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Business Segments
 12 Months Ended
Dec. 31, 2012
Business Segments

NOTE J — BUSINESS SEGMENTS

Segment information

The Company operates in two reportable business segments: the Wholesale segment, the Company’s primary business segment, in which the Company designs, markets and distributes products to retailers and distributors, and the Retail Direct segment, in which the Company markets and sells a limited selection of its products directly to consumers through its Pfaltzgraff®, Mikasa®, Housewares Deals® and Lifetime Sterling® Internet websites. The operating results of Creative Tops and Fred® & Friends since the dates of the acquisitions are included in the Wholesale segment.

The Company has segmented its operations to reflect the manner in which management reviews and evaluates the results of its operations. While both segments distribute similar products, the segments have been distinct due to the different methods the Company uses to sell, market and distribute the products. Management evaluated the performance of the Wholesale and Retail Direct segments based on net sales and income (loss) from operations through December 31, 2012. Such measures give recognition to specifically identifiable operating costs such as cost of sales, distribution expenses and selling, general and administrative expenses. Certain general and administrative expenses, such as senior executive salaries and benefits, stock compensation, director fees and accounting, legal and consulting fees, are not allocated to the specific segments and are reflected as unallocated corporate expenses. Assets in each segment consist of assets used in its operations and acquired intangible assets. Assets in the unallocated corporate category consist of cash and tax related assets that are not allocated to the segments.

 

     Year Ended December 31,  
     2012     2011     2010  
     (in thousands)  

Net sales:

       

Wholesale

    $ 464,862      $ 421,119      $ 413,809   

Retail Direct

      21,980        23,299        29,362   
  

 

 

    

 

 

    

 

 

  

Total net sales

    $ 486,842      $ 444,418      $ 443,171   
  

 

 

    

 

 

    

 

 

  

Income from operations:

       

Wholesale(1)

    $ 40,530      $ 38,410      $ 42,997   

Retail Direct

      463        (524 )      (1,018 ) 

Unallocated corporate expenses

      (13,658 )      (13,302 )      (12,196 ) 
  

 

 

    

 

 

    

 

 

  

Total income from operations

    $ 27,335      $ 24,584      $ 29,783   
  

 

 

    

 

 

    

 

 

  

Depreciation and amortization:

       

Wholesale

    $ 9,074      $ 8,183      $ 9,719   

Retail Direct

      250        214        91   
  

 

 

    

 

 

    

 

 

  

Total depreciation and amortization

    $ 9,324      $ 8,397      $ 9,810   
  

 

 

    

 

 

    

 

 

  

Assets:

       

Wholesale

    $ 342,872      $ 317,435      $ 271,670   

Retail Direct

      512        813        1,441   

Unallocated/ corporate/ other

      5,413        497        4,475   
  

 

 

    

 

 

    

 

 

  

Total assets

    $ 348,797      $ 318,745      $ 277,586   
  

 

 

    

 

 

    

 

 

  

Capital expenditures:

       

Wholesale

    $ 4,897      $ 4,730      $ 2,541   

Retail Direct

      58        229        323   
  

 

 

    

 

 

    

 

 

  

Total capital expenditures

    $ 4,955      $ 4,959      $ 2,864   
  

 

 

    

 

 

    

 

 

  

Note:

 

(1) In 2012, income from operations for the Wholesale segment includes $1.1 million of intangible asset impairment.

 

Geographical information

The following table sets forth net sales and long-lived assets by the major geographic locations (in thousands):

 

     Year ended December 31,  
     2012      2011  

Net sales:

      

United States

    $ 430,758       $ 426,405   

International

      56,084         18,013   
  

 

 

     

 

 

  

Total

    $ 486,842       $ 444,418   
  

 

 

     

 

 

  

Long-lived assets at period-end:

      

United States

    $ 133,841       $ 118,803   

International

      2,197         1,145   
  

 

 

     

 

 

  

Total

    $ 136,038       $ 119,948   
  

 

 

     

 

 

  

Product category information — net sales

The following table sets forth net sales by major product categories included within the Company’s Wholesale operating segment:

 

      Year Ended December 31,  
     2012      2011      2010  
     (in thousands)  

Category:

         

Kitchenware

    $ 256,154       $ 215,707       $ 208,491   

Tabletop

      113,911         134,652         123,432   

Home Solutions

      52,176         64,099         81,886   

Creative Tops

      42,621         6,661         —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 464,862       $ 421,119       $ 413,809   
  

 

 

     

 

 

     

 

 

  

The product categories, which incorporate a 2011 change to establish a Home Solutions products category and the additional revenue source from Creative Tops, reflect a refined alignment of the products into the sources of revenue which the Company analyzes. The revenue source categories disclosed in 2010 have been reclassified to conform to current year presentation for comparative purposes.