Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Segmented Information

v3.4.0.3
Note 8 - Segmented Information
 3 Months Ended
Apr. 03, 2016
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
8
.
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 reportable segment’s site contribution (site revenues minus operating expenses, excluding unrealized foreign exchange, corporate allocations and restructuring expenses) to monitor reportable segment performance. Site contribution is utilized by the chief operating decision-maker 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:
 
 
 
Three months ended
 
 
 
April 3,
2016
 
 
March 29, 2015
 
Revenues
 
 
 
 
 
 
 
 
Mexico
   $ 26,792     $ 35,607  
China
     11,657       9,342  
U.S.
     5,958       6,578  
Total
   $ 44,407     $ 51,527  
Intersegment revenue
 
 
 
 
 
 
 
 
Mexico
   $ (116
)
   $ (105
)
China
     (2,309
)
     (2,664
)
U.S.
     (62
)
     (44
)
Total
   $ (2,487
)
   $ (2,813
)
Net external revenue
 
 
 
 
 
 
 
 
Mexico
   $ 26,676     $ 35,502  
China
     9,348       6,678  
U.S.
     5,896       6,534  
Total segment revenue (which also equals consolidated revenue)
   $ 41,920     $ 48,714  
Site Contribution
 
 
 
 
 
 
 
 
Mexico
   $ 2,528     $ 2,896  
China
     615       305  
U.S.
     32       (6
)
Total
   $ 3,175     $ 3,195  
Corporate allocations
     2,889       2,914  
Unrealized foreign exchange (gain) loss on unsettled forward exchange contracts
     (1,046 )     318  
Interest
     231       310  
Restructuring charges
     176       —  
Income (loss) before income taxes
   $ 925     $ (347
)
 
 
Additions to property, plant and equipment
 
The following table contains additions, including those acquired through capital leases, to property, plant and equipment for the three months ended:
 
 
 
Three months ended
 
 
 
April 3,
2016
 
 
March 29,
2015
 
Mexico
   $ 181     $ 83  
China
     159       375  
U.S.
     237       6  
Segment total
     577       464  
Corporate and other
     56       26  
Total
   $ 633     $ 490  
 
 
 
 
Property, plant and equipment
(a)
 
 
 
April 3,
2016
 
 
January 3, 2016
 
Mexico
   $ 10,220     $ 10,674  
China
     3,194       2,217  
U.S
     2,292       3,255  
Corporate and other
     306       297  
Segment assets
   $ 16,012     $ 16,443  
 
 
(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 the product shipment destination, for the three months ended April 3, 2016 and March 29, 2015:
 
 
 
Three months ended
 
 
 
April 3,
2016
 
 
March 29,
2015
 
U.S.
   $ 29,184     $ 40,975  
Canada
     8,964       5,593  
Europe
     791       1,331  
China
     1,111       732  
Africa
     1,870       83  
Total
   $ 41,920     $ 48,714  
 
 
Significant customers and concentration of credit risk
 
Sales of the Company’s products are concentrated in certain cases among specific customers in the same industry. The Company is subject to concentrations of credit risk in trade receivables. 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 larger customers or any product line manufactured for one of its larger customers, it could experience a significant reduction in revenue. Also, the insolvency of one or more of its larger customers or the inability of one or more of its larger customers to pay for its orders could decrease revenue. As many costs and operating expenses are relatively fixed, a reduction in net revenue can decrease profit margins and adversely affect the business, financial condition and results of operations.
 
During the three months ended April 3, 2016, two customers exceeded 10% of total revenues, comprising 14.2% and 14.0%, respectively of total revenue across all geographic segments. For the three months ended March 29, 2015, three customers exceeded 10% of total revenues, comprising 21.4%, 17.6% and 10.8%.
 
As of April 3, 2016, the top two customers represented 12.0% and 4.7%, respectively (January 3, 2016, 16.8% and 3.8% respectively) of the Company’s trade accounts receivable.