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II-VI Incorporated Achieves Record Fourth Quarter And Fiscal Year 2013 Revenues; Exits Tellurium And Selenium Chemical Businesses; Increases HIGHYAG Ownership To 100%

Stocks in this article: IIVI

In the Company's Advanced Products Group segment, the Wide Bandgap Materials (WBG) group manufactures and markets single crystal silicon carbide substrates for use in the solid-state lighting, wireless infrastructure, RF electronics and power switching industries. Marlow Industries, Inc. (Marlow) designs and manufactures thermoelectric cooling and power generation solutions for use in defense, space, photonics, telecommunications, medical, consumer and industrial markets. Worldwide Materials Group (WMG) provides expertise in materials development, process development and manufacturing scale up. M Cubed Technologies, Inc. (M Cubed) develops and markets advanced composite materials serving the semiconductor, display, industrial and defense markets.

Forward-looking Statements

This press release contains forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company's performance on a going-forward basis. The forward-looking statements in this press release involve risks and uncertainties, which could cause actual results, performance or trends to differ materially from those expressed in the forward-looking statements herein or in previous disclosures. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management's expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct. In addition to general industry and global economic conditions, factors that could cause actual results to differ materially from those discussed in the forward-looking statements in this press release include, but are not limited to: (i) the failure of any one or more of the assumptions stated above to prove to be correct; (ii) the risks relating to forward-looking statements and other "Risk Factors" discussed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2012 and Quarterly Reports on Form 10-Q for the quarters ended September 30, 2012, December 31, 2012 and March 31, 2013; (iii) the purchasing patterns from customers and end-users; (iv) the timely release of new products, and acceptance of such new products by the market; (v) the introduction of new products by competitors and other competitive responses; and/or (vi) the Company's ability to devise and execute strategies to respond to market conditions. The Company disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events or developments, or otherwise.

 
II-VI Incorporated and Subsidiaries
Condensed Consolidated Statements of Earnings (Unaudited)
($000 except per share data)
         
   Three Months Ended Year Ended
   June 30, June 30,
  2013 2012 2013 2012
Revenues         
Net sales:        
Domestic $ 72,107 $ 57,864 $ 241,045 $ 214,822
International 82,938 79,046 317,351 319,808
Total Revenues 155,045 136,910 558,396 534,630
         
         
Costs, Expenses & Other Expense (Income)        
Cost of goods sold  104,185 88,648 360,830 341,889
Internal research and development 5,697 5,533 22,689 21,410
Selling, general and administrative 29,993 25,037 110,175 99,392
Interest expense 452 28 1,160 212
Other expense (income), net (442) (1,721) (7,155) (7,168)
Total Costs, Expenses, and Other Expense (Income)  139,885 117,525 487,699 455,735
         
Earnings Before Income Taxes 15,160 19,385 70,697 78,895
         
Income Taxes 4,922 4,614 18,766 17,620
         
Net Earnings 10,238 14,771 51,931 61,275
Less: Net Earnings Attributable to Noncontrolling Interest 212 325 1,118 969
Net Earnings Attributable to II-VI Incorporated $ 10,026 $ 14,446 $ 50,813 $ 60,306
Net Earnings Attributable to II-VI Incorporated Diluted Earnings Per Share: $ 0.16 $ 0.22 $ 0.80 $ 0.94
Net Earnings Attributable to II-VI Incorporated Basic Earnings Per Share: $ 0.16 $ 0.23 $ 0.81 $ 0.96
         
Average Shares Outstanding - Diluted 63,622 64,579 63,884 64,385
Average Shares Outstanding - Basic 62,180 63,019 62,411 62,823
     
     
II-VI Incorporated and Subsidiaries    
Condensed Consolidated Balance Sheets (Unaudited)    
($000)    
  June 30, June 30,
  2013 2012
Assets    
Current Assets    
Cash and cash equivalents $ 185,433 $ 134,944
Accounts receivable  107,173 104,761
Inventories 141,859 137,607
Deferred income taxes 10,794 10,796
Prepaid and refundable income taxes 4,543 8,488
Prepaid and other current assets 11,342 13,777
Total Current Assets 461,144 410,373
Property, plant & equipment, net 170,672 153,918
Goodwill 123,352 80,748
Other intangible assets, net 86,701 44,014
Investment 11,203 10,661
Deferred income taxes 2,696 145
Other assets 8,034 6,627
Total Assets $ 863,802 $ 706,486
     
Liabilities, Redeemable Noncontrolling Interest and Shareholders' Equity    
Current Liabilities    
Accounts payable $ 23,617 $ 29,420
Accruals and other current liabilities 70,817 54,308
Total Current Liabilities 94,434 83,728
Long-term debt 114,036 12,769
Deferred income taxes 4,095 5,883
Other liabilities 15,129 12,720
Total Liabilities 227,694 115,100
     
Redeemable noncontrolling interest -- 5,160
     
Total Shareholders' Equity 636,108 586,226
Total Liabilities, Redeemable Noncontrolling Interest and Shareholders' Equity $ 863,802 $ 706,486
     
     
II-VI Incorporated and Subsidiaries    
Condensed Consolidated Statements of Cash Flows (Unaudited)    
($000)  
  Year Ended
  June 30,
  2013 2012
Net cash provided by operating activities $ 107,607 $ 88,069
     
Cash Flows from Investing Activities    
Additions to property, plant and equipment (25,273) (42,840)
Purchases of businesses, net of cash acquired (126,193) (46,141)
Proceeds received on contractual settlement from Thailand flood 4,797 --
Proceeds from sale of equity investment 2,138 3,478
Other investing activities -- 615
Net cash used in investing activities (144,531) (84,888)
     
Cash Flows from Financing Activities    
Proceeds from long-term borrowings  113,000  7,000
Payments on long-term borrowings (11,000) (14,295)
Payment of debt issuance costs (560) --
Purchases of treasury stock (19,978) (4,988)
Payments on earn-out arrangement -- (6,000)
Proceeds from exercises of stock options 4,104 2,658
Distributions on noncontrolling interest (284) --
Minimum tax withholding requirements (138) --
Excess tax benefits from share-based compensation expense 635 821
Net cash provided by (used in) financing activities 85,779 (14,804)
     
Effect of exchange rate changes on cash and cash equivalents 1,634 (2,893)
     
Net increase (decrease) in cash and cash equivalents 50,489 (14,516)
     
Cash and Cash Equivalents at Beginning of Period 134,944 149,460
Cash and Cash Equivalents at End of Period $ 185,433 $ 134,944
         
         
II-VI Incorporated and Subsidiaries        
Reconciliation of Selected Non-GAAP Financial Measurements        
($000 except per share amounts)        
         
Reconciliation of Reported Net Earnings to Non-GAAP Net Earnings         
(Unaudited)        
         
   Three Months Ended Year Ended
   June 30, June 30,
  2013 2012 2013 2012
         
Reported Net Earnings Attributable to II-VI Incorporated $ 10,026 $ 14,446 $ 50,813 $ 60,306
         
Add back:        
Write-downs of tellurium and selenium inventory 1,293 2,296 2,688 8,743
Discontinuance of tellurium and selenium chemical businesses 4,434 -- 4,434 --
         
Income tax impact on unusual items -- (114) -- (437)
         
Adjusted Non-GAAP Net Earnings Attributable to II-VI Incorporated $ 15,753 $ 16,628 $ 57,935 $ 68,612
         
Per share data:        
Net Earnings Attributable to II-VI Incorporated:        
Net Earnings Attributable to II-VI Incorporated Diluted Earnings Per Share: $ 0.16 $ 0.22 $ 0.80 $ 0.94
Net Earnings Attributable to II-VI Incorporated Basic Earnings Per Share: $ 0.16 $ 0.23 $ 0.81 $ 0.96
         
Per share, After-Tax Impact of Write-Downs of Unusual Items:        
Net Earnings Attributable to II-VI Incorporated Diluted Earnings Per Share: $ 0.09 $ 0.03 $ 0.11 $ 0.13
Net Earnings Attributable to II-VI Incorporated Basic Earnings Per Share: $ 0.09 $ 0.03 $ 0.11 $ 0.13
         
Adjusted Non-GAAP Net Earnings Attributable to II-VI Incorporated:         
Adjusted Non-GAAP Net Earnings Diluted Earnings Per Share: $ 0.25 $ 0.26 $ 0.91 $ 1.07
Adjusted Non-GAAP Net Earnings Basic Earnings Per Share:  $ 0.25 $ 0.26 $ 0.93 $ 1.09

Below is a reconciliation of the Segment Earnings and EBITDA reported in this press release to reported Net Earnings.

     
Reconciliation of Segment  Three Months Ended Year Ended
Earnings and EBITDA to Net Earnings June 30, June 30,
  2013 2012 2013 2012
         
Total Segment Earnings $ 15,170 $ 17,692 $ 64,702 $ 71,939
Interest expense 452 28 1,160 212
Other expense (income), net (442) (1,721) (7,155) (7,168)
Income taxes 4,922 4,614 18,766 17,620
Net earnings  $ 10,238 $ 14,771 $ 51,931 $ 61,275
         
EBITDA $ 26,548 $ 28,545 $ 112,786 $ 113,800
Interest expense 452 28 1,160 212
Depreciation and amortization 10,936 9,132 40,929 34,693
Income taxes 4,922 4,614 18,766 17,620
Net earnings $ 10,238 $ 14,771 $ 51,931 $ 61,275
CONTACT: II-VI Incorporated
         Craig A. Creaturo, Chief Financial Officer and Treasurer
         (724) 352-4455
         ccreaturo@ii-vi.com

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