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 nine-month and three-month periods ended September 30, 2017 and October 1, 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
Nine Months ended September 30, 2017
Revenues from external customers	$	49,650	$	13,565	$	63,215	$	27,358	$	22,031	$	49,389	$	13	$	112,617
Depreciation, depletion and amortization		1,026		111		1,137		449		322		771		24		1,932
Operating income (loss)		2,484		1,544		4,028		219		579		798		(2,464)		2,362
Segment assets		40,013		7,617		47,630		24,764		10,461		35,225		2,340		85,195
Capital expenditures (b)		3,367		131		3,498		650		216		866		14		4,378
Three Months ended September 30, 2017
Revenues from external customers	$	18,054	$	4,936	$	22,990	$	10,144	$	5,489	$	15,633	$	4	$	38,627
Depreciation, depletion and amortization		316		39		355		147		107		254		8		617
Operating income (loss)		1,602		600		2,202		151		(270)		(119)		(765)		1,318
Segment assets		40,013		7,617		47,630		24,764		10,461		35,225		2,340		85,195
Capital expenditures		1,148		12		1,160		285		151		436		(21)		1,575


	Construction Products Industry						HVAC Industry
	Concrete,
	Aggregates &				Combined		Heating				Combined
	Construction				Construction		and		Evaporative		HVAC		Unallocated
	Supplies		Doors		Products		Cooling		Cooling		Products		Corporate		Total
Nine Months ended October 1, 2016
Revenues from external customers	$	51,267	$	13,212	$	64,479	$	27,390	$	22,715	$	50,105	$	12	$	114,596
Depreciation, depletion and amortization		1,020		95		1,115		415		356		771		11		1,897
Operating income (loss)		2,881		1,390		4,271		1,205		2,077		3,282		(2,510)		5,043
Segment assets (a)		33,518		6,173		39,691		22,381		12,283		34,664		3,653		78,008
Capital expenditures (b)		2,798		106		2,904		584		129		713		—		3,617
Three Months ended October 1, 2016
Revenues from external customers	$	18,156	$	4,467	$	22,623	$	9,605	$	5,416	$	15,021	$	3	$	37,647
Depreciation, depletion and amortization		316		32		348		138		118		256		3		607
Operating income (loss)		1,010		543		1,553		408		259		667		(859)		1,361
Segment assets (a)		33,518		6,173		39,691		22,381		12,283		34,664		3,653		78,008
Capital expenditures (b)		565		54		619		208		14		222		—		841

(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.