Note 16 - Business Unit Segment Information

12 Months Ended

Dec. 29, 2012

Segment Reporting Disclosure [Text Block]

16. Business Unit Segment Information

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 company reports its operations by the following business unit segments: Electronics, Automotive and Electrical.

•  Electronics. Provides circuit protection components and expertise to leading global manufacturers of a wide range of electronic products including mobile phones, computers, LCD TVs, telecommunications equipment, medical devices, lighting products and white goods. The Electronics business segment has the broadest product offering in the industry including fuses and protectors, positive temperature coefficient (“PTC”) resettable fuses, varistors, polymer electrostatic discharge (“ESD”) suppressors, discrete transient voltage suppression (“TVS”) diodes, TVS diode arrays and protection thyristors, gas discharge tubes, power switching components and fuseholders, blocks and related accessories.  

•  Automotive. Provides circuit protection products to the worldwide automotive original equipment manufacturers (“OEM”) and parts distributors of passenger automobiles, trucks, buses and off-road equipment. The company also sells its fuses in the automotive replacement parts market. Products include blade fuses, high current fuses, battery cable protectors and varistors.  

•  Electrical. Provides circuit protection products for industrial and commercial customers. Products include power fuses and other circuit protection devices that are used in commercial and industrial buildings and large equipment such as HVAC systems, elevators and machine tools.

Each of the operating segments is directly responsible for sales, marketing and research and development. Manufacturing, purchasing, logistics, customer service, finance, information technology and human resources are shared functions that are allocated back to the three operating segments. The CEO allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss), 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. All other functions are shared by the operating segments and expenses for these shared functions are allocated to the operating segments and included in the operating results reported below. The company does not report inter-segment revenue because the operating segments do not record it. The company does not allocate interest and other income, interest expense, equity in loss of unconsolidated affiliate, or taxes to operating segments. Although the CEO uses operating income 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.

The company has provided this business unit segment information for all comparable prior periods. Segment information is summarized as follows (in thousands):

	2012			2011			2010
Net sales
Electronics	$	329,466		$	354,487		$	373,370
Automotive		206,222			197,586			139,096
Electrical		132,225			112,882			95,555
Total net sales	$	667,913		$	664,955		$	608,021
Depreciation and amortization
Electronics	$	20,741		$	22,324		$	23,636
Automotive		6,822			5,992			4,918
Electrical		3,870			3,936			3,451
Total depreciation and amortization	$	31,433		$	32,252		$	32,005
Operating income (loss)
Electronics	$	51,422		$	62,982		$	69,676
Automotive		29,817			30,002			17,038
Electrical		32,794			28,902			24,697
Other (1)		(7,163	)		(7,982	)		(3,837	)
Total operating income		106,870			113,904			107,574
Interest expense, net		1,701			1,691			1,437
Impairment and equity in net loss of unconsolidated affiliate (2)		7,334			—			—
Other expense (income), net		(2,217	)		(2,888	)		(1,542	)
Income before income taxes	$	100,052		$	115,101		$	107,679

(1)  Included in “Other” Operating income (loss) for 2012 are acquisition related fees ($1.0 million), non-cash charges for the sale of inventory that had been stepped-up to fair value at the acquisition date of Accel and Terra Power ($0.6 million), charges related to a pension liability settlement ($5.1 million) (see Note 13), and asset impairment charges related to the sale of the Dünsen, Germany facility ($0.5 million) (See Note 12).   Included in “Other” Operating income (loss) for 2011 are acquisition related fees ($1.0 million), a non-cash charge for the sale of inventory that had been stepped-up to fair value at the acquisition date of Cole Hersee ($3.7 million), asset impairment charges related to closure of the company’s Des Plaines, Illinois ($0.8 million), Dundalk, Ireland ($0.6 million) and Dünsen, Germany ($0.9 million) manufacturing facilities (see Note 12) and purchase accounting adjustments related to the Selco acquisition ($0.7 million).   Included in “Other” Operating income (loss) for 2010 are asset impairment charges related to closure of the company’s Des Plaines, Illinois ($1.3 million) and Dundalk, Ireland ($1.7 million) manufacturing facilities (see Note 12).

(2)  During the fourth quarter of 2012, the company recorded approximately $7.3 million related to the impairment and equity in net loss of its investment in Shocking Technologies. (See Note 6).

The company’s significant net sales and long-lived assets (total net property, plant and equipment) by country for the fiscal years ended 2012, 2011 and 2010 are as follows (in thousands):

	2012		2011		2010
Net sales
United States	$	222,530	$	223,701	$	192,987
China		142,553		148,717		149,096
Other countries		302,830		292,537		265,938
Total net sales	$	667,913	$	664,955	$	608,021
Long-lived assets
United States	$	96,938	$	92,482	$	93,851
China		43,565		45,466		48,148
Canada		44,269		42,299		44,419
Other countries		118,543		98,917		98,244
Total long-lived assets	$	303,315	$	279,164	$	284,662

For the year ended December 29, 2012, approximately 67% of the company’s net sales were to customers outside the United States (exports and foreign operations) including 21% to China. Sales to Arrow Pemco were less than 10% for 2012 and 2011, respectively, but 10.4% in 2010. No other single customer accounted for more than 10% of net sales during the last three years.