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 months ended March 31, 2018 and 2017 and as of March 31, 2018 and December 31, 2017 are as follows (in thousands):

	Three Months Ended March 31,
	2018		2017
Net Sales
U.S. and Canada	$	70,535	$	70,912
International		17,299		19,942
Halloween		5,170		3,651
	$	93,004	$	94,505

	Three Months Ended March 31,
	2018			2017
Loss from Operations
U.S. and Canada	$	(22,979	)	$	(7,876	)
International		(6,939	)		(1,772	)
Halloween		(5,740	)		(6,076	)
	$	(35,658	)	$	(15,724	)

	Three Months Ended March 31,
	2018		2017
Depreciation and Amortization Expense
U.S. and Canada	$	2,416	$	3,374
International		581		898
Halloween		99		108
	$	3,096	$	4,380

	March 31, 2018		December 31, 2017
Assets
U.S. and Canada	$	199,711	$	229,505
International		91,764		106,255
Halloween		22,416		34,589
	$	313,891	$	370,349

The following tables present information about the Company by geographic area as of March 31, 2018 and December 31, 2017 and for the three months ended March 31, 2018 and 2017 (in thousands):

	March 31, 2018		December 31, 2017
Long-lived Assets
China	$	17,229	$	17,194
United States		5,504		5,755
Hong Kong		223		278
	$	22,956	$	23,227

	Three Months Ended March 31,
	2018		2017
Net Sales by Customer Area
United States	$	71,373	$	69,560
Europe		8,629		12,560
Canada		3,761		4,444
Hong Kong		227		219
Other		9,014		7,722
	$	93,004	$	94,505

Major Customers

Net sales to major customers for the three months ended March 31, 2018 and 2017 were as follows (in thousands, except for percentages):

	Three Months Ended March 31,
	2018					2017
	Amount		Percentage of Net Sales			Amount		Percentage of Net Sales
Wal-Mart	$	24,758		26.6	%	$	26,370		27.9	%
Target		15,312		16.5			12,671		13.4
Toys "R" Us		10,625		11.4			13,260		14.0
	$	50,695		54.5	%	$	52,301		55.3	%

At March 31, 2018 and December 31, 2017, the Company’s three largest customers accounted for approximately 58.4% 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 worldwide pre and post-petition gross accounts receivable balance as of March 31, 2018 is $35.1 million. In April 2018, the Company collected $12.0 million from its insurance carrier and $0.6 million from TRU, resulting in a net receivable from TRU of $22.5 million. The $22.5 million net receivable balance has been fully reserved by the Company as of March 31, 2018.

At March 31, 2018 and December 31, 2017, the Company's TRU consolidated accounts receivable balance represented 29.4% and 26.4%, respectively, of the Company’s gross accounts receivable.