Business and Geographic Segments

12 Months Ended

Dec. 31, 2018

Note 2 – Business and geographic segments:

Our operating segments are defined as components of our operations about which separate financial information is available that is regularly evaluated by our chief operating decision maker in determining how to allocate resources and in assessing performance. At December 31, 2018, we had two reportable operating segments – Security Products and Marine Components.

The Security Products segment, with a facility in South Carolina and a facility shared with Marine Components in Illinois, manufactures locking mechanisms and other security products for sale to the transportation, postal, office and institutional furniture, cabinetry, tool storage, healthcare and other industries.

Our Marine Components segment, with a facility in Wisconsin and a facility shared with Security Products in Illinois, manufactures and distributes stainless steel exhaust systems, gauges, throttle controls, wake enhancement systems, trim tabs and related hardware and accessories primarily for performance and ski/wakeboard boats.

The chief operating decision maker evaluates segment performance based on segment operating income, which is defined as income before income taxes, exclusive of certain general corporate income and expense items (primarily interest income) and certain non-recurring items (such as gains or losses on the disposition of long-lived assets outside the ordinary course of business). The accounting policies of the reportable operating segments are the same as those described in Note 1. Capital expenditures include additions to property and equipment, but exclude amounts attributable to business combinations.

Segment assets are comprised of all assets attributable to the reportable segments. Corporate assets are not attributable to the operating segments and consist primarily of cash, cash equivalents and note receivable from affiliate. For geographic information, the point of origin (place of manufacture) for all net sales is the U.S., the point of destination for net sales is based on the location of the customer, and property and equipment are attributable to their physical location. Intersegment sales are not material.

	Years ended December 31,
	2016				2017					2018
	(In thousands)
Net sales:
Security Products	$		94,693			$	96,600			$		98,383
Marine Components			14,227				15,435					19,834
Total	$		108,920			$	112,035			$		118,217
Operating income (loss):
Security Products	$		19,981			$	19,182			$		21,947
Marine Components			1,707				1,342					2,738
Corporate			(6,114	)			(5,289		)			(6,874	)
Total operating income			15,574				15,235					17,811
Interest income			390				1,929					2,664

Income before income taxes	$		15,964			$	17,164			$		20,475

Depreciation and amortization:
Security Products		$	3,025			$		3,072			$	2,914
Marine Components			663					591				535
Corporate			10					10				5
Total		$	3,698			$		3,673			$	3,454
Capital expenditures:
Security Products		$	3,017			$		2,389			$	2,126
Marine Components			153					405				991
Corporate			5					2				-
Total		$	3,175			$		2,796			$	3,117

Net sales point of destination:
United States	$	98,526	$	103,646	$	108,773
Canada		7,515		5,353		6,436
Mexico		1,315		1,486		1,438
Other		1,564		1,550		1,570
Total	$	108,920	$	112,035	$	118,217

		December 31,
		2016		2017		2018
Total assets:
Security Products	$	73,345	$	72,961	$	74,714
Marine Components		12,209		11,704		14,189
Corporate and eliminations		58,426		66,294		77,526
Total	$	143,980	$	150,959	$	166,429

Net property and equipment for 2016, 2017 and 2018 is entirely located in the United States.