7. The Company operates primarily in two industry groups, Heating, Ventilation and Air Conditioning (HVAC) and Construction Products. The Company has identified two reportable segments within each of the industry groups: the Heating and Cooling segment and the Evaporative Cooling segment in the HVAC industry group and the CACS segment and the Door segment in the Construction Products industry group.

The Heating and Cooling segment primarily produces and sells gas-fired wall furnaces, console heaters and fan coils from the Company’s wholly-owned subsidiary, Williams Furnace Co. (WFC) of Colton, California. The Evaporative Cooling segment primarily produces and sells evaporative coolers from the Company’s wholly-owned subsidiary, Phoenix Manufacturing, Inc. (PMI) of Phoenix, Arizona. Sales of these two segments are nationwide, but are concentrated in the southwestern United States. Concrete, aggregates and construction supplies are offered from numerous locations along the Southern Front Range of Colorado operated by the Company’s wholly-owned subsidiaries Castle Concrete Company and Transit Mix Concrete Co., of Colorado Springs and Transit Mix of Pueblo, Inc. of Pueblo, Colorado (the three companies collectively are referred to as TMC). The Door segment sells hollow metal and wood doors, door frames and related hardware, lavatory fixtures and electronic access and security systems from the Company’s wholly-owned subsidiary, McKinney Door and Hardware, Inc. (MDHI), which operates out of facilities in Pueblo and Colorado Springs, Colorado. Sales of these two segments are highly concentrated in the Southern Front Range of Colorado although door sales are also made throughout the United States.

In addition to the above reporting segments, an “Unallocated Corporate” classification is used to report the unallocated expenses of the corporate office which provides treasury, insurance and tax services as well as strategic business planning and general management services. Expenses related to the corporate information technology group are allocated to all locations, including the corporate office.

The Company evaluates the performance of its segments and allocates resources to them based on a number of criteria including operating income, return on investment and other strategic objectives. Operating income is determined by deducting operating expenses from all revenues. In computing operating income, none of the following has been added or deducted: unallocated corporate expenses, interest, other income or loss or income taxes.

The following table presents information about reported segments for the six-month and three-month periods ended July 1, 2017 and July 2, 2016 along with the items necessary to reconcile the segment information to the totals reported in the financial statements (amounts in thousands):


	Construction Products Industry						HVAC Industry
	Concrete,
	Aggregates &				Combined		Heating				Combined
	Construction				Construction		and		Evaporative		HVAC		Unallocated
	Supplies		Doors		Products		Cooling		Cooling		Products		Corporate		Total
Six Months Ended July 1, 2017
Revenues from external customers	$	31,596	$	8,629	$	40,225	$	17,214	$	16,542	$	33,756	$	9	$	73,990
Depreciation, depletion and amortization		710		72		782		302		215		517		16		1,315
Operating income (loss)		882		944		1,826		68		849		917		(1,699)		1,044
Segment assets		39,736		7,889		47,625		21,728		13,619		35,347		2,354		85,326
Capital expenditures (b)		2,219		119		2,338		365		65		430		35		2,803
Three Months ended July 1, 2017
Revenues from external customers	$	18,113	$	4,760	$	22,873	$	6,778	$	10,233	$	17,011	$	3	$	39,887
Depreciation, depletion and amortization		373		37		410		151		108		259		8		677
Operating income (loss)		1,466		652		2,118		(497)		906		409		(872)		1,655
Segment assets		39,736		7,889		47,625		21,728		13,619		35,347		2,354		85,326
Capital expenditures		1,837		18		1,855		267		22		289		29		2,173


	Construction Products Industry						HVAC Industry
	Concrete,
	Aggregates &				Combined		Heating				Combined
	Construction				Construction		and		Evaporative		HVAC		Unallocated
	Supplies		Doors		Products		Cooling		Cooling		Products		Corporate		Total
Six Months Ended July 2, 2016
Revenues from external customers	$	33,111	$	8,745	$	41,856	$	17,785	$	17,299	$	35,084	$	9	$	76,949
Depreciation, depletion and amortization		704		63		767		277		238		515		8		1,290
Operating income (loss)		1,871		847		2,718		797		1,818		2,615		(1,651)		3,682
Segment assets (a)		33,518		6,173		39,691		22,381		12,283		34,664		3,653		78,008
Capital expenditures (b)		2,233		52		2,285		376		115		491		—		2,776
Three Months ended July 2, 2016
Revenues from external customers	$	20,912	$	4,890	$	25,802	$	6,635	$	10,279	$	16,914	$	5	$	42,721
Depreciation, depletion and amortization		357		32		389		139		119		258		4		651
Operating income (loss)		2,065		537		2,602		(237)		1,365		1,128		(900)		2,830
Segment assets (a)		33,518		6,173		39,691		22,381		12,283		34,664		3,653		78,008
Capital expenditures (b)		1,314		30		1,344		259		91		350		—		1,694

(a)

Segment assets are as of December 31, 2016.

(b)

Capital expenditures are presented on the accrual basis of accounting.

There are no differences in the basis of segmentation or in the basis of measurement of segment profit or loss from the last annual report.