Business Segments, Concentration of Business, and Credit Risk and Significant Customers

The Company's accounting policies of the segments below are the same as those described in the summary of significant accounting policies (see Note 1), except that the Company does not allocate corporate overhead costs or non-operating income and expenses to segments. The Company evaluates segment performance primarily based on net sales and income (loss) from operations. The Company's reportable segments include the strategic business units for the worldwide wholesale operations of the UGG brand, Teva brand, Sanuk brand, and its other brands, its E-Commerce business and its retail store business. The wholesale operations of each brand are managed separately because each requires different marketing, research and development, design, sourcing, and sales strategies. The E-Commerce and retail store segments are managed separately because they are Direct-to-Consumer sales, while the brand segments are wholesale sales. The income (loss) from operations for each of the segments includes only those costs which are specifically related to each segment, which consist primarily of cost of sales, costs for research and development, design, selling and marketing, depreciation, amortization, and the costs of employees and their respective expenses that are directly related to each business segment. The unallocated corporate overhead costs include: costs of the distribution centers, certain executive and stock compensation, accounting and finance, legal, information technology, human resources, and facilities costs, among others. During the quarter ended (transition period) March 31, 2014, certain operating expenses were reclassified between segments. This change in segment reporting only changed the presentation within the below table and did not impact the Company's consolidated financial statements for any period. The segment information for prior periods have been adjusted retrospectively to conform to the current period presentation.

Beginning January 1, 2013, all gross profit derived from the sales to third parties of the E-Commerce and retail stores segments is reported in income from operations of the E-Commerce and retail stores segments, respectively.

During the year ended March 31, 2015, the Company converted seven of its retail stores in China to partner retail stores, whereby, upon conversion, the stores became wholly-owned and operated by local, third-party companies within China. These conversions included the assignment of the lease and the sale of both the Company's on-hand inventory and store leasehold improvements to the operator. As of the date of conversion, partner retail stores sales are included in the UGG brand wholesale segment and not included in the retail stores segment.

The Company's other brands include Ahnu®, Hoka, MOZO® and TSUBO®. The results of operations for Hoka are included in the other brands segments beginning from the acquisition date of September 27, 2012. The wholesale operations of the Company's other brands are included as one reportable segment, "other brands wholesale", presented in the figures below. Business segment information is summarized as follows:



	Year ended			Quarter ended (transition period)			Years ended
	3/31/2015			3/31/2014			12/31/2013			12/31/2012
Net sales to external customers:
UGG wholesale	$	903,926		$	83,271		$	818,377		$	819,256
Teva wholesale	116,931			45,283			109,334			108,591
Sanuk wholesale	102,690			28,793			94,420			89,804
Other brands wholesale	76,152			18,662			38,276			20,194
E-Commerce	233,070			38,584			169,534			130,592
Retail stores	384,288			80,123			326,677			245,961
	$	1,817,057		$	294,716		$	1,556,618		$	1,414,398
Income (loss) from operations:
UGG wholesale	$	269,489		$	13,595		$	224,738		$	206,039
Teva wholesale	13,320			6,425			9,166			9,228
Sanuk wholesale	21,914			7,530			20,591			14,398
Other brands wholesale	(9,838		)	(758		)	(9,807		)	(4,523		)
E-Commerce	92,392			13,272			66,849			56,190
Retail stores	57,928			7,646			65,683			63,306
Unallocated overhead	(220,786		)	(48,118		)	(169,323		)	(157,690		)
	$	224,419		$	(408	)	$	207,897		$	186,948
Depreciation and amortization:
UGG wholesale	$	5,029		$	137		$	641		$	622
Teva wholesale	94			33			641			515
Sanuk wholesale	6,969			1,769			7,761			8,838
Other brands wholesale	940			250			507			1,622
E-Commerce	949			242			744			839
Retail stores	20,139			4,967			21,117			12,073
Unallocated overhead	15,030			3,140			9,959			8,911
	$	49,150		$	10,538		$	41,370		$	33,420
Capital expenditures:
UGG wholesale	$	246		$	119		$	313		$	314
Teva wholesale	51			—			63			326
Sanuk wholesale	487			2			91			448
Other brands wholesale	351			26			477			197
E-Commerce	644			8			676			347
Retail stores	18,484			3,549			34,993			34,004
Unallocated overhead	71,590			13,916			43,217			25,966
	$	91,853		$	17,620		$	79,830		$	61,602
Total assets from reportable segments:
UGG wholesale	$	194,720		$	153,341		$	314,122		$	377,997
Teva wholesale	77,423			81,766			54,868			59,641
Sanuk wholesale	224,974			214,627			208,669			209,861
Other brands wholesale	53,634			41,281			34,315			29,446
E-Commerce	4,485			3,129			7,331			5,058
Retail stores	142,938			160,535			182,491			134,804
	$	698,174		$	654,679		$	801,796		$	816,807

Inter-segment sales from the Company’s wholesale segments to the Company’s E-Commerce and retail stores segments are at the Company’s cost, and there is no inter-segment profit on these inter-segment sales. Income (loss) from operations of the wholesale segments does not include any inter-segment gross profit from sales to the E-Commerce and retail stores segments.

The assets allocable to each segment include accounts receivable, inventory, fixed assets, goodwill, other intangible assets, and certain other assets that are specifically identifiable with one of the Company's segments. Unallocated assets are the assets not specifically related to the segments and include cash and cash equivalents, deferred tax assets, and various other assets shared by the Company's segments. Reconciliations of total assets from reportable segments to the consolidated balance sheets are as follows:



	3/31/2015		3/31/2014		12/31/2013
Total assets from reportable segments	$	698,174	$	654,679	$	801,796
Unallocated cash and cash equivalents	225,143		245,088		237,125
Unallocated deferred tax assets	29,083		38,933		35,632
Other unallocated corporate assets	217,533		125,504		185,176
Consolidated total assets	$	1,169,933	$	1,064,204	$	1,259,729

The Company does not consider international operations a separate segment, as management reviews such operations in the aggregate with the aforementioned segments. Long-lived assets, which consist of property and equipment, in the US and all other countries combined were as follows:



	3/31/2015		3/31/2014		12/31/2013
US	$	196,513	$	148,178	$	136,726
All other countries*	35,804		36,392		37,340
Total	$	232,317	$	184,570	$	174,066

* No other country's long-lived assets comprised more than 10% of total long-lived assets as of March 31, 2015, March 31, 2014 and December 31, 2013.

The Company sells its products to customers throughout the US and to foreign customers located in Europe, Asia, Canada, Australia, and Latin America, among other regions. International sales were 35.9%, 32.7%, 33.0% and 31.2%, of the Company's total net sales for the year ended March 31, 2015, quarter ended March 31, 2014, and the years ended December 31, 2013 and 2012, respectively. For the year ended March 31, 2015, quarter ended March 31, 2014, and the years ended December 31, 2013 and 2012, no single foreign country comprised more than 10% of total sales.

Management performs regular evaluations concerning the ability of its customers to satisfy their obligations and records a provision for doubtful accounts based upon these evaluations. No single customer accounted for more than 10% of net sales in the year ended March 31, 2015, quarter ended March 31, 2014, and the years ended December 31, 2013 and 2012. As of March 31, 2015, March 31, 2014 and December 31, 2013 the Company had one customer representing 11.8%, 11.8% and 11.4% of net trade accounts receivable, respectively. At March 31, 2015, March 31, 2014 and December 31, 2013 the Company had a second customer representing 11.0%, 11.4% and 19.7% of net trade accounts receivable, respectively.

The Company's production is concentrated at a limited number of independent contractor factories in Asia. Sheepskin is the principal raw material for certain UGG products and the majority of sheepskin is purchased from two tanneries in China, which is sourced primarily from Australia and the United Kingdom. We began using a new raw material, UGGpure, a wool woven into a durable backing, in some of our UGG products in 2013 and which we currently purchase from one supplier. The other materials used by the Company in production are sourced primarily in Asia. The Company's operations are subject to the customary risks of doing business abroad, including, but not limited to, currency fluctuations, customs duties and related fees, various import controls and other nontariff barriers, restrictions on the transfer of funds, labor unrest and strikes and, in certain parts of the world, political instability. The supply of sheepskin can be adversely impacted by weather conditions, disease, and harvesting decisions that are completely outside the Company's control. Further, the price of sheepskin is impacted by demand, industry, and competitors.

A portion of the Company's cash and cash equivalents are held as cash in operating accounts that are with third-party financial institutions. These balances, at times, exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits. While the Company regularly monitors the cash balances in its operating accounts and adjusts the balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets.

The remainder of the Company's cash equivalents is invested in interest bearing funds managed by third-party investment management institutions. These investments can include US treasury bonds and securities, money market funds, and municipal bonds, among other investments. Certain of these investments are subject to general credit, liquidity, market, and interest rate risks. Investment risk has been and may further be exacerbated by US mortgage defaults, credit and liquidity issues, and sovereign debt concerns in Europe, which have affected various sectors of the financial markets. As of March 31, 2015, the Company had experienced no loss or lack of access to cash in its operating accounts, invested cash and cash equivalents. The Company's cash and cash equivalents are as follows:



	3/31/2015		3/31/2014		12/31/2013
Money market fund accounts	$	127,900	$	143,816	$	154,105
Cash	97,243		101,272		83,020
Total cash and cash equivalents	$	225,143	$	245,088	$	237,125