EX-99 2 ex99.txt Release Date: October 20, 2004 Contact: Craig A. Creaturo Chief Accounting Officer and Treasurer (724) 352-4455 ccreaturo@ii-vi.com Homepage: www.ii-vi.com II-VI INCORPORATED ACHIEVES QUARTERLY EARNINGS INCREASE OF 90% ON 19% REVENUE GROWTH; FISCAL YEAR GUIDANCE RAISED PITTSBURGH, PA., October 20, 2004 -- II-VI Incorporated (NASDAQ NMS: IIVI) today reported results for its first fiscal quarter ended September 30, 2004. Net earnings for the quarter were $5,959,000 ($0.40 per share-diluted). These results compare with net earnings of $3,114,000 ($0.21 per share-diluted) in the first quarter of last fiscal year. Bookings for the quarter increased 9% to $37,532,000 compared to $34,582,000 in the first quarter of last fiscal year. Bookings are defined as customer orders received that are expected to be converted into revenues during the next 12 months. Revenues for the quarter increased 19% to $40,507,000 from $34,094,000 in the first quarter of last fiscal year. Francis J. Kramer, president and chief operating officer said, "Revenues for the quarter increased 19% from the first quarter last year and earnings per share nearly doubled. Maintaining strong operating performance has enabled II-VI to produce outstanding results again this quarter. We also are increasing our guidance for revenues and earnings per share for fiscal year 2005." - more - II-VI Incorporated October 20, 2004 Page 2 Segment Bookings and Revenues Bookings for the quarter for the Infrared Optics segment increased 3% to $23.0 million from $22.3 million in the first quarter of last fiscal year. Because infrared optics customers based in Switzerland are serviced by the Company's majority-owned subsidiary II-VI LOT Suisse S.a.r.l., the bookings recorded from that part of the world will occur on a more continual basis. When LOT Suisse was an independent distributor for the Company, a significant twelve-month contract was booked in the first quarter of each fiscal year, including the first quarter of last fiscal year. Revenues for the quarter for infrared optics increased 16% to $23.1 million from $19.9 million in the first quarter of the last fiscal year. Bookings for the quarter for the Near-Infrared Optics segment increased 54% to $7.1 million from $4.6 million in the first quarter of last fiscal year. Revenues for the quarter for near-infrared optics increased 28% to $7.7 million from $6.0 million in the fourth quarter of the last fiscal year. Bookings for the quarter for the Military Infrared Optics segment decreased 8% to $5.6 million from $6.1 million in the first quarter of the last fiscal year. Revenues for the quarter for military infrared optics increased 12% to $6.4 million compared to $5.7 million in the first quarter of the last fiscal year. Bookings for the quarter for the "Compound Semiconductor Group" (which primarily represent the eV PRODUCTS division and the Wide Bandgap Materials group) increased 20% to $1.8 million from $1.5 million in the first quarter of the last fiscal year. Revenues for the quarter for this Group increased 27% to $3.3 million from $2.6 million in the first quarter of last fiscal year. Outlook For the second fiscal quarter ending December 31, 2004, the Company currently forecasts revenues to range from $41 million to $43 million and earnings per share to range from $0.37 to $0.41. For the fiscal year ending June 30, 2005, the Company expects revenues to range from $168 million to $173 million and earnings per share to range from $1.48 to $1.55. As discussed in more detail below, actual results may differ from these forecasts due to numerous factors including changes in product demand, competition and general economic conditions. - more - II-VI Incorporated October 20, 2004 Page 3 Webcast Information The Company will host a conference call at 10:00 a.m. Eastern Time on Thursday, October 21, 2004 to discuss these results. The conference call will be broadcast live over the Internet and can be accessed by all interested parties from the Company's web site at www.ii-vi.com as well as at http://phx.corporate-ir.net/playerlink.zhtml?c=65340&s=wm&e=952967. Please allow extra time prior to the call to visit the site and, if needed, download the media software required to listen to the Internet broadcast. A replay of the webcast will be available for 2 weeks following the call. Headquartered in Saxonburg, Pennsylvania, II-VI Incorporated designs, manufactures and markets optical and opto-electronic components, devices and materials for infrared, near-infrared, visible light, x- ray and gamma-ray instrumentation. The Company's infrared optics business manufactures optical and opto-electronic components sold under the II-VI brand name and used primarily in CO2 lasers. The Company's near-infrared optics business manufactures near-infrared and visible light products for industrial, scientific, military and medical instruments and laser gain materials and products for solid- state YAG and YLF lasers at the Company's VLOC subsidiary. The Company's military infrared optics business manufactures infrared products for military applications under the Exotic Electro-Optics (EEO) brand name. In the Company's Compound Semiconductor Group, the eV PRODUCTS division manufactures and markets solid-state x-ray and gamma-ray sensor products and materials for use in medical, industrial, environmental, scientific and homeland security applications; the Company's Wide Bandgap Materials (WBG) group manufactures and markets single crystal silicon carbide substrates for use in the solid-state lighting, wireless infrastructure, RF electronics and power switching industries. This press release contains forward-looking statements as defined by Section 21E of the Securities Exchange Act of 1934. Any information which is not historical in nature constitutes such forward-looking statements. Actual results may differ from the results described in any forward-looking statements due to, among other things, changes in market demand for infrared, near-infrared and military infrared optics, and products of the Compound Semiconductor Group, including eV PRODUCTS division and Wide Bandgap Materials group, the Company's ability to maintain or increase market share, the Company's ability to effectively address market opportunities, and general market and economic conditions throughout the world. Additional information on potential factors that could affect the Company's financial results was included in the Company's Form 10-K for the year ended June 30, 2004 as filed with the Securities and Exchange Commission. CONTACT: Craig A. Creaturo, Chief Accounting Officer and Treasurer of II-VI Incorporated, 724-352-4455, or e-mail, ccreaturo@ii-vi.com. - more - II-VI Incorporated and Subsidiaries Condensed Consolidated Statements of Earnings (Unaudited) (000 except per share data) Three Months Ended September 30, 2004 2003 ---------- ---------- Revenues Net sales $37,824 $32,053 Contract research and development 2,683 2,041 ---------- ---------- 40,507 34,094 ---------- ---------- Costs, Expenses & Other Expense (Income) Cost of goods sold 20,414 18,066 Contract research and development 2,308 1,991 Internal research and development 1,048 1,087 Selling, general and administrative 9,001 8,226 Interest expense 63 134 Other income, net (491) (91) ---------- ---------- 32,343 29,413 ---------- ---------- Earnings Before Income Taxes 8,164 4,681 Income Taxes 2,205 1,567 ---------- ---------- Net Earnings $ 5,959 $ 3,114 ========== ========== Diluted Earnings Per Share $ 0.40 $ 0.21 ========== ========== Average Shares Outstanding - Diluted 14,905 14,639 II-VI Incorporated and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) ($000) September 30, September 30, 2004 2003 ------------ ------------ Assets Current Assets Cash and cash equivalents $ 16,033 $ 21,683 Accounts receivable, net 26,448 25,540 Inventories 32,201 29,201 Deferred income taxes 5,352 4,561 Other current assets 1,738 1,595 ------------ ------------ Total Current Assets 81,772 82,580 Property, Plant & Equipment, net 64,081 62,339 Goodwill, net 28,987 28,987 Investment 1,943 1,888 Intangible Assets, net 5,704 5,852 Other Assets 2,839 2,288 ------------ ------------ $185,326 $183,934 ============ ============ Liabilities and Shareholders' Equity Current Liabilities Accounts payable $ 7,338 $ 8,337 Current portion of long-term debt 12,350 7,550 Other current liabilities 13,754 19,909 ------------ ------------ Total Current Liabilities 33,442 35,796 Long-Term Debt-less current portion 3,057 7,986 Other Liabilities, primarily deferred income taxes 9,742 8,285 Shareholders' Equity 139,085 131,867 ------------ ------------ $185,326 $183,934 ============ ============ II-VI Incorporated and Subsidiaries Condensed Segment and Other Selected Financial Information (Unaudited) ($000) The following segment and other financial information includes segment earnings (defined as earnings before income taxes, interest expense and other income or expense, net) and earnings before interest, income taxes, depreciation and amortization (EBITDA). Management believes segment earnings are a useful performance measure because they reflect the results of segment performance over which management has direct control. Similarly, EBITDA reflects operating profitability before certain non-operating expenses and non-cash charges. Three Months Ended September 30, ---------------------- Segment Information 2004 2003 ------------------------------- ---------- ---------- Revenues Infrared Optics $ 23,065 $ 19,906 Near-Infrared Optics 7,747 5,951 Military Infrared Optics 6,411 5,682 Compound Semiconductor Group 3,284 2,555 ---------- ---------- Total Revenues $ 40,507 $ 34,094 ========== ========== Segment earnings (loss) Infrared Optics $ 7,535 $ 5,451 Near-Infrared Optics 466 544 Military Infrared Optics 281 (6) Compound Semiconductor Group (546) (1,265) ---------- ---------- Total Segment Earnings $ 7,736 $ 4,724 ========== ========== Three Months Ended September 30, ---------------------- Other Selected Financial Information 2004 2003 --------------------------------------- ---------- ---------- Earnings before interest, income taxes, $ 10,836 $ 7,173 depreciation and amortization (EBITDA) Cash paid for capital expenditures $ 4,197 $ 2,753 Payments on indebtedness, net of borrowings $ 87 $ 1,012 II-VI Incorporated and Subsidiaries Condensed Segment and Other Selected Financial Information (Unaudited) (cont.) ($000) Reconciliation of Segment Earnings and EBITDA to Earnings Before Income Taxes --------------------------------------------- Three Months Ended September 30, ---------------------- 2004 2003 ---------- ---------- Total Segment Earnings $ 7,736 $ 4,724 Interest expense (63) (134) Other income, net 491 91 ---------- ---------- Earnings before income taxes $ 8,164 $ 4,681 ========== ========== EBITDA $ 10,836 $ 7,173 Interest expense (63) (134) Depreciation and amortization (2,609) (2,358) ---------- ---------- Earnings before income taxes $ 8,164 $ 4,681 ========== ========== # # # #