Quarterly report pursuant to Section 13 or 15(d)

Note 9 - Segmented Information

v2.4.1.9
Note 9 - Segmented Information
 3 Months Ended
Mar. 29, 2015
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

9.

Segmented information


    

General description


The Company is operated and managed geographically and has production facilities in the United States, Mexico and China. Commencing in fiscal 2014, the Company changed the measure it utilizes to monitor reportable segment performance from adjusted EBITDA, (previously defined as earnings before restructuring charges, interest, taxes, depreciation, amortization and unrealized foreign exchange gains and losses on forward contracts) to each reportable segment’s site contribution (site revenues minus operating expenses, excluding unrealized foreign exchange, corporate allocations and restructuring expenses). 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

 
   

March 29, 2015

   

March 30, 2014

As Revised (See Note 2)

 

Revenues

               

Mexico

  $ 35,607     $ 38,757  

China

    9,342       15,530  

U.S.

    6,578       12,692  

Total

  $ 51,527     $ 66,979  

Intersegment revenue

               

Mexico

  $ (105 )   $ (365 )

China

    (2,664 )     (3,266 )

U.S.

    (44 )     (5,325 )

Total

  $ (2,813 )   $ (8,956 )

Net external revenue

               

Mexico

  $ 35,502     $ 38,392  

China

    6,678       12,264  

U.S.

    6,534       7,367  

Total segment revenue (which also equals consolidated revenue)

  $ 48,714     $ 58,023  

Site Contribution

               

Mexico

  $ 2,896     $ 1,473  

China

    305       1,456  

U.S.

    (6 )     966  

Total

  $ 3,195     $ 3,895  

Corporate allocations

    2,914       3,670  
Unrealized foreign exchange loss (gain) on derivative forward exchange contracts     318       (243 )

Interest

    310       394  

Restructuring charges

    —       670  

Loss before income taxes

  $ (347 )   $ (596 )

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

 
   

March 29,

2015

   

March 30,

2014

 

Mexico

  $ 83     $ 177  

China

    375       -  

U.S.

    6       55  

Segment total

    464       232  

Corporate and other

    26       20  

Total

  $ 490     $ 252  

Property, plant and equipment (a)


   

March 29,

2015

   

December 28,

2014

 

Mexico

  $ 11,945     $ 12,556  

China

    3,191       3,001  

U.S

    1,687       1,776  

Segment total

    16,823       17,333  

Corporate and other

    231       257  

Total assets

  $ 17,054     $ 17,590  

 

(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 March 29, 2015 and March 30, 2014:


   

Three months ended

 
   

March 29,

2015

   

March 30,

2014

 

U.S.

  $ 35,712     $ 52,283  

Canada

    12,447       4,375  

Europe

    —       284  

China

    555       1,077  

Mexico

    —       4  

Total

  $ 48,714     $ 58,023  

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 March 29, 2015, three customers exceeded 10% of total revenues, comprising 21.4%, 17.6% and 10.8%, respectively of total revenue across all geographic segments. For the three months ended March 30, 2014, three customers exceeded 10% of total revenues, comprising 36.1%, 13.6% and 10.6%.


As of March 29, 2015, the top three customers represented 17.0%, 3.9% and 17.0%, respectively (December 28, 2014, 14.2%, 12.3% and 14.4% respectively) of the Company’s trade accounts receivable.