Form 10-Q - Quarterly report [Sections 13 or 15(d)]

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended September 1, 2024

 

OR

 

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

 

For the transition period from ________ to__________         

 

Commission file number 1-4415

 

PARK AEROSPACE CORP.

(Exact Name of Registrant as Specified in Its Charter)

 

New York		11-1734643
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
1400 Old Country Road, Westbury, N.Y.		11590
(Address of Principal Executive Offices)		(Zip Code)

 

[phone]

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 19,961,792 as of October 7, 2024.

 

 

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PARK AEROSPACE CORP. AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

		Page Number
PART I.	FINANCIAL INFORMATION:
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets September 1, 2024 (Unaudited) and March 3, 2024	4
	Consolidated Statements of Operations 13 weeks and 26 weeks ended September 1, 2024 and August 27, 2023 (Unaudited)	5
	Consolidated Statements of Comprehensive Earnings 13 weeks and 26 weeks ended September 1, 2024 and August 27, 2023 (Unaudited)	6
	Consolidated Statements of Shareholders’ Equity September 1, 2024 and August 27, 2023 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows 26 weeks ended September 1, 2024 and August 27, 2023 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Factors That May Affect Future Results	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION:
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
EXHIBIT INDEX		28
SIGNATURES		29

 

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PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

PARK AEROSPACE CORP. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

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		September 1, 2024 (unaudited)				March 3, 2024*
ASSETS
Current assets
Cash and cash equivalents		$	8,153			$	6,567
Marketable securities (Note 3)			63,831				70,644
Accounts receivable, less allowance for credit losses of $136 and $128, respectively			10,914				12,381
Inventories (Note 4)			7,630				6,404
Prepaid expenses and other current assets			2,499				2,849
Total current assets			93,027				98,845
Property, plant and equipment, net			21,891				23,499
Operating right-of-use assets (Note 5)			334				95
Goodwill and other intangible assets			9,776				9,776
Other assets			87				94
Total assets		$	125,115			$	132,309
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable		$	3,700			$	3,514
Operating lease liability (Note 5)			40				53
Accrued liabilities			1,348				1,986
Income taxes payable			5,121				4,105
Total current liabilities			10,209				9,658
Long-term operating lease liability (Note 5)			339				82
Non-current income taxes payable (Note 9)			-				5,259
Deferred income taxes (Note 9)			3,087				3,222
Other liabilities			1,222				1,174
Total liabilities			14,857				19,395
Commitments and contingencies (Note 12)
Shareholders' equity (Note 8)
Common stock			2,096				2,096
Additional paid-in capital			170,626				170,445
Accumulated deficit			(47,379	)			(45,374	)
Accumulated other comprehensive loss			(1,250	)			(2,271	)
			124,093				124,896
Less treasury stock, at cost			(13,835	)			(11,982	)
Total shareholders' equity			110,258				112,914
Total liabilities and shareholders' equity		$	125,115			$	132,309

 

*	The balance sheet at March 3, 2024 has been derived from the audited consolidated financial statements at that date.

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

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PARK AEROSPACE CORP. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

 

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		13 Weeks Ended (Unaudited)								26 Weeks Ended (Unaudited)
		September 1,				August 27,				September 1,				August 27,
		2024				2023				2024				2023
Net sales		$	16,709			$	12,481			$	30,679			$	28,032
Cost of sales			11,952				8,402				21,823				19,120
Gross profit			4,757				4,079				8,856				8,912
Selling, general and administrative expenses			2,140				1,853				4,157				4,468
Earnings from operations			2,617				2,226				4,699				4,444
Storm damage charge (Note 11)			(46	)			-				(1,098	)			-
Interest and other income			245				139				584				463
Earnings from operations before income taxes			2,816				2,365				4,185				4,907
Income tax provision (Note 9)			750				619				1,126				1,307
Net earnings		$	2,066			$	1,746			$	3,059			$	3,600
Earnings per share (Note 7)
Basic:
Basic earnings per share		$	0.10			$	0.09			$	0.15			$	0.18
Basic weighted average shares			20,216				20,256				20,234				20,359
Diluted:
Diluted earnings per share		$	0.10			$	0.09			$	0.15			$	0.18
Diluted weighted average shares			20,291				20,338				20,331				20,432

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

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PARK AEROSPACE CORP. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(Amounts in thousands)

 

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		13 Weeks Ended (Unaudited)								26 Weeks Ended (Unaudited)
		September 1,				August 27,				September 1,				August 27,
		2024				2023				2024				2023
Net earnings		$	2,066			$	1,746			$	3,059			$	3,600
Other comprehensive earnings (loss), net of tax:
Unrealized gains on marketable securities:
Unrealized holding gains arising during the period			758				109				1,016				701
Unrealized losses on marketable securities:
Unrealized holding losses arising during the period			-				(107	)			(35	)			(107	)
Less: reclassification adjustment for losses included in net earnings			40				108				40				232
Other comprehensive earnings			798				110				1,021				826
Total comprehensive earnings		$	2,864			$	1,856			$	4,080			$	4,426

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

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PARK AEROSPACE CORP. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

 

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																		Accumulated
										Additional								Other
		Common Stock								Paid-in				Accumulated				Comprehensive				Treasury Stock
		Shares				Amount				Capital				Deficit				(Loss) Earnings				Shares				Amount
Balance, March 3, 2024			20,965,144			$	2,096			$	170,445			$	(45,374	)		$	(2,271	)			711,783			$	(11,982	)
Net earnings			-				-				-				993				-				-				-
Unrealized gain on marketable securities, net of tax			-				-				-				-				223				-				-
Stock-based compensation			-				-				89				-				-				-				-
Cash dividends ($0.125 per share)			-				-				-				(2,532	)			-				-				-
Balance, June 2, 2024			20,965,144			$	2,096			$	170,534			$	(46,913	)		$	(2,048	)			711,783			$	(11,982	)
Net earnings			-				-				-				2,066				-				-				-
Unrealized gain on marketable securities, net of tax			-				-				-				-				798				-				-
Stock options exercised			-				-				(9	)			-				-				(2,062	)			35
Stock-based compensation			-				-				101				-				-				-				-
Repurchase of treasury shares			-				-				-				-				-				149,633				(1,888	)
Cash dividends ($0.125 per share)			-				-				-				(2,532	)			-				-				-
Balance, September 1, 2024			20,965,144			$	2,096			$	170,626			$	(47,379	)		$	(1,250	)			859,354			$	(13,835	)

 

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																		Accumulated
										Additional								Other
		Common Stock								Paid-in				Accumulated				Comprehensive				Treasury Stock
		Shares				Amount				Capital				Deficit				(Loss) Earnings				Shares				Amount
Balance, February 26, 2023			20,965,144			$	2,096			$	169,932			$	(42,694	)		$	(4,244	)			493,934			$	(9,156	)
Net earnings			-				-				-				1,854				-				-				-
Unrealized gain on marketable securities, net of tax			-				-				-				-				716				-				-
Stock-based compensation			-				-				218				-				-				-				-
Repurchase of treasury shares			-				-				-				-				-				129,654				(1,669	)
Cash dividends ($0.125 per share)			-				-				-				(2,559	)			-				-				-
Balance, May 28, 2023			20,965,144			$	2,096			$	170,150			$	(43,399	)		$	(3,528	)			623,588			$	(10,825	)
Net earnings			-				-				-				1,746				-				-				-
Unrealized gain on marketable securities, net of tax			-				-				-				-				110				-				-
Stock-based compensation			-				-				104				-				-				-				-
Repurchase of treasury shares			-				-				-				-				-				91,445				(1,211	)
Cash dividends ($0.125 per share)			-				-				-				(2,531	)			-				-				-
Balance, August 27, 2023			20,965,144			$	2,096			$	170,254			$	(44,184	)		$	(3,418	)			715,033			$	(12,036	)

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

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PARK AEROSPACE CORP. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

 

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		26 Weeks Ended (Unaudited)
		September 1,				August 27,
		2024				2023
Cash flows from operating activities:
Net earnings		$	3,059			$	3,600
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Non-cash storm damage charge			887				-
Depreciation and amortization			927				644
Stock-based compensation			190				322
Provision for credit losses			8				8
Deferred income taxes			(135	)			(52	)
Amortization of bond premium			84				408
Loss on sale of marketable securities			55				184
Changes in operating assets and liabilities			(4,052	)			(7,759	)
Net cash provided by (used in) operating activities			1,023				(2,645	)
Cash flows from investing activities:
Purchase of property, plant and equipment			(206	)			(374	)
Purchases of marketable securities			(7,772	)			(3,329	)
Proceeds from sales and maturities of marketable securities			15,467				37,915
Net cash provided by investing activities			7,489				34,212
Cash flows from financing activities:
Dividends paid			(5,064	)			(25,561	)
Proceeds from exercise of stock options			26				-
Purchase of treasury stock			(1,888	)			(2,880	)
Net cash used in financing activities			(6,926	)			(28,441	)
Increase in cash and cash equivalents:			1,586				3,126
Cash and cash equivalents, beginning of period			6,567				4,237
Cash and cash equivalents, end of period		$	8,153			$	7,363
Supplemental disclosure of non-cash activities:
Addition to operating right-of-use asset from new operating lease liability		$	267			$	-
Supplemental cash flow information:
Cash paid during the period for income taxes, net of refunds		$	5,199			$	5,107

 

See Notes to Condensed Consolidated Financial Statements (Unaudited).

 

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PARK AEROSPACE CORP. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

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1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The Condensed Consolidated Balance Sheet and the Consolidated Statement of Shareholders’ Equity as of September 1, 2024, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended September 1, 2024 and August 27, 2023, 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 September 1, 2024 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 (“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 March 3, 2024. There have been no significant changes to such accounting policies during the 26 weeks ended September 1, 2024.

 

 

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.

 

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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 September 1, 2024.

 

 

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:

 

		September 1, 2024
		Total				Level 1				Level 2				Level 3
U.S. Treasury and other government securities		$	63,831			$	63,831			$	-			$	-
Total marketable securities		$	63,831			$	63,831			$	-			$	-

 

		March 3, 2024
		Total				Level 1				Level 2				Level 3
U.S. Treasury and other government securities		$	67,210			$	67,210			$	-			$	-
U.S. corporate debt securities			3,434				3,434				-				-
Total marketable securities		$	70,644			$	70,644			$	-			$	-

 

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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
September 1, 2024:
U.S. Treasury and other government securities		$	65,543			$	43			$	1,755
U.S. corporate debt securities			-				-				-
Total marketable securities		$	65,543			$	43			$	1,755
March 3, 2024:
U.S. Treasury and other government securities		$	70,320			$	-			$	3,110
U.S. corporate debt securities			3,435				-				1
Total marketable securities		$	73,755			$	-			$	3,111

 

 

The estimated fair values of such securities at September 1, 2024 by contractual maturity are shown below:

 

 

Due in one year or less		$	32,607
Due after one year through five years			31,224
		$	63,831

 

 

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:

 

 

		September 1,				March 3,
		2024				2024
Inventories:
Raw materials		$	5,406			$	5,047
Work-in-process			541				397
Finished goods			1,683				960
		$	7,630			$	6,404

 

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5. LEASES

 

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

 

Future minimum lease payments under non-cancellable operating leases as of September 1, 2024 are as follows:

 

Fiscal Year:
2025		$	28
2026			57
2027			59
2028			61
2029			65
Thereafter			202
Total undiscounted operating lease payments			472
Less imputed interest			(93	)
Present value of operating lease payments		$	379

 

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.

 

For the 13 weeks and 26 weeks ended September 1, 2024, the Company’s operating lease expenses were $15 and $31, respectively. Cash payments of $27, 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 September 1, 2024:

 

Operating right-of-use assets		$	334
Operating lease liabilities		$	40
Long-term operating lease liabilities			339
Total operating lease liabilities		$	379

 

The Company’s weighted average remaining lease term for its operating leases is 6.5 years.

 

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6. STOCK-BASED COMPENSATION

 

As of September 1, 2024, 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, approved by the shareholders of the Company at the Annual Meeting of Shareholders of the Company on July 24, 2018, and amended by the shareholders of the Company on July 18, 2024 and provides for the grant of options to purchase up to 1,550,000 shares of common stock of the Company. Prior to the 2018 Plan, the Company had the 2002 Stock Option Plan (the “2002 Plan”) which had been approved by the Company’s shareholders and provided for the grant of stock options to directors and key employees of the Company. All options granted under the 2018 Plan and 2002 Plan have exercise prices equal to the fair market value of the underlying common stock of the Company at the time of grant which, pursuant to the terms of such Plans, is the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date the option is granted. Options granted under the Plans become exercisable 25% one year after the date of grant, with an additional 25% exercisable each succeeding anniversary of the date of grant, and expire 10 years after the date of grant. Upon termination of employment or service as a director, all options held by the optionee that have not previously become exercisable shall terminate and all other options held by such optionee may be exercised, to the extent exercisable on the date of such termination, for a limited time after such termination. Any shares of common stock subject to an option under the 2018 Plan, which expires or is terminated unexercised as to such shares, shall again become available for issuance under the 2018 Plan.

 

During the 26 weeks ended September 1, 2024, the Company granted options under the 2018 Plan to purchase a total of 135,100 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 $434 and will be recorded on a straight-line basis over the requisite service period. The weighted average fair value of the granted options was $3.21 per share using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 4.23%-4.24%; expected volatility factor of 28.7%-29.1%; expected dividend yield of 3.77%; and estimated option term of 5.8-8.6 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 September 1, 2024. The estimated term of the options was based on evaluations of the historical and expected future employee exercise behavior.

 

During the 2024 fiscal year, the Company recorded non-cash charges of $109 related to the modification of previously granted employee stock options resulting from the $1.00 per share special cash dividend paid by the Company in April 2023.

 

The future compensation expense to be recognized in earnings before income taxes for options outstanding at September 1, 2024 was $895, which is expected to be recognized ratably over a weighted average vesting period of 1.53 years.

 

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The following is a summary of option activity for the 26 weeks ended September 1, 2024:

 

		Outstanding Options				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (in years)				Aggregate Intrinsic Value
Balance, March 3, 2024			708,325			$	11.53
Granted			135,100				13.26
Exercised			(2,062	)			11.97
Terminated or expired			(4,688	)			12.71
Balance, September 1, 2024			836,675			$	11.80				6.17			$	1,498
Vested and exercisable, September 1, 2024			518,988			$	11.22				4.60			$	1,258

 

 

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
		September 1, 2024				August 27, 2023				September 1, 2024				August 27, 2023
Net earnings		$	2,066			$	1,746			$	3,059			$	3,600
Weighted average common shares outstanding for basic EPS			20,216				20,256				20,234				20,359
Net effect of dilutive options			75				82				97				73
Weighted average shares outstanding for diluted EPS			20,291				20,338				20,331				20,432
Basic earnings per share		$	0.10			$	0.09			$	0.15			$	0.18
Diluted earnings per share		$	0.10			$	0.09			$	0.15			$	0.18

 

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 84,000 and 148,000 for the 13 weeks ended September 1, 2024 and August 27, 2023, respectively, and 42,000 and 152,000 for the 26 weeks ended September 1, 2024 and August 27, 2023, respectively.

 

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8. SHAREHOLDERS’ EQUITY

 

On May 23, 2022, 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 1,500,000 additional shares of its common stock. This authorization supersedes any unused prior Board of Directors’ authorizations to purchase shares of the Company’s common stock. The Company purchased 149,633 and 221,099 shares of its common stock during the 26 weeks ended September 1, 2024 and August 27, 2023, respectively. As a result, the Company is authorized to purchase up to a total of 1,129,268 shares of its common stock, representing approximately 5.7% of the Company’s 19,961,792 total outstanding shares as of the close of business on October 7, 2024. There is no assurance the Company will purchase any shares pursuant to this Board of Directors’ authorization. Shares purchased by the Company, if any, will be retained as treasury stock and will be available for use under the Company’s stock option plan and for other corporate purposes.

 

 

9. INCOME TAXES

 

For the 13 weeks and 26 weeks ended September 1, 2024, the Company recorded income tax provisions from operations of $750 and $1,126, respectively, which included discrete income tax provisions of $22 and $41, respectively. For the 13 weeks and 26 weeks ended August 27, 2023, the Company recorded income tax provisions from operations of $619 and $1,307, respectively, which included discrete income tax provisions of $16 and $53, respectively.

 

The Company’s effective tax rates for the 13 weeks and 26 weeks ended September 1, 2024 were income tax provisions of 26.6% and 26.9%, respectively, compared to income tax provisions of 26.2% and 26.6% in the comparable prior periods. The effective tax rates for the 13 weeks and 26 weeks ended September 1, 2024 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. The effective rates for the 13 weeks and 26 weeks ended August 27, 2023 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and discrete income tax provisions for the accrual of interest related to unrecognized tax benefits.

 

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.

 

 

10. GEOGRAPHIC REGIONS

 

The Company’s products are sold to customers in North America, Asia and Europe. The Company’s manufacturing facility is located in Kansas. Sales are attributed to geographic regions based upon the region in which the materials were delivered to the customer. All of the Company’s long-lived assets are located in North America.

 

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

 

		13 Weeks Ended								26 Weeks Ended
		September 1, 2024				August 27, 2023				September 1, 2024				August 27, 2023
Sales:
North America		$	15,284			$	11,338			$	27,270			$	24,957
Asia			176				412				895				542
Europe			1,249				731				2,514				2,533
Total sales		$	16,709			$	12,481			$	30,679			$	28,032

 

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11. STORM DAMAGE CHARGE

 

The Company recorded a charge of $46 and $1,098, respectively, for storm damage in the 13 weeks and 26 weeks ended September 1, 2024.

 

On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which transitioned the area.  None of the Company’s manufacturing lines or equipment were damaged by the storm.  Although the building structures are secure, the roofs on all three buildings in the Company’s Newton, Kansas campus will ultimately need to be replaced.  Also, multiple specialty HVAC units were damaged or destroyed.  These specialty HVAC units are necessary to control the temperature and humidity in certain manufacturing areas, quality laboratories and R&D laboratories, which is required by certain specifications and certifications the Company is subject to.  The Company is currently working with multiple contractors on site to remediate the damage.

 

Although the Company is still in the process of remediating the damage, the Company’s production lines were returned to full production within two weeks of the storm. The Company is employing certain temporary measures in order to return its production lines to full service, including the use of temporary HVAC equipment, but it will take the Company several months to permanently repair or replace all of the damaged facilities and infrastructure equipment. 

 

The Company does not anticipate the loss of any sales for the 2025 fiscal year.

 

The Company paid its employees for the days immediately following the storm despite many not being able to work while others worked on the clean-up of the storm damage to the facilities. The Company incurred $78 of payroll and related costs for lost production time and employees working on clean-up.

 

The charge recorded by the Company includes an asset damage charge, emergency services by outside contractors, rental of temporary HVAC units and the cost of employee downtime or time spent on the clean-up of the storm damage to the facilities. Additional costs will be recorded in future periods as additional work is needed and performed.

 

The Company has insurance coverage for wind damage with a deductible of approximately $2.5 million. Under the insurance policy, the Company expects to recover all costs and damages incurred in excess of the deductible. The costs will be in part based on replacement costs, which will be in excess of the charge. Any insurance recovery will be recorded when realization can be determined and is assured.

 

 

12. CONTINGENCIES

 

Litigation

 

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

 

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Environmental Contingencies

 

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

 

Under the Superfund Act and similar state laws, all parties who may have contributed any waste to a hazardous waste disposal site or contaminated area identified by the EPA or comparable state agency may be jointly and severally liable for the cost of cleanup. Generally, these sites are locations at which numerous persons disposed of hazardous waste. In the case of the Company’s subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at waste sites by various companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its 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 during which the Company’s subsidiaries’ waste was disposed at these three sites have in the past reimbursed the Company and its subsidiaries for 100% of their legal defense and remediation costs associated with two of these sites.

 

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

 

Included in selling, general and administrative expenses are charges for actual expenditures and accruals, based on estimates, for certain environmental 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.

 

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

 

General:

 

Park Aerospace Corp. (“Park” or the “Company”) develops and manufactures solution and hot-melt advanced composite materials used to produce composite structures for the global aerospace markets. Park’s advanced composite materials include film adhesives (Aeroadhere®) and lightning strike protection materials (Electroglide®). 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 SigmaStrut^TM and AlphaStrut^TM product lines) are, among others, prototype and development aircraft, special mission aircraft, spares for legacy military and civilian aircraft and exotic spacecraft.

 

Financial Overview

 

On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which transitioned the area.  None of the Company’s manufacturing lines or equipment were damaged by the storm.  Although the building structures are secure, the roofs on two of the three buildings in the Company’s Newton, Kansas campus will need significant repairs and the roof on one building will need to be replaced.  Also, multiple specialty HVAC units were damaged or destroyed.  These specialty HVAC units are necessary to control the temperature and humidity in certain manufacturing areas, quality laboratories and R&D laboratories, as required by certain specifications and certifications the Company is subject to.  The Company is currently working with multiple contractors on site to remediate the damage.

 

Although the Company is still in the process of remediating the damage, the Company’s production lines are all fully operational.  The Company is employing certain temporary measures in order to keep its production lines operating at full service, including the use of temporary HVAC equipment, but it will take the Company several months to permanently repair or replace all the damaged facilities and infrastructure equipment.  The Company has recorded a charge of $1.1 million in the 26 weeks ended September 1, 2024 related to the damage and related repair and downtime costs.

 

The Company's net sales in the 13 weeks and 26 weeks ended September 1, 2024 were $16.7 million and $30.7 million, respectively, compared to $12.5 million and $28.0 million, respectively, in the 13 weeks and 26 weeks ended August 27, 2023. Sales for the 13 weeks and 26 weeks ended September 1, 2024 were higher than in the comparable periods of the prior fiscal year due to higher sales to the commercial aerospace and military markets.

 

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The Company’s gross profit in the 13 weeks ended September 1, 2024 was higher than the gross profit in the prior year’s comparable period due to higher sales levels in the 13 weeks ended September 1, 2024 compared to the comparable period in the prior year partially offset by a less favorable product mix, higher depreciation, repairs and maintenance and utilities related to the use of a new production line, and higher costs for raw materials, supplies, freight and labor resulting from inflationary trends. The Company’s gross profit in the 26 weeks ended September 1, 2024 was similar to the gross profit in the prior year’s comparable period despite higher sales levels primarily due to a less favorable sales mix and the higher costs mentioned above.

 

The Company’s gross profit margins, measured as percentages of sales, were 28.5% and 28.9%, respectively, in the 13 weeks and 26 weeks ended September 1, 2024 compared to 32.7% and 31.8%, respectively, in the 13 weeks and 26 weeks ended August 27, 2023. The lower gross profit margins for the 13 and 26 weeks ended September 1, 2024 compared to the prior year’s comparable periods were primarily due to ramping up capacity ahead of customer program volume increases, a less favorable sales mix due to fabric sales, higher depreciation, repairs and maintenance and utilities related to use of the new production line, and higher costs for raw materials, supplies, freight and labor resulting from inflationary trends, partially offset by higher sales.

 

The Company’s earnings before income taxes and net earnings increased 19.1% and 18.3%, respectively, in the 13 weeks ended September 1, 2024, compared to the 13 weeks ended August 27, 2023, primarily as a result of higher sales, partially offset by an unfavorable sales mix due to higher fabric sales and the higher costs mentioned above.

 

The Company’s earnings before income taxes and net earnings decreased 14.7% and 15.0%, respectively, in the 26 weeks ended September 1, 2024, compared to the 26 weeks ended August 27, 2023, primarily as a result of charges incurred related to the storm damage and the higher costs mentioned above, partially offset by higher sales.

 

The Company continues to experience inflation in costs of raw materials and supplies, freight costs and other costs and expenses. The impact of inflation on the Company’s profits has been partially mitigated by the Company’s ability to adjust pricing for a large portion of its sales to pass the impact of inflation through to its customers.

 

Programs in which the Company participates as a supplier are, in some cases, experiencing supply chain issues from other suppliers to the programs that could result in delays in production for certain customers of the Company. The Company’s sales may be impacted by these supply chain challenges its customers are experiencing from other suppliers.

 

While the wars in Ukraine and the Middle East have had a negative impact on the Company’s results of operations due to delayed shipments, the Company may experience an increase in future sales due to increases in spending worldwide on missile defense systems and other defense programs. The Company does not have any significant customers in Russia or Ukraine but does have customers in Israel. The Company has experienced some increases in raw material costs from overseas suppliers due to the impacts of the wars in Ukraine and the Middle East.

 

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

 

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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)		September 1, 2024				August 27, 2023				% Change				September 1, 2024				August 27, 2023				% Change
Net sales		$	16,709			$	12,481				33.9	%		$	30,679			$	28,032				9.4	%
Cost of sales			11,952				8,402				42.3	%			21,823				19,120				14.1	%
Gross profit			4,757				4,079				16.6	%			8,856				8,912				(0.6	)%
Selling, general and administrative expenses			2,140				1,853				15.5	%			4,157				4,468				(7.0	)%
Earnings from operations			2,617				2,226				17.6	%			4,699				4,444				5.7	%
Storm damage charge			(46	)			-				100.0	%			(1,098	)			-				100.0	%
Interest and other income			245				139				76.3	%			584				463				26.1	%
Earnings from operations before income taxes			2,816				2,365				19.1	%			4,185				4,907				(14.7	)%
Income tax provision (Note 9)			750				619				21.2	%			1,126				1,307				(13.8	)%
Net earnings		$	2,066			$	1,746				18.3	%		$	3,059			$	3,600				(15.0	)%
Earnings per share:
Basic:
Basic earnings per share		$	0.10			$	0.09				11.1	%		$	0.15			$	0.18				(16.7	)%
Diluted:
Diluted earnings per share		$	0.10			$	0.09				11.1	%		$	0.15			$	0.18				(16.7	)%

 

Net Sales

 

The Company's net sales in the 13 weeks and 26 weeks ended September 1, 2024, were $16.7 million and $30.7 million, respectively, compared to $12.5 million and $28.0 million, respectively, in the 13 weeks and 26 weeks ended August 27, 2023. Sales for the 13 weeks and 26 weeks ended September 1, 2024 were higher than the comparable periods of the prior year, primarily due to higher sales to the commercial aerospace and military markets.

         

Gross Profit

 

The Company’s gross profit in the 13 weeks ended September 1, 2024 was higher than the gross profit in the prior year’s comparable period due to higher sales levels in the 13 weeks ended September 1, 2024, compared to the comparable period in the prior year partially offset by a less favorable product mix, due to higher fabric sales, higher depreciation, repairs and maintenance and utilities related to use of the new production line, and higher costs for raw materials, supplies, freight and labor resulting from inflationary trends. The Company’s gross profit in the 26 weeks ended September 1, 2024 was similar to the gross profit in the prior year’s comparable period despite higher sales levels primarily due to a less favorable sales mix, due to higher fabric sales, and the higher costs mentioned above.

 

The Company’s gross profit margins, measured as a percentage of sales, were 28.5% and 28.9%, respectively, in the 13 weeks and 26 weeks ended September 1, 2024, compared to 32.7% and 31.8%, respectively, in the 13 weeks and 26 weeks ended August 27, 2023. The lower gross profit margins for the 13 and 26 weeks ended September 1, 2024, compared to the prior year’s comparable periods were primarily due to ramping up capacity ahead of customer program volume increases, to a less favorable sales mix, due to higher fabric sales, higher depreciation, repairs and maintenance and utilities related to the use of the new production line, and higher costs for raw materials, supplies, freight and labor resulting from inflationary trends, partially offset by higher sales.

 

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Selling, General and Administrative Expenses

 

Selling, general and administrative expenses increased by $287,000 during the 13 weeks ended September 1, 2024, and increased by 15.5% compared to the prior year’s comparable period, and these expenses, measured as percentages of sales, were 12.8% in the 13 weeks ended September 1, 2024 compared to 14.8% in the 13 weeks ended August 27, 2023. The increase in selling, general and administrative expenses during the 13 weeks ended September 1, 2024 was primarily due to freight out, advertising and tradeshow expense, higher salaries and payroll related expenses and higher profit sharing expense mainly due to higher headcount in connection with ramping up capacity in preparation of increases in customer program volumes.

 

Selling, general and administrative expenses decreased by $311,000 during the 26 weeks ended September 1, 2024, and decreased by 7.0% compared to the prior year’s comparable period, and these expenses, measured as a percentage of sales, were 13.5% in the 26 weeks ended September 1, 2024 compared to 15.9% in the 26 weeks ended August 27, 2023. The decrease in selling, general and administrative expenses during the 26 weeks ended September 1, 2024 was primarily due to $570,000 of activist shareholder defense costs in the prior year comparable period.

 

Selling, general and administrative expenses included stock option expenses of $101,000 and $190,000, respectively, for the 13 weeks and 26 weeks ended September 1, 2024, compared to stock option expenses of $104,000 and $322,000, including $109,000 due to the modification of previously granted stock options, respectively, for the 13 weeks and 26 weeks ended August 27, 2023.

 

Earnings from Operations

 

For the reasons set forth above, the Company’s earnings from operations were $2.6 million and $4.7 million, respectively, for the 13 weeks and 26 weeks ended September 1, 2024, compared to $2.2 million and $4.4 million, respectively, for the 13 weeks and 26 weeks ended August 27, 2023.

 

Interest and Other Income

 

Interest and other income were $245,000 and $584,000, respectively, for the 13 weeks and 26 weeks ended September 1, 2024, compared to $139,000 and $463,000, respectively, for the prior year's comparable periods. Interest income increased 76.3% and 26.1%, respectively, for the 13 weeks and 26 weeks ended September 1, 2024, primarily as a result of higher weighted average interest rates and lower losses on the sales of marketable securities, compared to the prior year's comparable periods. During the 13 weeks and 26 weeks ended September 1, 2024, 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 September 1, 2024, the Company recorded income tax provisions of $750,000 and $1.1 million, respectively, which included discrete income tax provisions of $22,000 and $41,000, respectively, for the accrual of interest related to unrecognized tax benefits. For the 13 weeks and 26 weeks ended August 27, 2023, the Company recorded income tax provisions of $619,000 and $1.3 million, respectively, which included discrete income tax provisions of $16,000 and $53,000, respectively, for the accrual of interest related to unrecognized tax benefits.

 

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The Company’s effective tax rates for the 13 weeks and 26 weeks ended September 1, 2024 were 26.6% and 26.9%, respectively, compared to 26.2% and 26.6%, respectively, in the prior year’s comparable periods. The effective tax rates for the 13 weeks and 26 weeks ended September 1, 2024 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and liabilities and the accrual of interest related to unrecognized tax benefits. The effective rates for the 13 weeks and 26 weeks ended August 27, 2023 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

 

For the reasons set forth above, the Company's net earnings for the 13 weeks and 26 weeks ended September 1, 2024 were $2.1 million and $3.1 million, respectively, compared to net earnings of $1.7 million and $3.6 million, respectively, for the 13 weeks and 26 weeks ended August 27, 2023.

 

Basic and Diluted Earnings Per Share

 

In the 13 weeks and 26 weeks ended September 1, 2024, basic and diluted earnings per share were $0.10 and $0.15, respectively, compared to basic and diluted earnings per share of $0.09 and $0.18, respectively, in the 13 weeks and 26 weeks ended August 27, 2023.

 

Liquidity and Capital Resources - Continuing Operations:

 

(Amounts in thousands)		September 1,				March 3,
		2024				2024				Change
Cash and cash equivalents and marketable securities		$	71,984			$	77,211			$	(5,227	)
Working capital			82,818				89,187				(6,369	)

 

		26 Weeks Ended
(Amounts in thousands)		September 1,				August 27,
		2024				2023				Change
Net cash provided by (used in) operating activities		$	1,023			$	(2,645	)		$	3,668
Net cash provided by (used in) investing activities			7,489				34,212				(26,723	)
Net cash used in financing activities			(6,926	)			(28,441	)			21,515

 

Cash and Marketable Securities

 

Of the $72.0 million of cash and cash equivalents and marketable securities at September 1, 2024, $30.4 million was owned by one of the Company’s wholly-owned foreign subsidiaries.

 

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The change in cash and cash equivalents and marketable securities at September 1, 2024 compared to March 3, 2024 was the result of capital expenditures, the purchase of treasury shares, dividends paid to shareholders, the Company’s transition tax installment payment, and a number of additional factors. The significant changes in cash provided by (used in) operating activities was as follows:

 

●

accounts receivable decreased by 12% at September 1, 2024 compared to March 3, 2024 primarily due to timing of sales;

 

●

inventories increased by 19% at September 1, 2024 compared to March 3, 2024 primarily due to timing of raw materials purchases;

 

●

prepaid and other current assets decreased by 12% at September 1, 2024 compared to March 3, 2024 primarily due to lower prepaid tax balances;

 

●

accounts payable increased by 5% at September 1, 2024 compared to March 3, 2024 primarily due to timing of vendor payments;

 

●

accrued liabilities decreased by 32% at September 1, 2024 compared to March 3, 2024 primarily due to decreases in bonus, profit sharing, and property tax accruals; and

 

●

income taxes payable decreased by 45% at September 1, 2024 compared to March 3, 2024 due to the payment of a $4.2 million transition tax installment payment in June 2024.

 

In addition, the Company paid $5.1 million in cash dividends in the 26-week period ended September 1, 2024 compared to $25.6 million in the 26-week period ended August 27, 2023. The amount paid during the 26-week period ended August 27, 2023 included a $20.5 million special dividend.

 

Working Capital         

 

The decrease in working capital at September 1, 2024 compared to March 3, 2024 was due principally to the decreases in marketable securities, accounts receivable and prepaid and other current assets and increased income taxes payable, partially offset by an increase in inventories and decreases in accrued liabilities.

 

The Company's current ratio (the ratio of current assets to current liabilities) was 9.1 to 1.0 at September 1, 2024, compared to 10.2 to 1.0 at March 3, 2024.

 

Cash Flows

 

During the 26 weeks ended September 1, 2024, the Company's net earnings, adjusted for depreciation and amortization, deferred income taxes, stock-based compensation, amortization of bond premium and changes in operating assets and liabilities, resulted in a $1.0 million operating cash inflow. During the same 26-week period, the Company expended $206,000 for the purchase of property, plant and equipment, compared with $374,000 during the 26 weeks ended August 27, 2023. The Company paid $5.1 million in cash dividends in the 26-week period ended September 1, 2024, compared to $25.6 million in the 26-week period ended August 27, 2023. The Company purchased treasury shares of $1.9 million in the 26-week period ended September 1, 2024 compared to $2.9 million in the 26-week period ended August 27, 2023.

 

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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, and appropriate acquisitions and other expansions of the Company's business.

 

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 $140,000, 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 Condensed Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these Condensed 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 credit losses, 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 Condensed Consolidated Financial Statements and that entail, to a significant extent, the use of estimates and assumptions and the application of management’s judgment are described in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in the Company’s Annual Report on Form 10-K for the fiscal year ended March 3, 2024. There have been no significant changes to such accounting policies during the 2025 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.

 

24

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Factors That May Affect Future Results.

 

Certain portions of this report which do not relate to historical financial information may be deemed to constitute forward-looking statements that are subject to various factors which could cause actual results to differ materially from the Company’s expectations or from results which might be projected, forecasted, estimated or budgeted by the Company in forward-looking statements. Such factors include, but are not limited to, general conditions in the aerospace industry, the Company’s competitive position, the status of the Company’s relationships with its customers, economic conditions in international markets, the cost and availability of raw materials, transportation and utilities, and the various factors set forth under the caption “Factors That May Affect Future Results” in Item 1 and in Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended March 3, 2024.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

The Company’s market risk exposure at September 1, 2024 is consistent with, and not greater than, the types of market risk and amount of exposures presented in the Annual Report on Form 10-K for the fiscal year ended March 3, 2024.

 

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 September 1, 2024, 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.

 

25

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PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings.

 

None.

 

Item 1A.

Risk Factors.

 

There have been no material changes in the risk factors as previously disclosed in the Company’s Form 10-K Annual Report for the fiscal year ended March 3, 2024.

 

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 2025 fiscal year second quarter ended September 1, 2024.

 

Period		Total Number of Shares (or Units) Purchased				Average Price Paid Per Share (or Unit)				Total Number of Shares (or Units) Purchased As Part of Publicly Announced Plans or Programs				Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
June 3 - July 3			0			$	-				0
July 4 - August 4			31,968			$	12.82				31,968
August 5 - September 1			117,665			$	12.56				117,665
Total			149,633			$	12.62				149,633				1,129,268	(a)

 

(a)	Aggregate number of shares available to be purchased by the  Company pursuant to a share purchase authorization announced on May 23, 2022. Pursuant to such  authorization, 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.

 

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Item 6.

Exhibits.

 

10.1

Amended and Restated 2018 Stock Option Plan of the Company.

 

31.1

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

 

31.2

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

 

32.1

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

 

32.2

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

 

101

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 1, 2024, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 1, 2024 (unaudited) and March 3, 2024; (ii) Consolidated Statements of Operations for the 13 weeks and 26 weeks ended September 1, 2024 and August 27, 2023 (unaudited); (iii) Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended September 1, 2024 and August 27, 2023 (unaudited); (iv) Consolidated Statements of Shareholders’ Equity at September 1, 2024 (unaudited) and August 27, 2023; and (v) Condensed Consolidated Statements of Cash Flows for the 26 weeks ended September 1, 2024 and August 27, 2023 (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.

 

27

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EXHIBIT INDEX

 

Exhibit No.	Name
10.1	Amended and Restated 2018 Stock Option Plan of the Company.
31.1	Certification of principal executive officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).
31.2	Certification of principal financial officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).
32.1	Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 1, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 1, 2024 (unaudited) and March 3, 2024; (ii) Consolidated Statements of Operations for the 13 weeks and 26 weeks ended September 1, 2024 and August 27, 2023 (unaudited); (iii) Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended September 1, 2024 and August 27, 2023 (unaudited); (iv) Consolidated Statements of Shareholders’ Equity at September 1, 2024 (unaudited) and August 27, 2023; and (v) Condensed Consolidated Statements of Cash Flows for the 26 weeks ended September 1, 2024 and August 27, 2023 (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.

 

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SIGNATURES

 

 

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

 

	Park Aerospace Corp.
	(Registrant)
Date: October 16, 2024	/s/ Brian E. Shore
	Brian E. Shore
	Chief Executive Officer
	(principal executive officer)
	/s/ P. Matthew Farabaugh
Date: October 16, 2024	P. Matthew Farabaugh
	Senior Vice President and Chief Financial Officer
	(principal financial officer)
	(principal accounting officer)

 

29

Exhibit 10.1

 

 

PARK ELECTROCHEMICAL CORP.

AMENDED AND RESTATED 2018 STOCK OPTION PLAN

 

1. Purpose of the Plan. This Park Electrochemical Corp. 2018 Stock Option Plan (herein called the "Plan") is designed to promote shareholder value by providing appropriate incentives to certain employees, including officers, of Park Electrochemical Corp., a New York corporation (the "Company"), and any of its present or future subsidiaries ("Subsidiaries"), and to offer an additional inducement in obtaining the services of employees, directors and consultants. The Plan provides for the grant of (i) incentive stock options ("Incentive Stock Options"), as contemplated by Section 422 of the Internal Revenue Code of 1986, as now in effect or later amended or superseded (the "Code"), which Options shall be subject to the tax treatment described in Section 421 of the Code, and (ii) non-qualified stock options ("Non-Qualified Stock Options" and, together with Incentive Stock Options, the “Options”).

 

The Plan supersedes and replaces the Park Electrochemical Corp 2002 Stock Option Plan, as amended (the “Prior Plan”), for options granted on or after the Effective Date (as hereinafter defined in Section 14) of this Plan. Options may not be granted under the Prior Plan beginning on the Effective Date, but the adoption and effectiveness of the Plan will not affect the terms or conditions of any outstanding options granted under the Prior Plan prior to the Effective Date, and the Prior Plan shall remain in effect with respect to all outstanding options granted under the Prior Plan until such options have been exercised, forfeited, canceled, expired or otherwise terminated in accordance with the terms of such options. At the Effective Date, none of the shares of Common Stock available under the Prior Plan shall be available under this Plan and none of the shares of Common Stock subject to outstanding options granted under the Prior Plan shall again become available for issuance under this Plan, whether upon the expiration, termination, cancellation or forfeiture of such options or otherwise.

 

2. Stock Subject to the Plan. Options may be granted under the Plan to purchase in the aggregate not more than 1,550,000 shares¹ of Common Stock, par value $.10 per share, of the Company ("Common Stock"), which shares may, in the discretion of the board of directors of the Company (the “Board”), consist either in whole or in part of authorized but unissued shares of Common Stock or shares of Common Stock held in the treasury of the Company, and all of which are available for the grant of both Incentive Stock Options and Non-Qualified Stock Options. Subject to the provisions of Section 7 hereof, any shares of Common Stock subject to an Option which for any reason expires or is terminated unexercised as to such shares shall again become available for issuance under this Plan.

 

3. Administration of the Plan. The Plan shall be administered by the Board or such committee as the Board may establish or designate from time to time (the "Committee"). The Committee shall be composed of one or more members each of whom shall, unless otherwise determined by the Board, be "non-employee directors,” within the meaning of Rule 16b-3 (as amended or superseded) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Committee shall have such powers and authorities related to the administration of the Plan as are consistent with the governing documents of the Company and applicable law. If the Board does not establish or designate a Committee to administer the Plan, all references herein to the Committee shall be deemed to be references to the Board. In addition, all references in the Plan to the authority, determinations or actions of the Committee shall be deemed to include the authority, determinations and actions of the Board as well as the Committee, including the right of the Committee to send any determination or action to the Board for review, approval and/or ratification by the Board.

 

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1 The only amendment in this Amended and Restated 2018 Stock Option Plan is the increase, as adopted by the Board of Directors of the Company on June 13, 2024 and approved at the Company’s 2024 Annual Meeting of Shareholders on July 18, 2024, in the total number of shares authorized for issuance under the Plan from 800,000 shares to 1,550,000 shares.

 

 

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Subject to the express provisions of the Plan, the Committee shall have the authority, in its discretion, to (i) determine the individuals to receive Options (each an “Optionee”), (ii) determine the times when an Optionee shall receive an Option, (iii) determine the number of shares of Common Stock to be subject to each Option (except that no grants of Options may be made "in tandem,” i.e., where an exercise of one Option, in whole or in part, automatically results in the lapse of termination of another Option, in whole or in part), (iv) determine whether and to what extent Options shall be designated Incentive Stock Options or Non-Qualified Stock Options, (v) determine the amount of any required federal income tax or other withholding amount, (vi) determine the term of each Option, (vii) determine the date each Option shall become exercisable, (viii) determine whether an Option shall be exercisable in whole, in part or in installments, and if in installments, the number of shares subject to each installment, the date each installment shall become exercisable and the term of each installment, and whether to accelerate the date of exercise of any installment, (ix) amend, modify or supplement the terms of any Option that has been granted, (x) make any adjustments necessary or desirable as a result of the granting of Options to eligible individuals located outside the United States, (xi) determine the terms and conditions of each Option (including but not limited to, the Exercise Price (as hereinafter defined in Section 5), the nature and duration of any restriction or condition (or provision for the lapse thereof) relating to vesting (including performance conditions), exercise, transfer, suspension or forfeiture of an Option or the Common Stock subject thereto and the method or methods to be used for the same, and any terms or conditions that may be necessary to qualify as an Incentive Stock Option or to ensure exemption from or compliance with Section 409A of the Code, (xii) prescribe the form of the agreements evidencing Options granted under the Plan, (xiii) determine whether, to what extent, and under what circumstances, Options may be settled in cash, Common Stock, other securities or other property, and the method or methods by which Options may be settled, (xiv) permit or require the deferral of any gain attributable to the exercise of an Option into a deferred compensation arrangement, subject to compliance with Section 409A of the Code, where applicable, and such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or dividend equivalents, if any, including converting such interest or dividend equivalents into deferred Common Stock equivalents; provided, however, that notwithstanding the foregoing, no deferral shall be allowed if the deferral opportunity would subject any Option, which would otherwise be excluded from Section 409A of the Code, to the requirements of Section 409A of the Code, and (xv) include as a condition to the receipt, exercise or settlement of an Option and the timing thereof, certain corporate and individual performance conditions, where such conditions may consist of one or more business criteria and a targeted level or levels of performance with respect to such criteria to be achieved during any performance period, and the length of such performance period; provided, that performance conditions may differ for Options granted to any one Optionee or different Optionees.

 

The Committee is authorized to interpret the Plan and the Options granted under the Plan and the agreements evidencing such Options, to establish, amend and rescind any rules relating to the Plan, and to make any other determinations which it deems necessary or desirable for the administration of the Plan; provided, that, notwithstanding the foregoing, no amendment, modification or supplement of any outstanding Option shall, without the consent of the Optionee, impair the Optionee’s rights under such outstanding Option, or subject any outstanding Option to the requirements of Section 409A of the Code that was exempt from such application as of the grant date. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Option or any agreement evidencing an Option in the manner and to the extent the Committee deems necessary or desirable to carry it into effect. Any decision of the Committee in the interpretation and administration of the Plan, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. The Committee may act only by a majority of its members in office, except that the members thereof may authorize any one or more of their members or any officer of the Company to execute and deliver documents or to take any other action on behalf of the Committee with respect to Options granted or to be granted to Optionees.

 

 

2

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No member of the Committee and no officer of the Company shall be liable for anything done or omitted to be done in good faith by such person, by any other member of the Committee or by any officer of the Company in connection with the performance of duties under the Plan, except for such person’s own willful misconduct or as expressly provided by applicable law. The Company shall indemnify and hold harmless each member of the Committee and each officer of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own willful misconduct or bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s governing documents, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

Notwithstanding anything in the Plan to the contrary, an outstanding Option may not be amended to reduce the Exercise Price of such Option and an outstanding Option (with an Exercise Price greater than the Fair Market Value of a share of Common Stock) may not be cancelled in exchange for cash or another Option with an Exercise Price that is less than the Exercise Price of the original Option, in each case, without the prior approval of the Company's shareholders, provided that appropriate adjustments may be made to outstanding Options pursuant to Section 10 hereof.

 

The “grant date” for an Option under the Plan shall be the date on which the Committee approves a grant or such later date as may be specified by the Committee.

 

4. Eligibility. The Committee may, consistent with the purposes of the Plan, grant Options from time to time within ten (10) years from the Effective Date, to (i) certain employees, including officers and directors who are employees, of the Company or any Subsidiary, (ii) directors of the Company who are not employees of the Company or any Subsidiary and (iii) consultants rendering services to the Company or any Subsidiary, covering such number of shares of Common Stock as the Committee may determine and subject to such terms and conditions as the Committee shall from time to time determine in its sole discretion, subject to the terms and provisions of the Plan.

 

The aggregate Fair Market Value (determined as of grant date of the Option) of the shares of Common Stock with respect to which Incentive Stock Options may be granted under this Plan and any other incentive stock options satisfying the requirements of Section 422 of the Code granted under any other plan of the Company or any Subsidiary (as defined in Section 424(f) of the Code) or of its parent (as defined in Section 424(e) of the Code) which are exercisable for the first time by any particular Optionee during any calendar year shall not exceed $100,000 for such Optionee. In addition, no Incentive Stock Option may be granted under the Plan if such grant, together with any other applicable grant of Incentive Stock Options under the Plan and any other incentive stock options satisfying the requirements of the Code granted under any other plan of the Company or any Subsidiary (as defined in Section 424(f) of the Code) or of its parent (as defined in Section 424(e) of the Code), would exceed any other applicable maximum established under the Code for incentive stock options. If an Option granted under the Plan exceeds the foregoing limitations, such Option shall be deemed a Non-Qualified Stock Option to the extent it exceeds such limitations.

 

3

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Notwithstanding anything in the Plan to the contrary, commencing in the Company's fiscal year ending March 3, 2019, no individual may, in any such fiscal year, receive Options relating to Common Stock which in the aggregate exceed the greater of (i) 50% of the total number of shares of Common Stock granted pursuant to the Plan in any such year or (ii) 100,000 shares of Common Stock. Further, notwithstanding anything in the Plan to the contrary, the aggregate Fair Market Value on the grant date (computed as of such grant date in accordance with applicable financial accounting rules) of all Options granted to any non-employee director of the Company during any single fiscal year shall not exceed $500,000; provided, however, that such limit shall not apply to any election of a non-employee director to receive an Option in lieu of all or a portion of any annual committee cash retainers or other similar cash-based payments.

 

5. Exercise Price. The exercise price of the Common Stock under each Option shall be determined by the Committee, but shall in no event be less than the Fair Market Value of the Common Stock at the grant date; provided, however, that if as of the grant date of an Incentive Stock Option, the grantee owns stock possessing more than 10% of the total combined voting power of all classes of the capital stock of the Company, of its present and future subsidiaries (as defined in Section 424(f) of the Code) or of a parent (as defined in Section 424(e) of the Code), the exercise price shall not be less than 110% of the Fair Market Value of the Common Stock as of the grant date (the “Exercise Price”).

 

“Fair Market Value” shall mean the reported closing price of the Common Stock on the New York Stock Exchange (or, if the Common Stock is not then listed on the New York Stock Exchange, on such other securities exchange on which the Common Stock may then be listed), on the date preceding the grant date, or if there is no reported sale of the Common Stock on that date, then on the last previous day on which such sale was reported; provided that, if the foregoing clause is inapplicable, Fair Market Value shall be determined by the Committee and provided that, with respect to Incentive Stock Options, if such method is inconsistent with any regulations applicable to such Options adopted by the U.S. Department of Treasury, then the Fair Market Value shall be determined by the Committee consistent with such regulations.

 

6. Term of Option/Vesting. The term of each Incentive Stock Option granted pursuant to the Plan shall be for a period not exceeding ten (10) years from the grant date; provided, however, that if, as of the grant date of an Incentive Stock Option, the grantee owns stock possessing more than 10% of the total combined voting power of all classes of the capital stock of the Company, of any of its present or future subsidiaries (as defined in Section 424(f) of the Code) or of a parent (as defined in Section 424(e) of the Code), the term of the Incentive Stock Option granted to such individual shall be for a period not exceeding five (5) years from the grant date. The term of each Non-Qualified Stock Option granted pursuant to the Plan shall be for a period not exceeding ten (10) years from the grant date. Options shall be subject to earlier termination as hereinafter provided.

 

Subject to Section 10(b) hereof, each Option shall have a minimum vesting period of one year from the grant date; provided that, Options with respect to 5% of the total Common Stock authorized to be issued under the Plan may have a vesting period of less than one year.

 

7. Exercise or Surrender of Option. (a) General. An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company at its principal office (as of the Effective Date, located at 48 South Service Road, Melville, NY 11747 ), identifying the Option being exercised, specifying the number of shares of Common Stock as to which such Option is being exercised and accompanied by payment in full of the aggregate Exercise Price therefor (i) in cash (including check, bank draft or money order, or wire or other transfer of funds to the Company), (ii) at the discretion of the Committee (including if provided in the applicable Stock Option Contract), in shares of Common Stock with a Fair Market Value equal to the Exercise Price or a combination of cash and shares of Common Stock which in the aggregate are equal in value to such Exercise Price, plus, in either case, any required federal income tax or other withholding amount or (iii) to the extent permitted by law and to the extent permitted by the Committee, in its sole discretion, may be made all or in part by delivery (on a form acceptable to the Committee) of an irrevocable direction to a registered securities broker acceptable to the Company to sell shares of Common Stock and to deliver all or part of the sales proceeds to the Company in payment of the Exercise Price and any required federal income tax or other withholding amount. Certificates representing the shares of Common Stock purchased shall be issued as promptly as practicable thereafter, and, at the discretion of the Committee, such certificates may be issued in the name of the Optionee and another person jointly with the right of survivorship. The Optionee shall not have the right of a shareholder with respect to the shares of Common Stock covered by the Option until the date of issuance of a stock certificate to such Optionee for such shares or as evidenced by the appropriate entry on the books of the Company. In no case may a fraction of a share be purchased or issued under the Plan. For the avoidance of doubt, shares of Common Stock used to satisfy the payment of the Exercise Price or any required federal income tax or other withholding requirements, will not then be again available for issuance under the Plan for grants of Options.

 

4

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(b) Surrender. (1) General Rule. The Committee may provide in the applicable Stock Option Contract that an Optionee may surrender such Option in whole or in part in lieu of the exercise in whole or in part of that Option on any date that:

 

(a) the Fair Market Value of the Common Stock subject to such Option exceeds the Exercise Price for such Common Stock; and

 

(b) the Option to purchase such Common Stock is otherwise exercisable.

 

(2) Procedure. The surrender of an Option in whole or in part shall be effected by the delivery of the Stock Option Contract to the Committee or to its delegate together with a statement signed by the holder of the Option which specifies the number of shares of Common Stock as to which the Optionee surrenders the Option and how the Optionee desires payment be made for such Common Stock surrendered in accordance with this Section 7(b)(2).

 

(3) Payment. In exchange for the Option surrendered in accordance with this Section 7(b)(3), the Optionee shall receive a payment in cash or in Common Stock, or in a combination of cash and Common Stock, equal in amount on the date such surrender is effected to the excess of the Fair Market Value of the Common Stock subject to such Option surrendered in accordance with this Section 7(b)(3) on such date over the Exercise Price for such Common Stock subject to such Option (reduced by any applicable federal income tax or other withholding amount). The Committee may approve or disapprove the request for payment by the Optionee in whole or in part in cash and may cause such payment to be made in cash or in such combination of cash and Common Stock as the Committee deems appropriate. A request for payment only in Common Stock shall be approved and made in Common Stock to the extent payment can be made in whole shares of Common Stock and, at the Committee's discretion, in cash in lieu of any fractional share of Common Stock.

 

8. Termination of Employment. Unless otherwise provided in connection with the grant of any Option, the applicable Stock Option Contract or an employment, consulting or severance agreement with the Company or any Subsidiary, (a) upon the termination of employment or service as a director or consultant of any Optionee, all Options held by such Optionee that have not previously become exercisable shall terminate on the date of such termination of employment or service, (b) any Optionee whose employment or whose service as a director or consultant has terminated for any reason other than death, or as set forth in (d) below, may exercise such Option, to the extent exercisable upon the date of such termination, at any time within three (3) months (or, for an Optionee terminated by reason of disability (as defined in Section 22(e)(3) of the Code), within one (1) year), after the date of termination, but in no event after the expiration of the term of the Option, (c) with respect to any Optionee whose employment or service as a director or consultant has terminated as a result of the Optionee’s death, the executor, administrator or such other person at such time entitled by law to such rights under such Option, may exercise such Option, to the extent exercisable upon the date of such termination, at any time within six (6) months after the date of termination, but in no event after the expiration of the term of the Option and (d) with respect to any Optionee whose employment or service as a director or consultant has terminated either (i) for Cause (as defined below), or (ii) without the consent of the Company, all Options (to the extent not previously exercised) held by such Optionee shall terminate immediately.

 

5

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Options granted under the Plan shall not be affected by any change of employment (including duties or position) so long as the Optionee continues to be an employee of the Company or of any Subsidiary or of a corporation or its parent or subsidiary issuing or assuming an Option in a transaction to which Section 424(a) of the Code applies. In connection with the termination of employment or service as a director or consultant of any Optionee, the Committee may, in its discretion, determine to permit a longer period than that specified in this Section 8, the applicable Stock Option Contract or an applicable employment, consulting or severance agreement with the Company or any Subsidiary for the exercise of all or any part of such Option after such termination; provided, that, such period does not extend past the expiration of the term of such Option or is otherwise not permitted under Section 409A of the Code. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options and may reflect distinctions based on the reason for a termination of employment or service.

 

For the purpose of the Plan, an employment relationship shall be deemed to exist between an individual and a corporation if, at the time of the determination, the individual was an employee of such corporation for purposes of Section 422(a) of the Code. As a result, an individual on military leave, sick leave or other bona fide leave of absence shall continue to be considered an employee for purposes of the Plan during such leave if the period of the leave does not exceed 90 days, or, if longer, so long as the individual's right to re-employment with the Company or any of its Subsidiaries is guaranteed either by applicable law or by contract. If the period of leave exceeds 90 days and the individual’s right to re-employment is not guaranteed by applicable law or by contract, the employment relationship shall be deemed to have terminated on the 91st day of such leave.

 

Nothing in the Plan or in any Option shall confer on any person any right to continue in the employ or as a consultant of the Company or any Subsidiary, or as a director or consultant of the Company, or interfere in any way with any contractual or other right of the Company or any Subsidiary to terminate such relationship (or revise the compensation, position or duties of such person) at any time for any reason whatsoever. The obligation of the Company to pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those amounts described in this Plan, in the manner and under the conditions prescribed in this Plan, and to the extent that any Optionee or beneficiary acquires a right to receive payments from the Company pursuant to an Option, such right shall be not greater than the right of any unsecured creditor of the Company. The Plan shall in no way be interpreted to require the Company to transfer any amounts to a third party or otherwise hold any amounts in trust or escrow for payment to any Optionee or beneficiary under the terms of the Plan.

 

"Cause", in connection with the termination of an Optionee, shall mean (i) "cause," as such term (or any similar term, such as "with cause") is defined in any employment, consulting, severance or other applicable agreement for services between the Company or any Subsidiary and such Optionee, or (ii) in the absence of such an agreement, "cause," as such term is defined in the Stock Option Contract executed by the Company and such Optionee pursuant to Section 9 hereof, or (iii) in the absence of both of the foregoing, (A) indictment of such Optionee for any illegal conduct, (B) failure of such Optionee to adequately perform any of the Optionee's duties and responsibilities in any capacity held with the Company or any Subsidiary (other than any such failure resulting solely from such Optionee's physical or mental incapacity), (C) the commission of any act or failure to act by such Optionee that involves moral turpitude, dishonesty, theft, destruction of property, fraud, embezzlement or unethical business conduct, or that is otherwise injurious to the Company or any Subsidiary or any other affiliate of the Company (or its or their respective employees), whether financially or otherwise, (D) any violation by such Optionee of any Company rule or policy, or (E) any violation by such Optionee of the requirements of any other contract or agreement between the Company or any Subsidiary and such Optionee or the Plan (as in effect from time to time); in each case, with respect to subsections (A) through (E), as determined by the Board or the Committee.

 

6

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9. Stock Option Contracts. Each Option shall be evidenced by an appropriate Stock Option Contract which shall provide, among other things, (a) that in the event of the exercise of such Option, unless the Common Stock received upon exercise shall have been registered pursuant to an effective registration statement under the Securities Act of 1933, as amended, the individual acknowledges that such Common Stock may be "restricted securities" as defined in Rule 144 under such Act and agrees that such Common Stock may not be sold except in compliance with applicable provisions of such Act, and (b) that in the event of any disposition of the Common Stock acquired upon the exercise of an Incentive Stock Option within two (2) years from the grant date or one (1) year from the date of issuance of Common Stock (upon the exercise of such Option) to the Optionee, such Optionee will notify the Company thereof in writing within thirty (30) days after such disposition and will pay to the Company an amount necessary to satisfy any obligations the Company may have to withhold any taxes by reason of such disqualifying disposition.

 

10. Adjustments Upon Changes in Common Stock; Certain Other Changes.

 

(a) In the event the shares of Common Stock are changed into or exchanged for any other class or series of capital stock or cash or securities or other property pursuant to a recapitalization, reclassification, share split, reverse split, combination of shares, exchange of shares, share dividend or other extraordinary or special distribution, occurring after the Effective Date, the number shares of Common Stock for which grants of Options may be made under the Plan shall be adjusted proportionately and accordingly by the Board, whose determination shall be conclusive. In addition, the number shares of Common Stock for which Options are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the Optionee immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in respect of Options shall not change the economic value of such unexercised Options, but shall include a corresponding proportionate adjustment in the Exercise Price. Notwithstanding the foregoing, in the event of any extraordinary or special distribution or dividend to shareholders of the Company but excluding a non-extraordinary or non-special dividend payable in cash or in shares of Common Stock, the Company may, in such manner as the Board, whose determination shall be conclusive, deems appropriate, adjust the number shares of Common Stock subject to the Option and/or the Exercise Price of such Option to reflect such distribution or dividend. Any adjustment under this Section 10 shall be made in a manner consistent with the requirements of Sections 409A and 424 of the Code and the regulations promulgated thereunder.

 

(b) The provisions of this Section 10(b) shall apply in the case of a Change of Control. If more specific terms are set forth in any separate plan document or agreement between the Company or any Subsidiary and an Optionee, such separate plan or document shall govern the treatment of Options.

 

(i)

Upon the occurrence of a Change of Control, and except with respect to any Option assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change of Control in a manner approved by the Committee or the Board, the Committee, in its sole discretion, or as otherwise set forth in a Stock Option Contract, may take such actions as it deems appropriate to provide for the acceleration of the exercisability and vesting in connection with such Change of Control of any or all outstanding Options upon such conditions and to such extent as the Committee shall determine. To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth in Section 422(d) of the Code, the excess Options shall be deemed to be Non-Qualified Stock Options.

 

7

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(ii)

With respect to Options assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change of Control, if within one year after the effective date of a Change of Control, an Optionee’s employment or service is terminated without Cause or with Good Reason, then

 

a.

Any time-based vesting restrictions on outstanding Options shall lapse; and

 

b.

The payout opportunities attainable under all of such Optionee’s outstanding performance-based Options shall be earned based on actual performance through the end of the performance period, or if actual performance cannot be determined, at target level, and there shall be a payout to the Optionee within 30 days after the amount earned has been determined (unless a later date under Section 10(b)(iii) hereof is required) based on the length of time within the performance period that has lapsed prior to the date of termination.

 

To the extent that this provision causes Incentive Stock Options to exceed the dollar limitation set forth in Section 422(d) of the Code, the excess Options shall be deemed to be Non-Qualified Stock Options.

 

(iii)

No action shall be taken under this Section 10(b) which shall cause an Option to fail to be exempt from or comply with Section 409A of the Code or the treasury regulations thereunder.

 

For purposes of the foregoing, “Change of Control” shall mean: (i) any Person (as defined in Section 3(a)(9) of the Exchange Act, but excluding (1) the Company, (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (3) an underwriter temporarily holding securities pursuant to an offering of such securities, or (4) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the "Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company) representing 30% or more of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a Non-control Merger (as defined in clause (iii) below); or (ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to, a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or (iii) there is consummated a merger or consolidation of the Company with any other corporation; other than a merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the Board, the entity surviving such merger or consolidation or any parent thereof (a "Non-control Merger"); or (iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than a sale or disposition by the Company of all or substantially all of the Company's assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the Board of the entity to which such assets are sold or disposed or any parent thereof.

 

8

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For purposes of the foregoing, “Good Reason”, in connection with the termination of an Optionee, shall mean (i) “good reason,” as such term (or any similar term) is defined in any employment, consulting, severance or other applicable agreement for services between the Company or any Subsidiary and such Optionee, or (ii) in the absence of such agreement, “good reason,” as such term is defined in the Stock Option Contract executed by the Company and such Optionee pursuant to Section 9 hereof, or (iii) in the absence of both or the foregoing, a voluntary resignation within six (6) months after any of the following actions are taken by the Company or any of its Subsidiaries or affiliates without the Optionee’s consent: (A) a material diminution in the responsibilities or authority of the Optionee and which is materially inconsistent with the Optionee’s position other than (1) in connection with the termination of the Optionee’s employment or service for Cause, (2) temporarily while the Optionee is physically or mentally incapacitated or (3) as required by applicable law; (B) a material diminution in the annual base salary, bonus or fees to be paid to the Optionee (other than a general reduction that affects all similarly situated employees, directors or consultants of the Company in substantially the same proportions); or (C) a relocation of the Optionee's principal place of employment or service by more than 50 miles; provided, however, that none of the foregoing events shall constitute Good Reason unless the Optionee shall have notified the Company in writing describing the event(s) which constitute Good Reason within thirty (30) days of the Optionee’s knowledge of the event and then only if the Company shall have failed to cure such event(s) within thirty (30) days after the Company’s receipt of such written notice.

 

In addition, if a Change of Control constitutes a payment event with respect to any amount which constitutes or provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event described herein with respect to such amount must also constitute a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A of the Code.

 

11. Amendments and Termination of the Plan. The Committee may, at any time, suspend or terminate the Plan or revise or amend it in any respect whatsoever, provided, however, that the requisite shareholder approval shall be required if and to the extent the Committee determines that such approval is appropriate or necessary for purposes of satisfying Section 422 of the Code or Rule 16b-3 under the Exchange Act or other applicable law or regulations of the New York Stock Exchange (or other securities exchange on which the Common Stock is then listed). Options may be granted under the Plan prior to the receipt of such shareholder approval, but each such grant shall be subject in its entirety to such approval and no Option may be exercised, vested or otherwise satisfied prior to the receipt of such approval. No suspension, termination, revision or amendment of the Plan shall, without the consent of the Optionee affected thereby, adversely affect such Optionee’s rights under such Option.

 

9

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12. Non-Transferability of Options. No Option shall be transferable otherwise than by will or the laws of descent and distribution, and Options may be exercised, during the lifetime of the Optionee thereof, only by the Optionee.

 

If authorized in the applicable Stock Option Contract, an Optionee may transfer, not for value, all or part of an Option which is not an Incentive Stock Option to any person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of the Optionee, any person sharing the Optionee’s household (other than a tenant or employee), a trust in which any one or more of these persons (or the Optionee) have more than fifty percent of the beneficial interest, a foundation in which any one or more of these persons (or the Optionee) control the management of assets, and any other entity in which one or more of these persons (or the Optionee) own more than fifty percent of the voting interests (the “Family Members”). For the purpose of this Section 12, a “not for value” transfer is a transfer which is (i) a gift to a trust for the benefit of the Optionee and/or one or more Family Members, or (ii) a transfer under a domestic relations order in settlement of marital property rights. Following a transfer under this Section 12, any such Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred Options are prohibited except in accordance with this Section 12 or by will or the laws of descent and distribution. The events of termination of employment of Section 8 hereof shall continue to be applied with respect to the original Optionee, following which the Option shall be exercisable by the transferee only to the extent, and for the periods specified, in Section 8 hereof.

 

13. Conditions of Exercise or Surrender. Each Option shall be subject to the requirement that, if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the Common Stock subject to such Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable, as a condition of, or in connection with, the granting of such Option or the issue or purchase of Common Stock thereunder, no such Option may be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

 

14. Effective Date and Term of Plan. The Plan shall become effective when adopted by the Board (the “Effective Date”), but the Plan (and any grants of Options made prior to shareholder approval of the Plan) shall be subject to the requisite approval of the shareholders of the Company. In the absence of such approval, such Options shall be null and void. Unless earlier terminated by the Committee, the right to grant Options under the Plan shall terminate on the tenth anniversary of the Effective Date. Options outstanding at Plan termination shall remain in effect according to their terms and the provisions of the Plan.

 

15. Miscellaneous. (a) No Shareholder Rights. No Optionee shall have any rights as a shareholder of the Company as a result of the grant of an Option to the Optionee under this Plan or such Optionee’s exercise or surrender of such Option pending the actual issuance of shares of Common Stock subject to such Option to such Optionee.

 

(b) Withholding. The exercise or surrender of any Option granted under this Plan shall constitute the Optionee's full and complete consent to whatever action the Committee elects to satisfy the federal and state tax withholding requirements, if any, which the Committee in its discretion deems applicable to such exercise or surrender.

 

(c) Dividends. In the event dividends or dividend equivalents are payable with respect to any Option under this Plan, no Stock Option Contract shall otherwise provide for payment of dividends or dividend equivalents on any Option or portion of an Option that is not vested.

 

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(d) Captions. The use of captions in this Plan or any Stock Option Contract is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or such Stock Option Contract.

 

(e) Number and Gender. With respect to words used in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, etc., as the context requires.

 

(f) Severability. If any provision of this Plan or any Stock Option Contract shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions of the Plan or the Stock Option Contract, as applicable, shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.

 

16. Foreign Employees. In order to facilitate the making of any grant under this Plan, the Committee may provide for such special terms for grants to employees or other persons under this Plan who are foreign nationals or who are employed by the Company or any Subsidiary outside the United States of America as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, shall include any provision that is inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the shareholders of the Company.

 

17. Recoupment Policy. Notwithstanding any provision in this Plan, any Stock Option Contract or any employment, consulting or severance agreement with the Company or any Subsidiary, all Options under this Plan shall be subject to any compensation recoupment, other compensation recovery or clawback policy of the Company that may be applicable to any Optionee, as in effect from time to time, as approved by the Committee or the Board.

 

18. Section 409A.  This Plan and Options are intended to either be exempt from, or comply in form and operation with, the requirements of Section 409A of the Code, and the final regulations issued thereunder.  To the extent permitted by applicable Department of Treasury/Internal Revenue Service guidance, or law or regulation, the Company will take reasonable actions to reform this Plan and/or Option or any actions taken pursuant to the operation of this Plan if necessary to comply with Section 409A of the Code.  Notwithstanding the foregoing, in no event shall the Company or any Subsidiary, affiliates or representatives be liable to the Optionee for any additional tax, interest or penalty imposed upon, or other detriment suffered by, the Optionee under Section 409A of the Code or for any damage suffered by the Optionee for failure of this Plan and/or Option to comply with or be exempt from Section 409A of the Code.  In addition, for purposes of this Plan and Options, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury regulations after giving effect to the presumptions contained therein). Notwithstanding anything contained herein to the contrary, if the Optionee is a “specified employee” within the meaning of Section 409A of the Code, then to the extent required in order to avoid additional and/or accelerated taxation under Section 409A of the Code, if the Optionee becomes entitled to receive a payout in respect to such Optionee’s Options on account of the Optionee’s termination of employment as set forth in this Plan, such payout shall be paid on the earlier of (i) the first business day after the date that is six (6) months following the Optionee’s termination or (ii) the date of the Optionee’s death.

 

11

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19. Section 280G. Notwithstanding any other provision of this Plan or any other agreement, contract or understanding entered into by an Optionee and the Company or any Subsidiary, except an agreement, contract or understanding hereinafter entered into that expressly modifies or excludes application of this paragraph, and notwithstanding any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Optionee (including groups or classes of Optionees or beneficiaries of which the Optionee is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Optionee, if the Optionee is a “disqualified individual,” as defined in Section 280G(c) of the Code and any payment or benefit (whether or not pursuant to this Plan) the Optionee would receive in connection with a Change of Control from the Company or otherwise (the “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this paragraph, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Optionee shall receive the Payment that provides the greater after-tax benefit to the Optionee based on the following two alternatives: (A) payment in full of the entire amount of the Payment, or (B) payment of only a part of the Payment so that the Optionee receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”). In determining the Reduced Payment, the reduction in payments and/or benefits shall occur in the following order: (A) reduction of cash payments in the reverse chronological order in which otherwise payable; (B) cancellation of accelerated vesting of outstanding Options; and (C) reduction of other benefits paid to Optionee in the reverse chronological order in which otherwise payable. In the event that acceleration of compensation from outstanding Options is to be reduced, such acceleration of vesting shall be canceled in the reverse order of the grant date and, in the case of a particular grant, in the reverse chronological order in which the grant would otherwise vest.

 

20. Statute of Limitations. An Optionee or any other person filing a claim for benefits under this Plan must file a claim within one-year after the Optionee or other person knew or reasonably should have known of the principal facts on which the claim is based.

 

21. Governing Law. The validity and construction of this Plan and Stock Option Contracts shall be governed by the laws of the State of New York, without giving effect to any choice or conflicts of laws’ provisions or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

 

 

May 8, 2018, as amended on June 13, 2024

 

12

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 September 1, 2024 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 16, 2024

 

 

 

/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 September 1, 2024 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 16, 2024

 

 

 

 

/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 September 1, 2024 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 16, 2024

  

 

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 September 1, 2024 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 16, 2024

         

 

Document And Entity Information - shares	6 Months Ended
	Sep. 01, 2024	Oct. 07, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 01, 2024
Document Transition Report	false
Entity File Number	1-4415
Entity Registrant Name	PARK AEROSPACE CORP.
Entity Incorporation, State or Country Code	NY
Entity Tax Identification Number	11-1734643
Entity Address, Address Line One	1400 Old Country Road
Entity Address, City or Town	Westbury
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11590
City Area Code	631
Local Phone Number	465-3600
Title of 12(b) Security	Common Stock, par value $.10 per share
Trading Symbol	PKE
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		19,961,792
Entity Central Index Key	0000076267
Current Fiscal Year End Date	--03-03
Document Fiscal Year Focus	2025
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 01, 2024	Mar. 03, 2024	[1]
Current assets
Cash and cash equivalents	$ 8,153	$ 6,567
Marketable securities (Note 3)	63,831	70,644
Accounts receivable, less allowance for credit losses of $136 and $128, respectively	10,914	12,381
Inventories (Note 4)	7,630	6,404
Prepaid expenses and other current assets	2,499	2,849
Total current assets	93,027	98,845
Property, plant and equipment, net	21,891	23,499
Operating right-of-use assets (Note 5)	334	95
Goodwill and other intangible assets	9,776	9,776
Other assets	87	94
Total assets	125,115	132,309
Current liabilities
Accounts payable	3,700	3,514
Operating lease liability (Note 5)	40	53
Accrued liabilities	1,348	1,986
Income taxes payable	5,121	4,105
Total current liabilities	10,209	9,658
Long-term operating lease liability (Note 5)	339	82
Non-current income taxes payable (Note 9)	0	5,259
Deferred income taxes (Note 9)	3,087	3,222
Other liabilities	1,222	1,174
Total liabilities	14,857	19,395
Commitments and Contingencies
Shareholders' equity (Note 8)
Common stock	2,096	2,096
Additional paid-in capital	170,626	170,445
Accumulated deficit	(47,379)	(45,374)
Accumulated other comprehensive loss	(1,250)	(2,271)
Stockholders' Equity, Including Treasury Stock	124,093	124,896
Less treasury stock, at cost	13,835	11,982
Total shareholders' equity	110,258	112,914
Total liabilities and shareholders' equity	$ 125,115	$ 132,309
[1] The balance sheet at March 3, 2024 has been derived from the audited consolidated financial statements at that date.

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 01, 2024	Mar. 03, 2024
Accounts receivable, allowance for doubtful accounts	$ 136	$ 128

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 01, 2024	Aug. 27, 2023	Sep. 01, 2024	Aug. 27, 2023
Net sales	$ 16,709	$ 12,481	$ 30,679	$ 28,032
Cost of sales	11,952	8,402	21,823	19,120
Gross profit	4,757	4,079	8,856	8,912
Selling, general and administrative expenses	2,140	1,853	4,157	4,468
Earnings from operations	2,617	2,226	4,699	4,444
Storm damage charge (Note 11)	(46)	0	(1,098)	0
Interest and other income	245	139	584	463
Earnings from operations before income taxes	2,816	2,365	4,185	4,907
Income tax provision (Note 9)	750	619	1,126	1,307
Net earnings	$ 2,066	$ 1,746	$ 3,059	$ 3,600
Basic:
Basic earnings per share (in dollars per share)	$ 0.1	$ 0.09	$ 0.15	$ 0.18
Basic weighted average shares (in shares)	20,216	20,256	20,234	20,359
Diluted:
Diluted earnings per share (in dollars per share)	$ 0.1	$ 0.09	$ 0.15	$ 0.18
Diluted weighted average shares (in shares)	20,291	20,338	20,331	20,432

Consolidated Statements of Comprehensive Earnings (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 01, 2024	Aug. 27, 2023	Sep. 01, 2024	Aug. 27, 2023
Net earnings	$ 2,066	$ 1,746	$ 3,059	$ 3,600
Other comprehensive earnings (loss), net of tax:
Other comprehensive earnings	798	110	1,021	826
Total comprehensive earnings	2,864	1,856	4,080	4,426
Gains on Marketable Securities [Member]
Other comprehensive earnings (loss), net of tax:
Unrealized holding gains arising during the period	758	109	1,016	701
Losses on Marketable Securities [Member]
Other comprehensive earnings (loss), net of tax:
Unrealized holding gains arising during the period	0	(107)	(35)	(107)
Less: reclassification adjustment for losses included in net earnings	$ 40	$ 108	$ 40	$ 232

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, Common [Member]	Total
Balance (in shares) at Feb. 26, 2023	20,965,144				493,934
Balance at Feb. 26, 2023	$ 2,096	$ 169,932	$ (42,694)	$ (4,244)	$ (9,156)
Net earnings	0	0	1,854	0	0
Unrealized gain (loss) on marketable securities, net of tax	0	0	0	716	0
Stock-based compensation	0	218	0	0	0
Cash dividends	$ 0	0	(2,559)	0	$ 0
Repurchase of treasury shares (in shares)	0				129,654
Repurchase of treasury shares	$ 0	0	0	0	$ (1,669)
Balance (in shares) at May. 28, 2023	20,965,144				623,588
Balance at May. 28, 2023	$ 2,096	170,150	(43,399)	(3,528)	$ (10,825)
Balance (in shares) at Feb. 26, 2023	20,965,144				493,934
Balance at Feb. 26, 2023	$ 2,096	169,932	(42,694)	(4,244)	$ (9,156)
Net earnings						$ 3,600
Balance (in shares) at Aug. 27, 2023	20,965,144				715,033
Balance at Aug. 27, 2023	$ 2,096	170,254	(44,184)	(3,418)	$ (12,036)
Balance (in shares) at May. 28, 2023	20,965,144				623,588
Balance at May. 28, 2023	$ 2,096	170,150	(43,399)	(3,528)	$ (10,825)
Net earnings	0	0	1,746	0	0	1,746
Unrealized gain (loss) on marketable securities, net of tax	0	0	0	110	0
Stock-based compensation	0	104	0	0	0
Cash dividends	$ 0	0	(2,531)	0	$ 0
Repurchase of treasury shares (in shares)	0				91,445
Repurchase of treasury shares	$ 0	0	0	0	$ (1,211)
Balance (in shares) at Aug. 27, 2023	20,965,144				715,033
Balance at Aug. 27, 2023	$ 2,096	170,254	(44,184)	(3,418)	$ (12,036)
Balance (in shares) at Mar. 03, 2024	20,965,144				711,783
Balance at Mar. 03, 2024	$ 2,096	170,445	(45,374)	(2,271)	$ (11,982)	112,914	[1]
Net earnings	0	0	993	0	0
Unrealized gain (loss) on marketable securities, net of tax	0	0	0	223	0
Stock-based compensation	0	89	0	0	0
Cash dividends	$ 0	0	(2,532)	0	$ 0
Balance (in shares) at Jun. 02, 2024	20,965,144				711,783
Balance at Jun. 02, 2024	$ 2,096	170,534	(46,913)	(2,048)	$ (11,982)
Balance (in shares) at Mar. 03, 2024	20,965,144				711,783
Balance at Mar. 03, 2024	$ 2,096	170,445	(45,374)	(2,271)	$ (11,982)	112,914	[1]
Net earnings						$ 3,059
Stock options exercised (in shares)						2,062
Balance (in shares) at Sep. 01, 2024	20,965,144				859,354
Balance at Sep. 01, 2024	$ 2,096	170,626	(47,379)	(1,250)	$ (13,835)	$ 110,258
Balance (in shares) at Jun. 02, 2024	20,965,144				711,783
Balance at Jun. 02, 2024	$ 2,096	170,534	(46,913)	(2,048)	$ (11,982)
Net earnings	0	0	2,066	0	0	2,066
Unrealized gain (loss) on marketable securities, net of tax	0	0	0	798	0
Stock-based compensation	0	101	0	0	0
Cash dividends	$ 0	0	(2,532)	0	$ 0
Stock options exercised (in shares)	0				(2,062)
Stock options exercised	$ 0	(9)	0	0	$ 35
Repurchase of treasury shares (in shares)	0				149,633
Repurchase of treasury shares	$ 0	0	0	0	$ (1,888)
Balance (in shares) at Sep. 01, 2024	20,965,144				859,354
Balance at Sep. 01, 2024	$ 2,096	$ 170,626	$ (47,379)	$ (1,250)	$ (13,835)	$ 110,258
[1] The balance sheet at March 3, 2024 has been derived from the audited consolidated financial statements at that date.

Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Sep. 01, 2024	Jun. 02, 2024	Aug. 27, 2023	May 28, 2023
Cash dividends, per share (in dollars per share)	$ 0.125	$ 0.125	$ 0.125	$ 0.125

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Sep. 01, 2024	Aug. 27, 2023
Cash flows from operating activities:
Net earnings	$ 3,059	$ 3,600
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Non-cash storm damage charge	887	0
Depreciation and amortization	927	644
Stock-based compensation	190	322
Provision for credit losses	8	8
Deferred income taxes	(135)	(52)
Amortization of bond premium	84	408
Loss on sale of marketable securities	55	184
Changes in operating assets and liabilities	(4,052)	(7,759)
Net cash provided by (used in) operating activities	1,023	(2,645)
Cash flows from investing activities:
Purchase of property, plant and equipment	(206)	(374)
Purchases of marketable securities	(7,772)	(3,329)
Proceeds from sales and maturities of marketable securities	15,467	37,915
Net cash provided by investing activities	7,489	34,212
Cash flows from financing activities:
Dividends paid	(5,064)	(25,561)
Proceeds from exercise of stock options	26	0
Purchase of treasury stock	(1,888)	(2,880)
Net cash used in financing activities	(6,926)	(28,441)
Increase in cash and cash equivalents:	1,586	3,126
Cash and cash equivalents, beginning of period	6,567	4,237
Cash and cash equivalents, end of period	8,153	7,363
Supplemental disclosure of non-cash activities:
Addition to operating right of use asset from new operating lease liability	267	0
Supplemental cash flow information:
Cash paid during the period for income taxes, net of refunds	$ 5,199	$ 5,107

Note 1 - Condensed Consolidated Financial Statements	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]	1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS   The Condensed Consolidated Balance Sheet and the Consolidated Statement of Shareholders’ Equity as of September 1, 2024, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Earnings for the 13 weeks and 26 weeks ended September 1, 2024 and August 27, 2023, 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 September 1, 2024 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 (“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 March 3, 2024. There have been no significant changes to such accounting policies during the 26 weeks ended September 1, 2024.

Note 2 - Fair Value Measurements	6 Months Ended
	Sep. 01, 2024
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 September 1, 2024.

Note 3 - Marketable Securities	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]	3. MARKETABLE SECURITIES   All marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, included in comprehensive earnings. Realized gains and losses, amortization of premiums and discounts, and interest and dividend income are included in interest and other income in the Consolidated Statements of Operations. The costs of securities sold are based on the specific identification method.   The following is a summary of available-for-sale securities:       September 1, 2024       Total     Level 1     Level 2     Level 3   U.S. Treasury and other government securities   $ 63,831     $ 63,831     $ -     $ -   Total marketable securities   $ 63,831     $ 63,831     $ -     $ -         March 3, 2024       Total     Level 1     Level 2     Level 3   U.S. Treasury and other government securities   $ 67,210     $ 67,210     $ -     $ -   U.S. corporate debt securities     3,434       3,434       -       -   Total marketable securities   $ 70,644     $ 70,644     $ -     $ -     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   September 1, 2024:                         U.S. Treasury and other government securities   $ 65,543     $ 43     $ 1,755   U.S. corporate debt securities     -       -       -   Total marketable securities   $ 65,543     $ 43     $ 1,755                             March 3, 2024:                         U.S. Treasury and other government securities   $ 70,320     $ -     $ 3,110   U.S. corporate debt securities     3,435       -       1   Total marketable securities   $ 73,755     $ -     $ 3,111       The estimated fair values of such securities at September 1, 2024 by contractual maturity are shown below:     Due in one year or less   $ 32,607   Due after one year through five years     31,224       $ 63,831

Note 4 - Inventories	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Inventory Disclosure [Text Block]	4. INVENTORIES   Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value. The Company writes down its inventory for estimated obsolescence or unmarketability based upon the age of the inventory and assumptions about future demand for the Company’s products and market conditions. Work-in-process and finished goods inventories cost valuations include direct material costs as well as a portion of the Company’s overhead expenses.  The Company’s overhead expenses that are applied to its finished goods inventories are based on actual expenses related to the procurement, storage, shipment and production of the finished goods. Inventories consisted of the following:         September 1,     March 3,       2024     2024                     Inventories:                 Raw materials   $ 5,406     $ 5,047   Work-in-process     541       397   Finished goods     1,683       960       $ 7,630     $ 6,404

Note 5 - Leases	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
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 one year to ten years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is 2068 assuming exercise of all applicable renewal options by the Company. The Company’s existing leases are not subject to any restrictions or covenants which preclude its ability to pay dividends, obtain financing or exercise its available renewal options.   Future minimum lease payments under non-cancellable operating leases as of September 1, 2024 are as follows:   Fiscal Year:         2025   $ 28   2026     57   2027     59   2028     61   2029     65   Thereafter     202   Total undiscounted operating lease payments     472   Less imputed interest     (93 ) Present value of operating lease payments   $ 379     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.   For the 13 weeks and 26 weeks ended September 1, 2024, the Company’s operating lease expenses were $15 and $31, respectively. Cash payments of $27, 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 September 1, 2024:   Operating right-of-use assets   $ 334             Operating lease liabilities   $ 40   Long-term operating lease liabilities     339   Total operating lease liabilities   $ 379     The Company’s weighted average remaining lease term for its operating leases is 6.5 years.

Note 6 - Stock-based Compensation	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Share-Based Payment Arrangement [Text Block]	6. STOCK-BASED COMPENSATION   As of September 1, 2024, 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, approved by the shareholders of the Company at the Annual Meeting of Shareholders of the Company on July 24, 2018, and amended by the shareholders of the Company on July 18, 2024 and provides for the grant of options to purchase up to 1,550,000 shares of common stock of the Company. Prior to the 2018 Plan, the Company had the 2002 Stock Option Plan (the “2002 Plan”) which had been approved by the Company’s shareholders and provided for the grant of stock options to directors and key employees of the Company. All options granted under the 2018 Plan and 2002 Plan have exercise prices equal to the fair market value of the underlying common stock of the Company at the time of grant which, pursuant to the terms of such Plans, is the reported closing price of the common stock on the New York Stock Exchange on the date preceding the date the option is granted. Options granted under the Plans become exercisable 25% one year after the date of grant, with an additional 25% exercisable each succeeding anniversary of the date of grant, and expire 10 years after the date of grant. Upon termination of employment or service as a director, all options held by the optionee that have not previously become exercisable shall terminate and all other options held by such optionee may be exercised, to the extent exercisable on the date of such termination, for a limited time after such termination. Any shares of common stock subject to an option under the 2018 Plan, which expires or is terminated unexercised as to such shares, shall again become available for issuance under the 2018 Plan.   During the 26 weeks ended September 1, 2024, the Company granted options under the 2018 Plan to purchase a total of 135,100 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 $434 and will be recorded on a straight-line basis over the requisite service period. The weighted average fair value of the granted options was $3.21 per share using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 4.23%-4.24%; expected volatility factor of 28.7%-29.1%; expected dividend yield of 3.77%; and estimated option term of 5.8-8.6 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 September 1, 2024. The estimated term of the options was based on evaluations of the historical and expected future employee exercise behavior.   During the 2024 fiscal year, the Company recorded non-cash charges of $109 related to the modification of previously granted employee stock options resulting from the $1.00 per share special cash dividend paid by the Company in April 2023.   The future compensation expense to be recognized in earnings before income taxes for options outstanding at September 1, 2024 was $895, which is expected to be recognized ratably over a weighted average vesting period of 1.53 years.   The following is a summary of option activity for the 26 weeks ended September 1, 2024:       Outstanding Options     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (in years)     Aggregate Intrinsic Value                                     Balance, March 3, 2024     708,325     $ 11.53                   Granted     135,100       13.26                   Exercised     (2,062 )     11.97                   Terminated or expired     (4,688 )     12.71                   Balance, September 1, 2024     836,675     $ 11.80       6.17     $ 1,498   Vested and exercisable, September 1, 2024     518,988     $ 11.22       4.60     $ 1,258

Note 7 - Earnings Per Share	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Earnings Per Share [Text Block]	7. EARNINGS PER SHARE   Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potentially dilutive securities outstanding during the period. Stock options are the only potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method.   The following table sets forth the calculation of basic and diluted earnings per share:       13 Weeks Ended     26 Weeks Ended       September 1, 2024     August 27, 2023     September 1, 2024     August 27, 2023                                     Net earnings   $ 2,066     $ 1,746     $ 3,059     $ 3,600                                     Weighted average common shares outstanding for basic EPS     20,216       20,256       20,234       20,359   Net effect of dilutive options     75       82       97       73   Weighted average shares outstanding for diluted EPS     20,291       20,338       20,331       20,432                                     Basic earnings per share   $ 0.10     $ 0.09     $ 0.15     $ 0.18   Diluted earnings per share   $ 0.10     $ 0.09     $ 0.15     $ 0.18     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 84,000 and 148,000 for the 13 weeks ended September 1, 2024 and August 27, 2023, respectively, and 42,000 and 152,000 for the 26 weeks ended September 1, 2024 and August 27, 2023, respectively.

Note 8 - Shareholders' Equity	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Equity [Text Block]	8. SHAREHOLDERS’ EQUITY   On May 23, 2022, 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 1,500,000 additional shares of its common stock. This authorization supersedes any unused prior Board of Directors’ authorizations to purchase shares of the Company’s common stock. The Company purchased 149,633 and 221,099 shares of its common stock during the 26 weeks ended September 1, 2024 and August 27, 2023, respectively. As a result, the Company is authorized to purchase up to a total of 1,129,268 shares of its common stock, representing approximately 5.7% of the Company’s 19,961,792 total outstanding shares as of the close of business on October 7, 2024. There is no assurance the Company will purchase any shares pursuant to this Board of Directors’ authorization. Shares purchased by the Company, if any, will be retained as treasury stock and will be available for use under the Company’s stock option plan and for other corporate purposes.

Note 9 - Income Taxes	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Income Tax Disclosure [Text Block]	9. INCOME TAXES   For the 13 weeks and 26 weeks ended September 1, 2024, the Company recorded income tax provisions from operations of $750 and $1,126, respectively, which included discrete income tax provisions of $22 and $41, respectively. For the 13 weeks and 26 weeks ended August 27, 2023, the Company recorded income tax provisions from operations of $619 and $1,307, respectively, which included discrete income tax provisions of $16 and $53, respectively.   The Company’s effective tax rates for the 13 weeks and 26 weeks ended September 1, 2024 were income tax provisions of 26.6% and 26.9%, respectively, compared to income tax provisions of 26.2% and 26.6% in the comparable prior periods. The effective tax rates for the 13 weeks and 26 weeks ended September 1, 2024 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. The effective rates for the 13 weeks and 26 weeks ended August 27, 2023 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and discrete income tax provisions for the accrual of interest related to unrecognized tax benefits.   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 10 - Geographic Regions	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Geographic Regions [Text Block]	10. GEOGRAPHIC REGIONS   The Company’s products are sold to customers in North America, Asia and Europe. The Company’s manufacturing facility is located in Kansas. Sales are attributed to geographic regions based upon the region in which the materials were delivered to the customer. All of the Company’s long-lived assets are located in North America.   Financial information regarding the Company’s continuing operations by geographic region is as follows:       13 Weeks Ended     26 Weeks Ended       September 1, 2024     August 27, 2023     September 1, 2024     August 27, 2023   Sales:                                 North America   $ 15,284     $ 11,338     $ 27,270     $ 24,957   Asia     176       412       895       542   Europe     1,249       731       2,514       2,533   Total sales   $ 16,709     $ 12,481     $ 30,679     $ 28,032

Note 11 - Storm Damage Charge	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Storm Damage Charges [Text Block[	11. STORM DAMAGE CHARGE   The Company recorded a charge of $46 and $1,098, respectively, for storm damage in the 13 weeks and 26 weeks ended September 1, 2024.   On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which transitioned the area.  None of the Company’s manufacturing lines or equipment were damaged by the storm.  Although the building structures are secure, the roofs on all three buildings in the Company’s Newton, Kansas campus will ultimately need to be replaced.  Also, multiple specialty HVAC units were damaged or destroyed.  These specialty HVAC units are necessary to control the temperature and humidity in certain manufacturing areas, quality laboratories and R&D laboratories, which is required by certain specifications and certifications the Company is subject to.  The Company is currently working with multiple contractors on site to remediate the damage.   Although the Company is still in the process of remediating the damage, the Company’s production lines were returned to full production within two weeks of the storm. The Company is employing certain temporary measures in order to return its production lines to full service, including the use of temporary HVAC equipment, but it will take the Company several months to permanently repair or replace all of the damaged facilities and infrastructure equipment.    The Company does not anticipate the loss of any sales for the 2025 fiscal year.   The Company paid its employees for the days immediately following the storm despite many not being able to work while others worked on the clean-up of the storm damage to the facilities. The Company incurred $78 of payroll and related costs for lost production time and employees working on clean-up.   The charge recorded by the Company includes an asset damage charge, emergency services by outside contractors, rental of temporary HVAC units and the cost of employee downtime or time spent on the clean-up of the storm damage to the facilities. Additional costs will be recorded in future periods as additional work is needed and performed.   The Company has insurance coverage for wind damage with a deductible of approximately $2.5 million. Under the insurance policy, the Company expects to recover all costs and damages incurred in excess of the deductible. The costs will be in part based on replacement costs, which will be in excess of the charge. Any insurance recovery will be recorded when realization can be determined and is assured.

Note 12 - Contingencies	6 Months Ended
	Sep. 01, 2024
Notes to Financial Statements
Contingencies Disclosure [Text Block]	12. CONTINGENCIES   Litigation   The Company is subject to a small number of immaterial proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. The Company believes that the ultimate disposition of such proceedings, lawsuits and claims will not have a material adverse effect on the liquidity, capital resources, business, consolidated results of operations or financial position of the Company.     Environmental Contingencies   The Company and certain of its subsidiaries have been named by the Environmental Protection Agency (the “EPA”) or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the “Superfund Act”) or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at three sites.   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 during which the Company’s subsidiaries’ waste was disposed at these three sites have in the past reimbursed the Company and its subsidiaries for 100% of their legal defense and remediation costs associated with two of these sites.   The Company does not record environmental liabilities and related legal expenses for which the Company believes that it and its subsidiaries have general liability insurance coverage for the years during which the Company’s subsidiaries’ waste was disposed at two sites for which certain subsidiaries of the Company have been named as potentially responsible parties. Pursuant to such general liability insurance coverage, three insurance carriers reimburse the Company and its subsidiaries for 100% of the legal defense and remediation costs associated with the two sites.   Included in selling, general and administrative expenses are charges for actual expenditures and accruals, based on estimates, for certain environmental 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.

Insider Trading Arrangements	6 Months Ended
	Sep. 01, 2024
Insider Trading Arr Line Items
Material Terms of Trading Arrangement [Text Block]	Item 5. Other Information.   None.
Rule 10b5-1 Arrangement Adopted [Flag]	false
Rule 10b5-1 Arrangement Terminated [Flag]	false
Non-Rule 10b5-1 Arrangement Adopted [Flag]	false
Non-Rule 10b5-1 Arrangement Terminated [Flag]	false

Note 3 - Marketable Securities (Tables)	6 Months Ended
	Sep. 01, 2024
Notes Tables
Debt Securities, Available-for-Sale [Table Text Block]	September 1, 2024       Total     Level 1     Level 2     Level 3   U.S. Treasury and other government securities   $ 63,831     $ 63,831     $ -     $ -   Total marketable securities   $ 63,831     $ 63,831     $ -     $ -       March 3, 2024       Total     Level 1     Level 2     Level 3   U.S. Treasury and other government securities   $ 67,210     $ 67,210     $ -     $ -   U.S. corporate debt securities     3,434       3,434       -       -   Total marketable securities   $ 70,644     $ 70,644     $ -     $ -
Schedule of Available-for-Sale Securities Reconciliation [Table Text Block]	Amortized Cost Basis     Gross Unrealized Gains     Gross Unrealized Losses   September 1, 2024:                         U.S. Treasury and other government securities   $ 65,543     $ 43     $ 1,755   U.S. corporate debt securities     -       -       -   Total marketable securities   $ 65,543     $ 43     $ 1,755                             March 3, 2024:                         U.S. Treasury and other government securities   $ 70,320     $ -     $ 3,110   U.S. corporate debt securities     3,435       -       1   Total marketable securities   $ 73,755     $ -     $ 3,111
Investments Classified by Contractual Maturity Date [Table Text Block]	Due in one year or less   $ 32,607   Due after one year through five years     31,224       $ 63,831

Note 4 - Inventories (Tables)	6 Months Ended
	Sep. 01, 2024
Notes Tables
Schedule of Inventory, Current [Table Text Block]	September 1,     March 3,       2024     2024                     Inventories:                 Raw materials   $ 5,406     $ 5,047   Work-in-process     541       397   Finished goods     1,683       960       $ 7,630     $ 6,404

Note 5 - Leases (Tables)	6 Months Ended
	Sep. 01, 2024
Notes Tables
Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]	Fiscal Year:         2025   $ 28   2026     57   2027     59   2028     61   2029     65   Thereafter     202   Total undiscounted operating lease payments     472   Less imputed interest     (93 ) Present value of operating lease payments   $ 379
Schedule of Right-of-use Assets and Operating Lease Liabilities [Table Text Block]	Operating right-of-use assets   $ 334             Operating lease liabilities   $ 40   Long-term operating lease liabilities     339   Total operating lease liabilities   $ 379

Note 6 - Stock-based Compensation (Tables)	6 Months Ended
	Sep. 01, 2024
Notes Tables
Share-Based Payment Arrangement, Option, Activity [Table Text Block]	Outstanding Options     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (in years)     Aggregate Intrinsic Value                                     Balance, March 3, 2024     708,325     $ 11.53                   Granted     135,100       13.26                   Exercised     (2,062 )     11.97                   Terminated or expired     (4,688 )     12.71                   Balance, September 1, 2024     836,675     $ 11.80       6.17     $ 1,498   Vested and exercisable, September 1, 2024     518,988     $ 11.22       4.60     $ 1,258

Note 7 - Earnings Per Share (Tables)	6 Months Ended
	Sep. 01, 2024
Notes Tables
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	13 Weeks Ended     26 Weeks Ended       September 1, 2024     August 27, 2023     September 1, 2024     August 27, 2023                                     Net earnings   $ 2,066     $ 1,746     $ 3,059     $ 3,600                                     Weighted average common shares outstanding for basic EPS     20,216       20,256       20,234       20,359   Net effect of dilutive options     75       82       97       73   Weighted average shares outstanding for diluted EPS     20,291       20,338       20,331       20,432                                     Basic earnings per share   $ 0.10     $ 0.09     $ 0.15     $ 0.18   Diluted earnings per share   $ 0.10     $ 0.09     $ 0.15     $ 0.18

Note 10 - Geographic Regions (Tables)	6 Months Ended
	Sep. 01, 2024
Notes Tables
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]	13 Weeks Ended     26 Weeks Ended       September 1, 2024     August 27, 2023     September 1, 2024     August 27, 2023   Sales:                                 North America   $ 15,284     $ 11,338     $ 27,270     $ 24,957   Asia     176       412       895       542   Europe     1,249       731       2,514       2,533   Total sales   $ 16,709     $ 12,481     $ 30,679     $ 28,032

Note 3 - Marketable Securities - Summary of Available-for-sale Securities (Details) - USD ($) $ in Thousands	Sep. 01, 2024	Mar. 03, 2024
Available-for-sale securities	$ 63,831
Fair Value, Recurring [Member]
Available-for-sale securities	63,831	$ 70,644
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities	63,831	70,644
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities	0	0
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities	0	0
US Treasury and Government [Member] | Fair Value, Recurring [Member]
Available-for-sale securities	63,831	67,210
US Treasury and Government [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities	63,831	67,210
US Treasury and Government [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities	0	0
US Treasury and Government [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities	$ 0	0
Debt Security, Corporate, US [Member] | Fair Value, Recurring [Member]
Available-for-sale securities		3,434
Debt Security, Corporate, US [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Available-for-sale securities		3,434
Debt Security, Corporate, US [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities		0
Debt Security, Corporate, US [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Available-for-sale securities		$ 0

Note 3 - Marketable Securities - Summary of Unrealized Gains and Losses on Available-for-sale Securities (Details) - USD ($) $ in Thousands	Sep. 01, 2024	Mar. 03, 2024
Amortized cost basis	$ 65,543	$ 73,755
Gross unrealized gains	43	0
Gross unrealized losses	1,755	3,111
US Treasury and Government [Member]
Amortized cost basis	65,543	70,320
Gross unrealized gains	43	0
Gross unrealized losses	1,755	3,110
Debt Security, Corporate, US [Member]
Amortized cost basis	0	3,435
Gross unrealized gains	0	0
Gross unrealized losses	$ 0	$ 1

Note 3 - Marketable Securities - Estimated Fair Value of Securities by Contractual Maturity (Details) $ in Thousands	Sep. 01, 2024 USD ($)
Due in one year or less	$ 32,607
Due after one year through five years	31,224
Debt Securities, Available-for-Sale	$ 63,831

Note 4 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands	Sep. 01, 2024	Mar. 03, 2024
Raw materials	$ 5,406	$ 5,047
Work-in-process	541	397
Finished goods	1,683	960
Inventory, Net	$ 7,630	$ 6,404	[1]
[1] The balance sheet at March 3, 2024 has been derived from the audited consolidated financial statements at that date.

Note 5 - Leases (Details Textual) $ in Thousands	3 Months Ended	6 Months Ended
	Sep. 01, 2024 USD ($)	Sep. 01, 2024 USD ($)
Operating Lease, Expense	$ 15	$ 31
Operating Lease, Payments		$ 27
Operating Lease, Weighted Average Remaining Lease Term (Year)	6 years 6 months	6 years 6 months
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	Sep. 01, 2024 USD ($)
Present value of operating lease payments	$ 379
Leases with Renewal Options [Member]
2025	28
2026	57
2027	59
2028	61
2029	65
Thereafter	202
Total undiscounted operating lease payments	472
Less imputed interest	(93)
Present value of operating lease payments	$ 379

Note 5 - Leases - Schedule of Right-of-use Assets and Operating Lease Liabilties (Details) - USD ($) $ in Thousands	Sep. 01, 2024	Mar. 03, 2024	[1]
Operating right-of-use assets	$ 334	$ 95
Operating lease liabilities	40	53
Long-term operating lease liabilities	339	$ 82
Total operating lease liabilities	$ 379
[1] The balance sheet at March 3, 2024 has been derived from the audited consolidated financial statements at that date.

Note 6 - Stock-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	6 Months Ended	12 Months Ended
	Sep. 01, 2024	Apr. 30, 2023	Sep. 01, 2024	Mar. 03, 2024
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross			135,100
Share-Based Payment Arrangement, Plan Modification, Incremental Cost				$ 109
S2023FYDividends [Member]
Common Stock, Dividends, Per Share, Cash Paid		$ 1
The 2018 Stock Option Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized	1,550,000		1,550,000
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
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 895		$ 895
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			1 year 6 months 10 days
The 2018 Stock Option Plan [Member] | Directors and Certain Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross			135,100
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 434		$ 434
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 3.21
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate			3.77%
The 2018 Stock Option Plan [Member] | Directors and Certain Employees [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			4.23%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate			28.70%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term			5 years 9 months 18 days
The 2018 Stock Option Plan [Member] | Directors and Certain Employees [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate			4.24%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate			29.10%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term			8 years 7 months 6 days

Note 6 - Stock-based Compensation - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Sep. 01, 2024
Outstanding options, balance (in shares)	708,325
Outstanding options, weighted average exercise price (in dollars per share)	$ 11.53
Outstanding options, granted (in shares)	135,100
Granted, weighted average exercise price (in dollars per share)	$ 13.26
Outstanding options, exercised (in shares)	(2,062)
Exercised, weighted average exercise price (in dollars per share)	$ 11.97
Outstanding options, terminated or expired (in shares)	(4,688)
Terminated or expired, weighted average exercise price (in dollars per share)	$ 12.71
Outstanding options, balance (in shares)	836,675
Outstanding options, weighted average exercise price (in dollars per share)	$ 11.8
Outstanding options, weighted average remaining contractual term (Year)	6 years 2 months 1 day
Outstanding options, aggregate intrinsic value	$ 1,498
Vested and exercisable, outstanding options (in shares)	518,988
Vested and exercisable, weighted average exercise price (in dollars per share)	$ 11.22
Vested and exercisable, weighted average remaining contractual term (Year)	4 years 7 months 6 days
Vested and exercisable, aggregate intrinsic value	$ 1,258

Note 7 - Earnings Per Share (Details Textual) - shares	3 Months Ended		6 Months Ended
	Sep. 01, 2024	Aug. 27, 2023	Sep. 01, 2024	Aug. 27, 2023
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	84,000	148,000	42,000	152,000

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
	Sep. 01, 2024	Aug. 27, 2023	Sep. 01, 2024	Aug. 27, 2023
Net earnings	$ 2,066	$ 1,746	$ 3,059	$ 3,600
Weighted average common shares outstanding for basic EPS (in shares)	20,216	20,256	20,234	20,359
Net effect of dilutive options (in shares)	75	82	97	73
Weighted average shares outstanding for diluted EPS (in shares)	20,291	20,338	20,331	20,432
Basic earnings per share (in dollars per share)	$ 0.1	$ 0.09	$ 0.15	$ 0.18
Diluted earnings per share (in dollars per share)	$ 0.1	$ 0.09	$ 0.15	$ 0.18

Note 8 - Shareholders' Equity (Details Textual) - shares	6 Months Ended
	Sep. 01, 2024	Aug. 27, 2023	Oct. 07, 2024	May 23, 2022
Share Repurchase Program, Authorized, Number of Shares				1,500,000
Stock Repurchased During Period, Shares	149,633	221,099
Share Repurchase Program, Remaining Authorized, Number of Shares			1,129,268
Stock Repurchase Program, Percentage of Outstanding Shares Authorized to be Repurchased			5.70%
Common Stock, Shares, Outstanding			19,961,792

Note 9 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 01, 2024	Aug. 27, 2023	Sep. 01, 2024	Aug. 27, 2023
Income Tax Expense (Benefit)	$ 750	$ 619	$ 1,126	$ 1,307
Income Tax Expense (Benefit), Discrete Amount	$ 22	$ 16	$ 41	$ 53
Effective Income Tax Rate Reconciliation, Percent	26.60%	26.20%	26.90%	26.60%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%	21.00%	21.00%
Undistributed Earnings, Basic, Total			$ 25,000

Note 10 - Geographic Regions - Financial Information by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 01, 2024	Aug. 27, 2023	Sep. 01, 2024	Aug. 27, 2023
Sales	$ 16,709	$ 12,481	$ 30,679	$ 28,032
North America [Member]
Sales	15,284	11,338	27,270	24,957
Asia [Member]
Sales	176	412	895	542
Europe [Member]
Sales	$ 1,249	$ 731	$ 2,514	$ 2,533

Note 11 - Storm Damage Charge (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 01, 2024	Aug. 27, 2023	Sep. 01, 2024	Aug. 27, 2023
Storm Damage Charges	$ 46	$ (0)	$ 1,098	$ (0)
Payroll and Related Costs Incurred, Storm Cleanup			78
Insurance, Deductible			$ 2,500

Note 12 - Contingencies (Details Textual) $ in Thousands	6 Months Ended
	Sep. 01, 2024 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	$ 0
Number of Insurance Carriers	3

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