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 months ended March 31, 2019 and 2018 and as of March 31, 2019 and December 31, 2018 are as follows (in thousands):



	Three Months Ended March 31,
	2019		2018
Net Sales
U.S. and Canada	$	57,433	$	70,535
International	9,753		17,299
Halloween	3,640		5,170
	$	70,826	$	93,004



	Three Months Ended March 31,
	2019			2018
Loss from Operations
U.S. and Canada	$	(15,454	)	$	(22,979	)
International	(4,423		)	(6,939		)
Halloween	(4,164		)	(5,740		)
	$	(24,041	)	$	(35,658	)



	Three Months Ended March 31,
	2019		2018
Depreciation and Amortization Expense
U.S. and Canada	$	2,687	$	2,416
International	450		581
Halloween	97		99
	$	3,234	$	3,096



	March 31, 2019		December 31, 2018
Assets
U.S. and Canada	$	211,483	$	223,877
International	92,282		108,669
Halloween	8,210		10,295
	$	311,975	$	342,841

The following tables present information about the Company by geographic area as of March 31, 2019 and December 31, 2018 and for the three months ended March 31, 2019 and 2018 (in thousands):



	March 31, 2019		December 31, 2018
Long-lived Assets
China	$	15,489	$	15,825
United States	4,526		4,920
Hong Kong	141		157
	$	20,156	$	20,902



	Three Months Ended March 31,
	2019		2018
Net Sales by Customer Area
United States	$	57,558	$	71,373
Europe	7,191		8,629
Canada	2,560		3,761
Hong Kong	255		227
Other	3,262		9,014
	$	70,826	$	93,004

Major Customers

Net sales to major customers for the three months ended March 31, 2019 and 2018 were as follows (in thousands, except for percentages):



	Three Months Ended March 31,
	2019				2018
	Amount		Percentage of Net Sales		Amount		Percentage of Net Sales
Wal-Mart	$	22,109	31.2	%	$	24,758	26.6	%
Target	12,179		17.2		15,312		16.5
Toys "R" Us	*		*		10,625		11.4
	$	34,288	48.4	%	$	50,695	54.5	%

* Sales to Toys "R" Us in the applicable periods were less than 10% of total net sales

No other customer accounted for more than 10% of the Company's total net sales.

As of March 31, 2019 and December 31, 2018, the Company’s three largest customers accounted for approximately 48.2% and 61.4%, 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. For the three months ended March 31, 2018, the Company recorded bad debt expense of $13.8 million primarily due to the bankruptcy and liquidation of Toys "R" Us.