Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Segmented information

v2.4.0.6
Note 8 - Segmented information
 3 Months Ended
Apr. 01, 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 Asia. 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. In the three month period ended April 3, 2011, 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:

   
Three months ended
 
   
April 1, 2012
   
April 3, 2011
 
Revenues
           
Mexico
  $ 42,102     $ 34,179  
Asia
    11,387       8,297  
Canada
    8,492       11,518  
U.S.
    13,376       3,994  
Total
  $ 75,357     $ 57,988  
                 
Intersegment revenue
               
Mexico
  $ (969 )   $ (343 )
Asia
    (755 )     —  
Canada
    (745 )     (1,314 )
U.S.
    (431 )     (8 )
Total
  $ (2,900 )   $ (1,665 )
                 
Net external revenue
               
Mexico
  $ 41,133     $ 33,837  
Asia
    10,632       8,297  
Canada
    7,747       10,204  
U.S.
    12,945       3,986  
Total
  $ 72,457     $ 56,323  
                 
Adjusted EBITDA
               
Mexico
  $ 4,035     $ 2,757  
Asia
    686       34  
Canada
    (1,012 )     (505 )
U.S.
    599       (22 )
Total
  $ 4,308     $ 2,264  
                 
Interest
    463       286  
Restructuring charges
    451       364  
Depreciation
    752       663  
Earnings before income taxes
  $ 2,642     $ 951  

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 months ended April 1, 2012:

   
Three months ended
 
   
April 1, 2012
   
April 3, 2011
 
Mexico
  $ 1,269     $ 495  
Asia
    3       —  
Canada
    501       1,046  
U.S.
    326       44  
Total
  $ 2,099     $ 1,585  

Long-lived assets (a)

   
April 1, 2012
   
January 1, 2012
 
Mexico
  $ 10,728     $ 10,170  
Asia
    610       631  
Canada
    3,115       2,686  
U.S.
    2,249       1,868  
Total
  $ 16,702     $ 15,355  

 
(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 April 1, 2012 and April 3, 2011:

   
Three months ended
 
   
April 1, 2012
   
April 3, 2011
 
U.S.
  $ 50,212     $ 35,176  
Canada
    17,487       14,973  
Europe
    4,510       4,383  
Asia
    207       1,788  
Mexico
    41       3  
Total
  $ 72,457     $ 56,323  

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 April 1, 2012, two customers individually comprised 34.3% and 12.6% (April 3, 2011– three customers 16.4%, 15.2% and 10.0%) of total revenue across all geographic segments. As of April 1, 2012, these customers represented 29%  and 12%, respectively, (January 1, 2012, 22%, 4%, and 11%, respectively) of the Company’s trade accounts receivable.