Note 15 - Business Unit Segment Information

12 Months Ended

Jan. 02, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

15

. 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 Industrial.

● 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.

● Industrial (formerly 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):

	20 15		20 14		20 13
Net sales
Electronics	$	405,497	$	410,065	$	367,052
Automotive		339,957		325,415		267,207
Industrial		122,410		116,515		123,594
Total net sales	$	867,864	$	851,995	$	757,853
Depreciation and amortization
Electronics	$	22,936	$	22,177	$	20,735
Automotive		13,437		14,204		9,928
Industrial		5,268		5,494		3,817
Total depreciation and amortization	$	41,641	$	41,875	$	34,480

(Table continued from prior page.)
	20 15			20 14			201 3
Operating income (loss)
Electronics	$	78,194		$	86,981		$	69,559
Automotive		53,086			45,086			39,170
Industrial		18,094			10,674			24,363
Other (1)		(45,217	)		(8,911	)		(3,211	)
Total operating income		104,157			133,830			129,881
Interest expense		4,091			4,903			2,917
Impairment and equity in net loss of unconsolidated affiliate (2)		—			—			10,678
Foreign exchange loss (gain)		(1,465	)		3,925			(3,303	)
Other expense (income), net		(5,417	)		(6,644	)		(4,646	)
Income before income taxes	$	106,948		$	131,646		$	124,235

(1) 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 Cost of sales (“COS”)), acquisition related fees ($4.6 million included in Selling, general and administrative expenses (“SG&A”)), pension settlement and other costs ($31.9 million in SG&A), internal legal restructuring costs ($3.6 million in SG&A) and (($0.2 million) of other 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 (See Note 2)), severance charges ($2.7 million in COS and $0.5 million in SG&A), internal legal 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). 

Included in “Other” Operating income (loss) for 2013 are acquisition related fees ($1.7 million included in SG&A) and non-cash charges for the sale of inventory that had been stepped-up to fair value at the acquisition date of Hamlin ($1.5 million included in COS). 

(2) During the first quarter of 2013, the company recorded approximately $10.7 million related to the impairment of Shocking Technologies. (See Note 6).  

The company’s significant net sales, long-lived assets and additions to long-lived assets by country for the fiscal years ended 2015, 2014 and 2013 are as follows (in thousands):

	201 5		201 4		201 3
Net sales
United States	$	344,305	$	313,762	$	274,666
China		193,792		189,191		158,494
Other countries		329,767		349,042		324,693
Total net sales	$	867,864	$	851,995	$	757,853
Long-lived assets
United States	$	23,965	$	34,179	$	27,294
China		37,241		40,981		45,843
Canada		10,488		12,899		14,429
Other countries		90,874		70,581		62,607
Total long-lived assets	$	162,568	$	158,640	$	150,173

	201 5		201 4		2013
Additions to long-lived assets
United States	$	8,609	$	9,134	$	4,644
China		9,710		7,265		7,864
Canada		506		555		2,280
Other countries		25,194		15,327		20,165
Total additions to long-lived assets	$	44,019	$	32,281	$	34,953

For the year ended January 2, 2016, approximately 60% of the company’s net sales were to customers outside the United States (exports and foreign operations) including 22% to China. No single customer accounted for more than 10% of net sales during the last three years.