(

)

Segment Information

The Company

’s operations are conducted through

three

operating segments consisting of DTC, commercial and international franchising. The DTC segment includes the operating activities of corporately-managed locations and other retail delivery operations in the United States, Canada, China, Denmark, Ireland and the United Kingdom, including the Company’s e-commerce sites and temporary stores. The commercial segment includes the Company’s transactions with other businesses, mainly comprised of licensing the Company’s intellectual properties for

third

party use and wholesale activities. The international franchising segment includes the licensing activities of the Company’s franchise agreements with store locations in Europe (outside of the United Kingdom, Ireland and Denmark), Asia, Australia, the Middle East, Africa and Mexico. The operating segments have discrete sources of revenue, different capital structures and different cost structures. These operating segments represent the basis on which the Company’s chief operating decision maker regularly evaluates the business in assessing performance, determining the allocation of resources and the pursuit of future growth opportunities. Accordingly, the Company has determined that each of its operating segments represent a reportable segment. The

three

reportable segments follow the same accounting policies used for the Company’s consolidated financial statements.

Following is a summary of the financial

information for the Company’s reporting segments (in thousands):

	Direct-to				International
	Consumer		Commercial		Franchising		Total
Fifty-two weeks ended December 30, 2017
Net sales to external customers	$	349,408	$	6,007	$	2,451	$	357,866
Net income before income taxes		10,436		934		2,443		13,813
Capital expenditures		17,882		-		191		18,073
Depreciation and amortization		16,101		2		62		16,165
Fifty-two weeks ended December 31, 2016
Net sales to external customers	$	357,593	$	4,312	$	2,299	$	364,204
Net income before income taxes		2,760		1,813		736		5,309
Capital expenditures		28,083		-		35		28,118
Depreciation and amortization		16,086		2		83		16,171
Fifty-two weeks ended January 2, 2016
Net sales to external customers	$	372,715	$	2,783	$	2,196	$	377,694
Net income before income taxes		16,053		977		868		17,898
Capital expenditures		24,307		7		74		24,388
Depreciation and amortization		16,284		1		134		16,419

Total Assets as of:
December 30, 2017	$	188,685	$	5,949	$	3,355	$	197,989
December 31, 2016	$	190,236	$	6,143	$	3,216	$	199,595

The Company

’s reportable segments are primarily determined by the types of products and services that they offer. Each reportable segment

may

operate in many geographic areas. Revenues are recognized in the geographic areas based on the location of the customer or franchisee. The following schedule is a summary of the Company’s sales to external customers and long-lived assets by geographic area (in thousands):

	North
	America (1)		Europe (2)		Other (3)		Total
Fifty-two weeks ended December 30, 2017
Net sales to external customers	$	293,282	$	61,901	$	2,683	$	357,866
Property and equipment, net		68,141		9,578		32		77,751
Fifty-two weeks ended December 31, 2016
Net sales to external customers	$	296,152	$	66,140	$	1,912	$	364,204
Property and equipment, net		66,154		8,733		37		74,924
Fifty-two weeks ended January 2, 2016
Net sales to external customers	$	297,554	$	78,788	$	1,352	$	377,694
Property and equipment, net		61,211		6,459		71		67,741

For purposes of this table only:

(

)

North America includes the United States, Canada, Puerto Rico and franchise business in Mexico

(

)

Europe includes the United Kingdom, Ireland, Denmark and franchise businesses in Europe

(

)

Other includes franchise businesses outside of North America and Europe and, beginning in

2016,

a corporately-managed location in China