SEGMENT INFORMATION

Segment information is prepared on the same basis the chief operating decision maker reviews financial information for operational decision-making purposes. During the first quarter of fiscal year 2018, the Company redefined its operating segments to reflect how the chief operating decision maker now evaluates the business as a result of the Company's Board of Directors' approval of the mall-based business and International segment sale. See Note 1 to the Consolidated Financial Statements. The Company now reports its operations in two operating segments: Company-owned salons and Franchise salons. The Company's operating segments are its reportable operating segments. Prior to this change, the Company had four operating segments: North American Value, North American Premium, North American Franchise, and International. The Company did not operate under the realigned operating segment structure prior to the first quarter of fiscal year 2018.

The Company-owned salons reportable operating segment is comprised of 3,966 company-owned salons located mainly in strip center locations and Walmart Supercenters. Company-owned salons offer high quality, convenient and value priced hair care and beauty services and retail products. SmartStyle, Supercuts, Cost Cutters and other regional trade names operating in the United States, Canada and Puerto Rico are generally within the Company-owned salons segment.

The Franchise salons reportable operating segment is comprised of 4,114 franchised salons located mainly in strip center locations, Walmart Supercenters and mall-based locations. Franchise salons offer high quality, convenient and value priced hair care and beauty services and retail products. This segment operates in the United States and Canada and primarily includes the Supercuts, SmartStyle, Cost Cutters, Regis, Mastercuts, First Choice Haircutters, Roosters and Magicuts concepts.

Concurrent with the change in reportable segments, the Company recast its prior period financial information to reflect comparable financial information for the new segment structure. Historical financial information shown in the following table and elsewhere in this filing reflects this change. Financial information concerning the Company's reportable operating segments is shown in the following table:



	For the Year Ended June 30, 2018
	Company-owned		Franchise		Corporate⁽¹⁾			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	899,051	$	—	$	—		$	899,051
Product	204,963		53,703		—			258,666
Royalties and fees	—		56,357		—			56,357
	1,104,014		110,060		—			1,214,074
Operating expenses:
Cost of service	530,582		—		—			530,582
Cost of product	98,495		42,128		—			140,623
Site operating expenses	127,249		—		—			127,249
General and administrative	67,163		25,880		81,002			174,045
Rent	181,869		269		958			183,096
Depreciation and amortization	48,508		365		9,332			58,205
Total operating expenses	1,053,866		68,642		91,292			1,213,800
Operating income (loss)	50,148		41,418		(91,292		)	274
Other (expense) income:
Interest expense	—		—		(10,492		)	(10,492		)
Interest income and other, net	—		—		6,670			6,670
Income (loss) from continuing operations before income taxes and equity in loss of affiliated companies	$	50,148	$	41,418	$	(95,114	)	$	(3,548	)



	For the Year Ended June 30, 2017
	Company-owned		Franchise		Corporate⁽¹⁾			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	960,347	$	—	$	—		$	960,347
Product	229,199		30,623		—			259,822
Royalties and fees	—		48,291		—			48,291
	1,189,546		78,914		—			1,268,460
Operating expenses:
Cost of service	610,384		—		—			610,384
Cost of product	103,611		22,686		—			126,297
Site operating expenses	127,797		—		—			127,797
General and administrative	47,673		21,222		88,440			157,335
Rent	179,463		171		844			180,478
Depreciation and amortization	42,273		357		9,458			52,088
Total operating expenses	1,111,201		44,436		98,742			1,254,379
Operating income (loss)	78,345		34,478		(98,742		)	14,081
Other (expense) income:
Interest expense	—		—		(8,584		)	(8,584		)
Interest income and other, net	—		—		2,831			2,831
Income (loss) from continuing operations before income taxes and equity in loss of affiliated companies	$	78,345	$	34,478	$	(104,495	)	$	8,328



	For the Year Ended June 30, 2016
	Company-owned		Franchise		Corporate⁽¹⁾			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	978,614	$	—	$	—		$	978,614
Product	234,390		31,406		—			265,796
Royalties and fees	—		47,523		—			47,523
	1,213,004		78,929		—			1,291,933
Operating expenses:
Cost of service	608,965		—		—			608,965
Cost of product	106,929		23,086		—			130,015
Site operating expenses	135,130		9		—			135,139
General and administrative	48,811		21,490		86,711			157,012
Rent	182,932		162		1,056			184,150
Depreciation and amortization	42,466		363		10,059			52,888
Total operating expenses	1,125,233		45,110		97,826			1,268,169
Operating income (loss)	87,771		33,819		(97,826		)	23,764
Other (expense) income:
Interest expense	—		—		(9,229		)	(9,229		)
Interest income and other, net	—		—		3,713			3,713
Income (loss) from continuing operations before income taxes and equity in loss of affiliated companies	$	87,771	$	33,819	$	(103,342	)	$	18,248

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(1) Corporate consists primarily of unallocated general and administrative expenses, including expenses associated with salon support, depreciation and amortization related to our corporate headquarters and unallocated insurance, benefit and compensation programs, including stock-based compensation.

The Company's chief operating decision maker does not evaluate reportable segments using assets and capital expenditure information.

Total revenues and property and equipment, net associated with business operations in the U.S. and all other countries in aggregate were as follows:



	June 30,
	2018				2017				2016
	Total Revenues		Property and Equipment, Net		Total Revenues		Property and Equipment, Net		Total Revenues		Property and Equipment, Net
	(Dollars in thousands)
U.S.	$	1,112,155	$	102,528	$	1,174,408	$	119,649	$	1,198,227	$	146,722
Other countries	101,919		3,332		94,052		3,632		93,706		5,438
Total	$	1,214,074	$	105,860	$	1,268,460	$	123,281	$	1,291,933	$	152,160