Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Segmented information

v2.3.0.15
Note 8 - Segmented information
 9 Months Ended
Oct. 02, 2011
Segment Reporting Disclosure [Text Block]
8.
Segmented information

    
General description

The Company derives its revenue from one 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. 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, 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 quarters, the segment measure of profitability previously reported on was adjusted EBITA (earnings before restructuring charges, loss on extinguishment of debt, loss on derivative financial instruments, interest, taxes and amortization). The measure was changed to conform to the measure used in the Company’s quarterly results press release and analyst call, and 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:

   
Three months ended
   
Nine months ended
 
   
October 2,
2011
   
October 3,
2010
   
October 2,
2011
   
October 3,
2010
 
Revenues from continuing operations
                       
Mexico
  $ 27,111     $ 32,417     $ 89,003     $ 93,657  
Asia
    9,135       13,672       28,091       46,432  
Canada
    6,103       14,992       27,013       44,488  
U.S.
    4,843       5,519       11,679       17,369  
Total
  $ 47,192     $ 66,600     $ 155,786     $ 201,946  
Intersegment revenue
                               
Mexico
  $ (1,530 )   $ (455 )   $ (2,174 )   $ (1,708 )
Asia
    —       —       (189 )     —  
Canada
    (1,507 )     (762 )     (4,053 )     (2,223 )
U.S.
    (73 )     (2 )     (90 )     (65 )
Total
  $ (3,110 )   $ (1,219 )   $ (6,506 )   $ (3,996 )
Net external revenue from continuing operations
                               
Mexico
  $ 25,581     $ 31,962     $ 86,829     $ 91,949  
Asia
    9,135       13,672       27,865       46,432  
Canada
    4,596       14,230       22,960       42,265  
U.S.
    4,770       5,517       11,589       17,304  
Total
  $ 44,082     $ 65,381     $ 149,243     $ 197,950  
EBITDA
                               
Mexico
  $ 1,959     $ 4,617     $ 7,214     $ 12,983  
Asia
    662       457       1,001       1,340  
Canada
    (1,409 )     (1,918 )     (2,521 )     (4,936 )
U.S.
    (355 )     613       (636 )     1,980  
Total
  $ 857     $ 3,769     $ 5,058     $ 11,367  
Interest
    326       436       981       1,376  
Loss on extinguishment of debt
    300       —       300       —  
Loss on derivative financial instrument
    125       —       125       —  
Restructuring charges
    686       —       2,793       —  
Depreciation
    704       643       2,059       1,892  
Earnings (loss) before income taxes
  $ (1,284 )   $ 2,690     $ (1,200 )   $ 8,099  

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 October 2, 2011 and October 3, 2010:

   
Three months ended
   
Nine months ended
 
   
October 2,
2011
   
October 3,
2010
   
October 2,
2011
   
October 3,
2010
 
Mexico
  $ 703     $ 64     $ 1,250     $ 195  
Asia
    6       65       6       700  
Canada
    63       30       1,171       74  
U.S.
    20       11       140       37  
Total
  $ 792     $ 170     $ 2,567     $ 1,006  

Long-lived assets (a)

   
October 2,
 2011
   
January 2,
2011
 
Mexico
  $ 9,700     $ 9,793  
Asia
    653       718  
Canada
    2,326       1,614  
U.S.
    1,938       1,766  
Total
  $ 14,617     $ 13,891  

 
(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, for the three and nine months ended October 2, 2011 and October 3, 2010:

   
Three months ended
   
Nine months ended
 
   
October 2,
2011
   
October 3,
2010
   
October 2,
2011
   
October 3,
2010
 
U.S.
  $ 26,419     $ 42,394     $ 89,117     $ 120,026  
Canada
    14,111       16,857       46,075       49,063  
Europe
    3,206       5,870       10,593       15,700  
Asia
    341       257       3,430       13,149  
Mexico
    5       3       28       12  
Total
  $ 44,082     $ 65,381     $ 149,243     $ 197,950  

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 October 2, 2011, four customers individually comprised 22.5%, 11.6%, 11.0% and 10.4% (October 3, 2010– three customers 16.7%, 15.9% and 13.9%) of total revenue from continuing operations across all geographic segments. During the nine months ended October 2, 2011 four customers individually comprised 17.7%, 12.2%, 11.9% and 10.3% (October 3, 2010 – 16.5%, 14.9%, 13.4% and 13.4% )  of total revenue from continuing operations across all geographic segments.  As of October 2, 2011, these customers represented 18%, 13%, 8% and 3%, respectively, (January 2, 2011, 8%, 4%, 10% and 5%, respectively) of the Company’s trade accounts receivable.