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 nine months ended September 30, 2019 and 2018 and as of September 30, 2019 and December 31, 2018 are as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net Sales
U.S. and Canada	$	165,087	$	133,481	$	271,022	$	263,397
International	39,251		37,902		59,297		77,245
Halloween	75,792		65,316		115,819		94,842
	$	280,130	$	236,699	$	446,138	$	435,484



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019			2018
Income (Loss) from Operations
U.S. and Canada	$	26,557	$	12,029	$	193		$	(17,373	)
International	5,958		2,919		(1,159		)	(6,764		)
Halloween	3,147		5,095		(6,062		)	(3,618		)
	$	35,662	$	20,043	$	(7,028	)	$	(27,755	)



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Depreciation and Amortization Expense
U.S. and Canada	$	4,405	$	4,823	$	9,717	$	10,125
International	1,094		1,312		2,110		2,886
Halloween	1,499		428		2,644		980
	$	6,998	$	6,563	$	14,471	$	13,991



	September 30, 2019		December 31, 2018
Assets
U.S. and Canada	$	296,349	$	223,877
International	112,892		108,669
Halloween	70,400		10,295
	$	479,641	$	342,841

The following tables present information about the Company by geographic area as of September 30, 2019 and December 31, 2018 and for the three and nine months ended September 30, 2019 and 2018 (in thousands):



	September 30, 2019		December 31, 2018
Long-lived Assets
China	$	12,889	$	15,825
United States	3,766		4,920
Hong Kong	270		157
	$	16,925	$	20,902



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net Sales by Customer Area
United States	$	229,975	$	186,497	$	369,942	$	337,543
Europe	25,740		25,606		39,477		49,542
Canada	10,218		11,091		14,960		18,663
Hong Kong	616		1,182		1,808		1,709
Other	13,581		12,323		19,951		28,027
	$	280,130	$	236,699	$	446,138	$	435,484

Major Customers

Net sales to major customers for the three and nine months ended September 30, 2019 and 2018 were as follows (in thousands, except for percentages):



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
	Amount		Percentage of Net Sales		Amount		Percentage of Net Sales		Amount		Percentage of Net Sales		Amount		Percentage of Net Sales
Wal-Mart	$	78,347	28.0	%	$	64,133	27.1	%	$	130,165	29.2	%	$	107,344	24.6	%
Target	64,172		22.9		50,797		21.5		90,367		20.2		87,641		20.1
	$	142,519	50.9	%	$	114,930	48.6	%	$	220,532	49.4	%	$	194,985	44.7	%

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

As of September 30, 2019 and December 31, 2018, the Company’s three largest customers accounted for approximately 43.0% 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 nine months ended September 30, 2018, the Company recorded bad debt expense of $12.0 million primarily due to the bankruptcy and liquidation of Toys “R” Us.