Reportable Segments

The Company's operating and reportable segments are:


•	Wolfspeed


•	LED 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.

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 31, 2019. 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 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						Nine Months Ended
	March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018
Revenue:
Wolfspeed revenue		$141,253			$81,902			$403,958			$218,628
LED Products revenue	132,797			143,298			424,771			440,500
Total revenue		$274,050			$225,200			$828,729			$659,128

Gross Profit and Gross Margin:
Wolfspeed gross profit		$68,851			$39,285			$193,947			$105,816
Wolfspeed gross margin	48.7		%	48.0		%	48.0		%	48.4		%
LED Products gross profit	36,982			37,764			121,787			115,180
LED Products gross margin	27.8		%	26.4		%	28.7		%	26.1		%
Total segment gross profit	105,833			77,049			315,734			220,996
Unallocated costs	(3,938		)	(2,186		)	(10,782		)	(7,066		)
COGS acquisition related costs	(1,441		)	—			(2,667		)	—
Consolidated gross profit		$100,454			$74,863			$302,285			$213,930
Consolidated gross margin	36.7		%	33.2		%	36.5		%	32.5		%

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, 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):



	March 31, 2019		June 24, 2018
Wolfspeed		$67,490		$47,190
LED Products	100,384		100,452
Total segment inventories	167,874		147,642
Unallocated inventories	4,919		3,994
Consolidated inventories		$172,793		$151,636