Note 12 - Segment and Geographic Information

6 Months Ended

Jul. 02, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

1

2

. Segment and Geographic Information

The company and its subsidiaries design, manufacture and sell components and modules for circuit protection, power control and sensing throughout the world. The company reports its operations by the following segments: Electronics, Automotive, and Industrial. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. The CODM is the company’s President and Chief Executive Officer (“CEO”). The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss) before interest and taxes, but does not evaluate the operating segments using discrete balance sheet information.

Sales, marketing and research and development expenses are charged directly into each operating segment. Manufacturing, purchasing, logistics, customer service, finance, information technology and human resources are shared functions that are allocated back to the three operating segments. The company does not report inter-segment revenue because the operating segments do not record it.

Certain expenses, determined by the CODM to be strategic in nature and not directly related to segments current results, are not allocated but identified as

“

Other

”

.

Additionally, the company does not allocate interest and other income, interest expense, or taxes to operating segments.

These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments.

Although the CODM uses operating income (loss) to evaluate the segments, operating costs included in one segment may benefit other segments. Except as discussed above, the accounting policies for segment reporting are the same as for the company as a whole.

Segment information for the three and six months ended July 2, 2016 and June 27, 2015 are summarized “as follows (in thousands):

	For the Three Months Ended						For the Six Months Ended
	July 2 , 201 6			June 27, 2015			July 2, 2016			June 27, 2015
Net sales
Electronics	$	132,170		$	105,553		$	230,966		$	204,933
Automotive		111,370			85,918			203,303			169,989
Industrial		28,372			30,550			57,041			57,412
Total net sales	$	271,912		$	222,021		$	491,310		$	432,334
Depreciation and amortization
Electronics	$	7,717		$	5,775		$	13,089		$	11,573
Automotive		4,988			3,303			8,254			6,639
Industrial		1,376			1,295			2,828			2,579
Other (1)		-			-			937			-
Total depreciation and amortization	$	14,081		$	10,373		$	25,108		$	20,791
Operating income (loss)
Electronics	$	25,259		$	22,167		$	47,675		$	40,832
Automotive		16,474			12,699			33,965			23,870
Industrial		2,028			4,709			3,701			7,439
Other (2 )		(14,059	)		(3,404	)		(23,211	)		(6,422	)
Total operating income		29,702			36,171			62,130			65,719
Interest expense		1,670			948			3,715			2,099
Foreign exchange (gain) loss		(6,237	)		(1,292	)		(2,414	)		1,825
Other (income) expense, net		255			(1,202	)		(262	)		(2,328	)
Income before income taxes	$	34,014		$	37,717		$	61,091		$	64,123

(1) Consists of intangible impairments. (See Note 14).

(2) Included in “Other” Operating income (loss) for the 2016 second quarter is $6.1 million ($12.3 million year-to-date) of acquisition-related costs primarily related to legal and integration costs associated with the company’s acquisition of the PolySwitch business, a $6.9 million ($6.9 million year-to-date) inventory adjustment relating to the PolySwitch acquisition as described in Note 4, $0.3 million ($1.9 million year-to-date) in charges related to the closure of the company’s manufacturing facility in Denmark, $0.7 million ($1.7 million year-to-date) related to the company’s transfer of its reed sensor manufacturing operations from the U.S. and China to the Philippines and $0.1 million ($0.4 million year-to-date) related to internal legal restructuring costs.

Included in “Other” Operating income (loss) for the 2015 second quarter is $0.9 million ($1.9 million year-to-date) of costs related to the company’s transfer of its reed sensor manufacturing from the U.S. to the Philippines, $1.7 million ($2.9 million year-to-date) related to internal legal restructuring, $0.2 million ($0.3 million year-to-date) related to acquisition costs and $0.7 million ($1.3 million year-to-date) of expense related to the planned termination of the U.S. pension as described in Note 11

.

The company’s significant net sales by country for the three and six months ended July 2, 2016 and June 27, 2015 are summarized as follows (in thousands):

	For the Three Months Ended ( a )				For the Six Months Ended ( a )
	July 2, 2016		June 27, 2015		July 2, 2016		June 27, 2015
United States	$	93,036	$	89,608	$	178,184	$	172,981
China		62,411		49,920		110,919		94,349
Other countries		116,465		82,493		202,207		165,004
Total	$	271,912	$	222,021	$	491,310	$	432,334

(a) Sales by country represent sales to customer or distributor locations.

The company’s significant long-lived assets by country as of July 2, 2016 and January 2, 2016 are summarized as follows (in thousands):

	Long-lived assets (b)
	July 2 , 2016		January 2, 2016
United States	$	23,985	$	23,965
China		70,325		37,241
Canada		10,925		10,488
Other countries		119,275		90,874
Total	$	224,510	$	162,568

(b) Long-lived assets consists of net property, plant and equipment.

The company’s significant additions to long-lived assets by country for the six months ended July 2, 2016 and June 27, 2015 are summarized as follows (in thousands):

	Additions to long-lived assets
	July 2 , 2016		June 27, 2015
United States	$	2,783	$	6,615
China		3,847		4,080
Canada		137		878
Other countries		13,450		14,815
Total	$	20,217	$	26,388