NOTE 5 – SEGMENT AND GEOGRAPHIC INFORMATION

The Company follows accounting guidance which requires disclosure of segment data based on how management makes decisions about allocating resources to segments and measuring their performance.

The Company conducts its business in two operating segments: Wholesale and Retail. The Company’s Wholesale segment includes the designing, manufacturing and distribution of watches of quality owned brands and licensed brands, in addition to revenue generated from after-sales service activities and shipping. The Retail segment includes the Company’s retail outlet locations.

The Company divides its business into two major geographic locations: United States operations, and International, which includes the results of all non-U.S. Company operations. The allocation of geographic revenue is based upon the location of the customer. The Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 32.1%, 11.2%, 8.8% and 6.9%, respectively, of the Company’s total net sales for the three months ended July 31, 2018. For the three months ended July 31, 2017, the Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 26.4%, 10.2%, 9.3% and 6.1%, respectively, of the Company’s total net sales.

The Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 32.3%, 11.0%, 9.6% and 7.4%, respectively, of the Company’s total net sales for the six months ended July 31, 2018. For the six months ended July 31, 2017, the Company’s International operations in Europe, the Americas (excluding the United States), the Middle East and Asia accounted for 27.8%, 10.4%, 8.9% and 6.1%, respectively, of the Company’s total net sales.

Operating Segment Data for the Three Months Ended July 31, 2018 and 2017 (in thousands):

	Net Sales
	2018		2017
Wholesale:
Owned brands category	$	51,533	$	46,339
Licensed brands category		69,722		62,529
After-sales service and all other		1,827		2,150
Total Wholesale		123,082		111,018
Retail		21,011		17,763
Consolidated total	$	144,093	$	128,781

	Operating Income (3) (4)
	2018		2017
Wholesale	$	8,202	$	4,797
Retail		4,658		3,520
Consolidated total	$	12,860	$	8,317

Operating Segment Data for the Six Months Ended July 31, 2018 and 2017 (in thousands):

	Net Sales
	2018		2017
Wholesale:
Owned brands category	$	93,116	$	79,481
Licensed brands category		135,573		113,899
After-sales service and all other		6,493		4,798
Total Wholesale		235,182		198,178
Retail		36,060		29,868
Consolidated total	$	271,242	$	228,046

	Operating Income (3) (4)
	2018		2017
Wholesale	$	14,569	$	309
Retail		6,430		4,360
Consolidated total	$	20,999	$	4,669

	Total Assets
	July 31, 2018		January 31, 2018		July 31, 2017
Wholesale	$	601,788	$	621,965	$	609,893
Retail		25,460		23,415		24,180
Consolidated total	$	627,248	$	645,380	$	634,073

Geographic Location Data for the Three Months Ended July 31, 2018 and 2017 (in thousands):

	Net Sales				Operating Income / (Loss) (3) (4)
	2018		2017		2018			2017
United States (1)	$	59,020	$	61,845	$	(2,209	)	$	1,401
International (2)		85,073		66,936		15,069			6,916
Consolidated total	$	144,093	$	128,781	$	12,860		$	8,317

United States and International net sales are net of intercompany sales of $76.5 million and $62.3 million for the three months ended July 31, 2018 and 2017, respectively.

Geographic Location Data for the Six Months Ended July 31, 2018 and 2017 (in thousands):

	Net Sales				Operating Income / (Loss) (3) (4)
	2018		2017		2018			2017
United States (1)	$	107,862	$	106,640	$	(8,191	)	$	(8,380	)
International (2)		163,380		121,406		29,190			13,049
Consolidated total	$	271,242	$	228,046	$	20,999		$	4,669

United States and International net sales are net of intercompany sales of $141.1 million and $124.6 million for the six months ended July 31, 2018 and 2017, respectively.

(1)

The United States operating (loss) included $10.6 million and $7.2 million of unallocated corporate expenses for the three months ended July 31, 2018 and 2017, respectively. The United States operating loss included $20.7 million and $13.4 million of unallocated corporate expenses for the six months ended July 31, 2018 and 2017, respectively.

(2)

The International operating income included $11.3 million and $7.9 million of certain intercompany profits related to the Company’s supply chain operations for the three months ended July 31, 2018 and 2017, respectively. The International operating income included $22.3 million and $15.5 million of certain intercompany profits related to the Company’s supply chain operations for the six months ended July 31, 2018 and 2017, respectively.

(3)

In the International location of the Wholesale segment, for the three months ended July 31,2017, operating income included a pre-tax charge of $0.1 million, as a result of the Company’s cost savings initiatives. In the United States and International locations of the Wholesale segment, for the six months ended July 31, 2017, operating (loss) / income included a pre-tax charge of $3.8 million and $2.6 million, respectively, as a result of the Company’s cost savings initiatives.

(4)

In the International locations of the Wholesale segment, for the three months and six months ended July 31, 2018, operating income included $0.7 and $1.5 million, of expenses primarily related to the amortization of acquired intangible assets, as a result of the Company’s acquisition of the Olivia Burton brand. In addition, in the United Sates locations of the Wholesale segment, for the three months and six months ended July 31, 2018, operating income included $1.0 million, of expenses primarily associated with the pending acquisition of MVMT. In the United States and International locations of the Wholesale segment, for the three months and the six months ended July 31, 2017, operating income / (loss) included a pre-tax charge of $0.2 and $4.3 million, respectively, of expenses related to transaction costs and adjustments in acquisition accounting, as a result of the Company’s acquisition of the Olivia Burton brand.

	Total Assets
	July 31, 2018		January 31, 2018		July 31, 2017
United States	$	206,346	$	188,346	$	216,929
International		420,902		457,034		417,144
Consolidated total	$	627,248	$	645,380	$	634,073

	Property, Plant and Equipment, Net
	July 31, 2018		January 31, 2018		July 31, 2017
United States	$	16,771	$	16,570	$	17,521
International		7,762		8,101		13,891
Consolidated total	$	24,533	$	24,671	$	31,412