PARK AEROSPACE CORP
For the period ended Aug 31, 2025. Filed Oct 14, 2025.
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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.
Aug 31, 2025 · Filed Oct 14, 2025
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 2025-06-01; filed 2025-07-16.
0001437749-25-022825
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-08-31; filed 2025-10-14.
0001437749-25-030897
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 61 previous paragraphs and 59 current paragraphs.
25 unchanged; 27 reworded; 7 added; 8 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 10 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 (7)
Current report
The Company's net sales in the 13 weeks and 26 weeks ended August 31, 2025 were $16.4 million and $31.8 million, respectively, compared to $16.7 million and $30.7 million, respectively, in the 13 weeks and 26 weeks ended September 1, 2024. Net sales for the 13 weeks ended August 31, 2025 were marginally lower than in the comparable period of the prior fiscal year while net sales for the 26 weeks ended August 31, 2025 were higher than in the comparable period of the prior fiscal year. The decrease for the 13 weeks period was due to lower sales to military markets. Sales in the 13 weeks ended September 1, 2024 were positively impacted by shipments that were delayed in the 13 weeks ended June 2, 2024 due to the storm damage that occurred late in that period. The increase in sales for the 26 weeks ended August 31, 2025 was due to higher sales to commercial markets offset by lower sales in the business aircraft market.
Current report
The Company’s gross profit margins, measured as percentages of sales, were 31.2% and 30.9%, respectively, in the 13 weeks and 26 weeks ended August 31, 2025, compared to 28.5% and 28.9%, respectively, in the 13 weeks and 26 weeks ended September 1, 2024. The higher gross profit margins for the 13 and 26 weeks ended August 31, 2025 compared to the prior year’s comparable periods were primarily due to a more favorable sales mix as well as sales price increases and lower waste in the 26 weeks ended August 31, 2025 partially offset by the increased overhead costs noted above.
Current report
The Company’s earnings before income taxes and net earnings increased 43.6% and 46.6%, respectively, in the 26 weeks ended August 31, 2025, compared to the 26 weeks ended September 1, 2024, primarily due to the higher gross profit margins mentioned above, the charges incurred in the prior year related to the storm damage and higher interest and other income partially offset by higher selling, general and administrative expenses.
Current report
The Company's net sales in the 13 weeks and 26 weeks ended August 31, 2025, were $16.4 million and $31.8 million, respectively, compared to $16.7 million and $30.7 million, respectively, in the 13 weeks and 26 weeks ended September 1, 2024. Sales for the 13 weeks ended August 31, 2025 were lower than the comparable period of the prior year, primarily due to lower sales to the military markets. In addition, sales for the 13 weeks ended September 1, 2024 were positively impacted by delayed shipments in the first quarter of fiscal year 2025 due to the storm damage incurred to the Company’s facility in May of 2024. Sales for the 26 weeks ended August 31, 2025 were higher than the comparable period of the prior year, primarily due to higher sales to the commercial markets partially offset lower sales to the business aircraft market.
Current report
The Company’s gross profit in the 13 weeks ended August 31, 2025 was higher than the gross profit in the prior year’s comparable period despite lower sales levels in the 13 weeks ended August 31, 2025, compared to the comparable period in the prior year due to a more favorable product mix as well as sale price increases partially offset by higher labor costs, higher freight costs and higher overhead costs related to bringing up new manufacturing lines to ramp up capacity in preparation for increases in customer program volumes. The Company’s gross profit in the 26 weeks ended August 31, 2025 was higher than the gross profit in the prior year’s comparable period due to higher sales as well as a more favorable sales mix and sales price increases partially offset by higher labor costs and the higher overhead costs mentioned above.
Current report
The Company’s gross profit margins, measured as a percentage of sales, were 31.2% and 30.9%, respectively, in the 13 weeks and 26 weeks ended August 31, 2025, compared to 28.5% and 28.9%, respectively, in the 13 weeks and 26 weeks ended September 1, 2024. The higher gross profit margins for the 13 and 26 weeks ended August 31, 2025 compared to the prior year’s comparable periods, were primarily due to a more favorable sales mix as well as sales price increases and lower waste in the 26 weeks ended August 31, 2025 partially offset by the increased overhead costs noted above.
Current report
Selling, general and administrative expenses increased by $413,000, or 9.9%, during the 26 weeks ended August 31, 2025 compared to the 26 weeks ended September 1, 2024, and these expenses, measured as a percentage of sales, were 14.4% in the 26 weeks ended August 31, 2025 compared to 13.5% in the 26 weeks ended September 1, 2024. The increase in selling, general and administrative expenses during the 26 weeks ended August 31, 2025 was primarily due to the expenses noted above.
Removed paragraphs (8)
Previous report
The Company's total net sales in the 13 weeks ended June 1, 2025 were $15.4 million compared to $14.0 million in the 13 weeks ended June 2, 2024. The increase in sales was primarily due to the impact on 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.
Previous report
The Company’s gross profit margins, measured as percentages of sales, were 30.6% in the 13 weeks ended June 1, 2025 compared to 29.3% in the 13 weeks ended June 2, 2024. The higher gross profit margin for the 13 weeks ended June 1, 2025 was primarily due to higher sales volume in the 13 weeks ended June 1, 2025 noted above and, to a lesser extent, lower waste, partially offset by the costs related to bringing up new manufacturing lines to ramp up capacity in preparation for increases in customer program volumes.
Previous report
The Company's total net sales in the 13 weeks ended June 1, 2025 were $15.4 million compared to $14.0 million in the 13 weeks ended June 2, 2024. The increase 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.
Previous report
Storm Damage
Previous report
The Company recorded a charge of $1.1 million for storm damage in the 13 weeks ended June 2, 2024.
Previous report
The Company did not lose 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.
Previous 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.
Previous report
The $1.1 million charge recorded by the Company included 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. There were no corresponding charges in fiscal 2026.
Reworded paragraphs (27)
Previous wording
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. The roofs on all three buildings in the Company’s Newton, Kansas campus required repairs or replacement. Also, multiple specialty HVAC units were damaged or destroyed. The Company 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. There were no corresponding charges in the 13 weeks ended June 1, 2025.
Current wording
On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which transited the area. None of the Company’s manufacturing lines or equipment were damaged by the storm. The roofs on all three buildings in the Company’s Newton, Kansas campus required repairs or replacement. Also, multiple specialty HVAC units were damaged or destroyed. The Company recorded a charge of $1.1 million in the 26 weeks ended September 1, 2024 related to the damage and repair and downtime costs. There were no corresponding charges in the 26 weeks ended August 31, 2025.
Previous wording
The Company’s gross profit margins, measured as percentages of sales, were 30.6% in the 13 weeks ended June 1, 2025 compared to 29.3% in the 13 weeks ended June 2, 2024. The higher gross profit margin for the 13 weeks ended June 1, 2025 was primarily due to the negative impact in the prior fiscal year resulting from the storm damage mentioned above and, to a lesser extent, lower waste in the current fiscal year, which was partially offset by the costs related to bringing up the new manufacturing lines to ramp up capacity in preparation for increases in customer program volumes.
Current wording
The Company’s gross profit in the 13 weeks ended August 31, 2025 was higher than the gross profit in the prior year’s comparable period despite lower sales levels in the 13 weeks ended August 31, 2025 compared to the prior year’s comparable period. This was due to a more favorable product mix partially offset by higher overhead costs including costs related to bring up new manufacturing lines to ramp up capacity in preparation for increases in customer program volumes as well as higher freight costs. The Company’s gross profit in the 26 weeks ended August 31, 2025 was higher than the gross profit in the prior year’s comparable period due to slightly higher sales levels and a more favorable sales mix partially offset by the higher costs noted above.
Previous wording
The Company’s earnings from operations before income taxes and net earnings increased 102.6% and 109.5%, respectively, in the 13 weeks ended June 1, 2025 compared to the 13 weeks ended June 2, 2024, primarily as a result of the negative impact of the storm damage that occurred in the 13 weeks ended June 2, 2024. The 13 weeks ended June 1, 2025 were also negatively impacted by higher salaries, travel expenses, legal and professional fees and higher labor costs related to higher headcount.
Current wording
The Company’s earnings before income taxes and net earnings increased 14.9% and 16.4%, respectively, in the 13 weeks ended August 31, 2025, compared to the 13 weeks ended September 1, 2024, primarily as a result of higher gross profit margins mentioned above and higher interest and other income partially offset by higher selling, general and administrative costs, including higher salaries and fringe benefits, travel expenses, and professional fees.
Previous wording
The Company continues to experience inflation in costs of raw materials and supplies, freight costs and other costs and expenses. In addition, the Company has also been impacted by the increase in global tariffs. The impact of inflation and tariffs on the Company’s profits has been largely 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 wording
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 largely 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.
Previous 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.
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 that its customers are experiencing from other suppliers.
Previous wording
The Company has a number of long-term contracts pursuant to which certain of its customers, some of which represent a substantial portion of the Company’s revenue, places orders. Long-term contracts with the Company’s customers are primarily requirements-based and do not guarantee quantities. An order forecast is generally agreed concurrently with pricing for any applicable long-term contract. This order forecast is then typically updated periodically during the term of the contract. Purchase orders are generally received by the Company more than three months in advance of delivery.
Current wording
The Company has a number of long-term contracts pursuant to which certain of its customers, some of which represent a substantial portion of the Company’s revenue, place orders. Long-term contracts with the Company’s customers are primarily requirements-based and do not guarantee quantities. An order forecast is generally agreed concurrently with pricing for any applicable long-term contract. This order forecast is then typically updated periodically during the term of the contract. Purchase orders are generally received by the Company more than three months in advance of delivery.
Previous wording
Under a Business Partner Agreement with ArianeGroup SAS of Les Mureaux, France, Park is the exclusive North American distributor of ArianeGroup’s RAYCARB C2®B NG proprietary product. RAYCARB C2®B NG is used to produce ablative composite materials for critical rocketry and missile systems. Park is a long-term customer of ArianeGroup and uses ArianeGroup’s RAYCARB C2®B NG product in the production of many of Park’s key ablative materials, which Park supplies into critical rocket and missile programs. On March 27, 2025, Park and ArianeGroup entered into an agreement under which Park would advance funds to ArianeGroup against future purchases of C2®B product in the total amount in Euros of €4,587,000 payable in three installments in 2025, 2026, and 2027. These advanced funds are to be used to help fund the purchase and installation, by ArianeGroup, of additional manufacturing equipment for ArianeGroup’s production of C2®B product.
Current wording
Under a Business Partner Agreement with ArianeGroup SAS of Les Mureaux, France, Park is the exclusive North American distributor of ArianeGroup’s RAYCARB C2®B NG proprietary product. RAYCARB C2®B NG is used to produce ablative composite materials for critical rocket and missile systems. Park is a long-term customer of ArianeGroup and uses ArianeGroup’s RAYCARB C2®B NG product in the production of many of Park’s key ablative materials, which Park supplies into critical rocket and missile programs. On March 27, 2025, Park and ArianeGroup entered into an agreement under which Park would advance funds to ArianeGroup against future purchases of C2®B product in the total amount in Euros of €4,587,000 payable in three installments in 2025, 2026, and 2027. These advanced funds are to be used to help fund the purchase and installation, by ArianeGroup, of additional manufacturing equipment for ArianeGroup’s production of C2®B product.
Previous wording
Selling, general and administrative expenses increased compared to the prior year’s comparable period, and these expenses, measured as percentages of sales, were 14.9% in the 13 weeks ended June 1, 2025 compared to 14.4% in the 13 weeks ended June 2, 2024. The increase in selling, general and administrative expenses was primarily due to higher salaries, travel expenses and professional and legal fees in the 13 weeks ended June 1, 2025.
Current wording
Selling, general and administrative expenses increased by $131,000, or 6.1%, during the 13 weeks ended August 31, 2025 compared to the 13 weeks ended September 1, 2024, and these expenses, measured as percentages of sales, were 13.9% in the 13 weeks ended August 31, 2025 compared to 12.8% in the 13 weeks ended September 1, 2024. The increase in selling, general and administrative expenses during the 13 weeks ended August 31, 2025 was primarily due to higher salaries, fringe benefits, travel expenses, research and development expenses and professional fees partially offset by lower freight out, advertising and tradeshow expenses and lower supplies expense.
Previous wording
Selling, general and administrative expenses included stock option expenses of $88,000 for the 13 weeks ended June 1, 2025, compared to stock option expenses of $89,000 in the 13 weeks ended June 2, 2024.
Current wording
Selling, general and administrative expenses included stock option expenses of $101,000 and $189,000, respectively, for the 13 weeks and 26 weeks ended August 31, 2025, compared to stock option expenses of $101,000 and $190,000 for the 13 weeks and 26 weeks ended September 1, 2024.
Previous wording
For the reasons set forth above, the Company’s earnings from operations were $2.4 million for the 13 weeks ended June 1, 2025 compared to $2.1 million for the 13 weeks ended June 2, 2024.
Current wording
For the reasons set forth above, the Company’s earnings from operations were $2.8 million and $5.3 million, respectively, for the 13 weeks and 26 weeks ended August 31, 2025, compared to $2.6 million and $4.7 million, respectively, for the 13 weeks and 26 weeks ended September 1, 2024.
Previous wording
Interest and other income was $355,000 for the 13 weeks ended June 1, 2025, compared to $339,000 for the prior year’s comparable period. Interest income increased 4.7% for the 13 weeks ended June 1, 2025 due to higher returns partially offset by lower invested balances. During the 13 weeks ended June 1, 2025, 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 were $390,000 and $745,000, respectively, for the 13 weeks and 26 weeks ended August 31 ,2025, compared to $245,000 and $584,000, respectively, for the prior year's comparable periods. Interest income increased 59.2% and 27.6%, respectively, for the 13 weeks and 26 weeks ended August 31, 2025, primarily due to interest received on tax refunds in the 13 weeks ended August 31, 2025 and a foreign exchange gain recorded related to a long-term supplier advance. During the 13 weeks and 26 weeks ended August 31, 2025, the Company earned interest income principally from its investments, which consisted primarily of short-term instruments and money market funds as well the tax refund noted above.
Previous wording
For the 13 weeks ended June 1, 2025, the Company recorded an income tax provision of $694,000, which included a discrete income tax benefit of $(28,000) for the excess tax benefits of stock option exercises in the 13 weeks ended June 1, 2025 partially offset by the accrual of interest related to unrecognized tax benefits. 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.
Current wording
For the 13 weeks and 26 weeks ended August 31 , 2025, the Company recorded income tax provisions of $831,000 and $1.5 million, respectively, which included discrete income tax provisions of $(10,000) and $(38,000), respectively, for excess tax benefits from stock option exercises offset by the accrual of interest related to unrecognized tax benefits. For the 13 weeks and 26 weeks ended September 1, 2024, the Company recorded income tax provisions of $750,000 and $1.1 million, respectively, which included discrete income tax provisions of $22,000 and $41,000, respectively, for the accrual of interest related to unrecognized tax benefits.
Previous wording
The Company’s effective tax rate for the 13 weeks ended June 1, 2025 was 25.0% compared to 27.5% in the prior year’s comparable period. The effective tax rate for the 13 weeks ended June 1, 2025 was higher than the U.S. statutory rate of 21% primarily due to state and local taxes. The effective 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.
Current wording
The Company’s effective tax rates for the 13 weeks and 26 weeks ended August 31, 2025 were 25.7% and 25.4%, respectively, compared to 26.6% and 26.9%, respectively, in the prior year’s comparable periods. The effective tax rates for the 13 weeks and 26 weeks ended August 31, 2025 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 offset by excess tax benefits on stock option exercises. The effective rates for the 13 weeks and 26 weeks ended September 1, 2024 were higher than the U.S. statutory rate of 21% primarily due to state and local taxes and 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 ended June 1, 2025 were $2.1 million compared to net earnings of $1.0 million for the 13 weeks ended June 2, 2024.
Current wording
For the reasons set forth above, the Company's net earnings for the 13 weeks and 26 weeks ended August 31, 2025 were $2.4 million and $4.5 million, respectively, compared to net earnings of $2.1 million and $3.1 million, respectively, for the 13 weeks and 26 weeks ended September 1, 2024.
Previous wording
In the 13 weeks ended June 1, 2025, basic and diluted earnings per share were $0.10 compared to basic and diluted earnings per share of $0.05 in the 13 weeks ended June 2, 2024, including the storm damage charge of $1.1 million.
Current wording
In the 13 weeks and 26 weeks ended August 31, 2025, basic earnings per share were $0.12 and $0.23, respectively, and diluted earnings per shares were $0.12 and $0.22, respectively, compared to basic and diluted earnings per share of $0.10 and $0.15, respectively, in the 13 weeks and 26 weeks ended September 1, 2024.
Previous wording
Liquidity and Capital Resources:
Current wording
Liquidity and Capital Resources - Continuing Operations:
Previous wording
Of the $65.6 million of cash and cash equivalents and marketable securities at June 1, 2025, $31.4 million was owned by one of the Company’s wholly-owned foreign subsidiaries.
Current wording
Of the $61.6 million of cash and cash equivalents and marketable securities at August 31, 2025, $31.7 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 June 1, 2025 compared to March 2, 2025 was the result of repurchases of treasury shares of $2.2 million in the 13 weeks ended June 1, 2025, a supplier advance of $1.6 million paid in April 2025 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:
Current wording
The change in cash and cash equivalents and marketable securities at August 31, 2025 compared to March 2, 2025 was the result of capital expenditures, the purchase of treasury shares, dividends paid to shareholders, the Company’s transition tax installment payment, and a number of additional factors. The significant changes in cash (used in) provided by operating activities was as follows:
Previous wording
In addition, the Company paid $2.5 million in cash dividends in both the 13-week period ended June 1, 2025 and the 13-week period ended June 2, 2024.
Current wording
In addition, the Company paid $5.0 million in cash dividends in the 26-week period ended August 31, 2025 compared to $5.1 million in the 26-week period ended September 1, 2024. During the 26 weeks ended August 31, 2025, the Company repurchased shares of $2.2 million compared to $1.9 million of repurchases in the 26 weeks ended September 1, 2024.
Previous wording
The decrease in working capital at June 1, 2025 compared to March 2, 2025 was due principally to the repurchases of treasury shares of $2.2 million in the 13 weeks ended June 1, 2025, the payment of a long-term advance to a supplier of $1.6 million during the period and lower inventories offset by lower current liabilities at June 1, 2025.
Current wording
The decrease in working capital at August 31, 2025 compared to March 2, 2025 was primarily due to a decrease in cash as a result of the payment of the long-term supplier advance of $1.6 million, treasury share repurchases of $2.2 million and the payment of $5.0 million of dividends.
Previous wording
The Company's current ratio (the ratio of current assets to current liabilities) was 8.6 to 1.0 at June 1, 2025 compared to 9.7 to 1.0 at March 2, 2025.
Current wording
The Company's current ratio (the ratio of current assets to current liabilities) was 17.6 to 1.0 at August 31, 2025, compared to 9.7 to 1.0 at March 2, 2025.
Previous wording
During the 13 weeks ended June 1, 2025, the Company had operating cash flows of $1.6 million. During the same 13-week period, the Company expended $481,000 for the purchase of property, plant and equipment, compared with $12,000 during the 13 weeks ended June 2, 2024. The Company paid $2.5 million in cash dividends in the 13-week period ended June 1, 2025.
Current wording
During the 26 weeks ended August 31, 2025, the Company's net earnings, adjusted for depreciation and amortization, deferred income taxes, stock-based compensation, amortization of bond premium, provision for credit losses, loss on sale of marketable securities and changes in operating assets and liabilities, resulted in a $0.5 million operating cash outflow compared to a cash inflow of $1.0 million for the 26 weeks ended September 1, 2024. The decrease was driven by the payment of a $1.6 million long-term supplier advance during the 26 weeks ended August 31, 2025. During the same 26-week period, the Company expended $664,000 for the purchase of property, plant and equipment compared with $206,000 during the 26 weeks ended September 1, 2024. The Company paid $5.0 million in cash dividends in the 26-week period ended August 31, 2025 compared to $5.1 million in the 26-week period ended September 1, 2024. The Company purchased treasury shares of $2.2 million in the 26-week period ended August 31, 2025 compared to $1.9 million in the 26-week period ended September 1, 2024.
Previous wording
The Company believes its financial resources will be sufficient, through the 12 months following the filing of this Form 10-Q Quarterly Report and for the foreseeable future thereafter, to provide for continued investment in working capital and property, plant and equipment and for general corporate purposes. The Company’s financial resources are also available for purchases of the Company's common stock, cash dividend payments, appropriate acquisitions and other expansions of the Company's business.
Current wording
The Company believes its financial resources will be sufficient, through the 12 months following the filing of this Form 10-Q Quarterly Report and for the foreseeable future thereafter, to provide for continued investment in working capital and property, plant and equipment and for general corporate purposes. The Company’s financial resources are also available for purchases of the Company's common stock, cash dividend payments, and appropriate acquisitions and other expansions of the Company's business.
Previous wording
The Company’s contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of (i) operating lease commitments and (ii) commitments to purchase raw materials. In March 2025, the Company entered into an agreement with a supplier, ArianeGroup SAS, under which the Company would advance funds against future purchases. The agreement requires payments of €4,587 over three years, of which €1,376 was paid in April 2025 (actual cost of $1,564), €1,834 (approximately $2,127 based on June 24, 2025 exchange rates) is due in the first quarter of fiscal 2027 and €1,376 (approximately $1,596 based on June 24, 2025 exchange rates) is due in the first quarter of fiscal 2028. Under the agreement, the Company commits to purchase C2®B product through December 2033 at an estimated cost of €36,000. The Company has no other long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than two standby letters of credit in the total amount of $140,000, to secure the Company’s obligations under its workers’ compensation insurance program.
Current wording
The Company’s contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of (i) operating lease commitments and (ii) commitments to purchase raw materials. In March 2025, the Company entered into an agreement with a supplier, ArianeGroup SAS, under which the Company would advance funds against future purchases. The agreement requires payments of €4,587 over three years, of which €1,376 was paid in April 2025 (actual cost of $1,564), €1,835 (approximately $2,149 based on October 7, 2025 exchange rates) is due in the first quarter of fiscal 2027 and €1,376 (approximately $1,611 based on October 7, 2025 exchange rates) is due in the first quarter of fiscal 2028. Under the agreement, the Company commits to purchase C2®B product through December 2033 at an estimated cost, in aggregate, of €36,000. The Company has no other long-term debt, capital lease obligations, unconditional purchase obligations or other long-term obligations, standby letters of credit, guarantees, standby repurchase obligations or other commercial commitments or contingent commitments, other than two standby letters of credit in the total amount of $140,000, that secure the Company’s obligations under its workers’ compensation insurance program.
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 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.
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 GAAP. The preparation of these Condensed Consolidated Financial Statements requires the Company to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to sales allowances, allowances for credit losses, inventories, valuation of long-lived assets, income taxes, contingencies and litigation, and employee benefit programs. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
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 March 2, 2025. There have been no significant changes to such accounting policies during the 2026 fiscal year first 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 2, 2025. There have been no significant changes to such accounting policies during the 2026 fiscal year second 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 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.
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 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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which transited the area. None of the Company’s manufacturing lines or equipment were damaged by the storm. The roofs on all three buildings in the Company’s Newton, Kansas campus required repairs. 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.