Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Interim Consolidated Financial Statement Details

v3.19.3
Note 4 - Interim Consolidated Financial Statement Details
9 Months Ended
Sep. 29, 2019
Notes to Financial Statements  
Condensed Financial Statements [Text Block]
4.
Interim Consolidated financial statement details
 
The following consolidated financial statement details are presented as of the period ended for the consolidated balance sheets and for the periods ended for each of the consolidated statements of operations and comprehensive income (loss).
 
 
  
 
(a)
Accounts receivable – net:
 
   
September 29
,
201
9
   
December 30
,
201
8
 
Trade accounts receivable
  $
62,330
    $
72,937
 
Other receivables
   
723
     
447
 
Allowance for doubtful accounts
   
(1,845
)    
(398
)
Total
  $
61,208
    $
72,986
 
 
The increase of
$1,447
in allowance for doubtful accounts was primarily the result of specific provisions of
$1,691
on customers serviced in the Dongguan manufacturing facility (note
12
).
 
 
(b)
Unbilled contract assets
 
   
September 29
,
201
9
   
December 30
,
201
8
 
Opening
  $
20,405
    $
3,734
 
Contract assets additions
   
266,778
     
205,387
 
Contract assets invoiced
   
(260,393
)    
(188,716
)
Ending
  $
26,790
    $
20,405
 
 
 
(c)
Inventories:
 
   
September 29
,
201
9
   
December 30
,
201
8
 
Raw materials
  $
50,465
    $
52,102
 
Finished goods
   
     
418
 
Parts and other
   
633
     
896
 
Provision for obsolescence
   
(1,563
)    
(213
)
Total
  $
49,535
    $
53,203
 
 
The increase of
$1,350
in the provision for obsolescence was due to specific provisions of
$1,550
for customers serviced out of the Dongguan manufacturing facility (note
12
).
 
 
(d)
Property, plant and equipment – net:
 
   
September 29
,
201
9
   
December 30
,
201
8
 
Cost:
               
Land
  $
1,648
    $
1,648
 
Buildings (b)
   
18,985
     
18,985
 
Machinery and equipment (a) (d)
   
41,702
     
40,083
 
Office furniture and equipment (c)(d)
   
979
     
845
 
Computer hardware and software (d)
   
3,894
     
3,945
 
Leasehold improvements (d)
   
4,230
     
3,863
 
     
71,439
     
69,368
 
                 
Less accumulated depreciation:
               
Land
   
     
 
Buildings (b)
   
(10,113
)
   
(9,190
)
Machinery and equipment (a) (d)
   
(29,548
)    
(27,093
)
Office furniture and equipment (c)(d)
   
(509
)    
(457
)
Computer hardware and software (d)
   
(3,164
)    
(3,053
)
Leasehold improvements (d)
   
(1,756
)    
(1,415
)
     
(45,091
)    
(41,208
)
Property, plant and equipment—net (d)
  $
26,348
    $
28,160
 
 
 
(a)
Included within machinery and equipment were assets under capital leases with costs of
$
2,275
and associated accumulated depreciation of
$834
and
$409
as of
September 29, 2019
and
December 30, 2018,
respectively. The related depreciation expense for the
three
months ended
September 29, 2019
and
September 30, 2018
was
$142
and
$34,
respectively. The related depreciation expense for the
nine
months ended
September 29, 2019
and
September 30, 2018
was
$426
and
$70,
respectively.
 
  
(b)
 
Included within buildings are costs associated with Melbourne facility under finance lease of
$
9,082
and associated accumulated depreciation of
$699
 and
$96
as of
September 29, 2019 
and
December 30, 2018,
respectively. The related depreciation expense for the
three
months ended
September 29, 2019 
and
September 30, 2018
was
$201
and
$Nil,
respectively. The related depreciation expense for the
nine
months ended
September 29, 2019 
and
September 30, 2018
was
$603
and
$Nil,
respectively.
   
(c)
Included within office furniture and equipment were assets under finance leases with costs of
$
297
and associated accumulated depreciation of
$35
 and
$NIL
as of
September 29, 2019 
and
December 30, 2018,
respectively. The related depreciation expense for the
three
months ended
September 29, 2019 
and
September 30, 2018
was
$9
and
$NIL,
respectively. The related depreciation expense for the
nine
months ended
September 29, 2019 
and
September 30, 2018
was
$29
and
$NIL,
respectively.
   
(d)
Included in restructuring and closure charges for the
three
months ended
September 29, 2019
were write down charges of
$261
associated with property, plant and equipment with 
no
future benefit related to the Dongguan manufacturing facility (note
12
). Write down charges of
$129
were incurred on machinery and equipment with cost of
$883
and accumulated amortization of
$754.
Write down charges of
$10
were incurred on office furniture and fixtures with cost of
$35
and accumulated amortization of
$25.
Write down charges of
$39
were incurred on computer hardware and software with cost of
$252
and accumulated amortization of
$213.
Write down charges of
$83
were incurred on leasehold improvements with cost of
$111
and accumulated amortization of
$28.
  
 
(e)
Intangible assets:
 
   
September 29
,
201
9
   
December 30,
2018
 
Cost:
               
Customer relationships
  $
12,350
    $
12,350
 
Order backlog
   
6,990
     
6,990
 
Trade name
   
1,300
     
1,300
 
Non-compete agreements
   
360
     
360
 
     
21,000
     
21,000
 
                 
Less accumulated amortization:
               
Customer relationships
   
(1,105
)    
(178
)
Order backlog
   
(4,168
)    
(673
)
Trade name
   
(1,163
)    
(188
)
Non-compete agreements
   
(161
)    
(26
)
     
(6,597
)    
(1,065
)
Intangible assets—net
  $
14,403
    $
19,935
 
 
Amortization expense of
$1,844
for the
three
months ended
September 29, 2019
and
$5,532
for the
nine
months ended
September 29, 2019
are recorded in cost of sales in the consolidated statement of operations and comprehensive income (loss).
 
 
 
 
(f)
Goodwill:
 
The carrying value of goodwill as at
September 29, 2019
was
$18,165
(
December 30, 2018 –
$18,165
). The carrying value of goodwill is assessed annually as well as assessed each reporting period for impairment triggers to determine whether there exists any indicators of impairment.
 
 
 
 
(g)
Accrued liabilities: 
 
   
September 29
,
201
9
   
December 30
,
201
8
 
Payroll
  $
5,655
    $
5,637
 
Customer related
   
2,764
     
2,237
 
Vendor related
   
2,464
     
2,048
 
Professional services
   
1,248
     
702
 
                 
Rebates
   
     
236
 
Interest
   
552
     
381
 
Rent
   
     
428
 
Other
   
704
     
1,371
 
Total
  $
13,387
    $
13,040
 
 
 
 
(h)
Contingent Consideration
Gain
 
During the
first
quarter of
2019,
fair value of the contingent consideration liability was determined to be
$0
which resulted in a gain of
$3,050
being recognized. The contingent consideration liability was initially recognized at fair value in the
fourth
quarter of
2018
and related to a contingent earn-out payment associated with the acquisition of MC Assembly. Fair value estimate under purchase accounting of
$3,050
was derived from a multiple of earnings based on MC Assembly’s forecasted
twelve
-month earnings for the period ended
March 31, 2019.
Based on actual earnings, the contingent consideration liability was resolved and
no
longer payable as at
March 31, 2019.
 
 
 
(i)
Interest expense:
 
   
Three months ended
   
Nine
months ended
 
   
September 29
,
201
9
   
September 30
,
201
8
   
September 29
,
201
9
   
September 30
,
201
8
 
Long-term debt
  $
1,135
    $
107
    $
4,596
    $
321
 
Revolving credit facility
   
597
     
318
     
1,813
     
718
 
Equipment facility
   
     
43
     
     
57
 
Amortization of deferred financing fees
   
50
     
11
     
122
     
32
 
Amortization of debt issuance costs (1)
   
705
     
     
1,178
     
 
Obligations under capital leases
   
192
     
6
     
640
     
67
 
Interest expense
  $
2,679
    $
485
    $
8,349
    $
1,195
 
 
 
(
1
)
During
three
months ended
September 29, 2019,
$477
was expensed related to unamortized deferred financing fees on Term Loan B when it was paid in full during the quarter.