-----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, VCepfAGlovxRDrmeYaasN0Go2+71nqoyBNaRGID6IQItaR5rou+sTR/OXOWR0gBP 5SuNHqBKxMS6gnN47SGmWw== 0000950132-96-000064.txt : 19960216 0000950132-96-000064.hdr.sgml : 19960216 ACCESSION NUMBER: 0000950132-96-000064 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960213 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: 96517263 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 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 December 31, 1995 [ ] 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 February 8, 1996, 6,117,635 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 - December 31, 1995, and June 30, 1995.......................................................... 4 Condensed Consolidated Statements of Earnings -- Three and six months ended December 31, 1995 and 1994................................ 5 Condensed Consolidated Statements of Shareholders' Equity -- Three and six months ended December 31, 1995................................. 7 Condensed Consolidated Statements of Cash Flows -- Six months ended December 31, 1995 and 1994....................................... 8 Notes to Condensed Consolidated Financial Statements................... 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................. 11 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security-Holders.................... 12 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 December 31, 1995, and the related condensed consolidated statements of earnings, shareholders' equity and cash flows for the three and six month periods ended December 31, 1995 and 1994. 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, 1995, 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 19, 1995, 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, 1995 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Alpern, Rosenthal & Company January 16, 1996 A Professional Corporation - ----------------------------------------------------------------------------------------------- Irving P. Rosenthal, CPA Members American and Pennsylvania Deborah H. Wells, CPA Michael H. Levin, CPA Institutes of Certified Public Accountants Fred M. Rock, CPA Harvey A. Pollack, CPA Sean M. Brennan, CPA Fred J. Morelli, Jr., CPA Accounting Firms Associated, inc. Alexander Paul, CPA Edward F. Rockman, CPA Member Firms in Principal Cities 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)
December 31 June 30 Assets 1995 1995 ----------- -------- Current Assets Cash and equivalents $ 11,311 $ 3,822 Accounts receivable - less allowance for doubtful accounts of $231 at 12/31/95 and $261 at 6/30/95 5,562 5,412 Inventories 4,665 4,165 Deferred income taxes 282 309 Prepaid and other current assets 513 376 ---------- -------- Total Current Assets 22,333 14,084 Property, Plant & Equipment, net 12,644 9,892 Other Assets 387 391 ---------- -------- $ 35,364 $ 24,367 ========== ======== Liabilities and Shareholders' Equity Current Liabilities Notes payable $ 1,093 $ - Accounts payable - trade 912 835 Accrued salaries, wages and bonuses 1,464 2,114 Income taxes payable 231 585 Accrued profit sharing contribution 171 278 Other current liabilities 760 1,027 Current portion of long-term debt 23 373 ---------- -------- Total Current Liabilities 4,654 5,212 Long-Term Debt--less current portion 56 1,190 Deferred Income Taxes 944 967 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 - 6,685,858 shares at 12/31/95 and 5,669,987 at 6/30/95 15,482 4,485 Cumulative translation adjustment 58 (17) Retained Earnings 15,300 13,660 ---------- -------- 30,840 18,128 Less treasury stock, at cost - 570,623 shares at 12/31/95 and 6/30/95. 1,130 1,130 ---------- -------- 29,710 16,998 ---------- -------- $ 35,364 $ 24,367 ========== ========
All share data reflects the two-for-one stock split which was effected as of the close of business September 6, 1995. - -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 December 31, 1995 1994 ------------ ------------ Revenues Net Sales: Domestic $ 4,076 $ 2,658 International 3,642 3,012 ------------ ------------ 7,718 5,670 Contract research and development 236 234 ------------ ------------ 7,954 5,904 ------------ ------------ Costs, Expenses & Other Income Cost of goods sold 4,475 3,295 Contract research and development 163 253 Internal research and development 138 120 Selling, general and administrative expenses 2,152 1,598 Interest and other expense - net (139) (15) ------------ ------------ 6,789 5,251 ------------ ------------ Earnings Before Income Taxes 1,165 653 Income Tax Expense 331 144 ------------ ------------ Net Earnings $ 834 $ 509 ============ ============ Earnings Per Share $ 0.14 $ 0.10 ============ ============
All share data reflects the two-for-one stock split which was effected as of the close of business September 6, 1995. - -See notes to condensed consolidated financial statements. 5 II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Earnings (Unaudited) ($000 except per share data)
Six Months Ended December 31, 1995 1994 ------------- ------------- Revenues Net Sales: Domestic $ 8,313 $ 5,063 International 7,362 5,768 ------------- ------------- 15,675 10,831 Contract research and development 367 519 ------------- ------------- 16,042 11,350 ------------- ------------- Costs, Expenses & Other Income Cost of goods sold 9,031 6,359 Contract research and development 264 451 Internal research and development 286 252 Selling, general and administrative expenses 4,283 3,070 Interest and other expense - net (123) (4) ------------- ------------- 13,741 10,128 ------------- ------------- Earnings Before Income Taxes 2,301 1,222 Income Tax Expense 661 317 ------------- ------------- Net Earnings $ 1,640 $ 905 ============= ============= Earnings Per Share $ 0.28 $ 0.18 ============= =============
All share data reflects the two-for-one stock split which was effected as of the close of business September 6, 1995. - -See notes to condensed consolidated financial statements. 6 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, 1995 5,670 $ 4,485 $ (17) $ 13,660 (571) $ (1,130) $ 16,998 Shares issued under stock option plan 15 51 - - - - 51 Net earnings for the quarter - - - 806 - - 806 Translation adjustment - - 61 - - - 61 --------- --------- ------------- ---------- -------- -------- -------- Balance--September 30, 1995 5,685 $ 4,536 $ 44 $ 14,466 (571) $ (1,130) $ 17,916 Shares issued under stock option plan 1 6 - - - - 6 Net proceeds from second offering 1,000 10,940 - - - - 10,940 Net earnings for the quarter - - - 834 - - 834 Translation adjustment - - 14 - - - 14 --------- --------- ------------- ---------- -------- -------- -------- Balance--December 31, 1995 6,686 $ 15,482 $ 58 $ 15,300 (571) $ (1,130) $ 29,710 ========= ========= ============= ========== ======== ======== ========
All share data reflects the two-for-one stock split which was effected as of the close of business September 6, 1995. - -See notes to condensed consolidated financial statements. 7 II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) ($000)
Six Months Ended December 31, 1995 1994 -------- ---------- Cash Flows from Operating Activities Net Earnings $ 1,640 $ 905 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,195 993 Loss on sale of asset - 17 (Gain) on foreign currency transactions (87) (7) Deferred income taxes 4 90 Increase (decrease) in cash from changes in: Accounts receivable (271) (213) Inventories (668) (149) Accounts payable 298 72 Accrued salaries, wages and bonuses (647) 115 Accrued profit sharing contribution (107) 23 Income taxes payable (354) (37) Other operating net assets (451) 165 -------- ---------- Net cash provided by operating activities 552 1,974 -------- ---------- Cash Flows from Investing Activities Additions to fixed assets (3,920) (796) Payment for purchase of Virgo Optics, net of cash acquired - (2,353) -------- ---------- Net cash used in investing activities (3,920) (3,149) -------- ---------- Cash Flows from Financing Activities Proceeds on short-term borrowings - 1,499 Payments on short-term borrowings - (94) Proceeds from long-term borrowings - 108 Payments on long-term borrowings (141) (270) Proceeds from sale of common stock 10,998 39 Purchase of treasury stock - (18) -------- ---------- Net cash provided by financing activities 10,857 1,264 -------- ---------- Net increase in cash and equivalents 7,489 89 Cash and Equivalents at Beginning of period 3,822 1,734 -------- ---------- Cash and Equivalents at End of period $ 11,311 $ 1,823 ======== ==========
- -See notes to condensed consolidated financial statements. 8 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 and six month periods ended December 31, 1995 and 1994 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 Annual Report as filed as an exhibit to the Company's Form 10-K Annual Report dated October 3, 1995 filed with the Securities and Exchange Commission. The consolidated results of operations for the three and six month periods ended December 31, 1995 and 1994 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:
December 31 June 30 1995 1995 ----------- --------- Raw Materials $ 1,859 $ 1,750 Work in Progress 1,237 1,348 Finished Goods 1,569 1,067 -------- --------- $ 4,665 $ 4,165 ======== =========
Note C - Property, Plant and Equipment ($000) ------------------------------------- Property, plant and equipment consist of the following:
December 31 June 30 1995 1995 ----------- --------- Land and land improvements $ 367 $ 307 Buildings and improvements 5,782 4,258 Machinery and equipment 19,823 17,486 --------- --------- 25,972 22,051 Less accumulated depreciation 13,328 12,159 --------- --------- $ 12,644 $ 9,892 ========= =========
9 II-VI Incorporated and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) Note D - Stock Split ----------- On August 16, 1995, the Board of Directors declared a two-for-one split of II-VI's common stock which was distributed to shareholders of record on August 30, 1995, effective at the close of business September 6, 1995. All per share amounts included in the condensed consolidated financial statements and notes are based on the increased number of shares giving retroactive effect to the stock split, unless otherwise noted. Note E - Stock Offering -------------- On October 20, 1995, a registration statement on Form S-3 covering the public offering of 1,000,000 shares was declared effective by the Securities and Exchange Commission, with the shares sold to the public at $12.00 per share. Note F - Subsequent Events ----------------- On January 9, 1996 the Company's Japan subsidiary borrowed $761,000 from a Japanese bank. The debt is payable in equal installments over a sixteen month period. The current interest rate on this loan is 2.125%. On January 11, 1996 the Company announced that it has entered into a letter of intent to acquire Lightning Optical Corporation. Consummation of the transaction is subject to customary conditions and execution of a definitive purchase agreement. 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS ------------- Results of Operations - --------------------- Net earnings for the second fiscal quarter of 1996, ended December 31, 1995, were $834,000 ($0.14 per share) on revenues of $7,954,000. This compares to net earnings of $509,000 ($0.10 per share) on revenues of $5,904,000 in the second quarter of fiscal 1995. For the six months ended December 31, 1995, net earnings were $1,640,000 ($0.28 per share) on revenues of $16,042,000. This compares with net earnings of $905,000 ($0.18 per share) on revenues of $11,350,000 for the same period last fiscal year. The Company issued an additional 1,000,000 shares of common stock during the second quarter of fiscal 1996. This increased the average shares outstanding for the second quarter by 667,000 shares to 6,155,000 shares, and the average outstanding shares for the year by 333,000 to 5,834,000. Order bookings for the second quarter were $10,522,000 compared to $6,762,000 for the same period last fiscal year, a 56% increase. Year-to-date order bookings grew by 46% to $18,569,000 from $12,698,000 in last fiscal year. These increases are attributable to the addition of the Virgo Optics Division, increased demand in the international industrial market and the eV PRODUCTS Division, and additional contract R&D bookings. Manufacturing gross margin for the quarter was $3,243,000 or 42% of revenues compared to $2,375,000 or 42% of revenues for the second quarter of fiscal 1995. Manufacturing gross margin year-to-date was $6,644,000 or 42% of revenues compared to $4,472,000 or 41% of revenues in fiscal 1995. The year-to-date increase reflects lower per unit operating costs associated with increased volume. Selling, General and Administrative expenses for the quarter were $2,152,000 or 27% of revenues compared to $1,598,000 or 27% of revenues for last fiscal year's second quarter. Selling, General and Administrative expenses year-to-date were $4,283,000 or 27% of revenues compared to $3,070,000 or 27% of revenues in fiscal 1995. The increase in expense is attributable to higher compensation expense associated with the Company's world-wide profit driven bonus programs and expenses incurred at the Virgo Optics Division. The Company's year-to-date effective income tax rate is 29% of pre-tax earnings as compared to 26% for the same period last year. The higher rate is due to the mix of earnings from domestic and foreign operations. Liquidity and Capital Resources - ------------------------------- Cash increased during the first six months of fiscal 1996 by $7,489,000 due mainly to $10,940,000 in net proceeds from the October public stock offering and cash generated from operations of $552,000 being offset by $3,920,000 in capital expenditures. The cash generated from operations was a result of net earnings before depreciation of $2,835,000 being offset mostly by the payment of compensation costs relating to the Company's fiscal 1995 world-wide profit-driven bonus programs, the payment of corporate income tax estimates, and increases in inventory and other net operating assets. The capital expenditures focused on manufacturing facility expansion and process automation. The current cash balance will be used for working capital needs, further capital expenditures, and possible acquisitions of complementary businesses, products or technologies. In January, the Company entered into a letter of intent to acquire Lightning Optical Corporation. Consummation of the transaction is subject to customary conditions and execution of a definitive purchase agreement. Also in January, the Company's Japan subsidiary borrowed $761,000 from a Japanese Bank. Terms of this loan call for equal installments to be made over a sixteen month period with interest being paid at 2.125%. 11 PART II - OTHER INFORMATION --------------------------- Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------ --------------------------------------------------- On November 3, 1995, the Company held its annual meeting of shareholders. The two matters voted upon at the annual meeting were the election of two directors and the ratification of the selection of Alpern, Rosenthal & Company as auditors for the year ending June 30, 1996. Each of the Company's nominees for director was reelected at the annual meeting. The total number of votes cast for the election of directors was 4,428,933. Following is a separate tabulation with respect to each director: Votes For Votes Withheld --------- -------------- Peter W. Sognefest 4,433,065 11,932 Francis J. Kramer 4,395,057 17,812 The total number of votes cast for the ratification of the appointment of Alpern, Rosenthal & Company as auditors for the year ending June 30, 1996, was 4,428,933 with 4,418,949 votes for, 3,800 votes against and 6,184 votes abstaining. There were no broker non-votes on these two matters. Item 6. EXHIBITS AND REPORTS ON FORM 8-K. - ------ -------------------------------- (a) Exhibits. -------- 15.01 Accountant's acknowledgment letter dated February 12, 1996...........................Filed herewith. 27.01 Financial Data Schedule.....................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: February 12, 1996 By: /s/ Carl J. Johnson ------------------------------------ Carl J. Johnson Chairman and Chief Executive Officer Date: February 12, 1996 By: /s/ James Martinelli ------------------------------------ James Martinelli Treasurer & Chief Financial Officer EXHIBIT INDEX ------------- Exhibit No. - ----------- 15.01 Accountant's acknowledgment letter dated February 12, 1996..............................Filed herewith. 27.01 Financial Data Schedule........................Filed herewith. EX-15 2 LETTER FROM ALPERN ROSENTHAL & CO. Exhibit 15.01 [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 December 31, 1995 and 1994, as indicated in our report dated January 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 December 31, 1995, is incorporated by reference in Registration Statements No. 33-19511, No. 33-38019, and No. 33-19510 on Form S-8 and No. 33-63739 on Form S-3. We 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. Alpern, Rosenthal & Company February 12, 1996 A Professional Corporation - ----------------------------------------------------------------------------------------------- Irving P. Rosenthal, CPA Members American and Pennsylvania Deborah H. Wells, CPA Michael H. Levin, CPA Institutes of Certified Public Accountants Fred M. Rock, CPA Harvey A. Pollack, CPA Sean M. Brennan, CPA Fred J. Morelli, Jr., CPA Accounting Firms Associated, inc. Alexander Paul, CPA Edward F. Rockman, CPA Member Firms in Principal Cities Michael E. Forgas, CPA Emanuel V. DiNatale, CPA Joel M. Rosenthal, CPA
EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS JUN-30-1996 OCT-01-1995 DEC-31-1995 11,311 0 5,793 231 4,665 22,333 25,972 13,328 35,364 4,654 56 0 0 15,482 15,358 35,364 16,042 16,042 9,295 9,295 4,446 0 0 2,301 661 1,640 0 0 0 1,640 .28 0
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