Pottery Barn 2013 Annual Report Download - page 69

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$88,452,000, or $0.88 per common share, and $76,308,000, or $0.73 per common share, respectively. Our
quarterly cash dividend may be limited or terminated at any time.
Note L: Segment Reporting
We have two reportable segments, direct-to-customer and retail. The direct-to-customer segment has seven
merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm, Rejuvenation
and Mark and Graham) which sell our products through our e-commerce websites and direct-mail catalogs. Our
direct-to-customer merchandising concepts are operating segments, which have been aggregated into one
reportable segment, direct-to-customer. The retail segment has five merchandising concepts (Williams-Sonoma,
Pottery Barn, Pottery Barn Kids, West Elm and Rejuvenation) which sell our products through our retail stores.
Our retail merchandising concepts are operating segments, which have been aggregated into one reportable
segment, retail. Management’s expectation is that the overall economic characteristics of each of our operating
segments will be similar over time based on management’s judgment that the operating segments have had
similar historical economic characteristics and are expected to have similar long-term financial performance in
the future.
These reportable segments are strategic business units that offer similar home-centered products. They are
managed separately because the business units utilize two distinct distribution and marketing strategies. Based on
management’s best estimate, our operating segments include allocations of certain expenses, including
advertising and employment costs, to the extent they have been determined to benefit both channels. These
operating segments are aggregated at the channel level for reporting purposes due to the fact that our brands are
interdependent for economies of scale and we do not maintain fully allocated income statements at the brand
level. As a result, material financial decisions related to the brands are made at the channel level. Furthermore, it
is not practicable for us to report revenue by product group.
We use operating income to evaluate segment profitability. Operating income is defined as earnings (loss) before
net interest income or expense and income taxes. Unallocated costs before interest and income taxes include
corporate employee-related costs, occupancy expenses (including depreciation expense), administrative costs and
third party service costs, primarily in our corporate administrative and systems departments. Unallocated assets
include corporate cash and cash equivalents, deferred income taxes, the net book value of corporate facilities and
related information systems, and other corporate long-lived assets.
Income tax information by reportable segment has not been included as income taxes are calculated at a
company-wide level and are not allocated to each reportable segment.
55
Form 10-K