Annual report pursuant to Section 13 and 15(d)

Note 13 - Segmented information

v2.4.0.6
Note 13 - Segmented information
 12 Months Ended
Jan. 01, 2012
Segment Reporting Disclosure [Text Block]
 13.           Segmented information

General description

The Company derives its revenue from one dominant industry segment, the electronics manufacturing services industry. The Company is operated and managed geographically and has facilities in the United States, Canada, Mexico and Asia. As at July 5, 2009, the Boston facility was classified as a discontinued operation and its results of operations have been excluded from the U.S. segment for all periods reported. The Company monitors the performance of its geographic operating segments based on adjusted EBITDA (earnings before restructuring charges, loss on extinguishment of debt, loss on derivative financial instruments, acquisition costs, interest, taxes, depreciation and amortization). Intersegment adjustments reflect intersegment sales that are generally recorded at prices that approximate arm’s-length transactions. In assessing the performance of the operating segments management attributes revenue to the operating segment which ships the product to the customer. In previous periods, the segment measure of profitability previously reported on was adjusted EBITA (earnings before restructuring charges, loss on extinguishment of debt, interest, taxes and amortization). The measure was changed in the third quarter of 2011 to provide a more cash-flow based measure of performance that the chief operating decision makers use in evaluating the business. Information for prior periods has been restated to reflect the updated measure. Information about the operating segments is as follows:

   
Period ended
January 1,
2012
   
Period ended
January 2,
2011
   
Period ended
January 3,
2010
 
Revenues
                 
Mexico
  $ 129.677     $ 127,318     $ 71,697  
Canada
    36,582       56,492       49,854  
US
    24,248       21,784       13,881  
Asia
    37,988       62,417       47,401  
                         
Total
  $ 228,495     $ 268,011     $ 182,833  
                         
Intersegment revenue
                       
Mexico
  $ (2,862 )   $ (2,182 )   $ (2,398 )
Canada
    (4,998 )     (3,182 )     (910 )
US
    (95 )     (67 )     (16 )
Asia
    (189 )     —       —  
                         
Total
  $ (8,144 )   $ (5,431 )   $ (3,324 )
                         
Net external revenue
                       
Mexico
  $ 126,815     $ 125,136     $ 69,299  
Canada
    31,584       53,310       48,944  
US
    24,153       21,717       13,865  
Asia
    37,799       62,417       47,392  
                         
Total
  $ 220,351     $ 262,580     $ 179,509  
                         
Adjusted EBITDA
                       
Mexico
  $ 11,169     $ 11,191     $ 8,039  
Canada
    (3,880 )     338       (1,320 )
US
    286       1,565       (334 )
Asia
    1,707       1,013       1,283  
                         
Total
  $ 9,282     $ 14,107     $ 7,668  

Adjusted EBITDA
  $ 9,282     $ 14,107     $ 7,668  
Interest
    1,468       1,697       1,960  
Income tax expense (recovery)     805       (2489 )     (309 )
Depreciation
    2,794       2,551       2,861  
Restructuring charges
    2,678       —       783  
Loss on extinguishment of debt
    300       —       —  
Acquisition expenses
    87       —       —  
                         
Net earnings
  $ 1,150     $ 12,350     $ 2,357  

Capital expenditures:

The following table contains capital expenditures for:

   
Period ended
January 1,
 2012
   
Period ended
January 2,
 2011
   
Period ended
January 3,
 2010
 
Mexico
  $ 2,289     $ 215     $ 653  
Canada
    1,576       166       334  
US
    166       1,045       26  
Asia
    9       784       29  
                         
Total
  $ 4,040     $ 2,210     $ 1,042  

Assets:

   
January 1, 2012
   
January 2, 2011
 
Long-lived assets (a)
           
Mexico
  $ 10,170     $ 9,793  
Canada                                                                                                 
    2,686       1,614  
US                                                                                                 
    1,868       1,766  
Asia                                                                                                 
    631       718  
                 
Total
  $ 15,355     $ 13,891  
                 
Total assets
               
Mexico
  $ 65,828     $ 61,199  
Canada
    18,018       21,951  
US
    24,984       3,562  
Asia
    5,466       11,715  
                 
Total
  $ 114,296     $ 98,427  

(a)
Long-lived assets information is based on the principal location of the asset.

Geographic revenues:

The following table contains geographic revenues based on the product shipment destination:

   
Period ended
January 1,
2012
   
Period ended
January 2,
2011
   
Period ended
January 3,
2010
 
US
  $ 131,739     $ 157,746     $ 71,725  
Canada
    70,846       69,770       74,590  
Europe
    14,249       21,182       627  
Asia
    3,486       13,869       32,548  
Mexico
    32       13       19  
                         
Total
  $ 220,351     $ 262,580     $ 179,509  

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 the carriage of 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 January 1, 2012, three customers individually comprised 22%, 11% and 10% of revenue from continuing operations across all geographic segments. At January 1, 2012, these customers represented 22%, 4% and 11% of the Company’s trade accounts receivable.

During the period ended January 2, 2011, four customers individually comprised 16%, 15%, 13% and 13% of revenue from continuing operations across all geographic segments. At January 2, 2011 these customers represented 8%, 4%, 10% and 5% of the Company’s trade accounts receivable.

During the period ended January 3, 2010, five customers individually comprised 22%, 16%, 16%, 14% and 10% of revenue from continuing operations across all geographic segments. At January 3, 2010, these customers represented 35%, 24%, 3%, 9% and 5% of the Company’s trade accounts receivable.