XML 24 R11.htm IDEA: XBRL DOCUMENT v3.6.0.2
Business Segments, Geographic Data, Sales by Product Group and Major Customers
 12 Months Ended
Dec. 31, 2016
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 of products. The Company recently realigned its operating segments into three new segments to better reflect the management and operation of the business. The Company’s segments are (i) U.S. and Canada, (ii) International and (iii) Halloween. Prior year’s segment reporting units have been restated to reflect this change.
 
The U.S. and Canada segment includes action figures, vehicles, play sets, plush products, dolls, electronic products, construction toys, infant and pre-school toys, role play and everyday costume play, foot to floor ride-on vehicles, wagons, novelty toys, seasonal and outdoor products, kids’ indoor and outdoor furniture, and pet treats and related products, primarily within the United States and Canada.

Within the International segment, the Company markets and sells its toy products in markets outside of the U.S. and Canada, primarily in the European, Asia Pacific, and Latin and South American regions.

Within the Halloween segment, the Company markets and sells Halloween costumes and accessories and everyday costume play products, primarily in the U.S. and Canada.
 
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 relative sales volumes. Segment assets are primarily comprised of accounts receivable and inventories, net of applicable reserves and allowances, goodwill and other assets. Certain assets which are not tracked by operating segment and/or that benefit multiple operating segments have been allocated on the same basis.
 
Results are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. Information by segment and a reconciliation to reported amounts as of December 31, 2015 and 2016 and for the three years in the period ended December 31, 2016 are as follows (in thousands):
 
 
    Years Ended December 31,  
    2014     2015     2016  
Net Sales
                        
U.S. and Canada
  
$
546,864
    
$
478,728
    
$
478,595
  
International
    
121,607
      
169,826
      
131,229
  
Halloween
    
141,589
      
97,187
      
96,779
  
 
  
$
810,060
    
$
745,741
    
$
706,603
  
 
 
   
Years Ended December 31,
  
   
2014
    
2015
    
2016
  
Income from Operations
                  
U.S. and Canada
  
$
20,864
    
$
17,562
    
$
17,434
  
International
    
6,275
      
16,249
      
4,360
  
Halloween
    
4,188
      
(3,281
)
    
(4,688
)
 
  
$
31,327
    
$
30,530
    
$
17,106
  
 
 
   
Years Ended December 31,
  
   
2014
    
2015
    
2016
  
Depreciation and Amortization Expense
                  
U.S. and Canada
  
$
13,411
    
$
13,023
    
$
16,817
  
International
    
2,991
      
4,439
      
4,549
  
Halloween
    
2,569
      
1,398
      
1,578
  
 
  
$
18,971
    
$
18,860
    
$
22,944
  
 
 
   
December 31,
   
2015
    
2016
  
Assets
            
U.S. and Canada
  
$
313,312
    
$
306,895
  
International
    
149,950
      
119,560
  
Halloween
    
36,358
      
37,848
  
 
  
$
499,620
    
$
464,303
  
 
 
 
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 $10.2 million in 2015 and $15.7 million in 2016 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, 2015 and 2016 and for each of the three years in the period ended December 31, 2016 (in thousands):
 
 
  
December 31,
  
 
  
2015
    
2016
  
Long-lived Assets
            
China
   $
10,172
     $
15,710
  
United States
    
7,702
      
6,587
  
Hong Kong
    
561
      
544
  
 
   $
18,435
     $
22,841
  
 
 
  
Years Ended December 31,
  
 
  
2014
    
2015
    
2016
  
Net Sales by Customer Area
                  
United States
   $
653,497
     $
542,101
     $
544,096
  
Europe
    
67,027
      
117,313
      
92,811
  
Canada
    
33,040
      
32,587
      
26,947
  
Hong Kong
    
2,746
      
1,675
      
2,012
  
Other
    
53,750
      
52,065
      
40,737
  
 
   $
810,060
     $
745,741
     $
706,603
  
 
Major Customers
 
Net sales to major customers were as follows (in thousands, except for percentages):
 
 
  
2014
    
2015
    
2016
  
 
        
Percentage of
          
Percentage of
          
Percentage of
  
 
  
Amount
    
Net Sales
    
Amount
    
Net Sales
    
Amount
    
Net Sales
  
Wal-Mart
   $
165,777
      
20.5
 %   $
163,333
      
21.9
 %   $
165,345
      
23.4
 %
Target
    
124,257
      
15.3
      
96,766
      
13.0
      
110,159
      
15.6
  
Toys ‘R’ Us
    
93,926
      
11.6
      
71,150
      
9.5
      
66,633
      
9.4
  
 
   $
383,960
      
47.4
 %   $
331,249
      
44.4
 %   $
342,137
      
48.4
 %
 
No other customer accounted for more than 10% of the Company’s total net sales.
 
As of December 31, 2015 and 2016, the Company’s three largest customers accounted for approximately 56.2% and 35.8%, 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.