Segment Reporting

9 Months Ended

Mar. 31, 2016

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.

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 based on these segments.  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 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 II-VI 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, 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. II-VI Laser Solutions also manufactures compound semiconductor epitaxial wafers for applications in optical components, wireless devices, and high-speed communication systems and manufactures 6-inch gallium arsenide wafers allowing for the production of high performance lasers and integrated circuits in high volume sold under the EpiWorks and ANADIGICS brand names.  

The II-VI Photonics segment is located in the U.S., China, Vietnam, 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 President of II-VI Performance Products, 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 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 are eliminated.

On February 1, 2016, the Company completed its acquisition of EpiWorks. On March 15, 2016, the Company completed its acquisition of ANADIGICS. See Note 3. Acquisitions. The operating results of these acquisitions have been reflected in the selected financial information of the Company’s II-VI Laser Solutions segment since the respective dates of acquisition.

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

	Three Months Ended March 31, 2016
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	73,778	$	80,603	$	50,724	$	-		$	205,105
Inter-segment revenues		5,962		3,363		1,800		(11,125	)		-
Operating income		5,395		9,543		4,452		-			19,390
Interest expense		-		-		-		-			(769	)
Other income (expense), net		-		-		-		-			(1,257	)
Income taxes		-		-		-		-			(2,426	)
Net earnings		-		-		-		-			14,938
Depreciation and amortization		4,192		4,888		5,581		-			14,661
Segment assets		502,754		449,511		270,130		-			1,222,395
Expenditures for property, plant and equipment		7,156		4,160		2,271		-			13,587
Investment		-		-		12,567		-			12,567
Goodwill		88,820		97,627		52,890		-			239,337

	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
Expenditures for property, plant and equipment		2,994		2,098		3,462		-			8,554

	Nine Months Ended March 31, 2016
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	215,552	$	226,762	$	143,432	$	-		$	585,746
Inter-segment revenues		15,342		9,160		5,738		(30,240	)		-
Operating income		28,820		23,282		10,797		-			62,899
Interest expense		-		-		-		-			(2,015	)
Other income (expense), net		-		-		-		-			794
Income taxes		-		-		-		-			(10,535	)
Net earnings		-		-		-		-			51,143
Depreciation and amortization		11,587		14,961		15,237		-			41,785
Expenditures for property, plant and equipment		16,511		10,783		5,449		-			32,743

	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		39,207		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