. Segment Information

Our business consists of

two

segments for financial reporting purposes. The

two

segments are identified as (i) private-label contract manufacturing, which primarily relates to the provision of private-label contract manufacturing services to companies that market and distribute nutritional supplements and other health care products, and (ii) patent and trademark licensing, which primarily includes direct raw material sales and royalty income from our license and supply agreements associated with the sale and use of beta-alanine under our CarnoSyn® and SR CarnoSyn® trade names.

We evaluate performance based on a number of factors. The primary performance measures for each segment are net sales and income or loss from operations before corporate allocations. Operating income or loss for each segment does

not

include corporate general and administrative expenses, interest expense and other miscellaneous income and expense items. Corporate general and administrative expenses include, but are

not

limited to: human resources, corporate legal, finance, information technology, and other corporate level related expenses, which are

not

allocated to any segment. Transfers of raw materials between segments are recorded at cost. The accounting policies of our segments are the same as those described in the summary of significant accounting policies in Note A.

Our operating results by business segment for the years ended

June

were as follows (in thousands):

	201 8		201 7
Net Sales
Private-label contract manufacturing	$	110,992	$	95,024
Patent and trademark licensing		21,445		26,922
	$	132,437	$	121,946

	201 8			201 7
Income from Operations
Private-label contract manufacturing	$	10,482		$	8,569
Patent and trademark licensing		5,730			7,534
Income from operations of reportable segments		16,212			16,103
Corporate expenses not allocated to segments		(6,679	)		(6,401	)
	$	9,533		$	9,702

	201 8		201 7
Assets
Private-label contract manufacturing	$	69,037	$	60,489
Patent and trademark licensing		16,170		12,122
	$	85,207	$	72,611

Our private-label contract manufacturing products are sold both in the U.S. and in markets outside the U.S., including Europe, Canada, Australia, New Zealand, and Asia. Our primary markets outside the U.S. are Europe and Asia. Our patent and trademark licensing activities are primarily based in the U.S.

Net sales by geographic region, based on the customers’ location, for the

two

years ended

June

were as follows (in thousands):

	201 8		201 7
United States	$	65,482	$	63,104
Markets outside the United States		66,955		58,842
Total net sales	$	132,437	$	121,946

Products manufactured by NAIE accounted for

81%

of consolidated net sales in markets outside the U.S. in fiscal

2018

and

59%

in fiscal

2017.

products manufactured by NAIE were sold in the U.S. during the fiscal years ended

June

30,

2018

and

2017.

Assets and capital expenditures by geographic region, based on the location of the company or subsidiary at which they were located or made, for the

two

years ended

June

were as follows (in thousands):

201 8	Long-Lived Assets		Total Assets		Capital Expenditures
United States	$	10,887	$	51,562	$	1,564
Europe		8,403		33,645		2,517
	$	19,290	$	85,207	$	4,081

201 7	Long-Lived Assets		Total Assets		Capital Expenditures
United States	$	10,753	$	47,777	$	2,365
Europe		7,383		24,834		2,989
	$	18,136	$	72,611	$	5,354