SMTC Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Note 11 - Segmented Information

Note 11 - Segmented Information

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Segmented information

General description

The Company is operated and managed geographically and has production facilities in the United States, Mexico and China. The Company utilizes each reportable segment

’s site contribution (site revenues 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. Site contribution 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 site management is 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:

	Year ended December 3 1, 2017			Year ended January 1 , 2 017			Year ended January 3 , 2016
Revenues
Mexico	$	99,577		$	102,546		$	142,738
US		21,269			21,703			33,088
China		27,349			52,745			55,155
Total	$	148,195		$	176,994		$	230,981
Intersegment revenue
Mexico	$	(13	)	$	(530	)	$	(488	)
US		(255	)		(442	)		(286	)
China		(8,696	)		(8,154	)		(9,591	)
Total	$	(8,964	)	$	(9,126	)	$	(10,365	)
Net external revenue
Mexico	$	99,564		$	102,016		$	142,250
US		21,014			21,261			32,802
China		18,653			44,591			45,564
Total segment revenue (which also equals consolidated revenue)	$	139,231		$	167,868		$	220,616

Site Contribution
Mexico	$	7,515		$	8,380		$	9,784
US		(1,794	)		(1,327	)		913
China		(1,115	)		4,196			3,099
Total	$	4,606		$	11,249		$	13,796



Corporate expenses		10,174			11,061			12,560
Unrealized foreign exchange gain on unsettled forward exchange contracts		(918	)		(831	)		(616	)
Restructuring charges		1,732			176			—
Interest expense		903			788			1,183
Earnings (loss) before income taxes	$	(7,285	)	$	55		$	669

Capital expenditures:

The following table contains additions including those acquired through capital leases, to property, plant and equipment for

201

2016

and

2015:

	Year ended December 3 1, 2017		Year ended January 1 , 2017		Year ended January 3 , 2016
Mexico	$	480	$	771	$	735
U.S.		499		550		857
China		145		694		1,048
Segment total		1,124		2,015		2,640
Corporate and other		123		185		188
Total	$	1,247	$	2,200	$	2,828

Segment assets:

	December 3 1, 2017		January 1 , 201 7
Property, plant and equipment (a)
Mexico	$	7,518	$	8,858
U .S.		1,188		2,314
China		1,380		3,046
Segment total		10,086		14,218
Corporate and other		183		219
Total	$	10,269	$	14,437

Total segment assets
Mexico	$	47,835	$	42,275
U .S.		12,748		9,482
China		8,011		15,489
Segment total		68,594		67,246
Corporate and other		1,262		1,758
Total	$	69,856	$	69,004

(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 our customer invoicing location:

	Year ended December 3 1, 2017		Year ended January 1 , 2017		Year ended January 3 , 2016
U.S.	$	108,783	$	114,850	$	167,229
Canada		19,986		37,845		31,275
Europe		—		1,833		4,481
China		4,961		6,832		3,336
Africa		5,501		6,508		14,295
Total	$	139,231	$	167,868	$	220,616

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 period ended

December 31, 2017,

two

customers each comprised

12%

of revenue from across all geographic segments. At

December 31, 2017,

three

customers comprised

40%

(

14%,

14%

and

12%,

respectively) of the Company’s trade accounts receivable.

other customers individually represented more than

10%

of trade accounts receivable.

During the period ended

January 1, 2017,

two

customers comprised

16%

and

12%

, respectively of revenue from across all geographic segments. At

January 1, 2017,

one

customer represented

12%

of the Company’s trade accounts receivable.

other customers individually represented more than

10%

of trade accounts receivable.

During the period ended

January 3, 2016,

two

customers individually comprised

13%

and

11%

of revenue from across all geographic segments. At

January 3, 2016,

one

customer represented

17%

of the Company

’s trade accounts receivable.

other customers individually represented more than

10%

of trade accounts receivable.