PARK AEROSPACE CORP 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.   The Company's Financial Statements begin on the next page.   36     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     The Board of Directors and Shareholders of Park Aerospace Corp.     Opinion on the Financial Statements   We have audited the accompanying consolidated balance sheets of Park Aerospace Corp. and subsidiaries (the “Company”) as of February 27, 2022 and February 28, 2021 and the related consolidated statements of operations, comprehensive earnings, shareholders’ equity, and cash flows for each of the years in the three-year period ended February 27, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 27, 2022 and February 28, 2021, and the results of its operations and its cash flows for each of the three years in the period ended February 27, 2022, in conformity with accounting principles generally accepted in the United States of America.   Basis for Opinion   These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.   Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.   /s/ CohnReznick LLP   We have served as the Company’s auditor since 2014.   Parsippany, New Jersey   May 12, 2022   37       PARK AEROSPACE CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share amounts)       February 27, 2022     February 28, 2021   ASSETS                 Current assets:                 Cash and cash equivalents   $ 12,811     $ 41,595   Marketable securities (Note 2)     97,550       74,947   Accounts receivable, less allowance for doubtful accounts of $ 104 and $ 89 , respectively     8,339       7,633   Inventories (Note 3)     4,657       4,794   Prepaid expenses and other current assets     3,082       3,372   Total current assets     126,439       132,341                     Property, plant and equipment, net (Note 3)     24,333       21,130   Operating right-of-use assets (Note 10)     203       103   Goodwill and other intangible assets, net (Note 3)     9,790       9,797   Other assets (Note 4)     122       141   Total assets   $ 160,887     $ 163,512                     LIABILITIES AND SHAREHOLDERS' EQUITY                 Current liabilities:                 Accounts payable   $ 2,534     $ 3,300   Operating lease liabilities (Note 10)     53       33   Accrued liabilities (Note 3)     1,494       1,708   Income taxes payable     2,211       2,952   Total current liabilities     6,292       7,993                     Long-term operating lease liabilities (Note 10)     174       86   Non-current income taxes payable (Note 4)     12,621       14,303   Deferred income taxes (Note 4)     1,671       778   Other liabilities (Note 4)     4,497       4,411   Total liabilities     25,255       27,571                     Commitments and contingencies (Notes 10 and 11)                                       Shareholders' equity (Note 6):                 Preferred stock, $ 1 par value per shares-authorized, 500,000 shares; issued, none     -       -   Common stock, $ 0.10 par value per shares-authorized, 60,000,000 shares; issued, 20,965,144 shares     2,096       2,096   Additional paid-in capital     169,665       170,038   Accumulated deficit     ( 24,767 )     ( 25,063 ) Accumulated other comprehensive loss     ( 1,965 )     ( 336 )       145,029       146,735                     Less treasury stock, at cost, 506,934 and 582,268 shares, respectively     ( 9,397 )     ( 10,794 ) Total shareholders' equity     135,632       135,941   Total liabilities and shareholders' equity   $ 160,887     $ 163,512     See Notes to Consolidated Financial Statements.   38       PARK AEROSPACE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts)       Fiscal Year Ended       February 27,     February 28,     March 1,       2022     2021     2020                             Net sales   $ 53,578     $ 46,276     $ 60,014   Cost of sales     35,661       33,085       41,341   Gross profit     17,917       13,191       18,673   Selling, general and administrative expenses     6,249       6,113       7,932   Restructuring charges (Note 8)     259       1,570       -   Earnings from continuing operations     11,409       5,508       10,741   Interest and other income     375       1,777       3,330   Earnings from continuing operations before income taxes     11,784       7,285       14,071   Income tax provision (Note 4)     3,320       2,093       3,866   Net earnings from continuing operations     8,464       5,192       10,205   Loss from discontinued operations, net of tax (Note 12)     -       ( 328 )     ( 653 ) Net earnings   $ 8,464     $ 4,864     $ 9,552                             Earnings (loss) per share (Note 7)                         Basic:                         Continuing operations   $ 0.41     $ 0.25     $ 0.50   Discontinued operations     -       ( 0.01 )     ( 0.03 ) Basic earnings per share   $ 0.41     $ 0.24     $ 0.47   Basic weighted average shares     20,422       20,387       20,507                             Diluted:                         Continuing operations   $ 0.41     $ 0.25     $ 0.50   Discontinued operations     -       ( 0.01 )     ( 0.03 ) Diluted earnings per share   $ 0.41     $ 0.24     $ 0.47   Diluted weighted average shares     20,551       20,478       20,595     See Notes to Consolidated Financial Statements.   39       PARK AEROSPACE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Amounts in thousands)         Fiscal Year Ended                                 February 27,     February 28,     March 1,       2022     2021     2020                             Net earnings   $ 8,464     $ 4,864     $ 9,552   Other comprehensive (loss) earnings, net of tax:                         Unrealized gains on marketable securities:                         Unrealized holding gains arising during the period     108       421       990   Less: reclassification adjustment for gains included in net earnings     ( 36 )     ( 272 )     ( 49 ) Unrealized losses on marketable securities:                         Unrealized holding losses arising during the period     ( 1,713 )     ( 1,176 )     ( 291 ) Less: reclassification adjustment for losses included in net earnings     12       23       40   Other comprehensive (loss) earnings     ( 1,629 )     ( 1,004 )     690   Total comprehensive earnings   $ 6,835     $ 3,860     $ 10,242     See Notes to Consolidated Financial Statements.   40       PARK AEROSPACE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Amounts in thousands, except share and per share amounts)                                       Accumulated                                                     Other                       Common Stock     Additional Paid-in     Accumulated     Comprehensive Earnings     Treasury Stock       Shares     Amount     Capital     Deficit     (Loss)     Shares     Amount                                                             Balance, March 3, 2019     20,965,144     $ 2,096     $ 169,395     $ ( 2,605 )   $ ( 22 )     479,191     $ ( 9,853 )                                                           Net earnings     -       -       -       9,552       -       -       -   Unrealized gain on marketable securities, net of tax     -       -       -       -       690       -       -   Stock options exercised     -       -       ( 259 )     -       -       ( 32,870 )     676   Stock-based compensation     -       -       726       -       -       -       -   Cash dividends ($ 1.40 per share)     -       -       -       ( 28,721 )     -       -       -   Balance, March 1, 2020     20,965,144       2,096       169,862       ( 21,774 )     668       446,321       ( 9,177 )                                                           Net earnings     -       -       -       4,864       -       -       -   Unrealized gain on marketable securities, net of tax     -       -       -       -       ( 1,004 )     -       -   Stock options exercised     -       -       ( 15 )     -       -       ( 1,450 )     27   Stock-based compensation     -       -       191       -       -       -       -   Purchase of treasury stock     -       -       -       -       -       137,397       ( 1,644 ) Cash dividends ($ .40 per share)     -       -       -       ( 8,153 )     -       -       -   Balance, February 28, 2021     20,965,144       2,096       170,038       ( 25,063 )     ( 336 )     582,268       ( 10,794 )                                                           Net earnings     -       -       -       8,464       -       -       -   Unrealized loss on marketable securities, net of tax     -       -       -       -       ( 1,629 )     -       -   Stock options exercised     -       -       ( 658 )     -       -       ( 75,334 )     1,397   Stock-based compensation     -       -       285       -       -       -       -   Cash dividends ($ .40 per share)     -       -       -       ( 8,168 )     -       -       -   Balance, February 27, 2022     20,965,144     $ 2,096     $ 169,665     $ ( 24,767 )   $ ( 1,965 )     506,934     $ ( 9,397 )   See Notes to Consolidated Financial Statements.   41       PARK AEROSPACE CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)       Fiscal Year Ended       February 27,     February 28,     March 1,       2022     2021     2020   Cash flows from operating activities:                         Net earnings   $ 8,464     $ 4,864     $ 9,552   Loss from discontinued operations, net of tax     -       328       653   Net earnings from continuing operations     8,464       5,192       10,205   Adjustments to reconcile net earnings to net cash provided by operating activities:                         Depreciation and amortization     1,136       1,150       1,544   Stock-based compensation     285       191       726   Allowance for bad debt     16       16       41   Provision for deferred income taxes     894       ( 56 )     849   Amortization of bond premium     956       543       27   Loss (gain) on sale of marketable securities     10       ( 10 )     ( 15 ) Loss on sale of fixed assets     27       -       -   Non-cash restructuring     -       1,318       -   Changes in operating assets and liabilities:                         Accounts receivable     ( 722 )     3,276       ( 1,614 ) Inventories     137       1,585       ( 1,112 ) Prepaid expenses and other current assets     ( 550 )     157       490   Other assets and liabilities     111       250       3,348   Accounts payable     ( 766 )     ( 1,435 )     1,566   Accrued liabilities     ( 214 )     ( 1 )     ( 1,211 ) Income taxes payable     ( 1,583 )     1,164       ( 8,973 ) Net cash provided by operating activities - continuing operations     8,201       13,340       5,871   Net cash used in operating activities - discontinued operations     -       ( 328 )     ( 653 ) Net cash provided by operating activities     8,201       13,012       5,218                             Cash flows from investing activities:                         Purchases of property, plant and equipment     ( 4,372 )     ( 7,493 )     ( 6,846 ) Proceeds from sales of property, plant and equipment     14       -       -   Purchases of marketable securities     ( 59,422 )     ( 83,941 )     ( 104,600 ) Proceeds from sales and maturities of marketable securities     34,224       124,392       68,935   Net cash (used in) provided by investing activities - continuing operations     ( 29,556 )     32,958       ( 42,511 ) Net cash provided by investing activities - discontinued operations     -       -       -   Net cash (used in) provided by investing activities     ( 29,556 )     32,958       ( 42,511 )                           Cash flows from financing activities:                         Dividends paid     ( 8,168 )     ( 8,153 )     ( 28,721 ) Proceeds from exercise of stock options     739       12       417   Purchase of treasury stock     -       ( 1,644 )     -   Net cash used in financing activities - continuing operations     ( 7,429 )     ( 9,785 )     ( 28,304 ) Net cash used in financing activities - discontinued operations     -       -       -   Net cash used in financing activities     ( 7,429 )     ( 9,785 )     ( 28,304 )                           (Decrease) increase in cash and cash equivalents before effect of exchange rate changes - continuing operations     ( 28,784 )     36,513       ( 64,944 ) (Decrease) in cash and cash equivalents before effect of exchange rate changes - discontinued operations     -       ( 328 )     ( 653 ) (Decrease) increase in cash and cash equivalents before effect of exchange rate changes     ( 28,784 )     36,185       ( 65,597 )                           (Decrease) increase in cash and cash equivalents     ( 28,784 )     36,185       ( 65,597 ) Cash and cash equivalents, beginning of year     41,595       5,410       71,007   Cash and cash equivalents, end of year   $ 12,811     $ 41,595     $ 5,410     See Notes to Consolidated Financial Statements.   42     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Three years ended February 27, 2022 (Amounts in thousands, except share (unless otherwise stated), per share and option amounts)     1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Park Aerospace Corp. and its subsidiaries (collectively, “Park” or the “Company”), is a global advanced materials company which develops and manufactures advanced composite materials, primary and secondary structures and assemblies and low-volume tooling for the aerospace markets.     a. Principles of Consolidation – The consolidated financial statements include the accounts of Park and its subsidiaries. All significant intercompany balances and transactions have been eliminated.     b. Basis of Presentation – On July 25, 2018, the Company entered into a definitive agreement to sell its Electronics Business for $ 145,000 in cash. This transaction was completed on December 4, 2018. ( See Note 12 ).       The Company has classified the operating results of its Electronics Business, together with certain costs related to the transaction, as discontinued operations, net of tax, in the Consolidated Statements of Operations and Consolidated Statements of Cash Flows, in accordance with Accounting Standards Codification (“ASC”) 205 - 20, Discontinued Operations. (See Note 12 ).     c. Use of Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates.     d. Accounting Period – The Company’s fiscal year is the 52 - or 53 -week period ending the Sunday nearest to the last day of February. The 2022, 2021 and 2020 fiscal years ended on February 27, 2022, February 28, 2021 and March 1, 2020, respectively. Fiscal years 2022, 2021 and 2020 each consisted of 52 weeks.     e. 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.   43         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 current 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 2 ).   The Company’s non-financial assets measured at fair value on a non-recurring basis, for purposes of calculating impairment, 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. There were no transfers between levels within the fair value hierarchy during the 2022, 2021 or 2020 fiscal years.     f. Cash and Cash Equivalents – The Company considers all money market securities and investments with contractual maturities at the date of purchase of 90 days or less to be cash equivalents. The Company had $ 5,998 and $ 29,492 in debt securities included in cash equivalents at February 27, 2022 and February 28, 2021, respectively, which were valued based on Level 2 inputs. Certain of the Company’s cash and cash equivalents are in excess of U.S. government insurance. $ 29,595 of the $ 110,360 of cash and marketable securities at February 27, 2022 were owned by one of the Company’s wholly-owned foreign subsidiaries .       Supplemental cash flow information:       Fiscal Year       2022     2021     2020                             Cash paid during the year for:                         Income taxes, net of refunds   $ 3,924     $ 782     $ 8,296         At February 27, 2022 and February 28, 2021, the Company held $ 2,929 and $ 12,446 , respectively, of cash and cash equivalents in foreign financial institutions.   44       g. 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, net. The cost of securities sold is based on the specific identification method.     h . 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.     i . Revenue Recognition – The Company recognizes revenue when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the providing entity expects to be entitled in exchange for those goods or services. We recognize revenue when all of the following criteria are met: ( 1 ) we have entered into a binding agreement, ( 2 ) the performance obligations have been identified, ( 3 ) the transaction price to the customer has been determined, ( 4 ) the transaction price has been allocated to the performance obligations in the contract, and ( 5 ) the performance obligations have been satisfied. Revenue is recognized in accordance with contracted shipping terms, which represents the Company’s performance obligation. Shipping and handling costs are treated as fulfillment costs.     j . Sales Allowances and Product Warranties – The Company records estimated reductions to revenue for customer returns, allowances, and warranty claims. Provisions for such reductions are recorded in the period the sale is recorded and are derived from historical trends and other relevant information. The Company’s products are made to customer specifications and tested for adherence to specifications before shipment to customers. Composite structures and assemblies may be subject to “airworthiness” acceptance by customers after receipt at the customers’ locations. There are no future performance requirements other than the products’ meeting the agreed specifications. The Company’s basis for providing sales allowances for returns are known situations in which products may have failed due to manufacturing defects in products supplied by the Company. The amounts of returns and allowances resulting from defective or damaged products have been less than 1.0 % of sales for each of the Company's last three fiscal years.     k. Accounts Receivable – The Company’s accounts receivable are due from purchasers of the Company’s products. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are due within established payment terms and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than established payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the conditions of the general economy and the aerospace industry. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company writes off accounts receivable when they become uncollectible.   45       l . Valuation of Long-Lived Assets – The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Important factors that could trigger an impairment review include, but are not limited to, significant negative industry or economic trends and significant changes in the use of the Company's assets or strategy of the overall business. $ 1,318 of impairments of long-lived assets was recognized in the 2021 fiscal year and no impairments of long-lived assets were recognized in the 2022 or 2020 fiscal years.     m. Goodwill and Other Intangible Assets – Goodwill is not amortized. Other intangible assets are amortized over the useful lives, which is 15 years, of the assets on a straight-line basis. The Company tests for impairment of intangible assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. With respect to goodwill, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value is less than the carrying value. If, based on that assessment, the Company believes it is more likely than not that the fair value is less than the carrying value, a one -step goodwill impairment test is performed. The Company assesses the impairment of goodwill at least annually. The Company conducts its annual goodwill impairment test as of the first day of the fourth quarter. The Company concluded that there was no impairment in the 2022 or 2021 fiscal years.     n . Shipping Costs – Most of the costs for third -party shippers for transporting products to customers are paid for or reimbursed by customers. The Company records minimal shipping costs in selling, general and administrative expenses.     o . Property, Plant and Equipment – Property, plant and equipment are stated at cost less accumulated depreciation and amortization. The Company capitalizes additions, improvements and major renewals and expenses maintenance, repairs and minor renewals as incurred. Depreciation and amortization are computed principally by the straight-line method over the estimated useful lives of the assets. Machinery, equipment, furniture and fixtures are generally depreciated over 10 years. Building and leasehold improvements are generally depreciated over 25 - 30 years or the term of the lease, if shorter. The depreciation and amortization expenses associated with property, plant and equipment were $ 1,136 , $ 1,150 and $ 1,544 for the 2022, 2021 and 2020 fiscal years, respectively.     p . Income Taxes – Deferred income taxes are provided for temporary differences in the reporting of certain items, such as depreciation and undistributed earnings of foreign subsidiaries, for income tax purposes compared to financial accounting purposes. In evaluating the Company’s ability to recover the deferred tax assets within the jurisdiction from which they arise, all positive and negative evidence is considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, tax planning strategies and results of recent acquisitions. If these estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets, resulting in additional income tax expense in the Company's Consolidated Statements of Operations, or conversely to further reduce the existing valuation allowance, resulting in less income tax expense. The Company evaluates the realizability of the deferred tax assets and assesses the need for additional valuation allowances quarterly. (See Note 4 ).   46         Tax benefits are recognized for an uncertain tax position when, in the Company’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than- not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available. Such adjustments are recognized entirely in the period in which they are identified. The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by the Company. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes its liability for unrecognized tax benefits is adequate. Interest and penalties, if any, recognized on the liability for unrecognized tax benefits are recorded as income tax expense.     q. Foreign Currency Translation – Assets and liabilities of foreign subsidiaries using currencies other than the U.S. dollar as their functional currency are translated into U.S. dollars at period-end exchange rates or historical exchange rates, where applicable, and income and expense items are translated at average exchange rates for the period. Gains and losses resulting from translation are recorded as currency translation adjustments in comprehensive earnings and are eliminated when foreign operations are sold or otherwise disposed of.     r. Stock-Based Compensation – The Company accounts for stock options, the only form of equity compensation issued by the Company, as compensation expense based on the fair value of the options on the date of grant and recognizes such expense on a straight-line basis over the four -year service period during which the options become exercisable, net of forfeitures. The Company determines the fair value of such options using the Black-Scholes option pricing model. The Black-Scholes option pricing model incorporates certain assumptions relating to risk-free interest rate, expected volatility, expected dividend yield and expected life of options, in order to arrive at a fair value estimate.     s. Treasury Stock – The Company considers all shares of the Company’s common stock purchased by the Company as authorized but unissued shares on the trade date. The aggregate purchase price of such shares is reflected as a reduction to Shareholders’ Equity, and such shares are held in treasury at cost.     t. 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 terms 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.   47       2. MARKETABLE SECURITIES   The following is a summary of available-for-sale securities:       February 27, 2022       Total     Level 1     Level 2     Level 3   U.S. Treasury and other government securities   $ 62,612     $ 62,612     $ -     $ -   U.S. corporate debt securities     34,938       34,938       -       -   Total marketable securities   $ 97,550     $ 97,550     $ -     $ -         February 28, 2021       Total     Level 1     Level 2     Level 3   U.S. Treasury and other government securities   $ 56,906     $ 56,906     $ -     $ -   U.S. corporate debt securities     18,041       18,041       -       -   Total marketable securities   $ 74,947     $ 74,947     $ -     $ -     The following tables show the amortized cost basis, gross unrealized gains and losses and gross realized gains and losses on the Company’s available-for-sale securities:       Amortized Cost Basis     Gross Unrealized Gains     Gross Unrealized Losses   February 27, 2022:                         U.S. Treasury and other government securities   $ 65,177     $ 5     $ 2,570   U.S. corporate debt securities     35,064       5       131   Total marketable securities   $ 100,241     $ 10     $ 2,701                             February 28, 2021:                         U.S. Treasury and other government securities   $ 57,400     $ 153     $ 647   U.S. corporate debt securities     18,008       52       19   Total marketable securities   $ 75,408     $ 205     $ 666         Fiscal Year       2022     2021     2020                             Gross realized gains on sale   $ 26     $ 155     $ 90                             Gross realized losses on sale   $ 36     $ 145     $ 75     The estimated fair values of such securities at February 27, 2022, by contractual maturity, are shown below:   Due in one year or less   $ 58,582   Due after one year through five years     38,968       $ 97,550     48     3. OTHER CONSOLIDATED BALANCE SHEET DATA   Other consolidated balance sheet data consisted of the following:       February 27,     February 28,       2022     2021   Inventories:                 Raw materials   $ 4,026     $ 3,490   Work-in-process     253       147   Finished goods     378       1,157       $ 4,657     $ 4,794                     Property, plant and equipment:                 Land, buildings and improvements   $ 16,054     $ 14,236   Machinery, equipment, furniture and fixtures     33,581       37,446         49,635       51,682   Less: accumulated depreciation and amortization     25,302       30,552       $ 24,333     $ 21,130                     Goodwill and other intangible assets:                 Goodwill   $ 9,776     $ 9,776   Other intangibles     14       21       $ 9,790     $ 9,797                     Accrued liabilities:                 Payroll and payroll related   $ 688     $ 596   Employee benefits     3       2   Workers' compensation     96       138   Professional fees     512       451   Restructuring (Notes 8 and 12)     8       260   Other     187       261       $ 1,494     $ 1,708         4. INCOME TAXES   The income tax provision (benefit) for continuing operations includes the following:       Fiscal Year       2022     2021     2020                             Current:                         Federal   $ 1,912     $ 1,662     $ 2,556   State and local     484       447       40   Foreign     4       10       383         2,400       2,119       2,979                             Deferred:                         Federal     565       132       899   State and local     88       109       ( 12 ) Foreign     267       ( 267 )     -         920       ( 26 )     887       $ 3,320     $ 2,093     $ 3,866     49     The income tax provision (benefit) for discontinued operations includes the following:       Fiscal Year       2022     2021     2020                             Current:                         Federal   $ -     $ ( 84 )   $ ( 183 ) State and local     -       ( 23 )     ( 15 ) Foreign     -       -       -         -       ( 107 )     ( 198 )                           Deferred:                         Federal     -       -       -   State and local     -       -       ( 38 ) Foreign     -       -       -         -       -       ( 38 )     $ -     $ ( 107 )   $ ( 236 )   State income tax benefits from loss carryforwards to future years were recognized as deferred tax assets in the 2022, 2021 and 2020 fiscal years.   Notwithstanding the U.S. taxation of the deemed repatriated foreign earnings as a result of the transition tax, 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 that such earnings will be remitted in the foreseeable future, the Company may be required to accrue U.S. deferred taxes. In connection with sale of the Electronics Business and the enactment of the Tax Act, the Company repatriated $ 0 , $ 0 , and $ 100,216 in cash from its Singapore and French subsidiaries in the 2022, 2021 and 2020 fiscal years, respectively.   The Company’s pre-tax earnings (loss) from continuing operations in the United States and foreign locations are as follows:       Fiscal Year       2022     2021     2020                             United States   $ 11,987     $ 8,732     $ 11,676   Foreign     ( 203 )     ( 1,447 )     2,395   Earnings before income taxes   $ 11,784     $ 7,285     $ 14,071     The Company’s pre-tax earnings (loss) from discontinued operations in the United States and foreign locations are as follows:       Fiscal Year       2022     2021     2020                             United States   $ -     $ ( 435 )   $ ( 887 ) Foreign     -       -       -   (Loss) earnings before income taxes   $ -     $ ( 435 )   $ ( 887 )   50     The Company’s effective income tax rate differs from the statutory U.S. Federal income tax rate as a result of the following:       Fiscal Year       2022     2021     2020                             Statutory U.S. Federal tax rate     21.0 %     21.0 %     21.0 % State and local taxes, net of     4.3 %     5.9 %     0.1 % Federal benefit                         Foreign tax rate differentials     2.7 %     0.7 %     ( 0.6 %) Valuation allowance on deferred tax assets     0.0 %     0.0 %     ( 0.1 %) Adjustment on tax accruals     ( 0.3 %)     0.0 %     ( 17.6 %) ASC 740-10 change     0.5 %     0.9 %     23.5 % Foreign tax credits     0.0 %     ( 0.1 %)     ( 2.7 %) Subpart F     ( 1.0 %)     1.1 %     4.0 % Permanent differences and other     1.0 %     ( 0.8 %)     ( 0.1 %)       28.2 %     28.7 %     ( 27.5 %)   The Company had state net operating loss carryforwards of approximately $ 2,030 and $ 2,160 in the 2022 and 2021 fiscal years, respectively, and total net foreign operating loss carryforwards of approximately $ 7,790 and $ 7,798 in the 2022 and 2021 fiscal years, respectively. The Company utilized $ 64 of net operating loss in the 2020 fiscal year. The Company has a valuation allowance against the remaining carryforwards. The state net operating loss carryforwards will expire in 2023 through 2039.   The Company had available Kansas tax credits of $ 0 at the end of both the 2022 and 2021 fiscal years. Kansas credits of $ 191 were utilized in 2020 and a corresponding tax benefit was recognized.  The Company had Arizona tax credits of $ 991 in both the 2022  and 2021  fiscal years, for which no benefit has been provided.   The deferred tax asset valuation allowance of $ 3,587 as of February 27, 2022 relates to foreign net operating losses and state tax credit carryforwards from continuing operations for which the Company does not expect to realize any tax benefit. During the 2022 fiscal year, the valuation allowance did not change. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.   Significant components of the Company's deferred tax assets and liabilities from continuing operations as of February 27, 2022 and February 28, 2021 were as follows:       February 27,     February 28,       2022     2021                     Deferred tax assets:                 Net operating loss carryforwards   $ 2,598     $ 2,602   Tax credits carryforward     991       991   Stock options     977       1,235   Other, net     174       774         4,740       5,602   Valuation allowance on deferred tax assets     ( 3,587 )     ( 3,587 ) Total deferred tax assets, net of valuation allowance     1,153       2,015   Deferred tax liabilities:                 Depreciation     ( 2,492 )     ( 2,045 ) Undistributed earnings     ( 2 )     ( 4 ) Other     ( 556 )     ( 702 ) Total deferred tax liabilities     ( 3,050 )     ( 2,751 ) Net deferred tax asset (liability)   $ ( 1,897 )   $ ( 736 )   51     At February 27, 2022 and February 28, 2021, the Company had gross unrecognized tax benefits and related interest of $ 4,537 and $ 4,452 , respectively, included in other liabilities.  If any portion of the unrecognized tax benefits at February 27, 2022 were recognized, the Company’s effective tax rate would decrease.   A reconciliation of the beginning and ending amounts of unrecognized tax benefits for continuing operations is as follows:       Unrecognized Tax Benefits       February 27,     February 28,     March 1,       2022     2021     2020                             Balance, beginning of year   $ 4,117     $ 4,164     $ 937   Tax positions - Discontinued Ops in prior period     -       ( 47 )     -   Gross decreases - tax positions in prior period     ( 39 )     -       ( 32 ) Gross increases - current period tax positions     -       -       3,259   Audit settlements     -       -       -   Balance, end of year   $ 4,078     $ 4,117     $ 4,164     The amount of unrecognized tax benefits may increase or decrease in the future for various reasons, including adding or subtracting amounts for current year tax positions, expiration of statutes of limitations on open income tax years, changes in the Company’s judgment about the level of uncertainty, status of tax examinations, and legislative changes. Changes in prior period tax positions are the result of a re-evaluation of the probability of realizing the benefit of a particular tax position based on new information. It is reasonably possible that none of the unrecognized tax benefits will be recognized within the next 12 months.   A list of open tax years by major jurisdiction follows:   U.S. Federal   2020 - 2022   California   2018 - 2022   New York   2020 - 2022   Kansas   2018 - 2022   France   2018 - 2022   Singapore   2017 - 2022     The Company had approximately $ 460 and $ 335 of accrued interest and penalties as of February 27, 2022 and February 28, 2021, respectively. The Company’s policy is to include applicable interest and penalties related to unrecognized tax benefits as a component of current income tax expense.   52     The Company has no ongoing examinations of its Federal returns. The audit of the New York state tax returns for the 2018 and 2019 fiscal years has been completed.       5. STOCK-BASED COMPENSATION   As of February 27, 2022, the Company had a 2018 Stock Option Plan (the “2018 Plan”) and no other stock-based compensation plan. The 2018 Plan was adopted by the Board of Directors of the Company on May 8, 2018 and approved by the shareholders of the Company at the Annual Meeting of Shareholders of the Company on July 24, 2018. 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 an 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. Options to purchase a total of 800,000 shares of common stock were authorized for grant under the 2018 Plan. At February 27, 2022, 475,150 shares of common stock of the Company were reserved for issuance upon exercise of stock options under the 2018 Plan.   The compensation expense for stock options includes an estimate for forfeitures and is recognized on a straight-line basis over the requisite service period.   The future compensation expense to be recognized in earnings before income taxes for options outstanding at February 27, 2022 was $ 607 , which is expected to be recognized ratably over a weighted average vesting period of 2.60 years.   The Company records its stock-based compensation at fair value. The weighted average fair value for options was estimated at the dates of grants, using the Black-Scholes option pricing model.   The following table represents the weighted average fair value and valuation assumptions used for options granted in the 2022, 2021 and 2020 fiscal years:       Fiscal Year       2022     2021     2020                                   Weighted average fair value per share of option grants     $ 2.76         $ 2.12         $ 3.97     Risk-free interest rates   0.74 % - 1.85 %     0.23 % - 0.42 %     2.24 % - 2.26 %   Expected stock price volatility   27.8 % - 29.2 %     26.9 % - 30.0 %     30.4 % - 31.5 %   Expected dividend yields   2.73 % - 3.07 %     3.18 % - 3.49 %       2.43 %     Estimated option terms (in years)   4.4 - 7.6     4.3 - 7.6     4.3 - 5.8     The risk-free interest rates are based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the estimated term of the options at the date of grant. Volatility factors are based on historical volatility of the Company’s common stock. The expected dividend yields are 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 2020 fiscal year. The estimated terms of the options are based on evaluations of the historical and expected future employee exercise behavior.   53     During the 2020 fiscal year, the Company recorded non-cash charges of $ 208 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 February 2020.   Information with respect to stock option activity follows:       Outstanding Options     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (in years)     Aggregate Intrinsic Value   Balance, March 3, 2019     540,709     $ 13.49             $ 70   Granted     114,450       15.44                   Exercised     ( 32,873 )     11.64                   Terminated or expired     ( 111,652 )     15.95                   Balance, March 1, 2020     510,634     $ 12.45             $ 597   Granted     132,100       12.55                   Exercised     ( 1,450 )     8.02                   Terminated or expired     ( 6,750 )     13.01                   Balance, February 28, 2021     634,534     $ 12.47             $ 730   Granted     147,750       13.82                   Exercised     ( 75,334 )     9.81                   Terminated or expired     ( 58,650 )     13.96                   Balance, February 27, 2022     648,300     $ 12.96       5.38     $ 428   Vested and exercisable, February 27, 2022     391,275     $ 12.47       3.32     $ 450   Expected to vest, February 27, 2022     609,402     $ 12.47       5.38     $ 701       The aggregate intrinsic values realized (the market value of the underlying shares on the date of exercise, less the exercise price, times the number of shares acquired) from the exercise of options during the 2022, 2021 and 2020 fiscal years were $ 358 , $ 8 and $ 124 , respectively.   A summary of the status of the Company’s non-vested options at February 27, 2022, and changes during the fiscal year then ended, is presented below:       Shares Subject to Options     Weighted Average Grant Date Fair Value                     Non-vested, beginning of year     208,375     $ 2.80   Granted     147,750       2.78   Vested     ( 60,400 )     2.91   Terminated or expired     ( 38,700 )     2.86   Non-vested, end of year     257,025     $ 2.75         6. SHAREHOLDERS ’ EQUITY   Treasury Stock – On January 8, 2015, the Company announced that its Board of Directors had authorized the Company’s purchase, on the open market and in privately negotiated transactions, of up to 1,250,000 shares of its common stock, representing approximately 6 % of the Company’s 20,945,634 total outstanding shares as of the close of business on January 7, 2015. This authorization superseded all prior Board of Directors’ authorizations to purchase shares of the Company’s common stock.   54     On March 10, 2016, the Company announced that its Board of Directors authorized the Company’s purchase, on the open market and in privately negotiated transactions, of up to 1,000,000 additional shares of its common stock, in addition to the unused prior authorization to purchase shares of the Company’s common stock announced on January 8, 2015. During the 2016 fiscal year, the Company purchased 599,832 shares pursuant to the above authorizations at an aggregate purchase price of $ 12,187 . In 2021, the Company purchased 137,397 shares pursuant to the above authorization at an aggregate purchase price of $ 1,644 . As a result, the Company is authorized to purchase up to a total of 1,394,015 shares of its common stock, representing approximately 6.8 % of the Company’s 20,458,210 total outstanding shares as of the close of business on February 27, 2022.   Reserved Common Shares – At February 27, 2022, 1,123,450 shares of common stock were reserved for issuance upon exercise of stock options.   Accumulated Other Comprehensive Earnings (Loss) – Accumulated balances related to each component of other comprehensive earnings were as follows:       February 27, 2022     February 28, 2021                     Unrealized losses on investments, net of taxes of $1,629 and $1,004, respectively   $ ( 1,965 )   $ ( 336 ) Accumulated balance   $ ( 1,965 )   $ ( 336 )       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 potential common stock equivalents outstanding during the period. Stock options are the only common stock equivalents, 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:       Fiscal Year   (Amounts in thousands, except per share amounts)   2022     2021     2020                             Net earnings - continuing operations   $ 8,464     $ 5,192     $ 10,205   Net (loss) earnings - discontinued operations     -       ( 328 )     ( 653 ) Net earnings   $ 8,464     $ 4,864     $ 9,552                             Weighted average common shares     20,422       20,387       20,507   outstanding for basic EPS                         Net effect of dilutive options     129       91       88   Weighted average shares outstanding for diluted EPS     20,551       20,478       20,595                             Basic earnings per share - continuing operations   $ 0.41     $ 0.25     $ 0.50   Basic (loss) earnings per share - discontinued operations     -       ( 0.01 )     ( 0.03 ) Basic earnings per share   $ 0.41     $ 0.24     $ 0.47                             Diluted earnings per share - continuing operations   $ 0.41     $ 0.25     $ 0.50   Diluted (loss) earnings per share - discontinued operations     -       ( 0.01 )     ( 0.03 ) Diluted earnings per share   $ 0.41     $ 0.24     $ 0.47     Potentially dilutive stock options, which were not included in the computation of diluted earnings per share because either the effect would have been antidilutive or the options’ exercise prices were greater than the average market price of the common stock, were 263,744 , 387,975 and 132,000 for the 2022, 2021 and 2020 fiscal years, respectively.   55       8. RESTRUCTURING CHARGES   The Company recorded restructuring charges of $ 259 , $ 1,570 and $ 0 in the 2022, 2021 and 2020 fiscal years, respectively, related to the closure of the Company’s Park Aerospace Technologies Asia PTE, LTD facility located in Singapore.   The following table sets forth the charges and accruals related to the restructuring:       Accrual February 28, 2021     Current Period Charges     Cash Payments     Non-Cash Charges     Accrual February 27, 2022     Total Expense Accrued to Date   Facility lease costs   $ 252     $ ( 194 )   $ ( 82 )   $ 24     $ -     $ 252   Asset impairment     -       -       -       -       -       1,318   Asset removal     -       381       ( 381 )     -       -       154   Other     -       72       ( 72 )     -       -       43   Total restructuring charges   $ 252     $ 259     $ ( 535 )   $ 24     $ -     $ 1,767         9. EMPLOYEE BENEFIT PLANS   Profit Sharing Plan – The Company has a non-contributory profit sharing retirement plan covering substantially all full-time employees in the United States. The plan may be modified or terminated at any time, but in no event may any portion of the contributions revert back to the Company. The Company's estimated contributions are accrued at the end of each fiscal year and paid to the plan in the subsequent fiscal year. The Company’s contributions to the plan were $ 170 and $ 168 for fiscal years 2021 and 2020, respectively. The contribution for fiscal year 2022 has not been determined or paid. Contributions are discretionary and may not exceed the amount allowable as a tax deduction under the Internal Revenue Code.   Savings Plan – The Company also sponsors a 401 (k) retirement savings plan but has no financial obligations to plan participants in the form of matching contributions or otherwise.       10. LEASES AND COMMITMENTS   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 terms 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 amounts disclosed in our consolidated balance sheet as of February 27, 2022, pertaining to the right-of-use assets and lease liabilities, are measured on our current expectations of exercising our available renewal options. 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 10 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.   56     Future minimum lease payments under non-cancellable operating leases as of February 27, 2022 are as follows:   Fiscal Year:         2023   $ 53   2024     53   2025     36   2026     -   2027     -   Thereafter     162   Total undiscounted operating lease payments     304   Less imputed interest     ( 77 ) Present value of operating lease payments   $ 227     The above payment schedule includes renewal options that the Company is reasonably likely to exercise. Leases with an initial term of 12 months or less are not recorded on the Company’s balance sheet. The Company recognizes lease expense for leases on a straight-line basis over the terms of the leases. The above payment schedule does not include lease payments of $ 119 in for the Company’s idle facility in Singapore that were previously accrued on the consolidated balance sheets in accrued liabilities, this lease was terminated as of February 27, 2022.   During the 2022 fiscal year, the Company’s operating lease expense was $ 62 . Cash payments of $ 51 , pertaining to operating leases, are reflected in the consolidated 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 February 27, 2022:   Operating right-of-use assets   $ 203             Operating lease liabilities   $ 53   Long-term operating lease liabilities     174   Total operating lease liabilities   $ 227     The Company’s weighted average remaining lease term for its operating leases is 7.22 years.   These non-cancelable leases have the following payment schedule:   Fiscal Year     Amount   2023     $ 36   2024       -   2025       -   2026       -   2027       -   Thereafter       -         $ 36     The above payment schedule does not include renewal options that have not been committed to. An additional $ 112 would be included in the period 2023 to 2025 if the Company included renewal periods that the Company deems likely to renew.   Rental expenses, inclusive of real estate taxes and other costs, were $ 267 , $ 328 and $ 368 for the 2022, 2021 and 2020 fiscal years, respectively.   57     In December 2018, the Company entered into a Development Agreement with the City of Newton, Kansas and the Board of County Commissioners of Harvey County, Kansas. Pursuant to this agreement, the Company agreed to construct and operate a redundant manufacturing facility of approximately 90,000 square feet for the design, development and manufacture of advanced composite materials and parts, structures and assemblies for aerospace. The Company further agreed to equip the facility through the purchase of machinery, equipment and furnishings and to create additional new full-time employment of specified levels during a five -year period. In exchange for these agreements, the City and the County agreed to lease to the Company three acres of land at the Newton, Kansas Airport, in addition to the eight acres previously leased to the Company by the City and County. The City and County further agreed to provide financial and other assistance toward the construction of the additional facility as set forth in the Development Agreement. The Company estimates the total cost of the additional facility to be approximately $ 19.5 million. The expansion construction is complete and is undergoing customer qualifications, which are expected to be completed in the second half of the 2022 calendar year. As of February 27, 2022, the Company had $ 635,000 in equipment purchase obligations and $ 18.7 million of construction-in-progress related to the additional facility.     11. 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 or consolidated results of operations or financial position of the Company.   Environmental Contingencies   The Company and certain of its subsidiaries have been named by the Environmental Protection Agency (the “EPA”) or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the “Superfund Act”) or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at three sites.   Under the Superfund Act and similar state laws, all parties who may have contributed any waste to a hazardous waste disposal site or contaminated area identified by the EPA or comparable state agency may be jointly and severally liable for the cost of cleanup. Generally, these sites are locations at which numerous persons disposed of hazardous waste. In the case of the Company’s subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at waste sites by various companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its subsidiaries have been accused of or charged with any wrongdoing or illegal acts in connection with any such sites. The Company believes it maintains an effective and comprehensive environmental compliance program.   The insurance carriers which provided general liability insurance coverage to the Company and its subsidiaries for the years during which the Company’s subsidiaries’ waste was disposed at these 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.   58     The Company does not record environmental liabilities and related legal expenses for which the Company believes that it and its subsidiaries have general liability insurance coverage for the years during which the Company’s subsidiaries’ waste was disposed at two sites for which certain subsidiaries of the Company have been named as potentially responsible parties. Pursuant to such general liability insurance coverage, three insurance carriers reimburse the Company and its subsidiaries for 100% of the legal defense and remediation costs associated with the two sites.   Included in selling, general and administrative expenses are charges for actual expenditures and accruals, based on estimates, for certain environmental matters described above. The Company accrues estimated costs associated with known environmental matters, when such costs can be reasonably estimated and when the outcome appears probable. The Company believes that the ultimate disposition of known environmental matters will not have a material adverse effect on the Company’s results of operations, cash flows or financial position.     12. DISCONTINUED OPERATIONS   On July 25, 2018, the Company entered into a definitive agreement to sell its Electronics Business to AGC Inc. for $ 145,000 in cash, subject to post-closing adjustments for changes in working capital compared to target net working capital, excluding cash in certain acquired subsidiaries and certain accrued and unpaid taxes of certain acquired subsidiaries. The net cash proceeds from the sale were approximately $ 124,156 , net of transaction costs of approximately $ 7,657 and taxes of approximately $ 13,187 . The net gain on the Sale was estimated to be $ 102,145 . The net gain on the sale was calculated as the sum of the gains on the sale of each of the Electronics Business subsidiaries as determined by the total consideration allocation between the subsidiaries, less the respective tax bases and deductible transaction costs for each of the subsidiaries. The total consideration allocation for Nelco Products Pte. Ltd (Singapore), Neltec, Inc. (US), and Neltec SA (France), was 82 %, 16 %, and 2 %, respectively, as agreed upon by the Company and AGC Inc. The Company completed this transaction on December 4, 2018.   The Company has classified the operating results of its former Electronics Business, together with certain costs related to the transaction, as discontinued operations, net of tax, in the Consolidated Statements of Operations. The Company has income in the U.S., Singapore and France, the blended tax rates for discontinued operations for the 2021 and 2020 fiscal years were negative 24.7 % and negative 26.4 % respectively. The Company had no income from discontinued operations in the 2022 fiscal year.   59     The following table shows the summary operating results of the discontinued operations:       Fiscal Year Ended                                 February 27,     February 28,     March 1,       2022     2021     2020                             Net sales   $ -     $ -     $ -   Cost of sales     -       -       -   Gross profit     -       -       -   Selling, general and administrative expenses     -       8       234   Restructuring charges     -       427       941   (Loss) earnings from discontinued operations     -       ( 435 )     ( 1,175 ) Other income     -       -       288   (Loss) earnings from discontinued operations before income taxes     -       ( 435 )     ( 887 ) Income tax (benefit) provision     -       ( 107 )     ( 234 ) Net (loss) earnings from discontinued operations   $ -     $ ( 328 )   $ ( 653 )       13. GEOGRAPHIC REGIONS   The Company’s products are sold to customers in North America, Asia and Europe. The Company’s manufacturing facilities are located in Kansas. Sales are attributed to geographic regions based upon the region in which the materials were delivered to the customer. Sales between geographic regions were not significant.   Financial information regarding the Company’s continuing operations by geographic region is as follows:                Fiscal Year       2022     2021     2020                             Sales:                                                   North America   $ 51,307     $ 43,874     $ 56,264   Asia     700       625       1,378   Europe     1,571       1,777       2,372   Total sales   $ 53,578     $ 46,276     $ 60,014                             Long-lived assets:                                                   North America   $ 34,448     $ 31,170     $ 24,942   Asia     -       1       1,650   Europe     -       -       -   Total long-lived assets   $ 34,448     $ 31,171     $ 26,592       14. CUSTOMER AND SUPPLIER CONCENTRATIONS   As a result of the sale of the Electronics Business, the Company now operates in a single segment. As such, segment reporting is no longer provided.   60     Customers – Net sales to affiliate and non-affiliate subtier suppliers of General Electric Company were 49.5 %, 27.9 % and 48.2 % of the Company’s total worldwide sales in the 2022, 2021 and 2020 fiscal years, respectively. Net sales to AAE Aerospace were 20.7 % of the Company’s total worldwide sales in the 2021 fiscal year.   While no other customer accounted for 10% or more of the Company's total worldwide net sales in the 2022, 2021 or 2020 fiscal years, the loss of a major customer or of a group of customers could have a material adverse effect on the Company's business or consolidated results of operations or financial position.   Sources of Supply – The principal materials used in the manufacture of the Company's advanced composite materials, aerospace grade reinforcements, thermoset resins and base chemicals. Although there is a limited number of qualified suppliers of these materials, the Company has nevertheless identified alternate sources of supply for many of such materials. While the Company has not experienced significant problems in the delivery of these materials and considers its relationships with its suppliers to be strong, a disruption of the supply of material from a principal supplier could adversely affect the Company's business. Furthermore, substitutes for these materials are not readily available, and an inability to obtain essential materials, if prolonged, could materially adversely affect the Company’s business.     15. ACCOUNTING PRONOUNCEMENTS   Recently Adopted   In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2019 - 12, Income Taxes (Topic 740 ): Simplifying the Accounting for Income Taxes.   The changes simplify the accounting for a number of topics, some of which are narrow. Some of the proposed amendments eliminate specific exceptions to the general principles of income tax accounting while other changes clarify a handful of narrow issues within the broad topic of income tax accounting. The amendments in ASU 2019 - 12 are effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the requirements are effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted for: ( 1 ) public business entities for periods for which financial statements have not yet been issued, and ( 2 ) all other entities for periods for which financial statements have not yet been made available for issuance. The Company adopted this ASU in the first quarter of the 2022 fiscal year.  The adoption of ASU 2019 - 12 did not have a material impact on the Company’s consolidated financial statements and disclosures.   61       PARK AEROSPACE CORP. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Amounts in thousands, except per share amounts)       Quarter       First     Second     Third     Fourth                                     Fiscal 2022:                                 Net sales   $ 13,594     $ 13,618     $ 13,864     $ 12,502   Gross profit     5,472       4,411       3,836       4,198   Net earnings from continuing operations     2,745       2,022       1,741       1,956   Net loss from discontinued operations     -       -       -       -   Net earnings     2,745       2,022       1,741       1,956                                     Basic earnings (loss) per share:                                 Basic net earnings per share from continuing operations   $ 0.13     $ 0.10     $ 0.09     $ 0.10   Basic net loss per share from discontinued operations     -       -       -       -                                     Basic earnings per share     0.13       0.10       0.09       0.10                                     Diluted earnings (loss) per share:                                 Diluted net earnings per share from continuing operations   $ 0.13     $ 0.10     $ 0.08     $ 0.10   Diluted net loss per share from discontinued operations     -       -       -       -                                     Diluted earnings per share     0.13       0.10       0.08       0.10                                     Weighted average common shares outstanding:                                 Basic     20,383       20,397       20,450       20,458   Diluted     20,710       20,485       20,503       20,508                                                                       Fiscal 2021:                                 Net sales   $ 12,213     $ 9,250     $ 10,372     $ 14,441   Gross profit     3,674       2,638       2,553       4,326   Net earnings from continuing operations     1,972       1,151       1,037       1,032   Net (loss) earnings from discontinued operations     ( 15 )     ( 197 )     ( 116 )     -   Net earnings     1,957       954       921       1,032                                     Basic earnings (loss) per share:                                 Basic net earnings per share from continuing operations   $ 0.10     $ 0.06     $ 0.05     $ 0.05   Basic net (loss) earnings per share from discontinued operations     -       ( 0.01 )     -       -                                     Basic earnings per share     0.10       0.05       0.05       0.05                                     Diluted earnings (loss) per share:                                 Diluted net earnings per share from continuing operations   $ 0.10     $ 0.06     $ 0.05     $ 0.05   Diluted net (loss) earnings per share from discontinued operations     -       ( 0.01 )     -       -                                     Diluted earnings per share     0.10       0.05       0.05       0.05                                     Weighted average common shares outstanding:                                 Basic     20,402       20,381       20,381       20,382   Diluted     20,460       20,433       20,434       20,587     Earnings per share are computed separately for each quarter. There‐fore, the sum of such quarterly per share amounts may differ from the total for each year.   62         ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.   None.