SEGMENT REPORTING

The Company is a leading multi-channel retailer of casual clothing, accessories and footwear, as well as home products, and has two reportable segments: Direct and Retail. Product revenue is divided by product categories: Apparel and Non-apparel. The Non-apparel revenue includes accessories, footwear, and home goods. Services and other revenue includes embroidery, monogramming, gift wrapping, shipping and other services. Net revenue is aggregated by product category in the following table:



(in thousands)	Fiscal 2017		Fiscal 2016		Fiscal 2015
Net revenue:
Apparel	$	1,144,950	$	1,086,439	$	1,156,047
Non-apparel	176,287		168,945		183,073
Services and other	85,440		80,376		80,658
Total Net revenue	$	1,406,677	$	1,335,760	$	1,419,778

The Company identifies reportable segments according to how business activities are managed and evaluated. The Company's reportable segments are strategic business units that offer similar products and services but are sold either directly from its warehouses (Direct) or through its retail stores (Retail). Adjusted EBITDA is the primary measure used to make decisions on allocating resources and assessing performance of each reportable segment. Adjusted EBITDA is computed as Income before taxes appearing on the Consolidated Statements of Operations net of interest expense, depreciation and amortization and other significant items that while periodically affecting the Company's results, may vary significantly from period to period and may have a disproportionate effect in a given period, which may affect comparability of results. Reportable segment assets are those directly used in or clearly allocable to a reportable segment's operations. Depreciation, amortization, and property and equipment expenditures are recognized in each respective segment. There were no material transactions between reporting segments for the years ended February 2, 2018, January 27, 2017 and January 29, 2016.

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The Direct segment sells products through the Company's e-commerce websites and direct mail catalogs. Operating costs consist primarily of direct marketing costs (catalog and e-commerce marketing costs); order processing and shipping costs; direct labor and benefits costs and facility costs. Assets primarily include goodwill and trade name intangible assets, inventory, accounts receivable, prepaid expenses (deferred catalog costs), technology infrastructure, and property and equipment.

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The Retail segment sells products and services through dedicated Lands' End Shops at Sears across the United States, the Company's Lands' End stores and international shop-in-shops. Operating costs consist primarily of labor and benefits costs; rent, CAM and occupancy costs; distribution costs; and in-store marketing costs. Assets primarily include inventory in the retail stores, fixtures and leasehold improvements.

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Corporate overhead and other expenses include unallocated shared-service costs, which primarily consist of employee services and financial services, legal and corporate expenses. These expenses include labor and benefits costs, corporate headquarters occupancy costs and other administrative expenses. Assets include corporate headquarters and facilities, corporate cash and cash equivalents and deferred income taxes.

Financial information by segment is presented as follows:



(in thousands)	Fiscal 2017		Fiscal 2016		Fiscal 2015
Net revenue:
Direct	$	1,234,115	$	1,149,149	$	1,214,993
Retail	172,562		186,611		204,785
Total Net revenue	$	1,406,677	$	1,335,760	$	1,419,778



(in thousands)	Fiscal 2017			Fiscal 2016			Fiscal 2015
Adjusted EBITDA:
Direct	$	104,632		$	78,582		$	141,936
Retail	(7,866		)	(5,339		)	(301		)
Corporate/other	(38,502		)	(33,411		)	(34,347		)
Total adjusted EBITDA	$	58,264		$	39,832		$	107,288
Loss on disposal of property and equipment	348			672			44
Transfer of corporate functions	3,921			—			—
Product recall	—			(212		)	(3,371		)
Depreciation and amortization	24,910			19,003			17,399
Intangible asset impairment	—			173,000			98,300
Operating income (loss)	$	29,085		$	(152,631	)	$	(5,084	)
Interest expense	25,929			24,630			24,826
Other expense (income), net	2,708			1,619			(671		)
Income tax (benefit) expense	(27,747		)	(69,098		)	(9,691		)
Net income (loss)	$	28,195		$	(109,782	)	$	(19,548	)



(in thousands)	Fiscal 2017		Fiscal 2016		Fiscal 2015
Depreciation and amortization:
Direct	$	22,279	$	15,877	$	13,916
Retail	1,277		1,674		2,029
Corporate/other	1,354		1,452		1,454
Total Depreciation and amortization	$	24,910	$	19,003	$	17,399



(in thousands)	February 2, 2018		January 27, 2017
Total assets:
Direct	$	856,986	$	805,201
Retail	49,933		69,792
Corporate/other	217,216		239,398
Total assets	$	1,124,135	$	1,114,391



(in thousands)	Fiscal 2017		Fiscal 2016		Fiscal 2015
Capital expenditures:
Direct	$	37,893	$	32,590	$	21,630
Retail	123		635		318
Corporate/other	129		94		276
Total capital expenditures	$	38,145	$	33,319	$	22,224

The geographical allocation of Net revenue is based upon country of order fulfillment. Other foreign amounts represent orders fulfilled from the United States and shipped to customers in another country. The following presents summarized geographical information:



(in thousands)	Fiscal 2017		Fiscal 2016		Fiscal 2015
Net revenue:
United States	$	1,204,199	$	1,143,529	$	1,211,226
Europe	134,543		125,410		136,890
Asia	48,704		50,030		51,808
Other foreign	19,231		16,791		19,854
Total Net revenue	$	1,406,677	$	1,335,760	$	1,419,778



(in thousands)	February 2, 2018		January 27, 2017
Property and equipment, net:
United States	$	126,015	$	113,045
Europe	9,862		9,075
Asia	624		716
Total Property and equipment, net	$	136,501	$	122,836

Other than the United States, no one country is greater than 10% of total Net revenue or of total Property and equipment, net.