(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 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 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. 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. In prior periods, the gross profit derived from the sales to third parties of the E-Commerce and retail stores segments was separated into two components: (i) the wholesale profit was included in the related operating income or loss of each wholesale segment, and represented the difference between the Company’s cost and the Company’s wholesale selling price, and (ii) the retail profit was included in the operating income of the E-Commerce and retail stores segments, and represented the difference between the Company’s wholesale selling price and the Company’s retail selling price. Each of the wholesale segments charged the E-Commerce and retail segments the same price that they charged 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. These changes in segment reporting only changed the presentation within the table below and did not impact th e Company’s consolidated financial statements for any periods. The Company believes that these changes better align with how management views the business, which is that sales of the E-Commerce and retail stores segments each generate a cash flow of their own and the wholesale segments are not active in generating those cash flows. The segment information for the years ended December 31, 2012 and 2011 have been adjusted retrospectively to conform to the current period presentation.

The Company's other brands include Simple®, TSUBO®, Ahnu®, MOZO®, and Hoka. The Company ceased distribution of the Simple brand effective December 31, 2011. 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 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 December 31,
	2013			2012			2011
Net sales to external customers:
UGG wholesale	$	818,377		$	819,256		$	915,203
Teva wholesale	109,334			108,591			118,742
Sanuk wholesale	94,420			89,804			26,039
Other brands wholesale	38,276			20,194			21,801
E-Commerce	169,534			130,592			106,498
Retail stores	326,677			245,961			189,000
	$	1,556,618		$	1,414,398		$	1,377,283
Income (loss) from operations:
UGG wholesale	$	224,736		$	206,039		$	339,665
Teva wholesale	9,165			9,228			19,265
Sanuk wholesale	20,591			14,398			798
Other brands wholesale	(9,807		)	(4,523		)	(9,993		)
E-Commerce	66,819			56,190			47,244
Retail stores	65,716			63,306			58,552
Unallocated overhead	(169,323		)	(157,690		)	(170,693		)
	$	207,897		$	186,948		$	284,838
Depreciation and amortization:
UGG wholesale	$	641		$	622		$	4,375
Teva wholesale	641			515			587
Sanuk wholesale	7,761			8,838			5,125
Other brands wholesale	507			1,622			533
E-Commerce	744			839			540
Retail stores	21,117			12,073			6,082
Unallocated overhead	9,959			8,911			8,185
	$	41,370		$	33,420		$	25,427
Capital expenditures:
UGG wholesale	$	313		$	314		$	706
Teva wholesale	63			326			305
Sanuk wholesale	91			448			1,778
Other brands wholesale	477			197			198
E-Commerce	676			347			1,419
Retail stores	34,993			34,004			22,297
Unallocated overhead	43,217			25,966			29,083
	$	79,830		$	61,602		$	55,786
Total assets from reportable segments:
UGG wholesale	$	314,122		$	377,997		$	347,213
Teva wholesale	54,868			59,641			61,893
Sanuk wholesale	208,669			209,861			217,936
Other brands wholesale	34,315			29,446			10,690
E-Commerce	7,331			5,058			5,964
Retail stores	182,491			134,804			80,514
	$	801,796		$	816,807		$	724,210

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 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,
	2013		2012
Total assets from reportable segments	$	801,796	$	816,807
Unallocated cash and cash equivalents	237,125		110,247
Unallocated deferred tax assets	35,632		30,662
Other unallocated corporate assets	185,176		110,348
Consolidated total assets	$	1,259,729	$	1,068,064

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:



	December 31,
	2013		2012
US	$	136,726	$	89,423
All other countries*	37,340		35,947
Total	$	174,066	$	125,370

* No other country's long-lived assets comprised more than 10% of total long-lived assets as of December 31, 2013 and 2012.

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 33.0%, 31.2% and 31.4%, of the Company's total net sales for the years ended December 31, 2013, 2012 and 2011, respectively. For 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 years ended December 31, 2013 and 2012. As of December 31, 2013 and 2012 the Company had one customer representing 19.7% and 18.8% of net trade accounts receivable, respectively. At December 31, 2013 the Company had a second customer representing 11.4% of net trade accounts receivable.

The Company's production is concentrated at a limited number of independent contractor factories. 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, Europe and the US. The source for other materials used by the Company is concentrated in Australia and China. 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. As of December 31, 2013, 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 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 December 31, 2013, 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,
	2013		2012
Money market fund accounts	$	154,105	$	52,650
Cash	83,020		57,597
Total cash and cash equivalents	$	237,125	$	110,247