XML 33 R21.htm IDEA: XBRL DOCUMENT v3.7.0.1
Reportable Segments
 9 Months Ended
Mar. 26, 2017
Segment Reporting [Abstract]  
Reportable Segments
Reportable Segments

The Company's operating and reportable segments are:
•
Lighting Products
•
LED Products
•
Wolfspeed

As discussed more fully in Note 2, “Termination of Wolfspeed Sale Transaction,” on July 13, 2016, the Company executed a definitive agreement to sell the Wolfspeed business to Infineon, which agreement was subsequently terminated on March 6, 2017. As a result of the termination of the agreement, the Company has reclassified the results of the Wolfspeed business as continuing operations in its consolidated statements of (loss) income, and presented it as a separate reportable segment, for all periods presented. For comparative purposes, the prior segment results have been recast to conform to the current segment presentation.
Reportable Segments Description
The Company's Lighting Products segment primarily consists of LED lighting systems and bulbs. The Company's LED Products segment includes LED chips and LED components. The Company's Wolfspeed segment includes power devices, RF devices, and SiC materials.
Financial Results by Reportable Segment
The table below reflects the results of the Company's reportable segments as reviewed by the Chief Operating Decision Maker (CODM) for the three and nine months ended March 26, 2017 and March 27, 2016. The Company's CODM is the Chief Executive Officer. The Company used the same accounting policies to derive the segment results reported below as those used in the Company's consolidated financial statements.
The Company's CODM does not review inter-segment transactions when evaluating segment performance and allocating resources to each segment, and inter-segment transactions are not included in the segment revenue presented in the table below. As such, total segment revenue in the table below is equal to the Company's consolidated revenue.
The Company's CODM reviews gross profit as the lowest and only level of segment profit. As such, all items below gross profit in the consolidated statements of (loss) income must be included to reconcile the consolidated gross profit presented in the table below to the Company's consolidated loss from continuing operations before income taxes.
In order to determine gross profit for each reportable segment, the Company allocates direct costs and indirect costs to each segment's cost of revenue. The Company allocates indirect costs, such as employee benefits for manufacturing employees, shared facilities services, information technology, purchasing, and customer service, when the costs are identifiable and beneficial to the reportable segment. The Company allocates these indirect costs based on a reasonable measure of utilization that considers the specific facts and circumstances of the costs being allocated.
Unallocated costs in the table below consisted primarily of manufacturing employees’ stock-based compensation, expenses for profit sharing and quarterly or annual incentive plans and matching contributions under the Company’s 401(k) plan. These costs were not allocated to the reportable segments’ gross profit because the Company’s CODM does not review them regularly when evaluating segment performance and allocating resources.
The depreciation and amortization adjustment in the table below represents the depreciation and amortization that would have been recognized had the Wolfspeed assets been continuously classified as held and used, as discussed more fully in Note 2, “Termination of Wolfspeed Sale Transaction.” These costs were not allocated to the reportable segments’ gross profit for the three months ended March 26, 2017 because they represent an adjustment which does not provide comparability to the corresponding prior period and therefore were not reviewed by the Company’s CODM when evaluating segment performance and allocating resources. These costs were allocated to the Wolfspeed segment’s gross profit for the nine months ended March 26, 2017 because they provide comparability to the corresponding prior period and were reviewed by the Company’s CODM when evaluating segment performance and allocating resources.
Revenue, gross profit and gross margin for each of the Company's segments were as follows (in thousands, except percentages):
 
Three Months Ended
 
Nine Months Ended
 
March 26,
2017
 
March 27,
2016
 
March 26,
2017

March 27,
2016
Revenue:
 
 
 
 
 
 
 
Lighting Products revenue

$154,045

 

$187,714

 

$546,805

 

$690,715

LED Products revenue
131,327

 
135,552

 
406,858

 
407,873

Wolfspeed revenue
56,133

 
43,653

 
160,401

 
129,626

Total revenue

$341,505

 

$366,919

 

$1,114,064

 

$1,228,214

 
 
 
 
 
 
 
 
Gross Profit and Gross Margin:
 
 
 
 
 
 
 
Lighting Products gross profit

$35,355

 

$48,808

 

$159,415

 

$190,531

Lighting Products gross margin
23.0
%
 
26.0
%
 
29.2
%
 
27.6
%
LED Products gross profit
32,385

 
42,829

 
115,499

 
127,645

LED Products gross margin
24.7
%
 
31.6
%
 
28.4
%
 
31.3
%
Wolfspeed gross profit
26,396

 
22,750

 
74,737

 
70,990

Wolfspeed gross margin
47.0
%
 
52.1
%
 
46.6
%
 
54.8
%
Total segment gross profit
94,136

 
114,387

 
349,651

 
389,166

Unallocated costs
(3,459
)
 
(5,354
)
 
(13,077
)
 
(15,115
)
Depreciation and amortization adjustment
(4,601
)
 
—

 
—

 
—

Consolidated gross profit

$86,076

 

$109,033

 

$336,574

 

$374,051

Consolidated gross margin
25.2
%
 
29.7
%
 
30.2
%
 
30.5
%



Assets by Reportable Segment
Inventories are the only assets reviewed by the Company's CODM when evaluating segment performance and allocating resources to the segments. The CODM reviews all of the Company's assets other than inventories on a consolidated basis.
Unallocated inventories in the table below were not allocated to the reportable segments because the Company’s CODM does not review them when evaluating performance and allocating resources to each segment. Unallocated inventories consisted primarily of manufacturing employees’ stock-based compensation, profit sharing and quarterly or annual incentive compensation and matching contributions under the Company’s 401(k) plan.
Inventories for each of the Company's segments were as follows (in thousands):
 
March 26,
2017
 
June 26,
2016
Lighting Products

$151,698

 

$172,261

LED Products
111,308

 
104,544

Wolfspeed
24,041

 
21,871

Total segment inventories
287,047

 
298,676

Unallocated inventories
4,086

 
4,866

Consolidated inventories

$291,133

 

$303,542