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                                FORM 10-K

                              United States
                    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, 2002

[ ]  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, PA                              16056

(Address of principal executive offices)        (Zip code)

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

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.

               Preferred Stock Purchase Rights

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.          [  ]

Aggregate market value of outstanding Common Stock, no par value, held
by non-affiliates of the Registrant at September 10, 2002, was
approximately $144,552,000 based on the closing sale price reported on
the Nasdaq National Market for September 10, 2002.  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 10, 2002, was 14,040,374.  All share and per share
information included in this Form 10-K reflects the two-for-one stock
split effected on September 20, 2000.

<PAGE>
             DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's definitive proxy statement, which
will be issued in connection with the 2002 Annual Meeting of
Shareholders, are incorporated by reference into Part III of this
annual report on Form 10-K.

                 Forward-Looking Statements

     This annual report on Form 10-K (including certain information
incorporated herein by reference) contain forward looking statements
as defined by Section 21E of the Securities Exchange Act of 1934, as
amended, including the statements regarding projected growth rates,
markets, product development, financial position, capital expenditures
and foreign currency hedging.  Forward-looking statements are also
identified by words such as "expects," "anticipates," "intends,"
"plans," "projects" or similar expressions.

     Actual results could materially differ from such statements due
to the following factors:  materially adverse changes in economic or
industry conditions generally (including capital markets) or in the
markets served by the Company, the development and use of new
technology and the actions of competitors.  Other important factors
and uncertainties include, but are not limited to the Risk Factors set
forth in Item 7.

<PAGE>
                                 PART I
ITEM 1.  BUSINESS

Introduction

     II-VI Incorporated ("II-VI" or the "Company") was incorporated in
Pennsylvania in 1971.  Our executive offices are located at 375
Saxonburg Boulevard, Saxonburg, Pennsylvania 16056.  Our telephone
number is 724-352-4455.  Reference to the "Company" or "II-VI" in this
Form 10-K, unless the context requires otherwise, refers to II-VI
Incorporated and its wholly-owned subsidiaries:  VLOC Incorporated;
II-VI Delaware, Incorporated; II-VI Holdings B.V.; II-VI Japan
Incorporated; II-VI Singapore Pte., Ltd.; II-VI Acquisition Corp.; II-
VI Optics (Suzhou) Co. Ltd.; II-VI International Pte., Ltd.; II-VI
U.K. Limited; and Laser Power Corporation and its wholly-owned
subsidiaries:  EMI Acquisition Corporation; Exotic Materials,
Incorporated; Laser Power Optics de Mexico S.A. de C.V.; Laser Power
Europe N.V.; and Laser Power FSC, Ltd.  eV PRODUCTS operates as a
division of II-VI Incorporated.  The Company's name is pronounced
"Two-Six Incorporated."  The majority of our revenues are attributable
to the sale of optical components for the industrial laser processing
industry.

Information Regarding Market Segments and Foreign Operations

     Our business comprises three segments: (i) the design,
manufacture and marketing of optical and electro-optical components,
devices and materials for infrared, near-infrared and visible-light
instrumentation, (ii) the manufacture and marketing of x-ray and
gamma-ray instrumentation and (iii) the Company's Laser Power
Corporation subsidiary acquired in fiscal 2001.

     Financial data regarding our revenues, results of operations,
industry segments and international sales for the three years ended
June 30, 2002 is set forth on the Consolidated Statements of Earnings
and on Note J of the Company's Consolidated Financial Statements
included in this Form 10-K.

General Description of Business

     We develop, manufacture and market high technology materials and
derivative products for precision use in industrial, medical,
telecommunications, military and aerospace applications.  We use
advanced material growth technologies coupled with proprietary high
precision fabrication, micro-assembly, and thin-film coating
production processes.  The resulting optical and optoelectronic
devices are supplied to manufacturers and users of a wide variety of
laser, detection, military and telecommunication components and
systems.  A key strategy is to develop and manufacture complex
materials from elements of chemistry's periodic table.  We focus on
providing critical products to the heart of our customer's assembly
lines for products such as high power laser material processing
systems, military fire control and missile guidance devices and
advanced medical x-ray systems.  We believe we are a market leader for
high power (CO2) and YAG laser optical elements, military infrared
optical components, and x-ray and gamma ray detectors for both the
medical and nuclear radiation industries.

     Our United States production operations are located in
Pennsylvania, Florida, California and New Jersey and our international
production operations are based in Singapore, China, Mexico and
Belgium.  In addition to sales offices at each of our manufacturing
sites we have sales and marketing subsidiaries in Japan and the United
Kingdom.  Approximately 39% of our revenues are for product sales
outside of the United States.

     Our primary products are key optical and optoelectronic
components used in the laser, military and nuclear radiation detection
industries.

     - Our laser-related products include laser gain materials for
       solid-state lasers and many of the high precision optical
       elements used to focus and direct laser beams to target or work
       surfaces.  The majority of our laser products require advanced
       optical materials that are internally produced.  Our vertical
       integration from material growth, through fabrication and thin-
       film coating provides us with a significant competitive
       advantage.

<PAGE>
     - Our military infrared products include targeting and navigation
       systems that utilize advance optical materials.  The vertical
       integration of our manufacturing processes for these military
       applications provides us with a significant competitive
       advantage.

     - Nuclear radiation detector products are based on the
       semiconductor material Cadmium Zinc Telluride (CdZnTe).  These
       detectors are attractive to customers due to the increased
       performance, reduced size, improved ruggedness and lower
       voltage requirements as compared to traditional technologies.

     We are at the forefront of advanced material growth research,
development and high volume production.  Over the past five years we
have expanded our material growth development to include single
crystal Silicon Carbide (SiC) for use in blue and green Light Emitting
Diodes (LEDs), diode lasers and high performance electronics.  In
fiscal 2002, we acquired the Litton Systems Inc. Silicon Carbide Group
to complement the Company's SiC development activities and to
accelerate our product to market.  Significant progress has been made
in this relatively short development period and at the present time we
are working closely with potential customers to qualify and further
develop our products.

Our Markets

     Our business is comprised of four markets:

     1)  Design, manufacture and marketing of optical and electro-
         optical components, devices and materials for infrared, near
         infrared and visible light lasers and instrumentation by our
         II-VI business units and VLOC subsidiary.

     2)  Manufacture and marketing of x-ray and gamma-ray solid-state
         radiation detectors and components for medical, industrial,
         environmental and scientific instruments by our eV PRODUCTS
         division.

3)  Design, manufacture and marketing of infrared products for
         military applications and optical and electro-optical
         component devices for infrared lasers by our Laser Power
         Corporation subsidiary acquired in fiscal 2001.

     4)  Development of single crystal growth and fabrication of
         Silicon Carbide (SiC) substrates for use in the manufacture
         of devices such as high temperature electronics and blue and
         green high brightness LEDs by our Wide Band Gap (WBG) group.

     Our reportable segments, in accordance with Statement of
Financial Accounting Standards No. 131, ''Disclosures About Segments
of an Enterprise and Related Information,'' currently are optical
components (which encompasses markets 1 and 4 above), radiation
detectors (which is market 2 above) and the Company's Laser Power
Corporation subsidiary (which is market 3 above).

     Laser Components Market.  In recent years, increases in laser
component consumption have been driven by continued worldwide
proliferation of laser processing applications.  Manufacturers are
seeking solutions to increasingly complex 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 prototyping,
production simplification, efficient sequencing, and computer control
on high throughput production lines.  Manufacturers of recreation
vehicles, motorcycles, lawn mowers and garden tractors cut, trim and
weld metal parts with lasers to achieve flexibility, high consistency,
reduced post processing and lower costs.  Furniture manufacturers
utilize lasers to provide easily reconfigurable, low-distortion, low-
cost prototyping and production capabilities that facilitate the
manufacturing of customer specified designs.  On high-speed processing
lines, laser marking provides automated date coding for food packaging
and computer driven container identification for pharmaceuticals.

     We provide optical elements and components for both CO2 and YAG
laser systems.  In addition to use by original equipment manufacturers
(OEMs), a replacement part aftermarket exists in support of an
estimated current worldwide installed base of over 100,000 industrial
YAG and CO2 lasers.

<PAGE>
     Solid-State Radiation Detection Market.  Solid-state radiation
detectors and components are sold primarily to companies engaged in
the manufacture of medical diagnostic, medical imaging or industrial
gauging/inspection, security and monitoring equipment.  In an
increasing number of applications, the use of gamma- or x-ray
radiation enables more rapid and accurate measurement of medical
conditions, industrial quality and early detection and identification
of nuclear materials and threatening objects.  Solid-state detectors
based on CdZnTe are making inroads against older, more established
technologies such as cryogenically cooled germanium detectors or
sodium iodide scintillators coupled to photomultiplier tubes.  CdZnTe
detectors have already been substituted for these older technologies
in applications where increased accuracy, simpler operation,
portability and lower cost are required.  CdZnTe is beginning to
enable new medical, industrial and security/monitoring applications
not feasible with the older technologies and is used routinely in
cancer probes, bone densitometry systems and process control systems.

     We believe the annual worldwide market for all solid-state
radiation detectors is currently over $250 million and growing at 10%
per year.  Digital radiography (the recording of digital x-ray images)
represents the largest market segment followed in order by nuclear
medicine (the detection or imaging of radioactively tagged materials
in the body), industrial gauging, radiation monitoring and nuclear
safeguards/non-proliferation.  Presently, we believe that the
addressable CdZnTe market has grown to represent $50 million of the
worldwide solid-state radiation detector market.
     During the next several years, the performance of CdZnTe and
other solid-state detectors will be improved through additional
research and development, creating the potential for digital imaging
to replace x-ray film in a myriad of traditional radiography
applications.

     We believe that the market for CdZnTe detectors and imagers will
grow faster than the overall market rate of 10% because of several
factors, including:

     - the strong migration toward ''film-less'' detection methods
       that enable the direct recording of digital images or videos
       which can be stored, recalled and transmitted via the Internet;

     - the desire for lower radiation dosage;

     - the desire for simpler and safer operation at room temperature;

     - the increasing requirement that equipment be ''intrinsically
       safe'' in environments where a spark might start a fire;

     - the general trend towards equipment miniaturization; and

     - the need to inspect, document and control quality at additional
       points within the manufacturing process in a wide range of
       industries; for example, the measurement and control of film
       thickness during the painting of automobile bodies.

     Equipment manufacturers increasingly desire to procure fully
tested, packaged components rather than devices that must be qualified
and assembled.  We believe that this trend will require leading
suppliers to provide products containing ever-higher levels of signal
processing and, as a result, the market will place high value on
suppliers having strong applications engineering capabilities and a
focus on customer relationships.

     Military Infrared Optics Market.  The military infrared optics
market is comprised of a demand for several critical products
primarily windows, window assemblies and domes.  Windows and window
assemblies are utilized in thermal imaging systems that provide night
vision, targeting, and navigation systems.  These systems are
installed in various platforms, including ground vehicles, helicopters
and fixed-wing aircraft.  Domes are utilized as a protective cover for
infrared guided missiles.  Missile sizes range from small, man-
portable designs to larger designs mounted on ground vehicles,
helicopters and fixed-wing aircraft.  These infrared optics products
are sold primarily to the U.S. government and its prime contractors
for use in night vision, thermal imaging and guidance systems.

     Currently, the demand for military optics is being driven by
upgrades to existing platforms such as the F-16 and F-18 fighter
aircraft and the introduction of high performance/lower cost mid-wave
infrared sensors.  This complements the current market of long-wave
infrared optical products that we have traditionally produced while
providing

<PAGE>
additional growth.  Demand for mid-wave infrared optical components
from materials such as sapphire, ALON and Spinel will likewise
increase to meet this demand.

     The U.S. government is directing several research and development
programs to field defensive anti-missile systems using laser
technology.  An example of such programs is the Air Borne Laser (ABL)
program.  These programs require high performance coatings that must
withstand extremely high laser energies and must be reliably coated
onto large aperture optics including windows, domes and mirrors.

     Silicon Carbide Electronic Materials Market.  Silicon carbide is
a wide band gap semiconductor material that offers high-temperature,
high-power and high-frequency capabilities in applications that are
rapidly emerging at the high-performance end of the optoelectronic,
telecommunication, power distribution and transportation markets.
Silicon carbide has certain inherent physical and electronic
advantages over competing semiconductor materials such as silicon and
gallium arsenide, including the ability to operate at up to 400
degrees Centigrade (750 degrees Fahrenheit) and the capability to
conduct up to twice the amount of heat away from operating devices.
Typically, either silicon carbide or gallium nitride layers are
deposited on a silicon carbide substrate and the desired
optoelectronic or electronic devices are fabricated in the resulting
material structure.  Silicon carbide based structures are being
developed and deployed for the manufacture of a wide variety of
microwave and power switching devices while gallium nitride based
structures are already standard for the manufacture of blue and green
light emitting diodes and blue laser diodes.

     We believe that wide band gap semiconductor devices incorporating
silicon carbide materials technology will penetrate a wide range of
applications in the optoelectronic, telecommunication, power
distribution and transportation markets during the next decade.  For
instance, blue and green LEDs built on silicon carbide substrates
offer the promise of higher output power than devices currently built
on less expensive but thermally insulating sapphire substrates.  The
realization of this promise will establish silicon carbide substrates
as an important building block in high brightness computer driven
signs or displays, in high brightness automotive lighting and in the
replacement of incandescent and eventually fluorescent lighting by
high power, high efficiency solid-state lamps.  High power, high
frequency silicon carbide microwave devices promise to rival gallium
arsenide devices in telecommunication base station transmitters and
silicon devices in both commercial and military air traffic radar
applications.  Silicon carbide high power, high-speed switching
devices promise to improve the performance and reliability of utility
transmission and distribution systems and for motor controls in a wide
variety of applications.  These devices could also play a key role in
the evolution of the electric car.

Our Strategy

     Our strategy is to build businesses with world-class, high
technology materials capabilities at their core.  The following
current business activities follow this model:  CO2 and infrared
optics based on Zinc Selenide (ZnSe) and Zinc Sulfide (ZnS), near
infrared and visible laser components based on YAG and Yttrium Lithium
Fluoride (YLF), and solid-state radiation detectors based on CdZnTe.
Consistent with this strategy, our initiative to enter the
optoelectronic and electronic substrates business is predicated on the
establishment of Silicon Carbide (SiC) capabilities.  In every case,
we subsequently manufacture precision parts and components from these
materials using established but evolving expertise in low damage
surfacing and micro fabrication, thin-film coating, and exacting
metrology.  A substantial portion of our business is based on long-
term contracts with market leaders, which enables substantial forward
planning and production efficiencies.  In addition, industry leading
product quality and delivery performance allows us to achieve
comparatively high operating margins in major segments of our
business.  We intend to capitalize on the execution of this proven
model and continually gain market share for laser optics and
components, solid-state radiation detectors, telecommunication devices
and optoelectronic/electronic materials and substrates.

     - Continue Investment to Gain CO2 and YAG Market Share Worldwide.
       We continually invest in our manufacturing operations worldwide
       to increase production capacity.

     - Enhance Our Reputation as a Worldwide Quality and Customer
       Service Leader.   We are committed to understanding our
       customers' needs and exceeding their expectations.  We have
       established ourselves as a consistent high quality supplier of
       components into our customers' assembly lines.  In many cases
       we deliver on a just in time (JIT) basis.  We believe our on-
       time delivery record and product return rates are the best in
       the industries we serve. Our quality mission statement is, ''We
       pledge to exceed our internal and external customer
       requirements through employee dedication to continuous
       improvement.''

<PAGE>
     - Pursue Strategic Acquisitions and Alliances.   Some of the
       markets we participate in remain fragmented and we expect
       consolidation to occur over the next several years.  We will
       pursue strategic acquisitions and alliances with companies
       whose products or technologies compliment our current products,
       expand our market coverage, increase our addressed market or
       create synergies with our current capabilities.  We intend to
       identify acquisition opportunities that accelerate our access
       to emerging high growth segments of the markets we serve.

     - Pursue Military Infrared Systems Programs.   We believe our
       Laser Power Corporation subsidiary is a leading supplier of
       optics for military infrared systems.  The Exotic Electro-
       Optics (EEO) subsidiary of Laser Power Corporation is committed
       to capturing new military contracts and currently has
       significant contracts in place with every major military prime
       contractor.  Our Large Optics Coating Facility (LOCF) will
       enable us to pursue the increased U.S. government defense
       funding for programs directed towards defensive anti-missile
       systems using laser technology.  This facility is unique in the
       industry placing itself as one of the few coating laboratories
       to provide high performance coatings that must withstand
       extremely high laser energies.  Laser Power has several
       proprietary coatings that are the enabling technology for these
       systems.

     - Continue Extension of Technology Leadership in the Gamma- and
       X-ray Detector Field.   We believe our eV PRODUCTS division is
       the leader in the manufacture of solid-state gamma- and x-ray
       detector devices and components.  CdZnTe handheld probes in the
       medical field allow the introduction of new cancer location
       techniques.  CdZnTe based imaging arrays are being introduced
       in nuclear medicine.  CdZnTe is being developed for real time
       x-ray radiography, which will allow a physician to view
       relevant parts of the body in real time using a fraction of the
       x-ray dose required with film.  In addition, CdZnTe is drawing
       attention from the Transportation Safety Administration (TSA)
       for use in baggage and package inspection systems.  Our eV
       PRODUCTS division is working on these medical, industrial and
       security applications with market leaders worldwide.  The high
       pressure Bridgman growth process for producing CdZnTe is a
       materials expertise unique to the Company.

     - Utilize Proven Materials Growth Expertise to Perfect Silicon
       Carbide (SiC).   We are a proven provider of hard to grow
       materials and opto-electronic crystals.  We intend to leverage
       our skills and experiences in commercially producing ZnSe, ZnS,
       CdZnTe, YAG and YLF to move rapidly forward with our SiC
       development program.  We intend to gain market share and become
       a reliable second source of SiC substrates to the worldwide
       marketplace.  We will utilize our low damage fabrication
       experience and exacting metrology in achieving this position.

Our Products

     Our products include optical, optoelectronic and electronic
materials, devices and components for use in laser, detection,
military, telecommunication and advanced electronic and optoelectronic
applications.  These products are sold to laser system manufacturers
and end-users, military laser system and defense suppliers,
manufacturers of nuclear radiation detection systems and component
suppliers to the optoelectronic and electronic industries.

     Laser Components.  We supply a broad line of precision optical
components such as lenses, waveplates, and mirrors to the CO2 laser
market.  CO2 lasers are used in a wide variety of industrial processes
including cutting, welding, drilling, marking and heat treating of
materials such as steel alloys, non-ferrous metals, plastics, wood,
paper, fiberboard, ceramics and composites.  CO2 lasers are also used
in cosmetic and invasive medical surgery.  Our precision optical
components are used to regulate the amount of laser energy, enhance
the properties of the laser beam, and focus and direct laser beams to
a target work surface.  The optical components include both reflective
and transmissive optics and are made from materials such as ZnSe,
Copper, Silicon and Germanium.  Transmissive optics used with CO2
lasers are predominately made from ZnSe.  We are the largest
manufacturer in the world of ZnSe providing us with a significant cost
advantage.  We believe our ZnSe production capability, high precision
fabrication operations and proprietary thin-film coating technology
has earned us a reputation as the quality leader in this world market.

     Additionally, we supply replacement optics and refurbishing
services to end users of CO2 lasers.  Over time optics may become
contaminated and must be replaced to maintain efficient laser
operations.  This aftermarket portion of our business continues to
grow as laser applications proliferate worldwide.

<PAGE>
     Key materials and precision optical components for YAG and other
solid-state laser systems are part of our product offering.  The
increasing power levels and reduced operating costs of evolving YAG
laser systems are enabling this technology to address new
applications.  YAG lasers are now used in high power application such
as cutting, welding, marking and date coding.  Additionally, YAG laser
energy can be delivered through optical fibers, which provides high
flexibility beam delivery systems.

     We supply a family of standard and custom laser gain materials
and optics for industrial, medical, scientific and research YAG
lasers.  Our YAG laser gain materials are produced to stringent
industry specifications and precisely fabricated into rods or slabs.
Additionally, we offer waveplates, polarizers, lenses, prisms and
mirrors for visible and near-infrared applications which are used to
control or alter visible or near-infrared energy and its polarization.

     Solid-State Radiation Detectors.  We design, manufacture and
market CdZnTe room temperature, solid-state radiation detectors
combined with custom-designed low noise electronics and imbedded
systems.  New and expanding applications in industry, medicine,
security and research are fueling increased demand for our products.
Our solid-state CdZnTe nuclear radiation detectors are attractive
because of their reduced size, improved ruggedness, and lower voltage
requirements as compared to traditional detectors based on
scintillator/photomultiplier or cooled germanium technologies.

     CdZnTe-based imaging arrays can be used in both nuclear medicine
(internally emitted gamma-rays) and radiography (x-rays from an
external source).  In nuclear medicine, CdZnTe makes feasible a new
generation of gamma cameras, offering much improved position
sensitivity and the ability to produce images using lower doses of
injected radioactivity.  In radiography, higher density CdZnTe can
provide much improved sensitivity to the higher x-ray energies used in
some of the newer diagnostic techniques.  Direct-read digital
radiography cameras are being developed which, if successful, will
allow the physician to view the relevant part of the body in real
time, reducing the time required for diagnosis.  In security
applications, the unique properties of CdZnTe can provide additional
information during a normal baggage scan that allow the system to not
only show the image of a suspicious object, but more importantly, tell
the operator the material or chemical composition of the item.

     Military Infrared Optics.  We produce optics for military
infrared systems including thermal imaging, night vision, targeting,
and navigation systems.  These optics comprise missile domes, electro-
optical windows and assemblies and imaging lenses and filters.  Our
precision optical products utilize optical materials consisting of
zinc selenide, zinc sulfide, germanium, silicon, sapphire, AMTIR,
ALON, and Spinel.  The vertical integration of our manufacturing gives
us a unique capability to design, fabricate, coat, and assemble these
complex systems in-house.  These products are currently utilized on
the M1 tank, Apache Helicopter, F-14 and F-16, military aircraft, and
others, as well as future platforms including the Joint Strike Fighter
(JSF).

Research, Development and Engineering

     Our research and development effort calls for the pursuit of a
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.  We are committed to accepting only
funded research that ties closely to our growth plans.

     We devote significant resources to research, development and
engineering programs directed at the continuous improvement of
existing products and processes and to the timely development of new
technologies, materials and products.  We believe that our research,
development and engineering activities are essential to our ability to
establish and maintain a leadership position in each of the markets
that we serve.  As of June 30, 2002 we employed 148 people in
research, development and engineering functions, 124 of which 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.

     During the past year, we have made focused investments in:

     - Silicon Carbide Substrate Technology:  In fiscal 2002, we
       acquired the Litton Systems Inc. Silicon Carbide Group to
       complement the Company's SiC development activities.  We
       presently have several crystal growth furnaces producing
       silicon carbide at both our Pennsylvania and New Jersey
       manufacturing facilities.  In

<PAGE>
       addition, slicing and substrate polishing facilities are in
       place and qualification products are being sampled by key
       customers.

     - Large Diameter YAG Manufacturing:  Our research and development
       activities in this area are focused on producing materials that
       will accelerate the evolution of kilowatt-class YAG lasers.
       Achievements in process control and reliability are rapidly
       transferred into production at our Florida manufacturing
       facility, largely due to effective teamwork and crossover
       between our development and manufacturing personnel.

     - High Performance CdZnTe Materials:  The marketplace success of
       eV PRODUCTS depends on our capability and capacity to produce
       radiation detectors with ever-higher sensitivity, resolution
       and efficiency at lower cost.  Key advancements have been
       achieved and will continue to be sought in the production of
       larger single crystal ingots as well as in the fabrication
       techniques for the manufacture of monolithic arrays of closely
       spaced detectors.  As improved performance is indicated, new
       applications and market potential are opened to CdZnTe
       products.

     The development of our products and processes is largely based on
proprietary technical know-how and expertise.  We rely on a
combination of contract provisions and trade secret laws to protect
our proprietary rights.  When faced with potential infringement, we
have in the past and will continue to protect our rights.

     Research, development and engineering expenditures were $11.3
million, $8.1 million and $4.0 million for the fiscal years ended June
30, 2002, 2001 and 2000, respectively.  For these same periods, the
customer and government funded portions of these expenditures were
$7.6 million, $5.1 million and $1.7 million.

Marketing and Sales

     We market our products through a direct sales force in North
America, Japan, Southeast Asia, Belgium and the UK, and through
representatives and distributors elsewhere in Europe, Asia, and South
America.  Our market strategy is focused on building market awareness
and acceptance of our products.  New products are constantly being
produced and sold to our established customers in the laser component
market places.

     Each of our product lines is responsible for their own worldwide
marketing and sales functions, as follows:

     1) The laser component businesses share many common customers and
        sell through our subsidiaries II-VI Japan Incorporated and II-
        VI U.K. Limited as well as through a common distributor in
        most of Europe.  In Germany, we recently established a new
        joint venture with L.O.T.-Oriel Laser Optik Technologie
        Holding GmbH and L.O.T. - Oriel Laser Optik GmbH & Co. KG of
        Darmstadt, Germany (collectively L.O.T.) to distribute II-VI
        Incorporated and Laser Power Corporation products.  (See Note
        M to the Consolidated Financial Statements.)

     2) The eV PRODUCTS marketing and sales initiative is handled
        through a direct sales force in the US coupled with
        manufacturers' representatives.  An array of distributors and
        representatives are used throughout the rest of the world.

     3) The military infrared products marketing and sales initiative
        is handled through a direct sales force in the United States.

     4) The management and technical staff work closely with potential
        customers providing samples and deliverable products from our
        wide band gap wafer materials activities in SiC.

     Our sales force develops close relationships with our OEM and
end-user customers worldwide.  All divisions actively market their
products through targeted mailings, telemarketing, select advertising
and attendance at trade shows.  Our sales force includes a highly
trained team of application engineers to assist customers in
designing, testing and qualifying our parts as key components of our
customers' systems.  As of June 30, 2002, we employed 60 individuals
in sales, marketing and support.

<PAGE>
Manufacturing Technology and Processes

     A majority of the products we produce depend on our ability to
manufacture difficult optical, opto-electronic or electronic
materials.  The table below shows these key materials and the
processes used to produce them.

                           Materials
Product Line               Produced        Growth Process Utilized
------------               ---------       -----------------------
- Laser Components         ZnSe and ZnS    Chemical Vapor Deposition
- Laser Components         YAG and YLF     Czochralski
- Solid-State Detectors    CdZnTe          High Pressure Bridgman and
                                             Conventional Bridgman
- SiC Substrates           SiC             Physical Vapor Transport
                                             and Axial Gradient
                                             Transport

     The ability to produce these difficult materials and to control
the quality and yields is an expertise of II-VI.  Processing of these
materials into finished products is difficult to accomplish; yet the
quality and reproducibility of these products are critical to the
performance of our customer's instruments and systems.  In the markets
we serve there are a limited number of suppliers of many of the
components we manufacture.

     The network of our worldwide manufacturing sites allows products
to be produced in regions that provide cost-effective advantages.  We
believe our cost to produce our infrared and near infrared components
are the lowest among all competitors.  We employ numerous advanced
manufacturing technologies and systems in all product-manufacturing
facilities.  These include automated CNC optical fabrication, high
throughput thin-film coaters, micro precision metrology and custom-
engineered automated furnace controls for the crystal growth
processes.  Producing products for use across the electromagnetic
spectrum requires the capabilities to repeatedly produce products with
high yields to tolerances in the nanometer range.  We embody a
technology and quality mindset that gives our customers the confidence
to utilize our products in a just in time basis straight into the
heart of their production lines.

Sources of Supply

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

     The continued high quality of these materials is critical to the
stability of our manufacturing yields.  We conduct 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.  We have not
experienced significant production delays due to shortages of
materials.  However, we do occasionally experience problems associated
with vendor supplied materials not meeting contract specifications for
quality or purity.  A significant failure of our suppliers to deliver
sufficient quantities of necessary high-quality materials on a timely
basis could have a materially adverse effect on our results of
operations.

Customers

     Our customer base for our laser component products consists of
over 5,000 customers worldwide.

     The three main groups of customers for our laser component
products are as follows:

     - Leading original equipment manufactures and system integrators
       of high power industrial, medical and military laser systems,

<PAGE>
     - Laser end users who require replacement optics for their
       existing laser systems, and

     - Scientific and military customers, including the U.S. military
       and its allies, for use in advanced targeting, navigation and
       infrared imaging systems.

     For our solid-state radiation detector products, our customers
are manufacturers of equipment and devices for industrial process
control, nuclear medicine, x-ray imaging, environmental monitoring,
nuclear safeguards and nonproliferation, and health physics.  We are
currently dependent on a limited number of key customers for this
product line.

     Our silicon carbide electronic materials product sales to date
have been limited and we do not have an established customer base for
this product line.

Competition

     We believe that we are a leading producer of products and
services in our addressed markets.  In the area of commercial infrared
laser optics and materials, we believe we are an industry leader.  We
are a leading supplier of infrared optics used in complex military
assemblies for targeting, navigation and thermal imaging systems to
every major military prime contractor.  We are a leading supplier of
CdZnTe substrates and devices for x-ray and gamma-ray detectors and
components.  We are a significant supplier of YAG rods and YAG laser
optics to the worldwide markets of scientific, research, medical and
industrial laser manufacturers.

     We compete on the basis of product quality, delivery time, strong
technical support and pricing.  Management believes that we compete
favorably with respect to these factors and that our vertical
integration, manufacturing facilities and equipment, experienced
technical and manufacturing employees, and worldwide marketing and
distribution provide competitive advantages.

     We have a number of present and potential competitors, many of
which have greater financial, selling, marketing or technical
resources.  A competitor of our production of ZnSe is a division of
Rohm and Haas Company.  The competitors producing infrared and CO2
laser optics include Sumitomo in Japan and Ophir Optronics in Israel
as well as several companies producing limited quantities of infrared
and CO2 laser optics.  Competing producers of YAG materials and optics
include the Poly-Scientific Division of the Northrop Grumman Component
Technologies Sector and a division of Saint-Gobain.  Competing
producers of infrared optics for military applications are in-house
fabrication and thin film coating capabilities of major military prime
contractors, such as Raytheon Corporation.  Competing producers of
CdZnTe and CdZnTe detectors include Acrorad in Japan and Imarad in
Israel.

     In addition to competitors who manufacture products similar to
those we produce, there are other technologies or materials that may
compete with our products.

Bookings and Backlog

     We define our bookings during a fiscal period as incoming orders
believed to be deliverable to customers in the next twelve months net
of any order cancellations.  Certain long-term research and
development contracts exceeding twelve-month may be booked in their
entirety, but in no event would exceed twenty-four months.  For the
year ended June 30, 2002, our bookings were $117.0 million compared to
bookings of $132.7 million for the year ended June 30, 2001.  We
believe that the decrease in bookings was driven by the weak worldwide
economy and industrial demand.  Many large one-year blanket orders
were not cancelled, but were pushed out three to six months due to
weakened industrial demand.

     We define our backlog as customer orders available for shipment
in the next twelve months and certain long-term research and
development contracts not exceeding twenty-four months as of the end
of the fiscal period.  As of June 30, 2002, our backlog was $48.0
million compared to $44.7 million at June 30, 2001.  The increase in
backlog is primarily reflective of strong second half bookings, more
specifically large one-year blanket orders recorded by the eV PRODUCTS
division, significant military orders booked at the Laser Power
Corporation and contract bookings for the development of Silicon
Carbide.

<PAGE>
Employees

     As of June 30, 2002, we employed 976 persons worldwide.  Of these
employees, 148 were engaged in research, development and engineering,
613 in direct production and the balance in sales and marketing,
administration, finance and support services.  Our production staff
includes highly skilled optical craftsmen.  None of our employees are
covered by a collective bargaining agreement, and we have never
experienced any work stoppages.  We have a long-standing policy of
encouraging active employee participation in selected areas of
operations management.  We believe our relations with our employees to
be good.  We reward our employees with incentive compensation based on
achievement of performance goals.

Patents, Trade Secrets and Trademarks

     We rely on our trade secrets and proprietary know-how to develop
and maintain our competitive position.  We have not pursued process
patents due to the disclosures required in the patent process and the
relative difficulties in successfully litigating process-type patents.
We have confidentiality and noncompetition agreements with our
executive officers and certain other personnel.

     The processes and specialized equipment utilized in crystal
growth, infrared materials fabrication and infrared optical coatings
as developed by us 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 our 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 our technology.  We may be
required to obtain licenses under such patents, and there can be no
assurance that we 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 our results
of operations.  In addition, our 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.

     We hold six registered trademarks: the II-VI INCORPORATED (R)
name; INFRAREADY OPTICS(R) for replacement optics for industrial CO2
lasers; EPIREADY(R) for low surface damage substrates for Mercury
Cadmium Telluride epitaxy; and eV PRODUCTS(R) for products
manufactured by our eV PRODUCTS division; LASER POWER CORPORATION(R)
name; MP-5(R) for low absorption coating technology.  The trademarks
are registered with the United States Patent and Trademark Office, but
not with any states.  We are not aware of any interference or
opposition to these trademarks in any jurisdiction.


ITEM 2. PROPERTIES

Facilities

     Our headquarters are located in Saxonburg, Pennsylvania, 25 miles
north of Pittsburgh, on approximately 64 acres of land.  This location
contains several manufacturing facilities totaling 171,000 square
feet.  Our VLOC subsidiary maintains two manufacturing facilities in
Florida, northwest of Tampa.  These locations total 65,000 square
feet.  In addition, we lease manufacturing and office space in
California, New Jersey, Mexico, Singapore, China, Japan, U.K. and
Belgium totaling 184,000 square feet.


ITEM 3. LEGAL PROCEEDINGS

     None.


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.

<PAGE>
                  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     60   Chairman, Chief Executive Officer and
                         Director
Francis J. Kramer   53   President, Chief Operating Officer and
                         Director
Herman E. Reedy     59   Vice President and General Manager of Quality
                         and Engineering
James Martinelli    44   General Manager of Laser Power Corporation
                         and Chief Financial Officer of II-VI
                         Incorporated
Craig A. Creaturo   32   Treasurer

     Carl J. Johnson, a co-founder of II-VI in 1971, serves as
Chairman, Chief Executive Officer, and Director of II-VI.  He served
as President of II-VI 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.  From 1964 to 1966, Dr. Johnson worked at Bell
Telephone Laboratories as a member of the technical staff.  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.  Dr. Johnson serves as a
director of Xymox Technologies, Inc., and Armstrong Laser Technology,
Inc.
     Francis J. Kramer has been employed by II-VI since 1983 and has
been its President and Chief Operating Officer since 1985.  Mr. Kramer
has served as a Director of II-VI since 1989.  Mr. Kramer joined II-VI
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 II-VI, Mr. Kramer was the Director of
Operations for the Utility Communications Systems Group of Rockwell
International Corp.  Mr. Kramer graduated from the University of
Pittsburgh in 1971 with a B.S. degree in Industrial Engineering and
from Purdue University in 1975 with an M.S. degree in Industrial
Administration.

     Herman E. Reedy has been with II-VI 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 II-VI, Mr. Reedy was employed by Essex International,
Inc., serving last as Manager, MOS Wafer Process Engineering.  Prior
to 1973, he was employed by Carnegie Mellon University and previously
held positions with SemiElements, 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 II-VI since 1986.  He has
served as General Manager of Laser Power Corporation since July 2000
and Chief Financial Officer of II-VI Incorporated since 1994.  Mr.
Martinelli joined the Company as Accounting Manager, was named
Controller in 1990 and named Chief Financial Officer and Treasurer in
1994.  Prior to his employment by II-VI, Mr. Martinelli was Accounting
Manager at Tippins Incorporated and Pennsylvania Engineering
Corporation from 1980 to 1985.  Mr. Martinelli graduated from Indiana
University of Pennsylvania in 1980 with a B.S. degree in Accounting
and is a member of the Pennsylvania Institute of Certified Public
Accountants.

     Craig A. Creaturo has served as Treasurer and Director of
Finance, Accounting and Information Systems since July 2000.  Mr.
Creaturo has been employed by the Company since 1998 when he joined
the Company as Corporate Controller.  Prior to his employment by the
Company, Mr. Creaturo was employed by Arthur Andersen LLP from 1992 to
1998 and served in the audit and attestation division with a final
position as Audit Manager.  Mr. Creaturo graduated from Grove City
College in 1992 with a B.S. degree in Accounting.  Mr. Creaturo is a
Certified Public Accountant in the Commonwealth of Pennsylvania and is
a member of the American Institute of Certified Public Accountants and
the Pennsylvania Institute of Certified Public Accountants.


<PAGE>
PART II

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

     The Company's Common Stock is traded on the 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 Nasdaq.


                         High            Low
                         ----            ---
Fiscal 2002
    First Quarter      $17.25         $12.67
    Second Quarter     $18.05         $11.90
    Third Quarter      $19.10         $13.95
    Fourth Quarter     $15.78         $11.98

Fiscal 2001
    First Quarter      $28.50         $13.31
    Second Quarter     $23.38         $13.89
    Third Quarter      $17.69         $11.00
    Fourth Quarter     $17.50         $11.88

     On September 10, 2002, the last reported sale price for the
Common Stock was $13.31 per share.  As of such date, there were
approximately 800 holders of record of the Common Stock.  The Company
historically has not paid cash dividends and does not anticipate
paying cash dividends in the foreseeable future.


ITEM 6. SELECTED FINANCIAL DATA

FIVE-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>

Year Ended June 30,               2002       2001      2000      1999      1998
-------------------               ----       ----      ----      ----      ----
<s>                           <c>        <c>        <c>       <c>       <c>
(000 except per share data)
Statement of Earnings
Net revenues                  $113,688   $123,334   $74,092   $62,014   $61,340
Net earnings                  $  7,264   $  9,491   $ 7,311   $ 5,463   $ 6,780
Basic earnings per share      $   0.52   $   0.69   $  0.57   $  0.43   $  0.53
Diluted earnings per share    $   0.51   $   0.67   $  0.55   $  0.42   $  0.51
Diluted weighted average
  shares outstanding            14,314     14,160    13,176    12,980    13,348
===========================   ========   ========   =======   =======   =======
</TABLE>
<FN>
Share and per share data for 2000, 1999 and 1998 were adjusted to
reflect the two-for-one stock split in fiscal 2001.
</FN>



<TABLE>
<CAPTION>
June 30,                          2002       2001      2000      1999      1998
-------------------               ----       ----      ----      ----      ----
<s>                           <c>        <c>        <c>       <c>       <c>
($000)
Balance Sheet
Working capital               $ 35,746   $ 33,976   $24,335   $17,590   $13,420
Total assets                   151,901    148,173    84,102    70,843    67,774
Total debt                      34,503     37,006     5,585     6,674     8,209
Retained earnings               61,451     54,187    44,696    37,385    31,922
Shareholders' equity            97,660     89,413    63,426    54,493    50,063
===========================   ========   ========   =======   =======   =======
</TABLE>
<FN>
For the five-year period ended June 30, 2002, no cash dividends were
declared.
</FN>


<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operations are forward-
looking statements.  Forward-looking statements are also identified by
words such a "expects," "anticipates," "believes," "intends," "plans,
"projects," or similar expressions.  Actual results could differ
materially from those anticipated in these forward-looking statements
for many reasons, including risk factors described in the Risk Factors
set forth in Item 7.


CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are described in Note A of the
Consolidated Financial Statements, which were prepared in accordance
with accounting principles generally accepted in the United States of
America.  In preparing our financial statements, we made estimates and
judgments which affect the results of our operations and the value of
assets and liabilities we report.  Our actual results may differ from
these estimates.

We believe that the following summarizes critical accounting policies
which require significant judgments and estimates in our preparation
of our consolidated financial statements.

The Company records revenue, other than on long-term contracts, when a
product is shipped.  Revenue on long-term contracts 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.

The Company records an allowance for doubtful accounts receivable
including warranty reserves as a charge against earnings based on a
percentage of actual historical product returns over the past twelve
months.  Additional reserve is estimated for potential non-collection
of the receivable based on historical results.  The Company has not
experienced a non-collection of accounts receivable materially
affecting the financial position or results of operations.

The Company records a slow moving inventory reserve as a charge
against earnings for all products on hand that have not been sold to
customers in the past twelve months.  An additional reserve is
recorded for product on hand that is in excess of product sold to
customers over the past twelve months.

The Company records bonus and profit sharing estimates as a charge
against earnings based on a percentage of operating income.  These
estimates are adjusted to actual based on final results of operations
achieved during the fiscal year.  Certain bonuses are paid quarterly
at a level of 75% of the current year to date operating income with
final payment in August of the subsequent fiscal year.  Other bonuses
and profit sharing are paid annually in August of the subsequent
fiscal year.

From time to time, estimated accruals are recorded as a charge against
earnings based on known circumstances where it is probable that a
liability has been incurred or is expected to be incurred and the
amount can reasonably be estimated.


<PAGE>
RESULTS OF OPERATIONS

Fiscal 2002 Compared to Fiscal 2001

NET EARNINGS  Net earnings decreased 23% in fiscal 2002 to $7.3
million from $9.5 million in fiscal 2001.  The major contributor to
the net earnings decrease was the general softening of demand for
laser optics and component products in the industrial sector impacted
by the weak worldwide economy.

BOOKINGS  Bookings decreased 12% to $117.0 million in fiscal 2002
compared to $132.7 million in fiscal 2001.  Order backlog increased 7%
to $48.0 million at June 30, 2002 from $44.7 million at June 30, 2001
as a result of bookings outpacing shipments in fiscal 2002.  The
increase in backlog is primarily due to strong second half bookings,
more specifically large orders recorded by significant military orders
booked at Laser Power Corporation, blanket orders recorded by eV
PRODUCTS division and contract bookings for the development of Silicon
Carbide.  Manufacturing orders comprised 93% of the backlog at June
30, 2002.  Manufacturing bookings decreased by approximately $16.1
million while contract research and development bookings increased by
approximately $0.1 million.  Bookings for laser optics and component
products decreased approximately 15%, primarily driven by delays in
EOM and aftermarket orders caused by a slowdown in the industrial
sector.  Bookings for Laser Power Corporation were $37.4 million for
the fiscal year ended June 30, 2002 compared to $39.0 million for
eleven months ended June 30, 2001 during which period Laser Power
Corporation was owned by the Company.  The overall decrease in the
Laser Power Corporation bookings was due to a decrease in commercial
bookings more than offsetting an increase in military bookings.
Bookings for the eV PRODUCTS division decreased approximately 30% due
to the absence of orders to replace fiscal year 2001 high volume
orders such as the NASA swift telescope program and Neoprobe bone
densitometry.  Bookings for the Silicon Carbide development activities
of the WBG group were $2.3 million.

REVENUES  Revenues decreased 8% to $113.7 million in fiscal 2002
compared to $123.3 million last fiscal year.  Revenues for laser
optics and component products decreased approximately 10% due to lower
shipments of industrial laser OEM and aftermarket sales from sluggish
industrial worldwide demand, revenues from the eV PRODUCTS division
decreased approximately 30% from the absence in sales to replace the
fiscal year 2001 volume sales primarily in the medical sector, and the
Company recorded revenues from Laser Power Corporation of
approximately $32.5 million for the fiscal year ended June 30, 2002
compared to $31.1 million for eleven months ended June 30, 2001.

COSTS AND EXPENSES  Manufacturing gross margin was $36.3 million or
34% of net revenues in fiscal 2002 compared to $46.1 million or 39% of
net revenues in fiscal 2001.  The dollar and percentage decrease was
attributable to lower sales volume.  The decrease in the gross margin
percentage was also driven by a shift in the product mix during the
past few quarters.  As the industrial business has slowed, the Company
has taken on more military business which historically has lower
margins.

Contract research and development gross margin was $0.7 million or 9%
of contract research and development revenues in fiscal 2002 compared
to $1.5 million or 29% of contract research and development revenues
in fiscal 2001.  The gross margin was negatively impacted during the
year as Laser Power Corporation and, more specifically, the Large
Optics Coating Facility, encountered continued production issues
related to several developmental contracts.

Company-funded internal research and development remained relatively
unchanged at $4.4 million in fiscal 2002 from $4.5 million in fiscal
2001.  In general, internal research and development expense reflects
increased efforts focused on Silicon Carbide crystal growth technology
and processing development, the Company's corporate research and
development activities and the research and development activities of
eV PRODUCTS.

Selling, general and administrative expenses were $21.2 million or 19%
of revenues in fiscal 2002 compared to $24.8 million or 20% of
revenues in fiscal 2001.  This dollar and percentage decrease is
attributable to the elimination of certain redundant expenses, as well
as, expense and manpower reductions due to decreased manufacturing
demand during fiscal 2002.

<PAGE>
Other expense was $0.4 million in fiscal 2002 compared to $1.4 million
in fiscal 2001.  The other expense decrease was primarily due to the
absence of approximately $1.5 million of goodwill amortization
incurred in fiscal 2001 (see Note E to the Consolidated Financial
Statements) and foreign currency gains in 2002 as compared to losses
in fiscal 2001.  The overall decrease was partially offset by fiscal
2002 charges related to the closing of operations of Laser Power
Corporation in Mexico of $0.4 million, costs related to consolidating
several of the Company's European distribution arrangements of $0.4
million, and the write-off of certain crystal growth equipment and
technology of $0.7 million.

Interest expense was $1.4 million in fiscal 2002 compared to $2.3
million in fiscal 2001.  The decrease in interest expense was
primarily due to the lower borrowings and continuing decrease of the
Company's LIBOR based interest rate as compared to fiscal 2001.  The
Company's weighted average interest rate was approximately 37% lower
at June 30, 2002 as compared to the previous year.  Scheduled
quarterly payments on the term loan component of the Company's credit
agreement began in fiscal 2002.

The effective corporate income tax rate was 24% in fiscal 2002
compared to 35% in fiscal 2001. The decrease in the effective income
tax rate reflects the favorable mix of worldwide earnings from the
Company's focus on increased manufacturing in China and Singapore
where tax rates are lower than the United States.

Fiscal 2001 Compared to Fiscal 2000

NET EARNINGS  Net earnings increased 30% in fiscal 2001 to $9.5
million from $7.3 million in fiscal 2000.  The major contributor to
the net earnings increase were higher revenues.  Each contributor is
explained further in this section.

BOOKINGS  Bookings increased 60% to $132.7 million in fiscal 2001
compared to $83.0 million in fiscal 2000.  Order backlog increased 64%
to $44.7 million at June 30, 2001 from $27.2 million at June 30, 2000
as a result of bookings outpacing shipments in fiscal 2001 and the
addition of Laser Power Corporation.  Manufacturing orders comprised
96% of the backlog at June 30, 2001.  Manufacturing bookings increased
by approximately $50.3 million, of which $39.0 million was
attributable to Laser Power Corporation, while contract research and
development bookings decreased by approximately $0.2 million.
Bookings for laser optics and component products increased
approximately 15% and bookings for the eV PRODUCTS division increased
approximately 15%.  These increases were attributable to strong demand
for the Company's laser optics and component products and continued
acceptance of products of the eV PRODUCTS division.

REVENUES  Revenues grew 66% to $123.3 million in fiscal 2001 compared
to $74.1 million last fiscal year.  Revenues for laser optics and
component products increased approximately 20% due to continued strong
demand for infrared optics products, revenues from the eV PRODUCTS
division increased approximately 53% due to successful market launches
and other new product acceptance in the marketplace, and the Company
recorded revenues from Laser Power Corporation of approximately $31.1
million.

COSTS AND EXPENSES  Manufacturing gross margin was $46.1 million or
39% of net revenues in fiscal 2001 compared to $30.9 million or 43% of
net revenues in fiscal 2000.  The dollar increase was attributable to
higher sales volume at all three of the Company's segments.  Increased
sales included infrared optics and materials, detector products at the
eV PRODUCTS division, and sales from Laser Power Corporation.  The
decrease in gross margin as a percentage of net sales reflects the
addition of Laser Power Corporation which has historically lower gross
margins than the Company.

Contract research and development gross margin was $1.5 million or 29%
of contract research and development revenues in fiscal 2001 compared
to $0.5 million or 28% of contract research and development revenues
in fiscal 2000.  The Company has increased the amount of contract
research and development projects it undertakes and plans to increase
this amount over the foreseeable future.

Company-funded internal research and development increased to $4.5
million in fiscal 2001 from $2.8 million in fiscal 2000.  The Company
continues to expand its internal research and development projects,
including projects associated with developing nuclear radiation
detectors at the eV PRODUCTS division, infrared optics and materials,
and silicon carbide at the Company's optical components businesses.

<PAGE>
Selling, general and administrative expenses were $24.8 million or 20%
of revenues in fiscal 2001 compared to $18.2 million or 25% of
revenues in fiscal 2000.  This dollar increase is attributable to the
addition of the selling, general and administrative expenses of the
Company's Laser Power Corporation subsidiary, increased employment
costs associated with new employees, increased payroll expense
attributable to the Company's worldwide profit driven bonus programs,
and increased sales and marketing efforts.  The decrease in selling,
general and administrative expenses as a percentage of net revenues
reflect the addition of Laser Power Corporation and revenue
improvements from the eV PRODUCTS division and the Company's VLOC
subsidiary with limited corresponding increases to selling, general
and administrative expenses.

Other expense was $1.4 million in fiscal 2001 compared to other
expense of $0.2 million in fiscal 2000.  The increase in other expense
was primarily attributable to the amortization of goodwill related to
the purchase of Laser Power Corporation.

Interest expense was $2.3 million in fiscal 2001 compared to $0.3
million in fiscal 2000.  The increase in interest expense was the
direct result of additional borrowings in connection with the purchase
of Laser Power Corporation.

The effective corporate income tax rate was 35% in fiscal 2001
compared to 25% in fiscal 2000. The increase in the effective income
tax rate reflects the completion of several international related tax
opportunities during fiscal 2000 and the non-deductible amortization
of goodwill resulting from the acquisition of Laser Power Corporation.


LIQUIDITY AND CAPITAL RESOURCES

In fiscal 2002, cash generated from operations was $16.1 million.
Proceeds from the net increase in borrowings of $1.3 million in
addition to the cash generated from operations were used primarily to
fund an investment of $8.6 million in property, plant and equipment,
to finance a $1.7 million investment for a 25% ownership of a key
supplier to the Company, to acquire for $2.2 million the Litton
Systems, Inc. Silicon Carbide Group and pay down $3.8 million due on
the term loan.  Cash transactions for fiscal 2002 and cash on hand at
the beginning of the fiscal year resulted in a cash position of $9.6
million at June 30, 2002.

The largest sources of the $16.1 million in cash generated from
operations in fiscal 2002 was $16.6 million in net earnings before
depreciation and amortization, an increase in deferred income taxes
and a decrease in accounts receivable and inventories of $2.3 million.
This increase in cash was partially offset by a decrease in accounts
payable and other operating net assets of $2.5 million.

The impact of inflation on the Company's business has not been
material.

The Company expects cash flow from operations to continue to fund
working capital needs, capital expenditures and internal growth.
During fiscal 2002, the Company reinvested $8.6 million into capital
projects.


RISK FACTORS

We Depend on Highly Complex Manufacturing Processes Which Require
Products from Limited Sources of Supply

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

<PAGE>
     We produce Hydrogen Selenide gas which is used in our production
of ZnSe.  There are risks inherent in the production and handling of
such material.  Our inability to effectively handle Hydrogen Selenide
could require us to curtail our production of Hydrogen Selenide.
Hydrogen Selenide can be obtained from one outside source.  The cost
of purchasing such material is significantly greater than the cost of
internal production.  As a result, purchasing a substantial portion of
such material from the outside source would significantly increase our
production costs of ZnSe.  Therefore, our inability to internally
produce Hydrogen Selenide could have a material adverse effect on our
business, results of operations or financial condition.

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

Our Business is Dependent on Other Cyclical Industries

     Our business is significantly dependent on the demand for
products produced by end users of industrial lasers.  Many of these
end users are in industries that historically have experienced a
highly cyclical demand for their products.  Therefore, as a result,
demand for our products and our results of operations are subject to
cyclical fluctuations.

Our Revenues are Subject to Potential Seasonal Fluctuations

     Due to our customers' buying patterns, particularly in Europe,
revenues for our first fiscal quarter ending in September could be
below those in the preceding quarter.  Our first fiscal quarter
results often are dependent upon the sales made in the last month of
the quarter.

We May Encounter Substantial Competition

We may encounter substantial competition from other companies in the
same market, including established companies with substantial
resources.  Some of our competitors may have financial, technical,
marketing or other capabilities more extensive than ours and may be
able to respond more quickly than we can to new or emerging
technologies and other competitive pressures.  We may not be able to
compete successfully against our present or future competitors, and
competition may adversely affect our business, financial condition or
operating results.

International Sales Account for a Significant Portion of Our Revenues

     Sales to customers in countries other than the United States
accounted   for approximately 39%, 37% and 49% of revenues during the
years ended June 30, 2002, 2001 and 2000, respectively.  We anticipate
that international sales will continue to account for a significant
portion of our revenues for the foreseeable future.  In addition, we
manufacture products in Singapore and China and maintain direct sales
offices in Japan, the UK and Belgium.  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 our business, financial condition or results of operations.
In particular, although our international sales, other than in Japan,
Belgium and the UK, are denominated in U.S. dollars, currency exchange
fluctuations in countries where we do business could have a material
adverse affect on our business, financial condition or results of
operations, by rendering us less price-competitive than foreign
manufacturers.  Our sales in Japan are denominated in yen and,
accordingly, are affected by fluctuations in the dollar/yen currency
exchange rates.  We generally reduce our exposure to such fluctuations
through forward exchange agreements hedging approximately 75% of our
sales in Japan.  We do not engage in the speculative trading of
financial derivatives.  There can be no assurance, however, that our
practices will reduce or eliminate the risk of fluctuation in the
dollar/yen currency exchange rate.

<PAGE>
Our Revenues May Suffer if General Economic Conditions Worsen

     Our revenues and earnings may be affected by general economic
factors, such as excessive inflation, currency fluctuations and
employment levels, resulting in a temporary or longer-term overall
decline in demand for our products.  Therefore, any significant
downturn or recession in the United States or other countries could
have a material adverse effect on our business, financial condition
and results of operations.

We May Expand Product Lines and Markets by Acquiring Other Businesses

Our business strategy includes expanding our 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 a material adverse affect on our 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.  In fiscal
1995, we acquired the Virgo Optics Division of Sandoz Chemicals
Corporation.  In fiscal 1996, we acquired Lightening Optical
Corporation.  Subsequently, these acquisitions were combined to form
our VLOC subsidiary.  In fiscal 2001, we acquired Laser Power
Corporation.   In fiscal 2002, we acquired the Litton System, Inc.
Silicon Carbide Group.

Our Success Depends on New Products and Processes

     In order to meet our strategic objectives, we must continue to
develop, manufacture and market new products, develop new processes
and improve existing processes.  As a result, we expect 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 our business.
Our success 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 we will be
able to develop and introduce new products or enhancements to our
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 our ability to grow our business.

Failure to Keep Pace with Industry Developments May Adversely Affect
Our Operations

     We are engaged in industries which will be affected by future
developments.  The introduction of products or processes utilizing new
developments could render existing products or processes obsolete or
unmarketable.  Our continued success will depend upon our ability to
develop and introduce on a timely and cost-effective basis new
products, processes and applications that keep pace with developments
and address increasingly sophisticated customer requirements.  There
can be no assurance that we will be successful in identifying,
developing and marketing new products, applications and processes and
product or process enhancements, that we will not experience
difficulties that could delay or prevent the successful development,
introduction and marketing of product or process enhancements or new
products, applications or processes, or that our products,
applications or processes will adequately meet the requirements of the
marketplace and achieve market acceptance.  Our business, results of
operations and financial condition could be materially and adversely
affected if we were to incur delays in developing new products,
applications or processes or product or process enhancements or if we
did not gain market acceptance.

Exposure to Government Markets

     With the acquisition of Laser Power Corporation, sales to
customers in the defense industry have increased.  These customers in
turn generally contract with a governmental entity, typically the U.S.
government.  Most governmental programs are subject to funding
approval and can be modified or terminated with no warning upon the
determination of a legislative or administrative body.  The loss or
failure to obtain certain contracts or a loss of a

<PAGE>
major government customer could have a material adverse effect on our
business, financial condition and results of operations.

Our Success Depends on the Ability to Retain Key Personnel

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

There Are Limitations on the Protection of Our Intellectual Property

     We do not currently hold any material patents applicable to our
processes and rely on a combination of trade secret, copyright and
trademark laws and employee non-competition and nondisclosure
agreements to protect our intellectual property rights.  There can be
no assurance that the steps taken by us will be adequate to prevent
misappropriation of our technology.  Furthermore, there can be no
assurance that, in the future, third parties will not assert
infringement claims against us.  Asserting our rights or defending
against third-party claims could involve substantial expense, thus
materially and adversely affecting our business, results of operations
or financial condition.  In the event a third party were successful in
a claim that one of our processes infringed its proprietary rights, we
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 our business, results of operations or
financial condition.

Our European Sales Rely On A Single Distributor

     A significant portion of our European sales not made by our
subsidiaries in the UK and Belgium have been made through a European
distributor.  This distributor also provides service and support to
the end users of our products.  Thus, a reduction in the sales efforts
of this distributor could adversely affect our European sales and our
ability to support the end users of our products.  There can be no
assurance that this distributor will continue to distribute, or to
distribute successfully, our products and, in such an event, our
business, results of operations and financial earnings could be
materially and adversely affected.  We recently established
controlling interest in a new joint venture with the distributor
serving the German market.  (See Note M to the Consolidated Financial
Statements.)

Our Stock Price May Fluctuate

     Future announcements concerning us, our competitors or customers,
quarterly variations in operating results, announcements of
technological innovations, the introduction of new products or changes
in product pricing policies by us or our competitors, seasonal or
other variations in anticipated or actual results of operations,
changes in earnings estimates by analysts or reports regarding our
industries in the financial press or investment advisory publications,
among other factors, could cause the market price of our stock to
fluctuate substantially.  In addition, stock prices may fluctuate
widely for reasons which may be unrelated to operating results.  These
fluctuations, as well as general economic, political and market
conditions such as recessions, military conflicts or market or market-
sector declines, may materially and adversely affect the market price
of our common stock.  In addition, any information concerning us,
including projections of future operating results, appearing in
investment advisory publications or on-line bulletin boards or
otherwise emanating from a source other than us could in the future
contribute to volatility in the market price of our common stock.

We Have Adopted Antitakeover Devices Which May Limit the Price that
Certain Investors May be Willing to Pay in the Future for Shares of
Our Common Stock

     Our articles of incorporation, by-laws and shareholder rights
plan contain provisions which could make us a less attractive target
for a hostile takeover or make it more difficult or discourage a
merger proposal, a tender offer or a proxy contest.  This could limit
the price that certain investors might be willing to pay in the future
for shares of our common stock.  The provisions include:

<PAGE>
     - classification of the board of directors into three classes;

     - a procedure which requires shareholders or the board of
       directors to nominate directors in advance of a meeting to
       elect such directors;

     - the ability of the board of directors to issue additional
       shares of common stock or preferred stock without shareholder
       approval; and

     - certain provisions requiring supermajority approval (at least
       two-thirds of the votes cast by all shareholders entitled to
       vote thereon, voting together as a single class).

     - a formal shareholder rights plan designed to protect all
       corporate interests in the event the Company's Board of
       Directors and shareholders are confronted with an abusive or
       unfair takeover attempt.

     In addition, the Pennsylvania Business Corporation Law contains
provisions which may have the effect of delaying or preventing a
change in our control.

We Are Subject to Stringent Environmental Regulation

     We use or generate certain hazardous substances in our research
and manufacturing facilities.  We believe that our handling of such
substances is in material compliance with applicable local, state and
federal environmental, safety and health regulations at each operating
location.  We invest 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.  We annually
conduct 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.  We do
not carry environmental impairment insurance.

     Relative to its generation and use of the extremely hazardous
substance Hydrogen Selenide, we have in place an emergency response
plan.  Special attention has been given to all procedures pertaining
to this gaseous material to minimize the chances of its accidental
release to the atmosphere.

     With respect to the production, use, storage and disposal of the
low-level radioactive material Thorium Fluoride, our facilities and
procedures have been inspected and licensed by the Nuclear Regulatory
Commission.  This material is utilized in our thin-film coatings.
Thorium bearing by-products are collected and shipped as solid waste
to a government-approved low-level radioactive waste disposal site in
Clive, Utah.

     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 us to be in material
compliance with regulations.  We believe that all of the permits and
licenses required for operation of our business are in place.
Although we do not know of any material environmental, safety or
health problems in our properties or processes, there can be no
assurance that problems will not develop in the future which would
have a materially adverse effect on us.

Some Laser Systems Are Complex in Design and May Contain Defects that
Are Not Detected Until Deployed Which Could Increase Our Costs and/or
Reduce Our Revenues

     Laser systems are inherently complex in design and require
ongoing regular maintenance.  The manufacture of lasers, laser
products and systems involves a highly complex and precise process.
As a result of the technical complexity of our products, changes in
our or our suppliers' manufacturing processes or in the use of
defective or contaminated materials by us or our suppliers could
result in a material adverse effect on our ability to achieve
acceptable manufacturing yields and product reliability.  To the
extent that we do not achieve such yields or product reliability, our
business, operating results, financial condition and customer
relationships could be adversely affected.  Our customers may discover
defects in our products after the products have been fully deployed
and operated under peak stress conditions.  In addition, some of our
products are combined with products from other

<PAGE>
vendors, which may contain defects.  Should problems occur, it may be
difficult to identify the source of the problem.  If we are unable to
fix defects or other problems, we could experience, among other
things:

     - loss of customers;

     - increased costs of product returns and warranty expenses;

     - damage to our brand reputation;

     - failure to attract new customers or achieve market acceptance;

     - diversion of development and engineering resources; and

     - legal action by our customers.

The occurrence of any one or more of the foregoing factors could
seriously harm our business or financial condition.

Recently Issued Financial Accounting Standards

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 143,
"Accounting for Asset Retirement Obligations."  SFAS 143 requires that
the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable
estimate of the fair value can be made.  The Statement is effective
for financial statements issued for fiscal years beginning after June
15, 2002.  The Company will adopt this standard as of July 1, 2002 and
does not believe that the adoption of SFAS 143 will have a significant
impact on its financial position or results of operations.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which provides guidance
that will eliminate inconsistencies in the accounting for the
impairment or disposal of long-lived assets under existing accounting
pronouncements.  The Company will apply the provisions of the
pronouncement beginning July 1, 2002.  The Company does not expect the
adoption of this pronouncement to have a material impact on its
financial position or results of operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections."  SFAS 145 will affect income statement
classification of gains and losses from extinguishment of debt and
make certain other technical corrections.  Based on current
operations, the Company does not expect the adoption of this
pronouncement to have a material impact on its financial position or
results of operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities."  SFAS 146 addresses
financial accounting and reporting for costs associated with exit or
disposal activities and nullified EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a
Restructuring)."  The principal difference between SFAS 146 and Issue
94-3 relates to SFAS 146 requirements for recognition of a liability
for a cost associated with an exit or disposal activity.  SFAS 146
requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred.  Under
Issue 94-3, a liability for an exit cost as generally defined in Issue
94-3 was recognized at the date of an entity's commitment to an exit
plan.  The provisions of SFAS 146 are effective for exit or disposal
activities that are initiated after December 31, 2002.  The Company
does not expect the adoption of this pronouncement to have a material
effect on its financial position or results of operations.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISKS  The Company is exposed to market risks arising from
adverse changes in foreign currency exchange rates and interest rates.
In the normal course of business, the Company uses a variety of
techniques and derivative financial instruments as part of its overall
risk management strategy.

<PAGE>
Foreign Exchange Risks - 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 ordinary business
risks regarding foreign currencies on product sales.  Foreign currency
exchange contracts are used to limit transactional exposure to changes
in currency rates.  The Company enters into foreign currency forward
contracts that permit it to sell specified amounts of foreign
currencies expected to be received from its export sales for pre-
established U.S. dollar amounts at specified dates.  The forward
contracts are denominated in the same foreign currencies in which
export sales are denominated.  These contracts provide the Company
with an economic hedge in which settlement will occur in future
periods and which otherwise would expose the Company to foreign
currency risk.  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 risk in the event of non-
performance by the counterparties to these financial instruments, it
does not anticipate such losses.  The Company entered into a low
interest rate, 237 million Yen loan with PNC Bank in September 1997 in
an effort to minimize the foreign currency exposure in Japan.  A
change in the interest rate of 1% for this Yen loan would have changed
the interest expense by approximately $20,000 and a 10% change in the
Yen to dollar exchange rate would have changed revenues by
approximately $830,000 for the year ended June 30, 2002.  In September
2002, the Company replaced the 237 million Yen loan with a 300 million
Yen loan effective September 25,2002.  (See Note M to the Consolidated
Financial Statements.)

Interest Rate Risks - The Company entered into an interest rate cap
with a notional amount of $12.5 million as required under the terms of
its current credit agreement in order to limit interest rate exposure
on one-half of the $25.0 million term loan.  A change in the Company's
overall interest rate of 1% would have changed the interest expense by
approximately $350,000 for the year ended June 30, 2002.


<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF II-VI INCORPORATED AND
SUBSIDIARIES:

We have audited the accompanying consolidated balance sheets of II-VI
Incorporated and subsidiaries (the "Company") as of June 30, 2002 and
2001, and the related consolidated statements of earnings,
shareholders' equity, comprehensive income and cash flows for each of
the three years in the period ended June 30, 2002.  Our audits also
included the financial statement schedule listed in Item 15.  These
consolidated financial statements and financial statement
schedule are the responsibility of management.  Our responsibility is
to express an opinion on the consolidated financial statements and
financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America.  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 referred to
above present fairly, in all material respects, the financial position
of II-VI Incorporated and subsidiaries as of June 30, 2002 and 2001
and the results of their operations and their cash flows for each of
the three years in the period ended June 30, 2002 in conformity with
accounting principles generally accepted in the United States of
America.  Also, 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.

As discussed in Note E to the Consolidated Financial Statements, the
Company changed its method of accounting for goodwill amortization in
fiscal 2002.

/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
September 13, 2002 (September 25, 2002 as to Note M)


<PAGE>
CONSOLIDATED BALANCE SHEETS

June 30,                                          2002             2001
-----------------------------------------------------------------------
($000)
Current Assets
Cash and cash equivalents                    $  9,610          $  8,093
Accounts receivable -
  less allowance for doubtful accounts
  of $847 at June 30, 2002 and $749 at
  June 30, 2001                                21,541            21,884
Inventories                                    19,741            20,782
Deferred income taxes                           3,457             3,304
Prepaid and other current assets                1,488             1,644
-----------------------------------------------------------------------
Total Current Assets                           55,837            55,707
Property, Plant & Equipment, net               60,711            58,031
Goodwill, net                                  28,987            29,236
Intangible Assets, net                          3,233             4,086
Other Assets                                    3,133             1,113
-----------------------------------------------------------------------
                                             $151,901          $148,173
=======================================================================



Current Liabilities
Accounts payable                             $  3,970          $  5,714
Accrued salaries and wages                      2,125             1,826
Accrued bonuses                                 2,851             5,260
Income taxes payable                            1,012             2,158
Accrued profit sharing contribution               736             1,122
Other accrued liabilities                       4,329             1,817
Current portion of long-term debt               5,068             3,834
-----------------------------------------------------------------------
Total Current Liabilities                      20,091            21,731
Long-Term Debt                                 29,435            33,172
Other Liabilities,
   Primarily Deferred Income Taxes              4,715             3,857
-----------------------------------------------------------------------
Total Liabilities                              54,241            58,760
Shareholders' Equity
Preferred stock, no par value;
   authorized - 5,000,000 shares; none issued       -                 -
Common stock, no par value; authorized -
   30,000,000 shares; issued -
   15,101,450 shares at June 30, 2002;
   14,981,163 shares at June 30, 2001          37,840            37,045
Accumulated other comprehensive income            279                91
Retained earnings                              61,451            54,187
-----------------------------------------------------------------------
                                               99,570            91,323
Less treasury stock at cost, 1,068,880 shares   1,910             1,910
-----------------------------------------------------------------------
Total Shareholders' Equity                     97,660            89,413
-----------------------------------------------------------------------
                                             $151,901          $148,173
=======================================================================
See Notes to Consolidated Financial Statements.


<PAGE>

<TABLE>
<CAPTION>



CONSOLIDATED STATEMENTS OF EARNINGS


Year Ended June 30,                          2002               2001               2000
-----------------------------------      --------           --------           --------
($000 except per share data)
<S>                                      <C>                <C>                <C>

Revenues
Net sales:
   Domestic                              $ 61,995           $ 73,075           $ 36,265
   International                           44,066             45,176             36,176
Contract research and development           7,627              5,083              1,651
-----------------------------------      --------           --------           --------
                                          113,688            123,334             74,092
-----------------------------------      --------           --------           --------

Costs, Expenses and Other Expense
Cost of goods sold                         69,732             72,181             41,550
Contract research and development           6,905              3,619              1,196
Internal research and development           4,441              4,499              2,844
Selling, general and administrative        21,245             24,767             18,171
Interest expense                            1,444              2,330                349
Other expense - net                           411              1,382                226
-----------------------------------      --------           --------           --------
                                          104,178            108,778             64,336
-----------------------------------      --------           --------           --------
Earnings Before Income Taxes               9,510              14,556              9,756
Income Taxes                               2,246               5,065              2,445
-----------------------------------      --------           --------           --------
Net Earnings                             $ 7,264            $  9,491           $  7,311
-----------------------------------      --------           --------           --------
Basic Earnings Per Share                 $  0.52            $   0.69           $   0.57
Diluted Earnings Per Share               $  0.51            $   0.67           $   0.55
</TABLE>
<FN>
See Notes to Consolidated Financial Statements.
</FN>


<PAGE>
<TABLE>
<CAPTION>


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


                                                          Accumulated
                                           Common Stock      Other                 Treasury Stock
                                          -------------- Comprehensive  Retained  ---------------
                                          Shares  Amount    Income      Earnings  Shares   Amount      Total
                                          ------ -------    ------      --------  ------   --------  -------
(000)
<S>                                       <C>    <C>        <C>          <C>      <C>      <C>       <C>
BALANCE - JUNE 30, 1999                   13,752 $18,746    $  272       $37,385  (1,069)  $(1,910)  $54,493
Shares issued under
  stock option plans                         224     681         -             -       -         -       681
Net earnings                                   -       -         -         7,311       -         -     7,311
Other comprehensive loss, net of tax           -       -         -             -       -         -       (62)
Income tax benefit for
  options exercised                            -   1,027       (62)            -       -         -     1,027
------------------------------------      ------ -------    ------      --------  ------   --------  -------
BALANCE - JUNE 30, 2000                   13,976  20,454       210       44,696   (1,069)   (1,910)   63,450
Shares issued under
  stock option plans                         128     466         -            -        -         -       466
Shares issued to acquire
   Laser Power Corporation                   877  15,474         -            -        -         -    15,474
Net earnings                                   -       -         -        9,491        -         -     9,491
Other comprehensive loss, net of tax           -       -      (119)           -        -         -      (119)
Income tax benefit for
  options exercised                            -     651         -            -        -         -       651
------------------------------------      ------ -------    ------      --------  ------   --------   -------
BALANCE - JUNE 30, 2001                   14,981  37,045        91       54,187   (1,069)   (1,910)   89,413
Shares issued under
  stock option plans                         120     370         -            -        -         -       370
Net earnings                                   -       -         -        7,264        -         -     7,264
Other comprehensive income, net of tax         -       -       188            -        -         -       188
Income tax benefit for
  options exercised                            -     425         -            -        -         -       425
------------------------------------      ------ -------    ------      --------  ------   --------   -------
BALANCE - JUNE 30, 2002                   15,101 $37,840    $  279      $61,451   (1,069)  $ (1,910) $97,660
====================================      ====== =======    ======      ========  ======   ========   =======
</TABLE>
<FN>
See Notes to Consolidated Financial Statements.
</FN>






<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended June 30,                                2002         2001         2000
-------------------------------------------      ------       ------       ------
($000)
<S>                                            <C>          <C>          <C>
Net earnings                                   $  7,264     $  9,491     $  7,311
Other comprehensive income (loss):
   Foreign currency translation adjustments,
     net of tax                                     188         (119)         (62)
-------------------------------------------      ------       ------       ------
COMPREHENSIVE INCOME                           $  7,452     $  9,372     $  7,249
===========================================      ======       ======       ======
</TABLE>
<FN>
See Notes to Consolidated Financial Statements.
</FN>




<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF CASH FLOW
                                                                           Year Ended June 30,
($000)                                                             2002           2001           2000
-------------------------------------------------               -------        -------        -------
<S>                                                             <C>            <C>            <C>
Cash Flows from Operating Activities
Net earnings                                                    $ 7,264        $ 9,491        $ 7,311
Adjustments to reconcile net earnings to net cash
provided by operating activities:
    Depreciation                                                  8,429          6,838          4,693
    Amortization                                                    363          1,866            326
    (Gain) loss on foreign currency transactions                   (165)         1,445           (368)
    Net loss on disposal or writedown of assets                     335            237              -
    Deferred income taxes                                           794          1,518            662
    Other                                                          (672)             -              -
    Increase (decrease) in cash from changes in:
        Accounts receivable                                         596         (3,702)          (576)
        Inventories                                               1,700         (1,745)        (4,478)
        Accounts payable                                         (1,775)          (484)         1,674
        Other operating net assets                                 (731)            40          3,292
-------------------------------------------------               -------        -------        -------
Net cash provided by operating activities                        16,138         15,504         12,536
-------------------------------------------------               -------        -------        -------

Cash Flows from Investing Activities
Additions to property, plant and equipment                       (8,663)       (16,699)        (8,877)
Purchases of businesses                                          (2,172)       (27,726)        (2,894)
Investment in unconsolidated businesses                          (1,698)             -              -
Disposals of other assets                                           317            259            786
-------------------------------------------------               -------        -------        -------
Net cash used in investing activities                           (12,216)       (44,166)       (10,985)
-------------------------------------------------               -------        -------        -------

Cash Flows from Financing Activities
Proceeds (payments) on short-term borrowings                      1,250          4,308         (1,344)
Proceeds from long-term borrowings                                    -         25,000              -
Payments on long-term borrowings                                 (3,834)           (44)           (46)
Proceeds from sale of common stock                                  370            466            681
-------------------------------------------------               -------        -------        -------
Net cash (used in) provided by financing activities              (2,214)        29,730           (709)
-------------------------------------------------               -------        -------        -------
Effect of exchange rate changes on cash and cash equivalents       (191)           695            (70)
-------------------------------------------------               -------        -------        -------
Net increase in cash and cash equivalents                         1,517          8,093          1,763

Cash and Cash Equivalents
Beginning of year                                                 6,330            772          5,558
-------------------------------------------------               -------        -------        -------
End of year                                                       9,610        $ 8,093        $ 6,330
=================================================               =======        =======        =======
Non-cash transactions:  Net asset acquired as                   $   366              -              -
                        settlement on a customer
                        purchase commitment
                        Net assets acquired for
                        fair value of common stock                    -              -        $15,474
=================================================               =======        =======        =======
</TABLE>
<FN>
See Notes to Consolidated Financial Statements.
</FN>


<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION  The consolidated financial statements
include II-VI Incorporated and its wholly-owned subsidiaries:  VLOC
Incorporated; II-VI Delaware, Incorporated; II-VI Holdings B.V.; II-VI
Japan Incorporated; II-VI Singapore Pte., Ltd.; II-VI Acquisition
Corp.; II-VI Optics (Suzhou) Co. Ltd.; II-VI International Pte., Ltd.;
II-VI U.K. Limited; and Laser Power Corporation and its wholly-owned
subsidiaries:  EMI Acquisition Corporation; Exotic Materials,
Incorporated; Laser Power Optics de Mexico S.A. de C.V.; Laser Power
Europe N.V.; and Laser Power FSC, Ltd. (collectively the "Company").
All intercompany transactions and balances have been eliminated.

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.

PROPERTY, PLANT AND EQUIPMENT  Property, plant and equipment are
carried at cost or valuation.  Major improvements are capitalized,
while maintenance and repairs are generally expensed as incurred.  As
of June 30, 2002, the Company reviewed its property, plant and
equipment in accordance with Statement of Financial Accounting
Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived
Assets to Be Disposed Of".  SFAS 121 requires comparing the future
cash flows from operations for an asset to the recorded value, if the
cash flows do not exceed the value of the asset, an impairment loss is
recorded.  Based on this analysis, the cash flows of certain assets
with a value of approximately $0.3 million, net of tax did not project
the recoverability of the investment, in accordance with SFAS 121, the
Company recorded a charge to operations in fiscal 2002.

DEPRECIATION  Depreciation for financial reporting purposes is
computed primarily by the straight-line method over the estimated
useful lives of the assets.  Depreciable useful lives range from 3 to
20 years.  Depreciation expense was $8.4 million, $6.8 million, and
$4.7 million in 2002, 2001, and 2000, respectively.

GOODWILL  The excess purchase price over the net assets of businesses
acquired is reported as goodwill in the accompanying Consolidated
Balance Sheets.  SFAS 142 "Goodwill and Other Intangible Assets", was
adopted by the Company as of July 1, 2002.  SFAS 142 requires that
goodwill no longer be amortized, but instead be tested for impairment
at least annually (see Note E for further discussion).

INTANGIBLES  Intangible assets are carried at cost or valuation.
Amortization for financial reporting purposes is computed using the
straight-line method over the estimated useful lives of the assets
ranging from 5 to 20 years.  As discussed above under the caption
Property, Plant and Equipment, related technology with a net book
value of approximately $0.2 million, net of tax was written off (see
Note E for further discussion).

INVESTMENTS  In fiscal 2002, the Company acquired for $1.7 million a
25% ownership of a key supplier to the Company.  In July 2002, the
Company increased its ownership to 33% as a result of a loan
conversion to equity in accordance with the original purchase
agreement.  This investment is accounted for under the equity method
of accounting.

As of June 30, 2002, the Company has outstanding notes receivable of
approximately $0.2 million from an equipment and supply agreement with
this supplier.  Payments on these notes are made quarterly with
interest calculated at the Canadian Prime Rate plus 1 1/2% on the
unpaid balance.

For the fiscal year ended June 30, 2002, the Company purchased $0.2
million of raw materials from this key supplier.

The Company's pro rata share of the earnings from this investment and
the interest received from both of these agreements did not have a
material effect on the Company's results of operations.

The Company performs an evaluation for impairment whenever events or
changes in circumstances indicate that the carrying amount of the
equity investment is not recoverable.  If the evaluation indicates an
other than temporary decline in fair value, the investment is written
down to fair value.  No impairment was recorded in fiscal 2002.

FOREIGN CURRENCY TRANSLATION  For II-VI Singapore Pte., Ltd., and its
subsidiaries, and for Laser Power Optics de Mexico S.A. de C.V., 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.  Foreign currency translation gains (losses) were
$165,000, ($459,000), and ($75,000) in 2002, 2001, and 2000,
respectively.

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

INCOME TAXES  Deferred income tax assets and liabilities are
determined based on the differences between the financial statement
and tax basis of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse.
Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.

REVENUE RECOGNITION  Revenue, other than on long-term contracts, is
recognized when a product is shipped.  Revenue on long-term contracts
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.  Total shipping and handling costs included in revenues
and in selling, general and administrative expenses were $261,000,
$344,000 and $282,000 for the years ended 2002, 2001 and 2000,
respectively.

RESEARCH AND DEVELOPMENT  Research and development costs are expensed
as incurred.  Costs related to customer and/or government funded
research and development contracts are charged to costs and expenses
as the related sales are recorded.

EARNINGS PER SHARE  The following table sets forth the computation of
earnings per share for the periods indicated:

Year Ended June 30,                     2002          2001        2000
----------------------------------------------------------------------
(000 except per share data)
Net earnings                        $  7,264      $  9,491    $  7,311
Divided by:
   Weighted average common
   shares outstanding                 13,962        13,737      12,756
----------------------------------------------------------------------
Basic earnings per share            $   0.52      $   0.69    $   0.57

Net earnings                        $  7,264      $  9,491    $  7,311
Divided by:
   Weighted average common
   shares outstanding                 13,962        13,737      12,756
   Dilutive effect of common
   stock equivalents                     352           423         420
----------------------------------------------------------------------
   Dilutive weighted average
   common shares outstanding          14,314        14,160      13,176
----------------------------------------------------------------------
Diluted earnings per share          $   0.51      $   0.67    $   0.55
======================================================================
Weighted average shares issuable upon the exercise of stock options
that were not included in the calculation because they were
antidilutive, were immaterial for fiscal years 2002, 2001 and 2000,
respectively.

CASH AND CASH EQUIVALENTS  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 is invested in investment grade
money market type instruments.  Cash of foreign subsidiaries is on
deposit at banks in Japan, Singapore, China, Belgium, and the United
Kingdom.

NATURE OF BUSINESS  The Company designs, manufactures and markets
optical and electro-optical components, devices and materials for
infrared, near-infrared, visible light, x-ray and gamma-ray, and
telecommunication instrumentation and applications.  The Company
markets it products in the United States through its direct sales
force and worldwide through its wholly-owned subsidiaries,
distributors and agents.

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 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.

<PAGE>
ESTIMATES  The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America 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.  Our significant estimates include the following:
allowance for doubtful accounts, product warranty reserves, inventory
obsolescence, income tax accrual, deferred income tax valuation
allowances related to net operating losses primarily from our foreign
subsidiaries, and certain liabilities based on known circumstances.

FAIR VALUE OF FINANCIAL INSTRUMENTS  The following methods and
assumptions were used to estimate the fair value of financial
instruments:

     Cash and Cash Equivalents  The carrying amount approximates fair
     value because of their short maturities.

     Debt Obligations  The fair values of debt obligations are
     estimated based upon market values of similar issues.  The fair
     values and carrying amounts of the Company's debt obligations,
     specifically the line of credit, Yen loan and the PIDA loan, are
     approximately equivalent.

CONCENTRATIONS OF CREDIT RISK  Concentrations of credit risk with
respect to accounts receivable are limited due to the Company's large
number of customers.  However, a significant portion of accounts
receivable is from a European distributor.  As of June 30, 2002, the
accounts receivable balance from the European distributor was $2.4
million, or 11% of the accounts receivable balance.  Although the
Company does not currently foresee a risk associated with these
receivables, repayment is dependent upon the financial stability of
this distributor.

COMPREHENSIVE INCOME  Comprehensive income is a measure of all changes
in shareholders' equity that result from transactions and other
economic events of the period other than transactions with owners.
Accumulated other comprehensive income is a component of shareholders'
equity and consists of foreign currency translation adjustments of
$279,000 and $91,000 as of June 30, 2002 and 2001, respectively.

DERIVATIVE INSTRUMENTS  SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral
of the effective date of SFAS No. 133", and SFAS No. 138, "Accounting
for Certain Derivative Instruments and Certain Hedging Activities",
were effective for the Company as of July 1, 2000.  SFAS No. 133
establishes accounting and reporting standards for derivative
instruments and hedging activities.  It requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value.  The Company was not required to record any transition
adjustments as a result of adopting these standards.

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

The Company recorded the fair value of contracts with a notional
amount of approximately $1.2 million as of June 30, 2002 on the
statement of financial position.  The Company does not account for
these contracts as hedges as defined by SFAS No. 133, and records the
change in the fair value of these contracts in the results of
operations as they occur.  The change in the fair value of these
contracts (decreased) increased net earnings by $(66,000) and $165,000
for the years ended June 30, 2002 and 2001, respectively.

To satisfy certain provisions of its line of credit facility, on March
6, 2002 the Company entered into a one-year interest rate cap expiring
March 6, 2003, with a notional amount of $12.5 million replacing an
interest rate collar that expired on March 5, 2002.  These agreements
were entered into to limit interest rate exposure on one-half of the
$25 million term loan.  The floating rate option for the cap agreement
is the one-month LIBOR rate with a cap strike rate of 3.00%.  At March
31, 2002 the one-month LIBOR rate was 1.87%.  The Company has elected
not to account for these agreements as hedges as defined by SFAS No.
133, and recorded the unrealized change in the fair value of these
agreements as an increase or decrease to interest expense in the
results of operations.  The combined effect of these instruments
increased net earnings for fiscal 2002 by approximately $88,000.  The
effect of the interest rate collar on net earnings for fiscal 2001 was
immaterial.


<PAGE>
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS NoAccounting for Asset Retirement Obligations."  SFAS 143
requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a
reasonable estimate of the fair value can be made.  The Statement is
effective for financial statements issued for fiscal years beginning
after June 15, 2002.  The Company will adopt this standard as of July
1, 2002 and does not believe that the adoption of SFAS 143 will have a
significant impact on its financial position or results of operations.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which provides guidance
that will eliminate inconsistencies in the accounting for the
impairment or disposal of long-lived assets under existing accounting
pronouncements.  The Company will apply the provisions of the
pronouncement beginning July 1, 2002.  The Company does not expect the
adoption of this pronouncement to have a material impact on this
financial position or results of operations.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections."  SFAS 145 will affect income statement
classification of gains and losses from extinguishment of debt and
make certain other technical corrections.  Based on current
operations, the Company does not expect the adoption of this
pronouncement to have a material impact on its financial position or
results of operations.

In June 2002, the FASB issued Statement of Financial Accounting
Standards No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities".  SFAS 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities and
nullified EITF Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity"
(including Certain Costs Incurred in a Restructuring).  The principal
difference between SFAS 146 and Issue 94-3 relates to SFAS 146
requirements for recognition of a liability for a cost associated with
an exit or disposal activity.  AFAS 146 requires that a liability for
a cost associated with an exit or disposal activity be recognized when
the liability is incurred.  Under Issue 94-3, a liability for an exit
cost as generally defined in Issue 94-3 was recognized at the date of
an entity's commitment to an exit plan.  The provisions of SFAS 146
are effective for exit or disposal activities that are initiated after
December 31, 2002.  The Company does not expect the adoption of this
pronouncement to have a material effect on our financial position or
results of operations.


Note B  ACQUISITIONS

LITTON SYSTEMS, INC. SILICON CARBIDE GROUP  On October 19, 2001, the
Company acquired the Litton Systems, Inc. Silicon Carbide (SiC) group
for approximately $2.2 million in cash.  The major assets acquired
were equipment, inventory and intangible assets.  The cash paid
equaled the fair value of the assets as of the closing date, therefore
no goodwill was recorded.  No liabilities or long-term obligations
were assumed.  The acquired group, located in New Jersey, concentrates
their efforts on research and development of SiC and will complement
the Company's SiC research and development activities that have been
ongoing since 1998.

ACQUISITION OF LASER POWER CORPORATION  On September 21, 1999, the
Company purchased 1,250,000 shares of Laser Power Corporation common
stock, representing an ownership interest in the company of
approximately 13%, for a total purchase price of approximately $2.8
million.  Laser Power Corporation designs, manufactures, and markets
high performance optics for the industrial, medical and military
applications.  Laser Power's infrared products are sold under the
Laser Power brand name.  Infrared products manufactured for military
applications are sold under the Exotic Electro-Optics brand name.

On August 14, 2000, the Company increased its ownership in Laser Power
Corporation to approximately 88%, giving the Company a controlling
interest.  This additional ownership was acquired for a total
consideration of approximately $23.8 million in cash and the issuance
of approximately 739,000 shares of the Company's common stock for a
total cost of $37.1 million.

On October 24, 2000, the Company completed its acquisition of Laser
Power Corporation for a total consideration of approximately $3.9
million in cash and the issuance of approximately 132,000 shares of
the Company's common stock for a total cost of $6.3 million.

<PAGE>
This transaction has been accounted for as a purchase.  The results of
Laser Power Corporation since the date of acquisition are included in
the Company's consolidated financial statements.


Pro forma results, as if the acquisition of Laser Power Corporation
had occurred at the beginning of fiscal year 2000, are as follows:

Year Ended June 30,                       2002       2001       2000
---------------------------------------------------------------------
($000)
Net revenues                          $113,688   $125,483   $107,569
Income from continuing operations        7,264      9,019      4,801
Net income                               7,264      9,019      3,573

Basic earnings per share:
  Income from continuing operations   $   0.52   $   0.66   $   0.35
  Loss from discontinued operations          -          -      (0.09)
---------------------------------------------------------------------
Net income
Diluted earnings per share:           $   0.52   $   0.66   $   0.26
  Income from continuing operations   $   0.51   $   0.64   $   0.34
  Loss from discontinued operations          -          -      (0.09)
---------------------------------------------------------------------
Net income                            $   0.51   $   0.64   $   0.25

The pro forma results are not necessarily indicative of what actually
would have occurred if the transaction had taken place at the
beginning of the period, are not intended to be a projection of future
results and do not reflect any cost savings that might be achieved
from the combined operations.  The loss from discontinued operations
relates to the activities of Laser Power Corporation in prior periods.
The pro forma information above does not include the SFAS 142
adjustment (see Note E).

Prior year financial statements reflect the adoption of the equity
method of accounting in a manner consistent with the accounting for a
step-by-step acquisition of Laser Power Corporation.  The effect of
the restatement was to reclassify all of the Company's investment in
Laser Power common stock at June 30, 2000 from an investment accounted
for as an available for sale security to an investment accounted for
under the equity method.  The effect of the restatement on income for
the year ended June 30, 2000 was a charge to net income of $129,000.


Note C  INVENTORIES

The components of inventories are as follows:

June 30,                          2002             2001
-------------------------------------------------------
($000)
Raw materials                 $  4,638         $  6,173
Work in process                  8,958            8,680
Finished goods                   6,145            5,929
-------------------------------------------------------
                              $ 19,741         $ 20,782
=======================================================


Note D  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment (at cost or valuation) consists of the
following:

June 30,                          2002             2001
-------------------------------------------------------
($000)
Land and land improvements    $  1,551         $  1,715
Buildings and improvements      30,008           24,426
Machinery and equipment         73,041           68,217
-------------------------------------------------------
                               104,600           94,358

Less accumulated depreciation   43,889           36,327
-------------------------------------------------------
                              $ 60,711         $ 58,031
=======================================================
The interest capitalized associated with the construction of buildings
and improvements approximated $118,000 and $119,000 during the years
ended June 30, 2002 and 2001, respectively.  No interest was
capitalized during the year ended June 30, 2000.


<PAGE>
Note E  GOODWILL AND INTANGIBLE ASSETS

SFAS 142 "Goodwill and Other Intangible Assets", was adopted by the
Company as of July 1, 2001.  SFAS 142 requires that goodwill no longer
be amortized, but instead be tested for impairment at least annually.
SFAS 142 also requires recognized intangible assets be amortized over
their respective estimated useful lives and reviewed for impairment in
accordance with SFAS 121 "Accounting for Long-Lived Assets and for
Long-lived Assets to Be Disposed Of".  Any recognized intangible asset
determined to have an indefinite useful life will not be amortized, but
instead tested for impairment in accordance with the Standard until its
life is determined to no longer be indefinite.  As of June 30, 2001,
the Company had goodwill and other intangible assets, net of
accumulated amortization of $33.3 million, which was subject to the
transitional assessment provisions of SFAS 142.  A third-party
valuation advisory service was engaged by the Company to calculate the
fair value of the identified reporting units of the Company which have
recorded goodwill.  A discounted cash flow model was used to determine
the fair value of the reporting units for purposes of testing goodwill
for impairment.  The discount rate used was based on a risk-adjusted
weighted average cost of capital for the Company.  The Company
completed its impairment test of goodwill prior to December 31, 2001.
The results of this test indicated that the Company's goodwill was not
impaired as of July 1, 2001, therefore, no impairment loss was
recorded.

In accordance with SFAS 142, the Company evaluates its goodwill on an
annual basis.  The Company completed a discounted cash flow and
comparable market capitalization analysis by identified reporting units
of the Company which have recorded goodwill as of June 30, 2002.  Based
on the results of this analysis, the Company's goodwill was not
impaired as of June 30, 2002.

In accordance with SFAS 142, the Company discontinued the amortization
of goodwill effective July 1, 2001.  The following pro forma
information adjusts previously reported net earnings, basic earnings
per share and diluted earnings per share to exclude goodwill
amortization:

Year Ended June 30,               2002        2001        2000
                               -------     -------     -------
($000)
Net earnings                   $ 7,264     $ 9,491     $ 7,311
Add:  Goodwill amortization          -       1,473          87
                               -------     -------     -------
Adjusted net income            $ 7,264     $10,964     $ 7,398
                               =======     =======     =======

Basic earnings per share       $  0.52     $  0.69     $  0.57
Add:  Goodwill amortization          -        0.11         .01
                               -------     -------     -------
Adjusted net income            $  0.52     $  0.80     $  0.58
                               =======     =======     =======

Diluted earnings per share     $  0.51     $  0.67     $  0.55
Add:  Goodwill amortization          -        0.10        0.01
                               -------     -------     -------
Adjusted net income            $  0.51     $  0.77     $  0.56
                               =======     =======     =======

Changes in carrying amount of goodwill are included below:

Year Ended June 30,                                2002         2001
                                               --------     --------
($000)
Balance - Beginning of Year                    $ 29,236     $  1,792
Goodwill acquired - Laser Power Corporation           -       28,917

Goodwill amortization                                 -       (1,473)
Reclassification of intangibles into goodwill       229            -
Tax adjustment                                     (478)           -
                                               --------     --------
Balance - End of Year                          $ 28,987     $ 29,236

The Company completed a tax project in fiscal 2002 relating to its
acquisition of Laser Power Corporation in August 2000.  The result of
this tax study identified additional deferred income tax assets of
$311,000 and a reduction in current income tax payable of $167,000.
These tax adjustments resulted in a reduction of goodwill of $478,000
related to the acquisition of Laser Power Corporation during the year
ended June 30, 2002.

<PAGE>
The gross carrying amount and accumulated amortization of the Company's
intangible assets other than goodwill as of June 30, 2002 and 2001 are
as follows ($000):

<TABLE>
<CAPTION>
                           June 30, 2002                            June 30, 2001
               -----------------------------------------------------------------------------

               Gross                         Net        Gross                         Net
               Carrying     Accumulated      Book       Carrying     Accumulated      Book
               Amount       Amortization     Value      Amount       Amortization     Value
               --------     ------------     -----      --------     ------------     ------
<S>            <C>          <C>              <C>        <C>          <C>              <C>
Patents        $2,193       ($  757)        $1,436      $2,142       ($  285)         $1,857
Trademark       1,491          (143)         1,348       1,491           (68)          1,423
Other           1,250          (801)           449       1,751          (945)            806
               --------     ------------     -----      --------     ------------     ------
Total          $4,934       ($1,701)        $3,233      $5,384       ($1,298)         $4,086
               ========     ============     =====      ========     ============     ======
</TABLE>

In addition to the equipment written-off as noted in Note A under
property, plant and equipment, related technology with a net book value
of approximately $235,000 net of tax was written off as a charge to
operations in fiscal 2002.

Amortization expense recorded on the intangible assets for the years
ended June 30, 2002, 2001 and 2000 was $363,000 $393,000, and $239,000,
respectively.  The estimated amortization expense for existing
intangible assets for each of the five succeeding years is as follows:



Year Ended June 30,
---------------------------
($000)
2003               $328,000
2004                328,000
2005                328,000
2006                276,000
2007                177,000
===========================


Note F  DEBT

The components of debt are as follows:

June 30,                                                2002      2001
----------------------------------------------------------------------
($000)
Line of credit, interest at the
   LIBOR Rate,as defined, plus 1.375%
   and 1.25%, respectively                          $ 10,750  $  9,500
Term loan, interest at the LIBOR Rate,
   as defined,plus 1.375% and 1.25%,
   respectively, payable in quarterly
   installments through August 2005                   21,250    25,000
Pennsylvania Industrial Development Authority
   (PIDA) term note, interest at 3%, payable
   in monthly installments through October 2011          499       546
Term note, interest at the Japanese Yen Base Rate,
   as defined, plus 1.49%, principal payable in
   full in September 2002 (See Note M)                 1,983     1,902
Other                                                     21        58
----------------------------------------------------------------------
Total debt                                            34,503    37,006
Current portion of long-term debt                     (5,068)   (3,834)
----------------------------------------------------------------------
Long-term debt                                       $29,435   $33,172
======================================================================

The Company has a $45.0 million secured credit agreement, which it
obtained in connection with the Company's acquisition of Laser Power
Corporation.  The facility has a five-year life effective August 14,
2000 and contains term and line of credit borrowing options.  The
facility is collateralized by the Company's accounts receivables and
inventory, a pledge of all of the capital stock of each of the
Company's existing direct and indirect domestic subsidiaries, and a
pledge of 65% of the stock of the Company's foreign subsidiaries.
Additionally, the facility is subject to certain restrictive covenants,
including those related to minimum net worth, leverage and interest
coverage.  This facility has an interest rate range of LIBOR plus 0.88%
to LIBOR plus 1.50%.  The weighted average interest rate of borrowings
under the credit agreement was 3.36% and 5.31%, respectively,


<PAGE>
at June 30, 2002 and 2001.  The average outstanding borrowings under
the line of credit were $33.0 million and $28.9 million during the
years ended June 30, 2002 and 2001, respectively.  The Company had
available $12.0 million and $16.1 million under its line of credit as
of June 30, 2002 and 2001, respectively.

In September 1997, the Company obtained a 237 million Yen loan with PNC
Bank.  Interest is at a rate equal to the lesser of the floating rate
or the maximum rate as defined in the loan agreement.  The floating
rate is equal to the Japanese Yen Base Rate, as defined, plus 1.49% and
the maximum rate is 3.74%.  The Japanese Yen Base Rate was 0.10% and
0.13% and the floating rate was 1.59% and 1.62% at June 30, 2002 and
2001, respectively.

On June 28, 2002, the Company amended the credit facility to allow for
a renewal of and an increase to the principal of the Yen loan.  The
principal amount available under the Yen loan was increased to 300
million Yen.  Additionally, terms relating to the required interest
rate protection agreement and to a restrictive covenant were amended to
enhance the clarity of the agreement.  All other substantial terms and
conditions of the credit facility remain unchanged.

The Company has a line of credit facility with a Singapore bank which
permits maximum borrowings in the local currency of approximately
$415,000 and $385,000 for the fiscal year ended June 30, 2002 and 2001,
respectively.  Borrowings are payable upon demand with interest being
charged at the rate of 1.00% above the bank's prevailing prime lending
rate.  The interest rate at June 30, 2002 and 2001 was 6.00%.  At June
30, 2002 and 2001 there were no outstanding borrowings under this
facility.

The aggregate annual amounts of principal payments required on the
long-term debt, considering the refinancing of the Yen loan, are as
follows:

Year Ending June 30,
---------------------------
($000)
2003               $  5,068
2004                  6,923
2005                  7,550
2006                 12,676
2007                     53
Thereafter            2,233
===========================

Interest and commitment fees paid during the years ended June 30, 2002,
2001 and 2000 totaled approximately $1.4 million, $2.3 million and $0.4
million, respectively.




Note G  INCOME TAXES

The components of income tax expense are as follows:

Year Ended June 30,             2002       2001       2000
----------------------------------------------------------
($000)
Current
   Federal                    $  423     $2,387     $1,094
   State                         233        387         53
   Foreign                       690        939        667
----------------------------------------------------------
Total                          1,346      3,713      1,814
==========================================================
Deferred:
   Federal                   $ 1,015     $1,119     $  528
   State                         190        118         60
   Foreign                      (305)       115         43
----------------------------------------------------------
Total                            900      1,352        631
==========================================================
Provision for Income Taxes   $ 2,246     $5,065     $2,445
==========================================================

<PAGE>
Principal items comprising deferred income taxes are as follows:

<TABLE>
<CAPTION>

June 30,                                                    2002                     2001
-------------------------------------------------        -------                  -------
<S>                                                      <C>                      <C>
($000)
Deferred income tax liabilities
Tax over book accumulated depreciation                   $ 4,333                  $ 3,476
Intangible assets                                            962                    1,474
-------------------------------------------------        -------                  -------
Deferred income taxes liability - long-term              $ 5,295                  $ 4,950
=================================================        =======                  =======

Deferred income tax assets
Transfer price adjustment                                $   167                  $     -
Inventory capitalization1,                                 1,004                    1,256
Non-deductible accruals                                      416                    1,248
Net-operating loss carryforward - current portion            870                      800
-------------------------------------------------        -------                  -------
Deferred income taxes asset - current                    $ 3,457                  $ 3,304
=================================================        =======                  =======

Net-operating loss carryforward                          $ 1,882                  $ 2,334
Valuation allowance                                         (468)                    (317)
-------------------------------------------------        -------                  -------
Deferred income tax asset - long-term                    $ 1,414                  $ 2,017
=================================================        =======                  =======
Net deferred income tax asset (liability)               ($   424)                 $   371
=================================================        =======                  =======
</TABLE>

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

<TABLE>
<CAPTION>

Year Ended June 30,                                   2002    %       2001    %       2000    %
----------------------------------------------    --------   --   --------   --   --------   --
<S>                                               <C>        <C>  <C>        <C>  <C>        <C>
($000)
Taxes at statutory rate                           $  3,234   34   $  4,949   34   $  3,317   34
Increase (decrease) in taxes resulting from:
   State income taxes - net of federal benefit         279    3        358    3         69    -
   Excludable Foreign Sales
       Corporation income                             (719)  (7)      (378)  (3)      (628)  (6)
Excludable foreign income                             (525)  (6)      (124)  (1)      (728)  (7)
Foreign taxes                                           83    1        126    1        181    2
Non-deductible goodwill amortization                     -    -        500    3         30    -
Other                                                 (106)  (1)      (366)  (2)       204    2
----------------------------------------------    --------   --   --------   --   --------   --
                                                  $  2,246   24   $  5,065   35   $  2,445   25
==============================================    ========   ==   ========   ==   ========   ==
</TABLE>

During the years ended June 30, 2002, 2001,and 2000, cash paid by the
Company for income taxes was approximately $1.4 million, $1.7 million,
and $1.6 million, 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, an additional deferred
tax liability of approximately $6.9 million and $5.6 million would have
been required as of June 30, 2002 and 2001, respectively.

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


Year Ended June 30,                         2002       2001      2000
----------------------------------------   -----     ------     -----
($000)
Depreciation and amortization              $ 344     $2,232     $ 691
Inventory capitalization                     252       (872)     (119)
Net operating loss carryforward              639        729       145
Other - primarily nondeductible accruals    (335)      (737)      (86)
----------------------------------------   -----     ------     -----
                                           $ 900     $1,352     $ 631
========================================   =====     ======     =====

As of June 30, 2002, net operating loss carryforwards totaled $4.6
million.  Of that amount, $3.1 million expire in 2018.  The remaining
$1.5 million expire in 2019.


<PAGE>

Note H  OPERATING LEASES

The Company leases certain property under operating leases that expire
at various dates through fiscal 2007.  Future rental commitments
applicable to the operating leases at June 30, 2002 are as follows:

Year Ended June 30,
---------------------------
($000)
2003                 $  971
2004                    712
2005                    572
2006                    561
2007                    261
Thereafter                -
============================

Rent expense was approximately $1.1 million, $1.0 million and $0.5
million for the years ended June 30, 2002, 2001 and 2000, respectively.


Note I  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 3,870,000 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.  Generally, twenty
percent of the options may be exercised one year from the date of grant
with comparable annual increases on a cumulative basis each year
thereafter.  The stock option plan also has vesting provisions
predicated upon the death, retirement or disability of the optionee.
The amount available for future grants under the stock option plan was
1,122,377 as of June 30, 2002.

The Company has a nonemployee directors stock option plan with 240,000
shares of common stock reserved for use under this plan.  The plan
provides for the automatic grant of options to purchase 30,000 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 joined 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.  The amount available for future grants
under the nonemployee directors stock option plan was 120,000 as of
June 30, 2002.

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, 2002 is as follows:


                               Number of          Weighted
                             Shares Subject   Average Exercise
Options                        to Option       Price Per Share
--------------------------------------------------------------
Outstanding - July 1, 1999     1,277,990            $  4.49
Granted                           80,300            $  9.38
Exercised                       (224,570)           $  3.00
Forfeited                        (26,994)           $  8.30
--------------------------------------------------------------
Outstanding - July 1, 2000     1,106,726            $  5.04
Granted                          225,775            $ 17.27
Exercised                       (128,460)           $  3.63
Forfeited                        (29,750)           $  7.55
--------------------------------------------------------------
Outstanding - July 1, 2001     1,174,291            $  7.47
Granted                         (119,640)           $ 15.10
Exercised                        (39,320)           $  2.96
Forfeited                         45,950            $ 13.98
--------------------------------------------------------------
Outstanding - June 30, 2002    1,061,281            $  8.07

Exercisable - June 30, 2002      744,620            $  5.76
Exercisable - June 30, 2001      737,569            $  4.41
Exercisable - June 30, 2000      733,416            $  3.75
==============================================================

<PAGE>
Outstanding and exercisable options at June 30, 2002 are as follows:

<TABLE>
<CAPTION>
                       OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                  ---------------------------------   -------------------
                            Weighted
                             Average
                            Remaining     Weighted              Weighted
  Range of                 Contractual     Average               Average
  Exercise       Number of    Life        Exercise   Number of  Exercise
   Prices          Shares    (Years)        Price      Shares     Price
--------------- ---------- -----------    ---------   -------   --------
<S>             <C>           <C>          <C>        <C>        <C>
$ 1.00 - $ 2.00    297,100    2.29         $  1.59    297,100    $  1.59
$ 4.25 - $ 5.50    251,726    5.22         $  5.21    188,195    $  5.15
$ 6.09 - $10.00    194,420    5.15         $  8.93    163,120    $  9.11
$10.50 - $15.74    121,470    7.25         $ 13.31     55,940    $ 11.67
$16.00 - $23.38    196,565    8.16         $ 17.43     40,265    $ 17.56
--------------- ----------    ----         -------    -------    -------
                 1,061,281    5.16         $  8.07    744,620    $  5.76
=============== ==========    ====         =======    =======    =======
</TABLE>

The Company uses the intrinsic value approach specified in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees."  Had the Company determined compensation costs based upon
the fair value of the options at the grant dates in accordance with
SFAS No. 123, "Accounting for Stock-Based Compensation," its net
earnings for the years ended June 30, 2002, 2001 and 2000 would have
been reduced by $632,000, $635,000 and $390,000 or $.04, $.04 and $.03
per diluted share, respectively.

The pro forma adjustments were calculated using the Black-Scholes
option pricing model under the following weighted-average assumptions
in each fiscal year:

Year Ended June 30,              2002         2001         2000
---------------------------------------------------------------
Risk free interest rate         3.81%         6.1%         6.5%
Expected volatility               47%          92%          81%
Expected life of options   7.00 years   6.40 years   5.95 years
Expected dividends               none         none         none

Based on the option pricing model, options granted during the years
ended June 30, 2002, 2001 and 2000 had fair values at the date of the
grant of $8.09, $13.81 and $6.90 per share, respectively.


Note J  SEGMENT AND GEOGRAPHIC REPORTING

The Company reports its segments using the "management approach" model
for segment reporting.  The management approach model is based on the
way a company's management organizes segments within the company for
making operating decisions and assessing performance.  Reportable
segments are based on products and services, geography, legal
structure, management structure or any other manner in which management
segregates a company.

The Company's reportable segments offer similar products to different
target markets.  The segments are managed separately due to the
production requirements and facilities that are unique to each segment.
The Company has three reportable segments:  Optical Components, which
is an aggregation of the Company's infrared optics and material
products business and the Company's VLOC subsidiary; Radiation
Detectors, which is the Company's eV PRODUCTS division; and the
Company's Laser Power Corporation subsidiary acquired in fiscal 2001.

The Optical Components segment is divided into the geographic locations
within the United States, Singapore, China, Japan and the United
Kingdom.  Each geographic location is directed by a general manager and
is further divided into production and administrative units that are
directed by managers.  The Optical Components segment designs,
manufactures and markets optical and electro-optical components,
devices and materials for precision use in infrared, near infrared and
visible light instrumentation.  The Optical Components segment includes
certain general corporate management and administrative activities of
the Company which are not allocated to the other segments, certain
research and development activities of the Company not necessarily
specific to the Optical Components segment and other unallocated
charges.

The Radiation Detectors segment is located in the United States and is
a division of the Company.  The Radiation Detectors segment is directed
by a general manager.  The Radiation Detectors segment is further
divided into production and administrative units that are directed by
managers.  The Radiation Detectors segment develops and markets solid-
state x-ray and gamma-ray products for the nuclear radiation detection
industry.

<PAGE>
The Laser Power Corporation segment is located primarily in the United
States.  Laser Power Corporation is directed by a general manager.  The
Laser Power Corporation segment is further divided into production and
administrative units that are directed by managers.  The Laser Power
Corporation segment designs, manufactures and markets high performance
optics for military, industrial and medical applications.  Laser
Power's infrared products are sold under the Laser Power brand name.
Infrared products manufactured for military applications are sold under
the Exotic Electro-Optics brand name.

The accounting policies of the segments are the same as those described
in the Summary of Significant Accounting Policies (see Note A).
Substantially all of the Company's corporate expenses are allocated to
the segments.  The Company evaluates segment performance based upon
reported segment profit or loss from operations.  Inter-segment sales
and transfer have been eliminated.

<PAGE>

<TABLE>
<CAPTION>


                                     Optical      Radiation    Laser Power
                                    Components    Detectors    Corporation    Totals
--------------------------------------------------------------------------------------
<S>                                  <C>           <C>          <C>           <C>
($000)
2002
Net revenues                         $ 74,693      $  6,490     $ 32,505      $113,688
Income (loss) from operations          12,331        (1,703)         737        11,365
Interest expense                            -             -            -         1,444
Other expense, net                          -             -            -           463
Equity income                               -            52            -            52
Earnings before income taxes                -             -            -         9,510

Depreciation and amortization           6,120           700        1,972         8,792
Segment assets                         93,805        10,214       47,882       151,901
Expenditures for property,
  plant and equipment                   6,370         1,203        1,090         8,663
Equity investment                           -         1,750            -         1,750
Goodwill                                1,926             -       27,061        28,987
------------------------------       --------      --------     --------      --------
($000)
2001
Net revenues                         $ 83,345      $  8,863       31,126      $123,334
Income (loss) from operations          15,036          (992)       4,224        18,268
Interest expense                            -             -            -         2,330
Other expense, net                          -             -            -         1,382
Earnings before income taxes                -             -            -        14,556

Depreciation and amortization           5,208           685        2,811         8,704
Segment assets                         84,642         8,173       55,358       148,173
Expenditures for property,
  plant and equipment                  14,914           490        1,295        16,699
Goodwill                                1,698             -       27,538        29,236
------------------------------       --------      --------     --------      --------
2000
Net revenues                         $ 68,302      $  5,790            -      $ 74,092
Income (loss) from operations          12,427        (2,096)           -        10,331
Interest expense                            -             -            -           349
Other expense, net                          -             -            -           226
Earnings before income taxes                -             -            -         9,756

Depreciation and amortization           4,352           667            -         5,019
Segment assets                         76,476         7,650            -        84,126
Expenditures for property,
  plant and equipment                   8,501           376            -         8,877
Goodwill                                1,792             -            -         1,792
------------------------------       --------      --------     --------      --------
</TABLE>

Geographic information for revenues, based on country of origin, and
long-lived assets which include property, plant and equipment, goodwill
and other intangibles, net of related depreciation and amortization
follows:




                                       Revenues
------------------------------------------------------------
Year Ended June 30,          2002          2001         2000
------------------------------------------------------------
($000)
United States            $ 89,659      $ 97,753     $ 55,493

    Singapore               9,714         8,230        6,867
    Japan                   8,301        11,668        9,839
    Belgium                 4,305         3,460            -
    United Kingdom          1,709         2,223        1,893
------------------------------------------------------------
Total Non-United States    24,029        25,581       18,599
------------------------------------------------------------
                         $113,688      $123,334     $ 74,092
============================================================

<PAGE>

                                   Long-Lived Assets
------------------------------------------------------------
Year Ended June 30,          2002          2001         2000
------------------------------------------------------------
($000)
United States             $88,570       $86,606      $41,533

    Singapore               2,390         2,801        1,347
    Japan                      27            17           36
    Belgium                   472           476            -
    China                   1,465         1,443        1,263
    United Kingdom              7            10           12
------------------------------------------------------------
Total Non-United States     4,361         4,747        2,658
------------------------------------------------------------
                          $92,931       $91,353      $44,191
============================================================

Note K  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 $738,000,
$1,122,000 and $812,000 for the years ended June 30, 2002, 2001 and
2000, respectively.

The Company has an employee stock purchase plan for employees who have
completed 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.
This plan, as amended, limits the number of shares of commons stock
available for purchase to 400,000 shares.  There were 206,454 and
215,313 shares of common stock available for purchase under the plan at
June 30, 2002 and 2001, respectively.

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

The II-VI Incorporated Deferred Compensation 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.  Employees of the Company made contributions to the
Plan in the amount of approximately $71,000, $354,000 and $248,000 for
the years ended June 30, 2002, 2001, and 2000, respectively.


Note L  CONTINGENCIES

As the result of issues generated in the course of daily business, the
Company is involved in legal proceedings.  Management believes that the
final disposition of these proceedings will not have a material adverse
effect on the Company's operations, financial position, liquidity or
results of operations.


Note M  SUBSEQUENT EVENTS

European Distribution Joint Venture

Effective September 25, 2002, the Company reached an agreement with
L.O.T.-Oriel Laser Optik Technologie Holding GmbH and L.O.T. - Oriel
Laser Optik GmbH & Co. KG of Darmstadt, Germany (collectively L.O.T.)
to establish a new European joint venture to distribute II-VI
Incorporated and Laser Power Corporation products in Germany.  The
Company purchased a 75% controlling interest in this joint venture,
called II-VI L.O.T. GmbH (II-VI/L.O.T.), for approximately $2.8 million
net of taxes already or to be refunded to the Company.  II-VI/L.O.T.
will be based in Darmstadt, Germany and will provide distribution,
marketing and laser specific know-how needed to successfully sell both
II-VI and Laser Power products in Germany to OEM and aftermarket
customers.


<PAGE>

Yen Loan

On September 23, 2002, the Company replaced its 237 million Yen loan
with PNC Bank, with a 300 million Yen loan with the same bank.  This
loan matures on September 25, 2007.  Interest is at a rate equal to the
Japanese Yen base rate, as defined in the loan agreement, plus 1.49%.
Due to this event, the aggregate annual amounts of principal payments
required on the long-term debt as of June 30, 2002 were revised to
reflect this transaction (see Note F).


<PAGE>

                               SCHEDULE II

                   II-VI INCORPORATED AND SUBSIDIARIES

                    VALUATION AND QUALIFYING ACCOUNTS
                YEARS ENDED JUNE 30, 2000, 2001 AND 2002
                        (IN THOUSANDS OF DOLLARS)


                                   Additions (1)
                                -----------------
                   Balance at   Charged  Charged   Deduction   Balance
                   Beginning      to     to Other    from      at End
                   of Year      Expense  Accounts  Reserves    of Year
                   ----------   -------  --------  ----------  -------

YEAR ENDED
JUNE 30, 2000:
Allowance for
doubtful accounts
& warranty returns    $ 457       $ 213   $   7     $ 102 (2)   $ 575

YEAR ENDED
JUNE 30, 2001:
Allowance for
doubtful accounts
& warranty returns    $ 575       $ 232   $  94     $ 152 (2)   $ 749

YEAR ENDED
JUNE 30, 2002:
Allowance for
doubtful accounts
& warranty returns    $ 749       $ 158   $  42     $ 102 (2)   $ 847
Other (3)             $   -       $ 780   $   -     $  88       $ 692

------
(1)  Amounts primarily relate to businesses acquired, warranty returns
     and the effects of foreign currency translation.
(2)  Uncollectible accounts written off, net of recovery
(3)  Primarily relates to the closing of manufacturing operations in
     Mexico and the costs related to consolidating several of the
     Company's European distribution arrangements.

<PAGE>



<TABLE>
<CAPTION>

QUARTERLY FINANCIAL DATA

FISCAL 2002
                                          SEPTEMBER 30,   DECEMBER 31,     MARCH 31,       JUNE 30,
QUARTER ENDED                                 2001           2001            2002            2002
-------------------------------------     -------------   ------------     ---------       --------
<S>                                          <C>            <C>             <C>            <C>
($000 except per share data)
Net revenues                                 $28,693        $27,446         $27,441        $30,108
Cost of goods sold                            18,590         18,640          19,848         19,559
Internal research and development                990          1,345           1,153            953
Selling, general and administrative            5,645          4,876           4,824          5,900
Interest expense                                 542            358             313            231
Other expense (income) - net                    (565)           (95)           (353)         1,424
-------------------------------------        -------        --------        -------        -------
Earnings before income taxes                   3,491          2,322           1,656          2,041
Income taxes                                   1,152            577             492             25
-------------------------------------        -------        --------        -------        -------
Net earnings                                 $ 2,339        $ 1,745         $ 1,164        $ 2,016
-------------------------------------        -------        -------         -------        -------
Basic earnings per share                     $  0.17        $  0.13         $  0.08        $  0.14
-------------------------------------        -------        -------         -------        -------
Diluted earnings per share                   $  0.16        $  0.12         $  0.08        $  0.14
=====================================        =======        =======         =======        =======
</TABLE>
<FN>
Other expense for the quarter ended June 30, 2002 includes the closing
of operations of Laser Power in Mexico of $400, costs related to
consolidating several of the Company's European distribution
arrangements of $350, and the write-off of certain crystal growth
equipment and technology of $700.
</FN>

<TABLE>
<CAPTION>

                                          SEPTEMBER 30,   DECEMBER 31,     MARCH 31,       JUNE 30,
QUARTER ENDED                                 2000           2000            2001            2001
-------------------------------------     -------------   ------------     ---------       --------
<S>                                          <C>            <C>             <C>            <C>
($000 except per share data)
Net revenues                                 $26,713        $31,738         $32,531        $32,352
Cost of goods sold                            16,180         19,364          20,847         19,409
Internal research and development                992          1,166           1,088          1,253
Selling, general and administrative            6,268          6,239           6,083          6,177
Interest expense                                 337            837             657            499
Other expense (income) - net                      67            543             180            592
Earnings before income taxes                   2,869          3,589           3,676          4,422
Income taxes                                     909          1,246           1,241          1,669
Net earnings                                $  1,960       $  2,343        $  2,435       $  2,753
Basic earnings per share                    $   0.15       $   0.17        $   0.18       $   0.20
Diluted earnings per share                  $   0.14       $   0.16        $   0.17       $   0.19
</TABLE>

<FN>
Fiscal 2001 results reflect the August 2000 acquisition of Laser Power
Corporation.
</FN>






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

         None.


<PAGE>

                               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", "Board of Directors and Board Committees" and
"Other Matters - Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's definitive proxy statement for the 2002
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
2002 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
         AND RELATED STOCKHOLDER MATTERS

<TABLE>
<CAPTION>

                                     Equity Compensation Plan Information
                                                                           Number of securities
                         Number of securities                             remaining available for
                            to be issued            Weighted-average        future issuance under
                          upon exercise of         exercise price of      equity compensation plans
                         outstanding options,      outstanding options,     (excluding securities
Plan category            warrants and rights       warrants and rights    reflected in column (a) )
---------------------------------------------------------------------------------------------------
                                 (a)                      (b)                       (c)
<S>                          <C>                         <C>                     <C>
Equity compensation
    plans approved by
    security holders         1,061,281                   $8.07                   1,242,377
Equity compensation
    plans not approved
    by security holders          0                         0                         0
-------------------------    ---------                   -----                   ---------
                Total        1,061,281                   $8.07                   1,242,377
=========================    =========                   =====                   =========
</TABLE>


     The other 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 2002
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

     The information required by this item is incorporated herein by
reference to the information set forth under the caption "Board of
Directors and Board Committees" in the Company's definitive proxy
statement for the 2002 Annual Meeting of Shareholders filed pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended.


ITEM 14. CONTROLS AND PROCEDURES

         Not yet applicable.


<PAGE>

                                 PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
         8-K

(a)  (1) Financial Statements

         The financial statements are set forth under Item 8 of this
         annual report on Form 10-K.

     (2) Schedules

         Schedule II - Valuation and Qualifying Accounts for each of
         the three years in the period ended June 30, 2002 is
         set forth under Item 8 of this annual report on Form 10-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.

    (2) Exhibits.

Exhibit Number                             Description of Exhibit
--------------                             ----------------------

3.01  Amended and Restated Articles        Incorporated herein by
      of Incorporation of II-VI            Exhibit 3.02 to reference is
      Incorporated                         Registration Statement No.
                                           33-16389 on Form S-1.


3.02  Amended and Restated By-Laws of      Filed herewith.
      II-VI Incorporated


4.01  Rights Agreement dated as of         Incorporated herein by
      August 11, 2001                      reference is Exhibit 1 to
                                           the Company's Exchange Act
                                           Registration Statement
                                           on Form 8-A (file number
                                           0-16195) filed on
                                           August 28, 2001.


10.01  II-VI Incorporated Employees'       Incorporated herein by
       Stock Purchase Plan                 reference is Exhibit 10.03
                                           to Registration Statement
                                           No. 33-16389 on Form S-1.


10.02  II-VI Incorporated Amended and      Incorporated herein by
       Restated Employees' Stock           reference is Exhibit 10.04
       Purchase Plan                       to Registration Statement
                                           No. 33-16389 on Form S-1.


10.03  First Amendment to the II-VI        Incorporated herein by
       Incorporated Amended and Restated   reference Exhibit 10.01 to
       Employees' Stock Purchase Plan      II-VI's Form 10-Q for the
                                           Quarter Ended
                                           March 31, 1996.


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


10.05  Form of Representative Agreement    Incorporated herein by
       between II-VI and its foreign       reference is Exhibit 10.15
       representatives                     to Registration Statement
                                           No. 33-16389 on Form S-1.


<PAGE>
Exhibit Number                             Description of Exhibit
--------------                             ----------------------

10.06  Form of Employment Agreement*       Incorporated herein by
                                           reference is Exhibit 10.16
                                           to Registration Statement
                                           33-16389 on Form S-1.


10.07  Description of Management-By-       Incorporated herein by
       Objective Plan*                     reference is Exhibit 10.09
                                           to II-VI's Annual Report on
                                           Form 10-K for the fiscal
                                           year ended June 30, 1993.


10.08  II-VI Incorporated 1994             Incorporated herein by
       Nonemployee Directors Stock         reference is Exhibit A to
       Option Plan*                        II-VI's Proxy Statement
                                           dated September 30, 1994.


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


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


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


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


10.13  Amended and Restated II-VI          Incorporated herein by
       Incorporated 1997 Stock Option      reference is Exhibit 10.04
       Plan*                               to II-VI's Annual Report on
                                           Form 10-K for the fiscal
                                           year ended June 30, 1998.


10.14  Agreement by and between            Incorporated herein by
       PNC Bank, National Association      reference is Exhibit 10.01
       and II-VI Incorporated for          to II-VI's Form 10-Q for
       Amended and Restated Letter         the Quarter Ended
       Agreement for Committed Line of     March 31, 1999.
       Credit and Japanese Yen Term Loan


10.15  Credit Agreement by and among       Incorporated herein by
       II-VI Incorporated, its             reference is Exhibit (b)(1)
       subsidiary guarantors, various      to Amendment No. 3 to the
       lenders and PNC Bank, National      Company's Tender Offer
                                           Statement on Schedule TO
                                           filed on August 24, 2000.
                                           Association dated as of
                                           August 14, 2000


10.16  II-VI Incorporated Stock Option     Incorporated herein by
       Plan of 2001                        reference is Exhibit 10.01
                                           to II-VI's Form 10-Q for the
                                           quarter ended
                                           December 31, 2001.


<PAGE>
Exhibit Number                             Description of Exhibit
--------------                             ----------------------

10.17  First Amendment to Credit           Filed herewith.
       Agreement by and among
       II-VI Incorporated, its
       subsidiary guarantors, various
       lenders and PNC Bank, National
       Association dated as of
       June 28, 2002


21.01  List of Subsidiaries of             Filed herewith.
       II-VI Incorporated


23.01  Consent of Deloitte & Touche LLP    Filed herewith.


99.01  Certification Pursuant              Filed herewith.
       to 18 U.S.C. Section 1350,
       as Adopted Pursuant to
       Section 906 of the
       Sarbanes-Oxley Act
       of 2002 for Carl J. Johnson


99.02  Certification Pursuant              Filed herewith.
       to 18 U.S.C. Section 1350,
       as Adopted Pursuant to
       Section 906 of the
       Sarbanes-Oxley Act
       of 2002 for Craig A. Creaturo

-------
*  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 2002.

(c)  The Company hereby files as exhibits to this Form 10-K the
     exhibits set forth in Item 15(a)(2) above.


<PAGE>

                                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 27, 2002                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 27, 2002                By:     /s/ Carl J. Johnson
                                     Carl J. Johnson, Chairman
                               Chief Executive Officer and Director

                                  Principal Financial
                                  and Accounting Officer:

September 27, 2002                By:     /s/ Craig A. Creaturo
                                         Craig A. Creaturo
                                             Treasurer

September 27, 2002                By:   /s/ Francis J. Kramer
                                         Francis J. Kramer
                                          President, Chief
                                   Operating Officer and Director

September 27, 2002                By:  /s/ Thomas E. Mistler
                                         Thomas E. Mistler
                                             Director

September 27, 2002                By:  /s/ Duncan A. J. Morrison
                                        Duncan A. J. Morrison
                                             Director

September 27, 2002                By:  /s/ Peter W. Sognefest
                                        Peter W. Sognefest
                                             Director




<PAGE>

                            CERTIFICATIONS

I, Carl J. Johnson, certify that:


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

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

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


September 25, 2002             By:    /s/ Carl J. Johnson
                                          Carl J. Johnson
                               Chairman, Chief Executive Officer
                                         and Director



I, Craig A. Creaturo, certify that:


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

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

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

September 25, 2002             By:    /s/ Craig A. Creaturo
                                          Craig A. Creaturo
                               Treasurer (principal financial officer)


<PAGE>

                              EXHIBIT INDEX

3.01  Amended and Restated Articles        Incorporated herein by
      of Incorporation of II-VI            Exhibit 3.02 to reference is
      Incorporated                         Registration Statement No.
                                           33-16389 on Form S-1.


3.02  Amended and Restated By-Laws of      Filed herewith.
      II-VI Incorporated


4.01  Rights Agreement dated as of         Incorporated herein by
      August 11, 2001                      reference is Exhibit 1 to
                                           the Company's Exchange Act
                                           Registration Statement
                                           on Form 8-A (file number
                                           0-16195) filed on
                                           August 28, 2001.


10.01  II-VI Incorporated Employees'       Incorporated herein by
       Stock Purchase Plan                 reference is Exhibit 10.03
                                           to Registration Statement
                                           No. 33-16389 on Form S-1.


10.02  II-VI Incorporated Amended and      Incorporated herein by
       Restated Employees' Stock           reference is Exhibit 10.04
       Purchase Plan                       to Registration Statement
                                           No. 33-16389 on Form S-1.


10.03  First Amendment to the II-VI        Incorporated herein by
       Incorporated Amended and Restated   reference Exhibit 10.01 to
       Employees' Stock Purchase Plan      II-VI's Form 10-Q for the
                                           Quarter Ended
                                           March 31, 1996.


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


10.05  Form of Representative Agreement    Incorporated herein by
       between II-VI and its foreign       reference is Exhibit 10.15
       representatives                     to Registration Statement
                                           No. 33-16389 on Form S-1.


10.06  Form of Employment Agreement*       Incorporated herein by
                                           reference is Exhibit 10.16
                                           to Registration Statement
                                           33-16389 on Form S-1.


10.07  Description of Management-By-       Incorporated herein by
       Objective Plan*                     reference is Exhibit 10.09
                                           to II-VI's Annual Report on
                                           Form 10-K for the fiscal
                                           year ended June 30, 1993.


10.08  II-VI Incorporated 1994             Incorporated herein by
       Nonemployee Directors Stock         reference is Exhibit A to
       Option Plan*                        II-VI's Proxy Statement
                                           dated September 30, 1994.


<PAGE>
Exhibit Number                             Description of Exhibit
--------------                             ----------------------

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


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


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


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


10.13  Amended and Restated II-VI          Incorporated herein by
       Incorporated 1997 Stock Option      reference is Exhibit 10.04
       Plan*                               to II-VI's Annual Report on
                                           Form 10-K for the fiscal
                                           year ended June 30, 1998.


10.14  Agreement by and between            Incorporated herein by
       PNC Bank, National Association      reference is Exhibit 10.01
       and II-VI Incorporated for          to II-VI's Form 10-Q for
       Amended and Restated Letter         the Quarter Ended
       Agreement for Committed Line of     March 31, 1999.
       Credit and Japanese Yen Term Loan


10.15  Credit Agreement by and among       Incorporated herein by
       II-VI Incorporated, its             reference is Exhibit (b)(1)
       subsidiary guarantors, various      to Amendment No. 3 to the
       lenders and PNC Bank, National      Company's Tender Offer
                                           Statement on Schedule TO
                                           filed on August 24, 2000.
                                           Association dated as of
                                           August 14, 2000


10.16  II-VI Incorporated Stock Option     Incorporated herein by
       Plan of 2001                        reference is Exhibit 10.01
                                           to II-VI's Form 10-Q for the
                                           quarter ended
                                           December 31, 2001.


10.17  First Amendment to Credit           Filed herewith.
       Agreement by and among
       II-VI Incorporated, its
       subsidiary guarantors, various
       lenders and PNC Bank, National
       Association dated as of
       June 28, 2002


21.01  List of Subsidiaries of             Filed herewith.
       II-VI Incorporated


<PAGE>
Exhibit Number                             Description of Exhibit
--------------                             ----------------------

23.01  Consent of Deloitte & Touche LLP    Filed herewith.


99.01  Certification Pursuant              Filed herewith.
       to 18 U.S.C. Section 1350,
       as Adopted Pursuant to
       Section 906 of the
       Sarbanes-Oxley Act
       of 2002 for Carl J. Johnson


99.02  Certification Pursuant              Filed herewith.
       to 18 U.S.C. Section 1350,
       as Adopted Pursuant to
       Section 906 of the
       Sarbanes-Oxley Act
       of 2002 for Craig A. Creaturo

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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>4
<FILENAME>ex302.txt
<TEXT>



                      II-VI INCORPORATED

                      BY-LAWS, as Amended

                       August 10, 2002


                         ARTICLE I

                  MEETING OF SHAREHOLDERS

     Section 1.01.  ANNUAL MEETINGS; NOTICE.  An annual
meeting of the shareholders shall be held each year at such
time and place within or without the Commonwealth of
Pennsylvania as may be designated by the Board of Directors.
Written notice of the annual meeting shall be given at
least five (5) days prior to the meeting to each shareholder
of record entitled to vote thereat, except in the instance
where the meeting will consider a fundamental change in the
corporation as defined in Chapter 19 of the Pennsylvania
Business Corporation Law of 1988 in which case notice shall
be given at least ten (10) days prior to the meeting.  Any
business may be transacted at the annual meeting,
irrespective of whether the notice of such meeting contains
a reference thereto, except as otherwise expressly required
herein or by law.

     Section 1.02.  SPECIAL MEETINGS; NOTICE.  Special
meetings of the shareholders may be called at any time, for
the purpose or purposes set forth in the call, by the
Chairman or by the Board of Directors by delivering a
written request to the Secretary, such meeting to be held
not more than sixty (60) days after receipt of the request.
Special meetings of the shareholders shall be held at such
place as may be designated by the Board of Directors, or if
not so designated, at the principal office of the
corporation.  Except as otherwise provided in Section
1.03(b) of these By-laws, written notice of special meetings
specifying the place, day, and hour of the meeting and the
general nature of the business to be transacted shall be
given at least five (5) days prior to the meeting to each
shareholder entitled to vote thereat, except in the instance
where the meeting will consider a fundamental change in the
corporation as defined in Chapter 19 of the Pennsylvania
Business Corporation Law of 1988 in which case notice shall
be given at least ten (10) days prior to the meeting.  No
business may be transacted at any special meeting other than
that the general nature of which has been stated in the
notice of meeting, and business which is germane thereto.

     Section 1.03.  ORGANIZATION AND MANNER OF ACTING.  (a)
PROXIES: Every shareholder entitled to vote at a meeting of
the shareholders or to express consent or dissent to
corporate action in writing without a meeting may authorize
another person or persons to act for him/her/it by proxy.
Every proxy shall be executed or authenticated by the
shareholder or by his/her/its duly authorized attorney-in-
fact and filed with or transmitted to the Secretary of the
corporation or its designated agent. A shareholder or
his/her/its duly authorized attorney-in-fact may execute or
authenticate a writing or transmit an electronic message
authorizing another person to act for him/her/it by proxy.
A telegram, telex, cablegram, datagram, e-mail, Internet
communication or other means of electronic transmission from
a shareholder or attorney-in-fact, or a photographic,
facsimile or similar reproduction of a writing executed by a
shareholder or attorney-in-fact shall be treated as properly
executed or authenticated if it sets forth or utilizes a
confidential and unique identification number or other mark
furnished by the corporation to the shareholder for purposes
of a particular meeting or transaction.  A proxy, unless
coupled with an interest, shall be revocable at will,
notwithstanding any other agreement or any provision in the
proxy to the contrary, but the revocation of a proxy shall
not be effective until notice thereof has been given to the
Secretary of the corporation or its designated agent in
writing or by electronic transmission.  An unrevoked proxy
shall not be valid after three years from the date of its
execution, authentication or transmission unless a longer
time is expressly provided therein.  A proxy shall not be
revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised,
written notice of the death or incapacity is given to the
Secretary of the corporation or its designated agent.  (b)
QUORUM:  A shareholders' meeting duly called shall not be
organized for the transaction of business unless a quorum is
present.  At any meeting and except as otherwise provided by
law, the presence in person or by proxy of shareholders
entitled to cast at least a majority of the votes which all
shareholders are entitled to cast on the particular matter
shall be necessary and sufficient to constitute a quorum for
the purpose of considering such matter.  The shareholders
present at a duly organized meeting can continued to do
business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.  If a
meeting cannot be organized because a quorum has not
attended, those present may adjourn the meeting from day to
day to such time and place as they may determine by vote of
shareholders entitled to cast a majority of the votes
present, until a quorum as aforesaid shall be present at any
such reconvened meeting.  When a meeting is adjourned, it
shall not be necessary to give any notice of the adjourned
meeting or of the business to be transacted at the adjourned
meeting, other than by announcement at the meeting at which
such adjournment is taken unless the Board of Directors
fixes a new record date.  At any such adjourned meeting at
which a quorum is present or represented, any business may
be transacted which might have been transacted at the
meeting as originally noticed.  The determination of
shareholders entitled to notice of and to vote at a meeting
of shareholders shall apply to any adjournment of that
meeting unless the Board of Directors fixes a new record
date.  (c)  VOTING:  Unless otherwise provided in the
Articles of Incorporation, these By-laws or by law, every
shareholder of record shall be entitled to one vote for
every share standing in his/her name on the books of the
corporation.  Elections of Directors need not be by ballot,
except upon demand by a shareholder made at the election and
before voting begins.  In all elections of Directors, voting
shall be conducted according to the principles of cumulative
voting.  Except as provided in the Articles of
Incorporation, resolutions of the shareholders shall be
adopted, and any action of the shareholders at a meeting
upon any matter shall be taken and be valid, only with the
affirmative vote of shareholders entitled to cast at least a
majority of the votes which all shareholders present at the
meeting are entitled to cast, except as otherwise provided
by law.  (d)  PRESIDING OFFICER, SECRETARY:  The Chairman of
the Board, or in his/her absence or if such office is vacant
the President, shall preside, and the Secretary shall take
the minutes, at all meetings of the shareholders.  In the
absence of the presiding officer hereinabove designated, the
presiding officer shall be designated by the Board of
Directors, or if not so designated, selected by the
shareholders present; and in the absence of the Secretary,
the presiding officer shall designate any person to take the
minutes of the meeting.  (e)  MEETING BY TELEPHONE:  One or
more of the shareholders may participate in a meeting of the
shareholders by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other.

     Section 1.04.  CONSENT OF SHAREHOLDERS IN LIEU OF
MEETING.  Any action which may be taken at a meeting of the
shareholders or of a class of shareholders may be taken
without a meeting if, prior or subsequent to the action, a
consent or consents in writing, setting forth the action so
taken, shall be signed by all of the shareholders who would
be entitled to vote at a meeting for such purpose and shall
be filed with the Secretary of the corporation.

     Section 1.05.  VOTING LIST.  The officer or agent
having charge of the transfer books for the shares of the
corporation shall make, for each meeting of shareholders, a
complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, with the address of
and the number of shares held by each.  The list shall be
produced and kept open at the time and place of the meeting,
and shall be subject to inspection by any shareholder during
the whole time of the meeting.  If the corporation has 5,000
or more shareholders, the corporation may, in lieu of making
such list, make such information available by any other
means.

     Section 1.06.  DETERMINATION OF SHAREHOLDERS OF
RECORDS.  The Board of Directors may fix a time, not more
than ninety days before the date of any meeting of the
shareholders or the date fixed for the payment of any
dividend or distribution, or the date for the allotment of
rights, or the date when any change or conversion or
exchange of shares will be made or go into effect, as a
record date for the determination of the shareholders
entitled to notice of, or to vote at, any such meeting, or
entitled to receive payment of any such dividend or
distribution, or to receive any such allotment of rights, or
to exercise the rights in respect of any such change,
conversion or exchange of shares.  In such case, only such
shareholders as shall be shareholders of record on the date
so fixed shall be entitled to notice of, or to vote at, such
meeting, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of
any shares on the books of the corporation after the record
date fixed.  Unless a record date is fixed by the Board of
Directors for the determination of shareholders entitled to
receive notice of, or to vote at, a shareholders' meeting,
transferees of shares which are transferred on the books of
the corporation within ten days next preceding the date of
such meeting shall not be entitled to notice of, or to vote
at, such meeting.  The Board of Directors may adopt a
procedure whereby a shareholder of the corporation may
certify in writing to the corporation that all or a portion
of the shares requested in the name of the shareholder are
held for the account of a specified person or persons.

     Section 1.07.  JUDGES OF ELECTION OR VOTE.  In advance
of any meeting of shareholders, the Board of Directors may
appoint judges of election, who need not be shareholders, to
act at such meeting or any adjournment thereof.  If judges
of election be not so appointed, the chairman of any such
meeting may, and on the request of any shareholder or
his/her proxy shall, make such appointment at the meeting.
The number of judges shall be one or three.  If appointed at
a meeting on the request of one or more shareholders or
proxies, the majority of shares present and entitled to vote
shall determine whether one or three judges are to be
appointed.  No person who is a candidate for office shall
act as a judge.  In case any person appointed as judge fails
to appear or fails or refuses to act, the vacancy may be
filled by appointment made by the Board of Directors in
advance of the convening of the meeting, or at the meeting
by the person or officer acting as chairman of the meeting.
The judges of election shall determine the number of shares
outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, the
authenticity, validity, and effect of proxies, receive votes
or ballots, hear and determine all challenges and questions
in any way arising in connection with the right to vote,
count and tabulate all votes, determine the result, and do
such acts as may be proper to conduct the election or vote
with fairness to all shareholders.  The judges of election
shall perform their duties impartially, in good faith, to
the best of their ability, and as expeditiously as is
practical.  If there be three judges of election, the
decision, act or certificate of a majority shall be
effective in all respects as the decision, act or
certificate of all.  On request of the chairman of the
meeting, or of any shareholder or his/her proxy, the judges
shall make a report in writing of any challenge or questions
or matter determined by them, and execute a certificate of
any fact found by them.  Any report or certificate made by
them shall be prima facie evidence of the facts stated
therein.


                         ARTICLE II

                         DIRECTORS

     Section 2.01.  NUMBER, ELECTION AND TERM OF OFFICE.
The number of Directors shall be at least five (5) and not
more than nine (9) Directors, the exact number to be set
from time to time by resolution of the Board of Directors.
Until otherwise provided by resolution of the Board of
Directors, the Board shall consist of six (6) Directors.
Commencing with the annual meeting of the shareholders first
following the adoption of these By-laws by the Board of
Directors, the Board of Directors shall be divided into
three classes in respect to term of office.  Each class
shall be as nearly equal in number as possible  The term of
office of Directors of the first class shall expire at the
annual meeting of the shareholders in the first year
following their election; the term of office of Directors of
the second class shall expire at the annual meeting of the
shareholders in the second year following their election;
the term of office of Directors of the third class shall
expire at the annual meeting of the shareholders in the
third year following their election.  Upon the expiration of
the terms of office of the Directors as classified above,
their successors shall be elected for the term of three
years, so that, as nearly as possible, one-third (1/3) of
the number of Directors of the corporation shall be elected
annually.  Directors shall be natural persons of full age,
but need not be residents of Pennsylvania or shareholders of
the corporation.

     Section 2.02.  ORGANIZATION MEETING OR ANNUAL MEETING;
NOTICE.  An organization meeting, or annual meeting of the
newly elected Board of Directors shall be held each year at
the same place as and promptly after the annual meeting of
shareholders.  At such meeting, the Board of Directors shall
organize itself and elect the executive officers of the
corporation for the ensuing year, and may transact any other
business.  Notice of the organization meeting of the Board
or of the business to be transacted thereat shall not be
required to be given, except as otherwise expressly required
herein or by law.

     Section 2.03.  REGULAR MEETINGS; NOTICE.  Regular
meetings of the Board of Directors shall be held at such
time and place as shall be designated by the Board from time
to time.  Notice of such regular meetings of the Board shall
not be required to be given, except as otherwise expressly
required herein or by law, except that wherever the time or
place of regular meetings shall be initially fixed or
changed, notice of such action shall be given promptly by
telephone or otherwise to each Director not participating in
such action.

     Section 2.04.  SPECIAL MEETINGS.  Special meetings of
the Board of Directors may be called at any time by the
Board itself by vote at a meeting, or by any Director, or by
the Chairman to be held at such place and day and hour and
for such purposes as shall be specified by the person or
persons calling the meeting in an oral or written notice at
least one hour prior to the meeting.  Any business may be
transacted at a special meeting, irrespective of whether the
notice of such meeting contains a reference thereto, except
as otherwise expressly required herein or by law.

     Section 2.05.  ORGANIZATION AND MANNER OF ACTING.  At
all meetings of the Board of Directors, the presence of at
least a majority of the Directors in office shall be
necessary and sufficient to constitute a quorum for the
transaction of business and the acts of a majority of the
Directors present at a meeting at which the quorum is
present shall be the acts of the Board of Directors.  If a
quorum is not present at any meeting, the meeting may be
adjourned from time to time by a majority of the Directors
present, until a quorum as aforesaid shall be present; but
notice of the time and place to which such meeting is
adjourned shall be given to any Director not present on at
least the day prior to the date of reconvening.  Resolutions
of the Board shall be adopted, and any action of the Board
at a meeting upon any matter shall be taken and be valid,
with the affirmative vote of at least a majority of the
Directors present at a meeting duly convened, except as
otherwise expressly required herein or by law.  The Chairman
of the Board, or in his/her absence or if such office is
vacant the President, shall preside at all meetings of the
Board.  The Secretary shall take the minutes at all meetings
of the Board.  In the absence of the presiding officer
hereinabove designated, the Directors present shall select a
member of the Board to preside; and in the absence of the
Secretary, the presiding officer shall designate any person
to take the minutes of the meeting.

     Section 2.06.  RESIGNATIONS.  Any Director may resign
by submitting to the Chairman of the Board or the President
his/her resignation, which (unless otherwise specified
therein) need not be accepted to make it effective and shall
be effective immediately upon its receipt by such officer.

     Section 2.07.  REMOVAL OF DIRECTORS.  (a) By action of
the shareholders:  The entire Board of Directors, or a class
of the Board, where the Board is classified with respect to
the power to elect Directors, or any individual Director may
be removed from office at any time without assigning any
cause therefor, by the vote of shareholders as provided by
the Articles of Incorporation.  In case the Board, or such a
class of the Board, or any one or more Directors be so
removed, new Directors may be elected at the same meeting.
Unless the entire Board or a class of the Board be removed,
not more than one Director at a time may be removed by any
one vote of the shareholders.  No individual Director shall
be removed unless the entire Board or a class of the Board
is removed in case the votes of a sufficient number of
shares are cast against the resolution for his/her removal
which if cumulatively voted at an annual election of the
Board would be sufficient to elect at least one (1)
Director.  (b) By action of the Directors:  The Board of
Directors may declare vacant the office of a Director if
he/she be declared of unsound mind by an order of court, or
convicted of a felony, or for any other proper cause, or if,
within sixty (60) days after notice of his/her election,
he/she does not accept such office either in writing or by
attending a meeting of the Board of Directors and fulfill
such other requirements of qualification these by-laws may
specify.  (c) Other removal:  The provisions of this section
shall not be deemed exclusive of any provision of law
authorizing the removal of any Director or a class of the
Board.

     Section 2.08.  VACANCIES.  Vacancies in the Board of
Directors, including vacancies resulting from an increase in
the number of Directors, shall be filled by a majority of
the remaining members of the Board though less than a quorum
or by the sole remaining Director, and each person so
elected shall be a Director for the unexpired term of
his/her predecessor in office, or, if a vacancy arises as a
result of an increase in the number of Directors, the
Director filling the vacancy shall be a Director for a term
to be determined by the Board of Directors, but in no event
to exceed a term of three years.  Any such vacancy in any
class of the Board of Directors may be filled by any
incumbent member of any other class of the Board of
Directors, provided, however, that such incumbent member
shall consent to such election; such consent to such
election shall be considered for the purposes of this
Section 2.08 to be a simultaneous resignation by such
Director from his former class.

     Section 2.09.  COMPENSATION.  Directors, as such, shall
not receive any stated salary for their services, but by
resolution of the Board of Directors a fixed sum and
expenses of attendance, if any, may be allowed for
attendance at each annual, regular or special meeting of the
Board; provided, that nothing herein contained shall be
construed to preclude any Director from serving the
corporation in any proper capacity and receiving
compensation therefor.

     Section 2.10.  CONSENT OF DIRECTORS IN LIEU OF MEETING.
 Any action which may be taken at a meeting of the Directors
may be taken without a meeting if, prior or subsequent to
the action, a consent or consents in writing setting forth
the action so taken shall be signed by all of the Directors
and shall be filed with the Secretary of the corporation.

     SECTION 2.11.  PRESUMPTION OF ASSENT.  A Director of
the corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken
unless his/her dissent shall be entered in the minutes of
the meeting or unless he/she shall file his/her written
dissent to such action with the person acting as the
Secretary of the meeting before the adjournment thereof or
shall forward such dissent in writing by registered mail to
the Secretary of the corporation immediately after the
adjournment of the meeting.  Such right to dissent shall not
apply to a Director who voted in favor of such action.

     Section 2.12.  TELEPHONE MEETINGS.  Regular or special
meetings of the Board of Directors may be held by means of a
conference telephone or similar communications equipment by
means of which all persons participating in the meeting can
hear each other.

     Section 2.13.  COMMITTEES OF THE BOARD.  The Board of
Directors may, by resolution adopted by a majority of the
whole Board, designate one or more committees, each
committee to consist of two or more of the Directors of the
corporation.  The Board may designate one or more Directors
as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the
committee.  A committee, to the extent provided in the
resolution creating it, shall have and exercise the
authority of the Board of Directors in the management of the
business and affairs of the corporation except as restricted
by law.  In the absence or disqualification of any member of
a committee, the member or members thereof present at any
meeting and not disqualified from voting, though less than a
quorum, may unanimously appoint another Director to act at
the meeting in the place of the absent or disqualified
member.

     Section 2.14.  COMMITTEE RULES.  Unless the Board of
Directors provides otherwise, each committee designated by
the Board may adopt and amend rules for the conduct of its
business. In the absence of a resolution of the Board or a
provision in the rules of such committee to the contrary, a
majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of
business, the vote of a majority of the members present at a
meeting if a quorum is then present shall be the act of such
committee, and in other respects each committee shall
conduct its business in the same manner as the Board
conducts its business pursuant to these by-laws.  One or
more members of a committee of the Board may participate in
a meeting of the committee by means of conference telephone
or similar communications equipment by means of which all
persons in the meeting can hear each other.

     Section 2.15.  NOMINATIONS.  Nominations for election
to the Board of Directors may be made by the Board of
Directors or by any shareholder of the corporation entitled
to notice of, and to vote at, any meeting called for the
election of Directors.  Nominations, other than those made
by or on behalf of the Board of Directors of the
corporation, shall be made in writing and shall be received
by the Chairman of the Board of the corporation not later
than (i) with respect to an election of Directors to be held
at an annual meeting of shareholders, ninety days prior to
the anniversary date of the immediately preceding annual
meeting, and (ii) with respect to an election of Directors
to be held at a special meeting of shareholders, the close
of business on the tenth day following the date on which
notice of such meeting is first given to shareholders or
public disclosure of the meeting is made.  Such notification
shall contain the following information to the extent known
to the notifying shareholder:  (a) the name and residence
address of each proposed nominee and of the notifying
shareholder; (b) the principal occupations of each proposed
nominee over the past five (5) years; (c) a representation
that the notifying shareholder intends to appear in person
or by proxy at the meeting to nominate the person or persons
specified in the notice; (d) the total number of shares of
the corporation that will be voted for each proposed
nominee; (e) the total number of shares of the corporation
owned by the notifying shareholder; (f) a description of all
arrangements or understandings between the notifying
shareholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the
nomination or nominations are to be made by the notifying
shareholder; (g) such other information regarding each
nominee proposed by such shareholders as would be required
to be included in a proxy statement filed with the
Securities and Exchange Commission; and (h) the written
consent of each nominee to serve as a Director of the
corporation if so elected.


                         ARTICLE III

                    OFFICERS AND EMPLOYEES

     Section 3.01.  EXECUTIVE OFFICERS.  The executive
officers of the corporation shall be the Chairman of the
Board, the President, one or more Vice Presidents (as may be
determined by the Board of Directors), the Secretary and the
Treasurer, all of whom shall be elected by the Board of
Directors.  Any two (2) or more offices may be held by the
same person.  Each executive officer shall hold office until
the next succeeding annual meeting of the Board of Directors
and thereafter until his/her successor is duly elected and
qualifies, or until his/her death, resignation or removal.
At the discretion of the Board of Directors, the office of
Chairman of the Board and the office of Vice President may
be left vacant.

     Section 3.02.  ELECTION, TERM, AND VACANCIES.  The
officers of the corporation to be elected by the Board of
Directors shall be elected annually at the annual meeting of
the Board.  If the election is not held at such meeting, the
election shall be held as soon thereafter as conveniently
may be.  Each officer shall hold office until his/her
successor has been duly elected and qualified or until
his/her earlier death, resignation or removal. A vacancy in
any office occurring in any manner may be filled by the
Board of Directors.

     Section 3.03.  REMOVAL.  Any officer or agent elected
or appointed by the Board of Directors may be removed by the
Board of Directors whenever in its judgment the best
interests of the corporation will be served thereby, but
such removal shall be without prejudice to the contract
rights, if any, of the person so removed.

     Section 3.04.  ADDITIONAL AND ASSISTANT OFFICERS,
AGENTS AND EMPLOYEES.  The Board of Directors from time to
time may appoint one or more other officers, assistant
officers, agents, employees and independent contractors as
the Board deems advisable; and the Board of Directors or the
President shall prescribe their duties, conditions of
employment and compensation.  Subject to the power of the
Board of Directors, the President or any other executive
officer may employ from time to time such other agents,
employees and independent contractors as he/she may deem
advisable, and prescribe their duties, conditions of
employment and compensation.  The President may dismiss any
agent, employee or independent contractor not employed by
authority of the Board, without prejudice to the contract
rights, if any, of the person so dismissed.

     Section 3.05.  THE CHAIRMAN.  The Chairman of the
Board, if any, shall be elected from among the Directors,
shall preside at the meetings of the shareholders and of the
Board of Directors at which he/she shall be present, and
shall have such other powers and perform such other duties
as may be prescribed by the Board of Directors, and, in the
event that the duties of the Chairman are not prescribed by
the Board of Directors, the Chairman shall have duties at
least as extensive as those prescribed for the office of the
President in Section 3.06.

     Section 3.06.  THE PRESIDENT.  The President, subject
to the control of the Board, shall have management and
supervision over and exercise general executive powers
concerning all the property, business and affairs of the
corporation.  The President shall be charged with carrying
out the policies, programs, orders and resolutions adopted
or approved by the Board, and shall have all powers and
perform all duties incident to the office of general
manager, and any further powers and duties as from time to
time may be prescribed by the Board of Directors.  He/she
shall have the power to execute deeds, bonds, mortgages,
other contracts, agreements and instruments of the
corporation.  The President shall be, ex officio, a member
of all standing committees.  Except as otherwise directed by
the Board of Directors, all other officers shall render
reports to the President.

     Section 3.07.  THE VICE PRESIDENTS.  Except as
otherwise ordered by the Board of Directors, the Vice
Presidents, if any, shall have and exercise such powers and
duties as from time to time may be conferred upon them by
the Board of Directors or by the President.  The seniority
of Vice Presidents, if seniority is to be assigned, may be
designated at the time of their election. At the request of
the President or in his/her absence or disability, the
senior Vice President shall have and exercise the powers and
duties of the President.

     Section 3.08.  THE SECRETARY.  The Secretary shall:
(a) keep or cause to be kept at the principal office of the
corporation an original or duplicate record of the
proceedings of the shareholders and the Board of Directors,
and a copy of the Articles of Incorporation and of these By-
laws; (b) attend to the giving of notices as may be required
by law or these By-laws; (c) be custodian of the
corporation's records and of the seal of the corporation and
see that the seal is affixed to such documents as may be
necessary or advisable; (d) have charge of and keep at the
registered office of the corporation an original or
duplicate share register, giving the names of the
shareholders in alphabetical order, and showing their
respective addresses, the number and classes of shares held
by each, the number and date of certificates issued for the
shares, and the date of cancellation of every certificate
surrendered for cancellation and (e) have all powers and
perform all duties incident to the office of Secretary, and
such other powers and duties as may from time to time be
prescribed by the Board of Directors or the President.

     Section 3.09.  THE TREASURER.  The Treasurer shall:
(a) be custodian of the corporation's contracts, policies,
leases, deeds and other indicia of title, and all other
business records, tax matters, financial documents and
accounting records; (b) see that the lists, books, reports,
statements, tax returns, certificates and other documents
and records required by law are properly prepared, kept and
filed; (c) be the principal officer in charge of tax and
financial matters and of the accounting of the corporation;
(d) have charge and custody of and be responsible for the
corporation's funds, securities, and investments; (e)
receive, endorse for collection and give receipts for
checks, notes, obligations, funds and securities of the
corporation, and deposit moneys and other valuable effects
in the name and to the credit of the corporation, in such
depositories as shall be designated by the Board of
Directors; (f) cause to be kept appropriate, complete and
accurate books or records of account of all the
corporation's business and transactions; (g) render to the
President and the Board of Directors when and as required,
an account of all his/her transactions as Treasurer, and a
report as to the financial position and operations of the
corporation; and (h) have all powers and perform all duties
incident to the office of Treasurer, and such other powers
and duties as may from tie to time be prescribed by the
Board of Directors or the President.

     Section 3.10.  VACANCIES.  Vacancy in any office or
position by reason of death, resignation, removal,
disqualification or any other cause, shall be filled in the
manner provided in this ARTICLE III for regular election or
appointment to such office.

     Section 3.11.  DELEGATION OF DUTIES.  In case of the
absence of any officer, or for any other reason that the
Board of Directors may deem sufficient, the Board of
Directors may delegate for the time being the powers and
duties, or any of them, of such officer to any other officer
or Director or other person whom it may select.

     Section 3.12.  SALARIES.  The salaries of the officers
shall be fixed from time to time by the Board of Directors,
and no officer shall be prevented from receiving such salary
by reason of the fact that he/she is also a Director of the
corporation.


                          ARTICLE IV

                    SHARES OF CAPITAL STOCK

     Section 4.01.  SHARE CERTIFICATES.  Every holder of
fully-paid stock in the corporation shall be entitled to a
certificate or certificates, consecutively numbered, to be
in such form as required by law and as the Board of
Directors may from time to time prescribe, and signed by the
Chairman of the Board or the President or a Vice President
and the Secretary or the Treasurer or an Assistant Secretary
or an Assistant Treasurer, which shall represent and certify
the number of shares of stock owned by such holder.  Where a
certificate is signed by a transfer agent or an assistant
transfer agent or a registrar, the signature of any such
Chairman of the Board, President, Vice President, Secretary,
Treasurer, Assistant Secretary or Assistant Treasurer may be
facsimile.  In case any transfer agent, registrar, officer
or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or
certificates shall cease to be such transfer agent,
registrar, officer or officers of the corporation, whether
because of death, resignation or otherwise, before such
certificate or certificates have been issued by the
corporation, such certificate or certificates may
nevertheless be adopted by the corporation and be issued as
though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such transfer agent,
registrar, officer or officers of the corporation.  The
Board may authorize the issuance of certificates for
fractional shares or, in lieu thereof, scrip or other
evidence of ownership, which may in the discretion of the
Board entitle the holder thereof to voting, dividend or
other rights of shareholders.

     Section 4.02.  TRANSFERS OF SHARES.  Transfer of shares
of stock of this corporation shall be made on the books of
the corporation only upon surrender to the corporation or
the transfer agent for cancellation of the certificate or
certificates for such shares properly endorsed by the
registered shareholder or by his/her assignee or legal
representative, who shall furnish proper evidence of
succession, assignment or authority to transfer, or by the
agent of one of the foregoing thereunto duly authorized by
an instrument duly executed and filed with the corporation.
The Board of Directors may appoint, or authorize any
principal officer to appoint, one or more transfer clerks or
one or more transfer agents and one or more registrars and
may require all certificates for capital stock to bear the
signature or signatures of any of them.

     Section 4.03.  LOST, STOLEN, DESTROYED OR MUTILATED
CERTIFICATES.  New certificates for shares of stock may be
issued to replace certificates lost, stolen, destroyed or
mutilated upon such terms and conditions, including proof of
loss or destruction and the giving of a satisfactory bond of
indemnity, as the Board of Directors from time to time may
determined.

     Section 4.04.  REGULATIONS RELATING TO SHARES.  The
Board of Directors shall have power and authority to make
all such rules and regulations not inconsistent with these
By-laws as it may deem expedient concerning the issue,
transfer and registration of certificates representing
shares of the corporation.

     Section 4.05.  HOLDERS OF RECORD.  The corporation
shall be entitled to treat the holder of record of any share
or shares of stock of the corporation as the holder and
owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or right,
title or interest in such shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise expressly provided by the laws
of Pennsylvania.


                          ARTICLE V

        MISCELLANEOUS CORPORATE TRANSACTIONS AND DOCUMENTS

     Section 5.01.  SIGNATURES ON NOTES, CHECKS, ETC.  All
properly authorized notes, bonds, drafts, acceptances,
checks, endorsements (other than for deposit), guarantees,
and all evidence of indebtedness of the corporation
whatsoever, shall require such number of signatures, and
shall be signed by such officers or agents of the
corporation, subject to such requirements as to
countersignature or other conditions, as the Board of
Directors from time to time may determine.  Facsimile
signatures on checks may be used if authorized by the Board
of Directors.

     Section 5.02.  EXECUTION OF INSTRUMENTS GENERALLY.
Except as provided in Section 5.01, all properly authorized
deeds, mortgages, contracts and other instruments requiring
execution by the corporation may be executed and delivered
by any executive officer of the corporation; and authority
to sign any such contracts or instruments, which may be
general or confined to specific instances, may be conferred
by the Board of Directors upon any other person or persons.
Any person having authority to sign on behalf of the
corporation may delegate, from time to time, by instrument
in writing, all or any part of such authority to any person
or persons if authorized so to do by the Board of Directors.

     Section 5.03.  VOTING SECURITIES OWNED BY CORPORATION.
Voting securities in any other corporation held by this
corporation shall be voted by the President, unless the
Board of Directors confers authority to vote with respect
thereto, which may be general or confined to specified
investments, upon some other person.  Any person authorized
to vote securities shall have the power to appoint proxies,
with general power of substitution.



                          ARTICLE VI

                        INDEMNIFICATION

     Section 6.01.  STANDARD OF CARE AND JUSTIFIABLE
RELIANCE.

          (a)  A Director of the corporation shall stand in
a fiduciary relation to the corporation and shall perform
his/her duties as a Director, including his/her duties as a
member of any committee of the board upon which he/she may
serve, in good faith, in a manner he/she reasonably believes
to be in the best interests of the corporation, and with
such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under
similar circumstances.  In performing his/her duties, a
Director shall be entitled to rely in good faith on
information, opinions, reports or statements, including
financial statements and other financial data, in each case
prepared or presented by any of the following (1) One or
more officers or employees of the corporation whom the
Director reasonably believes to be reliable and competent in
the matters presented; (2) Counsel, public accountants or
other persons as to matters which the Director reasonably
believes to be within the professional or expert competence
of such person; and (3) A committee of the board upon which
he/she does not serve, duly designated in accordance with
law, as to matters within its designated authority, which
committee the Director reasonably believes to merit
confidence.  A Director shall not be considered to be acting
in good faith if he/she has knowledge concerning the matter
in question that would cause his/her reliance to be
unwarranted.

          (b) In discharging the duties of their respective
positions, the board of Directors, committees of the board
and individual Directors may, in considering the best
interests of the corporation, consider the effects of any
action upon employees, upon suppliers and customers of the
corporation and upon communities in which offices or other
establishments of the corporation are located, and all other
pertinent factors.  The consideration of those factors shall
not constitute a violation of subsection (a).

          (c) Absent breach of fiduciary duty, lack of good
faith or self-dealing, actions taken as a Director or any
failure to take any action shall be presumed to be in the
best interests of the corporation.

     Section 6.02.  PERSONAL LIABILITY OF DIRECTORS.  A
Director of the corporation shall not be personally liable
for monetary damages as such for any action taken, or any
failure to take any action, unless: (1) the Director has
breached or failed to perform the duties of his/her office
under Section 6.01 (relating to standard of care and
justifiable reliance); and (2) the breach or failure to
perform constitutes self-dealing, willful misconduct or
recklessness.  The provisions of this section shall not
apply to:  (1) the responsibility or liability of a Director
pursuant to any criminal statute; or (2) the liability of a
Director for the payment of taxes pursuant to local, State
or Federal law.

     Section 6.03.  INDEMNIFICATION IN THIRD PARTY ACTIONS.
The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason
of the fact that he/she is or was a Director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a Director, officer,
employee, or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by
him/her in connection with such action, suit or proceeding
if he/she acted in good faith and in a manner he/she
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his/her conduct was unlawful.  The termination of
any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner
which he/she reasonably believed to be in or not opposed to
the best interests of the corporation and, with respect to
any criminal action or proceeding, had reasonable cause to
believe that his/her conduct was unlawful.

     Section 6.04.  INDEMNIFICATION IN DERIVATIVE ACTIONS.
The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason
of the fact that he/she is or was a Director, officer,
employee or agent of the corporation, or is or was serving
at the request of the corporation as a Director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses
(including attorney's fees) actually and reasonably incurred
by him/her in connection with the defense or settlement of
such action or suit if he/she acted in good faith and in a
manner he/she reasonably believed to be in or not opposed to
the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged
to be liable for negligence or misconduct in the performance
of his/her duty to the corporation unless and only to the
extent that the Court of Common Pleas of the county in which
the registered office of the corporation is located or the
court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity
for such expenses which the Court of Common Pleas of such
other court shall deem proper.

     Section 6.05.  WHEN INDEMNIFICATION IS NOT TO BE MADE.
 Indemnification pursuant to Section 6.03 and 6.04 shall not
be made in any case where the act or failure to act giving
rise to the claim for indemnification is determined by a
Court to have constituted willful misconduct or
recklessness.

     Section 6.06.  EXPENSES UPON SUCCESSFUL TERMINATION.
To the extent that a Director, officer, employee or agent or
the corporation has been successful on the merits or
otherwise in the defense of any action, suit or proceeding
referred to in Sections 6.03 and 6.04, or in defense of any
claim, issue or matter therein, he/she shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him/her in connection therewith.

     Section 6.07.  DETERMINATION OF STANDARD OF CONDUCT.
Any indemnification under Sections 6.03 and 6.04 (unless
ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that
indemnification of the Director, officer, employee or agent
is proper in the circumstances because he/she has met the
applicable standard of conduct set forth in Sections 6.02,
6.03 and 6.04.  Such determination shall be made:  (1) by
the board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to such action,
suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a majority vote of a
quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or (3) by the
shareholders.

     Section 6.08.  PAYMENT OF EXPENSES.  Expenses incurred
by an officer, Director, employee or agent in defending a
civil or criminal action, suit or proceeding may be paid by
the corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by
or on behalf of such person to repay such amount if it shall
ultimately be determined that he/she is not entitled to be
indemnified by the corporation.

     Section 6.09.  INDEMNIFICATION RIGHTS, SUPPLEMENTAL AND
CONTINUING.  The indemnification and advancement of expenses
provided by this Article shall not be deemed exclusive of
any other rights to which those seeking indemnification may
be entitled under any agreement, vote of stockholders or
disinterested Directors or otherwise, both as to action in
his/her official capacity and as to action in another
capacity while holding such office, and shall continue as to
a person who has ceased to be a Director, officer, employee
or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.


                         ARTICLE VII

                    AMENDMENT OF BY-LAWS

     Section 7.01.  AMENDMENT.  Except as otherwise provided
in the Articles of Incorporation or in Section 1.03(c) of
these By-laws, these By-laws may be altered, amended and
repealed, and new By-laws may be adopted, by the vote of
shareholders entitled to cast at least a majority of the
votes which all shareholders are entitled to cast, or by the
vote of a majority of the full Board of Directors of the
corporation, at any regular or special meeting.  In each
case, notice of the specific Section proposed to be changed
must be given to the shareholders or to the Directors, as
the case may be.  No provision of these By-laws shall vest
any property right in any shareholder.

     Section 7.02.  CERTAIN AMENDMENTS.  Notwithstanding the
provisions of Section 7.01, the Board of Directors shall not
have the authority to adopt or change a By-law on any subject
that is committed expressly to the shareholders by any of the
provisions of Subpart B of the Pennsylvania Business Corporation
Law of 1988.


                          ARTICLE VIII

                       GENERAL PROVISIONS

     Section 8.01.  OFFICES.  The principal office of the
corporation shall be at Saxonburg Boulevard, Saxonburg, Butler
County, Pennsylvania.  The registered office of the corporation,
required by the Pennsylvania Business Corporation Law to be
maintained in the Commonwealth of Pennsylvania, may be, but need
not be, the same as the principal office.  The address of the
registered office may be changed from time to time by the Board
of Directors.  The corporation may also have additional offices
and places of business at such other places within or without
the Commonwealth of Pennsylvania as the business of the corporation
may require.

     Section 8.02.  CORPORATE SEAL.  The Board of Directors shall
prescribe the form of a suitable corporate seal, which shall
contain the full name of the corporation and the year and state
of incorporation.

     Section 8.03.  FISCAL YEAR.  The fiscal year of the corporation
shall end on such day as shall be fixed by resolution of the Board
of Directors.

     Section 8.04.  FINANCIAL REPORTS TO SHAREHOLDERS.  The Board
of Directors shall have discretion to determine whether financial
reports shall be sent to shareholders, what such reports shall
contain, and whether they shall be audited or accompanied by the
report of an independent or certified public accountant.

     Section 8.05.  INSPECTION OF CORPORATE RECORDS.  Every
shareholder shall, upon written demand under oath stating the
purpose thereof, have a right to examine, in person or by agent
or attorney, during the usual hours for business, for any proper
purpose, the share register, books or records of account, and
records of the proceedings of the shareholders and Directors, and
to make copies or extracts therefrom.  A proper purpose shall mean
a purpose reasonably related to such person's interest as a
shareholder.  In every instance where an attorney or other agent
shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or other
writing which authorizes the attorney or other agent to so act
on behalf of the shareholder.  The demand under oath shall be
directed to the corporation at its registered office or at its
principal place of business.

     Section 8.06.  INTERESTED DIRECTORS; QUORUM.  No contract
or transaction between the corporation and one or more of its
Directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in
which one or more of its Directors or officers are Directors or
officers, or have a financial interest, shall be void or voidable
solely for such reason, or solely because the Director or officer
is present at or participates in the meeting of the Board which
authorizes the contract or transaction, or solely because his/her
or their votes are counted for such purpose, if:

          (1)  The material facts as to his/her relationship or
     interest and as to the contract or transaction are disclosed
     or are known to the Board of Directors and the Board authorizes
     the contract or transaction by a vote sufficient for such
     purpose without counting the vote of the interested Director
     or Directors; or

          (2)  The material facts as to his/her relationship or
     interest and as to the contract or transaction are disclosed or
     are known to the shareholders entitled to vote thereon, and the
     contract or transaction is specifically approved in good faith
     by vote of the shareholders; or

          (3)  The contract or transaction is fair as to the
     corporation as of the time it is authorized, approved or ratified,
     by the Board of Directors or the shareholders.

Interested Directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors which authorizes a
contract or transaction specified in this Section.

     Section 8.07.  DISALLOWED EXPENSES; REIMBURSEMENT.  Any
payments made to an officer or employee of the corporation, such
as salary, commission, bonus, interest or rent or entertainment
or travel expense, which shall be disallowed to the corporation in
whole or in part as a deductible expense by the Internal Revenue
Service, shall be reimbursed by such officer or employee to the
corporation to the full extent of such disallowance.  It shall be
the duty of the Board of Directors, as a Board, to enforce payment
of each such amount disallowed.  In lieu of payment by the officer
or employee, subject to the determination of the Board of Directors,
proportionate amounts may be withheld from such officer's or
employee's future compensation, until the amount owed to the
corporation has been received.

     Section 8.08.  NOTICES; WAIVER OF NOTICE.  (a) NOTICE:
Whenever under these By-laws or by law notice is required to be
given to any person, including written notice (and unless otherwise
provided by these By-laws or by law), it may be given to such
person, either personally or by sending a copy thereof through the
mail, or by telegram, charges prepaid, to his/her address appearing
on the books of the corporation, or supplied by him/her to the
corporation for the purpose of notice.  If the notice is sent by
mail or by telegraph, it shall be deemed to have been given to the
person entitled thereto when deposited in the United States mail
or with a telegraph office for transmission to such person.  Such
notice shall specify the place, day and hour of the meeting; except
in the case of a special meeting of shareholders or as otherwise
expressly required herein or by law, neither the business to be
transacted at, nor the purpose of, the meeting need be specified
in the notice.  (b)  WAIVER:  Whenever under these By-laws or by
law written notice is required to be given to any person, a waiver
thereof in writing, signed by the person or persons entitled to
such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice.  Except in the
case of a special meeting of shareholders or as otherwise expressly
required herein or by law, neither the business to be transacted
at, nor the purpose of, the meeting need be specified in the waiver
of notice of such meeting.  (c)  ATTENDANCE CONSTITUTES WAIVER:
Attendance of a person in person, or by proxy in the case of a
shareholder, at any meeting shall constitute a waiver of notice of
such meeting, except where a person attends a meeting for the express
purpose of objecting to the transaction of any business because the
meeting was not lawfully called or convened.




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>ex1017.txt
<TEXT>
               FIRST AMENDMENT TO CREDIT AGREEMENT

          THIS FIRST AMENDMENT made this 28th day of June, 2002 (the
"First Amendment"), is made by and among II-VI INCORPORATED, a
Pennsylvania corporation (the "Borrower"), each of the Guarantors (as
defined below), the LENDERS (as defined below), and PNC BANK, NATIONAL
ASSOCIATION, as a Lender ("PNC"), Swing Loan Lender, Issuing Bank and
Agent (the "Agent") for the Lenders under this Agreement.

          WHEREAS, the Borrower, the Guarantors (as original parties or
by joinder), and the Lenders (as original parties or by assignment) and
the Agent are parties to a Credit Agreement dated as of August 14, 2000
(the "Credit Agreement"); and

          WHEREAS, the parties hereto wish to amend the Credit
Agreement as provided herein.

          NOW, THEREFORE, in consideration of the premises and
covenants contained herein and intending to be legally bound hereby,
the Borrower, the Guarantors,  the Administrative Agent and the
Required Lenders agree as follows:

          1.  Definitions.  Except as set forth herein, capitalized
terms used herein but not defined or amended herein shall have the
meanings set forth in the Credit Agreement.

          2.  Amendment to Definitions.  The definition of "Rate
Protection Term Loan" set forth in the Credit Agreement is hereby
amended and restated as follows:

              "Rate Protection Agreement" shall mean the Amended and
          Restated Letter Agreement dated March 26, 1999 (as the same
          may be amended) under which PNC Bank extended a rate
          protection term loan to the Borrower, as may in the future be
          amended, restated or replaced by a credit agreement or other
          secured lending arrangement whereby PNC Bank extends a rate
          protection term loan to  II-VI Japan Incorporated of up to
          Yen 300,000,000, such amount to be guaranteed by the Borrower
          (amounts outstanding under the March 26, 1999 Letter
          Agreement as amended, restated or replaced as described above
          being referred to herein as the "Rate Protection Term Loan").

          3.  Confirmation of Security Interest and Pledge.  Each of
the Loan Parties acknowledges and confirms that the reference to "Rate
Protection Agreement" and "Rate Protection Term Loan" in the definition
of "Secured Obligation" in each of the Security Agreements  and Pledge
Agreements executed by such Loan Parties in favor of the Agent for the
benefit of the Lenders shall refer to the Rate Protection Agreement and
Rate Protection Term Loan as defined in this First Amendment.

          4.  Amendment to Section 8.1.11.  Section 8.1.11 of the
Credit Agreement is hereby amended and restated as follows:

              8.1.11  Interest Rate Protection

              Within ninety (90) calendar days of the Closing
          Date, the Borrower shall enter into or have entered
          into, and Borrower shall maintain in place so long as
          the Term Loan is outstanding hereunder, one or more
          Interest Rate Protection Agreements covering 50% of
          the principal amount of the Term Loan outstanding from
          time to time, all in form and substance acceptable to
          the Agent (collectively the "Interest Rate Protection
          Agreement").  If one or more of the Lenders is a party
          to such Interest Rate Protection Agreement, the Interest
          Rate Protection Agreement shall be considered a Loan
          Document secured by the Collateral.

          5.  Amendment to Section 8.2.1(vi).  Section 8.2.1(vi) of the
Credit Agreement is hereby amended and restated to read as follows:

              (vi)  Indebtedness of the Borrower or II-VI Japan
          Incorporated, as applicable, to PNC Bank, National
          Association under the Rate Protection Term Loan of up to Y
          300,000,000 (as guaranteed by the Borrower) (including Y
          237,000,000 set forth in Schedule 8.2.1 to the Credit
          Agreement as originally executed).

          6.  Dissolution of Subsidiaries.  Notwithstanding the
provisions of Section 8.2.6 of the Credit Agreement or any provision of
the Pledge Agreements or the Security Agreements, the Loan Parties
shall be permitted to dissolve all or any of the following
Subsidiaries:

              (a)  II-VI Worldwide Inc.
              (b)  Laser Power FSC, Ltd.
              (c)  Laser Power Optics de Mexico S.A. de C.V.

          7.  Amendment to Section 8.2.14.  Section 8.2.14 of the
Credit Agreement is hereby amended and restated as follows:

              8.2.14  Minimum Consolidated Fixed Charge Coverage Ratio.

              The Loan parties shall not permit the Consolidated Fixed
          Charge Coverage Ratio, calculated as of the end of each
          fiscal quarter for the previous four fiscal quarters to be
          less than the ratio set forth below for the periods set forth
          below:

                       Period                         Ratio
                       ------                         -----
               From the Closing Date                1.25:1.0
               through and including
               June 30, 2003

               After June 30, 2003                  1.5:1.0

          8.  Amendment to Section 8.2.16.  Section 8.2.16 of the
Credit Agreement is hereby amended and restated as follows:

              8.2.16  Minimum Net Worth.

              The Borrower shall not at any time permit Consolidated
          Net Worth to be less than $57,000,000 plus 50% of positive
          quarterly net income for fiscal quarters ending on or after
          June 30, 2000 plus 100% of the Net Cash proceeds of any
          Offering plus 100% of the increase in the Borrower's
          Consolidated Net Worth from the stock portion of the
          purchase price for the Acquisition.

          9.  German Joint Venture.  Notwithstanding the provisions of
Credit Agreement identified below or any provision of the Pledge
Agreements or the Security Agreements, the Borrower and its
Subsidiaries, as applicable, shall be permitted to undertake the
following actions in connection with the establishment of a German
subsidiary:

              (a)  Section 8.2.9 - Borrower shall be permitted to
     create a wholly-owned subsidiary under the laws of The Netherlands
     ("DutchCo"), provided that Borrower shall pledge to the Agent for
     the benefit of the Lenders under the Borrower Pledge Agreement 65%
     of the outstanding capital stock of DutchCo.;

              (b)  Section 8.2.4, 8.2.7 and 8.2.9 - Borrower shall be
     permitted to contribute to the capital of DutchCo all of the
     outstanding capital stock of II-VI Singapore Pte, Ltd. ("Singapore
     Holdco") and the Agent, on behalf of the Lenders, shall release
     the pledge of 65% of the stock of Singapore Holdco which it holds;

              (c)  Sections 8.2.4 and 8.2.9 - DutchCo shall be
     permitted to establish and create a wholly-owned subsidiary under
     the law of Germany ("GmbH");

              (d)  Section 8.2.5 - Singapore Holdco shall be permitted
     to distribute up to Euro 1,710,000 to DutchCo as a dividend;

              (e)  Section 8.2.4 - Singapore Holdco shall be permitted
     to loan up to Euro 1,100,000 to DutchCo, GmbH or II-VI /LOT GmbH
     (as defined below);

              (f)  Section 8.2.4 and 8.2.9 - DutchCo shall be permitted
     to contribute to the capital of GmbH up to Euro 1,710,000;

              (g)  Section 8.2.4 - DutchCo shall be permitted to loan
     up to Euro 1,100,000 to GmbH;

              (h)  Section 8.2.4 and 8.2.9 - GmbH shall be permitted to
     purchase for Euro 2,820,000 from LOT GmbH Holding, a German
     holding company ("LOT GmbH Holding") 75% of the capital stock of
     LOT GmbH Holding's operating subsidiary, II-VI/LOT GmbH
     ("II-VI/LOT GmbH"), and

              (i)  The amounts set forth in subsection (d) and (e)
     above and in subsections (f) and (g) above may be revised by the
     Borrower, provided that in no case may the sum of the amount in
     subsection (d) plus the amount in subsection (e), as so revised,
     exceed Euro 2,820,000 and provided further that in no case may the
     sum of the amount in subsection (f) plus the amount in subsection
     (g), as so revised, exceed  Euro 2,820,000.

          10.  Additional Foreign Joint Ventures.  The Credit Agreement
is hereby amended to insert "(a)" prior to the first paragraph of
Section 8.2.9 and to add the following new subparagraph (b) to Section
8.2.9:

               (b)  Borrower and its Subsidiaries shall be permitted to
                    create, invest in or acquire interests in
                    corporations or other entities formed under the
                    laws of nations other than the United States and
                    its political subdivisions (each a "Permitted Joint
                    Venture") provided that in each such case the
                    following conditions are met:

                    (i)   Borrower shall provide the Agent notice of
                          any such investment or acquisition not later
                          than 30 days prior to such investment or
                          acquisition;

                    (ii)  The total amount of investments and
                          acquisition (measured at the time of each
                          such investment or acquisition) permitted
                          under this Section 8.2.9(b) (including any
                          indebtedness of such Permitted Joint Venture
                          guaranteed by Borrower or any subsidiary)
                          shall not at any time exceed $4,960,000; and

                    (iii) If the equity interest in the Permitted Joint
                          Venture is owned by a Loan Party, such Loan
                          Party shall pledge such equity interest (up
                          to 65%) of the total outstanding equity
                          interest of such Permitted Joint Venture) to
                          the Agent for the benefit of the Lenders, all
                          under documentation acceptable to the Agent.

          11.  Representations and Warranties.  The Loan Parties
jointly and severally hereby represent and warrant to the Agent and
each of the Lenders as follows:

               (a)  all representations, warranties and covenants made
     by the Loan Parties to the Agent and the Lenders that are
     contained in the Loan Documents (after giving effect to any
     revised Schedules attached hereto) are true and correct in all
     material respects on and as of the date hereof with the same
     effect as though such representations, warranties and covenants
     had been made on and as of the date hereof;

               (b)  to the Loan Parties' knowledge, no event or
     condition has occurred or exists which, with the giving of notice
     or the passage of time, or both, would constitute an Event of
     Default under any of the Loan Documents; and

               (c)  the execution and delivery of this Amendment and
     the consummation of the transactions contemplated hereby and by
     any other documents executed by the Loan Parties required to be
     delivered to the Agent and the Lenders in connection with this
     Amendment have been duly and validly authorized by each Loan Party
     and all such documents together constitute the legal, valid and
     binding agreement of each Loan Party, enforceable against each
     Loan Party in accordance with their respective terms, except to
     the extent that enforceability of any of such documents may be
     limited by bankruptcy, insolvency, reorganization, moratorium or
     other similar laws affecting the enforceability of creditors'
     rights generally or general equitable principles.

          12.  Effectiveness.  This First Amendment and the amendment
to the Credit Agreement effected hereby shall become effective upon the
delivery to the Agent of:

               (a)  a copy of this First Amendment, executed by each
     Loan Party;

               (b)  a stock certificate representing 65% of the capital
     stock of DutchCo, together with a stock power in blank executed by
     the Borrower and a written acknowledgment by Borrower that such
     stock constitutes "pledge shares" under the Pledge Agreement
     executed by the Borrower;

               (c)  Borrower shall pay to the Agent for the benefit of
     the Lenders an amendment fee of $50,000; and

               (d)  the Borrower shall have paid or caused to be paid
     to the Administrative Agent all accrued fees and expenses
     (including the fees and expenses of Kirkpatrick & Lockhart LLP,
     and any local counsel of the Agent) of the Agent and the Lenders
     in connection with this First Amendment.

          13.  Counterparts.  This First Amendment  may be executed in
one or more counterparts by any party hereto in separate counterparts,
each of which when so executed and delivered to the other party shall
be deemed an original.  All such counterparts together shall constitute
one and the same instrument.

          14.  Waivers.  This First Amendment shall not, except as
expressly set forth above, serve to waive, supplement or amend the
Credit Agreement, which Credit Agreement shall remain in full force and
effect as amended hereby.


          IN WITNESS WHEREOF, the parties hereto have executed and
delivered this First Amendment as of the date and year first above
written.


WITNESS:                              II-VI INCORPORATED
/s/ Craig A. Creaturo                 By: /s/ Francis J. Kramer
                                      Title:  President
[Seal]

WITNESS:                              II-VI DELAWARE, INC.
/s/ Craig A. Creaturo                 By: /s/ Francis J. Kramer
                                      Title:  President
[Seal]

WITNESS:                              VLOC INCORPORATED
/s/ Craig A. Creaturo                 By: /s/ Francis J. Kramer
                                      Title:  Vice President
[Seal]

WITNESS:                              LASER POWER CORPORATION
/s/ Craig A. Creaturo                 By: /s/ Francis J. Kramer
                                      Title:  Secretary
 [Seal]

WITNESS:                              EMI ACQUISITION CORP.
/s/Craig A. Creaturo                  By: /s/ Francis J. Kramer
                                      Title:  Secretary
[Seal]

WITNESS:                              EXOTIC MATERIALS, INC.
/s/ Craig A. Creaturo                 By: /s/ Francis J. Kramer
                                      Title:  Secretary
[Seal]

WITNESS:                              II-VI ACQUISITION CORP., a
                                      Pennsylvania corporation
/s/ Craig A. Creaturo                 By: /s/ Francis J. Kramer
                                      Title:  President
[Seal]

WITNESS:                              PNC BANK, NATIONAL ASSOCIATION,
                                      individually and as Agent
/s/ Ronald L. Bovill                  By: /s/ William Armitage
                                      Title:  Vice President
[Seal]


WITNESS:                              WACHOVIA BANK, NATIONAL ASSOCIATION
                                      (f/k/a First Union National Bank)
                                      as a Lender
/s/ Thomas DiFilippo                  By: /s/ Patrick J. Kaufmann
                                      Title:  Vice President
[Seal]



WITNESS:                              MANUFACTURERS AND TRADERS
                                      TRUST COMPANY, as a Lender
/s/ Elaine Scott                      By: /s/ Christopher Kania
                                      Title:  Vice President
[Seal]


WITNESS:                              NATIONAL CITY BANK OF
                                      PENNSYLVANIA, as a Lender
/s/John L. Hayes                      By:  /s/ Lori B. Shure
                                      Title:  Vice President
[Seal]




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>6
<FILENAME>ex2101.txt
<TEXT>






         LIST OF SUBSIDIARIES OF II-VI INCORPORATED





                                                  Jurisdiction of
       Subsidiary                                 Incorporation
       ----------                                 ---------------

VLOC Incorporated                                  Pennsylvania
II-VI Delaware, Incorporated                       Delaware
II-VI Holdings B.V.                                The Netherlands
II-VI Japan Incorporated                           Japan
II-VI Singapore Pte., Ltd.                         Singapore
II-VI Acquisition Corp.                            Pennsylvania
II-VI Optics (Suzhou) Co. Ltd.                     China
II-VI International Pte., Ltd.                     Singapore
II-VI U.K. Limited                                 England
Laser Power Corporation                            Delaware
EMI Acquisition Corporation                        California
Exotic Materials, Incorporated                     California
Laser Power Optics de Mexico S.A. de C.V.          Mexico
Laser Power Europe N.V.                            Belgium
Laser Power FSC, Ltd.                              Barbados


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>7
<FILENAME>ex2301.txt
<TEXT>












                     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, No. 33-67121,
No. 333-12737 and No. 333-74682 of II-VI Incorporated on Form S-8 of
our report dated September 13, 2002 (September 25, 2002 as to Note M),
which report expresses an unqualified opinion and includes an
explanatory paragraph relating to a change in the method of accounting
for goodwill amortization in fiscal 2002, appearing in this Annual
Report on Form 10-K of II-VI Incorporated and subsidiaries for the year
ended June 30, 2002.


/s/ Deloitte & Touche LLP

Pittsburgh, Pennsylvania
September 27, 2002


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>8
<FILENAME>ex9901.txt
<TEXT>
                   CERTIFICATION PURSUANT TO
                    18 U.S.C. SECTION 1350,
                    AS ADOPTED PURSUANT TO
          SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Annual Report of II-VI Incorporated (the
"Corporation") on Form 10-K for the period ending June 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), each of the undersigned officers of the Corporation
certifies, pursuant to 18 U.S.C. SS 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

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

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




Date:  September 25, 2002                 /s/ Carl J. Johnson
                                              Carl J. Johnson
                                         Chairman of the Board
                                        and Chief Executive Officer



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



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>9
<FILENAME>ex9902.txt
<TEXT>
                         CERTIFICATION PURSUANT TO
                          18 U.S.C. SECTION 1350,
                          AS ADOPTED PURSUANT TO
               SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Annual Report of II-VI Incorporated (the
"Corporation") on Form 10-K for the period ending June 30, 2002 as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), each of the undersigned officers of the Corporation
certifies, pursuant to 18 U.S.C. SS 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

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

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




Date:  September 25, 2002              /s/ Craig A. Creaturo
                                         Craig A. Creaturo
                                             Treasurer
                                     (principal financial officer)



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





</TEXT>
</DOCUMENT>
</SUBMISSION>
