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 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, and 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 as of December 31, 2018 and 2019 and for the three years in the period ended December 31, 2019 are as follows (in thousands):



	Year Ended December 31,
	2017		2018		2019
Net Sales
U.S. and Canada	$	406,411	$	364,313	$	384,585
International	107,231		101,873		94,453
Halloween	99,469		101,624		119,611
	$	613,111	$	567,810	$	598,649



	Year Ended December 31,
	2017			2018			2019
Loss from Operations
U.S. and Canada	$	(35,720	)	$	(11,693	)	$	(2,121	)
International	(13,184		)	(8,706		)	(6,007		)
Halloween	(15,254		)	(11,774		)	(9,661		)
	$	(64,158	)	$	(32,173	)	$	(17,789	)



	Year Ended December 31,
	2017		2018		2019
Depreciation and Amortization Expense
U.S. and Canada	$	15,286	$	12,553	$	13,130
International	4,079		3,449		3,097
Halloween	1,638		1,079		1,407
	$	21,003	$	17,081	$	17,634



	December 31,
	2018		2019
Assets
U.S. and Canada	$	223,877	$	254,124
International	108,669		102,460
Halloween	10,295		8,638
	$	342,841	$	365,222

Net revenues are categorized based upon location of the customer, while long-lived assets are categorized based upon the location of the Company’s assets. Tools, dies and molds represent a substantial portion of the long-lived assets included in the United States with a net book value of $15.8 million in 2018 and $11.4 million in 2019 and substantially all of these assets are located in China. The following tables present information about the Company by geographic area as of December 31, 2018 and 2019 and for each of the three years in the period ended December 31, 2019 (in thousands):



	December 31,
	2018		2019
Long-lived Assets
China	$	15,825	$	11,461
United States	4,920		3,556
Hong Kong	157		242
	$	20,902	$	15,259



	Year Ended December 31,
	2017		2018		2019
Net Sales by Customer Area
United States	$	479,133	$	439,979	$	481,309
Europe	71,094		69,646		65,557
Canada	21,882		21,923		19,937
Latin America	21,157		17,827		11,415
Asia	6,514		8,504		10,112
Australia and New Zealand	6,503		5,937		7,870
Middle East and Africa	6,828		3,994		2,449
	$	613,111	$	567,810	$	598,649

Major Customers

Net sales to major customers were as follows (in thousands, except for percentages):



	2017				2018				2019
	Amount		Percentage of Net Sales		Amount		Percentage of Net Sales		Amount		Percentage of Net Sales
Wal-Mart	$	156,436	25.5	%	$	143,587	25.3	%	$	177,063	29.6	%
Target	108,799		17.8		122,141		21.5		124,709		20.8
Toys "R" Us	69,508		11.3		*		*		*		*
	$	334,743	54.6	%	$	265,728	46.8	%	$	301,772	50.4	%

* 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 December 31, 2018 and 2019, the Company’s three largest customers accounted for approximately 61.4% and 56.9%, 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 years ended December 31, 2017, 2018 and 2019, the Company recorded bad debt expense (recoveries) of $11.8 million, $9.6 million and ($0.9) million, respectively, primarily due to the bankruptcy and liquidation of Toys "R" Us.