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NATIONAL PRESTO INDUSTRIES INC

NATIONAL PRESTO INDUSTRIES INCNPKEarnings & Financial Report

NYSE · Industrials · Ordnance & Accessories, (No Vehicles/Guided Missiles)

National Presto Industries is a company founded in 1905 in Eau Claire, Wisconsin. Originally called "Northwestern Steel and Iron Works" the company changed its name to the "National Pressure Cooker Company" in 1929 and then National Presto Industries, Inc. 1953. The company originally produced pressure canners for commercial, and later home, use. Beginning in 1939, the company introduced small home-use cooking appliances. The company was admitted to the New York Stock Exchange on March 3, 1969.

What changed in NATIONAL PRESTO INDUSTRIES INC's 10-K — 2023 vs 2024

Top changes in NATIONAL PRESTO INDUSTRIES INC's 2024 10-K

94 paragraphs added · 103 removed · 77 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Inventory build-up also occurs in the Safety segment both for seasonal products like carbon monoxide alarms and to meet potential demand of customers that require delivery with shorter lead times. 6.
Inventory build-up also occurs in the Safety segment both for seasonal products like carbon monoxide alarms and smoke alarms, and to meet potential demand of customers that require delivery with shorter lead times. 6.
Housewares/Small Appliance Segment Housewares and electrical appliances sold by the segment include pressure cookers and canners; the Presto Control Master® heat control line of skillets in several sizes, griddles, woks and multi-purpose cookers; slow cookers; deep fryers of various sizes; air fryers; waffle makers; pizza ovens; slicer/shredders; electric heaters; corn poppers (hot air, oil, and microwave); dehydrators; vacuum sealers; rice cookers; microwave bacon cookers; egg cookers; coffeemakers and coffeemaker accessories; electric knife sharpeners; and timers.
Housewares/Small Appliance Segment Housewares and electrical appliances sold by the segment include pressure cookers and canners; the Presto Control Master® heat control line of skillets in several sizes, griddles, woks and multi-purpose cookers; slow cookers; deep fryers of various sizes; waffle makers; pizza ovens; slicer/shredders; electric heaters; corn poppers (hot air, oil, and microwave); dehydrators; vacuum sealers; microwave bacon cookers; coffeemakers and coffeemaker accessories; electric knife sharpeners; and timers.
The Amron manufacturing facility is 208,000 square feet and is located in Antigo, Wisconsin. Tech Ord, a division of AMTEC ("Tech Ord"), holds the assets formerly owned by Chemring Energetic Devices, Inc.’s business located in Clear Lake, South Dakota and all of the real property previously owned by Technical Ordnance Realty, LLC. These assets were acquired on January 24, 2014.
The Amron manufacturing facility is 212,000 square feet and is located in Antigo, Wisconsin. Tech Ord, a division of AMTEC ("Tech Ord"), holds the assets formerly owned by Chemring Energetic Devices, Inc.’s business located in Clear Lake, South Dakota and all of the real property previously owned by Technical Ordnance Realty, LLC. These assets were acquired on January 24, 2014.
Spectra Technologies LLC ("Spectra"), a subsidiary of AMTEC, was acquired on July 31, 2003, and is engaged in the manufacture and delivery of munitions and ordnance-related products for the DOD and DOD prime contractors. Spectra maintains 364,000 square feet of space located in East Camden, Arkansas, dedicated primarily to LAP type work.
Spectra Technologies LLC ("Spectra"), a subsidiary of AMTEC, was acquired on July 31, 2003, and is engaged in the manufacture and delivery of munitions and ordnance-related products for the DOD and DOD prime contractors. Spectra maintains 384,000 square feet of space located in East Camden, Arkansas, dedicated primarily to LAP type work.
The loss of, or material reduction in, sales to any of the segment's major customers could adversely affect the segment's business. The majority of the housewares and electrical appliances are sourced from vendors in the Orient. (See Note J to the Consolidated Financial Statements.) The segment has a sales force of seven employees that sell to and service most customers.
The loss of, or material reduction in, sales to any of the segment's major customers could adversely affect the segment's business. The majority of the housewares and electrical appliances are sourced from vendors in the Orient. (See Note J to the Consolidated Financial Statements.) The segment has a sales force of six employees that sell to and service most customers.
Tech Ord manufactures in its 98,000 square foot Clear Lake facility detonators, booster pellets, release cartridges, lead azide, and other military energetic devices and materials. Its major customers include United States and foreign government agencies, AMTEC, and other defense contractors. The equity interests of Woodlawn Manufacturing, Ltd.
Tech Ord manufactures in its 124,000 square foot Clear Lake facility detonators, booster pellets, release cartridges, lead azide, and other military energetic devices and materials. Its major customers include United States and foreign government agencies, AMTEC, and other defense contractors. The equity interests of Woodlawn Manufacturing, Ltd.
Based on factors known as of December 31, 2023, it is believed that the Company's environmental liability reserve will be adequate to satisfy on-going remediation operations and monitoring activities; however, should environmental agencies require additional studies or remediation projects, it is possible the existing accrual could be inadequate.
Based on factors known as of December 31, 2024, it is believed that the Company's environmental liability reserve will be adequate to satisfy on-going remediation operations and monitoring activities; however, should environmental agencies require additional studies or remediation projects, it is possible the existing accrual could be inadequate.
New product introductions are further subject to delivery delays from supply sources, which can impact availability to meet commitments. 6 Table of Contents Research and development costs related to new product development for the years 2023, 2022, and 2021 were expensed in operations of these years.
New product introductions are further subject to delivery delays from supply sources, which can impact availability to meet commitments. 6 Table of Contents Research and development costs related to new product development for the years 2024, 2023, and 2022 were expensed in operations of these years.
The segment has a sales force of three employees that sell to and service most customers. It also utilizes a few manufacturers' representatives who may also sell other product lines. Product competition extends to product features, product pricing, product quality, marketing programs, service policies and other factors.
The segment has a sales force of two employees that sell to and service most customers. It also utilizes a few manufacturers' representatives who may also sell other product lines. Product competition extends to product features, product pricing, product quality, marketing programs, service policies and other factors.
For the year ended December 31, 2023, Amazon.com, Inc. accounted for 11% of the Company’s consolidated net sales. For the year ended December 31, 2022, this segment had no one customer that accounted for 10% or more of the consolidated net sales. For the year ended December 31, 2021, Amazon.com, Inc. accounted for 10% of the consolidated net sales.
For the year ended December 31, 2024, Amazon.com, Inc. accounted for 10% of the Company’s consolidated net sales. For the year ended December 31, 2023, Amazon.com, Inc. accounted for 11% of the Company’s consolidated net sales. For the year ended December 31, 2022, this segment had no one customer that accounted for 10% or more of the consolidated net sales.
Research and development costs related to new product development for the years 2023, 2022, and 2021 were expensed in operations of these years and were not a material element in the aggregate costs incurred by the Company.
Research and development costs related to new product development for the years 2024, 2023, and 2022 were expensed in operations of these years and were not a material element in the aggregate costs incurred by the Company.
It is anticipated that the backlog will be produced and shipped during an 18- to 36-month period, after December 31, 2023. C. AVAILABLE INFORMATION The Company has a web site at www.gopresto.com. The contents of the Company's web site are not part of, nor are they incorporated by reference into, this annual report.
It is anticipated that the backlog will be produced and shipped during an 18- to 42-month period, after December 31, 2024. C. AVAILABLE INFORMATION The Company has a web site at www.gopresto.com. The contents of the Company's web site are not part of, nor are they incorporated by reference into, this annual report.
During 2023, almost all of the work performed by this segment directly or indirectly for the DOD was performed on a fixed-price basis.
During 2024, almost all of the work performed by this segment directly or indirectly for the DOD was performed on a fixed-price basis.
In November of 2023, the Company divested itself of a subsidiary, Rusoh, Inc., that was previously included in this segment. See Note L of the Consolidated Financial Statements. OneEvent leases 7,000 square feet in Mount Horeb, Wisconsin.
In November of 2023, the Company divested itself of a subsidiary, Rusoh, Inc., that was previously included in this segment. See Note L of the Consolidated Financial Statements. OneEvent leases 4,300 square feet in Mount Horeb, Wisconsin.
Rusoh, Inc. was formed in 2012, to design and market an owner-maintained, multipurpose, reloadable, dry chemical fire extinguisher and was the first portable owner-maintained fire extinguisher. The operations of the two current businesses that comprise the Safety segment are startup in nature and have resulted in limited revenues.
Rusoh, Inc. was formed in 2012, to design and market an owner-maintained, multipurpose, reloadable, dry chemical fire extinguisher and was the first portable owner-maintained fire extinguisher. As noted above, the business was divested in 2023. The operations of the two current businesses that comprise the Safety segment are startup in nature and have resulted in limited revenues.
For the year ended December 31, 2023, approximately 9% of consolidated net sales were provided by cast products (griddles, waffle makers, die cast deep fryers, skillets and multi-cookers), and approximately 18% by noncast/thermal appliances (stamped cookers and canners, pizza ovens, corn poppers, coffee makers, microwave bacon cookers, dehydrators, rice cookers, egg cookers; slow cookers, electric stainless steel appliances, non-cast fryers, air fryers and heaters).
For the year ended December 31, 2024, approximately 10% of consolidated net sales were provided by cast products (griddles, waffle makers, die cast deep fryers, skillets and multi-cookers), and approximately 15% by noncast/thermal appliances (stamped cookers and canners, pizza ovens, corn poppers, coffee makers, microwave bacon cookers, dehydrators, slow cookers, electric stainless steel appliances, non-cast fryers, air fryers and heaters).
On August 30, 2017, the Army awarded AMTEC, as the sole prime contractor, a third five-year 40mm system contract covering FY17-21 requirements. The value of awards to date is approximately $539,600,000 for FY17 through FY21, with deliveries scheduled to continue into 2025.
On August 30, 2017, the Army awarded AMTEC, as the sole prime contractor, a third five-year 40mm system contract covering FY17-21 requirements. The value of awards for the FY17 through FY21 requirements is approximately $539,600,000, with deliveries scheduled to complete in 2026.
Human Capital As of December 31, 2023, the Company and its subsidiaries had 1,007 employees compared to 973 employees at the end of December 2022. Approximately 192 employees of Amron are members of the United Steel Workers union. The most recent contract between Amron and the union is effective through February 28, 2025.
Human Capital As of December 31, 2024, the Company and its subsidiaries had 1,126 employees compared to 1,007 employees at the end of December 2023. Approximately 181 employees of Amron are members of the United Steel Workers union. The most recent contract between Amron and the union is effective through February 28, 2030.
The contract backlog of the Defense segment was approximately $564,005,000, $505,069,000, and $460,800,000 at December 31, 2023, 2022, and 2021, respectively. Backlog is defined as the value of orders from the customer less the amount of sales recognized against the orders.
The contract backlog of the Defense segment was approximately $1,085,612,000, $564,005,000, and $505,069,000 at December 31, 2024, 2023, and 2022, respectively. Backlog is defined as the value of orders from the customer less the amount of sales recognized against the orders.
The second is Rely Innovations, Inc., which offers carbon monoxide alarms with large digital displays and an array of voice messages that clearly inform of incipient danger. 1.
The second is Rely Innovations, Inc., which offers carbon monoxide alarms with large digital displays and an array of voice messages that clearly inform of incipient danger. It also markets an economy line of carbon monoxide and smoke alarms. 1.
For the year ended December 31, 2022, approximately 11% of consolidated net sales were provided by cast products, and approximately 24% by noncast/thermal appliances. For the year ended December 31, 2021, approximately 13% of consolidated net sales were provided by cast products, and approximately 17% by noncast/thermal appliances.
For the year ended December 31, 2023, approximately 9% of consolidated net sales were provided by cast products, and approximately 18% by noncast/thermal appliances. For the year ended December 31, 2022, approximately 11% of consolidated net sales were provided by cast products, and approximately 24% by noncast/thermal appliances.
Actual annual and cumulative dollar volume with the Army over the course of the contract will be dependent upon military requirements and funding, as well as government procurement regulations and other factors controlled by the Army and the DOD.
The maximum ceiling value of the IDIQ contract is $818,900,000. Actual annual and cumulative dollar volume with the Army over the course of the contract will be dependent upon military requirements and funding, as well as government procurement regulations and other factors controlled by the Army and the DOD.
On September 23, 2022, the Army awarded AMTEC, as the sole prime contractor, a fourth five-year 40mm system contract covering FY22-26. The initial award value was $69,800,000, with deliveries scheduled to commence in 2024.
On September 23, 2022, the Army awarded AMTEC, as the sole prime contractor, a fourth five-year 40mm system contract covering FY22-26 requirements. The value of awards to date is approximately $564,400,000 for FY22 through FY24, with deliveries commencing in 2024 and scheduled to complete in 2028.
Removed
On March 31, 2023, May 26, 2023, and September 25, 2023, the Army awarded AMTEC option awards totaling $137,400,000 under year two (Army's FY 2023) of AMTEC's current five-year 40mm system contract. Deliveries are scheduled to begin in 2024. The maximum ceiling value of the contract is $826,800,000.
Added
Two award years (FY25 and FY26) remain, with the maximum ceiling value of the contract at $826,800,000. Actual annual and cumulative dollar volume with the Army over the course of the contract will be dependent upon military requirements and funding, as well as government procurement regulations and other factors controlled by the Army and the DOD.
Added
On May 13, 2024, the Army awarded AMTEC a five-year Indefinite Delivery Indefinite Quantity (IDIQ) contract for production of the 40mm M918E2 High Velocity Target Practice - Day/Night/Thermal (TP-DNT) cartridge.
Added
The M918E2 TP-DNT Cartridge allows the warfighters to train as they fight by delivering a projectile whose impact signature can be seen day or night, by unaided eye, and through current thermal and night vision sights. The value of awards to date is approximately $116,200,000, with deliveries scheduled to commence in 2025.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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The Company’s suppliers purchase significant amounts of metals, plastics, chemicals, and energy to manufacture the Company’s products. Also, the cost of fuel has a major impact on transportation costs, as do intermodal shipping rates.
The Company’s suppliers purchase metals, plastics, chemicals, and energy to manufacture the Company’s products. Also, the cost of fuel has a major impact on transportation costs, as do intermodal shipping rates.
There is no guarantee that the Company will be aware of all relevant intellectual property in the industry and may be subject to claims of infringement, which could preclude it from producing and selling a product.
The introduction of new products may require substantial expenditures for advertising and marketing to gain marketplace recognition or to license intellectual property. There is no guarantee that the Company will be aware of all relevant intellectual property in the industry and may be subject to claims of infringement, which could preclude it from producing and selling a product.
Various products in the Safety segment are reliant upon up-to-date software, hardware, and the wireless communications infrastructure. The effective operation of various products in the Safety segment depend on software that utilizes data obtained wirelessly via telecommunication network infrastructure.
The effective operation of various products in the Safety segment depend on software that utilizes data obtained wirelessly via telecommunication network infrastructure.
The commercial sales of certain of the Safety segment’s products are dependent on the approval of officials that oversee fire safety at state and local levels for use of the products in areas under their jurisdiction. The inability to obtain the approval of these officials has had and may continue to have an adverse impact on the segment’s operating results.
Regulatory constraints and authorities having jurisdiction has impeded and may continue to impede sales of certain of the segment’s products. The commercial sales of certain of the Safety segment’s products are dependent on the approval of officials that oversee fire safety at state and local levels for use of the products in areas under their jurisdiction.
The ability to develop new products is affected by, among other things, whether the Company can develop and fund technological innovations and successfully anticipate consumer needs and preferences, as well as the intellectual property rights of others. The introduction of new products may require substantial expenditures for advertising and marketing to gain marketplace recognition or to license intellectual property.
The development and introduction of new housewares/small appliance products is very important to the Company’s long-term success. The ability to develop new products is affected by, among other things, whether the Company can develop and fund technological innovations and successfully anticipate consumer needs and preferences, as well as the intellectual property rights of others.
Traditionally, this segment has recognized a substantial portion of its sales during the holiday selling season. Any downturn in the general economy, shift in consumer spending away from its housewares/small appliances, or further deterioration in the financial health of its customer base could adversely affect sales and operating results.
Any downturn in the general economy, shift in consumer spending away from its housewares/small appliances, or further deterioration in the financial health of its customer base could adversely affect sales and operating results. The Company may not be successful in developing and introducing new and improved consumer products.
In addition, international manufacturing is subject to significant risks, including, among others, labor unrest, adverse social, political and economic conditions, interruptions in international shipments, tariffs and other trade barriers, legal and regulatory constraints and fluctuations in currency exchange rates. Although China currently enjoys “most favored nation” trading status with the United States, the U.S.
In addition, international manufacturing is subject to significant risks, including, among others, labor unrest, adverse social, political and economic conditions, interruptions in international shipments, tariffs and other trade barriers, legal and regulatory constraints and fluctuations in currency exchange rates. An increase of tariffs on products imported from China would have a material adverse effect on the Company’s business.
The Housewares/Small Appliance segment is dependent on key customers, and any significant decline in business from one or more of its key customers could adversely affect the segment’s operating results. Although the Company has a long-established relationship with its major customers, it does not have any long-term supply agreements or guaranties of minimum purchases.
An increase of tariffs on products imported from China would have a material adverse effect on the Company’s business. The Housewares/Small Appliance segment is dependent on key customers, and any significant decline in business from one or more of its key customers could adversely affect the segment’s operating results.
As a result, the customers may fail to place anticipated orders, change planned quantities, delay purchases, or change product assortments for reasons beyond the Company’s control, which could prove detrimental to the segment’s operating results. The sales for this segment are highly seasonal and dependent upon the United States retail markets and consumer spending.
Although the Company has a long-established relationship with its major customers, it does not have any long-term supply agreements or guaranties of minimum purchases. As a result, the customers may fail to place anticipated orders, change planned quantities, delay purchases, or change product assortments for reasons beyond the Company’s control, which could prove detrimental to the segment’s operating results.
The Company’s insurance coverage may not be adequate to cover all the costs related to cyber security attacks or disruptions.
The Company’s insurance coverage may not be adequate to cover all the costs related to cyber security attacks or disruptions. On March 1, 2025, the Company experienced a system outage caused by a cybersecurity incident. Upon discovery, the Company activated its incident response team, comprised of internal personnel and external cybersecurity experts retained to assist in addressing the incident.
Removed
Although China currently enjoys “most favored nation” trading status with the United States, the U.S. Government has in the past proposed to revoke that status and to impose higher tariffs on products imported from China, which could have a material adverse effect on the Company’s business.
Added
The sales for this segment are highly seasonal and dependent upon the United States retail markets and consumer spending. Traditionally, this segment has recognized a substantial portion of its sales during the holiday selling season.
Removed
Currently, it maintains penalty tariffs on some imports and in the past has threatened to impose a penalty tariff on all products. The latter, if imposed, would have a material adverse effect on the Company’s business.
Added
The inability to obtain the approval of these officials has had and may continue to have an adverse impact on the segment’s operating results. Various products in the Safety segment are reliant upon up-to-date software, hardware, and the wireless communications infrastructure.
Removed
The Company may not be successful in developing and introducing new and improved consumer products. The development and introduction of new housewares/small appliance products is very important to the Company’s long-term success.
Added
While the full scope of the impact is not yet known, the incident could have the potential to have a material impact on the Company’s financial condition and results of operations. The Company is continuing its forensic investigation and analysis to assess the potential impact.
Removed
Government has in the past proposed to revoke that status and to impose higher tariffs on products imported from China, which could have a material adverse effect on the Company’s business. Currently, it maintains a penalty tariff on some imports and in the past has threatened to impose a penalty tariff on all products.
Removed
The latter, if imposed, would have a material adverse effect on the Company’s business. Regulatory constraints and authorities having jurisdiction has impeded and may continue to impede sales of certain of the segment’s products.
Removed
Some of the Company's systems have in the past experienced security breaches; however, to the best of the Company's knowledge as of the date of this filing, the breaches did not have a material adverse effect on its operating results or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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The Company's Safety segment leases space in Mount Horeb, Wisconsin; Chapel Hill, North Carolina; and Lisle, Illinois. OneEvent Technologies, Inc. leases approximately 7,000 square feet for its operations in Mount Horeb and Rely Innovations, Inc. leases approximately 4,300 and 5,600 square feet for its operations in Chapel Hill, North Carolina and Lisle, Illinois, respectively.
The Company's Safety segment leases space in Mount Horeb, Wisconsin; Chapel Hill, North Carolina; and Lisle, Illinois. OneEvent Technologies, Inc. leases approximately 4,300 square feet for its operations in Mount Horeb and Rely Innovations, Inc. leases approximately 4,300 and 5,600 square feet for its operations in Chapel Hill, North Carolina and Lisle, Illinois, respectively.
As of December 31, 2023, facility expansion plans were in progress for 2024 at several of the Defense segment’s operating locations in anticipation of additional awards.
As of December 31, 2024, facility expansion plans were in progress for 2025 at several of the Defense segment’s operating locations in anticipation of additional awards.
There are two warehousing facilities located in Jackson and Canton, Mississippi used in the Housewares/Small Appliance and Safety segments. The Jackson facility contains 252,000 square feet. The Company also leases a 255,000 square foot building in Canton which is used primarily for warehousing and distribution and some activities for product service functions.
There are two warehousing facilities located in Jackson and Canton, Mississippi used in the Housewares/Small Appliance and Safety segments. The Jackson facility contains 252,000 square feet. The Canton facility contains 255,000 square feet which is used primarily for warehousing and distribution and some activities for product service functions.
The Antigo, Wisconsin facility is comprised of approximately 208,000 square feet, the East Camden, Arkansas operation leases approximately 364,000 square feet, the Clear Lake, South Dakota facility is comprised of approximately 98,000 square feet which includes the Company's 2021 construction of 10,000 square feet of office space, and the Marshall, Texas facility is comprised of approximately 56,500 square feet.
The Antigo, Wisconsin facility is comprised of approximately 212,000 square feet, the East Camden, Arkansas operation leases approximately 384,000 square feet, the Clear Lake, South Dakota facility is comprised of approximately 124,000 square feet which includes the Company's 2021 construction of 10,000 square feet of office space, and the Marshall, Texas facility is comprised of approximately 56,500 square feet.
During 2018, the Company completed construction of a 30,000 square foot office building adjacent to its Eau Claire facility, which it also leases to Drylock Technologies, Ltd. The Company has Defense segment manufacturing facilities located in Janesville and Antigo, Wisconsin; East Camden, Arkansas; Clear Lake, South Dakota; and Marshall, Texas.
During 2018, the Company completed construction of a 30,000 square foot office building adjacent to its Eau Claire facility, which it also leases to Drylock Technologies, Ltd. On January 23, 2025 the Company purchased a 507,000 square foot building located in Nettleton, Mississippi to be used principally in the warehousing and distribution function of the Housewares/Small Appliance segment.
Removed
The Janesville, Wisconsin facility is comprised of approximately 106,000 square feet.
Added
The total cash paid at closing was $19,750,000. The Company has Defense segment manufacturing facilities located in Janesville and Antigo, Wisconsin; East Camden, Arkansas; Clear Lake, South Dakota; and Marshall, Texas. The Janesville, Wisconsin facility is comprised of approximately 106,000 square feet.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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This number does not reflect stockholders who hold their shares in the name of broker dealers or other nominees. During the fourth quarter of 2023, the Company did not purchase any of its equity securities. The information under the heading “Equity Compensation Plan Information,” in the Company’s Proxy Statement for its 2024 Annual Meeting of Stockholders, is incorporated by reference.
This number does not reflect stockholders who hold their shares in the name of broker dealers or other nominees. During the fourth quarter of 2024, the Company did not purchase any of its equity securities. The information under the heading “Equity Compensation Plan Information,” in the Company’s Proxy Statement for its 2025 Annual Meeting of Stockholders, is incorporated by reference.
The line graph and related information set forth under the heading “Performance Graph” in the Company’s 2023 Annual Report is incorporated by reference. 15 Table of Contents
The line graph and related information set forth under the heading “Performance Graph” in the Company’s 2024 Annual Report is incorporated by reference. 15 Table of Contents
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Record of Purchases of Equity Securities None within the fourth quarter of the year ended December 31, 2023. On February 16, 2024, the Company’s Board of Directors announced a regular dividend of $1.00 per share, plus an extra dividend of $3.50.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Record of Purchases of Equity Securities None within the fourth quarter of the year ended December 31, 2024. On February 21, 2025, the Company’s Board of Directors announced a regular dividend of $1.00 per share.
The dividend is payable on March 15, 2024 to the stockholders of record as of March 1, 2024. The common stock of National Presto Industries, Inc. is traded on the New York Stock Exchange under the symbol “NPK”. As of March 1, 2024, there were 217 holders of record of the Company’s common stock.
The dividend is payable on March 17, 2025 to the stockholders of record as of March 4, 2025. The common stock of National Presto Industries, Inc. is traded on the New York Stock Exchange under the symbol “NPK”. As of March 4, 2025, there were 209 holders of record of the Company’s common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Other income increased by $3,581,000 (94%), earnings before provision for income taxes increased by $16,487,000 (64%), and net earnings increased by $13,860,000 (67%). Details concerning these changes can be found in the comments, by segment, below. Net sales of the Housewares/Small Appliance segment decreased by $20,729,000, from $118,347,000 to $97,619,000, or 18%.
Other income increased by $3,581,000 (94%), earnings before provision for income taxes increased by $16,487,000 (64%), and net earnings increased by $13,860,000 (67%). Details concerning these changes can be found, by segment, in the comments below. Net sales of the Housewares/Small Appliance segment decreased by $20,729,000, from $118,347,000 to $97,619,000, or 18%.
This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), has resulted in a presentation of the Company’s Consolidated Balance Sheets that the Company believes understates the true liquidity of the Company’s income portfolio.
This interpretation, which is contrary to the interpretation that the Company’s representative received directly from the FASB (which indicated it would not object to the Company’s classification of variable rate demand notes as cash equivalents), has resulted in a presentation of the Company’s Consolidated Balance Sheets that the Company believes understates the true liquidity of the Company’s income portfolio.
The bulk of its marketable securities are invested in the variable rate demand notes described above, in municipal bonds that are pre-refunded with escrowed U.S. Treasuries, and certificates of deposit. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The Company's principal commitments consist of purchase and lease obligations.
The bulk of its marketable securities have been invested in the variable rate demand notes described above, in municipal bonds that are pre-refunded with escrowed U.S. Treasuries, and certificates of deposit. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings. The Company's principal commitments consist of purchase and lease obligations.
Backlog is defined as the value of orders from the customer less the amount of sales recognized against the orders. It is anticipated that the backlog will be produced and shipped during an 18- to 36-month period. Critical accounting ESTIMATES The Company's discussion and analysis of financial condition and results of operations are based upon its Consolidated Financial Statements.
Backlog is defined as the value of orders from the customer less the amount of sales recognized against the orders. It is anticipated that the backlog will be produced and shipped during an 18- to 42-month period. Critical accounting ESTIMATES The Company's discussion and analysis of financial condition and results of operations are based upon its Consolidated Financial Statements.
Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings. 2023 COMPARED TO 2022 Readers are directed to Note L, “Business Segments,” to the Company’s Consolidated Financial Statements for data on the financial results of the Company’s three business segments for the years ended December 31, 2023 and 2022.
Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings. 2024 COMPARED TO 2023 Readers are directed to Note L, “Business Segments,” to the Company’s Consolidated Financial Statements for data on the financial results of the Company’s three business segments for the years ended December 31, 2024 and 2023.
Forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, elsewhere in this Form 10-K, in the Company’s 2023 Annual Report to Shareholders, in the Proxy Statement for the annual meeting to be held May 21, 2024, and in the Company’s press releases and oral statements made with the approval of an authorized executive officer are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, elsewhere in this Form 10-K, in the Company’s 2024 Annual Report to Shareholders, in the Proxy Statement for the annual meeting to be held May 20, 2025, and in the Company’s press releases and oral statements made with the approval of an authorized executive officer are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Other income increased $3,581,000, which was primarily attributable to higher interest earned with higher yields, partially offset by a reduced portfolio of marketable securities. Earnings before provision for income taxes increased $16,487,000 from $25,944,000 to $42,431,000.
Other income increased $3,581,000, which was primarily attributable to higher interest earned with higher yields, partially offset by a reduced portfolio of marketable securities. 18 Table of Contents Earnings before provision for income taxes increased $16,487,000 from $25,944,000 to $42,431,000.
NEW ACCOUNTING PRONOUNCEMENTS Please refer to Note A(18) to the Company’s Consolidated Financial Statements for information related to the effect of adopting new accounting pronouncements on the Company’s Consolidated Financial Statements.
NEW ACCOUNTING PRONOUNCEMENTS Please refer to Note A(17) to the Company’s Consolidated Financial Statements for information related to the effect of adopting new accounting pronouncements on the Company’s Consolidated Financial Statements.
The principal factors behind the decrease in cash provided can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows.
The principal factors behind the increase in cash provided can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows.
The impairment test for goodwill requires the determination of fair value of the reporting unit. The Company uses multiples of earnings before interest, taxes, depreciation, and amortization ("EBITDA"), sales, and discounted cash flow models, which are described above, to determine the reporting unit's fair value, as appropriate.
The impairment test for goodwill requires the determination of fair value of the reporting unit. The Company uses multiples of earnings before interest, taxes, depreciation, and amortization ("EBITDA"), sales, and discounted cash flow models, which are described above, to determine the reporting unit's fair value, as appropriate. The Company also utilizes qualitative analyses to assess goodwill impairment.
The Company has substantial liquidity in the form of cash and cash equivalents and marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means.
The Company has sufficient liquidity in the form of cash and cash equivalents and marketable securities and credit facilities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means.
Lease obligations are described in Note M - Leases to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. 2022 COMPARED TO 2021 Cash provided by operating activities was $8,768,000 during 2022 as compared to $34,688,000 during 2021.
Lease obligations are described in Note M - Leases to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. 2023 COMPARED TO 2022 Cash provided by operating activities was $45,389,000 during 2023 as compared to $8,768,000 during 2022.
LIQUIDITY AND CAPITAL RESOURCES 2023 COMPARED TO 2022 Cash provided by operating activities was $45,389,000 during 2023 as compared to $8,768,000 during 2022. The principal factors behind the increase in cash provided can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows.
LIQUIDITY AND CAPITAL RESOURCES 2024 COMPARED TO 2023 Cash used in operating activities was $53,426,000 during 2024 as compared to $45,389,000 provided by operating activities during 2023. The principal factors behind the increase in cash used can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows.
Purchase obligations include outstanding purchase orders issued to the Company's Housewares and Safety segments' manufacturers in the Orient and to material suppliers and contractors in the Defense segment, and as of December 31, 2023 amounted to approximately $343,580,000.
Purchase obligations include outstanding purchase orders issued to the Company's Housewares and Safety segments' manufacturers in the Orient and to material suppliers and contractors in the Defense segment, and as of December 31, 2024 amounted to approximately $346,143,000.
The provision for income taxes increased from $5,245,000 to $7,872,000, which resulted in an effective income tax rate of 19% and 20% for the years ended December 31, 2023 and 2022, respectively.
The provision for income taxes increased from $5,245,000 to $7,872,000, which resulted in an effective income tax rate of 19% and 20% for the years ended December 31, 2023 and 2022, respectively. Net earnings increased $13,860,000 from $20,699,000 to $34,559,000.
The Company’s current ratio was 6.1 to 1.0 at December 31, 2022 and 6.6 to 1.0 at December 31, 2021. 20 Table of Contents DEFENSE SEGMENT BACKLOG The Company’s Defense segment contract backlog was approximately $564,005,000 at December 31, 2023, and $505,069,000 at December 31, 2022.
The Company’s current ratio was 5.0 to 1.0 at December 31, 2023 and 6.1 to 1.0 at December 31, 2022. 20 Table of Contents DEFENSE SEGMENT BACKLOG The Company’s Defense segment contract backlog was approximately $1,085,612,000 at December 31, 2024, and $564,005,000 at December 31, 2023.
Net earnings increased $13,860,000 from $20,699,000 to $34,559,000. 17 Table of Contents 2022 COMPARED TO 2021 Readers are directed to Note L, “Business Segments,” to the Company’s Consolidated Financial Statements for data on the financial results of the Company’s three business segments for the years ended December 31, 2022 and 2021.
Net earnings increased $6,901,000 from $34,559,000 to $41,460,000. 17 Table of Contents 2023 COMPARED TO 2022 Readers are directed to Note L, “Business Segments,” to the Company’s Consolidated Financial Statements for data on the financial results of the Company’s three business segments for the years ended December 31, 2023 and 2022.
Cash flows from financing activities for 2022 and 2021 primarily differed as a result of the $1.75 per share decrease in the extra dividend paid during these years. Cash flows for both years also reflected the proceeds from the sale of treasury stock to a Company sponsored retirement plan.
Cash flows from financing activities for 2024 and 2023 primarily differed as a result of the $0.50 per share increase in the extra dividend paid during these years. Cash flows for both years also reflected the proceeds from the sale of treasury stock to a Company sponsored retirement plan.
The Company reviewed the development and selection of the critical accounting policies and believes the following are the most critical accounting policies that could have an effect on the Company’s reported results as they involve the use of significant estimates and assumptions as described above.
The Company reviewed the development and selection of the critical accounting policies and believes the following is the most critical accounting policy that could have a material effect on the Company’s reported results as it involves the use of significant estimates and assumptions as described above.
As a result of the foregoing factors, cash and cash equivalents increased in 2023 by $16,946,000 to $87,657,000. 19 Table of Contents Working capital increased by $15,100,000 to $288,091,000 at December 31, 2023 for the reasons stated above. The Company’s current ratio was 5.0 to 1.0 at December 31, 2023 and 6.1 to 1.0 at December 31, 2022.
As a result of the foregoing factors, cash and cash equivalents increased in 2023 by $16,946,000 to $87,657,000. Working capital increased by $15,100,000 to $288,091,000 at December 31, 2023 for the reasons stated above.
As of December 31, 2022 and 2021, $3,638,000 and $25,427,000, respectively, of variable rate demand notes are classified as marketable securities. These notes have structural features that allow the Company to tender them at par plus interest within any 7-day period for cash to the notes’ trustees or remarketers and thus provide the liquidity of cash equivalents.
These notes have structural features that allow the Company to tender them at par plus interest within any 7-day period for cash to the notes’ trustees or remarketers and thus provide the liquidity of cash equivalents.
This increase in operating losses was offset by the absence of the prior year's write-downs of inventory and materials to reflect realizable values of $1,822,000, leading to the comparative increase in gross margin of $517,000. 16 Table of Contents Selling and general expenses for the Housewares/Small Appliance segment increased $355,000, primarily reflecting increased compensation/payroll costs of $503,000, and changes to accrual levels, which included increased bad debt reserves of $285,000 and decreased legal and professional fees of $534,000.
Selling and general expenses for the Housewares/Small Appliance segment increased $355,000, primarily reflecting increased compensation/payroll costs of $503,000, and changes to accrual levels, which included increased bad debt reserves of $285,000 and decreased legal and professional fees of $534,000.
See Note P to the Consolidated Financial Statements. Impairment – goodwill and intangible assets increased as a result of impairments of goodwill and technology intangibles in the Safety segment. See Note A (10) and Note A (11) to the Consolidated Financial Statements. The above items were responsible for the change in operating profit from continuing operations.
Intangibles amortization decreased as a result of the absence of the prior year's amortization of intellectual property intangibles from the acquisition of Knox Safety, Inc. See Note P to the Company's Consolidated Financial Statements. The above items were responsible for the change in operating profit from continuing operations.
Impairment and Valuation of Long-lived Assets and Goodwill The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Long-lived assets consist of property, plant and equipment and intangible assets, including the value of contracts/customer relationships, trademarks and safety certifications, trade secrets, and technology software.
Long-lived assets consist of property, plant and equipment and intangible assets, including the value of contracts/customer relationships, trademarks and safety certifications, trade secrets, and technology software.
Of particular note during 2021 were net earnings of $25,654,000, which included a non-cash provision for doubtful notes and accounts receivable of $7,665,000, total non-cash depreciation and amortization expenses of $2,978,000, a non-cash deferred income tax benefit of $1,612,000, and net decreases in deposits made to vendors included in other assets and current assets and accounts receivable.
Of particular note during 2023 were net earnings of $34,559,000, which included total non-cash depreciation and amortization of $6,007,000, decreases in accounts receivable levels and deposits made to vendors (included in other assets and current assets), and a net increase in payable and accrual levels.
These critical accounting policies and estimates have been reviewed with the Audit Committee of the Board of Directors. See Note A - Summary of Significant Accounting Policies to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more detailed information regarding the Company's critical accounting policies.
See Note A - Summary of Significant Accounting Policies to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more detailed information regarding the Company's critical accounting policies. 21 Table of Contents Impairment and Valuation of Long-lived Assets and Goodwill The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.
These decreases were partially offset by higher legal and professional expenses of $567,000 and compensation expenses of $175,000. Defense segment selling and general expenses increased $680,000, primarily due to increased legal and professional expenses of $302,000, increased compensation/payroll costs of $209,000, and increased marketing costs of $121,000.
Defense segment selling and general expenses increased $1,530,000, primarily due to increased personnel costs of $1,609,000, partially offset by decreased legal and professional expenses of $156,000.
Defense gross profit decreased $18,567,000 from $61,205,000 (26% of sales) to $42,638,000 (21% of sales), primarily reflecting the decrease in sales mentioned above, a less favorable mix, inefficiencies from labor shortages, delays in securing materials and other supply chain issues. Due to the startup nature of the businesses in the Safety segment, gross margins were negative in both years.
Defense gross profit increased $6,170,000 from $52,003,000 (22% of sales) in 2023 to $58,173,000 (21% of sales) in 2024, primarily reflecting the increase in sales mentioned above. Due to the startup nature of the businesses in the Safety segment, gross margins were negative in both years.
As a result of the foregoing factors, cash and cash equivalents decreased in 2022 by $39,094,000 to $70,711,000. Working capital decreased by $21,903,000 to $272,991,000 at December 31, 2022 for the reasons stated above.
In addition, the Company drew on and repaid its line of credit during 2024, incurring interest expense of $2,000. As a result of the foregoing factors, cash and cash equivalents decreased in 2024 by $69,994,000 to $17,663,000. 19 Table of Contents Working capital increased by $4,134,000 to $292,225,000 at December 31, 2024 for the reasons stated above.
Other income increased by $1,387,000 (57%), earnings before provision for income taxes decreased by $6,515,000 (20%), and net earnings decreased by $4,955,000 (19%). Details concerning these changes can be found in the comments by segment below. Housewares/Small Appliance net sales increased by $2,424,000, from $115,924,000 to $118,348,000, or 2%, primarily attributable to an increase in pricing and changes in mix.
Details concerning these changes can be found, by segment, in the comments below. Net sales of the Housewares/Small Appliance segment increased by $5,180,000, from $97,619,000 to $102,799,000, or 5%, primarily attributable to the increase in units shipped. Net sales of the Defense segment increased by $42,322,000, from $241,703,000 to $284,025,000, or 18%, reflecting an increase in units shipped.
Of particular note during 2022 were net earnings of $20,699,000, which included a non-cash loss on impairment of goodwill and intangible assets of $5,295,000 and total non-cash depreciation and amortization expenses of $3,347,000. These were partially offset by a non-cash deferred income tax benefit of $2,311,000 and increases in accounts receivable and inventory levels.
Of particular note during 2024 was net earnings of $41,460,000, which included total non-cash depreciation and amortization of $5,046,000 and deferred income tax benefit of $4,528,000. This was augmented by decreases in deposits made to vendors (included in other assets and current assets) and a net increase in payable and accrual levels.
These were partially offset by an increase in inventory levels and a net decrease in payable and accrual levels. Net cash used in investing activities was $16,436,000 during 2022 as compared to $32,548,000 provided by investing activities during 2021. During 2022 the Company acquired two businesses for $24,683,000 net of cash acquired, and purchased plant and equipment for $1,030,000.
These were partially offset by non-cash deferred income tax benefit of $1,190,000 and an increase in inventory levels. Net cash provided by investing activities was $14,965,000 during 2024 as compared to $447,000 used in investing activities during 2023. Of note during 2024 were net sales and maturities of marketable securities of $21,459,000 and proceeds from a note receivable of $1,037,000.
The provision for income taxes decreased from $6,805,000 to $5,245,000, which resulted in an effective income tax rate of 20% and 21% for the years ended December 31, 2022 and 2021, respectively. Net earnings decreased $4,955,000 from $25,654,000 to $20,699,000.
Other income decreased $1,941,000, which was primarily attributable to a reduced portfolio of marketable securities. Earnings before provision for income taxes increased $8,239,000 from $42,431,000 to $50,670,000. The provision for income taxes increased from $7,872,000 to $9,210,000, which resulted in an effective income tax rate of 18% and 19% for the years ended December 31, 2024 and 2023, respectively.
Removed
On a consolidated basis, sales decreased by $34,154,000 (10%), gross profit decreased by $9,271,000 (14%), selling and general expense decreased by $7,032,000 (21%), intangibles amortization increased by $368,000 (172%) and Impairments - goodwill and intangible assets increased $5,295,000.
Added
On a consolidated basis, sales increased by $47,316,000 (14%), gross profit increased by $11,114,000 (17%), selling and general expense increased by $1,054,000 (3%), and intangibles amortization decreased by $120,000 (7%). Other income decreased by $1,941,000 (26%), earnings before provision for income taxes increased by $8,239,000 (19%), and net earnings increased by $6,901,000 (20%).
Removed
Approximately 85% of the increase from price and mix changes were offset by a decrease in units shipped. The increase was further offset by the absence of the prior year's partial reversal of $1,530,000 of a reserve for estimated refunds related to a product recall of indoor smokers.
Added
Gross profit of the Housewares/Small Appliance segment increased $5,611,000 from $19,867,000 (20% of sales) in 2023 to $25,478,000 (25% of sales) in 2024, primarily reflecting the increase in sales mentioned above, augmented by an improved product mix and a favorable LIFO inventory adjustment.
Removed
Defense net sales decreased by $37,031,000, from $239,514,000 to $202,483,000, or 15%, reflecting a decrease in units shipped.
Added
The comparative decrease in gross margins of $667,000 were primarily due to increased product development and testing. 16 Table of Contents Selling and general expenses for the Housewares/Small Appliance segment increased $361,000, primarily reflecting increased personnel costs of $654,000 and accrual levels for self insurance of $339,000, partially offset by changes to accrual levels for bad debt of $571,000.
Removed
Housewares/Small Appliance gross profit increased $7,448,000 from $9,974,000 (9% of sales) in 2021 to $17,422,000 (15% of sales) in 2022, primarily reflecting the changes in pricing and mix mentioned above, augmented by decreased ocean cargo and inland freight costs, partially offset by the decrease in unit shipments, as well as adjustments related to obsolete or excess inventory levels of $3,613,000, and decreases in standard unit costs of $3,108,000 that were not offset by decreases in the segment's LIFO inventory reserve.
Added
Safety segment selling and general expenses decreased $837,000, primarily reflecting decreased personnel costs of $935,000 and legal and professional expenses of $322,000, partially offset by the absence of the prior year's gain on the sale of Rusoh, Inc. of $351,000. See Notes L to the Company's Consolidated Financial Statements.
Removed
A reduction in the amount of write-downs of inventory and materials at Rusoh, Inc. to reflect realizable values contributed to the comparative increase in gross margin of $1,848,000. Selling and general expenses for the Housewares/Small Appliance segment decreased $446,000, primarily reflecting lower health and accident expenses of $699,000, product liability costs of $383,000, and insurance costs of $164,000.
Added
This increase in operating losses was offset by the absence of the prior year's write-downs of inventory and materials to reflect realizable values of $1,822,000, leading to the comparative increase in gross margin of $517,000.
Removed
Safety segment selling and general expenses decreased $7,267,000, primarily reflecting the absence of prior year impairment of $7,615,000 of notes receivable and related interest held by Rusoh, Inc., augmented by the bargain purchase gain of $492,000 recognized upon the acquisition of Knox Safety, Inc. See Note P.
Added
The combination of these factors was more than offset by increases in inventory and accounts receivable levels.
Removed
These were offset in part by increased compensation expenses of $311,000 and legal and professional expenses of $383,000, both largely related to the acquisition of Knox Safety, Inc. Intangibles amortization increased as a result of the acquisition of contracts/customer relationship and intellectual property intangibles in the acquisitions of Knox Safety, Inc. and Woodlawn Manufacturing, Ltd.
Added
These were partially offset by purchases of plant and equipment of $7,531,000. Of note during 2023 were proceeds from sale of subsidiary of $2,000,000, net purchases of marketable securities of $1,466,000 and purchases of plant and equipment of $1,840,000.
Removed
Other income increased $1,387,000, which was primarily attributable to higher interest earned with higher yields, offset in part by a reduced portfolio of marketable securities. 18 Table of Contents Earnings before provision for income taxes decreased $6,515,000 from $32,459,000 to $25,944,000.
Added
As of December 31, 2024, there were no variable rate demand notes classified as marketable securities. As of December 31, 2023, $5,123,000 of variable rate demand notes are classified as marketable securities.
Removed
These were partially offset by net sales and maturities of marketable securities of $9,171,000. Of note during 2021 were net sales and maturities of marketable securities of $34,621,000 offset by the purchase of plant and equipment of $2,866,000, which primarily included expenditures to augment the Company's production facilities in the Defense segment.
Added
The Company’s current ratio was 4.9 to 1.0 at December 31, 2024 and 5.0 to 1.0 at December 31, 2023.
Removed
Inventories New Housewares/Small Appliance and Safety product introductions are an important part of the Company’s sales. In the case of the Housewares/Small Appliance segment, the introductions are important to offset the morbidity rate of other products and/or the effect of lowered acceptance of seasonal products due to weather conditions.
Added
This critical accounting policy and estimate have been reviewed with the Audit Committee of the Board of Directors.
Removed
New products entail unusual risks and have occasionally, in the past, resulted in losses related to obsolete or excess inventory as a result of low or diminishing demand for a product. The Housewares/Small Appliance segment recorded impairments related to such losses of $1,216,000 and $3,613,000 in 2023 and 2022, respectively.
Removed
The Safety segment recorded impairments of $1,822,000 and $3,090,000 in 2022 and 2021, respectively, largely due to aged Rusoh extinguisher inventory. Fire safety regulations require fire extinguishers to be replaced or torn down every 12 years after the date of manufacture. There were no other obsolescence issues that had a material effect during the current year.
Removed
In the future should product demand issues arise, the Company may incur losses related to the obsolescence of the related inventory. Inventory risk for the Company’s Defense segment is not deemed to be significant, as products are largely built pursuant to customers’ specific orders.
Removed
Self-Insured Product Liability & Health Insurance The Company is subject to product liability claims in the normal course of business and is self-insured for health care costs, although it does carry stop loss and other insurance to cover claims once a health care claim reaches a specified threshold.
Removed
The Company’s insurance coverage varies from policy year to policy year, and there are typically limits on all types of insurance coverage, which also vary from policy year to policy year. Accordingly, the Company records an accrual for known claims and incurred but not reported claims, including an estimate for related legal fees in the Company’s Consolidated Financial Statements.
Removed
The Company utilizes historical trends and other analysis to assist in determining the appropriate accrual. There are no known claims that would have a material adverse impact on the Company beyond the reserve levels that have been accrued and recorded on the Company’s books and records.
Removed
An increase in the number or magnitude of claims could have a material impact on the Company’s financial condition and results of operations. 21 Table of Contents Revenues Sales are recorded net of discounts and returns for the Housewares/Small Appliance segment. Sales discounts and returns are key aspects of variable consideration, which is a significant estimate utilized in revenue recognition.
Removed
Sales returns pertain primarily to warranty returns, returns of seasonal items, and returns of those newly introduced products sold with a return privilege. The calculation of warranty returns is based in large part on historical data, while seasonal and new product returns are primarily developed using customer provided information.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed7 unchanged
Other than a failure of a major U.S. bank, there are no known risks of which the Company is aware that relate to these notes in the current market. The balance of the Company’s investments is held primarily in fixed rate municipal bonds and certificates of deposits with an average life of 0.8 years.
Other than a failure of a major U.S. bank, there are no known risks of which the Company is aware that relate to these notes in the current market. The balance of the Company’s investments is held primarily in fixed rate municipal bonds and certificates of deposits with an average life of 0.7 years.
Based on the accounting profession’s interpretation of cash equivalents under FASB ASC 230, the Company’s seven-day variable rate demand notes are classified as marketable securities rather than as cash equivalents.
Based on the accounting profession’s interpretation of cash equivalents under FASB ASC 230, the Company’s seven-day variable rate demand notes have been classified as marketable securities rather than as cash equivalents.