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Business Segments, Geographic Data, and Sales by Major Customers | 6 Months Ended
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Jun. 30, 2018
Business Segments, Geographic Data, and Sales by Major Customers | 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 reporting 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 related products. 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 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 (loss) 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, 2018 and 2017 and as of June 30, 2018 and December 31, 2017 are as follows (in thousands):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Net Sales |  |  |  |  |  |  |  |  |  |  |  |
U.S. and Canada |  | $ | 59,381 |  |  | $ | 70,140 |  |  | $ | 129,916 |  |  | $ | 141,052 |
International |  |  | 22,044 |  |  |  | 17,500 |  |  |  | 39,343 |  |  |  | 37,442 |
Halloween |  |  | 24,356 |  |  |  | 31,925 |  |  |  | 29,526 |  |  |  | 35,576 |
|  | $ | 105,781 |  |  | $ | 119,565 |  |  | $ | 198,785 |  |  | $ | 214,070 |
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Income (Loss) from Operations |  |  |  |  |  |  |  |  |  |  |  |
U.S. and Canada |  | $ | (6,423 | ) |  | $ | (9,519 | ) |  | $ | (29,402 | ) |  | $ | (17,395 | )
International |  |  | (2,744 | ) |  |  | (1,479 | ) |  |  | (9,683 | ) |  |  | (3,251 | )
Halloween |  |  | (2,973 | ) |  |  | (3,110 | ) |  |  | (8,713 | ) |  |  | (9,186 | )
|  | $ | (12,140 | ) |  | $ | (14,108 | ) |  | $ | (47,798 | ) |  | $ | (29,832 | )
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Depreciation and Amortization Expense |  |  |  |  |  |  |  |  |  |  |  |
U.S. and Canada |  | $ | 2,886 |  |  | $ | 4,051 |  |  | $ | 5,302 |  |  | $ | 7,425 |
International |  |  | 993 |  |  |  | 984 |  |  |  | 1,574 |  |  |  | 1,882 |
Halloween |  |  | 453 |  |  |  | 698 |  |  |  | 552 |  |  |  | 806 |
|  | $ | 4,332 |  |  | $ | 5,733 |  |  | $ | 7,428 |  |  | $ | 10,113 |
|  | June 30, 2018 |  |  | December 31, 2017 |
Assets |  |  |  |  |  |
U.S. and Canada |  | $ | 202,078 |  |  | $ | 229,505 |
International |  |  | 99,456 |  |  |  | 106,255 |
Halloween |  |  | 47,347 |  |  |  | 34,589 |
|  | $ | 348,881 |  |  | $ | 370,349 |
The following tables present information about the Company by geographic area as of June 30, 2018 and December 31, 2017 and for the three and six months ended June 30, 2018 and 2017 (in thousands):
|  | June 30, 2018 |  |  | December 31, 2017 |
Long-lived Assets |  |  |  |  |  |
China |  | $ | 19,157 |  |  | $ | 17,194 |
United States |  |  | 5,366 |  |  |  | 5,755 |
Hong Kong |  |  | 183 |  |  |  | 278 |
|  | $ | 24,706 |  |  | $ | 23,227 |
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Net Sales by Customer Area |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 79,673 |  |  | $ | 99,070 |  |  | $ | 151,046 |  |  | $ | 168,630 |
Europe |  |  | 15,307 |  |  |  | 10,337 |  |  |  | 23,936 |  |  |  | 22,897 |
Canada |  |  | 3,811 |  |  |  | 2,580 |  |  |  | 7,572 |  |  |  | 7,024 |
Hong Kong |  |  | 300 |  |  |  | 168 |  |  |  | 527 |  |  |  | 387 |
Other |  |  | 6,690 |  |  |  | 7,410 |  |  |  | 15,704 |  |  |  | 15,132 |
|  | $ | 105,781 |  |  | $ | 119,565 |  |  | $ | 198,785 |  |  | $ | 214,070 |
Major Customers Net sales to major customers for the three and six months ended June 30, 2018 and 2017 were as follows (in thousands, except for percentages):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | Amount |  |  | Percentage of Net Sales |  |  | Amount |  |  | Percentage of Net Sales |  |  | Amount |  |  | Percentage of Net Sales |  |  | Amount |  |  | Percentage of Net Sales |
Wal-Mart |  | $ | 18,454 |  |  |  | 17.4 | % |  | $ | 21,627 |  |  |  | 18.1 | % |  | $ | 43,211 |  |  |  | 21.7 | % |  | $ | 48,051 |  |  |  | 22.4 | %
Target |  |  | 21,532 |  |  |  | 20.4 |  |  |  | 20,521 |  |  |  | 17.2 |  |  |  | 36,844 |  |  |  | 18.5 |  |  |  | 33,172 |  |  |  | 15.5 |
Toys ‘R’ Us |  |  | * |  |  |  | * |  |  |  | 13,745 |  |  |  | 11.5 |  |  |  | * |  |  |  | * |  |  |  | 27,019 |  |  |  | 12.6 |
* Sales to Toys ‘R’ Us in the applicable periods were less than 10% of total sales At June 30, 2018 and December 31, 2017, the Company’s three largest customers accounted for approximately 48.1% and 60.6%, respectively, of the Company’s gross 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. On March 15, 2018, Toys “R” Us (“TRU”) filed a motion to conduct an orderly wind down of its operations in the U.S. and commence store closing sales at all 735 U.S. stores. The total TRU worldwide pre and post-petition gross accounts receivable balance as of March 31, 2018 was $35.1 million. During the second quarter of 2018, the Company collected $12.0 million from its insurance carrier and $1.9 million from TRU related to the $35.1 million exposed accounts receivable. The resulting net receivable from TRU of $21.2 million has been fully reserved by the Company as of June 30, 2018. At June 30, 2018 and December 31, 2017, the Company’s TRU consolidated accounts receivable balance represented 17.5% and 26.4%, respectively, of the Company’s gross accounts receivable.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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