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SEGMENT REPORTING
 3 Months Ended
May 03, 2015
SEGMENT REPORTING

NOTE D. SEGMENT REPORTING

We have two reportable segments, e-commerce and retail. The e-commerce segment has the following merchandising strategies: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, PBteen, Williams-Sonoma Home, Rejuvenation and Mark and Graham, which sell our products through our e-commerce websites and direct-mail catalogs. Our e-commerce merchandising strategies are operating segments, which have been aggregated into one reportable segment, e-commerce. The retail segment has the following merchandising strategies: Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm and Rejuvenation, which sell our products through our retail stores. Our retail merchandising strategies are operating segments, which have been aggregated into one reportable segment, retail. Our operating segments have had similar historical economic characteristics and it is management’s expectation that the operating segments will have similar long-term financial performance in the future.

These reportable segments are strategic business units that offer similar home-centered products. They are managed separately because the business units utilize two distinct distribution and marketing strategies. Based on management’s best estimate, our operating segments include allocations of certain expenses, including advertising and employment costs, to the extent they have been determined to benefit both channels. These operating segments are aggregated at the channel level for reporting purposes due to the fact that our brands are interdependent for economies of scale and we do not maintain fully allocated income statements at the brand level. As a result, material financial decisions related to the brands are made at the channel level. Furthermore, it is not practicable for us to report revenue by product group.

We use operating income to evaluate segment profitability. Operating income is defined as earnings (loss) before net interest income or expense and income taxes. Unallocated costs before interest and income taxes include employee-related costs, occupancy expenses (including depreciation expense), administrative costs and third party service costs, primarily in our corporate departments. Unallocated assets include corporate cash and cash equivalents, deferred income taxes, the net book value of corporate facilities and related information systems, and other corporate long-lived assets.

 

Income tax information by reportable segment has not been included as income taxes are calculated at a company-wide level and are not allocated to each reportable segment.

Segment Information

 

In thousands E-commerce   Retail   Unallocated   Total  

Thirteen weeks ended May 3, 2015

Net revenues1

 $   532,573    $ 498,103    $ 0    $ 1,030,676   

Depreciation and amortization expense

   8,102      20,150      13,226      41,478   

Operating income (loss)

   127,574      28,126      (83,772 )    71,928   

Assets2

   610,976        1,053,039        587,074        2,251,089   

Capital expenditures

   3,936      19,928      16,520      40,384   

Thirteen weeks ended May 4, 2014

Net revenues1

 $ 491,289    $ 483,041    $ 0    $ 974,330   

Depreciation and amortization expense

   7,407      19,360      11,863      38,630   

Operating income (loss)

   121,136      30,196      (77,006 )    74,326   

Assets2

   547,077      988,659      632,364      2,168,100   

Capital expenditures

   9,477      14,700      13,942      38,119   
1  Includes net revenues of approximately $54.8 million and $51.1 million for the thirteen weeks ended May 3, 2015 and May 4, 2014, respectively, related to our foreign operations.
2  Includes long-term assets of approximately $59.0 million and $59.8 million as of May 3, 2015 and May 4, 2014, respectively, related to our foreign operations.