Note 4.

Acquisitions

Aegis Lightwave, Inc.

In July 2011, the Company acquired all of the outstanding shares of Aegis Lightwave, Inc. ("Aegis"), a privately-held company based in Woburn, Massachusetts with additional locations in New Jersey and Australia, for approximately $46.1 million, net of cash acquired of $8.4 million. Aegis supplies tunable optical devices required for high speed optical networks that provide the bandwidth expansion necessary for increasing Internet traffic. As a result of the acquisition, the Company will enhance its product portfolio for the increasing deployments of 40G and 100G in flexible and reconfigurable optical networks, including those aimed at delivering fiber to the home services over passive optical networks. Aegis will work cooperatively with Photop Technologies, Inc. ("Photop") to achieve synergies by leveraging and expanding combined telecommunication product offerings around the world. Due to the timing of the acquisition, the Company is in the process of completing its fair market valuation, including the valuation of certain tangible and intangible assets. The following table presents the preliminary allocation of the purchase price of the assets acquired and liabilities assumed at the date of acquisition, as the Company intends to finalize its accounting for the acquisition of Aegis during fiscal year 2012 ($000):


Assets
Short-term investment	$	565
Accounts receivable, net		4,572
Inventories		2,853
Prepaid and other assets		238
Deferred income taxes		9,976
Property, plant & equipment		2,900
Intangible assets		14,000
Goodwill		21,202


Total assets acquired	$	56,306


Liabilities
Accounts payable	$	1,375
Deferred income taxes		5,655
Long-term debt		1,295
Other accrued liabilities		1,840


Total liabilities assumed	$	10,165


Net assets acquired	$	46,141

The goodwill of Aegis of $21.2 million is included in the Near-Infrared Optics segment and is attributed to the expected synergies and the assembled workforce of Aegis. None of the goodwill is deductible for income tax purposes. The fair value and gross contractual amount of accounts receivable acquired was $4.6 million, as the Company expects the entire amount to be collectible as of the acquisition date. The $10.0 million of deferred tax assets of Aegis are primarily related to net operating loss and tax credit carryforwards. The Company has considered any carryforward limitations and expirations and expects to fully utilize these carryforwards to offset future income taxes.

The amount of revenues and earnings of Aegis included in the Company's Condensed Consolidated Statement of Earnings for the three months ended September 30, 2011 was revenues of $4.8 million and net loss of $0.4 million, respectively. In conjunction with the acquisition of Aegis, the Company incurred approximately $0.9 million of transaction costs, which were expensed in fiscal year 2011 in accordance with current accounting standards.

The following unaudited pro-forma consolidated results of operations for fiscal year 2011 have been prepared as if the acquisition of Aegis had occurred on July 1, 2010, the beginning of the Company's fiscal year 2011, which is the fiscal year prior to acquisition ($000 except per share data).


	Three Months Ended September 30, 2011		Three Months Ended September 30, 2010
Net revenues	$	138,373	$	127,004
Net earnings attributable to II-VI Incorporated		18,579		18,998
Basic earnings per share		0.30		0.31
Diluted earnings per share		0.29		0.30

The pro-forma results are not necessarily indicative of what actually would have occurred if the transaction had taken place at the beginning of the period, are not intended to be a projection of future results and do not reflect any cost savings that might be achieved from the combined operations.

Max Levy Autograph, Inc.

In December 2010, the Company acquired all of the outstanding shares of Max Levy Autograph, Inc. ("MLA"), a privately-held company based in Philadelphia, Pennsylvania, for approximately $12.8 million, net of cash acquired. MLA manufactures micro-fine conductive mesh patterns for optical, mechanical and ceramic components for applications such as circuitry, metrology standards, targeting calibration and suppression of electro-magnetic interference. As a result of the acquisition, the companies have combined efforts to enhance product offerings for their military-based customers. The following table presents the allocation of the purchase price of the assets acquired and liabilities assumed at the date of acquisition ($000):


Assets
Accounts receivable, net	$	586
Inventories		275
Prepaid and other current assets		91
Deferred income taxes		171
Property, plant and equipment		2,845
Intangible assets		5,610
Goodwill		6,485


Total assets acquired	$	16,063


Liabilities
Accounts payable	$	154
Deferred income taxes		2,625
Other accrued liabilities		471


Total liabilities assumed	$	3,250


Net assets acquired	$	12,813

The goodwill of MLA of $6.5 million is included in the Military & Materials segment. The goodwill recognized is attributed to the expected synergies and the assembled workforce of MLA. None of the goodwill is deductible for income tax purposes.

The operating results of MLA since the date of acquisition have been included in the Company's results of operations in the Company's Military & Materials segment and are insignificant. Pro-forma financial information has not been provided for the acquisition of MLA as it was not material to the Company's overall financial results of operations.