Segment Reporting

9 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Reporting

Note  11. Segment Reporting

The Company reports its business segments using the “management approach” model for segment reporting. This means that 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.

Effective July 1, 2014, the Company realigned its reportable segments from five to three reporting segments to increase focus on end markets and customers, better align the Company’s businesses and technical processes, improve the line of sight on profitability and cash usage and streamline communications. The Company reports its financial results in the following three segments: (i) II-VI Laser Solutions, (ii) II-VI Photonics, and (iii) II-VI Performance Products, and the Company’s chief operating decision maker receives and reviews financial information in this format.  The Company evaluates business segment performance based upon segment operating income, which is defined as earnings before income taxes, interest and other income or expense. The segments are managed separately due to the market, production requirements and facilities unique to each segment. The Company has the following reportable segments at March 31, 2015: (i) II-VI Laser Solutions, which consists of the Company’s infrared optics and material products businesses, II-VI HIGHYAG, the semiconductor laser portion of the former Active Optical Products segment, and smaller units of high-power laser technology from the former Near-Infrared Optics segment and certain remaining corporate activities (primarily corporate assets and capital expenditures); (ii) II-VI Photonics, which consists of the former Near-Infrared Optics segment and the pump laser and optical amplifier businesses of the former Active Optical Products segment; and (iii) II-VI Performance Products, which contains the former Military & Materials and Advanced Products Group segments.

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

The II-VI Photonics segment is located in the U.S., China, Vietnam, Australia, Germany, Japan, the U.K., Italy and Hong Kong. II-VI Photonics is directed by the President of II-VI Photonics and is further divided into production and administrative units that are directed by managers. II-VI Photonics manufactures crystal materials, optics, microchip lasers and opto-electronic modules for use in optical communication networks and other diverse consumer and commercial applications.  In addition, the segment also manufactures pump lasers, optical amplifiers and micro-optics for optical amplifiers for both terrestrial and submarine applications within the optical communications market.

The II-VI Performance Products segment is located in the U.S., Vietnam, Japan, China, Germany and the Philippines. II-VI Performance Products is directed by the Corporate Chief Operating Officer, while each geographic location is directed by a general manager. II-VI Performance Products is further divided into production and administrative units that are directed by managers. II-VI Performance Products designs, manufactures and markets infrared optical components and high-precision optical assemblies for military, medical and commercial laser imaging applications.  In addition, the segment designs, manufactures and markets unique engineered materials for thermo-electric and silicon carbide applications servicing the semiconductor, military and medical markets.

The Company completed the discontinuance of its tellurium product line by exiting all business activities associated with this product in December 2013. This product line was previously serviced by PRM and included as part of the II-VI Performance Products segment. Segment information for all periods presented has been adjusted to properly reflect the tellurium product as a discontinued operation.

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

The following tables summarize selected financial information of the Company’s operations by segment ($000):

	Three Months Ended March 31, 2015
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	73,289	$	64,303	$	45,117	$	-		$	182,709
Inter-segment revenues		5,023		2,853		1,924		(9,800	)		-
Operating income		14,058		608		2,993		-			17,659
Interest expense		-		-		-		-			(844	)
Other income (expense), net		-		-		-		-			(1,534	)
Income taxes		-		-		-		-			(773	)
Net earnings		-		-		-		-			14,508
Depreciation and amortization		3,233		5,124		4,253		-			12,610
Segment assets		327,240		439,291		271,737		-			1,038,268
Expenditures for property, plant and equipment		2,994		2,098		3,462		-			8,554
Investment		-		-		12,296		-			12,296
Goodwill		43,474		99,270		52,890		-			195,634

	Three Months Ended March 31, 2014
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	63,273	$	58,321	$	51,961	$	-		$	173,555
Inter-segment revenues		3,110		2,037		3,411		(8,558	)		-
Operating income		4,046		216		4,481		-			8,743
Interest expense		-		-		-		-			(1,412	)
Other income (expense), net		-		-		-		-			1,694
Income taxes		-		-		-		-			(494	)
Net earnings		-		-		-		-			8,531
Depreciation and amortization		4,238		4,580		4,374		-			13,192
Expenditures for property, plant and equipment		2,966		976		2,536		-			6,478

	Nine Months Ended March 31, 2015
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	213,743	$	188,794	$	142,741	$	-		$	545,278
Inter-segment revenues		15,585		9,473		6,032		(31,090	)		-
Operating income		39,208		3,093		11,286		-			53,586
Interest expense		-		-		-		-			(3,086	)
Other income (expense), net		-		-		-		-			6,079
Income taxes		-		-		-		-			(7,673	)
Net earnings		-		-		-		-			48,906
Depreciation and amortization		10,134		15,875		13,233		-			39,242
Expenditures for property, plant and equipment		22,432		8,067		9,664		-			40,163

	Nine Months Ended March 31, 2014
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	182,832	$	155,259	$	157,249	$	-		$	495,340
Inter-segment revenues		5,310		4,860		9,210		(19,380	)		-
Operating income		16,407		790		14,585		-			31,782
Interest expense		-		-		-		-			(3,064	)
Other income (expense), net		-		-		-		-			2,766
Income taxes		-		-		-		-			(5,823	)
Earnings from discontinued operation		-		-		-		-			133
Net earnings		-		-		-		-			25,794
Depreciation and amortization		11,702		14,231		13,492		-			39,425
Expenditures for property, plant and equipment		8,451		6,426		5,890		-			20,767