BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

12 Months Ended

Jan. 02, 2016

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

7. BUSINESS SEGMENTS, MAJOR CUSTOMERS AND SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

The Company identifies its segments based on the way management organizes the Company to assess performance and make operating decisions regarding the allocation of resources. In accordance with the criteria in FASB ASC 280 "Segment Reporting," the Company has concluded it has three reportable segments: the North America segment, the EMEA segment and the Strategic Alliances segment. The North America and EMEA segments are both single reportable, operating segments that encompass the Company’s operational, technology and software consulting services inside of North America and outside of North America, respectively. Both reportable segments offer management consulting, custom developed software, and technical services. The Strategic Alliances reportable segment is a single, reportable segment that includes the Company’s world-wide commercial activities undertaken with third-party service or solutions providers. The Farncombe Entities, acquired on July 22, 2015 are included in the EMEA segment.

Management evaluates segment performance based upon income (loss) from operations, excluding share-based compensation (benefits) and depreciation. There were no inter-segment revenues during fiscal years 2015 and 2014. In addition, in its administrative division, entitled "Not Allocated to Segments," the Company accounts for non-operating activity and the costs of providing corporate and other administrative services to all the segments, including, but not limited to, share-based compensation expense, depreciation expense, certain research and development costs, and costs related to the arbitration with the Company’s former Chief Executive Officer. See Note 13, Commitments and Contingencies, for additional discussion of the arbitration costs. Summarized financial information concerning the Company's reportable segments is shown in the following table (amounts in thousands):

							Not
							Allocated
	North				Strategic		to
	America		EMEA		Alliances		Segments		Total
As of and for the fiscal year ended January 2, 2016:
Revenues	$	34,025	$	43,844	$	475	$	–	$	78,344
Income (loss) from operations		8,222		5,884		(2,982)		(17,330)		(6,206)
Total other income (expense)		–		–		–		(899)		(899)
Income (loss) before income tax provision		8,222		5,884		(2,982)		(18,229)		(7,105)
Depreciation		–		–		–		952		952
Total assets	$	6,831	$	9,725	$	626	$	24,177	$	41,359
As of and for the fiscal year ended January 3, 2015:
Revenues	$	34,660	$	36,979	$	36	$	–	$	71,675
Income (loss) from operations		9,057		6,908		(1,229)		(15,617)		(881)
Total other income (expense)		–		–		–		(1,651)		(1,651)
Income (loss) before income tax provision		9,057		6,908		(1,229)		(17,268)		(2,532)
Depreciation		–		–		–		628		628
Total assets	$	7,398	$	6,099	$	3,030	$	25,749	$	42,276

Segment assets, regularly reviewed by management as part of its overall assessment of the segments' performance, include both billed and unbilled trade accounts receivable, net of allowances, inventory, and certain other assets, if applicable. Assets not assigned to segments include cash and cash equivalents, current and non-current investments, property and equipment, goodwill and intangible assets and deferred tax assets, excluding deferred tax assets recognized on accounts receivable reserves, which are assigned to their segments.

In accordance with the provisions of FASB ASC 280-10, revenues earned in the United States and internationally based on the location where the services are performed are shown in the following table (amounts in thousands):

	Revenues
	Fiscal Year		Fiscal Year
	2015		2014
United States	$	34,511	$	34,125
International:
United Kingdom		41,399		34,642
Other		2,434		2,908
Total	$	78,344	$	71,675

In accordance with the provisions of FASB ASC 280-10, long-lived assets, excluding intangible assets, by geographic area are shown in the following table (amounts in thousands):

	Long-Lived Assets
	January 2,		January 3,
	2016		2015
United States	$	2,611	$	1,673
United Kingdom		346		230
France		12
Total	$	2,969	$	1,903

Major customers in terms of significance to Cartesian's revenues (i.e. in excess of 10% of revenues) for fiscal years 2015 and 2014 and accounts receivable as of January 2, 2016 and January 3, 2015 were as follows (amounts in thousands):

	Revenues
	Fiscal Year 2015				Fiscal Year 2014
	North				North
	America		EMEA		America		EMEA
Customer A			$	18,906			$	21,995
Customer B			$	16,243			$	7,365
Customer C	$	13,377			$	11,851

	Accounts Receivable
	January 2,		January 3,
	2016		2015
Customer A	$	1,510	$	2,112
Customer B	$	3,577	$	2,870
Customer C	$	1,423	$	2,783

Revenues from the Company's ten most significant customers accounted for approximately 87% and 84% of revenues in fiscal years 2015 and 2014, respectively.

 

Substantially all of Cartesian's receivables are obligations of companies in the communications, media and entertainment industries. The Company generally does not require collateral or other security on its accounts receivable. The credit risk on these accounts is controlled through credit approvals, limits and monitoring procedures. The Company records bad debt expense based on judgment about the anticipated default rate on receivables owed to Cartesian at the end of the reporting period. That judgment is based on the Company's uncollected account experience in prior years and the ongoing evaluation of the credit status of Cartesian's customers and the communications industry in general.