Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Segmented Information

v3.5.0.2
Note 8 - Segmented Information
 6 Months Ended
Jul. 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 gain (loss) on unsettled forward exchange contracts, 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
 
 
Six months ended
 
 
 
July 3,
2016
 
 
June 28,
2015
 
 
July 3,
2016
 
 
June 28,
2015
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ 25,672     $ 39,155     $ 52,464     $ 74,762  
China
     15,100       12,150       26,757       21,492  
U.S.
     4,722       9,008       10,680       15,586  
Total
   $ 45,494     $ 60,313     $ 89,901     $ 111,840  
                                 
Intersegment revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ (139
)
   $ (105
)
   $ (255
)
   $ (210
)
China
     (1,535
)
     (2,426
)
     (3,844
)
     (5,090
)
U.S.
     (205
)
     (41
)
     (267
)
     (85
)
Total
   $ (1,879
)
   $ (2,572
)
   $ (4,366
)
   $ (5,385
)
                                 
Net external revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ 25,533     $ 39,050     $ 52,209     $ 74,552  
China
     13,565       9,724       22,913       16,402  
U.S.
     4,517       8,967       10,413       15,501  
Total segment revenue (which also equals consolidated revenue)
   $ 43,615     $ 57,741     $ 85,535     $ 106,455  
                                 
Site Contribution
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ 2,343     $ 2,779     $ 4,871     $ 5,675  
China
     550       664       1,165       969  
U.S.
     (472 )     491       (440 )     485  
Total
   $ 2,421     $ 3,934     $ 5,596     $ 7,129  
                                 
Corporate allocations
     2,645       3,257       5,534       6,171  
Unrealized foreign exchange gain (loss) on unsettled forward exchange contracts
     47       (789
)
     (999
)
     (471
)
Interest
     203       304       434       614  
Restructuring charges
     —       —       176       —  
Earnings (loss) before income taxes
   $ (474 )   $ 1,162     $ 451     $ 815  
 
Additions to property, plant and equipment
 
The following table contains additions to property, plant and equipment including those acquired through capital leases for the three and six months ended July 3, 2016 and June 28, 2015:
 
 
 
Three months ended
 
 
Six months ended
 
 
 
July 3,
2016
 
 
June 28,
2015
 
 
July 3,
2016
 
 
June 28,
2015
 
Mexico
   $ 153     $ 313     $ 334     $ 396  
China
     321       252       480       627  
U.S.
     54       379       291       385  
Segment total
     528       944       1,105       1,408  
Corporate and other
     115       13       171       39  
Total
   $ 643     $ 957     $ 1,276     $ 1,447  
 
 
Property, plant and equipment
(a)
 
 
 
July
3, 2016
 
 
January 3, 2016
 
Mexico
   $ 9,505     $ 10,674  
China
     3,290       2,217  
U.S
     2,469       3,255  
Corporate and other
     370       297  
Segment assets
   $ 15,634     $ 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 and six months ended July 3, 2016 and June 28, 2015:
 
 
 
Three months ended
 
 
Six months ended
 
 
 
July 3,
2016
 
 
June 28,
2015
 
 
July 3,
2016
 
 
June 28,
2015
 
U.S.
   $ 25,194     $ 40,807     $ 54,378     $ 86,393  
Canada
     14,736       6,164       23,700       11,757  
Europe
     114       5,641       905       2,361  
China
     1,541       818       2,652       1,550  
Africa
     2,030       4,311       3,900       4,394  
Total
   $ 43,615     $ 57,741     $ 85,535     $ 106,455  
 
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 July 3, 2016, two customers exceeded 10% of total revenues representing 22.1% and 17.6% respectively (June 28, 2015 – two customers represented 17.1% and 11.3%) of total revenue for the second quarter of 2016. During the six months ended July 3, 2016 two customers individually comprised 18.2% and 15.8% (June 28, 2015 – two customers individually comprised 19.1% and 14.2% ) of total revenue for the six months ended July 3, 2016.
 
As of July 3, 2016, these two customers represented 28.7% and 5.1% respectively, (January 3, 2016, 16.8% and 3.8% respectively) of the Company’s accounts receivable.