Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Segmented Information

v2.4.0.6
Note 8 - Segmented Information
 9 Months Ended
Sep. 30, 2012
Segment Reporting Disclosure [Text Block]
8.        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 China. The Company monitors the performance of its geographic operating segments based on adjusted EBITDA (earnings before restructuring charges, loss on extinguishment of debt, 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. Information about the operating segments is as follows:

   
Three months ended
   
Nine months ended
 
   
September 30,
2012
   
October 2,
2011
   
September 30,
2012
   
October 2,
2011
 
Revenues from continuing operations
                       
Mexico
  $ 59,546     $ 27,111     $ 169,613     $ 89,003  
China
    10,680       9,135       37,921       28,091  
Canada
    10,322       6,103       29,377       27,013  
U.S.
    16,078       4,843       41,690       11,679  
Total
  $ 96,626     $ 47,192     $ 278,601     $ 155,786  
Intersegment revenue
                               
Mexico
  $ (235 )   $ (1,530 )   $ (2,483 )   $ (2,174 )
China
    (380 )     —       (2,295 )     (189 )
Canada
    (2,211 )     (1,507 )     (5,014 )     (4,053 )
U.S.
    (7,964 )     (73 )     (10,101 )     (90 )
Total
  $ (10,789 )   $ (3,110 )   $ (19,892 )   $ (6,506 )
Net external revenue from continuing operations
                               
Mexico
  $ 49,049     $ 25,581     $ 131,570     $ 86,829  
China
    10,300       9,135       35,626       27,865  
Canada
    8,111       4,596       24,363       22,960  
U.S.
    8,114       4,770       31,589       11,589  
Total
  $ 75,575     $ 44,082     $ 223,149     $ 149,243  
Adjusted EBITDA
                               
Mexico
  $ 3,214     $ 1,959     $ 10,154     $ 7,214  
China
    101       662       1,522       1,001  
Canada
    (1,560 )     (1,534 )     (3,222 )     (2,646 )
U.S.
    801       (355 )     2,721       (636 )
Total
  $ 2,556     $ 732     $ 11,175     $ 4,933  
Interest
    526       326       1,531       981  
Loss on extinguishment of debt
    —       300       —       300  
Restructuring charges
    —       686       451       2,793  
Depreciation
    786       704       2,310       2,059  
Earnings (loss) before income taxes
  $ 1,244     $ (1,284 )   $ 6,883     $ (1,200 )

Additions to Property, Plant and Equipment

The following table contains additions, including those acquired through capital leases, to property, plant and equipment for the three and nine months ended September 30, 2012 and October 2, 2011:

   
Three months ended
   
Nine months ended
 
   
September 30,
2012
   
October 2,
2011
   
September 30,
2012
   
October 2,
2011
 
Mexico
  $ 187     $ 703     $ 1,891     $ 1,250  
China
    143       6       1,819       6  
Canada
    43       63       634       1,171  
U.S.
    140       20       558       140  
Total
  $ 513     $ 792     $ 4,902     $ 2,567  

Long-lived assets (a)

   
September 30,
2012
   
January 1,
2012
 
Mexico
  $ 10,498     $ 10,170  
China
    2,358       631  
Canada
    2,884       2,686  
U.S.
    2,207       1,868  
                 
Total
  $ 17,947     $ 15,355  

 
(a)
Long-lived assets information is based on the principal location of the asset. During the three months ended July 1, 2102 $1,500 of long-lived assets were purchased from Alco Electronics Ltd. in China.

Geographic revenues

The following table contains geographic revenues based on the product shipment destination, for the three and nine months ended September 30 1, 2012 and October 2, 2011:

   
Three months ended
   
Nine months ended
 
   
September 30,
2012
   
October 2,
2011
   
September 30,
2012
   
October 2,
2011
 
U.S.
  $ 53,341     $ 26,419     $ 158,542     $ 89,117  
Canada
    20,539       14,111       53,546       46,075  
Europe
    1,576       3,206       10,560       10,593  
Asia
    115       341       449       3,430  
Mexico
    4       5       52       28  
Total
  $ 75,575     $ 44,082     $ 223,149     $ 149,243  

Significant customers and concentration of credit risk:

Sales of the Company’s products are concentrated in certain cases among specific customers in the same industry. The Company is subject to concentrations of credit risk in trade receivables. 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 larger customers or any product line manufactured for one of its larger customers, it could experience a significant reduction in revenue. Also, the insolvency of one or more of its larger customers or the inability of one or more of its larger customers to pay for its orders could decrease revenue. As many costs and operating expenses are relatively fixed, a reduction in net revenue can decrease profit margins and adversely affect the business, financial condition and results of operations.

During the three months ended September 30, 2012, two customers individually comprised 36.6% and 11.1% (October 2, 2011– four customers individually comprised 22.5%, 11.6%, 11.0% and 10.4%) of total revenue across all geographic segments. During the nine months ended September 30, 2012 two customers individually comprised 34.3% and 13.4% (October 2, 2011 – four customers individually comprised 17.7%, 12.2%, 11.9% and 10.3%) of total revenue from continuing operations across all geographic segments.  As of September 30, 2012, these customers represented 30.3%, and 10.7%, respectively, (January 1, 2012, 22% and 4%, respectively) of the Company’s accounts receivable.