Segment Information

12 Months Ended

Dec. 31, 2017

SEGMENT AND ENTERPRISE-WIDE INFORMATION

In accordance with FASB ASC 280, Segment Reporting, we determined that we have two operating segments - Direct and Retail. There have been no changes in our operating segments during the year ended December 31, 2017.

We evaluate performance using several factors, of which the primary financial measures are net sales and reportable segment contribution. Contribution is the measure of profit or loss, defined as net sales less product costs and directly attributable expenses. Directly attributable expenses include selling and marketing expenses, general and administrative expenses, and research and development expenses that are directly related to segment operations. Segment assets are those directly assigned to an operating segment's operations, primarily accounts receivable, inventories, goodwill and other intangible assets. Unallocated assets primarily include cash and cash equivalents, available-for-sale securities, derivative securities, shared information technology infrastructure, distribution centers, corporate headquarters, prepaids and other current assets, deferred income tax assets and other assets. Capital expenditures directly attributable to the Direct and Retail segments were not significant in any period.

Following is summary information by reportable segment (in thousands):



	Year Ended December 31,
	2017			2016			2015
Net Sales:
Direct	$	219,440		$	225,057		$	225,595
Retail	183,875			177,920			106,195
Unallocated royalty	2,869			3,062			3,974
Consolidated net sales	$	406,184		$	406,039		$	335,764
Contribution:
Direct	$	34,900		$	43,215		$	39,940
Retail	27,495			29,451			12,850
Unallocated royalty	2,852			3,018			3,974
Consolidated contribution	$	65,247		$	75,684		$	56,764

Reconciliation of consolidated contribution to income from continuing operations:
Consolidated contribution	$	65,247		$	75,684		$	56,764
Amounts not directly related to segments:
Operating expenses	(28,944		)	(22,290		)	(16,493		)
Other expense, net	(598		)	(1,813		)	(249		)
Income tax expense	8,080			16,480			13,219
Income from continuing operations	$	27,625		$	35,101		$	26,803

Depreciation and amortization expense:
Direct	$	1,666		$	1,944		$	868
Retail	4,606			4,775			757
Unallocated corporate	2,371			1,155			1,787
Total depreciation and amortization expense	$	8,643		$	7,874		$	3,412

	As of December 31,
Assets:	2017			2016
Direct	$	40,532		$	37,388
Retail	192,064			206,580
Unallocated corporate	92,180			89,098
Total assets	$	324,776		$	333,066

Net sales by geographic area were as follows:



	Year Ended December 31,
	2017		2016		2015
U.S.	$	352,703	$	353,893	$	295,366
Canada	25,589		26,005		33,230
All other	27,892		26,141		7,168
	$	406,184	$	406,039	$	335,764

There are no material long-lived assets held outside of the U.S.

In 2017, 2016 and 2015, Amazon.com accounted for 11.9%, 11.3% and 11.1%, respectively, of our net sales.