10-K

                                  FORM 10-K
     
                      SECURITIES AND EXCHANGE COMMISSION    
                          Washington, D.C.  20549    
    
[X]  Annual Report pursuant to Section 13 or 15(d) of the     
     Securities Exchange Act of 1934 

          for the fiscal year ended June 30, 1997    

[ ]   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           (I.R.S. Employer    
   incorporation or organization)          Identification No.)    
      375 Saxonburg Boulevard    
     Saxonburg, Pennsylvania                      16056    
 (Address of principal executive offices)      (Zip code)    
    
            Registrant's telephone number, including area code:     
                               412-352-4455    
Securities registered pursuant to Section 12(b) of the Act:     
                                                      None.    
Securities registered pursuant to Section 12(g) of the Act:    
             Common Stock, no par value.    

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  X    No    
                         ---      ---

Indicate by check mark if disclosure of delinquent filers 
pursuant to Item 405 of Regulation S-K is not contained 
herein and will not be contained, to the best of registrant's 
knowledge, in definitive proxy or information statements 
incorporated by reference in Part III of this Form 10-K or 
any amendment to this Form 10-K. 	[X]

Aggregate market value of outstanding Common Stock, no par 
value, held by non-affiliates of the Registrant at 
September 15, 1997, was approximately $129,985,825, based on 
the closing sale price reported on NASDAQ/NMS for 
September 15, 1997.  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 September 15, 1997, was 6,899,261.

               Documents Incorporated by Reference

Portions of the Annual Report to Shareholders for the fiscal 
year ended June 30, 1997 are incorporated by reference into 
Parts I, II and IV hereof.

Portions of the Proxy Statement for the 1997 Annual Meeting 
of Shareholders are incorporated by reference into Parts II 
and III hereof.


PART I 
ITEM 1. BUSINESS
Introduction

     II-VI Incorporated ("II-VI" or the "Company") was 
incorporated in Pennsylvania in 1971.  The Company's 
executive offices and manufacturing facilities are located 
at 375 Saxonburg Boulevard, Saxonburg, Pennsylvania 16056.  
Its telephone number is 412-352-4455.  Reference to the 
"Company" or "II-VI" in this Form 10-K, unless the context 
requires otherwise, refers to II-VI Incorporated, its wholly-
owned subsidiaries, II-VI Worldwide, Incorporated, II-VI 
Delaware, Incorporated, II-VI Japan Incorporated, II-VI 
Singapore Pte., Ltd., II-VI VLOC Incorporated, II-VI Optics 
(Suzhou) Co. Ltd., and II-VI U.K. Limited, as a consolidated 
operation.  eV PRODUCTS operates as a division of 
II-VI Incorporated.  The Company's name is pronounced 
"Two-Six Incorporated."

     II-VI Incorporated designs, manufactures and markets 
optical and electro-optical components, devices and materials 
for precision use in infrared, near-infrared, visible-light 
and x-ray/gamma-ray instruments and applications.  The Company's 
infrared products are used in high-power CO2 (carbon dioxide) 
lasers for industrial processing and for commercial and 
military sensing systems. The Company's near-infrared and 
visible-light products are used in industrial, scientific and 
medical instruments and solid-state (such as YAG and YLF)
lasers. Frequency-doubling and single-crystal substrate materials 
produced by the Company are utilized as building blocks in 
the emerging blue-light laser market segment.  II-VI also is 
developing and marketing solid-state x-ray and gamma-ray 
products for the nuclear radiation detection industry.  The 
majority of the Company's revenues are attributable to the 
sale of optical parts and components for the laser processing 
industry.

Information Regarding Market Segments and Foreign Operations

     The Company's business comprises one segment, the design,
manufacturer and marketing of optical and electro-optical 
components, devices and materials for precision use in 
infrared, near-infrared, visible-light and x-ray/gamma-ray 
instruments and applications.

     Financial data regarding the Company's revenues, results 
of operations and export sales for the Company's last three 
fiscal years is set forth in, and incorporated herein by 
reference to, the Company's Consolidated Statements of 
Earnings on page 17 of the II-VI Incorporated 1997 Annual 
Report (the "Annual Report") and Note H to the Company's 
Consolidated Financial Statements on page 25 of the Annual 
Report.

Industrial Processing Background

     Applications for laser processing are increasing 
worldwide as manufacturers seek solutions to increasing 
demands for quality, precision, speed, throughput, 
flexibility, automation and cost control.  High-power CO2 
and YAG lasers provide these benefits in a wide variety of 
cutting, welding, drilling, ablation, balancing, cladding, 
heat-treating and marking applications.  For example, 
automobile manufacturers use lasers to facilitate rapid 
product changeovers, process simplification, efficient 
sequencing and computer control on high-throughput production 
lines.  Manufacturers of recreational vehicles, lawn mowers 
and garden tractors cut, trim and weld metal parts with lasers 
to achieve flexible, high-consistency, reduced post-processing, 
lower-cost operations.  For office furniture producers, lasers 
provide easily reconfigurable, low-distortion, low-cost 
prototyping and production capability that facilitates semi-
custom manufacturing of customer-specified designs.  On high-
speed consumer product processing lines, laser marking provides 
automated date coding for food packaging and computer driven 
container identification for pharmaceuticals.

     Precision optics such as total reflectors, partial mirrors, 
beamsplitters and lenses are critical to the operation of lasers 
and laser systems.  Many CO2 and YAG laser systems contain up to 
15 optical elements either as part of the laser resonator or 
associated with routing of the laser beam to the work piece.  
To the extent that optics wear or become contaminated during 
operation, optics are consumables in laser processing.  Thus, 
an aftermarket demand is generated by an estimated current 
worldwide installed base of approximately 55,000 industrial 
YAG and CO2 lasers.

Products

     The Company's products include optical and electro-optical 
components, devices and materials for precision use in infrared, 
near-infrared, visible light, X-ray and gamma-ray instruments, 
and their applications.  The Company's infrared products are 
used in high power CO2 lasers for industrial processing 
worldwide.  The Company's VLOC subsidiary manufactures near-
infrared and visible light products used in industrial, 
scientific and medical instruments and solid-state (such as 
YAG and YLF) lasers.  II-VI is also developing and marketing 
solid-state X-ray and gamma-ray detector products for the 
nuclear radiation detection industry through its eV PRODUCTS 
division.  The majority of the Company's revenues are 
attributable to the sale of optics or optical elements and 
components for the industrial laser processing industry.

Infrared Optics and Materials

     Reliable operation of high power (1 to 20 kW) CO2 
infrared lasers requires high quality, low absorption optical 
elements.  The CO2 laser emits infrared energy at a wavelength 
of 10.6 micrometers, a wavelength which is optimal for many 
industrial processes including cutting, welding, drilling and 
heat treating of various materials such as steel and other 
metals or alloys, plastics, wood, paper, cardboard, ceramics 
and numerous composites.  This wavelength is also desirable 
for certain types of medical surgery and for various 
surveillance and sensing systems that must penetrate adverse 
atmospheric conditions.

     The Company is a broad line supplier of virtually all 
of the optics and optical elements used in CO2 lasers and 
laser systems.  The Company supplies a family of standard 
and custom transmissive, reflective and precision diamond 
turned optical elements to high power CO2 laser 
manufacturers, CO2 laser system manufacturers and to the 
aftermarket as replacement parts.  Transmissive optical 
elements manufactured by the Company are predominately made 
from Zinc Selenide produced in-house.  The Company is one 
of the two dominant manufacturers in the world of this 
optical material.  The Company's Zinc Selenide capability 
and its low absorbing, thin film coating technology have 
earned II-VI a reputation as the quality leader worldwide 
in this marketplace.  

     The Company provides replacement optics and refurbishing 
services to users of industrial CO2 lasers.  The Company sells 
its infrared replacement optics with a 24-hour shipment 
guarantee under the trade name of INFRAREADY(registered 
trademark) optics.  Consumable items such as focusing lenses 
and output couplers are cost effectively refurbished for 
the Company's aftermarket customers.  The aftermarket portion 
of the Company's business is growing rapidly as industrial
laser applications proliferate worldwide.

     The Company supplies Cadmium Zinc Telluride (CdZnTe) 
substrates primarily to U.S. military and NATO defense suppliers 
under the trade name EPIReady(registered trademark).  These 
substrates are subsequently processed by the Company's customers 
into infrared detectors using epitaxial crystal growth and 
device fabrication techniques.  The Company supplies Zinc 
Sulfide in the form of domes and windows to military suppliers 
for Forward Looking InfraRed (FLIR) systems worldwide.  A portion 
of the Company's infrared substrate business involves development 
programs funded by the Defense Advanced Research Projects Agency 
(DARPA), Department of Defense (DOD) and other governmental 
agencies.

YAG Laser Components

     The power levels available from YAG lasers (1 to 3 kW) 
are increasing  while the costs of such lasers are decreasing.  
These trends are making YAG laser processing more attractive 
in such high-power YAG applications as the welding of airbag 
sensors and inflators.  Low-power YAG applications include 
the high speed micro-welding of multi-blade shaving razor 
assemblies, the welding of heart pacemakers, the precision 
trimming of resistors  in electronic assemblies, and marking 
or labeling of integrated circuits.  The capability to deliver 
the 1.06 micrometer YAG laser wavelength over flexible, low 
loss optical fibers has enhanced YAG laser deployment in many 
applications where complex shapes require versatile beam 
delivery geometries.  A YAG laser requires the same optical 
elements as the CO2 laser except that they are made of 
different materials to operate at the YAG laser near-infrared 
wavelength of 1.06 micrometers.

     The Company supplies a family of standard and custom laser 
gain materials and optics for industrial, medical, scientific 
and research YAG lasers.  The YAG laser gain materials are 
produced to stringent industry specifications and precisely 
fabricated into rods or slabs.  Included in the Company's 
products are refurbished YAG rods sold to the Company's 
aftermarket customers.  The Company offers waveplates, 
polarizers, lenses, prisms, and mirrors for visible and 
near-infrared applications.  These products control and 
alter the visible and near-infrared energy and its 
polarization.  The Company offers cavities for use in 
flashlamp pumped lasers.  These cavities are made primarily 
of samarium doped glass which improves the laser performance.

Nuclear Radiation Detectors

     The nuclear radiation detection market is composed 
of medical probe and imaging, industrial gauging, environmental 
monitoring, nuclear safeguards and nonproliferation, and 
health physics segments.  Solid-state CdZnTe nuclear radiation 
detectors are attractive because of their reduced size, improved 
tolerance of environmental conditions and lower voltage/current 
requirements compared to the more traditional 
scintillator/photomultiplier or cryogenically cooled Germanium 
devices.

     The use of CdZnTe hand-held probes in the medical field 
allows the introduction of new cancer location techniques, based 
on the injection of a radio-labeled antibody that binds to the 
cancer cells.  This allows the surgeon to accurately identify
and remove cancerous tissue.

     CdZnTe-based imaging arrays can be used in both the 
nuclear medical (internal gamma-ray emission) and Radiographic 
(external X-ray source) fields.  In nuclear medicine, the 
material is patterned with up to 2mm x 2mm pixels and 
allows the manufacture of a new generation of gamma cameras, 
offering a much improved position sensitivity and the potential 
to produce images using lower doses of injected radioactivity.  
In the Radiographic field, the material is processed into much 
smaller pixels (<100(m x 100(m) and provides a much improved 
sensitivity to the higher energy X-rays used in some of the 
newer diagnostic techniques.  It also allows the possibility 
of direct-readout digital radiography, which allows the doctor 
to see the relevant part of the body in real time, thus 
reducing the time delay between X-ray and diagnosis.

     The Company designs and manufactures CdZnTe room-
temperature, nuclear radiation detectors combined with 
custom designed low noise front-end electronics.  The 
Company believes it has become the leader in room-temperature, 
direct conversion radiation detectors.

Frequency Doubling and Blue Emitter Materials

     For over a decade, researchers in university, government
and industry laboratories have been seeking routes to the 
fabrication of reliable, solid-state blue light emitters and 
lasers.  Blue light sources are expected to be used in such 
applications as optical data storage, telecommunications, 
graphic displays and high density printers.  The Company 
supplies both laser gain and frequency doubling materials 
which are being used in emerging laser based systems for 
blue light generation.  The Company produces Potassium Niobate 
based microlaser assemblies which are used by customers to 
frequency double other light sources, thus producing up to 
30 mW of blue light or 50 mW of green light.  The Company 
also produces single crystal Zinc Selenide, a high quality 
substrate which is being used by customers in the development 
of blue light lasers.

Fluoride Materials

     Nd:YLF (neodymium doped yttrium lithium fluoride) 
displays exceptional qualities as a laser material for 
solid-state lasers.  The crystal offers high power laser 
operation at 1.047 micrometers and 1.053 micrometers with 
low beam divergence leading to good Q-switched and single 
mode laser operation.  Nd:YLF is used in both flashlamp pumped 
and diode pumped solid-state lasers.  Due to high lasing 
efficiency, Nd:YLF lasers are suitable for use on the 
manufacturing floor for scribing, trimming and cutting of 
semiconductor materials.

     Nd:YLF also lases at 1.313 micrometers.  That, along with 
the 1.047 micrometer wavelength, have attractive applications 
for use in cable television and other telecommunication 
applications which require devices with high data rates.

Customers and Markets

Industrial

     The Company's customers include leading industrial OEMs 
and system manufacturers worldwide in the CO2 and YAG laser 
machine tool industry.  The Company has focused its marketing 
efforts on growing both high and low power segments of the 
laser optics marketplace.

     High power CO2 lasers manufactured by the Company's 
customers are installed on systems that are used for cutting, 
drilling, welding and marking of materials and heat treating 
of metals.  The Company also sells their products to laser 
end users which require replacement optics, such as focusing 
lenses and beam steering mirrors.  Users of industrial lasers 
include a broad range of industries and applications, such as 
automotive, electrical equipment, packaging, building products, 
office furniture, garment, airframe or aerospace, consumer 
electronics, tooling and machinery.

     Low power, sealed CO2 lasers are utilized for both 
medical and small parts manufacturing, engraving and 
serialization of products.  These small, lightweight, low-
cost systems are flexible and provide rapid response for a 
number of medical and light manufacturing applications.  
Manufacturers of these laser sources are high volume optics 
customers of the Company.

     The Company's YAG component customers' systems are used 
for marking, scribing, microwelding and precision trimming.  A 
broad range of industries use YAG systems, including medical 
devices, consumer products, automotive and semiconductors.  
The Company offers YAG laser manufacturers both the YAG laser 
rod and the necessary optics for a complete laser system.

     The Company's customers are developing products 
incorporating fluoride materials for use in telecommunications, 
material processing and environmental monitoring.

     The Company is using its close working relationships 
with its industrial CO2 customers worldwide to increase its 
YAG component supply market share, since both products are 
needed by many of the same customers.

Scientific and Military

     The scientific, research and new product development 
areas of the electro-optics device market are creating many 
opportunities for the visible, near-infrared and infrared 
optics and materials produced by the Company.  The Company 
provides high end, high specification components to this 
group of customers which include products such as aspheric 
optics, prisms, parabolic reflectors and focusing element 
assemblies.  The Company provides specialty optics and 
components to instrument manufacturers.  II-VI's products 
are integrated into spectrophotometers, interferometers and 
distance measuring instruments; scanning mirrors for high 
resolution color printing; and focusing assemblies for 
infrared cameras.  Quick response, short lead times, high 
quality products and engineering support are cornerstones 
of the Company's pursuit of these markets.

     U.S. and NATO allies are pursuing defense strategies 
based upon stringent budgets to improve the effectiveness 
of military systems through electronics upgrades, including 
infrared imaging systems.  The Company supplies materials 
and optics to manufacturers of infrared sensing systems.

Sales and Distribution
 
     The Company markets its products in the United States 
through its direct sales force; in Japan through its 
subsidiary, II-VI Japan Incorporated; in certain Southeast 
Asian markets through its subsidiary, II-VI Singapore Pte. Ltd.; 
and in the United Kingdom through its subsidiary, II-VI U.K. 
Limited.  For the remainder of Europe, sales are effected 
through distributors, and sales throughout the rest of the 
world are made through manufacturers' representatives.  The 
Company's products are sold to over 3,000 customers throughout 
the world.  The Company's principal international markets are 
Germany and Japan.

Manufacturing Processes

Infrared and Visible Optics

     The manufacturing processes for optics include a number 
of low-cost, automated, high-precision processes that have 
been developed and documented at the Company's manufacturing 
sites in Pennsylvania, Florida, Singapore and China.  
Manufacturing steps for the majority of the Company's optical 
products include:

Grinding and Polishing.  The Company rigorously tests starting 
materials in the optics fabrication process to assure conformity 
to specifications for absorption, clarity, stress and purity.  
The manufacturing sequence typically involves grinding a part 
to the desired curvature and precision polishing the optic to 
the desired high-quality surface shape and finish.  The Company 
has developed specialized processes for fabricating visible, near-
infrared, and infrared optics.  The Company has state-of-the-art, 
numerically controlled generating and grinding equipment and 
automated synchrospeed optical polishing apparatus.

Diamond Turning.  The Company's diamond turning of metal mirrors 
involves state-of-the-art equipment for cutting of flat metal 
reflectors and turning of contoured spherical or aspherical 
shapes.  The ability to produce spherical and aspherical 
diffraction-free surfaces, due to a proprietary real-time 
feedback test system, provides the highest-quality high-power-
handling copper reflecting mirrors available in the industry.  
The Company is currently investing in expansion of this 
manufacturing unit's capacity as the demand for these products 
has grown rapidly during the last few years.

Thin-Film Coating.  Multilayer, thin-film, visible-light and 
infrared coatings are produced by evaporating precisely 
controlled thicknesses of various substances from 
microprocessor-controlled thermal or electron-beam sources 
onto optical surfaces in custom-built vacuum chambers.  The 
know-how to control such process variables as time, pressure, 
gas flow and temperature are critical to achieving low-
absorption, high-adhesion and properly transmitting thin 
films.  Production of zero-defect coatings is a part of the 
proprietary knowledge of II-VI.

Materials

     II-VI is a materials-based company.  Processes used to 
produce these materials require long development periods, are 
capital intensive and involve precision process control.  Yields 
are raised from minimal to acceptable as know-how and process-
consistency techniques are developed.

     The Company's infrared components and materials are made 
from compounds composed primarily of elements from Groups II 
and VI of the Periodic Table of the Elements ("II-VI Compounds").  
II-VI Compounds, a class of non-hygroscopic (do not absorb water) 
materials, are leading infrared transmitting materials.  Their 
high infrared transmission efficiency, the key property needed 
for high-power infrared laser optics, is a result of low 
infrared absorption.  Infrared absorption is low due to the 
type of bonding that exists within a II-VI crystalline 
structure and due to the relatively high molecular weights of 
the most useful II-VI Compounds.  The Group II elements used 
by the Company are Zinc, Cadmium and Mercury, and the Group VI 
elements used are Sulfur, Selenium and Tellurium.

Materials manufactured by the Company include:

Zinc Selenide.  The Company manufactures fine-grained 
polycrystalline Zinc Selenide by a proprietary chemical vapor 
deposition process.  II-VI is one of two dominant manufacturers 
of this material in the world and has earned the reputation 
for producing the lowest-absorbing laser-grade Zinc Selenide.  
The process involves high-temperature disassociation of 
Hydrogen Selenide gas and a gas phase reaction with Zinc vapor.  
Solid Zinc Selenide is deposited on graphite mandrels at 
high temperatures, forming sheets of the material.  Zinc 
Selenide is the principal material used in the Company's CO2 
laser optics.  All material is polished, inspected and laser-
tested for defects.  

Zinc Sulfide.  The chemical vapor deposition process is also 
utilized to manufacture fine-grained polycrystalline Zinc 
Sulfide.  Some Zinc Sulfide is further processed to form 
Multispectral Zinc Sulfide.  The Multispectral Zinc Sulfide 
is highly transmissive from the ultraviolet to the middle 
infrared wave lengths, making it the material of choice for 
tank windows, for example, through which humans, laser range-
finders and guidance systems identify targets.

Cadmium Zinc Telluride Substrates.  II-VI utilizes vertical 
and horizontal Bridgman processes to grow its Cadmium Zinc 
Telluride single-crystal substrate materials.  The Bridgman 
processes involve direct solidification from a liquid melt 
with closely controlled unidirectional freezing in either a 
vertical or horizontal configuration.  The substrates are 
mined from thoroughly tested Cadmium Zinc Telluride ingots 
utilizing precision crystal-orientation techniques followed 
by a sequence of surface lapping and semiautomated diamond 
sawing.  Wafers are precision sized, then surfaced through 
a series of critical polishing and chemical etching steps.

Cadmium Zinc Telluride for Nuclear Radiation Detectors.  
The high-pressure vertical Bridgman process is used to grow 
Cadmium Zinc Telluride for nuclear radiation detectors.  This 
proprietary process produces critical materials which, when 
mated to hybrid front-end electronics built by the Company, 
are sold to industrial gauging and other equipment 
manufacturers.  The high-pressure Bridgman process yields 
products that are cost-competitive with scintillator/
photomultiplier devices.

YAG Materials.  Neodymium-doped YAG, solid-state laser gain 
materials are manufactured at the Company's Florida operations.  
The Company's precision process control and know-how result 
in consistent YAG rod products which are in high demand.  The 
Company expects to have additional capacity for this material 
on-line within the next several months.

YLF and LiSAF Materials.  Neodymium-doped YLF and chromium-
doped LiSAF solid-state laser gain materials are manufactured 
at the Company's Florida operations.  The Company utilizes a 
top-seeded Czochralski technique with precision computer-aided 
diameter control techniques to produce the high-quality YLF 
and LiSAF crystals required for the high-demand laser rod 
products.  The Company is the industry leader in the LiSAF 
market and competes in the YLF rod and slab business on price, 
quality and delivery.

Potassium Niobate and Single Crystal Zinc Selenide.  The 
Company's material science expertise has developed frequency-
doubling Potassium Niobate in conjunction with an international 
laboratory.  This frequency-doubling material, when coupled 
with a laser gain material and a laser pump, can be used to 
generate blue, green or red light.  Using this material, the 
Company offers monolithic laser assemblies to OEMs that are 
pursuing blue and green laser markets.  Through another 
proprietary process the Company is producing single-crystal 
Zinc Selenide, which is used as a substrate in the production 
of blue-light emitters and lasers.

Sources of Supply

     The major raw materials used by the Company are Zinc, 
Selenium, Hydrogen Selenide, Hydrogen Sulfide, Cadmium, 
Tellurium, Yttrium Oxide, Aluminum Oxide and Iridium.  The 
Company produces all of its Zinc Selenide and Zinc Sulfide 
requirements internally, although small quantities of Zinc 
Selenide and Zinc Sulfide may be purchased from outside vendors 
from time to time.  The Company also purchases Gallium Arsenide, 
Copper, Silicon, Germanium, Quartz, optical glass and small 
quantities of other materials for use as base materials for 
laser optics.  The Company purchases Thorium Fluoride and 
other materials for use in optical fabrication and coating 
processes.  There are more than two suppliers for all of the 
above materials except for Zinc Selenide and Hydrogen Selenide 
(excluding the Company) and Thorium Fluoride, for each of which 
there is only one proven source of merchant supply.  For most 
materials, the Company has entered into annual purchase 
arrangements whereby suppliers provide discounts for annual 
volume purchases in excess of specified amounts.

     The continued high quality of these raw materials is 
critical to the stability of the Company's manufacturing 
yields.  The Company conducts testing of materials at the 
onset of the production process to meet evolving customer 
requirements.  Additional research may be needed to better 
define future starting material specifications.  The Company 
has not experienced significant production delays due to 
shortages of materials.  However, the Company does 
occasionally experience problems associated with vendor-
supplied materials that do not meet contract specifications 
for quality or purity.  A significant failure of the Company's 
suppliers to deliver sufficient quantities of necessary high-
quality materials on a timely basis could have a materially 
adverse effect on the Company's results of operations.

Environmental, Health and Safety Matters

     II-VI uses or generates certain hazardous substances 
in its research and manufacturing facilities.  The Company 
believes that its handling of such substances is in material 
compliance with applicable local, state and federal 
environmental, safety and health regulations at each 
operating location.  The Company invests substantially 
in proper protective equipment, process controls and 
specialized training to minimize risks to employees, 
surrounding communities and the environment due to the 
presence and handling of such hazardous substances.  The 
Company annually conducts employee physical examinations 
and workplace air monitoring regarding such substances.  
When exposure problems or potential exposure problems have 
been indicated, corrective actions have been implemented and 
re-occurrence has been minimal or non-existent.  The Company 
does not carry environmental impairment insurance.

     Relative to its generation and use of the extremely 
hazardous substance Hydrogen Selenide, the Company has in 
place a government-approved emergency response plan.  
Special attention has been paid to all procedures pertaining 
to this gaseous material to minimize the chances of its 
accidental release to the atmosphere.

     With respect to the use, storage and disposal of the 
low-level radioactive material Thorium Fluoride, the Company's 
facilities and procedures have been recently inspected and 
approved by the Nuclear Regulatory Commission.  This material 
is utilized in the Company's thin-film coatings.  All Thorium 
Fluoride bearing by-products are collected and shipped as solid 
waste to a government-approved low-level radioactive waste 
disposal site in Barnwell, South Carolina.

     The generation, use, collection, storage and disposal of 
all other hazardous by-products, such as suspended solids 
containing heavy metals or airborne particulates, are believed 
by the Company to be in material compliance with regulations.  
Management believes that all of the permits and licenses 
required for operation of the Company's business are in place.  
Although the Company is not aware of any material environmental, 
safety or health problems in its properties or processes, 
there can be no assurance that problems will not develop in 
the future which would have a materially adverse effect on the 
Company.

Research and Development

     The Company's research and development policy calls for 
the pursuit of a balanced program of internally funded and 
contract research and development totaling between 5 and 8 
percent of product sales.  From time to time the ratio of 
contract to internally funded activity varies significantly 
due to the unevenness and uncertainty associated with most 
government research programs.  The Company is committed to 
accepting only funded research that ties closely to its growth 
plans.

     Company research and development activities focus on 
developing new proprietary products or on understanding, 
improving and automating crystal growth, low-damage 
fabrication or optical thin-film coating technologies.  The 
Company performs commercial prototype and engineering work 
for customers and, in addition, participates in various
government and university research and development consortia.  
The Company maintains an engineering, research and development 
staff of eighty-three.  Fifty-six of the Company's employees 
are engineers or scientists.  In addition, manufacturing 
personnel support or participate in research and development 
on an ongoing basis.  Interaction between the development and 
manufacturing functions enhances the direction of projects, 
reduces costs and accelerates technology transfers.

     The Company is primarily engaged in ongoing research and 
development in the following areas:  Zinc Selenide optical 
material production; vertical and horizontal Bridgman Cadmium 
Zinc Telluride crystal growth and substrate manufacturing; Zinc 
Selenide single-crystal growth and substrate production; high-
pressure Bridgman Cadmium Zinc Telluride crystal growth and 
radiation detector manufacturing; YAG crystal production; YLF 
and other fluorides production; Potassium Niobate crystal 
growth; automated, deterministic optical fabrication methods; 
optical thin-film processes and products; and microlaser 
assemblies based on various combinations of YAG or yttrium 
vanadate gain materials with frequency-doubling materials.

     Company-funded research and development and contract 
research expenditures totaled approximately $1.4 million, 
$1.7 million and $3.0 million during fiscal 1995, 1996 
and 1997, respectively.  Contract research revenues during 
those respective years totaled approximately $1.2 million, 
$1.7 million and $2.7 million.  The Company has been active in 
various research and development programs, including the 
Pennsylvania Ben Franklin Partnership program, the Federal 
Small Business Innovation Research programs of primarily the 
Department of Defense agencies and a DARPA-sponsored industry 
team program focused on infrared materials producibility.

Competition

     The Company believes that it is a leading producer of 
products and services in its addressed markets.  In the area 
of high-power CO2 laser optics and materials, II-VI believes 
it supplies over half of the world market.  The Company is a 
leading supplier of Cadmium Zinc Telluride substrates used for 
infrared imaging arrays, and believes that it is the only 
supplier of Cadmium Telluride electro-optic modulators to U.S. 
and NATO defense contractors.  The Company is a significant 
supplier of YAG rods and YAG laser optics to the worldwide 
markets of scientific, research, medical and industrial laser 
manufacturers.

     The Company competes on the basis of product quality, 
quick delivery, strong technical support and pricing.  
Management believes that the Company competes favorably with 
respect to these factors and that its vertical integration, 
manufacturing facilities and equipment, experienced technical 
and manufacturing employees, and worldwide marketing and 
distribution provide competitive advantages.

     II-VI has a number of present and potential competitors, 
many of which have greater financial, selling, marketing or 
technical resources.  The significant competitor of the 
Company in the production of Zinc Selenide is Morton 
International's Advanced Materials Division.  The competitors 
producing infrared and CO2 laser optics include Laser Power 
Corporation and Coherent in the United States and Sumitomo 
in Japan.  Competing producers of YAG materials and optics 
include the Litton Airtron Division of Litton Industries and 
the Crystal Products Group of Union Carbide.  The Company is 
not aware of any currently significant competitors for its 
Cadmium Zinc Telluride radiation detector product line.

     In addition to competitors who manufacture products 
similar to those of the Company, there are other technologies 
or materials that may compete with the Company's products.  
The markets for the nuclear radiation detector and the 
frequency doubling and blue emitter materials are in their 
infancy and could be affected by competing technologies.

Order Backlog

     Order backlog increased 30% to $16.9 million at 
June 30, 1997 from $12.9 million at June 30, 1996. 
Manufacturing orders comprise 83% of the backlog at 
June 30, 1997, compared to 82% of backlog at June 30, 1996.  
All of the manufacturing order backlog at June 30, 1997 is 
expected to be shipped in fiscal 1998. 

Employees

     As of June 30, 1997, the Company employed 568 persons 
worldwide.  Of these employees, 83 were engaged in research, 
development and engineering, 354 in direct production and 
the balance in sales and marketing, administration, finance 
and support services.  The Company's production staff includes 
highly skilled optical craftsmen.  None of the Company's 
employees are covered by a collective bargaining agreement, and 
the Company has never experienced any work stoppages.  The 
Company has a long standing policy of encouraging active 
employee participation in selected areas of operations 
management.  The Company believes its relations with its 
employees to be good.  The Company rewards its employees 
with incentive compensation based on achievement of 
performance goals.

Patents, Trade Secrets And Trademarks

     II-VI relies on its trade secrets and proprietary know-
how to develop and maintain its competitive position.  The 
Company has not pursued process patents due to the disclosures 
required in the patent process and the relative difficulties 
in successfully litigating process-type patents.  The Company 
has confidentiality and noncompetition agreements with its 
executive officers and certain other personnel.

     The processes and specialized equipment utilized in crystal 
growth, infrared materials fabrication and infrared optical 
coatings as developed at the Company are complex and difficult 
to duplicate.  However, there can be no assurance that others 
will not develop or patent similar technology or that all 
aspects of the Company's proprietary technology will be 
protected.  Others have obtained patents covering a variety 
of infrared optical configurations and processes, and others 
could obtain patents covering technology similar to the 
Company's.  The Company may be required to obtain licenses 
under such patents, and there can be no assurance that the 
Company would be able to obtain such licenses, if required, 
on commercially reasonable terms, or that claims regarding 
rights to technology will not be asserted which may adversely 
affect the Company.  In addition, Company research and 
development contracts with agencies of the United States 
Government present a risk that project-specific technology 
could be disclosed to competitors as contract reporting 
requirements are fulfilled.

     The Company holds four registered trademarks: the II-VI 
INCORPORATED (registered) name; INFRAREADY OPTICS (registered 
trademark) for replacement optics for industrial CO2 lasers; 
EPIREADY (registered trademark)  for low surface damage 
substrates for Mercury Cadmium Telluride epitaxy; and 
eV PRODUCTS (registered trademark) for products manufactured
by the Company's eV PRODUCTS division.  The trademarks are 
registered with the United States Patent and Trademark Office, 
but not with any states.  The Company is not aware of any 
interference or opposition to these trademarks in any 
jurisdiction.

Risk Factors
Environmental Concerns

     The Company is subject to a variety of federal, state 
and local governmental regulations related to the storage, 
use and disposal of environmentally hazardous materials.  
Both the governmental regulations and the costs associated 
with complying with such regulations are subject to change 
in the future.  There can be no assurance that any such change 
will not have a material adverse effect on the Company.  The 
Company manufactures and utilizes Hydrogen Selenide gas, an 
extremely hazardous material, in the production of Zinc 
Selenide.  In its processes, the Company also generates waste 
containing Thorium Fluoride, a low-level radioactive material, 
and other hazardous by-products such as suspended solids 
containing heavy metals and airborne particulates.  The Company 
has made and continues to make substantial investments in 
protective equipment, process controls, manufacturing 
procedures and training in order to minimize the risks to 
employees, surrounding communities and the environment due to 
the presence and handling of such extremely hazardous and 
hazardous materials.  The failure to properly handle such 
materials, however, could lead to harmful exposure to 
employees or to discharge of certain hazardous waste 
materials, and, since the Company does not carry 
environmental impairment insurance, to a material adverse 
effect on the financial condition or results of operations 
of the Company.  Although the Company has not encountered 
material environmental problems in its properties or processes
to date, there can be no assurance that problems will not 
develop in the future which would have a material adverse 
effect on the business, results of operations or financial 
condition of the Company.

Manufacturing and Sources of Supply

     The Company utilizes high quality, optical grade Zinc 
Selenide in the production of a majority of its products.  
The Company is a leading producer of Zinc Selenide for its 
internal use and for external sale.  The production of Zinc 
Selenide is a complex process requiring production in a 
highly controlled environment.  A number of factors, including 
defective or contaminated materials, could adversely affect 
the Company's ability to achieve acceptable manufacturing 
yields of high quality Zinc Selenide.  Zinc Selenide is 
available from only one outside source and quantity and 
qualities may be limited.  The unavailability of necessary 
amounts of high quality Zinc Selenide would have a material 
adverse effect upon the Company.  In addition, in fiscal 1992 
and 1993, the Company experienced fluctuations in its 
manufacturing yields which affected the Company's results of 
operations.  There can be no assurance that the Company will 
not experience manufacturing yield inefficiencies which could 
have a material adverse effect on the business, results of 
operations or financial condition of the Company.

     The Company produces the Hydrogen Selenide gas used in 
its production of Zinc Selenide.  There are risks inherent in 
the production and handling of such material.  The inability 
of the Company to effectively handle Hydrogen Selenide could 
result in the Company being required to curtail its production 
of Hydrogen Selenide.  Hydrogen Selenide can be obtained from 
one source, and the Company has previously purchased and, to 
supplement its internal production, currently purchases such 
material from this source.  The cost of purchasing such 
material is significantly greater than the cost of internal 
production.  As a result, if the Company purchased a 
substantial portion of such material from its outside source, 
it would significantly increase the Company's production costs 
of Zinc Selenide.  Therefore, the Company's inability to 
internally produce Hydrogen Selenide could have a material 
adverse effect on the business, results of operations or 
financial condition of the Company.

     In addition, the Company requires other high purity, 
relatively uncommon materials and compounds to manufacture 
its products.  Failure of the Company's suppliers to deliver 
sufficient quantities of these necessary materials on a 
timely basis could have a material adverse effect on the 
business, results of operations or financial condition of the 
Company.

Competition

     The Company has a number of present and potential 
competitors, many of which have greater financial resources 
than the Company.  The markets for many of the Company's 
products can be subject to competitive pricing in order to 
gain or retain market share.  Such competitive pressures could 
affect the Company's pricing and adversely affect the business,
results of operations or financial condition of the Company.

International Sales and Operations

     Sales to customers in countries other than the United 
States accounted for approximately 43% to 47% of revenues in 
each of the last three fiscal years.  The Company anticipates 
that international sales will continue to account for a 
significant portion of revenues for the foreseeable future.  
In addition, the Company manufactures products in Singapore and 
China, and maintains direct sales offices in Japan and the 
United Kingdom.  Sales and operations outside of the United 
States are subject to certain inherent risks, including 
fluctuations in the value of the U.S. dollar relative to 
foreign currencies, tariffs, quotas, taxes and other market 
barriers, political and economic instability, restrictions on 
the export or import of technology, potentially limited 
intellectual property protection, difficulties in staffing 
and managing international operations and potentially adverse 
tax consequences.  There can be no assurance that any of these 
factors will not have a material adverse effect on the 
Company's business, financial condition or results of 
operations.  In particular, although the Company's 
international sales, other than in Japan and the 
United Kingdom, are denominated in U.S. dollars, currency 
exchange fluctuations in countries where the Company does 
business could have a material adverse affect on the Company's 
business, financial condition or results of operations, by 
rendering the Company less price-competitive than foreign 
manufacturers.  The Company's sales in Japan and the United 
Kingdom are denominated in the foreign currency and, 
accordingly, are affected by fluctuations in exchange rates.  
The Company generally reduces its exposure in Japan to such 
fluctuations through forward exchange agreements.  The 
Company does not engage in the speculative trading of 
financial derivatives.  There can be no assurance, however, 
that the Company's practices will eliminate the risk of 
fluctuation in the currency exchange rates.

Acquisitions

     The Company's business strategy includes expanding its 
product lines and markets through internal product development 
and acquisitions.  Any acquisition may result in potentially 
dilutive issuances of equity securities, the incurrence of debt 
and contingent liabilities, and amortization expense related 
to intangible assets acquired, any of which could have material 
adverse affect on the Company's business, financial condition 
or results of operations.  In addition, acquired businesses may 
be experiencing operating losses.  Any acquisition will involve 
numerous risks, including difficulties in the assimilation of 
the acquired company's operations and products, uncertainties 
associated with operating in new markets and working with new 
customers, and the potential loss of the acquired company's key 
employees.

Sustaining and Managing Growth

     The Company is currently undergoing a period of growth 
and there can be no assurance that such growth can be sustained 
or managed successfully.  This expansion has resulted in a 
higher fixed cost structure which will require increased 
revenue in order to maintain historical gross margin and 
operating margins.  There can be no assurance that the 
Company will obtain the increased orders necessary to generate 
increased revenue sufficient to cover this higher cost 
structure.  Failure by the Company to manage growth 
successfully or have the systems and capacities necessary 
to sustain its growth could have a material adverse affect 
on the Company's business, results of operations or financial 
condition.  In addition, in connection with any future 
acquisitions, the Company expects that it will hire additional 
senior management.  There can be no assurance that the Company 
will be able effectively to achieve growth, including in such 
new markets, integrate such new personnel or manage any such 
growth, and failure to do so could have a material adverse 
effect on the business, results of operations or financial 
condition of the Company.

Dependence on New Products and Processes

     In order to meet its strategic objectives, the Company 
must continue to develop, manufacture and market new products, 
develop new processes and improve existing processes.  As a 
result, the Company expects to continue to make significant 
investments in research and development and to continue to 
consider from time to time the strategic acquisition of 
businesses, products, or technologies complementary to the 
Company's business.  The success of the Company in developing, 
introducing and selling new and enhanced products depends upon 
a variety of factors including product selection, timely and 
efficient completion of product design and development, timely 
and efficient implementation of manufacturing and assembly 
processes, effective sales and marketing, and product 
performance in the field.  There can be no assurance that the 
Company will be able to develop and introduce new products or 
enhancements to its existing products and processes in a manner 
which satisfies customer needs or achieves market acceptance.  
The failure to do so could have a material adverse affect on 
the Company's ability to grow its business.

Dependence on Key Personnel

     The Company is highly dependent upon the experience and 
continuing services of certain scientists, engineers and 
production and management personnel.  Competition for the 
services of these personnel is intense, and there can be no 
assurance that the Company will be able to retain or attract 
the personnel necessary for the Company's success.  The loss 
of the services of the Company's key personnel could have a 
material adverse affect on the business, results operations or 
financial condition of the Company.

Proprietary Technology Claims

     The Company does not currently hold any material patents 
applicable to its processes and relies on a combination of 
trade secret, copyright and trademark laws and employee non-
compete and nondisclosure agreements to protect its 
intellectual property rights.  There can be no assurance that 
the steps taken by the Company to protect its rights will be 
adequate to prevent misappropriation of the Company's 
technology.  Furthermore, there can be no assurance that, in 
the future, third parties will not assert infringement claims 
against the Company.  Asserting the Company's rights or 
defending against third-party claims could involve substantial 
expense, thus materially and adversely affecting the business, 
results of operations or financial condition of the Company.  
In the event a third party were successful in a claim that one 
of the Company's processes infringed its proprietary rights, 
the Company may have to pay substantial damages or royalties, 
or expend substantial amounts in order to obtain a license or 
modify the process so that it no longer infringes such 
proprietary rights, any of which could have an adverse effect 
on the business, results of operations or financial condition 
of the Company.


ITEM 2. PROPERTIES
Facilities

     The Company's headquarters are located in Saxonburg, 
Pennsylvania, 25 miles north of Pittsburgh, in a 90,000-square-
foot facility, on 41 acres of land, which was purchased in 1976.  
In addition, the Company has leases for its manufacturing and 
office space in Florida, Singapore, China, U.K., and Japan 
totaling 62,000 square feet, and owns a 13,000-square-foot 
facility in Florida.

     During fiscal 1997, the Company began construction of a 
manufacturing facility in Florida that will combine most of the 
operations of its VLOC subsidiary.  This facility is expected 
to be completed in December of 1997.  Additionally, the Company 
plans to purchase a facility which is currently being leased 
for the YAG material growth operations.  This facility is 
approximately 18,000 square feet and is expected to be 
purchased by October 30, 1997.

     The Company has also started construction on a 30,000-
square-foot facility in Pennsylvania.  This facility, which 
is located on Company-owned property at its corporate office 
in Saxonburg, will be used by its eV PRODUCTS manufacturing 
operation.  

ITEM 3. LEGAL PROCEEDINGS

     The Company is not a party to any litigation which 
could have a materially adverse effect on the Company or its 
business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders 
during the fourth quarter of the fiscal year covered by this 
Form 10-K.

Executive Officers of the Registrant

     The executive officers of the Company and their 
respective ages and positions are as follows:

       Name            Age              Position

Carl J.  Johnson       55           Chairman, Chief Executive 
                                    Officer and Director

Francis J.  Kramer     48           President, Chief Operating 
                                    Officer and Director

Herman E.  Reedy       54           Vice President and 
                                    General Manager of 
                                    Quality and Engineering

James Martinelli       39           Treasurer and 
                                    Chief Financial Officer

     Carl J. Johnson, a co-founder of the Company in 1971, 
serves as Chairman, Chief Executive Officer and a Director 
of the Company.  He served as President of the Company from 
1971 until 1985 and has been a Director since its founding 
and Chairman since 1985.  From 1966 to 1971, Dr. Johnson was 
Director of Research & Development for Essex International, 
Inc., an automotive electrical and power distribution products 
manufacturer, now a subsidiary of United Technologies 
Corporation.  From 1964 to 1966, Dr. Johnson worked at Bell 
Telephone Laboratories as a member of the technical staff.  
In August 1996, he was selected as a director of Xymox 
Technology, Inc.  Dr. Johnson completed his Ph.D. in Electrical 
Engineering at the University of Illinois in 1969.  He holds 
B.S. and M.S. degrees in Electrical Engineering from Purdue 
University and Massachusetts Institute of Technology (MIT), 
respectively.

     Francis J.  Kramer has been employed by the Company 
since 1983, has been its President and Chief Operating Officer 
since 1985 and was elected to the Board of Directors in 1989.  
Mr. Kramer joined the Company as Vice President and General 
Manager of Manufacturing and was named Executive Vice President 
and General Manager of Manufacturing in 1984.  Prior to his 
employment by the Company, Mr.  Kramer was the Director of 
Operations for the Utility Communications Systems Group of 
Rockwell International Corporation.  Mr. Kramer graduated from 
the University of Pittsburgh in 1971 with a B.S. in Industrial 
Engineering and from Purdue University in 1975 with an M.S. in 
Industrial Administration.

     Herman E. Reedy has been with the Company since 1977 and 
is Vice President and General Manager of Quality and 
Engineering.  Previously, Mr. Reedy held positions at II-VI as 
General Manager of Quality and Engineering, Manager of Quality 
and Manager of Components.  From 1973 until joining the 
Company, Mr. Reedy was employed by Essex International, Inc., 
now a subsidiary of United Technologies Corporation, serving 
last as Manager, MOS Wafer Process Engineering.  Prior to 
1973, he was employed by Carnegie Mellon University and 
previously held positions with Semi-Elements, Inc. and 
Westinghouse Electric Corporation.  Mr. Reedy is a 1975 
graduate of the University of Pittsburgh with a B.S. degree 
in Electrical Engineering.

     James Martinelli has been employed by the Company since 
1986 and has served as Treasurer and Chief Financial Officer 
and Assistant Secretary since May of 1994.  Mr. Martinelli 
joined the Company as Accounting Manager and was named 
Controller in 1990.  Prior to his employment by the Company, 
Mr. Martinelli was Accounting Manager at Tippins Incorporated 
and Pennsylvania Engineering Corporation from 1980 to 1985.  
Mr. Martinelli graduated from Indiana University of 
Pennsylvania with a B.S. degree in Accounting and is a member 
of the Pennsylvania Institute of Certified Public Accountants.


PART II 


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED 
        STOCKHOLDER MATTERS

     The Company's Common Stock is traded on the National 
Association of Securities Dealers, Inc. Automated Quotations 
("NASDAQ") National Market under the symbol "IIVI."  The 
following table sets forth the range of high and low closing 
sale prices per share of the Company's Common Stock for the 
fiscal periods indicated, as reported by the NASDAQ National 
Market.

                           High               Low
Fiscal 1997       
  First Quarter            $23              $12 3/4
  Second Quarter           $27 1/8          $19 1/2
  Third Quarter            $31 3/4          $22 1/8
  Fourth Quarter           $25 1/4          $16 3/32

Fiscal 1996
  First Quarter            $23              $12 7/8
  Second Quarter           $18              $ 9 1/2
  Third Quarter            $12 5/8          $ 9 3/4
  Fourth Quarter           $16 7/8          $11 5/8

     On September 15, 1997, the last reported sale price for 
the Common Stock on the NASDAQ National Market was $25 per 
share.  As of such date, there were approximately 700 holders 
of record of the Common Stock.  The Company has not 
historically paid cash dividends and does not anticipate 
paying cash dividends in the foreseeable future.


ITEM 6. SELECTED FINANCIAL DATA

     The information required by this item is incorporated 
by reference from page 13 of the Company's 1997 Annual Report 
to Shareholders.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
        CONDITION AND RESULTS OF OPERATION

     The information required by this item is incorporated 
by reference from pages 9 through 12 of the Company's 1997 
Annual Report to Shareholders.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item is incorporated 
by reference from pages 14 through 26 of the Company's 1997 
Annual Report to Shareholders.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
        ACCOUNTING AND FINANCIAL DISCLOSURE

     The information required by this item is incorporated 
by reference to the information set forth on page 13 in the 
first, second, and third paragraph under the caption "Change 
in Certifying Accountant" in the Company's definitive proxy 
statement for the 1997 Annual Meeting of Shareholders filed 
pursuant to Regulation 14A of the Securities Exchange Act of 
1934, as amended.


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information set forth above in Part I under the 
caption "Executive Officers of the Registrant" is incorporated 
herein by reference.  The other information required by this 
item is incorporated herein by reference to the information 
set forth under the captions "Election of Directors" and 
"Board of Directors and Board Committees", and the information 
set forth under the caption "Other Matters - Section 16(a) 
Beneficial Ownership Reporting Compliance" in the Company's 
definitive proxy statement for the 1997 Annual Meeting of 
Shareholders filed pursuant to Regulation 14A of the Securities 
Exchange Act of 1934, as amended.  


ITEM 11. EXECUTIVE COMPENSATION

     The information required by this item is incorporated
herein by reference to the information set forth in the second 
paragraph under the caption "Board of Directors and Board 
Committees" and the information set forth under the caption 
"Executive Compensation and Other Information" in the 
Company's definitive proxy statement for the 1997 Annual 
Meeting of Shareholders filed pursuant to Regulation 14A of 
the Securities Exchange Act of 1934, as amended.  


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 
         AND MANAGEMENT

     The information required by this item is incorporated 
herein by reference to the information set forth under the 
caption "Principal Shareholders" in the Company's definitive 
proxy statement for the 1997 Annual Meeting of Shareholders 
filed pursuant to Regulation 14A of the Securities Exchange 
Act of 1934, as amended.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Not applicable.


PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS 
         ON FORM 8-K

     Financial statements, financial statement schedules and 
exhibits not listed have been omitted where the required 
information is included in the consolidated financial 
statements or notes thereto, or is not applicable or required.  

(a)    (1)  The consolidated balance sheets as of June 30, 1997 
            and 1996, the consolidated statements of earnings, 
            shareholders' equity, and cash flows for each of the
            three years in the period ended June 30, 1997, 
            and the notes to consolidated financial statements, 
            presented in the Company's 1997 Annual Report to 
            Shareholders, are incorporated herein by reference.

            The report of Deloitte & Touche LLP, dated August 12, 
            1997 on the 1997 financial statements presented in 
            the Company's 1997 Annual Report to Shareholders, 
            is incorporated herein by reference.

            The report of Alpern, Rosenthal & Company, dated 
            August 12, 1996 on the balance sheet as of 
            June 30, 1996 and the consolidated statements of 
            earnings, shareholders' equity, and cash flows for 
            each of the two years in the period ended 
            June 30, 1996, is included herein.

       (2)  Financial Statement Schedule:

            The financial statement schedule shown below 
            should be read in conjunction with the financial 
            statements contained in the 1997 Annual Report to
            Shareholders.  Other schedules are omitted because 
            they are not applicable or the required information 
            is shown in the financial statements or notes 
            thereto.

            Independent Auditors' Report on Schedule II for 
            the year ended June 30, 1997.

            The report of Alpern, Rosenthal & Company, dated 
            August 12, 1996 on Schedule II for each of the 
            two years in the period June 30, 1996, is included 
            herein.

            Schedule II - Valuation and Qualifying Accounts 
            for each of the three years in the period ended 
            June 30, 1997

       (3)  Exhibits.

EXHIBIT NO.                                         REFERENCE    

2.01  Merger Agreement and Plan of              Incorporated herein by    
      Reorganization by and among               reference is     
      II-VI Incorporated, II-VI Lightning       Exhibit 2.01 to the    
      Optical Incorporated and Lightning        Company's Report    
      Optical Corporation, dated as of          on Form 8-K for the    
      February 22, 1996                         event dated     
                                                February 22, 1996.    
    
2.02  Registration Rights Agreement dated       Incorporated herein by     
      February 22, 1996 by and among certain    reference is    
      former shareholders of Lightning Optical  Exhibit 2.02 to the    
      Corporation and II-VI Incorporated        Company's Report    
                                                on Form 8-K for the     
                                                event dated    
                                                February 22, 1996.    

2.03  Escrow Agreement dated                    Incorporated herein by     
      February 22, 1996 by and among certain    reference is    
      former shareholders of Lightning Optical  Exhibit 2.03 to the    
      Corporation and II-VI Incorporated        Company's Report    
                                                on Form 8-K for the     
                                                event dated    
                                                February 22, 1996.    
    
3.01  Amended and Restated Articles of          Incorporated herein by    
      Incorporation of II-VI Incorporated       reference is    
                                                Exhibit 3.02 to     
                                                Registration Statement    
                                                No.  33-16389 on Form     
                                                S-1.    

3.02  Amended and Restated By-Laws of II-VI     Incorporated herein by     
      Incorporated                              reference is    
                                                Exhibit 3.02 to the     
                                                Company's Annual    
                                                Report on Form 10-K for     
                                                the fiscal year ended     
                                                June 30, 1991 (file     
                                                number 0-16195 and     
                                                docketed on     
                                                September 30, 1991).    
    
10.01 II-VI Incorporated 1982 Incentive         Incorporated herein by     
      Stock Option Plan*                        reference is    
                                                Exhibit 10.01 to     
                                                Registration    
                                                Statement No. 33-16389     
                                                on Form S-1.    
    
10.02 II-VI Incorporated Stock Option Plan      Incorporated herein by     
      of 1987*                                  reference is    
                                                Exhibit 10.02 to     
                                                Registration Statement     
                                                No. 33-16389 on Form     
                                                S-1.    

10.03 II-VI Incorporated Stock Option Plan      Incorporated herein by    
      of 1990*                                  reference is Exhibit    
                                                10.02 to the Company's     
                                                Annual Report on     
                                                Form 10-K for the fiscal    
                                                year ended     
                                                June 30, 1991(file    
                                                number 0-16195 and     
                                                docketed on     
                                                September 30, 1991).    
    
10.04 II-VI Incorporated Employees' Stock       Incorporated herein by     
      Purchase Plan                             reference is    
                                                Exhibit 10.03 to     
                                                Registration Statement     
                                                No. 33-16389 on Form     
                                                S-1.    
    
10.05 II-VI Incorporated Amended                Incorporated herein by    
      and Restated Employees'                   reference is    
      Stock Purchase Plan                       Exhibit 10.04 to     
                                                Registration Statement     
                                                No. 33-16389 on Form     
                                                S-1.    
    
10.06 First Amendment II-VI Incorporated        Incorporated herein by     
      Amended and Restated Employees'           reference is    
      Stock Purchase Plan                       Exhibit 10.01 to the     
                                                Company's Form 10-Q for     
                                                the Quarter Ended     
                                                March 31, 1996.    
    
10.07 II-VI Incorporated Amended and            Incorporated herein by     
      Restated Employees' Profit-Sharing        reference is    
      Plan and Trust Agreement, as amended      Exhibit 10.05 to     
                                                Registration    
                                                Statement No. 33-16389     
                                                on Form S-1.    

10.08 Form of Representative Agreement          Incorporated herein by     
      between the Company and its foreign       reference is    
      representatives                           Exhibit 10.15 to     
                                                Registration    
                                                Statement No. 33-16389     
                                                on Form S-1.    
    
10.09 Form of Employment Agreement*             Incorporated herein by     
                                                reference is    
                                                Exhibit 10.16 to     
                                                Registration    
                                                Statement No. 33-16389     
                                                on Form S-1.    
    

10.10 Description of Management-By-Objective    Incorporated herein by     
      Plan*                                     reference is    
                                                Exhibit 10.09 to the     
                                                Company's Annual    
                                                Report on Form 10-K for     
                                                the fiscal year ended     
                                                June 30, 1993.    
    
10.11 II-VI Incorporated 1994 Nonemployee       Incorporated herein by     
      Directors Stock Option Plan               reference is    
                                                Exhibit A to the     
                                                Company's Proxy    
                                                Statement dated     
                                                September 30, 1994.    

10.12 II-VI Incorporated Deferred               Incorporated herein by.    
      Compensation Plan*                        reference is    
                                                Exhibit 10.12 to the     
                                                Company's Annual Report    
                                                on Form 10-K for the 
                                                fiscal year ended 
                                                June 30, 1996.
    
10.13 Trust Under the II-VI Incorporated        Incorporated herein by 
      Deferred Compensation Plan*               reference is
                                                Exhibit 10.13 to the
                                                Company's Annual Report
                                                on Form 10-K for the 
                                                fiscal year ended 
                                                June 30, 1996.

10.14 Description of Bonus Incentive Plan*      Incorporated herein by
                                                reference is
                                                Exhibit 10.14 to the
                                                Company's Annual Report
                                                on Form 10-K for the 
                                                fiscal year ended 
                                                June 30, 1996.


10.15 Amended and Restated II-VI Incorporated   Incorporated herein by
      Deferred Compensation Plan*               reference is 
                                                Exhibit 10.01 to the
                                                Company's Form 10-Q
                                                for the Quarter Ended
                                                December 31, 1996.

10.16 Amended and Restated II-VI Incorporated   Incorporated herein by
      Stock Option Plan of 1990*                reference is 
                                                Exhibit 10.01 to the
                                                Company's Form 10-Q
                                                for the Quarter Ended
                                                September 30, 1996.

11.01 Statement of Computation of               Filed herewith.
      Earnings Per Share

13.01 Annual Report to Shareholders             Portions of the 1997     
                                                Annual Report are    
                                                filed herewith.    
    
21.01 List of Subsidiaries of II-VI             Filed herewith.    
      Incorporated      
    
23.01 Consent of Deloitte & Touche LLP          Filed herewith.    

23.02 Consent of Alpern, Rosenthal &            Filed herewith.
      Company

27.01 Financial Data Schedule                   Filed herewith.    
_______    
*  Denotes management contract or compensatory plan, contract or 
   arrangement.    
    
     The Registrant will furnish to the Commission upon 
     request copies of any instruments not filed herewith 
     which authorize the issuance of long-term obligations 
     of Registrant not in excess of 10% of the Registrant's 
     total assets on a consolidated basis.    
    
     (b)  No reports on Form 8-K have been filed during the
 .        fourth quarter of fiscal year 1997.
     (c)  The Company hereby files as exhibits to this Form 
          10-K the exhibits set forth in Items 14(a)(3) hereof 
          which are not incorporated by reference.    
     (d)  The Company hereby filed as a financial statement 
          schedule to this Form 10-K the financial statement 
          schedule set forth in Item 14(a)(2) hereof.    
    
     With the exception of the information incorporated by 
     reference to the Company's 1997 Annual Report to 
     Shareholders in Item 1 of Part I, Items 6, 7 and 8 of 
     Part II and Item 14 of Part IV of this Form 10-K, the 
     Company's 1997 Annual Report to Shareholders is not deemed 
     filed as a part of this Report.    


                      SIGNATURES
     Pursuant to the requirements of Section 13 or 15(d) 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
September 26, 1997               By:  /s/ Carl J. Johnson
                                 Carl J. Johnson, Chairman and
                                    Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act 
of 1934, this report has been signed below by the following 
persons on behalf of the registrant and in the capacities and 
on the dates indicated.

                                 Principal Executive Officer:
September 26, 1997               By:  /s/ Carl J. Johnson
                                 Carl J. Johnson, Chairman and
                                    Chief Executive Officer
                                         and Director

September 26, 1997               By: /s/ Francis J. Kramer
                                     Francis J. Kramer
                                    President and Chief
                                Operating Officer and Director

                                  Principal Financial 
                                and Accounting Officer:
September 26, 1997              By:  /s/ James Martinelli
                                    James Martinelli
                                     Treasurer and 
                                Chief Financial Officer

September 26, 1997              By:  /s/ Richard B. Bohlen
                                     Richard B. Bohlen
                                         Director

September 26, 1997              By:  /s/ Thomas E. Mistler
                                     Thomas E. Mistler
                                         Director

September 26, 1997              By:  /s/ Duncan A. J. Morrison
                                    Duncan A. J. Morrison
                                         Director

September 26, 1997              By:  /s/ Peter W. Sognefest
                                      Peter W. Sognefest
                                          Director


INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders
II-VI Incorporated and Subsidiaries
Saxonburg, Pennsylvania

     We have audited the consolidated balance sheet of II-VI
Incorporated and Subsidiaries as of June 30, 1996, and the
related consolidated statements of earnings, shareholders'
equity and cash flows for each of the two years in the period
ended June 30, 1996; such consolidated financial statements are
included in the Company's 1997 Annual Report to Shareholders and
are incorporated herein by reference.  Our audits also included 
the financial statement schedule II, Valuation and Qualifying
Accounts of II-VI Incorporated and Subsidiaries for the years
ended June 30, 1996 and 1995, listed in Part IV at Item 14.
These consolidated financial statements and financial statement
schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these 
consolidated financial statements and financial statement
schedule based on our audits.

     We conducted our audits in accordance with generally
accepted auditing standards.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material 
misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the 
consolidated financial statements.  An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements and
financial statement schedule referred to above present fairly,
in all material respects, the financial position of II-VI
Incorporated and Subsidiaries as of June 30, 1996 and the 
results of their operations and their cash flows for each of
the two years in the period ended June 30, 1996, in conformity
with generally accepted accounting principles.  Also, in our
opinion, such financial statements schedule, when considered
in relation to the basic consolidated financial statements
taken as a whole, presents fairly in all material respects,
the information set forth therein.

/s/ Alpern, Rosenthal & Company
Pittsburgh, Pennsylvania
August 12, 1996




INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
II-VI Incorporated and Subsidiaries:


     We have audited the consolidated balance sheet of 
II-VI Incorporated and subsidiaries as of June 30, 1997 
and the related consolidated statements of earnings, 
shareholders' equity and cash flows for the year then ended, 
and have issued our report thereon dated August 12, 1997; 
such consolidated financial statements and report are included 
in your 1997 Annual Report to Shareholders and are 
incorporated herein by reference.  Our audit also included 
the consolidated financial statement Schedule II, Valuation 
and Qualifying Accounts, of II-VI Incorporated and subsidiaries 
for the year ended June 30, 1997.  The consolidated financial 
statement schedule is the responsibility of the Company's 
management.  Our responsibility is to express an opinion based 
on our audit.  In our opinion, such financial statement 
schedule, when considered in relation to the basic 
consolidated financial statements taken as a whole, presents 
fairly in all material respects the information set forth 
therein.


/s/ Deloitte & Touche LLP

Pittsburgh, Pennsylvania
August 12, 1997







                                                    SCHEDULE II    
    
                                     II-VI INCORPORATED AND SUBSIDIARIES    
    
                                         VALUATION AND QUALIFYING ACCOUNTS    
                                   YEARS ENDED JUNE 30, 1995, 1996, AND 1997
                                              (IN THOUSANDS OF DOLLARS)   
   
                                                       Additions    
                                                 ------------------------    
                                    Balance at                  Charged       Deduction    
                                    Beginning     Charged to    to Other        from        Balance at     
                                     of Year       Expense      Accounts 1    Reserves 2    End of Year    
                                    ---------     ----------    --------      ----------    -----------
                                                                                
YEAR ENDED JUNE 30, 1995: 
Allowance for doubtful accounts
   & warranty returns                 $125           $49          $79            $ (8)         $261 
YEAR ENDED JUNE 30, 1996: 
Allowance for doubtful accounts
   & warranty returns                 $261           $86          $16            $117          $246 
YEAR ENDED JUNE 30, 1997: 
Allowance for doubtful accounts
   & warranty returns                 $246           $45          $35            $ 20          $306
_________
1 Amounts primarily relate to businesses acquired and warranty returns.
2 Uncollectible accounts written off (recovered), net. 










EXHIBIT NO.                                         REFERENCE    

2.01  Merger Agreement and Plan of              Incorporated herein by    
      Reorganization by and among               reference is     
      II-VI Incorporated, II-VI Lightning       Exhibit 2.01 to the    
      Optical Incorporated and Lightning        Company's Report    
      Optical Corporation, dated as of          on Form 8-K for the    
      February 22, 1996                         event dated     
                                                February 22, 1996.    
    
2.02  Registration Rights Agreement dated       Incorporated herein by     
      February 22, 1996 by and among certain    reference is    
      former shareholders of Lightning Optical  Exhibit 2.02 to the    
      Corporation and II-VI Incorporated        Company's Report    
                                                on Form 8-K for the     
                                                event dated    
                                                February 22, 1996.    

2.03  Escrow Agreement dated                    Incorporated herein by     
      February 22, 1996 by and among certain    reference is    
      former shareholders of Lightning Optical  Exhibit 2.03 to the    
      Corporation and II-VI Incorporated        Company's Report    
                                                on Form 8-K for the     
                                                event dated    
                                                February 22, 1996.    
    
3.01  Amended and Restated Articles of          Incorporated herein by    
      Incorporation of II-VI Incorporated       reference is    
                                                Exhibit 3.02 to     
                                                Registration Statement    
                                                No.  33-16389 on Form     
                                                S-1.    

3.02  Amended and Restated By-Laws of II-VI     Incorporated herein by     
      Incorporated                              reference is    
                                                Exhibit 3.02 to the     
                                                Company's Annual    
                                                Report on Form 10-K for     
                                                the fiscal year ended     
                                                June 30, 1991 (file     
                                                number 0-16195 and     
                                                docketed on     
                                                September 30, 1991).    
    
10.01 II-VI Incorporated 1982 Incentive         Incorporated herein by     
      Stock Option Plan*                        reference is    
                                                Exhibit 10.01 to     
                                                Registration    
                                                Statement No. 33-16389     
                                                on Form S-1.    
    
10.02 II-VI Incorporated Stock Option Plan      Incorporated herein by     
      of 1987*                                  reference is    
                                                Exhibit 10.02 to     
                                                Registration Statement     
                                                No. 33-16389 on Form     
                                                S-1.    

10.03 II-VI Incorporated Stock Option Plan      Incorporated herein by    
      of 1990*                                  reference is Exhibit    
                                                10.02 to the Company's     
                                                Annual Report on     
                                                Form 10-K for the fiscal    
                                                year ended     
                                                June 30, 1991(file    
                                                number 0-16195 and     
                                                docketed on     
                                                September 30, 1991).    
    
10.04 II-VI Incorporated Employees' Stock       Incorporated herein by     
      Purchase Plan                             reference is    
                                                Exhibit 10.03 to     
                                                Registration Statement     
                                                No. 33-16389 on Form     
                                                S-1.    
    
10.05 II-VI Incorporated Amended                Incorporated herein by    
      and Restated Employees'                   reference is    
      Stock Purchase Plan                       Exhibit 10.04 to     
                                                Registration Statement     
                                                No. 33-16389 on Form     
                                                S-1.    
    
10.06 First Amendment II-VI Incorporated        Incorporated herein by     
      Amended and Restated Employees'           reference is    
      Stock Purchase Plan                       Exhibit 10.01 to the     
                                                Company's Form 10-Q for     
                                                the Quarter Ended     
                                                March 31, 1996.    

10.07 II-VI Incorporated Amended and            Incorporated herein by     
      Restated Employees' Profit-Sharing        reference is    
      Plan and Trust Agreement, as amended      Exhibit 10.05 to     
                                                Registration    
                                                Statement No. 33-16389     
                                                on Form S-1.    

10.08 Form of Representative Agreement          Incorporated herein by     
      between the Company and its foreign       reference is    
      representatives                           Exhibit 10.15 to     
                                                Registration    
                                                Statement No. 33-16389     
                                                on Form S-1.    
    
10.09 Form of Employment Agreement*             Incorporated herein by     
                                                reference is    
                                                Exhibit 10.16 to     
                                                Registration    
                                                Statement No. 33-16389     
                                                on Form S-1.    
    

10.10 Description of Management-By-Objective    Incorporated herein by     
      Plan*                                     reference is    
                                                Exhibit 10.09 to the     
                                                Company's Annual    
                                                Report on Form 10-K for     
                                                the fiscal year ended     
                                                June 30, 1993.    
    
10.11 II-VI Incorporated 1994 Nonemployee       Incorporated herein by     
      Directors Stock Option Plan               reference is    
                                                Exhibit A to the     
                                                Company's Proxy    
                                                Statement dated     
                                                September 30, 1994.    

10.12 II-VI Incorporated Deferred               Incorporated herein by.    
      Compensation Plan*                        reference is    
                                                Exhibit 10.12 to the     
                                                Company's Annual Report    
                                                on Form 10-K for the 
                                                fiscal year ended 
                                                June 30, 1996.
    
10.13 Trust Under the II-VI Incorporated        Incorporated herein by 
      Deferred Compensation Plan*               reference is
                                                Exhibit 10.13 to the
                                                Company's Annual Report
                                                on Form 10-K for the 
                                                fiscal year ended 
                                                June 30, 1996.

10.14 Description of Bonus Incentive Plan*      Incorporated herein by
                                                reference is
                                                Exhibit 10.14 to the
                                                Company's Annual Report
                                                on Form 10-K for the 
                                                fiscal year ended 
                                                June 30, 1996.
    

10.15 Amended and Restated II-VI Incorporated   Incorporated herein by
      Deferred Compensation Plan*               reference is 
                                                Exhibit 10.01 to the
                                                Company's Form 10-Q
                                                for the Quarter Ended
                                                December 31, 1996.

10.16 Amended and Restated II-VI Incorporated   Incorporated herein by
      Stock Option Plan of 1990*                reference is 
                                                Exhibit 10.01 to the
                                                Company's Form 10-Q
                                                for the Quarter Ended
                                                September 30, 1996.

11.01 Statement of Computation of               Filed herewith.
      Earnings Per Share

13.01 Annual Report to Shareholders             Portions of the 1997    
                                                Annual Report are    
                                                filed herewith.    
    
21.01 List of Subsidiaries of II-VI             Filed herewith.    
      Incorporated      
    
23.01 Consent of Deloitte & Touche LLP          Filed herewith.    

23.02 Consent of Alpern, Rosenthal &            Filed herewith.
      Company

27.01 Financial Data Schedule                   Filed herewith.    

_______
*  Denotes management contract or compensatory plan, contract or arrangement.

EX-11

                                     II-VI INCORPORATED AND SUBSIDIARIES    
                               STATEMENT OF COMPUTATION OF EARNINGS PER SHARE

   
                                                                  Year Ended June 30,   
($000'S except per share data)                             1997           1996         1995
- -------------------------------------------------------------------------------------------
                                                                               
Net earnings                                            $ 7,111        $ 4,371      $ 2,518
                                                        =======        =======      =======

Common stock                                              6,359          5,842        5,045
Outstanding options                                         255            411          244
                                                        -------        -------      -------
Primary weighted average shares outstanding               6,614          6,253        5,289
                                                        =======        =======      =======

Common stock                                              6,359          5,842        5,045
Outstanding options                                         255            444          402
                                                        -------        -------      -------
Fully diluted weighted average shares outstanding         6,614          6,286        5,447
                                                        =======        =======      =======

Primary earnings per share                              $  1.08        $  0.70      $  0.48
                                                        =======        =======      =======

Fully diluted earnings per share                        $  1.08        $  0.70      $  0.46
                                                        =======        =======      =======

Notes:

The 1995 calculation is adjusted to reflect the two-for-one stock split in fiscal 1996.

The common stock equivalents consist of the shares reserved for issuance under II-VI's stock option plan and 
deferred under II-VI's deferred compensation, earnings growth, deferred compensation plan for directors and 
directors' common stock plan.

The fully diluted earnings per share calculations are submitted in accordance with Regulation S-K item 
601(b) (11).

EX-13

Management's Discussion & Analysis
Fiscal 1997, 1996 & 1995 - Results of Operations

Results of Operations
Fiscal 1997 Compared to Fiscal 1996

Overview
Net earnings rose 63% in fiscal 1997 to $7.1 million, up 
from $4.4 million in fiscal 1996. Revenues grew 39% to $52.7 
million in fiscal 1997 compared to $37.9 million last fiscal 
year. This growth was attributed to improved CO2 laser 
optics sales throughout the world along with the results of 
operations of Lightning Optical Corporation, which was 
acquired during February 1996, being included for a full 
fiscal year (the "Acquisition"). Bookings increased 35% to 
$56.7 million in fiscal 1997 compared to $42.1 million in 
fiscal 1996. Order backlog increased 30% to $16.9 million at 
June 30, 1997 from $12.9 million at June 30, 1996 as a 
result of orders outpacing shipments in fiscal 1997 and, to 
a lesser extent, the Acquisition. Manufacturing orders 
comprised 83% of the backlog at June 30, 1997, compared to 
82% of backlog at June 30, 1996.

Net Earnings
Net earnings rose 63% in fiscal 1997 to $7.1 million, up 
from $4.4 million in fiscal 1996. The major contributors to 
the net earnings growth were improved CO2 laser optics sales 
volume, the Acquisition, and additional other income as a 
result of higher interest income from increased cash levels 
and a foreign currency gain. These contributors more than 
offset both the increased selling, general and 
administrative expenses that were needed to support the 
Company's growth, and a slight increase in the effective 
corporate income tax rate.

Sales and Markets
Bookings increased 35% to $56.7 million in fiscal 1997 
compared to $42.1 million in fiscal 1996. Orders for 
manufactured products accounted for the entire increase in 
bookings. Contract research and development bookings 
decreased slightly from fiscal year 1996. The largest 
portion of the growth in manufacturing orders was driven by 
increased demand in the international industrial markets, 
including Japan, and the Acquisition.

Revenues grew 39% to $52.7 million in fiscal 1997 compared 
to $37.9 million last fiscal year. Approximately 93% of this 
growth was in manufacturing revenues. This growth was led by 
increased demand in the international industrial markets and 
the Acquisition. Contract research and development revenues 
increased 59% to $2.7 million in fiscal 1997 from $1.7 
million in fiscal 1996. This increase was attributable to 
work being performed on several additional government 
contract awards in fiscal 1997.

Costs and Expenses
Manufacturing gross margin was $22.5 million or 45% of net 
sales in fiscal 1997 compared to $15.7 million or 43% of net 
sales in fiscal 1996. This increase was attributable to 
higher sales volume in the CO2 laser optics market and the 
Acquisition. The increase in gross margin as a percentage of 
net sales was driven by lower per unit operating costs 
associated with increased production volume and improved 
manufacturing efficiencies.

Contract research and development gross margin was $707,000 
or 27% of net contract sales in fiscal 1997 compared to 
$452,000 or 27% of net contract sales in fiscal 1996. The 
increase was attributable to work being performed on the 
additional government contract awards mentioned above.
Company-funded internal research and development increased 
to $1.0 million in fiscal 1997 from $514,000 in fiscal 1996. 
The majority of this increase was attributable to nuclear 
radiation detector development. 

Selling, general and administrative expenses were $12.7 
million or 24% of net sales in fiscal 1997 compared to $9.9 
million or 26% of net sales in fiscal 1996. This increase 
was attributable to the Acquisition, increased compensation 
expense associated with the Company's worldwide profit-
driven bonus programs and increased payroll and other 
general administrative expenses needed to support the 
Company's growth.

                         9

Other income increased to $544,000 in fiscal 1997 from 
$369,000 in fiscal 1996 as a result of investment earnings 
on increased cash balances and a foreign currency gain 
driven by the favorable position of the U.S. dollar against 
the Japanese yen experienced for the majority of the year.
The effective corporate income tax rate was 29% in fiscal 
1997 compared to 27% in fiscal 1996. This increase was 
attributable to the lower proportion of the Company's 
earnings that were generated by foreign subsidiaries. The 
Company's future effective tax rates will continue to be 
affected by the level of profit or loss generated by the 
foreign subsidiaries. The Company anticipates that its 
effective corporate income tax rate for fiscal 1998 will 
increase as a result of increased earnings attributable 
to domestic operations as a percentage of total corporate 
earnings.

Fiscal 1996 Compared to Fiscal 1995

Overview
Net earnings rose 74% in fiscal 1996 to $4.4 million, up 
from $2.5 million in fiscal 1995. Revenues grew 37% to $37.9 
million in fiscal 1996 compared to $27.8 million last fiscal 
year. This growth was attributed to the acquisition of Virgo 
Optics and Lightning Optical Corporation ("VLOC") and 
improved CO2 laser optics sales throughout the world. 
Bookings increased 48% to $42.1 million in fiscal 1996 
compared to $28.4 million in fiscal 1995. Order backlog 
increased 87% to $12.9 million at June 30, 1996 from $6.9 
million at June 30, 1995 as a result of orders outpacing 
shipments in fiscal 1996 and, to a lesser extent, the 
Acquisition. Manufacturing orders comprised 82% of the 
backlog at June 30, 1996, compared to 96% of backlog at June 
30, 1995. The increase in the contract research and 
development backlog was a result of a $2.3 million, two-year 
DARPA contract award. 

Net Earnings
Net earnings rose 74% in fiscal 1996 to $4.4 million, up 
from $2.5 million in fiscal 1995. The major contributors to 
the net earnings growth were improved CO2 laser optics sales 
volume, the acquisition of VLOC, and additional interest 
income as a result of increased cash levels. These 
contributors more than offset both the increased selling, 
general and administrative expenses that were needed to 
support the Company's growth and a slight increase in the 
effective corporate income tax rate.

Sales and Markets
Bookings increased 48% to $42.1 million in fiscal 1996 
compared to $28.4 million in fiscal 1995. Manufacturing 
orders comprised nearly 80% of this growth. The largest 
portion of the growth in manufacturing orders was from the 
acquisition of VLOC, followed by increases in the 
international industrial markets and the military/aerospace 
and medical markets. The increase in contract research and 
development bookings was predominantly from the $2.3 million 
DARPA contract and a $400,000 U.S.-Israel Science and 
Technology commission award.

Revenues grew 37% to $37.9 million in fiscal 1996 compared 
to $27.8 million last fiscal year. Approximately 95% of this 
growth was in manufacturing revenues. This growth was led by 
the acquisition of VLOC, followed by increases in the 
international industrial markets, the military/aerospace 
and medical markets, and the domestic industrial market. 
Contract research and development revenues increased 44% 
to $1.7 million in fiscal 1996 from $1.2 million in fiscal 
1995.  This increase was attributable to work being performed 
on several additional government contract awards in 
fiscal 1996.

                        10

Costs and Expenses
Manufacturing gross margin was $15.7 million or 43% of net 
sales in fiscal 1996 compared to $10.8 million or 41% of net 
sales in fiscal 1995. This increase was attributable to 
higher sales volume in the CO2 laser optics market and the 
acquisition of VLOC. The increase in gross margin as a 
percentage of net sales was driven by lower per unit 
operating costs associated with increased production volume.
Contract research and  development  gross margin was 
$452,000 or 27% of net sales in fiscal 1996 compared to 
$239,000 or 21% of net sales in fiscal 1995. The increase 
was attributable to work being performed on the additional 
government contract awards mentioned above and an increase 
in reimbursable costs allocable to government contracts.
Company-funded internal research and development increased 
to $514,000 in fiscal 1996 from $447,000 in fiscal 1995. The 
majority of this increase was in the crystal growth research 
area.

Selling, general and administrative expenses were $9.9 
million or 26% of net sales in fiscal 1996 compared to $7.3 
million or 26% of net sales in fiscal 1995. This increase 
was  attributable to expenses incurred in the operation of 
VLOC, increased compensation expense associated with the 
Company's worldwide profit-driven bonus programs and 
increased payroll and other general administrative expenses 
needed to support the Company's growth.

Other income increased to $369,000 in fiscal 1996 from 
$143,000 in fiscal 1995 as a result of investment earnings 
on increased cash reserves. The increased cash reserves were 
attributable to the Company's October 1995 public stock 
offering.

The effective corporate income tax rate was 27% in fiscal 
1996 compared to 26% in fiscal 1995. This increase was 
attributable to the proportion of the Company's earnings 
that were generated by foreign subsidiaries. The Company's 
future effective tax rates will continue to be affected by 
the level of profit or loss generated by the foreign 
subsidiaries.

Liquidity and Capital Resources

The Company historically has funded its working capital 
needs, capital expenditures and growth from cash flow from 
operations and, to a lesser extent, borrowings.
The two largest sources of the $8.4 million in cash 
generated from operations in fiscal 1997 were $10.3 million 
in net earnings before depreciation and amortization and a 
$2.0 million increase in accounts payable. These cash 
sources were partially offset by increases in accounts 
receivable and inventory of $2.1 million and $2.6 million, 
respectively. The increase in accounts receivable was 
attributed mainly to the increased revenue volume. The 
increase in inventory was necessary to keep pace with 
customer demand for the Company's products and to increase 
customer service with shorter lead times as well as to 
improve on-time deliveries.

The Company invested $7.4 million in capital expenditures 
during the year. These expenditures focused on the 
automation of processes and facility expansions in Saxonburg 
and the VLOC locations. A $741,000 low interest rate loan 
agreement with the Pennsylvania Industrial Development 
Authority was completed during fiscal 1997 to finance a 
portion of the Saxonburg expansion. Planned discretionary 
capital expenditures for fiscal 1998 of approximately $15.2 
million will focus on automation of processes, improved 
capacity and continued opportunities for synergy from the 
merger of the two VLOC locations.

                        11

The Company believes internally generated funds along with 
existing cash reserves will be sufficient to fund its 
working capital needs, capital expenditures and scheduled 
debt payments for fiscal 1998 and the foreseeable future.
The impact of inflation on the Company's business has not 
been material.

In the normal course of business, the Company enters into 
foreign currency forward exchange contracts with its banks. 
The purpose of these contracts is to hedge the impact of 
foreign currency fluctuations on committed or anticipated 
foreign currency positions. The Company monitors its 
positions and the credit ratings of the parties to these 
contracts. While the Company may be exposed to potential 
losses due to credit risk in the event of non-performance by 
the counterparties to these financial instruments, it does 
not anticipate such losses. The Company anticipates a low 
interest rate, $2.0 million equivalent, yen loan with PNC 
Bank to be entered into by September 30, 1997 in an effort 
to minimize the foreign currency exposure.

This Management's Discussion and Analysis, along with the 
preceding Letters to Shareholders, contain forward looking 
statements as defined by Section 21E of the Securities 
Exchange Act of 1934, including the statements regarding the 
Company's long-term growth rate, anticipated higher demand 
for the Company's products, the expected increase in the 
effective corporate income tax rate for fiscal 1998 and the 
Company's ability to fund future working capital needs, 
capital expenditures and scheduled debt payments from 
internally generated funds and existing cash reserves. The 
Company's long-term growth rate, projections for higher 
product demand and ability to fund future capital needs from 
internally generated funds and existing cash reserves could 
differ from these statements if worldwide economic 
conditions change, competitive conditions intensify, 
technology problems emerge, and/or if suitable acquisitions 
of technologies or businesses cannot be consummated. The 
Company's anticipated increase in the effective corporate 
income tax rate may not occur if there is a material change 
in worldwide economic conditions that causes a difference in 
the anticipated proportion of foreign earnings to total 
earnings. There are additional risk factors that could 
affect the Company's business, results of operations or 
financial condition. Investors are encouraged to review the 
risk factors set forth in the Company's most recent Form 10-
K as filed with the Securities and Exchange Commission.

New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board 
issued Statement of Financial Accounting Standards ("SFAS") 
No. 128, Earnings per Share, which establishes standards for 
computing and presenting earnings per share and applies to 
entities with publicly held common stock or potential common 
stock. This Statement will be effective beginning with the 
Company's financial statements for the quarter ending March 
31, 1998. This Statement requires restatement of all prior-
period earnings per share data presented. Basic earnings per 
share as defined by SFAS No. 128 for fiscal years 1997, 1996 
and 1995 would be $1.12, $.75 and $.50, respectively. 
Diluted earnings per share as defined by SFAS No. 128 
approximates the historically presented earnings per share 
for the fiscal years 1997, 1996 and 1995.

In June 1997, the Financial Accounting Standards Board 
issued SFAS No. 131, Disclosures about Segments of an 
Enterprise and Related Information, which redefines how 
operating segments are determined and requires disclosure of 
certain financial and descriptive information about a 
Company's operating segments. The Company is required to 
adopt this pronouncement beginning in fiscal 1999. The 
Company has not yet completed its analysis of which 
operating segments under this standard it will be required 
to report on.

                        12


  
II-VI Incorporated & Subsidiaries  
Five-Year Financial Summary  
 
                                                            Year Ended June 30,  
(000 except per share data)              1997          1996          1995         1994*         1993
- ----------------------------------------------------------------------------------------------------- 
                                                                                    
Statement of Earnings  
Net revenues                           $52,741       $37,940       $27,760       $18,681      $17,169
Net earnings                           $ 7,111       $ 4,371       $ 2,518       $ 1,135      $    75

Earnings per share                     $  1.08       $  0.70       $  0.48       $  0.22      $   .01
Weighted average shares outstanding      6,614         6,253         5,289         5,061        5,255
- ----------------------------------------------------------------------------------------------------- 
Share and per share data for the fiscal years ended June 30, 1995, 1994, and 1993 
were adjusted to reflect the two-for-one stock split in fiscal 1996 - See Note A of 
the Notes to Consolidated Financial Statements.
*Included in net earnings is a gain of $699,000 on the sale of an investment in a former 
Japanese distributor.


 
                                                                June 30,  
($000)                                    1997         1996         1995          1994          1993
- ----------------------------------------------------------------------------------------------------- 
                                                                                    
Balance Sheet  
Working capital                        $21,089      $16,687      $ 8,872       $ 6,648       $ 6,009   
Total assets                            54,512       44,169       24,367        17,570        17,265   
Total debt                               1,346        1,461        1,563           263           765   
Deferred taxes - net                     1,185        1,324          658           562           579   
Retained earnings                       25,142       18,031       13,660        11,142        10,007   
Shareholders' equity                    42,522       34,403       16,998        14,237        13,217   
- ----------------------------------------------------------------------------------------------------- 
For the five year period ended June 30, 1997, no dividends were declared.  

                        13


II-VI Incorporated & Subsidiaries  
Quarterly Financial Data  
 
Fiscal 1997                                                     Quarter Ended  
($000 except per share data)                 9/30/1996     12/31/1996     3/31/1997     6/30/1997  
- ----------------------------------------------------------------------------------------------------- 
                                                                                    
Net revenues                                   $12,110        $12,190      $ 13,651      $ 14,790  
Cost of goods sold                               6,743          6,732         7,691         8,364  
Internal research and development                  124            260           312           306  
Selling, general and administrative expenses     3,030          2,951         3,210         3,522  
Interest and other expense (income) - net         (125)          (168)          (52)         (143) 
- ----------------------------------------------------------------------------------------------------- 
Earnings before income taxes                     2,338          2,415         2,490         2,741  
Income taxes                                       678            700           722           773  
- ----------------------------------------------------------------------------------------------------- 
Net earnings                                   $ 1,660        $ 1,715      $  1,768      $  1,968  
- ----------------------------------------------------------------------------------------------------- 
Earnings per share                             $  0.25        $  0.25      $   0.27      $   0.30  
===================================================================================================== 


 
Fiscal 1996                                                     Quarter Ended  
($000 except per share data)                 9/30/1995     12/31/1995     3/31/1996     6/30/1996  
- ----------------------------------------------------------------------------------------------------- 
                                                                                    
Net revenues                                   $ 8,088        $ 7,954      $ 10,072      $ 11,826  
Cost of goods sold                               4,657          4,638         5,765         6,750  
Internal research and development                  148            138           154            74  
Selling, general and administrative expenses     2,131          2,152         2,610         3,031  
Interest and other expense (income) - net           16           (139)          (83)         (122) 
- ----------------------------------------------------------------------------------------------------- 
Earnings before income taxes                     1,136          1,165         1,626         2,093  
Income taxes                                       330            331           417           571  
- ----------------------------------------------------------------------------------------------------- 
Net earnings                                   $   806        $   834      $  1,209      $  1,522  
- ----------------------------------------------------------------------------------------------------- 
Earnings per share                             $  0.15        $  0.14      $   0.18      $   0.23  
===================================================================================================== 


                        14


Independent Auditors' Report

The Board of Directors and Shareholders of II-VI 
Incorporated and Subsidiaries:

We have audited the accompanying consolidated balance sheet 
of II-VI Incorporated and subsidiaries as of June 30, 1997, 
and the related consolidated statements of earnings, 
shareholders' equity and cash flows for the year then ended. 
These consolidated financial statements are the 
responsibility of the Company's management. Our 
responsibility is to express an opinion on these 
consolidated financial statements based on our audit. The 
consolidated balance sheet of II-VI Incorporated and 
subsidiaries as of June 30, 1996 and the related 
consolidated statements of earnings, shareholders' equity 
and cash flows for each of the two years in the period ended 
June 30, 1996, were audited by other auditors whose report 
dated August 12, 1996, expressed an unqualified opinion on 
those statements.

We conducted our audit in accordance with generally accepted 
auditing standards. Those standards require that we plan and 
perform the audit to obtain reasonable assurance about 
whether the financial statements are free of material 
misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the 
consolidated financial statements. An audit also includes 
assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the 
overall financial statement presentation. We believe that 
our audit provides a reasonable basis for our opinion. 

In our opinion, the fiscal 1997 consolidated financial 
statements referred to above present fairly, in all material 
respects, the financial position of II-VI Incorporated and 
subsidiaries as of June 30, 1997 and the results of their 
operations and their cash flows for the year then ended in 
conformity with generally accepted accounting principles.

/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
August 12, 1997

                        15



  
II-VI Incorporated & Subsidiaries  
Consolidated Balance Sheets  
 
                                                                                 June 30,  
($000 except share data)                                                   1997            1996  
- ----------------------------------------------------------------------------------------------------- 
                                                                                        
Current Assets  
Cash and cash equivalents                                              $ 10,854         $ 9,417
Accounts receivable -- less allowance for doubtful accounts  
   of $306 in 1997 and $246 in 1996                                      10,808           8,712
Inventories                                                               8,129           5,490
Deferred income taxes                                                       428             429
Prepaid and other current assets                                            563             607
- ----------------------------------------------------------------------------------------------------- 
Total Current Assets                                                     30,782          24,655
Property, Plant & Equipment, Net                                         19,631          15,085
Other Assets                                                              4,099           4,429
- ----------------------------------------------------------------------------------------------------- 
                                                                       $ 54,512        $ 44,169
=====================================================================================================


Current Liabilities  
Notes payable                                                          $    590        $  1,393  
Accounts payable                                                          3,207           1,260  
Accrued salaries, wages and bonuses                                       3,740           3,105  
Income taxes payable                                                         80             607  
Accrued profit sharing contribution                                         740             556
Other current liabilities                                                 1,264           1,024
Current portion of long-term debt                                            72              23
- ----------------------------------------------------------------------------------------------------- 
Total Current Liabilities                                                 9,693           7,968
Long-Term Debt (Less Current Portion)                                       684              45
Deferred Income Taxes                                                     1,613           1,753
Commitments & Contingencies
                                                                              -               -  
Shareholders' Equity  
Preferred stock, no par value; authorized - 5,000,000 shares; unissued        -               -  
Common stock, no par value; authorized - 30,000,000 shares;   
    issued - 6,802,946 shares in 1997; 6,691,718 shares in 1996          18,072          17,055
Cumulative translation adjustment                                            70              79 
Retained earnings                                                        25,142          18,031
- ----------------------------------------------------------------------------------------------------- 
                                                                         43,284          35,165  
Less treasury stock at cost                                                 762             762
- ----------------------------------------------------------------------------------------------------- 
Total Shareholders' Equity                                               42,522          34,403  
- ----------------------------------------------------------------------------------------------------- 
                                                                       $ 54,512        $ 44,169
=====================================================================================================
See notes to Consolidated Financial Statements.  

                        16

II-VI Incorporated & Subsidiaries  
Consolidated Statements of Earnings & Shareholders' Equity  
 

Earnings                                                    Year Ended June 30,  
($000 except per share data)                           1997        1996        1995  
- ---------------------------------------------------------------------------------------
                                                                   
Revenues  
Net sales:  
  Domestic                                         $ 27,634    $ 19,922    $ 13,697   
  International                                      22,450      16,344      12,901
Contract research and development                     2,657       1,674       1,162
- ---------------------------------------------------------------------------------------
                                                     52,741      37,940      27,760
- ---------------------------------------------------------------------------------------
Costs, Expenses and Other Income  
Cost of goods sold                                   27,580      20,588      15,765
Contract research and development                     1,950       1,222         923
Internal research and development                     1,002         514         447
Selling, general and administrative expenses         12,713       9,924       7,324
Interest expense                                         56          41          57
Other income - net                                     (544)       (369)       (143)
- ---------------------------------------------------------------------------------------
                                                     42,757      31,920      24,373
- ---------------------------------------------------------------------------------------
Earnings Before Income Taxes                          9,984       6,020       3,387
Income Taxes                                          2,873       1,649         869
- ---------------------------------------------------------------------------------------
Net Earnings                                       $  7,111    $  4,371    $  2,518
- ---------------------------------------------------------------------------------------
Earnings Per Share                                 $   1.08    $   0.70    $   0.48
=======================================================================================
See notes to Consolidated Financial Statements.  


 
                                                          Cumulative  
                                                          Translation  Retained  
Shareholders' Equity                      Common  Stock   Adjustment   Earnings   Treasury Stock  
- ------------------------------------------------------------------------------------------------------------
(000)                                     Shares  Amount                          Shares   Amount    Total  
- ------------------------------------------------------------------------------------------------------------
                                                                               
Balance-July 1, 1994                       5,586 $ 4,184     $ 10      $ 11,142   (566)   $(1,099) $ 14,237  
Shares issued under the stock option plan     84     131        -             -      -          -       131  
Purchase of treasury stock                     -       -        -             -     (5)       (31)      (31) 
Net earnings for the year                      -       -        -         2,518      -          -     2,518  
Translation adjustment                         -       -      (27)            -      -          -       (27) 
Tax benefit for options exercised              -     170        -             -      -          -       170  
- ------------------------------------------------------------------------------------------------------------
Balance-June 30, 1995                      5,670   4,485      (17)       13,660   (571)    (1,130)   16,998  
Shares issued for purchase  
   of Lightning Optical Corporation            -   1,470        -             -    187       368     1,838  
Net proceeds from stock offering           1,000  10,929        -             -      -         -    10,929  
Shares issued under stock option plan         22      71        -             -      -         -        71  
Net earnings for the year                      -       -        -         4,371      -         -     4,371  
Translation adjustment                         -       -       96             -      -         -        96  
Tax benefit for options exercised              -     100        -             -      -         -       100  
- ------------------------------------------------------------------------------------------------------------
Balance-June 30, 1996                      6,692  17,055       79        18,031   (384)     (762)   34,403 
Shares issued under stock option plan        111     285        -             -      -         -       285
Net earnings for the year                      -       -        -         7,111      -         -     7,111  
Translation adjustment                         -       -       (9)            -      -         -        (9)  
Tax benefit for options exercised              -     732        -             -      -         -       732 
- ------------------------------------------------------------------------------------------------------------
Balance-June 30, 1997                      6,803 $18,072     $ 70      $ 25,142   (384)   $ (762)  $42,522 
============================================================================================================
See notes to Consolidated Financial Statements.  

                        17


II-VI Incorporated & Subsidiaries  
Consolidated Statements of Cash Flows  
 
                                                               Year Ended June 30,  
($000)                                                    1997        1996        1995  
- ----------------------------------------------------------------------------------------
                                                                       
Cash Flows From Operating Activities   
Net earnings                                           $ 7,111     $ 4,371     $ 2,518
Adjustments to reconcile net earnings to net cash  
provided by operating activities:  
  Depreciation                                           2,852       2,156       1,956 
  Amortization                                             333         332          50
  (Gain) loss on foreign currency transactions            (104)          9         (76)
  Net (gain) loss on disposal of property and equipment    (32)          -          19
  Deferred income taxes                                   (138)        (83)         96
  Increase (decrease) in cash from changes in:  
    Accounts receivable                                 (2,061)     (2,462)       (826)
    Inventories                                         (2,633)     (1,296)       (384)
    Accounts payable                                     1,961         576         196
    Other operating net assets                           1,150         211       1,917
- ----------------------------------------------------------------------------------------
Net cash provided by operating activities                8,439       3,814       5,466  
- ----------------------------------------------------------------------------------------
Cash Flows From Investing Activities   
Additions to property, plant & equipment                (7,432)     (6,146)     (2,384)
Proceeds from sale of property, plant & equipment           66           -           -
Net cash on purchase of subsidiaries                         -      (1,938)     (2,353)
Additions to other assets                                   (3)        (23)       (115)
- ----------------------------------------------------------------------------------------
Net cash used in investing activities                   (7,369)     (8,107)     (4,852)
- ----------------------------------------------------------------------------------------

Cash Flows From Financing Activities   
(Payments) proceeds on short-term borrowings              (728)     (1,095)      1,472
Proceeds from long-term borrowings                         741           -         108
Payments on long-term borrowings                           (53)        (23)       (281)
Proceeds from sale of common stock                         285      11,100         301
Purchase of treasury stock                                   -           -         (31)
- ----------------------------------------------------------------------------------------
Net cash provided by financing activities                  245       9,982       1,569
- ----------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                    122         (94)        (95)
- ----------------------------------------------------------------------------------------
Net increase in cash and cash equivalents                1,437       5,595       2,088
Cash and Cash Equivalents  
Beginning of year                                        9,417       3,822       1,734
- ----------------------------------------------------------------------------------------
End of year                                            $10,854     $ 9,417     $ 3,822
========================================================================================
See notes to Consolidated Financial Statements.  
  

                        18


Note A
Summary of Significant Accounting Policies

Principles of Consolidation
The consolidated financial statements include II-VI 
Incorporated (the "Company") and its wholly-owned 
subsidiaries II-VI Worldwide, Inc., II-VI Delaware, Inc., 
II-VI Japan Incorporated, II-VI VLOC Incorporated, II-VI 
U.K. Limited, and II-VI Singapore Pte., Ltd. All significant 
intercompany transactions and balances have been eliminated.

     During fiscal 1996 the Company formed II-VI Optics (Suzhou) 
Co. Ltd., a wholly-owned subsidiary located in China that 
manufactures small infrared optics. The subsidiary began 
operations in fiscal 1997 and is consolidated as part of  
II-VI Singapore Pte., Ltd.

Inventories 
Inventories are valued at the lower of cost or 
market, with cost determined on the first-in, first-out 
basis. Inventory costs include material, labor and 
manufacturing overhead.

Depreciation  
Depreciation for financial reporting purposes 
is computed primarily by the straight-line method over the 
estimated useful lives of the assets which range from 5 to 
20 years.

Foreign Currency Translation
For II-VI Singapore Pte., Ltd., the functional currency is 
the U.S. dollar. Gains and losses on the remeasurement of 
the local currency financial statements are included in net 
earnings.

     For II-VI Japan Incorporated and II-VI U.K. Limited, the 
functional currency is the local currency. Assets and 
liabilities of those operations are translated into U.S. 
dollars using year-end exchange rates; income and expenses 
are translated using the average exchange rates for the 
reporting period. Translation adjustments are deferred as a 
separate component of shareholders' equity.

Income Taxes  
Deferred income taxes are determined based on 
the differences between financial statement and tax basis of 
assets and liabilities using enacted tax rates in effect in 
the years in which the assets or liabilities are expected to 
be settled.

Revenue Recognition
Revenue, other than on long-term U.S. Government sales 
contracts and subcontracts, is recognized when a product is 
shipped. Revenue on long-term U.S. Government sales 
contracts and subcontracts is accounted for using the 
percentage-of-completion method, whereby revenue and profits 
are recognized throughout the performance period of the 
contract. Percentage of completion is determined by relating 
the actual cost of work performed to date to the estimated 
total cost for each contract. Losses on contracts are 
recorded in full when identified.

Earnings Per Share
Earnings per share is calculated using the weighted average 
number of shares outstanding giving retroactive effect in 
fiscal 1995 to a two-for-one stock split during fiscal 1996 
and assuming dilutive stock options outstanding were 
exercised at the beginning of the fiscal year or at the date 
of issuance, if later. Weighted average shares outstanding 
for fiscal 1997, 1996 and 1995 used in the earnings per 
share calculation were 6,614,420, 6,252,523, and 5,289,072, 
respectively.

     On August 16, 1995, the Board of Directors declared a two-
for-one split of the Company's common stock to be 
distributed to shareholders of record on August 30, 1995, 
effective at the close of business September 6, 1995. 
Weighted average shares outstanding and all per share 
amounts for fiscal 1995 included in the consolidated 
financial statements and notes are based on the increased 
number of shares giving retroactive effect to the stock 
split, unless otherwise noted.

     On October 20, 1995, a registration statement on Form S-3 
covering the public offering of 1,000,000 shares was 
declared effective by the Securities and Exchange 
Commission, with the shares sold to the public at $12.00 per 
share.

Cash 
For purposes of the statement of cash flows, the 
Company considers highly liquid debt instruments with an 
original maturity of three months or less to be cash 
equivalents. The majority of cash and cash equivalents are 
invested in investment grade money market type instruments. 
Sufficient cash to fund current operations of foreign 
subsidiaries is on deposit at banks in Japan, Singapore, 
China and the United Kingdom.

                        19

Nature of Business
The Company designs, manufactures and markets optical and 
electro-optical components, devices and materials for 
precision use in infrared, near-infrared, visible light, X-
ray and gamma-ray instruments, and their applications. The 
Company markets its products in the United States through 
its direct sales force and worldwide through its wholly-
owned sales subsidiaries, II-VI Japan Incorporated and II-VI 
U.K. Limited and manufacturers' representatives.

The Company uses certain uncommon materials and compounds to 
manufacture its products. Some of these materials are 
available from only one proven outside source. The continued 
high quality of these materials is critical to the stability 
of the Company's manufacturing yields. The Company has not 
experienced significant production delays due to a shortage 
of materials. However, the Company does occasionally 
experience problems associated with vendor supplied 
materials not meeting contract specifications for quality or 
purity. A significant failure of the Company's suppliers to 
deliver sufficient quantities of necessary high-quality 
materials on a timely basis could have a material adverse 
effect on the Company's results of operations.

Estimates
The preparation of financial statements in conformity with 
generally accepted accounting principles requires management 
to make estimates and assumptions that affect the reported 
amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the 
financial statements and the reported amounts of revenues 
and expenses during the reporting period. Actual results 
could differ from those estimates.

Acquisitions
On February 22, 1996, the Company acquired substantially all 
of the assets and assumed certain liabilities of Lightning 
Optical Corporation, a Florida Corporation, located in 
Tarpon Springs, Florida.  

     The aggregate purchase price paid to the shareholders of 
Lightning Optical Corporation consisted of $2.4 million in 
cash and 186,183 shares of the Common Stock, no par value, 
of the Company. The acquisition was accounted for as a 
purchase. The purchase price was allocated as follows:

($000)  
- ----------------------------------------------------  
Accounts receivable                          $ 1,125  
Inventory                                        227  
Property, plant and equipment                  1,381  
Goodwill                                       2,169  
Other intangible assets                        2,000  
Other assets                                      47  
- ----------------------------------------------------  
                                               6,949  
Current liabilities                           (2,059) 
Long-term debt                                  (320) 
Deferred income taxes - noncurrent              (794) 
- ----------------------------------------------------  
Purchase price, net of cash acquired         $ 3,776  
====================================================  

     The other intangible assets acquired, including technology 
and sales and marketing expertise, are being amortized on a 
straight-line basis over a 10 year period, while goodwill is 
being amortized on a straight-line basis over a 25 year 
period. Accumulated amortization amounted to $385,000 and 
$101,000 at June 30, 1997 and 1996, respectively.

     On December 29, 1994, the Company acquired the net 
assets of the Virgo Optics Division of Sandoz Chemicals 
Corporation. The acquisition was accounted for as a 
purchase and included inventories, accounts receivable, 
machinery and equipment and certain current liabilities. 
The purchase price was allocated as follows:

($000)  
- ----------------------------------------------------  
Accounts receivable                          $   720  
Inventories                                      400  
Property, plant and equipment                  1,387  
Other assets                                       3  
- ----------------------------------------------------  
                                               2,510  
Current liabilities                             (157) 
- ----------------------------------------------------  
Cash purchase price                          $ 2,353  
====================================================  

                        20

     The following unaudited pro forma financial information 
presents the consolidated results of operations as if the 
Lightning Optical Corporation and the Virgo Optics division 
acquisitions had occurred on the first day of II-VI 
Incorporated's 1995 fiscal year (July 1, 1994).

     This information does not purport to present what II-VI 
Incorporated's results of operations actually would have 
been had the acquisitions occurred on July 1, 1994, or to 
project the results of operations for any future period.

                            Unaudited Pro Forma Results  
                              for Year Ended June 30,  
($000 except per share data)     1996           1995  
- ----------------------------------------------------  
Revenues                     $ 41,951       $ 35,117  
Net earnings                    4,976          3,212  
Earnings per share                .78            .59  

Fair Values of Financial Instruments
The Company's financial instruments recorded on the balance 
sheet as of June 30, 1997 and 1996 include cash and cash 
equivalents, and short and long-term debt. The carrying 
amount of those financial instruments approximates fair 
value. Off balance sheet financial instruments at June 30, 
1997 and 1996 relate to foreign currency forward contracts. 
The fair value of these instruments is immaterial. The fair 
value amounts have been estimated by the Company using 
available market information and appropriate valuation 
methodologies. Considerable judgment is necessary in 
interpreting market data to develop the estimates of fair 
value and, accordingly, the estimates are not necessarily 
indicative of the amounts that the Company could realize in 
a current market exchange.

     The Company has entered into foreign currency forward 
exchange contracts in order to hedge its currency exposure  
in Japan. Gains and losses on those contracts are recognized 
as they occur. At June 30, 1997 and 1996, the Company had 
contracts outstanding of approximately $3,046,000 and 
$1,415,000, respectively. The counterparties to these 
financial instruments consist of large financial 
institutions, and the Company does not believe that it is 
subject to any significant credit risk associated with these 
contracts.

New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board 
issued Statement of Financial Accounting Standards ("SFAS") 
No. 128, Earnings per Share, which establishes standards for 
computing and presenting earnings per share and applies to 
entities with publicly held common stock or potential common 
stock. This Statement will be effective beginning with the 
Company's financial statements for the quarter ending March 
31, 1998. This Statement requires restatement of all prior-
period earnings per share data presented. Basic earnings per 
share as defined by SFAS No. 128 for fiscal years 1997, 1996 
and 1995 would be $1.12, $.75 and $.50, respectively. 
Diluted earnings per share as defined by SFAS No. 128 
approximates the historically presented earnings per share 
for fiscal years 1997, 1996 and 1995.

     In June 1997, the Financial Accounting Standards Board 
issued SFAS No. 131, Disclosures about Segments of an 
Enterprise and Related Information, which redefines how 
operating segments are determined and requires disclosure of 
certain financial and descriptive information about a 
Company's operating segments. The Company is required to 
adopt this pronouncement beginning in fiscal 1999. The 
Company has not yet completed its analysis of which 
operating segments under this standard it will be required 
to report on.

Note B

INVENTORIES
The components of inventories are as follows:

                                    June 30,  
($000)                      1997                1996  
- ----------------------------------------------------  
Raw materials            $ 3,083             $ 2,279  
Work in process            1,992               1,427  
Finished goods             3,054               1,784  
- ----------------------------------------------------  
                         $ 8,129             $ 5,490  
====================================================  

                        21

Note C

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment (at cost) consist of the 
following:

                                        June 30,  
($000)                            1997          1996  
- ----------------------------------------------------  
Land and land improvements     $   876       $   539  
Buildings and improvements       8,073         6,952  
Machinery and equipment         27,893        22,084  
- ----------------------------------------------------  
                                36,842        29,575  
Less accumulated depreciation   17,211        14,490  
- ----------------------------------------------------  
                               $19,631       $15,085  
====================================================  


Note  D

INDEBTEDNESS

     Notes payable consist of one note at June 30, 1997 and 
two notes at June 30, 1996 at the Company's Japan location. All 
notes are guaranteed by the parent company.

     The $590,000 note at June 30, 1997, which had an 
outstanding balance at June 30, 1996 of $891,000, calls 
for monthly principal payments plus interest for a five 
year period ending September 1999. The interest rate at 
June 30, 1997 was 2.125%. The bank has the option of 
calling this loan in December of each year. The second 
note, which was outstanding at June 30, 1996 for $502,000 
and had an interest rate of 2.125%, was repaid during 
fiscal 1997.

     The Company has a line of credit (cash overdraft) facility 
with a Singapore bank which permits maximum borrowings of 
approximately $560,000. Borrowings are payable upon demand 
with interest being charged at the rate of 1.5% above the 
bank's prevailing prime lending rate. The interest rate at 
June 30, 1997 was 7.5%. At June 30, 1997 and 1996 there were 
no borrowings under this facility.

     Included in long-term debt at June 30, 1997 and 1996 is 
an installment loan in the amount of $45,000 and $68,000, 
respectively, at the Company's Singapore location which 
matures in August of fiscal year 2000, and is payable in 
equal monthly payments including interest at an annual 
interest rate of 7.5%. During fiscal 1997, the Company 
obtained a low interest rate loan in the amount of $741,000 
from the Pennsylvania Industrial Development Authority 
(PIDA), of which $711,000 is outstanding at June 30, 1997, 
to finance a portion of a facility expansion. The terms of 
the PIDA loan call for equal monthly payments over a fifteen 
year period, including interest at 3%.

     The aggregate annual amounts of principal payments 
required on the long-term debt are as follows:

($000) Year ending June 30,        Amount
- -------------------------------------------
1998                                $  72
1999                                   69
2000                                   53
2001                                   49
2002                                   49
Thereafter                            464
- -------------------------------------------
                                    $ 756
===========================================

     Interest payments made during the years ended 
June 30, 1997, 1996 and 1995 totaled $56,000, $41,000 
and $48,000, respectively.


Note E

INCOME TAXES
The components of income tax expense are as follows:


                               Year Ended June 30,  
($000)                     1997      1996       1995  
- ----------------------------------------------------  
Current:  
  Federal               $ 2,754   $ 1,457      $ 534  
  State                     202       227        174  
  Foreign                    55        48         65  
- ----------------------------------------------------  
                          3,011     1,732        773  
Deferred                   (138)      (83)        96  
- ----------------------------------------------------  
                        $ 2,873   $ 1,649      $ 869  
====================================================  

Principal items comprising deferred income taxes are as 
follows:

                                         June 30,  
($000)                                1997      1996  
- ----------------------------------------------------  
Deferred income tax liabilities  
Tax over book accumulated   
  depreciation                     $   910   $   970  
Intangible assets                      703       783  
- ----------------------------------------------------  
Deferred income tax liability
  -long-term                       $ 1,613   $ 1,753  
====================================================  

Deferred income tax assets  
Inventory capitalization           $   126   $   156  
Nondeductible accruals                 302       273  
- ----------------------------------------------------  
Deferred income tax asset 
  - current                        $   428   $   429
====================================================  

                        22

 
 

The reconciliation of income tax expense at the statutory 
federal rate to the reported income tax expense is as follows:  

Year Ended June 30,  
($000)                                              1997    %      1996      %     1995     %  
- --------------------------------------------------------------------------------------------- 
                                                                          
Taxes at statutory rate                          $ 3,395   34   $ 2,047     34   $ 1,152   34
Increase (decrease) in taxes resulting from:  
  State income taxes - net of federal benefit        133    1       150      2        88    3
  Excludable Foreign Sales Corporation income        (80)   -       (50)    (1)      (45)  (1)
  Excludable foreign income                         (503)  (5)     (559)    (9)     (376) (11) 
  Foreign taxes                                       36    -        32      1        43    1  
  Nondeductible expenses                              20    -        29      -         7    -  
  Other                                             (128)  (1)        -      -         -    -  
- --------------------------------------------------------------------------------------------- 
                                                 $ 2,873   29   $ 1,649     27   $   869   26
=============================================================================================
  



     One of the Company's foreign subsidiaries operates under a 
tax holiday and does not pay income taxes. The tax holiday 
has been extended to March 2000.

     During the years ended June 30, 1997, 1996 and 1995, cash 
paid by the Company for income taxes was approximately 
$2,660,000, $1,772,000 and $379,000, respectively.

     The Company has not recorded deferred income taxes 
applicable to undistributed earnings of foreign subsidiaries 
that are indefinitely reinvested outside the United States. 
If the earnings of such foreign subsidiaries were not 
indefinitely reinvested, a deferred tax liability of 
approximately $2,152,000  and $1,473,000 would have been 
required as of June 30, 1997 and 1996, respectively.

     The sources of differences resulting in deferred income 
tax expense (credit) and the related tax effect of each were 
as follows:

                                Year Ended June 30,  
($000)                        1997     1996     1995  
- ----------------------------------------------------  
Depreciation                 $(136)   $ (79)   $ (98) 
Inventory capitalization       (30)     (18)     (13) 
Alternative minimum   
 tax carryforward                -        -      275 
Other - primarily  
 nondeductible accruals         28       14      (68)
- ----------------------------------------------------  
                             $(138)    $(83)   $  96  
====================================================  


Note F

OPERATING LEASES
     The Company leases certain property under operating 
leases that expire at various dates through 2000. Future 
rental commitments applicable to the operating leases at 
June 30, 1997 are approximately $453,000, $253,000, and 
$218,000 for 1998, 1999 and 2000, respectively. Rent expense 
was approximately $519,000, $507,000 and $462,000 for the 
years ended June 30, 1997, 1996 and 1995, respectively.


Note G

STOCK OPTION PLANS
     The Company has a stock option plan under which stock 
options have been granted by the Board of Directors to 
certain officers and key employees, with 1,240,000 shares of 
common stock reserved for use under this plan. All options 
to purchase shares of common stock granted to-date have been 
at market price at the date of grant. Twenty to twenty-five 
percent of the options granted may be exercised one year 
from the date of grant with comparable annual increases on a 
cumulative basis each year thereafter.

     The Company added a nonemployee directors stock option plan 
in 1995, with 120,000 shares of common stock reserved for 
use under this plan. The Plan provides for the automatic 
grant of options to purchase 15,000 shares to each 
nonemployee director at the fair value on the date of 
shareholder approval of the plan and a similar grant for 
each nonemployee director that joins the Board prior to October 
1999. Twenty percent of the options granted may be exercised 
one year from the date of grant with comparable annual 
increases on a cumulative basis each year thereafter.

                        23

     All stock options expire 10 years after the grant date.

     Stock option activity relating to the plans in each of 
the three years in the period ended June 30, 1997 is as follows:


                                Number of          Weighted
                                 Shares            Average
                               Subject to         Exercise
Options                          Option        Price Per Share
- -------------------------------------------------------------  
Outstanding - July 1, 1994       327,800            $ 2.03     
Granted                          314,000            $ 3.37  
Exercised                        (84,380)           $ 1.55
Forfeited                        (54,900)           $ 3.59
- -------------------------------------------------------------  
Outstanding - June 30, 1995      502,520            $ 2.79
Exercisable - June 30, 1995      110,600            $ 1.88

- -------------------------------------------------------------  
Outstanding - July 1, 1995       502,520            $ 2.79
Granted                          132,200            $10.03
Exercised                        (19,640)           $ 1.68
Forfeited                         (5,200)           $ 3.94
- -------------------------------------------------------------  
Outstanding - June 30, 1996      609,880            $ 4.38
Exercisable - June 30, 1996      185,440            $ 2.45

- -------------------------------------------------------------  
Outstanding - July 1, 1996       609,880            $ 4.38
Granted                           86,100            $19.10  
Exercised                       (109,246)           $ 2.37  
Forfeited                         (1,200)           $17.50
=============================================================
Outstanding - June 30, 1997      585,534            $ 6.89  
Exercisable - June 30, 1997      209,074            $ 3.53
=============================================================


Outstanding and exercisable options at June 30, 1997 by
expiration date are as follows:


                      Number of                   Number of
                   Shares Subject   Per Share      Shares
Expiration Dates      to Option       Price      Exercisable
- -------------------------------------------------------------  
May 1999               8,000         $ 3.69         8,000
May 2000                 360         $ 2.69           360
August 2000           31,180         $ 1.83        31,180
February 2002         44,660         $ 2.13        44,660
June 2002              3,000         $ 2.13         3,000
April 2004             2,400         $ 1.50           800
July 2004             30,000         $ 2.00        12,000
July 2004              4,000         $ 1.97         1,600
August 2004           89,600         $ 2.69        29,600
November 2004         58,000         $ 4.00        22,000
December 2004         96,400         $ 3.94        32,200
February 2005          8,000         $ 4.94         3,200
June 2005              2,000         $16.13           800
December 2005            960         $10.63             -
February 2006        116,574         $ 9.88        18,574
May 2006               2,500         $15.25           600
February 2006          3,000         $ 9.75           500
August 2006           62,200         $17.50             -
November 2006          1,800         $22.00             -
February 2007          3,500         $30.25             -
June 2007             17,400         $22.38             -
- -------------------------------------------------------------  
                     585,534                      209,074
=============================================================

                        24

     In 1997, the Company adopted SFAS No. 123, Accounting for 
Stock-Based Compensation. SFAS No. 123 provides that 
companies may choose to change their methods of accounting 
for stock options to a fair value method using an option 
pricing model. The Company uses the intrinsic value approach 
specified in Accounting Principles Board Opinion No. 25 in 
accounting for stock options and did not change from this 
method upon adoption of the new standard. Had the Company 
changed its accounting method, its net income for 1997 would 
have been reduced by $177,000 or $.03 per share. Net income 
for 1996 would have been reduced by $35,000 or $.01 per 
share. The pro forma adjustments were calculated using the 
Black-Scholes option pricing model to value all stock 
options granted since July 1, 1995 under the following 
assumptions in each year:

- ----------------------------------------------------
                              1997           1996
- ----------------------------------------------------
Risk free interest rate       5.8%           6.4%
Expected volatility           69%             68%
Expected life of options   7.33 years     7.33 years
Expected dividends            none           none    
- ----------------------------------------------------  

     Based on the option pricing model, options granted during 
1997 and 1996 had fair values of $13.77 and $7.17 per share, 
respectively.

 

Note H

  
INTERNATIONAL AND DOMESTIC OPERATIONS AND EXPORT SALES  

                                                                   Year Ended June 30,  
($000)                                                   1997            1996            1995  
- --------------------------------------------------------------------------------------------- 
                                                                             
Sales:  
  United States                                      $ 50,489        $ 37,244        $ 26,644   
  International                                        21,063          13,204          11,158
- --------------------------------------------------------------------------------------------- 
Total                                                $ 71,552        $ 50,448        $ 37,802  
- --------------------------------------------------------------------------------------------- 
Sales or transfers between geographic areas: 1
  United States                                      $ 11,925        $  7,172        $  5,847
  International                                         6,886           5,336           4,195
- --------------------------------------------------------------------------------------------- 
Total                                                  18,811          12,508          10,042
- --------------------------------------------------------------------------------------------- 
Net sales                                            $ 52,741        $ 37,940        $ 27,760  
=============================================================================================
Export sales from the United States 2                $  5,979        $  6,938        $  5,509
=============================================================================================
Operating income:  
  United States                                      $  7,822        $  3,975        $  1,860
  International                                         1,674           1,717           1,441
  Other - net                                             488             328              86
- --------------------------------------------------------------------------------------------- 
Earnings before income taxes                         $  9,984        $  6,020        $  3,387
=============================================================================================
Identifiable assets:  
  United States                                      $ 46,923        $ 39,478        $ 20,633
  International                                         7,589           4,691           3,734
- --------------------------------------------------------------------------------------------- 
Total assets                                         $ 54,512        $ 44,169        $ 24,367
=============================================================================================
Amounts for International operations in the above table primarily relate to the Company's operations in Asia.
1 Intersegment sales are made at established transfer prices.
2 Export sales are primarily made to western Europe.
  
                        25

Note I

EMPLOYEE BENEFIT PLANS

     Eligible employees of the Company participate in a profit 
sharing retirement plan. Contributions to the plan are made 
at the discretion of the Company's Board of Directors and 
were approximately $740,000 in 1997,  $455,000 in 1996 and 
$259,000 in 1995. The Company has an employee stock purchase 
plan for all employees who have six months of continuous 
employment with the Company. The employee may purchase the 
common stock at 5% below the prevailing market price. The 
amount of shares which may be bought by an employee is 
limited to 10% of the employee's base pay for each fiscal 
year. The plan, as amended, limits the number of shares of 
common stock available for purchase to 200,000 shares. At 
June 30, 1997, 127,535 shares of common stock were available 
for purchase under the plan.

     The Company has no program for postretirement health and 
welfare and postemployment benefits.

     On June 21, 1996, the Board of Directors of the Company 
approved the II-VI Incorporated Deferred Compensation Plan 
(the "Plan"). The Plan is designed to allow officers and key 
employees of the Company to defer receipt of compensation 
into a trust fund for retirement purposes. The Plan is a 
nonqualified, defined contribution employees' retirement 
plan. At the Company's discretion, the Plan may be funded by 
the Company making contributions based on compensation 
deferrals, matching contributions and discretionary 
contributions. Compensation deferrals will be based on an 
election by the participant to defer a percentage of 
compensation under the Plan. All assets in the Plan are 
subject to claims of the Company's creditors until such 
amounts are paid to the Plan participants. The Company made 
contributions to the Plan in the amount of $139,000 in 1997 
and did not make any contributions in 1996.

Note J

QUARTERLY STOCK INFORMATION (UNAUDITED)

     II-VI Incorporated common stock high and low closing 
sales price as reported on the Nasdaq National Market:

                          1997                   1996  
                     High      Low         High        Low  
- --------------------------------------------------------------  
First Quarter      $ 23      $ 12 3/4    $ 23       $ 12 7/8
Second Quarter       27 1/8    19 1/2      18          9 1/2   
Third Quarter        31 3/4    22 1/8      12 5/8      9 3/4   
Fourth Quarter       25 1/4    16 3/32     16 7/8     11 5/8   

The Company estimates that as of September 15, 1997 there 
were approximately 700 record holders of common stock.

                        26

EX-21

LIST OF SUBSIDIARIES OF II-VI INCORPORATED






                                     Jurisdiction of
Subsidiary                             Incorporation
- --------------                       ---------------
II-VI Delaware, Incorporated             Delaware
II-VI Singapore Pte., Ltd.               Singapore
II-VI Worldwide, Incorporated            Barbados
II-VI Japan Incorporated                 Japan
II-VI VLOC Incorporated                Pennsylvania
II-VI U.K. Limited                    United Kingdom
II-VI Optics (Suzhou) Co. Ltd.            China

EX-23

INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in 
Registration Statements No. 33-19511, No. 33-38019, No. 33-
19510, No. 33-63739 and No. 333-12737 on Form S-8 and No. 
333-04531 on Form S-3 of II-VI Incorporated of our reports 
dated August 12, 1997, appearing in and incorporated by 
reference in this Annual Report on Form 10-K of II-VI 
Incorporated for the year ended June 30, 1997.


/s/ Deloitte & Touche LLP

Pittsburgh, Pennsylvania
September 26, 1997

EX-23

CONSENT OF INDEPENDENT AUDITORS


We hereby consent to the incorporation by reference in 
Registration Statements No. 33-19511, No. 33-38019, 
No. 33-19510, No. 33-63739 and 333-12737 on Form S-8 
and No. 333-04531 on Form S-3 of  II-VI Incorporated 
of our report dated August 12, 1996, appearing in this 
Annual Report on Form 10-K of II-VI Incorporated for 
the year ended June 30, 1997.

/s/ Alpern, Rosenthal & Company
Pittsburgh, Pennsylvania
September 26, 1997

EX-27

 

<ARTICLE> 5
       
                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          JUN-30-1997
<PERIOD-START>                             JUL-01-1996
<PERIOD-END>                               JUN-30-1997
<CASH>                                          10,854
<SECURITIES>                                         0
<RECEIVABLES>                                   10,808
<ALLOWANCES>                                       306
<INVENTORY>                                      8,129
<CURRENT-ASSETS>                                30,782
<PP&E>                                          36,842
<DEPRECIATION>                                  17,211
<TOTAL-ASSETS>                                  54,512
<CURRENT-LIABILITIES>                            9,693
<BONDS>                                            684
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        18,072
<OTHER-SE>                                      24,450
<TOTAL-LIABILITY-AND-EQUITY>                    54,512
<SALES>                                         52,741
<TOTAL-REVENUES>                                52,741
<CGS>                                           29,530
<TOTAL-COSTS>                                   29,530
<OTHER-EXPENSES>                                13,171
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                  56
<INCOME-PRETAX>                                  9,984
<INCOME-TAX>                                     2,873
<INCOME-CONTINUING>                              7,111
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     7,111
<EPS-PRIMARY>                                     1.08
<EPS-DILUTED>                                     0.00