $ 4,160     $ 7,572  

Net loss - discontinued operations

    (116 )     (360 )     (328 )     (404 )

Net earnings

  $ 921     $ 2,446     $ 3,832     $ 7,168  
                                 

Weighted average common shares outstanding for basic EPS

    20,381       20,518       20,388       20,503  

Net effect of dilutive options

    53       99       54       98  

Weighted average shares outstanding for diluted EPS

    20,434       20,617       20,442       20,601  
                                 

Basic earnings per share - continuing operations

  $ 0.05     $ 0.14     $ 0.20     $ 0.37  

Basic loss per share - discontinued operations

    0.00       (0.02 )     (0.01 )     (0.02 )

Basic earnings per share

  $ 0.05     $ 0.12     $ 0.19     $ 0.35  
                                 

Diluted earnings per share - continuing operations

  $ 0.05     $ 0.14     $ 0.20     $ 0.37  

Diluted loss per share - discontinued operations

    0.00       (0.02 )     (0.01 )     (0.02 )

Diluted earnings per share

  $ 0.05     $ 0.12     $ 0.19     $ 0.35  

 

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 471,000 and 76,000 for the 13 weeks ended November 29, 2020 and December 1, 2019, respectively, and 457,000 and 115,000, respectively, for the 39 weeks ended November 29, 2020 and December 1, 2019, respectively.

 

13

 

 

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 January 4, 2021.

 

The Company purchased 137,397 and 0 shares of its common stock during the 39 weeks ended November 29, 2020 and December 1, 2019, respectively.

 

 

9. INCOME TAXES

 

For the 13 weeks and 39 weeks ended November 29, 2020, the Company recorded income tax provisions from continuing operations of $369 and $1,557, respectively, which included discrete income tax provisions of $44 and $126, respectively. For the 13 weeks and 39 weeks ended December 1, 2019, the Company recorded income tax provisions from continuing operations of $1,069 and $2,895, respectively.

 

The Company’s effective tax rates for the 13 weeks and 39 weeks ended November 29, 2020 were 26.3% and 27.2%, respectively, compared to 27.6% and 27.7%, respectively, in the comparable prior year periods. The effective tax rates for the 13 weeks and 39 weeks ended November 29, 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 tax rates for the 13 weeks and 39 weeks ended December 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.

 

 

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.

 

14

 

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

 

   

13 Weeks Ended

   

39 Weeks Ended

 
   

November 29,
2020

   

December 1,
2019

   

November 29,
2020

   

December 1,
2019

 
                                 

Sales:

                               
North America   $ 9,863     $ 14,469     $ 30,245     $ 41,546  

Asia

    195       473       499       882  

Europe

    314       905       1,091       2,092  

Total sales

  $ 10,372     $ 15,847     $ 31,835     $ 44,520  

 

 

   

November 29,
2020

   

March 1,

2020

 

Long-lived assets:

               
North America   $ 29,215     $ 24,942  

Asia

    1,529       1,650  

Europe

    -       -  

Total long-lived assets

  $ 30,744     $ 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.

 

15

 

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

 

   

13 Weeks Ended (Unaudited)

   

39 Weeks Ended (Unaudited)

 
                                 
   

November 29,

   

December 1,

   

November 29,

   

December 1,

 
   

2020

   

2019

   

2020

   

2019

 
                                 

Net sales

  $ -     $ -     $ -     $ -  

Cost of sales

    -       -       -       -  

Gross profit

    -       -       -       -  

Selling, general and administrative expenses

    8       -       8       231  

Restructuring charges

    143       484       427       599  

Loss from discontinued operations

    (151 )     (484 )     (435 )     (830 )

Other income

    -       -       -       288  

Loss from discontinued operations before income taxes

    (151 )     (484 )     (435 )     (542 )

Income tax benefit

    (35 )     (124 )     (107 )     (138 )

Net loss from discontinued operations

  $ (116 )   $ (360 )   $ (328 )   $ (404 )

 

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 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
November 29,

2020

   

Total

Expense

Accrued to

Date

   

Total

Expected

Costs

 

Facility Lease Costs

  $ 432     $ 151     $ (580 )   $ -     $ 3     $ 3,080     $ 3,080  

Severance Costs

    -       -       -       -       -       1,081       1,081  

Equipment Removal

    -       229       (224 )     -       5       815       815  

Other

    -       47       (47 )     -       -       963       963  

Total Restructuring Charges

  $ 432     $ 427     $ (851 )   $ -     $ 8     $ 5,939     $ 5,939  

 

 

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.

 

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.

 

16

 

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.

 

17

 

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. 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 39 weeks ended November 29, 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.

 

18

 

 

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 jets, 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 SigmaStrutTM and AlphaStrutTM 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 39 weeks ended November 29, 2020 were $10.4 million and $31.8 million, respectively, compared to $15.8 million and $44.5 million, respectively, in the 13 weeks and 39 weeks ended December 1, 2019.

 

The Company’s gross profit margins from continuing operations, measured as percentages of sales, were 24.6% and 27.8%, respectively, in the 13 weeks and 39 weeks ended November 29, 2020 compared to 31.7% and 30.6%, respectively, in the 13 weeks and 39 weeks ended December 1, 2019.

 

The Company’s earnings from continuing operations before income taxes and net earnings from continuing operations decreased 63.7% and 63.0%, respectively, in the 13 weeks ended November 29, 2020 compared to the 13 weeks ended December 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 45.4% and 45.1%, respectively, in the 39 weeks ended November 29, 2020 compared to the 39 weeks ended December 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.

 

19

 

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 November 29, 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

           

39 Weeks Ended

         

(amounts in thousands, except per

 

November 29,

   

December 1,

   

%

   

November 29,

   

December 1,

   

%

 
share amounts)  

2020

   

2019

   

Change

   

2020

   

2019

   

Change

 
                                                 

Net sales

  $ 10,372     $ 15,847       (35 )%   $ 31,835     $ 44,520       (28 )%

Cost of sales

    7,819       10,825       (28 )%     22,970       30,881       (26 )%

Gross profit

    2,553       5,022       (49 )%     8,865       13,639       (35 )%

Selling, general and administrative expenses

    1,536       1,949       (21 )%     4,718       5,785       (18 )%

Earnings from continuing operations

    1,017       3,073       (67 )%     4,147       7,854       (47 )%

Interest and other income

    389       802       (51 )%     1,570       2,613       (40 )%

Earnings from continuing operations before income taxes

    1,406       3,875       (64 )%     5,717       10,467       (45 )%

Income tax provision

    369       1,069       (65 )%     1,557       2,895       (46 )%

Net earnings from continuing operations

    1,037       2,806       (63 )%     4,160       7,572       (45 )%

Loss from discontinued operations, net of tax

    (116 )     (360 )     (68 )%     (328 )     (404 )     (19 )%

Net earnings

  $ 921     $ 2,446       (62 )%   $ 3,832     $ 7,168       (47 )%
                                                 

Earnings (loss) per share:

                                               

Basic:

                                               

Continuing operations

  $ 0.05     $ 0.14       (64 )%   $ 0.20     $ 0.37       (46 )%

Discontinued operations

    -       (0.02 )     (100 )%     (0.01 )     (0.02 )     (50 )%

Basic earnings per share

  $ 0.05     $ 0.12       (58 )%   $ 0.19     $ 0.35       (46 )%
                                                 

Diluted:

                                               

Continuing operations

  $ 0.05     $ 0.14       (64 )%   $ 0.20     $ 0.37       (46 )%

Discontinued operations

    -       (0.02 )     (100 )%     (0.01 )     (0.02 )     (50 )%

Diluted earnings per share

  $ 0.05     $ 0.12       (58 )%   $ 0.19     $ 0.35       (46 )%

 

Net Sales

 

The Company’s total net sales from continuing operations worldwide in the 13 weeks and 39 weeks ended November 29, 2020 decreased to $10.4 million and $31.8 million, respectively, from $15.8 million and $44.5 million, respectively, in the 13 weeks and 39 weeks ended December 1, 2019. The decrease in sales was principally due to the lower sales to customers servicing the commercial and business aircraft markets.

 

20

 

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. Consequently, the programs the Company’s materials feed into have experienced reduced manufacturing rates and the Company has also experienced order push-outs and cancellations.

 

Gross Profit

 

The Company’s gross profit from continuing operations in the 13 weeks ended November 29, 2020 was lower than its gross profit from continuing operations in the prior year’s comparable period. The Company’s gross profit from continuing operations as a percentage of sales for the Company’s worldwide operations in the 13 weeks ended November 29, 2020 decreased to 24.6% from 31.7% in the 13 weeks ended December 1, 2019. The lower gross profit margin from continuing operations for the 13 weeks ended November 29, 2020 compared to the 13 weeks ended December 1, 2019 was principally a result of lower sales, an unfavorable sales mix and the partially fixed nature of overhead expenses in the 13 weeks ended November 29, 2020 compared to the 13 weeks ended December 1, 2019.

 

The Company’s gross profit from continuing operations in the 39 weeks ended November 29, 2020 was lower than its gross profit from continuing operations in the prior year’s comparable period, and gross profit from continuing operations as a percentage of sales of the Company’s worldwide operations in the 39 weeks ended November 29, 2020 decreased to 27.8% from 30.6%, in the 39 weeks ended December 1, 2019. The lower gross profit margin from continuing operations for the 39 weeks ended November 29, 2020 compared to the 39 weeks ended December 1, 2019 was principally a result of lower sales, and the partially fixed nature of overhead expenses in the 39 weeks ended November 29, 2020 compared to the 39 weeks ended December 1, 2019, partially offset by decreased direct labor and supplies expenses.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses from continuing operations decreased by $413,000 and $1.1 million, respectively, during the 13 weeks and 39 weeks ended November 29, 2020, or by 21.2% and 18.4%, respectively, compared to last fiscal year's comparable periods, and these expenses, measured as a percentage of sales from continuing operations, were 14.8% in both the 13 weeks and 39 weeks ended November 29, 2020 compared to 12.3% and 13.0%, respectively, in the 13 weeks and 39 weeks ended December 1, 2019. The decreases in such expenses during the 13 weeks and 39 weeks ended November 29, 2020 were 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 $49,000 and $142,000, respectively, for the 13 weeks and 39 weeks ended November 29, 2020 compared to stock option expenses of $139,000 and $404,000, respectively, for the 13 weeks and 39 weeks ended December 1, 2019.

 

Earnings from Continuing Operations

 

For the reasons set forth above, the Company’s earnings from continuing operations were $1.0 million and $4.1 million, respectively, for the 13 weeks and 39 weeks ended November 29, 2020 compared to $3.1 million and $7.9 million, respectively, for the 13 weeks and 39 weeks ended December 1, 2019.

 

21

 

 Interest and Other Income

 

Interest and other income from continuing operations was $389,000 and $1.6 million, respectively, for the 13 weeks and 39 weeks ended November 29, 2020 compared to $802,000 and $2.6 million, respectively, for last fiscal year's comparable periods. Interest income decreased 51.5% and 39.9%, respectively, for the 13 weeks and 39 weeks ended November 29, 2020 primarily as a result of lower average balances of marketable securities held by the Company in the 13 weeks and 39 weeks ended November 29, 2020 compared to last fiscal year's comparable periods, and lower weighted average interest rates. During the 13 weeks and 39 weeks ended November 29, 2020, the Company earned interest income principally from its investments, which consisted primarily of short-term instruments and money market funds.

 

Income Tax Provision

 

For the 13 weeks and 39 weeks ended November 29, 2020, the Company recorded income tax provisions from continuing operations of $369,000 and $1.6 million, respectively, which included a discrete income tax provision of $126,000 pertaining to the accrual of interest related to unrecognized tax benefits. For the 13 weeks and 39 weeks ended December 1, 2019, the Company recorded income tax provisions from continuing operations of $1.1 million and $2.9 million, respectively, which included a discrete income tax provision of $223,000 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 39 weeks ended November 29, 2020 were 26.3% and 27.2%, respectively, compared to 27.6% and 27.7%, respectively, in the comparable prior year periods. The effective tax rates for the 13 weeks and 39 weeks ended November 29, 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 tax rates for the 13 weeks and 39 weeks ended December 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 39 weeks ended November 29, 2020 were $1.0 million and $4.1 million, respectively, compared to net earnings from continuing operations of $2.8 million and $7.6 million, respectively, for the 13 weeks and 39 weeks ended December 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 Company’s vacated facility in Fullerton, California in the 13 weeks and 39 weeks ended November 29, 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 39 weeks ended December 1, 2019.

 

22

 

Basic and Diluted Earnings Per Share

 

In the 13 weeks and 39 weeks ended November 29, 2020, basic and diluted earnings per share from continuing operations were $0.05 and $0.20, respectively. This compared to basic and diluted earnings per share from continuing operations of $0.14 and $0.37, respectively, in the 13 weeks and 39 weeks ended December 1, 2019. The net impact of the tax benefit described above decreased basic and diluted earnings per share by $0.02 for the 39 weeks ended December 1, 2019.

 

Liquidity and Capital Resources - Continuing Operations:

 

 

(amounts in thousands)

 

November 29,

   

March 1,

         
   

2020

   

2020

   

Change

 
                         

Cash and cash equivalents and marketable securities

  $ 116,966     $ 122,355     $ (5,389 )

Working capital

    126,689       136,487       (9,798 )

 

 

   

39 Weeks Ended

 

(amounts in thousands)

 

November 29,

   

December 1,

         
   

2020

   

2019

   

Change

 
                         

Net cash provided by operating activities

  $ 8,610     $ 2,693     $ 5,917  

Net cash used in investing activities

    (2,145 )     (60,867 )     58,722  

Net cash used in financing activities

    (7,758 )     (5,749 )     (2,009 )

 

Cash and Marketable Securities

 

Of the $117.0 million of cash and cash equivalents and marketable securities at November 29, 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 November 29, 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 23% at November 29, 2020 compared to March 1, 2020 primarily due to lower sales in the quarter ended November 29, 2020 compared to the fourth quarter of the 2020 fiscal year;

 

 

inventories decreased by 26% at November 29, 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 31% at November 29, 2020 compared to March 1, 2020 primarily due to a reduction of tax refunds;

 

23

 

 

accounts payable decreased by 30% at November 29, 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 12% at November 29, 2020 compared to March 1, 2020 primarily due to decreases in restructuring accruals and bonus accruals; and

 

 

income taxes payable increased by 6% at November 29, 2020 compared to March 1, 2020 primarily due to the income tax provision for the 39 weeks ended November 29, 2020.

 

In addition, the Company paid $6.1 million in cash dividends in each of the 39-week periods ended November 29, 2020 and December 1, 2019.

 

Working Capital

 

The decrease in working capital at November 29, 2020 compared to March 1, 2020 was due principally to the decreases in accounts receivable, inventories, and prepaid expenses 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 18.6 to 1.0 at November 29, 2020 compared to 16.7 to 1.0 at March 1, 2020.

 

Cash Flows

 

During the 39 weeks ended November 29, 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 $8.6 million. During the same 39-week period, the Company expended $5.3 million for the purchase of property, plant and equipment, compared with $4.4 million during the 39 weeks ended December 1, 2019. The Company paid $6.1 million in cash dividends in each of the 39-week periods ended November 29, 2020 and December 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 withstand the impact of the COVID-19 Pandemic on its business, but also to take advantage of the opportunities presented by it.

 

24

 

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.

 

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 third 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 November 29, 2020 is consistent with, and not greater than, the types of market risk and amount of exposures presented in the Company’s 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 November 29, 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 2021 fiscal year third quarter ended November 29, 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

                           

August 31 - September 29

    0     $ -       0    
                           

September 30 - October 29

    0     $ -       0    
                           

October 30 - November 29

    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.

 

27

 

Item 4.          Mine Safety Disclosures.

 

None.

 

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 November 29, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at November 29, 2020 (unaudited) and March 1, 2020; (ii) Consolidated Statements of Operations for the 13 weeks and 39 weeks ended November 29, 2020 and December 1, 2019 (unaudited); (iii) Consolidated Statements of Comprehensive Earnings for the 13 weeks and 39 weeks ended November 29, 2020 and December 1, 2019 (unaudited); (iv) Consolidated Statements of Shareholders’ Equity at November 29, 2020 (unaudited) and December 1, 2019; and (v) Condensed Consolidated Statements of Cash Flows for the 39 weeks ended November 29, 2020 and December 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 November 29, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at November 29, 2020 (unaudited) and March 1, 2020; (ii) Consolidated Statements of Operations for the 13 weeks and 39 weeks ended November 29, 2020 and December 1, 2019 (unaudited); (iii) Consolidated Statements of Comprehensive Earnings for the 13 weeks and 39 weeks ended November 29, 2020 and December 1, 2019 (unaudited); (iv) Consolidated Statements of Shareholders’ Equity at November 29, 2020 (unaudited) and December 1, 2019; and (v) Condensed Consolidated Statements of Cash Flows for the 39 weeks ended November 29, 2020 and December 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)  
       
       

 

 

 

 

  

 

/s/ Brian E. Shore

 

Date: January 7, 2021 

 

Brian E. Shore 

 

 

 

Chief Executive Officer 

 

    (principal executive officer)  
       
       
       
    /s/ P. Matthew Farabaugh   
Date: January 7, 2021   P. Matthew Farabaugh  
    Senior Vice President and Chief Financial Officer    
    (principal financial officer)  
    (principal accounting officer)  

 

30
EX-31.1 2 ex_219567.htm EXHIBIT 31.1 ex_219567.htm

 

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 November 29, 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:      January 7, 2021

 

 

 

/s/           Brian E. Shore                       

Name:    Brian E. Shore

Title:      Chief Executive Officer

 

 
EX-31.2 3 ex_219568.htm EXHIBIT 31.2 ex_219568.htm

 

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 November 29, 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:      January 7, 2021

 

 

 

/s/          P. Matthew Farabaugh                                                    

Name:   P. Matthew Farabaugh

Title:     Senior Vice President and Chief Financial Officer

 

 
EX-32.1 4 ex_219569.htm EXHIBIT 32.1 ex_219569.htm

 

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 November 29, 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:    January 7, 2021

 

 
EX-32.2 5 ex_219570.htm EXHIBIT 32.2 ex_219570.htm

 

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 November 29, 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:    January 7, 2021

 

 
EX-101.INS 6 pke-20201129.xml XBRL INSTANCE DOCUMENT false --02-28 Q3 2021 2020-11-29 10-Q 0000076267 20381426 Yes false Non-accelerated Filer Yes PARK Aerospace CORP false true Common Stock, par value $.10 per share pke 18000000 143000 484000 427000 599000 <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font: inherit;">14.</div></div><div style="display: inline; font-weight: bold;"> </div><div style="display: inline; font-weight: bold;">COVID-<div style="display: inline; font-style: italic; font: inherit;">19</div> PANDEMIC</div></div> <div style=" font-family: 'Times New Roman', Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">In <div style="display: inline; font-style: italic; font: inherit;"> December 2019, </div>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 &#x201c;COVID-<div style="display: inline; font-style: italic; font: inherit;">19</div> Pandemic&#x201d;).</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">The COVID-<div style="display: inline; font-style: italic; font: inherit;">19</div> Pandemic and resultant global economic crisis had significant impacts on the Company's results of operations and cash flow for the <div style="display: inline; font-style: italic; font: inherit;">13</div> weeks and <div style="display: inline; font-style: italic; font: inherit;">39</div> weeks ended <div style="display: inline; font-style: italic; font: inherit;"> November 29, 2020. </div>The COVID-<div style="display: inline; font-style: italic; font: inherit;">19</div> 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.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&nbsp;</div></div> <div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font: inherit;">1</div></div><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font: inherit;">0</div></div><div style="display: inline; font-weight: bold;">. </div><div style="display: inline; font-weight: bold;">GEOGRAPHIC REGIONS</div><div style="display: inline; font-weight: bold;"> </div></div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">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 <div style="display: inline; font-style: italic; font: inherit;">not</div> significant.</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&nbsp;</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Financial information regarding the Company's continuing operations by geographic region is as follows:</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&nbsp;</div> <div> <table border="0" cellpadding="0" cellspacing="0" style="; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px; min-width: 700px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="6" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); border-top: thin solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">13 Weeks Ended</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="6" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); border-top: thin solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">39 Weeks Ended</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">November 29,<br /> 2020</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">December 1,<br /> 2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">November 29,<br /> 2020</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td colspan="2" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-weight: bold;">December 1,<br /> 2019</div></div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom;"> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> <td>&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td colspan="1" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><div style="display: inline; font-weight: bold;">Sales:</div></div> </td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><div style="display: inline; font-weight: bold;">&nbsp;</div></td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td colspan="1" style="padding-left: 9pt;">North America</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">9,863</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">14,469</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">30,245</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">41,546</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td colspan="1" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 9pt; text-align: left;">Asia</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">195</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">473</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">499</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font: inherit;">882</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td colspan="1" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt 0pt 0pt 9pt; text-align: left;">Europe</div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">314</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">905</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">1,091</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&nbsp;</td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font: inherit;">2,092</div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px;">&nbsp;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 44.6%;"> <div style=" font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; margin-left: 18pt;"><div style="display: inline; font-weight: bold;">Total sales</div></div> </td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-weight: bold;">$</div></td> <td style="width: 9%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-weight: bold;"><div style="display: inline; font-style: italic; font: inherit;">10,372</div></div></td> <td nowrap="nowrap" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&nbsp;</td> <td style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);"><div style="display: inline; font-weight: bold;">$</div></td>