Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Segmented Information

v2.4.0.8
Note 8 - Segmented Information
 6 Months Ended
Jun. 29, 2014
Segment Reporting [Abstract]  
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 manufacturing facilities in the United States, Mexico and China. The Company ceased production at its Canadian facility at the end of the second quarter of 2013. 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 that ships the product to the customer. Information about the operating segments is as follows:


   

Three months ended

   

Six months ended

 
   

June 29, 2014

   

June 30, 2013

   

June 29, 2014

   

June 30, 2013

 

Revenues

                               

Mexico

  $ 38,945     $ 42,806     $ 77,702     $ 91,674  

Asia

    15,159       11,901       30,689       23,683  

Canada

    -       6,723       -       12,703  

U.S.

    13,849       11,722       26,541       22,226  

Total

  $ 67,953     $ 73,152     $ 134,932     $ 150,286  

Intersegment revenue

                               

Mexico

  $ (142 )   $ (194 )   $ (507 )   $ (5,055 )

Asia

    (3,758 )     (1,064 )     (7,024 )     (3,483 )

Canada

    -       (1,417 )     -       (2,541 )

U.S.

    (6,069 )     (5,581 )     (11,394 )     (8,864 )

Total

  $ (9,969 )   $ (8,256 )   $ (18,925 )   $ (19,943 )

Net external revenue

                               

Mexico

  $ 38,803     $ 42,612     $ 77,195     $ 86,619  

Asia

    11,401       10,837       23,665       20,200  

Canada

    -       5,306       -       10,162  

U.S.

    7,780       6,141       15,147       13,362  

Total

  $ 57,984     $ 64,896     $ 116,007     $ 130,343  

Adjusted EBITDA

                               

Mexico

  $ 735     $ (1,736 )   $ 253     $ 794  

Asia

    1,196       335       2,622       870  

Canada

    369       (2,149 )     199       (2,131 )

U.S.

    (46 )     105       450       361  

Total

  $ 2,254     $ (3,445 )   $ 3,524     $ (106 )

Interest

    473       445       867       829  

Restructuring charges

    509       702       1,179       1,154  

Depreciation

    979       1,008       2,107       1,917  

Earnings (loss) before income taxes

  $ 293     $ (5,600 )   $ (629 )   $ (4,006 )

Additions and Disposals to Property, Plant and Equipment


The following table contains additions and disposals to property, plant and equipment for the three and six months ended June 29, 2014 and June 30, 2013:


   

Three months ended

   

Six months ended

 
   

June 29, 2014

   

June 30, 2013

   

June 29, 2014

   

June 30, 2013

 

Mexico

  $ 2,088     $ 510     $ 2,265     $ 921  

Asia

    39       79       39       422  

Canada

    92       (1,288 )     112       (1,214 )

U.S.

    57       125       112       191  

Total

  $ 2,276     $ (574 )   $ 2,528     $ 320  

Long-lived assets (a)


   

June 29, 2014

   

December 29, 2013

 

Mexico

  $ 13,182     $ 12,236  

Asia

    3,251       3,534  

Canada

    354       399  

U.S.

    1,860       2,050  

Total

  $ 18,647     $ 18,219  

 

(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 six months ended June 29, 2014 and June 30, 2013:


   

Three months ended

   

Six months ended

 
   

June 29, 2014

   

June 30, 2013

   

June 29, 2014

   

June 30, 2013

 

U.S.

  $ 51,048     $ 54,356     $ 103,331     $ 104,422  

Canada

    5,358       7,092       9,733       18,778  

Europe

    —       1,378       284       2,805  

Asia

    1,578       2,061       2,655       4,308  

Mexico

    —       9       4       30  

Total

  $ 57,984     $ 64,896     $ 116,007     $ 130,343  

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 June 29, 2014, three customers exceeded 10% of total revenues representing 30%, 12.7% and 11% respectively of total revenue for the second quarter of 2014 (June 30, 2013 – one customer individually comprised 37.5% of total revenue). During the six months ended June 29, 2014 three customers individually comprised 33%, 13.1% and 10.1% (June 30, 2013 – two customers individually comprised 37.5% and 10.1%) of total revenue. As of June 29, 2014, these customers represented 16.3%, 14.4% and 4.1% respectively, (As of December 29, 2013, these customers represented 22.3%, 17.7% and 3.7% respectively) of the Company’s accounts receivable.