10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2017

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to .

Commission File Number: 0-16195

II-VI INCORPORATED

(Exact name of registrant as specified in its charter)

PENNSYLVANIA	25-1214948
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
375 Saxonburg Boulevard
Saxonburg, PA	16056
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 724-352-4455

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,”  “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act    ☐   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

At April 27, 2017, 63,128,756 shares of Common Stock, no par value, of the registrant were outstanding.

II-VI INCORPORATED

INDEX

		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets – March 31, 2017 and June 30, 2016 (Unaudited)	3
	Condensed Consolidated Statements of Earnings – Three and nine months ended March 31, 2017 and 2016 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income – Three and nine months ended March 31, 2017 and 2016 (Unaudited)	6
	CondensedConsolidatedStatementsofCashFlows – Nine months ended March 31, 2017 and2016 (Unaudited)	7
	Condensed Consolidated Statement of Shareholders’ Equity – Nine months ended March 31, 2017 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Issuer Purchases of Equity Securities	30
Item 6.	Exhibits	31

2

PART I - FINANCIAL INFORMATION

Item  1. FINANCIAL STATEMENTS

II-VI Incorporated and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

($000)

	March 31,			June 30,
	2017			2016
Assets
Current Assets
Cash and cash equivalents	$	247,581		$	218,445
Accounts receivable - less allowance for doubtful accounts of $1,340 at March 31, 2017 and $2,016 at June 30, 2016		173,564			164,817
Inventories		191,802			175,133
Prepaid and refundable income taxes		5,389			6,535
Prepaid and other current assets		20,485			18,033
Total Current Assets		638,821			582,963
Property, plant & equipment, net		335,752			242,857
Goodwill		232,513			233,755
Other intangible assets, net		114,840			124,590
Investment		12,007			11,354
Deferred income taxes		5,940			7,848
Other assets		7,775			8,614
Total Assets	$	1,347,648		$	1,211,981
Liabilities and Shareholders' Equity
Current Liabilities
Current portion of long-term debt	$	20,000		$	20,000
Accounts payable		66,909			53,796
Accrued compensation and benefits		45,740			59,012
Accrued income taxes payable		10,364			12,588
Other accrued liabilities		23,029			25,846
Total Current Liabilities		166,042			171,242
Long-term debt		258,101			215,307
Capital lease obligation		23,689			-
Deferred income taxes		12,990			11,103
Other liabilities		33,930			31,991
Total Liabilities		494,752			429,643
Shareholders' Equity
Preferred stock, no par value; authorized - 5,000,000 shares; none issued		-			-
Common stock, no par value; authorized - 300,000,000 shares; issued - 73,996,491 shares at March 31, 2017; 72,840,257 shares at June 30, 2016		262,247			243,812
Accumulated other comprehensive income (loss)		(25,999	)		(14,017	)
Retained earnings		715,415			652,788
		951,663			882,583
Treasury stock, at cost - 10,928,083 shares at March 31, 2017 and 10,965,925 shares at June 30, 2016		(98,767	)		(100,245	)
Total Shareholders' Equity		852,896			782,338
Total Liabilities and Shareholders' Equity	$	1,347,648		$	1,211,981

- See notes to condensed consolidated financial statements.

3

II-VI Incorporated and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

($000 except per share data)

	Three Months Ended
	March 31,
	2017			2016
Revenues
Domestic	$	80,940		$	74,884
International		164,047			130,221
Total Revenues		244,987			205,105
Costs, Expenses and Other Expense (Income)
Cost of goods sold		147,277			127,436
Internal research and development		25,380			14,946
Selling, general and administrative		43,291			43,333
Interest expense		1,936			769
Other expense (income), net		(2,164	)		1,257
Total Costs, Expenses & Other Expense (Income)		215,720			187,741
Earnings Before Income Taxes		29,267			17,364
Income Taxes		6,837			2,426
Net Earnings	$	22,430		$	14,938
Basic Earnings Per Share	$	0.36		$	0.24
Diluted Earnings Per Share	$	0.35		$	0.24

- See notes to condensed consolidated financial statements.

4

II-VI Incorporated and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

($000 except per share data)

	Nine Months Ended
	March 31,
	2017			2016
Revenues
Domestic	$	224,474		$	219,812
International		473,855			365,934
Total Revenues		698,329			585,746
Costs, Expenses and Other Expense (Income)
Cost of goods sold		418,754			365,544
Internal research and development		70,844			40,252
Selling, general and administrative		128,865			117,051
Interest expense		4,547			2,015
Other expense (income), net		(9,611	)		(794	)
Total Costs, Expenses & Other Expense (Income)		613,399			524,068
Earnings Before Income Taxes		84,930			61,678
Income Taxes		22,303			10,535
Net Earnings	$	62,627		$	51,143
Basic Earnings Per Share	$	1.00		$	0.83
Diluted Earnings Per Share	$	0.97		$	0.81

- See notes to condensed consolidated financial statements.

5

II-VI Incorporated and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

($000)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2017			2016			2017			2016
Net earnings	$	22,430		$	14,938		$	62,627		$	51,143
Other comprehensive income (loss):
Foreign currency translation adjustments		3,002			4,553			(12,145	)		(9,009	)
Pension adjustment, net of taxes of ($40) and $45 for the three and nine months ended March 31, 2017, respectively, and ($5) and $9 for the three and nine months ended March 31, 2016, respectively		(149	)		(17	)		163			32
Comprehensive income	$	25,283		$	19,474		$	50,645		$	42,166

- See notes to condensed consolidated financial statements.

6

II-VI Incorporated and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

($000)

	Nine Months Ended
	March 31,
	2017			2016
Cash Flows from Operating Activities
Net earnings	$	62,627		$	51,143
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		35,190			32,613
Amortization		9,532			9,172
Share-based compensation expense		8,695			8,516
(Gains) losses on foreign currency remeasurements and transactions		(3,633	)		586
Earnings from equity investment		(654	)		(653	)
Deferred income taxes (benefit)		248			(1,193	)
Excess tax benefits from share-based compensation expense		-			(96	)
Increase (decrease) in cash excluding the effect of the purchase of acquisitions    from changes in:
Accounts receivable		(8,220	)		(4,548	)
Inventories		(20,273	)		(8,950	)
Accounts payable		7,610			(337	)
Income taxes		2,958			(2,628	)
Accrued compensation and benefits		(12,387	)		6,471
Other operating net assets		(3,321	)		(8,860	)
Net cash provided by operating activities		78,372			81,236
Cash Flows from Investing Activities
Additions to property, plant & equipment		(99,135	)		(32,743	)
Purchases of businesses		(580	)		(118,657	)
Other investing activities		1,707			92
Net cash used in investing activities		(98,008	)		(151,308	)
Cash Flows from Financing Activities
Proceeds from borrowings		64,000			125,200
Payments on borrowings		(20,000	)		(38,500	)
Proceeds from exercises of stock options		14,625			7,444
Payments in satisfaction of employees' minimum tax obligations		(3,407	)		(1,983	)
Debt issuance costs		(1,384	)		-
Purchases of treasury stock		-			(6,284	)
Other financing activities		-			96
Net cash provided by financing activities		53,834			85,973
Effect of exchange rate changes on cash and cash equivalents		(5,062	)		(2,162	)
Net increase in cash and cash equivalents		29,136			13,739
Cash and Cash Equivalents at Beginning of Period		218,445			173,634
Cash and Cash Equivalents at End of Period	$	247,581		$	187,373
Cash paid for interest	$	3,937		$	1,859
Cash paid for income taxes	$	16,852		$	13,378
Non-cash transactions:
Capital lease obligation incurred on facility lease	$	25,000		$	-
Additions to property, plant & equipment included in accounts payable	$	6,521		$	-
Purchase of business utilizing earnout consideration recorded in other current liabilities	$	-		$	2,000
Purchase of business utilizing earnout consideration recorded in long-term liabilities	$	-		$	4,000

- See notes to condensed consolidated financial statements.

7

e II-VI Incorporated and Subsidiaries

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

(000)

						Accumulated
						Other
	Common Stock					Comprehensive			Retained		Treasury Stock
	Shares		Amount			Income (Loss)			Earnings		Shares			Amount			Total
Balance - June 30, 2016		72,840	$	243,812		$	(14,017	)	$	652,788		(10,966	)	$	(100,245	)	$	782,338
Shares issued under share-based compensation plans		1,119		14,625			-			-		(137	)		(3,407	)		11,218
Net earnings		-		-			-			62,627		-			-			62,627
Treasury stock under deferred compensation arrangements		37		(4,885	)		-			-		175			4,885			-
Foreign currency translation adjustments		-		-			(12,145	)		-		-			-			(12,145	)
Share-based compensation expense		-		8,695			-			-		-			-			8,695
Pension adjustment, net of taxes of $45		-		-			163			-		-			-			163
Balance - March 31, 2017		73,996	$	262,247		$	(25,999	)	$	715,415		(10,928	)	$	(98,767	)	$	852,896

- See notes to condensed consolidated financial statements.

8

II-VI Incorporated and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note  1. Basis of Presentation

The condensed consolidated financial statements of II-VI Incorporated (“II-VI” or the “Company”) for the three and nine months ended March 31, 2017 and 2016 are unaudited. In the opinion of management, all adjustments considered necessary for a fair presentation for the periods presented have been included. All adjustments are of a normal recurring nature unless disclosed otherwise. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016. The consolidated results of operations for the three and nine months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full fiscal year. The June 30, 2016 Condensed Consolidated Balance Sheet information was derived from the Company’s audited financial statements.

During the quarter ended December 31, 2016, the Company purchased certain assets, mainly inventory and fixed assets, of DirectPhotonics Industries GmbH located in Berlin, Germany for approximately$0.6 million. This business was combined with the Company’s II-VI HIGHYAG division in the II-VI Laser Solutions segment. Due to the insignificant amount of the acquisition purchase price, certain business combinations disclosures typically required under U.S. GAAP have been omitted.

Note  2. Recent Accounting Pronouncements

Adopted Pronouncements

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.  This ASU requires entities to present debt issuance costs in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability, consistent with debt discounts. The Company adopted ASU 2015-03, as clarified by ASU 2015-15, which did not have a material impact on the Company’s Consolidated Financial Statements other than corresponding reductions to total assets and total liabilities on the Condensed Consolidated Balance Sheets. Prior to adoption, the Company recorded deferred financing costs as Other assets on the Consolidated Balance Sheets. Upon adoption, the Company reclassified these costs as unamortized debt issuance costs that reduce long term debt on the Consolidated Balance Sheets and retrospectively reclassified $0.6 million that were previously presented as deferred financing costs, an asset on the Consolidated Balance Sheets as of June 30, 2016. There was no effect on the Consolidated Statements of Earnings as a result of the adoption.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. This update requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements.

In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance about whether a cloud computing arrangement includes a software license. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This update affects reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements.

Pronouncements Currently Under Evaluation

In March 2017, the FASB issued ASU 2017-07, Consolidation (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This update affects Employers’ presentation of defined benefit retirement plan costs. Early adoption is permitted. The standard will be effective for the Company’s 2019 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In February 2017, the FASB issued ASU 2017-05, Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial assets. This update provides clarification on the scope and application of the sale or transfer of nonfinancial assets and in substance nonfinancial assets to

9

noncustomers, including partial sales. Early adoption is permitted but only as of fiscal years beginning after December 15, 2016. The standard will be effective for the Company’s 2019 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business. This update changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Early adoption is permitted. The standard will be effective for the Company’s 2020 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. This standard removes the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit were needed to measure the goodwill impairment. Under this updated standard, goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The Company will adopt this for any impairment test performed after July 1, 2017 as permitted under the standard.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This update requires that when intra-entity asset transfers occur, the entity must recognize tax effects in the period in which the transfer occurs. The standard will be effective for The Company’s 2019 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in the update provide guidance on eight specific cash flow issues. The update will be effective for the Company’s 2019 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update is intended to provide financial statement users with more decision-useful information about expected credit losses and other commitments to extend credit held by the reporting entity. The standard replaces the incurred loss impairment methodology in current GAAP with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The update will be effective for the Company’s 2021 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This update simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, and classification in the statement of cash flows. The standard will be effective for the Company’s 2018 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. This update eliminates the requirement to retrospectively apply the equity method in previous periods when an investor obtains significant influence over an investee. The standard will be effective for the Company’s 2018 fiscal year. Early adoption is permitted. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires that a lessee recognize leased assets with terms greater than 12 months on the balance sheet for the rights and obligations created by those leases. The standard will be effective for the Company’s 2020 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and measurement of Financial Assets and Financial Liabilities (Topic 825). This update requires that public entities measure equity investments with readily determinable fair values, at fair value, with changes in their fair value recorded through net income. This ASU also clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. The standard will be effective for the Company’s 2018 fiscal year. The Company is evaluating the impact on the Company’s Consolidated Financial Statements.

10

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This update simplifies the measurement of inventory valuation at the lower of cost or net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new inventory measurement requirements will be effective for the Company’s 2018 fiscal year and will replace the current inventory valuation guidance that requires the use of a lower of cost or market framework. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern. This update provides U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The adoption of this standard is effective as of June 30, 2017. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09: Revenue from Contracts with Customers (Topic 606) which supersedes virtually all existing revenue recognition guidance under U.S. GAAP. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update allows for the use of either the retrospective or modified retrospective approach of adoption. On July 9, 2015 the FASB approved a one year deferral of the effective date of the update. The update will be effective for the Company’s 2019 fiscal year. In May 2016, the FASB issued an amendment which did not change the core principles of the guidance in Topic 606. Rather, the amendments in this update affect only narrow aspects of Topic 606. We have not yet selected a transition method and are currently evaluating the impact that this guidance, along with the subsequent updates and clarifications, will have on the Company’s Consolidated Financial Statements.

Note  3. Inventories

The components of inventories were as follows ($000):

	March 31,		June 30,
	2017		2016
Raw materials	$	76,215	$	70,623
Work in progress		65,059		57,566
Finished goods		50,528		46,944
	$	191,802	$	175,133

Note  4. Property, Plant and Equipment

Property, plant and equipment consists of the following ($000):

	March 31,			June 30,
	2017			2016
Land and improvements	$	4,604		$	4,990
Buildings and improvements		131,542			110,219
Machinery and equipment		448,643			409,551
Construction in progress		97,674			34,602
		682,463			559,362
Less accumulated depreciation		(346,711	)		(316,505	)
	$	335,752		$	242,857

During the quarter ending March 31, 2017, the Company sold its manufacturing facility located in Newport Ritchey, Florida. The Company received $1.7 million, net of customary closing costs and a $0.3 million reserve held in escrow for environmental purposes. The gain on sale of $0.3 million was recorded in other expense (income), net in the Condensed Consolidated Statement of Earnings.

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Note  5. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill were as follows ($000):

	Nine Months Ended March 31, 2017
	II-VI Laser			II-VI			II- VI Performance
	Solutions			Photonics			Products		Total
Balance-beginning of period	$	84,105		$	96,760		$	52,890	$	233,755
Foreign currency translation		(100	)		(1,142	)		-		(1,242	)
Balance-end of period	$	84,005		$	95,618		$	52,890	$	232,513

Note 1 of the Notes to the Consolidated Financial Statements in the Company’s most recent Annual Report on Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s Consolidated Financial Statements. Management has evaluated goodwill for indicators of impairment and has concluded that there are no indicators of impairment as of March 31, 2017.

The gross carrying amount and accumulated amortization of the Company’s intangible assets other than goodwill as of March 31, 2017 and June 30, 2016 were as follows ($000):

	March 31, 2017							June 30, 2016
	Gross					Net		Gross					Net
	Carrying		Accumulated			Book		Carrying		Accumulated			Book
	Amount		Amortization			Value		Amount		Amortization			Value
Technology and Patents	$	53,994	$	(26,010	)	$	27,984	$	54,344	$	(22,724	)	$	31,620
Trademarks		15,749		(1,308	)		14,441		15,869		(1,209	)		14,660
Customer Lists		111,807		(39,448	)		72,359		112,141		(33,912	)		78,229
Other		1,569		(1,513	)		56		1,571		(1,490	)		81
Total	$	183,119	$	(68,279	)	$	114,840	$	183,925	$	(59,335	)	$	124,590

Amortization expense recorded on the Company’s intangible assets was $3.1 million and $9.5 million for the three and nine months ended March 31, 2017, respectively, and was $3.2 million and $9.2 million for the three and nine months ended March 31, 2016, respectively. Technology and patents are being amortized over a range of 60 to 240 months, with a weighted average remaining life of approximately 94 months. Customer lists are being amortized over a range of approximately 120 to 240 months with a weighted average remaining life of approximately 137 months. The gross carrying amount of trademarks includes $14.0 million of acquired trade names with indefinite lives that are not amortized but tested annually for impairment or more frequently if a triggering event occurs. Included in the gross carrying amount and accumulated amortization of the Company’s intangible assets is the effect of foreign currency translation on that portion of the intangible assets relating to the Company’s German and Chinese subsidiaries.

At March 31, 2017, the estimated amortization expense for existing intangible assets for each of the five succeeding fiscal years is as follows ($000):

Fiscal Year Ending June 30,	Amount
Remaining 2017	$	3,156
2018		12,108
2019		11,789
2020		10,981
2021		10,125

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Note  6. Debt

The components of debt for the periods indicated were as follows ($000):

	March 31,			June 30,
	2017			2016
Line of credit, interest at LIBOR, as defined, plus 1.5%	$	187,000		$	188,000
Term loan, interest at LIBOR, as defined, plus 1.5%		90,000			45,000
Yen denominated line of credit, interest at LIBOR, as    defined, plus 0.625%		2,683			2,917
Total debt		279,683			235,917
Current portion of long-term debt		(20,000	)		(20,000	)
Unamortized debt issuance costs		(1,582	)		(610	)
Long-term debt, less current portion	$	258,101		$	215,307

On July 28, 2016, the Company amended and restated its existing credit agreement. The Third Amended and Restated Credit Agreement (the “Amended Credit Facility”) provides for a revolving credit facility of $325 million, as well as a $100 million term loan. The term loan is being repaid in consecutive quarterly principal payments on the first business day of each January, April, July and October, with the first payment having commenced on October 1, 2016, as follows: (i) twenty consecutive quarterly installments of $5 million and (ii) a final installment of all remaining principal due and payable on the maturity date of July 27, 2021. Amounts borrowed under the revolving credit facility are due and payable on the maturity date. The Amended Credit Facility is unsecured, but is guaranteed by each existing and subsequently acquired or organized wholly-owned domestic subsidiary of the Company. The Company has the option to request an increase to the size of the revolving credit facility in an aggregate additional amount not to exceed $100 million. The Amended Credit Facility has a five-year term through July 27, 2021 and has an interest rate of either a Base Rate Option or a Euro-Rate Option, plus an Applicable Margin, as defined in the agreement governing the Amended Credit Facility. If the Base Rate option is selected for a borrowing, the Applicable Margin is 0.00% to 0.075% and if the Euro-Rate Option is selected for a borrowing, the Applicable Margin is 0.75% to 1.75%. The Applicable Margin is based on the Company’s ratio of consolidated indebtedness to consolidated EBITDA. Additionally, the Credit Facility is subject to certain covenants, including those relating to minimum interest coverage and maximum leverage ratios. As of March 31, 2017, the Company was in compliance with all financial covenants under its Amended Credit Facility.

The Company’s Yen denominated line of credit is a 500 million Yen (approximately $4.5 million) facility. The Yen line of credit matures in August 2020. The interest rate is equal to LIBOR, as defined in the loan agreement, plus 0.625% to 1.50%. At March 31, 2017 and June 30, 2016, the Company had 300 million Yen borrowed. Additionally, the facility is subject to certain covenants, including those relating to minimum interest coverage and maximum leverage ratios. As of March 31, 2017, the Company was in compliance with all financial covenants under its Yen facility.

The Company had aggregate availability of $138.4 million and $37.7 million under its lines of credit as of March 31, 2017 and June 30, 2016, respectively. The amounts available under the Company’s lines of credit are reduced by outstanding letters of credit. As of March 31, 2017 and June 30, 2016, total outstanding letters of credit supported by these credit facilities were $1.4 million and $1.2 million, respectively.

The weighted average interest rate of total borrowings was 2.3% and 1.6% for the nine months ended March 31, 2017 and 2016, respectively.

Remaining annual principal payments under the Company’s existing credit facilities as of March 31, 2017 were as follows:

					U.S.
					Dollar
	Term		Yen Line		Line of
Period	Loan		of Credit		Credit		Total
Year 1	$	20,000	$	-	$	-	$	20,000
Year 2		20,000		-		-		20,000
Year 3		20,000		-		-		20,000
Year 4		20,000		2,683		-		22,683
Year 5		10,000		-		187,000		197,000
Total	$	90,000	$	2,683	$	187,000	$	279,683

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Note  7. Income Taxes

The Company’s year-to-date effective income tax rate at March 31, 2017 and 2016 was 26.3% and 17.1%, respectively. The variations between the Company’s effective tax rate and the U.S. statutory rate of 35% were primarily due to the consolidation of the Company’s foreign operations, which are subject to income taxes at lower statutory rates.  

U.S. GAAP clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As of March 31, 2017 and June 30, 2016, the Company’s gross unrecognized income tax benefit was $6.6 million and $5.6 million, respectively. The Company has classified the uncertain tax positions as noncurrent income tax liabilities, as the amounts are not expected to be paid within one year. If recognized, $0.5 million of the gross unrecognized tax benefits at March 31, 2017 would impact the effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions in the income tax provision on the Condensed Consolidated Statements of Earnings. The amount of accrued interest and penalties included in the gross unrecognized income tax benefit was $0.2 million and $0.1 million at March 31, 2017 and June 30, 2016, respectively. Fiscal years 2014 to 2017 remain open to examination by the United States Internal Revenue Service, fiscal years 2012 to 2017 remain open to examination by certain state jurisdictions, and fiscal years 2006 to 2017 remain open to examination by certain foreign taxing jurisdictions. The Company’s income tax returns are not currently under examination. The Company believes its income tax reserves for these tax matters are adequate.

Note  8. Earnings Per Share

The following table sets forth the computation of earnings per share for the periods indicated. Weighted average shares issuable upon the exercises of stock options and the release of performance and restricted shares are not included in the calculation because they were anti-dilutive and totaled approximately 36,000 and 163,000 for the three and nine months ended March 31, 2017, respectively, and 109,000 and 178,000 for the three and nine months ended March 31, 2016, respectively ($000 except per share data):

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2017		2016		2017		2016
Net earnings	$	22,430	$	14,938	$	62,627	$	51,143
Divided by:
Weighted average shares		62,807		61,369		62,403		61,252
Basic earnings per common share	$	0.36	$	0.24	$	1.00	$	0.83
Net earnings	$	22,430	$	14,938	$	62,627	$	51,143
Divided by:
Weighted average shares		62,807		61,369		62,403		61,252
Dilutive effect of common stock equivalents		2,203		1,684		1,930		1,566
Diluted weighted average common shares		65,010		63,053		64,333		62,818
Diluted earnings per common share	$	0.35	$	0.24	$	0.97	$	0.81

Note  9. 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.

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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 before income taxes, interest and other income or expense. Inter-segment sales and transfers are eliminated.

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

	Three Months Ended March 31, 2017
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	83,648	$	109,099	$	52,240	$	-		$	244,987
Inter-segment revenues		9,661		3,450		2,713		(15,824	)		-
Operating income		8,337		15,898		4,804		-			29,039
Interest expense		-		-		-		-			(1,936	)
Other income (expense), net		-		-		-		-			2,164
Income taxes		-		-		-		-			(6,837	)
Net earnings		-		-		-		-			22,430
Depreciation and amortization		5,713		5,029		4,182		-			14,924
Segment assets		556,238		496,068		295,342		-			1,347,648
Expenditures for property, plant & equipment		23,299		8,727		9,287		-			41,313
Investment		-		-		12,007		-			12,007

	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
Expenditures for property, plant & equipment		7,156		4,160		2,271		-			13,587

	Nine Months Ended March 31, 2017
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	244,421	$	305,824	$	148,084	$	-		$	698,329
Inter-segment revenues		24,361		10,049		7,091		(41,501	)		-
Operating income		22,628		45,689		11,549		-			79,866
Interest expense		-		-		-		-			(4,547	)
Other income (expense), net		-		-		-		-			9,611
Income taxes		-		-		-		-			(22,303	)
Net earnings		-		-		-		-			62,627
Depreciation and amortization		17,025		14,853		12,844		-			44,722
Expenditures for property, plant & equipment		59,161		21,224		18,750		-			99,135

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	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 & equipment		16,511		10,783		5,449		-			32,743

Note 10. Share-Based Compensation

The Board of Directors adopted the II-VI Incorporated Amended and Restated 2012 Omnibus Incentive Plan (the “Plan”), which was approved by the Company’s shareholders. The Plan provides for the grant of performance-based cash incentive awards, non-qualified stock options, stock appreciation rights, restricted share awards, restricted share units, deferred share awards, performance share awards and performance share units to employees, officers and directors of the Company. The maximum number of shares of the Company’s common stock authorized for issuance under the Plan is limited to 4,900,000 shares of common stock, not including any remaining shares forfeited under the predecessor plans that may be rolled into the Plan. The Company records share-based compensation expense for these awards in accordance with U.S. GAAP, which requires the recognition of grant-date fair value of share-based compensation in net earnings and over the requisite service period of the individual grantees, which generally equals the vesting period.  The Company accounts for cash-based stock appreciation rights, cash-based restricted share unit awards and cash-based performance share unit awards as liability awards, in accordance with applicable accounting standards.

Share-based compensation expense is allocated approximately 20% to cost of goods sold and 80% to selling, general and administrative expense, based on the employee classification of the grantees. Share-based compensation expense for the periods indicated was as follows ($000):

	Three Months Ended				Nine Months Ended
March 31,		2017		2016		2017		2016
Stock Options and Cash-Based Stock Appreciation Rights	$	1,565	$	755	$	4,659	$	3,892
Restricted Share Awards and Cash-Based Restricted Share Unit Awards		1,890		991		5,450		3,776
Performance Share Awards and Cash-Based Performance    Share Unit Awards		1,110		762		2,438		2,438
	$	4,565	$	2,508	$	12,547	$	10,106

Note  11. Fair Value of Financial Instruments

The FASB defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous markets for the asset and liability in an orderly transaction between market participants at the measurement date. The Company estimates fair value of its financial instruments utilizing an established three-level hierarchy in accordance with U.S. GAAP. The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date as follows:

•	Level 1 –	Valuation is based upon unadjusted quoted prices for identical assets or liabilities in active markets.
•	Level 2 –	Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments.
•	Level 3 –	Valuation is based upon other unobservable inputs that are significant to the fair value measurements.

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The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement. At March 31, 2017, the Company had foreign currency forward contracts recorded at fair value. The fair values of these instruments were measured using valuations based upon quoted prices for similar assets and liabilities in active markets (Level 2) and are valued by reference to similar financial instruments, adjusted for credit risk, restrictions and other terms specific to the contracts. Foreign currency loss related to these contracts was $1.1 million for the three months ended March 31, 2017, and foreign currency gain of $0.2 million for the nine months ended March 31, 2017. The Company had a contingent earnout arrangement related to the acquisition of EpiWorks recorded at fair value. The EpiWorks earnout arrangement provides up to a maximum of $6.0 million of additional cash payments based upon EpiWorks achieving certain agreed upon financial and operational targets for capacity, wafer output and gross margin, which if earned would be payable for the achievement of each specific target over the next three years. The fair value of the contingent earnout arrangement was measured using valuations based upon other unobservable inputs that are significant to the fair value measurement (Level 3).  

The following table provides a summary by level of the fair value of financial instruments that are measured on a recurring basis for the periods presented ($000):

	Fair Value Measurements at March 31, 2017 Using:
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	March 31, 2017		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Foreign currency forward contracts	$	135	$	-	$	135	$	-
Contingent earnout arrangement	$	5,545	$	-	$	-	$	5,545

	Fair Value Measurements at June 30, 2016 Using:
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	June 30, 2016		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Foreign currency forward contracts	$	511	$	-	$	511	$	-
Contingent earnout arrangement	$	4,352	$	-	$	-	$	4,352

The Company’s policy is to report transfers into and out of Levels 1 and 2 of the fair value hierarchy at fair values as of the beginning of the period in which the transfers occur. There were no transfers in and out of Levels 1 and 2 of the fair value hierarchy during the three and nine months ended March 31, 2017.

The following table presents a reconciliation of the beginning and ending fair value measurements of the Company’s level 3 contingent earnout arrangement related to the acquisition of EpiWorks ($000):

	Significant
	Unobservable Inputs
	(Level 3)
Balance at July 1, 2016	$	4,352
Payments		-
Changes in fair value		1,193
Balance at March 31, 2017	$	5,545

The change in fair value of $1.2 million was recorded in other expense (income), net in the Condensed Consolidated Statement of Earnings.

The fair values of cash and cash equivalents are considered Level 1 among the fair value hierarchy and approximate fair value because of the short-term maturity of those instruments. The Company’s borrowings including its capital lease obligation are considered Level 2 among the fair value hierarchy and are variable interest rates and accordingly their carrying amounts approximate fair value.

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Note 12. Derivative Instruments

The Company, from time to time, purchases foreign currency forward exchange contracts, primarily in Japanese Yen, that permit it to sell specified amounts of these foreign currencies expected to be received from its export sales for pre-established U.S. dollar amounts at specified dates. The Company enters into these contracts to limit transactional exposure to changes in currency exchange rates of export sales transactions in which settlement will occur in future periods and which otherwise would expose the Company, on the basis of its aggregate net cash flows in respective currencies, to foreign currency risk.

The Company has recorded the fair market value of these contracts in the Company’s Condensed Consolidated Financial Statements. These contracts had a total notional amount of $7.9 million and $9.2 million at March 31, 2017 and June 30, 2016, respectively. As of March 31, 2017, these forward contracts had expiration dates ranging from April 2017 through July 2017, with Japanese Yen denominations individually ranging from 100 million Yen to 400 million Yen. The Company does not account for these contracts as hedges as defined by U.S. GAAP, and records the change in the fair value of these contracts in Other expense (income), net in the Condensed Consolidated Statements of Earnings as they occur. The fair value measurement takes into consideration foreign currency rates and the current creditworthiness of the counterparties to these contracts, as applicable, and is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments and thus represents a Level 2 measurement. These contracts are recorded in Other accrued liabilities as of as of March 31, 2017 and June 30, 2016 in the Company’s Condensed Consolidated Balance Sheets. The fair value of these contracts decreased $1.3 million and increased $0.4 million for the three and nine months ended March 31, 2017, respectively.

During the month of March 2017, the Company entered into a $50.0 million forward contract that matured on March 31, 2017 to limit exposure to the Chinese Renminbi. Upon expiration of this contract, the Company recorded a $0.3 million gain in the Condensed Consolidated Statement of Earnings.

Note  13. Commitments and Contingencies

The Company records a warranty reserve as a charge against earnings based on a percentage of sales utilizing actual warranty claims over the last twelve months. The following table summarizes the change in the carrying value of the Company’s warranty reserve, which is a component of Other accrued liabilities in the Company’s Condensed Consolidated Balance Sheets ($000):

Nine Months Ended March 31, 2017	Amount
Balance-beginning of period	$	3,908
Payments made during the period		(3,184	)
Additional warranty liability recorded during the period		3,286
Balance-end of period	$	4,010

Note 14. Post-Retirement Benefits

The Company has a pension plan (the “Swiss Plan”) covering employees of the Zurich, Switzerland subsidiary.  Net periodic pension costs associated with the Swiss Plan included the following ($000):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2017			2016			2017			2016
Service cost	$	874		$	658		$	2,642		$	1,978
Interest cost		39			107			117			321
Expected return on plan assets		(176	)		(269	)		(532	)		(810	)
Net amortization		(189	)		(22	)		208			41
Net periodic pension costs	$	548		$	474		$	2,435		$	1,530

The Company contributed $0.8 million and $2.6 million to the Swiss Plan during the three and nine months ended March 31, 2017, respectively, and $0.5 million and $1.5 million during the three and nine months ended March 31, 2016, respectively. The Company currently anticipates contributing an additional estimated amount of approximately $1.0 million to the Swiss Plan during the remainder of fiscal year 2017.

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Note  15. Share Repurchase Program

In August 2014, the Company’s Board of Directors authorized the Company to purchase up to $50 million of its Common Stock through a share repurchase program (the “Program”) that calls for shares to be purchased in the open market or in private transactions from time to time. The Program has no expiration and may be suspended or discontinued at any time.  Shares purchased by the Company are retained as treasury stock and available for general corporate purposes. As of March 31, 2017, the Company has purchased 1,316,587 shares of its Common Stock pursuant to the Program for approximately $19.0 million.

Note 16. Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (“AOCI") by component, net of tax, for the nine months ended March 31, 2017 were as follows ($000):

	Foreign						Total
	Currency			Defined			AccumulatedOther
	Translation			Benefit			Comprehensive
	Adjustment			Pension Plan			Income (Loss)
AOCI - June 30, 2016	$	(6,185	)	$	(7,832	)	$	(14,017	)
Other comprehensive loss before reclassifications		(12,145	)		-			(12,145	)
Amounts reclassified from AOCI		-			163			163
Net  current-period other comprehensive income (loss)		(12,145	)		163			(11,982	)
AOCI - March 31, 2017	$	(18,330	)	$	(7,669	)	$	(25,999	)

Note 17. Capital Lease

During the quarter ended December 31, 2016, the Company’s OptoElectronic Devices subsidiary entered into a capital lease related to a building in Warren, New Jersey. The following table shows the future minimum lease payments due under the non-cancelable capital lease ($000):

Fiscal Year Ending June 30,	Amount
2017 (remaining)	$	645
2018		2,579
2019		2,579
2020		2,579
2021		2,579
Thereafter		27,082
Total minimum lease payments	$	38,043
Less amount representing interest		13,297
Present value of capitalized payments	$	24,746
Less: current portion		1,057
Long-term portion	$	23,689

The current and long-term portion of the capital lease obligation was recorded in Other accrued liabilities and Capital lease obligation, respectively, in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2017. The present value of capitalized payments of $25.0 million was recorded in Property, Plant & Equipment, net, in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2017, with associated depreciation being recorded over the 15 year life of the lease.

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Item  2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations (“Management’s Discussion and Analysis”), contains forward-looking statements as defined by Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding projected growth rates, markets, product development, financial position, capital expenditures and foreign currency exposure. Forward-looking statements are also identified by words such as “expects,” “anticipates,” “intends,” “plans,” “projects” or similar expressions.

Although our management considers these expectations and assumptions to be reasonable, actual results could differ materially from any such forward-looking statements included in this Quarterly Report on Form 10-Q or otherwise made by our management due to the following factors, among others: dependency on international sales and successful management of global operations; the development and use of new technology; the timely release of new products and acceptance of such new products by the market; our ability to devise and execute strategies to respond to market conditions; our ability to achieve the anticipated benefits of capital investments that we make; the impact of acquisitions on our business and our ability to assimilate recently acquired businesses; the impact of impairment in goodwill and indefinite-lived intangible assets in one or more of our segments; adverse changes in economic or industry conditions generally (including capital markets) or in the markets served by the Company; our ability to protect our intellectual property; domestic and foreign governmental regulation, including that related to the environment; the impact of a data breach incident on our operations; supply chain issues; the actions of competitors; the purchasing patterns of customers and end-users; the occurrence of natural disasters and other catastrophic events outside of our control; and changes in local market laws and practices. There are additional risk factors that could materially affect the Company’s business, results of operations or financial condition as set forth in Part I, Item 1A of the Company’s most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission on August 26, 2016.

In addition, we operate in a highly competitive and rapidly changing environment; new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statement. The forward-looking statements included in this Quarterly Report on Form 10-Q are based only on information currently available to us and speak only as of the date of this Report. We do not assume any obligation, and do not intend to, update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by the securities laws. Investors should, however, consult any further disclosures of a forward-looking nature that the Company may make in its subsequent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, or other disclosures filed with or furnished to the SEC.

Investors should also be aware that, while the Company does communicate with securities analysts from time to time, such communications are conducted in accordance with applicable securities laws. Investors should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report.

Introduction

II-VI Incorporated (“II-VI,” the “Company,” “we,” “us” or “our”), a worldwide leader in engineered materials and opto-electronic components, is a vertically integrated manufacturing company that develops innovative products for diversified applications in the industrial, optical communications, military, life sciences, semiconductor equipment, and consumer markets. The Company produces a wide variety of application-specific photonic and electronic materials and components, and deploys them in various forms, including integration with advanced software.

The Company generates revenues, earnings and cash flows from developing, manufacturing and marketing engineered materials and opto-electronic components for precision use in industrial, optical communications, military, semiconductor, medical and consumer applications. We also generate revenue, earnings and cash flows from government-funded research and development contracts relating to the development and manufacture of new technologies, materials and products.

Our customer base includes original equipment manufacturers, laser end users, system integrators of high-power lasers, manufacturers of equipment and devices for industrial, optical communications, security and monitoring applications, U.S. government prime contractors, various U.S. government agencies and thermoelectric solutions suppliers.

20

During the quarter ended March 31, 2016, the Company completed the acquisitions of EpiWorks, Inc (referred to now as II-VI EpiWorks) and ANADIGICS, Inc. (“ANADIGICS”, and referred to now as II-VI OptoElectronic Devices or “II-VI OED”). The results of operations for these two acquisitions are included in the II-VI Laser Solutions segment since the respective acquisition dates.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America and the Company’s discussion and analysis of its financial condition and results of operations require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its condensed consolidated financial statements and accompanying notes. Note 1 of the Notes to Consolidated Financial Statements in the Company’s most recent Annual Report on Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. There have been no changes in significant accounting policies as of March 31, 2017.

New Accounting Standards

See “Note 2. Recent Accounting Pronouncements” to our unaudited financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.

Results of Operations ($ in millions, except per-share data)

The following table sets forth bookings and select items from our Condensed Consolidated Statements of Earnings for the three and nine months ended March 31, 2017 and 2016, respectively:

	Three Months Ended						Three Months Ended
	March 31, 2017						March 31, 2016
Bookings	$	280.8					$	235.5
				% of					% of
				Revenues					Revenues
Total revenues	$	245.0			100.0	%	$	205.1		100.0	%
Cost of goods sold		147.3			60.1			127.4		62.1
Gross margin		97.7			39.9			77.7		37.9
Operating expenses:
Internal research and development		25.4			10.4			14.9		7.3
Selling, general and administrative		43.3			17.7			43.4		21.2
Interest and other, net		(0.2	)		(0.1	)		2.1		1.0
Earnings before income tax		29.2			11.9			17.3		8.5
Income taxes		6.8			2.8			2.4		1.2
Net earnings	$	22.4			9.1	%	$	14.9		7.3	%
Diluted earnings per share:	$	0.35					$	0.24

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	Nine Months Ended						Nine Months Ended
	March 31, 2017						March 31, 2016
Bookings	$	799.4					$	630.4
				% of					% of
				Revenues					Revenues
Total revenues	$	698.3			100.0	%	$	585.8		100.0	%
Cost of goods sold		418.8			60.0			365.5		62.4
Gross margin		279.5			40.0			220.3		37.6
Operating expenses:
Internal research and development		70.8			10.1			40.3		6.9
Selling, general and administrative		128.9			18.5			117.1		20.0
Interest and other, net		(5.1	)		(0.7	)		1.2		0.2
Earnings before income tax		84.9			12.2			61.7		10.5
Income taxes		22.3			3.2			10.6		1.8
Net earnings	$	62.6			9.0	%	$	51.1		8.7	%
Diluted earnings per share:	$	0.97					$	0.81

Executive Summary

Net earnings for the three months ended March 31, 2017 were $22.4 million ($0.35 per-share diluted), compared to $14.9 million ($0.24 per-share diluted) for the same period last fiscal year.  Net earnings for the nine months ended March 31, 2017 were $62.6 million ($0.97 per-share diluted), compared to $51.1 million ($0.81 per-share diluted) for the same period last fiscal year. The increase in net earnings for the three and nine months ended March 31, 2017 compared to the same periods last year was primarily the result of increased revenues, favorable product mix at the II-VI Photonics segment and improved operational performance from all three segments. In particular the Company has seen continued increased demand from the optical communications customer base as a result of continuation of the China broadband initiative, data center and U.S. metro upgrade cycles (including cable television). In addition, the Company’s II-VI Laser Solutions segment saw increased demand for its carbon dioxide (“CO₂”) and one-micron laser applications. Partially offsetting the increase in net earnings were increased internal research and development expenses for the Company’s investment in the high-volume vertical cavity surface emitting lasers (“VCSELs”) platform. Income tax expense increased compared to the same periods last fiscal year due to the current year impact of the U.S. income tax valuation allowance as well as prior year income taxes benefitted from the expiration of the statute of limitations for certain tax reserves.  

Consolidated

Bookings. Bookings for the three months ended March 31, 2017 increased 19% to $280.8 million, compared to $235.5 million for the same period last fiscal year. Bookings for the nine months ended March 31, 2017 increased 27% to $799.4 million, compared to $630.4 million for the same period last fiscal year. Bookings are defined as customer orders received that are expected to be converted to revenues over the next twelve months. For long-term customer orders, the Company does not include in bookings the portion of the customer order that is beyond twelve months, due to the inherent uncertainty of an order that far out in the future. The Company’s II-VI Laser Solutions segment realized increased bookings of $24.2 million, or 30%, and $54.3 million, or 25%, for the three and nine months ended March 31, 2017, respectively, over the same periods last year. The increase was driven by the acquisitions of II-VI EpiWorks and II-VI OED, as well as higher demand for high and low power laser optics, one-micron laser applications and semiconductor photolithography. Additionally, the Company’s II-VI Performance Products segment realized increased bookings of $14.6 million, or 29%, and $30.2 million, or 20%, for the three and nine months ended March 31, 2017, respectively, over the same periods last year. The increase was driven by demand for silicon carbide (“SiC”) substrates supporting radio frequency (“RF”) development of power device products in automotive and industrial markets.

Revenues. Revenues for the three months ended March 31, 2017 increased 19% to $245.0 million, compared to $205.1 million for the same period last fiscal year. Revenues for the nine months ended March 31, 2017 increased 19% to $698.3 million, compared to $585.8 million for the same period last fiscal year. The Company has seen continued increased demand from the optical communications customer base as a result of continuation of the China broadband initiative, data center and U.S. metro upgrade cycles (including cable television). In addition, the Company’s II-VI Laser Solutions segment saw increased demand for its products addressing CO₂ and one-micron laser applications.

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Gross margin. Gross margin for the three months ended March 31, 2017 was $97.7 million, or 39.9%, of total revenues, compared to $77.7 million, or 37.9%, of total revenues, for the same period last fiscal year. Gross margin for the nine months ended March 31, 2017 was $279.5 million, or 40.0%, of total revenues, compared to $220.3 million, or 37.6% of total revenues, for the same period last fiscal year.The improvement in gross margin for both the three and nine months ended March 31, 2017 compared to the same periods last fiscal year was primarily driven by incremental margins realized on the Company’s higher revenue levels and favorable product mix primarily in the II-VI Photonics segment.

Internal research and development. Company-funded internal research and development expenses for the three months ended March 31, 2017 were $25.4 million, or 10.4% of revenues, compared to $14.9 million, or 7.3% of revenues, for the same period last fiscal year. Company-funded internal research and development expenses for the nine months ended March 31, 2017 were $70.8 million, or 10.1% of revenues, compared to $40.3 million, or 6.9% of revenues, for the same period last fiscal year. The increase in internal research and development expense for the three and nine months ended March 31, 2017 is the result of the Company’s continued investments in the development of the technology required to produce new opto-electronic devices in large volume for future applications as well as new product introductions across the Company’s segments. The Company anticipates the internal research and development expenses as a percentage of revenues to approximate the current run rate as the Company continues to invest in its growth strategy around the high-volume VCSELs platform.

Selling, general and administrative. Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2017 were $43.3 million, or 17.7% of revenues, compared to $43.4 million, or 21.2% of revenues, for the same period last fiscal year.SG&A expenses for the nine months ended March 31, 2017 were $128.9 million, or 18.5% of revenues, compared to $117.1 million, or 20.0% of revenues, for the same period last fiscal year. SG&A included $2.5 million and $6.8 million for the three and nine months ended March 31, 2016, respectively, of expense attributed to the acquisitions of II-VI EpiWorks and II-VI OED that occurred during the March 31, 2016 fiscal quarter last year. The Company experienced favorable leverage ratios as a result of capitalizing on synergies created from the Company’s recent acquisitions over the past several years.

Interest and other, net. Interest and other, net for the three months ended March 31, 2017 was income of $0.2 million, compared to expense of $2.1 million for the same period last fiscal year. Interest and other, net for the nine months ended March 31, 2017 was income of $5.1 million, compared to expense of $1.2 million for the same period last fiscal year. Included in interest and other, net were interest expense on borrowings, interest income on excess cash reserves, unrealized gains and losses on the Company’s deferred compensation plan, foreign currency gains and losses and contingent earnout and technology transfer income from the sale of the ANADIGICS RF business that occurred in June 2016. In particular, the Company recorded for the current three months ended March 31, 2017, $2.3 million of income relating to the residual agreements from the sale of the RF business offset by interest expense of $1.9 million on outstanding borrowings. For the nine months ended March 31, 2017, other income consisted primarily of foreign currency gains of $3.6 million and income from the residual agreements on the sale of the RF business noted above of $4.8 million offset by interest expense of $4.5 million on outstanding borrowings.    

Income taxes. The Company’s year-to-date effective income tax rate at March 31, 2017 was 26.3%, compared to an effective tax rate of 17.1% for the same period last fiscal year. The variation between the Company’s effective tax rate and the U.S. statutory rate of 35% was primarily due to the Company’s foreign operations, which are subject to income taxes at lower statutory rates. The higher effective tax rate during the current fiscal year is due to the ongoing valuation allowance against certain U.S. based deferred tax assets.

Segment Reporting

Bookings, revenues and operating income for the Company’s reportable segments are discussed below. Operating income differs from net earnings in that operating income excludes certain operational expenses included in other expense (income) – net as reported. Management believes operating income to be a useful measure for investors, as it reflects the results of segment performance over which management has direct control and is used by management in its evaluation of segment performance. See “Note 9. Segment Reporting,” to our unaudited financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on the Company’s reportable segments and for the reconciliation of the Company’s operating income to net earnings, which is incorporated herein by reference.

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II- VI Laser Solutions ($ in millions)

												%
	Three Months Ended				%			Nine Months Ended				Increase
	March 31,				Increase			March 31,				(Decrease)
	2017		2016					2017		2016
Bookings	$	106.0	$	81.8		30	%	$	271.6	$	217.3		25	%
Revenues	$	83.6	$	73.8		13	%	$	244.4	$	215.6		13	%
Operating income	$	8.3	$	5.4		54	%	$	22.6	$	28.8		(22	%)

The above operating results for the three and nine months ended March 31, 2017 include the Company’s acquisitions of II-VI EpiWorks and II-VI OED. II-VI EpiWorks was acquired on February 1, 2016 and II-VI OED was acquired on March 15, 2016.

Bookings for the three months ended March 31, 2017 for II-VI Laser Solutions increased 30% to $106.0 million, compared to $81.8 million for the same period last fiscal year. Bookings for the nine months ended March 31, 2017 for II-VI Laser Solutions increased 25% to $271.6 million, compared to $217.3 million for the same period last fiscal year. Bookings included $7.3 million and $23.0 million for the three and nine month periods ended March 31, 2017, respectively, and $2.2 million for the same periods during 2016 attributed to the recent acquisitions of II-VI EpiWorks and II-VI OED. Exclusive of acquisitions, the increase in bookings for the three and nine months ended March 31, 2017 was driven by increased demand for CO₂ and one-micron laser applications and photolithography related products, including diamond product lines.

Revenues for the three months ended March 31, 2017 for II-VI Laser Solutions increased 13% to $83.6 million, compared to revenues of $73.8 million for the same period last fiscal year. Revenues for the nine months ended March 31, 2017 for II-VI Laser Solutions increased 13% to $244.4 million, compared to revenues of $215.6 million for the same period last fiscal year. Revenues included $5.5 million and $17.8 million for the three and nine months ended March 31, 2017, respectively, and $4.2 million for the same periods during 2016 attributed to the recent acquisitions of II-VI EpiWorks and II-VI OED. Exclusive of acquisitions, the increase in revenues for the three and nine month periods ended March 31, 2017 was the result of higher demand for high and low power laser optics, one-micron laser applications and semiconductor photolithography.

Operating income for the three months ended March 31, 2017 for II-VI Laser Solutions increased 54% to $8.3 million, compared to $5.4 million for the same period last fiscal year. Operating income for the nine months ended March 31, 2017 for II-VI Laser Solutions decreased 22% to $22.6 million, compared to $28.8 million for the same period last fiscal year. Operating income included $7.0 million and $12.9 million for the three and nine months ended March 31, 2017, respectively, and $4.3 million for the same periods during 2016 of operating losses attributed to the recent acquisitions of II-VI EpiWorks and II-VI OED. Exclusive of acquisitions, the increase in operating income for the three months ended March 31, 2017 was primarily driven by volume and favorable product mix. Exclusive of acquisitions, the increase in operating income for the nine months ended March 31, 2017 was primarily driven by increased revenues.

II- VI Photonics ($ in millions)

	Three Months Ended				%			Nine Months Ended				%
	March 31,				Increase			March 31,				Increase
	2017		2016					2017		2016
Bookings	$	109.5	$	103.0		6	%	$	350.2	$	265.7		32	%
Revenues	$	109.1	$	80.6		35	%	$	305.8	$	226.8		35	%
Operating income	$	15.9	$	9.6		66	%	$	45.7	$	23.3		96	%

Bookings for the three months ended March 31, 2017 for II-VI Photonics increased 6% to $109.5 million, compared to $103.0 million for the same period last fiscal year. Bookings for the nine months ended March 31, 2017 for II-VI Photonics increased 32% to $350.2 million, compared to $265.7 million for the same period last fiscal year. The increase in bookings during the three and nine month periods ended March 31, 2017 compared to the same periods last fiscal year was the result of increased orders from the ongoing Chinese broadband initiative, U.S. Metro, data center communications, and the continued investment in undersea fiber optic networks. The broadband China initiative continued to increase demand for the segment’s transport and amplification component products, particularly 980nm pumps, optical channel monitors and integrated passive components used in optical communications.

Revenues for the three months ended March 31, 2017 for II-VI Photonics increased 35% to $109.1 million, compared to $80.6 million for the same period last fiscal year. Revenues for the nine months ended March 31, 2017 for II-VI Photonics increased 35% to $305.8 million, compared to $226.8 million for the same period last fiscal year. The Company continued to realize increased revenues from

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the broadband China initiative as China continues to expand its geographical broadband networks. In addition, increased market share gains and new product introductions fueled the higher revenues during the current three and nine month periods ended March 31, 2017.

Operating income for the three months ended March 31, 2017 for II-VI Photonics increased 66% to $15.9 million, compared to $9.6 million for the same period last fiscal year. Operating income for the nine months ended March 31, 2017 for II-VI Photonics increased 96% to $45.7 million, compared to $23.3 million for the same period last fiscal year. The increase in operating income for both the three and nine month periods ended March 31, 2017 was primarily due to incremental margin realized on the higher revenue volume as well as higher margin product mix, including terrestrial and submarine 980nm pumps, and new product introductions which have higher margin profiles upon introduction to the market.

II-VI Performance Products ($ in millions)

	Three Months Ended				%			Nine Months Ended				%
	March 31,				Increase			March 31,				Increase
	2017		2016					2017		2016
Bookings	$	65.3	$	50.7		29	%	$	177.6	$	147.4		20	%
Revenues	$	52.3	$	50.7		3	%	$	148.1	$	143.4		3	%
Operating income	$	4.8	$	4.4		9	%	$	11.5	$	10.8		6	%

Bookings for the three months ended March 31, 2017 for II-VI Performance Products increased 29% to $65.3 million, compared to $50.7 million for the same period last fiscal year. Bookings for the nine months ended March 31, 2017 for II-VI Performance Products increased 20% to $177.6 million, compared to $147.4 million for the same period last fiscal year. The increase in bookings for the three and nine month periods ended March 31, 2017 were driven by increasing demand for SiC substrates for RF and power applications supporting growth in the 4G base station market, and supporting development of power device products in automotive and industrial markets.

Revenues for the three and nine months ended March 31, 2017 for II-VI Performance Products for both periods increased 3% to $52.3 million and $148.1 million, respectively, compared to $50.7 million and to $143.4 million for the same periods last fiscal year. The increase in revenues for the three and nine month periods ended March 31, 2017 was driven by continued growth in the 4G base station market which is expanding geographically. Revenue growth was also driven by increasing demand for 150mm power device products as the market enters the manufacturing phase in the transition from 100mm to 150mm SiC substrates.  

Operating income for the three months ended March 31, 2017 for II-VI Performance Products increased 9% to $4.8 million, compared to $4.4 million for the same period last fiscal year. Operating income for the nine months ended March 31, 2017 for II-VI Performance Products increased 6% to $11.5 million, compared to $10.8 million for the same period last fiscal year. The increase in operating income for the three and nine month periods ended March 31, 2017 was driven primarily by increased sales volume.

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Liquidity and Capital Resources

Historically, our primary sources of cash have been from operations and long-term borrowing. Other sources of cash include proceeds received from the exercises of stock options and sale of equity instruments and proceeds received on earnout arrangements. Our historic uses of cash have been for capital expenditures, investment in research and development, business acquisitions, payments of principal and interest on outstanding debt obligations and purchases of treasury stock. Supplemental information pertaining to our sources and uses of cash for the periods indicated is presented as follows:

Sources (uses) of Cash (millions):

	Nine Months Ended
	March 31,
	2017			2016
Net cash provided by operating activities	$	78.4		$	81.2
Additions to property, plant & equipment		(99.1	)		(32.7	)
Net borrowings on long-term borrowings		44.0			86.7
Proceeds from exercises of stock options		14.6			7.4
Payments in satisfaction of employees' minimum tax    obligations		(3.4	)		(1.9	)
Debt issuance costs		(1.4	)		-
Purchases of businesses		(0.6	)		(118.7	)
Purchases of treasury shares		-			(6.3	)
Effect of exchange rate changes on cash and cash equivalents    and other items		(3.4	)		(2.0	)

Net cash provided by operating activities:

Net cash provided by operating activities was $78.4 million for the nine months ended March 31, 2017, compared to net cash provided by operating activities of $81.2 million for the same period last fiscal year. The decrease in cash provided by operating activities was due to higher levels of accounts receivable and inventory at March 31, 2017. Additionally, higher award levels on the Company’s fiscal year 2016 bonus programs, paid in August 2016, contributed to the decrease in cash provided by operating activities.

Net cash used in investing activities:

Net cash used in investing activities was $98.0 million for the nine months ended March 31, 2017, compared to net cash used of $151.3 million for the same period last fiscal year. The net cash used in investing activities during the nine months ended March 31, 2017 consisted primarily of cash paid for capital expenditures. The increase in capital expenditures in the current fiscal period compared to the same period last year was driven by additional capital expenditures to increase the Company’s capability to produce new opto-electronic devices as it continues to accelerate its new technology investment platform. Additionally, the Company purchased certain assets of DirectPhotonics Industries GmbH, located in Berlin, Germany, for $0.6 million. The net cash used in investing activities during the nine months ended March 31, 2016 consisted primarily of $118.7 million for the acquisition of EpiWorks and ANADIGICS.

Net cash provided by (used in) financing activities:

Net cash provided by financing activities was $53.8 million for the nine months ended March 31, 2017, compared to net cash provided by financing activities of $86.0 million. During the current nine months the Company borrowed $64.0 million in long-term debt. The Company also received $14.6 million of proceeds from stock option exercises. Offsetting the increase in cash were payments made on outstanding borrowings of $20.0 million, $3.4 million of minimum tax withholding obligations on the vesting of employees’ restricted and performance shares, and $1.4 million of debt issuance costs associated with the Amended Credit Facility entered into on July 28, 2016. Net cash provided by financing activities was $86.0 million for the nine months ended March 31, 2016, was primarily composed of $86.7 million of net proceeds on borrowings, $6.3 million of treasury stock repurchases and $2.0 million minimum tax withholding obligations on the vesting of employees’ restricted and performance shares, offset by $7.4 million of proceeds from stock option exercises.

On July 28, 2016, the Company amended and restated its existing credit agreement. The Third Amended and Restated Credit Agreement (the “Amended Credit Facility”) provides for a revolving credit facility of $325 million, as well as a $100 million term loan. The term loan is being repaid in consecutive quarterly principal payments on the first business day of each January, April, July

26

and October, with the first payment having commenced on October 1, 2016, as follows: (i) twenty consecutive quarterly installments of $5 million and (ii) a final installment of all remaining principal due and payable on the maturity date of July 2021. Amounts borrowed under the revolving credit facility are due and payable on the maturity date. The Amended Credit Facility is unsecured, but is guaranteed by each existing and subsequently acquired or organized wholly-owned domestic subsidiary of the Company. The Company has the option to request an increase to the size of the revolving credit facility in an aggregate additional amount not to exceed $100 million. The Amended Credit Facility has a five-year term through July 27, 2021 and has an interest rate of either a Base Rate Option or a Euro-Rate Option, plus an Applicable Margin, as defined in the agreement governing the Amended Credit Facility. If the Base Rate option is selected for a borrowing, the Applicable Margin is 0.00% to 0.075% and if the Euro-Rate Option is selected for a borrowing, the Applicable Margin is 0.75% to 1.75%. The Applicable Margin is based on the Company’s ratio of consolidated indebtedness to consolidated EBITDA. Additionally, the Credit Facility is subject to certain covenants, including those relating to minimum interest coverage and maximum leverage ratios. As of March 31, 2017, the Company was in compliance with all financial covenants under its Amended Credit Facility.  

The Company’s Yen denominated line of credit is a 500 million Yen (approximately $4.5 million) facility. The Yen line of credit was extended in September 2015 through August 2020 on substantially the same terms. The interest rate is equal to LIBOR, as defined in the loan agreement, plus 0.625% to 1.50%. At March 31, 2017 and June 30, 2016, the Company had 300 million Yen borrowed. Additionally, the facility is subject to certain covenants, including those relating to minimum interest coverage and maximum leverage ratios. As of March 31, 2017, the Company was in compliance with all financial covenants under its Yen facility.

The Company had aggregate availability of $138.4 million and $37.7 million under its lines of credit as of March 31, 2017 and June 30, 2016, respectively. The amounts available under the Company’s lines of credit are reduced by outstanding letters of credit. As of March 31, 2017 and June 30, 2016, total outstanding letters of credit supported by the credit facilities were $1.4 million and $1.2 million, respectively.

The weighted average interest rate of total borrowings under all credit facilities was 2.3% and 1.6% for the nine months ended March 31, 2017 and 2016, respectively.

In August 2014, the Company’s Board of Directors authorized the Company to purchase up to $50 million of its issued and outstanding common stock through a share repurchase program (the “Program”) that calls for shares to be purchased in the open market or in private transactions from time to time. The Program has no expiration date and may be suspended or discontinued at any time.  Shares purchased by the Company are retained as treasury stock and available for general corporate purposes. As of March 31, 2017, the Company has purchased 1,316,587 shares of its Common Stock pursuant to the Program for approximately $19.0 million. There have been no repurchases during the current fiscal year.

The Company’s cash position, borrowing capacity and debt obligations for the periods indicated were as follows (in millions):

	March 31,		June 30,
	2017		2016
Cash and cash equivalents	$	247.6	$	218.4
Available borrowing capacity		138.4		37.7
Total debt obligation		279.7		235.9

The Company believes that cash flow from operations, existing cash reserves and available borrowing capacity will allow the Company to fund its working capital needs, capital expenditures, repayment of long-term borrowings and capital lease obligations, investments in internal research and development, share repurchases and growth objectives for the next twelve months.

The Company’s cash and cash equivalent balances are generated and held in numerous locations throughout the world, including amounts held outside the United States. As of March 31, 2017 and June 30, 2016, the Company held approximately $220 million and $177 million, respectively, of cash and cash equivalents outside of the United States. Cash balances held outside the United States could be repatriated to the United States, but, under current law, would potentially be subject to United States federal income tax, less applicable foreign tax credits. The Company has not recorded deferred income taxes related to the majority of its undistributed earnings outside of the United States, as the majority of the earnings of the Company’s foreign subsidiaries are indefinitely reinvested.

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Contractual Obligations

The following table presents information about the Company’s contractual obligations and commitments as of March 31, 2017.

Tabular-Disclosure of Contractual Obligations

	Payments Due By Period
			LessThan 1		1-3		3-5		More Than 5
Contractual Obligations	Total		Year		Years		Years		Years
($000)
Long-term debt obligations	$	279,683	$	20,000	$	40,000	$	219,683	$	-
Interest payments(1)		24,839		6,342		11,267		7,230		-
Capital lease obligations		24,746		1,057		2,313		2,622		18,754
Operating lease obligations(2)		63,614		12,631		19,363		11,307		20,313
Purchase obligations(3) (4)		38,078		33,958		4,120		-		-
Other long-term liabilities reflected on the Registrant's    balance sheet under GAAP		-		-		-		-		-
Total	$	430,960	$	73,988	$	77,063	$	240,842	$	39,067

(1) Variable rate interest obligations are based on the interest rate in place at March 31, 2017 and relate to the Credit Facility.

(2) Includes an obligation for the use of two parcels of land related to II-VI Performance Metals. The lease obligations extend through 2039 and 2061.

(3) A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on the Company and that specifies all significant terms, including fixed or minimum quantities to be purchased, minimum or variable price provisions, and the approximate timing of the transaction. These amounts are primarily composed of open purchase order commitments to vendors for the purchase of supplies and materials.

(4) Includes cash earnout opportunities based upon II-VI EpiWorks for the achievement of certain agreed upon financial and operational targets for capacity, wafer output and gross margin.  

The Company’s gross unrecognized income tax benefit at March 31, 2017 has been excluded from the table above because the Company is not currently able to reasonably estimate the amount by which the liability will increase or decrease over time. However, at this time, the Company does not expect a significant payment related to these obligations within the next year.

Pension obligations are not included in the table above. The Company expects the remaining defined benefit plan employer contributions for fiscal year 2017 to be $1.0 million. Estimated funding obligations are determined by asset performance, workforce and retiree demographics, tax and employment laws and other actuarial assumptions which may change the annual funding obligations. The funded status of our defined benefit plans is disclosed in Note 14 to the Company’s Consolidated Financial Statements.

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Item  3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISKS

The Company is exposed to market risks arising from adverse changes in foreign currency exchange rates and interest rates. In the normal course of business, the Company uses a variety of techniques and derivative financial instruments as part of its overall risk management strategy, which is primarily focused on its exposure in relation to the Japanese Yen and the Chinese Renminbi. No significant changes have occurred in the techniques and instruments used other than those described below.

Foreign Exchange Risks

In the normal course of business, the Company enters into foreign currency forward exchange contracts with its financial institutions. The purpose of these contracts is to hedge ordinary business risks regarding foreign currencies on product sales. Foreign currency exchange contracts are used to limit transactional exposure to changes in currency rates. The Company enters into foreign currency forward contracts that permit it to sell specified amounts of foreign currencies expected to be received from its export sales for pre-established U.S. dollar amounts at specified dates. The forward contracts are denominated in the same foreign currencies in which export sales are denominated. These contracts provide the Company with an economic hedge in which settlement will occur in future periods, thereby limiting the Company’s exposure. These contracts had a total notional amount of $7.9 million and $9.2 million at March 31, 2017 and June 30, 2016, respectively. The Company continually monitors its positions and the credit ratings of the parties to these contracts. While the Company may be exposed to potential losses due to risk in the event of non-performance by the counterparties to these financial instruments, it does not currently anticipate such losses.

During the month of March 2017, the Company entered into a $50.0 million forward contract that matured on March 31, 2017, to limit exposure to the Chinese Renminbi. Upon expiration of this contract, the Company recorded $0.3 million gain in the Condensed Consolidated Statement of Earnings.

A 10% change in the Yen to U.S. dollar exchange rate would have changed revenues in the range from a decrease of $1.7 million to an increase of $2.0 million for the three months ended March 31, 2017. A 10% change in the Yen to U.S. dollar exchange rate would have changed revenues in the range from a decrease of $5.1 million to an increase of $6.2 million for the nine months ended March 31, 2017.

The Company has short-term intercompany notes that are denominated in U.S. dollars with one of the Company’s European subsidiaries. A 10% change in the Euro to U.S. dollar exchange rate would have changed net earnings in the range from a decrease of $2.0 million to an increase of $2.5 million for the three months ended March 31, 2017.

For all other foreign subsidiaries, the functional currency is the applicable local currency. Assets and liabilities of those operations are translated into U.S. dollars using period-end exchange rates, while income and expenses are translated using the average exchange rates for the reporting period. Translation adjustments are recorded as accumulated other comprehensive income within shareholders’ equity.

Interest Rate Risks

As of March 31, 2017, the Company’s total outstanding borrowings of $279.7 million were from a line of credit of $2.7 million denominated in Japanese Yen, borrowings under a term loan of $90.0 million under the Company’s Credit Facility denominated in U.S. dollars and a line of credit borrowing of $187.0 million under the Company’s Credit Facility denominated in U.S. dollars. As such, the Company is exposed to market risks arising from changes in interest rates. An increase in the interest rate of these borrowings of 1% would have resulted in additional interest expense of $0.4 million and $1.3 million for the three and nine months ended March 31, 2017, respectively.

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Item  4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s President and Chief Executive Officer, and the Company’s Chief Financial Officer and Treasurer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. The Company’s disclosure controls were designed to provide reasonable assurance that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, the controls have been designed to provide reasonable assurance of achieving the controls’ stated goals. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control over Financial Reporting

No changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) were implemented during the Company’s most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Part II – Other Information

Item 1. LEGAL PROCEEDINGS

The Company and its subsidiaries are involved from time to time in various claims, lawsuits, and regulatory proceedings incidental to its business. The resolution of each of these matters is subject to various uncertainties, and it is possible that these matters may be resolved unfavorably to the Company. Management believes, after consulting with legal counsel, that the ultimate liabilities, if any, resulting from these legal and regulatory proceedings will not materially affect the Company’s financial condition, liquidity or results of operation.

Item 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2016, which could materially affect our business, financial condition or future results. Those risk factors are not the only risks facing the Company. Additional risks and uncertainties not currently known or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. ISSUER PURCHASES OF EQUITY SECURITIES

The following table sets forth repurchases of our common stock during the quarter ended March 31, 2017:

						Total Number of		Dollar Value of
						Shares Purchased		Shares That May
						as Part of Publicly		Yet be Purchased
	Total Number of			Average Price Paid		AnnouncedPlans or		Under the Plan or
Period	Shares Purchased			Per Share		Programs		Program
January 1, 2017 to January 31, 2017		-		$	-		-	$	30,906,904
February 1, 2017 to February 28, 2017		126	(a)	$	36.60		-	$	30,906,904
March 1, 2017 to March 31, 2017		31,873	(b)	$	35.50		-	$	30,906,904
Total		31,999		$	35.50		-

(a) Includes 126 shares of our Common Stock transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted or performance stock awards.

(b) Includes 31,873 shares of our Common Stock transferred to the Company from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted or performance stock awards and deferred compensation plan distributions.

30

Item 6. EXHIBITS

Exhibit Number	Description of Exhibit	Reference
10.01	Consulting Agreement, dated June 30, 2016, between II-VI Incorporated and Carl J. Johnson	Filed herewith.
31.01	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
31.02	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
32.01	Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith.
32.02	Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith.
101	Interactive Data File	Filed herewith.

The Registrant will furnish to the Commission upon request copies of any instruments not filed herewith that authorize the issuance of long-term obligations of the Registrant not in excess of 10% of the Registrants total assets on a consolidated basis.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	II-VI INCORPORATED
	(Registrant)
Date: May 2, 2017	By:	/s/    Vincent D. Mattera, Jr.
		Vincent D. Mattera, Jr
		President and Chief Executive Officer
Date: May 2, 2017	By:	/s/    Mary Jane Raymond
		Mary Jane Raymond
		Chief Financial Officer and Treasurer

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EXHIBIT INDEX

Exhibit Number	Description of Exhibit	Reference
10.01	Consulting Agreement, dated June 30, 2016, between II-VI Incorporated and Carl J. Johnson	Filed herewith.
31.01	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
31.02	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith.
32.01	Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith.
32.02	Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith.
101	Interactive Data File	Filed herewith.

The Registrant will furnish to the Commission upon request copies of any instruments not filed herewith that authorize the issuance of long-term obligations of the Registrant not in excess of 10% of the Registrants total assets on a consolidated basis.

33

EX-10.01

Exhibit 10.01

CONSULTING AGREEMENT

THIS AGREEMENT made and entered into this 30th day of June, 2016 by and between II-VI INCORPORATED, a Pennsylvania corporation, having a principal place of business at 375 Saxonburg Boulevard, Saxonburg, Butler County, Pennsylvania 16056, hereinafter referred to as “II-VI”, and Carl J. Johnson, with a street address of 18 Windsor Ridge, Frisco, Texas 75034, hereinafter referred to as the “Consultant.”

WITNESSETH:

WHEREAS, II-VI desires to retain the services of Consultant, and Consultant is willing to be retained as a consultant and independent contractor to II-VI, upon the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, and intending to be legally bound hereby, the parties agrees as follows:

1.Consulting Services.II-VI

(a)II-VI hereby retains the Consultant, and the Consultant hereby agrees, to perform consulting services for II-VI in accordance with the description, schedule, milestones, and/or deadlines set forth on Schedule A attached hereto and made a part hereof (the “Consulting Services”) on the terms and conditions set forth herein. During the Term (as defined below), the Consultant shall be required to devote such time in rending services as shall be mutually agreeable to II-VI and the Consultant.

(b)Consultant hereby agrees (i) to comply at all times with all applicable laws and policies of II-VI in connection with the performance of the Consulting Services and (ii) to perform the Consulting Services in a good, timely, efficient, professional, diligent and workmanlike manner.

(c)Consultant shall furnish and submit intermediate reports to II-VI in such form, timing and number as may be reasonably requested by II-VI and shall make such final reports as may be reasonably requested by II-VI concerning the work and services performed under this Agreement.

2.Term. The term (“Term”) of this Agreement shall commence on the date hereof and shall

continue until June 30, 2018 provided, however, that either party may terminate this Agreement on 30 days prior written notice.

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3.Compensation.

(a)During the Term, II-VI shall pay the Consultant a retainer fee of $12,500.00 per quarter and a consulting fee of $2,500.00 per day or $1,250.00 per half day (the “Consulting Fee), payable as set forth in Section 3(b) below. During the Term, II-VI shall also reimburse the Consultant for all reasonable and necessary expenses incurred by the Consultant in performing the Consulting Services, on the same basis as executives of II-VI and in accordance with II-VI’s policies in effect from time to time. Consultant will not be entitled to compensation for any work not expressly described on Schedule A or authorized by II-VI in writing. Except as provided for in this Section 3(a), Consultant shall not be entitled to any other compensation for Consulting Services.

(b)Consultant will invoice II-VI on a monthly basis detailing the Consulting Services performed by Consultant, the compensation due for such Consulting Services and any expenses incurred by the Consultant pursuant to this Agreement. Payment on satisfactory invoices shall be made within a reasonable time after receipt by II-VI.

4.Independent Contractor Status. Consultant shall be an independent contractor and Consultant acknowledges, and confirms to II-VI, Consultant’s status as that of an independent contractor. Nothing herein shall be deemed or construed to create a joint venture, partnership, agency, or employee/employer relationship between the parties for any purpose, including but not limited to taxes or employee benefits. Consultant will be solely responsible for payment of any and all taxes and insurance, including without limitation medical insurance. Consultant will submit to II-VI upon request evidence of compliance with the provisions of this paragraph in a form and manner satisfactory to II-VI.

5.No Power to Act on Behalf of II-VI. Consultant shall not have any right, power or authority to create any obligation, express or implied, or make any representation on behalf of II-VI except as Consultant may be expressly authorized in advance in writing from time to time by II-VI and then only to the extent of such authorization.

6.Confidential Information.

(a)The Consultant acknowledges that while rendering the Consulting Services the Consultant will occupy a position of trust and confidence. The Consultant in the performance of the Consulting Services may have access to and become familiar with “Confidential Information,” as defined below. Both during the Term of this Agreement and thereafter, Consultant covenants and agrees that Consultant (a) shall exercise utmost diligence to protect and safeguard the Confidential Information; (b) shall not disclose to any third party any such Confidential Information, except as may be required in the course of Consultant’s performance of the Consulting Services and authorized by II-VI in writing; and (c) shall not use, directly or indirectly, for Consultant’s own benefit or for the benefit of another, any such Confidential Information. Consultant acknowledges that Confidential Information has been and will be developed and

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acquired by II-VI by means of substantial expense and effort, that the Confidential Information is a valuable proprietary asset of II-VI’s business, and that its disclosure would cause substantial and irreparable injury to II-VI’s business.

(b)“Confidential Information” means all information of a confidential or proprietary nature, whether or not specifically labeled or identified as “confidential,” in any form or medium, that is or was disclosed to, or developed or learned by, Consultant in connection with Consultant’s past, present or future involvement with II-VI and that relates to the business, products, services, research or development of II-VI or any of its subsidiaries, affiliates or its suppliers, distributors or customers. Confidential Information includes but is not limited to the following: (i) internal business information (including, but not limited to, information relating to strategic plans and practices, business, training, marketing, promotional and sales plans and practices, cost, rate and pricing structures, accounting and business methods); (ii) identities of, individual requirements of, specific contractual arrangements with, and information about, any of II-VI’s or any of its subsidiaries, affiliates, suppliers, distributors and customers and their confidential information; (iii) trade secrets, know-how, compilations of data and analyses, techniques, systems, formulae, research, records, reports, manuals, documentation, models, data and data bases relating thereto or other information or thing that has economic value, actual or potential, from not being generally known to or not being readily ascertainable by proper means by other persons; and (iv) inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable). Confidential Information shall not include information that Consultant can demonstrate: (a) is publicly known through no wrongful act or breach of obligation of confidentiality; or (b) was rightfully received by Consultant from a third party without a breach of any obligation of confidentiality by such third party.

(c)In any judicial proceeding, it will be presumed that the Confidential Information constitutes protectable trade secrets and the Consultant will bear the burden of proving that any Confidential Information is publicly or rightfully known by the Consultant. All Confidential Information and equipment relating to the business of Il-VI shall not be removed from the premises of II-VI under any circumstances whatsoever without the prior written consent of II-VI.

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7.Work Product.

(a)All Work Product shall be made for hire by the Consultant for II-VI or any of its subsidiaries or affiliates and will be the sole and exclusive property of II-VI. “Work Product” means all ideas, discoveries, inventions, innovations, improvements, developments, methods, processes, designs, analyses, drawings, reports and all similar or related information, whether or not patentable or reduced to practice or comprising Confidential Information, and any copyrightable work, trade mark, trade secret or other intellectual property rights, whether or not comprising Confidential Information, and any other form of Confidential Information, any of which relate to II-VI or any of its affiliates or subsidiaries actual or anticipated business, research and development or existing or future products or services and which:

(i)were or are conceived, reduced to practice, contributed to or developed or made by Consultant, whether alone or jointly with others and whether on premises or elsewhere within the scope of the Consultant’s duties hereunder;

(ii)relates to the business and operation of II-VI or any subsidiary or affiliate, including but not limited to any product, service, or other item which would be in competition with the products or services offered by Il-VI or any subsidiary or affiliate or which is related to products or services of Il-VI or any subsidiary or affiliate, whether presently existing, under development, or under active consideration; or

(iii)was, in whole or in part, the result of the Consultant’s use of II-VI’s resources, including without limitation personnel, computers, equipment, facilities, Confidential Information or otherwise.

(b)Consultant will disclose promptly to Il-VI any and all Work Product and, upon request by II-VI, will reduce such disclosure to a detailed writing. During the Term of this Agreement and after termination of this Agreement, if Il-VI should then so request, the Consultant agrees to assign and does hereby assign to II-VIall rights in the Work Product. The Consultant agrees to execute and deliver to II-VI any instruments II-VI deems necessary to vest in Il-VI the sole title to and all exclusive rights in the Work Product. The Consultant agrees to execute and deliver to II-VI all proper papers for use in applying for, obtaining, maintaining, amending and enforcing any legal protections as II-V1 may desire. The Consultant further agrees to assist fully 11-V1 or its nominees in the preparation and prosecution of any litigation connected with the Work Product. The Consultant’s obligations and covenants in this Section will be binding upon the Consultant’s heirs, legal representatives, successors and assigns.

(c)If II-VI is unable because of Consultant’s mental or physical incapacity or for any other reason (including, but without limitation, Consultant’s refusal to do so after request therefore is made by II-V1) to secure Consultant’s signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Work Product belonging to or assigned to II-VI pursuant

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to this Agreement, then Consultant hereby irrevocably designates and appoints II-VI and its duly authorized officers and agents as Consultant’s agent and attorney-in-fact to act for and in Consultant’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents or copyright registrations thereon with the same legal force and effect as if executed by Consultant. Consultant agrees not to apply for or pursue any application for any United States or foreign patents or copyright registrations covering any Work Product other than pursuant to this paragraph in circumstances where such patents or copyright registrations are or have been or are required to be assigned to II-VI.

8.Nonsolicitation of Customers. The Consultant covenants and agrees that, within United States of America, Canada, Japan, Germany, Switzerland or Italy (the “Restricted Territory”), at no time during the Term of this Agreement or for a period of two (2) years immediately following the termination of this Agreement for any reason (the “Restricted Period”) will the Consultant, for itself, or on behalf of any other person, firm, partnership, corporation, company or other entity, call upon any customers or distributor of II-VI for the purpose of soliciting, selling, or both, to any of said customers or distributors, any services or products directly related to those provided and/or produced by II-V1; nor will the Consultant, in any way directly or indirectly, for itself or on behalf of or in conjunction with any other person, firm, partnership, corporation, company or any other entity, solicit, divert, or take away any such customers or distributors of II-VI during the Restricted Period for any reason.

9.Nonsolicitation of Employees. The Consultant covenants and agrees that at no time during the Restricted Period for any reason, will the Consultant, for itself, or on behalf of any other person, persons, firm, partnership, corporation, company or other entity hire any person who is employed by II-VI or has been employed by II-VI within one (1) year of such termination date.

10.Covenant not to Compete. The Consultant covenants and agrees that during the Restricted Period for any reason, the Consultant will not, in or with respect to the Restricted Territory, enter into or engage generally in direct or indirect competition with II-VI in the business of infrared, electronic with the exception forSilicon Carbide Epitaxial materials ,or electro-optic materials, optics, components and detectors, whether as an individual, or as a partner or joint venturer, or as an employee or agent for any person or entity, or as a five percent (5%) or more investor, officer, director, shareholder or otherwise of a corporation or other entity.

The Consultant agrees to notify II-VI in the event that the Consultant enters into any contract or agreement to provide consulting services of any type during the Restricted Period.

For purposes of Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 18, 20 and 23 of this Agreement, any reference to II-VI shall mean and include II-VI and any entity controlled by II-VI.

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11.Prior Relationships.

(a)The Consultant agrees that it will not, during the Term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any person or entity with which or whom the Consultant has an agreement or duty to keep in confidence, and that the Consultant will not bring onto the premises of II-VI any unpublished document or proprietary information belonging to any other person or entity unless consented to in writing by II-VI and such person or entity.

(b)The Consultant represents that the Consultant has attached hereto a copy of any agreement which presently affects Consultant’s compliance with the terms of this present agreement. (Such copy must specify the other contracting party or employer, the date of such agreement, and the date of termination of any agreement.) IF THERE ARE NO SUCH AGREEMENTS TO BE ATTACHED, CONSULTANT INITIAL HERE

12.Return of Property. The Consultant agrees, upon the termination of this Agreement for any reason whatsoever, to return to an officer of II-VI all Confidential Information and other equipment, records, copies of records, papers and other work product pertaining to the Consulting Services. In the event the Consultant shall fail to comply with the provisions of this Section 12, or in the event the Consultant shall otherwise violate this Agreement, the Consultant shall forfeit all claims to unpaid Consulting Fees without affecting the right of II-VI to compel the return of the Confidential Information.

13.Nondisparagement. The Consultant agrees not to make any disparaging statements that reflect negatively on the reputation or good name of II-VI.

14.Compliance.

(a)During the course of performing the Consulting Services, Consultant may be exposed to items (e.g. products, technology, technical data, drawings, software, and equipment) that are subject to export control laws and regulations, including the U.S. International Traffic in Arms Regulations and the U.S. Export Administration Regulations (collectively, the “Export Control  Laws”). Consultant shall not export or transfer, directly or indirectly, any items that are subject to the Export Control Laws in violation of the Export Control Laws and without the express prior written consent of II-VI.

(b)Consultant shall comply with the Anti-Corruption Laws (defined below) and shall not cause II-VI to be in violation of any Anti-Corruption Laws. “Anti-Corruption Laws” mean collectively: (i) the U.S. Foreign Corrupt Practices Act; (ii) any applicable legislation or regulation implementing the Organization for Economic Cooperation and Development Convention Against Bribery of Foreign Public Officials in International Business Transactions; and (iii) all other applicable laws, regulations, orders, judicial decisions, conventions and international financial institution rules regarding domestic or international corruption, bribery, ethical business conduct, money

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laundering, political contributions, gifts and gratuities, or lawful expenses to public officials and private persons, agency relationships, commissions, lobbying, books and records, and financial controls. Specifically, Consultant will not, directly or indirectly, pay, promise or offer to pay, or authorize the payment of, any money or give any promise or offer to give, or authorize the giving of anything of value, to a public official or entity for purposes of corruptly obtaining or retaining business for or with, or directing business to, any person, including, without limitation, II-VI.

(c)Consultant shall comply with all applicable II-VI policies and procedures, sign such acknowledgements as may be reasonably requested by II-VI, and participate in training provided by II-VI as directed by II-VI.

15.Indemnification. Consultant shall indemnify and hold II-VI, its directors, officers, shareholders, business partners, employees and agents, harmless from and against any claims, demands, loss, damage or expense (i) related to bodily injury or death of any person or damage to property resulting from the negligent or willful acts or omissions of Consultant, (ii) resulting from any claim that Consultant is not an independent contractor, (iii) incurred by II-VI based on any claim that Consultant’s use of any skill, knowledge or materials in the scope of this Agreement is a breach of contract to which the Consultant is a party or infringes on any copyright, trade secret or other proprietary right of any third party, or (iv) resulting from a breach by Consultant of the representations and covenants set forth herein.

16.Entire Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the Consulting Services and contains all of the covenants and agreements between the parties with respect to the matters contained herein. No alterations, amendments, changes or additions to this Agreement will be binding upon either the Consultant or II-VI unless in writing and signed by both parties. No waiver of any right arising under this Agreement made by either party will be valid unless set forth in writing signed by both parties.

17.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.

18.Successors and Assigns. The Consultant may not assign or transfer this Agreement or any rights or obligations hereunder without the prior written consent of II-VI. II-VI may assign its rights under this Agreement to any affiliate, subsidiary or parent of II-VI or to any corporation or entity acquiring all or substantially all of the assets of II-VI or to any other corporation or entity into which II-VI may be liquidated, merged, or consolidated.

19.Arbitration. All disputes arising under this Agreement or with respect to its interpretation or enforcement not otherwise resolved by the parties shall be decided by arbitration, except that the parties shall adjudicate any controversy or claim arising out of or relating to the noncompetition, nonsolicitation and confidentiality provisions of this Agreement. The arbitration shall be held in the City of Pittsburgh, Pennsylvania for

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determination by the American Arbitration Association in accordance with its then existing rules pertaining thereto using one arbitrator. The decision of the arbitrator shall be final and binding upon all parties and judgment upon the award may be entered in any Court having jurisdiction thereof. Filing fees and other costs assessed by the American Arbitration Association shall initially be shared between and paid equally by the parties provided that the non-prevailing party in such arbitration, within thirty (30) days following a final determination of such arbitration, shall reimburse the prevailing party for any such fees and costs previously advanced by the prevailing party to the extent so awarded by the arbitrator.

20.Relief.

(a)It is agreed by the parties hereto that any violation by Consultant of any of the noncompetition, nonsolicitation or confidentiality covenants contained herein would cause immediate, material and irreparable harm to II-VI which may not adequately be compensated for by money damages and, therefore, II-VI shall be entitled to injunctive relief (including, without limitation, one or more preliminary injunctions and/or ex parte restraining orders) in addition to, and not in derogation of, any other remedies provided by law, in equity or otherwise for such a violation including, but not limited to, the right to have such covenants specifically enforced by any court of competent jurisdiction and the right to require Consultant to account for and pay over to II-VI all benefits derived or received by Consultant as a result of any such breach of covenant together with interest thereon, from the date of such initial violation until such sums are received by II-VI. Any person against whom such action or proceeding is brought hereby waives the claim or defense that the party seeking injunctive relief has an adequate remedy at law, and such person shall not argue in any action or proceeding the claim or defense that such remedy at law exists. Any Restricted Period set forth herein shall be extended by any period of time in which the Consultant is in breach of this Agreement and for any period of time which may be necessary to secure an Order of Court or injunction, either temporary or permanent, to enforce any provision of this Agreement

(b)Consultant acknowledges and agrees that the periods of restriction and geographical areas of restriction imposed by the noncompetition, nonsolicitation and confidentiality covenants of this Agreement are fair and reasonably required for the protection of II-VI. In the event that, and if for any reason, any portion of this Agreement shall be held to be invalid or unenforceable, it is agreed that the remaining covenants and restrictions or portions thereof shall remain in full force and effect, and that if the validity or unenforceability is due to the unreasonableness of the time or geographical area covered by said covenants and restrictions, said covenants and restrictions of this Agreement shall nevertheless be effective for such period of time and for such area as may be determined to be reasonable by a Court of competent jurisdiction.

(c)In addition to and not in derogation of any other remedies provided for in this Agreement, upon Consultant’s material breach of any of the noncompetition, nonsolicitation and confidentiality provisions contained in this Agreement, II-VI’s

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obligations, if any, to continue to make payments to Consultant shall terminate and any notes or other instruments evidencing such obligations including, without limitation, payments of compensation or other benefits, under this Agreement or otherwise, shall terminate and become null and void. Consultant acknowledges and agrees that II-VI shall not be responsible for fees and expenses incurred by Consultant in defending any suit brought by II-VI under this Section, notwithstanding statutory or decisional law to the contrary.

21.Waiver. The rights and remedies herein specified are cumulative and, except as otherwise herein provided, are not exclusive of any rights or remedies which any party hereto would otherwise have.

22.Notice. All notices of other communication which are required or permitted hereunder shall be in writing and sufficient if delivered personally, or sent by registered or certified mail, postage prepaid, or by overnight carrier at the address set forth in the heading of this Agreement.

23.Employees and Contractors of Consultant. The Consultant represents and warrants that all employees and independent contractors of Consultant performing Consulting Services pursuant to this Agreement or having access to Confidential Information have executed confidentiality and nondisclosure agreements and have properly assigned any rights they may have in any Work Product to the Consultant or II-VI. Upon request of II-VI, the Consultant shall provide evidence of such agreements to II-VI prior to the employees or independent contractors performing Consulting Services.

24.Binding Agreement: Survival. This Agreement is binding upon the parties hereto and their respective heirs, personal representatives, successors and assigns. The Consultant agrees that the obligations of Sections 4 through and including 23 of this Agreement will survive the termination of this Agreement

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Schedule A

Consulting Services:

Consulting services will be provided in the following areas and the expected Outcome(s) will be defined as each engagement or thrust is initiated. The overall intent is to have access to Carl Johnson’s services for approximately 30 to 45 days (240 hours to 360 hours) for any given 12 month period. This will vary by need and agreement. The areas of focus will be:

1)In the Photonics Segment;

2)With IRD&E Analytics;

3)With Advanced Materials Group (previously AMDC); and

4)In other agreeable areas that the COO, President or CEO identifies from time to time.

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IN WITNESS WHEREOF, the parties hereto intending to be legally bound have set their hands arid seals the day and year first above written.

ATTEST:			II-VI INCORPORATED:
/s/ Marlene L. Acre			By:	/s/ David G. Wagner
Name:	Marlene L. Acre		Name:	David G. Wagner
Title:	Director, HR		Title:	VP, HR
ATTEST/WITNESS:			CONSULTANT:
/s/ Anna Do			/s/ Carl J. Johnson
Name:	Anna Do		Name:	Carl J. Johnson
Title (if applicable)		Staff Accountant	Title (if applicable)		Consultant

Revised June 27, 2016)

Note:

An executed copy of this agreement must be forwarded w Michelle Freehling for the Corporate file. Please contact Michelle at Ext. 55259 if you have any questions.

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EX-31.01

Exhibit 31.01

CERTIFICATIONS

I, Vincent D. Mattera, Jr. certify that:

1. I have reviewed this quarterly report on Form 10-Q of II-VI Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 2, 2017	By:	/s/     Vincent D. Mattera, Jr.
		Vincent D. Mattera, Jr.
		President and Chief Executive Officer

EX-31.02

Exhibit 31.02

CERTIFICATIONS

I, Mary Jane Raymond, certify that:

1. I have reviewed this quarterly report on Form 10-Q of II-VI Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 2, 2017	By:	/s/    Mary Jane Raymond
		Mary Jane Raymond
		Chief Financial Officer and Treasurer

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of II-VI Incorporated (the “Corporation”) on Form 10-Q for the period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Corporation certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: May 2, 2017	By:	/s/      Vincent D. Mattera, Jr.
		Vincent D. Mattera, Jr.
		President and Chief Executive Officer

* This certification is made solely for purposes of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

EX-32.02

Exhibit 32.02

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of II-VI Incorporated (the “Corporation”) on Form 10-Q for the period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Corporation certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to her knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: May 2, 2017	By:	/s/    Mary Jane Raymond
		Mary Jane Raymond
		Chief Financial Officer and Treasurer

* This certification is made solely for purposes of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

XML

Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2017	Apr. 27, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	IIVI
Entity Registrant Name	II-VI INC
Entity Central Index Key	0000820318
Current Fiscal Year End Date	--06-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		63,128,756

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Current Assets
Cash and cash equivalents	$ 247,581	$ 218,445
Accounts receivable - less allowance for doubtful accounts of $1,340 at March 31, 2017 and $2,016 at June 30, 2016	173,564	164,817
Inventories	191,802	175,133
Prepaid and refundable income taxes	5,389	6,535
Prepaid and other current assets	20,485	18,033
Total Current Assets	638,821	582,963
Property, plant & equipment, net	335,752	242,857
Goodwill	232,513	233,755
Other intangible assets, net	114,840	124,590
Investment	12,007	11,354
Deferred income taxes	5,940	7,848
Other assets	7,775	8,614
Total Assets	1,347,648	1,211,981
Current Liabilities
Current portion of long-term debt	20,000	20,000
Accounts payable	66,909	53,796
Accrued compensation and benefits	45,740	59,012
Accrued income taxes payable	10,364	12,588
Other accrued liabilities	23,029	25,846
Total Current Liabilities	166,042	171,242
Long-term debt	258,101	215,307
Capital lease obligation	23,689
Deferred income taxes	12,990	11,103
Other liabilities	33,930	31,991
Total Liabilities	494,752	429,643
Shareholders' Equity
Preferred stock, no par value; authorized - 5,000,000 shares; none issued
Common stock, no par value; authorized - 300,000,000 shares; issued - 73,996,491 shares at March 31, 2017; 72,840,257 shares at June 30, 2016	262,247	243,812
Accumulated other comprehensive income (loss)	(25,999)	(14,017)
Retained earnings	715,415	652,788
Shareholders' equity excluding treasury stock	951,663	882,583
Treasury stock, at cost - 10,928,083 shares at March 31, 2017 and 10,965,925 shares at June 30, 2016	(98,767)	(100,245)
Total Shareholders' Equity	852,896	782,338
Total Liabilities and Shareholders' Equity	$ 1,347,648	$ 1,211,981

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Statement Of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 1,340	$ 2,016
Preferred stock, par value
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	73,996,491	72,840,257
Treasury stock, shares	10,928,083	10,965,925

XML

Condensed Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Revenues
Domestic	$ 80,940	$ 74,884	$ 224,474	$ 219,812
International	164,047	130,221	473,855	365,934
Total Revenues	244,987	205,105	698,329	585,746
Costs, Expenses and Other Expense (Income)
Cost of goods sold	147,277	127,436	418,754	365,544
Internal research and development	25,380	14,946	70,844	40,252
Selling, general and administrative	43,291	43,333	128,865	117,051
Interest expense	1,936	769	4,547	2,015
Other expense (income), net	(2,164)	1,257	(9,611)	(794)
Total Costs, Expenses & Other Expense (Income)	215,720	187,741	613,399	524,068
Earnings Before Income Taxes	29,267	17,364	84,930	61,678
Income Taxes	6,837	2,426	22,303	10,535
Net Earnings	$ 22,430	$ 14,938	$ 62,627	$ 51,143
Basic Earnings Per Share	$ 0.36	$ 0.24	$ 1.00	$ 0.83
Diluted Earnings Per Share	$ 0.35	$ 0.24	$ 0.97	$ 0.81

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Statement Of Income And Comprehensive Income [Abstract]
Net earnings	$ 22,430	$ 14,938	$ 62,627	$ 51,143
Other comprehensive income (loss):
Foreign currency translation adjustments	3,002	4,553	(12,145)	(9,009)
Pension adjustment, net of taxes of ($40) and $45 for the three and nine months ended March 31, 2017, respectively, and ($5) and $9 for the three and nine months ended March 31, 2016, respectively	(149)	(17)	163	32
Comprehensive income	$ 25,283	$ 19,474	$ 50,645	$ 42,166

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Statement Of Income And Comprehensive Income [Abstract]
Pension adjustment tax	$ (40)	$ (5)	$ 45	$ 9

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash Flows from Operating Activities
Net earnings	$ 62,627	$ 51,143
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	35,190	32,613
Amortization	9,532	9,172
Share-based compensation expense	8,695	8,516
(Gains) losses on foreign currency remeasurements and transactions	(3,633)	586
Earnings from equity investment	(654)	(653)
Deferred income taxes (benefit)	248	(1,193)
Excess tax benefits from share-based compensation expense		(96)
Increase (decrease) in cash excluding the effect of the purchase of acquisitions from changes in:
Accounts receivable	(8,220)	(4,548)
Inventories	(20,273)	(8,950)
Accounts payable	7,610	(337)
Income taxes	2,958	(2,628)
Accrued compensation and benefits	(12,387)	6,471
Other operating net assets	(3,321)	(8,860)
Net cash provided by operating activities	78,372	81,236
Cash Flows from Investing Activities
Additions to property, plant & equipment	(99,135)	(32,743)
Purchases of businesses	(580)	(118,657)
Other investing activities	1,707	92
Net cash used in investing activities	(98,008)	(151,308)
Cash Flows from Financing Activities
Proceeds from borrowings	64,000	125,200
Payments on borrowings	(20,000)	(38,500)
Proceeds from exercises of stock options	14,625	7,444
Payments in satisfaction of employees' minimum tax obligations	(3,407)	(1,983)
Debt issuance costs	(1,384)
Purchases of treasury stock		(6,284)
Other financing activities		96
Net cash provided by financing activities	53,834	85,973
Effect of exchange rate changes on cash and cash equivalents	(5,062)	(2,162)
Net increase in cash and cash equivalents	29,136	13,739
Cash and Cash Equivalents at Beginning of Period	218,445	173,634
Cash and Cash Equivalents at End of Period	247,581	187,373
Cash paid for interest	3,937	1,859
Cash paid for income taxes	16,852	13,378
Non-cash transactions:
Capital lease obligation incurred on facility lease	25,000
Additions to property, plant & equipment included in accounts payable	$ 6,521
Purchase of business utilizing earnout consideration recorded in other current liabilities		2,000
Purchase of business utilizing earnout consideration recorded in long-term liabilities		$ 4,000

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Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 9 months ended Mar. 31, 2017 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Treasury Stock
Beginning Balance at Jun. 30, 2016	$ 782,338	$ 243,812	$ (14,017)	$ 652,788	$ (100,245)
Beginning Balance, shares at Jun. 30, 2016		72,840			(10,966)
Shares issued under share-based compensation plans	11,218	$ 14,625			$ (3,407)
Shares issued under share-based compensation plans (in shares)		1,119			(137)
Net earnings	62,627			62,627
Treasury stock under deferred compensation arrangements		$ (4,885)			$ 4,885
Treasury stock under deferred compensation arrangements, (in shares)		37			175
Foreign currency translation adjustments	(12,145)		(12,145)
Share-based compensation expense	8,695	$ 8,695
Pension adjustment, net of taxes of $45	163		163
Ending Balance at Mar. 31, 2017	$ 852,896	$ 262,247	$ (25,999)	$ 715,415	$ (98,767)
Ending Balance, shares at Mar. 31, 2017		73,996			(10,928)

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Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Statement Of Stockholders Equity [Abstract]
Pension adjustment tax	$ (40)	$ (5)	$ 45	$ 9

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Basis of Presentation

9 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation

Note  1. Basis of Presentation

The condensed consolidated financial statements of II-VI Incorporated (“II-VI” or the “Company”) for the three and nine months ended March 31, 2017 and 2016 are unaudited. In the opinion of management, all adjustments considered necessary for a fair presentation for the periods presented have been included. All adjustments are of a normal recurring nature unless disclosed otherwise. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016. The consolidated results of operations for the three and nine months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full fiscal year. The June 30, 2016 Condensed Consolidated Balance Sheet information was derived from the Company’s audited financial statements.

During the quarter ended December 31, 2016, the Company purchased certain assets, mainly inventory and fixed assets, of DirectPhotonics Industries GmbH located in Berlin, Germany for approximately$0.6 million. This business was combined with the Company’s II-VI HIGHYAG division in the II-VI Laser Solutions segment. Due to the insignificant amount of the acquisition purchase price, certain business combinations disclosures typically required under U.S. GAAP have been omitted.

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Recent Accounting Pronouncements

9 Months Ended

Mar. 31, 2017

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Recent Accounting Pronouncements

Note  2. Recent Accounting Pronouncements

Adopted Pronouncements

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.  This ASU requires entities to present debt issuance costs in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability, consistent with debt discounts. The Company adopted ASU 2015-03, as clarified by ASU 2015-15, which did not have a material impact on the Company’s Consolidated Financial Statements other than corresponding reductions to total assets and total liabilities on the Condensed Consolidated Balance Sheets. Prior to adoption, the Company recorded deferred financing costs as Other assets on the Consolidated Balance Sheets. Upon adoption, the Company reclassified these costs as unamortized debt issuance costs that reduce long term debt on the Consolidated Balance Sheets and retrospectively reclassified $0.6 million that were previously presented as deferred financing costs, an asset on the Consolidated Balance Sheets as of June 30, 2016. There was no effect on the Consolidated Statements of Earnings as a result of the adoption.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. This update requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements.

In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance about whether a cloud computing arrangement includes a software license. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This update affects reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements.

Pronouncements Currently Under Evaluation

In March 2017, the FASB issued ASU 2017-07, Consolidation (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This update affects Employers’ presentation of defined benefit retirement plan costs. Early adoption is permitted. The standard will be effective for the Company’s 2019 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In February 2017, the FASB issued ASU 2017-05, Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial assets. This update provides clarification on the scope and application of the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. Early adoption is permitted but only as of fiscal years beginning after December 15, 2016. The standard will be effective for the Company’s 2019 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business. This update changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Early adoption is permitted. The standard will be effective for the Company’s 2020 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. This standard removes the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit were needed to measure the goodwill impairment. Under this updated standard, goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The Company will adopt this for any impairment test performed after July 1, 2017 as permitted under the standard.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This update requires that when intra-entity asset transfers occur, the entity must recognize tax effects in the period in which the transfer occurs. The standard will be effective for The Company’s 2019 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in the update provide guidance on eight specific cash flow issues. The update will be effective for the Company’s 2019 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update is intended to provide financial statement users with more decision-useful information about expected credit losses and other commitments to extend credit held by the reporting entity. The standard replaces the incurred loss impairment methodology in current GAAP with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The update will be effective for the Company’s 2021 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This update simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, and classification in the statement of cash flows. The standard will be effective for the Company’s 2018 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. This update eliminates the requirement to retrospectively apply the equity method in previous periods when an investor obtains significant influence over an investee. The standard will be effective for the Company’s 2018 fiscal year. Early adoption is permitted. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires that a lessee recognize leased assets with terms greater than 12 months on the balance sheet for the rights and obligations created by those leases. The standard will be effective for the Company’s 2020 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and measurement of Financial Assets and Financial Liabilities (Topic 825). This update requires that public entities measure equity investments with readily determinable fair values, at fair value, with changes in their fair value recorded through net income. This ASU also clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. The standard will be effective for the Company’s 2018 fiscal year. The Company is evaluating the impact on the Company’s Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This update simplifies the measurement of inventory valuation at the lower of cost or net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new inventory measurement requirements will be effective for the Company’s 2018 fiscal year and will replace the current inventory valuation guidance that requires the use of a lower of cost or market framework. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern. This update provides U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The adoption of this standard is effective as of June 30, 2017. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09: Revenue from Contracts with Customers (Topic 606) which supersedes virtually all existing revenue recognition guidance under U.S. GAAP. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update allows for the use of either the retrospective or modified retrospective approach of adoption. On July 9, 2015 the FASB approved a one year deferral of the effective date of the update. The update will be effective for the Company’s 2019 fiscal year. In May 2016, the FASB issued an amendment which did not change the core principles of the guidance in Topic 606. Rather, the amendments in this update affect only narrow aspects of Topic 606. We have not yet selected a transition method and are currently evaluating the impact that this guidance, along with the subsequent updates and clarifications, will have on the Company’s Consolidated Financial Statements.

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Inventories

9 Months Ended

Mar. 31, 2017

Inventory Disclosure [Abstract]

Inventories

Note  3. Inventories

The components of inventories were as follows ($000):

	March 31,		June 30,
	2017		2016
Raw materials	$	76,215	$	70,623
Work in progress		65,059		57,566
Finished goods		50,528		46,944
	$	191,802	$	175,133

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Property, Plant and Equipment

9 Months Ended

Mar. 31, 2017

Property Plant And Equipment [Abstract]

Property, Plant and Equipment

Note  4. Property, Plant and Equipment

Property, plant and equipment consists of the following ($000):

	March 31,			June 30,
	2017			2016
Land and improvements	$	4,604		$	4,990
Buildings and improvements		131,542			110,219
Machinery and equipment		448,643			409,551
Construction in progress		97,674			34,602
		682,463			559,362
Less accumulated depreciation		(346,711	)		(316,505	)
	$	335,752		$	242,857

During the quarter ending March 31, 2017, the Company sold its manufacturing facility located in Newport Ritchey, Florida. The Company received $1.7 million, net of customary closing costs and a $0.3 million reserve held in escrow for environmental purposes. The gain on sale of $0.3 million was recorded in other expense (income), net in the Condensed Consolidated Statement of Earnings.

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Goodwill and Other Intangible Assets

9 Months Ended

Mar. 31, 2017

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Note  5. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill were as follows ($000):

	Nine Months Ended March 31, 2017
	II-VI Laser			II-VI			II- VI Performance
	Solutions			Photonics			Products		Total
Balance-beginning of period	$	84,105		$	96,760		$	52,890	$	233,755
Foreign currency translation		(100	)		(1,142	)		-		(1,242	)
Balance-end of period	$	84,005		$	95,618		$	52,890	$	232,513

Note 1 of the Notes to the Consolidated Financial Statements in the Company’s most recent Annual Report on Form 10-K describes the significant accounting policies and methods used in the preparation of the Company’s Consolidated Financial Statements. Management has evaluated goodwill for indicators of impairment and has concluded that there are no indicators of impairment as of March 31, 2017.

The gross carrying amount and accumulated amortization of the Company’s intangible assets other than goodwill as of March 31, 2017 and June 30, 2016 were as follows ($000):

	March 31, 2017							June 30, 2016
	Gross					Net		Gross					Net
	Carrying		Accumulated			Book		Carrying		Accumulated			Book
	Amount		Amortization			Value		Amount		Amortization			Value
Technology and Patents	$	53,994	$	(26,010	)	$	27,984	$	54,344	$	(22,724	)	$	31,620
Trademarks		15,749		(1,308	)		14,441		15,869		(1,209	)		14,660
Customer Lists		111,807		(39,448	)		72,359		112,141		(33,912	)		78,229
Other		1,569		(1,513	)		56		1,571		(1,490	)		81
Total	$	183,119	$	(68,279	)	$	114,840	$	183,925	$	(59,335	)	$	124,590

Amortization expense recorded on the Company’s intangible assets was $3.1 million and $9.5 million for the three and nine months ended March 31, 2017, respectively, and was $3.2 million and $9.2 million for the three and nine months ended March 31, 2016, respectively. Technology and patents are being amortized over a range of 60 to 240 months, with a weighted average remaining life of approximately 94 months. Customer lists are being amortized over a range of approximately 120 to 240 months with a weighted average remaining life of approximately 137 months. The gross carrying amount of trademarks includes $14.0 million of acquired trade names with indefinite lives that are not amortized but tested annually for impairment or more frequently if a triggering event occurs. Included in the gross carrying amount and accumulated amortization of the Company’s intangible assets is the effect of foreign currency translation on that portion of the intangible assets relating to the Company’s German and Chinese subsidiaries.

At March 31, 2017, the estimated amortization expense for existing intangible assets for each of the five succeeding fiscal years is as follows ($000):

Fiscal Year Ending June 30,	Amount
Remaining 2017	$	3,156
2018		12,108
2019		11,789
2020		10,981
2021		10,125

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Debt

9 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Debt

Note  6. Debt

The components of debt for the periods indicated were as follows ($000):

	March 31,			June 30,
	2017			2016
Line of credit, interest at LIBOR, as defined, plus 1.5%	$	187,000		$	188,000
Term loan, interest at LIBOR, as defined, plus 1.5%		90,000			45,000
Yen denominated line of credit, interest at LIBOR, as    defined, plus 0.625%		2,683			2,917
Total debt		279,683			235,917
Current portion of long-term debt		(20,000	)		(20,000	)
Unamortized debt issuance costs		(1,582	)		(610	)
Long-term debt, less current portion	$	258,101		$	215,307

On July 28, 2016, the Company amended and restated its existing credit agreement. The Third Amended and Restated Credit Agreement (the “Amended Credit Facility”) provides for a revolving credit facility of $325 million, as well as a $100 million term loan. The term loan is being repaid in consecutive quarterly principal payments on the first business day of each January, April, July and October, with the first payment having commenced on October 1, 2016, as follows: (i) twenty consecutive quarterly installments of $5 million and (ii) a final installment of all remaining principal due and payable on the maturity date of July 27, 2021. Amounts borrowed under the revolving credit facility are due and payable on the maturity date. The Amended Credit Facility is unsecured, but is guaranteed by each existing and subsequently acquired or organized wholly-owned domestic subsidiary of the Company. The Company has the option to request an increase to the size of the revolving credit facility in an aggregate additional amount not to exceed $100 million. The Amended Credit Facility has a five-year term through July 27, 2021 and has an interest rate of either a Base Rate Option or a Euro-Rate Option, plus an Applicable Margin, as defined in the agreement governing the Amended Credit Facility. If the Base Rate option is selected for a borrowing, the Applicable Margin is 0.00% to 0.075% and if the Euro-Rate Option is selected for a borrowing, the Applicable Margin is 0.75% to 1.75%. The Applicable Margin is based on the Company’s ratio of consolidated indebtedness to consolidated EBITDA. Additionally, the Credit Facility is subject to certain covenants, including those relating to minimum interest coverage and maximum leverage ratios. As of March 31, 2017, the Company was in compliance with all financial covenants under its Amended Credit Facility.

The Company’s Yen denominated line of credit is a 500 million Yen (approximately $4.5 million) facility. The Yen line of credit matures in August 2020. The interest rate is equal to LIBOR, as defined in the loan agreement, plus 0.625% to 1.50%. At March 31, 2017 and June 30, 2016, the Company had 300 million Yen borrowed. Additionally, the facility is subject to certain covenants, including those relating to minimum interest coverage and maximum leverage ratios. As of March 31, 2017, the Company was in compliance with all financial covenants under its Yen facility.

The Company had aggregate availability of $138.4 million and $37.7 million under its lines of credit as of March 31, 2017 and June 30, 2016, respectively. The amounts available under the Company’s lines of credit are reduced by outstanding letters of credit. As of March 31, 2017 and June 30, 2016, total outstanding letters of credit supported by these credit facilities were $1.4 million and $1.2 million, respectively.

The weighted average interest rate of total borrowings was 2.3% and 1.6% for the nine months ended March 31, 2017 and 2016, respectively.

Remaining annual principal payments under the Company’s existing credit facilities as of March 31, 2017 were as follows:

					U.S.
					Dollar
	Term		Yen Line		Line of
Period	Loan		of Credit		Credit		Total
Year 1	$	20,000	$	-	$	-	$	20,000
Year 2		20,000		-		-		20,000
Year 3		20,000		-		-		20,000
Year 4		20,000		2,683		-		22,683
Year 5		10,000		-		187,000		197,000
Total	$	90,000	$	2,683	$	187,000	$	279,683

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Income Taxes

9 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Note  7. Income Taxes

The Company’s year-to-date effective income tax rate at March 31, 2017 and 2016 was 26.3% and 17.1%, respectively. The variations between the Company’s effective tax rate and the U.S. statutory rate of 35% were primarily due to the consolidation of the Company’s foreign operations, which are subject to income taxes at lower statutory rates.  

U.S. GAAP clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As of March 31, 2017 and June 30, 2016, the Company’s gross unrecognized income tax benefit was $6.6 million and $5.6 million, respectively. The Company has classified the uncertain tax positions as noncurrent income tax liabilities, as the amounts are not expected to be paid within one year. If recognized, $0.5 million of the gross unrecognized tax benefits at March 31, 2017 would impact the effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions in the income tax provision on the Condensed Consolidated Statements of Earnings. The amount of accrued interest and penalties included in the gross unrecognized income tax benefit was $0.2 million and $0.1 million at March 31, 2017 and June 30, 2016, respectively. Fiscal years 2014 to 2017 remain open to examination by the United States Internal Revenue Service, fiscal years 2012 to 2017 remain open to examination by certain state jurisdictions, and fiscal years 2006 to 2017 remain open to examination by certain foreign taxing jurisdictions. The Company’s income tax returns are not currently under examination. The Company believes its income tax reserves for these tax matters are adequate.

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Earnings Per Share

9 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share

Note  8. Earnings Per Share

The following table sets forth the computation of earnings per share for the periods indicated. Weighted average shares issuable upon the exercises of stock options and the release of performance and restricted shares are not included in the calculation because they were anti-dilutive and totaled approximately 36,000 and 163,000 for the three and nine months ended March 31, 2017, respectively, and 109,000 and 178,000 for the three and nine months ended March 31, 2016, respectively ($000 except per share data):

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2017		2016		2017		2016
Net earnings	$	22,430	$	14,938	$	62,627	$	51,143
Divided by:
Weighted average shares		62,807		61,369		62,403		61,252
Basic earnings per common share	$	0.36	$	0.24	$	1.00	$	0.83
Net earnings	$	22,430	$	14,938	$	62,627	$	51,143
Divided by:
Weighted average shares		62,807		61,369		62,403		61,252
Dilutive effect of common stock equivalents		2,203		1,684		1,930		1,566
Diluted weighted average common shares		65,010		63,053		64,333		62,818
Diluted earnings per common share	$	0.35	$	0.24	$	0.97	$	0.81

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Segment Reporting

9 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Reporting

Note  9. 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 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 before income taxes, interest and other income or expense. Inter-segment sales and transfers are eliminated.

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

	Three Months Ended March 31, 2017
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	83,648	$	109,099	$	52,240	$	-		$	244,987
Inter-segment revenues		9,661		3,450		2,713		(15,824	)		-
Operating income		8,337		15,898		4,804		-			29,039
Interest expense		-		-		-		-			(1,936	)
Other income (expense), net		-		-		-		-			2,164
Income taxes		-		-		-		-			(6,837	)
Net earnings		-		-		-		-			22,430
Depreciation and amortization		5,713		5,029		4,182		-			14,924
Segment assets		556,238		496,068		295,342		-			1,347,648
Expenditures for property, plant & equipment		23,299		8,727		9,287		-			41,313
Investment		-		-		12,007		-			12,007

	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
Expenditures for property, plant & equipment		7,156		4,160		2,271		-			13,587

	Nine Months Ended March 31, 2017
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	244,421	$	305,824	$	148,084	$	-		$	698,329
Inter-segment revenues		24,361		10,049		7,091		(41,501	)		-
Operating income		22,628		45,689		11,549		-			79,866
Interest expense		-		-		-		-			(4,547	)
Other income (expense), net		-		-		-		-			9,611
Income taxes		-		-		-		-			(22,303	)
Net earnings		-		-		-		-			62,627
Depreciation and amortization		17,025		14,853		12,844		-			44,722
Expenditures for property, plant & equipment		59,161		21,224		18,750		-			99,135

	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 & equipment		16,511		10,783		5,449		-			32,743

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Share-Based Compensation

9 Months Ended

Mar. 31, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation

Note 10. Share-Based Compensation

The Board of Directors adopted the II-VI Incorporated Amended and Restated 2012 Omnibus Incentive Plan (the “Plan”), which was approved by the Company’s shareholders. The Plan provides for the grant of performance-based cash incentive awards, non-qualified stock options, stock appreciation rights, restricted share awards, restricted share units, deferred share awards, performance share awards and performance share units to employees, officers and directors of the Company. The maximum number of shares of the Company’s common stock authorized for issuance under the Plan is limited to 4,900,000 shares of common stock, not including any remaining shares forfeited under the predecessor plans that may be rolled into the Plan. The Company records share-based compensation expense for these awards in accordance with U.S. GAAP, which requires the recognition of grant-date fair value of share-based compensation in net earnings and over the requisite service period of the individual grantees, which generally equals the vesting period.  The Company accounts for cash-based stock appreciation rights, cash-based restricted share unit awards and cash-based performance share unit awards as liability awards, in accordance with applicable accounting standards.

Share-based compensation expense is allocated approximately 20% to cost of goods sold and 80% to selling, general and administrative expense, based on the employee classification of the grantees. Share-based compensation expense for the periods indicated was as follows ($000):

	Three Months Ended				Nine Months Ended
March 31,		2017		2016		2017		2016
Stock Options and Cash-Based Stock Appreciation Rights	$	1,565	$	755	$	4,659	$	3,892
Restricted Share Awards and Cash-Based Restricted Share Unit Awards		1,890		991		5,450		3,776
Performance Share Awards and Cash-Based Performance    Share Unit Awards		1,110		762		2,438		2,438
	$	4,565	$	2,508	$	12,547	$	10,106

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Fair Value of Financial Instruments

9 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Fair Value of Financial Instruments

Note  11. Fair Value of Financial Instruments

The FASB defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous markets for the asset and liability in an orderly transaction between market participants at the measurement date. The Company estimates fair value of its financial instruments utilizing an established three-level hierarchy in accordance with U.S. GAAP. The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date as follows:

•	Level 1 –	Valuation is based upon unadjusted quoted prices for identical assets or liabilities in active markets.
•	Level 2 –	Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments.
•	Level 3 –	Valuation is based upon other unobservable inputs that are significant to the fair value measurements.

The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement. At March 31, 2017, the Company had foreign currency forward contracts recorded at fair value. The fair values of these instruments were measured using valuations based upon quoted prices for similar assets and liabilities in active markets (Level 2) and are valued by reference to similar financial instruments, adjusted for credit risk, restrictions and other terms specific to the contracts. Foreign currency loss related to these contracts was $1.1 million for the three months ended March 31, 2017, and foreign currency gain of $0.2 million for the nine months ended March 31, 2017. The Company had a contingent earnout arrangement related to the acquisition of EpiWorks recorded at fair value. The EpiWorks earnout arrangement provides up to a maximum of $6.0 million of additional cash payments based upon EpiWorks achieving certain agreed upon financial and operational targets for capacity, wafer output and gross margin, which if earned would be payable for the achievement of each specific target over the next three years. The fair value of the contingent earnout arrangement was measured using valuations based upon other unobservable inputs that are significant to the fair value measurement (Level 3).  

The following table provides a summary by level of the fair value of financial instruments that are measured on a recurring basis for the periods presented ($000):

	Fair Value Measurements at March 31, 2017 Using:
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	March 31, 2017		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Foreign currency forward contracts	$	135	$	-	$	135	$	-
Contingent earnout arrangement	$	5,545	$	-	$	-	$	5,545

	Fair Value Measurements at June 30, 2016 Using:
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	June 30, 2016		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Foreign currency forward contracts	$	511	$	-	$	511	$	-
Contingent earnout arrangement	$	4,352	$	-	$	-	$	4,352

The Company’s policy is to report transfers into and out of Levels 1 and 2 of the fair value hierarchy at fair values as of the beginning of the period in which the transfers occur. There were no transfers in and out of Levels 1 and 2 of the fair value hierarchy during the three and nine months ended March 31, 2017.

The following table presents a reconciliation of the beginning and ending fair value measurements of the Company’s level 3 contingent earnout arrangement related to the acquisition of EpiWorks ($000):

	Significant
	Unobservable Inputs
	(Level 3)
Balance at July 1, 2016	$	4,352
Payments		-
Changes in fair value		1,193
Balance at March 31, 2017	$	5,545

The change in fair value of $1.2 million was recorded in other expense (income), net in the Condensed Consolidated Statement of Earnings.

The fair values of cash and cash equivalents are considered Level 1 among the fair value hierarchy and approximate fair value because of the short-term maturity of those instruments. The Company’s borrowings including its capital lease obligation are considered Level 2 among the fair value hierarchy and are variable interest rates and accordingly their carrying amounts approximate fair value.

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Derivative Instruments

9 Months Ended

Mar. 31, 2017

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments

Note 12. Derivative Instruments

The Company, from time to time, purchases foreign currency forward exchange contracts, primarily in Japanese Yen, that permit it to sell specified amounts of these foreign currencies expected to be received from its export sales for pre-established U.S. dollar amounts at specified dates. The Company enters into these contracts to limit transactional exposure to changes in currency exchange rates of export sales transactions in which settlement will occur in future periods and which otherwise would expose the Company, on the basis of its aggregate net cash flows in respective currencies, to foreign currency risk.

The Company has recorded the fair market value of these contracts in the Company’s Condensed Consolidated Financial Statements. These contracts had a total notional amount of $7.9 million and $9.2 million at March 31, 2017 and June 30, 2016, respectively. As of March 31, 2017, these forward contracts had expiration dates ranging from April 2017 through July 2017, with Japanese Yen denominations individually ranging from 100 million Yen to 400 million Yen. The Company does not account for these contracts as hedges as defined by U.S. GAAP, and records the change in the fair value of these contracts in Other expense (income), net in the Condensed Consolidated Statements of Earnings as they occur. The fair value measurement takes into consideration foreign currency rates and the current creditworthiness of the counterparties to these contracts, as applicable, and is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments and thus represents a Level 2 measurement. These contracts are recorded in Other accrued liabilities as of as of March 31, 2017 and June 30, 2016 in the Company’s Condensed Consolidated Balance Sheets. The fair value of these contracts decreased $1.3 million and increased $0.4 million for the three and nine months ended March 31, 2017, respectively.

During the month of March 2017, the Company entered into a $50.0 million forward contract that matured on March 31, 2017 to limit exposure to the Chinese Renminbi. Upon expiration of this contract, the Company recorded a $0.3 million gain in the Condensed Consolidated Statement of Earnings.

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Commitments and Contingencies

9 Months Ended

Mar. 31, 2017

Guarantees [Abstract]

Commitments and Contingencies

Note  13. Commitments and Contingencies

The Company records a warranty reserve as a charge against earnings based on a percentage of sales utilizing actual warranty claims over the last twelve months. The following table summarizes the change in the carrying value of the Company’s warranty reserve, which is a component of Other accrued liabilities in the Company’s Condensed Consolidated Balance Sheets ($000):

Nine Months Ended March 31, 2017	Amount
Balance-beginning of period	$	3,908
Payments made during the period		(3,184	)
Additional warranty liability recorded during the period		3,286
Balance-end of period	$	4,010

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Post-Retirement Benefits

9 Months Ended

Mar. 31, 2017

Compensation And Retirement Disclosure [Abstract]

Post-Retirement Benefits

Note 14. Post-Retirement Benefits

The Company has a pension plan (the “Swiss Plan”) covering employees of the Zurich, Switzerland subsidiary. Net periodic pension costs associated with the Swiss Plan included the following ($000):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2017			2016			2017			2016
Service cost	$	874		$	658		$	2,642		$	1,978
Interest cost		39			107			117			321
Expected return on plan assets		(176	)		(269	)		(532	)		(810	)
Net amortization		(189	)		(22	)		208			41
Net periodic pension costs	$	548		$	474		$	2,435		$	1,530

The Company contributed $0.8 million and $2.6 million to the Swiss Plan during the three and nine months ended March 31, 2017, respectively, and $0.5 million and $1.5 million during the three and nine months ended March 31, 2016, respectively. The Company currently anticipates contributing an additional estimated amount of approximately $1.0 million to the Swiss Plan during the remainder of fiscal year 2017.

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Share Repurchase Program

9 Months Ended

Mar. 31, 2017

Equity [Abstract]

Share Repurchase Program

Note  15. Share Repurchase Program

In August 2014, the Company’s Board of Directors authorized the Company to purchase up to $50 million of its Common Stock through a share repurchase program (the “Program”) that calls for shares to be purchased in the open market or in private transactions from time to time. The Program has no expiration and may be suspended or discontinued at any time.  Shares purchased by the Company are retained as treasury stock and available for general corporate purposes. As of March 31, 2017, the Company has purchased 1,316,587 shares of its Common Stock pursuant to the Program for approximately $19.0 million.

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Mar. 31, 2017

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Note 16. Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (“AOCI") by component, net of tax, for the nine months ended March 31, 2017 were as follows ($000):

	Foreign						Total
	Currency			Defined			AccumulatedOther
	Translation			Benefit			Comprehensive
	Adjustment			Pension Plan			Income (Loss)
AOCI - June 30, 2016	$	(6,185	)	$	(7,832	)	$	(14,017	)
Other comprehensive loss before reclassifications		(12,145	)		-			(12,145	)
Amounts reclassified from AOCI		-			163			163
Net  current-period other comprehensive income (loss)		(12,145	)		163			(11,982	)
AOCI - March 31, 2017	$	(18,330	)	$	(7,669	)	$	(25,999	)

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Capital Lease

9 Months Ended

Mar. 31, 2017

Leases [Abstract]

Capital Lease

Note 17. Capital Lease

During the quarter ended December 31, 2016, the Company’s OptoElectronic Devices subsidiary entered into a capital lease related to a building in Warren, New Jersey. The following table shows the future minimum lease payments due under the non-cancelable capital lease ($000):

Fiscal Year Ending June 30,	Amount
2017 (remaining)	$	645
2018		2,579
2019		2,579
2020		2,579
2021		2,579
Thereafter		27,082
Total minimum lease payments	$	38,043
Less amount representing interest		13,297
Present value of capitalized payments	$	24,746
Less: current portion		1,057
Long-term portion	$	23,689

The current and long-term portion of the capital lease obligation was recorded in Other accrued liabilities and Capital lease obligation, respectively, in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2017. The present value of capitalized payments of $25.0 million was recorded in Property, Plant & Equipment, net, in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2017, with associated depreciation being recorded over the 15 year life of the lease.

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Recent Accounting Pronouncements (Policies)

9 Months Ended

Mar. 31, 2017

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Recent Accounting Pronouncements

Adopted Pronouncements

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.  This ASU requires entities to present debt issuance costs in the balance sheet as a direct deduction from the carrying amount of the corresponding debt liability, consistent with debt discounts. The Company adopted ASU 2015-03, as clarified by ASU 2015-15, which did not have a material impact on the Company’s Consolidated Financial Statements other than corresponding reductions to total assets and total liabilities on the Condensed Consolidated Balance Sheets. Prior to adoption, the Company recorded deferred financing costs as Other assets on the Consolidated Balance Sheets. Upon adoption, the Company reclassified these costs as unamortized debt issuance costs that reduce long term debt on the Consolidated Balance Sheets and retrospectively reclassified $0.6 million that were previously presented as deferred financing costs, an asset on the Consolidated Balance Sheets as of June 30, 2016. There was no effect on the Consolidated Statements of Earnings as a result of the adoption.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. This update requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements.

In April 2015, the FASB issued ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. This update provides guidance about whether a cloud computing arrangement includes a software license. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This update affects reporting organizations that are required to evaluate whether they should consolidate certain legal entities. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements.

Pronouncements Currently Under Evaluation

In March 2017, the FASB issued ASU 2017-07, Consolidation (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This update affects Employers’ presentation of defined benefit retirement plan costs. Early adoption is permitted. The standard will be effective for the Company’s 2019 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In February 2017, the FASB issued ASU 2017-05, Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial assets. This update provides clarification on the scope and application of the sale or transfer of nonfinancial assets and in substance nonfinancial assets to noncustomers, including partial sales. Early adoption is permitted but only as of fiscal years beginning after December 15, 2016. The standard will be effective for the Company’s 2019 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business. This update changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Early adoption is permitted. The standard will be effective for the Company’s 2020 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. This standard removes the second step of the goodwill impairment test, where a determination of the fair value of individual assets and liabilities of a reporting unit were needed to measure the goodwill impairment. Under this updated standard, goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The Company will adopt this for any impairment test performed after July 1, 2017 as permitted under the standard.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This update requires that when intra-entity asset transfers occur, the entity must recognize tax effects in the period in which the transfer occurs. The standard will be effective for The Company’s 2019 fiscal year. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in the update provide guidance on eight specific cash flow issues. The update will be effective for the Company’s 2019 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update is intended to provide financial statement users with more decision-useful information about expected credit losses and other commitments to extend credit held by the reporting entity. The standard replaces the incurred loss impairment methodology in current GAAP with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The update will be effective for the Company’s 2021 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This update simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, and classification in the statement of cash flows. The standard will be effective for the Company’s 2018 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. This update eliminates the requirement to retrospectively apply the equity method in previous periods when an investor obtains significant influence over an investee. The standard will be effective for the Company’s 2018 fiscal year. Early adoption is permitted. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires that a lessee recognize leased assets with terms greater than 12 months on the balance sheet for the rights and obligations created by those leases. The standard will be effective for the Company’s 2020 fiscal year. Early adoption is permitted. The Company is evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and measurement of Financial Assets and Financial Liabilities (Topic 825). This update requires that public entities measure equity investments with readily determinable fair values, at fair value, with changes in their fair value recorded through net income. This ASU also clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. The standard will be effective for the Company’s 2018 fiscal year. The Company is evaluating the impact on the Company’s Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This update simplifies the measurement of inventory valuation at the lower of cost or net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new inventory measurement requirements will be effective for the Company’s 2018 fiscal year and will replace the current inventory valuation guidance that requires the use of a lower of cost or market framework. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern. This update provides U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. The adoption of this standard is effective as of June 30, 2017. The adoption of this ASU is not expected to have a material effect on the Company’s Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09: Revenue from Contracts with Customers (Topic 606) which supersedes virtually all existing revenue recognition guidance under U.S. GAAP. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The update allows for the use of either the retrospective or modified retrospective approach of adoption. On July 9, 2015 the FASB approved a one year deferral of the effective date of the update. The update will be effective for the Company’s 2019 fiscal year. In May 2016, the FASB issued an amendment which did not change the core principles of the guidance in Topic 606. Rather, the amendments in this update affect only narrow aspects of Topic 606. We have not yet selected a transition method and are currently evaluating the impact that this guidance, along with the subsequent updates and clarifications, will have on the Company’s Consolidated Financial Statements.

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Inventories (Tables)

9 Months Ended

Mar. 31, 2017

Inventory Disclosure [Abstract]

Components of Inventories

The components of inventories were as follows ($000):

	March 31,		June 30,
	2017		2016
Raw materials	$	76,215	$	70,623
Work in progress		65,059		57,566
Finished goods		50,528		46,944
	$	191,802	$	175,133

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Property, Plant and Equipment (Tables)

9 Months Ended

Mar. 31, 2017

Property Plant And Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment consists of the following ($000):

	March 31,			June 30,
	2017			2016
Land and improvements	$	4,604		$	4,990
Buildings and improvements		131,542			110,219
Machinery and equipment		448,643			409,551
Construction in progress		97,674			34,602
		682,463			559,362
Less accumulated depreciation		(346,711	)		(316,505	)
	$	335,752		$	242,857

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Mar. 31, 2017

Goodwill And Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill

Changes in the carrying amount of goodwill were as follows ($000):

	Nine Months Ended March 31, 2017
	II-VI Laser			II-VI			II- VI Performance
	Solutions			Photonics			Products		Total
Balance-beginning of period	$	84,105		$	96,760		$	52,890	$	233,755
Foreign currency translation		(100	)		(1,142	)		-		(1,242	)
Balance-end of period	$	84,005		$	95,618		$	52,890	$	232,513

Gross Carrying Amount and Accumulated Amortization of Intangible Assets Other Than Goodwill

The gross carrying amount and accumulated amortization of the Company’s intangible assets other than goodwill as of March 31, 2017 and June 30, 2016 were as follows ($000):

	March 31, 2017							June 30, 2016
	Gross					Net		Gross					Net
	Carrying		Accumulated			Book		Carrying		Accumulated			Book
	Amount		Amortization			Value		Amount		Amortization			Value
Technology and Patents	$	53,994	$	(26,010	)	$	27,984	$	54,344	$	(22,724	)	$	31,620
Trademarks		15,749		(1,308	)		14,441		15,869		(1,209	)		14,660
Customer Lists		111,807		(39,448	)		72,359		112,141		(33,912	)		78,229
Other		1,569		(1,513	)		56		1,571		(1,490	)		81
Total	$	183,119	$	(68,279	)	$	114,840	$	183,925	$	(59,335	)	$	124,590

Estimated Amortization Expense for Existing Intangible Assets for Each of Five Succeeding Fiscal Years

At March 31, 2017, the estimated amortization expense for existing intangible assets for each of the five succeeding fiscal years is as follows ($000):

Fiscal Year Ending June 30,	Amount
Remaining 2017	$	3,156
2018		12,108
2019		11,789
2020		10,981
2021		10,125

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Debt (Tables)

9 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Components of Debt

The components of debt for the periods indicated were as follows ($000):

	March 31,			June 30,
	2017			2016
Line of credit, interest at LIBOR, as defined, plus 1.5%	$	187,000		$	188,000
Term loan, interest at LIBOR, as defined, plus 1.5%		90,000			45,000
Yen denominated line of credit, interest at LIBOR, as    defined, plus 0.625%		2,683			2,917
Total debt		279,683			235,917
Current portion of long-term debt		(20,000	)		(20,000	)
Unamortized debt issuance costs		(1,582	)		(610	)
Long-term debt, less current portion	$	258,101		$	215,307

Remaining Annual Amounts of Principal Payments

Remaining annual principal payments under the Company’s existing credit facilities as of March 31, 2017 were as follows:

					U.S.
					Dollar
	Term		Yen Line		Line of
Period	Loan		of Credit		Credit		Total
Year 1	$	20,000	$	-	$	-	$	20,000
Year 2		20,000		-		-		20,000
Year 3		20,000		-		-		20,000
Year 4		20,000		2,683		-		22,683
Year 5		10,000		-		187,000		197,000
Total	$	90,000	$	2,683	$	187,000	$	279,683

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Earnings Per Share (Tables)

9 Months Ended

Mar. 31, 2017

Earnings Per Share [Abstract]

Computation of Earnings Per Share

The following table sets forth the computation of earnings per share for the periods indicated. Weighted average shares issuable upon the exercises of stock options and the release of performance and restricted shares are not included in the calculation because they were anti-dilutive and totaled approximately 36,000 and 163,000 for the three and nine months ended March 31, 2017, respectively, and 109,000 and 178,000 for the three and nine months ended March 31, 2016, respectively ($000 except per share data):

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2017		2016		2017		2016
Net earnings	$	22,430	$	14,938	$	62,627	$	51,143
Divided by:
Weighted average shares		62,807		61,369		62,403		61,252
Basic earnings per common share	$	0.36	$	0.24	$	1.00	$	0.83
Net earnings	$	22,430	$	14,938	$	62,627	$	51,143
Divided by:
Weighted average shares		62,807		61,369		62,403		61,252
Dilutive effect of common stock equivalents		2,203		1,684		1,930		1,566
Diluted weighted average common shares		65,010		63,053		64,333		62,818
Diluted earnings per common share	$	0.35	$	0.24	$	0.97	$	0.81

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Segment Reporting (Tables)

9 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Financial Information of Company's Operation by Segment

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

	Three Months Ended March 31, 2017
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	83,648	$	109,099	$	52,240	$	-		$	244,987
Inter-segment revenues		9,661		3,450		2,713		(15,824	)		-
Operating income		8,337		15,898		4,804		-			29,039
Interest expense		-		-		-		-			(1,936	)
Other income (expense), net		-		-		-		-			2,164
Income taxes		-		-		-		-			(6,837	)
Net earnings		-		-		-		-			22,430
Depreciation and amortization		5,713		5,029		4,182		-			14,924
Segment assets		556,238		496,068		295,342		-			1,347,648
Expenditures for property, plant & equipment		23,299		8,727		9,287		-			41,313
Investment		-		-		12,007		-			12,007

	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
Expenditures for property, plant & equipment		7,156		4,160		2,271		-			13,587

	Nine Months Ended March 31, 2017
	II-VI				II-VI
	Laser		II-VI		Performance
	Solutions		Photonics		Products		Eliminations			Total
Revenues	$	244,421	$	305,824	$	148,084	$	-		$	698,329
Inter-segment revenues		24,361		10,049		7,091		(41,501	)		-
Operating income		22,628		45,689		11,549		-			79,866
Interest expense		-		-		-		-			(4,547	)
Other income (expense), net		-		-		-		-			9,611
Income taxes		-		-		-		-			(22,303	)
Net earnings		-		-		-		-			62,627
Depreciation and amortization		17,025		14,853		12,844		-			44,722
Expenditures for property, plant & equipment		59,161		21,224		18,750		-			99,135

	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 & equipment		16,511		10,783		5,449		-			32,743

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Share-Based Compensation (Tables)

9 Months Ended

Mar. 31, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation Expense by Award Type

Share-based compensation expense is allocated approximately 20% to cost of goods sold and 80% to selling, general and administrative expense, based on the employee classification of the grantees. Share-based compensation expense for the periods indicated was as follows ($000):

	Three Months Ended				Nine Months Ended
March 31,		2017		2016		2017		2016
Stock Options and Cash-Based Stock Appreciation Rights	$	1,565	$	755	$	4,659	$	3,892
Restricted Share Awards and Cash-Based Restricted Share Unit Awards		1,890		991		5,450		3,776
Performance Share Awards and Cash-Based Performance    Share Unit Awards		1,110		762		2,438		2,438
	$	4,565	$	2,508	$	12,547	$	10,106

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Mar. 31, 2017

Summary by Level of Fair Value of Financial Instruments Measured on Recurring Basis

The following table provides a summary by level of the fair value of financial instruments that are measured on a recurring basis for the periods presented ($000):

	Fair Value Measurements at March 31, 2017 Using:
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	March 31, 2017		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Foreign currency forward contracts	$	135	$	-	$	135	$	-
Contingent earnout arrangement	$	5,545	$	-	$	-	$	5,545

	Fair Value Measurements at June 30, 2016 Using:
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	June 30, 2016		(Level 1)		(Level 2)		(Level 3)
Liabilities:
Foreign currency forward contracts	$	511	$	-	$	511	$	-
Contingent earnout arrangement	$	4,352	$	-	$	-	$	4,352

EpiWorks

Reconciliation of Beginning and Ending Fair Value Measurements of Level Three Contingent Earnout Arrangement Related to Acquisition

The following table presents a reconciliation of the beginning and ending fair value measurements of the Company’s level 3 contingent earnout arrangement related to the acquisition of EpiWorks ($000):

	Significant
	Unobservable Inputs
	(Level 3)
Balance at July 1, 2016	$	4,352
Payments		-
Changes in fair value		1,193
Balance at March 31, 2017	$	5,545

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Commitments and Contingencies (Tables)

9 Months Ended

Mar. 31, 2017

Guarantees [Abstract]

Change in Carrying Value of Company's Warranty Reserve

The following table summarizes the change in the carrying value of the Company’s warranty reserve, which is a component of Other accrued liabilities in the Company’s Condensed Consolidated Balance Sheets ($000):

Nine Months Ended March 31, 2017	Amount
Balance-beginning of period	$	3,908
Payments made during the period		(3,184	)
Additional warranty liability recorded during the period		3,286
Balance-end of period	$	4,010

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Post-Retirement Benefits (Tables)

9 Months Ended

Mar. 31, 2017

Compensation And Retirement Disclosure [Abstract]

Schedule of Net Periodic Pension Costs

Net periodic pension costs associated with the Swiss Plan included the following ($000):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2017			2016			2017			2016
Service cost	$	874		$	658		$	2,642		$	1,978
Interest cost		39			107			117			321
Expected return on plan assets		(176	)		(269	)		(532	)		(810	)
Net amortization		(189	)		(22	)		208			41
Net periodic pension costs	$	548		$	474		$	2,435		$	1,530

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Mar. 31, 2017

Equity [Abstract]

Changes in Accumulated Other Comprehensive Income ("AOCI") by Component, Net of Tax

The changes in accumulated other comprehensive income (“AOCI") by component, net of tax, for the nine months ended March 31, 2017 were as follows ($000):

	Foreign						Total
	Currency			Defined			AccumulatedOther
	Translation			Benefit			Comprehensive
	Adjustment			Pension Plan			Income (Loss)
AOCI - June 30, 2016	$	(6,185	)	$	(7,832	)	$	(14,017	)
Other comprehensive loss before reclassifications		(12,145	)		-			(12,145	)
Amounts reclassified from AOCI		-			163			163
Net  current-period other comprehensive income (loss)		(12,145	)		163			(11,982	)
AOCI - March 31, 2017	$	(18,330	)	$	(7,669	)	$	(25,999	)

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Capital Lease (Tables)

9 Months Ended

Mar. 31, 2017

Leases [Abstract]

Schedule of Future Minimum Lease Payments Due Under Non-Cancelable Capital Lease

The following table shows the future minimum lease payments due under the non-cancelable capital lease ($000):

Fiscal Year Ending June 30,	Amount
2017 (remaining)	$	645
2018		2,579
2019		2,579
2020		2,579
2021		2,579
Thereafter		27,082
Total minimum lease payments	$	38,043
Less amount representing interest		13,297
Present value of capitalized payments	$	24,746
Less: current portion		1,057
Long-term portion	$	23,689

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Basis of Presentation - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Dec. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Business Acquisition [Line Items]
Payment for purchase of certain assets		$ 580	$ 118,657
DirectPhotonics Industries GmbH | Germany
Business Acquisition [Line Items]
Payment for purchase of certain assets	$ 600

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Recent Accounting Pronouncements - Additional Information (Detail) $ in Millions	Jun. 30, 2016 USD ($)
ASU 2015-03
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Reclassification as unamortized debt issuance costs	$ 0.6

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Components of Inventories (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 76,215	$ 70,623
Work in progress	65,059	57,566
Finished goods	50,528	46,944
Inventories, Total	$ 191,802	$ 175,133

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Property Plant and Equipment (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, gross	$ 682,463	$ 559,362
Less accumulated depreciation	(346,711)	(316,505)
Property, Plant and Equipment, net	335,752	242,857
Land and Improvements
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, gross	4,604	4,990
Buildings and Improvements
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, gross	131,542	110,219
Machinery and Equipment
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, gross	448,643	409,551
Construction in Progress
Property Plant And Equipment [Line Items]
Property, Plant and Equipment, gross	$ 97,674	$ 34,602

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Property Plant and Equipment - Additional Information (Detail) - Manufacturing Facility $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($)
Property Plant And Equipment [Line Items]
Proceeds from sale of manufacturing facility	$ 1.7
Proceeds held in escrow for environmental purpose	0.3
Gain on sale of manufacturing facility	$ 0.3

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Changes in Carrying Amount of Goodwill (Detail) $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Goodwill [Line Items]
Balance-beginning of period	$ 233,755
Foreign currency translation	(1,242)
Balance-end of period	232,513
II-VI Laser Solutions
Goodwill [Line Items]
Balance-beginning of period	84,105
Foreign currency translation	(100)
Balance-end of period	84,005
II-VI Photonics
Goodwill [Line Items]
Balance-beginning of period	96,760
Foreign currency translation	(1,142)
Balance-end of period	95,618
II- VI Performance Products
Goodwill [Line Items]
Balance-beginning of period	52,890
Balance-end of period	$ 52,890

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Gross Carrying Amount and Accumulated Amortization of Intangible Assets Other Than Goodwill (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 183,119	$ 183,925
Accumulated Amortization	(68,279)	(59,335)
Net Book Value	114,840	124,590
Technology and Patents
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	53,994	54,344
Accumulated Amortization	(26,010)	(22,724)
Net Book Value	27,984	31,620
Trademarks
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	15,749	15,869
Accumulated Amortization	(1,308)	(1,209)
Net Book Value	14,441	14,660
Customer Lists
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	111,807	112,141
Accumulated Amortization	(39,448)	(33,912)
Net Book Value	72,359	78,229
Other
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,569	1,571
Accumulated Amortization	(1,513)	(1,490)
Net Book Value	$ 56	$ 81

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Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Goodwill And Other Intangible Assets [Line Items]
Amortization expense recorded on intangible assets	$ 3.1	$ 3.2	$ 9.5	$ 9.2
Carrying amount of indefinite trade names acquired	$ 14.0		$ 14.0
Technology and Patents
Goodwill And Other Intangible Assets [Line Items]
Remaining amortization period of patents and customer lists, in months			94 months
Technology and Patents | Minimum
Goodwill And Other Intangible Assets [Line Items]
Amortization period of finite lived intangible assets, in months			60 months
Technology and Patents | Maximum
Goodwill And Other Intangible Assets [Line Items]
Amortization period of finite lived intangible assets, in months			240 months
Customer Lists
Goodwill And Other Intangible Assets [Line Items]
Remaining amortization period of patents and customer lists, in months			137 months
Customer Lists | Minimum
Goodwill And Other Intangible Assets [Line Items]
Amortization period of finite lived intangible assets, in months			120 months
Customer Lists | Maximum
Goodwill And Other Intangible Assets [Line Items]
Amortization period of finite lived intangible assets, in months			240 months

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Estimated Amortization Expense for Existing Intangible Assets for Each of Five Succeeding Fiscal Years (Detail) $ in Thousands	Mar. 31, 2017 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Remaining 2017	$ 3,156
2018	12,108
2019	11,789
2020	10,981
2021	$ 10,125

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Components of Debt (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Line Of Credit Facility [Line Items]
Total debt	$ 279,683	$ 235,917
Current portion of long-term debt	(20,000)	(20,000)
Unamortized debt issuance costs	(1,582)	(610)
Long-term debt, less current portion	258,101	215,307
Line of credit
Line Of Credit Facility [Line Items]
Total debt	187,000	188,000
Term Loans
Line Of Credit Facility [Line Items]
Total debt	90,000	45,000
Yen denominated line of credit
Line Of Credit Facility [Line Items]
Total debt	$ 2,683	$ 2,917

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Components of Debt (Parenthetical) (Detail) - London Interbank Offered Rate (LIBOR)	9 Months Ended
	Mar. 31, 2017
Line of credit
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate	1.50%
Term Loans
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate	1.50%
Yen denominated line of credit
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate	0.625%

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Debt - Additional Information (Detail)		9 Months Ended
	Jul. 28, 2016 USD ($)	Mar. 31, 2017 USD ($)	Mar. 31, 2017 JPY (¥)	Jun. 30, 2016 USD ($)	Jun. 30, 2016 JPY (¥)	Mar. 31, 2016
Line Of Credit Facility [Line Items]
Available credit under lines of credit		$ 138,400,000		$ 37,700,000
Total outstanding letters of credit		$ 1,400,000		$ 1,200,000
Weighted average interest rate of total borrowings		2.30%	2.30%			1.60%
Revolving Credit Facility
Line Of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 325,000,000
Credit facility, term	5 years
Debt instrument, maturity date	Jul. 27, 2021
Term Loans
Line Of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 100,000,000
Term loan, quarterly principal Payment	$ 5,000,000
Term loan, maturity date	Jul. 27, 2021
Term loan, first quarterly principal payment commencement date	Oct. 01, 2016
Yen denominated line of credit
Line Of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity		$ 4,500,000	¥ 500,000,000
Debt instrument, month and year of maturity		2020-08
Line of credit, outstanding | ¥			¥ 300,000,000		¥ 300,000,000
Maximum | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Credit facility, optional additional borrowing amount	$ 100,000,000
Base Rate Option | Minimum | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate	0.00%
Base Rate Option | Maximum | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate	0.075%
Euro Rate Option | Minimum | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate	0.75%
Euro Rate Option | Maximum | Revolving Credit Facility
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate	1.75%
London Interbank Offered Rate (LIBOR) | Term Loans
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate		1.50%
London Interbank Offered Rate (LIBOR) | Yen denominated line of credit
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate		0.625%
London Interbank Offered Rate (LIBOR) | Minimum | Yen denominated line of credit
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate		0.625%
London Interbank Offered Rate (LIBOR) | Maximum | Yen denominated line of credit
Line Of Credit Facility [Line Items]
Debt instrument, rate added on variable rate		1.50%

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Remaining Annual Amounts of Principal Payments of Credit Facility (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Line Of Credit Facility [Line Items]
Year 1	$ 20,000
Year 2	20,000
Year 3	20,000
Year 4	22,683
Year 5	197,000
Total debt	279,683	$ 235,917
Term Loans
Line Of Credit Facility [Line Items]
Year 1	20,000
Year 2	20,000
Year 3	20,000
Year 4	20,000
Year 5	10,000
Total debt	90,000	45,000
Yen Line of Credit
Line Of Credit Facility [Line Items]
Year 4	2,683
Total debt	2,683	2,917
U.S. Dollar Line of Credit
Line Of Credit Facility [Line Items]
Year 5	187,000
Total debt	$ 187,000	$ 188,000

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Income Tax Contingency [Line Items]
Effective income tax rate	26.30%	17.10%
U.S. statutory rate	35.00%
Unrecognized tax benefits that would impact effective tax rate	$ 6.6		$ 5.6
Interest and penalties accrued	0.2		$ 0.1
Liability for uncertain tax positions that would impact the effective tax rate if recognized	$ 0.5
United States Internal Revenue Service | Earliest Tax Year
Income Tax Contingency [Line Items]
Tax year remain open to examination	2014
United States Internal Revenue Service | Latest Tax Year
Income Tax Contingency [Line Items]
Tax year remain open to examination	2017
State Jurisdictions | Earliest Tax Year
Income Tax Contingency [Line Items]
Tax year remain open to examination	2012
State Jurisdictions | Latest Tax Year
Income Tax Contingency [Line Items]
Tax year remain open to examination	2017
Foreign Taxing Jurisdictions | Earliest Tax Year
Income Tax Contingency [Line Items]
Tax year remain open to examination	2006
Foreign Taxing Jurisdictions | Latest Tax Year
Income Tax Contingency [Line Items]
Tax year remain open to examination	2017

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Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Weighted Average
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Weighted average Shares issuable upon the exercises of stock options excluded from the dilutive share calculation	36,000	109,000	163,000	178,000

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Computation of Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Net earnings	$ 22,430	$ 14,938	$ 62,627	$ 51,143
Weighted average shares	62,807	61,369	62,403	61,252
Basic earnings per common share	$ 0.36	$ 0.24	$ 1.00	$ 0.83
Net earnings	$ 22,430	$ 14,938	$ 62,627	$ 51,143
Weighted average shares	62,807	61,369	62,403	61,252
Dilutive effect of common stock equivalents	2,203	1,684	1,930	1,566
Diluted weighted average common shares	65,010	63,053	64,333	62,818
Diluted earnings per common share	$ 0.35	$ 0.24	$ 0.97	$ 0.81

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Segment Reporting - Additional Information (Detail)	9 Months Ended
	Mar. 31, 2017 Segment
Segment Reporting [Abstract]
Number of reporting segments	3

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Financial Information of Company's Operation by Segment (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2016
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Revenues	$ 244,987	$ 205,105	$ 698,329	$ 585,746
Operating income	29,039	19,390	79,866	62,899
Interest expense	(1,936)	(769)	(4,547)	(2,015)
Other income (expense), net	2,164	(1,257)	9,611	794
Income taxes	(6,837)	(2,426)	(22,303)	(10,535)
Net earnings	22,430	14,938	62,627	51,143
Depreciation and amortization	14,924	14,661	44,722	41,785
Segment assets	1,347,648		1,347,648		$ 1,211,981
Expenditures for property, plant & equipment	41,313	13,587	99,135	32,743
Investment	12,007		12,007		$ 11,354
Eliminations
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Inter-segment revenues	(15,824)	(11,125)	(41,501)	(30,240)
II-VI Laser Solutions | Operating Segments
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Revenues	83,648	73,778	244,421	215,552
Inter-segment revenues	9,661	5,962	24,361	15,342
Operating income	8,337	5,395	22,628	28,820
Depreciation and amortization	5,713	4,192	17,025	11,587
Segment assets	556,238		556,238
Expenditures for property, plant & equipment	23,299	7,156	59,161	16,511
II-VI Photonics | Operating Segments
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Revenues	109,099	80,603	305,824	226,762
Inter-segment revenues	3,450	3,363	10,049	9,160
Operating income	15,898	9,543	45,689	23,282
Depreciation and amortization	5,029	4,888	14,853	14,961
Segment assets	496,068		496,068
Expenditures for property, plant & equipment	8,727	4,160	21,224	10,783
II- VI Performance Products | Operating Segments
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Revenues	52,240	50,724	148,084	143,432
Inter-segment revenues	2,713	1,800	7,091	5,738
Operating income	4,804	4,452	11,549	10,797
Depreciation and amortization	4,182	5,581	12,844	15,237
Segment assets	295,342		295,342
Expenditures for property, plant & equipment	9,287	$ 2,271	18,750	$ 5,449
Investment	$ 12,007		$ 12,007

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Share-Based Compensation - Additional Information (Detail)	9 Months Ended
	Mar. 31, 2017 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of share based compensation expense allocated to cost of sales	20.00%
Percentage of share based compensation expense allocated to selling, general and administrative expense	80.00%
Omnibus Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock authorized for issuance under the Plan	4,900,000

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Share-Based Compensation Expense by Award Type (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense	$ 4,565	$ 2,508	$ 12,547	$ 10,106
Stock Options and Cash-Based Stock Appreciation Rights
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense	1,565	755	4,659	3,892
Restricted Share Awards and Cash-Based Restricted Share Unit Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense	1,890	991	5,450	3,776
Performance Share Awards and Cash-Based Performance Share Unit Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share based compensation expense	$ 1,110	$ 762	$ 2,438	$ 2,438

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Fair Value of Financial Instruments - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Mar. 31, 2017	Mar. 31, 2017	Feb. 29, 2016
Other Expense (Income), Net
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Change in fair value		$ 1.2
Foreign Currency Forward Contract
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Foreign currency gain (loss)	$ (1.1)	$ 0.2
EpiWorks | Upon Achievement of Financial and Operational Targets For Capacity Wafer Output and Gross Margin [Member] | Maximum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Business acquisitions, contingent consideration			$ 6.0

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Summary by Level of Fair Value of Financial Instruments Measured on Recurring Basis (Detail) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Mar. 31, 2017	Jun. 30, 2016
Liabilities:
Foreign currency forward contracts	$ 135	$ 511
Contingent earnout arrangement	5,545	4,352
Fair Value, Inputs, Level 2
Liabilities:
Foreign currency forward contracts	135	511
Fair Value, Inputs, Level 3
Liabilities:
Contingent earnout arrangement	$ 5,545	$ 4,352

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Reconciliation of Beginning and Ending Fair Value Measurements of Level Three Contingent Earnout Arrangement Related to Acquisition (Detail) - Fair Value, Inputs, Level 3 - EpiWorks $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Business Acquisition Contingent Consideration [Line Items]
Balance - beginning of period	$ 4,352
Changes in fair value	1,193
Balance - end of period	$ 5,545

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Derivative Instruments - Additional Information (Detail)	3 Months Ended	9 Months Ended
	Mar. 31, 2017 USD ($)	Mar. 31, 2017 USD ($)	Mar. 31, 2017 JPY (¥)	Jun. 30, 2016 USD ($)
Minimum
Derivative [Line Items]
Foreign currency forward exchange contracts, expiration date		2017-04
Maximum
Derivative [Line Items]
Foreign currency forward exchange contracts, expiration date		2017-07
Foreign Currency Forward Exchange Contracts
Derivative [Line Items]
Foreign currency forward exchange contracts, notional amount	$ 7,900,000	$ 7,900,000		$ 9,200,000
Foreign currency forward exchange contracts, increase (decrease) in fair value	(1,300,000)	400,000
Foreign Currency Forward Exchange Contracts | Minimum
Derivative [Line Items]
Foreign currency forward exchange contracts, notional amount | ¥			¥ 100,000,000
Foreign Currency Forward Exchange Contracts | Maximum
Derivative [Line Items]
Foreign currency forward exchange contracts, notional amount | ¥			¥ 400,000,000
Foreign Currency Forward Exchange Contracts | Chinese Renminbi
Derivative [Line Items]
Foreign currency forward exchange contracts, notional amount	$ 50,000,000	$ 50,000,000
Foreign currency forward exchange contracts, maturity date		Mar. 31, 2017
Gain on expiration of foreign currency forward exchange contracts		$ 300,000

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Change in Carrying Value of Company's Warranty Reserve (Detail) $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Guarantees [Abstract]
Balance-beginning of period	$ 3,908
Payments made during the period	(3,184)
Additional warranty liability recorded during the period	3,286
Balance-end of period	$ 4,010

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Schedule of Net Periodic Pension Costs (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Defined Benefit Plan Net Periodic Benefit Cost [Abstract]
Service cost	$ 874	$ 658	$ 2,642	$ 1,978
Interest cost	39	107	117	321
Expected return on plan assets	(176)	(269)	(532)	(810)
Net amortization	(189)	(22)	208	41
Net periodic pension costs	$ 548	$ 474	$ 2,435	$ 1,530

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Post-Retirement Benefits - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Compensation And Retirement Disclosure [Abstract]
Contributions to the Compensation Plan by the employer	$ 0.8	$ 0.5	$ 2.6	$ 1.5
Contributions to the Compensation Plan by the employer in remainder of fiscal year 2017			$ 1.0

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Share Repurchase Program (Detail) - USD ($)	32 Months Ended
	Mar. 31, 2017	Aug. 31, 2014
Equity [Abstract]
Stock repurchase program, authorized amount		$ 50,000,000
Purchase of common stock, shares	1,316,587
Purchase of Treasury Stock	$ 19,000,000

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Changes in Accumulated Other Comprehensive Income ("AOCI") by Component, Net of Tax (Detail) $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	$ 782,338
Other comprehensive loss before reclassifications	(12,145)
Amounts reclassified from AOCI	163
Net current-period other comprehensive income (loss)	(11,982)
Ending Balance	852,896
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(6,185)
Other comprehensive loss before reclassifications	(12,145)
Net current-period other comprehensive income (loss)	(12,145)
Ending Balance	(18,330)
Defined Benefit Pension Plan
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(7,832)
Amounts reclassified from AOCI	163
Net current-period other comprehensive income (loss)	163
Ending Balance	(7,669)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning Balance	(14,017)
Ending Balance	$ (25,999)

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Capital Lease - Schedule of Future Minimum Lease Payments Due Under Non-Cancelable Capital Lease (Detail) $ in Thousands	Mar. 31, 2017 USD ($)
Leases [Abstract]
2017 (remaining)	$ 645
2018	2,579
2019	2,579
2020	2,579
2021	2,579
Thereafter	27,082
Total minimum lease payments	38,043
Less amount representing interest	13,297
Present value of capitalized payments	24,746
Less: current portion	1,057
Capital lease obligation	$ 23,689

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Capital Lease - Additional Information (Detail) $ in Thousands	9 Months Ended
	Mar. 31, 2017 USD ($)
Leases [Abstract]
Present value of capitalized payments	$ 24,746
Property, plant and equipment estimated useful lives, years	15 years