Segment Reporting

3 Months Ended

Sep. 30, 2011

Segment Reporting [Abstract]

Segment Reporting

Note 12. Segment Reporting

The Company reports its business segments using the "management approach" model for segment reporting. The Company determines its reportable business segments based on the way the chief operating decision maker organizes business segments within the Company for making operating decisions and assessing performance.

The Company has four reportable segments. The Company's chief operating decision maker receives and reviews financial information in this format. The Company evaluates business segment performance based upon reported business segment earnings, which is defined as earnings before income taxes, interest and other income or expense. The segments are managed separately due to the production requirements and facilities that are unique to each segment. The Company has the following reportable segments at September 30, 2011: (i) Infrared Optics, which is the Company's infrared optics and material products businesses, HIGHYAG Lasertechnologie GmbH ("HIGHYAG") and remaining corporate activities, primarily corporate assets and capital expenditures; (ii) Near-Infrared Optics, which is the Company's VLOC Incorporated subsidiary, and Vietnam near-infrared operations, Photop and Aegis; (iii) Military & Materials, which is the Company's Exotic Electro-Optics, Inc. ("EEO") subsidiary, Pacific Rare Specialty Metals & Chemicals, Inc. subsidiary ("PRM"), and the Max Levy Autograph, Inc. subsidiary ("MLA"); and (iv) Advanced Products Group (formerly the Compound Semiconductor Group), which is comprised of the Company's Marlow Industries, Inc. ("Marlow") subsidiary, the Wide Bandgap Materials Group ("WBG") and the Worldwide Materials Group ("WMG"); WMG is responsible for the corporate research and development activities.

The Infrared Optics segment is divided into geographic locations in the U.S., Singapore, China, Germany, Switzerland, Japan, Belgium, the U.K. and Italy. The Infrared Optics segment is directed by a general manager, while each geographic location is also directed by a general manager, and is further divided into production and administrative units that are directed by managers. The Infrared Optics segment designs, manufactures and markets optical and electro-optical components and materials sold under the II-VI brand name and used primarily in high-power CO₂ lasers. The Infrared Optics segment also manufactures fiber-delivered beam delivery systems and processing tools for industrial lasers sold under the HIGHYAG brand name.

The Near-Infrared Optics segment is located in the U.S., China, Vietnam, Australia, Germany, Japan, the U.K., Italy and Hong Kong. The Near-Infrared Optics segment is directed by a Corporate Executive Vice President and is further divided into production and administrative units that are directed by managers. The Near-Infrared Optics segment manufactures crystal materials, optics, microchip lasers and optoelectronic modules for use in optical communication networks and other diverse consumer and commercial applications sold under the Photop brand name and manufactures tunable optical devices required for high speed optical networks sold under the Aegis and AOFR brand names. The Near-Infrared Optics segment also designs, manufactures and markets near-infrared and visible-light products for industrial, scientific, military and medical instruments and laser gain material and products for solid-state yttrium aluminum garnet ("YAG") lasers, yttrium lithium flouride ("YLF") lasers and ultra-violet ("UV") Filter components sold under the VLOC brand name.

The Military & Materials segment is located in the U.S. and the Philippines. The Military & Materials segment is directed by a Corporate Vice President, while each geographic location is directed by a general manager. The Military & Materials segment is further divided into production and administrative units that are directed by managers. The Military & Materials segment designs, manufactures and markets infrared products for military applications under the EEO brand name, refines specialty metals, primarily selenium and tellurium under the PRM brand name, and manufactures and markets micro-fine conductive mesh patterns for optical, mechanical, and ceramic components for applications under the MLA brand name.

The Advanced Products Group is located in the U.S., Japan, China, Vietnam and Germany and is directed by a Corporate Executive Vice President. In the Advanced Products Group segment, Marlow designs and manufactures thermoelectric cooling and power generation solutions for use in defense and space, telecommunications, medical, consumer and industrial markets. The WBG Group manufactures and markets single crystal silicon carbide substrates for use in solid-state lighting, wireless infrastructure, radio frequency ("RF") electronics and power switching industries. The WMG Group directs the corporate research and development initiatives.

The accounting policies of the segments are the same as those of the Company. All of the Company's corporate expenses are allocated to the segments. The Company evaluates segment performance based upon reported segment earnings, which is defined as earnings before income taxes, interest and other income or expense. Inter-segment sales and transfers have been eliminated.

In July 2011, the Company completed its acquisition of Aegis. See "Note 4. Acquisitions." Aegis is combined with the Company's Near-Infrared segment for financial reporting purposes. Segment earnings for the Near-Infrared segment include the operating results of Aegis for the period ended September 30, 2011.

In December 2010, the Company completed its acquisition of MLA. See "Note 4. Acquisitions." MLA is combined with the Company's Military & Materials segment for financial reporting purposes. Segment earnings for the Military & Materials segment include the operating results of MLA for the period ended September 30, 2011.

The following table summarizes selected financial information of the Company's operations for the periods indicated by segment ($000):

		0000000		0000000		0000000		0000000		0000000			0000000
	Three Months Ended September 30, 2011
	Infrared Optics		Near-Infrared Optics		Military & Materials		Advanced Products Group		Eliminations			Total
Revenues	$	50,796	$	38,110	$	23,659	$	25,808	$	—		$	138,373
Inter-segment revenues		658		222		1,752		784		(3,416	)		—
Segment earnings		12,357		1,708		2,962		6,008		—			23,035
Interest expense		—		—		—		—		—			(59	)
Other income, net		—		—		—		—		—			1,630
Income taxes		—		—		—		—		—			(5,892	)
Net earnings		—		—		—		—		—			18,714
Depreciation and amortization		2,195		4,215		963		937		—			8,310
Segment assets		201,558		270,608		92,295		101,467		—			665,928
Expenditures for property, plant and equipment		1,700		5,740		1,988		3,284		—			12,712
Equity investments		—		—		—		15,777		—			15,777
Goodwill		9,834		55,286		10,399		10,314		—			85,833

		0000000		0000000		0000000		0000000		0000000			0000000
	Three Months Ended September 30, 2010
	Infrared Optics		Near-Infrared Optics		Military & Materials		Advanced Products Group		Eliminations			Total
Revenues	$	41,226	$	36,945	$	20,135	$	21,828	$	—		$	120,134
Inter-segment revenues		513		51		1,340		1,066		(2,970	)		—
Segment earnings		8,648		6,881		3,721		3,411		—			22,661
Interest expense		—		—		—		—		—			(30	)
Other income, net		—		—		—		—		—			2,062
Income taxes		—		—		—		—		—			(6,292	)
Net earnings		—		—		—		—		—			18,401
Depreciation and amortization		2,031		3,412		578		813		—			6,834
Segment assets		215,434		181,641		54,515		85,497		—			537,087
Expenditures for property, plant and equipment		786		1,428		1,429		1,638		—			5,281
Equity investments		—		—		—		15,431		—			15,431
Goodwill		9,869		32,353		3,914		10,314		—			56,450