Segment and Geographic Reporting

12 Months Ended

Jun. 30, 2015

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.

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 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 Company has the following reportable segments at June 30, 2015, which are the Company’s operating segments: (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 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. 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, 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 a Corporate Executive Vice President, 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 II-VI Performance Metals and was 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:

	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 and 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	)
Earnings from discontinued operation		-		-			-		-			133
Net earnings		-		-			-		-			38,449
Depreciation and amortization		15,018		20,123			17,957		-			53,098
Expenditures for property, plant and equipment		11,797		8,359			9,064		-			29,220
Segment assets		312,281		468,055			291,590		-			1,071,926
Equity investment		-		-			11,589		-			11,589
Goodwill		44,041		99,214			52,890		-			196,145

	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
($000)
2013
Revenues	$	217,604	$	141,319	$	192,152	$	-		$	551,075
Inter-segment revenues		5,671		3,950		9,458		(19,079	)		-
Operating income		53,963		15,037		2,491		-			71,491
Interest expense		-		-		-		-			(1,160	)
Other income, net		-		-		-		-			7,155
Income taxes		-		-		-		-			(18,766	)
Loss from discontinued operation		-		-		-		-			(6,789	)
Net earnings		-		-		-		-			51,931
Depreciation and amortization		8,554		17,181		15,057		-			40,792
Expenditures for property, plant and equipment		6,536		8,849		9,820		-			25,205

Geographic information for revenues from the country of origin, 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,	2015		2014		2013
($000)
United States	$	241,974	$	263,493	$	251,735
Non-United States
China		140,586		114,247		123,306
Hong Kong		109,428		54,602		-
Germany		77,524		69,983		59,628
Switzerland		56,940		70,260		10,268
Japan		52,864		38,110		29,462
Vietnam		24,307		23,141		29,425
Philippines		11,334		14,959		17,400
Italy		9,313		8,897		7,593
United Kingdom		7,749		7,148		6,865
Belgium		5,731		6,578		5,821
Singapore		3,897		8,273		6,280
Australia		314		3,570		3,292
Total Non-United States		499,987		419,768		299,340
	$	741,961	$	683,261	$	551,075

	Long-Lived Assets
June 30,	2015		2014		2013
($000)
United States	$	102,171	$	109,138	$	110,337
Non-United States
China		46,794		45,667		43,139
Switzerland		26,384		22,524		5
Germany		15,790		16,129		2,107
Vietnam		7,985		9,107		10,081
Philippines		6,003		6,205		7,207
Hong Kong		2,476		5,111		-
Other		1,282		2,218		3,244
Total Non-United States		106,714		106,961		65,783
	$	208,885	$	216,099	$	176,120