UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ________ to__________
Commission file number
PARK AEROSPACE CORP.
(Exact Name of Registrant as Specified in Its Charter)
| | |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
| | |
| (Address of Principal Executive Offices) | (Zip Code) |
(
(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 |
| | | |
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.
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).
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 ☐
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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
PARK AEROSPACE CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
| PART I. |
FINANCIAL INFORMATION: |
Page Number |
| Item 1. |
Financial Statements |
|
| Condensed Consolidated Balance Sheets August 29, 2021 (Unaudited) and February 28, 2021 |
4 |
|
| Consolidated Statements of Operations 13 weeks and 26 weeks ended August 29, 2021 and August 30, 2020 (Unaudited) |
5 |
|
| Consolidated Statements of Comprehensive Earnings 13 weeks and 26 weeks ended August 29, 2021 and August 30, 2020 (Unaudited) |
6 |
|
| Consolidated Statements of Shareholders’ Equity August 29, 2021 and August 30, 2020 (Unaudited) |
7 |
|
| Condensed Consolidated Statements of Cash Flows 26 weeks ended August 29, 2021 and August 30, 2020 (Unaudited |
8 |
|
| Notes to Condensed Consolidated Financial Statements (Unaudited) |
9 |
|
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 |
| Factors That May Affect Future Results |
26 |
|
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
26 |
| Item 4. |
Controls and Procedures |
26 |
| PART II. |
OTHER INFORMATION: |
|
| Item 1. |
Legal Proceedings |
27 |
| Item 1A. |
Risk Factors |
27 |
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
27 |
| Item 3. |
Defaults Upon Senior Securities |
27 |
| Item 4. |
Mine Safety Disclosures |
27 |
| Item 5. |
Other Information |
28 |
| Item 6. |
Exhibits |
28 |
| EXHIBIT INDEX |
29 |
|
| SIGNATURES |
30 |
|
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
PARK AEROSPACE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
| August 29, 2021 | February 28, 2021* | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable securities (Note 3) | ||||||||
| Accounts receivable, less allowance for doubtful accounts of $ and $, respectively | ||||||||
| Inventories (Note 4) | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Operating right-of-use assets (Note 5) | ||||||||
| Goodwill and other intangible assets | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Operating lease liability (Note 5) | ||||||||
| Accrued liabilities | ||||||||
| Income taxes payable | ||||||||
| Total current liabilities | ||||||||
| Long-term operating lease liability (Note 5) | ||||||||
| Non-current income taxes payable (Note 10) | ||||||||
| Deferred income taxes (Note 10) | ||||||||
| Other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 13) | ||||||||
| Shareholders' equity (Note 8) | ||||||||
| Common stock | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Less treasury stock, at cost | ( | ) | ( | ) | ||||
| Total shareholders' equity | ||||||||
| Total liabilities and shareholders' equity | $ | $ | ||||||
| * The balance sheet at February 28, 2021 has been derived from the audited consolidated financial statements at that date. |
See Notes to Condensed Consolidated Financial Statements (Unaudited).
PARK AEROSPACE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
| 13 Weeks Ended (Unaudited) | 26 Weeks Ended (Unaudited) | |||||||||||||||
| August 29, | August 30, | August 29, | August 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Restructuring charges (Note 9) | ||||||||||||||||
| Earnings from continuing operations | ||||||||||||||||
| Interest and other income | ||||||||||||||||
| Earnings from continuing operations before income taxes | ||||||||||||||||
| Income tax provision (Note 10) | ||||||||||||||||
| Net earnings from continuing operations | ||||||||||||||||
| Loss from discontinued operations, net of tax (Note 12) | ( | ) | ( | ) | ||||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||||
| Earnings per share (Note 7) | ||||||||||||||||
| Basic: | ||||||||||||||||
| Continuing operations | $ | $ | $ | $ | ||||||||||||
| Discontinued operations | ( | ) | ( | ) | ||||||||||||
| Basic earnings per share | $ | $ | $ | $ | ||||||||||||
| Basic weighted average shares | ||||||||||||||||
| Diluted: | ||||||||||||||||
| Continuing operations | $ | $ | $ | $ | ||||||||||||
| Discontinued operations | ( | ) | ( | ) | ||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | ||||||||||||
| Diluted weighted average shares | ||||||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
PARK AEROSPACE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(Amounts in thousands)
| 13 Weeks Ended (Unaudited) | 26 Weeks Ended (Unaudited) | |||||||||||||||
| August 29, | August 30, | August 29, | August 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||||
| Other comprehensive earnings, net of tax: | ||||||||||||||||
| Unrealized gains on marketable securities: | ||||||||||||||||
| Unrealized holding gains arising during the period | ||||||||||||||||
| Less: reclassification adjustment for gains included in net earnings | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Unrealized losses on marketable securities: | ||||||||||||||||
| Unrealized holding losses arising during the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: reclassification adjustment for losses included in net earnings | ||||||||||||||||
| Other comprehensive (loss) earnings | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive earnings | $ | $ | $ | $ | ||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
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 | (Loss) Earnings | Shares | Amount | ||||||||||||||||||||||
| Balance, February 28, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Net earnings | - | - | ||||||||||||||||||||||||||
| Unrealized gain on marketable securities, net of tax | - | - | ||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Cash dividends ($ per share) | - | ( | ) | - | ||||||||||||||||||||||||
| Balance, May 30, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Net earnings | - | - | ||||||||||||||||||||||||||
| Unrealized loss on marketable securities, net of tax | - | ( | ) | - | ||||||||||||||||||||||||
| Stock options exercised | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Cash dividends ($ per share) | - | ( | ) | - | ||||||||||||||||||||||||
| Balance, August 29, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Treasury Stock | ||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Earnings | Shares | Amount | ||||||||||||||||||||||
| Balance, March 1, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||
| Net earnings | - | - | ||||||||||||||||||||||||||
| Unrealized gain on marketable securities, net of tax | - | - | ||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Repurchase of treasury shares | ( | ) | ||||||||||||||||||||||||||
| Cash dividends ($ per share) | - | ( | ) | - | ||||||||||||||||||||||||
| Balance, May 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net earnings | - | - | ||||||||||||||||||||||||||
| Unrealized loss on marketable securities, net of tax | - | ( | ) | - | ||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Cash dividends ($ per share) | - | ( | ) | - | ||||||||||||||||||||||||
| Balance, August 30, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
PARK AEROSPACE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| 26 Weeks Ended (Unaudited) |
||||||||
| August 29, |
August 30, |
|||||||
| 2021 |
2020 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net earnings |
$ | $ | ||||||
| Loss from discontinued operations, net of tax |
||||||||
| Net earnings from continuing operations |
||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Stock-based compensation |
||||||||
| Deferred income taxes |
( |
) | ||||||
| Amortization of bond premium |
||||||||
| Changes in operating assets and liabilities |
( |
) | ||||||
| Net cash provided by operating activities - continuing operations |
||||||||
| Net cash used in operating activities - discontinued operations |
( |
) | ||||||
| Net cash provided by operating activities |
||||||||
| Cash flows from investing activities: |
||||||||
| Purchase of property, plant and equipment |
( |
) | ( |
) | ||||
| Purchases of marketable securities |
( |
) | ( |
) | ||||
| Proceeds from sales and maturities of marketable securities |
||||||||
| Net cash used in investing activities - continuing operations |
( |
) | ( |
) | ||||
| Net cash used in investing activities - discontinued operations |
||||||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: |
||||||||
| Dividends paid |
( |
) | ( |
) | ||||
| Proceeds from exercise of stock options |
||||||||
| Purchase of treasury stock |
( |
) | ||||||
| Net cash used in financing activities - continuing operations |
( |
) | ( |
) | ||||
| Net cash used in financing activities - discontinued operations |
||||||||
| Net cash used in financing activities |
( |
) | ( |
) | ||||
| Decrease in cash and cash equivalents: |
( |
) | ( |
) | ||||
| Cash and cash equivalents, beginning of period |
||||||||
| Cash and cash equivalents, end of period |
$ | $ | ||||||
| Supplemental cash flow information: |
||||||||
| Cash paid during the period for income taxes, net of refunds |
$ | $ | ||||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
PARK AEROSPACE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in thousands, except share (unless otherwise stated), per share and option amounts)
1. CONSOLIDATED FINANCIAL STATEMENTS
The Condensed Consolidated Balance Sheet and the Consolidated Statements of Shareholders’ Equity as of August 29, 2021, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended August 29, 2021 and August 30, 2020, and the Condensed Consolidated Statements of Cash Flows for the 26 weeks then ended have been prepared by Park Aerospace Corp. (the “Company”), without audit. In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at August 29, 2021 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 condensed 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 February 28, 2021. There have been no significant changes to such accounting policies during the 26 weeks ended August 29, 2021.
2. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
Fair value measurements are broken down into three levels based on the reliability of inputs as follows:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals or current market) and contractual prices for the underlying financial instrument, as well as other relevant economic measures.
Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
The fair value of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying value due to their short-term nature. Certain assets and liabilities of the Company are required to be recorded at fair value on either a recurring or non-recurring basis. On a recurring basis, the Company records its marketable securities at fair value using Level 1 or Level 2 inputs. (See Note 3).
The Company’s non-financial assets measured at fair value on a non-recurring basis include goodwill and any long-lived assets written down to fair value. To measure fair value of such assets, the Company uses Level 3 inputs consisting of techniques including an income approach and a market approach. The income approach is based on a discounted cash flow analysis and calculates the fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate. Assumptions used in the discounted cash flow analysis require the exercise of significant judgment, including judgment about appropriate discount rates, terminal values, growth rates and the amount and timing of expected future cash flows. With respect to goodwill, the Company first assesses qualitative factors to determine whether it is more likely than not that fair value is less than carrying value. If, based on that assessment, the Company believes it is more likely than not that fair value is less than carrying value, a goodwill impairment test is performed. There have been no changes in events or circumstances which required impairment charges to be recorded during the 13 weeks and 26 weeks ended August 29, 2021.
3. MARKETABLE SECURITIES
All marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, included in comprehensive earnings. Realized gains and losses, amortization of premiums and discounts, and interest and dividend income are included in interest and other income in the Consolidated Statements of Operations. The costs of securities sold are based on the specific identification method.
The following is a summary of available-for-sale securities:
| August 29, 2021 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| U.S. Treasury and other government securities | $ | $ | $ | $ | ||||||||||||
| U.S. corporate debt securities | ||||||||||||||||
| Total marketable securities | $ | $ | $ | $ | ||||||||||||
| February 28, 2021 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| U.S. Treasury and other government securities | $ | $ | $ | $ | ||||||||||||
| U.S. corporate debt securities | ||||||||||||||||
| Total marketable securities | $ | $ | $ | $ | ||||||||||||
The following table shows the amortized cost basis of, and gross unrealized gains and losses on, the Company’s available-for-sale securities:
| Amortized Cost Basis | Gross Unrealized Gains | Gross Unrealized Losses | ||||||||||
| August 29, 2021: | ||||||||||||
| U.S. Treasury and other government securities | $ | $ | $ | |||||||||
| U.S. corporate debt securities | ||||||||||||
| Total marketable securities | $ | $ | $ | |||||||||
| February 28, 2021: | ||||||||||||
| U.S. Treasury and other government securities | $ | $ | $ | |||||||||
| U.S. corporate debt securities | ||||||||||||
| Total marketable securities | $ | $ | $ | |||||||||
The estimated fair values of such securities at August 29, 2021 by contractual maturity are shown below:
| Due in one year or less | $ | |||
| Due after one year through five years | ||||
| $ |
4. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company’s products and market conditions. Work-in-process and finished goods inventories cost valuations include direct material costs as well as a portion of the Company’s overhead expenses. The Company’s overhead expenses that are applied to its finished goods inventories are based on actual expenses related to the procurement, storage, shipment and production of the finished goods. Inventories consisted of the following:
| August 29, | February 28, | |||||||
| 2021 | 2021 | |||||||
| Inventories: | ||||||||
| Raw materials | $ | $ | ||||||
| Work-in-process | ||||||||
| Finished goods | ||||||||
| $ | $ | |||||||
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 year to years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is 2068 assuming exercise of all applicable renewal options by the Company. The Company’s existing leases are not subject to any restrictions or covenants which preclude its ability to pay dividends, obtain financing or exercise its available renewal options.
Future minimum lease payments under non-cancellable operating leases as of August 29, 2021 are as follows:
| Fiscal Year: | ||||
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Total undiscounted operating lease payments | ||||
| Less imputed interest | ( | ) | ||
| Present value of operating lease payments | $ |
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 condensed consolidated balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the terms of the leases. The above payment schedule does not include lease payments of $
For the 13 weeks and 26 weeks ended August 29, 2021, the Company’s operating lease expenses were $
The following table sets forth the right-of-use assets and operating lease liabilities as of August 29, 2021:
| Operating right-of-use assets | $ | |||
| Operating lease liabilities | $ | |||
| Long-term operating lease liabilities | ||||
| Total operating lease liabilities | $ |
The Company’s weighted average remaining lease term for its operating leases is
In December 2018, the Company 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, the Company agreed to construct and operate an additional manufacturing facility of approximately
6. STOCK-BASED COMPENSATION
As of August 29, 2021, 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
During the 26 weeks ended August 29, 2021, the Company granted options under the 2018 Plan to purchase a total of
The risk-free interest rates were based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the estimated terms of the options at the date of the grant. Volatility factors were based on historical volatility of the Company’s common stock. The expected dividend yields were based on the regular quarterly cash dividend per share most recently declared by the Company and on the exercise price of the options granted during the 13 weeks and 26 weeks ended August 29, 2021. The estimated term of the options was based on evaluations of the historical and expected future employee exercise behavior.
The following is a summary of option activity for the 26 weeks ended August 29, 2021:
| Outstanding Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | ||||||||||
| Balance, February 28, 2021 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | ||||||||||
| Terminated or expired | ( | ) | ||||||||||
| Balance, August 29, 2021 | $ | |||||||||||
| Vested and exercisable, August 29, 2021 | $ | |||||||||||
7. EARNINGS PER SHARE
Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potentially dilutive securities outstanding during the period. Stock options are the only potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method.
The following table sets forth the calculation of basic and diluted earnings per share:
| 13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
| August 29, | August 30, | August 29, | August 30, | |||||||||||||
| Net earnings - continuing operations | $ | $ | $ | $ | ||||||||||||
| Net loss - discontinued operations | ( | ) | ( | ) | ||||||||||||
| Net earnings | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding for basic EPS | ||||||||||||||||
| Net effect of dilutive options | ||||||||||||||||
| Weighted average shares outstanding for diluted EPS | ||||||||||||||||
| Basic earnings per share - continuing operations | $ | $ | $ | $ | ||||||||||||
| Basic loss per share - discontinued operations | ( | ) | ( | ) | ||||||||||||
| Basic earnings per share | $ | $ | $ | $ | ||||||||||||
| Diluted earnings per share - continuing operations | $ | $ | $ | $ | ||||||||||||
| Diluted loss per share - discontinued operations | ( | ) | ( | ) | ||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | ||||||||||||
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
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
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
The Company purchased
9. RESTRUCTURING CHARGES
The Company recorded restructuring charges of $
The following table sets forth the charges and accruals related to the restructuring:
| Accrual February 28, 2021 | Current Period Charges | Cash Payments | Non-Cash Charges | Accrual 2021 | Total Expense Accrued to Date | |||||||||||||||||||
| Facility Lease Costs | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||
| Asset Impairment | ||||||||||||||||||||||||
| Asset Removal | ( | ) | ||||||||||||||||||||||
| Other | ( | ) | ||||||||||||||||||||||
| Total Restructuring Charges | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||
10. INCOME TAXES
For the 13 weeks and 26 weeks ended August 29, 2021, the Company recorded income tax provisions from continuing operations of $
The Company’s effective tax rates for the 13 weeks and 26 weeks ended August 29, 2021 were income tax provisions of
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 $
11. GEOGRAPHIC REGIONS
The Company’s products are sold to customers in North America, Asia and Europe. The Company’s manufacturing facilities are located in Kansas. Sales are attributed to geographic regions based upon the region in which the materials were delivered to the customer. Sales between geographic regions were not significant.
Financial information regarding the Company’s continuing operations by geographic region is as follows:
| 13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
| August 29, | August 30, | August 29, | August 30, | |||||||||||||
| Sales: | ||||||||||||||||
| North America | $ | $ | $ | $ | ||||||||||||
| Asia | ||||||||||||||||
| Europe | ||||||||||||||||
| Total sales | $ | $ | $ | $ | ||||||||||||
| August 29, | February 28, 2021 | |||||||
| Long-lived assets: | ||||||||
| North America | $ | $ | ||||||
| Asia | ||||||||
| Europe | ||||||||
| Total long-lived assets | $ | $ | ||||||
12. DISCONTINUED OPERATIONS
On July 25, 2018, the Company entered into a definitive agreement to sell its Electronics Business for $
The Company has classified the operating results of its Electronics Business, together with certain costs related to the transaction, as discontinued operations, net of tax, in the Consolidated Statements of Operations.
The following table shows the summary operating results of the discontinued operations:
| 13 Weeks Ended (Unaudited) | 26 Weeks Ended (Unaudited) | |||||||||||||||
| August 29, | August 30, | August 29, | August 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Restructuring charges | ||||||||||||||||
| Loss from discontinued operations | ( | ) | ( | ) | ||||||||||||
| Other income | ||||||||||||||||
| Loss from discontinued operations before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax benefit | ( | ) | ( | ) | ||||||||||||
| Net loss from discontinued operations | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
13. CONTINGENCIES
Litigation
The Company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. The Company believes that the ultimate disposition of such proceedings, lawsuits and claims will not have a material adverse effect on the liquidity, capital resources, business, consolidated results of operations or financial position of the Company.
Environmental Contingencies
The Company and certain of its subsidiaries have been named by the Environmental Protection Agency (the “EPA”) or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the “Superfund Act”) or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at three sites.
Under the Superfund Act and similar state laws, all parties who may have contributed any waste to a hazardous waste disposal site or contaminated area identified by the EPA or comparable state agency may be jointly and severally liable for the cost of cleanup. Generally, these sites are locations at which numerous persons disposed of hazardous waste. In the case of the Company’s subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at waste sites by various companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its sub‐sidiaries 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 dur‐ing which the Company’s subsidiaries’ waste was disposed at these three sites have in the past reimbursed the Company and its subsidiaries for
The Company does 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,
Included in selling, general and administrative expenses are charges for actual expenditures and accruals, based on estimates, for certain environmental mat‐ters described above. The Company accrues estimated costs asso‐ciated 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.
14. ACCOUNTING PRONOUNCEMENTS
Recently Adopted
In December 2019, the Financial Accounting Standard Board issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The changes simplify the accounting for a number of topics, some of which are narrow. Some of the proposed amendments eliminate specific exceptions to the general principles of income tax accounting while other changes clarify a handful of narrow issues within the broad topic of income tax accounting. The amendments in ASU 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the requirements are effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted for: (1) public business entities for periods for which financial statements have not yet been issued, and (2) all other entities for periods for which financial statements have not yet been made available for issuance. The Company adopted this ASU in the first quarter of the 2022 fiscal year. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements and disclosures.
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. Park’s advanced composite materials include film adhesives (undergoing development) and lightning strike 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 26 weeks ended August 29, 2021 were $13.6 million and $27.2 million, respectively, compared to $9.3 million and $21.5 million, respectively, in the 13 weeks and 26 weeks ended August 30, 2020. The increases in sales were primarily due to improving sales for the commercial and business aircraft markets.
The Company’s gross profit margins from continuing operations, measured as percentages of sales, were 32.4% and 36.3%, respectively, in the 13 weeks and 26 weeks ended August 29, 2021 compared to 28.5% and 29.4%, respectively, in the 13 weeks and 26 weeks ended August 30, 2020. The higher gross profit margin for the 13 and 26 weeks ended August 29, 2021 was primarily due to the higher sales compared to last year’s comparable periods and a favorable sales mix of high margin products.
The Company’s earnings from continuing operations before income taxes and net earnings from continuing operations increased 76.4% and 75.7%, respectively, in the 13 weeks ended August 29, 2021 compared to the 13 weeks ended August 30, 2020 primarily as a result of higher sales partially offset by lower interest income compared to last year’s comparable period.
The Company’s earnings from continuing operations before income taxes and net earnings from continuing operations increased 57.0% and 52.6%, respectively, in the 26 weeks ended August 29, 2021 compared to the 26 weeks ended August 30, 2020 primarily as a result of higher sales and a favorable sales mix of high margin products in the first quarter of the current fiscal year, partially offset by lower interest income compared to last year’s comparable period.
The Company is experiencing inflation in raw material and other costs. The impact of inflation on the Company’s profits has been partially mitigated by the Company’s ability to adjust pricing for most of its sales to pass the impact of inflation through to its customers.
With the recovery of the aerospace markets, some companies in the aerospace supply chain may not be fully prepared to ramp up their production as quickly as needed, which may create a risk to the Company of not getting enough raw materials on a timely basis to fully support our customers’ demands. Additionally, some shipments from overseas suppliers are experiencing transportation delays due to a lack of available containers and a backlog at incoming ports of entry. Delays of overseas shipments of raw materials is having a small impact on the Company’s production levels. Delays in raw material shipments continue to represent a risk to the Company.
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.
In December 2019, a novel strain of coronavirus was reported in Wuhan, China and has since spread worldwide, including to the United States, posing public health risks that have reached pandemic proportions (the “COVID-19 Pandemic”).
The COVID-19 Pandemic and resultant global economic crisis had significant impacts on the Company’s results of operations and cash flow for the 13 weeks and 26 weeks ended August 30, 2020. The COVID-19 Pandemic and crisis had significant impacts on the markets the Company sells into, particularly the commercial and business aircraft markets. As a result, the Company had experienced significant reductions in sales and backlog during those periods. The Company continues to experience the impacts related to raw material availability and costs.
Even after the COVID-19 Pandemic has subsided, the Company may continue to experience adverse impacts to its business as a result of the potential continuing impact of the economic crisis on the markets the Company serves.
Results of Operations:
The following table sets forth the components of the consolidated statements of operations:
| 13 Weeks Ended |
26 Weeks Ended |
|||||||||||||||||||||||
| (amounts in thousands, except per share amounts) |
August 29, |
August 30, |
% |
August 29, |
August 30, |
% |
||||||||||||||||||
| 2021 |
2020 |
Change |
2021 |
2020 |
Change |
|||||||||||||||||||
| Net sales |
$ | 13,618 | $ | 9,250 | 47 | % | $ | 27,212 | $ | 21,463 | 27 | % | ||||||||||||
| Cost of sales |
9,207 | 6,612 | 39 | % | 17,329 | 15,151 | 14 | % | ||||||||||||||||
| Gross profit |
4,411 | 2,638 | 67 | % | 9,883 | 6,312 | 57 | % | ||||||||||||||||
| Selling, general and administrative expenses |
1,488 | 1,552 | (4 | )% | 3,136 | 3,182 | (1 | )% | ||||||||||||||||
| Restructuring charges |
170 | - | 0 | % | 184 | - | 0 | % | ||||||||||||||||
| Earnings from continuing operations |
2,753 | 1,086 | 153 | % | 6,563 | 3,130 | 110 | % | ||||||||||||||||
| Interest and other income |
89 | 525 | (83 | )% | 206 | 1,181 | (83 | )% | ||||||||||||||||
| Earnings from continuing operations before income taxes |
2,842 | 1,611 | 76 | % | 6,769 | 4,311 | 57 | % | ||||||||||||||||
| Income tax provision |
820 | 460 | 78 | % | 2,002 | 1,188 | 69 | % | ||||||||||||||||
| Net earnings from continuing operations |
2,022 | 1,151 | 76 | % | 4,767 | 3,123 | 53 | % | ||||||||||||||||
| Loss from discontinued operations, net of tax |
- | (197 | ) | (100 | )% | - | (212 | ) | (100 | )% | ||||||||||||||
| Net earnings |
$ | 2,022 | $ | 954 | 112 | % | $ | 4,767 | $ | 2,911 | 64 | % | ||||||||||||
| Earnings per share: |
||||||||||||||||||||||||
| Basic: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.10 | $ | 0.06 | 67 | % | $ | 0.23 | $ | 0.15 | 53 | % | ||||||||||||
| Discontinued operations |
- | (0.01 | ) | (100 | )% | - | (0.01 | ) | (100 | )% | ||||||||||||||
| Basic earnings per share |
$ | 0.10 | $ | 0.05 | 100 | % | $ | 0.23 | $ | 0.14 | 64 | % | ||||||||||||
| Diluted: |
||||||||||||||||||||||||
| Continuing operations |
$ | 0.10 | $ | 0.06 | 67 | % | $ | 0.23 | $ | 0.15 | 53 | % | ||||||||||||
| Discontinued operations |
- | (0.01 | ) | (100 | )% | - | (0.01 | ) | (100 | )% | ||||||||||||||
| Diluted earnings per share |
$ | 0.10 | $ | 0.05 | 100 | % | $ | 0.23 | $ | 0.14 | 64 | % | ||||||||||||
Net Sales
The Company’s total net sales from continuing operations worldwide in the 13 weeks and 26 weeks ended August 29, 2021 increased to $13.6 million and $27.2 million, respectively, from $9.3 million and $21.5 million, respectively, in the 13 weeks and 26 weeks ended August 30, 2020. The increases in sales were principally due to the higher sales to customers servicing the commercial and business aircraft markets.
Gross Profit
The Company’s gross profits from continuing operations in the 13 weeks and 26 weeks ended August 29, 2021 were higher than its gross profits from continuing operations in the prior year’s comparable periods, and the gross profits from continuing operations as percentages of sales for the Company’s worldwide operations in the 13 weeks and 26 weeks ended August 29, 2021 increased to 32.4% and 36.3%, respectively, from 28.5% and 29.4%, respectively, in the 13 weeks and 26 weeks ended August 30, 2020. The higher gross profit margin from continuing operations for the 13 and 26 weeks ended August 29, 2021 was primarily due to the higher sales and a favorable sales mix of high margin products compared to last year’s comparable periods.
Selling, General and Administrative Expenses
Selling, general and administrative expenses from continuing operations decreased by $64,000 and $46,000, respectively, during the 13 weeks and 26 weeks ended August 29, 2021, or by 4.1% and 1.4%, respectively, compared to the prior year’s comparable periods, and these expenses, measured as percentages of sales from continuing operations, were 10.9% and 11.5%, respectively, in the 13 weeks and 26 weeks ended August 29, 2021 compared to 16.8% and 14.8%, respectively, in the 13 weeks and 26 weeks ended August 30, 2020.
Selling, general and administrative expenses from continuing operations decreased by $64,000 and $46,000, respectively, during the 13 weeks and 26 weeks ended August 29, 2021, or by 4.1% and 1.4%, respectively, compared to the prior year’s comparable periods, and these expenses, measured as percentages of sales from continuing operations, were 10.9% and 11.5%, respectively, in the 13 weeks and 26 weeks ended August 29, 2021 compared to 16.8% and 14.8%, respectively, in the 13 weeks and 26 weeks ended August 30, 2020.
Restructuring Charges
In the 13 weeks and 26 weeks ended August 29, 2021, the Company recorded pre-tax restructuring charges of $170,000 and $184,000, respectively, in connection with the closure of the Company’s Park Aerospace Technologies Asia Pte. Ltd facility located in Singapore.
Earnings from Continuing Operations
For the reasons set forth above, the Company’s earnings from continuing operations were $2.8 million and $6.6 million, respectively, for the 13 weeks and 26 weeks ended August 29, 2021 compared to $1.1 million and $3.1 million, respectively, for the 13 weeks and 26 weeks ended August 30, 2020.
Interest and Other Income
Interest and other income from continuing operations was $89,000 and $206,000, respectively, for the 13 weeks and 26 weeks ended August 29, 2021, compared to $525,000 and $1.2 million, respectively, for the prior year's comparable periods. Interest income decreased 83.0% and 82.6%, respectively, for the 13 weeks and 26 weeks ended August 29, 2021 primarily as a result of lower average balances of marketable securities held by the Company in the 13 weeks and 26 weeks ended August 29, 2021, compared to the prior year's comparable periods, and lower weighted average interest rates. During the 13 weeks and 26 weeks ended August 29, 2021, 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 26 weeks ended August 29, 2021, the Company recorded income tax provisions from continuing operations of $820,000 and $2.0 million, respectively, which included discrete income tax provisions of $27,000 and $170,000, respectively, for the write-off of deferred tax assets and liabilities related to a change in the tax filing basis of the Company’s Singapore entity and the accrual of interest related to unrecognized tax benefits. For the 13 weeks and 26 weeks ended August 30, 2020, the Company recorded income tax provisions from continuing operations of $460,000 and $1.2 million, respectively, which included discrete income tax provisions of $42,000 and $83,000, respectively, pertaining to the accrual of interest related to unrecognized tax benefits.
The Company’s effective tax rates for the 13 weeks and 26 weeks ended August 29, 2021 were 28.8% and 29.6%, respectively, compared to 28.6% and 27.5%, respectively, in the prior year’s comparable periods. The effective tax rates for the 13 weeks and 26 weeks ended August 29, 2021 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes, the write-off of deferred tax assets and liabilities and the accrual of interest related to unrecognized tax benefits. The effective rates for the 13 weeks and 26 weeks ended August 30, 2020 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and the accrual of interest related to unrecognized tax benefits.
Net Earnings from Continuing Operations
For the reasons set forth above, the Company's net earnings from continuing operations for the 13 weeks and 26 weeks ended August 29, 2021 were $2.0 million and $4.8 million, respectively, compared to net earnings from continuing operations of $1.2 million and $3.1 million, respectively, for the 13 weeks and 26 weeks ended August 30, 2020.
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 expenses pertaining to the sale transaction and costs related to the Company’s vacated facility in Fullerton, California in the 13 weeks and 26 weeks ended August 30, 2020. The Company vacated the Fullerton facility in the third quarter of the 2021 fiscal year and is no longer incurring these discontinued operations costs.
Basic and Diluted Earnings Per Share
In the 13 weeks and 26 weeks ended August 29, 2021, basic and diluted earnings per share from continuing operations were $0.10 and $0.23, respectively, compared to basic and diluted earnings per share from continuing operations of $0.06 and $0.15, respectively, in the 13 weeks and 26 weeks ended August 30, 2020.
Liquidity and Capital Resources - Continuing Operations:
| (amounts in thousands) |
August 29, |
February 28, |
||||||||||
| 2021 |
2021 |
Change |
||||||||||
| Cash and cash equivalents |
||||||||||||
| and marketable securities |
$ | 112,842 | $ | 116,542 | $ | (3,700 | ) | |||||
| Working capital |
122,346 | 124,348 | (2,002 | ) | ||||||||
| 26 Weeks Ended |
||||||||||||
| (amounts in thousands) |
August 29, |
August 30, |
||||||||||
| 2021 |
2020 |
Change |
||||||||||
| Net cash provided by operating activities |
$ | 2,976 | $ | 6,321 | $ | (3,345 | ) | |||||
| Net cash used in investing activities |
(21,251 | ) | (3,512 | ) | (17,739 | ) | ||||||
| Net cash used in financing activities |
(3,619 | ) | (5,720 | ) | 2,101 | |||||||
Cash and Marketable Securities
Of the $112.8 million of cash and cash equivalents and marketable securities at August 29, 2021, $29.4 million was owned by one of the Company’s wholly owned foreign subsidiaries.
The change in cash and cash equivalents and marketable securities at August 29, 2021 compared to February 28, 2021 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 change in cash provided by operating activities was as follows:
| ● |
accounts receivable increased by 11% at August 29, 2021 compared to February 28, 2021 primarily due to timing of sales; |
| ● |
prepaid and other current assets decreased by 7% at August 29, 2021 compared to February 28, 2021 primarily due to receipt of tax refunds; |
| ● |
accounts payable decreased by 24% at August 29, 2021 compared to February 28, 2021 primarily due to timing of vendor payments; and |
| ● |
accrued liabilities decreased by 17% at August 29, 2021 compared to February 28, 2021 primarily due to decreases in restructuring, bonus and profit sharing accruals. |
In addition, the Company paid $4.1 million in cash dividends in each of the 26-week periods ended August 29, 2021 and August 30, 2020.
Working Capital
The decrease in working capital at August 29, 2021 compared to February 28, 2021 was due principally to the decrease in cash and cash equivalents, marketable securities and prepaid and other current assets, partially offset by an increase in accounts receivable and decreases in accounts payable, accrued liabilities and income taxes payable.
The Company's current ratio (the ratio of current assets to current liabilities) was 18.6 to 1.0 at August 29, 2021 compared to 16.6 to 1.0 at February 28, 2021.
Cash Flows
During the 26 weeks ended August 29, 2021, the Company's net earnings, before depreciation and amortization, deferred income taxes, stock-based compensation, amortization of bond premium and changes in operating assets and liabilities, were $3.0 million. During the same 26-week period, the Company expended $2.5 million for the purchase of property, plant and equipment, compared with $3.9 million during the 26 weeks ended August 30, 2020. The Company paid $4.1 million in cash dividends in each of the 26-week periods ended August 29, 2021 and August 30, 2020.
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.
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 $320,000, 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 GAAP. 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 February 28, 2021. There have been no significant changes to such accounting policies during the 2022 fiscal year second quarter.
Contingencies:
The Company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters.
Factors That May Affect Future Results.
Certain portions of this Report which do not relate to historical financial information may be deemed to constitute forward-looking statements that are subject to various factors which could cause actual results to differ materially from the Company’s expectations or from results which might be projected, forecasted, estimated or budgeted by the Company in forward-looking statements. Such factors include, but are not limited to, general conditions in the aerospace industry, the Company’s competitive position, the status of the Company’s relationships with its customers, economic conditions in international markets, the cost and availability of raw materials, transportation and utilities, and the various factors set forth under the caption “Factors That May Affect Future Results” in Item 1 and in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2021.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company’s market risk exposure at August 29, 2021 is consistent with, and not greater than, the types of market risk and amount of exposures presented in the Annual Report on Form 10-K for the fiscal year ended February 28, 2021.
Item 4. Controls and Procedures.
(a) Disclosure Controls and Procedures.
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of August 29, 2021, 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.
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 February 28, 2021.
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 2022 fiscal year second quarter ended August 29, 2021.
| 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 |
|||||||||
| May 31 - June 29 |
0 | $ | - | 0 | |||||||||
| June 30 - July 29 |
0 | $ | - | 0 | |||||||||
| July 30 - August 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.
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 |
| 32.2 |
| 101 |
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended August 29, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at August 29, 2021 (unaudited) and February 28, 2021; (ii) Consolidated Statements of Operations for the 13 weeks and 26 weeks ended August 29, 2021 and August 30, 2020 (unaudited); (iii) Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended August 29, 2021 and August 30, 2020 (unaudited); (iv) Consolidated Statements of Shareholders’ Equity at August 29, 2021 (unaudited) and August 30, 2020; and (v) Condensed Consolidated Statements of Cash Flows for the 26 weeks ended August 29, 2021 and August 30, 2020 (unaudited). * +
|
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * |
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 Exchanzge Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
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 |
|
| 32.2 |
|
| 101 |
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended August 29, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at August 29, 2021 (unaudited) and February 28, 2021; (ii) Consolidated Statements of Operations for the 13 weeks and 26 weeks ended August 29, 2021 and August 30, 2020 (unaudited); (iii) Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended August 29, 2021 and August 30, 2020 (unaudited); (iv) Consolidated Statements of Shareholders’ Equity at August 29, 2021 (unaudited) and August 30, 2020; and (v) Condensed Consolidated Statements of Cash Flows for the 26 weeks ended August 29, 2021 and August 30, 2020 (unaudited). * + |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * |
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. |
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.
|
Date: October 8, 2021
Date: October 8, 2021 |
Park Aerospace Corp. ------------------------------ (Registrant)
/s/ Brian E. Shore ----------------------------------- Brian E. Shore Chief Executive Officer (principal executive officer)
/s/ P. Matthew Farabaugh ----------------------------------- P. Matthew Farabaugh Senior Vice President and Chief Financial Officer (principal financial officer) (principal accounting officer) |
EXHIBIT 31.1
Certification of Principal Executive Officer
Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)
I, Brian E. Shore, as Chief Executive Officer of Park Aerospace Corp., certify that:
|
1. |
I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended August 29, 2021 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 GAAP; |
|
(c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 8, 2021
/s/ Brian E. Shore
Name: Brian E. Shore
Title: Chief Executive Officer
EXHIBIT 31.2
Certification of Principal Financial Officer
Pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)
I, P. Matthew Farabaugh, as Senior Vice President and Chief Financial Officer of Park Aerospace Corp., certify that:
|
1. |
I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended August 29, 2021 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 GAAP; |
|
(c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: October 8, 2021
/s/ P. Matthew Farabaugh
Name: P. Matthew Farabaugh
Title: Senior Vice President and Chief Financial Officer
EXHIBIT 32.1
Certification of Principal Executive Officer Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Park Aerospace Corp. (the “Company”) for the quarterly period ended August 29, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Brian E. Shore, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Brian E. Shore
Name: Brian E. Shore
Title: Chief Executive Officer
Date: October 8, 2021
EXHIBIT 32.2
Certification of Principal Financial Officer Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Park Aerospace Corp. (the “Company”) for the quarterly period ended August 29, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), P. Matthew Farabaugh, as Senior Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ P. Matthew Farabaugh________________________
Name: P. Matthew Farabaugh
Title: Senior Vice President and Chief Financial Officer
Date: October 8, 2021
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands |
Aug. 29, 2021 |
Feb. 28, 2021 |
|||
|---|---|---|---|---|---|
| Accounts receivable, allowance for doubtful accounts | $ 96 | $ 89 | [1] | ||
| |||||
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
Aug. 29, 2021 |
Aug. 30, 2020 |
|
| Net sales | $ 13,618 | $ 9,250 | $ 27,212 | $ 21,463 |
| Cost of sales | 9,207 | 6,612 | 17,329 | 15,151 |
| Gross profit | 4,411 | 2,638 | 9,883 | 6,312 |
| Selling, general and administrative expenses | 1,488 | 1,552 | 3,136 | 3,182 |
| Restructuring charges (Note 9) | 170 | 0 | 184 | 0 |
| Earnings from continuing operations | 2,753 | 1,086 | 6,563 | 3,130 |
| Interest and other income | 89 | 525 | 206 | 1,181 |
| Earnings from continuing operations before income taxes | 2,842 | 1,611 | 6,769 | 4,311 |
| Income tax provision (Note 10) | 820 | 460 | 2,002 | 1,188 |
| Net earnings from continuing operations | 2,022 | 1,151 | 4,767 | 3,123 |
| Loss from discontinued operations, net of tax (Note 12) | 0 | (197) | 0 | (212) |
| Net earnings | $ 2,022 | $ 954 | $ 4,767 | $ 2,911 |
| Basic: | ||||
| Continuing operations (in dollars per share) | $ 0.10 | $ 0.06 | $ 0.23 | $ 0.15 |
| Discontinued operations (in dollars per share) | 0 | (0.01) | 0 | (0.01) |
| Basic earnings per share (in dollars per share) | $ 0.10 | $ 0.05 | $ 0.23 | $ 0.14 |
| Basic weighted average shares (in shares) | 20,397 | 20,381 | 20,390 | 20,392 |
| Diluted: | ||||
| Continuing operations (in dollars per share) | $ 0.10 | $ 0.06 | $ 0.23 | $ 0.15 |
| Discontinued operations (in dollars per share) | 0 | (0.01) | 0 | (0.01) |
| Diluted earnings per share (in dollars per share) | $ 0.10 | $ 0.05 | $ 0.23 | $ 0.14 |
| Diluted weighted average shares (in shares) | 20,485 | 20,433 | 20,597 | 20,447 |
Consolidated Statements of Comprehensive Earnings (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
Aug. 29, 2021 |
Aug. 30, 2020 |
|
| Net earnings | $ 2,022 | $ 954 | $ 4,767 | $ 2,911 |
| Other comprehensive earnings, net of tax: | ||||
| Other comprehensive (loss) earnings | (61) | (203) | (9) | 1 |
| Total comprehensive earnings | 1,961 | 751 | 4,758 | 2,912 |
| Gains on Marketable Securities [Member] | ||||
| Other comprehensive earnings, net of tax: | ||||
| Unrealized holding gains (losses) arising during the period | 10 | 109 | 104 | 397 |
| Less: reclassification adjustment for gains (losses) included in net earnings | (5) | (37) | (9) | (54) |
| Losses on Marketable Securities [Member] | ||||
| Other comprehensive earnings, net of tax: | ||||
| Unrealized holding gains (losses) arising during the period | (66) | (275) | (104) | (342) |
| Less: reclassification adjustment for gains (losses) included in net earnings | $ 0 | $ 0 | $ 0 | $ 0 |
Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Retained Earnings [Member] |
AOCI Attributable to Parent [Member] |
Treasury Stock [Member] |
Total |
|||
|---|---|---|---|---|---|---|---|---|---|
| Balance (in shares) at Mar. 01, 2020 | 20,965,144 | 446,321 | |||||||
| Balance at Mar. 01, 2020 | $ 2,096 | $ 169,862 | $ (21,774) | $ 668 | $ (9,177) | ||||
| Net earnings | 0 | 0 | 1,957 | 0 | 0 | ||||
| Unrealized gain on marketable securities, net of tax | 0 | 0 | 0 | 204 | 0 | ||||
| Stock-based compensation | 0 | 43 | 0 | 0 | 0 | ||||
| Cash dividends | $ 0 | 0 | (2,038) | 0 | $ 0 | ||||
| Balance (in shares) at May. 31, 2020 | 20,965,144 | 583,718 | |||||||
| Balance at May. 31, 2020 | $ 2,096 | 169,905 | (21,855) | 872 | $ (10,821) | ||||
| Repurchase of treasury shares (in shares) | 0 | 137,397 | |||||||
| Repurchase of treasury shares | $ 0 | 0 | 0 | 0 | $ (1,644) | ||||
| Net earnings | $ 0 | 0 | 1,957 | 0 | $ 0 | ||||
| Balance (in shares) at Mar. 01, 2020 | 20,965,144 | 446,321 | |||||||
| Balance at Mar. 01, 2020 | $ 2,096 | 169,862 | (21,774) | 668 | $ (9,177) | ||||
| Net earnings | $ 2,911 | ||||||||
| Balance (in shares) at Aug. 30, 2020 | 20,965,144 | 583,718 | |||||||
| Balance at Aug. 30, 2020 | $ 2,096 | 169,955 | (22,939) | 669 | $ (10,821) | ||||
| Net earnings | 2,911 | ||||||||
| Balance (in shares) at May. 31, 2020 | 20,965,144 | 583,718 | |||||||
| Balance at May. 31, 2020 | $ 2,096 | 169,905 | (21,855) | 872 | $ (10,821) | ||||
| Net earnings | 0 | 0 | 954 | 0 | 0 | 954 | |||
| Unrealized gain on marketable securities, net of tax | 0 | 0 | 0 | (203) | 0 | ||||
| Stock-based compensation | 0 | 50 | 0 | 0 | 0 | ||||
| Cash dividends | $ 0 | 0 | (2,038) | 0 | $ 0 | ||||
| Balance (in shares) at Aug. 30, 2020 | 20,965,144 | 583,718 | |||||||
| Balance at Aug. 30, 2020 | $ 2,096 | 169,955 | (22,939) | 669 | $ (10,821) | ||||
| Net earnings | $ 0 | 0 | 954 | 0 | $ 0 | 954 | |||
| Balance (in shares) at Feb. 28, 2021 | 20,965,144 | 582,268 | |||||||
| Balance at Feb. 28, 2021 | $ 2,096 | 170,038 | (25,063) | (336) | $ (10,794) | 135,941 | [1] | ||
| Net earnings | 0 | 0 | 2,745 | 0 | 0 | ||||
| Unrealized gain on marketable securities, net of tax | 0 | 0 | 0 | 52 | 0 | ||||
| Stock-based compensation | 0 | 64 | 0 | 0 | 0 | ||||
| Cash dividends | $ 0 | 0 | (2,038) | 0 | $ 0 | ||||
| Balance (in shares) at May. 30, 2021 | 20,965,144 | 582,268 | |||||||
| Balance at May. 30, 2021 | $ 2,096 | 170,102 | (24,356) | (284) | $ (10,794) | ||||
| Net earnings | $ 0 | 0 | 2,745 | 0 | $ 0 | ||||
| Balance (in shares) at Feb. 28, 2021 | 20,965,144 | 582,268 | |||||||
| Balance at Feb. 28, 2021 | $ 2,096 | 170,038 | (25,063) | (336) | $ (10,794) | 135,941 | [1] | ||
| Net earnings | $ 4,767 | ||||||||
| Stock options exercised (in shares) | 46,134 | ||||||||
| Balance (in shares) at Aug. 29, 2021 | 20,965,144 | 536,134 | |||||||
| Balance at Aug. 29, 2021 | $ 2,096 | 169,779 | (24,373) | (345) | $ (9,939) | $ 137,218 | |||
| Net earnings | 4,767 | ||||||||
| Balance (in shares) at May. 30, 2021 | 20,965,144 | 582,268 | |||||||
| Balance at May. 30, 2021 | $ 2,096 | 170,102 | (24,356) | (284) | $ (10,794) | ||||
| Net earnings | 0 | 0 | 2,022 | 0 | 0 | 2,022 | |||
| Unrealized gain on marketable securities, net of tax | 0 | 0 | 0 | (61) | 0 | ||||
| Stock-based compensation | 0 | 74 | 0 | 0 | 0 | ||||
| Cash dividends | $ 0 | 0 | (2,039) | 0 | $ 0 | ||||
| Stock options exercised (in shares) | 0 | (46,134) | |||||||
| Stock options exercised | $ 0 | (397) | 0 | 0 | $ 855 | ||||
| Balance (in shares) at Aug. 29, 2021 | 20,965,144 | 536,134 | |||||||
| Balance at Aug. 29, 2021 | $ 2,096 | 169,779 | (24,373) | (345) | $ (9,939) | 137,218 | |||
| Net earnings | $ 0 | $ 0 | $ 2,022 | $ 0 | $ 0 | $ 2,022 | |||
| |||||||||
Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | |||
|---|---|---|---|---|
Aug. 29, 2021 |
May 30, 2021 |
Aug. 30, 2020 |
May 31, 2020 |
|
| Retained Earnings [Member] | ||||
| Cash dividends, per share (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 |
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands |
6 Months Ended | |
|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
|
| Cash flows from operating activities: | ||
| Net earnings | $ 4,767 | $ 2,911 |
| Loss from discontinued operations, net of tax | 0 | 212 |
| Net earnings from continuing operations | 4,767 | 3,123 |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
| Depreciation and amortization | 451 | 556 |
| Stock-based compensation | 138 | 93 |
| Deferred income taxes | 390 | (96) |
| Amortization of bond premium | 515 | 120 |
| Changes in operating assets and liabilities | (3,285) | 2,525 |
| Net cash provided by operating activities - continuing operations | 2,976 | 6,321 |
| Net cash used in operating activities - discontinued operations | 0 | (212) |
| Net cash provided by operating activities | 2,976 | 6,109 |
| Cash flows from investing activities: | ||
| Purchase of property, plant and equipment | (2,533) | (3,935) |
| Purchases of marketable securities | (30,888) | (32,909) |
| Proceeds from sales and maturities of marketable securities | 12,170 | 33,332 |
| Net cash used in investing activities - continuing operations | (21,251) | (3,512) |
| Net cash used in investing activities - discontinued operations | 0 | 0 |
| Net cash used in investing activities | (21,251) | (3,512) |
| Cash flows from financing activities: | ||
| Dividends paid | (4,077) | (4,076) |
| Proceeds from exercise of stock options | 458 | 0 |
| Purchase of treasury stock | 0 | (1,644) |
| Net cash used in financing activities - continuing operations | (3,619) | (5,720) |
| Net cash used in financing activities - discontinued operations | 0 | 0 |
| Net cash used in financing activities | (3,619) | (5,720) |
| Decrease in cash and cash equivalents: | (21,894) | (3,123) |
| Cash and cash equivalents, beginning of period | 41,595 | 5,410 |
| Cash and cash equivalents, end of period | 19,701 | 2,287 |
| Supplemental cash flow information: | ||
| Cash paid during the period for income taxes, net of refunds | $ 3,049 | $ 254 |
Note 1 - Consolidated Financial Statements |
6 Months Ended |
|---|---|
Aug. 29, 2021 | |
| Notes to Financial Statements | |
| Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] |
1. CONSOLIDATED FINANCIAL STATEMENTS
The Condensed Consolidated Balance Sheet and the Consolidated Statements of Shareholders’ Equity as of August 29, 2021, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended August 29, 2021 and August 30, 2020, and the Condensed Consolidated Statements of Cash Flows for the 26 weeks then ended have been prepared by Park Aerospace Corp. (the “Company”), without audit. In the opinion of management, these unaudited condensed consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at August 29, 2021 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 condensed 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 February 28, 2021. There have been no significant changes to such accounting policies during the 26 weeks ended August 29, 2021.
|
Note 2 - Fair Value Measurements |
6 Months Ended |
|---|---|
Aug. 29, 2021 | |
| Notes to Financial Statements | |
| Fair Value Disclosures [Text Block] |
2. FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
Fair value measurements are broken down into three levels based on the reliability of inputs as follows:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals or current market) and contractual prices for the underlying financial instrument, as well as other relevant economic measures.
Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
The fair value of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying value due to their short-term nature. Certain assets and liabilities of the Company are required to be recorded at fair value on either a recurring or non-recurring basis. On a recurring basis, the Company records its marketable securities at fair value using Level 1 or Level 2 inputs. (See Note 3).
The Company’s non-financial assets measured at fair value on a non-recurring basis include goodwill and any long-lived assets written down to fair value. To measure fair value of such assets, the Company uses Level 3 inputs consisting of techniques including an income approach and a market approach. The income approach is based on a discounted cash flow analysis and calculates the fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate. Assumptions used in the discounted cash flow analysis require the exercise of significant judgment, including judgment about appropriate discount rates, terminal values, growth rates and the amount and timing of expected future cash flows. With respect to goodwill, the Company first assesses qualitative factors to determine whether it is more likely than not that fair value is less than carrying value. If, based on that assessment, the Company believes it is more likely than not that fair value is less than carrying value, a goodwill impairment test is performed. There have been no changes in events or circumstances which required impairment charges to be recorded during the 13 weeks and 26 weeks ended August 29, 2021. |
Note 3 - Marketable Securities |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] |
3. MARKETABLE SECURITIES
All marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, included in comprehensive earnings. Realized gains and losses, amortization of premiums and discounts, and interest and dividend income are included in interest and other income in the Consolidated Statements of Operations. The costs of securities sold are based on the specific identification method.
The following is a summary of available-for-sale securities:
The following table shows the amortized cost basis of, and gross unrealized gains and losses on, the Company’s available-for-sale securities:
The estimated fair values of such securities at August 29, 2021 by contractual maturity are shown below:
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Note 4 - Inventories |
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| Inventory Disclosure [Text Block] |
4. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company’s products and market conditions. Work-in-process and finished goods inventories cost valuations include direct material costs as well as a portion of the Company’s overhead expenses. The Company’s overhead expenses that are applied to its finished goods inventories are based on actual expenses related to the procurement, storage, shipment and production of the finished goods. Inventories consisted of the following:
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Note 5 - Leases |
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| Lessee, Operating Leases [Text Block] |
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 year to years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is 2068 assuming exercise of all applicable renewal options by the Company. The Company’s existing leases are not subject to any restrictions or covenants which preclude its ability to pay dividends, obtain financing or exercise its available renewal options.
Future minimum lease payments under non-cancellable operating leases as of August 29, 2021 are as follows:
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 condensed consolidated balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the terms of the leases. The above payment schedule does not include lease payments of $142 for the Company’s idle facility in Singapore that have been accrued on the condensed consolidated balance sheets in accrued liabilities.
For the 13 weeks and 26 weeks ended August 29, 2021, the Company’s operating lease expenses were $14 and $29, respectively. Cash payments of $25, pertaining to operating leases, are reflected in the cash flow statement under cash flows from operating activities.
The following table sets forth the right-of-use assets and operating lease liabilities as of August 29, 2021:
The Company’s weighted average remaining lease term for its operating leases is 15.6 years.
In December 2018, the Company 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, the Company agreed to construct and operate an additional manufacturing facility of approximately 90,000 square feet for the design, development and manufacture of advanced composite materials and parts, structures and assemblies for aerospace. The Company 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 the Company three acres of land at the Newton, Kansas Airport, in addition to the eight acres previously leased to the Company by the City and County. The City and 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 $19,100, and the Company expects to complete the construction of the additional facility in the second half of the 2021 calendar year. As of August 29, 2021, the Company had $889 in equipment purchase obligations and $17,131 of construction-in-progress related to the additional facility.
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Note 6 - Stock-based Compensation |
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| Share-based Payment Arrangement [Text Block] |
6. STOCK-BASED COMPENSATION
As of August 29, 2021, the Company had a 2018 Stock Option Plan (the “2018 Plan”) and no other stock-based compensation plan. The 2018 Plan was adopted by the Board of Directors of the Company on May 8, 2018 and approved by the shareholders of the Company at the Annual Meeting of Shareholders of the Company on July 24, 2018 and provides for the grant of options to purchase up to 800,000 shares of common stock of the Company. Prior to the 2018 Plan, the Company had the 2002 Stock Option Plan (the “2002 Plan”) which had been approved by the Company’s shareholders and provided for the grant of stock options to directors and key employees of the Company. All options granted under the 2018 Plan and 2002 Plan have exercise prices equal to the fair market value of the underlying common stock of the Company at the time of grant which, pursuant to the terms of such Plans, is the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date the option is granted. Options granted under the Plans become exercisable 25% 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 expires or is terminated unexercised as to such shares, shall again become available for issuance under the 2018 Plan.
During the 26 weeks ended August 29, 2021, the Company granted options under the 2018 Plan to purchase a total of 142,250 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 $396 and will be recorded on a straight-line basis over the requisite service period. The weighted average fair value of the granted options was $2.78 per share using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 0.74%- expected volatility factor of 29.0%- expected dividend yield of 2.73%- and estimated option term of 4.4-7.6 years.
The risk-free interest rates were based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the estimated terms of the options at the date of the grant. Volatility factors were based on historical volatility of the Company’s common stock. The expected dividend yields were based on the regular quarterly cash dividend per share most recently declared by the Company and on the exercise price of the options granted during the 13 weeks and 26 weeks ended August 29, 2021. The estimated term of the options was based on evaluations of the historical and expected future employee exercise behavior.
The following is a summary of option activity for the 26 weeks ended August 29, 2021:
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Note 7 - Earnings Per Share |
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| Earnings Per Share [Text Block] |
7. EARNINGS PER SHARE
Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potentially dilutive securities outstanding during the period. Stock options are the only potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method.
The following table sets forth the calculation of basic and diluted earnings per share:
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 166,000 and 474,000 for the 13 weeks ended August 29, 2021 and August 30, 2020, respectively and 171,000 and 450,000 for the 26 weeks ended August 29, 2021 and August 30, 2020, respectively.
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Note 8 - Shareholders' Equity |
6 Months Ended |
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Aug. 29, 2021 | |
| Notes to Financial Statements | |
| Stockholders' Equity Note Disclosure [Text Block] |
8. SHAREHOLDERS’ EQUITY
On January 8, 2015, the Company announced that its Board of Directors authorized the Company’s purchase, on the open market and in privately negotiated transactions, of up to 1,250,000 shares of its common stock, representing approximately 6% of the Company’s 20,945,634 total outstanding shares as of the close of business on January 7, 2015. This authorization superseded all prior Board of Directors’ authorizations to purchase shares of the Company’s common stock.
On March 10, 2016, the Company announced that its Board of Directors authorized the Company’s purchase, on the open market and in privately negotiated transactions, of up to 1,000,000 additional shares of its common stock, in addition to the unused prior authorization to purchase shares of the Company’s common stock announced on January 8, 2015. As a result, the Company is authorized to purchase up to a total of 1,394,015 shares of its common stock, representing approximately 6.8% of the Company’s 20,458,210 total outstanding shares as of the close of business on October 1, 2021.
The Company purchased 0 and 137,397 shares of its common stock during the 26 weeks ended August 29, 2021 and August 30, 2020, respectively. |
Note 9 - Restructuring Charges |
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| Restructuring and Related Activities Disclosure [Text Block] |
9. RESTRUCTURING CHARGES
The Company recorded restructuring charges of $170 and $184, respectively, for the 13 weeks and 26 weeks ended August 29, 2021 compared to $0 for both the 13 weeks and 26 weeks ended August 30, 2020, related to the closure of the Company’s Park Aerospace Technologies Asia Pte, Ltd facility located in Singapore.
The following table sets forth the charges and accruals related to the restructuring:
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Note 10 - Income Taxes |
6 Months Ended |
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Aug. 29, 2021 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
10. INCOME TAXES
For the 13 weeks and 26 weeks ended August 29, 2021, the Company recorded income tax provisions from continuing operations of $820 and $2,002, respectively, which included discrete income tax provisions of $27 and $170, respectively. For the 13 weeks and 26 weeks ended August 30, 2020, the Company recorded income tax provisions from continuing operations of $460 and $1,188, respectively, which included discrete income tax provisions of $42 and $84, respectively.
The Company’s effective tax rates for the 13 weeks and 26 weeks ended August 29, 2021 were income tax provisions of 28.8% and 29.6%, respectively, compared to income tax provisions of 28.6% and 27.5% in the comparable prior periods. The effective tax rates for the 13 weeks and 26 weeks ended August 29, 2021 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and discrete income tax provisions for the write-off of deferred tax assets and liabilities related to its closed Singapore facility and the accrual of interest related to unrecognized tax benefits. The effective rates for the 13 weeks and 26 weeks ended August 30, 2020 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and a discrete income tax provision for 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 on such earnings. |
Note 11 - Geographic Regions |
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| Geographic Regions [Text Block] |
11. GEOGRAPHIC REGIONS
The Company’s products are sold to customers in North America, Asia and Europe. The Company’s manufacturing facilities are located in Kansas. Sales are attributed to geographic regions based upon the region in which the materials were delivered to the customer. Sales between geographic regions were not significant.
Financial information regarding the Company’s continuing operations by geographic region is as follows:
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Note 12 - Discontinued Operations |
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| Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] |
12. DISCONTINUED OPERATIONS
On July 25, 2018, the Company entered into a definitive agreement to sell its Electronics Business for $145,000 in cash. The Company completed this transaction on December 4, 2018.
The Company has classified the operating results of its Electronics Business, together with certain costs related to the transaction, as discontinued operations, net of tax, in the Consolidated Statements of Operations.
The following table shows the summary operating results of the discontinued operations:
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Note 13 - Contingencies |
6 Months Ended |
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Aug. 29, 2021 | |
| Notes to Financial Statements | |
| Contingencies Disclosure [Text Block] |
13. CONTINGENCIES
Litigation
The Company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. The Company believes that the ultimate disposition of such proceedings, lawsuits and claims will not have a material adverse effect on the liquidity, capital resources, business, consolidated results of operations or financial position of the Company.
Environmental Contingencies
The Company and certain of its subsidiaries have been named by the Environmental Protection Agency (the “EPA”) or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the “Superfund Act”) or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at three sites.
Under the Superfund Act and similar state laws, all parties who may have contributed any waste to a hazardous waste disposal site or contaminated area identified by the EPA or comparable state agency may be jointly and severally liable for the cost of cleanup. Generally, these sites are locations at which numerous persons disposed of hazardous waste. In the case of the Company’s subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at waste sites by various companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its sub‐sidiaries 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 dur‐ing 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 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 mat‐ters described above. The Company accrues estimated costs asso‐ciated 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. |
Note 14 - Accounting Pronouncements |
6 Months Ended |
|---|---|
Aug. 29, 2021 | |
| Notes to Financial Statements | |
| Accounting Standards Update and Change in Accounting Principle [Text Block] |
14. ACCOUNTING PRONOUNCEMENTS
Recently Adopted
In December 2019, the Financial Accounting Standard Board issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The changes simplify the accounting for a number of topics, some of which are narrow. Some of the proposed amendments eliminate specific exceptions to the general principles of income tax accounting while other changes clarify a handful of narrow issues within the broad topic of income tax accounting. The amendments in ASU 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the requirements are effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted for: (1) public business entities for periods for which financial statements have not yet been issued, and (2) all other entities for periods for which financial statements have not yet been made available for issuance. The Company adopted this ASU in the first quarter of the 2022 fiscal year. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements and disclosures.
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Note 3 - Marketable Securities (Tables) |
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| Debt Securities, Available-for-sale [Table Text Block] |
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| Schedule of Available-for-sale Securities Reconciliation [Table Text Block] |
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Note 4 - Inventories (Tables) |
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Aug. 29, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Schedule of Inventory, Current [Table Text Block] |
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Note 5 - Leases (Tables) |
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Aug. 29, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||
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| Schedule of Right-of-use Assets and Operating Lease Liabilities [Table Text Block] |
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Note 6 - Stock-based Compensation (Tables) |
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| Share-based Payment Arrangement, Option, Activity [Table Text Block] |
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Note 7 - Earnings Per Share (Tables) |
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| Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Note 9 - Restructuring Charges (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Closure of Park Aerospace Technologies Asia PTE, LTD facility located in Singapore [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Schedule of Restructuring Reserve by Type of Cost [Table Text Block] |
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Note 11 - Geographic Regions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block] |
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Note 12 - Discontinued Operations (Tables) |
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| Disposal Groups, Including Discontinued Operations [Table Text Block] |
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Note 3 - Marketable Securities - Summary of Available-for-sale Securities (Details) - USD ($) $ in Thousands |
Aug. 29, 2021 |
Feb. 28, 2021 |
|---|---|---|
| Available-for-sale securities | $ 93,141 | $ 74,947 |
| Fair Value, Inputs, Level 1 [Member] | ||
| Available-for-sale securities | 93,141 | 74,947 |
| Fair Value, Inputs, Level 2 [Member] | ||
| Available-for-sale securities | 0 | 0 |
| Fair Value, Inputs, Level 3 [Member] | ||
| Available-for-sale securities | 0 | |
| US Treasury and Government [Member] | ||
| Available-for-sale securities | 55,630 | 56,906 |
| US Treasury and Government [Member] | Fair Value, Inputs, Level 1 [Member] | ||
| Available-for-sale securities | 55,630 | 56,906 |
| US Treasury and Government [Member] | Fair Value, Inputs, Level 2 [Member] | ||
| Available-for-sale securities | 0 | 0 |
| US Treasury and Government [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Available-for-sale securities | 0 | 0 |
| Debt Security, Corporate, US [Member] | ||
| Available-for-sale securities | 37,511 | 18,041 |
| Debt Security, Corporate, US [Member] | Fair Value, Inputs, Level 1 [Member] | ||
| Available-for-sale securities | 37,511 | 18,041 |
| Debt Security, Corporate, US [Member] | Fair Value, Inputs, Level 2 [Member] | ||
| Available-for-sale securities | 0 | 0 |
| Debt Security, Corporate, US [Member] | Fair Value, Inputs, Level 3 [Member] | ||
| Available-for-sale securities | $ 0 | $ 0 |
Note 3 - Marketable Securities - Summary of Unrealized Gains and Losses on Available-for-sale Securities (Details) - USD ($) $ in Thousands |
Aug. 29, 2021 |
Feb. 28, 2021 |
|---|---|---|
| Amortized cost basis | $ 93,614 | $ 75,408 |
| Gross unrealized gains | 103 | 205 |
| Gross unrealized losses | 576 | 666 |
| US Treasury and Government [Member] | ||
| Amortized cost basis | 56,111 | 57,400 |
| Gross unrealized gains | 75 | 153 |
| Gross unrealized losses | 556 | 647 |
| Debt Security, Corporate, US [Member] | ||
| Amortized cost basis | 37,503 | 18,008 |
| Gross unrealized gains | 28 | 52 |
| Gross unrealized losses | $ 20 | $ 19 |
Note 3 - Marketable Securities - Estimated Fair Value of Securities by Contractual Maturity (Details) - USD ($) $ in Thousands |
Aug. 29, 2021 |
Feb. 28, 2021 |
|---|---|---|
| Due in one year or less | $ 54,800 | |
| Due after one year through five years | 38,341 | |
| Debt Securities, Available-for-sale, Total | $ 93,141 | $ 74,947 |
Note 4 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands |
Aug. 29, 2021 |
Feb. 28, 2021 |
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|---|---|---|---|---|---|
| Raw materials | $ 3,906 | $ 3,490 | |||
| Work-in-process | 179 | 147 | |||
| Finished goods | 736 | 1,157 | |||
| Inventory, Net, Total | $ 4,821 | $ 4,794 | [1] | ||
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Note 5 - Leases (Details Textual) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended |
|---|---|---|---|
|
Dec. 31, 2018
USD ($)
ft²
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Aug. 29, 2021
USD ($)
|
Aug. 29, 2021
USD ($)
|
|
| Lessee, Operating Lease, Liability, to be Paid, Year One | $ 142 | $ 142 | |
| Operating Lease, Expense | $ 14 | 29 | |
| Operating Lease, Payments | $ 25 | ||
| Operating Lease, Weighted Average Remaining Lease Term (Year) | 15 years 7 months 6 days | 15 years 7 months 6 days | |
| Construction in Progress Estimated Cost | $ 19,100 | ||
| Purchase Obligation, Total | $ 889 | $ 889 | |
| Construction in Progress, Gross | $ 17,131 | $ 17,131 | |
| Additional Manufacturing Facility [Member] | |||
| Area of Land (Square Foot) | ft² | 90,000 | ||
| Minimum [Member] | |||
| Lessee, Operating Lease, Renewal Term (Year) | 1 year | 1 year | |
| Maximum [Member] | |||
| Lessee, Operating Lease, Renewal Term (Year) | 10 years | 10 years |
Note 5 - Leases - Future Minimum Lease Payments (Details) $ in Thousands |
Aug. 29, 2021
USD ($)
|
|---|---|
| 2023 | $ 142 |
| Present value of operating lease payments | 97 |
| Leases with Renewal Options [Member] | |
| 2022 | 8 |
| 2023 | 0 |
| 2024 | 0 |
| 2025 | 0 |
| 2026 | 0 |
| Thereafter | 162 |
| Total undiscounted operating lease payments | 170 |
| Less imputed interest | (73) |
| Present value of operating lease payments | $ 97 |
Note 5 - Leases - Schedule of Right-of-use Assets and Operating Lease Liabilities (Details) - USD ($) $ in Thousands |
Aug. 29, 2021 |
Feb. 28, 2021 |
[1] | ||
|---|---|---|---|---|---|
| Operating right-of-use assets | $ 76 | $ 103 | |||
| Operating lease liabilities | 8 | 33 | |||
| Long-term operating lease liabilities | 89 | $ 86 | |||
| Total operating lease liabilities | $ 97 | ||||
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Note 6 - Stock-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | |
|---|---|---|
Jul. 24, 2018 |
Aug. 29, 2021 |
|
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares) | 142,250 | |
| Share-based Payment Arrangement, Option [Member] | ||
| Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $ 396 | |
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) | $ 2.78 | |
| The 2018 Stock Option Plan [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares) | 800,000 | |
| Percentage of Stock Options, Exercisable One Year From Date of Grant | 25.00% | |
| Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year) | 1 year | |
| Percentage of Stock Options Exercisable On Each Succeeding Year from Date of Grant | 25.00% | |
| Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period (Year) | 10 years | |
| The 2018 Stock Option Plan [Member] | Directors and Certain of Employees [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in shares) | 142,250 | |
| The 2018 Stock Option Plan [Member] | Directors and Certain of Employees [Member] | Minimum [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.74% | |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 29.00% | |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 2.73% | |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term (Year) | 4 years 4 months 24 days | |
| The 2018 Stock Option Plan [Member] | Directors and Certain of Employees [Member] | Maximum [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.28% | |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 29.20% | |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 2.90% | |
| Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term (Year) | 7 years 7 months 6 days |
Note 6 - Stock-based Compensation - Option Activity (Details) - $ / shares |
6 Months Ended |
|---|---|
Aug. 29, 2021 | |
| Outstanding options (in shares) | 634,534 |
| Balance, weighted average exercise price (in dollars per share) | $ 12.47 |
| Outstanding options, granted (in shares) | 142,250 |
| Granted, weighted average exercise price (in dollars per share) | $ 13.85 |
| Outstanding options, exercised (in shares) | (46,134) |
| Exercised, weighted average exercise price (in dollars per share) | $ 9.93 |
| Outstanding options, terminated or expired (in shares) | (32,650) |
| Terminated or expired, weighted average exercise price (in dollars per share) | $ 13.99 |
| Outstanding options (in shares) | 698,000 |
| Balance, weighted average exercise price (in dollars per share) | $ 12.85 |
| Balance, weighted average remaining contractual term (Year) | 6 years 29 days |
| Outstanding options, vested and exercisable (in shares) | 426,975 |
| Vested and exercisable, weighted average exercise price (in dollars per share) | $ 12.30 |
| Vested and exercisable, weighted average remaining contractual term (Year) | 4 years 29 days |
Note 7 - Earnings Per Share (Details Textual) - shares |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
Aug. 29, 2021 |
Aug. 30, 2020 |
|
| Share-based Payment Arrangement, Option [Member] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) | 166,000 | 474,000 | 171,000 | 450,000 |
Note 7 - Earnings Per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
Aug. 29, 2021 |
Aug. 30, 2020 |
|
| Net earnings - continuing operations | $ 2,022 | $ 1,151 | $ 4,767 | $ 3,123 |
| Net loss - discontinued operations | 0 | (197) | 0 | (212) |
| Net earnings | $ 2,022 | $ 954 | $ 4,767 | $ 2,911 |
| Weighted average common shares outstanding for basic EPS (in shares) | 20,397 | 20,381 | 20,390 | 20,392 |
| Net effect of dilutive options (in shares) | 88 | 52 | 207 | 55 |
| Weighted average shares outstanding for diluted EPS (in shares) | 20,485 | 20,433 | 20,597 | 20,447 |
| Basic earnings per share - continuing operations (in dollars per share) | $ 0.10 | $ 0.06 | $ 0.23 | $ 0.15 |
| Basic loss per share - discontinued operations (in dollars per share) | 0 | (0.01) | 0 | (0.01) |
| Basic earnings per share (in dollars per share) | 0.10 | 0.05 | 0.23 | 0.14 |
| Diluted earnings per share - continuing operations (in dollars per share) | 0.10 | 0.06 | 0.23 | 0.15 |
| Diluted loss per share - discontinued operations (in dollars per share) | 0 | (0.01) | 0 | (0.01) |
| Diluted earnings per share (in dollars per share) | $ 0.10 | $ 0.05 | $ 0.23 | $ 0.14 |
Note 8 - Shareholders' Equity (Details Textual) - shares |
6 Months Ended | |||||
|---|---|---|---|---|---|---|
Mar. 10, 2016 |
Aug. 29, 2021 |
Aug. 30, 2020 |
Oct. 01, 2021 |
Jan. 08, 2015 |
Jan. 07, 2015 |
|
| Stock Repurchase Program, Number of Shares Authorized to be Repurchased (in shares) | 1,250,000 | |||||
| Stock Repurchase Program, Percentage of Outstanding Shares Authorized to be Repurchased | 6.00% | |||||
| Common Stock, Shares, Outstanding, Ending Balance (in shares) | 20,945,634 | |||||
| Stock Repurchase Program, Number of Additional Shares Authorized to be Repurchased (in shares) | 1,000,000 | |||||
| Stock Repurchased During Period, Shares (in shares) | 0 | 137,397 | ||||
| Subsequent Event [Member] | ||||||
| Stock Repurchase Program, Percentage of Outstanding Shares Authorized to be Repurchased | 6.80% | |||||
| Common Stock, Shares, Outstanding, Ending Balance (in shares) | 20,458,210 | |||||
| Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased (in shares) | 1,394,015 | |||||
Note 9 - Restructuring Charges (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
Aug. 29, 2021 |
Aug. 30, 2020 |
|
| Restructuring Charges, Total | $ 170 | $ 0 | $ 184 | $ 0 |
| Facility Closing [Member] | ||||
| Restructuring Charges, Total | $ 170 | $ 0 | $ 184 | $ 0 |
Note 9 - Restructuring Charges - Restructuring Charges (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
Aug. 29, 2021 |
Aug. 30, 2020 |
|
| Current Period Charges | $ 170 | $ 0 | $ 184 | $ 0 |
| Closure of Park Advanced Composite Materials, Inc. Business Unit [Member] | ||||
| Accrued, Beginning Balance | 252 | |||
| Current Period Charges | 184 | |||
| Cash Payments | (213) | |||
| Non-Cash Charges | (22) | |||
| Accrued, Ending Balance | 201 | 201 | ||
| Total Costs Accrued to Date | 1,754 | 1,754 | ||
| Facility Lease Costs [Member] | Closure of Park Advanced Composite Materials, Inc. Business Unit [Member] | ||||
| Accrued, Beginning Balance | 252 | |||
| Current Period Charges | 0 | |||
| Cash Payments | (29) | |||
| Non-Cash Charges | (22) | |||
| Accrued, Ending Balance | 201 | 201 | ||
| Total Costs Accrued to Date | 252 | 252 | ||
| Asset Impairment [Member] | Closure of Park Advanced Composite Materials, Inc. Business Unit [Member] | ||||
| Accrued, Beginning Balance | 0 | |||
| Current Period Charges | 0 | |||
| Cash Payments | 0 | |||
| Non-Cash Charges | 0 | |||
| Accrued, Ending Balance | 0 | 0 | ||
| Total Costs Accrued to Date | 1,318 | 1,318 | ||
| Asset Removal [Member] | Closure of Park Advanced Composite Materials, Inc. Business Unit [Member] | ||||
| Accrued, Beginning Balance | 0 | |||
| Current Period Charges | 152 | |||
| Cash Payments | (152) | |||
| Non-Cash Charges | 0 | |||
| Accrued, Ending Balance | 0 | 0 | ||
| Total Costs Accrued to Date | 152 | 152 | ||
| Other Restructuring [Member] | Closure of Park Advanced Composite Materials, Inc. Business Unit [Member] | ||||
| Accrued, Beginning Balance | 0 | |||
| Current Period Charges | 32 | |||
| Cash Payments | (32) | |||
| Non-Cash Charges | 0 | |||
| Accrued, Ending Balance | 0 | 0 | ||
| Total Costs Accrued to Date | $ 32 | $ 32 | ||
Note 10 - Income Taxes (Details Textual) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
Aug. 29, 2021 |
Aug. 30, 2020 |
|
| Income Tax Expense (Benefit), Total | $ 820 | $ 460 | $ 2,002 | $ 1,188 |
| Income Tax Expense (Benefit), Discrete Amount | $ 27 | $ 42 | $ 170 | $ 84 |
| Effective Income Tax Rate Reconciliation, Percent, Total | 28.80% | 28.60% | 29.60% | 27.50% |
| Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% | ||
| Undistributed Earnings, Basic, Total | $ 25,000 | |||
Note 11 - Geographic Regions - Financial Information by Geographic Region (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
Aug. 29, 2021 |
Aug. 30, 2020 |
Feb. 28, 2021 |
|
| Net sales | $ 13,618 | $ 9,250 | $ 27,212 | $ 21,463 | |
| Total long-lived assets | 33,230 | 33,230 | $ 31,171 | ||
| North America [Member] | |||||
| Net sales | 12,981 | 8,636 | 26,054 | 20,382 | |
| Total long-lived assets | 33,218 | 33,218 | 31,170 | ||
| Asia [Member] | |||||
| Net sales | 182 | 115 | 324 | 304 | |
| Total long-lived assets | 12 | 12 | 1 | ||
| Europe [Member] | |||||
| Net sales | 455 | $ 499 | 834 | $ 777 | |
| Total long-lived assets | $ 0 | $ 0 | $ 0 | ||
Note 12 - Discontinued Operations (Details Textual) $ in Millions |
Dec. 04, 2018
USD ($)
|
|---|---|
| Electronics Business [Member] | Discontinued Operations, Disposed of by Sale [Member] | |
| Disposal Group, Including Discontinued Operation, Consideration | $ 145 |
Note 12 - Discontinued Operations - Summary of Discontinued Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Aug. 29, 2021 |
Aug. 30, 2020 |
Aug. 29, 2021 |
Aug. 30, 2020 |
|
| Net sales | $ 0 | $ 0 | $ 0 | $ 0 |
| Cost of sales | 0 | 0 | 0 | 0 |
| Gross profit | 0 | 0 | 0 | 0 |
| Selling, general and administrative expenses | 0 | 0 | 0 | 0 |
| Restructuring charges | 0 | 264 | 0 | 284 |
| Loss from discontinued operations | 0 | (264) | 0 | (284) |
| Other income | 0 | 0 | 0 | 0 |
| Loss from discontinued operations before income taxes | 0 | (264) | 0 | (284) |
| Income tax benefit | 0 | (67) | 0 | (72) |
| Net loss from discontinued operations | $ 0 | $ (197) | $ 0 | $ (212) |
Note 13 - Contingencies (Details Textual) $ in Thousands |
6 Months Ended |
|---|---|
|
Aug. 29, 2021
USD ($)
| |
| Percentage of Legal Defense and Remediation Costs Associated with Sites Reimbursed by Insurance Carriers | 100.00% |
| Number of Units Covered Under General Liability Insurance Coverage | 2 |
| Accrual for Environmental Loss Contingencies, Ending Balance | $ 0 |
| Number of Insurance Carriers | 3 |
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