UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 14(d)15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended DecemberJune 1, 20132014

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to__________

Commission file number     1-4415

PARK ELECTROCHEMICAL CORP.

(Exact Name of Registrant as Specified in Its Charter)

                  (631) 465-3600                    

(Registrant's Telephone Number, Including Area Code)

                  Not Applicable                    

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐ Accelerated Filer ☒ Non-Accelerated Filer ☐ Smaller Reporting Company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 20,870,59720,926,992 as of January 6,July 7, 2014.

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item I.     Financial Statements.

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

		December 1, 2013 (Unaudited)				March 3, 2013*
ASSETS
Current assets:
Cash and cash equivalents		$	128,679			$	186,117
Marketable securities (Note 3)			162,581				89,099
Accounts receivable, less allowance for doubtfulaccounts of $421 and $423, respectively			22,852				25,878
Inventories (Note 4)			14,633				12,918
Prepaid expenses and other current assets (Note 9)			6,421				6,662
Total current assets			335,166				320,674
Property, plant and equipment, net			30,154				32,187
Goodwill and other intangible assets			9,854				9,854
Other assets			6,969				6,943
Total assets		$	382,143			$	369,658
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	6,224			$	6,485
Accrued liabilities (Note 6)			6,679				6,016
Income taxes payable			2,691				4,177
Total current liabilities			15,594				16,678
Long-term debt (Note 5)			52,000				52,000
Deferred income taxes			761				812
Other liabilities			246				246
Total liabilities			68,601				69,736
Commitments and contingencies (Note 11)
Shareholders' equity:
Common stock			2,087				2,083
Additional paid in capital			160,558				158,790
Retained earnings			149,957				138,514
Accumulated other comprehensive income			1,034				629
			313,636				300,016
Less treasury stock, at cost			(94	)			(94	)
Total shareholders' equity			313,542				299,922
Total liabilities and shareholders' equity		$	382,143			$	369,658

 

*The balance sheet at March 3, 2013 has been derived from the audited financial statements at that date.

See accompanying Notes to the Consolidated Financial Statements (Unaudited).

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

 

		13 Weeks Ended (Unaudited)								39 Weeks Ended (Unaudited)
		December 1, 2013				November 25, 2012				December 1, 2013				November 25, 2012
Net sales		$	39,678			$	41,265			$	127,613			$	133,741
Cost of sales			28,640				28,725				89,963				95,026
Gross profit			11,038				12,540				37,650				38,715
Selling, general and administrative expenses			6,106				6,365				18,703				20,012
Restructuring charges (Note 6)			-				559				319				3,095
Earnings from operations			4,932				5,616				18,628				15,608
Interest expense (Note 5)			187				-				543				-
Interest and other income			139				143				284				520
Earnings before income taxes			4,884				5,759				18,369				16,128
Income tax provision (Note 9)			163				1,049				674				3,239
Net earnings		$	4,721			$	4,710			$	17,695			$	12,889
Earnings per share (Note 7):
Basic earnings per share		$	0.23			$	0.23			$	0.85			$	0.62
Basic weighted average shares			20,857				20,801				20,840				20,799
Diluted earnings per share		$	0.23			$	0.23			$	0.85			$	0.62
Diluted weighted average shares			20,917				20,803				20,871				20,824
Dividends declared per share		$	0.10			$	0.10			$	0.30			$	0.30

See accompanying Notes to the Consolidated Financial Statements (Unaudited).

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEEARNINGS

(Amounts in thousands)

		13 Weeks Ended (Unaudited)								39 Weeks Ended (Unaudited)
		December 1, 2013				November 25, 2012				December 1, 2013				November 25, 2012
Net earnings		$	4,721			$	4,710			$	17,695			$	12,889
Other comprehensive income, net of tax:
Foreign currency translation			9				189				210				371
Less: reclassification adjustment for foreigncurrency translation gains included in net income			-				-				-				(1,465	)
Unrealized gains on marketable securities:
Unrealized holding gains arising during the period			176				39				153				6
Less: reclassification adjustment for gainsincluded in net income			-				(8	)			-				(10	)
Unrealized losses on marketable securities:
Unrealized holding losses arising during the period			-				(49	)			(62	)			(60	)
Less: reclassification adjustment for lossesincluded in net income			60				1				104				18
Other comprehensive income (loss)			245				172				405				(1,140	)
Total comprehensive income		$	4,966			$	4,882			$	18,100			$	11,749

See accompanying Notes to the Consolidated Financial Statements (Unaudited).

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

		39 Weeks Ended (Unaudited)
		December 1, 2013				November 25, 2012
Cash flows from operating activities:
Net earnings		$	17,695			$	12,889
Adjustments to reconcile net earnings to net cashprovided by operating activities:
Depreciation and amortization			2,975				3,204
Stock-based compensation			787				643
Amortization of bond premium			886				1,140
Impairment of fixed assets			-				3,620
Non-cash restructuring			-				(1,465	)
Changes in operating assets and liabilities			332				(6,773	)
Net cash provided by operating activities			22,675				13,258
Cash flows from investing activities:
Purchase of property, plant and equipment			(773	)			(1,190	)
Purchases of marketable securities			(198,485	)			(118,627	)
Proceeds from sales and maturities ofmarketable securities			124,417				136,200
Net cash (used in) provided by investingactivities			(74,841	)			16,383
Cash flows from financing activities:
Dividends paid			(6,252	)			(6,239	)
Proceeds from exercise of stock options			987				159
Purchase of treasury stock			-				(93	)
Net cash used in financing activities			(5,265	)			(6,173	)
Change in cash and cash equivalents beforeeffect of exchange rate changes			(57,431	)			23,468
Effect of exchange rate changes on cash andcash equivalents			(7	)			(28	)
Change in cash and cash equivalents			(57,438	)			23,440
Cash and cash equivalents, beginning of period			186,117				129,503
Cash and cash equivalents, end of period		$	128,679			$	152,943
Supplemental cash flow information:
Cash paid during the period for income taxes		$	4,465			$	5,998
Cash paid during the period for interest		$	486			$	-

See accompanying Notes to the Consolidated Financial Statements (Unaudited).

PARK ELECTROCHEMICAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in thousands, except per share amounts)

The condensed consolidated balance sheet as of DecemberJune 1, 2013,2014 and the consolidated statements of operations, and the consolidated statements of comprehensive income for the 13 weeks and 39 weeks ended December 1, 2013 and November 25, 2012,earnings and the condensed consolidated statements of cash flows for the 3913 weeks then ended June 1, 2014 and June 2, 2013 have been prepared by Park Electrochemical Corp. (the “Company”), without audit. In the opinion of management, these unaudited consolidated financial statements contain all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at DecemberJune 1, 20132014 and the results of operations and cash flows for all periods presented. The consolidated statements of operations are not necessarily indicative of the results to be expected for the full fiscal year or any subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 3, 2013.2, 2014. There have been no significant changes to such accounting policies during the 3913 weeks ended DecemberJune 1, 2013.2014.

Certain reclassifications have been made to the prior period’s consolidated statementsstatement of comprehensive incomeearnings to conform to the current period’s presentation.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

Fair value measurements are broken down into three levels based on the reliability of inputs as follows:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals or current market) and contractual prices for the underlying financial instrument, as well as other relevant economic measures.

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The fair value of the Company’s cash and cash equivalents, accounts receivable, accounts payable and currentaccrued liabilities approximate their carrying value due to their short-term nature. Due to the variable interest rates periodically adjusting with the current LIBOR, the carrying value of outstanding borrowings under the Company’s long-term debt approximates its fair value. (See Note 5). Certain assets and liabilities of the Company are required to be recorded at fair value on either a recurring or non-recurring basis. On a recurring basis, the Company records its marketable securities at fair value using Level 1 or Level 2 inputs. (See Note 3).

The Company’s non-financial assets measured at fair value on a non-recurring basis include goodwill and any assets and liabilities acquired in a business combination at acquisition date or any long-lived assets written down to fair value. The Company tests for impairment of such assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To measure fair value of such assets, the Company uses Level 3 inputs consisting of techniques including an income approach and a market approach. The income approach is based on a discounted cash flow analysis and calculates the fair value by estimating the after-tax cash flows attributable to a reporting unit and then discounting the after-tax cash flows to a present value using a risk-adjusted discount rate. Assumptions used in the discounted cash flow analysis require the exercise of significant judgment, including judgment about appropriate discount rates and terminal value, growth rates and the amount and timing of expected future cash flows. With respect to goodwill, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying value. If, based on that assessment, the Company believes it is more likely than not that the fair value is less than its carrying value, a two-step goodwill impairment test is performed. There have been no changes in events or circumstances which required impairment charges to be recorded during the 3913 weeks ended DecemberJune 1, 2013. During the 39 weeks ended November 25, 2012, the Company impaired the long-lived assets of Nelco Technology (Zhuhai FTZ) Ltd. (See Note 6).2014.

All marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses, net of tax, included in comprehensive income (loss).earnings. Realized gains and losses, amortization of premiums and discounts, and interest and dividend income are included in interest and other income in the Consolidated Statements of Operations. The costs of securities sold are based on the specific identification method.

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

		December 1, 2013
		Total				Level 1				Level 2				Level 3
U.S. Treasury and othergovernment securities		$	134,266			$	134,266			$	-			$	-
U.S. corporate debt securities			28,315				21,215				7,100				-
Total marketable securities		$	162,581			$	155,481			$	7,100			$	-

At DecemberJune 1, 20132014 and March 3, 2013,2, 2014, the Company’s level 2 investments consisted of commercial paper which was not traded on a regular basis or in an active market, and the Company was unable to obtain pricing information on an on-goingongoing basis. Therefore, these investments were measured using quoted market prices for similar assets currently trading in an active market or using model-derived valuations in which all significant inputs are observable for substantially the full term of the asset.

The following table showstables show the amortized cost basis of, and gross unrealized gains and losses and gross realized gains and losses on, the Company’s available-for-sale securities:

The estimated fair values of such securities at DecemberJune 1, 2013,2014, by contractual maturity, are shown below:

 Inventories are stated at the lower of cost (first-in, first-out method) or market. Inventories consisted of the following:

		December 1, 2013				March 3, 2013
Raw materials		$	7,863			$	6,639
Work-in-process			3,039				2,870
Finished goods			3,447				3,213
Manufacturing supplies			284				196
		$	14,633			$	12,918

On January 30, 2013, the Company entered into a five-year revolving credit facility agreement (“Credit(the “Credit Agreement”) with PNC Bank, National Association.Association (“PNC Bank”). The Credit Agreement providesprovided for loans up to $52,000 (the “Facility”) to the Company and letters of credit up to $2,000 for the account of the Company. As of December 1, 2013, theThe Company had outstanding borrowings ofborrowed $52,000 which were used to finance a special dividend paid to shareholders of the Company in the 2013 fiscal year fourth quarter.

On February 12, 2014, the Company entered into a four-year amended and restated revolving credit facility agreement (the “Amended Credit Agreement”) with PNC Bank. The Amended Credit Agreement provides for loans up to $104,000 (the “Amended Facility”) to the Company and letters of credit up to $2,000 for the account of the Company. Through June 1, 2014, the Company has borrowed $52,000 to finance a special dividend paid to shareholders of the Company in the 2014 fiscal year fourth quarter and an additional $52,000 to continue the loan that was provided under the Credit Agreement, and PNC Bank National Association hadhas issued two standby letters of credit for the account of the Company in the total amount of $1,145$1,100 to secure the Company’s obligations under its workers’ compensation insurance program. The $104,000 outstanding borrowing under the Amended Credit Agreement is payable as follows: $10,000 due on February 12, 2015 followed by four quarterly installments of $2,500 and then eight quarterly installments of $3,750 with the remaining amount outstanding under the Amended Credit Agreement is payable on January 30,February 12, 2018.

Borrowings under the Amended Facility bear interest at a rate equal to, at the Company’s option, either a (a) LIBOR rate option determined by a fluctuating rate per annum equal to the LIBOR Rate plus 1.15%1.10% or (b) base rate option determined by a fluctuating rate per annum equal to the highest of (i) the Federal Funds Open Rate (as defined in the Amended Credit Agreement) plus 0.5%, (ii) the Prime Rate (as defined in the Amended Credit Agreement), and (iii) the Daily LIBOR Rate (as defined in the Amended Credit Agreement) plus 1.0%. Under the Amended Credit Agreement, the Company also is obligated to pay a nonrefundable commitment fee, accruing from January 30, 2013February 12, 2014 until the earlier of January 30,February 12, 2018 and the date on which the Amended Credit Agreement is terminated, equal to 0.20% per annum multiplied by the average daily difference between the amount of (a) the revolving credit commitment and (b) the revolving facility usage, payable quarterly in arrears.

The Amended Credit Agreement also contains certain customary affirmative and negative covenants and customary financial covenants that require the Company to maintain a minimum interestfixed charge coverage ratio of 3.001.10 to 1.00 at the end of each fiscal quarter and not to exceed a maximum funded debt ratio, which decreases periodically, of (a) 3.75 to 1.00 through February 28, 2015, (b) 3.50 to 1.00 for the period March 1, 2015 through February 27, 2016, (c) 3.00 to 1.00 atfor the endperiod February 28, 2016 through February 25, 2017, and (d) 2.25 to 1.00 for all periods thereafter. In addition, the Company must maintain minimum domestic liquid assets of each fiscal quarter.$25,000 in cash and marketable securities and a quick ratio (as defined in the Amended Credit Agreement). On July 10, 2014, the Company and PNC Bank entered into an Amendment to the Amended Credit Agreement that modified the quick ratio, which, as modified, ranges from 8.50 to 1.00 to 8.00 to 1.00 through November 27, 2016 and is 3.25 to 1.00 for all periods thereafter. As of DecemberJune 1, 2013,2014, the Company was in compliance with all of suchthese financial covenants. The dividend covenant permits the Company to pay regular quarterly dividends in amounts not exceeding $0.10 per share.share and an annual special dividend to shareholders in amounts ranging from $1.00 to $2.50 with prior written notification to PNC Bank. The Company’s obligations under the Amended Credit Agreement are guaranteed by its Nelco Products, Inc., Neltec, Inc. and Park Aerospace Technologies Corp. subsidiaries and secured by a pledge of 65% of the capital stock of the Company’s Nelco Products Pte. Ltd. subsidiary in Singapore. The minimum domestic liquid assets of $25,000 are reflected as restricted cash on the Condensed Consolidated Balance Sheets.

The Amended Facility is available to (i) refinance the Credit Agreement, (ii) support working capital and general corporate needs, including the issuance of letters of credit, (ii)(iii) fund special distributions to the Company’s shareholders permitted under the Amended Facility, and (iii)(iv) finance on-goingongoing capital expenditures and acquisitions. At DecemberJune 1, 2013, $52,0002014, $104,000 of indebtedness was outstanding under the FacilityAmended Credit Agreement with an interest rate of 1.37%1.29%. Interest expense recorded under the Facility and Amended Facility was approximately $187$353 and $543$167 during the 13 weeks ended June 1, 2014 and 39 weeks,June 2, 2013, respectively, ended December 1, 2013.which is included in interest expense on the Consolidated Statements of Operations.

During the 39 weeks ended November 25, 2012,2013 fiscal year, the Company recorded restructuring charges of $2,675$2,730 related to the closure of the Company’s Nelco Technology (Zhuhai FTZ) Ltd. business unit located in Zhuhai, China. The charges included a non-cash asset impairment charge of $3,620 related to property, plant and equipment and were net of the recapture of a non-cash cumulative currency translation adjustment of $1,465. The reclassification of the non-cash cumulative currency translation adjustment was included in foreign currency translation changes in the Consolidated Statements of Comprehensive Income.Earnings. The Company has a building with a carrying value of $2,047$1,996 as of DecemberJune 1, 2013,2014, which is held for sale at its Nelco Technology (Zhuhai FTZ) Ltd. business unit. The Company ceased depreciating this building during the 2013 fiscal year second quarter and expects to sell the building in the 20142015 fiscal year. During the 13 weeks and 39 weeks ended DecemberJune 1, 2013,2014, the Company recorded $0 and $319, respectively,$106 of additional pre-tax charges related to such closure. The Company paid $92 and $360 of such charges during the 13 weeks and 39 weeks, respectively, ended December 1, 2013closure and expects to record no significant additional charges in connection with such closure.

The Company recorded additional restructuring charges of $420$161 during the 3913 weeks ended November 25, 2012June 1, 2014 related to the closure of the Company’s Park Advanced Composite Materials,New England Laminates Co., Inc. business unit located in Waterbury, Connecticut.Newburgh, New York. The New England Laminates Co., Inc. building in Newburgh, New York is held for sale. In the 2004 fiscal year, the Company reduced the book value of the building to zero, and the Company intends to sell it during the 2015 fiscal year.

Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potential common stock equivalentspotentially dilutive securities outstanding during the period. Stock options are the only common stock equivalents;potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method.

The following table sets forth the calculation of basic and diluted earnings per share for the 13 weeks and 39 weeks ended December 1, 2013 and November 25, 2012.share:

 

		13 Weeks Ended								39 Weeks Ended
		December 1, 2013				November 25, 2012				December 1, 2013				November 25, 2012
Net Earnings		$	4,721			$	4,710			$	17,695			$	12,889
Weighted average common sharesoutstanding for basic EPS			20,857				20,801				20,840				20,799
Net effect of dilutive options			60				2				31				25
Weighted average sharesoutstanding for diluted EPS			20,917				20,803				20,871				20,824
Basic earnings per share		$	0.23			$	0.23			$	0.85			$	0.62
Diluted earnings per share		$	0.23			$	0.23			$	0.85			$	0.62

Common stock equivalents,Potentially dilutive securities, which were not included in the computation of diluted earnings per share because either the effect would have been anti-dilutive or the options’ exercise prices were greater than the average market price of the common stock, were approximately 13924 and 564720 for the 13 weeks ended DecemberJune 1, 20132014 and November 25, 2012, respectively, and 375 and 327 for the 39 weeks ended December 1,June 2, 2013, and November 25, 2012, respectively.

During the 3913 weeks ended DecemberJune 1, 2013,2014, the Company issued 423 shares pursuant to the exerciseexercises of stock options and received proceeds from such exercises of $987$76 and recognized stock-based compensation expense of $787.$301. These transactions resulted in the $1,774a $377 increase in additional paid-in capital during the period.

The Company’s effective tax rates for the 13-week13 weeks ended June 1, 2014 and 39-week periods ended December 1,June 2, 2013 were 3.3%16.7% and 3.7%19.6%, respectively, compared to 18.2% and 20.1%, respectively, for the 13-week and 39-week periods ended November 25, 2012.respectively. The effective rates varied from the U.S. Federal statutory rate primarily due to foreign income taxed at lower rates and a tax refund described below.  

During the 2011 and 2012 fiscal years, the Company filed amended tax returns for the 2004, 2005, 2006 and 2007 fiscal years with the Internal Revenue Service to claim a refund of taxes paid. In September 2013, the Company received a refund of $2,181, net of the tax impact on interest, and recognized a tax benefit of $2,181. The tax benefit recognized and interest received affected the effective tax rate and was recorded as a discrete tax benefit during the 39 weeks ended December 1, 2013. Accordingly, the Company’s annual effective tax rate for the 13 weeks ended June 1, 2014 fiscal year, excluding the discretewas primarily due to higher portions of taxable income in jurisdictions with lower effective income tax benefit, is estimated to be 15.3% (which includes U.S. Federal, state, local and foreign taxes) based upon the Company’s anticipated earnings in domestic and foreign operations.rates.

OfThe Company continuously evaluates the $291.3 millionliquidity and capital requirements of cash and marketable securities held by the Company at December 1, 2013, approximately $235.2 million was owned by certain of the Company’s wholly owned foreign subsidiaries. If such foreign owned cash were needed to fund the Company’sits operations in the United States and of its foreign subsidiaries. As a result of such evaluation, the Company would be required to accrue and pay Federal and staterecorded a non-cash charge for the accrual of U.S. deferred income taxes in the United States on the amount of such cash that was repatriated to the United States. However, it is$63,958 on undistributed earnings of the Company’s practice and current intent to indefinitely reinvest such cash owned by its foreign subsidiariessubsidiary in Singapore during the operationsfourth quarter of its foreign subsidiaries or in other foreign activities, including acquisitions outside the United States.2014 fiscal year.

The Company is a global advanced materials company which develops, manufactures, markets and sells high technology digital and RF/microwave printed circuit materials principally for the telecommunications and internet infrastructure and high-end computing markets and advanced composite materials, parts and assemblies for the aerospace markets. The Company’s printed circuit materials products and the Company’s advanced composite materials, parts and assemblies products are sold to customers in North America, Asia and Europe. The Company’s manufacturing facilities are located in Singapore, France, Kansas, Arizona and California. The Company considers itself to beoperates as a single operating segment.segment, which is advanced materials for the electronics and aerospace markets, with common management and identical or very similar economic characteristics, products, raw materials, manufacturing processes and equipment, customers and markets, marketing, sales and distribution methods and regulatory environments. The chief operating decision maker reviews financial information on a consolidated basis.

Sales are attributed to geographic region based upon the region in which the materials were delivered to the customer. Sales between geographic regions were not significant.

Financial information regarding the Company’s operations by geographic region is as follows:

		13 Weeks Ended								39 Weeks Ended
		December 1, 2013				November 25, 2012				December 1, 2013				November 25, 2012
Sales:
North America		$	20,196			$	18,860			$	63,814			$	59,895
Asia			17,135				18,886				54,809				60,809
Europe			2,347				3,519				8,990				13,037
Total sales		$	39,678			$	41,265			$	127,613			$	133,741

 

		December 1, 2013				March 3, 2013
Long-lived assets:
North America		$	32,845			$	34,555
Asia			13,823				14,102
Europe			309				327
Total long-lived assets		$	46,977			$	48,984

11.

CONTINGENCIES

11.    CONTINGENCIES

Litigation 

The Company is subject to a number of proceedings, lawsuits and other claims related to environmental, employment, product and other matters. The Company is required to assess the likelihood of any adverse judgments or outcomes in these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy in dealing with these matters. The Company believes that the ultimate disposition of such proceedings, lawsuits and claims will not have a material adverse effect on the liquidity, capital resources, business or consolidated results of operations or financial position of the Company.

Environmental Contingencies 

The Company and certain of its subsidiaries have been named by the Environmental Protection Agency (the "EPA") or a comparable state agency under the Comprehensive Environmental Response, Compensation and Liability Act (the "Superfund Act") or similar state law as potentially responsible parties in connection with alleged releases of hazardous substances at four sites. In addition, a subsidiary of the Company has received a cost recovery claim under a state law similar to the Superfund Act from another private party involving one other site.

Under the Superfund Act and similar state laws, all parties who may have contributed any waste to a hazardous waste disposal site or contaminated area identified by the EPA or comparable state agency may be jointly and severally liable for the cost of cleanup. Generally, these sites are locations at which numerous persons disposed of hazardous waste. In the case of the Company's subsidiaries, generally the waste was removed from their manufacturing facilities and disposed at waste sites by various companies which contracted with the subsidiaries to provide waste disposal services. Neither the Company nor any of its subsidiaries have been accused of or charged with any wrongdoing or illegal acts in connection with any such sites. The Company believes it maintains an effective and comprehensive environmental compliance program.

The insurance carriers who provided general liability insurance coverage to the Company and its subsidiaries for the years during which the Company's subsidiaries' waste was disposed at these sites have in the past reimbursed the Company and its subsidiaries for 100% of their legal defense and remediation costs associated with three of these sites.

The total costs incurred by the Company and its subsidiaries in connection with these sites, including legal fees incurred by the Company and its subsidiaries and their assessed share of remediation costs and excluding amounts paid or reimbursed by insurance carriers, were $1approximately $7 and $20$21 in the 13 weeks ended June 1, 2014 and 39 weeks, respectively, ended December 1,June 2, 2013, and $21 and $44 in the 13 weeks and 39 weeks, respectively, ended November 25, 2012.respectively. The Company had no recorded liabilities for environmental matters at DecemberJune 1, 20132014 or March 3, 2013.2, 2014.

The Company does not record environmental liabilities and related legal expenses for which the Company believes that it and its subsidiaries have general liability insurance coverage for the years during which the Company's subsidiaries' waste was disposed at three sites for which certain subsidiaries of the Company have been named as potentially responsible parties. Pursuant to such general liability insurance coverage, two insurance carriers have been paying 100% of the legal defense and remediation costs associated with such three sites since 1985. In the 2012 fiscal year fourth quarter, one of such insurance carriers, which had been paying 45% of such legal defense and remediation costs, indicated that it no longer agreed to such percentage. As a result, the Company commenced litigation against such insurance carriers and a third insurance carrier. The three insurance carriers have filed answers to the lawsuit, and one has asserted counter claimscounterclaims against the Company. The insurance carriers and the Company are engaged in discussions to settle this matter. The Company does not expect any such settlement to have a material adverse effect on the Company’s consolidated results of operations, cash flows or financial position.

Included in selling, general and administrative expenses are charges for actual expenditures and accruals, based on estimates, for certain environmental matters described above. The Company accrues estimated costs associated with known environmental matters, when such costs can be reasonably estimated and when the outcome appears probable. The Company believes that the ultimate disposition of known environmental matters, including the litigation described above, will not have a material adverse effect on the liquidity, capital resources, business or consolidated results of operations or financial position of the Company.

Recently Adopted

In March 2013, the FASB issued authoritative guidance which states that when a parent sells an investment in a foreign entity and ceases to have a controlling interest in that foreign entity, or when a foreign subsidiary disposes of substantially all of its assets, or when a parent acquires control of a foreign entity in which the parent held an equity interest before the acquisition date, the cumulative translation adjustment should be released into net earnings. The Company adopted this guidance effective March 3, 2014, the first day of the Company’s 2015 fiscal year, and the adoption of this guidance did not impact the Company’s consolidated results of operations, cash flows or financial position.

Recently Issued

In May 2014, the FASB issued authoritative guidance on the recognition of revenue from customers. Under this guidance, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. This guidance also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance is effective for fiscal years (and interim reporting periods within fiscal years) beginning after December 15, 2016. The Company is currently evaluating the impact this guidance will have on its consolidated financial position, results of operations, cash flows and disclosures and is currently unable to estimate the impact of this guidance.