PARK AEROSPACE CORP
For the period ended Mar 1, 2026. Filed May 29, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed May 29, 2026
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-K
Period ended 2025-03-02; filed 2025-05-30.
0001437749-25-019023
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2026-03-01; filed 2026-05-29.
0001437749-26-018900
Item 7. 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 85 previous paragraphs and 86 current paragraphs.
56 unchanged; 22 reworded; 5 added; 4 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 10 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 (5)
Current report
The Company’s gross profit margin, measured as a percentage of sales, increased to 30.9% in 2026 from 28.4% in 2025. The higher gross profit margin was the result of higher sales prices, a more favorable sales mix and lower labor and overhead costs as a percentage of sales due to improved leverage of these costs.
Current report
The Company’s gross profit margin, measured as a percentage of sales, increased to 30.9% in 2026 from 28.4% in 2025. The higher gross profit margin was the result of higher sales prices, a more favorable sales mix and lower labor and overhead costs as a percentage of sales due to improved leverage of these costs.
Current report
Storm Damage Charge
Current report
Interest and Other Income/Expense
Current report
On January 13, 2026, the Company entered into an Equity Distribution Agreement with Needham & Company, LLC (“Needham”) and Citizens JMP Securities, LLC (“Citizens”) (the “Distribution Agreement”) with respect to an “at the market offering” program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.10 per share, having an aggregate offering price of up to $50.0 million through Needham and Citizens as its sales agents. The Company is not obligated to sell any shares under the Distribution Agreement. Subject to the terms and conditions of the Distribution Agreement, Needham and Citizens will use commercially reasonable efforts, consistent with their normal trading and sales practices and applicable laws and regulations, to sell shares of the Company’s common stock from time to time based upon instructions received from the Company, including any price, time or size limits or other customary parameters or conditions specified, subject to certain limitations. Under the Distribution Agreement, Needham and Citizens may sell shares of the Company’s common stock by any method permitted by law deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. The issuance and sale, if any, of shares of the Company’s common stock under the Distribution Agreement are made pursuant to a registration statement on Form S-3 that the Company filed with the U.S. Securities and Exchange Commission (“SEC”) on January 13, 2026 and was declared effective on January 21, 2026. The offering is described in a prospectus filed as part of the registration statement. During the fiscal year ended March 1, 2026, the Company sold 942,749 shares under the Distribution Agreement at an average price of $24.21 per share. Gross proceeds of $22.8 million were reduced by commissions and other expenses of $1.1 million resulting in net proceeds of $21.7 million. The remaining amount available to be sold under the Distribution Agreement as of March 1, 2026 was $27.2 million. The Company may, from time to time at its sole discretion, elect to sell additional shares of its common stock under the Distribution Agreement, subject to market conditions and other considerations.
Removed paragraphs (4)
Previous report
The Company’s gross profit margin, measured as a percentage of sales, decreased to 29.5% in 2024 from 30.5% in 2023. The decrease in gross margin was primarily due to higher costs for labor, employee benefits, depreciation, utilities, property taxes and other items, partially offset by a favorable sales mix and higher pricing.
Previous report
The increase in selling, general and administrative expenses in 2024 was primarily due to shareholder activist defense costs in 2024, higher research and development costs, higher stock option expense due to the modification of previously granted stock options, costs to settle an insurance claim as the result of the bankruptcy of an insurer, higher recruiting fees, higher incentive compensation and the additional week in 2024 compared to 2023, which resulted in higher fixed expenses.
Previous report
Interest and Other Income
Previous report
On December 22, 2017, the U.S. government enacted comprehensive tax reform commonly referred to as the Tax Cuts and Jobs Act (“TCJA” or “Tax Act”) and significantly revised U.S. corporate income tax by, among other things, lowering corporate income tax rates, imposing a one-time transition tax on deemed repatriated earnings of non-U.S. subsidiaries, and implementing a territorial tax system. As a result of the Tax Act, the Company recorded taxes payable to be paid in installments over eight years. The remaining balance of these installment payments, as of March 2, 2025, was approximately $5.3 million to be paid in the second quarter of 2026.
Reworded paragraphs (22)
Previous wording
The Company's total net sales worldwide in 2025 were 11% higher than in 2024. The increase in sales was primarily driven by an increase in sales in the military and commercial aircraft markets and, to a lesser extent, higher sales in the business aircraft market, while sales to each of the other markets the Company serves were relatively even with the prior year sales levels.
Current wording
The Company's total net sales worldwide in 2026 were 18% higher than in 2025. The increase in sales was primarily driven by an increase in sales in the military and commercial aircraft markets and, to a lesser extent, higher sales in the space market, partially offset by lower sales in the Business Aircraft market.
Previous wording
The Company’s earnings from operations in 2025, as a percentage of sales, were 15.1% compared to 15.0% in 2024, primarily as a result of lower selling, general and administrative expenses which offset the lower gross profit margin noted above. The lower selling, general and administrative expenses, as a percentage of sales, were due to higher legal fees in 2024 as a result of shareholder activism defense costs, costs incurred in 2024 to settle an insurance claim as a result of the bankruptcy of the insurer, lower incentive compensation expense and an additional week of expenses included in 2024. The Company’s net earnings from operations in 2025 were 7% higher than in 2024, primarily due to an 11% increase in sales, and higher interest income in 2025 offset by the $1.1 million storm damage charge, higher costs of sales referenced above, higher selling, general and administrative costs and higher tax expense in 2025 due to a provision recorded for undistributed foreign earnings. The increase in the 2025 tax rate compared to the 2024 tax rate primarily resulted from a deferred tax provision recorded in the fourth quarter of fiscal 2025 on unrepatriated foreign earnings offset by a higher benefit from the reduction in uncertain tax positions in 2025 as compared to 2024.
Current wording
The Company’s earnings from operations in 2026, as a percentage of sales, were 18.4% compared to 15.1% in 2025, primarily as a result of the higher sales and improved gross margin partially offset by higher selling, general and administrative expenses. The higher selling, general and administrative expenses were due to higher salaries and fringe benefits, travel expenses, professional fees, incentive compensation and research and development expenses in 2026. The Company’s net earnings in 2026 were 92% higher than in 2025, primarily due to an 18% increase in sales, higher gross margins, higher interest income in 2026 and a $1.1 million storm damage charge in 2025. These increases were offset by higher selling, general and administrative expenses in 2026 as well as higher income tax expense in 2026. While income taxes increased in whole dollars in 2026, the 2026 tax rate decreased compared to the 2025 tax rate primarily as the result of a deferred tax provision recorded in the fourth quarter of fiscal 2025 on unrepatriated foreign earnings partially offset by a higher benefit from the reduction in uncertain tax positions in 2025 as compared to 2026.
Previous 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 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. The Company may also experience increasing costs resulting from the imposition of duties, tariffs, and similar governmental charges by the United States and certain foreign jurisdictions on the products of its customers and suppliers.
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 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. The Company also experienced increasing costs resulting from the imposition of duties, tariffs, and similar governmental charges by the United States and certain foreign jurisdictions on the products of its customers and suppliers. The impact of these tariffs and other duties was largely mitigated by the Company’s ability to adjust pricing to pass the impact of these costs through to its customers.
Previous wording
The Company’s total net sales worldwide in 2024 were 4% higher than in 2023. Higher sales in 2024 were primarily driven by increased sales in the military markets.
Current wording
The Company’s total net sales worldwide in 2026 were 18% higher than in 2025. Higher sales in 2026 were primarily driven by increased sales in the military, commercial aerospace and space markets partially offset by decreased sales in the business aircraft market.
Previous wording
Selling, general and administrative expenses increased by $1.6 million, or 25%, during 2024 compared to 2023. Such expenses, measured as percentages of sales, were 14.6% and 12.1% during 2024 and 2023, respectively.
Current wording
Selling, general and administrative expenses increased by $0.9 million, or 11%, during 2026 compared to 2025. Such expenses, measured as percentages of sales, were 12.5% and 13.3% during 2026 and 2025, respectively.
Previous wording
For the reasons set forth above, the Company’s earnings from operations were $8.4 million for 2024 compared to earnings from continuing operations of $10.0 million for 2023.
Current wording
For the reasons set forth above, the Company’s earnings from operations were $13.5 million for 2026 compared to earnings from continuing operations of $9.4 million for 2025.
Previous wording
On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which moved through the area. None of the Company’s manufacturing lines or equipment were damaged by the storm. Although the building structures are secure, the roofs on two of the three buildings in the Company’s Newton, Kansas campus needed significant repairs and the roof on one building needed 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 has remediated much of the damage and is scheduled to complete the repairs in the first quarter of 2026. The Company recorded a charge of $1.1 million in 2025 related to the damage and related repair and downtime costs.
Current wording
On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which moved through the area. None of the Company’s manufacturing lines or equipment were damaged by the storm. Although the building structures are secure, the roofs on two of the three buildings in the Company’s Newton, Kansas campus needed significant repairs and the roof on one building needed 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 completed the repairs in the first quarter of 2026. The Company recorded a charge of $1.1 million in 2025 related to the damage and related repair and downtime costs.
Previous wording
Interest and other income were $1.1 million in both 2024 and 2023. Higher weighted average interest rates in 2024 were offset by lower levels of marketable securities in 2024 due to the payment of the special dividend in the first quarter. During 2024 and 2023, the Company earned interest income principally from its investments, which were primarily in short-term instruments and money market funds.
Current wording
Interest and other income were $1.5 million in 2026 compared to $1.2 million in 2025. Higher weighted average interest rates in 2026 were offset by lower levels of marketable securities in 2026 due partially to share repurchases of $2.2 million in 2026, a $1.6 million advance payment made to a supplier in 2026 as well as a transition tax installment payment of $4.9 million made in the second quarter of 2026 related to the one-time transition tax on deemed repatriated earnings of non-US subsidiaries recorded in fiscal year 2018. During 2026 and 2025, the Company earned interest income principally from its investments, which were primarily in short-term instruments and money market funds.
Previous wording
Basic and diluted earnings per share for 2024 were $0.37 compared to basic and diluted earnings per share for 2023 of $0.52. The lower earnings per share in 2024 reflects the impact of the higher costs in 2024 and the tax benefit from the reduction in uncertain tax positions in 2023.
Current wording
Basic and diluted earnings per share for 2026 were $0.56 compared to basic and diluted earnings per share for 2025 of $0.29. The higher earnings per share in 2026 reflects higher earnings in 2026 due to the reasons detailed above as well as the negative impact in 2025 of the storm damage charge and tax charge related to undistributed foreign earnings.
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 the facilities were damaged along with specialty HVAC units used to control the temperature and humidity in certain manufacturing, laboratory and research and development areas. Repairs are substantially completed. The storm had limited impact on the Company’s production lines. Remaining repairs are scheduled to be completed in the first quarter of 2026. The Company recorded a charge of $1.1 million in 2025 related to the damage and related repair and downtime costs.
Current wording
On May 19, 2024, the Company’s manufacturing facilities in Newton, Kansas were damaged by a strong storm which moved through the area. None of the Company’s manufacturing lines or equipment were damaged by the storm. Although the building structures are secure, the roofs on two of the three buildings in the Company’s Newton, Kansas campus needed significant repairs and the roof on one building needed 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 completed the repairs in the first quarter of 2026. The Company recorded a charge of $1.1 million in 2025 related to the damage and related repair and downtime costs.
Previous wording
Interest and other income were $1.2 million in 2025 compared to $1.1 million in 2024. Higher weighted average interest rates in 2025 were offset by lower levels of marketable securities in 2025 due partially to share repurchases of $4.2 million in 2025 as well as a transition tax installment payment of $4.2 million made in the second quarter of 2025 related to the one-time transition tax on deemed repatriated earnings of non US subsidiaries recorded in fiscal 2018. During 2025 and 2024, the Company earned interest income principally from its investments, which were primarily in short-term instruments and money market funds.
Current wording
Interest and other income were $1.2 million in 2025 compared to $1.1 million in 2024. Higher weighted average interest rates in 2025 were offset by lower levels of marketable securities in 2025 due partially to share repurchases of $4.3 million in 2025 as well as a transition tax installment payment of $4.2 million made in the second quarter of 2025 related to the one-time transition tax on deemed repatriated earnings of non-US subsidiaries recorded in fiscal year 2018. During 2025 and 2024, the Company earned interest income principally from its investments, which were primarily in short-term instruments and money market funds.
Previous wording
The Company’s effective income tax rate was 38.1% for 2025 compared to an effective rate of 20.8% for 2024. The increased rate was due primarily to a deferred tax provision of $2.1 million recorded in the fourth quarter of fiscal 2025 on unrepatriated foreign earnings that the Company had previously considered to be indefinitely reinvested. Although the Company is currently involved in discussions with Asian industrial conglomerates regarding potential Asian-based manufacturing joint ventures, the Company would consider contributing certain of its intellectual property to such joint ventures but would consider contributing only minimal capital to such joint ventures. Other than such potential joint ventures, the Company is not currently involved in any activities which would likely lead to the Company’s investment of such funds overseas. As a result, the Company determined that it is unlikely that opportunities to invest these funds overseas will be realized in the foreseeable future and, therefore, the Company has provided for the potential repatriation of such funds currently held by its Singapore subsidiary. This increase in rate was offset by the U.S. federal rate and state income tax reductions in uncertain tax positions. The benefits from the reductions in 2025 and 2024 were $1.1 million and $0.6 million, respectively, related to the expirations of statutes of limitations on tax positions taken in prior years regarding the taxability of funds repatriated from the Company’s subsidiary in Singapore and to the expiration of statutes of limitations related to state throw-back rates.
Current wording
The Company’s effective income tax rate was 38.1% for 2025 compared to an effective rate of 20.8% for 2024. The increased rate was due primarily to a deferred tax provision of $2.1 million recorded in the fourth quarter of fiscal 2025 on unrepatriated foreign earnings that the Company had previously considered to be indefinitely reinvested. Although the Company is currently involved in discussions with Asian industrial conglomerates regarding potential Asian based manufacturing joint ventures, the Company would consider contributing certain of its intellectual property to such joint ventures but would consider contributing only minimal capital to such joint ventures. Other than such potential joint ventures, the Company is not currently involved in any activities which would likely lead to the Company’s investment of such funds overseas. As a result, the Company has determined that it is unlikely that opportunities to invest these funds overseas will be realized in the foreseeable future, and, therefore, the Company has provided for the potential repatriation of such funds currently held by its Singapore subsidiary. This increase in rate was offset by the U.S. federal rate and state income tax reductions in uncertain tax positions. The benefits from the reductions in 2025 and 2024 were $1.1 million and $0.6 million, respectively, related to the expirations of statutes of limitations on tax positions taken in prior years regarding the taxability of funds repatriated from the Company’s subsidiary in Singapore and to the expiration of statutes of limitations related to state throw-back rates.
Previous wording
Basic and diluted earnings per share for 2025 were $0.29 compared to basic and diluted earnings per share for 2024 of $0.37. The lower earnings per share in 2025 reflects the impact of the storm damage charge as well as the tax charge related to undistributed foreign earnings. These decreases were partially offset by higher sales in 2025 and a higher tax benefit from the reduction in uncertain tax positions in 2025 compared to 2024.
Current wording
Basic and diluted earnings per share for 2025 were $0.29 compared to basic and diluted earnings per share for 2024 of $0.37. The lower earnings per share in 2025 reflects the impact of the storm damage charge as well the tax charge related to undistributed foreign earnings. These decreases were partially offset by higher sales in 2025 and a higher tax benefit from the reduction in uncertain tax positions in 2025 compared to 2024.
Previous wording
The Company believes it has sufficient liquidity to fund its operating activities for the 12 months from the date of the filing of this Form 10-K Annual Report and for the foreseeable future thereafter.
Current wording
The Company believes it has sufficient liquidity to fund its operating activities for the 12 months from the date of the filing of this Form 10-K Annual Report and for the foreseeable future thereafter. The Company expects the planned new composite materials manufacturing facility to be a significant capital project and, accordingly, anticipates funding-related expenditures from cash generated from operations, existing cash and marketable securities, and if appropriate, other available capital resources.
Previous wording
The change in cash and marketable securities at March 2, 2025 compared to March 3, 2024 was primarily the result of stock repurchases of $4.3 million in the second and third quarters of 2025, as well as a transition tax payment of $4.2 million made in the second quarter of 2025. The significant changes in cash provided by operating activities were as follows:
Current wording
The change in cash and marketable securities as of March 1, 2026 compared to March 2, 2025 was primarily the result of the $21.7 million of proceeds from issuance of common stock under the “at the market offering” program described above and improved earnings in 2026 offset by repurchases of the Company’s common stock of $2.2 million in the first quarter of 2026, as well as a transition tax payment of $4.9 million made in the second quarter of 2026 and the payment of a supplier advance of $1.6 million made in the first quarter of 2026. The significant changes in cash provided by operating activities were as follows:
Previous wording
In addition, the Company paid $10.1 million and $30.6 million in cash dividends during 2025 and 2024, respectively.
Current wording
In addition, the Company paid $10.0 million and $10.1 million in cash dividends during 2026 and 2025, respectively.
Previous wording
Working capital at March 2, 2025 decreased $8.2 million compared to March 3, 2024. Decreases in cash and cash equivalents and marketable securities and higher current income taxes payable were partially offset by higher inventories and accounts receivable, as well as lower accounts payable.
Current wording
Working capital as of March 1, 2026 increased $21.7 million compared to March 2, 2025. This was primarily due to the increase in cash and cash equivalents and marketable securities and lower current income taxes payable partially offset by lower accounts receivable, as well as higher accounts payable and accrued liabilities.
Previous wording
The Company's current ratio (the ratio of current assets to current liabilities) was 9.7 to 1 at March 2, 2025 compared to 10.2 to 1 at March 3, 2024.
Current wording
The Company's current ratio (the ratio of current assets to current liabilities) was 18.2 to 1 as of March 1, 2026 compared to 9.7 to 1 as of March 2, 2025.
Previous wording
During 2025, the Company's net earnings before non-cash storm damage charges, depreciation and amortization, stock-based compensation, provision for deferred income taxes, loss on sales of marketable securities, amortization of bond premium and gain on sale of fixed assets, were $11.3 million compared to $11.1 million in fiscal 2024 and $12.6 million in fiscal 2023. Such earnings were decreased by changes in operating assets and liabilities of $6.6 million, $6.7 million and $6.1 million in fiscal 2025, 2024 and 2023, respectively. This resulted in $4.7 million, $4.4 million and $6.5 million of cash provided by operating activities from continuing operations in fiscal 2025, 2024 and 2023, respectively. During 2025, the Company expended $0.9 million for the purchase of property, plant and equipment compared to $0.6 million during 2024, and $1.0 million in 2023. Proceeds from the sale and maturities of marketable securities, net of purchases of marketable securities, were $24.9 million, $32.0 million and $(6.0) million in 2025, 2024 and 2023, respectively. The Company paid $10.1 million, $30.6 million and $8.2 million in cash dividends in 2025, 2024 and 2023, respectively. The 2024 dividends paid included a special dividend of $20.5 million paid in the first quarter of that year.
Current wording
During 2026, the Company's net earnings before non-cash storm damage charges, depreciation and amortization, stock-based compensation, provision for deferred income taxes, loss on sales of marketable securities, amortization of bond premium and gain on sale of fixed assets, were $14.3 million compared to $11.3 million in fiscal 2025 and $11.1 million in fiscal 2024. Such earnings were decreased by changes in operating assets and liabilities of $2.8 million, $6.6 million and $6.7 million in fiscal 2026, 2025 and 2024, respectively. This resulted in $11.5 million, $4.7 million and $4.4 million of cash provided by operating activities from continuing operations in fiscal 2026, 2025 and 2025, respectively. During 2026, the Company expended $2.0 million for the purchase of property, plant and equipment compared to $0.9 million during 2025, and $0.6 million in 2024. Proceeds from the sale and maturities of marketable securities, net of purchases of marketable securities were $36.9 million, $24.9 million, and $32.0 million in 2026, 2025 and 2024, respectively. In 2026, the Company had cash proceeds from the issuance of stock of $21.7 million. The Company paid $10.0 million, $10.1 million and $30.6 million in cash dividends in 2026, 2025 and 2024, respectively. The 2024 dividends paid included a special dividend of $20.5 million paid in the first quarter of that year. The Company expended $2.2 million, $4.3 million and $2.9 million in 2026, 2025 and 2024, respectively, on repurchases of common stock.
Previous wording
The Company's contractual obligations and other commercial commitments to make future payments under contracts, such as lease agreements, consist only of operating lease commitments, commitments to purchase raw materials and commitments to purchase equipment, as described in Note 9 of the Notes to Consolidated Financial Statements included elsewhere in this report. 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 $1,569), €1,834 (approximately $2,055 based on May 9, 2025 exchange rates) is due in the first quarter of fiscal 2027 and €1,376 (approximately $1,541 based on May 9, 2025 exchange rates) is due in the first quarter of fiscal 2028. 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 $0.1 million 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 primarily of operating lease commitments, commitments to purchase raw materials and commitments to purchase equipment, as described in Note 9 of the Notes to Consolidated Financial Statements included elsewhere in this report. 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 was paid in May 2026 (actual cost of $2,156) and €1,376 (approximately $1,598 based on May 18, 2026 exchange rates) is due in the first quarter of fiscal 2028. 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 $0.1 million to secure the Company's obligations under its workers’ compensation insurance program.
Previous wording
In 2025, 2024 and 2023, the Company incurred approximately $37,000, $29,000 and $14,000, respectively, for remedial response and voluntary cleanup costs and related legal fees, and the Company received, or expects to receive, reimbursement pursuant to general liability insurance coverage for approximately $37,000, $29,000 and $14,000, respectively, of such amounts. While annual environmental remedial response and voluntary cleanup expenditures, including legal fees, have generally been constant from year to year, with increases over time, the Company expects it will be able to fund such expenditures from cash flow from operations. The timing of expenditures depends on a number of factors, including regulatory approval of cleanup projects, remedial techniques to be utilized and agreements with other parties. At March 2, 2025 and March 3, 2024, there were no amounts recorded in accrued liabilities for environmental matters.
Current wording
In 2026, 2025 and 2024, the Company incurred approximately $43,000, $37,000 and $29,000, respectively, for remedial response and voluntary cleanup costs and related legal fees, and the Company received, or expects to receive, reimbursement pursuant to general liability insurance coverage for approximately $43,000, $37,000 and $29,000, respectively, of such amounts. While annual environmental remedial response and voluntary cleanup expenditures, including legal fees, have generally been constant from year to year, with increases over time, the Company expects it will be able to fund such expenditures from cash flow from operations. The timing of expenditures depends on a number of factors, including regulatory approval of cleanup projects, remedial techniques to be utilized and agreements with other parties. As of March 1, 2026 and March 2, 2025, there were no amounts recorded in accrued liabilities for environmental matters.
Previous wording
As part of the processes of preparing its consolidated financial statements, the Company is required to estimate its income taxes payable in each of the jurisdictions in which it operates. This process involves estimating the actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the Company’s Consolidated Balance Sheets. 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.
Current wording
As part of the process of preparing its consolidated financial statements, the Company is required to estimate its income taxes payable in each of the jurisdictions in which it operates. This process involves estimating the actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the Company’s Consolidated Balance Sheets. 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.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The increase in selling, general and administrative expenses in 2026 was primarily due to higher salaries and fringe benefits as well as higher travel expenses, professional fees, incentive compensation and research and development expenses. These increases were offset by lower outbound freight costs in 2026.
Current report — wording carried from elsewhere
The Company’s effective income tax rate was 25.1% for 2026 compared to an effective rate of 38.1% for 2025. The decreased rate was due primarily to a deferred tax provision of $2.1 million recorded in the fourth quarter of fiscal 2025 on unrepatriated foreign earnings that the Company had previously considered to be indefinitely reinvested. Although the Company is currently involved in discussions with Asian industrial conglomerates regarding potential Asian based manufacturing joint ventures, the Company would consider contributing certain of its intellectual property to such joint ventures but would consider contributing only minimal capital to such joint ventures. Other than such potential joint ventures, the Company is not currently involved in any activities which would likely lead to the Company’s investment of such funds overseas. As a result, the Company has determined that it is unlikely that opportunities to invest these funds overseas will be realized in the foreseeable future, and, therefore, the Company has provided for the potential repatriation of such funds currently held by its Singapore subsidiary. In addition, 2025 effective income tax rate was positively impacted by U.S. federal rate and state income tax reductions in uncertain tax positions. The benefits from the reductions in 2025 were $1.1 million related to the expirations of statutes of limitations on tax positions taken in prior years regarding the taxability of funds repatriated from the Company’s subsidiary in Singapore and to the expiration of statutes of limitations related to state throw-back rates. The benefits from the reductions in uncertain tax positions in 2026 were not material. The decrease in the effective tax rate in 2026 was also due to the tax benefits from the exercise of nonqualified stock options in 2026.
Current report — wording carried from elsewhere
The Company’s net earnings for 2026 were $11.3 million compared to $5.9 million in 2025. The increase in net earnings was primarily due to higher net sales and related gross profit. As noted above, net earnings in 2025 included a $1.1 million charge related to storm damage incurred in May 2024 as well as a tax charge of $2.1 million for deferred taxes on undistributed foreign earnings. These charges were offset by a tax benefit from reduction in uncertain tax positions.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
The Company’s gross profit margin, measured as a percentage of sales, decreased to 28.4% in 2025 from 29.5% in 2024. A less favorable sales mix and higher labor and overhead costs due to ramping up of manufacturing capacity in anticipation of customer program volume increases as well as higher depreciation more than offset the increase in sales.
Previous report — wording carried elsewhere
The Company’s effective income tax rate was 20.8% for 2024 compared to an effective rate of 2.7% for 2023. The increased rate was due primarily to the U.S. federal rate and state income tax reductions in uncertain tax positions. The benefits from the reductions in 2024 and 2023 were $574,000 and $2,800,000, respectively, related to the expirations of statutes of limitations on tax positions taken in prior years regarding the taxability of funds repatriated from the Company’s subsidiary in Singapore in 2023 and to the expiration of statutes of limitations related to state throw-back rates in 2024.
Previous report — wording carried elsewhere
The Company’s net earnings from continuing operations for 2024 were $7.5 million compared to $10.7 million in 2023. As noted above, net earnings in 2024 included shareholder activist defense costs, a charge related to the modification of previously issued stock options, legal costs stemming from the settlement of an insurance claim due to the bankruptcy of an insurance carrier and recruiting fees, partially offset by the tax benefit from the reduction in uncertain tax positions. The 2023 earnings included the benefit from the reduction in uncertain tax positions of $2.8 million.