Annual report pursuant to Section 13 and 15(d)

Note 10 - Segmented Information

v3.7.0.1
Note 10 - Segmented Information
 12 Months Ended
Jan. 01, 2017
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
10.
Segmented information
 
General description
 
The Company is operated and managed geographically and has production facilities in the United States, Mexico and China. The Company utilizes each reportable segment’s site contribution (site revenues minus operating expenses, excluding unrealized foreign exchange gain (loss) on unsettled forward foreign exchange contracts, corporate allocations and restructuring expenses) to monitor reportable segment performance. Site contribution is utilized by the chief operating decision-maker (defined as the Chief Executive Officer) as the indicator of reportable segment performance, as it reflects costs which our operating site management is directly responsible for. Intersegment adjustments reflect intersegment sales that are generally recorded at prices that approximate arm’s-length transactions. In assessing the performance of the reportable segments, management attributes site revenue to the reportable segment that ships the product to the customer, irrespective of the product’s destination. Information about the reportable segments is as follows:
 
 
 
 
Year ended
January
1
,
201
7
 
 
Year ended
January 3,
2016
 
 
Year ended
December 28,
2014
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $
102,546
     $
142,738
     $
154,064
  
US
    
21,703
      
33,088
      
46,652
  
China
    
52,745
      
55,155
      
57,909
  
Total
   $
176,994
     $
230,981
     $
258,625
  
Intersegment revenue
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $
(530
)
   $
(488
)
   $
(730
  
US
    
(442
)
    
(286
)
    
(16,775
)
China
    
(8,154
)
    
(9,591
)
    
(12,543
)
Total
   $
(9,126
)
   $
(10,365
)
   $
(30,048
)
Net external revenue
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $
102,016
     $
142,250
     $
153,334
  
US
    
21,261
      
32,802
      
29,877
  
China
    
44,591
      
45,564
      
45,366
  
Total segment revenue (which also equals consolidated revenue)
   $
167,868
     $
220,616
     $
228,577
  
                         
Site Contribution
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $
8,380
     $
9,784
     $
8,860
  
US
    
(1,327
 )    
913
      
2,583
  
China
    
4,196
      
3,099
      
4,613
  
Total
   $
11,249
     $
13,796
     $
16,056
  
                         
                         
                         
Corporate allocations
    
11,061
      
12,560
      
13,231
  
Unrealized foreign exchange (gain) loss on unsettled forward exchange contracts
    
(831
 )    
(616
)
    
1,822
  
Restructuring charges
   
176
      
—
      
1,366
  
Interest expense
    
788
      
1,183
      
1,693
  
Earnings (loss) before income taxes
   $
55
     $
669
     $
(2,056
 )
 
Capital expenditures:
 
The following table contains additions including those acquired through capital leases, to property, plant and equipment for
2016,
2015
and
2014:
 
 
 
Year ended
January
1
,
201
7
 
 
Year ended
January 3,
2016
 
 
Year ended
December 28,
2014
 
Mexico
   $
771
     $
735
     $
2,962
  
China
    
694
      
1,048
      
140
  
US
    
550
      
857
      
361
  
Segment total
    
2,015
      
2,640
      
3,463
  
Corporate and other
    
185
      
188
      
169
  
Total
   $
2,200
     $
2,828
    $
3,632
 
 
Segment assets:
 
 
 
January
1
,
201
7
 
 
January 3,
2016
 
Property, plant and equipment (a)
 
 
 
 
 
 
 
 
Mexico
   $
8,858
     $
10,674
  
US
    
2,314
      
2,217
  
China
    
3,046
      
3,255
  
Segment total
    
14,218
      
16,146
  
Corporate and other
    
219
      
297
  
Total
   $
14,437
     $
16,443
  
                 
Total segment assets
 
 
 
 
 
 
 
 
Mexico
   $
42,275
     $
45,637
  
US
    
9,482
      
11,069
  
China
    
15,489
      
23,523
  
Segment total
    
67,246
      
80,229
  
Corporate and other
    
1,758
      
1,744
  
Total
   $
69,004
     $
81,973
  
  
(a)
Property, plant and equipment information is based on the principal location of the asset.
 
Geographic revenues:
 
The following table contains geographic revenues based on our customer invoicing location:
 
 
 
Year ended
January
1
,
2017
 
 
Year ended
January 3,
2016
 
 
Year ended
December 28,
2014
 
US
   $
114,850
     $
167,229
     $
195,465
  
Canada
    
37,845
      
31,275
      
25,066
  
Europe
    
1,833
      
4,481
      
2,067
  
Asia
    
6,832
      
3,336
      
5,922
  
Africa
    
6,508
      
14,295
      
57
  
Total
   $
167,868
     $
220,616
     $
228,577
  
 
Significant customers and concentration of credit risk
 
Sales of the Company’s products are concentrated among specific customers in the same industry. The Company requires collateral only from new customers with insufficient credit until such time as credit insurance can be obtained. The Company is subject to concentrations of credit risk in trade receivables and mitigates this risk through ongoing credit evaluation of customers and maintaining credit insurance. The Company considers concentrations of credit risk in establishing the allowance for doubtful accounts and believes the recorded allowances are adequate.
 
The Company expects to continue to depend upon a relatively small number of customers for a significant percentage of its revenue. In addition to having a limited number of customers, the Company manufactures a limited number of products for each customer. If the Company loses any of its largest customers or any product line manufactured for
one
of its largest customers, it could experience a significant reduction in revenue. Also, the insolvency of
one
or more of its largest customers or the inability of
one
or more of its largest customers to pay for its orders could decrease future revenue. As many costs and operating expenses are relatively fixed, a reduction in net revenue can decrease profit margins and adversely affect business, financial condition and results of operations.
 
During the period ended
January
1,
2017,
two
customers individually comprised
16%
and
12%
of revenue from across all geographic segments. At
January
1,
2017,
one
customer represented
12%
of the Company’s trade accounts receivable.
 
During the period ended
January
3,
2016,
two
customers individually comprised
13%
and
11%
of revenue from across all geographic segments. At
January
3,
2016,
one
customer represented
17%
of the Company’s trade accounts receivable.
 
During the period ended
December
28,
2014
three
customers individually comprised
31%,
12%
and
10%
of revenue from across all geographic segments. At
December
28,
2014,
four
customers represented
21%,
15%,
14%
and
12%
of the Company’s trade accounts receivable.