Note 14 - Segment Information

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

14.

Segment 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.

● Electronics Segment : Provides circuit protection components for overcurrent and overvoltage protection, as well as sensor components and modules to leading global manufacturers of a wide range of electronic products. The segment covers a broad range of end markets, including consumer electronics, telecommunications equipment, medical devices, lighting products, and white goods. The Electronics segment supplies circuit protection, sensing and control products to various leading manufacturers. The Electronics segment has one of the broadest product offerings in the industry including fuses and protectors, positive temperature coefficient (“PTC”) resettable fuses, varistors, polymer electrostatic discharge (“ESD”) suppressors, discrete TVS diodes, TVS diode arrays protection and switching thyristors, gas discharge tubes, power switching components, fuseholders, reed switch and sensor assemblies, IGBT blocks, and related accessories.

● Automotive Segment: Provides circuit protection and sensor products to the worldwide automotive original equipment manufacturers (“OEM”) and parts distributors of passenger automobiles, trucks, buses, and off-road equipment. In addition, the company supplies heavy duty power distribution modules, switches and relays to the commercial vehicle industry. The company also sells its fuses, including blade fuses and high current fuses, battery cable protectors, and varistors, in the automotive replacement parts market. The company also supplies wiring harness manufacturers and auto parts suppliers worldwide.

● Industrial Segment: Provides circuit protection products for industrial and commercial customers. Products include power fuses and other circuit protection devices, including protection and time delay relays, which are used in commercial and industrial buildings and large equipment such as HVAC systems, elevators, and machine tools. The company also supplies industrial ground fault protection in mining and other large industrial operations.

The company has provided this segment information for all comparable prior periods.

Segment information is summarized as follows:

(in thousands )	2016			2015			2014
Net sales
Electronics	$	535,191		$	405,497		$	410,065
Automotive		415,200			339,957			325,415
Industrial		105,768			122,410			116,515
Total net sales	$	1,056,159		$	867,864		$	851,995
Depreciation and amortization
Electronics	$	29,141		$	22,936		$	22,177
Automotive		18,107			13,437			14,204
Industrial		5,889			5,268			5,494
Total depreciation and amortization	$	53,137		$	41,641		$	41,875
Operating income (loss)
Electronics	$	117,088		$	78,194		$	86,981
Automotive		59,905			53,086			45,086
Industrial		3,615			18,094			10,674
Other (a)		(49,964	)		(45,217	)		(8,911	)
Total operating income		130,644			104,157			133,830
Interest expense		8,628			4,091			4,903
Foreign exchange loss (gain)		472			(1,465	)		3,925
Other expense (income), net		(1,730	)		(5,417	)		(6,644	)
Income before income taxes	$	123,274		$	106,948		$	131,646

(a) Included in “Other” Operating income (loss) for

2016

are costs related to the impairment of the custom products reporting unit

($14.8

million), acquisition and integration costs associated with the company’s

2016

acquisitions

($29.2

million in Cost of sales (“COS”) and SG&A), transfer of the company’s reed switch manufacturing operations from its Lake Mills, Wisconsin and Suzhou, China locations to the Philippines

($1.6

million in COS), impairment and severance costs related to the closure of the company’s manufacturing facility in Denmark

($1.9

million in SG&A), and restructuring costs

($2.5

million in SG&A and R&D).

Included in “Other” Operating income (loss) for

2015

are costs related to the transfer of the company’s reed switch manufacturing operations from its Lake Mills, Wisconsin and Suzhou, China locations to the Philippines

($5.2

million in COS), acquisition related fees

($4.6

million included in SG&A), pension settlement and other costs

($31.9

million in SG&A), and restructuring costs

($3.6

million in SG&A).

Included in “Other” Operating income (loss) for

2014

are acquisition related fees

($0.4

million included in SG&A), non-cash charges for the sale of inventory that had been stepped-up to fair value at the acquisition date of SymCom

($2.8

million included in COS), severance charges

($2.7

million in COS and

$0.5

million in SG&A), restructuring costs

($2.2

million in SG&A) and asset impairments

($0.2

million in Research and development and

$0.1

million in SG&A).

The company’s significant net sales, long-lived assets and additions to long-lived assets by country for the fiscal years ended

2016,

2015,

and

2014

are as follows:

(in thousands )	2016		2015		2014
Net sales
United States	$	356,674	$	344,305	$	313,762
China		263,701		193,792		189,191
Other countries		435,784		329,767		349,042
Total net sales	$	1,056,159	$	867,864	$	851,995
Long-lived assets
United States	$	23,731	$	23,965	$	34,179
China		65,345		37,241		40,981
Canada		9,880		10,488		12,899
Other countries		118,219		90,874		70,581
Total long-lived assets	$	217,175	$	162,568	$	158,640
Additions to long-lived assets
United States	$	4,694	$	8,609	$	9,134
China		13,181		9,710		7,265
Canada		177		506		555
Other countries		28,176		25,194		15,327
Total additions to long-lived assets	$	46,228	$	44,019	$	32,281

For the year ended

January

2,

2016,

approximately

66%

of the company’s net sales were to customers outside the United States (exports and foreign operations) including

25%

to China. No single customer accounted for more than

10%

of net sales during the last

three

years.