Note 13 - Segment and Geographic Information

9 Months Ended

Oct. 01, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

1

3

. 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 nine months ended October 1, 2016 and September 26, 2015 are summarized as follows (in thousands):

	For the Three Months Ended						For the Nine Months Ended
	October 1 , 201 6			September 26, 2015			October 1, 2016			September 26, 2015
Net sales
Electronics	$	147,730		$	102,616		$	378,696		$	307,549
Automotive		106,341			81,475			309,644			251,464
Industrial		26,260			31,419			83,301			88,831
Total net sales	$	280,331		$	215,510		$	771,641		$	647,844
Depreciation and amortization
Electronics	$	7,694		$	5,811		$	20,783		$	17,384
Automotive		4,627			3,244			12,881			9,883
Industrial		1,733			1,260			4,561			3,839
Other (1)		(937	)		-			-			-
Total depreciation and amortization	$	13,117		$	10,315		$	38,225		$	31,106
Operating income (loss)
Electronics	$	34,571		$	20,923		$	82,246		$	61,755
Automotive		15,032			15,253			48,997			39,123
Industrial		57			5,781			3,758			13,220
Other (2 )		(22,134	)		(33,373	)		(45,345	)		(39,795	)
Total operating income		27,526			8,584			89,656			74,303
Interest expense		2,571			922			6,286			3,021
Foreign exchange (gain) loss		(4,700	)		(3,549	)		(7,114	)		(1,724	)
Other (income) expense, net		(778	)		(1,430	)		(1,040	)		(3,758	)
Income before income taxes	$	30,433		$	12,641		$	91,524		$	76,764

(1) Consists of intangible impairments related to its loss on sale of product line now reflected in selling, general and administrative expenses for the nine months ended October 1, 2016. (See Note 15).

(2) Included in “Other” Operating income (loss) for the 2016 third quarter is $14.8 million (14.8 million year-to-date) of charges related to the impairment of the custom products reporting unit, $5.9 million ($18.2 million year-to-date) of acquisition and integration costs associated with the company’s 2016 acquisitions, primarily PolySwitch, $0.6 million ($7.5 million year-to-date) of non-cash inventory charges relating to the company’s 2016 acquisitions, primarily PolySwitch, as described in Note 4, $1.9 million year-to-date in charges related to the closure of the company’s manufacturing facility in Denmark, $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 $0.9 million ($1.3 million year-to-date) related to internal legal restructuring costs.

Included in “Other” Operating income (loss) for the 2015 third quarter is $2.1 million ($6.8 million year-to-date) related to internal legal restructuring, $0.3 million ($0.7 million year-to-date) related to acquisition costs and $30.9 million ($32.2 million year-to-date) of expense related to the planned termination of the U.S. pension as described in Note 12

.

The company’s significant net sales by country for the three and nine months ended October 1, 2016 and September 26, 2015 are summarized as follows (in thousands):

	For the Three Months Ended ( a )				For the Nine Months Ended ( a )
	October 1, 2016		September 26, 2015		October 1, 2016		September 26, 2015
United States	$	92,475	$	85,049	$	270,659	$	258,030
China		70,215		49,345		181,134		143,694
Other countries		117,641		81,116		319,848		246,120
Total	$	280,331	$	215,510	$	771,641	$	647,844

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

The company’s significant long-lived assets by country as of October 1, 2016 and January 2, 2016 are summarized as follows (in thousands):

	Long-lived assets (b)
	October 1 , 2016		January 2, 2016
United States	$	24,578	$	23,965
China		67,003		37,241
Mexico		51,988		47,130
Philippines		34,511		33,525
Other countries		45,773		20,707
Total	$	223,853	$	162,568

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