Reportable Segments

The Company's operating and reportable segments are:


•	Lighting Products


•	LED Products


•	Wolfspeed

Reportable Segments Description

The Company's Lighting Products segment primarily consists of LED lighting systems and lamps. 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 six months ended December 24, 2017. 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 income (loss) must be included to reconcile the consolidated gross profit presented in the table below to the Company's consolidated income (loss) 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.

For the three and six months ended December 25, 2016, the Wolfspeed segment was presented as discontinued operations. 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. These costs were allocated to the Wolfspeed segment's gross profit for the three and six months ended December 25, 2016 because they represent an adjustment which provides comparability to the current period.

Revenue, gross profit and gross margin for each of the Company's segments were as follows (in thousands, except percentages):



	Three Months Ended						Six Months Ended
	December 24, 2017			December 25, 2016			December 24, 2017			December 25, 2016
Revenue:
Lighting Products revenue		$144,616			$208,924			$294,340			$392,760
LED Products revenue	152,682			138,038			297,202			275,531
Wolfspeed revenue	70,572			54,364			136,726			104,268
Total revenue		$367,870			$401,326			$728,268			$772,559

Gross Profit and Gross Margin:
Lighting Products gross profit		$22,964			$74,770			$54,847			$124,060
Lighting Products gross margin	15.9		%	35.8		%	18.6		%	31.6		%
LED Products gross profit	38,606			40,314			77,416			82,084
LED Products gross margin	25.3		%	29.2		%	26.0		%	29.8		%
Wolfspeed gross profit	34,133			25,911			66,531			49,371
Wolfspeed gross margin	48.4		%	47.7		%	48.7		%	47.4		%
Total segment gross profit	95,703			140,995			198,794			255,515
Unallocated costs	(3,100		)	(4,859		)	(5,859		)	(9,618		)
Depreciation and amortization adjustment	—			4,431			—			4,601
Consolidated gross profit		$92,603			$140,567			$192,935			$250,498
Consolidated gross margin	25.2		%	35.0		%	26.5		%	32.4		%

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):



	December 24, 2017		June 25, 2017
Lighting Products		$140,657		$145,710
LED Products	100,411		108,297
Wolfspeed	28,047		26,453
Total segment inventories, net	269,115		280,460
Unallocated inventories	4,096		3,925
Consolidated inventories, net		$273,211		$284,385