General description

In 2020 the Company operated and managed by geographic region which are the United States, Mexico and China which are our operating and reportable segments. During the fourth quarter of fiscal year 2019 the Company ceased manufacturing in China and began to relocate the equipment used at our Chinese manufacturing facility to our North American sites which was completed in the first quarter of fiscal year 2020 China and began to relocate the equipment used at our Chinese manufacturing facility to our North American sites which was completed in first quarter of fiscal year 2020. We utilize each reportable segment’s contribution (revenue minus operating expenses, excluding unrealized foreign exchange gain (loss) on unsettled forward foreign exchange contracts, corporate allocations and restructuring expenses) to monitor reportable segment performance. Contribution by country is utilized by the chief operating decision-maker (defined as the Chief Executive Officer) as the indicator of reportable segment performance, as it reflects costs which our operating segment management are 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: 

The industry sectors for the fiscal year ended December 29, 2019 have been reclassified to align with the presentation for the fiscal year ended January 3, 2021. Upon review of customer sectors in fiscal 2020, certain customers were reclassified to new industry sectors as it was determined to be more appropriate based on the end products we manufacture.

Capital expenditures:

The following table contains additions including those acquired through finance leases, to property, plant and equipment for 2020, 2019 and 2018:

Segment assets:

Geographic revenue:

The following table contains geographic revenue based on our customer invoicing location:

Significant customers and concentration of credit risk

Sales of the Company’s products are concentrated among specific customers in the same industry. The Company requires collateral only from new customers with insufficient credit until such time as credit insurance can be obtained. The Company is subject to concentrations of credit risk in trade receivables and mitigates this risk through ongoing credit evaluation of customers and maintaining credit insurance. 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 largest customers or any product line

manufactured for one of its largest customers, it could experience a significant reduction in revenue. Also, the insolvency of one or more of its largest customers or the inability of one or more of its largest customers to pay for its orders could decrease future revenue. As many costs and operating expenses are relatively fixed, a reduction in net revenue can decrease profit margins and adversely affect business, financial condition and results of operations.

During the year ended January 3, 2021, one customer comprised 12.2% of revenue. At January 3, 2021, one customer comprised 10% of the Company’s trade accounts receivable. No other customers individually represented more than 10% of total revenue or trade accounts receivable.

During the year ended December 29, 2019, one customer comprised 12.8% of revenue. At December 29, 2019, one customer comprised 10% of the Company’s trade accounts receivable. No other customers individually represented more than 10% of total revenue or trade accounts receivable.

During the year ended December 30, 2018, one customer comprised 11% of revenue from across all geographic segments. At December 30, 2018, two customers comprised 21% (11% and 10%, respectively) of the Company’s trade accounts receivable. No other customers individually represented more than 10% of trade accounts receivable.