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Business Segments, Geographic Data, Sales by Product Group and Major Customers
 12 Months Ended
Dec. 31, 2015
Business Segments, Geographic Data, Sales by Product Group and Major Customers
Note 3—Business Segments, Geographic Data, Sales by Product Group and Major Customers
 
The Company is a worldwide producer and marketer of children’s toys and other consumer products, principally engaged in the design, development, production, marketing and distribution of its diverse portfolio. The Company’s reportable segments are Traditional Toys and Electronics, and Role Play, Novelty and Seasonal Toys, each of which includes worldwide sales.
 
The Traditional Toys and Electronics segment includes action figures, vehicles, playsets, plush products, dolls, accessories, electronic products, construction toys, infant and pre-school toys, foot to floor ride-on vehicles, wagons and pet products and related products.
 
The Role Play, Novelty and Seasonal segment includes role play and dress-up products, novelty toys, seasonal and outdoor products, indoor and outdoor kids’ furniture and Halloween and everyday costume play.
 
Segment performance is measured at the operating income level. All sales are made to external customers and general corporate expenses have been attributed to the various segments based upon sales volumes. Segment assets are comprised of accounts receivable and inventories, net of applicable reserves and allowances, goodwill, molds and tooling and other assets.
 
Results are not necessarily those that would be achieved were each segment an unaffiliated business enterprise. Information by segment and a reconciliation to reported amounts as of December 31, 2014 and 2015 and for the three years in the period ended December 31, 2015 are as follows (in thousands):
 
   
Years Ended December 31,
   
2013
  
2014
  
2015
Net Sales
                  
Traditional Toys and Electronics
  
$
320,565
    
$
408,426
    
$
437,683
  
Role Play, Novelty and Seasonal Toys
    
312,360
      
401,634
      
308,058
  
   
$
632,925
    
$
810,060
    
$
745,741
  
 
   
Years Ended December 31,
   
2013
  
2014
  
2015
Operating Income (Loss)
                  
Traditional Toys and Electronics
  
$
(25,286
)
  
$
10,654
    
$
13,588
 
Role Play, Novelty and Seasonal Toys
    
(19,246
)
    
20,673
      
16,942
  
   
$
(44,532
)
  
$
31,327
    
$
30,530
  
 
   
Years Ended December 31,
   
2013
  
2014
  
2015
Depreciation and Amortization Expense
                  
Traditional Toys and Electronics
  
$
12,475
    
$
11,159
    
$
10,911
  
Role Play, Novelty and Seasonal Toys
    
8,939
      
7,812
      
7,949
  
   
$
21,414
    
$
18,971
    
$
18,860
  
 
   
December 31,
   
2014
  
2015
Assets
            
Traditional Toys and Electronics
  
$
313,380
    
$
326,199
  
Role Play, Novelty and Seasonal Toys
    
248,402
      
179,701
  
   
$
561,782
    
$
505,900
  
 
Information regarding the Company’s operations in different geographical areas is presented below on the basis the Company uses to manage its business. Net revenues are categorized based upon location of the customer, while long-lived assets are categorized based upon the location of the Company’s assets. Tools, dies and molds represent a substantial portion of the long-lived assets included in the United States with a net book value of $8.8 million in 2014 and $10.2 million in 2015 and substantially all of these assets are located in China. The following tables present information about the Company by geographic area as of December 31, 2014 and 2015 and for each of the three years in the period ended December 31, 2015 (in thousands):
 
   
December 31,
 
2014
  
2015
Long-lived Assets
            
China
  
$
8,816
    
$
10,172
  
United States
    
1,689
      
7,702
  
Hong Kong
    
591
      
561
  
   
$
11,096
    
$
18,435
  
 
   
Years Ended December 31,
   
2013
  
2014
  
2015
Net Sales by Geographic Area
                  
United States
  
$
524,193
    
$
653,497
    
$
542,101
  
Europe
    
48,585
      
67,027
      
117,313
  
Canada
    
25,125
      
33,040
      
32,587
  
Hong Kong
    
6,721
      
2,746
      
1,675
  
Other
    
28,301
      
53,750
      
52,065
  
   
$
632,925
    
$
810,060
    
$
745,741
  
 
Major Customers
 
Net sales to major customers were as follows (in thousands, except for percentages):
 
   
2013
  
2014
  
2015
         
Percentage of
        
Percentage of
        
Percentage of
   
Amount
  
Net Sales
  
Amount
  
Net Sales
  
Amount
  
Net Sales
Wal-Mart
  
$
135,223
      
21.4
%
  
$
165,777
      
20.5
%
  
$
163,333
      
21.9
%
Target
    
98,770
      
15.6
      
124,257
      
15.3
      
96,766
      
13.0
  
Toys ‘R’ Us
    
68,074
      
10.8
      
93,926
      
11.6
      
71,150
      
9.5
  
   
$
302,067
      
47.8
%
  
$
383,960
      
47.4
%
  
$
331,249
      
44.4
%
 
No other customer accounted for more than 10% of the Company’s total net sales.
 
As of December 31, 2014 and 2015, the Company’s three largest customers accounted for approximately 29.8% and 56.2%, respectively, of net accounts receivable. The concentration of the Company’s business with a relatively small number of customers may expose the Company to material adverse effects if one or more of its large customers were to experience financial difficulty. The Company performs ongoing credit evaluations of its top customers and maintains an allowance for potential credit losses.