Note 2 — Business Segments, Geographic Data, and Sales by 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 has aligned its operating segments into three segments that reflect the management and operation of the business. The Company’s segments are (i) U.S. and Canada, (ii) International, and (iii) Halloween.

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 for the three and six months ended June 30, 2017 and 2016 and as of June 30, 2017 and December 31, 2016 are as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Net Sales
U.S. and Canada	$	70,140	$	89,737	$	141,052	$	161,939
International		17,500		19,953		37,442		40,121
Halloween		31,925		31,287		35,576		34,726
	$	119,565	$	140,977	$	214,070	$	236,786

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Income (Loss) from Operations
U.S. and Canada	$	(9,519	)	$	654		$	(17,395	)	$	(7,899	)
International		(1,479	)		(344	)		(3,251	)		(2,505	)
Halloween		(3,110	)		(1,410	)		(9,186	)		(4,512	)
	$	(14,108	)	$	(1,100	)	$	(29,832	)	$	(14,916	)

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Depreciation and Amortization Expense
U.S. and Canada	$	4,051	$	3,240	$	7,425	$	6,310
International		984		702		1,882		1,554
Halloween		698		714		806		828
	$	5,733	$	4,656	$	10,113	$	8,692

	June 30, 2017		December 31, 2016
Assets
U.S. and Canada	$	246,043	$	306,895
International		90,304		119,560
Halloween		62,031		37,848
	$	398,378	$	464,303

The following tables present information about the Company by geographic area as of June 30, 2017 and December 31, 2016 and for the three and six months ended June 30, 2017 and 2016 (in thousands):

	June 30, 2017		December 31, 2016
Long-lived Assets
China	$	17,813	$	15,710
United States		6,272		6,587
Hong Kong		442		544
	$	24,527	$	22,841

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Net Sales by Customer Area
United States	$	99,070	$	115,216	$	168,630	$	186,184
Europe		10,337		11,410		22,897		24,165
Canada		2,580		5,053		7,024		9,703
Hong Kong		168		338		387		677
Other		7,410		8,960		15,132		16,057
	$	119,565	$	140,977	$	214,070	$	236,786

Major Customers

Net sales to major customers for the three and six months ended June 30, 2017 and 2016 were as follows (in thousands, except for percentages):

	Three Months Ended June 30,										Six Months Ended June 30,
	2017					2016					2017					2016
	Amount		Percentage of Net Sales			Amount		Percentage of Net Sales			Amount		Percentage of Net Sales			Amount		Percentage of Net Sales
Wal-Mart	$	19,391		16.2	%	$	39,063		27.7	%	$	42,643		19.9	%	$	66,810		28.2	%
Target		20,522		17.2			18,818		13.3			33,181		15.5			26,940		11.4
Toys 'R' Us		11,020		9.2			10,130		7.2			18,731		8.8			18,464		7.8
	$	50,933		42.6	%	$	68,011		48.2	%	$	94,555		44.2	%	$	112,214		47.4	%

At June 30, 2017 and December 31, 2016, the Company’s three largest customers accounted for approximately 42.9% 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.