8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) January 22, 2008

II-VI Incorporated

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania

(State or Other Jurisdiction of Incorporation)

0-16195	25-1214948
(Commission File Number)	(IRS Employer Identification No.)
375 Saxonburg Boulevard, Saxonburg, Pennsylvania	16056
(Address of Principal Executive Offices)	(Zip Code)

(724) 352-4455

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On January 22, 2008, II-VI Incorporated issued a press release announcing its financial results for the quarter ended December 31, 2007. A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits. The following exhibit is being furnished pursuant to Item 601 of Regulation S-K and Instruction B.2 to this Form:

99.1 Press Release

SIGNATURES

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

	II-VI INCORPORATED
	(Registrant)
Date: January 22, 2008	By:	/s/ Francis J. Kramer
		Francis J. Kramer
		President and Chief Executive Officer
Date: January 22, 2008	By:	/s/ Craig A. Creaturo
		Craig A. Creaturo
		Chief Financial Officer and Treasurer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release

EX-99.1

Press Release		II-VI Incorporated
		375 Saxonburg Boulevard
		Saxonburg, Pennsylvania 16056
		Telephone (724) 352-4455

Release Date:	January 22, 2008	Contact:	Craig A. Creaturo
			Chief Financial Officer and Treasurer
			(724) 352-4455
			ccreaturo@ii-vi.com
			Homepage: www.ii-vi.com

II-VI INCORPORATED:

REPORTS RECORD SECOND QUARTER REVENUES AND EARNINGS,

RECORDS GAIN ON SALE OF EQUITY INVESTMENT

PITTSBURGH, PA., January 22, 2008 — II-VI Incorporated (NASDAQ Global Select: IIVI) today reported results for its second quarter ended December 31, 2007. Revenues for the quarter increased 17% to a record $74,256,000 from $63,342,000 in the second quarter of last fiscal year. Revenues for the six months ended December 31, 2007 increased 18% to $146,927,000 from $124,139,000 for the same period last fiscal year. Net earnings for the quarter were a record $26,760,000 or $0.88 per share-diluted and included a $0.52 after-tax gain on sale of equity investment as described below. These results compare with net earnings of $9,110,000 or $0.30 per share-diluted in the second quarter of last fiscal year. For the six months ended December 31, 2007, net earnings were $36,383,000 or $1.19 per share-diluted and included a $0.52 after-tax gain on sale of equity investment as described below. This compares with net earnings of $16,608,000 or $0.55 per share-diluted for the same period last fiscal year.

During the quarter ended December 31, 2007, the Company sold its equity interest in a Canadian company, 5NPlus, Inc., for approximately $30 million in cash on which it recorded an after-tax gain of $15,913,000 or $0.52 per share diluted.

Bookings for the quarter increased 11% to $79,735,000 compared to $72,151,000 in the second quarter of last fiscal year. Bookings for the six months ended December 31, 2007 increased 18% to $161,573,000 from $136,448,000 for the same period last fiscal year. Bookings are defined as customer orders received that are expected to be converted into revenues during the next 12 months.

Francis J. Kramer, president and chief executive officer said, “Second quarter operating results exceeded our expectations due to improved operating performances in the Military & Materials and Near-Infrared Optics segments. Pacific Rare Specialty Metals & Chemicals executed well. This is the fourth consecutive quarter of record Company revenues, and bookings were the second highest in Company history led by a record-setting quarter for Infrared Optics. Our backlog has increased 14% since June 30, 2007 and is up 27% from the year ago quarter.”

Kramer continued, “The sale of our investment in 5NPlus strengthened the Company’s financial fundamentals which enabled us to pay down our debt significantly. We completed our acquisition of a 74.9% equity interest in HIGHYAG Lasertechnologie GmbH on January 2, 2008. We are pleased to welcome HIGHYAG to the II-VI Incorporated family of companies and have adjusted our outlook for the remainder of this fiscal year to include their expected revenue and earnings contribution.”

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II-VI Incorporated

January 22, 2008

Page 2

Segment Information

The following segment information includes segment earnings (defined as earnings before income taxes, interest expense and other income or expense, net). Management believes segment earnings are a useful performance measure because they reflect the results of segment performance over which management has direct control.

	Three Months Ended December 31,						Six Months Ended December 31,
	2007		2006		% Increase (Decrease)		2007		2006		% Increase (Decrease)
Bookings:
Infrared Optics	$	39,018	$	31,328	25	%	$	74,517	$	64,127	16	%
Near-Infrared Optics		10,103		25,134	(60	)%		34,241		32,595	5	%
Military & Materials		18,949		7,560	151	%		30,515		14,579	109	%
Compound Semiconductor Group		11,665		8,129	43	%		22,300		25,147	(11	)%
Total Bookings	$	79,735	$	72,151	11	%	$	161,573	$	136,448	18	%
Revenues:
Infrared Optics	$	33,918	$	31,494	8	%	$	67,535	$	63,652	6	%
Near-Infrared Optics		14,419		11,727	23	%		28,651		22,239	29	%
Military & Materials		12,239		6,462	89	%		24,216		12,649	91	%
Compound Semiconductor Group		13,680		13,659	0	%		26,525		25,599	4	%
Total Revenues	$	74,256	$	63,342	17	%	$	146,927	$	124,139	18	%
Segment Earnings:
Infrared Optics	$	7,823	$	8,794	(11	)%	$	15,190	$	17,597	(14	)%
Near-Infrared Optics		2,842		1,635	74	%		5,744		2,834	103	%
Military & Materials		2,251		603	273	%		3,770		844	347	%
Compound Semiconductor Group		1,147		1,160	(1	)%		1,528		1,013	51	%
Total Segment Earnings	$	14,063	$	12,192	15	%	$	26,232	$	22,288	18	%

Outlook

For the third fiscal quarter ending March 31, 2008, the Company currently forecasts revenues to range from $81 million to $84 million and earnings per share to range from $0.37 to $0.42. Results for the quarter ended March 31, 2007 were revenues of $67.1 million and earnings per share of $0.33. For the fiscal year ending June 30, 2008, the Company expects revenues to range from $315 million to $321 million and earnings per share to range from $1.93 to $2.05. The results for the fiscal year ending June 30, 2008 include the after-tax gain on sale of equity investment of $0.52 per share. Results for the year ended June 30, 2007 were revenues of $263 million and earnings per share of $1.25.

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II-VI Incorporated

January 22, 2008

Page 3

Webcast Information

The Company will host a conference call at 9:00 a.m. Eastern Time on Tuesday, January 22, 2008 to discuss these results. The conference call will be broadcast live over the internet and can be accessed by all interested parties from the Company’s web site at www.ii-vi.com as well as at http://www.videonewswire.com/event.asp?id=44827. Please allow extra time prior to the call to visit the site and, if needed, download the media software required to listen to the internet broadcast. A replay of the webcast will be available for two weeks following the call.

About II-VI Incorporated

II-VI Incorporated, the worldwide leader in crystal growth technology, is a vertically-integrated manufacturing company that creates and markets products for a diversified customer base including industrial manufacturing, military and aerospace, medical radiology, high-power electronics and telecommunications, and thermoelectronics applications. Headquartered in Saxonburg, Pennsylvania, with manufacturing, sales, and distribution facilities worldwide, the Company produces numerous crystalline compounds including zinc selenide for infrared laser optics, cadmium zinc telluride for gamma radiation detectors, silicon carbide for high-power electronic and microwave applications, and bismuth telluride for thermoelectric coolers.

In the Company’s infrared optics business, II-VI Infrared manufactures optical and opto-electronic components for industrial laser and thermal imaging systems, and HIGHYAG Lasertechnologie GmbH (“HIGHYAG”) manufactures fiber-delivered beam delivery systems and processing tools for industrial lasers. In the Company’s near-infrared optics business, VLOC, manufactures near-infrared and visible light products for industrial, scientific, military and medical instruments and laser gain materials and products for solid-state YAG and YLF lasers. In the Company’s military & materials business, Exotic Electro-Optics (EEO) manufactures infrared products for military applications, and Pacific Rare Specialty Metals & Chemicals produces and refines selenium and tellurium materials. In the Company’s Compound Semiconductor Group, the eV PRODUCTS division manufactures and markets solid-state x-ray and gamma-ray sensor products and materials for use in medical, industrial, environmental, scientific and homeland security applications; the Wide Bandgap Materials (WBG) group manufactures and markets single crystal silicon carbide substrates for use in the solid-state lighting, wireless infrastructure, RF electronics and power switching industries; the Marlow Industries, Inc. subsidiary designs and manufactures thermoelectric cooling and power generation solutions for use in defense, space, photonics, telecommunications, medical, consumer and industrial markets; and, the Advanced Materials Development Center (AMDC) provides expertise in materials development, process development, and manufacturing scale up.

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II-VI Incorporated

January 22, 2008

Page 4

This press release contains forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company’s performance on a going-forward basis. The forward-looking statements in this press release involve risks and uncertainties, which could cause actual results, performance or trends to differ materially from those expressed in the forward-looking statements herein or in previous disclosures. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management’s expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct. In addition to general industry and economic conditions, factors that could cause actual results to differ materially from those discussed in the forward-looking statements in this press release include, but are not limited to: (i) the failure of any one or more of the assumptions stated above to prove to be correct; (ii) the risks relating to forward-looking statements and other “Risk Factors” discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007; (iii) purchasing patterns from customers and end-users; (iv) timely release of new products, and acceptance of such new products by the market; (v) the introduction of new products by competitors and other competitive responses; and/or (vi) the Company’s ability to devise and execute strategies to respond to market conditions.

CONTACT: Craig A. Creaturo, Chief Financial Officer and Treasurer of II-VI Incorporated, 724-352-4455, or e-mail, ccreaturo@ii-vi.com.

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II-VI Incorporated and Subsidiaries

Condensed Consolidated Statements of Earnings (Unaudited)

(000 except per share data)

	Three Months Ended December 31,						Six Months Ended December 31,
	2007			2006			2007			2006
Revenues
Net sales	$	70,232		$	60,870		$	139,163		$	119,049
Contract research and development		4,024			2,472			7,764			5,090
Total Revenues		74,256			63,342			146,927			124,139
Costs, Expenses, Other (Income) Expense
Cost of goods sold	$	40,132		$	33,803		$	81,394		$	67,854
Contract research and development		3,125			1,915			5,948			3,902
Internal research and development		2,020			1,561			4,124			2,862
Selling, general and administrative		14,916			13,871			29,229			27,233
Interest expense		70			295			195			669
Other (income) expense, net		(1,054	)		(937	)		(2,188	)		(1,445	)
Gain on sale of equity investment, pre-tax		(26,455	)		—			(26,455	)		—
Total Costs, Expenses, Other (Income) Expense		32,754			50,508			92,247			101,075
Earnings Before Income Taxes		41,502			12,834			54,680			23,064
Income Taxes		14,742			3,724			18,297			6,456
Net Earnings	$	26,760		$	9,110		$	36,383		$	16,608
Diluted Earnings Per Share	$	0.88		$	0.30		$	1.19		$	0.55
Average Shares Outstanding – Diluted		30,538			30,119			30,470			30,017
Average Shares Outstanding – Basic		29,696			29,312			29,645			29,254

II-VI Incorporated and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(000)

	December 31, 2007		June 30, 2007
Assets
Current Assets
Cash and cash equivalents	$	68,038	$	32,618
Accounts receivable, net		42,593		47,724
Inventories		64,314		59,857
Deferred income taxes		9,175		9,279
Prepaid and other current assets		3,676		2,434
Total Current Assets		187,796		151,912
Property, Plant & Equipment, net		87,176		85,639
Goodwill		24,656		24,489
Other Intangible Assets, net		14,146		13,920
Investments		3,665		6,982
Other Assets		5,269		4,982
Total Assets	$	322,708	$	287,924
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	11,607	$	14,099
Accruals and other current liabilities		30,719		29,595
Current portion of long-term debt		—		55
Total Current Liabilities		42,326		43,749
Long-Term Debt—less current portion		3,581		14,940
Deferred Income Taxes		4,229		6,087
Other Liabilities		13,014		3,708
Total Liabilities		63,150		68,484
Shareholders’ Equity		259,558		219,440
Total Liabilities and Shareholders’ Equity	$	322,708	$	287,924

II-VI Incorporated and Subsidiaries

Other Selected Financial Information (Unaudited)

($000 except per share data)

The following other selected financial information includes earnings before interest, income taxes, depreciation and amortization (EBITDA). Management believes EBITDA is a useful performance measure because it reflects operating profitability before certain non-operating expenses and non-cash charges.

Other Selected Financial Information

	Three Months Ended December 31,				Six Months Ended December 31,
	2007		2006		2007		2006
EBITDA	$	45,743	$	17,229	$	63,380	$	31,910
EBITDA excluding pre-tax gain on sale of equity investment	$	19,288	$	17,229	$	36,925	$	31,910
Cash paid for capital expenditures	$	4,264	$	5,375	$	9,239	$	8,439
Net payments on indebtedness	$	10,735	$	8,388	$	11,749	$	12,276
Incentive stock option and performance share compensation expense, pre-tax	$	1,033	$	793	$	2,102	$	1,536
Cash paid for shares repurchased through the Company’s stock repurchase program	$	—	$	—	$	594	$	502
Shares repurchased through the Company’s stock repurchase program		—		—		20,000		19,500

Reconciliation of Segment Earnings and EBITDA to Earnings Before Income Taxes	Three Months Ended December 31,						Six Months Ended December 31,
	2007			2006			2007			2006
Total Segment Earnings	$	14,063		$	12,192		$	26,232		$	22,288
Interest expense		70			295			195			669
Other (income), net		(27,509	)		(937	)		(28,643	)		(1,445	)
Earnings before income taxes	$	41,502		$	12,834		$	54,680		$	23,064
EBITDA	$	45,743		$	17,229		$	63,380		$	31,910
Interest expense		70			295			195			669
Depreciation and amortization		4,171			4,100			8,505			8,177
Earnings before income taxes	$	41,502		$	12,834		$	54,680		$	23,064

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