-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QsJ5qSH9I1DRYKK/iutbl5kBL9YDNrRiUeXWylwZGqX/E7umuihXGJYriVLs0uMV Sjrr2uUYSZTleUwIRVrBCw== 0000820318-96-000023.txt : 19961113 0000820318-96-000023.hdr.sgml : 19961113 ACCESSION NUMBER: 0000820318-96-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: II-VI INC CENTRAL INDEX KEY: 0000820318 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 251214948 STATE OF INCORPORATION: PA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16195 FILM NUMBER: 96659276 BUSINESS ADDRESS: STREET 1: 375 SAXONBURG BLVD CITY: SAXONBURG STATE: PA ZIP: 16056 BUSINESS PHONE: 4123524455 MAIL ADDRESS: STREET 1: 375 SAXONBURG BLVD CITY: SAXONBURG STATE: PA ZIP: 16056 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended, September 30, 1996 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________________ to __________________. Commission File Number: 0-16195 II-VI INCORPORATED (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-1214948 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 375 Saxonburg Boulevard Saxonburg, PA 16056 16056 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 412-352-4455 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: At November 7, 1996, 6,362,296 shares of Common Stock, no par value, of the registrant were outstanding. II-VI INCORPORATED AND SUBSIDIARIES ----------------------------------- INDEX -----
Page No. -------- PART 1 FINANCIAL INFORMATION Item 1. Financial Statements. Independent Accountants' Report. . . . . . . . . . 3 Condensed Consolidated Balance Sheets - September 30, 1996, and June 30, 1996. . . . . . . 4 Condensed Consolidated Statements of Earnings - Three months ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . 5 Condensed Consolidated Statements of Shareholders' Equity - Three months ended September 30, 1996 . . . . . . . . . . . . . . . . 6 Condensed Consolidated Statements of Cash Flows - Three months ended September 30, 1996 and 1995. . . . . . . . . . . . 7 Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . 10 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K . . . . 12
2 [LOGO OF ALPERN, ROSENTHAL & COMPANY] Certified Public Accountants Warner Centre, Suite 400 . 332 Fifth Avenue Pittsburgh, Pennsylvania 15222-2413 (412) 281-2501 . Fax (412) 471-1996 Independent Accountants' Report To the Board of Directors and Shareholders of II-VI Incorporated Saxonburg, Pennsylvania We have reviewed the accompanying condensed consolidated balance sheet of II-VI Incorporated and Subsidiaries as of September 30, 1996, and the related condensed consolidated statements of earnings, shareholders' equity and cash flows for the three month periods ended September 30, 1996 and 1995. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheets of II-VI Incorporated and Subsidiaries as of June 30, 1996, and the related consolidated statements of earnings, shareholders' equity and cash flows for the year then ended (not presented herein); and in our report dated August 12, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of June 30, 1996 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ Alpern, Rosenthal & Company October 16, 1996 A Professional Corporation - ---------------------------------------------------------------- Members American and Pennsylvania Institutes of Certified Public Accountants Accounting Firms Associated, inc. Member Firms in Principal Cities Irving P. Rosenthal, CPA Deborah H. Wells, CPA Michael H. Levin, CPA Fred M. Rock, CPA Harvey A. Pollack, CPA Sean M. Brennan, CPA Fred J. Morelli, Jr., CPA Alexander Paul, CPA Edward F. Rockman, CPA Michael E. Forgas, CPA Emanuel V. DiNatale, CPA Joel M. Rosenthal, CPA
3 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements - ------------------------------------------------ II-VI Incorporated and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) ($000 except share data)
September 30 June 30 Assets 1996 1996 ------------ ----------- Current Assets Cash and equivalents $ 8,606 $ 9,417 Accounts receivable - less allowance for doubtful accounts of $256 at 9/30/96 and $246 at 6/30/96 9,177 8,712 Inventories 6,004 5,490 Deferred income taxes 429 429 Prepaid and other current assets 720 607 ------- ------- Total Current Assets 24,936 24,655 Property, Plant & Equipment, net 15,762 15,085 Goodwill 2,126 2,138 Other Assets 2,227 2,291 ------- ------- $45,051 $44,169 ------- ------- Liabilities and Shareholders' Equity Current Liabilities Notes payable $ 1,167 $ 1,393 Accounts payable - trade 1,276 1,260 Accrued salaries, wages and bonuses 1,770 3,105 Income taxes payable 950 607 Accrued profit sharing contribution 207 556 Other current liabilities 993 1,024 Current portion of long-term debt 73 23 ------- ------- Total Current Liabilities 6,436 7,968 Long-Term Debt--less current portion 731 45 Deferred Income Taxes 1,753 1,753 Commitments & Contingencies - - Shareholders' Equity Preferred stock, no par value; authorized - 5,000,000 shares; unissued - - Common stock, no par value; authorized - 30,000,000 shares; issued - 6,720,636 shares in September 1996; 6,691,718 shares in June 1996 17,121 17,055 Cumulative Translation Adjustment 81 79 Retained Earnings 19,691 18,031 ------- ------- 36,893 35,165 Less treasury stock, at cost - 384,440 shares at 9/30/96 and 6/30/96. 762 762 ------- ------- 36,131 34,403 ------- ------- $45,051 $44,169 ------- -------
[FN] - -See notes to condensed consolidated financial statements. 4 II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Earnings (Unaudited) ($000 except per share data)
Three Months Ended September 30, 1996 1995 -------- -------- Revenues Net Sales: Domestic $ 6,772 $ 4,237 International 4,820 3,720 ------- ------- 11,592 7,957 Contract research and development 518 131 ------- ------- 12,110 8,088 ------- ------- Costs, Expenses & Other Income Cost of goods sold 6,348 4,556 Contract research and development 395 101 Internal research and development 124 148 Selling, general and administrative expenses 3,030 2,131 Interest and other (income) expense - net (125) 16 ------- ------- 9,772 6,952 ------- ------- Earnings Before Income Taxes 2,338 1,136 Income Tax Expense 678 330 ------- ------- Net Earnings $ 1,660 $ 806 ------- ------- Earnings Per Share $ 0.25 $ 0.15 ------- -------
[FN] - -See notes to condensed consolidated financial statements. 5 II-VI Incorporated and Subsidiaries Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (000) II-VI Incorporated and Subsidiaries Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (000)
Common Stock Cumulative Treasury Stock -------------- Translation Retained ---------------- Shares Amount Adjustment Earnings Shares Amount Total ------ ------ ----------- -------- ------- -------- ----- Balance--July 1, 1996 6,692 $17,055 $ 79 $ 18,031 (384) $ (762) $34,403 Shares issued under stock option plan 29 66 - - - - 66 Net earnings for the quarter - - - 1,660 - - 1,660 Translation adjustment - - 2 - - - 2 ------ ------ ----------- -------- ------- -------- ------- Balance-- September 30, 1996 6,721 $17,121 $ 81 $ 19,691 (384) $ (762) $36,131
[FN] - -See notes to condensed consolidated financial statements. 6 II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) ($000)
Three Months Ended September 30, 1996 1995 ------- ------- Cash Flows from Operating Activities Net Earnings $ 1,660 $ 806 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 816 593 (Gain) loss on foreign currency transactions (58) 39 Deferred income taxes - (38) Increase (decrease) in cash from changes in: Accounts receivable (456) (405) Inventories (525) (221) Accounts payable 43 346 Accrued salaries, wages and bonuses (1,336) (923) Accrued profit sharing contribution (349) (187) Income taxes payable 343 (21) Other operating net assets (132) (175) ------- ------- Net cash provided by (used in) operating activities 6 (186) ------- ------- Cash Flows from Investing Activities Additions to property, plant, & equipment (1,407) (2,482) Additions to other assets (9) - ------- ------- Net cash used in investing activities (1,416) (2,482) ------- ------- Cash Flows from Financing Activities Payments on short-term borrowings (202) - Proceeds from long-term borrowings 741 - Payments on long-term borrowings (6) (57) Proceeds from sale of common stock 66 51 ------- ------- Net cash provided by (used in) financing activities 599 (6) ------- ------- Net decrease in cash and equivalents (811) (2,674) Cash and Equivalents at Beginning of period 9,417 3,822 ------- ------- Cash and Equivalents at End of period $ 8,606 $ 1,148 ------- -------
[FN] - -See notes to condensed consolidated financial statements. 7 II-VI Incorporated and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) Note A - Basis of Presentation The condensed consolidated financial statements for the three month periods ended September 30, 1996 and 1995 are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation for the periods presented have been included. These interim statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto contained in the Company's 1996 Annual Report to the shareholders. The consolidated results of operations for the three month periods ended September 30, 1996 and 1995 are not necessarily indicative of the results to be expected for the full year. Note B - Inventories ($000) The components of inventories are as follows: September 30 June 30 1996 1996 Raw Materials $ 2,464 $ 2,279 Work in Progress 1,550 1,427 Finished Goods 1,990 1,784 -------- ------- $ 6,004 $ 5,490 -------- ------- Note C - Property, Plant and Equipment ($000) Property, plant and equipment consist of the following: September 30 June 30 1996 1996 Land and land improvements $ 545 $ 539 Buildings and improvements 7,139 6,952 Machinery and equipment 23,298 22,084 ------- ------- 30,982 29,575 Less accumulated depreciation 15,220 14,490 ------- ------- $15,762 $15,085 ------- ------- 8 II-VI Incorporated and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) Note D - Debt In September of 1996, the Company secured a $741,000 low interest rate loan from the Pennsylvania Industrial Development Authority to finance a portion of a facility expansion. The terms of the loan call for equal monthly payments over a fifteen year period, including interest at three percent. 9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- Net earnings for the first quarter of fiscal 1997 were $1,660,000 ($0.25 per share) on revenues of $12,110,000. This compares to net earnings of $806,000 ($0.15 per share) on revenues of $8,088,000 in the first quarter of fiscal 1996. The increased earnings were driven by the improved revenue volume. Order bookings for the first quarter were $12,927,000 compared to $8,017,000 for the same period last fiscal year, an increase of 61%. Approximately two-thirds of this increase was from the VLOC operation and included $1.1 million of Research and Development contract awards. The remaining increase was attributable to increased demand for infrared optics and materials in the worldwide industrial market and the military/aerospace market, in conjunction with improved bookings in the eV PRODUCTS division. As indicated in the Company's press release announcing the first quarter results, overall market demand for the Company's products continues its strong growth. Manufacturing revenues for the first quarter increased 46% to $11,592,000 compared to $7,957,000 for the same period last fiscal year. This increase was the result of improved shipments in all of the markets served by the Company with the VLOC operation contributing more than one half of the increase. Manufacturing gross margin for the first quarter was $5,244,000 or 45% of revenues compared to $3,401,000 or 43% of revenues for the first quarter of fiscal 1996. Improved manufacturing efficiency in the VLOC operation was the primary driver to the increased gross margin as a percentage of revenues. This was partially offset by the further strengthening of the U.S. dollar against the Japanese Yen. Selling, General and Administrative expenses for the quarter were $3,030,000 or 25% of revenues compared to $2,131,000 or 26% of revenues for last fiscal year's first quarter. The increase in expense is attributable to increased expenses in the VLOC operation, higher compensation expense associated with the Company's world-wide profit driven bonus programs and higher general and administrative expenses needed to support the Company's growth. Other income increased by $141,000 in comparison to last fiscal year's first quarter due to investment earnings on increased cash balances. The increased cash is primarily due to the October 1995 public stock offering. The Company's first quarter effective income tax rate is 29%, the same as last fiscal year's first quarter. Liquidity and Capital Resources - ------------------------------- Cash decreased during the first three months of fiscal 1997 by $800,000 primarily from $1,407,000 in capital expenditures being partially offset by $741,000 of financing from a low interest rate loan with the Pennsylvania Industrial Development Authority. The capital expenditures focused on improved capacity, process automation and the start up of the Company's China operation. The Company generated $6,000 in cash from operations for the first quarter of fiscal 1997, as cash generated from net earnings before depreciation and amortization was offset by the payment of compensation costs relating to the Company's fiscal 1996 world-wide profit-driven bonus and retirement programs, and increases in inventories and accounts receivable needed to support the growth in sales volume. The current cash balance will be used for working capital needs, further capital expenditures, and possible acquisitions of complementary businesses, products or technologies. 10 This Management's Discussion and Analysis contains forward looking statements as defined by Section 21E of the Securities Exchange Act of 1934, including the statement regarding strong demand for the Company's products. The projected strong demand for our products could differ from our statements if worldwide economic conditions change, competitive conditions intensify, technology problems emerge, and/or if suitable acquisitions of technologies or business cannot be consummated. There are additional risk factors that could affect the Company's business, results of operations or financial condition. Investors are encouraged to review the risk factors set forth in the Company's Form 10-K filed on September 24, 1996. 11 PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. -------- 10.01 II-VI Incorporated Amended and Restated Stock Option Plan of 1990 . . . . . . . . Filed herewith. 15.01 Accountant's acknowledgment letter dated November 12, 1996 . . . . . . . . . . . . Filed herewith. 27.01 Financial Data Schedule . . . . . . . . . Filed herewith. 99.01 Press release dated October 17, 1996. . . Filed herewith. (b) Reports on Form 8-K. None 12 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. II-VI INCORPORATED (Registrant) Date: November 12, 1996 By: /s/ Carl J. Johnson ----------------------- Carl J. Johnson Chairman and Chief Executive Officer Date: November 12, 1996 By: /s/ James Martinelli ----------------------- James Martinelli Treasurer & Chief Financial Officer EXHIBIT INDEX Exhibit No. 10.01 II-VI Incorporated Amended and Restated Stock Option Plan of 1990 . . . . . . . . Filed herewith. 15.01 Accountant's acknowledgment letter dated November 12, 1996 . . . . . . . . . . . . Filed herewith. 27.01 Financial Data Schedule . . . . . . . . . Filed herewith. 99.01 Press release dated October 17, 1996. . . Filed herewith. 14 EX-10 2 [Amended as of August 16, 1996] II-VI INCORPORATED STOCK OPTION PLAN OF 1990 Section 1. Amendment. Upon the effective date set forth in Section 13, the II-VI Incorporated Stock Option Plan of 1987 is hereby amended and restated as the II-VI Incorporated Stock Option Plan of 1990 (hereinafter called the "Plan"). Under the Plan, directors, officers and key employees of II-VI Incorporated (hereinafter called the "Company") and its subsidiaries, if any, who are responsible for its continued growth and development and future financial success of the Company may be granted options to purchase shares of common stock of the Company in order to secure to the Company the advantages of the incentive and sense of proprietorship inherent in stock ownership by such persons. Section 2. Duration. All options granted under this Plan must be granted within ten years of August 25, 1990. Any options outstanding after the expiration of such ten-year period may be exercised within the periods prescribed by Section 8. Section 3. Administration. The Plan shall be administered by the Board of Directors of the Company or, at the election of the Board of Directors, by a committee of the Board of Directors (the "Administrator") constituted so as to comply with Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934, as amended, as such rule may be amended from time-to- time, or any successor rule. In the event that the Administrator is a committee of the Board of Directors, a majority of the committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present or acts approved in writing by a majority of the committee shall be deemed the acts of the committee. Subject to the provisions of the Plan and to policies determined by the Board of Directors, the Administrator is authorized to adopt such rules and regulations and to take such action in the administration of the Plan as it shall deem proper. Section 4. Eligibility. Directors, officers and key employees of the Company and its subsidiaries, if any (including officers and employees who are directors of the Company), who, in the opinion of the Administrator, are mainly responsible for the continued growth and development and future financial success of the business shall be eligible to participate in the Plan. The Administrator shall, in its sole discretion, from time to time, select from such eligible persons whose to whom options shall be granted and determine the number of shares to be included in such option. No officer or employee shall have any right to receive an option, except as the Administrator in its discretion shall determine. The terms "subsidiaries" and "parent" where used in the Plan or in any stock option agreement entered into under the Plan means a "subsidiary corporation" or a "parent corporation" respectively as defined in Section 424 of the Internal Revenue Code of 1986, as it may be amended from time to time (the "Code"). Section 5. Shares Subject to Plan. Inclusive of options granted under this Plan prior to amendment hereby, options may be granted pursuant to the Plan to purchase up to 1,240,000 shares of no par value common stock of the Company (subject to adjustment as provided in Section 9), which may be either authorized and unissued shares or shares held in the treasury of the Company. To the extent that options granted under the Plan (including options granted under the Plan prior to amendment hereby) shall expire or terminate without being exercised shares covered thereby shall remain available for purposes of the Plan. Section 6. Types of Options. Options granted pursuant to the Plan may be either options which are intended to be treated as incentive stock options under Section 422 of the Code (hereinafter called "Incentive Stock Options") of other options not intended to be treated as incentive stock options under Section 422 of the Code (hereinafter called "Nonstatutory Stock Options"). Incentive Stock Options and Nonstatutory Stock Options shall be granted separately hereunder. Subject to the foregoing, the Administrator shall determine, in its sole discretion, whether and to what extent options granted under the Plan shall be Incentive Stock Options or Nonstatutory Stock Options. Section 7. Authority of Administrator. The Administrator, in its sole discretion, may permit an optionee voluntarily to surrender for cancellation an option granted under the Plan, such surrender to be conditioned upon the granting to such optionee of a new option under the Plan for the same or a different number of shares as the option surrendered, or may require such voluntary surrender as condition precedent to the grant of a new option to such optionee. Any such new option shall be exercisable at the price, during the period, and in accordance with any other terms and conditions specified by the Administrator at the time the new option is granted, all determined in accordance with the provisions of the Plan without regard to the price, period of exercise, or any other terms or conditions of the option surrendered for cancellation. The grant of such new option shall not be deemed an amendment of the Plan or the option surrendered. For purposes of Section 5 hereof, options granted under this Plan and subsequently surrendered for cancellation shall be deemed to have terminated without being exercised. Section 8. Terms of Options. Each option granted under the Plan shall be evidenced by a stock option agreement between the Company and the person to whom such option is granted designating the option as either an Incentive Stock Option or a Nonstatutory Stock Option and shall be subject to the following terms and conditions: (a) Subject to adjustment as provided in Section 9 of this Plan, the price at which each share covered by an option may be purchased shall be determined in each case by the committee but shall not be less than the fair market value thereof at the time the option is granted. If an optionee owns (or is deemed to own under applicable provisions of the Code and rules and regulations promulgated thereunder) more than 10% of the combined voting power of all classes of the stock of the Company (or any parent or subsidiary of the Company) and an option granted to such optionee is designated as an Incentive Stock Option, the option price shall be no less than 110% of the fair market value of the shares covered by the option on the date the option is granted. (b) During the lifetime of the optionee the option may be exercised only by the optionee. The option shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution. (c) An option may be exercised in whole at any time, or in part from time to time, within such period or periods not to exceed ten years from the granting of the option as may be determined by the Administrator and set forth in the stock option agreement (such period or periods being hereinafter referred to as the "option period"), provided that all options will terminate if the optionee shall cease to be employed by the Company or any of its subsidiaries except as follows: (i) if the optionee shall cease to be employed by the Company or any of its subsidiaries because of early, normal or late retirement, as those terms are defined in the Company's profit sharing plan, the option may be exercised only within three years after the termination of employment and only within the option period; (ii) if the optionee shall cease to be employed by the Company or any of its subsidiaries because of a total and permanent disability as that term is defined in Section 22(e)(3) of the Code, the option may be exercised only within twelve months after the termination and only within the option period; and (iii) if the optionee shall die, the option may be exercised only within twelve months after the optionee's death and only within the option period (and only within the period set forth in subparagraph (i) hereof if such death follows a termination of employment other than for a total and permanent disability; or only within the period set forth in subparagraph (ii) hereof if such death follows a termination of employment due to a total and permanent disability as set forth in subparagraph (ii)) and only by the optionee's personal representatives or persons entitled thereto under the optionee's will or the laws of descent and distribution. (d) The option may not be exercised for more shares (subject to adjustment as provided in Section 9) after the termination of the optionee's employment or the optionee's death than the optionee was entitled to purchase thereunder at the time of the termination of the optionee's employment or the optionee's death. (e) If an optionee owns (or is deemed to own under applicable provisions of the Code and rules and regulations promulgated thereunder) more than 10% of the combined voting power of all classes of stock of the Company (or any parent or subsidiary of the Company) and an option granted to such optionee is designated as an Incentive Stock Option, the option by its terms may not be exercisable after the expiration of five years from the date such option is granted. (f) The option price of each share purchased pursuant to an option shall be paid in full at the time of each exercise of the option either (i) in cash, (ii) by delivering to the Company shares of the common stock of the Company having an aggregate fair market value equal to the option price of such shares being purchased; or, (iii) by delivering a combination of the foregoing having an aggregate fair market value equal to the option price of such shares being purchased. (g) Nothing contained in the Plan or in any stock option agreement shall confer upon any optionee any right with respect to the continuance of employment by the Company or any subsidiary or interfere in any way with the right of the Company or any subsidiary to terminate his employment or change his compensation at any time. (h) If the optionee terminates his employment with the Company or a subsidiary for any reason, and commences employment with a Competitor of the Company or a subsidiary within twelve months of the date the option is exercised, the optionee shall return to the Company the shares acquired pursuant to such exercise and the Company shall return the purchase price of such shares in cash or certified check within thirty days after the optionee commences such employment with a Competitor. If the optionee has sold such shares, then he agrees to pay to the company, in cash or certified funds, an amount equal to the proceeds received by the optionee on the sale of such shares less the amount which the optionee paid for such shares on the exercise of the option. Such amount shall be paid to the Company within thirty days after the optionee commences his employment with the Competitor. For the purpose of this Plan, a "Competitor" shall mean any corporation, partnership, sole proprietorship or other entity who sells, manufactures, produces or modifies a product or products similar to, the same as or a substitute for any product or products sold by the Company or any subsidiary. (i) A stock option agreement may contain such other terms and conditions not inconsistent with the foregoing as the Administrator shall approve for any or all options granted hereunder, including a vesting restriction on exercise for some or all of the shares subject to the option for certain periods of time not to exceed five years. Section 9. Adjustment of Number and Price of Shares. (a) In the event that a dividend shall be declared upon the common stock of the Company payable in shares of said stock, including any such dividend declared prior to the effective date of this amendment to the Plan, the number of shares of common stock covered by each outstanding option and the number of shares available for issuance pursuant to the Plan but not yet covered by an option shall be adjusted by adding thereto the number of shares which would have been distributable thereon if such shares had been outstanding on the date fixed for determining the shareholders entitled to receive such stock dividend. (b) In the event that the outstanding shares of common stock of the Company shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted for the shares of common stock covered by each outstanding option and for the shares available for issuance pursuant to the Plan but not yet covered by an option, the number and kind of shares of stock or other securities which would have been substituted therefor if such shares had been outstanding on the date fixed for determining the shareholders entitled to receive such changed or substituted stock or other securities. (c) In the event there shall be any change, other than specified above in this Section 9, in the number or kind of outstanding shares of common stock of the Company or of any stock or other securities into which such common stock shall be changed or for which it shall have been exchanged, then, if the Board of Directors shall determine, in its discretion, that such change equitably requires an adjustment in the number or kind of shares covered by an option, such adjustment shall be made by the Board of Directors and shall be effective and binding for all purposes of the Plan and on each outstanding stock option agreement. (d) In the event that, by reason of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board of Directors shall authorize the issuance or assumption of a stock option or stock options in a transaction to which Section 424(a) of the Code applies, then, notwithstanding any other provision of the Plan, the Committee may grant an option or options upon such terms and conditions as it may deem appropriate for the purpose of assumption of the old option, or substitution of a new option for the old option, in conformity with the provisions of such Section 424(a) and the regulations thereunder, as they may be amended from time to time. (e) No adjustment or substitution provided for in this Section 9 shall require the Company to issue or to sell a fractional share under any stock option agreement and the total adjustment or substitution with respect to each stock option agreement shall be limited accordingly. (f) In the case of any adjustment or substitution provided for in this Section 9, the option price per share in each stock option agreement shall be equitably adjusted by the Board of Directors to reflect the greater or lesser number of shares of stock or other securities into which the stock covered by the option may have been changed or which may have been substituted therefor. Section 10. Fair Market Value. In any determination of fair market value under this Plan, fair market value shall be deemed to be (i) if there quoted, the closing price on the National Association of Securities Dealers Automated Quotation- National Market System, for the no par value common stock of the Company for the date in question, or if no sales were made on that date, on the next preceding date on which sales were made, or (ii) the mean between the bid and the asked price as quoted by the National Association of Securities Dealers Automated Quotation System. Section 11. Amendment and Discontinuance. The Board of Directors may alter, amend, suspend or discontinue the Plan, provided that no such action shall deprive any person without such person's consent of any rights theretofore granted pursuant hereto. Except as provided in Section 9, the Board of Directors shall submit any amendment to the Plan to the stockholders of the Company for approval only if (i) required by law, or (ii) considered advisable or necessary by the Board of Directors. Section 12. Compliance with Governmental Regulations. (a) Notwithstanding any provision of the Plan or the terms of any stock option agreement issued under the Plan, the Company shall not be required to issue any shares hereunder prior to registration of the shares subject to the Plan under the Securities Act of 1933 or the Securities Exchange Act of 1934, if such registration shall be necessary, or before compliance by the Company of any participant with any other provisions of either of those acts or of regulations or rulings of the Securities and Exchange Commission thereunder, or before compliance with all other federal and state laws and regulations and rulings thereunder. (b) The Company shall use its best efforts to effect such registrations (except as otherwise provided in paragraph (c) hereof) and to comply with such laws, regulations and rulings forthwith upon advice by its counsel that any such registration or compliance is necessary. (c) The Company may, based upon advice by counsel to the Company, require an optionee to make such representations and warranties at the time of exercise of a stock option granted under the Plan as shall be necessary or convenient to cause the issuance of the shares to such optionee to be in compliance with such laws, regulations and rulings without registration. Section 13. Effective Date of Amended Plan. The Plan, as amended, is effective as of August 25, 1990, subject to approval and adoption of the amendment to the Plan by the holders of a majority of the votes cast at the 1990 annual meeting of stockholders. EX-15 3 [LOGO OF ALPERN, ROSENTHAL & COMPANY] Certified Public Accountants Warner Centre, Suite 400 . 332 Fifth Avenue Pittsburgh, Pennsylvania 15222-2413 (412) 281-2501 . Fax (412) 471-1996 To the Board of Directors and Shareholders of II-VI Incorporated Saxonburg, Pennsylvania We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of II-VI Incorporated and Subsidiaries for the periods ended September 30, 1996 and 1995, as indicated in our report dated October 16, 1996; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, is incorporated by reference in Registration Statements No. 33-19511, No. 33-38019, No. 33-19510 and No. 33-63739 on Form S-8. We are also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /s/ Alpern, Rosenthal & Company November 12, 1996 A Professional Corporation - ---------------------------------------------------------------- Members American and Pennsylvania Institutes of Certified Public Accountants Accounting Firms Associated, inc. Member Firms in Principal Cities Irving P. Rosenthal, CPA Deborah H. Wells, CPA Michael H. Levin, CPA Fred M. Rock, CPA Harvey A. Pollack, CPA Sean M. Brennan, CPA Fred J. Morelli, Jr., CPA Alexander Paul, CPA Edward F. Rockman, CPA Michael E. Forgas, CPA Emanuel V. DiNatale, CPA Joel M. Rosenthal, CPA
EX-27 4
5 1,000 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 8,606 0 9,433 256 6,004 24,936 30,982 15,220 45,051 6,436 731 0 0 17,121 19,772 45,051 12,110 12,110 6,743 6,743 3,029 0 0 2,338 678 1,660 0 0 0 1,660 .25 0
EX-99 5 October 17, 1996 Jim Martinelli Treasurer & Chief Financial Officer (412) 352-4455 II-VI INCORPORATED ANNOUNCES RECORD FIRST QUARTER RESULTS PITTSBURGH, PA., October 17, 1996--II-VI Incorporated (NASDAQ NMS: IIVI) today reported results for its first fiscal quarter ended September 30, 1996. Net earnings for the period increased 106% to $1,660,000 ($0.25 per share) on revenues of $12,110,000. These results compare with net earnings of $806,000 ($0.15 per share) on revenues of $8,088,000 in the first quarter of last fiscal year. Bookings increased 61% to $12,927,000 for the quarter from $8,017,000 for the same period last year. Approximately two-thirds of the increase was attributable to bookings from the VLOC operation and includes $1,100,000 of Research and Development contract awards. Infrared optics and materials bookings accounted for most of the remaining increase. Bookings from the eV PRODUCTS division of nearly $400,000 doubled last year's first quarter bookings. Manufacturing revenues increased 46% to $11,592,000 for the quarter from $7,957,000 for the same period last year. Increased shipments of the VLOC operation accounted for the majority of this increase. Improved shipments were recorded in all of the markets served by the Company. Manufacturing gross margin was $5,244,000 or 45% of net sales for the quarter compared to $3,401,000 or 43% of net sales for the same period last year. Improved manufacturing efficiency in the VLOC operation was the primary driver to the increased gross margin as a percentage of revenues. This was partially offset by the strengthening of the U.S. dollar against the Japanese yen. Selling, general and administrative expenses were $3,030,000 or 25% of revenues for the quarter as compared to $2,131,000 or 26% of revenues for the same period last year. The expense increase is attributable to increased expenses in the VLOC operation, higher compensation expense associated with the Company's worldwide profit-driven bonus programs and higher general and administrative expenses needed to support the Company's growth. Francis J. Kramer, president and chief operating officer stated, "Market demand for our products continues to grow rapidly. We have invested in all of our manufacturing operations and have increased the capacity to support this increased demand. Our focus on quality, service and cost is aimed at establishing and maintaining leadership positions in every market we serve." Headquartered in Saxonburg, Pennsylvania II-VI Incorporated designs, manufactures and markets optical and electro-optical components, devices and materials for precision use in infrared, near infrared, visible light and x-ray instruments and applications. The Company's infrared products are used in high-power CO2 (carbon dioxide) lasers for industrial processing worldwide. The Company's VLOC operation manufactures near infrared and visible light products used in industrial, scientific and medical instruments and solid-state (such as YAG and YLF) lasers. II-VI is also developing and marketing solid-state x-ray and gamma-ray products for the nuclear radiation detection industry through its eV PRODUCTS division. II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Earnings (Unaudited) ($000 except per share data) Three Months Ended September 30, 1996 1995 Revenues Net sales 11,592 7,957 Contract research and development 518 131 12,110 8,088 Costs, Expenses & Other Income Cost of goods sold 6,348 4,556 Contract research and development 395 101 Internal research and development 124 148 Selling, general and administrative expenses 3,030 2,131 Interest and other (income) expense - net (125) 16 9,772 6,952 Earnings Before Income Taxes 2,338 1,136 Income Tax Expense 678 330 Net Earnings $ 1,660 $ 806 Earnings Per Share $ 0.25 $ 0.15 Average Shares Outstanding 6,743 5,506 II-VI Incorporated and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) ($000) September 30, June 30, Assets 1996 1996 Current Assets Cash and equivalents $ 8,606 $ 9,417 Accounts receivable 9,177 8,712 Inventories 6,004 5,490 Other current assets 1,149 1,036 Total Current Assets 24,936 24,655 Property, Plant & Equipment, net 15,762 15,085 Other Assets 4,353 4,429 $ 45,051 $ 44,169 Liabilities and Shareholders' Equity Current Liabilities Notes payable $ 1,167 $ 1,393 Accounts payable 1,276 1,260 Other current liabilities 3,993 5,315 Total Current Liabilities 6,436 7,968 Long-Term Debt--less current portion 731 45 Deferred Income Taxes 1,753 1,753 Shareholders' Equity 36,131 34,403 $ 45,051 $ 44,169 -----END PRIVACY-ENHANCED MESSAGE-----