Reportable Segments

The Company's operating and reportable segments are:


•	Wolfspeed


•	LED Products


•	Lighting Products

Reportable Segments Description

The Company's Wolfspeed segment includes power devices, RF devices, and SiC materials. The Company's LED Products segment includes LED chips and LED components. The Company's Lighting Products segment primarily consists of LED lighting systems and lamps.

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 months ended September 23, 2018. 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 must be included to reconcile the consolidated gross profit presented in the table below to the Company's consolidated 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, 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 cost of goods sold (COGS) acquisition related cost adjustment includes RF Power acquisition costs impacting cost of revenue for fiscal 2019. These costs were not allocated to the reportable segments' gross profit for fiscal 2019 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.

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



	Three Months Ended
	September 23, 2018			September 24, 2017
Revenue:
Wolfspeed revenue		$127,375			$66,154
LED Products revenue	146,802			144,520
Lighting Products revenue	134,090			149,724
Total revenue		$408,267			$360,398

Gross Profit and Gross Margin:
Wolfspeed gross profit		$60,415			$32,398
Wolfspeed gross margin	47.4		%	49.0		%
LED Products gross profit	41,283			38,810
LED Products gross margin	28.1		%	26.9		%
Lighting Products gross profit	31,058			31,883
Lighting Products gross margin	23.2		%	21.3		%
Total segment gross profit	132,756			103,091
Unallocated costs	(3,376		)	(2,759		)
COGS acquisition related costs	(1,212		)	—
Consolidated gross profit		$128,168			$100,332
Consolidated gross margin	31.4		%	27.8		%

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, quarterly or annual incentive compensation, matching contributions under the Company’s 401(k) plan, and acquisition related costs.

Inventories for each of the Company's segments were as follows (in thousands):



	September 23, 2018		June 24, 2018
Wolfspeed		$45,961		$47,190
LED Products	106,028		100,452
Lighting Products	146,665		144,193
Total segment inventories	298,654		291,835
Unallocated inventories	7,735		4,180
Consolidated inventories		$306,389		$296,015