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Note M - Leases

12 Months Ended

Dec. 31, 2024

M. LEASES

The Company accounts for leases under ASC Topic 842, Leases. The Company’s leasing activities include roles as both lessee and lessor. As lessee, the Company’s primary leasing activities include buildings and structures to support its manufacturing operations at one location in its Defense segment, warehouse space and equipment to support its distribution center operations in its Housewares/Small Appliances segment, and office space to support its Safety segment's operations. As lessor, the Company’s primary leasing activity is comprised of manufacturing and office space located adjacent to its corporate offices. All of the Company’s leases are classified as operating leases.

The Company’s leases as lessee in its Defense segment provide for variable lease payments that are based on changes in the Consumer Price Index. As lessor, the Company’s primary lease also provides for variable lease payments that are also based on changes in the Consumer Price Index, as well as on increases in costs of insurance, real estate taxes, and utilities related to the leased space. Generally, all of the Company’s lease contracts provide for options to extend and terminate them. The majority of lease terms of the Company’s lease contracts recognized on the balance sheet reflect extension options, while none reflect early termination options.

The Company has determined that the incremental borrowing rates implicit in its leases are not readily determinable and estimates those rates utilizing quotes from financial institutions for real estate and equipment, as applicable, over periods of time similar to the terms of its leases. The Company has entered into various short-term leases as lessee and has elected a non-recognition accounting policy, as permitted by ASC Topic 842.

	Years Ending
	(In thousands)
Summary of Lease Cost	2024		2023		2022
Operating lease cost	$	1,212	$	1,215	$	1,079
Short-term and variable lease cost		265		206		169
Total lease cost	$	1,477	$	1,421	$	1,248

Rent expense was approximately $1,476,000, $1,348,000, and $1,129,000 for the years ended December 31, 2024, 2023, and 2022, respectively. Operating cash used for operating leases was $1,476,000, $1,421,000, and $1,248,000 for the years ended December 31, 2024, 2023, and 2022, respectively. The weighted-average remaining lease term was 19.1 years, and the weighted-average discount rate was 4.7% as of December 31, 2024.

Maturities of operating lease liabilities are as follows:

Years ending December 31:	*(In thousands)*
2025	$	887
2026		798
2027		793
2028		798
2029		744
Thereafter		12,074
Total lease payments	$	16,094
Less: future interest expense		6,132
Lease liabilities	$	9,962

Lease income from operating lease payments was $2,283,000, $2,281,000, $2,195,000 for the years ended December 31, 2024, 2023, and 2022, respectively and is included in Other income on the Consolidated Statements of Comprehensive Income. Undiscounted cash flows provided by lease payments are expected as follows:

Years ending December 31:	*(In thousands)*
2025	$	2,264
2026		2,257
2027		2,257
2028		2,257
2029		2,257
Thereafter		13,542
Total lease payments	$	24,834

The Company considers risk associated with the residual value of its leased real property to be low, given the nature of the long-term lease agreement, the Company’s ability to control the maintenance of the property, and the creditworthiness of the lessee. The residual value risk is further mitigated by the long-lived nature of the property, and the propensity of such assets to hold their value or, in some cases, appreciate in value.