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Reportable Segments | 6 Months Ended
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Dec. 29, 2019
Segment Reporting [Abstract] |
Reportable Segments | Reportable Segments Reportable segments are components of the Company that the Chief Operating Decision Maker (CODM) regularly reviews when allocating resources and assessing performance. The Company’s CODM reviews segment performance and allocates resources based upon segment revenue and segment gross profit. The Company's identified CODM is the Chief Executive Officer. The Company’s operating and reportable segments are: •Wolfspeed •LED Products The Wolfspeed segment includes silicon carbide materials, power devices and RF devices and the LED Products segment includes LED chips and LED components. Financial Results by Reportable Segment The tables below reflect the results of the Company's reportable segments as reviewed by the CODM for the three and six month periods ended December 29, 2019 and December 30, 2018. 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 operations 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 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 cost of goods sold (COGS) acquisition related cost adjustment includes acquisition costs related to our acquisition of the RF Power (RF Power) business of Infineon Technologies AG (Infineon) 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:
| Three months ended |  |  |  | Six months ended |  |
| December 29, 2019 |  | December 30, 2018 |  | December 29, 2019 |  | December 30, 2018
Revenue: |  |  |  |  |  |  |
Wolfspeed revenue | $120.7 |  |  | $135.3 |  |  | $248.4 |  |  | $262.7 |
LED Products revenue | 119.2 |  |  | 145.2 |  |  | 234.3 |  |  | 292.0 |
Total revenue | $239.9 |  |  | $280.5 |  |  | $482.7 |  |  | $554.7 |
Gross Profit and Gross Margin: |  |  |  |  |  |  |
Wolfspeed gross profit | $41.8 |  |  | $64.7 |  |  | $100.8 |  |  | $125.1 |
Wolfspeed gross margin | 34.6 | % |  | 47.8 | % |  | 40.6 | % |  | 47.6 | %
LED Products gross profit | 26.5 |  |  | 43.5 |  |  | 48.6 |  |  | 84.8 |
LED Products gross margin | 22.2 | % |  | 30.0 | % |  | 20.7 | % |  | 29.0 | %
Total segment gross profit | 68.3 |  |  | 108.2 |  |  | 149.4 |  |  | 209.9 |
Unallocated costs | (6.4) |  |  | (4.7) |  |  | (13.3) |  |  | (6.9) |
COGS acquisition related costs | — |  |  | — |  |  | — |  |  | (1.2) |
Consolidated gross profit | $61.9 |  |  | $103.5 |  |  | $136.1 |  |  | $201.8 |
Consolidated gross margin | 25.8 | % |  | 36.9 | % |  | 28.2 | % |  | 36.4 | %
Geographic Information The Company conducts business in several geographic areas. Revenue is attributed to a particular geographic region based on the shipping address for the products. Disaggregated revenue from external customers by geographic area is as follows:
| Three months ended |  |  |  |  |  |  |  | Six months ended |  |  |  |  |  |
| December 29, 2019 |  |  |  | December 30, 2018 |  |  |  | December 29, 2019 |  |  |  | December 30, 2018 |  |
(in millions of U.S. Dollars) | Revenue |  | % of Revenue |  | Revenue |  | % of Revenue |  | Revenue |  | % of Revenue |  | Revenue |  | % of Revenue
United States | $60.7 |  |  | 25.3 | % |  | $62.8 |  |  | 22.4 | % |  | $116.1 |  |  | 24.1 | % |  | $129.0 |  |  | 23.3 | %
China | 72.2 |  |  | 30.1 | % |  | 105.6 |  |  | 37.6 | % |  | 145.4 |  |  | 30.1 | % |  | 206.6 |  |  | 37.2 | %
Europe | 60.5 |  |  | 25.2 | % |  | 64.1 |  |  | 22.9 | % |  | 123.5 |  |  | 25.6 | % |  | 133.9 |  |  | 24.1 | %
Other | 46.5 |  |  | 19.4 | % |  | 48.0 |  |  | 17.1 | % |  | 97.7 |  |  | 20.2 | % |  | 85.2 |  |  | 15.4 | %
Total | $239.9 |  |  |  |  | $280.5 |  |  |  |  | $482.7 |  |  |  |  | $554.7 |  |  |
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, matching contributions under the Company’s 401(k) plan, and acquisition related costs. Inventories for each of the Company's segments were as follows:
| December 29, 2019 |  | June 30, 2019
Wolfspeed | $84.6 |  |  | $81.6 |
LED Products | 76.2 |  |  | 99.2 |
Total segment inventories | 160.8 |  |  | 180.8 |
Unallocated inventories | 4.5 |  |  | 6.6 |
Consolidated inventories | $165.3 |  |  | $187.4 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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