Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Segmented Information

v3.5.0.2
Note 8 - Segmented Information
 9 Months Ended
Oct. 02, 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
 
 
Nine months ended
 
 
 
October 2,
2016
 
 
September
27, 2015
 
 
October 2,
2016
 
 
September
27, 2015
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ 24,857     $ 34,753     $ 77,321     $ 109,515  
China
     15,134       12,055       41,891       33,547  
U.S.
     5,009       9,218       15,689       24,804  
Total
   $ 45,000     $ 56,026     $ 134,901     $ 167,866  
                                 
Intersegment revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ (141
)
   $ (126
)
   $ (396
)
   $ (336
)
China
     (2,108
)
     (2,361
)
     (5,952
)
     (7,451
)
U.S.
     (68
)
     (114
)
     (335
)
     (199
)
Total
   $ (2,317
)
   $ (2,601
)
   $ (6,683
)
   $ (7,986
)
                                 
Net external revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ 24,716     $ 34,627     $ 76,925     $ 109,179  
China
     13,026       9,694       35,939       26,096  
U.S.
     4,941       9,104       15,354       24,605  
Total segment revenue (which also equals consolidated revenue)
   $ 42,683     $ 53,425     $ 128,218     $ 159,880  
                                 
Site Contribution
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ 1,642     $ 2,007     $ 6,513     $ 7,682  
China
     1,643       804       2,808       1,773  
U.S.
     (331
)
     243       (771
)
     728  
Total
   $ 2,954     $ 3,054     $ 8,550     $ 10,183  
                                 
Corporate allocations
     2,789       3,167       8,323       9,338  
Unrealized foreign exchange (gain) loss on unsettled forward exchange contracts
     4       805       (995
)
     334  
Interest
     164       300       598       914  
Restructuring charges
     —       —       176       —  
Earnings (loss) before income taxes
   $ (3
)
   $ (1,218
)
   $ 448     $ (403
)
 
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 nine months ended October 2, 2016 and September 27, 2015:
 
 
 
Three months ended
 
 
Nine months ended
 
 
 
October 2,
2016
 
 
September
27, 2015
 
 
October 2,
2016
 
 
September
27, 2015
 
Mexico
   $ 256     $ 107     $ 590     $ 503  
China
     95       150       575       777  
U.S.
     12       221       303       606  
Segment total
     363       478       1,468       1,886  
Corporate and other
     14       30       185       69  
Total
   $ 377     $ 508     $ 1,653     $ 1,955  
 
 
Property, plant and equipment
(a)
 
 
 
October 2, 2016
 
 
January 3, 2016
 
Mexico
   $ 9,220     $ 10,674  
China
     3,157       2,217  
U.S.
     2,311       3,255  
Segment total
     14,688       16,146  
Corporate and other
     241       297  
Total
   $ 14,929     $ 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 nine months ended October 2, 2016 and September 27, 2015:
 
 
 
Three months ended
 
 
Nine months ended
 
 
 
October 2,
2016
 
 
September
27, 2015
 
 
October 2,
2016
 
 
September
27, 2015
 
U.S.
   $ 29,470     $ 41,821     $ 83,848     $ 128,214  
Canada
     9,132       7,186       32,832       18,973  
Europe
     592       1,163       1,497       3,524  
China
     1,751       584       4,403       2,134  
Africa
     1,738       2,672       5,638       7,066  
Total
   $ 42,683     $ 53,425     $ 128,218     $ 159,880  
 
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 October 2, 2016, two customers exceeded 10% of total revenues representing 15.6% and 10.2% respectively (September 27, 2015 – two customers represented 16.0% and 11.7%) of total revenue for the third quarter of 2016. During the nine months ended October 2, 2016 two customers individually comprised 15.8% and 15.4% (September 27, 2015 – two customers individually comprised 14.5% and 11.6%) of total revenue for the nine months ended October 2, 2016.
 
As of October 2, 2016, two customers exceeded 10% of the Company’s accounts receivable representing 12.1% and 10.6% respectively, (January 3, 2016, one customer represented 16.8% of the Company’s accounts receivable).