SMTC Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Interim Consolidated Financial Statement Details

Note 4 - Interim Consolidated Financial Statement Details

3 Months Ended

Mar. 31, 2019

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 loss.

Consolidated Balance Sheets

Accounts receivable – net:

	March 3 1 , 201 9			December 30 , 201 8
Trade accounts receivable	$	74,248		$	72,937
Other receivables		330			447
Allowance for doubtful accounts		(398	)		(398	)
Total	$	74,180		$	72,986

Unbilled contract assets

	March 3 1 , 201 9			December 30 , 201 8
Opening	$	20,405		$	3,734
Contract assets additions		24,208			205,387
Contract assets invoiced		(20,405	)		(188,716	)
Ending	$	24,208		$	20,405

Inventories:

	March 3 1 , 201 9			December 30 , 201 8
Raw materials	$	48,243		$	52,102
Finished goods		—			418
Parts and other		633			896
Provision for obsolescence		(216	)		(213	)
Total	$	48,660		$	53,203

Property, plant and equipment – net:

	March 3 1 , 201 9			December 30 , 201 8
Cost:
Land	$	1,648		$	1,648
Buildings (b)		18,985			18,985
Machinery and equipment (a)		40,596			40,083
Office furniture and equipment (c)		862			845
Computer hardware and software (d)		4,018			3,945
Leasehold improvements		3,939			3,863
		70,048			69,368

Less accumulated depreciation:
Land		—			—
Buildings (b)		(9,502	)		(9,190	)
Machinery and equipment (a)		(28,150	)		(27,093	)
Office furniture and equipment (c)		(483	)		(457	)
Computer hardware and software (d)		(3,163	)		(3,053	)
Leasehold improvements		(1,537	)		(1,415	)
		(42,835	)		(41,208	)
Property, plant and equipment—net	$	27,213		$	28,160

(a)

Included within machinery and equipment were assets under finance leases with costs of

$2,275

and associated accumulated depreciation of

$550

and

$409

as of

March 31, 2019

and

December

30,

2018,

respectively. The related depreciation expense for the

three

months ended

March 31, 2019

and

December

30,

2018

was

$142

and

$187,

respectively.

(b)

Included within buildings are costs associated with Melbourne facility under finance lease of

$9,082

and associated accumulated depreciation of

$297

and

$96

as of

March 31, 2019

and

December 30, 2018,

respectively. The related depreciation expense for

three

months ended

March 31, 2019

and

December 30, 2018

was

$201

and

$96,

respectively.

(c)

Included within office furniture and equipment were assets under finance leases with costs of

$158

and associated accumulated depreciation of

$15

and

as of

March 31, 2019

and

December 30, 2018,

respectively. The related depreciation expense for the year ended

March 31, 2019

and

December 30, 2018

was

$10

and

$6,

respectively.

(d)

Included within computer hardware and software were assets under finance leases with costs of

$91

and associated accumulated depreciation of

$28

and

$20

as of

March 31, 2019

and

December 30, 2018,

respectively. The related depreciation expense for the year ended

March 31, 2019

and

December 30, 2018

was

and

$20,

respectively.

Intangible assets:

	March 31 , 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		(487	)		(178)
Order backlog		(1,838	)		(673)
Trade name		(513	)		(188)
Non-compete agreements		(71	)		(26)
		(2,909	)		(1,065)
Intangible assets—net	$	18,091		$	19,935

Amortization expense of

$1,844

is recorded in cost of sales in the consolidated statement of income and comprehensive income.

Goodwill:

The carrying value of goodwill as at

March 31, 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.

Accrued liabilities:

	March 3 1 , 201 9		December 30 , 201 8
Payroll	$	6,046	$	5,637
Customer related		3,002		2,237
Vendor related		1,498		2,048
Professional services		687		702
Restructuring		254		—
Rebates		—		236
Interest		259		381
Rent		—		428
Other		1,276		1,371
Total	$	13,022	$	13,040

During the

first

quarter of

2019,

restructuring charges of

$624

were incurred related to the reduction of

full-time equivalents (“FTEs”) in U.S. and

FTEs in Canada and

167

FTEs and contract employees in Mexico. As at

March 31, 2019,

the company had

$254

of accrued restructuring charges remaining to be paid.

Contingent Consideration:

During the quarter, fair value of the contingent consideration liability was determined to be

nil

resulting in a gain of of

$3,050

being recognized. The contingent consideration liability was initially recognized at fair value in the

fourth

quarter and relates 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 is considered resolved and

longer payable as at

March 31, 2019.

Consolidated Statements of Opera

tions and Comprehensive

Income

Interest expense:

	Three months ended
	March 3 1 , 201 9		April 1 , 201 8
Long-term debt	$	1,752	$	109
Revolving credit facility		619		175
Amortization of deferred financing fees		34		9
Amortization of debt issuance costs		237		—
Obligations under finance leases		228		14
Total	$	2,870	$	307