Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Interim Consolidated Financial Statement Details - Consolidated Balance Sheets (Details)

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Note 4 - Interim Consolidated Financial Statement Details - Consolidated Balance Sheets (Details) - USD ($)
$ in Thousands
Jul. 02, 2017
Jan. 01, 2017
Trade accounts receivable $ 22,214 $ 22,284
Other receivables 311 511
Allowance for doubtful accounts (985) (171)
Accounts receivable—net 21,540 22,624
Raw materials 16,976 14,863
Work in process 2,715 1,557
Finished goods 4,655 3,678
Parts 749 576
Inventories 25,095 20,674
Professional services 300 281
Property, plant and equipment 47,250 49,344
Accumulated depreciation, property, plant and equipment (35,676) (34,907)
Property, Plant and Equipment, Net 11,574 14,437
Payroll 2,360 2,134
Accrued liabilities 5,421 4,604
Land [Member]    
Property, plant and equipment 1,648 1,648
Accumulated depreciation, property, plant and equipment
Building [Member]    
Property, plant and equipment 9,852 9,852
Accumulated depreciation, property, plant and equipment (8,397) (8,174)
Machinery and Equipment [Member]    
Property, plant and equipment [1],[2],[3] 29,913 31,615
Accumulated depreciation, property, plant and equipment [1],[2],[3] (23,389) (22,460)
Furniture and Fixtures [Member]    
Property, plant and equipment 518 556
Accumulated depreciation, property, plant and equipment (400) (438)
Computer Equipment [Member]    
Property, plant and equipment [1],[4] 3,079 3,544
Accumulated depreciation, property, plant and equipment [1],[4] (2,428) (2,842)
Leasehold Improvements [Member]    
Property, plant and equipment 2,240 2,129
Accumulated depreciation, property, plant and equipment (1,062) (993)
Customer Related [Member]    
Other accrued liabilities 1,222 898
Restructuring [Member]    
Other accrued liabilities 518 27
Vendor Related [Member]    
Other accrued liabilities 524 613
Other Accrued Liabilities [Member]    
Other accrued liabilities $ 497 $ 651
[1] During the quarter ended July 2, 2017, the Company removed fully depreciated assets that were no longer in use with a cost and accumulated depreciation value of $870. The China segment impaired assets from machinery and equipment with net book value of $265, associated cost of $383 and accumulated depreciation value of $118. The China segment also impaired assets from machinery and equipment with net book value of $181, associated cost of $472 and accumulated depreciation value of $291. The corporate segment also impaired assets with net book value of $130, associated cost of $135 and accumulated depreciation of $5. A total impairment loss was recorded of $576 in the second quarter of 2017.
[2] In accordance with ASC 360-10, the Company is required to evaluate for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Upon the occurrence of a triggering event, the Company assesses whether the estimated undiscounted cash flows expected from the use of the asset and the residual value from the ultimate disposal of the asset exceeds the carrying value. In the second quarter of 2017, the Company identified that results did not meet forecasted results for new and existing customers, which was considered a triggering event related to its U.S. segment asset group. The net carrying amount of the U.S. asset group was $2,108. The Company estimated undiscounted cash flows and determined the carrying amounts was exceeded by the recoverable amount, therefore an impairment loss of $1,025 has been recorded in the second quarter of 2017. The estimate of discounted cash flows are sensitive to these key assumptions, for instance, if our revenue projections are lower by 1%, the impairment would increase by $110. If there was a 1% increase in the weighted average cost of capital, the impairment would increase by $37. The Company calculated the impairment loss by discounting the future cash flows which was determined to represent the fair value of the asset group and deducted this from the carrying amount of the segment asset group. In the second quarter of 2017, the Company also identified that results did not meet forecasted results for new customers and existing customers had revenue pushouts, which was considered a triggering event related to its China segment asset group. The net carrying amount of the China asset group was $1,504. The Company estimated undiscounted cash flows and determined a recoverable amount of $1,128 in excess of the net carrying value, therefore no impairment loss has been recorded in the second quarter of 2017. The key assumptions included in these cash flows are projected revenue based on management’s forecast and corresponding margins. The estimate of undiscounted cash flows are sensitive to these key assumptions, for instance, if our revenue projections are lower by 1%, the recoverable amount in excess of the carrying amount would be reduced to $641. As such, the Company will continue to review for impairment triggers which may result in a need to write down the assets to fair value in the future.
[3] Included within machinery and equipment were assets under capital leases with costs of $533 and $2,193 and associated accumulated depreciation of $95 and $673 as of July 2, 2017 and January 1, 2017, respectively. The related depreciation expense for the three months ended July 2, 2017 and July 3, 2016 was $55 and $74, respectively. The related depreciation expense for the six months ended July 2, 2017 and July 3, 2016 was $133 and $154, respectively. During the three months ended July 2, 2017, machinery and equipment under capital lease of $1,660 was purchased and transferred to machinery and equipment owned.
[4] Included within computer hardware and software are assets under capital leases with costs of Nil and $83 as at July 2, 2017 and January 1, 2017 and associated accumulated depreciation of Nil and $80 as at July 2, 2017 and January 1, 2017, respectively. The related depreciation expense for the three months ended July 2, 2017 and July 3, 2016 was Nil and $10, respectively. The related depreciation expense for the six months ended July 2, 2017 and July 3, 2016 was $3 and $20, respectively.