PARK AEROSPACE CORP
For the period ended Jun 2, 2024. Filed Jul 17, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 2, 2024 · Filed Jul 17, 2024
PKE$23.38+3.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-11-26; filed 2024-01-10.
0001437749-24-001085
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-02; filed 2024-07-17.
0001437749-24-022897
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 54 previous paragraphs and 64 current paragraphs.
26 unchanged; 22 reworded; 16 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
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, it is likely that 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, as required by certain specifications and certifications the Company is subject to. The Company is currently working with multiple contractors on site in order to fully assess the damage and the remediation options.
Current report
Although the Company is still in the process of assessing the situation, 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 13 weeks ended June 2, 2024 related to the damage and related repair and downtime costs.
Current report
The Company's total net sales in the 13 weeks ended June 2, 2024 were $14.0 million compared to $15.6 million in the 13 weeks ended May 28, 2023. The decrease in sales was primarily due to disruptions in production and shipping resulting from the storm damage that occurred late in the first quarter of the 2025 fiscal year. The Company expected to have an additional $1.8 million in sales in the 13 weeks ended June 2, 2024 that did not ship due to the disruption in operations resulting from the storm.
Current report
The Company’s gross profit margins, measured as percentages of sales, were 29.3% in the 13 weeks ended June 2, 2024 compared to 31.1% in the 13 weeks ended May 28, 2023. The lower gross profit margin for the 13 weeks ended June 2, 2024 was primarily due to lower sales volume resulting from the storm mentioned above and to, among other things, a higher depreciation expense and higher salaries and higher labor costs related to higher headcount.
Current report
The Company’s earnings from operations before income taxes and net earnings decreased 46.1% and 46.4%, respectively, in the 13 weeks ended June 2, 2024 compared to the 13 weeks ended May 28, 2023, primarily as a result of lower sales due to the storm and the charge recorded for the storm damage that occurred in the 13 weeks ended June 2, 2024. The 13 weeks ended June 2, 2024 were also impacted by a higher depreciation expense and higher salaries and higher labor costs related to higher headcount. The 13 weeks ended May 28, 2023 included $65,000 of losses on sales of investments to fund the $1.00 per share special cash dividend paid on April 6, 2023 to shareholders of record on March 9, 2023, additional stock option expense of $109,000 due to the modification of previously granted stock options in connection with the special cash dividend mentioned above and $570,000 of activist shareholder defense costs.
Current report
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.
Current report
The Company's total net sales in the 13 weeks ended June 2, 2024 were $14.0 million compared to $15.6 million in the 13 weeks ended May 28, 2023. The decrease in sales was primarily due to disruptions in production and shipping resulting from the storm damage that occurred late in the first quarter of fiscal year 2025. The Company expected to have an additional $1.8 million in sales in the 13 weeks ended June 2, 2024 that did not ship due to the disruption in operations resulting from the storm.
Current report
The Company’s gross profit margins, measured as percentages of sales, were 29.3% in the 13 weeks ended June 2, 2024 compared to 31.1% in the 13 weeks ended May 28, 2023. The lower gross profit margin for the 13 weeks ended June 2, 2024 was primarily due to lower sales volume resulting from the storm damage mentioned above and to higher costs for raw materials, supplies and freight resulting from inflationary trends, higher depreciation expense and higher salaries and labor due to higher headcount.
Current report
Storm Damage
Current report
The Company recorded a charge of $1.1 million for storm damage in the 13 weeks ended June 2, 2024.
Current report
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, as required by certain specifications and certifications the Company is subject to. The Company is currently working with multiple contractors on site and the insurance company in order to fully assess the damage and the remediation options.
Current report
Although the Company is still in the process of assessing the situation, 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 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 of the damaged facilities and infrastructure equipment.
Current report
The Company does not anticipate the loss of any sales for the 2025 fiscal year, however, $1.8 million of sales could not be delivered before the end of the first quarter ended June 2, 2024 due to storm related delays. The Company expects these delayed shipments will be delivered during the Company’s second quarter ended September 1, 2024.
Current report
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 $78,000 of payroll and related costs for lost production time and employees working on the clean-up.
Current report
The $1.1 million 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 and for on-going rental of temporary HVAC units.
Current report
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.
Removed paragraphs (6)
Previous report
The Company's net sales in the 13 weeks and 39 weeks ended November 26, 2023 were $11.6 million and $39.7 million, respectively, compared to $13.9 million and $40.5 million, respectively, in the 13 weeks and 39 weeks ended November 27, 2022. Sales for the 13 weeks and 39 weeks ended November 26, 2023 were negatively impacted by inventory reduction efforts at the Company’s largest customer, which are not expected to continue in the Company’s fourth quarter, and shipping difficulties to customers in the Middle East due to the war in that region.
Previous report
The Company’s gross profit margins, measured as percentages of sales, were 27.2% and 30.5%, respectively, in the 13 weeks and 39 weeks ended November 26, 2023 compared to 32.0% and 31.1%, respectively, in the 13 weeks and 39 weeks ended November 27, 2022. The lower gross profit margins for the 13 weeks and 39 weeks ended November 26, 2023 compared to the prior year’s comparable periods were primarily due to lower sales and higher costs and expenses for labor, benefits, depreciation, utilities and other items, partially offset by a favorable sales mix and higher pricing. Gross profits for the 13 weeks and 39 weeks ended November 26, 2023 were negatively impacted by lower sales to the Company’s largest customer due to the customer’s inventory reduction efforts.
Previous report
The Company’s earnings before income taxes and net earnings decreased 49.5% and 46.1%, respectively, in the 13 weeks ended November 26, 2023 compared to the 13 weeks ended November 27, 2022 primarily as a result of lower sales, and higher costs and expenses for labor, benefits, depreciation, utilities and other items, partially offset by a favorable sales mix and bad debt expense recovery related to a customer bankruptcy in the prior year 13-week period.
Previous report
The Company’s earnings before income taxes and net earnings decreased 22.1% and 20.3%, respectively, in the 39 weeks ended November 26, 2023 compared to the 39 weeks ended November 27, 2022 primarily as a result of higher costs and expenses for labor, benefits, depreciation, utilities and other items and $570,000 of activist shareholder defense costs, partially offset by a favorable sales mix.
Previous report
The Company's net sales in the 13 weeks and 39 weeks ended November 26, 2023 were $11.6 million and $39.7 million, respectively, compared to $13.9 million and $40.5 million, respectively, in the 13 weeks and 39 weeks ended November 27, 2022. Sales for the 13 weeks and 39 weeks ended November 26, 2023 were negatively impacted by inventory reduction efforts at the Company’s largest customer, which are not expected to continue in the Company’s fourth quarter, and shipping difficulties to customers in the Middle East due to the war.
Previous report
The Company’s gross profit margins, measured as percentages of sales, were 27.2% and 30.5%, respectively, in the 13 weeks and 39 weeks ended November 26, 2023 compared to 32.0% and 31.1%, respectively, in the 13 weeks and 39 weeks ended November 27, 2022. The lower gross profit margins for the 13 weeks and 39 weeks ended November 26, 2023 compared to the prior year’s comparable periods were primarily due to lower sales and higher costs and expenses for labor, benefits, depreciation, utilities and other items, partially offset by a favorable sales mix and higher pricing. Gross profits for the 13 weeks and 39 weeks ended November 26, 2023 were negatively impacted by lower sales to the Company’s largest customer due to the customer’s inventory reduction efforts.
Reworded paragraphs (22)
Previous wording
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.
Current wording
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 and lightning strike protection materials. Park offers an array of composite materials specifically designed for hand lay-up or automated fiber placement (“AFP”) manufacturing applications. Park’s advanced composite materials are used to produce primary and secondary structures for jet engines, large and regional transport aircraft, military aircraft, Unmanned Aerial Vehicles (UAVs commonly referred to as “drones”), business jets, general aviation aircraft and rotary wing aircraft. Park also offers specialty ablative materials for rocket motors and nozzles and specially designed materials for radome applications. As a complement to Park’s advanced composite materials offering, Park designs and fabricates composite parts, structures and assemblies and low volume tooling for the aerospace industry. Target markets for Park’s composite parts and structures (which include Park’s proprietary composite Sigma Strut TM and Alpha Strut TM product lines) are, among others, prototype and development aircraft, special mission aircraft, spares for legacy military and civilian aircraft and exotic spacecraft.
Previous wording
Programs that the Company supplies into may be experiencing supply chain issues from other suppliers to the programs. The Company’s sales could be impacted by delays and reductions in its customers’ production schedules caused by other suppliers in the customer’s supply chain. The Company is experiencing some delays in shipments to customers in the Middle East due to the ongoing war in that region.
Current wording
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.
Previous wording
The war in Ukraine has had a small impact on the Company’s results of operations, but the Company has the potential for 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. The Company has experienced some increases to raw material costs from overseas suppliers due to the impacts of the war in Ukraine.
Current wording
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.
Previous wording
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. Pricing is agreed upon in the contract.
Current wording
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.
Previous wording
Selling, general and administrative expenses increased by $281,000 and $1.4 million during the 13 weeks and 39 weeks ended November 26, 2023, respectively, or by 18.5% and 28.3%, respectively, compared to the prior year’s comparable periods, and these expenses, measured as percentages of sales, were 15.5% and 15.8%, respectively, in the 13 weeks and 39 weeks ended November 26, 2023 compared to 11.0% and 12.1%, respectively, in the 13 weeks and 39 weeks ended November 27, 2022. The increases in selling, general and administrative expenses were primarily due to $570,000 of activist shareholder defense costs and higher research and development costs.
Current wording
Selling, general and administrative expenses were lower compared to the prior year’s comparable period, and these expenses, measured as percentages of sales, were 14.4% in the 13 weeks ended June 2, 2024 compared to 16.8% in the 13 weeks ended May 28, 2023. The decrease in selling, general and administrative expenses was primarily due to $570,000 of activist shareholder defense costs included in the 13 weeks ended May 28, 2023.
Previous wording
Selling, general and administrative expenses included stock option expenses of $104,000 and $426,000, respectively, for the 13 weeks and 39 weeks ended November 26, 2023, including $109,000 due to the modification of previously granted stock options, compared to stock option expenses of $95,000 and $274,000, respectively, for the 13 weeks and 39 weeks ended November 27, 2022.
Current wording
Selling, general and administrative expenses included stock option expenses of $89,000 for the 13 weeks ended June 2, 2024, compared to stock option expenses of $218,000, including $109,000 due to the modification of previously granted stock options in the 13 weeks ended May 28, 2023.
Previous wording
For the reasons set forth above, the Company’s earnings from operations were $1.4 million and $5.8 million, respectively, for the 13 weeks and 39 weeks ended November 26, 2023 compared to $2.9 million and $7.7 million, respectively, for the 13 weeks and 39 weeks ended November 27, 2022.
Current wording
For the reasons set forth above, the Company’s earnings from operations were $2.1 million for the 13 weeks ended June 2, 2024 compared to $2.2 million for the 13 weeks ended May 28, 2023.
Previous wording
Interest and other income was $261,000 and $724,000, respectively, for the 13 weeks and 39 weeks ended November 26, 2023, compared to $299,000 and $653,000, respectively, for the prior year's comparable periods. Interest income decreased 12.7% for the 13 weeks ended November 26, 2023, primarily as a result of lower average available cash to invest in the 13 weeks ended November 26, 2023, compared to the prior year's comparable periods. Interest income increased 10.9% for the 39 weeks ended November 26, 2023, primarily as a result of higher weighted average interest rates partially offset by losses on the sales of marketable securities in the 39 weeks ended November 26, 2023, compared to the prior year's comparable periods. Interest and other income for the 39 weeks ended November 26, 2023 included $65,000 of losses on sales of investments to fund the $1.00 per share special dividend paid on April 6, 2023 to shareholders of record on March 9, 2023. During the 13 weeks and 39 weeks ended November 26, 2023, the Company earned interest income principally from its investments, which consisted primarily of short-term instruments and money market funds.
Current wording
Interest and other income was $339,000 for the 13 weeks ended June 2, 2024, compared to $324,000 for the prior year’s comparable period. Interest income increased 4.6% for the 13 weeks ended June 2, 2024. Interest and other income for the 13 weeks ended May 28, 2023 included $65,000 of losses on sales of investments to fund the $1.00 per share special cash dividend paid on April 6, 2023 to shareholders of record on March 9, 2023. During the 13 weeks ended June 2, 2024, the Company earned interest income principally from its investments, which consisted primarily of short-term instruments and money market funds.
Previous wording
For the 13 weeks and 39 weeks ended November 26, 2023, the Company recorded income tax provisions of $423,000 and $1.7 million, respectively, which included discrete income tax provisions of $25,000 and $78,000, respectively, for the accrual of interest related to unrecognized tax benefits. For the 13 weeks and 39 weeks ended November 27, 2022, the Company recorded income tax provisions of $990,000 and $2.4 million, respectively, which included discrete income tax provisions of $58,000 and $133,000, respectively, for the accrual of interest related to unrecognized tax benefits. Additionally, tax expense was negatively impacted by $153,000 in the 13 weeks and 39 weeks ended November 27, 2022 by tax deductions becoming unavailable due to stock options expiring unexercised.
Current wording
For the 13 weeks ended June 2, 2024, the Company recorded an income tax provision of $376,000, which included a discrete income tax provision of $19,000 for the accrual of interest related to unrecognized tax benefits. For the 13 weeks ended May 28, 2023, the Company recorded an income tax provision of $688,000, which included a discrete income tax provision of $37,000 for the accrual of interest related to unrecognized tax benefits.
Previous wording
The Company’s effective tax rates for the 13 weeks and 39 weeks ended November 26, 2023 were 26.0% and 26.5%, respectively, compared to 30.7% and 28.2%, respectively, in the prior year’s comparable periods. The effective tax 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 liabilities and the accrual of interest related to unrecognized tax benefits. The effective rates for the 13 weeks and 39 weeks ended November 27, 2022 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.
Current wording
The Company’s effective tax rate for the 13 weeks ended June 2, 2024 was 27.5% compared to 27.1% in the prior year’s comparable period. The effective tax rate for the 13 weeks ended June 2, 2024 was higher than the U.S. statutory rate of 21% primarily due to state and local taxes and the accrual of interest related to unrecognized tax benefits. The effective rate for the 13 weeks ended May 28, 2023 was 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.
Previous wording
For the reasons set forth above, the Company's net earnings for the 13 weeks and 39 weeks ended November 26, 2023 were $1.2 million and $4.8 million, respectively, compared to net earnings of $2.2 million and $6.0 million, respectively, for the 13 weeks and 39 weeks ended November 27, 2022.
Current wording
For the reasons set forth above, the Company’s net earnings for the 13 weeks ended June 2, 2024 were $1.0 million compared to net earnings of $1.9 million for the 13 weeks ended May 28, 2023.
Previous wording
In the 13 weeks and 39 weeks ended November 26, 2023, basic and diluted earnings per share were $0.06 and $0.24, respectively, compared to basic and diluted earnings per share of $0.11 and $0.29, respectively, in the 13 weeks and 39 weeks ended November 27, 2022.
Current wording
In the 13 weeks ended June 2, 2024, basic and diluted earnings per share were $0.05, including the storm damage charge of $1.1 million, compared to basic and diluted earnings per share of $0.09 in the 13 weeks ended May 28, 2023, including the pretax charges of $570,000 related to activist shareholder defense costs, the stock option modification pretax charge of $109,000 and the $65,000 of losses on sales of investments to fund the special cash dividend.
Previous wording
Liquidity and Capital Resources - Continuing Operations:
Current wording
Liquidity and Capital Resources:
Previous wording
Of the $74.0 million of cash and cash equivalents and marketable securities at November 26, 2023, $30.6 million was owned by one of the Company’s wholly-owned foreign subsidiaries.
Current wording
Of the $74.4 million of cash and cash equivalents and marketable securities at June 2, 2024, $28.9 million was owned by one of the Company’s wholly-owned foreign subsidiaries.
Previous wording
The change in cash and cash equivalents and marketable securities at November 26, 2023 compared to February 26, 2023 was the result of capital expenditures, dividends paid to shareholders and cash used in operating activities and a number of additional factors. The significant change in cash used in operating activities were as follows:
Current wording
The change in cash and cash equivalents and marketable securities at June 2, 2024 compared to March 3, 2024 was the result of capital expenditures and dividends paid to shareholders, partially offset by cash provided by operating activities and a number of additional factors. The significant changes in cash provided by operating activities were as follows:
Previous wording
In addition, the Company paid $28.1 million in cash dividends in the 39-week period ended November 26, 2023 compared to $6.1 million in the 39-week period ended November 27, 2022.
Current wording
In addition, the Company paid $2.5 million in cash dividends in the 13-week period ended June 2, 2024 and $23.0 million in cash dividends in the 13-week period ended May 28, 2023.
Previous wording
The decrease in working capital at November 26, 2023 compared to February 26, 2023 was due principally to the decreases in cash and cash equivalents, marketable securities, accounts receivable and prepaid expenses and other current assets and increases in accrued liabilities, partially offset by an increase in inventories and decreases in accounts payable and income taxes payable.
Current wording
The increase in working capital at June 2, 2024 compared to March 3, 2024 was due principally to the increases in inventories and prepaid expenses and other current assets and a decrease in accounts payable and accrued liabilities partially offset by decreases in cash and cash equivalents and accounts receivable and a decrease in income taxes payable.
Previous wording
The Company's current ratio (the ratio of current assets to current liabilities) was 14.6 to 1.0 at November 26, 2023 compared to 4.4 to 1.0 at February 26, 2023.
Current wording
The Company's current ratio (the ratio of current assets to current liabilities) was 12.3 to 1.0 at June 2, 2024 compared to 10.2 to 1.0 at March 3, 2024.
Previous wording
During the 39 weeks ended November 26, 2023, 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 $0.9 million operating cash outflow. During the same 39-week period, the Company expended $481,000 for the purchase of property, plant and equipment, compared with $749,000 during the 39 weeks ended November 27, 2022. The Company paid $28.1 million in cash dividends in the 39-week period ended November 26, 2023 compared to $6.1 million in the 39-week period ended November 27, 2022.
Current wording
During the 13 weeks ended June 2, 2024, the Company had a negative operating cash flow of $423,000. During the same 13-week period, the Company expended $12,000 for the purchase of property, plant and equipment, compared with $167,000 during the 13 weeks ended May 28, 2023. The Company paid $2.5 million in cash dividends in the 13-week period ended June 2, 2024.
Previous wording
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 doubtful accounts, inventories, valuation of long-lived assets, income taxes, contingencies and litigation, and employee benefit programs. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Current wording
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 US 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 doubtful accounts, inventories, valuation of long-lived assets, income taxes, contingencies and litigation, and employee benefit programs. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Previous wording
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 February 26, 2023. There have been no significant changes to such accounting policies during the 2024 fiscal year second quarter.
Current wording
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 first quarter.
Previous wording
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.
Current wording
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 accrual required, if any, for these contingencies is made after careful analysis of each individual issue. The required accrual 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.