Cover and table of contents

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

for the fiscal year ended June 30, 2021

☐ 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: 001-39375

II-VI INCORPORATED

(Exact name of registrant as specified in its charter)

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

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

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, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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:

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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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

Aggregate market value of outstanding Common Stock, no par value, held by non-affiliates of the Registrant at December 31, 2020, was approximately $7,871,289,598 based on the closing sale price reported on the Nasdaq Global Select Market. For purposes of this calculation only, directors and executive officers of the Registrant and their spouses are deemed to be affiliates of the Registrant.

Number of outstanding shares of Common Stock, no par value, at August 16, 2021, was 105,718,326.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement, which will be issued in connection with the 2021 Annual Meeting of Shareholders of II-VI Incorporated, are incorporated by reference into Part III of this Annual Report on Form 10-K.

Forward-Looking Statements

This Annual Report on Form 10-K (including certain information incorporated herein by reference) contains forward-looking statements made pursuant to Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). The statements in this Annual Report on Form 10-K that are not purely historical are forward-looking statements, including, without limitation, statements regarding our expectations, assumptions, beliefs, intentions or strategies regarding the future. In some cases, these forward-looking statements can be identified by terminology such as, “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “predicts,” “projects,” “potential,” or “continue” or the negative of these terms or other comparable terminology. Forward-looking statements address, among other things, our assumptions, our expectations, our assessments of the size and growth rates of our markets, our growth strategies, our efforts to increase bookings, sales and revenues, projections of our future profitability, cash generation, success of our research, development and engineering investments, results of operations, capital expenditures, our financial condition, our ability to integrate acquired businesses or other “forward-looking” information and include statements about revenues, costs, investments, earnings, margins, or our projections, actions, plans or strategies.

The forward-looking statements in this Annual Report on Form 10-K 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. We believe that all forward-looking statements made by us have a reasonable basis, but there can be no assurance that these expectations, beliefs or projections will actually occur or prove to be correct, at least on the timetable of our expectations. Actual results could differ materially. We claim the protection of the safe harbor for forward-looking statements contained in the PSLRA for our forward-looking statements.

The risk factors described in more detail herein under Item 1A. “Risk Factors” and summarized below under “Risk Factor Summary,” among others, in some cases have affected and in the future could affect our financial performance and actual results, and could cause actual results for fiscal 2022 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this Annual Report on Form 10-K or otherwise made by our management.

All such factors, as well as factors described or referred to in other filings we make with the Securities and Exchange Commission (the “SEC”) from time to time, should be considered in evaluating our business and prospects. Many of these factors are beyond our reasonable control. In addition, we operate in a highly competitive and rapidly changing environment, and, therefore, new risk factors can arise and be present without market participants like us knowing until a substantial amount of time has passed. It is not possible for management to predict all such risk factors, assess the impact of all such risk factors on our business or estimate the extent to which any individual risk factor, or combination of risk factors, may impact our business. It is also not possible for management to mitigate all such risks, and therefore any such risk factor may cause results to differ materially from those contained in any forward-looking statement. The forward-looking statements included in this Annual Report on Form 10-K speak only as of the date of this Annual Report on Form 10-K. We do not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or developments, or otherwise, except as may be required by the securities laws. We caution you not to rely on them unduly.

II-VI Incorporated does communicate with securities analysts from time to time and those communications are conducted in accordance with applicable securities laws. Investors should not assume that II-VI Incorporated agrees with any statement or report issued by any analyst, irrespective of the content of the statement or report.

Risk Factor Summary

The following is a summary of the material risks and uncertainties that could cause our business, financial condition or operating results to be adversely impacted. We encourage you to carefully review the full risk factors contained in Item 1A. “Risk Factors” herein in their entirety for additional information regarding these risks and uncertainties.

Risks Relating to Our Business and Our Industry

• Investments in future markets of potential significant growth may not result in the expected return.

• Our competitive position depends on our ability to develop new products and processes.

• A widespread health crises could materially and adversely affect us.

• Global economic downturns may adversely affect us.

• Our products may contain defects that are not detected until deployed.

• Foreign currency risk may negatively affect us and could result in foreign exchange losses.

• Our competitive position may still require significant investments.

• We may be unable to successfully implement our acquisitions strategy or integrate acquired companies and personnel.

• We may not realize expected benefits from our acquisition or be able to retain those benefits even if realized.

• Our global operations are complex and present multiple challenges to manage.

• We are subject to complex and rapidly changing import and export regulations.

• Changes in trade policies could increase the costs of goods imported into the United States or China.

• Any inability to access financial markets from time to time to raise funds could negatively impact us.

• We may not be able to settle conversions of our convertible senior notes in cash or repurchase the notes when required.

• Our current credit agreement restricts our operations in certain regards.

• We may fail to accurately estimate the size and growth of our markets and our customers’ demands.

• We may encounter increased competition.

• There are limitations on the protection of our intellectual property.

• A significant portion of our business is dependent on cyclical industries.

• Our global operations are subject to complex legal and regulatory requirements.

• Changes in laws and regulations governing data privacy and data protection could have a material adverse impact on us.

• We could be negatively impacted by data breach incidents and breakdowns of information and communication technologies.

• We have entered into supply agreements that commit us to supply products on specified terms.

• We depend on highly complex manufacturing processes that require feeder materials, components, and products from limited sources of supply.

• Increases in commodity prices may adversely affect our results of operations and financial condition.

• We use and generate potentially hazardous substances that are subject to stringent environmental regulations.

• We have a substantial amount of debt, which could adversely affect us and prevent us from fulfilling our obligations.

• Unfavorable changes in tax rates, tax liabilities, or tax accounting rules could negatively affect future results.

• Natural disasters or other global or regional catastrophic events could adversely affect us.

• Our success depends on our ability to attract, retain, and develop key personnel and requires good employee relations.

• We contract with a number of large customers that have considerable bargaining power.

• We may be adversely affected by climate change regulations.

• We depend on large purchases from a few significant customers.

• The manufacturing of our products may be adversely affected if we are unable to manufacture certain products in our manufacturing facilities.

• Failure to accurately forecast our revenues could result in additional charges.

• If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

Risks Relating to Our Pending Acquisition of Coherent, Inc. (“Coherent”)

• The market prices of our securities after completion of our pending acquisition of Coherent may be affected by factors different from those currently affecting the markets for our securities or securities issued by Coherent.

• There can be no assurance that we will be able to secure the funds necessary to pay the cash portion of the merger consideration payable in our acquisition of Coherent, in a timely manner or at all.

• The agreements that will govern indebtedness to be incurred or assumed in connection with our acquisition of Coherent are expected to contain various covenants that will impose restrictions on us that may affect our ability to operate our businesses.

• The significant additional indebtedness that we will incur in connection with our acquisition of Coherent could adversely affect us.

• Integrating Coherent may be more difficult, costly or time-consuming than expected, and we may fail to realize the anticipated benefits of the acquisition.

• We and Coherent may have difficulty attracting, motivating and retaining executives and other employees.

• Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on us following the completion of the acquisition.

• The acquisition is subject to conditions that may not be satisfied on a timely basis, or at all.

• We have incurred, and will continue to incur, significant transaction-related costs in connection with the acquisition.

• The closing of the acquisition may trigger change in control provisions in certain agreements to which Coherent is a party.

• We and Coherent each are subject to business uncertainties and contractual restrictions while the acquisition is pending.

• Holders of our capital stock will have a reduced ownership and voting interest in us after the completion of the acquisition.

• Shareholder litigation could prevent or delay the closing of the acquisition or otherwise negatively impact us.

• The issuance and sale of our Series B Preferred Stock reduces the relative voting power of holders of our other capital stock, dilutes the ownership of such holders and may adversely affect the market price of our securities.

• Our Series B Preferred Stock has rights that are not held by, and are preferential to, the rights of holders of our other outstanding capital stock.

• The redemption rights of the holders of Series B Preferred Stock may result in the use of our cash in such a way that could adversely affect us and holders of our other capital stock.

• Holders of our Series B Preferred Stock can exercise significant control over us.

• The market prices of our securities may decline in the future as a result of the acquisition.

• Our future results will suffer if we do not effectively manage our expanded operations.

• We and Coherent face competition, which is expected to intensify after the closing of the acquisition.

• We expect to incur substantial expenses related to the acquisition and the related integration.

• Following the consummation of the acquisition, we will be bound by all obligations and liabilities of both companies.

• The acquisition may result in a loss of suppliers and strategic alliances or the termination of existing contracts.

Risks Relating to Our Capital Stock

• The trading prices for our securities have been volatile in the past and may be volatile in the future.

• Provisions in our governing documents and applicable law may delay or prevent our acquisition by a third party.

• We do not currently intend to pay dividends on our common stock.

• Our ability to declare and pay dividends on our capital stock may be limited.

• Trading in preferred stock that we have issued may adversely affect the market price of our common stock.

• Our common stock is subordinate to our existing and future indebtedness and any preferred stock we may issue. Our preferred stock ranks junior to all of our and our subsidiaries’ consolidated liabilities.

• Our board of directors can issue, without approval of our stockholders, preferred stock with rights that could adversely affect holders of our common stock.

• Reports published by securities or industry analysts and others could adversely affect our share price and trading volume.

• Regulatory actions may adversely affect the trading price and liquidity of our Mandatory Convertible Preferred Stock.

• Holders of Mandatory Convertible Preferred Stock have no voting rights, except under limited circumstances.

• We depend on our subsidiaries for cash to fund our operations and expenses.

PART I