10. Business Segments

The Company operates in two business segments, ATG and CPG. The Company’s reportable segments are strategic business units that offer different products and services. The segments are composed of separate corporations and are managed separately. Operations in ATG primarily involve the design, manufacture, and marketing of servo-control components (i.e., torque motors, control valves, actuators, etc.) for government, commercial and industrial applications. CPG’s operations involve the design, manufacture and marketing of a variety of cutlery products for use by consumers and government agencies. The Company derives its primary sales revenue from domestic customers, although a portion of finished products are for foreign end use.

As of September 30, 2019, the Company had identifiable assets of approximately $45,701,000 ($41,685,000 – December 31, 2018) of which approximately $36,339,000 ($31,639,000 – December 31, 2018) was for ATG and approximately $9,362,000 ($10,046,000 – December 31, 2018) was for CPG.

Information regarding the Company’s operations in these segments is summarized as follows:


	($000’s omitted except per share data)
	ATG						CPG						Consolidated
	Nine Months Ended						Nine Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,
	2019			2018			2019			2018			2019			2018
Revenues from unaffiliated customers	$	33,926		$	30,028		$	4,506		$	5,245		$	38,432		$	35,273

Cost of goods sold, inclusive of depreciation		(24,400)			(21,600)			(5,155)			(4,759)			(29,555)			(26,359)
Gross margin		9,526			8,428			(649)			486			8,877			8,914
Gross margin %		28.1	%		28.1	%		(14.4)	%		9.3	%		23.1	%		25.3	%

Selling, general and administrative		(4,558)			(4,131)			(1,878)			(1,584)			(6,436)			(5,715)
Interest expense		(66)			(55)			(22)			(25)			(88)			(80)
Total costs and expenses		(29,024)			(25,786)			(7,055)			(6,368)			(36,079)			(32,154)

Income before income tax provision		4,902			4,242			(2,549)			(1,123)			2,353			3,119

Income tax (provision) benefits		(852)			(849)			443			225			(409)			(624)
Net income/(loss)	$	4,050		$	3,393		$	(2,106)		$	(898)		$	1,944		$	2,495
Capital expenditures	$	1,449		$	1,277		$	211		$	175		$	1,660		$	1,452


	($000’s omitted except per share data)
	ATG						CPG						Consolidated
	Three Months Ended						Three Months Ended						Three Months Ended
	September 30,						September 30,						September 30,
	2019			2018			2019			2018			2019			2018
Revenues from unaffiliated customers	$	11,180		$	10,639		$	1,182		$	2,129		$	12,362		$	12,768

Cost of goods sold, inclusive of depreciation		(7,378)			(6,965)			(1,449)			(1,863)			(8,827)			(8,828)
Gross margin		3,802			3,674			(267)			266			3,535			3,940
Gross margin %		34.0	%		34.5	%		(22.6)	%		12.5	%		28.6	%		30.9	%

Selling, general and administrative		(1,539)			(1,476)			(595)			(598)			(2,134)			(2,074)
Interest expense		(25)			(20)			(6)			(8)			(31)			(28)
Total costs and expenses		(8,942)			(8,461)			(2,050)			(2,469)			(10,992)			(10,930)

Income before income tax provision		2,238			2,178			(868)			(340)			1,370			1,838

Income tax (provision) benefits		(389)			(457)			151			76			(238)			(381)
Net income/(loss)	$	1,849		$	1,721		$	(717)		$	(264)		$	1,132		$	1,457
Capital expenditures	$	288		$	432		$	19		$	36		$	307		$	468