What changed in this filing

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Item 1. Financial Statements

2025-01-15 compared with 2024-10-16 · 47 added, 36 removed, 302 unchanged (22% of the section changed)

4 unchanged sentences

(Amounts in thousands)

December 1, 2024

March 3, 2024*

83 unchanged sentences

Balance, September 1, 2024

Unrealized gain on marketable securities, net of tax

Stock-based compensation

Repurchase of treasury shares

Cash dividends ($ 0.125 per share)

Balance, December 1, 2024

Comprehensive

12 unchanged sentences

Balance, August 27, 2023

Unrealized gain on marketable securities, net of tax

Stock options exercised

Stock-based compensation

Cash dividends ($ 0.125 per share)

Balance, November 26, 2023

See Notes to Condensed Consolidated Financial Statements (Unaudited).

25 unchanged sentences

Net cash used in financing activities

Increase in cash and cash equivalents:

Increase (decrease) in cash and cash equivalents:

Cash and cash equivalents, beginning of period

10 unchanged sentences

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 Condensed Consolidated Balance Sheet and the Consolidated Statement of Shareholders’ Equity as of December 1, 2024, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Earnings for the 13 weeks and 39 weeks ended December 1, 2024 and November 26, 2023, and the Condensed Consolidated Statements of Cash Flows for the 39 weeks then ended have been prepared by Park Aerospace Corp.

(the “Company”), without audit.

In the opinion of management, these unaudited 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.

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 December 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.

1 unchanged sentence

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.

There have been no significant changes to such accounting policies during the 39 weeks ended December 1, 2024.

FAIR VALUE MEASUREMENTS

17 unchanged sentences

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.

There have been no changes in events or circumstances which required impairment charges to be recorded during the 13 weeks and 39 weeks ended December 1, 2024.

MARKETABLE SECURITIES

3 unchanged sentences

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

September 1, 2024

December 1, 2024

Treasury and other government securities

5 unchanged sentences

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

September 1, 2024:

Amortized Cost Basis

December 1, 2024:

Treasury and other government securities

corporate debt securities

Total marketable securities

3 unchanged sentences

Total marketable securities

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

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

Due in one year or less

16 unchanged sentences

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:

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

Total undiscounted operating lease payments

2 unchanged sentences

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.

Leases with an initial term of 12 months or less are not recorded on the Company’s Condensed Consolidated Balance Sheets.

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:

For the 13 weeks and 39 weeks ended December 1, 2024, the Company’s operating lease expenses were $ 16 and $ 47 , respectively.

Cash payments of $ 40 , pertaining to operating leases, are reflected in the Condensed Consolidated Statements of Cash Flows under cash flows from operating activities.

The following table sets forth the right-of-use assets and operating lease liabilities as of December 1, 2024:

Operating right-of-use assets

3 unchanged sentences

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

In the second quarter of fiscal year 2025, the Company entered into an extension of an expiring lease.

The extension resulted in an additional right-of-use asset and lease liability of $ 267 .

An incremental borrowing rate of 4.90 % was used to determine the right-of-use asset and related liability.

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.

As of December 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.

4 unchanged sentences

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.

During the 39 weeks ended December 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.

7 unchanged sentences

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:

The future compensation expense to be recognized in earnings before income taxes for options outstanding at December 1, 2024 was $ 789 , which is expected to be recognized ratably over a weighted average vesting period of 1.45 years.

The following is a summary of option activity for the 39 weeks ended December 1, 2024:

Exercise Price

4 unchanged sentences

Terminated or expired

Balance, September 1, 2024

Vested and exercisable, September 1, 2024

Balance, December 1, 2024

Vested and exercisable, December 1, 2024

EARNINGS PER SHARE

11 unchanged sentences

Diluted earnings per share

Potentially dilutive securities, which were not included in the computation of diluted earnings per share, because either the effect would have been anti-dilutive or the options’ exercise prices were greater than the average market price of the common stock, were 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.

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 75,000 and 72,000 for the 13 weeks ended December 1, 2024 and November 26, 2023, respectively, and 53,000 and 126,000 for the 39 weeks ended December 1, 2024 and November 26, 2023, respectively.

SHAREHOLDERS ’ EQUITY

1 unchanged sentence

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.

The Company purchased 180,547 and 0 shares, respectively, during the 13 weeks ended December 1, 2024 and November 26, 2023 and 330,180 and 221,099 shares, respectively, of its common stock during the 39 weeks ended December 1, 2024 and November 26, 2023, respectively.

As a result, the Company is authorized to purchase up to a total of 948,721 shares of its common stock, representing approximately 4.8 % of the Company’s 19,925,243 total outstanding shares as of the close of business on January 7, 2025.

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.

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.

For the 13 weeks and 39 weeks ended December 1, 2024, the Company recorded income tax provisions from operations of $ 559 and $ 1,685 , respectively, which included discrete income tax provisions of $ 19 and $ 60 , respectively.

For the 13 weeks and 39 weeks ended November 26, 2023, the Company recorded income tax provisions from operations of $ 423 and $ 1,730 , respectively, which included discrete income tax provisions of $ 25 and $ 78 , respectively.

The Company’s effective tax rates for the 13 weeks and 39 weeks ended December 1, 2024 were income tax provisions of 26.2 % and 26.7 %, respectively, compared to income tax provisions of 30.7 % and 28.2 % in the comparable prior periods.

The effective tax rates for the 13 weeks and 39 weeks ended December 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.

The effective rates for the 13 weeks and 39 weeks ended November 26, 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.

14 unchanged sentences

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.

The Company recorded a charge of $ 1,098 for storm damage in the 39 weeks ended December 1, 2024.

On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which transitioned the area.

12 unchanged sentences

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.

The cost of the repairs from the storm damage will be less than this deductible and, as such, the Company will not have an insurance recovery related to the damage.

CONTINGENCIES

9 unchanged sentences

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.

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.

2 unchanged sentences

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.

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 asso‐ciated with known environmental matters when such costs can be reasonably estimated and when the outcome appears probable.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements