(8) 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 or 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 eCommerce 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 eCommerce and retail store segments are managed separately because they are direct to consumer sales, while the brand segments are wholesale sales. The income or 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 the following: costs of the distribution centers, certain executive and stock compensation, accounting and finance, legal, information technology, human resources, and facilities costs, among others. The gross profit derived from the sales to third parties of the eCommerce and retail stores segments is separated into two components, and is recorded at the time of sale to the third party: (i) the wholesale profit is included in the related operating income or loss of each wholesale segment, and represents the difference between the Company's cost and the Company's wholesale selling price, and (ii) the retail profit is included in the operating income of the eCommerce and retail stores segments, and represents the difference between the Company's wholesale selling price and the Company's retail selling price. Each of the wholesale segments charge the eCommerce and retail segments the same price that they charge third party retail customers, with the resulting profit from inter-segment sales included in income (loss) from operations of each respective wholesale segment. Inter-segment sales and cost of sales are eliminated upon consolidation. In prior periods, the gross profit of the international portion of the eCommerce and retail stores segments included both the wholesale and retail profit. 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 periods. The segment information for the year ended December 31, 2010 has been adjusted retrospectively to conform to the current period presentation.

The Company's other brands include Simple®, TSUBO®, Ahnu®, MOZO® and Hoka One One®. The Company ceased distribution of the Simple brand effective December 31, 2011. The wholesale operations of the Company's other brands are included as one reportable segment, other wholesale, presented in the figures below. The Sanuk brand operations are included in the Company's segment reporting effective upon the acquisition date of July 1, 2011. Business segment information is summarized as follows:

	Years Ended Decemer 31,

	2012			2011			2010
Net sales to external customers:
UGG wholesale	$	819,256		$	915,203		$	663,854
Teva wholesale		108,591			118,742			96,207
Sanuk wholesale		89,804			26,039			—
Other brands wholesale		20,194			21,801			23,476
eCommerce		130,592			106,498			91,808
Retail stores		245,961			189,000			125,644

	$	1,414,398		$	1,377,283		$	1,000,989

Income (loss) from operations:
UGG wholesale	$	267,823		$	388,275		$	307,478
Teva wholesale		10,072			20,267			18,684
Sanuk wholesale		15,567			797			—
Other brands wholesale		(4,317	)		(9,524	)		(6,184	)
eCommerce		29,903			24,255			23,536
Retail stores		25,590			31,461			27,310
Unallocated overhead		(157,690	)		(170,693	)		(121,736	)

	$	186,948		$	284,838		$	249,088

Depreciation and amortization:
UGG wholesale	$	622		$	4,375		$	112
Teva wholesale		515			587			2,024
Sanuk wholesale		8,838			5,125			—
Other brands wholesale		1,622			533			1,125
eCommerce		839			540			232
Retail stores		12,073			6,082			3,018
Unallocated overhead		8,911			8,185			5,772

	$	33,420		$	25,427		$	12,283

Capital expenditures:
UGG wholesale	$	314		$	706		$	1,155
Teva wholesale		326			305			150
Sanuk wholesale		448			1,778			—
Other brands wholesale		197			198			226
eCommerce		347			1,419			1,030
Retail stores		34,004			22,297			11,296
Unallocated overhead		25,966			29,083			9,191

	$	61,602		$	55,786		$	23,048

Total assets from reportable segments:
UGG wholesale	$	377,997		$	347,213		$	194,028
Teva wholesale		59,641			61,893			49,849
Sanuk wholesale		209,861			217,936			—
Other brands wholesale		29,446			10,690			12,031
eCommerce		5,058			5,964			4,053
Retail stores		134,804			80,514			39,377

	$	816,807		$	724,210		$	299,338

Inter-segment sales from the Company's wholesale segments to the Company's eCommerce and retail segments are as follows:

	Years Ended December 31,

	2012		2011		2010
Inter-segment sales:
UGG wholesale	$	182,299	$	140,004	$	102,222
Teva wholesale		3,260		2,369		2,129
Sanuk wholesale		1,696		—		—
Other wholesale		507		1,040	$	1,446

Total	$	187,762	$	143,413	$	105,797

Income (loss) from operations of the wholesale segments includes inter-segment gross profit from sales to the eCommerce and retail segments as follows:

	Years Ended December 31,

	2012		2011		2010
Inter-segment gross profit:
UGG wholesale	$	65,932	$	64,160	$	44,165
Teva wholesale		1,108		1,130		802
Sanuk wholesale		825		—		—
Other wholesale		134		425	$	516

Total	$	67,999	$	65,715	$	45,483

The assets allocable to each segment generally include accounts receivable, inventory, fixed assets, 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:

	December 31,

	2012		2011
Total assets from reportable segments	$	816,807	$	724,210
Unallocated cash and cash equivalents		110,247		263,606
Unallocated deferred tax assets		30,662		27,637
Other unallocated corporate assets		110,348		130,743

Consolidated total assets	$	1,068,064	$	1,146,196

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. As of December 31, 2012, the Company had experienced no loss or lack of access to cash in its operating accounts.

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 treasuries and government agencies, 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 the European debt crisis, which have affected various sectors of the financial markets. As of December 31, 2012, the Company had experienced no loss or lack of access to its invested cash and cash equivalents.

The Company's cash and cash equivalents are as follows:

	December 31,

	2012		2011
Money market fund accounts	$	52,650	$	196,315
Cash		57,597		67,291

Total cash and cash equivalents	$	110,247	$	263,606

The Company sells its products to customers throughout the US and to foreign customers located in Europe, Canada, Australia, Asia, and Latin America, among other regions. International sales were 31.2%, 31.4% and 23.7%,of the Company's total net sales for the years ended December 31, 2012, 2011 and 2010, respectively. For the year ended December 31, 2012, no single foreign country comprised more than 10% of total sales. 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, by major country were as follows:

	December 31,

	2012		2011
US	$	89,423	$	65,034
All other countries*		35,947		25,223

Total	$	125,370	$	90,257

*: No other country's long-lived assets comprised more than 10% of total long-lived assets as of December 31, 2012 and 2011.

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 years ended December 31, 2012 and 2011. One customer accounted for 11.9% of the Company's net sales in 2010. This customer's revenues were generated from UGG, Teva, and other wholesale segments. No other customer accounted for more than 10% of net sales in the year ended December 31, 2010. As of December 31, 2012, the Company had one customer representing 18.8% of net trade accounts receivable. As of December 31, 2011, the Company had one customer representing 17.1% of net trade accounts receivable.

The Company's production is concentrated at a limited number of independent contractor factories. The Company's materials sourcing is concentrated in Australia and China and includes a limited number of key sources for the principal raw material for certain UGG products, sheepskin. Sheepskin used in UGG products is sourced from two tanneries. 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.