Segment and Geographic Reporting

12 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment and Geographic Reporting

Note 11. Segment and Geographic 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 II-VI EpiWorks and II-VI OptoElectronic Devices Division 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 optoelectronic modules for use in optical communication networks and other diverse consumer and commercial applications.  In addition, the segment also manufactures pump lasers, and 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 thermoelectric and silicon carbide applications servicing the semiconductor, military and medical markets.

On February 1, 2016, the Company completed its acquisition of EpiWorks. On March 15, 2016, the Company completed its acquisition of ANADIGICS. On June 3, 2016, the Company sold the RF business and related assets of ANADIGICS. See Note 2. Acquisitions/Divesture. 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 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:

	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
($000)
2016
Revenues	$	303,002	$	325,879	$	198,335	$	-		$	827,216
Inter-segment revenues		24,290		12,081		7,274		(43,645	)		-
Operating income		36,184		37,849		17,780		-			91,813
Interest expense		-		-		-		-			(3,081	)
Other income, net		-		-		-		-			1,223
Income taxes		-		-		-		-			(24,469	)
Net earnings		-		-		-		-			65,486
Depreciation and amortization		17,222		19,855		19,586		-			56,663
Expenditures for property, plant & equipment		25,620		21,096		11,454		-			58,170
Segment assets		470,364		467,486		274,741		-			1,212,591
Equity investment		-		-		11,354		-			11,354
Goodwill		84,105		96,760		52,890		-			233,755

	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
($000)
2015
Revenues	$	287,881	$	260,825	$	193,255	$	-		$	741,961
Inter-segment revenues		21,021		13,210		9,325		(43,556	)		-
Operating income		55,039		7,208		14,552		-			76,799
Interest expense		-		-		-		-			(3,863	)
Other income, net		-		-		-		-			6,176
Income taxes		-		-		-		-			(13,137	)
Net earnings		-		-		-		-			65,975
Depreciation and amortization		14,127		21,073		17,883		-			53,083
Expenditures for property, plant & equipment		27,349		11,324		13,640		-			52,313
Segment assets		330,308		450,763		277,093		-			1,058,164
Equity investment		-		-		11,914		-			11,914
Goodwill		43,578		99,426		52,890		-			195,894

	II-VI					II-VI
	Laser		II-VI			Performance
	Solutions		Photonics			Products		Eliminations			Total
($000)
2014
Revenues	$	254,342	$	216,493		$	212,426	$	-		$	683,261
Inter-segment revenues		9,825		9,533			12,000		(31,358	)		-
Operating income (loss)		24,457		(113	)		22,142		-			46,486
Interest expense		-		-			-		-			(4,479	)
Other income, net		-		-			-		-			3,634
Income taxes		-		-			-		-			(7,325	)
Loss from discontinued operation		-		-			-		-			133
Net earnings		-		-			-		-			38,449
Depreciation and amortization		15,018		20,123			17,957		-			53,098
Expenditures for property, plant & equipment		11,797		8,359			9,064		-			29,220

Geographic information for revenues from the country of origin (shipped from), and long-lived assets from the country of origin, which include property, plant and equipment, net of related depreciation, and certain other long-term assets, were as follows:

	Revenues
Year Ended June 30,	2016		2015		2014
($000)
United States	$	266,347	$	241,974	$	263,493
Non-United States
China		172,292		140,586		114,247
Hong Kong		140,821		109,428		54,602
Germany		72,070		77,524		69,983
Japan		57,287		52,864		38,110
Switzerland		54,760		56,940		70,260
Vietnam		24,267		24,307		23,141
Italy		10,160		9,313		8,897
United Kingdom		8,154		7,749		7,148
Philippines		8,106		11,334		14,959
Belgium		6,026		5,731		6,578
Korea		3,887		-		-
Singapore		3,039		3,897		8,273
Australia		-		314		3,570
Total Non-United States		560,869		499,987		419,768
	$	827,216	$	741,961	$	683,261

	Long-Lived Assets
June 30,	2016		2015		2014
($000)
United States	$	137,521	$	102,171	$	109,138
Non-United States
China		51,824		46,794		45,667
Switzerland		38,202		26,384		22,524
Germany		15,162		15,790		16,129
Vietnam		8,895		7,985		9,107
Philippines		4,399		6,003		6,205
Hong Kong		1,765		2,476		5,111
Other		1,146		1,282		2,218
Total Non-United States		121,393		106,714		106,961
	$	258,914	$	208,885	$	216,099