Quarterly report pursuant to Section 13 or 15(d)

Note 9 - Segmented Information

v3.3.0.814
Note 9 - Segmented Information
 9 Months Ended
Sep. 27, 2015
Notes to Financial Statements  
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 the fourth quarter of 2014, the Company changed the measure it utilizes to monitor reportable segment performance from adjusted EBITDA, (which was defined as earnings before restructuring charges, interest, taxes, depreciation, amortization and unrealized foreign exchange gains and losses on unsettled forward contracts) to each reportable segment’s site contribution (which is calculated by management based on site revenues minus operating expenses, excluding unrealized foreign exchange, corporate allocations and restructuring expenses). Comparative periods reflect the change in the Company’s measure of segment performance. Site contribution is utilized by the CEO who is defined as 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, and by which the chief operating decision maker makes decisions about resources to be allocated to its operating segments. 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 originates the shipment of product to the end customer, irrespective of the product’s destination. Information about the reportable segments is as follows:
 
 
 
Three months ended
 
 
Nine
months ended
 
 
 
September 27
,
2015
 
 
September 28
, 2014
(As Revised –
See Note 2)
 
 
September 27
,
2015
 
 
September 28
, 2014
(As Revised –
See Note 2
)
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ 34,753     $ 37,122     $ 109,515     $ 114,824  
China
     12,055       14,120       33,547       44,809  
U.S.
     9,218       12,132       24,804       38,673  
Total
   $ 56,026     $ 63,374     $ 167,866     $ 198,306  
                                 
Intersegment revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ (126
)
   $ (112
)
   $ (336
)
   $ (619
)
China
     (2,361
)
     (2,648
)
     (7,451
)
     (9,672
)
U.S.
     (114
)
     (5,086
)
     (199
)
     (16,480
)
Total
   $ (2,601
)
   $ (7,846
)
   $ (7,986
)
   $ (26,771
)
                                 
Net external revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ 34,627     $ 37,010     $ 109,179     $ 114,205  
China
     9,694       11,472       26,096       35,137  
U.S.
     9,104       7,046       24,605       22,193  
Total segment revenue (which also equals consolidated revenue)
   $ 53,425     $ 55,528     $ 159,880     $ 171,535  
                                 
Site Contribution
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mexico
   $ 2,007     $ 2,721     $ 7,682     $ 6,210  
China
     804       1,050       1,773       3,631  
U.S.
     243       598       728       2,438  
Total
   $ 3,054     $ 4,369     $ 10,183     $ 12,279  
Corporate allocations
     3,167       3,384       9,338       10,591  
Unrealized loss (gain) on derivative financial instruments
     805       923       334       (171
)
Interest
     300       470       914       1,337  
Restructuring charges
     —       187       —       1,366  
Loss before income taxes
   $ (1,218 )   $ (595 )   $ (403 )   $ (844
)
 
 
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 nine months ended September 27, 2015 and September 28, 2014:
 
 
 
Three months ended
 
 
Nine
months ended
 
 
 
September 27
,
2015
 
 
September 28
,
2014
 
 
September 27
,
2015
 
 
September 28
,
2014
 
Mexico
   $ 107     $ 393     $ 503     $ 2,675  
China
     150       27       777       56  
U.S.
     221       174       606       286  
Segment total
     478       594       1,886       3,017  
Corporate and other
     30       23       69       135  
Total
   $ 508     $ 617     $ 1,955     $ 3,152  
 
 
 
Property, plant and equipment
(a)
 
 
 
September 27
,
2015
 
 
December 28,
2014
 
Mexico
   $ 11,017     $ 12,556  
China
     3,185       3,001  
U.S.
     2,137       1,776  
Segment total
     16,339       17,333  
Corporate and other
     222       257  
Total assets
   $ 16,561     $ 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 customer location, for the three and nine months ended September 27, 2015 and September 28, 2014:
 
 
 
Three months ended
 
 
Nine
months ended
 
 
 
September 27
,
2015
 
 
September 28
,
2014
 
 
September 27
,
2015
 
 
September 28
,
2014
 
U.S.
   $ 46,994     $ 45,924     $ 127,238     $ 149,255  
Canada
     6,057       7,729       31,068       17,462  
Europe
     —       —       —       284  
China
     374       1,875       1,574       4,530  
Mexico
     —       —       —       4  
Total
   $ 53,425     $ 55,528     $ 159,880     $ 171,535  
 
 
 
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 September 27, 2015, two customers individually comprised 15.9% and 11.6% (September 28, 2014 – three customers individually comprised 27.8%, 13.8% and 10.6%) of total revenue across all geographic segments. During the nine months ended September 27, 2015 two customers individually comprised 14.5% and 11.6% (September 28, 2014 – three customers individually comprised 31.3%, 13.4% and 10.3%) of total revenue across all geographic segments. No other customers represented more than 10% of revenue. The two customers with revenues in excess of 10% for nine months ended 2015 represented 12.0% and 4.2%, respectively as at September 27, 2015, (as of December 28, 2014, these customers represented 14.3% and 20.8%, respectively) of the Company’s accounts receivable.