Quarterly report pursuant to Section 13 or 15(d)

Note 8. Segmented Information

v2.4.0.6
Note 8. Segmented Information
 6 Months Ended
Jul. 01, 2012
Segment Reporting Disclosure [Text Block]
8.        Segmented information

General description

The Company derives its revenue from one dominant industry segment, the electronics manufacturing services industry. The Company is operated and managed geographically and has facilities in the United States, Canada, Mexico and China. The Company monitors the performance of its geographic operating segments based on adjusted EBITDA (earnings before restructuring charges, loss on extinguishment of debt, acquisition costs, interest, taxes, depreciation and amortization). Intersegment adjustments reflect intersegment sales that are generally recorded at prices that approximate arm’s-length transactions. In assessing the performance of the operating segments management attributes revenue to the operating segment which ships the product to the customer. In the three and six month periods ended July 3, 2011, the segment measure of profitability previously reported on was adjusted EBITA (earnings before restructuring charges, loss on extinguishment of debt, interest, taxes and amortization). The measure was changed in the third quarter of 2011 to provide a more cash-flow based measure of performance that the chief operating decision makers use in evaluating the business. Information for prior periods has been restated to reflect the updated measure. Information about the operating segments is as follows:

   
Three months ended
   
Six months ended
 
   
July 1,
2012
   
July 3,
2011
   
July 1,
2012
   
July 3,
2011
 
Revenues from continuing operations
                       
Mexico
  $ 42,667     $ 27,713     $ 84,768     $ 61,892  
China
    15,854       10,622       27,241       18,956  
Canada
    10,563       9,392       19,055       20,910  
U.S.
    12,236       2,842       25,612       6,836  
Total
  $ 81,320     $ 50,569     $ 156,676     $ 135,346  
                                 
Intersegment revenue
                               
Mexico
  $ (1,279 )   $ (301 )   $ (2,248 )   $ (644 )
China
    (1,160 )     (189 )     (1,915 )     (189 )
Canada
    (2,058 )     (1,232 )     (2,803 )     (2,546 )
U.S.
    (1,706 )     (9 )     (2,137 )     (17 )
Total
  $ (6,203 )   $ (1,731 )   $ (9,103 )   $ (3,396 )
                                 
Net external revenue from continuing operations
                               
Mexico
  $ 41,388     $ 27,412     $ 82,520     $ 61,248  
China
    14,694       10,433       25,326       18,730  
Canada
    8,505       8,160       16,252       18,364  
U.S.
    10,530       2,833       23,475       6,819  
Total
  $ 75,117     $ 48,838     $ 147,574     $ 105,161  
                                 
Adjusted EBITDA
                               
Mexico
  $ 2,905     $ 2,498     $ 6,940     $ 5,255  
China
    735       305       1,421       339  
Canada
    (650 )     (607 )     (1,662 )     (1,112 )
U.S.
    1,321       (259 )     1,920       (281 )
Total
  $ 4,311     $ 1,937     $ 8,619     $ 4,201  
                                 
Interest
    542       369       1,005       655  
Restructuring charges
    —       1,743       451       2,107  
Depreciation
    772       692       1,524       1,355  
Earnings (loss) before income taxes
  $ 2,997     $ (867 )   $ 5,639     $ 84  

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 and six months ended July 1, 2012 and July 3, 2011:

   
Three months ended
   
Six months ended
 
   
July 1,
2012
   
July 3,
2011
   
July 1,
2012
   
July 3,
2011
 
Mexico
  $ 435     $ 52     $ 1,704     $ 547  
China
    1,673       —       1,676       —  
Canada
    90       62       591       1,108  
U.S.
    92       76       418       120  
Total
  $ 2,290     $ 190     $ 4,389     $ 1,775  

Long-lived assets (a)

   
July 1,
2012
   
January 1,
2012
 
Mexico
  $ 10.739     $ 10,170  
China
    2,257       631  
Canada
    3,012       2,686  
U.S.
    2,212       1,868  
Total
  $ 18,220     $ 15,355  

(a)       Long-lived assets information is based on the principal location of the asset.  In the three months ended July 1, 2012 long-lived assets of $1,500 were purchased from Alco Electronics Ltd. in China.

Geographic revenues

The following table contains geographic revenues based on the product shipment destination, for the three and six months ended July 1, 2012 and July 3, 2011:

   
Three months ended
   
Six months ended
 
   
July 1,
2012
   
July 3,
2011
   
July 1,
2012
   
July 3,
2011
 
U.S.
  $ 54,989     $ 27,522     $ 105,201     $ 62,698  
Canada
    15,520       16,991       33,007       31,964  
Europe
    4,474       3,004       8,984       7,387  
Asia
    127       1,301       334       3,089  
Mexico
    7       20       48       23  
Total
  $ 75,117     $ 48,838     $ 147,574     $ 105,161  

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 1, 2012, two customers individually comprised 31.8% and 16.4% (July 3, 2011– three customers 16.1%, 15.3% and 10.1%) of total revenue across all geographic segments. During the six months ended July 1, 2012 two customers individually comprised 33.0% and 14.6% (July 3, 2011 – four customers 15.7%, 12.5%, 12.5% and 10.0%) of total revenue from continuing operations across all geographic segments.  As of July 1, 2012, these customers represented 28.6%, and 7.6%, respectively, (January 1, 2012, 22%, 4%, and 11%, respectively) of the Company’s accounts receivable.